Centralized Insanity: Kain Warwick, Synthetix

Transcript

this episode of Empire is brought to you by quick node quick node is an end-to-end blockchain development platform that makes building web 3 apps super easy no matter what you want to build you can effortly develop any application by leveraging their elastic apis go to quicknode.com use codeempire you'll get a free month on their feature back build plan that's right go to quicknode.com you'll get a free month to start playing around you'll hear more about quick node later in the show this episode is brought to you by synthetics the liquidity layer for D5 derivatives with synthetics V3 any protocol can now tap into synthetics liquidity to bootstrap derivatives markets you'll hear more about synthetics later in the show [Music]

all right everyone welcome back to another episode of Empire uh you guys sawant you got Kane Kane welcome to the shower are we still calling you the semi-benevolent dictator or uh or do we have a new title for 2023 uh I think on Twitter I'm the head of decentralized Finance um someone someone wrote an article about me and put that in I'll take that I've already have been rolled up by by uh you know in some International group of uh of you know three letter agencies yet so yeah I don't know maybe no one takes it seriously yeah the CEO of ethereum huh yeah exactly nice someone's got to do it yeah exactly I'm just gonna go straight for the jugular because that's what people are doing today are is your altitude

you know what's so funny is no right um and and like I think you know like it is funny because there was a long time where people uh in Discord especially were like this has to be resolved like it just has to be like it would just be so good and like there's it's funny because like for a long time I wish that it were but I don't have the capacity to run at all I tried to run an ALT for like a month and I was like this yeah I don't know how people do it like it it all also probably has like multiple personality disorder at some points like actors like snapping out of like roles like you know it was fun it was fun because I got to say [ __ ] to people that

like sometimes [ __ ] what's wrong with you but then I'd be like oh I promise to be a little bit Kinder than that um yeah and then I was just like look this is too hard I can't maintain this yeah just can't maintain that so I I have to I have to hang it up okay so I'll take that so yeah so I mean it's great having you on because you have probably you've been around uh in the space and as we think about everything that's going on recently um you know D5 has been in a bear Market talk about DJ Spartan he loves to tweet this chart of D5 versus eth and how it's like exactly he loves maker but just D5 likes as a composite has just been really in a

brutal Trend even before Tara even before like three hours all that stuff and now it feels like maybe you know with all the backgrounds happening with the binance stuff happening centralizing exchanges kind of taking a big hit it sort of does pose the question and maybe this is a central theme of the episode is so what does that mean for defy like does and synthetics has had some recent actions um and historically synthetics has sort of been kind of the leading the charge of the next run um and so I'm kind of curious to get your thoughts on everything that's going on I think just on that point of like synthetics leading the charge right like you know D5 summer it was compound launching a token right

um and you know leveraging yield farming right uh to really you know get like attention right um and both of those things were you know kind of synthetics Playbook you know things right like you know I mean the holding off and launching the token later I think that was something that I think everyone thought compound would do but um you know juicing up the TBL um because that was the game at the time right juicing up TBL was the name of the game and compound just hooked up that you know synthetics level Playbook and said okay let's throw a bunch of tokens at this and see what happens right um and you know it was incredibly effective um and that was kind of what launched by

summer right um but you know for all of 2019 um and it's funny because like I literally compressed 2019 and 2020 um about a month ago and I was on a podcast like I literally forgot to beat my summer it happened in 2020. it seemed like it was all very quick but you know synthetics uh launched yield farming and you know the inflation Supply and all the stuff in 20 early 2019 like March April 2019 um so it really did take a year right um so then the question of like okay well you know what was it that allowed this kind of deep eye Resurgence and I I think you know it was all of those games there's all of those like you know kind of early PVP games that people you know got excited about and there was

something interesting to pay attention to again and it was within the context of a series of projects that were doing things that were actually functional you know compound you could borrow some lend slash Ave you could you could borrow stuff make her dials working you know like it was scaling up like we hadn't yet hit any scaling walls like all this stuff was actually working but that wasn't enough to excite people you also needed the like crazy you know uh kind of incentive schemes to get people inside it I would love to get like your perspective on like how far synthetics has come over the years and what has perhaps been some of the challenges that haven't been possible or weren't able to be solved maybe until recently

um if there are any I think in short all of the challenges were not possible right and we're not even sure if they're possible yet like that's the fun thing about synthetics right is that like it is very much this like experimental concept uh doing something that is incredibly hard right and you know every time we get close to finding out that some component is working then we just push the envelope further it's like well okay let's try this right and I think that is one reason why synthetics is kind of perpetually interesting right even if it's not potentially working or perpetually you know generating revenue or doing

whatever it's doing like it is always interesting because you know it's a set of really hard problems that we keep solving and the other thing I think is that we rope other people into helping us solve them right like you made that point about um you know uh yield farming like we we roped uni swap into that right like we said hey unisoft's here and we need liquidity as an alternator like rather than trying to do it ourselves like let's bring you something and you know we were the largest uh you know um pool and unusual for like nine months right now that obviously paid off for a lot of people with the unusual paragraph um you know but uh but things like that where you know we take uni swap or chain link or like some other protocol and say

like okay let's work out a way to help you know to bring that thing and help us solve this problem and so you know it started off with like a really simple thing of we just want tokens that represent things that copy on ethereum so Bitcoin right gold silver oil you know FX currencies and USD is included in that right like that's the that's the primary one like USD is not a blockchain concept right USD is a real world concept and we've tried all kinds of ways to bring USD on blockchain that was the first synthetics problem you know even before synthetic one was Haven so all these problems have been like okay how do we how do we do this so it was like all right let's tokenize real world assets and find a way to represent them

on the blockchain um on ethereum specifically um then let's let people exchange those tokens right and like find a way to do that right and and you know then let's find a way for people to get leverage let's find a way for people to you know get margin trade let's find a way to like do a potential future so it's always like kind of pushing the envelope um you know and as you push further and things get bigger you find cracks in the the old system and you're like oh right okay actually that doesn't work at scale like we can get it like same thing as maker I like dye looked amazing the first 100 million dot right it's like this thing's gonna scale to a trillion dollars right then you're like oh actually no there's a problem here like it's not that capacity of deep blending

Etc and so you know this is what all of divine is about just keep you know pushing push and pushing you find a new problem and you're like okay and you know it's one of the reasons why yes um synthetics also uh has struggled at times because when you're in the midst of the the solution side of one of these high problems it can look like it just doesn't work right and it's really easy if you're a pessimistic person be like well this thing's dumb it's never gonna work right the amount of people who said like you know uh being the counterparty to all trades will never work right and like it didn't when you looked at it back then like it actually didn't work you could see the fundamentally it didn't work but conceptually did it not work right and that's the thing that

people you know kind of pessimistically assume but actually conceptually it does work when you have Perpetual Futures and you have you know these funding rate mechanisms that kind of keep the SKU in line and all of this stuff and so suddenly we're now two years down the road it's like actually maybe it does work [ __ ] that would be crazy if that works yeah that's such a good point I think you guys were critical in key pieces right when you think about like synthetic assets you need a really good Oracle and I guess you were for adopting chain link and the success that they've had then you realize well it's really expensive when you're doing a lot of frequent transactions in an L1 environment so that I guess pushed you to then think about optimism or an L2 solution like optimism

um I wonder like from your perspective I guess you do have a really good vantage point on the infrastructure deficit or the state of the infrastructure of ethereum and other l1s which I know you've been really kind of critical on or just have stayed away from from them um and you've been pretty vocal on that um what are what's your latest kind of thinking on where is ethereum today you know and the more concrete answer is people look at Define say okay great you built all this stuff but there's like 10 users like why are we gonna actually see millions of users and so I'm curious when do you think that's gonna happen yeah I mean I don't want to jump ahead too too far into the conversation because I know you know we're going to

talk about uh centralized you know Insanity um later so I'll leave I'll talk that for now right uh but I think you know at a fundamental level um ethereum is the original you know rolling experiment right it's like hey you know I think you know this vitalik in you know whatever 2013 um you know I think we can uh build a thing that can execute you know small contracts on chain right and the amount of people who said like absolutely no you can't right and you and certainly you can't do it that way and certainly you know this and certainly that and you know there's it's weird right how many people are in crypto who are super

pessimistic right and and I think it's incentives they intended to be pessimistic once you're in crypto and you've got something that's working if you're a Bitcoin Maxi and you're sitting there on your pop digital gold it's really easy to be like no nothing will work you're all done and like look at this pile of digital gold everyone focus on that thing right that's my thing that I'm I'm excited about um but it you know when you're when you're pessimistic you're just trying to you know shoot holes and things um you're right most of the time because most things are really hard in crypto and you know most things are hard in startups and those things are hard in life and a lot of things fail and so you're going to be right but you're gonna miss out on the fun of you know hey can this thing work and how do I get

it and solve it and so when you look at like ethereum ethereum started off and you know I remember sitting there in 2017 in Mexico the metallic was like proof of stake like you know like the murder like there it was just like we're almost there guys six months and we're gonna nail this right and obviously we all know that that turned out to not be the case and that's not a criticism of anyone that's just the world right like the world's [ __ ] hard and so when you set up to do really hard things it takes a long time right and so you know ethereum scaling has taken way longer than we expected and you know I've said this many times that the fact that it took longer left a window of opportunity you know we can't pick on some level when the Cycles happen right

um and if a cycle starts to to ramp up before you're ready you're it's going to be bad for everyone it's gonna be a bad time for everyone right because the the market will fill the Gap right so either you can turn up and be like well hand wave [ __ ] whatever it's going to be fine or you can be like actually you've still got really hard problems that we don't know how to solve because you're being honest about the problem and someone else turns up and says hey like I've got a computer over here and it does 30 000 TPS right like and it's decentralized don't look over you know whatever right like and that person is going to win on some level right because they're selling something that's really easy to to you know kind of get for the average person turning up and they're

like no no my thing is going to win the computer in the back room is going to win right this ethereum thing's nonsense it's not going to work um and so I think that that has been you know an issue for ethereum a couple times and it's been an issued for a d-pod and for synthetics that like we weren't quite ready to scale up when the market started you know ripping up and people absent a genuine solution will look for a you know shitty not real solution because they want something they want an answer Ken do you think that's just a what ends up happening in all these crypto Cycles though is like bear market ethereum wins ethereum things get built ckevm L2 those kind of things get built in in the in the bear Market bull market happens value gets kind of attracted to those

things in the beginning football Market but in the latter half of a bull market you get things like all l1s and like other ideas and like that's the sexy thing that gets the attention and then we have to get to the other side of the bowl to realize that it was ethereum all along or do you think that like or do you think that changes in future Cycles I I think there have been a couple of reasons why the altel ones you know if you look at the original Alto one pieces was like eels right you know and like we kind of we left we left that door open like the amount of people that I had in like 2017 2018 were like you cannot believe how good he else is it is so amazing and it's like I mean I mean I still remember

you guys were like at some point we're looking to like partner with them we were looking at going on there because we're like everyone's saying to us this thing's amazing like maybe we're the idiots right like we had so many people that were like no he also like I was like oh okay so we spent six months you know uh like um JJ who ran engineering spent six months looking into it and this conclusion was this [ __ ] nonsense this is a guy I would come from mongodb and you know was the director of engineering there and he's like this there's no Engineers here there's no structure there's no they don't like this is like ethereum is bad don't get me wrong ethereum's bad but this is nonsense right like and it was like all these people that were talking about how he also was going to be this amazing

thing either had no credibility because they hadn't looked into what it was or how it worked or how it was structured or whatever but they were just talking their own bags basically I mean so like maybe but put a pause on all this stuff I'm just kind of curious to get your perspective how does a company like block one the guys behind EOS managed to raise four billion dollars and like from like really good investors for like this this was going on for like a year and like how do they pull it off I mean to be fair you guys probably Mark the top of the Ico Booth like you raised up it was a 200. 260 million no 30 30. 30 million sorry off by an order of

magnitude 30 million but it was like the fastest sale which was yeah a lot but like how does EOS like raise this amount of money and no one ever like dig deep like you guys did well there's there's two schools of thought on that right like one is they actually didn't they structured their uh sale in a way that was you know an ongoing year-long thing right um and they were able to just recycle funds back into it and just buy more and more of them which meant that they control so much of the supply they had a whole bunch of like civil wallets and you know that theory has been around for a while I don't know if you'll ever be able to disapproval prove that they that it was legit but crypto in crypto it wouldn't even surprise me if someone

came out and said actually it was all legit and we've got all the people and we just got like a document that says here's all the people in it you know this is how the money got in like it wouldn't surprise me it would not surprise me if it was totally illegitimate and it was just recycled funds and they really raised like 500 mil or whatever um but you know towards the end of the Ico boom in early 2018 you know I mean what telegram Race 2 billion or something like let's and I say this a lot right people are like oh two billion like that's not that big of a deal because people I think actually get confused between raising two billion dollars or raising four billion dollars and a four billion value weight right like those things are not the same thing if you raised four billion dollars

your valuation is like Infinity right like like it's like nonsense like no one's ever raised four billion in around Africa like it could be the largest race in history I don't know like I just can't imagine you know outside of like some huge fund right like someone for an actual thing that people are going to do raising four billion dollars absolutely lunacy right yeah um and so so like you know why does no one look at this stuff because of fomo you know I mean realistically if you experiment with the mechanism for people to put money in and there's promo I remember being in like Decemberists in 2018 and everyone we're in this car and we're like coming back from like a dinner or whatever and all of these species were just frothing over Telegram

and I remember sitting next to this guy and I was like no like God it's like what are you talking about like even if this is amazing how are you gonna put two billion dollars into it and have this make sense right um and you know that's a different story obviously yeah a lot of stuff happened I mean um you've seen this movie play out before Oh again okay no just one one more point on these like going back to what we were talking about earlier with the kind of like alternative ecosystems outside of the youth because I think it's unfair to say that the things happening today are like EOS and I know what you're saying but I do think like it's unfair to compare something like uh I don't know the cosmicellana to an 800 it's ten times better yeah so I'm curious that's why I

said like that was the original right right right I'm curious to just get your view on other ecosystems like in your mental model for this world and then crypto like is there anything in these other ecosystems and is there anything of interest there or you're like look the world will be built on Ethan that is it look you know there's a whole uh ecosystem of you know people you know I mean not anymore but like you know people could even like phono lessons right like Windows phone like you know Microsoft was able to like Pump It Up money into that that like people came and turned up and they're like we're building exclusively for Windows phone or you know whatever so like there's always going to be activity there the question is like is it sustainable is it the best activity or the best people doing it like does that

make sense right um and so of course the Alltel ones have gone much better no question like EOS was a dumpster fire and like you know Solana like you know they've got challenges or whatever they're making trade-offs that I don't agree with but like it's a real thing they've got Engineers there so so you know this is not to say that like you know everything is eos all over again it's it's you know um it's definitely better than that but the reality is that by eight building out in the open the way that it did by being honest about the challenges by being honest about you know and like I said the eve Community being honest about like you know the issues that um remain to be solved right it was so easy for someone to turn up and be like oh we don't have any issues remaining to

be solved we actually solved them last week so you know dump a bunch of money into us because we're about to just you know run past it here and ethereum is kind of like and you know there's there is this thing if you go on crypto Twitter especially in the bull market where like ethereum people are losing their minds they're like why are we being honest with people like how can you compete when you're being honest and it's like you can you just compete in the long term and it's just one cycle and you just let it go you know so when the guy's like no no like we solve that technical problem last week and here's how we solved it um and just you know look over there right like it can be frustrating but you just have to accept that that's just the

market the Market's gonna do what it's going to do yeah so I want to transition a little bit because you know other than building synthetics are also very prolific investor uh you know certainly things that you want to be see built so like what is it that you're most excited about um in crypto right now like things that perhaps haven't worked but will work or they thematically really excited about that you think are really going to take off the next cycle I think this is the the kind of point of all of that stuff would have sort of leading up to is that like ethereum is basically there now right like at least to the extent that we can see like we've gotten we have actually solved the problems right like even proof at stake

that was a long time I was like oh proof is taking all real things it's never gonna happen right even though there were other proof mistake you know systems that existed like the idea of ethereum transition from proof work for State people were just like now it can't happen right you just sit there and be a pessimist and shoot holes in that but the reality is that it has happened and you know then it's like okay we'll move on to like emerge is never gonna happen and now it's like we're withdrawals and everything you know this next thing is never going to happen but it inevitably does and it seems to me like ethereum with the current setup that it has with multi-client teams with you know really good incentives to work hard like it's working better than it ever has like the decentralized coordination component of

ethereum is 10 times better than it was 0.17. it just like it's just you know empirically obvious right and so now the question is okay like can we keep this momentum as the ethereum ecosystem into the inevitable next bull market and my sense is yes and so like you know to go back to your question like what's the difference you know do we always end up with this like frothy nonsense at the top yes there will absolutely be that but if you give people a reason to go to BSC because the transactions are a thousand times cheaper right people will do it right if you go you know if you give people a reason to go somewhere else in the middle of a bull market they will I think we are the closest we've ever been to not giving people a reason to leave

ethereum this cycle I think there will be you know really you know there's always there's always a reason one of the reasons is that if you can go and buy a thing for one cent and pump it to you know a dollar right like that's a reason so that reason will never go away so there will always be frothy nonsense but the technical underlying architectural reasons and like user-facing reasons I think we're close to removing that reason for people to know someone else and what about the um can we uh were you in Denver at eat Denver or did you no I wasn't no I haven't been traveling much I talked to Santi about this the other day but a lot of the um this the discussion in crypto today is very hardcore infrastructure still so if you looked at like all the folks in Denver it was um it's like very

little of the Zeitgeist is dedicated to things that people want to use it was like CK EVMS and like wallet infrastructure and stuff like that staking different staking mechanisms when does that when does that shift over to things that people want to use are we are we multiple Cycles away from that no I think we've already got this stuff that people want to use people want to use derivatives they want to trade like if we look at the main use case of crypto it's you know people want to trade crypto right like that's the main use case the other use cases I think will kind of emerge out of that one or when that's called right but we can genuinely do that in an essential life way and that's when D5 will win right and that you know again not to like Jump Ahead to the conversation but I think

that's where we're close to doing now why or why is everyone focused on infrastructure because all of a sudden infrastructure is working for the first [ __ ] time and so people are like oh wow this is a thing that actually you know like before they're like oh maybe we shouldn't work on infrastructure because you know uh some guy with 500 000 followers says you know ethereum's dead and you know everything is pointless right and now people are like oh wait a second like infrastructure is a way you know there's still unsolved problems here that we can that we can solve and there are but the the Gap is getting smaller I think right you know we've got an ecosystem of l2s now we've got you know there's stuff that's kind of filling those gaps that used to exist within the ethereum ecosystem and so it

will get harder but there's no question that like well there's a whole bunch of unsolved problems still yeah like on that point that you could argue that like we're now in an infrastructure Surplus point where like yeah you know could like transactions are now one super cheap on ethereum and if there was a time where we complained that it cost the car and a half to like would do one transaction uh and like L2 feet like like arbitrum optimism combined Like You could argue there's so much capacity the question is like you know again like what is it going to take to onboard millions and millions of users I know it's like a loaded question because you can go in so many directions but like what is the first thing that like comes to mind as like the main challenge

that we could be focused on it's a community you know it's an interesting question because even still yeah I say we have working l2s right we don't really have working l2s now I'm going to put my honesty hat on right and say like we don't and you know that's going to leave the door open for some [ __ ] idiot to waltz in I guarantee you in you know 2024 and be like I've got a working L2 it the sequencer's decentralized yeah like they're like they're gonna just say like we've got all the problems they're all solved in the back room just not going back there right now but like trust me they're all solved and you know like sometimes you're just describing side chains here sir will reinvent themselves as like some

other thing there'll be some memeable name that they've like got that's like slightly better than else who's and they'll be raising 100 million [ __ ] dollars I promise you this will happen in 2024. um and so you know like to to go back you know we we don't have decentralized sequences yet right that's going to be a hard problem to solve right right um we don't have you know uh full proofs right like or we do but they're you know like there's still you know issues with them or whatever um we don't even have an optimized data availability layer in L1 to the l2s right like that's still you know like this they still work to happen there right um you know the Zippy's uh coming that will make that even better right um you

know this fundamental architectural changes that need to happen in the L2 so like you know we say we've got working LTS we don't really we have significant scaling still left in the current l2s that we're working on um and yet I would say if like you know five million people turned up um you know in a month's time we would accommodate them so much more effectively than we did last cycle all right quick break from the show there is this kind of overused cliche saying in crypto but it's true bear markets for building and everyone tells you that never knows it what people don't know is that if you're building apps in crypto and building apps in web3 without using quick node

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free hope you guys enjoy it all right folks it is time to talk about one of my and a lot of your favorite D5 protocols synthetics synthetics has been pushing the limit in D5 Innovation since 2017 and has just started its most exciting transition yet with synthetics V3 with synthetics V3 any protocol can now tap into synthetics liquidity to bootstrap derivatives markets the transition has already started with synthetics perps synthetics perps Taps into synthetics's liquidity layer and is a new primitive that developers can leverage to launch defy derivatives the perps product has been going incredibly

well so far hopefully you've seen it it's had some great traction hitting 500 million in Daily volume this March we know that liquidity rules defy and synthetics is becoming the modular liquidity layer for D5 derivatives as a Trader you can trade synthetics perps with low fees in over 20 different markets at Quinta dot IO decentrics.com and polynomial dot Phi and this opportunity set keeps growing with 10 new partners in the pipeline ready to launch Integrations on top of synthetics including front ends Structured Products and institutional offerings the team gave me a sneak peek of all this stuff it's really cool would really recommend you check out synthetics.io forward slash perps to learn more and if you're

looking to build on synthetics pop into their Discord server reach out to the team directly make sure to tell them that Empire and Santi and Yano sent you again synthetics.io4ps you can also hop into the Discord server and reach out to the team directly transitioning a little bit into kind of what needs to be built the first obvious thing is there's been a lot of wreckage in the centralized world partially because not because it wasn't a good business model just because of terrible mismanagement like it's like people that are have no experience in finance or risk management just kind of blew something that was actually pretty good do you think that all of that eventually transitions into a decentralized context now that we have all this infrastructure

yeah so you know it comes back to in my mind a very simple thing right the market will solve a problem so the market will solve a problem it will solve it in the most kind of efficient way that it can right like that's that's what markets do right um and so if the most efficient way is to just centralize everything right and take all of the benefits of the technology and remove them right um then the market will do that and every single time we've gotten into a bull market we've been forced into that because we haven't had the decentralized technology we've had a little bit and so people you know will kind of play in the decentralized land a little bit right but the the primary demand in a bull

market is trading crypto that's just that's where the demand is going to come from right and so if you can't trade crypto in a decentralized fashion um like you couldn't in 2017 so zero percent of you know activity I mean that's not like either Delta or whatever like .001 right of of you know uh transactions happened on decentralized exchanges right I saw a chart a couple days ago but it says it's like 15 or 20 or something like that of uh exchange activities happening on decentralized exchanges now I think Hayden posted about you know uni Swap and a bunch of like that's the that's crazy like there were people that said that it will never get above one percent

it just isn't even possible that you can compete right um and so I do think that we are going to see people are going to want to trade crypto again we'll have a mass influx of people who want to trade crypto and we are in a position now where the way that they typically want to trade crypto over time is like Leverage and margin et cetera they won't be like bitmex invented you know the Perpetual future and that's the thing that is the most efficient way to you know express your desire to trade crypto I don't think that's going to change in the near term um and therefore we need to centralize versions of that we weren't even close you know uh in 2020 right no one was even close yeah we're pretty close now um it feels like we're pretty close to that I think by the time there's a lot

of demand we'll be very very close and the key thing is that you need to have multiple solutions for something right too many times in crypto especially in centralized Finance we've only had like one maybe two options and I think when you have one or two options in in a decentralized solution and then like 50 options that are centralized it's really hard to compete even if the two are quite good um you know so that's that's one of the things you need like a flourishing ecosystem of options for people to use well speaking of options it does feel like that is dwindling down in the centralized land there's certainly more regulation coming in the U.S like on-ramps liquidities really dried up You could argue potentially coinbase is a viable business could be impaired

um how does that what does that mean for crypto or so like especially decentralized Finance so I think it means probably a couple of things one you know the regulatory Arbitrage payoff increases right so you know finding some jurisdiction you know some banana republic or something that you can you know turn up and and buy out the entire government and set up your crypto you know Paradise of centralization there right um that payoff will will be much higher um than it was even last cycle right because the the Delta between you know coinbase or Kraken or like a you know an exchange that's trying to do the right thing that's you know in a in a you know

same ish jurisdiction right and you know some place now you know in the asteroid somewhere right you know out in um uh in space is going to be significant right because they're just going to be able to do things that those other changes won't be able to do right they're going to be really you know fighting with both hands slapping at their back um but we have an alternative which is decentralized finance which is its own version of regulatory office right now right now um and so the the you know the Delta of using a decentralized exchange that can give you everything you want as a user versus using you know centralized exchange is going to compress in a way that it never has right and so I think we could actually see like a

Bible you know ecosystem of exchanges to centralize exchanges yeah I think uh all too many times like there's some regulatory action then it gets crypto gets bundled all together right and there's not enough Nuance I do think that there's understanding at the working group level of these agencies but sometimes the Press mainstream just sort of like looks at it's like all of it's bad you know and unfortunately that's kind of the state we're in so early um but like if a regular regulator approaches you tries to understand what synthetics does say the cfdc or whatever and like if you look at like the issues that they're bringing up against some of these centralized players You could argue and I'm curious if you agree with this

that like why wouldn't you want to have a totally transparent system that the counterpart us is very well understood the like the level of permissions that you give a smart contract or whatever counterparty are very well defined and so you don't really necessarily have these issues that have existed in traditional Finance for so long which are largely a result of there's no transparency just people don't there's just sort of this like trust us I promise but don't look at the charts just today for instance as an anecdote you can't like CNBC you can't now look at credit default swaps for most banks so how crazy is that so you try to look at the CDs for Bank of America no longer

there folks turn away go elsewhere go for a jog like you know I mean like so anyways back to serious question do you think that we'll ever get to a state where like a regulator appreciates that do you think that they care I'm just trying to understand how perhaps Can it can definitely like work its way into the traditional system which is just a [ __ ] so I've thought about this a lot and you know I've talked to some other uh founders of you know deep eye projects and and you kind of scratch your head a little bit and you're like okay well you know these are obviously competent people right like you know it's hard to get into a position of power in the world right like there's this you know game where you have to beat other people

now maybe you're optimizing for the wrong qualities or skills in a person right um but it's not easy to become you know the uh head of the cfpc right or you know the head of the SEC like that's not an easy thing you can't just turn up and be like hey I'm Jimmy and I'm gonna run this place right um you know it takes a lot of work and time and effort and um so then you go okay well like these are obviously competent people they're obviously intelligent people where is the misalignment and I think the answer is that they are you know to go back to this like pessimism thing they're skewed maybe pessimistic right they're like we have a solution to this problem right the solution is oversight

that's that's the solution right like we don't need to remove the need for oversight we've got oversight look at rules and we've got rules and we've got people that can go in and look at your you know manila folders and go through them and highlight them and you figure it out it takes 10 years and it's you know slow and clunky and allowed for a bunch but we've got that system right and they're just pessimistic at a fundamental level that you can solve this with technology that like oversight can be like you know removed as a necessity because you can have things that are like transparent by default so I think if you talked against like you just say like you know you're you're this is like a kind of misdirection where you're building something that

won't give us this thing because there's a fundamental level of pessimism that you're not going to get this oversight and by saying you're going to give people oversight you're finding a way to like kind of skirt around our Riverside which is the only way that the world can be sure that this thing works and I think you know everyone in crypto or at least a lot of us in crypto who believe in the technology and understand you know why it's a better solution to this coordination problem of you know you either need oversight or you need transparency I think we believe that the world will get this eventually right like this is not like we will win this but at the moment unfortunately the people you're you're trying to convince are people that have been playing this

game of I want to be the head of the SEC for who knows 30 years right and they like the start of that career if I want to be the head of the SEC there's no such thing as transparency right like everyone's a bad actor and you gotta have oversight or whatever so like that guy needs to die basically right before you know this is like the structure of Scientific Revolution so I like this idea that like the people who are in charge now grew up in a paradigm that just doesn't comprehend what we're trying to do and you know when all of The Regulators you know who are 70 80 years old you know kick the bucket then you know some new person turns up who knew that crypto was a thing the whole time and they get it and they're like oh okay

Innovation happens one Death at a time right that's such a good point I feel like regularly just by default are pessimistic because yeah I know non-transparent Financial system with like you have to kind of assume everyone's like evil uh brings me back to something you said earlier about efficiency that ultimately consumers value efficiency and the market sort of like that's how you win the market do you think that well we're undergoing sort of a paradigm shift with this backgrounds that for now people kind of really wake up to this idea of like oh I actually now understand what happens when I deposit into a bank and then that eventually no do you think that is that too often this is this is where I'm pessimistic right like I'm pessimistic

that the average person that we're going to be able to educate everyone into caring enough about what we hear about right um that they will be like oh I get now why this is a good thing right right like you know there's a there's a battle in the market and the battle in the market is like you need to be the most efficient you need to be uh you know the the cheapest best solution or whatever you need to be 10x better than the incumbent and then people will use you people are never going to care how you did that like a small group of enthusiasts will care the average person doesn't care um and so you know people right now hold up about Bank runs you know in two weeks time it'll be you know whatever okay so again what will make do you find a 10x

better better experience than opening up a Robin Hood app and trading so this is this is something where I think we in crypto including myself were overly optimistic about um you know I I tweeted about this a little while ago that like if you want to uh decentralize a NASDAQ um doing it at this like guerrilla warfare is just not gonna work right I think we kind of thought I kind of thought like maybe that's where it was worth a try right like let's see if maybe we can like go and decentralize the NASDAQ without them noticing um I just don't think that's a thing really um I think that what we need to do is decentralize the things that we can and

show that the the Delta between the things that we can decentralize and the stuff that's not decentralized and you know this is kind of crept into the zeitcast a little bit there are people like that wait a second do we really need to shut off creating you know uh every day like what if we had continuous trading or like do we really need like three-day settlement what if we had one day settlement so like when you when you put some Market pressure on something all of a sudden people are like oh actually maybe there is a better way of doing it right uh it's going to take a while I think before we decentralized the NASDAQ but I think we can get efficient decentralized trading of old crypto assets like let's solve that problem first and then we can start talking about equities and things like

that I want to get your take on stable coins I know synthetics has its own susd it's been around for a while and that feels like the Achilles heel here of D5 like talk about efficiency like people don't care they'll just use tether and usdc because they work right and they have the best liquidity what's your vision for stable coins yeah there is a visit right that um was kind of I think probably Arthur Hayes was the first one to espouse this that like there is a better decentralized stable Point than what we've got now right um which is basically this like faceless trade Perpetual future backed uh you

know Bitcoin in this case Bitcoin I mean it still hasn't quite cut off the Bitcoin vaccine train yet but you know we'll get in there eventually um and you can slowly slowly uh slowly migrating uh to the promised land uh but you know the idea is like okay use this this you know asset and it's the most deeply liquid 24 7 market and like basically construct a stable coin that uses that as its backing there's a couple of issues with that right one is that you know Bitcoin is natively on ethereum blockchain and obviously the stablecoin needs to be underneath your blockchain so you've got a couple of you know issues there so I think his solution is like you go and look at like centralized exchanges Etc like again he's not quite you know like we can't be looking at centralized changes as a way

to build a decentralized stable coin right so the the alternative is okay we'll get Perpetual Futures right Perpetual Futures that are running on decentralized exchanges aren't eat natively and use them as underlying collateral have this like basis trade that to me makes a lot more sense we're not quite there yet we're getting close now whether that will even work is kind of an open question like is it even I think that's viable like but it may be and we have the technology to test it now I think we're getting close to being able to test it um I think one of the other potential Avenues um is uh you know like just a central pack digital currency comes along right

um maybe for you know um uh like Australia is even playing around with this right so like it's you know even like thought about like okay what if you use something like that which kind of you know it's not Australia's not as neutral as say like Switzerland you know it was like um you know a cbdc you know or CHF or whatever but like um you could potentially use that as a way of uh collateralizing something you know provided like the the issue Works incredibly neutral and it's like backed by Central Bank because like fundamentally you know what do people want that what are people worried about that on there the ones that worried about like how safe is the cloud right and you know a central bank digital currency is fairly safe it's

certainly safer than where the money is with tether or Circle right um right now you would say you know um yeah because it's issued by a central bank right like it's narrow banking with Central Bank like I think the US isn't quite there yet but like it's possible that you know some some smaller Nations that are still in the G20 or whatever could start playing around with the stuff and that could end up being like pretty useful collateral so there's there's still experiments to be run you know on like how do we collateralize the stable form something I know you have a couple other questions I saw your Tweet out about uh my FTX is the greatest thing for D5 so I don't know if you and like you mentioned this these two words centralized Insanity earlier I don't know if you

covered all all the all the things you wanted to mention earlier but I did just want to dig into that a little more with you well I think there's two things right you know every cycle uh people again this is default pessimism right people like well No One's Gonna Be able to you know supplant X like poloniex right like in 2016 or whatever I like people like paulos like dominant and you know okay coinbase as like the U.S market blah blah right um and then it was like you know and then Finance kind of came and destroyed everyone right and people were like how is that possible to finance in like 11 months or whatever it could become the dominant exchange it's like well they just listed every [ __ ] coin right like that's a very obvious Playbook right like they did things that

no one else is willing to do and you know that people want to trade and they'll go you know they'll eventually migrate to the place which is later in the trade you know the stuff that they want to be able to trade um but then I remember like vividly in 2018 well that's the last time that anyone could ever Supply you know like become the biggest exchange like Finance is it and it will be to the end of time right and then you know this like scrappy little uh FDX thing pops up right and people are like huh okay now they've got like Perpetual Futures and they've got all this stuff and you know they started like taking on like a whole bunch of things right and gave people leverage or whatever now you know who knows how much of the

customer acquisition costs were like you know subsidized by the customer's own money well I mean we may never know the answers to that right like you know if you're just losing money constantly to people like they're probably gonna migrate to your exchange because everyone's like this is the greatest place to trade ever right so you know we don't really know how much Alameda just leveraging money to all the Traders on FDX was was a driver of growth um but the reality is that we are now in a situation where there isn't really a dominant like there's Finance right but I mean you're buying felt their own problems right uh but binance has already been beaten by the last guy but then the last guy blew up and so now it's like well we

know it's gonna be beaten right so then it's the question of like who can beat Finance is going to be a centralized exchange well maybe binance can be beaten by decentralized exchange or a group of decentralized exchanges or by the regulator or by company I'm sorry speaking of that what do you think of Base yeah that's a good question um I think basis is interesting you know when we talk about ecosystems right we're going to have an ecosystem of all twos right and base will be in that ecosystem now right and base has a lot of just to be clear like coinbase is L2 that is based on op staff right um like they've got a lot of customers

right you know they just do um so uh you know um taking the best tech stack arguably right um for an L2 and jamming a bunch of customers in there is definitely a Playbook that you know could work really effectively right um then it's a question you know I guess from the optimism side of like how effective is the Super King concept of like a chain of chains where you know everything kind of falls down obviously you know basically talked about not launching their own token um you know we've heard that story a million times themselves themselves yeah exactly yeah so you know

um so I think we need to take that with a grain of salt on some level uh but you know because I still believe that you know absent a token it's hard to coordinate something in a centralized way and you know coinbase may not have figured that out yeah but whatever right like you know we'll see what happens there um and so you know you now have like three or four different uh l2s right and then you know the ZK stuff that's coming around like there's a whole bunch of things that are ready to accommodate a lot of customers and a lot of them already has a bunch of customers it is the the most you know kind of viable customer acquisition strategy just transfer them from your old Tech to your new tech right without you know hopefully you don't lose too many of them on the way

over yeah do you think that something like that is what sparks the next Bull Run as compound liquidity mining program did for D5 summer it certainly seems like it could be uh you know of all the things that could spark that right um you know just dumping whatever you know tens millions of customers into an L2 and being like hey look at this thing isn't this cool right you know um I think that that could work but to go back to you know the earlier question about like infrastructure right um that only works if you've got like solid wallet infrastructure and you know ease of use of like all these different

things like in you know um you know socialize recovery and now maybe base because it comes from a centralized parade placement's got kyc and has customer information like maybe there'll be some ways that can like be a hybrid you know certainly a hybrid centralized decentralized Network right had some advantages there's a lot with BSC right um you know so bass will have some advantages I would say right that you know it's got It's got user information it's got some stuff that it can do um so it's going to be a very interesting experiment for sure okay last time you're on Empire six months ago um we started the conversation by talking about like in in each cycle there's a different metric that people care about so in 2017 the metric was um amount of money that you raised in 2020 it was tvl

and your thesis at least six seven months ago was in the next cycle it'll be cash flow that the protocol is actually spitting off what what do you still think that seven months later yeah absolutely I think you know that's only embedded down more right like you look at um you know we had crypto fees back then D5 llama now has you know their own version of that there's other people that are building it I do think that like llama you know started as like a you know sort of competitive pulse right which was a tvl dashboard I do think a dashboard that just focuses on that one metric you know is kind of a selling point people kind of kind of go to it and now

everyone's weird things it's obviously a harder thing to track than other people you know do a contract calling it's just there right um so there's some Nuance about how you count things so um it's not as easy it's a little bit a little bit more of a sophisticated metric um uh but I do think that people are coming around this idea and sort of seeing it as a place to compete yeah do you do you ever think about optimizing like when you were when you and the team in the community are building synthetics and folks are building on top like how much does that sort of belief about what folks will value in the future dictate how you build a product I think

that revenue is the real benefit right this is the difference like this is where we're kind of getting to a point where like it's no longer nonsense right like TBL was kind of nonsensical right but it was the only thing we could track there wasn't anything else to track now it's like well we can track Revenue like that's the end game right you need to be able to generate Revenue but until you can generate Revenue right but now it's like no like if you hold this token you get this Revenue how do you think about um that's it I was gonna I mean as someone who thinks about like a block Works building dashboards that could track fees and things like that like one thing that we're talking about internally is um you know not all revenue is treated

equally just like not all tvl is treated equally so like like using uh uniswap revenue for example like do you count all of unit swaps Revenue do you only count Revenue that they eventually probably send back to token holders like like or back to the back to the protocol like how do you think about Revenue across you know different protocols and different projects this is where I think you know the Nuance comes in right because it's real right you don't need new ones when it's a nonsensical game that everyone playing against each other right like even within TBR it was a little bit but really it was just like how things are in there right you know maybe there was like take out the cut the token um you know the internal token of the project like carve that out maybe that

was the only carb out of like oh well let's go and count the projects token let them account like eat but that didn't even really work that well right like I remember deep on pulse had like a just show me like the eighth amount that's locked and everyone's like ah [ __ ] I don't care about that I want to do the Top Line number right has 10 billion or whatever so um this is a much more nuanced question and it'll be up to the dashboard I guess probably to set those expectations right and try and be be neutral um and again it's now like a market problem right like if one of the dashboards makes a bad decision and starts tracking something that's really gamable and everyone games it and they don't follow it to try and fix that then someone else will probably pop up and be

like well I'm going to carve out that gamed metric because this is showing the wrong thing and then now you've got some competition um but you know competition and crypto is still hideously inefficient right so how long does that take before someone steps up and says well wait a second I know this is not a ride you know let's let's fix this um it could take a while I mean this sort of assumes that you know people even care or are valuing these things on cash flow like I mean it took like 100 years to develop formal evaluation methodologies for stocks it's probably crazy to think that crypto is trading on any substance of fundamentals but even in traditional Capital markets like outside of crypto we we're on the other side of this big VC bubble bursting and folks even if you look at

that those kind of very hyped up venture-backed tech companies the Ubers and lifts of the world they are you know if you look at their what their board is telling them to do they're telling them to race towards profitability too I don't think it's just a crypto thing no so sorry just to be clear I think to the um at any point and this I think it's not like we're going to Value these things we're going to pick winners based on cash flow right the you know the price to earnings is gonna be like nonsensical right there's no question there right it's going to be like a thousand X versus you know 950x or something like that right you know um so um or or you know price of sales

depending on how you want it whatever right but like you know it's going to be the winners will be determined by who has the most you know uh Revenue right and that's where there is new ones because uni swap has the most Revenue we did for a while right had the most Revenue uh of a D5 protocol right um I think it you know there's some argument about like op where does that fit in network whatever you know uni sold for a long time but it has zero revenue for token holder right right so you show zero or do you show three million dollars a day whatever you know like which one is it and feel free to answer this question or not but do you think that we've been in this like specifically on the uni token

like fee switch or not it's been heavily discussed among particularly large holders which are Venture back like our VC is based in the US turning on a fee has implications that a crypto lawyer might say wait a minute that might then look like a security which has always been like this problem in crypto we we have done a lot of architectural choices and trade-offs because of this security thing I'm curious to get your opinion on on on that scenario one we continue on this path at some point we get some regulatory policy whatnot um or option b we get clarity say all of these things are securities you got to

register you got to do information disclosures is that scenario terribly bad where crypto no longer becomes a viable thing like a lot of startups just die because token issuers like just can't issue a token because it's heavily problematic I think there's an option C right which is that you know for the foreseeable future Regulators do not provide Clarity right um but also say you know I mean they are already kind of providing Clarity they're saying like you should all register right yeah no one's you know scrambling to register right um and the reason why not because everyone's sitting here saying no you know we are securities we're just you know coming our nose that the law and saying we're not going to register it

because there's a fundamental ideological disagreement about what these things are right um and then there's a question of like okay so who registers in the case of synthetics there's no entities right there's a dow token holders both people in like you know the synthetics governance is one of the most decentralized governance Frameworks that exist right like it's not even governance theater like there's still components which are a bit centralized in terms of like deployments and stuff but in terms of how decisions are made uh it's it's about as decentralized as you can get and so the question is like who registered who even can decide to register um you know what does that even look like and and I I think you know the onus is kind of on the regulator to say if

there is a thing that looks like this and we're saying register and it is fundamentally incompatible with the thing something's broken here like you need to like come up with a new definition or a new you know pathway for that thing to do the thing that you wanted to do right there's no entity there's no Corporation you know in Delaware if they're saying yep it's us we're going to register this thing and you know it's our efforts that are generating you know profit for you know token holders or whatever like that doesn't exist in a lot of these it does in some cases but it doesn't in a lot of cases and so I think that that could if if that really you know starts to accelerate which I think it is right it pushes people more towards option C

which is look more like a thing that doesn't have the ability to register then look like a thing that's refusing to register in spite of the the pressure what do you think about the next bull market can we just tie this all back to synthetics actually so you guys have um I mean I think Santi and I have both I mean Santi even more intimately but like we've watched your um Evolution from like this application that started with a focus on spot uh synthetics and then now is really like this infrastructure liquidity layer and we've had blockworks folks have gotten pretty close to like uh Quentin Lira and uh D hedge and all and all these folks who have leveraged what you guys have built and have built these really successful applications on top what is the can you talk about V3 a little bit

and I've got this Dune dashboard up called synthetic stack uh synthetics stats and the numbers are just ripping right it's like 100 million on March 9th 500 million on March 17th I don't know if this is tied in at all with like the banking crisis but the number or maybe it's just with the you know new launch of V3 and stuff like that but a V2 but anyways tell me tell me about V3 and what's coming yeah so there's there's kind of like versions yeah like like ethereum probably doesn't do a great job of uh of you know version versioning or like what they are or whatever you know it's all a big and and convoluted but um we have the perps product

uh version one of which was pretty useless right um which I will put my hand up and say you know I had a lot of uh say in how that was designed and then we have V2 which is actually quite useful and kind of does the thing that it's supposed to do uh which launched recently um but but purpose V2 is just a product that built on the synthetics liquidity engine if you will right um you know it's just an internal product that's that's developed in the same way that like Lyra attacks into synthetics liquidity or you know whoever right um you know they like all of these different things like it's just a thing that was built by synthetics to tap into the liquidity um and that's the old liquidity right like that's the the existing synthetic

system that's been around since you know late 2018 or whatever um synthetics V3 is basically a complete redesign of that liquidity engine and that redesign will allow for all of these projects that are already pulling that liquidity to do it much more efficiently there's a whole bunch of advantages there's you know so um it's it's a reimagining of a liquidity layer could function right now alongside that there's going to be improvements to the purpose product which again is just a product that's bolted onto that liquidity layer like they're they're kind of independent someone could turn up tomorrow really um and build their own implementation of perks right and bolt it onto the liquidity layer because it's

permissionless right um and in fact I expect that something like that may happen right but from the synthetics token holders perspective that's great like what you want is more things bolting onto this liquidity layer because the liquidity layer um is what is uh generating the fees right that's the the thing that you know charges for access to itself right um and synthetics holders are the ones that back that and they're the ones that you know get the benefit from it nice what's the toughest part about this getting folks to build on top or getting the Traders um I think you know historically it's been getting a product that works right like you know we've had multiple iterations that just didn't work or had like significant flaws and so when you

when you have a product that has flaws typically what we found I think is in practice the flaws mean that it can't scale right like that's what I think you know you can kind of do it for a while and it works and you know until someone notices the floor and they really try and like scale it up and they start exploiting it you know so like Oracle latency was the thing that you know article agency existed for years right and we all just kind of like looked the other way and just you know used it or whatever and then you know one day someone showed up and they're like hey I can maybe exploit this article latency and then you know yeah a whole bunch of bad things that happened right in like July 2019 or whatever um you know and and kind of kept

happening right and we've seen our latency exploited in multiple protocols um and so then you go okay well now we're gonna you know change the way the Articles work or whatever so like there's this iterative game of like you do a thing and there's some you know inefficiencies and then people start exploiting those inefficiencies and then you fix them and then you're gonna go and fix the different part of it so we're at a point now where I think we've fixed a lot of the inefficiencies and and you know our latency isn't an issue um you know uh probably the the biggest issue for synthetics right now I would say is like liquidity is an issue yeah um you know we don't have sufficient liquidity you know 50 million susd and I think 100 million total cents is not enough to be the dominant um you know perp trading venue for the

world right like we need to scale up significantly have you guys ever thought about launching your own chain after looking at like what do idx is doing local fee markets capture the mov try to get closer to the user is that on your roadmap at all um we definitely thought about it you know there was that you know the power chain thing you know like I was I was at um you know uh a talk that um you know I think when polkadot launched so around about time you know when Gavin was launching polkadot and he was like okay car chains is interesting no it hasn't gone anywhere for whatever for a number of reasons right um the biggest downside to an app chain in my mind's composability right people really did not understand the value of

composability I think even early D5 people didn't really understand the value of composability right um you know it's it turns out it's significantly more valuable than it even seems like it should be on paper and I think we valued it highly but just noticed highly as we should have and so the question for I guess you know optimism for example with the super chain idea right and you know with bass and maybe other chains that are like connected to the super chain is how do we ensure composability or how do we how do we kind of get something that's close or approximates composability because if you break composability what we've seen is that is a significant impediment to your utility for users for someone listening who doesn't understand why composability is so

important what what is that why so so um if you the interesting thing and I said this about the body X right like dydf was had the luxury of actually camping out and building their own little Silo right it was almost like a decentralized centralized thing right um you know it was like dc5 or something like that right instead of cd5 whatever and it was like we're decentralized we're non-custodial but we're running on a computer in someone's house right and the you know worst case is if someone shuts down the computer like you can get your funds out you know it'll take a while you got to send a letter to the house and then you know whatever right it was this whole complicated scheme no

one knew how to like write the language I just ignore that for a second right but the idea was no reply at dydx.com yeah exactly yeah yeah or no reply like you know stockware headquarters in Israel or whatever um but anyway so like the point the point was that like we weren't controlling your funds but we were controlling kind of every aspect of how the system operated right um but they could do that because old people want to know if you wanted was like boss trading right they just wanted like deep liquidity boss execution um you know a lot of different options to trade and you know so dydx interestingly was like the kind of you know 2017 centralized exchange Playbook

of like you know only list 10 assets or whatever but just be really like liquid and you know then someone else comes along finance and says why don't we have a hundred assets right and people like well actually you have the 10 assets that I want to trade but the other 90 and so you kind of migrate away right so that's like it is just an interesting thing to think that like they were kind of doing the centralized exchange Playbook from like 2015 2016 or whatever like be really deeply liquid but they didn't need composability because you were just literally you just wanted to trade you wanted to go and trade e purpose that was it right whereas if you were let's say Ave right um and you wanted to have a lending Market but people were doing weird stuff

with like Eve and there was no way for them to like take their wrapped eat derivative and put it into your protocol because you were off and you're on Silo that's a huge impediment to growth that would have been all really worked right so dydx had the luxury of kind of going and talking themselves in this little kind of centralized you know app chain that they build right because it didn't really diminish the utility but for almost every other protocol it would have because not being able to like move assets between and you know create linkages and things like that um it wouldn't really work now the interesting thing is that what I think we've realized now is the composability for a purpose change is actually valuable but we didn't know because we didn't have

one that had composability and so we're seeing with synthetics that like synthetics having composability and being a liquid purpose exchange or GMX or whatever is actually beneficial because people start building stuff that feeds into that cross margining and other cool things that just couldn't exist on dydx because you can't cross margin it because you're in your own sideline and so I think that like that is where we're seeing that like composability has value uh but you don't see it until you build cool stuff and it works would you say that that's one of the things that like composability and Defy is is a beautiful thing flash loans and across like it just the ability to innovate is is incredible but it feels like super at least still like it

requires a level of sophistication like you've seen the meme like you take this ass and like it's pretty like it's crazy to think but like I would say but like it's limited to maybe a thousand users that are really kind of taking advantage of composability is this something that like you think over time will play up and really differentiate defy where maybe the aggregator the wallet or the financial institutions really takes advantage because there's this whole as you said ecosystem that is being built on top of synthetics but it's like too early and you just sort of like building with like a very core set of crazy Spartans which is by the way historically been

the case hoping that one day like all these kind of Innovations come out of composability composability which is cool right like that was you know that was like deep by Summer yeah those people being like okay I'm just gonna build my own thing so that was that's definitely a thing and that's always available and that's how the experiments happen right but if you look at composability the best example I think still historically of composability is like instant app Instagram just said hey there's like an interest rate Arbitrage between you know maker and compound and people want leverage and they don't care you know they just want the cheapest thing right

and then one inch probably was then the next best example of like people just want to trade and there's like 50 different places where liquidity is pooled why don't we just put a layer on top of that and we can you know start and like that worked amazingly well and now you have accounts will open there's all kinds of stuff so like I think you know that initial uh experimentation is like always kind of DIY like you just have to turn up and just test stuff out but then you can systematize it over time like the Instagram guys built that in the hackathon and we're like What if we could just you know click a button go from compound to maker or make her to compound and then they're like why don't we put an interface over that and all of a sudden they had like five billion

dollars of TBL or a billion dollars something like that right so yeah um you know people will systematize composability after the experiments demonstrate value or utility maybe for a skeptical listener that went through like kind of the global financial crisis I'd say wait wait a minute I I've seen this movie before like you talk about efficiency great which I fundamentally think composability makes D5 really efficient like these arbs go like are exploited very quickly and so it makes a more efficient system the account argument of that is wait a minute you built a really fragile House of Cards here where as soon as you start piling up these Legos or Jenga Tower one brick goes down [ __ ] hits the fan everything goes down what is your response to someone that

like thinks that as he listens you talk about composability so I think that the difference is that the opacity you know all of the connectivity in the GFC right between different things was uh undermined on some level uh or the risk of connectivity was exacerbated by the opacity of each of the things right like you couldn't go in and infect the state of you know now you're laughing right but like so like you know in defy if everything has its own risk management structure right like if maker has good risk management good liquidation practices or

whatever it shouldn't matter what it's connected to right yeah like it should just have an efficient thing now there is an argument to be made that like if eth is the reserve asset of all these things and eat goes to zero well then they all go to zero I don't think there's a way that you can remove that you know that's more right like fundamental issue a fundamental problem right um you know in the same way like if the dollar goes to zero then like all banks like you know or whatever if there's if there's fear right like there's there are legitimate things that you just can't kind of avoid right but um if every Silo of liquidity has its own risk management practices that are transparent and then you connect them

can bad things happen 100 right is it much less risky than connecting a bunch of opaque centralized things to each other 100 absolutely well yeah I was laughing more so because you talked about Oracle problems in D5 I was just thinking of the scene in The Big Short where like they're looking at the housing like bubble is bursting and like the CDs like the instrument that they were like using to short the housing hadn't moved and it's like guys like this is fraudulent like they're calling Goldman saying guys like update this thing like the housing crisis says like the housing publishes burst and the index hadn't moved so anyways like it's just interesting well yeah an oracle provider lived with the silos

right or like a couple of them when they have a huge book that they need to offload yeah they're going to delay the Oracle uh for a bit yeah no you're absolutely right um I I hope uh I mean it's so great having you on because you have uh a very sober take I think but also optimistic one in many ways a balanced view um as someone that's been around for just a long time and you've had gone through a few pivots and um I guess as we round out I do want to just do a quick fire around questions but I don't know if there's anything else you want to cover on the synthetics front or things that you're excited about generally that you're investing in recently uh before we go to the fire round no I think you know fundamentally I'm

excited that we now have the infrastructure that we've been looking for for a long time um and I think the thing that shifted for me and you know constantly D5 forces you to learn lessons one of the lessons I've learned is that a single solution to a problem is actually not a viable marketplace right and you know this is probably the lesson from optimism I would say um is that in order to be a credible alternative uh to the incumbents you need like a a an ecosystem of solutions right with different trade-offs and and I think that that's where we're at now like there's uh an ecosystem of l2s within the ethereum ecosystem sub ecosystem of l2s that um is viable

um the same thing is true of like wallet providers I think we need like we can't just have like a single even though that would be the the you know um Optimal Solutions just have like one wallet that does all the things and one else that does all the things I just think that's not realistic to expect um and that it's better to have an ecosystem and that exists now um and so I think we're in a position where you know if the market starts to rip up you know this year or next year or whatever that we're going to be in a place where we can finally do what we've said we would be able to do which is actually you know provide an experience that's better than a centralized Exchange yeah and not on some like you know metric that no one cares about

right like oh we're not gonna like you know fraudulently steal all your money no one cares about that money moving up like actually on the things that people care about like we've got better assets we've got better liquidity we've got better utility we've got better you know whatever up time like we've got all these things that are actually the metrics people care about and not like Hey we're worse in every way except we won't steal your money because it turns out people don't care about that they'll give it to the guy who's going to steal their money on the efficiency score as you said yeah faster better cheaper exactly all right man those have been great let's do a quick fire around um cool five six questions um uh what's been your worst trade uh I sold um

several thousand eight at about seven dollars um in 2017. that was probably my worst trade it's a pretty bad trick s Philippines film had a good reason I've been there well if Alex told the tone at 18 and then went back to nine yeah good times yeah best trade yeah uh my best trade is probably uh sticking with us next how many hours of sleep do you get now and is it more or less than it was two years ago it's a lot more I used to sleep you know four or five hours a night um now I try and

get like seven or eight hours of sleep um I've realized that obviously is that because your kids are getting older or just because you know it's probably a little bit but also like I've made it like concerted effort to get more sleep um it's something that I I just didn't focus on nice can help but notice a bunch of uh really nice musical equipment back there what's your uh what's your favorite song my favorite song my favorite song of all time is probably uh the diamond C by Sonic Youth nice um and perhaps last two what's what's your best advice for someone that is in crypto or looking to get into crypto um I think

if you're looking to get into crypto find something that excites you that people are uh sort of pessimistic on right like find a problem that you're excited by um that you can you put some optimism towards um that you know the consensus is like this is not a thing because oftentimes it is and that's where the opportunities lie that's awesome Kane thanks for coming on uh always a treat having you um and and really appreciate the time if anyone wants to learn more about what you're doing or what about synthetics what are the best kind of ways to to

follow to follow you I mean synthetics discord's always a fun place to hang out um be careful going to see gen fighting but it's pretty pretty safe um and then you can follow me on Twitter um uh or my my Twitter handle awesome sir thank you yeah I appreciate you thanks guys [Applause] [Music]