Bankless - Can Story Protocol Tokenize the $70 Trillion IP Market? | Jason Zhao

Episode Date: April 29, 2025

Can Crypto disrupt the IP Market? In this episode, we dive deep with Jason Zhao, co-founder of Story Protocol, on how their new token launch could unlock the $70 trillion intellectual property market. We explore the bold vision of making IP liquid, programmable, and globally accessible — and how crypto-native creators, DAOs, and even major studios could reshape how stories are owned and built. This might just be crypto's most ambitious attempt at disrupting the media yet. ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🌐SELF | PROVE YOUR SELF https://bankless.cc/Self 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🏦INFINEX | THE CRYPTO-EVERYTHING APP https://bankless.cc/Infinex ------ TIMESTAMPS 0:00 Intro 5:48 Why Onchain IP? 16:52 Eliminating Lawyers 24:41 Step One 28:56 Code as Law 38:38 Ownership Protection 45:35 Onchain IP Nuances 53:11 Final Words 56:30 Closing & Disclaimers ------ RESOURCES Jason Zhao https://x.com/jasonjzhao Story Protocol https://x.com/storyprotocol ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

You have to climb this ladder. You have to swallow this pill. You have to accept reality. Like, you need the stable coin to get random people that don't care about the ideological part of crypto to use crypto. And then maybe then they'll take that ladder and they'll climb up and they'll use Eith. And maybe they don't even want to use stable coins anymore. But ultimately, stable coins are how we have to get there. So I think story takes that approach.

Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today on Bank Cliffs, we are exploring the frontier of tokenized intellectual property on a blockchain. There's a new blockchain out there called Story Protocol, and its mission is to tokenize the world's IP and put it on chain. But their real vision is not to necessarily tokenize, like currently existing IP, call it Trad IP. They also, they do want to do that, but they also want to unlock future potential, future IP,

future content, and enable a net new era of human creativity and just kind of be the IP layer for the Internet. And I think that's a very different construction. of a blockchain than anyone in the crypto space has really ever really comprehended before. And my first initial reaction to the concept of tokenized IP is, well, IP is a nation state legal system construct. And blockchains are not meant to cooperate necessarily with nation states. They are meant to be a layer higher than nation states. And so it's weird to me that we are taking this nation state concept and trying to imbue it into a blockchain. That's not really how I

understand blockchains to really work. And so that was my first, like, reaction to story and the idea of tokenized IP. And I wanted to just get Jason, the co-founder of Story Protocol, on to, like, kind of run that take by him. He taught me about, like, the Story Vision, the Story Protocol, and how it works and what it wants to do for the world. I gave him my more antagonistic takes about, like, all the ways that I don't think that this makes sense. And I was left with understanding the optimistic Bull case for Story. I think there is a, there's a lot it's going to take to get there. I don't necessarily think that that is an easy path for them.

But I think there is an optimistic future for story if they do it. I'm not necessarily convinced, but I will leave you, the listener. I will leave that for you to decide after you listen to this episode with Jason from Story. So let's go ahead and get to that conversation with Jason from Story. But first, a moment to talk about some of these fantastic sponsors that make the show possible. In the wild west of Defi, stability and innovation are everything, which is why you should check out Fract Finance. The protocol revolutionizing stable coins, defy, and Rolex. The core of frax finance is FraxUSD, which is backed by BlackRock's institutional biddle fund.

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I think this episode got instigated by a tweet that I made talking about how I didn't think IP and blockchains go together. So this episode you're wondering you today is going to unpack that idea. And Jason here is going to give us the pitch for IP on blockchain. Jason, welcome to bankless. Hey, David, thanks for having me on. Really excited for this conversation. And yeah, I mean, I appreciate the sort of skepticism. I think it's healthy in the space.

And so we'd love to kind of dive into like where IP makes sense on chain and maybe where you still need to rely on off-chain solutions. So excited for the conversation. Yeah, sure. I think just to kick things off, I want to hear the pitch. What is the pitch for IP on the blockchain? And is that also how you would even pitch it as like, is it IP on the blockchain? Is that what we're doing? Yeah, I think that is the high level way to understand it. Obviously, once you dig in, there's a ton of nuances, right? But that's a great way to kind of understand it. I think I'll start just by talking about IP because this is an idea that maybe for some people they're familiar with, but usually when I talk about intellectual property, especially with people who are more native to the blockchain space. You know, the three reactions I get are boredom, fear and confusion, right? One of the three or sometimes all three. And so just to deep pack, like, what is IP at a high level? Intellectual property, I think most people get the idea that IP can consist of, you know, a song, or

or a sort of character or movie, the creative works, that's what we consider copyright. That is admittedly where stories the most focus today. But IP as an asset class as a whole also includes the biggest brands in the world. So you think about trademarks. Like Louis Vuitton needs to have that brand, right? And it's important that we know

this is a real Louis Vuitton and this is, you know, a fake Vili of Vaton. So the biggest brands in the world rely on IP. And then also, of course, the biggest section is actually patents, which is you think about new inventions, new processes, drug discovery. These are all things that are protected by patents.

And so if you take that all together, it's a multi-trillion dollar asset class. And that's really exciting. But at the same time, what you realize about the asset class is that essentially none of us touch that. Like, it's easier for us to access debt or a treasury bill, even real estate through a reet, than IP. And so the thesis is, yeah, you have a massive asset class income.

There's a lot of different things. But it's also extremely high friction. So it's essentially as if, you know, in order to make a swap on uniswap, you had to pay $10,000 U.S. dollars. Well, at that point, no one is paying for a swap on U.S.wap. Only very sophisticated actors like Hollywood studios with lawyers can then do anything with IP. So you have a very big market, but it's very inefficient. IP objects is like a super costly transaction.

And I can give you like a very trivial example. Like I want to create a Darth Vader lunchbox. Okay. It's like the basic, like super easy. My kid wants to create a dark fader lunchbox. How do they do that? Well, I got to go hire a lawyer for them to represent them because I have no idea like how to do it. I could be getting screwed, right?

So I have no idea how to represent myself. So I need to hire a lawyer. even the cheapest ones are $10,000, like over the hours that they work, I need to then get in contact of the right person on Disney's licensing team. If they agree to talk to me, which they probably won't, then I need to meet in person and negotiate the terms of that deal. If I'm really lucky, I'll get a deal, and then at that point, Disney would need to start auditing me, making sure that my revenues are actually getting paid out to Disney, so I need to go and audit Target, because Target needs to tell me how much I'm making. And even then, that's a very oversimplified process,

but I would like in making a Darth Vader lunchbox to kind of like an atomic swap on a Dex, right? And so just to do the simplest thing with IP is prohibitively expensive. And so no one does anything with it outside of big corporation. So that's IP and that's what we're trying to solve is our thesis, or at least my vision for blockchains. Like, why do blockchains matter? They create unstoppable digital markets for new types of assets that can coordinate ownership at scale, right? And you take that problem, it obviously applies. Like bankless itself, the name, I mean, I really like it because it's like,

software can be a better intermediary than banks for many things, right? Well, what if software could be a better intermediary for creating a Darth Vader lunchbox? So what we're trying to do is not like replace IP as a concept. We're actually trying to do like the stable coin approach almost. Like take a primitive in the case stable coins is the US dollar, extend it by putting it on chain. You know, it's just like better. You don't have to use swift. You have like programmability. Same thing. Like we're taking this really antiquated pen and paper system. I agree that needs to change in the age of AI. And one of the simplest thing that we're doing is just bringing it on chain, making it program. so that now with story, you know, obviously Disney would have to consent, but if they did,

all you need to do is call an API, right, or call a smart contract. And now you have liquid rights to create a Darth Vader lunchbox and you can stream the revenues on chain for everyone to audit. So that doesn't solve every problem in IP, but it does make this massive market a little bit more efficient, which is essentially what we're trying to do. Do you have any like numbers that you could share just to help listeners get agroch the size of IP, like the TAM of IP? Yeah. So this is not my number, but the World Intellectual Property Organization. When I started looking this up on 20-23. It was 61 trillion. Now it's 70 trillion. And so, you know, how did they calculate this number? Obviously, it's not just like movies and things like this.

They also calculate the intangible assets that a lot of companies own, in particular with patents. A lot of the world's most valuable companies really rely on patents, right? So, I mean, even though, I know we had a conversation with Jack Dorsey briefly on Twitter, you know, he had this, he had this tweet over the weekend of delete all IP law, right? And it's, you know, so I think, you know, there's a lot of people who are kind of seeing that IP is fraying at the edges, which I agree with. but I don't think they may be taking the right solution. But one is, like, even Block has hundreds of patents. Jack Dorsey has 123 patents when I looked it up to his name, right?

So if you add all those up, you do amass a lot of value and that goes into the trillions. Okay, Jason, I want to parse apart just a little bit more about IP. When we compare to IP to like owning something in like TradFi, which is like owning shares of a company, owning equity on a stock market or like owning dollars in our bank account, right? we are owning to like discrete units of something. Like I've got $8,000, $1,000 in my bank account, or I own 17 Apple shares. And they are these like very objective shares of this tradable asset that everyone is like,

there's no confusion there. With IP, it's a little bit different because like the line that is drawn around like where IP begins and ends. Like what exactly is a Darth Vader lunchbox is actually like not a clear line? And where that line is drawn is really just determined on an as-needed basis by, like, lawyers in a courtroom. And so that kind of just changes the nature of the asset in question, of the IP. And fundamentally, IP as a category. So maybe you can just like, just to help, like, educate and illuminate to our listeners and me about how, again,

IP works. Maybe you could just like carry that conversation forward a little bit. How is this just like, how does this make this industry different? Yeah, absolutely. So IP does have a lot more, I would say, fuzzy edges. than Tradfi and then money in general. I will point out that even though money is more concrete than IP, there is a lot of instances in crypto itself has had to deal with this in many ways where money can kind of exist in two places at once and you need some sort of judge or dispute or arbitration system

in order to resolve it. In the classic case, it's payments. There's so much fraud in the payment system and who do you know how to trust, right? Like when you pay something to someone for an asset and then they give it to you and you say, hey, I didn't get it. Maybe, you know, maybe, you know, it's hard to determine who actually is telling the truth here. And so that is, you know, a billion dollar problem, if not a trillion dollar problem in the global payments market is, who do we trust when it comes to the fuzzy edges of payments where money's in two places at once and people are claiming two different things. So I do think these problems are tractable, right? They're not just unique to IP, and blockchain has had to solve them as well. So there are solutions. IP is even more extreme than I would say

the payments situation, because almost every interaction involves a little bit of that subjectivity, whereas only like fraudulent payments claims have that, have that property. So I think, that in that case what story does is we're building a neutral protocol right so we don't want to be the the sort of supreme court of our own protocol what we do is we allow anyone who registers IP to story to set the the terms for how their IP is defined so they can choose to upload the entire book or they can upload each chapter individually right and so they can get as granular or as as as broad as they want and they set the terms where how that atomic asset is going to be used and one thing that we do is every single asset that comes into story,

we have this thing called the story attestation service, which is why we've really wanted to build our own custom architecture. So every new asset that comes on a story, we actually check whether the asset looks like anything else that's already been on story, because in that case it could be potentially infringing or whether it looks like any common assets that we know are likely to be infringed upon.

So like a Duolipa song or Mickey Mouse, we know those things are common. And then we actually provide an on-chain attestation that says, hey, this looks very similar to some other things, and maybe you shouldn't license it, maybe you shouldn't use it. And we want to provide more clarity, more rigidity around this asset than exists before. But obviously, we're never going to be perfect. I do think this is an example where AI is actually going to do a lot of work for us. It's never going to be able to make the final

call, but it can probably filter out 99.9% of the edge cases that used to have to require manual review. And we're actually using AI in the story attestation service to kind of provide at least the first line signal so that there's a lot more clarity in the world of IP than there was before. Okay, so maybe you can just give me the story protocol, pitch? Like, how do you guys pitch yourselves? What's the grand vision? Yeah, so the grand vision is to ultimately become something like a payments network, but for intellectual property. And so the way I described it is you have Visa MasterCard. You have these massive payments network, payment networks in the Web 2. And essentially what they do is they connect

merchants with customers. And the more storefronts that are connected to Visa, the more valuable it is for any individual user Visa card to get the Visa card. So you have these really, really strong network effects where they're facilitating payments across like people who have nothing in common and merchants that have nothing in common. Same thing for story. We're essentially trying to be a decentralized IP system. And so anyone can register IP almost like supplying IP to this market. We really think about things in a marketplace kind of context. So you have a two side of marketplace creators, IP holders, they're registering IP in these atomic assets. They're saying, hey, you can license my work for five USDC and you need to share 50% of the revenues with me. These terms are

embedded on chain. So anytime you see an asset on story, or any app that use a story, you don't have to ask who made this, how much do I need to pay to use it? You can just use it with a single API call. And on the other hand, it's building an ecosystem of applications and partners through BD that are licensing IPs from Story. So they're the demand side. They want to pay to access IP. They want to avoid lawsuits. They want to avoid the negotiations I talked about with the Darth Vader lunchbox.

They just want to make a single API call and be able to license IP either to show that to their customers. Perhaps like, you know, we have some, you know, comic book apps on Story that let people use any character on story, right, whether it was registered on the comic book app or not, being able to pull assets from story. So it's essentially this two-sided marketplace that we're trying to build where people supply and demand IP and then we are the sort of payment network, so to speak, at the middle of it all. And I think this will be really important, especially in AI context, right, because these AI companies are getting sued left and right by IP holders. I think this is really bad for AI. I think it's also really bad for IP. And the current model of essentially finding the fair value of

IP by doing a bunch of retroactive lawsuits that gets settled five years later is not really good market mechanism for valuing IP, right? That's one way to do it is to say, like, let's let the courts decide the price of the IP because they're just going to, you know, think about this and come up with a legal ruling. Our hope is that, yes, we are backed by the law, but ultimately, if we can create a market where there's price discovery and it's really low cost to make these transactions, then we can make the market more efficient and hopefully allow AI companies to just build the best models and not have to worry about building up a licensing team and a BD team and a legal team, and then let IP holders have some skin in the game, right? So it's about balancing

those two things and meeting in the middle. One of my favorite older bankless podcast episodes we did with a Turun Chitra, and he just hit me up saying, like, yo, I've got this idea for an episode. And the TLDR of the net of that episode was that he was going through the history of markets, of electronic markets. Like first, the stock market was trading on ticker tape, and we were all in person, shouting out numbers. Then we, like, made things more electronic. And now we're getting to where we are today. where it's so incredibly virtual that we are trading like tokens on uniswap.

And the main punchline of that episode with Turun was every phase change in like market technology. The markets found a way to eliminate lawyers in the process. Like there was one layer of lawyers eliminated and allowed for markets to like express themselves better, more powerfully, connect more people, and just be more efficient. And the step changes in every evolution of the market

was always an elimination of a whole layer of lawyers in that process. I thought it was a really useful way of understanding how markets, market technology are developed, developing. I think what your pitch is, what the story protocol pitch is, is that despite all of the advances that we've had in markets and even with crypto, the lawyer level, the lawyer layer around intellectual property has not gotten disrupted at all whatsoever. And so story is trying to represent the lawyer level and like, you know, be the sort of

smart contracting layer for lawyers for intellectual property. How do you like that articulation? I love that. I mean, I'm going to steal that. So thank you to you and thank you to Roon. I'm going to, you know, license your IP. But no, I mean, part of this is exactly. It's like software should be a better intermediary than lawyers. And not just lawyers. You think about IP, there's agents as well. So it's not just lawyers. It's agents negotiating with lawyers negotiating with agents back and forth and back and forth. And they all want to cut. And so at the end of the day, the ultimate creator is getting very, very little of that. And it's also a very expensive process. And I think that there's like real parallels between what smart contracts do and what legal contracts do.

And that's why they're called smart contracts. You have the first, for the first time, blockchains can create commitments in software that resemble almost like a legal contract. And so what if you actually created a link or a wrapper between the legal system and the on-chain system. So what we're doing at story is not just, hey, let's build a bunch of smart contracts at funnel royalties. I think like people have done that. Like zero-I splits is great, right? There's a lot of great solutions for just funneling royalties. a big part of what we do is for every dollar we invest in the tech side, we also invest in building

out a legal framework, which we call the programmable IP license, which essentially reads, it has like a bunch of drop-down parameters, kind of like a YCC, if you kind of fill in, hey, this is how much I'm investing, this is the valuation, and then the rest of it is just, you know, it's just preset. We have a little bit more sophisticated version of that for Story where every single asset, when you're registering the terms on chain, that is actually reflected in a legal contract. And so if something goes wrong, if you're doing licensing deal on story and it goes wrong, it's not ideal that you have to go to court, but you can. And that provides a backstop. And so that's kind of why I think the stable coin analogy comes in. It's like, if you really don't want stable coins

anymore, you can take your USC and circle will give you a dollar, right? And so that's kind of the model that we wanted to build. And just like chatu B. Ting just the size of intellectual property, it gives you a very, a very big ballpark estimate, something like $300 to $500 to $500 billion of patents, 200 to 300 billion dollars of trademarks, $200 to $400 billion of copyrights. And then there's also like a billion, a billion dollars a year, excuse me, a trillion dollars a year

of licensing and royalty markets. And this is just aggregating everything together. And so the market itself is very nebulous. And so, again, it's undefined, it's loose, it's squishy. And again, just trying to interpret the mission of stories, kind of, again, doing the same thing that crypto has done

to traditional finances, make it more universal. make it more concrete, more objective, more streamlined, more automated, remove a layer of the lawyers and just make everything more efficient. And so my question to you is, why do you need a...

And it seems to be... Story is a app-specific chain. Kind of like, not unlike how Zora is meant to be for content and like file formats, tokenized file formats. It's trying to be like the culture chain. It's an app-specific chain going after a specific use case

and trying to maximize that one. And I'm seeing Story Protocol is similar where like, you know, you could be a general purpose blockchain, but you guys are just specifically gearing story to just focus on IP. Maybe you can talk about that choice of just like narrowing the having having a blockchain, but narrowing it, it's scope to just IP. Like why build a blockchain just to do this? Yeah, no, it's a really important question. And the way I phrase story is more like purpose built in the sense of there's not one single application on story. There's, you know, 10, 20 really, really active applications already. And I think the,

the thing that ties them together is kind of a broader belief in how blockchains will evolve over time, right? And this is kind of from the history of the internet, right? So we talked about the history of markets. I think over the course of the internet, you know, I was reading about the original inventors of ARPANET, which was like the first network of distributed computers. And they were sort of, you know, doomsday planning for a scenario when they would have more than 256 computers in that network? They're like, I mean, are we ever got, do we even need to create the standards for this? because will there ever be more than 256 computers?

Obviously, that's, like, ridiculous now. But I think we're in a similar place with blockchains where I think at first we thought, hey, like let's build everything on one or maybe two blockchains. And now we're getting to a point where there's many different chains. There's lots of layer twos. There's a lot of different block space providers, right? And ultimately, there will be, I think, we'll look back and we'll think, wow, we can't believe we actually thought we could fit all this on like one chain or 10 chains.

It's going to be like that 256 moment where we have an internet of blockchains. And every single block space, it could be. secured by, let's say, Ethereum or another DA layer, but essentially block space should be specialized. And so that was our thesis with story. We actually explored building on a layer too. We'd spun one up with a roll-up provider. And essentially, we ran into some issues. For example, like the story attestation service I was telling you about, we wanted to actually have validators run that compute. So we wanted to decentralize the attestation service itself so that every single IP coming on a story, it's not just like, hey, story team is now running an AI algorithm,

and now we're going to put on-chain annotations. And again, be the Supreme Court of a protocol that should be neutral. We wanted to decentralize that on the validator level. We also wanted to decentralize, or we actually, we had some issues with the sort of EVM as is. Like, I think it's a very good foundation. But when you traverse this sort of graph of, it's almost like a GitHub like graph of IP1 is like the parents of these five IPs and these five IPs now have like these their own children, when you want to flow royalties up that tree, that becomes very expensive. Right. So there was a lot of things where we're like, okay, we can make these custom tweaks or we can kind of own our fate and be customized block space that is purpose built to a very specific problem. And the thesis is

not to compete with other chains. Like, in fact, the way that we run our ecosystem, we don't give big grants. And we're very explicit about this. I don't want to compete with avalanche, or Ethereum for like apps. And in fact, we work with apps that are primarily based on the EVM or Ethereum mainnet itself. And then they're just using Story as the IP microservice, right? In the same way that I'm building like a Etsy storefront, I'm obviously using Stripe to, process my payments. I'm using AWS or Google Cloud to host my data. I'm using another service for AI inference if I need that. And I think story is just one layer, right? And so we're not trying to monopolize execution. You can build your payments on base or what have you. You can have your

whatever on ZKSync and then you can use IP story as your IP system. So that's kind of our thesis. And let's just build a blockchain that just does one thing and does it really well. And then let apps web two and Web 3, plug into this, almost like a microservice, like via an API. Okay, Jason, I think I'm getting to the end of my, like, preliminary questions trying to understand the story idea. I'm like, if it's starting to get it, feels pretty clear to me. Before we just leave that part of the conversation, I just want to, like, leave room for maybe any question that I didn't ask for any other element of story that is worth highlighting

that I haven't asked about yet. So I want you to think about that possibility, and I'll ask kind of like my last question that I know I want to ask, which is what does it actually take and look like to get IP tokenized on chain. So what does that pipeline look like of there's IP out there? It already exists. How do you convince people like what's the go-to-market, what it's BD look like to get existing IP tokenized on chain? And also how's that going? Yeah. So the product level process, and then I can talk about exactly what we're doing to get that product in the hands of users. The product level process is relatively simple. So we've actually built a first-party app called the portal where you can literally

just drag and drop IP that you have on your own device, you know, upload the file. And then you set very simple licensing terms. You can go advanced, so you can set every single one of the 15 terms by hand, or we have a bunch of license presets that you can use. You attach those licenses to your IP, and it's registered on story in the standardized global IP repository with those licenses, and the terms that you set, like let's say upfront fee is $10, right? All those terms are on chain, and then also we generate a real license for you in case anyone actually purchases those licenses, which they can do on-chain, they can mince a license token that they can actually trade, and you actually create a secondary market for rights. But if anyone creates license,

then you have a real legal contract around that agreement as well. So that's kind of the product level process. They go to market, this is something that we're still actively thinking about. But what we found to be successful is to start with bringing the best IPs on chain. Because there will be demand for those IPs if you have enough high quality. But ultimately, it is a cold start problem. Like, it's kind of like, do you start as Uber, do you start with the drivers or do you start with the writers? Like you can have 500 drivers, but no one wants to ride.

You have a big problem. For us, we're really starting with bootstrapping the supply side and just getting a lot of high quality IPs. onto story and then, you know, attracting demand that way. And then our long-term goal, right now, so, you know, in terms of progress, we've done a lot, I think, in the music world. So we have an ecosystem app called ARIA. They're an IPRWA protocol. So they're bringing on, like, Justin Bieber's peaches. Like that song is now on chain. The rights are on chain. We've done that with Sabrina Carpenter songs and BTS songs. And so essentially what we're doing is taking existing assets, moving the rights and the revenue on chain and using that to get some legitimacy

and get some interest on the demand side. We've also worked with a few Hollywood creators like David Goyer. He's the creator behind the Dark Night trilogy, and he's creating a brand new sci-fi universe on Story where each of the characters and each of the spaceships and everything, they're actually registered as like atomic assets. On Story and his community is already remixing it, right? So we have a few experiments that are like high-quality IP supply,

but I think in the long run where we want to go is that, you know, we don't want to just bring existing big IPs on chain. That's not super exciting. That's very much like a zero-to-one thing. exciting is people are creating new types of IPs that are built to be decentralized, built to be built upon. And it's almost like YouTube. When they started, like, everyone made fun of YouTubers because it didn't look like real content, right? Like you had your Niga Higa, you had your annoying orange. It looks like kind of like, you know, it's fun internet stuff. And now,

Mr. Beast is making more than almost every single Hollywood director, right? And so I kind of think of it that way on story, like, yeah, we're bootstrapping legitimacy. But in the long run, I'd hope that, you know, people that we don't know now that are doing things that look kind of ridiculous now become the Mr. Beasts of story and they actually learn how to use this infrastructure to the advantage. So that's a long-term goal. But right now we're kind of bootstrapping supply by bringing legitimate highly, you know, highly sought after IPs on chain. Right. Okay. So like step one is bring trad IP tokenizer on chain. And then that's the zero to one. And then the one to 10 is to like how like convince the world of this aha moment of

what is it like to make net new IP, have that process be easier. not how to talk to a lawyer. You can just talk to story protocol. And then there's new IP that would never have been created that is specifically being created because of what story IP is bringing to the market. Exactly, exactly. Cool.

Okay, I think I understand that generally pretty well. I think that's a pretty bullish pitch. I kind of get it. Now, I want to flip things around because I want to get a little bit antagonistic because there are things that just aren't fitting for me as, and like, the cypher punk part of me that I have. And like the primary,

the primary one is that IP is inherently a nation state legal system phenomena. And I think what excites me about crypto, what excites me about blockchains is like blockchains are these technologies that exist above the nation state. They are not beholden to the nation state. Bitcoin and the 21 million supply cap is antagonistic to the nation state, right? Like you can't change Bitcoin. Same thing with Ethereum and smart contracts. They are these like higher order.

higher dimension organizational structures that exist above the nation state. IP and Story Protocol, I'm seeing it at positioning as an extension of nation state legal systems. Kind of in the same way, like the NASDAQ was an extension of like the traditional stock market

back before we had computers. And so it's using blockchain technology to do all the things that you want to do, make trade more efficient, like make IP markets more better. But, it is not like truly crypto. It is something much more trad.

It's actually just like trad. It's extending trad capabilities without actually like, you know, having any of the cypherpunk ethos. So when I tweeted out the tweet that brought us to this episode today, it was something along the lines of like, I can't remember what it was,

but it was like discounting the value of like the concept of IP on the blockchain. And it was something that I also saw my best friend Kyle Somani tweet out where it was like IP, is useless in the age of abundance. And my interpretation of that was like, well, in the future, like, the whole point of blockchain is to like make nation states redundant and obsolete and create this like digital

universe in the cloud where the rules of smart contracts, you know, the smart contracts on Ethereum, the smart contracts of Solana supersede all everything. And so I actually find it's much more likely that in the future, people are just going to route around IP and just ignore IP law to begin with than. actually like being interested in extending nation state IP. So like that I'll pause there. That's kind of like my base positioning about this concept of tokenized IP and extending IP law using blockchain tech.

How do you react to that? Yeah. So I have a lot of reactions. I think that was very well articulated. So I have like the story product answer. And then I have like my personal answer like as, you know, an individual. And then I kind of, I think the Kausa Moni tweet is actually a good, you know, like way to rather do together.

So in terms of the story answer, I think, you know, To some degree, like I think your articulation of story is, current mission is to extend the capabilities of the existing IP system, which is, of course, rooted in traditional governments. It's true. Like, we are, this, I always compare with stable coins, right? So stable coins, you talk to Jeremy Lear at Circle, you talk to, even Brian Armstrong, to somebody be right,

building a centralized exchange. Like, I think they are fundamentally thinking about building out better solutions than exist today without like necessarily trying to create like a new political structure. Right. So stable coins, they're using the US dollar. Like, I mean, it's literally, you know, USDC, right? The country's name is in the actual token itself. That doesn't mean stable coins aren't like one of the only products in crypto that have

true product market fit. And guess what? If stable coins succeed, the ability for Ethereum, for example, to succeed and be an independent currency increases, right? So somehow like extending the sort of traditional system, but bringing it on chain, lets this libertarian dream live. In fact, it may be the only level. You have to climb this ladder.

to swallow this pill. You have to accept reality. You need the stable coin to get random people that don't care about, you know, the ideological part of crypto to use crypto. And then maybe then they'll take that ladder and they'll climb up and they'll use ETH. And maybe they don't even want to use stable coins anymore, right? But ultimately, stable coins are how we have to get there. So I think story takes that approach. So that's the idea is like you have existing copyright law. It's pretty bad. It's very inefficient. We talked about how many layers of intermediation with lawyers and agents there are. Bring it on chain. By virtue of bringing on chain, make it more efficient. And then this comes to the personal, right?

That's where it's story kind of, that's where we're focused on. And I think that's our short and medium term and probably long term. But personally, yeah, I'm very sympathetic to this. Like, the reason I got into the space is I actually studied political theory and university. Like, I'm, like, highly libertarian in many ways. I'm not like, you know, I'm kind of more like Tyler Cowan, like, state capacity libertarian. Like, I think the state does have some functions that are good. But in general, I'm very sympathetic to the idea that code should be law.

And so in the Western, like, I think in the West, like, we conceive of like sovereign powers the nation states has having like three primary functions. One is money, which crypto is already working on. The other is violence, which I don't really believe in. I think that crypto probably, I don't really know what crypto has to do with like, you know, monopoly on violence. But the third is monopoly on law, right? Setting the constitution, setting the legal system.

And I think if we really want to get to a world, like almost like a biology network state world where we can create independent money and independent law, you need to take this ladder of actually extending the existing legal system in order to get people comfortable with the idea that code can be law. right so the kind of way I picture in my head is you have like you know super boomer like existing legal system that's pen and paper you bring some of it on chain now it's kind of both at once right but eventually people start using the on chain system more than the traditional legal system it's almost like cash versus digital money right like now no one wants cash like it's just kind of like a decayed

concepts but like you want you want digital money right and soon people want digital money they'll want stable coins or and then maybe they want stable coins they want eth so you're starting to climb this ladder of like making smart contracts more of legal structure right in this middle phase. That's where stories playing. And in the long run, you can imagine like sovereign nations essentially using programmable laws, right, independent of the pen and paper system that they evolve from. It's almost like a vestigial organ, right? My hope is that we can get there. I think that's very ambitious, it's going to be harder to do that with law than with money. So that's why we're very focused on pragmatic things. But I'm very sympathetic to the idea that like code is law.

And that's one of my slogans, you know, code should be law. Right now we're turning law into code. Eventually code will become law. But that's kind of, that's kind of very utopian. I don't think we're going to get there by jump like kind of jumping over a hurdle. And then just to kind of close the loop on what Kyle was saying is like IT is a boomer concept, I think in Asia abundance, which I think is hilarious. And to some degree, I'm like very sympathetic to that idea. Like if he's talking about like pen and paper lawyers, because like I worked at deep mind, like I think AI progress is super important. And the last thing I'd want to do is let IP get in the way of progressing AI, right? But I think that people are putting like, they're looking at the existing system and they're seeing like

antagonism, which is exactly what the existing legal system. I'm trying to do. It's like you have to sue each other, otherwise you can't get price discovery. I think in a system in a world where AI's, you know, 8 billion people in their smartphone can create Hollywood level content. Let's say 8 billion people can each create thousands of videos a day. Yeah, that is the age of abundance. But when you have super abundant content, the idea of IP becomes more important, not less. Like the first order of consequence is like content becomes abundance. The second order consequence of that abundance is that original ideas that are truly novel or inspiring become more valuable. Right. So scarcity is actually the second order

implication. And, and I think IP needs to be upgraded. I think it needs to look completely different. I think traditional IP is kind of a boomer concept. But like ultimately, I think the idea of like not having any property rights for creators is is not going to end well. And if you look at like civilizational progress, you compare civilization with property rights to one without. The one with property rights is going to win every time. So I think, you know, it's finding how to make those property rights digital. How to make those property rights scale with the internet, that's super important. And yeah, maybe one day we'll get to this place where code is law. But I think stories like very pragmatic and just like focus on the short term problems that we can solve right now.

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And so now it's, now Story is like doing the, being my agent is represent being my representation, my legal representation, and it's automating the law around my IP that I created by uploading it to Story. But say I'm just like this super long-tail niche artist, and no one really knows me, and my IP is not actually that valuable. But I'm optimistic about the future growth of me as an artist, and so that's why I upload my art to Story. That's why I upload my IP to Story. And so now it's tokenized on Story. And say somebody sees my art and likes it and decides to rip me off and ignores the fact that I have uploaded my IP2 Story Protocol. And they just copy my style. They re-repurpose, reproduce exactly my style.

Just rip me off. And there's nothing story protocol can really do about that. And in order for me to claim what is mine, say the person ripped me off is also United States citizens. So we have two United States citizens. So we're inside the same legal jurisdiction. I still don't have the means to go and claim what is mine because I still have to go sue this person. And I still have to go, because they are not following the rules of story protocol, they are just ripping me off.

And so now I have to go find a lawyer to tell this person to cease and desist or to pay me my due. That's kind of how I assume this would go. Am I correct in that? Or how would you respond to that? Yeah, yeah. So, yeah, this is a good question, which is the ultimate question is like,

how do you actually make sure this happens, right? And so one caveat to make cure is like just from the front, like, we are not guaranteeing perfect enforcement of all IP. In order to do that, we'd have to build a surveillance day. Like, that would be very bad. Like, we'd have to, like, know exactly what you're doing on your computer at all times. And so perfect enforcement is not the goal. I think the way that I think about is, like, what is the current status of, like, this creator didn't use story. Like, what would their life be like, right?

And I think when you compare against the status quo versus, like, the ideal of, like, being able to enforce everything, it becomes a lot more pragmatic. And you see it's, like, you know, 10x better. And so the current version of this is like the creator doesn't do anything because they don't think about like IP and it's too complex to think about it. And so when they get ripped off, they don't have any like what are they going to claim like, oh, you know, I made this Instagram post, you know, like three years ago. Like, I mean, I could have like literally copied that Instagram post, right? Like I could have saved someone else's work posted on Instagram and said it was mine. And so that's not very good defense, right? Like so essentially if you don't think about it, you don't have any providence around whether you actually created it.

You certainly don't have any legal registration at all because like you know. never did that. And so when you make that claim, if you want to sue that person, you really don't have anything to work with, right? So that's kind of the status quo, right? So I think when you comparing with, I think when a lot of people think about story, they're like, oh, let's compare it against like a perfect situation where like you can enforce everything. Well, you know, you know, like a car is not a perfectly efficient vehicle, right? If you compare a car with like a theoretical speed of light, yeah, it's pretty shit, right? Like it's not very good. And so I think, you know, yes, the speed of light, like we're not going to enforce everything. But what we do is

there's three parts to any sort of like IP protection process. The first is you have to declare those rights. You had to like actually have provenance and attribution. And you have to say like here's how I want my IP to be used. Otherwise, you know, it could be fair use, right? So you have to declare your rights in a legal way, in a very structured way. That also tracks like you were the real creator at this time. That's step one.

Story makes that super easy. You just drag and drop you at some term. So declaration we can help with. And then and then the second thing, there's one step before enforcement. You actually need to know that someone is messing with your IP. Right. In the studio jibbli example, okay, obviously it's all over the internet. you just like go online and you know people are using it but i think that you know for most indie

creators it's not going to be like disney the ceiling their IP it's probably going to be other indie creators or smaller creators that they might not even know about right until they blow up at that point it's too late and so we actually have the story attestation service where we try to help create on chain attestation saying hey like it looks like your IP is being used by someone else you might want to check that out right and so we give people not only the ability to declare their rights but also have some visibility over when those rights may not be respected right because the unhappy path is going to happen all the time. And so those two steps we can help a lot with. You're right, the enforcement part, we can't go and we don't want to necessarily like be everyone's lawyer, right? That's

kind of what we're trying to avoid. And so that part still needs to continue. But I think that with the enforcement part, it's a lot stronger argument if you have the declaration and the infringement detection. And actually, like we're talking about the U.S. here, within U.S. copyright law, there are actually differences. If you register copyright with the copyright office and then your IP gets infringed upon, you are entitled to a lot more damages than if you do not register it and then you have it infringed upon. So the US basically says, look, if you're telling us you created this work and you want to protect it obviously because you're talking to us and you actually end up in a bad situation, you're entitled to a lot more than if you kind of, you didn't declare

anything. And then only after the fact, after a complex legal process, we're able to discover that indeed, you did create this thing. So I think that what we can help with is creating legibility and transparency and then also legibility and transparency into when that IP isn't being used properly. And you're right. We can't enforce everything perfectly. But hopefully we can make it 10x cheaper and easier to get to that point. Okay, understood. So it's really that that first step of, you know, kind of like how like legal Zoom allows accessibility to like longer tail like legal services via like a very trad internet way. But you guys are just taking that and now doing it with blockchain. So does that mean that like if I am an artist with IP and I tokenize it,

Do you call it tokenizing it? Yeah, tokenizing, on-ramping, yeah. On-ramping, yeah. I en-ramp my IP onto story. That means that is, now I get equivalent assurances that I would otherwise if I had, like, declared it with the United States. Does that count as declaring your IP with the United States?

And what are the nuances with that? Yeah, yeah. So not technically. Like right now, one of the things that we're working on actively, and we have to do this nation-by-nation, so it's a little bit unscalable, but I think it is kind of like a moat once we do it, is making the registration

process integrate with the governmental process, right? So we've launched the blockchain part of things. And, you know, the good thing about copyright is, like I said, you still do get some protection, right? And the more that you can prove in court that you've tried to declare something, like which on-chain, you know, on a legal focus blockchain definitely counts, the better your outcomes are going to be. But we want to actually formally allow people to register with the U.S. Copyright Office. And that's one of my priorities this year is we're talking to the EU, we're talking to the World of the Property Organization. The downside of doing that is you have to fill out a lot more because the U.S. copyright application is.

very, very difficult. So we're trying to make this like as easy as possible. We've focused on lowering the friction, but for users that really care, you can imagine like there's kind of like a custom, it's almost like a legal zoom at that point, right? There's a custom process. They have to spend a lot more time. They have to provide a lot more info. Right now it's kind of like an API call, so it's relatively simple. But yeah, that is a direction we want to move in. And there's like, because IP is a intersubjective concept, different nation states have different like lenses onto the existence of IP or the like what is true about IP. And so how does that make things difficult?

Because every single legal jurisdiction has its own source of truth about what IP is real and what IP is not real. So as a blockchain, as a transnational blockchain, how does that make things difficult for you guys? Yeah, it does make things difficult, especially with patents and trademarks, it's a pain in the ass. Like I think, you know, especially patents, right? Like me look at what China and the U.S. are going in an IP war right now. Like IP is king. and obviously they're trying to seal each other's IP, right? So I think ultimately with patents

is very, very difficult to enforce, but the reason why we started with copyright is because it is pretty global. So, I mean, it's been a problem that, you know, since the invention copyright has existed, so if I'm Nintendo and I made Pikachu, it's Japanese, doesn't mean that, you know, everyone in the U.S. because they're not living in Japan,

should be able to do whatever they want, Pikachu. So essentially, at a very high level, there has been very, very strong harmonization of copyright law and principles across almost every major nation. So there's, you know, historically, There's a thing in 1886 called the Burn Convention. A bunch of countries got together and said, hey, why don't we, like, try to harmonize our

IP laws because, you know, all of our companies are going to benefit from this. And so essentially with copyright, it's, you know, enforcement will always differ, right? And to our previous conversation, enforcement is kind of the mandate of the state. So we can never really, like, fully automate that. So, like, China may not enforce IP in the same way that the U.S. In fact, they don't. But the actual principles of the law are very similar. And so that's why we get a lot of benefits and we can be more truly global.

And actually in the same way that stable coins make it a lot easier to transact value across borders, that is one of the benefits that Story gives with respect to copyright. Okay, so it's like the long term vision for story, something kind of like a visa, like a settlement network of IP that's a shared standard across legal jurisdictions. Exactly. It's like IP settlement. And that's why I'm never like worried about other chains than like they, you know, they might have like TVL as their metric, right?

Okay, great. If you really want to like be the bank for the world or whatever, great, then, you know, we'll settle your IB. That's cool. So I think that for us, it's a very microservice model. And yes, exactly, like we want to be the Visa MasterCard for individual creators, even hopefully nation states. Like, hopefully the ideal is every time, you know, someone who's not on chain registers a copyright with the U.S., it also gets put on story, right? Like, it's not just story also registering with the copyright. It's also copyright registering the story. Like that's our goal is to be like a sort of middleware layer or settlement layer between all these different entities that want to exchange this asset.

Yeah. There's one nuance that I want to make up that. That's a a difference between the story story and Visa and also Swift. I want to bring Swift into this. Visa was not actually a like VC funded bootstrapped startup. It was this like conglomerate of banks that created a payments network between them. And then they spun it out to create the visa company. And same thing with Swift. Swift was this payments standard, this payments like, again, like kind of conglomerate.

I don't know if it conglomerates, not the right word, but like an association of bank. created Swift, and then Swift is now this independent entity where governance over Swift was determined by how much volume banks were putting through the Swift Protocol. And then that created the Swift entity. So neither of these things which created, which like had dominates so much of like international bank settlements, neither of them started as a VC-backed startup. And so there's a sort of conversation around credible neutrality here where like you guys are going to the government and be like, hey, governments, we are an extension of your IP contract system. And the government is like, you know, good for you, you private interest, but that's not

credibly neutral, right? And like, maybe they don't think in these terms. But there is like, like, you know, why, like, I'm sure you would love all governments to like put their IP, extend their IP law through you guys, but you are a private startup with private interests and, you know, VC backers. Do you see that like getting in your guys's way when it comes to growth and just like having this sort of like lack of credible neutrality as a part of your just like DNA. Yeah. So I think this is where like actually the Devco and the foundation can actually split in many ways, right? Because like ultimately, you know, in the beginning, they're tied very closely together. But ultimately like the technology is decentralized. And we're

running one validator, right, at the Defco. Like there's 63 other validators. And so from a technical perspective, like it's, you know, pretty decentralized already. It's obviously not at the Ethereum's level. But I think that the way I think about this is, Ultimately, the examples you pointed are very real, but I think there are also other examples that didn't involve, like, collusion within, you know, incumbents. So, for example, like the early internet protocols, yes, like DARPA funded the internet, but the, you know, HTTP or, you know, like, the domain name system, like these were pretty much, like, individual researchers coming up with these, and then they were adopted by the world's governments and by the world's private entities.

And then more recently, you can even think of, like, Android, which is, like, absolutely developed as a private company is now the biggest open source operating system. in the world. And obviously, Google has great influence over Android, but, you know, like, their biggest competitors, like, Samsung also use Android. So it's not, you know, like they have a depth grip over that. And then now with Anthropics, like model context protocol, Anthropic made the model context protocol, but now Open AI is using it, now Google is using it. And so I think we're getting to a world where, like, this protocolization is becoming more of a feature, which is great. Like, in order to get the world that I think we both want to be in, like, private entities

that are well-funded with top talent are going to produce good ideas, but those good ideas, the upside is shared, right? So I think, yes, there may be skepticism. People might see, hey, like, we have, you know, at the Defco, like venture backers and maybe that makes us bias in some ways. But ultimately, I think there are a lot of success cases of protocols that, you know, now when people talk about NCP, no one says anthropic NCP. They just say MCP. So I've always said, like, the success case for story, even though it doesn't seem like, you know, like we're still in the very early days, is like no one actually knows what we are. Like, I want to be as unsexy as the domain name system. I don't want, no one has a shirt that

says, I love the domain name system, the thing that I use every single day to access any website on Earth. Like, it just exists and no one even cares because it just works. Like, I think stories should be that boring and that universal where, yeah, like, maybe, you know, some developers know, like, if you right click on a piece of content, you can see like some on-chain metadata. But, like, it's not really something that exists as a corporate entity. It's something that exists as a backbone, right? And I think there are now standards of companies spitting out these protocols that then the world uses. Okay, so the classic story of the story of the token for a blockchain is economic

security, you use it for gas to pay for transactions, you stake it to be a validator of the network. Is there any different story with the IP token for story protocol than the traditional proof of stake blockchain system? Are there any nuances there? Yeah. So there is like the traditional, you know, we think about it as like network security, gas governance. So those, like trifect does there. But then also what I'm the most excited about is that actually, even though you can, you can use stable coins to pay for licenses, but all the revenues actually converted to. IP tokens on the back end. And that's what's actually being used to settle every single IP transaction. So we talked about like the Visa MasterCard analogy, essentially all the value, even though, you know,

people can pay in whatever currency they want. They can actually use Fiat. It gets converted into IP. So IP is a sort of bearer of that demand in those transactions. And so that's an interesting feature of the token is that ultimately we want all the world's IP transactions to use IP under the hood as a token. So that would be on top of, you know, securing the network and keeping it running. Jason, I feel very educated about what you guys are doing and over it story. Just I'll open up the floor to you if there's anything I didn't ask about or any nuance that's worth elevating or anything you want to say to the bankless nation as we wrap this thing up. I'll open the floor to you. Yeah, yeah.

I think we covered like a ton and he actually has really good questions. I've kind of like explored areas that I haven't thought about in a long time. But I will say like one of the hottest areas where IP is relevant and probably why we're having this conversation is AI. Right. And I think that AI is a huge force for good. We're AI optimists. and ultimately the way I'd like push people to think about IP is not don't think about like the pen and paper system of IP like that is certainly outdated that certainly will not carry over into the age of AI but think about like how do you actually create property rights that give people incentives to create meaningful things like ultimately IP in my opinion intellectual property rights are not about the ultimate the individual that creates them I think that that would be a damaging concept actually what the way we think about IP is what level of incentive for creation would be offered multiple such that we can create the best things that benefit all of society. And in fact, that was the,

like, that is the justification for IP philosophically for me. It's not, hey, like, if I create something, I should be able to, like, keep it from everyone else and it's mine and I can't share. It's not about the individual. It's about how do we incentivize the next Newton, the next Einstein, the next, you know, great drug discovery, the next cancer drug to the right level such that society does have enough innovation. And I think the conversations about AI are good. Like, we should accelerate AI progress. That's great. But if we throw away, all incentives to create meaningful work by going way too far on the side of just like everything is everyone's. It's not that like, you know, we kind of screw over individual creators.

It's actually we lose something ourselves, which is that we lose the incentives for the next van go, right? We lose the incentives for the next great artist, the next Disney. And that I think is a big loss, right? So I think the challenge here is to think like second order implications. The first order implication is if you steal all the IP, yeah, you can like in the short term build a better model. Like, that's absolutely true. But in the long term, it's like, well, okay, at some point, then no one's creating anything. So what's going to go into the model? Like, I mean, you're going to just create synthetic data over and over again to go into the model. Like, I think ultimately, you're going to be able, it's kind of like oil. You're going to run out. Like, if you don't incentivize

new creation. So that's kind of where story wants to play. And I think that's like a nuance I just wanted to add in because I do think like, you know, I am pretty optimistic about AI. I do think it's a national security concern. But ultimately, like, that's the first order implication. And we need to think about the second order implications of having no incentives for creativity, which I think would in the long run actually hurt AI progress itself. I am very into that articulation of IP. And I think, yeah, like the interesting thing to me, the most interesting thing to me about what you guys are building is this innovation layer for human creativity because I think that's just fundamentally good. Humans are meant to be creative. And I do really enjoy that

a nuance behind like the idea of synthetic data versus an abundance of human created content for the internet. And especially as like other conversations around like robotics and automation and intelligence explosions comes online, I think it's a noble cause to pursue venues for increased human expressivity and creativity. And if story protocol does that, I think that's very noble. Thank you. Yeah.

I think you put it really well. Jason, thanks for coming on a bankless today. I really appreciate it. Appreciate it, David. Thanks for having me. Bankless Station. You guys know the deal. Crypto is risky.

You can lose what you put in. But nonetheless, we are headed west. This is Frontier. It's not for everyone. But we are glad you are with us on the bankless journey. Thanks a lot.