LIVE: MARKET DOWN, PROJECT0, EIGENZERO | 0xResearch

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[music] [music] [music] [music] Hold on. I can't hear you.

Okay. Yeah, I don't I can't hear you. Okay, >> there we go. We are I think you can hear me now, Mc. >> Yes. >> Early, but it's okay. I'm gonna >> Yeah, I'm a little early. Yeah, just making sure everything works. >> Very good. >> Um, what's up guys? Welcome back uh to ZRX Research. I am waiting for Ryan Connor as well, but we're joined by, as you can see, MC Brennan today um to talk about project zero. Maybe my friend until um Ryan gets here because I know he wants to talk to you. I don't want to take any any time off. Do you wanna

>> do a lot of people ask you about your thoughts on the market? Is this something you do a lot or do you want to chat about? >> No, not really. Like I'm not >> not a big markets guy. >> Giving giving directional advice is like the hardest job in the world. So yeah, I stay away from it. >> That makes sense. Um I guess do you want to talk a bit about I don't know how Salana's been going? Are you >> happy that you guys have been focused there still? So, so we're we're live, right? Wait, we're live right now. Um, right. Is that correct?

>> Yes. >> And then this is just getting streamed to to everyone on Twitter basically. >> Cool. And then this will be done as like a podcast >> or or like in audio format. Sweet. Cool. >> Um, yeah. I mean, I remain more bullish on I I think actually So, what is Salana's FTD now? It's something like 80 billion or something, [clears throat] I guess, right? check. Yeah. >> Yeah. Probably >> Yeah. 80 billion. >> All right. So, and it made like 2.5 billion last year or something like that. So, like the multiple is just compressing right now. Um, so it's like everyone says you can't do value

investing in crypto, but um I beg to differ. And then like obviously like that that sort of is uh not accounting for application revenue as well. Like I would expect like Salana to just as more capacity opens up for margins to get lower and lower for validators. But um yeah, that two billion number again, it doesn't even account for like apps like Pump Fun or you know these massive massive apps that are just completely destroying it, you know. So yeah.

>> Yeah, Ryan, you'll enjoy this. Mcrenan is also a Salana bull based on the valuation. So this will be good for you. Yeah, it's a good it's a good like uh it's a good multiple right now if if if indeed we're at like an 80 billion FTV with yeah two billion in revenue last year. >> Yeah, >> I'm a little worried about revenue though going forward but damn >> that's what I was just saying. Yeah, I expect uh as more capacity opens up, I expect validators to make less money from the chain itself, but that is not uh including what I was like just saying uh application revenue, which um which will also start to go to validators in

in some forms. Uh, so that $2 billion number totally excludes like right when you hopped on I was saying like pump fun and like these massive applications that are just wrecking. Um, so I expect I expect value capture to happen a little bit there as well. [clears throat and cough] >> Okay. Um, >> Ryan, good to meet you, man. I don't think we've met before. >> Yeah, great to meet you as well. I I often do talk valuation with folks before I introduce myself. So that's right on right on message.

>> Sweet. Sweet. >> Um you were you were with Margin Fi as well right? >> Yeah. So I I co-ounded uh Margin Fi. Um I co-ounded Margin Research. Cool. >> I co-ounded Temporal. Um and founded >> uh projects here. Yeah. >> We just had >> Yeah, you just had Ben on. It's by the way. >> Yeah. Yeah, >> I guess I never put those to that makes sense because I know I've seen you post about temporal also Ben is clearly involved.

>> Wow, you're very very deep into Solana. Some might even say part of the cabal on Sana very very deep state Solana. >> Yeah, I'm I'm in the weeds for sure. I'm not I I will um uh I'm I'm not involved with the the with temporal like I'm not active there now. very good friends with everyone on that team. Um, and yeah, and I saw it from the start and everything those guys got to work on. But, uh, yeah, I'm uh, like fully behind Project Zero right now.

>> Yeah. And that's a great way to go into this. So, do you want to give like a quick introduction on what you guys are building over at Project Zero? >> Yeah. So, um, DeFi has hit this inflection point. There are teams now that have won their or are winning their corners of the market. Um, and risk models have evolved. Program security has evolved. Like I can confidently tell you right now that a isn't going anywhere. Camino isn't going anywhere. Hyperlquid is like really exciting. Isn't going anywhere. And so given this um as a DeFi user, you're naturally going to have your capital

across like these these venues um you know for for different reasons like you trade per on a per exchange you do some like credit stuff on credit market maybe some interest rate derivative stuffs on like exponent you know [snorts] etc and that you have capital fragmentation and so the minute you're using more than one venue really like the second you're using two plus venues, you actually have inherently a need for a prime broker. You have a need to be able to now borrow against your whole portfolio. And especially if you have like these two this like more complex portfolio configuration where uh perhaps you're actually like levered long on venue A

and leverage short on venue B. Um you'd get better borrowing ability with like the addition of a prime broker. Um so that's what project zero is. uh project zero like allows you to use the venues you love using for the reasons you're using them and gives you better risk, better rates, better capital efficiency, better UX across them. Um, and the super cool thing here is that like whenever you say prime broker, like in traditional finance, that is exclusively reserved for the big boys. Like that's for the hedge funds. That's for, you know, the super high- netw worth individuals. That is not for, you know, your typical guy on Robin Hood. Like,

he's never going to get a prime broker. Um, but in DeFi, that's not the case. Um, in DeFi, anyone can can sort of access Pzero, which is sort of like one of the original cool promises of DeFi, where there's not only this like decentralization, there's also this democratization. And so now, like anyone has access to this tooling that previously was just reserved for um, you know, the the the hedge funds and the rich guys. Uh so I think that that part is that's very fulfilling to me as well like when I'm working on this >> that that sounds cool. Um what does it I guess like the trify comp what does it

look like to build a prime brokerage in DeFi versus in in trady like what are some nuances that you have to be very careful with? >> Um it's an extreme test of risk management essentially. So um as it is in in traditional finance as well like some of the biggest prime brokers uh of well in traditional finance it's like these bulge bracket banks it's like Morgan Morgan Stanley Goldman Sachs etc etc. Um however like when you go back to like FTX era um one one big uh prime broker was uh uh Barry Silbert and crew essentially and

uh you know they they ran into some like massive risk issues when uh a bunch of bad debt was spreading a bunch of contagion was h happening post FTX fallout. Um, and so that sort of like exposed a big hole in off-chain prime brokerage where you're essentially underwriting the credit uh credit against like these independent third party venues. And when you're doing that offchain, you have no verifiability.

like if the venue tells you it has like 100 million and it's good for it, maybe you can borrow, you know, 60 million against it, but it's still kind of like a trust me bro when it's offchain. And so the cool thing is is P 0 is completely onchain. So um we can, you know, real time verify that, you know, each of the venues that we're integrating are solvent. And so that's that's that's like a a big difference as well um with with like our model versus if you were doing this offchain.

>> That makes sense. Um one one thing I want to ask is so Solana Okay. primarily will you guys be um marketing or I guess like focusing on per products or any trading venue? >> Yeah. Yeah. Yeah, we'll we'll absolutely we'll integrate like I'm excited to integrate Drift Purps. I'm excited to integrate Hyperlquid Perks. Um I think there's some new purpose players coming on the market soon that I'm very excited about integrating. And what that'll actually do is for the first time open up this multi-enue basis trade where you can like long the asset, deposit, earn the yield on like Camino, short the per on like drift and then lever that up and you can do that capital efficiently which also has not been possible

previously. So right now we're doing like that but for spot. So we have multiple spot credit markets live. And so we're opening up these also these trades that were previously impossible. Like something a trade people are doing right now is like they're longing a incentivized asset on Camino that's yielding you know like 10% plus um or last I checked and they're borrowing an asset against that collateral on P 0. That's like the borrow rate uh is like 6%. And they're levering that up. That was previously impossible, right? Like if you deposit into Camino, you now have a spread. Now you're going to borrow at a higher rate uh just isolated to Camino. Um so so there's like some

really cool flywheels here where we're directing a lot of like liquidity tanning integrated venue. Um and then we're opening up these basis trades, radars, carry trades essentially at the start um against all of them. >> Yeah. And I assume like dealing with a lot of these decks um per deck is like across different um chains, you're going to get a lot of funding rate dislocations across them, right? Which will >> Yeah. Yeah. Yeah. Yeah. Per is like its own animal. So, and also like from the POV of like risk management, your risk engine levels up dramatically the minute you start uh having like access to perks and collateral [clears throat] against per or any sort of derivative. So, um,

we're really focused right now on getting first like 100% coverage of credit markets on Salana and like really refining like our our risk engine will never be done, but like really refining our risk engine against these spot products before we start adding on derivative derivative like direct integrations to derivative products on top of that because then we start dealing with like a bunch of like really complex Greek stuff and and uh and I want to be like fully prepared on the spot side before we shift our focus to That's >> I'm I'm curious if you take on any risk with these bridges. Um especially if you're like integrating Hyperlid. I'm >> Yeah. Yeah. So if we had Hyperlid live like recently, we would have like taken on a ton of risk essentially when they

paused their bridge for however long. Um uh now you can um you can build redundancy around this. So we have no like crosschain integrations live now. If we were to integrate something crosschain like we wouldn't have a single point of failure at the bridge like we would probably build like our own messaging layer uh outside of the bridge that you know is housed on our own infrastructure uh and we take this approach with everything we have you know massive redundancy with liquidators massive redundancy like oracles and pricing systems etc. So the same would be true for bridging infrastructure. So that's not to say that because hyperlid paused their chain, we just wouldn't be able to operate, but it would like add

definitely a lot of complexity. So um so [clears throat] when we do make um when we do eventually make you know our first crosschain integration it'll definitely be uh on top of extremely robust redundant bridging infrastructure that has been live for you know a while >> I presume means some form of layer zero integration but we don't have to chat too much about that. >> Um >> yeah yeah no lay layer zero wormhole I mean kind of all the above.

>> Yeah. Um, Ryan, you've recently been increasingly interested in prime brokerages. Do you wanna >> Yeah, I think it's a big gap in the market. We've been talking about it for a bunch of years. Like why why is the time now, right? Like this has been tried or sorry, there's been like a lot of cold starts. >> Like why why Yeah. Why is the time now? Yeah, the time is now because um previously risk risk engines were not nearly as sophisticated as they are now across DeFi. Smart contract risk was not to the level it was now across DeFi. And also there was no like there wasn't a lot of

winners like it was very like if you were a DeFi team and you lasted more than one year, you were doing great. uh you know historically uh again like those like all all those variables have now changed um there's teams I know that are going to be here next year um there's risk engines across these teams that um have proven to be to to with withhold uh a host of market conditions and market events um and uh and so now you can sort of make the lever bet on them which is like like what what we're essentially do every integration we make is like essentially we're saying okay we've validated the market risk with this uh particular venue and we're comfortable

you know spending two months like building out really you know particular uh uh integration tooling around this to to open up like uh credit against this venue. So um all those all those things were not true like two years ago. One thing you mentioned the smart contracts. Um I guess like what would happen if one of the lending venues that you guys are using has bad would that um affect >> project?

Yeah. So if um [clears throat] if uh if an integrated venue that we have live um were to have some sort of uh socialization event uh that would also impact proportionate to that would impact our our credit proportionate to the amount of collateral we have um on that particular venue essentially. So um and and and uh we we've done this right now what what it would do is it would kind of impact the whole credit pool. So like if you know there's $100 million on Camino and Camino has to mark down their assets by you know like 20%.

um and there's $100 million on on commino through through P 0, then yeah, that that $20 million socialization would sort of like be spread across the entire credit pool on P 0. Um what we're what we're looking to sort of shift to uh is to focus that socialization per venue. So really to only affect the people that chose to use that venue on P 0 uh disproportionately to all the other like people that are using different venues on P 0 and that's something we'll we'll definitely do that's very achievable. Um we're just sort of in V1 right now which is where it's equally spread across um the the credit pool. So that's why like we we're very particular

on the the venues we we integrate. >> Yeah. So it's just Camino right now, but I assume you're going to integrate essentially every lender in Solon and then add on EVM, right? >> So it's Camino and uh the Project Zero market itself. Um which which already opens up like a incredible amount of like differentiated trades and the Project Zero market has like $250 million of liquidity in it and like 100 million of that is borrowed. Uh and we have like 200 million more across like other systems of ours. So, we're like we're the largest decentralized prime broker in crypto uh right now. And we've also been like the fa one of the fastest, if not the fastest growing

uh DeFi app on Salana. We've been averaging over a million per day of inflow since launch, which was in September. Um but uh but yeah, um it's just Camino right now. to your point, we'll uh we'll first get 100% credit coverage of all Salana lending venues. So, Drift and Save are audited and essentially we're just working on and and done and we're just working on the application roll out with that and then soon after we'll go live with Jupyter Lend and uh Loop Scale. Um, and then we'll we'll kind of be there. Like that's that's pretty much 100% market coverage. And then we'll start to shift to derivative products.

Like we'll start to integrate per markets. And I also like I'm I'm massively bullish on like interest rate derivative markets as well. So I'd like to see more direct integrations to to those as well. >> Oh, like rate x exponent maybe pendal. >> Exactly. One um concern I've had is like Solana hasn't been able to come up with this >> um perpetuals protocol yet. Like Drift is good um but it's just like it seems like Hyperlid and Lighter are kind of doing very very well. So I'm I'm happy that you guys are like >> not pigeon holing into Solana and you're like we'll just do it like across because it makes the most sense.

>> Yeah, we can go anywhere. That being said, I am um so I've been very close to a lot of like per teams on Salana and a lot of just like market microstructure stuff. Uh and uh I am very optimistic on the state of like Salana per like in 2026 essentially. So, um, yeah, this game isn't one yet, I would say. But, uh, but yeah, we can [clears throat] we can definitely Hyperlid is a fantastic product. Um, and Lighter is killing it right now. And, and so, respect of both those teams, we can definitely, uh, we can definitely integrate them. It's just like those two the the sad part is is like Hyperlid

like I don't even think there is a direct bridge between Salana and Hyperlid. like we'd have to go to Arbitum and then to Hyperlquid. >> Uh and Lighter is also on this like custom ZK rollup thing. So >> that's like the sad part where like it is like that's more risk and more work for us. Um and I would like to just see more uh history with these things first so that we can hedge against things that happened what was it like yesterday with Hyperlid. Um but yeah, they're great products. So we got to go where there's user demand and there's definitely user demand there >> and I think that makes sense. Um and when you say 2026 you expect a big year for purpose. Is that just with new

launches coming up or is it from what I understand is like BAM is meant to help these products out or why? >> Yeah. So there's there's a lot of innovation happening at the um like Salana client level which like BAM um like what the harmonic guys are doing and uh etc. and a lot of competition there as well. Anza as well um uh so the brain power between team you know the tempo guys and um Anza is is great. like the fact that they're all sort of going after this is just going to end up in a really good outcome.

>> Um so and that will give a lot of optionality to applications um which will be great which should like tighten spreads um and if it doesn't it's a failure essentially and then um like we've seen the emergence. So then we got like teams like new teams like Bulk. There's other new teams that haven't been announced. We have like Drift V3 and uh Drift V3 seems to be as I look prioritizing uh propm uh uh uh makers as well which is really cool. Really really cool. I am uh I am a big believer in prop amms being applicable to per not just spot as well.

Um, so we've seen what propms have done with spot and sort of like just completely changing for the first time ever. You can get better prices on chain than you can get on Binance with props with spot. And so, uh, the combination of like those variables I just threw at you, I think is extremely optimistic for Salana in 2026 with per. So um so yeah I wouldn't I wouldn't um again respect to hyperlquid and lighter but I do think uh I think people might be underestimating how how important this is for Salana.

>> Could I ask more about prop amms and your views just given how deep you are in Salana ecosystem. >> Yeah. >> Yeah. Like I mean what do you think about passive liquidity on Salana going forward? Um my you have to assume that these prop amms are going to eat more and more of the market just given the success that they've had like >> yes >> is there a place for the old models on Salana? >> Uh yeah that's a great question. Um, so the hedged version of this is like, oh, let's just have a composable order book and prop a mem and we'll have the like

these prop amms like fighting close to, you know, the spread and then we'll have like these more passive quotes across the edges of the order book to fill in depth. Um, but saying that and I and this is also on the back of um I'm I'm very good friends with like KV over the temporal side and I was was talking with him about propos recently. So some of this thinking is shared between him and I. It's not just me exclusively coming up with these ideas. Um I think people underestimate the the depth of uh prop amms and how quickly they can update if like a big order comes in. Um, so everyone keeps saying, uh, we need these

order books because, you know, if someone wants to slam a $10 million order, they're going to need to, um, eat into the order book a little bit. But if that in in practice happens with the state of today's even today's propm on spot, uh, and these prop amms have access to adequate inventory, they can update so fast that they can just eat that all up. Um, and uh, and I think people are underestimating that fact. So I I I I I think that like a prop amm alone could potentially just handle 80% 90% plus of like all trading needs. Um, and people can try with orderbooks and

and also from like my point of view, so I'm coming at this as someone who is offering credit against multiple, you know, like from the P 0 perspective and and when we're on these permissionless systems, like we're talking about like liquidations, which are automatic permissionless, and like I need a good idea of market depth to manage solvency, you know, like if if um I'm offering credit against like If I'm if I'm offering the ability to borrow hund00 million against a particular asset, and that asset needs to then be immediately liquidated, I need to be able to sell big chunks of that asset on the market. Um, and liquidators need to be able to protect solveny fast. And so, um, historically for me, it's been great if you just put

that in like a constant product AMM and I can just be like, "Okay, cool. There's like five million bucks of liquidity here. I know exactly how this models if you know a big like sell uh buy or sell comes in." Um it gets much more harder with prop amm um because like their depth isn't really representative of how much they could swallow up uh when you're like looking like oh this propm only has like 30k in it like no this it could probably actually eat up like 150k of like sell pressure immediately. Um so that part is going to be more of a headache for me. Um, but hey, that that means like DeFi is evolving. So, uh, so that that that that that that's cool.

Yeah. Yeah. I'm so I gave you a really long answer. I'm very bullish on on propM. I think they can be used for purp, uh, I think that market structure could just like almost entirely shift them with um, safety measures in place across AMMs and order books. Like I think um, Sanctum is really great. Like look at what Sanctum has done for Salana LSTs. They just put this big pot of like soul and LST liquidity in one place. It's easy to model and Camino and PZ and Drift and we can underwrite like tons of credit against LSTs now because of that.

Um I'd love to see the same for like Bitcoin products. I'd love to see the same for ETH products. I'd love to see the same for stablecoin products. And so that's also totally agnostic to a prop amm or an order book. That's just like kind of like I think AMMs are like really important for those types of products. But yeah, I think we could see this power law with AMMs and then prop AMMs essentially and then order books are kind of like this weird uh middle child. >> The the one thing is Ben also said this one thing that was in my mind is then you never let price discovery happen on Solana, right? because you're only getting price from >> Well, that would be that would be like saying that so all these propms are reliant on like

this internal oracle, right? that's saying that like you would have no um pricing like pricing alpha with your oracle which which I don't think is I think like a lot of these guys are capable of >> figuring out where prices should be and updating the their oracle accordingly and then um price discoveries is once again happening. Yeah. And now it's happening onchain instead of on Binance. So we're not just reading off of Binance and updating prices. Now we've actually finally for the first time like this is also like the biggest dream for forever that has never come true. Now like price discovery is actually happening on like these prop amms fighting on Salana which is which would be in incredible. Yeah

>> that makes sense. Um my friend I have two more questions and then we can wrap things up. The first one is um moving away from margin five into project zero. I can see a clear like we're doing lending why not do it at a much larger scale and much more >> um ingrained scale but do you have what's the story like over there? Yeah, I mean, so yeah, I was part of the the margin team. It was like the fastest growing DeFi product of 2023. And then and then, you know, my uh my co-founder had very bad day, crashed out. Um and he destroyed a lot of trust like in a very short amount of time. And um you know,

that was really disappointing to me. I was disappointed to like all the people on the team uh that had put in a lot of time and effort into making this like a really successful product. Um and the easiest thing I could have done in that situation is just be like, okay, uh I don't want to deal with this anymore. I'm going to, you know, take this really really talented team and go do something else. Um but I decided, you know, not to do that. Um, and we we we still saw, you know, this massive problem with uh capital fragmentation on Salana. So I was like, okay, let's like rebuild this from the ground up um with this like really talented team um and build something like net new. Uh and so and

the the the nature of doing that like I had to do that sort of like behind the scenes. I couldn't give a lot of like meaningful updates. It took like a year about a year to do this to get to that you know the point in essentially September which is two months ago. Um uh to be able to launch it. Um but I I you know I felt a deep like uh I felt a deep respect to our user base, a deep respect to our stakeholders and a deep respect to our team. And um and I knew we were very capable of this. So that that sort of marked that transition.

Um in doing so, yeah, I also like Marginify was in a rough spot. Um if if we didn't make any any big big changes, the company would have went bankrupt. Um so that's when uh you know with with Ben with with Jacob founded Temporal, Margin Fi and Temporal work very closely together to to like essentially save Margin Fi from bankruptcy. um lots of lot like sleepless nights. Uh but that, you know, all that sort of got us to to the point where we could um take a stab at at Onchain Prime Brokerage. So um I've learned a lot from it. I've grown a lot from it. You know, I deeply love the people I got to work with during it all,

inclusive of Ben, who you had on, inclusive of Jacob, Ky, guys on the temple side, and then a bunch of guys on the margin side as well. you know, Adam and John and Abdul, etc. Um, and then like our investors, which would would be Multicoin and Panta and Salon Adventures. Um, you know, all that together really, really held the held the ship together and and now, yeah, we're on this like really exciting new chapter and we're one of the fastest growing teams in Salana DeFi and um, yeah, we we we we know very well what what we're what we're capable of doing.

So that was that was the story there. That's the lore. Yeah, >> it's good lore. >> Yeah, >> it's very good. Um, okay, just to end things off, what what does the next six to 12 months look like for you guys? And what do you think people who listen to the pod, listen to the live stream, um, should be doing with regard to project zero? >> Yeah. So, the next six months um, involves wrapping like we'll we'll be fully wrapped within six months. We we'll be hopefully have uh our first like derivative market live at the end of six months. We'll be fully wrapped with credit markets on Salon. We'll have a 100% coverage. So if you're coming to Salana and you're using lending

programs, you should get a more capital efficient riskaware experience through project zero. You should get better risk, better rates, better capital efficiency, better UX through project zero if you're using lending markets on Salana in in at the end of this six months. And if you're not, we're doing something wrong and you should DM me and I should fix that. Um, and that again is like, and what that will do as well, it'll be this really cool um, efficiency flywheel to all our integrated venues. So, what should happen also is that rates per asset should adjust to their risk adjusted return um, per venue.

meaning like maybe USDC on Camino it's super safe and it's at you know 5% and on drift there's like a little bit extra risk and so it's up at like 6% and then any all of these different like rate differences across venues can immediately get arbed capital efficiently to their risk adjusted level so that flywheel should like happen credit market should become like super efficient um I'm excited about that and then yeah we should be live or close to within 6 months certainly um we should be live with like our first derivative integration probably hurt per market and then I'd also love to have like some interest rate markets also live so those two things uh also at breakpoint I will

be talking so Breakpoint's next month breakpoint's in like essentially exactly a month from now I will be talking about the project zero uh token and how we're thinking about like that whole, you know, all that. And we're we're very focused on getting a token live before derivative markets because we see derivative markets being essentially our biggest opportunity for growth. So this way we're not like launching a token at the top and also it's fantastic now like markets are down and so like this is a great time I think to um to get a token out. So I will be talking about the token uh at Breakpoint. I have like a a talk at Breakpoint and I want to get that live before [snorts] our derivative

markets start to go live. Um, so that's like that's six months. I think that's about as you know those are some big things. So yeah, >> that's very exciting. Um I guess because you brought up the token now I feel like I have to ask this kind of in terms of um how does a prime brokerage I guess business model work? I'm not particularly like do you just clip on fees? Do you clip on interest, paid like borrow interest? How does this work out? >> Yeah. Um it's pretty multifaceted. So there there is inherently like these spreads uh associated with offering credit um and and increasingly differentiated spreads

per asset based on its riskiness which introduc introduces the ability to capture additional fees essentially. So that's one fee source is just inherently spreads. Another fee source actually that a lot of people disregard is um orderflow as well. Uh so like we should be a big generation generator of differentiated unique like liquidations. We should be a big uh originator of like collateral swap options and and uh and you know interest rate uh and and like especially as we see the the maturation of interest rate derivative markets um a lot of like the interest rate moves that

will happen on P 0 will directly impact them and so like this order flow is actually very meaningful um it's different than order flow when you think of like Jupiter or like Titan or DFlow it's it's completely different. Um so like that's its own sort of order flow segment and we would be like a very differentiated orderflow segment but also with liquidations that also is like you know every time someone liquidates on project zero um the program captures a fee on that. Uh and liquidations are open to anyone any profit motivated actor can come in and liquidate. So those are some bigger areas. Um and then finally like we have a world-class application team at BZero and we have some differentiated apps that are that

will also go live uh one of which before Breakpoint as well. So within the next month um that introduce like its own you know fee capture. So, um, like a good example of that is like our strategies page that we recently launched where we sort of surface like these differentiated um, interest rate arbs and carry trades that you can only capture on P 0. And many of these, you know, we just show the spread right now. We're about to update it actually, but with leverage, it's like 20% plus yields on assets you're already um, holding. And so any sort of like automation or point-and-click functionality on the

application side, that's very valuable to users and users will like pay a few bits uh for interacting with that. So um that's something we want to double down on as well. I I'm very much like of the thought camp that programs like DeFi programs in any sort of like sufficiently competitive market fees should compress meaningfully. like programs themselves should not be able to capture a ton of fees and a lot of the fee capture should happen at the application side is where you have like this exclusive relationship with the end user and you can offer like really great tooling around what the what the what the D5 program provides. So that's that's that's how I think about things.

I >> I think that's the general Salana thought process and it opens up like how will Solana generate revenue going forward? Is there like a rent thing for you guys for example? Well, it be the same thing like in like an app someone using a perp trading app will like I want my uh order to be prioritized and so they will pay a fee to the application and the application may share that fee with like a validator for example and so that is something that currently the Salana program isn't set up to to capture um but that will be like inherent value to the sole token itself essentially for using this you know shared >> um uh database case essentially. Yeah.

>> Yeah, that makes sense. Um, Ryan, anything you want to ask or >> No, we're good. McBurnen, I thank you for coming on. This was very very [clears throat] >> Yeah. >> Um, do you want to I guess like people should follow Project Zero. We'll put this in the show notes as well as Mc Brennan CC who does not do as many shirtless live streams anymore. [laughter] Yeah, that was uh that was like peak bare market 22 essentially where I was like, "All right, well, [laughter] that was a different time. That was when everyone was, you know, considering leaving the industry and I was like, "All right, well, what's the worst that can happen?" Yeah. Very good. All right.

>> Have a good day. >> Yeah, you too. See you guys. It's just you and me now. Ryan, [sighs] can we talk about the markets a little bit? And then Ian's gonna come on and I'll let you go. But I sold this morning and I think >> I messed up. What do you think? >> I mean, today's the bottom, so it's really that's that really sucks for you. >> You didn't sell too much. >> No, I did. I did sell quite a bit. For context, I messaged Ryan this morning, European time, and I presume it was like 4:00 a.m. for him, and he was like, "Why did you why do you always sell the

[ __ ] bottom?" So, [laughter] I don't know. We're going to see what happens. Um, >> true story. >> This is I'm happy you came on the spot because I I I think it incorporates like three of your favorite things, which is prime brokerages, um, per on Salana, and also how can Salana make revenue going forward. And I didn't know this like applications can pay a fee was a thing that they're thinking about. Imagine if Mc Brennan's talking about it. This is something they're quite actively thinking about. >> There are a lot of uncertainties I think in Salana land, but there's also a lot of things to be very excited about. Um, you know, I think one of my big failures of 25 was just assuming that it

would look a lot like 24. But things are so rapidly changing in Salana land that it's just it's hard to get a handle on it. Um I think it's 26 is going to be really exciting and I'm looking to forward to seeing how the chips fall. I don't know what's going to happen. Um >> I really don't know but it's the ecosystem has so much momentum. It's like I said in the beginning of the call like I'm a little worried about the monetization thing. Um, but I think Hyperlquid is proof that like and Salana in 23 24 was proof that if you kick the fee low enough, you can really offset in volumes and make up for that. So, you know, I'm I'm optimistic.

>> Yeah. I um one thing that like kind of has been has put me in the same boat in terms of like I don't know what the hell is going to happen in 2026. There's our Salana guy coming in. I don't know what the hell is going to happen in 2026 is purely because um like [snorts] in my mind the landscape was very clearly JO beforehand. It's like okay JTO controls majority of how Solana value flows through. Um, but if they're bringing in these um like what the temporal guys are building harmonic um as well as like clearly ANS is much more competitive than it used to be. Um I don't know what's going to happen with Fire Dancer still. I I have no idea where that like

development is going. Um but like it's going to be kind of a weird 2026. Um Ian, you're a validator a part of the Salana Cabal. Do you What are your thoughts on what's happening in 2026. You need to unmute, by the way. I don't know if you know this. >> Can you hear me? I don't think you can hear me. >> Yeah. Um, yeah, I think you guys are right. I mean, it's kind of anyone's game for the next year. Um, yeah. Yeah, I can hear you. You can't hear me?

You're very delayed. >> Sorry. I think the the audio is messed up on mine. I think the audio is >> That's it. That's it from >> No, >> I removed them up and come back. >> That was the most impressive delay. I've never I've never experienced such a long delay on the call before. [laughter] He just looked right back at me. I'm gonna try him again. Are we ready? Hey, Ian, can you hear us now? >> Yeah. Yeah. Sorry, I can hear you. I had it playing through Twitter and so there was like a delay on my end. I was like I think I was like I didn't have the actually live audio. I had like the Twitter audio. Uh but yeah, no, sorry

you guys are right. >> You can hear me now though, right? >> Yes, we can hear you now. We were have Yeah, there was trouble syncing state across nodes. Yeah. Yeah, we we IBRL that though, right? Right, Picacio. Um, so yeah, but anyways, for for next year, I think it's great. There's like tons of competition over there now. Uh, like I think like one of Mac's points was like it's going to result in just like better outcomes no matter what because you've got like a bunch of smart teams working towards um like you know the actually like the best user outcome which I think is great. So quite happy about that. And yeah, I think if you like start looking at like the judo guys, like they're

definitely like locked back in now. Uh cuz like there's a lot more competition than they've ever faced. Uh and like props to like the Agave team as well because like they stepped it up when Fireer came in. Um but yeah, I mean it's looking really positive. Um so yeah, I think it should be a good next year. >> Have you have you looked into these new per protocols, Ryan? Have you like bulk trade etc. kind of right I Ian did you >> uh I mean we chatted with like bulk earlier this week but I don't fully understand their architecture yet but essentially my takeaway is like they're going to be able to be running per on salon with like 20 20 millisecond

latency and so like that's that's really good because I mean even on like the fastest like SPM implementation we'll see with Fogo which is like 40 milliseconds um they're going to be doing half of that on like a chain with already existing distribution. Um, and the guys who are building it themselves like you like they understand uh like trading quite well. Like apparently they were doing like market making prior to this and like now they're building their own platform. So um that's quite cool to see. But yeah, that's like the one thing Salona has not cracked yet to be fair is like the the purpose trading. Um so obviously like BAM can help uh people build out like a better like purse trading experience over there but I

don't know if BAM can solve like the latency in the same way. Um so it seems like bulk is kind of going after like the timing game there. So um yeah hopefully hopefully it's a great product and hopefully people use it but yeah >> Ian I have a question. Will BAM enable hyperlid like performance or will it not? I mean for I think C like in terms of ordering and stuff like that it'll be closer to what you see but I don't think like you're still going to be subject to uh network latency right and so I think hyperlquid is correct me if I'm wrong buck but I think it's like 80 to 100

millisecond blocks right so >> well it's like being lowered on test net quite drastically it's at like 50 milliseconds on test net >> that's yeah like that's so that's really Good. So, uh, Salana right now is like 400 milliseconds, I believe. Um, and that it's like an existing issue right now on Salana to try to make sure that people are not, uh, like slot lagging either. Like trying to get, uh, blocks to be faster is kind of an issue because a lot of the uh, larger validators realized if you make your blocks go longer, then you can produce more profitable blocks. uh which is like you know it's like it was a timing game thing on Ethereum for a while kind of

got labeled as that like the EF research cabal uh and then people realized you can do the same on Salana so uh it's a little hard to crack down on that from like the protocol level itself like obviously if you're a stake pool you can blacklist validators that are doing that uh but I think it's going to come down to like what's really going to make Salana competitive with Hyperlid from like the per trading standpoint is always going to be like that networking latency uh like how fast are the blocks produced uh and like I think naturally you're also seeing the Salana valer count continue to shrink like when we joined the set there was 1300 validators now there's 860 and that probably continues to shrink as the Salana foundation like get uh takes back like

claws back a lot more of their delegation. Um so that will end up with a lot of the valers probably being you know like located in the same data centers. Um but obviously like it's pretty hard to uh drop block times meaningfully to compete with Salana in that way. So I think bulk might be like the most viable solution to compete with like hyperloop in that sense. But Hyperlood also has like a massive lead now in terms of all the distribution they have, all the users. Um like it there's this really crazy dashboard that came out and like one of the things on them was uh how often or like what percent um of users are coming through like the builder codes and it's like

it's some like ridiculous percentage. I think it's like 60% of like all users right now are coming through those builder codes uh which are like the ASXN dashboard. So I can I'll probably share that in in Twitter or something. But um yeah, really really crazy lead that they have over there. But yeah, >> that is insane. I saw that as well. The 60% coming from building. I mean that's just [sighs] I I wonder if bulk is a um a network extension by the way or do you know if they're building directly on Solon? Because to me like 16 milliseconds latency on directly on Solana seems impossible. Yeah, I need to dig into like their docs again. Like I didn't really get it first time around, but it

sounds like it's more of some sort of sidecar implementation, but the cool part is like they're also going to have like their own uh like agave fork uh and then the validators are paid in stable coins, which is pretty cool. So like um any like you'll be able to get additional yield there and it'll be in stable coins. So I think like that'll be pretty attractive for uh getting some stake there. But um yeah, I also don't know I don't know what like percentage of stake they would need for network to function in like a real like the most optimal way. Uh but yeah, I think that's definitely one to like watch.

>> Yeah. Um I guess like my my last thing here is with regard to how you said like per dexes have never been figured out. Ryan, I'm I'm curious what you think here as well, but like it feels like every chain has something that they get really really into and it feels like Solana just got really into prop AMMs. Like all of the like really really smart guys are just involved in prop AMMs now. Um and like on Ethereum it's like whatever validators or decentralization or like cipher punk stuff. Um, but I'm wondering if that's kind of removing the the like efforts going towards building up per X's. Although now it seems like

like bulk and stuff is coming up. But on Monday we had Ben from no on Tuesday we had Ben from Harmonic and today McBrren they were both like oh like we can use prop amm to do Ps products. I was like why not just focus out on building out like a order book for Pers products right? Like that to me feels like something proven, something that's worked before, and then like just focusing on building that out to me makes a lot more sense. Any takes here? No takes. Yeah. I mean, they were It seems like a lot of the Salana intellectual community is definitely oneshotted by prop amms. Some people say in the same way some people really like trains >> and other other fun things like that.

>> Uh but I thought that was an interesting point. I didn't I I haven't considered anything around that. I think that's more up uh Daniel Daniel Smith's alley. I think he's also quite interested in training props to my understanding. >> He [ __ ] loves prop amnms. Carlos as well got oneshotted by props. We do this newsletter every day. If anybody wants to subscribe, it's called the Zerx Research Newsletter. Daily market insights from the analyst team. And every time I read Carlos's piece, it's about prop amms. It's insane. like how can you keep writing about propms and you [ __ ] >> I I mean I guess it is kind of like the only kind of new evolution we've seen of like onchain trading on Salana right now

but um yeah I I don't really understand like the per prop amm value prop there. So would like to learn more about that. >> Yeah, Ryan, you unmuted. >> I gotta run. while it lasted. >> It was fun while >> this was great, Ryan. We should do it again sometime. >> It was really good seeing you both. I'll see you in the chat. >> Very good. >> Peace. >> Removed and kicked. My favorite thing is to remove and kick people. Ian, I need you for 15 more minutes, but before that, I want to give a massive shout out to Apptos for sponsoring this stream.

Apptos, Bitcoin DeFi is heating up on Aptos with nearly $400 million in BTC assets onchain. Apptos users can now earn yield on their Bitcoin via Echo ABTC and OKXBTC without the typical bridge risks and high fees. Thanks again to Appto for sponsoring today's stream thoughts. Let's not do this, but it was pretty good. I like my >> That was good. That was a really good segway. >> I think so, too. So, Ian, you're not typically known as a trader, but I tried to ask Mc Brennan his market thoughts and he was like, I don't want to talk about this right now. I asked Ryan, he was like, I don't really want to talk about this right now. I'm gonna talk to you. What are your market thoughts right now?

>> That's what people are tuning in for. Yeah [laughter] >> I mean, yeah, I think the market's in a bit of a weird place. It's just been hard to actually get any sort of read on it since like 1010. Um, like market has just not really recovered since then. Everyone's just like like cryptically talking about bodies floating to the surface and it's like okay well what exactly happened? We don't really know. Uh apparently like some funds are like I don't know waiting to I I don't I think there's like stuff we maybe shouldn't talk about. But I think in general it seems like it's an issue maybe outside of uh crypto's sphere, right? it kind of seems like a broader

macro issue. Uh like the fact that like Nvidia's down is also kind of obviously hurting everything. Um but yeah, I think like Sam Alton has been moving kind of weird. I think the AI people are are moving pretty weird. Uh they're I think people are starting to ask a lot of questions over there around like you know are these companies like appropriately valued? uh how does like OpenAI plan to IPO at like a trillion dollars if they're doing like 1.6 billion ARR? Why is there no monthly economic data for the month of October?

Uh it's like kind of hard for like I guess like investors outside of crypto to really kind of assess what's going on out there because it seems like the law like the US obviously went all in from a financial standpoint on on crypto not crypto AI and like the big idea there is like it's going to bring all these productivity gains and meanwhile like it's just everyone making like sloth with AI for the most part like seems like that's like the largest consumer use of just like you know brain rot maxing. >> [laughter] >> So, >> I don't know. One thing is like, yeah, Sam Alman's been moving pretty weird.

This is the official term. And he's like, oh, like, you know, the taxpayers will [ __ ] cover it. And it's like, okay, what are the taxpayers covering? It's like old people looking at their phone for 16 hours a day. And it's like, I swear to God, every time I see somebody in the in the metro, it's like somebody looking at um this like woman jumping into the pool and like getting all the water out of it. and they're like, "Is this [ __ ] real?" It's like, "Yeah, Sam Alman's going to make people pay for this as well. It's insane." >> Um, >> maybe we should raise the prices on that. If like that's like the main outcome, maybe that will solve some of the slop.

>> Um, but yeah, >> I also don't really understand how they monetize any of it. It It seems like they want to do it's just a really tough cell, right? Like you start off AI by saying, "Okay, we're going to essentially solve like human capital problems. We're going to make sure that everybody has um like exceptional tooling and knowledge under their palm at all times at like record speed. And then it's like, okay, how are you going to monetize it? We're going to serve ads, personalized ads to people who are chatting to it. Um and also the main two use cases are slop and people falling in love with their chat bots and using it as like personal diaries essentially. It's Ryan would be so upset

if he was here. I'm glad he left before we started. >> Yeah, >> I think the I mean, yeah, it seems like the real use case there could be like health related things uh like all those like I don't know that seems like a harder I have no edge over there either though. I think like if you're trying to do like deep scientific research with it, I'm sure it's like helpful. >> Yeah. But also for like the most part it seems like people are just [clears throat] using it for slop using it for like coding and like some of that also like some of that coding is just like to code like some like slop app like vibe coding obviously is like there's a lot of like just loweffort things that have come to market. Um so yeah I mean maybe they should like raise prices and see like

how sticky like the users actually are and like then maybe you get like some real stuff out of there. But I think back on the crypto side uh despite like prices being down, it seems like directionally a lot of the tokens are moving towards the right thing in terms of actually starting to have like an idea of like this is how that the token makes money. This is like we're going to use like the protocol money to do this like um obviously like Uniswap was like the one that everyone's been dogging for just like years now because it's just been like you know it was like the first big DeFi coin and it was just like cucked for so long. So, it's nice to kind of actually see uh some progress over there. Uh Lido came out with like their fee switch like that's all cool.

Uh and like meanwhile like the protocols that just started doing buybacks from like day one. I think those will probably be the ones that are going to like actually end up uh outperforming and like going forward. So like um whenever we get some sort of recovery, I'm sure like hype probably rebounds pretty fast. Pump probably rebounds pretty fast. Like Pump is like now they bought back like 11% of their circulating supply. >> I sold Pump today >> in the morning. >> I got >> Yeah. I mean, how's their revenue doing by the way? Um like they every time I check it, it's like they're still somehow making like, you know, >> exact millions. Yeah.

>> Every time somebody brings up Pump, they're like, "How the [ __ ] is Pump still making a million dollars a day?" And it just like it's one of two things, right? First of all, I think that Pump's revenues are legit, but there's always like two thoughts that pop into your mind. One is like, okay, I have no idea what this market actually wants and looks like. Yeah. >> Like, there's clearly strong demand for this one product that I just genuinely don't understand. >> And the second thing is like, okay, they're cooking the books, but they they're not cooking the books because >> if they're cooking the books, it's it's a horrible look for them. like they're using raised cash to buy back, which either way is fine because they're just buying back 11% of the token. But clearly these guys are just there's this

market of crypto traders still out there who are trading pump fun coins and I I don't know who they are. Do like James Kristoff sends in one a week. He's like this gonna be a cook and then it goes down 80%. That's my like only only relationship with Pump Fun right now. >> Yeah. No, I I agree with that. I've like I checked uh I saw like their Arkham entity or whatever. Like they still have like the billion dollars of cash in there. So, uh yeah, like right now they're holding like 889 million of USDC, 299 million USDT, 166 million of soul, and then one I mean it's like their arch entity, so it's

going to count the pump they have too, but it says like 1.84 billion of pump. Um, yeah, it's interesting. I guess like someone's still using it. Uh, I do think it's like those things that like there's a lot of like attention tokens, right? Anytime like there's some weird new event, like people are launching traders for it. >> Um, >> and I guess there's like people that are still trading these things. Um, but yeah, I mean they're I think they're probably doing the right thing of just shoving that all back into the token and seems like they're trying to corner their own supply and uh they're sitting on a billion dollars of cash. So yeah, I think it's I think they're, you know, going to stay on course for this.

>> Yeah. Um, [clears throat] with regard to your point of like how these tokens are converging and I think this will be the last thing that we do because I need to do an ad read and then the layer and layer zero guys are going to be on but very important. I feel like we have now like there's the argument in early January, February is there's too many [ __ ] coins that you can't like what are you going to bid not the market isn't going up well enough but now it's like there's really only like 10 tokens that you can bid like realistically maybe [clears throat] 15 and you can like and there's like flavor of the month flavor of the week if you really want to gamble on X42 you can buy that like whatever the Ping token was out

there and you could have bought that. Um, but most of the time it's really like only a few tokens putting in not even particularly like intense moves up. They're going they're just grinding up like 3 4% a day. It's not like the old days where it was like Zcash [snorts] and or exceptions exceptions like we're in a zle market. We're in a or kind of not as relevant now but I don't know. Um, but yeah, like there's only 10 15 tokens that you want to bid, right? Max. >> Yeah. I mean, also like I'd just be curious in general what percent like of all crypto purchases from buybacks like all like the dollar amount of that and the dollar amount of like liquid capital

in the space to actually bid things from like the fund side like how do those two numbers stack up next to each other because like how many like dollars of buybacks has like hyped since it launched >> if you know I would assume it's like hundreds of millions, right? Yeah, probably close to a billion. It's It's closer to a billion than it is to 100 million. I think it's like 7800 mil. >> Yeah. Like that alone is insane. Uh Pump is pro I would say Pump is probably like the second largest in terms of like dollar amount of buybacks. Um I actually don't know who would like come up third though. Like I feel like it kind of trickles off and those are both like trading related apps. Uh I don't really know anyone else who's like making a

substantial amount of revenue like that. I I think there are a few other tokens. I just don't think that there are a few other protocols. I just don't think like Jupiter buys back quite a bit as well. I just don't know what it is compared to their earnings uh compared to their price like their FTV. Um Radium used to buy back a lot more now. Like obviously the market's shifted on the AMM side on Salana. Um but a is a big one. Maker perpetually um like undervalued based on a multiple but seems to know despite like them buying back. I think they're the earliest token to implement the buyback.

>> I think you're right. Yeah, I think they kind of pioneered that whole thing and I think I just saw something that they're moving their buybacks from unis swap to hyperlquid for sky. I'm not I'm not entirely sure about that, but I know there was like a big issue for them is like they were just they were doing buybacks, but they're also supplying liquidity and [laughter] I I think they fixed that a while ago, but like that was like an issue and I think they were just trying to figure out like where can we actually get like better execution and like right now like there's no like flow on chain for like Ethereum L1. Like the majority of like trading over there is like sex arbs. Um so just like retail just getting like rinsed on anytime they try to buy like onchain tokens over there. Um, and like

there's no like new assets over there that people want to trade. Uh, but yeah, I'm pretty sure I saw something about that about um the buybacks moving over to Hyperliquid. So that's that's quite cool. But um yeah, they have been doing that forever. I wonder what percent of the supply they own as well. Uh I don't know. I also need to check that. I mean like Maker I think all of the old remaining D5 protocols Maker A um I saw Multicoin just published a piece about how they bought I think it's multicoin. I don't want to get in I don't want to be lying on Kyle Sanmani's name, but I think they just bought into Ephina. Um I don't know how is doing in terms of like revenues and

>> price earnings, price sales. But I imagine that's also in the camp where it's like you see I mean they're moving into this white labelled stable coin idea which I think is has a much larger and I think much riskier TAM than like um than UST which I think it's it's a scary thing. People just get scared by it. I don't think it's necessarily at risk ever. >> Let's not say ever. You never know. But like I don't think it's at like this massive risk that people put it in. Um, I'm sure there's people much smarter than me who can explain why it actually is, but um, I think it just gets discounted so heavily, like it it gets sold down so heavily when like any form

of like the market sniffs out just a bit of risk in lending or like in stable coin areas and they're like, "Oh, I got to [ __ ] get out right now." >> Yeah. I think like the best chart to watch there is like the like USDS supply versus like USD supply. It's usually kind of like uh signals like risk on, risk off. Uh I think like what yeah what Athena is doing is pretty smart honestly to expand beyond uh like a yield that's just relying upon like um like funding rates because obviously like they're kind of constrained there in terms of how much they can scale because they also just need like uh market sentiment to be like super bullish for the yield to be great and the need that to also like continue to grow over time as like uh USD deposits like scale too. So I'm

not sure what the the civil coin as a service is backed by. If it's backed by like their like bidding thing with um securize >> it is >> I think like okay then that like I think that's quite secure uh and there's good like transparency there. So, I think it's a smart move, honestly. And I hope that we see like like a Athena flip circle in terms of like raw dollar amount that they hold uh within like the next couple years. I think that'd be exciting. Uh because they are like a really like lean driven team, DeFi native, crypto native.

>> Um and if you watch some of their tweets, they it seems like that's like who they're gunning for is circle. So, it's nice to see like, you know, >> you can't really gun for tether though because >> No, no, you [laughter] can't. Yeah, you can't. Yeah, there's some things better left unsaid. [laughter] >> I don't know if you can come for that, but um >> No. Yeah. Yeah. >> I guess like like Carlos wrote this piece and he was like long met um and then like short other AMM tokens and um I think it played out. Oh, Ian, I'm gonna let you go. the big dogs have have come in. Thank you for coming.

>> Can you Can you segue me out? >> Yeah, Ian, thank you so much for coming on. I really appreciate it. Have a have a fantastic evening. I appreciate you sharing your market thoughts as a renown trader and analyst. [laughter] >> My pleasure. Thank you for having me on. >> Thank you for coming on. >> I got to remove Ian. Hello, Brian. This is going to be a little personal for the first few minutes until Shuram joins in, but I hope that's okay. Are you doing well?

>> No worries. Yeah, great. >> Very good. Um I guess before Shir comes in, I I wanted to ask you a few questions. Um if if you want to um and you can always not want to answer if you want, but I've been kind of wondering about what the strategy for layer zero is in terms of um I guess issuing assets on um Hyperlid. I I I I seem to think that I've seen a few and this is Darren just joined us. This is another analyst at Blockworks Research. But um seem to see some like assets ending with zero and I assume it's it's being issued by you guys, right?

>> Uh so it it depends. Uh I think post uh you know USDT0 people sort of love the the naming convention in general. Uh we have definitely been working with a bunch of different asset issuers to basically take them to you know a ton of different environments. Um so that is is something that's pretty pretty highly requested right now for sure. >> That makes sense. Um one thing I had on um McBenan from margin five previously margin now works at project zero. One of the things that he mentioned was um how they can't really do because they have to hop two links to go to hyperlquid.

like they have to go to arbitum and then hyper liquid. Is that I mean you guys seem to be connecting everybody to everybody. Is that something you guys are going to be working on? Like solar >> already solved. So we have uh we have a thing we call direct deposit for hyperlquid built specifically for hyperlquid. So you can one hop any asset directly in hyperlquid already. >> Very cool. I did not know that. >> You'll see some more integrations roll out around that. So we built it kind of semi-reently and now a bunch of assets and other groups around are adopting it. So you will for sure see that but available today.

>> Very cool. All right. Hey Shirum. >> Hey. >> Hello. >> Hello. >> Okay. Um big big day for me today and big day for you guys I guess last week um with IEN zero. Before um before we get started with the questions, do you guys want to give a short um and I don't know who to pick here? So I I'll I'll let you guys decide on who wants >> ahead. I was already I was already chatting some. So, >> but um what is IGEN zero? What should people be looking forward to? And maybe like a rough overview.

>> Yeah, amazing. Hey, everybody. I'm super excited to be here. Thanks, Brian, for doing this together. Um [clears throat] uh what is Zero? Right. So, as uh you know, Blair Zero leading bridge, right? So, you know, does uh I think more volume than Western Union. Uh Brian recently had a beautiful comparison. >> Oh, five times Western Union in the last month. >> Oh man, they're crushing. See, amazing. So, you know, you want to build a crypto bridge and like one of the big the architectures underneath uh layer zero is this idea of a DVN, right? Which is a decentralized validation network which

will actually verify the messages and move the messages across different chains. And a question that shows up is how do you know that a a DVN is secure, it's honest, it's uh trustworthy. And you can have different mechanisms, right? You can have reputation, you can have uh many parties, you know, it's decentralization, you know, these are different mechanisms. A very cryptonative mechanism which is what secures basically all blockchains is stick, right? You know, Ethereum's secured, Solana is secured, all the chains are secured because somebody stakes and promises to run this network correctly. And can we have a similar mechanism for a DVN which is some kind

of cryptoeconomic stake that is securing it where if this stake secures this DVN and this bridge, it means that um you know that this amount of economic security is backing this bridge. If this amount of economic security is backing this bridge and the operators are malicious in moving messages around then they will lose their stake and then they'll be slashed and that money will be redistributed to the harmed parties right so this is the end toend flow you know over time this will become like a you know fully insured bridge right an insured bridge is uh you know when I'm transacting if my if I'm if my bridge is broken because of an operator malicious

is you know action so because I'm taking counterparty risk on an operator because of that if I'm losing money then I will get redistributed so that's the idea of like you know this is combining the two things that both of us are building layer staking slashing redistribution layer zero DVN leading bridge so we came together to build this product called I zero Brian >> yeah yeah I mean the way I view it is uh I mean I think we can get into a bunch of this stuff but in effectively. You know, I think there's been long-standing demand for how do how do you take like how do you add economic stake into this layer and there's a bunch of different ways that people uh basically try to secure sort of different sides of this and there's everything from right again

from from ZK proofs to economic security like all of these different stacks. How do you make a stronger and stronger sort of validation or verification layer? Uh there's two sides what we did. One is the framework which is kind of like the big thing like listen here's a framework that anybody can now apply and use uh to build this economic layer on top. So every application who uh is rolling something out every asset issue has the ability to do this. And you can imagine there's some pretty interesting times. uh people used to think you know you need a huge amount right you need to have you know hundreds of billions of dollars secure to be able to do this but so we so there's a framework and then there's our implementation which is like the iigen zero DM DVN right um and so for us we just put up $5 million of zero

in that and so you're ask well $5 million given the amount of volume moving there not like not a huge amount of of economic security tied to this what you can actually do if you look at something like an intent layer so if you looked prior people talked a lot felt like a cross and intense and one of the biggest complaints they had against them was this uh 90minute window uh to get the assets back. Uh so you had a 90minute sort of um approval period to be able to unlock your assets on the other side. Now you have the ability to basically be able to do that every call it 30 seconds, right? And so now you think about $5 million, you think about it as as the size of your pipe effectively where you could secure $5 million of throughput every 30 seconds

throughout the entire day. So now you're talking about the ability to do you know many hundreds of millions or billions of dollars daily uh 100% completely secured with zero risk right uh and you can talk about the ability of asset issuers where you see sometimes assets choose to set pretty long outbound comps um from certain networks and you could say hey uh you know we're going to allow sort of we're going to monetize so CCTP or something takes a fee for CCTB v2 uh so it takes some amount of bips and you could say, "We're going to allow fast uh fast withdrawals or fast transfers out of this network that is a typically longer period of time. We're going to charge a you know tiny amount of BIPS on

that, but it's going to be effectively instant. It's going to be backed against this and this becomes the pipe." And so there's a bunch of like cool things that you can do. Um, but I think the framework to me is the most interesting piece of it all because what we're most interested in seeing the evolution of this sort of landscape of DVNs and I think there are a bunch of really cool things where with a relatively small amount of stake and a relatively small amount of um uh of of charge for bypassing like a for a faster window to have near instant you know zero block comp or one block comp transfers out of any network and so on and so forth, Right? You now can create a model that's actually like very very compelling to the end consumer. You have

you have almost instant experience when you're talking about intent layer stuff. You have almost instant uh getting your capital back on the other side which now means you can quote like much cheaper because you you don't have duration risk where you just like have assets that are not being useful for 90 minutes. Um so there's a bunch of cool things in there that I think will be downstream unlocks. Uh but yeah, the first step is like build it, get it out in the world and kind of encourage people to to see what they do with it. Yeah. Um I I want to take one tiny step back just so that the listeners can have a better grasp of what's happening. So when you say DVN's um do you want to kind of um run over why they are involved in this process alto together?

>> Yep. Yeah. So I will I will try to keep this you you tell me if you want me to to be more technical and we can you know go down a rabbit hole as much as you want. Effectively every chain no matter what is just like an untrusted state machine. They do not know the state of each other. They don't know anything. And so your something has happened on chain A and something needs to is going to happen on chain B, right? So this most commonly is like burn some asset, burn a million dollars here, mint a million dollars there. Um there's a bunch of different ways that you can tell chain B what happened on chain A.

And sometimes people put you know a middle chain in the middle and they say our special little network of validators is going to tell the truth about what happened and like circle CCTP I just mentioned right they have their own attestation where they just say they run an attestation server and they say this happened here over here like I authorize this mint on this side because I saw this thing there. We always took the opinion that building a generic set of parameterization for all applications is just bad. You don't want like your one- cent NFT projects to be paying the same for security as your uh and getting the same security as like application doing billion dollar transfers or multiund million dollar liquidations. Those are

likely going to be willing to pay more for much higher standard of security. So needing to force everybody to like one parameterization just makes everybody out of bounds. These guys don't get enough security. These guys overpay. And so the concept of a DVN was just it's abstract. This can be anything. Fast forward to today, there's about 52 DVNs on the network and they look like all different kinds of things. These are big orgs. These are Ubisoft and Deutsche Telecom and Google and these are groups like Nethermind and P2P uh you know like known entities. And then there's also things like Polyhedra which is a full ZK proof coming out of Ethereum which is like the aggregated signatures of the whole ETH and committee. you know, there's all of these different things

that people have built to provide this attestation layer. What you typically see um when you have like a USDT0 or an Athena or a Bitco get to define their own and typically they're like, "Hey, like Circle, I want to I want to sign off on these messages as well." So me, PayPal, or me, whoever, I'm going to create an attestation, but I also probably don't want to be the only one. uh because you don't want to be like a single point of failure and so then they'll backs stop and say I must be required so I must have signed off on this but I also want to include you know Google and nethermind and uh polyhedra and x and y and z right so you'll typically combine uh some number of

these and you create your own sort of attestation layers but DVN is just any mechanism that produces the attestation of state and again that can be you know a single DVN could be a 10,000 nodes it could be a whole network and you know in cosmos sort of every chain could be its own DVN. You really can be anything. It's a very abstract concept. It can be a single node of some guy in his basement who wants to run a DVM. Doesn't matter. Um and then again the applications themselves sort of choose what they want this set to be. I >> think perfect. That's that was a very sure go ahead.

>> Yeah. I think the the simple way is who's verifying the message is correct. Right. That's it. So some it could be a smart contract. It could be a group of people. It could be like you know they are staked. They are not staked. All these things are possible. This modularization helped like a bunch of experiments that can be done on you know like Brian said 50 plus DVNs that have been working on top. >> Perfect. And with IEN zero uh Sham you guys are incorporating your existing operators to opt into this and say I want to be part of this EVN or not. >> That's right. So it's the so I think Brian said we have a framework and we have a particular implementation. So let me talk about the framework right the

idea that so firstly what is the point of cryptoeconomic security and why why do we need it why you know so this has been one of the core thesis of layer right as you know uh layer is invented this paradigm of restaking but the core idea is how do you supply cryptoeconomic security to any kind of service and network so that's kind of like the underlying value problem layer now you can ask like why do you need a deviant so there are 50 plus devians why do you need a cryptoeconomic deviant. What is the special thing that it does? So when you think about it, um when you make a system trustless, then it can scale because anybody can provision resources into it. So I'll

explain this. If you make a system trustless, anybody can provision resources and the system can scale. So what do I mean by that? Suppose I have a new chain, okay? and I want to connect my new chain to like I want to build a DVN that's going to bring bring messages from my new chain to other chains. Now the problem is if I have to go with an existing DVN that DVN has to add support for my new chain. It's a whole thing you know I have to talk to them they have to accept that they have to expand this to my chain. I could do another thing which is if I can just build my own DVN to transport messages back and forth my from my chain that that's something simpler but then you'll be like who the

hell is Shira why would I trust messages signed by this TVM but if I say oh the message volume on this chain is like you know $10 million daily or $100 million daily and I've put up $100 million of stake then you don't need to know who I am where I'm from and like what my reputation is. So now like if I want to add my chain, I just add my chain and then like I can throw in a DVN that actually validates my chain correctly and you know you don't need to know who I am. So this so cryptoeconomic security makes this system trustless. Why do I say trustless? Because either my message goes through correctly or if the message didn't go through correctly, I'm going to slash the guy and get the money back.

So you know net I'm okay. So if you have a framework like this, then the DVN system can scale infinitely, right? Anybody can keep adding new DVNs to actually secure new things and as long as they're built within this framework and I know that I have full economic security and it's fully insured. So that's the real kind of like thing that we're going for here with this framework is to enable a whole sleuth of like slew of permissionless you know deviants to be built all of them secured with economic security and therefore they can all be trusted with a similar grade without needing to know who they are where they're from whether I trust them or don't trust them. So that's the big

big thing that we're very excited about. And >> again, the interesting point for me from earlier is is if that $100 million of daily chain volume is distributed equally over time, you would only need $35,000 in stake to actually be able to secure that entire thing, right? It's typically not going to be equal. And you can set rate limiter. You can do all of these things to guarantee your your pipe is sort of not being exceeded. But you can talk about being able to secure a hund00 million daily volume with with maybe a couple hundred thousand dollars and and comfortably never exceed uh the pipe.

>> That makes sense. Um just just to like clarify one thing for me in the announcement, I saw that um there was $5 million worth of slashable zero. Where does that come in over here? How does that compare to the to the $und00 million 35k thing? >> Yeah. Yeah. Yeah. So $5 million in in zero slashable uh basically is again you can think about that as the throughput or the pipe. Um and so it depends on uh sort of what that's being set for outbound comps. But if you imagine again imagine 30 second period. Well now you can do $5 million sort of of pipe every 30 seconds or times that by 2880 for the daily volume. So you know it's a it's a it's a big number for the amount of uh

you know 2880 five millions. uh you can do a lot of a lot of throughput on that. Um and even even for us when we're doing you know we're doing over a billion dollars a day pretty consistently now um you know 99% of that is coveraged within this sort of like $5 million 30 secondond pipe. one one question I have here is um what are some things that uh Brian on your end this seems kind of like it fits right like it it works because you have an existing system and you're adding something on top of it. Um Sham I guess like my question for you is was there anything that you you guys were like I don't know if this is going to work on our end or if like if this is

going to interact weirdly with other parties that we're involved with. Was this ever a concern for you? Yeah, I mean so the thing is we built this uh you know uh earlier this year we went live with slashing and uh later with redistribution. These are the pieces that were needed. You know Brian and I did a podcast now like more than you know 14 months back where we kind of like kicked off this partnership. uh you know uh one of the things I really love is building with long-term builders, people who are here and you know have a long-term vision and actually like you know working towards it. So really enjoyed like getting to know Brian and starting to work on this but you know slashing and realistic were

not live and those are two key features that were needed before we could actually you know go ahead and build this product and showcase it. So in terms of like what was needed that was the first thing right. So you know slashing needs to be live on layer redistribution needs to be live and this is you know um the first lighthouse project that is actually showcasing all these features building it together. So that's as far as the core layer systems concerned. Now I know there's all kinds of details on you know how does the DVN actually work? How does slashing actually work? Who are how is you know the who's the slashing committee? How is it constituted? How is the what is the

trust model? So again there is going to be a lot of evolution on this over time but starting to build the first one. How do you observe for example an L2 may uh make a claim and later say that they never made a claim like a sequencer right like think of a L2 sequencer it makes a claim and it says oh I never made this claim. How do you observe this? How do you attribute it? Do you know fault the DVN or you fault the sequencer? How do you attribute these things correctly? So there's a lot of like science that goes under the hood on this. One of the reasons and know of abundance of caution we launched on a few handpicked chains to begin with right I think it's three chains to begin with and over time expand to like you know cover the whole gamut of chains is

because of this uh feature because of this issue of how do you observe how do you attribute things that you kind of like when you want to build a trustless system things that you kind of slip under the rug oh the sequencer said therefore it should be right but the sequencer said now the devian said like but did the sequence of tell the deviant or the deviant told you something wrong like you need to know these things correctly and so the so part part of the work you know ongoing work actually is to actually uh identify these things and wherever there was yolo trust models again like chains that don't finalize chains that say they may have finality but actually if you dig under the hood you actually find out they don't have finality like these kinds of things are

all problematic because we're aspiring for a high trustless in the in the bridging model. So lots of fun stuff for us to get into like the rabbit hole there. But that's I think slashing redistribution core on the iggon layer part you know the first lighthouse integration with that you know what are the conditions for slashing what is the observability like so more research you know happening but I would say this is one of those places where you put we are putting not just a spotlight on what's happening in layer but what is kind of like other people are slipping under the rug in the rest of the ecosystem. This was the scale of like a sunlight is the best decent segment here.

>> Perfect. Go ahead. >> So I just want to say like um we've talked a lot about what's taken to create this to create zero but um for on the developer side of things what is the unlock for for that for that group of people like what changes for those that can build on top of IGEN zero or that can build with IGEN zero? >> Yeah. I mean I think the biggest thing is as as an application your uh sort of role in this is to pick this group uh of this attestation layer for what your validation layer is. And so now you have this sort of like $5 million of slashable stake that's guaranteeing uh the transactions on on sort of this

layer that's happening there. And so what you have is again uh an option and your set of options that now is uh you know potentially more secure than what you had prior. And then on the other side which I think from the framework side is what people find more again more interesting than maybe the specific instance is you as as any application or any asset issuer now have the ability to have your own. And so we had a huge demand actually for asset issuers who said hey we want to secure our own messaging and put up our own stake to again create like this piper throughput.

So now you might have a you know you have um asset X uh and you know you're some large asset and you have you maybe you're moving a billion2 billion five billion dollars a month across the rails. uh you might want to put up uh you know x 510 50 hundred million dollars in stake uh that one allows people in the community to like stake into this and then allows them to potentially get yield if you're if you're again allowing faster withdrawals allowing people to bypass that again if you're if you go the CCB route you charge kind of a small fee for the convenience of this fast uh sort of bypassing of finality so then the sort of mechanism bears the risk uh but then there's some reward for that in terms of

the overall throughput. So it just it gives you the ability to offer like a more dynamic product and I think both users we've seen really consistently users are are willing to make large tradeoffs um for for like very fast experience. you see it with a lot of the um you know some some of the other bridging solutions right now are just like very very fast and they're being run out of EOS but they deliver like obviously just an incredible experience just bam delivered um and so people people want that and they're willing to give it and so if you can as an asset issuer give them that in a way that uh sort of is is more economically secure delivers the same experience all of this then it's both compelling for the asset

issuer and compelling uh for the end user and then gives their token holders some ability to to again stake into this participate in the overall security etc. So I think there's a couple of vectors there >> and when you say um people want speed I think you're referring to like people want the speed but they don't really necessarily want to give like a cut every time. So if you have a DVN on the back end um >> yeah more more like I I think so when we um when we were building like Stargate let's say right uh we were like very adamant that everything was 100% onchain and you have these pools of native assets that exist and you were doing verification on like a per message basis

and you know on and on and on and on and then came intense and people were like well rather than waiting for, you know, two minutes for finality. I can get my asset in a couple of seconds. Uh, and who cares that, you know, maybe there are is only like one solver filling this or maybe there's, you know, in times of volatility, there's just like not going to be a market. Uh, there's no like censorship resistant aspect to it. Any of those things what the end user wanted. Uh, so you can basically frame it as the end user cared about the average experience and not about like the worst case experience, right? And I think most mechanisms in crypto uh have to design obviously in like a hyper adversarial permissionless environment

against the worst case. So unis swap all these things are built to protect against the worst case. And what we found out in most of the consumer applications today is is the users are actually optimizing for like the average case not for the worst case. And so you started to see a lot of trade-offs where now there are a bunch of things that are are are literally just like straight EOA just deliver. And they they give a an incredible incredible experience. you quote offchain, you give them money and they give you money on the other side and like you know they do a good job. They're a service provider. It's great. You've been able to trust them so far.

You'll probably keep being able to trust them. No problem. And like people are uh again there has been an appetite for that. And so what you have seen again is historically we're building continuously for the worst case. I think a protocol level you always have to build for the worst case. But I actually think the asset issuers and the applications are building more and more for the average case of the consumer and trying to deliver an amazing average case. And I think what you want is to be able to give them a really compelling easy way to deliver a really really good average case uh while still um while still doing in a way that like maybe protects the user a little bit more or gives them these sort of um uh more secure environment to do this in. Um and so I

think from our side that is sort of the unlock for the end developer because again the developer and the user are chasing this average case. Uh you want to give them sort of like the most secure best way to do that. I think that makes a lot of sense. And one thing we talked about it how is how this relates to I guess asset issuers mostly. Um when you say asset issuers, do you specifically mean real world asset providers like tokenizing assets, bring them on chain or is this more like referring to general asset issuers um chain to chain? >> Yeah, I I I view asset issuers and applications as just as a little bit different, right? Application is going to be sushi swap built swaps embedded in the application, right? and it's like uh originally it was like swap bridge swap and now they've done all these other

mechanisms to to build out sort of like a fully functional application whereas an asset issuer might be like PayPal's PYUSD0 or PYUSD right and and there there was just an asset and that asset wants to move it wants to have more aum but at the end of the day the asset issuer is issuing a single asset and the asset is the thing it is the product >> make sense just chatting a little bit there the you know >> there is a RWA type asset issuer but also I think layer zero has a format called which you know if you're issuing a native onchain asset normally you to choose a chain in which it's launched but the omni chain fungeible token

standard actually lets you launch a token which is across many chains but then you have to decide like how the messages go across chains so that's another example of an asset issuer which is even just like natively the onchain assets. It it doesn't have to be RWS. >> So, one thing I would like to ask here is like for the developers like just to follow up here um how should developers compare like the I guess I zero to other DVNs. So I know that um in the past or I guess uh in the past one criticism was that like DVNs despite having like the capability like to choose whatever DVM people you know wanted they would just

go with like Google cloud or some or some set of providers. Um from my point of view it seems like I zero provides like a pretty easy funnel uh into like a a distributed network so that you don't have that like same centralization. Is that is that correct or is there what else would how else would you you describe that? >> Yeah. So I think I think it's a little bit and sure obviously you comment as well. I think it's a little bit different where the IGEN zero DVN is is not um there's like a slashing committee and there's some uh distribution around that. The actual operation of the the individual DVN isn't really significantly different than existing DVN. It just happens to have economic stake tied to it. Right? isn't uh it isn't this uh super wide distributed

network which again is something that that people can do and likely will do. That's the point of the framework. This is more an example to show what can be done and how it can be done and tying economic state to it and sort of setting the stage for everybody else. Uh I think the big things around the DVN spread itself uh is well um well many people use uh sort of you'll have overlap on a bunch of the DVNs we have all this data that we can sort of like publish and show. So like actually layer zero labs DVN gets used a lot uh but layers labs DVN is never used like exclusively and so if you actually look at the set uh there's actually reasonable amount of split across applications where like almost all of

the big applications I mean if you talk Athena on USDT0 PayPal's PYUSD0 USDG uh or PYUSD not PG USDG on and on and on WBTC all these things right every single one of them uses diverse uh and like not a single one of those uses the same set of DVNs as any as the others. Huge amount of overlap between them where a bunch of them may actually all share a DVN but there's a bunch of others that are sort of mixed in there and sometimes it's your own sometimes other third parties etc. So the point is like you want to build resiliency uh against and the way that we always viewed it is again single parameterization is global exposure that is broken everything is broken and this

if any of those happen to have all of their DVNs corrupted broken malicious colluding all of these things it's still isolated only to a single asset the broader network is like not affected at all and I think what you want to do is again to continue to have this like bifurcation of especially as you get larger and larger assets sets or as you get these, you want there to be as little overlap between exact identical sets as as any of them. And it gets harder and harder um to think about a scenario of like broader corruption the more that you do that.

>> Yeah, just I want to add one thing here. This is uh you know people uh conflate two different concepts. One concept is decentralization and other one is trustlessness or verifiability. And so you know the whole idea of for example the rollup paradigm is that you have a single node doing the computation but the computation is verified and therefore like you don't need to worry that the node can make a mistake or in this case that's the paradigm that the first you know framework is actually showcasing is even if it's a single node doing the action it has put up a collateral which is greater than the amount you know volume flowing through for that time and

therefore you do you're not really trusting that node. You're trusting that this the mechanism to actually enforce the slashing and redistribution as opposed to you're trusting that node. So that's you know that's a really good um um like model to understand right because you don't need so why do you need decentralization why do you need trustlessness this is more on the trustlessness rather than on the decentralization. Uh second one is this framework can be expanded to make it more permissionless for anybody to as long as you put up more you know enough stake I should be able to sign off on a message I don't need to be this one node I can be any node so make it more

permissionless to do that so that those are the kinds of directions that we are headed in so the idea being even if in the normal mode only a few nodes are running it anybody can spin up a node and permissionlessly validate if these nodes go down so that's the two faults you worry out, right? Is the message sent correct? If it's not correct, you can slash them. If the if the node just goes down, it's just like robustness, you can have another node spin up and do it. So, that's that's how we think about it in terms of like the the decentralization versus trustlessness here.

>> Uh I want to double click on something or just to clarify I want to ask like where does I zero fit in the grand scheme of the road map for layer zero? Um from my point of view layer zero there's been a lot of focus on asset issuers and providing like um providing like verifiability to to those asset issuers. Um and I see this across like different uh infrastructure providers as well. Like if I look at um like both the chain link team or like Pith or something like that, those teams all are like partnering with asset issuer issuers in the same way as layer zero has with um with the Fireblocks engine and they're they all have like really or

they all have um interoperability solutions that they are backing with crypto economic guarantees as well. Where do you see this like trending uh in the long run? >> Yeah, I view it as a as a tool in a toolbox ultimately. Like I think if you look again, we just talked about last month, right? Last month at at $ 38 billion, I think that translated to something like 90% across the market in terms of like value transferred overall, right? It's like asset issuers largely by and large, stable coins primarily and and many others are are building on layer zero. And the question is why are they building on layer zero and what do they want? Right. I think there's a couple of things there. One for us, the large thing had it always been uh and I joke it because it's like, you know,

just job's kind of done because like the protocol is immutable. I couldn't change it if I wanted to. And that's part of the core guarantee to the asset issuers themselves is that you don't have to trust us, right? You don't the protocol is there. It is immutable. We cannot change it. It exists. You have comfort with knowing that there's longevity there. And then it is really like okay great. What do they want? Do they want decreasing latency, right? How do you get DVNs and sort of the off-chain workers that are creating these attestations? How do you build better clients that people can run? How do you uh incentivize other groups? So client diversity is something we cared about a huge amount, right? I think there isn't actually another group uh in the space outside of Ethereum who has as much client diver like we have four pushing

five unique clients now. A bunch built by by teams that are you know not us at all. We've built two of them, but there are three other unique clients built completely from the ground up. And so when you talk about like uh downstream effects of uh many other solutions right now just you know just push client updates and everybody accepts it and if there's a bug in that then it doesn't matter how many validators you have because there's a bug in the client it's everything is rugged right and so uh you know there's a bunch of these things where we just continue to try to figure out how do we provide a better stronger and stronger guarantees to the asset issuers or the people building on top of the protocol so that they can deliver sort of a worldclass experience to their end user and I think This is like part

of that approach overall. And I I think again I I I continuously get these moments that are crazy for me because for me I remember I remember launching the protocol and I remember the first like dollars going through the protocol and you know everybody who's using it and like people are asking you questions to do everything and like we were sitting there the other day and the team sent me two transfers and they're like oh hey like $550 million just went through in a single transfer and then it was like $800 million just went through in a single transfer. or somebody sent $800 million almost a billion dollars in one single message and I have no clue who that person is. No idea, right? It's just like the the protocol is there. It works. It exists. It's being used like in production at scale in a

permissionless way and I have absolutely no idea the participants, right? And like that is extremely powerful and I think that's what you want is to build something that like supersedes you and people needing to trust sort of you and the solution that you're providing. What we're providing are tools for people to be able to deliver their own solution. Again, the asset issuers come in and they build with the OFT and they build with sets of DVNs that they like and they build, you know, they take this stuff that is existing, but then it's out in the world and like they're driving it and they're driving adoption and they're using it overall. And I think like that is how we view it is we're going to continuously build better and better tooling that give the asset issuers what they need to be able to have their customers not our customers

their customers come and send a billion dollars in a single transfer and like that itself is is the thing >> that makes that's um makes a lot of sense. I am uh kind of jealous that you experienced this feeling that somebody sent through $800 million and um it is very awe inspiring. Um sure I want to ask you the same question but um with a kind of a twist I have um we we did a pod before as well. I'm not sure if you remember. It's okay if you don't, but um and back then it felt like I layer was very much like focused on building this system um and was not particularly product focused versus now it feels like

over the past six months you guys have become increasingly more product focused and I zero feels kind of like that to me. Um is this I guess like where does I zero fit into your plans and where do you guys see going forward? >> Yeah, absolutely. So we built the um the our core thesis at IGN layer is IGEN in German for your own layer right uh you know you should be able to build what what you want at the kind of protocol level and so uh the way we uh the way we've evolved from think u from that starting point is initially we were like okay you know we have this

powerful layer of trust that anybody can tap into and build whatever you know decentralized protocol they want on top of it. And what we found is while this is great for like deep complex infrastructure builders like a layer zero or infura right these are products building on top of wagon layer it is not good [clears throat] for a regular application developer like a regular app developer cannot just directly come and build an ass on top of wagon layer it's extremely complicated and so you know this is like dark metal right and so the way we've started thinking about it is like if you think of like a cloud Right?

You know in the cloud the base layer of a cloud is a data center right if you are open AI you want direct access to the data center and directly build something on top of it and so that's how I view this like I can zero you know partnership between layer zero and us like open AI they have their own customers they have like huge distribution they want to build something bare bones powerful bare metal and so they they can directly use a whereas most developers I'm just building an application and I want to use an AI agent in my application. I'm building an application. I want to use um you know off-chain compute verifiably, right? So there is like all there is a broad category of use cases

that application builders want and they don't have the tools to go and build an ABS by themselves. So we launched two new services compute and IGEN AI which is basically run offchain compute you know give me a docker container go build you know it goes and runs it offchain and then brings the result back on chain you know using it you know different trust models so that's an example of us taking the step to go closer to product closer to users closer to developers right AI is something similar right I want to run an AI uh inference right I and I want to bring that result onchain to make an action and um I take this

action I do this inference offchain and bring the results back on chain but in a trustless verifiable manner so that those are two products which are much more abstracted much easier right so uh one of our u friends uh who's a hardcore engineer like call and told me man it's so hard to build an als Yes, it's so easy to build on compute, right? And it's kind of like that and this is mental model of data center and like bare metal data center and services built on top actually like is a very good model to think of like layer and then the services that we've built on top right very powerful builders can go and actually directly like configure the

data center to do what they want but most application builders want like highly abstracted like if you go to AWS you want a storage service S3 you want a compute service E2 you want a AI service bedrock like this is what you want. What we've built is IGN DA is our data service. IGEN comput is our compute service and IGN AI is our inference service. And so I when I build an application I'm not any more restricted to the developer environment EVM or Solana or whatever can actually run something offchain and then bring those results back on chain like in a very fast loop. So you know and one of the big things we are actually envisioning here is AI agents. If I want to build AI agents, I need both, you know, uh,

compute to be verified, the input data streams to be verified, and the AI to be verified. And so by mixing and matching all these things, you can actually get really powerful, uh, powerful experiences built on top. >> Perfect. I um, yeah, I think that makes a lot of sense. Um, I guess one last question for both of you. Um again you'll have to decide between yourselves who wants to go first but um so what is the next step for IGEN zero? Um when are we going to get some exciting updates on um who's on boarded and what is the let's say six months although I'm not I'm not an engineer so I don't know what timelines look like. So maybe you can

give me a better timeline estimate as well. >> Yeah I think uh I'll start. I think the the again the most exciting thing in all of this to me is the framework right it is what are other people going to come and build and so I think if you want to look six months forward and say hey um you know was was this you know did it work did the market care was this successful as as a product I think what you look at is uh how many other people have come and built what other developers or assets have come and used this as a framework to actually build their own and so I think the things that are interesting is when you start to see uh these other large assets um and again you know all of the ones that I named effectively and start to say hey are

they rolling out sort of their own mechanism of slashable stake are they putting this up where are they using it is this to make sort of intents have faster rebalancing is this to make it so that you have uh again like a like an instant bridging option for is this to do x to y to z uh and I think there's a bunch of interesting paths that people can take it down there But it starts with somebody uh from the asset issuer side saying, "Hey, this is something I want to do." And again, we we've had inbound interest of people saying, "I I want to take my own asset and allow people to stake into this. So, turn it into like a community token style mechanism that has this uh uh reward back to those people for sort

of like the risk that they're bearing on the underlying chain side. Um or whether they just do it themselves internally and kind of what that looks like. uh and so I think from the foundation side or from whatever right so I think there's a couple of different things but like Sri Ram said the end result is that the user has a uh trustless experience because it has stake that is bound more than the value that is being transferred and so they don't need to think about what the option set is for DVNs what any of these things are it is just is there more economic stake uh than what is current throughput going through the pipe uh if yes great everything is perfect um and so I think yeah for Again the six months is just who adopts it, what does it look like, what like we are both people who

build largely uh as as sort of groups for the end developer. And so while us launching our own thing is cool and is interesting and seeing usage and adoption would be would be nice, uh I think both of us are much more interested in seeing developer adoption and the end users of the underlying protocol actually like that's where real growth comes from. Um so that for me is like that is the measure of success. >> I know we I >> or sorry I know um box have one more question or but I do actually have one more thing I would like to ask us. Um, so and I could be entirely butchering this, but I recently read about like a

uh kind of a cyber attack using AI agents um using or it was there was a international like cyber attack with AI agents um for the clawed code tool and I'm curious if there is like an angle here for verifiability because it seems like this is like this is like a prime area for for something like this to to be involved. What are your thoughts? >> Yeah, great question. It's uh is an interesting angle, but I think it's not an easy problem for us to solve. So, let me just uh state like where trust lies in in you know when for example when you're using an AI system.

So, the first one is what I call uh runtime trust. So, maybe let's just contextualize on a simpler example. Let's say trading agents. Okay, so I want to use a good, you know, I want to use a trading AI agent, right? I'm why do I need it to be trustless, secure? I'm giving it some money to go and do my trades. So, you know what? If I give it money and then like it goes and buys, so let's say like Grock comes up with an automated trading agent and then it goes and buys a bunch of Dogecoin, okay, or GameStop or something and then people, you know, may may lose money and then they're going to be like, "Oh my god, it's Elon. Elon like made Grock buy like Dogecoin or, you know, GameStop and then

like I lost money." So it's a huge liability surface area for a Grock or ChibiBD. In fact, CHAGBD came up with an advisory like or update to its terms of service, you know, last week saying that no legal advice, medical advice, health advice or even, you know, human advice. I don't know, they excluded all kinds of advice and like the the reason is they're worried about liability, right? Because now like you know as they are kind of like becoming more and more central. So when you think about the the input output interface to like uh chat GPD you don't know what's running in the back end you're just like oh that's chat GPD like that's what you know like you don't know what it is that you're talking to. So the first level of trust is I can guarantee like I en can for

example guarantee that it's this AI agent with this specific code this specific model with this specific weights and this specific compute which is actually doing this task. That's what we can guarantee right we can get just like exactly what Ethereum guarantees for smart contracts. It says this piece of code can only move your money. Right? Same thing. This AI agent is this piece of code, this piece of data, this piece of inference together. That is what can actually touch your money. Now, if that piece of code is it good or bad, right, is outside the purview of like what we can underwrite trust for, right? Just like Ethereum, like you know, somebody can write like a balancer smart contract

which has a bug, right? or somebody can write like a thing that doesn't have bug but that's not a thing that Ethereum knows whether it's a bug or not it just knows this piece of code can run this piece of money so I think of two layers of trust in AI like one is is the code is it like you know break the black box and know this code's running your thing but is that code doing what you think it should be doing that's another layer of like you know trust and the way I think that we resolve that as a society and like what we can play a role is in insurance right so normally you know these are risks right so you don't know that a code all so imagine there's a travel agent that's booking tickets right and I say book a ticket from SFO

to SCA I'm thinking it's Seattle but it's actually booked a ticket to Southeast Asia right and so like suddenly I'm like okay you know now I lost my money and paid $2,000 to book that ticket and so you can use things like but I know I'm talking to this model and you know this model makes errors like 1% of the time. So somebody maybe like an iggon layer stakers can come and underwrite that risk as an insurance and say that this model makes an error 1% of the time. Somebody lose money because of that I'm going to pay back pay them back. How by collecting money from all the people in the normal mode. This is exactly how insurance works. So that's the kind of thing that we can do for the the soft you know this code is running but this code did

something mistake and so things like cyber security attack are the hardest because it is like a code I know this code's running but somebody figured out how to cheat this code and extract all the money from it. then you are you're out of luck. Basically, right now we need to know how to figure how to build systems that are actually more robust. That makes sense. Um okay, sure. Um then um asking the same question that I asked Brian. Um what does the next six to 12 months look like for zero on your end? What are you guys focused on? Um >> yeah, I think Brian's totally right.

like our main goal is always developer adoption right so that's our kind of like we are developer platform so we want developer adoption more developers come and build on top of it uh we already like Brian mentioned after we posted this we got a bunch of people asking us hey how do I come build a DVN using this framework so that's really what we want and other developers up taking this up and then going and building new and interesting things on top um so in terms of the underlying technology itself we will continue to research and evolve this you know both of us a portfolio of Andre and Horowitz and their research team has actually helped us a lot in thinking through like all these observability conditions I was talking about how do you attribute who's

actually at fault if a sequencer lies or if a if a DVN lies so those kinds of things we will continue to evolve the underlying framework and make sure that you can actually like support a wide range of chains and conditions yeah so that's so on our side we improve the underlying framework on the developer side adoption uptake and more asset issuers choosing these things and over time if something like this becomes the standard where I don't need to know who the developer is I don't need to know who the deployer is I can just directly check check it's a cryptoconomic DVN it has x amount of state I don't need to worry about anything else I think that's our would be the good end state for us >> perfect that makes a lot of sense um guys uh I want to thank you both for

coming on this was really fun before you So um I assume everybody follows um both layer zero and iggon cloud um and is familiar with um what is happening but do you want to give I guess like what should people look into what what should people read about what should people be focusing on um yeah what do you want people to come come with >> yeah maybe I I can start um because we announced this new umbrella brand cloud right think of a cloud the underlying layer of the cloud is a data center the underlying layer of IGN cloud is IGEN layer because it's decentralized distributed cryptoeconomic data center on top of which we have these services DA compute and AI DA I can comput I can AI um so there is a huge number of new unlocks

for developers with comput and AI you can build many interesting new things very very quickly uh including things like AI agents games um you know uh agentic payments all these things so I would uh urge the so we just launched this developer website um let me just put the link here I don't know if the users can see it but developers.cloud.xyz uh basically explaining some of these things so um yeah excited for users the the viewers to check this out and build new and cool things. I think one thing I just want to stay like say abstracting out is crypto has been infra constraint

for a long time. I think with this with the set of things we are building here crypto is no longer infra. So there is for whatever you can dream up you can build today because you can use offchain compute you can use onchain compute all the chains are connected with things like layer zero and I zero. So you are you can build pretty much anything you can think of. So, but I think people are still stuck in the mindset of like where infra was like one year back or you know two years back. I think the ability to express much much more complex computation trustlessly where family has grown. So like the call to developers is think of new and cool things that you can build on top of it.

>> Yeah, I think for us it's it's it's similar, right? I think what we I've said it a couple times recently. I think people right now obviously a bunch of our attention has been uh has been where we lived right now and we we've had a crazy amount of adoption has been amazing. I think stable coins have been a huge boon for us and we just continue to see growth in terms of numbers and metrics and how people are using it and what it's actually happening and uh you know rolled out things like we talked about at the beginning of this like direct deposit into hyperlquid and you know all of these other tools that just make it easier and easier for people to like do the things they want to do at the asset side. I think people are going to be really really shocked uh over the

next six to 12 months how deeply we've bridged the gaps into into some of the other sides of the market in the institutional side into the the sort of adoption across sort of like everybody who is now coming into the technology versus uh prior which I would say is like the more native side of things. Um, and so for us, if you are building, if you're interested in in building really any asset, any piece of technology, like we want to have the conversations, we're actively engaging with everybody across the board around this stuff. Even just how you think and ideate around it, how you design mechanisms across multiple chains. Uh, but for anybody else who's who's listening, I think uh, you know, I think follow along and uh, you you should see more of uh, more of what you

have seen. I think the next couple of uh, you know, next year is going to be incredible. Very good. Very excited for both of you. Um guys, again, thank you so much for coming on. Um I really appreciate you taking the time. >> Thank you for having us. >> Darren, I'm going to remove you as well. Goodbye Michael. >> Oh, bye. >> Okay. Um that was [clears throat] fun, guys. Unfortunately, at the end of the stream, um it's only me left. Uh before we go, I would like to give one

more shout out to Appos for sponsoring the stream. Um, with nearly 400 million in BTC assets onchain, supported by a secure, fast, affordable move VM environment, APOS has become the BTC fight growth chain. I can't express to you how grateful we are to Appos for sponsoring the stream and I recommend that you guys all check out um BTC finance happening on their chain. Once again, thank you so much for listening. I appreciate all of you and uh wishing you all fantastic weekend. Peace.