The Wolf Of All Streets - Generic Blockchains Don’t Work. Building A Layer 1 Specifically For DeFi | Piers Ridyard, CEO Radix

Episode Date: October 4, 2022

Piers Ridyard is a CEO at RDX Works, a core developer of the DeFi protocol, Radix. We met with Piers at Mainnet by Messari to talk about why Radix is building the decentralized finance-focused blockchain and how he sees the future of DeFi. Piers Ridyard https://twitter.com/PiersRidyard Radix: https://www.radixdlt.com/ ►► Get 20% off on your ticket to W3BX. Use my code: WOLF20. Register here: http://web3expo.live/  ►► JOIN THE FREE WOLF DEN NEWSLETTER https://www.getrevue.co/profile/TheWolfDen  GET UP TO A $8,000 BONUS IN USDT AND TRADE ALL SPOT PAIRS ON BITGET FOR ZERO FEES! ►► https://thewolfofallstreets.info/bitget   TRADE ON THE WORLD’S BEST DEX, BULLISH: ►► https://thewolfofallstreets.info/bullish/youtube  Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

What are you building these days? Describes what you're about to do. Make the tokens. So we'll copy the EVM, we'll copy Solidity, we'll copy the user experience, we'll fork Metamask. Well, we just copy the Uniswap code. We'll just copy the, you know, that's what's happened on BSC. Bridge hacks, exploits.

And, you know, in many ways that's terrifying and it should be terrifying. Yes, the yams were silly, but that's a really interesting tool. NFTs are going to be the most common form of asset on top of public ledgers, I have no doubt. What DeFi has done for us is show how you can create all of the things that have to happen. You said something in passing that so many founders and builders have said to me. Should we just drop everything and start again?

Probably not. At the end of the day, people have to not lose money. That's a long time. It's going to be hard. There's a seemingly endless list of layer one protocols and blockchains that people are using for multiple purposes, but most of them were not built for a specific reason. Piers Ridyard, the founder of Radix, sought to change that by building a blockchain that's specifically for DeFi. He's going to tell you why it's different and why that's important. What are you building these days?

So still the same thing, which is basically it's a public ledger, layer one protocol, like Ethereum, like Avalanche, like Cosmos, whatever you want to talk about, but focus specifically on decentralized finance. And we started that focus probably in 2019, where we started to look at what kind of applications are being built on top of the platforms that were already out there, like Ethereum. And we realized that we had strong conviction that decentralized finance was going to eat the world. That was essentially going to be that finance on top of a public ledger made so much sense because the ability to move capital instantaneously, to make it programmable, to make sort of capital allocation essentially an automatic process that you could compose together many, many different financial applications that would easily outcompete what we currently have as the banking system today, of course the $400 trillion global financial system was going to move on top of these platforms. But we did a survey and we're like, yeah, but nothing comes close to what is actually necessary to do that. It's all shit. It's all wall-to-wall crap. None of the infrastructure scales. The developer experience is awful. And these are well-paid

developers that are still getting exploited and hacked for, like, billions of dollars in these protocols. And is that the fault of the developer? Probably not. Probably not, given how long this space has been growing and building. Like, you've got to at some point say, are the tools wrong? Like, is this actually, is there something structurally incorrect in how we're building these applications in the first place? And then the user experience is laughably ridiculous, right? Like 1980s Commodore 64 level. Right. You'll be familiar when a developer hacks together a demo product, right? They go, okay, we're going to do a little

hack to show you what it might look like. But we would never ship this thing. Yet money started to flow into the space. And so people were like, oh, cool. Yeah, MetaMask is definitely the way that we should be making a user experience. And like, this is definitely, you know, the best thing that could possibly be produced. And the problem is, is it's terrifying. Like the way I describe these public ledgers is this is somewhere that we should be able to trust our financial future to. And we don't even trust that when we click the button, the money is going to go to the right place. Yeah. Which is kind of insane. So Radix is a public ledger that focuses on getting these

three things right, right? Like making sure that the infrastructure scales in a way that doesn't cause bottlenecks, creating a developer experience that actually allows developers to focus on the thing that matters, which is building functionality, like not worrying about exploits and hacks and bugs and all this kind of stuff, and creating a user experience that, you know, your mother, your gran, your sister, your friends who aren't in the crypto space could feel, you know, confident about using. And that's been our goal since, you know, Radix started back in 2013. It's just been that long journey of working out how to do that properly. Started in 2013? Right around 2013, yeah.

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web3expo.live. That's web3expo.live. Use code WOLF20 to get 20% off your ticket. WOLF20 for 20% off your ticket. Guys, let's hang out in Vegas, October 10th through 13th. What's interesting is that the problems you describe are perhaps more prevalent, or at least certainly more in the spotlight now. It's 2022, and all we hear about is endless bridge hacks, exploits, people losing their funds, phishing scams. I mean, if you buy a Bored Ape, it's basically gone instantaneously. So it feels like we haven't solved any of it. No.

And a lot of what's happened, I think, and this is kind of why I like bear markets, right? When money flows in, there is an immediacy requirement that every single company ends up having to follow or strongly feeling like they have to. And so every single layer one protocol that's come to market is basically just a little bit of a twist on what already came before, right? Oh, it's not scalable enough. We'll make it faster. We'll copy everything else. So we'll copy everything else so we'll copy the evm we'll copy solidity we'll copy like the user experience we'll fork metamask no one's actually stopped and gone should we just like drop everything and and start again with what we now know is necessary to make this work mainstream. So like a good example in Radix is something that we call the Transaction Manifest. So Transaction Manifest describes what you're about to

do with a transaction in almost plain English. So it goes, you're about to take these tokens from here, you're going to put them in there and you expect to get these tokens back, is that what you want to do? Sign, right? So now instead of blind signing a hex, you actually know what's going to happen in your user interface and what you're signing is actually what gets pushed down to the ledger, right? If you go down a level below that, everything that is a primitive of DeFi, so assets, tokens, NFTs, pools and shares, the ability to swap one token for another, all of those are just primitives of the Radix Ledger.

They're built directly in so that when you're a developer, you don't have to build all of this boilerplate. You can just go, OK, well, I want a pools and shares component. I want an authority component. I want to be able to do this or that. And that's all built into what we call the financing. Legos. Yeah, it's like Legos that now you're putting together,

but also you have all of this insurance about the security of it. You can't have reentrancy. You can't have recursion. You can't have all of these things that cause bugs and hacks and exploits. But to do that, we had to throw away the EVM. We literally had to just go, no, EVM's crap. We had to go, no, Solidity's crap. And so our approach is, in many ways,

is a harder path. We've chosen to go down this path of going, we're not going to take any of the stuff that has come before. And as a result, we have to work from behind because we can't just go, well, we just copy the Uniswap code. We'll just copy the, you know, that's what's happened on BSC. That's what's happened on Avalanche, whatever. But we believe in doing so, we're actually opening up the possibility to go from, you know, a few tens of thousands of devs that we have today to actually opening it up to give a programming language that allows people to get hundreds of thousands, maybe millions of devs into the space, which is what's necessary for us to move to the next level of this game. So was Solidity the issue that you identified initially?

It's just a poor programming language. You said it's not really the fault of the developers, so it implies that it's the fault of the tools that they're using. Yeah, it's a combination of a couple of things. So Solidity has a lot to answer for, but the way you architect programs on top of public ledgers also has a lot to answer for. So this goes a little

technical, but when you have an ERC20 contract, the Ethereum ledger doesn't understand what a token is, right? So when you open up your MetaMask wallet and you go, well, how much USDC do I have? The wallet doesn't know how much USDC you have. What you have to do is you have to say to the wallet, oh, that contract over there, that contains my balance. That's the USDC contract. And your key is just a line item on a balance that the USDC contract is storing itself, right? So instead of, imagine like Ethereum is this incredible Excel spreadsheet, right? And then every single smart contract is basically a post-it note that someone stick on top of the computer screen. They're not actually telling the ledger, hey, this is a token. They're

going, oh, you have to go and talk to this program to get your balance, which is why you can get all sorts of tokens that look like ERC-20 tokens, but actually steal your balance or whatever as a result of the way the authorities work on top of public ledgers. So if you want to swap between two tokens, you're not actually asking the ledger to go this token for this token. You're sending a message to that smart contract and you're saying, I authorize this smart contract to, on my behalf, update this balance on the condition that that balance over there is also updated. So you end up getting three smart contracts all talking via messaging. And all of those messages require delegated authorities.

And all of those delegated authorities lead to the hacks and exploits. And on Radix, what we did is we went, no, no, no, no. Make the tokens, make the resources that you care about components of the ledger. So if you create a token on Radix, it's a token. And if you want to swap it, one token for another, you're swapping, you're telling the ledger to swap one token for another. And all of this message passing and all of these ways

in which hacks and bugs and exploits can occur because of the balance checking and the, all of the things that have to happen just in the way you build smart contracts, that all goes away. So it's a combination of the language being bad and the way that smart contracts are architected being bad. So it'd be fair to say that nothing that you've seen in the space of late surprises you. The

hacks and exploits, you could have anticipated that for the last nine years. For 100% because it's so hard to, it's the problem that you always get with computing, which is you start with a generalized platform where you're not sure what it's going to be used for. And then as you understand more about what you need in computing, you end up with things like coprocessors, right? Where you will have, well, if I need to be able to do signal generation, then I'll have its own little component on the chipset because you know the shape of application that are necessary or GPUs or whatever. And because a public ledger is essentially set in stone

once it's put in motion, it's very difficult to change how state is managed on top of a public ledger. Look how long the merge took. And that was just changing how security was done. It wasn't even anything to do with how the programming language was executed. It's really difficult to change once things are set in motion. What you described also obviously is reminiscent of the need for layer twos.

Right. Right. You obviously build this foundation and then all of the problems that exist in it that you can't change, you have to go outside to other solutions. So will Radix eventually, let's say a billion people come into crypto and are using DeFi, will you eventually need Layer 2s or will everything be supported on the Layer 1 because of the way that you've built it? It's a really good question. I think there's a place for Layer 2s in, I think Layer 2s are really clever for lots of reasons,

but Radix will require Layer 2s a lot less. So the reason that Radix requires Layer 2s a lot less is because of the way that we do sharding. So on Radix, everything is sharded, or at least when we get to Xi'an, which is the sort of release we do after Babylon. So Babylon happens first half of next year, that's when our smart contracts get

integrated into the public ledger, and then Xi'an is when we go to full sharding. So, Radix has a shard space of two to the power 256 shards, which is a very large shard space. It works by making all transactions deterministically mapped to that shard space in a way that helps you sort between transactions that are related and transactions that are unrelated. Simple example,

let's say that in the shard space, your wallet maps deterministically to a shard, right? My wallet maps deterministically to a shard. Now, we're not the same person, and the chances of us being on the same shard is two to the power 256, one and two to the power 256. Now, we're not the same person. And the chances of us being on the same shard is two to power 256, one and two to power 256. Now, if you send some money to your mother and I send some money to my mother, those two transactions, we know they don't conflict. We know because they're coming from two different shards and they're coming from two different wallets, right? Now, the reason that's important is that most blockchains try and order absolutely everything. They don't care whether or not they're related or not. You have to, in a block, you have everything

is ordered in the block, and then each block is ordered literally against each other. On Radix, you have this idea of essentially virtual consensus operations where I, as a node, could be running your transaction consensus and my transaction consensus in parallel. There's no reason to be ordering them against each other. And so what you end up having is you have this ability to parallelize consensus operations in the same way that you see in a GPU versus a CPU. And that means that you're able to get a huge amount of throughput with a billion people in your example. But also because the shard space itself is already pre-sharded to a very

large degree, the amount of data on any given shard is actually quite small. So you can chop up the shard space across the nodes that are running different amounts of the shards so that you can have hundreds or thousands of nodes that are already, you essentially already have your data availability layer sharded in such a way that you can manage very large numbers of transactions and very large amount of data without having to go to a layer two solution.

The points where you might want to go to a layer two solution, is if you want to really dial down your transaction costs. You have some reason that you want to dial down the transaction costs from them. Because at the end of the day, consensus is expensive. There is a cost to consensus. And if you want a subset of nodes to agree on a thing, there's going to be an economic cost associated with that. With layer twos, you can basically block together very large amounts of transactions.

So I can see that coming. But from the point of view of DeFi applications, yeah, there is less reason to use Layer 2s on top of Radix, much less reason to use Layer 2s on top of Radix than you currently see. And the other reason to avoid Layer 2s is that there's a really important concept in DeFi called atomic composability, right? Which is this idea that I want to be able to compose together more than one application so that I can go, Flash loans are a great example of this. I want to, on Aave, I want to borrow something off Aave. I want to swap it on Uniswap. I want to take the result of

that, swap it on SushiSwap, and then I wanted to pay back my loan. I want to do it in one block. If you have lots of layer two solutions, you end up fragmenting liquidity and fragmenting the ability to compose together all of these financial objects. Now, that may seem okay, because as a viewer, you might be going, well, I don't do that. The thing is, is that that's actually what keeps the price in line, because what you have is zero block time transactions. You have transactions where you can arbitrage within block time price differences between markets. What that does is it makes sure that the market price stays as accurate as possible. And as soon as you break that, like you do with Ethereum sharding, like you do with actually any of the other sharding techniques that we've seen,

you now have to wait multiple blocks to be able to compose apps together. And that actually breaks the pricing model for how DeFi works today. So this is the other reason that we think layer two solutions are interesting, but should only be used in very specific circumstances. You said something in passing that so many founders and builders have said to me, which is, I kind of enjoy this bear market. It's sort of a meme now, bear markets are the time to build. But when we're in the depths of that bull market and there's FOMO and everything's going crazy, it seems like there is massive pressure to move fast and break things. But this time, I think we broke some massive things that have really put us as a target. It's put the industry down.

In general, it's hurt the industry. In general, it's hurt the industry. So I guess it's a multiple part question. Was it frustrating to you when everybody was moving fast and breaking things when you have a methodical approach? I mean, you just talked about like, our next update will be sometime next year, and then you're not trying to do things in three months or six months. So A, was it frustrating to see people doing what they were doing because you knew it would set them back?

And obviously, the attention goes to them rather than to you? And B, is there any sort of, I don't know, satisfaction or an I told you so kind of feeling now when it comes back to the people who actually were methodical moving slowly and wisely? I think it's really interesting. They're really interesting questions. I think that building a layer one and building an application on top of a layer one have very different time horizons. As a layer one, it's a lot like shipping hardware.

Like once it's in the field, it's really difficult to change and really expensive to change. So the way that you build tends to be quite defensively. You tend to be, have to be very methodical because at the end of the day, people have to not lose money on top of your platform. They have to be, have to be very methodical because at the end of the day people have to not lose money on top of your platform. They have to believe that the infrastructure is safe and secure.

Yeah, this isn't just your phone like failing to send a text message or something. This is people's money. Right, exactly. And you know in many ways that's terrifying and it should be terrifying, right? And then the platforms, the applications that live on top of them they they tend to in the defy realm it tended to get to the point where it was sort of leverage was was was continually ramped up uh and ways of re-hypothecating what you know people had like first thing was liquidity mining and then people worked out that you could then take the lp tokens from liquidity mining and put them somewhere else and then you could then borrow against them and get more and you just you just got this sort of cyclic thing the thing that what i think was most frustrating about it was actually that this

game has been played out several times before in the finance sector. Sure, of course. We built, literally, we built the 2008 banking system, but with inferior rails. Right, right, right. Cool. I mean, actually, we built the 1980s debt market. That might even be more accurate. Right. And then, and you know, that was the junk bond market was basically what we'd created. We didn't call them bonds, because we called them LP tokens and we used collateral

as a way of basically leveraging up, but it was the junk bond market, just in different form. There was this cheap money that was going around that allowed people to leverage up really, really high ratio stuff on stuff that didn't really have much underlying value. You mean we shouldn't have been farming yams and tacos i don't know what you're talking about it wasn't glaringly obvious enough at the time that everything was a meme and the thing is is that like i don't i i have a really weird um view on all of this because I think the human progress often comes as a result of excess. Like there is this... Almost always. Almost always, right? So like, you know, the one example I always give is that there was the rail,

there was the railway mania in the UK where people like the train had just been invented and it was this new technology and people got so excited about it and as a result of that mania huge amounts of rail was was laid down and that infrastructure dividend paid for the paid the country back over a very long period of time. Lots of people went bust, don't get me wrong, and like it was bad. And the same thing happened with, you know, the 2001 internet bubble, right? Where, you know, fiber optic cable was laid that we are now lighting up and we're getting gigabit internet connectivity or tens of gigabits in internet connectivity. And it pushed forward huge amounts of investment in space and research and so what has happened as a result of these these um bull cycles both with the ico boom 2017 and with the defy summer

has been this this uh building of a set of primitives. Those primitives were then used in more and more like exotic ways that actually the full risk of what was being done wasn't understood. But we are still left with the primitives. Like what DeFi has done for us is show how you can create long tail liquidity around assets that would just never have been previously liquid. And what does the capital markets have today is the biggest problem. It is actually long tail liquidity. Sure. Right. You try and buy an off the run bond or try and sell an off the run bond. Yeah. Try and sell an off the run bond anywhere near to par. That's basically impossible. We're

talking about bonds that have runs of like 100 million, 200 million, 500 million. In March of 2020, you literally couldn't find someone to buy a treasury. The United States bond, right? The Fed had to buy everything with it. It's unbelievable. And so, but yet we can create $100 million worth of liquidity for yams.

So like, yes, the yams were silly. But like, that's a really interesting tool. Proof of concept. It's a proof of concept. A proof of concept for something that is actually necessary in the financial markets. I mean, you talk about how it's usually greed and excess that leads to innovation. We've seen that in crypto over and over again, and in humanity, but in crypto over and over again. DeFi summer, NFT summer, metaverse fall, I guess. We had metaverse fall. But to your point, almost the bigger the joke and the bigger the bubble, the more solid the next sort of run within that genre or category will be.

It doesn't feel like we've had another run in DeFi yet. No. And I think that DeFi has, there's some growing up to do in DeFi, mostly in terms of working out how to get legitimate assets onto a public ledger and then how to create liquidity around those legitimate assets. And like regulation is going to be a big problem. I think that the, but, you know, sort of regulated DeFi is definitely coming. I've spoken to plenty of financial companies who are looking at DeFi and going, that liquidity is amazing. And like thinking about ways that they can recreate that liquidity for assets that they care about and their clients care about. I think, you know, sort of repo market style lending on top of public ledgers is coming very, very soon.

Because, you know, if you're a fund and you have a bunch of assets on book and you want to be able to borrow against those assets and there's a legitimate secondary market for those assets, suddenly you've created something that you can you can you can use to go and do trading or whatever and like a lot of what has happened already in the defi market is yet to come to the traditional markets however i think the next two to three years is going to be regulators blowing off some steam which is going to be regulators blowing off some steam, which is going to be painful for the industry. And then it's going to be working out which jurisdictions to do the issuances out of, how to create viable venues

for legitimate exchange of regulated assets. Like all of this stuff is going to take some time. And then the other thing that I think is probably going to be kicking off, and I've been saying this for a long time, but I think that derivatives make so much sense on top of a public ledger. Like the ability to, like a derivative instrument is a financially programmed instrument.

Putting that on top of a public ledger, that's a no-brainer. But you're right, the DeFi has got three years of finding itself. It's going to be interesting. We're going to talk about finding liquidity for real world assets, which should be the use case that the mainstream understands the most, certainly the legacy banking system. Are we talking about effectively attaching an NFT to a real world asset and then utilizing that as collateral? Yeah, exactly. I think that NFTs, most people, art is an interesting use for NFTs, but it obviously like- It's the yams. It's the yams. It is. It is exactly the yams. Like an NFT is, NFTs are going to be the most common form of asset on top of public ledgers, I have no doubt, because actually most things in the world are not fungible, right? Like most things are non-fungible. And so like NFTs for bond runs, NFTs for equities, NFTs for

like collateralized debt, all of this stuff, like mortggages each mortgage is an nft create an mbs mortgage-backed security like that that securitizes those things together and creates tranches around them it's definitely going to happen right definitely going to be way easier in d5 than in the real world way easier real world yeah and like centrifuge is already proving this out right centrifuge with their real world asset issuance. They've issued, I think, like $100 million worth of real world assets already. MakerDAO is a big buyer of those assets. But I spoke to them at Masari and I was like, what's the main reason that people are coming

to you and doing these issuances? And he said, look, it's cost. It's so much easier to build a relatively complicated, you know, tranched instrument on top of a public ledger using tokenization and NFTs than it is being able to do it in the traditional world because of all of the extra sort of legal structures and like intermediaries you have to use to be able to do that

when you can just describe what you want on top of using a smart contract. So that's definitely coming. It's just, it's going to be hard. I think the next cycle is where we start to see crypto touch the real world and realize how messy and complicated and difficult everything is. Well, if you've ever tried to get a mortgage, you probably know how difficult that is. Imagine if you could just do that in a single transfer.

Right. Right. And then if you could then use your mortgage as a line of credit as well, right, for something else. Like, why can I have a mortgage at 2% but my credit card's at 20%? Like, just the way in which our financial world isn't connected up for us as individuals is kind of crazy. Like, the concept of unsecured versus secured debt when actually your entire asset base is at risk if you default on your mortgage. If you default on your credit card, they'll still come after your house. So that is actually like collateral against your borrowing. But because of the way the badly

connected way in the finance, the different financial products don't talk to each other, if you start tokenizing those assets and being able to issue a mortgage against a house, a line of credit, then you can actually then draw down or pay off as you need to for other things, suddenly your financial world becomes more connected and I can't see people not going, yeah, sure, I would much rather pay 2% on my credit card than 20% on my credit card. So I think there's a lot of opportunity for making people's cost of borrowing lower as a result of all this. RAOUL PAL, It would be exciting if it was 10% instead of 20%, right?

If you could loan that 2% mortgage out at a 10% rate instead of putting it on your credit card for 20%, that would be a monster difference. SIMON DIXON Or borrow against your stocks and shares portfolio. Yeah. And that's the only thing you can, like in this country, basically, borrow against to some degree, unless you're talking about a line of credit along your home. And you should be able to collateralize everything. What's interesting is what you've described also solves a lot of the problems that we just had with the CeFi explosion, because there's no reason to ever have uncollateralized loans, right? Well, I mean, people are still going to do stupid things. I think there's- I think there's-

If you had to post something and it was that easy to do, and it didn't have to be something that is currently regulatorily approved, it could be an NFT or something like that, be much easier liquidity, and you would have less chance of a massive blow up. Right. I think that the, I think human excess goes in cycles and we will still have blow ups. We're not, we're not. We'll just find new and creative ways to do it.

I'm just saying it could have solved the previous. Yeah, yeah, no, for sure. And I think that the opportunity for the, it's so, because I can see the paths. I can see that, you know, as a result of this financial collapse within DeFi, better hedging solutions are going to come in, right? So like derivatives is a key part, right? There's going to come better collateral. So you can collateralize things, right? Insurance. All of those things will come in. And then someone will work out a way of leveraging all of those things together. Oh, of course. And they're going to package it in some

way and pass it on to someone else. And by the the end it'll be 100x and the collateral won't be relevant right but that's i mean so i guess that leads to the next question which is how do we we can't prevent it obviously the human nature side but how do we make sure that when the next bull market hits the tools are actually ready where at least we don't see the same mistakes the same mistakes yeah so i mean that's that that's basically what radix is doing right like um we we spent three years working with um developers um so we spoke to about just less than a thousand developers and projects where we got feedback on all of the ways in which they were building d5 and we built a programming language off the back of that feedback. It's called Scripto. And that programming language,

we were getting to the point in our feedback where we'd have one session with a developer, we'd show them the syntax and unusually we started with the syntax. That's how we didn't build any of the underlying bits. We just went, how should this feel? Like how should this feel if you're building Uniswap or if you're building Aave? And by the end, we'd have one session with a developer. They'd go away and a week later, from memory, they would give our pseudocode back and be like, hey, it was really interesting to do this session.

Would this work to build this kind of DeFi application? As soon as we started doing that, we realized that that was starting to get to product market fit. And so that went live in December. And since December, we already have over 3000 developers in our community building using Scripto. And that gets integrated into our mainnet, which went live in June of last year, July of last year, at Babylon, which is what we call the next release. And that happens in the first half of next year. And that's all about making it really intuitive to actually build decentralized finance so that you can avoid the bugs and hacks and exploits that come along.

The other thing that we're doing, we've built something called Instapass. And Instapass is a KYC AML stack for Web3 businesses because it's clear that regulation is going to be hitting more of these kind of applications. And what regulation often does is it creates a barrier to entry. It means the two kids in the dorm room can't go, hey, I'm going to, you know, launch YAMS 2, right? And with things like the sanctioning of Tornado Cache and stuff like that, it's getting more serious in the space. So what we did is we were like, okay, well, we're going to build a compliance stack that keeps the barrier to entry low. And if I was going to typify anything that Radix does as the driving build philosophy, it's do the difficult things that maintain the barrier to entry as low as possible so that as many people can come into the space and build. Because our platform is a platform for other people's success.

And so one of the things we see as a big problem, one of the things that's really difficult, and we've experienced the difficulty, is AML KYC is a really difficult thing to get your head around. So build a stack so that like with Amazon, you can go to AWS and you can get yourself, you know, your S1, S2 instances and whatever. With Instapass, you can now plug that into your Web3 application, and you can, one less thing to worry about as a founder. And I think that those two things together form the basis of what we see as the opportunity to build in the next cycle. I can't tell you exactly what is going to be built, but those two things, they stop the bugs, the hacks, and the exploits, and they give people a viable path to be able

to build in a regulatory compliant way. Do you still believe that DeFi will eat the financial world, or do you view it as a parallel rail? Yes, no, it's absolutely going to. Because the way I think about the financial world is like a badly connected archipelago of islands, right? So you have the New York Stock Exchange over here, and you have the Shanghai Stock Exchange over here, and you've got these banks that are all around the world. And every single one of these institutions have their own tech stack. Every single one of these institutions, the main way they talk to each other is Excel spreadsheets. Right? You know, doing a bond issuance is on an Excel spreadsheet.

It's literally on an Excel spreadsheet, and they'll send across an Excel spreadsheet, right? You know, doing a bond issuance is on an Excel spreadsheet. It's literally on an Excel spreadsheet and they'll send across an Excel spreadsheet, right? And if you're a client, if you own some shares on the New York Stock Exchange, you can't swap them for shares on the Shanghai Stock Exchange. Those two companies, entities, institutional products don't talk to each other at all. So if you want to do anything in finance, the more complicated it is, the more you have to go to the bulge bracket companies that have everything in house and can do all of those things. What DeFi does is it gives you composable bits of financial products from many different companies that have competition between them. You've got Aave and Compound,

you've got Uniswap and SushiSwap swap you have the best pricing possible the most liquid markets possible and you can stitch these different products together to create the kind of thing that the instruments that you care about like you know think about our VA our VA would not be able to exist without uni swap because it needs to have somewhere that you can liquidate right So those abilities to stitch together different financial products and different financial instruments to create things that are inter-reliant on each other, that is unheard of in the current financial sector. And so as soon as that starts to be possible for the existing financial instruments that most of the market runs around,

it will outcompete finance. So I'm 100% sure that finance will be eaten by DeFi. Which companies will that be is unclear. The giants of the internet today were not the giants of the pre-internet, right? So, you know, the post office is not… Kodak and Sears are not the biggest companies in the world. Right. Kodak and Sears are not the biggest companies in the world, right. And so there is an opportunity to be the Facebook, the Google, the Twitters of DeFi, of Web3 tomorrow.

But it is quite likely that the people who do that are going to be ones who have a foot in both industries, understand what it means to build, to be able to do the legal structures and the regulation and all that kind of stuff on the finance side, but have fully swallowed the Web3 way of building things and can see the opportunity to be able to build something that is just completely blows everything in traditional finance out of the park. Well, for your sake, I hope we have an extended crypto winter and bear market so that you can finish building everything you're building. For everybody else's listening sake, I hope that we start a bull market tomorrow.

When do you think the bottom is going to be? I think I hate answering that question more than, let me consult my crystal ball. I would say we are bottoming. Bottoming, okay. It's a process. It's a process. Rather than a price. I mean, we have a lot of historical precedents in an election year Q4, that's the bottom.

Right. And in a tightening cycle because strangely politicians like to get reelected. That generally requires people not being poor and paying 400 for a steak so i don't know i think that uh we're in the process but it's gonna take a while also if you line up the happening cycle right now we should be right there in the two four year cycle so we'll see but i think you've got plenty of time still left before we're seeing new all-time highs and real retail FOMO kicking in. I would imagine you agree. Yeah, 100%. I think that there's also recency.

Like the more recent the pain, the more people feel fear. And so we've just had a pretty painful drawdown period. And there has to be that period for people to have enough time to kind of recover from the trauma. Yeah, the PTSD. Yeah, you can only see bad Yes, you just can't even see the light at the end of the tunnel because of the recency bias. Absolutely true Well, thank you very much man is glad to sit down with you actually in person this time instead of through a screen It was great. So great to do that thank you let's go