Validated

0:00 - Intro1:17 - Introduction to panelists1:54 - How Solana’s infrastructure allows for scalability4:45 - What creators are looking for in NFT platforms 5:53 - Glass.xyz and the future of video NFTs7:25 - Overview of participants in the NFT space8:30 - What does future growth of the NFT market look like?10:12 - The impact of tech behemoths on the NFT space15:31 - Solana’s low network costs16:40 - Panelists’ favorite NFT projects 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.

0:00 Intro0:50 Intro to panelists and overview of the browser wars 2:25 How do lessons from the browser wars apply to the wallet market? 3:12 Differences between browsers and wallets 6:00 The roles of wallets in the crypto ecosystem 10:50 Will there be one wallet to rule them all? 16:04 How the dominant mobile platforms will impact wallets18:55 Lessons from Web 2 applicable to Web3 projects25:25 What the future of wallets looks likeDISCLAIMER The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

0:00 Overview of ReFi3:13 Intro to Emma, Ethan, and Shine Capital4:37 Why Shine sees ReFi as a sound business investment 7:10 Overview of how traditional carbon markets work8:03 Breakdown of pricing in current carbon markets 12:09 Shine’s thesis on how increased demand will impact carbon credit prices12:51 Where increased demand will come from13:53 More on how increased demand will impact carbon credit prices15:13 More on Shine’s confidence in ReFi’s economic viability17:57 Recap of discussion thus far19:28 Speculations on the growth trajectory for carbon markets22:35 ReFi market map23:48 Current systems of MRV and why they’re inefficient 25:28 How crypto can innovate traditional MRV28:02 Opportunities for entrepreneurs in the ReFi space31:25 Closing remarks DISCLAIMER The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

0:00 Overview of Carbon Markets and Crypto2:45 Intro to Brendan and Patch4:02 Intro to Matthew and Cerulean6:05 What is a carbon credit?7:25 Who are carbon credits for?9:00 Voluntary/compliance market recap10:40 Innovation in the voluntary carbon market12:00 Why are carbon credits so hard to acquire?13:34 Inefficiencies in the current OTC markets14:17 Examples of carbon credit projects15:15 Why do carbon credit prices vary so widely?17:00 More on inefficiencies in the current voluntary markets19:50 How blockchain will impact the supply side of the carbon market21:35 Are corporate buyers interested in crypto carbon credits?23:18 Carbon market scams26:06 Profit margins in the carbon market32:50 More on how blockchain will impact carbon credit supply34:36 Closing remarksDISCLAIMER The information on this podcast is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The information on this podcast is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional broker or financial advisor.

0:09 - Episode overview2:17 - Rolf Skar introduction and Greenpeace’s mission4:39 - Daniel Hwang introduction6:54 - Greenpeace’s history with energy-intensive crypto8:24 - The Change the Code Coalition12:32 - Why changing Bitcoin’s code might be feasible 15:49 - What changing the code would entail19:27 - What self-interested incentives are needed in order to change the code  24:49 - How institutions with climate commitments address Bitcoin investments 26:19 - The Blockchain Infrastructure Working Group28:57 - Rolf’s impression of the Web3 community31:37 - Closing remarks DISCLAIMER The content herein is provided for educational, informational, and entertainment purposes only, and does not constitute an offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction, nor should not be relied upon as advice to buy, sell or hold any of the foregoing. This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor. Solana Foundation Foundation and its agents, advisors, council members, officers and employees (the “Foundation Parties”) make no representation or warranties, expressed or implied, as to the accuracy of the information herein and expressly disclaims any and all liability that may be based on such information or any errors or omissions therein. The Foundation Parties shall have no liability whatsoever, under contract, tort, trust or otherwise, to any person arising from or related to the content or any use of the information contained herein by you or any of your representatives. 

Amir Haleem (CEO, Nova Labs & Founder, Helium) talks with Austin about the Helium story and the current proposal to move Helium to the Solana blockchain.0:00 - Introduction1:05 - Origins of the Helium network5:24 - Early challenges for Helium7:19 - Helium’s unique growth and economic models compared to other blockchains11:35 - The geo-specificity of Helium’s rewards14:18 - Why Helium started on its own L1 16:55 - Current disadvantages of Helium running on its own L1 20:46 - Why the time is right for a Helium migration24:28 - Why Solana is the best scaling solution for Helium28:56 - Composability as parts of the Helium network move off chain30:57 - Solana’s role in supporting amazing applications32:12 - How a migration will help Helium reclaim its internal engineering power34:36 - How the upcoming vote will impact Helium validators and hotspot operators36:27 - How Helium’s migration will open up the Solana ecosystem to its community37:36 - Recent developments in cellular networks41:59 - How long will Helium’s migration onto Solana take, and what will it entail?DISCLAIMERThe content herein is provided for educational, informational, and entertainment purposes only, and does not constitute an offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction, nor should not be relied upon as advice to buy, sell or hold any of the foregoing. This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor.  Solana Foundation Foundation and its agents, advisors, council members, officers and employees (the “Foundation Parties”) make no representation or warranties, expressed or implied, as to the accuracy of the information herein and expressly disclaims any and all liability that may be based on such information or any errors or omissions therein. The Foundation Parties shall have no liability whatsoever, under contract, tort, trust or otherwise, to any person arising from or related to the content or any use of the information contained herein by you or any of your representatives. Austin: I'm Austin. This is the Solana podcast. Today, we're talking with Amir Haleem, the founder of the Helium network and CEO of Nova Labs. Helium since its beginning has operated its own layer 1 blockchain, but in a process set forward several months ago, and which has sort of come to a community governance vote in HIP 70, the network is actually proposing switching from operating its own layer 1 to operating on another layer 1. Uh, in the details of HIP 70, the core developers and core contributors are recommending a move to the Solana blockchain as the new home for the Helium network. So we're gonna talk a bit about that today, some of the history of Helium, and how the network, uh, sets itself apart from other blockchains, uh, which is pretty interesting because it's based much more heavily on real world usage and physical hardware, as opposed to simply a software abstraction layer. So, Amir, welcome to the Solana Podcast.  Amir: Hi, thanks for having me. Austin: Great to have you here. Um, so let's kind of start at the level set here. Um, where did the original idea for Helium come from? Amir: So Helium has been around as a company, uh, for a little while and we, uh, we always intended to try and build, really, a sensor network, that was the original intention, right? It's like, if you wanted to build a big, broad wireless network designed for sensors, you know, how, how would you do it? . Like, it, it felt clear to us that cellular wasn't going to be the right, uh, solution for things like tracking devices and environmental monitors and things like that. And so we set about trying to build kind of like people have called it an overlay network. I like to think of it as, as more like an alternative network to cellular for small things. Right? Like that's kind of the easiest way to think about it. Um, Bluetooth wouldn't really work for this wifi wouldn't work for it, you know? So we always. Had the intention of like, how do we build something very specifically for these kinds of devices? Um, we had a bunch of friends at the time building startups that needed that kind of connectivity. That was really the thrust of, of why we did any of this. And we, you know, we took a bunch of different turns and iterations of trying to do it in, I don't know what you would describe it as, the web two way, perhaps, right? Where we would spend a bunch of money and we would build the network ourselves. Um, and somewhere along the line, like we just kind of realized that we're we're just like a poor version of AT&T or something. Like we were trying to do, we're trying to do things the same way that AT&T would do it or an existing carrier would do it, except we, we don't have any money, relatively. And so it, it wasn't really until 2017, I, I think, that we started to pay attention to crypto in a more serious way.Like embarrassingly, like I had just kind of ignored Bitcoin and Ethereum completely up until that time. Like, blockchain just kind of seemed like a buzzword, uh, that didn't make a lot of sense to me. I read the, the like Mastering Bitcoin book and my mind was kind of blown. Uh, and then I, you know, read the File Coin white paper, I think was the first time that we had seen. Kind of a proof of, of work model that like applied to a real thing, you know, it wasn't just, it wasn't just hashing and it wasn't, you know, just some kind of arbitrary use of compute power. It was actually like in file coin's case, if I can prove that I'm making file storage space available, then I'll, I'll get rewarded for that.And so that was a big thrust for us to like, think about doing things in a different way, was like, okay, here's a model for how you might build a wireless network based on a crypto economic model. Um, and do it in a completely different kind of throw the traditional model on its head or turn it on its head. And that was really the start. Uh, we started building in 20 17, 2018, uh, and launched in 2019. Went from being very small, with 150, you know, deployed devices to close to a million now after, after only three years. So a lot happened in that three years, but that's kind of roughly the, the story of, of how we got to where we wanna be.Austin: Yeah. So one of the things I really love about that story is it really tracks with, um, on a, on a much larger level, my own journey into blockchain, which is that, um, the utility reason was the reason that I actually first got into the space, which was I was working for a company and they thought the only way they could solve the problem was to build something on blockchain. And it, you know, seems very similar to sort of the way you guys examined a lot of different solutions and decided that that community ownership model is best expressed through, through blockchain. Um, so I think that's a really kind of interesting story. And one of the pieces I really like, I just find funny is I actually joined the Helium community far before I joined the Solana community. Um, I got, I got targeted with one of your ads back in the early days and actually bought, um, a few hotspots in, I think I actually, uh, I got in the discord and argued with Mark for a while about how this thing didn't make any sense and how it shouldn't exist or whatever. And there was no, there was no liquid token. And then, uh, you know, really got kind of, you know, as much used as you can get red pilled by a telco, uh, project, um, you know, really brought into the, the idea that this is really something that has a real interesting application in the real world out of it. Amir: Yeah. I, I remember you in the community in the early days. I mean, it was difficult at the start, right? Like, especially as a US based company, like, you've gotta be so careful from a regulatory point of view. And, and so I think some of the things that you kind of wanted to say, you couldn't say, and so, you're trying to explain what this was, I think was a little bit of a challenge, right? It's like, "buy this box and stick it in your window and earn this token." And that was kind of where we stopped. Right? Like we didn't, we didn't say anything more about, you know, what, what happens with the token after that, or, or what you could do with it and whether there would ever be a market for it. And, you know, we've been very careful to kind of stay away from all of that. But yeah, it grew like, like wildfire at some point. Like I, I remember at the start, it was very, very difficult to sell hotspots for like 500 bucks. And, you know, we were running a lot of ads are the ones that targeted you. Um, you know, we were giving away like pies and like doing promos for Valentine's day, you know, just said like, whatever scheme you could come up with to like try and get these things out the door, we were, we were doing it. And then at some point he just got its own momentum. And I remember taking, it took off from like 20 or 30,000 hotspots to hundreds of thousands. In what felt like no time. Austin: It's funny. I, I remember the pie. I, I couldn't remember, but I remember I was like, oh yeah, like you guys mailed me a pecan pie. I think for, cause I bought one around Thanksgiving.Amir: Yeah. We had pies, we had cookies, literally anything we could think of that would like motivate people to buy the box was what we were doing at the start. And then, you know, you had COVID supply shortage stuff happened and it, it went from like, we're trying to give these things away to like the demand for them was insane and they were selling on eBay for like 10 grand in the used market. So yeah, it definitely been, been crazy to, to watch and a hell of a journey. Austin: Yeah. So one of the things that, uh, I've always found fascinating about helium is that both the growth model and the economic model are very different than any other blockchain out there. The primary function of a network like Bitcoin or Ethereum or Solana is to be a software platform and to run well. Bitcoin's not a smart software platform in the same way, but Bitcoin is a scarce amount of supply. Ethereum and Solana are smart contract platforms that are designed for other people to build applications and services on top of. You know, apart from the fact that the helium blockchain will we'll get into a lot of the limitations of the existing L 1 right now, but the modeling is, is very different than what you'd see in any other network, because you are both rewarded for providing availability and then also of specific geographic coverage range and proving that you own, you can provide service within that range, and then also passing data through it. And this is one of the things that it took me a while to wrap my head around is like the real value here is on how do you reward the network infrastructure for simply existing and then creating an economic system to meter expenditures on pretty much anything that can be modeled economically as a flow system?Amir: That was the learning really from looking at something like File Coin, right? Like that they had figured the same thing out, which was that if we can bootstrap the network by rewarding people for making file storage space available, then you can start the flywheel that way, right? I mean, arguably Bitcoin works this way, right? Like, they are delivering block rewards to miners for mining blocks, regardless of whether there are any transactions or like meaningful fees inside those blocks and it's the same, you know, the same kind of flywheel there in the sense, right? You have to sort of create the network first, um, before it can be taken advantage of, and in the case of a wireless network, that's particularly challenging, right? Because there's a threshold that you have to cross before someone really takes the network seriously. And, and by someone, I mean like a user of the network, right? Like a, a UPS or something that's looking to build like a logistics solution can't really consider doing it on a network like Helium until Helium is large enough and the coverage is ubiquitous enough that it works in most places. You've really got a very, very like difficult ramp at the start. And that's where I think this economic model has been the most powerful, right? The biggest innovation I think we came up with was proof of coverage, where we devised this scheme where hotspots, which are the equivalent of miniature cell towers basically, um, would transmit encrypted packets over the air and other hotspots would receive them, um, and that was kind of the proof, right? Like, are you where you say you are, are you signing things with the right private key? Uh, and that was the reward that's sort of like the Bitcoin mining reward equivalent, right? If you can prove that you are available to move traffic, then you're gonna get some reward for that. And then you're also gonna get more reward if you actually move traffic. And again, if I were to like, continue the Bitcoin analogy, the miners also get transaction fees for whatever transactions are in their blocks. And it's, it's, you know, similar kind of bootstrapping. I think, you know, that's one of the most powerful effects of, of crypto and, and one of the most interesting parts of, of using these crypto economic models is that you really get to bootstrap these networks in this completely different way.I think when people have tried to build these community wireless networks in the past, it's been this kind of tit for tat model, right? Where you share your wifi network and you can use mine. Um, but that's just not that interesting, right? Like I want, I want to make money somewhere. I, I want to be a telco operator or I want to be an Airbnb host or I want to be a cab driver in the Uber model, you know, those were the sort of breakthroughs economically. And so I think crypto is a way of just sort of decentralizing and democratizing that same, that same effect. Austin: Yeah. It's interesting. Cuz with the File Coin analogy, you have a similar idea of a resource flow system where you reward both for availability and then for actual storage or in this case passing data. But you guys added, I mean, I'd say two quite difficult components to that. The first is, uh, you know, File Coin operates primarily in consolidated data centers, right? There's not many people running File Coin nodes at home because the economics are such that you really need large amounts of storage availability for that network. But there are penalizations on the Helium network. The rewards you get in New York city, uh, because it's so crowded are, are lower than the rewards you might get in like a, you know, a less dense urban environment. Um, so I think that's a really interesting component too, where you also have to account for overlapping coverage is incredibly desirable up to a certain point. At which point, then it becomes detrimental and you can't simply reward that system. So it's a, it's a much harder system to model than simply data availability where like, you know, an infinite number of replicas is infinitely desirable. There's obviously a diminishing utility there, but for here it's really, um, it's really different. So it's interesting. Amir: Yeah. It's, it's both difficult to, to model economically, but also challenging to educate, right? Like, because people kinda live wherever they live, and you have to sort of explain to people that, Hey, like being the 5001st, you know, hotspot in the greater New York area, not that useful, right? Like there are 5,000 others that are already there, you know, providing network coverage. And the redundancy is just not useful enough yet until there's, you know, significant amount of traffic. So it's such a new idea to build a telecom network this way that I think we've learned a ton about what users expect and what they do and how they behave. There's so much that can still be done. People are like, oh, congrats on, you know, all the success. And I'm like, it doesn't feel like we've accomplished anything yet. Like we're in, you know, 0.1% of the journey is complete at this point. Um, but yeah, I, I think, you know, our marketing team, especially I think did a phenomenal job of trying to like explain this in simple terms. And I think that was one of the other things that was important that we did well. We made crypto mining available to like random everyday people, right? Like it didn't, you didn't need to be in a data center. You didn't need some crazy like warehouse full of Asics. You know, like you, you literally could just stick this thing on a, on a window ledge and, and get going. And I think that was also a, a, a meaningful innovation. Austin: So I wanna get into, um, you know, the reason we're doing this call and podcast today and not, you. Four weeks from now, which is the HIP 70 proposal. Um, so let's start maybe with some of the history of Helium actually going forwards and deciding that the right model, at least to bootstrap the network was to build its own L1 and some of the learnings that you've had along that process that make you think now that the recommendation for the community is to migrate to a different L1.Amir: Yeah. So when we started, I mean, it's important for everyone to sort of think about the timeframe here. Like when, when we started building it was 2017 and um, Ethereum was really the only smart contract platform that you could even contemplate using at the time. Um, I mean, this is so long ago in crypto terms that Anatoly was interviewing for a job at Helium.Austin: What was he interviewing for?Amir: I don't remember what the role was, but Solana didn't exist. And he had a, a white paper in the form of a Google doc that was for something called loom. And he had this proof of history idea. Yeah. So that's where we were, right. Just to like, kind of set the landscape. Thankfully he didn't take the job and he went and built Solana, which is, um, which I think was a net positive for, for everyone. Um, But that's kind of where we were, Ethereum was kind of the thing that, that you could use. Uh, and if it wasn't for Ethereum, you're, you're kind of on your own, right?Like there were some other platforms where you could create a token. I think like stellar, perhaps, and even back then, we were worried that Ethereum would become too expensive. Like we weren't sure how to model the network in a way where the number of transactions was reasonable enough to, to not cost thousands of dollars a week. Um, and so given that circumstance, we had a bunch of distributed systems guys on the team. We decided to like, build our own blockchain that we didn't fork anything. We just, you know, started from scratch. We, we borrowed where we could. Um, but effectively it is a novel sort of ground-up build. Um, and I think for the most part, it, it sort of did the job that it needed to do. Like, we designed a system that was like maximally decentralized, I would say. Right? There weren't even validators, like the whole network was running on these hotspots, which were raspberry pie powered devices. Like, so literally you had like the whole network was being validated by hundreds of thousands of like raspberry pies, which is in hindsight, really cool, but also in incredibly insane, uh, to, to pull off. And so, you know, the network has grown so much, we've learned so much about the, the decisions that we made we've realized I think a lot of the, the challenges of like being on your own island, right? Like you, you don't have any of the interoperability with, with some of the amazing projects that you see, like Solana, for example, uh, things like wallet support is harder, you know, like trying to get Ledger to adopt you and, you know, like all of those things which are kind of like table stakes for crypto at this point. Exchange listings, defi stuff, NFT, marketplaces, you know, like we don't have any of that stuff because we're like on an island and we're also trying to build wireless networks. And so we don't have time to do it. And so I've come to think of like blockchains as almost like the database or like cloud infrastructure layer of like web two, where you would be insane to like try and build your own sequel database or to try and bootstrap your own data center when you could just use AWS for nearly all applications. There are some cases where that's not true, but for the vast, vast majority, that is true. So now that we're in this sort of new era of, uh, infrastructure and you've got things like Solana, it no longer really makes any sense to like, try and maintain your own L1, given that our mission objective is to build wireless networks. . And that's, I think, just like the simplest way without getting into like a ton of technical detail, that's the simplest way of thinking about it is. There's a bunch of stuff that's very novel and unique about Helium, and none of it is to do with moving tokens around and like validating blocks. And, and so if you can outsource that work, you should. And I don't think we could in, in 2017, uh, but we certainly can now. And, and I, I definitely think Solana is the best place to be doing that work. Austin: Yeah. And I mean, Helium network to its credit, like, there are very few networks that could do something like run proof of coverage on chain. There's sort of this like strained analogy that you could say to like, you know, to go way back in the day, like Spark, and Sun Microsystems versus like an X 86 architecture, right? Like the, the thing that Helium is good at doing, it's incredibly good at doing and faster than really any other network could deliver that one specific thing. But as you're saying, the Helium network, it lacks any sort of smart contract support at this point, which is the foundation of really all the growth that we've seen in every other network. There's two networks that have that anyone cares about that exist, that don't have smart contracts, they're Bitcoin and their Helium right now. Um, so I think that's a pretty interesting kind of place to, to look at being in at this point. Amir: And it was a very calculated decision at the time. Like we, we knew the danger of having a smart contract environment. The sort of surface area of potential vulnerabilities was so large. And, and again, like we're trying to build a wireless network, like we're building hardware, we're building apps, we're building block explorers, we're building firmware. It's already a massive endeavor that could reasonably be three or four different companies worth of work. And so to add, like, you know, A smart contract platform and then try and like get integrations across like all of the different things, it it's just too much. People don't scale that way. Right? You need focus and I, I think a big part of the drive for HIP 70 is just for our team, but really the whole community, to get focused on what really matters, which are things like proof of coverage and data transfer and usage of the network and stuff like that. And really, again, not on like block validation or transaction validation and stuff like that, which is again, you kind of need it, but it's not differentiated on, on Helium anymore.Austin: Looking specifically at, um, why the move is required so some of the things you, you talked about before, that sort of the network is at a place where it's hard for it to keep up with itself in, in some of those operations, but then, um, as you look at expanding into a network that does have smart contracts on it, that that can do more of these kind of features. What are sort of the, the, the benefits, the trade offs, like how, how is that process internally to come to a place where the consensus from a lot of the core developers, both of Helium foundation at Nova was like, it's time to do this thing now?Amir: So a big part of like, what HIP 70 tries to do is, is also like rearchitect the way the network works. So as you kind of mentioned, everything is on chain today, and that has a lot of challenges in terms of, of how you scale it. Um, you've got a million hotspots beaconing and transactions that have to be validated all the time and, and the validation or the verification of those is reasonably complicated work from a computational point of view, so regardless of, of any move to a different network or a different L1, we had arrived at the conclusion that moving as much of this off chain as we could was probably the right thing to do for now. Um, so we could get the performance up, we could spend less time kind of firefighting the problems and, and really spend more time on like improving things, cuz there's a whole bunch of improvements and, and changes that we always wanted to make, but just had never really had the time to, to get through because of all the firefighting that we were doing. So, that's kind of one component of it, is thinking about like proof of coverage and data transfers being these off chain Oracles as, as we're describing them. Um, and so once you've kind of arrived at that design decision, you you're left with like, okay, what is it that the L1 does? And it, it really is just about, um, moving tokens around, right? It's like the Oracles will tell the, the L1, like, Hey, you, you know, these seven hotspots beaconed and these 25 hotspots witnessed, you need to pay out HNT to these owners. Um, and you, at that point, it's like, why would you maintain your own L1 just to do that? Right? Because you, you don't gain any of the upside of being part of a bigger community, like Solana. Those upsides are things like, you know, decentralized exchanges and this defi ecosystem and NFT marketplaces and, uh, exchange support and wallet support, and, you know, like all those things, uh, that you don't have. And you're still spending like a massive amount of engineering cycles, like maintaining your own L1 when really all the L1 does is move tokens from one place to another. So, really the fundamental design decision is like moving stuff off chain. And once you've done that, it's like, okay, why would you, why would you keep running an L1 if all it does is move tokens around. You should be on a platform where you get the benefit of like being part of this bigger ecosystem. And one of the other things I'm most excited about that we haven't talked about that much, or doesn't get talked about that much in the community is the ability for like other developers to contribute in a more meaningful way. Right? Like we wrote our L1 in Erlang, which is, you know, a powerful, but somewhat unique and quirky programming language. Um, WhatsApp is probably the, the biggest user of, of it that other people would would've heard of. But in general, it's kind of, you know, it's harder to find engineers that are Erlang people, uh, and it's harder for the community to contribute meaningfully as a result versus using something like Rust or, or being familiar with Anchor and other things on the Solana universe. Like, that will open the playing field significantly and allow more and more people to contribute and, and not be quite as dependent on the core team, you know, to do everything. So super excited about that part of things. Austin: Yeah. So let's, uh, let's cut to the chase a little bit on this. Why Solana? Why was the recommendation out of all of the different scaling solutions out there, um, and all the different blockchains that this, this could have been the recommendation of, what about Solana felt like the right thing to recommend to the community here?Amir: There were a few things. And I, I know we're still, you know, putting out this sort of matrix of, of like all the options we looked at and, and how they, how they stacked up. But I think there were a few, like really, really important things. I mean, one was speed, you know, there's something really to be said about the fact that using Solana feels like using a web two app, um, especially in our environment where the kinds of users are not necessarily like typical of a crypto community. Like we have a lot of people for whom Helium is their first and only like interaction point, um, in crypto. And so having things feel like it isn't on a blockchain is, is really, really powerful. Right? So like when you add a hotspot to the network, it's just there, versus, you know, we have to manage these pending states and stuff like that because our transactions take over a minute. So speed is definitely one factor, especially if, when you start to think about the fact that you're kinda sharing this with a lot of other applications. Um, the choice of, of programming language was also quite important to, to us. So the fact that like Rust is kind of the, the environment of choice, um, in Solana at the smart contract level, I think was really, really important, both because we have a lot of understanding of Rust internally, uh, but it's an extremely popular language with like a big developer community on the Solana side as well. So I think attracting developers and, and sort of further decentralizing core development, um, is important and a popular program language is a big part of that. There's other more nuanced things like key compatibility, which don't get talked about much. So both Helium and Solana use the ED 25 519 curve, and that doesn't sound like a big deal, but it's hugely important because it means we can, we can map a Helium address to a Solana address without knowing the private key, which means that we can migrate the whole ledger without the user having to, like, intervene in any way. And so we were very, very, very afraid of any process that required the user to intervene or to like migrate their key or like do something because you might end up in this case where like there's orphaned, you know, tokens and like someone's on vacation or, you know, it's just a nightmare scenario. So that was a really huge part of it. And, and strangely there aren't that many blockchains where that is the native address type. Um, so that was a big part of it. Um, the fact that, you know, the Solana team is very focused on mobile was also a very big part of it. I think Solana is the only network I've seen that has any ambition specifically around mobile and what to do with phones with, with the SMS stack, which I, I think gonna be interesting. The fact that you guys have a phone also kind of interesting, like maybe there's some stuff we could do there where Saga phones are, you know, POC maps on the 5g network, like there's all, there's all kinds of potential crossover there. Um, you know, so stuff, stuff like that, the fact that we, we know the team, well, I think matters, uh, whether that's fair or not, uh, but the fact that we can access senior people, you know, whenever we might need them, I think is a, is a consideration. Um, so in, in general, I think Solana has probably the biggest and most active developer ecosystem and the best support of, you know, the best wallets. Um, and just, you know, there's just a whole range of stuff that sort of fits in that mold that I, I think matters is a great deal, but fundamentally, it's about, you know, speed it's about having a scalable or, or a sane looking scalability roadmap. I, I think those are what matter. And, and I, I think for the Helium folks, it's important to also just be aware that, um, We, we are only sort of relying on the L1 for the token movement part, like all the proof of coverage and all the data transfer is kind of off chain. And, and so, um, the choice of L1, it sort of matters a little bit less in that context, right? Like it's not so much, it's not, you're not trying to do so much on chain anymore. Um, so that, you know, that was also a big part of just thinking through the architecture, but yeah, we've been playing around with Solana now for a long time um, and super happy with it. it still kind of blows my mind how quickly transactions confirm. I, I just love that. I think people are gonna be blown away by, by it as well. Austin: Yeah. So, as parts of the network, move off chain, what does that mean for like, let's just say I'm a, I'm a, I'm a messaging protocol on Solana. And I would like to, uh, like I know a wallet address that is on a phone that has another messaging app set up. If I wanna actually transmit a data packet over the network, what would that look like from a composability standpoint? Amir: I mean, it's, it's a really interesting question. Um, there's gonna be sort of a difference between. The physical network, right? So the, the actual sort of air network and what ends up being composable like on chain, and those are gonna be kind of interesting things to watch. Like we, we intend to, to make as much data available on chain as possible without trying to do all the computation there. So any other application that wanted to take advantage of the fact that it was known where a packet was sent, for example, should be able to do that. Um, but they are kind of two different networks. Like one is a physical like air network and the other is, um, the blockchain network for want of a better way of describing it. But there should be a lot of ways for existing Solana ecosystem applications to take advantage of the fact that you now have like a location aware source of data. I'm not sure if there is one on Solana. And certainly there's a, maybe there's a way for step in users to also be POC, like participants on helium. Like why not? Right. They're already out there doing stuff. Um, so there there's all sorts of potential there. And, and I think part of what excites me about platforms, you don't exactly know what people are gonna do with it.You just sort of give them the tools and they just kind of go off and, and build whatever they need. Um, so I'm excited for that. Just like sort of opening up the creativity and allowing people to like build stuff that, that we don't have to be prescriptive about, I think is a big deal. Austin: Yeah. It's, it's funny. You talk about that way. That's one of like the guiding principles of how the foundation approaches some of this development as well, which is, like, the role the foundation is to, is to create and invest in base level infrastructure that makes it possible for anyone to build anything on top of the network. Um, and so like, this is kind of exactly what you're talking about, where it's like, if, if the base layer isn't actually, what's integral to Helium's success, if it's the network effect, if it's the ability to, you know, have high availability and meet the uptime requirements of like major clients and users and that sort of thing, then like, why would you focus on that base layer? And, you know, from, from the foundation's perspective, uh, you know, if we're focused on the base layer, why would we build the application layer? And so, uh, it it's a nice, um, you know, there there's that old sort of saying about like, If it doesn't make your beer better, you know, have someone else do it. I think this comes from like Anheuser Bush back in the, in the day. Right. Whereas they outsourced everything except making the beer. And that's sort of that process here of like, as much as you can strip away of what's required to focus on making Helium the best networks it can be. Um, why wouldn't you do that? Yeah. Amir: Yeah. I, I think, um, that's exactly the way that I've been thinking about it for, for a while now, which is, is, you know, you've got a whole team there and a whole ecosystem that is just focused on making the best possible L1 basically, right? Like, so the whole mission objective, and there's so much for us as a team, but also as the helium community to do on, on the Helium side, um, now being able to just focus on that is, is just gonna be like a gigantic weight of our shoulders. Like if I had to guess we probably spent 60, 70% of our engineering time on L1 related things. Like it may be even more than that, honestly. Um, So, if you think about it that way, like you sort of reclaim like 70 or 80% or whatever the number is of, of your engineering brain power, to be able to spend on things like proof of coverage and reliable data transfer. Uh, and then, you know, from a customer centric point of view, the network gets more stable that way, right? Like we're able to spend more resources on like making the network useful and usable, uh, and less on, you know, block production, basically. Which is a very, very hard problem to, to do well and to do its scale. So I'm, I'm thrilled by the notion of, of being able to just focus on. On wireless networks cause that's, that's really what we're, we're here for. And there's so much good stuff coming, um, that I wish I could talk about today, but gimme another six days or whatever, and we'll be, we'll be able to talk about it. Austin: Yeah, totally. So when you're looking at things that like users can expect changes for here, I mean, part of it is, is in some ways, not much, right? If you're talking about address compatibility, uh, one day, if this, if this hit passes, um, users will simply have their HNT represented or IOT or mobile represented as an SPL token on Solana, as opposed to being, uh, you know, a token on the relying L1. Um, but apart from that, you know, uh, there's a validator network that's currently maintained on the IOT side of things. Uh, that's not necessarily needed anymore. Um, so there's a whole bunch of like, you know, internal Helium community changes that are also related to this sort of thing. But, uh, you know, one, one thing I guess I haven't heard, talked about much is, you know, the rewards that validators are getting what actually happens to them in HIP 70 once it passes?Amir: Yeah. Today it's 6.8, 5%. I think of all the H and T that gets created is going to validates today. Um, and they get paid that to effectively run the infrastructure and secure the network. In this model, because we are kind of moving to be an L2 ,uh, and you already have Solana validators at the L1, like we no longer need to like dedicate 6.8% of the HNT inflation, uh, to securing the network anymore. Right? So that's 6.85%, which I think is around 2 million HNT a year at the current emissions rate is now back in the pool, right? Like it's back in the pool that goes to, you know, hotspot operators, for example. Right. So that's another 2 million HNT going back into, into that universe, which, which is a huge win, like you're right. There's not that many people talking about that part of it. Uh, but using that HNT to pay for security is necessary in the current system and not necessary in, in the new design. Uh, so that's a big win to be able to, to get, get that HNT back into their hands of the people building the network, arguably. Um, and then from a user point of view, as you pointed out, I mean, most users on Helium today are using our wallet app, cuz it's kind of the only one that, that I think people trust. Um, and one day you're just gonna open it and you'll still see your HNT balance. It will just be on Solana instead of on helium's L1 you probably won't even notice except for the fact that your address looks different. Uh, but you'll still have your same 12 or 24 words. Um, your balance will still be the same, you know, like nothing really will change from, from that point of view, except the fact that you can now send that HNT to your Phantom wallet, or you can send it to a Serum exchange or you do whatever you want with it really within the Solana ecosystem. But, um, it shouldn't feel, it shouldn't feel like anything's happened other other than everything's faster. Austin: Yeah. Well, it's, it's funny because, you know, Like there's no defi on Helium at this moment, so this entire world of, you know, yield farming and vaults products and being able to take out loans against a helium balance just doesn't really exist nowadays in that ecosystem. And, you know, small things too, like when the validators were launched, like it's a hard 10,000 token delegation and there's no ability to delegate stake to another validator. Like there is in most other networks. A lot of these pieces seem like they make a lot more sense once the, once the transition takes place and you're able to kind of take these things that important structural developments, but sort of set them aside as saying like they've served their purpose, the network's going into its next phase. We can set aside some of this stuff, reclaim some of those rewards for node operators and kind of keep the, the process going. Um, at the same time you, uh, you know, there's an acquisition of freedom fi that took place as well. Was this sort of, part of the calculus about like, oh, if we're, if we're transitioning L1s, we can free up engineering time to work on stuff that maybe isn't quite as well supported in the world, like hardware. Amir: Yeah, a little bit. I mean, you know, Helium had spent a lot of time in the IOT universe, so we're pretty well acquainted with that world. Like we understood all the technology, all the hardware, all the protocols, um, you know, we'd experimented with it all over the years. And so we understood the universe of IOT, I think intimately. Um, on the cellular side, you know, even when we wrote the white paper back in 2017 or 2018, like, you know, we had in there that we wanna explore using this same set of tactics, basically for other wireless networks, right? Whether they be cellular or wifi or, or whatever, they may be. Um, and again, just like the sort of L1 landscape has evolved over time, the cellular landscape has probably evolved the most significantly over time specifically because you've got access to, uh, something called CBRS, which is the citizens band radio service.It's an unlicensed block of spectrum that the FCC made available a few years ago, um, that makes it possible for people like us to run a cellular network in an unlicensed band. And usually that's a huge moat, right? Like you've gotta spend, you know, a hundred billion dollars buying spectrum or whatever, before you can run a cell network. But now there's a pretty decent chunk of Spectrum that you can use, uh, to do that. And, and arguably as importantly, like all the major handset vendors support CBRS, right? So if you have an iPhone newer than an iPhone 11, or you have a galaxy S 20 above or a Pixel 5 or above, um, your handset already works in this citizen's band radio service block of spectrum, you don't have to do anything.So. Those were two like huge developments. And then, you know, as a result of that, there's a bunch of open source protocol stacks that, that you can now use without having to build them yourself like Magma. And so those were developments that just like, kind of the L1 landscape had shifted like dramatically since we started building Helium. And we had been so busy building Helium that we, we just, quite frankly, hadn't had time to learn what we needed to learn about how to do this in a cellular domain. And so we started talking to the freedom fi team a couple years ago, um, kind of they found us, I think, really because they were building private LTE networks, but had bigger ambitions. They wanted to figure out how to build bigger, bigger than private LTE networks. Um, and so the, you know, it felt like it made sense. They had deep expertise in doing this. They had spent the last two or three years understanding CBRS, understanding cellular, understanding what it took to like negotiate deals with carriers, uh, to operate networks in different environments. Like, they've done a lot in their, in their time, um, and we kind of understood how to do the other part of it, which was motivate the economic build out of a network. Um, so it kind of made sense that way. And, um, but yeah, I think part of it is, is being able to focus now on the network side and not so much on the blockchain side, I think is. It's kind of like a superpower for, for us basically, right? Like we, we can shed ourselves of a lot of attention. I mean, even when you add people, like, you know, your attention is still dragged away when you know, there's firefighting and there's problems and there's things that you want to change. Um, so it's not like you just add more people and the problem goes away. Those people also get distracted by, you know, L1 related things. And so I think being able to, to focus on, on what we do is going to be a, a huge win and freedom fi is a huge part of that because they, they bring with them this, this expertise set that we just didn't have, uh, internally and quite frankly, just didn't have time to, to, to learn.  It's fascinating to think about, um, that perspective too, like if you think of like, uh, like Rakuten in Japan, like they're, they're now a fully software defined cell phone network that's using ORAN and not relying on, uh, you know, single vendor lock in, and you kind of extrapolate that full and, you know, part of the, the success of, I think the helium I OT network was you could take a Helium brain and plug it into an existing LoRaWAN gateway system and suddenly, you know, all these devices would light up and be able to talk to the network and kind of stay online, and you can see kind of a future where, uh, you know, the, the 5g and cell phone carrier network has that same kind of multiplication effect behind it. Um, but you know, I would say that's a, that's a topic we can dive into on another day. Austin: As we look at like HIP 70, um, you know, if this thing, uh, passes, which, you know, the vote at this point is I think about 81% in favor, um, so pretty strong support at this point in the process, which is, you know, midday, Wednesday, um, what does that actual implementation migration process looks like? Is this, uh, just like an Ethereum merge processwhere we'll see it take three or four years to really come to fruition, or are we talking about a, a much more quick process here? Amir: I mean, I would love to try and get it done by the end of the year.Austin: Um, it's a lot quicker than three or four years. Amir: Yeah. I know everyone listening is probably, yeah. There's no, no chance of that. But, um, I, I think there is a chance of it. I mean, we we've been, uh, already spending quite a lot of time on the Oracle side of the problem, which, which I think is the most complicated part of the equation, which is, you know, moving proof of coverage and data transfer accounting off chain. So sort of like untangling it from the L1. Um, to me, that's by far the hardest part of the problem. And, and as I kind of mentioned, we were heading down that path anyway. So a decent amount of work has already gone in there. So that, that makes me optimistic that there's a chance to hit that.Um, the Solana side of it, there's still a bunch of work to do there, you know? So, so there's now three tokens in the Helium ecosystem. There's HNT, IOT, and MOBILE. So there's some work around, you know, like how those are emitted and, you know, you need to be able to redeem IOT and MOBILE for HNT whenever you want. So there's certainly work to do on the Solana side as well. Um, but it doesn't, it doesn't feel out of the question to, to me that there's a working version of this by the end of the year. Um, and then there's some migration details to, you know, figure out, but we've already got a pretty good head start on that. Like, I think on a test net somewhere, we have the entire ledger exported and imported as an SPL. Um, so you know, that, like I said, that was a hugely important part of the problem for us, was like, how do we make this like seamless to, to the user? And, and I think we've, we've successfully been able to prove that to ourselves.Um, there's also gonna be an airdrop of SOL tokens to all the HNT holders, um, so that they can cover, you know, roughly a hundred transactions worth of, of transactions. Cause that was another concern coming outta the community is that, Hey, we need this like, even though it's a fractional amount of, SOL you know, people now have to like ,buy SOL or acquire it and a lot of, again, a lot of our users are not crypto literate in any way. Um, so making that easy for, for people I, I think is super important. So now they don't really have to think about it. Um, and I expect once we sort of introduce them to the Solana world, they're gonna have a field day and start playing around with all kinds of other stuff. Um, but yeah, that, that's kind of where we're focused is like, how do we, how do we make this as seamless as possible? Um, and make it such that, you know, an existing Helium user is just thrilled by the time it's done basically, right? Like POC works better. Data transfer works better. Transactions are faster and they have more stuff to, to do with their, with their HNT.Austin: Yeah. I mean, I think for, for helium users who are, are listening to this, uh, one transaction on salon is $0.00025 to, to send on the network. So, uh, you know, if you're getting a hundred transactions worth, uh, unfortunately it's not exactly a down payment, but it's definitely enough to, to do a lot of transfers on the network and experience some of the, uh, you know, the fun things you can do in both Solana defi as, as well as just interacting with the ecosystem in general.Well, Amir, thank you for coming on the Solana podcast. Amir: Yeah. Thanks for having me look forward to, uh, hopefully being back sometime soon. Austin: Yeah. We'll have to, uh, have you at Breakpoint as well to talk a little bit more about this.  

Anatoly welcomes Jason Keats (Founder & Chief Hooligan, OSOM) to the podcast to talk about his epic career building hardware, the Solana Saga phone and all things mobile and web3. Pre-order the Saga now at solanamobile.com 00:09 - Intro00:25 - Background03:27 - Working at Apple08:07 - The Gem Phone10:15 - Privacy at Essential12:24 - Building for Mobile15:52 - Hardware he wants to build17:07 - Crypto x Cars19:02 - Do Apple or Google care about hardware and crypto?21:08 - Innovation in hardware21:56 - The saga phone22:56 - The manufacturing process26:29 - How to start building27:56 - Working with start ups29:15 - The innovation cycle in hardware30:36 - Privacy features32:42 - Working with non-crypto people36:08 - Outro DISCLAIMERThe content herein is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. Those who appear in the content may have a financial interest in any projects referenced, and any content herein is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.  This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor. Anatoly (00:09):Hey, folks. This is Anatoly and you're listening to The Solana Podcast. And today, I have Jason Keats with me who's the CEO and co-founder of OSOM. Welcome.Jason (00:18):Hey, how's it going? Glad to be here. Glad to chat everything we've been working on finally.Anatoly (00:22):Yeah. Me too. It's been kind of a crazy journey. You have an awesome background. Do you mind just sharing it?Jason (00:32):Yeah. I've had a very, weird hardware background throughout my career. When I left Berkeley, I decided I wanted to go build something. I didn't want to sit in front of a computer all day. Well, my degree is in astrophysics from Berkeley. And then I went on to work on solar panels. And that was-Anatoly (00:54):Like...Jason (00:54):What was that?Anatoly (00:55):Yeah. How did you get from astrophysics to hardware?Jason (00:59):So my senior year, my professor asked me to... He knew I had access to a machine shop because I was working with the Formula SAE, which is a student racing program. So they knew I had access to a machine shop and they wanted to make parts for telescopes. So I offered and said, "Hey, I can do that." So instead of being a traditional GSI or something like that, I was the monkey who machined random parts. And that was a lot more fun. At the end of the day, instead of having a program, I was like, "I have a thing. It's built." And that was it. I wanted to build things.Anatoly (01:39):That's awesome. How did you get into astrophysics then? What was the reason for getting into astrophysics?Jason (01:48):I just wanted to be able to say, I was... It was a rocket scientist was the logic I had, 18-year-old me had. Little did I know that wasn't exactly how that worked, but it sure sounded cool. And nowadays it just sounds really cool to say, "Oh, I have a degree in astrophysics from Berkeley."Anatoly (02:05):That does sound really cool. So what happened after? You build telescopes, right?Jason (02:10):Yeah. I built little bits and bobs for telescopes. I didn't want to get a real job, so I started a motorcycle company that was a complete disaster. Not a complete disaster, but it was pretty rough. I learned a lot about running a company there. Basically, I learned all the things you're not supposed to do.Anatoly (02:29):I mean, that's the first one, right? You're supposed to do that.Jason (02:33):Yeah. I'm glad it didn't hurt me too badly. And then I ended up being a consultant for a company in Silicon Valley. It was like a design engineering consultancy and they put me on to Solyndra, which was a solar panel company. And that was a very fun couple of years building some really interesting technology and honing the skills that I use today and some of the ethos that I still use today because one of the things we were trying to do was how do you make a solar panel easier to install, because right now it's quite a time consuming process. So my goal was to design a solar array that could be installed with no tools and we were successful in that.Anatoly (03:14):That's awesome. That's awesome. I'm going to keep saying that the whole episode.Jason (03:22):Two years on of creating the name and it still doesn't get old. So eventually Solyndra went belly up unfortunately, that could be 10 podcasts probably as to what happened there. But my boss at the time was like, "Cool, we need to go over to Apple right away." So I think that was a Wednesday, the company went bankrupt and on Monday I was working on secret projects at Apple.Anatoly (03:50):Cool. So there's like a period of how many years of what you can't talk about.Jason (03:55):A few years actually. And actually I know for a fact that the program is still ongoing and is still super secret.Anatoly (04:02):Cool. That's pretty cool. What did you work on at Apple that you can talk about?Jason (04:09):So when I started Apple, my first project was on Mac PD doing the last generation of the MacBook Air, which I mean, people still review that as one of the best laptops ever made. And I'm still quite proud of that. It was a very difficult project with a very small team, but it was very successful. And at some point in between MacBook Air and the little tiny MacBook, I was asked to help on a small project with Jony Ive which was the Leica infrared camera. And it was myself and one other mechanical engineer working with the ID team, designing this, what was supposed to be a two or three-week project. And six months later, I had my own office where we were doing prototypes of little tiny bits and pieces because Jony wanted it perfect. And that really kind of made my career at Apple was working on that project with the studio directly.Anatoly (05:01):Is that camera like something you can buy now?Jason (05:03):I mean, if you got a few million bucks. No, we only made one camera and it was purchased at auction for around $2 million if I recall correctly. I think it's on display somewhere. It was super cool. It had so many bits and pieces that were just absolutely ridiculous. The whole thing was handmade. My favorite little anecdote about that is it needed to be... The tolerances were so tight that it needed to be hand assembled in a very particular way. And so if the owner who currently has it decides it needs to be repaired or refurbished, for whatever reason, if they decide to actually to use a $2 million camera, there's a little post it inside that says, "Call Jason," with my phone number.Anatoly (05:52):Eventually you're going to get like a call at 3:00 AM.Jason (05:55):Oh, yeah. I do know who has it. And we do travel in the same circle, so I'm sure there's a day where I'll be like, "Hey, I built your camera." Yeah, that was fun. And then from there I joined iPad which was a whole other journey and learning a little bit more about mobile having come from solar panels and motorcycles, and desktop products, and laptops into iPad was a lot of fun. And my first real claim to fame in iPad was leading architecture on the original iPad Pro, which is the original 12.9 inch iPad.Jason (06:31):It was a lot of fun because we got to try a lot of different things. A funny story there though, that totally you know and a lot of people who follow me know, I'm huge into racing in cars and I do a lot of silly things. We actually built in carbon fiber speaker caps inside the iPad Pro. Apple marketing made this big spiel about, "Oh, it's different. It does this, it does that." That's all BS. It's because I like carbon fiber because I like race cars and that's why we used it. I'm sure there's some marketing guy going no, but that's the honest truth is to why there are carbon fiber speaker caps in the iPad pro.Anatoly (07:07):I thought those are so cool. I ride bikes. All the cool bikes are carbon fiber.Jason (07:17):Let's see. I don't think I have one here. I had one somewhere. I had the caps and everything, but it was a lot of work and it was a lot of fun. It was really interesting, but I got really sick of the bureaucracy at Apple. It wasn't for me. One day somebody was interviewing for my team at Apple, and they told me about what was going on Playground, which was Andy Rubin's new incubator. And I thought that was super, super interesting. So I just straight up cold called Andy on LinkedIn and was like, "Hey, I've done this stuff. I'm interested in getting out of the Apple ecosystem. Let's talk."Jason (07:53):And the next day I got a call from their recruiter and I went and interviewed a week later and they were like, "Hey, we have something. We can't tell you anything about it, but can you wait, like two months and we're going to give you a job. I said, "Cool." So for that two months, I went off and worked on Apple Maps, which was everybody goes, "What the hell were you doing on Apple Maps?" I was designing all the things you see, like the rooftop boxes and the things that went in the planes and the balloons that went up in the sky. We built some really weird stuff to capture images for Apple Maps.Anatoly (08:26):That's cool. Wow. I mean, there is a hardware component to Apple Maps that people don't don't realize.Jason (08:33):Oh, yeah. All that stuff has to be captured somewhere. I mean, there's warehouses full of hard drives of people having to still go through that data and make sure it's okay to use. And warehouses and warehouses full of hard drives.Anatoly (08:49):Yeah, I can imagine.Jason (08:52):So, yeah, after Apple, I went and joined Andy Rubin at what was... What were we called? We were called Ninja Army for the first five months. And then eventually became known as Essential. I was technically the first hire, but the second employee at Essential and was there from the very beginning to the very end. It was a hell of a ride. We built the Essential PH1, which was a really, really, really exceptional piece of hardware with some pretty crap software on it, unfortunately.Jason (09:19):Particularly the camera side needed a lot of work and unfortunately was released too early. And we could argue for days about what the reason was, but ultimately that was the end result of that. And we never managed to bring another product to market despite building some really cool hardware there.Anatoly (09:38):So yeah, man, launching hardware is hard. Why did you decide to do this again?Jason (09:47):The biggest product that we built... Or the coolest product. No, that was actually the smallest. The coolest product we designed at Essential was Project Gem. And we are working on that up until the very end. And that was so revolutionary in the terms of mobile experience in which taught all of us that there was really an opportunity here. There was still things to be done and new things to be invented and new ways of interacting to be made available.Jason (10:13):So when Essential went out of business, when Andy told me that was that, it was obvious to me that I need to take this opportunity now. I'm going to do it. I have a team available that I know is now all unemployed and let's keep them together and build something really, really cool.Jason (10:29):So I grabbed the key team members and then kept a few on the back burner while we raised money, and we got to the point where we were ready to rock and start building a new phone. So while the first phone is a little more traditional device, I think in the future, we're going to have some really crazy things to build with you guys.Anatoly (10:49):Yeah. I have no doubts. The gem thing was a pretty weird piece of hardware. Right? It kind of looked almost like totally made out of glass.Jason (11:03):Yeah. So this is one of those things that I love showing off in person is that glass phone. It was a glass uni body, which has never been done in a cell phone before. The overall shape was... I mean, the best description is either a candy bar mixed with an Apple TV remote and...Anatoly (11:21):Yeah.Jason (11:22):Yeah. That's a great description. Piece of glass, size of a candy bar that kind of looks like an Apple TV remote.Jason (11:28):Yeah, exactly. But it was all one piece of glass. Even the camera bump, the flash, everything was a continuous piece of glass. And every hardware engineer I've shown that to goes, "How did you make this? And how did you manage to achieve the tolerances required to build that?" And it took a lot of work with our good friends at Corning and a third party in China. But we were able to build them. And there's a couple of them in existence. I think they're all in Andy's garage still, except for the two that are in my possession still. And they work.Jason (12:00):Some of the issues we were encountering was that GMS wouldn't... We wouldn't be approved for GMS with that device. So we were going to have to do some new and novel use cases there and come up with all new ways to interact with the device.Anatoly (12:17):So awesome you guys started with a really strong focus on privacy. Yeah. Was that your decision or something that was just you guys wanted to do at Essential anyways?Jason (12:31):No, that was definitely my decision and the decision of the team. We looked at what killed, Essential. A big part of that was a lack of focus other than building cool stuff. And that only gets you so far. There needs to be a reason why your customers want to join our adventure rather than go with a Samsung, or LG, or HTC, or Motorola or whatever was available at that time.Jason (12:54):So we realized that a big problem facing everybody today is a lack of consumer privacy. And that's when we came to the conclusion that we could actually address that as an OEM.Anatoly (13:06):And that's a really tough challenge because you still probably want to keep Google services around.Jason (13:14):Yeah, absolutely. So I mean-Anatoly (13:16):Do you think... Yeah, go ahead.Jason (13:18):No, I was going to say it's a great segue into what things that people keep asking us since we announced our partnership is when we decided to say, "Okay, we're going to build a privacy centric phone, there have been privacy centric devices attempted in the past, but they were too extreme. By cutting out GMS, by cutting out Android in some cases, you were left with a device that was so private, nobody would use it, which yeah, it works as a privacy device, but you don't sell any.Jason (13:43):I mean, I know for a fact that there are two different phone manufacturers who sold less than a thousand devices, despite putting tens of millions of dollars into it because we all use the same suppliers. So the suppliers are excellent sources of information. And so I know for a fact that one of them was like, "Oh, we only shipped a thousand speakers to that company."Jason (14:06):So what we said was, "We're going to give you control and we're going to give the user control and we're going to give them options and they can make the choice as to how much they want to share or not share." And if they want to use Twitter, and Facebook, and Instagram and every Google service, then at least they have knowledge that they're doing that and is less secure than not doing it. Or they are consciously making that decision.Anatoly (14:31):Yeah. Go ahead.Jason (14:33):And that goes to what we've talked about is we're going to do the same with all the Solana mobile stack that we're integrating into the phone. We're not taking anything away. We're giving users an excellent device, a high-end flagship device that gives them more options and more choice in how they use it and what they use it for.Anatoly (14:52):Yeah. If you've been a web 3.0 dev, you've been building applications and you've never started with like, "I need to collect a username and an email and a password." That concept doesn't exist. Right?Jason (15:09):Yeah.Anatoly (15:09):That's something that being building like in crypto for the last four years, I almost forgot how to build traditional applications. And when I had to remember, I was like, "Oh man, yeah, there just doesn't seem a way to build privacy without really starting from the ground up and building a whole new set of applications that people actually use. Right? And they deliver value to those users. People use them because they love them. But you need to start from the ground up. And that's really hard because getting product market fit, building applications and then competing with existing services is just like a uphill climb.Jason (15:54):Yeah, absolutely. Building that community, which was what made our partnership so beautiful is you have that community and you have that development group that really wants to be actively involved and emotionally involved, and that's super exciting for us to be like, "Hey, let's give you a piece of hardware that you can call home too."Anatoly (16:12):Yeah. I mean, this is the first time, honestly, I've seen anyone tweet that they will stop using an Apple product and switch to Android.Jason (16:21):That is exciting. If we can crack 5% instead of the standard 4%, I will be absolutely ecstatic.Anatoly (16:29):Yep. That would be awesome. Yeah, I remember when the iPhone launch and that was a real watershed moment. A lot of us, I was working on BREW and a lot of us were actually, like, felt really frustrated with the mobile industry because we had all these ideas. We wanted to build rich applications that are easy to code and totally different kind of UIs, dynamic UIs and stuff. And these big telcos would give us like 200-page spec of what a phone should look like because they their customers. And there was like this moment where Apple announced this thing and Steve Jobs showed, "Look, there's a browser. It's a real internet." It's just not this [inaudible 00:17:15]. It's not the mobile web that... I don't know if people remember what that even looked on a LG flip phone.Jason (17:25):I do.Anatoly (17:25):That was a big deal. I don't know if we're there yet with crypto. I don't know if there's a single application or anything like that when people open up and they're like, "Oh wow, this is it." Because obviously when Apple announced the iPhone, it was already after the internet. It was big. Right? Everybody was already using the internet and there was this obvious gap between desktop and mobile. But I think when people actually pay with tokens for their day to day stuff and all that whole loop works and it, and it's beautiful and it doesn't suck, I think that might like open up people to new ideas of what we can do with crypto on a mobile device that actually supports it natively.Jason (18:18):Yeah. The day that both of our parents can go and shop with tokens will be a watershed moment for crypto.Anatoly (18:32):Yeah. I am really excited about that.Jason (18:33):Yeah. When I think about the potential there, I mean you and I have talked about it a few times. It's immense and almost a little bit intimidating and staggering what the obvious potential is there.Anatoly (18:45):So what kind of hardware, what else do you want to build besides a phone? You don't have to announce anything, but you personally as somebody that's a super hardware nerd, if you had infinite budget, and could do whatever you want, what would you build?Jason (19:02):Number one, I want to bring back Project GEM. I loved using that phone and I'm probably the only person on Earth that used that phone regularly for a while because I wanted to make sure it was great. And that thing worked so much better than anybody ever gave a potential credit for, as a small side device, as something you could toss in your pocket, in your bag and not think about. It was beautiful. I mean, for me, designing a piece of hardware has to also be very physically attractive and I think that was the most beautiful thing I've ever designed.Jason (19:31):I do want to see the expansion of using your mobile devices, be it your watch or your phone interacting with the automotive sector. Obviously, we've chatted about it before. I have a problem when it comes to cars. Oh, wait. Nobody can see what I just pointed at. So I think the inner relationship between mobile, crypto, and automotive is even earlier than anything else in crypto, but there's a hell an opportunity there. And thankfully, a lot of the automotive companies are starting to catch on and realize there's different potential there.Anatoly (20:13):What would be like a hardware integration between mobile and cars?Jason (20:18):I mean, we've already patented this idea. So I will talk about it freely now, is the ability to track all your history of your vehicle. And when you sell your vehicle, you have everything written to the blockchain. The NFT itself will simply be a photo or a connection to the title, which is held somewhere else. But you can guarantee that if somebody sends you a NFT of a title, that it is tied to a physical object, which we've already patented that as well.Anatoly (20:47):So you want like the miles like the RPMs, like the actual raw data. I don't know what else you got. I'm not a car person.Jason (20:56):Like the service history or the maintenance history, the sales history. Do you know if the mile... You can guarantee that the miles weren't rolled back. You can know if it went through any... What do they call... Oh, when they call you to bring the car back in. Oh, recall notices. Anything with service was done. That's a real utility of that technology.Anatoly (21:24):Cool. And the kind of cars that people would really want this for like collectibles, like classic cars that you're getting what you're paying for.Jason (21:34):Yeah, I think so. But also with your average Toyota or Civic, at least you know what the history was on that car. Was it repaired? Was it damaged at any given point? There is utility across the board.Anatoly (21:45):Cool.Jason (21:46):And then especially-Anatoly (21:47):Yeah, I can...Jason (21:47):Last thing on that one, especially, if we go into the collectibles, like being able to take a cut down the road. Okay. I sell the car to you. You sell it to somebody else and I can take a fraction of a percent of that sale is pretty awesome.Anatoly (22:00):If you're the person restoring the car. Right?Jason (22:03):Yeah.Anatoly (22:03):And you did this... Yeah, that's actually like, I think been... It's weird that model has never been replicated in the real world, but works so well with NFTs.Jason (22:16):Yeah. Exactly.Anatoly (22:19):That's a use case that I think is way under explored for stuff like that, for physical art.Jason (22:26):Yeah. It's one of the things that we patented early on was the connection between a physical and digital assets.Anatoly (22:40):Do you think Apple or Google care about what we're doing right now? Is this like reached anyone's decision-making yet or is this still-Jason (22:49):I know for a fact that our name has come up in both those companies, because I know a lot of people at the highest level. One of my good friends is an SVP at Apple and he texted me. He's like, "They're talking about you in an executive meeting." I was like, "Cool. I've made it in life. Are they talking about suing me though?" I'm sure Google has people thinking about it and worrying about it. I mean, obviously Google is still a partner because we are a GMS device and they are thrilled to have us. It's like being an advocate for the Android ecosystem.Anatoly (23:26):Oh yeah, absolutely. I think if we convert people from iOS to Android, Google should be like making parades for OSOM. It's a lot of...Jason (23:37):I'm serious, I haven't asked yet, but I should ask them like, "Hey, if we convert more than the standard 4%, do I get a bonus from Google?" That'd be nice.Anatoly (23:43):Yeah. Absolutely. I'm not too worried. They're so big that it doesn't seem like there's anything to worry about because they're just like, it's like worrying about, I don't know, nation state at this point.Jason (24:02):Yeah, exactly.Anatoly (24:03):For a startup, it's such a big competitor that it's not even a competitor.Jason (24:08):Yeah. And I think the companies that people often compare us to, or talk about us, nothing or... What's it? Oppo and OnePlus. One of the things that I've tried to do is make sure I have a good relationship with those companies as well, because it's kind of silly for a bunch of startups to be fighting over the scraps instead of taking swings at Apple, Google and Samsung in terms of device sales.Anatoly (24:31):Absolutely, yeah. I mean, OnePlus made some awesome devices too. That was really cool to see them launch. When I was working at Android at Qualcomm, there was just always like this huge gap between quality and innovation in terms of like how the device looks and feels and they were able to really push the limits there. Yeah.Jason (24:53):Well, I think our next devices will be pushing some new limits, which will be a lot of fun.Anatoly (24:58):Yeah. I guess, do you think like mobile... Because it's so big, is there still room to innovate in terms of hardware?Jason (25:14):Yes.Anatoly (25:15):Besides like on the standard daily driver.Jason (25:19):Yeah. I spend a lot of time actually. Now, that I'm the CEO and I have other teams of people now working for me pushing vision, I can spend a little more time thinking about how I want to change that interaction of device, what new technologies are out there, or even what new use cases of existing technologies there are.Jason (25:38):So I have been working on something wholly new for how we interact with our devices in a way that I think people will naturally enjoy using it. It's a bit of technology that'll change how you actually touch and use your device, but it'll be done in a form factor in a manner that makes it approachable. And it's not foldable because I think that's kind of silly most of the time.Anatoly (26:06):Yeah. Foldables, not also not sure about them. I really like the steel on the Saga phone.Jason (26:14):Yeah.Anatoly (26:15):Why did you guys pick steel?Jason (26:17):Two reasons. Number one, we didn't want to go titanium like we did on the Essential phone. It was a little too exactly the same, but we couldn't go to aluminum because it just doesn't have the same touch. It doesn't have the same feel. It doesn't have the same strength. It doesn't have the same feel, which I want to feel a premium device when I pick up a phone that I engineered. An aluminum loses that a little bit. It's not stiff enough for my taste.Jason (26:41):So we landed on steel for the housing and then we landed on ceramic because we still did want a little tie back to Essential, but also because it does feel premium, it looks premium. It's not paint, it's not glass. It's real ceramic. It's incredibly tough. It's very hard and it does well and drop while also allowing to be RF transparent and just, I mean, ultimately looking and feeling super premium to your fingers.Anatoly (27:09):When you make those decisions, how many logistics need to change? How many companies, suppliers, machines, how big of a process is that?Jason (27:24):Less now than it was five years ago, but it's because I have the team behind me that is incredibly capable of making it happen where we have a ridiculous Rolodex, a contact list for everybody under 25 of people to call for different materials and different processes. The big one is, as you saw in the first EVT devices. First stainless devices, they were quite heavy. So one of the big changes we had to do was we had to optimize for aluminum on the very, very first prototypes. We switched to stainless, but we didn't change our cutter pass. We didn't change our processes. So into the current build, we've made a lot of changes to ensure that we bring the weight down just the right amount, but still have a super strong device.Anatoly (28:11):Are those separate companies like the company that makes the cutters and stamps the thing and puts on the ceramic. If you went from ceramic to glass, how big of a logistical nightmare is that?Jason (28:25):If we switched over to glass, it's a different company that would manufacture and process the material. And then because it's glass, we'd have to also find a paint shop to paint the device. Whereas ceramic has that color baked in, literally.Anatoly (28:40):Got it. That makes sense. Okay. So you have to do like a bunch of work. It's not just one company that you go to and they're like, "Sure, we can do everything."Jason (28:51):Yeah, that doesn't exist as much as we'd love to. It's all over the place in Asia. Prior to the pandemic, I probably would've spent the last 10 months living in and out of China.Anatoly (29:02):And most of the stuff is in China or all over Asia at this point?Jason (29:07):A lot of the supply chain comes out of China, but that doesn't mean we're manufacturing there. We have plants or factories both in China and in Vietnam, but it's still all in Asia.Anatoly (29:18):Got it. Is there any chance for that stuff to ever happen in the US or is it just like the world is like manufacturing shifted irreparably?Jason (29:33):I have had a few conversations with the Canadian government about this. I think the US will be still quite difficult, but in Canada might be possible. But the biggest issue is all the subcomponents are still made in Asia. So even if you were doing final assembly in North America, you'd still have to ship all the individual components from Asia. Your SOC is going to come out of TSMC, which is in Taipei. Your memory is going to come out of Korea. The display will come out of either Indonesia or China and there's no manufacturing plants for all those components anywhere in the Western world.Anatoly (30:13):Actually manufacturing those components in the Western world is impossible. Right? Why is it impossible?Jason (30:18):I mean, just the billions of dollars required would be cost prohibitive to build those plants. Those fab houses are huge and would take years to build.Anatoly (30:30):And that's because things have gotten so specialized in displays and everything that it's just like, "Yeah. It's basically Intel like level kind of commitment."Jason (30:40):Oh, yeah. I mean, you're talking massive, massive. And even the ones that are good at it already have issues now at the scales we're talking about. Like the four nanometer process, which is used to build the chip we're using in Saga is there are only two companies in the world that even understand how to make the fab devices to make those chips.Anatoly (30:59):Yeah. This is the Tungsten droplet, right?Jason (31:04):Yeah.Anatoly (31:04):You have like a droplet that refracts UV light.Jason (31:08):Honestly, I'm not that familiar with that process, but yeah, it is crazy, crazy. It's tough to explain to people how tiny four nanometers is. And then how many traces they have to put down in a tiny little chip that we're going to put in your phone and makes everything work.Anatoly (31:29):How do you find these places? How do you start? If you were like a 18-year-old that's like, "Hey, I want to build cool shit, build cool electronics," how would you start?Jason (31:44):I think if I were starting today, I would try to find the R&D team at either Google or Apple or a startup like OSOM and just go like, "Hey, I want to be your man on the ground in Asia and I want to grow my network. I want to go out there with a completely open mind and just be like everybody teach me." Which is how I really got out there. I said, "I don't know what I'm doing on some of this stuff." But I am a sponge. I will sit here and learn from the best and I will be super polite because I see... That was one of the things that used to bug me a lot is I saw Western people acting like jackasses with their Eastern counterparts.Jason (32:23):Now they get nowhere and I made it at a point to always, always, always be polite, always say, "Look, I'm here to learn. Let me help you. If I know something that I can share, I'm going to go out of my way to share it." And that has enabled me to have amazing relationships with the CEOs of all these fantastic supply companies.Anatoly (32:43):It's basically like a relationship thing and you have to know what they can build and know what they do well and stuff.Jason (32:50):Yeah. And go in there with an open mind and sometimes an open wallet. That always opens some doors and expect to try to make it a back and forth. Because you get a lot further if you can say, "Hey, let me offer you some of my knowledge in exchange for some of your knowledge."Anatoly (33:07):How open are they to startups custom work with these small scale projects? Because my imagination is that like they only work with Google and they want to sell a hundred million units or whatever.Jason (33:20):Yeah. That's the other hard part. And that comes later on once you have those relationships because it doesn't matter who you are. If you don't have that existing relationship, they're going to laugh you out of the building, if they even let you in the door.Anatoly (33:34):Yeah. Makes sense. If you're building, if you dream of building awesome hardware, I guess you got to start like work for somebody like OSOM or R&D team. That's pretty good advice.Jason (33:52):I think it's the only way to build those relationships, so you know who to call. And I think a big part of it is it's not always the CEO you need to talk to. You need to talk to his right hand guy. You need to talk to the CTO. You need to know the right person to talk to at each company, and it changes a little bit. You'll you learn who the movers and shakers are, the people who can actually make things happen for you. And that's where it gets super interesting. And it takes boots on the ground to learn that.Anatoly (34:20):So I imagine that's still true for big companies, as you get bigger, you still just need to keep those relationships going.Jason (34:29):If you want to innovate, you need to. If you just want to just keep grinding out the same BS you've been doing for 20 years, they'll usually just give you the C team and you can just grind and nobody moves anything.Anatoly (34:41):Yeah. The innovation part is hard. How long is the innovation cycle and hardware?Jason (34:50):Anywhere from days to years, right? I have been on the back side of things where it's like, "Oh, I have an idea. Actually, that was super easy to implement." Okay, let's do it. It's done. But I've also... Making the glass housing for GEM was an 18-month project to get the tolerance that we need to hold. For everybody who's listening, you need to hold 100 microns is pretty standard, which a 10th of a millimeter. Very, very-Anatoly (35:19):How many human hairs is that?Jason (35:22):Less than one. So we need to hold those tolerances on piece of glass and how glass is manufactured is that you literally take a molded part and cook it down into a shape. And you can imagine trying to hold... Like if you're baking something in your oven and trying to get it to stay within a 10th of a millimeter, it's never going to happen. So we had to help both Corning and our third party invent new technologies to achieve that result.Anatoly (35:52):That's really cool. That's pretty cool. Are people using these technologies anywhere else? Or is this something that is basically just only was built for GEM?Jason (36:06):I think they're still using... There's not a lot of applications where you need a deep draw, weird aspect ratio glass part, but I know they're using it for two and a half D or even light 3D shapes, that at least allowed them to make 3D shapes that weren't as extreme as GEM in a more factory friendly manner.Anatoly (36:28):Super goal.Jason (36:31):Yeah. I could talk about random manufacturing for hours.Anatoly (36:35):You guys also have like a pretty awesome software team.Jason (36:39):Yeah.Anatoly (36:40):And you guys did a lot of work in actually adding privacy features to the Android stack.Jason (36:45):Yeah.Anatoly (36:46):What are these privacy features?Jason (36:49):I'd love to have Gary answer that question if he were here. But mostly what we wanted to do is allow the user to just be more aware of where their data is going and how it's being treated by any webpage they go, any app they use and alert them if more data than they expect is going out and a place where they can work within their device, where they can guarantee that nothing is going out that they don't control, which we haven't named yet because somebody stole our name.Jason (37:21):And then the other one that I love that I cannot wait to use more of is what we called lockdown, but then Google used that name for what they were doing. But the ability to just turn off any module on the phone when you want to.Anatoly (37:35):And what do you mean by module?Jason (37:39):So right now, I think in lockdown mode that Google offers you can turn off the camera and mic. But we can turn off the camera, the mic, the antennas, the USB port, whatever. A module is any piece of hardware on the device we can individually completely disable that.Anatoly (37:59):That's really cool. Does the user have a physical notification that that thing is turned off? Are there like LEDs or something that light up?Jason (38:10):Yeah. We're still working on that with your team as to what those notifications will look like, what that UI and UX looks like. But yeah, there are both physical haptic feedback as well as visual feedback.Anatoly (38:22):Can you turn off GPS and things like that and other sensors. Or I guess the GPS radio. I don't know how baked in those are these days.Jason (38:32):It's actually super, super, super baked in. One of our investors is an Apple employee. And I was explaining to him like, "Look, man, you can put your phone in an airplane mode." That GPS is still working. And he's like BS. And I'm like, "No, no, no. Watch, watch, watch. Put your phone in airplane mode." And we were on a bicycle ride. "Go bike 100 yards down the road and see your phone is still tracking you." And he's like, "What the hell?" And the next day he invested.Anatoly (39:01):How has it been like getting folks like... You guys work with mostly non-crypto people, up until you met me?Jason (39:10):You. Yeah, basically.Anatoly (39:14):Yeah. What has that conversation been like? What has been their reaction?Jason (39:19):It's been all over the map. It says there were some very vocal, negative people outside of the company, which I completely expected and doesn't really bug me at all. We had surprising support within the company, to be honest. I think I told you, I fully expected 10 to 20% of the company to be like, "Ah, screw this. This is ridiculous." And we really only had one person do that. And then the counter to that, the amount of support where people were like, "No, this is exciting. This is the next generation of mobile will be built on web 3.0. And I think the definition of web 3.0 remains fairly fluid and we get to be involved with really defining what that actually means to the end user.Anatoly (40:03):Yeah. I think this is like a huge opportunity for us to set the standards and really push for privacy first and just build something that can be a really good base. The bricks that web 3.0 is built on.Jason (40:19):Exactly.Anatoly (40:21):I guess, what was like the detractors? What was like the any points that they brought up that you think were interesting or worthwhile?Jason (40:30):I think that was the biggest thing is none of the negative comments I heard were worth that much because it was the standard anti-crypto comments, which is like, "Oh, I don't believe in it. This is scam. I don't see it." And I was like, "Okay, I'm not going to try to fight anybody over that. That's fine." People thought Facebook was stupid. Frankly, I still think Facebook is a little stupid, but they sure are worth billions and billions and billions of dollars. So there is a market for it.Anatoly (40:56):Yeah. It was really hard for me too, to accept, to believe in Facebook in those early days too. But in my mind that is like the quintessential internet company, more so than Google. Because it was really like... All they're doing is connecting people. And that's a very weird thing to think about that, that could be worth half a trillion dollars or whatever it is these days.Jason (41:22):Who knows? They're probably more than that.Anatoly (41:24):I have this analogy that Facebook has a social graph where you have to hop through people. Right? You're connected through some intermediaries, but crypto, it's all public keys, super connected or like a single censorship resistant message bus. Everybody in the world is now in like a single chat, basically, which is why it's a bit chaotic.Jason (41:46):Yeah. But I also see why... It's kind of interesting because you have that community, everybody is connected, which is inherently non-private, but it is also... Everybody in that group has a strong desire to keep certain things private. And it's that ability to choose what you keep private when you don't keep private, which makes this partnership so incredibly powerful.Anatoly (42:05):So obviously, a public data structure is really strong forcing function for developers to understand that this data is public, therefore I need to minimize how much it collects. It's almost like if all your interactions are over a public database, then you really, really try to know the least amount of the users that you need. And I think that's just been kind of a design constraint on web 3.0 devs from day one. And you forget about web 2.0 that you need to create cookies and store people's passwords and stuff like that.Jason (42:46):Yeah. And I think what we're going to bring to the fore for web 3.0 is that improved user experience and that UI. I mean, you and I have chat about it almost daily lately about the issues around that. And having a piece of hardware that can bypass a lot of the frustration that's there right now is huge.Anatoly (43:05):Agreed. Well, thank you, Jason, for being here. It's been awesome talking to you.Jason (43:10):Absolutely.Anatoly (43:10):I'm super excited to work with you. It's going to be great. Folks, if you've been listening, go to solanamobile.com and pre-order the Saga.

Sid Powell is the CEO & Co-Founder of Maple Finance. Maple is transforming capital markets through technology and count traditional finance and crypto-native firms as customers. Joe McCann guest hosts.00:35 -  What is Maple?                    01:32 - How does Maple determine Credit worthiness?02:55 - Expanding the addressable market  04:35 - Who uses Maple and how they get started08:18 - Defaulting and the recapture of collateral13:21 - Maple's advantages against challenges lenders face in crypto16:45 - Why use Maple: Governance and growth19:27 - From Ethereum to Solana Integration                23:37 - Maple and Composability          27:13- Partnerships and future initiatives29:56 - Bringing non-crypto folks into DeFi / Partnering with Circle32:33 - Views on Contraction              34:59 - How Maple started and where it is going                  39:04 - Monetary policies and how they affect Maple DISCLAIMERThe content herein is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. Those who appear in the content may have a financial interest in any projects referenced, and any content herein is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.  This content is intended to be general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented without undertaking independent due diligence and consultation with a professional advisor. Joe (00:09):Hey everybody. Welcome back to The Solana Podcast. I'm your guest host, Joe McCann. And today, I have the pleasure of speaking with Maple Finance CEO and founder, Sid Powell. Sid, welcome.Sid (00:22):Hey Joe. Thanks for having me. Great to be here.Joe (00:24):My pleasure. I've been looking forward to this one. For the folks that aren't necessarily familiar with Maple Finance. Can you just maybe give a brief introduction as to who you guys are and what you do?Sid (00:35):So, Maple is a DeFi lending platform. We think of ourselves as a marketplace for institutional lending. So, the right type of mental model to think about that with is, in the same way that Shopify provides out of the box tooling to run an eCommerce business. What Maple is trying to do is provide tooling to run a lending business that just happens to be on chain. So the way that Maple works at a high level is you have managers of pools, we call them delegates, they'll set up a pool, which is like an on chain lending business or on chain credit fund, people and institutions deposit into that. And then, the manager goes and originates loans to corporate borrowers out of it. So, it's recreating a TradFi credit fund or a TradFi lending business, but doing this on-chain.Joe (01:18):That raises a first question for me, that is, if I'm providing a loan to an actual business, how does Maple go about determining the credit worthiness of that particular business?Sid (01:32):It's a good question. And, what we've tried to do with Maple is be asset light, in that, Maple does not want to be the lender or the balance sheet lender itself. Instead, what we're trying to do is give people who have the expertise to underwrite and assess credit. So I think, people who were in credit teams at financial institutions before, or they might have been in investment banking, but they understand credit and underwriting loans. What they're doing is they would follow a fairly conventional process where they would meet the management of the borrower, assess their financials, so balance sheet profitability, and then enter a loan contract with them, and set commercial terms around it. So, it is replicating a fairly conventional and tried and true process of assessing whether a borrower can repay the loan. It's not really reliant on on-chain determinants of credit worthiness in that respect. Really where the blockchain comes in is actually settlement and management of loans and portfolios of loans.Joe (02:28):Got it. That makes total sense. I mean, you're really saying, "Hey look, TradFi folks that understand how to evaluate credit, and credit risk, and credit worthiness, here's a new avenue for you to do this, which is on chain." And so, does that imply that there's more or less a much larger market for this, or is it more just breaking down the barriers of how TradFi credit funds, or credit debts actually tend to work?Sid (02:55):It's both. I often like looking at business history and one of the things I was always really interested in was the way that when Sony released the Walkman, it actually expanded the addressable market of people listening to music, because they made it more portable and therefore easier to access. And so, I think with this, what we're trying to do is we're breaking down the workflows of running a lending business, but we're making it 10X simpler and less costly to run and operate that lending business or credit fund. And so, I think what that does, it actually expands the addressable market of people who can do credit to businesses, institutions and corporate borrowers. I think that market's really underserved, and I think that's actually going to crimp innovation and entrepreneurship in the economy and in the private sector.Sid (03:41):And so, what we're trying to do is expand the supply of people who can operate and run lending businesses, so that the private sector can get access to more and better credit. And the demand for that is not really being well met by the banking sector today. So I think, there are a few suppliers in the private credit or private debt markets. These would include players like Fortress Group. But I think with this technology, if we're successful, we should see a lot more of those types of players, because it will be significantly easier to set up and run that business. Those businesses will be more profitable to run. And, this is beneficial for the economy.Joe (04:19):And so, how does someone get started with Maple then? I mean, it sounds like there may be a couple of different avenues. I just want to make sure we go through the permutations of the opportunities for, say, individuals or actual companies that want to create this Fortress 2.0, if you will.Sid (04:37):Yeah. So, the central company or user of the platform, that role, we call it a delegate. But that's the manager of a pool. And so, they're, in effect, your lending business that's being conducted on chain. So those types of players, how they would get started, they go through due diligence with us. And then, once they're admitted to the platform, we really want to go through and see what sector they would be lending to, how they would attract institutions or individuals to lend into their pools, and then who on the other side are going to be the borrowers. We want to make sure that it's either a new sector. It's a growing, it's a profitable sector. It's one where there are fairly credit worthy borrowers. We're trying not to get into things that are too speculative. It's not for small businesses and for startups. It's more for established companies that are profitable, that have a great track record, and a big opportunity.Sid (05:31):So, that's one side. And then on the other side, institutions who are going to lend into the platform or individuals. I mean, this could be wealth aggregators, hedge funds, family offices, high net worths. But what they're looking for is a place to park capital and pretty simply earn a yield. That yield is going to be higher than going into things like AVA or Compound, because you're taking credit risk. You are lending to corporate borrowers. And so there is risk involved in that. But, generally these types of players have a fairly long time horizon and they're reasonably sophisticated in their understanding. So, that's lenders.Sid (06:07):And then, the other side is borrowers. Now these are typically corporates who are crypto native at the moment. So, that's the small wedge. If you think about, when you're going to attack a market, you have to start with a wedge. And what we did was started with crypto native companies who are generally market makers, high frequency traders, or arbitrage traders. But, that's one sector within the crypto industry that we can attack first. And then, next we want to look at other sub sectors, which could be infrastructure. So it could be players like Figment, Blockdaemon, Chorus. Could be Bitcoin minors, like Marathon, Core Scientific, any of these publicly listed players, or even large private players. And then beyond that, we want to start to look at SaaS companies. The goal here is not to live solely within crypto. We think crypto is tremendous infrastructure, but it's infrastructure that gives us an edge over traditional finance. And so, that's not really going to be successful until you can actually bridge and replace traditional finance in lending to those sectors.Joe (07:09):Yeah. That's really smart. Spoken like a true founder too. You got to start with your wedge and expand from there. I love that. This raises an interesting point though, today, starting with, say, crypto companies, I think makes a ton of sense. But more importantly, when folks create a pool and then, say, a family office or an institution decides to lend into that pool, what happens if someone defaults, right? So, in traditional finance and I'm definitely butchering this a little bit just to keep it short, but let's assume a business goes to a traditional bank and says, "I'd like to borrow a million dollars for working capital." And they say, "Well, what's your business?" "Well, my business is..." I don't know, "We build warehouses." Or something, right? And they say, "Well, what are you going to pledge as collateral?" Well, maybe they own the land, right, that they're going to build these warehouses on or something.Joe (07:56):In theory, and maybe even in practice, if they were to default on that loan, the lender would then have a legal claim against, say, the land that they pledge as collateral. How does that work? Not only necessarily just in the wedge that you're using with crypto companies today, but as you move towards, call it, infrastructure companies and even potentially SaaS businesses, how does default work in the recapture of that collateral?Sid (08:24):The way that lending began in crypto was largely over collateralized and it was using liquid financial assets, cryptocurrency, to serve as that collateral. And then, the lender would take possession of it, and then liquidate it if it drop below a certain rate, or if the borrower fails to repay. It's now evolved towards under collateralized lending. Certainly most institutions borrow under-collateralized now. And this means really what you're having to do is underwrite and assess the strength of their balance sheet. A lot of people think that this is an aberration, but this is actually most commercial lending.Sid (08:56):So, if you're lending against real estate, that would typically be an asset backed lend. But if you're lending to say Apple or a large technology company, typically they don't have a lot of property plant and equipment. They don't own a lot of land and you're not going to get your money back by being able to sell their land. Instead, what you're looking at is the equity of their balance sheet and the profitability of their business. And so, where this type of lending can evolve would be effectively a secured loan, but the security for that loan would be a charge over that corporate entity. So that's what we're looking at as we expand into other sectors.Sid (09:38):But, I think, to be able to actually serve the broad corporate market and eventually have Fortune 500 companies borrowing through DeFi, you need to get comfortable with that type of risk, which means assessing the balance sheet of a borrower. I will say that, if you take security over a house and a borrower defaults, the foreclosure process is about 18 months. You'll get your money back, but it will take a significant amount of time. So it's not liquid collateral. And anyone who thinks that DeFi lending against those type of assets is going to give them an instant payback if there's a default, is going to be disappointed. But, if you're lending against the assets of a corporate, you want to make sure, ideally, they're not going to default. Your recovery's going to be lower than if you're lending against a house. But, your probability of default is probably also correspondingly lower if you're lending to a large corporate than an individual who just owns a house or a small business, who's pledging a house as collateral.Sid (10:34):You are still lending against effectively the strength of the business and the profitability of the business. But, as crypto goes into other sectors, I can see asset backed loans also playing a role. We would look at real estate backed loans, but currently one of the main issues is that, that requires paper filing in any individual state that you borrow from. So, it's not even 10 years behind, it's 40 years behind in terms of actually having to file security and manage the opposite of that.Joe (11:02):Got it. Very helpful answer. I think, the takeaway really is, "Look, if you're lending money to Apple..." I love that example. "You're not necessarily having them pledge their One Infinite Loop address and ownership of that land as collateral." You're saying, "Look, it's Apple, right? They've got a ton of cash on their balance sheet, or they've got great potential for future cash flows, et cetera, et cetera. We're just taking that to something like Maple's platform and folks can assess." Like you said, it's really up to the lenders to assess the credit worthiness, right?Sid (11:33):One of the innovations that we've tried to build in is that if you're coming to the platform and you want to deposit into a pool, you don't have to be a sophisticated underwriter yourself. What we're trying to build is a way for you to assess that here's a pool that is lending to this risk profile.Sid (11:50):Let's say, mega cap companies based in the U.S., here's the historical performance. It's earned this much in yield. There have been X number of defaults. And then, you have a bio on the management team that is making those lending decisions. And that enables you to decide, "Okay, I'm going to allocate a bit into this pool and maybe a bit into a second pool." Rather than, you having to come to the platform and go, "Well, do I want to lend to company A? Or do I want to lend to company B?" Because, it's not really in most people's expertise or ability to devote that time to doing that. And I think that was why earlier peer-to-peer lending platforms like Lending Club didn't quite take off and achieve widespread adoption, because that model is just super inefficient for both the borrower who's coming to a platform and doesn't know who they can borrow from, as well as the lenders who come to the platform and don't know how to assess whether Apple is going to repay its loan. Apple's probably a poor example, but some other company.Joe (12:48):Well, and speaking of defaults, we would be remiss not to talk a little bit about some of the challenges facing the lending industry in crypto right now, without having to necessarily name names. I think it's pretty well understood at this point that there's been some stress in the credit markets, if you will, when it comes to crypto. Can you talk a little bit about maybe how Maple does or does not "hedge" against that, being more of the facilitator and it's really on the lender's ability to evaluate that risk? Or, are there any sort of advantages that Maple provides that theoretically could have mitigated some of the challenges that some of the lenders in crypto have faced?Sid (13:29):So there's probably three key advantages or differences for doing this in DeFi, which would've been risk mitigants. So, the way that Maple works is you have multiple pools, each pool is a basket of loans that you can deposit into and effectively you're lending to those borrowers on the other side. Number one is that, all of the loans and flow of funds is totally transparent and on chain. So if you go into a Maple pool, you can see who the 25 different borrowers are. So you'd never have a situation where you wake up tomorrow and you find out that a Maple pool was actually lending to a borrower that you had no idea about. And that that borrower was 30% of the pool. So, transparency is risked mitigant number one.Sid (14:05):Number two is that the withdrawals and flow of liquidity is all just governed by smart contracts. So, as cash flows back into the pools, people can withdraw. So, you'd never have a situation where you go and you find that on a discretionary basis withdrawals have been halted. At the moment, liquidity is constrained, but it's purely dependent on just paybacks of the loans, which are coming through over the next 60, 90 days and beyond. And then, element three, as you can see that, there is a reserve for each of the pools. So the reserve is there and it can absorb some of the credit losses. I would say, our reserves in the pools at the moment are probably undersized where they should be on a normalized basis and that's a learning, but conceptually having that reserve on chain, I think, gives people who are lending inter pools and into protocols comfort when they can effectively see the buffer that is available to protect people who are a senior there. Otherwise, contrasting that with more black box CeFi lending, it's just a feature that is not there.Joe (15:08):Weird. So you mean more transparency is actually better for market participants?Sid (15:13):Well, I think, yeah, at this stage with current events, it's a clear argument, yes. I think, where CeFi lending has advantages is obviously in flexibility, having a protocol and being governed by those rules obviously creates inflexibility and slows things down a bit. But, I would say ultimately what we're actually trying to design is a system that is resilient and robust enough to shocks that it doesn't require a bail in, or a lender of last resort concept, because over a long enough period of time, you will see enough volatility that stresses things that rely on a single counterparty. We saw during the GFC, everyone was insured by AIG. Well, when there was an out-sized level of defaults, AIG went bust, then no one was insured.Joe (16:03):That's right. Yeah. It's interesting, I was chatting with a coworker of mine who was at Lehman Brothers during the GFC and he was having a little bit of flashbacks to some of the stuff that's been happening in crypto today with the CeFi-related lending.Sid (16:17):Yeah.Joe (16:17):Let's talk a little bit about Maple itself. So the protocol, this is obviously The Solana Podcast, we're going to get into the Solana integration in a second, but I really wanted to provide the listeners with a fairly solid understanding of the actual product and the business, and also the business of lending. So they could understand maybe what Maple's token is, and what does the protocol do, and how does governance work? So, could you maybe just talk a little bit about if I'm a Maple token holder, and maybe I'm staking Maple, why have this protocol, and what does the governance actually do for the future of Maple's growth?Sid (16:54):It's a good question. And so, the way that the token fits into things is, it can be staked. So, that's the first use. The second is that, when you stake it can be deposited into that pool cover. Pool cover is your subordinate reserve. And so, the purpose that therefore provides is, providing a safeguard and some absorption for credit losses, in addition to being used as the governance token to make decisions on the platform. So, what you would do then, in terms of a workflow, so you might stake it, then you're receiving a portion of the establishment fees.Sid (17:27):So, Protocol Treasury earns about 66 basis points on loan origination volume, and then half of that goes to pay stake tokens. And then, the other element where the stake token participates, is that, if it's put in pool cover, pool cover is paid a portion of the interest. So, generally in most pools, it's about 10% of the interest cash flow. So, if a pool is a billion dollars, paying 10% on average, it's a $100 million in interest, 10% of that, so $10 million would go to pool cover. So it's going to pay effectively for credit protection there. That pool cover is comprised of the token and USDC. In future, we'll just have single-sided depositing of the token.Sid (18:10):But therefore, it receives a portion of revenues for actively participating in the credit protection of the pools and the senior lenders on the platform. So, that's how it figures in the platform both economically and from a risk allocation perspective. And I think, risk allocation is super important, because as I alluded to before, this is one of the ways in which we're trying to fix some of the problems inherent in TradFi lending. So, an alignment of incentives is super important and the pool delegate, so that team of managers who are deciding who are good borrowers, they have to put some of their capital into that subordinate reserve, the credit reserve. And they do that so that if there are defaults, they are among the first to take a hit. And that helps ensure that they are incentivized to maintain pretty good credit standards.Joe (18:57):It's really cool, because there's so many ways that you can participate in Maple. But also, the notion that folks have shared incentives and are aligned is I think one of the most powerful aspects of the protocol, but that raises the question of, "Well, man, it seems like a lot of scope for some engineering talent." Let's dive into a little bit of the tech, not get too deep, but certainly enough to give people an understanding of what it is that you've built, and ultimately why and when you added salon integration? What does that look like for your team? And, what has been the lessons learned from starting on Ethereum, and then adding Solana support.Sid (19:36):Yeah, it's interesting. I mean, looking back at our tech stack that we have on Ethereum. So, we launched the Ethereum version of the protocol in May of 2021. And then, we were steadily growing. So, Ethereum, or the protocol as a whole, has done about 1.5 billion worth of loans to date. It's pretty good for 12 months. But what we looked at as we built out Ethereum... So there's certain things that you really keep in mind when you're developing. So, upgradability was something we debated for a long time, because if you have upgradability, it gives you flexibility. And it means you can move faster, ideally not break things, but it gives you the ability to iterate, but it's less secure, because upgrading a protocol or upgrading a component of the protocol, that's how hacks and exploits can happen. So, we initially traded more on the side of security there and inflexibility.Sid (20:26):Now, as we near launching pools V2, we are thinking about upgradability and how we can have something that evolves. But, it was around late last year, I was actually at Breakpoint Solana in Lisbon, and I was meeting a lot of founders who were coming from TradFi backgrounds and looking at building things on Solana. And, we had been receiving comments from people who were using the platform about the transaction costs on Eth. And so, that prompted us to start looking at, "Could we build on layer twos? Should we evaluate alternative layer ones?" And, being at the conference, yeah, I was very much struck by, one, the level of development in the ecosystem, particularly on the DeFi side. Two, the level of talent that was moving across there. And, a lot of our clients and borrowers, like Alameda, obviously have a lot to do with the Solana ecosystem.Sid (21:13):And so, we started researching who was doing Maple on Solana. We met a team that was called Avari, and then we ended up acquiring them. And that meant that we were able to get live on Solana probably six months ahead of where we would've been. And it gave us access to really good talent in terms of Rust engineering, which was super short on supply. So, for us, it meant, one, speed to market. Two, talent acquisition. And, Jeff and Quinn, the two guys who came on board the team, really aligned with us in terms of values.Sid (21:43):And, it's given us now I would say the advantage of being on two chains is that you can start to build out a differentiated product that ideally isn't cannibalizing what you've already done on Ethereum. It should be meaningfully differentiated. And that's why I've been pretty excited to see things like the launch of the Solana phone, because the more differentiation and uniqueness that we have on the ecosystem that product is built on, the more we can serve a differentiated market, whether if you have something like, SolPay, that starts to introduce tech or SaaS companies into using crypto and blockchain to support their financing, then that's a market we could go and lend to.Sid (22:24):So anyway, that's a long-winded answer. But, that was why we started looking at Solana. And as we're evolving that product, so there's now about 113 million in loans on Solana, Genesis and X-Margin are each running pools there. We're trying to see, how can we build that product to serve either a unique customer base, whether it's like SaaS companies or a unique and differentiated lender?Joe (22:46):Got it. Yeah. The Breakpoint conference last year, I think, was really eye-opening for a lot of folks that were just getting familiar with Solana. And, the response I've heard from most people is that, just the developer activity and the developer acumen, the technical acumen of the developers that were migrating towards Solana was a super strong signal to why they wanted to participate, or in your case support Solana. One of the key features of Solana is this concept of composability. So, the notion that protocols can almost operate as Legos and you can build various things, developers can build various things. Is there a notion of composability with what Maple's doing? Meaning, could developers actually try to build something with Maple powering it, or as a piece of some bigger product, or protocol idea that they may have? Or is Maple more meant to be, "We're a vertically integrated thing that supports Solana's chain"?Sid (23:46):Yeah, it's an interesting concept. It's, do you go the Apple route and you be vertically integrated and control your destiny? Initially, the concept from Maple was for tranche fixed income, but then it evolved to be full stack lending. And that was because DeFi was so early that we didn't really want to be dependent on other protocols to get to market and to grow. And so, we took more of the Apple approach early on. Now as I look at DeFi, one, I think there's actually going to be a contraction in the scope of different products on DeFi for a while. And so, being vertically integrated is strategically pretty good for us, but the counter to the apple approach would be where Microsoft has found itself now, where I think, arguably before they might not have had a stronger set of products outside of Windows and Office.Sid (24:30):But, now when you look at what they've got, they've got GitHub, Teams, Xbox, gaming, Activision. They're actually adding this full suite of things, where when you go into their ecosystem, you have access to all of this. And it's a very interesting product to serve to institutions or enterprises from Microsoft's side. And so, I'm looking at what is within the lending product suite, whether it's yield. So this could include swaps, could include things like credit scores, could include flavor of insurance or credit default swaps, or it could include different types of credit indices. What are the adjacent or complimentary products that would, one, make our product offering stronger, and two, enhance the strength of a product that's trying to partner with us.Sid (25:16):So, credit scores are really a natural one. But, I'd say, at this stage, it is very early on in that space just because people aren't conducting most of their economic activity on chain. But other things like fix for floating swaps, or hedges, I think, are a pretty good complimentary one. It's still very early, but those are the natural ones that I speculate about, because that was what I used to do when I was in banking. We'd also have to go on frequently talk to a swaps desk, or a ratings agency. So I think those would be naturally the first ones.Joe (25:44):Got it. Yeah. There's a conversation that I have with a number of the founders that I advise on their companies about staying very tightly scoped to what you're building, versus opening up almost an API, or a set of SDKs, or a platform if you will. And there's just trade offs to both of those, right?Sid (26:01):Yeah.Joe (26:02):One is that if you are vertically integrated, well, you really control not only your destiny, but you also control the end-user experience, and what that end-user... How they're going to interact with your product/protocol. And that's super important, but it could potentially restrict the potential speed of the growth of what you could be doing in these adjacent areas like you're describing. Whereas, if you, say, theoretically, open up a platform with APIs and SDKs for developers to build on, you're not necessarily controlling that end-user experience, and that could be potentially detrimental to the brand of Maple, assuming someone has a poor experience. But, it's a great trade off to make, right?Joe (26:40):And I think, staying the course of what you guys have done thus far, the fact that you're even thinking about CDSs or credit scores. I mean, one of the questions that came to mind earlier was, if you're bridging a lot of what happened in TradFi, are we going to start to see a ratings agency? Are we going to start to see the CDOs and CDO squares, and for the listeners that may not know what that is, it's a collateralized debt obligation that could then also have various tranches associated with it, which unfortunately led to a big portion of the global financial crisis. And we don't necessarily want to recreate that. But I guess, from my perspective, how do you think about that roadmap that you're doing. And, where are you going to be doubling down, or are there other areas where you want to partner with folks? And, how do you think about that going forward?Sid (27:24):Yeah, I actually think about a lot. I mean, we get a lot of inbound interest in partnerships, because I feel like we've been around a little while and we've demonstrated a certain amount of traction. So that's good. But then, a big question becomes how do you decide and prioritize amongst those opportunities? And what I try and think about now is... I think, a big focus for us is which opportunities get us fastest out the gate in terms of serving non-crypto native customers right now. So there's a certain question of, how much do you want to be doubling down serving crypto native borrowers, versus say, leaping out and serving SaaS companies? And to serve SaaS companies, the types of product integrations that you might need, or just any customer outside of crypto, would be things like on and off-ramps.Sid (28:07):Now, that's a really intensive product development on the legal and compliance side. It's actually pretty simple build, but it starts to become a strategic question of, "How much effort do we want to devote to something like that, versus say, evaluating an alternative L1 or going to an L2?" I think, the scale's probably tipped in favor of looking at how quickly you can get out and serve just a wider set of customers. And I would say, part of our role at this stage is trying to educate people who are not actually in crypto already, and try and bring them into crypto and into DeFi, rather than bringing DeFi to them. Instead of evangelizing about it to the people who are already in crypto. I think what we're trying to do is just demonstrate a very workable product to people who are not already in there and wow them with what we think the huge benefits over doing this through the traditional financial system.Joe (28:57):I mean, look, I love the notion and the approach of trying to get a lot more non-crypto people into DeFi. I think, one of the things that I look for when I talk to founders or folks that are in the ecosystem... And I know that Anatoly and Raj did the same thing, and the Solana lab team more broadly is like, "How can we get more and more users that aren't already in the space?" And, there's a couple ways that you can do that. One is, you can build an amazing product that's very easy to use. Easier said than done.Sid (29:29):Yeah.Joe (29:29):But the second is some partnerships. And, what brought this to mind for me was I think when we met in-person, it was at a dinner that Jeremy Allaire, the CEO of Circle put on. Could you maybe talk a little bit about how maybe the Circle is an example of how you're thinking about levering someone in this space that is absolutely doing God's work out there, working with institutions and folks trying to get them into crypto and DeFi? Jeremy's done an amazing job of doing this with USDC and what he's been doing at Circle. So I'd love to get your take on if Circle is an example of how... Or someone that you would partner with to help accelerate some of those non-crypto native people into DeFi.Sid (30:08):Definitely. So, Circle, as you said, is a great partner. So, the pools lend on Maple in USDC, which is the vast majority of the lending that's happening on the platform, and also wrapped Eth. But if we look at USDC, this is absolutely essential infrastructure, I think, for DeFi, because having this secure stable currency in a digital form, which we can then distribute loans to corporate borrowers, as well as companies who are coming into DeFi and looking to earn a yield, are wanting that yield in stable coins. But, where Circle has been tremendous, and I think where there is a huge opportunity to grow is, one, there is the Circle yield product, which could potentially be integrated with Maple and a partnership there would offer people access to yields coming through the platform. What they've actually done really well, which is underrated is, the front-end of the Circle treasury and USDC product has, I think, the best off-ramp in the market.Sid (31:05):So, we use it for our own corporate treasury management and when we have to pay things in fiat. And, having that product, that's a really good Trojan horse, that if a regular non-crypto company starts using that, they have a seamless on and off-ramp through which they could access a product like Maple. So, I could lend to a company and let's say that company is doing SaaS, or it's a FinTech business, or even a business in real estate or construction. So, if we could lend USDC to that company, then they could take that through the Circle front-end, convert it into fiat, and then use it to pay vendors, suppliers, salaries. And so, I think, the growth and proliferation of stable coin usage is super essential and it's going to precede wider adoption of DeFi, because it's a necessary part, it's key, picks, and shovels for the space. But I'd say that's how the Circle partnership is super important for us.Joe (32:03):Yeah. The folks at Circle are great. I have nothing but positive things to say about them as well. And, there are other partners in this space that I think have been super helpful as well to DeFi adoption. As you think about these partnerships... What struck me earlier about when you said you think there's going to be a contraction in DeFi, how does evaluating how Maple is going to play in this space relative to the potential contraction that you're seeing? So, maybe to unpack this a little bit, can you talk about maybe your view on the contraction and how that may or may not influence how you want to go out and partner with folks to bring on those call it a 100 million new users into DeFi.Sid (32:46):The contraction is happening broadly across all risk on assets. So, people are going risk off for crypto for equities. And, what's happening is that because crypto is a much smaller market, the outflow is felt more acutely. But we've seen out general outflows from crypto and DeFi lending as a whole. And, what it's forced us to do is probably consolidate around a core working product. So, in this case, it's probably caused us to, say, push out potential partnerships that are maybe less clear in their scalability, because it's a bird in the hand, two in the bush. So, if you have a customer set that is working and partnerships that are working, you have to be more circumspect and conservative in the new ones, because you probably have less bullets. And so, what the pullback is forcing us to think about is, if we wanted to go and target a new set of borrowers, who is a new set of borrowers that we could potentially sell to lenders who would need to deposit into the pools that are lending to those borrowers?Sid (33:46):So, it forces us to think about matching and extending the markets that are offered on the platform, i.e., the pools that are offered on Maple. And, in terms of integrations, it forces us to concentrate more acutely on what partnerships, for example, Circle as well as off-ramps will help us extend our reach to serve customers who are outside of crypto. So things like credit scores, you have to be a little bit more conservative about, because probably the next six months, there's not going to be as much on chain activity. And so, the amount of value you could get out of, say, an on chain credit score is probably diminished for the next six months. It's not that it wouldn't work eventually. It's just that, probably that goes down your priority list in the near term.Joe (34:33):Got you. Yeah, that makes total sense. Can we talk maybe a bit about your company? We've been talking so much about DeFi, and of the product, and this and that. I probably should have asked this at the beginning of the podcast, but can you maybe just talk a little bit about the company? How old the company is? And, where you're located? Potentially remote, like most modern companies. And, what does the the roadmap look like for folks you want to bring on or folks that you're looking to add to the team? The reason I bring this up is that a lot of folks that tend to listen to the podcast are very passionate about participating in the Solana ecosystem and are interested to hear about how companies started and where they're going.Sid (35:13):We have an interesting structure. So, two segments, we've got the DAO, which raised capital. And the DAO is effectively governing the protocol and it has a multisignature that will implement any major changes, deploy new contracts. And then, we've got the operating company, which is employing developers, conducting business development and marketing. And so, that's domiciled out of Australia. And that company receives grants from the DOW, which cover operating costs and cash burn on a quarterly basis. And I suppose with those two segments, it's worth noting, so most of the team is remote. They tend to be based out of the US, Canada, UK, and Western Europe. We try to aggregate everyone around not too many time zones, so that it was easy to coordinate calls when I was living in Australia. I used to have to do 4:00 AM calls most days.Joe (36:02):Brutal.Sid (36:02):Yeah. But, we've got about 36 people at the moment. And so, we were hiring more aggressively. I think in current market conditions, we paired that back a little bit, but we are still hiring. So, if there are good people out there who want to join a team, we are looking for a couple of engineering roles at the moment. We're looking for a capital markets associate for anyone who is in TradFi or investment banking, and looking for a change into crypto. Never a better time to do it. And so, I actually want us to run a pretty lean model. So I think, me and my co-founder have always been of the opinion that you add people on the basis of jobs that need to be done, rather than just headcount for headcounts sake.Sid (36:42):And so, I've definitely been inspired by the FTX model there in terms of how much they've been able to ship for how lean they are. I would say, we've actually developed a sales team, operations marketing, as well as product engineering and design. So, we are a fairly complete core. And so I think, there are potential roles on the team for someone in sales, design, or engineering, if there are good people out there. Yeah, that's where we got to at the moment.Sid (37:13):But in terms of roadmap, the roadmap for us is we're launching pools V2. So there's a really complex engineering ask there. And, the team is doing a lot of research. And particularly with the market events of recent market volatility and some of the points and implosions we noted in the CeFi side, we're trying to take learnings and incorporate them into pools V2.Sid (37:37):So this would include things like, how to have a better withdrawal mechanism? How to have better cover support, i.e., credit protection, because people are really more acutely concerned about that. And that's something that probably wasn't a big market focus six months ago. And then, better asset liability matching, which is that point I made about sustainability of a lending business. You can't fund term loans without call deposits. And so, we just want to get better about matching those up.Sid (38:05):But then, on Solana, what we're focused on at the moment is things like open term loans, active collateral management. These are the types of things that we think is going to be super interesting tooling to bring more CeFi businesses onto DeFi rails. So I think, we recognize that is a core customer set of ours. And it's like, "How do we build the tooling that means that you would want to run a multi-billion dollar lending business on top of DeFi rails?"Joe (38:30):Wow, fascinating. And man, could we use that? If there's anything that we learned, I think, this year thus far is, self custody is definitely going to be a key thing going forward.Sid (38:40):Self custody is king.Joe (38:41):Yeah. Well, look, this has been an absolutely fascinating conversation. I have one last question for you. And, we will absolutely hold you to it long-term. You've been talking a lot about lending and there's an interest rate associated with those loans in the United States. And, I think some of the other central banks are following suit. We've been raising interest rates. So, how do you think a little bit about competing with some of the broader interest rate markets and something that Maple can actually provide? Does that actually factor in? How do you think about, I guess, monetary policy from central banks relative to the business that Maple's building?Sid (39:20):For a really long time rates on crypto were outside rates in, let's call it, the real or traditional economy. And that was because there was a lack of liquidity there. Then, what we saw, rates and traditional economies started to go up, but because there was actually more supply coming through, particularly earlier this year, we actually saw rates drop. And so, the delta between TradFi and DeFi/CeFi rates really compressed. Now, we've seen with the implosion of liquidity... Liquidity has totally dried up. We've seen rates go way wider again.Sid (39:54):So rates now blowing out to mid-teen levels, you can probably clear in crypto and DeFi. I'm a big student of financial history. And I look back at the last time that inflation was this bad, which was probably the Volcker era. And, cash rates got up to double digits to break the back of inflation. And I'm interested, because I still think that lending rates in the traditional economy are sub-inflation. And therefore, everybody who's lending in the real economy is still earning a negative real rate of return. Whereas, in crypto, at least you're earning a rate that clears inflation. But I'm interested to see, and I wouldn't be surprised if rates continue to go up in the cash rates and the TradFi economy up to high single digits. And then, in DeFi and crypto that probably pushes them close to high teens. And yeah, I wouldn't consider that out of the ordinary. I think, people assume that because we haven't seen that in 20 years that that's not possible, but I would say, in the 60s, rates were pretty normal low single digits. And in the 80s, inflation was double digits, so.Joe (41:00):So basically, to wrap it all up, you're saying, crypto rates will be clearing inflation, whereas the real economy, likely not so.Sid (41:10):Crypto you can't have that distortive effect of the central bank, where you have people who are lending out at negative real rates, because they're below inflation. I think, in crypto, there is a demanded risk premium. And, it's a more pure form of capitalism, I would say, where people are going to price rates so that they can clear a real positive rate. So I'd say, with supply inflows being limited, I'd say that effect is more exacerbated. So I probably expect to see the spread between crypto and TradFi actually widen over the next 12 months.Joe (41:44):Very cool. Well, we will absolutely hold you to that. And in 12 months, we will verify that you were correct. Sid, this was a great conversation. Thanks so much for sharing your story with Maple. And, if folks want to find you and Maple online, where should they look?Sid (42:01):So you can go to our website, maple.finance. That's where you can find the web app, any news and updates. If you're active on crypto Twitter, you can find Mapl @maplefinance. And you can find me @syrupsid, both one word. If anyone wants to reach out, happy to make contact with them.Joe (42:17):Great stuff. Thanks, Sid. Well, it was an awesome conversation. It was such a great time hosting The Solana Podcast again. My name's Joe McCann. I'll see you guys next time.Sid (42:26):Thanks, Joe.

Noah Prince (Co-Founder/ CEO, Strata Protocol) and Austin Adams (Lead Protocol Dev, Metaplex Studios) sit down with Austin Federa to discuss the integration of Strata's Dynamic Pricing Mint tool into the Metaplex Program Library.00:51 - What is Strata?02:12 - Challenges when launching a token04:43 - Why is Strata more successful than competitors?06:15 - Fundraise and the changing use cases of tokens on Solana08:47 - Changing mentalites around the function of tokens10:48 - How is Metaplex's approach different11:51 - Description of the flow using Strata13:25 - Mechanisms of dynamic pricing15:12 - Tools for dynamic pricing / Collusion19:06 - Metaplex and additional tooling21:54 - Optimizing Metaplex's architecture for the community25:05 - Advantages and drawbacks with metaplex's architecture29:44 - Metaplex and backward compatibility32:39 - Pitch for using dynamic pricing 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. Austin Federa (00:10):Welcome to The Solana Podcast. I'm Austin Federa. Today we're talking about a new partnership between Metaplex, the NFT implementation on Solana, and Strata Protocol, a toolkit that helps developers launch tokens. They've built some new tools to help creators set dynamic pricing for NFT mints and these change the economic incentives around NFTs which will hopefully reduce the botting of NFT mints. We're joined by Noah Prince, the co-founder, and CEO of Strata Protocol, and Austin Adams, a software engineer and lead protocol developer at Metaplex. Gentlemen, welcome to the Solana Podcast.Noah Prince (00:42):Thanks, Austin.Austin Adams (00:42):Thanks for having us.Noah Prince (00:43):Glad to be here.Austin Federa (00:44):Great. So let's go ahead and start out today with just an overview of, Noah, what is Strata and what are you guys trying to do in the space?Noah Prince (00:52):So Strata Protocol at its core is a protocol for launching tokens and managing the liquidity around those tokens. So we have a variety of different auction mechanisms, and we can launch tokens anywhere from small tokens that you don't really know who the counterpart of the trade is, there's not going to be much volume, all the way up to large tokens where you want to do a large offering and then eventually put those on a DEX. How we ended up getting into this space is just that our auction mechanisms for tokens also offer a solution for the NFT botting situation. So we thought long and hard about how to keep bots from botting the token launches that we have. And if you launch one of those tokens and then put it as the entry price to a Candy Machine, you get a dynamic pricing Candy Machine.Austin Federa (01:39):So let's talk a little bit just to kind of roll back to what Strata really is trying to accomplish here. You mentioned it's a solution for launching tokens and providing initial liquidity for those tokens. What are the challenges that people run into when actually launching a token? I think if you look across the space, you'd see that there are hundreds of different tokens run by hundreds of different projects across the Solana ecosystem, the majority of which were not launched with something like a launchpad or basically a protocol to help them go through that process. What are the challenges that people are facing when they're actually looking at launching a token?Noah Prince (02:12):Yeah. So I think token launching kind of comes in a few steps, right? The very first step is the ideation phase, where you're trying to figure out what your token is, do you have multiple tokens? What are the tokenomics? And somewhat in that same phase is where legal comes in. And to a lot of degrees, that is the hardest spot is where you're going to figure out what your token does. But a lot of times for people launching a token, there's this kind of big okay, we know what we want to do, but how do we physically create that token? And then how do we go and do things like auction that token off? I want to sell some of that token to investors. I want to sell some of that token to all of my community, how do we actually distribute that thing?Noah Prince (02:54):And then after that, there's the step where you've distributed it, you've collected some money for the token that you can use to bootstrap the project. And then you also want it to be tradable on a DEX or on an AMM. And then you go and set that up. So Strata is really there to help with the creation part of the token and for really small tokens, we also manage the liquidity. So if you don't want to even care about what is an AMM, what is a DEX, who is the counterparty to a trade? We have a way you can launch a token and it's basically one click. The protocol just takes care of all of it for you.Austin Federa (03:30):Yeah. So if you think about maybe a year ago, when someone was trying to launch a token, there was lots of technical components in actually creating and launching that token, but you'd have to go and submit something to the Solana token registry. You'd have to then go ahead and set up a permissionless pool on something like Serum. You'd have to go ahead and try and get it verified to get it actually listed there so it would show up in the list. Someone didn't have to add it as a custom market and all these things are functionally automated through you guys at this point, correct?Noah Prince (03:56):Yep. So for the most part, those things are automated. You still need to go and set it up on a AMM after you bootstrap the liquidity, but yeah, we're basically making it permissionless to go and do this. So the idea was to make it as easy to launch a token on Solana as it is right now to launch an NFT which Metaplex has kind of done a great job of.Austin Federa (04:16):And so there's been a lot of organizations that have tried to create launchpads or create basically systems of easier onboarding on the Solana blockchain. And a number of them haven't really gone anywhere, or they've been sort of overrun with, I would say very low-quality projects that are just trying to find a quick way to launch a token. What's the reason you think that Strata has had a bit more success here and not fallen into some of those traps?Noah Prince (04:43):Well, I think the first big trap there is talking about projects that are obviously disingenuous, they're trying to cash grab. They're not actually a real project. And when you talk about creating something permissionless, you want to get away from that, right? The barrier to entry should be low so that anybody can do it because tech is tech, but we don't want to be the ones that are creating the list of all the different tokens that we think that people should buy, right?Noah Prince (05:12):Equally, Metaplex isn't doing that. Metaplex doesn't go out and tell you which projects to buy. There are plenty of Launchpads that have their own lists that'll tell you who they think you should buy, and there are plenty of Twitter influencers who will tell you that as well. So that's one way that we're doing it. And then the other way that we're doing it is trying to make it easier for these projects that are smaller and maybe don't have all the idea of how to do everything that's complicated with launching a token, they just want a simple token. Things like social tokens are like little community chat projects, making it easier for those.Austin Federa (05:47):Some of the interesting things you guys have done in addition to the ability to create a new token or sell an existing token bootstrap liquidity is this idea of a fundraise and the dynamic pricing of NFT mints. On the fundraising side, what did you see in the changing ways people wanted to use tokens or the changing use cases of tokens on Solana that really led to the idea of a fundraise being something that a launchpad protocol should build tooling for.Noah Prince (06:14):Yeah. Fundraise was inspired deeply by ConstitutionDAO, which if you didn't see it, was this thing where a bunch of people on Eth just banned together, they said they were going to buy a copy of the Constitution of the United States of America. There was an open bidding that happened. I think they raised like $30 or $40 million and ended up getting outbid, but it was still this example of a community coming together and bootstrapping a ton of liquidity to do something cool. And the idea was that there will be shared ownership of the Constitution, or at least this copy of it after the bidding was done.Noah Prince (06:49):And so how you do that mechanically is just, you're collecting money into a pool that somebody then uses for the bid. And then as you're collecting money, people are getting a token that represents their share of that pool. And so even after you've used the money, they still have the token. And so with the ConstitutionDAO you had the people token. And that's just one of many ways to launch a token and why a launchpad is formatted like a wizard because we want it to be like a no-code tool where it asks you the questions that you need to answer to get towards launching your own token.Austin Federa (07:20):It's super interesting to think about the implications for some of the stuff for the intersection of real-world assets like something like a constitution and then the intersection of the ability to have full liquidity through something like a token mechanism for this. So I think that's a very interesting use case for it. And one of the great things I think about ConstitutionDAO when we saw that all happen is it's still going, right? There's still a community there. It's still passionate about this thing that they failed to create, but now is turned into something else which is in a large part, a lot of the story of NFTs on Solana as well, is that they start with one mission and suddenly something changes and Trash Pandas are now fighting plastic in the oceans, and all these other projects are building real community service kind of components into them.Austin Federa (08:05):When you're looking at the idea of a no-code solution here, what was the reasoning for something like that for more complex protocols? I guess the thing that I'm trying to tease out here is there's an assumption from a lot of folks that if someone's not sophisticated enough to figure out how to launch a token, they're probably not sophisticated enough to launch a project on a blockchain. That's obviously not necessarily the case, but that is part of why you've seen launchpads in general, or less code solutions be something that tends to have a lower quality project coming out of it in general. How do you respond to some of that criticism or look at the different ways that we just need to change our mentality around what a token's meant to be used for?Noah Prince (08:47):Yeah, I think there is that tendency, but as a dev, it's all about tools, right? For me, it's how can I get something done with the least effort possible that meets all the requirements. And so when you give tools to devs so that they can launch a token really easily, the devs can spend time focusing on the things that matter and not the things that don't. So part of it is that but also you need this primitive and you need this primitive to be easy because we're in the infancy of tokens right now, right? There's just one token. We're starting to see more complex systems like STEPN pop up where you have systems of tokens where that's just two tokens, all the way up to things like WOMBO, and BitClout, and Rally, where you have hundreds and hundreds of social tokens. And these things all start to interconnect together, and you can start to do really cool things when you can create systems of tokens. And that's something that you couldn't do in the past without this kind of primitive.Austin Federa (09:43):Yeah, it's fascinating. So, Austin, let's talk a little bit about the interface here with Metaplex NFT initial mints. So one of the things that we've observed over the last few months is that the increasing demand for NFT is on Solana. And also I would say real success of projects in building a strong community pre-launch has created situations where there is both a high incentive to bot the launch of an NFT, but also there's just extremely high demand for these things when they're coming up for initial mint. Some of that's driven by expectations that they might be able to flip them, but a lot of this is just organic community demand for a project that they feel very excited and interested in.Austin Federa (10:22):There's been a few attempts to create systems that would either increase the fairness or would try and reduce the incentives for botting. One of these was the Fair Launch Protocol which was created as sort of an extension of the Candy Machine toolkit, but Fair Launch Protocol never really caught on from a community standpoint. So what is sort of different in the approach here that you think is going to be successful in creating better incentives and dynamics?Austin Adams (10:48):I think the reason that this will be more successful is we will market it a lot harder than we marketed Fair Launch, but also the mechanics of Fair Launch weren't really, and they could have been changed they weren't really a great experience having to wait and then not knowing if you were going to get things. The NFT minter, once that sort of casino-style experience, they pull the lever, they get the thing they know right away, they're having fun, it's addicting. With the dynamic price mint coming in we get that addicting and fun feeling while still getting some technical protection against bots and making it a little bit more advantageous for creators. If they've created demand, they're getting rewarded for that demand.Austin Federa (11:38):Yeah. That's super interesting. So let's walk through, I guess, from both of you, what is the flow that both a creator and a user goes through if the project that they're trying to mint is using this new dynamic pricing powered with Strata?Noah Prince (11:52):Yeah. So the flow right now is a little bit broken up and that's kind of the point of this partnership, but right now you launch a normal Candy Machine through Metaplex, you grab the ID of that Candy Machine, and then Strata has a UI where you can plug in that ID and it converts it to a dynamic pricing Candy Machine. Now from a user standpoint, this looks pretty much exactly like the usual mint interface that you're looking, they're used to, right?Noah Prince (12:18):You just click a mint button, but the price is changing. So the price is just slowly ticking down and occasionally it bumps up when somebody purchases something and you can also switch tabs and you can go look at a price history plot. But as a user, you're trying to figure out at what point do you want to enter, right? At what price do you want to pay? And bots are playing the same game which is an unsolvable game. When do you enter a live market is a question that nobody knows the answer to. So it feels very much like a normal mint it's just that the price is moving and it's a game of who flinches first.Austin Adams (12:53):That's the current experience but as I'm sure you'll get to, we hope to create a deeper integration together that can utilize Strata's tech and Metaplex's tech for the entire experience without needing to go from one place to the other but using our new UIs and CLI tools, they can create a dynamic price Candy Machine that also gives us even more bot protections than we had before without having to go from one website to another.Austin Federa (13:25):So what is the dynamic pricing set based on? What are the mechanics that go into actually setting what that amount should be and how much volatility do you expect to see throughout the course of a typical 10,000 mint that might sell out in the course of several minutes?Noah Prince (13:43):Yeah. So generally, you want to establish what is basically the order of magnitude of the price. So something that's going to be in the 0.01 SOL range versus something that's going to be in the 10 SOL range, they're pretty different and it would be hard for any system to account for that. So generally what you're doing is you're setting kind of a range that you expect. So in the case of Divine Dogs, they were one of the very first ones that we did this with, they were minting an NFT that they thought would probably sell for two SOL. Now they're associated with the gods. And so 3.33 is a magic number for them. And so they actually set the starting price at 3.33 SOL and the minimum price at 1.1 SOL.Noah Prince (14:24):And so the idea was the minimum that they were willing to take as a project to get the funding to do what they needed to do was 1.1 SOL and they thought that people would pay up to 3.3 but probably not much more. And so what happened with that was I think the average price ended up being 2.32. But generally, you want the prices start slightly higher than what you think people will enter at so that bots don't have an advantage to spamming, they're just waiting for it to fall down and then it'll hit some fair price and it just oscillates around the fair price.Austin Federa (14:57):You mentioned a few things there where it sounds like projects have to do a bit of estimation around what they expect to see. What are the either software or just like human tools that someone should be looking at when they're trying to figure out where do they start with dynamic pricing?Noah Prince (15:13):Yeah. I mean, I think to a lot of degrees this is similar to right now people are just deciding a fixed price for their mint which is even more dangerous. You have no idea if it's going to sell out for that fixed-price or not. If you're a really hyped project, it probably will as long as you set it less than 10 SOL. But there's also a stigma, right? SolBears came out and set it to 10 SOL and people got pretty mad about it. So I think for most projects, this range of I mean, it depends what SOL's current prices, but right? This range of 1 to 5 SOL is generally reasonable. If you get really far off on the price, it can go above the starting price but we haven't seen that happen in practice. Usually, projects have a pretty good idea of what they're going to sell for or at least like a ballpark. They don't know exactly but they know a range.Austin Federa (16:05):Yeah, just because this was one of the first prominent uses of the Fair Launch Protocol where the community of degenerate Trash Panda Minters banded together and actually crashed the price. They all basically colluded against the project owners to mint at 0.1 SOL when the pre-mint tokens had been trading at 3 or 4 SOL on the exchanges and obviously, the price has gone up from there, but it's a very interesting dynamic when you give the community the tools to set their own pricing, you do open yourself up to a certain amount of collusion which I think is fascinating. No one would've thought that in a free market open system you'd be able to get a bunch of degens who are trying to optimize for the most value they can create to all band together and try and basically drive down the mint price of an NFT.Noah Prince (16:52):They also got to change their vote in the second half which made it a little less risky to bid small.Austin Federa (16:57):Yes. That's true. So that sort of one-tiered system is part of the dynamics here that you think make it more robust to get something like that.Noah Prince (17:06):Oh yeah. I mean, so we've done a couple of mints with it now and every single time in the Discords I actually hope that someone proves me wrong because it would be kind of interesting from a psychology perspective. But usually, there's a band of people in the Discord that are like, "Nobody buy. Nobody buy. We're going to let the price fall really low, like the bid small." But because it's so real-time, what ends up happening is it hits a number that's really, really good and it's just like a prisoner's dilemma. A few people defect and then everybody sees that a few people defect and all of a sudden the faction that was trying to hold back and not buy everyone starts buying and the price starts ripping because it's the lowest price that they're going to see.Austin Federa (17:47):Yep. Totally. It's really interesting the way those dynamics play out.Noah Prince (17:51):Yeah. Honestly, if your project gets hit by this and the people actually manage to do a prisoner's dilemma experiment where nobody defects, you have an amazing community, I don't even know that you need the money. Your community is incredible.Austin Federa (18:04):Yeah. It's worth noting that for the more successful projects out there, they have made many multiples of the initial mint revenue on secondary sale royalties. So it's kind of this interesting dynamic where you really want to bring the strongest community possible into an NFT project but the same time you need to fund appropriately for whatever your medium-term goals are to make sure you can actually deliver on any roadmap you've sort of laid out as a project which is really interesting. So when we're looking at some of the underlying architecture here and how it interfaces with Metaplex, I know there's a whole bunch of work on Metaplex that's been rebuilding a lot of the way that some of these contracts work. There's a whole expansion of what's possible on Metaplex coming soon. Austin, how are you thinking about additional tooling like Strata and other types of partnerships that will make it easier for a lot of this work that's being done to actually be deployed and usable? So the difference between reference implementation engineering and actually production engineering.Austin Adams (19:06):I think on a case-by-case basis, we always look at where we can stay generic and composable meaning one contract calls into the Metaplex contracts and the Metaplex contracts stay as this secure core that we audit very frequently and we're taking care of all that nonsense for the community. But in other cases, we identify a piece of technology that's really good and the composable way of doing it doesn't give us the guarantees necessarily that we want. And so we look at a deeper level of integration. The recent gains in shipping velocity that Metaplex is getting are coming more from CICD and looking at ways to improve our software stability so we are not scared to ship.Austin Adams (20:00):And I think that's what Metaplex is moving into as we're stabilizing and as we're trying to remain the base infrastructure for NFTs as well as move into some exciting new landscapes. So with this specifically, we do have some big changes coming to canning machines soon. We have some big changes coming to optional changes for everyone coming soon, but this one here falls right in line with our anti-botting work. And so we're heavily invested in making this as deep of a integration as it needs to be and shipping it as soon as possible, as well as shipping it not just in the contract level, but shipping it in our UIs and CLIs that are coming out or are out.Austin Federa (20:44):Yeah. Interesting. So I'd actually love to dig in a little bit more on how you're thinking about multiple layers of contracts or interoperable contracts that all can, I guess, give optionality in terms of how someone wants to deploy something. What are those different components and how are you thinking about... So classically, every time you have a contract talk to another contract, you've created an attack vector. This is most of the hacks that you see across DeFi and on Solana and on other places in Solana are non-validated fields. There's some ability for someone to inject something into the contract at a point that someone thought wasn't injectable that ends up creating an outcome that's not desirable for the users of that protocol or that contract.Austin Federa (21:28):That's like a very standard attack vector. So not to go too far into the security of this because of course that's maybe a separate conversation, but when you're thinking about that sort of multiple contract architecture, talking back to one central contract, what are the types of things you are thinking about or the Metaplex protocol is really thinking about from an architecture standpoint to make that secure, stable, but also upgradeable and able to respond to the needs of the community quickly?Austin Adams (21:53):Yeah, that's a great question. So I do believe it does depend on what the contract does in a large part, but generically, when we think about Web 2.0 land, when we've all created public APIs that take in user input, we can think about those as if they're analogous to we're allowing someone to direct their digital plumbing pipe at our digital plumbing pipe to use the euphemism or the saying that we're just all digital plumbers. I think I like that. One of the ways that we approach this is just being extremely careful on validating the input and being very restrictive with what specific instructions and what specific things a transaction can do when calling into our contracts.Austin Adams (22:47):So for example, with Candy Machine, although it is not as composable as other programs may be, we restrict the specific programs that can call out to Candy Machine and we restrict what they can do. We look at the instruction data using the instructions this far. For those who are non-technical that just means we can inside of the instruction or inside of the program, we can look at the instructions that are coming in and we can validate the input that's coming in. But for other programs such as AuctionHouse, we actually have purpose-built it to be composed over. And the way that we handle that is by bringing all the things that we want to make sure always stay secure into the contract.Austin Adams (23:33):So the token account creation, the mint creation, for example, the transfers, all of those are in the core AuctionHouse transaction protocol, but we've created this other system of composability called Auctioneer where people can put their additional logic such as token gating, timed auctions, even dynamic priced auctions via Strata can be done at that layer. So like I've said in summary, it does depend on the contract for Candy Machine because it's such a target for bots. We are very restrictive but we hope to find additional ways to loosen those things to allow more contracts to compose over it while still getting more bot, anti-botting guarantees.Austin Federa (24:20):It's kind of an interesting question here. When you think about on most layer ones or layer twos, the implementation of an NFT is something that's sort of done, I guess you called it the L1 or L2 level at the protocol level, as opposed to at the application level. Metaplex is a little bit different in its architecture, right? The tokens that are built are fundamentally still SPL-compatible tokens. And they're built more like an application level. And by application, I mean, it's not hard coded into the base Solana code. It's actually running on top of it which is a little bit different of an architecture than you see on something like Ethereum. What are the both advantages and challenges that both of you have run into because of that difference in architecture?Noah Prince (25:05):Yeah. So I did a deep dive at one point on composability on Solana versus Eth. Fundamentally, the NFTs on Eth and even the tokens that are on Eth are just following an interface. So it looks a lot like interfaced extension. I'm going to get real deep in engineering if I don't be careful here.Austin Federa (25:23):No, no, no, let's do it. This is the back half of the podcast.Noah Prince (25:26):Cool. Okay. Yeah. So it looks a lot like interfaced extension and classical object-oriented programming. So you think Java is the big example of object-oriented programming. Now Solana actually ends up looking a lot more like functional programming where you've got these contract endpoints that are effectively functions that operate over some state and then output a state. And then the next function can take that state and do something with it. Now, a lot of people will tell you when they're learning functional programming coming from object-oriented programming, it's scarier at first. It's like chewing glass. It's a little bit more complicated, but there's a lot more that you can do with it. And so like my example of composability actually is the current state of the integration with Metaplex where you talk about how there are different security vulnerabilities with checks, but a token is the absolute interface between us and Metaplex and that's the only interface.Noah Prince (26:26):The single check is whether or not you have the token that allows you to mint this Candy Machine and we just output that token. So we are a function that takes in some SOL and outputs a token. They are a function that takes in a token and outputs an NFT. And actually, they don't have to know about each other at all. It's only the user interface that knows about it. So this is how we generally deal with composability on Solana and why I like this model a little bit better, but I am a little bit of a functional programming maxi, so …Austin Federa (26:57):Austin, what about you?Austin Adams (26:59):Yes. I believe that the Metaplex model for NFTs is actually quite brilliant. And I'll talk about the pros first and maybe the cons second. I believe one of the reasons for our enormous growth is because our contracts are like APIs. You don't need to deploy your own contract. You don't need to manage that. You don't need to have everything that can be known about your implementation done ahead of time and then deploy an immutable contract. You can iterate and fail and try again and do new things on top of our programs without having to, one, manage the security of the program. Two, without having to really be an expert. And I know that you don't have to be an expert to launch an Ethereum NFT series because there's some great tools. But I think that's one of the reasons people choose Solana. Devs choose Solana, creators choose Solana to run their NFT projects is because the Metaplex contracts were brilliantly designed as APIs whereas they could have been designed in an interface model.Austin Adams (28:07):Now the cons of that are the Metaplex development team now needs to look at backward compatibility every single day. Any change that we make we have to micromanage that aspect all the time because we don't want to break anybody's use of the system. And through our DAO we need to ensure that what we're doing is reflective of what the community wants. So another con would be that some people see it as less decentralized, but in reality, because it's a community project, it doesn't seem so decentralized when you can build right on top of it and do whatever you need to because we try to keep the protocol light and do less things. I see that we can move into both areas. We can produce an interface-like system while getting these contracts as API feel. And I think that's some of the backbone of some things that you'll see coming out of Metaplex soon.Austin Federa (29:07):So when you think about something like backwards compatibility, what does Metaplex see as its sort of role and responsibility there, right? So famously for a number of years, Android had like seven different versions of the Android API that Google had to support because folks just would not update their apps. And Windows still has backwards compatibility with stuff that was probably about when most of us were born. What are you guys thinking about when you look at that sort of backwards compatibility and how long or what kind of functionality needs to persist for X amount of time?Austin Adams (29:44):So what we try to do is never break you unless it's security-related. If it's security-related, we fix it as soon as we can and we announce as quickly and as widely as we can. That hasn't happened very often and currently, we think that... We kind of take the semantic versioning approach where we will give you a long amount of time. Now we don't have a rigorous set amount of time yet. We're very new as a project if you think about it, but we will always provide you a new instruction and deprecate the old instruction and it works perfectly fine for a long time. And it's very rare. In fact, it's only happened once where we will remove old instructions. Part of that is looking at our contracts as APIs. And when you look at microservice patterns because that's how we think about them kind of is our contracts are microservices.Austin Adams (30:43):Look at the traffic of your instruction. If you're seeing it the traffic go down, people have moved to the other one, you're in safe territory to start announcing that, "Hey, we're going to start moving on from this specific instruction." But if you see it holding steady, that's a good signal from your community that that thing still needs to live or you need to educate and do more work. And that's how we'd like to see it. I think in the future, we'll see probably more rigorous guidelines around how long we're going to keep things out. But right now it's we'd be nothing without the people using it. So they're our top priority when we're shipping new things, we don't want to break anyone.Noah Prince (31:22):Yeah. I think at least how we've been approaching it with Strata is that I am very, very bearish on the idea that I'm never going to have to change anything. And so actually every one of our smart contract endpoints, every one of our arguments, every one of our piece of state has a V0 next to it. Some of them actually have a V1 already. And then in SDK land, so like in JavaScript, we wrap these calls with things that don't include V0 and we wrap them in interfaces such that if we ever have to change anything, we just bump it to V1 at the protocol level, change the interfaces, leave the V0 endpoints around for a while and then like Austin said, watch the traffic and then slowly deprecate them. But yeah, I mean, I think you kind of have to accept that these things are living, breathing things and like most APIs, you just have to version them. Now, a lot of people who don't have V0 next to their things, don't worry, you can put V1 next to anything.Austin Adams (32:19):It's okay.Noah Prince (32:19):And V0 is just the lack of a tag. It's okay.Austin Federa (32:22):So all of this depends of course, on creators and people launching NFT projects actually adopting and using the dynamic pricing tools. What's your pitch for why someone who's launching an NFT project should do it this way as opposed to doing it the way that's currently done.Noah Prince (32:37):Yeah. So one of the big things, I mean, even if you watch Frank, he is talking all the time about how he wants people who are long-term his project. He doesn't want paper hands. He doesn't want flippers, right? So right off the gate, you've got to acknowledge that having people that are just buying the project to flip it immediately aren't really good for your project long term anyway. I mean, if you were going to overprice your fixed price mint, you just weren't going to sell out. And so this will help you sell out which is ideally what you want, right?Noah Prince (33:09):Because you're picking the quantity of the mint so that you have a certain size of community. Now, if you had underpriced your fixed price meant, this actually means that you're going to get more funding to do what you want to do, right? And that's what matters is that you can actually execute on your roadmap. Now it's not like that price discovery isn't happening, right? It is still happening. If you price your mint at 2 SOL and the NFT is actually worth 10 SOL, it just drives up to 10 SOL on the secondary. But you know who makes that money? People who are flipping it and don't care about the project. So I would rather have that money go to the team than people who are flipping it any day of the week.Austin Federa (33:49):I'd love to hear from the Metaplex side what the pitch is to use it that isn't just it doesn't break the network.Austin Adams (33:55):Then I get nothing.Austin Federa (33:56):Because this is the thing is like one of the things about crypto is we have to assume everyone is a evil self-interested actor at all times who cares primarily about what they're trying to accomplish from a financial standpoint and isn't a altruistic actor trying to make the world's best-decentralized computing environment possible or else all of the assumptions of how blockchain works start to break down. So I think that's one of those questions that if either of you have something addressing that sort of side of things and-Austin Adams (34:25):Yeah, totally. I'll go with Metaplex's side of why I use dynamic price mint. So from the Metaplex side, we realize that Candy Machine has been botted so badly and we want to increase fairness for the collectors, creators, and the community. Just like Noah said earlier, we want to incentivize long-term holders, people to be a part of the project because NFTs are showing us they're more about community than they are really like a financial mechanism. They are a financial mechanism, but they've exposed this incredible new, psychological phenomenon.Austin Adams (35:01):For collectors, we've seen click farms, and bots, and extensions, not even if it hurts the network, but just hurting the experience. So one way that dynamic price mint helps is by making these click farms and botters, I mean, have to think twice, have to actually do some calculation, and have to do it in a fast and real-time manner. So this helps them be able to take part in the project even if they didn't get into the discords or other things like that at the right time, it's also going to help us move past this whole allow list trend in the community where you have to do all these specific things to get a spot and then you get a spot and you get a chance to mint, but then you don't actually get to mint. And so, hopefully, this makes the work that's required just being a part of the community and having the desire and the funds to mint.Noah Prince (36:01):Well said.Austin Federa (36:01):Awesome. Well, I think that does it for today. Thank you both for joining us to talk about this new launch of a Stratus support for dynamic pricing on Metaplex and creating new tools for creators to be able to actually implement this. If folks want to read more about it or want to consider using this for their next drop, where should they go to find more information?Noah Prince (36:22):Yeah. So for now it's actually, if you go to app.strataprotocol.com and you have a Candy Machine ID, you can launch one directly right there. We also have on docs.strataprotocol.com. We have extensive documentation on how to set up one of these dynamic pricing mints and a YouTube video on how to do one and even do one with a white list. In the future, we hope that this is directly on Metaplex's documentation and kind of more built as a first-class citizen into the Candy Machine and Metaplex's new UIs such that you don't need to be bouncing around from Strata to Metaplex. It's just there for you.Austin Adams (36:59):Yeah. 100% stay tuned on the Metaplex Docs and on our blog, Twitter, radio station. Oh wait, we don't have a radio station.Noah Prince (37:08):Yet.Austin Adams (37:09):Yet.Austin Federa (37:09):Great. Well, thank you both for joining us today.Austin Adams (37:13):Thank you, Austin.Noah Prince (37:14):Thanks for having us.

Brett Harrison is the President of FTX US, a US-regulated cryptocurrency exchange. Prior to joining FTX US, Brett was Head of Semi-Systematic Technology at Citadel Securities, where he managed technology for the firm’s Options, ETF, OTC, and ADR trading globally. He began and spent the majority of his career at Jane Street, where he led the firm’s algorithmic trading system development. 00:34 - The role of FTX.US’ president01:24 - About FTX02:55 - Nontraditional brand marketing08:05 -  Educating people about Crypto10:46 - Being at the forefront of regulation14:52 - Collaborating with other players in crypto19:03 - FTX's policy in exchange and crypto23:19 - FTX and NFTs26:44 - CeFi / DeFi exchange and Cross-chains31:36 - Building interconnectivity between centralized crypto exchanges34:59 - Market hours in crypto?36:33 - Process of evaluating a token38:44 - Things he is hopeful for 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. Austin (00:10):I'm Austin Federa. Welcome to the Solana podcast. Today, we have Brett Harrison joining us, who's the president of FTX.US. We got a bunch to talk about today, including the role of FTX in the markets, his sort of path there, and a bunch of what's been going on recently in crypto. So, Brett, thanks for joining us.Brett (00:27):Yeah. Thanks for having me on, Austin.Austin (00:29):I wanted to kick it off. What does the president of FTX.US actually do on a daily basis?Brett (00:34):Yeah, for sure. A good question. So yeah, I joined FTX.US exactly one year ago. Little bit of background first. So FTX is obviously the global cryptocurrency derivatives exchange. It's the second or third largest in the world. Around a year and a half ago, FTX.US, a separate company affiliated with FTX, was started for the purpose of creating a US regulated set of businesses to be able to do things like offer a spot cryptocurrency in the US, but also to satisfy some of our broader ambitions to enable other kinds of investment products for US customers such as US crypto derivatives, stocks, and things like that. My role is to sort of help run the ship over here, hire the team, and put people in the right offices, but also like do everything from think about regulatory strategy and policy to some actual software development in architecture and on some of our products. So it's sort of a little bit of everything.Austin (01:25):Yeah. It's kind of an interesting role. How big is the FTX.US operations at this point?Brett (01:30):We're around 80 people right now.Austin (01:33):That's pretty sizable for one year.Brett (01:35):Yeah, for us at least.Austin (01:36):Yes.Brett (01:37):For sure.Austin (01:38):You're at the top of a pretty interesting organization nowadays. When you joined, the pace of excitement and interest in crypto from a mainstream audience was far lower. The presence of FTX was far lower than it is now. There's many people who are familiar with crypto, who have been for both FTX for a very long time, as both the FTX international and FTX.US as two different entities that play an important role in pushing the concept of a centralized exchange further. Before you guys came on the scene, the role of a centralized exchange was maybe not quite as professionalized as it is now. There's sort of more of a lot of respect in the market for the speed that FTX is able to execute on and both sort of the pace of innovation that's come out of that.Austin (02:23):But at the same time, in the United States specifically, which is where we're talking about today, you guys have done a huge amount of what I would call very traditional marketing usually reserved for banks, and telecommunication companies, and these sort of like old Titans of industry in the United States. But this is a very new operation. Walk me through a little bit about that process of saying not only do we see a target opportunity here, but we're not going to take the path of most other companies, and run a ton of digital ads, and put up select billboards. But we're going to put our name on AAA, IP, and media.Brett (02:55):It's incredible to see where we are now compared to a year ago, two years ago, and FTX.US were fairly obscure in the United States. Not so much overseas where FTX had already really gained a name for itself as this leading cryptocurrency derivatives exchange. And it was really competing with the other top exchanges around the world that have been trading these derivatives products traditionally. But in the US, we had just started. We're up against 10 year incumbents in the space and very few people ever heard of FTX. And now we're on Super Bowl commercials. We are the subject of congressional hearings. It's like quite amazing to sort of see the way that we've sort of infiltrated the crypto ecosystem in the United States, in a way that's really established our presence as a brand that people trust, as one that feels innovative and fast moving.Brett (03:47):So I think just taking it back a bit. So we wanted to be able to get into the US market, and the US has one of the largest retail user bases in the world, maybe the largest retail user base in the world. So the number of people who are traditionally using their phone to trade stocks, for example, for themselves, is just much higher percentage in the United States than almost anywhere else. And so you have this broad class of people now getting interested in crypto, who want to be able to have access to that as a means of investment. But if you think about where crypto has been for the last decade, there's been a lot of ups and downs and noise. You have exchanges that lose customer funds, or they go down, or they get hacked, or they like suddenly become slow.Brett (04:31):And if people are going to invest in this still fairly risky, volatile, asset class, where there's a lot to learn for people, it's a very high learning curve. They're going to want some brand that they feel they're comfortable taking that leap, and putting their money in, and investing with. And so in the beginning, it was very difficult to acquire customers for us. And then Sam had this idea of, what's the largest thing that we could do, as fast as possible, and reach tens of millions of people. And it's not go out and buy Facebook ads. And the conventional wisdom here for us was, "Okay, when's the last time you saw an ad on Facebook for like Citibank or JP Morgan, and you are like a Bank of America customer? And then you said, you know what, I love this Facebook ad. It's time to move all my money from my checking account to this other one." I think it doesn't usually happen. I think it's a pretty high activation cost for doing something like that. It's not like giving some new website a try.Brett (05:28):Just plain and simply this is like a serious investment decision. And so we really needed to build that trust for people, and do it quickly, and in a way that really established ourselves as a unique player. And so the biggest thing someone could think of was, well, what if we put our name on a stadium. And it seemed crazy at the time, but then we did it and we put our name on the Miami Heat stadium, the FTX Arena. It was an amazing deal, the right place at the right time, because we got to also work with Miami Dade County on many of their anti-gun violence initiatives. So it was a really good fit. And short time after that, we did two other big deals. One was with Tom Brady and the other one was with the Major League Baseball.Brett (06:04):And for those, first of all, Tom Brady being this universally loved and respected individual for just his incredible talent and drive. And then for Major League Baseball for being this time modern institution. I think it, the signal to people was imagine what it took, what kind of due diligence was required for an institution like Major League Baseball to come trust FTX, crypto exchange no one's ever heard of. And let alone do anything in crypto. That's how I think we were able to sort of catapult ourselves into the US market very quickly was through this somewhat non-traditional way of doing this brand marketing. And since then, it's been amazing. I mean, we went from 10,000 customers at the beginning of 2021 to like 1.2 million customers at the end of 2021. So a huge growth in a very short period of time, on the eve of some of our new product offerings that we're launching. So pretty excited about the growth so far.Austin (06:56):What's very interesting for me on this, apart from just the growth of FTX.US in general, is this is against the grain for, I would say, the last 20 years of marketing. Which is that you really want to focus on identifying your core demographic, activating that core demographic, using them as voices and ambassadors. And this is the way that most crypto exchanges, and honestly, most cryptocurrencies have gone about growth as well. They've said let's put a bunch of resources into the very narrow domain things that are working, and then it will be an organic growth kind of coming out of that.Austin (07:32):And you normally see something like branding rights for an arena or a major partnership with MLB or some, or any sports team, something along those lines as being something that a company that isn't trying to educate customers, but is just looking for general awareness, goes through. Right? Staples Center, UBS, all the big banks have their names on these places. Not because they're trying to differentiate Bank of America's products versus Chase's products, but because they want general awareness. What was that process like to say, "Okay, we've got a stadium, but no one knows what crypto is still." What's that part two of that strategy?Brett (08:09):Yeah. I think we had to rewrite the playbook there. Because we don't yet know what the right demographic is for crypto, but also we don't want to pre-select a demographic. I mean, the whole spirit of crypto is to enable people to have access to investment opportunities, wealth creation, control over your personal finances in ways that have typically been difficult for many parts of the country. And if we just sort of start by saying, okay, well, who is the most obvious demographic to target for this? And let's just run Facebook ads that target them. I think it sort of misses the point. We're here to educate people, as you said, about not just the investment class, but also the promises of the technology itself. The fact that this will represent a new way of building internet based applications, in ways that allow people to share in the upside of those applications. It's going to enable for greater robustness and stability by using decentralized technology.Brett (09:11):I think these are all things that it's going to be difficult to teach people over time, but we have to start somewhere. And that starts with a general awareness. And it starts with trust, right? People have to understand that we are a very legitimate company. We are highly regulated, contrary to popular belief. We have, between FTX and FTX.US, we have something like a hundred different regulators. We have 50 different licenses. We need to be able to break through the noise and convey that to people. And that's why we started more on this general awareness. And now we're doing some of the other stuff. Like we're starting now to run some Google ads. We're starting to go for iOS App Store placements and traditional SEO. And we're doing that now that we have the product that we like and we're happy with where it is, although we're always trying to improve it. And we've built that general awareness and trust.Austin (09:58):Yeah. So, so you mentioned that you are both in a highly regulated industry and yourselves, highly regulated, by various regulators who look at the industry. FTX has, over the last year, put itself at the forefront of regulation in crypto in the US. You and Chainalysis are right up there together, testifying in front of Congress, and also putting out this FTX policy proposal that came out, was that six months ago or so, as well. What was the decision making process like internally to say, this is something that not only do we want to engage with, but to actually make a decision to be a face of. There are many exchanges that operate in the US. None of them have necessarily taken that as the mantle, as proactively, we are going to put ourself in this position. I'm sure that was both risky, and you saw a lot of opportunity in that process.Brett (10:50):Yeah, absolutely. So there's the part that's specific to FTX and the part that's general. Starting with the part that's specific, we would like to be able to offer an array of different products and services in the US. Some of those has to do with spot cryptocurrencies. Regulation in the US for spot cryptocurrencies are not well defined. And that is because of the two market regulators that exist in the US, and the US is one of the few countries in the world that actually has two separate market regulators not one, the SEC and the CFTC, the lines of jurisdiction over digital spot assets are not very well drawn. That's not true for traditional securities like Apple and Tesla and US government bonds, which is regulated by the SEC. And it's not true for the CFTC, which regulates commodity futures, and other sort of broad based index futures, and sometimes security futures as well in conjunction with the SEC. But for actual things like Bitcoin to USD spot markets, it's not clear.Brett (11:47):And what we want to do is help shape that regulation, such that we can safely innovate and offer products that also protect consumers. And in terms of how we influence regulation, do so in a way that doesn't push all of the intellectual property and all that innovation overseas. I mean, you guys know this too, that so much of the intellectual property, the founders, the CEOs, the developers come from the United States. And then ultimately move themselves to somewhere outside the United States because they don't feel like they have a safe place to be able to build their business and to be an entrepreneur. We really want to help that. So I think that kind of actually combines both sort of specific and general of what I wanted to say.Brett (12:26):Which is that on the specific front, we want to be able to offer all the spot tokens that we think are appropriate. We want to be able to list CFTC regulated margin derivative products in the US for US customers. We want to maybe eventually do more innovative, ambitious things like create tokenized stocks or tokenized treasuries. But then, at the same time, we want to make sure the playing field is great for all crypto participants in the US. And they really want to stay here and work here and build here, because we just think that's going to be good for the country. Now what's been interesting for us in this journey of being this sort of public face of regulation and policy, is that what we found is the most effective thing that we can do as a company is just showing up in person. You'd be surprised how many companies, and this is not just crypto, send these large teams of lobbyists and lawyers to Washington hoping to sort of engage in policy discussions.Brett (13:17):And I'm not in the room for those, but I imagine some of those come off as disingenuous. Or there are cases where you can't really get in the weeds of a conversation because the right stakeholders aren't in the room. The fact that Sam and Zach and Ryan and Mark and I just sort of like go to Washington, and email the Fed or the Treasury or members of the House or the Senate or the executive branch, and just show up and talk to them. And say like, "We don't have an agenda. We're just here to answer questions. We know we're in the education phase." Same thing with regulators. We talk with the CFTC, SEC, FINRA. It is just great to show up in person and show that we are open honest people who really want to engage in dialogue. It's been so useful for everyone involved. And I think that's really helped shift the narrative of crypto being like anti-regulatory or anti-government in some way. And that's been really helpful.Austin (14:09):Do you see this as something that you're primarily, obviously there's a lot of upside for FTX in getting greater clarity around regulations and having a legal framework that it can operate in with more definition around it. At the same time you look across at other industries, the credit card industry, the banking industry, agriculture, et cetera. They have very well defined and powerful industry groups at this point. And you often see like a lot of the big banks in the US moving in lockstep with one another. How closely does FTX work with other large exchanges in the United States or other people in the crypto space? And if that's not really as mature as it is in other industries, why do you think that is right now?Brett (14:54):Yeah. Great question. We do to some extent. We do more now than we did before. It's almost certainly not enough. And partly it's because this industry is very new, and it's not super well defined exactly what we need, and there's differing opinions of how we get there. I also think that crypto has done itself a bit of a disservice in the past by being somewhat hostile to regulatory involvement. And you see this a lot on Twitter. And I think it's not super productive. We want to be able to create a market environment that allows for all participants to participate in a way that it safeguards them. And to just completely throw away a hundred years of regulatory development to think that we can just sort of do the whole thing better from scratch, with no protections, is almost certainly not right.Brett (15:44):At the same time, I'm very sympathetic to the idea that you could, through the act of regulatory requirements, end up excluding individuals for not good reasons. For example, there's a lot of people who criticize KYC by saying there might be disenfranchised people who don't have good drivers licenses. And so therefore they can't KYC with an exchange. And so you're actually excluding a certain segment of the population by doing so. And I think we are receptive to those arguments. And so we would like to be able to push the envelope forward with crypto and allow the greatest number of people to participate without prejudice. But we have to engage collaboratively and cooperatively with regulators to do so.Brett (16:27):And so we are now starting to talk a lot more with the other competitors in the space about what are our shared goals for regulation? What do we think about who should be regulating us? What do we think policies would look like in the areas of spot tokens, of stable coins, of listing procedures, of licensing for exchanges. And I think that we're making progress there. Because the thing we've heard all the time in Washington is, okay this proposal of yours sounds great, but it can't be just the FTX proposal. Washington's not in the business of picking winners and losers in industry. We want to see you guys come together as an industry. And so that's, it's going to be critical for us going forward. And it's not just the exchanges. I mean, it's the protocol tokens, it's the stable coin providers, the infrastructure providers, miners. Sort of all across the board, I think we just need to come together more as an industry.Austin (17:19):Yeah. It's one of those things where you look at the Web 2.0 industry, and I think it's probably pretty obvious that they say at this point that their unwillingness to come together around issues of establishing common frameworks for content moderation, common frameworks for when a user should be banned from a platform, those sorts of things have really opened them up to a lot of attacks from Washington about... You see these hearings in the Senate all the time when they're talking one company, why your policy different from another company? And then there's a void there, where the regulators and Congress aren't really sure how to write a law, but they have a lot of ideas about what could be changed. Given the decentralized nature of crypto, there's one level where it's like, there are these centralized companies like FTX, like Coinbase, like Kraken, like Chainalysis that are on one side of things.Austin (18:10):But then there's organizations like Solana Labs or the Solana Foundation, which have a very different role and place in the market. And don't always necessarily have the same incentive alignment in those sort of areas. One of the beautiful things about FTX is, or any exchange, is that it's a entity which makes money on the aggregate state of cryptocurrency. And so the specific whims of one network is not necessarily of huge concern to it. For example, the shutting out of a certain type of user, based on a KYC requirement, is much less of a burden in the United States or for something like an exchange, then it might be for... Like if you have to KYC every user, that's not a problem. If Audius has to KYC every user, that actually puts them at a significant disadvantage compared to a competitor like a Spotify. How do you think about both the role of the policy work FTX does within the exchange industry and the wider crypto industry in general?Brett (19:07):It's interesting to think about where we need to head as an industry together. I think a lot about the role of CeFi and DeFi and how they interplay. I think there's a lot of people online who sort of draw this very bright line between them. And it's like, if you're on the left side, you're a centralized player and you are completely antithetical to the whole point of crypto. And if you're on the right side, you're part of the golden club and true decentralization means there can never be anyone who touches anything involving like regulation or identification or safeguards and things like this. And I think, again, these are the kinds of counterproductive discussions I was talking about earlier. I think that we need each other to grow.Brett (19:47):The more DeFi grows, the more equitable access to financial markets will continue to grow around the world. And the more the need for centralized regulated players, like FTX, who kind of bridge the gap between the traditional financial system and DeFi, will play that role as well. As far as regulation goes, you're right. It's not clear where you go with a project like Audius. And you like it to be such that it's the same as Spotify, but then you get into these tricky issues of like, well, what is the Audius token? And how does that interplay with who can actually buy and sell that token and interact with the system in some way? You have more ambitious projects, on the topic of music, like can we create tokens for songs where people can receive token distributions for the number of plays that occur? And does that make it sort of like a dividend and a securities offering? Well, I don't know. And this sort of is very difficult to understand.Brett (20:39):But there are two strategies when it comes to regulation for a company like Audius. And so one strategy is to sort of move as fast as possible and try to always stay like a step ahead of regulation. And eventually, maybe the feeling and the ecosystem around DeFi regulation catches up to an Audius and everything is okay. It allows us to do what it does, and it was worth the risk because they got to innovate very quickly and become a profitable business. But that comes with its risks, that maybe regulation catches up to it in a bad way, and says, "You shouldn't have been doing this all along. And please give me all your profits back from the last couple years."Brett (21:16):There's another way, which is sort to walk in the front door, and be sort of transparent and obvious about what you're trying to do, and to try to operate within the regulatory envelope of some jurisdiction, and try to get this properly vetted and allowed to occur. And that has the benefit of sort of establishing clear rules and allowing for other companies to tread similar paths. On the other hand that could slow you down. And if you have one of these competitors, that's going to run as fast as possible, you might lose to them, even though you're doing the right thing.Brett (21:46):So there's not really a right answer here. And this is sort of a tricky space for DeFi. I will say in either case, I do think it's worth it for these DeFi projects for Solana Labs, for the founders and companies involved, and this kind of entrepreneurship, people in the United States should really start going to Washington more and just explaining what this stuff is. I mean, people kind of get what Bitcoin is, but people do not understand what Solana is and why it's different. And that should change. People should understand what Solana is, what all these other layer 1s are, these layer 2s are. What these different token projects are. Why they're interesting. Why they're useful. Why they represent a departure from Web 2.0. Why that's important. Why that needs to be fostered and why that needs to be grown. I think that would be something that we could continue to work together on, as industry participants, is the education piece.Austin (22:33):So changing topics a little, we've seen FTX.US try and enter a few different, I would say different markets than are necessarily like the original core. So one of those was the NFT marketplace. I think there's been it probably mixed success in that. One of the things that I found fascinating is how different NFT culture is from crypto culture. Obviously it's a subset, but a lot of the applications and the platforms that have been very strong from a crypto trading perspective, in terms of fungible digital assets have not had much success in the non fungible space. And the non fungible marketplaces have either had no interest or no success in moving into the fungible asset space. Talk a little bit about some of the learnings that you guys had in that process and how that's informing the decisions of where FTX expands into in the future.Brett (23:25):Yeah, it's fascinating. So I personally worked on the NFT marketplace a lot for us. And when we entered this space, we thought there's not enough competition for Solana NFT marketplaces. There was really only one at the time. And we thought, this is definitely an area that's ripe for disruption. We were not wrong. But at the same time we did it, six other players did it. And they were able to move a lot faster for a number of reasons. First of all, they were able to really focus all of their energy on the user experience, which was super important. The second is that they were just sort of deeply in that culture and they were able to create, continue creating that NFT culture, in a way that like you have to spend 150% of your time on that to be able to actually really keep up with it and get what's going on.Brett (24:11):And the third was the decentralized nature of it. Whereas most of the trading in fungible assets is occurring on centralized exchanges in a custodial fashion. Just about all the NFTs are trading in a non-custodial fashion. Hook up MetaMask to OpenSea, you list your asset, you're done. And so I think we were disadvantaged by trying to, although I don't regret it at all, walk the sort of regulatory path of requiring people to custodian their NFTs with FTX in order to list them. And then we do proper KYC, and we make sure you're not like transferring an NFT from North Korea or something. So this is what we chose to do. And I think we ultimately lost out a little bit on that, but we're still very happy to have done it for a number of reasons.Brett (24:59):So first is that NFTs have been an important part of our various partnerships, like getting to do this really cool NFT drop with Coachella or for Formula 1. And having that as a platform has been very beneficial to us, even if we're not competing on Bored Ape Yacht Club. The second is that we have this longer term vision that majority of NFTs will not be in these like art or PFP collections. It will be in things like games. And to do that, you have to really build a platform and your average Tier One AAA game studio is not going to partner with a non-custodial solution. If they think it's going to hurt their regulatory standing at all. And so we're kind of building things out from the B2B platform side. With a hope that's actually going to be where this technology actually takes us. And so it's been definitely a learning experience for us and humbling in a lot of ways.Austin (25:53):So let's kind of talk about that a little bit. In a future where US regulations relax, and that there's a framework that allows for a little bit more flexibility and a little more certainty throughout it. We've seen over the last few months a rise in cross-chain DEX swaps. Whether that's enabled through something like Wormhole or whether it's these organizations that are sort of rolling a bit of their own solution. How do you see the competitive world, between what a centralized exchange offers and what a decentralized exchange, can offer evolving over time? I think in the early days of decentralized exchanges, a lot of people were like, oh, these are totally going to kill centralized exchanges. And we obviously have not seen that to be the case. But for a long time, the moat was described as being like, well, I can't swap my SOL into Eth on anything other than a centralized exchange, but we're seeing that change. So I'm sure this is a strategy that you've mapped out internally. What does that look like for you guys?Brett (26:50):I think you probably give us a little bit too much credit. I'm not sure we've like completely mapped out the strategy. I mean, between FTX, FTX.US, FTX Ventures, I think we have various either monetary or intellectual capital investments in a bunch of these spaces. Like FTX Ventures invests in a lot of DeFi and different bridging solutions. FTX itself is benefits and more people trading on our centralized exchange. And so we want to kind of to be able to benefit from the growth of both. I mean, again, we sort of see that, no matter what, FTX is going to be one of the major places to link up with traditional financial system. Like if you want to get Mexican Peso onto a blockchain, you're going to have to do this going through someone who can actually hook up to a Mexican bank.Brett (27:37):It's just going to be required.Austin (27:39):Yeah.Brett (27:39):But in terms of like you want to swap Eth for SOL then, yeah, I think there's going to be a couple different ways to do that. And I can sort of see the benefits and drawbacks of each one. One thing I think is sort of obvious, and I think people understand it but they don't talk about it enough, is the fact that DeFi still has a long way to go. Primarily because the entirety of the code is sort of laid bare for all to see at all times. Usually if you have a financial application and it has a bug, you're sort of protected by the network. And by network, I don't mean network of people who use it, I mean like the actual switches and routers that prevent certain kinds of traffic from getting in. And you have your moat around your application. And if there's a bug, you patch it and you're done.Brett (28:23):With DeFi, if there's the slightest bug, your whole smart contract gets exploited, and the funds are drained, and you're sort of back at square one. And again, I think that the discourse around Defi or CeFi as being kind of incompatible, has probably done DeFi a disservice in terms of its growth. Where probably some slight hybrid approach of building out smart contracts, iterating on them for like a long time, but doing so in a way that's sort of safe and secure, and doesn't mean that the first side of a bug means you are going to be drained, until it gets to the point where it's highly stable. And then you start to relax some of the centralized aspects. You follow the goal of making it completely decentralized, completely open, no intermediaries, and kind of get there over time. But I think the people who do that now would be criticized as being like too centralized. Everyone thinks everyone else is too centralized.Brett (29:17):So I think we have a lot that we can do together is what I'm trying to say. Whether it's us helping with KYC, or it's providing sort of the regulated entry points into DeFi. Whether it's helping create sort of these hybrid solutions between DeFi and CeFi, that will, I think, help DeFi grow over time. So we're trying to foster that innovation in a bunch of different ways.Austin (29:38):I would also say that if we are in a place where CeFi versus DeFi is a zero sum game, we've all astronomically succeeded as an industry.Brett (29:47):Right.Austin (29:48):That's still probably a five to 10 year away, before there are no new users left to onboard and instead a battle for who actually has those users' attention.Brett (29:57):Even CeFi versus CeFi is not a zero sum game.Austin (30:00):Yes.Brett (30:00):At all.Austin (30:01):That's true.Brett (30:02):There's a story that when ICE listed certain versions of energy contracts, that were being traded on the CME, the day they did that, CME volume went through the roof and the largest trading volume times per day were the times where the two overlapped with each other. And this is obviously because arbitrageurs came into the space and were interested and started trading the two off of each other. I think we cannot just have one centralized exchange. We need a bunch. And we will grow the pie together. And so, yeah, we're very, very far away from a zero sum nature of crypto, which is why I like crypto so much.Austin (30:39):So actually to that extent, I think there's a built in assumption there, which is that we need multiple centralized exchanges. And that is a, I think, a very valid assumption, but in some ways that comes from a world that predates computerized global interoperable connectivity. And that the idea that arbitrage opportunities should exist between comparable, centralized financial exchanges feels a little outdated, honestly. That the thesis of Solana as one global state machine to settle all of the world's trades and information, that's a very compelling, decentralized narrative story, but you can also see the exact same thing where you would have interoperable order books between something like FTX and Coinbase. Is that anything that, are there conversations anywhere about building some of those interconnectivities that you see in the traditional equities world still, within like centralized crypto exchanges? Because there is no NYSE for centralized crypto exchanges yet.Brett (31:42):I have actually the complete opposite take to what you're describing here, which is US equity markets have to abide by this rule called reg, or regulation, NMS, or National Market System, where you have to fill a customer quote at the best price seen on any exchange, any one of the lit exchanges, of which they're like 15 now. So that means like, let's say you want to go send an order to NASDAQ and NASDAQ thinks that they are one penny behind the price on BATS. Well then NYSE either has to reject your order or route your order to bats and get filled. There's a big problem with this. Actually, there are multiple big problems with this, in my opinion.Brett (32:24):One is that light is not infinitely fast. And so what is the kind of prevailing quote is going to depend on where you are. Because of those 15 exchanges, some of them are in Secaucus, New Jersey. Some of them are in Carteret, New Jersey. Some of them are in Mahwah, New Jersey. Some of them are in Chicago, Illinois. And so there's no one place where you can have the absolute truth of what the best quote is. And even above that, the second big problem here is you have to pay a lot of money just to get the market data required to make that determination. And then third, if you're going to do that, some HFT with slightly faster hardware and market data is going to detect that routing and probably beat you there. And they're going to profit off that opportunity.Brett (33:10):While I think that NMS was well intentioned at the time that it was created, which was somewhat before the real advent of electronic markets, now that we have electronic markets, I actually think that NMS has added a lot of complication, and fixed cost, and deadweight loss to the system of equities, and made things like very difficult to sort of spin up as a new exchange. Compared to, in crypto where there was never like an NMS routing between exchanges, but there doesn't really need to be because there's someone whose job it is to arbitrage between the exchanges and keep them in line. And they're paid naturally for the job of doing that. And so the market forces keep the exchanges in line and that works extremely well, and makes crypto very low cost and low barrier to entry for new participants.Brett (33:56):You don't have to hook up to every single exchange. You don't need to send your market data to some central thing, which has to display the quotes everywhere. And you can't accept orders, if it doesn't look like it's on the top of the book of that far away aggregator. It means that exchanges can exist sort of more globally instead of all being centralized mostly in New Jersey or something like that.Austin (34:14):Yeah.Brett (34:14):So there's been so many benefits to that. And then the other thing I want to say about this is, look, there's never going to be just one of anything. The only real way to kind of get rid of an arbitrage opportunity is to only have literally one order book. And even on Solana, you have different order books for SOL, USDC. And some of them might be kind of built off of similar primitives, but there's still going to end up being kind of arbitrage things between this swapping tool and this DEX order book and this centralized exchange, it's always going to exist.And so I think we should just thank the arbitrageurs for their service and just be happy with the fact that we can have multiple marketplaces. I think that's the ultimately right thing for competition.Austin (35:00):Do you think crypto needs market hours?Brett (35:02):No.Austin (35:03):We'll never get them, but I'm curious if you think it would help or hurt the industry?Brett (35:06):No, I don't. One thing I've kicked around in my head at some points is, something like whether one time per day, there should be an auction. Basically like a five second freeze or something, where people can submit bids and offers. And there's like a single kind of auction type clearing event that establishes an official mark for the day in that crypto. And there's a lot of different market structure theory between whether an auction type mechanism or a continuous trading mechanism is ultimately better and fair for our participants. And there's just lots of research in both directions. But that could be interesting to me to have some sort of discontinuous event, maybe once per day. It would help for things like ETFs that want to sort of mark their basket to sort of a day over day performance and they need sort of an official closing mark, and it would be nice to have sort of a single auction event for that. But I don't feel strongly about that at all. And in general, I think that 24/7 markets are the way that every other market has to go.Austin (36:05):Yeah. I agree with you on that. So I put out a call on Twitter that was like, oh, what are people most interested in learning about from FTX, apart from a rundown of all of your cats, which we don't have time for today. One of the ones is what is the process of evaluating the listing of a token looks like. Obviously replies are full of people shilling their specific coin. But there are also some real genuine questions in there about like, you see Coinbase having taken a very, very sharp turn in what the criteria they use for listing a token is over the course of the last 12 months. How do you and FTX.US think about that?Brett (36:40):So we have taken the position, as a company, that we would like to be very conservative on token listings in the US. And that is because a lot of the issues we talked about earlier in the podcast about the regulatory uncertainty around what US based crypto companies are allowed and not allowed to list. And I think there might become a point at which listing criteria becomes clearly well defined by regulators, at which point we will basically take as much risk as it allowed to us. But for now we think about what is our comparative advantage as a company? Is it to list the long tail of 500 tokens? Or is it some of these other things that we're doing that maybe some of our competitors are not going to be able to do in the short term? So the biggest one for us is listing Bitcoin and Ether futures for US customers.Brett (37:32):And we think that has such a greater potential to improve the health of the market. Give people opportunities for hedging risk, and being able to get capital efficient exposure, and to be able to trade the spot versus the future and capture the basis. This is much more important to us than listing that 200th asset on CoinMarketCap. And we're concerned that some of our actions in the latter might jeopardize our success in the former.Austin (38:00):Interesting.Brett (38:00):So we're just sort of, we have different risk profiles in the different aspects of what we want to do. And that's part of the decision there as well. We're also moving very much into some non crypto things. Like we're a student launching a stocks trading platform that's going to be vanilla US stocks through a broker dealer, all trading through like an exchange that's not ours. So we have just sort of different ways of thinking about diversifying our product set. And for now, I think as long as the regulatory environment remains this unclear, we're going to stay on the conservative side of that.Austin (38:33):One kind of last question before we wrap up here. With the amount of market volatility we have seen in the last few weeks here, the sort of precipitous drop in the first half of May, what are you excited for and hopeful for about the future of this industry in the United States?Brett (38:52):Yeah, it's natural for these times of great volatility and certain assets dropping a lot in value, for people to sort of turn inward and maybe lose sight of the broader mission. And we have to remember that we are building a generational opportunity for technology and for wealth creation. And many have already benefited from this, but we have much more to go on all the promises that we have. I mean, just think about how one of the main things people have talked about for crypto is creating this kind of global payments network for people to sort of cheaply or freely send money for remittances and things like this. I think we have yet to really fulfill that promise. So regardless of where asset prices go, we have to, as everyone says, keep building.Brett (39:39):And we're just excited for people to continue to push forward and continue to sort of responsibly innovate, and hopefully show people in the United States, especially policy makers, that even though assets can be volatile... I mean, equities have lost more money in value in the last month than crypto has, and people sort of forget that sometimes. But in spite of downward cycles in markets, there's a real intrinsic value to what we're all doing here. It's not just pure speculation. And we need to do everything we can to keep that going, and keep building, and keep investing.Austin (40:13):Well, Brett, thank you so much for joining us today on the Solana podcast.Brett (40:17):Yeah. Thanks for having me on.