Uniswap Is Building The Liquidity Network For Everything | Hayden Adams

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. [music] All right, everyone. Welcome back to Empire. Very excited about this one. Hotly requested episode. We just went live with our data coverage of Uniswap. Wanted to bring Hayden Adams who's the founder of Uniswap on. Hayden, welcome. Welcome. I was going to say welcome back, but first time actually, I think. >> Uh is it? It might be. Uh thrilled to be here though. >> Yeah. Yeah. Well, how you been, man? What's going on? >> It's been good. UNISAF has been having a crazy year. We've been shipping things left and right. There's been a huge amount of attention and traction. Uh, you know, recently the the Robin Hood launch in particular has gotten a huge amount of usage. So, uh, but yeah, it's been it's been a great year. I'm having

a lot of fun. >> I feel like you guys are having a moment right now. >> Yeah, I think that it's it's so funny like you know, sometimes I I think that like a lot of crypto moves on these just like very very short cycles. And I think a thing that has been really like motivating for me is that like ideas or plans that were laid like 2 3 years ago are like coming to fruition now and starting to have an impact. And so I think that like you know there's just like this long-term strategic thinking and when that stuff pays off that's like some of the like the most kind of uh you know motivate motivating uh things and like so for example unis swap v4 hooks right like you know unis swap v4 was initially we started working on it almost maybe more

like even like four years ago and we spent years developing it and you know we had all these ideas around how we could make the the market structure of unis swap just much more flexible and customizable and programmable and you know when we released it we didn't have any of the hooks themselves built because we just spend the whole time building the platform and a lot of people were there was a lot of like skepticism or like what can you do with hooks or you know what uh is it actually that big big of an innovation can will it actually speed up development how will routing work and all there was all these conversations and questions and I think people didn't quite understand the the the power impact and it's only even now like uh maybe yeah it's been a while it's been on the market for like a year

whatever it's only really now that we're starting to kind of see uh hooks have their their really big moment where people are starting to recognize oh like I can create a completelyusto ized market structure and still have it work within the entire unis swap ecosystem. You know, I could do that like it it speeds up the development time. Building a new AMM from scratch could take years. And so, you know, having being able to build something in a in a matter of days and being able to have it be extremely customizable, like that's really powerful, but it took a long time for people to even like kind of like rock the like the core thing here. And so, you know, that's just an example, like one of many examples, but like, you know, just having these sort of like long-term vision and then having it sort

of start to pay off like years out when there was like along the way there's like all sorts of, you know, conversations like is this was this a bad decision? Was it you know, should we have just built a more um you know, a more opinionated singular implementation of an AMM that doesn't give people as much flexibility, but it adds some improvements on top or something. Uh but so it's just feels really good to kind of see that payoff. There's a gratifying feeling to be like, I wasn't completely crazy two years ago when I said >> Yeah. >> Yeah. And and there's also Yeah. >> There's also just like this interesting dynamic where like when you're working in crypto, you have to make a lot of like very fast decisions and you like you have to like sort of balance your short-term decisions against your long

term. And like sometimes you have to move really fast like with like the launch pad we did recently, we we actually moved very quickly from like should we build this to like let's build it to like it shipped was like a matter of weeks, not you know years. And so you sort of have to balance like when you're moving really really fast uh with like when you're moving kind of like uh almost like really slow and and it's it's a it's a really fun for me that's really that's like a lot of the fun of it. >> Yeah. How do you think about Hayden what unis swap is today? >> Yeah. Uh so I think that you know and and this has kind of been uh at its core I think you've saw a say liquidity network and I think that people sometimes because of how it shows up in

so many different expressions people I think often think of us as like they're an exchange or they're a decentralized exchange and they think of like what is the role of an exchange and that's what that is but it's decentralized. Uh but I think unis swap is like a lot more than that. It's it's more like an Ethereum, right? It's like a platform. It's a network. Uh it it you know, it's kind of uh it's like value comes a lot from its network effects and its ecosystem and the things building on top of it. Um and you know, I think that even like uh it's been an interesting like I think that even like the word decentralized exchange has actually sometimes like almost done us harm because you know when we talk to exchanges sometimes they're like, "Oh, but you're an exchange. You're trying to compete with

And I'm like, well, no, we're like a, you know, like you could also think of us as like a coalition of market makers or like you could think of it as like, you know, there's there's so many different ways to think about it, but at its core, you know, it makes it really easy to create a market. Uh, it, you know, the it's in the uh I think sometimes people underrelect on the the name automated marketmaking. Like a big part of how we've kind of created this this liquidity network is by automating and and enabling like the automation of of, you know, uh, of marketmaking itself. And that is like a really big part of it. and and exchanges when you when you talk to like you know a centralized exchange for example uh and you say we're an exchange they're like oh okay we compete with you if you say

you know uh actually we're like a liquidity marketmaking system they're like oh we integrate with market makers and it's a very different kind of vibe and so I think that like even as we've recently been talking to more folks in tradi or more to folks in fintech I think like the the positioning and the framing has become increasingly important to helping people understand what unis swap can do for them and so you know uh yeah and so that's just been like a really interesting learning for us and something we've been working on a lot. >> When you are thinking of big thorny problems at Uniswap and you're thinking about opportunities are like let's say you're on a walk and you're thinking about unis swap does your mind go to BTOC like do you end up thinking about like customer acquisition and how can we have people use the app or do you end up

thinking about B2B TOC like where where are you uh floating these days? >> Yeah. So I think that we are a lot more B2B now than we we ever you know I think that like there's this like really interesting dynamic where unis swap it's like a you know it's a it's a network it's a it's a it's a protocol and and so you know I think that we can build we certainly we build one you know we build several applications on top of unis swap and they have value but I think that the value of our applications uh is always going to be small relative to the the overall value of everything that is built around unis swap and that's always kind of the goal of it and so you know uh with unification that's been a big part of even our shift in focus uh from

just like building our own apps to on top of unis swap to kind of empowering everyone else that is building apps and so that comes in the form of supporting hook developers it comes in the form of like uh providing our our training API to other frontends um you know the same API that we use for our front end which just makes it easier you also don't even need our API you can build your own API um it comes you know we've built out a developer platform we've built out documentation we've built out uh we have a a team of four deployed engineers that will help other teams do their unis swap integrations. It's not Yeah. And so I I think another thing is like some of this shift was not just because of unification. Part of it was also because of like the timing like we

spent so much time building the core platform with unis swap before that we didn't have time to spend you know to help people building on top of unis swap v4 and so now that that's it's out there and in the world we've been able to kind of shift our priority and focus to kind of empowering everyone else that's building on top. And so I think a lot of it is um you know talking to asset issuers even like people that are creating tokens whether they're whether they're memecoins or cryptonative tokens or real world assets being brought on chain or or or something else or stable coins. There's kind of like uh the user base of unis swap is very broad right it's like it's anything that that could benefit from liquidity which is pretty much any asset on earth. And I think one of the the interesting challenges we

often face there's all oftentimes there'll be like an internal push to people. We'll be like well we have like which assets are we prioritizing? What are the most important ones? And I'm like it's a really like tough conver. It's like we want we want every asset. >> I was you're like all all of them. >> Yeah. Yeah. It's sometimes I try to compare against like a YouTube. It's like it's like what type of video is blown on YouTube. I mean, it's like a lot of like it's like not like it's like because YouTube you have like like weird memes to like people selling protein supplements to people but to like high quality educational content to news to like people's like own like kind of businesses to like video game streamers like there's a lot of variety to the content on you know on a social platform

or on a on a like an internet platform and I think people are not used to the world of finance working more like the internet and so I think that like part of what Uniswap is doing and part of what DeFi is doing is trying to like create this sort of like infinite kind of uh user user uh owned userenerated uh landscape but in a world where uh where it kind of works for financial markets which is just such a kind of novel idea and that's why even like what is the point of automated marketmaking? Well, it's like automated marketmaking is like a critical component of every exchange system or like marketmaking is a critical component, but like you know that the model from trady just does not scale to the the scale of the number of assets and things that happen um and are

going to happen on top of blockchain rails and so yeah. >> Well, one thing I've never heard you talk about so I want to get into a whole bunch of other stuff market structure hooks Robin Hood chain the impact it's had on the business. One thing I've never heard you talk about is how you run the business. how you run the business of unis swap and so when I think about like putting myself in the founder shoes of unis swap you have a you know decentralized like you know this the industry used to be very different so you were a a lot of decentralization a lot of governance stuff you probably had a big governance team very BTOC so you must have had a lot of marketing and customer acquisition people right and then the last couple years you're changing from a from that to like you know the industry

shifted a lot now it's very B2B I like do you have a B2B sales team I'd just be curious how it's been to evolve a company? >> Yeah, I think that's a really interesting question. It's true. I haven't talked about it a lot to be honest like you know it feels like every three to six months. One of what one of the reasons I like what I do is because every 3 to six months I have to almost like completely reinvent what I do and how the company like it's a constant evolution. It changes the people change the the priorities change the needs change. Um right uh and obviously not not every not every aspect of everything. There's like the through line and you know I think a lot of it is grounded in like this vision of making uh you know markets and exchange you

know uh like lowering their barrier to entry um and and kind of creating value for for people and right everything has to kind of be downstream of that vision and and the impact that we want to have on the world. So that's like the the kind of starting point. uh in terms of how you map that I I I think you know when I think about like our like what is the flywheel of unis swap I think that's another important part for that people have to understand when you're running a company and so like the flywheel that I've been explaining uh especially like internally and part of it is like constantly evolving and and improving how you talk about things but the way I've been talking about the flywheel of this like liquidity network that we're building around is that you know it's basically like two things there's like

growing liquidity and then there's uh unlocking distribution for that liquidity right all the different volume sources And when we talk about like the value prop of an AMM, you know, a lot of it like what what I've been trying to explain to the team and then al ultimately to our customers is like putting your assets on unis swap. It's not you're not like getting listed on an exchange. It's almost like listing uh getting listed on every exchange on Earth at once, right? It's like, you know, that's like the distribution of unis swap. It's it's integrated into literally thousands of of frontends around the world and and through whether it's through our API or through director integrations and and or or data partners or whatever it is. there's sort of like this like mass global distribution that happens when you put your tokens on unis swap and when you talk to an asset

issuer for example and I I'll come back to like the team like more ground team itself stuff but like just but all it kind of is downstream of this a bit but it's like you know when you when so when you talk to an asset issuer they might not understand like every nuance of what makes automated market making cool and that we're going to get into that and that's really cool but like they understand like the need for distribution for their assets and so you know it's like oh you put your asset in unis swap it now shows up in all of these places in all of these surfaces um around the world. And so like there's kind of like that's like the distribution side and then the liquidity side is like we have all we we make it really easy to to kind of just like take

an asset and create liquidity in an automated way. And like the more distribution you have, the more value flows to that liquidity, the more benefit of the liquidity. The more liquidity you have, the more valuable our distribution points are becoming things like our our API uh which have you know has has grown massively. So I think helping people internally understand the strategy is a really kind of key part to running the company. um understanding it yourself. Uh and then I'd say that like you know generally you want teams mapped to the organization's priorities. Uh and and so I'd say that like one kind of uh one thing I'll say is when we were like a little bit more B toc and where we were like a couple years ago is it was a little bit more top down and kind of structured. Uh we've become a lot flatter. I think part

of this is also and and we've become a little bit smaller. I think we peaked out at about 160 people. >> This is probably also the nature of startups with AI right now too is I I think all of my friends companies are I think every every founder right now is saying a little bit smaller is better and a and and a lot flatter is better right now. >> Yeah. And it's definitely been there's an AI component. There's like I think there's just like broader learnings. I think a lot of people are even kind of using a like a lot of the like layoffs you see in big tech or whatever like people are kind of like using AI as like a convenient excuse of it. But like the reality is also that they overhired and were bloated and like you know we've aimed to be like a really like there's

been probably there's been maybe like a few there's been a few different rows of unis swap. uh you know in the early days we were like five people doing this thing and then we've kind of like grown into this B TOC thing that was like 150 people and now we're like this B2B thing that is like 120ish people. Um but as we've grown we also kind of like uh went from kind of a period where it was like extremely flat and small to like starting to hire in like a lot more like leaders from outside of crypto and had a a bit more of like a top down structure. And I think now it's like I I do have like a lot more reports than I did say a year or two ago. I have maybe 10 to 12 reports. Um uh versus before I had like

five or six and and I I I think I used to feel like the more reports the more work. Uh but I've actually found that in some ways like the more reports often like you can do more things in a shared group or you can kind of uh more people are on the same page and they're able to kind of work together to figure out things and um uh you know and and so I found like a flatter structure for UNISOP has worked very well. Uh it also like lets different people have kind of ownership over different kind of uh important focus areas or priorities. Um so yeah and then definitely like uh yeah and I've definitely found that like the more reports I've had almost like the the easier it's run itself because it's it's and it's it's it's kind of ironic that I have to learn this as a person

that creates decentralized systems for a living. Um but it turns out that like decentralization to some degree or like like you don't want like consensus decision-making, right? That's like the failure mode. But uh but you do want like kind of like uh but but there's something nice about having kind of like a broader network of people working on something as long as they're coordinating well with each other and kind of uh so I've found that like you know we've definitely shifted also like I think that like we've removed any sort of layers that felt like you know if if a layer is like kind of strictly only for management then it's not like like you kind of want every leader to be like in the in the in the weeds of the content uh that that is rolling up to them. like a lot of these are like basic

learnings that people have from running startups but uh they are sort of still key. Um and then I think the other thing is that like a lot of it is just going to be downstream of like people want to be working on uh work they want to see the that how their work has an impact on the organization and so I think that like the more we've kind of like I think that like one of the biggest kind of positive changes that came out of unification is that increasingly people are able to kind of tie their work to what is h like to like an a broader impact on the unisoft ecosystem uh and and that's been like a really kind of uh uh motivating thing internally.

Yeah. On the on the B2B side of the business or B2B TOC who if you um who are the dream customers like you can go sit down with any customer in the world. You're like this is our tier one of the tier ones. I'm curious how you give me a a little bit of light into like how you think about BB strategy. >> Yeah. So I think that there's like a lot of different and I I have to be careful with like specifically talk tossing out names because in some ways we're like talking to everyone on Earth right now. And so um but I think that like you know the way I think about it is uh definitely like trading platforms like whether they're like uh frontends or or or backend systems like I think that like unis swap as a liquidity source tying into uh any like various trading

platforms around the world. I think that like that kind of idea of like 247 uh onchain deep liquidity in literally at this point you know there's there's technically like millions of assets on unis swap but you know even like uh definitely like thousands or tens of thousands that trade every day. um you know having that like plugged into anywhere that people want to access and and and exchange uh value is useful but I think that there's also starting to become these like other interesting integration points things like payment networks so like you know payment networks like they want to start accepting uh payment in crypto or more assets uh unis swap has like increasingly a valuable liquidity source for them and so like you know having like we've sort of had I've had a little bit of this vision of just like uh kind of you know people in crypto talk a lot

about like what is the best decentralized uh you know like money and I think the best decentralized money is basically being a people being able to use literally any asset they want as money. Um and so sort of having like uh you know liquidity uh like like as long as you have like a lowcost uh liquidity network that can cover every asset you can kind of accept you you can have a system where someone can pay in any asset um and or or even like a portfolio of assets you know and then have the recipient receive any asset or portfolio of assets. And so, uh, I I I really like this like pay anything, receive anything vision. Um, we're starting a little bit around like Uniswap's, uh, like around particularly like stable coins and payment networks. Uh, we haven't talked about this a lot publicly, but we've

been talking to them behind the scenes. Um, but like an interesting aspect of that is like today Uniswap's stable coin market share has just massively ballooned uh, from where it was even like a year or two ago. In the EVM world, we're up to 60% of stable coin swapping. Uh, I think we're like even if you include include non EVM who whose business are you eating into? Is this like competing with curve or is this a so this is at the liquidity network layer. So this here we're talking about things like curve and things like other AMMs. Um so you uh yeah it's it's something it's something like 60 to 70% now of EVM I think it might even be 70 and then it's something like um 40 to 50 of like all stable stable swaps across non EVM as well uh is just unis swap

protocol and so I think that like that massive growth on stable coin side has been helpful for positioning us with stable with like payments networks who are starting to they're not quite ready to like accept payments in in you know every token on earth but they're maybe starting to think about how do we accept payments in stable coins oh there's all these stable coins how do we choose And so we're we're kind of positioning you swap as like a liquidity source for that. Um that's another example. Um I think that you know I think that there's an interest some interesting opportunities here with like uh what's happening around RWAS and tokenized stocks and saying like you know uh for for especially outside the US like giving access to to you know US um stocks to non- US folks and have it having it trade in a way that is kind of

you know 247 fractional like nights and weekends. uh like that's actually really powerful and and also ultimately we can like bring that at a very low cost and so I think that having like integrations into uh into whether it's like a you know international brokerages or whatever it is that's like a interesting integration point we've been thinking about uh a bit more recently I think there's actually also the kind of people sometimes think about it as like US stocks uh in the outside of the US but I think people don't realize that like there's an entire it's like every country's stocks in every other country like it's not just like like the and and I think that like like it's because partially obviously the US stock market has been the biggest one and and and that's sort of how people think about it like people often think about the

obvious one but but part but part but part but part but part but part but part but part but part but part but part of it you have to think about is like every like there's like the piping never connects doesn't connect very well between any of the countries like stock exchanges or systems and so I think that like decentralized networks and things like unis swap offer an interesting opportunity to really have like you know like uh you know country a integrate country B's uh tokenized assets in Yeah. Yeah. Or just or just liquidity for the user between or seamless flows between uh what's the big robotics company that's IPOing in China? Uni Uni Tree like Uni Tree to copper into uh you know into into pounds or something like that like how do we flow those assets seamlessly between each other?

>> Yeah. And it's just so interesting that the way like the way that Trady systems work it it doesn't even like it just doesn't even like connect. And like like there's you know there was like a interesting um like an interesting like thing we built recently and I'll kind of connect it to this system in a second but like is you know we built this like uh hook um that we're calling dual pool with with spark team collaborated with spark team on it where you know you can have assets that are in in uh passively sitting in unisoft liquidity pools also earning yield on a lending protocol. Um pretty cool design pretty useful. it it really lets you like reduce the opportunity cost of of market making because you can also be earning your yield. But I think that some of the things like that like you know uh like

doing things like that in like a stratifi like if you know if you want if you wanted market makers in a in a traditional exchange to also be able to like have them earning lending yield at the exact same time like it's it doesn't really it's very hard to make it all flow and pipe together. And so I think that like uh being able to like unlock things like this uh are just like really cool efficiency improvements. Um and and and and so like like an example of this that that kind of the reason I thought of that and why my brain went there by the way was that like you know you can't just like take your like treasuries and deposit them to an exchange and then like swap them and like like you can't like take your treasuries and put them in a centralized you know uh or like in

like a brokerage a trady brokerage. Um well you you can in certain ones but like I think the point is that like the like the the way like the the way that you like the conversions have to kind of happen often like on the deposit or like they have to happen in a separate system and then you have to move like there's sort of this like seamless way that it flows in unis swap. Obviously brokerages accept treasuries. I I I think that kind of I misframed it there. But like the point here is that like it doesn't like like the piping is just like seamless in crypto and that lets you really like have a world where like what what does it look like when you can convert anything to anything um in kind of any and and have that happen like on the fly

in inside uh trading systems or inside frontends or inside payments networks and so I think that that's like a lot of what will unlock sort of the the next stage of value from here. >> Yeah. Um, how >> Hayden, where do you think DeFi goes from here in terms of like is everyone So, we we just had Paul from Morpho on the podcast and you know, one one idea that we were talking about which I'm curious to get your take on maybe this exact same idea is basically >> uh two two things. One is DeFi is basically just becoming infrastructure, financial infrastructure for the rest of the world. And this idea of like trying to drive users to your own app will probably start to go away. That's bucket number one. The second bucket is like the layerification and almost um purposefully making your product more

complex so that the uh infrastructure can ultimately serve more people. So an example of this would be like um okay let's try to apply it to unis swap unis swap everyone could make or take right everyone could go create a like it was very easy for any retail person to go do anything as you have started to roll out v2 v3 v4 it you're actually making it harder for the user to go make or take but actually m but ultimately is a much better experience for everybody in the network in the in this ultimate goal of the liquidity network Right. So it's harder for me the retail person probably but it's a better liquidity experience.

>> I Okay. So I think the way I would think about it uh is you know it's like it's just about abstraction layers I think like the the underlying network is certainly getting more complicated like the same way that like if you know when people are like programming like back in the day you know uh I I had a I had a family member who kind of uh who worked on computer who has now 60 years of computer science experience or something. Um and and you know used to program using like punch cards uh where you like physically programming your computer um using like a physical you know uh and and and right and over time computing has gotten increasingly complex and complicated the chips the internals the the u you know every right the the the firmware etc. And yet, you know, computers haven't gotten harder to

use because we've increasingly improved the abstraction layers on top, whether it's like better programming languages or, you know, obviously now vibe coding. But but uh so I think that right and and like now I have now uh other family members who never programmed in their life who now basically can write code using cloud code, right? And so I think that like the point I'm sort of making here is that like ultimately like the system certainly becomes more complicated. I don't think that the products or enduser experience should be in fact it should become like dramatically easier over time. Uh and I think that like a lot of what uh you know has been happening like I think a lot of what has like what has made DeFi sometimes challenging for end users is that like you know we're still building and defining the internal and the

underlying and and making more radical changes um uh over and so that that has basically and and we're figuring out the front ends like as we do it and so like the but but I think what we're starting to see is those abstraction layers become a step easier um to to use on top of it. And so like I think of it as like you know definitely by the way agree with Paul on like DeFi is becoming infrastructure and it's going to be increasingly integrated into products around the world and into systems around the world. Um and I think that like what that ultimat ultimately will mean is that way more people can use it and make it way easier. Um even on the like side of like you mentioned like maker and taker side like I think that there's a lot of things that we've started to

experiment with that will make you know the act of like lping or you know providing liquidity a much better experience. But I think it took building V4 which increases complexity for us to be able to start building these things. And so you know we we have things we have various hooks that we're building right now that will actually dramatically simplify you know uh starting with stable coin stable lping. Um uh to so that you don't have to think as much about what you do but it still is optimized you know improving the returns relative to what you might get today. Um so that's a more technically complex system but the end user product of providing liquidity there will be like a much easier experience. And so that's something that is not rolled out yet, but is like, you know, only possible because we have E4 hooks and

now we're able to build these things on top of them. Um, so that's kind of how I I I think about it there. >> Yeah, I have a question on maybe market structure. Maybe we can spend a little bit of time on market structure of AMMs. I feel like every year there's a, you know, a couple big tweet threads about why AMMs are cooked and why it's, you know, the end of AMMs and why AMMs can never scale. And I feel like that has consistently been proven wrong. Maybe if I can bring up a couple of the things that I frequently see, it's uh you know most concentrated liquidity is idle. Um what are other things? The you know the the the best flow is leaving the pure AMMs, right? It's going you know unis swap x or cow swap or oneinch fusion, right? Or they're kind of taking the

high quality less toxic order flow. Um what else would it be? Some you know something around LVR is >> Yeah. Yeah. It all kind of it it ironically is all the same thing and it's just a different framing of it each time. So it's like so let's talk go >> in the very beginning of in the very beginning of time it was like order books like this will never like before even launching unis swap it was like you know AMM will never compete with order books it's just a less efficient system market makers need to be able to update their orders and you know uh and so leaking your strategy on chain will leak value whatever it is right that was like the very first and then you know eventually it was like oh like actually RFQ systems will do this and and that's kind of the same thing it's like more

actively managed offchain you know uh and then it was like you know uh propm will do this right props are just another expression of the same thing where it's kind of like props are sort of like RFQ but adapted uh to be a little bit more programmable on chain to try to learn from AMMs and by the way in in reverse like I think AMMs are going to learn from from prop amms but um the way that I I think that like usually uh I think that there's two things I think that like a lot of there's probably two things one it's like it's very hard for people to like AMM reasoning is like very complicated like I've been having like internal mental breakthroughs about my own internal understanding of it like in the past few months and I've been working on unis swap consecutively for

nine and a half years almost 10 years now right like and and I'm still kind of like informing my own uh mental model like constantly so I think that like it makes sense that when you sort of like kind of like hear about this new thing you're like you know it's very easy to think oh this thing is just going to outperform this other thing but I think that there's a lot of like uh one thing is that it's often misunderstanding why amms were successful in the first place um and two is kind of underestimating the ability for AMMs to continue to improve and adapt from here. And so those are like the two um so so I'll I'll start to kind of like uh parse it out um a bit. Um I I think that like one mental model that I have for automated

marketmaking or not even mental model maybe to ground it a little bit in like why unis swap was successful in the first place. I think one sorry I could this is a topic I could by the way spend like several hours talking about consecutive. >> Let's talk about it. Let's talk about it. Yeah. Um, so you know, and and I've been meaning to even try to like write some some blog posts or something to help like have a written record of some of this. But anyway, okay. So like to kind of start I think that like you know one like people underestimate the the like it's like what okay so like one thing I like to do like almost break out asset categories like what are automated market making like we because like automated marketmaking has performed differently for different asset categories and classes and pair types.

Um and I think that like you know uh a good example that is like really emblematic of the value prop of AMM is stable coins. Uh so when you look at stable coins you know today automated marketmaking is completely dominating. The best market makers I know in crypto you know uh the the winter mutes SCPs they don't they don't market make on USDC USDT and the and and why don't they? It's not because they couldn't do a better job than than unis swap actually. if and it's not because they couldn't it's not because they can't do it more efficiently. they can do it more efficiently but doing it more efficiently you know but they also have like a higher opportunity cost to their capital and they have a higher operational overhead to doing it right and so like when you think about like uh uh the automated strategy for market

making USDC to USDT is is like the is is simple enough like like the automated strategies are simple enough to do in a way that is good enough that the marginal delta between the most sophisticated actor and the and the like uh literally zero thinking you know front-end user on unis swap is it's not there's still a gap but it's low enough that like if you know if professional marketmaking firms are doing like double digit returns on their capital and you know a retail retail you know is happy to get a couple percent of stable yield like that's a very different you know like then essentially like you have retail undercutting uh the more sophisticated actors uh by having a lower a lower operational overhead and a

lower cost of capital right like if you if you start to reframe things around cost of capital or opportunity cost like it really starts to like change the equation, right? Like people underestimate like you don't need to market make more efficiently. Uh let's say that like um you know a winter mute can do a two high two twox return relative to um a 2x return um uh but has a four times higher copus cost of capital. You only need to be two times you only need to be within the 2x margin of them to kind of out compete them. And where I'd say like AMM might actually be more like within like a 20% or 10% right. And so I think that like the the kind of that's like one framing that people miss is that like there's like the business of marketmaking has a high

overhead and there's like and and and there and then I think another kind of interesting angle to this that people really underestimate is uh that there's a lot of inefficiencies in trady that are like buried between the efficiencies that people like people think about like efficient trading systems. People talk about like, you know, there's like this famous story of Citadel where like someone like stole one of their algorithms and, you know, uh, and then before he was caught like threw it in the Hudson River and then they hired like a scuba diving team to like swim in and pick it up to try to send the guy to prison because of how valuable their proprietary trading strategies are. And I think that like people I I bring this up because people think of it as like a game of like efficiency um, and and think, well,

they're so they're so incredibly smart at how they do it that there's no competing with it. But I think a lot of the like the um business of marketmaking firms is historically been like one of like almost gatekeeping or like you know like kind of proprietary access to something or like not having enough competition or because it's very hard to to because of like um the sort of uh uh basically like you know economies of scale that that that traditional market making allows. Um, by the way, I'm a little at risk of diverging too far from my core thesis I want to share here, but um, >> no, this is I have Keep going. I have a few follow-up questions before you go too deep into this, but >> but but yeah, and so, you know, they they have this like and and and so I

think that like you know something that like AMM has also been really good. AM is really good at stables because you can automate the best strategies pretty well and it lets you shift capital to a low cost of capital. for longtail. It also has a it also is very good because you know uh traditionally to get in a market maker to market maker for your longtail asset they don't one they don't want exposure to your assets which by the way is another way to think about cost of capital it's like if you someone doesn't want exposure to the thing they're market making on that like raises their that's like you know they have to like that's like inventory cost that they have to hedge right and so I think that what you can do with longtails often the market makers are people that have a lower cost of capital

aka you know in crypto often it's like the asset issuers themselves or early project team members or supporters or bespoke market making firms that are like that are like willing to take directional bets on specific projects, right? Like if you're if if the inventory that you're marketing on uh like like you know a lot of like trady marketing is all built around this like concept of like everyone wants to be delta neutral. Everyone wants to denominate in dollars and hedge all their risk and that's like how marketmaking is viewed. But I think that what something that you can do with market making is you can actually segment out, you know, if you're a market maker on ETH to to uh a DeFi token. You know, if you're long ETH and the DeFi token, you your inventory risk becomes like way lower. Uh your or it

almost becomes a benefit, not a thing you have to hedge. And then you only really need to worry about this like uh relative exposure risk, which is a much lower cost uh especially in assets that tend to correlate, which is why you see like DeFi tokens paired against like ETH or whatever because they tend to correlate with each other. Um, and so that's kind of like one aspect to it. And then for the longtail, it's like the cost of capital for a longtail asset is negative because they otherwise have to pay people to market make on it. Like their alternative before AMMs was paying a professional marketmaking firm a huge amount of money to do it for them. And so they're they're to to like create liquidity, they have to like lose money, right? and and there and so I think that like for them like LPing themselves with

assets that they already hold on their balance sheets uh where the alternative and where they can actually generate a yield where the alternative is paying a professional marketmaking firm a huge amount of money or often it would be like these like very extractive option deals where the market making firm would get these huge options and then if the token went up a lot they would like you know just like you know the the the person that supplied those option like I know about crypto firms that you know lost had a huge amount of money to market making firms in these like custom option deals before we had like AMM as like the dominant distribution. >> Wait, so Hayden, let me let me stop you and there's more to go if you want to keep going, but um it is >> like I said, I could go for hours. It's

hard to >> It is interesting hearing you talk about this because I think when I think the general public, if you said who is uh who who does Hayden think about as his competition, you know, I think people would say like the centralized exchanges, right? He's a decentralized exchange. competes with the centralized exchanges, but actually it seems like maybe the centralized exchanges could be your customer because you can integrate, you know, maybe you can give them better liquidity. Uh especi especially on the longtail hearing you talk for the last five minutes, you think about your competition perhaps as the market makers. >> It's really complicated because I like market makers on Yeah. So >> I think it often again has to do with like I think what we're trying to do is create a more competitive flexible dynamic system of market making. So like

prof professional market makers and active market makers have a huge role in that and I don't want to underell like how they fit in and it is really important that they can improve on the efficiency of of of markets for top trading pairs. I think what is like uh kind of missing is like there's like a combinated a series of like market structure related things that we I I want to get into in a second but that like can essentially uh but I think part of it is about like how do we unlock more people to being market makers. So it's like you could think of it as we're competing with a market maker or you could think of it as like we're lowering the barrier to market making. So the market making itself as an industry has a lot more competition and even like

specialization uh right where it's like right now like market makers only have to compete with like like you know you have a single marketmaking firm that has 25% of all equities trading the second biggest has 15%. That's 40% of equities trading in two companies, right? And I think that like you know when I think about like uh you know what is an ideal like like and I and part of it is because they built really sophisticated trading systems, but I think that like part of what I'm trying to say is that like the way things have developed in Tradfi have led to these like monopolies and economies of scale. And I think what we can do and ultimately have uh have served certain assets very well and served other assets very very very poorly. And I think that what we're trying to do is create a system that

like dramatically lowers the barrier and increases in to being a market maker such that you have a significantly more competition in the market making industry that ultimately allows like there will still be sophisticated strategies that thrive but they'll be doing it in an environment that is a lot that has like a lot more competition where it's like you know before like if if you couldn't find a marketmaking firm to market make your asset your asset couldn't have liquidity. Now you have a backup which is you know now you have now you can put it in unis swap and so now and and we're going to continuously raise the bar by increasing the sophistication of what the automated strategies can do but the active strategies are still kind of uh you know uh ultimately like a way to improve the efficiency. I'll also mention that like

even for the active strategies I think that there are ways that we can benefit those active professional market makers by reconfiguring uh how pairs work. And this gets to like the thing I've been hinting about about market structure um and and kind of uh co pairs. I'll get to that in a second. The only thing other one want to mention is just like it's like what is the barrier to launching an asset right now? you like what like anyway I I the point there is like if you're an asset issuer having like unis swap as an option is like like in some ways that's competing with market making but in some ways like you could also think of like assets have like a life cycle like they start small they grow to medium they grow to big and you can imagine that like different market

participants um you know maybe like a like a a unis swap amm strategy makes sense for a new asset that has never you know existed or like a fully passive strategy but then maybe you have the like semi-passive you know uh semi-automated strategies that start to be work for like as they start to grow in size and scale. Uh but then maybe like once they got really big, it is still useful for for bigger market makers to come in, but now they have like a a deeper liquidity base. Um and they don't have to like kind of like underwrite as much risk. Um okay, I I want to kind of quickly talk about this thing that I've been thinking about with correlated pairs. I've been hinting at it for a little bit. Um but I think it's one of the bigger unlocks that AMMs can

offer right now that I think is like underthought about and discussed in the industry. Um and something that we've been thinking about a lot. Uh so to kind of like flesh out the thesis, I've kind of already mentioned that I think that like low volatility stable pairs uh AMMs are are already really good because the simple the strategies are simple um is the is a way to look at it. And then for longtail uh it's really good because there's not much competition uh and and and the opportunity and the the like and you can like find like specialized market makers or partic particular market new market participants uh that like uh that like kind of improve the competition and and ability to create markets in the first place. There's like this third category that has been the battleground of AMM uh in my mind which

is like how do we unlock u AMM uh you know value uh for the kind of um for the like top but also still volatile assets and that's like the battleground that like you know people have always and and when you when you talk to people about the some of like the AMM doomer thesis that you hear on Twitter kind of are some are some variant of like there's a power law and only the top assets matter and AMM is going to be weakest on the top assets. And so, you know, if this power law holds and this AMM weakness on top assets hold, then there ultimately uh AMM will be chipped at by like these other trading systems. That's like their

their case. Um uh I have like I've and then I I'm going to give you my like traditional answer to that and then I'm going to give you my new answer to that. uh because I I I it has evolved in the past say six months. So and and I think that they're both part of the story. So I don't I don't want to understate the first part of that. Um so my traditional answer to that uh has been something like well first off there's like other fundamental benefits of AMM. you get like really good like 247 liquidity and it kind of it still unlocks like um market m like it you still like like even if AMM strategy like there's a there's an interesting angle where like you know an opport someone's opportunity can cost can be can be different like when people do this like LVR math which

is like essentially like how much money do you make for market making on like a volatile pair um they're they're assuming everyone is like delta neutral like a normal market maker usually which is like you know are like are they are like they they're assuming people have like a certain strategy in mind which is like um but but I think that like what they don't always anticipate is that sometimes market makers have a very different strategy in mind which is like around like if you can be like DGEN long mean reversion right mean so mean rever essentially the I'm maybe at risk of getting really technical here but like you know like generally these like the way the AMM strategies work is that like if the assets roughly kind of track along the same like a similar like um average you know similar kind of

relative price between the two then you have like lower people call impermanent loss or or divergence loss or whatever. Um, and you know, you could say that like, oh, people that are LP on swap lost money, um, because after the fact when we measured it, you know, the the assets diverged when they could have correlated. And what people don't what I think people underestimate there is that like that might be true, but it might also be the case that the LP themselves were like people in crypto are DGN all the time. The LP could have been DGN long, it mean reverting, and then it didn't. And that doesn't mean that like it it was a bad and that just may have meant like someone like took on a strategy they were incorrect but the the AMM performed at the way that they were

hoping and if their thesis had come out true these assets will mean revert then they actually would have made a lot more money right and so like people are like are like kind of like not realizing that that like because they're so used to the market making the market makers having such a specific profile that they're you know that they're not used to the fact that some people might actually be like ultra long, you know, ETH kind of stay, you know, I guess staying flat or ETH to bit to ETH to a DeFi token they're lping kind of correlating really heavily over time. So that's like one really small I I I I kind of over spent time on that one. But there's like another example is just like the the broader like distribution and the 247 markets and the fractional there's all these different things. But I think that

like um and then then the other part I I kind of started to bring into the equation again this is all my traditional answer which all still applies but it's not my latest um is like well we can also just make AMMs better, right? like we have this hoot new hook design. We can now uh one of the best things about hooks is that you can customize and experiment with the market structure really quickly. And so the idea here is we can like do dynamic fee hooks. We can do volat that that do fees based on volatility or based on you know all these different things, right? And we can kind of continuously adapt and improve the AMM's automated strategies to kind of lower uh the the leaked value. And again, remember, you don't need to have the the efficiency be exactly equal to to traditional market

making. You just need it to be like a close enough that you know that that you can tap into people with a different cost of capital or opportunity cost than a traditional marketmaking exchange. And that's a really important kind of nuance to it is like you could as as you make AMMs more efficient and we have all these ways that we think we can make AMMs more efficient with hooks and are doing it as we speak. Whether it's things like the dual pool that like allow you to also get lending yield at the same time or whether it's uh we have this kind of crazy design we've been talking about that that does some that brings in some of the learnings from from prop amms while still keeping some of the benefits of open AMMs. Um uh it might be a subject of another one. Uh

but then okay so that's like the traditional models we get better at AMMs uh AMM still have some other advantages and ultimately you get >> okay so I follow you up I follow everything here give me the what's the new what's the new take >> okay so the new thing kind of I've been hinting at it a little bit as we spoke throughout but like okay so the new thing is basically like people you know it actually happened I was in a part I was in a meeting with like a trifi partner and they asked me um you know or like a potential a prospective trifi partner and They asked me like how base pairs have developed in crypto. And I think that, you know, I started to like give this answer where I was like, well, like, you know, most stable coins tend to pair against USDC or USDT or

another stable coin. Um, and then like most DeFi tokens pair against ETH. Um, you have like uh BTC pairs tend to like like BTC uh various BTC tokenized Bitcoin things pair against other tokenized Bitcoin or ETH. Um, and then you have like Salonium coins paired against Soul. Um, and then you have these like bridge pairs between them. Like ETHUDC is like a big bridge pair between like the stablecoin world and then like the ETH world. Um and and and that's kind of like they've been and and I start to explain that like a lot of this has to do with like the correlation of these underlying assets that like DeFi tokens tend to correlate with ETH very heavily and so ETH has become a really good base pair uh because you know market makers on DeFi tokens uh you know have like a lower you know uh like

like again like the the like leaked value is from divergence in the assets and so the more they correlate the like kind of lower your impermanent loss or whatever right so like people who are long you know ETH and long you know uni or morpho or a or whatever it is, you know, they can LP on them. They don't care like they actually get to be happy about the underlying inventory exposure of both and they only have to worry about the relative divergence which in their mind is much lower than say dollars to ETH or dollars to uni or dollars to a right because they're like long those assets. Um and you know similarly like Salana memecoins might kind of pair with Soul right because Salana a lot of Salana's activity and revenue is driven by memecoin trading and so if the memecoins are down and the

Salana might be down right so this and and again this these are kind of cutting with a broad hat but and and same with the stable coins um and as I started to flesh this out I realized that you could take this thinking and apply it to all financial markets and you suddenly can like and and and if you do so AMM start to perform better like Like right when we talked about that there's like this delta you have like this delta like you can lower the delta between an active market maker and a passive AMM what by like adding improving the dynamic fees with hooks you can do it by but one of the ways to do it is is is changing the base pairs and and the way that the hub and spoke liquidity network has kind of evolved and so like a a

really good example is like you know what like what should oil stocks be be traded against like it could be you know uh right right now they're all going to be paired against dollars it could be you know oil the commodity it could be an oil ETF. Um it could be like s some sort of basket thing. Um uh you know and then and then that could then be paired against dollars as sort of like the bridge pair, right? Or like what about like top tech stocks? Top top tech stocks could be you know tend to correlate very heavily with the broader US financial market, right? And so you can imagine, you know, QQQ or SPY being paired against like a Google or Nvidia or Apple stock and you know that becomes like the ETH to uni or ETH to you know uh you know DeFi token kind of pair when

you think about the like correlation of them or even like honestly they're they tend to be even more correlated right for a lot of them right or like if you're long you know you know if you're long Nvidia stock you're probably not short the US financial markets right now right because of like the kind of role and impact it plays and so uh you know, when you start to kind of imagine um you know, like the like the US like USDC to ETH to UNI becoming like USDC to um you know, to SPY to Google or USDC to oil ETF to Chevron or whatever it is, right?

Um there's also this other opportunity which is like in traditional markets like it's very hard to like cross commodities and securities with each other um because of you know like the kind of inherent and and but in the crypto world when we have these like tokenized commodities tokenized securities um uh you know you can start to imagine that like you know they're just they all just become ERC20s on and that that are all sort of like uh equally programmable with each other right this is like one of the fundamental benefits of DeFi technology is that you have like programmable interoperable infrastructure and so you have all these like things being tokenized and put on chain. You can imagine like you know that the best base pair for some securities markets might be a commodities market or a commodities market against a basket of commodities.

And you can imagine that like once you do this you know you're like the AMM the AMMs as they are today. Like so another way to like frame it all is that like it becomes increasingly hard to uh to like out compete the most sophisticated actors on increasingly volatile pairs. Um but one part of the equation that has just been way underweighted is shifting the percentage of volume that flows uh through volatile pairs um by having this like hub and spoke model and and there's like this one other kind of component I want to land and you might have some follow questions first but like the other thing that is really relevant is like the irony of it all is I'm talking about it like as if like AMMs are not good at like the top volatile pairs but the irony is that like Ethusc has been

the biggest market on unis swap for a really long time and it's actually a really healthy reallyffic efficient market and the reason for that is because everything else flows through it as a bridge. And so what you can imagine about the efficiency of these systems is you have these like correlated hubs >> of liquidity like these hubs like you have like an asset that has like a correlated bunch of correlated pairs against it >> and then that asset has a bridge pair against like dollars or you know right and then that bridge pair get is becomes like you know imagine like you let's do like the oil example I um right like imagine you have like some sort of oil basket to oil stocks and or commodity and and the probably commodity as well um to like dollar pair like the dollar to to like basket pair becomes like

really high traffic which just generates a lot of natural demand which uh basically brings in sophisticated professional marketmaking firms which is already what's happening on ETHUSDC and then you have these correlated pairs have like more bespoke market makers that want to be long both assets in the position >> they want to be long the basket and the underlying so their opportunity cost becomes way lower because they don't have to hedge their inventory risk because they want their inventory risk and they just have to hedge this much lower divergence delta which is also a lower than it would be and So that's kind of like a model that is uh how I'm envisioning it. And so you'll kind of have really healthy liquidity on both the volatile kind of connecting pair and on the correlated kind of >> Okay, I followed all that. Let's say you're right about all of this, Hayden.

What is the um give me the 302 I'm listening to Empire. >> Yeah, >> I got most of that, but maybe I lost some of it. There's a lot in there. What's the 30 secondond like why does this matter for me? What's the What's the actual impact? Yeah, I think the end impact is ultimately like again dramatically like lowering the barrier to creating markets dramatically but uh like increasing the liquidity in the world essentially improve like uh uh you know you allow mark uh market makers to specialize more uh which uh basically allows for kind of I would just think of it as like end users who buy who buy assets whatever they are whether crypto assets or you know stocks or whatever like get lower better prices uh on on 247 markets um uh and then or you know yeah basically people at better prices

and then the other side of that so there's like the supply side and the demand side on the demand side it's >> end users buying things getting better prices on the demand side it's actually the yield uh that that that is earned from market making flows to more people um and I and right and so like right now all the all the like the the the yield of market making flows to a few top marketm firms here we can like kind of democratize that and have that flow to you know far more parties um and and that ranges from like you know from retail to like much more sophisticated but like but like different parties from like you know just the top marketing firms.

>> Hey, have you thought much about there's a um so we have an IPO problem. We have a public private to public problem in the capital markets today where companies are staying uh private for longer and longer. You're going to have multiple trillion dollar companies likely that are privately held businesses. That's probably a a problem of capital markets maybe. I think some would say um I I would probably argue that it is a problem of capital markets when that's the case. So, have you thought about like what the public how the IPO will change and how like >> this probably gets into a conversation about like equities versus tokens as well, which I'd love your take on, but yeah, let's talk IPOs for a second.

>> I'm glad you prompted that and it definitely ties into all of this. Um, something I think about a lot, >> I think that there's like I think like I generally think that part of DeFi's role in the world is like providing competition. And so I think part of one thing that DeFi has done is provide some competition like like you can go public or you can build it like or or you can kind of you know and and build a traditional company or you can build for certain systems that can be decentralized you can actually now like do a different thing and you create a token and follow a different very different path. Um I think that like you know once you have like decentralized exchange infra decentral uh you know uh frontends to those uh uh to to those systems um and you automate market making you

you do start to create like a parallel path which is um and I think that like I think we can separate out like the like compliance stuff and like the is it a security or token for a second from the technology and we just talk about the technology I think like it's very clear that we've like started like all these pieces tied together start to create you know a a compelling alternative to like a tradition traditional IPO from a market structure perspective and then we can kind of get into like the nuances of the legal definitions in a second but um you know we're already seeing this in crypto people are like launching like it used to be that people would kind of like try to get listed on a top centralized exchange we're starting to see people launch directly into unis swap um uh uh you know and and they can

do that because there's am automated marketmaking positions we've also created this like uh other decentralized protocol thing we call continuous clearing auctions which essentially are used uh people put a bunch tokens in it, it auctions them off and uses the result of that auction to seed a liquidity pool uh which kind of bootstraps the liquidity from day one. And so like rather than thinking of it as like what percentage of like what am I going to pay like how much am I going to pay a professional marketmaking firm for my asset to have liquidity it's like you know let me just like allocate a portion of my initial uh you know launch or whatever to like liquidity and then it just like kind of becomes permanent onchain liquidity and and it rather than being like a short-term relationship with a marketmaking firm it becomes like

permanent onchain liquidity that so we're seeing like like you know like projects like Aztec you know the privacy privacy chain right they they launched their token directly using unis swap CCA they raised a whole bunch of money and now there's like a very deep liquidity pool that is in unis swap at the and and so I think that that already like starts to present when you look at it like an alternative uh for them it works you know because like you know and and for them there there's like the um you know for them it partially works because um you know like of the kind of nuances to like you know they're doing it for decentralized protocol but I will say that like even their auction had um some really interesting like compliance stuff built into it so like you know they wanted to offer for the sale to US

citizens. They didn't want to kind of worry about some of the like you know a lot of tokens like launch outside the US. They didn't want to worry about it. But they also had their own bespoke uh you know ZK uh you know ZK passport technology where they like let you kind of where you KYC to buy into the auction um to make sure that they're kind of like uh if you're in the US and then you know um and then it it checked that but it did like a client side zero knowledge proof which was really cool. Um uh so anyway, all that to say like there's we already starting to see these pieces exist. Um but when you kind of like think about kind of uh the broader IPO market, one I think that like there is definitely a huge opportunity for us to

like see if we can integrate our technology uh with these like IPO systems. Uh I think that like AMMs and and and CCA could be really good price discovery mechanisms. Um, I think that they can also be really good like long-term liquidity mechanisms and having them there from day one like it's it doesn't seem like like another way like one way to put it is that like crypto could look like like everyone could just like ignore AMMs and choose to use centralized exchanges but in crypto people choose to put their liquidity in AMMs they want and that's had a healthy effect on crypto markets. So, so like when you see that NASDAQ is moving, I don't know if you saw this headlines, like you know, we, you know, I'm sure you've talked to this team as well, like NASDAQ is launch is moving all these equities on chain, right?

They're launching a tokenized equities platform basically. >> Uh, you see that as competition or as a B2B >> I think it's a huge opportunity. I mean, I think that like Yeah, I think that like, you know, they're tokenizing assets. I think that means that like the moment that they took >> liquidity on those assets. >> Yeah. Yeah. So, like they're tokenizing existing assets, right? if they start tokenizing a new if they if they start launching you know let you launch as a token from the start then our technology works from day one right and so that like suddenly like if you know if if NASDAQ's you know future IPOs you know um again I have no no inside scoop on on on anything here I'm just kind of speaking in in the theoretical but like if there are future IPOs you know uh we're having directly on chain and then

then suddenly our technology could be integrated from day one right and so for me that's a huge opportunity it's not a you know we're not trying to replace them and I also think that like again part of a lot of what they're doing is is marketing or like kind of you know stuff around filings and and this like traditional security structure is still going to be around and so you still need people to kind of like you know work through that process. I think that there is this other angle which is like I think one thing that token I do okay like if I'm really kind of trying to get um uh channel my like I I think early on like like I think that there's one thing about like I do think that there's something broken about our our kind of current IPO and securities markets uh

which is essentially that you know everything big is now going public at like a trillion dollar valuation and I think what that points to is like like think about it this way a trillion dollars has been made before retail is allowed to buy it or $2 trillion has been made. And that to me and and it's like by the time reach like it's there's something broken about the fact that like you know like like stock like essentially like the best investments on earth are early stage companies that ultimately become valuable and then the the like the rule for whether or not you're allowed to invest in it like these like you know these the current rules around that are like you know are you um are you already a millionaire like that's actually the rule for

whether or not like that I don't know of a shorter distillation of securities law than you have to be a millionaire to invest in early stage companies, right? And so like that's the one sentence pitch for the current system and I don't get it. And so I think that like one thing that tokens are do present is an opportunity to like create different models that like distribute more value earlier. And I know that people like don't like I know that like airdrop meta has kind of like faded a bit in crypto and people are like why are you giving away tokens for free and all that I don't I don't really like I think we're going to like have a renaissance there again at some point which is like ultimately like users are going to choose platforms that are more generous with them that distribute more value.

the current value flows are like really messed up, right? Like right now all the val like like you know like it's it's there's a lot of when a platform is successful a lot of the value is is from the early users the early creators and right now it doesn't like flow in very well. Um, and I think that there's like an a an opportunity of tokens to one like create liquidity earlier. Um, to two like have like programmable kind of like uh built-in value distribution things like you know you know using platforms does earn you ownership. I think that's fair. Like if if at the same time Uber launched you know an Uber competitor was like giving Uber drivers they their top Uber drivers like small amounts of stock. It doesn't need to be crazy numbers. I think part of how why airdrops didn't work is sometimes the

numbers were really high. Um, but you still like giving ownership and then if and then you know and I think that like people often think about is like it's it's very funny because securities law is kind of built around this framing of like well like the risk is that people are too stupid to invest in the right things and so we have to just tell them they can't invest unless they've proven they're smart by being a millionaire. Again, how it currently works as far as I can tell. I don't I don't buy that as but I think that like when you actually think about it as differently is people are actually very smart about what products they use. They think a lot about you know like people are often earlier like when people think about it as a financial investment um you know it's like becomes trickier like is this

a good but if you think about like I like this product I'm an early user like that's a form of tastem and and predicting the future like this product this app will be be big right and and I think that user and I think people actually like I think retail is actually early there and actually more on the the pulse and the cutting edge often than like people at VC firms or people at private equity firms who are probably like not using these products. often in the same ways and so I guess yeah so I guess all that to say that like I think that like there's an opportunity that DeFi and tokens represent which is like uh improving the number of parties that that that are in the flow of ownership of things uh finding new ways to distribute ownership um uh unlocking liquidity lower at earlier prices um all

of which ultimately should be valuable and and I think that we can still create systems that help pe you know warn people of the risks they're taking on without like telling them you know you know without making it like a full gate kept. >> Yeah. Um Hayden, one thing we haven't talked about is Robin Hood. I'm curious to get your take on Robin Hood, but also in light of this idea that like, you know, you guys were very big on Ethereum. You also launched Uni Chain. There's also this Robin Hood chain. Like I I know I know uh Uniswap has been incredibly successful in the last month or so because of in or in in in part because of Robin Hood, I'd say, and the launch of Robin Hood crypto. How do you think about that in light of like, you know, you you've got your own chain,

you've got obviously ET, like should you just be on every single chain? Do you want to do more of these partner like partnership launches? Um, there's a couple follow-ups there, but yeah, I'm curious to get your take there. >> Yeah, I think that like, you know, definitely like the Robin Hood uh partner Robin Hood partnership and then like the launch of Robin Hood chain has just been an insane success for like, you know, full stop. like the volumes there are pretty much our highest volumes anywhere now and they've just seen a huge kind of like initial surge of traction and usage. A lot of it has been around like memecoin trading but also increasingly around tokenized rwas which was like their core thesis behind their chain um as they talked about it.

Um, so I think that like I mean on on our end I think that I've been encouraging like our team to just like bring you like I think that like you know I think that we will be in a world of a lot of chains ultimately and I think that you know we're not in the game of trying to like pick the winners here like we're kind of in the game of trying like our technology like is is you know uh like we we want to be like we want to bring unis swap protocol to as many chains you know as as we can and I think that like I I look I we we love Ethereum and the Ethereum ecosystem and it's been like the most successful chain and we do a lot to grow and invest in unis swap there. Um cool thing is

actually by the way Robin Hood chain is part is an Ethereum L2 which is which is very cool. Um I think that like you know but I think that we've tried to be like kind of a little bit neutral and just bring unis swap to anywhere that people want it. Um you know while kind of factoring in like that there is like some level of like you need like infrastructure providers and you need like like the full tech stack of unis swap becomes increasingly hard. like there's like we've been trying to invest a lot and being able to kind of like you know uh be kind of a little bit more like like you know again new like support the chain like support the chains where unis swap is doing well today um and kind of also like you know bring unis swap to new chains as they're

as they're brought to the market um as opposed to like overly trying to predict which is going to be the biggest chain ever like I think there's like a thing where it's like there was a world where Robin Hood chain wasn't a massive success um and we had but you know there's but like I'm glad we were there day one right and so I that like you know I think that there is sort of this um learning from I think earlier on in UNISOP's history um we tried to like overly guess which chain would be I think part of it was like a challenge around technical scaling like it was like an engineering cost for each chain that we wanted to deploy to um but we made that a pretty low we we've we've been working on lowering the cost there and like know there are chains that we

weren't on day one that we should have been and that we ultimately lost market share because we weren't and so I think that like you know and and so I think that we're like letting the users decide which chains are successful. Um, but again like also thinking about like if a chain brings in like a a unique customer base or a unique value prop where like for example Robin Hood chain is interesting. One of the reasons it was so interesting to us and why we invested more heavily than we do in most chains is because of their like existing user base their existing their kind of focus around RWA which was like a new kind of asset. I mean there's there's various chains that are doing RWA right now but like that being but like they're like such a well positioned kind of um partner to do that. So like we

definitely invest in more in Robin Hood chain than your average chain deployment by a decent amount, but like at the same time like >> we're still trying to play a bit of like a neutral uh stance here and but then like where but also like doubling down where we see success. It's kind of like low like lower barrier to like new chain deployment but then if a chain is getting like no traction and no one uses unis swap or whatever and then we're like okay less of a focus here versus if a chain gets some early adoption usage that's where we want to like double down or triple down and figure out what are the compelling use cases that are developing on that chain. what are the compelling partners that are deploying to that chain and how can they integrate with unis swap and so that's what we're

starting to see on Robin Hood chain at a mass scale is like a huge number of hook development a huge number of like you know products and platforms building on top of unis swap on top of and and it's kind of creating a really like healthy ecosystem there so uh we've we've been yeah it's been it's been really huge for us I think it's also a really good I think one reason that it's really good also for us is not just because I see that chain continuing to grow uh which we do but also because I think that like it shows that you like be a fintech company and bring your user base on chain and kind of like uh unlock some new value, right? that like Robin Hood chain is now a real new revenue line for Robin Hood and like that and there

wasn't guaranteed that it would be success and I think that also like for unis swap like I think that we were a big part of driving that success and we weren't the only part but we were a huge part of it and so I think that they they see that but now I think the hope is that like other people who are bringing their chains to market will also see that and like recognize that like unis swap can really unlock a lot of value by by creating programmable liquidity for for an ecosystem and and so I think that's that's what is like part particularly bullish for for the UNISOP ecosystem. >> Yeah, Hayden, maybe I know we we only have a couple minutes left here. Maybe we can wrap with a conversation around this token versus equity split. Uh this idea of investor relations becoming a

thing that, you know, protocols need to do. You know, we we just launched this dashboard with you guys to I think in part one of the reasons to do that is you have all these great metrics. Let's show the metrics to investors. Um and I'm I'm very curious to hear >> just maybe almost your philosophy around investor relations right now, like Yeah. Yeah, I I think that like you know a big part like first off like every like you know I think for a long time we we definitely struggled a bit and I think we even made some mistakes about like kind of our like you know how we we handled like relationships with say even like you know the token holders the broader unis swap ecosystem. Um so I think that we've like learned a lot there. The way I think about it is like

you know there was like these like historical like people historically had various like um you know there there was like before we we went through this sort of like long period where like there was like people didn't quite understand the relationship between the token and and the and the and the company. Um and that was partially because like the company was being run kind of like a B2C thing that had its own revenue stream and then like the token like sort of there was no there was no e like the economics weren't in place yet. And I think that it's like actually reasonable. They weren't in place for for a while and you know there was there's various like legal considerations but there was also and kind of that that we just had to work through but then there was also um you know it was also just like timing

and various other things. Uh but um I think that what what we did with unification is we put in a place that really clearly ties like you know like the the company receives you know the unisoft labs development company which is what we are. We're a software development company. um you know we received like a this sort of like uh kind of grant um growth fund from the the the governance treasury that has like you know incentivizes us um that that's like all the that's the entire economics of the company like we have one you know we have one revenue stream and it's like you know our our kind of service provider relationship with the token holder DAO um so we and and that's denominated in uni which is really important because that means that we have like a shared you know upside and economic incentive with the broader unis

swap ecosystem um and Then like all all protocol revenue now feeds into this burn system that ultimately flows into the the you know the buy and burn mechanism that that kind of uh you know burns uni over time. Um and that's like the the core economics that are in place. Um and so like from kind of uh what does that mean for how we talk right like when you you mentioned like investor relations and I think that like more like we're definitely more often seeing people like you know like an important part of the uni token is it's not like it's like we do have like the small equity company. It's now in our, you know, we have this equity company.

It's now entirely funded through the token. Um, it's entirely its revenue is entirely denominated in the tok or it's it's like upside like the the money that we like our growth budget like that we're funded out of it is entirely denominated in this token. So now like you know we can kind of like just from our own like we can just think about like it lets us just like focus around the protocol growth as our main like you know as our main kind of focus. And so for that I think that like it starts you know I think we've always done a poor job or we've for a long time did a poor job explaining all the growth and development that is happening in the unis swap ecosystem. Um and so uh we've definitely recently started spending a lot more time kind of just like talking

about it and like speaking to not just like our investors at unis swap labs the development company but like you know speaking to like the broader you know governance stakeholders and you know for a long time we had this like very clear setup of like the foundation talked to the you know talked to governance and the ecosystem and we talked and we worked on our products and kind of just communicated about our products but now like unisoft labs is pretty directly speaking to a broader audience. I wanted like you know we're we're kind of doing a better job doing things like working with you guys like creating dashboards um kind of talking about how you know uh how the the the kind of you know talking about the burn system and how that works um and and just like providing likeformational information about it because I think that like the swap

ecosystem has had a really good year and few years and is like on a really good trajectory and I think that like a lot of the narratives that like were holding it back around like well where's the value going to flow or where you know um or is there like a you know a true economic system in place like those are all kind of in the past and so it's really just about but I you know it's it's really just about kind of communicating it out publicly now and so by the way an ironic thing I know we were running out of time a very ironic thing is that like before we turn on the you before we put forth the proposal that turned on the fee switch the most like common question in my replies was like when is the fee switch going to be

on or like or or there would be like all these like Twitter accounts that would dunk that be like but fe is off switch is off uni holders get you know, there's nothing union holders have no economics in place. Uh the irony is that that is still the most frequent tweet reply to me and after it was all put in place. Uh and so I don't know if it's that people we haven't done a good enough job uh you know communicating out all the advancements and changes and how there is like all these clear economics in place. Um or if a lot of the people that reach the reply were always bots and the we just have like old bots that are are supposed to reply to everything about unis swap saying that >> yeah probably some combination of both.

It's probably a combination of both. But just to be clear to, you know, there is an economics in place. It's it's on track. We're running about 100 million annualized uh which is pretty pretty cool. If you look at the slightly longer averages, um they're they're still more in like the 5060 million I think. But like if you look at the more recent uh post V4 post Robin Hood chain numbers, they annualized to more like uh 100 million uh in uni per year on the burn. That's >> Yeah. Yeah. >> So if you So we launched this dashboard with with you guys. So it's >> if you scroll down they have some of these annualized ones but um yeah you can look at the if you look at the unis swap uni burn via protocol fees one over there on the bottom right like you can

see that it's been really ramping up >> and so if you look at the more recent you know the recent numbers >> excuse me >> yeah yeah you can see it's like ramped up significantly with all the ramen chain usage and so if you look at these recent numbers and you annualize them it's kind of approaching about hund00 million which is pretty impressive. >> Yeah that's great. So if you're looking at these a dashboard like this what is the one or two metrics you care about the most right now? Is it volume? Is it swaps? Is it number of wallets? Is it tradable assets? Is it burn right now? Like what do you is it just >> I think the reality is everyone always wants us to have one KPI. And in some ways we it's like if we really have to pick one, we're usually picking volume

where like volume is ultimately driving liquidity and it's also driving burn. Burn is kind of like in some ways a function of volume as well, right? So you can they're all kind of these are really tied together. Um, but really like everything we're doing is worth looking at feeding liquidity in the US protocol which drives more volume and feeding and and then driving distribution for the protocol that that creates more volume that drives more liquidity. And so like that's like the flywheel and that's what we're driving. I I I also will say that like these current numbers are like based on like current like like DeFi is so early, right? And you have like you're starting to even see the like major banks do these like these like >> I saw I saw the standard charter the you know $100 uni price. Yeah. Which it's

funny because they are more optimistic than I think a lot of the crypto people right now. That's the funniest irony is when you talk to Tradfi folks, they almost like sometimes like get it more than not not going to speak to any specific price, but like they kind of get the like growth potential of DeFi uh more than like even people that have like sometimes maybe people have been in crypto too long and they get like a little jaded or something and they start to like think about these like oh well that will never happen. There's no, but I think that like we're like like we're such a small percentage of of financial markets and you know it's so early on and we're already seeing these like you know almost hundred million dollars of burn generation. we're already seeing, you know, a trillion dollars a year in

trading and we're like and crypto is like the the smallest asset class, you know, relative to all these new and so I think that like, you know, the potential for growth um is huge and then the potential for DeFi to realize a lot of the value from that growth is also really clear. That's like that's the standard charter thesis as I read it is like DeFi can grow massively if more value come if more assets come on chain and more users come on chain. uh current D5 protocols have done a really like unis swap has done a really good job keeping its market share as you know like you know we're we're nine years in we've had more competitors than anyone on earth unis swap you know the the unis smart contracts that's been forked literally thousands of times not hundreds not tens there's been thousands

of attempted forks of unis swap at this point some of them are smaller some whatever but you know it's um and then we've had various non-fork competitors but like you know it's it's it's been like a really kind of like we've been through a lot of rounds of this crucible or whatever and like we've kind of come out with like you know our market share is like as good as it's ever been um maybe growing growing in many places uh growing on its mainet growing uh you know in EVM more broadly um and so I think that like you know as more and more as and then you have like players like Robin Hood they come on chain and they're choosing EVM um and unis swap is getting you know a lot of the trading or like the liquidity like that's sort of like a really good signal for like the

potential future we're we're in >> 100%. Well, Hayden, it's uh fun to work with you guys on on everything that we're doing together and just yeah, fun to see you evolve the company. So, and and the protocol, the business or whatever we're calling it these days. So, congrats on everything and uh yeah, man. It's good to see you again. >> Yeah, great great to be on. [music] Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial [music] advice or necessarily the views of Block Works. Our hosts, guests, and the Block Works team may hold positions in the companies, funds, or projects discussed.