The Wolf Of All Streets - The Real Killer App Of Crypto | Ethan Buchman, Cosmos

Episode Date: July 30, 2023

Ethan Buchman, co-founder of Cosmos and a crypto-nerd-core-rapper, came to my show to discuss what's going on with Cosmos, what is collaborative finance, and how he wants to apply graph theory to finance.  Ethan Buchman: https://twitter.com/buchmanster ►► OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉 https://www.okx.com/join/SCOTTMELKER ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #trading  Timestamps: 0:00 Intro 1:20 Cosmos & Bitcoin 3:35 Crypto rap 4:30 Cosmos update 10:00 Collaborative finance 15:45 CoFi for people 18:02 Making blockchain user friendly 20:10 Interoperability vs one chain 25:08 DeFi 31:00 New world on blockchain 38:10 Timeline for mainstream adoption 40:44 Follow Ethan 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.

Are we are we live? Oh, you've been live this whole time. Okay. I do like crypto nerdcore rap. I used to read Usenix with crypto fiends, salts and nonces, math like you've never seen. And Bitcoin still holds a special place in our heart. Yeah, I mean, we could do that track on that.

We could turn this podcast into basically me rapping. Mainframe consensus computers like Bitcoin and Ethereum, you know, the big bad, big bag, ugly global kind of guys. And we'll call the first phase initiation, the second phase integration, the second phase integration, and the third phase illumination. Self-proclaimed internet biophysicist, sustainability existentialist, monetary localist, Ethan Buckman is the

co-founder of Cosmos and the CEO of Informal Inc. Building on Cosmos, but also thinking about how blockchain can be used to reimagine our future, whether that comes to governance, constitutions, but specifically how we use our money and what our money means to us. This winding conversation, we covered a lot of ground. Really incredibly interesting. He's a great thinker. I think you're going to truly enjoy this conversation. Did you start as a Bitcoiner? Yeah. I mean, one could say I still am one, but yeah, definitely. You're not allowed to be a Bitcoiner if you like other coins. Come on, they play your card.

Yeah, no. Our secret plan is for Cosmos to save Bitcoin. And, you know, there's a bunch of Bitcoin maxis at the heart of Cosmos. And, you know, so we, Bitcoin still holds a special place in our heart. Let's put it like that. Okay, so how are you going to save Bitcoin? You know, by scaling it by using app specific chains to leverage Bitcoin security and offer new functionality, but still honoring the core values. So how much then with Cosmos is actually being built on Bitcoin?

Because obviously that's not the part of it you hear about. Yeah, I mean, there's a few projects. So there's the Babylon project, which is explicitly about using Bitcoin security to enhance the security of proof of stake networks. And that's built using the Cosmos tech and a lot of Cosmos chains are like stoked about leveraging Bitcoin security for themselves. And then there's also the Nomic project, which is built as a, basically a Bitcoin side chain, where the Bitcoins are controlled by a multi-sig that is basically the validator set of the side chain. So you have basically a validator set of a Cosmos chain

that controls a multi-sig on Bitcoin. And anytime the validator set changes, the multi-sig changes, and that way you can move Bitcoin in and out of the chain. And it's basically trusting that validator set, essentially, you know? So would you say that you get support

from the Bitcoin community for these projects? Or would you get pushback? Or is it some strange mix of both? I don't know if we really care I think we get kind of general support I'm not telling you should care I'm just curious what they say no no it's good yeah I don't know I mean I don't know how much I don't know who really you know is the Bitcoin community anymore there is like something of a Bitcoin community in cosmos that you know cosmos is always about like you know the um let's say uh I don't know, polyamorous expression of different polycentric expression of different different values. And there's always been sort of an understanding in the Cosmos community that Bitcoin is sort of at a root level like Bitcoin and also Ethereum to some extent, but that they carry different different purposes and that we should honor that and respect it.

And we do. So from that perspective perspective i think the bitcoiners respect us so actually i don't know if you know if you know that i'm um i do like crypto nerdcore rap and the original the original rap i did when was when we went to a bitcoin conference back in 2015 and we were like gonna talk to them about proof of stake and tenement and all this stuff for two hours and i was like before i do that let me give you Juicy's Biggie, but about Bitcoin. And so I... Do you remember it? Yeah, I know the rap. Yeah.

It was all a dream. Yeah, yeah. I used to read Useniks with crypto fiends, salts and nonces, math like you never seen. Anyways, it's on YouTube. I could do it for your audience if you want. I need that. I need that. I'm one of the world's biggest Biggie fans.

Yeah, I mean, we could do that track on that. We could turn this podcast into basically me rapping. I was a DJ for 20 years. That's amazing. That's what I did as a career long before this. I DJed for the Wu-Tang guys, a bunch of other people. So yeah, you're a man after my own heart, for sure. That's awesome.

I've written a bunch of hits. So outside of rapping and staying true to your Bitcoin roots, what's your main focus now? I mean, individually, but more, I think, from the Cosmos perspective. It's a project that's been on my radar for a very long time. I actually like your community supported the podcast very early. I've had a ton of people from different projects working with you on over the years. So what are you guys really focused on at this moment?

Are we, are we live? Oh, you've been live this whole time. Okay. That's how I do it, man. I just hit you with the,

get you comfortable rapping. And then all of a sudden we get into the real shit. I wasn't sure. That's good. Yeah. I was going to ask about, you know, the audience and stuff and what direction

we should take this and um and things like that but uh i i don't know them they've never been to my house so i just guess that they're uh people who show up and they trust that whoever i talk to will be interested enough to be here so i think we're good yeah yeah okay um that works yeah so uh so what am i interested in these days? Yeah. So, you know, the way I've been telling the Cosmos story is, you know, Cosmos is really about what we call the community computer revolution, right? Just like personal computers took us from like the mainframe idea of, you know, we have this computing technology, transistors and all this. People start building mainframes. They're really inaccessible. They only live in IBM's basement. And, you know,

and then the personal computing revolution comes along, gives everyone access to this technology. Now you have your own personal computer, right? We see the same sort of thing playing out in the blockchain space where you start with these, like, you know, you have this new computing primitive, what we might call consensus computing. And then you have these, like, mainframe consensus computers like Bitcoin and Ethereum, you know, the big bad, big bag, ugly global kind of guys. And then what Cosmos is offering is this community computer vision that anyone could have one of these consensus computers that they can be scaled down and they can be offered in a general purpose way. And Cosmos at a high level, it's not

a particularly new project in the scheme of things in blockchain. The initial white paper was written in 2016 and was fully shipped by 2021 and has started, you know, has seen like a pretty substantial success and adoption over the years. And so the way I've been framing what Cosmos is up to is that, you know, the broad story of Cosmos is happening in three phases and we'll call the first phase initiation, the second phase integration, and the third phase illumination. And so the initiation phase is done and it sort of completed last year. And now we're moving, you know, squarely so the initiation phase is done, and it sort of completed last year. And now we're moving, you know, squarely into the integration phase. But in order to understand what we need to do in the integration phase, we got to understand, you know, what illumination

is really about. And ultimately, for me, you know, I think we're on the cusp of, say, like, large scale constitutional reform that's going to play out over the next, you know, few decades, on the scale of maybe what happened in, say, the 19th century, where you have sort of new constitutions coming together for nation states and sort of new approaches to money and industry and, you know, corporations become a sort of common thing and so on. We're on the cusp of something like that similarly happening. And in the 19th century, it was about, you know, nation states and moving on from empires, and so on. And I think in the 21st century, it was about, you know, nation states and moving on from empires and so on. And I think in the 21st century, it's about city-states and bioregions, right?

And bringing down the, you know, what we actually represent in our social organizations. I call it stakeholders and state machines, right? We build all these state machines. They need to represent the stakeholders that care about them, that use them, that run them. And we do a really bad job of representing cities, which are the actual, like, nexus civilization and, and bioregions, which is, you know, the planet that keeps us alive. If you like, you know, people and land, most of the people are in cities and then there's land. So most of our, most of our structures are built around capital, capital accumulation and, and thinking like that. And, and, and we need to move beyond that to better represent, you know,

people and land, if we're going to have a shot at being a sustainable civilization. And I think what's sort of interesting about the crypto revolution and Bitcoin, even though Bitcoin has had very much a sort of capital and sort of capitalistic focus, it sort of hinted that there was more to the story here that, you know, communities could use this kind of, you know, Bitcoin is like kind of fundamentally a human rights technology. And hints at this idea that communities can use this technology to, you know, build systems where they can better define what's valuable, what's valuable to them. But in order to, you know, this is sort of a long-winded way to get back to your question, what am I working on? What am I excited about? But in order to, in order for this all to work in order to get to this, you know, phase of illumination, constitutional reform, all that, all that kind of good stuff, we need this technology to be much more accessible, much more usable, much more performant, and to tap into the actual real world use cases where it kind of matters. And so, you

know, we think about at Informal, which is the company I run now, Informal Systems, we've been sort of a major core developer within Cosmos the last few years. We think about sort of three key institutions of society that we're going after, or that the Cosmos technology is giving us the opportunity to go after. And those are software, how we build and deploy it, money, how we issue and distribute it, and organizations, how we own and govern them. And we're sort of working in parallel on all three sort of pillars and using, you know, using the Cosmos technology and the interchain vision, as we sort of call it, to go after that. And so to make software more reliable and using techniques like formal methods, to make money more of a, you know, more tuned to what it's actually for as a medium of exchange

and a clearing solution, rather than just a store of value and a sort of settlement solution, which is sort of what blockchains get obsessed with. So we can get deep into that because that's what I'm most focused on now, what I call collaborative finance, as opposed to decentralized finance. And then there's the organizational side of things and sort of moving away from pure shareholder-based corporations to more cooperatives and to whatever the future of DAOs are going to be. But DAOs are still kind of pretty nebulous. And I think- I want to talk about collaborative finance because all we hear about is decentralized finance. So I want to know what that is. And you said that's what you're passionate about.

So let's go there. That's where I'm at. Yeah, let's go there. So I've been convinced for a long time that money is the killer app of crypto, but that most of crypto doesn't really know what it's doing when it comes to money and it comes to the problem. We're still kind of stuck in this old Austrian store of value kind of mindset. And so the way I've been framing it is that if we really want to go after the problem of money and banking, we need to understand the history of money and banking, we need to understand what money and banks, what they actually do. And there's a few different ways of framing this, and I'll give you a few of them. But one,

at sort of a high level, is to understand that banks are able to leverage the trust that they have between themselves to save massive amounts of liquidity, right? What banks are doing is they're providing a payment system. Fundamentally, money is about payments. Money is where the payments are. It's not about hoarding. It's not about the pet rock. It's not about the store of value. That's not to say store of value function isn't an important function for payments, but money is about payments. And the banking system is what grew up to enable the system of payments, the global system of payments we have today. And you could think about payments as having two sides, right? There is the obligation, which is like the debt that you create through real world sort of exchange activity.

And then there is the sort of settlement, the actual transfer of an asset to extinguish a debt, right? And you need both. Otherwise, you know, there isn't really, you don't really have a real payment system. You need the obligations and you need the asset transfers. And everyone likes to, people often think about, oh, money is just a convenience for a medium of exchange and it just arises as a convenience of barter and all that sort of stuff. That kind of misses the whole, that takes for granted that the whole thing is

synchronous, right? And that I have something and you have something and money is just sort of a convenience for that. When in reality, money is about debt, it's about denominating and discharging debt. And what's interesting about blockchains is, yeah, they seem to be some kind of revolution in money, but they've largely failed to address the problem of debt and to really grapple with the more credit theories of money that need to be combined, let's say, with the Austrian economics background. And so one way I frame what's happening of happening with, with banks and blockchains, and what we're calling co-fi or collaborative finance, is that the banks, for hundreds of years, they have built these clubs where they get together, and they save themselves massive amounts of liquidity in order to build up,

you know, their payment system, right. And so they're netting out debts between each other all day. And that that reduces the amount of actual money that they need to have to do business. So they do all this clearing, they keep it for themselves, but then they build a settlement system that they offer to everyone else, right? So everyone else just gets to move money around, but doesn't really get to participate in the obligation clearing, in the netting that the banks sort of get to do. And so then blockchain show up and blockchains kind of say, well, look, what these bankers are doing, we don't like that. We don't like, you know, debt and trust and credit. Let's try to get rid of all of that. Let's just build a settlement system, but build it open and

for anyone, right? And what's missing there is the other side of settlement, which are the debts, the obligations, the trust, and so on. And so what Kofi is saying is coming in saying, look, yeah, but blockchains, you got the right idea. But we need to also include this clearing component, because this is the foundation, you know, where trust is coming from in, but we need to also include this clearing component because this is the foundation where trust is coming from in society. We need to find ways to put trust sort of back on chain. And we can do this by focusing in on clearing, which is really the missing piece that's necessary to build a successful payment system. And so from the perspective of Kofi, it's about settlement and clearing for everyone.

So that's kind of high level and maybe a little bit big. I'd be happy to get into more concrete details. But the other thing I want to put out there that I think is really, really important, because this is really guiding the direction we're using, is that so much of monetary economics and even in blockchains is driven by reasoning about game theory, by reasoning about independent agents and sort of rational, subjective, individualistic, atomistic, you know, preferences and reasoning. And what we want to move towards is a perspective based on graph theory and network theory, because the monetary system and the payment system, it's a graph, it's a network of debts, right? And those debts are discharged by people making transfers along those lines where they have debts. And that graph, if you have access to it, if you can see it, if you can visualize it, you can start to do a lot of interesting things. For example, you can discover that there is actually structure in the graph. There's balance in the graph that allows you to clear debt with no money at all, right?

And this is really easy to think about. If I owe you $100 and then you owe me $100, we don't need to transfer any money. We can just clear those debts, right? That's kind of an obvious case. But if I owe you $100 and you owe Alice $100 and Alice owes me $100, normally we're not going to be aware that there's a closed loop there. But if we become aware, then we can sort of net out our debts in that loop and clear that debt without any money. And so it turns out these loops exist all throughout society. And by being able to view the monetary system as a graph and apply

sort of graph theory to it, we can significantly reduce the amount of money needed to discharge, you know, more and more debt. And we can use the money that we do have in a sort of more intelligent and more optimized way to, you know, to clear debts for more people and, you know, work through gridlock in the payment system and things like that. So it starts as sort of a low level, but it potentially has much larger implications when you start viewing the network, because then you can start to see the patterns of trust that actually exist in society. And you can leverage that within the structure of your payment system to think about where new currencies ought to be created and how currency ought to flow in sort of an optimal way to enable people to sort of grow and improve commerce and so on. That was a lot, but, you know, I'm excited. And so I'll just

put it all out there. You make my job way easier when you do a lot, because it allows me to just see your mental flow and I don't really have to interrupt and ask questions. So I think that that was really perfect. So how can the average person who's utilizing the network, how can the average person in some foreign country who's just trying to get by benefit from the idea of collaborative finance? Because most people we know are still just trying to pay their bills. Right? Yeah, that's right. And I do want to say also, interestingly, you describe that as sort of the killer app being money of crypto. And I always say that stable coins are the killer app, but it's like you've taken that and gone a step deeper.

Yeah. We could talk about stable coins. I think there's a lot of potential issues there, but that's sort of, you know, along the right lines, but we do need to go a step further. For the average person, like you said, the average person just trying to, you know, just trying to get their debts paid, right? And generally, you know, people face a kind of cash flow problem, right? And a lot of small businesses even, you know, they're facing a situation where they're a solvent business. If you look at their balance sheet, their assets exceed their liabilities, right? They look like a healthy, profitable, solvent business. But the reality day to day is that there might be some kind of duration mismatch, right? They're trying to collect on their invoices in order to pay their bills. And if they can't

collect fast enough, they might go out of business, even though they're technically solvent sort of. You have accounts receivable problem. Yeah, exactly. Matching accounts receivable and accounts payable. And so if you collect accounts payables from people, then you can start to map them out. And it turns out just naturally because of the structure of society, there are closed loops in that graph, right? And so this offers a way for people to say, look, I have these payables and I have this cash. And if a lot of people come together and do that on a common platform, then we can optimize to discharge more debt with the minimal amount of cash, right? And in some cases, people have their debts reduced with no cash at all. And in other cases, people's cash will be able to be

used to discharge multiple debts or for many people, right? And so you get this sort of like velocity multiplier that allows people's existing cash to go much further and can potentially significantly ease the cash flow burden on a sort of typical small business, you know, if they're participating in this and if others are as well. And so that's sort of what we're focused on, what we're looking at, because we think there's an opportunity here to sort of reformulate the entire discipline of monetary economics and put it on sort of sound graph theory, network theory footing, and also, you know, directly improve the lives and financial

health and situation of the 200 million small businesses across the world. So the challenge then is to build that first, but second is to deploy it in a way that it's easy and understandable for every single person, which I would say has been the biggest impediment for literally everything being built in blockchain so far. UX, UI, meme, grandma can't use it, the obvious things, memorizing seed phrases, the terror of being your own bank. We all know the problems. Yeah. How much closer are we becoming to making these processes as familiar as making a PayPal transfer or signing into your social media

account or any of the other things that people have become comfortable and familiar with? Yeah, I mean, I think we're still not there yet. I mean, it's going to take more time and more sort of real world applications and pressure from that. You know, I think there are some like cryptographic advances that will continue to sort of help ease these sorts of things and make it so that, you know, you can still in a relatively trustless way or by trusting small numbers of people, you know, be able to easily use these kinds of systems and provide simple UX. So I think that's

coming. And that's, you know, a big part of kind of what, you know, how I describe this integration phase. I mean, it's for Cosmos, but it sort of applies to blockchains in general. You know, this integration phase thing, yeah, is really about integrating with the real world, right, and making it possible for real world systems to come on to come online. But that requires trust. I mean, so much of the real world operates on trust. And we have this sort of, you know, vision and crypto of like, trustlessness. And it's important to have a base foundation of trustlessness as like, a guarantor of a certain kind of international human right, like that is, that is fundamental. But in order for this actually to reach, you know, the large

majority of people, we have to figure out how to bring trust back in, in a way that sort of makes sense for people, but that also doesn't create, you know, you know, too much risk and lock them in and, and so on. And I think that's where these ideas of like, you know, sovereignty and interoperability that are so core to Cosmos really come in because it because it really puts the puts the thing front and center that's like, okay, you are, you know, each community can be sovereign over its infrastructure and its applications, it can make decisions for itself, what sort of levels of trust it wants to embed in the system and who else it wants to, you know,

engage with and connect with and so on. But we still have, you know, I think quite a ways to go to really make this stuff usable for the real world and for real world applications, right? And yeah. Yeah. So Cosmos,, interoperability is key. Do you still believe at your core that we'll have multiple winning Layer 1s and blockchains and that the key is to get them working together? Or do you think that we're going to get to a point where one or two of these are so powerful fast that

they can actually win and handle everything? One chain to rule them all, so to speak. No, no, no. I will remain against the one chain to rule them all until I die. But that doesn't mean I'm not a strong believer in certain chains and that certain chains will be around for a long time. I mean, I think that basically Bitcoin, Ethereum and the Cosmos philosophy are here to stay, at least. And the Cosmos philosophy kind of includes within it the broader scope of all

the other sort of L1s, which each represent their own kind of sovereign communities. Many of them, just their identity is basically Ethereum killer in this direction or in that direction or in some other direction. But Cosmos is a lot more sort of broad than that. And the idea, you know, if we're really talking about, you know, ultimately constitutional reform and these being, you know, we think of these things as tools for political economic expression. That's how I describe Cosmos, as tools to enable us to work through this constitutional struggle that's playing out around us and that is going to, you know, formalize over the next few decades properly in real material changes to, you know, the structure of countries and cities and so on. And so we need to mature these tools to be able to do that. But that's going to lead

to a state where there certainly are many blockchains, you know. Ideally, I think they will be sort of jurisdictionally bounded. So they'll be, you know, they'll serve particular regions, bioregions, cities, and at different scales. And we'll sort of have like a, you know, I describe it as like a fractal hierarchy of relationships between them. And there will be certainly competition at different layers and different scales for people saying, you know, wanting to compete to be at the top or whatever exactly that might mean. Though I do think Bitcoin is going to win it. And, you know, that's mostly because of its proof of work and conservative philosophy and things like that. But, you know, I think Ethereum will certainly have a role there

and probably others will too. But what I'm most interested in is the. But, you know, I think Ethereum will certainly have a role there and probably others will too. But what I'm most interested in is the sort of, you know, more local, geographical and bioregional sort of representations in order to reset basically how we do accounting broadly as a society and, you know, how we organize what we value in a way that allows for a lot more, you know, polycentricity and other kinds of values to shine through and doesn't just try to denominate everything in like the USD, right?

And when we just say, oh, stable coins, USD stable coins is the killer app. It's not really, it's kind of a red herring. It's sort of like, oh, it's just sort of like giving up. It's like, yeah. Temporarily. Yeah, temporarily. Okay.

I mean, yeah, when I say it's the killer, I should reframe that. Yeah. When I say it's the killer app, it's the killer app I should reframe that. Yeah. When I say it's the killer app, it's the killer app so far outside of Bitcoin. I talk about all these ideas that we have and just none of them have really reached mainstream adoption, but stable coins have. Right.

If you're in a country with hyperinflating currency or currency devaluation, as much as we would love the idea that everybody's rushing to buy Bitcoin, they're not. They want dollars. Right. And stable coins solve that. That's what I mean by it being the killer app so far. I certainly don't believe that tokenized fiat is going to be the endgame for crypto as a Bitcoiner, right? Right. Right. Exactly. So that question of what is the endgame and how do we even chart a course to it? And frankly it requires a diversion through like monetary theory and history um and you know there's a lot of skeletons in that closet that we need to dig up and and reckon with that i think you know

challenge some amount of sort of bitcoin fundamentals and and austrian economics which you kind of have to come to the conclusion is just like completely immature or insufficient um for the purposes at hand, right? And we need broader theory, like the, you know, subjective value theory and marginalism isn't sufficient to reason through what's ahead of us, right? And this is where the sort of graph theory approach comes in of COFI and collaborative finance, because these are, we're talking about unlocking economic possibilities that are only enabled through collaboration and sharing of debts. And it's a very concrete kind of collaboration. You're basically pooling

your obligations in a common place so that you can map them out, so that you can find cycles, so that you can optimize to do more with less money, right? There's this fixation on the quantity of money in the system. Everyone's obsessed with monetary quantities and quantity theory and how many reserves is the Federal Reserve printing. And none of that almost matters at all because the important thing is about not the stock of money, but the flow. How does money flow in society? Who does it flow to?

When it comes in, when it's created, where does it flow from there? Does it just stockpile here or does it just sit stale or how is it flowing? And so moving towards more of a quality theory of money that is a study really of the sort of network and the flows is where we need to push the whole space to actually even start to answer the question of what does it mean to create new units of account and stores of value and to have people start to use them, you know, as money in their real lives, you know. So I think we can get there, but it's sort of, we have some steps to pass through. So what happened to DeFi? Were you just skipping it? Well, DeFi is interesting.

DeFi is kind of interesting. It's, you know, I think it's an exploratory space. And I think they are, you know, it gives an opportunity to experiment with a lot of new kinds of constructs that I think are important in general. I think the sort of, you know, exploration in AMM design and bonding curves, automated market makers, this kind of stuff. And in general, sort of exploration in AMM design and bonding curves, automated market makers, this kind of stuff. And in general, sort of having, it sort of serves as an incentivization layer to sort of improve the overall quality of like distributed systems and cryptography and things like that. And so I think that's been really useful and we've seen sort of major advances in cryptography for sure and arguably distributed systems too. And so I think it's valuable for that, but I think it's also kind of a red herring, right?

Because if all we do is make the existing financial system like... Well, we learned what... Right. The CeFi, DeFi knockoffs. We learned how it worked when we just created the financial system with inferior rails and less regulation. Exactly. We just basically have a rails and less regulation. Exactly. We just basically have a lot of bankruptcies.

Exactly. But I think, do you think that's what DeFi is? Or do you think that that's just a really bad and bastardized version of DeFi? No, I think that, look, I think there's an element of DeFi that's directly an extension of the fundamental guarantor of human rights that Bitcoin represents. It's just like cryptographic primitives to protect independent sovereign privacy preserving exchange, let's say, at a general level. It's just like a guarantor of fundamental basic human right to transact. You need that and we will continue to need innovation on that and enablement on that,

but DeFi has gone way further than that. So there's like, you could say there's like the blue chip DeFi sort of foundation that is important. And then there's just this been like explosion of innovation, you could call it, but experiment that are really just about like finance and lending and yield and APR and gambling and casinos and all this sort of degenerate stuff. And I mean, people take pride in this sort of degenerate label. So I mean that in a sort of endearing way.

But that stuff's important because it finances us getting to the next step. But let's not pretend that it isn't what it is, which is a direct extension of existing financial mechanisms and sort of, you know, capital. But more degenerate. More degenerate, yeah, exactly. It's literally a more degenerate version of the existing financial system.

Yeah, it's a place for all your most degenerate desires. An unregulated stock market of non-companies. I mean, we know that, right? I mean, we know that when these meme coins start dropping

and we go into meme coin season, you see billion dollar valuation, billion dollar market caps on meme coins that there's something wrong here. Yeah, but it's an extension of, it's not like something that's unique to crypto, right? It's an extension of existing patterns of behavior. And you've seen the same issues in VC and startup and on the stock market and all over the world. So it's not like it's something new.

And I don't want to dismiss it outright because I think there is important innovation and progress that happens there. And it does finance real forward technical motion. And like I said, cryptography and distributed systems, even economics and so on. But taking crypto to the next level does require something, I think, another step. And we've seen this sort of refi movement, regenerative finance. We're just sort of trying to push. I've never even heard of that.

So I'm way behind. I'm still in defi, man. Yeah, yeah, yeah. Well, so the refi movement was sort of like, you know, the like green branch of defi, let's say, right, the like, carbon credits and these sorts of things. And there's some good stuff in there. But a lot of it, you know, a lot of that rhetoric also kind of gets kind of gets captured. And, you know, there's all these issues with, these issues with carbon credits and reforestation, just all the usual silly, linear monoculture thinking that 20th century humans are known for. And so we're trying to push it towards this. Yeah, this is why we felt we needed a new term, collaborative finance. And partially, I mean, from where I'm coming from, for a long time,

I've been talking about local currencies, community currencies, mutual credit systems. These are sort of small scale alternate money systems that have always felt like really important to the future of sustainability. I was sort of completely sold on that sort of vision. The way I describe it, I have a philosophy of sustainability existentialism that leads me to a politics of monetary localism. And these local money systems are sort of a big part of it. But it always felt like something was really missing to make that, to really make those things scale and achieve broad adoption. There are a few

successful examples of them, and some of them are even starting to use blockchain tech. And I always sort of thought like, there's really, you know, blockchains really have a role to play in making this the killer app of money, the thing beyond just stable coins. And it wasn't until this paper came out in 2021 called Liquidity Saving Through Obligation Clearing that really spelled this all out and put the dots together. And so the three authors of that paper, I ended up getting in touch with them. They all now work with me at Informal Systems. And we sort of kicked off this co-fi movement by taking that and really trying to turn that into a, into a larger vision that, you know, it's really about looking at the sort of network of debts, the network of

obligations that exist in society, and using that as the foundation of your payment system, because then you can offer clearing to everyone to, you know, actively work to reduce the amount of debts in society with the least amount of money. And you can do it in a way where you can start to introduce money in a really deliberate and sort of, you know, precise manner, again, with the goal of reducing debt. So it's not this like ad hoc blunt, you know, liquidity injection, like we get from the Fed in the form of QE, it's something that's very, you know, precise and sound and properly mathematically driven, not just like economists putting their fingers in the air and asking, you know, how much money to, you know, to, to buy bonds with or whatever, but, you know, something much more

sort of fundamental than that. And so that really, that really lit me up. And, you know, and now that's a big thing we're working on. Yeah. So you talk about, obviously, the future of constitutions, the way that society will be structured, largely, it seems like DAOs are the initial version of that, although I think they've largely failed thus far in their first iterations. How do we get there from nation states? Because to have that, you obviously have to see, I don't know, the United States fail, China fail, right? Or are you saying that this is a parallel system in jurisdictions that are more friendly to this conceptually and some people still continue to live in the existing system yeah i mean uh so i don't know exactly i don't i i don't really

want to think about you know america and china failing because they're not going to fail without massive wars and because they were in full mathematics right yeah yeah exactly so i i try to think okay is there a sort of graceful way to allow them to like unwind their power or like you know nudge them into like, hey, like, you know, we've kind of got you in a corner. Cryptographically speaking, it's time to unwind and, you know, let's still, we can still acknowledge your legitimacy, but you need to, you need to give something in return and so on. And so, so I think there, you know, I'm not, at some level, I'm an optimist. So I like to like to think there is a path there without, you know,

too much war, you know, trying to be a realist as well and you know student of history and and and so on um i do think there is a lot we can do i mean one way i think about it you know so dows are dows are are interesting but mostly because of sort of what they're missing um and so i think you know generally speaking again there's a lot of like good energy and and creativity and excitement and it's going to drive things forward but similar to defy i feel like it's really missing the sort I think generally speaking, again, there's a lot of good energy and creativity and excitement, and it's going to drive things forward. But similar to DeFi, I feel like it's really missing the fundamentals of organizational design essentially, just like DeFi is missing fundamentals of.

Yeah. To me, it's mostly Lord of the Flies. Sure. Yeah. All of these things, I mean, power is just everywhere, right? And so you need to take into account the realities of power and the dynamics of power. And at the end of the day, the way to sort of start to cut through these things

is by thinking about debts and promises and obligations. And so at Informal, we use a language we call workflow to really, it's really a language for talking about promises, promise making, right? Making and managing promises. Because everything you do in an organization, it really boils down to the promises you're making, right? Making and managing promises. Because everything you do in an organization, it really boils down to the promises you're making, right?

The consensual expectations that you develop with the other humans you're working with and trying to be explicit about that and reasoning through the continuous sort of promise redemption loops that occur, you know, whenever, you know, anywhere in an organization. And so, you know, better language for actually reasoning about accountability that's not just like, you know, waving your hands and pretending kind of power doesn't exist, but trying to really embed it in a problem of, well, who's making promises, and what are they promising, what scope and what time horizon, and really thinking in those kinds of terms, you start to, you know, understand hierarchy or other things that kind of, you know, DAOs are, you know, want to throw out or whatever, as really emerging from the structure of the promises that

are being made, you know, one way to think about what a CEO does is they're the person that makes the broadest scope and the longest time horizon promises to the rest of the organization, right? And typically, they make it, they make those promises to the board, that's, that's, you know, that's who they're performing for. But what the other thing we need to do is close the loop between the board and the employees, the other people in the organization. And that's where cooperatives come in. And so Informal is actually structured as a workers cooperative.

So it's a sort of one person, one vote organization. And I think that's something a lot of DAOs are also potentially kind of missing because they're still very much driven by sort of capitalization. Who holds the most coins. Yeah, exactly. Buy more coins, get more votes. Yes, yeah. Exactly.

And so that's certainly something we need to move away from if we're going to actually sort of bring humans back in the loop and, you know, represent the people and the land and not just capital is sort of the way I framed this initially. And, you know, sort of historically speaking, there was a, you know, this is,

I don't want to offend your audience too much, but depending on who they are, but just talking about, you know, history of economics and sort of early days of socialism, right? There were other socialisms besides Marxist. There was sort of the anarchist and there was the workers' cooperative movement. Yeah, it worked tremendously well in Israel, of course. Yeah, exactly. Right.

But even long before that, but, you know, in the early 1800s, you had this sort of Robert Owen and the origin of the workers co-op movement. And he was sort of wildly successful in England until he tried to start, you know, some utopian commune in the States and that failed. But the worker cooperative sort of idea seems really fundamental to fundamentally important to me because sort of workers and employees within an organization are so critical to the organization and are sort of chronically underrepresented. And so that you end up in this, like in these big battles between like corporations and their big unions and everything is just like big and bureaucratic rather than thinking about changing

the corporate form itself to better represent the employees in the form of a, of a cooperative. And so, and a workers cooperative in particular, you know, and one of the big problems with, with Marx was he, he basically went on the attack against these other kinds of socialists against, you know, both Proudhon and Robert Owen and sort of, you know, called them utopian socialists and just sort of dismissed them in favor of his like scientific socialism. And arguably that set, you know, the progressive agenda back 150 years because it got just sort of bogged down in like communism and these sort of state-based socialist regime that just ended up being, you know, basically genocidal, right? And so now there's, you know, hopefully, arguably,

this opportunity for these, you know, alt-socialist ideas of sort of more local, not to call these like socialism, but just things that, because I think there actually is, you know, sort of written about this fundamental way that it interacts with sort of Hayekian thinking and sort of Hayekian sort of localist, you know, Hayek was sort of very much focused on the individual in the global society. And I think, arguably, sort of missed the importance of organizational boundaries and other kinds of local knowledge beyond just the individual entrepreneur. But, you know, arguably, his thought sort of got extended into, you know, what became the work of the Ostroms and thinking about the commons and, you know, all these kinds of things that are now also prominent in the blockchain space. But all this to say, there's an opportunity

now for that energy of the sort of workers cooperative movement to kind of come back and to reformulate a way forward for technology companies, but also companies generally, and, you know, especially in the blockchain space to structure themselves differently to actually be the change, you know, they claim they want to be in the world, rather than just, you know, putting up more, you know, sort of token based voting schemes to organize and govern everything. So I think there's, you know, incredible opportunity for us to do things different. And we're trying to, you know, walk the talk a little bit at at informal working on, you know, being structured as a cooperative and really working on these,

these local money systems and trying to make that work. But that's really what we see is, as as the potential, you know, killer transformative impact of, of this technology. So. You need to hang out with Bology, man. Yeah. I've, I've, you know, we've, we've chatted a couple of times, but I have some words to say to Bology. But you remind me of him the way, the way that your mind works. Yeah. Very interesting thinker. And, you. And he's made some interesting calls.

And there's some interesting stuff in the network state for sure. But I think there's also some stuff missing and it needs to be a bit more grounded. And I'm sure he'd probably agree with some of what I say and maybe disagree with others. But yeah, it'd be interesting

to chat with him more. So what's the timeline for... Okay, not all that. I think we've covered the future of society. But what would you what's the timeline for, okay, not all that. I think we've covered the future of society, but what would you say is the timeline for true interoperability between all these chains and easy use and actual, say 50 million people using it. I'm not going to jump to a billion, but some meaningful level of mainstream adoption. So I think we can both argue that we don't have that yet. No, I don't know the number of users, but probably a lot of the users are just there

to sort of hold an asset and see if price go up. People really using it for the purposes that you've described. Yeah. I mean, I think it might take five to 10 years or something like that, which I've probably been saying for the last five to 10 years. So yeah, it turns out I've been 10 years in crypto since like this year or something, which is kind of nuts to think about how much and how little we've accomplished basically as a community is really food for thought. But yeah, I think there's still years to go on this. I mean, at some level, you know, so we developed this interoperability protocol we call IBC,

the Interblockchain Communication Protocol. And that's seeing pretty widespread adoption and starting to be, you know, understood as like a standard for interop between different chains. And so we hope to see a lot more of that and for that to make it a lot easier for chains to connect and to reason about their security models and things like that. But for really, you know, to bring, you know, 50 million users on chain in meaningful ways, we need the applications, right? And the applications have to get built and they have to be real. And we think the, you know, we happen to think proper payment systems, but specifically based

not on, you know, on reducing the amount of money that's actually needed to make payments happen. That's what's so unique about about collaborative finance is that you can actually collaborate to reduce the amount of money necessary to make all your payments. And that that opens up really interesting possibilities for liquidity saving, you know, especially, especially relevant in this, you know, increasing era of liquidity crises. And we've seen multiple banks fail this year, which is like kind of insane to think about. And, you know, everyone's just like, oh, it's over, you know, is it really over? Like, I mean, major institutions just failed

like two months ago. So, you know, obviously we need to do something about this liquidity crisis that we're in. And the answer isn't just like print more currency units. It's somehow something else more fundamentally that has to do with like the structure of the payments graph and the balance necessary within it. So anyway, I'm sort of getting carried away from what the original question was. But yeah. That's what we do here. So where can people keep up with you after this conversation? And then

I guess if there's anyone who's a developer looking to build something, how can they become involved in the Cosmos ecosystem? Yeah, totally. So you can follow me on Twitter, Buckmanster, at Buckmanster, B-U-C-H-M-A-N-S-T-E-R. Our company is Informal.Systems. So we do a lot of interesting stuff. And we also do security audits, informal verification, and this collaborative finance stuff and building Cosmos.

And then Cosmos itself, Cosmos.network. You can get started with the tutorials there, the Developer Academy. You can build on Cosmos in many different languages. So there's a lot of flexibility there. And yeah, follow Cosmos on Twitter. Hey, you have an amazing mind. I really enjoyed listening to that. And I hope we can do this again and dig deeper. Sounds great. Yeah, it was great chatting. Thanks so much, Ethan.