Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - 'Is Tether's USDT Safe?' - Paolo Ardoino

Episode Date: April 25, 2024

Long regarded as an impending black swan, Tether has successfully weathered out the contagion and bank runs caused by Luna’s collapse in the depths of the 2022-2023 bearmarket. Since then, a large portion of Tether’s reserves has been shifted to treasury bills, which are the closest dollar proxy, positioning Tether among the top 20 holders of T-bills, worldwide. However, navigating the Tether FUD was not the first rodeo for Paolo Ardoino, as he has also previously led Bitfinex, which successfully recovered after a $72M hack, back in 2016. The worldwide adoption of USDT, especially in emerging markets and developing economies, serves as a testament to Tether’s commitment to create a product with tangible real-life applications.Topics covered in this episode:Paolo’s backgroundHow Bitfinex succeededDEX vs. CEX UXEntrepreneurship and company cultureFounding Tether and its use casesExpanding Tether’s cross-chain supportTether’s reserves and long-term visionStablecoin wars: BUSD & USDCDecentralized stablecoins and bank runsThe potential of diversifying physical backingHolepunch & Keet - the P2P renaissanceIncentivising P2P interactionsEpisode links:Paolo Ardoino on TwitterTether on TwitterBitfinex on TwitterHolepunch on TwitterKeet on TwitterSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.oneThis episode is hosted by Brian Fabian Crain & Friederike Ernst.

The hug was one of the pivotal moments of BitFinex. That was incredible. I think in seven months, I think by April 2017, all the outstanding BFX tokens were either, you know, converted, redeemed or converted in inequity. The really simple idea around Tatter was, okay, let's reuse the incredible technology that Bitcoin created called blockchain. let's just put the US dollar because it's the most used currency in the world. I always say that before 2022, we never had even a marketing team for Tether. So Tether USDT has becoming really important for hundreds of millions of people across the world, especially in emerging markets and developing countries.

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to stake up to 8,000 eth in a single transaction. You can even offer high-year staking to your own customers using their API. Your assets always remain in your custody, so you can have complete peace of mind. Startsaking today at corus.1. Welcome to App Center, the show which talks about the technology projects and people driving decentralization and the blockchain revolution. I'm Brian Crane and I'm today

here with Frederica Ernst. Today we're speaking with Paulo Ardorino who is the CEO and co-founder of Tether and CTO of BitFinex and also working on another new thing called Whole Punch which we'll talk about.

So of course some enormously influential projects in the crypto space most of this Tedders are really excited to get into this. Paul, thanks so much for coming on. It's really great to have you. Thank you for having me.

Rick, get right into it. I mean, you've been in crypto for a really long time and have worked on many different things. But how did it all start? Like, how did you become interested in crypto and what triggered your imagination? So, 2024 is my 10th year in business in crypto. You know, I discovered Bitcoin in 2013.

So I've been a developer all my life. now I'm focusing more on business and strategy, but I was born as a developer since I was eight years old, I was coding. I was living in a really small town outside of the city and didn't have many friends around, so I spent almost all of my afternoons with the computer. So fast forward went to the university in Genoa in Italy

and studied math applied to computer science. and I'm also a big sci-fi fan so my dream and my interest in technology was all about building things building technological solutions that would be resisting to apocalypse right so you know in how sci-fi there's always problems for the world

you know things getting for going for the worst you have either wars or you have aliens or you have to abandon the earth and go somewhere else and so on. So that's that thing always was sticking to my mind on how, you know, whatever we do, whatever we build should not be built for the best case scenario, but should be built for the worst case scenario. And so, you know, I started as soon as I graduated from the university, I got one of the most interesting jobs ever as a researcher at the university.

So I was building resilient telecommunication systems for distressed situations like battlefields. And, you know, that taught me how to be, you can build really resilient networks that are, you know, really critical and crucial in certain moments. Then as most of the time happens, in Italy, you don't pay, you don't get paid too much. So, you know, that's the unfortunately situation of Italy. So I decided to move to a field that I thought was more rewarding, at least in economical pay. That was finance. So I got my first job in finance, actually in Switzerland. And then I decided to move to London to open my startup to build the financial software.

So in 2012, I opened this startup. And in 2013, I was already really annoyed by the outdated technology that the financial system was relying on. If you haven't worked with banks or hedge funds and so on, you know that every time they trade, any time a trader trades for an institution for a hedge fund, at the end of the day, you have to reconcile all the positions, all the trades, all the cash balances across multiple trading venues, across multiple banks and custodians. And all that is speaking tens of different protocols, is kept together by rubber and bands,

is all really outdated. It feels like it's all still written in Kabul 40 years ago. So in 2013, I got the chance to learn about Bitcoin. And the first thing that I thought about Bitcoin was, okay, this is really cool. This is not just, I didn't get immediately, honestly, the humanitarian and social implications.

But I got the technology aspect, and I thought that Bitcoin could be the solution for the financial board in terms of having a common settlement network across all the institutions, across all the governments. The beautiful thing about Bitcoin as a blockchain is that everyone that has a synced node sees the same thing, right? So you cannot have errors in reconciliation and so on. So it's beautiful. It prevents double spending and so on.

So I was really excited about it. And then at the end of 2013, I thought, I was really deep in the rabbit hole. And so I started understanding more how Bitcoin is actually a game changer as a currency for, and its social impact could be incredible. So long story short, in 2014, I got the chance of working for Bitcoin. So BitFenex was one of the first trading platforms, was really one of probably the only in the first trading platform that at the time was offering margin trading on Bitcoin. And so the CFO, Giancarlo DeVasini of Bitfinex contacted me through a common friend, and he asked my help in making sure that Bitcoin could scale with the demand.

2014 is not 2012. Of course, we are seeing today that a huge demand of, of, of, of Bitcoin, you know, brought by by ETFs and so on. But in 2014, still, there was an increasing demand for accessing Bitcoin trading. And so most of the exchanges in 2014 were built by, amateur is not the right term. It's not about, you know, being, but we're mostly almost e-commerce is for Bitcoin rather than high-performance trading platforms. Today, we are used to have super low latency, high frequency trading and so on, but back in time was kind of different. So I brought my expertise in building the, you know, the BitFinex platform and the

setting up a team. In 2016, I became the CTO of BitFinex. And in 2017, I became the CTO of also Tether. And then from there, I started working also on the stablecoin side for Tether. More recently, I started to care more about long-term strategy, vision, and growth with all the teams and execution of the strategy for Tether. While still, I am the CEO for BitFedek, so I take care of the tech platform and all the trading tools built around BitFidex. So this is just me in 15 minutes, probably more, but... Yeah, no, no.

Thank you so much for that. I'm curious, like, going a little bit into sort of the story of BitFinex, what do you think it was that helped BitFinex succeed? And actually, there's maybe one episode that would really be curious if you go to talk about it. I think some people will still remember it, right? Because once you guys had this massive hack and then you had this very interesting way of, like, dealing with the hack that I think ended up working out really well. but I'd also love if you could sort of talk through that episode and what happened then. I think that's right. I think the hack was one of the pivotal moments of BitFinex.

Remember that the word was coming, well, the Bitcoin world was coming from a big hack that was the Montgox hack, right? So at that time when Bitcoin Finnex was hacked, it was personally a devastating, moment, also for, of course, for the company, for our customers. But look, we had two choices. Either let it go and let BitFenex potentially die, or we could roll up our sleeves and make sure that our customers would get whole, right? So at the time when Bitcoin was hacked was the 2nd of August 2016, Bitcoin was around $600. So the total loss of Bitcoin was around $72 million, around $119,000 Bitcoin. So we decided, so I remember those days really well, because after the first day or so of assessment of what happened and how it could have happened, so on, we decided

to come up with a plan to resume trading and make everyone whole. And the way that we used was actually new and I think was extremely intelligent and forward thinking. So we dollarized the $72 million and we issued the so-called BFX tokens and we distributed the BFX tokens across the product across the users. And so also we open the market for these BFX tokens. so that people could trade their IUs. The interesting thing is that these tokens had multiple functions, right? So people could take these tokens and convert them into equity

if they believed that BitFenance would be successful in Lodder. They could trade them on the market, so sell them, for example, and they could also wait for the redemption. So we committed to redeeming those tokens at one day, dollar face value with the revenues of the exchange. So as soon as the market started, so after one week, so it took one week to bring back the platform up and running. I remember that probably slept two hours in a week. I was completely destroyed after seven days, but we had to make it. We had to put everything we had to start trading again because if you wait too much,

you don't have, you know, people will just disappear, will go away and, you know, there is no chance of success anymore. So we knew that we had to restart trading within one week. So as soon as we started trading, the BFX token people started selling their BFX tokens, and the price went from one to 20 cents. You know, that they thought, well, these guys will never make it. But after the first days, we had, the first days we had a huge outflow of, of Bitcoin from the platform. You know, customers, of course, were withdrawing in panic. But after a few days, after 10 days, 15 days, we were back the first exchange by trading volume. So at the end of June, at the end of August,

we were the first, again, the biggest exchange by trading volume. And so by the end of September, we redeemed the first GIFX tokens. So people were like, holy cow, these guys are making money. they are buying back the tokens. And so the price on the secondary market for this BFX token

started to go out. And so then October came, November came, we kept making more money because also that coincided with the BORAN, the started BULRAN by the end of 2016, going to 2017, that was one of the most incredible years

for Bitcoin in the crypto ecosystem. So we were making really good profits, buying back the BFX tokens. So more and more people start to convert their BFX tokens into equity, So that's how basically we got almost 300 shareholders for iFNX. And that was incredible. I think in seven months, I think by April 2017, all the outstanding BFX tokens were either converted, redeemed or converted in inequity.

So I really like and love to think about that part of the story because I think that in these moments of weakness is how you. really assess the team and I must say that no one in our team left the company. Everyone was focused on make sure that the platform would be profitable to make everyone a ball. Yeah, to this day, it's one of the biggest comebacks in crypto history. And I also really appreciated the story of the BFX token, how kind of you use crypto economics to kind of to make it work for you guys. So yeah, tipping my head to you guys.

So you talked about kind of switching out the financial rails and kind of settling things on blockchain because it makes sense. And I conquer 100%. So kind of we have recently started building financial infrastructure that kind of crosses the chasm from blockchain to legacy finance with Nosis Pay and other such integrations. and I was absolutely flabbergasted at the stack that kind of like the financial world runs on. It's unbelievable. So you guys, in that vein, you guys started a decentralized exchange in 2017, back when these were kind of still fairly marginal. So it was Heath Venex and it later rebranded to diversify and then now Rhinofi.

How do you juggle this? So basically in terms of trustlessness and so on, obviously having a Dex is preferable to having a centralized exchange in some sense because kind of like everything is transparent, kind of the spirit is there. So how do you see the coexistence of both of these branches? So I think that the beauty of BigFenex and this group that is always, you know, there is this meme of being in for the tech, right? So then, you know, you have people with big,

gold chains and so on. But we have been always really in this field for the tech, right? We always try to push the boundaries of tech. Even when Daxis were not a thing, we thought how we could make sure that people, if people are not comfortable in leaving their tokens and their money on the exchanges, how we can make the experience, their user experience great in a sense that centralized exchanges have the advantage of being extremely fast in execution. Because think about the fact that now the average latency of an order on BitFinex is around in the internal system is around 10 microseconds, between 10 and 20 microseconds, right? So that's how you scale.

You can handle any sort of volume and so on. And you can only do that through a centralized platform. because even the fastest blockchains like Solana, they have a block time for 100 milliseconds, so that is incredibly incredibly longer. It's like an eternity compared to the latency that you have in a centralized system. But, you know, the problem there is just something in physics called the speed of light. The information goes to the speed of light, and so you cannot move information if you have multiple nodes that have to concur to the same information.

They have to agree. They have to exchange information. that speed is the speed of light. And so as fast as it can be, if you have to have two different round trips around the world because one node could be in Tokyo, one could be in Switzerland, the other one could be in the US,

then you know you get to 400, 500 milliseconds of a minimum time that is needed for a blockchain and so for a DAX to in terms of latency. Now, so the way we approach this is what are the pros and cons of a DAX? compared to a centralized exchange. And for us, the most important part was having the ability of keeping your own custody while trading. So being able to trade as fast as you can with the normal centralized user experience,

but at the same time keeping control over your own custody. I think that is the holy grail of finance, if I have to think it through. Of course, the other important part is the transparency, right? So you want to make sure that people don't front around you and so on. But I think that the transparency can be on one side, of course, on the daxies, you have transparency, but you have a normal latency. So you can also, there were also cases in which people were front run because, you know, they, you know, looking at the menpool, looking at, you know, the, you know, have even,

the validators, for example, who can front-run people because they receive transactions a little bit sooner. So there are also problems like that in DECS, right? So to me, the Holy Grail and the big advantage of a Dax is the ability of letting people control their own funds.

So that's why we started FNX in that way. As of today, I think, you know, the, there is another or there was another interesting kind of advantage of Daxis versus centralized exchanges, that is privacy or anonymity, if you will, if you will, right? So with Daxis, you usually log in with your Metamask and so, you know, or whatever other wallet you have. And then you can start trading immediately. You don't have to go through K. Y, CML and so on. But my, opinion as of today seen also Mika and the other regulations, that part, that advantage of

daxes will come to an end. I think is, you know, regulators make it, made it abundant and clear that if you trade against someone else and that someone else is a person that is sanctioned, the fact that you are using a dax is not going to save you or create a justification for you. So basically what will end up, in my opinion, from what I gather, being the only advantage of Dexis, that is still a great advantage, is the ability of keeping your own custody of the funds and not be subject to potential exchange hacks. So we'll see. The future is, we'll tell us how this thing will develop. I wanted to ask another question that sort of relates and a bit to the sort of BitFinex journey but also like more generally it's your journey like as an entrepreneur

I mean you mentioned sort of like how the team sort of made it through all of that and and like you mentioned also like how you have to focus on tech I'm curious like how do you think about you know building an organization and like company culture and like what are sort of the main learnings you've had in that regard? So far between Bitfinex and Tether, we had a really, really, really low number of defactions.

I think in, I don't know, in 10 years we could count it less than, you know, 2, 3%. People stick here. I think the reason is the culture. The culture is really about, openness, kindness. There is a first rule that I have, so myself and a couple other people in the chief positions, we do every single final interview, right?

So we still do all the final interviews, although we are growing. The number one rule is never hire, don't hire a toxic person. So you sometimes have amazing. talent, but behaviorally could be challenging for the team. Right? You don't, if you hire the wrong person, that person will affect 10 people around them. So the ability, sometimes, you know, as I said, I've been a developer. Sometimes you see developers that get all cocky because, you know, they are right and

everyone else is wrong. Or because they have, you know, the, they, they are all. the only ones that have the truth on how things should be architect. Right. And so we are really careful in hiring people that understand the value of collaboration within the teams. And that's something that so far over time allowed BitFinex to remain one of the top platforms in the crypto ecosystem while having probably one-tenth to one-fifth of the head account.

of other platforms. So that's something about, you know, creating an healthy team, healthy responsibilities and chain of responsibilities. People really committed to the success of the company. And so I think, you know, the biggest takeaway from my career is focus on the team, focus on the people, and you will have success. I really appreciate you sharing that. Let's talk about Tedder, like, how.

How did TEDx got started? Tether started in 2014 as a really simple product, a simple idea. In 2014, there were just a few exchanges, right? You could count, you know, the exchange of the cryptocurrency exchanges only on the fingers of two hands. There was BitVenex, of course, BitT stamp, Krakken, Coinbase. There was OKC coin and BTCC, not not. many others, at least not many relevant others. And so at the end of 2013 was also the first moment in history that Bitcoin broke $1,000 in price. And across multiple trading venues, right?

So you had maybe $1.2,000. At any point in time, there was a huge spread across exchanges, up to 20%. Right. So some exchanges were at 1.2K. others were at 9,950, others were at 1,000. The reason is that by then the work of the arbitrators was not possible. The arbitrators are those kind of traders that sell Bitcoin, where on the exchange where the price is higher, they send it for dollars, they take the dollars, they move the dollars on the exchange where the price is lower,

they use these dollars to buy Bitcoin, and then send the Bitcoin on the exchange where the price is higher, and so on and so forth. They do it in the loop so that the spread across these exchanges will go down and they all get aligned. In order to do this, you need to be able to move Bitcoin from one exchange to another, but also you need to be able to move dollars from one exchange to another. But moving Bitcoin takes 10 minutes, right?

the average block time, Bitcoin is 10 minutes, but moving dollars is extremely more difficult. Sometimes, you know, international wires might take one days, two days, three days, seven days, and there is the weekend. So your trading opportunity, your arbitrage of opportunity, is long gone if you wait so much. So the really simple idea around Tatter was, okay, let's reuse the incredible technology that Bitcoin created called blockchain. Let's just put the US dollar because it's the most used currency in the world. Simple as that. Back in at that time, you know, there was no it here yet. So the way to do it, the only platform that allowed that was called Omnilayer that is a color coin system that is

based on Bitcoin. So Tether was born on Omnilayer. Fast forward many years. And you know, Tether started as a simple project to allow, to make more effective. efficient crypto trading. But in 2019, 2020, with a pandemic, something changed, you know, with the economies of the world, especially in the merchant markets, developing countries, they started to have big issues. We're seeing Argentina, Turkey, Vietnam, Venezuela, so many others, you know, all these national currencies are devaluating against the dollar really, really quickly. In some cases, I think that Argentina pesos. lost 98% against the US dollar in five years, and more than 80% was lost by the Turkish

year. So all the people living in those countries where these people need a solution, needed a way out, needed a way to save their wealth, right, who is not about speculation here, is about a father of a family that works the entire year to earn, for example, Turkish lira, at the end of the year is poorer compared to the beginning of the year just because his national currency went down the bin. And so people have

a survival instinct, and so they started to look at solutions. And USDT was already the most used solution that could help them. So USDT became basically this currency that the world started to use and to build on.

In all the merchant markets, now if you go in Argentina and Buenos Aires, you find a ton of places where you can pay in USDT. Same happens in Venezuela in so many other countries. And I must say, we didn't envision that.

We didn't think about it. When we created Tatter, was really a simple idea, and so we are humbled by the success of USDT. I always say that before 2022, we never had even

a marketing team for Tether. And so, you know, people started using our product in the way they sold more feet and in the way that was more helpful to them. So that is really exciting. Can you give us an idea of how it's used today? So kind of in percentage, kind of like what percentage is kind of like what I would call normy use? So kind of like the Turkish father or the Argentinian family mother who kind of

keeps their salary and tether in order to spend it as efficiently a couple of months later? So it's really, just to say, it's really hard to pinpoint the exact figures because we are living in a decentralized world and so information is scattered. But as of today, I think that at least 50% of the tether in circulation, the USDT in circulation, institutions, insidulation, are kept as savings and not necessarily used for trading. So that is a great achievement because I think it happened in four years. In four years, people had this incredible bad situation of suffering, financial suffering. And I always say that we are kind of a weird situation at that because we see a weird situation at that

because we see that if we have more success means that the world is going towards a worse place, right? Because, you know, that's the reason for all these countries to look at the dollar is because something is not working in their own country. And the easiest way to have access to the dollar is USDT. So in one way, someone could see it, of course, it's a success for a company, but is, is sudden to see that, you know, to understand that success is also, determined by imparting competency from, you know, financial management for many countries and the inability to preserve wealth from government in these countries that led people to fly towards a more a safer currency. You've moved stack or you have kind of added stacks over the last couple of years.

So as you said, kind of you guys started out on Omni, and then you added Ethereum, and now USCT is natively issued on a number of networks. How do you determine which chains to issue natively on? So basically, if you look at payments on chain, tether on Tron is kind of where it's at the moment. So how do you kind of see these movements? How do they happen? Do you plan them?

Yeah. So we listen to communities. Every time we deploy USDT on the chain, we do an enormous amount of the dividends that goes from the security of the blockchain, so how is, you know, the technology is built, to the interest of a real community and the actual ecosystem around such blockchain. It is pointless to list to add UST to. a chain that doesn't have users or interest because then, you know, we expose ourselves to risks while not, you know, getting any benefit in terms of adoption. So the interesting,

and I get this question a lot. The interesting thing about Tron is that, you know, we launched first Ethereum. Well, first there was Tetheromni, then there was USATT was launch on Ethereum, and then was launched on Tron. People choose whatever they want, right? So people choose, the transport layer of UST they want. We, just to be clear, we are centralized stablecoins. So all our features and capabilities are shared across the different blockchains. For example, we can freeze us.

It's public, right? We can freeze wallets working with law enforcement. That is something that applies to all the different blockchains. And so people just choose the transport layer, so the blockchain for USDT, that is more fitting to them. And 99% of the people would always choose something that is faster and something that is cheaper. Let's think about what I said before. So Tether USDT has become really important for hundreds of millions of people across the world, especially in emerging markets and developing countries. You know, we don't support US customers and I don't think Europeans need stable coins either.

That is my take. So the vast majority of Tether users is all in emerging markets in developing countries. Countries, as we said, their initial currency is losing really quickly against the dollar, and where every dollar or transaction fee is extremely important. We have seen after 2018, 2017, how many times the Ethereum gas fees, they grew through, you know, from $2 to $50 to $100, right? Every time there is some excitement, the gas fees go crazy high. And so, Tron had really low cost fees for a long time, right?

Tron had this is more centralized as this system of validators, and for a long time had, you know, proof of stake compared to proof of work. Ethereum moved from proof of work to proof of stake more recently. So, you know, the throne was a simplified approach to EVM that was extremely effective because, you know, all this in think about Africa and South America and the Central America, certain countries of Asia, you know, even 50 cents of transaction fees are really high, right? So maybe they earn $50 to $200 in a month.

And if they have to spend $5 every time they send a transaction, that is not a product for them. The interesting, and sometimes, you know, the Ethereum community criticize us a little bit because, you know, the Tron is still heavily used. The reality is that Ethereum had two, for Ethereum, it took four years to come up with layer two solutions. That would bring down the fees to a variable value, right, for the vast majority of the users of blockchain. And so if you give to a competitor that would be drawn in this case for years of first mover advantage, of course it's really hard to take it back, especially when also all these layers of two solutions built on Ethereum are completely

are anyway competing with each other as well. It's like the Simpsom meme where, you know, with the Scots, where basically in the end everyone ate each other. And the reality is that we we are seeing, you know, we think that it's really important for USAT to be more diversified on different blockchains. It's important that although these blockchains will start to grow an ecosystem, will keep transaction fees low and will keep the transaction speed high in order to fulfill the interest and the need of emerging markets populations.

Tron transaction fees have moved up significantly though, right? So basically, TSC20 transfer currency is around $1.50. So it should be impacting the people that are served best by Tether. Yes, exactly. And that's why we are seeing opportunities on launching another chains. Recently, we launched on CELO. Well, two days ago, we launched on CELO that has lower transaction fees. is if we have compatible.

And we are also looking at Polygon and other layer 2s. What I'm saying is that now that hundreds, well, actually tens of thousands of integrators like merchants, payment solutions have adopted Tron, is really hard for the layer 2 solutions on Ethereum to compete. Right? They had four years of first mover advantage. So you started kind of,

focusing on this arbitrage use case and now there is, you know, kind of Tether has like branched out and there's a lot of these, you know, payments use cases or people using it as a store value. I heard in some interview you talked about Tether as a sort of over collateralized bank account. I'm curious if you think of like the long term vision for a Tether, like where do you see it going? So Tether evolved a lot. I mean, we wear the black sheep of crypto. Maybe we still are and I'm not realizing it, but we were the black sheep of crypto for a long time. I think the mistake we made is that we thought that keeping your head down and not being, you know, not entering in public disputes and not being, you know, present on Twitter and so on,

would work for us. You know, it's like, okay, if I keep my head down and do a good job, people will be okay with me, we'll be happy. And we realize that we are good people. And then, you know, that didn't work well. And, you know, we started to understand that people, needed and heavy quantities of transparency. And I think, you know, it's rightful to ask for that.

And so we changed, I think, heavily in the last years, the amount of information that we publish. The way we managed our services much more public. We came up, we were the first ones to come up with an attestation with a breakdown of the reserves showing how much we have in different things. We were subject to many critics that we took well and we applied to the company so that we could improve also our serves. I'm sure you remember the commercial paper part. Although there were a lot of nonsense like we had Evergrande and all the Chinese papers and so on, that was really stupid. But anyway, we proved that we could convert everything or almost everything in US TBLs. As of today, so the community was

asking us to do changes, and we always listen to the community. We made these changes. As of today, I think we have, well, as the 31st of December, 2003, we had 80.3 billion dollars in US treasury bills that would put us at the 20th, as the 20th country in the world, as homeowners of a US debt. And when it comes, I think, to the three months treasury bills, owners, we are the third one as in terms of holdings. So at our, at the majority of our TBLs are all short terms like within 90 days. And so now nowadays in the last attestation we published other numbers like we have, we had 5.2 billion on top of the 100% reserves that are covering all the issued USDT tokens. So means meaning that

we had, Tether is making good money, right? In a quarter, we made almost $3 billion. And we could have dividended any other company, any other normal company. Imagine a bank that would make $3 billion in profits. Oh, my God, they would distribute these profits left and right to all the shareholders up to the last cent. But no, with Tether, we decided to keep the vast majority of these profits within the company up to 5.2 billion as the last quarter.

so that Tether ended up in being 5.2 billion over collateralized. So, of course, banks are upset

because, you know, banks are lending out 90% of their portfolio and their balance sheet, and Tether instead is doing the opposite. It's actually accruing

more money and keeping it to show that you can build something that is safe. You can build a financial tool that is safe. And doesn't need to lend out people's money.

And so that's what I like about Tether, right, this ability of revolutionizing how, you know, some certain things in finance are now. So the yield on US Treasury builds has gone up enormously over the last year or so. Have you ever thought about kind of making USCT in some form, Yilkbearing and letting people who actually use it and hold it participate in that windfall? So that is a really interesting one, right? So I get this a lot as well. The reason why, there are two different reasons why we cannot do it and doesn't make sense for us to do it, is the first

one is that if you start giving out interest and sharing interest, that becomes a financial product, that then becomes a security. So that's something that is, I don't think is a good approach. So I think that many of the products that are the stable coins that are trying to do a stable coin that provides an interest are going to end up in having some issues with the US regulators and other regulators. But also, you know, I consider myself a scientific person. and when I create a product, I always think how, for whom this product is created for

and who is going to use this product. If you live in Argentina where the intra-day volatility of the Argentinian Payses is higher than 4% to 5%. Does it really matter that at the end of the year you get 4%? And on the other side, if we get that 4%, we can create a really incredible, stable product that is helping hundreds of millions of people. So that's why I think, you know, if you are in the US,

you have already the best bank in Rails. You have already the US dollar. So if you put money in a stable coin, you expect to receive an interest, right? Because that's the concept of a saving account and a checking account. On a saving account, you want to have an interest. But everywhere else outside the UN is,

For all the people outside the US, the interest is in especially the ones living in the merchant markets and developing countries that are the actual users of a stable coin. Then that 4% is not really meaningful because what they care about is to have something that protect themselves from a much worse situation. So I totally understand that reasoning. Of course, one thing that did happen like a few years ago, that's. sort of like along these lines, right, is that a lot of the usage of tether or of us DT was that people hold it on exchanges, right, the trade. And, and then I think, you know, Binance created their BUSD. And, you know, I think it was because they say like, well, all these people holding, you know, USDT there. And of course, the sort of profits of that equate, um, you're

accrued with tether. And they were like, okay, let's, if we can swap this out with our own stable coin, right? We can capture that. So I'm curious, do you think that might be a path for basically USDT would incentivize, like, some of these large platforms where massive amounts of USDT get held? Or do you see that as a sort of competitive threat? Well, I know that some of our biggest competitors are kind of doing that, right? So, you know, I know that some of our competitors are paying big institutions and exchanges to hold their stable comment. Again, to me and to many legal teams that we talk to, that ends up in, you are giving interest to someone else, hence can become or can be considered security. So the point is that

Taylor today is $102 billion in market cap maybe we'll go down maybe someone else will create a better solution but we are not look again we are keen for the tech we are keen for the innovation if we become the second biggest table coin

or third biggest table coin as long as it's safe as long as it follows our ethos that's fine we are happy with it right so we don't we don't have to be forever the first We need, what we like is to leave a sign in terms of innovation, a utility, and how with our technology, with our passion, we can change the world.

And if someone will create something better, that's fine. But I believe that creating, trying to, you know, to compete and trying to reduce the security, also in this case from the legal side, right? So if you start doing more and more things, if you keep adding flavors to the stable coin and you start doing this and that because you are scared to become the second or the third or losing market cap or losing market share, look, I mean, that's not us. Right. So we believe that the simpler it is, the safer it is.

So if you start adding all these nuances, eventually you will fall in an issue and that could endanger the stable coin. So again, Tatar has more than 300 million users across the world, and so the only thing we do care about is that is safe. Your main USD stablecoin competitors, USCC,

how do you see the differences between USCT and USCC? Well, they are focusing mostly and historically, they have been focusing a lot on the US. To me, and Europe now, to me,

is if you look at the US and if you look at Europe or Switzerland, everyone has two credit cards or debit cards in their pocket, have cash, have two bank accounts. You know, there is no need. To me, I always described like trying to sell an ice cream to an Eskimos. Right? So there is no point. When you create a product, again, you have to create it for the people that really need it.

You know, and those are the ones that don't have. have access to a bank account. There are billions of people in the world. They don't have access to a bank account. There are billions of people that are not bad people. They're really good people. They're nice people. But they are not really interesting for the banking system. Because for the banking system, if you're not profitable enough as a human being, you will not be on board. If you'll not put in all your salary and if your salary is not enough, it's not big enough to justify, you know, their outdated, you know, financial infrastructure, then they will never accept you as a customer. For all those people, there is UST. We were clear,

you know, when we saw the pandemic and all these emerging markets issues happening, we were clear. That is our crowd. That is the people we want to serve. We see our competitors always trying to play the game of Wall Street and be, want to be, you know, the stable coin of institutions. But institutions have already the best banking rails. So I think there is a big, so the biggest difference in, I think, is strategy. So we want to be the last, the stable coin, the dollar for the last mile, right? For the, for the normal people, we think that bankers have already too much. What are your thoughts on the essential? stables. So basically things like dye, rye, I mean, so basically there's different flavors,

right, like fully collateralized, collaterized with acid that may be difficult to get a price feed for under-collateralized agorismic and so on. Do you see those gaining ground in any way? Because kind of the way that centralized stable coins work is we leverage heavily the existing financial infrastructure and kind of are exposed to. to financial infrastructure risk that kind of pertains to the legacy system. How do you see that play out in the future? Let's go with a little bit of history, right? So while we think about algorithmistable coins, we think about Terra Luna.

We all know how it ended up, right? So I was quite vocal in a month before saying to many people, look, Terraluna is going to be going to blow up. And many answer me, well, you are only saying that because Terra Luna is going to eat up all Tether market share. But the interesting fact is that it's easy to create a stable coin that is, you know, one mid-billion in market cap, two billion, third billion, five billion. If you get to 10 billion or I think 17 to 18 billion was Terra Luna at the peak, the liquid it has to be there. You have to be able to pay out immediately.

You have to be able to redeem. In 2022 was April, May, when Terra Luna blew up, there was, you could see the difference between an algorithm stable coin that was made through some weird incentivization mechanisms and Tether. So Terraluna fell because they couldn't sustain have redemptions. So everything started to blow up. After Terraluna blew up, publicly a group of hedge funds started to short USDT on the secondary markets. So you could see, and recently I think DCG came out or neither were some,

some disclosures during a class action showing that also DCG shorted during those times USDT for 400 million dollars. But there are other hedge funds like Fear Tree and others. They shorted billions of dollars all together across all these groups. In few days of USDT, they kept the price of USDT below

one dollar on the secondary markets. Why they did that? Of course, they did that because they wanted to to cause a bank run. That is, what basically happened on Terra Luna. So they wanted to close a bank run where people, you know, if you keep the price of USDT below the dollar or a stable coin below the dollar, what happens is that market makers are coming in on the secondary markets and buying the stable coin for cheap, going to the stable coin insurer, i.e. in this case, tenor, redeeming for one dollar, getting the dollar, going to moving the dollar back on the exchange, buying cheap stable coin, going to the stable coin issuer, redeem it, and so on and so forth.

That is, in the banking world, the start of a bank run. So what happened with Tether in 2022 in May was that Tether was able to pay out in 48 hours, $7 billion, it was 10% of our reserves. And in 20 days, we paid around $20 to $25 billion of redemptions. So that was 25% of our market cap. So there are a few banks in the history that have been subject to a bank run. Washington Mutual, 2008, 10% redemption, they went belly up. Silicon Valley Bank, Sincher, Silver Gate, all these guys didn't survive to bankruns.

You know, we are seeing recently also another bank in these days had issues. So the difference between a stable coin that is backed by liquid and real world assets and an algorithm stable coin is enormous. I don't think an algorithm stable coin makes sense that war can grow above a certain threshold because otherwise become too risky. It becomes attackable by attackers. They tried it with us. They couldn't make it.

And they lost enormous amount of money because in the... we were backed and we were solid. They had and when they tried to attack Terraluna, they succeeded. It blew up really, really fast. So when it comes to the other times, like collateralize like dye, I think they're really interesting concepts.

The issue is how you grow the market cap with having extremely volatile assets in your portfolio. Like if you have Bitcoin and Ethereum as part of your collateral, all that becomes hard because we have seen how in the last four years, Bitcoin and Ethereum lost 80% of their value, right? So it's really, really tricky. So that pushed Dye, to my understanding,

to move towards TBLs as well. But, you know, if you start using Tbilts as part of your clutter, you are not different than Tether or the other, you know, centralized table coins. So I think in a way, Dye decided to, decided that the model of Tether was probably the right one and more scalable one in the long term. Yeah, they added USCC as collateral first.

So the TBAs, I think this is something that's kind of slowly ramping up, but for some time, 70% of die collateral was actually USC. And so it's just a proxy, right? So I think, look, the point is, and the question that people should ask, themselves is why you need a stable coin. So what you want to get from a stable coin? Because

if you want to have an asset that is resistant to the wrath of God that no one can take away from you and so on, that is Bitcoin, right? So you have already something that is digital, that is unconfiscatable, that is built to survive to, you know, all the crazy monetary policies that that word is going into. If you want a stable coin that quacks like a dollar, probably, you know, you are still bound to the Fiat word. So you need for a specific use case a dollar. So why you are forcing, why we are trying to push all these crazy mechanisms

to try to recreate a dollar and not using, you know, if you want a dollar, if you're trying to recreate the dollar, means you need a dollar for something and you need at some point to exchange that dollar for a dollar, right, for a real world dollar. So if you are in that situation, probably you just want something that is backed by a dollar or backed by

the closest proxy to a dollar that is your S-T bills. So, you know, why putting Bitcoin in Ethereum to recreate the dollar? I mean, when eventually that dollar, that you created through Bitcoin and Ethereum, you have to sell it for a dollar that is backed by the real dollars or by the US economy that would be tether.

You cannot cash out easily die. You have to sell it for USD. You cannot redeem it directly for US dollars. And so that's the point of the stable coin is to be able to have a link to the physical world or to the Fiat world. So that's my small rant around the stable coins. It's just not that we didn't think about

how we can create something matter, Well, we have some ideas that are quite interesting, but the reality is that nothing is really proven to be able to become so big as USDT and maintaining stability no matter what that without using heavy amount of physical assets. So US dollars, I mean, especially in this crowd, they are heavily criticized and kind of,

they are often made out to be something that could kind of could collapse any day now. Right? So have you thought about adding an additional product that kind of doesn't just use US dollars or treasury bills as the underlying collateral, but kind of having some sort of basket of currencies or kind of like special drawing rights? And yeah, so basically adding like the Swiss franc and the euro and the yen and so on to the mix. So this is a great question and there is a lot of them park. The thing is that, so again, if you are scared about the US dollar, the reason why you should be scared is that eventually, like in the Weimar Republic, you might be able to buy a lot of bread with $1 billion, right?

But I can tell you, and if the dollar gets to that point, the euro is long gone. And that's not about, speak about the Japanese yen. well, the Swiss frac is probably the only thing that will remain and will survive because Swiss people understand finance better than anyone else. But there is no other basket. The only thing that would make sense is gold. What about a basket of kind of like stocks and, you know, in principle, I mean, you would ask yourself, where would the value go, right?

And basically physical values would still be there. So kind of wouldn't you want like shares in? companies and actual physical goods like gold, silver. And I mean, there are representations of those on chain as well, right? Well, if the dollar goes bust, that is the entire NASDAQ and New York Stock Exchange and all the American markets are the biggest ones. So do you want ready to have some stocks in the US market? I think if we are thinking, and I like that.

this thought, right? So about, you know, what will happen if something happens to the US dollar. But that means that the entire world economy is going towards a reset. And there are only two things that will save you, Bitcoin and gold. So every human, humanity went through many resets and they will, they always were done through gold, never through fiat currency. Now we have also Bitcoin as a great alternative and gold on steroids. But here's the thing, right? So USAT has to represent a dollar. So with one USDT, you shouldn't be able to buy more than one dollar, right? So for us, the USDT is a representation of dollar that is a representation of the US economy. If again, with the dollar you can buy, if you need one billion dollars to buy a lot of bread,

you will need one billion USDT to buy a lot of bread is not our business to make the dollar prettier and more solid than the dollar itself, right? So it's just a representation of dollar. If you really want something that is better, then you might want to use Bitcoin or gold. Yeah. I mean, I think a huge part of the value of, you know, something like USDT is also, well, I mean, let's say in crypto, UST or USC is used a lot, right? Like let's say you invest in some company or do something like that. It's mostly done with stable coins. And of course, the nice thing is you will have a contract and in a contract it says, oh, $50,000, $70,000, something like that. And you can just send $70,000 USDT. And there's no complexity, there's no conversion. Accounting is simple.

So like, I think even if you created some kind of other stable coin that, you know, let's say tracked inflation and it's from a practical perspective, it will be less useful, right? Then, something that just mirrors the dollar. I couldn't agree. The point, the question that people should always ask themselves is, what I'm using this for? So, if you're using it to just to

have a dollar, then you should go for the closest thing to a dollar that you can find. And that will quack as a dollar, and also in the accounting, as you said. So, for the rest, there is plenty of other options that we created in the last many years.

Cool. Well, let's Let's maybe move on to the last topic, because, I mean, we've talked about Bitfinex. We've talked about Tether. So, I mean, you already are doing a lot. But then I think you started another thing, which is called Whole Punch, which is focused on building peer applications. Can you talk a little bit about what is Whole Punch and, you know, the kind of related things to Whole Punch and like what's the vision behind that? Sure. So with Tether, we came from.

this enormous learning curve on how the world is going bust, and it's not just us, right? So one of the main reasons of crypto is that we think, at least many of us, think that economy is, the real world economy, is going towards a direction where countries are more and more at war among themselves. The economy is getting more unpredictable, and so we created a solution to that,

that is Bitcoin or blockchain-based products and so on. But, you know, we have this concept in crypto that is called individual sovereignty, where you should be, of course, we all live in a society, but you should have financial freedom. So you want to have the right to interact with whoever you want. But the individual sovereignty that, through, financial freedom is incomplete, you need also freedom of speech to achieve that. Because if you have individual sovereignty, but you cannot say anything to anyone, because otherwise you get censored or

go in jail, that doesn't matter much, right? And vice versa, if you have freedom of speech, but then you don't have financial freedom, whatever you say can be used to seize your funds or make sure that you are not really free to use your own money. So, five, six years ago, myself and Matthias Bus, the, you know, both developers, both really enjoying the concept of peer-to-peer communications as we are enjoying the concept of Bitcoin as peer-to-peer money, we both came from a background of file sharing system like BitTorrent, you know, and all the predecessors. And we, you know, there is an interesting aspect of file sharing systems that I think is really was comparable and is comparable to blockchains and money systems.

So you might be familiar with Napster, the first file sharing system, you know, went past, closed. And all through different iterations, developers try to create different solutions to make file sharing more decentralized exactly as we tried to do with money. So different attempts, right, from you had line wire, you have Kazam, you have a donkey, you have a mule, and then finally you had BitTorrent. The difference across all these different approaches is that all the different approaches before BitTorrent, they had a centralization point. They had, you know, if you were using Kazam or Linewire, you wanted to look for a movie, you had to connect. to a centralized index or certain servers that had all the list of all the files,

so you can find download the files, right? And all these centralized servers were shut down, right? So then people jump to a next version, trying to decentralize file sharing a bit more, and so on and so forth. So there was this history of fide sharing arrived to the point where with BitTorrent, everything was really decentralized from the indexes, So the list of all the files were decentralized through a system called distributed hash table, DHD. You know, the file sharing itself, the exchange of the files was completely peer-to-peer, and so on and so forth.

Now, with Matthias myself really were fun of BigTorrent, and so we thought, what if we took the very same technology around BitTorrent, but we improve it, we make it available for not only for FyCherent but for real-time, streams. In the world, almost everything is a real-time stream. This chat on the riverside is a real-time stream, right? So we have tons of tens of streams, audio, video, when we browse of the internet, is a real-time stream. And so we thought if we can take those protocols and we can create a new set of protocols that are free, that are open source, that are private. So we took also all the learnings from blockchain to create identity, to use that encryption that we learn from blockchain

to make it more secure than Big Torrent was and it is, right? So we spend five years to recreate the basic protocol technology to create a better layer for internet. I think personally, you know, when, you know, the, I'm a technology, and I think that something that really annoys me is the fact that internet changed from the beginning, from the real purpose it was born for. When the internet was born,

was born to allow people to talk to each other and share information with each other. Every computer had an IP address and still today has an IP address so that every computer could directly interact with the others. But more and more after the year 2000, centralized system were born. So Google, of course,

then email, supercentralized, and then WhatsApp, up, Telegram, all these communication systems are incredibly centralized. They are going actually against, and all the cloud providers are incredibly centralized. Now, 70% of the entire traffic intern is provided by servers that are running on the top three cloud providers, AWS, Microsoft, Google. So is that really the future that we want? So what happens is, and now we go back to the beginning of this, this chart.

We are building internet for the best case scenario where everyone is friendly to each other. What if tomorrow, and we should learn from history, what if tomorrow Italy and France will not be friends with each other or, I don't know, Germany and Spain or I don't know, the US and another country? So what if, and we build, and, you know, the reality is that all these solutions like WhatsApp are built by a specific company, a single company, and is using data centers in specific locations, in specific geographic locations.

So you might see a future where data will be held hostage and used against other countries. If you live in Europe, you use WhatsApp, if you live in Rome, you know, use WhatsApp, every single time you send a small message will we go to Frankfurt and go back to Roe. So 90% of the people, for 90% of their time, are talking to people that are within, you know,

two kilometers from where they live. Yet, every time we chat, data travels thousands and thousands of miles just to go back, you know, to our neighbor, or to go back to be two kilometers for months. Is that intelligent? Not, of course. Imagine how much governments are spending in internet infrastructure,

just to create beefier lines, bigger internet lines, for people that are talking for most of the time with their neighbors or with their families that are living in the same area. That is really utterly stupid. Sorry to say that, but it is. And so this is done because centralized companies and big tech providers

are needed that amount of information every day to milk that information, to make money, to sustain additional growth and new data centers, is like a circle that goes around and keep growing. It's like, and it's feeding itself. Without us sharing more information, more photos daily, they will never survive.

The cost of maintaining their infrastructure will crush them. And so this long story to say that the reason why we create a whole punching kit is to showcase that this interview could have been done through Keat, completely peer to peer, without any central server. If WholePash, the company that is building Kitt would die tomorrow,

Kit will keep working. Imagine if you are in a country, right? So KIT is serverless, allows you to do chats. We created a Bitcoin chat on KIT. There are 1.5,000 people today. There is no central server. They are talking real time, they're sharing files. You can share any size of file you want

because there is no limit. It's just your bandwidth. You are interacting with each other. You don't need, if you share a file on Zoom, you are limited to 100 megabyte, because otherwise, if everyone was sharing two big files, then you would crash, you know, telegram or Zoom or whatever. Right. But in peer-to-peer, you don't have those limitations.

So what we wanted to create with Kitan Fold Punch is we wanted to prove to the world and to all the developers that you can build peer-to-peer applications with a great user experience without having to have central servers. And so Kitlau is being used by many people, have much better video quality, much better audio quality, just because if you are talking to a person living in the same area, it feels like you have that person in front of you. Because the latency is the smallest it can ever be, because the messages, the data packets will find the shortest path between you and that person. and that between, of course, the two devices. It's not magic. Internet was built in that way,

but there was never an incentive by anyone to build it, to use it in that way, because the companies that had the most money had the incentive to make it centralize. And all the rest, all the nerds, let's say, like us, they never had the money to build, you know, highly successful applications to prove that internet

can become server-free in a way, or at least most of it can become server-free. And so, long story short, Tadder found recently, as we chatted a little bit about it, with an important profitability. So since we are, as I said, we are in for the technology,

we wanted to create the freest, free as in freedom, a chat solution that is unstoppable, that is private, and doesn't need any central server. Super cool. So I get key this kind of like basically decentralized peer

or alternative to like sort of WhatsApp and Telegram. Do you see the same protocol also as a foundation for, you know, very different types of applications? Sure. On the same protocols, you can build peer-to-peer Uber. One of the scariest things is, like, imagine that, you know, this baby comes where, that you monitor your children.

You know, they are all the data passed through a central server that you don't own. How scary is that? You should be able to connect directly from your phone to your home device without crazy configuring, needing crazy configurations. All that is possible through Whole Punch. And you can build, you know, peer-to-peer mapping. You can, whatever you think is built today, you can build a whole punch.

You don't know how many, when I talk to other developers, I tell them, I showcase whole punch. I showcase how you can build, you know, interaction between two devices without any middle server, providing, you know, one device provides some services to another device, without both phones, maybe, without any central server. And even developers are mind-blown. And that tells a lot about our education.

So as developers, when we go to university, we are taught that the client server model is the only model model existing. You always need a server for many clients. That's not true. And we wanted to prove it, and we are going to do it. and we are going to invest a lot of money to make sure that education will pick up this new pattern because we want an horde of developers

to build peer-to-peer applications that decentralize applications to reduce the dominance of the military big tech companies. I hear all of that, and I'm a big fan. I will definitely check out Whole Punch. The one thing that kind of always got me about these peer-to-peer platforms like BitTorrent was that there was an incentive layer missing.

So kind of people, basically was very sensitive to kind of people who would exploit it by kind of downloading and not seeding. So in principle, kind of like on any crypto infrastructure, you can kind of build in an incentive layer set happening with hold punch as well? No, not really. I mean, Whole Punch is based protocols.

It doesn't have a token, will never have a token, because I believe that is a simple protocol that can, well, it's quite complex, but it's a protocol that can be taken by everyone and you can build whatever you want on it. Now, I agree that there were, with BitTorrent, most of the people wanted only to download, but never give up their upload bandwidth.

It's completely true. But let's think about the other side, right? If you are building like a peer-to-peer chat and you won't use a chat, your incentive is to talk to people. So there is no actual cost for you. It's not that you are running a node that allow people to run their traffic through you.

So the difference between whole punch and a blockchain is that in a blockchain you have a global share state. So if you run a node, you will see all the traffic, you will see the mempool data and so on. With the Whole Punch, you only choose to talk and to connect to the people you want to because you are creating a network with them. So WholePunch is not a huge, big network, but it's a protocol to create your own small network with only the people you want to talk to because you are interacting with them

without any central server. That's the only way to make something scalable. Blockchains are need to use a global share state because you need to make sure that no one is double spending. right but you don't need that you don't need in if you are creating a communication system you don't want to receive messages from someone from the other side of the world to route them somewhere else right so it doesn't matter you shouldn't be a server yourself there is now this other program project called noster they use you know they use relays centralized relays i always make the comparison between Nostr and Kitt, as in with Nostr, you have relays, so you need to provide

incentives to people to run a relays, otherwise nothing will work. While with Holpunch, you don't need relays, so hence you have a simpler, more simplified network, and you don't have to have incentives because the incentive of people is already talking to each other. For example, now you are in, imagine that you were in UAE, in Dubai, you cannot use telegram or WhatsApp to call your friends and family. because, you know, the telegram and WhatsApp are blocked, you can use Keat to talk to anyone and from there and to there

because that's because the beauty of Keat is because it's peer-to-peer. In order to block Kidd, you will need to block the entire internet because it's not predictable where you connect to. Super interesting. So is the underlying technologies at some sort of whisper network or how does it work? It's used the same concept of BitTorrent. in order to find each other, we use the same concept of Bitcoin called DHD,

the distributed hash table, so that the distributed hash table is in BitTorrent arrived to 10 million nodes in size at the peak. So you have all these 10 million nodes that are acting as not connection points, but our temporary databases is basically they are key value stores that are storing part of the global

index in a really resilient way. So if you shut down a part of the network, even one million nodes, the network will keep surviving and will adapt to the new set of nodes. So it's really the most sophisticated, resilient distributed database ever created, and we used it in order to allow people to find each other for Kitt. Because if we added a centralized index to Kitt, that would be centralized. The point of centralization is that you cannot just add just a little bit of centralization. Right. So either you are centralized or not. There is no there's no in between because the moment you are a bit centralized, then you are centralized. I'm curious. So one of the things, one of the projects I've been pretty deeply involved in for quite a while is a thing called

orbit, which sort of, you know, envisions basically a different architecture for like computing and an alternative to the internet where basically all of the computers work in a kind of P-to-P-P-R-A where applications run locally. Have you looked at orbit? Do you have any thoughts on the sort of trade-offs between the whole punch approach versus that?

So I really like orbit. I mean, I play with it, I think, in 2017, 2018. I don't remember when, but I think it's a really not old project in a sense of old, but it is around since a long time. And the concept is great. I think, and the way it is designs also, I really love it. I think Whole Punch is creating protocols for the real world, right?

It doesn't trying to change the world completely starting from scratch. We already have internet. We have immediate needs that are creating, a layer on top of internet that is secure, that is, that gives sovereignty to people. And we are doing the most simple way, in a most modular way, because with orbit you had, it was kind of, the way I felt it is a monolithic approach. You have to take it all and everything should run on orbit. Otherwise, it would, you know, what wouldn't work. But with whole punch is, we have more than 100 GitHub projects and libraries.

you can take bit and pieces and use it and craft it for and integrating your real application, your existing application already. So we are taking a different approach in order to change the internet, that is giving you the tools to do small steps toward decentralization rather than forcing everyone in a new, completely different ecosystem. Yeah, no, absolutely. Absolutely. I think that's a fair description in terms of the different.

Do you see Keats becoming some kind of business down the line? Or is it just a sort of public service that you guys want to develop? I think it will remain public service. I mean, the point of Keats is not making money. You know, there is this, sorry, making many references to memes. But, well, you know, the from Batman, Joker is not that he said, it's not about, um, the money is about sending a message. And for us, Kitt is that, right? So we make good money with Tether. We not that we have to make money every single time we do something. Sometimes it's important to send a message.

And there is a pun intended because Kitt sends messages. And I think this is a fantastic place to end because it is such an iconic, you know, message to go out on. I will definitely explore Kite in Whole Punch move. I think the entire interview was super fascinating,

but somehow the Whole Punch part got Mimos as kind of like a peer-to-peer and decentralization maxi. If people kind of want to learn more about Whole Punch or indeed BinFinnor X or Tether, where can they go to, where can we send them? So on X, there is until we replace X with something built on Whole Punch, so that's a disclaimer. So you could go on at Teter underscore Tio or at Beat Fenex or at All Punch underscore Tio or at Kitt underscore I.O.

Or at Paolo Ardoino. So name is your name to find all my memes and something about everything that I do. Cool. Thanks so much for coming on, Paolo. Really enjoyed the conversation. Thank you guys. It was super fun. Thank you for joining us on this week's episode.

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