What Went Wrong With Starknet's Airdrop

Transcript

look smart contracts are I think it almost seems cliche and kind of pointless to say this but like uh most of the value in blockchain I think comes from Smart contract platforms I think that that much is clear you know there's smart contracts on Bitcoin now there's smart contracts on pretty much [Music] everything hello and welcome to the protocol podcast I'm Brad C here with my co-hosts Margot nykerk and Sam Kessler we're excited to dive into Today's Show with

the latest news and developments in technology behind crypto and blockchains first please do not forget to subscribe to our Weekly Newsletter the protocol on coindesk.com now we have a guest with us today Mike cazza CEO and founder of ethery which is right at the center of this exploding Trend that Sam's been writing about like like what five stories I think this week Sam a lot of stories ether fi is uh the biggest reaking protocol according to defi Lama I just checked that um anyway welcome Mike yeah thanks for having me yeah it's

an exciting space certainly lck going on pretty much every day yeah I imagine well we're gonna get to that um and Mike's Gonna Be our guest host so he's going to be with us as we discuss uh some of the hot stories of the week the Stark net airdrop I mean it has just been non-stop Stark net airdrop coverage Margo you cover Stark net you you know you're a stark net expert here what is tell us what's the latest on this darket air drop yeah so so the starnet airdrop went live as of February 20th um this was long awaited it was announced the week prior um and there was a lot of

controversy around it a lot of people who were excited about the possibility of finally claiming their Stark tokens and you know the starkware foundation uh claimed that this was the largest uh airdrop eligibility criteria I believe some like 1.3 million wallet addresses were eligible to claim their Stark token but at the same time a lot of the Stark net users were sort of frustrated with this criteria for one there was one of the eligible groups was solo like ethereum solo stakers I think it made up about 22% the foundation had sort of come out and said that like we're doing this to sort of thank the people who are maintaining the security of the main net you know the base blockchain ethereum

Stark net is a layer to built on top of ethereum so that's sort of where that comes in you know a lot of Stark Stark net users has sort of noted that solo stakers have a large amount of cash available to you know participate in the staking process and so awarding them with more like tokens and more free money basically is adding to their bags it's not really decentralizing the system and on the other hand there was another eligibility criteria where uh you had to have 0.005 e in your wallet on your in your Stark net wallet on November 15th I think it's I think it is the date um and so there are some users who you know have participated in the Stark net ecosystem consistently throughout the

you know throughout the last couple months and because they didn't have that exact amount on that day they also were not eligible for the airdrop a lot of like praise and backlash for this specifically uh just because it depends what you know bucket you fall into um but it's been really interesting to sort of Follow Follow that as that's unfolded and just quick quick glance at the market here I mean shorty yalwa our colleague wrote about this this morning that you know the the price of the thing came out at like $5 per token and now trading it I think a189 which is a circulating market cap of$ 1.4 billion dollar um but I mean the other thing the other controversial thing is this that

they have these token unlocks that are coming uh for the team in like two months which uh Sam you have any quick thoughts on the Stark net aird drop I mean I I kind of want to withhold some of my thoughts until um you know a later segment when we talked to Mike here about points and um you know what they are and how projects can think about incentivizing usage patterns in a way that both satisfies users in terms of aligning their expectations with aird drops but also moves them towards doing things that are in alignment with whatever that ecosystem that's air dropping tokens wants I'm talking kind of like vaguely here and broadly but we we'll get more specific about it later I do think though that the starkware

airdrop is another example in a long line of examples I didn't write about this one but of how airdrops can and almost always do go wrong it it's kind of hilarious like you saw on salana a bunch of air drops that came out that actually went pretty well because they came out of nowhere and um you know all of a sudden people were getting free money and now we're seeing air drops again on ethereum but with with without many exceptions sana's ecosystem being a a slight one with a couple air drops there you always see problems I think about the the arbitrum um you know airdrop that we saw I I last year I I forget um how many months ago at this point where there are problems with their distribution um distribution being

one of the common points of contention but you've also you know you'll have problems when e even when well I'll just stop here you can go through basically every single airdrop and find problems like this with it but it does feel like the heat of um you know things has been in intensified with the starkware thing maybe because it's you know you know there haven't been as many recently yeah I wanted to add to that you know he's Sam you're absolutely right you know with the arbitrary M drop there was also a 50% decrease immediately um in the token price so that's not entirely unusual there is always some sort of backlash or something goes wrong but it's always interesting because these projects always start to claim then that you know things are going smoothly like I saw Ellie benone he who's the co-founder of starkware he tweeted out

this morning that um you know were there was no technical mishaps I think 70% of Stark tokens have been claimed they had you know I think it was like 420 million tokens are is that number specifically so they would argue like it's going quite smoothly like people are interested and people are claiming them but you know he was on Laura Shin's podcast last week and he wouldn't say exactly what it is that from the mistakes that they've made what it is specifically that they've learned so we'll you know we'll have to we'll we'll have to get into this another thing that you did not say was whether he would sell his token soon as they he did not do himself many favors with that podcast we kind of talked about that offline as well but I do

think that that kind of speaks to the fact that you know even though we see backlash almost every time one of these things happens um at least in this case it seems like they weren't bracing for it like one might expect like even if they thought they had everything figured out which it does seem like they did in this case they didn't you know they didn't plan but again I don't know if token prices are a right y for whether this sentiment actually matters um because it does seem like you know we're not talking about everything that happened with arbitrum anymore that ecosystem is doing really well they went to like you know over the summer they set a bunch of Records they're still the the the leading layer 2 ecosystem on ethereum so you know does this matter I don't know but it is worth talking about

um and it's something that I imagine Regulators are looking at as well because air drops free money the reason why aird drops exist is because of you know ico's not working before and those looking too much like IPOs and you can't claim these in the United States for a bunch of reasons I I'm rambling here but there's a lot of you know reasons why I I I think despite token prices backlash like this might be something that Founders and teams should you know bear in mind Mike what about you have you were you following this story pretty closely yeah somewhat uh you know crypto is this amazing space uh that's almost like a Bizarro land where you can give people a hundred million and they find a way to complain about it because they didn't get quite enough or somebody else got more it's uh it's so I don't know

it's it's kind of absurd um uh and you know and looking at the price of the token I think um these things are such speculative assets um I think if you think about the market cap of you know starkware versus uh the market cap of you know let's say other companies more in the in the real world let's say um it's hard to draw comparisons right like how much economic value is actually being created here um and so to me like this is still like it's part of a speculative Mania that's mostly just following kind of the ups and downs of the of the market I still very much look at it as just kind of levered beta rather than something that has its own uh own substance lever beta on what in this case uh well I guess on ethereum I

mean we see if you actually do the like the correlation between these assets I mean they're all about you know 0. n it's just the the volatility is higher one or another um so uh you know it's it's hard to say that there's anything really like pegging the value of one token or or another relative to the project itself versus just the the entire Market kind of moving up and down in unison is there anything broadly speaking that you think um based on what you do know or have observed about the stb airdrop that they you know clearly screwed up on um I mean they they they started thinking about this a while ago but yeah yeah I think I mean it's so hard to criticize sitting on the on the sidelines um uh I want to be careful with what I

say here I I tend to think that Simplicity with these things is really key um anytime you try to come up with clever rules and exclusions and like curves and tranches and all that stuff inevitably it makes things worse like inevitably you end up you know creating some sort of system that favors one group versus another and it just creates frustrations ver versus going out with a really simple let's say linear system um you're still not going to make everybody happy but at least it's so straightforward that like it's hard to argue with so if I if I had any uh criticisms or advice it's that like like so many air drops they tried to get too

cute and in complex with it he kind of owned that you know in terms of I mean not as a problem but as a virtue he was positioning it that they really to your point they really tried to get creative and it was you know it was nonstandard um in terms of the allocation so yeah not simple yeah so many air drops basically every single one outlayer was another recent you know big one and uh again it's I don't know what the hundreds of millions of dollars given away to users and like all you heard about was the complaining um and because you know the trunch system and too much went to nfts and it's just uh it's hard to it's hard to please

everybody so yeah yeah in a sense like just a like really dumb simple system might might have been a better approach do you think that that says something about the airdrop model itself yeah I mean aird drops are such a weird kind of mechanism um if you look at it purely from like a cost of acquisition standpoint it makes no sense right you're you're spending a $100 million to acquire however many thousands of users uh like the the the ROI on that makes absolutely no sense but that's not quite the right way to look at it because if you didn't do the airdrop you wouldn't have had that those users in the first place and you wouldn't have had something that's actually worth airdropping and so it's this weird kind of like circular reflexive kind of thing

that I haven't seen a coherent model around um so maybe the answer is it's just a bad idea in aird drops are you know just aren't a good model uh or someone needs to come up with like a an analytical frame to understand like what what is the right way to think about these these things I haven't seen a good one why you got to be such a hater Mike there there's a lot about crypto that is not driven by what is the most sensible thing to do it's driven by constraint that are constraints that are externally imposed all right well this is a fun topic let's move on our next story thank you Mike the headline of the story Stellar starts phased roll out of sorban

smart contracts I think I'll say Stellar is our sponsor here so just throwing that disclosure out there but Stellar is is pretty interesting that they're doing this you know they were a blockchain from you know 2014 a fork of Ripple you know payments focused they were kind of one of the ogs predating by ethereum by a year you know and and now here in the year 2024 they're adding smart contracts they've been adding they they've been working on this for for two years um and it's been a huge push of uh of their

Foundation this this kind of OG blockchain ecosystem half the battle in this business is just kind of getting name recognition I think sometimes and you know Stellar definitely is a name that a lot of people know you know uh they're not you know they're nowhere on defi I think they're in the you know I'm just looking up here on defi llama they're 55 55th biggest def5 because they don't really have D at the moment but you know I think that's the idea of bringing in smart contracts I don't know what do y'all think about this idea of you know OG chain uh you know trying to Spruce itself Mike you want to go first

on this one I mean I I can't tell you the last time I looked at Stellar um okay uh look smart contracts are I think it almost seems cliche and kind of pointless to say this but like uh most of the value in blockchain I think comes from Smart contract platforms I think that that much is clear you know there smart contracts on Bitcoin now there's smart contracts on pretty much everything so it makes a ton of sense that they're doing this uh you know that's that's how you kind of have to stay relevant um um historically this is not you know like a you know an old protocol that's been

around for a long time bolting something else on it's that's rarely successful um I hope you know for the benefit of the ecosystem I hope that's that's not the case here I hope they do really well and it's it's a great product but um it's a it's a challenging thing to do to sort of pivot to do kind of a hard pivot like this I would say zooming out too so there's a lot of ecosystem like this that we've seen I mean EOS to some extent Ripple to a larger extent that raised a bunch of money during the Ico boom of 2016 2017 now they have buckets and buckets of cash like billions of dollars worth sitting in these foundations things work differently then it wasn't Dows it's a it's a completely different model and at a certain point like there are companies there are

developers working on these things and they do kind of have to justify those those treasure troves um that they that they you know made however many years ago and I do think that a part of that Playbook um is frequently adding smart contracts um you you're seeing it with ripple to to some extent where there's some team that's working on Smart contracts there you see it here but you know they they might make um and and there I I think there is reason Mike like you said to to you know there you do need smart contracts if you want to keep up um um unless you're something like a Bitcoin but Bitcoin itself even has smart contracts and that kind of brings me to my last Point here which is the Bitcoin model and I have a story that's I think going out in 3 minutes as

of the recording of this that is about smart contracts on on bitcoin on that ecosystem the whole selling point there is that there's a ton of value on bitcoin and so by adding smart contracts by adding decentralized Finance by adding nfts they unlock that value in the most valuable blockchain to be used in all of these other ways to create all these other Primitives and I do see that being you know a narrative that you could apply here which is Stellar for for even though we don't really talk about it that much on this podcast or Mike you might not be talking about it there is a lot of value lock there just by virtue of how old it is and it is like a top ranking coin on Co micr cap so maybe the rationale is hey that money is locked up there if we can

do more things with it you know power to them I don't have a lot more to add I think Mike took a lot of the words out of my my own mouth but I agree like you know as someone that covers ethereum like the fact that smart contracts are coming in 2024 is like oh yawn you know like you know so there's all these other innovations that are happening but I guess you know like you said Stellar is this like payments focused blockchain and so um this is there I mean you know it's great that there's more Innovation but like smart contracts from the ethereum perspective is at the heart of what blockchain is and blockchain Tech is you know so uh I guess the more the merrier I mean to Sam's Point they have lots of money right I mean I guess maybe that is a question is if can you if you

have all that money can you can you build it yeah and also but like if you're going to go and and you know use a blockchain for the purpose of using you know smart contracts are you going to go to Stellar I don't know there's a there's a long list of other blockchains maybe you go first too I think this kind of thing it always comes down to the team and I I I admit I don't know the Stellar team at all um if they can deliver if they can execute if they can you know set up the right BD relationships and like get the right developer ecosystem going if they can attract you know good good Engineers uh this could work it all comes down to the team I mean the um smart contract Tech is something that's it's just it's

existed for a long time now uh it's it's pretty well understood what the table Stakes are I mean I don't know if there's some special Twist on it you know in this case but it's pretty just well understood um so it really just comes down to execution um and will they be able to do it I think that's uh that's entirely up to the team I mean Stellar they do have a pretty you know vibrant Comm community in terms of I don't know if it's as rabid as like the you know the xrp uh army or whatever but it's you know they they have you know a pretty well attended conference that there's always a lot of you know cheering and stuff well I I think that there's like different kinds of communities right

there's like on Ripple you have a big investor Community a lot of people who hold their xrp bags and so that is a community in some sense on ethereum um you have a larger I would a developer Community they do have a big investor Community but they also have a very large developer community of people who are building things and that comes as a result of smart contracts so if you're adding smart contracts to your ecosystem maybe you can expand that Community to include all of those Engineers who are building things on top of the chain I know that's one of the rationals that um we were given by um the CTO of Ripple um recently as for why they're adding smart contracts it can help expand that net but when we talk about Community um I don't know if there's over laap between their existing community and the kind of

community that they'd need to cultivate or would want to cultivate with smart contracts there's like a spectrum uh to use an imperfect analogy of like on the one hand you have Cosmos where there's like some of the best engineers in the world working on that it's the coolest Tech ever zero investors nobody seems to care about it as as a financial thing but like probably the most interesting technology and then on the other hand yeah what whether it's like uh you know Stellar or whatever other more communities that are just entirely financially driven um and then ethereum is probably somewhere in in between um but you you have to you have to move more closer to Cosmos if you actually

want to create real value lasting value on a smart contract plan interesting all right well let us go to the break here uh and when we come back we're going to be talking to Mike about uh his wheelhouse House of uh of liquid reaking uh which is just blowing up and we're uh pretty lucky to have him all right let's go to the break calling all developers score a consensus 2024 developer pass for just $19 but Act Fast only a limited number of these passes are available you may have heard that consensus ain't for devs but here's why you're wrong consensus is

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houses around town grab your $19 developer pass today but remember this exclusive offer is limited visit consensus. coindesk.com now to secure your developer pass before they're gone explore the epicenter of block blockchain Innovation at consensus 2024 all right welcome back uh we're here with Mike sadza um super lucky to have the CEO of ethery the leading uh liquid reaking protocol and uh I think I'm going to

turn it over here to Sam uh who has quickly become our expert on liquid reaking uh how many stories this week have you written several several several okay yeah I don't think it was five but several so Sam why don't you lead this discussion I'm gonna move over to Mike here because I think he'll be able to give an explanation of you know what this is but at a high level um we saw in June the the launch um in in you know to some extent of something called igen layer which is a reaking platform on ethereum that essentially lets you share ethereum security with other networks if you staked you know ethereum on um or staked ether with ethereum to keep the network secure the value ad here is now

you can stake it or restake it instead with igen layer to spread that security to other so-called avss actively validated services but there's this new thing um which is called liquid reaking which does something similar to what Lio did on ether ethereum staking where it added liquidity but I'm going to ask maybe Mike you can kind of talk to us about how these two things sort of connect and then we'll talk about all the crazy billions of dollars we've seen flowing into this ecosystem recently yeah so the um I think it's worth saying that reaking is something that emerges very naturally out of proof of stake as soon as you have a proof of stake blockchain uh like like ethereum uh reaking just is

like really a logical Next Step that comes out of that one kind of abstract but I think helpful way to think about it is staking is driven by slashing conditions within ethereum meaning when you stake your eth you're you know accepting the responsibility of operating a validator and opting into slashing conditions but those slashing conditions are fixed on ethereum and reaking basically makes those slashing conditions programmable so now you can say well okay now I'm going to be opting into the slashing conditions of this other note and this other service and so on so forth in exchange for fees in the same way that you get fees for opting into the slashing conditions of ethereum

and so that's an interesting and important analogy because in the same way that ethereum is a natural extension of Bitcoin where Bitcoin has Bitcoin script which is a very limited programming language and ethereum makes that fully programmable which is where smart contracts come in proof of stake or or restak I should say is a natural extension where it makes those slashing conditions on ethereum programmable so it really is kind of uh there's no way to avoid it like this was going to happen no matter what like this Prov AK just inherently leads to reaking um um in some ways it's surprising that it's taken this long uh to to emerge and part of that I think is the um the meme The Narrative of putting a word on it like

reaking and defining it and like putting a theoretical framework around it as as seram and his team at IG have done um that's what really triggered all the excitement but it it is sort of this inevitable kind of kind of thing um and uh I use the analogy of Bitcoin to ethereum um uh deliberately because I really think it's a big deal like this is there there is a lot of hype around it but in the same way that moving from sort of static Bitcoin to more Dynamic and programmable ethereum was a really big deal that unlocked a huge amount of uh value creation and uh and ability to build products around it I think making ethereum like meta programmable in a

sense uh similarly blocks a tremendous amount of value there's a lot of potential here um however that potential is entirely unrealized now it is entirely speculative because there are no reaking Services none zero there's no reaking Services live but there's six or seven billion or whatever the number is inside of igen Lair you know and inside of restating protocols like uh like us um which is uh crazy when you think about it like this this is a huge amount of money flowing into things that is completely completely like road map driven um so that's uh I think people are reasonably excited about it um but there's a lot of unrealized potential so

okay going back to ethery yeah ethery is you can think of it I think a better way to think about ethery as just as a Next Generation staking protocol in the same way that you had Lio and Rocket pool as the first gen of staking protocols ethery is really just a next generation of that so I I don't even like the distinction between like liquid staking versus liquid staking because really like all staking is going to have reaking built in there's it's not going to make any sense to just do vanilla staking all staking is going to be restak automatically um and so really this is just a natural next step of what staking uh looks like and so it operates from a user standpoint exactly the same way as you know people have been used to which is you know instead of locking up

your eth uh in order to stake it uh you have now a liquid receipt token that you can use in Define and that's what ether gives you you go to Ether put in your eth mint your eth liquid restak token and then use it in dozens and dozens of different def5 protocols to do all the normal things that you'd expect to be able to do like borrow against it take leverage trade and do all kinds of fun and interesting things that defi allows you to do so maybe to talk a little bit about what the incentives are so you know um we we went over a lot there but um just to like remind listeners like at a high level the whole point of aen layer from an investor standpoint is that now instead of just earning staking interest you earn raking interest which is extra interest you get for helping to

secure these abss that you're now securing with your e your ether tokens on top of the ethereum network but um even though I I was kind of like kg about whether igen layer has launched even though igen layer has launched um igen layer has not launched or or rather it hasn't opened up the ability for these avss to to to launch so the interest that is rewarded um you know isn't really happen yet so can you talk a little bit about why people are putting money into this system now what are the rewards that's exactly right it has not avss have not been turned on um the first AVS is Igan da which is built by Igan there and then there's a whole constellation of really crazy and interesting projects that are in Flight

none of them are are live yet um uh so why yeah so why are people putting in uh uh their billion dollar of E I should say seven billion dollars of eth and the answer is points uh you may have seen you know the meme and and meta around points floating around the the Twitter Sphere for X spere that doesn't sound as good um the you know the the the universe of social media around around crypto um and uh there's I would say a mixed bag of some people love the new crazy points games that are going on and some people are just sick of it and just give me the tokens and and Emissions so uh but that's what people are doing they're farming points in

all so that obvious question uh have to be somewhat careful with what you can also read Sam story this morning on coindesk.com I think so maybe for context if you put money um for for our listeners again like we we're talking in the weeds but if you put money um deposit it into ethery which is one of these liquid reaking protocols the biggest one with over a billion dollars I believe you were the first launch or the F the first major one to launch yeah um you get in return ultimately you're going to get this token that earns interest this e token that earns interest from abss but right now you get points you get igen layer points and then you get ether Five Points so what are the points that's that's where we're at in the com exctly

so you you are getting staking rewards so it's these days it's the equivalent of the staking words are the equivalent of three and a half% interest which is the same as you'd get in any staking protocol pretty much um uh so you're getting your staking rewards eventually you'll get your reaking rewards but right now you're getting staking rewards plus points etherite points and and igen layer points um uh these points are basically a representation of how much you've contributed to the protocol that's that's what they're for and people are buying them they're selling them they're Levering them up oh that's what you're about to talk about the speculation yeah so they uh people are doing all kinds of I'm happy to talk about some examples of crazy things that people are doing with their their points

um but um no one including us is allowed to talk about anything what the value might be from those points so I don't know what they're be like what does allowed mean that's like as a journalist we're curious and because everybody's so Cy I just talked to puffer yesterday too yeah um they're one of your competitors I don't know if you all also K about what is a competitor but um yeah what yeah what what is all the sensitivity around because a lot of people expect that they're we we're accepting no obligation for what points may or may not turn into uh they are simply a fun gamified way just like you it's even less direct than like when you use a credit card you get

some loyalty points um we're not committing uh or communicating anything about what those points might turn into uh why have them that's the obvious next question not to put you on the hot seat but no I mean well they are a representation of how much a user has contributed to the the protocol um uh and we have communicated that they may have some values in the future but we're not committing to anything specific and yeah you have to be pretty careful with that um yeah uh some of the things that people are doing with these points I mean it's gotten really crazy so just today or yesterday it you know it's it's happening pretty fast yeah there's there's a market that opened up for ether Five Points where people can now

buy and sell them I don't even know exactly how that works but that's you had nothing to do with that people just did it yeah of course yeah no it's it is uh we put out the protocol the protocol ascribes points to wallet uh somehow I don't I literally don't even know how exactly they do this but somehow they're you know they're allowing people to to swap these points back and forth founder are you concerned about the like you've got which is lever yeah so can you kind of because I imagine you guys are building a a very real thing with all this anti- slashing and like all this stuff how do you communicate to users hey this thing's going to have value but it doesn't any value and be careful don't lever it up but it will have value

so maybe you should people are Levering it up people are 10 20 x leverage like gearbox recently released a thing where and this so pendo is a model that a lot of people have started sort of uh I guess replicating and doing versions of and pendo is honestly one of the coolest protocols on ethereum I would say I'll give give them that's the Le where you can get this point leverage just for well it's actually it's more subtle and interesting it it leads to effectively being able to lever up on points but the way it actually works is it is an interest rate trading protocol so it you you put in on the input of pendo is you put in an interest bearing asset in this case it's a liquid staking token but it could be anything could be a stable coin

could be a liquidity pool could be anything you you're putting in an interest yield bearing asset and what pendo does is split it into two tokens the principal token which is a fixed value uh and then the yield token and normally if you have something that's yielding a fixed you know 3% there's a very well-defined parameter there that the principal token is going to be worth less because it's discounted by the the yield and the yield token is going to be worth whatever the yield is in this case the yield token also holds the points and so uh there's a lot of speculation about what these things are going to be worth is there some value ascribed to them and people are going so it allows you to lever up on points because you can as a user come in and just say okay

I'm just going to buy the yeld token and I'm going to bid it up because I think the points are going to be really valuable and so users have bit up these points Tokens The Yield token to uh a completely unhinged degree I I will I'll fully say that it's just gotten absolutely crazy and the net effect of that is on on the other side you have users that are able to lock in effectively a fixed interest rate on their picked principal token uh as high as 40% in some case annualized interest rate for you know three months six months um because people are speculating on the value of these uh of these points um so uh nobody could have predicted how big this would have gotten I mean it's up to now I think over well over $300

million maybe even $400 million in these like various uh you know crazy instruments um uh we certainly had no idea that it was it was going to be this big uh when we s when we did the partnership with with pendo um uh I think it's exceeded everyone's expectations even I mean this goes all the way to igen lir too I I don't think they uh uh I know this fairly confidently they they definitely didn't think they would get $7 billion to be deposited uh into their protocol before launch what were they expecting I I don't know what number they had I I'll tell you what number we had in our head in terms of our targets um we were targeting uh 100K stake teeth

which today would be I guess around you know $280 million or whatever May 29 the math that's a lot less that's for ether for E for ether we we thought we'd feel so good if we got 100K e by the end of March uh we hit 100K eth by January 18th and we're now at 475k so it's just it's completely gone yeah it's gone Bonkers uh we feel humbled and yeah it's just it's it's it's been amazing to watch the the amount of excitement people have for this thing why do you think it's gone bongers though because there's always a lot of like fat not fat I know it gets

confused confusion here but like there's a lot of fad like you know or craze in uh like crypto Trends and you know points aird drops that sort of like at the heart of a lot of this so I sort of want to understand why you think this has exploded and like whether we think this is persistent right because there's skyrocketing of interest but will it slow down you know yeah no it's there's there's definitely going to be a correction like I 100% there's going to be a trough of disillusionment it's just it's impossible for it to meet like it's too high there's no way to meet this expectation so what are you guys doing to prepare for that like you know yeah that's a great let me answer the

question because I do think it's an interesting and important question like crypto is this uh very free unrestricted hypers speculative market and so what happened was the money printer got turned on again but the US basically the fed the money printer is back on and so everything is going crazy the S&P is going crazy nowda I mean everything is going up now it's this is crypto is levered beta they said that earlier you know it's the same thing it's just it it's the money printers back on therefore everything is just getting pumped to to infinity and it just happened to be that reaking just was this like really powerful idea that is correct and valid and will be huge source of value Creation in in over the

long term but it became this focal point where it just like all of the speculation and craziness just got focused on this one particular space and just everyone is you know and the more crazy it gets the the higher the expectation for what igen Lay's you know token is is going to be at which becomes this you know self-perpetuating you know fuel cycle um what we're trying to do is a uh create enough scale with ethery that we become this Lindy protocol that a has value as a staking and reaking platform but B is just a good way to hold uh to have long exposure to eth if you want to be long eth we want to be a

trusted brand that has all this great functionality is integrated with every single defi protocol it's going to be on every exchange it's just going to be everywhere and so we want to be a great way for users to hold eth and get exposure to defi um and with the plan is all out a suite of products over time um that uh Beyond just staking so integrated products over time that uh that again create real value for users in terms of making their life easier and navigating the complexities of defi so even if it takes years which is probably how long it will take for the the reality of reaking to catch up to the craziness around it um you know we we hope to continue to build really good

products that make lives easier uh over that entire period Mike I'd like to hear you know here we are in early 2024 and all of a sudden there's you know 470 e in your protocol you know I mean just to back up you know shiram uh as you know as you mentioned is sort of credited with with igen layer and this idea of reaking but when did you get get the idea of doing the reaking protocol on top of igen layer like how how what was that timing like we you know I it's a great question and I think back at how just honestly I

think lucky uh we we got in a sense that we um uh we looked at the staking universe and saw an opportunity to build a Next Generation staking protocol and when was that this was last year in around actually January December of 22 January 23 was around the time when we were really thinking about this and we had seen we saw these at the time all there was was some interesting YouTube lectures by this like uh clearly very smart Professor named sham uh talking about this concept of reaking uh and for me it was it was a bit of an aha moment in similar to the moment when I first read about Bitcoin or first read about

ethereum where it was just This Moment of clarity that this is this is going to be the future of ethereum it was just like it was crystal clear in that in that same way and so we had made the decision to like really bet everything to build a staking protocol that like at the core of it had reaking baked into it um this was a pretty major uh bet and it seemed like it was very speculative at the time because we we sort of said well like this is still a very Niche thing no one's really like talking about it um um and it just it the I think there was a lot of luck associated with it but um it ended up being more right than we ever could have anticipated like the amount of excitement around it ended up being

far more right than we thought and we just because we had been working we were the first ones to start working on it so we were the first ones to launch and so the timing just worked out that everything exploded and now we have a billion and a half dollars in the protocol in the spin of you know four months um so it's just yeah it it ended up being quite quite crazy maybe I'll ask one more question to just close things up to kind of go back to the points which is what's kind of like kicked off this entire speculative frenzy that we were talking about obviously if you don't issue points you're kind of dead in the water at this point everybody's issuing points yeah I guess that's probably true at this point yeah and so I wonder like concretely I I kind of asked this question before and

maybe I'm forgetting or maybe we didn't get a full answer but like and I I'm sorry to put you on the spot on this but why can't we talk about what like why can't you just come out and say hey points are or are not tied to a future aird drop because you could also say there is no air drop that's something that you saw on other ecosystems as well in separate Trends and we've said that for ourselves multiple times there's no we haven't talked about any kind of air drop but you haven't said there's no airdrop like you we have actually we have oh you have yeah we we we said there no we've confirmed nothing there's no we're not promising or saying anything about an airdrop uh that's that's coming I mean um first of all I will say we we definitely do not get the

blame for the points uh thing we started our points back uh you know in February I think February March of last year but like blur was the one that really kicked this whole thing off uh if I could put blame uh on points fatigue uh for users I definit I pointed straight at blur I think we yeah we just happen to be uh doing it at the same time um uh yeah look you have to be very careful with these uh token launches um you know there was a lot of um bad behavior when it came to the Ico Mania of uh you know a few years back um and so you just have to be careful with how you launch these things and you you you have to be

careful in terms of not uh offering anything not creating any kind of offering to retail and being very careful to in our case in particular to um avoid us customers so we we actually in our terms of service uh we you know block us customers users have to sign a transaction saying they're not a US person um and GE offense we do we take all kinds of measures to uh to avoid it but that's really what it comes down to is you wanna we want to be compliant in every way that we can um and so that's part of it is you you have to be very careful not to make any promises or insinuations around what may or may not

happen with the token launch got this topic is not going away I have a feeling um and I hope Mike you'll be back at some point I hopefully we won't have to wait for that trough of disillusionment before you come back but anyway thank you Mike for joining us we're going to wrap here that's it for this week shout out to our producer Michelle muso and our Booker Mel Monas uh thank you for listening to the protocol podcast if you have any questions about any stories or comments please reach out to us at podcasts coindesk.com subject line the protocol listen to US Weekly on coindesk podcast Network or wherever you get your

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