Ryan Sean Adams: Mythos Capital – On Becoming Bankless (#334)

Transcript

this is epicenter episode 334 with guest Ryan Sean Adams hi welcome to epicenter my name is Sibylle sync with Joe today our guest is Ryan Sean Adams Ryan is the founder of mythos Capital they're a crypto fund they hold crypto assets of course and they also offer staking services to large stake holders for the cosmos and loom networks Ryan is also the author of a popular defy newsletter called Bank lists now if you're not a

subscriber I would encourage you to check it out we'll leave the links in the show notes because it's one of the newsletters that takes a very practical approach to leveraging defy and becoming Bank lists as he puts it so he shares a lot of thoughts about the ecosystem of course but one of the things that I like the most about it are the actionable strategies that you can implement to improve your utilization of defy and you know even make money he's also the host of the bank list podcast which was recently launched and that he hosts with David Hoffman who was also recently on the podcast so here's what you'll learn in this interview Bryan's background as a tech entrepreneur and how he got involved in crypto launching mythos capital and the

thesis of his fund why it's important to become Bank list and being able to do money verbs like lending spending paying etc without banks what good analogy is we can use to describe defy what good analogies we can use to describe defy to people who are not familiar with it the power concentrated in centralized exchanges and whether or not that's a threat to defy the trustless nature of aetherium versus bitcoin ether as a store of value asset in a theorem and the idea that 'if is money the importance of self-reinforcing feedback loops in defy the role of nation-states in the future defy ecosystem and of

course the effects of coronavirus on the world economy and crypto markets so for the last two months we've been running a survey on the podcast and I wanted to extend my gratitude to everybody who participated in this survey it was our first survey and I wasn't really sure how it was gonna turn out but about 200 of you participated so thanks a lot because the insights that we learned here are extremely valuable so I'll be writing a blog post this week and posting it to our medium and also our blog on the website with some of the key insights here so thanks to all of you and thanks to shapeshift for offering to give key keys to everybody who participated I hope you guys are enjoying your key keys now I'm not one to watch a lot of TV I don't have a TV I don't usually have a

Netflix account but being in confinement these last couple of weeks you got to occupy yourself and so I started watching a few things and last week I binge watched the entire ten episodes of the new Star Trek Picard series I got so excited about this thing because when I was a kid I was really into Star Trek and so of course you can't have John Luke the card without the Borg right and so if you're not familiar with Star Trek the Borg are the species that co-op technologies from other species and they sort of assimilate those technologies within their own collective hive mindset and they have this incredible ability to adapt whenever they were attacked the first few would fall but then they would always adapt in fact they would always

say that they would say they've adapted and then the good guys would have to change up their strategies well I feel this is a great analogy for security in the blockchain space every time there's a hack or when a security vulnerability is discovered we collectively adapt our strategies and our mindsets to improve our defenses so I'd like to tell you about an event that will help upgrade your security mindset the privacy focused security consulting company leased authority is hosting their first security sessions on April 30th this is a free online meet up for blockchain founders and tech leads where you will learn about the low-hanging fruit common vulnerabilities that you can fix today what security audits actually look like

from start to finish and exciting developments in blockchain security research you can ask questions to their team of experts security researchers and get advice about the things that you're most concerned about and it's free so once again it's happening on April 30th and there will be several sessions throughout the day to accommodate for all time zones to sign up for this free event go to least authority comm slash Meetup be like the Borg and upgrade your security mindset once again to sign up go to least authority comm slash Meetup and with that here is our conversation with Rhine Sean Adams we're here with Ryan Sean Adams

Ryan Sean Adams is the founder of mythos capital and also writes a pretty popular newsletter I say in the in the defy space called bank lists and so we're gonna talk with Ryan today about a number of things but primarily you know defy why it's important and his thoughts on the long-term sustainability of define Ryan thanks for joining us today it's great to be with you guys I love the podcast so that's it's fantastic to be on it thank you it's great pleasure to have you so forget started tell us a bit about your background and how you came to be involved in the crypto space yeah so my background is you know tech entrepreneurship kind of a Silicon

Valley track had a health care to startup that I was involved as kind of a co-founder of I'm sold that and in 2013 really started to you know pop the lid on Bitcoin a bit and and this was through a friend of mine actually the good friend of the company he said that he was buying some Asics to mine something called Bitcoin and that sounded so weird and bizarre I I had to check it out so I remember one Thanksgiving weekend that year I spent the entire weekend just absorbing everything I could Andreas Antonopoulos talks you know mastering Bitcoin books documentaries everything I could get my hands on and I

remember finishing that weekend being like wow this is a game changer I know I want to quit my job now and go into this I didn't cooler heads prevailed come Monday morning and I kind of went back to you business as usual I didn't get further involved in this space but my round to you in the crypt i rabbit hole was really etherion so--but bitcoin was was really interesting the things he could do with it and transferring cryptocurrency around but for me aetherium was like the paradigm shift and the reason I got into aetherium was because of this aspect of programmable money so not only can you move ether from one place to another you can create

other assets on top of the etherium economy you can create money protocols you can accomplish other things like lending and borrowing you know fundraising even though I cos were sort of an early example of permissionless fundraising and programmable money around fundraising so that was like the you know the the second I guess one to combo punch for me and I was just I was just gone I couldn't think of anything else nothing else was as interesting to me after that you know it's just the combination of economics and finance and psychology and monetary history and technology like it's all there I

realized that this is sort of the birth of a new internet a kind of a you know once-in-a-lifetime or a generational type experience I remember the early internet as a kid and you know playing around the fad and how magical that was and I decided I absolutely was not going to miss it miss this this revolution so I kind of went all-in at that point from a career perspective do some crypto investing now also have a staking company and this year I created a newsletter program to explore the D 5 space called Bank 'less and we're just helping people with with tactics and strategy how to think about crypto and become more and more Bank lists because

I think that is the promise of crypto and I bet we'll get into that in a bit more but it's it's not just Bitcoin it's Bank less with central bank without a commercial bank being able to do this on a peer-to-peer basis that is the self sovereign money aspect of crypto and that's why this space is incredibly interesting at least to me that's why I'm here I'm curious if you can dive into this a little bit more you know you discovered Bitcoin first and then sort of didn't fully fall down the rabbit hole but kind of like partially and then after as he did so why do you think like what was it about here him that that second time

like really fully caught you I think something just kind of clicked for me you really the second go-around with aetherium it was a much more expressive platform so you could create other assets on top of it you know that was kind of the initial use case that was incredibly interesting so with Bitcoin it's sort of this mono asset platform where you only kind of have Bitcoin at least in the trustless in a trustless way with etherium the ability to create all of these assets even something early on with if you're in like like the tokenized gold you know it with the did Jax platform how interesting is that or the augur platform was kind of an early etherion project with prediction

markets and being able to create sort of this this idea of an Oracle it was that program ability that I think felt to me a lot more like the early internet and the early internet I see as and the Internet today is it's it's really a permissionless communication protocol so anybody can create a website you don't have to ask Google or Facebook you know you just create a website anyone can send an email using protocols like SMTP and pop you don't have to ask permission to do that and the applications you can build around that I mean we've seen that play out over the over the last couple of decades so it was this expressivity in

aetherium that kind of drew me in that in that second round and I thought wow this is this is like the Internet this is like a new set of protocols for digital scarcity and for value transfer and the permissionless aspect of aetherium the ability to program things on top of it that's like the early internet and that could lead to kind of a this massive second wave of innovation and so you know after I kind of figured that out you know that was kind of it for me I will say a little bit after that I probably round tripped on Bitcoin a little bit and rediscovered the value of store of value nests and you know kind of monetary premium

inherent in the Bitcoin asset and you know that kind of reinvigorated a some excitement for Bitcoin for me too and it helped kind of inform the the model and the thesis I use for these assets today the programmability and expressivity of etherium and its economy as a money platform and also some of the monetary premium aspects of Bitcoin both of those things I think are really important in a bank list system given this the sort of personal thesis around crypto can you tell us a bit more about mythos capital and how that how your personal convictions sort of flow into the

investment thesis here and what you're doing at mythos yeah so in 2017 I think you know I'm so excited about this space that wasn't the only one to obviously think this what the first thing I wanted to do is like you know I should go start a hedge fund right that's why everyone's doing go start a hedge fund that's a way to kind of invest in the space and and partake in the space but what I realized about the kind of the hedge fund model is it's not it doesn't kind of suit my strengths or sort of my thesis for the world so the the hedge fund model of course you pool assets from other investors and you get paid 20% annual 2

percent 3 percent you know performance something like that and you know your returns are really measured on a monthly quarterly annual basis I don't think monthly quarterly is the the best time horizon least for me in thinking about crypto monies as a narrative what it what it tends to Fosters is hedge funds that do what I call narrative investing rather than more fundamentals long-term investing so the narrative investing is like well you know staking so hot this year so we're gonna buy a bunch of staking assets or you know initial exchange offerings is so hot right now we're gonna do that or exchange tokens there the thing and it keeps you kind of moving around from

gain to gain and then that's fine it's just not what I wanted to do what I found is they were just uh if you look at the coin a market cap top 100 they're just a couple of assets you know maybe a handful that I felt excited about that I felt would be able to accrue and maintain a monetary premium and if I'm just holding you know assets like ether and assets like Bitcoin for investors well it makes no sense to charge investors you know 2 and 20% just to just to do that they can go do that themselves so I can't the the hedge fund idea have kind of a you know a smaller capital pool of some private investors

where we're just kind of investing for the long-term and primarily the thesis is crypto money type assets it's like Bitcoin and ether we've got also some some stuff going and sort of the the staking world as well with a couple of assets that we don't think will accrue monetary premium but are nonetheless somewhat interesting so a little bit there and then really what I decided to spend most of my time on is kind of the the long-term development of a community that's going on the same journey that I'm going on which is the the journey to become more Bank lists so essentially to you take these crypto money systems that we have ether Bitcoin

and all of the protocols built on top of them and then start using them start using them in place of our bank accounts so your Bank of America your Wells Fargo account the thesis is those will become less and less necessary over time and your crypto accounts your ether address your Bitcoin wallet those will become more and more valuable over time and there might come a time in place where you know first your net worth shifts to more crypto assets rather than traditional assets and for some people that's already happened and then second wave is you know the vac tivity their account activity their banking activity switches from their wells fargo bank account to their

aetherium address you know and that to me is a vision worth striving for something I'm passionate about and I think has a really interesting upside monetary accrual type of value proposition so it just it just checks all the boxes for me why is it important to become bank this yeah so I think that the reason it's important to become bank less is because over the last 100 you know 200 years and now I think the pace is accelerating a lot of the sovereignty that individuals have had has started to disappear it seems to me when you kind

of look across the world that we're moving in a direction of more authoritarian regimes more totalitarian type control less individual decision-making and more decision-making by the few who control the lives of the many and I actually think that the you know advent of technologies like not the internet not the base internet protocols but the tech giants that have built on top of those platforms are not helping us they are causing more centralization it shouldn't be the case that a government can control an individual's economic activity shut off access to

their bank accounts you know inflate the the value of their assets essentially that's a that's a power that the few shouldn't have it gives it gives governments too much power the ability to you know label you as a dissident and you out of the global economic system and I think that that is an unhealthy balance so in some ways we're in precarious times and we're moving more towards you know more greater control of the fuel and in more precarious times so to me the the movement is about decentralization and what I mean by decentralisation is and changing the structure of power from the few taking

some power from the few and distributing it to the many and so I think a self sovereign money system that includes not only a money that's not state state backed at the at the base layer but also a banking system on top of that that is permissionless that is available to you know the 4.5 billion people across the world with an internet connection that can't be turned off by governments across the world that is accessible to all that anyone can build on top of that to me is a worthwhile and important project in these precarious times ya know absolutely couldn't agree more of

this and so when you look at defy is that but like how would you describe defy how do you describe defy to people are kind of like you know new to this thing maybe they've heard of Bitcoin and cryptocurrency but they don't have a conception of T file like how do you describe it so I like I like to use analogies because the problem is when we're talking about defy the people in this space we go into this like you know word salad of things that just no one understands you know I'm going to take my die and I'm gonna put it in the DSR and I'm gonna get chai out of it and then I'm gonna zap into yo synthetics and I'm gonna zap out like it's it's

it's it sounds crazy I mean to some of your listeners this might sound normal because because they're doing these sorts of things but that that's not the way to explain it to the mainstream so you know the way I like to explain it is you know first of all we've got a traditional system traditional money system on the left right that's everything we use today so we have fiat money that's the base layer money and then we have the banking system right that's the Wells Fargo's of the world the Bank of America's they just be seized right and and together though that's the money platform that we use today and it allows us to do do things with our money do finance so things that are important like paying and you know spending and borrowing and

lending longing and shorting all of those things happen in the traditional world today well crypto and this is you know even broader than defy but the crypto is this parallel universe right so it operates in this in this kind of separate area you have exchanges like coinbase that serve as a bridge so they will help you convert your traditional money over to this new money system they're like a bridge for that but once you're in this new money system you're kind of there and it looks similar to you the old money system in that there's a base layer instead of fiat currency like US dollars or the Euro that base layer is crypto money systems and when I say

crypto money people always get tripped up by the word money I just mean assets that are a store of value used as collateral reserve assets for the crypto ecosystem and Bitcoin has been and is one of those ether I think is is one of those two and is emerging as a kind of a defy reserve asset if you will but that's the bottom layer so that's like fiat right the base money crypto layer it's different than fiat because issuance is trustless so we don't have to trust you know 12 people at the Federal Reserve to make decisions we've got algorithms that make those decisions and issuance decisions if you will and those algorithms are really difficult to change it requires lots of

social consensus so it's it's a better money system from from that perspective now it's much more volatile so you people get tripped up when you call it money but we could talk about that more but so so you got this base money layer these reserve assets like Bitcoin and ether on the other side in this new world and then above that you've got the the crypto banks as I call them so sort of the the exchanges and you also have the defy protocols so that's the banking layer so though that those are our equivalents to Wells Fargo and Bank of America and so if it's a if it's a crypto bank it does have an element of of centralization of course it's more similar to Wells Fargo so you

know coinbase is set up as a as a corporate entity but the coin base allows you to do things with your crypto money it allows you to accept it coin based commerce so you can put a plug-in on a website and start accepting dye and ether it allows you to trade it allows you to borrow and lend these exchanges will become more and more like like banks over time but then you also have this really interesting new set of protocols that are generally built on top of etherium and these are the d5 protocols the money protocols if you will and these are really interesting because they allow you to accomplish those money verbs the borrowing and the and the lending and the trading they allow you

to start doing those things without a bank in between right so with yoona swap for instance it's just you and a protocol you don't give up your private keys you still maintain control of your your crypto money there's there's no one in the middle it's just code that's the purest form of a defy protocol like you know the highly highly trustless and now with you to swap you can start trading without anybody in between right that is a fully Bank list system and as those money protocols develop more and more you know we'll have a completely parallel system I think that replicates

the traditional system but has one key advantage that advantages it's it's trustless so it's trust lessly settled and our crypto money is trust trust lessly issued and we can we can go fully bank less so with your aetherium account your theorem address which anyone can access anyone can open there's no restrictions it's not it's not sensible you have a passport to this parallel system and that to me is what it means to to go fully Bank less and that to me is is the vision of defy it's an extension of the original crypto vision that I feel like at times you know the Bitcoin maximalist community has has forgotten

like that the point of this whole thing is to go bank lists it's not to replace you know the traditional bankers with a new set of like finance and coinbase and you know new banking overlords the point of this is complete self sovereign money and a completely self sovereign parallel financial system and d5 plays a key role in that in my mind maybe just beyond that so I I mean I agree with this that this is a desirable outcome at the same time it seems like what we've you know what we've seen in the last years is that the changes have become increasingly powerful they are doing more and more different things for example we had Jesse power from cracking

on a while ago you know he was talking about ok the idea like they did the advantage have any change that you know if you trade on the change and if they also offer derivatives you can use like you know your balance in the spot trade to like as margin for derivatives and you know then exchanges offense taking exchange is offering lending you know there's ideas of so many changes to go into trading other assets like stocks and stuff like that so do you think this is going to happen in terms that or like what are gonna be the drivers that actually make this a sort of self sovereign money you know I manage my own assets as opposed to you know just a new

set of basically large financial institutions I totally agree that's the direction it's going right or or it might go and I think answer your question is defy that's why I'm so excited about it's it's it's defy its money protocols rather than crypto banks we want protocols not banks so what's what's happening as you say is is crackin is becoming our new JP Morgan right and by Nance is becoming our new goldman sachs and what what alarms me somewhat is that I don't want to characterize her stereotype the Bitcoin community but certainly among Bitcoin maximalist they seem totally fine with that some women do what they want to do what many of

them want to do is uh sure in a a new gold standard right where we're Bitcoin is kind of you know the Bitcoin standard but the problem with the Bitcoin network is it's not expressive enough to contain an entire trustless financial system so with Bitcoin there's one thing you can do on Bitcoin trust lessly and you can only do it at three to four transactions per second and that's move Bitcoin from one place to another that's the thing you do that's the verb you can accomplish you can pay someone you can receive Bitcoin that's it it's not expressive enough to create an entire trustless banking layer on top of it and so what happens is due to this

limitation I feel like the Bitcoin community is someone said well you know who needs all this dphi stuff anyway right we have crackin coinbase and you know we don't need high transactions per second on the base layer anyway this is all about you know even even Safa Dean and in his book the Bitcoin standard he's like I'd be fine with the world where there's you know thousand maybe different crypto banks settling on the Bitcoin main chain and individuals really don't do it day to day well like I mean that's not compelling to me that means we're all you know kind of keeping we're using crypto banks for all of the the money verbs and they

become our new banking overlords and so maybe that serves to make original Bitcoin holders rich but it doesn't it doesn't lead to a completely self sovereign money system right because the thing you have to realize is that you know in the traditional world works the same way at the central banks and the banking structure they're all part of the the same apparatus right you know the the banking structure in the u.s. they're kind of an extension of of the Fed to the central banks yes that's the the monetary policy sets the interest rate all of these things and commercial banks essentially carried out if the Fed requires something commercial banks do it they are nodes on the feds network right so unless you disrupt and

have replacements for both of those things it's just going to resent relies on the banking layer so to me that limited Bitcoin vision is not at all compelling what is compelling is having money protocols actually compete on the banking layer in aetherium for example and you know a world where yoona swap is bigger in terms of liquidity pool than by Nance and coinbase you know and maybe not you know swap maybe a protocol like it something that is completely permissionless and trustless that's the world I want to see and I think that's the world of the original crypto vision so it's about these protocols getting

stronger and even starting to disrupt some of the banks and I think what will happen is this I write a post on bank lists recently called the great protocol sync which is in this this gives me hope because it seems right now that the exchanges in the crypt of banks they will kind of control this banking layer but what I think could happen is protocols could kind of drop drop below and the crypto banks might start serving as onboarding for these defy protocols so you already saw queue coin which is a you know exchanging Asia they're incorporating the dye savings rate into you into their accounts so you can deposit directly into the dye savings

right so defied protocol has kind of slipped under underneath a crypto bank in that case right well how long until crypto banks start tapping into you the liquidity reserves of eunice watt hopefully hopefully that might come soon I made the prediction out I think a top three exchange will incorporate the dye savings rate into its platform sometime this year and once one does then they all will so that is my grandma that is kind of the great hope the great protocol sync is that some of these defy protocols start to become so credibly neutral and start to acquire enough state to actually be you by these crypto banks the same way the crypto banks are using crypto money

protocols like Bitcoin and ether that's the hope ya know so I love that you bring this up because this is a topic that you know at course one we've spent tons of time working on and especially around the topic of proof of stake but because in proof of stake you have now many changes supporting staking and they can kind of do defy like things where let's say you can stake and you can maybe lent the money at the same time you can still trade and it's actually it's more powerful than than if you kind of custody the asset on your own so we've been doing work and there's currently kind of a working group that we've been running on this topic that's been funded from the entertain foundation around how you can basically

kind of bring defy to proof of stake protocols so that you could do those things in a decentralized way well so you don't have to give up custody of assets and I totally agree I think it's a super important thing it's actually especially around proof of stake because if you have the proof of stake assets all all mostly controlled by changes and then those assets also become kind of deciding things around consensus it means really they they control the chains in a way that they don't control Bitcoin you know even if like 50 percent of Bitcoin are held on a bunch of exchanges they can be 51% attack Bitcoin because it's a separate thing but with with proof or stake the kind of can so I think it's a super important topic yeah

I completely agree and I think dphi needs a lot more innovation around what you're talking about you know creating staking assets that are useful in a permissionless way if defy doesn't do this and if these money protocols don't become competitive and let's talk about the third element is if consumers just don't care about going you know fully trust less and then I think the crypto banks will sort of win you know in the staking business with with mythos we participate in network called loom there's like something like 300 million or something loom staked financed just launched a couple months ago on that they now have 153 million or you know

like it's over 50% that can easily happen to you crypto networks and particularly in staking and I think the great defense that that money protocols need to have is is to be incredibly useful and ultimately to have liquidity liquidity pools are the hedge against crypto banks kind of running the entire crypto economy which not a lot of people are talking about to be honest right now and I think I think we should be there's a lot to unpack here but I'd like to come back on a couple of things you said as we're recording this I just I just came back from ECC actually was happening here in town but I heard a couple people say there that in the dphi space well

what people really care about and what people are really passionate about is the ability to to sort of create money Legos in a permissionless way right if you know how to smart if you know how to code solidity if you know how to put a smart contract like you can create new types of financial vehicles and new money Legos and and the composability of those different parts right so you talked about defy zap earlier but that in the end tres lessness as interesting as it is like some some people probably are fully aware that we're not gonna go to fully trust this or a baby have to resign themselves to that fact it's like you were talking earlier about exchanges capturing you know the majority of the liquidity in in the networks and

consumers need to care about that well like consumers are fully are perfectly fine with putting most of their information on Facebook or in medium or whatever but their ability to create content they're just at will and express themselves and talk about whatever they want is really what they care about so you know it's sort of overlapping the define allergy to the Internet of information analogy do you think that it's possible that it just ends up going in a direction where we have the ability to create all these interesting financial products but that the underlying networks themselves are not fully trust 'less yeah so maybe I'll say two things on that so the first is I'm not on a crusade against the crypto banks right

so that you know I think crypto banks are incredibly useful coinbase has done so much for this space it's it's incredible bringing Fiat over making crypto usable tapping into Bitcoin ether and other crypto assets as a money protocol to enable exchanging to enable lending trading all of these things massively useful you know love crypto banks aren't from that vantage point don't want us to be limited to by them but the thing that makes I think crypto protocols and protocols in general etherium of course as well it's the thing that makes it so special is that it's permissionless so anyone can build anything on it I think that stable coins

Bank stable coins are a brilliant use case for crypto that's not completely trustless at all but it allows you to move trusted US dollars using you SDC across the world in a matter of seconds you know billions worth for transaction fees that cost cents that's magic right and of course if there am is a platform can't say no to that use guess and doesn't say no wouldn't wouldn't want to so all that to say I actually I you know I I say defy and I use the meme but it's with like reservation and with objection because I don't actually love the term defy I like

the term open finance better because this is a lot like the Internet no you know no one could stop you from publishing a blog or uploading a video or creating a website it's permissionless like the internet it's open like the internet that i think is is the true potential anyone can build on top of it you can build a trusted money application you can build the trust list money application so I don't think everything in on ethereum needs to be fully trust lists or fully defy I think there's a spectrum you know on the on the one hand that you know totally decentralized money protocol left probably the the best case of that is Eunice WAP right but then we get things

that are more and more trusted all the way to the other side of that where you get something like tokenized securities and that's just a token representation of something that that settles in legal meat space but even that is is highly useful so it's about permissionless not decentralized it's about open finance I think but that the second thing I would say to your point about hey look consumers don't care I mean they're happy to lend on coinbase and or defy whichever is easier right and wherever they can get the the best return in the most liquidity right you know I tend to agree with that I don't think consumers care but I will tell you another party that cares if you think about like groups of people who care a bit more broadly the crypto banks care about what

protocols they built on so I don't think that coin base is going to be very excited about building on top of Finance chain with B and B as the reserve asset that's by Nance's token right why because you know that entire finance economy is as has tilted in favor of by Nance right it's kind of their system it's the same reason you know China's is not really excited to build on a protocol that's controlled by the US right you know that they'd like to establish their own money protocols and have dominance over their own money protocols so it kind of I guess all this goes to the the thesis that the credible neutrality of a protocol is what what

really matters when you talk about these these large consumer groups like like banks and potentially countries you know China would never build on a crypto network that was controlled by the US government would they build on aetherium well maybe if they think it's it's credibly neutral if they think that it's the fair system maybe they would coinbase would never holder or build massive trading pairs on B&B that's the finance coin but would they on Bitcoin yeah of course they've done that before and they will continue will they on on ether yes so what I'm saying is maybe in consumers don't care as much you know that would be the more pessimistic view

and I'm inclined to agree but large consumer groups like nation-states and like other crypto banks care about the credible neutrality of the underlying protocol and they're going to build on protocols that aren't tilted in someone's favor that aren't centralized that are maximally decentralized so that I think is the bull case for for money protocols and why they that why they kind of sink to the bottom just naturally and we're seeing money protocol to do that we're seeing Bitcoin kind of sink to the bottom continue to accrue value we're seeing that happen with etherium it's the most credibly neutral protocols that end up winning let's imagine a future where you know etherium and defy and in general you know have grown to several hundreds of

billions of dollars of locked value and massive economies built on top of these platforms what role do you see central banks having and by extension of nation state money what role do you see that having in the broader defy yuko system as it continues to grow I'm not one who believes that you know central banks or nation state powers will evaporate overnight or even in decades nor am I wanted to believe that's that's even like would be a good thing the whole Citadel view of the world where the world goes to hell but you know some people construct Citadel's to survive Armageddon it's not enticing I hope that doesn't happen and I actually don't

think it well I think central banks and nation-states will continue to play an important role in the future but I do think that as the world develops a digital alternative because we've had a physical alternative we've had physical alternatives to fiat money before in the form of like gold and in commodity assets like that but crypto is the first time we've had a digital alternative to centrally backed digital US dollars as we have an alternative and if the old system the traditional system makes missteps mistakes abuses their trust doesn't innovate fast enough well more of that trust and more of that

monetary premium and more of the value will flow from the traditional world to the new crypto world over time and I think that that's the the crypto bet that anyone who's invested in crypto assets is at least monetary crypto assets that's the bet that they're making that funds and capital will flow from this old traditional world to this new traditional world it could take decades it might take generations but you know future generations will have an alternative to the traditional system and hopefully that restores a bit more balance we have a backup system to the traditional central bank's and Fiat system and we can use that bank backup

system if things go wrong and that backup system has some really nice perks anyone with an internet connection can access it no one can stop you from moving funds or going bank lists on it so it's it's a nice system to have in place as a check on central powers and to use if central powers again just don't innovate and increasingly interfere with a lot in an unfair way with the lives of their citizens I'd love to touch a little bit on this topic if it's money I know there's been kind of a raging debate going on in that or maybe that's slightly exaggerated but like a lot of discussion about that in the Theorem community where I think some

people strongly like this notion and you're one of them and some you know very much against it I probably flat Sam fear the one that comes most of mind but what do you mean when you say eath is money how do you define money and how does it kind of fit in this context I'm definitely a proponent of the view that Efus money I think it's absolutely essential for to have a bank less financial system to have a bank less store value at the base layer I think that if as a store of value asset in aetherium is probably the most important or money Lego in the entire stack is

that that store of value it collateral eise's loans it provides the quiddity for trading pairs and protocols like unis WAP it's the backing for entire permissionless table coins like die so it's vital it's it's essential so I guess the the opposing view on the like eath is not money camp like I don't understand how a theorem works or even matters as a global economic open finance system unless eath is money I haven't heard that case yeah people do get tripped up on the word money and I totally understand that because there's a classical definition of money that economists use its story value so that

means you put your your future value in it it's a medium of exchange so you can pay vendors with it you buy your your coffee at Starbucks with it and it's a even if account so things are priced in ether and ether certainly is not all three of those things yet now it is three of those things and in some small ways inside of its own economy so within the borders of aetherium the digital nation-state in the digital economy I would argue ether is used as money across all three of those dimensions but even in the etherium economy there are better money's in some ways if you're using that you know it's got to be all three things definition like die is a

better money than ether when it comes to being a better unit of account and being a better store of value in the short run and also a medium of exchange I like to spend diet don't like to spend ether but even dye itself is only possible because ether is a highly liquid monetary asset and you can see this fairly easily right so there's about 100 million die today you just ask yourself the question well if we were trying to get to a hundred billion dye or a Chilean dye what would that take and if you were to do it in a permissionless way one that doesn't depend on tokenized assets that are settled in meatspace in the legal system

well it would depend on a term I used to describe it the economic bandwidth of assets like ether in side of aetherium to back that die so to get died to a trillion you have to have multiple trillions worth of eath in value if eath is going to be the thing that backs die moving forward by eath is money what I generally mean when I say it is eath is a reserved asset eath is an asset that has monetary premium that people choose to store that is used as collateral that is used as a trading pair inside of the etherium economy so it seems to me like it's actually if you

use that definition you know people are like well yeah yeah of course it's it's money or at least some people think it's money and the thing with money is it's a social coordination mechanism what is money well money is the thing that people agree is money right it has been various things throughout history and the more people who believe earth is money and partake in a bank less system and use efis money to lend to borrow against to transfer all of these things the more it actually becomes money so it's this kind of feedback loop self-reinforcing feedback loop and I think that's happening with eath I think that's happening with Bitcoin I would say bitcoin is money to watching to see if it starts happening with other crypto assets haven't really seen it yet but

that's what ethers money means at least to me I have not been extremely supportive of the idea that eath is money because the claim that people make that eath is money when they make the claim it's like this fit that completely right it's like it's money because it has all these properties when in fact you know it doesn't have all the properties of money and even if it did it has the properties of money for a very small portion of people right you said that money is about social consensus well the social broad social consensus of like the majority of the world's population or even just like the population of a country isn't that eath is money and so like there's still a long ways to go before we can get to the social consensus that uses money and get past the fact that it doesn't

necessarily fully align with the definition of what is money and this is something I want to talk about earlier is like when trying to apply analogies to crypto it might be helpful generally as a space I think we should be trying to find new terms to qualify what these things are you know just like you know with sort of previous waves of innovation let's just say like the Internet and publishing and information you know the spread of information we found new terms like we don't use the same terminology as we did before because that old terminology doesn't apply anymore we just found words that we find you know more accurately describe what we're trying to convey as an idea and so similarly with EFA's money I think it's misleading and confusing to some people may be on periphery of the space to say that it's

money I agree with that right so one thing I would say is if you think of money as an adjective right so you know different assets have different degrees of moneyness so eath has some degree of moneyness it has more money 'no stan rap tokens from augur it probably has less money than bitcoin right it has less liquidity yet both those assets certainly have less money mnestheus dollar but they're somewhere on the spectrum of moneyness Andy tha's money as is saying like well the eath is somewhere on the spectrum of moneyness and that moneyness is likely to you to increase but you know I would ask if if you feel like would you say Sebastian that like is dye money is that a closer

definition to you then if you said eath was money maybe I mean perhaps you know it does have more stability than eath for instance which is like a property that one wants and money but the ability to spend died right like which is another property of money the ability to exchange it for goods and services much like either is still fairly in existent and so from those perspectives like for me if or even Bitcoin to that extent like maybe Bitcoin is a little bit more money because I can spend it more easily than ether but not that much more again we're seeing the spectrum right all these assets exist on a spectrum of moneyness you know when I say ether as money or when I think of an asset like dye dye is essentially just stabilized

eath right so when you're spending dye you're spending 98 percent eath so that's kind of spending eath or the value of e tha's money and i do think that when you make the transition from that old universe on the left the traditional financial system right where everything is trusted to this new universe on the right crypto system where we've got a trustless money system trustless financial system well in this new system what else are the money's it's not USD see that's not trust less so if we're narrowing it down to what are the trustless monies well it's you know Bitcoin eath and dye I don't know to your point about using another term I don't know what other term we'd use I would be more supportive

of of analogies to help people understand the space and introduce them to the space like skew morphisms right so when you in the early days of operating systems using terms like a file system or using you know terms like Windows helps people understand a graphical user interface I feel like we're kind of doing the same thing here with terms like wallets and terms like vaults in terms like money it's possible also that just the term money loses some of its maybe the term gets diluted a little bit similarly to the idea of news right like 50 years ago the concept of news had a lot more weight and gravity to it than it does now you know you say news well what does that mean are you

talking about like your evening news or you know the New York Times writing a story about something or like something that you read on some like blog with no references or like no reputation but that still doesn't discount the fact that people still get confused about what is news and lie people will give the same weight I guess to the credibility to both of those things when they made two things that might be in two different things I get a portion of my news from reddit you know and my parents think that's crazy but I call that news they would not call that news right to your point so we've kind of broaden the definition of what news is or at least some of us have and I think it's helpful to broaden the definition of what money is but if that definition does not work for you I would say look

man ignore the meme throw it out you can substitute it with reserve asset if you want some people when they hear that okay well you know if isn't money but yeah I could see it being a reserve asset for defy it's obviously used as collateral it's obviously used this economic bandwidth that might be more helpful for some you got to kind of pick the meme that you most resume with I think we had Gabe shapur on recently and like he said something with which really resonated with me and that is really accurate is that most people in the space who hold the Krypto behind all of the ideological memes and EFA's money etc are holding crypto as investments and like they're waiting for those investments to go up

in value and if we can all just be comfortable with that then maybe we can use terms that really do kind of resonate with what we really see these things to be right and instead of being kind of I don't want to say dishonest about Excel because the sounds but misleading what we think these certain things are well one term I like if you're thinking about new terms is the term economic bandwidth to describe these reserve assets like ether and like Bitcoin so the idea is just as we have you know Internet bandwidth and you know if you had a 56k modem you know there's not enough bandwidth to load today's websites and you know today's internet so you need you need broadband you need faster connections essentially

you can download get more data with a faster connection I don't think we should shy away from the fact that the value of these assets like Bitcoin and ether are the economic bandwidth constraints for the value of trustless things we can put on top of them right so back to that die thought exercise die is not very interesting as a as a hundred million dollar asset it's really interesting as a trillion dollar asset that all of the world needs and what does it take to become a trillion dollar asset in a permissionless way well the economic value of the trustless economic value of aetherium

or any system diets based on has to increase to meet that need otherwise we're constrained we're bandwidth constrained we don't have enough economic bandwidth to grow die in a trustless way we'd have to you know take other assets like tokenize t-bills or tokenized gold which again settle in meatspace and aren't trustless and use that as bandwidth and that is not trustless economic bandwidth that at least has helped me define it a little bit more and understand it is this idea that you know the value of eath the value of Bitcoin those things are limiters capacity limiters for the growth of defy and even the growth of Krypton in general so this whole

speculation thing that we're doing in buying these crypto money assets at the base layer we could be honest about that that's what we're doing I mean I think this whole crypto money system is interesting because it has massive upside on the base layer and if we're right if the world becomes more and more Bank lists then these assets will appreciate and as they appreciate they provide more economic bandwidth to make the system bigger and on board more people that's what makes this base so interesting let's go to last topic that we want to talk about so we're recording this weather on Monday March 9th and for anyone who doesn't live under a rock they've probably you know now aware of co 819 and sort of the whole virus that's spreading very rapidly in all

over the place now and you know we've had some crypto downturn I mean we're also going to do a full episode on this topic soon so we don't want to go too much into sort of the health implications and stuff like that all listeners who haven't really looked into that do your research it's doing I think it's very important topically on top off but let's talk especially in this context here about you know what this means for crypto markets the crypto industry you know both in the short and in the long term what's your take on this what do you think I'm gonna give you one guys take and what guys your thoughts on it as they are now such as they are now and subject to change so

Ryan sulcus wrote a really great piece this morning actually I just read called rip good times rest in peace good times and you know that post kind of goes about how you'd expect it from the title where he walks through sort of coronavirus and its potential implications in the US and economics and healthcare was and I think it's a great read you've got to be publishing a post on Bank list today I just kind of write it first called don't panic position yourself I do think that coronavirus there's a nonzero probability and it's an increasing probability could be the catalyst for paradigm shift that Ray Dalio famous

investor has kind of written about 2020s will be a lot different than the 2010s and you know the way it could happen is coronavirus is kind of underestimated I think in the economy it's a non real chance that that it is anyway all of this could could fade out of course but let's say it doesn't and let's put those odds that maybe 30% right now we did disagree if that assessment but yeah more than that let's say bad stuff happens in the US and supply chains freeze people can't go to work that's obviously going to cause recession probably global recession economic downturn and what's going to happen it's going to need to happen is the Fed is going to bring rates to zero percent

maybe negative territory as in some European countries but there's not much room to move there and then you know once you've done that you're trying to solve a problem that's not a monetary problem with monetary tools so once we do that then what do you do well that's where you start injecting stimulus packages into the US economy maybe funnel that into the kind of travel industry or you know the sector's energy maybe even sectors that are have been worst hit you're going to have to adopt a modern monetary hyper Keynesian policy in order to do that you're going to have to be very easy with the money supply that you print and the liquidity you inject that will just have to become the way world governments the US government included fails things out so

if that all comes to pass what could happen I think is in the short-run things like stocks go down as they have been there's economic recession potentially crypto I think will take a hit look it's a risk on asset right now but on the other side of that where you have governments that are essentially having to print cash to bail out particular industries I think on the other side of that this Bank this world that we've been talking about maybe has a resurgence and becomes more important in the economy and maybe starts to live up to the potential of a safe haven asset

in certain conditions one of those conditions is if central bank's kind of lose a grip and lose restraint and start printing a lot of money so on the other side of this you know maybe there's some upside for crypto but it could be a bit rocky until we hit that inflection point and I look it's just one thought as of today and the only way to really see how this plays out is to wait and see but I think what folks should be doing is thinking about how to position themselves for that type of scenario as a possibility as a probability not panic but position you know in order to come out on the right side of that one thing

that is an interesting question right you is it was often this idea that okay Bitcoin could be this hedge this protection this you know notion of digital gold has often been used now it doesn't tend to behave like that in times of like you know real volatility or instability so far maybe at some point it will did you see kind of either in the same way do you think this could be coming at some point yes it's kind of digital gold both ether and Bitcoin I see us as as a new type of commodity money algorithmic protocol backed money and both of them being at some point in the future alternatives to store values that are found in the Fiat system so I would

bucket them in the same category now ether is going to be higher beta asset than Bitcoin right so it's going to be a bit more risky I would couple them in the same category it's early for both of those assets in this type of scenario to be you know a safe haven assets at the outset probably not this one anyway we'll see what happens though is it just a question of size and kind of how widely spread they are or why is it earlier what's going to change that they actually start acting like that we need more economic bandwidth in the space I think we need more applications in the space more that you can do with your

crypto right now the population of people who own crypto probably 50 million people ish you know in that range population people doing stuff with defy is like a small city maybe 250 K to be very generous people actually you know using cryptosystems and going bank lists that I fully Bank lists so we need many more people we need much more capital much more liquidity we need a better banking infrastructure both you know exchanges and crypto banks and also many protocols mostly I think we just need time I think that a generation you know millennial generation is kind of growing up in crypto is kind of normal yeah for us right if you ask Millennials do you

prefer Bitcoin or or gold they're gonna pick the crypto the digital asset right because that's the world they grew up in well you know the generation behind us Gen Z even more so you know they were brought up in in games like fortnight right it's all digital currency some of this is gonna take decades and generational shifts and that sort of thing that's why for me if you're in crypto and you're not you're not doing the narrative thing where you know flippin assets getting in and out it's you have to have a long-term decades-long perspective when the internet came out people didn't immediately cancel their magazine subscriptions and start sending everything via email and you're not sending postcards right it took time and

they phased out of those old legacy systems over time and we had a new generation of digital natives on the other side of that that took decades right it didn't all happen at once so I think crypto will happen in a similar way we have initial group of crypto natives that are going kind of you know thankless today just sort of testing the system there were alpha testers if you will it's not ready for mainstream I can't drop my traditional bank accounts today I would never do that I'd be silly it's not pragmatic to do that at this point in time but more and more these crypto natives are shifting into this new crypto world and as more people join us as kind of the system's get better then I think it'll just naturally happen and at that point in

time then you know Bitcoin ether they start to become safe-haven assets but not yet we're not ready for that yet they're still going to be highly volatile during a recession type of condition it was really fantastic to speak with you and I think it's an extremely exciting space I think the work you're doing is really great in terms of educating people on how to actually use these products because that's gonna be one of the big challenges and it's one of the important things to do so yeah you're gonna of course have links to bank lists so people can check that out check out your newsletter and tell us about your podcast that you just started you know it's kind of moving the bank list program into a podcast format some people learn better that way

I myself do I've learned so much from from you guys over the years you know I think epicenters has been part of onboarding me so I feel like this is kind of you know the second generation you know folks that you've onboarding are doing this stuff but the bank was podcast it's just about folks on the journey of going bank lists so using cryptosystems in real life as their bank account like tactics opportunities right now we're starting things off with kind of defining what it means to go bank lists and starting with the money layer and work our way upwards so people have a framework for how to understand this stuff and we published every every week so every Monday so there'll be a new episode out and super excited about it my co-host is David Hoffman who's great who's also been on the podcast yeah it's

just fun reason I'm doing this is because I think that not enough people are talking about this right and I feel like this is core and central to crypto bank lists right it's not just about Bitcoin price appreciation it's about a new money bank less money system I'm just passionate about it and everything else is boring in comparison well I definitely agree there all right thanks a lot for joining us today thanks Sebastian thanks Brian it's been fun thank you for joining us on this week's episode we release new episodes every week you can find and subscribe to the show on iTunes Spotify YouTube SoundCloud or wherever your listen to podcasts and if you have a Google home or Alexa device you can tell it to

listen to the latest episode of the epicenter podcast goto epicenter TV slash subscribe for a full list of places where you can watch and listen while you there be sure to sign up for the newsletter so you get new episodes in your inbox as they're released if you want to interact with us guests or other podcast listeners you can follow us on Twitter and please leave us a review on iTunes it helps me behind the show and we're always happy to read them well thanks so much and we look forward to being back next week [Music] [Music]