14 - The DeFi Exchange | Cameron & Tyler Winklevoss

Episode: #14 June 1, 2020 Cameron & Tyler Winklevoss on Bankless! The mainstream world knows them as Zuckerberg's bane from "The Social Network https://en.wikipedia.org/wiki/The_Social_Network" but the bankless world knows them as multi-faceted entrepreneurs, early believers in crypto, and the founders the Gemini https://gemini.com/ exchange. Whatever you think you know about the Winklevoss twins you have to admit...these guys have an uncanny ability to see the future. So what do they see in our future? Future of crypto? Future of DeFi? Of the world? They bridged technology to our social lives. They bridged crypto to Wall Street. What bridges are they building next? Is Gemini the DeFi-friendly bank we've been waiting for? We cover: How Cameron & Tyler "see things" early What the Winklevosses first saw in Bitcoin The evolution of crypto banks JPMorgan is banking Gemini!! Big Banking vs Big Tech Is Gemini DeFi friendly? Why the Winklevosses are ETH whales What's the next crypto-sized opportunity? Will the Winklevosses turn Gemini into a bridge to DeFi money protocols? Listen to the episode and decide for yourself! Note: David and I skipped our Big Picture chat this week to get straight to the Winklevoss convo but we're releasing our Big Picture chat in a special Bankless episode coming to you on Wednesday June 3rd! ----- Tools from our sponsors to go bankless: Ramp https://ramp.network/ - the fiat onramp for DeFi (mention Bankless!) Monolith https://monolith.xyz/ - holy grail of bankless Visa cards Aave https://aave.com/ - money lego for lending & borrowing Multis http://www.multis.co/ - bank your business without a bank (1 mon. trial https://multis.co/!) ----- Resources discussed: (News) JP Morgan Banks Gemini https://www.coindesk.com/coinbase-gemini-first-crypto-exchange-customers-jpmorgan-bank-report (Article) How to Bank your Businness without a Bank https://bankless.substack.com/p/how-to-bank-your-business-without ----- Episode Actions: Look at DAI trading pair on Gemini https://gemini.com/ Download Bonus Bankless podcast on Wednesday! Give Bankless at 5-star review on iTunes ----- Subscribe to podcast on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 | Spotify https://open.spotify.com/show/41TNnXSv5ExcQSzEGLlGhy | YouTube https://www.youtube.com/c/bankless | RSS Feed http://podcast.banklesshq.com/ Leave a review on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 Share the episode with someone you know! ----- Don't stop at the podcast! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit official Bankless website http://banklesshq.com/ for resources Follow Bankless on Twitter https://twitter.com/BanklessHQ | YouTube https://www.youtube.com/c/bankless Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:13Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we are here to help you become more bankless. David, how are you doing this week, my friend?

• 0:31David Hoffman?

  Doing really good. Just came out of a fantastic interview with the Winklevoss Twins. Getting the Winklevoss onto the Bankless Podcast was an absolute blast, and picking their brains about how they think about this space, where they think this space is going, and also where Gemini is going, was really insightful. Really tip of the hat to the Winklevoss Twins to building a really awesome exchange, and in my opinion, building something that is going to be really successful and crucial infrastructure into the future. Ryan, what did you really enjoy about this interview?

• 1:05Ryan Sean Adams?

  Well, look, I think it's cool, because, you know, who hasn't seen The Social Network, right? It kind of felt like we were interviewing celebrities in their own right, but now the Winklevoss Twins are big into crypto and have really developed a compelling exchange offering. But I liked this because we were able to ask questions that I think a lot of people in crypto haven't asked them. So, talking about DeFi, talking about Bankless, at one point, we brought up the subject, well, how can crypto banks remain neutral in this space? Will they become just like the traditional banks if given enough power? And they had a good answer to that. I

• 1:49Ryan Sean Adams?

  think one of my big takeaways, really, from this conversation is they see Gemini as being a bridge, almost an interface for money protocols, with Bitcoin and Ether being sort of the first of a set, but then also die. They seemed open even to... To integrating the DICE savings rate and possibly compound protocols like AVE down the line. They seemed open to that. And when you brought up the Protocol Sync thesis, they nodded their heads yes, basically.

• 2:22David Hoffman?

  Yeah, I think the Protocol Sync thesis is going to be a very reoccurring question for all incoming guests on the Bankless Podcast. And it was really exciting to hear their appreciation of that thesis. And so in the Bitcoin space, we often see Bitcoin banks, things like BlockFi, things where you deposit your Bitcoin and you get some banking services. And I think Gemini, and behind the scenes, what I think is kind of going on is there's a race to become the DeFi bank, right? So we talked about what would it take for companies like Gemini to be compliantly integrating something like a MakerDAO Vault? Or any sort of other financial services based on the protocols found on Ethereum?

• 3:06David Hoffman?

  So that's really where we end up in this conversation, but we go through and kind of get the history of the Winklevoss twins. Ryan, you did a really good job expanding on the metaphor of them building out their rowing team in the town that no one had a rowing team in. And then using that as an extrapolation for how the Winklevoss seem to be ahead of the curve. So really fantastic interview. In fact, it was such a great interview that we have decided to cut the big picture segment out of this particular episode. And we will be releasing that as its own standalone episode on Wednesday. There was a ton of stuff that has happened in the Ethereum and crypto space.

• 3:49David Hoffman?

  And me and Ryan go on for almost an hour talking about it. And so we didn't really want to have a two and a half hour long episode. So we broke that part of the episode out and are releasing it as a standalone episode coming this Wednesday as a bonus episode. So stay tuned for that. A little extra Bankless content coming your way this week. Before we get into the interview though, let's talk about our sponsors. Our first sponsor is Monolith. If you guys have your assets inside of Ethereum. Ethereum, but you also want to live your life. Monolith for our European customers might be the product for you. They have their DeFi card, which is a Visa card connected to a smart contract wallet on Ethereum.

• 4:32David Hoffman?

  So that when you go to the store, you buy your coffee, you buy your groceries, you swipe your Monolith card. And then your DAI gets deducted out of your smart contract wallet, sold for dollars. And then you make a, both a transaction on Ethereum and a transaction on the Visa network. Really crucial infrastructure for people that want to live a bankless life, but don't really want to compromise and be that weird friend that doesn't have any real money.

• 5:02David Hoffman?

  Real money.

• 5:03Ryan Sean Adams?

  I like that.

• 5:05David Hoffman?

  So you can download the app at monolith.xyz to get your bankless Visa card today. And then you can get some of the world's economic activity placed onto the Ethereum network.

• 5:16Ryan Sean Adams?

  All right, guys, I am super excited to introduce you to our next new sponsor, Ramp. What is holding crypto back? It's really getting fiat into the crypto system. That's what's holding DeFi back. The problem is a new user has to create an account with an exchange to buy some crypto. They have to wire funds. They have to go through a whole bunch of steps. What's holding DeFi apps back? The exact same thing. Users drop off in the signup process and it really limits the DeFi market to hardcore crypto people. But no longer, Ramp solves that. Ramp has a delightfully easy fiat on Ramp service. So let's users get crypto, ETH, DAI, USDC in five minutes or less.

• 6:01Ryan Sean Adams?

  That's right, five minutes or less, no exchange needed. And a new user can have crypto right into their account and start using the app. So if you are a developer, this takes about 10 minutes to implement. They've got very easy to use APIs, apps like DeFi, apps like Xerion, Ethereum, Torus are using Ramp. You can visit ramp.network to see how easy this is. This is really an opportunity for DeFi developers to 100x their addressable market size. This is like the ultimate growth hack. And here's what's cool. If you mention Bankless, they will on-ramp the first 100K from your app of USD free.

• 6:45Ryan Sean Adams?

  So that's 100K free when you mention Bankless. Go to ramp.network and check it out. R A M P dot network. Mention Bankless and check it out.

• 6:56David Hoffman?

  All right, guys, let's go ahead and get right into the interview with Cameron and Tyler Winklevoss of Gemini Exchange.

• 7:09Ryan Sean Adams?

  Okay, we are in for a special episode today. David and I are here with Cameron and Tyler Winklevoss. They are the co-founders of Gemini, partners at Winklevoss Capital, rowing Olympians. They were involved in the original idea behind Facebook. You may have seen them in the social network. These guys have done a lot, including C crypto extra early. My first question, Cameron, to you is, how did you get at Winklevoss on Twitter before Tyler, man?

• 7:40Speaker 02

  It's a great question. The simple answer is Cameron Winklevoss doesn't actually fit. Twitter doesn't give you enough space for that handle. So we figured someone will take Winklevoss, better be one of us as opposed to someone else, so.

• 7:55Ryan Sean Adams?

  Yeah, nice. Tyler, do you ever ask if you could, you know, share that account or is it all Cameron's?

• 8:01Speaker 02

  It's definitely Cameron's. A lot of people sort of taunt me on Twitter and say, oh, why'd he get it and not you? And I guess, because like, yeah, Cameron's reasoning, my name fits by default and his doesn't, which I think is actually the cooler thing. But I guess, I guess reasonable mind, reasonable minds can disagree.

• 8:23Ryan Sean Adams?

  So, okay, so speaking of reasonable minds, we want to start here because something that I think is super fascinating about you guys is you tend to see things early, like that's been the case. So, uh, seeing Facebook before Facebook in the early 2000s, in the early aughts, pretty incredible, but also seeing crypto before, and Bitcoin specifically, before most of the population saw it, like back in 2012. My first question is, uh, how do you guys see these things so early? Like, is there a recipe? Is there a formula? Can you teach us how to do this?

• 9:01Speaker 02

  You know, it's a, it's an interesting question, and I think we've definitely asked ourselves that before. And I think part of it comes down to just a lot of curiosity. And we tend to approach problems with a total beginner's mind. So we don't have all these like preconceived notions or ideas or assumptions that we bring with us when we're evaluating a new thing. And that was definitely true with Bitcoin when we found it in 2012. And it was also true of social networking in, in the early 2000s. Most people were not, did not believe that people would be readily sharing information and photos online.

• 9:47Speaker 02

  It was, uh, not a popular concept at all. In fact, most people online were using avatars to basically cloak their identity or have some level of privacy. So this idea that people would be themselves and really want to establish their online identity and link it to their real world identity, that was novel. And I think we just thought that, you know, we, we believed in that concept that, that your, your real world identity will eventually be mapped on to your online identity. And it was definitely not a popular belief at the time. But we, we sort of, you know, it, it made a lot of sense, I guess, instinctually to us.

• 10:31Speaker 02

  And we we sort of shut out the noise in that regard because if you look around everywhere else, people are always looking for for identity and belonging in a group, whether it's your college, you're an alumni of the university, or a high school, or a sports team. So it felt like that's pretty common human behavior that's existed forever. Why would the online world be much different? And so we weren't, I guess, distracted by a lot of the noise out there.

• 11:06Ryan Sean Adams?

  Do you guys think that's a problem? Like, is that why people miss crypto? I've heard so many stories about, you know, people seeing it and reading an article in 2011, 2012, and then just dismissing it at the time, picking it up maybe later. We even saw like Goldman released a report today where they they talked about Bitcoin being tulips, you know, our favorite analogy. We're back to the tulips again, like.

• 11:29Speaker 02

  Yeah, that was like eight years ago.

• 11:30Ryan Sean Adams?

  Is that the problem? Are are people, you know, traditional finance and people who dismiss crypto? Are they just not looking at this thing with a beginner's mind?

• 11:40Speaker 02

  So I think there's a couple of things at play here. One of them is absolutely that people are not approaching it with a beginner's mind and sort of this carte blanche and open thinking and ability to say, okay, wait a second. This is a totally new area. What are what are the what's the promise behind it? What is the inherent benefits or whatever? But stepping back, why do people not approach problems with a beginner's mind? And I think a lot of that could be because you became the master of the universe in something for decades in the traditional world of finance. And you're forced to basically disrupt yourself and challenge

• 12:24Speaker 02

  all the things that you hold dear and that you understood. And you have to reinvent yourself. And it's costly and time consuming and takes conviction and effort. And a lot of people just don't want to effectively disrupt themselves and reinvent themselves. And those that do and are willing to kind of challenge that over and over again are the ones that are able to see a you know, the next wave, the next future. So there's a lot of that. Behind their inability to, you know, see the promise here or unwillingness. Because they have, you have an existing franchise and customer base and you, you, people like what they know.

• 13:10Speaker 02

  So I think that's a large part of it. It's also why you see, you see crypto, the sort of the breakdown on the believers versus the non-believers. A lot of it is just an age thing. And not because people who are older can't get these ideas, but because like Cameron said, they've acquired this experience, this skills, they have an asset that all of a sudden may not be relevant in the new world order of crypto. And so whenever you talk to a millennial, like they, they're totally bought in. You never convince a millennial about Bitcoin. Because they, ultimately, they have very little to lose. If you're eighteen, in high school, just out of high school, even a college student, you have like negative to lose, right? You have, you have like student loans.

• 13:54Speaker 02

  So it's not like you built this whole career and you have like real estate and mortgages to uphold and, and you know, this whole life in this system. That you all of a sudden have to give up. So that's definitely part of it. Why, you know, I think why a lot of people don't get it. I think, believe it or not, people, a lot of people are inherently pessimists. They, they don't see maybe the new opportunity or they're not motivated by it. We've always been motivated by increasing choices, you know, and, and creating new alternatives. And this kind of goes back to even our days in high school. There was actually no crew team at our school.

• 14:38Speaker 02

  Our next door neighbor went to boarding school, he's a little bit older, learned how to row and was successful and we heard about his exploits. And we decided like, we were tall, we knew we kind of had the build, we didn't really know what that meant. But just like someone who's tall knows that maybe they could be good at basketball, we understood that being tall might be good at rowing. So we found a rowing club, started rowing, found this amazing coach, really liked it. And then went to the headmaster and started the team at our school. And effectively, we manufactured this opportunity for ourselves to become athletes in a certain way that didn't exist.

• 15:16Speaker 02

  And it's simply because we we asked the question like, why doesn't this exist? There's plenty of water. There's actually a rowing club thirty, forty-five minutes away. All of the elements are here. Um, we, we can do this. And of course, we manufactured, we created that opportunity. We, we, we joked that it was very much our first startup. Um, we rode in college and then rode in the Olympics. That never would have happened if we had accepted the world around us and the options that were available to us. And so, I don't know, like, is it thinking outside the box? But we really were like curious and like, like Cameron said.

• 15:56Speaker 02

  And we wanted greater choices and we just didn't accept, we asked the question, didn't just accept what was there. And we've continued to do that, whether it was social networking. Hey, let's, we, we go to school um in, in Boston, this, uh, you know, and there's so many universities, there's so many students. Yet we're coming into our junior year. We don't really, it doesn't feel like everyone's in their bubble and everyone's busy and we want a better way to connect with students. So, um, we thought there was like a better way or possibility. And social network was that sort of way to express it. And then taking that further to, to money.

• 16:38Speaker 02

  Um, when we saw this idea, we didn't dismiss it like skeptics or pessimists. We're like, okay, what is money um today and what's wrong with it? And what is this thing? And why does it have merit or doesn't? And like, we weren't completely sure at first. Um, I think Cameron said to me, this is either complete bullshit or the next big thing. But let's, let's take a look. Let's at least like take it seriously and give it some credibility. Because the smartest people in the room are, are so passionate about it. They're putting every penny of their life, all their time. And so that dedication was, was really interesting. And we, we start, we, we decided to look more, which isn't saying that much.

• 17:23Speaker 02

  But I guess it's a lot more than most people did.

• 17:26David Hoffman?

  That's some great background with you guys and the story of how you got started the rowing team, I feel like is a preamble of what's to come or what came with Gemini. So before we get into Gemini, can maybe you guys can illustrate what you saw in crypto that really brought you into the world of crypto, like and maybe some of your pre-existing beliefs about the world, like were you guys Austrian economics or did you believe in the Austrian school? Did that change your mind coming into the crypto space? Or how, what did you see in crypto and how has that changed you guys now that you guys are in the world?

• 18:04Speaker 02

  So we both actually majored in economics in undergrad at Harvard. But I think that it wasn't really until, at least for me personally, when I saw Bitcoin, when I really started to challenge my understanding and belief of money. And I think we look at Bitcoin from a lot of different angles and I'm not sure if it necessarily all fits under one school of thought. There's elements of a lot of them in there. But I think the, you know, the store of value properties are clearly, obviously very important, right? If you're

• 18:47Speaker 02

  trying to create a hedge to fiat currency regimes, which on average have a lifespan of 27 years. And people who live in the US, we never really challenged, you know, the idea of the dollar. It's what we've known. It's been a very, pretty good medium of exchange and store of value for a long period of time. But that's not true of many and most parts of the world. And so fiat currency in general, creating alternatives like stores of value are very important to protecting people's value. And then there's the elements of censorship

• 19:28Speaker 02

  resistance and all these other interesting ideas around payments that Bitcoin comes along with. So I'm not sure if there was like one thing for us, but we love the idea of like a new system. That is essentially enforced by cryptography and math and incredibly transparent and open. You, there's no inside baseball with, with the, with Bitcoin. There is no sort of Federal Reserve behind closed doors, people making decisions and then explaining to the rest of us what's going on. It's all open kimono and open source.

• 20:12Speaker 02

  Now, it, it doesn't, it's not necessarily the only system, but it, you know, it's, it's amazing that that system and that opportunity at least exists. In addition to the, you know, previous system.

• 20:24Ryan Sean Adams?

  You know, it's really interesting you say that. So like something that, that resonates, I think about, about your story and how you approach things like philosophically and, you know, escaping your meme bubble and disrupting yourself and all of these things. But you also seem to think in like non-zero sum games, like win wins, right? So a lot of people in crypto, I think, are here to disrupt the state and tear down the existing system. But I get the sense that you guys are a bit more along the ethos of, well, like this system is new and different. It's not necessarily going to completely disrupt the old traditional system, but we're going to create this new system in parallel that's going to have its, its, its advantages. So it's a little bit like rowing, right?

• 21:07Ryan Sean Adams?

  When you're growing up, you, you, you added rowing to the roster of other sports that were offered in your community. It didn't take away from those other sports. It provided a new alternative. Is that how you see it?

• 21:18Speaker 02

  Yeah, I mean, look, we didn't start the rowing team to just destroy the football team. We created it to create more choice, more independence and, and more opportunity. And I think the same is true with crypto. It's another system, another choice, you know, another opportunity. And interestingly, if you actually spend a lot of effort trying to destroy the previous system or the existing system, you're actually, you know, reducing one option or a choice.

• 21:51Ryan Sean Adams?

  Yes.

• 21:52Speaker 02

  You're, you're reducing a system or eliminating or trying to eliminate a system.

• 21:58Speaker 02

  That a lot of people still use.

• 22:02Ryan Sean Adams?

  Yeah, and plus you piss off all the football players and they could be on your side. They could be good rowers.

• 22:07Speaker 02

  Exactly, exactly. Yeah, and you'll see some athletes will change sports like that, just like some, a lot of people in Wall Street have, are leaving Wall Street to join crypto. You know, did email disrupt completely snail mail? No, you know, and sometimes you have to actually physically send something through mail and email doesn't quite work. So, you know, I think we, we view crypto as, as like a new color as opposed to like trying to be better, you know, better at red, a better red or something, a different shade of red.

• 22:48Speaker 02

  And, you know, the, the, the, like gold, for instance, I mean, people, yeah, this, this us versus them, I think the zero something is definitely not our, our style. Just like the argument that gold disrupts us, you know, a share of Apple stock doesn't make a lot of sense to me like,

• 23:11Speaker 02

  do we really believe in a, in a, in a world where, you know, gold is the only asset or the only currency, like gold can be currency, but generally people have shifted to, to fiat currencies and, and it's been currency and money has been this 10,000 year old experiment. And ultimately, there is so many different ways to express yourself. There's so many different definitions of money. And crypto is just the latest iteration of it, but like, if Bitcoin, if Bitcoin disrupts something, it's gold or if it takes away. But I think it's very hard to be all things to all people. You know, at least, you know, you have to be, I think focus is super important.

• 23:56Speaker 02

  And I think ultimately assets and what they do and how they perform is very specialized. Like if you look at um the diff- go to the Olympic Village and you'll see how different um different athletes are. The physiques, the sizes, the shapes, the tall, short, um you know LeBron James is the best basketball player in the world. But and Nadia Komnichi was maybe the best gymnast of all time. They're the world's best at what they do. They're both athletes, but they'd be terrible at each other's sports. Um so I think I think there's a there's there's a a big spectrum of like

• 24:38Speaker 02

  of of assets, of currency, of money, and it's hard to be everything.

• 24:43David Hoffman?

  So in Bitcoin, there is a wide spectrum of people that have different stances towards uh you know a a authority or the state, right? Like you have the the ultra libertarians who want nothing to do with the state and believe in crypto anarchism. Uh but I I believe what you guys are saying where there's this zeros uh where there's no zero sum games between Bitcoin and legacy systems. And there's actually room for more people to kind of have one foot in in both camps. I see that reflected in the ethos of Gemini where you guys are um very strongly making your brand

• 25:20David Hoffman?

  about how Gemini is like a very compliant, very regulated, uh uh following the rules type of uh financial institution. Where people who are perhaps maybe nervous or scared about crypto can start to actually uh look at the Gemini company and see a lot of familiar features there. Can you guys talk about um the ethos behind Gemini and and if that reflects reality or not?

• 25:48Speaker 02

  Sure, that that definitely, I think, is a good assessment of what we're trying to do. And and we grew up in the Wild West of Bitcoin, the early days, when it was a Bitcoin world. We bought a lot of Bitcoin on Mt. Gox, which famously imploded a few years later. Thankfully, we weren't injured in that implosion. We, you know, when we purchased coin, we pulled it off exchange shortly thereafter. Never really wanted to be exposed to the counterparty risk of an exchange being run by two Frenchmen in Tokyo that was a pivot from a Magic, the online gathering exchange. Didn't feel like safety and soundness was was a core principle of Mt. Gox.

• 26:32Speaker 02

  And through that experience, we said, look, as amazing as this technology is or might be, if we can't build and earn and maintain trust in this new asset class and demystify a lot of the things that are, you know, that people have questions around, then it's never really going to go mainstream. And I don't think you can point to a a market, a viable, thriving market anywhere in the world that doesn't have some element of thoughtful regulation. It just doesn't exist.

• 27:09Speaker 02

  Maybe, you know, some people have this view that that it's perhaps possible with the right incentives, but but we just haven't seen it. And so when we started thinking more about, okay, how how do we really get Bitcoin mainstream? We thought about investing in an exchange and ultimately decided that we should just go build one. Because most people were thinking about the problem from a technology lens or solely from that that narrow perspective, saying, you know, I can build a matching engine that's more reliable than Mt. Gox and has more uptime. But there's there's

• 27:50Speaker 02

  A lot of key considerations, one of which is security, of course, and we've always sort of operated with a security-first mentality with Gemini. And then there's a big piece around compliance and licensing. And you can't get a bank account or get banked as a business if you don't have licensing and a compliance function. And those are hard problems that are not a lot of fun to solve for, but are really necessary and important to getting a license and also to a large number of people who want to enter the space of crypto.

• 28:29Speaker 02

  So we, you know, I guess the, the way to sum up the ethos of Gemini is we started by asking permission, not forgiveness. We went in the front door of regulators, engaged with the New York Department of Financial Services, and decided, you know, we want to pursue a trust company license in New York, not just for institutional customers, but also for individuals, the entire spectrum. And we want to create the highest bar of compliance and regulatory oversight available at the time, so that people, when they enter this new asset class, which is kind of a scary thing for a lot of people.

• 29:11Speaker 02

  And I think a lot of people stayed on the sidelines, like they understood conceptually and they loved Bitcoin, but they didn't think there was a safe way to get involved. And, and that's, that's a fair assumption when you look at the history of, of, you know, behavior in the space. It's been a lot of, unfortunately, there's been a lot of hacks and problematic behavior that doesn't engender trust. So we, we really said, you know, we've got to help correct this narrative and let's see if we can start building and maintaining trust with people.

• 29:52Ryan Sean Adams?

  Yeah, I think a lot of people who came later in the space and you know even memory fade. But people forget how crazy it was back in that era of 2012 and 2013. I mean, most, everybody was dismissing crypto as this tool for drug dealers, basically, right? You know, Silk Road.

• 30:11Speaker 02

  Yeah.

• 30:12Ryan Sean Adams?

  Like, it was.

• 30:13Speaker 02

  We didn't even, we didn't even, um, we, we didn't feel comfortable going public with our investment for, for about six months.

• 30:20Ryan Sean Adams?

  Right. It was embarrassing.

• 30:22Speaker 02

  We're like, the moment someone says, oh, you guys own Bitcoin? What are you like into like, uh, you know?

• 30:28Ryan Sean Adams?

  Yeah.

• 30:29Speaker 02

  Illicit activity and drug dealers and Silk Road? I'm like, no, like that, that's not, not what it's about.

• 30:35Ryan Sean Adams?

  Like, listeners here, like who, who are newer to crypto? I mean, the, the, the largest crypto exchange in the world was formerly a Magic the Gathering card exchange and just pivoted to crypto. Like, that's where we were back in 2013.

• 30:50Speaker 02

  Right. MT Gox is the, you know, the acronym for Magic the Gathering Online Exchange. That was, that was the base, I think it was the only, I mean, there was probably other exchanges at the time, but it was about 95% of Bitcoin USD volume. And, and they actually had a lot of other fiat currency pairs too. That was the price discovery mechanism of Bitcoin for years. That, and, and, and was the main ability to source back in 2012. It's pretty amazing.

• 31:23Ryan Sean Adams?

  Yeah.

• 31:24Speaker 02

  And, and it was, it was, um, also like if you, people knew storing Bitcoin on Mt. Gox was super difficult.

• 31:35Speaker 02

  And, um, if you actually, this is a shameless plug, but if you, uh, if you, uh, pick up a copy of Bitcoin Billionaires, there's a chat. That goes through of how we actually stored a lot of our Bitcoin on paper shards in different banks and safety deposit boxes and this whole sort of mission impossible type endeavor. And we just knew that that was like not feasible for for most people. There's just not that many safety deposit boxes in the world or in the country. So we had to make it easier and more secure.

• 32:09David Hoffman?

  Yeah, yeah, absolutely. I mean, this is really a process of of you guys making the infrastructure to go recruit the football team, you know, to rowing, basically. That's what you're doing with Gemini and it it it totally makes sense.

• 32:24David Hoffman?

  Hey guys, just want to pause the interview real quick and talk about our sponsor, Ave. Ave is a DeFi lending and borrowing platform with with some new cool features that you might not be used to compared to other borrowing and lending applications on Ethereum. First and foremost, the feature that stands out to me the most is their fixed interest loans. And so, you know, variable interest loans can get pretty hairy, right? So Maker Dow launched at 0.5% and then it slowly skyrocketed. It slowly ramped up to 20%, which is which is a very wide range of possible interest rates and it's not really sustainable for, you know, some of the more typical things. And so that's where Ave comes in with their stable, non-variable interest rates where you can

• 33:09David Hoffman?

  lock in a specific interest rate and borrow against borrow assets using that interest rate and being able to depend on that fixed interest rate. Really important, a really important money Lego that we need in the DeFi space to really have DeFi grow and mature in a dependable way. But that's not all you can do. You can also do flash loans on Ave, which is also a brand new money Lego where you can borrow, you can borrow assets at without any collateral, so long as you also repay it back in the same transaction. So there's a lot of potential here. If you want to pay back collateral, but open up a different loan with different collateral, you can do that all in one transaction without all the slippage costs. So Ave and their flash loans allow

• 33:52David Hoffman?

  You to do that. They are the number four biggest application in DeFi coming in at 70 million locked in DeFi right now. The bankless community really loves AVE and and we've just been watching AVE climb the ranks of the of the DeFi market cap. So check them out at ave.com. Deposit crypto to start earning or borrowing. Any Ethereum wallet will work. So try it out.

• 34:17Ryan Sean Adams?

  I want to introduce you to a new sponsor on the bankless podcast, Multis. Multis is a way to run your business without a bank. So we talk a lot about the bankless lifestyle from a personal perspective. But what if you could run your entire business without a bank? That's what Multis provides. It's the first ever bankless bank account for entrepreneurs who want to use crypto and traditional stablecoin currencies to run their business. So it has a multi-signature wallet. That means you can give teams access controls. One person can have the ability to withdraw from an account, set limits. So it has a multi-signature wallet. That means teams can get involved here. You can set access controls.

• 35:01Ryan Sean Adams?

  You can take your stablecoins and some of your assets and you can earn interest with various money protocols. Well, you have them parked inside of the Multis account. You can streamline payments. They're also adding fiat on-ramps. So there'll be a bridge to traditional finance with US dollars and euros. You can open an account. This is super easy to do. We've actually featured it and written about it on Bankless. We will include an article in the show notes, but what you need to do now is open an account and try it out at www.multis.co. So that's M U L T I S dot co.

• 35:40Ryan Sean Adams?

  And of course, we've got something for Bankless listeners. Multis is brand new. Their newest releases is is new. They're on waiting list mode only now, but listeners of the podcast can jump the queue when you enter Bankless Podcast in the form when you sign up. So make sure you do that. Enter Bankless Podcast and you'll be able to skip the queue. You'll get a one month free trial of Multis. If you are a business trying to go bankless, this is the way to do it. That's multis.co. Check it out. Okay, let's continue the interview with Cameron and Tyler.

• 36:19Ryan Sean Adams?

  So there's this like evolution, though, in exchanges that we're starting to see. You know, and we call sometimes exchanges crypto banks. And they're really turning into full-service offerings that are doing more. They started out as a custody and trade, but now they're starting to tackle some of the other money verbs like staking, for instance, or like lending and borrowing. And some of them are even going like, you know, the Binance 125 X margin option that you can trigger. How do you see these crypto banks evolving? And is that Gemini's path too? Are you going to start essentially offering more of the money verbs? And you bring you folks to crypto that way?

• 37:04Speaker 02

  So I think, long term, I think that is one of the most exciting parts of crypto and why I think ultimately we're in this space and we really are super passionate. Because when you look at the world, there is a billion plus unbanked people out there. In this country alone, there's millions of unbanked or underbanked individuals. And if the banking community and system could bank them, they would. And there's a lot of problems around identity. That's part of the issue is how do you like identify and authenticate and verify an individual? Because that's obviously an obligation and requirement.

• 37:47Speaker 02

  I think ultimately we're headed in that direction. And Gemini started out as a very straightforward sort of spot Bitcoin exchange, buy, sell, store. And that actually involves multiple businesses under sort of one roof. Because in the typical world of equities, for example, you've got your brokerage, like in E-Trade, you've got an exchange like New York Stock Exchange, you've got the DTCC, which clears the transaction. And then you've got a custodian like State Street. There's about four major custodians, State Street being one of them, Bank of New York,

• 38:31Speaker 02

  and JP Morgan, and Northern Trust. And these businesses are well over hundreds of years old. And so in the existing equity market, you have all these sort of pieces split apart.

• 38:46Speaker 02

  In crypto, one of the cool things that I think it's most people don't quite realize is we've been able to build greenfield and imagine and actually collapse or sort of integrate the full stack, at least on the side of virtual commodities like Bitcoin and whatnot. So we think there's a lot of interesting efficiencies there. It also makes it kind of challenging to say what we actually are. We often say, oh, we're a Bitcoin exchange, but it's really a lot more than that. And so I think the right word is platform. We are effectively a platform and we will be adding a lot more services over time. And

• 39:29Speaker 02

  I think we'll continue to do more and more services that look and feel like a bank. Now, whether we actually become a bank, that's a, you know, an open question because there's a whole new regulatory regime, you know, that is involved with providing banking services, but there's a lot you can do with a trust company.

• 39:51Ryan Sean Adams?

  So this is really interesting because I, you know, I have some mixed feelings about this. I think folks in the bankless community do as well. So on the one hand, what we love is the fact that you guys are going and recruiting the football team and bringing like Wall Street traditional finance closer and also protecting users, making it easier to buy. Lots of people aren't going to self custody, as you said, they need an easy fiat on ramp. At the same time, there's a worry in the back of our minds that the crypto banks could start to become a bit more like the traditional banking system that we just left, right? So not necessarily Gemini, but we look at things that maybe Binance is doing.

• 40:36Ryan Sean Adams?

  And there was a recent fork on the Steam network and it seemed like Binance and the leaders of Binance got involved and actually made some decisions as to which fork they were going to support. It was really a political decision essentially and some folks on the fork that lost ended up losing their Steam tokens. So what's your take on that? How do we make sure that the new crypto banks of the future don't become like the old ones? How do you maintain neutrality in a crypto exchange like Gemini?

• 41:07Speaker 02

  Yeah, so I think I think it's it's also, you know, I'd start first by saying finance is unregulated. I'm not aware of any licensure they have. So so there isn't a sort of a stakeholder with oversight ensuring that a company or organization does what they say they're doing. They're, you know, audit effectively auditing or providing an additional assurance to that. So it's hard to, it's definitely not an apples to apples comparison. And I think a lot of people sort of, they don't quite understand that difference a little bit.

• 41:48Speaker 02

  And that is one of the major benefits to regulatory oversight is that we have somebody who's verifying.

• 41:57Speaker 02

  And we also have legal obligations around our customers and consumer protections and privacy. With that said, I think that, you know, I think that it's important. What what's what's interesting is is a lot of people got into the Internet through AOL, America Online, which is effectively a closed system, a walled garden of the Internet. And AOL did a phenomenal job of onboarding millions of people into this crazy new cyberspace world. And and then people eventually they sort of migrated beyond AOL. AOL did not keep up with with the times and it was, you know, for for many reasons.

• 42:43Speaker 02

  The the Internet moved. It's it's become more closed over time, right? It it's sort of, it's open, then it gets closed, then it sort of opens. It seems to be closing again. And I think innovation tends to push push it, you know, open again. And I think we're now, that's what we love about crypto in many ways is is that Bitcoin offered a blueprint to decentralize the world. And so you're we're going to see projects, especially around Web three, that are decentralizing decentralized services. So what I what I think is, and perhaps to go maybe a little more specific

• 43:26Speaker 02

  to your to your question, or the thought, is that a lot of people, you know, will will onboard into crypto into an exchange like Gemini, and and they'll be perfectly fine and happy with that. But but there may be people who start with Gemini and move into a more DeFi world. And it's also possible, you know, we I mean, we are very interested in DeFi, that we continue to move in that space as an organization as well. So I think that you're going to see a lot of evolution, and and taking a snapshot today is is is not going to be reflective of where where we're going to be in five or 10 years from now.

• 44:12Speaker 02

  Yeah, and I and I think another thing to note is the different needs of different

• 44:18Speaker 02

  people, customers. There are engineering trade offs between a decentralized exchange and a centralized exchange. You just couldn't have the volume liquidity and price discovery today, at least, on a on a DEX as you could on a centralized exchange. So the big market makers, the big high frequency algorithmic traders are used to centralized finance. And Wall Street is really, it's the the street in in in New in downtown New York City is really symbolic. Wall Street's actually a bunch of servers in a parking lot in New Jersey right now. And every inch that the server moves closer to the exchange matching engine

• 45:04Speaker 02

  matters. And it's probably like, you know, centimeters matter kind of thing. And so, but the more decentralized you get, the less speed and less of that performance that you have, it's a trade off. And so, like, there's been a movement in capital markets and finance over the last quarter, quarter century to actually move things together for that performance. Obviously, that comes at a cost of decentralization. So, going back to sort of like, is there one currency to kill all, to be all currencies? You know, is Bitcoin, can it be everything to everybody?

• 45:49Speaker 02

  And right now, as like an exchange custodian platform, it's hard to be everything to everybody because of these engineering trade offs and the different needs and demands of customers. So I think there's like a future where there's a couple of different versions of Gemini. And if you really need like the high performance and you love the regulated centralized part, then we'll have a stack for you. If you want to, you know, decentralize the clearing and settlement part or the custody, then there may be like a hybrid stack.

• 46:34Speaker 02

  And going to the other extreme, there may be like a pure play decentralized stack.

• 46:42Speaker 02

  So I think there, there's, there's a future where, where you may see different versions of Gemini and it's sort of like, depending on the customer, pick your adventure. And this is how I sort of think about like the Gemini dollar, which is a centrally issued and regulated stablecoin versus, let's say, something like DAI, which is a decentralized algorithmic stablecoin. If you're JP Morgan, you may love and, and think that DAI is super sophisticated in, in the future, but you may not be able to do business or handle a stablecoin that isn't centrally issued and regulated by a regulator, you know. You just may need to know the counterparties.

• 47:27Speaker 02

  And so they're different. They're different things. They're both trying to be stable value mediums of exchange and in decentralized finance on the blockchain. But depending on who you are as a customer, your compliance department, your needs, like one may just be an honest starter for you.

• 47:49Ryan Sean Adams?

  Yeah, Tyler, since you mentioned JP Morgan, I yeah, I gotta ask. So Jamie Dimon, a few years ago, made the statement that Bitcoin is tulips. It was a fraud. It was going to crash to nothing. Captain of the football team, right? Now JP Morgan is actually banking Gemini and Coinbase. You know, that that just happened, I think, this month. How is that a big deal? Or like beyond the headlines, is that a really big deal for traditional finance to essentially start servicing and working with with crypto exchanges?

• 48:23Speaker 02

  It is, in our opinion, at least. So the process of opening a bank account with JP Morgan took over two years, which included extensive due diligence of our compliance program. We had to go through risk committees, reputational committees. And ultimately, what you saw, there was a Wall Street Journal article that we got. The banking relationship is the culmination of of two years in the making. So and sort of going back to Jamie Dimon's comments, like, look, really smart, brilliant people get things wrong all the time. You know, none of us are perfect. We sometimes make mistakes that way.

• 49:04Speaker 02

  But I think it shows how good of a leader he is that he was able to, you know, look at the technical merits of of crypto, ultimately get it and and get behind it. Or even if he, you know, and I don't know if he's what his public statements have been, but even if he doesn't, he allows people in his organization to to get it and to understand, and he lets them run with it and get the future.

• 49:29Ryan Sean Adams?

  Yeah, I definitely would seem like a big deal to to us and to. To those on the outside, sort of traditional finance plus crypto exchanges and that bridge being built. You know, I've, I've kind of somewhat joked in the past that, and I just used the name Coinbase, it could be Gemini. Coinbase is either going to get acquired by an Amazon or JP Morgan, right? So all I'm saying there is that I feel like big tech is going to enter this space in a big way. And so is big banking. How do you, how do you kind of look at that with, with stable coins and Libra entering the market? And then you've got traditional banks, you guys have bridged both, both worlds. You know, social networking in the early 2000s and now, now crypto and sort of on the banking side.

• 50:13Ryan Sean Adams?

  Who wins? Is there a battle between big, big tech and Libra and big banking, like the JP Morgans of the world coming? And who, if so, who wins?

• 50:24Speaker 02

  Well, it's a, it's a really interesting insight that you have. And I think what we're going to see is, is crypto is really an intersection between finance in many ways and technology and cryptography. And a lot of the, you know, existing financial institutions, they don't have a technology game. They don't have technologists in the organization who could build out, you know, platforms. And so the likely strategy may very well be to partner and or acquire the technology that you can't otherwise build.

• 51:04Speaker 02

  And it does make sense, you know, for a large financial institution to be looking at companies in crypto. But it also makes sense for big technology companies to be looking at companies in crypto. And it will be interesting to see who ends up doing more M and A work. And, and maybe they're both competing, you have these two different sectors competing on, on the same companies, which is obviously good for, for price discovery and those companies to have more suitors running after them. But it is, you know, we're seeing that intersection and, and we saw that intersection with, with, with technology in other places like music and, and movies and.

• 51:50Speaker 02

  So in the, you know, it took iTunes to come along to basically solve the recording industry of America's problems when it came to digital piracy. They really struggled to move from the physical formats to MP3s. And this goes back to what we were talking about in the beginning around beginner's mind and willingness to disrupt yourselves. The recording industry and all of the record labels were unwilling to accept the future and the reality. And to the point where they didn't just not accept it, they fought it. And they fought it aggressively for, for a long time.

• 52:34Speaker 02

  And technologies need just moved ahead of them. And so you had Napster centralized piracy, then you had Kazaa and BitTorrent. And it goes on and on and on. And it was always, you know, a step ahead of, of the, of the actual, um, the recording industry. And it took a company like Apple, uh, which is, you know, famous for always challenging the status quo to say, you know what? I, I, there's a better way to do this. There's a fair way to do it. And when they, when they invented iTunes and created songs à la carte for a dollar apiece, and it was fair, consumers were like, you know, I, I will pay for something that

• 53:16Speaker 02

  I feel, you know, is fair, that I'm not getting ripped off. I don't actually want this piracy experience. I don't feel good about that. Most people don't. We do want to support artists, but we also don't want to get, um, you know, we don't like highway robbery. So I think that, um, you saw that intersection there. And then with, with streaming and movies, Netflix, uh, Apple TV, uh, Amazon Prime, Hollywood, the, the, the biggest buyers of content in Hollywood is, is big tech. Who would have thought that, right? Um, and you know, you go to Sundance with a film and, and there's three people that, you know, there's three groups that are important and they're not from Southern Los Angeles.

• 54:00Speaker 02

  You know, Southern California, Los Angeles, though they're all now building, I think, studios down there and they're going to have big, big presences. So I think that finance, that, you know, what you're saying about this intersection of finance and technology is going to happen in a big way. I mean, it's, it's starting to happen, but I think over the next decade, it's going to get really interesting.

• 54:26David Hoffman?

  Going further on that note, we, we've seen a lot of, you know, tech companies try and become banks in a way, right? Like, so Apple just has the Apple Card now, Starbucks has a billion dollars in loans from their, from their, their cards that have balances on them. All these different tech companies are turning into banks in a, in a little bit, in a little bit of a way. And then all in likewise, all these banks are trying to become closer to tech companies. And turning to DeFi, DeFi is really this perfect split between finance and tech, where all these, the D, these DeFi teams look like Silicon Valley startups,

• 55:07David Hoffman?

  but they're building out what you would find in the legacy financial world. So as we, we're, we're opening up the, the DeFi can of worms here. So as we get down into that, further into that rabbit hole, how do you guys think that DeFi and crypto exchanges like Gemini intersect into the future?

• 55:25Speaker 02

  So I think, you know, starting off what you're saying about banks and technology companies, I think, you know, we work really well in concert together. As we were mentioning just shortly before, we're super excited about our partnership with JP Morgan and the fact that they're banking us. Banking is their core competency. It's not our core competency. Our core competency is obviously crypto. And I think that, you know, centralized exchanges and DeFi, there's going to be a lot of great sort of partnership and working together in that, in that area.

• 56:08Speaker 02

  We just listed DAI on the Gemini platform. We're super excited about it. That's obviously a fundamental building block. So we're, we, we think, yeah, we think, we think it's awesome and we want to, you know, start, we're starting by. Supporting projects and then continue to look at like how else we can integrate with projects or into that space. It's obviously a newer space. You know, it's it almost reminds me where Bitcoin was many years ago, but super exciting to see all the smart people and teams moving in there.

• 56:45Ryan Sean Adams?

  Yeah, so I'll just I'll just throw out there. So I feel like we've had a lot of like Bitcoin exchanges and Bitcoin banks, right? And you guys pioneered one of them. It feels like right now, and I think I speak for the bankless community, and certainly David feels this way, too. We want a DeFi-friendly crypto bank, right? So a bank that is going to start onboarding the masses to DeFi protocols. And Gemini listing DAI is a fantastic start to that, because DAI, of course, is an algorithmic crypto-backed, open finance, a stablecoin. Is that is that going to be you guys? Are you gonna is Gemini going to be the DeFi friendly bank for us?

• 57:26Speaker 02

  Well, we're certainly not going to be DeFi unfriendly. But we I think it's totally possible. We want to support DeFi projects. We want to support Web3 and all of that exciting promise. And so we're going to be working hard to continue to support that. And it's sort of hard to predict what that might look like a year or two out from now, because the space is evolving and moving quickly. But we think it's a very important system in the crypto world, but really in the world in general, and what's going on there. And so another

• 58:05Speaker 02

  project that we just listed on Gemini is Link and bringing real-world data into the blockchain. And you there's so many interesting applications around that and building smart contracts with parametric information. So for example, an insurance contract where a lot of times people buy flood insurance and it it you can set it to if if the tide, for example, rises to this level, the insurance pays out. And it may or may not actually destroy the the building or whatever you're trying to ensure. But because you've picked an objective thing,

• 58:49Speaker 02

  there's no question around it, so to speak. And it's a very kind of, it's an efficient way to price insurance and make a determination after the fact. But if you don't get the information into the blockchain, then it, it, it doesn't really work. So putting that information into the blockchain and DeFi and smart contracts is super exciting because then you can just write contracts based on objective information. So there's, there's all kinds of possibilities. It's really, quite frankly, unlimited and endless.

• 59:30Speaker 02

  And sort of going on to that theme, a lot of times we think about Gemini as, as a protocol company, or rather a bridge between the old world of finance and the new world of finance. And I think a lot of people don't understand how hard it is to speak to these protocols. The different signing algorithms, like understanding deposits, withdrawals, blockchains. They all have their own communities. Sometimes there's forks that are planned. Sometimes there's forks that are unplanned. Just a lot of different things happen. And if you list and support a bunch of different tokens for custody

• 1:00:10Speaker 02

  in trading, you have to be up on current events of all of these different blockchains and networks. And the, the idea of like a bank being able to attract the tech talent to be able to interface with these protocols is really hard. And some of them have tried, some of them don't. They try and partner with companies like JP Morgan, you know, partners with a Gemini, right? Or builds a relationship with Gemini. We also have a relationship with State Street to actually be the software sub custodian provider. For them and their clients and they actually, I think, hired a bunch of blockchain or engineers,

• 1:00:53Speaker 02

  maybe a hundred, hundred fifty people to do this mission and decided like, hey, this is not really core to what we do. Let's let the the tech companies do that. We'll take care of the banking. So these massive companies, State Street is the second oldest company in the country. I think it's two hundred and twenty five years old, have tremendous distribution networks and customer bases built in. And so if we can connect those those portals to our bridge or portal into DeFi, that's incredibly powerful. The other thing that people don't quite realize is that when you're a bank, it's very hard to grow at the speed of tech or at tech multiples.

• 1:01:38Speaker 02

  And in fact, like, if you have like more than twenty percent like year over year growth,

• 1:01:47Speaker 02

  the regulators find that suspicious. It's dangerous when a bank grows too big and the FDIC, who's the backstop insurer. So the OCC and the Fed both regulate, but the the FDIC as well is is really the final gate to get through for a banking charter. You you you really wouldn't get the green light if you have like tech growth multiples, because it doesn't really, it's an odd bedfellow with the concept of growing a bank with with safety and soundness as your primary principle and objective. And that's ultimately what this is, what what bank regulators are concerned with is safety and soundness of institution.

• 1:02:30Speaker 02

  So running fast and breaking things and moving at the pace of innovation is incongruous with being a a large financial institution. So there are so many different variables. It's very hard for a zebra to change its stripes. And I think a lot of people don't understand these distinctions and how specific they are to different players that maybe overlap, but cannot play the same role. So I think that like big finance is better off partnering, collaborating with tech companies.

• 1:03:12Speaker 02

  Conversely, like, it's hard for big tech to come in here because they live in a world that's completely unregulated. If you look at the, like, GDPR is sort of like these things are coming down, but social media companies, there's no regulation. If people are upset about Cambridge Analytica or these things, like, there were no rules broken. You could disagree with philosophy, or like, that's not how I would run my company, but they didn't do anything wrong in the eyes of the law. Whereas if you are actually regulated, like a bank, like GDPR is not like a new thing because you've been doing that for forever.

• 1:03:54Speaker 02

  Like, you've been KYCing people, you've having, you've been having their personal identifying their PII information and protecting that like, like it's sacred for a long time. You've understood like data and data protection. So, come, building a business that's like basically completely unregulated with respect to information and data. And then coming in and all of a sudden having to like bolt on KYC is probably like also more difficult than it sounds. So like, once you get in motion, you build like these, this philosophy, like growth hacking, run fast, build, you know, break things.

• 1:04:33Speaker 02

  And then you have to sort of like have the, the, act a little bit more like a regulated company. I think that's also very difficult. Gemini, we've been, we've been, we've been trying to marry both from day one. We joke, we've got, you know, a hoodie on one's, like, on one side and we wear a suit on the, on the other, on the other side. And we've been trying to marry the ethos of like Silicon Valley tech shops with East Coast, like financial markets and regulation. And threading that needle, other companies that have had to do that, and I think have done that quite well, for instance, might be a square.

• 1:05:14Speaker 02

  They are Silicon Valley visionary company led by a visionary leader, but they also have money.

• 1:05:21Speaker 02

  Any transmission license, they just got um an industrial loan bank charter. So they've lived, they've straddled both worlds and quite well and quite effectively and built something great. And and it's much easier to start from day one saying we're going to, you know, have that formation and that's going to be like our DNA than to come from, you know, one far side of the field or the other far side of the field and make your way into the middle.

• 1:05:52David Hoffman?

  Uh, I wanna, I wanna bring up a subject that me and Ryan have been chewing on a lot recently. This is a thesis that we have, which we've been calling the Protocol Sync thesis. And the concept is that, you know, blockchains, things like Bitcoin and Ethereum offer these credibly neutral protocols for everyone to use massively scalable, found all over the world. Uh, and, you know, all the good reasons that we love them. Uh, and institutions or companies or services like Gemini, but also others can tap into these protocols uh and use them as they see fit for their benefit. Uh, and like just using Bitcoin and being an exchange on top of Bitcoin is maybe a very early example of this.

• 1:06:36David Hoffman?

  Um, but with DeFi and Ethereum, Ethereum is like this protocol of protocols, right? And what we call DeFi apps are really just individual protocols on top of Ethereum. Each one offering its own uh a level of credible neutrality or dependability that centralized companies like Gemini can can leverage to better improve their product that they offer for their for their customers. So you guys just listed DAI, which is could be perhaps viewed as the Protocol Sync thesis where uh things, uh companies, centralized companies can uh leverage dependable protocols on blockchains like Bitcoin and Ethereum.

• 1:07:18David Hoffman?

  Uh, and because they're dependable, in the same way that the internet is dependable, uh, because you can depend on DAI being there, it's a good uh business decision for you guys to offer DAI and DAI trading on your website. Uh, the thesis is that uh Centralized companies like Gemini or crypto banks at large will use more and more of these protocols over time, and the more dependable, the better. And so like if this thesis is correct, we would predict that in the future Gemini might list or might make available the DAI savings rates. So not just having DAI on the platform, but also being able to put it inside of the Maker Dow protocol and get an interest on it. And then we could go even further and like maybe you guys

• 1:08:01David Hoffman?

  just build out a an interface for the complete Maker Dow protocol, not just including vaults, but also governance. And then there's so many other protocols that we could also talk about as well, like Compound, AVE, any type of protocol can just be built and have an interface built on it by a exchange like Gemini. And that makes Gemini a better exchange. It makes Gemini have more better products for their customers. So how do you guys feel about the protocol sync thesis? And do you guys resonate with that future?

• 1:08:37Speaker 02

  I think it's a very smart one, and I think I think it's correct in many ways. And I think that the more that we can offer to our customers, the better. And I think the more customers we can offer to a protocol, I think it sort of benefits both sides, or all parties involved, if you will. And I think, you know, it's almost like this, you can create, the internet was a hard place to navigate pre web browser and pre sort of search. And so the more tools and experience you can give people to navigate these protocols, the better. And if you can create a good experience,

• 1:09:21Speaker 02

  because I think one of the challenges with a lot of the projects out there is it's like so hard to to interact with them. And that's just because it's early, right? It was it was hard to interact with Bitcoin eight years ago when we found it. It was it was really tough. You had to be highly motivated to to go buy it. And then you had to be, you know, motivated to figure out how to store it. And that's, of course, changed dramatically in a short period of time. And I think the same is true with DeFi and

• 1:09:54Speaker 02

  And Web 3. So I, I, I agree and a lot of that resonates with us. Yeah, I was, I was gonna joke, like it sounds, I feel like you've been sitting in some of our roadmap brainstorming meetings. But, uh, but definitely love that, you know, obviously like phase one of, of crypto was buy, sell, store. But I think earn or use, um, you know, all these other use cases have to like verbs, if you will, have to happen and have to be a part of Gemini's story. And so, yeah, it's really hard to interact with TCP IP and SMTP. But then people build applications like Gmail on top of it.

• 1:10:37Speaker 02

  And if Gemini is this application that can onboard people and help people in a user-friendly way, interact with these protocols, whether it's earning money, um, which is a great, it's a great environment, right? To have the DICE savings rate or something like Compound because we're going, we're zero net, we're zero interest rates right now in fiat world land and potentially, uh, going negative. So, um, but you know, I love this idea of like, yeah, like, what we're talking about here is protocols and plugging into protocols. Self-driving cars, like the Internet of Things, when it arrives, like really arrives, it will be able to plug into a protocol like a self-driving car,

• 1:11:21Speaker 02

  but it will not be able to open up a bank account with JP Morgan. And so my, uh, prediction is that one day Gemini may be, may have more customers, they're actually not humans, um, but actually machines. Now maybe a human has an account and sub-accounts off of their account where they run their fleet of self-driving cars. But ultimately like we'll, we'll be like KYC-ing machines because machines need protocols and interact with protocols and can do micro-payments.

• 1:11:58Speaker 02

  On the blockchain, when you know a car is on the road, it wants to pay another car to move ahead of it. That's going to happen in the protocol world. It's not going to happen in ACH credit card, you know, Fedwire banking system. And so that's the world that Gemini's, the future that Gemini's built towards. And we're translating between the old and the new, and we want to bring people into that new world. Because ultimately, like, I think that is just undeniable to the future.

• 1:12:31Ryan Sean Adams?

  Gemini as a bridge to money protocols, I've got to say, is a really compelling vision for where you guys are going. You know, and part of that bridge that you brought in the past is obviously the user experience, you know, that's kind of the fiat onboarding, that sort of thing. But it's also been the regulatory aspect of it, the regulatory clarity. This year, DeFi just passed a billion locked inside of it, right? So that's not an insignificant amount, but that is definitely not the institutional money yet. So it seems a little bit like you guys made the analogy to it's like, it's kind of, DeFi is like, kind of like early Bitcoin. In that the institutions aren't yet comfortable with it.

• 1:13:11Ryan Sean Adams?

  What kind of regulatory barriers are there to, say, you know, depositing something in compound through the Gemini interface? What sort of legal barriers need to be overcome there?

• 1:13:22Speaker 02

  Before we sort of get there, I think that's an interesting point of how you sequence people getting into crypto. Nobody's first, I don't think anyone's first foray into crypto is like, I'm going to go buy some DAI. I think it's like really simple, right? It's like, I heard about Bitcoin, I've been hearing about it for 10 years. Oh, my gosh, the Fed is printing so much money.

• 1:13:48Speaker 02

  Maybe it's time to inoculate myself from the money printing disease. Like, I buy the Bitcoin gold thesis. Like, okay, let's buy some. And when, you know, a hedge fund like Bridgewater, AQR, they're going to go to a regulated institution or path to dip their toe in. It's a big toe because this is huge money, but they're going to try and, they're going to start with buying Bitcoin. And then you have to bring them along, right? But nobody like people like you experienced crypto. It's hard to explain it. Once you get into Bitcoin, you feel it, you get comfortable. And then you say, eh, what's this ether thing? Right?

• 1:14:30Speaker 02

  There's this evolution of people getting in. And and we need to meet them where they are. Right? If you're a Bridgewater or AQ or a massive hedge fund, you're used to calling up State Street or something like Straight Street or, you know, you do business in the regulated world. So we have to get them bridge from, you know, where they are to to start getting them in. And then one day down the road, I think they can get behind eye. They can understand it. They're very brilliant, sophisticated people. But I think it's important to focus on like the the the initial battles that we have to win first.

• 1:15:08Speaker 02

  I I also would just add that it's possible that DeFi, you know, the the elements of DeFi are really attractive to individuals who otherwise can't get access to the existing system. And so a lot of institutions, you know, they they have access to US equities. But there could be people in the unbanked population, for example, who who don't have access to US equities. But some synthetic contract on DeFi all of a sudden gives them that access. So it's something that they need, but it's not relevant to a large institution in the US or Wall Street.

• 1:15:53Speaker 02

  So I think that's probably it. It could very well be a story where the people who need it really, really gravitate towards it at first. And I I think we saw that with Bitcoin a lot. Most of the world was like, hey, I'm I'm OK with gold. I can buy a gold ETF and and I don't know if I need this new store of value. And so it's it's, you know, ironically started off as a as a very retail individual based market.

• 1:16:23Speaker 02

  And it's one of the few asset classes, maybe the only asset class in the world where Wall Street will be the last person to the party.

• 1:16:30David Hoffman?

  On a recent interview you guys did, I believe it was with Camila Russo, you guys talked about your ETH holdings, which everyone in the Ethereum community was surprised and happy to hear that they are sizable, according to what you guys said in the interview. Maybe you guys can give us your guys' value accrual thesis for Ether, the asset?

• 1:16:51Speaker 02

  Sure, yeah. I'm actually surprised a lot of people might have missed that. Maybe we've never talked about it before. I thought we had. But either way, yeah, we do own a lot of Ether and have for a long time. And I guess our thesis, stepping back, is really Ethereum is this amazing decentralized computer or operating system, for lack of a better word. And like any operating system, it provides an environment where you can run applications and creates this sort of unbounded opportunity of building. So that was our initial,

• 1:17:36Speaker 02

  like, aha moment. This is really, really interesting. Yeah, like Ethereum, when it was launched and we looked at it, just the smart contract aspect, the Turing complete nature, you know, Bitcoins, digital gold, it seemed like Ether was going to make a really good run at digital oil, you know, to use the metaphor. So incredible community, again, very passionate, and it felt like a real project. So we were very big, we are very big supporters and have been for a long time. And we're actually,

• 1:18:21Speaker 02

  I think, the first US-regulated exchange to actually list Ether for

• 1:18:28Speaker 02

  Trading in custody back in twenty, maybe it was twenty sixteen, so even before the ICO craze. So, so yeah, big fans of Ether and have big, big holdings as well.

• 1:18:43Ryan Sean Adams?

  Yeah, that's really cool. You know, David and I are from the tribe of, you know, ETH as money is it's, it's starting to be used inside of its ecosystem as a collateral and as economic bandwidth. It's, it's starting to accrue this monetary property too. It sounds like you guys are, are seeing something similar, but I want to ask this, and this, this can kind of close it out for us, guys, because you saw rowing in, in kind of your community growing up before anyone else did. You saw Facebook and social networking before anyone else did. You saw crypto very early as well. What are you seeing today, like now, that other people aren't like, because, because we want to buy it, whatever it is?

• 1:19:27Speaker 02

  Yeah, we, we could tell you, but no.

• 1:19:33Speaker 02

  So I think one of the things that I would, I would say in response to that initially is also sort of the time horizon of, of seeing things and then determining, you know, the, the lifespan of, of, of that particular thing. So, so when we look at social networking, it really, it's sort of peaked and, and at this point, it feels like the centralized social networks are, are pretty well baked and, you know, they're growing probably at the pace of the internet at this point. And so is there a lot more to do there? I'm not so sure, probably not.

• 1:20:19Speaker 02

  But I think when you look at crypto, I would, I would, I would draw more of a parallel to, to the internet and, and the late nineties, early two thousands and we're still, you know, twenty, twenty-five years into sort of that modern experience where the internet. Was commercialized and and I don't think there's any sort of, you know, stopping or slowing down, so to speak. So we're we're ten years ish into the crypto experiment. And I don't think, you know, I think it's literally just getting started i- i- if that. We're in like the preface of the of the of the novel. And um, there there's so much to be done.

• 1:21:04Speaker 02

  Um, I don't think that, you know, there's going to be any shortage of ideas. So so the space as a whole, I think, is so early and really unbounded. Uh, and I don't know if that's, it's a pretty broad answer. But I think that um, it's it's important to know when certain innovations or trends have effectively peaked. And there's not much more to do. And then crypto hasn't even gotten started. Um, but I think generally like sticking to the big things that that are that that makes sense on a conceptual level.

• 1:21:42Speaker 02

  We've talked about Ethereum, like, is there going to be an operating system for uh, the decentralized world? Uh, there will probably be more than one, uh, in generally like centralized operating systems on systems. There there's there's a handful of them. Uh, and in the case of Ethereum, uh, the more apps and the more vibrant, um, that value tends to accrue into the protocol and makes it more valuable. Uh, that's a pretty easy concept to wrap your head around on a macro level. I think when you look at Bitcoin, you're you're looking at a a digital gold thesis. And gold is ten thousand years old.

• 1:22:23Speaker 02

  So so we're we're year ten or eleven into the next, what, ten thousand years? Uh, you could stay in Bitcoin for your entire lifetime and there's still stuff to be done. Uh, so these are, these are super, these aren't applications on on, you know, the internet that have become sort of mature and and and uh,

• 1:22:49Speaker 02

  And saturated. When we're talking about crypto, we're talking about an entirely new network effectively, or internet, like these sub internets. And so I think that, you know, we try to focus on the really big pieces. And we think that there's work to do for hundreds of years from now forward. Yeah, it feels like we're still in the very much like the infrastructure phase. If you go back to the internet, everyone's sort of like on a dial up modem right now. There

• 1:23:29Speaker 02

  isn't really fast like T1 or whatever T3 lines. We're going through the analog like phone lines where people like at home can pick up the receiver and screw up your connection and like all of a sudden you're winning. Like I was in hour long, multiple hour long age.

• 1:23:50Ryan Sean Adams?

  Mom, stop picking up the phone.

• 1:23:53Speaker 02

  Oh, my God. Yeah, like it was just, it just was crushing. And then you lose ultimately.

• 1:24:01Ryan Sean Adams?

  She doesn't understand what's at stake, you know, in these, in the games like this, in these war games.

• 1:24:07Speaker 02

  But ultimately, when the success of a project, right, like CryptoKitties effectively DDoS is the Ethereum network, that's like my mom picking up the phone and my Age of Empires game. That's kind of where we are. And we haven't really had the massive application adoption use case moment. It's, you could say that like, maybe Bitcoin is, you know, the first use case and speculation or investment is it. But it's gotta be, it's gotta be so much more. So focusing on like, what are the important building blocks to go forward

• 1:24:48Speaker 02

  to like, set the stage for that moment. So Ethereum is decentralized compute, maybe Filecoin is decentralized storage. What other building blocks do we need? DAI, maybe one of them to go forward. And lastly, I'll say that

• 1:25:03Speaker 02

  I'm very interested in just we purchased Gemini purchased acquired Nifty Gateway, which is an NFT platform. And I think that, you know, the first incarnation of crypto as we know it was let's create decentralized gold and then maybe we can bring stock certificates or utility tokens on the blockchain. I think ultimately we're going to bring art and collectibles onto the blockchain. We all grew up collecting baseball cards, comic books. Some of us graduate into, you know, collecting very expensive art at some point. And I think I think there's going to be a push for that.

• 1:25:48Speaker 02

  And ultimately, I think it's just like being long human behavior. It is human to express yourself creatively through art, collectibles, and also to be a consumer of that. And I really like that. The other thing I'd like to see is sort of the fusion of e-gaming and crypto. E-gaming is so big, but it's also so walled garden. It's like the most exciting fastest growing sport area in the world, yet it doesn't seem like

• 1:26:25Speaker 02

  and it's like it's so everyone in that world, I think, is totally into crypto or would be. But it doesn't seem like we we've brought it together. But I'm sure we will, but that when that happens, when it had like the Twitch canon or the e-gaming canon comes over the blockchain, then it's just a again, it's like a whole nother step up. I'm glad Tyler sort of narrowed it in on those two particular areas because they I think a lot of times we look at innovation and and we focus on

• 1:27:07Speaker 02

  The things that aren't as fun. And, and a lot of times innovation just comes about through people had a lot of fun through gaming. It starts out pretty casual and then all of a sudden you're like, whoa, this is transformative and it's touching everything. Um, and I think e-gaming is one of those areas where, where there's all these kids that are just having a lot of fun. But they, you know, they can't really get their, their identities or, you know, a shield or a sword out of the game. But if they could get it onto a blockchain, uh, that would really be a very interesting, you know, thing.

• 1:27:45Speaker 02

  And I think a lot of, you know, it's possible the next wave of crypto innovation is around gaming or art and collectibles. And it's just sort of fun stuff that doesn't have a high threshold of like, require a super high threshold of trust. Um, you don't have to convince someone, hey, put like a super material amount of your life savings into this new asset. Instead of gold or, or whatever, you're, you're basically telling younger people who live online. Um, have like incredibly important, their, their online identities are super important. And you're saying, hey, like, do you want to collect this online thing?

• 1:28:28Speaker 02

  Um, that's, that's scarce and verifiable. Of course, like, why not? Why wouldn't I do that? You have to convince them. You have to tell them why they shouldn't do that, not why they should. And so sometimes adoption comes through those avenues that you least expect. And here we are focusing on, you know, the synthetic S and P on DeFi. Like, how is that, you know, how are we going to get people into that? Which we will, but sometimes the side door, um, or the indirect way. We may indirectly onboard an entire generation through crypto. Um, not through the concepts of open finance or open DeFi or whatever.

• 1:29:09Speaker 02

  But through, uh, this casual fun way. And I don't, I don't think it's, it's a, it's a coincidence that Magic, the Gathering. You know, Mal Gox was the first exchange. Um, it's sort of. Kind of makes perfect sense that that you start up as this as this exchange for for a card game and and it kind of moves into crypto and and we may see that again. So it'll be interesting.

• 1:29:41Ryan Sean Adams?

  Yeah, absolutely. I mean, it strikes me that the key innovation of Bitcoin is this innovation around digital scarcity. And you heard it here first, folks. So the Winklevosses think there are multiple waves of that innovation to to come. So kind of like there was a Web one and there's a Web two, we're just in crypto one and a ton of opportunities are left in crypto 2.0 and 3.0. I do think that Gen Z will be all over the NFT use case digitally scarce games. As you said, they are more passionate about this stuff than than even millennials. So it'll be exciting to watch. I want to say on behalf of the Bankless community and our

• 1:30:24Ryan Sean Adams?

  listeners, Tyler Cameron, thank you so much for coming on. We learned a lot. We will look to Gemini for the developments around DeFi. We're excited that you're adopting DAI and we'll we'll look forward to more innovation coming from me in the future, too.

• 1:30:38Speaker 02

  Thanks so much, guys. This was a really, really fun and enjoyable. Really appreciate your time. Yeah, thank you so much.

• 1:30:48Ryan Sean Adams?

  Awesome.

• 1:30:49David Hoffman?

  Thanks, guys.

• 1:30:49Ryan Sean Adams?

  Thanks a lot.

• 1:30:50David Hoffman?

  Cheers.

• 1:30:51Ryan Sean Adams?

  So, action items, guys. There aren't currently many places to buy DAI today. You can buy it on decentralized exchanges. Coinbase also has a good order book. You should also check out Gemini's order book. They recently added DAI. It can become a great place to purchase it. So check that out as an action item. It's currently trading over a dollar. When it trades over a dollar, there can be some arbitrage advantage for you. So check that out. Also, second action item, what we want you to do is listen to a bonus podcast we're coming out with on Wednesday. So this is Monday when you're listening to this. This interview with Tyler and Cameron went so long, we covered so much material, we didn't get an opportunity to talk about the big picture items that we love to talk about

• 1:31:36Ryan Sean Adams?

  on a weekly basis. So we're releasing that in a special bonus edition of Bankless. That will be coming out Wednesday. And finally, David, we need those five star reviews, right, man?

• 1:31:48David Hoffman?

  We always need those five star reviews. That is how we get the bankless gospel into as many people's ears as possible. So if you think that more people should listen to bankless, which I hope you do, and if you don't, please let us know. Please go to wherever you listen to podcasts and give us those five star reviews. So we can show up higher than all those crypto podcasts that came out in 2017, got a bunch of listeners from people that left and then are still kind of sitting there with after they haven't produced any content for years. So if you think that bankless should show up higher than them, please go to iTunes, please go to wherever you listen to your podcasts and give us those five star reviews.

• 1:32:26Ryan Sean Adams?

  That's us guys. Take us to the top of the charts. Now, risks and disclaimers, of course. What we talked about was risky today because crypto is risky. DeFi is risky. Even crypto banks like Gemini custody your funds and there is risk associated with that. So be careful out there. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.