The Wolf Of All Streets - Exploring the Internet of Assets with John Wu, President of Ava Labs

Episode Date: October 13, 2020

John Wu, the president of Ava Labs, came from a traditional background in finance, including extensive work in fintech and hedge fund investing. Upon discovering Bitcoin, he realized that he could only invest in it personally and not for his clients, due to his fiduciary duty and an inefficient financial system. So he built Ava Labs. John now directs an ambitious team that’s developing an entirely new blockchain infrastructure, set to disrupt both traditional finance and pre-existing blockchains. Scott Melker and John Wu further discuss discovering Bitcoin in 2013, the untapped world of alternative assets, taxi medallions, the internet of assets, the DeFi Petri dish, NFT’s, political polarization, the danger of big companies, the schoolyard vs. the comment section, trillions of dollars locked in an inefficient system, the ‘08 crash and DeFi, Mad Men investors and more. --- ROUNDLYX RoundlyX allows you to dollar-cost-average into crypto with our spare change "Roundup" investing tool, manage multiple crypto exchange accounts in one dashboard and access curated digital asset content and services. Visit RoundlyX and use promo code "WOLF" to learn more about accumulating your favorite digital assets when making everyday purchases and earn $4 in free Bitcoin. --- EQUOS Diginex is the first company with a cryptocurrency exchange to be listed in the US. That exchange, EQUOS, has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using equos.com/wolf. --- CELSIUS With the Celsius app you can earn up to 15% APY rewards on over 30 cryptocurrencies. Have crypto but want cash? Celsius also offers the lowest cost loans against your crypto with interest rates starting at just 1% APR. Enter promo code WOLF when you sign up and get $20 in BTC! Users must transfer and hold at least $200 of any coin for 30 days to be eligible for the reward. --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

I'd like to thank my sponsors, Celsius, Equus, and Round the X for making this episode possible. Stay tuned later in the episode for more info. What's up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast, where twice a week, I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, basically anyone with a good story to tell. This show is powered by Blockworks Group, a media company with over 20 podcasts in their network. Check them out at blockworksgroup.io. Now, if you like the podcast, you follow me on Twitter, then you should check out my website and join my newsletter. You can find both of those things at thewolfofallstreets.io. Now on to what's actually important.

Today's guest is the president of Avalabs, an exceptional company looking to disrupt traditional finance, headed by a group of people that are seemingly way smarter than me after doing some due diligence here. John has an extensive background in fintech and hedge funds, having worked for Kingdom Capital and Tiger Management. I can't wait to learn more about how he's brought his knowledge from traditional finance over to crypto. So, John Mu, man, thank you for taking the time to come on the show.

Well, thanks for having me. I've been looking forward to this. In fact, I mean, your background is so cool. I think I should have you on my podcast and I should interview you. I'm down anytime, but everyone here is bored of my story. So I try to find people more interesting to share with them. That's very kind. Thank you. So let's just start from the beginning. Give us your background. Obviously, I touched on a bit of it there, but how did you get interested in this space? How did it develop and how did you land where you are now? Sure. So I got interested in this space for two reasons. One, from an investing perspective. And two, when I looked at the business model of all of these blockchain companies. So way back when I started my career

as a technology investor at some places you mentioned that you probably know, Tiger Management, Kingdom Capital, I ran my own fund at Blackstone Seedit. And it was about that time in 13, 14 that I started looking at the crypto space. Bitcoin was going crazy in 2013, and then it crashed in 2014. So I started looking at it and trying to figure out if this thing was real or not. And frankly, I was a little skeptical in the very beginning. Ultimately, I went all in and I didn't go all in, but I loved it. And I said, I got to be part of this. I'll explain how I made that investment decision. But besides the investing itself, what I realized when I was at

my firm was that there was no infrastructure for a proper fund to invest in this stuff. I mean, back then, there was no such thing as a qualified custodian. So if I had invested this in my fund, I wouldn't have done my fiduciary responsibility to my investors. So I just invested personally in this. And that led to another chain of events where, you know, once I started investing effectively for my family office or for myself, I realized how many assets were out there, not just in crypto, but private alternative assets. And we think of alternative assets like just being an LP and a venture fund or a private equity fund. Sure. But the world has changed a lot. There's obviously crypto. You can buy private shares like

Airbnb in the secondary markets. You can obviously still be a fund in one of these venture funds, LP in one of these venture funds. We've seen Cadre, Yieldstreet, all of these things started popping up. And I realized that it was very inefficient, very hard. The infrastructure was not set up for individuals to invest in these things. When you are at a large firm, you have a giant back office, you have administrators, you have on the whole other floor, lawyers, everything, who makes it so easy for you that you don't even realize all the pain it takes to invest in this stuff. Anyway, one thing leads to another. 2017 happens, and we see this massive ICO boom. I think they raised just under $10 billion in 2017. Something-

Chopped change, right? It was a lot. It was just, well, what was astonishing, Scott, was two things to me, at least. The first was that how fast and how efficient a crowdfund mechanism can be. I mean, if I participated in my share of IPOs, nothing goes that quickly, that fast, and that efficiently. The second thing, having been in the alternative space my entire career, I kind of realized that all of the US dollars being put into this, most of it, were just basically illegal raises. You know, in the US, they were basically not complying with the security acts of 33 and 34. They weren't relying on the Reg D, Reg S, or 144A exemptions in order to raise money and transact.

So that led me to one of the places where I was investing in private shares, SharesPost. I knew a board member there. And I went on this mission, basically, to create a security token market. We had a great team. I was CEO of the Digital Assets Group. We actually affected some compliant trades. And ultimately, that led me to Avalabs, where Eamon Gunseer is the founder, came out of Cornell University. And what Avalabs is, with Avalanche Protocol, it really is a next generation blockchain. It's a platform where anyone can digitize assets, create assets and exchange those assets. And their mission is exactly the same as mine, make the world of digitizing assets and transferring them back and forth in a frictionless,

efficient way. You know, hopefully, ideally, we see assets and transferring them back and forth in a frictionless, efficient way. You know, hopefully, ideally, we see assets and value being transferred on the blockchain as easily as sending an email one day. Okay, so we get the idea. How do you do it? Because that seems like a Herculean task. So obviously, you know, in 2013, we're talking about Bitcoin. And, you know, that's when I started looking at it. That actually helped get people familiar with the whole space.

You had a growth in this asset class, inviting new entrants. And now we're about 500, 400, 500 billion. Bitcoin's like 200 or something of it. And it's created awareness. Bitcoin kind of has been around for a while now, 10, 11 years, and established itself as a store of value. So how do we get there? Well, I think it's basically the fact that Ethereum and now new first-layer protocols like ours, Avalanche,

that allow you to perform the things like scale, finality, lack of latency. It's that type of new innovation development. We're not the only one out there trying to do this. That's going to allow more creative and more products and different dApps. Part of that also is just time and people getting familiar. We had the first iteration of FinTech on the blockchain with the ICOs and fundraising. And now we've got a whole industry of DeFi. And that DeFi industry has gone, what, like 10 billion now? I mean, that was just like a billion in the beginning of the summer or something. A few months ago.

Yeah. Yeah. Parabolic. It's parabolic. It's actually insane. I mean, I think it's great for the space. But you're again, going back to your question, how do we get there? It's getting more people involved, creating instruments that that can cross over to great example of that. Although right now, frankly, DeFi is crypto stuff for crypto people. It's really retail. You're not going to see BlackRock tomorrow coming in and yield farming.

Although I can tell you, it's nice to have 20% yields when your bank is less than 1%. Yeah, interesting. I agree with you largely, but there are the platforms like Celsius and BlockFi and Voyager that offer high interest rates and feel more like a bank to your average person without having to go to Uniswap or log into a website that looks like it's from 1985 and start praying as you yield farm, as you said. So I do think that we are part of the way there. What is interesting is touching on what you said about the ICO craze. We saw how fast people were able to raise money versus an IPO or a normal security offering of some sort. But now in DeFi, you see these projects conceived, funded, launched, and then listed on a major exchange within two weeks. Fast, fast. Well, I think there's a couple of reasons for that. So first of all, going back

to your earlier statement, I think both groups, these DeFi products and companies, as well as the BlockFis who provide different types of yield, they're both necessary. One group gives a user experience that's more traditional finance. Yeah. The regular user is more used to that. Sure. The DeFi is really more crypto for crypto, if you will. But what it is showing the world is it's really deconstructing how the financial system value chain has been created.

You know, people think of DeFi just as the actual products or the apps, but it is really reconstructing the entire industry and taking that trust mechanism away from what used to be a major bank or intermediary and placing it in the hands and the governance of people who hold the token. So I think it is incredible. It is shining a light on something potentially great, but it's also a very dangerous petri dish where there's tons of experiments, tons of scans. And part of that is real genius also. Genius with new products, new things that are going to change the way people think about finance and how businesses are created. I think it's very difficult for your average person to differentiate and vet those projects and figure out which is which though. So it is a

dangerous environment, I would say, where people need to be cautious. But what you touched on is, the core concept of DeFi, decentralized finance, is brilliant. It is the future. I don't think that that's really in dispute. But what always strikes me now when I think about all these yields and the way we're seeing these platforms offer this interest is what the hell have our banks been doing this whole time? Right? Because this is the same structure. It just lets you know that there's a middleman that's taking away all of your yield at a traditional bank, right? They could do it. Right. Well, I mean, there's many reasons for

that. You know, some of the banks are, banking since 2008, since the Great Recession, has been more and more and more regulated. And when you are regulated, the regulation, yes, there's a for good purpose to protect the end user, mostly retail, but it stifles innovation. So I don't think the banks, these Goliaths, are in a position that they can just easily innovate and try new things. So this is the opportunity. It's classic David Goliath for any startup. But I also think the banks look at these products, frankly, you know, I have enough friends in banks today who look at these products and think that it is somewhat reckless.

I mean, of course, you know, but there are a lot of similarities. They don't realize how reckless 2002 to 2007 was. I mean, so you look at Uniswap, right? I mean, you're basically layering leverage upon leverage upon leverage. So you have this liquidity pool, you know, you put the thing in, you get this LP token and you take that LP token, you put it into the next pool, you get another LP token, you put it into another. So let's go back to 2007, 2008. So we had the mortgage housing crisis that created the Great Recession. What is that all about?

I mean, that was people taking mortgages, transferring the risk off of their balance sheet to banks. Banks purchase these things, strip them out, create tranches, you know, to different risk reward profiles, securitize this product, and sold it to institutions, though, frankly, institutions. And then the institutions thought themselves as sophisticated so they can underwrite that risk and they can basically narrow down where the pockets of weakness were so to hedge out that risk so they felt like they knew what they were doing going into these higher return profiles and then they take that and then you take the CDO and they literally put it into another pool and it became a CDO square that's number

two LP token into the next thing and then they take a CDO square. That's number two LP token into the next thing. And then they take the CDO square, pull that out and put it into CDO cube. So it's like layer upon layer upon layer of leverage. That's no different, by the way, than what's happening on Uniswap. So we all know now that when leverage goes up, correlation goes to one. And you have to figure out what that hidden risk is. And once that hidden risk falls on itself, the whole pyramid topples down on itself. So that's a risk that banks are not willing to take because they can't assess the risk in DeFi. They don't know how to assess that risk because in the traditional world, that risk was housing prices.

And the data they had in housing prices was that as a whole, the United States of America, houses never had a downtick in prices until 2006, 2007. When that happened, all the models blew up. What is the hidden risk in DeFi? Is it security? We've seen hacks already. Okay. Is it tether? One of these things, They don't know what the risk is. They do know that there's financial risk, there is potentially regulatory risk, and there's technology risk. So they just know that there's too much risk. So it's not going to be anywhere near the comfort level they have with trying to assess and nailing down to one or two things. So back to your question, what's the banks doing? Why aren't they doing it? They're hampered by regulation. And I don't think they're willing to accept this

type of risk yet. I know they're not going down the DeFi path of the crypto path, just to be more specific. I'm just saying that they can definitely squeeze out a couple percent for your average Joe who wants to put their money in a savings account, and they're not finding a way to do that. I do not believe that's through DeFi or through crypto, but there's money to be made. Not yet. Just to play the other side here, not yet. But I can see one of these, who are the biggest players again in the structure finance world?

A lot of them were the European banks back in the day. They were willing to go into exotic stuff and create derivatives. I can see some boutique bank whose technology is technologically savvy and needs to get an edge in their business that will someday, not in the next year or two, but someday create some of these,

call it products or use some of these products to help their clients get a better risk by underwriting that risk so the end user will be able to say, okay, XYZ European Bank, you're taking that risk on for me. I know my counterparty of this. And then they'd have to go figure out their counterparty risk. Well, we have seen the OCC come out and say that federal banks or banks in the United States can custody crypto assets. And now we've seen Kraken become a bank in Wyoming, although not, you know, they can't do everything that a normal bank can do, but they can, you know, offer you a savings account and give you a debit card. And, you know, so.

I thought that was a big thing. I thought that was a big, huge, but it didn't seem like the rest of everyone was so fascinated with DeFi. They weren't thinking, well, now, Fidelity's path to being a custodian was a lot easier. Goldman Sachs can do this. And I don't know, it just seemed like everyone was so focused on DeFi at the time when the news came out early in the summer. It was just kind of drowned in all the good news. Yeah, it was kind of crazy because I think it's huge. I've always said that one of the biggest barriers, I think, to mainstream adoption, even for your average person, is just they don't want to take that security leap. They don't want to go into unfamiliar territory and figure out how to use a wallet or any of these things. They just want to put it in their bank. Like they do any

of their other money and see it grow. But I mean, this also talking about yield and banks, I mean, if they can custody your crypto, they can lend against it. So, I mean, we're opening those doors to the banks, right? Yeah, that's right. It's an evolutionary process though. It's not going to happen overnight. We've already highlighted in our conversation how many different components it will take or variables it will take to get people comfortable and it will happen over time. Right. So you guys have been really, really busy. We were actually supposed to talk about a week earlier, but it happened to hit right in the middle of your main net. So I can imagine that you didn't sleep probably for about a week.

What was that experience like? It was awesome. It was very exciting. The whole firm was jazzed up about it. Knock on wood, so far it's been a good success. We have over 500 validators now in about a week on the protocol. And we are continuing to evolve and develop and make it more robust, the blockchain. But also we're starting to build that ecosystem out and stay tuned. In the next couple of weeks, we'll have some cool announcements of people we're

partnering with. That's awesome. So can you give us a little more like brass tacks, dig a little deeper into how it actually works? Because obviously, most people think Ethereum, as you mentioned, when they think about all this stuff, but Ethereum is like the equivalent of like a 1980s computer in ways of computing power, right? And it's very slow. It has its use cases, but it's not ideal. And clearly what you're doing seems somewhat competitive? Well, it is somewhat competitive, but we don't view ourselves as competitors of Ethereum. I mean, Gun, our founder, is very good friends with a lot of people in the Ethereum network, so to speak. We definitely do not want to be specific competitors with them. We think more than one protocol can exist. What we've done was very targeted and specific for what we've been developing, both from the business vision side as well as from the technology perspective. Sure, we think our underlying consensus protocol and our blockchain is actually faster. It's basically 2.0 and all those benefits, but we've built features and applications and made it easy to use so that whether it's permissionless or permission side, they can digitize their assets.

There's tons of assets that sit on balance sheets of traditional financial organizations, and they are not basically tokenized or digitized. We want to make it so that it's very easy for them. It's kind of like the way we like to describe it. It's like the old way was a building website when you hired a consulting firm to come in with all their HTML coders. And then you give them specs and you get this clunky product on your web for hundreds of thousands of dollars.

And then comes along Wix, where you literally drag and drop WordPress, which is a better iteration. And then it's just drag and drop. So we are making it so that developers don't have to just know slip. We're talking to a couple of enterprises working on proof of concepts. The one thing they love about it is that their own internal developers find it relatively easy to work with us. So that's another differentiator. But I think from a financial services perspective, one thing that I do have to highlight that makes a difference is that the way we do governance and the way we have it set up so that it's a hybrid system where you can have your own sub network, which is, think of it almost like a private blockchain,

where traditionally the restrictions to transfer these assets in a compliant way was set at the smart contract level. Restrictions were programmed in. We still have that, but now we've created governance at a deeper layer, at the network layer. So financial institutions who want to create their own sub-market or sub-blockchain, think of it, can actually create their own rules at the network layer, at the node level, and they can select who the other members of that network are. So that governance flexibility allows different products, because different securities have different restrictions,

different geographies have different restrictions, allows these banks or these institutions to be more flexible and control the lifecycle of that asset. And that's something they really appreciate, having that governance that they control. I think it begs an important question, which is why digitize or tokenize these assets in the first place? What's the advantage to changing that system?

Awesome question. I mean, in some sense, all assets are digital already, right? We've gone from analog to zero one. So, but that movement without the blockchain was what I consider more just like recording the right, the ownership onto a somewhat of a digital ledger. What blockchain has enabled is programmability on the blockchain and making that ownership intelligent and embedding code for the business logic into the blockchain and making that ownership intelligent and embedding code for the business logic into the blockchain. So suddenly with that, what you're doing is you're taking away

tons of workflow. So in the old way, sure, you take a piece of paper, a title for a property or anything, and you put, you know, digitize it as you don't want it and you store it on a database somewhere in your office, in the server room downstairs with cages. But when you want to transfer that title, that deed, or something around, there's a lot of manual workflow, a lot of things. Different companies have to get involved external to your company. They all have their own similar version of that, and you've got to repeat that recording and verification seven times

in old legacy systems at seven different places. At Rest Smart, you know, digitization or tokenization, everyone's on that same network. You're taking away that manual overhead, that manual workflow and making it instant and creating whole new ways to transfer that value and information almost instantaneously. In fact, in crypto, a payment of something is the settlement, whereas in traditional finance, I mean, I don't have to tell you, equity can be finally gone from three to two days, which still traps a lot of money in the system. Fixed income syndicated loans sometimes take 30, 40, 50 days. And a private share, if you want to move ownership from an employee

who owns some Airbnb to your hands, sometimes takes two or three months. So if that settlement process can all be done a lot faster, you're extracting trillions of dollars out of the system. And you as an investor can benefit that because you could deploy that capital elsewhere and your IRR would be much higher. So there's an infinitely better system to do it this way than the old way. So it exponentially increases speed and reduces costs and also eliminates all of these centralized parties and all of the middlemen in these transactions. It's actually scary because it's not just happening in finance. I mean, we're seeing,

you know, 10 years ago, you know, companies had their own, we just talked about, you transfer from hardware to software, you know, there's a lot of people in your IT department, just maintaining that cage in the basement and all of that. And suddenly it's like, they're all gone. No one doing that because it's in the cloud. It's AWS. It took some time. You know, when I was running my hedge fund, I remember my investors would not accept a cloud solution because they weren't, they didn't trust it. They didn't realize that Amazon is actually very secure. They thought, wait, I want to see a guy. I want to see the guy in the basement. I want to see him looking over and I want to see your, you know, your default place in case of a disaster.

And where's the second, you know, the second location. They wanted to physically see that. Today, that trust is now embedded into the investing due diligence checklist and it's accepted. I think that same mentality is what we talked about before with your average person who still like wants the security or the feeling that there's the guy they can call and they don't want to self-custodiate it. Or even if that may actually be the safer and more proper route. So I think it's just kind of an evolution of people's trust in technology to some degree and eliminating the feeling that there's a person that you need to secure, you know, to secure your assets and your information. You're so right on that. But that sometimes, you know, sometimes it's not the technology that's the limiting barrier.

It's the psychology of human beings. You know, when I first started investing in tech, I was investing in a lot of these advertising related companies. And it was kind of like Mad Men. You remember the old TV show? Of course. So good. Where you actually went out for steak dinners and drink nice wine and you smoked a cigar. And you had literally a physical rate card, a CPMs. And then the whole new fall lineup comes out. And these two guys, both dressed in suits, would go back and forth. And it was subjective like okay so this is gonna have this many viewers i want to charge you 30 per cp or whatever and you know i was a young investor i saw all these cool things like double click come out

and all these you know online advertising solutions where you can have more data you can track things you can have more precise analysis and it was like, why isn't this just taking over like instantly? And as a young person, there's two reasons I learned from that, by the way. One is because what we were just talking about, it just takes time in the generational shift and minds to adapt to a new way of doing things. But the other reason was kind of like, you know, those people have run through the gauntlet of a whole career of that. And the last thing they want to do was give up the change when they were just in the sweet spot of their career. So those are the two reasons, but that's the same thing here. Like, I think the good news with

evolution of technology, people now, the minds are more flexible. They are really, they've seen things just get disintermediated so quickly. I mean, you know, you went to a great school undergrad and you went to, I think Wharton, right? Is that right? I went to, I was in the college of arts and sciences at Penn. So I don't get to claim the Wharton degree, although I took the classes. A great school for finance and whatever it is, the good news is that they taught you how to think because you can now adapt to new things. But if you were just there and just learned the financial instruments and how things work,

you can actually throw out half of those textbooks and never even repeat it because that world just doesn't even exist anymore. We're talking about how the, you know, even the way central banks work, it's just completely different. And how you will value a company is now completely different.

I mean, it's just, if I told you there would be X amount of IPOs in the last five years that don't have any profitability, different. And how you will value a company is now completely different. I mean, it's just, if I told you there will be X amount of IPOs in the last five years that don't have any profitability, the old you would probably like call the new you crazy. Roundthex.com is one of my favorite companies in the entire crypto space. What they do is take all your small purchases and round them up to the nearest dollar and invest that spare change into any of over 30 crypto assets of your choice. They integrate with your favorite exchanges that you can view various exchange balances all in one dashboard and round up into different assets all at the same time. And they do all this without ever holding any of your Bitcoin. This is by far the best way to

dollar cost average into Bitcoin. Go to round the x.com and use the promo code WOLF for $4 in free Bitcoin after making your first roundup or purchase. That's R-O-U-N-D-L-Y-X.com and code WOLF for $4 in free Bitcoin. Diginex is making huge moves and is soon to be the first crypto exchange listed on the NASDAQ. This means that people will finally be able to invest on a platform they're comfortable with without being directly exposed to Bitcoin. Absolutely massive for mainstream adoption. DigiNext has basically everything investors need under a single roof, including an institutional grade exchange called Equus. Equus allows institutional and retail investors alike access to an exchange that's on par with platforms they've come to trust in other markets. This means

they are compliant with regulation, transparent and fair with regards to fees and orders, secure and far ahead of the curve in regards to innovation. Go to equus.com slash wolf to get 5% off trading fees. That's E-Q-U-O-S dot com slash W-O-L-F to get 5% off of your trading fees. Sign up now. Unless you've been living under a rock, you've heard about the DeFi craze in crypto. By far the safest and simplest way to passively earn in the space is to hold your coins on Celsius. You can earn your rewards in the same crypto you're holding, or you can earn even more in their cell token. Right now I choose to earn 5% on Ethereum in Ethereum and 15% on my stable coins in cell token. It's a little bit better than the sub 1% interest rates you can earn in a legacy bank account. Celsius was founded with the belief

that crypto is the opportunity to really shake up the financial system. They're changing the standards for all financial services. They share 80% of their revenue in the form of weekly reward payments. That's how their users are earning up to 15% APY with compounding rewards. They also commit to providing the lowest cost loans on the market. Their loans start at just 1% APR. For just 1% interest, you can borrow cash against your crypto and avoid selling, which also eliminates the taxable event. It's absolutely huge. High rewards on your holdings and low interest on loans on a platform whose mission you can believe in. Celsius is giving $20 to every new user that joins with promo code WOLF. Just enter the code in the app during registration. $20 is

awarded after 30 days of maintaining a wallet balance of $200 or more. Visit celsius.network, that's C-E-L-S-I-U-S.network, and use promo code WOLF, W-O-L-F. Right. That's true. And it's funny, the velocity of information now has increased so dramatically. Even I remember being a freshman in 1995, 1996 at Penn, and one of my classes, they told us, effectively, everything you learn now will be irrelevant

by the time you're a senior in 1999, right? So it touches, I guess, the whole part of education is you really do go there to learn how to think and how to learn because the information you learn. But I've got to imagine that now, over 20 years, sadly, later, since I graduated, that it's completely, I mean, it's that just on speed, right? I mean, they learned so much more than we ever could have

from our textbooks without, I mean, I was on a 14-4 dial-up in the library. That's right. If you wanted to download a movie, you basically like started the night before, you go to sleep. Yeah. And hopefully it comes in the next morning. Yeah. It was different. Yeah. If you wanted to like download a picture of a really attractive girl, I'm not saying if you did that my freshman year, but you would go to lunch and come back and it would be doing like the dot matrix. You would watch the picture load on your screen.

So do you remember the old brilliant analyst and now works at Kleiner Perkins, Mary Meeker? Yeah, of course. So I remember she was at Morgan Stanley at the time. She was a thought leader in this space and it was very early in space. I remember reading one of her reports where i think it was a future looking report she said that one day we will all be watching video on our pcs i mean it's pcs it wasn't even mobile it was an ipad you can even imagine that and then like everyone at my firm

at the time completely um made fun of that report because they did the math. This is how many hours it would take to download that movie. This is how much it would cost. And the math just wasn't possible. Somehow, call it about 10, 15 years since then, Netflix has shown everyone that it's even better than that report could have ever imagined. And I think that's the way it's going to be like a blockchain.

It's first going to be like AWS. It's just like, it's part of your business. And you don't even realize it's on a blockchain. It's just how you do things. Yeah, we talk about this literally on the show all the time. Like you don't think about how your email works or why your mobile phone can pick up a call. You just use it.

And I think that that's the future of the blockchain is it's just the underlying layer that you don't think about in all of your technology and most things that we do. Although one day I would love to know how my car takes me from one place to another and open that thing and look in there. I have not. My whole family are car guys and I'm definitely the guy who's like, uh, white. Some people know a lot about that. It's pretty cool. It's a really cool thing. I need to,

that may be one of my retirement pursuits. So we talked about tokenizing assets, the important of it and why you would digitize them. There's this huge buzz right now on NFTs, right? It's all of a sudden the, like the huge catchphrase. And it's been like in the last two weeks, it's been something I've been interested in.

It's been bubbling, but now we see like Ari Paul from, you know, and all those guys now saying like they're going really heavily into NFTs. So that's,

they're talking about ARK specifically, but when you're talking about tokenizing an asset, are you effectively talking about a non-fungible token? I mean, is that? It can be,

or I mean, I think non-fungible tokens used to be associated with just collectibles, digital collectibles. Right. I mean, that was basically what it was. And, you know, you had two standards. One allowed you to, I think, you know, they were all unique, but one allowed you to like

trade or fractionalize or something with it. I think the reason why NFTs have really taken a buzz recently, at least for me, I've seen a lot of use cases now, I think, for NFTs that make a lot of sense, even in DeFi. Like when you want to invest, you typically have PI information that needs to be transferred. Why not create an NFT-like structure where you capture that data and then somehow this NFT product, it's just you and it's unique to you, but you can transfer what you need so that you don't have to disclose all that stuff. It's a great, it has potential for being a great PII type of product,

as well as these collectibles and all of these other cool things that people are thinking up about. But we'll see. But I would imagine that Avalanche has use cases for all of these things, right? I mean, beyond obviously like the obvious things, as you said, like your mortgage title, you know, art as well, right? I mean,

so yes, the answer is yes, we are, you know, and you're right about last two weeks, we've seen a lot of projects who are talking to us about how to create cool things. And unfortunately I can't talk about one. That's really on top of my mind because we're still in discussing with them. It's actually a traditional business. I'm going to call you back in like two weeks, please do. But they are doing something with NFTs. I think it's going to be very, very cool. And on the other side,

we already have a business development partnership with Polyent and Polyent's creating a NFT platform for trading. So things are definitely happening in that space. I've definitely seen it empirically from my phone calls, if you will. But I think it's's gonna be one of those things where also it's gonna take time for people to find out the ideal use case. Yeah, I agree. I think that, uh, it's very much in the exploratory and early phases, but it's really, really exciting in my opinion. I mean, even if you just take it in the context of the art, the ability, the scarcity, the

provability, the lack of worrying about forgeries and provenance and all those things. It's just such a cool and unique. And then of course, all the additions you can do with it being digital, you know, um, and it just, just really, really, really cool. And something that I'm really excited about. I want them to figure out a way so that I can own me again. Um, no, seriously. I mean, like if you, I Facebook Apple all these companies they have tons of data on you Scott you know the you know the the online you probably knows the physical you better than the physical you knows for sure you and the problem is they take that and they actually use it to make money and don't pass any of that to you. And they actually invade your privacy many times. So like, if we can figure out a way with these non fungible tokens to give you back to you, I mean, there's going to be business models imagined from that alone.

Now you've gone way over my head, but I love it. I love it. I love that concept. I can't, I guess I can't quite grasp how that would be possible, but that would be incredible. And you've obviously, as you said before, I mean, you were very interested in these online advertising models from the very beginning. My wife is an internet marketer. She owns an internet marketing company. She's been doing this stuff since like 2008 as well. So I think I've been privy to how kind of scary the entire thing is and how targeted and how much data they do have.

Do you find these huge companies, the Googles, the Facebooks, Amazons, the amount of data, do you find that a bit terrifying? I mean, to me, that's a bigger threat to myself and to the world and life as we know it than any government is. I mean, terrifying is a good word. I feel like when they just collected your data to better send you ideas for what you want to buy on e-commerce, that was one thing. Fine. have engaged with the best of the best psychologists and, you know, people who are, as well as statisticians, they combine these interdisciplinary skills into a way to, like, persuade you on what you should be doing. And that is now very, very, very scary. And I think a lot of these companies, unfortunately, have to come to a reckoning at some point because a lot of them basically end around

the communications laws by claiming to be a platform where anyone can say and do anything. But now they're starting to restrict people and they're also using data to persuade people. And once you do that, you're a media company. You're not an independent platform. So I think one thing both right and left people can agree upon. And something has to be done at some point. Because really, your identity, that data is really today's equivalent of energy. And that makes everything run. So someone needs to figure this out. And when you combine the amount of data they have, the way they're using it, as you said,

and then just the physical addiction to the devices. Yeah. When you combine all of those things, you really, your average person, anyone, you don't have a chance. You can't even formulate your own thoughts anymore in this world because they're so good at feeding you what you think you should believe. That's correct. It's one thing if your own habits get you addicted to something, but they are purposely planting things to addict you.

How is it different from cigarettes then? Or coffee, putting extra caffeine in there so they know what makes people love this and come back for and create a feedback loop so they can't stop. It's also become very, um, I hate to say it, but like, I just, it's crazy how, you know, how much angst there is in the world today. It's just sad. Yeah. When we were kids, you know, you hashed out your issues on the street or in school or face to face and you just didn't have this level of angst. It's as you said, I feel like it's made everybody nervous, anxious, fearful, paranoid, choose your favorite word. But we did not grow up in a world with this level of polarization and fear. No, no, it's weird. It's kind of weird. I mean, I think when you're anonymous behind the screen,

you're more willing to say crazy things. But when you're on the schoolyard, you're not as willing because, you know, like you said, you know, you resolved it face to face in one way or another. Yeah. Trolling was not a thing when I was growing up, but there was just a talking when I was growing up. There was just talking smack and dealing with the consequences. I guess you could tell someone something bad about someone and it

would eventually get back to them and then meet me at three o'clock at the merry-go-round. But yeah, it's definitely a different world. So I'm curious now, you guys have launched. It's clear what your use case is. If you had to give us the vision of, I don't know if it's a year, 10 years, a hundred years from now, but when you are at full capacity, when this thing is complete, what does it look like? All right. So there was one year, there's five, 10 years. So I think one year from now, we're going to be populating our ecosystem. You're going to see a lot of applications. You're going to have more assets on our protocol, and you're going to have a lot more users. That's simple. I think in three to five years,

I think we are going to help usher in, I would think, a new way of how people think about not just money and how money and assets are transferred. But because our platform is capable of doing so much and scalable and we're going to grow this community, I think we're going to help the way people think about how business models are developed and how business entities are developed. And I think with the programmability of the blockchain and the community of the blockchain, we've seen some crazy things. I think earlier you said, look at these companies that just two weeks ago were almost nothing and suddenly they're huge. So even in crypto, you've got like a coin base that's just from according to the last round i think they're an eight billion dollar valuation they've got like 14 or 1500 people working there they've been around for eight nine years and then you've got and then you've got uniswap i think it's like less than 10 people there um very new you know not a

year old i don't think. And basically, if you do their network market cap based on their coin, again, this is not apples to apples, but to give you some sort of perspective, they're almost as big as Coinbase. They're like, you know, four or five billion. So like, the way people think of businesses, and if the business logic can be programmed into the blockchain, and then you have a good community around it, this is what Linux needed back in the 90s. I mean, Linux ultimately, because this open source technology became very powerful and is used today by enterprises, but it didn't have right incentive mechanism and a community around it has allowed literally companies to basically work as if you're in you know a commune like in burning man where everyone just works together and accomplishes something um and it's actually a beautiful thing i mean you know as a tech investor even you know back in the day we were taught you want to look at things

that were low CapEx, high margin and could have network effects because so it could really scale. And suddenly, you know, blockchains figure out the ultimate scaling mechanism. I wonder how much actually gets accomplished at Burning Man or how much people perceive that they have accomplished. I think they perceive a lot. They haven't accomplished the meaning of life on Friday,

but I forgot it on Saturday. They definitely have a lot of fun, that's for sure. It definitely seems that way. So you've created this incredible network that can be used by almost any industry, seemingly. Where does, you touched on this earlier, but where does regulation fall into this? Because you are dealing with, I mean, every single country and forget that, every state,

sometimes every county has its own regulation or laws specifically for finance, certainly. Does this skirt those regulations? Does it make them moot or do you have to deal on a per case basis with every country that someone wants to utilize Aave. And I think the answer, especially at DeFi, I'm assuming that's the primary topic. In general, yeah, sure, DeFi, yeah. So I think with DeFi in particular, regulation is going to be more and more of a risk. And the answer is to when, I think that's one of your questions. It's the same answer with the ICOs back in the day is when there's enough dollars that could have been captured by Wall Street that's not being captured by Wall Street. I mean, do the 5%

on the $9, $10 billion of funds raised, that's a lot of money that's not going to Goldman Sachs' pocket. When that starts happening and DeFi starting to get to that size, then people will start looking at it and start picking at it and try to create barriers, most likely regulatory barriers and start creating issues. And I think we're getting close to that point. That's a Machia technique. That's like your business is running on my turf. So pay me a percentage or I put you out of business. No, I don't think it's like that. Sopranos, man. Come on.

I just think when enough money is being flown into an asset class, it invites new people to look at it and say, wait, why can't I do that? I mean, look at, you know, unfortunately, the taxi commissions can do that well enough because Uber and Lyft kind of skirted a lot of municipal rules. They just said, you know what, we're just going to do this. We don't need a taxi license. Luckily for Uber and Lyft, they had the power of the people who love the service and was convenient. So the taxi commissions, and frankly, no one cared about those guys anyway, you know, weren't able to fight back. They tried. Medallions in New York City were like an investable asset. I'm born and raised in New York and I cannot believe how those things used to be so valued and just like destroyed people's lives. Yeah. I mean, I don't know what they are now. I have no idea, but I know that they were effectively had reached a seven figures, you know, per, per medallion just to, for the, um,

for the honor of being able to run a taxi. And like I said, it was a tradable asset. I mean, people bought up the medallions effectively leased them out and made an absolute killing because your average cab driver can't buy a $600,000 medallion just so he can go drive around. That's crazy. That's right. That's a scam. I mean, it's so insane when you think back about it that that was, but it's a great example. But going back to this, you're not dealing with taxi commissions. You're dealing with large, large, well-funded bodies out there. And it's a different fight to pick.

Right. But it's interesting is that the point you make, and I agree, is that it's when it gets on Goldman Sachs' radar that it becomes a problem, not when it gets on the government's radar. Although we could say, I guess, when it's on Goldman Sachs's radar, it's effectively the government's radar. But it really is about Wall Street and the money more than it is about protecting the average person, I think, in my opinion. There's two ways they can go about this. They can either embrace it and get all in on it, and maybe even buy some companies out, or they can go and fight it and go the other way. Right. How much do you think a company like Goldman Sachs is exposed to crypto?

Actually, since the OCC rule, I think they are definitely getting more and more into it. In fact, I think they're talking to a lot of crypto companies to figure out how to manage their treasury. So it's still tiptoe. It's still not that big, but they are moving towards that for sure. And I think that they've,

I mean, we've seen they've invested or at least superficially have some money exposed to companies in the space. So I guess, you know, it's kind of the axes and shovels, pick axes and shovels approach, which is invested in exchange and you'll always make money on the space and you don't need to have it. Right. But I mean, I think that there have been creative ways for these large companies to invest in crypto without having to custody Bitcoin. I think that is changing. So they are going to start going from investors to actually operators of certain businesses, but it's going to be a slow path. They're going to tiptoe. There's no way they're going to just like dive headfirst into these pools. Yeah. So I'm curious what you think of Bitcoin in 2020, because obviously you found it early. As you said, you went all in. You weren't necessarily going all in on Bitcoin. You saw the promise of the space and the technology. So what do you think Bitcoin is now and where do you think we stand? Well, I think Bitcoin has established itself as a alternative store of value to the other stores of value.

Digital gold. Digital gold, if you will. And I really think, going back to what we talked about with the money printing we've seen in central banks as a whole, this is going to be one of the alternatives to fiat, you know, and people are going to start buying. You're going to have asset inflation and fiat deflation. And the question is Bitcoin, and it's going to be a competitor for that capital,

be it from gold or equities or other instruments. And then how it competes with those instruments will depend on two things. How many rails are set up so people can easily get into Bitcoin and the willingness to psychologically get over the hump that this is something you can't really kind of touch when we talked about. And I think over time, when the investors, especially when the millennials get more and more

of the wealth in the country, Bitcoin continues to go higher and higher and higher, which is great for crypto and blockchain as a whole. It's inviting more people, new users, and hopefully with that money and the capital that comes into the space, we can create some of those cool things you and I talked about that I threw out there,

but have no idea how we're going to get there. So Bitcoin's not going anywhere. It's not my space. What do you like? I agree. I mean, I agree. I think that I'm definitely not a maximalist in the idea that there can be only one. I think it's great for what it is. We know that there are faster networks, better ways to transact. But I believe that because it was the first in the deflationary and security aspects, that it's a great store of gold.

I kind of joke that like, at this point in my life, I want to save my Bitcoin and spend my dollars, you know? Absolutely. Yeah, that's the store of value. Dollars are not storing your value, for sure. It's very hard then to compel people to spend Bitcoin if they believe that, which I still do. So it is a bit of a catch-22 if you want it to be something that you would use daily if you view it as your store of value. I would rather spend dollars than spend. Yeah, that's right. That's right. You're 100% correct.

So what do you think the future is for Ethereum? Ethereum is going to exist. They've got 200,000 devs on there, which is, you know, a lot for crypto. But if you compare that to like the two or three million on iOS, developers on iOS, and I think six or seven million on Android, It is just really a tiny, tiny speck in terms of developers out there and languages they know. So I think Ethereum is the first. It's going to be around for some time, but I think there will be other platforms

like ours and others that you may like that have improved upon some of the things that Ethereum is trying to improve upon. And then those new platforms will serve specific functions. There's no reason why there should be just one system out there, if you will. There can be many systems. And Ethereum 2.0 seems like just an incredibly difficult thing to implement with, especially now that DeFi is booming so hard and there's so much happening on the network and

it's so slow. I mean, how do you implement those solutions? Very hard. It's probably going to be pushed out like it has been. Every six months, it kind of just gets pushed out again. I don't know, but the gas prices and the congestion is a problem and it's one of the other risks to defy. Obviously, we've seen it already. I tried to participate in a liquidity pool early when I was just testing it out. It was a hilarious experience. It was literally $10,000 and the gas was $3,000. Obviously, I didn't do it.

And then by the time I got my $10,000 out, it was like $9,000 because there had been a move in the asset that I had to buy. And those are the kinds of challenges that you, uh, that you face when you go through these things. But I've seen gas fees that are literally $3,000 and your average transaction now is up to the same at 30, 40 bucks a lot of the time. I mean, you'll see three and four, if you're just moving something, but if you actually are on Uniswap and you want it to be fast and make sure that it actually goes through and you're upping the gas. That's kind of music. That's like an international wire transfer prices.

Absolutely. That's kind of music to my ears because on a macro level, I'm glad to hear that there are so many people involved in DeFi. It's happening. On a micro level, that's great. This is what Avalabs and Avalanche is all about. And in fact, some of the devs that have been in our testnet, they're DeFi-oriented type guys.

And they want to see what the potential is. Yeah, the potential is tremendous. So something I noticed that you're passionate about is advocating for diversity and inclusion as a board member of different companies. Why is this something that's so important to you? Well, I mean, I think it goes back to like governance. You know, part of the reason why I am in crypto is because, like we said before,

the token holders somehow are part of the governing and decision making. And I don't want Goliath, whether it be a government or places of companies you mentioned earlier, to control everything and then ultimately use that power to persuade me. And I don't even realize that I'm being persuaded. So I think if you have some diversity, you're hearing different voices. You are also, you know, I'm not saying everyone

is right. And I frankly, you know, diversity is very important to me, but I also want the right people for the firm. So you can't completely trade off one for the other. But in the ideal world, I want to see a diverse group of people with different thought processes, and I want to take the best one out of it and make it good for everyone. Makes sense. And talking about this Goliaths, man, just to get back to it, like, hasn't the train left the station? I mean, how do you stop this once it's begun? It's not going to be regulated away,

their behavior. It's impossible. I mean, it just feels like we're going to be like suckers to our phones and these companies into, into perpetuity. Well, you may be right. Hopefully you're wrong, but you may be right. I mean, if you look at all the great areas of technology going forward, whether it's AI or Internet of Things, all of that just play more and more into the hands of the existing, the technology that actually may combat that at some level. But everything else just makes that theme bigger and bigger and feeds the beast, so to speak. I mean, AIs and machine learning, just more data, more processing capability, more persuading you to do whatever they want you to do and buy things that they want you to buy. So hopefully blockchain is one of those answers. You just mentioned the internet of things. There was something, a cool catchphrase that I saw on your guy's site and in the video, the internet of assets was a term you guys use. What does that mean?

So we want to think of ourselves as a platform and enable people to basically come to us and develop cool things in finance or digitizing various assets. It could be financial assets or it could be some sort of collectible. You know, we're talking about NFT. is good for transferring information around, but the blockchain is something that can transfer info and value around in a seamless manner. So we want to be the platform that allows you to do that. So cool. It's so cool. It has so much potential. I love that phrase. So I know we're getting up against it with time. Are there any parting thoughts, anything else that you'd like to share with people, what's coming from you guys in the future, things they can get excited about? Absolutely.

So what's coming from us is even more functionality. And also there's going to be some great partnerships. And I think you already kind of created a pre-announcement of various sectors that we're doing in both in DeFi as well as in the, call it, memorabilia world or NFT world. So stay tuned for that. But in the meantime, I think I would love everyone to go check out Mainnet. It's brand new. Try it out. Be a Val dude.

And, you know, we're up to 500 already and test out the speeds pretty soon when projects are on there and assets are on there. And where can everybody follow you and keep up with you guys to make sure? So the best thing about our website is a lot is on it and you can find anything. So it's avalabs.org. You can find a lot of information from deaf kids

to just general information about what Avla is and the people involved in our mission and what our goals are. And then for me personally, my Twitter handle is John, the number one Wu, or feel free to go to my website, johnwu.finance and read some of the stuff I've put out there. Awesome, man. Well, thank you so much for taking the time. I can't wait to see what you guys have for us in the future. It really sounds like earth shattering tech and that this is one of those things that could really change the way that we operate. Scott, this is awesome. Thank you so much. I appreciate it. All right. Do it again soon. Excellent. Let's go.