Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Itamar Lesuisse: Argent – The Self-Custody Crypto Bank

Episode Date: February 18, 2020

Decentralized finance (DeFi) is continuing on its remarkable path to the broad adoption of permissionless financial services. While many people celebrated passing $1 billion locked in DeFi products at the start of February 2020, only a week later, an additional $200 million had entered the ecosystem.DeFi products thus far have proven useful to early adopters with the resilience and knowhow required to navigate the often clunky user experience of Web 3.0. Companies like Argent are building the interface and user experience essential for the masses, with a vision to bring a billion people into the future of finance.Itamar Lesuisse, Co-founder and CEO of Argent, joins us to discuss his vision of the future of DeFi, and the necessity to build products that enable intuitive, secure, and permissionless access to finance for anyone with a smartphone.Topics covered in this episode:Itamar's background and journey to cryptoCreating a Web 3.0 product for mass adoptionRestoring a wallet with Argent GuardiansThe DeFi products accessible in Argent todayAccommodating DeFi products on protocols other than EthereumBuilding a business model for wallet productsWho Argent's users are, and the DeFi products they useSolving mass adoption of crypto with a frictionless on- and off-rampItamar's vision of the future of DeFi and the role Argent will playEpisode links:ArgentEarning interest has never been easier - MediumItamar Lesuisse - TwitterArgent - TwitterArgent - MediumDownload Argent and skip the waitlistEpicenter Meetup at EthCCEpicenter 2020 Audience SurveySponsors:Pepo: Meet the people shaping the crypto movement - https://pepo.com/epicenterStatus: A multi-purpose communication tool that combines a peer-to-peer messenger, secure crypto wallet, and web3 browser - https://status.im/This episode is hosted by Sebastien Couture & Friederike Ernst. Show notes and listening options: epicenter.tv/327

This is Epicenter, Episode 327 with guest, Itamar le Suisse. Hey there, Sebastian here. You know, the podcaster listener relationship is too unbalanced. You know us a lot better than we know you, and we want to narrow that gap. So please do me a favor and answer our audience survey. It takes four minutes, and it will help us to continue producing content that informs and inspires you. You can find the survey at epicenter.orgs slash survey, and at the end, I'll tell you how you can get a free, keep-key hardware wallet, courtesy of

ShapeShift, to thank you for your time. So thanks in advance, and on with the show. Hi, welcome to Epicenter. My name is Sebastian Quidreouille. Today our guest is Itamar Luis. Itemar is the CEO of Argent. It's an Ethereum smart contract wallet, which has a number of great features, and in my opinion, it's one of the best wallets for DFI. So as a smart contract wallet has many of the features that you would expect in terms of security and wallet recovery, but also it has native support for defy savings products like compound and die savings accounts, also has borrowing through Maker and supports NFTs. I've been using Argent for about six months. The onboarding experience is absolutely terrific. If you use something like Revolut or N26,

the experience is much closer to that of a refined FinTech product than the most crypto wallets. One of the really cool things about Argent is this concept of guardians. They can be people you trust, but also devices that you own like other smartphones or hardware wallets. And they can help you in a number of ways to do things like lock your wallet if your phone has been stolen or recover your wallet on a new device. Not long ago, a friend of mine bought a new iPhone and sent me a recovery request through Argent and within 24 hours had fully recovered his wallet without any seed or backup key or anything like that. So that experience was really seamless. The other great thing about Argent is that they've implemented

transactions, which removes a lot of the barriers that people face when entering the space. So with Argent, you could download the wallet, create your account, buy Ether with your credit card, and put that Ether in compound to start gaining interest in probably less than 10 minutes. You know, compare that to the experience of first having to buy Ether in order to pay for the gas to deploy the smart contract. For most people who don't have the right technical background, I think these barriers can make it very difficult, perhaps even impossible to even enter the defy space. And so having that seamlessly integrated into the app is a great benefit. Argent is still in invite-only mode, but they were nice enough to set up a special URL for epicenter listeners that allows

you to skip the lineup. And the link for that is in the show note. Frederica and I did this interview and it was a lot of fun. Itemar was a great guest. So we talked about Argent, we talked about the vision, how the product works, but also discussed the general state of the wallet space and talked about some bigger trends in Defi. So, a bit of housekeeping. We're going to be at ECC on the week of March 2nd.

The conference is on the 3rd, 4th, and 5th, and the hackathon is happening over the weekend on the 6th, 7th, and 8th. I know the Ethereum friends, folks, really well. are working their butts off to put on the best community conference in Europe this year. The speaker list is massive. If you go to the website, ECC.io, you can check out all the speakers. And I happen to know, I don't know if I can talk about this yet, but Vitalik Bouturin and Joe Lubin have confirmed they will be speaking.

And on Wednesday the 4th, Epicenter is having a casual drinks meetup. Frederica, Sonny, and I will all be there. and it will be our absolute pleasure to hang out with you and have a couple of drinks in Paris. Before we go to the interview, I'd like to tell you about our sponsors for today's episode, starting with Pepo, where the crypto community comes together with short video updates and tokens of appreciation. And boy, the crypto community is really coming together on Pepo this week. I don't know if you've heard, but there's a little event going on right now called East Denver, and there have been tons of new people joining Pepo, posting content from the conference,

and conversations and some of the cool things that are happening at Heath Denver. And I couldn't make it, unfortunately, but I felt that I was there because I was just following all of the stuff that's happening in Heath Denver. So that's been really cool to follow and be a part of. Go to pepo.com slash epicenter to download the app. You can follow me there. I'm at Seb 2.0, and I post there almost daily. I post updates about what's going on at Epicenter.

I let people know when we have guests scheduled for the podcast so that they can ask questions and help us prepare the interview. And yeah, it's just been a great experience. I really like the community there and I hope to see you there as well. Thanks to Peppo for sponsoring Epicenter. We are also brought to you by status. And I am so happy to tell you that status is finally out of beta and available in the Apple App Store and Google Play Store. Once you've installed it, join the public channel, hashtag Epicenter. Come and say hi and we'll give you some S&T tokens so you can get started and do things like create your own E&S domain. Now that they've released a mobile app, they can get to work on building more infrastructure, developer tooling, and end-user products

that align with their mission to enable sovereignty and creating open-source software as a public good. Let me give you a couple of examples. There's Nimbus, the E2.0 client for resource-restricted devices. There's VACP-2P, the modular messaging protocol for private and secure communication that status leverages. There's Embark, which is a robust framework for creating DAP. They have keycard, a secure, contactless, open source hardware wallet API for people to be able to store their private keys securely. These are all projects that make up the robust and powerful ecosystem that is the status network. Go to status network.com to learn about everything that they're building. And of course, you can go to status.com to learn more about the status messaging app,

which you can download in the Apple App Store and Google Play Store. And with that, here's interview with Itamar Le Suisse. We're here today with Itemarleux who is the founder of Argent. Argent is a great smart contract wallet for Ethereum and has a lot of built-in defy applications, which is really nice,

but also includes some really neat and very useful social recovery features that we'll talk about in this podcast. Itamara and I met the first time, I think it was, was it a DapCon last year? And we had a panel about user experience. Am I remembering that right? That's correct. Yeah. And so, you know, one of the things that's great about Argent is that it's got a really great UX and the onboarding is really seamless

and it's a really polished application. So ETAML, thanks for joining us today. Thanks, Sebastian. Thanks, Frederica, for having me. So let's start with a bit of backgrounds. I believe this is not your first entrepreneurial endeavor. Tell us what you were doing before founding urgent. Yeah, so this is my third startup. I mean, my background, I'm an engineer. I've worked in companies as project manager. Like I worked at Amazon, worked at Visa and Payment.

I had a few startups. The last one was a very large, the largest, actually, mobile brain training application in the world. We had 60 million users, and we were running a very large subscription business for a peak. How did you move into crypto? What peaked your interest and when did all of this happen? It's a good question.

When was this? So in 2016, we sold Peak to a very large book publisher. So for the first time, I had a bit of free time and available cash. One of my employee in the team was telling me about this great, great platform that was Ethereum. And actually, that's the ether is the first crypto I bought. I knew about blockchain more as a technology. the two friends who are my co-founders here at Arjun were talking a lot about blockchain,

but I never really got what it was. When I bought my first ETH, transferred it from an exchange to my hardware wallet, that's when I really had this moment where I saw, okay, I know payment very well, I know how a visa payment works, and now suddenly I can move money in a trustless way with now a middleman.

So that really was a moment for me. But clearly something wasn't quite right because you felt the need to start Argent. So what exactly was missing? What exactly were you trying to build? So initially we were fascinated by Ethereum because it was a platform on top of which we could build software. So we saw really that as a new, you know, between you had mainframe, computer, servers, suddenly you had this new paradigm. And we also knew that we love doing.

consumer products. So two of the co-founder, Gerald and I came from the consumer world. But then, after a bit of thinking, it was clear, it was not ready for that, because we felt the core experience of interacting with Ethereum wasn't there. We think in terms of large number, we thought could a billion people write down the seed phrase on a piece of paper? It was clear the answer was no. So we thought, let's solve that. That's the biggest issue. And like I mentioned earlier, Argent has a really great onboarding experience. Where did you get sort of the inspiration for what you wanted Argent to become in terms of a user experience overall? So if you look at Argent mission is quite simple.

We want people to own control and benefit from these assets, from their assets and their identity. So we started with some very clear constraint. We wanted an experience that was super easy, that would work for a billion people. We wanted an experience that was non-custodial. So people had to own it, had to be in control. And we wanted an experience that was as safe as the safest. We wanted something where people that would replace their bank account. It had to be safe and you needed that peace of mind.

So we then started from that experience. So the onboarding of Arjun is not that difference of any work-to-app. It's not too different from joining, I don't know, WhatsApp, Telegram or the apps. We started from this constraint. We looked at all the friction points we had to eliminate. The obvious one is sit-phrase. We actually saw gas as a friction. So we looked at getting rid of that.

And then in everything we do, when you interact with a D-Fi protocol, doing a near C-20 approve is also a friction point. So all of these steps, we saw them as friction point. We built first the UX we felt we should achieve. Then we looked at what technology would allow us to achieve that. And that's how we became a smart contract wallet. That's interesting. I think we talked about this during the panel too, which was like, what comes first?

Is it the U.S. that comes first? Or is it the technology that informs the U.S. because certain things simply aren't possible yet. How do you sort of balance that? So people see sometimes UX has designed, my user interface in front of me. It's not it. We, now, the prototype we had in, I don't know,

December 2017, which had no design, which was ugly, which was, I mean, just one of my co-founder worked on it, was already had that great UX. It was already a super safe model with a great recovery, with all the abstraction you need it. So we started from that user experience. We started from, you know, we wanted a recovery for us. We do the parallel with a mental model you know, which is your bank.

You lose your wallet. You call someone that you trust and you tell them, look, I lost my wallet, freeze my card, send me a new one. So we looked at how can we reproduce that same mental model in this computer? pretty new space. And I think it can't be stressed enough. So if you're not on Argent, absolutely try it out. So the onboarding experience is super slick. It's a really polished product.

Actually using it, it's more like using a Web 2 application, like, you know, like N26 or a Revolut banking app rather than a Web 3 product. So kudos to you guys for that. It's really cool. What I wonder is, how did you decide to actually make this a mobile wallet? Was that because basically your expertise wasn't mobile or was that a conscious decision? So good question. It's interesting to revisit how things happened. I don't think we thought about it too much. I mean, first, we saw these little bespoke USB keys used to store crypto, these hardware

wallets. We thought, look, every piece of device that we own is being replaced. There's no more camera. You don't record things with a mic anymore. You use your phone. everything has been replaced with our phone and all come that now we would have some bespoke hardware that is not our phone. So there was an element of look, it makes sense, it's in my pocket, it's actually

a quite secure device compared to a laptop. The second thing is if you just look at the entire world and I think the mission of crypto, that should also be anyone with a phone in their pocket can access a global, transparent, open system. A lot of

many more billion people have a phone. then have a desktop. So the phone is the most ubiquitous platform, and smartphone amongst that is taking bigger and bigger chair. So the smartphone is the device that has that ubiquitous and global footprint and takes more and more of attention of people. That's where we spend our time. So it was just a no-brainer.

And you mentioned in 26th, Revolute, think about these platforms. They are actually mobile only for retail users. Well, mobile first at least. So they all have like a website that you can interact with. But yeah, they're very much mobile fast. I think Revolut doesn't actually for retail users. We have one for the business. But it's really as extreme that some do not have.

Monzo in the UK doesn't. It's so I don't know about N26. It just shut down from the UK. So I couldn't test. Oh, yeah, yeah. So I'm an N26 user and I can assure you. So they have a website version. It doesn't have all the features of the app, but they do have that.

Okay. Nice. So let's talk about the social recovery feature, which is I think one of the really unique things about Argent. So with social recovery, essentially, the idea is that you as a user can rely on your sort of network of people around you, your close friends and surroundings, to recover your wallet and do other things like lock your wallet if you lost your phone or surpass, say, spending limits or things like this. This is a pretty unique concept, you know, that even we don't see this in sort of banking apps or anything like that because there's always a third party. Do you think that this is something that people generally feel comfortable with? What has been the reception to this idea of social recovery in your experience? So first, you'll notice that Arjan never talks about this as social recovery.

but I think the term sticks more than delegated recovery or guardians. We never saw it as it's all about my friends securing my wallet. What we built was a framework that allowed a mental model similar to your bank, as I said. It's really, we looked, what do I do when I lose my wallet in real life? I call some kind of entity that I trust that entity. I trust that entity and that entity knows me. They can recognize me. I asked them to freeze my card and send me a new one, and it's quite smooth.

That's really what we have created with delegated recovery. At the end, a guardian in Arjan can be any Ethereum address. It can be an EOA, so a wallet, it can be a smart contract, it can be a multi-sick, can be really anything. And then in the app, we picked some use case. Anyone could build a new Guardian service. So you have users that use Arjun Guard, which is really a custodian service that would hold keys. These keys do not have your funds. These keys do not have access to your money to your assets. It's a service you trust to trigger recovery. Some other will use friends, families or other human

beings that have the Arjan app, but you can also be your own guardian, which actually quite popular use case. Many people will just use another device. It can be another phone. It can be a hardware wallet, can be metamask, can be anything that has an Ethereum address. That's really how we saw it from start. So friends, family, we see, you know, it is a use case, but I think you will see that a lot of people wouldn't trust their partner or their friends for that. I think it's also related to technical literacy. So if you have very technical friends or partner, you might trust them. So we love the model. I use human beings as guardians. But in some other use case, you will, depending on everyone's context, they might prefer to be their own guardians.

or to actually trust a third party. It's a quite common use case, too, because this third party, whether it's Argent and others, cannot access your funds. So you do have that peace of mind. So walk me through the process. Say, I lose my phone and I had set up three guardians. So Argent Guardian service, my ledger and my friend.

So now I lose my phone. What do I have to do to recover my account? So you get a new phone. You reinstalled the app. You put your username, and then you will need, you mentioned a use case with three guardians. You will need a majority, so you will need two guardians to approve the recovery. So out of the three, so if it's Argent Guard, you will interact with us with two-factor authentication,

and then the transaction will be fired. With your hardware wallet, you will do it yourself. So you will go on your website, you will plug your hardware wallet, and you will sign this approval. And if it's your friend, you will literally talk to them, call them, whatever channel you want. And you will tell them, can you go in the Arjan app and approve my recovery? Cool. And in the meantime, I have lost my phone. Can I also lock the account?

Yes. So if you believe someone could have access to it, the reality is that it's extremely hard. I won't say impossible, but to, you know, if you had biometric encryption, a pin, it's very unlikely someone will be able not only to unlock your phone then to unlock Arjun. But if you wanted, indeed, you could go to a Guardian. you don't need a majority. You can go to a guardian, ask them to put a freeze on your account.

So if you have your hardware wallet, you would do it yourself, and it puts a five days freeze to your account, exactly like you would on Revoluta and 26, top freeze and it would freeze a card for a time period. So this is an interesting scenario because I think there are many circumstances around which one could lose a device

and perhaps even lose many devices, right? So let's just take the example of, like, traveling and you get your bag stolen and your bag has your laptop and your phone in it. I mean, personally, if that were to happen to me, I think I'd maybe know two people that I actually know their phone numbers off the top of my head. And those are not my guardians on Argent. I mean, of course, that's a really extreme situation. And I think most people that find themselves would find themselves in that situation would be pretty handicapped in their ability to communicate. But are there any scenarios that you've seen users actually going through the recovery process

where they found themselves in very extreme situations and where they were able to leverage the guardian feature to either freeze their accounts or recover their accounts in this sort of time of an emergency? Yeah, I mean, that happens more than you would think. At start, the main use case, and of course we don't see all of them. So it's the people who contact us or sometimes tweet about it. It is really people getting the device destroyed. So we saw a lot of that.

They would trigger a recovery. 36 hours later, they would have access to their wallet. This morning, we had actually someone I knew was, he's traveling the world, got his phone stolen, but it was quite a bit of crypto, and it was really seamless for him to get back access. I think it happens more often than we want. It's really about peace of mind.

I hope you will never have to use your guardians, but it's always good to, you know, the day it happens, I think it's important to create that very frictionless experience, but it's really about the stress level. If we can maintain that if you have that peace of mind, you know you will get back access to your money and some people contact support, especially at the early days. We were, you know, we didn't have like perfect flow everywhere and we would tell people, look, we can see at smart contract level, you have guardians, everything will be fine, your phone is destroyed so no one has access to it. let's go through it together.

And so we had to improve this experience, really, to create that peace of mind and people know they would have access back to their funds. The social recovery is one of the features that is enabled by using a smart contract as a wallet, but there are others, right? So there's things like batching transactions, using meta-transactions, and doing other, you know, more complex debt interactions with it. Can you tell us a bit about that? Yeah, so very early on, when we started working, we didn't know it would be called Metatransaction,

but I think several teams in parallel were working on this idea. And suddenly, very early on, we worked on it. For us, the main reason to work on it was really the gas abstraction. So we had an issue with the idea that you would have to top up some little gas station within your phone so that you can submit transactions. And that's really why we started to work with Metatransaction, then realize, look, let's just get rid of the notion of gas in the app and we'll pay for it. We realize it's small enough and people shouldn't have to worry about these little fees.

In Web 2, we abstract the cost of our EWS servers or whatever other products we use. We thought, let's do the same. It started that way and then, you know, bit by bit, you just get excited by everything you can do. So you mentioned batch transaction. We were not using much of it until, well, we were using it internally. So in a bit different way, it's more we were orchestrating actions within the wallet. So the fun use case were someone closing a CDP on Argen, we would automatically like exchange eth into dye and MKR through Uniswap to pay for their CDP fees,

and then we would close the CDPs, and all that would happen within one atomic transaction. So that was really, really fun. But what you can do also with that is, for example, get read of the RC20 approved. So we now have that starting to implement this, where you do one action with origin, like buy a pull-together ticket, put money in compound, and the two actions which are the ERC20 approve and the actual transaction or opening of that account

will happen within the same atomic transaction. And that really, for us, that's a breakthrough in terms of user experience because you can abstract so many steps. Yeah, I totally agree. And basically, if you go to the wallet, that you can actually use defyre products natively out of the wallet and have it done in one click. So can you talk about the kind of things you can actually do out of the Argent wallet?

So within the Argen wallet today, the first few daps we got excited about and integrated was first of you see an exchange. So we thought we should have a decentralized exchange within Argen. At that time, really, we felt Khybered a lot of it was before all these decks existed, but Kiber, very early on and a very interesting model, because it was so simple for users. With that swap experience, we didn't want like an order book within Argen.

So we integrated Kiber, and again, it's exactly the same than exchanging currency in Revolute. You type an amount, you push a button, don't. That was the first integration we did. Then came things like compound. We got very excited, again, because the offering was so simple. You put $100 in something and you will get interest back. I can explain that to anyone. So we thought, okay, we can integrate compound in a way that is so seamless.

It will take five seconds to join. It will be as easy to easier than opening, way easier than opening a savings account in the current financial world. So compound is integrated natively the DSR. So similar offering a savings account through the maker DSR. We also added in the past the ability to open CDP. So what will migrate now to a new model, which is a maker vault, which is a more advanced use case. But we were just super excited because we could orchestrate and simplify like seven transactions into one.

We thought we'd just have to do it because it's really cool. There's so many other DAPs that you could integrate into Argent. I'm sure that you're already planning to integrate new ones, versions that come. But how do you decide which DAPs to integrate within Argent? Are there any evaluation criteria there for making those decisions? Yeah, so we've been debating, discussing that for a long, long, long time. There is, on one end, we want to simplify things for users to create very simple options, but we also realize this Defi world is so new.

I mean, it's amazing that we just passed the $1 billion bar in Defi, but it's so new. No one knows what will happen next week, next month, next year. So the current direction is to be more open, to have much more defined protocols, and to really have as much transparency as possible, making it clear that this is the protocol you interact with, that there are risks, and do not take too much of a hands-on approach there in saying, okay, you are not allowed to be in.

At the end, it's your wallet, it's your identity, you should be able to interact with any protocol. Of course, we might not prioritize something where we have a feeling that it's a bit dodgy. And that's very hard. What is that feeling? It can be related to who is behind the project. Was there an audit behind, etc? It might just be that we put a big red flag on these projects.

With this vision of being more open, that's also why we have implemented Wallet Connect. Yes, we can improve experience by making things native into the app. But in any case, through Wallet Connect, our adoption. like that, you will be able to interact in the future with any doubt. It's really up to you. And then it wouldn't necessarily be seen as an endorsement, as I would take the stance it currently is if it's integrated into an Argent wallet. I don't think all users actually have the crypto expertise to say, this is a good protocol. And on this one, I'm not so sure about the smart contract security. Do you see any legal problems coming up with integrating,

access to other debts natively into your browser or into your wallet? Is that something that you guys think about? So we think about that and that's why we so far we decide not to make an endorsement of this project. In the sense, we could easily say, look, let's have only the DSR natively. Let's just call it the Argent savings account. Let's not, let's abstract all these things or make it automatic for your, your funds to go there. we say, look, for the short to mid-term, it's still a world where relatively, I would say,

crypto-curious users. We still, let's go step by step. And so let's not endorse. Let's make it very clear that you're interacting with something that is not urgent, that is the third party, and partly because we wouldn't want to have, you know, this legal responsibility there.

So legally, we are taking the right step. Our worry is more vis-à-vis our users. You know, if you interact with a protocol and something goes very wrong, they will contact us. We seem to be one of the few companies with the customer support, which sadly it's me, but we just hired someone, so it's going better. My life is improving now.

But, you know, we have one word, the other, a responsibility vis-à-vis our users, so we will keep an eye on that and making sure we warn users if we feel something is a very advanced feature that they might not want to use. Even things like CDP, you know, maker team is fantastic, but it's a complex product.

People have to realize, people, we live in that bubble and we think everyone understand everything. You have to realize that many users entering this space here, for example, about amazing interest rate on die, so they buy ease, they lock it in a CDP so that they can have dye, and then they put that in compound.

And then they realize, wait, but I'm paying interest on the CDP, but then I get interest in compound. What's the point? So we have to explain them. No, you have to trade. You need to die. You shouldn't open a CDP.

And it's not straightforward at all. So really being very transparent and explaining things as clearly as possible is definitely within our responsibility. The fact that you're using Ethereum smart contracts is interesting because it allows you to leverage the social recovery aspect and also integrate lots of defaults.

apps on Ethereum. But the defy space is growing and it's quite likely that in the future, defy will also include apps on Cosmos and on Pocodot and other blockchains. And, you know, of course, there's the big guy in the room, which is Bitcoin. What's your approach here? How do you, how do you see Arjun evolving in the future in this context? And do you think that at some point you'll need to consider options to add, uh, other networks to Argent. So philosophically, we think users in the future will not care and will not know which blockchain they are interacting with.

So for us, this should all be abstracted. We are very bullish on Ethereum. That's where we see a ton of developer activity. And this developer ecosystem is what brings this richness and all these new protocols. If there were some super valuable DFI product only available on a lot, the blockchain, then we would definitely consider it. We have ideas, we have planned, we have solutions for all these things. I think what we are probably a bit less excited is just listing all the blockchain

one by one just to have their core token as speculative assets. It won't last forever that you can have 100 assets or 1,000 assets that might all increase 10fold in value. Bitcoin is, of course, a bit different. I mean, it might not forever do this, but it might still be a very interesting store of value. And especially what I'm more excited is maybe having Bitcoin play a role within DFI on Ethereum. So I think there there is something quite interesting. We follow very closely, for example, TBTC, where that is launching very soon.

And I think we'll see some interesting stuff around that. But how did you deal with the technical limitations, for instance, of being able to implement social recovery of a Bitcoin wallet on an Ethereum smart contract wallet. How would you deal with that? So we wouldn't implement probably one-on-one the exact same experience, but there are definitely things you can do. Our vision is around using Ethereum

as the main operating system of your wallet. Where we are very interested is could we use the Ethereum identity as a way to recover than your Bitcoin wallet at a later stage? I would say I'm still more excited about TBD which first is very easy for us, but also because that would allow Bitcoin to play a role within the Defi ecosystem.

And I would like to see that project grow, and that's where I want to see things going. Cool, super interesting. So let's switch gears a little bit. We've talked about other things that you're currently offering and are planning to offer. Let's talk about your business model. So you're VC funded currently,

and you're paying for a lot of the expenses of your users. So you pay for the deployment of the wallet, for converting tokens, registering an E&S address and so on. So how do you envisage making money in the long run? Good question. I think first people need to realize that, I mean, first, we need a business model. We need to make money at some point. But it's not because of us subsidizing gas.

I mean, subsidizing gas is cheaper than the cost that revolutioned. And Monzo probably have around many other elements that are in the current financial system. which is so clunky, so bloated, that you have all these additional costs. So this is not the main issue. It's still way more expensive to buy laptops for our team than to pay for gas. There's a lot more coming into origin. And so we have a lot of ideas. We will not implement monetization this year.

We think there's so much more growth to come into this space that we should first focus on that and removing all that friction. So there's much more Dify protocol that would come, potentially all of them will come within Argen. And we think there are some straightforward ways that we could monetize in the future. One inspiration we can take from products you mentioned in 26th Revolut is the idea of maybe have a premium subscription.

So you could imagine premium features or above a certain volume. Pro users would pay a small subscription every month to get access to extra stuff. The key for us in business model is to be super transparent. It's not go back into the issues of Web 2, If there is a business model, it should be transparent to the user, is what you are paying for, and you are paying for value.

But I think also Defy, beyond that, we could imagine creating new Defy products, new Defy protocols on top of others, and there is potentially a lot of a potential for making money. We are looking at things like insurance also. You could imagine new financial products builds on top of the existing building blocks. As long as you can add value to users,

I believe there is a business model to be, to be built. I'm totally with you on that. But you currently have a wait list with around 1,500 people who are waiting on getting Argent wallet. So if it's not the cost of providing the service to them, why aren't you letting them have one? So is there another reason for kind of keeping people on the waitlist? So I think today is a very valid question. At the very early days, Arjan was not what it was today. It was not as Polish. It was still clunky. We did a lot of. of work on infrastructure, to manage big fluctuation in gas price, making sure every transaction goes through whatever happens to the network.

No, we are getting actually very close to being able to remove it, but there are still some fundamental changes. So right now, if we just remove the wait list right now, you would have to wait for a transaction to be mined in order to access the wallet because it's a smart contract. So we are finalizing our testing on Create 2, So that as a user, you download the app 10 seconds later and the wallet you can send funds, it's done to make it really seamless. So there's no more big technical hurdle.

We are finalizing that. So we are very, very close to removing the wait list, yes. So I want to talk about the general state of the wallet space a little bit. And more broadly, the state of sort of crypto apps in the mobile app ecosystem, there seems to be some kind of attention between the need and the desire for people to have an open ecosystem. And on the other hand, the app stores, and specifically I think the Apple App Store, which is a closed ecosystem with very tight restrictions on what kind of apps can make it into the app store. What's your position on that? And do you think that in the future apps like Argent should be open sourcing the code, their sort of application

code in addition to the smart contractor that's already open sourced? And how would one protect so their core business in that if that were the case? I think there are several points here. It's running software on a closed platform. First, you can open transparency, as you say, by open

sourcing, but you are still running on a closed platform and then also the impact of having that world garden on us and what type of feature we can launch. Let's talk first maybe about the open sourcing. It's been something we've been thinking about. We open source part of our work, so we have open source

Of course, the smart contract from day one, that was a no-brainer. Some areas of our apps, we have open-source, but some libraries that we think other team could benefit from. But indeed, the entire app was not open-source. The issue is indeed on iOS, that even if we were to open-source, you couldn't guarantee that's what's running on your phone. Once it goes through the App Store, you have no idea if you are downloading the same thing. On Android, it's easier.

You could download an APK directly. So it's a different situation. Our view from day one was that you shouldn't trust the client, you shouldn't trust our backend. If the smart contract are open source, tested, audited, etc., if there's full transparency on the smart contract, you are secure. Because anything that happens on the client actually would be reflected. So even if some dodgy client would send your funds to another address, with any other wallet, you might see on the screen an address, but in fact the funds go to another address. The urgent model is built so that even if that were to happen, your funds are protected because your daily limit that is visible at smart contract level with a white list at smart contract level

would kick in and protect your phone. So of course we have internal process to ensure strong security, but in fact the smart contract is there as a last barrier. And so we felt we are quite actually different. We're actually much more open, transparent than hardware wallet. You have no way to check what's in your hardware wallet. You have no idea. So on one end, people talk about this wall garden, but the wall garden that are hardware wallet, because you can't really, it's security by affiscation.

It's very hard to pick into your hardware wallet and see what you have. Actually, it's much more opaque than what a smart contract wallet would be. So this ensures security transparency. I think in terms then of what can we do in the app store, their limitation, we know the stories of, I think it's con base that mentioned they might have to remove their. That browser, I think we knew what. we were getting in. We've worked with Apple for now seven years, I believe. There are rules, and you need unfortunately to play by these rules. I think there is hope for the crypto ecosystem. It's the first time, I think it started last year that Apple had crypto rules. So, you know,

maybe not yet the best, but at least there are crypto rules. They have acknowledged that crypto exists and it's there to stay. So I think things will improve and will be able to get more flexibility, but of course, buying game assets using ETH is probably not something you will see next year, because in a purchase is the business of the app store and virtual goods have to be paid through in a purchase. I see some trends where it seems like Apple is going into the direction of allowing more crypto apps in the app store, like for instance, PEPO or a sponsor who's recently launched and uses a cryptocurrency as payment. Of course, there's no DAP browser there. And what you can do with the cryptocurrency and the app is actually quite limited.

But then we're seeing apps like, you know, Metamask and, like, status is delayed. And it seems like there's some blockage there to get the app pushed into the app store. I hope that things will go in the way that they did sort of in 2014. I think it was when at some point Apple decided, hey, we're like, we're going to let people have Bitcoin wallets in here because there's no threat to our business model. But, you know, if Defi gets big enough that, you know, people using these apps are, There's a blanking on the English word here, but Monca Gagne, maybe you can help me. Because of opportunity costs. Right. If there's an opportunity cost that they're losing out on, then maybe that would be a little bit harder to get these apps to start getting through.

I want to also get your thoughts on other wallets that have sort of similar recovery schemes to that of Arjun, specifically like threshold signature based wallets. Do you see these as a strict alternative to smart contract wallets? Are they strictly on different, planets or are there opportunities for these two technologies to augment each other in a way? Yeah, so I think they sit at a different layer. So we looked at a treasured signature. There was a lot of interesting work done in the past two years. This is the recovery of the key while the wallet, think about the smart contract wallet almost has some kind of bank account. I don't like the world, but a non-custodial bank account and it gives you all these features, this ability to block transfer, to have daily limit, to abstract gas, etc., etc.

So as a role in that layer, it plays really a role on the pure recovery of your key or of your account. When we looked at that, we had a wish list of what it had to achieve and we were just not happy with it were missing some elements. It was non-custodial, but it's not censorship resistance. So for us, that's not really non-custodial. For us, non-custodial means I cannot access your funds, but I cannot prevent you from accessing your funds. And most of the model around Treasual Signature would allow the providers to prevent you from accessing the fund. We were just not comfortable. We felt let's start with the smart contract wallet. We can always decide to add a treasual signature on top of that, maybe for recovery keys, but still not being able to prevent

you from accessing your funds, which is why we launch the Argent emergency kit. If Argent disappeared, our backend disappears, we can't really transaction. you can use your phone almost like a hardware wallet. You sign the transaction and then you use Metamask or MataWallet My Crypto to send the transaction. That was really, really important for us, which is why it was part of our decision to go in that direction. Can you talk about that emergency? I wasn't very... I wasn't aware of that. One worry of early users, which is really fair, was if Argent disappear, our infrastructure, we relay transaction.

You sign them with your phone and our backend take that signature and sends it through the blockchain. and that's how we pay for gas. That's what a meta-transaction is. I don't think the worry was urgent disappearing. We are well-funded. We will be there for many, many years. But it's more, you know, a government comes and free our servers or something like that.

Then you cannot make a transfer. So early days, the answer to that was a bit conkey. Yes, if you have a hardware wallet or Metamask as a guardian, you can start a recovery by interacting with a smart contract. So philosophically and technically, the model was not custodial, but this is really clunky. I mean, interacting with a smart contract, I wouldn't know today in five minutes how to do it. I would need some help, some good documentation. It would take some time. So what we did is the emergency kit. It's live on

iOS and soon on Android. You open the app. You leave your, you say, I want to send all my funds to that address. And instead of tapping the button send, you leave your button push for 10 seconds. And suddenly you will have a window with a signed transaction. You copy, paste that. You put it in any other wallet in the data field and you suddenly are triggering, you are relaying your own transaction. A bit like you would do with the other wallet, you sign with the other wallet, but you send it with your laptop. You could do the same.

And for us, that was, again, to that same philosophy of being fully non-custodial and also putting us ourselves in a situation where we cannot harm you. And that's the same with your question on the closed ecosystem of Apple, because the smart contract are public, everything on chain, we cannot harm you. And again, here, even if someone forces us to arm you to say, no, you cannot let that person access their funds, we wouldn't be able to do it. That's actually super neat. I had no idea that existed. So it's like having like an inbuilt parity signer, but basically all the derivation parts and so are clear.

So I think that's a super cool thing to have. Let me move on a bit to the defy space. Do you do analytics on your users? Do you know what they do within your wallet? and has this changed over the course of the last year or so? Because I mean, so many things have changed in Defi, right? So our main analytic is actually on-chain activity. That's actually the most exciting.

And often we learn more on our wallet sometimes from tweets from other people. Like recently, there have been some tweets on wallet activation. But we also have anonymous activity on, you know, are people stuck in our onboarding, or are people tapping compound and all that? But things like, are there actually putting money in Dying compound or in DSR? All of that is actually on-chain activity. So it's just so transparent that it's a track.

And if Anderson, while your question was therefore, is Defi a big part of the activity? Oh, no, basically, has it changed a lot? Because basically, the defy space is so quick changing, right? I don't think we are illustrative enough of the market because what happened to us is we had a wallet where you could only, I mean, like any wallet that we saw as useless, you could only store, send and receive. You couldn't do anything with our jet. So obviously, people would put some ease in there

and that's it because people don't choose yet crypto for payment. The minute we launched compound, everything changed. Everyone would, I mean, we would have that same flow. People would put $1, put it in compound, remove it, put it out of compound, out of the wallet. They would test the full flow. Oh, it worked, it was easy, now I can put real money. and then you have people putting hundreds of dollars, thousand, hundred thousand of dollars.

So it was really suddenly it became that mix of a, this shift between, is it called a hot wallet? Is it like my wallet for $50 or my ledger for $100K, I think got blurred and people would suddenly put large amount of money, very large amount of money, because it was so simple to have it in compound and earn interest. And at the same time, it's in your pocket at any time you can, you have that peace of mind. You know the money is there. What kind of bigger trends are you seeing in Defi and are you seeing your users? Are you seeing the reflection of those trends in the way people are using the app? Now, there are many more protocols and we see more people getting very curious about this new.

I think it's still an experimentation phase. Once we launch all these other protocols within our gen, it will be quite interesting to see how user behave. Right now it's very limited and savings is really the main use case. in terms of trends, lending was a big trend. And now you have more and more lending protocols. I think it's there to stay. I think the whole area of Synthetics, I was listening actually to your interview of the Synthetics team,

which was very interesting. I think it's again, it's an experiment, and I think it would be very interesting to see how our users in our gen that are maybe, you know, we have a bigger mix of less advanced user, people are just a bit curious, will be interesting to see how they face with maybe more complex products. I'm a big fan of simple products. I mean, that's what the power of token said, for example, again,

is that anyone can understand. It's like buying some kind of index or robot trader. So for me, any products that can really appeal to a wider part of the population, I find it quite interesting, but the savings account is probably the easiest to sell. I think this is one of the things we had talked about during our panel was at the time. And I still do kind of, I was arguing that there aren't very many non-crypto users in the crypto space. It's mostly people who are like either building on the technology or working on the technology. And so it's this kind of like this bubble.

What's your user base like? I suppose it's mostly crypto people. But are you seeing non-crypto people just utilizing the app in order to benefit from these great interest rates that they can gain from by leveraging crypto and defy? No, I think people have for a long time say usability of crypto or scalability of crypto is not good enough. That's why there's no mass adoption. I think the hard truth is that that's not the reason.

I mean, my mom can use Argent. It's not more complex than N26. I should say my dad. I think my mom is even more technical. But my parents can use it, but they have no reason to use it. They have no reason to use it. So savings interest rate are interesting, but I think the on-ramp is still too clunky, not just in terms of user experience, but fees.

When you put money from your bank account 226 or when you put money to Robin Hood, you are not suddenly losing 2-3% in fees. Moving money should be free. So I think until and if you make the mass, my on-ramp to die, my off-ramp to die, then your interest rate starts to be much, much less interesting. The mass don't add up. That's probably the last bit that we need to solve. We need a frictionless unramp to stable coin that is free to users.

It cannot cost. That was for us really almost an experiment at start, but that's why we launched in the US on ramp to bank transfer with zero fees. That's harder for us. We subsidize the unramp, but we felt that's really the only way that we can get more people to try it. We haven't yet implemented the off-ramp. But once you have both ways with no fees, then I think you can start talking to less crypto-savvy people. So right now, our audience is still thinking about people who have had Heath, maybe in a problem in an exchange.

Some, a lot of them, but they've never gone beyond. We have the Metamask users. We have all this type of users. We also have these people who going to Metamask is one step further. They see that more as a developer tool. They want the simplicity of their centralized exchange. But for more advanced use cases, like, for example, I mean, defy savings, et cetera.

We still haven't cracked this sort of mass adoption question. I mean, for me, I feel like the apps that are most interesting and that I would like to see adopted are the sort of self-sovereignty apps. So things like status or SIA where essentially you leverage blockchain to improve your privacy. And these are things that people can actually use. Whereas defy, you know, it's this sort of financial use case. Some would argue and I somewhat believe that the sort of underliebred. the lying value isn't really there. But I guess we'll see how that develops.

I also have a question as to this. So do you see the frictionless on and off ramp as the thing that will solve the mass adoption problem? Because where crypto comes from ideologically is more this self-sovereign idea that Sebastian just talked about, right? So basically it wasn't about the couple of percentage points you can get more than on US dollar holdings or something. And I would also argue economically that as soon as there is a large influx of previously non-crypto money,

this discrepancy in the money market percentage rates is going to go away by and large. Do you think it's going to be like a quick boon where basically a couple of million people more flow in and basically everything defy kind of goes away? Or do you think it's going to be a real paradigm shift? I agree with a lot of what you just said, actually. First, mass adoption is not a binary thing. It's not, they won't be like pre-mass adoption and post-mass adoption. They are like, it's like an energy wall.

Each time you pass one of this wall of friction, you will get to the next one and will gradually grow. So on ramp, off-ramp, very slick, will get more people in the fight. They'll be curious. They'll put dollar. They don't need to speculate anymore. And suddenly they can get high interest rate. Indeed, there is not enough trader in the world because for compound to work, you need both sides.

You need people to want to do margin trading, leverage, and therefore they will borrow. You don't have enough in the whole world to create this interest rate. One caveat on that, however, is if you start growing the type of assets, I mean, margin trading exists in the traditional stock market. The difference is I don't get that money. the broker gets that or whatever app you use for that. Here, we need to see the value in having removed all the middlemence through compounds. I interact directly with this trader. But indeed, the interest rate will crash.

If everyone needs die, suddenly they might be changed on the DSR rates, etc. You're right. It will lower, but suddenly you will get a new wave of people. Fundamentally, I think a financial system that is open source permissionless, is mind-blowing. So for me, it's there to stay. That's one. There are many exciting stuff happening now.

This is an amazingly exciting stuff. The fact that the team of three developers can suddenly build a new financial product. And it might not be Compon and DSR getting to a billion people. They will get to some people. And then other projects will get to more and more. So I think there's fundamentally something fascinating there.

In our mission, you know, we talk about assets and identity. So I couldn't agree more that now this notion of finding use case where you have self-sovereign identity score of what we do. Interacting with DAPS through Wallet Connect is an element of that. At the end, you have that thing in your pocket that allows you to own your money, owns your identity and decide who can access what data. I think this will take time because, again, we'll need to find use case. We'll need to find specific apps that user wants to use.

We'll not get straight away big web to Reddit allowing, WebTree wallet login straight away. I think it will first be DAPS and bit by bit that might grow the user base and hopefully we can then move on to other. It might be that we start with gaming. A good game attracting 100 million users is possible. And then from there you have 100 million people with self-sovereign identity and they want to use it on Twitch.

And so on this Twitch will feel pressure to use that and bit by bit, it could expand. So, you know, we need to start somewhere. Yeah, and we haven't even mentioned the fact that Argent also has collectibles. So you can also have collectibles within Argent. And this is, I think, where there's perhaps some interactions with the gaming space. I wanted to ask you another thing, too, which you mentioned earlier in sort of people using hardware wallet and testing Argent with like small amounts of money and progressively putting larger amounts of money in it. I love Argent as a product. I use Argent. I use other mobile wallets as well. But the there's something about it that I feel very reluctant, even though sort of I know that it's secure and I know that there's a social recovery, I feel reluctant to put all my crypto in there. I'm still somewhat attached to my hardware wallet. Maybe it's just because I've been in the space for a long time and that's just the way we did it back then. But like, are you seeing people's mental model shift and trusting their mobile wallet to hold like, you know, significant

amounts of their crypto holdings? Or are people still a little bit reluctant? in moving their funds there. So first, we don't always know where they come from, of course. I mean, in your case, you have already made the investment, not in terms of money, but creating that setup with a hardware wallet. You have set up your upsec in a way that you probably, I hope, have your seed in a very secure way. So you made that investment. So honestly, I have no problem then with you using a hardware wallet.

It's just not something that a billion people can do in a secure way. You have to realize that in most wallet, I mean, the biggest, storage of Seitzphrase is people's camera roll. That's where people store Seed Frays. If it's a phone wallet, they take a screenshot. I mean, hardware wallet, in some way, because it's so clunky to see these 24 words, they cannot take a screenshot, and that's good news. But then these seatphrase is in their desk. So a hardware wallet where your seat phrase is just visible on your desk or on a Post-It is not secure, and not because of the hardware, because that's where the seed phrase is. So,

first I think people getting there end up with a very insecure. You need to be very careful in suggesting to people to use the hardware wallet if they are not trained, I would say, or savvy enough to use it. Not everyone should be. We should create softwares and tools and make it very easy. We see users, as I say, with more than $100,000 in Argent. There are people putting maybe $200,000, it depends on the week, would be the highest part of the sweet spot.

We're not a tool for millions in the sense. Often when it's millions, you need access policy. it belongs to a fund, they need a base on the amount. You would use a tool like multis. If it's a million dollar, then it's to move. You need the CEO. If it's a smaller amount, you need two mid-level people. I don't know.

It's a different setup. We see people putting more money. I think with time, you know, we do what we can, of course, more audits, starting with a team now working on formal verification. With part of the wallet, small parts being formally verified and more and more coverage will come and then doing additional audits by different teams and then more and more funds will come in the wallet, more trust will come with that. So it's just a new model that people are not used, but inherently, I think for many,

many people, it is a more secure option. If you look at the full big picture of the hardware they use, their obsec, etc., it becomes a more secure option. Yeah, maybe I need to review my absc. You mentioned a couple of things there that kind of light bulbs went off. I can see on the back your seat phrase there on your... This is only audio. I don't have it on a post-it, but for a lot of people entering the space, maybe...

I think there's this sort of thing that if you were around when you still had to buy an air gap laptop and put armory on it, that there's this kind of notion that that's the only way to store your keys. But maybe like people that have come into the space later that didn't know that time in crypto are perhaps more comfortable. It could be also a generational thing. I don't know. Just to be clear, I mean, I love my hardware wallet. I have a hardware wallet.

We have them in the team. We use them sometimes as guardians. They are a good device to store a key. And I don't need to write down the seed because I can lose it because I have other guardians. So it's a different use case for us. They are great device for people that know how to use them, basically. The problem with hardware wallets is also that you basically have to trust that they are still work in five years, right? So basically, I mean, ideally, you won't need them.

But I mean, even if you have the seed phrase somewhere and basically your treas is not recognized by your computer anymore or something, you still have to find out how you actually go from the seed phrase to the private key. And I think that's something that you don't necessarily want to have to do. I think we will hear many horror stories. I mean, hardware wallets will fail. Like any electronic we own, you know, they do not last 10, 15 years. none of the phones or TVs, everything. It's little bits of plastic that will pop out of that. We see hardware wallets every day being reset and we need to put back the seed.

And then people will realize that ink also doesn't last and that that piece of paper that they had with ink is not readable anymore or that it got wet or they will have no clue where it is. Crypto Steelers where it's at. Exactly. And so I think there are some people to who it will fit, the same. way that some people might have an actual vault, metal steel vault at home. Most people don't have that and we're putting cash under the pillow before banks were there. And I hope we're not ending up in a space where people will put seed phrase under the mattress. Back in my day,

we kept our seed phrase under a mattress. I can hear this in the future sometimes. Arjit is kind of like a, I see it as kind of like a crypto custody or self-custody Crypto Bank. And I wonder if you also see it this way. And if you envisaged the future where Argent and other apps like Argent start also developing their own DFI products and services, you know, kind of like a bank does, right? Because the business model here in DFI, I mean, just generally in the space, business models, I think, are hard. If you guys are able to capture a lot of the business models that sort of revolve around DFI, whether that's like issuing your own synthetic assets or offering staking services or something like that, you can build an ecosystem

within Argent where it's kind of like your one-stop shop for all your defy needs. Is that the direction where you're seeing things or how do you see the future here? All that makes sense. Yes, you could, you know, you have the users. They are there in your app. You could offer them access to a new protocol that you have built. I think there are several things to think about here. First, if we end up in a world where every wallet is a walled garden with their own protocol, we probably failed. And I don't think that's the, you know, I don't think we can be smart and creative enough to come with all the best protocol ideas in the world. That's a bit how it is, right? I mean, if I mean, you can move funds from one wallet to another, but I can't, like, port my Argent smart contract to another

wallet, right? Or in the future, you will be able to interact with more and more, I would say all protocols, they don't need to be built by Arjan, you can use the compound savings, the DSR savings, it doesn't need to be the urgent savings. So if we create something where you can only interact with my protocols on my Argen layer two, it's very attractive, I'm sure as a business, but I think

it's probably not what will bring the most value to users. Yes, there might be a day where we say, okay, we need that feature. We want to, there's a need. What's the best way to deliver that need? I can partner, in a permissionless world is different. I can

basically integrate compound DSR. We felt that's the best way to fulfill that need. Maybe one day we'll see a need that is not fulfilled well enough by existing protocol and we'll say let's build it internally. I think being open enough access to a global ecosystem is really what we're excited about. So could we build protocols? Yes. Would we end up in a world where that's the only thing you can do in the wallet?

Definitely not. Last question, Itama. So what's the roadmap for Arjan for the next couple of years? Let's start by one year, a couple of years. That's like, what do you hope to achieve by end of 2020? Three big things we want to deliver on. It might be sooner than end of 2020, but we want to deliver first on removing that wait list.

So that's happening soon. More Defy. We've been very clear that Argent should be the place where you can access to all of Defi. So we are working right now on making this happen. That's probably one of our top priorities. The third one, and that's a bit more related to your point of identity, we still want to do much more work on solving DAP onboarding.

So you will see towards the second half of the year more projects around really solving how people interact with DAPS and especially on board with DAPS. Thank you so much for coming on. I'm looking forward to what Agen will have in store for us, you know, over the course of the next year. Thanks for having me. It was really awesome. Thank you for joining us on this week's episode. We release new episodes every week.

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