SotN #33: Joseph Lubin on CME ETH Futures (Future of ETH, 2021 Bull Run, Consensys)

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

• 0:02Ryan Sean Adams?

  All right, Bankless Station, welcome to another episode of State of the Nation. We've got a special guest here, Joe Lubin. Before we get to Joe, State of the Nations, what do we do during State of the Nations, David?

• 0:15David Hoffman?

  We talk about a headline article, a headline news piece, something in the news cycle that is, oop, one more, I got the audio going into my ears. We talk about something that's going through the news cycle, which for this week, it was the CME futures launch, something cool that happens every single week. We get a guest on to talk about what's going on in the news cycle. And of course, this week, it's Joseph Lubin, who has watched the growth of Ethereum since day one. And now that ETH futures are launched, we want to get Joe on to talk about really what does this mean for the story of Ether, the asset, and Ethereum, the economy?

• 0:49Ryan Sean Adams?

  It has been quite the journey, so getting Joe's thoughts here are going to be cool. State of the Nation comes out every Tuesday. We stream this live over YouTube, so catch it there. That's the best way to catch it. You can also get it directly into your ears via the podcast, so catch it that way, too. We released the podcast episodes on Wednesday. David, before we get to CME futures, before we talk to Joe, a few things going on in the nation that we should talk about. We just had Vitalik on the podcast, where we got his reflections on the year that was 2020. We talked about rollups. We also talked about smart contract wallets, in particular, the UX around social recovery. That was an awesome episode. What were your takeaways there?

• 1:32David Hoffman?

  Yeah, I often say that the crypto industry has one of the best vantage points to see the rest of the world, because there's so many different things that are happening in the world that are very new in 2020 and now 2021. Money printer go brrr, the president getting deplatformed, you know, social unrest. And crypto offers like a lens to see all of it. And that's kind of what Vitalik put into his 2020 reflections blog post, which I found absolutely fascinating. Vitalik does a good job kind of putting into perspective how he sees the world and how crypto is going to impact the world when we, when just the... Collision course of crypto impacts the rest of the world, which we all think is coming,

• 2:13David Hoffman?

  especially this year. And so that was a pretty interesting piece. And then, of course, we get into more Ethereum centric conversations such as rollups and how rollups work and why rollups are so cool. And also the intersection of social recovery and smart contract wallets, specifically on L2s like rollups. Vitalik is long-term bullish on smart contract wallets on L2 platforms. And so that was just a fantastic pieces of blog posts, Vitalik's blog posts that we went through. So really informative episode.

• 2:45Ryan Sean Adams?

  Absolutely. Anytime Vitalik is on a podcast, I make a point to listen because there's always something insightful there. So do that. That came out on Monday. We also have Brett Johnson, who is coming out next week, our podcast recording with him. This is the guy behind the dollar milkshake theory. We asked Brett about the crypto milkshake theory, but we also talk about the dollar's reserve currency status. So if you are tracking this from a monetary theory perspective, make sure you tune into that episode coming next Monday. And then David, this Thursday, we have a live AMA with Tasha from the Alpha Finance Protocol. This protocol has been like exploding in growth, just a massive amount of ETH locked. Last time I looked, it was like three and a half percent. No,

• 3:27Ryan Sean Adams?

  it was it was half a percent of ETH locked, 350 million or something ETH locked inside of the Alpha Finance Protocol. So this is going to be a community AMA with Tasha where we figure out where they're going next.

• 3:41David Hoffman?

  Yeah, this is the AMAs are fantastic for me personally, because I ask my own questions that I'm interested in. I get a ton of learning done during these things. And then, of course, we always turn to the YouTube chat box to get listener questions as well. The last AMA we did, the chat box was a pretty fun place to be. And so if you have questions about what Alpha is, how it works, or what's going on with Alpha in the future, definitely tune into that AMA coming this Thursday.

• 4:07Ryan Sean Adams?

  Guys, this is the secret. David and I do this blacklist thing for ourselves so that we can level up and so that we can learn and we're just open sourcing it. That's actually, that's actually the entire platform in a nutshell.

• 4:17David Hoffman?

  Open source learning.

• 4:18Ryan Sean Adams?

  Yeah, all right, David, before we get to Joe, I'm gonna ask you the question I always ask you at the beginning of State of the Nations. What is the state of the nation this week, my friend?

• 4:28David Hoffman?

  The state of the nation is astounded. We are astounded. Elon Musk, the world's richest man, the CEO of like the most beloved company, at least from a younger person's perspective, just bought 1.5 billion dollars worth of Bitcoin. Like, we've never seen a that large of a single purchase of Bitcoin ever. And it's been done by like Elon Musk, who has a just a massive platform and a massive following on Twitter. So like, just adding a core, core fundamental character right into the heart of like the Bitcoin world. And like Bitcoin paints its largest candle ever, a one-day candle, $8,000 in a single day. Absolutely insane. I'm astounded. I'm pretty sure the rest of the blacklist nation is astounded as well.

• 5:13Ryan Sean Adams?

  Yeah, it's, it's, it's a pretty big week. And I, I kind of woke up to the fact that, oh, crypto's mainstream now. Like, that's what's happening. You're, you're still maybe early on ETH, you're still maybe early on DeFi. You are no longer early on Bitcoin, right? Like, Elon Musk is buying it and it's going mainstream. This is also going to get some of the, I think, the Wall Street Bets crowd involved. Of course, Tesla is one of their beloved stocks. And I think, given the events of GameStop, we've talked about that a lot here, this is going to draw some of their attention too. So dude, overall bullish. It's, it's astounding. Good word choice, my friend. I'm wondering when you're gonna run out of adjectives, though, for these State of the Nations.

• 5:51David Hoffman?

  We're going through them quick.

• 5:54Ryan Sean Adams?

  That's awesome, especially the bullish ones. All right, guys, last thing. Consensus, the conference, is coming up. This is a really exciting conference to attend, especially in a crypto bull market. I remember my first bull market consensus conference. It was absolutely off the wall, insane. They're doing a virtual this year. It's happening May 24th. Ray Dalio is coming. Like, we couldn't get Ray Dalio. You know, five years ago. So this is consensus, the conference, of course, you can reserve your place now. You could save $20 with Bankless. We've got a link in the show notes for you. So do that in just a moment. We will be back to talk to Joe Lubin, co-founder of Ethereum about ETH futures. But before we do,

• 6:36Ryan Sean Adams?

  we want to tell you about our fantastic sponsors who made this episode possible.

• 6:41David Hoffman?

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• 7:26David Hoffman?

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• 8:10David Hoffman?

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• 8:54David Hoffman?

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• 9:07Ryan Sean Adams?

  Guys, we are back with State of the Nation. We've got Joe Lubin here, who is the co-founder of Ethereum. He needs no introduction to the Ethereum community. He's also the founder of Consensus, which has built some of the most important pieces of Ethereum infrastructure over the years, including MetaMask, which if you're going Bankless, you probably use just about every day. Also, Gitcoin, Ifura, Truffle, many other pieces of infrastructure. Joe, how are you doing today, sir? Welcome to Bankless.

• 9:36Speaker 02

  Great, thank you. I've been sitting back here in the weight room. I've got an appointment scheduled with my Bankless managers.

• 9:44Speaker 02

  Treasury manager for the people who like Ether.

• 9:47Ryan Sean Adams?

  You know, there's a live shot of David somewhere on Twitter, and he was caught inside a Wells Fargo today. I'm not sure how that happened, David, but like you're supposed to be Bankless, man. You're inside a Wells Fargo. What's going on?

• 9:57David Hoffman?

  Yeah, somebody caught me making a deposit.

• 10:01Ryan Sean Adams?

  Well, very good. Well, Joe, this is a really exciting week, I think, for all of crypto. David just talked about Elon Musk and his purchase of Bitcoin earlier, but also the launch of Ether Futures on the CME. Maybe we could kind of rewind the clock a little bit and talk about, because you've seen this project through from inception, basically.

• 10:25Speaker 02

  I predicted like two weeks ago.

• 10:28Ryan Sean Adams?

  Okay, well, tell, two weeks, weeks, not months, right? So, but Joe, when you were starting the project early on with the other kind of co-founders, how did you think about ETH the asset? Did you ever think that there would be a day where it would be traded on the Chicago CME?

• 10:48Speaker 02

  So, I...

• 10:52Speaker 02

  Locked in pretty early on this stuff. I thought that when I read, pretty much right when I read the Bitcoin white paper, I thought it would be massively transformational. I thought it would take quite a long time. I have been called an optimist or a true believer. And so I, I did think that, that there would be profound transformation accelerated by Vitalik's vision over how fast it would have happened if we were sort of moving bits around with a scanning, tunneling microscope and trying to build software that way on, on the Bitcoin protocol.

• 11:36Speaker 02

  And I did, I've spoken over the years about the fact that we were building infrastructure and that that infrastructure was sort of commodity-like or would take on similar architectures as that of grains and precious metals and other kinds of commodities. And so would need financial instruments and deep financial infrastructure to get more efficient. We've seen, so we started out with super inefficient mining and, and wallets that would just set prices for you and nobody would even know what they were or, or adjust them ever.

• 12:18Speaker 02

  And, and recently our Infura team is launching something really, really cool called Infura Transactions Manager. And they've demonstrated that people are overpaying pretty massively just because there's so much fear about getting your transaction handled that we can actually.

• 12:42Speaker 02

  Using various techniques and intelligence, we can actually just assure people that the the pitfalls that are inherent in sometimes in in trying to get transactions processed are managed by a service that can save you money and and guarantee nearly that what you want to happen does happen. So I would say that, yes, I did. And and several people did anticipate that things would go mainstream. It is astonishing to see how fast it's happened. And I want to

• 13:24Speaker 02

  call out my friends at Arisex. So we've been involved as investors and and really actively with that project early on, Arisex. So so the CME news is incredible. Super excited about it. It is much more institutional focused. Retail trader would have to jump through some hoops to take advantage of that. Arisex actually paved the way for for the CME futures. So they they launched May of last year, I think. So they've got Bitcoin futures, Ether futures,

• 14:04Speaker 02

  and spot, and and they're certainly more friendly to retail. And they're they have a physically delivered product, which I think is important. It's something that I've been talking about for a long time. If you're a speculator or or need to hedge in other ways,

• 14:25Speaker 02

  making sure of the difference from basis is not because these are really two different markets, two different liquidity pools, and they can get skewed pretty badly. And so making sure they're they're locking in at at delivery.

• 14:41Ryan Sean Adams?

  Yeah, yeah. You know, physical delivery is is is key. I'm I'm wondering your your your thoughts on this. Is this the kind of the the CME, the listing on the CME and Arisex, as as you were mentioning earlier, kind of paved the way for this. But is this basically US regulators signaling that, yes, we agree ETH is a commodity asset, ETH is a commodity money?

• 15:07Speaker 02

  Yes, absolutely. So Pete Harbert made that statement explicitly. The SEC has basically said that. We said that in the first few months of the Ethereum project that we saw it as as a fuel, as one of the first crypto commodities. There are others and will be other crypto commodities. And he said money in there. I don't know if you think about whether ether is money or not, but

• 15:39Ryan Sean Adams?

  I thought about that. Dave and I have given that some thought and we've come to the conclusion that indeed it is money. Ether indeed is money. Do you concur, David?

• 15:47David Hoffman?

  It is known.

• 15:51Speaker 02

  So the question is, what is money or what is money going forward? We know the three definitions of money. So numerar, means of exchange, store of value. And we've positioned ether as a crypto fuel. We also positioned it as a better money than money and a better money than Bitcoin even because it's programmable and cheaper to fire around sometimes, usually. We'll see that that will change in both directions over time. And money is kind of contextual and social and symbolic. So cigarettes are money in some cases.

• 16:37Speaker 02

  Notches on sticks are money in some cases. I would argue in the future that we're not going to need abstract money so much, except as a numerar. I would argue that maybe that gets taken care of by evolving baskets of tokens. But money is really a convenience right now. In a world in which we're tokenizing everything and in which we have intelligent agents determining which token you want to get rid of when you're paying for something first and which tokens you want to receive when you're receiving in a certain order. And exchange services that can help you make that trade if you're not able to accomplish that directly. And just

• 17:23Speaker 02

  Listings of tokens where you've got these open markets that are valuing the tokens, whether they're automated market makers or order books inside of the spread of automated market makers. I would argue that the role of money, the abstract role of money is going to go away and everything's going to be money.

• 17:44David Hoffman?

  Joe, I want to get your perspective on how this story of ETH has evolved so far, because, you know, we talk about ETH as money, we talk about ETH as like a triple point asset as gas or, you know, store of value for DeFi. But I want to get your opinion as to what was the consensus around Ether the asset back in 2015? And how, knowing what we know now, the six-year-old history of Ether and Ethereum, how has the path followed suit or not followed suit from the mental models that you had back in the early days of Ethereum? Like, what is surprising to you and what is something that you just expected?

• 18:28Speaker 02

  So there were things that we were thinking that we weren't saying. And we were initially not very disciplined in the first two or three months, and then we got very disciplined about what we would say publicly after discussions with lawyers. And so we crafted legal arguments to the effect that we would be selling a token that would not be considered by the SEC a sale of an unregistered security to any Americans. And so the characterization of Ether as a crypto fuel was genuine, is still genuine. It pays for storage and execution of computational

• 19:10Speaker 02

  steps on Ethereum. And we also really wanted to focus on the developer ethos where it was all about building and then bidding and not so much about

• 19:28Speaker 02

  Early speculation. So the speculation came in a few years later, mostly in 2017. And that's great. I mean, we need speculators in our ecosystem. We need people, actors with all sorts of interests in our ecosystem. But the fact that we established the developer ethos early was really important. And as I said earlier, we did anticipate many of the things that were happening. We anticipated sharding in the first three days. I remember having a discussion about that. We had a burn model that we were working on with respect to Ether very early, which

• 20:12Speaker 02

  presages 1559. So we know the execution has been remarkable. And it's incredibly difficult to stand up a technology top down. It has evolved beautifully by the agency of so many different actors with different expertise. So it seems to be going pretty well. We've got a long way to go.

• 20:40Ryan Sean Adams?

  So Joe, for those not familiar with, you know, what futures listing regulator approved futures listing means in the US, we have a lot of retail listeners out there and they're probably not as familiar with kind of the traditional financial banking landscape. But what does this mean for the financialization of Ether as an asset or even the institutions and their outlook on Ether as an asset?

• 21:12Speaker 02

  Yeah, so there has been astonishing movement in the Bitcoin ecosystem, driven early on by people like my friend Mike Novogratz, more recently by Paul Tudor Jones, Stanley Drucke Miller, and a handful of others who've jumped in. And recently, Michael Saylor, who I think wins MVP already for 21, maybe for 20 as well, late 20. So MicroStrategy has taken a very structured, organized approach to pivoting almost their business model to turn their balance sheet into a Bitcoin museum where they're

• 21:57Speaker 02

  Trading assets for Bitcoin and borrowing money and buying Bitcoin and so far I think that's gone very well for them. Bitcoin's a volatile asset, so and I know they're very smart, so I expect they won't get into trouble, but they're packaging up the tremendous diligence that they did and the structured strategic steps that they've followed. And I think they mentioned it may be a thousand or 1,400 CEOs and CFOs were on their livestream and I'm sure many more will be watching the recorded versions.

• 22:38Speaker 02

  And so Novogratz has been saying the herd is coming for several years and by that he meant that the Ethereum and Bitcoin phenomenon was largely retail driven. And by the herd, he meant that institutionals were getting more and more interested. And the herd is now taking university economics courses delivered by Michael Saylor and crew in how to exist and thrive in the early days of the decentralized protocol system and in the early days of DeFi.

• 23:19Speaker 02

  So with respect to futures, options, regulators in the United States, these organizations need to be prudent as they divest themselves of certain assets and invest in certain assets. There is likely a transformation going on, an evolution going on between legacy or state issued assets and newer decentralized protocol assets in different forms. And they need the, as you said, financial infrastructure, they need instruments.

• 23:58Speaker 02

  So that they can respond in real time if they want to put on a hedge or if they want to take advantage of an opportunity. Or, you know, if they want to wire up a lending-driven financial flow in real time in DeFi on Ethereum. So that's coming real soon. Real organizations are getting serious about that. And bottom line, they're not ready to hedge in DeFi on Ethereum. But absolutely, they, you know, they already have the accounts open. They have for years or decades. And this moves cryptocurrencies into their wheelhouse.

• 24:38Speaker 02

  And they know that the world is evolving much more rapidly than we all expected it to for certain reasons. And the smart ones, the aware ones are going to survive and thrive. And if your head is buried and you, for whatever reason, aren't paying attention to or refusing to understand and acknowledge what's going on in our ecosystem, then you're going to have a wicked game of catch-up or find another job or career or something like that.

• 25:20David Hoffman?

  Speaking of a wicked game of catch-up, one thing that really interests me about this ETH futures release is that it took Ether only five years to get futures, yet it took Bitcoin nine. And like naturally Bitcoin came first, it has a harder fight to fight. But Ether, Ether got futures faster than Bitcoin did. What is your takeaway from that?

• 25:44Speaker 02

  So I would say thank you to Bitcoin for being there first and paving the way significantly.

• 25:49David Hoffman?

  Big brother Bitcoin.

• 25:51Speaker 02

  And so, you know, the CME, CBO, others, ArisX especially, have done a tremendous amount of work to try to get the regulators comfortable with this. It was weeks away, a few years away. And regulators have put up hurdles or just slowed processes. So.

• 26:18Speaker 02

  Built on the shoulders of giants and giants in our ecosystem. And I think what you're saying has merit that I forget the exact wording of Mr. Tarbert, but he just said something like Ethereum is awesome, period, stop, something like that. And that's just a reflection of the understanding of people, financial professionals, who, when they take the time to understand the technology, are just astonished at all the problems that it will solve and all the opportunities that it will create and the

• 26:58Speaker 02

  frictions that it will eradicate and the financial flows that will get immediate. And the agency that small organizations and individuals will have over their economic freedom, their economic activity and their political activity.

• 27:19Ryan Sean Adams?

  You know, Joe, on Bankless, we've called Bitcoin kind of the gateway drug to crypto, the gateway drug to DeFi. And I wonder if you sort of see that playing out. So you captured this moment in time where we've got Michael Saylor putting Bitcoin on the MicroStrategy balance sheet. We've just come off news this week where it turns out Tesla stacked 1.5 billion worth of Bitcoin in January. And I was kind of struck by their SEC filings where it sort of disclosed that information, that they said they would pursue a strategy to continue acquiring digital assets. They didn't just say Bitcoin, they said digital assets. So, you know, I'm curious, do you think that Ether is just going to follow in

• 28:01Ryan Sean Adams?

  that same path now that we've got regulator approvals, like, you know, CME futures? Is Ether going to be the next thing that a publicly traded company like a MicroStrategy buys? Maybe they start staking it. Maybe a Tesla buys Ether as part of its digital strategy portfolio. What's your take here?

• 28:20Speaker 02

  Yeah, so I was a Bitcoiner. Then I encountered Ethereum and was blown away by how much more expressive and capable it would be. And we realized a lot of that vision. I like to think of both the Bitcoin token and the Ethereum token as high-powered money. You may have called it permissionless bandwidth. And those tokens are beautiful as they are. Ethereum adds onto both of those high-powered money foundations an astonishing layered complexity.

• 29:05Speaker 02

  Or, you know, we will build an astonishing layered complexity out of Magic Internet money protocol Legos. And that's where the excitement lies. So in staking, in massively decentralizing these networks, I expect that we will see many organizations contract to with a cloud or run their own infrastructure. Consensus offers mining infrastructure, or sorry, we do a little bit of mining, but staking infrastructure, which is, I think, what you're interested in discussing.

• 29:48Speaker 02

  And these foundational protocols, or at least Ethereum, serve as platform for other kinds of platforms. And these other kinds of platforms are what I've sometimes called collaboration networks. And so we, as individuals and organizations, will be participating in a wide variety of collaboration networks that are built on platforms like Ethereum. And they will involve investing, they will involve holding tokens, they will involve voting the governance rights on your tokens, they will involve active treasury management,

• 30:33Speaker 02

  they will involve setting goals for your collaboration network and raising money for your collaboration network and executing the work. So all of those different functions that...

• 30:46Speaker 02

  Essentially sit in different companies right now are getting much more tightly integrated. I'm not sure how that's going to play out, other than by having much more granular groups of people responsible for that and the the boundaries between what we call companies sort of dissolving where I and you two will be part of lots of these collaboration networks for work or leisure or research. And so I fully expect that any organization that wants to operate optimally and protect

• 31:27Speaker 02

  its interests will need to pay attention to many aspects of the emerging decentralized tokenized economy. And so, yeah, treasury management doesn't necessarily mean just financial aspects anymore or what's true.

• 31:47David Hoffman?

  There's something interesting about Ether CME futures that is uniquely different than than Bitcoin futures, because Ether, the asset, and Ethereum, the platform, have a roadmap, right? There are obstacles and objectives that we are going to get over as a community. Like we mentioned, EIP1559, that has become a core component of Ether, the asset, yet it is not yet included. And then we also have just the the further democratization of staking and then ETH staking derivative tokens. So there's plenty of upgrades to have to put into Ether, the asset. Ether, the asset, is set to have software updates. But that's weird, because the Chicago Mercantile Exchange is a place to trade commodities,

• 32:30David Hoffman?

  and nowhere has there ever been a commodity on the CME that has gotten a software update, right? Wheat doesn't get a software update. Bitcoin does not get software updates. So how do you think about this comparison, where like the CME is trading this this asset that has like this roadmap? And how do you see the Ether roadmap, specifically perhaps with EIP1559 and then Ether staking derivatives? How do you see that impacting the long term just institutional models of understanding Ether, the asset?

• 33:00Speaker 02

  So the first easy out answer to your question is that, yes, Ether is the token and the commodity. And just like the grain industry, or the oil industry, or the metals industry, there are lots of companies that organize their own strategies and roadmaps around sourcing,

• 33:23Speaker 02

  refining, packaging, and delivering, and utilizing those commodities. So I can easily map our ecosystem onto those ecosystems.

• 33:36Speaker 02

  But the more profound, perhaps, answer to your question is that things are shifting. I mean, the old world has certain models, and as I discussed before, where these tokens aren't just money, they represent a lot of different things. And it's certainly a new kind of commodity. It is unprecedented, and we're coming up.

• 34:06Speaker 02

  It's a paradigm shift. It's stated more intensely. It's a clash of civilizations, and hopefully it'll be a gentle evolutionary clash. But it's going to involve us bringing forth

• 34:23Speaker 02

  great, exciting technology and showing the benefits of that technology by demonstration, as Uber has done and Airbnb has done. And then it's going to involve a discussion in various jurisdictions around the world about how they would like this technology to fit in and serve their particular civilization, their particular society, economy, ethos. It will serve Sweden differently from how it will serve mainland China, probably. And it's a powerful technology, so I think it's going to transform everything over time.

• 35:03Speaker 02

  And even regulation in the United States, it's going to involve a lot of learning from regulators, and some of them have done a great job already. And it's going to involve a change in some of the rules, just because lots of rules around...

• 35:26Speaker 02

  Financial regulation and compliance were designed to protect consumers from custodians. So if consumers are only using self custody wallets and systems, then that some of that shouldn't apply or some of that should fall away.

• 35:46Ryan Sean Adams?

  Joe, when we come back, I want to talk to you more about this idea of the clashing of civilizations. But before we do, we want to tell you a bit about the sponsors that made this episode possible.

• 35:59David Hoffman?

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• 36:42David Hoffman?

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• 37:18David Hoffman?

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• 38:03David Hoffman?

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• 38:27Ryan Sean Adams?

  All right, guys, we are back with Joe Lubin. Joe, I want to talk about this comment that you made just prior to our break, where you talked about this clash of civilizations, right? And I want to unpack kind of what you mean there, right? Because there are maybe many elements of these civilizations that are clashing. So the bankless dichotomy would be there's a bit of traditional finance versus this new decentralized finance. We've also talked about kind of the nation-state way of organizing things versus the protocol-network-state way of organizing things. But what do you think about when you talk about this clash of civilization? What are the civilizations that are clashing here?

• 39:09Speaker 02

  So what I was thinking about was something that is an older notion and it's still relevant, but early on, several years ago, before the project or in the early days of the project.

• 39:30Speaker 02

  It was at least clear to us that we would need to be careful how we organized, how we launched, how we publicized, how we executed the project. There was a concerted effort to avoid the United States of America. I sort of jumped back pretty quickly because I did want to operate there. But there was a history of the United States of America not liking projects that created their own money. And so we thought it might be a bad idea to piss the United States off.

• 40:10Speaker 02

  Early on, we'd landed at JFK and get tackled to the tarmac by the FBI and made an example of. And so we did consciously avoid that for the first year while still engaging with American lawyers. And we set up in Switzerland because they cherish freedom and decentralization. And they think of government as a service pretty much rather than a right and they negotiate with you. So I had a great experience there. And things went remarkably well, remarkably quickly. We haven't made any horrible mistakes.

• 40:54Speaker 02

  But we were aware that well resourced vested interests would take notice of us at some point. We've been delighted at how many people in government and and industries really embrace these ideas and think they're valuable and are adopting them and supporting them. But still, we have been thinking that at some point we might run up against.

• 41:28Speaker 02

  Organizations that have vested interests that don't want to play, that don't appreciate our existence and the transformation that we might represent. And so we'll see that, I think, although this change wave is awfully powerful. I I believe that Ethereum as a technology, because it's so much more expressive, has staying power. I didn't feel that Bitcoin had the same staying power, just because you don't really build much on it. It's just, but everything's a belief system and Bitcoin is much more of a belief system than Ethereum is because you can just build a lot of functionality on Ethereum.

• 42:13Speaker 02

  Until the recent activities where this belief system is being really strongly religiously adopted by major corporations in the United States.

• 42:26Speaker 02

  I wasn't certain about Bitcoin, I'm pretty certain now. And we just need a lot of that so that Bitcoin, Ether and other tokens, other protocols are so embedded in the more fast-moving organizations like companies. You know, similar to how Uber and Airbnb established themselves and succeeded and then dealt with the regulators after. I think we're on a good trajectory and so hopefully the clash of civilizations will be as gentle as it has been for Uber and Airbnb.

• 43:03Ryan Sean Adams?

  Yeah, absolutely. So this kind of leads into you a little bit of, you know, what you're doing with consensus, which I think is fascinating and fits into this, right? So it may be that, as we call kind of governments, the final boss, the final boss, the US government has not raised its head on Ethereum because there are so many potential wins.

• 43:22Speaker 02

  Sure, sure.

• 43:22Ryan Sean Adams?

  For, well, they have in some ways, but, but there are also like lots of wins.

• 43:27Speaker 02

  They've been pretty positive, yeah.

• 43:29Ryan Sean Adams?

  Yeah, and exactly. So like when the US sees, maybe it's geopolitical adversary like China, create its

• 43:37Ryan Sean Adams?

  Own a closed, private blockchain type solution. Well, it is adversarial but adversarially beneficial for the world to have a more open, transparent Linux-type Ethereum-type open ledger. So, can you talk about what consensus is doing, maybe with respect to stablecoins? And how governments around the world, particularly like free, open, democratic governments, think about Ethereum and the wins that they can get from an open ledger like Ethereum?

• 44:11Speaker 02

  Yeah, so we've done a fair amount of work to bring the Ethereum technology into the central bank digital currency context. We work with two central banks over time in the past and we're working with four currently. And I think we're about to add three more. And there are different use cases that we're exploring and it's early days for most of them. Certainly China and a couple of other nations are earliest in rolling out pilot systems.

• 44:46Speaker 02

  Others are really quite in the early stages. So the use cases are things like cross-border payments or retail payments, so just payments by consumers.

• 45:00Speaker 02

  And the Ethereum technology is getting real interest, which is exciting. One argument that we've been trying to make in certain contexts, and we made it in the context of the United States, is that, yeah, it's nice to roll out your central bank digital currency on the next generation of technology. That just makes sense. But if you really think about it, this is likely or can be the foundation of your economy. And we're in a moment where we're transitioning everything we do from analog and frictional forms to natively digital frictionless forms,

• 45:42Speaker 02

  whether it's identity, reputation, or money, or other kinds of digital assets.

• 45:49Speaker 02

  And when you do that, clearing and settlement happens in the instance of the transaction. And you squeeze all the delays out of your system. And if you're squeezing all the delays out of these different financial transactions, you're essentially compounding the creation of value much more closely over time. And so you're likely to grow value in your ecosystem much faster. So why would you want to build a money only blockchain platform or near blockchain platform for your CBDC central bank digital currency, when you can build something with smart contracts? And it can serve as your nation state blockchain, which interoperates with

• 46:35Speaker 02

  public mainnet blockchains. We do need public mainnet blockchains. I think nation states can and will and should have their own nation state infrastructure. So think of it as a a subnet and different regions within the nation state can and probably should do that sort of thing.

• 46:56Speaker 02

  But we're going to need a global settlement layer for digital assets that that everybody can trust, especially as

• 47:10Speaker 02

  nation states have issues with one another, as I think we're going to increasingly see over the next decade or so. So even if these nation states do have issues, they should be able to enter into agreements. They should be able to stake value in these agreements. And there should be impartial judges that can potentially judge when something bad happens and slash stakes. So there should be treaties can be executed on blockchains. And most of the time when these nation states make agreements with one another.

• 47:46Speaker 02

  There isn't much enforcement power unless you decide to do something really destructive.

• 47:54Ryan Sean Adams?

  Yeah, could not agree more with that. Like, so Dave and I have talked about so much on Bankless, how Ethereum kind of provides this credibly neutral substrate for the world. And it can solve human, global, international coordination problems that we couldn't previously solve. Joe, I feel like we could get you on an entire episode to talk about all of the other things that Consensus is doing. You know, because there's so much from MetaMask to Infura to all of these other things. But if you could just-

• 48:21Speaker 02

  I'll see you next week.

• 48:22Ryan Sean Adams?

  Yeah. And that should be like a three hour long episode. But if you could just pick one thing right now, just one maybe project, something interesting that you know is brewing at Consensus that Bankless listeners would be interested in. What would you, what would you talk about today?

• 48:39Speaker 02

  It's a hard one. Let me, let me just go with our approach. So we've built a blockchain stack, the most dominant or utilized blockchain stack in the Ethereum ecosystem and the blockchain ecosystem. That consists of Quorum for enterprise with the built essentially on two different Ethereum clients, Geth and Hyperledger Basu. Above that, we have Infura and Truffle and Diligence, which is our security audit group that also produces software. So that's an infrastructure layer that services developers.

• 49:19Speaker 02

  And MetaMask sits on top of that with the, I think we're at 1.8 million monthly active users now in MetaMask. So that's consumer facing, and it's also B2B to C as we launch the Snap plugin architecture. We have a group that is building applications. We call that group Commerce and Decentralized Finance Group. And they are able to launch applications for consumers and make them available, make the APIs available to developers through Infura and Truffle. And also for some of them, make those financial instruments or financial flows

• 50:00Speaker 02

  or other services available to enterprise as enterprise gets more and more excited about lining their treasuries with Ether. And so- The first really exciting application of all of that is launching something called MetaSwaps. And so we will be MetaSwaps is

• 50:20Speaker 02

  off the charts in terms of its success in in bringing

• 50:25Speaker 02

  uniform interface to swapping tokens and and great pricing. So you're getting everything that you need in MetaMask rather than going to different aggregators or DEXs. We also have private market makers involved. And we're going to be doing that for a whole bunch of products and services for for those three cohorts, consumers, developers and enterprise. Long-winded, but MetaSwaps is exciting and much more to come.

• 50:57David Hoffman?

  Joe, I think everyone in the bankless nation and the broader Ethereum community at large has to thank for, thank you for everything you've done at Consensus. Building out what makes the bankless nation tick, like some of this infrastructure. We wouldn't be able to have this podcast without some of the infrastructure that came out of Consensus. As a, as a longstanding veteran of this crypto industry and of and have seen many, many bull markets. I want to ask this final question before we sign off here. On what I'm trying to get my head around is like, how big this bull market is about to be, right? And like, I'm, I'm trying to like, keep myself calm and like, not get out over my skis and not just like, get too bullish just because other people are getting bullish. But the world's richest man just bought 1.5 billion dollars worth of Bitcoin.

• 51:42David Hoffman?

  So like, on the Richter scale of bull markets, like, can you, can you like, what are you feeling? Like, how, how are you measuring this thing?

• 51:52Speaker 02

  Um, yeah, so one should always be careful and markets have a, a characteristic ebb and flow normally.

• 52:03Speaker 02

  I don't think of this as a bull market. I think of it as a, a global paradigm shift.

• 52:10Speaker 02

  And it's gonna be.

• 52:13Speaker 02

  A new way of organizing all of the systems on the planet on new sounder trust foundations. And we're building financial infrastructure on that new sound trust foundation. Everything else can be re-architected much better on top of that.

• 52:32Speaker 02

  You don't see assets power in such straight lines for quite long times unless something is going on. So I think we were already in the middle of a paradigm shift and that paradigm shift is now surfing. The perfect wave, which is caused by the perfect storm of COVID and financial bubbles of all kinds. I mean, we're at the end of 70 plus year debt super cycle. That's how the system was organized and

• 53:06Speaker 02

  people have recognized that and are fed up about that and it's broken, so broken anyway, that a new paradigm has to occur. So

• 53:19Speaker 02

  I won't say that I'm bullish, but something's going on.

• 53:25Ryan Sean Adams?

  Joe, I think that smile says everything we need and it has been fantastic having you on the Bankless Podcast. We really appreciate it. All the work that you've done in this space and you've definitely foreseen many of these things before they happened. Congratulations to everyone in the Ethereum community on CME ETH futures. This is a massive milestone and Joe, thanks for coming on and sharing it with us.

• 53:50Speaker 02

  Yeah. So thanks to you guys too. You guys are such a smart, entertaining breath of fresh air and such wonderful energy. I'm very grateful for the work that you guys do and I know that the ecosystem loves you.

• 54:04Ryan Sean Adams?

  Well, we appreciate it, Joe. We gotta get you in a bankless. Yeah, it is fun. We just do this to learn and there's no place I would rather be and I think David feels the same. We both feel like we work for the community, for the protocol, as I know you do. Well, fantastic, guys. Thanks, Joe, once again. Risks and disclaimers, of course. We talked a little bit about the bull market there, but you have to keep in mind, eat is risky.

• 54:28Speaker 02

  None of that was financial advice.

• 54:29Ryan Sean Adams?

  None of this is financial advice, as always. Never, ever, right, David? Crypto is risky, so is DeFi. You could lose what you put in, but we are head west. This is absolutely the frontier and we're glad you're with us on the bankless journey. Thanks a lot.