LayerZero's cross-chain vision, the Kelp exploit and its new chain

Transcript

The question is who needs two million transactions per second? Because you don't need two million transactions per second to tokenize a bond or you know the real estate building on chain. Layer zero is known for connecting other blockchains but now they are building their own and launching an exchange on top of it. What does an interoperability company need its own layer 1 for? And what do investors need to know about all this? Hello and welcome to Milkroad Crypto, the show that now runs its own five of five verifier setup on every joke and they still don't land. I'm your host John Gillan. Today is Simon Got that one. That's good. Today we are joined by Simon Baxis, the chief business officer at Layer Zero, the protocol connecting more than 100 different blockchains and building a lot of things on top of it. We're going to

talk about a lot of really important things going on in the market today. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who needs to hear it. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Nexo, the digital asset platform that lets you trade, earn, and borrow all in one place, all in one account. So keep an ear out for more information on them later in the episode. But for now, welcome to Milk Road Crypto. Simon, how are you, sir? >> I am doing very well. Thanks for having me John. >> Well, thank you for your patience with some of the technical issues we've had this morning. I wanted to start this conversation um just at a high level.

For those who don't know Layer Zero, just give us a 30 second overview of what you would describe the company as, what you're focused on, and what people should know about Layer Zero. >> Yeah, absolutely. So Layer Zero has been around since 2021. roughly five to six years now and we were initially founded on sort of solving the problem that is blockchain interoperability, right? How do you streamline communication across the different code bases and different um ecosystems that exist? We were very fortunate uh to raise a total of $280 million at a $3 billion valuation on the latest series B in 2023. all co-led by A6Z and Sequoia with participation from

PayPal, from Frank Templeton, from a variety of institutions and most recently Citadel Securities, Tether and Arc Invest. And so fast forward to now, we're the market leading interoperability provider with roughly 90% market share. I'm sure we'll talk about that in a bit. And and really have become not just an interoperability company, I would say, but an sort of onchain technology company, right? And so we sort of define our mission as um infrastructure powering the global movement and exchange of value. >> So talk to me about the interoperability piece of this because you know for people who who have been in crypto for a while they know interoperability is important and they may have heard of you know chain link as an interoperability

solution and circle has their you know interoperability play as well and so do many other players in the market. Uh layer zero you say is the leader in this. talk to us about what the product is that you're offering for interoperability and and why you think you're you're in such a leadership position in the market. Yeah. So I'd say interoperability is is a big buzz word. Uh you know and define it depends how you define it and most people in frankly any industry not just blockchain I would say interoperability is important. Everyone wants things to work together. That is natural. Um where we have uh spent most of our time and energy is uh onchain crosschain interoperability.

Right? So what that means is actually connecting one one blockchain to another, standardizing that across the EVM world versus the non EVM world, etc. You know, you mentioned a couple of uh the other folks in the industry. We've really have a first mover advantage since 2021. We've been kind of living and breathing interoperability since the um since the day we founded this company. What we built and what layer the layer zero protocol is is really a messaging protocol, right? So think of it as um infrastructure that transfers packets of data from one application on one blockchain to another. You can do a lot of different things with that but sort of the largest use case and sort of product market fit if you will for interoperability has become value

transfer. So, how do you take a tokenized asset, be that cash, be that an RWA, be that a bond or an equity, and transfer that natively without the need of uh wrapping of assets, which is kind of how uh originally people approached the interoperability problem from one blockchain to another. And so, we've been building that business for over five years now. We have the most performing technology. We connect the most blockchains. When we talk about a market leader position of I think in September 91.5% market share, we measure that in two ways. One is the amount of value transferred from one blockchain to another or sorry across public blockchains if you will. And then the

second uh is uh crosschain transactions or messages. Right? So on any given month, we do roughly 10 to 15 billion dollars a month of crosschain value transfer. Um, and we power exclusively some of the biggest asset issuers in the world. Folks like PayPal's PYUSD, the global dollar network from Paxos, all of Athena assets, all of Etherfy assets, Tether and USDT0, and a variety of others. And so if you take sort of the uh combination of all public blockchain crosschain volume, layer zero accounts for roughly 91% of that volume.

>> Okay. So there's obviously a huge need there and you guys have been chosen by a lot of big players in the market for the solutions you're providing. Uh I want to ask about the kelp situation because a lot of people either first heard about layer zero or let's say like were reminded about layer zero back in April. Um there was a 29 $290 million um uh attack, let's call it, where where that much capital or value was drained. Uh Layer Zero was involved. I think there's still a lawsuit going on about all of this. But you know, just from your perspective, chief business officer, talk to me about the lessons learned here and how layer zero has moved forward from this incident and yeah, just like talk me through where we are now after after that happened. Yeah, probably uh one of the very few examples

of any publicity is good publicity. Um so that's certainly not how we would like to be known in market and I think we've done you know a stellar job over many many years building up the reputation that we have. Things like uh security incidents and sort of exploit hacks etc have plagued this industry for a very long time. Uh what happened with Kelp is certainly not easy. I think um you know one of the I'll call it toxic traits of this industry is uh in moments like that not to come together and sort of you know solve the problem but almost kind of poke at it and to your point really really put the the public light on it. So it's never easy, you know, it

hasn't been uh an easy year for us, but I think it taught a lot to the industry. What what matters to us most is that our partners and customers maintain the trust in our technology. And if you look at sort of that incident in particular, it actually was nothing to do with uh the protocol that is layer zero. It was nothing to do with um compromise of keys etc. It was very isolated to one particular application that we did not have a contractual relationship with. And I think one thing that is the paradox of this industry is you sort of want to have open permissionless technology and have everyone build the way that they think they should build,

which is kind of how we've always buil built our technology. But at the same time, from a security standpoint, you want to make sure that if something happens, you know, the like who's who's whose reputation are we talking about, right? And so in our case it's ours regardless of the sort of how it happened, why it happened, etc. But I think since then, you know, it's it's been six plus months, six plus months. Um, our market share has only increased. Our trust with our customers and partners has only increased and we continue to work with everyone and I think have have come back much harder and stronger really with the aim to not only make our technology better, but also make this entire industry better together. Just want to pause for a quick second to remind you all that the crypto bull market is back. I have been

deploying capital into altcoins that I think are going to do very well this bull market. Some of them are already up over 2x from where I entered. So if you want to see what's in my portfolio, what's on my watch list and have access to me in Discord to ask questions 24 hours a day. Join Milkroad Pro now. The link is in the description. It's just a dollar. I'll see you there. I appreciate the perspective on that. And yeah, I think this is an important distinction. I didn't call it a hack because it was more of an attack. they they fed bad data into the system and you know the system like yeah anyway it's it's not quite the same thing as hacking or breaking the smart contract. It's uh manipulating things and and lying basically. Um, and I want to kind of just like use this as a a way into a

larger conversation around artificial intelligence as like a a security threat or as a means for defense against things like this or or just in general going forward because a lot of people right now in crypto are wondering is AI a bigger risk for security or is it going to be something that helps us bolster our security and how do you think about that and and what's what's outlook from from where you're sitting? >> Yeah, I think that was that kind of goes back to the point I was making in terms of making this entire industry better together, right? So I think it was eye opening for us of how AI is getting applied towards various incidents and if you look at the past 6 months I mean there is probably a security incident in the incident in the crypto industry almost every day it feels like we have a

large security team we monitor all these things we work with the entire industry we work with teams like seal 911 etc. And so we see a lot of this. And so, you know, what we've been doing in the past six months is working with our customers, working with our partners, working with folks that even aren't customers to say, "Hey, like these are the the the precautions that you should take because this is more serious than ever." And so, and and working with companies like Crowd Strike and Mandy, sort of the the leading, you know, cyber security firms in the world to really shed light on on on what is, I think, a a big risk for this entire industry. And so, you know, we take that very seriously and and again, I think it's been an opportunity for us to work with the entire crypto industry and frankly

the financial services industry to really make sure that everyone knows what the risks are and what are the sort of proactive steps everyone should be taking, every organization, every developer, etc. to to to combat that. >> Well, I appreciate your leadership on this. I want to talk about sort of the next steps for layer 0ero because the next thing that you're working on very actively is this new layer 1 zero. Layer layer zero is an interoperability company. Your whole pitch has been about connecting everyone else's blockchains. Why did you guys make the decision to build your own layer 1 and what should people know about that?

>> Yeah, it's it's interesting because I think a lot of folks think that building a blockchain for us is orthogonal to our business because we are interrupt an interrupt provider. Um, and it's actually quite the opposite if if you kind of understand the landscape, which is, you know, one, we've spent our entire history as a company integrating every single blockchain technology under the sun, which means we think we are the subject matter expert. We know we are the subject matter expert in in in what blockchain architecture is, was, and should be. And and and with that uh the other point that is important is you know blockchains are actually not our customers right um blockchains we work with very closely uh but they are mostly

distribution channels for us because the actual customer that we serve is the asset issuer. So when I talk about powering folks like uh PayPal PYUSD or Paxos USDG or Athena or Tether or Ono Finance and a lot of the financial institutions that we work with, it is the asset issuer that we serve, right? So those those those are two important things. And so on on the first point, since we have so much experience integrating different blockchains, we sort of unintentionally created new architectures, new designs and technologies that have resulted in um incredible performance and technical advancements as far as um blockchain

architectures go. And so what at first was a bit of a research project for us and we said hey maybe we'll just release these white papers to the world and and and we did there are quite a few of them that are that are embraced by some of the biggest companies um in the digital asset space now that kind of led us down the path of wait like if this is so good and and and and we think we can actually make a design that's fundamentally better because frankly between you and I um everything in the space in the past 5 years has been a lot of kind of copy and pasting, right? It becomes more about go to market rather than actual technical advancements. And we said, if we have this opportunity, if we have the expertise, if we can if we can create

something better for this entire industry, why don't we just do it ourselves? Um and so we took that with a combination of who actually cares about this level of performance because some of the you know some of the stats that we throw around are 1 to2 million transactions perh per per second horizontally scalable um sort of an incredibly fast and decentralized technology that that frankly no one else uh can meet. And so the question is, you know, who needs two million transactions per second? Because you don't need two million transactions per second to tokenize a bond or, you know, a real estate building on chain. But what we figured out is that capital markets absolutely needs that level of performance. Highfrequency trading needs

that level of performance. And so um if you you know measure that against for example the New York Stock Exchange who does 2 million messages per second to support their entire trading system or someone like NASDAQ that does even more 3 million transactions or call it messages per second. If you wanted to put those systems on chain uh before the technology that we invented, you actually couldn't, right? And so we kind of went down this path of saying who cares about that? Um and it turns out a lot of folks did and and so sort of you know the the partners that we announced in February of this year, the Intercontinental Exchange, the parent company of NIC, Citadel Securities, who also became a large investor, the DTCC, Tether, Google, all all these companies

that need a bit of a different level of scale. They said we care and we said okay well if you care then we will go ahead and and build this technology. And so that was sort of the the spawn of Zero, the layer 1 blockchain that we announced in February and that we are um officially launching in the fall of this year. >> Gotcha. It's very comprehensive uh answer. You covered a couple questions I had about this, but I want to drill down on this piece about Wall Street because like you said, the the 2 million transactions per second that zero is going to bring to market um is a very high throughput that is makes it very competitive in that landscape. Why is Wall Street so excited about zero? What made you attractive some of these partners like ICE or the DTCC or Citadel

versus you know some of these high performant other layer ones like Sui or Salana? Talk to me about that. What was the the pitch that you think really resonated for them? >> Yeah, I think that I think it's important to note that that performance is is sort of not just a little bit faster, right? Um it's not a little bit cheaper. It's not a little bit more decentralized like it is exponentially more. Right. So you mentioned uh you know some of some of the other systems sort of best case scenario those systems we're talking 50 60 70,000 transactions per second maybe 100,000 but that is still uh leaps and bounds under you know what what zero is capable of and so I think that the reason why

Wall Street got excited and the reason that all these folks are working with us and partnering with us is because it opened up new opportun unities that they didn't actually even think about before. Right? So, everyone, you know, can agree tokenization, stable coins, RWAs, absolutely uh product market fit, that is what we've all been working on as an industry for a very long time. Not as many folks have been thinking about highfrequency trading on chain. How do you take a whole how do you how do you take sort of the the performance and the fairness of the traditional financial capital markets and combine that with the best of um what we all love about crypto which is self-custody and

verifiability some of those things like weren't actually possible you know if you look at what Dani talks about the CTO of the DTCC that we work with very closely in terms of what zero And this is this is public information in terms of what Zero is capable of and sort of the the the the things that it opened his eyes to in terms of like how much of their systems they can actually put on chain on zero versus what they thought was impossible before. Um it is sort of like a prime example of again just sort of new things that folks weren't even thinking were possible before.

>> Gotcha. Okay. Well, let's talk a little bit about some of what's possible now. Um, and I think this is a good way to segue to this Atlas exchange, the headless exchange as you guys are calling it. Um, this was announced in August. Um, Atlas stands for aggregated trading liquidity and settlement. Uh, and you're calling it a headless exchange. What is a headless exchange in plain English and why do you think it's so important for layer layer zero to bring this to market? >> Yeah, well done on the abbreviation there. Yeah. So, >> I wrote it down so I'd get it right. So one thing uh that I think is also important about zero and how we're approaching the market with the launch of zero is that what we did not want to do is launch a general purpose chain and

launch a general purpose layer one because we do have a lot of those and even if the performance is much better uh sort of the concept of you know lay the the foundation for this kind of you good technology technology primitive and they will come is is hit or miss. Sometimes they do come but but you know you have to you have to make sure that that that they do. And so the way that we're doing that is building sort of purposebuilt use case um driven applications on top of zero. So you can kind of think of um zero being this uh infrastructure primitive that is hyper decentralized and performant and we're building what we we call zones or applications on top.

And so the first application is called Atlas exactly as you mentioned which is an an onchain stack for uh risk credit matching engine clearing and settlement. So sort of a full onchain exchange system powered by this underlying layer that is that is zero. And so what that really means when you say a headless exchange is that it has all the properties of an onchain exchange but without the trading platform or front end on top. So the same way that we built the layer zero interoperability protocol being sort of this credibly neutral infrastructure connecting across

different blockchains. We think of Atlas as as sort of the same approach credibly neutral exchange infrastructure where we do not sort of prioritize our own front-end application or our own trading platform for the benefit of layer zero. We have other trading venues integrating Atlas. So think of uh you know really any application with a retail user base or an institutional investor base and we can talk about how we think about sort of open atlas versus institutional atlas but other trading platforms integrating this exchange to distribute access to different asset classes across uh spot across per across options outcomes etc. with commodities,

with equities, with crypto. Um, and really delivering sort of that best execution, best experience to the end user of the trading platform integrating Atlas. >> Okay. So, let's pick up on that last piece there. You said that you've got uh different solutions for different users of Atlas. There's Open Atlas, which is for permissionless markets, and institutional Atlas, which has KYC sort of built in. Why the two different versions? Which one do you think is going to get bigger here? And like you just talk to me a little bit about like why there are two different versions of Atlas already.

>> Yeah. So I wish we had a whiteboard so I could draw all this out uh because it's it gets it gets more complicated as we go. But but sort of to reiterate right you have zero is the underlying infrastructure layer atlas built on top and then it's sort of bifurcated into exactly what you said which is open and institutional. And across both open and institutional again you have uh spots per options outcomes across commodities, equities, crypto and sort of the the difference is on the open side which is what the industry has validated quite a bit of demand for I would say right talking roughly two to300 billion a month of perpetual volume today on sort

of this this permissionless infrastructure right so Open is available to anyone, anywhere, anytime, permissionless, self-custody, etc. that is global by nature. That tends to be more of the retail trader, um, maybe the sort of the the whale trader, etc. Right? And I think there again, sort of the the demand has been validated for that already. the technology that we uh that we built is fundamentally sort of a a leaprog of what exists today to deliver that experience um via other trading platforms. On the institutional side, it is sort of combining the best of both worlds where you're getting sort

of the the performance and the the sort of the fairness um of traditional finance combined with um self-custody and verifiability uh and extending that to institutional investors. So institutional capital can get access to those same assets onchain 24/7. Um but the dynamic there is different right it is not permissionless. It is therefore permissioned. It is KYC. It is AML etc. All the things that the regulatory environment will require in the US and other jurisdictions. So we're kind of taking this technology um ultimately building one liquidity layer and bifurcating those markets based on kind

of open and permissionless access versus institutional uh capital uh that is permissioned. >> Okay. So there's a bifurcation there for different purposes, different use cases. I understand that the the whole description of this is as a headless exchange. Who puts the head on, right? Like is it just something that the New York Stock Exchange just plugs into? do they have to build on top of this? Um or like you know you said the open one is maybe for whale traders or whatever. Does someone have to build something on top of that? Who who does that? And just talk me through like how ahead actually gets put on this product.

>> Yeah, absolutely. So we're streamlining the integration regardless of whether it's open or institutional. Um so we'll be very simple for the trading platforms. On the open side, you can imagine, you know, some of the largest self-custodial wallets in the world or uh folks that have large user bases. I'm sort of being intentionally vague with uh because we haven't announced some of the some of the largest partners on the open side. >> I'm trying to get you to spill the beans, Simon. You're you're too smart for me, but yeah, keep going. >> The platforms that we have announced on sort of the the first iteration of this, you know, folks like GT, Bullish, uh which I think a lot of folks are familiar with, uh True North, etc. So those are folks with retail user bases.

Those are folks that can put the head on um as you mentioned in a very uh simple and easy way for for their end users. On the institutional side, it'll be more of the call with the prime brokerage or brokerage or uh folks that offer trading to an institutional um user base. That integration will look a little bit different, right? Because we want to adapt uh to to to sort of what exists there today to make that very easy for the institutional investors to to access. But uh but yeah, it will be uh sort of platforms that extend the investment access to their institutional base.

>> Okay. I would like to ask you a question about the zero token because the you don't have to talk about the price performance. I don't want to get you in trouble, but the the token has been ripping recently and there's a lot that's going on in terms of products you guys are bringing to markets. Where does the zero token fit into this? How does it capture value and and why do you all need a token for this this system and these products that you're building? >> Yeah, so the Zero token has been around since June of 2024. It was brought to market initially as a governance token for the interoperability business. And looking at the interoperability business today there are plans from a governance perspective to turn on the fee switch on the interoperability business that gets voted um every six months in in a

referendum. And that fee switch will essentially attach a a a zero based fee to each and every single crosschain transaction that we power that will then buy back and burn zero. That has been sort of the the plan on the interoperability side. Um now of course with the launch of zero uh and with the launch of uh Atlas, it introduces um an enormous amount of additional utility to ZRO, right? So not only governance for the layer 1 blockchain um but also ZRO becomes the staking asset, the fee asset and so there there's a lot more that's coming to it and you're right the performance has been quite good. I think you know seeing sort of the

I I think that the industry kind of going back to earlier in the year sort of really putting us down immediately and saying okay like these you know these guys are done. I think uh what the industry has realized in the in the past few months of just like how much we are doing, how much we are building and how much value that is bringing now and in the future to ZRO as the asset. So we're really excited about that and I think um there will be an enormous amount more applicability to ZRO as a token. >> Gotcha. Okay. So the market is sort of pivoting from the the skepticism of the Kelp Dow days to starting to appreciate more what you're building now and and ZRO is going to be a big part of that.

Um okay let let's talk about the changing regulatory landscape here because the Clarity Act did not go through uh in Congress but the CFTC the SEC have been very like let's say forthcoming with regulator regulatory frameworks um to try to bring more digital asset products on shore into the United States. I'm curious h have this has this changed anything for layer zero in terms of what you're building what you're trying to bring to market or what your strategy is here to have the the US sort of opening the doors um regulatory speaking uh to digital asset products and and what's what's that been like for you guys?

>> Yeah, I think um you know it's been exciting to see the administration really push the I'd say innovation frontier of of crypto. Even with the Clarity Act not passing, I think it's actually not the worst thing in the world. I think there's a lot more to come. And to your point, the the CFTC and the SEC are pushing the boundaries there to make sure that, you know, sort of the the innovation that is built, innovation like ours, for example, stays here in the United States, right? And and that the United States can take advantage of it. So, I think, you know, for us that matters quite a bit and and largely on the Atlas side, right?

Because one of the wedges that I think we have as far as the Atlas technology goes is the institutional side and the institutional relationships and partners that we have and the things that we are building with them to bring to market in in the very in the very near term the friendlier that regulation is for investors for trading for capital markets for perpetual futures etc. in the US I'd say the faster we get to those institutions uh driving very very meaningful amounts of volume across this trading infrastructure. So, you know, we're actively following, participating, um, and and helping push, I'd say, that invasion alongside the regulators.

>> You know, one of the weird things about crypto is that the longer you're in it, the more accounts you seem to end up with. You buy in one place, trade somewhere else, earn yield somewhere else, and if you actually need capital, you end up having to sell something that you probably wanted to keep. That's why we at Milk Road are partnering with Nexo. These guys keep the whole thing under one account. You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it. All in one spot, all in one account, all on Nexo. So, if you need liquidity, but you don't want to give up your position, or you're already holding crypto and you want to be able to do more with it, I think Nexo is worth your time. We love working with them. I think you will,

too. Tell them Milk Road sent you. Okay. Yeah. Some other people who are pushing um innovation are Coinbase. They have tokenized uh stocks on base. Robin Hood has its own chain. They're doing tokenized products there. I'm curious about who you see as your competition, right? Like do you see it um as being some of these performant L1s? Do you see it as being Wall Street and Tradi or some of these like let's say uh crypton native incumbents? Who do you see as the competition that layer zero is trying to disrupt or is it all of these players? And and how do you think about uh the the advantage that you have over some of these other players who are also innovating in the market right now?

Yeah, I mean I think there's still a lot that will shake out over the coming months and years. I think when you talk about and and there's like this fundamental distinction I think that I think a lot of people miss in terms of you know what is actual onchain trading versus off-chain trading pretty important distinction because a lot of like if you think about Coinbase, Robin Hood, etc. like centralized exch like they are just offchain trading just because we're you know trading digital assets doesn't mean that it's that it's trading onchain. you know, what's happening with tokenized equities, what's happening with with sort of uh Robin Hood chain and tokenized equities there against sort of the meme coins, etc. are just like scratching the surface, I think, of what is possible and like how this industry will shake

out. And even the volumes that we're seeing today, they're they're they're large. We're all, you know, sort of as an industry, we've come a long way, but they are still small in the context of traditional finance. And so, you know, when you say like who is the competition, uh, I think on sort of the Atlas and trading side, I actually don't know exactly what that answer is. You know, you could point to say, you know, maybe that's uh, you know, the hyperlsids, lighters, the the Robin Hoods, kind of like the the classic players in in in the space um, over the past 12 to 18 months. But, but I think like that landscape changes significantly. Our wedge has always been about going really really deep with some

um of the biggest you know partners in the world and B it's always been about a technological advantage like we as a company are very engineering driven have some really really incredibly smart people on the team and where we shine is sort of the technology later is that it is it is the performance it is building better systems which doesn't always come through clearly in this industry that is very noisy, right? People read a headline, they they pick something up and they and they just kind of move on and they're like, "Oh, the these guys are are winning, right?" But we build for the long term and I think, you know, usually building the right way, building the best technology in the long term will

win. And so we kind of view that as as a as as the main edge, I would say. I want to talk a little bit more about the the future outlook here and what is possible because like you said like there's a big difference between offchain and onchain and the world is just beginning to pioneer what is possible onchain. When you talked about Atlas you said that this is just one zone of what's possible on zero the the the layer one that you guys are building. What other zones might there be? What what does that vision look like for you once all these onchain things are launched? like talk to me about that that broader outlook vision for for what layer zero is trying to move towards.

>> Yeah. So when we initially announced the architecture of zero, we announced three zones or three applications and that still remains true in terms of what we're building um we prioritized Atlas and the capital markets environment to to ship first because we see such a large uh unique opportunity there. The second sort of application or zone was a a a general purpose environment. So, a bit maybe less exciting, but sort of necessary in terms of like, you know, you still want a kind of an a general landing zone for the things that we all sort of love and expect in in in crypto, right? Um that is DeFi, that is borrowing, that is lending, vaults, etc.

Like um that won't exist on Atlas, but it will exist on Zero. And that's kind of that general purpose in mind. The third thing um that is incredibly exciting to us and it has maybe shifted just a little bit but that third the third zone that we announced was payments. We have a unique edge in payments I would say because of powering all these stable coins um and assets on the interoperability side and so we we we view that sort of the payments landscape onchain payments very very interesting. What has become more interesting I think since we announced zero to now is agentic payments because of sort of the the the rise of agents and AI. One thing that is I think very

clear is that agents probably will not transact with each other with credit cards and fiat. you know, they're probably not going to be pulling n cents out of your uh you know, Chase bank account to pay for a microtransaction of unlocking a Wall Street Journal article. But that is like all very possible um or paying another agent to do something else, etc., right? And so that will be um that will be digital assets, whether that's stable cocoin, whether that's Bitcoin, etc. like let let's see but there will be a need for um millions tens of millions of transactions per second for microp payments for agentic transactions etc and so that has become

increasingly interesting to us and that is again yet another sort of novel application of zero and the performance that we have this leads right into the next question which is agentic finance and the rise of all of this stuff and I want to hear a little bit more about about that because you know the numbers you just quoted are higher transactions per second than what layer zero can or the zero chain rather can currently do. Um how do you scale to that target and then do you have a dedicated strategy specifically around agentic finance AI agents and getting them to adopt us because we talked a little bit about the strategy for retail and for institutions AI could be a little bit of a different animal and I'm curious what the strategy is focused on that specifically.

Yeah. So, one, you know, sort of the the benefit of having, let's call it a new gen blockchain architecture that we do is that we get to do a lot of things that um other folks cannot and you know, systems that have been around for a long time that are highly, you know, decentralized, etc. The the benefit of being newer to market from from like a Lero perspective is that, you know, we can do so many other things, right? And so, like our systems are horizontally scalable. We will be releasing some um exciting announcements and white papers etc of like what that horizontal scale looks like very very soon because of all this um work that we've been doing on the gentic payment side. So without sort of spoiling that uh right now I will say

yes we have the ability to scale the system much much further the from a strategy for aentic finance for aentic payments etc. again one that wasn't maybe as top of- mind for us even 5 months ago is very very top of mind for us now and so if you look at things you know public things for example like X42 and the work that Cloudflare is doing and like the scale that um Matthew Prince talks about the CEO of Cloudflare that is necessary for agentic payments right he's talking in in in the context of tens and hundreds of millions of transactions per second so you know if and when we reach that scale, we will be ready. And that's sort of like the the

the world that we're building towards. >> All right, I got to let you go because we're getting close to time, but I got to get you to say something that's wildly bullish here at the end. Um, I I want to ask about what the addressable market is in your mind because a lot of people think of layer zero still as just an interoperability solution, but it sounds like what you're playing for is much much bigger, right? Like payments and capital markets and like a whole lot of other things. What is the addressable market that layer zero is going after? How big do you think this this can actually get? >> Yeah, look, I mean, our ambition is very very big. Uh, even when we announc zero, I think, right? Like we said, Atlas, general purpose, payments, like kind of three of like the biggest things in, you

know, in like all of digital assets and we are tackling all three of those problems and we have the interoperability business which tackles kind of uh it it from the other angle and so I think we're still so early John I mean if you look on the interoperability side you know today we talk about 10 to 15 billion dollars a month that we do crosschain you have you know what sub40 billion dollars of RWAS on chain the projections by 2030 if we all believe in in this world in this industry we're talking trillions right two to four trillion on chain so how does how does that shape the interoperability business which correlates really to the amount of

assets on chain to some extent right um that is exponential growth just for the interoperability side of the house as more and more asset issurers come to the market as more institutions tokenize things on chain on the zero side. Again, sort of very similarly, if we all believe that blockchain is fundamentally better from a infrastructure perspective for finance than the volumes that we're talking about today and the hundreds of billions a month compared to traditional finance, we're talking we're talking trillions, right? We kind of have this like little headline in most of our slide decks that says, you know, billions today, trillions tomorrow. And

and I truly believe that. I think this this industry is poised for exponential growth. >> Simon, you did great. Billions today, trillions tomorrow is a great tagline. We can go out on that. Simon Baxis, chief business officer at Layer Zero. Where can we send people to find more of you and your work online? >> Yeah, absolutely. Uh layer.network is is our website. Our Twitter uh is always full of the latest and greatest. Um, so please follow us there, myself as well that you see on the screen. But, uh, yeah, thank you for having me, John. It's, uh, been an absolute pleasure. >> Thank you for being on Milk Road Crypto.

I learned a lot. I know our audience is going to love this conversation. I just want to say like I really appreciate what you're building and doubling down and like the way you guys have come back from the kelp situation and like stayed focused on what you're building. It's really inspiring. Really appreciate it. Um, so thanks for being on Milro Crypto. I hope we can catch up again soon. >> Thank you, John. And thank you all for joining us. I hope you all learned something today. I know I did. So until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Crypto. Thanks for being here everyone. Bye. >> Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's

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