Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Kiln: Democratising Value Creation in Digital Assets - Laszlo Szabo

Episode Date: January 23, 2025

Kiln operates as a staking-as-a-service platform, primarily focused on Ethereum, enabling users to stake assets programmatically, managing validators, rewards, and commissions through an API-first approach. In addition, it offers white-label solutions that allow institutional clients to integrate staking functionalities into their own offerings, with unified API for all assets and rewards, making it easier for businesses to provide staking services without developing the infrastructure themselves. With more than $13bn worth of assets secured, Kiln has proven its reliability, having no slashing events thus far. Moreover, Kiln widget offers a no-code experience for launching custom earn options, integrated with every major wallet and custodian.Topics covered in this episode:Laszlo’s backgroundFounding KilnEnterprise-grade validators and slashingDevOps & infrastructure maintenanceETH staking and custodyLiquid staking and restakingThe evolution of staking providers and requirementsDeFi yieldInstitutional investorsKiln roadmapEpisode links:Laszlo Szabo on XKiln on XSponsors: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 Friederike Ernst.

From running a node on your computer, a solo staker, to being an institutional grade operator, there's a couple of things that differ. We tend to overperform the network a little bit. We do MED, introduce timing games. You delay a little bit, block proposal, so that you can get a little bit more MEP, and then, like, we are the largest independent node operator. Welcome to Applesenter, the show which talks about the technologies, projects, and people driving decentralization and the blockchain revolution.

I'm Frederica Ernst, and today I'm speaking with Lazo Sabo, who is the co-founder of Killen, an institutional great rewards platform which offers staking and GIFI access. Before I talk with Laszlo, I'd like to tell you about our sponsors this week. If you're looking to stake your crypto with confidence, look no further than Corse 1. More than 150,000 delegates, including institutions like BitGo, Pinterra Capital and Ledger trust Corse 1 with their acids. They support over 50 blockchains and are leaders in governance or network. like Cosmos, ensuring your stake is responsibly managed.

Thanks to their advanced MEV research, you can also enjoy the highest staking rewards. You can stake directly from your preferred wallet, set up a white label note, restake your assets on eigenayer or symbiotic, or use the SDK for multi-chain staking in your app. Learn more at chorus.1 and start staking today. This episode is proudly brought to by NOSIS, a collective dedicated to advancing a decentralized future. NOSIS leads innovation with circles, NOSIS pay, and Metri, reshaping, open banking, and money. With Hashi and NOSIS VPN, they're building a more resilient privacy-focused internet.

If you're looking for an L1 to launch your project, Nosis chain offers the same development environment as Ethereum with lower transaction fees. It's supported by over 200,000 validators, making NOSIS chain a reliable and credibly neutral foundation for your applications. NOSISDAO drives NOSIS governance where every voice matters. Join the NOSIS community in the NOSISDAO forum today. Deploy on the EVM-compatible NOSIS chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at NOSIS.I.O. Lasdo, it's a pleasure to have you on.

Thanks for having me. So you've been in this space for quite some time. But maybe let's focus on what happened before. So tell us about your journey leading up to founding killing. So I did an hospitality school, nothing related to tech or even crypto. Then I discovered Bitcoin in 2014. I had found this guy very interesting in Japan,

actually that was building BRG wallet. I don't know if you remember. It was one of the largest Bitcoin wallet at the time. And he explained me Bitcoin and digital gold, the old story behind it. So I bought my first Bitcoin back in Europe. And then in 2016, I had a shadowed friend that started to work at Consensus. So Consensus in 2016 was working on variable, which is basically trying to do a decentralized stable coin, like a type of maker at consensus.

And yeah, I was just mind-blown by this idea of like, well, computer, Ethereum, decentralized applications. So I invested it in Ethereum in some ether in 2016. But I never really came for the financial aspect of it. I was always, and I think still very bad at like managing my own money. Maybe I shouldn't say this on the podcast. But so no, I came for the kind of the tech. And then like 2017 was the crazy ice.

period and and then I was just formal. I was already an entrepreneur since 2015 because I launched my tech recruitment company 10 years ago. So also when I started to look at at blockchains and crypto in general. And in 2017, I was just two things. First, frustrated to not work with the engineers. I was working. I was, sorry, recruiting. for other companies.

I wanted to build products with them and I'll recruit them for other companies building cool products. I want to be on the other side of the river. And then also I was just formal by the blockchain and crypto ecosystem as a whole. I think I did a first meetup in 2017 in Paris. And when you do a meetup,

you just find a bunch of nerds, builders, all together. And I was like, okay, a week after I was like, I'm done with recruitment. I'm still showholder of this company in the sales of France. They're still a good friend, partners. And I'm like, guys, I need to try to build a company in blockchains. And it's what I did. There's a lot to unpack here. So how kind of coming from a hospitality background, how did you get a lack out?

in kind of tech recruiting? Yeah, there was, I think just my friends in Marseilles, also friends at the time, just went to be and said, hey, we want to build a company. We don't know what to build. We just want to be entrepreneurs because we don't think any other companies will like to hire us. We are not recruitable. This is a great start for tech recruitment company

kind of like trying to kind of help unrecrucible people. That's right, exactly, right? You're the best consultants. At least you can tell not to, you know, candidates not to look like us at the time so that they had to get more chance to get hired. But yes, and it came to me, and I was still finishing my hospitality school, say, hey, you are from Paris,

and tech is very centralized in France, and you might know more companies that want to recruit engineers. So do you want to be part of the journey? Why we find the engineers, you have this relationship with these startups that want to recruit? And I'm like, yeah, well, guys,

okay but you know I need to finish my school and everything so if it doesn't work after a month because I don't have time or I'm not just delivering you know well shake hands and and you'll move on so that's we started and it can have worked and then I got

just very very excited about the tech industry in general like and very excited about engineers for me was we're good people the artists of like the 20 first century. It's like, I think that it was the best part of my job is like sometimes it was a hard job. Recruiting is a hard job. You have to, you know, scrap numbers on LinkedIn and then call like 100

people. There's 70 people that won't be interested or even not answering you with 37 people that are, you know, answering you but say they're not interested. Two people that literally insults you. It's like, oh, where did you find my number? And maybe one person saying like, oh yeah, maybe this job, might be interesting for me. So it's a hard one, but sometimes you have a discussion with 30 minutes, an hour with an engineer talking about like AI or at the time, you know, blockchain. And you just like find this person so passionate. It's like, wow, if I get to work with this person every day, my life would be better. That's a super nice blockchain origin story. Let's talk about how you honed in on kind of

of the staking space because Kynne kind of started off in Ethereum staking. So how did you identify this as a target for your own company? Yep. So 2017, 18, from a recruitment background, the only thing I knew was like I was trying to put CVs on chain, a wallet for candidates that would certify the fact that it worked for this company on this mission and was the next employee, you would show certification there. maybe with zero knowledge,

you know, kind of like a decentralized professional ID. Then we obviously pivoted. We tried to explain this to the French state in 2018. They were like, what the fuck are you talking about? So then we pivoted. And in 2019,

we did our first blockchain as a service platform. At the time in France, consensus actually had an office in France. And most of the proof of concept being done were on private blockchain. So I kind of like, we're deploying like private Ethereum, Corom, Corda, these kind of stuff where it's like today sounds terrible. And I think they were. And but I was looking at the staking space from 2018.

I had friends at Cosmos like Cotima and others launching or even like the OGs like Corus 1, stickfish, P2P. they were launching validators or parasitating in the cosmos network. For me, it was just too much of a retail market. I didn't understand it, right? Like, I couldn't grasp the understanding of it. And seeing at the time Bison Charles, Joe Lelous, explaining that the platforms exchanges at the time in 2019 and 2020 will be able to offer staking to their users

while retaining, making it as a business model, I was like, okay, now I understand it, like a B2B type of company that you'd leverage to then have indirect hundreds of thousands of millions of users. So in 2020, the first taking product we launched was for Pocket Network. It was a decentralized RPC network. We were offering RPC ourselves. So, like, wow, if you can decentralize it, this is genius.

So like Michael, the CEO, I met him in Berlin, actually, in Berlin blockchain in 2019. I was like, wow, this guy is so smart, so bright. And if the future is to centralize the access of blockchains or to centralize, that could potentially be part of it. And in 2020, he comes to HHC in Paris, we do an event and together in office, and then he covered it. And he comes to me and say, man, like, I, I need a professional infrastructure company to offer staking to my investors while deploying nodes.

And it's a pure proof of stake network. So it's not a delegated proof of stake network, meaning that every X number of tokens, in that case, was like 15,000 number of token. You have to launch another validator. So we're not running one validator on pocket. When running like thousands of data is actually, right? It was a fort of tenements at the time. And anyway, we built this. We was like, okay, we didn't find a market on our PC.

So that's focused on staking. In summer 2020, we, we're ready to launch the product. We launched the products. And, you know, it's defy summer. So, boom, price goes up. The demand for staking is just like insane. And suddenly, from zero customers, and they're struggling in blockchain for two years, two years,

three years and a half, like we had like 50 customers in two months, right, from everywhere the world, like US, New Zealand, Europe. So yeah, we, we, we, we, we, we, we found, we found a market. That was the first, um, staking product we launched. And then, um, Ethereum was a very natural, um, evolution for us because Ethereum was the first major pure proof of state network, right? You would have to run. a validator, every X number of token has on pocket. Every 32E, you have to run a validator. So we were good at running validators at scale,

only on Pockets. It's just there was a much bigger protocol to secure, much bigger playground. So we launched our Ethereum operations when the B country launched in December 2020. And quickly, we also had Lido as a customer. So I have to shoot out to the lighter team for trusting us at the time because we're not known at all. And we owe them quite a lot.

And then, yeah, then, you know, I guess can give you more details about the rest and rest is history. But that's how we started. Give us some nuance for what it takes to kind of run a validator, kind of add an institutional grade for clients. Because kind of I think a lot of people will have experience. with kind of like a running kind of like in the theorem or nosus chain or so validator. But usually it's pretty, there are some challenges. And these are kind of the networks on which it is super easy to kind of run nodes. Right.

Kind of like there's a lot of networks where kind of running a node is extremely, it kind of, it requires very close maintenance and the professional expertise. So kind of give us some nuance to kind of like what it takes to kind of operate this. as a business? No, that's a very good question. Yeah, first off, you're right. There's some blockchains, for example, Ethereum or your cosmos, where it's easier to run validators than like on Ton, for example.

For those we know Tom. We love Ton. It's a fantastic blockchain. It's just hard to operate in. And, yeah, I mean, even on, let's say, Ethereum, from running a node on your computer, a solo staker that you mentioned to like being an institutional grade operator, there's

a couple of things that differ. First, we tend to sometimes other, I mean, sometimes on regular basis, overperform the network a little bit. I guess that's our, the first type of

advantage that we offer our clients. Meaning we do we do MED. We introduced where some of the ones that introduced timing games in, I think, September 22, if I recall, because there was papers from the foundation, but nobody really put it in production

so that you delay a little bit the blog proposal so that you can get a little bit more MEV. And then, like, we did a lot of research was like how the network will be impacted by this. And with definitely all the new operators and the foundation themselves, so that we work hand in hand not to slow down on not to impact the theorem as a whole.

And we found, like, kind of a recipe. So, I mean, this is the first advantage. The second is definitely, so the rewards, right? The rewards part. And in on-chain reward, launching yields, there's always this, like, risk and rewards components. So reward, like, we try to overperform the network a little bit. This is the case on Ethereum.

There's also the case on Solana and all the networks. the risk cards is also very, very important when you try to be institutional, right? So you try to offer first insurance in case of slashing. So this, you know, I think $3 to $4 million is the total amount of that has ever been slashed on the beacon chain, which is quite minimal if you look at like, you know, number of billions of assets are stakes. But still, we try to be insured in case there's a slashing event for clients so that they are sure their clients will be paid back. Then we try to have like internal security measures. We, you know, try to avoid double voting, double proposing

and we double signing and we have a couple of and we published some blog post. with the foundation on this, actually. Even our monitoring, valid in a monitoring tool is open source. You can, if you're a solo stoker, you can use it. But you never want to be slashed, right? And slashing measures are like a Swiss cheese. It's a couple of layers.

It's, you know, double-slashing, double voting prevention. It's definitely insurance. It's definitely monitoring at different. level, external and internal monitoring. It's the signing, we use Web 3 signer, but we might use like more type of HSM signers when we sign blocks in the future. And you'd decouple the signing from the validator infrastructure.

And then you spread this validated infrastructure across the globe. And lastly, we use different valid data clients, PRISM, Lighthouse, and Teku, we were one-third, one-third, one-third, so we'd like split. But we realized that if you run a majority of the clients, so for example, Lighthouse and Tegu, so lighthouse and Prism, sorry, that I have like more than 33% of the network, you might, in case of a large slashing event, a bug on the client, you know, it might be very damaging for all infrastructure. So we decided to actually reduce drastically the lighthouse and prism exposure that we have

and run a majority of TACU-Ballader the clients. Anyway, I hope I don't go too much into the weeds, but all of that is how you differentiate from being a solo staker. Maybe we can just very quickly kind of give some color to the, some background to the slashing discussion. So kind of the background here is that kind of if you double science, you're always slashed, but kind of if you just, if you're validated just goes down and stops kind of attesting and proposing blocks, then you're slashed based on how much of the network

kind of goes down with you. So kind of if you're just a solo staker and kind of you lose power on your, on your server or something, that's, that actually doesn't get you slashed a lot. But kind of like if you and half of the network go down, that is actually a very slashable event. So kind of you want to prevent, you want to prevent kind of your users to be penalized that way by kind of being caught in a situation where they are a part, they are a large part of the network, or they are a part of the large part of the network that kind of goes down, right? Yeah, that's right. But so you said it like being down will be always less damageable, a part of a large part of the network goes down at the same time. Then

being slashed. So we have a mantra, it's like better be down than slash, right? And there's, there's a couple of events that you, you, it's okay to be down or you, you're, you're fine to be down, right? Yep, then like avoiding a session events. Tell us about the team that kind of, that it, that it takes to kind of operate this. So kind of, I just know this kind of from our side, kind of we operate a number of nodes and kind of like archival nodes and so on. And I know there's a, that our DevOps team, they do a lot of monitoring and they have kind of like they have on-call duties and so on. So how is that set up within Kieln and how many people do we have

dedicated for kind of just maintenance of infrastructure? Right. So we have a team, and infrastructure for us is two sides is like running the nodes, but it's also sticking data, which is also like sitting you apart from like being institutional, like a essential staker. like, for example, and I'm happy to come back to it, but if you're an ETP or an ETF and you offer a stick ETP, then you need the granularity of the data to get ticking reconciliation. What's the nav? What's the rewards on, you know, daily, weekly, yearly basis?

The data needs to be, and that's actually a very, very tricky part, indexing. I mean, you know this, right? But in blockchings, you have two types of data. You have like the execution later data smart contracts and the consensus lay data. And consensus lay data, we very few on the planet to just like index it because it usually means you need staking data, right? So it's basically, it's usually like institutional staking providers that does it.

So we have a team of 15 DevOps just running, you know, all the infrastructure running the nodes on 47 different chains. And as you mentioned, there's uncles. So 247, they have an application on their mobile. and it can be waking up at 4 a.m. on Saturday morning. And that rotates. And today it's mainly concentrated in Europe, but in the future we could have teams across the globe

so that maybe like you don't get waking up and that's for air on a Saturday morning. And then on the data part, it's another 15 other other people, they're working and indexing 20 different chains. So that's, and it's valid and agnostic, right? So we don't, we don't only index our value. There's a lot of our clients actually are using our data to index other providers because they're using one, two, three or four providers because they want to spread the risk

because they want to have more coin coverage and so forth. But they're still using our data to index the network and then get the NAV, get the rewards on all these validators and so course. This being said, coming back, that's the recruiters talking, it's not about like number of engineers at the end, right? It's never about the number of engineers. It's always about like spending a lot of time to finding the right engineer. So you might say, oh, 15 and 15, oh, 30 people, oh, it's a big team.

Well, I mean, but the number of things they're doing, it's quite a small team, I can tell you, right? And we are, and I meet every one of them. I know all of their names. Some of them I've been working for four, four, five years. And some of the ones, for example, in charge of Ethereum and our Ethereum infrastructure is called EmixS or Sebastian Ranu. He's doing a lot of research himself. He's doing open source, our Ethereum validated, what are, what are doing to, what are doing to, to monitor Ethereum validators,

is doing open source with commit boost. So basically the pre-conf project post-Pectra that we'll use, working a lot with the foundation, doing some research about the impact on MEV, for example, on the network and so forth, so on and so forth. So they're not only DevOps, right? They are protocol specialists in a way.

Yeah. Yeah, absolutely. Can you give us an idea how much of the state ETH is staked via Kieln and kind of compare this to other networks you're also operating on? Yes. So in total we have 13 billion asset that are stick on the platform. It's don't want to, so we have 4.6% of the EFM network, which means I don't want to, I don't want to wrong the numbers. I think would mean like between $5 or $6 billion of assets. So dollars of ETH that are stakes through evaluators running 49,000 evaluators.

And yeah, that's that's that's that's that's I think of kind of about it. We say that we are the largest independent like node operator, meaning you still have like large platforms like Coinbase. You can argue maybe Binance. they're running more than we do. But as an impendent, a staking provider, we tend to say on Ethereum, we're the largest. What are your biggest clients?

Yeah, so we work with exchanges, wallets, custodians, asset managers, so the ETF, ETP-like, and Neo-Banks, and maybe the banks and the like that are coming into the space.

And we have a couple of direct clients. It's a small portion of a business, but when you go on ledger, for example, or you go on SAFE, you know, SAFE has a marketplace and you can stake directly through DAP, so you will see KILN there. I would say that's 5 to 10% of our volume. 90% of our volume, it's actually our white-label infrastructure that is used by, I don't know, Bipanda that is used by coin-based wallet that is used by, you know, five blocks and alike, so that their customers, either retail or institutional customers, can stake. We should probably stress that kind of like, all the staking that you guys do is non-custodial.

So I mean kind of like if you kind of have funds on an exchange, on a centralized exchange, and kind of you let them stake for you, kind of they are in custody of your, funds, but you are never in custody of someone's funds. So kind of how does this work on a technical level? Yep. So the exchanges and in exchange, for example, we use our APIs that then like points to a validators. And our APIs automates the endstaking and end sticking flow and also give them the

right data rates. Hey, today, you have stake this number of amounts and you have earned this number of rewards for this number of customers. A wallet will use, for example, safe, we'll use our smart contracts. And we have a smart contract platform so that on Ethereum, for example,

you can stake 32ith, a Valiator. If you want to stick Valiator, that's how you know, you are, for example, CO swap is on also the it's the white label solution that is used for the swapping engine on the safe

interface. We are now the way-gable solution for the staking engine on the safe dashboard. For now, you can only stick 32-Eath, so a validator. But maybe in the future, you will be able to stake any amounts of ETH, if you don't have 32-Eth to stake. And in that case, we have a smart contract that pulls customers' funds and then redirect to a validator. That's valid-diagnostic.

For example, some of this smart contract on-chain. rewards management platform is used by Coinbase Cloud, for example. And they're running the nodes, but they for Coinbase wallet, but they use our smart contract platform to offer pooling staking so that their customers non-custodial can

stake any amount. Or consensus is offering 32th staking while using our smart contract on Minamask. So, yeah, that's That's the type of non-custrial staking that we can also offer to our customers. Custodial staking is the exchanges, the asset managers, and some of the custodian that are regulated custodian,

or non-custodial staking for wallets or technology custody. That's super interesting. I want to come back to that in just a second, but maybe kind of let's zoom out a little bit. So kind of when we look at kind of the evolution of staking on Ethereum, or maybe even preceding the switch to proof of stake on Ethereum, what do you see as kind of the major milestones kind of in the history of proof of stake in this ecosystem? Yeah, that's a good question. I think, I mean, the first I remember doing a percentage,

like the history of staking right like the first staking protocol were like 2013 2014 were kind of the first iteration of staking then like in 2014 2013 2013 for 2014 a term already speaks about proof stake in the white paper and they say it's going to be next year right next year for for the next five years and and then in 2017 18 you start to I would say the first proof of stake network that launched at scale. So it's cosmos. It's Tesos. In 2020, and basically in 2017-2018 is like, hey, we're just going to do like a smart

contract platform we're staking. It's not going to be scalable. At the time, the scalability was not yet, I would say, part of the discussion. Or even like, you know, technically available. Or in 2020, you start to have smart contract platform using staking to say, we're going to be a proof of stake network, and we're going to be scalable on L1. So that's Solana. And then in the end of 2020, Ethereum's five or four or six years after saying that staking will be the endgame,

finally launched the beacon chain. And two years after launching the beacon chain, they move finally from proof of order to proof of stake. And that's kind of the history of proof of stake network. The history of adoption of staking, I would say, would be that we feel that until 2019, 2020, it was, and even ahead because Lido also was a Wells to retail type of adoption. I would say since 2019, 2020, then the adoption became very platform, right? So you would start staking from an exchange, you would start staking from a wallet, you would start staking from a custodian. Versus you invested in the ICO of Solana and you would delegate directly to a validator, right?

Like nobody, none of the ledger five blocks safe or Bitponda, Coinbase or ByBit at the time would tell you, hey, by the way, you have Solana on my platform so you can start to stake. This came a little bit after. And so it was very platform adoption, I would say, from 2020 to onward. And now you're really seeing, because everyone say, oh, in the institutional adoption, what institutions means, right? But you're really seeing like traditional financial institutions that are and will start to stake. And it starts with the ETPs, ETF, right? So, for example, in Europe, we have Vannac as a client, Vanek, as a client,

Panic is a traditional financial institution in the US that has ETPs product in Europe and can start to say you have a ETH-staked ETP so that you invest in Ethereum, but you also invest in Ethereum that get rewards annually with staking. And it's not yet available in the US, but you know, you might argue that maybe this year or the next year now that the administration is changing and is becoming pro-crypto stinking is going to come for these products. And then, you know, from now on, other institutional type of players will start to offer staking the banks, the new banks, the banks, the other large pension funds and edge funds.

And we have very meaningful discussions with these players who were looking at us like crazy Gingens three, four years ago. Yeah, I totally hear that. One of the things that kind of no one, I think, initially kind of foresaw was the emergence of both kind of liquid staking and then restaking. So kind of with liquid staking, the ideas that kind of you steak, and for instance, via Lido, and you kind of get a representation of your stake token back. so you can use that as collateral

and you can kind of leverage up. How do you view that? Because you don't offer that to your institutional customers, right? So there's some opportunity cost for them there. So we do offer liquid staking to our customers. And there's two offering we have. It's one, if you're a retail platform and exchange of wallet, you can offer liquid staking.

We do liquid staking as a service with pooling. So let's say you're an exchange, you want to launch your own X-Eath, the name of the exchange or the name of the wallet Eith. And in that case, it's very similar to White Label LIDO if you want. Okay. And we do offer liquid staking for institutions, ETF and alike, with we tokenized a validator, right? Because we think an ETF needs liquid staking because they can stake us more than a specific amount of the, of the, the ETF of the fund because, you know, they still need to be liquid on a daily basis. They have T plus one or T plus two redemption requirements.

And the way for them to stake more would be to use liquid staking solutions, but they don't want to use pooling solutions, commingling solutions, because it would mix jurisdiction, right? Like when you stick on Lido, for example, you have people from all over the world staking in the Lido pool. And we think it doesn't fit stem. So what we did is we tokenized a validator and we represented with an NFT. And this NFT can be traded from one ETF to the other or from one ETF to a marketmaker.

Anyway, coming back to liquid staking, I think it's a fantastic product. And Lido really explained to the crypto market with the adoption of the product that it's a needed product. And the first staking is the first, it's the primary. rewards, the risk-free rate, if you will, of crypto. But it's not defy. Right? It's a protocol reward where liquid staking became the first defy product and start to flow this reward back to lending-boring protocols or liquidity providing or, you know, options and risk-free rate

protocols and so forth. So liquid staking is very needed. First of all, because you need liquidity, but you also might need a higher source of rewards. And you can't combine this staking reward with other type of rewards if you don't have a liquid staking token. So, yeah, I think liquid staking is great. Of course, it introduces a bit more risk, right?

What are these risks? So, of course, the smart contract, like, you know, staking is the risk. of staking is quite low. I told you, it's three, three to four million dollar slashed on dozens of billions of dollars of assets are staked. On liquid staking, you start to have a complex smart contract. And we build this smart contract ourselves. So I can tell you there's a risk there. It's not risk free. Then, of course, you can mitigate it using great auditors and using continuous smart contract monitoring tools. And of course, the security standards from like three years ago to now completely changed.

I think the industry is much more mature in that regard. And then restaking. Yeah, I can talk about restaking as well. But I see maybe just this. I see staking as the use of the staking position horizontally. And I see restaking as the use of the staking position vertically, right? Like you think you, oh, sorry, the other way around. Anyway, but basically, yeah, restaking invented by Agon layer was explaining to the market,

as Lido explained to the market that liquid staking was a thing and was the primary DFI source, primary DFI protocol that restaking could be used to secure other networks or other applications that needs decentralization. It's quite complex, and I'm sure you've launched, Frederica, your chain. So you know it's complex to launch a chain and to manage a network, right? You have to manage go-to-market or you have to manage,

you know, a lot of validators. And do these two things at the same time is, you know, actually very, very time-consuming. it's often not at all the same thing. And what's your chain and your token is going to worse if you don't focus on go-to-market. So I can come and say, hey, if you are a startup, if you're a project,

and you want to use this decentralization, this validation marketplace, we already have a set of validers that you can use, and you can use a platform or marketplace to bootstrap your decentralized application and project. yeah, that's that's that's very compelling. Let's see, you know, how and where it hands with the maturity of all these aviases and startup that has launched with Aguilary and out Samhabili, is the kind of the second mover

on Ethereum and Babylon on Bitcoin. But that's interesting from a startup project, a distributionization application point of view. That's also interesting from the other side of the marketplace. It's like, hey, I have heat. I have Bitcoin and suddenly you're introducing this new type of rewards on the market. This is not staking plus defy. It's staking plus staking. It's two type.

I get a reward two or two times or three times to secure one two or three network with the same security pool coming from Ethereum of Bitcoin. Yeah, the you know, that's that's a very interesting. concept and that's something that our clients, even if they are taking the time to use or integrate these products, they're still looking at on regular basis. And I'm confident this ecosystem will grow. Do you think it potentially messes up the security of the underlying protocol, in this case, Ethereum? Yes, it could for sure. Leveraging the security of Ethereum with five or ten different networks

with the same security pool that could mess up Ethereum. That's a very good point. And I think it's hard to tell where the guardrails should be. Is it at the protocol level, but then it's not really permissionless. Is it at the Dow level, the community level, maybe a combination of all of that, but, you know, leveraging on Ethereum should be prevented somehow because you're not, yeah, you are playing with the security of the network. So that's the risk for sure. But, you know, does like an Oracle protocol or a stable coin or a stable coin or. or anyone building around Etherb or even Bitcoin now

won't want to leverage the security of the underlying protocol. I think they should, right? I think it's an interesting mechanism that they should leverage. How do you see the staking ecosystem kind of evolve over the next? Let's talk about long timescales in terms of blockchain. Let's say over the next five to ten years, how do you think it's going to evolve? Is it going to be all kind of institutional-grade staking providers, or do you think we'll still have some solo stakers,

or do you think the pendulum will actually swing the other way and kind of we will have a majority of smaller solo stakers or staking providers? Yeah, that's a very good question. And I'm still hopeful in the like disincentrization aspect of it, even if, you know, there will be consolidation. And I mean, I'm not, you know, playing on for the kiln flag and out because, of course, you know, having having more part of the markets is one of our objective, but as well as like keeping the network decentralized. I think the difference between Bitcoin. Because if you look at Bitcoin today, mining, like, mining is a clear consensus mechanism that push the small players out of the network. Right.

It's like if you don't have like three, if you don't pay your kilo water three to four cents while, you know, having like great azic infrastructure to run it to validate the Bitcoin network, then you just out. And today, you know, they'd be like frankly Bitcoin might be validated by 40, 50 main companies, if not less. Like, you know, there's a lot. I can list you at least three companies that have more than 10% of the, you know, validation power on Bitcoin. I can list you only one company that has this on Ethereum. So I think stake in that sense is a better consensus mechanism to keep the network, the centralized. Because even in five years or 10 years, it will be easier and easier for a solo staker to run a validator on his computer, which is the main difference from prove-a-work to prove-a-stake. Though, will it happen?

That's the question you ask in the first place. I think there will be definitely a combination of it. I think that there will definitely be consolidation because, you know, these ETF, for example, they will start to, to use one, two or three or four providers, and they will need, you know, performance, insurance. I mean, everything in social grader that mentioned to you earlier, which a solo staker cannot provide. But maybe there's a solo staker type of aggregator

that helps them to decentralize also their staking sets because they have the incentives to keep them decentralized if you think about it as well, right? and I think a part the part of the validation will be run by solo stakers and the ones that are decentralization maxi and we need them, right?

We need them to keep them decentralized. So by the way, one of the reasons we are doing, we offering liquid staking products and defy products to our customers and we can talk about it later is because, of course, they ask it, but also because like we don't want to be in a world,

where we have to keep growing on the staking business, and it actually could potentially hurt the decentralization of the network itself that we are trying to secure in the first place. There's efforts underway in the Ethereum ecosystem to kind of make staking easier in terms of capital requirements. So currently you need 32Eth, which is $100,000. And kind of the idea is to kind of reduce this marketly. What are your thoughts on this?

I think it's great. I think it's great. I think it's also advantage us in a way because it concentrates the, I mean, we won't have to run that many validators anymore. We will be able to merge validators one to another and run as much as 64 validators, 2048th. I don't know, please I'm not sure about the calculation

but I think that's it. And these 64 validators, this 20408 versus 32 will kind of auto compound, right? So you will have kind of like validator pools in a way at the protocol level

which is pretty compelling also for the large players, but it's also compelling for a solo staker because now the requirement will be much lower. So I think it's great. I think it's going the right way. A little while ago, you kind of ventured outside of your course-taking business, and you kind of launched Killing DFI,

which kind of lets your same clients kind of tap into DFI yields. Tell us about that. Yep. And actually, you remember, we had the discussion. I think we were in Prague together at conference, and that was the beginning of our discussion. I mean, we think, like, and we think it's evident that stable coins will push the payment markets and the value

market in general to an on-chain future. At least that's what we think, right? I like this quote from, say, let's put the GDP on chain. Yes, let's put the GDP on chain. If we need to push the GDP on chain, stability in these transactions need to happen. And that's what stable coins are there. And the stablecoin market already found private market. I think there's 170 billion stable coins in circulation right now, USDT, USDC and others. And we realized that most of our clients had, and most of their users, most of their clients had a lot of stablecoin on the platform, but wouldn't access reward, wouldn't access yields. And there are some fantastic yields, you know, on in on chain.

The first ones are provided by lending and borrowing protocols, such as Morphal and citing them first because I love them. It's not only because they're French, because I think it's a fantastic protocol. Maybe one of the best, if not the best one out there. And there's Ave and there's compound, of course, and there's many others. And on the other side, there was only 4% at the time

we start, I think now it went up to 6, 6, 7% of stable coins that are getting interest, right? Which if you compare it to Ethereum, sorry, Ethereum is 30% of assets that are staked, and if you compare to stickable assets, so all POS assets, I think it's 45% of all POS assets that are staked. So this stablecoin rewards market is very immature, at least 10x, when we started 10x, less mature than the staking market. So we thought, okay, well, as we did for staking, we'll provide infrastructure for these exchanges, wallet, custodians, new banks, banks to offer tablecoin rewards. So that's how we started CalDFI, we aggregated with our own smart contract, both infrastructure, the main lending and boring platforms. so that

these it changes while its custodians can start to monetize this while offering 10 or 15 different protocols on 10 or 15 different assets

stable coin assets and now we're expanding this to other other type of rewards on chain for example if you want to lend if and get close to 8 or 10% type of rewards and you're not happy

of the 3% staking, you want to higher type of yields, we also offer that. And maybe just lastly, it's like, you know, retail customers, they need usually one-click experience. And if you want to keep them on-chain, which is all over product do is like keeping them on-chain, you need to simplify this experience on-chain. So if you want to, and that's one of the reason why a lot of customers were sitting on-a-changes, not moving on-chain, because the UX is not as good. You know, I was the exchanges that can just build the front-hand and use omnibus setup in the background. Whereas now, you can start to build with pass-key, you can abstraction, the onboarding is getting much better, and also the on-chain experience.

The one-click you can rebalance from any yield position to the other, on-shading one-click, whatever the asset, whatever the defypricle, whatever the chain is. And that's something we heavily working on, and that's something that will increase the adoption of these products on Dr. How do you evaluate which products to include in this? Because kind of like you're in a way, this is a huge inducement, right? Because kind of like if I'm your client, I kind of expect you to kind of do your diligence on these protocols. Yeah, that's a very good question.

And you would be disappointed of the answer because frankly, We started to take the ones that our clients wanted and also the largest one, right? Like, you know, we assume that AVE and Morpho, where great protocols when we started to offer them to our users, then it starts to get tricky when specifically, in case of Morpho, for example, when you have like different volts, different risk profile that are managed by strategists and curators, are a third party that is managing the risk. So the risk is not even managed by the protocol itself. He's managed by a third party.

So in that case, you also need to assess the risk of the third party. So what are we doing now? Naturally, it's like as we did for smart contract, in the beginning we had only security team outside of our company, right? We're using auditors, like the spare bits and the likes. and continuous monitoring tool where vendors like Xagate, but now we have a security team in-house. And we still use these external providers,

but we definitely need an expertise in-house. It's going to be the same for risk in D-Fi. We access external vendors, and we are building a risk team in-house. So to say, hey, why are we pushing this? type of vault on morpho managed by this curator was this risk rewards approach versus the other because because it's not the only creator that managed volts on morpho. So that's where we're building at the moment and I guess that's what our clients as well

will require in the future. Yeah, that makes a lot of sense. when do you look at your clients and I mean you kind of you have your ear to the ground here right so kind of when it comes to institutional investors and so on are they in it just for the yield or do they also kind of believe in the underlying asset do you think kind of in as how much do you think this capital is mercenary it's hard to tell it's hard to tell they definitely have to run a business right and and to see the revenue opportunity so in that sense, I don't think Mercery is the right word because if it's a short-term, like a platform that is thinking 10, 20, 30 years ahead and say, hey, actually the world is going to, or the transaction on this planet will be on chain. So I still want to be there in 20 years, cannot offer a yield that is short term, right? if they don't believe, for example,

I give you an example. If they don't believe in Bitcoin staking, I can tell you, I'm not going to cite some platforms, but they won't offer it. Regardless of the revenue they can make, regardless of the amount of Bitcoin they have on the platform, which is much higher than any other assets,

because they are thinking long-term, right? They are thinking, well, I mean, I don't really understand the risk yet, so I don't want to offer it to my users. Even if I know the day they will launch it, it will be a success because, you know, suddenly people can start to have deals on Bitcoin, same for stable coins.

So we tend to think that most of our largest clients, largest platform, they think long-term, so they really still access the risk. And I don't think Mastery is the word here. They're thinking, okay, is this source of yields sustainable? Is basically for more clients lending makes sense because there's borers on the other side of the spectrum, and it will essentially make this economy better.

Okay, I'm able to support it. And same for us. Like, we're thinking long term. We definitely need to grow our revenue and the yield we offer on the platform. But if we have one fuck up, let's say, like, it's the end of our business. And if we treat our customers or their customers, badly it's the end, right? So that's a good point.

I think like, I think because we're starting to, for example, on Avimorfo, we're starting to see fintechs actually using, integrating this infrastructure to do credit lines, right? And you're working in a way on this infrastructure as well, where basically, you know, you have a wallet, you have a card, you might have eF on the wallet, but you still want to pay on USDC or Tether or basically stablecoin so that you can pay real life. We're starting to see proper use cases of that into the background. You need to land your ETH against USDC, USDT, and then you have a credit where you spend

you money in real life. So I think, and by the way, I think moving forward, the biggest part of the adoption is going to come from these use cases because we think all the fendex, the neobanks, the new banks, the stripe and alike, and we're seeing that they do, of course, a big push on stable coin will offer these type of rails

and in that case, it's like a saving account, right? You will need your saving account close to your payment accounts. And that's what we're trying to provide. We call it the saving account for the world. I hope, yeah, I hope

we'll make it happen. I think this future is exciting to us. Yeah, super cool. So what's on the roadmap for Kynne in the coming year or so? Yeah, definitely, and I haven't thanked any type of rewards on the platform, on chain. And then seeing on-chain movement, right? I think, like, for example, exchanges, the first stack of an exchange that will move on-chains,

the earn section, because they don't need low latency of trading. And the earned section can move on-chain before the others. So we'll definitely push the exchanges to move on chain, at least during section at first, because that's our topic. And we will also look at institutional adoption worldwide. The U.S. is now opening up post-election with the administration's changing, though we're still waiting for more clarity, but the hope and excitement is there. and we'll try to build this saving account for the world. While, you know, still, our mission is democratized value creation in digital assets. We think once you're on chain, of course we have a business.

Of course, we'll make revenue, but at least everyone will see how much we're making our commissions and if we're really driving value to our clients. So that's what we'll try to do. Cool. Those are super nice parting words. Tell us where can we send listeners to kind of find out more about killing? Yes, please go on our website, kiln.5. Stake on our daps directly on the website or via our partners marketplace, say, for Ledger.

We have a Twitter account, LinkedIn for the Movers. And, you know, in conferences, if you go on conferences and you see a Kunt T-shirt, please come and say hi. Cool. Thank you so much for coming on, Lhastog. Thanks for the Eka.