The New Era of Infra Investing with Wyatt Lonergan and Xiang Xie

Transcript

are these things agents right or are these people I think the first priority for us is not the technology side is is about the product it's about how to you know enable the users no l1s no l2s almost abstracting completely away from this chain Centric view is part of the bet that you're making there with the progressive decentralization also somewhat reliant on the advancements in ZK what's going to be more important is that crypto and AI I think collectively are going to be front and center welcome back to the rollup your home for technical talks and open conversations that shape the modular future nothing on today's show is to be construed as Financial advice you can see our full disclosures list at tholl up.co ventures sit back relax and enjoy today's episode

after a quick word from some of our awesome Partners innovating Finance Global institutional and onchain deep liquidity to drive Capital efficiency now maximize yields on institutional grade liquid staking with M unlock trillion dollars of capital via F Bitcoin all of this secured by Mantle's treasury of billions in stables and eth Capital Pools this entire ecosystem is coordinated by a vast network of seasoned VC's that are aiming to create the next generation of Banking and Financial technology this is mantle

what's going on guys welcome back to the rollup today we have an episode about some of the Cutting Edge Primitives built in the crypto and in the blockchain space which on our podcast I think that we are going to start to kind of separate the two the speculative use cases of crypto and the more non-speculative use cases of blockchain I anticipate today is going to be more of a thesis driven conversation around some of the non-speculative Technology based use cases which we're always happy to talk about we got Wyatt here today and Shan welcome in guys from around the world good to have you good to be here GL be here thank you for sure so both your first times on on the show um Robbie and I have been doing this for four years we've had many

many guests but it's our honor to have you and bring you guys up for your introductions and um why you're building in crypto why why this space matters to you and a bit about your background so I know you guys both have some pretty interesting backgrounds so why don't we start with you Sean and then move to White welcome in yeah for sure yeah hi my name is Sean and uh yeah my background is based C photography so actually I got my PhD back to 2015 and at that time working ontography to see how it helped the real world so and then I jumped into the uh blockchain Community like in 2017 so working in a company um no startup company in Asia specific uh and uh uh help them to build

these cryptography based cryptog Solutions and then I joined the o la at cryptography engineer and then at that time uh we studed the primers so working on this Zs uh solutions to help to uh bridging like web two data to three and then also you know uh privacy preserving computations using F steps so that's basically me yeah great to be here guys um Wyatt I'm a general partner um founding partner of vanic Ventures which is a a new early stage Venture fund uh that we created here at VC a little background on vek um it's an asset management firm U been around for almost 70 years manage about $120 billion do

mainly like an ETF business however uh in 2017 we were one of the first firms to file for Bitcoin and uh eth ETFs which finally got approved in 2024 um and at that time really started uh putting out more research and diving into crypto that to us creating two more liquid funds um that are active today and then eventually a vure fund so we kind of cover everything from like the first check into an early stage company to growth Capital to eventually um have ETFs and I imagine more crypto products will or more tokenized fund products will come to Market in the future as well um for me I got into crypto in 2018

I transitioned from being an entrepreneur to being an investor uh and it was one of those kind of Righttime um you know perfectly timing the market type of things uh I I was working at an investment platform a broker dealer um that was trying to Pioneer crowdfunding and this is also post Ico boom um and our view my view at the time where I was so excited was that I thought you could take kind of the magic of Ico and Internet Capital markets but actually have them be in a structured way so that retail doesn't get burned but they can participate alongside DCS um as I joined the company we had already we were already in the process of being acquired by Circle so it rolled into Circle in 2018 this was

pre usdc at the time Circle operated an exchange trade desk payments products a brokerage app um all of which we kind of got rid of or turned really that technology into um the underlying technology to support usdc and then in 2021 um I started Circle Ventures which was our corporate vent arm um and during my time there we invested in over 100 companies including a lot of the l1's L2 wall Tech providers kind of moving up the stack Bridges um and that experience really I think has provided the perspective and thesis for for vanic ventures which is we're chain agnostic um we really

believe that the chains our distribution points I think the technology has been battle tested um and it's it's in our opinion the best time to be investing in the middleware in the applications that drive the consumption of of block space but also Drive the consumption of things like stable coins so our thesis is very focused on fintech um and real world applications and what got us very excited about Primus is that they enable that so I'm sure we're going to get into this but we want to be able to be compliant but also protect consumer data uh we want to be compliant but we also want to innovate in areas like Ai and you're seeing that that battle play out today with closed sourc and open source so we're really strong Believers um in

open source um in permissionless networks but at the same time we want to make sure that we can create things that actually follow the rules and I think the setup that we have here with the current Administration has like never been perfect for both of those things to collide so really excited to talk about that and we can tell that you're in NYC which is the new crypto Hub of the world um shout out to shout out to the new Administration uh I'm excited I'm going to be there in about two months for do like a three or four month stint to try to uh just grow our business and grow our brand and so excited to to be able to network and just do all the things that you can do when when really the perception of crypto has been so so poor

in the past uh but it really feels like it's it's switching uh back to a more positive light and I think and again I think that I started this out and Robbie and I have been kind of harping on this that we believe that a lot of these non-speculative use cases around blockchain outside of like crypto almost like the whole Bitcoin not blockchain movement back in the day or maybe it was vice versa uh is actually starting to show itself again so w curious from your perspective uh how your thesis originally developed and you mentioned it already where right where we had this kind of barbell of apps and infra and frankly if we're thinking about it as a seesaw it was so heavily tilted towards infrastructure for basically early stage

investing why it was a proven way to get a return it was safe it was Battle tested one VC told the next VC told the next VC that investing in infra oh yeah we're an infra only fund we're an infra only dude I just do no I just do infra you do infra I do in and so like we had a conversation with um a lad from 1kx in person in in Bangkok Robbie and I and we talked about how this seesaw is kind of actually turning the other way and how there's a lot more upside in invest in applications at lower valuations than there is in funding the next chain at 100 200 500 million valuations there's a lot more user owned relationships those who own the order flow own that upside there's there's a lot of opportunity

there as well so you mentioned a couple things and I kind of added in a bit there and I'm sure Rob has some stuff to add but curious from your perspective how your thesis originally developed on the crypto markets at large at Circle um and then how that's shaped now into this uh 30 or $4 million fund that you guys are running at Vanek and what that thesis continues to be whether it be application heavy infra middleware and kind of where you see the next era of growth for for early stage crypto companies yeah I think you hit the nail on the head which is apps in turn inform infra and that cycle repeats itself consistently um as technology develops so for example if we go back right it was crypto Kitty's Clogg ethereum

blockchain that led to conversations around scalability we've had many such examples over time we've gotten to a place today where like if you look at the underlying numbers like trillions of dollars of value is flowing over public blockchains stable coins are are leading a lot of that transaction volume um we've seen that with with trading as well so clearly the technology has been battl tested and used at scale anytime I I reference that for someone who's not in crypto they're always like wow I didn't realize that right like I thought stable coins were this new thing that just popped up and it's like they are pretty new but they're set over $24 trillion a year I don't think we can comp that necessarily to like Visa volume that's constantly used like stable coin payments they're not really payments for payments they're payments

for assets they should be competent against something like dtcc volumes um but and I think coming back to like the infr verse apps it it it depends so I would say in a lot of the real world use cases today around AI there's a huge play at the middleware layer I would say the same thing for financial services so if we want stocks bonds currencies to to trade on chain compliantly there's actually a huge missing piece in the Middle where layer there um but we also need distribution and that has been so clear in crypto like we really lack distribution and so what you get are these kind of as you said the endless L1 Investments the endless printing of this kind of like you know internet money

shifting tvl from here to there and it's just a massive rotation game um and I think that ends I think that ends over this next cycle as you have real businesses with real on real real metrics in real time onchain so think about that right like crypto companies don't need to do quarterly earnings calls you can track this information in real time make your own assumptions on what's sustainable and make bets into the market so we want to you know the the the founders that we back you know they have to be great people super talented really ambitious but they're the ones that are not like running away from building something that somebody might actually use but in some cases like Primus as an example they might be that middleware because we're in this

transition period where like this stuff is really still being built and we're okay doing that it doesn't need to be another L1 which is what I I really liked about the Primus team's approach is that it's blockchain agnostic and so that's something uh I really learned from being a circle we had usdc deployed across 15 Chains It's somewhat a venture portfolio in that respect like you don't really know and it's a power law curve so it's about being being at the right place at the right time Circle was early to having U stable coin on ethereum benefited from defi summer usdc went from2 to 33 billion do in a calendar year was early to salana that has played out really really well and so I think about that with our companies is like I

I think the days were over of just being like X forx ecosystem you need to be across chains and see like where is the Innovation happening so today in the AI world that tends to be on things like salon and base but that could change um as as you know new chains start to to move into those spaces so that's how we think about it but ultimately like we want to own distribution endpoints and where maybe it's a little too early to make that play that's when you you want to make a middleware bet yep quick comment on the on the stable coin front is that absolutely settling 24 trillion is is kind of mind-boggling for people to wrap their heads around you made a subtle kind of uh aside to a dtcc which is on the scale of quadrillions of

dollars of settlement so I think that I think that gives people a sense of the scale um and then you know moving on to where like Solana base right maybe are the winners right now in the chain Centric view Andy and I and the show are big Believers in modularity and the way this is tend trending towards is is no l1s no l2s almost abstracting completely away from this chain Centric view but going from the and the progression went from you know obviously l1's ethereum the alternative L1 thesis from there ultimately to rollups and the roll-up Centric road map those rollups originally were optimistic Roll-Ups now they're becoming ZK rollups and we

believe that they will eventually become ZK apps on their own and we will have these Blobs of state and they will settle to one another and interoperate with one another via ZK proofs um and ZK TLS is another of that that kind of takes the real world blob and brings in a social graph and and a data graph into the ZK apps as well so I'd love to get a little bit more into the technicals Sean you know maybe you can explain what Primus is at a high level and we can drill down into some of these components yeah for sure actually uh we started to uh builds back to 20 uh 22 so after we saw The Deco Paper I think

that's the beginning of you know um U steps so yeah we we kind of you know found that the decco paper is not that efficient enough to you know to be deployed in the client side so our cryptography things to spend like half a year to improve everything so make it quite lightweight so that's what we call the NPC TLS or the proxy Ts that so we have like two versions on that so uh the the the the goal we uh we we achieved that we make it so lightweight that we can deploy it inside browsers and um is like more than 10 times faster than

existing ones like the de paper so after that I think uh one of the players in EAS Foundation like just lottery so our paper so yeah we are now helping them to switch uh their protocol to ours because more performance so that's that's very the very beginning that because we are using like uh D proof systems like interactive proof system not like you know snugs stocks in in in in L too because all that kind of you know uh uh ZK systems are working in the server site because it's very a computation intensive and memory consuming but this is not suitable for you know consumer apps because all the consumer apps

running in browsers learning in mobile apps so we had to use very lightweight uh systems so That's The Power of our you know our paper our solution which is I think is I think it's the go-to solution using a quick SE which is invented by our cryptography team and is the most efficient interactive Z Pro system and uh to to make it quite you know uh useful in all of these uh applications so um so for now and maybe for the next step is that we want to build this as as I said middleware for all these projects who can who or who want to bring this web two data or valuable data to web stre or to

blockchain and to make it more decentralized to make it valuable to make the users can you know monetize all the data you know to you know build the more diverse applications in web stream or in blockchain so like like uh like a few years ago we only have like price ortic call then we have like uh defy summer so maybe probably we have more like interesting applications to uh to build with zls because we have more diverse data and we can build more diverse applications in m stre and when using like blockchain or smart contract so so that's that's basically uh we can offer and I think our solution is now

the most efficient one and we are going to uh promote our product and we're going to uh promote the uh uh the community and U also we have we need support for investors so that's why we are so excited to have to announce that primers like raise uh $3.5 million in this round and Van is one of investors and we got a lot of help from these amazing investors and others so congratulations thank you thank you Andy yeah yeah it's no it's uh it's uh the journey is just beginning and we appreciate the high level under understanding I I think what would even be more helpful now with that context is

understanding some of kind of like the problem space here which I believe to be is one of the core use cases for Primus is this kind of intersection between Ai and crypto right and we're seeing this AI agent narrative come it really hit hard all the way up until about truth terminal OTC $15 million of fart coin on my head and I'm still holding because I I will hold and I will not be shaken out but that narrative went up and then kind of has came down so Wyatt maybe you can paint this AI agent narrative from your view from the more institutional View and then why you see why you feel there's a strong need for verification and then sh um shang's super excited to understand more technically how you guys

provide that as well well I I think I I'm more interested in in AI agents replacing things like verticalized B2B SATs like ultimately the agent is only as good as its end use case so of course in crypto like the first use case was a k right and like that we went right there just like they're not replacing me W they can't take they can't replace you but but you know it's like the K pum pump the token but and he just outed himself as a KO yeah yeah yeah exactly but but what we what we saw pretty early on was that people were like are these things agents right or are these people I I think was it ax BT or somebody had like a spelling error and they're like

wait AI shouldn't be making spelling errors right I could be mixing up my agents but um I I think that the market what happens in cryptos tends to reward really interesting kind of far-reaching ideas and as those things come to Market um sometimes that can actually have a negative effect on the token price because he could be like oh like maybe this isn't as Grand as we thought it was going to be but I think the huge missing Gap there is like you know you're you're connecting these agents to things that are creating content and again we can't necessarily verify that this is an agent um and we don't know kind of where they're pulling their data from as an example so I think the market um let's put aside token prices here but I think

there's been a lot of really good constructive feedback on what these agent Frameworks are separately I think as as you know we create more agents that are actually going to do things um I think this actually becomes more of a regulatory and education issue because for example like a agent payments are talked about all the time um there's actually an interesting company that that we're making an investment in now like why are agents good in payments It's like because AI creates perfect competition and so these agents are are really almost like solvers they're they're looking for the best path but they also need to follow the rules you have the travel rule you have kyc you have AML you have all these you gdpr in in Europe like how do you bake that in

and that's really more of a question of how do you create this stuff and make it programmable in digital um there was a tweet earlier about from Doge but you know like they found like this gring gots with all the uh retirement accounts and things like that like we live in a paper based world right and so like we need to move this stuff onto blockchains which I think actually the government will help push this forward um and then we need to make this stuff programmable so we can enforce compliance on chain and that's where I think the magic of a lot of what Primus is working on which would enable ZK kyc as an example um that's where it really starts to shine and so you can imagine that you know you log in with privy right it it it tracks all the places that you've already

logged in but your your information is safe and I actually think this is going to become mandatory like my view is in the next five to 10 years Regulators are going to prefer this because we're not storing personal information how many hacks do we have each year at like large Credit Agencies for example where all of our information is leaked this actually perpetuates fraud um and so I think crypto is is amazing for this like you can pay using stable coins on your phone connect it to your non-custodial wallet you can use your B ID to enact that transaction and on the other side all you're doing is just showing a credential saying like I am Wyatt this is my wallet and it's like okay great now you can make that transaction that's the world that we're

heading towards and so again this is kind of a section today where I don't think we're ready for that world yet which is why we need some of this middleware to to bring it to life yeah yeah appreciate your your uh kind of chronologically driven idea from okay we did a infrastructure was very successful from the investment wise you can't just jump to like the end user application from a venture perspective from square one there's a logical step in between that likely still has a lot of opportunity left to kind of squeeze into it before you jump into like the you know like the frex of the world or the forecasters of the world or you know like like these really true end user applications and so it it also makes sense just based on

where the the ecosystem is headed from this multi-chain approach and and and Shan you guys have a similar approach but before we get into kind of your chain agnostic approach as well our community has a really strong understanding in our our audience of ZK TLS right similar to oracles however the key advantage of ZK TLS is you can verify that the offchain data was brought on chain but you do not need to expose the data whereas oracles it's very clear that there's an expose of dat of sorts however A New Concept that you guys are bringing to this verification stack if you will is ZK fhe which is something that I'm not sure that our audience is super super up to speed with so maybe you could uh illuminate what ZK

fhe really means and how that is different from normal fully homomorphic encryption and then how you guys use that technology in your verification stack yeah yeah for sure so first of all and fully homic inition it means that um uh you got you can just encrypt your data and Out Source the data to like anybody to certain party that he can do the computation on the side text without seeing any PR text this is the meaning of FH steps so I think there is kind of a few startups now working on FH like they can build uh uh you know um privacy a private uh onchain applications

because for now all the data on chines is public so use FH you can like uh preserve the Privacy while do the computation on a small contract that's a very uh straightforward applications there and um but one thing that missing in this solution is that you have to trust the third party who is doing the computation in terms on Integrity not a privacy so he can just return you some random you know static random steps or you cannot you cannot check is correct or not so ZK FH means that okay in order to ensure the trust of that operator the operator has to run a proof gen proof system to make sure that okay all the

result is done by uh the correct logic I'm not cheating I'm not give you some rabbit so rabbish so I can I can make sure that all the competition is correct means that um we can solve the trust uh problem in all eff F applications especially in web stre I think this is very important in web stre so this is the meaning of JK FH it actually um solve the missing part of all the FH applications and I think all the FH application need that and um so why we are working on zls and the FH together so the story is here so actually I think

people knows people know Ed t means that we can uh prove the source of the data that's what d d has done so we can make sure that okay all the data you bring from web to is is is is it's true data it's not some kind of false data so but this is only uh the step one of you know handle this kind of data mean that okay I bring this data and I'm can make sure that this data is correct but the most important thing we think is that how to handle or how to how to use that data means that okay can I put it on chain to do some kind of computations without you know noing uh privacy so that's how why

FHA comes and U we believe that we are soing the whole life cycle of data you know proving the authenticity of the data and the computer data and the dkf means that we can make everything trust this and we can bring this uh you know uh whole Tech stack for the whole data cite called applications so that's the vision of of primers that that's why we now working on D kfh yes and and I think there's yeah I think people may mention that one point is okay FH is not efficient enough for now and even the kfh is not efficient for now so that's why we spend like I personally spend four years on this problem and when I

create start primary we spend more one more here to design new agons Pro systems to speed up so now we have very uh a nice result our proving system is like more than three or very close to like 400 times than existing on so we are very close to you know make it practical to improve all the you know uh efficiency of performance to make it uh very useful in uh applications like to you know to to speed up you know FHS or any other you know FH ready applications awesome the the pace of of innovation in

ZK is just astonishing like anytime we have a conversation with a ZK founder it is incredible to hear the oh now we can solve proofs in 10 seconds now we can solve it in three seconds and it continues to accelerate which is awesome to see I mean you did a great job kind of like explaining ZK Fu which I think is a major unlock we haven't seen any you know we have projects out there they're able to compute on encrypted data right and then we have ZK projects that are able to provide very succinct proofs and people can verify of it but we haven't seen those put together and so I think to your point you know you make the enti prim is here makes the entire stack and you mentioned it makes the entire St stack

trustless I I think part of the Innovation here is that it makes it trustless and verifiable because that was the part that was missing was that FH your point you know we can say you know 2 plus two right and I can encrypt that so that you know we go we pass it to someone they can they get two random bits of information they don't know they don't know it's two and two but they can spit back an answer and say it's four with fhe they can do that but when I get the answer four how do I know that's correct and obviously these computations are much more elaborate like in real use cases but now with ZK I can verify four is the correct answer they can provide a proof that four is correct and I can verify that on my side completing the

entire supply chain if you will the entire stack making it trustless on the computation and verifiable when I get the answer to that computation and to connect the dots here Wyatt I I love the vision that you had for from a regulatory sense because we can abstract this to the to say that you know I'm the citizen of a state or a country or I'm an accredited investor I don't have to give away my social security number my annual income how much I'm right but I can just provide that as encrypted bits the regulatory agency can provide a proof or some middleware can construct that proof and then deliver it back and verify that without ever having to know my street address or you know my mother's maiden name they can prove that

I'm an accredited investor so these are how these applications connect to these middleware connect to these real real world use cases to ultimately Advance our privacy and the efficiency of these systems seong I I wanted to ask kind of like just any other components that are at work here are you guys working with any prover networks or any pro proof Market places or any verification layers you know we we've spoken to lrange or FMA or some of uh risk zero and succinct are you working with any of these you know ZK infrastructure players that are helping to provide and accelerate ZK proofs Redstone is def's modular Oracle supporting over 100 clients on over 50

chains offering 1,000 assets Redstone is the leader for Bitcoin staking and yield bearing assets they offer the most robust customizable price feeds available in any model join the Redstone exhibition [Music] today yeah that's that's very good question and I think the the the final goal of us is to uh bu this uh you know Pro proving Network or you know to bring this dfh or DS and dfh network for you know to make it the more decentralized to be a to bring more applications there but from now I think uh you know uh we

Al we got a very you know uh astonishing improvement improvement in in FH steps but I think it's still very early and especially when you are handling very complicated applications it's it's very early so our our strategy is that okay first of all we can I think this only digitals already have a lot of applications we can spot this application first and like we can bring more a lot of like we to data to the whole ecosystem and the next step is that we gr be this FH solutions for you know further privacy preserving applications and make them together so this is our strategy we want to make it you know real useful for uh consumers when to no we don't want to build you

know you know just a network and then there's no apps running one day so so that's our strategy so we we we now promote our zls product is already production ready so we have promote all of this and also we have like cryptography team in house still like improving everything to make it know uh decentralized Network in the KF stuff and eventually we got this network for the you know all these kind of you know real applications this this is what this is wall we really care about I think one um one interesting thing to kind of double click on your point Robbie and and to kind of rip off of what Xiang was saying I think not only are these like really interesting technological

advancements but like think of the cost savings that these are going to create like coming back to the you know Doge retirement example these things take months to process paper based systems like you think about the Fed and the technology that they use Jeremy aair was talking about it's like they're running on servers from the 1970s so like part of upgrading all of this to more digital infrastructures that like we can put in these systems that just make it really really cheap and like think about you know sitting inside a a institution like vanc like broker dealers have to store customer information for six years and they often do that in printed forms plus with a digital copy so now what you're seeing is that the primary record

could be restored on a blockchain and if that happens then you can start to layering these Technologies again like if I move maybe I just update a credential on my wallet or if my income changes and I'm a credit investor that just gets updated and that's verified and confirmed by somebody else in these same types of networks and the cost Savings of that is going to be like enormous and it reduces a lot of friction importantly and so it enable certain Financial transactions that otherwise would have taken a lot of time that hold up money and that makes this whole thing just much more seamless we don't have the bank holidays we don't have any of these things that we've previously had and that unlocks a ton of capital and makes it more productive I think just the the removal of human air too is

something yeah it just that takes it away and you just put it into these ZK attestations these kind of proven Technologies and W you have quite a bit of insight into the regulatory uh kind of circumstances that we've we've been existing in for at least the last couple of years and things are going to change I think in in the next couple but like how should we be thinking about designing crypto or blockchain Primitives that enable compliance without sacrificing privacy and like you know ZK kyc ZK attestations how can we as an industry basically build our technology going forward to actually adhere to what

is going to be required of us in the future to actually reach adoption because it would be silly for us to build all this technology and not build it in the the manner that the largest governments or corporations in the world will accept because then we're basically just fighting an uphill battle against those who will so like how should we what should be our mental model for the builders watching for the for our audience how should we be thinking about building these Technologies to kind of bridge that Gap and whether it's specific to the ZK attestation ZK kyc question or just more broadly blockchain technology as a whole well I think the the biggest hurdle the most important hurdle like we're we're climbing over right now which was the regulatory side we don't need net new regulation for

this stuff like I don't expect certain compliance rules to to change I expect that we're just not going to have action from the SEC and you already saw that you know just yesterday Hester Pierce came out and you know started to allude to what will be in the sec's purview and what will not um and so that's going to be great they're not trying to go out there and you know go after a Primus for building something that's actually useful and I think that's again that's what's led to a lot of the speculative activity we have in the market it's like it's bizarre but it's it's me coins are like a result of okay there's no utility so we can't get in trouble or Dows even we're like we have to do a dow and the

token can only be a governance token so the token can't even acrew any revenues from the actual protocol those restrictions are gone those are going to be gone and you're going to have what's going to be more important is that crypto and AI I think collectively are going to be front and center and so we're shifting that Focus now doesn't help that like the president drops a mcoin right as we're like you know putting out some of this uh some of the new rules and regulations but I think first and foremost people are going to lean in and you're going to have stable coin regulation you're going to have a market structure Bill and then it's Off to the Races and so as you know for example if the government does indeed it's been they've alluded to the fact that they want to use blockchains and

stable coins to track government spending that's fantastic that's going to add in a new layer of transparency um I think you're going to see a lot of Corporations start to move into this technology because it's faster cheaper right like that's that's the main thing if you're moving value blockchains are are a phenomenal tool to do that um so I I I think the first part was regulatory we're getting over that second part is just building for compliance so I I see this a lot in the payment side um where teams will kind of just be like great you know moving value from wallet a to wallet B like we've solved it and the reality is the rules are generally more complex over a certain transaction size if I'm sending money to you in Europe

today we might have to follow what's known as the travel rule um talked about this a little bit before but like gdpr for Consumer data in Europe like you need to think about where your customers are going to potentially be moving value um confidential payment I think is going to be huge like let's say Amazon uh decides to come on chain and start using stable coins do they think they you know the whole world's going to start tracking like Amazon's payment flows probably not the other alternative is that they could use something like an Omnibus account so you could see this with stripe you see this with circle right we can see what's going in and out of circle or coinbase's main wallets we don't really know what's happening at the customer level that's okay that's an intermediary step but eventually you

would have to assume that they're going to want to own an operate all their assets on chain um which means we just need to be able to like one you know always focus on selective disclosure like we should not be we we want to disclose we don't want to disclose sensitive details um and so I think you know zkps are phenomenal use case there we want to make compliance fully programmable meaning like I can see where your location is maybe again using Z proof we not we're not releasing that information but I know that I need to follow XYZ in order to make that transaction happen um and so that's just embedding compliance directly into the protocol um and then making sure that you have you know the the right

attestations and you're ensuring like data integrity at each step of the transaction so I think if we start with the use cases and back into it you can see how you could start to build these systems so we don't need to build for like some potential future net new regulations we just need to fit our current system into the the into reality basically it's this than that yeah basically like it's just it's logic like is Robbie a credit investor located in the United States can he invest in this thing right what that process would look like today is like I have to fill out that paperwork every single time and then if I'm the broker dealer or the investment pmer I have to hold that personal information of his including

his address and social security number and accreditation status like in paper form for six years that's insane so I think what we're going to see and what what the SEC and uh folks like David Sachs and others have alluded to is that like we're going to upgrade a lot of this stuff so we don't need to do all these things because they're they're outdated um and I think hopefully as a result some laws do change but the compliance part itself like is not going to change so it's you know it's up to Primus and and teams that they're going to build this stuff that can then plug into big corporations so they kind of sit between the payment systems for example or traditional Financial systems that are coming out today using blockchains and then the end consumer or institution why I don't want to be a

bear but you know do you think it's the case that we leap frog from gring got's you know underground Limestone cave with a bunch of Banker boxes full of papers all the way to blockchain or do you think there's some intermediate steps to get it online but not onchain yeah that's where I think you have players like coinbase Circle Stripe Right that that will uh they'll be huge proponents of the technology but they'll do it in generally like more custodial ways where they might not use this um but the world's really big right and I think a lot of people for example I think privy on the consumer side like huge Trojan Horse here right if you own the login

layer why can't they just issue uh you know a verif why can't they be the verifier of a credential that just says these things and I think crypto companies and startups will be the ones that will push this and then Corporation are going to have to match it and compete so it's not going to happen overnight um I always like like in blockchain technology to e-commerce right we're at like 25% penetration 20s something years in and you still have trillion dollar companies like Amazon so I think that's going to happen in crypto as well doesn't need to be 100% penetration there's a lot of value there's a lot of big things out there to go tackle yep um um Shang I also have a question that I'm going to start with I don't mean to be a bear but I'm going to try to poke some holes to Primus here um

one regardless of how you guys do your your ZK fhe and ZK TLS there there needs to be some sort of mechanism to achieve consensus amongst either nodes or some sort of of of party that's going to essentially settle these proofs like we need to have a way to settle the verification of of the of the data from ZK TLS on chain as well as from the the proofs that you generate to verify the encrypted data with the FHA portion so how do you guys plan to reach consensus are you guys building your own chain are you guys going to be just doing something with cryptoeconomic security like a like a AVS from Igan lay or

symbiotic Network or like how do you plan to uh achieve sufficient decentralization uh to settle the proofs and to settle the data on chain and where do you plan to do that um and why yeah that that's a very great question so yeah um in terms of DK DLS and DK FH so actually there is only one party so doing the attestation or doing the computation uh you know uh in the whole in the whole in the whole protocol so it has to be a way to make it decentralized because you don't want to just you know just one operator or just one guys doing all everything so we have a few like solutions to uh do this but I think it's

not just the cryptography it's a kind of for uh combination of all possible uh you know uh solutions to make it secure make it you know uh decentralized so uh we're doing it in like a few steps or gradually so first of all I think to make inist there is actually a like uh a trust assumption mean that there's no conclusion between you know uh the client and the tester so for now the very beginning so we're now putting our like take server into T tees because you know we there's there's kind of uh uh it's some kind of way to make sure that we're not the guy who is manipulated in the server side we can just put everything

in Te so it's it's very cheap it's very fast and it can you know satisfy lot of applications like you know L of wrapping stuff or def5 applications that's that's totally sufficient and then in the last step real quick on on that point so basically you're offloading the trust assumption of the the this the single party uh who who would be uh settling uh the the data or the proofs and you can correct me there where I'm wrong into a te and effectively the trust assumption then becomes that Intel or whoever is managing the chip of that te that's that's hidden in a in a warehouse somewhere that that can't be touched or

messed with so there so no other party can get basically proprietary information or priority information in into what's happening and so you're offloading the trust assumption from like one single party that you guys would own putting that into the te and then allowing it to be kind of obus skated if you will in that manner maybe you can correct me where I misspoke so basically uh uh if you're using Zs protocols like in cryptography we can run everything so in order to reduce the trust we run of DS protocol inside the te so that's that's simple that that's simple so means that uh oh uh even the own that server we cannot change anything so we are not the B guy here so and we can deploy to any

different te uh you know providers for now we are not like collaborating with f and we can collaborate with others that we can make sure that uh to support uh most of the use cases right now so that's the first step I think is it's it's quite reasonable for us to do that because it's very cheap and it's very fast and we just spend like one week we can integrate everything and there is no you know performance loss in this in this solution so uh the second step is we want to make it very decentralized so we have two options so first of all as you said we can you know use uh crypto economies uh solutions to like Leverage like AVS you know to uh uh allow different you know uh operators to do

the attest and do run of protocols and even past the so we can make sure that everything is is is is very decentralized and is also very trusted so this is uh I think is the go-to solution that we can do in the future and um without you know sacrificing the the diplomas very very very much and the final solution we want to do and we actually are not doing it is that for now I think the digital protocol is kind of they involves in you know NPC protocols that just two- party and is called two PC protocol so we are not extending to multi party protocols means that there is a bunch of you know a testest that run the NPC protocol with

the client to to to the digal I think it's the kind of the the end game of digital because we can decentralize everything and uh in terms of you know using cryptography but yes it comes uh as a cost because it has to you know as more communication size you know the performance is like a little bit uh uh uh bad than our two- party two party version but we the the the strength of our team is that we have very exp uh you know experience in cryptography and cryptographers in our team we like have more than five person who is professors in phography so we kind of designed this protocol and we are pretty sure that

maybe in in in one years in one year we can know deploy or design very efficient ones but to make sure that we can support all the uh use cases we kind of do te first and then we then do AVS and then we do multi party TLS stuffs so that's the that that the whole goal of the RO map of primary so yeah yeah and so is part of the bet that you're making there with the progressive decentralization also somewhat reliant on the advancements in ZK such that you guys use a te in the immediate term which is cheap and fast while still ZK proofs are not as cheap and fast as we'd like them to be but if you expand this over 3 to 5 years time

Horizon you can move to be to be more decentralized while the performance of ZK improves such that in the end State you can have really high quality ZK proofs fast and cheap but then also maximally decentralized through this MPC model so you kind of get the best of both worlds but it wouldn't make much sense to get all the way there in the immediate term because well it's an early stage team early stage project and ZK still needs to catch up a bit is that kind of like the right way to think about it yeah so the I think the first priority first is not the technology side it's it's about the product it's about how to you know enable the users enable the the the the builders to build their applications and support them to provide a better user experience I think

that's the most important thing and then we can gradually make it more secure decentralized so everything is about product and although I I I work in you know cryptography for for a long time but from my side I think we should provide a you know products and a better uh us experience for the clients for the developers so that's the first priority in prise awesome um all right guys zooming out from into the weeds a bit we just have a couple more minutes left want to think about more use cases here and just more General uh kind of forward-looking for for where we think this this is going to take us so um W when you guys were evaluating you know premise as well

as other Investments that you guys have looked at when you're thinking into the future and trying to like because when you're investing in Venture and Robbie and I have a ventures arm we've done about 50 or 60 deals we've invested seven figures of our own Capital no LPS over the last two years it's it's TR it's basically just going to be our our you know it's our retirement fund which is crazy to say because it's so risky and we don't I don't have a 41k I don't think Rob has an IRA this is this is our retirement fund um because who else would need one of those things um but that being said like we aren't thinking about the the our investments with the current lens of today right we're thinking about what does the world look like in five years and does this make

sense so whether it be for prise that you want to start with or just more broadly how you think about evaluating the the crypto landscape if you will in five you know three to five years or even longer like what is your mental model for uh allocating Capital what is your mental model for um you know what's the Primus thesis what's your kind of broad thesis when you're looking at the crypto landscape down the line and how do you use that to make good decisions in the now yeah I think the the hardest thing about crypto is that you know it's part uh technology it's part Capital markets it's part attention and you have a lot of people probably really focused on the latter two buckets which leads to

a lot of you know short-term speculation narratives that come and go I think the the biggest thing as a as a venture investor is like you you can't quickly jump on a narrative like you can in liquid markets you can't speculate because we're locked up for three five years before for example we could potentially exit an asset and that's not even the timeline that we necessarily want to exit an asset we want to see these companies grow um and grow into the market and continue building out their product Suite so for example if we jumped on the AI agent narrative like you'd be washed out in like six months so I'm not saying that that's not an interesting space to make investments in um in fact we're making a kind of

payments investment there today but I think about like what are these agents going to do I think that they're going to do very specific tasks that they could potentially replace software as we know it or applications and therefore we want to like focus on that um and so the payment side is something that I'm I'm really really excited about and we talked about this a little bit but like ZK kyc is an example like that enables a lot on the payment side because I already know the information about this person again you can embed compliance Primus could help there um we've seen kind of uh the explosion of like um ZK peer-to-peer on off ramps that's awesome like now again same thing like I don't have to go on get put my information in

but I can get access to cash app PayPal um these different markets um there's actually a an interesting company that we made an investment in um that does a very similar thing in Emerging Markets um where you have large cash to stable coin transactions and eventually you're going to have a lot of stable coin to stable coin transactions um as new stable coins come to Market as well that's that's really really exciting too um and I think like just in general Finance is a huge design area for all things EK and I think you know the Primus team have identified some of those examples and so what was really exciting is like you know again we want to back the best teams that are you know

Cutting Edge in developing this technology and that we think in 5 to 10 years can grow and be you know a service provider for the entire space so what's cool and what what we eventually thought would happen primes is actually I think the first investment we made because we were looking into confidential payments at Circle uh we made an investment into inco um and so we were looking at providers like Zama and when we met Shang and team were like okay these guys have developed the best technology we are going to make a lot of Investments at the application layer SL we already have made a lot of Investments through Circle and so if we can plug these guys into our existing ecosystem it's going to enable all the real world use cases that we think are eventually going to come my bet was that it was going to

come on the back of things like stable coin regulation and I I you know who knew about Trump right I kind of put that as like 5050 odds now it's like speed up your timelines because again I don't think this is GNA happen overnight but everyone's thinking about stable coins so think of the logical progression there of like great I have all my wallet all my information is just sitting there on chain like that feels weird all right so then I could use a centralized provider but like again maybe I don't want to do that maybe I want to own all my own flows and that's again where I think a lot of this privacy preserving technology comes into play and it'll just run under the hood and and I'm a firm believer that a lot of this just really gets abstracted away which is

also why we were really excited about the blockchain agnostic approach you should tap into as many ecosystems as possible actually I said before we you're definitely working on this long-term stuffs because uh as as we saw because there is a lot of you know narrative in the market and it really lacks of you know um real applications in web street so so like like like a few one or two years ago there is a lot oh yeah I think like there is a lot of like device project def is good but I think should be there should be more diversifications in in in in web stre so I think that the the future that probably we can bring

all web two applications to web stre using like like Z steps so that's the I think the broad future in website and uh that's yeah I I think Andy mentioned a term earlier that I hadn't heard I think it's a great term based on what w was talking about ZK kyc which to me if that's not a narrative it should be because that I I love that uh as a use case awesome Shen thank you so much for coming out as well why it's been a pleasure um and Robbie as always I mean we all we are also supporters of inco and Remy and the team uh have been there for a while and uh really really excited about this

technology I've learned a lot actually so uh today's been great thank you guys so much than FK you all right