DAPPCON 2025: Future of Onchain Organizations Safe{CON}3 Track

Transcript

Let's see if this is on. Yeah, perfect. Yes. Um, hi everyone. Yes. Uh, welcoming you to the panel on the future of onchain organizations. Uh, we want to talk a little bit broad about onchain organizations, not necessarily only about what we see right now as Dows, but actually how organizations that work on chains evolve. We see more and more organizations that choose for instance the IPO route. We see like a circle before a coinbase going IPO. We see uh M&A happening in it like recently like a privy being acquired. So maybe like how we think about onchain organizations right now with like a token a DAO is not anymore just the only route how things are developing. So, and welcoming kind

of like um my fellow panelists uh here. Um we have Alice from Kapatki, we have Azim from Miden, and we have Dennis from Telly. And um starting maybe quickly um from you, Dennis with with a quick intro kind of what is uh Telly doing, what are you doing, and how do you support um onchain organizations, organizations that are on chain and then we go through and we kick it off with questions. Yeah. Awesome. Thank you so much. So, I'm Dennis Bertram. I'm the CEO and co-founder of Tally. Uh we started originally as a Dow tool helping teams vote on things, but we've also evolved into this like complete management application for uh really institutional grade tokens. So that includes

governance, that includes things like launching, that includes things like staking, that includes things like compliance. So, we're working on really the full stack of making sure these organizations are successful at scale with, you know, billions of dollars and, you know, potentially hundreds of thousands of contributors and participants. Hi everyone, I'm Azim. I'm the founder of mine. It's a new ZK blockchain focusing on client side execution. Uh, so interested particularly in bringing large-scale institutions on chain in a way that allows them to have uh compliance speed and particularly privacy. have been in the space for a long time and done things uh like deals with Shell Oil, the UNICEF crypto fund, the American Cancer

Society, brought all of them on chain among other things. Consult with the UNICEF crypto fund at the moment as well. Um I'm Alice and I work at KPK. We help organizations with onchain asset management. Um and we work with leading Dows in the space and foundations including safe uh andnosis downstairs as well as ENS a and others. So why am I so excited about this panel is because I think we have like different elements together and like different aspects to hopefully the questions that we're talking about. Um kicking off though with Dows at like the purest form of onchain organization. Um we see more and more Dows actually

centralizing or working more as a traditional company. Um what would you say are like the development? What are like benefits or also tradeoffs of um the sort of movement? Yeah, I would say that there are tradeoffs of efficiency versus being inclusive. So on the one hand clearly like more centralized organizations tend to be more efficient just because you have like a smaller group of people that need to agree on something to make a decision. Um while on the other hand the more decentralized an organization is the more inclusi inclusive it is. So you have benefits from different perspectives and people

from different backgrounds. uh but it's tricky you know to find the sweet spot between those two aspects and I feel like today most Dows are either too much on one side or too much on the other uh and we haven't really yet found uh like the good balance but hopefully in 10 years we will Dennis and I I know you're working a lot with Dows together you um are very involved in them how do you see the development and this balance that has to be struck between efficiency and different views. I think first of all something that people love to talk about is like trying to define what a Dow is and then they try and define what

decentralization is. I think actually the interesting point that's sort of emerging now especially in the US regulatory market is is that decentralized is actually going to end up being a legal definition. It's not going to be some physical abstract notion. it's going to be actually a legal state. Either you have reached these like you know um thresholds as described by some law as being decentralized and then you are decentralized and that that will sort of like define you. Um and how that's going to actually shape up is going to be maybe different than what we've done in the past. Right? Even I would argue the past four years a lot of our ideas of what decentralization was was actually driven by a need to sort of like obfiscate like our organizations in front of a very hostile regulatory

regime. Right? Right? So you had things like people doing airdrops to hundreds of thousands of random people with the hopes of saying, "Oh, there's so many people here like clearly it's decentralized, right?" And that of course brought along with it the operational inefficiency um that we tend to see with these organizations because you have so many non-aligned disinterested and you know not uh informed participants uh simply because the the larger organization is under this pressure to sort of like create this like cloud of decentralization through just like sheer numbers right um so I think that is changing a lot and that was should also bring a lot of regulatory um and and efficiency gains to these these organizations as they are able to say well decentralization maybe

looks like this and this also happens to be a little bit more efficient. Um something I've said for many many years uh especially when you know uh first started tally was if something like a lending protocol is decentralized only for the banks it's still decentralized right if it's decentralized for the core users or dependence of infrastructure doesn't actually need you know hundreds of thousands of people like participating and that I think goes to the heart of like efficiency like are the the number of actors who are needed to participate um aligned with what effic efficient decision-making looks like and you know certainly a Dow of like four people doesn't sound very decentralized but if you look at safe you know in many ways most of these are

Dows of like you need to get the decision-m of these people who are um materially affected by the operation of this smart contract and thus yes it is decentralized because you know it's not just one person making the decision so I I think that you know sort of like long story short that like we will see changes in the efficiency of these organizations and you will you will be able to see these organizations becoming more adept at getting things done as the definition of decentralized begins to match a little bit better their operational needs and like efficiencies.

So just a follow-up question to that like the Dow setups were a lot driven by like regulatory needs right so it seems that this is still the case but maybe it's not anymore how we thought about Dows beforehand just a bunch of token holders and a bunch of delegates so you think that will change yeah absolutely I think that's going to change I I think like the the previous you know in a weird way we built on what we sort of thought decentralization was and didn't maybe entirely realize that like what the previous administration's requirement around decentralization was actually maybe intentionally convoluted to slow us down and make us

less efficient on purpose. You know, I think we've seen a lot of this behavior um in the pri prior administration of things when it comes to like meme coins. Memecoins aren't securities because they're so dumb. So, everybody should just build memecoins, right? like it seems like, oh, that's like a really wonderful innovation for the industry, but actually it was intended to sort of like discredit uh what we're actually building here, trivialize while also punishing the really legitimate applications that people are building. So, yeah, I think we're going to see what these Dows look like change. Um, and I think we're going to see uh a lot of clarity come around what the word DAO actually means. If you look at the sort of writings of like Miles Jennings over at A16Z and sort of this idea in the Clarity Act of like what an absence of

control or what like definition of control of an organization is going to be. We're going to have a clear idea of like what the regulatory definition of of decentralization is. And maybe that's not going to align fully with like the cipher punk vision of like what decentralization might be. But of course I would argue at the same time um that definition is like maybe intentionally unclear uh from the beginning. Azim, I heard one quote of yours on uh Twitter space um where you said if Apple were to act on chain and they would do some treasury management or big investments um if it's all transparent how it's being governed right now, they would basically have to put every single time a press release out and explain why they're doing XYZ, why they haven't

informed, etc. like where do you see like where organizations that move more and more onchain might have like blockers how things are currently done what actually what are benefits for them moving more and more on chain when it comes to investments on chain their operations on chain um I think it's going to be interesting to see them move on chain so much of it to me depends on like where the regulatory framework for it goes because I think that there's consistently been appetite to move on chain But risk mitigation tends to be one of the most important things for any of these organizations. And so there was the Coinbase report recently that said 50 or 60% of Fortune 500 companies at this point are either exploring

blockchain or already have explored doing something with blockchain. So it's to say that they're very much so interested in seeing like what are the opportunities to I don't know generate yield that go far beyond the like 4% that JP Morgan will give you and do it in a way that's safe. But for them, making sure that it's done in a regulatory safe way is the most important thing. And when they look at, you know, lack of privacy and then lack of compliance, which ties to like regulations, I think that it keeps everyone sort of at bay. But I've consistently for years now been chatting with orgs who are very interested in just consistently like, "Yeah, but we just have to make sure we don't get sued."

We see kind of like a convergence, right? We see um to the traditional market investing more and more in DeFi, growing their um maybe investing DeFi also putting crypto on their balance sheets. On the other side, we see also like DeFi protocols um putting RWAS on chain and actually like generally like these both worlds converging closer together. How do you see like from uh KPK development or like this convergence happening and what does it mean actually when Treadfi and DeFi starts to be like invested in one another? I mean I think in the long term it makes sense for uh the two ecosystems to eventually

converge in the sense that DeFi well was born as you know um an alternative to the traditional financial system. So in many ways a we've seen improvements to the traditional financial systems and that's I mean stable coins are a great example of that uh to improve like for life for experts for example um but at the same time I think there are some elements in the traditional financial system that are still valuable uh and that we could leverage or integrate within DeFi. Um and so RWAS are an example of this where that's a model that works and if I can actually benefit

from that and improve over the system that that we had before. So integrating it and like having these two words converge to me it's a good thing and it's a thing that we will see more and more in the future. Um and at the same time I think on the other side we also have like um a problem of distributions. So we've seen Coinbase and Circle uh do IPOs that's because I mean they're already leading players in the market and so it's not really saturated but they clearly already have a strong position in the crypto market. So if they want to

go beyond they need to reach like a larger audience and IPOs are a way to do that. Um while at the same time it's a different level of maturity. Uh I don't think they are like abandoning crypto values or anything. I just think that the those are companies that have actual revenues um and so they want to be um seen as serious companies. um that like are evaluated also for their revenues. While for example, if you if they were to just distribute a token and remain, you know, in the crypto market, the distribution would be less and at the same time like it would

be hard for them to be compared fairly with other projects that for example don't have revenues. So I think the the two systems can coexist and will eventually merge. I think this growth aspect and like distribution like what you want to tap into is super interesting. Um you've um I think from perspective of maiden I think you're thinking a lot about institutions and um they coming in and like where does growth happen? How do you see that? Who needs it more? Does crypto need the institution angle to grow? Does the institutional angle need now the crypto rails to grow? I think it's a little bit of both. When I when I look at how the narrative has been, it's it's always sort of been seen as like crypto versus

TRDFI. And I just think like it's fintech 2.0 in so many ways. Like here's new rails to do interesting things that you can't already do with Tradfi. TRDFI is interested in doing them. And so we're offering opportunities to be able to do that. And it reminds me a lot of like in the early 2010s when large tech companies would just go and start buying like I don't know ways and everything Instagram WhatsApp to be able to figure out we're not going to be able to do this. Uh and it's sort of like a product and distribution issue where you know if you work with the Franklin Templeton the access to distribution that you have for whatever it is that you might be doing increases exponentially but Franklin Templeton's ability to be able to figure

out how to build that tech is completely different. And so in working with and already chatting with a lot of these institutions, what I like continue to find is that we need to come together because there's almost an arrogance that crypto folks have that they think they know what it is that needs to be built that TRDFI needs. And then at least TRFI from my understanding has been like they get that they don't have any clue how to build any of these things, but they're interested in the potential profits that they can generate. Dennis, do you think this convergence crypto companies ipoing um maybe going more the M&A route, is that something that we'll see

more and more? Absolutely. Um yeah, absolutely. I I can't see it being any other way. The more conversations I have, the more I hear with each institution that huge appetite for doing stuff, but zero idea how to go about doing it for the most part. And so they'll the same way tech founders did. They'll go buy a company uh they'll force the team to stay on for two to four years to vest everything and then they'll give them a kush title. to give them a million dollar a year salary and they'll tell them that they have to go out and build the team out because can you imagine going to someone at JP Morgan and being like to find the best developers for what you're looking for you need to figure out how to scour crypto Twitter and people are like bears

and pickles [Laughter] seriously right like but like for us that's like completely normal you're like oh no like that pickle is actually one of the best developers in the world yeah there's the pickle Dennis, we talked also about it shortly beforehand. Uh will we see maybe a first DAO being acquired by um a Fortune 500 company or uh well we've seen Dows acquire each other, right? So that that's happened a number of times. I'm not sure if a Fortune 500 company directly will acquire a DAO. um you know you'd have to have a DAO that brought a lot of value to it because again a lot

of like Dows today they're constituted under a framework that sort of like deliberately created to be inefficient and structurally have issues um and that often poses like a lot of challenges on buying them like you know great example is a lot of organizations don't know who their token holders are maybe it's North Korea right like it'd be very difficult for a company to take the risk of like buying North Korea and then allowing the North Koreans to like trade their tokens freely, right? Like that that represents like a serious serious like danger and risk to organizations.

New organizations that are created actually the chance is quite higher, right? Like if if people build out these decentralized orgs in a very um uh you know compliant way well then I think you know traditional institutions will have a lot more visibility into understanding what they're getting into. Uh I think additionally something that we'll see a lot of is a lot of like you know decentralized organizations actually IPOing their lab entity right where we actually have this world where you have this token which captures some sort of value ideally but you also have the equity portion of it and the equity portion is very ripe for um you know IPOing and you know even if you look at something like circle which you don't consider as a Dow um it is an equity

company that has a token right if you look at Tron which has announced that they're going to IPO. It is a token that now will have an equity organization, too. So, I think we'll probably see this like weird hybrid coming forward where you have these large especially like finance, DeFi kind of institutions that'll probably go the route of having a token as well as uh IPOing. So, they're going to kind of double dip and get like the best of both worlds. But, these two things are actually going to like merge like the equity and tokens. you know, we'll tokenize equity and we'll, you know, equityize tokens and then we'll have both of them and they'll come together and they'll be separate things. Um, so I think we're going to see a lot of kind of like new innovation

from these sort of like organizational structures coming forward in the next, you know, four years. A follow up to that for any of you wants to um take it up, it's we do see it like going full circle, right? Like yesterday, Coinbase announced they want to bring onchain uh stocks. So um now we have a crypto company that went IPO that also might have a token that they tokenized it again and now we trade everything in the same system. Um do you think like tokenized stocks next to governance token next to different like it can all coexist kind of for investors or for owners of companies in the same system or like what challenges does that bring to again put it all into one basket?

Yeah. So I think again with like the clarity act um there'll be like very clear definitions here which are going to be very useful. The protocol is actually going to tokens are actually going to represent represent protocols themselves and protocols are going to exist in a little bit of a different class of like the entity or even though um in many cases for you know based on clarity like the first four years the protocol may be directly controlled by the the equity entity but if you think about most labs entities that have built out protocols and launch tokens a lot of them don't only do that thing right like unis swap labs builds a lot of other products that aren't unis swap protocol things like the wallet for example right

and these things monetize they have cash flows and they are not at all related to the token right so I think we will see that in many cases like some of the labs entities that launch L2s right like once they launch the L2 and they have the token well they could go launch a whole new L2 with a whole new token right so you start to see the token as related to the product or the protocol itself while actually the labs entity, the equity portion is actually free to build a lot of other things. Um, so I think we're going to see all of this happening together. They'll definitely coexist.

There'll be a lot more options and opportunities for investors. Um, ideally there isn't like a crazy amount of confusion around it, but there's definitely going to be opportunities also to intermingle these things one way or another. Yeah. Also, I think they might be um slightly different financial instruments. So for example like the crypto market is open 24/7 the stock market like closes on weekends and things like that. Um and also the crypto market is generally a bit more liquid so it moves faster. So I think that even the nature like even if it's the same company u the fact that you have it in different markets means that you have different financial instruments with

different scopes as well. I'm going to be curious how, you know, um, if stocks come on chain, the flexibility of how trading works, uh, and the lack of compliance with how trading works, how that's going to honestly affect things. It's been one of the things I've been thinking about is like how do you make sure that the Lazarus Group isn't the one that's buying AT&T on chain and figuring out how to make money on it and that turning into a big story. And so I think in the beginning it's probably going to have to start out much slower till they can figure out what they really need to do with that. Eventually it'll mature, but uh I've been chatting with teams who now are talking about trying to figure out how to generate yield on tokenized stocks too.

Yeah. I'm wondering like from your perspective if one looks 5 to 10 years down the road like what is the biggest blocker for like onchain organizations or to move more onchain? What do you think has to fall in place now the next 5 to 10 years? I would say regulation because right now it's still a it has improved but it's still a gray area and like many Dows many organizations like don't really know how to do things in a proper way so we find workarounds we have like common entities and things like that but that's not how you reach you know mass adoption so I think

regulation and having clarity is definitely take one big element. I think uh it's simply going to be so much of what we've seen with Dows and everything around it has been around ideas of inclusivity and fairness and it's almost intentionally been ineffective. But I think the big thing will be showing that these actually can be more effective or more efficient as compared to to traditional things. And so I think by then we will. I think sort of like echoing like what has already been said that you know I think the regulatory part of it is the important unlock going forward. So you know while it's you know we can speculate a little bit right now I think

in the next you know 6 to 12 months we'll really see um clear evidence of what it's going to look like going forward. Yeah. Thank everyone for the panel. Yes. Thank you. [Applause] We have time for one quick question or two from the audience. Silence. There we go. There we go.

There's a question. You just have to wait for a minute. Yeah. I mean like you were discussing how basically we'll see like labs entities launching several tokens and the token being more related to a specific product or protocol. Um but I guess in the early stages of startup I think many onchain organizations are still in their early stages you should expect them to pivot and so like if you're an early investor that invests in the labs entity great you're participating all the pivots but like it's yeah it's kind of kind of like a bad story to tell for all the public token investors like one of the issues

like people saying okay actually tokens should trade at a discount to to equity because of that. So do you see also like having more rights being given to uh token holders to participate in pivots further tokens that are being launched and and actually kind of maybe that's just onchain securities after all then no so I think what's going to happen is that the tokens holders definitely are not going to have any rights in the labs entity and I think when you go to right now you sort of expect the labs entity to launch a token and two things to be the same thing forever and always. And that's probably not going to be the case, right? If you hold uni token, you don't have any piece of uni wallet. Um,

that's probably going to be okay, right? Like, you know, I'm a UNI token holder. I like UNI token. I think unis swap is great. Um, I'm not interested in investing in a wallet business. I love uni unis swap like the the protocol, but I'm not interested in a wallet business. if the wallet had its own token like uni wallet token um I would evaluate uni wallet token on the basis of like that product itself you know would you you know is that a bad thing I I think you know there's an assumption there that the token has to represent the labs entity and they definitely will have to pivot so you know um the token represents probably the protocol specifically and does that protocol survive and work on its own um that's going to be you know a big question you

know token holders themselves will certainly have some rights and like capabilities around that network in and of itself. But I don't think that we should expect going forward that by default the token represents the equity and the equity represents the token because really in the sort of like new regulatory future that you know we're probably going to get um that's going to be very strictly uh separate. So you you just won't have any like labs sort of relationship to to the the token. and the token will be specifically for the network and then you know your your purchase decision or your investment decision or your participation decision is going to be on the success of that network versus the success of the the the labs entity.

Thanks so much. We be back in a minute with an X panel.