The Wolf Of All Streets - The Perfect Time For DeFi | DeFi Ken Olling, CEO Of Meld

Starting point is 00:00:00 In 2022, the word yield. It's all about the yield. But you know that I am pissed off, obviously. I'm a Voyager creditor. I'm probably one of their top 30 creditors. I think anybody who wants to do a land war in Europe should be punished terribly. And they like being super slow.

Starting point is 00:00:15 Of course, I want to say that I'm a good person and I'm presenting that I'm a good person. But what happens when, you know, I step down and somebody else takes over? What happens when you have managers? Everybody is not going to be good. I trust the code more than I trust other people. Exactly.

Starting point is 00:00:33 In 2022, the hunt for yield caused a contagion across the crypto space with BlockFi, Voyager, Celsius, even FTX. But what if there's a way to keep custody of your assets, to keep control of your own keys, and still to earn a yield in DeFi and to tie it to an actual neobank? That's what they're building at MELD. I talked with their CEO, Ken Ahling, today about all the things that they're doing, why it's important, why this is the perfect time to launch these products, and when it will be available for retail. In 2022, the word yield, although it doesn't have four letters, effectively became

Starting point is 00:01:18 a four-letter word because we saw the collapse of Voyager, BlockFi, Celsius, even FTX, you could say, was the hunt for yield to some degree. But here you are with MELD, a neo-bank that has a DeFi side that's talking all about yield again in 2023. Talk to me about that. It's all about the yield. Yield has a bit of a different relationship compared to the U.S. The U.S. was affected much more by FTX and all of these kinds of things in a much more direct way. There were less people that were exposed.

Starting point is 00:01:52 So it doesn't have as quite a negative feeling in Europe or in Asia as it does stateside. But I completely understand why it's there. It's very, very sad. But I think it's very healthy at the same time. It's a painful lesson to learn, but it proved very, very beneficial to MELD because at the beginning of 2022, we had six competitors. At the end of 2022, we had no competitors. I guess that's factually true. So the question then is, how do you differentiate yourself and why should people trust yet another yield product in this space? to this because to get the difference between what we're trying to do and what CeFi has tried to do, we really need to ask a lot of these really hard questions.

Starting point is 00:02:52 Yeah. And I know you're about to say, but you know that I am pissed off, obviously. I'm a Voyager creditor. I'm probably one of their top 30 creditors. I knew these guys personally. I platformed these guys. I had them on my show. You know, I had Steve Ehrlich on my show. I considered him a friend multiple times. Alex Mashinsky was on my show multiple times. SPF was on my show multiple times. I thought these were great guys with great ideas. I didn't see it at all.

Starting point is 00:03:16 And the fact is, if we had even just had the disclosures and the transparency, I would have been fine with it. Because if I had seen, oh, Voyager just gave a $650 million unsecured, uncollateralized loan to 3AC, I would have pulled my money off. Right. As simple as that. Transparency, that's all it comes down to. So our starting point, and it was hard when we were trying to do this because we were compared against BlockFi and Celsius. But our thesis is we're starting from the DeFi, from the crypto side. So transparency, keep your own keys. Transparency is a beautiful thing. Transparency is like being audited by the

Starting point is 00:03:53 IRS in 100 different places, 24 hours a day. And the transparency is what balances out against the sort of human condition component of it. So keep as much transparent as is possible, much on the blockchain as possible. Then people are going to call you out. You're not going to have an opportunity to take and use other people's funds. And you're also non-custodial, so you're not going to be holding those funds anyways. Correct. So we have the two sides. We have the DeFi side, which is the lending and borrowing, And then we have Neobank, which is the fiat side.

Starting point is 00:04:28 On the lending and borrowing, it's all non-custodial. We have no custody of any type in any way, shape, or form. You can look at our filings. All of our filings state that we have no custody. So we fully believe that it's your keys, your crypto, period, end of conversation. And it should always be that way. And then on the fiat side, it also kind of non-custodial in the sense that the type of license we have, it's an electronic money license.

Starting point is 00:04:58 It allows us to facilitate transactions. It allows us to take deposits. It allows us to do debit cards. We don't get to keep that money. We can't keep that money in our bank accounts, for example. The actual fiat is kept in the Central Bank of Lithuania. So we can work with it in regards to a set of activities that we're legally allowed to do. One of those activities is not use it for anything. At the end of the day, the books have to balance. We cannot take any money for any period of time and do anything with it.

Starting point is 00:05:32 Yeah, which I think is desirable to everybody because then it can't just disappear. Well, just it's that. But think about the human condition. Bitcoin effectively came about as an answer to game theory, as an answer to the human side of finance. And it's not a matter of looking for good people. Of course, I want to say that I'm a good person and I'm presenting that I'm a good person. But what happens when I step down and somebody else takes over?

Starting point is 00:06:00 What happens when you have managers? Everybody is not going to be good. And so I trust the code more than I trust other people. And that was why I got into crypto in the first place. I want people to trust the code, not trust me. It's not a cult of personality. This is not about going out there and believing in a particular person's vision you should look at the code and we're doing this actually when we launch we're going to be having a series of of of educational things for people to learn how to read the code on the blockchain so that they can be investigators they can be the auditors for us among other people this is how you create a healthy ecosystem yeah i agree and talking about unhealthy ecosystems, going back, of course, to the

Starting point is 00:06:48 contagion of years past, I think the real problem beyond even disclosures was the misrepresentation of what the products were. FDIC insurance for Voyager, or that Celsius was a way to unbank yourself and it was just as safe as a bank and only operating the same lending procedures as a bank. So yes, it's transparency, but it's also just about being clear about what you are and representing that there is risk, right? Because Celsius should have said, we are a bank. And if you turn this button on, we're going to lend and your risk is such this is what we're doing with it so that you can earn this yield. Right. So you're not representing that there's no risk to yield with this product. That's the scary part, this kind of this this approach that a lot of regulated retail organizations have.

Starting point is 00:07:41 And, you know, regulators are trying to sort of defend against this. But it's a very difficult thing where the the regulated entities are trying to sort of defend against this but it's a very difficult thing where the the regulated entities are trying to sell as much as they can they have a license to effectively print money they can say whatever they can to be able to get as many customers as possible well if you just simply try and educate people on the idea that you know there is always going to be risk but the risk needs to be user activated risk, not risk that nobody has any idea about. And, you know, when it comes down to it, they're putting that money at risk for their own gains. They're not putting that money at risk for the gains of the person who's fronting this.

Starting point is 00:08:19 So giving access, giving visual control, the ability to see what it is that your money is doing is really everything that you're looking for. It's all about control. How does that specifically work on MELD? Are there multiple yield products? You can choose a higher yield with a higher risk profile, but that's all transparent. Or is it a fixed yield product? How does it look? So we have two components.

Starting point is 00:08:44 We have staking and then we have the lending and borrowing protocol in the lending and borrowing protocol it's similar to ave in many ways where you supply your asset to a lending pool and then other people can borrow it the amount of people that borrow that asset determines the amount of yield you get so if a lot of people borrow it you get a higher yield if nobody bor borrow it, you get a higher yield. If nobody borrows it, then you get almost no yield. We have turned that a little bit on its head in the sense that we don't think that that's very efficient. So let's say you supply ETH and only 10% of that pool is being used. We then take 70 or 80% of that pool and we put it into the native ETH staking, like Rocket, like Lido, to generate a yield for that. So we will make a decision as to which system that's going into.

Starting point is 00:09:35 The DAO will vote on that system. But then when you supply your asset, you'll have to turn this yield boost on. When you supply the asset, it'll say unsupplied yield is whatever, 0.6% or 0.4%, whatever it currently is. But- Like a bank. Like a bank. Like a bank yield. Yeah, sub 1%.

Starting point is 00:09:54 Nobody's borrowing ETH, right? So it's not, not right now at least. But if you want to have a yield boost, then you're told that that yield, that ETH that you're putting in, the unused ETH, you're putting in, the unused ETH, is going to go towards native staking, and then it's going to be 5%. So the floor on our stake pools are much higher than something like an Aave and a Compound. So because we're becoming much more capital efficient in how we're handling it. So obviously in the United States, Kraken got in trouble for staking as a service,

Starting point is 00:10:29 which is effectively what this is. But I think we've got better clarity in other jurisdictions. So I'm assuming that we Americans can't play in this pond for the moment. No, no. On the part that we're talking about, the lending and borrowing from crypto to crypto for the staking, it's fully open to Americans completely. It's DeFi. We're talking about, the lending and borrowing from crypto to crypto, for the staking, it's fully open to Americans. Completely. It's DeFi. We're talking about DeFi here. With Kraken, what are you doing?

Starting point is 00:10:52 You're handing over your keys, right? We're not taking anybody's keys, period. This is all DeFi. This is all non-custodial. deal. So all of the staking that we're handling here, it's all sort of stated very, very, very clearly what you're getting and what you're getting in return and how it's working. We're not handling any of those types of assets. So no, it's very, very different than something like a Kraken. So you're not going to be, they're not going to be coming after us for staking as a service. Are there any parts of it that are not available to us poor Americans who can't have any fun? So yes, unfortunately, the fiat side is currently not going to be

Starting point is 00:11:33 available to Americans in America. We want to bring it to the States. We have a plan to bring it to the States, but it's going to take a lot longer or it's going to take until the new administration comes into power and things start to change. But we actually had a plan to bring it to the US until about four months ago or five months ago. And then we just deemed that the SEC and Treasury were too aggressive and too sort of, I don't know, too difficult to work with, too much of a predator and not willing to have a conversation at this point in time. So we just decided to back off on it.

Starting point is 00:12:14 It's interesting because I think from inside the crypto bubble, you would think the fiat side would be the easier part in the United States. You have effectively some sort of banking license in Lithuania, right? So why is that impossible here if you actually have that banking license with a central bank? So the U.S. has a unique set of, well, that's not true. The U.S. has a pretty harsh and unique set of rules when it comes to providing banking services to retail. They want it to be an American licensed entity. They want to follow state rules when it comes to things like interest and these kinds of

Starting point is 00:12:52 regulations. It's not great. It's really, really difficult for it. In reality, it actually hinders a lot of what retailers can do and how they can earn. But it's just, it is the way it is. This is how the states are currently set up in regards to their regulations. And we have to accept the fact that it's going to be that way for the short term. Speaking of central banks, I know that you have some passionate feelings there and some insight as to the behavior of central banks in the past few months and year? Yeah, I mean, right now there's kind of a, I wouldn't call it a war per se, but I would say that there's definitely a point in time right now and over the next couple of months where central banks are picking sides. So you have in September, you had the war in Ukraine

Starting point is 00:13:46 started Russia invaded, and the Federal Reserve and ECB and the IMF and the BIS sees $600 billion in Russian central bank funds as a result of that. The fact that they seized it because Russia invaded into Europe, i think is fantastic i think anybody who wants to do a land war in europe should be punished terribly but what it the signal that it sends is that the u.s has has pushed the nuclear option when it comes to finance and dollars. So they've seized a central bank's foreign dollar denominated reserves, which they had never done before. You know, they'd done it in small, small situations, things like Iraq and things like that.

Starting point is 00:14:38 But they've not done it to like a permanent seat in the UN Security Council. That is a big, big deal. And what it's telling, what the signal that it's sending to all the central bankers is their funds are not safe in dollars. The US government has the opportunity, has the ability to take that. And with some excuse or some whatever reason, they can actually seize those assets. We have legal precedents now for doing it. So China is not thinking about Taiwan. China is thinking about $1 trillion in dollar-denominated assets, right? If they do anything, and the U.S. acts upon it the way they have acted upon Russia, effectively, the U.S. is out of debt if they do something like that. So it's a serious carrot.

Starting point is 00:15:27 Oh, sorry, it's a serious stick, and there is no carrot right now. That's the problem. And you see this now. After this event happened, you saw the bricks come together. There became this unifying idea, this unifying fear about India and Brazil and Egypt and Kenya and, you know, UAE. All of these countries are, what they see is that their dollar denominated assets are not safe if they don't follow what the U.S. tells them to do. This is really scary stuff.

Starting point is 00:15:59 And I think that we're going to look back in 20 years and we're going to see September as being a serious sort of line in the sand that has fundamentally changed the way that we understand the banking system that's existed for the past 50 or 60 years. I wholeheartedly agree. And it seems like you just made the case for crypto. Yeah, this is this is such a, you know, I feel like I would love to take the credit. But I feel like it's just it's luck, right? It's it's a timing thing. You know, we we had a lot of work to do in regards to development. So we didn't launch in 2022. We don't have much in the way of competitors left. And now there's this huge opportunity. The world's global economy is becoming bipolar. And when you have these two systems that don't trust each other, you have the BRICS and you have the US, the West, the US, Europe, then the sort of it screams the value proposition.

Starting point is 00:16:59 It screams the thesis of Bitcoin. It screams the thesis of crypto as a supranational non-sovereign oriented um store of value and so I think that we're going to see this over the next five or six ten years how how it's going to play out and how the world is going to embrace both their localized currencies like you have you know whatever in Russia and they're going to do trade deals in their native currencies, etc. But I think that they will more and more gravitate towards crypto, specifically Bitcoin, as a method of having a kind of an uncensored way of being able to transfer value, You'll start to see the very centralized mining of Bitcoin become more decentralized as each country starts to see that them running nodes is an incentive.

Starting point is 00:17:53 It's a protection on their own sovereign use of Bitcoin. So in a weird kind of way, the thesis or the starting point of Bitcoin, which was kind of to take away the power of centralized government's money and making it more decentralized, more predictable, that value proposition is becoming more and more valuable to countries. Right. To basically hedge against the United States, which is really interesting. Bitcoin has the same value proposition all the way down to eliminate predatory power structures effectively. Like you said, you guys have, whether by luck or skill, you're really threading the needle of this perfect opportunity with that CeFi collapse and this new sort of emerging, not new narrative, but people seeing the original narrative and sort of ethos of Bitcoin. I mean,

Starting point is 00:18:45 even you have Larry Fink from BlackRock on TV saying almost the exact thing that you just said, saying that it could be a global currency, it could transcend fiat currencies. Larry Fink, talking about a guy that manages almost $10 trillion in assets, is on TV every single day now talking about Bitcoin and crypto and digitizing assets. It's really a marvel. Yeah, I mean, the thesis was there from day one. But I think that, you know, I'm one, I didn't come into crypto until 2020. I didn't see the real value proposition until GameStop. When GameStop happened, then I got the sort of aha moment. But I think that it takes, especially if you've been

Starting point is 00:19:25 in finance, it takes you a lot longer to kind of get your head around this idea of having a currency that has no political loyalty, that has no ability to be, you know, bribed or abused in any way, shape or form. That only becomes a value when it becomes a pain point, right? In the US and in Europe, crypto is kind of lukewarm. But if you're looking at, you know, Argentina, if you're looking at Nigeria, if you're looking at Vietnam, if you look at countries that are suffering under bad monetary policy, they totally see the value of Bitcoin. They see the value of crypto because they know what monetary policy looks like when it's done very badly. Yeah, that makes perfect sense. So we're kind of having this regulatory conversation about the United States. Luckily, since you and I are having a conversation within a couple of days of actually release, we can talk about the new news and the BlackRock ETF is one of them. But the Ripple decision is another. What do you make of the fact that Ripple has effectively beaten the SEC, at least on the part of the case that people in crypto seem to deeply care about? I'm super happy about it because I think that crypto needs a win after all of these really

Starting point is 00:20:36 horrible sets of experiences. But the reality of it is very much not the case. I think that the situation is going to happen in the appeals of court. So when the SEC appeals, if the Court of Appeals accepts the appeal, they don't reject it, then I think you're going to see that the SEC has a much higher likelihood of actually winning the case in the end. But if the Court of Appeals does not accept it, then there's a chance that this becomes legal precedence. Of course, Ripple could win down the line as well. But never forget that the SEC has the war chest of war chests, right? They quite literally have the ability to print money.

Starting point is 00:21:29 And so I think that it's, I'm very happy about it. And I'm very happy that, you know, it's given this kind of boost of confidence into the crypto space. But I think in the long term, it really hasn't changed much of anything. I mean, the lawyers I've spoken to have said the appeal process at minimum would take a year to a year and a half just to be heard in court. So seems like we have this little golden zone right now of time when all of these coins can at least make the claim that they're not securities. And interestingly, the Coinbase, I mean, all these other exchanges immediately relisted XRP.

Starting point is 00:21:58 So they are not afraid of the SEC here, clearly. I don't believe that. I think that Coinbase is very, very afraid of the SEC here, clearly. I don't believe that. I think that Coinbase is very, very afraid of the SEC. I think that if you look at Coinbase's behavior, they have done everything that they possibly can to engage the SEC on more kind of amicable and fair footing. As soon as the SEC did their Wells notice, that's when you saw Coinbase pull out the knives.

Starting point is 00:22:24 And they were like, OK, fine. You want to come after us this way after we've tried everything we can? We'll come back after you. And you saw that their stance totally changed once the Wells notice happened. And so I think that they want, I think that their intent, based on what I've seen, their intent is to collaborate, which is what we wanted to do with regards to the SEC coming to the US. But that is not the intent of the current administration and the current SEC. They're clearly extremely hostile. And so Coinbase is kind of mirroring this hostility in order to

Starting point is 00:22:58 protect themselves. And I think that they're doing exactly what they should be doing. Yeah, that makes sense. And I think everybody at this point is galvanized behind these large companies that are going against the SEC, because even if you don't like the individual company, you don't like the actors involved, we still need the wins. As you said, it's good to get a win. Yeah, I mean, this is starting to turn into, and I hope it doesn't happen in Europe with Mika, but it's starting to turn into a real sort of battle for the right for individuals to handle their own investment, to handle their own money. Right. This is what it when if you boil it down to its basic, the SEC is trying to, quote unquote, protect retail investors. But if you look, you know, retail has been the most successful when it comes to crypto. Crypto is designed specifically for retail.

Starting point is 00:23:52 And it's just it puts retail on the same footing as institutional in many different ways. And so the battle that we're finding here is, you know, is it going to be a situation like it currently is in finance where you have to be an accredited investor in order to benefit from this system? Meaning the rich get to benefit from, you know, this very, very class structured system? Or is it going to continue what we have now, which is this more sort of egalitarian type of idea. Yeah. So that begs the next question, which is why create MELD? Who is it specifically for? Who's the target customer? Is it every man? Is it a certain people in certain countries that are unbanked? No, no. So it's nice to have this kind of bank the unbanked narrative and this kind of thing. But when it comes down to it, my real sort of passion for it has to do with fairness. It has to do with I'm not trying to, you know, to save people in specific countries.

Starting point is 00:24:57 What I'm trying to do is I'm trying to say that the maid in Brazil and the shopkeep in Nigeria and the stockbroker in New York, they should get absolutely the same treatment. They should get the same interest rate. They should get the same level playing field that they currently do not get, right? With the current financial system, with the current regulations, they're treated massively different based on their current country or their sex or all of these different types of things. So we just simply want to make really powerful, useful tools that are currently only available to corporations and high net worth individuals. We want to make them available to the masses. We want to help people manage wealth. We don't want credit scores. We don't want to create

Starting point is 00:25:43 debt for anybody. I don't think that debt brings anybody out of poverty. I think that there are more than enough, like, fascinating and really great financial tools out there that can help the poor become, you know, financially stable. And, you know, effectively, our starting point is this idea of a Lombard loan. And a Lombard loan is where you take an asset you already have and you borrow against it. So this is currently done. You can do it in the States. A collateralized loan. Yeah, of course.

Starting point is 00:26:13 I mean, the wealthy people have been doing this forever. Well, it's different in the sense that if it's an over collateralized loan, then there is no credit check, right? There is no duration for the loan. If you have put collateral up for it and you're paying your interest on a monthly basis, why do I have to pay it off in five or 20 or six or nine or 15 years? The bank's making the money or whoever is paying the interest to is making the money. So we want to sort of turn this back into take the tools that exist today. We want to turn it back into something that is much more fair for everybody involved. What assets will people be able to use as collateral?

Starting point is 00:26:58 So initially, we'll probably have a limited number of assets, probably 10, 15 assets in order to test out all of our risk models to make sure our risk models are solid and there's nothing in there that's questionable. Eventually, we will expand that out to hundreds of different assets. But remember that the assets that you're borrowing or assets that you're putting up and the assets that you're borrowing, the risk on those assets is going to change based on the specific asset. So if the asset is illiquid, then it's going to be a high risk asset. If the asset is very, very liquid, so if you have, you know,

Starting point is 00:27:36 you might have an asset that's worth, you know, whatever, several hundred thousand dollars, but if only like $200 a day is traded so that it's not a very liquid asset or it's if the if the liquidity in the asset is like twenty thousand dollars then it's not very liquid so there's a lot of components connected to that but in the beginning it'll probably be about 15 or 20 um assets and then we'll expand out from there but the assets will be across multiple blockchains. So we see blockchains as liquidity pools. We don't see them as isolated systems. And so we want, when you put

Starting point is 00:28:12 up your collateral, you're not putting up ETH and then borrowing against the ETH and putting up Aave and borrowing against, I'm sorry, AVAX and borrowing against AVAX. This is how Aave and Compound do it. They do it on a kind of chain by chain basis. We're approaching it as all of these chains are part of the ecosystem. So you can take your Bitcoin, your ETH, your AVAX, your ADA, you can mix it all together. And that's a single set of collateral that you're borrowing against. That's a really, really interesting approach. I think it will be favorable for a lot of people. Will you ever be able to use real-world assets as collateral? Yes.

Starting point is 00:28:49 So we don't talk about it much. You can now if you'd like. All of 2024, we're going to be focusing on tokenized assets. So right now, we're building the primitives necessary to do the basics, you know, staking pools, liquidity pools, lending and borrowing, you know, fiat finance. But in 2024, we're going to be launching a thing called MetaPools, which is effectively a method of taking real world tokenized assets and being able to get a yield against them. And when you get that asset as a token, you can trade it on the secondary market.

Starting point is 00:29:31 And so if you're familiar with the bigger economic sort of financial world, you understand that you have equities. But if you look at the bond market, it's four times bigger than the equities market. So the bond market is like the big guy in the room, but he never talks. So it's all OTC deal. It's all very quiet, hush hush. Again, you know, the public gets very little access to this unless they're doing it via funds or ot or etfs or something like that and so i think that there's a huge opportunity for normal people to get access to high yield assets high yield real

Starting point is 00:30:14 world assets um that they've never had asset access to in history and so if we win this if we win this kind of battle and we're able to provide this, then I think it has the potential to really change pretty much everybody from living day to day to starting to think about wealth management. And Larry Fink and BlockRock bringing them up again in their annual letter, which I think came out in March. People haven't been talking about this, but they talked about exactly that at length, about tokenizing real world assets, the multi-trillion dollar opportunities of doing that. We're all talking about their ETF, but this is where the

Starting point is 00:30:54 real money and use case for crypto arguably comes in. Will you be tokenizing the assets yourself, or would you be working with a partner? They do the tokenization of the asset, they take that side and you just allow it to be collateralized and to earn the yield. So I guess about September, October of last year, things changed. Like August, you had the huge collapse. We went into the bear market. And then I started hearing from lots of people that like the sort of class A large commercial banks and financial institutions started talking about and engaging us and other people with regards to tokenization. So I think that their plan is to take full advantage of this for the next bull market. And I think that it is going to be the actual, the big thing.

Starting point is 00:31:47 We are not going to be tokenizing anything. Tokenization is going to be a commodity. Anybody is going to be able to do it. What we're trying to do is we're trying to be the iTunes for the distribution of tokenized assets. We want to help make it fair and predictable and transparent how people choose the tokenized assets they want. Are there other major jurisdictions outside of the United States where certain features won't be available? How does this work with Mika in Europe?

Starting point is 00:32:19 So our license is based in Lithuania, so we're able to operate within the EU and the EEA. We're expecting that the tokenized assets part is not going to be part of our fiat sort of ecosystem. So it'll be part of the DeFi system. We're hoping it'll be determined probably in Q1 of next year. But we're offering our services globally. Obviously, we don't allow sanctioned countries. We don't allow, you know, sanctioned wallets. So we have things like, you know, whatever, Iraq, or sorry, Iran.

Starting point is 00:32:54 We don't have Venezuela. There's like 60 countries that we're not allowed to operate in. And these are set by the ECB. But outside of that, we have a free hand to be able to work with people and offer our services to them. So grand vision,

Starting point is 00:33:12 you talked about being able to offer tokenized assets. Are there other things that we haven't mentioned that you guys may do in three years, five years, 10 years that are in the framework? I think that for now,

Starting point is 00:33:27 I mean, there might be something sort of going forward, but for now, that's really kind of all we want to do. The value proposition, the sort of sign of success is if we can make it possible for a person who, you know, has really no financial future to be able to do a Lombard loan and buy a piece of a Bitcoin and then borrow against it, but keep the Bitcoin and see the appreciation of it, do all of these things that large corporations do, then I'm happy. I've won. You know, it's wonderful. I don't need anything else. But I mean, we're talking about, you know, between you and me and probably a lot of the people watching this show, we're the 1% or less than the 1%. There is 99% of the planet that doesn't have access to most of these things. I mean, I'm an American.

Starting point is 00:34:16 I live abroad, meaning I can't access any of the financial services in the United States because I live abroad. So the system is designed. It's kind of like the music industry back in the 80s when, you know, you couldn't you had sort of like Japanese imports or you had DVDs that, you know, you couldn't watch. And it's so segregated for no reason. Tower records are virgin. And, you know, and to get your music distributed, there was no Internet. So you had to have a predatory deal with a music label who had a distribution deal. And there were only five. Right. get you on the shelf in Tower Records. Yep.

Starting point is 00:34:49 So this playbook has played out many times in many different industries. And I think that the unique differentiating factor for us is that the actor that is playing out here is an impartial actor. It's not being disrupted by Spotify or iTunes or something like that. It's being disrupted by something that has no incentive for financial gain. It has no race. It has no sexist. It's not sexist. It's not racist. It's not nationalistic. It's completely flat in every way. And as long as we can keep our eye on that perspective, and that is our focus, is our starting point is from crypto. It's not from finance. If we can keep our eye on that, then I think we have a chance for this product to actually meet the expectations of Satoshi. Beyond the product itself, you're obviously an enthusiast.

Starting point is 00:35:50 You believe in this market. What excites you outside of specifically what Melda is doing? Are there other things that are happening in crypto that obviously you're not touching on? You can't do everything yourself that you think will become huge narratives in the coming months and years? What I love about crypto is the creativity that happens there. And it's important for everybody to understand that every system wants to create a balance for itself. And in crypto, on one end, you have this massive creativity with like automated market makers and flash loans and lending and borrowing

Starting point is 00:36:26 and stuff like this. But you can't have that without having all the rugs. It's not an option, right? That freedom creates massive creative opportunities and it also creates opportunities for people to take full advantage. As soon as you cut out the rugs, as soon as you regulate it so massively and so strictly that nobody can hurt anybody, then you no longer have any of that creativity either.. I mean, when I understood,

Starting point is 00:37:05 when I first learned about flash loans and how they work, they completely blew my mind. I mean, really, it blew my mind. And, you know, I think that 99% from my conversations, 99% of people in crypto don't understand what a flash loan is or how it works. That's for sure. Do you want to explain it?

Starting point is 00:37:24 Because that means 99% of the people listening won't know what a flash loan is or how it works. That's for sure. Do I, can you want to explain it? Because that means 99% of the people listening won't know what a flash loan is or how it works. And I think they've gotten a very negative view for a lot of people who do because of some of the collapses last year. So that's how I had it. I had, I had a view that it was about like sandwich attacking and things like that, front running people. No. So a flash loan is pretty simple in the sense that what it is, it's you're able to take out an uncollateralized loan within one single block. So you have to take the loan out and you have to pay it back inside of that one block. If it's not paid back in that block, then the way that the code is written is you never borrowed it.

Starting point is 00:37:58 So it will never be deducted from the account that it was theoretically taken out of. And so think about it this way. And this is a really valuable way of using it. You have, you've gone into Aave, and you have put up a bunch of collateral and you've borrowed USDC, and you're paying 2% on that USDC. But USDT is only 1% to borrow. So if you want to reposition yourself, you have to pay back that full USDC amount. And then you have to take out another loan with USDT. With a flash loan, you can do all of those transactions, you can pay back and get the USDT loan. So you're paying 1% less, you can do that in the same block. So if it's used in the right way, it's massively efficient

Starting point is 00:38:44 way of handling it. And it's super profitable if you're if you're doing in the right way, it's massively efficient way of handling it. And it's super profitable if you're doing a flash loan. So it's really aligned in many different ways towards creating a really healthy ecosystem, obviously outside of the front running stuff. But there are other use cases in it as well. But it can't exist in the traditional finance world. It doesn't exist because the technology doesn't afford it. And they like things super slow. True. They want to be the aircraft carrier, not the speedboat for sure, which makes sense. So

Starting point is 00:39:18 when will all this be available? I know that right now you can get on the waiting list. Yeah. So you can get on the waiting list, go to mel.fi, sign up. We're going to be launching in alpha in August. We'll be launching for early access people in September. And in September, we'll be launching our testnet for our lending and borrowing protocol. So probably sometime in October, it'll all come into mainnet. And then before Christmas, you'll see it open to absolutely everybody. But if you want early access, if you want to get in early, then you can come and sign

Starting point is 00:39:50 up on the MELD Finance, MELD.fi website, and you'll get early access, which will be probably in September. Amazing. And where can people follow you after this conversation? Right. You can follow me at Ken Blau, B-L-A-U-E on Twitter. Love it. Ken, thank you so much. I love what you guys are doing. I look forward to seeing it launch on the waiting list. I encourage everybody else to get on the waiting list as well. Thanks. I'm looking forward

Starting point is 00:40:19 to getting hard questions from you and sort of making sure we do the right thing. Well, I think we're all going to put it to the test once it launches, right? Looking forward to it. Awesome. Thank you so much, Ken. Thanks, Scott.

The Wolf Of All Streets - The Perfect Time For DeFi | DeFi Ken Olling, CEO Of Meld

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