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Bankless Nation, I'm here with Mo Jaleel and Oscar Thorne.

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They are the co-founders of ETH Systems, a new spin-out out of the Ethereum Foundation focused on three things.

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Ethereum.

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Institutions and privacy, which I think is desperately needed for all of crypto and Ethereum included, obviously, for really elevating Ethereum to the next level.

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Oscar, Mo, welcome to Bankless.

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David, thanks for having us.

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Why do we need privacy on Ethereum?

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Oscar, I'll throw that to you.

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Sure.

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So I would say that Ethereum is great sort of technology and works great as a sort of credibly neutral base layer, but obviously it doesn't have privacy baked in.

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And that's why you see sort of a lot of people have been trying to figure out solutions for that, whether it's on the base layer, but also a lot of application layer.

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So basically that's sort of the missing piece, if you will, in Ethereum land.

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And that's where we come in.

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Anyone that listens to Bankless will already know this.

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I apologize if you find me saying the same things you've heard many times.

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But basically, for us, we care about institutions.

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They generally have two things that they really care about.

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One is their business.

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And the second is that they're compliant.

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And because of those two things, they kind of tend towards places that they can control.

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At the same time, you have public Ethereum, which has deep liquidity, has all these new business opportunities and great ways of doing things they've already done, but much better.

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But you can't get both without cryptography.

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So for them, they need that in order to basically access the benefits of Ethereum.

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Can we talk about your guys' backgrounds?

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Because this is not day one for you guys.

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This is day one for ETH systems or month one for ETH systems.

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But this is just the next step on, I think, your guys' very long arc that started a while ago.

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What context do we need to know from you two and the work that you've done in Ethereum, in privacy, and with institutions that you guys are bringing to ETH systems?

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Maybe just continue taking that one away.

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Yeah, so a bit about myself.

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So I actually started in traditional finance.

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I used to build algo trading systems like Goldman Sachs.

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That's what I did for like five years.

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So I have a really good understanding of the kind of things that basically these kind of investment banks need.

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I then spent basically a number of years kind of in the hedge fund world.

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And for me, that was like the interesting part of the arc where I was looking at all these different things.

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I remember reading the Bitcoin white paper being blown away, but like that was too early.

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That was way too early.

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And then fast forward a number of years, I joined the Ethereum Foundation, kind of leading a lot of the APAC BD initiatives.

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This was last year when there was, you know, Tomas was basically co-executive director.

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And something became extremely obvious, just fascinating.

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In order for any of these organizations to use public Ethereum, they needed privacy.

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They needed cryptography.

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And I'd known Oscar for a while, actually.

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So I remember calling him up and saying, hey, look, Oscar, there's something that I think you'd be a great fit for and we should talk about it.

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So I've been there sort of Ethereum and Cryptospace for around a decade or so.

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I focused a lot on privacy very early on.

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So before this was kind of like a big talking point, working at Status and also creating an R&D lab.

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As part of that, we were developing various types of peer-to-peer communication protocols that were used for sort of sensor assistance and privacy and so on.

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So been sort of into protocol design and privacy and resistance specifically on the protocol infrastructure layer for quite a while now.

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And then I guess the last five, six years, I've been sort of diving deeper into Synology Proofs and sort of doing various tooling for it, including work with some of the early members of PSC at the Ethereum Foundation, and also wrote like a little mini book on Synology Proofs, did some research related to following schemes and some tooling for making client-side proving easier and so on.

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In the last few years, I've been at...

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So the Firm Foundation and also advising them when it comes to privacy strategy and now sort of the new access layer.

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And as Mo mentioned, that's where we met and we kickstarted institutional privacy taskforce.

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I think for me, one difference is that I used to sort of focus primarily on privacy of individuals.

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And while that's still something that's very dear and close to my heart, I think one thing that I noticed is that there's a massive, massive demand for privacy of institutions.

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And I think that's come about sort of with the last few years, sort of where there's been more regular clarity and so on.

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And you see that a lot of institutions, they actually care a lot about privacy, to some extent, even more so than individuals in some circumstances.

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So I thought that was quite exciting and sort of been a great sort of opportunity, as we've been focused on for the last year, as we've been focused on for the last year, as we've been building things in public and so on, and then spinning out into a separate entity a month ago or so.

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Yeah, just to add on that, so we basically, I think one interesting thing about us is that when we spun out, we came out with a year's worth of work, like an entire body of things that we've been doing from multiple workshops that we've gone, you know, hands on with lots of different organizations to, you know, public goods that we've published, which is basically a market map of all these different use cases that people are looking at and how they map onto private solutions in Ethereum.

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Yeah.

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And then finally, we had basically write-ups looking at whether it's like, you know, private disbursements or public, you know, public ledgers versus private rails, those kind of things.

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So I think for us, it was interesting.

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Like, yeah, like you said, the organization, like E-Systems is less than a month old, but the work we're doing spans not just a year, but probably a decade worth of work that we've been looking at.

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There are a couple of things you said, Oscar, that I'd like to learn a little bit more about.

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You said privacy strategy for the EFs.

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And then you also said privacy for institutions is different than privacy for individuals.

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I want to learn more about both of these things.

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But let's start with privacy strategy.

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What is a privacy strategy?

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Can you just illuminate what the strategy is?

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Yeah, so I think a lot of that had to do with sort of the context that PSC found itself at the time at the Ethereum Foundation.

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And I think one thing that we did is sort of

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try to move that into the Ethereum Foundation and see sort of what type of privacy thinks Ethereum Foundation focus on.

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That is now most, and it's like a lot of other people, so I don't want to talk too much about sort of for Ethereum Foundation and what they are working on.

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But what I would want to add to is also what Mo just said, is that as sort of part of the institutional privacy task force at the Ethereum Foundation,

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What we were trying to do is basically connect to these two worlds, where you have institutions on one hand and an ecosystem on the other.

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And in talking to them, oftentimes they didn't necessarily understand the Ethereum world because they just see, oh, it's a blockchain, there's no privacy.

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But the fact is that the Ethereum ecosystem is extremely rich in terms of different protocols or vendors or various solutions that exist.

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So what we're trying to do is sort of explain to them what the space looks like and in turn also talk into various companies in the space and protocol engineers and so on and explain to them, here's what these users actually are looking for.

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And that's why we sort of developed a privacy market map where we sort of talk about these specific requirements these users have.

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And they can be quite sophisticated if it's like specific business requirements or legal constraints.

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and specific use cases and then basically map that into sort of a set of solutions, whether it's like vendors or protocols and so on.

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And then basically doing POCs and write-ups to show things that are missing, like how you can combine these building blocks to sort of create protocols and solutions that sort of fit what the issues are looking for.

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Yeah, I just want to add one more thing on there.

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It's really quickly because I think

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Oscar, I know you mentioned PSE and folks that are listening might not know what that is, but actually the Ethereum ecosystem has been deep in privacy for many, many years.

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So I know privacy is like a really hot topic now, especially last year with Zcash and, you know, all these privacy protocols, but the EF has had a cryptographic research lab for seven years or so, right?

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And that was known as PSE.

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The privacy stewards of Ethereum, just like the group of people talking and building about privacy solutions.

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Does everything that you guys are saying, does this mean that we have the privacy solutions that we need in terms of just like code on the shelf, ready to pull off the shelf and apply it if institutions just know it's there and know how to do it?

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Or...

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in the terms of just like building privacy on Ethereum, building private systems on Ethereum, we still have some building to do.

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Like, where are we in that arc of, we still need to build more solutions or we already have the solutions and we just kind of need to come up with some standards or institutions just need to be made more aware of them and somebody kind of needs to just hold their hand and put the building blocks together to get what they need.

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Like, where are we with the evolution of privacy around Ethereum for institutions?

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It's a good question.

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I would say it's very much a mix.

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And I think one thing you see and I've seen over the last decade, and this is partly due to the Firm Foundation, but other people in this space like Ccash and independent resources, we've been sort of pushing up and making a lot of the cryptography actually usable.

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And then there's sort of companies that have come up around that and sort of made it even more useful.

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I would say that some solutions we sort of know how to do, but then when it comes to specific constraints, I would say we are still, there's still a bit to go.

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Because a lot of these institutional use cases, they are not necessarily obvious in terms of the specific constraints.

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So you do need to customize things a little bit.

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And you could say, oh, just use like a privacy L2.

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But if you look into the specifics, oftentimes there comes certain trade-offs that not every institution is willing to make.

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And it's very interesting when you talk to these various companies is that some of them, they're extremely sophisticated.

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Like they have their own R&D department with 20 people and photography PhDs.

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And we were looking at the space for like years.

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And then on the other end of the spectrum, you have people who just like, maybe they don't have like a very strong technical team, but they sort of want like a white label solution.

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So you see this wide sort of spectrum in terms of what these users are looking for, and then also different timelines and different sort of targets.

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If it's like retail, like massive scalability in terms of TPS, or if it's more of a higher assurance kind of security use cases.

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So it very much depends on the specifics we're talking about.

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And just to add on that, I think maybe, Oscar, I don't know if you're going to push back on me on this, but I think at least for the kind of use case that we look at, it's, I think, largely more of an engineering problem as opposed to like a research problem.

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Okay, so the research is done and the engineering, it seems to be like that is just like where Ethereum is these days.

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It's like the research is mostly done.

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It's about just about engineering.

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Can we go through like just a...

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typical case study that you guys have with like your most average institution conversation that you have, like what's the number one form of privacy that they are looking for?

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Is it their account balances with stable coins or if they are interested in like creating real world assets or using real world assets, it's like revealing their, how much of an asset that they have

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Is it sending these assets?

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So like private business to business, stablecoin transfers for payments, like businesses probably don't want to reveal that activity on chain.

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What kind of privacy is the most commonly needed privacy in the conversations that you guys have?

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Yeah, so I can add a bit of color here.

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So first of all, I think when it comes to the work that we do, we span a broad range of use cases.

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And our time is usually spent on the work that hasn't already been solved, to be perfectly honest.

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So, for example, when you talk about the situations that you just talked about, all of them, I think a lot of people know about them.

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Like, for example, private payments, you know, kind of tokenized deposits.

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Those are great.

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But they're already kind of solved in many ways, at least for some organizations in some countries.

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The type of work that we look at is kind of like the work that really hasn't been taken a look at yet.

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I'll give you some examples, right?

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So one is that, you know, we were definitely talking to a particular organization, let's just say, Tier 1 Investment Bank, where they do this thing known as inter-dealer compressions.

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So what ends up happening at the end of the day, they send all of their trades to a trusted third party, which they pay millions of dollars a year, by the way, tens of millions, if not hundreds of millions of dollars a year.

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And what happens is that this trusted third party, they look at this bank's trades and all of their positions.

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They look at another bank's trade, all of their positions, and then they net out.

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Right.

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No one likes doing this, but they do it because the value it brings in terms of compressing these trades down.

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And they also have less capital requirements because they don't have to get that ready.

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They have less transactions they have to do.

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And we basically had someone that come to us and they were like, well, hold on a second.

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Is there any way that we could do this?

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And this is the perfect example where a kind of like, I would say, foundational new technology like Ethereum, a shared state, could give them this without this particular third party.

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But the problem is then the entire world can see everything.

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So that's an example of like a very specific use case that, you know, I've talked to other teams about this and most people haven't really seen this business or this opportunity that needs to be addressed.

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But this in itself is a several billion dollar basically business that could be taken a look at.

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That's one.

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To your point around basically private payments, we've talked to a number of different organizations across different jurisdictions that are looking at this, and they all have different requirements.

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And I think Oscar made a great point where, like, sometimes the use case is well-known, like private payments, but the jurisdiction it's in gives you a various permutation of it that makes it non-trivial to do it.

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Yeah, also to add on that, like I would say, we talk about privacy a lot, and I think that's great.

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It's very important.

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But I don't want us to focus only on that, because oftentimes, if you think about building confidential and secure systems, that's one of the things you care about.

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Like you also care about the security properties, and if it's sensor persistent, and scalability, and so on.

190
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Yeah.

191
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A lot of it is also about sort of elevating the space a little bit in terms of rigor, because if you look at all these institutions, they already have product market fit.

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So they already have like a system with like billions of dollars flowing through it.

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And they want to be able to move on to Ethereum with confidence.

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And in order to do so, they need to actually be sure that the system works the way

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it's supposed to.

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So that's like a little bit different from like, you know, like live coding an app or whatever.

197
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Like it requires you to actually think carefully about what are security properties that you have.

198
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And privacy is definitely one of them and one of the more tricky ones, but also just one out of several.

199
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So you need to think about all of them as a whole in terms of a system and like having kind of technical specifications around this and so on.

200
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So I think that's like another thing to think like a bit more holistically about it, that just like multiple properties and they all have to be satisfied in order for institutions to actually want to move over onto Ethereum.

201
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I know that might not be like a satisfactory answer in terms of what's the most kind of popular use case.

202
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It's probably because we go for the really kind of edge case kind of problems that are out there.

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Is there an example, is there like a case study that you guys have worked with in the past that we can talk about where you could have the end-to-end conversation of you started talking to this institution, they had a privacy need,

204
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you guys worked with them, did whatever you guys do, and now they are using Ethereum in a confidential, private way.

205
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Is there a story you could tell us about an example that's worked so far?

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Yeah, I can tell you a story.

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I don't know if I can mention names because...

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Yeah, I would figure.

209
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Yeah.

210
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I mean, if we're talking about privacy.

211
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Yeah, yeah, yeah.

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People, people don't like to, you know, especially the bigger you are, the more that you have that you basically don't want to share.

213
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But we can talk about a couple.

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So for example, so we're talking about payments.

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Everyone understands that, right?

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Like, you know, I, you know, I do a payment to you and doing that on chain, everyone sees it.

217
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It's a use case that, you know, bog standard.

218
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For a particular jurisdiction, it's a bit non-standard because first of all, they want it to be confidential and they would like to roll out for almost the entire country.

219
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So what's happened to them is they're like, we think blockchains are amazing.

220
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We think, you know, payments are great, but we need to be able to do it at scale for an entire nation.

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And the thing about a payment is that normally it only has like really two actors, which is a sender and a receiver.

222
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It's known as like a DDP, like they usually have two actors.

223
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But because of this particular country, they have a relative requirement to have four actors for payments.

224
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This is the sender, the receiver, the auditor, and then the government, essentially.

225
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And to do that in a privacy-preserving way, they tried for, I think, two to three years.

226
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I'm anonymizing the years bit.

227
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And they tried basically, you name it, protocols are out there, and they were not able to do one in a way that was acceptable.

228
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Basically, was it performing enough?

229
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Could they basically hit the TBS?

230
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Could they do it in a way that basically is not like ridiculous computational costs?

231
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And what's interesting is that for the last year or so, we've basically been publishing our market map and we've been doing write-ups, and they basically saw one of the basically proof of concepts and works that we've done, because we often do exploratory work around what you could potentially do on Ethereum.

232
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And they're like, oh, hold on a second.

233
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We've tried, I don't want to name the protocols or the teams, but we tried X, Y, and Z for three, four years.

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We published a natural report about this, a 16-page report and why we can't do it.

235
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But it seems like actually this piece of work that's coming out of the EF could work for us.

236
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So they basically reached out to us and they're like, hey, hold on a second.

237
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We'd love to have you guys reference your work and build something that actually looks like it could kind of solve our needs.

238
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And that's an example of one where I think,

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Not only is the work kind of interesting and it might solve a few people's problems, but you can do it at scale.

240
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You can do it where you can affect tens of millions of people.

241
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And I think that's an example of like some of the things that we've done that, you know, had we not done this open source work, had we not published it, had people not seen it, they probably would have just put that on the backbone for a very long time.

242
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Or worse yet, gone to, I say worse yet, gone to some kind of private network.

243
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I would also add a little bit to that, that like, if you think about institutional sort of sales, like they are quite long.

244
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So oftentimes like it requires quite a lot of work to sort of get something going and there's like, you know, some confidentiality around that.

245
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And then it takes a while until you actually see sort of the complete fruits of your labor.

246
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So that's generally like a thing.

247
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And I think one thing we noticed at EF, and this is also one thing that gave us, I guess, the,

248
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idea that it makes sense as a separate for-profit entity is that we had a lot of engagements and collaborations with various institutions.

249
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And there were many cases where people were like, okay, so we would love to continue working with you guys.

250
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How can we pay you?

251
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And we're basically going to say, no, no, no, we're a nonprofit.

252
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We have to be neutral and so on.

253
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So we have to say no.

254
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And sometimes where some conversations stopped because

255
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It's extremely important that Ethereum Foundation stays incredibly neutral and so on.

256
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So we kind of have to back off there and let other people sort of take the ball there.

257
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But I think that also shows a lot about how much demand there is and so on.

258
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So as we've been sort of spinning out now and into a separate for-profit entity, it's a lot easier to have sort of these commercial agreements in place because it's a lot easier for an institution to understand.

259
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It's very straightforward in terms of contracts and so on.

260
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What I'm hearing from you guys is it feels like there is a lot of very bespoke solutions that need to be built, as you said, for the specific permutation of privacy in a particular compliance jurisdiction for the specific needs of a specific institution.

261
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My concern about that is that if we keep doing bespoke stuff, it doesn't really scale.

262
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Because if you make a perfectly fitting glove, it's only going to fit one hand, right?

263
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And the alternative that I see for that is like, well, we have the core of Ethereum,

264
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things like Uniswap, things like Aave, things like EOAs, like my address, my ledger.

265
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And if we can get privacy in these core things, the level of scalability that we get on Ethereum on net is going to become much larger.

266
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And maybe institutions can, like, once we get pretty high fidelity privacy scaled and easily accessible and closer to a default on Ethereum, then institutions could, like, bend a little bit.

267
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And they're like, this doesn't perfectly fit, but, like, I can maybe change my systems a little bit in order to fit this system.

268
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form factor of privacy.

269
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And if we get everyone onto the same standard, then the total amount of privacy, both on Ethereum and on the world, can grow massively.

270
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And so I guess the question is a concern about the scalability of what you guys are doing.

271
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And don't we just need privacy a little bit more baked into Ethereum core rather than doing bespoke stuff on the margins?

272
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How would you guys respond to that?

273
00:22:16.006 --> 00:22:17.507
Yeah, I've actually got a really good answer for this.

274
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So a couple of things.

275
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I think one is that

276
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We could do both.

277
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That's one.

278
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There are many things that do that, and that's why I think Ethereum is amazing.

279
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The second thing is that, you know, we talk about these bespoke bills, but actually each one of these markets, each one of these industries is freaking huge.

280
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We're talking about potentially hundreds of millions, if not billions of dollars.

281
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So the way we think about it is that we actually like,

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We don't like doing purely bespoke bills.

283
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We think that's a really bad idea.

284
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What we think is that you go in and understand these highly specific use cases because if you don't really understand it, you can't really solve it.

285
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And what you end up doing is that you can create generalized solutions that can be reusable for other people.

286
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So, for example, I told you about the inter-data compressions.

287
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That can be useful for every investment bank.

288
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We talked about, for example, the kind of like, you know, multi-party DDPs that can also be spread out.

289
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So our plan really is, and the way that we think about it is that we want to generalize, and we want to do two things.

290
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One is that where we can open source and share with the rest of the world, because that basically hardens the way that people look at privacy on Ethereum.

291
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The second is that take these reasonable components and put them into a place where it essentially becomes a stack that people can easily switch on.

292
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So

293
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The way I think about it is that this bespoke work is almost like, you know, when you do a startup, you have this idea maze.

294
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Balaji talks about the idea maze.

295
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You go and you try to find out what works.

296
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And, you know, Paul Graham also talks about things like, you know, do things that don't scale.

297
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And that really is important when you work with institutions because they have these systems already.

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They have billions of dollars.

299
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of business.

300
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And to get them on chain, you have to start from that side as opposed to the DeFi native side.

301
00:23:50.559 --> 00:24:02.668
And I think, like you said, there's different people working on both, but I don't think actually enough people are working on the TradFi side that then converts them to Ethereum as opposed to there are many teams already on the crypto native side that are kind of going the other way.

302
00:24:02.688 --> 00:24:04.490
So having both is the way to do this.

303
00:24:04.850 --> 00:24:05.871
Yeah, I would agree with that.

304
00:24:05.911 --> 00:24:10.753
And also, like I would say, like, in general, the space has invested like a lot in like generic infrastructure, if you will.

305
00:24:11.253 --> 00:24:12.414
And like if you build, they will come.

306
00:24:12.474 --> 00:24:17.256
But that's not always the case, especially when you're talking about these laws, institutions with like very specific requirements.

307
00:24:17.276 --> 00:24:21.718
So I think there's value in like actually going after the specifics and then generalizing after.

308
00:24:22.058 --> 00:24:23.299
And there's a few ways we're doing that.

309
00:24:23.559 --> 00:24:27.101
So like one is in terms of open source libraries that we're pushing out, so like building blocks.

310
00:24:27.561 --> 00:24:36.545
And also in terms of like technical specifications that are written in such a way that they can sort of be generalized or you sort of, to the extent that a special case, you sort of make it very clear.

311
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So it's like swap ball or pluggable or sort of modeler and so on.

312
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And then I think in general, like base layer privacy is amazing.

313
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We would love to see that.

314
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And that would just enable even more use cases.

315
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So we definitely support that.

316
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I think it's great.

317
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It's just not the main thing we're focusing on.

318
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And then it's like a lot of other things.

319
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So.

320
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For example, when we talk about liquidity, there's like solutions when it comes to interability, like Ethereum economic zone and these sorts of things.

321
00:24:58.879 --> 00:25:02.805
So I do think you can get the best of both worlds and there's like many different ways to approach this.

322
00:25:03.325 --> 00:25:07.571
We are focusing more on like, how do we actually move institutions onto Ethereum?

323
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And that's our number of priorities.

324
00:25:09.124 --> 00:25:21.752
Yeah, and just to add on that, I know we've got like a million points here, but I think for organizations that may have been running for over 100 years, some of them are like that old, you need to kind of build that bridge and come from where they're building.

325
00:25:21.852 --> 00:25:23.193
It's like, hey, look, this is how your business is.

326
00:25:23.233 --> 00:25:24.393
Okay, let's translate that.

327
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I think trying to force them into doing it the other way might not work.

328
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We've seen a lot of teams that have tried that and it hasn't worked for them.

329
00:25:32.358 --> 00:25:35.520
Is ETH Systems a startup or a nonprofit?

330
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What's the legal entity behind ETH Systems?

331
00:25:38.689 --> 00:25:41.291
So each systems is a for-profit entity.

332
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Profit.

333
00:25:42.272 --> 00:25:42.733
Okay.

334
00:25:42.773 --> 00:25:43.994
Yeah.

335
00:25:44.154 --> 00:25:44.394
Okay.

336
00:25:44.474 --> 00:25:44.774
Okay.

337
00:25:44.794 --> 00:25:52.441
Because my question was going to be like, isn't this best done as a startup trying to build a very scalable venture sized outcome?

338
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You guys are, you guys are a for-profit.

339
00:25:55.244 --> 00:25:56.525
Is that where you guys are?

340
00:25:56.985 --> 00:25:57.185
Yes.

341
00:25:57.205 --> 00:25:57.626
Yeah.

342
00:25:57.726 --> 00:25:57.886
Yeah.

343
00:25:57.906 --> 00:25:58.066
Yeah.

344
00:25:58.306 --> 00:25:58.486
Okay.

345
00:25:59.988 --> 00:26:01.589
I was like, okay, wait a second.

346
00:26:01.609 --> 00:26:15.759
If you guys are having all of these conversations and you're seeing that you can build solutions, isn't this best done with something like with KPIs, like TVL and volume, and you guys take a cut, but that is what you guys do.

347
00:26:15.959 --> 00:26:16.560
Yeah, yeah.

348
00:26:16.580 --> 00:26:19.482
So for us, it's a for-profit organization for a couple of reasons, actually.

349
00:26:19.542 --> 00:26:20.623
And this is something that we debate.

350
00:26:20.763 --> 00:26:22.344
Actually, Oscar, we talk about this quite a lot, right?

351
00:26:22.904 --> 00:26:27.448
It was like, I think there are a lot of non-profit organizations in our space, and I think they're amazing.

352
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But for the work that we're doing, it's going to be a multi-year journey.

353
00:26:33.485 --> 00:26:38.471
And the most, I think, cleanest way to sustainably fund it is to do it as a for-profit entity.

354
00:26:38.491 --> 00:26:38.892
That's one.

355
00:26:39.473 --> 00:26:42.336
Because public goods funding is extremely, extremely hard.

356
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And in my opinion, grants should be given to people that really need it.

357
00:26:45.380 --> 00:26:46.302
The second thing is that

358
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The types of organizations that we work with, in order for us to do the last mile, they actually require you to be a for-profit organization to go through procurement.

359
00:26:56.029 --> 00:26:59.370
Like being a nonprofit is actually a red flag sometimes and they just can't work with you.

360
00:26:59.850 --> 00:27:03.592
So for those two reasons, we basically went with the for-profit route.

361
00:27:03.892 --> 00:27:10.014
Knowing, by the way, that we have so many sister organizations and friends in the ecosystem that are nonprofit and they can kind of pick up the land all day.

362
00:27:10.374 --> 00:27:17.197
And also like just personally, like at least for the last seven years or so, like I mostly worked at sort of non-profit, so I definitely value that.

363
00:27:17.217 --> 00:27:22.439
And I think there's amazing value in terms of this like R&D and going really deep and public goods and so on.

364
00:27:22.459 --> 00:27:23.199
So that's amazing.

365
00:27:23.660 --> 00:27:26.621
I think in this case, it's kind of obvious as you kind of alluded to that.

366
00:27:27.421 --> 00:27:28.722
It's a very straightforward business model.

367
00:27:29.042 --> 00:27:31.603
You know, there's a customer and they're willing to pay for something and we can help them.

368
00:27:32.103 --> 00:27:39.327
So I think that's, it makes a lot of sense in this instance, especially for the reasons Mo mentioned in terms of commercial counterparty and so on.

369
00:27:39.807 --> 00:27:41.949
I would add that like, we're not only doing that.

370
00:27:42.129 --> 00:27:44.850
So the way we approach this, we kind of have these two work streams.

371
00:27:44.870 --> 00:27:47.371
So one is business driven and the other is open source.

372
00:27:47.792 --> 00:27:50.073
In ideal world, they're like 100% sort of aligned and so on.

373
00:27:50.513 --> 00:28:06.514
But the business-driven work, a lot of it is talking to institutions and understanding their specific requirements, if it's business or legal, and then basically mapping that to technical constraints and the science and sort of helping them in that sort of like, if it's like educating them or do architecture reviews or POCs or production environments and so on.

374
00:28:07.135 --> 00:28:12.779
Then based on that, we get like a lot of business intelligence or details, like particular details that are hard to talk about.

375
00:28:13.119 --> 00:28:14.460
We take those and generalize that.

376
00:28:14.840 --> 00:28:19.603
And they use that to sort of push out open source building blocks that can sort of elevate the space and also inform people.

377
00:28:19.743 --> 00:28:22.845
So it's kind of continuity in terms of the work we did at Ethereum Foundation.

378
00:28:22.865 --> 00:28:22.965
So-

379
00:28:23.305 --> 00:28:28.370
that can take the form of like POCs, like explaining, here are some examples of constraints and how you can think about it.

380
00:28:28.891 --> 00:28:35.457
Like write-ups, the service of the space, like how you can get these properties, open source libraries, take on specifications and so on.

381
00:28:35.497 --> 00:28:39.902
So we think that's extremely valuable, both for the ecosystem as a whole, but also in terms of like

382
00:28:40.828 --> 00:28:47.533
you know, just general communication and also attracting world-class talent, because open source is like something, it's hard to do too much open source.

383
00:28:48.053 --> 00:28:52.236
And fundamentally, a lot of the security properties, the private properties, they need open source solutions.

384
00:28:52.276 --> 00:28:56.599
Like you can't just sort of hide things and do sort of security by security.

385
00:28:56.619 --> 00:29:01.922
So a lot of these institutions, they actually ask for open investigations and open source in order to be able to trust the system.

386
00:29:02.243 --> 00:29:04.124
So that's something extremely important to us.

387
00:29:04.164 --> 00:29:06.566
We try to sort of keep a balance between the two, both sort of

388
00:29:07.106 --> 00:29:14.735
being very pragmatic in terms of business demand, but also very principled in terms of open source work and pushing it out with permissive licensing and so on so other people can build on it.

389
00:29:15.310 --> 00:29:15.630
Yeah.

390
00:29:15.690 --> 00:29:20.154
And just one last thing on that is that oftentimes there's these like unintended side effects.

391
00:29:20.634 --> 00:29:28.941
And one of the great things about kind of the work they're doing is actually you end up having four institutions funding some of these public goods and become great for the rest of the ecosystem.

392
00:29:29.301 --> 00:29:40.110
So are you guys a like a consultant dev shop where you guys are hired and paid to build technical solutions for institutions?

393
00:29:40.950 --> 00:29:53.983
Or is it something a little bit closer to something like, I don't know, Uniswap or Aave, where you are trying to build systems in code on chain that imbues institutions like workflows with privacy.

394
00:29:54.363 --> 00:30:02.031
But you're trying to build like a large scalable structure that, I don't know, like governs over a system or something like that.

395
00:30:02.091 --> 00:30:03.452
And so like there's a spectrum there where.

396
00:30:04.373 --> 00:30:07.274
It's just like you guys are just like, you know, privately paid consultants.

397
00:30:07.694 --> 00:30:11.295
And that has like one size outcome in terms of investment.

398
00:30:11.535 --> 00:30:16.057
Or there's like the massively scalable system where, well, you guys are talking to all these institutions.

399
00:30:16.097 --> 00:30:17.938
You're getting a view of the landscape.

400
00:30:18.038 --> 00:30:20.258
You are starting to get a picture of what's needed.

401
00:30:20.879 --> 00:30:26.140
And then when you guys are ready, you guys are ready to build the massively scalable, like venture sized outcome.

402
00:30:26.520 --> 00:30:29.241
And that is like a product that you guys build.

403
00:30:29.261 --> 00:30:31.382
Like, where are you guys in that spectrum?

404
00:30:31.402 --> 00:30:31.542
Yeah.

405
00:30:31.622 --> 00:30:33.003
Yeah, I think this is really clear for us.

406
00:30:33.043 --> 00:30:36.466
It's definitely the latter, which is basically we love products.

407
00:30:36.506 --> 00:30:38.427
I was a CTO of my last company building products.

408
00:30:38.827 --> 00:30:40.529
Austin's been building products his entire life.

409
00:30:40.949 --> 00:30:43.711
Products are the way to go for scalable solutions.

410
00:30:44.512 --> 00:30:45.653
But like you said, it's a spectrum.

411
00:30:45.693 --> 00:30:55.040
You need to do a lot of that hands-on understanding of all the various use cases, taking a bit more of a forward-deployed engineer model, sitting down with them on the trading desk and understanding what they're doing,

412
00:30:55.963 --> 00:31:01.605
But the goal definitely is to take some of these learnings and turn this into like scalable products that you can roll out in basically mass.

413
00:31:01.925 --> 00:31:10.648
How far along are you on the research and proving the landscape and gaining information side of things?

414
00:31:10.688 --> 00:31:17.250
Like how complete do you feel in terms of informing a product that you will eventually build later?

415
00:31:17.390 --> 00:31:20.091
Or is there still more like research and development to do?

416
00:31:20.371 --> 00:31:22.512
As I mentioned before, like the institutional sales are quite long.

417
00:31:23.032 --> 00:31:35.779
So it's the kind of thing where it's actually quite useful to take your time a little bit in terms of actually doing multiple collaborations with POCs and architecture reviews before sort of going deeper into one or a few product bets.

418
00:31:36.300 --> 00:31:49.207
So we have a lot of active collaborations, but it also takes a little bit of time to actually see those through and sort of see, okay, so what is the exact thing where we have a sort of competitive advantage and so on that makes sense to sort of go double down on.

419
00:31:50.028 --> 00:31:54.665
Yeah, and to Oscar's point, basically, we do have a couple of ideas already, like,

420
00:31:55.680 --> 00:32:07.364
some that I think could be absolutely quite game-changing, but it requires more testing of the thesis, going in there and really understanding whether or not those fundamental questions that we have have been answered and we're not quite there yet.

421
00:32:07.904 --> 00:32:13.226
And I will say, by the way, there's already examples of like venture-scale type businesses, for example, private RFQs, right?

422
00:32:13.246 --> 00:32:16.528
I think Zama did something recently where I personally think that's a huge business.

423
00:32:16.828 --> 00:32:20.689
And actually up until they did it, I don't think there were many people that are doing it at that level of scale.

424
00:32:21.029 --> 00:32:22.670
And there's other opportunities I like that will stop...

425
00:32:23.350 --> 00:32:24.091
I'll make a prediction.

426
00:32:24.151 --> 00:32:27.833
Over the next 24 months, you're going to see a whole number of businesses pop up that are like that.

427
00:32:28.374 --> 00:32:33.798
And the reason why I say 24 months is because a typical institutional engagement will take kind of at least 18 months.

428
00:32:34.858 --> 00:32:41.763
Like it takes you a number of months to get to talk to them and educate them, a number of months to go through procurement, and then like almost a year to kind of get the initial version out.

429
00:32:41.904 --> 00:32:51.671
What's the appetite these days for institutions to actually come on chain and do things in like the decentralized public blockchain context?

430
00:32:52.755 --> 00:32:54.918
Like, clearly the answer is some.

431
00:32:55.699 --> 00:33:02.686
But when you guys have conversations, is it a little bit more of like you guys are going to them and trying to convince them to come on chain?

432
00:33:03.407 --> 00:33:08.172
Or are they coming to you and being like, we really want to come on chain, but we can't because of these constraints?

433
00:33:08.592 --> 00:33:12.717
How much selling do you guys have to do to get people to come on Ethereum?

434
00:33:12.957 --> 00:33:16.321
Oh, so this is going to sound terrible, but actually I'm a really bad salesman.

435
00:33:16.682 --> 00:33:18.304
So most of the people are coming inbound.

436
00:33:18.344 --> 00:33:19.025
I'm not the worst.

437
00:33:19.185 --> 00:33:20.867
I'm not sure you're saying this, but I'm not the greatest.

438
00:33:21.648 --> 00:33:23.631
And most of the demand has been inbound.

439
00:33:23.671 --> 00:33:28.276
So I think, first of all, one thing that's amazing about that is that they understand the value of blockchains.

440
00:33:29.198 --> 00:33:31.200
Secondly, I think I've got to give credit to DeFi here.

441
00:33:31.720 --> 00:33:34.762
They can see what's happening in DeFi and that really, really interests them.

442
00:33:35.443 --> 00:33:42.128
So the things like Aave and Uniswap and Lido, they want those things, but they want to do it in a way that they're compliant.

443
00:33:42.548 --> 00:33:46.451
So to your point, like the demand is absolutely massive.

444
00:33:46.531 --> 00:33:46.692
Like,

445
00:33:47.572 --> 00:33:48.092
It's huge.

446
00:33:48.953 --> 00:33:53.295
And the thing that they're looking for is, in some ways, that even kind of classify as institutional DeFi.

447
00:33:53.836 --> 00:33:59.699
And you'll see, for example, various organizations and DeFi protocols are basically making forks of their products to do this.

448
00:34:00.339 --> 00:34:01.440
But it's huge and it's coming.

449
00:34:01.540 --> 00:34:13.047
And what you'll find is that the ones that have been looking at blockchains for the longest time, so up until recently, with regulatory clarity of the coming, and like Genius Act, they were looking at it with almost like, oh my God, this would be amazing if we could do it.

450
00:34:13.287 --> 00:34:14.768
And then the floodgates started opening up.

451
00:34:15.388 --> 00:34:18.610
So we don't do much selling, to be completely honest with you.

452
00:34:19.671 --> 00:34:24.534
We do think a lot of the demand is basically intrinsic to these businesses.

453
00:34:24.975 --> 00:34:26.336
They used to do proof of concepts.

454
00:34:26.616 --> 00:34:28.937
They used to have innovation teams that would try things out.

455
00:34:29.217 --> 00:34:33.861
But last year, something really changed, where sometimes a CEO would basically pick up their phone and talk to the innovation team.

456
00:34:33.881 --> 00:34:35.642
We're like, hey, look, you guys have been working on this for five years.

457
00:34:36.062 --> 00:34:37.103
We actually want to do business now.

458
00:34:37.463 --> 00:34:52.254
Maybe one way that this unfolds is we have the DeFi ecosystem, the main core campfire of Ethereum, the Uniswaps, the Aave, the stable coins, the Pendles, Morphos, all that kind of stuff.

459
00:34:52.314 --> 00:34:53.995
I'll call it the center of Ethereum.

460
00:34:54.015 --> 00:34:55.456
It really feels where all the heat is.

461
00:34:56.137 --> 00:34:58.699
And institutions are looking at that and be like, well, that makes sense.

462
00:34:58.819 --> 00:34:59.980
I want to go play there.

463
00:35:01.045 --> 00:35:15.119
First, there's going to be a very distinct parallel, dare I say even siloed ecosystem that gets built out for institutions that is private and fits their form factor of needs.

464
00:35:15.659 --> 00:35:16.040
Because...

465
00:35:16.360 --> 00:35:25.542
Directly integrating into those things is probably too soon, too ambitious, and we need to have things going out in the wild first.

466
00:35:26.002 --> 00:35:44.406
And so before there's deep privacy institutional integration to the core DeFi apparatus of Ethereum, there's first going to be distinct, siloed, separate arena, separate playground, separate sandbox for institutions to come in and do their business logic on chain in a private manner.

467
00:35:45.166 --> 00:35:47.468
And then they're going to see like, okay, this is working out for us.

468
00:35:47.849 --> 00:35:48.890
I like what we're doing here.

469
00:35:49.350 --> 00:35:55.616
And then maybe somebody can build us a system that integrates what we're doing into Morpho in a compliant way.

470
00:35:55.856 --> 00:36:03.864
And then later these systems start to intertwine and grow a little bit more together rather than being two separate versions of Ethereum.

471
00:36:03.884 --> 00:36:05.085
But that's kind of how I see the path

472
00:36:05.545 --> 00:36:07.786
playing out, you guys are slightly nodding your heads.

473
00:36:07.866 --> 00:36:12.107
And so like, first it starts off completely separate and then we figure out how to intertwine.

474
00:36:12.127 --> 00:36:14.567
The market will figure out how to intertwine these things.

475
00:36:14.587 --> 00:36:16.488
Do you guys agree with that sort of like logical evolution?

476
00:36:16.548 --> 00:36:20.969
I wonder if you've been in our meetings or something because that's exactly how I think it's going on.

477
00:36:21.389 --> 00:36:26.110
Because when you talk to them, you notice that there's like a path, right?

478
00:36:26.170 --> 00:36:26.530
And they are

479
00:36:27.350 --> 00:36:30.532
Some are further along and some are extremely sophisticated and they're already thinking about this.

480
00:36:30.612 --> 00:36:34.314
Like they have, they're thinking deeply about like how do we integrate with these issues of DeFi?

481
00:36:34.334 --> 00:36:36.095
How does this compose with all of everything else?

482
00:36:36.455 --> 00:36:38.537
So that's naturally happening.

483
00:36:38.877 --> 00:36:42.519
And that's something that we see the more sophisticated actors are already starting to plan for.

484
00:36:42.819 --> 00:36:44.460
But they sort of need to learn, right?

485
00:36:44.480 --> 00:36:46.341
Because it's a new system, it's a new world.

486
00:36:46.361 --> 00:36:48.983
They need to sort of level up in terms of their thinking.

487
00:36:49.343 --> 00:36:51.965
And like a lot of it is also like translation work because...

488
00:36:52.525 --> 00:36:57.107
A lot of these companies have been around for like 100 years or something like that, and they have a compliance officer.

489
00:36:57.547 --> 00:37:01.169
And the legal framework they're operating under was written for the old world.

490
00:37:01.449 --> 00:37:02.549
So all of that needs to update.

491
00:37:02.569 --> 00:37:07.652
And that goes into like, has everything to do with like policy work and like, how do you even map this to technical capabilities?

492
00:37:07.712 --> 00:37:12.093
And that's like a decades-long transition that's happening all across the space.

493
00:37:12.514 --> 00:37:13.454
And it'll continue to happen.

494
00:37:13.494 --> 00:37:14.574
It will take a while, right?

495
00:37:14.955 --> 00:37:20.097
But obviously, the sort of smarter money or more sophisticated money will sort of try to front run that a little bit and sort of,

496
00:37:20.517 --> 00:37:21.117
get ahead of things.

497
00:37:21.217 --> 00:37:24.259
But that's definitely how I think, at least, that things will develop.

498
00:37:24.699 --> 00:37:26.180
I mean, I've talked to asset managers.

499
00:37:26.280 --> 00:37:31.583
I'm talking about traditional asset managers that will come to us and say, hey, look, we want to put these products on chain.

500
00:37:32.263 --> 00:37:33.244
We can see what you guys are doing.

501
00:37:33.304 --> 00:37:34.885
We just need to figure out a way to do it.

502
00:37:36.105 --> 00:37:42.188
There is a lot of, I think, especially the more forward-thinking asset managers, and they are definitely, definitely interested in doing this.

503
00:37:42.649 --> 00:37:46.471
And I have this conversation almost every single, I would say, week or two.

504
00:37:47.494 --> 00:37:48.735
Like people are saying, hey, how do we do this?

505
00:37:49.135 --> 00:37:50.175
What gets unlocked?

506
00:37:50.216 --> 00:37:51.636
Like paint a picture for me.

507
00:37:52.357 --> 00:37:59.701
I know privacy is hard and crypto moves, I think, slower than it did in the past when we were trading meme coins.

508
00:38:00.021 --> 00:38:01.782
But paint a picture for me in like 2033.

509
00:38:01.802 --> 00:38:02.422
So seven years.

510
00:38:06.105 --> 00:38:10.571
and you guys have done the job that you have needed to do, institutions appetite continues to increase.

511
00:38:11.012 --> 00:38:16.300
Paint a picture for me of what that world looks like with institutions and privacy.

512
00:38:16.380 --> 00:38:20.085
What's the ambitious optimistic case in like a seven year timeframe?

513
00:38:20.566 --> 00:38:25.211
I think what you'd want it to be is that for the vast majority of people that are not crypto native, it should be invisible.

514
00:38:25.571 --> 00:38:28.995
Like the best technologies, you don't see them, but you get the affordances of it.

515
00:38:29.515 --> 00:38:37.463
For example, imagine I could trade US stocks without being the US without giving away my identity because I have digital, you know, I have like a DID system.

516
00:38:38.044 --> 00:38:39.305
Like that'd be amazing, right?

517
00:38:39.546 --> 00:38:49.696
So I think the way that we like to think about it is that not only is like basically trillions of dollars of assets on chain, but beyond that, like all of this stuff is visible, but I get all the amazing benefits that we currently have with DeFi.

518
00:38:49.836 --> 00:38:51.237
I think that's the way I like to think about it.

519
00:38:51.958 --> 00:38:55.501
You know, you could access any stocks in the world, you can access any kind of these assets.

520
00:38:56.470 --> 00:38:58.331
and you get all the benefits of a blockchain.

521
00:38:58.551 --> 00:39:00.292
Essentially, you can do transferability.

522
00:39:00.312 --> 00:39:02.353
You have ownership of the things that you want.

523
00:39:03.133 --> 00:39:05.154
So yeah, I think that's basically how we see it.

524
00:39:05.174 --> 00:39:10.516
Like in seven years, it's very realistic that the vast majority of financial infrastructure is going to be on a blockchain.

525
00:39:10.796 --> 00:39:11.496
It's happening right now.

526
00:39:11.536 --> 00:39:12.937
All the biggest players are already doing it.

527
00:39:13.857 --> 00:39:14.918
Hopefully that happens on Ethereum.

528
00:39:16.078 --> 00:39:25.022
Some of the core properties that we really, really like in crypto and on Ethereum is transparency, auditability, and verifiability.

529
00:39:27.213 --> 00:39:33.838
going back into some older days, I remember I would debate with Bitcoiners about the adoption of Lightning Network.

530
00:39:35.739 --> 00:39:40.222
And they would say, Lightning channels are private.

531
00:39:40.402 --> 00:39:42.024
You can't see the volume.

532
00:39:42.084 --> 00:39:47.147
There's actually insane amounts of volume going on on Lightning, but it's private, so you can't see it.

533
00:39:47.487 --> 00:39:50.069
And all the Ethereum people are like, you guys are bullshitting us.

534
00:39:50.249 --> 00:39:51.851
Lightning is a joke of a product.

535
00:39:52.451 --> 00:39:55.353
And just because it's hidden behind Bitcoin,

536
00:39:55.793 --> 00:40:02.895
private state channels doesn't mean we can't, sure, we can't verify it, but there's nothing going on back there.

537
00:40:03.355 --> 00:40:22.659
And so I just use that as an anecdote of just saying, okay, well, if we make things like asset transfers private and we hide TVL and AUM, that's also private, and we remove some of these core properties that make DeFi interesting and trusted in the sense that we can inspect, source some of our DeFi systems.

538
00:40:22.679 --> 00:40:23.599
If we hide everything,

539
00:40:24.059 --> 00:40:25.680
How do we know anything's actually going on?

540
00:40:26.521 --> 00:40:27.262
How would you respond to that?

541
00:40:27.402 --> 00:40:33.046
Yeah, so I think a question I'd have is like, I think some people often mistake privacy to be meaning hidden.

542
00:40:33.627 --> 00:40:36.489
I think privacy really is who can see what, when, and how.

543
00:40:37.510 --> 00:40:40.832
And, you know, for example, when I do a transfer of my bank account right now, I can see it.

544
00:40:41.072 --> 00:40:42.974
The person that's receiving can see it, but, you know, the public can't see it.

545
00:40:42.994 --> 00:40:43.354
That's great.

546
00:40:43.614 --> 00:40:44.695
That's great for me, and that's what I'd like.

547
00:40:45.516 --> 00:40:51.240
So the question I would have is like, I think transparency, people want that so they can have a level of trust, right?

548
00:40:52.041 --> 00:40:59.648
But if you could get trust without having to see people's details, I think actually that's a better product where it's almost optional.

549
00:40:59.668 --> 00:41:04.232
Like you can get all the same affordances that you have, but it's kind of selectively disclosed.

550
00:41:04.512 --> 00:41:11.197
So my question actually to you, David, would be like, imagine you could verify anything that you wanted to, like whether someone's doing the right transactions.

551
00:41:11.338 --> 00:41:12.519
It's like the right thing that they said.

552
00:41:12.579 --> 00:41:14.160
The TBL is above a certain amount.

553
00:41:14.500 --> 00:41:18.664
Like it's like good, but it's still somewhat selective where you can't see everything.

554
00:41:18.684 --> 00:41:19.985
Wouldn't that be great?

555
00:41:20.145 --> 00:41:31.731
Yeah, the things I would want to retain in verifiability and auditability is things like trading volume and market cap of an asset, like TVL.

556
00:41:32.252 --> 00:41:40.136
And so when these private assets get deposited into Morpho, Morpho gets to report the AUM of those assets in question.

557
00:41:40.316 --> 00:41:47.740
Or when assets are traded privately across Uniswap or some sort of prop AMM, the actual metrics are,

558
00:41:47.940 --> 00:41:50.362
of the activity is still like reportable.

559
00:41:51.083 --> 00:41:54.806
And beyond like who's trading the assets, I don't really care.

560
00:41:54.946 --> 00:42:07.277
And in fact, like just as an anecdote, like today's Friday, August 7th, there's like this Ethereum whale with $55 million T-wopping into like lit on the main Uniswap layer one.

561
00:42:07.297 --> 00:42:09.038
And everyone is like, oh, look at this guy.

562
00:42:09.078 --> 00:42:13.262
It's like, then the price is front running this individual because we see $55 million of stable coins.

563
00:42:13.642 --> 00:42:22.950
TWOPing into this token on Uniswap and everyone's also buying to get ahead of this whale doesn't feel right in terms of just like, that's not how finance should work.

564
00:42:23.571 --> 00:42:30.717
And like the other example that's happening is like people are like looking at all of these traders on hyperliquid

565
00:42:31.358 --> 00:42:39.880
with regards to like Robinhood meme coins, and they're seeing this one account with a trading history who traded all the correct meme coins ahead of Robinhood listing.

566
00:42:39.920 --> 00:42:50.683
In this case, it's actually really nice that we have the auditability, but still like you shouldn't be able to see people's trades and like accounts and all of their trading history.

567
00:42:51.304 --> 00:42:59.606
The fact that that's fully transparent is like an interesting property and it makes for a lot of drama on crypto Twitter, but like that's fundamentally a constraint for institutions

568
00:43:00.386 --> 00:43:03.569
But I still want to see the volumes, and I still want to see the assets being traded.

569
00:43:03.809 --> 00:43:07.473
There's a bunch of other stuff from removing the individual accounts.

570
00:43:07.493 --> 00:43:10.575
There's basically everything else I still want to see and retain.

571
00:43:11.196 --> 00:43:16.401
And so as long as I can verify all of that stuff, then we can get the best of both worlds.

572
00:43:16.681 --> 00:43:18.122
Yeah, and I would say you definitely can.

573
00:43:18.142 --> 00:43:22.905
They're not contradictory because especially with like photography and synodic proof and so on, you can get that.

574
00:43:22.945 --> 00:43:27.388
You can sort of prove sort of these aggregate metrics that you care about.

575
00:43:27.408 --> 00:43:28.909
So there's no contradiction there.

576
00:43:28.929 --> 00:43:35.693
Like you can definitely have a system where you sort of get transparency on the things that you want to be transparent and then privacy of the things you want to be private.

577
00:43:36.053 --> 00:43:42.557
I think a lot of also benefits of something like Ethereum, public blockchain and programmability and so on, that you can actually get these properties.

578
00:43:42.577 --> 00:43:45.219
You can design the system in such a way that you get the best of both worlds.

579
00:43:45.483 --> 00:43:47.085
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580
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581
00:43:49.167 --> 00:44:00.139
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582
00:44:00.259 --> 00:44:01.200
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583
00:44:01.380 --> 00:44:06.306
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584
00:44:06.446 --> 00:44:12.674
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585
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586
00:44:16.358 --> 00:44:23.843
So you can go and connect it to your cloud or chat GPT and suddenly your AI can answer your crypto queries with the entire Bankless archive behind it.

587
00:44:23.963 --> 00:44:27.826
And every new Bankless article or episode gets added automatically.

588
00:44:27.946 --> 00:44:29.807
So the context keeps staying up to date.

589
00:44:30.068 --> 00:44:33.990
The Bankless MCP is exclusively available to Bankless premium subscribers.

590
00:44:34.231 --> 00:44:38.333
So you can go to Bankless.com, upgrade to premium and connect the MCP in just a few minutes.

591
00:44:38.413 --> 00:44:43.357
And all of a sudden, your crypto queries to your AI, LLM, whatever you use, will get a thousand times better.

592
00:44:43.477 --> 00:44:44.117
So go check it out.

593
00:44:44.218 --> 00:44:45.398
There is a link in the show notes.

594
00:44:45.458 --> 00:44:49.642
And once you become a Bankless Premium member, you can hop into the Bankless Discord and let me know how you like it.

595
00:44:49.742 --> 00:44:50.402
Some exciting news.

596
00:44:50.482 --> 00:44:55.246
We are launching a new podcast to help people figure out the crypto cycle, how to navigate it.

597
00:44:55.326 --> 00:44:58.008
The best crypto cycle investor I know, his name is Michael Nato.

598
00:44:58.088 --> 00:44:59.149
He runs the DeFi Report.

599
00:44:59.209 --> 00:45:03.972
This is the guy that sent me a sell alert before the 1010 price drop happened.

600
00:45:04.152 --> 00:45:06.594
His cycle analysis has been absolutely on point.

601
00:45:06.694 --> 00:45:08.015
I've been following him for years.

602
00:45:08.195 --> 00:45:11.618
And this year we started recording weekly podcast episodes.

603
00:45:11.758 --> 00:45:19.524
Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle.

604
00:45:19.644 --> 00:45:22.025
There's new episodes that are released every Wednesday.

605
00:45:22.105 --> 00:45:22.826
They're 30 minutes.

606
00:45:22.906 --> 00:45:23.366
They're short.

607
00:45:23.406 --> 00:45:24.047
They're punchy.

608
00:45:24.147 --> 00:45:26.549
I think this crypto cycle is harder to navigate than most.

609
00:45:26.789 --> 00:45:28.030
So let's do it together.

610
00:45:28.170 --> 00:45:29.371
Go subscribe to this podcast.

611
00:45:29.431 --> 00:45:32.033
Search The DeFi Report wherever you get your podcasts.

612
00:45:32.093 --> 00:45:35.155
YouTube, Apple, Spotify, or find a link in the show notes.

613
00:45:35.275 --> 00:45:36.836
There's a new episode waiting for you now.

614
00:45:37.096 --> 00:45:37.877
I love smart contracts.

615
00:45:39.718 --> 00:45:44.402
who can help you unblock you the most about certain things?

616
00:45:44.562 --> 00:45:46.284
I feel like maybe there's two directions here.

617
00:45:46.724 --> 00:45:48.426
There's the broader DeFi ecosystem.

618
00:45:49.106 --> 00:45:58.074
So I don't know what this looks like, but Morpho off a Uniswap, maybe they can help you guys make privacy with those systems easier and more accessible.

619
00:45:58.854 --> 00:46:04.399
Is there something that you guys need from the Ethereum community or the Ethereum DeFi ecosystem to make your jobs easier?

620
00:46:04.519 --> 00:46:05.100
And then also...

621
00:46:05.660 --> 00:46:10.002
the other side of the spectrum, the Ethereum Foundation and the actual Ethereum protocol?

622
00:46:10.322 --> 00:46:16.444
Are there like EIPs or upgrades to the actual Ethereum protocol that would also make your guys' life easier?

623
00:46:16.784 --> 00:46:18.845
Basically, how can Ethereum help you?

624
00:46:19.125 --> 00:46:21.746
I can start with maybe the ecosystem, the Deco ecosystem.

625
00:46:22.066 --> 00:46:26.288
So we already know a lot of the folks in this ecosystem, but like, for example, if you're Morpho, if you're Aave,

626
00:46:26.808 --> 00:46:51.017
we're already talking some of them already like definitely talk to us because we'd love to be able to like look at your products and see how we can kind of like basically modify them in ways that would be suitable for very specific types of use cases that could be incredibly large so i think for me it's like come to us talk to us you know let's look at the products let's see what we can do to work together and yeah just like that's that's the one ask i would have like definitely come to us and we'd love to talk to you as well we're very open doors here like

627
00:46:51.537 --> 00:46:52.177
Come, come, come.

628
00:46:52.437 --> 00:46:58.219
And then actually another thing I would like to say is that because we do have public goods, like we basically release a write-up every three or four weeks.

629
00:46:58.959 --> 00:47:04.561
If you've done amazing work, and honestly, this is good for you as well, contribute to our open source repo.

630
00:47:04.881 --> 00:47:07.322
I will tell you right now, the number of banks that look at it,

631
00:47:07.982 --> 00:47:08.963
is pretty large.

632
00:47:09.283 --> 00:47:21.213
So if you have a product, you have a, if you're like, you've made something that's really kind of intuitive or cool, or you've got DeFi protocol, come to our repo, contribute open source, fork it if you want, change it however you want, but basically contribute.

633
00:47:21.333 --> 00:47:22.054
It's going to be great for you.

634
00:47:22.294 --> 00:47:25.097
I would add to that, like, so we talked to like a lot of people in ecosystem and so on.

635
00:47:25.117 --> 00:47:34.044
I think one thing that we've started seeing the last year or two or so is that people are starting to be a little bit more open-minded about like what the users might be like.

636
00:47:34.244 --> 00:47:35.766
And maybe it is partially because of sort of

637
00:47:36.306 --> 00:47:38.488
retail movements and cycles and whatnot.

638
00:47:38.508 --> 00:47:47.255
But I think that's another thing where try to sort of, yeah, be open-minded about like who might best benefit from using your product and protocols and so on.

639
00:47:47.836 --> 00:47:51.179
And think about what kind of requirements and constraints there are, but there are near.

640
00:47:51.199 --> 00:47:55.302
So that's something we're trying to sort of make a bit more public in terms of our privacy market map.

641
00:47:55.322 --> 00:47:58.124
But one thing we noticed a lot, and it's something we noticed at the FIERN Foundation is

642
00:47:58.845 --> 00:48:03.348
There's a massive, massive disconnect in terms of what the institutions are asking for and sort of what the ecosystem provides.

643
00:48:03.488 --> 00:48:07.230
And we try to sort of help bridge those and sort of create a feedback loop between the two.

644
00:48:07.470 --> 00:48:09.411
But it's definitely a lot more work that can be done.

645
00:48:09.472 --> 00:48:11.693
And this is like a ecosystem-wide effort.

646
00:48:12.277 --> 00:48:20.085
One last thing I want to add, and by the way, this is something that Oscar brought to the table, and I think the position that we often have is like cypherpunks in the boardroom.

647
00:48:20.125 --> 00:48:23.648
That's super counterintuitive because these are the two types of groups that normally don't talk to each other.

648
00:48:24.289 --> 00:48:30.795
But what we'd like to be is that bridge where those defaults that could be generally good for humanity have them built in.

649
00:48:30.855 --> 00:48:34.038
But the only way to do that is to get into the rooms that these decisions are made.

650
00:48:34.238 --> 00:48:34.579
Yeah.

651
00:48:34.659 --> 00:48:35.259
One thing that

652
00:48:36.100 --> 00:48:37.160
made me very optimistic.

653
00:48:37.400 --> 00:48:42.301
I was hearing a lot of Danny Ryan's reporting from like inside the room.

654
00:48:42.822 --> 00:48:44.382
And like, Danny Ryan's a cyberpunk.

655
00:48:45.222 --> 00:48:46.682
And he's talking to the banks.

656
00:48:47.603 --> 00:48:50.903
And they're talking the same thing, but with different words.

657
00:48:50.963 --> 00:48:56.045
It's kind of like the horseshoe theory, where like Danny's like, decentralization is really important.

658
00:48:56.245 --> 00:49:00.106
And the inside the bank is like, I want to remove all my counterparties.

659
00:49:00.406 --> 00:49:02.446
And we were like, these are the same things.

660
00:49:03.006 --> 00:49:05.267
And I feel like there's a lot of synergies

661
00:49:06.567 --> 00:49:11.211
you know, the powers that, the needs of the powers that be of the world and like cypherpunks.

662
00:49:11.751 --> 00:49:19.877
And like these things are like coming together and like touching is like completely opposite ends of the like the political spectrum or some sort of spectrum.

663
00:49:20.278 --> 00:49:24.441
But like the wants and desires and needs and products that they're building are actually synonymous.

664
00:49:24.501 --> 00:49:25.942
Is that your guys' experience as well?

665
00:49:26.142 --> 00:49:26.683
I would say so.

666
00:49:26.703 --> 00:49:29.745
And I would say it's like you have a lot of the tools that you use are the same.

667
00:49:29.805 --> 00:49:38.473
A lot of the affordances that people care about, what is individual institutions, they're often very much the same in terms of sensory presence and privacy and open source security and so on.

668
00:49:39.093 --> 00:49:46.139
And I think one of the great things about Ethereum is you can both have people go like, because some people who listen to this, they might be extremely skeptical.

669
00:49:46.159 --> 00:49:48.341
I'm like, oh, you know, Tradfuck, we don't want to touch that.

670
00:49:48.361 --> 00:49:49.282
We don't want to talk to these guys.

671
00:49:49.782 --> 00:49:52.124
You can still have that and build systems that are like,

672
00:49:52.885 --> 00:49:58.928
super cyberpunk, like no KYC, 100% anonymous and all these things and build it on top of Ethereum.

673
00:49:59.769 --> 00:50:00.870
And that works great.

674
00:50:00.910 --> 00:50:02.871
But you can also build these other systems that sort of

675
00:50:03.821 --> 00:50:06.923
have similar properties, but may be designed under different constraints.

676
00:50:07.224 --> 00:50:11.547
Like, for example, the legal framework that a specific company is operating under.

677
00:50:11.927 --> 00:50:18.392
And I want to say that I think people might judge some institutions quite harshly because of the regulations you're operating under.

678
00:50:18.812 --> 00:50:22.014
But if you talk to them, a lot of them, they do things like regulatory arbitrage.

679
00:50:22.075 --> 00:50:25.777
And they also, they're operating in an environment just like any individual.

680
00:50:26.077 --> 00:50:31.682
Like any individual might be like, oh, I'm not going to do a private payment when I buy a cup of coffee because it's not worth it for me.

681
00:50:32.262 --> 00:50:39.888
The same way an institution is like, well, this contract, I'm going to do it in this legislation, this jurisdiction, because that's sort of where I get the properties I care about.

682
00:50:40.328 --> 00:50:43.490
So it's not that different if you think about it from like a higher level.

683
00:50:43.891 --> 00:50:46.132
It's just a matter of like operating in different environments.

684
00:50:46.313 --> 00:50:49.375
And if you can give them what they need, then they're happy.

685
00:50:49.535 --> 00:50:51.296
Mo, Oscar, you guys are doing God's work.

686
00:50:51.797 --> 00:50:52.898
Thank you for doing what you're doing.

687
00:50:52.918 --> 00:50:53.878
I wish you guys the best.

688
00:50:54.239 --> 00:50:59.803
Privacy is still, unfortunately, in 2026, a problem, something that the space is lacking.

689
00:50:59.843 --> 00:51:04.086
And so the more people working on this problem and building towards solutions, the better.

690
00:51:04.386 --> 00:51:09.310
It's probably going to be the biggest unlock for Ethereum specifically that I can think of.

691
00:51:09.410 --> 00:51:11.892
So I'll let you guys get back to work and thanks for coming on the show.

692
00:51:12.465 --> 00:51:12.685
Great.

693
00:51:12.705 --> 00:51:13.206
Thanks, David.

694
00:51:13.567 --> 00:51:14.127
Thanks for having us.

695
00:51:14.448 --> 00:51:15.549
Bankless Nation, you guys know the deal.

696
00:51:15.569 --> 00:51:17.732
Crypto is risky, but that's why we're here.

697
00:51:17.853 --> 00:51:21.237
The institutions have landed, so we are going even further west.

698
00:51:21.318 --> 00:51:22.039
This is a frontier.

699
00:51:22.059 --> 00:51:25.143
It's not for everyone, but we are glad you are with us on the Bankless Journey.

700
00:51:25.163 --> 00:51:25.544
Thanks a lot.