Validated

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 Crypto02:09 - Why Solana over other platforms?04:10 - User Experience and Web 3.006:16 - What is Syndica?08:54 - Syndica and Web 3.012:33 - Syndica’s focus on infrastructure14:36 - Differentiating from other providers16:55 - Syndica and the data18:29 - Their user base20:03 - Plans on offering validator services?22:05 - Best practices for building on Solana24:49 - How should new developers approach web 3.0?28:16 - Storage33:03 - Interesting projects in the ecosystem37:53 - Solana Hackathon39:19 - What would you love to see built on Solana? DISCLAIMERThe 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.

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 -  Intro02:51 - Origin of the initiative / How it works06:25 - Ukrainian government receiving FIAT currency 09:13 - Banking, a legacy system10:04 - News on the ground12:39 - What can people do to get involvedDISCLAIMERThe 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 nation.io/dow/Ukraine, 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 nation.io/do/Ukraine. 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.

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 / Roles3:13 - The appeal of working at the foundation level07:48 - Establishing scope for the foundation12:42 - What’s working in the ecosystem?20:01 - From the ecosystem to the foundation21:21 - Growing Solana in new markets33:50 - Shared Ownership of the network36:21 - Predictions for 2022 in crypto and web 3.0DISCLAIMERThe 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 twitter.com 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.

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 them09:34 - Solana Pay13:42 - Integration of USDC and Stable Coins18:45 - How could Solana Pay become mainstream? 25:27 - The Solana Pay toolkit27:39 - Can businesses operate without a bank account?30:05 - Looking at Data Privacy in Solana Pay and Circle 34:35 - Hopes for Solana hackathon outcomes00:39 - Intro01:51 - pencilflip’s background03:30 - Working at facebook vs. web 3.007:31 - How pencilflip got into crypto08:52 - Views on NFTs10:45 - Getting into Solana15:29 - Experience working in lower level17:56 - 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 Solana33:24 - Advice to people moving to Web 3.0DISCLAIMERThe 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 amazon.com 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)Thanks. 

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 - Intro01:38 - Collaterals, maximizing censorship resistance07:40 - APYs and investors09:31 - How to get penetration across DeFi14:58 - Governance in a liquid stake pool18:23 - Automation vs. programmatic on-chain governance20:44 - Factors in selecting validators29:27 - Growing the validators set32:21 - Stake pool token in DeFi35:09 - Liquidity fragmented between too many pools41:01 - Who controls the network?44:46 - Increasing decentralization00:39 - Intro01:51 - pencilflip’s background03:30 - Working at facebook vs. web 3.007:31 - How pencilflip got into crypto08:52 - Views on NFTs10:45 - Getting into Solana15:29 - Experience working in lower level17:56 - 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 Solana33:24 - Advice to people moving to Web 3.0DISCLAIMERThe 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, P2P.org 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.

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 - Intro02:32 - Custodial vs. Non-custodial models for keys holding07:11 - Education is key11:37 - Building on top of user-controlled layers16:48 - Unbundling Wallets20:04 - Mobile vs. DesktopDISCLAIMERThe 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):Yeah.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 experienceFilip (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):Yeah.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):Right.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):Yeah.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):Yeah.Maria (10:07):Financial literacy and traditional financial services isn't great either to be honest.Ali (10:11):Yeah.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):Yeah.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):Completely.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):Yep.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 changingFilip (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):Yeah.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):Yeah.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):Yep.Filip (19:35):But mobile, when you're limited with space, it's going to be almost impossible.Ali (19:42):Completely.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):Yeah.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):Yeah.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.

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 (Allbridge.io). 00:10 - Intro02:50 - The importance of bridges not relying on Trust04:28 - Moving wrapped assets12:00 - Capital Efficiency of Bridges14:02 -  Future of bridges16:28 - Integration of bridgesDISCLAIMERThe 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):Yes.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):Yep.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):Yes.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):Yeah.Austin (18:45):Interesting.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.

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 - Intro00:54 - Integrating Solana in Brave08:00 - Challenges with creating the browser09:23 - How to scale crypto to the general public11:57 - A Decentralized search engine14:46 - NFTs as entry point to the metaverse16:35 - Mobile vs. Desktop18:00 - Languages and smart contract development20:40 - How to grow crypto to mass adoption22:44 - Global Peer-to-Peer environment in Crypto DISCLAIMERThe 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):Yep.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. DoAnatoly (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):Yes.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):Awesome.Anatoly (24:28):I'm excited. So thank you, Brendan. Thank you so much for doing here, for working with us.Brendan (24:34):Thanks.

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 Story04:44 - Seeing the order book10:20 - The idea behind creating Mango Markets15:38 - Going from creating smart contracts to creating Mango17:32 - How big is the DAO?20:01 - The Launch29:15 - VCs and the launch32:43 - Decentralization and getting stuff done34:55 - Will DAOs ever compete with big tech companies?40:43 - What’s next for Mango Markets?DISCLAIMERThe 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):Really?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 humansDaffy (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):Correct.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):Correct.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.

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 -  Intro2:20 -  Announcement of Seven Seven Six and Solana Foundation collaboration9:53 - GM, Twitter, #FreeRaj14:31 - Discussing Web 3.0 and the future of decentralized social media18:04 - User experience and building on Solana22:48 - New types of governance and delegation25:59 -  How crypto can change the way we see the world DISCLAIMERThe 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.