On The Brink with Castle Island - Keone Hon (Monad Foundation) on Blockchains Built to Scale (EP.683)

Episode Date: November 5, 2025

Keone Hon, founder of the Monad Foundation joins the show. In this episode: From the point of view of Keone's trading background, what is the promise of blockchains? Reimagining financial systems with blockchains in 2025 Why build Monad, and for anyone using a chain, why use Monad? How the importance of decentralization and chain efficiency becomes underscored during fragile market periods Auto-Deleveraging (ADL): What it is and why it is important. Where is there economic efficiency to be created? How has Keone gone about building a team to tackle this challenge? What would make Monad "successful" in 2-3 years?

Today, I was joined by Keone Hahn, co-founder of the Monad Foundation. In 2022, Keone, together with his co-founder's Uniskiarda and James Hunsiker, set out to build a financial settlement system better than any before. Having spent a decade in high-frequency trading and understanding the roots of financial markets, he and the team understood that blockchains could entirely reimagine financial markets and create a unified marketplace for assets, but not in their current form. With that, In my mind, Monad, the now almost fully mature brainchild of this vision, is a re-architected version of the Ethereum blockchain built to be faster, cheaper, and more efficient while

maintaining a decentralized structure. After over three years of development, building an entirely new financial piping, Monad is now on the verge of its imminent launch. I had the fortune to sit down with Keone and discuss the potential of on-chain financial markets, the importance of decentralized systems, and its personal experience in the this journey. For disclosure, Castle Island is an investor and strong supporter of Monad. Without further ado, I hope you enjoy our conversation. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not

reflect the opinions of Castle Island Ventures. Guest and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac,

the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. Dione, thanks for sitting down today. It's a really interesting moment in that you guys are really close to a major launch here,

which I think a lot of people are excited about. I wanted to get started maybe more broadly to ask, what gets you excited today about on-chain finance, maybe going back to why you got into the industry and why you're still here. What do you say to people from the outside when they ask about what gets you excited? I've been in the finance space. for about 10 years outside of crypto, working as a high-frequency trading quant. It's very clear that certain markets are very well capitalized, in particular the Western

markets and especially the American market. But there's a much broader set of businesses out there that lack access to capital, lack the ability to get listed on a credible exchange, and just generally, there's a lot of innovation that's going on outside of America, that doesn't have access to the same financial tools. So I think that on-chain finance is incredibly exciting because it offers everyone access to the same tools in the form of personal finance and also for businesses, access to capital

and ultimately things that help grow their business. It's interesting because I think we had the proliferation of exchanges in the stock market and that let, for example, anyone living in the U.S., for the most part, trade on a certain exchange, but there's still a disparate exchange system of where equities trade globally and it's not like it's seamless for me to go own

and ask to the trade on the other side of the world. I think that's like we almost forget about or take for granted, but you've to imagine in a perfectly efficient market economy, there are a lot of transactions that aren't happening because people just can't access an opportunity they don't know about or they might otherwise be depositing it too. And from your perspective, do those sorts of transactions then happen on-chain once you have faster on-chain systems?

Is that really the inspiration for Monad or what will be enabled in this future state that you think isn't happening today? Yeah, it's truly bidirectional. It is giving people who have capital access to a broader set of investments. And it's also giving people that maybe don't have as much capital. They're in a developing country access to, first of all, dollars themselves in the form of dollar stable coins, which even that in and of itself can be a huge boost for a lot of people that are in economies with currencies rapidly inflating. But then beyond that, also giving them access to American and more generally global products. I think that makes sense in particular for people who are

getting access to dollars for the first time when you might live in an inflationary currency. And are those going to be the adopters to you, people who don't have as many options to begin with? I imagine it's a bit of a harder sell to people who might be in the U.S. you're like a family office that already has a lot of opportunities granted this will give you more. I think it's strictly greater for everyone. And the beauty of it is that in a permissionless, decentralized system that is truly borderless, there's access for people regardless of their circumstance to a greater set of tools than they currently have. And with that in mind, people listening in this conversation will have varying levels of familiarity with Monad. So why Monad in the

context of that future state? Monad is a new blockchain system with a ton of new software architecture. It's a rebuild from scratch of the Ethereum blockchain with a bunch of new improvements that I think the Ethereum community is really excited about, which include parallel execution, asynchronous execution, which is decoupling the two components of a blockchain consensus and execution from each other for efficiency, reasons. It introduces pipelining. It introduces a optimized database for storing the kind of state that blockchains track and a new consensus mechanism that allows for really frequent blocks and really

fast time to finality of this system. For context, Ethereum is a blockchain that produces blocks every 12 seconds and that has roughly 12 minute time to finality. That means that if you submit a transaction on Ethereum, first of all, your transaction only gets loaded into a train car every 12 seconds, so you're waiting quite a bit, and then it only gets finalized 12 minutes later. So that entire time, you wouldn't be sure that your transaction has been enshrined into the ledger and is irreversible. Whereas with Monad, blocks are every 400 milliseconds, and finality is after 800 milliseconds. It's just much faster. The confluence of all of these improvements is a system that can process a billion transactions per day as compared to one million transactions per day for Ethereum.

So it's a thousand X improvement. And we think that this is just the start of what ultimately our team can do, but it is a significant step change that can enable a much greater level of adoption. And you come from a deep trading background where you had to understand these systems at a relatively deep level. I think this is a topical conversation because two weeks ago to the day, we had a relatively meaningful market fallout. And I think people forget about the problems of how often transactional on Ethereum. I'll even go to say things like the exchange level. You had assets trading at different prices across exchanges that day. So maybe as a case example, could you walk through what some of the problems that emerge are when you have these volatile

market periods and how Monad makes that different? Blockchains are ultimately there to different. find a stable source of truth that can allow many different people to coordinate. And that's really valuable in our world because right now in the non-crypto space, we live in a world with many different servers that are all talking to each other and trying to stay coordinated. Whereas blockchain allows for a single source of truth that's available globally and through consensus mechanisms, we keep all the nodes in sync and crypto in general. The point of blockchain systems is to enable that single source of truth and that shared global state while also being resilient to people that are running nodes potentially wanting to be malicious. It's resilient to those malicious

actors as well. That unlocks incredible capabilities on top of that that can be built on top of this coordination layer. I think the particular example that we're talking about from two weeks ago is a story about a bunch of disparate centralized exchanges that are all connected together using blockchain is this means of settlement. When you want to withdraw your coins, you can withdraw them onto one of these blockchains. And then once that transaction is processed and finalized, now the tokens are in your account. And then if you want to transfer it to a different exchange or something other than an exchange as well, you wanted to buy something at the Tesla dealership or whatever it is, you wanted to do a peer-to-peer payment with your friend, all of that is

possible as well. But the point is that the blockchain system is the underlying fabric. that's keeping all of these different venues, different centralized exchange venues, different stores and so on, all in sync with each other. But the problem is if there's a lot going on, the real world is moving very quickly and prices are moving very quickly. It could be very difficult for these prices to stay in line and for liquidity to move from exchange to exchange and for liquidity to move where it is most demanded in a reasonable amount of time and the latency of 12 minutes of finality or more is actually a significant impediment

to allowing liquidity to move from place to place. And that's just one story about the implications of slow finality and slow systems. But there are many others that are happening every day with respect to how enterprises are managing their money, how frequently they can switch from non-yield-bearing forms of dollar deposits to yield-bearing ones. When you have high efficiency when it's really seamless to be able to move money from one place to another. It unlocks a ton of efficiencies. I agree with everything you highlighted. One piece that frustrated me a couple weeks ago was because of these inefficiencies, partly around speed, around cost. And then some architecture of how the market structure works today. You saw the asset prices in the order books fall

very low on some of these assets. And as a user, you didn't necessarily see the opportunity to buy assets at those prices and marks across exchanges were changing drastically. And that brings me to another topic which is very central to Monad, which is centralization or decentralization. Because I think people forget about the risks of centralization. We're seeing a lot of what I would argue, fairly centralized blockchain architectures emerge now. But in that market structure, if an exchange owns a blockchain and they're in a period of distress and they want to switch off your ability to settle, they can do that. And because of that, you might lose out on what might be the best trading moment of the year, or you might not be able to get out of your positions, which could

be potentially worse. Can you speak to why and how you guys think about decentralization in that vein and why you think it's important? I will start by saying that building decentralized systems is harder than building centralized ones, because you're basically handling for all the corner cases ahead of time and building in fault tolerance. For users, the benefit of trading on a decentralized Exchange, a truly decentralized exchange, is that all the rules are well defined ahead of time and there aren't corner cases and there isn't a human who can just make an arbitrary decision and decide to freeze your account or prevent you from trading or put on a trade actually without your authorization, which is one of the big complaints from two weeks ago is that

a lot of people that did have profitable trades, like if they were short somewhere, that short position got automatically closed out through a process called auto de-leverging that a bunch of centralized exchanges have. And it's crazy because in my experience as a quant trader for a number of years, the expectation as a trader is that the only trades that will happen will be trades that are the result of orders that you send. So if I send an order to buy Apple at $100 in one cents, then that's a guarantee that if I am filled on that order, I'm filled at a price. that is either that price or a better price. And that order will persist in the order book until I submit a cancel or if it's good until the end of the day order, then until the end of the

trading session. And it would be very shocking to have a position on an exchange and then find out that the exchange inserted another order maybe in the opposite direction of my position right now. And that closed me out. So now I thought I had a position, but I'm actually flat because I never sent that order, I never authorized it. And one of the crazy anecdotes from two weeks ago is that a lot of people had positions or thought they had positions and then found out that they didn't have positions because the exchange just put in an order on their behalf. And not because it was necessarily to the customer's benefit, but rather because it was to the exchange's benefit to reduce the overall amount of leverage in the system. And I think that people will sometimes in our industry say that

decentralization doesn't matter, that it's fine to take a centralized system. operator's word for what they said. And the problem is that it's true until it's not. And you think that decentralization doesn't matter until you find out one day that it really does. And the benefit of decentralized systems with open source code that anyone can look at and audit and verify the behavior of is that it creates accountability and it removes the possibility of person operating the system to arbitrarily make a decision. Yeah, it's a major problem, this individual discretion. that you have in the centralized system. I heard an argument about it the other day that I hadn't heard before, but I thought

it was compelling, which was also that in today's day and age, the most common cyber attack of these social engineering attacks or the single point of failure attack. So if you're operating on a centralized venue in any form, you're essentially reliant that that person is controlling it, even if all of goodwill, that they're not going to be individually cyber attack, which you saw with the bivet exploit, which was a massive exploit. Speaking of these functional improvements, are you passionate, specifically about creating better financial systems? Is this a problem-solving endeavor for you and the team? Or why are you seeking to accomplish this? I think that any great startup is the combination of

a very clear mission that's solving a very urgent problem that is also combined with just the fit of the team and the team's expertise and the team's passion for solving those problems and the team's passion for engineering really well-thought-out solutions to the problems. So, For us, it is both really fun. I love what I do. It's really energizing to be working on it every day. The problems are hard, but they're very interesting. And the approach that the Monad team in general has taken to rebuilding everything from scratch and introducing a bunch of HFT style optimizations to Ethereum and building a new decentralized system that is truly decentralized, that is supporting a truly globally distributed set of validator nodes, creating a borderless system

that's really decentralized and also really perform it. That's really motivating to our whole team. And it's also a very urgent problem to solve. It's just the problem of supporting all of finance and supporting all of commerce eventually through a base layer fabric that allows many different people to all coordinate in a shared global state. And speaking of the team, I have a lot of respect for the team that you've built. You guys are a global organization now, accomplishing a lot. I've had a pleasure of meeting a lot of them. How have you gone about acquiring the best talent and building the best team

and the scope of what you guys are trying to do? And what goes into that? I'm really proud of our team and really grateful for everyone that's joined us on the journey. I think that it's what a lot of other startup people will say, which is that it's recognition that building something new, building something hard is a very intensive effort. And I think we've just ended up attracting people who are attracted to that really intensive effort. We spend a lot of time together. We work on a wide variety of different issues. So it's people that are really passionate about

being the best of what they do and being part of a group that has very high talent density. And also a lot of people that someday want to start their own startup. And for me and for the other leaders in the team, we actually be really excited if people that are on our team right now someday leave us and start their own startup. So there's a very strong entrepreneurial culture as well. On that note, it's a nice segue. I think a lot of founders or founding teams are tasked with making this transition that I imagine you've had to make over time, which is you go from being a founder, maybe there are two or three people on the team and you're performing tasks, you're doing a specific body of work, and then you transition into running an organization with tens, hundreds of people.

And I imagine your role changes and you wear a lot of different hats. So how has that transition been for you? And how do you do that effectively? Yeah, it's really fun. It is very challenging because I've been forced to learn new skills that I didn't have, learning how to be a better manager of a bigger org, learning how to communicate really efficiently, learning how to delegate. I mean, these all sound like very obvious things, but it is understandable actually why when you listen to very notable founders talk about how they think about organizations and how they think about running their team, oftentimes they have very specific, very strong views about how a team should work together and they put in place a lot of rules that sound crazy, but also are actually very understandable.

So for me, it reminds me a little bit of the, I don't know if you've ever watched Silicon Valley, but they portray Peter Gregory as this really very eccentric character who you'll start talking him about something and he'll be like, I don't want to talk about that. I want to talk about burger buns and the seeds on the buns or whatever it is. And from the outside, it might seem like that's a crazy person. But then I think after you have been executing for a while, you realize, oh, no, actually, it is very valuable to be extremely direct and to redirect or to have strong opinions about how we all work together. Because ultimately, it's a very intensive effort. stakes are high and everyone here wants to be part of a team that's doing really well and we'll

learn a lot from the process. So maybe not being afraid of being weird. And to that point, it's great when you attract the people you want just based on the mission that you guys have taken on. I meant to mention on that note, one of the pieces I've heard of what makes you guys run effectively what shows that you've done a very good job is that you and the team are quite brilliant but receptive at the same time, which can be a rare quality in founders or frankly people building things because I think you'll often get people who are brilliant, but in that vein, not very receptive to other ideas or to changing course or taking feedback as needed. So a lot of kudos to you and all others out there who are doing that. I did want to ask, in two to three years' time,

what'll be a measure looking back of whether Monad's been successful and to what extent it's been successful in your mind? I think we will have been successful if people think about blockchains pretty differently a couple years from now. I think that right now, the general public sees blockchain as an emerging technology that's exciting, but also very hard to understand. And I think that success will mean far more people being comfortable with using decentralized systems and excited about the fact that decentralized systems are actually giving them back control of their assets and their data and their access to systems. I hope for the same. And maybe as a last question, I want to ask you, what's the first thing you'll

do once Monad Mainette is live. I personally am really excited about many apps that different builders in the Monad ecosystem have been working on for months or years. So first thing is just to try everything out and basically just get to be a fan of all of the products that have gotten to this stage and are in production or launching. So it's not only the launch of Monad itself and what our decentralized system, but also of amazing apps. Yeah, I enjoy. I was at the demo day you guys had recently and I got to see you tweeting about one of the projects symphony the next day and your experience using it. So I love to see that kind of engagement. Keone, it's been a pleasure. Thanks for making time. Enjoyed chatting. And hopefully we can do it again soon, excited for the next few weeks. Of course. Thanks so much for having me live.

Thanks for listening to another episode of On the Brink with Castle Island. To learn more about Castle Island, visit castle island. And to listen to all of our podcast episodes, please visit Castle Island. dot vc slash podcast or just click on the tab on our website. Thanks for listening.