Eyal Hertzog, Co-founder and Product Architect at Bancor: The Coming Changes to Bancor

Eyal Hertzog is creator of Bancor. In this conversation, Eyal and Anthony Pompliano discuss his background, how he got into crypto so early, what Bancor is and how it works, and a couple of new announcements of things changing within the project. CRYPTO. COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it.

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

• 0:01Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:12Anthony Pompliano?

  Ayol Herzog is the creator of Bancor and creator dot eco. In this conversation, we discuss his background, how he got into crypto so early, what Bancor is, how it works, and a couple of new announcements that are changing within the project. I really enjoyed this conversation, and I hope you do as well. Skrt skrt! Wanna know who has the best URL? Crypto.com. That's right, Crypto.com. They're a crypto platform with one goal: motherf***ing mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying,

• 0:54Anthony Pompliano?

  earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out, tell him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you, always. Ever wanted to get into mining and didn't know how? Don't worry, your boy Pomp's got ya. Everybody got some electricity and wifi. All you gotta do is go to CoinMine.com, you buy a coin mine. It's like an Xbox or a Playstation that helps you turn your electricity into Bitcoin. That's right, you purchase it, it shows up at your doorstep, you pull it out of the box, you plug it in, connect to your wifi, 5 minutes or less, you're mining Bitcoin. All you have to do is control it from the mobile app they provide, and then you receive

• 1:36Anthony Pompliano?

  over-the-air updates that add new coins and new features on a consistent basis. Kinda like how Tesla does over-the-air updates and updates the car software. Just you're updating your coin mine. Consumer mining made easy. That's right, go to CoinMine.com, tell them Pomp sent ya, and thank me later. As many of you know, crypto investors store their digital assets on exchanges or in cold storage for long-term safekeeping. However, this strategy doesn't help them grow their investment holdings or build overall wealth. With the new BlockFi interest account, users can now securely store their Bitcoin or Ether at BlockFi and receive 6% annual interest, paid monthly in cryptocurrency. 6% is an absurdly high rate. It's the best rate in

• 2:18Anthony Pompliano?

  the industry. I highly suggest you go check out blockfi.com/pomp. Again, that's blockfi.com/pomp to sign up and start earning crypto today.

• 2:27Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:54Anthony Pompliano?

  All right, guys. Bang, bang. I am here with Aol. Thank you so much for taking the time to record this.

• 3:01Speaker 02

  Oh, thank you for having me.

• 3:04Anthony Pompliano?

  Sure. Let's jump right into your background. You've been building technology for a long time. Maybe just help us understand where it all started.

• 3:13Speaker 02

  Yeah, well, it all started when I was seven years old on the Apple II machine. I was 81 and I fell in love immediately. I was a programmer as a kid and even doing some business after when I was 16. And I was essentially located to the Israeli intelligence, to the same program that years later, Yoni Asya from ITORE, that was also a guest of yours, was joining. It's the PC Boys, a special program. They take just kids that know how

• 3:55Speaker 02

  to build software and just drop tasks on them with absolute no training.

• 4:01Speaker 02

  And I spent there four years and that was for me, you know, maybe the defining four years of my career. I I I can got exposed to large system, to databases, to, you know, I was running a network with over one thousand computer eh at some point. So I learned a lot and, you know, everyone that is released from that unit is immediately grabbed into some tech startup. So when I I left, it was ninety seven. I joined a startup. It was sold to Cisco after eighteen months. It was building internet protocols. And um a- at the same time, I was using kind of the first stuff that was on the internet. It was like,

• 4:46Speaker 02

  you know, email and and eh pointcasts, like old software. And ICQ was like the big thing, the the growing ecosystem of, you know, a growing community of users and I was using that. And it was three Israelis that build that. And I was like, I was so amazed by by by their success. And all of a sudden, you know, the startup was sold to AOL for four hundred million dollars on ninety eight. And I was like, I was like, whoa. Ah, this is amazing. And I was so inspired and and I I I decided to actually leave all my unvested shares at Cisco. And, you know, in general, I didn't like the the whole idea of big company. And I I started my first company in ninety eight.

• 5:29Speaker 02

  Eh, it was contact dot com. It was one of the first social networks. Eh, it was using a desktop application. It wasn't even the a web app, because there were no web apps in ninety eight. And that was a big hit. And we got money from Mich Kapor, the founder of Lotus, from Excel Ventures and, you know, I was like the eh the the Israeli internet star at the time. And it it all ended in April two thousand, when the market just crashed like completely. I was, you know, going around with VCs, trying to raise, you know, the next round for my internet startup. And no one wanted even to hear about

• 6:13Speaker 02

  anything has to do with the internet at that time. Even even that it was a social network with real identities that was personal and professional. Anyway, we had to shut down the company. That was. Very hard, but we did that. But I still believe that the internet was like a big deal, so I I was trying to get money to my other idea that that that I was, you know, having, which was essentially user-generated content. I always thought that was fascinating, because I got all those viral videos in email, and I thought to myself, this is a new kind of media. And in two thousand and three, I was actually able to raise fifty thousand dollars on valuation of zero, if you can believe that.

• 6:56Speaker 02

  The only reason I got shares is because I put twenty thousand out of those for a company that I started called MedicaFare. MedicaFare was one of the first video-sharing sites online. I think probably it was the first. And it also started as a desktop application, because bandwidth was too expensive in two thousand and three, and we actually had to move the video files peer-to-peer between the the the different machines. And, you know, the prices went down in two thousand and four and five, and and we released a website, and it just exploded. We went from four, five thousand users every day to like a million users every day within six months. It just exploded.

• 7:39Speaker 02

  And it was bigger than YouTube at the time. And for us, it was like, you know, a very challenging experience, because, you know, to scale those kind of, I would say, environment, the the L L LAMP stack, Linux and and and MySQL, there was no one in Israel that knew even how to build on those technologies, because everyone in Israel used Microsoft at the time. It was the first internet startup that actually made it to, you know, to the top one hundred websites in the world, according to Alexa. And as we were dealing with all that, it just YouTube like took off like crazy and

• 8:23Speaker 02

  was acquired by Google. And, you know, we saw their number just exploding so much faster. I mean, we thought we were big, but we we we didn't even realize that that there was so much potential.

• 8:36Speaker 02

  And for me, you know, one of the biggest lessons from that time was, you know, I would, I have no way to say it, but it was my miss. That I didn't figure out that online video is really going to be very different than television in, in, in the sense that it's not going to be about the hits. You know, when we watched TV, it was like, what's the best movies, the best TV series? It was always about the hits. But it's nothing like that with online video. With online video, the hits, you can find them on Reddit videos. Well, that's not very interesting and not getting many views. I mean, ninety-nine point nine percent of the engagement is in the long tail. A concept that didn't really exist on two thousand and three, when we started Metacafe,

• 9:21Speaker 02

  but, you know, came out and I, I kind of realized what's happening a bit too late at that time. And, and, and that was my big miss, the long tail. So I, I started to dig into that and to kind of research that. In two thousand and ten, after seven years at Metacafe, it was obvious that YouTube was winning. It's, you know, we were second, but it's a winner takes it all game. So I actually moved back to Israel. I, I, I lived like three years in the States at the peak of Metacafe. I moved back to Israel and I actually started to use the technology that I helped create, uh, creating, uh, I started to watch videos like all day long.

• 10:04Speaker 02

  Um, kind of expanding my mind, I would say, exposing myself to so, to the long tail, if you will, uh, which was a very defining experience as well for me. Uh, I learned a lot. I changed a lot of my views about many things. But, and the thing that hit me the most is that in May two thousand and eleven, in one of the blogs I was following, I saw a one hour long episode about Bitcoin. And my mind was blown. I was like, oh my God, I couldn't stop researching that thing for a whole month. I sent an email to everyone in my contact list. I said, take a look at this thing. This is amazing. Buy it, it's going to be great. It was six dollars and, you know, just go and buy it.

• 10:49Speaker 02

  This is going to take over the world. And, you know, people was, were replying to me, hey, yeah, you have a virus. And then I was like, you know, sending another email, you know, it's not a virus, it's me, Ayao, your friend, just, you know, take a look at this. I live to regret that because, you know, two months later Bitcoin actually peaked at thirty dollars and then dropped to two dollars. So, you know, whoever bought Bitcoin thought that I really screwed them, but, you know, those who were patient still thank me until today. And it took me like a year to even learn how to talk to people about Bitcoin, how to express, how to, how to explain it.

• 11:34Speaker 02

  It was very, very challenging. And, and I was, during that year, I was very active on Bitcoin Talk forum. You can, you know, look at my username, there is Ayao, that's my first name. And I was kind of touring with different ideas, with different concept. Initially, I thought to build something like what Bitpay is doing. And I, I, you know, I was introduced to the Bitpay guys. And I say, okay, so someone is building that, let's, let's try finding something else. Then I thought maybe I'll build a DAO. I'm actually talking there about the concept of decentralized organizations that I thought, you know, could be possible with something like Bitcoin. And that, that seemed also too early.

• 12:18Speaker 02

  But after a year or so, I think I got to the conclusion that I think the opportunity is in, you know, in, in, in my big miss for Meta affair, it is in the long tail of currencies. Because, you know, whenever you remove the barrier from creating anything, whether it's, you know, a blog post, like if you, something, someone writes or something, some recording like this, this podcast and, and a video or, or even a marketplace, when, when anyone can create that, what you're gonna get is a long tail. Because when you remove the barriers, when you reduce the cost of failure to zero, and you achieve a low cost of failure, people are gonna try stuff and, you know,

• 13:03Speaker 02

  some of it will work, most of it won't. And it ends up being a long tail. And I'm saying, you know, what, what we're seeing here is that... All of a sudden, to issue a token, an asset, a currency that anyone in the world can use from their mobile phone, the cost of that just dropped to zero, essentially. That's a big deal. And we're gonna see a long tail. And where it would be and, you know, how it would manifest, that has been my journey since 2012 to this day. When, you know, we're just about to release our platform for, for essentially user-generated

• 13:46Speaker 02

  tokens and to kind of target the long tail. So, so in 2012, we started with, essentially, building a platform with a company we created called AppCoin, which is a platform for tokens. And back then, you know, you couldn't build so much on Bitcoin. So, we actually built it on a centralized system just to see how users interact with currency that is not their, you know, fiat government-issued money. And we issued a currency for a moms group in Facebook, a popular moms group. And we told them, hey, you know, you can trade within the community with this currency.

• 14:30Speaker 02

  And we built an app for them. It was with integrated marketplace, with a wallet. And the currency was quote-unquote pegged. So, we told them, imagine that every unit were worth one shekel, the Israeli currency. So, the currency was issued when they joined, they got some. When they, you know, posted, there's something for sale, they got some. So, we kind of used that as incentive for engagement. And we started issuing the currency. And within a few months, it just exploded. It's exploded to the level that, that 10,000 active users were actually performing something

• 15:14Speaker 02

  in around 1,000 deals per day, transactions. And what they did is they bought jewelry and toys for their kids and clothes and, you know, even services like massage, massage and, you know, anything you can imagine, they just traded with that kind of local community currency.

• 15:39Speaker 02

  And we were very happy about it. We thought, actually, that we figured it out. And but but little did we know that that we're gonna run into difficulties. So after like a year or so that it was running. And and you know, we tried to do it with with additional community. We ran into a problem that, you know, I can talk for two hours just about the analysis of that. But but the wall we ran into was the wall of liquidity. I mean, the problem was that those currencies, they were like disconnected islands from from the world economy. And you couldn't buy them with your shekels and you couldn't sell them to you with your shekel like you can do with Bitcoin.

• 16:23Speaker 02

  And that kind of created and and and an isolated island of of of value transfer that that had issues because of that. And we started to think of, you know, how we can solve that. And we didn't really find a solution until 2016. And 2016, we got really familiar with Ethereum and with the concept of smart contracts. And as as as I got familiar with that, you know, it it it feels like maybe there is a solution there for the problem of liquidity of user-generated token for the long tail of currency. Because what's what's blocking the long tail of currencies is that, you know,

• 17:05Speaker 02

  if you if you create a currency or a token or an asset, it's no exchange gonna list it, no market maker gonna trade it. So it's it's just not gonna be liquid by default. And and and with smart contracts, it feels like there is might be a solution there. And, you know, we start, I started working on that and and and researching and trying to figure out what what can be done. And that was how Bancor Protocol was born. Bancor Protocol was actually the initial version, most people don't even know that, but the initial version of Bancor was just supporting user-generated tokens.

• 17:43Speaker 02

  So initially, we thought about building a smart token with a single reserve of another currency. It took us like two months to figure out that, you know, you can actually have two reserves in a smart token. And if you have two reserves, meaning that you're holding this token that holds different currencies and each one is like 50% reserve ratio, then you create what we like to call the token relay. And the token relay is what Bancor network is built upon, which is essentially a smart contract that lets you exchange between any two assets

• 18:23Speaker 02

  and guarantees liquidity between those two assets at all time, regardless of volume. That's kind of the big change. This is, you know, the same thing that was adopted by initially EOS for their RAM trading. This is how EOS RAM market works. Then it was adopted by Uniswap. Uniswap, you know, took our model one-to-one to build their network. Then it was adopted by Tron. So the whole idea of a smart contract that holds two tokens and the way that, you know, the price and the rate between them is calculated based on the purchases

• 19:05Speaker 02

  is something that actually came, you know, two months later before we released Bancor, but after we thought about the initial concept. And then we released it in February 2017. We released the white paper, you know, the responses were like initially very mute. We couldn't get any momentum, people like they couldn't understand even what we're talking about. What do you mean you solved liquidity? It sounds like like weird that there could be even a solution like that. And, you know, we were in the dev con of Ethereum presenting it.

• 19:46Speaker 02

  But, you know, people, it took time for people to even understand what we're trying to say. It took us time to figure out how to say it as well. And as we were moving into the initial token sale that we had at June in 2017, we were like, you know, traveling around the world, telling the story and slowly but surely, we started to gather momentum around the concept. And we were like completely shocked by the result of the ICO. I mean, I remember a few days before that, one of our seed investors told me, you know,

• 20:30Speaker 02

  what do you expect from that? And I told him, look, you know, if we get like few millions, that will be great. And he said, yeah, yeah, if we get, you know, three to five millions, that will be amazing. No one expected like, you know, $153 million in ICO. And that was, that was a shocker. And it seems like, you know, after our ICO, it's like just all hell broke loose. I mean, you know, people were doing much like, it was a world record for like few weeks. You know, then, then I believe it was Tesos and then, and obviously EOS that did a $4 billion ICO after us.

• 21:12Speaker 02

  So it was, it was a crazy, crazy period. And at that period, we found, you know what? What we were dreaming about, that, you know, the idea of user-generated token, that people can, can issue tokens easily, that will be useful, it's happening. Look, you know, everyone is issuing token. We are seeing the long tail of token being formed. And, and, and we kind of focused on supporting that. And that's why we have like 150 different tokens that we added to the bank or liquidity network.

• 21:50Speaker 02

  And we know what happened later. It's like everything crashed. Uh, you know, the everyone believed that, you know, this is the future and let's fund these teams, the this, this, this groups and, you know, something good will come out of it, some, some great product, great solution, great adoption. But none of it has happened yet. And I I'm I'm like the probably the oldest one in the group. So I'm like, you guys, I've seen it before. It's okay, you know. The the speculators can lose their belief completely. Again, I was trying to raise money for a social network in two thousand and one and failed.

• 22:33Speaker 02

  I couldn't raise a dime for a social network. Uh, there is a lost belief, but the technology behind Bitcoin and behind blockchain is a world-changing technology. It's much bigger than the internet and is just now about finding how it will get adoption and what will be the first killer apps and what will drive it. And, um, you know, we've been focusing on building, uh, our own service uh, for, uh, that uses bank or liquidity network for user-generated tokens uh, that we are actually launching today. Uh, and, um,

• 23:18Speaker 02

  and and also on on on evolving bank or, and, you know, luckily, we we did raise a significant amount that allow us to to go through that that very long winter. But, you know, I I do feel like, uh, you know, that there is, there is a change and and and things are starting to pick up and we see a lot of interesting trends like decentralized finance and all those things.

• 23:42Speaker 03

  What what do you think that you guys were able to raise so much capital compared to those who've come before you? What was the difference?

• 23:50Speaker 02

  So I think that the main thing is that we were the first group that were, uh,

• 23:58Speaker 02

  Consumer software, consumer service developers, seasoned consumer service, the entire founding team, you know, some of us came from a social gaming background. I came with a background of Metta Cafe that, you know, had like 50 million users every month and even contact before that. So our experience was, we were not techies. We are not technologists. We're not coming to build, you know, the next best blockchain or anything. We were here to build a solution for the masses. And we had a demo that actually allowed people to create tokens on Ethereum.

• 24:42Speaker 02

  Before our ICO, it was on testnet, but people can just go and create their tokens. And those were liquid tokens and they were working. And I think that people really liked the fact that we shipped all that solution that I think looked pretty good before we even went to the ICO. We were actually the first, I think, the first ICO that released its product to mainnet at the ICO. I mean, we took like 10 days in order to kind of prepare the stuff. But 10 days after the ICO, Banker Liquidity Network was up on mainnet.

• 25:26Speaker 02

  So and then, you know, the code was out there and we explained to everyone that this is what we're gonna do. So I think that was very different than many other ICOs that were just promising things that will happen in the future. And we're like, yeah, this is working and we're gonna do the ICO and launch the network. So I think people really responded to that as well.

• 25:47Speaker 03

  Got it. And so let's get into some of the announcements that you guys have, right? Let's start with the liquidity changes that are gonna occur.

• 25:56Speaker 02

  So, you know, our goal is basically to get more liquidity, to get more developers to work on the Banker Liquidity Network and to get more community governance. When I say more liquidity, so, you know, one of the things that...

• 26:15Speaker 02

  That we are working on, for example, with one of our partners, and this is announced again today, is something called the Bancor Stable Token, or USDB, which is essentially a stable token that is similar in some sense to DAI and to Maker in its structure, but it's collateralized by BNTs. And the reason that we're doing that is because we feel like there is a great need for a lot of people that want to provide liquidity to be able to reduce their speculation to a single asset.

• 26:56Speaker 02

  So it's much more sensible to speculate on a stable coin and another asset, which is what you do when you provide liquidity at a bank or liquidity network. So this is, those kind of things, supporting developers that are building those kind of solutions, is our core focus. Also with a co-trader, we have launched essentially a permissionless liquidity portal where people with self-service can just create their own relays on the bank or liquidity network, and they can, you know, contribute liquidity to existing relays.

• 27:38Speaker 02

  And we're looking at a solution to allow the liquidity providers to essentially set their own fees, because that's also, this is how liquidity providers get rewarded for the volume that is occurring on whatever liquidity pool they're supporting. Those kind of things are like our top priority with the liquidity network. And of course, expanding it to additional blockchains, because we go where the activity is, where the users are. You know, we started on Ethereum, but

• 28:15Speaker 02

  We talked from the first day that we want Bancor to be a cross blockchain liquidity network because, you know, obviously liquidity is something that you don't need only within a blockchain, but between blockchains. People, you know, today use exchanges, then those exchanges are using, you know, are connected to many different blockchains. And if you're going to have a decentralized liquidity solution like Bancor, then it should operate between blockchains. And we actually, almost a year ago, we launched our cross blockchain solution, which I believe was the first one in production, and maybe even still the only one.

• 28:58Speaker 02

  People can actually move their B N Ts from Ethereum to EOS and back. And using our system, they can convert any Ethereum token to any EOS token with a single action. And everything will just happen automatically in the background to support that. So as we Why would someone want to do that? Why would someone want to do that? To convert between assets. You know, this is what, this is the only thing people can or are doing today in the industry. It's all about speculation right now. I mean, if you, if you look at the entire space, the only use case, and it makes sense

• 29:36Speaker 02

  because, because there are no mass adopted solutions at this point in time, but at that point, you know, people speculate and they speculate by, by buying different currencies, different tokens, and, and, and change them, you know, and, and, you know, change their best from time to time. And what Bancor is allowing to do is to do that in a completely decentralized way and to also support small assets that don't have a lot of volume and provide liquidity for those. So, you know, just like people want to use Binance that support both EOS and Ethereum

• 30:19Speaker 02

  and Bitcoin, we believe that as a liquidity network that essentially providing an alternative service, and just like Uniswap, it's an alternative to an exchange, we need to support multiple blockchain. We shouldn't be focused on a single blockchain. And we see our users using that a lot and very happy with it, with the fact that they can convert EOS to Ether and EOS, Ether to EOS, just, you know, with the complete non-custodial solution.

• 30:48Speaker 03

  Got it. And then let's talk a little bit about kind of the Ethereum-based model versus Ether, EOS, and then moving to this multi-blockchain model. Talk to, first, you know, what the goal is, or what's the driving force as to why to do this, and maybe cover some of the technical components of it.

• 31:08Speaker 02

  Yeah, so when we launched BNT, we launched BNT as a smart tokens, like, you know, dog fooding, if you will, that has 10% reserve in Ether. So, you know, whatever the market cap of BNT at any given moment, it holds 10% of that market cap in Ether within the smart contract of the BNT token on the Ethereum network. And that's how we launched it, and that's how, you know, that drove the liquidity of BNT throughout that time. We never asked for any exchange to list us, because, you know, you can just convert Ether to BNT and BNT to Ether on-chain using our service. So, we didn't really need to be listed in

• 31:49Speaker 02

  exchanges to have liquidity. But as we expanded to EOS and we plan to expand to additional blockchain, so now this tie into Ethereum doesn't make as much sense as before. And what we're planning to do is essentially to take the Ether reserve that reside within the BNT smart contract.

• 32:17Speaker 02

  And create essentially a relay between B and T and Ether. And essentially distribute in some fashion. We're working out exactly how it will work. But distribute that relay to all the holders of B and T. So actually giving the liquidity of Ether liquidity of B and T to the B and T holder directly. And they will become proud owners of the Ether B and T relay themselves. And they can choose to do whatever they want with it. So this is a big change for us.

• 32:58Speaker 02

  And as part of this change, you know, we are essentially making B and T an inflationary token with a default inflation of zero. And that's very important because the community can actually decide collectively to raise the inflation or to keep it as it is. But they can raise the inflation in order to support strategic liquidity pools. So, you know, support them by dropping B and Ts into them and encouraging liquidity providers. They can use the inflation to support developers that are building on the bank or liquidity network.

• 33:37Speaker 02

  They can use the inflation to sponsor oracles that are actually using a multi-signature model connecting B and T to additional blockchains. So those things will make the bank or liquidity network more independent and more, I would say, long lasting in that sense. That, you know, it can sustain itself for the long term. And, you know, we're giving this control to the community because we believe that, you know, the B and T holder should be the one deciding on the future of the bank or liquidity network.

• 34:16Speaker 03

  For sure. And then as you're moving forward, what's the biggest risks that you face?

• 34:23Speaker 02

  The biggest risks, you know, I think that for us.

• 34:31Speaker 02

  Just like any other new technology developer, you can't expect what will come about and what kind of competing services will appear and how well they will work. And I strongly, strongly believe that the future is all about blockchain. And I strongly believe that the ability to issue an asset is something that has proven to be useful and is proving itself more and more to be useful every single day.

• 35:15Speaker 02

  So I do think that a solution for that will be needed. You know, there's always risks when you're dealing with smart contracts. You really don't want to find a critical bug at any point that could be a real challenge. And we know what happened to the Dow, right? And there's always, I would say,

• 35:43Speaker 02

  a risk of just not being able to see the future as it unfolds, because this is what we're doing. We're trying to essentially guess what will be successful in the future, not just us, you know, hundreds, if not thousands of different groups. And guessing wrong is always a risk. But it's really good that so many people are trying and guessing, because guess what? Some of us will get it right. And we just hope that it will be us,

• 36:14Speaker 02

  you know, at least on the side of the people that got it right. But there's always the risk that we're not.

• 36:24Speaker 03

  Got it. And so you're of the mindset, basically, the more experimentation, the better, right? There's no kind of sacred cows.

• 36:32Speaker 02

  Oh, of course, of course, you know, the I think I think that every industry in the history of technology is is proving that point, you know. I've been I've been in in this industry for, you know, actively working for more than twenty years and I can tell you it was always, you know, so many on I whether it was networking or the first internet infrastructure, whether it was the first web apps and the first mobile apps, it was always about experimentation, endless experimentation. And that's that's how you discover, you know, what what people really need, because if

• 37:14Speaker 02

  people need something, they will just adopt it and it will grow and it will explode. And and and and, you know, that's how evolution works, that's how nature works. It's experimentation and when someone something succeeds, then everyone can look at it and learn from its success and it leads to, you know, the next wave of of innovation. So, yes, I I I'm a very strong believer in that.

• 37:39Speaker 03

  Got it. And then maybe talk a little bit about this idea of the inflationary aspect being controlled by the community and how that, you know, emulates a Dow essentially.

• 37:53Speaker 02

  Yeah, so, you know, basically, we're using, you know, I shouldn't go too much into this because it's it's pretty technical, but but the model that is called weighted median. So, you know, everyone can essentially vote on what what they think should be the inflation and based on the amount of token each voter holds, you actually take the weighted median of that vote and that will be the inflation. And every token holders can also vote on which parties should be the recipient of that inflation and, you know, as as well as and of voting on how many parties should receive that inflation.

• 38:39Speaker 02

  And using those mechanisms, you essentially allow the community to express their opinions without creating camps and tribalism and those kind of things because it's very, you know, should I say mathematical in its nature. You just say what you want and the smart contracts calculate the majority will. Because the idea of weighted median is that if a group of people vote on different numbers, the weighted median would be exactly the number that 50% of the token that voted for that number or less and 50% voted for

• 39:18Speaker 02

  that number or higher. So that's the fairest, the most fair system that I can think of for a large community of holders to decide on any particular parameter.

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• 41:24Speaker 03

  As part of that, you know, I think a lot about these DAOs and kind of the potential is incredible. Obviously, we've seen some of the downside in the past. What's the timeline for this to be pervasive, if you think it'll ever get there?

• 41:43Speaker 02

  So you know what? One of my inspiration about that is actually Maker DAO. I mean, if you think about, I think Maker is probably the most, if I'm not mistaken, is the most successful token today, both in terms of adoption and in terms of market cap. In terms of adoption, obviously, I'm talking about DAI, which is the product of this DAO. And you know, the way, for example, that they upgrade their mechanism, which we definitely plan to adopt, is by community voting. So using the holders of Maker DAOs voting,

• 42:27Speaker 02

  they can upgrade the mechanism that actually runs their DAO. And they can add more features, they can, this is how they change the interest, actually. This is how they're going to add the multi-collateral capabilities to DAI. So I think the model is, as far as I'm concerned, is pretty much proven itself in probably the best, most successful use case for a token today. And again, as I said, I think it's critical that we look around, we see what works and we learn from that. And that's a great example to learn from.

• 43:07Speaker 03

  For sure. Let's talk a little bit about Creator and what you guys are doing there.

• 43:12Speaker 02

  Yeah, so Creator Eco. So it probably should be up by the time this is broadcasted. Creator ECO is essentially a solution that is built on top of the bank or liquidity network, where anyone can create a token for free. It's very simple. You don't need to be a crypto head in order to use that. You actually, you know, you sign in with your phone number. You have a web-based wallet. It's everything in a single solution. You don't need to use any external solution for that. So anyone can create a token for their channel. So I'm actually going to launch my own channel.

• 43:56Speaker 02

  For the first time, I'm launching a video channel on creator.eco. Actually, you know, because of MetaCafe, I have a really nice YouTube channel name. I'm youtube.com/eyal. And I'm going to launch my video channel and on creator.eco, I'm going to issue my token that is called Eyal ECO, E-Y-A-L-E-C-O, which is like, you know, a seven-letter symbol. And the way that it works is that I'm going to have my premium content and as well as premium Q&A sessions for supporters, as well as many benefits that are open only for token holders.

• 44:41Speaker 02

  So let's say if someone is holding, you know, 100 tokens, they can actually go and watch the premium video on my channel, where it's like an unlisted video on YouTube. Or if someone holds 150 tokens, they can participate in a Q&A session or Ask Me Anything session on Hangouts that is later broadcasted in the channel. And if someone is holding, I don't know, 200 tokens, then I will have a one-on-one session with him, you know, just a private consulting session or, you know, for whatever purpose. So I can offer all those perks. I would say in a similar way to how Patreon is offering perks to supporters of YouTube

• 45:25Speaker 02

  channel, but the main difference is that with Patreon, it's a monthly subscription you pay: ten dollars, twenty dollars, thirty dollars a month, and based on how much you pay and how big is your support, then you get access to different perks. And with Creator that eco, it's not about how much you pay, it's about how much you hold. So if you hold more tokens, you actually get more perks, and it's also visible within the community. So, you know, some of the features are not up, this is beta, but if I post something in the community and I have many replies, the reply is going to be sorted by the holdings of the members.

• 46:09Speaker 02

  So those who hold the most token, the reply will show, you know, at the top. So it's a kind of way to give clout to an audience and get support using a very different method. Now, the token that you issue is a smart token that has BNT in the reserve, and people can buy it and sell it, and just like any other smart token, just like BNT was, when people buy it, the price of the token goes up, when people sell it, the price of the token goes down. So it's really a good idea to maybe, first of all, look for creators when they are small,

• 46:50Speaker 02

  but it's also incentivize those people that hold the token to kind of spread the word about the channel, because they become, you know, more vested in the channel, and they become stakeholders, if you will, and become part of it for its success. So, you know, those who hold my token will have, you know, much more incentive to kind of share my videos and tell the story about this channel to other people than people that are just mere followers, or even people that support you on Patreon. So it's a very different model to get support for creators, and it's actually closing a

• 47:30Speaker 02

  big circle for me, because MettaGaffa had a program, you can actually search for it, there's many articles about it from 2007, I believe.

• 47:42Speaker 02

  Called Producer Rewards, Metacafe was the first video sharing service that actually shared the advertising revenue with those who uploaded videos, their own videos, not, you know, videos that they own, the copyright and we're checking that and, you know, we just shared the revenue with them. So we, we believe that supporting creators was, was, was very important more than 12 years ago. So now I'm actually releasing a system that, you know, can support creators and allow them to engage with our audience in, in, you

• 48:22Speaker 02

  know, in more ways that is just using tokens, their own tokens. And this is the first time that we are essentially releasing a product that is not targeted at the, at the crypto market. Because if, if you think about it, most of the solutions, the successful solution, the solution that got any kind of adoption in, in, in the, the entire world of blockchain are self-serving. And, and that's fine. This is how the internet started. I remember it like it was yesterday. The only users of the internet were internet startups and internet related services and, and internet companies. These are the people that use email and the

• 49:03Speaker 02

  web and no one else did, especially when it was dial-up, you know, in, in the 90s. So, so, you know, today we are dog fooding more than anything. That's what we're doing in crypto. And, and the reason I'm excited about that is, it's the first time we're launching a service that is not targeted at crypto people. It's targeted on the mass audience and, and, and, and we really, you know, hope to see it grow and succeed.

• 49:29Speaker 03

  For sure. What, um, what, what's the one thing that you look forward to with the Creator Project? That you're like, look, if we can accomplish this, that'll be an inflection point for the business?

• 49:42Speaker 02

  The word I would use is viral coefficient. Because the way that it works is that, let's say, you know, I'm a creator and I have, I don't know, four thousand followers on Twitter, I know it's nothing compared to you, but still. And let's say I tell them, hey, look at my channel. And they come and, you know, maybe some of them buy the token or not. But the idea is that there is a little button at the top right. Always, which says, create your own token.

• 50:18Speaker 02

  And if there's anything that we are hoping for is to get more and more people trying it out. And that's why we're kind of working on having a low cost of failure. So it would be free, you wouldn't risk anything material when you're trying to do that. And what we're hoping to see is that every creator that has used that with their audience actually ignited their imagination of at least some of his supporters in order to try their own token, create their own token.

• 51:00Speaker 02

  And if that happens, then what you're getting is a positive viral coefficient. And when you get there, then this is the making of the Googles, the Youtubes, the WhatsApps, the Facebooks, that this is what drive growth would, you know, to maximum, to the billions. And, you know, I just hope to see more and more people trying it out, experimenting with it and see that it works for them and bringing actually the next wave of users after that. That's what I hope for.

• 51:40Speaker 03

  For sure. What's the one lesson you've learned in all the years now that you've been focused on Bitcoin, cryptocurrency, DMT, etc. What's the one takeaway?

• 51:51Speaker 02

  One lesson, you know, I would tell you the biggest lesson, the biggest lesson is that... No one is immune from the euphoria when markets are going up. No one is immune. And on the other hand, no one is immune from the depression when everything's going down. And I think that my most important lesson was that we should always just not focus on the market, not focus on price, but focus on building something that people want.

• 52:34Speaker 02

  And this is the best thing that we can do for the markets as well. You know, the reason that the internet after the crash in 2000, 2001 was able to climb back up is because people was using it. And I think, you know, we got carried away with all the hype. Definitely, like many others, we got carried away. And, you know, today I feel like we are much more focused on solutions and advancing the technology than on, you know, on the greater market and, you know, all the hype.

• 53:16Speaker 02

  This is just, it's a distraction by the end of the day. And I think that was an important lesson from the last two years that has been quite a roller coaster, as you can imagine.

• 53:29Speaker 03

  For sure. Before I wrap up, I always do rapid fire questions. What do you think is the most important company in crypto other than your own?

• 53:37Speaker 02

  I would say, you know, I would say Maker. I think that they are doing, they're leading the way in something very important, which is a stable coin and... No currency that is not stable ever circulated as money. So, so I think that's, that's a very important step toward mass adoption.

• 54:00Speaker 03

  What's the one regulation you would change or improve if you could?

• 54:04Speaker 02

  Um, you know, definitely would make it more clear, um, you know, what constitute a security and what constitute a utility and, and I would, you know, I would make it more clear that, that when a token is being used to power a decentralized network that is controlled by its members, that, that clearly should be regarded as, as a utility and, you know, let, let people innovate with building kind of token-based networks. And there's so many concepts and ideas that can be experimented on.

• 54:40Speaker 03

  What's your most controversial thought in crypto? Like when you say it, people will vehemently disagree.

• 54:46Speaker 02

  So, I, I guess my controversial thought is that I, I think that Bitcoin value is not derived from the fact that it's going to be the future of money. I don't think that's the case. I think that the Bitcoin value derived from the fact that because it was first, it became the most popular trading pair in crypto. It has more, it's the base currency on crypto and which makes it the Dow Jones or the NASDAQ of crypto, which is kind of a safe bet on the entire market. And because the market is all about speculation, if you don't want to dig into the details or you

• 55:30Speaker 02

  don't understand the difference between the different project, you know, buying Bitcoin is, is a safe bet on the market and, and, and it has nothing to do with, with its technology or, or even its use case outside of speculation. It's just, you know, it's, it's, it's an index. It's a very useful index and it's, you know, it has a network effect as an index and that's what Bitcoin is.

• 55:51Speaker 03

  Most important book that you've read?

• 55:53Speaker 02

  Whew, recently or? So I would say recently, Anti-Fragile really affected me, um, by Nassim Taleb. And if, if I'm looking in the longer, I think The Long Trail is probably, you know.

• 56:12Speaker 02

  Uh, very, very good book that explain uh internet phenomena and and successes in in in in a great way, so. That was, that would be my second.

• 56:23Speaker 03

  All right, aliens, believer, non-believer.

• 56:27Speaker 02

  In aliens, of course I believe there are aliens, of course. Why?

• 56:31Speaker 03

  Yeah.

• 56:33Speaker 02

  I researched it.

• 56:35Speaker 03

  What what what did you find in your research that convinced you?

• 56:38Speaker 02

  Just too many, too many anecdotes, way, way, way, way too many. To to be all delusions, coincidence, you know, um propaganda, misinformation, it's just, it's just too much. And then, and and I didn't, you know, I I I could keep on, but but it's just overwhelming. But, you know, I think it's like Star Trek, it's they they don't wanna interfere with with with unevolved cultures, so they they keep themselves hidden.

• 57:11Speaker 03

  It it it's it's crazy how many people uh have never looked, right, or researched it. I I just, it's one of these things where it's one of the most fascinating things in the world to me is whether aliens or not. But I see all the time that people are, you know, I don't know, I haven't looked at it. And it just feels like if that's one of the biggest questions in the world, why not, uh, why not take a look?

• 57:34Speaker 02

  So, uh, you know, first of all, I recommend to everyone, there's a, the guy that wrote the story of the social network that became a movie. And also Twenty One, he's like, he he's this, the the the guy that wrote the the script for those, I I forgot his name. But he actually have a TED Talk about aliens and why I believe in aliens and why you should believe in them too. I I I recommend that, it's a very short talk, but it's really on point on that subject. And uh, it's clear to me why people don't wanna research that, because. It's, you know, excuse my language, but it's like being a Republican in California. You don't, you don't wanna hold an opinion that put you in the crazy bucket.

• 58:20Speaker 02

  And, and people's opinions about almost anything is affected by the social circles that they, they have. And there's a great movie on Netflix about Flat Earth. And it shows you that, you know, Flat Earthers, they, they don't have a choice, even though their own experiments prove that the Earth not flat. You know, one after the other, they don't have a choice but to believe in Flat Earth because not believing in it would just terminate their entire social life, everyone that they, you know, they become friends with. And there, there's no choice but to keep believing it. And I, I read a great sentence just, just the other day.

• 59:03Speaker 02

  No one can fool you as hard as you can fool yourself. And I think that's very, very true.

• 59:09Speaker 03

  I love that.

• 59:14Speaker 03

  And the part that, that is great is those sayings, whether they're jokes or, or sayings, the ones that have the hint of truth are the best ones, right?

• 59:26Speaker 02

  I, I do believe that, you know, people can fool themselves. We see that in crypto all the time. I mean, look at all the people that's saying it's only gonna be Bitcoin and those other people are saying it's only gonna be Ether and other people saying it's only gonna be Eos. And other people saying it's gonna be many. They, they cannot all be right, but they have such strong conviction in what they're saying. You, you, you can, you, you can see that, that in, in their eyes. And you know, that, that's fine because maybe you shouldn't believe that it's only gonna be Ether if you're gonna dedicate your life to building infrastructure on Ether. And maybe if it is Ether, you're gonna be very successful, but.

• 1:00:04Speaker 02

  But I I think that, you know, it's just it it's just how we how we are wired. We we we can we we make our own reality. We can convince ourselves of of of everything, anything. And and when you accept that, then you're not as bothered by people that think differently of you and of what you think. It's just, you know, that's how it's gonna be. And maybe that's good, because you might be wrong and or they might be wrong. It's a good thing to have variety of of of opinion at any given moment, as long as you don't kill each other for it.

• 1:00:36Speaker 03

  For sure.

• 1:00:39Speaker 03

  The the last thing I end with is letting you ask me a question. What what do you got for me?

• 1:00:44Speaker 02

  Ask you a question, yeah. So um, I I I wanted to ask you about um, the the whole Rubini

• 1:00:58Speaker 02

  episode that you had. I actually had, you know, I had the chance to meet him in in a conference that we helped organize in in in Bretton Woods a few months back. He was he was invited and um, I had an interesting talk with him that he abruptly ended. Uh, he got too upset. But I I wanted to ask you what you think about, you know, uh, Rubini and your interaction and why why he thinks that? And even more importantly, why why you think that that so many people think that he won the debate that he had with the uh, BitMEX CEO?

• 1:01:37Speaker 03

  Yes, I don't know that much about the uh, the debate. I think uh, look, he he he's a very smart guy. He knows exactly what he's doing. Um, and, you know, here here's what uh, I I always uh, go back to this one saying where um, a buddy of mine in, I think it was high school, I used to always say, uh, real recognize real, right? And and what that means is uh, it's this idea of um, When you play a game and you see somebody else playing the same game, you just gotta kinda say, you know, hey, look, I respect it. And I think Rubini is perfectly in line with that. And so if you look at all of the people who debate him, all of the people who argue with him, etc.,

• 1:02:21Speaker 03

  they're all playing the same game, right? It's this game of controversy and awareness trying to drive benefit, right? The benefit being either personally or for their business or whatever it is. He's doing no different, right? He is building a personal brand, he's getting paid to speak, he's doing all these different things. And I think for him, you know, we just gotta understand that he's playing the role of entertainer sometimes. And he's got other, you know, ulterior motives. That doesn't mean they're bad, right? It's just when you, once you recognize it, then it all kinda makes sense, right? It just fits into a bigger story.

• 1:03:06Speaker 03

  And so that's kinda the category I put him in. It's no different than majority of people, right? So again, I don't think that's a bad thing, but it's important to kinda just understand. You know, if you look at him as an entertainer, he's doing a fantastic job of that. So keep entertaining.

• 1:03:24Speaker 02

  Yeah, yeah. And, you know, I think he may have a point with some of his claims that maybe the techies that, you know, understand Bitcoin are not completely in the position to predict how the future of the world economy is going to operate, which many times they do.

• 1:03:47Speaker 03

  For sure. Look, he's no dumb, right? He is no dummy, and anyone who thinks he is dumb is probably missing the point, so.

• 1:03:56Speaker 02

  Yeah, yeah. He's an economist, though, he's not a technologist. And sometimes I think he forgets that.

• 1:04:03Speaker 03

  I think that he understands technology better than people give him credit for.

• 1:04:10Speaker 03

  Well, we'll see. All right, man. Listen, I really appreciate you taking the time to do this. You know, I know that your time's very valuable and so the hour you spent with us is much appreciated. Of course. We'll get this out and people can hear about some of the updates to our bank or and then we'll have to do it again in the future as you get more progress under your belt. Oh, I'd love to.

• 1:04:36Anthony Pompliano?

  Hey, everyone. Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.