The Solana Podcast

By Anatoly Yakovenko

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Welcome to The Solana Podcast. This podcast is a discussion between industry leaders in both blockchain and technology, our team, and community developers. DISCLAIMER The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Episode Date
Jason Keats - Founder & Chief Hooligan, OSOM Ep #70

Anatoly welcomes Jason Keats (Founder & Chief Hooligan, OSOM) to the podcast to talk about his epic career building hardware, the Solana Saga phone and all things mobile and web3. Pre-order the Saga now at


00:09 - Intro

00:25 - Background

03:27 - Working at Apple

08:07 - The Gem Phone

10:15 - Privacy at Essential

12:24 - Building for Mobile

15:52 - Hardware he wants to build

17:07 - Crypto x Cars

19:02 - Do Apple or Google care about hardware and crypto?

21:08 - Innovation in hardware

21:56 - The saga phone

22:56 - The manufacturing process

26:29 - How to start building

27:56 - Working with start ups

29:15 - The innovation cycle in hardware

30:36 - Privacy features

32:42 - Working with non-crypto people

36:08 - Outro



The content herein is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. Those who appear in the content may have a financial interest in any projects referenced, and any content herein is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.  This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor.


Anatoly (00:09):

Hey, folks. This is Anatoly and you're listening to The Solana Podcast. And today, I have Jason Keats with me who's the CEO and co-founder of OSOM. Welcome.

Jason (00:18):

Hey, how's it going? Glad to be here. Glad to chat everything we've been working on finally.

Anatoly (00:22):

Yeah. Me too. It's been kind of a crazy journey. You have an awesome background. Do you mind just sharing it?

Jason (00:32):

Yeah. I've had a very, weird hardware background throughout my career. When I left Berkeley, I decided I wanted to go build something. I didn't want to sit in front of a computer all day. Well, my degree is in astrophysics from Berkeley. And then I went on to work on solar panels. And that was-

Anatoly (00:54):


Jason (00:54):

What was that?

Anatoly (00:55):

Yeah. How did you get from astrophysics to hardware?

Jason (00:59):

So my senior year, my professor asked me to... He knew I had access to a machine shop because I was working with the Formula SAE, which is a student racing program. So they knew I had access to a machine shop and they wanted to make parts for telescopes. So I offered and said, "Hey, I can do that." So instead of being a traditional GSI or something like that, I was the monkey who machined random parts. And that was a lot more fun. At the end of the day, instead of having a program, I was like, "I have a thing. It's built." And that was it. I wanted to build things.

Anatoly (01:39):

That's awesome. How did you get into astrophysics then? What was the reason for getting into astrophysics?

Jason (01:48):

I just wanted to be able to say, I was... It was a rocket scientist was the logic I had, 18-year-old me had. Little did I know that wasn't exactly how that worked, but it sure sounded cool. And nowadays it just sounds really cool to say, "Oh, I have a degree in astrophysics from Berkeley."

Anatoly (02:05):

That does sound really cool. So what happened after? You build telescopes, right?

Jason (02:10):

Yeah. I built little bits and bobs for telescopes. I didn't want to get a real job, so I started a motorcycle company that was a complete disaster. Not a complete disaster, but it was pretty rough. I learned a lot about running a company there. Basically, I learned all the things you're not supposed to do.

Anatoly (02:29):

I mean, that's the first one, right? You're supposed to do that.

Jason (02:33):

Yeah. I'm glad it didn't hurt me too badly. And then I ended up being a consultant for a company in Silicon Valley. It was like a design engineering consultancy and they put me on to Solyndra, which was a solar panel company. And that was a very fun couple of years building some really interesting technology and honing the skills that I use today and some of the ethos that I still use today because one of the things we were trying to do was how do you make a solar panel easier to install, because right now it's quite a time consuming process. So my goal was to design a solar array that could be installed with no tools and we were successful in that.

Anatoly (03:14):

That's awesome. That's awesome. I'm going to keep saying that the whole episode.

Jason (03:22):

Two years on of creating the name and it still doesn't get old. So eventually Solyndra went belly up unfortunately, that could be 10 podcasts probably as to what happened there. But my boss at the time was like, "Cool, we need to go over to Apple right away." So I think that was a Wednesday, the company went bankrupt and on Monday I was working on secret projects at Apple.

Anatoly (03:50):

Cool. So there's like a period of how many years of what you can't talk about.

Jason (03:55):

A few years actually. And actually I know for a fact that the program is still ongoing and is still super secret.

Anatoly (04:02):

Cool. That's pretty cool. What did you work on at Apple that you can talk about?

Jason (04:09):

So when I started Apple, my first project was on Mac PD doing the last generation of the MacBook Air, which I mean, people still review that as one of the best laptops ever made. And I'm still quite proud of that. It was a very difficult project with a very small team, but it was very successful. And at some point in between MacBook Air and the little tiny MacBook, I was asked to help on a small project with Jony Ive which was the Leica infrared camera. And it was myself and one other mechanical engineer working with the ID team, designing this, what was supposed to be a two or three-week project. And six months later, I had my own office where we were doing prototypes of little tiny bits and pieces because Jony wanted it perfect. And that really kind of made my career at Apple was working on that project with the studio directly.

Anatoly (05:01):

Is that camera like something you can buy now?

Jason (05:03):

I mean, if you got a few million bucks. No, we only made one camera and it was purchased at auction for around $2 million if I recall correctly. I think it's on display somewhere. It was super cool. It had so many bits and pieces that were just absolutely ridiculous. The whole thing was handmade. My favorite little anecdote about that is it needed to be... The tolerances were so tight that it needed to be hand assembled in a very particular way. And so if the owner who currently has it decides it needs to be repaired or refurbished, for whatever reason, if they decide to actually to use a $2 million camera, there's a little post it inside that says, "Call Jason," with my phone number.

Anatoly (05:52):

Eventually you're going to get like a call at 3:00 AM.

Jason (05:55):

Oh, yeah. I do know who has it. And we do travel in the same circle, so I'm sure there's a day where I'll be like, "Hey, I built your camera." Yeah, that was fun. And then from there I joined iPad which was a whole other journey and learning a little bit more about mobile having come from solar panels and motorcycles, and desktop products, and laptops into iPad was a lot of fun. And my first real claim to fame in iPad was leading architecture on the original iPad Pro, which is the original 12.9 inch iPad.

Jason (06:31):

It was a lot of fun because we got to try a lot of different things. A funny story there though, that totally you know and a lot of people who follow me know, I'm huge into racing in cars and I do a lot of silly things. We actually built in carbon fiber speaker caps inside the iPad Pro. Apple marketing made this big spiel about, "Oh, it's different. It does this, it does that." That's all BS. It's because I like carbon fiber because I like race cars and that's why we used it. I'm sure there's some marketing guy going no, but that's the honest truth is to why there are carbon fiber speaker caps in the iPad pro.

Anatoly (07:07):

I thought those are so cool. I ride bikes. All the cool bikes are carbon fiber.

Jason (07:17):

Let's see. I don't think I have one here. I had one somewhere. I had the caps and everything, but it was a lot of work and it was a lot of fun. It was really interesting, but I got really sick of the bureaucracy at Apple. It wasn't for me. One day somebody was interviewing for my team at Apple, and they told me about what was going on Playground, which was Andy Rubin's new incubator. And I thought that was super, super interesting. So I just straight up cold called Andy on LinkedIn and was like, "Hey, I've done this stuff. I'm interested in getting out of the Apple ecosystem. Let's talk."

Jason (07:53):

And the next day I got a call from their recruiter and I went and interviewed a week later and they were like, "Hey, we have something. We can't tell you anything about it, but can you wait, like two months and we're going to give you a job. I said, "Cool." So for that two months, I went off and worked on Apple Maps, which was everybody goes, "What the hell were you doing on Apple Maps?" I was designing all the things you see, like the rooftop boxes and the things that went in the planes and the balloons that went up in the sky. We built some really weird stuff to capture images for Apple Maps.

Anatoly (08:26):

That's cool. Wow. I mean, there is a hardware component to Apple Maps that people don't don't realize.

Jason (08:33):

Oh, yeah. All that stuff has to be captured somewhere. I mean, there's warehouses full of hard drives of people having to still go through that data and make sure it's okay to use. And warehouses and warehouses full of hard drives.

Anatoly (08:49):

Yeah, I can imagine.

Jason (08:52):

So, yeah, after Apple, I went and joined Andy Rubin at what was... What were we called? We were called Ninja Army for the first five months. And then eventually became known as Essential. I was technically the first hire, but the second employee at Essential and was there from the very beginning to the very end. It was a hell of a ride. We built the Essential PH1, which was a really, really, really exceptional piece of hardware with some pretty crap software on it, unfortunately.

Jason (09:19):

Particularly the camera side needed a lot of work and unfortunately was released too early. And we could argue for days about what the reason was, but ultimately that was the end result of that. And we never managed to bring another product to market despite building some really cool hardware there.

Anatoly (09:38):

So yeah, man, launching hardware is hard. Why did you decide to do this again?

Jason (09:47):

The biggest product that we built... Or the coolest product. No, that was actually the smallest. The coolest product we designed at Essential was Project Gem. And we are working on that up until the very end. And that was so revolutionary in the terms of mobile experience in which taught all of us that there was really an opportunity here. There was still things to be done and new things to be invented and new ways of interacting to be made available.

Jason (10:13):

So when Essential went out of business, when Andy told me that was that, it was obvious to me that I need to take this opportunity now. I'm going to do it. I have a team available that I know is now all unemployed and let's keep them together and build something really, really cool.

Jason (10:29):

So I grabbed the key team members and then kept a few on the back burner while we raised money, and we got to the point where we were ready to rock and start building a new phone. So while the first phone is a little more traditional device, I think in the future, we're going to have some really crazy things to build with you guys.

Anatoly (10:49):

Yeah. I have no doubts. The gem thing was a pretty weird piece of hardware. Right? It kind of looked almost like totally made out of glass.

Jason (11:03):

Yeah. So this is one of those things that I love showing off in person is that glass phone. It was a glass uni body, which has never been done in a cell phone before. The overall shape was... I mean, the best description is either a candy bar mixed with an Apple TV remote and...

Anatoly (11:21):


Jason (11:22):

Yeah. That's a great description. Piece of glass, size of a candy bar that kind of looks like an Apple TV remote.

Jason (11:28):

Yeah, exactly. But it was all one piece of glass. Even the camera bump, the flash, everything was a continuous piece of glass. And every hardware engineer I've shown that to goes, "How did you make this? And how did you manage to achieve the tolerances required to build that?" And it took a lot of work with our good friends at Corning and a third party in China. But we were able to build them. And there's a couple of them in existence. I think they're all in Andy's garage still, except for the two that are in my possession still. And they work.

Jason (12:00):

Some of the issues we were encountering was that GMS wouldn't... We wouldn't be approved for GMS with that device. So we were going to have to do some new and novel use cases there and come up with all new ways to interact with the device.

Anatoly (12:17):

So awesome you guys started with a really strong focus on privacy. Yeah. Was that your decision or something that was just you guys wanted to do at Essential anyways?

Jason (12:31):

No, that was definitely my decision and the decision of the team. We looked at what killed, Essential. A big part of that was a lack of focus other than building cool stuff. And that only gets you so far. There needs to be a reason why your customers want to join our adventure rather than go with a Samsung, or LG, or HTC, or Motorola or whatever was available at that time.

Jason (12:54):

So we realized that a big problem facing everybody today is a lack of consumer privacy. And that's when we came to the conclusion that we could actually address that as an OEM.

Anatoly (13:06):

And that's a really tough challenge because you still probably want to keep Google services around.

Jason (13:14):

Yeah, absolutely. So I mean-

Anatoly (13:16):

Do you think... Yeah, go ahead.

Jason (13:18):

No, I was going to say it's a great segue into what things that people keep asking us since we announced our partnership is when we decided to say, "Okay, we're going to build a privacy centric phone, there have been privacy centric devices attempted in the past, but they were too extreme. By cutting out GMS, by cutting out Android in some cases, you were left with a device that was so private, nobody would use it, which yeah, it works as a privacy device, but you don't sell any.

Jason (13:43):

I mean, I know for a fact that there are two different phone manufacturers who sold less than a thousand devices, despite putting tens of millions of dollars into it because we all use the same suppliers. So the suppliers are excellent sources of information. And so I know for a fact that one of them was like, "Oh, we only shipped a thousand speakers to that company."

Jason (14:06):

So what we said was, "We're going to give you control and we're going to give the user control and we're going to give them options and they can make the choice as to how much they want to share or not share." And if they want to use Twitter, and Facebook, and Instagram and every Google service, then at least they have knowledge that they're doing that and is less secure than not doing it. Or they are consciously making that decision.

Anatoly (14:31):

Yeah. Go ahead.

Jason (14:33):

And that goes to what we've talked about is we're going to do the same with all the Solana mobile stack that we're integrating into the phone. We're not taking anything away. We're giving users an excellent device, a high-end flagship device that gives them more options and more choice in how they use it and what they use it for.

Anatoly (14:52):

Yeah. If you've been a web 3.0 dev, you've been building applications and you've never started with like, "I need to collect a username and an email and a password." That concept doesn't exist. Right?

Jason (15:09):


Anatoly (15:09):

That's something that being building like in crypto for the last four years, I almost forgot how to build traditional applications. And when I had to remember, I was like, "Oh man, yeah, there just doesn't seem a way to build privacy without really starting from the ground up and building a whole new set of applications that people actually use. Right? And they deliver value to those users. People use them because they love them. But you need to start from the ground up. And that's really hard because getting product market fit, building applications and then competing with existing services is just like a uphill climb.

Jason (15:54):

Yeah, absolutely. Building that community, which was what made our partnership so beautiful is you have that community and you have that development group that really wants to be actively involved and emotionally involved, and that's super exciting for us to be like, "Hey, let's give you a piece of hardware that you can call home too."

Anatoly (16:12):

Yeah. I mean, this is the first time, honestly, I've seen anyone tweet that they will stop using an Apple product and switch to Android.

Jason (16:21):

That is exciting. If we can crack 5% instead of the standard 4%, I will be absolutely ecstatic.

Anatoly (16:29):

Yep. That would be awesome. Yeah, I remember when the iPhone launch and that was a real watershed moment. A lot of us, I was working on BREW and a lot of us were actually, like, felt really frustrated with the mobile industry because we had all these ideas. We wanted to build rich applications that are easy to code and totally different kind of UIs, dynamic UIs and stuff. And these big telcos would give us like 200-page spec of what a phone should look like because they their customers. And there was like this moment where Apple announced this thing and Steve Jobs showed, "Look, there's a browser. It's a real internet." It's just not this [inaudible 00:17:15]. It's not the mobile web that... I don't know if people remember what that even looked on a LG flip phone.

Jason (17:25):

I do.

Anatoly (17:25):

That was a big deal. I don't know if we're there yet with crypto. I don't know if there's a single application or anything like that when people open up and they're like, "Oh wow, this is it." Because obviously when Apple announced the iPhone, it was already after the internet. It was big. Right? Everybody was already using the internet and there was this obvious gap between desktop and mobile. But I think when people actually pay with tokens for their day to day stuff and all that whole loop works and it, and it's beautiful and it doesn't suck, I think that might like open up people to new ideas of what we can do with crypto on a mobile device that actually supports it natively.

Jason (18:18):

Yeah. The day that both of our parents can go and shop with tokens will be a watershed moment for crypto.

Anatoly (18:32):

Yeah. I am really excited about that.

Jason (18:33):

Yeah. When I think about the potential there, I mean you and I have talked about it a few times. It's immense and almost a little bit intimidating and staggering what the obvious potential is there.

Anatoly (18:45):

So what kind of hardware, what else do you want to build besides a phone? You don't have to announce anything, but you personally as somebody that's a super hardware nerd, if you had infinite budget, and could do whatever you want, what would you build?

Jason (19:02):

Number one, I want to bring back Project GEM. I loved using that phone and I'm probably the only person on Earth that used that phone regularly for a while because I wanted to make sure it was great. And that thing worked so much better than anybody ever gave a potential credit for, as a small side device, as something you could toss in your pocket, in your bag and not think about. It was beautiful. I mean, for me, designing a piece of hardware has to also be very physically attractive and I think that was the most beautiful thing I've ever designed.

Jason (19:31):

I do want to see the expansion of using your mobile devices, be it your watch or your phone interacting with the automotive sector. Obviously, we've chatted about it before. I have a problem when it comes to cars. Oh, wait. Nobody can see what I just pointed at. So I think the inner relationship between mobile, crypto, and automotive is even earlier than anything else in crypto, but there's a hell an opportunity there. And thankfully, a lot of the automotive companies are starting to catch on and realize there's different potential there.

Anatoly (20:13):

What would be like a hardware integration between mobile and cars?

Jason (20:18):

I mean, we've already patented this idea. So I will talk about it freely now, is the ability to track all your history of your vehicle. And when you sell your vehicle, you have everything written to the blockchain. The NFT itself will simply be a photo or a connection to the title, which is held somewhere else. But you can guarantee that if somebody sends you a NFT of a title, that it is tied to a physical object, which we've already patented that as well.

Anatoly (20:47):

So you want like the miles like the RPMs, like the actual raw data. I don't know what else you got. I'm not a car person.

Jason (20:56):

Like the service history or the maintenance history, the sales history. Do you know if the mile... You can guarantee that the miles weren't rolled back. You can know if it went through any... What do they call... Oh, when they call you to bring the car back in. Oh, recall notices. Anything with service was done. That's a real utility of that technology.

Anatoly (21:24):

Cool. And the kind of cars that people would really want this for like collectibles, like classic cars that you're getting what you're paying for.

Jason (21:34):

Yeah, I think so. But also with your average Toyota or Civic, at least you know what the history was on that car. Was it repaired? Was it damaged at any given point? There is utility across the board.

Anatoly (21:45):


Jason (21:46):

And then especially-

Anatoly (21:47):

Yeah, I can...

Jason (21:47):

Last thing on that one, especially, if we go into the collectibles, like being able to take a cut down the road. Okay. I sell the car to you. You sell it to somebody else and I can take a fraction of a percent of that sale is pretty awesome.

Anatoly (22:00):

If you're the person restoring the car. Right?

Jason (22:03):


Anatoly (22:03):

And you did this... Yeah, that's actually like, I think been... It's weird that model has never been replicated in the real world, but works so well with NFTs.

Jason (22:16):

Yeah. Exactly.

Anatoly (22:19):

That's a use case that I think is way under explored for stuff like that, for physical art.

Jason (22:26):

Yeah. It's one of the things that we patented early on was the connection between a physical and digital assets.

Anatoly (22:40):

Do you think Apple or Google care about what we're doing right now? Is this like reached anyone's decision-making yet or is this still-

Jason (22:49):

I know for a fact that our name has come up in both those companies, because I know a lot of people at the highest level. One of my good friends is an SVP at Apple and he texted me. He's like, "They're talking about you in an executive meeting." I was like, "Cool. I've made it in life. Are they talking about suing me though?" I'm sure Google has people thinking about it and worrying about it. I mean, obviously Google is still a partner because we are a GMS device and they are thrilled to have us. It's like being an advocate for the Android ecosystem.

Anatoly (23:26):

Oh yeah, absolutely. I think if we convert people from iOS to Android, Google should be like making parades for OSOM. It's a lot of...

Jason (23:37):

I'm serious, I haven't asked yet, but I should ask them like, "Hey, if we convert more than the standard 4%, do I get a bonus from Google?" That'd be nice.

Anatoly (23:43):

Yeah. Absolutely. I'm not too worried. They're so big that it doesn't seem like there's anything to worry about because they're just like, it's like worrying about, I don't know, nation state at this point.

Jason (24:02):

Yeah, exactly.

Anatoly (24:03):

For a startup, it's such a big competitor that it's not even a competitor.

Jason (24:08):

Yeah. And I think the companies that people often compare us to, or talk about us, nothing or... What's it? Oppo and OnePlus. One of the things that I've tried to do is make sure I have a good relationship with those companies as well, because it's kind of silly for a bunch of startups to be fighting over the scraps instead of taking swings at Apple, Google and Samsung in terms of device sales.

Anatoly (24:31):

Absolutely, yeah. I mean, OnePlus made some awesome devices too. That was really cool to see them launch. When I was working at Android at Qualcomm, there was just always like this huge gap between quality and innovation in terms of like how the device looks and feels and they were able to really push the limits there. Yeah.

Jason (24:53):

Well, I think our next devices will be pushing some new limits, which will be a lot of fun.

Anatoly (24:58):

Yeah. I guess, do you think like mobile... Because it's so big, is there still room to innovate in terms of hardware?

Jason (25:14):


Anatoly (25:15):

Besides like on the standard daily driver.

Jason (25:19):

Yeah. I spend a lot of time actually. Now, that I'm the CEO and I have other teams of people now working for me pushing vision, I can spend a little more time thinking about how I want to change that interaction of device, what new technologies are out there, or even what new use cases of existing technologies there are.

Jason (25:38):

So I have been working on something wholly new for how we interact with our devices in a way that I think people will naturally enjoy using it. It's a bit of technology that'll change how you actually touch and use your device, but it'll be done in a form factor in a manner that makes it approachable. And it's not foldable because I think that's kind of silly most of the time.

Anatoly (26:06):

Yeah. Foldables, not also not sure about them. I really like the steel on the Saga phone.

Jason (26:14):


Anatoly (26:15):

Why did you guys pick steel?

Jason (26:17):

Two reasons. Number one, we didn't want to go titanium like we did on the Essential phone. It was a little too exactly the same, but we couldn't go to aluminum because it just doesn't have the same touch. It doesn't have the same feel. It doesn't have the same strength. It doesn't have the same feel, which I want to feel a premium device when I pick up a phone that I engineered. An aluminum loses that a little bit. It's not stiff enough for my taste.

Jason (26:41):

So we landed on steel for the housing and then we landed on ceramic because we still did want a little tie back to Essential, but also because it does feel premium, it looks premium. It's not paint, it's not glass. It's real ceramic. It's incredibly tough. It's very hard and it does well and drop while also allowing to be RF transparent and just, I mean, ultimately looking and feeling super premium to your fingers.

Anatoly (27:09):

When you make those decisions, how many logistics need to change? How many companies, suppliers, machines, how big of a process is that?

Jason (27:24):

Less now than it was five years ago, but it's because I have the team behind me that is incredibly capable of making it happen where we have a ridiculous Rolodex, a contact list for everybody under 25 of people to call for different materials and different processes. The big one is, as you saw in the first EVT devices. First stainless devices, they were quite heavy. So one of the big changes we had to do was we had to optimize for aluminum on the very, very first prototypes. We switched to stainless, but we didn't change our cutter pass. We didn't change our processes. So into the current build, we've made a lot of changes to ensure that we bring the weight down just the right amount, but still have a super strong device.

Anatoly (28:11):

Are those separate companies like the company that makes the cutters and stamps the thing and puts on the ceramic. If you went from ceramic to glass, how big of a logistical nightmare is that?

Jason (28:25):

If we switched over to glass, it's a different company that would manufacture and process the material. And then because it's glass, we'd have to also find a paint shop to paint the device. Whereas ceramic has that color baked in, literally.

Anatoly (28:40):

Got it. That makes sense. Okay. So you have to do like a bunch of work. It's not just one company that you go to and they're like, "Sure, we can do everything."

Jason (28:51):

Yeah, that doesn't exist as much as we'd love to. It's all over the place in Asia. Prior to the pandemic, I probably would've spent the last 10 months living in and out of China.

Anatoly (29:02):

And most of the stuff is in China or all over Asia at this point?

Jason (29:07):

A lot of the supply chain comes out of China, but that doesn't mean we're manufacturing there. We have plants or factories both in China and in Vietnam, but it's still all in Asia.

Anatoly (29:18):

Got it. Is there any chance for that stuff to ever happen in the US or is it just like the world is like manufacturing shifted irreparably?

Jason (29:33):

I have had a few conversations with the Canadian government about this. I think the US will be still quite difficult, but in Canada might be possible. But the biggest issue is all the subcomponents are still made in Asia. So even if you were doing final assembly in North America, you'd still have to ship all the individual components from Asia. Your SOC is going to come out of TSMC, which is in Taipei. Your memory is going to come out of Korea. The display will come out of either Indonesia or China and there's no manufacturing plants for all those components anywhere in the Western world.

Anatoly (30:13):

Actually manufacturing those components in the Western world is impossible. Right? Why is it impossible?

Jason (30:18):

I mean, just the billions of dollars required would be cost prohibitive to build those plants. Those fab houses are huge and would take years to build.

Anatoly (30:30):

And that's because things have gotten so specialized in displays and everything that it's just like, "Yeah. It's basically Intel like level kind of commitment."

Jason (30:40):

Oh, yeah. I mean, you're talking massive, massive. And even the ones that are good at it already have issues now at the scales we're talking about. Like the four nanometer process, which is used to build the chip we're using in Saga is there are only two companies in the world that even understand how to make the fab devices to make those chips.

Anatoly (30:59):

Yeah. This is the Tungsten droplet, right?

Jason (31:04):


Anatoly (31:04):

You have like a droplet that refracts UV light.

Jason (31:08):

Honestly, I'm not that familiar with that process, but yeah, it is crazy, crazy. It's tough to explain to people how tiny four nanometers is. And then how many traces they have to put down in a tiny little chip that we're going to put in your phone and makes everything work.

Anatoly (31:29):

How do you find these places? How do you start? If you were like a 18-year-old that's like, "Hey, I want to build cool shit, build cool electronics," how would you start?

Jason (31:44):

I think if I were starting today, I would try to find the R&D team at either Google or Apple or a startup like OSOM and just go like, "Hey, I want to be your man on the ground in Asia and I want to grow my network. I want to go out there with a completely open mind and just be like everybody teach me." Which is how I really got out there. I said, "I don't know what I'm doing on some of this stuff." But I am a sponge. I will sit here and learn from the best and I will be super polite because I see... That was one of the things that used to bug me a lot is I saw Western people acting like jackasses with their Eastern counterparts.

Jason (32:23):

Now they get nowhere and I made it at a point to always, always, always be polite, always say, "Look, I'm here to learn. Let me help you. If I know something that I can share, I'm going to go out of my way to share it." And that has enabled me to have amazing relationships with the CEOs of all these fantastic supply companies.

Anatoly (32:43):

It's basically like a relationship thing and you have to know what they can build and know what they do well and stuff.

Jason (32:50):

Yeah. And go in there with an open mind and sometimes an open wallet. That always opens some doors and expect to try to make it a back and forth. Because you get a lot further if you can say, "Hey, let me offer you some of my knowledge in exchange for some of your knowledge."

Anatoly (33:07):

How open are they to startups custom work with these small scale projects? Because my imagination is that like they only work with Google and they want to sell a hundred million units or whatever.

Jason (33:20):

Yeah. That's the other hard part. And that comes later on once you have those relationships because it doesn't matter who you are. If you don't have that existing relationship, they're going to laugh you out of the building, if they even let you in the door.

Anatoly (33:34):

Yeah. Makes sense. If you're building, if you dream of building awesome hardware, I guess you got to start like work for somebody like OSOM or R&D team. That's pretty good advice.

Jason (33:52):

I think it's the only way to build those relationships, so you know who to call. And I think a big part of it is it's not always the CEO you need to talk to. You need to talk to his right hand guy. You need to talk to the CTO. You need to know the right person to talk to at each company, and it changes a little bit. You'll you learn who the movers and shakers are, the people who can actually make things happen for you. And that's where it gets super interesting. And it takes boots on the ground to learn that.

Anatoly (34:20):

So I imagine that's still true for big companies, as you get bigger, you still just need to keep those relationships going.

Jason (34:29):

If you want to innovate, you need to. If you just want to just keep grinding out the same BS you've been doing for 20 years, they'll usually just give you the C team and you can just grind and nobody moves anything.

Anatoly (34:41):

Yeah. The innovation part is hard. How long is the innovation cycle and hardware?

Jason (34:50):

Anywhere from days to years, right? I have been on the back side of things where it's like, "Oh, I have an idea. Actually, that was super easy to implement." Okay, let's do it. It's done. But I've also... Making the glass housing for GEM was an 18-month project to get the tolerance that we need to hold. For everybody who's listening, you need to hold 100 microns is pretty standard, which a 10th of a millimeter. Very, very-

Anatoly (35:19):

How many human hairs is that?

Jason (35:22):

Less than one. So we need to hold those tolerances on piece of glass and how glass is manufactured is that you literally take a molded part and cook it down into a shape. And you can imagine trying to hold... Like if you're baking something in your oven and trying to get it to stay within a 10th of a millimeter, it's never going to happen. So we had to help both Corning and our third party invent new technologies to achieve that result.

Anatoly (35:52):

That's really cool. That's pretty cool. Are people using these technologies anywhere else? Or is this something that is basically just only was built for GEM?

Jason (36:06):

I think they're still using... There's not a lot of applications where you need a deep draw, weird aspect ratio glass part, but I know they're using it for two and a half D or even light 3D shapes, that at least allowed them to make 3D shapes that weren't as extreme as GEM in a more factory friendly manner.

Anatoly (36:28):

Super goal.

Jason (36:31):

Yeah. I could talk about random manufacturing for hours.

Anatoly (36:35):

You guys also have like a pretty awesome software team.

Jason (36:39):


Anatoly (36:40):

And you guys did a lot of work in actually adding privacy features to the Android stack.

Jason (36:45):


Anatoly (36:46):

What are these privacy features?

Jason (36:49):

I'd love to have Gary answer that question if he were here. But mostly what we wanted to do is allow the user to just be more aware of where their data is going and how it's being treated by any webpage they go, any app they use and alert them if more data than they expect is going out and a place where they can work within their device, where they can guarantee that nothing is going out that they don't control, which we haven't named yet because somebody stole our name.

Jason (37:21):

And then the other one that I love that I cannot wait to use more of is what we called lockdown, but then Google used that name for what they were doing. But the ability to just turn off any module on the phone when you want to.

Anatoly (37:35):

And what do you mean by module?

Jason (37:39):

So right now, I think in lockdown mode that Google offers you can turn off the camera and mic. But we can turn off the camera, the mic, the antennas, the USB port, whatever. A module is any piece of hardware on the device we can individually completely disable that.

Anatoly (37:59):

That's really cool. Does the user have a physical notification that that thing is turned off? Are there like LEDs or something that light up?

Jason (38:10):

Yeah. We're still working on that with your team as to what those notifications will look like, what that UI and UX looks like. But yeah, there are both physical haptic feedback as well as visual feedback.

Anatoly (38:22):

Can you turn off GPS and things like that and other sensors. Or I guess the GPS radio. I don't know how baked in those are these days.

Jason (38:32):

It's actually super, super, super baked in. One of our investors is an Apple employee. And I was explaining to him like, "Look, man, you can put your phone in an airplane mode." That GPS is still working. And he's like BS. And I'm like, "No, no, no. Watch, watch, watch. Put your phone in airplane mode." And we were on a bicycle ride. "Go bike 100 yards down the road and see your phone is still tracking you." And he's like, "What the hell?" And the next day he invested.

Anatoly (39:01):

How has it been like getting folks like... You guys work with mostly non-crypto people, up until you met me?

Jason (39:10):

You. Yeah, basically.

Anatoly (39:14):

Yeah. What has that conversation been like? What has been their reaction?

Jason (39:19):

It's been all over the map. It says there were some very vocal, negative people outside of the company, which I completely expected and doesn't really bug me at all. We had surprising support within the company, to be honest. I think I told you, I fully expected 10 to 20% of the company to be like, "Ah, screw this. This is ridiculous." And we really only had one person do that. And then the counter to that, the amount of support where people were like, "No, this is exciting. This is the next generation of mobile will be built on web 3.0. And I think the definition of web 3.0 remains fairly fluid and we get to be involved with really defining what that actually means to the end user.

Anatoly (40:03):

Yeah. I think this is like a huge opportunity for us to set the standards and really push for privacy first and just build something that can be a really good base. The bricks that web 3.0 is built on.

Jason (40:19):


Anatoly (40:21):

I guess, what was like the detractors? What was like the any points that they brought up that you think were interesting or worthwhile?

Jason (40:30):

I think that was the biggest thing is none of the negative comments I heard were worth that much because it was the standard anti-crypto comments, which is like, "Oh, I don't believe in it. This is scam. I don't see it." And I was like, "Okay, I'm not going to try to fight anybody over that. That's fine." People thought Facebook was stupid. Frankly, I still think Facebook is a little stupid, but they sure are worth billions and billions and billions of dollars. So there is a market for it.

Anatoly (40:56):

Yeah. It was really hard for me too, to accept, to believe in Facebook in those early days too. But in my mind that is like the quintessential internet company, more so than Google. Because it was really like... All they're doing is connecting people. And that's a very weird thing to think about that, that could be worth half a trillion dollars or whatever it is these days.

Jason (41:22):

Who knows? They're probably more than that.

Anatoly (41:24):

I have this analogy that Facebook has a social graph where you have to hop through people. Right? You're connected through some intermediaries, but crypto, it's all public keys, super connected or like a single censorship resistant message bus. Everybody in the world is now in like a single chat, basically, which is why it's a bit chaotic.

Jason (41:46):

Yeah. But I also see why... It's kind of interesting because you have that community, everybody is connected, which is inherently non-private, but it is also... Everybody in that group has a strong desire to keep certain things private. And it's that ability to choose what you keep private when you don't keep private, which makes this partnership so incredibly powerful.

Anatoly (42:05):

So obviously, a public data structure is really strong forcing function for developers to understand that this data is public, therefore I need to minimize how much it collects. It's almost like if all your interactions are over a public database, then you really, really try to know the least amount of the users that you need. And I think that's just been kind of a design constraint on web 3.0 devs from day one. And you forget about web 2.0 that you need to create cookies and store people's passwords and stuff like that.

Jason (42:46):

Yeah. And I think what we're going to bring to the fore for web 3.0 is that improved user experience and that UI. I mean, you and I have chat about it almost daily lately about the issues around that. And having a piece of hardware that can bypass a lot of the frustration that's there right now is huge.

Anatoly (43:05):

Agreed. Well, thank you, Jason, for being here. It's been awesome talking to you.

Jason (43:10):


Anatoly (43:10):

I'm super excited to work with you. It's going to be great. Folks, if you've been listening, go to and pre-order the Saga.

Jul 12, 2022
Sid Powell - CEO & Co-Founder, Maple Finance Ep #69

Sid Powell is the CEO & Co-Founder of Maple Finance. Maple is transforming capital markets through technology and count traditional finance and crypto-native firms as customers. Joe McCann guest hosts.

00:35 -  What is Maple?                    

01:32 - How does Maple determine Credit worthiness?

02:55 - Expanding the addressable market  

04:35 - Who uses Maple and how they get started

08:18 - Defaulting and the recapture of collateral

13:21 - Maple's advantages against challenges lenders face in crypto

16:45 - Why use Maple: Governance and growth

19:27 - From Ethereum to Solana Integration                

23:37 - Maple and Composability          

27:13- Partnerships and future initiatives

29:56 - Bringing non-crypto folks into DeFi / Partnering with Circle

32:33 - Views on Contraction              

34:59 - How Maple started and where it is going                  

39:04 - Monetary policies and how they affect Maple



The content herein is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. Those who appear in the content may have a financial interest in any projects referenced, and any content herein is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.  This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor.


Joe (00:09):

Hey everybody. Welcome back to The Solana Podcast. I'm your guest host, Joe McCann. And today, I have the pleasure of speaking with Maple Finance CEO and founder, Sid Powell. Sid, welcome.

Sid (00:22):

Hey Joe. Thanks for having me. Great to be here.

Joe (00:24):

My pleasure. I've been looking forward to this one. For the folks that aren't necessarily familiar with Maple Finance. Can you just maybe give a brief introduction as to who you guys are and what you do?

Sid (00:35):

So, Maple is a DeFi lending platform. We think of ourselves as a marketplace for institutional lending. So, the right type of mental model to think about that with is, in the same way that Shopify provides out of the box tooling to run an eCommerce business. What Maple is trying to do is provide tooling to run a lending business that just happens to be on chain. So the way that Maple works at a high level is you have managers of pools, we call them delegates, they'll set up a pool, which is like an on chain lending business or on chain credit fund, people and institutions deposit into that. And then, the manager goes and originates loans to corporate borrowers out of it. So, it's recreating a TradFi credit fund or a TradFi lending business, but doing this on-chain.

Joe (01:18):

That raises a first question for me, that is, if I'm providing a loan to an actual business, how does Maple go about determining the credit worthiness of that particular business?

Sid (01:32):

It's a good question. And, what we've tried to do with Maple is be asset light, in that, Maple does not want to be the lender or the balance sheet lender itself. Instead, what we're trying to do is give people who have the expertise to underwrite and assess credit. So I think, people who were in credit teams at financial institutions before, or they might have been in investment banking, but they understand credit and underwriting loans. What they're doing is they would follow a fairly conventional process where they would meet the management of the borrower, assess their financials, so balance sheet profitability, and then enter a loan contract with them, and set commercial terms around it. So, it is replicating a fairly conventional and tried and true process of assessing whether a borrower can repay the loan. It's not really reliant on on-chain determinants of credit worthiness in that respect. Really where the blockchain comes in is actually settlement and management of loans and portfolios of loans.

Joe (02:28):

Got it. That makes total sense. I mean, you're really saying, "Hey look, TradFi folks that understand how to evaluate credit, and credit risk, and credit worthiness, here's a new avenue for you to do this, which is on chain." And so, does that imply that there's more or less a much larger market for this, or is it more just breaking down the barriers of how TradFi credit funds, or credit debts actually tend to work?

Sid (02:55):

It's both. I often like looking at business history and one of the things I was always really interested in was the way that when Sony released the Walkman, it actually expanded the addressable market of people listening to music, because they made it more portable and therefore easier to access. And so, I think with this, what we're trying to do is we're breaking down the workflows of running a lending business, but we're making it 10X simpler and less costly to run and operate that lending business or credit fund. And so, I think what that does, it actually expands the addressable market of people who can do credit to businesses, institutions and corporate borrowers. I think that market's really underserved, and I think that's actually going to crimp innovation and entrepreneurship in the economy and in the private sector.

Sid (03:41):

And so, what we're trying to do is expand the supply of people who can operate and run lending businesses, so that the private sector can get access to more and better credit. And the demand for that is not really being well met by the banking sector today. So I think, there are a few suppliers in the private credit or private debt markets. These would include players like Fortress Group. But I think with this technology, if we're successful, we should see a lot more of those types of players, because it will be significantly easier to set up and run that business. Those businesses will be more profitable to run. And, this is beneficial for the economy.

Joe (04:19):

And so, how does someone get started with Maple then? I mean, it sounds like there may be a couple of different avenues. I just want to make sure we go through the permutations of the opportunities for, say, individuals or actual companies that want to create this Fortress 2.0, if you will.

Sid (04:37):

Yeah. So, the central company or user of the platform, that role, we call it a delegate. But that's the manager of a pool. And so, they're, in effect, your lending business that's being conducted on chain. So those types of players, how they would get started, they go through due diligence with us. And then, once they're admitted to the platform, we really want to go through and see what sector they would be lending to, how they would attract institutions or individuals to lend into their pools, and then who on the other side are going to be the borrowers. We want to make sure that it's either a new sector. It's a growing, it's a profitable sector. It's one where there are fairly credit worthy borrowers. We're trying not to get into things that are too speculative. It's not for small businesses and for startups. It's more for established companies that are profitable, that have a great track record, and a big opportunity.

Sid (05:31):

So, that's one side. And then on the other side, institutions who are going to lend into the platform or individuals. I mean, this could be wealth aggregators, hedge funds, family offices, high net worths. But what they're looking for is a place to park capital and pretty simply earn a yield. That yield is going to be higher than going into things like AVA or Compound, because you're taking credit risk. You are lending to corporate borrowers. And so there is risk involved in that. But, generally these types of players have a fairly long time horizon and they're reasonably sophisticated in their understanding. So, that's lenders.

Sid (06:07):

And then, the other side is borrowers. Now these are typically corporates who are crypto native at the moment. So, that's the small wedge. If you think about, when you're going to attack a market, you have to start with a wedge. And what we did was started with crypto native companies who are generally market makers, high frequency traders, or arbitrage traders. But, that's one sector within the crypto industry that we can attack first. And then, next we want to look at other sub sectors, which could be infrastructure. So it could be players like Figment, Blockdaemon, Chorus. Could be Bitcoin minors, like Marathon, Core Scientific, any of these publicly listed players, or even large private players. And then beyond that, we want to start to look at SaaS companies. The goal here is not to live solely within crypto. We think crypto is tremendous infrastructure, but it's infrastructure that gives us an edge over traditional finance. And so, that's not really going to be successful until you can actually bridge and replace traditional finance in lending to those sectors.

Joe (07:09):

Yeah. That's really smart. Spoken like a true founder too. You got to start with your wedge and expand from there. I love that. This raises an interesting point though, today, starting with, say, crypto companies, I think makes a ton of sense. But more importantly, when folks create a pool and then, say, a family office or an institution decides to lend into that pool, what happens if someone defaults, right? So, in traditional finance and I'm definitely butchering this a little bit just to keep it short, but let's assume a business goes to a traditional bank and says, "I'd like to borrow a million dollars for working capital." And they say, "Well, what's your business?" "Well, my business is..." I don't know, "We build warehouses." Or something, right? And they say, "Well, what are you going to pledge as collateral?" Well, maybe they own the land, right, that they're going to build these warehouses on or something.

Joe (07:56):

In theory, and maybe even in practice, if they were to default on that loan, the lender would then have a legal claim against, say, the land that they pledge as collateral. How does that work? Not only necessarily just in the wedge that you're using with crypto companies today, but as you move towards, call it, infrastructure companies and even potentially SaaS businesses, how does default work in the recapture of that collateral?

Sid (08:24):

The way that lending began in crypto was largely over collateralized and it was using liquid financial assets, cryptocurrency, to serve as that collateral. And then, the lender would take possession of it, and then liquidate it if it drop below a certain rate, or if the borrower fails to repay. It's now evolved towards under collateralized lending. Certainly most institutions borrow under-collateralized now. And this means really what you're having to do is underwrite and assess the strength of their balance sheet. A lot of people think that this is an aberration, but this is actually most commercial lending.

Sid (08:56):

So, if you're lending against real estate, that would typically be an asset backed lend. But if you're lending to say Apple or a large technology company, typically they don't have a lot of property plant and equipment. They don't own a lot of land and you're not going to get your money back by being able to sell their land. Instead, what you're looking at is the equity of their balance sheet and the profitability of their business. And so, where this type of lending can evolve would be effectively a secured loan, but the security for that loan would be a charge over that corporate entity. So that's what we're looking at as we expand into other sectors.

Sid (09:38):

But, I think, to be able to actually serve the broad corporate market and eventually have Fortune 500 companies borrowing through DeFi, you need to get comfortable with that type of risk, which means assessing the balance sheet of a borrower. I will say that, if you take security over a house and a borrower defaults, the foreclosure process is about 18 months. You'll get your money back, but it will take a significant amount of time. So it's not liquid collateral. And anyone who thinks that DeFi lending against those type of assets is going to give them an instant payback if there's a default, is going to be disappointed. But, if you're lending against the assets of a corporate, you want to make sure, ideally, they're not going to default. Your recovery's going to be lower than if you're lending against a house. But, your probability of default is probably also correspondingly lower if you're lending to a large corporate than an individual who just owns a house or a small business, who's pledging a house as collateral.

Sid (10:34):

You are still lending against effectively the strength of the business and the profitability of the business. But, as crypto goes into other sectors, I can see asset backed loans also playing a role. We would look at real estate backed loans, but currently one of the main issues is that, that requires paper filing in any individual state that you borrow from. So, it's not even 10 years behind, it's 40 years behind in terms of actually having to file security and manage the opposite of that.

Joe (11:02):

Got it. Very helpful answer. I think, the takeaway really is, "Look, if you're lending money to Apple..." I love that example. "You're not necessarily having them pledge their One Infinite Loop address and ownership of that land as collateral." You're saying, "Look, it's Apple, right? They've got a ton of cash on their balance sheet, or they've got great potential for future cash flows, et cetera, et cetera. We're just taking that to something like Maple's platform and folks can assess." Like you said, it's really up to the lenders to assess the credit worthiness, right?

Sid (11:33):

One of the innovations that we've tried to build in is that if you're coming to the platform and you want to deposit into a pool, you don't have to be a sophisticated underwriter yourself. What we're trying to build is a way for you to assess that here's a pool that is lending to this risk profile.

Sid (11:50):

Let's say, mega cap companies based in the U.S., here's the historical performance. It's earned this much in yield. There have been X number of defaults. And then, you have a bio on the management team that is making those lending decisions. And that enables you to decide, "Okay, I'm going to allocate a bit into this pool and maybe a bit into a second pool." Rather than, you having to come to the platform and go, "Well, do I want to lend to company A? Or do I want to lend to company B?" Because, it's not really in most people's expertise or ability to devote that time to doing that. And I think that was why earlier peer-to-peer lending platforms like Lending Club didn't quite take off and achieve widespread adoption, because that model is just super inefficient for both the borrower who's coming to a platform and doesn't know who they can borrow from, as well as the lenders who come to the platform and don't know how to assess whether Apple is going to repay its loan. Apple's probably a poor example, but some other company.

Joe (12:48):

Well, and speaking of defaults, we would be remiss not to talk a little bit about some of the challenges facing the lending industry in crypto right now, without having to necessarily name names. I think it's pretty well understood at this point that there's been some stress in the credit markets, if you will, when it comes to crypto. Can you talk a little bit about maybe how Maple does or does not "hedge" against that, being more of the facilitator and it's really on the lender's ability to evaluate that risk? Or, are there any sort of advantages that Maple provides that theoretically could have mitigated some of the challenges that some of the lenders in crypto have faced?

Sid (13:29):

So there's probably three key advantages or differences for doing this in DeFi, which would've been risk mitigants. So, the way that Maple works is you have multiple pools, each pool is a basket of loans that you can deposit into and effectively you're lending to those borrowers on the other side. Number one is that, all of the loans and flow of funds is totally transparent and on chain. So if you go into a Maple pool, you can see who the 25 different borrowers are. So you'd never have a situation where you wake up tomorrow and you find out that a Maple pool was actually lending to a borrower that you had no idea about. And that that borrower was 30% of the pool. So, transparency is risked mitigant number one.

Sid (14:05):

Number two is that the withdrawals and flow of liquidity is all just governed by smart contracts. So, as cash flows back into the pools, people can withdraw. So, you'd never have a situation where you go and you find that on a discretionary basis withdrawals have been halted. At the moment, liquidity is constrained, but it's purely dependent on just paybacks of the loans, which are coming through over the next 60, 90 days and beyond. And then, element three, as you can see that, there is a reserve for each of the pools. So the reserve is there and it can absorb some of the credit losses. I would say, our reserves in the pools at the moment are probably undersized where they should be on a normalized basis and that's a learning, but conceptually having that reserve on chain, I think, gives people who are lending inter pools and into protocols comfort when they can effectively see the buffer that is available to protect people who are a senior there. Otherwise, contrasting that with more black box CeFi lending, it's just a feature that is not there.

Joe (15:08):

Weird. So you mean more transparency is actually better for market participants?

Sid (15:13):

Well, I think, yeah, at this stage with current events, it's a clear argument, yes. I think, where CeFi lending has advantages is obviously in flexibility, having a protocol and being governed by those rules obviously creates inflexibility and slows things down a bit. But, I would say ultimately what we're actually trying to design is a system that is resilient and robust enough to shocks that it doesn't require a bail in, or a lender of last resort concept, because over a long enough period of time, you will see enough volatility that stresses things that rely on a single counterparty. We saw during the GFC, everyone was insured by AIG. Well, when there was an out-sized level of defaults, AIG went bust, then no one was insured.

Joe (16:03):

That's right. Yeah. It's interesting, I was chatting with a coworker of mine who was at Lehman Brothers during the GFC and he was having a little bit of flashbacks to some of the stuff that's been happening in crypto today with the CeFi-related lending.

Sid (16:17):


Joe (16:17):

Let's talk a little bit about Maple itself. So the protocol, this is obviously The Solana Podcast, we're going to get into the Solana integration in a second, but I really wanted to provide the listeners with a fairly solid understanding of the actual product and the business, and also the business of lending. So they could understand maybe what Maple's token is, and what does the protocol do, and how does governance work? So, could you maybe just talk a little bit about if I'm a Maple token holder, and maybe I'm staking Maple, why have this protocol, and what does the governance actually do for the future of Maple's growth?

Sid (16:54):

It's a good question. And so, the way that the token fits into things is, it can be staked. So, that's the first use. The second is that, when you stake it can be deposited into that pool cover. Pool cover is your subordinate reserve. And so, the purpose that therefore provides is, providing a safeguard and some absorption for credit losses, in addition to being used as the governance token to make decisions on the platform. So, what you would do then, in terms of a workflow, so you might stake it, then you're receiving a portion of the establishment fees.

Sid (17:27):

So, Protocol Treasury earns about 66 basis points on loan origination volume, and then half of that goes to pay stake tokens. And then, the other element where the stake token participates, is that, if it's put in pool cover, pool cover is paid a portion of the interest. So, generally in most pools, it's about 10% of the interest cash flow. So, if a pool is a billion dollars, paying 10% on average, it's a $100 million in interest, 10% of that, so $10 million would go to pool cover. So it's going to pay effectively for credit protection there. That pool cover is comprised of the token and USDC. In future, we'll just have single-sided depositing of the token.

Sid (18:10):

But therefore, it receives a portion of revenues for actively participating in the credit protection of the pools and the senior lenders on the platform. So, that's how it figures in the platform both economically and from a risk allocation perspective. And I think, risk allocation is super important, because as I alluded to before, this is one of the ways in which we're trying to fix some of the problems inherent in TradFi lending. So, an alignment of incentives is super important and the pool delegate, so that team of managers who are deciding who are good borrowers, they have to put some of their capital into that subordinate reserve, the credit reserve. And they do that so that if there are defaults, they are among the first to take a hit. And that helps ensure that they are incentivized to maintain pretty good credit standards.

Joe (18:57):

It's really cool, because there's so many ways that you can participate in Maple. But also, the notion that folks have shared incentives and are aligned is I think one of the most powerful aspects of the protocol, but that raises the question of, "Well, man, it seems like a lot of scope for some engineering talent." Let's dive into a little bit of the tech, not get too deep, but certainly enough to give people an understanding of what it is that you've built, and ultimately why and when you added salon integration? What does that look like for your team? And, what has been the lessons learned from starting on Ethereum, and then adding Solana support.

Sid (19:36):

Yeah, it's interesting. I mean, looking back at our tech stack that we have on Ethereum. So, we launched the Ethereum version of the protocol in May of 2021. And then, we were steadily growing. So, Ethereum, or the protocol as a whole, has done about 1.5 billion worth of loans to date. It's pretty good for 12 months. But what we looked at as we built out Ethereum... So there's certain things that you really keep in mind when you're developing. So, upgradability was something we debated for a long time, because if you have upgradability, it gives you flexibility. And it means you can move faster, ideally not break things, but it gives you the ability to iterate, but it's less secure, because upgrading a protocol or upgrading a component of the protocol, that's how hacks and exploits can happen. So, we initially traded more on the side of security there and inflexibility.

Sid (20:26):

Now, as we near launching pools V2, we are thinking about upgradability and how we can have something that evolves. But, it was around late last year, I was actually at Breakpoint Solana in Lisbon, and I was meeting a lot of founders who were coming from TradFi backgrounds and looking at building things on Solana. And, we had been receiving comments from people who were using the platform about the transaction costs on Eth. And so, that prompted us to start looking at, "Could we build on layer twos? Should we evaluate alternative layer ones?" And, being at the conference, yeah, I was very much struck by, one, the level of development in the ecosystem, particularly on the DeFi side. Two, the level of talent that was moving across there. And, a lot of our clients and borrowers, like Alameda, obviously have a lot to do with the Solana ecosystem.

Sid (21:13):

And so, we started researching who was doing Maple on Solana. We met a team that was called Avari, and then we ended up acquiring them. And that meant that we were able to get live on Solana probably six months ahead of where we would've been. And it gave us access to really good talent in terms of Rust engineering, which was super short on supply. So, for us, it meant, one, speed to market. Two, talent acquisition. And, Jeff and Quinn, the two guys who came on board the team, really aligned with us in terms of values.

Sid (21:43):

And, it's given us now I would say the advantage of being on two chains is that you can start to build out a differentiated product that ideally isn't cannibalizing what you've already done on Ethereum. It should be meaningfully differentiated. And that's why I've been pretty excited to see things like the launch of the Solana phone, because the more differentiation and uniqueness that we have on the ecosystem that product is built on, the more we can serve a differentiated market, whether if you have something like, SolPay, that starts to introduce tech or SaaS companies into using crypto and blockchain to support their financing, then that's a market we could go and lend to.

Sid (22:24):

So anyway, that's a long-winded answer. But, that was why we started looking at Solana. And as we're evolving that product, so there's now about 113 million in loans on Solana, Genesis and X-Margin are each running pools there. We're trying to see, how can we build that product to serve either a unique customer base, whether it's like SaaS companies or a unique and differentiated lender?

Joe (22:46):

Got it. Yeah. The Breakpoint conference last year, I think, was really eye-opening for a lot of folks that were just getting familiar with Solana. And, the response I've heard from most people is that, just the developer activity and the developer acumen, the technical acumen of the developers that were migrating towards Solana was a super strong signal to why they wanted to participate, or in your case support Solana. One of the key features of Solana is this concept of composability. So, the notion that protocols can almost operate as Legos and you can build various things, developers can build various things. Is there a notion of composability with what Maple's doing? Meaning, could developers actually try to build something with Maple powering it, or as a piece of some bigger product, or protocol idea that they may have? Or is Maple more meant to be, "We're a vertically integrated thing that supports Solana's chain"?

Sid (23:46):

Yeah, it's an interesting concept. It's, do you go the Apple route and you be vertically integrated and control your destiny? Initially, the concept from Maple was for tranche fixed income, but then it evolved to be full stack lending. And that was because DeFi was so early that we didn't really want to be dependent on other protocols to get to market and to grow. And so, we took more of the Apple approach early on. Now as I look at DeFi, one, I think there's actually going to be a contraction in the scope of different products on DeFi for a while. And so, being vertically integrated is strategically pretty good for us, but the counter to the apple approach would be where Microsoft has found itself now, where I think, arguably before they might not have had a stronger set of products outside of Windows and Office.

Sid (24:30):

But, now when you look at what they've got, they've got GitHub, Teams, Xbox, gaming, Activision. They're actually adding this full suite of things, where when you go into their ecosystem, you have access to all of this. And it's a very interesting product to serve to institutions or enterprises from Microsoft's side. And so, I'm looking at what is within the lending product suite, whether it's yield. So this could include swaps, could include things like credit scores, could include flavor of insurance or credit default swaps, or it could include different types of credit indices. What are the adjacent or complimentary products that would, one, make our product offering stronger, and two, enhance the strength of a product that's trying to partner with us.

Sid (25:16):

So, credit scores are really a natural one. But, I'd say, at this stage, it is very early on in that space just because people aren't conducting most of their economic activity on chain. But other things like fix for floating swaps, or hedges, I think, are a pretty good complimentary one. It's still very early, but those are the natural ones that I speculate about, because that was what I used to do when I was in banking. We'd also have to go on frequently talk to a swaps desk, or a ratings agency. So I think those would be naturally the first ones.

Joe (25:44):

Got it. Yeah. There's a conversation that I have with a number of the founders that I advise on their companies about staying very tightly scoped to what you're building, versus opening up almost an API, or a set of SDKs, or a platform if you will. And there's just trade offs to both of those, right?

Sid (26:01):


Joe (26:02):

One is that if you are vertically integrated, well, you really control not only your destiny, but you also control the end-user experience, and what that end-user... How they're going to interact with your product/protocol. And that's super important, but it could potentially restrict the potential speed of the growth of what you could be doing in these adjacent areas like you're describing. Whereas, if you, say, theoretically, open up a platform with APIs and SDKs for developers to build on, you're not necessarily controlling that end-user experience, and that could be potentially detrimental to the brand of Maple, assuming someone has a poor experience. But, it's a great trade off to make, right?

Joe (26:40):

And I think, staying the course of what you guys have done thus far, the fact that you're even thinking about CDSs or credit scores. I mean, one of the questions that came to mind earlier was, if you're bridging a lot of what happened in TradFi, are we going to start to see a ratings agency? Are we going to start to see the CDOs and CDO squares, and for the listeners that may not know what that is, it's a collateralized debt obligation that could then also have various tranches associated with it, which unfortunately led to a big portion of the global financial crisis. And we don't necessarily want to recreate that. But I guess, from my perspective, how do you think about that roadmap that you're doing. And, where are you going to be doubling down, or are there other areas where you want to partner with folks? And, how do you think about that going forward?

Sid (27:24):

Yeah, I actually think about a lot. I mean, we get a lot of inbound interest in partnerships, because I feel like we've been around a little while and we've demonstrated a certain amount of traction. So that's good. But then, a big question becomes how do you decide and prioritize amongst those opportunities? And what I try and think about now is... I think, a big focus for us is which opportunities get us fastest out the gate in terms of serving non-crypto native customers right now. So there's a certain question of, how much do you want to be doubling down serving crypto native borrowers, versus say, leaping out and serving SaaS companies? And to serve SaaS companies, the types of product integrations that you might need, or just any customer outside of crypto, would be things like on and off-ramps.

Sid (28:07):

Now, that's a really intensive product development on the legal and compliance side. It's actually pretty simple build, but it starts to become a strategic question of, "How much effort do we want to devote to something like that, versus say, evaluating an alternative L1 or going to an L2?" I think, the scale's probably tipped in favor of looking at how quickly you can get out and serve just a wider set of customers. And I would say, part of our role at this stage is trying to educate people who are not actually in crypto already, and try and bring them into crypto and into DeFi, rather than bringing DeFi to them. Instead of evangelizing about it to the people who are already in crypto. I think what we're trying to do is just demonstrate a very workable product to people who are not already in there and wow them with what we think the huge benefits over doing this through the traditional financial system.

Joe (28:57):

I mean, look, I love the notion and the approach of trying to get a lot more non-crypto people into DeFi. I think, one of the things that I look for when I talk to founders or folks that are in the ecosystem... And I know that Anatoly and Raj did the same thing, and the Solana lab team more broadly is like, "How can we get more and more users that aren't already in the space?" And, there's a couple ways that you can do that. One is, you can build an amazing product that's very easy to use. Easier said than done.

Sid (29:29):


Joe (29:29):

But the second is some partnerships. And, what brought this to mind for me was I think when we met in-person, it was at a dinner that Jeremy Allaire, the CEO of Circle put on. Could you maybe talk a little bit about how maybe the Circle is an example of how you're thinking about levering someone in this space that is absolutely doing God's work out there, working with institutions and folks trying to get them into crypto and DeFi? Jeremy's done an amazing job of doing this with USDC and what he's been doing at Circle. So I'd love to get your take on if Circle is an example of how... Or someone that you would partner with to help accelerate some of those non-crypto native people into DeFi.

Sid (30:08):

Definitely. So, Circle, as you said, is a great partner. So, the pools lend on Maple in USDC, which is the vast majority of the lending that's happening on the platform, and also wrapped Eth. But if we look at USDC, this is absolutely essential infrastructure, I think, for DeFi, because having this secure stable currency in a digital form, which we can then distribute loans to corporate borrowers, as well as companies who are coming into DeFi and looking to earn a yield, are wanting that yield in stable coins. But, where Circle has been tremendous, and I think where there is a huge opportunity to grow is, one, there is the Circle yield product, which could potentially be integrated with Maple and a partnership there would offer people access to yields coming through the platform. What they've actually done really well, which is underrated is, the front-end of the Circle treasury and USDC product has, I think, the best off-ramp in the market.

Sid (31:05):

So, we use it for our own corporate treasury management and when we have to pay things in fiat. And, having that product, that's a really good Trojan horse, that if a regular non-crypto company starts using that, they have a seamless on and off-ramp through which they could access a product like Maple. So, I could lend to a company and let's say that company is doing SaaS, or it's a FinTech business, or even a business in real estate or construction. So, if we could lend USDC to that company, then they could take that through the Circle front-end, convert it into fiat, and then use it to pay vendors, suppliers, salaries. And so, I think, the growth and proliferation of stable coin usage is super essential and it's going to precede wider adoption of DeFi, because it's a necessary part, it's key, picks, and shovels for the space. But I'd say that's how the Circle partnership is super important for us.

Joe (32:03):

Yeah. The folks at Circle are great. I have nothing but positive things to say about them as well. And, there are other partners in this space that I think have been super helpful as well to DeFi adoption. As you think about these partnerships... What struck me earlier about when you said you think there's going to be a contraction in DeFi, how does evaluating how Maple is going to play in this space relative to the potential contraction that you're seeing? So, maybe to unpack this a little bit, can you talk about maybe your view on the contraction and how that may or may not influence how you want to go out and partner with folks to bring on those call it a 100 million new users into DeFi.

Sid (32:46):

The contraction is happening broadly across all risk on assets. So, people are going risk off for crypto for equities. And, what's happening is that because crypto is a much smaller market, the outflow is felt more acutely. But we've seen out general outflows from crypto and DeFi lending as a whole. And, what it's forced us to do is probably consolidate around a core working product. So, in this case, it's probably caused us to, say, push out potential partnerships that are maybe less clear in their scalability, because it's a bird in the hand, two in the bush. So, if you have a customer set that is working and partnerships that are working, you have to be more circumspect and conservative in the new ones, because you probably have less bullets. And so, what the pullback is forcing us to think about is, if we wanted to go and target a new set of borrowers, who is a new set of borrowers that we could potentially sell to lenders who would need to deposit into the pools that are lending to those borrowers?

Sid (33:46):

So, it forces us to think about matching and extending the markets that are offered on the platform, i.e., the pools that are offered on Maple. And, in terms of integrations, it forces us to concentrate more acutely on what partnerships, for example, Circle as well as off-ramps will help us extend our reach to serve customers who are outside of crypto. So things like credit scores, you have to be a little bit more conservative about, because probably the next six months, there's not going to be as much on chain activity. And so, the amount of value you could get out of, say, an on chain credit score is probably diminished for the next six months. It's not that it wouldn't work eventually. It's just that, probably that goes down your priority list in the near term.

Joe (34:33):

Got you. Yeah, that makes total sense. Can we talk maybe a bit about your company? We've been talking so much about DeFi, and of the product, and this and that. I probably should have asked this at the beginning of the podcast, but can you maybe just talk a little bit about the company? How old the company is? And, where you're located? Potentially remote, like most modern companies. And, what does the the roadmap look like for folks you want to bring on or folks that you're looking to add to the team? The reason I bring this up is that a lot of folks that tend to listen to the podcast are very passionate about participating in the Solana ecosystem and are interested to hear about how companies started and where they're going.

Sid (35:13):

We have an interesting structure. So, two segments, we've got the DAO, which raised capital. And the DAO is effectively governing the protocol and it has a multisignature that will implement any major changes, deploy new contracts. And then, we've got the operating company, which is employing developers, conducting business development and marketing. And so, that's domiciled out of Australia. And that company receives grants from the DOW, which cover operating costs and cash burn on a quarterly basis. And I suppose with those two segments, it's worth noting, so most of the team is remote. They tend to be based out of the US, Canada, UK, and Western Europe. We try to aggregate everyone around not too many time zones, so that it was easy to coordinate calls when I was living in Australia. I used to have to do 4:00 AM calls most days.

Joe (36:02):


Sid (36:02):

Yeah. But, we've got about 36 people at the moment. And so, we were hiring more aggressively. I think in current market conditions, we paired that back a little bit, but we are still hiring. So, if there are good people out there who want to join a team, we are looking for a couple of engineering roles at the moment. We're looking for a capital markets associate for anyone who is in TradFi or investment banking, and looking for a change into crypto. Never a better time to do it. And so, I actually want us to run a pretty lean model. So I think, me and my co-founder have always been of the opinion that you add people on the basis of jobs that need to be done, rather than just headcount for headcounts sake.

Sid (36:42):

And so, I've definitely been inspired by the FTX model there in terms of how much they've been able to ship for how lean they are. I would say, we've actually developed a sales team, operations marketing, as well as product engineering and design. So, we are a fairly complete core. And so I think, there are potential roles on the team for someone in sales, design, or engineering, if there are good people out there. Yeah, that's where we got to at the moment.

Sid (37:13):

But in terms of roadmap, the roadmap for us is we're launching pools V2. So there's a really complex engineering ask there. And, the team is doing a lot of research. And particularly with the market events of recent market volatility and some of the points and implosions we noted in the CeFi side, we're trying to take learnings and incorporate them into pools V2.

Sid (37:37):

So this would include things like, how to have a better withdrawal mechanism? How to have better cover support, i.e., credit protection, because people are really more acutely concerned about that. And that's something that probably wasn't a big market focus six months ago. And then, better asset liability matching, which is that point I made about sustainability of a lending business. You can't fund term loans without call deposits. And so, we just want to get better about matching those up.

Sid (38:05):

But then, on Solana, what we're focused on at the moment is things like open term loans, active collateral management. These are the types of things that we think is going to be super interesting tooling to bring more CeFi businesses onto DeFi rails. So I think, we recognize that is a core customer set of ours. And it's like, "How do we build the tooling that means that you would want to run a multi-billion dollar lending business on top of DeFi rails?"

Joe (38:30):

Wow, fascinating. And man, could we use that? If there's anything that we learned, I think, this year thus far is, self custody is definitely going to be a key thing going forward.

Sid (38:40):

Self custody is king.

Joe (38:41):

Yeah. Well, look, this has been an absolutely fascinating conversation. I have one last question for you. And, we will absolutely hold you to it long-term. You've been talking a lot about lending and there's an interest rate associated with those loans in the United States. And, I think some of the other central banks are following suit. We've been raising interest rates. So, how do you think a little bit about competing with some of the broader interest rate markets and something that Maple can actually provide? Does that actually factor in? How do you think about, I guess, monetary policy from central banks relative to the business that Maple's building?

Sid (39:20):

For a really long time rates on crypto were outside rates in, let's call it, the real or traditional economy. And that was because there was a lack of liquidity there. Then, what we saw, rates and traditional economies started to go up, but because there was actually more supply coming through, particularly earlier this year, we actually saw rates drop. And so, the delta between TradFi and DeFi/CeFi rates really compressed. Now, we've seen with the implosion of liquidity... Liquidity has totally dried up. We've seen rates go way wider again.

Sid (39:54):

So rates now blowing out to mid-teen levels, you can probably clear in crypto and DeFi. I'm a big student of financial history. And I look back at the last time that inflation was this bad, which was probably the Volcker era. And, cash rates got up to double digits to break the back of inflation. And I'm interested, because I still think that lending rates in the traditional economy are sub-inflation. And therefore, everybody who's lending in the real economy is still earning a negative real rate of return. Whereas, in crypto, at least you're earning a rate that clears inflation. But I'm interested to see, and I wouldn't be surprised if rates continue to go up in the cash rates and the TradFi economy up to high single digits. And then, in DeFi and crypto that probably pushes them close to high teens. And yeah, I wouldn't consider that out of the ordinary. I think, people assume that because we haven't seen that in 20 years that that's not possible, but I would say, in the 60s, rates were pretty normal low single digits. And in the 80s, inflation was double digits, so.

Joe (41:00):

So basically, to wrap it all up, you're saying, crypto rates will be clearing inflation, whereas the real economy, likely not so.

Sid (41:10):

Crypto you can't have that distortive effect of the central bank, where you have people who are lending out at negative real rates, because they're below inflation. I think, in crypto, there is a demanded risk premium. And, it's a more pure form of capitalism, I would say, where people are going to price rates so that they can clear a real positive rate. So I'd say, with supply inflows being limited, I'd say that effect is more exacerbated. So I probably expect to see the spread between crypto and TradFi actually widen over the next 12 months.

Joe (41:44):

Very cool. Well, we will absolutely hold you to that. And in 12 months, we will verify that you were correct. Sid, this was a great conversation. Thanks so much for sharing your story with Maple. And, if folks want to find you and Maple online, where should they look?

Sid (42:01):

So you can go to our website, That's where you can find the web app, any news and updates. If you're active on crypto Twitter, you can find Mapl @maplefinance. And you can find me @syrupsid, both one word. If anyone wants to reach out, happy to make contact with them.

Joe (42:17):

Great stuff. Thanks, Sid. Well, it was an awesome conversation. It was such a great time hosting The Solana Podcast again. My name's Joe McCann. I'll see you guys next time.

Sid (42:26):

Thanks, Joe.

Jul 05, 2022
Chewing Glass - Cronos

Chewing glass is what Solana developers do. Introducing the fifth episode in a new series on the Solana Podcast, Chewing Glass. Chase Barker (Developer Relations Lead at Solana Labs) talks shop with the most interesting builders in the Solana ecosystem. It’s for devs, by devs.

Today's guest is Cronos, an on-chain task scheduler that allows users to schedule instructions and winner of the recent Riptide Hackathon. 

00:38 - Introductions

01:25 - How they started                 

02:48 - How they met                     

04:26  - Who else is in Austin            

05:09  -  Cronos backstory                 

07:34 - How they started building tasks    

09:11 - TLDR: what is Cronos?              

13:33  - Winning the Riptide Hackathon               

15:40  - How cronos came to life           

18:12 - Building on solana and familiarity with other languages

20:16  - Learning curve with rust         

22:50 -  Nick’s  learning curve              

25:04 -  Advice on learning curve         

27:08 - What's missing in Solana         

29:20  - Advice to new developers on Solana



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.



Chase (00:38):

Hey everybody. And welcome to Chewing Glass, the show where we talk to developers building in the Solana ecosystem. Today, we have Nick and Elias from Cronos, the recent winners of the Riptide Hackathon. Welcome guys. How's it going?

Elias (00:50):

It's going well.

Nick (00:51):

Yeah, great to be here.

Chase (00:52):

So let's start with you, Nick. What's your history? How'd you get into this whole thing?

Nick (00:56):

My background is basically, I worked on the payments team at Uber for about four years or so, helping build out the payroll system there. And so, was working on a lot of international banking integrations and just became very aware how broken the current legacy payment system is. Can't really even tell you the number of times I got woken up at 4:00 AM because some system failed somewhere and had to email a CSV file to some banker to push money through the system, it happens all the time.

Nick (01:28):

And so I heard about Solana and I had a light bulb moment really, where I realized that this thing is cheaper and faster and easier to use than any existing payment rails that I know about and so, I got quite excited about the potential for disruption there and this was all pre Solana Pay stuff. So, yeah, we dove in during the Ignition Hackathon.

Chase (01:52):

Oh, you did? Cool.

Nick (01:53):


Chase (01:53):

Yeah, I didn't realize that. I was actually, when you were talking, I was thinking in my head, I was like payments? I was like, wow, didn't even build anything on Solana Pay. So you guys were already rolling a little bit before that, so that's cool. Yeah. So Elias, how about you?

Elias (02:06):

I'm pretty fresh as far as experience in industry. I did have an internship in college as a data scientist in Argentina for a bit. I then transitioned into front-end development that following year and had been a front-end developer up until when I got into Solana development. But that's pretty much it.

Chase (02:23):

Cool. So, with all that said, you guys' backgrounds, how did you guys end up meeting each other? What's the story? Are you in the same place? You guys are in the same city? How did that work?

Nick (02:34):

We're both in Austin. Elias is a few minutes north of Austin. I'm kind of downtown and we meet up down here a few days a week. We basically met on Twitter last summer.

Elias (02:45):

Yeah. I was at Samsung before I met Nick. I was basically a site reliability engineer for this semiconductor facility here in Austin. I didn't love it. I absolutely hated it. So I was creating toy projects on GitHub just for front-end development purposes, just to better my skills, because I wasn't really progressing that well at Samsung. I was then tweeting about it and my philosophy was, well, what's the worst that could happen? Someone's going to see this and maybe look at my repo, who knows?

Elias (03:13):

Randomly I get a DM from this guy named Nick. He was like, "Hey, I like what you're doing. I looked at your GitHub. We're looking for front-end developers at this product studio that we have in Austin. I would love to grab a beer." And that's really where it started.

Chase (03:25):

Oh wow. That's awesome. I thought that stuff only happened in Web 3, but I guess it's happening outside of that too. So how did you find that tweet, Nick, in the first place?

Nick (03:36):

I don't remember, honestly. It's like scrolling the timeline, don't really remember what you saw 10 minutes ago. But, I think I saw Elias tweeting, maybe a GitHub link or something, saw he was a dev and I was just looking through his projects on GitHub. And, I found his resume actually and everything there was kind of focused around like Next.js and React, which we were doing a lot with at the time. And so, I figured sending a DM couldn't hurt and just kind of realized that he was based in Austin. I had just moved here, I think a week or so prior and we met up and grabbed a beer and just hit it off from there and have been working together since.

Chase (04:18):

Very cool. I think there's a couple other people in Austin. I believe Castle Finance is there. There's actually a pretty decent Solana builder presence at University of Texas at Austin.

Nick (04:30):

The [inaudible 00:04:30] team is here as well.

Chase (04:31):

Oh nice.

Elias (04:32):

I think BuffaLou is also here.

Chase (04:34):

BuffaLou? The famous BuffaLou is in Austin. Are we doxxing him over here?

Elias (04:37):

No, he's tweeted about it.

Chase (04:39):

I'm just kidding. So, that's pretty cool to hear the story about how you guys met. Now, let's dive into a little bit, go a little bit further. Where did this idea get birthed or what were you building? And start at Ignition and lead up to how the idea of Cronos came about.

Nick (04:55):

As we were saying before, we were looking at Solana initially from that perspective of payments and coming from the payments industry. And so we started in the Ignition Hackathon building an on-chain Venmo where users could send and receive invoices and pay those back on-chain. And then that kind of rolled into a token streaming service. And-

Chase (05:16):

Was that called Cronos or did it have a name at the point in time?

Nick (05:20):

Yeah, that was called Factor at the time. What we were specializing on was the use cases of subscription payments and payroll. And specifically we were trying to figure out how to schedule token transfers because it's kind of these inefficiencies in the vesting contract model where the sender has to lock up future payments up front into investing contract. So there's some inefficiency there. And the receiver has to go out of the way to claim from the vesting contract. So we thought if we could schedule token transfers, maybe that would be a better user experience.

Nick (05:52):

And we were working on that for a few months, got the whole system up and running. And then around February 1st, 2022, when mtnDAO was taking off, we realized that we could generalize that protocol from only supporting token transfers to being able to automate any arbitrary instruction. And from there it just took on a life of its own.

Chase (06:14):

So you guys were at mtnDAO?

Nick (06:16):

Yeah, I was at mtnDAO before it was mtnDAO. There was a version of it in 2021 called Mountain Compound. It was way smaller, but it was 14 of us, or so, just locked down in a house, trying to escape COVID, in Salt Lake City. And that was where I first met Edgar and Barrett. Barrett, at the time, was already working on Solana and Edgar and I were working on separate startups, but I think we both got the Solana pill during that time.

Chase (06:47):

Man. Wasn't expecting that one. That's a really cool story, actually. Those guys are involved in red-pilling a lot of people on to Solana, so I'm always happy to hear these stories. They just keep coming up randomly wherever I go.

Nick (06:58):


Chase (07:00):

Yeah, so that's awesome. So when you were building this payment stuff, the idea came around at mtnDAO, and that was, or right at the beginning-ish, I think, of Riptide. TJ was just on the show. That's when he started to talk about building out mtnPay. So you guys were like, "okay, we were doing payments, we just came up with this thing. We think we have solved a really big problem and we're going to build this out." Tell me a little bit more about that.

Nick (07:25):

Yeah, it started with just a proof of concept. So we just had this basic question of, can you even schedule arbitrary instructions on-chain? And how do you do that? So we started by building a basic Anchor program where users could create tasks and each task is a different account. And inside those accounts we would store serialized instruction data with a schedule.

Nick (07:50):

We basically had set up a separate off-chain bot process, also written in Rust, but using the RPC client. Which basically watched for task accounts and then would trigger transactions whenever the tasks came due. And we found that we could invoke those inner instructions as CPIs and that then unlocked this whole like, okay, we can schedule any arbitrary instruction.

Elias (08:15):

Yeah. I remember whenever he called me on our sync, I think it was on Monday because he built the proof of concept during the weekend. He told me, "you know, we have Factor and it's really cool, but imagine if we just generalized it to allow for any arbitrary instruction." And I was like, "Oh. Yeah, let's do that. That's a good idea."

Chase (08:33):

Yeah, I was really stoked. I remember seeing it the first time and I saw what it was and I was like, "Wow, people are really going to like this." By the way you guys are both technical founders. You both built out Cronos, correct?

Nick (08:45):

Yeah, correct.

Nick (08:46):

Mostly Nick, let me just... Mostly Nick.

Chase (08:49):

Actually, this is probably a good point to talk about what Cronos actually is officially. Like a TLDR for everybody watching. What you guys built and how it actually works at a high level?

Nick (09:01):

The basic concept is, it's just a keeper network for Solana. Every blockchain, at least that we're aware of right now, has this fundamental limitation and that's, you can't schedule transactions with a validator network and there's a few different reasons why that's the case. But it creates challenges for teams that have background jobs or tasks that they need to run just to make their programs work. And so, what Cronos is, is a keeper network to be able to facilitate that and service that. But the main difference is that we're kind of turning the Solana validators into the keepers for the system rather than relying on some external, off-chain, opaque bot network. And so that's required a lot of deep integration with the validator codebase in order to enable that.

Chase (09:48):

That is actually very, very cool. I wasn't officially, 100% certain how it worked. So you're using the validators as the keeper network to run these jobs on the network?

Nick (09:58):

Yeah, exactly. Our v1, proof of concept version was not integrated into the validator network. Hadn't even had that idea at the time, really.

Elias (10:08):

I didn't even know we could do that, knowing that we can just build a plugin for validators. Pretty cool.

Nick (10:13):

Yeah, it was around the same time we were building that initial bot that we started seeing some tweets about the account's DB plugin framework. And that has since been renamed to Geyser plugin framework and we just realized that there was all these scaling problems when you rely on these off-chain bots and that they have to submit transactions through the RPC network. And that can take up a whole bunch of bandwidth and you have to compete with other traffic to get those transactions through. And we realized there was this interface that Solana was providing, and the Geyser plugin framework, that we could actually spawn transactions from there. And it was much more efficient and made the system a lot more reliable. And so we basically copy pasted our bot code into the Geyser plugin framework and it mostly just worked out of the box.

Chase (11:01):

Oh wow. And that's quite unusual. For things that just work. So did you guys actually have to work with the validator community or did you guys have ever set up or run a validator? What's your knowledge there?

Nick (11:12):

Yeah, we have a few nodes that we got through the Solana server program, which that is a very useful program, if there's anyone that's looking to set up a node on Solana. And we have some servers running on DevNet and Testnet right now, that we're using to stress test the system. But yeah, we've been reaching out to all the node operators we can to talk with them and we're looking to get this thing rolled out on DevNet and Testnet quite soon. And actually, by the time this is published, it should be out on DevNet and Testnet, and we'll have quite a few integrations going on those networks.

Chase (11:49):

Yeah. I'm not going to lie. So like just leading in the sense, congratulations, you guys won the Riptide Hackathon. This was super incredible. And for me personally, I was so insanely excited to see some tooling win because this is just... developers need this tooling and to see that people watching a hackathon and a lot of these other, in the past, DeFi protocols, which are amazing out there, winning, but to see developer tooling take the grand prize, says a lot about what you guys had built and what the judges thought of it. So, that's quite amazing. So congratulations. But tell me, what was that like? Were you guys, have any idea, any expectations? Like what was your thoughts going through all that?

Nick (12:33):

Man. Yeah, there was a lot going on at the time, even, even outside the Riptide Hackathon. It was quite a journey, I think, to get here. Cronos was what we wish we had when we were building Factor. We came upon the idea for Cronos because we were trying to build Factor, this scheduled token transfer service. And we're like, "how do you schedule a timer on-chain?" And then we found out you couldn't schedule a timer on-chain, there just isn't a way. So we were talking to some other teams and I think it was, he goes by DoctorBlocks, at Switchboard. He described for us what a Crank function was and how they were running their automations. And from there we just started pulling on that thread and realized that here was all this dev tooling that was missing that we could build out and just started running with it.

Chase (13:22):

Were you expecting to win the grand prize of the hackathon? How did you react whenever you actually found out that you guys had won that thing? Was there-

Nick (13:30):

I didn't know we were going to win. We had been getting tips from a few people that we were on these ever shorter shortlists, but we didn't know until the moment of, that the blog post went out, someone sent it to me and then a moment later, Twitter started blowing up. And from there it was just a flood of inbound messages coming in from all directions. And last few weeks have been a lot of dealing with that.

Elias (13:57):

Yeah. A lot of dealing about knowing what is spam and what isn't from people it's pretty difficult to do.

Chase (14:03):

So did you guys celebrate, did you guys go out for beers? Like you did the first time you met? Did you do anything?

Elias (14:08):

Sure did.

Nick (14:09):


Chase (14:11):

That's awesome, man. Like I said, it's really great to see some developer tooling win and that value in that. Whenever I started at Solana Labs, like a year ago, there was no developer tooling out there. This was like... Then comes Armani and then here's Anchor. And then now we have all these indexers and then now we have Cronos and they just keep piling on. And eventually we're going to reach a place where every little narrow gap is covered and developers are going to be able to just jump in and do all the things that they could do in Web 2, in Web 3 and it's going to be a huge game changer for everybody. Not quite there, or we're pretty far off from there, I would say. Every tool like this really, really matters.

Elias (14:51):

To piggyback off that, the most exciting part about this job is not only building it and dealing with really interesting engineering problems, but knowing the impact that it will have to developers and how empowering it is to allow them to automate things on-chain. That's a pretty wild idea. So I'm really excited for that.

Chase (15:09):

Yeah and I think that's why a lot of engineers get into building out developer tooling instead of products because they're engineers themselves. And they're like, "man, if I was like on the other end of this and somebody built this tool, I'd be so stoked." And how many people that outwardly impacts is probably just a really incredible feeling. And it's just really awesome. So sorry, Factor, but I'm glad that Cronos ended up winning. By the way, is Factor just kind of sitting on a shelf somewhere right now, never to be reopened again?

Nick (15:38):

Yeah. We, we kind of just rolled Factor into Cronos. Actually the Twitter account is the same Twitter. We just changed the name now.

Chase (15:46):

Nice. Okay. So it's dead.

Nick (15:48):


Elias (15:49):

Dead, but very much alive.

Nick (15:51):


Chase (15:52):

Yeah. If Cronos would've never came alive, you would've been sitting at the mtnDAO with TJ, directly competing against each other. So, that's awesome. So basically two of these projects were the winning of the payments track and then the grand champion of Riptide. They both came out of mtnDAO. Every time I hear about mtnDAO and we talk about this, it's one more reason why understanding how incredible it was out there and how many builders were out there building really cool stuff.

Elias (16:20):

Yeah, the community in Salt Lake was amazing just knowing that you were in the same boat with all these developers. Either just getting into Solana or being in it just recently. Learning Rust and learning the runtime environment and what is possible on Solana is really crazy. And everyone was trying to help each other and answered questions. And if you didn't know the answer, they would direct you to somebody else. And everyone's just like, "yeah, let me help you with this," which is my favorite part about that.

Nick (16:48):

Yeah, it's been really cool to see communities pop up. Also happening right now is like AthensDAO in Greece. And unfortunately we weren't able to make it there, but I think we'll see, over the coming months, a few more of these communities start to pop up that are a bit more like longer running than just the kind of week long hacker house format.

Chase (17:06):

Yeah. I'm a big fan of the community run hacker houses and all these sorts of things like mtnDAO, just because whenever it's built out with the community like that, it just forms this other type of bond with everybody and it's just really exciting to see all that happen.

Chase (17:23):

This is the point in the show where we shift gears a little bit. We talked about that excitement, how Cronos came alive, you guys winning Riptide and now I want to talk about what that experience was like for you guys. Because this is the very important part of this show where we talk about what sucked and what was good and what could be better. So, I want to start with Elias this time. You came from a front-end engineering background? What's actually the languages that you had touched before you came to start building on Solana?

Elias (17:58):

Even before I was a front-end developer, I was dabbling in data science for a bit. It was a lot of fun, but a bit too meticulous for my taste. So I was dealing with a lot of Python. Fast forward to when I graduate, I was really interested in front-end development, got pretty good at helping with some friends and building toy applications and TypeScript React, some toy web apps with Next.js. And then that's whenever, like I said, met Nick, joined the team and I was building front-end applications for a while at, like, six months. And then I found, like a lot of people who started their Web 3 journey, Nader Dabit's Ethereum article on how to... It was like a super simple... I forget exactly the context of what the project was, but it was on And read through it and tried to understand what is this environment? What is this dev environment? What's going on? Not too long after I found Solana and Nick also brought it up, was like, "Hey, we should maybe look into this." And then-

Chase (18:53):

Did you do Dabit's tutorial on Solana too?

Elias (18:55):

I did. Yeah, I did. Yeah.

Chase (18:56):


Elias (18:57):

It was a lot simpler. I don't know. But also more difficult in some ways. When we were working on Factor, Nick gave me the talk like, "Hey, we may not need front-end developers. So there's a chance that I need you to flex over to becoming a Rust engineer, which is, you know-

Chase (19:13):

So he didn't fire you?

Elias (19:15):

No, no he did not. Luckily. Yeah. So fast forward to like mtnDAO when we know finally realize Cronos has a lot of potential. I buy the book that a lot of people seem to have and I have it on my desk right here, the programming Rust book. And it's been my north star, I would say, as far as growing my skills as a Rust engineer, as well as living in the Solana repo and Anchor repos.

Chase (19:39):

So you guys are building this in straight Rust? Are you guys also using Anchor?

Elias (19:44):

Yeah. So in the core of Cronos, it's a lot of Anchor. A lot of what I deal with, I'm building and optimizing the Geyser plugin that we have to listen to Cronos accounts and execute tasks when needed. That's just built in Rust and other like asynchronous libraries and things like that, but not Anchor specifically.

Chase (20:03):

This is the part, the glass chewing, what was your learning curve during that process of learning Rust coming from front-end? Was it as painful as everybody says? Everybody's different on this front, so what was that like to learn Rust?

Elias (20:16):

A big mistake that I would advise people attempting to get into the space would be first of all, just learn Rust by itself first. At least start there and understand that it is different from Anchor. And it's just a framework that lives with Rust. And then try to understand the Solana runtime just a little bit. And those are three separate entities, but they all coexist and you need the three in order to make a simple to do app in Rust on-chain. So differentiating between those three different entities is really important. And if you just jump straight into a Solana Anchor project, not knowing Rush, you're going to get really confused and pretty frustrated.

Chase (20:52):

So for you, was it hard or was it just time consuming? You just had to grind it out and you learned along the way?

Elias (20:58):

Yeah. Yeah. It's one of those things that you just have to do every day. You have to, you know, for me every morning before we would go to the mtnDAO-

Chase (21:06):

Glass for breakfast.

Elias (21:07):

Yeah, I would literally just sit on the couch and wait for Nick to finish showering before we drove to the office. And I would just read a chapter of the programming Rush book and it would just go over super simple things like structs and basic functions. And if you're a software engineer, it's not too difficult to transition into Rust, it's just another programming language just in the different context. And it looks a little weird with two semicolons next to each other or whatever, syntax. But it's not too bad. One of those things you just got to do every day. And then before you know it, you'll just hit the road running. It's pretty nice.

Chase (21:39):

I think a lot of people talk about chewing glass, like it's actually Solana, that's the real glass chewing, about learning the native concepts, like using PDAs and these things. And there are people out there who just don't ever end up learning Rust and they never actually tried it. They never just sat down and did it. You could get a little bit resistant to it just because it looks so foreign.

Chase (22:00):

And then the other part is, I've done a couple of Twitter Spaces around this exact same thing about you saying start with Rust. That's my recommendation always start with the base layer before you're using any sort of framework or anything that's intertwined in it, but there are people out there on the other side of the camp that say, just start with Anchor. I obviously disagree, because I think learning that first base language is always going to be the best. And it's going to save you down the road when you're running into issues.

Chase (22:27):

I'm going to go ahead and ask you Nick, kind of the same question, what your experience was like? What did you do to learn it? Was it similar to Elias? Was it hard? Was it easy? Was it just time consuming? What would that look like?

Nick (22:39):

I had some background working in back-end systems. Yeah, for my time out in California, I had worked mostly with Go prior and actually first tried picking up Rust in 2020, because I'd seen it was the most popular language on GitHub and it was just like, what is this? And I actually hated it the first time I looked at it because I was coming from that Go world. And Go is designed to be super ergonomic and easy to read and talk about and communicate and Rust is more optimized for performance,

Chase (23:13):

Performance and pain.

Nick (23:16):

Yeah. And so I hated Rust when I first looked at it, and I pushed it off to the side and didn't actually look at it again until we dove into Solana. I've since come to love it. It is a little bit steeper of a learning curve and there are some extra pieces to the mental model that you need, in terms of understanding memory and ownership of variables and how all that stuff works, lifetimes, for example, that other languages don't have. So that makes it a little more complicated or harder to learn. But it's not anything that can't be overcome, I think. It's just another programming language.

Nick (23:50):

But yeah, definitely breaking apart, as Elias said, the difference between Rust problems, Anchor problems and Solana problems and understanding that these are all like three different systems is probably the hardest thing when you're first diving into Solana because it all looks the same and all the error messages are cryptic and if you don't have a whole lot of debugging experience, it can be hard to pull that thread because all this stuff is quite new and a lot of devs, I think have the pattern of, you get an error message you don't understand, copy it in a Google and see what Stack Overflow results come up. Usually we're running into problems that no other devs have run into yet. And it's just like-

Chase (24:28):

It's actually pretty cool though. Like to be one of the first group of people on the planet. You guys are going to be the ones who answer these Stack Overflow questions in the future because that always starts somewhere. The first guy had to just figure it out.

Elias (24:40):

It's cool, but you're like, "I don't know what to do now." I guess we're just going to have to figure it out. So that's where I would just go to the Solana codebase and Nick has recommended multiple times. Just go live in there, you'll understand the runtime environment better, your errors will be easier to debug. It's a lot. The Solana codebase is a lot, but there are parts of it that really help you understand what is going on underneath.

Chase (25:03):

A lot of people come from Web 2, and again, I'm one of those people. We're used to having our hands held. We're used to being able to find the answers we want. We're used to all these pretty, amazing tutorials and all these different things. And when that's not the case, it makes it a lot harder. Sadly enough, not everybody's this reverse engineering code diver that's going to go do that sort of thing. And it takes a lot of time and a lot of effort and sometimes, at the end of the day, there might not be considered the greatest payoff for all that work. But the true engineers, the ones who just like to figure shit out, are going to go do that and then they're going to figure it out and then they're going to build Cronos. So it's awesome.

Nick (25:43):

It's definitely how you know you're on the bleeding edge, is when Google doesn't come up with any results for your error message.

Chase (25:49):

Zero results.

Nick (25:51):


Elias (25:52):

The beautiful, no search results for that Google search and like, well, okay cool. Like whatever.

Nick (25:57):

Yeah. I Would say to any devs that find themselves in this situation, the Anchor discord in particular is my new Google for trying to find solutions to these problems. And usually, 70% of the time, someone has asked about some of the error problems like we're running into in the Anchor discord somewhere. And there's been someone that is able to chime in and help and Armani and the team that's there is extremely helpful in terms of answering questions and generous with their time.

Chase (26:27):

And Alan and everybody that's out there and Jacob who's on our DevRel team and Donny. There's so many people and these are guys that are actually working on like Serum and Anchor and Solana Labs and all that stuff. But outside of that, the community of people just helping each other solve these problems, it's amazing to watch it happen in real life.

Chase (26:48):

We've been going on for a while now and I want both of you, if you can, to tell me what is missing from Solana right now, like in tooling? You guys just created one that was missing, where you were seeing a lot of tooling come out.

Elias (26:59):

I have one.

Chase (27:00):

Okay. All right, we'll start with you Elias. What are we missing right now?

Elias (27:04):

I'm probably stealing this from Matt because he's probably thinking about it, but one thing we've ran into recently is DevOps pipelining. It's pretty difficult to handle versioning from so many different projects. And when we're developing, we're having to stay ahead of Mainnet and work on Testnet and it's a very complicated, and different projects do it differently, but right now in our repo, we have a forked version of Anchor just so that we have up-to-date versions of Anchor, but using some different-

Nick (27:32):

The latest Solana dependency versions.

Elias (27:34):

Yes. So that right now is something that we have to build, but if there's a way to do that at scale for a lot of other teams, that'd be great.

Chase (27:41):

Yeah, that's not the first time I've heard that one, but that's a good one. I hear it just because I'm always paying attention to a lot of different places, but I don't know if everybody, except the ones who are coming into this problem actually know that this is something that's kind of necessary. It's not one of the ones that people are most vocal about. It's usually error codes and indexers and all these things. So Nick, did Elias steal yours or do you got something else for us?

Nick (28:05):

No, I think that's a great one. There's, at least for what we're doing, where we have both on-chain programs and a plugin, that we're trying to ship DevOps challenges around keeping the versions in sync between those two pieces can be challenging. And then, I guess something that's been on my mind a little bit is how there was a DeGit project in the Riptide Hackathon, decentralized Git, which I think, stuff in that space like decentralized DevOps processes and how does a decentralized global team of engineers contribute to a protocol and how do you keep the community open, but also secure, is, I think, an unsolved problem at this point.

Chase (28:50):

Well, I look forward to the Cronos team actually building out this suite of tools, all of it.

Nick (28:56):

A few pieces, but yeah.

Chase (28:58):

Yeah. So I usually wrap these shows up just asking what advice would you give to somebody who's thinking, on the other side, "Hmm, maybe I'm about to jump into Solana. I'm not sure if I want to put in the effort to build something." What general advice would you give somebody who was going to build or is building on Solana right now?

Elias (29:17):

If you're frustrated with learning Rust, but you're really wanting to build on Solana, then you're doing it right. You're not doing it right if you're not frustrated, that's the chewing glass part.

Chase (29:27):


Elias (29:27):

Just keep going. Because at some point you'll be able to look at other projects and their smart contracts and go, "oh, I see what they're doing." Like right now I'm looking at the Holaplex, that's called RabbitMQ plugin or Geyser plugin, shout out to the Holaplex team, and trying to understand why they made certain engineering designs with their plugin and see what we can take from. And that's just the beauty of open source of course. But yeah, if I wasn't chewing glass consistently and I wasn't looking at code and other repos, then I wouldn't be able to do that.

Chase (29:58):

Yeah. That's awesome. And like it is, I wish everybody would start open sourcing their code out there, but we'll get there eventually. How about you Nick, what kind of advice do you have? And again, we've kind of talked about a few good ideas for the community, so what do you think?

Nick (30:13):

Yeah, I think probably two things, as Elias mentioned, spending time in the Solana repo, it's helped a lot. There's a lot of patterns in there that, if you're trying to get familiar with Rust, it's a great resource to learn from. And the second thing is to actually read the error messages that you get back, because when you actually pull on that thread, they are very cryptic error messages a lot of times, but they do have information that leads you to the bug and the problem or points you in the right direction, maybe is the best way to put it. I find that skill, that debugging skill is like a muscle that needs to be trained and learned and doesn't always come supernaturally, because it's just hard. But yeah, reading error messages and trying to decipher what they're telling you is a fundamental exercise to dealing with large complex systems.

Chase (31:10):

Yeah, and it's also just a really cool skillset to have, to be able to just do these manual debugging stuff. Yeah. Like you said it becomes like a natural kind of mental muscle that all of a sudden, now it just happens quite naturally, once you get to a certain point.

Elias (31:23):

Yeah. One thing for those interested in just in general, distributed systems, trying to understand Solana a little bit better from a higher level, there's a great YouTube course from MIT. If you just search "distributed systems MIT", it's an OpenCourseWare, like 12 lecture series, just to understand like RPCs, multi-threading, concurrency, consensus and things like that. It's really beneficial to understanding distributed systems, blockchains, well, not necessarily blockchains, but at least for Solana distributed systems.

Chase (31:55):

Awesome. Yeah. There's a lot of people that come into blockchain and they don't even really know what a distributed system is. And then a lot of the times it's like, hey, go actually read about like what this thing is before diving into this.

Chase (32:07):

All right guys. Well really, really, thanks for coming on the show. I'm glad that we got to catch up. Congratulations winning Riptide. I'll talk to you later.

Nick (32:16):

Yeah. Well see you in Austin.

Elias (32:17):

Sounds good. Yeah, see you in Austin.

Chase (32:19):

All right. Cheers.

Jun 21, 2022
Strata Protocol & Metaplex Ep #68

Noah Prince (Co-Founder/ CEO, Strata Protocol) and Austin Adams (Lead Protocol Dev, Metaplex Studios) sit down with Austin Federa to discuss the integration of Strata's Dynamic Pricing Mint tool into the Metaplex Program Library.

00:51 - What is Strata?

02:12 - Challenges when launching a token

04:43 - Why is Strata more successful than competitors?

06:15 - Fundraise and the changing use cases of tokens on Solana

08:47 - Changing mentalites around the function of tokens

10:48 - How is Metaplex's approach different

11:51 - Description of the flow using Strata

13:25 - Mechanisms of dynamic pricing

15:12 - Tools for dynamic pricing / Collusion

19:06 - Metaplex and additional tooling

21:54 - Optimizing Metaplex's architecture for the community

25:05 - Advantages and drawbacks with metaplex's architecture

29:44 - Metaplex and backward compatibility

32:39 - Pitch for using dynamic pricing



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Austin Federa (00:10):

Welcome to The Solana Podcast. I'm Austin Federa. Today we're talking about a new partnership between Metaplex, the NFT implementation on Solana, and Strata Protocol, a toolkit that helps developers launch tokens. They've built some new tools to help creators set dynamic pricing for NFT mints and these change the economic incentives around NFTs which will hopefully reduce the botting of NFT mints. We're joined by Noah Prince, the co-founder, and CEO of Strata Protocol, and Austin Adams, a software engineer and lead protocol developer at Metaplex. Gentlemen, welcome to the Solana Podcast.

Noah Prince (00:42):

Thanks, Austin.

Austin Adams (00:42):

Thanks for having us.

Noah Prince (00:43):

Glad to be here.

Austin Federa (00:44):

Great. So let's go ahead and start out today with just an overview of, Noah, what is Strata and what are you guys trying to do in the space?

Noah Prince (00:52):

So Strata Protocol at its core is a protocol for launching tokens and managing the liquidity around those tokens. So we have a variety of different auction mechanisms, and we can launch tokens anywhere from small tokens that you don't really know who the counterpart of the trade is, there's not going to be much volume, all the way up to large tokens where you want to do a large offering and then eventually put those on a DEX. How we ended up getting into this space is just that our auction mechanisms for tokens also offer a solution for the NFT botting situation. So we thought long and hard about how to keep bots from botting the token launches that we have. And if you launch one of those tokens and then put it as the entry price to a Candy Machine, you get a dynamic pricing Candy Machine.

Austin Federa (01:39):

So let's talk a little bit just to kind of roll back to what Strata really is trying to accomplish here. You mentioned it's a solution for launching tokens and providing initial liquidity for those tokens. What are the challenges that people run into when actually launching a token? I think if you look across the space, you'd see that there are hundreds of different tokens run by hundreds of different projects across the Solana ecosystem, the majority of which were not launched with something like a launchpad or basically a protocol to help them go through that process. What are the challenges that people are facing when they're actually looking at launching a token?

Noah Prince (02:12):

Yeah. So I think token launching kind of comes in a few steps, right? The very first step is the ideation phase, where you're trying to figure out what your token is, do you have multiple tokens? What are the tokenomics? And somewhat in that same phase is where legal comes in. And to a lot of degrees, that is the hardest spot is where you're going to figure out what your token does. But a lot of times for people launching a token, there's this kind of big okay, we know what we want to do, but how do we physically create that token? And then how do we go and do things like auction that token off? I want to sell some of that token to investors. I want to sell some of that token to all of my community, how do we actually distribute that thing?

Noah Prince (02:54):

And then after that, there's the step where you've distributed it, you've collected some money for the token that you can use to bootstrap the project. And then you also want it to be tradable on a DEX or on an AMM. And then you go and set that up. So Strata is really there to help with the creation part of the token and for really small tokens, we also manage the liquidity. So if you don't want to even care about what is an AMM, what is a DEX, who is the counterparty to a trade? We have a way you can launch a token and it's basically one click. The protocol just takes care of all of it for you.

Austin Federa (03:30):

Yeah. So if you think about maybe a year ago, when someone was trying to launch a token, there was lots of technical components in actually creating and launching that token, but you'd have to go and submit something to the Solana token registry. You'd have to then go ahead and set up a permissionless pool on something like Serum. You'd have to go ahead and try and get it verified to get it actually listed there so it would show up in the list. Someone didn't have to add it as a custom market and all these things are functionally automated through you guys at this point, correct?

Noah Prince (03:56):

Yep. So for the most part, those things are automated. You still need to go and set it up on a AMM after you bootstrap the liquidity, but yeah, we're basically making it permissionless to go and do this. So the idea was to make it as easy to launch a token on Solana as it is right now to launch an NFT which Metaplex has kind of done a great job of.

Austin Federa (04:16):

And so there's been a lot of organizations that have tried to create launchpads or create basically systems of easier onboarding on the Solana blockchain. And a number of them haven't really gone anywhere, or they've been sort of overrun with, I would say very low-quality projects that are just trying to find a quick way to launch a token. What's the reason you think that Strata has had a bit more success here and not fallen into some of those traps?

Noah Prince (04:43):

Well, I think the first big trap there is talking about projects that are obviously disingenuous, they're trying to cash grab. They're not actually a real project. And when you talk about creating something permissionless, you want to get away from that, right? The barrier to entry should be low so that anybody can do it because tech is tech, but we don't want to be the ones that are creating the list of all the different tokens that we think that people should buy, right?

Noah Prince (05:12):

Equally, Metaplex isn't doing that. Metaplex doesn't go out and tell you which projects to buy. There are plenty of Launchpads that have their own lists that'll tell you who they think you should buy, and there are plenty of Twitter influencers who will tell you that as well. So that's one way that we're doing it. And then the other way that we're doing it is trying to make it easier for these projects that are smaller and maybe don't have all the idea of how to do everything that's complicated with launching a token, they just want a simple token. Things like social tokens are like little community chat projects, making it easier for those.

Austin Federa (05:47):

Some of the interesting things you guys have done in addition to the ability to create a new token or sell an existing token bootstrap liquidity is this idea of a fundraise and the dynamic pricing of NFT mints. On the fundraising side, what did you see in the changing ways people wanted to use tokens or the changing use cases of tokens on Solana that really led to the idea of a fundraise being something that a launchpad protocol should build tooling for.

Noah Prince (06:14):

Yeah. Fundraise was inspired deeply by ConstitutionDAO, which if you didn't see it, was this thing where a bunch of people on Eth just banned together, they said they were going to buy a copy of the Constitution of the United States of America. There was an open bidding that happened. I think they raised like $30 or $40 million and ended up getting outbid, but it was still this example of a community coming together and bootstrapping a ton of liquidity to do something cool. And the idea was that there will be shared ownership of the Constitution, or at least this copy of it after the bidding was done.

Noah Prince (06:49):

And so how you do that mechanically is just, you're collecting money into a pool that somebody then uses for the bid. And then as you're collecting money, people are getting a token that represents their share of that pool. And so even after you've used the money, they still have the token. And so with the ConstitutionDAO you had the people token. And that's just one of many ways to launch a token and why a launchpad is formatted like a wizard because we want it to be like a no-code tool where it asks you the questions that you need to answer to get towards launching your own token.

Austin Federa (07:20):

It's super interesting to think about the implications for some of the stuff for the intersection of real-world assets like something like a constitution and then the intersection of the ability to have full liquidity through something like a token mechanism for this. So I think that's a very interesting use case for it. And one of the great things I think about ConstitutionDAO when we saw that all happen is it's still going, right? There's still a community there. It's still passionate about this thing that they failed to create, but now is turned into something else which is in a large part, a lot of the story of NFTs on Solana as well, is that they start with one mission and suddenly something changes and Trash Pandas are now fighting plastic in the oceans, and all these other projects are building real community service kind of components into them.

Austin Federa (08:05):

When you're looking at the idea of a no-code solution here, what was the reasoning for something like that for more complex protocols? I guess the thing that I'm trying to tease out here is there's an assumption from a lot of folks that if someone's not sophisticated enough to figure out how to launch a token, they're probably not sophisticated enough to launch a project on a blockchain. That's obviously not necessarily the case, but that is part of why you've seen launchpads in general, or less code solutions be something that tends to have a lower quality project coming out of it in general. How do you respond to some of that criticism or look at the different ways that we just need to change our mentality around what a token's meant to be used for?

Noah Prince (08:47):

Yeah, I think there is that tendency, but as a dev, it's all about tools, right? For me, it's how can I get something done with the least effort possible that meets all the requirements. And so when you give tools to devs so that they can launch a token really easily, the devs can spend time focusing on the things that matter and not the things that don't. So part of it is that but also you need this primitive and you need this primitive to be easy because we're in the infancy of tokens right now, right? There's just one token. We're starting to see more complex systems like STEPN pop up where you have systems of tokens where that's just two tokens, all the way up to things like WOMBO, and BitClout, and Rally, where you have hundreds and hundreds of social tokens. And these things all start to interconnect together, and you can start to do really cool things when you can create systems of tokens. And that's something that you couldn't do in the past without this kind of primitive.

Austin Federa (09:43):

Yeah, it's fascinating. So, Austin, let's talk a little bit about the interface here with Metaplex NFT initial mints. So one of the things that we've observed over the last few months is that the increasing demand for NFT is on Solana. And also I would say real success of projects in building a strong community pre-launch has created situations where there is both a high incentive to bot the launch of an NFT, but also there's just extremely high demand for these things when they're coming up for initial mint. Some of that's driven by expectations that they might be able to flip them, but a lot of this is just organic community demand for a project that they feel very excited and interested in.

Austin Federa (10:22):

There's been a few attempts to create systems that would either increase the fairness or would try and reduce the incentives for botting. One of these was the Fair Launch Protocol which was created as sort of an extension of the Candy Machine toolkit, but Fair Launch Protocol never really caught on from a community standpoint. So what is sort of different in the approach here that you think is going to be successful in creating better incentives and dynamics?

Austin Adams (10:48):

I think the reason that this will be more successful is we will market it a lot harder than we marketed Fair Launch, but also the mechanics of Fair Launch weren't really, and they could have been changed they weren't really a great experience having to wait and then not knowing if you were going to get things. The NFT minter, once that sort of casino-style experience, they pull the lever, they get the thing they know right away, they're having fun, it's addicting. With the dynamic price mint coming in we get that addicting and fun feeling while still getting some technical protection against bots and making it a little bit more advantageous for creators. If they've created demand, they're getting rewarded for that demand.

Austin Federa (11:38):

Yeah. That's super interesting. So let's walk through, I guess, from both of you, what is the flow that both a creator and a user goes through if the project that they're trying to mint is using this new dynamic pricing powered with Strata?

Noah Prince (11:52):

Yeah. So the flow right now is a little bit broken up and that's kind of the point of this partnership, but right now you launch a normal Candy Machine through Metaplex, you grab the ID of that Candy Machine, and then Strata has a UI where you can plug in that ID and it converts it to a dynamic pricing Candy Machine. Now from a user standpoint, this looks pretty much exactly like the usual mint interface that you're looking, they're used to, right?

Noah Prince (12:18):

You just click a mint button, but the price is changing. So the price is just slowly ticking down and occasionally it bumps up when somebody purchases something and you can also switch tabs and you can go look at a price history plot. But as a user, you're trying to figure out at what point do you want to enter, right? At what price do you want to pay? And bots are playing the same game which is an unsolvable game. When do you enter a live market is a question that nobody knows the answer to. So it feels very much like a normal mint it's just that the price is moving and it's a game of who flinches first.

Austin Adams (12:53):

That's the current experience but as I'm sure you'll get to, we hope to create a deeper integration together that can utilize Strata's tech and Metaplex's tech for the entire experience without needing to go from one place to the other but using our new UIs and CLI tools, they can create a dynamic price Candy Machine that also gives us even more bot protections than we had before without having to go from one website to another.

Austin Federa (13:25):

So what is the dynamic pricing set based on? What are the mechanics that go into actually setting what that amount should be and how much volatility do you expect to see throughout the course of a typical 10,000 mint that might sell out in the course of several minutes?

Noah Prince (13:43):

Yeah. So generally, you want to establish what is basically the order of magnitude of the price. So something that's going to be in the 0.01 SOL range versus something that's going to be in the 10 SOL range, they're pretty different and it would be hard for any system to account for that. So generally what you're doing is you're setting kind of a range that you expect. So in the case of Divine Dogs, they were one of the very first ones that we did this with, they were minting an NFT that they thought would probably sell for two SOL. Now they're associated with the gods. And so 3.33 is a magic number for them. And so they actually set the starting price at 3.33 SOL and the minimum price at 1.1 SOL.

Noah Prince (14:24):

And so the idea was the minimum that they were willing to take as a project to get the funding to do what they needed to do was 1.1 SOL and they thought that people would pay up to 3.3 but probably not much more. And so what happened with that was I think the average price ended up being 2.32. But generally, you want the prices start slightly higher than what you think people will enter at so that bots don't have an advantage to spamming, they're just waiting for it to fall down and then it'll hit some fair price and it just oscillates around the fair price.

Austin Federa (14:57):

You mentioned a few things there where it sounds like projects have to do a bit of estimation around what they expect to see. What are the either software or just like human tools that someone should be looking at when they're trying to figure out where do they start with dynamic pricing?

Noah Prince (15:13):

Yeah. I mean, I think to a lot of degrees this is similar to right now people are just deciding a fixed price for their mint which is even more dangerous. You have no idea if it's going to sell out for that fixed-price or not. If you're a really hyped project, it probably will as long as you set it less than 10 SOL. But there's also a stigma, right? SolBears came out and set it to 10 SOL and people got pretty mad about it. So I think for most projects, this range of I mean, it depends what SOL's current prices, but right? This range of 1 to 5 SOL is generally reasonable. If you get really far off on the price, it can go above the starting price but we haven't seen that happen in practice. Usually, projects have a pretty good idea of what they're going to sell for or at least like a ballpark. They don't know exactly but they know a range.

Austin Federa (16:05):

Yeah, just because this was one of the first prominent uses of the Fair Launch Protocol where the community of degenerate Trash Panda Minters banded together and actually crashed the price. They all basically colluded against the project owners to mint at 0.1 SOL when the pre-mint tokens had been trading at 3 or 4 SOL on the exchanges and obviously, the price has gone up from there, but it's a very interesting dynamic when you give the community the tools to set their own pricing, you do open yourself up to a certain amount of collusion which I think is fascinating. No one would've thought that in a free market open system you'd be able to get a bunch of degens who are trying to optimize for the most value they can create to all band together and try and basically drive down the mint price of an NFT.

Noah Prince (16:52):

They also got to change their vote in the second half which made it a little less risky to bid small.

Austin Federa (16:57):

Yes. That's true. So that sort of one-tiered system is part of the dynamics here that you think make it more robust to get something like that.

Noah Prince (17:06):

Oh yeah. I mean, so we've done a couple of mints with it now and every single time in the Discords I actually hope that someone proves me wrong because it would be kind of interesting from a psychology perspective. But usually, there's a band of people in the Discord that are like, "Nobody buy. Nobody buy. We're going to let the price fall really low, like the bid small." But because it's so real-time, what ends up happening is it hits a number that's really, really good and it's just like a prisoner's dilemma. A few people defect and then everybody sees that a few people defect and all of a sudden the faction that was trying to hold back and not buy everyone starts buying and the price starts ripping because it's the lowest price that they're going to see.

Austin Federa (17:47):

Yep. Totally. It's really interesting the way those dynamics play out.

Noah Prince (17:51):

Yeah. Honestly, if your project gets hit by this and the people actually manage to do a prisoner's dilemma experiment where nobody defects, you have an amazing community, I don't even know that you need the money. Your community is incredible.

Austin Federa (18:04):

Yeah. It's worth noting that for the more successful projects out there, they have made many multiples of the initial mint revenue on secondary sale royalties. So it's kind of this interesting dynamic where you really want to bring the strongest community possible into an NFT project but the same time you need to fund appropriately for whatever your medium-term goals are to make sure you can actually deliver on any roadmap you've sort of laid out as a project which is really interesting. So when we're looking at some of the underlying architecture here and how it interfaces with Metaplex, I know there's a whole bunch of work on Metaplex that's been rebuilding a lot of the way that some of these contracts work. There's a whole expansion of what's possible on Metaplex coming soon. Austin, how are you thinking about additional tooling like Strata and other types of partnerships that will make it easier for a lot of this work that's being done to actually be deployed and usable? So the difference between reference implementation engineering and actually production engineering.

Austin Adams (19:06):

I think on a case-by-case basis, we always look at where we can stay generic and composable meaning one contract calls into the Metaplex contracts and the Metaplex contracts stay as this secure core that we audit very frequently and we're taking care of all that nonsense for the community. But in other cases, we identify a piece of technology that's really good and the composable way of doing it doesn't give us the guarantees necessarily that we want. And so we look at a deeper level of integration. The recent gains in shipping velocity that Metaplex is getting are coming more from CICD and looking at ways to improve our software stability so we are not scared to ship.

Austin Adams (20:00):

And I think that's what Metaplex is moving into as we're stabilizing and as we're trying to remain the base infrastructure for NFTs as well as move into some exciting new landscapes. So with this specifically, we do have some big changes coming to canning machines soon. We have some big changes coming to optional changes for everyone coming soon, but this one here falls right in line with our anti-botting work. And so we're heavily invested in making this as deep of a integration as it needs to be and shipping it as soon as possible, as well as shipping it not just in the contract level, but shipping it in our UIs and CLIs that are coming out or are out.

Austin Federa (20:44):

Yeah. Interesting. So I'd actually love to dig in a little bit more on how you're thinking about multiple layers of contracts or interoperable contracts that all can, I guess, give optionality in terms of how someone wants to deploy something. What are those different components and how are you thinking about... So classically, every time you have a contract talk to another contract, you've created an attack vector. This is most of the hacks that you see across DeFi and on Solana and on other places in Solana are non-validated fields. There's some ability for someone to inject something into the contract at a point that someone thought wasn't injectable that ends up creating an outcome that's not desirable for the users of that protocol or that contract.

Austin Federa (21:28):

That's like a very standard attack vector. So not to go too far into the security of this because of course that's maybe a separate conversation, but when you're thinking about that sort of multiple contract architecture, talking back to one central contract, what are the types of things you are thinking about or the Metaplex protocol is really thinking about from an architecture standpoint to make that secure, stable, but also upgradeable and able to respond to the needs of the community quickly?

Austin Adams (21:53):

Yeah, that's a great question. So I do believe it does depend on what the contract does in a large part, but generically, when we think about Web 2.0 land, when we've all created public APIs that take in user input, we can think about those as if they're analogous to we're allowing someone to direct their digital plumbing pipe at our digital plumbing pipe to use the euphemism or the saying that we're just all digital plumbers. I think I like that. One of the ways that we approach this is just being extremely careful on validating the input and being very restrictive with what specific instructions and what specific things a transaction can do when calling into our contracts.

Austin Adams (22:47):

So for example, with Candy Machine, although it is not as composable as other programs may be, we restrict the specific programs that can call out to Candy Machine and we restrict what they can do. We look at the instruction data using the instructions this far. For those who are non-technical that just means we can inside of the instruction or inside of the program, we can look at the instructions that are coming in and we can validate the input that's coming in. But for other programs such as AuctionHouse, we actually have purpose-built it to be composed over. And the way that we handle that is by bringing all the things that we want to make sure always stay secure into the contract.

Austin Adams (23:33):

So the token account creation, the mint creation, for example, the transfers, all of those are in the core AuctionHouse transaction protocol, but we've created this other system of composability called Auctioneer where people can put their additional logic such as token gating, timed auctions, even dynamic priced auctions via Strata can be done at that layer. So like I've said in summary, it does depend on the contract for Candy Machine because it's such a target for bots. We are very restrictive but we hope to find additional ways to loosen those things to allow more contracts to compose over it while still getting more bot, anti-botting guarantees.

Austin Federa (24:20):

It's kind of an interesting question here. When you think about on most layer ones or layer twos, the implementation of an NFT is something that's sort of done, I guess you called it the L1 or L2 level at the protocol level, as opposed to at the application level. Metaplex is a little bit different in its architecture, right? The tokens that are built are fundamentally still SPL-compatible tokens. And they're built more like an application level. And by application, I mean, it's not hard coded into the base Solana code. It's actually running on top of it which is a little bit different of an architecture than you see on something like Ethereum. What are the both advantages and challenges that both of you have run into because of that difference in architecture?

Noah Prince (25:05):

Yeah. So I did a deep dive at one point on composability on Solana versus Eth. Fundamentally, the NFTs on Eth and even the tokens that are on Eth are just following an interface. So it looks a lot like interfaced extension. I'm going to get real deep in engineering if I don't be careful here.

Austin Federa (25:23):

No, no, no, let's do it. This is the back half of the podcast.

Noah Prince (25:26):

Cool. Okay. Yeah. So it looks a lot like interfaced extension and classical object-oriented programming. So you think Java is the big example of object-oriented programming. Now Solana actually ends up looking a lot more like functional programming where you've got these contract endpoints that are effectively functions that operate over some state and then output a state. And then the next function can take that state and do something with it. Now, a lot of people will tell you when they're learning functional programming coming from object-oriented programming, it's scarier at first. It's like chewing glass. It's a little bit more complicated, but there's a lot more that you can do with it. And so like my example of composability actually is the current state of the integration with Metaplex where you talk about how there are different security vulnerabilities with checks, but a token is the absolute interface between us and Metaplex and that's the only interface.

Noah Prince (26:26):

The single check is whether or not you have the token that allows you to mint this Candy Machine and we just output that token. So we are a function that takes in some SOL and outputs a token. They are a function that takes in a token and outputs an NFT. And actually, they don't have to know about each other at all. It's only the user interface that knows about it. So this is how we generally deal with composability on Solana and why I like this model a little bit better, but I am a little bit of a functional programming maxi, so …

Austin Federa (26:57):

Austin, what about you?

Austin Adams (26:59):

Yes. I believe that the Metaplex model for NFTs is actually quite brilliant. And I'll talk about the pros first and maybe the cons second. I believe one of the reasons for our enormous growth is because our contracts are like APIs. You don't need to deploy your own contract. You don't need to manage that. You don't need to have everything that can be known about your implementation done ahead of time and then deploy an immutable contract. You can iterate and fail and try again and do new things on top of our programs without having to, one, manage the security of the program. Two, without having to really be an expert. And I know that you don't have to be an expert to launch an Ethereum NFT series because there's some great tools. But I think that's one of the reasons people choose Solana. Devs choose Solana, creators choose Solana to run their NFT projects is because the Metaplex contracts were brilliantly designed as APIs whereas they could have been designed in an interface model.

Austin Adams (28:07):

Now the cons of that are the Metaplex development team now needs to look at backward compatibility every single day. Any change that we make we have to micromanage that aspect all the time because we don't want to break anybody's use of the system. And through our DAO we need to ensure that what we're doing is reflective of what the community wants. So another con would be that some people see it as less decentralized, but in reality, because it's a community project, it doesn't seem so decentralized when you can build right on top of it and do whatever you need to because we try to keep the protocol light and do less things. I see that we can move into both areas. We can produce an interface-like system while getting these contracts as API feel. And I think that's some of the backbone of some things that you'll see coming out of Metaplex soon.

Austin Federa (29:07):

So when you think about something like backwards compatibility, what does Metaplex see as its sort of role and responsibility there, right? So famously for a number of years, Android had like seven different versions of the Android API that Google had to support because folks just would not update their apps. And Windows still has backwards compatibility with stuff that was probably about when most of us were born. What are you guys thinking about when you look at that sort of backwards compatibility and how long or what kind of functionality needs to persist for X amount of time?

Austin Adams (29:44):

So what we try to do is never break you unless it's security-related. If it's security-related, we fix it as soon as we can and we announce as quickly and as widely as we can. That hasn't happened very often and currently, we think that... We kind of take the semantic versioning approach where we will give you a long amount of time. Now we don't have a rigorous set amount of time yet. We're very new as a project if you think about it, but we will always provide you a new instruction and deprecate the old instruction and it works perfectly fine for a long time. And it's very rare. In fact, it's only happened once where we will remove old instructions. Part of that is looking at our contracts as APIs. And when you look at microservice patterns because that's how we think about them kind of is our contracts are microservices.

Austin Adams (30:43):

Look at the traffic of your instruction. If you're seeing it the traffic go down, people have moved to the other one, you're in safe territory to start announcing that, "Hey, we're going to start moving on from this specific instruction." But if you see it holding steady, that's a good signal from your community that that thing still needs to live or you need to educate and do more work. And that's how we'd like to see it. I think in the future, we'll see probably more rigorous guidelines around how long we're going to keep things out. But right now it's we'd be nothing without the people using it. So they're our top priority when we're shipping new things, we don't want to break anyone.

Noah Prince (31:22):

Yeah. I think at least how we've been approaching it with Strata is that I am very, very bearish on the idea that I'm never going to have to change anything. And so actually every one of our smart contract endpoints, every one of our arguments, every one of our piece of state has a V0 next to it. Some of them actually have a V1 already. And then in SDK land, so like in JavaScript, we wrap these calls with things that don't include V0 and we wrap them in interfaces such that if we ever have to change anything, we just bump it to V1 at the protocol level, change the interfaces, leave the V0 endpoints around for a while and then like Austin said, watch the traffic and then slowly deprecate them. But yeah, I mean, I think you kind of have to accept that these things are living, breathing things and like most APIs, you just have to version them. Now, a lot of people who don't have V0 next to their things, don't worry, you can put V1 next to anything.

Austin Adams (32:19):

It's okay.

Noah Prince (32:19):

And V0 is just the lack of a tag. It's okay.

Austin Federa (32:22):

So all of this depends of course, on creators and people launching NFT projects actually adopting and using the dynamic pricing tools. What's your pitch for why someone who's launching an NFT project should do it this way as opposed to doing it the way that's currently done.

Noah Prince (32:37):

Yeah. So one of the big things, I mean, even if you watch Frank, he is talking all the time about how he wants people who are long-term his project. He doesn't want paper hands. He doesn't want flippers, right? So right off the gate, you've got to acknowledge that having people that are just buying the project to flip it immediately aren't really good for your project long term anyway. I mean, if you were going to overprice your fixed price mint, you just weren't going to sell out. And so this will help you sell out which is ideally what you want, right?

Noah Prince (33:09):

Because you're picking the quantity of the mint so that you have a certain size of community. Now, if you had underpriced your fixed price meant, this actually means that you're going to get more funding to do what you want to do, right? And that's what matters is that you can actually execute on your roadmap. Now it's not like that price discovery isn't happening, right? It is still happening. If you price your mint at 2 SOL and the NFT is actually worth 10 SOL, it just drives up to 10 SOL on the secondary. But you know who makes that money? People who are flipping it and don't care about the project. So I would rather have that money go to the team than people who are flipping it any day of the week.

Austin Federa (33:49):

I'd love to hear from the Metaplex side what the pitch is to use it that isn't just it doesn't break the network.

Austin Adams (33:55):

Then I get nothing.

Austin Federa (33:56):

Because this is the thing is like one of the things about crypto is we have to assume everyone is a evil self-interested actor at all times who cares primarily about what they're trying to accomplish from a financial standpoint and isn't a altruistic actor trying to make the world's best-decentralized computing environment possible or else all of the assumptions of how blockchain works start to break down. So I think that's one of those questions that if either of you have something addressing that sort of side of things and-

Austin Adams (34:25):

Yeah, totally. I'll go with Metaplex's side of why I use dynamic price mint. So from the Metaplex side, we realize that Candy Machine has been botted so badly and we want to increase fairness for the collectors, creators, and the community. Just like Noah said earlier, we want to incentivize long-term holders, people to be a part of the project because NFTs are showing us they're more about community than they are really like a financial mechanism. They are a financial mechanism, but they've exposed this incredible new, psychological phenomenon.

Austin Adams (35:01):

For collectors, we've seen click farms, and bots, and extensions, not even if it hurts the network, but just hurting the experience. So one way that dynamic price mint helps is by making these click farms and botters, I mean, have to think twice, have to actually do some calculation, and have to do it in a fast and real-time manner. So this helps them be able to take part in the project even if they didn't get into the discords or other things like that at the right time, it's also going to help us move past this whole allow list trend in the community where you have to do all these specific things to get a spot and then you get a spot and you get a chance to mint, but then you don't actually get to mint. And so, hopefully, this makes the work that's required just being a part of the community and having the desire and the funds to mint.

Noah Prince (36:01):

Well said.

Austin Federa (36:01):

Awesome. Well, I think that does it for today. Thank you both for joining us to talk about this new launch of a Stratus support for dynamic pricing on Metaplex and creating new tools for creators to be able to actually implement this. If folks want to read more about it or want to consider using this for their next drop, where should they go to find more information?

Noah Prince (36:22):

Yeah. So for now it's actually, if you go to and you have a Candy Machine ID, you can launch one directly right there. We also have on We have extensive documentation on how to set up one of these dynamic pricing mints and a YouTube video on how to do one and even do one with a white list. In the future, we hope that this is directly on Metaplex's documentation and kind of more built as a first-class citizen into the Candy Machine and Metaplex's new UIs such that you don't need to be bouncing around from Strata to Metaplex. It's just there for you.

Austin Adams (36:59):

Yeah. 100% stay tuned on the Metaplex Docs and on our blog, Twitter, radio station. Oh wait, we don't have a radio station.

Noah Prince (37:08):


Austin Adams (37:09):


Austin Federa (37:09):

Great. Well, thank you both for joining us today.

Austin Adams (37:13):

Thank you, Austin.

Noah Prince (37:14):

Thanks for having us.

Jun 14, 2022
Brett Harrison - President, FTX.US Ep #67

Brett Harrison is the President of FTX US, a US-regulated cryptocurrency exchange. Prior to joining FTX US, Brett was Head of Semi-Systematic Technology at Citadel Securities, where he managed technology for the firm’s Options, ETF, OTC, and ADR trading globally. He began and spent the majority of his career at Jane Street, where he led the firm’s algorithmic trading system development.


00:34 - The role of FTX.US’ president

01:24 - About FTX

02:55 - Nontraditional brand marketing

08:05 -  Educating people about Crypto

10:46 - Being at the forefront of regulation

14:52 - Collaborating with other players in crypto

19:03 - FTX's policy in exchange and crypto

23:19 - FTX and NFTs

26:44 - CeFi / DeFi exchange and Cross-chains

31:36 - Building interconnectivity between centralized crypto exchanges

34:59 - Market hours in crypto?

36:33 - Process of evaluating a token

38:44 - Things he is hopeful for



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Austin (00:10):

I'm Austin Federa. Welcome to the Solana podcast. Today, we have Brett Harrison joining us, who's the president of FTX.US. We got a bunch to talk about today, including the role of FTX in the markets, his sort of path there, and a bunch of what's been going on recently in crypto. So, Brett, thanks for joining us.

Brett (00:27):

Yeah. Thanks for having me on, Austin.

Austin (00:29):

I wanted to kick it off. What does the president of FTX.US actually do on a daily basis?

Brett (00:34):

Yeah, for sure. A good question. So yeah, I joined FTX.US exactly one year ago. Little bit of background first. So FTX is obviously the global cryptocurrency derivatives exchange. It's the second or third largest in the world. Around a year and a half ago, FTX.US, a separate company affiliated with FTX, was started for the purpose of creating a US regulated set of businesses to be able to do things like offer a spot cryptocurrency in the US, but also to satisfy some of our broader ambitions to enable other kinds of investment products for US customers such as US crypto derivatives, stocks, and things like that. My role is to sort of help run the ship over here, hire the team, and put people in the right offices, but also like do everything from think about regulatory strategy and policy to some actual software development in architecture and on some of our products. So it's sort of a little bit of everything.

Austin (01:25):

Yeah. It's kind of an interesting role. How big is the FTX.US operations at this point?

Brett (01:30):

We're around 80 people right now.

Austin (01:33):

That's pretty sizable for one year.

Brett (01:35):

Yeah, for us at least.

Austin (01:36):


Brett (01:37):

For sure.

Austin (01:38):

You're at the top of a pretty interesting organization nowadays. When you joined, the pace of excitement and interest in crypto from a mainstream audience was far lower. The presence of FTX was far lower than it is now. There's many people who are familiar with crypto, who have been for both FTX for a very long time, as both the FTX international and FTX.US as two different entities that play an important role in pushing the concept of a centralized exchange further. Before you guys came on the scene, the role of a centralized exchange was maybe not quite as professionalized as it is now. There's sort of more of a lot of respect in the market for the speed that FTX is able to execute on and both sort of the pace of innovation that's come out of that.

Austin (02:23):

But at the same time, in the United States specifically, which is where we're talking about today, you guys have done a huge amount of what I would call very traditional marketing usually reserved for banks, and telecommunication companies, and these sort of like old Titans of industry in the United States. But this is a very new operation. Walk me through a little bit about that process of saying not only do we see a target opportunity here, but we're not going to take the path of most other companies, and run a ton of digital ads, and put up select billboards. But we're going to put our name on AAA, IP, and media.

Brett (02:55):

It's incredible to see where we are now compared to a year ago, two years ago, and FTX.US were fairly obscure in the United States. Not so much overseas where FTX had already really gained a name for itself as this leading cryptocurrency derivatives exchange. And it was really competing with the other top exchanges around the world that have been trading these derivatives products traditionally. But in the US, we had just started. We're up against 10 year incumbents in the space and very few people ever heard of FTX. And now we're on Super Bowl commercials. We are the subject of congressional hearings. It's like quite amazing to sort of see the way that we've sort of infiltrated the crypto ecosystem in the United States, in a way that's really established our presence as a brand that people trust, as one that feels innovative and fast moving.

Brett (03:47):

So I think just taking it back a bit. So we wanted to be able to get into the US market, and the US has one of the largest retail user bases in the world, maybe the largest retail user base in the world. So the number of people who are traditionally using their phone to trade stocks, for example, for themselves, is just much higher percentage in the United States than almost anywhere else. And so you have this broad class of people now getting interested in crypto, who want to be able to have access to that as a means of investment. But if you think about where crypto has been for the last decade, there's been a lot of ups and downs and noise. You have exchanges that lose customer funds, or they go down, or they get hacked, or they like suddenly become slow.

Brett (04:31):

And if people are going to invest in this still fairly risky, volatile, asset class, where there's a lot to learn for people, it's a very high learning curve. They're going to want some brand that they feel they're comfortable taking that leap, and putting their money in, and investing with. And so in the beginning, it was very difficult to acquire customers for us. And then Sam had this idea of, what's the largest thing that we could do, as fast as possible, and reach tens of millions of people. And it's not go out and buy Facebook ads. And the conventional wisdom here for us was, "Okay, when's the last time you saw an ad on Facebook for like Citibank or JP Morgan, and you are like a Bank of America customer? And then you said, you know what, I love this Facebook ad. It's time to move all my money from my checking account to this other one." I think it doesn't usually happen. I think it's a pretty high activation cost for doing something like that. It's not like giving some new website a try.

Brett (05:28):

Just plain and simply this is like a serious investment decision. And so we really needed to build that trust for people, and do it quickly, and in a way that really established ourselves as a unique player. And so the biggest thing someone could think of was, well, what if we put our name on a stadium. And it seemed crazy at the time, but then we did it and we put our name on the Miami Heat stadium, the FTX Arena. It was an amazing deal, the right place at the right time, because we got to also work with Miami Dade County on many of their anti-gun violence initiatives. So it was a really good fit. And short time after that, we did two other big deals. One was with Tom Brady and the other one was with the Major League Baseball.

Brett (06:04):

And for those, first of all, Tom Brady being this universally loved and respected individual for just his incredible talent and drive. And then for Major League Baseball for being this time modern institution. I think it, the signal to people was imagine what it took, what kind of due diligence was required for an institution like Major League Baseball to come trust FTX, crypto exchange no one's ever heard of. And let alone do anything in crypto. That's how I think we were able to sort of catapult ourselves into the US market very quickly was through this somewhat non-traditional way of doing this brand marketing. And since then, it's been amazing. I mean, we went from 10,000 customers at the beginning of 2021 to like 1.2 million customers at the end of 2021. So a huge growth in a very short period of time, on the eve of some of our new product offerings that we're launching. So pretty excited about the growth so far.

Austin (06:56):

What's very interesting for me on this, apart from just the growth of FTX.US in general, is this is against the grain for, I would say, the last 20 years of marketing. Which is that you really want to focus on identifying your core demographic, activating that core demographic, using them as voices and ambassadors. And this is the way that most crypto exchanges, and honestly, most cryptocurrencies have gone about growth as well. They've said let's put a bunch of resources into the very narrow domain things that are working, and then it will be an organic growth kind of coming out of that.

Austin (07:32):

And you normally see something like branding rights for an arena or a major partnership with MLB or some, or any sports team, something along those lines as being something that a company that isn't trying to educate customers, but is just looking for general awareness, goes through. Right? Staples Center, UBS, all the big banks have their names on these places. Not because they're trying to differentiate Bank of America's products versus Chase's products, but because they want general awareness. What was that process like to say, "Okay, we've got a stadium, but no one knows what crypto is still." What's that part two of that strategy?

Brett (08:09):

Yeah. I think we had to rewrite the playbook there. Because we don't yet know what the right demographic is for crypto, but also we don't want to pre-select a demographic. I mean, the whole spirit of crypto is to enable people to have access to investment opportunities, wealth creation, control over your personal finances in ways that have typically been difficult for many parts of the country. And if we just sort of start by saying, okay, well, who is the most obvious demographic to target for this? And let's just run Facebook ads that target them. I think it sort of misses the point. We're here to educate people, as you said, about not just the investment class, but also the promises of the technology itself. The fact that this will represent a new way of building internet based applications, in ways that allow people to share in the upside of those applications. It's going to enable for greater robustness and stability by using decentralized technology.

Brett (09:11):

I think these are all things that it's going to be difficult to teach people over time, but we have to start somewhere. And that starts with a general awareness. And it starts with trust, right? People have to understand that we are a very legitimate company. We are highly regulated, contrary to popular belief. We have, between FTX and FTX.US, we have something like a hundred different regulators. We have 50 different licenses. We need to be able to break through the noise and convey that to people. And that's why we started more on this general awareness. And now we're doing some of the other stuff. Like we're starting now to run some Google ads. We're starting to go for iOS App Store placements and traditional SEO. And we're doing that now that we have the product that we like and we're happy with where it is, although we're always trying to improve it. And we've built that general awareness and trust.

Austin (09:58):

Yeah. So, so you mentioned that you are both in a highly regulated industry and yourselves, highly regulated, by various regulators who look at the industry. FTX has, over the last year, put itself at the forefront of regulation in crypto in the US. You and Chainalysis are right up there together, testifying in front of Congress, and also putting out this FTX policy proposal that came out, was that six months ago or so, as well. What was the decision making process like internally to say, this is something that not only do we want to engage with, but to actually make a decision to be a face of. There are many exchanges that operate in the US. None of them have necessarily taken that as the mantle, as proactively, we are going to put ourself in this position. I'm sure that was both risky, and you saw a lot of opportunity in that process.

Brett (10:50):

Yeah, absolutely. So there's the part that's specific to FTX and the part that's general. Starting with the part that's specific, we would like to be able to offer an array of different products and services in the US. Some of those has to do with spot cryptocurrencies. Regulation in the US for spot cryptocurrencies are not well defined. And that is because of the two market regulators that exist in the US, and the US is one of the few countries in the world that actually has two separate market regulators not one, the SEC and the CFTC, the lines of jurisdiction over digital spot assets are not very well drawn. That's not true for traditional securities like Apple and Tesla and US government bonds, which is regulated by the SEC. And it's not true for the CFTC, which regulates commodity futures, and other sort of broad based index futures, and sometimes security futures as well in conjunction with the SEC. But for actual things like Bitcoin to USD spot markets, it's not clear.

Brett (11:47):

And what we want to do is help shape that regulation, such that we can safely innovate and offer products that also protect consumers. And in terms of how we influence regulation, do so in a way that doesn't push all of the intellectual property and all that innovation overseas. I mean, you guys know this too, that so much of the intellectual property, the founders, the CEOs, the developers come from the United States. And then ultimately move themselves to somewhere outside the United States because they don't feel like they have a safe place to be able to build their business and to be an entrepreneur. We really want to help that. So I think that kind of actually combines both sort of specific and general of what I wanted to say.

Brett (12:26):

Which is that on the specific front, we want to be able to offer all the spot tokens that we think are appropriate. We want to be able to list CFTC regulated margin derivative products in the US for US customers. We want to maybe eventually do more innovative, ambitious things like create tokenized stocks or tokenized treasuries. But then, at the same time, we want to make sure the playing field is great for all crypto participants in the US. And they really want to stay here and work here and build here, because we just think that's going to be good for the country. Now what's been interesting for us in this journey of being this sort of public face of regulation and policy, is that what we found is the most effective thing that we can do as a company is just showing up in person. You'd be surprised how many companies, and this is not just crypto, send these large teams of lobbyists and lawyers to Washington hoping to sort of engage in policy discussions.

Brett (13:17):

And I'm not in the room for those, but I imagine some of those come off as disingenuous. Or there are cases where you can't really get in the weeds of a conversation because the right stakeholders aren't in the room. The fact that Sam and Zach and Ryan and Mark and I just sort of like go to Washington, and email the Fed or the Treasury or members of the House or the Senate or the executive branch, and just show up and talk to them. And say like, "We don't have an agenda. We're just here to answer questions. We know we're in the education phase." Same thing with regulators. We talk with the CFTC, SEC, FINRA. It is just great to show up in person and show that we are open honest people who really want to engage in dialogue. It's been so useful for everyone involved. And I think that's really helped shift the narrative of crypto being like anti-regulatory or anti-government in some way. And that's been really helpful.

Austin (14:09):

Do you see this as something that you're primarily, obviously there's a lot of upside for FTX in getting greater clarity around regulations and having a legal framework that it can operate in with more definition around it. At the same time you look across at other industries, the credit card industry, the banking industry, agriculture, et cetera. They have very well defined and powerful industry groups at this point. And you often see like a lot of the big banks in the US moving in lockstep with one another. How closely does FTX work with other large exchanges in the United States or other people in the crypto space? And if that's not really as mature as it is in other industries, why do you think that is right now?

Brett (14:54):

Yeah. Great question. We do to some extent. We do more now than we did before. It's almost certainly not enough. And partly it's because this industry is very new, and it's not super well defined exactly what we need, and there's differing opinions of how we get there. I also think that crypto has done itself a bit of a disservice in the past by being somewhat hostile to regulatory involvement. And you see this a lot on Twitter. And I think it's not super productive. We want to be able to create a market environment that allows for all participants to participate in a way that it safeguards them. And to just completely throw away a hundred years of regulatory development to think that we can just sort of do the whole thing better from scratch, with no protections, is almost certainly not right.

Brett (15:44):

At the same time, I'm very sympathetic to the idea that you could, through the act of regulatory requirements, end up excluding individuals for not good reasons. For example, there's a lot of people who criticize KYC by saying there might be disenfranchised people who don't have good drivers licenses. And so therefore they can't KYC with an exchange. And so you're actually excluding a certain segment of the population by doing so. And I think we are receptive to those arguments. And so we would like to be able to push the envelope forward with crypto and allow the greatest number of people to participate without prejudice. But we have to engage collaboratively and cooperatively with regulators to do so.

Brett (16:27):

And so we are now starting to talk a lot more with the other competitors in the space about what are our shared goals for regulation? What do we think about who should be regulating us? What do we think policies would look like in the areas of spot tokens, of stable coins, of listing procedures, of licensing for exchanges. And I think that we're making progress there. Because the thing we've heard all the time in Washington is, okay this proposal of yours sounds great, but it can't be just the FTX proposal. Washington's not in the business of picking winners and losers in industry. We want to see you guys come together as an industry. And so that's, it's going to be critical for us going forward. And it's not just the exchanges. I mean, it's the protocol tokens, it's the stable coin providers, the infrastructure providers, miners. Sort of all across the board, I think we just need to come together more as an industry.

Austin (17:19):

Yeah. It's one of those things where you look at the Web 2.0 industry, and I think it's probably pretty obvious that they say at this point that their unwillingness to come together around issues of establishing common frameworks for content moderation, common frameworks for when a user should be banned from a platform, those sorts of things have really opened them up to a lot of attacks from Washington about... You see these hearings in the Senate all the time when they're talking one company, why your policy different from another company? And then there's a void there, where the regulators and Congress aren't really sure how to write a law, but they have a lot of ideas about what could be changed. Given the decentralized nature of crypto, there's one level where it's like, there are these centralized companies like FTX, like Coinbase, like Kraken, like Chainalysis that are on one side of things.

Austin (18:10):

But then there's organizations like Solana Labs or the Solana Foundation, which have a very different role and place in the market. And don't always necessarily have the same incentive alignment in those sort of areas. One of the beautiful things about FTX is, or any exchange, is that it's a entity which makes money on the aggregate state of cryptocurrency. And so the specific whims of one network is not necessarily of huge concern to it. For example, the shutting out of a certain type of user, based on a KYC requirement, is much less of a burden in the United States or for something like an exchange, then it might be for... Like if you have to KYC every user, that's not a problem. If Audius has to KYC every user, that actually puts them at a significant disadvantage compared to a competitor like a Spotify. How do you think about both the role of the policy work FTX does within the exchange industry and the wider crypto industry in general?

Brett (19:07):

It's interesting to think about where we need to head as an industry together. I think a lot about the role of CeFi and DeFi and how they interplay. I think there's a lot of people online who sort of draw this very bright line between them. And it's like, if you're on the left side, you're a centralized player and you are completely antithetical to the whole point of crypto. And if you're on the right side, you're part of the golden club and true decentralization means there can never be anyone who touches anything involving like regulation or identification or safeguards and things like this. And I think, again, these are the kinds of counterproductive discussions I was talking about earlier. I think that we need each other to grow.

Brett (19:47):

The more DeFi grows, the more equitable access to financial markets will continue to grow around the world. And the more the need for centralized regulated players, like FTX, who kind of bridge the gap between the traditional financial system and DeFi, will play that role as well. As far as regulation goes, you're right. It's not clear where you go with a project like Audius. And you like it to be such that it's the same as Spotify, but then you get into these tricky issues of like, well, what is the Audius token? And how does that interplay with who can actually buy and sell that token and interact with the system in some way? You have more ambitious projects, on the topic of music, like can we create tokens for songs where people can receive token distributions for the number of plays that occur? And does that make it sort of like a dividend and a securities offering? Well, I don't know. And this sort of is very difficult to understand.

Brett (20:39):

But there are two strategies when it comes to regulation for a company like Audius. And so one strategy is to sort of move as fast as possible and try to always stay like a step ahead of regulation. And eventually, maybe the feeling and the ecosystem around DeFi regulation catches up to an Audius and everything is okay. It allows us to do what it does, and it was worth the risk because they got to innovate very quickly and become a profitable business. But that comes with its risks, that maybe regulation catches up to it in a bad way, and says, "You shouldn't have been doing this all along. And please give me all your profits back from the last couple years."

Brett (21:16):

There's another way, which is sort to walk in the front door, and be sort of transparent and obvious about what you're trying to do, and to try to operate within the regulatory envelope of some jurisdiction, and try to get this properly vetted and allowed to occur. And that has the benefit of sort of establishing clear rules and allowing for other companies to tread similar paths. On the other hand that could slow you down. And if you have one of these competitors, that's going to run as fast as possible, you might lose to them, even though you're doing the right thing.

Brett (21:46):

So there's not really a right answer here. And this is sort of a tricky space for DeFi. I will say in either case, I do think it's worth it for these DeFi projects for Solana Labs, for the founders and companies involved, and this kind of entrepreneurship, people in the United States should really start going to Washington more and just explaining what this stuff is. I mean, people kind of get what Bitcoin is, but people do not understand what Solana is and why it's different. And that should change. People should understand what Solana is, what all these other layer 1s are, these layer 2s are. What these different token projects are. Why they're interesting. Why they're useful. Why they represent a departure from Web 2.0. Why that's important. Why that needs to be fostered and why that needs to be grown. I think that would be something that we could continue to work together on, as industry participants, is the education piece.

Austin (22:33):

So changing topics a little, we've seen FTX.US try and enter a few different, I would say different markets than are necessarily like the original core. So one of those was the NFT marketplace. I think there's been it probably mixed success in that. One of the things that I found fascinating is how different NFT culture is from crypto culture. Obviously it's a subset, but a lot of the applications and the platforms that have been very strong from a crypto trading perspective, in terms of fungible digital assets have not had much success in the non fungible space. And the non fungible marketplaces have either had no interest or no success in moving into the fungible asset space. Talk a little bit about some of the learnings that you guys had in that process and how that's informing the decisions of where FTX expands into in the future.

Brett (23:25):

Yeah, it's fascinating. So I personally worked on the NFT marketplace a lot for us. And when we entered this space, we thought there's not enough competition for Solana NFT marketplaces. There was really only one at the time. And we thought, this is definitely an area that's ripe for disruption. We were not wrong. But at the same time we did it, six other players did it. And they were able to move a lot faster for a number of reasons. First of all, they were able to really focus all of their energy on the user experience, which was super important. The second is that they were just sort of deeply in that culture and they were able to create, continue creating that NFT culture, in a way that like you have to spend 150% of your time on that to be able to actually really keep up with it and get what's going on.

Brett (24:11):

And the third was the decentralized nature of it. Whereas most of the trading in fungible assets is occurring on centralized exchanges in a custodial fashion. Just about all the NFTs are trading in a non-custodial fashion. Hook up MetaMask to OpenSea, you list your asset, you're done. And so I think we were disadvantaged by trying to, although I don't regret it at all, walk the sort of regulatory path of requiring people to custodian their NFTs with FTX in order to list them. And then we do proper KYC, and we make sure you're not like transferring an NFT from North Korea or something. So this is what we chose to do. And I think we ultimately lost out a little bit on that, but we're still very happy to have done it for a number of reasons.

Brett (24:59):

So first is that NFTs have been an important part of our various partnerships, like getting to do this really cool NFT drop with Coachella or for Formula 1. And having that as a platform has been very beneficial to us, even if we're not competing on Bored Ape Yacht Club. The second is that we have this longer term vision that majority of NFTs will not be in these like art or PFP collections. It will be in things like games. And to do that, you have to really build a platform and your average Tier One AAA game studio is not going to partner with a non-custodial solution. If they think it's going to hurt their regulatory standing at all. And so we're kind of building things out from the B2B platform side. With a hope that's actually going to be where this technology actually takes us. And so it's been definitely a learning experience for us and humbling in a lot of ways.

Austin (25:53):

So let's kind of talk about that a little bit. In a future where US regulations relax, and that there's a framework that allows for a little bit more flexibility and a little more certainty throughout it. We've seen over the last few months a rise in cross-chain DEX swaps. Whether that's enabled through something like Wormhole or whether it's these organizations that are sort of rolling a bit of their own solution. How do you see the competitive world, between what a centralized exchange offers and what a decentralized exchange, can offer evolving over time? I think in the early days of decentralized exchanges, a lot of people were like, oh, these are totally going to kill centralized exchanges. And we obviously have not seen that to be the case. But for a long time, the moat was described as being like, well, I can't swap my SOL into Eth on anything other than a centralized exchange, but we're seeing that change. So I'm sure this is a strategy that you've mapped out internally. What does that look like for you guys?

Brett (26:50):

I think you probably give us a little bit too much credit. I'm not sure we've like completely mapped out the strategy. I mean, between FTX, FTX.US, FTX Ventures, I think we have various either monetary or intellectual capital investments in a bunch of these spaces. Like FTX Ventures invests in a lot of DeFi and different bridging solutions. FTX itself is benefits and more people trading on our centralized exchange. And so we want to kind of to be able to benefit from the growth of both. I mean, again, we sort of see that, no matter what, FTX is going to be one of the major places to link up with traditional financial system. Like if you want to get Mexican Peso onto a blockchain, you're going to have to do this going through someone who can actually hook up to a Mexican bank.

Brett (27:37):

It's just going to be required.

Austin (27:39):


Brett (27:39):

But in terms of like you want to swap Eth for SOL then, yeah, I think there's going to be a couple different ways to do that. And I can sort of see the benefits and drawbacks of each one. One thing I think is sort of obvious, and I think people understand it but they don't talk about it enough, is the fact that DeFi still has a long way to go. Primarily because the entirety of the code is sort of laid bare for all to see at all times. Usually if you have a financial application and it has a bug, you're sort of protected by the network. And by network, I don't mean network of people who use it, I mean like the actual switches and routers that prevent certain kinds of traffic from getting in. And you have your moat around your application. And if there's a bug, you patch it and you're done.

Brett (28:23):

With DeFi, if there's the slightest bug, your whole smart contract gets exploited, and the funds are drained, and you're sort of back at square one. And again, I think that the discourse around Defi or CeFi as being kind of incompatible, has probably done DeFi a disservice in terms of its growth. Where probably some slight hybrid approach of building out smart contracts, iterating on them for like a long time, but doing so in a way that's sort of safe and secure, and doesn't mean that the first side of a bug means you are going to be drained, until it gets to the point where it's highly stable. And then you start to relax some of the centralized aspects. You follow the goal of making it completely decentralized, completely open, no intermediaries, and kind of get there over time. But I think the people who do that now would be criticized as being like too centralized. Everyone thinks everyone else is too centralized.

Brett (29:17):

So I think we have a lot that we can do together is what I'm trying to say. Whether it's us helping with KYC, or it's providing sort of the regulated entry points into DeFi. Whether it's helping create sort of these hybrid solutions between DeFi and CeFi, that will, I think, help DeFi grow over time. So we're trying to foster that innovation in a bunch of different ways.

Austin (29:38):

I would also say that if we are in a place where CeFi versus DeFi is a zero sum game, we've all astronomically succeeded as an industry.

Brett (29:47):


Austin (29:48):

That's still probably a five to 10 year away, before there are no new users left to onboard and instead a battle for who actually has those users' attention.

Brett (29:57):

Even CeFi versus CeFi is not a zero sum game.

Austin (30:00):


Brett (30:00):

At all.

Austin (30:01):

That's true.

Brett (30:02):

There's a story that when ICE listed certain versions of energy contracts, that were being traded on the CME, the day they did that, CME volume went through the roof and the largest trading volume times per day were the times where the two overlapped with each other. And this is obviously because arbitrageurs came into the space and were interested and started trading the two off of each other. I think we cannot just have one centralized exchange. We need a bunch. And we will grow the pie together. And so, yeah, we're very, very far away from a zero sum nature of crypto, which is why I like crypto so much.

Austin (30:39):

So actually to that extent, I think there's a built in assumption there, which is that we need multiple centralized exchanges. And that is a, I think, a very valid assumption, but in some ways that comes from a world that predates computerized global interoperable connectivity. And that the idea that arbitrage opportunities should exist between comparable, centralized financial exchanges feels a little outdated, honestly. That the thesis of Solana as one global state machine to settle all of the world's trades and information, that's a very compelling, decentralized narrative story, but you can also see the exact same thing where you would have interoperable order books between something like FTX and Coinbase. Is that anything that, are there conversations anywhere about building some of those interconnectivities that you see in the traditional equities world still, within like centralized crypto exchanges? Because there is no NYSE for centralized crypto exchanges yet.

Brett (31:42):

I have actually the complete opposite take to what you're describing here, which is US equity markets have to abide by this rule called reg, or regulation, NMS, or National Market System, where you have to fill a customer quote at the best price seen on any exchange, any one of the lit exchanges, of which they're like 15 now. So that means like, let's say you want to go send an order to NASDAQ and NASDAQ thinks that they are one penny behind the price on BATS. Well then NYSE either has to reject your order or route your order to bats and get filled. There's a big problem with this. Actually, there are multiple big problems with this, in my opinion.

Brett (32:24):

One is that light is not infinitely fast. And so what is the kind of prevailing quote is going to depend on where you are. Because of those 15 exchanges, some of them are in Secaucus, New Jersey. Some of them are in Carteret, New Jersey. Some of them are in Mahwah, New Jersey. Some of them are in Chicago, Illinois. And so there's no one place where you can have the absolute truth of what the best quote is. And even above that, the second big problem here is you have to pay a lot of money just to get the market data required to make that determination. And then third, if you're going to do that, some HFT with slightly faster hardware and market data is going to detect that routing and probably beat you there. And they're going to profit off that opportunity.

Brett (33:10):

While I think that NMS was well intentioned at the time that it was created, which was somewhat before the real advent of electronic markets, now that we have electronic markets, I actually think that NMS has added a lot of complication, and fixed cost, and deadweight loss to the system of equities, and made things like very difficult to sort of spin up as a new exchange. Compared to, in crypto where there was never like an NMS routing between exchanges, but there doesn't really need to be because there's someone whose job it is to arbitrage between the exchanges and keep them in line. And they're paid naturally for the job of doing that. And so the market forces keep the exchanges in line and that works extremely well, and makes crypto very low cost and low barrier to entry for new participants.

Brett (33:56):

You don't have to hook up to every single exchange. You don't need to send your market data to some central thing, which has to display the quotes everywhere. And you can't accept orders, if it doesn't look like it's on the top of the book of that far away aggregator. It means that exchanges can exist sort of more globally instead of all being centralized mostly in New Jersey or something like that.

Austin (34:14):


Brett (34:14):

So there's been so many benefits to that. And then the other thing I want to say about this is, look, there's never going to be just one of anything. The only real way to kind of get rid of an arbitrage opportunity is to only have literally one order book. And even on Solana, you have different order books for SOL, USDC. And some of them might be kind of built off of similar primitives, but there's still going to end up being kind of arbitrage things between this swapping tool and this DEX order book and this centralized exchange, it's always going to exist.

And so I think we should just thank the arbitrageurs for their service and just be happy with the fact that we can have multiple marketplaces. I think that's the ultimately right thing for competition.

Austin (35:00):

Do you think crypto needs market hours?

Brett (35:02):


Austin (35:03):

We'll never get them, but I'm curious if you think it would help or hurt the industry?

Brett (35:06):

No, I don't. One thing I've kicked around in my head at some points is, something like whether one time per day, there should be an auction. Basically like a five second freeze or something, where people can submit bids and offers. And there's like a single kind of auction type clearing event that establishes an official mark for the day in that crypto. And there's a lot of different market structure theory between whether an auction type mechanism or a continuous trading mechanism is ultimately better and fair for our participants. And there's just lots of research in both directions. But that could be interesting to me to have some sort of discontinuous event, maybe once per day. It would help for things like ETFs that want to sort of mark their basket to sort of a day over day performance and they need sort of an official closing mark, and it would be nice to have sort of a single auction event for that. But I don't feel strongly about that at all. And in general, I think that 24/7 markets are the way that every other market has to go.

Austin (36:05):

Yeah. I agree with you on that. So I put out a call on Twitter that was like, oh, what are people most interested in learning about from FTX, apart from a rundown of all of your cats, which we don't have time for today. One of the ones is what is the process of evaluating the listing of a token looks like. Obviously replies are full of people shilling their specific coin. But there are also some real genuine questions in there about like, you see Coinbase having taken a very, very sharp turn in what the criteria they use for listing a token is over the course of the last 12 months. How do you and FTX.US think about that?

Brett (36:40):

So we have taken the position, as a company, that we would like to be very conservative on token listings in the US. And that is because a lot of the issues we talked about earlier in the podcast about the regulatory uncertainty around what US based crypto companies are allowed and not allowed to list. And I think there might become a point at which listing criteria becomes clearly well defined by regulators, at which point we will basically take as much risk as it allowed to us. But for now we think about what is our comparative advantage as a company? Is it to list the long tail of 500 tokens? Or is it some of these other things that we're doing that maybe some of our competitors are not going to be able to do in the short term? So the biggest one for us is listing Bitcoin and Ether futures for US customers.

Brett (37:32):

And we think that has such a greater potential to improve the health of the market. Give people opportunities for hedging risk, and being able to get capital efficient exposure, and to be able to trade the spot versus the future and capture the basis. This is much more important to us than listing that 200th asset on CoinMarketCap. And we're concerned that some of our actions in the latter might jeopardize our success in the former.

Austin (38:00):


Brett (38:00):

So we're just sort of, we have different risk profiles in the different aspects of what we want to do. And that's part of the decision there as well. We're also moving very much into some non crypto things. Like we're a student launching a stocks trading platform that's going to be vanilla US stocks through a broker dealer, all trading through like an exchange that's not ours. So we have just sort of different ways of thinking about diversifying our product set. And for now, I think as long as the regulatory environment remains this unclear, we're going to stay on the conservative side of that.

Austin (38:33):

One kind of last question before we wrap up here. With the amount of market volatility we have seen in the last few weeks here, the sort of precipitous drop in the first half of May, what are you excited for and hopeful for about the future of this industry in the United States?

Brett (38:52):

Yeah, it's natural for these times of great volatility and certain assets dropping a lot in value, for people to sort of turn inward and maybe lose sight of the broader mission. And we have to remember that we are building a generational opportunity for technology and for wealth creation. And many have already benefited from this, but we have much more to go on all the promises that we have. I mean, just think about how one of the main things people have talked about for crypto is creating this kind of global payments network for people to sort of cheaply or freely send money for remittances and things like this. I think we have yet to really fulfill that promise. So regardless of where asset prices go, we have to, as everyone says, keep building.

Brett (39:39):

And we're just excited for people to continue to push forward and continue to sort of responsibly innovate, and hopefully show people in the United States, especially policy makers, that even though assets can be volatile... I mean, equities have lost more money in value in the last month than crypto has, and people sort of forget that sometimes. But in spite of downward cycles in markets, there's a real intrinsic value to what we're all doing here. It's not just pure speculation. And we need to do everything we can to keep that going, and keep building, and keep investing.

Austin (40:13):

Well, Brett, thank you so much for joining us today on the Solana podcast.

Brett (40:17):

Yeah. Thanks for having me on.

Jun 07, 2022
Crypto & National Security Ep #66

Welcome to a special episode of the Solana Podcast focusing on Crypto & National Security featuring Ari Redbord (Head of Legal and Government Affairs, TRM Labs) and Sigal Mandelker (former Under Secretary of the Treasury for Terrorism and Financial Intelligence). Amira Valliani (Policy Lead, Solana Foundation) guest hosts.

00:09 -  Intros
02:11 - Origin Story
05:53 - Correspondent Banks
07:37 - Why crypto resonates personally
09:54 - Use cases of Crypto in humanitarian applications
12:13 - Looking at the opportunity vs the risk
16:06 - Typical Day at Treasury
17:14 - What it takes to stop bad actors in Crypto
24:53 - BitFinex Hack and Large seizures
29:05 - Compliance and self-policing
31:13 - Advice to other people in regulation


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Amira (00:09):

Hello and welcome to the Solana podcast. My name is Amira Valliani and I run public policy at the Solana Foundation. Today we're talking about an issue that's really been at the forefront of a lot of people's minds since war broke out in Ukraine earlier this year. And that's the topic of crypto and national security. We've brought two of the world's foremost experts to talk about how crypto links with foreign policy and the movement of money all over the world, and they are Sigal Mandelker and Ari Redbord.

Sigal Mandelker is a general partner at Ribbit Capital where she deals with FinTech and crypto. But before this, she was Deputy Treasury Secretary and Under Secretary of Treasury for Terrorism and Financial Intelligence. She's joined by Ari Redbord who's the head of legal and government affairs at TRM Labs, the blockchain intelligence company. Before joining TRM, Ari was Sigal's senior advisor when she was the Under Secretary of Treasury and worked on a range of issues, including sanctions, anti-money laundering and a bunch of other scary and really important issues. Sigal and Ari, thank you so much for being here. We're excited to have you.

Ari (01:15):

Thank you so much for having us. I will say just to get things started, I'm a huge fan of sort of what you guys do at Solana and the team that's building with you and a huge fan of Sigal and just an amazing honor to be on a conversation like this with someone that I worked for when she was the under secretary and just really consider a close friend and colleague in the space now. So it's particularly cool. So thank you for having us.

Sigal (01:40):

Oh, it all goes back at both of you. I loved working with Ari then and I love being in this space with him now. It's pretty exciting.

Amira  (01:48):

I'm here for all of it. I think it's going to be a very exciting few minutes. I think the backgrounds are really interesting and you all know that this circle of people who come from government into crypto is growing, but it's small. And so very specific journeys I think got all of us into this space. I'm curious what got each of you interested in crypto? Why are you passionate about it? Ari, I don't know if you want to kick us off here. I know Sigal has a particular story.

Ari (02:13):

Sure. Yeah. No, happy to. Everyone has their sort of crypto origin story. And so many times you hear about "I bought Bitcoin 15 years ago." And for me it was really a lot different. We started to see it 2015 or so in a lot of our sort of large money laundering investigations that actually involve some of the sort of nation state actors like North Korea that we'll be digging into today. I think we sort of realized even then the power and promise of this technology, but also that if it was going to grow and flourish and they were going to build this new economy, that we needed to stop illicit actors from doing it. And that was sort of as a prosecutor and then honestly getting an opportunity to work with Sigal and the team at Treasury on some policy related issues in the space, I think really, really also got me interested in.

At TRM labs, it's sort of like we sit in this sort of intersection, because I think we obviously believe very firmly in the potential and the growth of this new crypto economy, but at the same time, sort of understand that trust layer, anti-money laundering national security is critical infrastructure for it. And that intersection that we're going to be talking about today is really sort of where I see the most work that can be done.

Amira (03:19):

Yeah. I think that's incredibly important to remember that trust is really important to make sure that the space thrives. Sigal, I'm curious about your crypto origin story. Tell us how you got into it and why you're so excited about it.

Sigal (03:31):

When I was at Treasury, my job was very much a global job, so I would travel all over the world. In those travels, I would often meet with senior government officials from heads of state on down, central bankers, CEOs of banks, et cetera. And along the way, it became increasingly clear to me for a number of different reasons that our banks, US banks had massively de-risked all over the world. It became clear to me because in so many different countries, particularly in the developing world, in emerging markets, in so many different countries these senior officials and CEOs of banks would ask me if I could help them get access to US correspondent banking. We really studied to look at it and study it. And the trend is clear. Like if you start looking from 2012 to today, just as one example, the number of US correspondent, global correspondent relationships is very, very much on the decline.

And so when I left Treasury, this became like an issue that I was very passionate about. How do we get great financial infrastructure and companies out of the US and elsewhere to be able to provide a variety of financial services in the developing world, in emerging markets, where in my opinion, in many respects, we had left them high and dry. And I came to the conclusion personally, that the only way we were going to do that was through disruptive financial technologies. And so I decided to find a place where I could pursue that passion. Along the way, I met our founder, Micky Malka, who has founded Ribbit along with Nick Shalek and some others about 10 years ago. I very quickly understood that really the mission of Ribbit is to change the world of finance and to do so exactly in this way through disruptive financial technologies that we're going to open up access to many, many more people in a much more efficient way all over the world.

And so a week later, Micky called me and asked if I was open to having a conversation about joining Ribbit. It was definitely a road less traveled for a former undersecretary, but it was a super exciting path to go down.

Amira  (05:36):

I want to stay back on the beat that you mentioned about the drop of US correspondent banking all over the world. It would be helpful if you describe what exactly does that mean? What is a correspondent bank and why were you concerned about that as an undersecretary of Treasury? Why is that important to you?

Sigal (05:54):

For many reasons. First of all, correspondent banking, it basically allows banks all over the world in part to get access to US dollar accounts among other things. And when you don't have that correspondent banking relationship, when you're being de-risked, there's just less access to the US financial infrastructure in many different ways, which means a lot of things. One of the things that it means is that if you think about our various sort of tools of financial leverage, we're seeing that play out right now in Russia, right? Where sanctions has become a major tool of national security. But if you're issuing a sanction in a country or a region that has very little touch points with the US financial infrastructure, then that economic leverage no longer actually really works, or it's less likely to work. It's more complicated than that.

Also, the US traditionally has been the exporter rate of democracy and American values. We have always prided ourselves in innovation and being like a center for ingenuity. And again, when you don't have US capital or those kinds of relationships all over the world, I think that's not only really to the detriment of the US, but also to the detriment of people all over the world. And then they're just going to go to alternatives. And that's definitely happening as well.

Amira  (07:14):

One of the things that we've chatted about before is, it's not just a whole for US national security, but there's a bunch of people out there who when US banks aren't abroad, they're still looking for financial services. One of the interesting things about crypto is it offers that.

Amira (07:29):

Sigal, I know you have a really personal story of why crypto and access to financial services are important to you. Now I was wondering if you could tell us a bit about that and why this industry resonates personally.

Sigal (07:39):

Yeah, so it's really in part because my parents are both Holocaust survivors. During the Holocaust, they were in hiding in a part of Poland that is now Ukraine. They were kids. So they were separate, but they happened to be relatively close to Lviv. And the only way at the time that my dad, for example, could have ate, had access to any food, was my grandfather would go out in the middle of the night and he would steal potatoes. Once he stole a pig ear and brought it to my dad and my dad said "It's not kosher dad, I can't eat this." And my grandpa said, "No, it's the only way for you to get nourishment." So when I think about, I imagine what would've happened back then if this technology existed and they had access to a phone and they had relatives far away who could actually send them some value that they could use to barter for food, something like that was just totally impossible back then. You couldn't get anything from your family members who were in another country.

Actually when I was at Treasury, there was somebody who had brought this idea to me of being able to use crypto to provide humanitarian aid, for example, to refugees in Syria. And I thought it was a really fascinating concept. And of course, it's so prescient today because the crypto community, including very much the Solana community, has really stepped up and used crypto working with the Ukrainian government to do exactly what we couldn't do in the forties '40s, which is to provide aid to the government in their fight for freedom, to help people get access to food, medical supplies, and elsewhere. And for many reasons, we could, I know, get into. I don't think banking is really necessarily set up to provide that kind of access in that way. It's too difficult. It's too complicated. Our banks don't operate in those parts of the world often where people really need that assistance. But crypto is global. It's everywhere where you can get access to it. In many other respects, it's just like a really groundbreaking innovation.

Amira (09:31):

It's kind of amazing, I mean, how much history repeats itself and how much access to these tools they were needed 80 years ago, they're needed today. Ari, I remember you telling me an example of how the US government I think, maybe it wasn't, was able to get aid into Venezuela directly using crypto. I'd love it if you could tell us a little bit more about that example.

Ari (09:51):

I think that was Sigal's story so I'm going to give her that one.

Sigal (09:56):

Okay. Well, this actually happened after I left Treasury, but I think it's also incredible. So when we had very heavy sanctions on Venezuela because of Maduro and what he was doing in that country, when we had the sanctions program, I made sure, or at least when I oversaw it, I made sure that in the Venezuela context we had the most forward leaning general license for humanitarian aid in particular that we had ever had before. I basically told our team like, "Everything that's ever been on the cutting room floor, we need to put it in this program because we need to help people who were literally starving to get access to aid." The other challenge was that it was very, very difficult for the US government to get anything resembling humanitarian aid into the country. I mean, literally, there were shiploads of stuff that the US government had sent and Maduro wouldn't allow it in or accept it.

I will say that even though we had these very forward leaning general licenses, NGOs would come to us, to me and to Ari, I had a call that Ari will remember at the state department where these NGOs would say, "Look, we know you've got this general license, but the banks were all de-risking us. They won't allow us to continue." And I said at the time, "Well, tell them to call me. I mean, this is why we had that such a forward leaning general license>" but banks are just very risk averse in that way.

And so fast forward, actually after I left Treasury, what was the one way that the state department working with Treasury and I think with Airtm and maybe with Circle, they were able to get USDC to help something like 60,000 or 80,000 doctors and nurses who are fighting on the front lines of COVID in Venezuela. Again, it's just like Ukraine. It's another really amazing use case where our banks weren't able necessarily, maybe some did, but many weren't able to get humanitarian aid in. But boom, instantly you could send it in and you could account for it because it's transparent, so you can audit it. You can make sure that if it lands in the wrong hands, that they can't use it. So it's a really incredible tool to allow access to, again, just like Solana is doing to allow access to a very fast payment system or a transfer of value for humanitarian purposes while also ensuring, helping to ensure at least, that it's used for the right reasons.

Ari (12:14):

I think what's so interesting is there's this narrative that crypto with these sort of qualities, decentralized permission list, cross border value transfer at the speed of the internet, somehow it's only used by illicit actors. But the fact is those are the qualities that allow it to sort of move outside of traditional financial systems to provide aid to people that would otherwise not have access to it. And I think this Ukraine moment in this really horrific situation is this incredible example of how communities, decentralized communities have developed in order to support a resistance movement in a government. I mean, Zelensky talks about Twitter being a tool of the resistance or a tool of Ukraine in this moment. Well, what you see happening on Twitter is communities developing to send cryptocurrency to support movements there.

Admittedly, I think Sigal and I are often talking about sort of the financial crime and the money laundering risks and the things in sort of that space, but you do have to step back and say like, "We have to stop bad actors from using it because it's so good and there's so much power and promise of it to do good." I do think we're having sort of a watershed moment in Ukraine where you're having this sort of global event where we're seeing hundreds of millions of dollars ultimately will flow to Ukraine in cryptocurrency and really arguably sort of the first maybe use case at scale of what the power of this technology can do. I think it's an exciting moment. Obviously, it's a moment you never wanted to see, but I think this will be an example that will be able to use as to why this technology has so much promise.

Sigal (13:47):

Yeah. And I would say just to add to that really quickly, what I like to talk about when I'm talking to policy makers and regulators, et cetera, is that you have to stop looking at everything through the lens of risk. Risk is important. We want to mitigate risk, but really what you need to do is start looking at the opportunity and how this technology will enable so much opportunity. Because what we have today are a bunch of developers, innovators, builders, dreamers, right? Who are literally thinking about how to build out a more efficient financial infrastructure for the future that many more people ultimately will be able to access and use.

That part of the infrastructure that deals with illicit finance and investor protection, that's being built too. So you can do those things really in parallel and therefore really drive out. In many ways more successfully than what we have in traditional finance, the illicit part of it as what we're seeing is like the vast, vast majority of people in crypto, they're just builders. They want to grow new things whether it's NFTs, games, payments, access, Ukraine, et cetera.

So if you only look at things as a regulator from the perspective of risk, then you're never going to let anything grow. You really have to start talking about how to use this technologies as a great opportunity, including one of the reasons that I came into this space, right? Which is because I thought like this is this great opportunity to build out potentially much better financial infrastructure, which many, many more people will be able to access in the future. And if a portion of that remains in the United States, then the United States will be able to continue to be a center of financial innovation for years to come. If it doesn't, that's a different story.

Amira (15:29):

A lot of folks in the audience have never actually been in your shoes or anywhere close to it. I want to take a second to dig into sort of like that Carrie Mathison type stuff, which is like, let's look behind the shroud and see what it looks like to walk into your desk at Treasury every morning and understand what's coming past your desk from the risk perspective. Let's help figure out why regulators might be so concerned and help listeners understand what it was like to track down bad actors when you were in Treasury. So what did that look like for traditional finance specifically? What would you see? What does the process look like? How do you start your days even?

Sigal (16:06):

I used to start my day every day with an intel briefing. Basically with a briefing, where I would learn about all the potential terrible things, terrible things around the world that were happening and potential terrible things that could happen. So when you're in a job whose title is terrorism and financial intelligence, that's just the way your day is going to start. You're constantly thinking about how to protect not only Americans, but people all over the world from bad actors. So that's how you start. Literally, the framing of your day really starts with hearing about bad stuff that could potentially happen. And then in many respects, you said about your day in part to ensure that that bad stuff doesn't actually come into place. There are all kinds of different ways in which that happens.

Another big part of my job was also to think about how do we reform, how do we provide much more guidance to the private sector which we did really with the FinCEN guidance in 2019 and in lots of different ways through our sanctions programs, through advisories that we issued to help the private sector also work with us to better protect themselves against being abused by bad actors.

Amira (17:15):

What does it actually look like when you're stopping bad actors? So you talk on sort of vagueness, but think about a case where maybe you had to take traditional tools of finance to stop a bad actor and what that process looks like. And then how does that actually contrast when you're thinking about a crypto bad actor? What are the differences in that process?

Ari (17:32):

One thing that we did at Treasury and at DOJ when I was in AUSA is you put together great teams and you reached out to all kinds of different pieces of the inner agency, the executive branch. So when we were prosecuting a case, we would want to ensure that we had a team of the best IRS CI agents and HSI and FBI. It was very similar at Treasury, right? I mean, if you were going to do a sanctions' designation on North Korea for example, you would want to ensure that you had the right policy people in the room from TFFC, and that you'd have the right intelligence from OIA, that you'd have exactly the right subject matter experts from OFAC on sanctions and FinCEN on money laundering and financial crime. And you would put them all together. And I think this is what, why Sigal was frankly so successful, is that you basically would reach out to teams of subject matter experts. And you'd put these teams together and they would inform great policy.

I think one thing that sometimes is missing is that there's this sense that sort of like from the private sector that the government doesn't know what it's doing and this sense from the government that the private sector just has a certain agenda. I really do think at the end of the day, some of the best subject matter experts in the world are in both places. When you have those public-private partnerships, you're going to have much, much more success. So to me, it really is about putting together great teams of subject matter experts. I think we're seeing that today quite frankly. I mentioned North Korea.

For example, you have this hack of the Ronin, Axie infinity blockchain a few weeks ago. And very, very quickly, Treasury essentially identified Lazarus group, a state actor from North Korea as having engaged in that attack. I'm not there anymore. Sigal's not there anymore. But what I imagine happened is they put together teams of experts from those different places who were using blockchain analytics tools to watch the flow of funds in that attack. And then you saw the designation, the sanction of a specific address for the first ever time associated with Lazarus group. And then you saw those funds flow to three other addresses, and immediately you saw those addresses sanctioned. And then you saw those funds flow through mixing services, which are basically exchanges on blockchains that mix funds and send them out, sort of clean the other side. And you saw those funds flow through a mixer called that was ultimately designated sanctioned by OFAC.

So again, while we're not there anymore, when I see these actions, I sort of picture a skiff, a secure facility within Treasury a few steps from where Sigal and I sat. I picture this group of true subject matter experts sitting around and laying out game planning, these types of actions. I think that's as inside baseball as I could do here. But I do think that like the key is great teams, and we were always very lucky to work with great teams.

Sigal (20:22):

Speaking of which, I was also really smart to bring brilliant people to work with me in my front office. And of course, Ari was very much at the center of that. We're in war mode all the time at Treasury, right? You're always dealing with really bad actors.

Ari (20:40):

I picture Sigal running when I think of Sigal, in heels down.

Sigal (20:45):


Ari (20:45):

And I remember actually ended up buying shoes that had sort of sneaker styles soles on the bottom because you were so constantly running up and down the hallways of these marble floors, because that's exactly what it was. You were always in a rush. It was always because the work you were doing was important.

Sigal (21:01):

I lost a lot of shoes that way. One thing I will say when Ari's talking about Lazarus, the first time that I really understood the power of blockchain analytics and blockchain technology was actually when we had sanctioned a big network. I think it was the first time we sanctioned... I actually included wallet addresses. Literally within a day, maybe it was that same day, I don't even remember, Chainalysis had put out a piece that literally identify all the different addresses that were linked to the ones that we had sanctioned so that people could very, very quickly know what to stay away from, like what was really bad news and actually protect themselves from interacting. Ideally, we could freeze funds.

I remember at the time saying to a different senior advisor, Leah Bressack, like, "Yes, this is what we want industry to do. We don't ever see this kind of analysis from the banking industry." And that was really in part because that capability doesn't exist in the same way. I mean, sure, we saw lots of SARS and sophisticated SARS from banking, but for somebody, a Chainalysis or now TRM to go out and very quickly publish reports much more quickly than we may have been able to do that really helped immediately track, detect, and deter illicit activity was really quite extraordinary.

Ari (22:25):

Yeah. I mean, it seems so obvious to probably most of your audience and certainly to us, but the ability to follow the money to watch financial flows in cryptocurrency is extraordinary compared to the traditional financial system. I mean Sigal and I both cut our teeth as prosecutors doing bulk cast smuggling cases and networks of hawalas and shell companies and Russian real estate and London and high value art, right? There's no TRM or Chainalysis for those things. Those are very hard. And in crypto you can follow the funds with great financial crime investigators at US law enforcement and globally can follow the funds using these kinds of tools in ways that were unimaginable before. So yes, you can certainly move money faster in larger amounts in many respects, but you have tremendous visibility. I think a lot of times that's missing still even from the conversations around sort of fraud and financial crime in crypto.

Amira (23:22):

So let me push on both points because I think this is really textured and no one knows more about this than you two, I think. So there are two people that might push back on what you just said. One is, I would say the folks that I think are especially concerned about crypto's usage for money laundering. Those people might say, "Yeah, but you're seeing the rise of privacy focused chains, of blending services, these things just make it impossible to obscure the movement of money. It's only a matter of time before we see these things succeed." And so maybe the technology's working for us now, but you're the first to say that this tech is early. How are we going to be able to catch terrorists and oligarchs once stuff advances?

Ari (24:02):

Yeah. No, it is still a little bit sort of a whack-a-mole. But it always has been in sort of the cat and mouse game between law enforcement and bad actors. I will say that so many of the big crypto investigations over the last few years involve mixing services, they involve privacy coins. Law enforcement ultimately was able to make those investigations using a combination of blockchain analytics like TRM, like Chainalysis, but then just great police work, off chain police works, subpoenas and search warrants, putting together the pieces.

Amira (24:30):

Is there an example that you can go into on that front?

Ari (24:33):

Yeah. I would say the Bitfinex case is a tremendous example actually. So I mean, essentially what you had there was a 2016 hack of an exchange where the money just sat there in a wallet. And then all of a sudden you started to see it move over the course of years across blockchains.

Amira (24:49):

And for background, for folks who aren't familiar, tell us what the broad strokes, the Bitfinex hack.

Ari (24:54):

Sure. Yeah, so really just that until recently, right? It was at the time one of the largest crypto hacks. About $70 million of Bitcoin was stolen from the Bitfinex exchange. A hacker breached these cybersecurity and stole about $70 million in Bitcoin. That money basically sat on an account for a while and then started to move in these individuals. They basically used every office station technique in the book, from mixers to privacy coins, to dark net markets and automating transactions which means you programmatically move funds across blockchains in order to obfuscate. Well, ultimately law enforcement used blockchain analytics tools to trace and track those funds through mixers and dark net markets. And ultimately, to be able to seize what grew to be about $4.2 billion, the largest seizure in US history, ultimately sees those funds.

What's so interesting about crypto, and I think Sigal made this point earlier, is the blockchain is forever. So you don't just have to be ready for whatever the analytics tools and whatever the investigation tools is when you do the hack and when you start to launder funds. You have to worry about what it's going to look like five years down the road, what the technology is going to look like. Because law enforcement was able to follow those funds across years and across blockchains, ultimately actually arresting a couple in New York city a couple of months ago and charging them with laundering the largest seizure in US history. So there are definitely powerful, anonymity enhancing tools out there, but I will say that law enforcement is still making a lot of these cases.

Sigal (26:38):

Yeah, I would just add. I mean, like in this very early days, still nascent technology, the reason that some of the largest seizures of illicit assets in history has come from crypto is not because there's more illicit activity in crypto. For all of the reasons that Ari just mentioned, it's just in many respects easier to trace and ultimately to disrupt than what you have when people move all kinds of assets through shell companies and like all sorts of different parts of the world. That's really important because if you just look at the headlines and you say "Bitfinex, largest money laundering seizure in history," then you may just jump to like, "Oh, of course, because it was crypto." But no, people are just using crypto for bad things. It's really because law enforcement now with blockchain analytic firms, et cetera, and prosecutors have all these amazing tools at their disposal.

Silk Road was another example. I mean there was a seizure last year or the year before of a billion dollars worth of, I think it was Bitcoin, that traced all the way back to maybe the earlier days of Silk Road. And boom! All of a sudden, money moved and they were able to pounce. I mean, frankly, if you're a bad actor, I would say as more of these cases are like coming to a fruition, stay away from crypto. There's a very decent chance you're going to get caught.

There's also this narrative that I think has largely tamped down, but there was a narrative that crypto was going to be used on mass for sanctions evasion in the Russia context. And for a number of different reasons, I just don't think that, and I think Ari would probably agree, that's just not going to be the case. It's not that it couldn't be used for some, but Russia has been very good at money laundering for a very long time through things like real estate and shell companies and all kinds of different mechanisms that we've investigated for many, many years. With crypto, there isn't like the liquidity to move assets at the volume or scale that they would need to do that. Plus, if they try to, boom, the TRMs and Chainalysis and law enforcement kind of actors would likely be able to, at some point, quickly detect it, plus you have all these regulated exchange who have done really a terrific job working with law enforcement to be able to help trace and track and disrupt this activity.

Ari (29:06):

The only thing I would just kind of add to that, I think Sigal makes a great point at the end there in particular around compliance. I think there's this sort of sense that, "The wild west" is what you hear thrown around in terms of sort of the regulatory landscape. And at least on what we're talking about today, sort of that AML national security space, look, crypto businesses that operate in the United States are treated as like any other money service business for purposes of this. When you're looking at sort of the large exchanges where so much of the liquidity is today, they have robust compliance controls in place. They have compliance officers, they have policies and procedures. They use tools like TRM and Chainalysis in order to monitor transactions. This is not the wild west when it comes to stopping sanctions evasion when it comes to stopping bad guys.

Ari (29:51):

I mean, look, I think the reality is, there is certainly illicit activity occurring in crypto, but honestly, illicit activity occurs in any thriving financial system. Bad actors would not want to use it if it wasn't working, that's certainly true of cash. That's certainly true of sort of anything else. And as we see the growth of this economy, we're going to see more illicit activity just by the nature of it. But as an overall percentage, it's going to remain very, very low because I think as Sigal mentioned, it's not a great way to launder funds. It's not a great way for illicit actors to move money because we're watching it all the time. It's not just blockchain analytics and law enforcement. I mean, the coolest thing is when you jump on some of these Discords or on Twitter and you watch these super sleuths and parts of these different communities develop that are in these like open source tools that are following the funds in a hack. There is a self-policing element too, in this community that has never existed before when it comes to sort of following the money, watching financial flows.

Amira  (30:50):

I think the headline from this episode's going to be advice from former Treasury officials, if you're a terrorist financeer, don't use blockchain.

Ari (30:57):

100%. Never use crypto. Yeah.

Amira (30:59):

This has flown by, and I feel like I have a million more things I could talk to you both about. But in our last couple minutes, maybe any advice you have for your peers who are in your shoes today, talking about sort of the growth of this new industry. What would you tell them? What do you wish you could whisper in their ear? Or maybe you've already whispered in their ear.

Sigal (31:14):

Look, what I say is, number one, you have to interact with the technology. You have to meet the entrepreneurs, the developers, the founders, to really understand what's being built. I mean, I had amazing folks around me in the government, but there's nothing to teach me to talk to me about this stuff. But there's nothing like interacting with someone like Anatoly or what have you to really see and envision what the future can look like with this infrastructure. So if you really want to understand what's happening, get out there, interact with the technology if you can. There's all kinds of ethical restrictions that don't allow enough people to be able to do that, but there should be mechanisms to allow you to interact with the technology, number one.

Sigal (31:55):

And number two, be open minded. Learn what's happening, what can the future look like, why do we think ultimately, why are there so many of us who've left government who are investing so much of our time and energy in these technologies because we actually believe that it's quite possible that this is where the future of finance lies. That's number one. Number two, if you're looking at how to regulate it, don't just put your mind around all the old tools that you know that you've come to rely on for the last century, right? This is a fundamentally new technology. It's transparent in a way that we haven't seen before. It's open source. There's so many different attributes of the technology that can help mitigate risk. And so be open to fresh new frameworks that potentially in my opinion not only, let's say on the AML side, can continue to drive illicit activity out, but really, really importantly can bring many more people around the world access to the financial ecosystem.

There's 1.7 billion people, at least as of 2017, who didn't have access to banking. We got to solve that problem. It's not enough to go to inter agency or multilateral meetings all over the world and talk about it in five minute interventions, which is often what happens in these meetings. We got to really find the technology that can help solve those. And then US people, they need to really focus on how can they maintain that leadership. It's not going to be by calling things wild west and it's not going to be by only seeing things through the lens of old boxes and old frameworks that were built up when we were using the telegram. I mean, not the app Telegram, like those telegrams that they used in the '30s. And then also, perhaps not the same frameworks that we were using when we were still using the rotary phone. I mean, this is fundamentally new technology. Let's understand it and regulate it in a way that makes sense in light of the technology and allow it to experiment and grow so that we can build something out really together that can be truly extraordinary.

Ari (34:13):

I think that's so beautifully said. I share a lot of those sentiments. I've been lucky to have really the coolest jobs that you can ever have, so don't take this personally, Sigal. But I have the coolest job that I've ever had now. I think it's because I've just gotten to sort of engage with this incredible community of builders and innovators. And they all understand, I think, uniquely that we're building essentially a new financial system. I think it's so important that regulators sort of also embrace that moment, that this doesn't have to be the same. We don't have to do what we've done before. We can work with the technology. We can work with these builders sort of build something new. I think Solana is an amazing example of this because the focus on speed and the focus on sort of that incredibly strong community of NFT builders and gaming, and really I think all the things that are starting to develop to me are like really the future not just of kind of the technology, but really also compliance and regulation.

The metaverse is not going to be a place that is entirely unregulated. It's going to be regulated, but it needs to be done in a super smart pro innovation kind of way. I'm so hopeful that these communities that I feel like I have been lucky enough to engage with over the last year or so, that regulators and policy makers are also engaging with them. So yeah, no, it's an incredibly exciting time. I don't know, I get up every morning kind of feeling that. I think it's sort of like, how do we inspire regulators and policy makers to kind of feel that same way.

Amira (35:39):

I'm revved up just hearing you about talk about this. Let's go.

Ari (35:41):

Let's go.

Amira (35:41):

All right.

Ari (35:45):

Sigal and Ari, thank you both so, so much for your time. We really appreciate it, and in giving us the inside view of what it's like to be a regulator dealing with these issues. I think I've learned a lot and I think our listeners have too. Thanks a bunch.

Sigal (35:56):

Thank you so much. And thanks for bringing us back together.

Ari (35:59):

Thank you so much. I loved it. Thank you so much.

Sigal (36:02):

Thank you.


May 24, 2022
Chewing Glass - T.J. Littlejohn

Chewing glass is what Solana developers do. Introducing the fifth episode in a new series on the Solana Podcast, Chewing Glass. Chase Barker (Developer Relations Lead at Solana Labs) talks shop with the most interesting builders in the Solana ecosystem. It’s for devs, by devs.

Today's guest is T.J. Littlejohn, the founder of MtnPay, which won 1st Prize in the Payments Track of the recent Riptide Hackathon.


01:30 - Origin Story and Background
05:12 - MntDAO
08:42 - Building with Solana
12:04 - MntPay
13:25 - The APIs
15:43 - Winning at Riptide
17:37 - From starting in Solana to winning 
20:41 - Starting to build in Solana
23:38 - Improving onboarding on Solana
25:26 - The Developer ecosystem
27:07 - Missing Tooling
29:30 - Advice for newcomers



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Chase (00:29):

Hey everybody and welcome to Chewing Glass, the show where we talk to developers building in the Solana Ecosystem. Today we have with us, TJ LittleJohn. He is the founder of mtnPay, winner of the most recent Solana Hackathon Payments Track for Riptide. TJ, how's it going, man?

TJ (00:55):

Dude, it's going good. We're stoked to be here. Thanks for having me on.

Chase (01:00):

Yeah, man. You and I basically met, I feel like a few months ago when you were building some stuff for iOS. Basically some IDL stuff with Anchor and we were talking about potentially getting you some work going on and then next thing you know, a couple of things happen and here we are. But before we dive too much into that, let's hear a little introduction. I know a lot of people probably don't know a ton about you. Where'd you start your journey and how'd you end up here, building in the Solana Ecosystem?

TJ (01:31):

Yeah. Wow. For sure. Abridged version. So, I'm from Florida originally born and raised. Grew up in South Florida, went to school in Tallahassee, Florida State Granoles. Originally I was a big Math guy. Always wanted to do pure Math and trying to see how I could make a career out of that. Finance was an option. And so I was exploring that and someone told me I should learn to code. So, I started learning to code, from that found Hackathons, from that found iOS development. And just down the rabbit hole there. At a hackathon, I ended up securing an internship at Apple, which turned into a job. And then I spent four years there doing research and development and experience prototyping. And then about a year ago I decided I was done with that and I wanted to be in startups. And so I left, joined a startup. Five months after that I found Solana through some friends and I just noticed the point in time we were at. And I was just stoked. And so I quit and I just immediately started building.

Chase (02:36):

Wow. So you don't have a CS degree, you're self-taught programmer and landed an internship at Apple dealing on the development side of things?

TJ (02:44):

No, I do have a CS degree.

Chase (02:46):

Oh, you do?

TJ (02:46):

So, I did both. I did Math and CS, but the CS portion to me was the less interesting one. I loved pure Math. I thought it was so cool. CS was more of the necessity one. And then I thought it was cool when I started doing it. But I think I learned a lot more through just the apps I built outside of class. So, partially self-taught. Because that was the more important part, but my education was super important too.

Chase (03:13):

You have a CS degree, you ended up interning for Apple. You did that for how long was it again?

TJ (03:20):

It was four years.

Chase (03:22):

Four years. And you said research, were you actually doing development while you were there?

TJ (03:26):

Yeah, so we did data collection for new products. So think how face ID was trained on millions of images. We built the software to facilitate those user studies that captured the data to train the models, to enable face ID. So we were brought in super early product.

Chase (03:44):

Oh, so I mean, I guess that's a little more interesting, like somebody who's into Math, you're dealing with lots of data and information, or opposed to just writing a high level code or something like that.

TJ (03:55):

Not exactly. The Math thing, it's like pure Math. I don't do with data and numbers and processing. I just think pure Math is fucking cool. And when I have an itch about something, I just want to dive. And so, that was the Math thing for me. That was just pure. I love it and I think it taught me how to understand stuff, which I think I still, every now and then, I'll see, I have the power to do that, which is really cool. The thing with Apple was that it let me just hack on shit. I had month long projects and software efforts that, because I get bored really quick, which is a blessing and a curse. Historically. Apple just let me work on a project and then a month later I was working on something else.

Chase (04:41):

Yeah, we've had some conversations, like you said, you get bored really quick, it comes through a little bit in your personality. You get super excited about things and bounce around and that's why I like your energy, it's super crazy and incredible. So it's nice to have people so excited about these things and especially considering the fact of some of the more recent, great things that have happened. I want to really start this whole conversation outside of your past on where it all truly, truly began, which from what I understand was really mtnDAO. That's like, lit this whole fire off. I don't know if everybody knows about it and if they do, maybe not how great of a thing that it turned out to be. Maybe about Barrett and Edgar and what they set up and how it was and then how that whole month went for you, that led to this moment.

TJ (05:31):

So yeah, mtnDAO, for people that don't know was a month long hacker house in Salt Lake City, Utah, where people from all over just congregated and we spent a month working on whatever it is you want to work on, in this co-working space called The Shop. And like you said, Edgar and Barrett, they're actually the ones that got me into Solana. They were the first people to introduce me and they just threw this hack house to grow the ecosystem out of the kindness of their own hearts and love for co-working and developing and hacking. And so yeah, a bunch of us came through and we just were chilling in Utah. We'd go snowboarding on the weekends. We'd throw parties on Fridays and bring in people from around the City and just strips, just get after it.

And that was the best part. We'd be working from like 10:00, 11:00 AM was when I would roll in till like 1:00, 2:00 in the morning, most days. And a good crew of people were always there doing that too. Maybe if you wanted to go grab dinner, you could and people would come back. But yeah, it was just a lot of incredibly focused work and a nice little crew formed out of that. And so I've seen a lot of the same mtnDAO folks at the next hacker houses and stuff, and that's always fun. And you just become friends with these people.

Chase (06:51):

Yeah, it seems like there was a lot of building going on. I'm not going to lie, I saw that notion that Edgar and Barrett, or I think it might have been Edgar, correct me if I'm wrong, put together this notion. And I was like, a Dev did this? Just because it was so organized and well put together. And then, those guys pretty much put this thing, from start to finish, got this thing going.

TJ (07:09):

Yeah. There was a lot of people that participated in the setup of it. I know Sam had a big part, Edgar and Barrett had a big part. A lot of those core Salt Lake City people were doing this stuff. But yeah. I mean, they took out the trash. There was, under the tables the first day, taping extension cords. So they, I mean, yeah, they did the stuff.

Chase (07:28):

Yeah. I talked to him in Miami and he was like, yeah, I have a room and an office that's filled with about a hundred monitors. I can't remember what it is at some point, but it looked like there was tons of building going on there. Whenever I see the community, they didn't really ask for permission. And a lot of people would say, why don't you bring a hacker house to our city or this or that? And the reality is, you don't need that. You have an idea, you execute, you make it known. And people are going to come there and you're probably going to likely get some sponsors to help you put it on because this is like an incubator. And obviously mtnPay came out of this, which is incredible. Let's talk a little bit about that. I'm pretty sure, maybe I'm wrong, is that Solana Pay, was it announced before you got to mtnDAO? Or was it announced while you were there?

TJ (08:13):

It was actually the same day. February 1st is when I rolled through.

Chase (08:19):

I was on a phone call with you actually, whenever you showed up, you remember that?

TJ (08:22):


Chase (08:23):

Yeah, you were like, I just got to mtnDAO. Yeah. We were...

TJ (08:27):

I probably called you from the airport. Yeah. I've been like--

Chase (08:29):

You did.

TJ (08:30):

Probably over-committing myself. And I remember we were talking about doing a possible grant or something for that IDL stuff. And I was like, just trying to not lose that. Not doing my end of it. You were like, TJ, if you just write a notion page on your idea, I can move it through. And I was like, ah, I don't know. I'm building. And yeah. So we never got through there, but yeah.

Chase (08:55):

Well, I think it worked out pretty well. So, you got there, Solana Pay's announced, and you were just like, okay, well I'm just going to build something with this.

TJ (09:04):

No, not at all.

Chase (09:06):


TJ (09:07):

There was two funny touch points with Solana Pay that got me rolling. The first one was, I hopped out of mtnDAO to go to the LA hacker house for a two day stint, because I was working with these people. And then as I was about to leave, I remember my friend Greg from Solana News was like, I missed the news cycle on Solana Pay. They must have had insider information, that was a couple of days after it was announced. And I was like, what do you mean, dude? It's been going on. He's like, what? I'm like, yeah. Are you not on Twitter? Do you not see this stuff? So, that was funny.

And so, that had top of mind a little bit, but the idea for mtnPay, it was Friday night, it was the night of the first party we were having, we had parties every Friday or Saturday. And I was grabbing a Red Bull from, they had this self-service checkout kiosk, as I do. I just consume just stupid amounts of Red Bull. And I was buying another one and you pay through square, tap your phone. I don't know. I just had a random idea that it was like, yo, wouldn't it be hilarious if we rebuilt this self checkout experience and then just added the Solana Pay stuff, because we're all Solana people here for a month, this the first week and that would just be funny.

And I told him, I was like, I'm just going to do it. And they're like, that's hilarious. Do it. And then so on Sunday, my boy Scott was in town and we were at the hacker house just trying to think of things to work on for Riptide. And we were skating through all these different ideas on creator tokens or I don't remember all the different things. And it was like, what if we do that Point of Sale thing? That'd be cool. And whatever, we could probably build this in a two day stint. Not a big deal and yeah, that's why we built it.

Chase (11:00):

Yeah, I remember starting to see a couple of days after Solana Pay launched, I started to see all these videos of people filming themselves and you guys paying with Solana Pay. I was like, this is crazy. This just came out. I can't believe, well, I could believe that you had put that together already. And then from there, Solana Pay's really gained a ton of traction, but you were really the first person to come out and be like, look, hey guys, I did it. And it's actually live in this place right now. And it's still there to this day? They keep that?

TJ (11:32):

Yeah. As far as I know. Our customer success could use some work. And so I haven't followed up with them in a couple weeks. But we got them set up on our new version, which was a more self-service thing. So as far as I know, it's still running there. There's even a week where it wasn't working and Barrett was texting me nonstop. Like, bro, you need to get this working again because I need this. And so, that's that classic, build something, people would be upset if it goes away. And so we did that.

Chase (12:01):

Yeah. So you did this in a short amount of time and since then, there was a lot left in the hackathon to go. So, since that first day or that you got that live, I guess you've been doing a ton of work up until the point where you made your final submission, tell us a little bit about mtnPay and what work was involved and what are the features and maybe what's the future of mtnPay.

TJ (12:30):

Yeah, for sure. So the first half the gate was just, it's an iOS Point of Sale app that enables users to use Solana Pay to pay. And then the second thing is a square integration. So, we use the square APIs to tie it into your current Point of Sale System. So the transactions show up in line. Chase bought a Red Bull here for $3 with his MasterCard and then he bought a cookie for a dollar using Solana Pay. And so that was the core thing. And we had built it specifically for The Shop. We got a bunch of inbound of like, how can I set this up? How can I do it? So we had to take a step back and use a couple weeks to make it more robust and actually usable in self-service. Which was our base for what we wanted to submit to the hackathon, was just like a usable Point of Sale by everyone, it's still in test flight.

And then Solana Pay evolved to a new spec while we were there. And then immediately became gas on that. And ever since the wheels have been turning there and then that initial spec change is what led us to where we are today, which is honestly, and not a lot of people know this, but we're more of an API company now. We're more like SaaS APIs and stuff like that.

Chase (13:43):

I guess, doing the API side makes it a little more versatile so that anybody can use it and they don't have to use a specific device or framework or anything like that.

TJ (13:55):

Yeah. I think the APIs, to be honest, they came more out of this idea of defensibility, because with a lot of the attention we got, it was like, what's the opportunity here? Is there something worth building out? And in that, there's a lot of things that could make you super existential, like just square adding Solana pay themselves. And so how do we actually build a moat in this industry or something. And so we were like, this transaction request thing came up, which enables you to use APIs in Solana Pay, what if we open that up to people and then let that be our defensibility and our moat. And so we spent a lot of time thinking about what that API suite would look like and then realize that, that's the bigger opportunity from our point of view, but probably more importantly, it's what we want to build in this space.

I think there's a lot of opportunities for a lot of people to participate and building out the client that people would use. There's also a lot of stuff that we weren't interested in building. Like inventory management and tax reporting and accounting. Like, nah. I want to do the Solana stuff. And the APIs is the Solana stuff. And so that's where we're at now.

Chase (15:08):

Now. Yeah. I mean, it makes sense. Here's the thing, you build a project and you don't want to start taking on things that you don't enjoy because then you probably stop enjoying your job. So you do what excites you and then you offload or allow connection points for other people to build that stuff who see that opportunity. But it makes a lot of sense. I've talked to people who have created businesses and then they pull in, maybe not this specifically, but like the tax stuff and all these different sort of inventory management. And then it becomes like, I don't really like this anymore. This is not what I signed up for.

TJ (15:42):

That's what was happening. And so it was like, really I had to focus on something specifically in there and that's, we picked the APIs and it's been cool. We've been working with different protocols to add their functionality to our APIs. And yeah, it's been fun since we started focusing there.

Chase (16:04):

So obviously it was the right move because you, just to circle back to this is, you won the Payments Track of the Riptide Hackathon. There was a lot of competition. There was a lot of good stuff in there. So I'm just curious, how did that feel when you saw that?

TJ (16:18):

I'm dumb competitive. And so it was so funny because it was like, it started off as people are, oh, you going to submit this to Riptide? And it was like, yeah, probably, but we're not really focused on that. And the closer we got to Riptide, we're like, we want to win. And then so we had been paying a lot of attention to other people that were building in this space, seeing where people's attention was. The whole time we were like, I don't know, fairly confident we would do well to some extent, but then I think it was up to, what did the judges value? You don't know. But we were super proud of what we built and we're hoping other people saw what we saw and seeing that we won the Payments Track, it was just like a pat on the back. It was like, we agree.

Chase (17:07):

We agree.

TJ (17:09):

Yeah. That's what it was. And there was some chest pounding, there was something like, yes. But I also think the part I was more stoked on was just the attention that would follow and knowing that we could leverage that to build something. Because I think the attention is just like, it's fuel. And you can't do it with only attention you have to follow it up. But we knew it would empower a lot of the things that we wanted to do.

Chase (17:37):

Yeah, for sure. And I think these aren't necessarily your classic typical hackathon, where you hack on some little thing for a week or a month. These sorts of events are actually catalysts to build real businesses. And this is meant to be inspirational to developers that are watching this, that may or may not have dipped their toes into Solana. Maybe they have, but they haven't gotten anywhere. These stories are super inspirational. So I want to put it in context. What is the timeframe from the day that TJ wrote his first piece or read his first Solana doc to winning Riptide Payments Track? What's that timeframe?

TJ (18:13):

September, August. I was reading, I was staying up late. I was still working at the startup and I was staying up till like 3:00, 4:00 in the morning, reading that classic, Paul article on doing an escrow. It was partly that it was partly that Packy podcast.

Chase (18:30):

Oh yeah.

TJ (18:30):

On Solana Summer. That was super dope. I remember I was at the gym and I was listening to him talk about the DJ Apes Mint and two weeks prior I was at Miami hack week, it was like, I remember I was chilling with Barrett, I met him for the first time, we had met through our friend Eve, shoutout Eve. And it was just me, Barrett, Edgar and Eve in this apartment and they were just talking about crypto and I knew nothing. So I wanted to fit in and I was like, oh, I bought some Ethereum lately.

I thought I would impress him. And he is like, nah, and he's looking at me, he's like, fuck Ethereum. And I was like, what? And just turns around and he goes, Solana. And I was like, what is Solana? I thought it was like some shit coin. And that was just when it got on my map. And then I saw the Packy thing. I did that. And then all these NFT things were popping up and I'm like, all right, what's going on? And then Candy Machine pops up. So I'm like reading that contract and I'm reading the Levi's thing and trying to set one up for myself and it feels like explosions all around me. And I'm like, what is this world? And people are just shipping and I can't keep up. And it was like overwhelming. And then I quit.

Chase (19:41):

So it's been about, from zero to hero in seven months, basically. Is what I'm hearing right here. Seven or eight months.

TJ (19:49):

Yeah. Something like that. Yeah. I feel like I got onboarded fairly quick. I feel like I was doing stuff to me that felt like mattered, immediately. All that iOS stuff that I was doing, to me felt groundbreaking.

Chase (20:04):


TJ (20:05):

And I felt like a hero then, honestly. That stuff made me feel more of a hero than what I felt like with Riptide.

Chase (20:11):


TJ (20:12):

To be totally honest.

Chase (20:12):

So it was more so just that you win Riptide, like, wow, I got this thing, but the more part for you was the personal win of actually just starting on this new journey and figuring out how to build on Solana.

TJ (20:26):

Like I said, I'm dummy competitive. So winning Riptide was great. It was a good job power, but with mtnPay, I don't feel like I've done anything yet. I think there's opportunities too. And we're on a path to actually really contribute to the Solana Ecosystem. But I don't feel like I've had a major accomplishment there yet. But with the iOS stuff, I totally did. I, from native iOS code, minted an NFT through Candy Machine. I figured out how to talk to Anchor programs from native iOS code. And that to me was like, that gave me so much energy.

Chase (21:05):

So tell me about that. You started building on Solana, did you start messing around with Rust? Did you start messing around with Anchor? Or did you go straight to those SWIFT SDKs that existed? What was your process for getting rolling on Solana?

TJ (21:18):

Totally. Yeah. That's a great thing to preface here is, I've done barely any Rust. I haven't shipped a smart contract to Mainnet. Mostly client work. So there's massive opportunities in this space to really participate and have impact just doing client work. That being said, the way I really learned it was just wanting to write an iOS app that would work with Solana. And so I found a couple of open source SWIFT packages that was doing iOS transaction stuff. And so, that's how I learned what a transaction object looked like and where you serialize it and how you add accounts to that. And what's an account. And what's [inaudible 00:22:02] coding. All of that stuff I just learned because I had to, to make an iOS app that talked to Anchor. And so me and my friend, Michael, we went to college together, and so we were up till like 4:00 in the morning for weeks just printing out transaction objects in JavaScript, on the Anchor thing and figuring out how do we bridge that to iOS? And that was the coolest.

Chase (22:30):

And then this is exactly the point we've talked about a couple times on this show. And I say it on my Twitter all the time. You just won Riptide Payments Track and you'd never shipped a smart contract. How? Well it's because not everybody needs to be this guy who writes the smart contracts. You just need to know how to talk to them, using these different APIs, SWIFT, JavaScript. There's a C# SDK, there's a Unity One built on top of that. There's a [inaudible 00:22:57] one, they're all out there and you can learn Solana, and in a way you're comfortable, which is in your native language. And you're talking about just doing print lines and printing out and just reading, what is this object? And now I get it.

TJ (23:10):

Yeah. That was the process. And it was great. And I think we have a long way to go before developers can step in and build incredibly easily and efficiently, but the process is still fun. And there's a lot of toys you get to use when building this up, a lot of exposure, you feel super low level. And yet, they encourage everyone to just dig in and start building shit.

Chase (23:38):

In your opinion, what are some of those things that need to improve to make this easier for the new guys or the old guys? It doesn't really matter. What needs to happen? And what do we need?

TJ (23:47):

Error messages.

Chase (23:49):

Error messages.

TJ (23:52):

It is like, you will get like, Error A4, and there's nowhere to go. And you're digging around. I'm like, dude, you literally got to clone the repo and go line by line and figure out what's that error? What are we doing? It's fun. And from when I got into it to like what Armani's done with Anchor now and the Anchor books, that's there, the Solana Cookbook, that's all there now. So it's easier to do it now. And even when I try to do more on-chain stuff or build out stuff that I'm not comfortable with, I'm able to go reference those materials, but they weren't there in September.

Chase (24:30):


TJ (24:31):

And that was kind of fun though. It was like a point in time. And I was always envious of people that got to code in machine code, because they had to and what a point in time that must have been to get to be a part of that. And that's why I started building in Solana, I saw that point in time again, I thought Solana was going to pop and I was like, I'm not missing it.

Chase (24:53):

You were basically like, I see Solana, I see that not everything's been created and there's massive opportunities and I'm going to carve myself out a slice of that and just do it. So it's pretty crazy to be talking about this now.

TJ (25:05):

Yeah, it's been a journey.

Chase (25:07):

Yeah. And a lot of this was all Discord Support. It was a huge pain in the ass. You answer the same questions 5,000 times a day. Shoutout to the [inaudible 00:25:16] team at Solana labs that really just spent way too much time in Discord and the core engineers that shouldn't be there all.

TJ (25:22):

Shoutout Alan.

Chase (25:23):

Yeah. Alan has actually been obviously incredible.

TJ (25:26):

Fun story, in that with Alan, we were working on that iOS stuff till dumb hours at night, I think it might have been 2:00 in the morning. And we were having these errors we could not figure out. And so we posted in Discord and Alan answered and we're going back and forth with this guy. Didn't know him at all. This is our first thing. He's like, I'm happy to hop on a call with you to help you sort it out. And we were on that call for three hours. But that to me is such a story of people in Solana. There is so many people that just are cool with just helping you. And they're in the weeds with you and it's that developer ecosystem that attracted me and I think is going to attract so many people after me.


Which to your credit, I think you've set up a lot of it. Being the dev relations at Solana, just creating the environment for those developers to thrive and giving them the resources. I think that's where this has come from, but yeah, that was just a monster classic Solana moment for me that I wanted to highlight.

Chase (26:31):

Yeah, for sure. And there's a lot of people. It started with Toly and Raj and then that attitude and welcomeness humor came down to me and Armani and so many different people that feels like you can approach anybody in the ecosystem. And I agree, I think this side of tone and vibe is what will attract a lot of younger developers.

TJ (26:56):


Chase (26:57):

There's lots of different complaints out there. One of the biggest ones we've been hearing a lot is about tooling. If you agree with that, what web tooling or blockchain tooling are we missing right now at Solana? Do you have anything personally that you would like to see?

TJ (27:12):

No, I don't have the most robust engineering background. When I was at Apple, we used Apple internal tools. So that was all I really knew. And so, even now, I'll be coding on something with someone at a hackathon and they're like, wait, you're not using this plugin. You're not using the Anchor plugin for VS code. I'm like, no, what is that?

Chase (27:34):

Here's the old-school.

TJ (27:36):

Yeah. They're like, baby come here. They would set me up with some stuff. So, that's so cool. I think examples are going to be great. I think just like getting examples out there for people so that they could learn that they can do it too is going to be really cool.

Chase (27:48):

And self-onboard.

TJ (27:48):

Yeah. Self-onboarding's massive. And that's one of the ways we want to go with mtnPay, because we're just like a set of APIs. I think we can open up these APIs to iOS native developers to be able to build apps, they don't need to do the exact transaction building. We can have just a normal API that lets them build the transaction themselves. So that's one of the directions we definitely want to go into and we feel like can bring native developers to Solana, hopefully.

Chase (28:16):

Yeah. It's about giving the tools, the education to onboard people like mtnPay and the rest of the ecosystem who then drives in the users and then that it just spreads outwardly from there. So it's pretty incredible to watch right now, I'm not going to say, like I started last May about, next month will be my one year. And the difference in one year has made, like you said, even in September, you didn't have half the things that are available now. It's happening at the speed of light and it's, who knows? In one year from now it's going to be, again, unrecognizable. So I mean, it'll be unrecognizable in like six months, most likely or less. We'll see.

TJ (28:57):

Yeah. Just being along for the journey, I feel grateful.

Chase (29:00):


TJ (29:01):

Just what a point in time that we're in. I was talking with Edgar the other day, I was like, we got to remember, we're in the good old days right now.

Chase (29:08):

I guess, to round this off and you kind of already touched on this and I always do this at the end of every single episode of the show is, to just give some advice to whoever you want to give to advice to, maybe it's the new devs looking to come into blockchain that might be scared or intimidated by just the name, blockchain, scares some people.

TJ (29:30):

I mean, just start. Just start and just build. There's so many opportunities within yourself to push things off and it's so easy to complain or give yourself reasons to not build stuff. Even within myself every day I'd catch myself either complaining or giving excuses or whatever. But reality is, just build because when you just start building, you'll figure it out. You can ask the questions, you'll get there. And then that building really gives you momentum to keep going.

Chase (30:09):

Yeah man.

TJ (30:10):

Yeah. And it attracts people to you and then those people are going to give you energy and it just, it all cycles. But you have to be the one to start.

Chase (30:21):

Yeah. I mean, I don't think anybody's really given that advice and it is, like, we're all engineers, we've all just put things off. We\ all have 200 projects that we started one night and then never got back to. So it's really just getting started and just following through.

TJ (30:35):

Yeah. And don't be afraid to chase the energy. There's so many things I've tried doing in Solana that I would work on for a week and then stop. But even now I go back to them and they're just tools in the belt. And you'll be able to leverage learnings later on.

Chase (30:51):

Yeah. For sure. Well, TJ, congratulations for winning the Riptide Payments Track with mtnPay. Glad to get you on the show. Glad to have a conversation. Love the energy. Just keep it up, man. And thanks again for doing what you do. And thanks for being here.

TJ (31:09):

Yeah, no, I appreciate the opportunity. I feel there's definitely the longest we've been able to chat for how long we've known each other. It's funny. I feel like we kept missing each other in Miami. So, I'm glad we got this opportunity and hopefully I'll see you in The Bahamas.

Chase (31:23):

Thanks for coming on.


May 17, 2022
Kanav Kariya - President, Jump Crypto Ep #65

Kanav Kariya (President, Jump Crypto) joins the Solana Podcast to discuss his optimism for the future and the many areas in which Jump Crypto is innovating in the crypto and blockchain space. Austin Federa (Head of Communications, Solana Labs) guest hosts.


00:49 - What is Jump?

03:07 - The path to operationalizing crypto

06:00 - Optimism for Crypto

10:49 - Discovering and Building in Crypto with Jump

14:24 - Personal Journey at Jump

16:43 - What's being built at Jump?

17:55 - Reasons to want to build

19:39 - What does Pyth offer?

22:22 - Criticism about conflict of interest

26:30 -  How Web 3.0 facilitates resource coordination

28:46 - Data contributors benefiting from onchain data

31:01 - Token Plans for Pyth

31:46 - Message bridging

34:48 - Wormhole, stable coins and asset tokens

37:36 - Time synchronization for cross-chain dApps

39:14 - State storage on wormhole for dApps

40:21 - Is Wormhole layer 0?

41:14 - Wrapped NFTs

44:13 - Jump's position towards NFTs

48:36 - Exciting things in the ecosystem

49:43 - Custom silicon / FPGAs

53:22 - A parallel execution model?



The content herein is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. Those who appear in the content may have a financial interest in any projects referenced, and any content herein is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.  This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor.


Austin (00:10):

Welcome to another episode of The Solana Podcast. I am Austin Federa, sitting in for Anatoly again this week. Today we've got a pretty special episode I think. I'm really looking forward to this conversation. I think it's been a long time coming with a few false starts. Today we have Kanav Kariya president of Jump Crypto, or do we just say Jump at this point?

Kanav (00:32):

Yeah, Jump Crypto is good.

Austin (00:34):

President of Jump Crypto, which maybe this time last year very few people knew existed, very few people knew what you guys were doing, what you were building, what your role in the ecosystem has been. So yeah, I guess let's just go ahead and Jump right into it. What is Jump Crypto and how did it come about?

Kanav (00:51):

Yeah, thanks for having me on Austin. So for context for the audience that aren't very familiar with us, Jump is historically a prop trading firm founded over 20 years ago in the pits at the CME. Today one of the largest quantitative trading firms in the world. And we started a crypto division over seven years ago. It started as an intern project at the University of Illinois, where we were running a miner in a closet and building some trading infrastructure.

And today we've got over 150 people on the crypto team doing a lot of different things. So the way I like to describe our business is spitting it into three primary pillars. One is prop trading, which is exactly what we do on the other side of the house, we build trading intelligence and we scale it. The second piece is building and that's the piece that I hope we'll get to talk a lot more about on this call and it's closest to my heart and closest to the heart of the team.

And that's in building pieces of infrastructure, really streets and sanitation for the space and a couple of the marquee projects that we've really focused a lot of our efforts on have been Wormhole and Pyth. And of course, along the journey, we've aligned ourselves with a lot of the major ecosystems in the place, including Solana, Terra and a whole number of others in building a lot of different things across those platforms.

The third bucket is venture, I like to call ourselves accidental VCs in that we found opportunities to add value, or we had requests come in to work with partners over the last six years in various different capacities. And we found that we could be meaningful in those contexts and work with people that were solving problems for us. And that has now grown into the venture division that's deploying across the space.

Austin (02:31):

I want to get into a lot of the work that Jump is doing as core code contributors and supporters of projects in the ecosystem. But I kind of want to start a little bit with that journey. I would say that the transition from prop trading equities and commodities to prop trading crypto, that feels pretty organic. And there's a number of firms in the space that have also made that transition. Albeit you guys seem to have made it sooner than a lot of other firms in the industry. What was that process like of going from deciding that you wanted to add crypto to actually operationalizing that? And then we'll get into some of the journey to actually becoming builders.

Kanav (03:07):

The project started as an intern project at this thing called Jump Labs. There was a research lab at the University of Illinois and was meant to work on cool stuff with the university on working on fun problems. So alongside the crypto stuff we were doing when I was an intern, there was a VR project working with professors at the university to abstract away trading screens. And there was work on some interesting machine learning and networking problems.

And the group has grown out of that. And of course matured out of these things, but we've definitely strongly retained that ethos. Now I want to caveat this by saying we definitely didn't have oppressions in being infrastructure builders. When we started the project in the lab that many years ago. It's been a very organic and natural process for us. And it's hard to make the instant leap from prop trading to what we're doing today, but it's easy to reason through the steps along the way.

As one of the earliest large trading firms in the space, we had a lot of requests from institutional liquidity exchanges, OTC platforms, and importantly projects that were looking to solve trading and liquidity related problems. And those conversations gave way to us exploring a lot of DeFi projects and a lot of L1 platform projects that shared a lot of the problems they were thinking through on complex financial system design or programming in resource consumer environments, which are very natural and germane to a quantitative trading firm.


And those conversations led to jamming about foreign ideas to implementing governance proposals, to maybe starting to write a little bit of code in them. And then all the way into committing over 50, 70 engineers that we have today in building through the space. And that process involves a few different steps. One, it involves the willingness for the institution at large to be mentally long the space. It requires a recognition and frankly a little bit of a taste of the upside.

It requires flexibility, which of course, prop trading firms just generally naturally just have to have. And then everything else you can just learn along the way, right? We've done a lot of things wrong. We've stumbled over ourselves a hundred times, but you've got to keep digging shots on asymmetric upside and with all the resources that we've had at the firm I think we've been able to make some good ones.

Austin (05:20):

Going back to you last year, Jump Crypto had sort of a moment where it decided it wanted to make itself public. You wrote a blog post that was laying out. I wouldn't quite call it a thesis, but laying out an idea of how you view the space and the role that something like Jump could play within it. One of the things I was struck by going back and rereading this is your level of optimism in this post, right? Which is something that you don't see from many financial trading firms. You see them seeing opportunities to make lots of money. You see them making lots of money. They're very profitable endeavors, but you usually don't see optimism contained within it. Where'd that come from?

Kanav (06:01):

That's a pretty good question. So quant firms today are basically research and development firms, right? So the people that build trading systems, that build the intelligence behind trading systems are generally of quantitative background. They generally have PhDs in either statistics, machine learning, physics, those kinds of endeavors. And the people building the platforms are low latency high performance systems engineers that there are different optimizations across every level of the stack to build robust, scalable, fast infrastructure.

The environment down to the lab five years ago was about exploring this space. It was like, what does this space mean? Right. And it wasn't about, okay, how are we going to make X billion dollars kind of getting into this endeavor? It was about exploring it. And I think it attracted that kind of people and it occurred that kind of environment.

And the leadership that stays since then has kind of embodied that. And just personally I'm a raging optimist, I believe in technology, I believe in the future, I believe in building towards something bigger. And thankfully I think the firm has shared those ideas and I hope I've been able to shape a lot of the culture and behaving that passion.

Austin (07:10):

Where do you think that optimism in yourself comes from? There's a lot of things you could have gone into coming out of school. What about both, something, an organization like Jump, which is undoubtedly a great place to go work. But you stay there for a while now, you've worked your way up, you're now in charge of the crypto division. Where does that sense of optimism in you come from and what makes Jump the right place for that?

Kanav (07:33):

I feel something for Jump because they had a cool internship program and they had a lab on site and they were working on really fun problems in a well resourced environment, that just made it fun and attractive. And after I had the opportunity to intern there for eight to 10 months, I kind of got a sense for the possibilities that existed. And this is the flexibility that the whole space had. And it was like, you come in, you get to make a lot of bets, you get a lot of resources. And if you make good bets, you get more resources and then you get more resources. This is the only place I've ever worked. I think it would be rather unique to have that kind setup. And again, no, I wouldn't say it was a passion moment to come in to Jump and know that I would be able to build suites and sanitation for crypto. But I knew I would get to do a lot of really cool stuff, work on fun problems with smart people. And where does optimism come from?

Austin (08:25):

Yeah. I mean, you look at a space like this. It's been through boom and bust. There's tons of amazing projects being built in the space that end up going nowhere. And especially from the vantage point of a trading firm, right? One of the secret sauce of a trading firm is it can make money in an up marketing, it can make money in a down market, right. And that is the advantage of a professional trading operation versus a more passive trading operation. But again, like those are not usually characteristics that breed optimism. Those are usually characteristics that bleed margins, where you're optimizing 1%, 2%, 3% here. So you can compound that over a year and it will make a marginal difference. But again, that's not usually an optimistic space, that's a very functional space to work in.

Kanav (09:10):

Yeah, it is. And traditionally I don't think it lends itself to naturally just exactly this. Jump culture has kind of always been a little bit unique. So Jump also has a number of other kind of divisions that work on non-high frequency trading stuff. Historically, since about 2011 or 2012, had a VBC arm called Jump Capital that invests in growing technologies in this space. They've had some cool endeavors in the biospace working on automation there in healthcare.

And so the founders have generally been optimist. They definitely believe in the future. They've been able to take shots at things that are going on. And even if it's not naturally germane to the trading business in and of itself, the culture itself lends itself to being able to do something like this, which is a really awesome combination of knowing how to monetize, but then also knowing how to build. Yeah, it's been an absolute pleasure to be able to soak in from that environment.

Austin (10:04):

Let's look at the building for a bit. I think it's pretty open secret at this point that Jump are core contributors to Wormhole and Pyth, you've been very heavily involved in that process. Take me back to some of the early days there where you are internal to Jump, and you're saying like, "Hey, we need to do more than just trade and invest in this space. I think we can actually build." And especially you're talking about this from the perspective of sanitation and roads and the very base level infrastructure. Crypto's been around for a long time. I think most people coming into the space in that time horizon wouldn't have necessarily looked at and said like, "Oh, there's very base level features that are missing from this ecosystem." What was that both discovery process like, and then the process of convincing everyone internally that this was worth dedicating resources to?

Kanav (10:50):

Yeah, the discovery process was very organic. We had a lot of inbound from people looking to solve trading and liquidity problems because a lot of people in the space, even though we were quite kind of new of our trading presence, and as one of the early trading firms that really was trying to make bigger pushes in the space. When you get to talk to awesome founders every day about all the problems that they have and get to build relationships with them, you start to uncover a lot more of the problem space that exists, start to internalize a lot of it.

And once you've got the opportunity to sit in that for a little bit, and I'm sure you see this today. We are much later on than we were when we made a lot of those big switches, but there's still a lot of opportunity, right? When we were kind of ideating on the origins of Pyth, the conversation we had was, look, our whole thesis at Jump Crypto is to be as long aligned with the space as possible, right? We're trying to get the maximum exposure we can on the space that we think is going to be explosive. And we're trying to ideate this ways which we put that quote unquote trade on, right? The best way to put a long trade on in a growing space, and the best mode to value capture is value creation. There's definitely a lot of inefficiencies created by hyper growth, right? And there's room to capture those inefficiencies. But those are small in magnitude relative to the absolute value creation at play.

And then there's a value creation capture correlation that you think about there. So if you think about it in that lens and you know that you want to be big contributors to the space and just aim to create a lot of value to both, then you start thinking about what the opportunities are within your realm to be able to engage in that capacity.

Austin (12:27):

But at some point there's a meeting, or you have a boss who you report to, and you have to go down and sit down in front of him or her and say, "Hey, I want to spend a lot of money to hire a lot of engineers to do something that's going to be totally public and totally open source at a firm that historically likes to stay out of the news."

Kanav (12:46):

It was a few meetings.

Austin (12:46):

Yeah, I'm sure.

Kanav (12:46):

And it's kind of baby steps along the way, or big steps along the way that compound into a complete shift and a big switch of that nature. We had this summit, we called the August summit a few years ago. And we went down to an offsite location and we talked about what being in this space means for us and how we differentiate. And I remember we showed up with these sheets that we went around and distributed to people. We were like, this is the toolkit that we have. This is the opportunity set in the space.

And everyone kind of had their own, things went on, but that was one of the approaches that I've taken. And if we believe this is where the space is going, this is the opportunity set that we can tackle. And these are the levels that we have to pull, right? And then you socialize that and you try to convince them people that there is opportunity to be had here and you get buy-in to take a first little step. And once you get the buy-in to take a first little step, and you kind of really show the big medics of differentiation in a native space, you get the buying for the next step.

And then suddenly it's the entire [inaudible 00:13:47]. You get the whole kitchen sink thrown behind you, and then you are kind of propelling to this part that you want to be at. And that's the whole thesis of Jump everywhere. You take bets with asymmetric upside and we throw the kitchen sink at things that are working. And a lot of the stuff that we were doing started working.

Austin (14:02):

How is that journey for you personally, going from an intern involved in a few projects now to the Jump Crypto teams over a hundred at this point?

Kanav (14:11):

Yeah. We've got over 150 now, hard to keep track.

Austin (14:14):

Wow. Yeah. From a leadership role, and from your own perspective, how has that transition been? What parts of it were easier for you? What parts were harder than you were anticipating? Scaling yourself is often much harder than scaling a company.

Kanav (14:28):

Without a doubt, yeah. I started in the team as an intern like you pointed out, working on software problems. I came back to the team a year later in a formal full-time capacity, working on quant problems, which was to do with predicting crypto markets, building alpha and kind of scaling that piece. And the early conversations with projects where we were trying to solve liquidity problems was an area that I got really, really interested in. And I just kind of went about trying to build that a little bit further.

Over time that led to a transition from engineering and quantitative work to more conversational business development work, just having spent years across all those functions and natively knowing how to live them has been the biggest tool that I've been able to build in the toolbox. Now that doesn't teach you how to manage a hundred people, that doesn't teach you how to propagate culture. It doesn't teach you how to scale hiring strategy. Doesn't teach you how to value the troops when things are low.

I definitely want to make a claim that there are many who are close to a finished product, rather than trying to be good at everything, good at every one thing, we always try to be excellent at a few things. And then by force just propel everything forward. I'd say some of the biggest lessons I've learned, the biggest mistakes we've made, definitely been in the shape of trying to shove square bags in a round hole. Where in a trading environment it's like the only people you have on your team are engineers and quants. They're just smart people that can solve any shape of technical problem you throw them at. When you move that towards sales and marketing and product and everything else, that all kind of falls apart.

Kanav (16:05):

And you need people that are able to natively live within specific sub domains across those functions. And that's something that we've been trying to scale in. I spend basically all my time hiring and trying to focus on making sure our zero to one projects have a lot of momentum. But yeah, it's been an awesome journey. And of course I have support from a company that's grown to a 1500 people as the largest quant trading firm in the world and so lots of guidance and help along the way.

Austin (16:33):

Let's talk a little bit about that work you guys are doing and actually building. So if I understand correctly, the two projects that you are mostly core contributors to is Pyth and Wormhole. Is there anything else that you'd put into that category of engagement?

Kanav (16:46):

That's the highest level of engagement for sure. We do a lot of things across the big ecosystems of course. We can talk all of what we're doing with Solana. We're always trying to get deeper. We built an NFD project on the Metaplex landscape after their investment as an intern project. That was a real fun one. We've been core contributors to some of the projects that are coming out on the data landscape today. We've worked on a lot of the mechanism design that goes on, on the other one. And there's a few other projects, but the highest levels of engagement have definitely been with Wormhole and Pyth.

Austin (17:18):

Looking at over that landscape, Pyth high frequency Oracle. But again, Oracles, they've existed for a long time. There's a number of name brand ones that got their start on the ecosystem in the 2017 range. Lots of people have had ideas about Oracles over the years, some of them have worked, some of them haven't. Similar to Wormhole, bridges have existed for a long time. Bridges are actually the basis of how any L2 works, right? Both of these are hardly new ideas I would say. What about looking at the landscape gave you guys the confidence to say, not only there's a need for something different, but we can help build something different and better.

Kanav (17:57):

Again, just like 100% organic. In that August summit, we were looking at some of the biggest things we could do. And a big problem that everyone kind of kept voicing to us is that they don't have access to equities data. They don't have access to fast data so that they don't have to have things like clawback mechanisms and all these different things that LPs don't get direct on every turn, right?

The fundamental thing with financial oracles is that they're used to settle risk transfer. They're used to set a price at which two parties exchange value. And if that price is latent or slow or not accurate, one side gets left folding the bag. Now, DeFi, the way protocols are constructed, the side that gets left holding the bag is either the LP that's contributing to the protocol or the protocol stakers or a key stakeholder in building the ecosystem.

And the takers are able to take all that value. If you are going to build something that's going to house all of OTC, if we're building something like synthetics for example, and your protocol stakers are taking the other side of every trade that happens on S-Oil or SSNP, you need to make sure that's the right price. Otherwise you're just going to get up the way down to zero. When we were ideating on what the biggest ways we could contribute is let's contribute our data. And the first idea was in let's start, let's go and figure out how we bring together a network of people to build an Oracle.

It was how do we contribute our data, right? And we browsed through the category of solutions. We had all the conversations. We spoke to dozens of investors and builders in the space. And there wasn't an easy way to slot in high fidelity financial data, into existing Oracle solutions. And so we spoke with some of the founding partners of the Pyth program and came to consensus that there was an opportunity here. And that led to the first step and we just kept building sets.

Austin (19:39):

In your mind, what is it that Pyth offers that other Oracle solutions don't offer?

Kanav (19:46):

Pyth is a very hyper specialized tool for high fidelity financial data, specifically financial data for settlement of risk transfer, right? If you think about the way the market data landscape looks today, it's different across asset classes, but there is a class of people that have access to high fidelity, streaming price data that they can legally distribute and make available to a protocol, create like an Oracle program.

One you need access to very fast financial data, which is hard to get and even harder to have a legal right to distribute. You want to make sure that the people who are publishing the prices are the real owners of the data so that you can set incentives for the data to be accurate, right? If you are staking the value of a third party aggregator, their third party aggregator has no skin in the game. That's one of the other kind of fundamental things that you have to think about.

And third, you need to acknowledge the fact that a price is not absolute. A price for Bitcoin has about 20 liquid trading venues that are distributed across the globe that can often be fractured, that can often have all kinds of different idiosyncrasies. And that being able to accurately determine the price on most relevant venues and build a dispersion is really important. If you think about kind of all those things together, you want very fast access. You want a broad range of access of independent sources, not reporting from the same source.

You want very high liveness and uptime of course, and you want kind of good legal clarity that that price can continue to be distributed because you don't want the application to suddenly get turned off when the regulator says, "What's going on?" And those are the kind of key things that Pyth has really focused on very heavily to build that piece of infrastructure and Solana was the perfect opportunity. Before Solana there wasn't a way to create a high fidelity fast Oracle. There just wasn't a need for it and there wasn't a platform for it, right. And so all those things just came together.

Austin (21:49):

One of the criticisms that you'll hear about Pyth is that because of its structured model here, where the people providing data are permissioned at this point and are also like firms that are professionalized trading operations themselves, that there is an inherent kind of conflict of interest in that system. With any system in blockchain, you have to assume everyone is trying to cheat, everyone is trying to extract the most value possible. How have you gone about setting up incentives to make sure that the users of Pyth and the contributors to Pyth are not at odds with one another?

Kanav (22:27):

Yeah. I think you made a totally fine point there in that we are building for byzantine systems, right? And so that's the kind of incentive design you've got to keep in place. I'll frankly say I think that claim is a little bit ludicrous for a few different reasons. Once you peel back the onion just a little bit, and I'll talk through some of the reasons why.

Austin (22:43):

Let's peel back the onion.

Kanav (22:44):

One, you've got to first understand that the amount of value that can be created in actually pulling something like Pyth off successfully is dramatic. And the forms that are building this are now incentive aligned to make that happen. But two, this is an open sourced protocol, it is decentralized, and you can look at exactly what the inputs are, how they're being aggregated and what their resort in price output is.

Three most importantly, there are about 50 financial firms that are submitting independent price data to this article to construct final outputs. And these financial trading firms aren't friendly with each other. This is the very first time that a group of highly adversarial trading firms, banks, exchanges, and ODC players across the entire space have come together and said, "Let's go build a piece of infrastructure." And one, I think that needs to be celebrated a lot, it's a huge win.

But two, the trading firm, there are 50 global financial trading firms contributing their proprietary prices directly to Solana on the Pyth program today. We have realized that these 50 comprise of between 60% to 80% of global asset class volumes at this point, given the network of participants that have aggregated around this protocol. When you are that big of market share that you're covering that kind of breadth, the participants in the protocol themselves are on the other side of each other's trades almost by definition. And so who's manipulating the price against who? Let's kind of just start there.

The system of incentives that set up in this taking protocol, you can read through this on the Pyth white paper has some really intelligent aggregation algorithms that put all this data together, that identify the quality of each of these independent data publishers that then sets out a mechanism to aggressively punish providers that don't have good prices. And good prices can mean I published a malicious bad price. It can mean I have slow prices. It can mean I published, I had a bug, it can mean anything.

The incentive design mechanism is meant to reward data providers that are not honest, but that have great data. And that's a fundamental difference in how system designs, we're not kind of rewarding agreement, we're rewarding prediction. And so you are rewarded for correctly predicting the price that would come up rather than for rewarding agreement between parties, and which can both have different kind of models and can both work in different ways.

But there is almost no possibility for one collusion across these landscapes, given the composition of the people in the network. And the incentive structure again is obviously explicitly set up to discourage that. Third, all these forms are heavily, heavily regulated. I spoke about 20 years of its reputation and a giant, giant business behind kind of making a lot of this happen. And we're definitely incentive aligned to make this thing as successful as it can possibly be.

Austin (25:39):

The Web 2.0 world and the rise of FinTech apps has largely taught people that organizations that claim to be on their side often aren't. There's very legitimate reasons from a market making perspective that during the game stock run up and squeeze, users of Robinhood and other FinTech applications, their trading was turned off. Now, there's a bunch of really good backroom reasons for why that might have happened. But the effect is what matters to the retail trader, which is that they were using a platform that they thought gave them equal access to a market, that platform did not provide them equal and neutral access to a market.

I think when people look at something like Pyth, it wouldn't be crazy to say that, well, the same incentives that made us think that Robinhood was on our side, could also be applied to Pyth. What is different about the Web 3.0 space and the construction of something like Pyth in your view that makes that not something someone should worry about.

Kanav (26:37):

Web 3.0 is fundamentally any means of resource coordination, and it facilitates that by, one, facilitating the export of trust. And the export of trust is actually one of the big reasons why the whole Robinhood debacle went on, right. They basically ran out of margin requirements in order to continue to clear trades on one side, since it was so directional.

And there is this massive web of intermediaries that set up all throughout traditional finance for the express purpose of establishing trust as the FCM, the DCM, the clearinghouse, all the other three letter acronyms. And all of them exist to make sure that when a match occurs on any platform that actually settles into a financial trade.

In crypto the match is the execution. And that's facilitated by the fact that you can export all the trust of executing a piece of code onto Solana, onto Ethereum, onto the blockchain itself. And that's unlocked this completely new means of resource coordination, which makes things like Pyth possible. It means that you can explicitly lay out a system of incentives in a closed loop fashion. And regardless of who's uploading the code, or who's proposing designs or architecting any of this, everybody is independently participating according to the incentives laid out very plainly by the program itself.

And that means DRW and Jane Street don't have to trust Jump when they decide to publish prices to pay. That means they look at the program that's running on Solana that they can read. They look at Solana's trust model and decided they can or don't trust Solana as a platform. And then contribute to the platform that then self executes and lives on its own terms. And the fact that we can allow different kinds of state to compose in a trustless fashion is the entire revolution Web 3.0, that's basically what the whole space has been building for the last 10 years. And that's what makes Pyth possible, it simply was not possible before.

Austin (28:32):

What does something like Jump or Jane Street or anyone who's a data contributor to Pyth, what do they get out of it? What is their incentive apart from any rewards that might be generated from contributing data. How are they then going back and using this on chain data in their own operations?

Kanav (28:51):

There's a few elements. And so one, it is fundamentally a two sided marketplace, right? It has data publishers and it has data consumers. And the other interesting thing like Uber did for taxi cabs, where it created a marketplace where cars could now come online, created this marketplace where data that was once latent came online.

Jump is publishing its own trades to the Pyth network. That is IP that it has the legal rights over, has only just been a cost center so far, and now has the opportunity to get monetized. And that's the same for all of the trading firms that sit in the network. It's a lot of people to turn cost centers into potential elements in the marketplace and that bootstraps the supply. The consumers of the data obviously are paying for this extremely created highly robust set of data inputs that then get aggregated. And that creates kind of flows in one direction. And then like your regular two sided marketplace, it accrues value, right?

All the data publishers today in Pyth have some sort of stake of asset interest in the thing succeeding. And there is a set of incentives that then rewards them for the correct participation going on with fees, rewards, all those kinds of things. And all that is in gross detail laid out in the white paper and we can go over some of that. But the off chain applications and some of this stuff is also quite interesting, right?

So if you look at kind of back office systems around the world at forms like Jump, you don't need microsecond level access to financial data, but you need that for your trading engines because otherwise you're playing at a disadvantage related to the field. But in order to make sure that your clearing prices have happened correctly in order to make charts in order to do something like a trading view, in order to get on the Bloomberg terminal or to be on a ticker somewhere, all these applications are now easily facilitated by subscribing to something like Pyth, that's living on an open kind of blockchain area. And so a lot of the off-chain use cases are getting more and more interesting I think over time. The fundamental value is in creating the pricing source for on chain data. And this is kind of like an awesome thing that just falls out of it.

Austin (30:56):

That's a really interesting way of thinking about both the incentive alignments and the rule that the data providers versus the data consumers play in the market. Are there any token plans for Pyth?

Kanav (31:07):

Yes, there is a token plan for Pyth. You can read all about it on the white paper, no comments on timing or anything of that at this point. And that's going to be a networking governance decision, but I'm sure in the near future.

Austin (31:16):

Transitioning over to Wormhole, which is the other project that Jump is heavily involved in as a core contributor of the code. When people look at wormhole, I think it's very easy to look at it and say, asset bridge, multi chain, cool, fundamentally utility. The first thing I noticed when we were talking about this and looking through it is this whole component of allowing different smart contracts on different blockchains to communicate with each other. I think most people understand how asset bridging works. Can you talk a little bit about this whole concept of message bridging?

Kanav (31:51):

Yeah. And this also kind of goes back to your question on, how do you decide that there's an opportunity here when bridging is something that people have talked about for a while? When we were kind of ideating with everybody else on kind the Pyth's team and the network on how Pyth goes across chain. Hendrick and team were building Wormhole as Solana Eths token bridge on the hackathon project at [inaudible 00:32:17].

And I called Hendrick and I asked him, "Look, is there a way to generalize this thing so that we can get Pyth messages across?" We're building this Oracle thing on the best, fast, scalable censorship resistant message bus we can, but we want to get it to all the other ones that operate on a slightly different resolution. And through the course of that conversation, we came to a conclusion that enabling generic message bosses to allow this cross chain composability in a much more high dimensional fashion than just the token bridge word was a massive opportunity set that had to be filled.

And so when we launched last August as a completely generic message bus. And what that means is that any piece of state that is created or lives on a blockchain can be included as a message that then gets communicated to any other blockchain environment. And so if you think about Oracles, you think about a governance board, right? Uniswap passes a governance board on Ethereum, produces workloads on a lot of different chains. The outcome of that governance board has to, in a secure, reliable fashion, be communicated to all the other geographies that Uniswap lives on. That needs to be encoded as a message.

And so Wormhole has outpost contracts on every chain that is deployed, it is deployed over eight chains today. The outpost contract just listens for a message that is sent to that contract and the Wormhole network of guardians attests to that arbitrary binary block. That block can then be picked up, relayed to any other blockchain environment, verified that is coming attested from the homeowner network and then decode to do anything arbitrary and interesting. And so generic message process have really exploded over the last year. We've seen so many awesome applications being built on it. And I think we're just kind of scratching the surface, right? There's a lot to do here.

Austin (34:04):

When I think about messaging, I think about how a lot of the models right now for cross chain communication of assets are a little tedious and maybe have more risk inherent to them than are necessarily required. A very centralized example, USDC, right? You can go to FTX and you can withdraw USDC as an ERC-20, as an SPL token or across several different networks. And what's happening there largely is because the mint authority to that is centrally controlled. They're able to issue new, quote unquote new USDC natively on each layer that USDC is supported on. Do you see the capability of developers using something like Wormhole to make that possible for fully decentralized, both stable coins and just asset tokens?

Not only possible, but already widely adopted in the Wormhole X asset framework, right? There's over four and a half billion of assets in the token bridge today. And the word token bridge kind of has meant a lot of different things to people at different points in time, right? The old token bridges were bidirectional, state sponsored bridges that sovereign ecosystems would run to communicate to Ethereum, to get liquidity in as soon as possible.

And then if you send that across a different bridge, then you would have like a double wrapped and triple wrapped implementation and just an absolute UX nightmare. When you use something like Wormhole's X asset framework, you retain complete path independence as you move assets across the ecosystem. Once you're registered as an X asset, let's take USD as an example, there's a couple billion dollars of USD on the bridge today. It flows throughout the ecosystem using Wormhole on the back end, Terra bridge money, uses one more on the back end to expose one of many front ends to users.

When USD flows from Terra over to Ethereum or to Solana to Polygon and then to Avalanche, it retains the same representation on Avalanche that USD flowing from Terra to Avalanche directly or through any other part in the ecosystem would retain. It's a truly cross chain native asset. It doesn't fracture liquidity, it fungus seamlessly, and it allows a lot of cool composition.

If you look at something, now like the result in second order effects of this, it's this theme that we've been calling X Dapps, right? So cross chained apps. And we've seen kind of the first marquee deployment of one of these apps in the form of X anchor, which is deployed on the Avalanche chain now, right?

And X anchor is just a light set of endpoints that's deployed on Avalanche. And all that does is it lets you kind of hit some functions that then really assets and/or messages bundled or separately or back to the Terra blockchain and then trigger state transitions on the Terra site. Anchor contracts don't need to be deployed to every chain. You don't need to replicate state everywhere, you don't need to stay synchronized continuously. But you allow for outposts and communications and different chains to then communicate back to the home chain using messages and assets. And now the USD that's in the X asset standard can be deployed to X anchors everywhere. And it's a much faster, much more robust getting strategy that has far less communication over.

Austin (37:07):

Let's dig into just a little bit on like a technical level too. When you're talking about X Dapps or cross chain Dapps that are communicating via Wormhole, you're inherently talking about fractured state across multiple L1s or L2, it's unavoidable when you're ... anything cross chain is inherently working under a fractured state model. How fast does that time synchronization need to be for developers to actually deploy something like an AMM or a club across chain and actually maintain price parody and appropriate liquidity between them.

Kanav (37:42):

Yeah, I'm glad you brought this up. There's a few different programming models for how cross chain Dapps works, right? One is you try to state synchronize as aggressively as possible. You keep sending messages back and forth. You have allowances, risk limits, tolerances that allow your apps to communicate. And the other is this X Dapps framework where state only lives on one chain and you allow people from other chains to then interact with it.

Now, of course that also comes with its own downsides, right? If you look at something like a club and you're trying to trigger a cross chain swap using the club from another chain, you are inherently incurring the latency of the two blockchain transactions and the finality assumptions that you want to kind of work with that. The more stateful your application becomes, obviously the more latency and risk constraints everything through. With something like a lending protocol or like a cross chain anchor, things like that. They are less stateful than something like an order book, but order book is probably the most stateful you can get right in the spectrum of applications.

And so any cross chain swap design inherently has to have some additional liquidity back then, that's like fundamental, right? You can ask people to take risk on your behalf. You can have the protocol take risk on your behalf, but that risk exists. There's a lot of ways to program around it and create better user experiences, but fundamentally that's a real problem and somebody has to be compensated with that risk.

Austin (38:56):

For the X Dapp framework, are you looking to actually be able to offload compute to the wormhole level there? Or is it really just ... The natural extension of this seems to be that eventually there's some sort of state storage on Wormhole that Dapps are able to actually access and leverage with some functionally side chain compute resourcing. Are you guys thinking about that as well?

Kanav (39:19):

Yeah. The fundamental cross chain thesis is that there are going to be independent, specialized compute environments that attack their own communities, their own audiences and their own apps. And Wormhole is away for folks to leverage state that results from these autogenous environments and compute the solutions on these environments to compose.

And you can cut that in a million different ways. You can leverage Solana as a state execution machine. You can leverage Terra as your stable coin asset layer and you can represent this third thing as a NFT thing, or you can bundle them all in. But the Wormhole vision itself right now with all the genetic message capabilities that are out there, in the near term roadmap doesn't need to build an execution layer of its own. It can naturally extend to it. I think you're definitely kind of pointing to something that's relevant.

But I don't know if that's the lowest hanging fruit given the capacities that exist in current blockchain compute environment. The vision of course is to make people, Web 3.0 users rather than blockchain users or L1 users. You basically want to deploy resources to the most relevant execution environment with the right community, that's creating the right apps and then expose that to at a higher order to consumers.

Austin (40:24):

Would you describe Wormhole as layer zero?

Kanav (40:28):

I’m rather old school, I think of layer zeros as networking protocols and internet backbones and things like that. I think it is maybe a useful analogy for kind of blockchain audiences given how we've very economically can't use the word L1, so I don't have an allergic reaction to it, but it's not my first word of choice.

Austin (40:46):

What would your first word of choice be?

Kanav (40:49):

Interoperability protocol. I'm not that creative.

Austin (40:51):

Yeah. Wormhole is also supporting wrapped NFTs, which is kind of an interesting concept. I think most people don't think of NFTs as something that's been bridged and quite frankly, the numbers on Wormhole on bridge NFTs are quite low compared to the success as an asset bridge or a messaging bridge. What was the original idea of using wrapped NFTs? And why do you think it hasn't caught on as much yet?

Kanav (41:20):

I think cross chain NFTs as a story are just beginning to play out. So there's about 16, 1700 on the NFT bridge itself. And again, NFTs are also cross chain fungible and composable across environments. They are also part of the X asset framework. And so X assets can mean anything. It can be in rebasing assets like STE, it can be in NFTs. It can be in fungible assets. It can mean anything else, right?

The NFT story started to play out as a result of new other ones trying to access marketplaces that supported one or the other chain, right? And so you get to access as new audiences, you get to create experiences with different communities. You get to access different user bases, but we're seeing the experiences get a lot richer. So you see something like [inaudible 00:42:00] come out recently, they got featured on Bloomberg for new cross chain staking program where they have in game elements that kind of change based on cross chain NFT staking that are different experiences with different communities. And much like the asset bridge has that kind of globalization and cross pollination of commercial kind of elements. Cross chain NFTs are globalization kind of culture. And incorporating a lot of those elements across games that live on Solana, that live on Terra, that live on other environments and just creating those kind of richer experiences.

And so we're seeing people make NFTs on one chain, come to Solana, fractionalize them, trade them, put them back in, move them over to OpenSea on Ethereum. There's all kind of interesting use case patterns. And so it's definitely been less aggressively adopted than the explosive token bridge or the other generic message applications. But there are still 16, 7,000 NFTs, there are a lot of teams using it for cool and innovative stuff that we just kind of keep up out of the wood works every some time.

Austin (43:02):

Do you think that's social? Do you think that's technological? Do you think that's just like the ecosystem hasn't matured enough? I think I'm surprised how much ... well, I guess surprises maybe the wrong term. People have a lot of emotional attachment to an NFT, in the same way they don't have an emotional attachment to a Bitcoin. They may have emotional attachment to the concept of a Bitcoin, but I would be upset if I lost my particular Degen ape, even if I got a different one for the exact same value. Do you think that factors in at all to how people view the concept of wrapping an NFT, that it somehow weakens the authenticity?

Kanav (43:39):

I think for a lot of purists, it does. I think it was just so worthy, right. For the most part, people aren't even going to realize, the large end of this consumers like buying these things, an NBA top shot or air, or any of these other platforms, it's something on the app for them. And eventually it's going to be extracted away as we draw to Eth, we draw to Solana, we draw to wallet, connect wallet, and it's going to be kind of as simple as that. And so we're always going to have purist stakes, but I think that's going to remain within our little chamber here.

Austin (44:05):

For Jump Crypto in general, how do you view NFTs? There are obviously firms now that are dabbling and market making and NFTs. Is that something that you've looked at and if not, what was the decision not to enter that space yet?

Kanav (44:19):

It just doesn't take a lot. We are looking at trading opportunities. You are looking about margins, you're looking about what predictive offer you can have, like what the edge you can have on a traders and then how many times you can apply that edge, right? It's just as simple as that. And even if you can get a 30% margin on something that trades a hundred million like week one, I mean, [inaudible 00:44:40] now.

But if you have a low volume asset class, even if it has slightly higher edge, and it is harder to predict and more dimensional, this is on a good researching decision. So as that volume changes, we will continue to stay on top of it. And I don't know if these are trading tens of billions of dollars every day, and have really interesting datasets, I'm sure we'll be trading them.

Austin (45:00):

If the market hundred X in size, you wouldn't be opposed to it, it's just the sizing opportunity issue right now.

Kanav (45:08):

[inaudible 00:45:08] you can't be the richest man. It's about identifying if there's opportunity and executing all native there is.

Austin (45:14):

Looking at wormhole, one of the things I do want to touch on is the wormhole hack and exploit that happened a little while ago. It was one of the larger bridge hacks at the time. It was eclipsed a few weeks later by an even larger hack of another bridge, also targeting stolen Eth in this process. I'm sure that activities and projects that Jump has been involved in have had larger losses of money or similar volumes of money just based on the area you operate in. But this is one that inherently to the nature of Web 3.0 is very public. How is that like internally knowing that your core contributors to a project that suffered this kind of exploit, and also that failure is now a public failure, as opposed to maybe where it would've been a private failure before

Kanav (45:56):

Building is hard, building in the open is even harder. And building in a decentralized open space where there's a large network of participants, consumers, affected people, the stakes we're playing in, right? That's the stakes that every DeFi application, that every L1 at every bridge and that everything in Web 3.0 that aims to do something meaningful inherently adopts and has to learn to deal with.

The hack was big punch in the gut, obviously a big financial loss as well. The fundamental nature of smart contracts is that the code and code can have bugs. And this exploit was kind of deep, deep, deep down in the stack, in kind of like Solana instruction verification account check that was missing. The auditors listed our team that has independently been one of the biggest bug bounty finders in the space missed, and code based at the opportunity to be out in the wide for seven months, kind of had unchecked.

The day of the hack, of course really, really rough. Jump is not used to being a public institution. So this was like you said, a very public kind of fallout in nature. I can't possibly have been prouder of the way the team reacted to this incident. We kind identified it within short course of it happening. We pulled the meeting room together, identified the bug, fixed up a batch, managed to coordinate the guardian network to bring it up, bring it down, announce our intent to refill the gaping 320 million hole within an hour of the incident being reported on, and brought the bridge back up within 18 hours to end to end.

Building bridges and building cross chain is very, very hard. And that's where the reward for it, building it right, is even harder. You don't even make 320 million decisions very lightly, and this should hopefully signify you how much conviction and faith we have in the code base in bringing it back up in 18 hours. It should tell you about where we think this whole space is going and where Wormhole is going and where interoperability is going and what a core piece of infrastructure in that realm would mean.

Security continues to be extremely, extremely top of mind. We have a 10 million bug bounty. We have an internal red team that's basically thinking about breaking Wormhole and our key projects every day. We have multiple audit from [inaudible 00:48:12] with lots of audits going on, pretty intense security review practices, all of which can be found publicly online. And I'm incredibly confident that Wormhole has come out more stronger from this incident. The team has come out kicking and that we're building one of the best and most trusted inter op solutions out there.

Austin (48:32):

Looking across the ecosystem, let's say over the next 12 to 18 months, what are you personally most excited for and what keeps you up at night? What do you still have worry around?

Kanav (48:44):

I'm looking forward to a whole bunch of things. So definitely very excited about all the advancements that we are seeing in the succinct proof and zero knowledge space. That stuff is just awesome, it's magic. And I'm just so excited to see all the things that's going to unlock for us. There's a lot of interesting problems in the hardware acceleration space that need to be made to make that possible. There's a lot of problems algorithmically that are kind of being uncovered there. And I think hopefully this conversation has lent on that we have a big infrastructure mindset. When I say streets and sanitation, that's kind of what we think about every day. That's what we're looking forward to. And on what we can build to and contribute to that.

Austin (49:19):

You said something I got to get a little more info. You said specific hardware to accelerate certain kinds of applications. The only place we've really seen this so far across the entire crypto landscape is ASICs for Bitcoin mining. You see GPU mining optimization, but again, nowadays I wouldn't necessarily even call GPU specialized hardware. It's really commodity hardware at this point that's just deployed for a specific application. When you're looking at the space, where are you seeing actually custom silicon or FPGAs becoming something that it makes sense to deploy?

Kanav (49:50):

Yeah, I mean, definitely for zero knowledge provers, right? So like two verification times have compressed a lot to the point where it's pretty feasible on most blockchain environments today. But proving itself is still super, super resource intensive. That's where there's a lot of simple math operations that can be encoded into Silicon and into FPGAs or ASICs to speed up the process significantly. And that's where we are seeing a lot of adopt. There's already a lot of people working on this on hardware acceleration using FPGAs, maybe even ASICs on zero knowledge provers.

It's a little bit of like it's tough to say when the right time is because there's new changes like algorithmically coming out all the time with the new advances in new papers. And so when you spend a whole bunch of time just optimizing Fast Fourier transforms. And then the next paper makes Fast Fourier transforms not relevant. It's tough to make a decision on when the right time is, but I know there's a lot of work already going on into it. And it's a space that we are very familiar with and that we are also excited about. And mostly, mostly positive stuff on the regulatory side.

Kanav (50:56):

As of recently I think there's a lot of good faith engagement from regulators around the world on setting frameworks and policies for how kind of all this stuff gets put into place. Outside of maybe China we haven't seen anything very aggressively or handed on cutting off innovation. We even saw India now finally starting to open up. And so I feel more optimistic about the regulatory landscape than I did 12 months ago. We need a new influx of builders to keep coming and building cool experience and leveraging this technology where we're seeing that happen. We need capital being continued to commit to this space where we're seeing that happen.

Austin (51:35):

The inverse of that question, what are you most concerned about on a macro level for the space still?

Kanav (51:39):

Asset pricing is of course highly dependent on macro environment and that is unrelated to crypto, right? And there's just like, it's its own thing. And so we'll see price movements on a different time scale. And if you see a very sustained global macro depressed environment, then we're going to see less capital, less builders and less momentum in the space. And I think that's probably the biggest overhang we have today.

Austin (52:03):

In the long run we're all dead.

Kanav (52:05):

In the wrong run we're all dead. That's right, so let's keep building.

Austin (52:09):

Yes. One kind of last question here, I think if you rerun the clock maybe three or four years, the prevailing wisdom in this space was not that traditional financial institutions were going to expand their vision and embrace blockchain and we'd call it Web 3.0 at the end of the day. And you'd have Twitter profile pictures of NFTs, you'd have Jump Trading building software that's open source for a decentralized environment. And we really have seen that that is what was originally pitched as a forked parallel path of economic development.

Austin (52:42):

It's a little bit more twisty curvy than we thought it was going to be. And there's a lot more integration with traditional companies. As crypto has a thesis about it, that it's moving more consumer, right? Across the spectrum you see more normies getting into crypto in one way or another. Does the existing market of specifically the United States and Europe where you see very few competitors within an ecosystem.

Austin (53:07):

There's basically only two phone companies. There's basically only three cell phone companies. There's basically only four internet provider companies. Across the spectrum you see very non-competitive markets. When you look at the consumer landscape in the United States, do you imagine that we're going to see similar patterns rolling out there as we saw in the financial industry, or we really are going to go back to that idea of a parallel execution model?

Kanav (53:30):

Yeah. I'll strongly state that I don't hold a heretical view of this kind of being a completely forked off parallel path that has no relevance to anything that we do today. I think it's an amazing technological invasion that gives us tools to coordinate resources in an untrusted environment. And that's unlocking a lot of magic.

Kanav (53:49):

But that again bleeds in with the rest of the real world, which is also big and has its own dramatic pieces of innovation and with a whole bunch of other stuff going on. I think one of the most exciting things has been kind of the global equalizer that crypto can serve to be. Yesterday we saw Polygon come out with an integration with Stripe. And these are three kids from India that had no early supporting or backing that kind of boosted the network on their own and are now competing on a very, very competitive landscape with people from every single part of the world that are very well resourced, competent teams.

Kanav (54:23):

We see [Inaudible] coming from Korea. We see teams from Australia and New Zealand over the [inaudible 00:54:28] guys. We see people from Berlin and the US and everybody competing on the same, not only the similar consumer markets, but also on the same capital markets. And there are network effects that accrue, but not cannibalistic network effects that accrue. That makes me very excited about where the space is going overall. When we talk about integration points itself, it's going to largely depend on [inaudible 00:54:52], right? And that's like an unsatisfactory answer.

Kanav (54:55):

But if you're talking about financial markets, crypto is already integrated heavily into the financial markets with 15 excellent international venues that are competing, so we already have a fractured environment. That is before the [inaudible 00:55:08], the NASDAQ, the CME groups have made their moves in the space. And they're clearly not going to be monopolies in crypto, obviously, right?

Kanav (55:16):

If you look at something like a telco and interactions with like cell networks still remains to be seen, whether like decentralized constructions of those kinds of things can be competitive. I mean, building telcos and stuff has such strong network effects and so many economies of scale. And it's unclear whether a Web 3.0 means of accruing that value to a decentralized organization has the ability to accrue the similar kind of network effects and so remains to be seen. But I'm excited to see it play out.

Austin (55:43):

I always enjoy getting to pick your brain about where these technologies are going and the intersection of a very traditional financial world with this new global system that we've all been building. But thank you so much for joining us for spending some time digging into this stuff.

Kanav (56:00):

Thanks a lot for having me on Austin. This was super fun and as always, love chatting, so yeah, we'll see you again soon.

Austin (56:04):


May 03, 2022
Chris Osborn - Founder & CEO, Dialect Ep #64

Chris Osborn is the Founder and CEO of Dialect, a smart messaging protocol that powers seamless, on-chain messaging experiences, starting with wallet-to-wallet chat and dapp notifications. Joe McCann guest hosts.


00:49 - Origin Story

02:06 - What is Dialect?

05:59 - What are the blockers in Web 3.0?

07:46 - Why Solana?

11:11 - Looked into other ecosystems?

13:52 - What is the process to use Dialect?

22:31 - Using Solana Pay with Dialect

27:22 - In-game messaging

28:36 - Dialect's operations and current projects

31:03 - Exciting projects in web 3.0

34:53 - NFTs and Messaging



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Joe (00:10):

Hey everybody. Welcome back to the Solana Podcast. It is Joe McCann here again as your guest host, and today we have a very special guest, founder and CEO of Dialect, Chris Osborn.

Chris (00:23):

Hey Joe, it's great to be here.

Joe (00:25):

It's great to have you. So I'm really excited about today's episode because what you are doing at Dialect, I think, unlocks a lot of really interesting use cases in the Solana ecosystem, but first I think it might be useful for the listeners to kind of get a sense of who you are, your background and frankly, how you even got started with Dialect.

Chris (00:49):

So my background is actually in physics. I did my PhD in Atomic Physics at Columbia University. So this WAs like laser cooling and trapping of atoms, precision time measurements and quantum computing stuff. I learned pretty quickly that what I really loved to do is write software and build technology, so I knew after graduating that I wanted to move to the West Coast and work on some cool technology problems. I actually had an opportunity to split the difference and I worked at Rigetti Computing. I don't know if you're familiar, they're a quantum computing startup and got to work on almost every part of their stack, including a lot of software and technology.

I helped lead one of the three teams that launched quantum cloud services, which was like AWS for quantum computing, and that helped me realize that I really love kind of like bridging the gap between hard tech and consumer problems and how do users interact with hard tech, and got the itch to build a startup. So actually I started this company outside of crypto and participated in YC. We were building a consumer investing product and pivoted the company actually last fall or early last fall full force induced Solana and started building Dialect.

Joe (02:01):

Yeah, that's great. I mean, can you maybe just in a few words, like what is Dialect?

Chris (02:07):

Yeah, so with Dialect what we're doing is we're building what we're calling a smart messaging protocol for DApp notifications and wallet-to-wallet chat. Those are the first two use cases that we're working on. And the best way to think about it is kind of like a decentralized inbox, a way to enable the messaging primitive between wallets. I personally like to think about kind of like hair on fire burning use cases, the things that people need today, and one of the major use cases here is giving DApps a way to connect directly with their users. And that's through the main mechanism that users identify themselves on the blockchain, which is with wallets.

Joe (02:46):

So cool. So, I mean, I remember meeting you many, many months ago last year and was really blown away because one of the kind of gaps that I was seeing in a lot of Web 3.0 Applications, irrespective of the underlying chain, was the ability to have like native notifications that are genuinely on chain and not using a service like Twilio or a Web 2.0 or cloud computing context. So the users kind of better understand what Dialect is and can enable, you can kind of walk through maybe some canonical use cases of Dialect?

Chris (03:22):

Yeah, absolutely. So the use case that got me into it right away like that first just really compelling use case is if you're using a collateralized lending protocol. You lend in token A and you borrow out token B and as prices move, if you become under collateral, the protocol or many protocols will end up liquidating your collateral on an underlying market. And in a world without messages and notifications, basically up until today, a lot of early DeFi users relied on just like a poll mechanism. Like I got to constantly come back to this product and refresh the browser and see how are my positions doing? And there've actually been some like kind of remarkable situations where when there were dramatic price movements, people could see that there was a wallet address on chain that was at risk of a very large liquidation and folks were like, "How do we get in touch with this user? How do we actually contact them and let them know that there's a problem?"

And so there's no question that there's like a huge need here. Liquidations were the start, we're now working with projects across DeFi in various capacities, DAOs is another really big use case we can talk about in a little bit and NFTs. So alerts about really important situations, obviously those are kind of like that first use case, but the holy grail with messaging is user retention and engagement. So even if you get beyond emergency situations across whether it's like NFTs and more social, or whether it's DAOs and collaboration, there's just like infinite use cases for technology like this.

Joe (04:58):

That's really cool. I mean, I agree. It feels like almost every Web 3.0 project or protocol is going to need notifications in some capacity. I mean, I know myself I've been in those positions where I need to add more collateral to a position and I have to keep going back to it, or more recently using some of the structured product vaults that are out there where you can... if you want to say redeem some of your investment, maybe the interest that you've earned, you have to just kind of set a calendar invite.

Chris (05:27):

That's exactly right. That's right.

Joe (05:28):

Yeah. So to me that's some friction for end users, but it seems like a solvable problem and it sounds like that's what Dialect is doing. But I'm curious because today in like a Web 2.0 Kind of cloudy world, push notifications, email notifications, in-browser notifications, they just seem so commonplace to implement. So why is it that you think that this hasn't really been a thing yet in Web 3.0 ? What's been kind of the blocker and maybe then we can talk about why you chose Solana?

Chris (06:01):

Yeah, this is actually a really... This is a super cool problem. The blocker is the following, and obviously nothing's ever truly a strict blocker, it's really just a question of sort of like what are your priorities and what are you working on? So in Web 2.0if you're like a typical startup, you're already running some backend service that's got a database and it's got some synchronous and asynchronous processes. And if you're building in Web 2.0, there's tons of Web 2.0 tooling to support you. And so right into one of those backend services, you can sign up for Twilio, get your authentication keys, store them as environment variables and then anytime there's a specific process where you want to send a user a text message, you just fire it off. Same exact kind of Web 2.0 SaaS system exists for Apple push notifications, Android, SendGrid email, all that. Where things get interesting in Web 3.0 is typically, and especially with like the more really Web 3.0 native projects, whether that's in DeFi, NFTs, wherever, your backend is the blockchain.

And there's some basic things that are different with most blockchains like Solana or Ethereum, and that's that most information is public. So you can't store sort of like secret credentials on chain and then in addition, you can't make HTTP requests to some other SaaS. So like the SaaS model breaks down when you start building in blockchain, so if you want to support these use cases for your users, you basically have to like expand your engineering footprint, spin up some Web 2.0 services that perform two processes. One is monitor the blockchain for the events that you care about and then number two is decide that you're going to send messages accordingly, whether that's like Twilio, email or push notifications. So that's part one and then part two, to answer your question about why Solana, and this comes back to my personal journey in crypto.

So a friend told me about Bitcoin way back in like 2011. Around that time, I was first exposed to the proof of work concept. It's like easily top five most incredible things that I've learned in my life. I didn't start working in crypto until now, but that had a huge impact on me and I've been following along with everything that's been happening in crypto since then. So heard about Ethereum in 2016 when it... I think it launched in 2016. And what Bitcoin did with proof of work decentralization and then Ethereum did for generalizing compute on-chain and in a decentralized fashion, I discovered Solana in late 2020, I think early October, 2020. For me what Bitcoin and Ethereum did, Solana's proof of history and how it scales technology for ultra fast transaction settlement times, ultra low transaction fee costs, that to me was as impactful. So I see that in the direct lineage of technology.

So, that was like late 2020, and DeFi Summer was in full force. I was starting to use more and more technology like more and more Web 3.0 native apps. Over the course of that year I mentioned I was working on a separate project, I saw the Solana ecosystem just absolutely explode. It was like a literal Cambrian explosion. So by the time it was like late summer of 2021, I was taking a hard look at what I was currently working on and then I was looking at Solana and saying every extra week that I'm not working on solana is just a huge missed opportunity. And pulled the trigger and moved full force into Solana. Solana's transaction costs and speed opened up an enormous new design space that is really not feasible if you want to build a truly on-chain messaging system on some other blockchains.

So if you're looking at fractions of a tenth of a penny in terms of the transaction costs and then subsecond, you know 400 millisecond block times, that enables a very large new design space. So what I saw at the time was this opportunity to build a whole new SaaS layers. So with Dialect we're building developer tooling, we want to provide this end user experience for developers to build into their own DApps. And when you have any orders of magnitude improvement in performance, it just opens up a very large new space to build in, so to me it was a no brainer. There was no question in my mind. So I've been a blockchain enthusiast for over 10 years, but Solana was that threshold. That was sort of that Rubicon where I just knew this is this, it's now time to build.

Joe (10:22):

Yeah. I mean, I feel like in other ecosystems, something like this... I don't want to say it's not possible, it just seems like it's impractical. And I think Solana's design where it has this incredibly cheap transaction fee and speed is perfectly suited for something like Dialect and on-chain messaging, if you will. But have you dug into say other chains like maybe something in the Cosmos Ecosystem or even just Ethereum? And did you evaluate whether or not this could be done or was it just kind of like at the baseline look, Ethereum is like pretty expensive for transaction and relatively slow block times, this is just going to work for say push notifications or wallet-to-wallet messaging?

Chris (11:12):

Yeah, so that's a great question. I would say the following: there are some wallet-to-wallet chat and communication tools on Ethereum and with many of them, what you do is you authenticate with your wallet, but the messages may be stored off-chain somewhere else. And that's not obviously a total deal breaker. In general, I think the authentication problem... I know it's not specific to messaging, but it obviously takes really like a front seat in messaging of who's sending these messages, and the general problem of authenticating with your wallet is just a fun design space. So we're personally really excited to see messaging come online on some other blockchains. If you really want to run a fully on-chain experience where the message source of truth is on-chain, Solana really has several orders of magnitude on a lot of these competing chains.

Not that that's necessarily the future that exists long term, it may actually make sense for there to be more of a data centric L1 that stores these messages. And so the choice for us coming full circle on this question is Solana presented an opportunity for us to build relatively small architectural footprint. That means let's just keep as much on Solana as possible. We're decentralized first, we're not storing any messages in say fire base or any other Web2 services, and really provide that great experience, and it's really just a question now of where go.

Messaging between wallet is such an important and compelling use case, and I think we're seeing a lot more projects come online now that this problem's inevitably going to be solved in a cross chain manner. We are excited about that future, but we're a hundred percent focused on Solana for now. We also say, I didn't necessarily explicitly say this earlier, but Solana's proof of history concept and the way that it works, some of the first podcasts I listened to about that in summer and fall of 2020, just really blew my mind. So another big piece of it is go where there's just exciting technology, where the developers are extremely talented and everybody's really enthusiastic. For us, there's just a no brainer, we a blast on Solana.

Joe (13:15):

I hear that very, very often these days, there's been quite a bit of interest from developers; in a lot of cases, developers who have never written an Ethereum app or any sort of other Web 3.0 app or just diving into Solana and loving it. So speaking of developers, as a developer, how do I use Dialect? Can you kind of walk us through the scenario? Is there an SDK? Is there a token I need to have? What is the kind of process if I'm a protocol or a project today that wants or needs on-chain messaging or notifications for my protocol or project? How do I get started?

Chris (13:54):

Let me answer in two parts. Number one is what you do today. Our messaging protocol is live and audited on the Solana main net, and we have open sourced our protocol and Web 3.0 client we build with Anchor. I really love anchor, it's one of our favorite toolkits we've worked with. So you can import that Web 3.0 client directly into your web app or some other process, some other service that you're running and you can get started sending messages right away. As I mentioned, even for DApp notifications, the primitive is wallet-to-wallet messaging. So in the same way that you might receive an email from a business, some kind of notification they're sending from an email address that they manages the business, the same thing goes here; you manage a key pair that you do your messaging with. So you can import our protocol and just start sending and receiving messages.

The main way that most projects interact with our tooling is two-part though, two layers on top of that core protocol. Number one is if you're a DApp and you need to send a notification to a user or a message saying that they're at risk of liquidation, let's come back to this liquidation example. You need to be monitoring the blockchain to detect that there's this event where you then programmatically send the messages. The same thing goes historically with Twilio or SendGrid, you incorporate this code into your services. So like we talked about earlier, you need to be running these off-chain services that help determine that events are happening and to write messages. And we offer open source tooling around this, it's called our monitor framework and our monitoring service, which is our opinionated way about how to host that. And you can then basically spin this up yourself, or you can host with us and you use that to write the very minimal code that's specific to your protocol.

So let's say you have some way to query for the users or the wallets obligations, which is a term that lending protocols use, and you can get your collateral health or your risk of liquidation directly from that data. Our monitoring service allows you to fetch that data, basically write the code that's specific to your protocol and then that gets piped into kind of like a reactive framework that we use to determine whether or not to send messages. So this is monitoring tooling that's specifically custom built for figuring out to send a message and it can work very flexibly with other kinds of tooling. Maybe it's like you've got a Kafka messaging queue, or some other kinds of... Some projects actually have fairly sophisticated Web 2.0 infrastructure, but they're still interested in working with us because we handle the hard problem to just making sure at most one and just at least one message get fired off to a user.

The second half is how do you surface these messages to users? So today what we're solving, what we're live with are what we're calling in-app notifications. So think about your favorite Web 2.0 product; you sign in, and maybe somewhere in the nav bar you see a little notification bell and it's a button and you can click to see that there are messages or something you need to know about from that product. Today, we offer basically like a single React component. We're prioritizing React, most projects, web apps are built in React, where you can drop that single component into the nav bar of your DApp and right out of the box if a user clicks that notification, they have the opportunity to fully onboard to the notification experience all within that single component. So it's like a model that pops up that allows you to say yes, I'd like to enable notifications for this app.

And then once you've done that, you can kind of see what are you going to get notifications around. So it might be warnings about pending liquidations, it might be liquidations themselves, it might be actually more receipt style messages. So it might be an order filled if you're using a DEX where orders fill asynchronously, it can be things around DAO collaborations. So one of the major use cases that DAOs we've been speaking to have been interested in is engagement and retention on voting. So you might receive notifications from a DAO telling you that you have six hours left to vote on a proposal, or that there's a new proposal, or that maybe you're near a quorum on the voting threshold needed to pass or reject a proposal. So there's all these different use cases and really you get that right out of the box directly in your nav bar with this single React component. So that's in-app notifications.

What's coming soon and coming back to this question of just the broader messaging thesis, we're launching support soon for email, Telegram, possibly text message, other kinds of Web 2.0 means because the reality is even if the thesis and the vision is fully on-chain messaging, we live in a world where many users rely on and really appreciate getting messages via Web 2.0. So email's a no-brainer, and a lot of projects have asked us to support that so that's coming online very soon. And then Telegram is a little more of like a Web 3.0 native messaging solution that's still off-chain, and a lot of projects have asked us for support on that. So you can think of the Dialect standard as both the on-chain messaging standard, as well as a suite of really out of the box tooling to allow DApps to reach their users however they want.

Joe (19:13):

What's really interesting about how you're thinking about building out your company and the protocol and kind of the suite of products is that it reminds me of kind of like early days of Twilio. So I wrote a blog post many years ago, probably 10 years ago now about how over-the-top messaging was really kind of this new platform play. We've seen through the myriad messaging apps and then kind of the power of iMessage on Apple and the blue bubble versus the green bubble. I think there's now a regulation coming out of the EU that all these messaging apps have to inter-op with each other. But that took many, many years and I think Twilio really captured a lot of the developer mind share around creating these kind of suites of messaging products and it started with SMS. And so you mentioned something like Telegram, which I think everybody in crypto lives and dies in Telegram. I can barely keep up with myself.

Chris (20:17):

That's right.

Joe (20:17):

I've written some Telegram bots and they're pretty easy if you have a fundamental understanding of how webhooks work. Is that something that Dialects will enable? Is that like maybe some arbitrary webhook could fire? Or is it something that needs to be actually he baked into the on-chain program itself?

Chris (20:34):

Yeah, so it's not actually for support. We want to keep the part on-chain as light and simple as possible and so you can think of these web two channels such as Telegram as really just parallel rails. So you have the detection of an event that a user wants to hear about and that's monitoring data on-chain, and then you have various channels which may purely be in one user's case, "Oh, I just want to get an email, or I just want to get a Telegram message from a bot that's managed by the project." The developer experience around Twilio and Telegram and whatnot are excellent, but what Dialect provides here, if a DApp is interested in reaching their users by these means is you just get it all out of the box right away. You write a little snippet of code that fetches the data that determines if a message needs to be sent, and then you say how you want each message to look and that's really all you have to think about.

The user will choose how they want to be gotten in touch with directly through the front end tooling that we provide. I think it was actually you, Joe, who mentioned this to us, that one of the key metrics is time to success. Crypto is moving at just an absolute lightning pace and while every project that we've talked to really wants this tooling, it's never quite the first priority that they have. So what we're trying to do is really make that as simple as possible for these projects to integrate us.

Joe (21:53):

So let's talk about some of the categories that exist, not just broadly in Web 3.0, but I would argue is probably more suited towards Solana, particularly the payment space. So Solana Pay has launched, there's lot of people building a lot of really interesting stuff with Solana Pay from point of sale solutions to web apps and mobile apps, et cetera. Can you kind of walk me through an example of how say someone that wants to build something with Solana Pay would utilize Dialect.


Chris (22:26):

Yeah, this is actually a really fun topic. Ever since Solana Pay got launched, the team and I have just been super excited about the messaging use cases there. This is also a good template for talking about our smart messaging thesis, so I'm going to segue from Solana Pay into a broader discussion here, but I would start by saying the following: Solana Pay is a standard for being able to perform transactions, being able to perform transfers between wallets on-chain and there is a very compelling messaging use case here. If you think about some of the standards in Web 2.0 , whether it's Apple Pay for transferring, or Venmo or Square Cash, that kind of dynamic experience of being able to message between users and actually take action on the message. One of our key insights with Dialect is this smart messaging standard we're building toward, and you can think of that kind of like an interactive link preview.

In every DApp that you use where you connect your wallet, you have signing privileges everywhere. And so where we're building and this... A few minutes ago I said, "Here's where Dialect is today and the question is where we're going." In this smart messaging future, we're allowing users to send basically interactive link previews and you can think of a transfer request as one of the simplest use cases there. So for example, if you want to send a transfer request by a Dialect message to one of your friends directly at their wallet address, you can send that and then they can take action right in the message, whether that's scanning a QR code that's rendered for them, or it's clicking a send payment message. Coming back to some of the use cases we talked a little while ago about such as liquidation, warnings or DAO proposals and voting prompts, the holy grail in user retention and engagement is being able to reach them and have them be able to take action right where you're messaging with them.

In Web 2.0 beyond these app specific use cases, whether it's a Venmo transfer request or similar, most of the time if you get an email, there's a link in the email and you have to click that and go out to another app. And maybe you're not logged in on your phone so you say, "Okay, in five hours when I'm back at my computer I'll take care of this." Or similar with a text message. What's really unique about messaging in Web 3.0 is that we can build a standard where you can take action right in the message. So whether it's Solana Pay, whether it's a vote yes or a vote no on a proposal, or it's a quick deposit to top up your collateral to avoid liquidation, any of those things with Dialect and our smart messaging standard, what we're building toward is that kind of Web 3.0 native future.


So the last thing I would say about this is, yes, it's true that messaging and notifications are this really critical missing piece of Web 3.0 and it's just a really known hair on fire problem. When we got started on Dialect, the question we asked ourselves is not just how we fill in that missing piece, but also how we take Web 3.0to a place that Web 2.0 can't as easily go. And this is because our thesis is Web 3.0 is going to reach mass adoption because of exciting and really compelling delightful new use cases that products are going to start to come online, whether they take advantage of universal authentication like we're talking about now, whether they take advantage of composability of sort of the global shared state of all the data existing on a single blockchain, those are the use cases that are going to make it really compelling for the first billion users to onboard to Web 3.0. This is our thesis with smart messaging and Solana Pay is a really key and interesting part of that picture.

Joe (26:18):

I'll be honest, that is fascinating because one of the cool things about what you're mentioning is that push notifications or in-app notifications become actionable. You can actually do something right there-

Chris (26:33):

That's right.

Joe (26:34):

... versus it being this sort of delayed or async process. And so the use cases really open up pretty dramatically because of the fact that these messages are now interactive and you can do things with them.

Chris (26:50):

That's right.

Joe (26:50):

And have you guys thought through maybe where this could potentially work in like the context of a video game or even like the metaverse? There's a lot of Web 3.0 games/metaverse type environments being created and I'm curious if sort of in-game messaging makes sense or if it's something that is slightly different?

Chris (27:18):

Yeah, in-game messaging I think is a fantastic use case, and we've spent a little less time talking to gaming projects. I think just because that's a little early on, as we have say, talking to DeFi, NFT, DAO projects. But one of the things I'm most excited about is sort of the universality of NFTs as assets and all of the infrastructure that's being built around the things that you achieve and the assets that you acquire in-game end up having a life and a value beyond that game. It's really compelling to us that there be interactive sort of like smart message experiences around that content, at the very least. So I think gaming is an incredibly exciting in use case.

Joe (28:05):

Awesome. Yeah, I could see a lot of really cool integrations being utilized there and they just kind of don't exist today. I mean, frankly, there aren't a lot of Web 3.0 games period, but I know a lot of them are coming online later this year. What about like the traction of the company and folks that you're working with today? I know since you pivoted Dialect into this smart messaging protocol business things have really started to heat up. Can you talk about maybe how many people you're kind of signing up or any projects that are currently utilizing your product today?

Chris (28:38):

Yeah, that's right. We're talking to a few dozen projects right now across a lot of the verticals that I mentioned earlier. We're going live with a handful of our first projects that we've publicly announced so far. So that includes Squads and meaning on the DAO tooling side, Jet Protocol on the lending side, Bridgesplit on the NFT and NFT fractionalization space. Oh, on protocol Friktion is another project, you mentioned structured products earlier and it's been a real joy working with them. One of the things that we believe is it's best to like dog food your own tooling to make it better. So we've just straight up been rolling our sleeves up to help build out with them, and that helps us get better and better at our developer tooling.

Then there's just this other wave, as I mentioned, a few dozen other projects that we can't talk about quite yet, but are extremely excited to support. And to support all these projects, we've also been growing the team pretty quickly as well. So there's a lot going on right now and as we talked about earlier, it's an incredibly compelling use case. This technology has to exist, at the very least receiving an email or a text message or a Telegram message. But where things really catch and where we really have a great time with our conversations is around this smart messaging future that we're building out, and that's when I think folks get really excited about the opportunity.

Joe (30:07):

Yeah. I mean, I completely agree. It's really hard to imagine a scenario where an app isn't going to need some form of messaging or notifications. And given the direction and the future of the company and where you guys want to take the product and protocol, it seems inevitable that folks are going to be adopting this. So maybe talk a little bit about how you're envisioning the future. You know, you have a very specific view into what you're doing with Dialect, but by engaging with all these different projects and protocols, you can get like an interesting view into what things are happening, what things are coming out soon, and maybe where you see things heading. The space is evolving and changing so rapidly and quickly that it's hard to predict anything, but what are some things that you kind of see in the future not necessarily just for Dialect, but also you Web 3.0 in general and how maybe Dialect plays a role in that?

Chris (31:05):

Yeah. I think if there were a single theme and I'm not alone in saying this, it's just really what got me into crypto in the first place and it's incredible to see it beginning to happen. I would say the thesis here is composability, so any blockchain that really makes global shared state a possibility. I think it might have been Chris Dixon who said composability is like compounding interest, it just causes this exponential runaway in technology. And the things I'm most excited about and we are most excited about at Dialect is that composability. So whether it's being able to exchange information and perform financial actions between DeFi protocols or it's the financialization that's going into some gaming tools that are coming online, like you said, that rely on some DeFi infrastructure like... To me, this is why it's going to be the sort of killer consumer experiences that come of composability and global shared state that are really going to make for the next big wave in Web 3.0.

Chris (32:09):

And the way we're interested in that in our own small way with Dialect, and I didn't mention this earlier, is one of our visions here with smart messaging is creating a kind of decentralized inbox. So as we mentioned, our tooling today supports these on chain messages delivered directly to any given DApp where the user enables and then can consume those messages in the DApp itself. But those messages can be consumed by anyone and so there's this other half of the problem that we're working on that's coming online soon, where for example, a mobile wallet could have an entire inbox and messaging section. And now you're talking about no matter which DApps you've enabled, you're receiving a true iOS or Android push notification directly to that mobile messaging experience that you have there, and that's just yet another example of composability. And so, like I said, I'm not alone in being incredibly excited about this but it really is, I think, the kind of compounding developer experience that's just going to create a whole new set of really exciting consumer... Like a new kind of internet consumer experience.

Joe (33:18):

That's awesome and I agree. I think one of the areas that is no short of discussion in Web 3.0 is NFTs. I've talked about this on some Twitter spaces and other podcasts where right now we're just kind of in the infancy of what NFTs can unlock. You know, there's obviously the art aspect of it, there's in video game assets, et cetera, et cetera. But one of the things that I am interested to hear your take on, and maybe how this correlates to Dialect is NFT is in a person's wallet, it's on chain, but the person interacting with the wallet is a customer, a user, and I think a lot of companies want to be able to engage with their customers and users more directly. So is there a scenario where I have an NFT in my wallet and depending on the NFT mentor or something, maybe it's a brand, maybe it's a company, maybe it's an artist, maybe it's a musician, has a way to either via the NFT directly or utilizing Dialect, be able to kind of communicate with me directly?

Joe (34:31):

An example I always give is imagine Starbucks wants to airdrop, I don't know, some seasonal loyalty program thing, right? Christmas, Easter, or whatever, spring break, you name it, and it's for people that have this NFT in their wallet and they want to airdrop them something or be able to communicate with them. Is this something that Dialect would unlock or do you think this is something that's more kind of NFT specific?

Chris (34:55):

To be honest, I thought you'd never ask about this. This is this third part of smart messaging that we are just beyond excited about. It touches on a few different things, but maybe I'll just say briefly that another key aspect of Web 2.0 messaging that I think to many of us feels very broken is this question of sort of like cold inbound and marketing and spam. With Web 3.0's inherent financialization, there is this very natural situation where you can basically tokenize messaging and create markets around how different entities communicate with each other. And on the two extremes there, or maybe let's talk about three, two to three points on the spectrum here. If you Joe and I just want to message with each other, there's sort of mutual opt-in in the exchange of a token and we can just message with each other.

Similarly, if there's a business that I really love and I want to opt-in let's say, like you mentioned, I think you said Starbucks, I'll opt into that and there may be some implicit under the hood kind of exchange of a token that allows for that messaging. There's also scenarios where businesses want to get in touch with individuals that they think are high value, and that's a cold inbound scenario. In that scenario, a business might need to actually buy one of these tokens of yours on an exchange in order to engage with you.

By financializing that component of cold inbound, I think one, it creates a much more harmonious kind of like cold messaging experience in Web 3.0 that in many ways is a bit much in Web 2.0, but in the mutual opt-in scenario or the messaging is effectively like vanishingly small cost or effectively free. And powering all of this, kind of coming back to your point about NFTs, is the NFT primitive. So this is a technology in an architecture we're exploring right now and it's very likely that NFTs will serve that use case. It's a kind of technology in a use case that we're just like beyond excited about.

Joe (36:59):

Fascinating conversation today with you, Chris. I really appreciate it. The future's bright for Dialect, the use cases that you've outlined are kind of no brainers, but what I'm really excited about is what we unlock in a Web 3.0 native context for smart messaging. I want to thank you today for joining the Solana Podcast. How can people actually get in contact with you? Are you on Telegram or Twitter? If they want to contact Dialect and get in touch, what's the best way of doing that?

Chris (37:26):

Yeah, the best way to get in touch with us is on Twitter and our Twitter handle is @saydialect, that's S-A-Y D-I-A-L-E-C-T. We love engaging with the community. Developer feedback, we live and die off of that, and so if you have complaints about our technology, have feature requests, any of that, send it our way. We're also on Discord. We have a Discord community, you can join that from our bio in Twitter. And then the last thing I would say is we're hiring, and so if this technology is interesting to you, we would love, love, love to work with you.

Joe (38:02):

Well, you heard it here first folks. Chris Osborn, computer scientist in the quantum physics space turned smart messaging protocol engineer and architect. Chris, thanks so much for joining the Solana Podcast. Looking forward to chatting with you again soon. See ya.

Chris (38:18):

Thank you very much, Joe. It was my pleasure.

Apr 27, 2022
Chewing Glass - Italo Casas

Chewing glass is what Solana developers do. Introducing the third episode in a new series on the Solana Podcast, Chewing Glass. Chase Barker (Developer Relations Lead at Solana Labs) talks shop with the most interesting builders in the Solana ecosystem. It’s for devs, by devs.

Today's guest is Italo Casas, the creator of SolDev and full time anchor contributor.


01:40 - Origin Story /  How he got into Solana

06:03 - ​​What he is working on now

08:33 - Engineering background

10:09 - How did he learn Solana to build Sol Dev?

12:04 - His Experience learning Solana

13:04 - Joining Solana to build Anchor / Anchor Tooling

18:39 - Native Solana Programs

20:11 - Thoughts on open-source

21:37 - Advice to other engineers

23:15 - Improving Solana



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Apr 19, 2022
Nigel Eccles - Co-Founder & CEO, Vault Laboratories Ep #63

Nigel Eccles is the co-founder and CEO of Vault Laboratories. VAULT is a new creator platform that uses the power of Web3 to unlock the next generation of fan experiences. Joe McCann guest hosts.

00:32 - Origin Story

04:48 - Vault

09:47 - Use case of Vault

14:38 - User experience in Web 3.0

18:01 - Why choose to build on Solana?

24:01 - BetDEX

25:51 - FanDuel vs BetDEX

27:41 - Regulation and user experience

31:04 - Youth as an inspiration?

32:48 - SAMO

34:42 - Exciting Projects on Solana


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Joe (00:09):

Hey everybody. Welcome back to the Solana podcast. It's your guest host once again, Joe McCann. Today I'm super excited to introduce the one and only Nigel Eccles.

Nigel (00:21):

Thank you. Thanks for having me on.

Joe (00:22):

Nigel, I want to jump right into it. Can you talk a bit about your background and ultimately, how did you get into crypto or Web 3.0 or however you want to define it?

Nigel (00:33):

Yes. I've got about 20 years experience in consumer tech, mostly in sports. I'm originally from the UK. I'm originally from Northern Ireland. Around 2000 I was involved in a, I guess a dot com. It was a company called as a product manager that I launched them as a betting exchange.

Nigel (00:51):

Since then I've been involved in a lot of different startups. The one that I launched in 2009 was a daily fantasy sports product called FanDuel. A lot of you if you're into sports, you almost certainly will be familiar with FanDuel because not only is it a very big fantasy sports operator, it's now a very big sports betting operator. Long history, I've always built consumer products. I've always been focused on B2C and trying to innovate and bring new consumer products together. Since then, I left FanDuel about four years ago and since then, I've actually launched three companies that are all in the consumer space.

Joe (01:32):

Wow. Three companies. When are you going to do something with your life?

Nigel (01:37):

Yeah. Well, they're all in their early stages. They're all in that promise space so it's exciting, but every day is still... There's still a lot of challenge. They're all still pretty early stage.

Joe (01:50):

Got you. We'll dive into each one of those in a minute. Can you maybe talk just a little bit about your journey of getting into crypto and then specifically, Solana?

Nigel (02:00):

I'm not super early. I've always, I've been aware of it for a long time, but 2017 was when I first got into it. Given that I've only ever really been interested in the consumer side, in 2017 I really dived in and was like, "Wow, this looks awesome." I remember reading about Ethereum. I never really had any interest in Bitcoin because I never really felt I had much money. And so I never really thought what's the point? I don't really have much money. Bitcoin to me seemed to be a great place if you had money and you wanted to store wealth. I didn't have any so it seemed mute to me. Whereas Ethereum seemed incredibly exciting so I get really interested in Ethereum. I also spent a lot of time looking at all these alternative coins in 2017. I remember going through CoinMarketCap coin by coin and going, "Okay. That looks totally pointless. That looks all promise, but no technology. That looks like that one above."

And really getting down to about 50 and I see chatting to some friends who are in the sector. Or that one looks totally scammy and just being fairly disillusioned. In the end I bought Ethereum and toyed with some of the stuff that was closer to being consumer ready like I think CryptoKitties. One of my former colleagues actually set up Rare Bits, which was an open sea competitor. Which was an NFT product back in 2017. He dabbled a bit, but really at the end of 2017 said, "This isn't even close to being ready for consumers. This is so hard to actually buy an NFT." It wasn't even clear what you would do with it regardless of any other form of transaction or paying for something, it was slow. It was expensive and I didn't see in the short term it was going to get there. 

I went back to focusing on Web 2.0 things over the following few years. In 2020 then, I started, I used to get interested in NFTs again. Interesting enough the first ones I looked at were Top Shot, which bubbled up very early in 2021 and then crashed again. And Nifty Gateway. Similarly, they had nice onboarding and that both of them you could buy-in with a credit card, but they both were a gateway for me to say, "Oh, I get this now. This is actually pretty smooth." Once I had an NFT, I was pretty beaten by it. It's like, okay. Because the first NFTs I ever bought was through a credit card. Then I went through the whole process of really understanding and trying to get my head around the infrastructure underneath it.

Joe (04:30):

Got you. That landed itself to probably some ideating on your end. One of these three companies you launched or projects, companies, whatever we call them these days is Vault. Can you talk a little bit about what Vault is and where the idea came from and frankly what's the plan with Vault?

Nigel (04:49):

Sure. Absolutely. Yeah. Vault is still very new, but we had been working with creators for about three or four years and what we'd been trying to do was to help them find a way to create a small space where they would bring in their very top funds and they would monetize them directly. If you ever read any material from this, [Ligen 00:05:11] is by far the leader here and we were talking to her three, four years ago and what we were trying to do is create this native mobile experience. Native was very important to us because if you look at consumption of media by consumers, 90 to 95% of it is mobile.

It's a native app. Whenever you do anything with consumers, they'll always say, "When's the app coming out?" You'd try and probe them and say, "Well, we got a really good mobile web." Then they'd go, "When's the app coming out?" Instead of fighting, we were like, "Look. It has to be a native mobile." We spent several years trying to build that native community, but it's really hard. What we found was it's hard to get people off existing platforms like YouTube, Instagram or Spotify. It's just hard to get them off.

Then secondly, it's very hard to monetize them particularly when Apple and Android are going to take a 30% cut. In about early 2021, when I started to dabble quite seriously with NFTs, I realized that actually this was a really interesting technology and we said, "This is a fascinating technology because I as a creator can actually monetize my work. I can actually sell something." Actually, if you think about it, it's much more in the analog world where I can create something of value and sell it. Previously to that in a digital world, it was very, very hard to do that because the person really struggled to buy something. When you could always right click copy something, it was very hard to do.

Now with the NFTs, that had provable providence. You had ownership and so we thought this is really interesting. We could definitely use this technology. When we dabbled with the NFTs, what we discovered was that lots of artists were really fascinated by it. Immediately they said, "This is great." But what we also found was a lot of them felt excluded. If you're a graphic artist, you're like, "Fantastic. Finally, a technology that people can discover art." If you speak to the graphic artists, NFT is just such a revelation to them. But a lot of the other artists, particularly music artists were like, "NFTs are fantastic, but it's not very authentic to what I do."

If you actually look in early 2021, [Grime 00:07:20], [Stevie Oke 00:07:20] and a lot of other music artists actually experimented with the NFTs, but they didn't really perform that well. Those NFTs are done between 60 and 90% in value from their meant price and a lot... More musicians actually just didn't do them. They just said, "Look. It just doesn't seem authentic. It doesn't seem to be the artist I am and it doesn't feel the right thing for me to be selling to my fans." We said to ourselves, "Well, why should this technology limit the art that could be shared? Why should it just be limited to graphic art?" Also, we thought it was interesting, everyone laughs at the right or they mock right click brigade. But they actually do have a point which is yes, you have ownership, but you have no exclusivity over this content.

There's anyone can see it and we thought there was something interesting if, what if we could A, remove the restrictions from the artist and B, create some exclusivity. Maybe only the people who own that NFT can actually see this piece of content. That was basically the background of the idea to Vault. What Vault is, is a platform where artists and some of the biggest artists that are coming on will be music artists would create a vault and they would then make keys to that vault and they would say, "Okay. I'm going to create a 1,000 keys and I'm going to the meant price of $50, a $100, a $1,000." Whatever price they set. That's fully set by the artist.

Then those NFT keys act as keys into a vault, and in that vault the artist can put any type of media that they want. That can be music. That can be video. That can be picture. That can be text. It could even be hyperlinks into other things like into merge or into live experiences. But the key thing there is that only the people with that NFT key can actually see what's in the vault.

Joe (09:10):

That's so cool. You hear a lot in the NFT world about these token gated communities. You're quite literally giving out keys or the artists I should say are literally giving out keys to get access to things that only the folks that have those keys can access to. It's a really cool concept.


Have you seen novel or unique things that these artists are doing or is it pretty straightforward like, "Hey, here's me eating breakfast or this is my workout playlist or whatever." What are the interesting use cases you've seen that artists I've come up with in their vaults?

Nigel (09:48):

Yeah. It's a really good question. Something just before I come to there, the other thing that we've done is we've made it very simple for the fan to consume the media and we've made it very simple for the creator to create the media. On the fan side, typically when you have this NFT gated community, you have to go to the discard and then you have to authenticate via club ladder grip which takes about 23 different attempts. And just in frustration it seems to have worked, although you're not sure. Sometimes the channels show up and sometimes they don't.

It's a really clunky experience and I'm not really criticizing them. I know it's a technically challenging thing to do. What we have done is that we allow people to create account that then links to their NFT and authenticates very smoothly. That's number one. The linkage between account and the NFT is very smooth. If they then sell that NFT, we actually know the address to look in and we automatically look and say, "No. They've sold it. They don't have access anymore."

Secondly, from the artist's perspective, again, that's a challenge for them. It's like, where do they put their content? What we've done is we've allowed them to add content to this native app that is seamless. Basically, if you can add media to Instagram, you can use Vault. It is literally one click, grab the media, drop it in. On the question of what use cases, we've seen a huge range but I'll give you a couple of examples. One that we're seeing is the artist album drop. When albums are being dropped, now normally they're going straight to Spotify. Sometimes some artists are also doing vinyl because they have a fan base that wants to collect.

What some of the artists we're working with are saying, "Actually, that vinyl's $30. Why don't you have $60 premium vault drop, which will not only have the music in it, but will also have some other special things? It will have some of the inspiration behind the music. It will have the cover art. It will have Voice Memos from me. Some all of backstory to the album." That's been a really interesting one. Another one music artists are working with us on is the tour drop. I'm going on tour next month. I'm going to be traveling for the next three months. Both myself and my team will be taking lots of social media. What I'm going to do is every day drop pieces of content from that tour so my fans can actually travel the country with me and see behind the scenes material that they would never otherwise see.

That's a really exciting one and we've got a few artists we're talking to about doing that on upcoming tours. Then the third one and a different category which is athletes. Last year college athletes got name, image, likeness rights. Before they couldn't be paid. They couldn't monetize their name. That has changed. But the challenge for a lot of them is like, "Okay. But what do I sell?" We've seen some of them advertise the local car dealership.

But they feel it. Again, it feels a little inauthentic. They have this huge fan base and what we've been talking to them and say, "Well, what you really should be doing is creating a vault and showing people what goes into that Saturday game day. What goes into getting to match madness." We're working with a number of athletes now that are doing vaults like road to the NFL. This is how I got to the draft. The training that goes on behind the scene. The interesting thing at a college level is we have boosters on the other side who want to buy the keys.

We have a really brilliant market emerging, which is boosters said, "Look. We want to support these athletes and we have these athletes coming into the college. God, well, we'd love to tell the story of what we're doing." That's becoming a nice market.

Joe (13:15):

It's so cool because I think one of the cool things that happened with Instagram is that when it really started to take off with celebrities and athletes and musicians, it's that fans felt closer to them  because they could see, hey, they're in this tour stop. Or they're just literally eating their lunch or whatever the thing may be. It just felt more personable. What it sounds like, this feels like maybe the second derivative of that where not only are you going to start to be able to see, hey, the behind the scenes of such and such band on tour, but also the spectrum of the media that could be produced and consumed by the fans is huge.

Nigel (13:56):


Joe (13:57):

One thing I wanted to point on that you mentioned earlier that I think is important is the user experience. You mentioned just authenticating really easily and being able to add content as simple as Instagram. Given the experience you have in consumer related tech, can you talk a little bit about maybe your broader ethos on this?

Because I know that certainly with DeFi 1.0, it was hey, we're just a bunch of hackers and academic engineers and we're just creating primitives. But some of these apps are just painful to use and now we're starting to see a big emphasis on user experience because quite literally it will help onboard more people. Can you walk us through that being at the forefront for Vault and even potentially the other products that you're working on?

Nigel (14:40):

Absolutely core. The co-founder of Vault, my co-founder at Vault also co-founded FanDuel with me. He was our head of product design and user experience. He had leveraged from the design of the product through to customer service. He's a world class designer. There's no way, two ways around that.

What he brings to it is just a completely smooth flow. We want to get millions, hundreds of millions of people into crypto, but we want to make it a smooth experience. And we think that one day, yes, maybe everybody does self-custody, but that won't be their first experience. We have to give them value that isn't just coin goes up. It has to be something that is cool that like me, I go, "That's cool. I'd really actually like to learn and understand the underlying technology and what else it does."

If we look at what Vault works, we've actually enabled in our payments. People were like, "I didn't even know you could do this with Apple." We're like, "You can." They're not opposed to this. What happens is a creator creates a vault. They set a price. Let's just say they set it at a $100 a key. It can't go as low as 20. One of the beauties about Solana is its low transaction costs. Things shouldn't cost hundreds or thousands of dollars.

If somebody's a fan of a band and they want to buy a vault, they should be able to buy something for $20. We could price it as low $20. The user can either buy with Solana. We give them the option with Solana. Or they can buy within in our payment. And that in our payment is two clicks.

Most people have their credit card already in their phone and suddenly they are owning an NFT that is built on Metaplex, built on Solana that they can then take off platform at a later date and self-custody. But they can have the full experience of owning that NFT and seeing the content without ever touching Solana or ever buying crypto. Without ever installing a wallet.

Joe (16:36):

Amazing. Yeah. Isn't it weird how people just want things that are fast and cheap? Such a novel concept.

Nigel (16:45):

Yeah. There's a very good book in usability. It goes back a few years called Don't Make Me Think-

Joe (16:50):

Yeah. Great book


Nigel (16:50):

... and it's perfect.

Nigel (16:52):

So many times people are like, you give them options or give them this, they're like, "No. Just make it real easy."

Joe (16:58):

Make it super easy.

Nigel (16:58):

If you can give them a straight line for them to get to where they want, the number of people you'd on-board will be several magnitudes higher than if you make them learn every step along the way.

Joe (17:09):

I totally agree. I think this may get to my next question around why Solana. It seems probably patently obvious at this point, but given that you have this experience in consumer tech, given that you built FanDuel or were co-founder with FanDuel, I don't want to diminish the massive team that brought this to market and maintains it.

While you were evaluating Web 3.0 related tech, and this is not meant to be a layup question. But you look at Solana versus some of the other ones and it's not that these other chains are bad, but when you're trying to design an experience that is seamless and as friction free as possible and using the principle of Don't Make Me Think, what was it that made you and your tech team say, "You know what? We're going with Solana because user experience is going to be so much better."

Nigel (18:04):

Yeah. It's a good question. It's funny the level of maxiness on Twitter. We have gone all in on an L1, but we've tried to be very clearheaded objective viewpoint because we're betting millions of dollars that this is the right decision. We're investing in an L1 because we think that this is going to be the best platform for us.

If it was a different one, we would totally have gone that different route because we can't be religious about it. We don't have the money to say, "Hey, we're going to invest in L1. That's not going to be the winner but for some reason we're going to do that." We started the process and even today we continue to look at other alternatives. I regularly look at Polygon. I regularly look at Arbitrum. I look at Avalanche. I look at NEAR because again, we're not religious. What led us to Solana though, was a number of factors.

Obviously the obvious headline was fast and cheap. But not just fast and cheap, but actually that being it was designed to be that. That was the criteria around how it was built. That was important to us because we knew that if in three, four years time that it got more congested, there was more demand, that the core team wouldn't be going, "Well, that's okay. We are fine with that because other things are successful."

We felt that there was a commitment for the core team. Though fast and cheap is core to this product, we're not going to the core to this platform. That was really important. The other factors we felt were that even at that point and this is early 2021, it had good momentum and that again was important. We didn't want to make a technically great choice, but all the momentum was going another direction and everything over the last 12 months has continued to convince us that was the right decision.

Nigel (19:56):

We also were impressed by this core team. Raj and Anatoly were straight on very first call. Somebody who's come from Web 2.0. Personally, I thought that was great that we can reach out to somebody and say, "Look. We're having issues with this." They've been incredibly supportive. I thought that was a huge factor as well.

Then the last thing I'd say that I've noticed about Solana is that I think there's a much stronger design ethos in Solana than I've seen in the other blockchains. I don't want to say it isn't bad, but these other ones. But some of the blockchains I've been on are, I think I cannot understand how they've made these design decisions.


I think some of it is a laziness about EVM. Which is like, well, it just works. It's EVM compatible so people will figure it out. I think Solana has gone down a slightly harder road, but it has forced people to say, "No. We're going to design this for humans."

I guess that handicap in a way has actually improved it. Something like Phantom, it is 10X better than MetaMask. Without a doubt I use MetaMask every day and I'm always still fascinated that for example, NFTs that I've sold six months ago are still in my wallet. I think there's a setting somewhere where I could change it to take those out. But the idea that they don't understand that would be something I would want natively is weird.


Those are, it's four or five major reasons. I think there's still a very, very large gap. We made the decision. We committed about 6 to 8 months ago. But since then it's only got stronger the thesis.

Joe (21:23):

Yeah. You bring up a number of points that I try to bestow upon a number of the founders of startups and projects that I'm advising is, look, you don't have to be religious about your technical solutions or choices. But I do think it's important to recognize that, hey, if your application or protocol is super successful, are you going to have to do what actually Infinity did and build your own scaling solution?

Are you willing to staff that or do you have the resources for that? Do you have the desire to do that? I think the second aspect is, and again, this isn't a NTL2 conversation. It's that in my view, when you add an L2 to your technical architecture, I have this running joke that the reason it's called an L2 is because now you have two problems. It's not just the L2 that you're building on, but you also have an upstream dependency on the L1.

I think a lot of the technical decision making early on is critically important to understand in the case that you do have this wildly successful app or protocol. Furthermore, to your point, Solana made some intentional design decisions that added some constraint around the protocol and furthermore, the applicability of the protocol.

I think, we're still early days-ish with what's possible on it and we're definitely have been pressure testing the network quite a bit. But I think longer term, this is currently going to be the chain that's going to enable those types of truly immersive rich internet experiences that users are accustomed to on mobile apps and Web 2.0 without having to have all these additional complexity. I take your point a 1,000% with MetaMask and I take nothing away from that team. But at the same time, Phantom has brought user-centric design to the wallet and that's super important for onboarding and more importantly for the apps that will ultimately be connected to those wallets. I hear you a 100% on that.

Because I know we're coming up on time pretty good, I wanted to switch gears quickly to talk about BetDEX. Because this is actually how we met. We were introduced by a mutual friend. He told me about your background and he told me that you were considering building on Solana and it was a fascinating idea. I said, "Would love to convert him to build this on Solana." Can you talk about what BetDEX is and what you're excited about BetDEX for? Then also again, maybe the design decision as to why you chose Solana.

Nigel (24:05):

Yeah. BetDEX is a sports betting protocol. The way to think about it is there's something like $2 trillion bet every year on sports globally. But that $2 trillion is basically split among tens, maybe even hundreds of thousands of different sportsbooks. We take FanDuel's example. FanDuel is quite a big sportsbook, but all the money they take, they're the counterparty. They take that counterparty risk. All the money that DraftKings takes or say some of the other ones, BetRivers takes, they all take that counterparty risk.

If you're one of those smaller sportsbooks and somebody Mattress Mark comes in with a million dollars, you can't take because you can't take the counterpart risk. The way that BetDEX imagines the world is says, "Well, what if all of those sportsbooks could basically share their liquidity in a central pool?"

Now, prior to crypto they probably wouldn't have wanted to do that because who would own that platform? What the governance would be. There will be lots of different challenges there on that actual protocol. Well, what BetDEX works as is, because it's going to be a decentralized protocol which will be owned through its token holders which may be many of those different applications, they then can pool their liquidity into a central exchange.

And so someone betting on FanDuel could be in effect counterpartied with somebody in the UK betting on a completely different website and they don't actually need to know that. Basically, BetDEX is the glue that's going to plug together all these different sportsbooks that gives us global liquidity pool.

Joe (25:40):

Super cool. Given your obvious experience with FanDuel, how would you juxtapose the two like FanDuel was for this type of a world or environment, and this is how BetDEX is different?

Nigel (25:54):

Yeah. They're actually very different. One day my aspiration is that FanDuel would use BetDEX. They don't have as immediate a need because they're a big sportsbook so they don't... Mattress Mark comes in and they'll say, "I'll take that liability." The way we want to see it is, we'll actually build the very first application which will also be called BetDEX. That's a licensed sportsbook in Malta that will take bets from over a 100 different countries. Unfortunately, not the US. Certainly initially.

But basically what will then happen is we will actually opensource that code and say to other operators, "Look. You can also build your own application. In fact, take our code. Put your own logo on it. Put your own brand on it and then you can interface with BetDEX as well." Then existing operators like DraftKings, like FanDuel can say, "Wait a second. There's this huge liquidity. Why are we managing all this risk ourselves? Why don't we pull some of our liquidity in here? Maybe I carry 90% of the risk of the money coming in and I just blow 10% onto this exchange." BetDEX is really a protocol and FanDuel really is an application that then would use that protocol like all of these other sportsbooks.

Joe (27:01):

Got it. Very cool. You mentioned something that hits home for me as an American that once again we are unfortunately geofenced, if you will, to a lot of the innovation that's happening in crypto and Web 3.0.

Nigel (27:14):


Joe (27:15):

Given your experience with FanDuel and certainly setting up BetDEX, can you talk a little bit about the policy risk? You mentioned a 100 different countries and how do you navigate that? Because the sports betting regulations in say the UK are very different than they would be in say New Jersey. Maybe even different they are in South Africa. How do you think about managing that? Again, not sacrificing the end user experience for folks that are using BetDEX.

Nigel (27:44):

Yeah. That's a very good point. Largely the regulatory issues set at the application layer, are very similar to... AWS typically does not have to deal with betting regulations. It's the application that builds on top of it. BetDEX is very simple. It's just their protocol it's up to those applications that build on top. For example, BetDEX the application is regulated in Malta. We are going through a very long process with the Malta's Gaming Authority and I was on the call with them yesterday going through my source of wealth and they want all my bank details. I've been fingerprinted. That's a process.

That's a process that happens at the application level. Basically the protocol just works with those applications and so it's agnostic to do that. It's the applications that deal with the regulation.

I will say that with FanDuel before we went through a lot of regulatory issues with FanDuel as a fantasy sports product. Then becoming a sports betting product. I'd say my personal view in the US regulatory process is, it always gets messy before it gets better. I see that with crypto as well. I'm actually probably one of the few crypto regulatory optimists in that I see what's happening today and some of it is ridiculous. A lot of it is through lack of understanding, but some of it, I think it is genuinely vested interests. Acting in their vested interests.

But I also feel that like fantasy football was, crypto is just too popular. Means too many people have it. It's too beneficial to consumers and it brings two things to politicians what they love, which is money and votes. I am very bullish longer term, but there's going to be speed bumps on the way.

Joe (29:29):

Yeah. I totally agree. I think you and Sam at FTX are definitely regulatory optimists. I am cautiously optimistic. But I do believe that there's a growing momentum, certainly in the United States about bipartisan support for candidates who are pro crypto. I think this is a very real movement that's happening in DC. I know there's lobbying groups. There's super perks being set up. I agree with you. I think that there's going to be some bumps along the way. There will probably be some blunders and bureaucratic mistakes if history serves as well.

But at the end of the day, I think that to your point, it's so popular nowadays and the rebranding of crypto to Web 3.0 which now encompasses things like NFTs, which is bringing culture in the crypto. Which is bringing video games into crypto. Which is bringing fantasy sport and sports betting into crypto. It feels we're on a path towards this reaching some consumer safety slash normalcy. I guess the next question that I had was, if I'm a kid nowadays, I know you have some kids. I have a son, but he's much too young to even be using a computer.

One of the fascinating things that I think about kids these days is that the concept of a video game or the concept of art or the concept of a sport is just so different. Can you talk a little bit about maybe how even just conversations with your kids or your view on the youth is influencing some of the decision making in what you're doing with the projects that you're helping launch?

Nigel (31:09):

Yeah. It is very interesting. I've got three kids and they're all gamers and they're from 17 to 28. It's a broad range. It's interesting how they're discognitive, I would say. Obviously discard is prevalent in crypto. I'd say that they're all very familiar with NFTs. It's not such an alien concept to them that I think it is to people maybe my generation.

It's really you spend money on something that's virtual. They have that experience. When they're gamers, I think they're little skeptical of NFTs and games like a lot of gamers are because I think they see that historically a lot of the games companies have used innovations like this to, not to make the game experience better, but to actually make more money.

They look at them a lot of times and say, they like NFTs in their own right and they're interested and they've all bought and sold them. Because they look them and they say, "Okay. These are load boxes. This is another way to get money from me for something that I probably should have got in the first instance."


That's been really interesting. They are very natively digital. I think that's what's very clear that a large part of their life, a vast majority of their life is digital. And so the concept of a digital life is something that's totally new to that.

Joe (32:25):

Yeah. You and I were chatting at one point in Lisbon actually at the Solana conference and you had mentioned something along the lines of how fun it was for your kids to be sending SAMO to each other.

Nigel (32:38):


Joe (32:38):

And how it's this meme coin on Solana, but it was just this fun experience because they're not going to be sending each other hundreds of dollars in USDC, but hey, they can send each other hundreds of SAMO and it's this cool experience.

Nigel (32:53):

Yeah. I'm unashamedly a SAMO enthusiast. I think you are as well.

Joe (32:58):

Oh yeah.

Nigel (32:59):

SAMO and Dogecoins are fun and they're popular. As someone who's tried to build lots of consumer businesses many of which have not been successful, popularity is hard to get. While they don't... Dogecoins don't do a lot today, that popularity I think is incredibly powerful. I'd say that BetDEX, we deliberately have been working with the SAMO community and we've done some fun things with them because they have something that we really want as a company, which is popularity. We definitely want to do a lot more with them and I'm very bullish in SAMO. I'm actually quite bullish on Dogecoins in general which is, it's very rare that you get something that level of popularity. That they don't figure out something to do with the... I think it's a very strong community. I think it's got a long way to go.

Joe (33:44):

Yeah. I agree. One of the most fascinating things I think that's occurred over the past couple of years specifically with the GameStop saga is that internet culture is a force and it doesn't necessary really have to equate to some business case study or some scientific proof for something to work or be popular or have utility. That's one of the most fascinating things about crypto to me is that the internet culture around it and how it supports things that on the surface appear to be maybe trivial in nature, but there's a huge community behind it and there's something to be said for that. I think maybe the last question I'll ask because I know we're coming up on time is, given the crazy expansive growth we're seeing in Web 3.0 and particularly in the types of applications on Solana, what are a handful of the projects or applications that you're really excited about now?

Nigel (34:47):

I think a few things. I think Phantom is an incredible wallet and I think they have a long way to go. I'm very bullish on that. I really think that's going to be critical onboarding people onto the L1. In terms of NFT projects, I have a Monkey. I'm incredibly impressed by that community and I've joined a lot of NFT communities and that one is just... It's so hard to keep up.

Joe (35:12):

I agree.

Nigel (35:13):

Yeah. I think they've done an amazing job. I do think there will be a bit of a... By verification of ones that clearly could become like that and ones that don't. I think a lot of entities at the moment are sitting in this nether land of, are they going to maybe get there or not? I think when it becomes apparent, prices will reflect that. I think that's really interesting one. I'm very bullish on the Monkeys. I think it's a great community. In terms of games, it's still very early. I'm really interested in Game Fire. I think NFTs could be really interesting on games.

Filling games is hard though and I feel that a lot of these games are all have an amazing game priced in. Even though no one's seen a line of gold or... And so that does worry me. I feel there's going to be a lot of failures. The only one that I hold a bit of is Panzer Dogs. I've actually played their demo and it's a pretty cute game and the studio has evidence of building good games before. I'm quite excited about that one. I've liked what they've been dropping.

I am very nervous in general about the whole Game Fire. I think that 2022, it might be the year that we discover in crypto that building games is hard and building games with NFTs in them is just as hard as building games. Those are probably the major ones. I do think that games is going to be really important though. But it may be more games like the Cops Game or Wolf Game, which is on Ethereum. It may be more games like that, that are not... Or even Loot. Loot was a fascinating project last year. Obviously it lost a lot of steam. But new game format where the community is actually core in building the next stages like I just gave you the building blocks and we build it, I think there's a lot to go there given that Solana is priced at a level where a much younger audience that doesn't necessarily have a lot of money can innovate.

That's where I would be more excited as opposed to triple-A games porting over and suddenly their skins which weren't really worth anything anyhow, suddenly are tradable assets. I'm not as excited about that. I'm more excited about games that are weird that we don't really understand right now coming up organically.

Joe (37:22):

Yeah. I think that's a fair assessment. In almost any startup boom cycle, you see people just trying to innovate in myriad different directions, which is awesome. But ultimately the ones that have something truly innovative that people can gravitate towards are going to be the ones that really make it. Right now it's up for grabs.

I'm always on the space like you are in general. I think that the caution that you're hitting is worthwhile, but man, there's a lot of really cool stuff out there. I will tell you, a lot of the game developers that I've been meeting with that are launching games are seasoned game devs.

Nigel (38:02):

Yeah. Yeah.

Joe (38:03):

They just see this as a way to like, hey man, I always wanted to have an Indy game studio or do my own game and this is a means to facilitate that. I think the key though, to your point is how are we going to integrate these things in a way that feels it's accretive to the game?

What's fascinating about your kid's view of being skeptical of these things is very wise because what we don't want is just things to be bolted on. We want them to actually add value to the experience. TBD on that. We still got lots of time to see when this is going to pan out.

Nigel (38:36):


Joe (38:36):

Well Nigel, this was awesome. Where can people find you on the internet, Twitter, or Telegram or wherever you're comfortable with?

Nigel (38:43):

Twitter's the best place. I'm Nigel Eccles. I'm fully docs. You'll see me. I'm a nice little red monkey. Yeah. I'm @nigeleccles on Twitter.

Joe (38:51):

Amazing. Well, you heard it here first folks. Nigel Eccles, man, has so many projects and companies. We couldn't even get through them all. But thank you so much for joining us on the Solana podcast and we'll see you guys next time.

Nigel (39:04):

Thank you.

Apr 12, 2022
Tristan Frizza - Co-Founder & CEO, Zeta Markets Ep #62

Tristan Frizza is the Co-Founder & CEO of Zeta Markets, an under-collateralized DeFi derivatives platform, powered by Solana and Serum. Matty Taylor (Head of Growth at Solana Labs) guest hosts.

00:26 - Origin Story

03:08 - Winning the Solana Hackathon

05:59 - What is Zeta?

08:49 - What's appealing about options?

11:17 - Why is Zeta more successful than other options projects?

16:44 - Using open-source primitives vs. building

20:15 - The front-end

24:22 - Mobile user experience

28:49 - Rapid Fire Questions: Anonymous Crypto teams

30:21 - Rapid Fire Questions: The Metaverse

31:18 - Rapid Fire Questions: Insurance in DeFi

34:40 - Rapid Fire Questions: Singapore

36:12 - Rapid Fire Questions: Sleep

38:27 - Rapid Fire Questions: Solana



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Matty (00:09):

Hey everyone. Welcome back to the Solana Podcast. My name is Matty. I'm the head of growth at Solana Labs. I'll be guest hosting today and we have a special guest Tristan from Zeta. So welcome.

Tristan (00:20):

Thanks for having me on Matty.

Matty (00:22):

It would be great to know just a little bit about yourself and maybe how you started your crypto journey.

Tristan (00:27):

Yeah, absolutely. I can give you the long and the short of it. So I think I started getting into crypto back in the day, probably in 2017 when I think a lot of people got into it during the last ball run. And that was mostly just speculate on coins, looking what was going on in the ecosystem. DeFi didn't really exist yet at that point. And I feel like a lot of people were still grasping at what is the real use case of crypto at the moment, other than this buying these coins and seeing the moon. Didn't feel like there was a real kind of engineering need for it or some kind of real product market fit. And so that's kind of why I tape it off a little bit after a year in that space, just kind of checking the things out.

I went back finished my degree, actually ended up doing a bunch of courses in distributed systems and computing, because I started getting interested in the whole blockchain side of things from the engineering standpoint, it was like creating your own coding up your own proof of work blockchain, which I thought was really cool and just understanding the fundamentals of Bitcoin. And then I think over the years I took a bit of a breather on it. I unfortunately missed DeFi summer, which I was pretty firm about. And then coming back to it, I'd been hearing so much about smart contract programming, what you can build in this kind of new DeFi Boom and what was going on there. And so, I came back into the space after having worked for roughly like two years as a data scientist, kind of in the Bay Area.

I think I was a little bit tired of the remote work kind of grind there, even though I enjoyed my job. And so I decided, hey, in my free time over Christmas, I'm just going to go and learn how to program on solidity. And so I made a few kind of smart contracts learned what was up there. Randomly was just putting together a DeFi idea, looped in some of my best friends from kind of more of a trading and finance background, we decided to put our brains together and just be like, "Hey, what can we build in this space?"

And then yeah, after throwing around enough ideas, I think we ended up settling on something that was really cool. We thought the derivative space was somewhat untapped, especially options seemed like such a huge market, but no one's really done it. And randomly, we reached out to Dom, fellow Australian, and then we basically, he put us in touch with Tolley and Bartos, and after talking to them a bunch and reading the whitepaper many times, I got really sold on Solana and I've just been developing on it since.

Matty (02:40):

Nice. And if I remember correctly, you guys were the winners of the Solana Season Hackathon, which was extremely competitive. I think there were like 13,000 plus participants, which I believe is the largest hackathon, not only in crypto, but ever in the technology space. So it would be great to just hear like how you guys worked through that whole event and what you guys came up with coming out of it.

Tristan (03:10):

Yeah, absolutely. So that was definitely a tough experience and an interesting challenge as you mentioned. Yeah. 13,000 people to compete against. And that was really when we were finding our feet in the crypto space, not having as much of a network or I guess like a reputation being new builders in the space and I won't go too much into it, but we went through a team split and stuff during that kind of time. So it was a really tumultuous period. And so, we just thought, "Hey, we got to give this hackathon 110% and do what we do best. Like we're all engineers and X traders. So we got to build man, because that's what we're really good at. And that's how we can prove ourselves. So we went into that.

I pretty much quit my job, I would say two days before the hackathon started to give it 110% as did like a couple of the other guys, and then we just went in there pretty much worked out of the same apartment for three weeks, I would say, putting in 16 hours a day. So we must have worked over a hundred hours a week, just ridiculous hours. It was pretty much like wake up, code, go to bed. Which got pretty tiring by the end, I was pretty exhausted, but we pumped out a lot of work and we built out this very early stage binary options, MVP platform of which is very far cry from what we have now. But, it was amazing to smash that out in three weeks, learn Anchor from fundamentals, still in the process of learning Rust at that time.

And then whipping together a front end, we ended up getting the product out, which was fine and it was a little hacky, but it worked. And then we ran into so many infrastructure problems. We didn't fully understand or appreciate the difficulty of RPC Nodes and trying to service all those requests. So our front end got rate limited crazy. So to actually get it out there on Devnet that people could use it, we were like, we have this funny photo where it's six laptops side by side, all hotspoting off different Wi-Fi hotspots, just so we get different IPs so we don't get rate limited on all of them. And then we were all doing what's called cranking, to process orders on the back end, all through these mini distributed cluster of computers in the same room. That was an awesome experience. And yeah, it brought the team together, we pretty much got a lot of our friends to come in who were our colleagues and then we hide them off the bat. And then we grew the team pretty quickly to seven or eight people straight off the bat to hackathon.

Matty (05:28):

Wow. That's insane. I didn't know that story about running your own cluster of computers to not get rate limited. That's amazing. And so I think you mentioned your initial idea in the hackathon and what you worked on initially was binary options, but that's not exactly what's in the product suite today For Zeta Protocol. So maybe just walk us through one, why didn't you pursue that idea and two, what is Zeta today? What is the actual product?

Tristan (06:01):

Yeah, absolutely great question. So I think with binary options, that was never really the plan for us. We didn't want to box ourselves into that very niche vertical. I think they have a bit of a bad rep in traditional markets. They're kind of banned in a lot of countries because I think they are a little bit of a degenerate product to be honest. It's kind of glorified betting. And so we wanted to move away from that. We want options that people can actually trade properly in a sophisticated manner in financial markets and Hedge Exposure and do all these things that you currently can't really do in crypto markets. People tend to just go bulls long right now, a 100x leverage and either get liquidated or they become a millionaire. So we're like, there's probably some in between where people can be a bit smarter and this is pretty much what all the pros use on Wall Street and all these other places pro traders are trading options and other derivatives.

So we're like, this is a great element to have in your toolbox. So we straight away from, I think binary options, even though the reason we did it was because the math is a ton easier and it was easy to implement. So we got that out there. It proved that we could build something like this. And then we backed away from that. We went for Vanilla options, which we think are far more interesting. There's far more market demand. It's like a multi-trillion dollar industry in traditional markets. People use it all the time, super popular. You even see people getting into it from more user friendly apps like Robinhood in the US, has just blown up in popularity. So we're like this clear market fit. And then now we're trying to, I think historically we've been seen as just purely an options platform, which we were for a period of a couple of months, but now we're really broadening our focus to all derivatives, which is really exciting. Having everything cross margin and viewed under the one umbrella platform, I think is really cool and always building into creation.


So what we have right now is futures and options. So we are the first one to offer dated futures on DeFi, I'm pretty sure. Even across Ethereum, I don't think anyone offers it, which is pretty interesting. Everyone seems to go fully PERPs, but we do futures, we do options, which is nice because you can kind of hedge out using the futures for your options. And then we're going to be looking to list stuff perpetual swaps as well. Probably broaden it into a bunch of other categories for derivatives based on demand and what's feasible to build on chain. But really we think the options are pretty limited and trying to build out a whole suite of trading products that people can get dug into.

Matty (08:21):

That a great overview. I guess kind of double clicking on one of the things you said, which is options are really popular product in institutional, traditional finance. And even now thanks to Robinhood of making it a great user interface for retail to even participate in options. Why exactly is that the case? What is so appealing about options that it applies to both audiences?

Tristan (08:50):

I think for more casual users, I think the payoff structure is just very appealing. I can't demonstrate it here on the podcast, but essentially you have unlimited upside. So as if you were to get a PERP or hold spot, if Solana rips to a thousand dollars, you're exposed to that whole upside, which is really nice to see. But the cool thing is your downside is essentially capped. So if Solana tanks, you only ever lose what you put up for the premium, which may be a hundred dollars or something or other. So it's almost like you're buying this insurance. You've got unlimited upside, limited downside, which is in stark contrast to say, you buy a PERP and Solana tanks a lot. And then suddenly you've lost a ton of money, you get liquidated, which is pretty tough.

So I think that's pretty cool. It's also options are inherently cheaper than spot as with like most derivatives. That's why they're more efficient. That's why people trade PERPs because it's easy leverage, I guess, with options they're inherently kind of under collateralized, you're only paying a fraction of what you would for the actual Solana coin is a spot asset. So that's pretty nice. And then I think from the institution side, and hopefully you're going to start seeing this more from the DeFi user side as well. I think it's a really good tool for hedging risk and this is their primary use case I would say in traditional markets. And you can almost think of it like you're buying fixed insurance on your portfolio. So what you'll do is say, I have a net long huge position on Solana or some other coin, and I want to protected on the downside.

I'm just paying a small amount of money essentially to buy put say, and so if the market does tank, I've got this nice thing that's protecting my downside. I think those are all really appealing things. And you can start to pair up a lot of these different options so you can buy calls and puts, and then you can build these very interesting payoff structures. Things like straddles, which are kind of this V-shaped payoff where I'm basically market neutral. I'm Delta neutral. I don't have an opinion on where the market's going to rip up or rip down, but I just know it's going to go a long way in one direction. So you essentially start speculating on purely volatility, which is an interesting new trading paradigm that I don't think a lot of people do. So you might be unsure, I don't know where the market's going to move, but I know it's going to move a ton and you can start placing bets on that, which is really exciting.

Matty (11:04):

Yeah. That's really interesting. I mean, Zeta is not the first project to try to tackle options and bring it to a bigger audience in DeFi. Why do you think previous attempts that this haven't been quite a successful?

Tristan (11:18):

Yeah. Awesome question. And this is really what spurred us to start in the first place. We were looking into this early 2021, we spent a good month or two, just not even coding that much, but just surveying the landscape, seeing what was out there and where we would necessarily fit in. And so I think at that time, pretty much nothing existed on Solana. There was what? Serum, Bonfida, Raydium had only just launched. It was very early days, but obviously most of the competitors, or people in that landscape were on the eat side. And so I won't name any platforms, but there were a couple out there. They're mostly these one sided AMM pools, which basically all they do is sell options. And so that's not really satisfactory. You're not doing the buying and selling. You're forced into one.

And whenever you are placing your capital into this AMM pool, you're a forced seller all the time. So basically you have no choice whether you want to sell the option and you always get done at really poor prices. It also requires people to have pretty good pricing to make sure they get a good deal for their LPs. But from what we saw with some of those platforms, they've priced them really poorly. You have this parameter called implied volatility that you will have an opinion on or put into your pricing model. And I remember the founder of this one protocol was updating it once a week. Whereas, crypto's very volatile, change is intraday. So, if you looked at the gene analytics dashboard, a lot of the LPs were just down 20% to date, which was like, why would I put my money in this pool? It's just losing me money consistently.

Matty (12:46):


Tristan (12:47):

And then there were other nice ones that were more like orderbook based, which I think were cool. But the only problem was Ethereum, gas fees were crippling, you try and put on a call spread, it'd be like $200 in fees. And I'm like, that just wipes out all my PNL. I've got to be a whale that's putting on this massive trade. Otherwise, any kind of smaller fry, just going to get completely priced out of the market. And their liquidity was just nonexistent. They've got one strike on their orderbook that had two trades on or something like that. Everything else was just blank. So I was like, there's no way that I'm going to trade on this willingly versus like Deribit or some other kind of options exchange out there.

And so I guess the way in which we're different, we're obviously built on Solana, so you get the really nice performance aspects of the network. A big sell for us was being able to use Serum. So the decentralized orderbook infrastructure, which is a feed of engineering there and powers pretty much all our markets, which is pretty incredible. And something that we've tried to do, I guess the four main points we've tried to hit capital efficiency is super important. So we want people to be able to put on positions without having to go over collateralized or fully collateralized and put up a ton of capital, which makes it really inefficient to trade. It means like, hey, I can't open a lot of positions. Suddenly, I've tied up all my money in this one position. And so this is really bad for individual users and especially market makers. Market makers need to put on 50 different positions across all different markets.

So that makes it really tough for them, makes it really inefficient to trade. And if you don't have market makers who can trade efficiently, you're just going to have not very liquid markets. So, that brings me into the second point. We want to aim for liquidity, obviously trying to onboard these market makers. We have two dedicated market makers, which is really cool. They're providing liquidity 24/7 and kind of quoting our markets, which is really exciting. The third point is user friendliness. I think options scare a lot of people and derivatives in general, can be scary, because they're a little bit more complicated. But they're nothing to be scared about. And we're trying to bring down that barrier entry, we've seen what other platforms like Robinhood have done in terms of making it a lot more user friendly, building stuff like a mobile app and having more explainers in product.

So we've taken some notes from that. We've tried to build a really intuitive trading interface first and foremost. So people can go in there and it somewhat makes sense on how to trade. And it's not this really opaque, confusing Excel spreadsheet looking interface, like you get on some other platforms. And we just really want to lower the barrier to options and make sure that everyone's able to access them and try and use them. And then the last bit is I think safety is really important because they are a volatile product and like options, prices can change quite a lot because they're kind of non-linear in nature. We want to make sure that users are protected. They're kind of managing risks, so we've got like a lot of safe margin parameters at the moment. So people can't get too over levered and then it's getting liquidated really easily.

And we also have this internal risk engine. We have what's called a Mark Price or our internal fair for what we think these options are worth these updates pretty much every block. So half a second, essentially it's based on the fifth Oracle, we update it really quickly. It's kind of calibrated to trades and other things that happen on the platform. So it's meant to be really reactive and we basically built this because we don't want prices to drift off what they actually should be. And then people just get randomly liquidated for no reason when they shouldn't be. So far it's been going pretty well. We've had barely any liquidations. I think people have been pretty happy, but always improvements to be made.

Matty (16:05):

Very Cool. One of the things you touched on was how you're starting with Vanilla options and you're interested in more perpetuals and maybe other derivatives and creating this suite of a variety of products that folks can use and you need cross margining across all of them. How do you decide from a product standpoint, when to use other open source primitives, maybe you can use Marginfi for cross margining or another protocol DeFi primitive for futures, contracts. How do you decide what you guys build versus plugging into this open source composable ecosystem that already exists on Solana?

Tristan (16:47):

Yeah. This is a really good question and saying we've been grappling with for many months. I think it does come with a set of trade offs and we do have to put our heads down and think about it quite a lot. I think in the early days we were really looking to integrate with one of these linear trading platforms. So anything that's like PERPs or spot or futures. So, obviously talking to teams like Mango and a bunch of others out there on integrating because we're like, "Hey, we need these futures," and we didn't necessarily want to build them ourselves. Because it was extra time. The one thing that's slightly tricky with early composability is so many of these platforms and protocols were changing every week. So it was like trying to hit a moving target.

Their code base is changing how they're doing stuff and we're like, we're also changing and trying to be agile. So in the early days that was a little bit tricky to kind of integrate Mango margins, their stuff's a little bit differently to how we do it. So it's really hard to consolidate and do a cross margin across two things. I know Marginfi's trying to tackle this now, which is why we're trying to work really hard with them and trying to integrate because I think it's such a cool product. But yeah, for example, with those futures we realized there's a clever trick where essentially if you treat a zero strike call, it's more or less a future. And so that was something that we could just pretty much chuck straight into our framework and pretty much pop out futures within a day's worth of work, which is pretty cool.

But now in the future we're really focusing on composability that's a massive thing for us. So working with say, some of the borrower lend platforms, I think they've got nice functionality and it allows us to do a multi collateral, because currently we just do cash margin for stuff, if we want people to margin with SOL, they can kind of borrow cash on their sole or something rather. And then yet now there's this whole ecosystem of derivatives apps that they are building on top of futures and options. And so we're really trying to service them. So you've seen these DeFi options vaults really blow up in probably the last month or two. There's this whole popping ecosystem of these now whereas, if you were to look at this, maybe like three, four, five months ago, there was pretty barren. No one was there.

Everyone was telling us like, hey options have no product market fit, no one cares about it. And now you've got Katana, you've got Friction, you've got like tap a bunch of others. You would've seen the news. We just brought over Ribbon Finance from Ethereum and we helped them launch on Solana, which to my knowledge is the biggest EVM kind of project to move over to Solana properly, which is pretty exciting. So yeah, we're just trying to service this ecosystem and really composed with all the projects that are trying to build up on us. And you've got like five hackathons happening now almost concurrently. You've got like serum convergence, a bunch of cool stuff came out of there. That looks really exciting. You've got this Solana global hackathon, which is coming up shortly and a bunch of others. So very exciting times.

Matty (19:33):

Yeah. A related question and you answered some of it, but Zeta, it seems like at its core, it is a protocol and you want external developers to be integrating with your protocol so that they can build things like structured product, things like Ribbon or Friction or Katana. But at the same time, you do have a really nice front end that you guys have obviously spent a good amount of time on, how do you view that piece of it where you are a developer platform in a sense, because you're composable with all these other systems that could plug in and provide value to the underlying protocol. But at the other end, how much work do you put into your front end to make it a trading destination for end users?

Tristan (20:18):

I think we started very much from the singular mindset of let's build this really amazing exchange ourselves and then have realized that, hey, we only have so many hours in a day and this is quite a grand vision. And you really get this exponential payoff or this nonlinear scaling when you start integrating developers from the community, people start building on top of you and you start growing a bit of an ecosystem. I think Serum's like a really great example of that. Obviously they've got this great orderbook, but now it's used by 50 plus projects. It really scales pretty amazingly. And it's like this core primitive in the ecosystem. And so we want to offer that because we've spent like six months trying to engineer this really complex and sophisticated options and future's protocol. We don't want people to necessarily go through the pain of figuring out how to do under collateralized trading and margining and settlement of options and all the pain points that we've had there.

And so we want people to leverage that, build cool things. But at the same time we needed like a front end. We want people to be able to trade. I'm not expecting people to whip up type script or get a CLI going and start placing trades programmatically. That's not going to really appeal to the majority of users so it was us coming up with a really sleek web app. We also built not a mobile app, but you can access it through a mobile browser and we're going to integrate that obviously with Phantom mobile, which I think will make for a really nice experience. But yeah, other than that, we've been focusing hugely on DevTooling. That was kind of a pivot in our focus from, we've built this exchange and it works really well internally.

And then I think I pushed pretty hard from our side to focus on composability and how we integrate with a lot of other projects. And so that was releasing a typescript SDK, which basically all the market makers and programmatic traders use. It just makes their life a lot easier. And a lot of people don't necessarily want to click trade through our platform. So if you're running a market, making bot, doing all those kind of essential functions, then that's really convenient for you. And then something else I wrote, which is our kind of like Rust cross program in vacation library. This is basically what the vault projects and all these other guys have been bugging us for months for. And I kept basically pushing back on guys like Katana and just being like, "It's coming, we're focusing on the platform. We're trying to get that out then I'll kind of service you guys once it's ready."

And so ended up kind of doing it in parallel. I'm like these guys are pretty important to our strategy, we really should be supporting them. So ended up just writing out that client. I even built a bit of a sample vault implementation just to make it as frictionless to move over as possible. And they've kind of taken that and run with it. And the feedback that we've gotten is everyone's like the developer documentation is really good. It's easy to use. They don't even need to ask questions. So it scales well for us where I don't need to get on a call for two hours and walk them through how our stuff works. They just read the docs, fork it over, start running it, make their own changes. And they've got a product working within like an hour, which is pretty amazing.

Matty (23:10):

That's awesome. One thing you also mentioned was mobile, which is interesting. I mean, yeah, for those who don't know, Phantom, the browser extension wallet has released an iOS app recently and getting a ton of downloads and it's getting the ecosystem thinking how do we optimize for mobile? Obviously part of the promise of DeFi, is that there's billions of people around the world, they have smartphones, they maybe don't have access to first world financial infrastructure. And so if they have a smartphone and they have a Phantom wallet and they can get some funds into the wallet, you get access to this next generation financial system. But on the other hand, and maybe that works well with simple things like I want to get a loan or I want to make a trade or invest in a stock.

Matty (23:56):

But when you're talking about using pretty advanced derivatives, whether it's futures or options, screen space matters. You just envision the Wall Street trader with 17 screens loaded up. How do you think about that? Are people, do you think going to be trading perpetuals and stuff from their mobile phones in Indonesia? Or how do you see that of playing out?

Tristan (24:25):

Yeah, definitely see it happening. To be honest, I think I went through a period where I used to pretty much exclusively use binance and FTX from my desktop computer. And then it got to a point where I just got too lazy and it was so convenient on my phone. If I just hear like, this coin is probably a good buy now, I'll just kind of check it on my app and go and place an order. And it's super frictionless. It's super easy to do and very convenient. So I really like that. And I think what spurred us was kind of a twofold thing. One is seeing what our audience was and what people wanted. And obviously it's a global audience.

If you're looking at the whole span of things, a lot of people do use mobiles actually, which kind of shocked me because I came into this being I've never used a DeFi app on mobile and I don't think I ever will. And then I looked at what our discord statistics were. We put out actually like a survey or two, how PM guy wanted to do a survey and figure out a little bit what our user base was. Turned out like this huge proportion of people, I forget the exact percentage, but were accessing and using primarily from mobile.

Matty (25:31):


Tristan (25:31):

And I think that tends to be probably more of a third world geography type thing. People tend to be very big on the mobile phone stuff. We were like, "Hey, we can't ignore this customer segment. There's clearly like a fair bit of demand there. And this is something that we should probably cater to." And it was really good from the design side. So this second part was we obviously want to simplify, but still have functional options. We don't want to simplify to a case where it's like click one button and it does stuff for you. It's like, we just want to make it intuitive and easy to use without making it unnecessarily complicated.

So we're like, "Let's hide stuff like Greek exposures and all this stuff in options. That's like probably for the pros and it's probably overkill." And so we're like let's design for mobile first, which is actually feedback from Josh Taylor, from the Solana team. The designer there gave us a bunch of good feedback of design for mobile first it'll force you to be really efficient and think about screen real estate and then go back to the web one after that and then you'll probably have a much simpler or more compact information dense kind of screen there.

So that worked really well for us. We kind of rolled with that, we had these two apps. We actually kind of split it up. We didn't want to have necessarily the same exact experience for both web and mobile, which we had initially. And I think our binary options won. It was just like a clone of both, but we realized, hey, we're going to have different audiences catering to both. Probably the more pro traders are going to get on the web app so we're going to have essentially the options, kind of the layout of all the options. You've got a lot more kind of parameters and knobs to look at. You can look at like open interest and probably we'll add in like Delta and all these other things that I think the pro traders really appreciate.

But when we're looking at the mobile app, we gave the normal interface and we put in other stuff, which is useful from the price. And you can kind of get these little metrics, like what's the probability of the option finishing and the money. And I feel like that's a lot more tangible than I just look at an option and it's priced at $2 or 70. And I'm like, what the hell does that mean? Whereas if I'm like, "Hey, this has a 20% chance of finishing in the money," then that makes a lot more sense to regular users. And we changed the flow a little bit as well, where it's like, if people aren't really comfortable placing options, we made a very simplified flow, which is like, I think the price is going up or the price is going down, which kind of caters to the people who are only familiar with these up-down perpetual products.

And that basically auto fills out your kind of, I'm buying a call or I'm buying a put with some nearest to expiry, some other parameters. So it kind of takes some of the decision load off people. Because otherwise people come in there, they're like, "I want to buy an option. I don't really know what I'm doing, but I've got to put in things like expiry, I've got to select the strike and then I've got to select all these different parameters. I've got to buy or sell it. Which one do I do? I don't know. It's kind of a lot of mental load." So we are just trying to minimize that for people.

Matty (28:15):

Nice. That's awesome. So maybe the last section here, we can go through some rapid fire questions. So I listen to this podcast from Tyler Cowen, who's an economist and professor in the United States. And basically how this is going to work is I'm going to say a word or a phrase, you're going to say whether it's overrated or underrated.

Tristan (28:37):

Got you.

Matty (28:38):

And then you can give a brief definition of why you think it's overrated or underrated. So, I'm going to say something first, a word and it's just going to be rapid fire. We can talk a little bit about each. But, you ready?

Tristan (28:49):

Yep. Let's do it.

Matty (28:50):

All right. Anonymous crypto teams.

Tristan (28:53):

I think underrated.

Matty (28:54):

Why is that?

Tristan (28:54):

I think they do pretty good work. And I think coming from a background in traditional software engineering where people care a lot about credentials and things like that, I think what you should really be measured on is your meritocratic thing where people just do good work. And I think people go out there in the crypto ecosystem, they don't make a big fuss, but they launch these protocols. And I think people do really good work and they don't need to have a Stanford CS background or something, although to contribute to the ecosystem. So it's really nice and refreshing to see people who might be self taught in crypto. And a lot of people are, I think they take it on their own initiative and they go out there, build amazing products and change and push the financial narrative forward or whatever they're building the crypto ecosystem. So I'm pretty bullish on those teams for sure.

Matty (29:39):

Out of curiosity, why didn't your team go anonymous?

Tristan (29:43):

Most people in the team I think are pretty anonymous and want to stay that way. I think it's me who's had to be the doxed individual on the team. But it's more like, you want to do these speaking opportunities or go and publicize or get the name out about your protocol. And I think it's very hard or at least for me it was tough to do that. People don't necessarily take you seriously, especially when you're trying to raise capital or do other things, people don't really... That doesn't fly with a lot of people when you're trying to talk to people from more traditional industries, they laugh it off as a bit of a joke. So I don't mind too much from my perspective, I'm pretty comfortable with it. But yeah, at least we have a little bit of a mix.

Matty (30:24):

The Metaverse.

Tristan (30:26):

I think overrated. I just hear it is this buzzword, you hear it from everyone, especially guys like VCs and other people. I hear it from a lot of my, I hate to say it but normie friends from outside of crypto. That's start to become a bit more of a tagline, but especially in relation with NFTs, this is something that everyone gets into in the space. And I think that's good to broaden adoption and onboard the next billion users, but I still don't have a really good understanding of what exactly the Metaverse is. And now I'm seeing all this stuff.

Matty (30:55):

What is it?

Tristan (30:56):

I don't know.

Matty (30:56):

I don't even know.

Tristan (30:57):

No, one's got a definition. It's just this buzzword that gets thrown around and now I'm seeing Facebook rebrands to Meta. You've got this corporate BS coming out and we're going to build the metaverse and I'm like, I don't really want to be part of Zuck's metaverse necessarily. So I'm a little bit bearish on that.

Matty (31:14):

Yes, I too do not want to be a part of Zuck's wonderland. 

Insurance and DeFi.

Tristan (31:22):

Definitely, I think underhyped. People go to the really quick and easy stuff to understand. And obviously NFT is a nice bridge gaming stuff like that I think is really cool. And not to downplay that. Then I think something, the narrative for DeFi is really strong. We're building a new financial ecosystem. If you're looking back at what's happened in traditional finance, obviously there's been like decades of innovation stuff. I feel like that's kind of slowing down and is not really suited to this web enabled world that we live in now. So there's kind of obviously this Web3 meme that everyone throws around, but I think it is genuinely true and it's going to be a bit of a paradigm shift.

Even now, I try and open a new bank account or do a cross-border payment or something although it's a huge pain in the ass. There's so many things and steps you have to go through, it takes forever, you get clipped on fees on absolutely everything. Whereas, I remember the first time I opened up a Solana wallet and I just sent someone USDC, it's confirmed in a second, pretty much. I paid a fraction of  cent in fees. I'm like, this is incredible, nothing beats this. And I think Anatoly brings that great statistic of 20% of global GDP just literally gets dedicated and used up by just moving money around and having all these middle men take commissions on things. Unlike, wouldn't it be incredible if we all got a day back in our lives that we didn't have to work if the whole financial ecosystem was a little bit more efficient and more transparent.

Personally, I really like it because having worked in the software industry where open source is pretty king there. And the only reason anything works is because people have built all these libraries and other things underneath that all build up. And you can build your application in 10 lines of Python now. And this is kind of like, doesn't obviously happen in traditional finance. You've got all these firms who guard their secrets, it's world gardens. And now you've got this transparent financial ecosystem where everything's, majority stuff is open sourced, it's composable, people don't need permission to go and place and execute orders through Zeta or build whatever their protocol is, their default product on top of us, just go ahead and do it. It's a piece of public infrastructure.

So I think that's pretty awesome. And I'm super excited when we live in this world where everything can talk to each other. You're actually earning productive yield on your assets and not the 0.2% that I probably get in my bank account these days. And then following on from that, I think derivatives are pretty cool. I think when you look at any financial ecosystem, you've got a few stages of where you're going through. So, we started with the simple token swaps, then you're going to these borrow lend protocols, then you're getting more into PERPs and leverage. And then I think the last piece of this derivatives puzzle is just trying to get to options and then on the very end of the spectrum, you're starting to get to exotic options and this crazy stuff and you're seeing a few protocols popping up for that.


So it'll be interesting to see how it plays out, but I think it's such a natural fit. And yeah, when we started this, we're like, it's such a obvious play that this will take off and we've already seen perpetuals swell to multiple billions, if not more of volume on centralized exchanges, even stuff like dYdX is just blown up massively all of last year and this year. So yeah, I'm super bullish on that. And I think it's under service still. I think it's just going to grow more and more. And if you look at traditional markets, derivatives eclipses spot by 20X or something although it's just huge.

Matty (34:42):


Tristan (34:44):

I think under hyped right now. I think it's still fairly under the radar. I think it's a pretty cool part of the world where it's like a nice melting pot between western and east. So it's cool. I think being around here and seeing that it's still an English speaking country, but you get exposure to that kind of side of the world. It was just kind of convenient for us as well because it's that whole kind of APAC time zone. And so far it's been pretty enjoyable. I think there's a really, really fast growing crypto ecosystem. So it's still behind. I would say the US, is kind of the leader. I think all the main people are there in the Bay Area or New York building cool stuff. You're definitely to starting to see more people move here.

I think it's a big crypto hub and I think kudos to the regulators for not just trying to outright ban things and trying to have a little bit of a conversation, which I think is pretty rare when it comes to crypto. You have everyone trying to shut it down and label it as this kind of like, this is some black market thing and people are using it for all these nefarious operations, when you have actual legitimate builders trying to build awesome financial infrastructure that will hopefully change the world. So yeah, I'm definitely see like more people moving here. I think hopefully growing a little bit of a Solana footprint, we'll have this Singapore Hacker House going and hopefully a more longer term installment and looking forward to having more startups around.

Matty (36:05):

Yeah. Completely agree. Huge fan of Singapore. I've been there handful of times and I've always had a really good experience there. So okay, next one. Sleep.

Tristan (36:15):

I think under hyped for sure. I have a lot of friends, probably more in the kind of banking sphere who are just sleep is for the weak type mentality. They're like I did sleep three hours and go back to my desk job like Goldman Sachs and then just do all my stuff there. And they're like, who needs to sleep? Doesn't really matter. They have fucked up sleep schedules. I've read a couple of books on sleep. I think there's that classic, like Matthew Walker one, on why we sleep and a bunch of other good ones and yeah, it does seem pretty critical. I know at least myself, when I get less than six hours of sleep, I'm super grumpy and just have a lot of brain fog and cannot think straight. And when you're trying to code up smart contracts and Rust, I think you need your mind to be performing pretty well.

So we have a bit of a weird sleep schedule going in our team somewhat, we're trying to service 24 hours of the clock. And even though some of us are in the same time zone, say we just have to like stagger our hours. So I'm personally a bit of a early bird. So I try and get off earlier and I enjoy the early hours because I tend to get very tired at night and can't problem solve. Whereas, I'm fresh in the morning. Whereas some other guys in the team, especially on the engineering team, love to pull the late nights and be up until like 3:00, 4:00, 5:00 AM. So, it kind of works, but we're around on the clock. So if a market maker or someone throws a fuss and the platform's breaking, we're always there on call. But I think sleep in general is super underrated. I think it's pretty important in the long run, you want to be getting your six to eight hours.

Matty (37:43):

I asked this question because I think you had a pretty infamous tweet and I think it was, "Peak crypto living." And it's just a picture of a rug and a ma and a mattress on the floor. I just wanted to get to the bottom of this.

Tristan (38:00):

That's right. My sleep is terrible. That was when we moved into a new place and I pretty much had no furniture. We bought a wide screen monitor before we bought a bed. We were working super productively, but then I would go up to my room and just more or less sleep on a yoga mat on the floor, which was maybe not the most comfortable thing, but I got by it for like a week and then managed to buy a bit more furniture. I have at least a basic bed now. So my sleep has improved incredibly since then.

Matty (38:26):

Nice. And this will be the last one. Solana.

Tristan (38:30):

That one's a hard one to say. I think if you were to ask me last year, it would definitely be under hyped. I still think it's under hyped. I think people have been fighting it and being like, "Hey, this isn't a real chain. It's overblown. It's VC chain bad or something." Although people are kind of always trying to put shed on it, which I don't think is justified. And I look at those people now and I'm like, "Clearly you haven't used any of the apps that are on the platform where you have no appreciation of what the people are trying to build." Because I think being, I wouldn't say an insider, but at least like a builder in the ecosystem, you're like, hey, there are a lot of really cool teams building cool stuff. And there are so many products yet to be launched.

So I still think it's in the period where it's under hyped and we're going to have just so many more Solana apps just because it can scale and we're not going to hit these really crappy limits like you hit it on Ethereum L1 where suddenly everything is costing an insane amount of money. So I still think the space has so much room to grow and the way that Solana is built, I think does scale pretty nicely. I think it has definitely gotten some hype towards the end of last year. I think it did feel a little bit toppy, I think in crypto in general and going to break point and there was so much hype and so much crazy sentiment going around. Everyone was feeling really good because their bags are getting pumped and people are in Solana 200 plus dollar territory. And there's this whole NFT thing going on, you've got to listen to announcements from founder of Reddit and founder of Brave and stuff.

And you're like, "Wow, this is mainstream adoption. What's going on? Solana's going to infinity." And then the whole market nuked and then kind of brings you somewhat back to reality. And I think now is probably the best time for builders when price is a little bit suppressed. People can kind of put their head down because, I got to say, end of last year was pretty hard to concentrate on just pure engineering. There's a million different distractions going on. So I think it's nice that things are a bit more low key now and it's a bit more of a healthy growth trajectory.

Matty (40:20):

Yeah, for sure. This is definitely Solana Season from my perspective, because this is the best time to build applications, I think. Yeah. Really happy that you guys are in the ecosystem. I'm really excited that Zeta is now on Mainnet. And yeah. Thanks again for coming on this show.

Tristan (40:38):

Awesome. Not at all. My pleasure.

Mar 29, 2022
Ahmad & Danial Abbasi - Co-Founders, Syndica Ep #61

Ahmad & Danial Abbasi are the co-founders of Syndica, a Web 3.0 blockchain infrastructure company focused on the Solana ecosystem.

00:35 - Background in Crypto

02:09 - Why Solana over other platforms?

04:10 - User Experience and Web 3.0

06:16 - What is Syndica?

08:54 - Syndica and Web 3.0

12:33 - Syndica’s focus on infrastructure

14:36 - Differentiating from other providers

16:55 - Syndica and the data

18:29 - Their user base

20:03 - Plans on offering validator services?

22:05 - Best practices for building on Solana

24:49 - How should new developers approach web 3.0?

28:16 - Storage

33:03 - Interesting projects in the ecosystem

37:53 - Solana Hackathon

39:19 - What would you love to see built on Solana?



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Mar 15, 2022
Chewing Glass - Brian Friel

Chewing glass is what Solana developers do. Introducing the third episode in a new series on the Solana Podcast, Chewing Glass. Chase Barker (Developer Relations Lead at Solana Labs) talks shop with the most interesting builders in the Solana ecosystem. It’s for devs, by devs.

Today's guest is Brian Friel, a Solana dev and regular contributor to the Solana Cookbook who recently joined Phantom as Developer Relations Evangelist.

01:18 - Intro / Phantom
04:04- Brian’s background
05:10 - His experience before working in Solana
06:42 - How did he start working in Solana
08:06 - When did he start looking into Solana
09:41 - First project on Solana
11:36 - What are the challenges working in Solana
13:14 - Anchor vs. Solana native
15:31 - The Solana cookbook
18:09 - Contributing to the space
21:01 - Solana Native Programs
23:01 - Any advice?


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Chase (00:39):

Hey, everybody. Welcome to Chewing Glass, the show where we talk to developers building in the Solana ecosystem. My name is Chase Barker, developer relations at Solana Labs. Today, we have with us, Brian Friel. Brian is actually a heavy contributor to the Solana ecosystem. I spoke with Brian, probably, a few months ago. I started noticing that he was writing some really great articles about Solana. I always have my eye out to kind of find people who are just altruistically contributing in the ecosystem. Brian was one of those guys, and here he is today. Brian, how's it going, man?

Brian (01:13):

Hey, Chase. Good to be here. Big fan of the show.

Chase (01:16):

Super excited to have you. You have done so many contributions to the ecosystem, everything from your own personal articles about PDAs with Anchor. You've contributed heavily to the Solana Cookbook. Actually, many people probably don't know because you never really spoke about it, there is some great news today. Brian, I actually heard from a little birdie that you just got hired at Phantom.

Brian (01:50):

That's correct. This is a Solana podcast exclusive. I'm joining Phantom, and I'll be their first developer relations hire there. Super stoked to build out the best wallet on Solana.

Chase (02:02):

Yeah, that's awesome. I haven't fully grasped what... I know that there's a use for that on a wallet. Every company's completely different whenever it comes to developer relations. You've been hanging out with the Solana Labs devrel team. I'm sure you'll jump in there, and you probably have already started to try to figure out what you're going to do on day one, I'm sure.

Brian (02:24):

It's a green-field kind of space here. There's a lot to do. I think you're right. One of the best things about this space, too, is that so many people are just building in public that we get a lot of feedback of what developers building on Solana want to see out of us at Phantom. My job is really to kind of get in touch with everyone who's building and start triaging what the biggest priorities are to make this the best experience.

Chase (02:46):

That's awesome. I'm sure you're going to do great. Also, another one of our wonderful part-time dev advocates, Loris just got hired by Metaplex. But, at the end of the day, we love this. This is exactly what we want. All the better and congrats on that.

Brian (03:00):

Yeah. Shout out, Loris. He's awesome. Metaplex got a huge win there, getting him.

Chase (03:05):

For sure. I guess, I usually start these out with some more of the boring things for most people. Everybody wants to hear about the development stuff. Number one, when you did start working with us, had I reached out to you or did you reach out to me? I've been thinking about this today, and I cannot actually remember how that unfolded.

Brian (03:25):

I think, way back, I actually reached out to you once. At the time, I might have not even been on Twitter under my real name. I just started a Twitter account just to check out a couple different things. I was interested in crypto. I saw your presence pretty early on and messaged you, but I'm pretty sure, at that time, you were just drowning in DMs. I went all out my way starting to build stuff, and then starting to just share stuff publicly, which we can talk about. But, I think, through that, then you had circled back, and then we reconnected.

Chase (03:55):

Yeah, exactly. If you're listening, that's how you do it. If I don't respond to you, do something cool, and we'll eventually connect. Anyways, definitely, generally curious on your background, whether it's tech related or not, just whatever you are comfortable with sharing and what you were doing before you were involved in any of this crazy thing that we call crypto.

Brian (04:16):

It feels like a lifetime ago. I, actually, didn't study computer science unlike a lot of people, but, over time, I did make my way into the tech world. Then, quickly after graduating, I got pretty lucky, and I got a job as a front end engineer at a small crypto hedge fund here in the Bay Area. It's called Castle. Was with those guys for about four years. Absolute, awesome experience. It was really interesting to see the whole trading side of the industry, which, obviously, is kind of how this all got its legs. People want to speculate on this. Over time, my role there really evolved from just the pure dev to somebody who was really kind of boots on the ground trying to figure out what's new in the space.

Through that, I came across Solana pretty early on. Obviously, seeing Sam Fried throw his weight behind it, but then some other stuff that came along like Mango. I'm seeing the possibilities there. In my free time, I really started just digging to it outside of work. Work was the catalyst for finding it. But, that's really how I got my start, just looking into the developer side of things on Solana.

Chase (05:18):

What was your experience level directly before Solana?

Brian (05:22):

I was a React front end engineer, was really my specialty. I, specifically, was tasked with building interfaces for our trading systems. We had a whole proprietary tech trading system, and I was the front end guy, so I would say pretty proficient with React and Node JS and TypeScript. But, I really wasn't a back end guy. I'd never done anything with Rust, and I actually hadn't really done too much on Solidity at the time yet. I had kicked around a few side projects, but nothing really ever got past just a couple weeks, side hobby sort of deal.

Chase (05:54):

What I definitely am seeing in this ecosystem, and I think Armani's talked about it a handful of times is that a lot of engineers in Solana are actually Solana natives that have never touched Solidity. They've never owned a MetaMask wallet. Obviously, a lot of these guys are probably some of the more younger guns, even some of the older ones as well, probably for a variety of reasons. But, it's interesting to see technologies that have been around for a while that newer technologies are actually being used and developed on first. It's never really been a thing before. There was always a learning path that was you find out about Bitcoin. You find out about Ethereum. You build on Solidity. Then, you find some other things, and you might jump ship. We're seeing a lot of people that are really just going straight to Solana. You were involved in that space, tasked with finding out what's hot, what's going on, and you saw SBF was building a central limit order book on Solana, and, then, that's kind of what set you in that direction?

Brian (06:54):

Yeah. I was pretty aware of the Ethereum ecosystem before. We actually were running our own validators for Eth 2 and doing a couple other things as it relates to trading, actually, on Ethereum Mainnet today. For me, personally, I think it was just really an interesting time to dedicate my free time in learning Solana because it felt like there was this new paradigm of blockchain development. A lot of the stuff that was coming out with other earlier ones felt a little bit derivative of Eth, but Solana really felt like it was carving its own path out, and I thought that was worth exploring.

At the same time, I could see there was people who had serious credibility in the space who were dedicating their time to it. Then, combined with that, they're just wasn't any resources or really any subject matter experts on it yet. That, to me, was the signal that it is a really good time. I still think it is a fantastic time to just dig my heels in and learn about this. I haven't really looked back since.

Chase (07:52):

The first time we kind of talked, it was probably early on, and I was really just trying to get a feel for everything. There probably wasn't a ton of information or content. I feel like there was some. You made a note to Mango Markets. What timeframe did you really start paying attention to Solana, not necessarily about what's going on in the ecosystem, but rather start looking at the documentation? Was this super early 2021?

Brian (08:18):

I had kicked the tires on things at the end of 2020 when Sollet was the only wallet, and there really wasn't anything. But, I think Break Solana was out there, and I think Raydium was out there.

Chase (08:29):

Serum DEX was also there around that time as well, I believe.

Brian (08:32):

Yeah, Serum. I had just kind of made a mental note around that time. Things were pretty crazy in the space, too, just everything was going on.

Chase (08:40):

The market, yeah-

Brian (08:41):

I was pretty busy at work, but, I would say, when the market kind of cooled off in the summertime is when I, personally, started to dig into the development side a lot more. Mango and Phantom, well, trying that out was definitely just the light bulb moment for me when I saw just how insane that user experience was. What really got me down the rabbit hole of development was following Armani on Twitter. Shout out, Armani's the man, and seeing what he was doing with Anchor, specifically.

I had stayed away from the development side of Solana purely because I had told myself, oh, I'm a front end guy. I would have to learn Rust first. Then, I would have to learn all the intricacies of Solana. It's just not worth my time. But, Anchor signaled to me that I could start a side project, and I could get up and running with something quickly. Then, if that was interesting to me, then I could dig in further. That's what I did. I think that's actually a pretty good path for people who are just kicking the tires on Solana development.

Chase (09:39):

I guess that means that you're pretty much intro journey into development. You went straight for Anchor before you-

Brian (09:46):

Yep, a hundred percent.

Chase (09:48):

... because I remember... Was the PDA article you wrote the first article that you had written?

Brian (09:52):

My first thing I did, I think this was either late August or early September, I just said, I'm going to make a really basic app, like a voting app on Solana, something that everyone's made before, but I'm going to use Anchor to do it. I think, at the time, Nader Dabit had just published his first article, so I was kind of using that as a reference. But, there really wasn't a whole lot about the intricacies of how Anchor related to Solana development, in particular. It was hard for me to wrap my head around the account model, which I think is the biggest thing for most people coming into the space, especially if they're familiar with Ethereum. I had just done a very basic, put a key pair on a node server, spin that up, something you would never want to do in a production app. It worked until the Herokuv server crashed, and then it just was a joke of an app.

I couldn't really sleep well. I had written up my experience, but I couldn't really sleep well knowing that that's as far as I got. That's when I dug into PDAs. I really started to understand the account model better on Solana, what that was. I just wrote about that experience, really, selfishly for me just to have a memo on that. Then, I just put it out there, but I found out that a lot of other people were simultaneously going around the same sort of journey. I think that was the article that I really started to get connected with a lot of people in the space.

Chase (11:09):

I mean, it's pretty typical for a lot of these guys to be documenting their journey. A lot of times that really sparks a revelation for people that I've noticed. It's like, wow, this is super valuable. Then, I want to do it again. It's like, if this is helping people, I'm going to keep deep diving these things. But, it all started with Armani being like, hey, I'm going to make this easier for everybody, and he did. Now, he has a massive community of supporters that are just building on top of Anchor. Was the accounts model in the PDAs... Typically, it is, but, for you, is that specifically was, until you got past that, Solana was pretty hard?

Brian (11:47):

Yeah. In my mind, I thought it was going to be Rust, especially being a front end dev. It's just the total different world, but-

Chase (11:54):

The syntax is disgusting when you first look at it, at least in my personal opinion.

Brian (11:58):

Yeah, you can kind of understand. But, I mean, it really is. If you've never touched Rust, it's not bad. It was nothing that, really, three or four hours worth of just looking over stuff. You can understand the gist of things, which is as much as you really need to get your first app up, which I think is the best way to learn, just by doing. For me, it really was the mental shift of just how does Solana work in the account model because I think everyone's so used to... I have Ethereum address. It has all these coins directly related to it. Then, there's this Ethereum smart contract, and it has its state. It has a counter, and it can do these things. It's really weird to, one, you're already saying, I'm going to go away from this ecosystem. I'm going to look at Solana.

But, then, two, a lot of what I have in my head as a mental map doesn't carry over. That seemed like a scary drum. That probably was the hardest thing, but, it's really that account model. I think that once you have a pretty good understanding of that, that's 80% of the work. The rest of the 20% of the work, you'll get over time.

Chase (12:58):

I mean, if we're talking about Rust Native, and then we're talking about Anchor, Anchor also hides a lot of these issues. You don't have to really worry so much about the serialization piece. Honestly, I don't know very many people that actually even know how to really do that efficiently and effectively in Rust. It's a huge pain in the ass to make that work. Have you done any of the serialization in Rust Native?

Brian (13:26):

Yeah. I've played around with Borscht a little bit now. I think as far as the whole Anchor versus Solana Native debate, speaking anecdotally, I definitely thought it was easier just to go with Anchor. It lets you focus on what you're building. You don't have to worry about all this stuff like serialization. But, then, I think once you do build something to actually really understand how it works, and if you ever were to actually put any money, your own, let alone other people's money in it, you absolutely should understand how Anchor relates to Solana Native, and why it's doing the things it's doing, what each trait and macro is actually doing under the hood. Then, that just makes you really understand, I think, Solana, all the better.

Chase (14:03):

There's a couple types of people there. There are the type of person out there that's like, no, I want to start with a base, and then I'm going to work my way up. Those people tend to be the more thorough, take their time, whatever. But, then a lot of others are like, I want to push out an MVP because I want to write code right this second, and then they do it. Then, just general curiosity over time when you feel like you understand a language like Anchor, and you're like, okay, I got this. This is great. Now, I'm actually curious how this works under the hood, so you just go in the reverse direction.

Brian (14:38):

This is, again, anecdotal, but for people like me, and probably if you're a front end dev, actually, it's really nice to have something tangible where it's like you built this. You can show it to a friend, and they can connect the Devnet Wallet to it, and they can use it. Then, you kind of really understand the tangible value of this new platform that Solana is. Now, you're innately curious of, okay, well how does this actually work? I saw that Anchor does this in less than 50 lines of Rust, but half these lines are macros that I'm not quite sure what they do under the hood. It's very natural, your learning path from there, if you can just get the first project done.

Chase (15:15):

Have you, to this day, written anything in Rust Native. Have you written any programs?

Brian (15:21):

No. I've transitioned over more to the web3.js side of things because that's what I'm more comfortable with.

Chase (15:28):


Brian (15:29):

As you know, recently, I've been spending most of my time on more conceptual stuff like the Solana Cookbook, and I dug in some stuff as well about retrying transactions during network congestion and all that. That's a little bit more, conceptually, how the Solana blockchain works as a whole.

Chase (15:42):

If you guys didn't know, Brian just released a PDA section to the Solana Cookbook, so check it out. Also, the retry portion. That was actually requested by the Solana core engineer team. They were like, there's a lot of people that don't understand how to manage failed transactions and how to retry them properly.

Brian (16:04):

Yeah, totally. That's kind of what drew me in to this space is that I had seen people like the core engineering team there, Trent and what Anatoly's built, obviously. But, there's all this amazing tech that these guys have built and they've been so focused on building that no one's really there to tell the story and to help make it more relatable to devs, maybe Web 2.0 devs who are coming in. I've seen a lot of people, and I have friends who maybe aren't full-time crypto who are just like Solana just doesn't work, unplug it and plug it back in kind of a deal, like what's going on there because it's very different from Ethereum.

But, in my mind, it's an incredible piece of technology that's been built, and there's reasons why certain things have hiccups at certain times, but it doesn't mean it's a bad design. It just means that we're testing in prod. We're moving this thing pretty fast. What I wanted to do is help shed light what is actually happening because as I learned about it, it gave me more confidence in Solana as a whole, the platform, understanding what the growing pains actually were under the hood.

Chase (17:02):

Whether people like to admit it or not, every blockchain, in its infancy, has suffered very, very similar problems. They're continuously working to improve this with QUICK and other different options that are going just make this more sustainable. The best thing we can do is be honest about it. We have Solana Docs. They're highly technical documentation. They're not necessarily developer experience friendly unless you're a very specific type of learner with a very large brain. The first time I read it, I probably absorbed 10%. The next time I got another 25%. Then, it took me five or six or seven times before I grasped everything that was happening in there. It serves a very specific purpose. Most of that documentation, the brunt of it, was written years ago by the co-founders. It can use some improvement, but, at the time, we're like let's move fast. Let's get the community contributing and kind of get the Cookbook built out.

It turned out really great. It has a half a million page views, just short of half a million, which is insane since that just goes to show you how valuable it is, and how valuable your contributions are. The same reason why we have these little developer advocacy teams that join weekly meetings with us, so they can know what's going on and just help. The goal is to get some experience, and then eventually get hired by whoever you want to get hired by. Luckily for you, that seems to have worked out and that's amazing.

Brian (18:25):

No, the Cookbook's been an awesome experience, and, definitely, shout out Jacob Creech and Leesam [inaudible 00:18:31] and Loris and Colin and all those people who are working hard on it. It's been very organic, and I think that's kind of true of the whole Solana developer ecosystem as a whole is that it's an aptly named podcast, Chewing Glass. But, there's a reason why people are dedicating their free time outside of work to this because it's really awesome. The Cookbook, in my mind, is the best way if you're sort of on the sidelines, or you've maybe built a small project, and you don't really know how to go from here, getting involved with that is definitely the best move I think you can make. Contributing to the space, as a whole, helping other people learn. The best way I've ever learned is writing for other people. Then, once you do do that, it's really easy to connect with others who are building in the space. There's so much to do that you'll get picked up by somebody, for sure.

Chase (19:12):

It's kind of crazy. When that Cookbook just exploded, also, shout out the SuperteamDAO for actually helping solve [crosstalk 00:19:20].

Brian (19:19):

Yeah, totally there.

Chase (19:20):

They really crushed it. Watching that organic just inflow of people that are like, hey, I'll do this thing. I'll do that thing, and they just did it. For a ghost chain, we actually seem to have a lot of developers in the ecosystem.

Brian (19:32):

Anecdotally, I've seen just an explosion of people who've reached out to me saying, hey, I read your stuff and I want to learn more. What's the best way to get involved? I think that gut feel of the developer buzz and people who are spending their nights and weekends trying to wrap their head around this. I think that's the best kind of indicator you can really have because, at the end of the day, there's a lot out there. But, if you can get people who are actually interested in putting in the sweat to actually learn about this thing that's not always easy right off the bat, but even if they're just interested in it's going to take mind sharing. That's how we can better.

Chase (20:08):

Yeah. Every day, I'm blown away, but I don't have to reach out to anybody. It's just all people reaching out. Obviously, I love to hear that they're reaching out to you and everybody in the ecosystem has their DMs open. If you write an article, expect for people to come and ask you for advice, and that tone has been set. It started with Anatoly with this whole openness thing, and him and Raj with their DMs open, went down to me, and then to the community. Then, it just keeps spreading and spreading, and everybody's really just trying, out there, to help each other. Without that sort of kind of vibe, you and I wouldn't have met. We wouldn't have worked together. None of these things would've happened.

Brian (20:45):

I think that's definitely the most important thing is keeping that vibe set because I could have just as easily gone away, but I hopped in an Anchor discord right when it was just getting started. There's people like Armani, but then others like CQFD and Don Diablo and other people who are in those channels taking time out of their day to help me out. Once I learned it, I felt like I had to pay it forward or wanted to pay it forward really and connect with more people. I think as long as we can keep that momentum going, that's a good thing.

Chase (21:18):

For sure. You talked about, you were doing some Web 3.0 stuff. You saw that the token program was completely rewritten in TypeScript.

Brian (21:25):

Yeah. Pretty cool.

Chase (21:27):

Have you touched that yet? Have you played around with it.

Brian (21:28):

I played around with it a little bit. Haven't done a whole lot there, but I definitely plan to. I think one of the things that I was most interested in when I came here was Web 3.0, web3.js because it's just so simple. It's like an NPM package or a yarn install. You can get up and running with that. I had an idea of making a little site that was a little bit interactive where you could have a snippet of code, say how to send a SOL to somebody, and then you click that. Then, on the right, it's actually rendering and showing what that actually looks like. But, I think the Cookbook has done a pretty good job. My idea kind of started right around when the Cookbook launched, so I've focused my efforts there, on the Cookbook, but I would say that should be a focus of mine and a bunch of other people who are interested in contributing. It's just improving the developer experience on Web 3.0 right now. There's a lot documentation-wise that I think we could improve.

Chase (22:22):

Even some of the Solana Program Library, for instance, the Solana Token Program JS library, which they dot bindings in the documentation, that doesn't exist for every program. You would, literally, just have to write your own custom transactions and instructions to be able to use it. We are adding that to our little roadmap. I'm sure there's additional components and extensions we can add to these things. We're working on it.

Brian (22:51):

I think it's the right time to be contributing towards that kind of shared resource like that. Another one that I found that isn't Solana Native programs, but the Saber team has done a great job with their Saber common repos. I think they've set a really great example for other projects that if they want to win, they got to have the whole ecosystem win. They got to grow the pie, open sourcing code and sharing what you know with people. Everyone I've interacted with across all projects has just been awesome so far. I would really love to see that continue.

Chase (23:20):

I do this every episode. I'm going to put you on the spot and just kind of ask you, give some advice.

Brian (23:27):

I thought about this. I'd seen your two other episodes, so I pulled a tweet from Armani, which if I can read here because this is what had actually, finally got me kind of off the couch and contributing. This is September 2021. He says, "For every new technology, the pace of innovation exceeds the pace of education. If there's tons of examples to copy and paste, you're late. If you're confused because there's no docs, good. You've discovered a secret that is yet to be revealed to the rest of the world."

I saw that right when I was kicking around the idea of maybe I should make an Anchor thing. Ah, I'm busy. I got all this other stuff. If I got a puppy, all this kind of stuff to take care of. But, I would a hundred percent agree with what he tweeted there. I think that's a legendary tweet. If it's confusing, good. Just keep at it. Then, I would say make a really simple project about as simple as you can. For me, it was an app that basically said, do you like crunchy peanut butter or do you like smooth peanut butter? You connect your Phantom wallet, and you vote for an option. The program records it. It's still live to this day. You can check it out,

Chase (24:32):

Nice plug.

Brian (24:33):

Nice plug for the peanut butter there. I'm not sponsored by any peanut butter companies. But, that, for me, was really what got me going. I had set a deadline. I'd said, okay, I have to have this live in two weeks. I think giving yourself that deadline is actually the most important thing because so many people come in. They say, hey, Solana is cool, but then they get distracted by something else because there's something new happening in this space every day. It's easier to watch the price of things, but sticking to a deadline, and even if you fail, but knowing why you failed.

If you're under pressure, and you can get something out in two weeks or less, just write about your journey. Just say this is what I built. It's simple, but it's live. Here's the source code. Here's the link, and this is what worked for me. This is what didn't work for me. This thing sucked. This thing was great. Just create a Twitter and tweet about it. I guarantee if you do that, people will reach out because you've probably touched some piece of code that someone else has written and they want to hear feedback on how that was. Then, you have your own experience you can write about, and maybe you can share something that helps other people build in the space. It's all about contributing really. Once you contribute, other people really want to reach out.

Chase (25:39):

It really just becomes this perpetual cycle of contributing, sharing. Somebody else uses it, and feels the same way, and it just keeps going you going. That's all we want. I'm just there screaming on Twitter to fuel the fire. You made a great point. Nobody's made that one yet. Bravo to you, not about the peanut butter, but about the fact that set a plan because all of us as engineers, in our past, have been like, I'm going to do this thing. You set no timeframe. You start on it, and then you never get back to it. Then, you have about 500 things that you've started, and then you never touch any of them, so really writing that down, setting that timeframe, setting that goal. You got to find a way to hold yourself accountable.

Things I've done in the past, starting Chewing Glass, about starting this show. I didn't ask anybody at the company. I just tweeted, "I'm going to start a podcast." If I didn't, people would start asking me about it later, and then I would look like a liar. I had to do it, so accountability can really come from just tweeting because if people follow you, they're going to throw it in your face one day, and nobody likes that.

Brian (26:43):

I'd say if you're still listening this podcast, if you've made it this far in Solana, you're interested enough to build something. Build it, and then tweet about it. You probably are interested in following people like Armani, people like Chase, people like Anatoly, and share it. If you build something, people will see it, and then you'll have kind of innate sense of accountability because you'll be connected those people, and you won't want to let them down. It'll just totally consume your life. But, it's awesome.

Chase (27:07):

By the way, if you build something really cool, or you write something really cool, tag me in it. I'll share it so other people can find it, and then you can inspire other people to-

Brian (27:18):

Join a hackathon. Win some money.

Chase (27:20):

Exactly. Anyways, Brian, this was awesome. I'm so glad we got to have this call. Thanks for coming on the show. Thanks for talking to me. Any last words?

Brian (27:31):

Thank you, Chase. I mean, this whole past couple months has totally exceeded my expectations, and there's real opportunity in this space. I think if you're listening to this, reach out to Chase, build something. He's a man who knows everybody. He can connect you to the right people, and he can teach you a lot. I'm super thankful for knowing him, and I'm super thankful for this space.

Chase (27:51):

All right, man. Have a good one. Cheers.

Mar 08, 2022
ukraine.sol Ep #60

On a special episode of the Solana Podcast, Sergey Vasylchuk (CEO, Everstake) talks about Aid for Ukraine, a DAO created by Everstake and endorsed by the government of Ukraine and Anatoly Yakovenko to support Ukraine during the ongoing crisis — and how it came together on Nation.

00:38 -  Intro
02:51 - Origin of the initiative / How it works
06:25 - Ukrainian government receiving FIAT currency 
09:13 - Banking, a legacy system
10:04 - News on the ground
12:39 - What can people do to get involved


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Austin (00:09):

Hello, and welcome to a special episode of the Solana podcast, I'm Austin Federa. Today we're joined by Sergey Vasylchuk, who's the CEO of Everstake, but we're actually not here to talk today about Everstake. We're here to talk about aid for Ukraine, and the situation in Ukraine and the project that Sergey and a bunch of others from the Ukraine and connected to the Ukraine have launched. Which is a fundraising effort to help raise money that's urgently needed for the government and for people there. Sergey welcome and thanks for joining us today.

Sergey Vasylchuk (00:39):

Yeah. Hi guys. Thank you for listening and thank you for helping us in this difficult situation. And yeah,the  situation in Ukraine is quite terrible. So we have been protecting our country for close to a week and we are struggling with one of the biggest armies in the world. But we still resist and sure, we'll win soon. But this will need... It's not just a magic maker, many of the people trying to protect their country, military are dying, military are fighting, the civilian are also trying to do all they can. And generalization is that every citizen of the Ukraine, it doesn't depend where he is located and what he can do, they do something. I do not know anyone who just sits in the idle and observes the news. First, probably two days for me was shock. 

I cannot believe what has happened. I was just stuck to the news and seeing what is going on, calling some relatives, asking what I can do to help and what's going on? It's just shock. And I was stuck, but sooner or later, I had the conversation with Anatoly Yakovenko from Solana, he is originally Ukrainian. He asked me, "Hey guys, what is going on? How are we going to help you? Let's do something." I said, "Yeah, I cannot sit and cry, and wait and I need to do something." And it was the case when we started to understand that we need some impact. And that's why we decided to start this activity.

Austin (02:17):

So the process here that's been running on is there's Ukraine.soul, which is a Bonfida name routing layer address, that routes to a wallet that's controlled by a MultiSig Dow on Solana. You can go to, you can see this there too. There's about $1.45 million contributed so far, as well as several NFTs from projects that will also be sold and liquidated to generate funds here. There's a lot of different efforts, raising different kinds of crypto to aid the government and the people. What was sort of your thought to do this, to start this up? And can you talk a little bit about how the country's actually involved as well in the government?

Sergey Vasylchuk (02:59):

Well we have quite an unusual ministry, which called Ministry of the Digital Transformation. It was created a few years ago, and many of the politicians were skeptical and it was a bit like late in the day. It's just few guys from the IT ground. They will not change nothing. But for the least two year guys made the great application. We probably have the digital ID have digital, driver license, have the digital vaccination certificate, whatever. So it go digital. The many of the services, the country are become in our smartphone. And those guys are quite trustworthy and respectable in our community. They just start to accept the donation, in any form of the money that is available. And you should understand that currently there is marshal law in the Ukraine and central bank put limitation that is hard to transact in the foreign countries, foreign currency, sorry for us is Euro a dollar.

So for example, I cannot transfer some USD to any other recipient outside, Ukraine. And many of the volunteer organization need to pay because, for example, night vision, like equipment or other stuff is outside Ukraine. So crypto become the obvious things to transact probably the only without the bureaucracy without need to go to the bank because, it's impossible to go through the bank in the middle of Ukraine is war is real war. So why crypto is obvious why government` and Montesquieu is because I was asking for many of partners asked me how we can help you. And I said, Hey, just donate. Many of them were skeptical. But what the source of this donation who are controlled those money, can you guarantee us that this money will be controlled by some legitimately people?

And yeah, it was a good question. I was calling the guys from this ministry that the digital ministry and say, can you help us to make it more legitimate? Hey, make some, posting the Twitter with this other, they say, yes, of course we can, we can do. So I take some of the guys is deputy of the ministry, which have provide his own Solana key to the Montesquieu. I also call him like few respectable companies, founders of these companies in the Ukraine who are well known. They also provide their keys and we create the Montesquieu with like 60% of the threshold and linked our Twitters to each of the keys to be transparent. So everyone see who is signing, what is signing and is blockchain is totally transparent. You can go to this nation now, which like Solana and see our dow and see what is going on.

Austin (05:56):

Yeah. The multisig is also, I mean, if you just think about the logistics of operating in a war zone, you don't know who's available to sign a transaction at any specific place. So having it split up into a multisig that has a proportional threshold requirement just allows the whole project to be much more nimble. So, funds that are create are, are collected into the, this Dow they're they're then going to the request from the government is pretty much to receive Fiat currency at the end. Is that correct?

Sergey Vasylchuk (06:25):

Yeah. There is two problems here. Problem one is there marshal law with restriction. Problems two that currently in the Ukraine, there are not much exchanges, which are able to transaction the, in the hryvnia or in the foreign currents that we need to convert. And if there are some, they are not very scalable and sometimes vendors, don't have the crypto. So we trying to find the way to make it sustainable, unlimited, out ramped solution to be able to liquidate crypto and to put this to the account and second issue here that also people need to know that we are spending money , in the right hand, in the proper proportion and so on. So, and you should understand that the only trustworthy for the everyone, outside the Ukraine is government. So government is resisting, is successfully resisting for the biggest army in the world.

So, you can put the there, reputation, yeah this is guys who are saving us. So that's why, we are going to you to build this unlimited gateway and put money directly to the central bank. Why central bank, because they own entity who is able to transact freely with outside the world. And they have special account, which were opened recently to all donation for the military operation, for the humanitarian operation, whatever. And we going to fund those accounts. After we try this to the sound scale amount, not significant amount. I believe that 1 million is not significant amount to have the impact in this strategy war, will we try to advertise this solution for the wide, for the wide audience? I want to build these something that would allow like every, every crypto holder, like down the Bennett from the, his size, it'll be hamster or whale, to donate any impact, as easy as $1, the 10 million, this is something that we going to build. Probably just tomorrow.

Austin (08:35):

Yeah. That's I mean, that's great to hear. And especially the ability of crypto to step in here and be a transfer medium that works 24/7, 365 days a year, even with the restrictions of having to get to Fiat currency at some point, it means that at least, you know, what's in the account and you're not waiting on banking hours in order for this to happen. And I think there's, there's probably also a safety component too, where people can donate in a more anonymous fashion compared to having to donate with a credit card or an accountant transfer. If, they themselves are in a situation where it may not be safe for them, maybe they're inside of Russia and they're actually still donating, you know, to something like this.

Sergey Vasylchuk (09:14):

Yeah, sure. Is just the new tool, the new generation tool, in our company, in between us, we call banking legacy system. So for us, the new finances, blockchain and everything that comes with the bank is legacy. So, but yes, sometimes we need the bridge become the system. But obviously for me, crypto is the new generation and this market for the 10 years. And, I am a 100% crypto guys, and this is how I can be useful for my country.

Austin (09:39):

So there's a real asymmetry of information here, as far as the media's been reporting that many people who are in Ukraine are not able to necessarily always get information out. And it's a little bit hard to understand. What's always going on over there, especially for someone like me, who's in the United States. What have you sort of been hearing from, from friends and family and colleagues about the situation there now?

Sergey Vasylchuk (10:04):

Well, I'm on the ride every minute. So you and understand, my parents stayed there. My sister stayed there. My friends stayed there. Everyone who stayed there, the males putting the guns and protecting the territory, female trying to be helpful with volunteering with the medicine, with anything. Even kids try to do something, but it's not possible everywhere. After the five days of trying to win our nation by the fire contact, Russia, understand it doesn't work. And now they try to use rockets, ballistic rockets, missiles and to hit our civilian cities. So what is going on Kharkiv is currently is bombing, like Kyiv is bombing. Zhytomyr is bombing. So they try to scare the people. One thing that they don't understand that they just bring more hate and angry, not the scary.

So we are the nation that we unite against the enemy. We have the problem with 214, they took some of the territory and those situations, the country was weak. So probably they tried to use the same approach, but it doesn't work right now. So each strategy is a full scale war, with 1,000 of the deaths, with a civilian, with a 1,000 the death of the military and with the damages of the infrastructure. So it's not a movie. It looks like a movie, but this is real life that currently where Ukrainian are facing.

Austin (11:52):

And, and just in the last few days, the, I would say that the international community has moved very slowly, but they, they are moving especially financially to have there be real consequences for this in terms of freezing foreign assets from the Russian government and imposing stricter restrictions on it. Do you have an idea? Do you have a sense of the magnitude of the need right now that Ukraine has that both from the inner, like there, there's obviously there's donations that people can do. There's also Congress people, they can call there. There's other political actors that they can call. What are the right steps for someone who's trying to get involved beyond just donating?

Sergey Vasylchuk (12:36):

Well, the biggest problem for the Ukraine is our sky. So we have not advanced systems to protect from the missile and rocket. And, if somebody can close our sky, no chance for enemy to win us. So all current attacks are away from the sky. So if anyone could call the congressmen, the government and impacts something that the vest could close our sky, be sure that we will resist. We kick the earth and we go away. We go away from, from our territory, we hitting this, just fighters, just because the excellent pilots, but our is limited. So the more, just the more weapons, the more something that protects our sky will help us. Probably we do not need anything more from the point of view, if you want donate us, like donate, but you should understand that sometimes this money will be useless if they will not go out to like some specific like direction.

So for example, Kharkiv, they need medicine, they need everything, but there is no logistic around because, everything is destroyed. No roads around. So the best way is to contact some volunteers who live in some specific places, which have, have the access to the some logistic and have the context with civilian military to ask directly, what do you need and what you want to have. This is why we also want you to interact after the building this crypto gateway to the central bank, we probably will try to onboard for, for the big exchanges, for the crypto exchanges funds, who will be able to make this direct support. And after this, we'll be able to send the crypto to liquidate the, and the exchanges and to help this way.

I know many of the suppliers, like a, already a certain crypto, because some of the solutions probably FTX a Coinbase base, make it quite seamless transactions. So they send the invoices probably in the US dollars, but, we're receiving this in the form of the crypto. Some magic happens inside the exchange and guys receiving the Fiat and the more these guys who been born with the crypto, it will be more of widespread and something that you would call adoption. Unfortunately this mass adoptions go in such situation as a war with the thought that will goes organically. No, it goes in the extremely situations.

Austin (15:17):

Well, Sergey thank you. Thank you so much for joining us today. We'll have to have you back to talk about Everstake at some point, which is something I've been meaning to do for, for a long time, but this obviously takes priority today. If people are interested in learning more in helping out, you can go That is connected to the same backend as the SPL governance program. So you can also just donate directly on chain at Ukraine.soul, which will accept any SPL token and any NFT as well.

Sergey Vasylchuk (15:46):

Yeah. Thank you guys for listening to me, please try to donate something to support like our survival. Thank you, Austin. Thank you Solana community. You are amazing. Please contribute something. It'll be your small, but very important and impactful contribution to save Ukraine as a nation. Thank you guys.

Austin (16:04):

Thank You.

Mar 04, 2022
Solana Foundation Ep #59

In this episode, Dan Albert (Executive Director), Lily Liu (President) and Mable Jiang (Board Member) discuss the role of the Solana Foundation in advancing the Solana protocol and ecosystem with support and initiatives around the world. Austin Federa (Head of Communications, Solana Labs) guest hosts.


0:43 - Intros / Roles

3:13 - The appeal of working at the foundation level

07:48 - Establishing scope for the foundation

12:42 - What’s working in the ecosystem?

20:01 - From the ecosystem to the foundation

21:21 - Growing Solana in new markets

33:50 - Shared Ownership of the network

36:21 - Predictions for 2022 in crypto and web 3.0


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Austin Federa (00:10):

Welcome to the Solana podcast. I'm Austin Federa filling in as guest host today. We spend a lot of time on the show talking to founders and builders in the space, people building on the Solana blockchain or otherwise involved in the Solana ecosystem. But today we're actually going to be talking about a different component, which is the Solana Foundation. Today with us, we have Dan who's the executive director of the Solana Foundation. We have Lily, who's the president of the Solana Foundation and Mabel, who's one of the board members of the Solana Foundation. Welcome to the Solana podcast, guys.

Lily (00:39):

Thanks for having us.

Dan (00:40):

Great to be here.

Mabel (00:41):

Thank you.

Austin Federa (00:42):

All right, Dan, let's start out with you. Tell me a little bit about what the Solana Foundation's role is in the ecosystem.

Dan (00:49):

Sure. The foundation is really here to help foster the growth of the Solana network and really the Solana ecosystem kind of in broad strokes at the highest level, what can we do to make sure that the Solana network continues to grow in the most kind of sustainable and decentralized manner as possible? And how can we provide resources and help the community grow to onboard the next or the first billion users to the Solana ecosystem and crypto in general?

Austin Federa (01:24):

Lily, what attracted you to the Solana Foundation? And how did you get involved in it?

Lily (01:30):

Well, I've been in the crypto ecosystem for a little bit and I must confess that in 2018, 2019, I actually spent a good bit of time being a Bitcoin maxi. And then I even was part of Little Bitcoin Book and which is not to say, sometimes I feel like people in crypto are a little bit maybe too tribal, which is not to say I don't love Bitcoin. I still consider Bitcoin to be king. But when I took a little bit of time out of crypto, when I came back to crypto, I started just using a lot of the apps that had sort of emerged out of DeFi Summer and I was totally floored by using Raydium in April. I really could not stop talking about it for just about a month because it was very squarely Web 3.0 but it felt like Web 2.0 and it was just so obvious to me at that moment that this was going to be how the next billion people, if we were going to get a billion people into crypto, anytime soon it was going to be on Solana.

Solana to me is just such a unique combination of being technically so innovative but at the same time, really understanding that to bring people into the ecosystem, it has to be a good experience. And sometimes for your end user, it really just is as simple as saying, "It's fast and cheap." And that's why ethernet is just better than 56K modems. And sometimes it just has to be that simple to the end user if you're going to appeal to a billion people.

Austin Federa (02:48):

Yeah, I completely agree with you. There's been so many of those moments I've sort of heard over the last year of people just trying something on Solana and having this experience of, oh, it just works. It's fast. It feels like a Web 2.0 application but it's delivered in a fully decentralized way. Just based on that, what was the decision in your mind to, tons of people have that experience, they go build something, they go work for a company building in the space in terms of a service provider company. What was the sort of appeal of something that's more at the foundation level?

Lily (03:19):

To me, I think that, I come from a background where I spent a lot of time, I originally started working in more traditional industries. I worked in McKinsey, I worked at KKR and I kind of fell into Bitcoin back in 2013, 2014, which at the time was not a very obvious thing to do. And so for me, I think one of the things that I maybe add to the ecosystem is helping run effective organizations and thinking about sort of how to scale a commercial kind of go to market strategy and having been in the ecosystem for a little bit. And so for me, what's always attracted to me to crypto and Web 3.0, is these kind of new ultimately end user experiences that you enable for, not just those of us who've been kind of nerding out over technical sort of minutia left and right but really making that accessible and available.

Lily (04:17):

Some of the things that I'm really excited about facilitating through the foundation is kind of new markets growth outside of the US, outside of Europe, outside of the parts of East Asia that are already very familiar with cryptocurrency. And to me, it's so clear that if these types of applications, call it DeFi or sort of more metaverse or social or NFTs are going to take hold, then it's most likely going to start on Solana first. And so just being a part of that and sort of making that more accessible to a broader rate of people is really what's exciting to me.

Austin Federa (04:51):

And Mabel, you tell us a little bit about your path to becoming a board member at the Solana Foundation.

Mabel (04:57):

I think among all the people here, I probably joined the board the earliest. I joined when the board started, the foundation started. That kind of history just goes back to when I think before the token launch of Solana happened to that Anatoly and Raj, they were in China and in East Asia. And then that was even before my time joining Multicoin. I met them, obviously at that point it was 2019 and then it wasn't really easy to raise fund for sure. But then we kind of just happened to hang out a lot in Shanghai, in Seoul. I think another places like Beijing and whatever. And then we spent a bunch of time over those three weeks and then talked about, oh, how do I think about or how do we usually think about go to market strategies for public chains? And then how do people really differentiate one smart contract from the other?

When they go back to San Francisco, they ask, "Can you maybe write us some sort of expansion or kind of go to market plan for Solana in East Asia?" And I did that. That was right around the time when they're forming a board for the foundation. And then, that's also around the time when I joined Multicoin. They invited, it's like since you're part of the ecosystem and then you are pretty unique kind of position compared to some of the other board members, are you interested to kind of help Solana Foundation or raising the Solana awareness in a global sense? I was like, oh, that was really interesting in a differentiated way to contribute to the ecosystem so I said, yes.

Since then, that was start of 2020. Since then over now, I've been doing quite a bit of things, always related to those lines, raising the awareness for Solana in China specifically because that's where I'm sitting. And also in some other places in Asia and also try to just kind of talk to different projects in multiple different ecosystem. And obviously now it's a multi chain world and then people would have different trade offs, like when to choose different things. But when they learn about Solana and learn about why they're optimizing certain things in the design, they're always willing to try it because back in 2020, there aren't that many people know about it. I think the first step really is just to having people understand how the system works and whatnot. I've been doing quite a bit of those. I think that's kind of my experience involved with Solana Foundation.

Austin Federa (07:31):

And Dan, as you kind of think about your role as the sort of executive director at the Solana Foundation, how do you define scope for an organization like that? What are the sort of things you're thinking about when you're thinking about initiatives that the foundation is engaging in or things the foundation is not doing and shouldn't be doing in your view?

Dan (07:52):

Yeah, that's an excellent question. Really, I see it as two primary areas of focus with kind of the overarching goal being broad growth of the network and the community itself without an eye towards turning a profit for the foundation. This is a nonprofit organization. We're not taking any equity investments or really taking the position to be picking winners. There's plenty of incredible innovation that's happening on Solana, lots of competing projects, lots of new stuff. And the foundation really wants to position itself to support, really talking how to provide support equally for everyone in the ecosystem. And so one of the primary thrusts, one of our main operational kind of focus points these days is really on growing the network itself from an infrastructure standpoint. That's really been my personal area of focus for really a long time now is how can we get the most number of high quality validator operators, the most humans running the most number of nodes, be it validators or RPC nodes, which serve as the API endpoints or API gateways for applications using the Solana network?

And to that end, the foundation has rolled out a number of programs, really leveraging kind of the foundation's holdings of tokens, which are really allocated to grow the community and grow the network. Kind of as I see it, I don't know, maybe a bit of a personal tangent here. I originally started engaging with Solana in early 2019. I was working on the engineering team at Solana Labs and it was early stage startup. We hadn't even launched the Testnet yet, just kind of scrappy early days, trying to get everyone to understand and hey, proof of history is a real thing. We're really going to prove out this tech. And one of the things that was really hard was trying to get people to run validators. A lot of our early stage validators that helped us launch Testnet for the very first time and get Mainnet off the ground were a lot of them came from the Cosmos ecosystem.

And so, we have a lot of these kind of OG longstanding validators who really helped get the Solana network off the ground came from standing on the shoulders of giants. The Cosmos ecosystem brought so much innovation to the proof of stake universe and kind of where this ties back to, in early days, myself and a couple of the early labs employees in true startup fashion, we were actually working out of one of the co-founder's basements and we hand built some of the first bare metal validators to run on the Solana network. Ordering parts on the internet, showing up in a bunch of boxes and just going forward kind of hacking on the hardware, trying to see how much performance we can squeeze out of these individual machines.

We went and installed them in a data center here in the Colorado area and those nodes are still running today. Some of them are pointed at Mainnet, some of them are Testnet. And that was sort of the, I don't know, the genesis of, at least for me personally, a lot of my personal investment in seeing the growth of the validator ecosystem on Solana, having kind of physically hooked up and bootstrapped some of the first ones. And now having transitioned earlier this year to take on this role at the foundation, we maintain a program for anyone who wants to run a validator, can engage with tier one data centers all over the world that the foundation has. We've really kind of went to bat for our validator community and helped a lot of these infrastructure providers understand that, yeah, it takes a lot of horsepower to run a node on Solana and it can be hard to get your hands on some of these machines.

And so in working with some of these execs at some of these older school, I'll say more traditional telco or infrastructure oriented companies, helping them to understand the value of what a powerful and secure and distributed Solana infrastructure ecosystem looks like, that's really been an exciting kind of growth track, I think for the foundation in helping to bring more hardware online and helping more people to learn to run it and get more nodes running and keep the network flying.

Austin Federa (12:16):

Yeah, I love the parallels to the Cosmos ecosystem being a validator ecosystem being early, early supporters of that because of course, Tendermint is also notoriously computationally intensive and runs better on bare metal than cloud so it seems like a very natural validator group to bring over in the early days.

Lily, from your view, as looking over the ecosystem, what are the parts you see that are working really well in the Solana ecosystem? What do you see are areas, be it tooling, Dan talked a little about infrastructure, areas in which the foundation can make a difference in help evolving?

Lily (12:53):

What I think is going quite well right now is a lot of the interest in the energy and kind of the inbound on various stakeholder groups within the community. I think there's a lot of excitement from a general audience also because it's very accessible to a general audience. Again, as we were saying earlier, if it costs dollars versus hundreds of dollars to mint an NFT, that's a very meaningful difference to many people. I think general awareness has been amazing. I think there's a lot of increased developer interest and accessibility. And if you look at sort of the hackathons that we've had, probably every two or three months, three or four months in the ecosystem, the number of sort of people who are new to Web 3.0 that are starting with Solana, I think is really impressive and has grown tremendously in a very short period of time.

We want to continue to extend that in various ways. And we've got a number of ideas as to sort of increasing the accessibility to even a retail audience, putting out sort of better documentation, better tooling to continue sort of onboard both maybe existing Web 3.0 developers who might be building in solidity or on sort of an EVM type environment. As well as, increasingly there's pretty substantial influx of folks coming over from Web 2.0 and thinking about where to get started and are starting off by making choices between essentially now it's really solidity or Rust and Rust, implicitly sort of Solana. And so I think that we can continue to invest in various ways of sort of helping people start within the Solana ecosystem. And I think that because Solana has grown so quickly in a very short period of time, there are also sort of ecosystem tools that are catching up right now.

One thing that we hear a lot about is kind of indexing within Solana is something that we can probably improve as a community, data analytics on Solana, given that a lot of the applications are very sort of more consumer retail audience oriented is something that I think is also, actively being worked on. And so those are of the sort of near term things that people are thinking about. Obviously with the pretty tremendous growth of the ecosystem, also making it easier for people to run nodes, have access to baseline infrastructure. That's also something we've invested tremendous resources on through data center partnerships and it's known that Solana some higher hardware requirements but we've invested a lot to try to take down those various barriers. Those are some of the things that we've been thinking about.

Dan (15:38):

Yeah. And I would actually just kind of add to that. Some people do like to kind of harp on the interesting hardware requirements or high end hardware requirements for Solana. In the broad scope of things, when kind of the history is written about at these sorts of things, it's like, this is going to be something that's in a number of years or maybe even just a couple years, it's going to run on whatever machine you want to plug in to your home. We do have some validators that are running infrastructure out of their home. Some people choose to run in data centers. Some people do, God bless them, choose to run it in the cloud. But I think to Lily's point regarding the incredibly rapid growth of the Solana ecosystem, I think one area where we're really starting to dedicate more resources, particularly me personally and from the foundation side is on helping more people understand what Solana infrastructure really looks like.

We've seen Tremendous resources and the developer relations team has put out incredible resources for new developers for Web 3.0 but the kind of tooling and community knowledge base of what does it take to run a good validator? And what does it mean to run a validator? Why should I care? I think it has a little ways to go in sort of advancing that narrative a little bit. In particular to lower the barrier to entry from, oh, you must be a sysadmin or a DevOps expert to, what I'd really love to see is all of these Web 3.0 teams and Web 3.0 app developers who are having a great time enjoying Solana and building on Solana, also participate in running the network that they so appreciate. I'd love to see more community buy in of teams that are vested in their project being built on top of a working Solana to help Solana run.

What we've seen, even in just the last couple weeks or so, a number of these sort of NFT based Dow communities that have popped up on Solana over the last six months or so have started really taking this message to heart and are launching their own validator, which is just really cool to see. I know, I think Monkeydow claims the title of first Dow to launch a validator on Solana. I know the Degen Apes and the Degen community have also launched. And so it's just really cool to see these communities that really organically popped up around people enjoying NFTs and collecting these cool RNFTs that kind of blew up on Solana this summer now really starting to take a stake in the consensus and ownership and management of the network itself. And so I'm really excited to see that to start happen and really something I want to hope that the foundation can foster. And it's just something I also am excited to see the community really kind of taking it into their own hands more.

Austin Federa (18:39):

Yeah. I kind of love that, that it's so easy, even a monkey can do it. Is kind of the tagline there.

Dan (18:47):

It's perfect.

Austin Federa (18:48):

And the other, the Degen Apes, which are famous for having probably the least technically successful NFT launch to ever have been done by any organization have now their own validator. It's a good testament to how far we've come.

Dan (19:02):

It was incredible. It was such a struggle. There were all sorts of technical issues, like with the Metaplex standard had recently rolled out. They had various challenges with the mints and it was this saga that we all kind of watched unfold on Twitter and on all these channels over a number of days. And I got to give them credit. There were frustration, there was joy, there were tears. And it came out with one of the most unique, strong, enthusiastic communities on Solana having kind of gone through the fire of this rocky birth that was the minting process. More power to them. I just thought it was just so cool.

Austin Federa (19:48):

Yeah. I love how that all gets constructed. Kind of, along those lines, you Dan, you came initially from Solana Labs, you were one of the early engineers in the ecosystem. You're now working at the foundation. What's that transition been like? How closely do you still work with people like Raj and Anatoly? What's that relationship like?

Dan (20:08):

Yeah. I think the working relationship it's really interesting. There has been obviously, Solana, the whole network was built and originally launched, all the code came out of Solana Labs, where Raj and Toly run the organization. And they're obviously major players in the Solana ecosystem. This is the vision and the hustle that they've really brought to the table has been instrumental in kind of getting the whole community and the whole Solana ecosystem and the tech stack to really where it is today I think. Where we relate from the foundation is as sort of industry peers, I would say, sure, I talk to Raj and Toly, I talk with a lot of the ecosystem teams, I talk with our board and Lily and so many people that have an interest in Solana's success on the broadest terms and that's to really what the foundation is here to foster. As we continue to grow and expand and evolve our kind of working relationships with a lot of these organizations, I think just continues to evolve and expand.

Austin Federa (21:22):

And Mabel, looking at, you mentioned a bunch of the work you were doing was helping grow Solana in new markets. Can you talk a little bit about that? And I think, a lot of people, especially who are not working in the region, there's a lot of information around whether cryptocurrency is going to be banned in India or China, sort of how do you view some of those approaches?

Mabel (21:44):

Yeah, definitely. I'll answer the first part of the questions. I think it's going to be pretty much the same line as what Lily and Dan just mentioned but I'll kind of carve out those into details. I'd say, at the beginning you are also, you definitely need to engage a lot of these staking facilities but these people here it's quite differentiated because many of them are running the mining pools, meaning the proof of work mining pools. I remember back in the days, in 2019, 2020, we were talking to a bunch of those and happened to be that a lot of those are just crashing their wifi in the office. It's pretty funny. But at the same time, Dom who's from Solana Labs, we're trying to age of all of these mining pools and then we're just giving out some of those GPUs.

But I think that's in the past. Now a lot more validators are actually starting from East Asia. I think there's some problem with in the past, with your location being far from the US so that's it's harder because Amazon cloud and whatnot but I think basically there's what Dan mentioned earlier, I think this will be a problem that can be solved in the future. I thought that was a pretty interesting thing to bootstrap at the beginning.


And then the other things like wallets and non-custodial wallets, custodial wallets, because I think for East Asian crypto, you can never kind of ignore the centralized parties and players, especially I think in the past 24 month all the way till the next 12 month or whatever. I think a lot of those custodial wallets, including some of those exchanges, it was a lot of very pivotal work to try to engage them to support Solana, to support STL, USDC, USCT and a lot of the other stablecoins. I think, those steps that we were able to achieve in the past year in order to get a lot of these centralized exchanges to support those, I think that's also pretty interesting.

Mabel (23:50):

I think the other thing is that you just generally need to go to wherever because like back in the days in 2 18, 19 and 20, not that many groups are fully aware of how Solana works or even if it's like in Rust, I think people here I'd say safely were more familiar with things like Polkadot than Solana back in the days. Talking to some of those developers and just telling them, there's a few different options and then go to some of the hackathons or just developer meetups or even just the Rust China conferences, and then to promote about it. Justin Stery, he spoke there. A lot of these engagement opportunities definitely helped over the past two years for Solana to really get the writers here.

I think that work still continue. And I think I believe that there will be a lot more application focused developers coming over, given from the history of Web 2.0, you see a lot of your infrastructure was built in the West but then application wise actually quite a few of them came from the East. I think, for Solana, for anything that's building on top of the smart contract platform, we could probably spec on the same track. You'll see a lot of people are going to build on top. Now once all of these are available.

I think one interesting thing is that for things like wallet, you have Phantom for browser because I think in the West, people are pretty used to using browser wallet but I think here in the East, you also need something that has really good user experience and people like to go mobile first. And that's why Slope Finance, which is one of the leading mobile wallet for Solana in China, they were doing really well because they understand the user behavior and all of those to deliver to the specific audience. I thought this is like quite interesting how you will need to focus on specific areas, the same thing for East and West but then you want to make sure that people get to have the best culturally fitting choices for them so that way you can actually get it around.

And then to answer the second part of the questions, so I actually the other day had a tweet about similar lines. There's a lot of Web 2.0 venture capitals and then some of the other funded funds, they're trying to deploy money and then we're asking it's still East Asia or some of the other places around still relevant because of the policy. The way I read this is that crypto is really global. I understand that there's certain restriction for developers to issue cryptocurrencies in China or in some of the other countries. However, I think the language circle and then user behavior, what I just mentioned was always going to be something more pivotal than the actual restriction. These people will move to somewhere else in Asia but they will continue to build. And then for people who want to use the kind of user experience for those products who are sitting here.

I think crypto liquidity is global but user experience is always regional. And I think, if you're growing an ecosystem, you can't ignore that. I'd say I'm still bullish. And I think people are recognizing some a lot of those things are just better built on Solana because it's higher performance. And then at the end, it's just about how you make sure that you are compliant to the place that you are at. And then not definitely go with the compliance part but then also not hindering yourself building.

Austin Federa (27:23):

Lily, Dan, do you have anything to add on growth in new markets and that process?

Lily (27:29):

Yeah. On new markets, we started to invest in building out the ecosystem in India, back in June and July. And it's no secret, there's extremely large both user bases and also developer communities. I think in the most recent hackathon, after the US, the second largest contributor of developers, developer submissions to the hackathon was from India. And I think Indonesia was in the top four as well. And so I think as we continue to look to Eastern Europe, for example, Latin America, Africa, some of the early narratives as to what applications would be unique and sort of the 10X type of functionality on crypto, have been talked about and written about for years, if not decades. And for example, payment applications Which become supercharged when you take DeFi functionality, global liquidity pools and they make that adjacent to an actual you potentially consumer transaction.

And I think that that to me, it's very clear that that's going to happen on Solana first. And so, what I'm particularly excited about is some of those seemingly sort of everyday type of transactions but those actually becoming very unique when you, for example, can take a stablecoin and have a Venmo feeling type of transaction or a WeChat pay feeling type of transaction but it's actually fully decentralized, fully on chain and also comes with a potentially a suite of financial services that are kind of baked into the ecosystem adjacent to that. I think those are the types of things that are going to resonate hugely in emerging markets, in new markets. And those are some of the things that I'm excited about maybe exploring in new markets.

Austin Federa (29:10):

Yeah. I do love how sort of culturally infectious the crypto mindset is. That to use a network, you also have to be an owner of the network and that the success of the network and the success of you as a user are tied in a way that they're really not in the setup of a stock corporation or something along those lines. You can sort of think of these things in some ways as giant digital co-ops that are all working towards this goal. It's really interesting to kind of hear that. And I'm really curious to see in the future, how that starts influencing culture. I think we're already seeing crypto just barely start to influence culture and that might take off a bit in the future. Be interesting to see.

Lily (29:54):

I think it is. And I think what's under the surface with crypto but what rapidly rises to the surface is that it's been talked about, written about philosophically for a very, very long time, this whole idea of a veil of ignorance, that your opportunity set is determined in large part sort of where you're geographically born today, rather than you know who you are as a person and what's in your heart and what's in your mind. And with crypto, you sort of have this radical accessibility. It's almost sort of radical equality if you will, in a way that we haven't really observed in a long time. And so I think that's really upending in so many different ways and that for me is a big part of why I continue to be interested in cryptocurrency. And also why I think Solana is really going to be at the forefront of that because all of those sorts of ideas, the accessibility, the sort of the very concept of why Web 3.0 is important and where people are most likely to get started on that today is the sort of general awareness funnels.

People will hear about Bitcoin. They'll learn about Bitcoin. They'll learn about store value and people will resonate with that. Your average person will resonate with that because it sounds so much like digital goals. But then once they start to learn about Bitcoin, they're like, okay, I've bought it, I get it. It's kind of like gold for the digital age. What's next? Well can I do DeFi on Bitcoin? Eh, no, not really. Lightning, we've been talking about it since 2015. Soon.

And then very quickly from there, people move on to, okay, well here, well that's really amazing. These sort of new applications. And I have some friends who bought NFTs and then they click a button and it's a $100 later. Gosh. Oh, that was painful. And I think that's kind of what a number of people have gone through so far. And so people sort of get onboarded to why this is important, why this is really sort of very exciting and part of the future. And then eventually what I've seen is so many people sort of end up with being in the Solana ecosystem. I guess what I'm excited about is accelerating that and maybe making it a little bit less of a circuitous journey.

Mabel (31:59):

I have a story to share related to what we were talking about here. I think, I now all of these protocols are starting to talk about Shopify type of experience, which is you have an underlying protocol and then you just have different ends. You just host a different way. It's actually not just for the cultural purpose. One story was shared by Roneil who's the co-founder of Audius, last week with me. He was saying that he realized because Audius is actually not, I think the main front end was not allowed in China at some point but then somebody actually set up a separate front end that's actually and filter out and then based on whatever the local compliance should be let a whole thing run. That front end actually works.

He was exactly kind of explaining to me how he was amazed by Audius should be the underlying protocol and then it should be determined by the front end itself on the ground, what to feature versus not. And everybody can have their own choices. That's a freedom choice. Nobody's going to question that. I thought that was like really amazing. It's definitely beat beyond just kind of I think this is really relevant to what we were talking about earlier because I think for Solana, it's the same thing, a lot of the things. It may not be compliant for a certain reason in the region but I think at the end it's about the front end. It's not about the protocol. The protocol should be permissionless. Anyone else can just do whatever they want but for the ones that you want to make it work for a certain region, you can just do that. I thought that was really, really amazing and very unique about crypto.

Austin Federa (33:30):

Yeah. I love that, that sort of view that because of the financial incentives with crypto, you can decouple the application layer from the protocol layer, that those two things can be separate. This is in some ways, this is the dream of Twitter. We had this glorious few years where there were all these Twitter clients and then it all got, because the app engine was introduced, it all got consolidated down to and the Twitter mobile apps. And RIP all of our favorite Twitter clients from back in the day. I love that, that the way this technology is built, it allows you to really separate those two things at origin, as opposed to having to think about the business models that support that over the long term.

Dan (34:09):

I would actually add, I think there's interesting things happening, both in the decoupling of that, like you said, the application and the protocol there but also an interesting sort of coupling there kind of to Lily's point about this shared ownership of the success of the project. And that's really this kind of shared ownership of the network is really the kind of core underpinning, this core idea that underpins this idea of staking on a proof of steak network. Which is your success is tied to the success and this really the security of the network. And what we're starting to see now are applications and DeFi applications, particularly stake pools that have recently launched on Solana that really bring the ability to participate in the shared security and shared ownership of the network to the application layer.

There have been a bunch of community launched stake pools. There's some private stake pools. The foundation is in the process of transitioning its entire treasury over to stake pools, which are really this, I think we did a whole podcast episode on this recently so I won't belabor the technical details here but basically it gives people an easy way to enter and exit from a liquid position, which is actively helping to secure the network via staking to various validators in the underlying smart contract. But what I think is really interesting about this is we're starting to see these public stake pools that pop up, Marinade Finance, JPool, Socient, Lido and a few others that are really bringing the application experience, that really slick, fast, fast and cheap promise of what does it feel like to just use a useful service built on top of Solana and oh, how cool that a normal user can transact in these stake pool tokens rather than unstaked SOL.

And I think we recently saw the first, there was an NFT sale or an NFT mint that was accepting stake pool tokens, a staked SOL positions, rather unstaked SOL. So we're starting to see this adoption of people who are not only just developing apps and playing around on the application layer but also recognizing that there's tremendous value in sort of moving the denominator of how we transact value on Solana to be pegged to the participation of securing the network itself.

Austin Federa (36:40):

Yeah, that's a really great point. Looking forwards, Looking into this year of 2022, what are the things that you see in Web 3.0 and crypto that have potential that could become trends that are going to advance and increase? I'll kind of start out. One of my big ones that I think is we're going to see a lot of the sort of tech-ish companies adopting decentralized Web 3.0 technologies as a competitive advantage to compete with a lot of vertically integrated companies. I think you're going to see a lot in payroll. You're going to see a lot in merchant payments, concert tickets. These companies that don't have platform scale are going to look to Web 3.0 as a competitive advantage. And you might see that role into the rest of the ecosystem. Dan, I'm curious kind of what your thoughts are. And we'll just go around the room here.

Dan (37:30):

Yeah, I think your spot on there, Austin. And I think one of the things that's really going to help unlock that is these sort of higher levels of abstraction of developer tooling and more sort of almost enterprise API access, if you will, to provide a more Web 2.0 like interface experience that someone could just plug in and it's Solana as a service. There's your SaaS for 2022 and it's instant settlement in stablecoins on Solana but no one needs to worry about the fact that it's a stablecoin on Solana. It's they integrate this API and the money transfers or the token transfers from merchant to customer or vendor to seller, whoever, immediately. I think that starting to see people using crypto and using blockchain without realizing that they're using a blockchain technology.

Austin Federa (38:22):

Lily, what are your 2022 predictions?

Lily (38:25):

I think industry wide I'm with you that Web 3.0 is going to become the starting point rather than sort of the periphery. I think that we're well on our way where Web 3.0 is going to sort of foment this decentralized center. And I think that there's a few things that are sort of going to happen alongside, in my perspective. One is this kind of movement towards multichain slash interchain future is just accelerating. I think that there's a few sort of different consolations within the ecosystem. There's clearly sort of the EVM world which we're going to have a connection to through Neon EVM. There's a lot of sort of obviously energy within Solana. There's some other, IBC, we talked about Cosmos a little a bit is probably another sort of approach within that and then connectors within these.

And so I think there's various foci that are going to emerge there and increasingly there is going to be sort of those sort of layer ones are actually, I think, going to be abstracted away over time as they probably should be when you talk about sort of appeal to your average person. I think that another theme that I see emerging is as more institutions want to get into this and compliance with existing regulatory frameworks, institutional KYC and tooling to allow institutions to participate in decentralized liquidity pools, which I think is going to be pretty exciting. And so that's where the existing world is actually going to start getting onboarded in earnest into Web 3.0. That's going to be quite interesting.

I think with that, there's a big theme around a sort of identity and privacy and on chain identity and having a little bit more control over your data on chain is another big thing, the theme that's going to evolve. And then, certainly in a consumer area, I think that NFTs went from being a very analog sort of digital representation of physical art and have now morphed into basically being the entry point into sort of Web 3.0 communities and metaverse and these kind of almost new communities, dare I say civilizations that are starting to sprout online. And so those are some of the from the more institutional to the more consumer, I think there's just so much happening out there. That's all really just going to continue to develop at a rapid pace in 2022.

Austin Federa (40:49):

And Mabel, what do you see for 2022?

Mabel (40:51):

Yeah. I'd like to maybe talk a little bit more about the application as in the middleware layer. Especially the crypto native ones. We've seen a lot of DeFi activities, 2020, 2021 for on Solana specifically because people like how fast transactions are like. But I think what's more excited, also something that I've been spending a lot of time thinking about and then exploring is that the actual kind of Web 3.0 application experience, what does that mean? People have been talking about metaverse so to speak for a long time but the things people can do beyond finance is never really happening before but I think there are, we've seen from a lot of the recent hackathons that you'll have address to address IM protocols, you have some of the Web 3.0 social graph where you can just basically have the relationship you with another person.

And then another, some of the other things open C collections or some of the other things that you did. And then you also have things like on chain credentialing protocols. All of these, we are seeing them happening on Solana. And then with all of these composable, with each other, you can actually see that you have relationship between people in a game, for example. Or when you bootstrap a new application with the social graph, you can you customize the front page that you push to the users based on the social graph because like you have all those data. Obviously what Lily said about privacy preservation was very, very important. You don't want to share everything, which kind of it's kind of against the purpose but I think the idea is that for Web 3.0, you own the data.

You are the one who approves the blockchain or whoever else to access your data of all eth and you control whether you approve someone to be your public connected contact. And then things like on chain credentials, you can prove, what are some of your achievements based on the contribution off chain. At this court discussion or things like whatever you've provided liquidity in the past for certain period of time or you just basically voted every single time in the community snapshot. All of these become your kind of on chain resumes or on chain badges that can later on help whatever you prioritize into a community. It's the such thing we call gated community. I think all of these are coming together. We're going to see actual consumer experience available on Solana. I thought that was extremely exciting because I think with all of these enabled, people will have no difference of experience compared to some of the other Web 2.0 application experience. I thought that's going to be very huge.

Austin Federa (43:35):

Well, thank you all for joining us today. It's fun to talk about some of these things that are not quite as pressing, as user facing that developers aren't picking up and doing but are nonetheless integral to the network and it's growth and its future. And I think it's really fun to talk with the names and some of the people behind the Solana Foundation. Thanks for joining us today.

Lily (44:00):

Thanks for having us, Austin.

Mabel (44:01):

Thank you.

Dan (44:02):

Great to be here. Thanks a lot.

Mar 01, 2022
Chewing Glass - pencil flip

Chewing glass is what Solana developers do. Introducing the second episode in a new series on the Solana Podcast, Chewing Glass. Chase Barker (Developer Relations Lead at Solana Labs) talks shop with the most interesting builders in the Solana ecosystem. It’s for devs, by devs.


Today's guest is pencilflip, a Solana dev who joined the Solana ecosystem just a few months ago, and in addition to contributing tools, guides and twitter threads for fellow developers, he recently founded Formfunction, a marketplace for 1/1 NFTs.


00:39 - Intro

01:51 - pencilflip’s background
03:30 - Working at facebook vs. web 3.0

07:31 - How pencilflip got into crypto

08:52 - Views on NFTs

10:45 - Getting into Solana

15:29 - Experience working in lower level

17:56 - What was his method to learn Solana?

21:01 - What’s the hardest concept on Solana?

23:53 - How fast did he move from Rust to Anchor?

27:35 - Building on Solana

33:24 - Advice to people moving to Web 3.0


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Chase: (00:38)

Hey everybody. And welcome to Chewing Glass the show where we talk to Solana developers building in the Solana ecosystem. Today, we have Matthew Lim, aka pencilflip. Matthew is actually one of the young bloods in the Solana ecosystem. I think I met him maybe two or three months ago. He was doing some really cool threads on Solana. So I reached out, we set up a call. He really dove into everything that has been going on in Solana and produced some really cool content. Everybody's been watching and just really interested in what he has to say. So with all that, Matt welcome. And how's it going?

pencilflip: (01:21)

It's good. Thanks for having me on here, Chase.

Chase: (01:23)

No, this is great. I know you and I have been trying to plan this conversation for quite a while. We just kept pushing it back. Things happen. Crypto happens fast. So it's great to have you today. I guess we'll just go ahead and jump right in. One of the first things that I think probably really cool especially somebody coming from Web 2.0 into Web 3.0 is really just, what's your background really interested to hear?

pencilflip: (01:51)

Yeah, so I guess before I dove fully into Web 3.0, I majored in computer science at Caltech. And then I went to go work at Facebook for a few years or Meta now, I guess. And so there I was working on a few different teams. First, I worked on integrity building out Facebook's content moderation platform, which is the biggest in the world. We have like tens of thousands of content moderators, so building out the tools and services for them. After that, I switched over to AR VR, whereas helping build Ray band stories, like three band glasses with a camera and a voice assistant. And that was a lot more like a lower level protocol work, basically working on the communications protocol between the glasses in your phone. And then finally I was at Facebook NPE. It's like an incubator inside Facebook, a bunch of smaller teams working on more zero to one projects outside of Facebook's main family of apps. And for that, I was doing more full stack web development.

Chase: (02:43)

I mean, that's pretty amazing. What languages are you actually working in when you're working on this project at Facebook?

pencilflip: (02:51)

Yeah, so I guess it varied from team. When I was doing more web stuff, the backend is in Hack, which is like Facebook's typed version of PHP. Front end is JavaScript or like Flow typed with flow. And then when I was working at AR VR, it was basically just all C++.

Chase: (03:11)

So C++, is that the only low level language you would work in at the time?

pencilflip: (03:16)

Yeah, at Facebook, it's the only low level language I worked with.

Chase: (03:20)

Obviously Facebook Metaverse lots of things going on there, crypto. So how was that? How was your experience working at Facebook and then to follow up, how was your experience working on Facebook compared to what you're doing right now in Web 3.0?

pencilflip: (03:38)

Yeah, that's a good question, I think. To just in general, how I liked working at Facebook, I think it is like in the beginning, when I first came into the company, I was learning a ton, basically experiencing for the first time building products that people are using at scale. And then I think over time, my learning curve got flatter or I start learning things as quickly and then stop learning as much, which is a big part of the reason why I eventually chose to leave. And that was like, even though I was switching teams pretty frequently and switching to different text stacks. At the end of the day, you're still working at this really big company. And back when I was at Facebook, there wasn't as big of a focus on the metaverse and all that.

Although AR VR was a pretty big focus and in general I'm pretty bullish on AV VR. So it was really fun to work on that stuff there. And I'd say in terms of the differences between working there versus now doing some of my own stuff in Web 3.0, I think now I'm just moving a lot faster. Web 3.0 in general moves so fast. There's new stuff happening every day. Huge things happening every day. Obviously on the regulatory side, things move a little more quickly too, because Facebook is bogged down by all these laws and GDPR and the FTC consent order. And in Web 3.0, most people, I think we're ahead of the regulation and the regulation needs to catch up to crypto. So yeah, just like the speed at which things happen, I think is a big difference.

Chase: (05:06)

That's actually... I don't know. I was a little more surprised whenever I heard you say that Facebook is slowed down by regulatory things. And I guess it took me back a little bit for a second. I was like, wait, crypto, there's lots of... Wait a second. People just ignore those for now until there's actually something going on. So it was pretty funny to hear that. Yeah. So, I mean, that's really cool in general, did you enjoyed working at Facebook up until the point where you ended up, I guess plateauing, as you say, like technologically?

pencilflip: (05:38)

Yeah. I think there's a lot of pros and cons of working there. It is really cool to see how one of the biggest companies in the world runs thing. Just to give you an understanding of what the infrastructure looks like at that level, how things are organized. And also when you build stuff, you're shipping it to build millions, if not billions of people, which is just a really cool thing. But on the other hand, right, you're at a big company so the overall impact you have is a lot smaller. And also as you go into a big... Working at a big company, there's a lot more processes in place too. So it's a little harder to get things done, because you have to go through maybe multiple layers of people or multiple layers of processes. So yeah, overall I'd say there's definitely good and bad parts, but I did enjoy working there. And I learned a lot of stuff.

Chase: (06:26)

The layers involved in the middle management and above middle management, below... All the different levels of management in this corporate... I mean, I came from the corporate world. I'm so glad I found crypto because that was somewhat the vein of my existence, to be honest. And I did a tweet the other day, just really thinking about that. And I was saying if somebody tried to sit me down and show me their spring NBC app, I literally might just die by having to deal with it. So it's the experience going from that world has been really, and coming to Web 3.0 has been incredibly great for me personally. And it sounds like it's the same for a lot of other people, but to your point about seeing how an organization like Facebook operates and being able to execute at scale like that, is pretty incredible.

And having people from that industry come here, hopefully what they learn is how to leave the bad and bring the good into crypto because there's probably tons of lessons learned from Facebook, how things could be done better in crypto, but also how to keep the things that were not super efficient out of there, but it's all very interesting stuff to me. So moving on, I would say the next thing is how did you get started in crypto in general? Like whether it was... You could start with how you got found out about crypto when you found out about it and then like how you actually ended up starting to get involved more on the development side of things.

pencilflip: (08:09)

Obviously the first thing I heard about was Bitcoin back in college and I read about it and I was like, "Oh, this is cool," but I didn't like pursue it that much. And then maybe fast forward to 2017 when CryptoKitties was a thing again, I was like, "Oh, this is cool." And I got a CryptoKitties or two. And then I got-

Chase: (08:26)

Well, that nostalgia right there, man, CryptoKitty's holy cow.

pencilflip: (08:30)

And then at the beginning of this year, one of my best friends was basically telling me about NFTs. And then I started looking into it more also based on all the activity that was happening. I actually did try to find my CryptoKitties, but I forgot my C phrase. So it's gone forever.

Chase: (08:47)

Well, at least you didn't give it away to somebody else who ended up stealing them. So I mean, maybe that's a little bit better.

pencilflip: (08:52)

Yeah. That's true. That's gone forever. I've never getting that back. But anyways, yeah so at the beginning of the year I started looking more into NFTs and following things more closely. And then it was only really until a few months ago though maybe September, I think around September where I really started going in really deep and learning and reading and also building things and trying to figure out what is web 3.0 and how does crypto work and what stuff could be built on it?

Chase: (09:23)

What did you think about NFTs? Did you actually see value? And then when you started diving in, how did that change your mind?

pencilflip: (09:29)

A lot of people immediately get it. And then a lot of people are like, "Well, it's weird." And I was actually more on the latter side. I was like, "Huh." I mean, I got the fact that, okay, it's like people collect stuff and now you can collect digital stuff. I think that's the most straightforward explanation for me, but I was still confused about like, okay, why are people paying all this money for it? In general, it was a little confusing, but I was kind of like dove into it more and both started using the products and like talking to different artists and creators and developers in this space, it started to become more clear what the utility was and why it's actually a really awesome technology for both artists and collectors. So yeah. That's how, and as far as like NFTs go.

Chase: (10:16)

Yeah, for me, I was never actually really skeptical. I just wasn't completely sold on them as what they were. The art thing was great. But then as time went on, I'm like there's communities forming around this. You now have this visual identifier on social media platforms. It's where before maybe it was a sports team, you see this guy with his shirt and he likes the Chicago bulls, just like you do, so now you connect. Now you, simply scrolling through your feed on social media, like Twitter, you see an SMB or you see a thug birds and you're like, "Oh, we're friends now."

It's the community building aspect that's has been pretty incredible to me. And then now beyond that, we've starting to see things with utility, like Genesis Go and different things like that that are trying to take it to a different level on how these things can be used. But it's been really cool to see. So when you got into this NFTs, what was your next step in terms... You dove into... I'm pretty sure when we spoke about this prior a couple months ago, you didn't go directly into Solana. Obviously, you started playing around elsewhere.

pencilflip: (11:32)

Yeah. And I guess just your point about the whole community thing. I think one thing I forget who said this, but so someone is talking about people have really expensive paintings in their house and the point is just people can look at it, but you know, realistically you probably only have 10 or 20 people over to your house, or I don't know 50 people over to your house every year, as opposed to having a Twitter avatar and like literally thousands of people can see that. And so that's like, well, actually these NFTs... More people are... They're much more visible to many more people than traditional art just hanging in your house.

And yeah, as far as getting into Solana, I first started on Ethereum because that's the biggest one. It's the most resources, is it's like the one that the people I knew were working on. And so I did crypto zombies and I started learning solidity. And then I eventually ended up building this pixel art marketplace on polygon, like a layer two for Ethereum, where you can draw and mint pixelar on the website. And so I was doing all that before I got into Solana.

Chase: (12:38)

Now that you've gone through all the experiences of Ethereum, at what point in time did you actually find out about Solana?

pencilflip: (12:46)

Yeah, I think I had heard of it when I was exploring Ethereum. I knew what it was, it was another L1, but I hadn't really dove too deep into it. And the point at which I started looking more into it is when my partner and I, Catherine, we wanted to do an NFT collection and we were exploring which blockchain to do it on. And so that's when I started looking into Solana more seriously because we didn't want to do it on Ethereum. It's too expensive. We didn't really want to do it on polygon either because there's not a great community on polygon as far as NFTs use this art collections. It's more about gaming. And so even though it's fast and cheap, we felt like Solan would be better because Solana's also fast. It's also cheap. And it also has this really thriving NFT community.

Chase: (13:34)

Yeah. You're an Ethereum developer. Then the next thing is you're like, okay, Solana's the one. It's cheap, it's fast. It's what we want to do. You started diving in and then where did you start and what was that experience like?

pencilflip: (13:49)

I think for me, my approach was, and this may be different for a lot of people, but basically I was like, okay, if I want to build on Solana and really dedicate a lot of time to it, I want to understand it pretty well. And actually have justification for me spending all this time on it as opposed to just relying maybe on like, "Oh, it's market cap is going up." Like coin price is really high. I want to know the tech behind it and know why it's supposed to be better.

And so at the beginning I spent a lot of time just reading through the white paper, which actually is not that detailed. Reading through the medium articles about all of Solana's different technologies and how it makes sense.

Chase: (14:30)

The core innovations.

pencilflip: (14:31)

Yeah. The core innovations exactly. Also, reading through Shinobi Systems, which is a validator on Solana, has a really good reference on proof of history and how it ties together with Solana's proof of stake. And so really just trying to understand how the blockchain actually works, how it's different than Ethereum and why the architecture allows for higher throughput, cheaper transactions. And that was really important because I wanted to understand that if I was going to spend all this time actually building on top of the blockchain.

Chase: (15:07)

Yeah. So you've you really deep dove into this, just to give a quick TLDR on the things that you were doing. You did some diagramming around accounts, you wrote some threads on PDAs, program derived addresses. You've done tons of deep dives into a lot of things like these exist and the documentation, but they hadn't really been broken down into these bite size, digestible chunks that are easy to understand for newer developers or web 2.0 developers or people who really haven't taken a dive into blockchain or an Ethereum developer, because lots of people try to do these one-to-one comparisons for accounts in the programming model.

And there really just aren't that many. So it's really important. And everybody that's probably watching this, that knows who pencilflip is super appreciative of that. But through that process, you have a lot of experience with lower level languages. What was that experience like for you? I'm assuming you enjoy doing this or sorts of things. So maybe would you call that eating glass for yourself or do you just enjoy this so much that it's not really that for you, this was just a fun little project to understand how Solana works.

pencilflip: (16:24)

Yeah, it's an interesting question. I think, and I think PaulX was talking about this too on the podcast you do with him. But I think the hard part is not really learning REST. I mean, I think it can definitely be maybe more difficult, especially if maybe you've never programmed before then you're probably going to have a hard time learning REST. But as like if you do know other languages then picking up another language, at least enough to write some basic programs and not too hard especially because... And Paul X also mentioned this, there's no multi-threading in these programs, you don't have to deal with race conditions.

Most of it is serial logic. You read some data, you write some data, you do some business logic. So the rest part is not super complicated, especially because Anchor provides you this very nice framework within to operate. Yeah. Like the C++ stuff I was doing at Facebook was way more painful because we were doing a lot of multi threading. You have to do all this address sanitization, thread sanitization to catch all these weird racing editions, which I haven't done in Solana yet.

Chase: (17:28)

So working at Facebook is also chewing glass as well.

pencilflip: (17:33)

Yeah. They are definitely some engineers there that are... They're chewing a lot of glass. So yeah, basically I was just going to say, I think just understanding Solana's programming model and the way accounts work and the way that programs are structured was a little more difficult than the language part.

Chase: (17:51)

How did you work your way through that whenever you were trying to understand these things? Did you just take a one step at a time? Did you have a game plan or did you just dive in randomly all over the place? Because one of the biggest challenges right now, currently with Solana is we're starting to have a lot more content, thanks to people like you and Paul X and many others who are creating, creating lots of content, but there's no clear path to understanding those things.

And we're doing something at Solana labs. And my dev team's been working on structuring the actual path for understanding things and the order of operations in which to learn them, because that's the biggest challenge. The information's out there, but people have to cherry pick when and where, but it's a lot easier if somebody says, this is the order that you learn things. It's a lot more helpful, but then there's some engineers who were open to just straight up diving code, but like, what was your method for really understanding these things? Or you just went along with whatever happened on the day.

pencilflip: (18:56)

Yeah. Yeah. It's definitely a good question. And I think there's like a lot of valid approaches. So mine isn't like the right one, but basically the way I usually like to do things is, I read enough to get a basic understanding and then I'll try actually building something. And then I can just reference things that I don't understand or things that I need more information on as I build the thing. And so specifically I think Nader Dabit tutorial was really helpful. I followed that to get some basic scaffolding and a basic app up.

Also, Brian Friel wrote a bunch of really good guys and writing the front end and writing the Solana program. And so I followed those, built something on my own. And then as I'm building stuff, I would like maybe modify it or maybe I ran into something that I didn't understand. So then I would look at the documentation and I think, one note too, is that for Solana, it's really important to be able to actually understand the source code and look at the program library or look at Metaplex’ code because yeah, things are so early, it's not really well documented. So I think that is just something you'll have to do if you want to build in the space is get used to reading the source code. Yeah.

Chase: (20:04)

I, 100% agree, but there are definitely different types of learners out there. And I think we can still make that a little bit easier by going to that source and pulling out some of these smaller little snippets of code and walking through it, instead of just saying, "Hey, here's a massive program. You can just walk through this yourself." Not everybody's used to learning that. Web 2.0, especially in the younger generations, like we're in snippet heaven here. Like if it's snippet, then I don't want to touch the thing sort of, which is why we started to create the Solana cookbook.

It's never going to solve all of your problems, but what it will do is give you some really good references to find it. Maybe it's not because you're finding out how to do it for the first time, but because you don't want to have to dive that code again. And here's a reference to something very normal that you would have to do on Solana and have to go back. So that's what we're trying to solve, but it's always interesting for me to just ask these questions because parts of my job is developer relations is to just ask developers what sucks and what's good and do more of the things that are good and do less of the things that suck and try to just continuously iterate and improving on this.

pencilflip: (21:19)

I mean, don't get me wrong. I don't think the status quo should be like, "Oh, everyone has to look at this source code." And I think the cookbook is really helping with that. Obviously it would be preferable, if you could just look at some docs, the interfaces are clearly documented. Like, "Oh, here are the accounts that get passed in. Here's the instruction data." We're just not at that state yet. But yeah, I do agree with you. It can definitely be improved and I think you, and all the stuff you're doing and everyone else is doing with the Solana cookbook is a big step towards making it easier to onboard.

Chase: (21:50)

We've already discussed, what were some of the challenges, but if you had to pick the most challenging thing through your experience, which one of those would it have been? Which concept on Solana was the hardest to just fully wrap your mind around and be like, "Okay, I get it. But it took me two weeks." Or however long it took you to figure it out.

pencilflip: (22:09)

Yeah. That's a good question. I don't know if this was maybe the most... Actually yeah, I think this was probably the most difficult and also the most important was just understanding how the account model works because after you understand that everything follows after. Like PDAs, it's the same thing, except it's derived from some seeds. So understanding how the cap model works and basically how the program state is separated from the program execution, which coming from Ethereum was a little confusing, I think just understanding that was the most difficult, but also the most important be because yeah, it's underlying the entire programming model. The way accounts work.

Chase: (22:53)

I think in software in general and I'm guilty of this as well, is that a lot of people actually come just really looking for shortcuts. And it's always important to know which pieces are the most... Which pieces are the hardest. Once the hardest stuff is understood, the accounts model, the PDA and the CPIs. Once you just can grasp these concepts, then your life gets exponentially easier because everything else is easy if you just buckle down and make your way through that.

pencilflip: (23:24)

And I think another key thing is, you don't necessarily have to do the rest part of things in order to get as in the Solana. You can be writing front end code and just interacting with existing programs. Although you still probably have to understand a little bit about how it works, but the build space course, a lot of it is just interacting with existing programs and writing JavaScript or type script. And that can also be a very, or at least a little bit easier of a way maybe to get started initially.

Chase: (23:51)

Yeah. I think that it highlights a point that I've been trying to reiterate for a long time, is that you don't need to know Rust to build on Solana. There's so many projects out there or even if you just want to play around, but there are projects that are just hiring specifically for the front end Dapp side of things, where it's just very similar to talking to a centralized API, as long as you know how to use Web 3.0.JS or any of these other front end clients. You don't need to know Rust to build on Solana, because the thing is, you start on the front end building in talking to a blockchain or a centralized database. It's very, very similar.

Then once you understand how it works and communicating using the RPC client that defines all of the methods that used to talk to those blockchains after you get that, then you're like, "Okay, now I want to write my own program." At least that's the hope and buildspace has done an amazing job. They've had... I know at least over 10,000 people have done that getting started and they love it. And you mentioned Nader and he also has done an incredible job with his tutorial. That's one of the most popular for sure. How quickly did you jump from doing the Rust bit moving to Anchor or did you just do that almost immediately?

pencilflip: (25:12)

Yeah. I think when I was getting into things, Anchor was already pretty popular and so I started out by writing Anchor programs, like toy Anchor programs. Yeah, this was actually a big question for me when I was starting out. I was like, "Should I learn Anchor first? Should I learn how to write programs with add Anchor? And I remember asking some people in the discord and getting their opinion and looking back at it I think, I mean, either one is fine to be honest, I think it's easier to start with Anchor obviously, but I do think it's super important to be able to understand programs written without Anchor just because so many programs are written like that.

Like the Solana program library programs, a lot of them aren't written with Anchor, although they're Anchor rappers or the Metaplex programs, a lot of them are not written with Anchor. So if you need to like... you basically need to be able to understand those programs if you're doing coding on Solana. And so you need to be able to understand programs that aren't written with Anchor as far as writing programs though, I think just default to Anchor.

Chase: (26:13)

Yeah, for sure. And I think as Anchor matures, I know the Anchor book is now out and Paul X has been working on that, which is going to be incredibly valuable to that. There was mostly minimal examples in the past and just like Solana has been working on... Solana labs has been working on all things like Anchor has been really cranking up the heat with getting out content and making it easier to onboard to there.

I think this year is going to be huge. I said it the other day on Twitter that I think that in one year, probably less than that, Armani says two weeks, whatever that means, but that the developer experience on Solana is going to be completely unrecognizable as it is today. People are not going to have to really ask much questions. We'll get to a... We're probably going to be at a place where you would have to be at least a junior developer who understands programming concepts could come in and within a certain amount of time, maybe two weeks, maybe a month, be able to self onboard to Solana without having to just constantly ask questions.

Chase: (27:19)

That's the ultimate goal. My ultimate job is to put myself out of a job by making the developer experience good that there's no need for Chase anymore.

pencilflip: (27:29)

I think that's a very hard job to accomplish. So I think your job security is still is fine.

Chase: (27:36)

No, I agree. I always make that joke, but the reality is like it's somewhat of an unachievable goal to an extent and I'll never achieve it, but we just keep striving to get there, but yeah, I'm super excited for this year and to look back on this year, next year, to see this conversation, the last conversation, all the things that have happened and how easy it is for some new developer to basically onboard to Solana. So, and again, this is thanks to people like you and Brian and Colin, all these different guys who are just altruistically contributing to the cookbook, writing their own content. I could not have scaled myself and developer relations without that. It would be 100% impossible because by the time that me as one person writes a piece of content, it's outdated in like a week.

So that's how fast things are moving. Yeah. Just to move on, this whole series of Chewing Glass is really to have the conversations we've been having. Like what was your experience like and how you got into it? But what I understand is, even though you started out as just a noob engineer on Solana, you actually have recently formed your own company on the Solana blockchain. And definitely, we're not going to talk about it too much, but I will definitely let you talk about what you're building.

pencilflip: (29:08)

Catherine and I... Catherine used to be a designer at Instagram. We are starting this product and this company called Form Function. And basically it's the best way for independent creators and artists to make a living off of NFTs. That's the longer term vision. The shorter term, we're just building the best marketplace for high quality, one of ones, high quality, one of one art, and for these independent artists and creators on Solana.

And so you can think about other marketplaces like Magic Eden and Solana as more catered towards collections. The things most people are buying on there is collections like DJ AVEs or Solana monkey business, or et cetera, et cetera. And it's not so much focused on these more independent artists or photographers who do their own art. They don't really have basically a class seat at those platforms. And so we really want to build a place where those independent creators can be really showcased and their high quality art can be displayed and featured on our platform.

Chase: (30:12)

Like you said, the Magic Edens and the Solana arts and all the other ones out there they're... I don't think their platforms specifically is for collections, but that is where the world is. And there's Holaplex and Metaplex's spin up auction platforms are doing that. But to have a marketplace, that's almost who knows? This is like an art gallery kind of of 101 creators who can come in here and create their own art. And it doesn't have to be this big marketed thing. People can just... Those collections are not.. They're community builders and some of them have utility, but this is like just shining a spotlight on these creators that have been gate keeped out of being able to get involved because of lack of technical knowledge and that's how it's been.


And I think this is going to... I've seen a couple people talk about it on the Twitter sphere lately about like 2022 being the year of creator NFTs, or like one of one NFTs for creators, and it's super exciting. I've seen some really awesome art out there that I have really been eyeing. And there's so many ways to do it. I've seen augmented reality pieces of NFTs. I've seen people doing paintings or photography and it's happening more and more because tools like, it sounds like what you're building are going to enable that to be a lot easier to happen.

pencilflip: (31:42)

Yeah, for sure. Yeah. Really excited for all the one of one stuff that's been happening on Solana. I think it's been growing, it's going to continue to grow and really a big part of what we want to do is just improve Solana's maybe culture or almost reputation, because I think sometimes people look at Solana and the NFT ecosystem and they see these board app derivative, where they see these soul planks.

And it's just like, well, is everyone on Solana just copying the popular projects in Ethereum, and that's definitely not true. There are a lot of awesome collections that are Solana native, but we also want to make it like a blockchain that's known as well for this really high quality art like Ethereum has become and have it be associated with that because that's good for artists. It's good for collectors. It's good for the entire Solana ecosystem. And it also gives these artists who maybe they don't want to list on Ethereum for environmental worries, or maybe the gas fees are too high for them. It gives them a really good place to go and sell their art that otherwise, maybe they wouldn't list at all.

Chase: (32:45)

Yeah. The, I do have some opinions on that and it's definitely the case that there were some collections that are just straight up clones and a lot of people outside of the Solana ecosystem that don't... They aren't really following it. They look in there and they're like, "Hey, why you guys just keep copying everything?" But if they actually were in the circles or bubbles that a lot of us are in, they would realize that the majority of these communities are also on the same page as them. They hate it as well.

There's actually campaigns that campaign around these collections that are just straight up clones telling people, "Please don't buy them. Please don't buy them." The reality is I have, maybe it's a conspiracy theory, but I feel like people who are doing these sorts of clone things, they're not necessarily Solana natives. And there's no way to actually verify that. But these are grifters. They are traveling around seeing where the money's flowing into and they're doing whatever they can as quickly as possible to hopefully capture some money. And then they disappear.

It's happening on Near as well. And I also spoke about this. I have a lot of sympathy and empathy for Near because it's happening there. Those clones are moving to them. It's going to happen. People are going to end up losing money. And the best thing that Near and or Solana still can do is to educate your community as quickly as possible, because otherwise lots of money is going to be stolen from people when these rugs are happening and a lot of them are. And if you see a project that's a direct clone of something and you think, oh, this is going to be great because I can get it for cheaper. It's not going to be great. I can promise you that. It's going to be the opposite of great. It's going to be very, very bad for you. So if you're listening, don't buy clones on any blockchain because it's not going to work out. So that's my little-

pencilflip: (34:42)

Totally agree with everything you just said.

Chase: (34:44)

That's my little feel.

pencilflip: (34:46)

It was a great feel.

Chase: (34:47)

Exactly. So this was a great conversation and to hold round the whole thing off, what would be your advice to people to future builders on Solana, whether it be how they learn or what they should do, or where they focus their time? What would be the one thing that comes to mind to you right now that would be your greatest advice to people looking to get into Web 3.0 blockchain and Solana?

pencilflip: (35:11)

Yeah, I mean, so first of all, I love what Paul X said here was basically like, "Get started, dive in, build something, read something, try something, how just like gets started. I think that's super important. And I'd add on that, get involved in the community. The Solana community is really welcoming and everyone's like... I think everyone I've met is super nice and friendly and like wants to help. And that's one of the best things you can do, both for the community, like give back to the community.

And also the community will get back to you. You can ask for help in these discords. If you DM them, people will probably help you out. And then it obviously helps when you're building your own things because then you have a network of people to ask questions, to bounce ideas off of et cetera.

So yeah, I think it's a great time to do it too, because Solana's still relatively small. It almost feels like a family where a lot of the people who are really into it know each other. Yeah. It's a really awesome place to be. So that would be one of my key pieces of advice, is just get involved in the community, make some friends and build some cool stuff.

Chase: (36:16)

Yeah. That's amazing advice and it's always just go build something and share it with people and just have a good conversation and send DMs to whoever you can find because they're going to answer. This is a very strange time where you can DM a CEO of a protocol or whatever and they're going to probably respond if it's somewhat reasonable and to have that accessibility is a pretty powerful and don't just sit back and submit resumes everywhere and think that's going to be the best choice.

Because I get a lot of messages to myself saying like, "Hey, nobody's responding." I'm get involved. DM people. Strike conversations. People are literally getting hired to really amazing companies simply just by being consistent, persistent building things, being involved in a discord. And just, if anything, just start answering questions and helping people. Somebody's going to pay attention to you and it could change your life in a very short amount of time so.

pencilflip: (37:18)

Yep. Totally agree with everything you just said.

Chase: (37:21)

Well, Matt, AKA pencil flip. It has been great. It's been about a month and a half since we've been talking about this. It finally happened and I think the listeners are really going to love it. So thanks for joining man. It's been a pleasure.

pencilflip: (37:37)

Yeah. Thanks for having me on Chase. It was great coming on and chatting with you. Always enjoy talking Solana and everything with you it's always a ton of fun.

Chase: (37:44)

All right, everybody. Thanks for listening.

Feb 15, 2022
Payments Ep #58

In this special Payments episode of the Solana Podcast, Austin Federa guest hosts a conversation between Jeremy Allaire (CEO, Circle) and Sheraz Shere (Head of Payments, Solana Labs). They discuss merchant payments, stablecoins and Solana Pay: the newly released, open, and free-to-use payments framework built on Solana.

00:45 - What is Circle?
03:35 -  The use case for stablecoins and the mechanisms to build them
09:34 - Solana Pay
13:42 - Integration of USDC and Stable Coins
18:45 - How could Solana Pay become mainstream? 
25:27 - The Solana Pay toolkit
27:39 - Can businesses operate without a bank account?
30:05 - Looking at Data Privacy in Solana Pay and Circle 
34:35 - Hopes for Solana hackathon outcomes

00:39 - Intro

01:51 - pencilflip’s background
03:30 - Working at facebook vs. web 3.0

07:31 - How pencilflip got into crypto

08:52 - Views on NFTs

10:45 - Getting into Solana

15:29 - Experience working in lower level

17:56 - What was his method to learn Solana?

21:01 - What’s the hardest concept on Solana?

23:53 - How fast did he move from Rust to Anchor?

27:35 - Building on Solana

33:24 - Advice to people moving to Web 3.0


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Austin: (00:09)

Hello and welcome to the Solana podcast. I’m Austin Federa guest hosting this week. Today we're going to be talking about stablecoins, USDC and Solana pay. So we're joined today by Sheraz Shere, the head of payments at Solana labs and Jeremy Allaire, the CEO of Circle. Welcome to the show.

Jeremy: (00:27)

Thank you.

Sheraz: (00:27)

Thanks Austin.

Austin: (00:28)

Great. Well, let's start off with Jeremy, talk a little bit about Circle. Can you tell us a little bit about what is Circle and what's its role in the US DC stablecoin?

Jeremy: (00:37)

Sure, absolutely. So Circle is a global financial technology firm. We operate a suite of services to help businesses take advantage of digital currency in payments and treasury applications on the internet, which is all really a mouthful. But specifically we have a couple of really critical things. The first is we operate a stablecoin market infrastructure as we call it called USDC, and we'll talk, I know more about that, but USDC is a dollar digital currency that is an asset backed or fully reserved digital currency that can be used for payments and settlement on the internet. And it's already used really, really widely in the crypto economy.

And so we run that infrastructure and provide that to businesses institutions, and through many, many of our partners out to tens or perhaps even hundreds of millions of end users that interact with USDC. And then we also operate a suite of services for companies to have payments and treasury management and other things that are needed to integrate this into the way that they operate. So almost like a crypto native bank account for businesses to store and transact, and then alongside that a broad set of API products.

So basically Circle APIs that connect the existing fiat system, credit cards, bank accounts, bank transfers with stablecoins, with the custody, security, blockchain management, and other things that are needed to use that and integrate that into your own application. So lots and lots of fintechs, startups, companies like building on those APIs to kind of integrate stablecoins and fiat in their applications. So hundreds of companies use those and those are the key things that we do. And we've been growing with other products in what we call to treasury services. So Circle yield, which is a stablecoin yield product, which has been growing really fast too.

Austin: (02:50)

Yeah. I want to get into that kind of in a minute. So stablecoins, they're foundational to a lot of how DeFi has been enabled over the years. So there's lots of different applications for that. Sometimes it's just as a common transacting layer between multiple currencies. There's lots of different applications for it, but as you mentioned, there's more and more sort of enterprises and traditional companies, as well as fintechs that are in that space that are looking to use stablecoins in their business operations. At the same time, you have a bunch of DeFi Degens who are sort of the original core audience for a stablecoin. What does that decision making process look like at Circle when you're trying to balance such a diverse user base?

Jeremy: (03:33)

Yeah, it's a great question. And sometimes I'm asked "What's the use case for USDC," and my answer is sort of "What's the use case for a dollar?" Well, the use cases are incredibly broad, and we see that actually today, we see people who are making personal point to point payments internationally. We see people making micropayments for digital IP through NFTs, and at the other end you see institutions that are using USDC to settle half a billion dollar bilateral trades. And that's a pretty broad range of use cases that are out there. I think more importantly, conceptually when we built USDC and you can go back and read the original white paper behind it. And the idea of fiat backed digital currencies, our ultimate belief is that what's needed is a sort of protocol layer for traditional money on the internet.

So you can have dollars and euros and pounds and yen and other currencies that just function on top of the internet, the same way that other protocols support the exchange of information and communications. And if we had that, and we could use those protocols at the speed of the internet with the cost efficiency of moving data, which is what I think blockchains hold that promise, Solana's executing really well on that, but hold that promise, that it could really unlock the storage of transmission of value to be a kind of commodity free service on the internet. And so ultimately our belief is that anything that any person or household or firm might need to do in the digital economy on the internet could be done with stablecoins.

And so we definitely expect that to grow. Now, when we got started, it was anchored in what I call crypto capital markets. So it's anchored in market participants that, for all the work that they do and all the assets that they might be interacting with, they're all digital assets, and they all move at the speed of blockchains, whatever that is and the efficiency of that. And so they need their dollars to work the same way, and so that kind of gave demand for payment and settlement mediums that could kind of work at the speed of those markets and those blockchains. So, that was a good bootstrap use case, and that's really what brought a lot of this into existence. But now the way I like to describe it is stablecoins are both protocols and money formats. It's a protocol that works on top of a blockchain with assurance and security and finality settle a transaction, but it's also a particular representation of value of a dollar or a Euro or whatever it is, and protocols and kind of formats our network affects businesses.

And so the more people who have that, the more valuable or more useful it becomes, and the more products and services that are plugged into a protocol, the more useful and in utility that exists. And so we're now seeing the spillover of the use cases go into everyday businesses more and more everyday businesses saying, "Wow, this is a very, very efficient medium. It's very inexpensive, it's very fast, it's secure. I know it's final and it works globally." So we're certainly seeing that pick up. And at Circle, as we think about use cases, we really believe that the acceptance of payments in a business context using digital currency like this is going to proliferate pretty significantly in the coming years, because it's got so many attributes that are superior to existing electronic payments methods.

Austin: (07:12)

Yeah. And so you touched on something that's really interesting, which I think everyone thinks of USDC as a protocol, but unlike most organizations that have launched a protocol, the underlying token of USDC is USDC. Its whole point is it does not fluctuate in value, it does not go up, not go down. It stays solid at an equivalent of one US dollar. But Circle, it obviously for-profit organization, what are the mechanisms there that actually allow you to run a business as an organization that has created USDC?

Jeremy: (07:48)

There are a lot of pieces. So the first is today USDC is approaching 50 billion in circulation, and Circle administers and reserves those assets. And so we generate income from that, from that $50 billion we generate income. And as that grows to be a hundred billion or 200 billion, we'll continue to generate income from that, and certainly in a rising rate environment, that's significant. The second is we run a whole set of, what we call transaction services and treasury services, and those are services that we charge fees for. So transaction services are taking traditional fiat payment methods, using our infrastructure to do blockchain, native, custody, and payments. And so those are kind of usage based and scale up kind of like a Stripe or equivalent type of transactional service.

And then we also provide treasury services. So people who want to lend their USDC can lend their USDC in a self-service way through our platform, and get fixed term fixed rate returns on capital on USDC, and we generate a spread income from that as well. So we're building out this sort of suite of commercial services that are globally available increasingly, and that provide a lot of incremental value. So those are several buckets as well, that are really helping us scale our business.

Austin: (09:14)

So we were talking about transactional services. Again Sheraz, You have been intricately involved in building and launching the Solana pay protocol. Can you give us an overview of what that is, and how stablecoins are an important part of that system?

Sheraz: (09:29)

Sure. Yeah. So Solana pay is basically a new blockchain based merchant payment system. It's open, permissionless, and decentralized, and it's premised on enabling merchants to connect directly with consumers in a peer-to-peer fashion with no intermediaries. And it's really premised on the notion that merchants would accept stablecoin like USDC. Most merchants, unfortunately for crypto natives, don't really care that much crypto per se, they care about running their business. And that's why having stablecoins, US dollar denominated stablecoins are critical, because what this affords us is the ability to move digital assets at speed and cost of the internet, as Jeremy mentioned.

So for Solana pay, what we're really trying to do is enable for merchants, things like instant settlement, near zero cost transaction processing, and something that's really important is the removal of intermediaries. If you think about it from a merchant perspective the most important thing a merchant does is collecting payments and engaging with their consumers with commerce, but there's a lot of friction tied to enabling payments of and commerce. And with friction comes intermediaries and with intermediaries come cost and the loss of control. So if there's one headline for Solana pay, it's really about giving power back to the merchant for the most important function, which they do.

Austin: (10:48)

So can you talk a little bit about that? Payments is obviously a many billion dollar industry globally. There's some big name that have reached some pretty astronomical valuations nowadays based off of providing credit card payment processing solutions and that sort of thing to e-commerce and non e-commerce business. What's the sort of difference of approach here? How would you compare something like Solana pay to a company maybe like Stripe?

Sheraz: (11:15)

Sure. Yeah. And Stripe, I would say that the removal of intermediaries doesn't mean that a lot of the traditional payments companies don't have a role to play. The actual act of moving a digital asset from a consumer to the end merchant, that's the piece where there isn't need to be a friction, right? So with the Solana blockchain and a stablecoin like USDC, the movement of digital currencies from a consumer's wallet to the merchant wallet should happen like an email going on the internet, it should happen instantly with no cost. However, once a merchant has accepted a USDC stablecoin or settled in a stablecoin, there's a lot of interesting services that are needed to be done that merchants typically don't want to necessarily do themselves. So setting up token accounts, doing treasury management, reconciliation, integrating into legacy bank accounts.

So there's a lot of work in the core stack of post settlement of payments that traditional payment companies can be involved in. The protocol itself is just trying to simplify one component of payment processing, which is the most critical one, which is that the transfer of value between the consumer and the merchant. One of the interesting things that we're building on the spec is the ability to also have a bidirectional communication. The benefit of having a true peer-to-peer connection between a merchant and a consumer and not having an intermediary is that this allows the merchant to, for example, send digital assets back to the consumer. So what this could look like is something like, let's say you buy a new shoe, using this protocol the merchant can send you back an NFT of that shoe into your wallet, which you can now take into the metaverse. Just an example, but illustrating why the notion of a peer-to-peer, a true peer-to-peer interaction between a merchant and a consumer can open up a whole new set of new things.

Austin: (13:09)

So Jeremy, Sheraz was talking there about one of the pieces of the stack that Solana pay is trying to solve, that payment from a consumer directly to a merchant. You in Circle work with companies that have extremely complicated payment flows that are trying to bring USDC into. What are some of the areas that integration has been easy and straightforward for these companies, and what are some of the areas that are still challenges for enterprise adoption of USDC and stablecoins?

Jeremy: (13:37)

First of all, just to say, as you know, we're really excited to be supporting Solana pay. And we believe that the problem space here is a really critical one, and solving this problem of how to build a better connection between an end user and a business and building beyond just the underlying digital asset transfer and solving some of these problems is really, really critical. The way I would kind of answer the question is there's sort of the base layer of you've got a blockchain and you've got addresses and wallets and you've got this settlement finality mechanism of moving an asset like USDC as well. And that part is kind of fairly low level.

Jeremy: (14:27)

And so businesses that want to use this as a substitute for say, a card payment, they can implement that out with Circle APIs, they can take Circle APIs and they can automatically generate new addresses automatically for each payment. They can then track that payment to a given payee. And then they can collect that and store it in USDC, or they can sweep it out to their bank account through an automated API that pushes a wire or other things. So there's like critical kind of behind the scenes treasury kind of infrastructure that's there. The problem is most end users, they don't really necessarily know what all these things are. And so I think being able to introduce things like having metadata associated with a payment, such as what the price is, what the product ID is, any other kind of merchant information that would be needed to kind of tie that payment to a commerce transaction, to be able to have of follow on interactions that are associated with that payment.

All these problems are I think really important and become things that people expect, whether it's through a traditional legacy payment mechanism, like handling something like "You sent me the wrong product I need a refund," is like the most common, or some loyalty mechanism that maybe is inducing me to want to use the payment instrument. And so how can I use a blockchain to provide that loyalty mechanism as an inducement as well, building a stronger connection between say the business and the user?

And so I think the pain points are more that there's incremental value that's needed for both the end user and the merchant to kind of bring this to a point where it's a superior payment, medium to legacy payment rails. And so those are the kinds of things that we see, but certainly the getting started piece is there. There's so much low hanging fruit. And I think so Solana pay is a really good start at hitting some of the low hanging fruit and creating a way for wallet creators. And then folks like Circle on the other end to make this a little bit more seamless for all the parties.

Sheraz: (16:41)

I would say that if you're a developer, a founder, or even a legacy payments company, there is a tremendous amount of interesting stuff to build. We just kicked off a hackathon and we have a payments track in that. And as Jeremy mentioned, the protocol itself is pretty low level, it's pretty basic if you look at it, right, it's just a very simple... The most native transaction on a blockchain is moving value from one token account to another token account.

And we've put some specifications around that to put in like transaction identifiers and things like that. The real innovation is really going to come thinking about what are the new features that can be built on top of this. Now some of this will look like traditional commerce things like offers and loyalty, but there's a whole new set of commerce related features and consumer value props that have yet to be discovered. And I think that's what's really interesting is that there are going to be new businesses built on top of these protocols that will leverage the power of the blockchain. Because this technology opens up, again a peer-to-peer connection between a merchant and a consumer, eliminates the need for intermediaries, and now it gives power back to the merchants. So both the customer relationship, the data, and power in terms of controlling costs.

Austin: (18:00)

Sort of to push on that little, payments has been the killer feature of blockchain since blockchain became a thing, but there's been no real successful blockchain payment systems that have really emerged. I think the closest is there are some exchanges where you can get a debit card that allows you to spend out of your exchange account, but that's still a custodial relationship with the exchanges holding your tokens. The places where USDC and other stablecoins have been really successful is not on the payments level as much as so far has been on that sort of collateralization level or within the DeFi space. So Sheraz what about both Solana pay or Solana is actually making this a useful place for payments to actually go mainstream?

Sheraz: (18:48)

So yeah, absolutely crypto payments have been tried before. I mean, it's been talked about ever since maybe the pizza example. The problem is the traditional approach to crypto payments have been settled with several problems. So the first of all is that merchants don't want to settle in volatile currencies, right? With some edge cases aside, most merchants say, "I want to settle in US dollars or something that is the equivalent of a US dollar." Second is that the blockchains in the past have taken minutes or longer to settle, and that just doesn't work when you're trying to complete a transaction right? On an e-commerce site every second, that delay is more card abandonment, so waiting minutes for a transaction to settle just doesn't work. And then blockchains, transaction fees that exceed the actual cost of the item that you're buying just doesn't work.

So to alleviate all this intermediaries came in and said, "Okay, great, look, I'll remove some of this friction for you. I'll exchange the Bitcoin and settle with you in US dollars. Oh, and by the way, I'll take on some of the risk of settlement taking 10 minutes. I'll give you an instant authorization and I'll just settle with you 24 hours later, and I'll eliminate some of the fluctuations in network fees. And for all that trouble, I'll charge you 100 basis points." And then it starts to feel and look a lot like traditional payment systems where you've got an intermediary, there's a lot of friction and a lot of cost and an intermediary is saying like, "I'll simplify all that for you, and I'll charge you a hundred basis points. And by the way, I'm the intermediary between you and your end customer."

And that's really, well from what I've seen, what the attempt at crypto payments have done. What's different now is a couple of things. So one is rise of stablecoins and specifically USDC as a US dollar backed stablecoin. And then the Solana blockchain technology that has the speed throughput and low cost that eliminates a lot of that friction. Right now you have instant settlement, you have costs measured infractions of a penny, and you have throughput. You're not dealing with congested blockchain networks.

And then the other thing is we now have a growing interest in crypto, there's tens of millions of wallets out there. People are more and more kind of normies as we call them, I guess, are dabbling into crypto. And I think you're going to see two kind of mental models, right? One is I buy crypto for speculation and investments, but I think more and more people are going to realize like, "Oh, I can use this for transactions. There are transactional currencies that I can use that provide me utility." So I think there's the combination of all of these factors coming into place with these new technologies are kind of going to give crypto payments a new shot in the arm.

Jeremy: (21:36)

Yeah. And I would just add to that just at a high level, I think one thing to note is stablecoins and public blockchains have achieved an astounding amount as payment system. I mean, these are decentralized infrastructure, running globally, supporting literally trillions of dollars of transaction throughput, and supporting pretty material volumes that have grown, and including in a wide variety of payment use cases. And we see that all the time, the number of businesses that are just signing up for Circle accounts, because they want to use USDC as just a payment medium outside of the markets themselves. And so it's a pretty amazing achievement, and that's happened in a very short period of time. I think there's many, many thousands of products and services that have integrated USDC.

It took like 50 years to get to like 10,000 issuers, which are people who have integrated the visa credentialing. And so the adoption of these standards is happening at a really fast rate, which ties into the other piece, which is there have been a number of things that have been really necessary. I think one has been regulatory clarity, people being comfortable that this form of dollar is as good as an ACH dollar or a credit card dollar in terms of its usefulness and its legal clarity. Businesses knowing that these are legitimate financial infrastructure that they can rely upon and build upon. The other's been, as we've talked about here already is just the reality of the economics, the unit cost of transaction, the speed of a transaction, and through platforms like Solana, we're seeing that be solved for.

And so I think what we're seeing is many more businesses, large merchants, traditional digital wallet companies who have large installed bases of consumers who want to wire up these protocols. And I think it's not just that they want to wire them up because this is a way to pay businesses. They want to wire them up, because these are interoperability standards that make it possible for digital wallets everywhere to kind of share value with each other, which is kind of moving outside of walled gardens and into the open internet of value. And so we're seeing all those kind of combined with each other and those are all mutually reinforcing factors that will then I think have more and more businesses saying, "Why don't I just add this as a payment method?"

Sheraz: (24:00)

As Jeremy said, I think in payments more broadly, tremendous traction and use cases and international remittances B2B. My view is a little thinking more about specifically about like retail, consumer emergent payments. And I think there's this open question that I keep hearing is like, "Well, we can't use USDC to buy milk." Well, we ran a physical point of sale transaction using so Solana pay and purchased a gallon of milk. So we're happy to share the video of that, but wanted to demonstrate how simple it is to use this currency and set up a small mom and pop with our in-store web app.

Jeremy: (24:40)

I mean, it reminds me of when the web was taking off and it was like, "Well, you can't use the internet to do this, this and this." And people are just wiring this stuff up and it's going to become something that's just so extraordinarily common and every business will be... they'd be idiots not to take digital currency payments as an alternative to the things that they do now, just like they would've been crazy not to set up email accounts or let customers contact them through the web, or through an online forum or through a Facebook page or whatever. It's just, these are just going to be, you have to do this if you just want to be a native internet business.

Austin: (25:15)

Look, the Internet's great, but all I can buy on is books, and I can do that at my local bookstore.

Jeremy: (25:20)

Yeah. Right. Yeah. Yeah.

Sheraz: (25:22)

That's right.

Austin: (25:23)

So Sheraz, when you're talking about this tool kit for Solana pay, what is actually live now, if someone is interested in actually setting this up for their business and enabling people to buy a gallon of milk with USDC, what's that toolkit look like, and how could they get started?

Sheraz: (25:39)

Sure. Yeah. We have a physical point of sale client, which is a simple web app. It's a very dead simple onboarding experience as well. We have an e-commerce SDK as well, so if you have your own website, the tooling is there to support both QR code payments and browser plugin. And we have a great set of partners that are working with us to both distribute these tools and help us build the future of this protocol and specification.

We have integrations with a set of wallets, FTX, Phantom, and Slope and others on the way. You know, part of the goal of this is that this is the first at bat at the first inning. We've built some of these tools to provide some reference implementations and tooling for people to start building, but there's a whole roadmap of additional things that we want the community to build with us.

Jeremy: (26:53)

Yeah. And we're super excited at Circle to support this. And we see getting these kinds of standards adopted in more and more wallets, it's great to see. And I think we're hoping that standards and efforts like this can get adopted in many, many other kind of crypto native wallets and other digital wallets that are kind of coming online to support USDC payments.

Austin: (27:15)

So, Jeremy, with this sort of front end component where you can now receive payments and USDC via Solana pay there's a whole series of other tools you're talking about, whether it's deposit into accounts for merchants. How soon of a future do you think it's going to be possible for someone to run a business, and make payroll and accept payments without actually having a bank account?

Jeremy: (27:39)

I think we're getting really, really close to that. I think with a Circle account, we provide businesses with the ability to open an account, it's got multi-user support, and administration so you can have multiple employees or people in your finance department using it. It provides on chain payments across multiple blockchains, it provides legacy bank payments, so if you need to get money out into legacy bank accounts, you can do that. We have a pretty exciting roadmap for new things that we're going to build there, so that kind of interoperability with legacy payouts is important as well. And then you have the ability to take your working capital and put it into yield. And so as you collect payments and you have working capital, you can deploy that and generate high interest rates on your USDC.

And so those are things that are there today, and there's obviously a lot more that can be built out there. We have a pretty exciting roadmap for things that we're building. We want really any crypto native business clearly to sort of make this their global financial account for their startup or their growth company, but more and more traditional companies as well, who are getting into this who want to use this as payments infrastructure, but then will tie it into some of their working capital management and treasury management.

And then underneath that is like any developer that really has something they want to do custom, everything is just a platform. Everything's a set of APIs that you can build on. Developers can automate all the different rails. They can automate how they store and move funds. They can kind of control all of that in a very, very fine grain way. And so while there is like that self-service experience, but a lot of startups want to kind of do this unique to their business so they can automate more and more of it. So we think this year is going to be a year where these types of hybrid digital currency bank like products are really starting to take more and more hold.

Austin: (29:33)

Yeah. So, sort of along those similar lines, the existing payments rails and industry is one where a lot of it still runs on data collection and data marketing as a way to help subsidize the cost of running a lot of those rails, right? Whether it's American Express offers or whether it's something like a company that actually is tracking purchases that are made in-store and using that to do marketing through direct mail or other means. How does data privacy play in both with Solana pay and Circle, and how are those things part of your decision making framework?

Sheraz: (30:08)

I think one of the most important aspects of the whole notion of the peer-to-peer transaction and removal of intermediaries is that now when you're accepting as a merchant, accepting a payment through this per protocol you're not necessarily going through Google or Apple or MasterCard or Bank of America or some other intermediary, right? You have a direct connection with that consumer, and because of that you're not potentially losing data. You don't have third parties accumulating all of this data. And the beauty of this protocol is that it's open, so any merchant could take this. We're not pushing an end solution down anybody's throat, this is an open decentralized protocol. Any merchant could take this and build the equivalent of the Target Red Card system, which is a very popular solution that Target built or the Starbucks closed loop payment system.

So I think the most important thing is that if merchants have control over commerce and the protocol is open and they can kind of craft on top of it, it gives them much more control over their data. We also have under development APIs as part of our core token program that can provide additional layers of data privacy. So we have a confidential token API that's under development. And there's a lot of technological solutions that can be built in to give either the consumer or the merchant more privacy, or whatever level of privacy they're interested in, but the key is they have control, they're building it in the way that suits their business needs.

Jeremy: (31:41)

One of the principal benefits of digital currency and stablecoins and public blockchains is the higher degrees of privacy and security that they afford. And I think that's something that people value and it's inherent in the architecture of these cryptographic forms of money and that's really key. And so we merely provide ways to interact with that infrastructure, and so we don't really stand in any specific data around users in that way. And even new technologies that we're working on in digital identity are designed to use cryptographic proof of identity, not pass around a whole bunch of PII. And that's going to be really critical as you start to marry digital identity with payments, with merchant behaviors. How can I, as a consumer present myself and prove to a business that I'm a legitimate individual that's been compliance checked, and make a payment to you without bleeding all my PII to you, and for me as a business to say, "No, I know this is not a drug trafficker or a terrorist or what have you that I'm transacting with," and have those settlements be fast and secure and final and private?

So I think those are really, really important things. At the same time I think that the building blocks of crypto give us new tooling for incentivizing customer relationships in new ways. NFTs and commerce are really powerful, powerful phenomenon, which we're seeing early experiments in. But I think for businesses that want to entice customers to give them more information or have a more direct relationship and where that information exchange can be valued in some way, I think NFTs create a really interesting and powerful way to do that. And that's something that can be direct between the consumer and the business and not something that's, again, bleeding all that information and out to other networks that are repurposing that. And so I think there's a chance to rebuild customer loyalty, incentives, loyalty marketing, and secure privacy preserving payments in a way that's superior to what we have with existing electronic payment systems today.

Sheraz: (33:58)

Yeah. It's like being a founder or an entrepreneur in 2000, right? Think about all of the things that needed to be built then and were built. And we are just on the starting point of this. So I think it's an exciting time to be an innovator and a developer and a founder and an entrepreneur.

Austin: (34:20)

I love that vision for the future. So, one last question before I let both of you two go. Riptide, the Solana global hackathons going on right now, if there's one thing that you would love to see a team build coming out of this, what would it be? And Sheraz, we'll start with you.

Sheraz: (34:38)

Sure. I mean, there's a bunch. I think one thing that could be really interesting is what does buy now pay later on chain look like, right? So we have so many crypto users that are sitting on SOL, and other assets that they want to hold that right, they're hold all that. They don't want to use that for transactions. So how could we enable so someone to purchase from a merchant using Solana pay, over collateralize their SOL holding and just buy now pay never? Use your staking rewards to pay for the purchase, call it buy now pay never. That's one example, that one could be really interesting.

Jeremy: (35:18)

I think we're excited to be part of the hackathon and putting forward some of our APIs that can be worked in conjunction with Solana pay as well. And so, I mean, just generally, we'd be very interested in seeing people who are building wallet experiences that are geared towards payments, whether it's a P2P payment or a person-to-merchant payment in particular, but really building experiences that are optimized for that flow, as opposed to being a DeFi Degen, or trading. And so I think those kinds of products that combine person-to-business and person-to-person payment experiences that abstract away some of the complexity, and then do that around these standards, I think we're super, super excited about that. And we're obviously excited to see what comes out of the hackathon. We're investing in a lot of companies now, and so we'll be watching really closely, because this is a space that we'd love to be investing in as well.

Austin: (36:20)

Well, Jeremy Allaire CEO of Circle Sheraz Shere end of payments at Solana Labs, thanks for joining us today.

Sheraz: (36:26)

Thank you, Austin.

Jeremy: (36:27)



Feb 08, 2022
Chewing Glass - PaulX

Chewing glass is what Solana developers do. Introducing a new series on the Solana Podcast, Chewing Glass! Chase Barker (Developer Relations Lead at Solana Labs) talks shop with the most interesting builders in the Solana ecosystem. It’s for devs, by devs.

Today's guest is PaulX, a Solana developer who invented the Solana Escrow program (lovingly referred to as the "Solana Bible") and core contributor to Anchor. 


00:40 - Intro / Origin Story

3:58 - How did Paul X find out about Solana?

7:43 - Motivation behind creating the escrow program

14:13 - Framework, using Anchor in Solana

21:08 - How can folks transition from web 2.0 to web 3.0

29:00 - Advice to other developers

00:39 - Intro

01:51 - pencilflip’s background
03:30 - Working at facebook vs. web 3.0

07:31 - How pencilflip got into crypto

08:52 - Views on NFTs

10:45 - Getting into Solana

15:29 - Experience working in lower level

17:56 - What was his method to learn Solana?

21:01 - What’s the hardest concept on Solana?

23:53 - How fast did he move from Rust to Anchor?

27:35 - Building on Solana

33:24 - Advice to people moving to Web 3.0


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

chase (00:38):

Hey everybody, and welcome to Chewing Glass, the show where we talk to Solana developers who have been building in the Solana ecosystem. We talk about the good, the bad and the ugly. Today, we have our very first and very special guest, Paul X. Paul X is actually the creator of the escrow program. The Solana escrow program, this program actually saved a lot of lives over the months. Back of the day, all that existed was and the Paul X escrow tutorial, sometimes referred to as the Solana bible. How's it going, Paul?

Paul X (01:15):

Yeah. Hi, thanks for having me. Yeah, I'm doing great.

chase (01:20):

Yeah, it's really great to have you. Just for context, Paul and I met probably about six months ago, or five months ago. When I first joined, I was writing a Getting Started blog post. I found out about the escrow tutorial. I wanted to talk to Paul to get some feedback and really just kind of get my bearings about me for what's going on in the Solana ecosystem. Also more recently, had a chance to catch up with him in Lisbon unexpectedly. That was pretty great. I guess we're just going to dive right in. I guess the first question I've got for you, Paul, is when did you get into blockchain?

Paul X (01:57):

First of all, I really enjoyed Lisbon as well, and seeing you there. Very cool. Just in general, the whole conference. It's really quite an experience, I think. I'm an undergrad in computer science, I'm in my second year right now. So, last year I was in my first and I felt like I wanted... I had been working for a year already, or actually two, I think, just part-time next to university, but regular full-stack engineering, but I got bored. I wanted to do something more challenging and I knew about crypto, so I thought that would be an interesting area to explore. So, that's what I did. I explored.

chase (02:52):

That's kind of me, I dove in about 2017. My first crypto purchase started building around 2018. Just out of curiosity, what was the first crypto that you ever purchased? The people want to know.

Paul X (03:07):

Bitcoin, most likely.

chase (03:14):


Paul X (03:14):

I don't remember, but if I had to guess, it would have to be Bitcoin, I think.

chase (03:20):

If it was three years ago or longer, I think most people's probably, really Coinbase, at least for us in the US was it. There was only three at the time.

Paul X (03:32):

Yeah. Oh, yeah! I actually remember how I bought them. It was actually done through... Not through an order book exchange, but just a message board in [crosstalk 00:03:47].

chase (03:47):

My Local Bitcoin? Was that the one?

Paul X (03:50):

Yeah, maybe something like that. Someone just posted, then you sent the money to their private bank account and they sent you the Bitcoin.

chase (03:58):

One of my friends did the same thing. I was like, "You did what?" I guess the next question, now that we got the "when you got interested in the space" out of the way, when and how did you find out about so Solana? Because being so early in writing the first tutorial, you were here before a lot of people. So I guess, how did you find out about it?

Paul X (04:29):

I don't remember exactly when. I know that Serum hadn't launched yet. I think it was about a month or two before Serum launched. Like I said, I wanted to explore the space. I'm an engineer, I want to build things, so I looked for platforms to build on. The obvious choice was obviously Ethereum. I wanted to build something that I could play around with and I couldn't really do that on Ethereum because it still is so expensive. So, that just wasn't really an option for me.

Paul X (05:16):

So I looked around and I... Layer 2s, also, weren't a thing. They weren't live yet. There's only so many options, then, that are left, that are legit, right? Obviously, the 2017 chains, they're still there, but wasn't... I wanted to explore the new ones. Yeah, I just wanted to get started, so I basically just looked up which chains were there, and I looked for a chain that seemed to have a legit team, a legit tech, and something that was actually live and working. Solana was that, and yeah, that's sort of how I got started.

chase (06:12):

Cool. What was the first thing you looked at when you found out about Solana? Was it the core innovation articles or was it just going straight to the documentation at the time?

Paul X (06:22):

It was the white paper and the articles, but the articles are not that detailed. There's only an introduction and the white paper also isn't that detailed, but the time, because I was relatively early, there weren't that many people in the Discord. So, I could just-

chase (06:49):

How many?

Paul X (06:50):

[crosstalk 00:06:50].

chase (06:50):

Just curious, how many [crosstalk 00:06:52] were in there?

Paul X (06:55):

I don't have a number. I just remember that there were a couple of regulars that were asking questions. One of them was [Daffy 00:07:06] from Mango and Smith, but the point is, you could talk with the Solana team relatively easily in the DeFi support channel. You'd good answers quickly, so we just chatted. That's sort of how I learned. That's also how I got much of the knowledge to write the blog post and the docs at the time. The docs are better now, but still lots to work on. At that time, there was just, talking with the Solana team about the docs really, really helped.

chase (07:57):

Yeah. So, I knew Daffy was in there. I knew of these other guys. Everybody's listening to you talk about the state of the documentation at the time. I'm sure there's a lot of people who have a lot of words and a lot of grievances from back in the day, whenever there's, at that time, really only the documentation. But one of the other big things that, the feedback since I joined, which I found out about Solana probably sometime in August, September, October, something of last year. Everybody I've talked to really just talks about how the dedicated support was really the way that they made their way through navigating Solana, just the Discord's... It's still that way today, we actually have some more developing relations in there outside of core engineering, but they kind of saved the day just to get some of those early movers like you over the hump. I guess-

Paul X (08:49):

Yeah. I agree.

chase (08:51):

... one thing I would really be interested to know is, so you found out about Solana, you're in the Discord, you're trying to play around, and then all of a sudden you were like, "I'm going to write this escrow tutorial based off of all this stuff." Or was that how it worked out? What made you decide to do the escrow program in general?

Paul X (09:08):

Yeah. It turned out to be a little bit of a bigger project than I thought in the beginning. I think it took about one or two months to write, and I still updated it regularly. So, that was one reason. I thought it wouldn't be that large, so I could just write something rather quickly. But also, it's just an effective learning method: if you want to learn something, explain it to someone else.

chase (09:46):


Paul X (09:47):

That's a good way to learn. So, that's what I was thinking.

chase (09:54):


Paul X (09:54):

I think that was basically it. Yeah. I didn't expect it to be what it became, to be honest.

chase (10:08):

It became a lot, it's actually still, probably, one of the most accessed tutorials that we have. I guess maybe for the smart contract side, there are some people just like you that learn by doing and learn by teaching, so we're escalating lots of new content being built. We just launched this thing called The Solana Cookbook, which is lots of code snippets for type script, the CLI and Rust.

Paul X (10:36):


chase (10:36):

We just did that two days ago and there's already so many contributors, and a lot of these guys-

Paul X (10:41):

Yeah, pretty cool.

chase (10:42):

... "I want to try this, but I don't know how to do it." We're like, "It doesn't matter. This is where you learn. You learn by teaching." I think we're super lucky to have people like you exploring new tech, writing things for other people, because I don't... Like you said, you had no idea in the beginning what this would turn into. In all reality, that document's probably been accessed tens of thousands of times at this point, definitely thousands. Probably into the-

Paul X (11:12):

It's maxing out my Netlify personal plan.

chase (11:15):

Oh, is it?

Paul X (11:16):

I've got 100 gigabytes. I have 100 gigabytes a month and it's very close to the limit now.

chase (11:25):

That's [crosstalk 00:11:26].

Paul X (11:26):

So if you know how big a website is, and you have 100 gigabytes, then you know how many views. You can sort of calculate how many views it gets each day.

chase (11:39):

That's actually incredible. I had no idea. I knew it was a lot. Again, I think a lot of people are going to thank you. Whenever I finally found out about the escrow program, which was when I actually ended up reaching out to you, it was a little bit later after I started, I somehow hadn't seen it. And I started sharing it with somebody who was like, "I need to make some sort of escrow program." Then I shared the tutorial and this ecosystem Telegram group I was in and everybody just jumped in. They were like, "That's the Solana bible." And I was like, "Everybody knows [crosstalk 00:12:12] all know this." They were like, "This is how we all got started in Solana." The thought about what would have happened if you hadn't written that? Think about this. There might have been a pretty decent number of people that started building, never made it to the Discord, your tutorial didn't exist and they just never ended up building... It could be somebody that's actually a live protocol with billions or millions of dollars of [TDL 00:12:38]. I don't know the answer to that, but it's kind of cool to think about that. You might have had that sort of... Well, you have, in a lot of ways.

chase (12:46):

What was the most painful part? This is a question I have to ask. Did you know Rust before you-

Paul X (12:55):


chase (12:56):

You didn't know? You...

Paul X (12:57):


chase (12:58):

No Rust at all? So what was the most painful part of this? Because I always thought it was Rust when I first started, come to find out, for a lot of people it's not Rust. It's actually Solana, it's a understanding accounts, PDAs and CPIs, a lot of things that, especially coming from E don't make sense because you can't compare the two, because they're completely different. Just curious on your thoughts on that.

Paul X (13:26):

Right. I knew C from university. That helped with Rust, but also not that much. I do think it's true, I don't think Rust is the difficult thing about Solana. Mostly because most Solana programs just don't use a lot of advanced Rust features. It's just the setting values. Probably the more comp... Anything with math is probably a little bit complicated, but you don't have to really think about multi-threading in a Solana program or anything like that. The Rust you use for Solana program is pretty simple. So yeah, I would say that programming model for Solana is the difficult part.

Paul X (14:32):

And also thinking about program architecture and related things, that's a difficult part. Yeah, specifically, it's a little bit far away now. When I remember that time, I pretty much remember a feeling of joy. It was a lot of fun. It's like...

chase (15:11):

I did it! I've made it!

Paul X (15:14):

Yeah, it's like you are thrown into a really difficult challenge and doing that, it's fun. Even not just the process of it is fun. But yeah, for sure, PDAs were a little bit tricky to wrap your head around. But yeah, you just put in the work and over time you'll understand.

chase (15:49):

Yeah. It has to be rewarding. At the time when you created that escrow program, probably one of the first external people ever to do that with only probably a handful, like 10 to 20 people in the world, that even knows what Solana is, let alone how Solana works, is pretty cool. I guess another one of the things that we hear a lot about, and honestly, it's of been solved so we'll talk about how that's been solved in a way, which is serialization and de-serialization. Most people that build on Solana still have no idea how to do it. There's never really been a... Obviously, people use Bosch, but there has been no like guidance to say, "This is what you should use." A lot of people bring that up, but this is a feature, not a bug. Nobody wants to tell you, but this leads us into the next thing, which is there is a framework out there that has very strong opinions on how this thing work, and it's called Anchor. I guess, number one, are you still developing on Solana, and number two, have you used Anchor?

Paul X (16:55):

Yes to both questions, but I'm not building any bigger programs right now, but I'm actually helping build Anchor now.

chase (17:10):

Oh wow, switched sides other there.

Paul X (17:17):

Yeah, I think Anchor is great. I think it's really important for future developers and developers that are on Solana that we improve the framework. I took like little bit of a break in 2021, but when I came back, Amani asked me whether I want to help build stuff. And we sort of thought that it would be a good idea if I come help with Anchor, so that's what I'm doing now. It wasn't really entirely my intention to work on it that much, but it's a lot of fun, so I've just been working on it all the time and thinking about what else we can do to improve it.

chase (18:18):

Yeah, people love Anchor there. There's actually Anchor Maxis out there at this point in time. I've spoken to a few of them.

Paul X (18:26):

Yeah. I saw the talk at the conference.

chase (18:31):

It's a strange thing, and not really a strange thing, but I've had a lot of these conversations. Working at Solana labs, one of the big things that I think about is there's just so many things going on right now and different paths to be taken. What's the right one? Where does labs and all these different people that are building out some... Which path should people be taking? Yes, I understand in order to scale and grow, developers, you're going to need something like an Anchor to be able to onboard people quickly because it takes away having to add all these accounts to every single transaction.

chase (19:18):

Actually, I'm not sure that Anchor abstracts that portion away, but it does abstract a lot of the underlying work, like the serialization and a lot of these things-

Paul X (19:25):

Serialization, yeah.

chase (19:26):

You don't have to think about a lot of the hard stuff, which is great. Frameworks are great.

Paul X (19:31):


chase (19:32):

But also, on the other side of that, you still need these like base layer engineers that can understand what happens underneath so that they can actually come and help fix Anchor. Because I'm assuming if you never did what you did, you wouldn't be very effective helping build Anchor right now, if you hadn't suffered through the pitfalls of just building Rust on the native. Maybe I'm wrong.

Paul X (19:58):

Yeah. No, this is something that I've been thinking about as well. I do think that if your plan is to deploy a protocol and you expect it to handle hundreds of millions of dollars, you should have people on your team that could write the same program in just regular Solana code. And if you can't do that, then you should probably not deploy right now, but go back and study it a little bit more. But that said, sure, it helps helps people. Raw Solana programming helps people understand Solana, but then they should move away eventually. I can't tell you what you should do, but I do think it would be a good idea to move to Anchor, but it depends on your specific use case. There are cases when maybe a raw Solana program is better, but for most programs Anchor will work fine and it will take a lot of work.

Paul X (21:18):

It will do a lot of work for you so you can focus on the things that really matter to your application, right? Like, if you don't have to think about... There are different kind of exploits. Sure, right? There are exploits that are sorts of Solana specific where you forget to check an owner of an account and that's something that's very Solana-specific. And that thing, Anchor can prevent for you. But what Anchor can't prevent is more complex interactions with other protocols and maybe there's something wrong with your tokenomics or generally your actual idea that's independent of Solana, so it allows you to spend more time focusing on that, which I think is very good.

chase (22:20):

Yeah. I guess the takeaway from that is that if you are managing tons and tons of money, your core engineering team should probably understand how all this stuff works. I know that some of these other bigger protocols like Saber and SI Options, they all started out, well, Solana native because Anchor didn't exist, but over time starting to add more features and features using Anchor, probably saving them lots of times. I've heard the term that Anchor, once you learn it, you can probably 10X your development speed or capacity. Obviously, that's subjective, depends on who you are.

Paul X (23:04):


chase (23:04):

But your recommendation would be, if you're coming onto Solana, you're not building this big protocol and you just want to start working and not worry about all these exploits and things, you just want to build something really cool and a lot faster than normal, than jump onto Anchor and get started. And if you decide to become a big protocol, maybe think about finding somebody who actually understands Rust and some of the base knowledge.

Paul X (23:33):

Right, and I mean, I think this is more or less true with any programming language or framework. If you want to be an okay, or close to good, engineer, just do the framework; but if you want to do great things and you know what want to know what to do when something goes wrong, and you want to know how to de-bug that, you can really only do that if you understand what the framework actually does for you.

chase (24:04):

Yeah. I think a good analogy for a lot of people who are probably watching this, because you're on the back-end side, I don't know if you do much of the Web 3.0 or the front-end stuff, but you can make the analogy, maybe it's not one-to-one, but JavaScript, you don't necessarily want to try to go start building React applications unless you understand how JavaScript works because when you get some errors and you don't understand some of the low-level JavaScript stuff, you might have a really painful experience trying to figure out what is actually wrong. I'm sure React is probably intuitive enough now to help get you through that. But if you know JavaScript, you're probably going to get things resolved a lot quicker. It's kind of the same thing, I think.

Paul X (24:52):

Right. Even if you cannot go deeper than that, you're going to have a better time overall if you know what the actual computer is doing underneath, what lies below that, if you understand what the computer is actually doing for you. Like, what is a stack, for example. That's not really necessary to get started with JavaScript or Rust, even, but if you want to really understand things more deeply and learn how to fix things when they go wrong, it's probably a good idea to also learn how a computer works.

chase (25:36):

Yeah. There's actually been people recently that, I spent a lot of time on Twitter just banging the drum about Solana, trying to get people to FOMO out of their Web 2.0 jobs to Web 3.0. There's people that have zero development experience that'll reach out. They're like, "How do I start developing on Solana if I have no development experience?" Almost like not even trying to jump from nothing to React, they're trying to jump from nothing to Solana, and my response is, "Honestly, if you don't learn so architectural basics and just building programs, or like learn a JavaScript or a Python, you almost have a 0% chance of success rate of building something on Solana. And if you are successful, it's probably not going to be very safe."

chase (26:24):

So it's kind of irresponsible to tell somebody to go from zero to Solana and skipping everything in between. Like I said, I don't think that you're going to have to be some sort of giga-brain to ever even make that leap. It's probably possible in some world, but...

Paul X (26:39):

Yeah, if I were to start from zero, I don't think I would try to launch my own protocol one month into my learning journey. Don't think that's a very good idea. But if I'm really interested in this space, then I can start, I still start doing work, I can still contribute from very early on. Not everyone needs to, your don't have to launch your own protocol to start learning and to start contributing. There's a ton of work to do on the open source projects in Solana, or maybe you can have an internship somewhere where you don't work on the core code, the actual program, but you can get sort of familiar. You can get acquainted with the industry and the people. That way you can build up the knowledge and already be in the ecosystem and without touching critical code. Over time, you'll be able to do that as well.


chase (28:03):

To that point, the Solana... It's not even just Solana, there's other blockchains as well, but I'm more familiar with the Solana community. It's super welcoming, especially the developer community. And if you want to get involved and you're a developer and you find a protocol that you really like, go into their Discord, start asking questions, then start helping people, then start thinking about maybe going and fixing a syntax issue and a GitHub repo. It doesn't matter. It can be the tiniest thing in the world.

Paul X (28:37):


chase (28:37):

Just keep doing that, next time a little bit like stronger. But when people reach out to me from Web 2.0 to Web 3.0, like, "Hey, I want a job. How do I get into the space?" Get involved, write, make a tool that everybody wants to use, give to the community, go contribute to a repo. Now my go-to is going to be, "Go write a recipe in the Solana cookbook and I'll help you out here." I'm kind of just joking here. But anyways, the people in this space, it's different. They're not looking on LinkedIn. They are looking for people that just go out and just get shit done. That's what everybody's doing and it's kind of incredible.

Paul X (29:16):

Also, if you really want to do this, and you start from zero, of course you can't take an entire degree in one or three months, but there's so much you can learn from online and just so many courses that you can take for free, and you can basically learn really all the time in your first six months. You are going to be fine. At least get a job somewhere, I think, in crypto.

chase (30:03):

Yeah, for sure-

Paul X (30:03):

If you really put in the work.

chase (30:05):

It's really just about passion and motivation, and persistence, and you keep going at it. If you really want it, you're going to eventually get it. I think that's the point that I keep trying to make to people. Everybody working in this space, it didn't happen by chance. They weren't just lucky. It's because they were like, "I want that job. I want to get in here." And they did it. I get messages that make me feel really good about what I do, is I'll get messages, I've gotten a couple from at least one from Phantom and some other places. I'll get a message down the line a month later, it's like, "Thank you so much. I just got hired at Phantom." And I was, "I've talked to thousands of people. When was this conversation?"

Paul X (30:46):


chase (30:46):

And then I would look back and I'm like, "Oh my God, man, I'm so happy for you." It's great because those people took the advice. I know that they listened to what I said, took the advice, just hammering it down, started contributing. And then the next thing you know, they're working on, in my opinion, the greatest UX wallet there is.

Paul X (31:05):

That's pretty good.

chase (31:08):

It's pretty good. So yeah, it's been a wild experience for a lot of people. Things are not slowing down anytime soon. We just had 530-some people in our latest hackathon. If the next one's any more than that, I don't even know what I'm going to do with myself doing [inaudible 00:31:29] but as our content gets better and things get a lot... Compared to two hackathons ago when there was not hardly anything, basically Paul X and then a couple resources, now to having a lot more community content, people were asking less questions in Discord. Anchor is actually taking a lot of people out of the Solana Discord and plucking them into there, which has been much relief.

Paul X (31:50):

We'll thank them.

chase (31:51):

Thank you Armani. That's been beautiful. But then there's just a lot more people. The more people that you help get over those big humps of Solana, the more people that they help out. And then it just keeps growing. I can't even put a number on it, but the Solana developer community has been super. It's huge. I guess the final question that I wanted to ask you is probably, I wanted to do this show specifically to talk about people's experiences, where they came from, where they are, how they got there, just so that people out there watching can get some inspiration and motivation to make the jump. There's a lot of people that are literally right there on that cliff of Web 2.0, just every day being, "I've got to do it, I've got to do it," and then they don't do it. So hopefully, talking to people like you, maybe Armani, wink, wink, at some point in time. That they'll just make that jump.

chase (32:55):

So you've already did a lot of work with the escrow tutorial. Hopefully, this interview also has a similar impact. I guess, do you have any words of advice for Solana devs that are just getting started? Just something. You made the jump into the space, you were in university, you were like, "I'm kind of bored with like this stuff. This thing looks cool." Any word of advice to some younger developers out there?

Paul X (33:22):

The first and most obvious one is to just get started. You don't have to go full time on this immediately. You can just get started with something so you can see whether that works for you, but get started. And I think once you do that, I'm not sure if I have really general advice for people, it really depends on the person, but once you get started, contribute to the ecosystem and talk to people, to anyone, to me, my DMs are open, Twitter and Discord, and many others you can talk to as well if you need specific advice that's more tailored to your background.

Paul X (34:27):

But yeah, in general, the way I think about crypto in general is that it's still quite early and we need a lot of experiments and we need experiments on all layers of the stack. So layer one, layer two, maybe the DOW layer above that [crosstalk 00:34:51].

chase (34:50):

Maybe design in UX.

Paul X (34:52):

[crosstalk 00:34:52] coordinate. Yeah, everything, right? We need to do those experiments. So if you have crazy ideas, now might be a good time to try and explore them because there's lots of money in crypto right now. You can probably get funding and support from people because crypto is very welcoming. Experiments are really good for this space to push it forward because who knows where we will be in like five years. I don't even... Just thinking about that, I have no idea, but the way we go, we push this thing forward, is to try a lot of different things. And again, I'm not even saying you should necessarily go to Solana, but you should at least, if you want to push the space forward, join an experiment that you think pushes this space forward. That will already be very good for all of us, and hopefully yourself as well.

Paul X (36:07):

Solana-specific, it's pretty much the same advice. Get started, talk to people, build programs as soon as possible to learn how it all works. And then again, if you think there's gaps in documentation, write stuff or make a video or something like that. At least that has helped me understand the programming model much better. It also helps others, so that's great. Really most of it is just putting in the work every day and grinding.

chase (36:51):

You mean eating glass and chewing glass and all that fun stuff?

Paul X (36:55):

Yeah, pretty much. Yeah, yeah. But get started.

chase (37:00):

I think you touched on something that I didn't really touch on, which is actually huge and part of my job in general is just to help grow the community. The way that I do that is by opening up my DMs to everybody. I'll literally talk to anybody if you're interested in this space. I probably get about probably 80 to 100 every day. I wake up in the morning, I go through all of them, filter out the [crosstalk 00:37:23] drop-

Paul X (37:23):

100 every day?

chase (37:25):

I filter out the NFT drop requests, that'll usually take about 30% of those. But anyways, this community's welcoming. If you have a question, don't be scared, reach out to somebody, follow a couple accounts that seem pretty active.

Paul X (37:40):


chase (37:41):

I actually created a list on Twitter called Solana Developers. All you have to do is follow that list and all the alpha is right there for you. Start DMing every single one of those people, including myself. Yeah, the community portion is huge. It's probably one of the greatest superpowers that Solana actually has right now.

chase (38:01):

Getting involved. Like you said, YouTube videos, this NFT space has blown up. There's people that aren't devs, they're starting podcasts. They're just participating. It's like this whole new world. We're getting the chance to kind of reinvent, and my personal view, there's probably some disagreement out there, we're getting to reinvent the internet in a way, so you're talking about these experiments. Get out there and experiment, and maybe you'll come up with something that nobody else has thought about doing on blockchain yet. It could change your life, and I'm not talking about just financially. You could just go into this trajectory of where this is where you were meant to be the entire time. And I've seen a lot of people say that. They're like, "We were unhappy until they actually got into Web 3.0 where we all work a lot, but we love it."

chase (38:54):

But anyways, Paul, thanks so much for joining. I know that you're a full time Anchor Maxi, I'm surprised you had [crosstalk 00:39:05] here. Just kidding. But, yeah. Thanks for joining. I really appreciate it. Thanks for the escrow tutorial. Thanks for building on Anchor and continuing that. Just generally thanks for everything and thanks to everybody for watching. We'll just check everybody later. Bye.

Paul X (39:23):

Thanks for having me.


Jan 11, 2022
Stake Pools Ep #57

Vasiliy Shapovalov (Tech Lead, Lido), F.P. (Co-Founder, Socean) and Ella Kuzmenko (Product Manager, Stake Pools & Delegation Program, Solana Foundation) chat with Anatoly about the complexity and game theory surrounding stake pools, decentralization and censorship resistance.

00:10 - Intro

01:38 - Collaterals, maximizing censorship resistance

07:40 - APYs and investors

09:31 - How to get penetration across DeFi

14:58 - Governance in a liquid stake pool

18:23 - Automation vs. programmatic on-chain governance

20:44 - Factors in selecting validators

29:27 - Growing the validators set

32:21 - Stake pool token in DeFi

35:09 - Liquidity fragmented between too many pools

41:01 - Who controls the network?

44:46 - Increasing decentralization

00:39 - Intro

01:51 - pencilflip’s background
03:30 - Working at facebook vs. web 3.0

07:31 - How pencilflip got into crypto

08:52 - Views on NFTs

10:45 - Getting into Solana

15:29 - Experience working in lower level

17:56 - What was his method to learn Solana?

21:01 - What’s the hardest concept on Solana?

23:53 - How fast did he move from Rust to Anchor?

27:35 - Building on Solana

33:24 - Advice to people moving to Web 3.0


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Anatoly (00:10):

Hey folks. This is Anatoly and you're listening to The Solana Podcast. I have a super exciting episode today, it's all about Stake Pools and decentralization and censorship resistance. And I have a group of guests that I'm going to let them introduce themselves, just to make it a little easier. So Ella, why don't you start first?

Ella (00:29):

Sure. Hey guys. Ella, I'm a Product Manager of Censorship Resistance at The Solana Foundation working on Stake Pools and the delegation program.

Vasiliy (00:39):

Hey. I'm Vasiliy, I'm tech lead at Lido. Honestly, I think that the person who should be here instead of me is someone, of course like Felix or [Uto 00:00:49] or maybe Brian, but they couldn't make it, so I'm here instead as a second best option.

Anatoly (00:58):

Awesome to have you. We'll take the second best.

FP (01:03):

Hi, guys. I'm FP. I'm co-founder and CEO of The Socean Stake Pool. Nice to meet you guys all today.

Anatoly (01:11):

Awesome. So censorship resistance Stake Pools, I've been pounding the table on this for two years as the most important thing and proof of stake networks, because I have this crazy belief that if we have liquid staking as collateral and DeFi than financial analyst to analyze systemic risk and these things, we'll actually prefer collateral that maximizes censorship resistance. And that is a crazy thing, because it would tie incentives for maximizing censorship resistance in the network to its actual use and primary use being DeFi. Is this real or not? Is this going to happen?

Vasiliy (02:00):

I probably got some experience to tell here because we were in production longer, not on Solana, but in general, longer than most liquid staking pools. And I can say that it's less pressure to decentralize than I thought it would be on one hand. On the other hand is much more pressure than we usually have as a stake provider, as node operator. I come from a stake provider, that is pretty big itself. So about 4 billion stake of fire down depends on phase of the moon, the day.

And people who usually stake, there is the kind of weak, very weak, but it's a prisoner's dilemma when people are incentivized to stake with best node operator. And when there is no clear best, they go by brand but there is a number of pretty good node operator that people are incentivized to stake with because these good node operator don't lose the mistake and give them good profits and stuff like that. And basically it leads to centralization because they are not incentivized very much to the centralized stake. And it's probably on goodwill and many stakers don't give enough thought to goodwill, but stake and pools always do. Basically, they're professionally obliged to do this and better holding up to hold the node operator accountable.

I think in Lido, we have a better monitoring system for node operator around for us. And most of the big stakers like changes and funds and stuff that we're monitoring people who stake for us way better than most stakers. And I can say that the trade of is real here, when that liquid stake can token hold us, are not putting a lot of pressure on us, but they're putting some and we are well equipped to react to that. And we would honestly welcome more pressure on this front.

Anatoly (04:14):

So, Ella, has this been easy to convince people that censorship resistance matters or is it like they're just learning about it for the first time?

Ella (04:24):

Yeah, that's an interesting question. I think I definitely would second what Vasiliy was saying about how it's surprisingly harder than you would think. People definitely will follow where the rewards are. And I don't think that is surprising. I think there's an interesting opportunity for Stake Pools to play with that idea and give rewards while also touting the benefits of censorship resistance. So, "Hey, we will give you great rewards, but you can also get governance tokens and you can help us build the future together."

And I think there's an interesting way that you can frame that discussion where you don't really have to pick one or the other. And I think to put a maybe crazy idea out there, I think we're only seeing the beginning of what can be built on top of Stake Pools. So it's pretty standard to take your Stake Pools tokens and you go stake them and then you earn some additional yield there. But I don't think we've really unlocked the potential of realizing that the underlying asset that you're staking will continue to accrue value every epoch and you should be able to build crazy financial things on top of that, that actually give you way better rewards than staking with an individual validator will ever do.

And as the product person, I just put crazy ideas out there and wait for other people to build them. But I think we're at the very early stages of that. And so I'm super excited for a year from now, what crazy things people have built, where the rewards are actually way sexier in Stake Pools. And you don't even have to care about censorship resistance by the fact that you participate in Stake Pools, you will be helping that. So that's the future that I'm really excited for.

Anatoly (06:09):

What do you think FP?

FP (06:12):

So the first question was, what do we think about the efforts towards decentralization and I think we're getting there, but I think it's still early days. If you add all of our Stake Pool operators together, we may have 10 minutes all between us and that's less than ever stake. That's less than one validator. So there's still a long way to go. And they charge 8% fees. What's going on? So definitely it is not a rational choice. It's more of a possibly just like inertia sort of thing.

And then I would say, to me, there seems to be a little bit of a trade off between Stake Pools and decentralization. And what I mean by that is even between Stake Pools, there are Stake Pools that decentralize more and there are Stake Pools that decentralize less. And in some sense, there is a trade off here because if you stake with too many validators, then you don't get good APY and people don't want to stake with you. And of course, if you only stake with the best ones, then you're not really doing your job as a stake pool. So there's a little bit of a delicate balance here, but I like what Ella said in the sense that there's interesting financial instruments you can build on top, which should make the APY discussion, it just falls out.

Anatoly (07:30):

So the APY is between all the pools and validators are pretty close. They don't really deviate by more than like 10%. Do investors actually optimize for that right now or participants? Are they actually looking at that or are they making a decision once and not even thinking about it later for months on end? What kind of behaviors do you guys see both as a normal stake operator and a pool operator?

Vasiliy (08:00):

As a stake operator, I can say that there is a lot of people who absolutely look at returns. We usually, when we go into network, we prepare profit reports for them and show them they are staking with us and we get better returns and stuff like that because that's one of the points that node operator can actually differentiate on. And there is not a lot of them, basically. We offer the same service to people.

But as a liquid staking protocols, there is a lot more of thing that can be a differentiator, way lot a lot. The node operator selection is one thing. Other thing is the opportunities to use your stake token in DeFi and CeFi and financial use for it. And this stuff beats these 0.1% point difference squarely. People don't care about the 0.1% point difference. But when they can actually use your token in 10 more protocols than the other person. So I think like, that's going to play as a serious factor way, way in the future, not for the few first years of stake, the liquid staking.

Anatoly (09:20):

So this is the difference between stable coins. Is how much penetration they have across DeFi protocols or exchanges even. Do you think exchanges are going to start having liquid staking like Lido, so Lido token?

Vasiliy (09:38):

Yes. I know it'll happen. It's not the matter of I think, I know it'll happen. It'll be inevitable. It'll start with smaller changes that don't have capacity to develop their own stake, liquid staking and don't have the network effect to make it a good option for people to use their exchange liquid staking. And then it comes to basically everywhere, I think. There is a pretty serious trading volume on liquid staking tokens right now and it's growing bigger month by month. So eventually, it'll be stupid not to waste them.

Anatoly (10:19):

FP, is that what you guys are most worried about or most working on? How do you get penetration across DeFi?

FP (10:26):

Yeah. I think so. Something that worries me is a lot of the protocols giving out emissions and the TVL is growing and all that. But I just wonder how much of it is organic growth because Stake Pools are very different from AMMs like ORCA or trading Texas, Mango where whereby in ORCA, they make their revenues from you doing stuff, from you trading or doing stuff. But in a stake pool, you want to do nothing. I mean, what we want our users is just literally put the SOL in us and just do nothing.

So it is a little bit of a different incentivization. And I wonder whether these incentives are sustainable, because look, if you're chasing the people who are farming short-term yield, these are not the people that you want in your stake pool anyway. You want people who are in it for the long haul. So I'm a little bit worried about this.

Ella (11:17):

Yeah. To piggyback off of that. I think something that's uniquely interesting for Stake Pools that is not true for staking to an individual validator is yes, you want them to just hold their stake tokens in your pool, but you also do want them to participate in the broader project. And what I mean by that is when you have of governance tokens, you have the ability to actually impact where the project will go. And you have the ability to be active in a way that you can't be, if you are, let's say, in CeFi buying an index fund from Vanguard. They're not going to ask you, "Hey, do you have opinions about where Vanguard should go next?" And I think similarly, if you're staking to an individual validator, like sure, they might be earning you great rewards. That's very important, obviously. But I think at some point, everybody gets to a point where they say, "Hey, more rewards would be great, but what I really want is a community."

And so I think Stake Pools that lean into this idea of, hey, we're going to give you this governance token, yes, hold your tokens. Do whatever you want on DeFi. But more than that, tell us what you want to see in the community and where you want the future of this project to go. I think that's a very unique power to Stake Pools that will organically grow. We just have to figure out how to market that in a way that's appealing to people who are institutional investors, retail investors, total crypto newbies, who don't even know what a Dow is. Don't know what governance tokens are, don't know what a stake pool is. So there's a lot of work to do there, but I think we have our work cut out for us because it lends itself to this very unique dynamic between all of the stakers.

Vasiliy (12:56):

The way I think about that is it will be a lot more market driven than participation in governance doing. People are usually who are staking as node operator and provided most of them, don't care to make governance decisions. You can actually look at how it will works with Cosmos and other proof stake blockchains, where governance is a part of staking. And you can see that most people don't vote apart from how they validate the votes, where they do.

They select basically a company that is aligned to them or maybe select the person that give them best returns. And then they don't take a look at governance usually. That's not true for all people, but that's a clear majority that delegates the governance power and it'll be pretty much the same with Stake Pools with liquid staking protocols. They won't be able to even to connect with most of the holders of the staking tokens, because they won't be like passionate enough to connect back, to understand what they want. So it'll be very indirect.

There will be staking pools that gouge some of the governance decision from stakers, but not from all of it. Not even from most of them, like from 10% of them, by volume and not by number. By number, it'll be like probably not 10% like about 0.1%, but they will take much more or maybe about the same pressure from protocols that uses staking token from the stakeholders in the blockchain ecosystem that don't use a liquid staking token by important like develop teams, develop clients and researchers as an ecosystem and stuff like that. And liquid staking pool will be a nexus of governance that will try to combine all this pressure in the single direction from stakers, from protocols, from major participants in the ecosystem.

Anatoly (14:58):

What is governance in a liquid stake pool? What is the function of it for the community that owns the token? What should they be looking at?

FP (15:08):

First and foremost, the delegation strategy. I think the community needs to decide the delegation strategy. I don't think this should be left to the founders or the creators of the stake pool. It should be democratized. I think another thing is fees. So I think the community should decide the fees that a stake pool should charge. And the last thing I would say is, we would like a lot of the associated infrastructure to be run by the community as well.

So for instance, the program, the upgrade authority is already given to the community. Treasury decisions are already given to the community, but there are still things like the front end or paying for a custom RPC note and things like that right now is centralized. And we would like that all to be on chain eventually. So I think that's all quite important.

Vasiliy (16:02):

My thought here is that the role of governance in a good liquid staking protocol is to drive itself to extinction. So it won't be easy or it won't be fast, but essentially liquid staking is walking in the outermost part of the security of the protocol. It touches the most important parts of the protocol like censorship, resistance, and decetralization and security and all of that. And if it gets a significant power in this parts and if it's not credibly neutral, it's like a great thing.

It should be credibly neutral and you can't be credibly neutral for long when your governance is overpowered. It's a natural thing for all governance to take too much power and use it in not a great way. So it basically has to, in order to be accepted by stakers and ecosystem as a ligand liquid stake protocol. The ligand part of staking, it should be self-depreciating to a point that where governance power are time locked and very light and mostly algorithm driven.

Anatoly (17:27):

This is interesting point because I think the goal of governance of a layer one is also to obsolete itself. Is how do we build the structures? And part of the reason of building out Stake Pools was because the foundation was running its own delegation program. And it really felt like why don't we get the community to do its own delegation programs. And then how do we get zero to one thing working, how do we now go want to earn? And that's always a way to disintermediate yourself from the governance work and then eliminate it all together. I think it's interesting that like inherently there isn't a drive to eliminate it from the community. We just want to push it out of the foundation and have you guys figure out what does that fine line between automation and having everything be programmatic to on chain governance?

Vasiliy (18:32):

Well, not yet. It's a work in progress. We are working on maybe systemizing the ways we can... What inputs do we have, is this programmatic governance, to understand where we can get the signal from, what we can use as a strong signal. We can't get rid of the governance entirely. We can just make it in a way that... Well, like I said, the role of governance in the mistaken is to take all this input from protocols and ecosystem and stakers and the outside water is large and fabricator of consensus out of it.

So part of this can be automated because we can have the signals in bits and bites and we can use algorithm to aggregate this signals into party of decision maybe. Right now, we're looking at stuff like what is objectively good characteristics of a node operator for example, for selecting node operator like up time and special risk and the reputation that is proxy by amount of stake can all the other protocols that they are staking.

And this is a strong signal. We can look at like time of operation within Lido, which is roughly correlate with reputation and outside Lido as well. We can look at stake as preference and the stake token can hold the preference to understand what they want, which is also a proxy for reputation, which I don't have. The things I don't have a good solution for getting into account, what people who run protocols think and what people who are major in the ecosystem think, because it's not directly correlated to a stake in stake pool. And we don't have a good way to get these signals yet, maybe ever.

Anatoly (20:29):

You guys like Lido and FP have two different approaches from what I can tell in terms of building out the validator set and the delegation strategy. FP, what are your thoughts on this? What are you guys driving most as the number one factor in selecting validators?

FP (20:48):

So I think it's important not to have a white list of validators because I think this is exclusionary. I think it's important not to dictate what fees validators should charge, because I think fees are only important in so far as they affect performance. So in some sense, we don't want to control validators. I think we shouldn't. We shouldn't dictate how validators... That being said, of course performance over time is very important. I think if not the most important. Yeah.

And the other thing I would say is, the decentralization, obviously we shouldn't be staking to nodes that are in the MSG, they have too much stake or nodes that are in one of the data centers that is in the MSG. So one of the top three data centers. But that being said, there also a middle ground. You don't want to spread your stake among, let's say, 600 validators, for example. And the reason why you don't want to do that is because then you can't make a meaningful difference in decentralization. You want of do want to reward validators that are doing well, that are also out of the security group. So yeah, I would say it's a bit of a balancing act here.

Anatoly (22:13):

Vasiliy, you guys have a totally different approach. I'm excited too, why did you guys come up with that system? And what is the Lido way?

Vasiliy (22:19):

To expand a bit on what the system is, we've got a wide list of node operator that run with Lido and charge the same commission and get the flat amount of reward. What the reason behind this, the whitelist selection is done by basically a peer review. We've got a lot of node operators, already validating Lido in different protocols in Ethereum, in Terra and now in Solana. And we have a submission process where people submit, they want to stake for Lido and we get the node operators. They took a look at them at the setup they have and historical performance in Solana and other blockchains, especially in Solana and stuff like that. And community participation and select that the next five or so participant of the whitelist when we need to expand.

The why we do that because we want to have good stake distribution that will be good for Solana and that's not the best, but it's easily achievable way to do that. Because that way we can guarantee that node operator are good because they're selected by the community of node operator essentially. And we can guarantee that they have enough stake to run the operations and have enough profit that say that. So they really want to keep this good business going. That's a good business for them. That's what they want to do. They are not arranged by scrap. They are paying their DevOps engineers handsome salary and stuff like that, so that they can afford to be honest.

It's not great in the sense that it's a process that allows us to select the distribution folks, but it doesn't allow people to come in fresh and grow. And that's not great. But as a temporary thing, when there is a good community of node operator that are just like not selected yet, it works, I think very well.

FP (24:36):

I think part of the reason why Lido does it is from what Vasiliy said, it's meant to make sure that the node operator are reliable and performant. And I would put forward that there's a very easy way to look and to see if a node operator is performing, just look at their API. So in some sense, I mean, I don't want to make any implications, but I believe this peer review process is a bit nepotistic. It's like if you're in our secret cabal and if we know you and and we like your DevOps engineers and blah, blah, blah, then will onboard you. Of course, that's not the case, but it's what it seems like.

Anatoly (25:15):

This is the most controversial Solana podcast we've ever had.

Vasiliy (25:21):

I wouldn't say that's not true. It really does not allow newcomers to come in easily because there is a community of node operator that been through thick and thin via market, like Greeks through this days, when we all worked like in the red four years, that was what happened. We used make way less money than we earned, like with P2P, which was a pretty big one even this time. Like I said, it's not great, with this process, we can't get in people who didn't build this reputation and track record and stuff.

What I don't agree with you that you can easily estimate how good is node operator, but looking at their performance, that's just not true. That's not how you estimate a node operator. You don't only evaluate performance. You also evaluate tailor risks. And tailor risks, you can't evaluate by performance. You should understand that these folks have bus factor of more than one. They don't have a single guy running all this stuff because if this guy gets sick, your validators get stuck.

You should understand that they will stay up at night when there is an upgrade. You should understand that if there is a via market, they will stay to the blockchains they're running and they don't all run on Hetzner. So because that's, at least used to be the easiest way to get APR is to run the same data center as everyone. That's how skip rates they used to work in Solana.

There is way more nuance in selecting a good set of node operator than just looking at performance. The geographical distribution, the jurisdiction distribution, the track record, other blockchains, which runs the reputation and community participation being in discord or running projects for Solana and stuff like that. There is way more stuff about node operator that is not easy to understand from just on chain metric. On chain metric is like the 20, 30% important stuff of choosing validator, because there are a lot of validators with good on chain metrics, but there are differentiated by stuff that is not seen by most people at all.

Ella (27:44):

I would say if somebody is staying up all night to make sure that their validator is running and they do restarts within the first five, 10 minutes, they're going to have better rewards. So I would say, it's more than 20%. I agree that being decentralized and being in data centers that are different from other people are doing community projects is super important. But I do think that rewards are a good proxy for how active the validator is actually running their node.

Vasiliy (28:13):

You can say that, that's a prerequisite. If you have good bad performance, you're not a good validator. That's true. That's not what makes your excellent node operator because excellent node operators run explorers, for example. And there are certs basically, for example. You can't say that this guy has the same performance cert, so they're as good. That's not true.

Ella (28:35):

But I mean, I would say there are maybe like 10 community members who run dashboards and different tooling. And I think there are way more than 10 stellar validators. So sometimes it's just not within their area of expertise. They could be excellent DevOps people and run validators across many blockchains, but they're not a web developer. That's just not their skillset, but I wouldn't say that they don't contribute to the community.

Vasiliy (29:01):

Yeah. What I'm saying just there is much more nuance, especially when you don't have 300 places for a node operator, you don't have enough money to pay them for 300 validators and you need to select 15 or 20 or 50.

Ella (29:18):

Unless a hundred million SOL gets stake to Stake Pools, then you can expand that list to 3,000 validators and everyone will be profitable.

Anatoly (29:26):

So this is the challenges. How do we grow the validator set? And it almost in my mind is like, you need both, you need people that are driving, we need higher quality. We need due to proof points that you know how to manage keys, but we also need people that are like, okay, just on board and figure it out and try it. Yeah. This is a tough problem. And I think part of the reason of not wanting the foundation to do it and push out this technology, a stake fulls is because we don't know. You guys are both sound very much validator operator focused, but these things like, I think are some form of financial, like DeFi application too. How much of your time are you thinking about like how these things actually work in DeFi?

Vasiliy (30:22):

I think I'd say a lot. That's what makes or breaks the liquid staking, the whole point of liquid staking is that it's liquid and usable in finance. I actually don't think a lot about a lot of time about node operator because I used to work here. I'm working as the staking provider since like 2020, early 2020. So I'm just have strong opinions because I do it right. But I have to think a lot about DeFi because that's uncharted, it's new.

FP (30:58):

So yeah. I mean, I think as Toly points out, I think the validator operator stuff is important, but really it really is just a baseline. And I think what we do with it next is the thing that's more important. So the question was, how do we think about how it's composed with DeFi? It's just the beginning. So right now what are the main things that you can do with your stake pool token? So you can put it in an AMM and provide liquidity that way, you can do lending and that's about it, I think.

I mean, there's lots of stuff you can do and you want to use the stake pool stake SOL in any occasion where you can use regular SOL. So whether it's just buying from a marketplace or doing some more exotic stuff, like options trading, that sort of stuff and not just putting it in liquidity pool or borrowing or lending or leverage yield farming. So yeah. I basically want to expand the ways in which stake pool tokens can be used. And I think that's going to be a big draw for people to start staking with us.

Anatoly (32:18):

How much work is it to get that adoption or to have a specific stake pool token used in a DeFi?

FP (32:27):

I think integration takes time. I mean, it really depends on the partner which you're integrating with. And I think some things just haven't been built out yet actually. So Ella and I have been talking about how we can use these stake pool tokens in the NFT marketplaces, for example. But none of this stuff has been built out. So, yeah. So we'll get that, but it's not there yet, I would say. So we have to build it.

Vasiliy (32:57):

There is two parts to the answer. One is how long does it take to build. The other is how long does it take to convince people to build? The first is, faster than usual for financial products in traditional finances, but still long because we know that shipping is hard and convincing is also can be pretty, pretty complicated. For example, we started the integration process on MiCA, I think in February this year. And we only now getting an executive at least take things on MiCA, I think around next week or so. That's how long it cost with MiCA. And it's very similar amounts of time with a major protocols on Ethereum that are by now pretty conservative. Solana is not conservative yet. Most of the protocols on Solana make fast and break things, move fast and break things. So I don't think it'll take like this long stake Solana tokens to be a major participant of DeFi, but it's still time.

Ella (34:12):

Yeah. I would say the technical integrations, they're not technically challenging, you're integrating an SPL token. So that part is pretty easy or not as challenging as you would imagine. I think in the early days, when the TVL was very small, it was maybe hard to convince platforms that they should care about this weird stake pool token thing. Now that TVL is close to $2 billion US dollars. They maybe will now take those meetings and be like, "Oh, okay. Yeah, let's integrate all the stake pool tokens."

And maybe whereas before they would have some liquidity requirements say, prove that users actually want this on our platform. Why should we spend the time integrating it? I think hopefully the script will flip and they'll be like, "Hey please, can we integrate your stake pool token?" But I think it just, realistically it takes a couple of months to get at that traction. And hopefully we have some momentum now and we can push forward more of those integrations.

Anatoly (35:08):

Is there kind of danger of liquidity being fractured between too many pools?

FP (35:14):

Hey, I seem to recall asking you this exact question on discord back in September, Toly. Yeah. I wondered this myself to be honest because I think there is a happy medium. You don't want one stake pool taking all of it because there are protocol risk there as it ends points out. Yeah. And if they fail it, that's dangerous. Well, on the other hand, it's going to be really difficult to integrate a hundred different stakes pools.

Although that being said, there are things we can do to mitigate it. One of which is to enforce some sort of standardization. So one good step would be, for example, to use the Solana reference recommendation instead of... Maybe it's too late now for some of the existing Stake Pools. But that being said we were talking about adapters. I don't know if you recall some sort of adapter, some sort of layer that makes sure that the Stake Pools can all interoperate with one another. I think that would be really good.

Vasiliy (36:14):

I think it's inevitable that a single representation of staked Solana to be the major player here. So that's basically Lido thesis and I'm seeing it play out in the Ethereum and in the LUNA and in the entire ecosystem. So I think it's going to happen. It doesn't necessarily mean that it'll be one stake pool, but the alternative here is just another layer of aggregation. One thing for example, was proposed by Michael from Curve where like basically a stable pool of multiple liquid staking tokens was used and LP token from this pool was proposed as a basically unit of account. I'm not sure that it will happen, but I am pretty sure that there will be one aggregate stake Solana token, that will take the majority of the market.

Anatoly (37:20):

I actually think that these things are far more fluid because it's all people based at the end of the day. And people will do promotions and get communities together and have fun or get excited about a thing that some innovation and you will see liquidity move from one thing to the other simply because it's exciting. And it feels like it's just a little too static for there to be only one token. This is not how normally people operate, but we'll see.

Yeah. It's at any given moment one winning token maybe is a better way to put it. So it doesn't mean there will be one token for eternity, but at any given moment, there will be a clear winner except maybe the moments of flipping that's how I see it.

FP (38:14):

So I worry a little bit about that actually. I worry because we talk about increasing decentralization. And that was the reason why Stake Pools were created in the first place. And it's true that if you have one stake pool controlling all the stake, that solves a particular kind of centralization, Nakamoto coefficient. But then it introduces a new kind of centralization. And maybe there are risks that can be mitigated that way, but still this worries me a little bit. So I'd rather have an ecosystem with a good number of different Stake Pools.

Ella (38:51):

That's where the education piece comes in. You got to let your delegators know the importance of censorship resistance and decentralization so if there is a sexy new aggregated stake pool token, they don't just gravitate towards it because it looks good without thinking about the consequences of that.

Anatoly (39:09):

But the yields are so high.

Vasiliy (39:15):

I don't like the dynamic at all, that there will be one lean stake token, but I think it's inevitable. And what we can do is not oppose it, but we can build protocols that will be a net good for the system anyway, even if this happens, hence the self depreciate of governance and in liquid stake and stuff like that, that's all flowing from there.

Ella (39:40):

I wouldn't say I'm oppose to it, I think in an instance where you have 10 really small stake pool operators, let's say universities decide, hey, we want to run the Yale stake pool and the UDab stake pool. And they have very fragmented liquidity. I think it makes total sense for there to be an aggregated university stake pool token, support university students help them get their pizza and ramen. Great. That's a fun way to do it. But that's a very specific use case where you're trying to make sure liquidity isn't fragmented.

But I think every stake pool today has more than 600,000 sold deposited into it Solana. So I wouldn't say that's a huge fragmentation. It seems like people have chosen the pool that they like and they're happy with the performance, with the project. And that's the one that they picked. And so I don't know that they would be attracted to something that tries to average everything out and is just a generic token, but I could be wrong.

Vasiliy (40:38):

Yeah. It's so very interesting to see the play out.

Anatoly (40:40):

So are you guys worried about if these are used collateral, like liquidations rapidly moving stake from the lenders to the people collecting to the traders, is that going to change the dynamic of the makeup of who controls the network over the long-term?

Vasiliy (41:05):

Not reallY. How I've seen it work by, in liquidation that happened in Terra and similar ones that there were not exactly strictly liquidation, but more of fire sale events in Ethereum when the price of weather went down and people were going out of stake teeth as well. The dynamics here is that people who have low time preference are selling at low prices and people who have higher time preference, they are buying. So then they went of the liquidation, the price goes down and people with more foresight and more patience are getting the discounted stake token. So if anything, that looks like stake token getting in the hands that smarter and are in for a longer game, usually. So not always the case, but very much looks like this.

FP (42:05):

I don't know. I mean, that being said, when you have all these incentive programs and emissions coming out. That doesn't that see to incentivize people who jump around pools, trying to find the best ones. And they're getting rewarded by lots of governance tokens at the end of the day. So what do we think about that?

Vasiliy (42:25):

I don't think that it's something to really think about, I don't know. Jumping around and getting this governance tokens and it is a natural way to get some money for people who like money. I don't know. That's not a bad thing. If you like some juicer smart contract risks and rockeries in your life, that's a very exciting way to spend time.

Anatoly (42:55):

Yeah. There is I think a danger, but I don't know how big it is in that normally for like a validator to receive more stake, the best they can really do is offer 0% commission and then they can start bribing people. And it's hard to bribe people, but with liquid staking, it's a lot easier. You can just simply say, when you stake with this pool, you get so many more rewards than you do anywhere else, because you can min this new reward token. And is that a dangerous, scary thing that could result with a third or more of the stake, all moving towards this hot, shiny thing? I don't know.

This is the part of where I think it's very critical for DeFi to mature and to have real analysts and people analyzing these things and looking deep and giving a ton of pushback on things that look a little fishy. It naturally happens, but only happens on crypto Twitter and still so much stuff sneaks through.

Anatoly (44:06):

So we'll see what happens, but thank you guys for joining. Super excited to have this actually being live now and making so much headway and growing so rapidly. Honestly, if we actually get to a point where DeFi is incentivizing censorship resistance, we're kind of done. We built it. We can actually take a break. So I'm looking forward to that.

FP (44:41):

Is that the biggest concern for you as a creator of the layer one, the increasing this decentralization, would you say that's the biggest concern?

Anatoly (44:49):

Yeah. This is the thing that I'm most worried about, because I think to do it in a sustainable way, it means that you need to have a use case which benefits from decentralization. You need to have external users that have a benefit that exceeds the cost of running the network. It can't just be self-sustaining tokens moving around. So to truly succeed there means that, we build something useful to the world. And that's the ultimate goal.

What else are you an engineer if not to build something useful? If that's what you care about, then you should be an artist and that's a totally different thing. Yeah. Awesome to chat with you guys. Thank you for being on the show and thank you for all the hard work everyone is doing, Ella, Vasiliy, FP. Just thank you guys.

FP (45:48):

Thank you so much for having us today.

Vasiliy (45:49):

Thank you.

Ella (45:49):

Thank you.

Dec 14, 2021
Gateways to Public Blockchains Ep #56

Live from Breakpoint 2021, Ali Yahya (a16z) moderates a discussion about wallets, custody and the User Control Layer with Brandon Millman (Phantom), Filip Dragoslavic (Solrise) and Maria Phillips (Slope Finance).


00:10 - Intro

02:32 - Custodial vs. Non-custodial models for keys holding

07:11 - Education is key

11:37 - Building on top of user-controlled layers

16:48 - Unbundling Wallets

20:04 - Mobile vs. Desktop


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Ali (00:10):

All right, welcome everyone. So today we have a great panel to talk about the user control layer. So everything that has to do with UX, interfaces, wallets, how people use their private keys to interact with blockchains, and how all of that plays into web 3.0, and the things that are being built in DeFi, NFTs, et cetera. And we've got only 20 minutes, unfortunately, which is an egregiously short period of time to cover such a meaty topic, but excited for it. It's going to be a great conversation. I'm going to start by letting our panelists, maybe introduce themselves. Maybe one minute kind of introduction, and then we can dive in. Does that sound good?

Filip (00:50):

That sounds good. I'm Filip from Solflare. We actually built the first wallet on solana. That was actually before magnet, July last year. And Solflare was the first taking wallet, and right now we have over 20% of solana circling supplies stake through Solflare, and we are expanding onto all platforms. We have a web browser, we have a browser extension. We just launched mobile on Friday. And we are just looking to give all our users the opportunity to access Solflare from whichever platform they want to. And that's what we're all about.

Brandon (01:37):

Hey, everyone, I'm, I'm Brandon Millman. I'm the CEO and co-founder of Phantom. Just got started back in May, and it's just been such an awesome journey. I just wanted to say thanks to everyone in the audience and listening back at home for helping support us on this journey, and to hit 1 million users recently. Each and one of you are one in a million to me, so really appreciate it.

Maria (02:03):

Hi everyone. I'm Maria Phillips with Slope Finance, I'm head of communications. Slope Finance was the first mobile wallet on solana and we have over 150,000 downloads and an MAU of 95%. We are mobile first. Yeah, fantastic. Delighted to be here today.

Ali (02:23):

Amazing. Well, thank you guys. Well, let's start with, I think one of the basic questions about how user interfaces should interact with a blockchain. And that is the question of whether the keys should be held by the user, or if those keys should be held, or might be held by a company in the middle, like say a company like Coinbase or a company like that, where that would be kind of a custodial model versus having things being non-custodial and sitting at the edges. And I think we all kind of know what the ethos of this space is, but of course there are many trade offs. And so I'm curious to talk through how you guys think about those trade offs, and what are the kinds of things that we can do to empower the user as much as we possibly can.

Filip (03:04):

There's two different approaches like custodial and noncustodial. Noncustodial is in a true spirit of crypto where you actually control the keys. You control their finances and no one can actually take it away from you. I talked to someone from Algeria and he told me how important that is for them.

Ali (03:24):


Filip (03:25):

Since I don't live in a country like that, I didn't know that's so important for them because at one point in time, someone can actually get something from the bank account, they lose everything. But on the other hand, all people are actually used to, don't have that responsibility of just holding all their finances with them. So we have bank accounts, we trust banks with our money and it's going to be a long road to educate old people, to get from the custodial to the non-custodial thing. And I don't think that it's ever going to happen in a big way, but as all crypto people here are, we are like early adopters and we want to try new things, but the vast majority will always stay non-custodial. And there's always going to be those two approaches.

Ali (04:19):

Yeah. Makes sense. What do you think, Brandon?

Brandon (04:22):

Yeah, I'll start off by saying that at Phantom, our goal is to make the decentralized web safe and easy to use for everyone. And you know, what that means is expanding past like the very small number of users we have now to tens of millions and billions in the future. But you know, the thing is that giving private keys directly to users, is sort of akin to giving them keys to like a super car Ferrari, it's like super powerful, but not everyone needs all that power. And I'll say, actually, I think there's actually more than just this dichotomy of like non-custodial and custodial. It is actually a bit of a range of different techniques that are kind of somewhat in the middle. So I think there's things like social recovery, multi-party computation, premier secret sharing, tourists, those sort of things. And I think all of those techniques have not really been given the chance to really been taken to their like full extent. So yeah, we're really excited to kind of explore a lot of those options and sort of bring more custodial flavor, to non custodial tools.

Maria (05:32):

When we look at our user base, okay, number one, India, number two, US and number three, Malaysia. Everyone of our customers really are accessing via mobile, and that onboarding, and that access is a huge concern to us to make it as easy as possible. So we are looking at different innovations in this space. And especially because we're looking at being the gateway from web 2.0 to web 3.0, and being able to link activities in decentralized identity is what we're calling it. Being able to identify people in specific ways, according to their activities. And hopefully we're going to use that to lower the access and entry barrier for our customers to make it as easy as possible. And a better experience

Filip (06:16):

Just wanted to add that actually education is so important and just getting people to know how crypto actually works and why is it so good for them? That's actually one of the things that, what we actually launched our sulfur academy. So we have blogs and guides to capture the users and tell them, okay, this is how works. Because there's a lot of scams out there. I mean, we both know that because before we actually launched mobile, we have caught three fake wallets. We actually met one of the developers who made those fake wallets reached out to us. And told us, oh, I'm so happy that you're using our wallet at the wallet that I made. And he was actually commissioned by someone else to produce fake wallets for Solflare and Phantom. So that was mind blown to us. He felt so bad, but he didn't know that. And so education is key actually to preventing users, for getting scammed and actually get so burnt that they say, oh, okay, all crypto is a scam. So that's why...

Ali (07:22):

I think this point of education is really good because I think there are two philosophies in this space. One of them is crypto wants to be seen. This is a line from Cavan, who's a founder of foundation. And his view is over time, people should become aware of what crypto is. People should become aware of the way that private keys work. They should become aware of the fact that holding your own private key is very different than signing into a web 2.0 service. And that's one philosophy that these things will become front and center. And that education will be a big piece of this and that you actually, as an application developer, should not be trying to hide it away, right. That you should not be trying to fully abstract it such that the user actually does not know anymore that they're interacting with a blockchain.

Ali (08:05):

And then a different philosophy would be more like a product and a very pragmatic point of view, which is people have a very hard time understanding how all of this works. And so instead, what you should do is you should abstract it away. You should make it look as much like a web 2.0 thing as possible, so that you can get people on board. And then over time, maybe you shift towards a more kind of web 3.0 native user pattern. And those are two very different ways of building a product. And I'm curious how you guys think about that. I mean, your point about education, how do you think about education?

Filip (08:38):

Yeah, I think educating users is actually the key to it. I mean, they don't need to know like 90% of it.

Ali (08:45):


Filip (08:45):

It's totally fine if they do the very basics and if they interact with, for example, much more complicated protocols, they don't need to know what goes on in the background.

Ali (08:55):


Filip (08:55):

But they need to know when the app says, okay, you're now signing a transaction, what end means on the blockchain. And this is the only thing that they should know. And we should actually push as an industry, users to educate themselves just in those basics.

Brandon (09:15):

I feel like none of us here really know what the final conclusion of all of this web 3.0 tech is really going to look like. And I think we're just so early in the vast majority of people who are going to use these centralized technologies have not really used it yet.

Ali (09:30):


Brandon (09:30):

But I agree. User education is super important. Support is another thing that we've seen that's super important. Unfortunately, the status quo nowadays is to kind of throw everyone into this zoo of a discord and let whatever happen. And unfortunately, a lot of projects basically just turn a blind eye to what happens in there. All these scams happen, people get DMed and whatever. So yeah, I think we really all need to take a much more user focused approach, not just in the applications themselves, but in, around just all of the surrounding infrastructure, support, education, et cetera.

Ali (10:06):


Maria (10:07):

Financial literacy and traditional financial services isn't great either to be honest.

Ali (10:11):


Maria (10:12):

But I do see this whole e-commerce space that we're involved in and looking at, I think that is a way to bring people into the space to understand it better.

Ali (10:20):


Maria (10:21):

If they start using cryptocurrencies or if they start using this in their normal daily shopping or activities, this is a way for them to understand that it's safe. You know, I paid for something, I got it. Yay. This is good. That's a real great way for them to understand and onboard in a really low level way, but get there.

Ali (10:41):


Filip (10:42):

I just wanted to touch on the topic that Brandon actually mentioned, with support. We both did in our discords, people get scammed and stuff like that. So we tried everything. So we take this try and see what works approach. So we tried with telegram, we tried with discord. Yep. But people always get scammed. So I think we're launching periods to our live chat support on the website, but it's always like this fine line of, okay, how do you actually provide the users the best experience, but that they also feel still completely anonymous. It all depends on that fine line, and we need to see what works best actually.

Ali (11:22):

Completely. Well I think this actually segues well into how a user control layer application like a wallet or other kind of applications at that layer enable developers to build on top of them. Right. And I think that there's another kind of spectrum of different schools of thought or different approaches in that world as well, where you can think of meta mask or the kind of wallet that is very un-opinionated about how developers build things on top, as being on one end of the spectrum where you can really just sign anything using meta mass, you can sign just a binary blob because it doesn't provide you with very much context as to what it is that you're doing. And it's really on the developer to inform you as to what you're signing actually is.

Ali (12:18):

And then on the other end of the spectrum, can be much more opinionated about how the wallet integrates with specific applications, such that the wallet itself, the team who builds the wallet itself might integrate directly with a protocol that does lending. One example on ethereum world would be compound, you integrate with compound directly. And then there's a whole spectrum in the middle where a wallet could provide the tools for developers to build applications for it that are standard. And that give a little bit more structure and context for what that integration should look like, but it's not done by the team itself. And it enables an ecosystem to kind of emerge, to improve what the user experience might look like by enabling them to do things in a way that's more structured. So I think we need certain standards that help us build these applications in a way that are intuitive. And I'm curious how you guys think about this factor, or if you agree with it and, and where you guys kind of land on it philosophically.

Brandon (13:19):

Sure. Yeah. I can lead. Again, I'll preface everything by saying that we're in this mass experimentation phase where a lot of things are still being figured out. That being said, I feel like some of the walls that you've alluded to that have done more plugin type architecture. So namely origin, I feel like have sort of been left in the past a little bit, just because they were not really able to keep up with the explosion of all of these permissionless daps.

Ali (13:50):


Brandon (13:51):

And, therefore were not really able to sort of participate in the network effect that gets created between daps and the users of those wallets. And so our opinion right now is to keep it very permissionless. Keep the current model going, as it has a lot of momentum and all of that. But again, that being said, I feel like we still have yet to see the final conclusion of all this, so things are always changing

Filip (14:19):

There's different trade offs between both approaches because if you integrated directly into the wallet, so firstly, the UX is going to be way better. And you could actually provide safe haven for all those new users because the permissionless world is the wild west. So you have like five great applications, you have five applications that will actually scam your money, so you could actually protect them. But on the other hand, you actually are gate keeping with your wallet. So this is why the panel is called whole user control layer. So the wallet actually dictates to which application the user can actually connect. And this may not always be in the best interest of the user because maybe that wallet has, for example, a business model with the dap that they have. So this is one part of it, in a permissionless system, the other thing applies.

Filip (15:22):

So there's inherent risk. And if we're going that way, then we need to go back to the previous topic and that is education. So if we educate them, then it's completely fine to do as permissionless because they know what they're doing. But if there's a big influx of new users who are just coming into the space, wanting to experience something and they want to do it quickly without educating themselves, we're in a really tough spot with permissionless systems. But as Brandon pointed out, we're so early, we don't know which way is actually going to work best. So I think there will be wallets with different approaches and we'll see which one is going to be the most successful one, which the users will actually choose that perspective.

Ali (16:10):

Completely. Do you want to add something Maria?

Maria (16:12):

Yeah. We have integrated with over 80 daps, but we're very lucky, we have 35 engineers, and we've created a standardized way for them to come to us and work with us and partner. So that's been fantastic and it grows, our list is growing, we're meeting people here, so happy to connect.

Ali (16:29):

And Maria are those integrations integrations that the team has pushed forward, or are those collaborations with the teams, or I'm curious how they end up working.

Maria (16:40):

It's collaborative. Yeah. Yeah. We absolutely work with them and make sure that they integrate with us seamlessly.

Ali (16:46):

I think an interesting question that also duck tails with what we're talking about here, with respect to integrations, is whether it's possible to kind of unbundle what a wallet is. And I mean, there are kind of standards out there that are being pioneered to things like wallet connect and I'm curious how you guys think of what the actual kind of user controls layer looks like. What are the various different components? What are the roles of that piece of the stack and how you think about what you're doing plays with that?

Brandon (17:20):

The wallet is actually, in its current form, a very complicated multifaceted product. So there's so many different parts. So not only in the app and outside of it. So inside the app, there's things like key management, there's things that people expect, like being able to do everything that you expect from your tokens.

Ali (17:39):


Brandon (17:40):

And if view, NFTs, swap tokens, like interact with daps and all that. And so it is a very challenging thing to juggle all of those things at once, especially in such a fast moving environment. And I think we're already seeing those sort of things, getting unbundled with like NFT viewing specific daps and daps that are more geared towards very fine gain grain control of your token accounts and things like that. And so I could see a world where they get unbundled, but I could also see a world where someone's kind of able to solve all those things, and under one umbrella,

Filip (18:26):

That's an interesting question. So it's basically the WeChat and other things. So is it a super app that can do everything?

Ali (18:34):


Filip (18:34):

Or is it an app that does one specific thing and then lets you connect to others? I think a really interesting approach is actually to have that super app, but in a light version. So you, the let the users do very basic operations with NFTs, with SPL tokens, with whatever they want to, because the space is evolving so fast, user demand is shifting from one week to the other and if a wallet can end up fast enough, then they could provide them those basic functionalities. But if they want to do some really heavy, deep stuff, then it's almost certainly going to be unbundled because you can't have 50 different integrations, fully integrated into the app. This just becomes exploded at one point. Especially on mobile. Dap is doable.

Ali (19:35):


Filip (19:35):

But mobile, when you're limited with space, it's going to be almost impossible.

Ali (19:42):


Maria (19:43):

For us, it's the super app approach. We love to keep our customers internally within the app. And you know, we do everything from activities, news, ranking centrally in the app. That's what we're trying to do, and it keeps our open rate really high as well.

Ali (19:59):

Yeah. Well, in a related question, which you alluded to is the question of mobile versus desktop and how the patterns of usage of web 3.0 and crypto might evolve and what might become the dominant vector for using keys for interacting with web 3.0 apps. What are your thoughts? How do you guys think that this will evolve?

Brandon (20:20):

Yeah, it's interesting. Because I feel like web 3.0 on mobile in more recent memory has had a hard time sort of getting started.

Ali (20:30):


Brandon (20:30):

And I think it's actually a function of the user base that has been using blockchain apps for the past couple years, which it has been more of like this prosumer DeFi type of user that prefers using complex DeFi apps on desktop. But what we're seeing now, I think is a couple paradigm shifts that are really setting the stage up for mobile. So first is this kind of new cohort of users that is much more NFT focused, and therefore a lot more casual. And so I think those people actually expect a really polished mobile experience. So I think that's one paradigm shift that's happening. And the second one is why we're all here today, is scalable and cheap blockchains, which their nature actually lends themselves much, much better to a mobile environment. So I think those two things are actually setting us up for the sort of new age of like web 3.0 on mobile. Which I think was not as tenable as before.

Maria (21:37):

Well for us, it's definitely mobile. Okay. We do have a Chrome extension as well, but for our customers, they don't really have laptops. It's very much mobile and that's their experience and how they onboard and how they continue to access. So it's definitely mobile for Slope.

Filip (21:53):

I'll go back to the last point and I'd say, it's going to be mixed. So you're going to do complex operations on a desktop, most certainly because mobile won't have the ability to provide them, but I see actually mobile and mobile wallet as your signing device for everything. When you connect to your desktop application, you just sign it with mobile. So because it's much more secure on mobile. I can't imagine myself, I can't imagine a lot of people actually, I don't know, sitting on a couch with a laptop open and browsing NFTs, as opposed to just sitting on a couch and browsing NFTs from their mobile app.

Ali (22:38):

Yeah. Yeah.

Filip (22:39):

And buying, selling. I want to connect to radio and harvest my farm in the morning from mobile. I don't want to do it from a desktop, open the desktop, type in radio, something like that.

Ali (22:51):

Yeah, it does feel as like, as web 3.0 begins to intersect more with a consumer world, mobile becomes increasingly more important as a result.

Filip (23:01):

Completely. Especially with NFTs.

Ali (23:03):


Filip (23:05):

Because NFTs and games in particular, so all those web 3.0 games are going to provide a huge user base, actually that is younger, the opportunity to experience crypto. And then you need a mobile wallet because all those mobile games will need a wallet.

Ali (23:20):

Of course.

Filip (23:21):

Unless they integrate one themselves, but talking to a lot of them, they don't want that responsibility because it's actually hard to build a wallet and maintain a wallet for it to be safe and secure for all users.

Ali (23:33):

Completely agreed. All right. Well, I think this is a good point to wrap the conversation. Thank you very much for joining us. This was awesome. This was awesome.

Dec 07, 2021
Scalability and Cross-Chain Bridges Ep #55

Live from Breakpoint 2021, Austin Federa (Solana Labs) moderates a discussion about the transfer layer and cross-chain bridges with Hendrik Hofstadt (Jump Crypto), Bryan Pellegrino (LayerZero), Alex Smirnov (deBridge) and Andriy Velykyy (


00:10 - Intro

02:50 - The importance of bridges not relying on Trust

04:28 - Moving wrapped assets

12:00 - Capital Efficiency of Bridges

14:02 -  Future of bridges

16:28 - Integration of bridges


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Austin (00:10):

All right. Welcome guys. We're here to talk today about the transfer layer, scalability, cross chain bridging, the technical problems, the operational problem, the UX problems. This is just a panel of problems today, but it's also a panel on opportunities. We've seen a huge amount bridge over between other protocols in solana between other protocols and other protocols. We think of bridges as something new, but bridges are how DeFi has used Bitcoin as collateral for quite a long time at this point. It's kind of funny to think about how this started as we're taking an asset that's considered quite stable and solid that has no smart contract ability and being able to use that in Ethereum and that early day work really set the stage for, I think, a lot of what we're seeing today.

Austin (00:55):

But bridges go far beyond just this idea of how do I move something from chain A to chain B. There's roles in them as being decentralized ways to pass messages between different chains. There's a role for them in making users feel safe about trading across chains, and there's a role about them, about creating an exit ramp too. So that if you do something like buy an NFT for $69 million, you're not dependent on one chain to hold that. There's an ability migrate in a decentralized and trustless way. So we're getting into a bunch of that today. I'd say, let's just go ahead down the line and give a quick introduce to yourself and your project.

Hendrik (01:31):

Sure. I'm Hendrick. I'm with Jump Crypto and as Jump Crypto we're core contributors to Wormhole, which is a cross chain messaging protocol, connecting high value chains. And message passing in this sense means anything can flow between these high value chains, meaning assets and data. So your coins, NFTs, but also governance decisions and more information like as a base layer for developers to build on top of.

Bryan (01:54):

Bryan from LayerZero. Our focus is purely generic messaging interop. High level is connect every contract on every chain to every contract on every other chain.

Alex (02:05):

Hi everyone. My name is Alex Smirnoff and I'm co-founder of the deBridge Protocol, which is cross chain interoperability and liquidity transfer protocol. So the protocol itself allows to breach any arbitrary assets or data between any blockchains including solana of course, down the road.

Andriy (02:23):

Hi I'm Andriy from Allbridge, I'm a co-founder there. We currently support seven blockchains, and I hope that this number would increase to 12 by the end of the year. We started in July and since July, we bridged to solana one point half billion worth of assets.

Austin (02:44):

It's great to see. So I want to start out with just a level set question and Andriy, we'll start with you. Why is it important for a bridge to not rely on trust?

Andriy (02:54):

You see, when we speak about trusted bridges and trustless bridges, and that is the question, I suppose?

Austin (03:00):


Andriy (03:01):

We have to consider that while we all here are building decentralized future, which should be completely trustless, in my personal opinion, sometimes we may sacrifice some layer of some level of decentralization to provide faster and better user experience. Because we are, in the end of the day, we are limited by the technology. And I have been thinking a lot about that because in the very end, we are building for our users and we want to create the product that would be used and used easily. And when we, in some cases, add too much of decentralization, that can affect user experience in a bad way. And this is something that we should consider as the owners of the business. So it is not so simple. I mean, as I said in the very beginning, I'm like a hundred percent over decentralization. I'm just saying, let's not forget about users. They going to use other product in the end of the day.

Austin (04:08):

Sure. So Bryan, when you're looking at something like this, is it possible... We talk about bridges, but these are more than just bridges. It's not like you're just, you take a bridge on a car, you're over the bridge, you're done, if the bridge falls down next week, you're still fine. You've gone over the bridge. But there's a different relationship here when we're moving wrapped assets. Can you talk a little bit about how users manage that and how you're thinking about that?

Bryan (04:33):

Yeah, I mean, I think that is the case when you do use wrapped assets, but I think wrapped assets are... You're always going to need wrapped assets for the primary chains. Because it's not like Ethereum can deploy a contract to mint Eth anywhere. But when you're talking about projects, Aave, Curve, like MIM, all these things, you're getting as projects move more and more to multiple chains, they're starting to deploy their token more and more on multiple chains and you have the ability to actually use native assets. So you can swap a real MIM for a real MIM rather than having four different bridges, which have four different versions of wrapped MIM coming in. And so I do think it's important to realize that over time the expectation should be that we do move away from wrapped assets. I don't think wrapped assets have to be the future for every project.

Bryan (05:14):

We've done it because we have something that's interesting on one chain and we want to create a synthetic on another chain, but these projects are starting to deploy wider and you will see much more of their own native. And especially when you have something, whether it's rebalancing or something like xSUSHI or [inaudible 00:05:32] any of these things. It's very important when you're getting a wrapped asset, you're getting like a Vanilla ERC20 equivalent where there is none of that and it creates a lot of issues. So I do think it's important to realize that move moving forward we will likely see or want to see native assets much more than wrapped assets.

Austin (05:46):


Alex (05:48):

[crosstalk 00:05:48] I can adhere that wrapped assets is only kind of a gateway to get into the asset that user wants to get in because eventually cross chain interoperability will be all about the user experience. As a user, I don't want to know what is bridged at all. I just want to open my wallet like Fantom or MetaMask, I want to swap from one asset to another. And I don't care whether it went through wrapped asset or through some liquidity pools. I just want to receive the desired asset in the target chain. So I truly believe that eventually bridges will be kind of TCP/IP. What TCP/IP did for internet. So that's what true cross chain interoperability protocol will do for the internet of blockchain. So it's all about delivering of the user experience and yeah, the only point of interaction between user and DeFi will be the wallet or like decentralized applications, like 1inch or ParaSwap.

Austin (06:42):

Yeah. Yeah. No, I'm going to push you a little bit on that because every step in the wrapping process is a point of either failure or a point of trust. You could have Bitcoin that was originally wrapped onto Ethereum that's moved to Polygon, that's moved to solana, that's moved to Binance Smart Chain, that's moved back to solana. How do you simplify that chain of custody experience for a user? And how much should users actually care about that?

Alex (07:08):

I believe that users do not care about that. I mean the regular user. And as a wrapped asset, for example, what we do at deBridge, we have a wrapped asset in different blockchains, but if you bridge from the secondary chain to the secondary chain, so you basically burn the wrapped asset in one blockchain and you mint it in another. And of course there's kind of a additional risk of the consensus algorithm of the specific blockchain, but that the risk that user takes, because he know that he's going to bridge this asset to this blockchain and in case something will happen, like with the consensus algorithm in this specific blockchain, it's just the kind of collateral in this specific blockchain will be drawn. And that's the risk that user takes.

Bryan (07:49):

Yeah, I think the user doesn't care until something goes horribly wrong. And then the user cares a lot generally, but definitely.

Austin (07:56):

Do you think wrapped assets should trade a discount?

Bryan (07:59):

That's a good question.

Alex (08:00):

Of course not, I think.

Bryan (08:03):

I mean, there's some inherent risk depending on the wrapping mechanism. And I think likely over time, you could see that. I think demand right now, the value of a wrapped Bitcoin is... Well, all right. I don't want to trigger a lot of people, but you can generate yield on a wrapped Bitcoin that you can't generate in an actual Bitcoin. So there's actually maybe the argument that the wrapped asset should trade at a premium rather than a discount, but... [crosstalk 00:08:24].

Austin (08:24):

I love it.

Bryan (08:24):

I'll leave it there.

Austin (08:25):

I love it.

Hendrik (08:26):

I think the core assumption below that is really that notion of trust because that's essentially what the bridge establishes. The bridge establishes trust between chains that can't verify each other, or can't [inaudible 00:08:37] yet like verifying and proof of work chain, verifying different consensus mechanisms, all of these. In order to verify or establish trust between these chains, there's complex mechanisms that differ between any kind of chain. And I think that's what we all essentially bridge in the beginning at the very base layer. We establish trust between these chains and of all bridges I think the most important aspect should be establishing that trust and making sure that the bridge is going to be alive and the bridge is going to be secure.

Hendrik (09:06):

So the notion of [inaudible 00:09:09] and safety as the core properties of the bridges and then applications being built on top, but relying on this core aspect. And the risk that sits at this core protocol then trickles down into the applications built on top of the bridge, eventually wrapped assets. And that's where you could apply risk discount to wrapped assets. But that would hopefully be as small as possible if we all do our jobs right.

Andriy (09:32):

There is one more thing to that, like combining trust to the bridges and what we discussed before about the wrapped assets. So let's say we have an asset coming from Ether to Polygon. So it's being wrapped issued on Polygon. From Polygon we take this asset and rewrap it on solana. Then on solana, this asset, I'm speaking from experience, it's get on Saber our partners converted to the native asset on solana. So for user it is one seamless flow. It is good. It is all under the hood. But for us, it is sometimes scary because ultimately that means that bridges should trust each other. Because a point of failure before the assets come to my bridge can essentially affect my performance as well.

Andriy (10:19):

And it would not be my security problem. It would be problem of other bridge, but I will end up with the wrapped asset that is locked on my bridge, which due to the [inaudible 00:10:30] or something, it costs zero. So what should I do? And this is, again, the question, how can bridge trust each other? What should be the protocol? What can be the thing to unite us and resolve this issue?

Alex (10:42):

But that there is that liquidity providers actually [inaudible 00:10:46]. So it's not about like cooperation between bridges, but more like whether users are able to swap from like wrapped asset to any other asset within these specific ecosystem or like solana or Polygon, whatever. So, yeah, basically when liquidity providers provide liquidity in pair of like wrapped asset pair with a, for example, most liquid asset of these specific blockchain, they trust to bridge and they should kind of believe that bridge is truly the decentralized and trustless.

Alex (11:12):

So users do not bear so much risk, in fact. The risk is mostly on liquidity providers, but the question interoperability is not only about the swaps. First of all, it's all about the delivering of arbitrary messagings or arbitrary call data. Because what I personally would like to see is when protocols on Ethereum could be kind of composable with the protocols on Polygon. So let's say algorithmic stable coin on Ethereum opens up position on the Mango Markets to maintain its [inaudible 00:11:45]. And that would be awesome. And in order to accomplish that, we need to have truly decentralized channels to deliver messages between cross chains.

Austin (11:54):

Yeah. So Hendrik, you guys have been doing a little bit of work on that. I want to ask you two questions. The first is on the capital efficiency of bridges. And the second is on use cases for bridges that are not just assets.

Hendrik (12:04):

Yeah. I mean, right now, if we just look at the wrapped assets, I would say, of course they are in a sense capital efficient, but there could be more. Like there have been people talking about increasing capital efficiency by using the capital on the one side where it's locked into the bridging contract and then also using the wrapped asset on the other side. So essentially double yielding and double earning. I think that is something that is interesting, but I think that should live, obviously, above the base trust layer of the bridge. But this is something that is certainly interesting. But then when you're talking about should wrapped assets trade at a discount, you involve even more smart contract risk. You layer risk, risk, risk on top of each other. And they're the point of view X comes in that we've approached a couple times here.

Hendrik (12:50):

How does a user understand who they need to trust when I use this wrapped asset, when I use this bridge, when I use cross chain lending. And I think right now the user experiences do not really do that well. I think we've got a lot of work to do in educating users, giving them a reliable risk score, and then we can tap into these pools. But before, and especially as everything's moving so quickly, I'm kind of afraid in tapping into that. But as long as users are getting educated that this is happening, I mean, the bridges already allow that in a sense. Like for example, the Wormhole has message passing and you can add new layers on top, as we said, it's kind of like the TCP/IP layer. You can build a protocol that is more capital efficient on top of it and launch it today.

Austin (13:37):

Yeah. So let's talk for a second about that component of both moving things like NFTs and enabling protocols that are now moving cross chain. Something like Lido, which now exists in multiple chains, multiple layer ones. How is that communication being managed for something like that? And as a broad concept, not Lido specifically. And then what is the role of a bridge? Is that the right analogy to think of for something passing messages back and forth?

Bryan (14:01):

I also just want to chime in real quick and say that one of the things everybody right now is... Because you said you wanted to kind of touch on future. And I feel like everybody right now is focused on an individual coming like one user coming and wanting to bridge their assets from chain A to chain B. But my very firm belief is that in the future, 12 months from now, whatever, 95% of bridging is going to be driven by applications and not by users. Users will come and they'll use a Uniswap or they'll use whatever it may be that they're going cross chain and they'll be completely abstracted away from the bridging process. So it's not going to be driven by an individual user coming and saying, "Oh yeah, I'm doing this bridge. I'm accepting this risk, et cetera." It's going to be, how can you integrate that into an actual UI that's functional and makes sense. And the application is comfortable with whatever the trust assumptions are, if there are any, and yeah.

Austin (14:48):

Yep. So you see that layer moving from something that's more user facing, like a Venmo style experience, to something that's more like an interbank transfer.

Bryan (14:56):

I mean, I think the user, whether it's lending or whether it's swapping right now, I think the process is not going to be that you do some action in a protocol on chain A. You leave, you grab a bridge, maybe you have to jump through another chain and then another bridge and then like you go do something on the other thing. It's taken an hour, you've paid seven fees and switched wallets and got native gas. Like that just can't be the way that's going to happen. The user's going to sit in an application, do a transfer, and something is going to happen on the other chain. I think, everybody's sort of talking about that process of triggering arbitrary messaging on the other chain, but I think that has to live at that application layer, not at the individual user walking through this entire process piecemeal.

Hendrik (15:34):

I think that's a really good point because actually when you ask us about future, we also can only make assumptions. It's like, if you had asked me one and a half years ago, "Will I be trading Degenerate Apes and like getting yield on NFTs?" I would've said you, "Austin, are you crazy?" But now we're in this world and proof there's I think none of us can predict what exactly is going to happen. What we can do is design the bridges in such a way that we enable developers. And I think that's the key goal to build these experiences, to build new applications that can do all these things.

Austin (16:07):

Yeah. I love that. So talking about enabling developers. So if we go over to Andriy, you've been talking about, like on solana, you guys have bridged a ton of assets.

Andriy (16:18):


Austin (16:19):

And that's not just going into direct people's wallets, oftentimes it's going into different dApps across solana. Talk about that developer work, how that integration works between the bridge and the application that the user's trying to use.

Andriy (16:31):

We were speaking the future. And that is exactly the future way of thinking about. It is like, we are calling this concept bridge as a service. Bridge, it is just the tool for users and for developers. So we would be more and more moving from the UI itself to some APIs and some connection with projects and developers. And this is how, for example, we built our whole strategy. We're not just the bridging assets. We bridge the asset and then on the destination chain, we partner up with Saber. We partner up with Orca. We create a flow because for users, the bridge, it is just like, it's a tall road and people they don't want to think about the road, they want to drive with their wife and kids from point A to point B. They don't care about the road.

Andriy (17:16):

And this is what happening here. And those bridges that would provide more flexible functionality. So for developers, it would be easier to build on top of them. Those are the ones that would succeed in future. And by future, I mean like six to 12 months from now. It is not distant future. It is not years. It is soon. This future is coming in soon. But in this sense, bridges is more like B2B business. Because I believe that other protocols and projects should be integrated with bridges, not user themselves. And we provide decentralized infrastructure, decentralized framework so that other protocols and projects can build on top of it.

Andriy (17:55):

And yeah. So for example, I think eventually like many projects and protocols, you'll want to kind of scale up and tap into user bases of other blockchain ecosystems like solana, for example, for project from Ethereum. And the main challenge here is to let actually protocols to build on top of this infrastructure. And in this case we don't need to have kind of censorship wide listing, et cetera. So we just need to provide kind of tooling so that any protocol can bridge their asset and any protocol can pass an arbitrary data cross chain that we will be executed in the target chain. We can actually let like protocols to decide on how they can do partnerships like with Orca or other dexes in other blockchains as well.

Austin (18:40):

So in a way we're talking about a composability layer for bridges.

Andriy (18:44):


Austin (18:45):


Hendrik (18:46):

And I mean to a certain degree, we're already there with applications building that on top. You already said Lido. Lido has staked. So they've staked Eth and then they get bridged to a protocol like [inaudible 00:18:57] and suddenly you have like a savings product. And that is what the user then consumes. This is the end user goal. I just want to put my money in and get interest or get some kind of yield and everything else is abstracted in the background. And I mean, this is one of the first steps and then we go further and further and further. We bring protocols truly like multi chain. Like if I hold COMP on solana, maybe I want to be able to participate in governance. I shouldn't lose that right on another chain and enabling this, but these are next steps. And I think to a certain degree we're already there.

Bryan (19:29):

Yeah, I think unified governance is something that's going to be a very hot topic over the next period. Almost certainly.

Austin (19:35):

Yes. Well, we'll have to do another one on cross chain governance protocol sometime later. Thank you all for joining us today.

Hendrik (19:41):

Thanks Austin.

Andriy (19:41):

Thank you.

Dec 02, 2021
Brendan Eich - CEO & Co-Founder, Brave Software Ep #54

Live from Breakpoint 2021, Brendan Eich sits down with Anatoly Yakovenko to discuss integrating Solana into the Brave Browser, the huge potential for a decentralized search engine and NFTs as an entry point to the metaverse.


00:09 - Intro

00:54 - Integrating Solana in Brave

08:00 - Challenges with creating the browser

09:23 - How to scale crypto to the general public

11:57 - A Decentralized search engine

14:46 - NFTs as entry point to the metaverse

16:35 - Mobile vs. Desktop

18:00 - Languages and smart contract development

20:40 - How to grow crypto to mass adoption

22:44 - Global Peer-to-Peer environment in Crypto



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Brendan (00:10):

Great conference.

Anatoly (00:11):

I know. Thank you. I'm really excited to be on stage here with you. You're-

Brendan (00:15):

Same, [crosstalk 00:00:17].

Anatoly (00:16):

... One of my heroes. As a programmer, JavaScript is a language that really revolutionized how we do application development, how we build. It's the foundation of the web. And I often think of web 3.0 really just being the web, just part of the bigger web.

Brendan (00:34):

Yeah, me too. That's how the web grows, by evolution. So we think the web 3.0 browser should be the gateway to a billion crypto users. And we are therefore integrating Solana into Brave soon as we can. And here's the cool thing, this is an evolutionary path. We're going to make it so any dapp that is Solana enabled, wherever other chains, EVM compatible or Ethereum, whatever it supports, if it supports Solana as well, we'll make it use Solana by default. So dapp builders who build for Solana as well as other chains. In Brave it's going to use Solana. And that's going to just help, I think, pull all the dapps on the Solana.

Anatoly (01:24):

Super exciting.

Brendan (01:25):

You like?

Anatoly (01:25):

Yeah, it's wonderful. Yeah.

Brendan (01:28):

Let's see what else. What do we like about Solana? We like NFT games, we like DeFi a lot. We want to make it easy for users to earn and get yield without having to be super expert or do a lot of complex operations. So we're going to work on building that probably in the first half of next year into the wallet so that you can just robo-earn, robo-yield. And we want NFT galleries and NFT transactions to be super slick. I was inspired by the Jules Urbach talk earlier today, and the demo earlier here with NFTs, there were several of them actually, it's all good.

Brendan (02:07):

We want as many NFT marketplaces integrated as we can, so that's on the agenda. And yeah, [Radium 00:02:13] is there, of course. Radium's still earning, yielding good. The thing that we do now with basic attention token tends to have to settle on Ethereum and it's going to cost you gas. And our valued settlement partners like Gemini, Uphold bitFlyer in Japan, but once we're on Solana, I suspect that BAT, which is already reflected through Wormhole, proxied through Wormhole, might just find it's better to settle on Solana. What do you think?

Anatoly (02:41):

Yeah, for sure. Absolutely.

Brendan (02:44):

I'm giving you the softballs here. And we really do want to get this out to all users. We think, whether you're having a hard time in some part of the world where it's hard to get banks to let you save or borrow, or you're beyond banks like a lot of us are or want to be, Solana is the way to do it. And I mentioned auto earn already, got ahead of myself, but I think this is going to be huge. It takes some skill, you got to make sure if you get on the wrong side of yield farming, you go somewhere where the grass is greener, but we'll make it as automatic and easy as possible. And it's just so much better on Solana. I'm making you blush. And yeah, the dapp ecosystem is growing, but if we do this Solana default on multi chain dapps, I think we'll just pull every dapps that's really popular over that Brave users want, and I hope that's going to be every dapp.

Brendan (03:37):

So here's more NFT marketplaces. There are lots of cool projects in crypto, so we're not doing only Solana, we have obviously Ethereum, we're going to do Bitcoin in the new wallet. It's coming up fast, it's in the Brave nightly builds. And we might do other chains, but I think it's important to pick a chain as default. This is a lesson we learned the hard way with search engines, because when you make a search engine the default, first of all, you can get paid if you get a deal, not always true. And really the user expects to just type keywords into the address bar and search. We want the wallet to have a fast, good default and that's Solana. So enough said. And we're bringing it to mobile too. This is important. I think a lot of fragmentation has occurred due to how wallets are split across mobile and desktop. We're seeing some good mobile first or mobile also wallets. We want to do it mobile and desktop feature parody, evolve at the same time. And we're happy to do that with Solana's partner.

Brendan (04:42):

So the last bit of news is the BAT system is a triangular system that involves privacy preserving ads. And users opt into it to get 70% of the gross revenue. What we've built so far has a part of our BAT ad system requiring us to verify things, to be the trust third party, which is a security hole. And so we started a project called Themus and worked with several crypto projects to see if we could bring it to high speed chains that can do things, like you need smart contract systems for zero knowledge proofs, you need some part of it in the browser because you're measuring attention. You don't want to put your detailed attention log on any blockchain, however fast, because it'll fingerprint you. So we're using black box accumulators in the browser with Themus and we're then minting ZK proofs. And the cool thing about Solana is we can just put those on-chain, no aggregator, no trusted third party. So we're getting rid of ourselves, we're firing ourselves as a trusted third party. And that's something we're excited about.

Anatoly (05:40):

And that's awesome. That was, feels like two years of research. It took quite a while to get to that design.

Brendan (05:47):

And now it's going fast. I think now we've got good working relations with Solana and we can crank out the Rust Co, because we love Rust. Because I was executive sponsor of Rust at Mozilla, so I have a tear in my eye to see my little babies all grown up. And Amazon's hired a bunch of the Rust core team. It's okay, they need jobs. But yeah, we want BAT to be fast, low fee, DeFi base pair and for ads on Solana. So Brave and Solana are doing the new crypto and ad system and it's going to be awesome. Thanks.

Anatoly (06:24):

That's awesome. I'm a huge fan of the web, huge fan of all the work that you guys have done and Brave. And I remember pre-mobile days, I was working on Brew and I was trying to optimized the web and flip phones. And there was a brief moment where the iPhone came out, we had a browser, and it felt like the web has opened up. And then it just got away from us.

Brendan (06:49):

That's right. Jobs said when he did the iPhone one, he said, "The web finally works on a phone." And then the story I heard from somebody who would is that they had to port a bunch of games which were C++ or whatever, and they had to do native apps. And they never looked back after that. But I think the web can always catch up and should catch up. And web 3.0, if you have this evolutionary path with dapps and dapp triggers from webpages, then you just evolve into it.

Anatoly (07:19):

Yeah, that to me is the really exciting part, is there's now an opportunity to have cryptography power the next generation, how web is monetized. Whether it's through advertisement, like with zero knowledge proofs or through direct payments and micro payments. Do you feel like Apple's going to crush us?

Brendan (07:41):

People a few years ago were worried about this Facebook thing, Libra and now DM. And they got crushed because some politicians hate them. But Apple is very cautious, and if they're doing anything with blockchains, it's a ways out. And then when they arrive in, it's going to be the diva at the party at midnight, like, "Start the party now," and the booze has already run out. So we're going to drink all the booze first.

Anatoly (08:06):

All right. I'm down for that. What are some of the challenges with building a browser for general consumers, but also with cryptography?

Brendan (08:17):

This is the problem with browsers is they are universal apps. You spend a lot of your digital life or online life in them. And so if you make the crypto stuff be this expert only area, or it's scary. I use wallet apps, I use ledger hardware wallets, but it's a little bit scary because you feel like, "Did I forget my pin in or did I have to reset it and do the word list?" And there's some anxiety and fear of loss. We want to make crypto be a positive sum, that's why the robo-earn is important to us. Just like with BAT private ads, you could get 70% of the revenue.

Brendan (08:53):

So you're always building up your assets as well as spending or sending them. And it should be slick, it should be for e-commerce. You can even do things like dis intermediate Amazon. I won't give away all my secrets, but we think we can do that without having a bunch of JavaScript user scripts attack every merchant checkout flow. We think there's a way to get into the interchange charge and do it. And crypto everywhere. It should be slick, should be easy, should be comfortable, make you feel like you're going to win, not lose.

Anatoly (09:23):

What about custody and keys? How do I get my parents to understand this stuff?

Brendan (09:28):

Yeah, it's really a little different, but we're looking at Taurus, we're looking at various ideas for backing up your keys that don't just put it on paper and word list in the safe, which we've all been through. And in some ways, the old web went with username and password and had to add a second factor, which often had to be a temporary access number generator on your phone. So at that point you're almost as complex as self custody. I would say you just have this more conventional recovery path. You lose your phone, you know your email, you can try to prove that you're the same person to Coinbase or whatever. But I think self custody has a complimentary role and we want both. We want people to use self custody and be comfortable with it, so we're looking at all these usability challenges. And we think we can get it just almost as good. And then unfortunately the regulators insist, if you want to do Fiat on/off, you're going to go through a custodian.

Anatoly (10:20):

Of course. The challenges, that's the exciting part. No one has figured this out yet and we're going to dive right in and see, how can we actually scale crypto to the general public?

Brendan (10:31):

Make it easy for your parents.

Anatoly (10:32):

Yeah. Yeah, would love to see it. What do you guys see as the tension between the app store on the mobile device and the mobile web?

Brendan (10:42):

Discoverability is always a problem. And we don't want these brutal curators like Apple. So having lots of stores is good, but then you have the need for a search engine, which Brave now has, which is a private engine and also involve users opting into building the index incrementally, that's the web discovery project. So we're going to aim, because we're very crypto first and our ad sales teams, one of who's here, always looks at crypto options and NFT options, we're going to aim at making our search engine best for crypto. It already uses [inaudible 00:11:14] charting, and it's still in beta, but we're working out all the kinks, so I think search, the good old search we remember from 2004 when Google was great needs to come back and it needs to be the way you find stuff in marketplaces and crypto exchanges.

Anatoly (11:29):

That's awesome. What kind of information do you think users would want out of a crypto first search engine or curated environment that's different from the traditional web?

Brendan (11:39):

Search almost gets into, is somebody trying to SEO you and compete for keywords? We're aware of this problem and there's no silver bullet. But we think with crypto, you might actually have a better chance at mechanizing this and having a fair playing field, an automated system for finding the lowest fees and the best yields.

Anatoly (11:57):

Is there hope for a decentralized search engine?

Brendan (12:01):

Yeah. So I had a friend who was involved with pre-research, Rich Scrantom, and pre-research looks like it's running a bunch of nodes [inaudible 00:12:07] Google, which Google does not like. And if they're running on [inaudible 00:12:10] IPs, Google's going to shut them down or use their anti-bot team to take them out. We're building a legitimate search engine, but we can't decentralize the algorithm easily because search is sharing queries, looking for some kind of objective best results like page rank, the eigenvalues of the random walk. And decentralizing that is a research problem as far as I know. But we have an active team, we're evolving search and we need your help because we're trying to crowdsource the incremental indexing of the web, we're not trying to index everything from 1998 on. Only Google can do that. Hats off to them, but their time is passing.

Anatoly (12:49):

When I was growing up as an engineer, the web was just starting, I was really passionate about Linux. And I had this dream of a Microsoft-free personal computer. It feels like the web 3.0 is potentially a dream of ad exchange free, that parasitic Google free web. Is that possible?

Brendan (13:13):

If you don't collect the data you won't go wrong that way. There's still other ways that central powers can turn on their users and take advantage of them. But I think there is, and that means ultimately you might need hardware that's indie or that's user first. And Brave's not capitalized to do this yet, but I know people, including friends from Firefox OS, which actually after it folded at Mozilla, continued in [inaudible 00:13:37] OS. And there's an open source lineage that you can trace back. And people at Qualcomm, we both know-

Anatoly (13:42):

Of course, yeah.

Brendan (13:42):

... We are working on it at the time. So I think there's a chance for a new open source OS that has web 3.0 and none of this Java or swift native stuff. And JavaScript, web 3.0 All the way down.

Anatoly (13:55):

Are we going to end up building a phone?

Brendan (13:57):

Brave OS. I don't know, I'd have to raise some more capital.

Anatoly (14:03):

Yeah. Yeah, that's a way to nerd snipe me for a couple years.

Brendan (14:07):

But people need independent hardware that serves their interest first. Absolutely.

Anatoly (14:10):

For sure. It always feels like that's a really tough challenge. But every two it gets easier and easier, hardware gets cheaper and cheaper and the tools get better and better.

Brendan (14:19):

And then Apple has something new and shiny that the commodity hardware can't match for another year or two, but that's just the nature of the game. So I'm sure we'll have iPhones, but we can probably have BAT phones too. Solana phones.

Anatoly (14:33):

The BAT phone. I love that. The BAT phone sounds really cool. As you guys see the web 3.0 evolving, I think from your presentation, NFTs were such a huge focus as well. Do you think this is the entry point for the Metaverse as people call it or that really interactive rich environment with ownership of the stuff around you?

Brendan (14:56):

Yeah. I think you have to keep running at these problems. And usually if you're a startup and the timing isn't right, or something goes wrong, you run out of capital and then the investors reset, or maybe they try again. With crypto, we have this great ability to just keep leveling up. So we're seeing Bitcoin, now we're seeing smart contracts on Ethereum, now we're seeing Solana. And as you level up, you can start to do some of these things that seemed hard before. Like you want some kind of cryptographic proof of ownership.

Brendan (15:26):

I think one of the demos talked about this. You want to make sure that somebody doesn't copy the pixels. And if you get into VR, there's been interesting research on this. And my friends at [inaudible 00:15:36] have done some work on this. You can actually watermark in a way that's indelible. And if somebody copies your art and tries to remove the watermark, they degrade the quality, because it's been convolved with the luminance and the chrominance. So I have hopes for this being useful in games and connected verses. And to me, that's the Metaverse, it's not going to be something centrally planned at Menlo park by Lieutenant commander data.

Anatoly (16:02):

I hope not. What I see out of the gaming companies that we talk to is that, especially the ones that are crypto focused, is the one to build browser first games. Everyone that I talked to had this idea that as soon as you open the page, you jump right into the game. There's no sign up, there's no friction, your wallet is your identity. And you're just exactly where you left off.

Brendan (16:24):

That took a lot of work at Mozilla, by the way. We did [inaudible 00:16:27] JS and that led to web assembly. And you could show games, in the story, you can start playing them and then you just convert. I think it's a great model.

Anatoly (16:34):

Do you feel like mobile is expressive enough for that? Or is the difference between iOS and Android and desktop is too hard to actually make that work?

Brendan (16:45):

There's certainly a difference. Even with the latest chip sets, you're just not as fast, you have less bandwidth all around. But games can scale down because the view port's smaller, there's hope that you can use the kind of tricks that we see with the remote rendering, cloud rendering. So I think mobile is the future, but I heard this 12 years ago, people would say around Silicon valley, mobile's the future. And then they would say, "That means there's no desktop." And that is very false. Everybody with a laptop or any big enough screen and a keyboard is still very high value. And that means the economics there don't go away, it just doesn't grow as fast.

Anatoly (17:19):

That's true. If you look at the growth of the Solana ecosystem, a lot of the users are basically dust up only.

Brendan (17:27):


Anatoly (17:27):

That to me says that a lot of folks, maybe there was a switch during COVID where we went from being so much immobile to where we're staring at screens again.

Brendan (17:36):

A bit of that. You go to India and a lot of people are mobile only, but you need both. And I think as mobile gets stronger, you're just going to see more parody, you won't see this need for apps, which is often artificial. It's like holding the browser back, sandbagging Safari a little bit. This is what my friends at Google, or one of them who went to Microsoft, always accuse Apple of, and it's not wrong. You got to give the browser it's due and then it can compete with native better.

Anatoly (18:00):

Got to ask you about languages.

Brendan (18:03):

Okay, [inaudible 00:18:04].

Anatoly (18:03):

How do you see smart contract development in the future as somebody that had incredible depth and understanding how application development happens on the web?

Brendan (18:12):

Yeah, I think the thing you're seeing with type script, especially with large teams, is more information that you need some kind of proof system or it could be just a warning system, but it's based on model checking. Often it could be based on higher level models than you can express in sound type system, which is something where there's just this timeless world of types that's potentially syntactically checked and prevents bad things from happening at runtime. You need dynamic systems, dynamic code, JavaScript, and the static checkers.

Brendan (18:44):

And you get the best of both worlds if you have really good ones. So I remember at Mozilla, we were investing in model checkers for C++ because it's memory unsafe. And you could build these higher level checks that knew about security properties you wanted to enforce. And I think this is what you're seeing with smart contracts. I was talking to somebody I met at the hotel bar about this, because it's still a very fruitful area that's had good research in computer science, programming language theory. And it hasn't always been brought to the programming masses like it should. There were companies like [inaudible 00:19:17] Covarity and others like that. The compilers themselves grew the ability to do plugins for static analysis. And now [LOVM 00:19:26] is there.

Anatoly (19:27):

Do you think that smart contract development needs to have a high level, easy to use language environment? Or can it be driver code?

Brendan (19:37):

Yeah, exactly. Driver code in the era of C was the worst code in the kernel.

Anatoly (19:42):

Driver code with Rust is a little bit less frightening.

Brendan (19:45):

In fact, a friend of mine who was at Microsoft at the time went to Mozilla and has his own startup now, did it at Microsoft, a checker for driver's C code. Which he could skirt the halting problem and kind of statically reason about it and say, "This is garbage driver code, send it back to the vendor." But yeah, I think you don't want to have happy, fun, JavaScript looseness if there's big money at stake. So I think it's important to have the right tools with the right static and dynamic checking.

Anatoly (20:13):

Do you think smart contract development is strictly financial or are we going to see things that are not financial that you can actually [crosstalk 00:20:21]?

Brendan (20:20):

You'll see things that are not obviously financial, but they'll turn into reputation in a game or gifting and those tend to matter too. So you still don't want too many dynamic errors.

Anatoly (20:32):

That's true.

Brendan (20:33):

So I talked about this in my chapter in coders org, I'm still a fan of static, even if it's unsound semi-static checking.

Anatoly (20:40):

What do you guys see as like the opportunity for us to grow crypto to a hundred million users, actual signers?

Brendan (20:49):

Yeah, I'd to get Brave to that scale in a year or two. It depends on everybody here and others. It also, I hate to say it, depends on the nation states of the world not doing something adversarial. But I think given the state of the world, not a great state, but there will always be options to do things with crypto. The internet routes around censorship, and that's true in the web 2.0 And the web 3.0 world. And it's true with blockchains. You still have concerns you have to fork to undo the censorship, but at least you have options. Do

Anatoly (21:26):

What kind of applications do you envision will actually drive that growth?

Brendan (21:30):

I think at first it's going to be people using crypto for payments and for DeFi. And some leading edge of that user base will be getting more sophisticated in doing other things. But just having things like gift cards, where we often find that they're useless points, even if we can use them or Congress passed the law to don't expire, we still just don't use them. We should have much more liquidity. We should have liquidity across all kinds of assets. And this is where you start talking about tokenized securities, and can you have primary and secondary liquidity for companies? I think if you're as old me, you all had a tiny piece of some startup that went sideways for 10 years and then sold. And you couldn't trade it easily. And you might have wanted to do that because you might have been squeezed out when it sold. So there's lots of room for blockchains to solve these problems. I think in general, connecting people more directly getting rid of these officious or censorious intermediaries. A lot of room for application.

Anatoly (22:29):

In this new evolution of the web, I often describe crypto as a fully connected network, as opposed to a social graph, like on Facebook.

Brendan (22:40):


Anatoly (22:40):

Do you think that's true? Do you think we're going to enter a stage where I am effectively with my cryptographic signatures, I'm in this true global peer to peer environment?

Brendan (22:50):

I hope so. I showed at web summit last week, I showed the slide with the correct diagram, which is more like a mesh for decentralized, and the incorrect one, which sometimes is called decentralized, which is really distributed, but it's mostly tree structured. Or if it's a graph, it has a dominating spanning tree. That's Google, that's Amazon. So with projects like Helium, with web RTC making it so you can make connections into the endpoints instead of only out. In the old days in the nineties, we could only make TCP connections out from the browser. I think we're heading toward this world. We have to build it iteratively and collaboratively, we have to get around the concrete firewall problems that web RTC mostly got around, it's still a little dodgy. And I think that is the future. I think we should all have Helium nodes if we can. I'm a fan of the project.

Anatoly (23:38):

That's awesome. The idea of decentralized browsing on an open source phone connected via an open network.

Brendan (23:49):

Low raw radio.

Anatoly (23:50):

Yeah, run by the people. Accessing Solana, that would blow my mind.

Brendan (23:55):

It sounds too good to be true, but I think it could be true, especially if we build it carefully and quickly enough and get it out there and make it usable, which is why I've always wanted to make Brave be about crypto. Even when we started using Bitcoin for our prototype, it was clear once you shield the user by blocking all those trackers, you break all the economics that pays advertising money into the publishers after taking a big slice out for the middlemen like Google. And if you cut that out, how are you going to reconnect it? It's crypto, peer to peer.

Anatoly (24:26):

All right, let's do it.

Brendan (24:28):


Anatoly (24:28):

I'm excited. So thank you, Brendan. Thank you so much for doing here, for working with us.

Brendan (24:34):


Nov 30, 2021
Daffy Durairaj - Co-Founder, Mango Markets Ep #53

Daffy Durairaj is the co-founder of Mango Markets and is currently working full time as a developer in service of the Mango DAO.

00:28 - Origin Story

04:44 - Seeing the order book

10:20 - The idea behind creating Mango Markets

15:38 - Going from creating smart contracts to creating Mango

17:32 - How big is the DAO?

20:01 - The Launch

29:15 - VCs and the launch

32:43 - Decentralization and getting stuff done

34:55 - Will DAOs ever compete with big tech companies?

40:43 - What’s next for Mango Markets?


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Anatoly (00:09):

Hey folks, this is Anatoly and you're listening to the Solana Podcast, and today I have with me Daffy Durairaj, who is the co-founder of Mango Markets, so awesome to have you.

Daffy (00:20):

It's great to be here.

Anatoly (00:22):

So origin story, how'd you get into crypto? What made you build Mango Markets?

Daffy (00:30):

How did I get into crypto? So, I started off really not wanting to get into crypto. I was really interested in algorithm training. I did that in college and did some competitions that I did well in, and I wanted to trade equities, but it turns out if you have not enough money, if you have a few thousand dollars it's just not allowed. You're not allowed to algorithmically trade. There's a patent day trader rule, and I was infuriated and I was just looking around and I found Poloniex where you can do anything you want. The thing that actually hooked me first to Poloniex was the lending market because immediately as soon as I saw an open lending market, I was like, "Oh wow, I have to buy some bitcoin, and I have to lend it out." And, Poloniex was all bitcoin, and then it gradually got into just the meat of it, which was algorithmic trading and everything about crypto seemed exciting, but I actually didn't want to hold bitcoin. Poloniex was all bitcoin, but again, I think the government sort of pushed me in the right direction.

I was like, "Okay, I don't want to hold bitcoin, I'll hedge off my risk on BitMEX, but again, not open to US persons, and so I was kind of reluctantly holding bitcoin and thinking, all right, I have a few thousand dollars if things go bad in this whole bitcoin thing. I'll come out okay. I'll get a job or whatever, but just never got a job, just kept holding bitcoin and continue to trade crypto, and I did that for about five years. Then, I wanted to actually start trading on chain because I thought this was probably for a lot of the reasons that you built Solana, the censorship resistance, and the global liquidity of it, and the openness of it, the fact that you're not excluding people that have a few thousand dollars. I wanted to build on chain and I was just not very bullish on a lot of things, so I kept going back to trading, and then I saw Serum DEX, and I was just hooked. I placed a trade and it felt totally natural and normal. It wasn't like $40 and takes 20 seconds and you don't know if it... And, then MetaMask was jammed and you're like, "Oh, but how do I cancel this?" So, that was a long-winded way of saying I was a trader and then I saw Serum DEX and then I had to start building the tools that would make Serum DEX even more fun.

Anatoly (02:59):

That's awesome. I got into it by trading. Basically, I set up like an Interactive Brokers IRA account, and that let me kind of bypass the rules.

Daffy (03:11):


Anatoly (03:13):

With a very small amount of money. I think they probably closed these loopholes already. I wrote a bunch of stuff on top of their Java STK and started trading there.

Daffy (03:22):

I remember I actually got started that way too. I did a bunch of stuff for their Java, and we can tell you we're both programmers. We wanted to build this money machine. It's so fascinating, and it's a machine that-

Anatoly (03:40):

It prints money.

Daffy (03:40):

It does things and it prints money. What more could you want? So, I got started with Interactive Brokers, but I guess the whole IRA thing... Because I was a college student, and so even talking to an accountant would take a huge dent out of my net worth.

Anatoly (04:01):

Totally, it's all really not designed for... The whole financial system in trading in the US is designed to funnel retail towards an app like E-Trade or Robinhood, which takes a cut, and then sells that trade to somebody else, who will take a cut, and then 10 other people until it gets an exchange, and that's how everybody's protecting their neck. They're all taking a little slice, and I think what's cool about crypto is that even centralized exchange like FTX is 1,000 times better and less extractive of the users than anything in traditional finance, simply because they can guarantee settlement. Such a very simple thing.

Daffy (04:49):

You feel it right from the beginning. You go to Poloniex in 2016, and it's like, oh, you have an email, you have deposited bitcoin, and now you're just lending to people. So, just talk about not being extractive. To see the order book through Interactive Brokers or Ameritrade or whatever costs you a lot of money and it costs them a lot of money to provide it, and I don't think I'd ever seen an order book. This was my passion, this is what I love to do, and I've never actually seen it.

There's that story of the blind men who are touching this elephant, and so I had kind of figured out maybe what the order book looks like, but then on Poloniex, you go there and you just see the order book and you see all the lights flashing and you're like, "Oh, this is it. This is where the trades are happening." And, that's free, and of course, a big part of Mango Markets as well is you can see the order book. That's it, that is it, there's nothing more, and it's all on chain and all this stuff. So, in terms of not being extractive, it's a really big piece of what motivates people to come in.

Anatoly (06:02):

I don't know if you ever tried to get data, real data. I wanted timing information when a bid comes in or when an ask comes in versus when it's filled. How do I get access to it? Because when you get data from any of these places, basically it's like a little better than Yahoo Finance, which is like every five minutes they give you a low and a high.

Daffy (06:27):

I don't know, did you ever succeed at doing that in Interactive Brokers?

Anatoly (06:32):

No, I recorded some of it, but it just never had that fidelity and it always felt like a gamble. I'll build some models and sometimes stuff would work locally against my simulations, but then whenever I would actually try to run it, I'd see that fills take a little longer than they should and all this stuff really feels like you're not interacting directly with the trading system, that somebody when they see your order they're like, "Well, maybe I'll put my order ahead of yours or do whatever or slow you down a bit." It just sucks.

Daffy (07:16):

It feels very opaque, it's like a black box, and of course, this is all for people like me who are kind of looking on the outside looking in. So, if I had gotten a job at Citadel or somewhere, then I could probably see what's actually happening, but the fact that the vast majority of people are going to look at it and not really know it's actually happening, not everyone wants to see an order book. That's an important fact, but there are a large number of people who need it to be a little bit transparent to be involved.

Anatoly (07:49):

What I hate about it is that there's a lot of people that make a lot of money from you not seeing, that they're in the business of information assymetry and fuck them.

Daffy (07:58):

So, it's not a family friendly podcast, so it's good. I was going to ask that. So, there's a funny story on RuneScape. I don't know if you've ever played RuneScape.

Anatoly (08:17):

I played Ultima Online, which is I think similar vibes in the early days.

Daffy (08:22):

Yeah, so on RuneScape, just like on the point of no one being able to see anything, on RuneScape, also they had an order book because that's the most natural thing to do, and I actually had to figure it out from first principles. I would place a trade and I would see that sometimes it would get executed and sometimes it would not get executed, then I realized, okay, if I place a trade for these water runes or something or oak logs or something, and I put the price really high it gets executed at some price that's not the price that I said, and then I was able to form this concept of that's the asking price. I didn't even have the terminology for this, and then I did the same for set the price to zero for a trade and now I found the bid, and now I can make a lot of money actually underbidding the best asker and overbidding the best bid.

Anatoly (09:18):

So, you're market making.

Daffy (09:20):

Yeah, so it's funny, I was reminded because you said there's a lot of people who make a lot of money in you not knowing, and I was just minting money. It took me years to accumulate like 1 million gold pieces in RuneScape and then I was able to just 30X it in a month.

Anatoly (09:46):

Too bad RuneScape is not a crypto currency. Whoever is running RuneScape, you're missing a huge opportunity right now to just go full crypto.

Daffy (10:00):

There was some talk about some NFT or something on Twitter. Somebody was trying to encourage Jagex, the company, to get involved in crypto, and of course, I tried to signal boost it, but eventually everyone falls in line.

Anatoly (10:17):

How did you end up with the idea for Mango Markets?

Daffy (10:21):

So, I have to give credit to dYdX. It was like 2019 and I hadn't really considered that this was possible. I was heads down writing, trading algorithms and trading crypto just kind of holding all of my wealth in bitcoin and I was borderline bitcoin maxi on that, and just seeing dYdX do it in those early days... Now of course, they're way more successful now. Those early days seemed that you could do leverage trading on chain, and they kind of showed it as a proof of concept, which I just kind of started pacing back and forth like, oh my God, this is changing our worldview completely.

Ethereum was slow and whatever, so years went by. Actually, maybe just like a year, and then I saw Serum DEX where I felt finally, okay, all the pieces are in play and also I wanted to market make on Serum DEX, but I really need leverage. I don't really need leverage, it just makes market making dramatically more efficient and safer. Leverage is just this tool that people who are involved in the financial plumbing really need, and it wasn't there. I was like, "Okay, this is the time and I have to learn how to code smart contracts," which sounds like a very scary and daunting task, but it was not that bad.

Anatoly (11:54):

The scary part was that you guys were building on a platform that was really rough around the edges at the time.

Daffy (12:02):

Well, no one told me that shit was really rough around the edges at the time. That was actually maybe important. You come in and there was nothing to do, this was August of 2020, things were not locked down necessarily here in the United States, but people kind of scattered. No one was hanging out in the major cities, they had kind of went to go live with their families, as did I. I fled San Francisco and went to the rural part of North Carolina. So, there was nothing going on and you just have all the time in the world and bitcoin is doing well, so that's funding you in a way.

Bitcoin is this big, or crypto in general, it's all the people who bought it or own some crypto, as long as it's going up, it's kind of funding whatever zany side projects you have in mind. So, this is just a side project. Wouldn't it be cool if I could access this part of the world or this technology? And so, that's why chewing glass... You probably coined that term, I don't know, that's why chewing glass wasn't so hard because that pressure to... You have all the time in the world basically.

Anatoly (13:30):

Basically, COVID and lockdowns were so boring that chewing glass to learn how to code smart contracts with Solana was like a reprieve from the boredom.

Daffy (13:45):

And, I've heard you kind of say, okay, a bear market is when everyone is coding. To give the opposite perspective, I feel like a bull market, unlike much more chill, oh yeah, nothing really matters. Crypto is going up, it doesn't matter what I do. The rent is going to be paid for, everything is going to be fine, might as well engage in high variance new ideas, new projects. In a bear market, I'm very I got to grind, I got to squeeze out a couple of more bips out of this trading algorithm because I got to pay rent. So, that's the bullish case on bull markets.

Anatoly (14:30):

That you can try something crazy. That is the point where people enter this space is in a bull market. It's that they kind of start coming in droves because they're like, "Everything is crazy and I can also be part of the party." But, it's hard as a founder to stay focused because you are in that high variance, high risk taking kind of mindset.

Daffy (14:58):

There's a trade off of during a bull market there's a lot of things looking for your attention, and a bear market is very calm, or it can be. If you built up a lot of liabilities during the bull market, now you have to stay afloat during the bear market. Maybe it's calm in the external world, but internally it's not calm. You're like, "I got to do X, Y, and Z today every day." There's that natural pressure.

Anatoly (15:32):

So, you decided to learn coding on smart contracts on Solana. How did you end up going from there into Mango?

Daffy (15:39):

Initially, it was called Leverum. Not it, there was just an idea and there was a command line tool where you could... The YouTube video might still be out there, and Max was out there somewhere on the internet and he saw it and he thought it was a great idea. And so, he reached out to me and we did some other things like speculative about a prediction market, and then we were like, "Okay, no one is going to build margin trading." A lot of people are saying it, but it doesn't look like if we just wait it's just going to happen in the next couple of weeks or something. It's probably we just have to build it.

Not we just have to, but we totally should. This is clearly a very important piece of the Solana ecosystem. So, we started building it. Mango was just we were thinking alliteration is good. Everybody loves mangoes, it's a fruit that I have never heard of anybody who doesn't like mangoes. It's probably the high sugar content and Mango Margin was the idea, but then we got the domain Mango.Markets. It's kind of evolved now. When you're starting off with something, you have kind of a narrow scope. You're like, "I just want to be able to borrow money." And now, there's this Mango DAO and people are talking about NFTs and drones. I'm talking about drones. I don't know if anybody else is, but it's just gone way higher and now I'm like, "I'm a humble servant of the Mango DAO." And, that's totally a normal thing to say.

Anatoly (17:27):

How big is the DAO?

Daffy (17:28):

How big is the DAO? That's a good question.

Anatoly (17:30):

In humans

Daffy (17:31):

That's like a philosophical question. In human terms, wow, again, even still a philosophical question. So, I think if you go to MNGO token, if you go to the Solana explorer and just type in mango or MNG or something, you can probably... I don't know if they have a list of unique token addresses, so in some sense that's the DAO, but in terms of the number of people who actively post on the forums and make proposals, that's much smaller. I'm guessing there's thousands of people who have votes, but the number of people who make proposals and add meaningful commentary on the forums is maybe 20 people, and it's expanding pretty quickly.

I always see new people coming in. There's also not just people, there's the wealth of the DAO and the cultural reach of the DAO, the spiritual significance of the DAO, all of those seem like size if you ask how big is the DAO. You interviewed Balaji Srinivasan, and there's this idea that he had on Twitter that was like a DAO should buy land in Wyoming and send a drone to circle it and this is kind of like a moon landing sort of kind of thing or some kind of significant breakthrough where the DAO is controlling physical objects in the real world. So, this is very exciting to me, but it has nothing to do with margin trading, it's just something exciting that maybe in a bear market, I don't know, I'll push to get this done.

Anatoly (19:23):

Do you want the control to happen on chain?

Daffy (19:25):

Yeah, I think that's necessary. Maybe not the total control, but some kind of signal that distance... So, you can kind of think of Congress authorizes a certain thing and then the executive branch does it. If we could make that link be as automated as possible, I think there's something useful there, at the very least something exciting and interesting, kind of like the moon landing where maybe there wasn't anything useful, but it was inspiring for sure.

Anatoly (20:02):

So, the DAO, if you guys decided you want to do something with leverage and lending, and how you guys launched was really unique. I don't even know if people did this in Ethereum. To me, this is the first time anyone's kind of done this style of launch. Can you talk about the design and how you guys thought of it and what let you make those choices?

Daffy (20:25):

So, people early to Solana may be familiar with the Mango market caps and how that went, which somewhat argues the first NFT on Solana, and that was done pretty much sort of like how NFTs are typically done where there's a mad rush to grab the caps as soon as possible and the price is swinging wildly and there's a lot of people. Now, I think we put that together as an April Fool's kind of thing, very quickly, and so it was great for what it did, but the experience from that was, okay, there's going to be a lot of angry people. If you do it in this way where the DAO is raising funds, and this is the inception of the DAO, the DAO is raising funds for insurance fund, you probably don't want it to just be distributed to the people who were the fastest to click.

And, that was the idea. We probably don't want that. It doesn't seem useful, it seems like a lot of angry people, and a lot of frustrated people. So okay, so you take out the time component, you take out the luck component, and then you're left with you kind of have this sort of auction that lasts 24 hours, but then what if X somebody comes at the last moment and dumps in a huge amount of money and raises the price for everyone? Everyone gets the same price. So, our design was we'll have a withdrawal period or a grace period at the end, the remaining 24 hours where if you kind of don't like the price, you can bail out. It had some flaws and I think we knew about those flaws from the beginning. We were like, "Okay, we just pushed to this game of chicken to a later point where someone can put in a lot of money to scare other people away and then they pull out at the last second. And that did happen, but it's not clear if that was net positive or net negative.

Anatoly (22:28):

And kind of in summary, there's this 24 hour period where people deposit funds in for a fixed supply of tokens.

Daffy (22:36):


Anatoly (22:37):

And, then the period is over, and now everybody knows what the total amount in the pot is for the token and there's kind of this price that's created and then if you don't like the price, you can withdraw the entire bid or as much as you want. You can only reduce your bid.

Daffy (22:54):


Anatoly (22:54):

But, you don't need to withdraw the entire bid, you can just reduce it.

Daffy (22:57):

Correct, yep.

Anatoly (22:58):

So, then that pushes the average price down at the same time, so for every dollar you take out, you kind of get a better price per token.

Daffy (23:07):

And, you see the price ticking up during the first 24 hours as more and more people are putting money in and then the price ticking down over the next 24 hours.

Anatoly (23:19):

I'm a huge fan of this setup because it creates a lot of... There was news, you guys made the news because it was almost half of all of USDC that was minted on Solana ended up in that smart contract. It was like 45% of it.

Daffy (23:43):

I remember actually because we saw the USDC on Solana was 700 million the days before and then it had climbed up to like 1.1 billion or I don't know what the number was at the end, and there was 500 million in the contract at the end of the first 24 hours. That was not the intention.

Anatoly (24:05):

It's like it was minted.

Daffy (24:05):

And honestly, I think you could appreciate it better from the outside than from my point of view for sure, and of course, I also could appreciate it better from the time distance, but that was not expected. We kind of knew that there would be a lot of money placed in the beginning and then money would go down. That was in all the documentation that we wrote, and that was expected and we had all these dev calls where everyone was always talking about it, and I was like, "Okay, come on. Literally, there isn't that much USDC in Solana." So, it can't be that bad, but of course, I underrated the possibility that someone could just mint a whole bunch of new USDC and bring it in from somewhere else. It made the news and a couple of other projects did the same thing, and I wonder if maybe it's a one time kind of thing. The game only works once. You can't expect to scare people every time or use the tactic every time.

Anatoly (25:10):

Maybe, I think a lot to be said, but there was no other way to go. Mango took it all, so there was no private round, they were never listed anywhere. This was really the only way to get it, and the anticipation of a project that was awesome, and from every other perspective is... What I always tell founders is that you should always raise the least amount for the highest price. The VCs kind of have more power than you usually because they have more information, they look at many deals, people come to them, they have the money, but it's sometimes the founders have this asymmetry where they're the only ones without equity. They're the only ones without tokens and that moment is if you can get everybody at the same time to compete for that thing, then you've kind of created the symmetry there and you maximize the capital raise for the DAO, for the project, for the community, and therefore that actually is a good thing. You have more resources to build a vision.

Daffy (26:16):

Although, I'll clarify, I think the DAO is still handing out a lot of tokens, so there's still a lot of ways to acquire Mango tokens, and that was kind of the inception for the insurance fund. The DAO has been paying people out of the insurance fund, and so it's been useful, but there's still more tokens to be had. There is a slight private rounds and I totally understand why people do them, but like I said earlier, if you are in crypto for a while, and this the cool thing about bull markets, I don't actually need money, I just need to pay rent and bitcoin has gone up 50%, so I'm solid.

And, no one was paid anything. There was just Mango tokens that were given to people and they were told the DAO values your contribution or this is the inception of the DAO, and everyone worked to build this thing. People worked without even the Mango tokens and sort of the tokens were given after the fact. I think it's a valuable way to build crypto projects actually.

Anatoly (27:30):

I want more teams to try to totally from genesis this DAO first approach, but it's really tough because you guys had such a principled view on how things should be done and there's a lot of people out there that are offering money for that one thing. How did you guys have the discipline to just go stick with this?

Daffy (27:54):

We had a lot of discussions about all these things. We talked to VCs and we still do and we like all VCs actually. So, I think Satoshi, I'm not trying to draw a comparison to us to Satoshi or anything, but there is this beauty in that story and I think there's a lot, maybe even the majority of bitcoin's value at least to me... To me, I just love the narrative. I love the story of Satoshi, the pseudonymous founder who is one of the richest people on the planet right now. Obviously, they're in a no VCs. This person wanted to not make a big fuss. It was kind of like this clockmaker prophetic person who just came and then left, built this thing and then left, and that's such an amazing story.

There are these long, long payoffs. Maybe they take a while, but they definitely do pay off that if you're not hurting for rent, again, I was in a position, all the other Mango devs were in this position as well where it was a bull market, we're not getting eviction notices or something, we could kind of float the boat for a while. Just consider the longterm payoffs, consider the five year payoffs. Stories are amazing.

Anatoly (29:17):

The weirdest thing is that every good VC will tell you that you should maximize for the highest return. Don't worry about the middle exit, or don't compromise. Actually, imagine you're taking over the world, what are the steps to get there? And, the risk don't matter. Actually maximize for the high and this is the irony here is that I think this kind of fair launch, most distribution will probably result in overall longterm, better, and higher returns, but the risks that I always find is that humans are hard to organize and at the same time, cryptography is this new tool for organization.

It is what allows us to massively scale agreement and complex problems, really, really complicated problems. We can just click a button and vote and agree on that one and you know. You know that the decision was made, but I'm curious, do you see tension between the decentralization, kind of the disorganization of the DAO and getting shit done? I've got to build stuff.

Daffy (30:34):

No, 100% actually, on a daily basis actually. There was a podcast with the guy on Twitter that goes by Austerity Sucks and this was back in April. We talked about this and he brought up a similar point and he was, "Yeah, this DAO thing, it's all a fine and dandy idea, but do you think this will work?" And I, to be honest with you, am skeptical, however it is always felt to me sort of a high variance idea, kind of like if you were in the 16th century Netherlands or the 17th century Netherlands and you were like, "Okay, we've got to get spices from India. How do we do it?"

And, you come up with a joint stock corporation and then the join stock corporation is everywhere and I don't think anyone has really figured out how to do DAOs well or what's the right mix, how do we communicate, how do we coordinate, all those things. I don't think anyone's quite figured it out yet. No one had figured it out like six months ago. I still don't think we have figured it out, but if it works, the payoff is enormous. There is global coordination, there isn't a jurisdiction. I imagine the DAO is controlling drones one day. It could be wild. So, even taking into account all of my skepticism, I was still like, "Okay, we should do the DAO idea." Anyway, not just me, Max is totally on board with this and Tyler and all the other people who kind of built Mango Markets. But on a day to day basis, as of October 2021, now I'm thinking, okay, maybe what we need to do is have small teams that build things and then pitch it in front of the DAO and get compensation. So, the DAO is kind of the government and it subcontracts out to people. Maybe not like direct democracy rules everything and we'll try that out and if that doesn't work, we'll try something else out, but try new stuff out quickly.

Anatoly (32:45):

That's awesome. This is actually a really good strategy to incentivize product development. Building an MVP, which means you're the PM, and the implementer, the dev, and you go do all the work and here's your management. It's all done, just give me money.

Daffy (33:09):

And, there's some maintenance tasks, so it's not purely new products, so I'm thinking Mango V4, but also in the meantime, there are all these nodes that need to be paid for.

Anatoly (33:24):

I think you guys will need to split. We called it KTLO, keeping the lights on work. You for six months, you're on KTLO duty, and you get paid a salary effectively, and you just got to keep the lights on, but then some other folks are like, "Go build something that you can propose to the DAO and the DAO will fund it."

Daffy (33:49):

I think that's basically what we have coalesced on is that, well, some people should be doing KTLO and other people should be doing new things, building the new product, and it takes kind of the risk out. The DAO doesn't have to pay for whatever stuff that I produce for Mango V4, but we both have some kind of incentive to be honest about it. If it's clearly a huge improvement or even a very substantial improvement, DAO should pay me something because if the DAO doesn't, then you can expect future builders to not go for it. And, we have these discussions on the forums.

People make good arguments like this. I think the average IQ in the Mango Markets forums is very high. I think probably higher than most legislative bodies. I'm just going to go out on a limb and just say that. Not ours of course, ours is obviously very high IQ, smart people in our government, but you know.

Anatoly (34:55):

Do you believe five years there's going to be a 30,000 person DAO. Imagine a tech company, 30,000 engineers, or 30,000 people, they got product managers, teams, layers of bullshit. Is there going to be a DAO that's competing with a big tech company?

Daffy (35:16):

It's legitimately really hard to figure out how this might look. The reason why I hesitate so much with the question of a 30,000 person DAO is I'm not sure it'll look exactly like a corporation that we can say, okay, these are these 30,000 people. You might never be able to figure out who is part of the DAO and maybe that's one of the benefits of the DAO. If I asked you, how many people are part of Solana, not Solana Labs, but Solana the community? It's a little bit difficult to even answer, lots of people, various levels of involvement, and financial. Some people have a lot of financial stake until you don't, but some people have a lot of financial stake and no involvement at all. It's wild all over the place. Does Bitcoin look like a country or a corporation? I can even point my finger on what it is.

Anatoly (36:20):

So, even LINE had a battle that had 8,000 people all coordinating over something and I think they have corporations within that game that are maybe probably span up to 1,000 I'd imagine. So, that's people organizing using tech for a common goal without a job, without a structure that you normally have at a company. Linux was built by people organizing online. I think as soon as you have something to lose and in Linux and even LINE you start building up a virtual token, your reputation is a contributor to this thing and becomes a thing that we don't normally think of as valuable in a monetary way, but it's valuable to that person, but I definitely care about my ability to continue contributing to an open source project. So, where tokens I think can get there is if there is something of value being created by the community, some common goal that everyone is working on and that token is in the middle of it and is uniting and organizing it. I think that could scale as large as a corporation.

Daffy (37:45):

No, I agree with you. I just think it'll always be a little bit hard to figure out how many or who is involved, just by the nature of it. I just think it'll be always a little bit hard to figure out, but will 30,000 people be building on Mango or some DAO? You already know the numbers better, but we might even be approaching that with Solana. So, I'm not part of Solana Labs or affiliated with Solana in any way, but building on Solana, and also I have a financial incentive too, but also I have a reputation incentive and it feel like I'm part of the Solana corps or whatever it is, but I don't know what it is. It doesn't even exist. It's not even a DAO. There isn't even a DAO there.

Anatoly (38:39):

Oddly enough, I feel the same way about Eth and bitcoin even is that we're competing with them.

Daffy (38:50):

But, it all feels like we're actually kind of a part of the same team and-

Anatoly (38:54):

This is the weird part that I think is going to be really interesting how it plays out because I don't think it's obvious to anybody what is crypto. Is it the token? Is it the coin? Is it the network? Is it the cryptography itself?

Daffy (39:10):

It's not the cryptography itself, so we can strike that one out.

Anatoly (39:14):

Are you so sure? I think it's honestly the power that a person has to be able to make these very concrete statements that are unbreakable no matter how... That's the math. The math behind it is what allows them to do them.

Daffy (39:36):

I don't totally know the cryptography itself. I know basic 101 number theory stuff, but I remember going through my first programming class and coming up feeling just very powerful. I'd write stuff down and then it happens. Kind of like a king, actually, more powerful than a king in a lot of ways because I was writing these training algorithms and it was happening around the world in ways that probably a medieval king couldn't imagine and crypto brings that to finance where things of actual value can be moved.

Mango Markets exists and you can go there and place a trade right now, but it was just somebody who wrote it. I was involved based on you can see the GitHub contributions, but it was just people who wrote it and that's probably... We can maybe chalk that up to the cryptography.

Anatoly (40:43):

So, what's next for you guys?

Daffy (40:46):

There's drones on the horizon. Yes, sometime in the future, but we have to do a lot of the nitty-gritty, roll up your sleeves kind of work. On Solana so far, there isn't... Maybe a lot of projects are struggling with this, indexing all the data and providing it for people in a usable way because there's just so many transactions. It turns out if transaction fees are really low, people just make a lot of transactions and they don't think about it.

And so, gathering it up and displaying it in a useful format to people, that's a very immediate term and then slightly medium term is sort of becoming the place where everyone does leverage trading and does borrow and lending, all the crypto natives. And then of course in the longterm, I would say it's somebody like my mom should be able to store her money in Mango Markets and not think twice about it. It's not a good idea right now I wouldn't say, but that's the goal. That involves a lot more social things than just technological things. That's get it to a level where she can do it safely and feel comfortable and manage her keys, or even if she's not managing her keys, have a solution for how the keys might be managed, that she's not falling for scams, and that's I would say my longterm goal.

Anatoly (42:09):

That's awesome, man. On that note, man, really awesome to have you on the podcast. Great conversation. I'm always excited about what you guys are doing and how the community is building this ecosystem of its own, so really amazing. It's serendipity that you guys started going on Solana, just really lucky to have folks like you in the ecosystem.

Daffy (42:35):

Thanks a lot. It means a lot. This was really fun.

Nov 23, 2021
Alexis Ohanian - Founder, Seven Seven Six Ep #52

Live from Breakpoint 2021, Alexis Ohanian sits down with Raj Gokal to discuss web3 and the $100 million fund to support decentralized social media projects on Solana.


00:10 -  Intro

2:20 -  Announcement of Seven Seven Six and Solana Foundation collaboration

9:53 - GM, Twitter, #FreeRaj

14:31 - Discussing Web 3.0 and the future of decentralized social media

18:04 - User experience and building on Solana

22:48 - New types of governance and delegation

25:59 -  How crypto can change the way we see the world



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.


Raj (00:10):

(silence). Ooh, beautiful.

Alexis (00:11):

This is fun. Hey everybody.

Raj (00:13):

It's electric.

Alexis (00:13):

All right. All right. Nice to see you all too. Oh, there we go. Okay. This is big. This is just the building of a new internet. Probably nothing.

Raj (00:26):

Probably nothing. It's such an honor, Alexis, really, to be on stage with you. It's like a dream. I've been a power user of Reddit, and I saw the way that you created that and the intention that you brought into it, and the intention you've brought into how we build technology that connects people together, and the conviction you have about how you want it to connect them for good. Not pull them apart but pull them together. Three things that connect them, their interests, their common grounds, and give them the tools to do that.

Alexis (00:59):

Thank you, man.

Raj (00:59):

Yeah, it's been really awesome.

Alexis (01:00):

I feel grateful. I was a dumb college kid in 2005, starting Reddit. The inspiration were like message boards. And I ran a PHPBB forum. Shout out PHPBB. I think those bulletin boards are still cranking somewhere in parts of the internet, but it was a hope for a more connected internet. But I really had no idea what would come from it. I'm obviously grateful. Hopefully a few of you all are Redditors. Any? Couple, one or two? Thank you. Thank you for all of your upvotes and thank you for also admitting you're the least productive people here. So thank you for your candor. I got so excited as crypto started taking off because Reddit is where I dove in. R/Bitcoin is the community that inspired me to first invest in Coinbase back in 2012. R/Ethereum was the community that got me really excited about what could actually be done with programmable money and this concept of building an internet that was decentralized and truly in the hands of all the people creating content. And now what I am seeing here, especially within the Solana community, is nothing short of awesome.

And we can just cut to chase and one of the reasons why I'm here is to announce a collaboration that we're doing. I have a venture fund called Seven Seven Six. We're earmarking with the Solana Foundation $50 million to invest in the next wave of social built on Solana. Because I think this new world... We were debating whether to do the announcement at the start or at the end, I'm happy we did at the start. It's good vibes. But my job these days is with our team to look for the next big thing, put our money into it, give our support, our advice, our feedback, and help build businesses that'll be even bigger than any of the ones I've created. And it's exciting because this actually fulfills ambitions that I remember having 16 years ago but that we just couldn't execute on because the technology did not exist. And so I'm going to take you down memory lane a little bit. We'll fire up some slides.

This is actually the very first version of Reddit that went live in 2005. I was not a great web designer. I was not. I'm really proud of Snoo, our mascot. I created that while I was bored in marketing class. But this was the first version, and a couple of things to notice, karma score, absolutely stole that from Slashdot. But I realized, okay, if we can get people to be incentivized to post good stuff, we can get more people to post more good stuff. And we'll just use internet points. It'll just be made up. And so if you got an upvote, you would gain a karma point. If obviously you were downvoted, you'd lose one. As you can see here, I posted the first link to Reddit, the Downing Street memo, and I was promptly downvoted because my co-founder is a dick. I knew exactly who it was, because it was just the two of us in an apartment. I knew who did that, and I have -1 karma. But internet points were the way we got people to come together and produce high-quality content.

If you could believe me, in 2005, no one believed me when I said that people would spend all this time on the internet creating content, sharing content, commenting on content, but clearly it worked. And as we saw more and more progress, I obsessed over even designing the up and down arrows. I probably did like 10 iterations. I'm embarrassed by how many different versions of up and down arrows I designed. But this was all with the idea that we could reward people and get them feeling like their contributions mattered and encourage the best behavior. You'll notice the leaderboard there, the stats. That little janky link was one of the most important part to the website back in 2005 because the top submitters cared so much where they were on the leaderboard that when the stats thing went down, we would get a flurry of emails from people saying, something's wrong. Fix the stats leaderboard. I grew up playing video games, probably like a lot of you, and this seemed like a pretty obvious mechanism to just motivate people to keep posting content.

But again, we're talking about internet points that outside of the community don't really amount to much, even awards. So once karma points exceeded their value, because once people got far enough along on Reddit, a new user would come on and feel demoralized because the idea of one day getting a million karma points seemed impossible. So I had to create new games. These awards, I was inspired by GoldenEye on the N64 because the end of Deathmatch, even my friends who were terrible at the game and never won would still get a little fun award at the end, like most cowardly. And we would ridicule them for that. It turned out that's like you spend the least amount of time on the screen of other players during the match. And it was these novel awards that inspired the Reddit awards today. I literally have people who introduce themselves, not by their government name, not by their username, but by the fact that they are a 12-year Redditor or a 14-year Redditor.

These badges, these awards that were just a game mechanic that I created 16 years ago without much thought have become a sense of pride. But I look at all these things and I think, damn, if only there was value beyond this world of this ecosystem, because there's clearly value there. And everything I've seen in the last few years, the reason I'm so excited about Web 3.0 is this is all the same mechanisms, except with real ownership. With real value gained by the people who did all the amazing work to make these platforms function. And then I can't not talk about swag. This was Reddit's original business model, and it was actually the first fight we had. So the first two months of Reddit, we got into a big fight because I really wanted sell merch. I knew that even though we had this burgeoning user base, that random strangers on the internet would want to buy t-shirts with our logo on it as a way to show solidarity with our tribe. It was a huge fight, finally won it, and I built a store. And this was before Shopify, before Stripe.


This was like a janky PayPal. It was really hard to take money from strangers on the internet back in 2005, okay? But I get this janky storefront up. I filled the bedroom with probably like 300, 400 t-shirts and put it online, and within 24 hours, sold out. And then I spent the next day stuffing envelopes and taking garbage bags full of these t-shirts to the post office. And with every one of them I sent out, I felt a little bit validated because random people on the internet wanted to show their pride by making their torso into a billboard for us, and give us money for that privilege. Today, just seeing someone change their profile pic is an even bigger statement of that tribal solidarity. And again, maybe if you have one of these original 400 Reddit shirts, you could probably fence it on eBay for a few bucks, but you didn't actually capture the real value. There was tremendous value in being one of those early adopters and signing up to say, yes, I am a part of this. I want you to believe.

And everything I see play out, even the most basic profile pic project, is a reminder that this is like the core atomic unit of building community online. And I just can't help but get even more excited because the rate at which this will grow is... it is hard to overstate. And even just thinking about where you all were, we were reminiscing backstage a year ago or two years ago with how far the Solana ecosystem has gone, I'm just very excited. So I'm thrilled to be announcing this fund with you. I hope we can do some amazing stuff together and fund the next generation of the social web.

Raj (09:45):

I think we totally will. It's totally going to happen.

Alexis (09:47):

Are you going to do that? Are you down with that?

Raj (09:53):

It's going to be incredible. I don't know if anyone was paying attention yesterday. Something interesting happens, right before Alexis and I went onto a... I think it was Fortune interview to talk about this... or Forbes, one or the other, to talk about this fund, I had gone on Twitter... GM everyone, by the way. GM.

Alexis (10:20):

Yes. Good morning.

Raj (10:22):

So someone who happens to be a good friend of mine, Sam Lessin, he used to run product at Facebook. I've known him for 10 years. He's the first person I've seen negatively respond to the idea of us all saying GM in crypto. And we all love GM. It's just good vibes, right? And so I went on Twitter and I said, "I'll kill you." But this wasn't me threatening Sam. I've known him for 10 years. We trust each other. Sam talks a lot about how... he was in the room when Venmo made the trust feature. I should be able to trust Alexis to be able to take as much money from me as he wants. We have a relationship. We should be able to flag that, right?

All these little features, the nuances of how we connect with one another and how we trust each other and how we have relationships should be reflected in social. But right now there's only little pieces and it's the pieces that happened because one platform that becomes monolithic decides which features it's going to differentiate on. And so, yeah, I guess I should have expected this, and my comms people tell me that I should have expected it, but I got suspended on the first day of Breakpoint. And it was actually amazing because I'm super addicted to Twitter. This is the first time I've spent 24 hours not on Twitter in probably years.

Alexis (11:44):

Jack just wanted you to have a respite from [crosstalk 00:11:47].

Raj (11:46):

Jack's a meditator. He wanted me to just meditate on my feelings and beliefs and my actions, and I did. Just another point on this, it was a joke. It was a reference to this Costco founder who, when the CEO talked about increasing the cost of hot dogs, he said, "I will kill you." So this was sort of two ideas to get other in one tweet. There's a lot of nuance, like I said, in social. Sam and I know each other, so of course I would never kill him. And also if you know this joke, it's the idea that there are some things that are sacred, that are positive, that are inherently good. Like a chief hot dog for everyone that comes into Costco is like part of their belief system. GM is like part of our belief system. We should wake up every morning and talk to each other with good intentions. And if you're going to threaten that, I will kill you, right? And that joke...

Alexis (12:47):

Like a Costco hot dog.

Raj (12:49):

Like a Costco hot dog. And that joke, Twitter doesn't get it. The rules don't get it. It's going to be hard to regulate these things and moderate these things. But when all of it comes from one place, we just see that nobody's happy. Jack's not happy with the rules that he's been forced to put in place, which is why he's deciding to turn Twitter into a decentralized protocol. I think my fear, and I don't know if you agree, but Facebook's going to do the same thing. And Reddit's going to do the same thing. Everyone's going to do the same thing, but these things happen pretty slow, and there's opportunity to build from all directions. It doesn't have to be the old social platforms converting. We can build new ones and it doesn't have to be competition and it doesn't have to be winner take all.

There will be hundreds of successful social media companies that are protocols and clients to those protocols, and choices will be made in programmable, modular ways between communities, just like Subreddits do that in certain ways. But it'll be much more fluid and we'll be able to govern these rules. I kind of see this pretty clearly, but I only see like maybe five or 10 companies trying it and building it. There should be 100. There should be 100 like tomorrow. So as we were talking with this reporter yesterday, it was a flurry of thesis. And even backstage, we just couldn't stop talking about all the ways that this future is going to happen. And I think it's going to happen quickly. And I realized $50 million is not that much for the number of teams and stabs at this problem that I think can happen in the next 12 months. So we're going to increase it to a $100 million.

Alexis (14:31):

That's right. See that, we lured you in with the 50. Surprised you with the hundo. And look, this is real. Normally, incumbents have had, and Zack has taken full advantage of this, incumbents have had a huge unfair advantage with the distribution. As social evolved, Facebook can gobble up, Instagram can gobble up, WhatsApp can get the economies to scale that distribution. But I would argue in Web 3.0 it's actually a liability because the intention with which you're building these new protocols and these new communities starts from the very beginning. It seeds the foundation of how people think about the platform. And the baggage of Web 2.0 infrastructure and the Web 2.0 precedent is that you're ultimately just harvested for an advertiser. And that factors into product decisions. That factors into design decisions.

And what's really exciting is that there's a whole new slew of founders who have a chance to jump into a very energized community and actually start building something with a very different business model in mind and very different product instincts and very different design focus, and that's compelling. And I think we could see new platforms emerge very fast. We talked about Discord backstage and how... 2015, I think, I first started noticing them on the sidebars of gaming communities on Reddit and I thought, damn, they're onto something here. And as someone who's suffered through TeamSpeak, it was like, okay, clearly there's got to be a better way. But that was five years now, six years now Discord is the dominant platform for all the real-time conversation around NFTs and a lot of things in crypto. But that window for a new platform to emerge keeps getting smaller and smaller. It keeps moving faster and faster, and we haven't even seen what happens when people build this way first.

Raj (16:33):

Totally. Yeah, the cycles are getting faster. And we don't have to wait. And I think even just the rise of Solana and the cycles in the blockchain industry have been getting faster. And a lot of folks are surprised by how much and how fast so Solana has grown. I think this next wave of companies are going to get to a billion... we set it at the top of this whole conference, a billion users. And we didn't set a timeline. We set as fast as possible. I think it could happen in 12 months, 18 months. It's very feasible if we build that future. And I think it'll happen in waves. Applications protocols will be quickly saturating to a billion, 4 billion users in rapid succession because it doesn't have to be a competition of a monolith against another. It's just ideas and changes and protocol shifts and forks that can propagate very quickly.

So I think this future's going to be happen very quickly and it's all connected. This is why we wanted to have Solana be one giant global state machine. A lot of people call it monolithic. Yeah, it's monolithic. That's the point. It's all one computer that we can build all of this together on because if you saw... I realized a lot of people miss some of the best talks here, but Jules Urbach from Render is making a photorealistic metaverse. We will be able to connect these social protocols to that rendering engine and we will be living in the metaverse faster than anyone thinks. It's going to happen.

Alexis (18:04):

And when that user experience hits, it will hit. In 16 years of designing product, of investing in product, I keep coming back to great user experiences, almost always end up winning. And that's broadly defined. That's the literal user experience as well as the figurative. How does it make customers or users feel? And what's exciting is we can do things on Solana that... and I'm not a maximalist in any regard. You'll see me, I'm very pragmatic on this stuff, but we can do things on Solana that just make so much more sense to create that amazing user experience that people have come to expect. And that's it at the end of the day. That's what wins. And you tie that in to being able to actually own the content you create and actually get rewarded for things like community building. It's going to be exhilarating.

The second wave, Web 2.0, whatever we're calling it, I really believe it's going to look like this transition period, almost a bleep in the internet where we first got online, everyone's on the World Wide Web and we were making our geo cities' websites and just trying to build for what was largely a pretty read-only internet. And it's so obvious to me, even in these last few years now coming out of the crypto winter, that this era we're in now is going to define, really define the internet as we know it. And when I'm explaining to my daughter about these phases of the internet, she's going to look at me and be like, "Wow, dad. You played all those video games without being rewarded for any of your time or effort." And she'll be shocked. She'll be shocked that I bought things on the internet that I didn't really own. She'll be shocked that so many of the things that are really some of the most valuable work online, whether it's content creation or curation or community building weren't rewarded in any way, shape, or form.

Alexis (20:07):

It will seem like this weird, dismal, brief period of the internet. And I think we'll all be better off for it, ultimately, but I'm just excited to see what people build because we're all still in the very early days where we're actually just trying to take better versions of what we've known for Web 2.0, and I think things level up once we get out of that mindset and then eventually start building the things with a first principled look at what Web 3.0 really can unlock. But I'm already excited for this stuff that's coming, which is why we're going to put $100 million towards funding it.

Raj (20:43):

You know what else we should do is make sure the app stores allow NFTs and tokens. Are we really going to hold this back at the...

Alexis (20:54):

The good news is, look, Epic on the one hand has been fighting the good fight and on the other, not so much, but momentum here is on our side in a world where I know most of you all are probably default skeptical of regulators, which is a fine thing to be. I really do think though that the principles of what is getting built now are so aligned with the average person, with the consumer. And I still do believe that those people are represented by people in government who are at the end of the day beholden to the voters.

I do think the more that we can tie the relevance and the value of crypto to the average American, especially beyond our initial early adopter community, the more we can make crypto a big part of people's lives, the better, because that ultimately is going to put leverage on the couple of monopolist or duopolist with their app stores. And I think it's still one of the strongest leverage points we have, which is it's just not good for consumers to have one of two app stores to choose from, and both that are pretty egregious in what they charge and the control they have.

Raj (22:05):

It's clear that social media affects government. It affects political movements. It's just very clear all of us. And I think one of the things that I always have tried to do, building products where people are taking on social behaviors, connecting is replicate what they're already doing, but do it in a positive way. I think you did that really well with Reddit. Focusing on upvotes, focusing on content creation and elevating each other and our creations and our content. And I'm curious, do you have any ideas about how the types of forces that have coalesced political movements in social media might be reflected in this next Web 3.0 Version of social media?

Alexis (22:48):

I really do think we're seeing some really interesting types of governance emerge. Look, for those of us, whether we're in European democracies, American democracies, these are global democracies, we ostensibly like these ideas of everyone gets a vote. And what's interesting now is you're even seeing what some of the recent ENS stuff and some of this... Just even the concept of vote delegation, being something that is getting more normalized. What I love about Web 3.0 broadly is we get a chance to think about, from first principles, how we can architect better and more representative systems. And so on the one hand I'm like, would I ever delegate my vote for a president of the United States? Would I ever delegate my vote for some company I'm a shareholder of? Maybe not, probably not, definitely not. There's a spectrum of answers to that. But what we get to build is whatever we think is the best tool for the job and then the broad market basically decides, okay, this is what wins.

And this kind of experimentation, I think, tends to be among the most, or will ultimately reward the most egalitarian way possible because it's not controlled as basically every institution has been from the top down for so long. So I do think there is this pretty strong streak throughout the crypto community that almost by definition is built in opposition to institutions that have had top-down authority and plenty of times abused it. So I think when you combine community and capital, which we're seeing play out right now, really surreal things happen. And WallStreetBets is probably the most visceral example that I get asked about all the time back in the states. But that's one example of many where you are seeing a power shift from the traditional top-down structures to the bottom-up, where it's people who are connected online able to communicate in real time, at scale, for free, essentially, and now able to also move dollars. And even though those dollars individually may not be that much, in aggregate, especially when coordinated, can move markets, can shift all kinds of things. This is the experimental phase of it so I'm excited to see what's to come.

Raj (25:16):

The word delegation, I think, that I heard there is so important because delegation is happening, like you said, every day in crypto. We delegate to validators. In Solana there are stake pools and there's nested delegation that can happen. And our representative democracy is a delegation of responsibility and decision-making authority. But there are really only a few ways that you can do it and a few bodies that you delegate to and a few people. And then you mentioned this idea of would I delegate my presidential vote? Maybe not that one, but there's probably 100 offices that we're voting for. Right now we just go one side of the ticket. That's a pretty dumb way to do it. Not everyone's doing their research.

Alexis (25:59):

This is the opening of a lot of doors for a lot of people because with all the progress that we have made so far, we are still a pretty insular community. We are all still early. Just being here means you are in a very, very select group. Congratulations, you're going to make it. You're among the earliest adopters. Yes. It's true. And so you're among the earliest adopters of something that I... I've been on record. I was on Rogan CNBC 2014 saying that I was cautiously optimistic about crypto because it just felt like, no, this is too good to be true. Somehow it's going to get screwed up, someone's going to mess it up. But I've gone from that to pretty irrationally exuberant now in the last year. It now feels inevitable. And so everyone who is here, you are among the earliest adopters for this. You all have a mindset shaped by being immersed in this space for a little while now.

There is a whole world, the vast majority of people still have not even started to think about the world the way that we do now by default. And that is going to unlock even more creativity and even more motivation and even more energy. And I'm excited to see that. And I encourage you, please, go out of your way to find people in your immediate community. Your friend group's an easy place to start. Don't be that person who just at every dinner just keeps talking about crypto, but please create this to be as welcoming and open as possible, because that is actually the long-term greedy move to make, because the faster that this adoption spreads beyond the early adopters in tech, especially the dudes who tend to look like me, the faster that this actually comes to fruition, and the more powerful it actually is.

Alexis (27:54):

And I'm excited because we get to rethink so many systems. And because finance is tied intrinsically into this, it means rewarding people for work, for effort, for creativity that historically have not been. And I get excited about that because selfishly, I just want better stuff. And so whether it is better democracy, whether it is better art, whether it's better social networking, we will get to see a flourishing, a literal Renaissance happening because of what is getting built here. And that is an amazing thing to be a part of because there will not be another time like this.

Raj (28:31):

There won't be. That's awesome, man. This is so cool. Look, I just want to close on one note. The one thing that came out of yesterday was this idea of #freeraj, which I love, but I'm back now. And so I don't need to be freed, but I do need to be freed from centralized social media. I want to get off Twitter. I want to get off. Help me do that. Build the next Twitter, build the next Facebook, build the next Instagram. I'm going to have a special prize for whoever helps me get off and delete my accounts from those centralized services.

Alexis (29:16):

Oh, the bounty is out there. I love it. Right on.

Raj (29:20):

You can come hang out with me and Alexis. Dude, thank you so much for coming, Alexis. This has been phenomenal.

Alexis (29:25):

Thank you.

Raj (29:25):

And I think we have many more great conversations to come and so many teams are going to form. It's going to be truly wonderful. I can't wait to do this with you. And thank you for committing capital and your time to these builders. It just means the world. Thank you.

Alexis (29:37):

I'm excited. Very grateful. Very grateful you all.

Nov 16, 2021
Tommy & Taylor Johnson - Co-Founders, PsyOptions Ep #51

Tommy and Taylor are the founders of PsyOptions, a DAO developing the leading options primitives on Solana.


00:09 - Introduction and Origin Story

04:04 - What are the challenges / improvements in Solana?

11:49 - Integration of Serum v3

14:32 - ​​Adoption of PsyOptions

17:19 - Architecting the system

22:11 - Liquidity mining vs. options trading

26:27 - Background in trading options

28:05 - DeFi vs. Traditional finance products

30:56 - Gaming as a market

32:56 - Exciting things out of the hackathon

34:09 - Announcements for PsyOptions

37:53 - If Solana could change one thing?



The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Anatoly (00:09):

Hey folks, this is Anatoly and you're listening to The Solana Podcast. And today I have with me Tommy and Taylor, co-founders of the PsyOptions protocol. Awesome to have you guys.

Tommy (00:18):

Thanks for having us.

Taylor (00:19):

Thanks for having us.

Anatoly (00:21):

Cool. So what's the origin story? How did you guys get into crypto and what made you build PsyOptions?

Tommy (00:27):

Crypto, it goes back to... I remember watching the Ethereum ICO, just being a broke college student, but felt we were too broke to actually throw anything into and that's a big regret, but that shaped up how we got into Solana later on. Really dove deep into everything back in 2017, right before the summer hype. And then in the summer hype, tried developing a little bit on Ethereum, doing some solidity development in the spare time, but I never jumped full time into it until PsyOptions. Taylor has a little bit of a different history with crypto.

Taylor (01:03):

Yeah. I've actually been full-time in crypto since late 2017, after Tommy and I shut down a previous business we started in school. We were looking for different things to do and I knew crypto had a lot of hype in 2017. I was like, "All right, this is definitely an industry I could see myself being a part of." I eventually took a job at Blockfolio and then as well as doing some freelance solidity development and then been full-time ever since.

Anatoly (01:27):

How did you guys meet? What was the genesis for you guys to go build PsyOptions?

Tommy (01:32):

Well, Taylor and I are twins, so we met a long, long time ago. We've always been hacking on ideas and stuff. And I guess, Taylor had his eye on Solana from 2018, right Taylor?

Taylor (01:47):

Yeah, pretty early on. I remember Multicoin writing about it. I was like, "Oh, this is actually a really sweet architecture, solves a lot of problems that we saw in Ethereum." And kept following before Mainnet beta was launched.

Tommy (01:59):

Yeah. And so we had been tinkering around, created a GitHub organization last summer, like the same one we're using now and just started reading the documentation. And then had a few projects we tried in the fall that never really took off. And then in October we were surfing with Tristan from FTX and he was just talking about Serum and everything that they were working on. So we knew what was in the pipeline and had that in the back of our mind. We did the first hackathon, did in place, built a trusted third party Oracle. And then after that had an issue with TradFi, trying to get API access to automate a options trading strategy, and that was what kicked it off. We were for fresh off that first hackathon, wanted a fresh idea, had our feet wet in Solana. And it was like, "Taylor, what if we just built options into the blockchain? We can get this API access built in. We have the order book already there, there's some basic infrastructure." And that was the genesis.

Anatoly (02:59):

That's awesome. Limited access to data was one of the reasons I started building this thing. Because I used to try to build stupid deep learning models on interactive brokers and you never have access to data. It's always even the quality is really suspects. It's like, "Do I really know that this is where things got executed? Or did they just copy and paste stuff from a database with a bunch of errors?"

Tommy (03:26):


Taylor (03:26):

That's terrible. Yeah. If you want good data quality, you have to pay up for it. That's why Bloomberg Terminal is what 20, 25K a month. And if you're just the hobbyist or just trying stuff out, it's just not feasible to pay that much.

Anatoly (03:41):

Yeah. This is to me I think part of the beauty of the space right now, is that you can build up a lot of what finance is with just a bunch of hobbyist. It's like Linux. Linux in the '90s, you're competing with Microsoft, billions of dollars of engineers buildings stuff, but it's just a bunch of people over the weekend can compete. It's crazy.

Tommy (04:03):

Yeah. It's wild.

Taylor (04:04):

I think that's one of the best parts, all that coordination.

Anatoly (04:07):

So what are the challenges? You guys are one of the earliest I would say teams working on Solana. What have you guys seen, or what were the real painful points? What got better? What still sucks?

Tommy (04:18):

Oh man. All right. This first Solana season hackathon, the one that we won, we wrote everything in Solana native. I remember pinging [Armani 00:04:29] back in February saying, "Hey, I hear you're working on some framework, can I poke around? And checking out the repository." But it wasn't anywhere near complete or, I didn't dive in enough to use it for the hackathon. So now I rewrote the entire American option protocol in Anchor and it took me very little time to actually write that. So the development life cycle and just ease of getting up to speed, has improved ridiculously.

Taylor (05:07):

Yeah. And documentation has improved too.

Anatoly (05:07):

That's awesome. What is Anchor doing for you guys that Native, Rust isn't?

Taylor (05:13):

It's helped simplify our integration tests. So that's one thing that we try to do when we first started was, we wrote our own integration testing framework in Rust. I guess I wouldn't even call it a framework, it was pretty rough. But Anchor takes care of that. You're just writing your test in JavaScript, it's pretty easy to get up and running. And then also handling a lot of different edge cases that you wouldn't have to think about, checking account addresses and other things just to bring safety in. And it removes a lot of those headaches that, if you're just getting started and trying to hack something together, you're not really going to be thinking about.

Tommy (05:48):

Yeah. I think the account, de-serializing accounts, token accounts and things like that. You just have your accounts structure, passing that into the context and it de-serializes all that. The amount of little issues we had just because oh, we mis-ordered one thing in the array when we were refactoring, the accounts array, and it's like, "What the hell is going on?" And then you're trying to debug and add messages and stuff, because you're just like, "Oh man. And what is..." And then it all turns out to be a typo or you fat fingered moving one line up or, and it was... So the account structure and dealing with that is just incredibly easy. You don't have to de-serialize anything yourself.

Well, anything that has a token, SPL token program or even some of the DEX infrastructure. And it makes cross program invocations a lot easier. I've been working with some teams for this hackathon, and wrote a bunch of cross program invocation examples for these teams to get up and running with PsyOptions pretty quickly. And it was just seamless for them to use our data structures and serialize it, de-serialize, because as long as we're all using the same framework, it works.

Anatoly (06:56):

Yeah. This was is my decision, so you can blame me, but I really didn't want to build a shitty framework. And until people started building on Solana, it was really hard to know, what do they need? I think it would've been worse if we built a bunch of code that nobody could build with, because it would've been incomplete. I'm going to say, it takes a lot of discipline to do that, versus laziness.

Tommy (07:22):

It makes sense to offload it on to the actual DAP developers. It's a different beast when you're programming the underlying system versus the actual just Solana runtime program. So it makes a lot of sense how Anchor came out and who really is leading it.

Anatoly (07:40):

Can you guys tell me what worked really well? Or what features or anything for any other Devs that when they're coming into building on Solana, what stuff actually feels like a superpower?

Taylor (07:52):

Well, one thing that's improved a ton is the SPL token program and how you manage the token accounts and whatnot. That's definitely something that a lot of the new developers on Solana don't have to deal with. But back then we were building into our UI the ability to have multiple accounts for the same SPL token and it was super frustrating and whatnot. So using those associated token accounts and other kind of, I guess you could call them rapper programs or things like that, that just improve the UX significantly. Understanding those and why they're there is pretty important when someone's getting started.

Tommy (08:30):

I think taking it a step further too, how does the associated token program work? And what's really under the hood is the program derived address. I put together some documentation for people starting to onboard to PsyOptions or related protocols. And I'm like, you need to read up all these Twitter threads, these documentations on PDAs, because there's just so many things you can do with a PDA that's very unique. You can get a mapping just to accounts, you can create a unique constraint. So for PsyOptions, there should never be... Right now, there's no reason to have more than one of the same option and the fungibility of those options are based on the expiration date, the strike price, the asset pair. And so we just have a PDA that is seated with those parameters and it creates this unique constraint.

Anatoly (09:24):

Oh, that's cool. So you encode the constraints as, basically hash it into the address.

Tommy (09:30):


Taylor (09:30):


Anatoly (09:31):

And the taker then has to satisfy those constraints to be able to take that trade.

Tommy (09:36):

No, not on the trade level, just on the general structure for creating the option. It's like, okay, if you want to spin up a BTC 70,000, USDC strike for the October 29th expiration, just that structure that creates that... because that's structure is the core structure of PsyOptions, the Psy American program. And that's what then controls the option TokenMint and writer TokenMint and how you dull out those option tokens. And so it's just there can never be more than one of those specific to those constraints. So it's separated from the trading concerns.

Anatoly (10:14):

Got it.

Taylor (10:15):

Yeah. I think you thinking of your stateless escrow. I thought that was a pretty cool proof of concept.

Anatoly (10:21):

Yeah. I wasn't sure that you guys already built... I think this idea has been around in crypto for a while, so I wouldn't be surprised if you guys use it too. But I like that idea that, because you don't want to generate infinite number of these markets, if everybody enters the same data, then it's going to spit out the same BTC month increment whatever, like May 2021 option or whatever you want.

Tommy (10:47):

Yeah. And we've seen it too. It's really useful to have these deterministic ways to look up an account address. So it's like, "Look, I can just check if this option market already exists by using these parameters, the PsyOptions market exists." And we also ran into some issues that we had to hack together, on the client side, because Serum doesn't have these kinds of constraints. And an adversary could come in and spin up multiple Serum markets for the same asset pair. And then when you're pulling that data from the chain on the client, it's like, "Well, which one is your UI using? Which one are these automated traders using? All that kind of stuff. How do you sync them up?"

And so that was a pain point, and we had to whip together a package. But now with Serum's permission markets and some other stuff, we can now use PDAs to say, "This is deterministically how the UI is going to determine the market. Here's how everyone else should do it. These are the seeds." And then it keeps everyone in line in a more decentralized way, rather than having to have some NPM package with metadata and it's painful to maintain.

Anatoly (11:54):

Got it. That's cool. What actually runs the market? Is it a Serum Q, a Serum V2 or V3 Q?

Tommy (12:03):

Serum V3 right now, for the Americans. Yeah.

Anatoly (12:05):

Awesome. Man, that's super cool. How was that integration? Is that blood, sweat and tears still, or are the tooling itself around Serum getting better?

Taylor (12:15):

It's getting better.

Tommy (12:16):

Blood, sweat and tears.

Taylor (12:17):

Yeah, but it was definitely blood, sweat and tears. I think that's what took us the longest part in the original hackathon that we won, was doing the Serum integration. And we weren't even doing any cross program invocations to Serum at that point, it was literally just client site integration. And that was really difficult. No documentation, got to read through the source code. I think we even found some bugs in their type script package and had to patch it ourselves. So yeah, definitely blood, sweat, and tears there.

Tommy (12:48):

There's still room for improvement. I'm like drop in list every time as hackathon participants start asking, or users are complaining about settling funds. I'm just at a constant stream of, "Hey, we should document this and add a flow chart for that." Because all the customer surface is offloaded to the people using the Serum stuff, so we get that inflow of feedback from users and other developers building on top.

Anatoly (13:12):

Yeah. People don't realize how strapped every team is.

Tommy (13:16):

I agree.

Anatoly (13:17):

It's literally like three, four engineers at best to, no customer service, no nothing, just pure software, open source software. It's not like when you look at a market cap of something, you think there's a equivalent to market cap S&P 500 company with 30,000 engineers just all cranking away. Thank God it's not, honestly.

Tommy (13:41):


Taylor (13:42):

Yeah. It's got its ups and downs. At least you can move fast, it's not a bureaucratic process. But at the same time, customer support definitely dwindles and I think 70% of people are probably testing in production. So the end users are just going to have to deal with that and understand that's just the way things are done in crypto right now.

Anatoly (14:03):

I guess, how close are you guys to launch and what are the next blockers?

Tommy (14:07):

So we actually are on Mainnet trading with BTC and ETH markets right now. We have been live since the end of August, just with BTC and ETH for the September strike. Then we upgraded to a V2 of our American protocol with Serum permission markets, so we can eventually close those markets. And so that gives us the ability to open a bunch more. And so we're live with those, we're working with a couple other partners to get some SOL markets up pretty soon. So we'll probably announce that here.

Anatoly (14:40):

Awesome. What have you guys seen in terms of adoption, and how are people using it and has anyone surprised you with what they're doing?

Tommy (14:49):

It's tough right now from the retail side using our user interface. I think what the biggest thing that I'm excited... There's been a lot of great feedback. Options are not an easy instrument to use, managing your own positions is tough. And so we've gotten a lot of great feedback from the community and it's shaping what some of these projects that are work thing on during this hackathon. I think that's what's most interesting and surprising is these teams that are building on top and they're not user interfaces. These are protocols that are going to be managing certain strategies and rolling positions for users, and so you can have this more passive product. It's like a ribbon finance to the basic ones, where it's just selling covered calls and secured puts or things that.

But there's a lot of plans, I don't want to leak their Alpha. But a lot of plans for additional products where it's more just, set it and forget it. And it has certain properties detailed out to hedge for various things, give you certain direction on volatility. And it'll make these... all these products, some more user friendly for retail, but also big institutions that are looking to hedge existing exposure.

Anatoly (16:00):

That sounds like you guys are building more of info level for options.

Tommy (16:04):


Anatoly (16:05):

That's awesome.

Taylor (16:06):

Yeah. We chalk up the V1 American that we built as just a primitive, and as decentralize as possible. It doesn't rely on Oracles, it doesn't need pricing information. So the only dependency is the Solana runtime and SPL token program, I guess now Serum with the permission markets. But the original one had only SPL token as dependency.

Tommy (16:29):

Yeah. So there's capital inefficiency with the American style, because you can exercise at any time up until the expiration. So we're about to hopefully announce pretty soon, we have a European that we've architected and we're going to break ground on that and we'll crank it out pretty quickly. That will have a little bit more dependencies, but it'll be more capital efficient because it'll be auto exercised and we'll have a margining system built into it. And the American will continue on because we're going to build, I like to call it Carta for DeFi, but just a place where people... We whipped out a vesting contract the other week. And we'll be able to show people their tokens that are vesting, their options that are vesting, the ones that have currently vested and the options all in their portfolio and whether they should exercise them or not. It'd be less like trading based and more of just an interface for managing your portfolio of vesting stuff and options, so.

Anatoly (17:33):

That's awesome. How many engineers do you guys have?

Tommy (17:38):

We actually just hired another front-end guy today. So we're two full-time front-ends, and we hired another protocol developer, so we're two full-time protocol developers. Then we have a community guy and a marketing guy, and then couple of part-time and open source contributors.

Anatoly (17:52):

That's so small, I mean that's awesome. I feel this is the biggest thing in crypto, is how fast small teams can ship really sophisticated products.

Tommy (18:04):

Yeah. I think, as I've learned, the hardest thing nowadays or right now is, it's not the programming, it's the architecting the system to fit the runtime and developing the instruction set. And once you wrap your head around how that whole system works and you have your instruction set, writing the actual code is not that hard. If you actually take the time to just think and focus, and you have to have the knowledge and experience to understand that, it's pretty easy to start architecting a bunch of stuff and delegating and managing a little bit more.

Taylor (18:35):

The thing I will say on that though is that, the runtime changes here and there, but the changes aren't that drastic. But when you're using dependencies like Serum, Pyth, whatnot, those change a ton. And so you're seeing a ton of changes on Serum, so one week you might have architected something for Serum B3, sounds great. All of a sudden Serum updates to some new thing and that might change the optimal architecture for it. So you have to be nimble in order to just go with the flow as different protocols update, and as new versions come out and new architectures are viable.

Anatoly (19:14):

It's weird to think of immutable code still having dependencies. But something with Serum, you're so dependent on liquidity in those markets that if they move to V4, you have to update because you can't point to a empty market.

Tommy (19:29):

Yeah. We bring a lot the liquidity ourselves. Well, these are brand new markets that we spin up. It's not as much of a pain point, it's more just announcing and coordinating. But it's more of the European protocol and architecture, it depends on a lot of the stuff like... it doesn't depend heavily on the SPL token, contracts aren't represented as SPLs. And so it depends on this new architecture that they just announced, that Bonfida has been working on. So it's just interesting, you have to keep up to speed with what exists in the ecosystem, so you can constantly be like, "Is there an improvement? Can we squeeze something out of this is?"

Anatoly (20:03):

Is the European option, are you also planning for it to be Oracle free, or no Oracle?

Tommy (20:08):

No. We'll rely on an Oracle just for the exercise. We're wrapping up the architecture and probably just, we're going to develop this one totally open source from the scratch. I just put up the boiler plate repository and its open source. We're going to open source, or at least make public the architecture, so everyone can read and comment on it while we're just cranking it out in the next week and a half. So there's a Oracle dependency just on one instruction, just to actually lock in the index price, that would be for the expiration. But we don't see it being too risky of a dependency, considering it's not an instruction that has a lot going on so we can do a lot of checks. We could pull two different Oracles and reduce the potential pitfalls there.

Anatoly (20:53):

Yeah. This is a hard problem too. When an option is exercise it's still going to hit the Serum market to actually exercise the price?

Tommy (21:03):

No. So on the base layer, the European, it's just going to... essentially the architecture is locking in the price, and then users basically have to settle up the positions and collateral themselves.

Anatoly (21:14):

Got it.

Tommy (21:14):

The best way to describe this one is Deribit on chain. It's really just like P&L, not the full underlying.

Anatoly (21:22):

Okay. So you can actually settle in any collateral. You could have an option on SOL, but settle in wrapped ETH or whatever?

Tommy (21:29):

Well this one, it's actually going to be... well, it's going to settle in the currency that it's trading. So BTC, it's going to have this siloed market and account that holds all the BTC and manages the entire portfolio, margining for someone's BTC options. And so it has it's own realm of just, this is the BTC world. And everything settles in BTC, everything's traded in BTC and premiums are even in BTC, but then it just uses the USD index price to actually settle up on the strike. And then SOL would have its own world, with its own portfolio margins system. So they're not cross margined between all those at the moment.

Anatoly (22:10):

Got it. Is cross margining something you guys are also thinking about?

Tommy (22:15):

Yeah. It's one of those things where we want to just crank this out and ship fast, because it's improved from the existing architecture, for when it comes to a trading perspective. And then we'll discuss a more improved cross margining system.

Anatoly (22:27):

Do you think that there's a gap still in this idea that I think, what's popular on DeFi Ethereum is liquidity mining, and I just want to put my tokens and get yield? And is there a gap between that and options trading and central limit order books?

Taylor (22:46):

I think there's a knowledge gap. The closer you are to dealing with the primitives, the more knowledge you need to have, the more hands on you have to be in managing your positions and whatnot. So I think that reduces the addressable market or the end users that are willing to participate. And so that's why you have people building programs and tooling on up to manage the position, so it can be more passive. Because I think that's one of the biggest things that drove a ton of people to DeFi, is the passive yield, all the token incentive programs and whatnot. So I do think that there's a bit of a gap, but it's slowly being closed. And the more passive it can be, the more non crypto people or even crypto native people, but the less financially sophisticated you could say will come in and utilize DeFi.

Anatoly (23:39):

So you guys imagine that... or there's probably somebody already building this, where I have my token, I'm an LP, which is under the actual thing behind that position is a covered call or some other fancy strategy, iron condors or whatever, right?

Tommy (23:58):

Yeah. So there's a couple teams from the hackathon building that right now, actually.

Anatoly (24:03):

That's awesome.

Tommy (24:04):

That's what I'm really excited about. Because that's what we've seen is, there's decent order flow, I haven't looked at the volumes because we're just very focused on product. We know what the low hanging fruit is, so we're not focusing on the vanity metrics at the moment and not really talking about the TVL and whatnot. But it'll just increase order flow because these people can just get passive yield from covered call products, or they can hedge certain positions just by depositing tokens. And it's all going to be managing these underlying options and straddles and things like that.

Anatoly (24:38):

How long does it take to go from, let's say I wanted to build an iron condor or something that as a strategy, can I do that? Do you guys have examples already, reference implementations for things like that?

Tommy (24:53):

Are you talking as a protocol or as just a user, using the... like a client?

Anatoly (24:58):

As a, here's my DAP, I'll take tokens from LPs and then automatically generate the position on PsyOptions.

Tommy (25:07):

The hard part actually isn't to the generating the initial positions, the hard part is handling how they want to roll, if you're trying to do it over time, where they just can keep that open. So the generating the positions is super easy, placing the orders. We have examples, CPI examples in the repository for minting options, exercising, placing an order, opening a Serums open orders account, all that kind of stuff. Just been cranking out examples as people ask for them. And then, it's onto those teams to handle that really tough part of, how should we roll? There's certain concerns in there for manipulation. There's certain concerns for front running, there's certain concerns for eating through the order book and having to build your own TWAP into it and stuff like that, so.

Anatoly (25:59):

Yeah. Man, you guys are taking on some really tough challenges, that's cool. This is something that I wanted to get good at, trading. Trading options and deep learning into these things, but I got it to work.

Taylor (26:15):

Yeah. It's a full time job. That's why we try to focus on the primitive and lower layers and try to get that right. So then other teams can focus, if they're much more financially savvy or have of better trading backgrounds, can handle that. It's a full-time job to be a trader, to come up with those models, to build those positions and roll them, it takes a long time. And you constantly have to be updating them too.

Anatoly (26:44):

How long did you guys trade options before?

Taylor (26:47):

Not much. We're just retail traders. I interned at an investment bank once a while back, but to the extent of my full-time finance career, that was about it. And then we would trade options here and there, but nothing serious. And then, when we wanted to automate that option trading strategy, that would've been probably the first automated system we would've built. I don't think we built an automated option trading strategy before that.

Tommy (27:15):

Yeah. I would say we relate best with the retail, speculative, YOLO option users, rather than very sophisticated options traders. But it's been nice building this and winning that hackathon and getting some attention, because then those people show up. And we have some really smart TradFi people who have been around crypto, some really smart TradFi people who have never been around crypto, contributing to the thought leadership of where we should go, what's needed to get to certain structured products and things like that. And that's been super helpful because we've been early in Solana and have the engineering capabilities and knowledge to work with them of a translating their vision into a Solana architecture. And so we've just been helping as many teams as possible that have that background and can bring that knowledge. And then, that's why we're just like, "Look, we'll help you as much as we can because you're going to help us answer some of these questions that we don't know." So it's been good to fill out the team and the surrounding circles with that.

Anatoly (28:23):

Do you think that DeFi is something that... I always think of it as growing faster than TradFi versus replacing it. Do you think these products are good enough to compete with traditional finance, or are we just going to see more stuff being built on open finance because it's easier? I don't have to go talk to a CME to launch an option for my in-game bullets for my shooter game or something like that.

Tommy (28:52):

I think it will be just the fact that it's open and anyone can do it. Looking at the architecture here and designing an ideal architecture for the most capital efficiency system, it's just not really... You could do it in CeFi so much easier than you can do it in DeFi. I don't even know if it's truly possible. We're still just on the back burner trying to figure out how you could portfolio margin everything. I think a lot of teams that we've talked to are all thinking about that in the back burners. It's like, how do we margin against everything? So I think it's definitely moving faster. I think they will rival CeFi, a lot of these products, but I think they're still going to be both working hand-in-hand.

Taylor (29:42):

Yeah. I think both have their ups and downs. The speed that DeFi innovates because of the open source nature and things can be represented and it's all digitally native, it just makes the pace of innovation faster, also makes what you can build much faster. Like CeFi you're beholden to, not that you're not beholden to regulation in DeFi, but CeFi there's a lot more red tape. You got to jump through hoops in order to be able to launch a market or... You can't just launch your own equities exchange, it's takes tons of money and resources and whatnot. So it stifles innovation in that respect. So I think even if DeFi can't become as capital efficient as CeFi, you're still going to have more innovative products, more flexibility in what you can do with your assets, that at the end of the day, you might not need that capital efficient, high, super fast, low latency systems to do what you want to do with your assets. So I think there's a place for both. And I think DeFi is just going to continue to innovate and outpace growth in terms of TradFi.

Anatoly (31:00):

Well, our goal is to get that latency to be as low as physics allow, and then we're competitive.

Tommy (31:10):

That's why we're here.

Taylor (31:10):

Let's do it, man.

Anatoly (31:11):

Won't rest until we're building neutrino emitter detector. I just think with gaming especially, the first massive multiplayer games instantly within six months had a market for the digital items there. As soon as you get something like Star Atlas or equivalent, like World of Warcraft that's decentralized with all these assets on chain, I think the idea of options as a service, people are just going to, "Well, I got whatever... I got more gold that people want to use because this game is hot right now." People are going to definitely spin up those markets, it's just going to happen.

Tommy (31:48):

100%. We've been talking about game... we're gamers ourselves, and I haven't played a game since I really dove into Solana development 11, 12 months ago. But I'm hoping to get back to it once Star Atlas and Aurory and all those other... Kaiju cards, everyone starts actually launching the game play, I'll jump back to gaming. But we've been thinking about it a lot and what could be done with this American primitive, and that got us into talking to other teams and other games, just to see what's out there. And then I actually got connected with Metaplex and built out a contract that they just announced that's focused on gaming. And it all stemmed from trying to think about, these games, everyone's so early and not really thinking about how these game assets are going to plug and play into DeFi protocols and things like that. And there's still just so much work and research that needs to be done, and some infrastructure needs to be built for it all to work perfectly together.

Taylor (32:42):

Yeah. I think the interoperability for gaming is still... there's still going to be some rough edges there, because it's harder to build standards across games. But I think you'll have a few games come out and maybe they'll have transferability between games and whatnot, but it's going to take some time and some trial and error before we get to this on chain metaverse where you can transfer assets between different game worlds and whatnot. But I do think that is going to be one of the ultimate killer applications on blockchain.

Anatoly (33:19):

What are you guys excited about out of this hackathon?

Tommy (33:22):

Oh, for me, it's really just the stuff we've mentioned with the structured products, passive yield products, all that kind of stuff, being built on top of PysOptions. I'm very heads down on product and everything at the moment. So aside from the people that are ping me, asking me for help, I don't really know what else is being built.

Anatoly (33:42):

Yeah, likewise. I see NFTs being launched and then I'm deep in the trenches and optimizations. I guess that's good. It means that there's more stuff to do than you have time, so you started actually going heads down and working.

Tommy (34:00):

But there's a lot. The roadmap with just these teams alone, is ridiculous. We have so many products that we want to whip out on top, and hoping to launch the first few in the next week or two. And then the framework's there, it'll be a little bit easier.

Taylor (34:14):

Well, it's just fun to see people building on software that you've built. I'm sure you and the rest of the Solana team get excited as new projects come out and new people innovate. And I think that's one of the more fun things to do, is just sit and watch what people come up with because you can't come up with every idea yourself, so might as well open source stuff and have community run with it.

Anatoly (34:33):

For sure. What should we be looking out for? Do you guys have any announcements you want to leak?

Tommy (34:40):

Oh man. SOL options coming soon. Passive yield products that will make it extremely easy for people to get volatility exposure or generate yield. And this is yield that's not going to go away. A lot of these pools are based on rewards, and API is based on rewards and things that will dry up and aren't sustainable. But the volatility is a little bit more sustainable in a sense. Sure volatility will decrease over time, but.

Anatoly (35:09):

So these are like covered call strategies, basically?

Tommy (35:12):

The first few are the most simple covered call and secured put strategies. But then there's going to be a few other vaults coming out once these are launched, then it'll be focus on a few other vaults that have different strategies. Eventually, we started talking to some other teams like Symmetry, because we want to get a good crypto index, because then if we get liquid index options, we can create a nice volatility index for certain baskets. So that's all on the horizon. And so, you need that rolling and rebalancing and infrastructure, and that's what we've been working on the past few weeks, or other teams have been working on. And then it's formulas for just managing array of positions.

Anatoly (35:57):

What is your development process like? How do you guys go to build test and ship?

Taylor (36:03):

In terms of roadmap and how we determine what to work on, it's pretty ad hoc, things change up weekly, biweekly. But we try to run in two week sprints, at least just pick like, "Okay, what... base on user feedback, check GitHub for issues." Obviously anything that's blocking usage is number one priority. And then it's, "All right. What do we want to see built? What do our partner teams need, and how can we get them going?" I don't know Tommy, you have anything to add to that?

Tommy (36:35):

Yeah. Protocol development too. I'd sit and focus and start drafting up a full architecture doc with the instruction sets and potential functions that are needed, black box some stuff, just to make it a little bit easier and then put a to-do to dive in later. And then you have this whole instruction set and a general outline and framework, and you know it fits into the Solana runtime because you've made sure that the constraints are handled. And then I'll dive into running a test driven development process with Anchor, just doing full integration test. You end up writing a lot more test code, but I just find that the confidence level is so much higher. You can refactor and upgrade versions and you're just so of confident in your code when you have all those tests, so. And then, it cuts down the time from DevNet testing, where everyone just puts up a contract and then just relies on interacting it to test it. Especially when you're building a primitive, you want to have all those cases handled.

Anatoly (37:36):

In your use case specifically with options, what bug are the most worrisome? Is it overflow or actual logic and economic?

Tommy (37:45):

Probably logic and economics. The American protocol, overflow is not an issue, not really. We do all the check map of course, but it's not an issue. Maybe if we get some weird [Altcoins 00:37:58] eventually trading, then we'll have some weird issues. But I'd really just say logic, economic attacks, things like that, when we get into the capital efficient Europeans that has the margining system built into the base layer, and liquidation built in the base layer. And just always thinking about account management. You have that limitation of number of accounts you can pass in, and how to architect around that.

Anatoly (38:19):

So if Solana could change one thing, what would it be? Or anything, and things-

Taylor (38:24):

Two things.

Anatoly (38:29):

... two things. Finite number

Taylor (38:29):

Fixed account length. If we could make it-

Tommy (38:32):

Oh, sure yeah.

Taylor (38:33):

... dynamic sized, I think that would be great.

Anatoly (38:36):

The length of the data.

Taylor (38:37):


Anatoly (38:37):


Taylor (38:38):

The account data.

Anatoly (38:39):

That's actually... I don't know if you guys saw, but believe-re growing reallocation from the program itself or the account that it owns, I think it might be live already in 1.8.

Tommy (38:49):

Yeah. I saw ...

Taylor (38:51):

I think I saw the PR for that.

Anatoly (38:52):


Taylor (38:53):

But that's one thing that... Sorry, but when people jump over from ETH to Solana, that's probably the biggest gotcha, that we're like, "Oh crap. I can't readjust or create a larger array, more mapping data, whatever." So that's one thing. And then also the number of accounts you can pass to an instruction [crosstalk 00:39:14].

Anatoly (39:13):

In a transaction. Yeah.

Taylor (39:15):

... open up more. Yeah.

Tommy (39:17):

And I think 1.8 handles a lot of these headaches, but you still, when you're trying to think, for the long term, just the limitations in general. I'm assuming they're always going to be there, the number of accounts you can pass in, can't be-

Anatoly (39:32):

109, the goal is to double the transaction size basically. So the number of bytes that a transaction can maximum size. That means you can double the user data or encode more, put more accounts in there. So there's always a limit because of the real time nature of the system. You're not submitting an arbitrary large transaction that then the block producer decides, "Okay, I'm going to pick this one." You're really like, "How do I write to the block right now?" And making sure that doesn't slow everything down, is a challenge. But really cool, man, you guys are shipping like crazy. It's awesome. It blows my mind that you guys were hackathon team that is now... there's teams in the hackathon building on top of PsyOptions.

Tommy (40:23):

I love it.

Anatoly (40:24):


Tommy (40:24):

I've been doing office hours, every Tuesday and Thursday, just letting people come in and ask questions because it's just nice to see people building on top. And we're going to do whatever we can to help them out and keep them there.

Anatoly (40:36):

That's super cool. Man, really good to catch up with you. Thank you for coming on the podcast. Is there anything you want to add for the listeners in the final bit?

Tommy (40:46):

Yeah. I would say, check out PsyOptions to trade your BTC and ETH right now, SOL coming soon. And then we'll be announcing an under collateralized European protocol pretty shortly, going to try and crank that out as quickly as possible.

Taylor (41:00):

Yeah. And get in touch. There's no shortage of projects that we can dream of and I'm sure others are too, but happy to help any team out that we can.

Tommy (41:08):

Yeah. And if you're a protocol too, looking to do option liquidity mining with American PsyOptions, reward contributors with options, or use the PsyOptions vesting contract, we're trying to get that. The vesting contract's a unique one, where you can delay your vest. The recipient has the option to delay their vest if the issuer grants it. So that way they can keep pumping the vesting and the potential taxable event. Not an accountant, so don't take that tax advice. Not financial advice.

Anatoly (41:39):

Not accounting advice, not financial advice. That's awesome.

Tommy (41:42):


Taylor (41:42):

No advice.

Anatoly (41:44):

That's super cool. Well, thank you guys.

Tommy (41:46):

Thank you.

Taylor (41:47):

Thanks for having us

Nov 02, 2021
Larry Cermak - VP Research, The Block Ep #50

Larry Cermak joined The Block as one of the first employees with the mission to provide professionals with accurate information about crypto. He now leads a 30-person research team that delivers insights to institutional customers.

00:09 - Intro

00:20 - Larry Cermak’s origin story / His work at The Block

08:25 - The fundamentals of Bitcoin

16:03 - The value of SushiSwap

19:35 - Investing based on Memes

23:42 - Market Value for future gains in Crypto

26:12 - Will NFTs be backing internet money?

28:44 - Thoughts on Algorithmic Stablecoins

31:00 - Regulation in the US

34:47 - Decentralization and tokens in the context of regulation

39:45 - Volume of users / social networks


The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.

The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

Anatoly (00:09):

Hey folks, this is Anatoly, and you're listening to The Solana Podcast. And today I have Larry Cermak, who's the VP of Research at The Block. Awesome to have you, man.

Larry Cermak (00:18):

Nice to be on, it's a pleasure.

Anatoly (00:20):

Yeah, so tell me your origin story. How'd you get into crypto?

Larry Cermak (00:24):

Yeah, it's probably slightly longer. But really high-level, I got involved in late 2016, I was in college in the US and was thinking about what to do my thesis on and Bitcoin seemed like one of the more obvious options, to not make it incredibly boring, so I just decided to go with that. And throughout the research process, I just kind of found that there isn't good research about Bitcoin, just in general crypto. There was either the super bullish people that were like all in on Bitcoin, or super bearish academics, and there nothing in between, and I felt like I can fill the gap a little bit.

So after I published that research, I shared it publicly as well with a few people, and based on that I got my first job offer to work at Diar which is a research company, focusing only on crypto. So I worked there for a couple of years, and really just tried to focus on data driven research, which now it sounds kind of obvious, but back then it just wasn't very common. Most people were just looking at the really simple metrics and munging data, but mostly it was just price discussion, price predictions, all that stuff. And we were really looking at just analyzing the market a little bit more fundamentally, that sounds even more silly now looking back.

And I got lucky that in 2017 when I joined full time, like early 2017 I joined full time, and that's when everything popped off massively, and it was just a bunch of shit ICOs, like a lot of sketchy stuff. I consciously started looking more into these projects, so I was one of the people that were kind of cautioning against some of the ICO stuff, and it was a lot of fun but I was quite skeptical back then still. So actually, a lot of people who have followed me for a while, they know initially I was a no-coiner, I had no crypto, and I was convinced that initially actually that a lot of this is just kind of hype mania, it's just all like overblown massively. But something really drew me into it, and it was mostly the permissionless nature, ability for anyone to participate, but what really I didn't like was just the hype around it, the marketing, the emptiness, and all that stuff.

So I over-focused on that I think initially, but after some time, I realized that that's probably not what this is all about. Initially, I didn't think that it was necessarily important for most projects to have tokens and I was very skeptical that most tokens need a project, and I started massively changing my mind on this with the DeFi beginnings. So early 2020 my mind started completely changing on most of the space and I stared allocating a little bit more, and now I also do seed investing privately. And obviously, I lead the research department at The Block which is now 25 researches, probably the largest research team in crypto.

Anatoly (03:33):

So you went from Bitcoin skeptic to full shit-coiner.

Larry Cermak (03:38):

Kind of, yeah. It's a little bit concerning honestly.

Anatoly (03:42):

In four years.

Larry Cermak (03:44):

Yeah, I don't think I was really a massive Bitcoin skeptic, I was just skeptical of everyone is just so positive, and Bitcoin maximalists, I just could not handle that. When you just start using really bad arguments, just kind of shit-post and being really negative about everything other than Bitcoin and not being open-minded, that really pissed me off and I wasn't open to it.

Then I was like relatively active in the Ethereum community early on and DeFi. We had Teo on the team initially who was one of the people the most involved in DeFi early on, he's now the Director of Strategy at Uniswap, and he definitely showed us all on the research team why this makes sense. And when I really started understanding that these tokens are not just useless, they can actually be used for real things, and they do get closer to almost equity in some ways, even though obviously a lot of them try not to, but when you have some sort of a claim and some sort of cashflows, that's when it gets interesting to me. And governance obviously as well, but that's when I really completely started flipping.

Larry Cermak (04:57):

But yeah, you're kind of right, I went from a skeptical no-coiner to then kind of a shit-coiner now, like spreading seed investments that I like.

Anatoly (05:06):

Do you still believe in this idea of sound money, or?

Larry Cermak (05:10):

So a lot of Ethereum community members think that Bitcoin is just a meme, it's going to go away, I actually don't believe that myself. I do believe that what's really powerful about Bitcoin is that it's been around for the longest time and it's very hard to compete against what it has, which is basically just the belief of a lot of people, and it's difficult to break that. And then you also have a lot of buy-in recently from, not only hedge funds, but also larger institutional investors, and that counts for a lot more than just blockchain, even though it sounds silly, something that's established as internet money and a lot of people pushing for it is really powerful.

So yeah, I still kind of believe in that and I don't think that Bitcoin is going to be surpassed by Ethereum anytime soon, I actually have a bet going with Kyle from Multicoin about that. But yeah, generally I believe there is some merit to it, but I definitely also believe that people should be more open-minded, and because a lot of people are close-minded, they are missing on a lot of really obvious opportunities. Really my bread and butter is exploiting these things, when people underestimate something, and when there is actual merit to it that they don't see because of some reason or another, that's when I usually perform really well.

Anatoly (06:35):

Yeah, that's digging for alpha man, that's real work.

Larry Cermak (06:40):

Yeah. But yeah, The Block's research team, when I started obviously it was just two people, and now we have 25 full time researchers that a lot of them digged that up for me now thankfully. It is a lot of hard work like doing a lot of that myself, but now there's a massive team behind me. It's going really well, like we're reaching a lot of institutional customers as well, and the market just exploded massively this year for institutional access.

Anatoly (07:08):

That's amazing. So 25 researchers at The Block, how many people total?

Larry Cermak (07:15):

Around 70 or something, 75 maybe. But The Block initially, even when we started, I joined one of the first employees like 2018, and the vision was always to go through all the noise and bullshit and price predictions, and SEO plays and all the click bait nonsense, and try to go through that and have more data driven, research oriented coverage on the news side. We started with that and then eventually turned into actually a research product that just mainly focused towards institutional customers. But obviously, the news part is still a really important part of the business, it's what most people know, the institutional product is not really accessible for regular retail customers.

And it's been a really, really fun ride, just going through this in the last three years. I don't think people realize how really difficult it is to go from nothing to building a media company that's recognized by people and somewhat respected. It's something that took a lot of hard work, and it's a very thankless business, like media, it doesn't usually make too much money, it's something that's really undermonetized in a lot of ways. So that's why we're going more into research, more into data, and just going after the institutional customers because they just have deeper pockets and they're more sophisticated, which is easier.

Anatoly (08:44):

What are the fundamentals with something like Bitcoin, something like money? It's just such a dumb idea for somebody that's like a value equity investor that's looking at the Amazon.

Larry Cermak (08:56):

It's a really good question, a lot of it is just a common belief that this is worth something. If you ask the same question about a lot of other things, you're going to arrive at the same answer, it's basically like the value is because a lot of people believe in it. Similarly with gold, like who's using gold for stuff, very little people for jewelry and chips and all that. Most people don't care about that, most people use it because they believe it will retain value and because they believe there is some sort of a scarce supply that's somehow protecting their investment.

And it's Bitcoin, it's something similar, where you have a lot of really, really religious supporters who are the holders of the last resort who are just never going to sell, that creates a pretty powerful price for a lot of these things. And then on top of that, you also have guaranteed fixed supply, which obviously I think there are going to be some issues about in the future, but it is a meme that people buy, it is a meme that people believe in, and I think that in itself is more powerful than-

Anatoly (09:58):

But people don't write research reports on gold, or fundamentals of gold, or how gold is going to get more gold.

Larry Cermak (10:06):

... Yeah, no, I agree. And I think it's like funny, we started the research firm three years ago, and since then what can you really research about Bitcoin? We've done obviously a few research pieces about mining, and few like micro looks basically on how Bitcoin is performing, but ultimately there really isn't much you can research. It's more so about just like enough people believing, and the better the buy-in is and the longer Bitcoin survives, I think the better the likelihood that it will continue surviving, is kind of my thesis. But there are a lot of issues obviously, like it's still not exactly figured out how everything is going to incentivized when there is not many subsidies anymore, and a lot of people just don't want to answer these things right now, because they just put it off.

But generally, yeah, there isn't much to research, we don't research much. What we also do from time to time is just explain what Bitcoin is, explain how it works, to just institutional customers that want to learn just fundamentally what it is. But generally yeah, if you want to dig a little bit deeper, really like Bitcoin mining is the only thing where look at a lot of data and analyze how that's going, everything else not much honestly.

Anatoly (11:19):

Part of this research right is to give you some ability to predict price I would imagine, like why would I care about Bitcoin, is because I hope that it doesn't crash or it goes up, something. So where does that come from?

Larry Cermak (11:36):

It just comes from people that... and I think that this is somewhat justified, let's see what's going on around us for the last two years and see that inflation is spiking while a lot of people have been denying that this is going to happen. It's just like this belief of finally having control over something, something like being programmed before, is a powerful concept that a lot of just hedge fund investors and institutional investors just buy into.

Anatoly (12:02):

Is it like a fundamental though? Are we going to have accounting standards for how much of a religious belief is spread?

Larry Cermak (12:15):

I think that by itself is somewhat fundamental, like why are people investing in gold, you can be asking the same questions. Central banks have some gold, but ultimately it's just because enough people believe that it will retain value, and it has done that relatively well historically. And as we are moving, everything as you know is now moving to the digital world, everything that used to be physical is somehow transforming into the digital world, and there's probably no reason why that shouldn't happen to money either.

And I think fundamentally, there also is some value to Bitcoin not changing that much. A lot of people make fun of it and I think it is kind of funny as well, there is not much innovation in Bitcoin, but also that it's one of the benefits, where you have something that's totally predictable, you have something that you know what to expect from. I kind of buy that as well, I think Bitcoin is one of the most boring things that you can invest in, but it's also the thing that usually gets people in the door, and it's always when friends come to me and when they say what they invested in, it's almost always Bitcoin first, just because it's talked about the most.

It's kind of like also the most safe, if you think about it. Everything else is kind of still unclear, even Ethereum, even Solana, it's not totally clear if all this is going to end up working out and if there's ever going to be some larger issues. Whereas with Bitcoin, it's a lot of more guaranteed that if people keep having this belief and if something is digitally scarce, it will probably retain the value in the future. So yeah, it is kind of ridiculous, but almost everything is a meme recently, so why not Bitcoin as well.

Anatoly (14:02):

Well, I mean it's weird, again, we're not looking at a company even like Google or Facebook, which has people and memes, or Twitter, but they still have like cashflow.

Larry Cermak (14:14):

Yeah, but Bitcoin was the first as well, which in itself has a lot of value. For every project, if you look at everyone who was always the first, even in crypto, there is always a big premium to that. And I don't think it matters too much if there are cashflows and if there are real people, it just matters if enough people believe that this will retain the value in the future and if enough people do.

I think like Tesla was a massive fundamental shift, like we saw that with our customers on the research side, it absolutely exploded after the announcement, just institutional interest, more companies inquiring into what Bitcoin is, more companies thinking about treasury management. Those things really matter, and it's hard to go back from them.

Anatoly (14:59):

Can you like measure that? Can you measure how many people believe that Bitcoin is safe or like an inflation fund? You're literally just testing how many people are part of the religion basically.

Larry Cermak (15:20):

I think you can say something similar about Ethereum, probably about Solana as well, you always need some sort of a belief. Of course, there is some backdrop of some sort of cashflow, some fee generating, but it's the same shit as people saying oh, I'm only investing in cashflow generating DeFi projects, but ultimately who cares. Ultimately, if the price goes down generally over the market, it doesn't matter if you have cashflows or not, everything is going to crash. It's just like a general belief in the market overall.

Anatoly (15:48):

Especially if they're marked in the token itself, then if the price goes down, so do the cashflows.

Larry Cermak (15:58):

Exactly, yeah. So a lot of TVL metrics and all the revenue metrics, and not only that, but we've talked about this before as well, but a lot of the revenue or what people call revenue is basically just going to the participants, like LPs, it's not even distributed in any way. So a lot of this thing, I think it just doesn't matter too much, what's important is social belief. It really is, it does sound ridiculous, even to people on the outside, but when more people are buying into it, it is basically a Ponzi but it's really like a well working Ponzi.

Anatoly (16:32):

You said it. What about something like SushiSwap? What is the value there?

Larry Cermak (16:42):

I think SushiSwap is interesting, and the value is your belief that this will continue existing in the future, that the people involved in SushiSwap, the developers will figure out ways how to get some value out of the ecosystem. And even though I said it's kind of bullshit, it is, but it does have some claim to cashflows, unlike Uniswap at the moment.

But yeah, the value is just you believing that the currently associated developers and the community will just build something that will end up sticking around. So right now, a lot of people are betting on the fact that they're developing an NFT platform to compete with OpenSea, they also have a token launching platform, it's always just going to be a bet on the people involved with the protocol and on the community.

I think that's one theme that I see constantly, time and time again, crypto is very much about the community, it's very much about engaging with the community, listening to what they want. I think what SushiSwap has shown even though it was really, really cold early on, for some really good reasons as well, is that it does listen to what people actually want, because if they listen to what people want, they will get more support, they will get more public support, price usually is pretty reflective of that. So that value is just like betting on this being around for a longer period of time, adjusting to the market, so if people figure out that AMM is not the right way to go and it's [inaudible 00:18:17] based exchange, they're betting on the fact that they'll be able to pivot to something that is meaningful. I think that's a relatively reasonable bet, but SushiSwap is still giving out, or was giving out a lot of incentives. What a lot of people don't realize or maybe don't want to realize is that if you look at how much they're giving out in incentives and how much they're actually generating in revenue or cashflows or whatever, it's usually negative, even for the most successful protocols, because it's still right now-

Anatoly (18:50):

Like Bitcoin even.

Larry Cermak (18:51):

... Yeah. Bitcoin is slightly different, where you're ultimately burning energy to prove something. But yeah, it is similar.

Anatoly (19:00):

So why couldn't Sushi become the meme for internet money or a store of value?

Larry Cermak (19:07):

I just think because Bitcoin was the first, it's the most established, it has probably closest properties to something like gold which is also a meme that people believe in. I think it potentially could, it's just unlikely. Ethereum could potentially replace Bitcoin at some point if enough people believe that that will happen, but I don't think that's going to happen anytime soon. If I was betting someone, and I think I bet Kyle that this is not going to happen by the end of this year which is ridiculous, I don't know why he made that bet, but even in the next three or five years, I don't think that's going to happen.

Anatoly (19:47):

I'm a logical person, I'm an engineer, this stuff doesn't make sense to me, so I try to break it down into things. The pieces that I see is that there's the technology to coordinate shared state, Makimoto, BFT, whatever, and then there's the people participating in that shared state, and the size of the people is that super connected social network and the technology is the piece of tech that does it.

Larry Cermak (20:13):

I mean, look at equities right now, no one fucking cares about the fundamental value, no one is investing based on that. People are investing based on meme, based on what they believe the future will be. So even something as dumb as Tesla, no one is looking at the cashflows, everyone is looking at the potential to become something larger in the future, and I think that's the same in crypto. People are looking at Bitcoin as being able to capture a lot of that. If you have someone that's right now, institutional investor or a big hedge fund, and they're looking for instruments to hedge the inevitable inflation that's coming in the market as central banks kind of went nuts in the last two years, what are your options right now? You're probably not buying Ethereum, you're probably not buying Solana. Maybe you're buying some gold, but probably you're already overexposed to gold in some way, and then also the upside in gold is probably relatively small, it hasn't really moved, it's not volatile, the opportunity isn't that great.

So if you're looking at it from like a really pragmatic approach, and I talk to these people so I know how they're thinking and this is how they're thinking, I mean it just works that way, it doesn't matter if there's no logic to it, what matters is enough people just buying into this meme and buying it because they believe that the price in the future will appreciate.

Anatoly (21:40):

Because the meme will get stronger so you get more people into that?

Larry Cermak (21:44):


Anatoly (21:44):

So if these are like memes, these are basically social networks.

Larry Cermak (21:49):

How much of the recent price appreciation in Solana do you think it's because of strong memes and because of strong community buy-in? Maybe you think differently.

Anatoly (21:59):

I can be totally honest, I think it's purely people comparing us to Ethereum. And they're like, well Ethereum is more and this [crosstalk 00:22:07] good.

Larry Cermak (22:07):

Exactly. And then if you make this comparison to Bitcoin and gold, it's exactly the same stuff. People are like, oh shit, what if this goes up to the gold's market cap, the upside is still 5 to 10x, or whatever it is. It's just like, that's how people think, and I think that's exactly right, you're totally right, it's because people in Solana or a lot of investors in Solana, they're like all of a sudden, what if there is 5% chance that Solana takes Ethereum's users and replaces Ethereum in some way?

Anatoly (22:39):

They're not doing the fundamental valuation comparison of what is the actual value of this thing to the world? What is the benefit derived from it even?

Larry Cermak (22:51):

Again, we can go back to this in almost everything, what's the benefit of any company, it's to satisfy shareholders, and people don't really care about cashflows anymore lately.

Anatoly (23:05):

Sure, but we can remove the cashflow component, maybe in a fully super connected peer to peer system, that doesn't make any sense. Maybe there is no cashflow because you don't have like a centralized coordinator that's doing it, it is purely peer to peer, then how do you measure what is the fundamental value that this thing is providing to the world? Like if this didn't exist, is the world poor? Can we even say that?

Larry Cermak (23:34):

Yeah, probably not, but again, you can this about everything. A lot of things don't need to exist.

Anatoly (23:40):

I can say that about Tesla, I can say if Tesla didn't exist the world would be poorer, because there would be fewer electric cards, high quality electric cars. I can clearly say that.

Larry Cermak (23:54):

I guess so. But the utility is always a small aspect of why people are buying into it, it's more so just your bet that in the future, this will become more important. And as people are grasping with how much inflation is hitting right now, there just aren't many other options, and I think that's really the main reason.

Anatoly (24:14):

So I can see price being inflated due to... there's so much money available, so much capital that is seeking future gains, that anything with potential for upside is now overvalued. But maybe not overvalued, maybe it's just market value, it's just the market value for future gains is so large right now. But I can still kind of look back at the era and look at like okay, Amazon was overvalued, Microsoft was overvalued, because there was a huge crash, but I could see that if I remove this thing from the world, the world is poor. Are we there yet with crypto, 10 years in?

Larry Cermak (24:58):

I think honestly we're getting there. I think crypto now, in the last two years, showed us there's potential to do good, which is basically giving access to something that they didn't have before, and tangibly making their life better for one reason or another, and also just giving people access to this new asset class. I think those are really powerful concepts by itself. And on top of that, you add like composability of all these different protocols working together.

I think yeah, I would say if crypto wasn't here, the world would probably be worse of, and I also think that the longer crypto is around, the higher the chance that it's not going to go away. I'm very sure, I can't imagine a world where in like three years, we bump into each other on the street and we say, holly fuck, this crypto thing was dumb and it's not around anymore, I just can't see that.

Anatoly (26:04):

We're all infected with the same virus.

Larry Cermak (26:06):

The concept of crypto makes a ton of sense to me, and it is definitely empowering people, even in jurisdictions that normally don't have that much access to the financial system. For example, we have a researcher from Kenya on the team, and we only pay her in stablecoins I believe, or it might be crypto, and we initially tried to pay her through the regular banking system and it was almost not possible. She's just one example, but there's tens of thousands of examples like this, where you have people all of a sudden getting access to something that they couldn't access before, and even if crypto just helped with that, that by itself, I love that, I love giving people more equal access to stuff.

Anatoly (27:01):

Okay, I'll throw some theories out and see if they stick. I think NFTs are a clear good to the world because any luxury spending that we move away from, like fast cars that burn fuel or penthouses into digital goods, is good for the world. Let people waste their money on digital things, because it costs nothing to create, that's great. So that's one theory.

Anatoly (27:35):

The other one is, if we are moving into post-capitalist society totally where everything is plentiful, what would people be doing? They would just be messing around in the digital metaverse, this is all just part of it.

Larry Cermak (27:56):

No, I think those are pretty good theories. I think it is kind of fascinating how you had this shift from NFTs basically being in like a digital flux, the most luxurious NFTs only owned by the elite, that's really, really interesting to me. I remember 2017, I was looking at CryptoKitties, and none of that made sense to me, and even with CryptoPunks, I was probably one of the biggest CryptoPunks skeptics as well, even earlier this year. The price is probably like 100x or 1000x since then, it makes almost no sense to me fundamentally as well, but it's what it is.

I think NFTs are quite similar to Bitcoin, Bitcoin is basically one of the original NFTs. It's the same thing, you're trying to collect as many of them as you can, and because you believe it's something that will have some value, and similar things are happening with NFTs. And yeah, maybe it is removing some luxury overspending on dumb cars and watches and all that, but who knows, I don't know if this is going to stick, but it seems sticky so far.

Anatoly (29:08):

My theory is that we're going to see internet money be a perpetual basis trade of a NFT floor market, that's going to be the asset that's backing internet money. It's not going to be Bitcoin, it's not going to be ETH, it's going to be entirely backed by culture, [crosstalk 00:29:32].

Larry Cermak (29:36):

Yeah, maybe. But I think that you kind of hit it on the head, a lot of this is just literally backed by culture, backed by communities, backed by culture, and that's what matters.

Anatoly (29:45):

Do you think algorithmic stablecoins can make it?

Larry Cermak (29:48):

Oh, no. Again, there are going to be people that are going to say, I'm super dumb and not looking at it from the right perspective, maybe I am, but I think algorithmic stablecoins are fundamentally broken. You're always relying on some sort of demand to be the backdrop of stabilizing these things, and I'm just not skeptical that that's going to hold up in really maybe not as favorable market conditions long term, and I have not seen a single evidence to show that these things will be resistant to some sort of scrutiny in the future. That being said, stablecoins are probably going to be regulated by the US government, and maybe if you create enough demand for these, it can sustain for some time. A lot of the algorithmic stablecoins have performed incredibly well, because they're really like, what happens if stablecoins are called securities in the US now, it severely impacts the rest of the crypto space. And when you look at something like DAI, it's backed massively by centralized stablecoins as well, and then all of a sudden what's the alternative. If none of the centralized stablecoins are allowed to be used by investors in the US, even on Solana, a lot of the DeFi apps still use USDC and on Ethereum as well.

I think that's why there's a lot of interest, is because people are realizing that centralized stablecoins are obviously prone to be regulated, and if they are, it's going to affect how the rest of the space operates. DAI hasn't shown that it's actually really decentralized, especially now that it's backed massively by centralized stable coins, and you don't really have any other options at the moment if you want to just transact value in some sort of stable instrument. But generally I think the idea of algorithmic stablecoins is never going to work. It's much better to just use Ethereum, or Solana, or Bitcoin as [inaudible 00:32:06] value and just [inaudible 00:32:07] if stablecoins are regulated, at least that's my belief.

Anatoly (32:11):

How much do you guys spend researching regulation in the US specifically?

Larry Cermak (32:17):

Not much on the research side, mostly on the news side, we have people in Washington that talk to these guys. But I guess the problem with researching regulation generally is that it's super opaque, like you don't see into it. Unless you talk to people and actually ask them what they're thinking, you don't really know. We know some people who are talking to the SEC, we know some people that are talking to CFTC and some regulators, and we have a directional idea of what will happen, but ultimately none of us can know until this is actually going to go into effect. We sometimes talk to the lobbying firms as well and they also don't know, it's a black box completely.

But I think what most people that we talk to that actually are in the know or some sort of insiders, they agree that some sort of regulation is coming. The SEC obviously, there have been tons of indications already, but the SEC will do something, the question is how severe this will be. And it is very likely to me right now that within the next year or a year and a half, there will be some sort of a framework for crypto assets from the SEC, so they can actually with some sort of certainty know if it could be a security, or if it just a utility coin, or a governance coin.

And there are also some serious indications that stablecoins are going to be in some way regulated. I've heard rumors that there are a lot of people who are trying to label it as securities, but none of that is final, and I don't think we're going to find out until actually that gets released in some way.

Anatoly (34:00):

Yeah, there is this like a lot of big uncertainty. You don't think there's any hope of US actually just creating clear, simple rules that just open the space up to innovation? Are you both bearish on regulation and bullish on crypto at the same time?

Larry Cermak (34:22):

I think the US is likely going to release some guidelines, the SEC will likely release some clear guidelines for what is and what isn't a security, I think that's going to be coming. That could be positive in some way, it's probably going to label a lot of the governance coins as securities, it could be negative short term as well.

Generally, yeah, I'm pretty bearish on US regulation. What I've seen anecdotally is a lot of people just getting out of there. I frankly don't understand why DeFi teams are based in the US, why Uniswap team is based in Brooklyn, it makes no sense to me. I think if you're trying to build a really censorship resistant DeFi protocol you should get out of the US, because there is uncertainly for you right now and also for people to invest in your protocols, there's just too much uncertainty. And I think a lot of the future in crypto will be anonymous developers developing these protocols, I'm pretty convinced about that as well, that this eventually will shift into pseudo-anonymous developers that are not doxed. I don't think this will happen to like L1s, so the networks that will be securing these protocols, but I do believe that those that are really trying to empower people without being limited by sometimes nonsensical regulations, I believe those will have to be build by pseudo-anonymous developers, in some way or another, and then just decentralize early. I think that that's going to solve some of the issues. There are obviously some doubts about people trusting these projects, but there have already been some hints at this potentially happening. So I'm pretty optimistic that this will happen.

Anatoly (36:12):

What is decentralization mean in that context for these projects?

Larry Cermak (36:16):

For me, it means just inability to shut something down. So if you're the SEC and if you're looking at Uniswap, maybe you can call the UNI token a security, but ultimately what are you going to accomplish if you go after the project? You're not going to able to shut it down, you're probably just going to look like a fool afterwards, so you don't have that many options. So to me, decentralization means if someone really wants, if a regulator really wants, or if some third party really wants, it's possible to shut you down. So just having unchangeable [inaudible 00:36:50] is a point on Ethereum or on Solana, that's decentralized to me, and I think a lot of that will go towards that direction.

We've seen examples of this with 1inch for example in the last two weeks, 1inch started limiting US customers or at least letting them sign a message. And that's partially because they're doing a lot of [inaudible 00:37:15] computing and they can be targeted in some way by these regulators, they can be threatened, whereas some other protocols really can't be. And I do also think that in the future, like in the next couple of years, there's going to be a lot of front end basically blocking or geo blocking, and restricting uses, blocking assets. So there's going to be a shift into alternative front ends for example, or making people interact with the protocols more directly that what they do now, which is they google Uniswap, go on the Uniswap's website, and then swap an asset, like that's not going to be sustainable, I'm already pretty certain about that.

Anatoly (38:00):

I'm just annoyed that like, if this is pure code, what is there to regulate? The token right, or the UNI token. So to speak to your original point that you've become a believer of every project needs a token, but if the contract itself doesn't need a token doesn't do anything, besides run this mathematical function, there's nothing to regulate.

Larry Cermak (38:22):

That is true, that is all true. I think why projects need a token is pretty simple, it's because it builds communities and it builds engagement, and it helps you incentivize some sort of usage or bootstraps these protocols. So I don't think that if Compound didn't do the initial liquidity mining last year, I don't think DeFi would be where it is right now, and the same goes for Airdrops. It just helps to engage people, it helps to get them invested in some way, and that's why I think they're important. But you're totally right, they are opening up a possibility for regulators to go after these tokens and regulate it in some way.

But tokens are also opening up opportunities for not only people to invest, but also institutional investors and more capital to be draw in. A lot of the VC firms right now, they're completely stacked in cash, there's billions of dollars on the sidelines right now waiting to be deployed, they're only investing because they know there's some sort of an exit strategy, which to them is selling the tokens at some point in the future to enough people that think it's going to be more valuable. And I don't think this would happen if there were no tokens, I used to believe this myself as well. It's like Uniswap doesn't need a token, it's a perfect protocol, it's totally fine the way it is, but because it does have a token, it just attracted more usage and it's trending more people to actually use these things. And I think that by itself is something that probably overweighs the negative consequences which is more regulatory capture.

Anatoly (39:56):

Do you think we could separate the devs from the community? Could you have the Shiba token adopt the best developers in the space? They built the distribution and the community and they're like, we're going bribe Vitalik to work on some more contracts for us.

Larry Cermak (40:26):

I don't think that can happen or will happen. We've seen this before as well, a lot of projects raised a lot of money, like Tezos or EOS, and they haven't been able to do much with it, they haven't been able to accomplish much. And I think a part of it is just because communities are built by people actually believing in the project, in the future, and I just think that communities rule everything in crypto, and that's how I think it's going to stay.

Anatoly (40:55):

This is like both utopia and dystopia at the same time.

Larry Cermak (40:59):

Yeah. I think it's just a pragmatic approach. You look at how everything has worked in the last three years, and the conclusion is like it makes sense for people to interact with these protocols early because you believe that in the future there's going to be some sort of an Airdrop. And then there are like loops to this, if enough people believe that there are going to be Airdrops for all the protocols on Ethereum and on Solana, they're going to use these protocols more. So even if you look at the number of transactions on Solana or just generally how many people are using these things and for what reason, a lot of it is just speculators, a lot of it is literally completely useless activity, and people just hoping that they're going to make money out of it. And that's fine, like if you're bootstrapping usage, if you bootstrap attention with purely capitalistic intent, I think that totally works. If Compound didn't do the incentives, I don't think we would be here right now talking to each other, I don't think Solana would be worth as much. And it's just a way to get more of that interest, and almost like abuse the speculators to get more attention for this, to get more mainstream media to cover this, to get more investors interested in this.

Larry Cermak (42:11):

I think it's much deeper than you think, where yeah, a lot of these are probably useless to some extent, but a lot of these are just social experiments, social tokens, and a way for people to get exposure to some of these things.

Anatoly (42:25):

If we use that as like the fundamental thing, then you really should be looking at these as social networks, how many people, how connected they are, what are they doing?

Larry Cermak (42:35):

Yeah, you should be, and then also utility on top. If I can get a stablecoin swap for cheaper than I can get it on [inaudible 00:42:43] exchange, that's probably worth something. Similarly for Uniswap, if some of these players have more liquidity and it's cheaper for me to go there instead of on Binance, if I want to sell $1 million of something, that's also worth something. But generally yes, it's absolutely a function of how many people are using these things, how many people are interacting with this. That's why I think for crypto, the most powerful indicators are really social indicators, it's like looking at how many people are using these things, how many people are actually transacting. What's more difficult sometimes is to remove all the either fake activity or non-essential activity, and that's the hard part. But generally yeah, it's just a function of attention, function of which people are involved, and eventually you hope that this will turn into a mainstream thing.

When I look at DeFi right now on Ethereum, and even on Solana, it's a relatively meaningless number of people using these things. Even Uniswap, maybe 150000 users maximum, it's a joke. None of us think that this is why we're here, all of us think that this will eventually go to tens of millions of people using these protocols, and that's really the end game. And I think even obviously for Solana, one of the premises for why it's designed this way is to support a lot of these new people.

Anatoly (44:06):

Yeah, I've said this a bunch of times, that trying to predict how this stuff is going to be used is like trying to predict Facebook in '94, zero chance I would've believed you that sharing pictures of your cats is going to be worth a trillion dollars, it's ridiculous.

Larry Cermak (44:24):

I totally agree, and no one knows. I think that's kind of the fun part, that it's like enabling people to really do whatever they want, it's really cool. Even just me talking to some small teams about seed investing, it's like you're talking to people in Pakistan and India, those guys normally would be somewhere closed up in their office, not really having these opportunities, and now all of a sudden they can develop these protocols, they can arbitrage them, they can make money. Like we have a guy in Russia, a genius coder, he's exploiting these arbitrage opportunities and making a ton of money, that's awesome. That's really powerful.

Anatoly (45:07):

Awesome man, really good to go deep down the rabbit hole with you.

Larry Cermak (45:13):

Yeah. Honestly, I didn't expect I would be the one convincing you of crypto's potential, I thought it would be the other way.

Anatoly (45:21):

I'm an engineer, so I look at a system and then I try to like, where does it break down? What does all this stuff not seem backed by strong arguments and real physics? Why is it all bullshit?

All right man, really awesome to have you. Thank you so much for being in the Solana Podcast, and always enjoy your work at The Block.

Larry Cermak:

Thanks a lot.

Oct 26, 2021
Packy McCormick - Founder of Not Boring Ep #49