Ethereum and The Trillion Dollar Internet Bond | Chris Perkins

Chris Perkins has a fascinating background as a marine who was shot at in Iraq, was at Lehman bros when it all came crashing down, was a Citigroup trying to pick up the piece of the financial crisis where he first ran across Gary Gensler, and now he’s in crypto. We talk about all that, but that’s not even the main event. The Main Event is Ether the asset and a new reference rate he’s building on top of it. This sounds in the weeds but it’s actually actually key to unlocking trillions in new financial products. You might call this new rate the Libor for ETH. ------ 🏹 USE PODCAST24 FOR 10% OFF https://bankless.cc/Citizen2024 ------ 🎧 Listen On Your Favorite Podcast Player: https://bankless.cc/Podcast ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum https://%E2%81%A0https//bankless.cc/Arbitrum 🦄 UNISWAP | Swap Smarter https://bankless.cc/uniswap ------ TIMESTAMPS 00:00:00 Start 00:11:33 Intro to Chris 00:13:17 From Banks To Crypto 00:16:27 Hostility Towards Crypto 00:19:16 National Security 00:25:23 Takes on Regulation 00:31:12 TradFi Response To Crypto 00:33:58 ETH ETF 00:37:24 Libor for ETH? 00:42:43 Libor Recap 00:45:35 How Was Libor Corrupted? 00:53:21 ETH Reference Rate 01:04:13 Risk Free Rate 01:10:08 Real vs Nominal Returns 01:21:51 DeFi Applications 01:26:01 Market Size 01:33:17 Going Forward ------ RESOURCES CESR home page: https://www.coindesk.com/indices/ether/cesr CESR methodology document: https://coinfund.io/cesr/ CESR Tearsheet: https://downloads.coindesk.com/cd3/CDI/CESR+Fact+Sheet.pdf More Reading: https://www.coindesk.com/consensus-magazine/2023/09/26/how-staking-rates-can-drive-the-crypto-economy-forward/ https://www.coindesk.com/business/2023/09/27/five-reasons-why-the-world-needs-a-standardized-ethereum-staking-rate/ https://www.risk.net/derivatives/7957405/new-hope-for-crypto-derivatives-as-markets-urged-to-hail-cesr ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠ https://www.bankless.com/disclosures%E2%81%A0

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

• 0:00Speaker 00

  I think the TradFi mind really understands Ethereum. Because Bitcoin, it's like, okay, what makes Bitcoin special? All right, there's 21 million coins that there can't be any more than that. So like, it's limited supply, totally, okay, I get it, store of value. Then they go to Ethereum and they're like, wait a second. You're telling me that there's yield on this thing? And I can have smart contracts? That's pretty cool. And so I do think that ETH as an asset class is going to be super appealing. As people take the time to really understand it a little bit. It's a matter of when, not if.

• 0:33Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams, and I'm here to help you become more bankless. Yep, just me today, solo episode. David's at a conference. The guest today is Chris Perkins. And my, my, this is definitely frontier of finance material. So Chris has a fascinating background, as I've come to learn. He was a Marine. He was shot at in Iraq. He was at Lehman Brothers when all of that came crashing down in 2008. Then he was at Citigroup, trying to pick up the pieces of the financial crisis. That's when he first ran across Gary Gensler. Now he's in crypto.

• 1:13Ryan Sean Adams?

  All of this, as you might imagine, gives Chris Perkins a very unique perspective on crypto, on national defense, on traditional finance. So we talk about all of that in the episode, but that's not even the main event. The main event is Ether, the asset, and a new reference rate, an interest benchmark, if you will. He's building on top of it. So this probably sounds in the weeds to a lot of people, but it's actually key to unlocking trillions in new financial products and capital. You might call this the LIBOR for ETH. Truth be told, I didn't fully understand what LIBOR was, or why it was so useful in traditional finance, but we get that education today.

• 1:57Ryan Sean Adams?

  And I want to give you some context on why this is important in the scope of Bankless and crypto and crypto investing. So on Bankless, we've described Ether, the asset, as the Internet bond. That's a narrative that we've used, a way of understanding it, an analogy, since probably 2020, before proof of stake on Ethereum even existed, before Ether even had yield. We called it the internet bond because it's simply the best way of describing Ether, the asset and its future. Ether is money. Staked Ether is the internet bond. So what do we mean by this? Ether is like the bond of a sovereign country. It's kind of like a T-bill.

• 2:40Ryan Sean Adams?

  That's a comparison we've made in the past. When you stake dollars into a government bond, like a treasury, like a T-bill, you get yield that's denominated in the dollar. And when you stake Ether into a validator, you start staking your ETH, you get yield denominated, not in dollars, but in Ether. And where does this yield come from? Well, you know, you've listened to previous Bankless episodes. It comes from revenue produced by the Ethereum protocol itself. In the world of nation states with sovereign bonds, you might call these revenues taxes because the revenue is proportional to the overall size of the economy. And that's true for Ethereum as well. The revenue produced by the Ethereum protocol

• 3:21Ryan Sean Adams?

  and given out as a yield to stakers, to validators, is proportional to the overall size of the Ethereum economy. You have more goods, you have more services, more block-based demand on Ethereum, you get more transaction fees, you get more revenue, you get higher yield for those staking. So what is the next step to establishing Ethereum as an internet bond, to making this narrative, to making this meme even more true than it is today? Well, according to our guest today, what we have to do is standardize on a global reference rate for ETH daily yield. So traditional finance has done this in the past, using things like LIBOR, which we'll discuss in the episode. So we need to create a LIBOR for Ethereum.

• 4:03Ryan Sean Adams?

  A reference rate on the yield on a daily basis that can be used both on-chain and off-chain has to be open, has to be public accessible, it can't be corrupted in the way that traditional finance reference rates were, like LIBOR. And why is this all important? What's the summary here? Well, in TradFi, interest benchmarks like this, like formerly LIBOR and other reference rates, underpin hundreds of trillions of capital. Chris mentioned in the episode, $500 trillion in derivatives markets, all underpinned by these types of reference rates. They also set the risk-free rate. They determine the cost of capital. So this is a metric for investors everywhere. And they are also part of the reason the dollar is

• 4:48Ryan Sean Adams?

  the global reserve currency. They're the reason Jerome Powell is the high priest of global finance and the world stops, all of TradFi stops to listen to what he has to say. So here's how this connects. For Ethereum to become an internet bond worth trillions of dollars, it will need a reference rate, something similar to the reference rate Caesar that Chris talks about today. This is how Ether, the asset, scales and becomes central to the functioning of the global economy, which, of course, you know, we believe is its destiny. So hang on, fascinating episode ahead. Essential learning for the bankless journey. Let's get right to our episode with Chris Perkins. But before we do, we want to thank the sponsors that made this possible, including our number one

• 5:31Ryan Sean Adams?

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• 5:37David Hoffman?

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• 7:52David Hoffman?

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• 8:16Ryan Sean Adams?

  Bankless Nation, I'm extremely excited to bring on our guest, Chris Perkins. He's the president of Coinfun, which was one of the world's first crypto funds. We've actually had Jake from Coinfun on the podcast previously. It's a VC fund. They do liquid crypto assets as well, and Chris himself has led quite the interesting life, I would say. Three professional careers. First, he was a Marine Corps officer, served in Iraq in 2004 in a unit that actually experienced some of the heaviest casualties of the war. And then he made a switch over to TradFi, spent some time there, and now he is in crypto and has been for the past three years or so, I believe. Chris, welcome to Bankless.

• 8:57Speaker 00

  Hey, thanks, Ryan. And I guess to sum it up, I guess I'm used to getting shot at.

• 9:00Ryan Sean Adams?

  Oh, my God. Wow. So is that a continuation in crypto? Are we metaphorically getting shot at? I mean, not to diminish it, I'm sure in Iraq, it's quite a bit different than what we're dealing with in crypto. But yeah, well, you know, maybe let's start there, Chris. Take us through the web of your life. How are these three things related? So in the Marines, in Iraq, actually getting shot at, and then you switched to TradFi, doing that for a while, and now you're in crypto. What's kind of the unifying theme of your career so far and your life experience?

• 9:37Speaker 00

  Yeah, I guess I always wanted to be on the cutting edge. Went to the Naval Academy, studied national security of all things at Georgetown after that. And then I went into this adventure called the Marine Corps. I volunteered in Iraq. My family was impacted by 9/11. I'm from the New York City area. Couldn't get out and volunteered to go really to the front lines. Ended up in part of the Battle of Fallujah and then also really the Battle of Ramadi for nine months in 2004 to 2005. Saw a ton of combat there. And then, long story short, I was going to go in a bunch of different directions. I came back home, knew a Marine who was at Lehman Brothers and went down there and they actually hired me on the spot.

• 10:18Ryan Sean Adams?

  When you say Lehman Brothers, what day are we talking? Because that's like very important. I guess it was before the collapse, right? There's only the before and after. But when did you join?

• 10:28Speaker 00

  So I joined in 2006 and literally started building out a derivatives business. And then TLDR got blown up in Iraq. And then I went to Lehman Brothers and I learned what it was like to get blown up there. I was on the ground floor of Lehman when we went bankrupt, right? I had a derivatives book, awful, awful experience. But man, when you hit those types of experiences, it's also where you learn the most. And I'd been in finance for two years, but coming out of that, incredible learning that happened. And you learned that like when you hit the biggest crises, like that's when you build the biggest relationships. I could tell you all different types of stories, but phone rang. And it was Citigroup and they said, hey, do you want a job? And I said, well, what kind of package do you have arrogantly?

• 11:12Speaker 00

  And they said, it's called a great package. It's called the job. So I, I literally had to get on the train on the next day and I had to go to Citigroup, where I started cleaning up my own mess. And then, okay, so I'm at Citigroup and then I got involved in the derivatives industry and we had to take the $700 trillion derivatives industry from unregulated to regulated. I was, I, I led that initiative and guess who my regulator was? It was Chairman Gary Gensler. Chairman Gary Gensler.

• 11:42Ryan Sean Adams?

  Oh, we know him.

• 11:43Speaker 00

  Right? So, um, you know, under, you know, it was, it was different back then. He was totally empowered by Dodd-Frank, um, and, and built the largest regulated derivatives business in the world, uh, took over a few other businesses. By the time I left Citigroup, um, I ran our foreign exchange prime brokerage business and then I took over our futures business. Um, so I had about 725 direct and indirect reports. I found myself running, Ryan, the largest derivatives intermediary in the world. But by nights and weekends, and I'd gotten into, you met, you know, you had Sandy on, like, we'd gotten into crypto years prior. And I'm like, what am I doing, man? I'm running the largest intermediary in the world, but I can go home, I'm, I'm scared to death because my yen's not settling for days.

• 12:27Speaker 00

  I go home and I'm messing around with the Abbe and compound and I'm seeing technology. In fact, like, I'm like, why am I, I even need it at this point? So rather than, um, I, I decided to go all in and yeah, this is my third year at Coin Fund, um, having a great time and, um, it's, it's been quite an experience.

• 12:45Ryan Sean Adams?

  I, I, uh, it's such an interesting background. I don't, I, I want to camp on that for a while. I, I know we're going to talk about something, um, a little bit more financially geeky, uh, something that, uh, I'm calling at least, and you got to educate me in this, the library for ETH. Uh, so we'll, we'll, we'll talk about that in the context of a reference rate and why it's important, what you're building over at Coin Fund. But, um, I, you know, I've got to ask a bit more about your background because it is just, um, I don't know, you've, you've led a very interesting life, my friend. Uh, I guess maybe, maybe starting from the last part. So. Give us some more detail on how you went from derivatives and traditional finance in one of the biggest banks in the world to crypto. Like, how did that happen?

• 13:29Ryan Sean Adams?

  Because not many people cross that chasm, right? There's a lot of people in TradFi who, even still today, and certainly at the time when you joined, think crypto is smoke and mirrors, a scam, overrated, or something technical doesn't really impact them. But you somehow found a reason to move over. Why?

• 13:48Speaker 00

  I mean, it was pretty obvious to me years prior. You know, we all learned about Bitcoin. I couldn't tell you what year it was, 2014 or something like that. And read a book, and I'm like, wow, these smart contracts are really interesting. And the utility of settlement was so obvious to me, right? When you're sitting and running a big derivatives clearing business, it's all about settlements and the latency. You just accumulate so much risk when things don't settle appropriately. And so in the beginning, you know, started to think, wow, this blockchain thing can really solve a lot of our problems. But, and I kept trying and trying to implement it and get it off the ground. And there was incredible resistance to really embrace superior technology that could have

• 14:33Speaker 00

  actually lowered risk. And then, you know, as I started getting into understanding, really, I dove deep into the Ethereum ecosystem and really understand the financial applications of Ethereum and how it could change the world and lead to much more accessible. So I bought into the ideals, right? And the last thing I did at Citigroup was I was actually able to get Bitcoin and Ethereum futures approved on the CME. This was a brutal, brutal feat. You know, you can imagine, I think there were like 65 people that tried to say no. And like, I'm a Marine, right? So I just had to battle, battle, battle. And explain to them how, you know, we could risk manage the product, why it was useful.

• 15:16Speaker 00

  And look, I've spent a lot of time, even in my current job, I'm on the CFTC's Global Markets Advisory Committee. I testified in front of Congress on derivatives market structure. We have a lot of work to do. And, you know, here's the TLDR. It's that our entire regulatory apparatus is predicated on intermediaries. Now we have tech, and the reason for that is because we didn't have technology prior that could allow people to monitor and regulate it effectively. But now we do. And so it's very scary for, you know, for certain regulators and I feel for them, right? They should, when I went through what I went through with derivatives, like they were fully backed by Dodd-Frank.

• 15:56Speaker 00

  Their, their mission was clearly articulated. Now they're really not empowered by legislation. And so it's a very challenging position that they're in. But like what I'm trying to do is not shitpost on crypto Twitter, but rather engage, right? Like try to explain to them, look, I understand how it works. I, I built businesses in TradFi. We can use the technology to make the market safer, more efficient and more accessible. And so I'll keep trying and, you know, we're engaging wherever we can.

• 16:27Ryan Sean Adams?

  Look, thanks for doing that. Thanks, thanks for trying. Thanks for bridging the gap. We, we need a lot of that with respect to TradFi. And certainly Sandy from Franklin Templeton, who actually connected us, Chris, we had her on the podcast a few weeks ago. She's kind of fighting that, that same fight. I got to ask you though, because you've had experience with, you know, like Gary Gensler in the past and Dodd-Frank. And now you're kind of like talking to regulators right now. You said you feel for them and that there's kind of like they're, they're maybe scared of the future. That they're a little bit uncertain, that sort of thing. I think that's a great framing of it. And also, Chris, it assumes good faith.

• 17:06Ryan Sean Adams?

  And sometimes when we're in crypto, I know crypto Twitter can like dial it up a lot and turn extra toxic. But some of the actions coming out of some of our regulators, some of the time, and maybe particularly the, the SEC, a lot of the time. And Gary Gensler himself don't actually seem in good faith. It, it doesn't actually seem like it's coming from a position of, um, we're uncertain about the future. We're scared. There's no good, uh, like, uh, regulation legislation. It, it seems to. At least the tone and tenor of it has seemed like there is this kind of grasping for power, maybe, or control, and it's not like good faith engagement. Disabuse me of that, if you will, or maybe you think that's the case in some corners,

• 17:50Ryan Sean Adams?

  not in others. How should crypto natives think about our regulators and some of the, I guess, actions that are coming out of like, the US has really turned hostile, Chris, and we're not, we're not really sure why they're so hostile to crypto.

• 18:03Speaker 00

  Yeah, a couple of thoughts. I think what I try to do is stay maniacally focused on the truth, right? And the truth is, is that this is a technology that's very good for national security. It's a technology that's very good for our markets. It follows American ideals. And so you've just got to stay really, really focused on the truth. I would love to talk about some of the work we've been doing around the national security front as well. But the good news is, is that like, we're on the right side of history. You and I both know it, Ryan, right? And when you talk to, you know, the younger members of Congress, they get it. And, and like, my son is 16. He had a real difficult job opening about bank account, but you know what? Opening up a wall on a metamask, no problem. And so I think that the inevitability is that,

• 18:47Speaker 00

  you know, we're on the right side of history. We need to stay focused on engaging and focused on the truth, and really educating and engaging, because like, we know how this, how this is going to end. But yeah, it's unfortunate when things become political, because that's not good for anyone. So like, I continue to stay focused on the truth.

• 19:08Ryan Sean Adams?

  Do you think it's the right framing that there are many regulators who are operating in good faith and some that are not operating in good faith?

• 19:17Speaker 00

  I can't speak for their motives or their career desires. But there are some that are working in good faith. Like, you know, I work closely with Caroline Pham. She's asking for regulatory recommendations. And so one thing that we're doing right now on the CFTC Committee that I'm working on is trying to put forth recommendations on how, you know, working with like powerhouses like Rebecca Redding, you know, how do we put forth recommendations that they should follow? And a lot of it is like on us to educate and engage. As far as other folks, look, I can't speak to their political agendas or motivations, but all I can do is continue to speak for the truth.

• 19:55Speaker 00

  You know, maybe we can talk a little bit about national security because that also seems to be a huge issue right now. Is that all right?

• 20:01Ryan Sean Adams?

  Yeah, I would say, Chris, that, yeah, let's do that because the conversation has really shifted, I think. I mean, there's less talk of like Bitcoin being kind of like a Ponzi scheme, I would say, and a lot of the conversation has shifted to national security concerns, to financial surveillance types of concerns. I know there have been many, call it kind of Elizabeth Warren anti-crypto army kind of types that have said that crypto is actually a tool that is being used by terrorists, by being used by just like illicit finance enemies of the United States. And I know you've had some takes on that, and

• 20:43Ryan Sean Adams?

  I think you came into your professional career, it sounds like, from a national security perspective. So I would love to hear a bit about that. One note for the audience, and I learned this when we were first, like, meeting, Chris, is, Bankless listeners might remember a letter that Elizabeth Warren sent. I'm trying to look this up here. It was a letter that basically targeted some folks in the crypto industry, you know, crypto lobbyist type groups, Coin Center, Rebecca's group, others, and basically charged crypto with perpetuating kind of a revolving door, basically taking folks from DC and then plugging them

• 21:24Ryan Sean Adams?

  into the crypto industry and using that to kind of bend policy to their will. And I think this letter from Senator Warren was basically like, "Stop doing this," kind of implying that crypto was kind of corrupting the process of engagement with lawmakers and DC. I believe, Chris, were you actually named in that letter?

• 21:45Speaker 00

  I wasn't named, but I did sign the first letter, and I have visited Congress and talked to them about the imperative of national security. So, yeah, I've been involved in those circles.

• 21:56Ryan Sean Adams?

  Okay, so tell me about it. What's the context for a letter like that? And, yeah, what's your take on this concern about national security and crypto?

• 22:06Speaker 00

  Yeah, so like I said, Ryan, I was in Ramadi in 04 and 05. It was a super violent place. I was shot at. I was RPG'd. I was blown up by IEDs. You know, and there were some really bad dudes in that town. And they were terrorists. They were foreign terrorists.

• 22:24Speaker 00

  And all of that funding that they received to, to, you know, come after us, that was all before blockchain, right? And they, they made very good use of technology. They, they used the internet. They would make these video CDs. They used cell phones. And their, one of their web technologies of choice were garage door openers, right? So as we would drive down the streets, they would have these IEDs and they would trigger them with garage door openers. And so like, as you move forward now, you say, okay, this, these technologies are so dangerous. Like, I don't know why we haven't outlawed garage door openers, because, you know, they're so dangerous. And, and they were used to attack me for, for nine months in Iraq. And so like, that's the paradigm that I'm attacking this problem with, right?

• 23:08Speaker 00

  Anti-crypto army. What is crypto? It's technology. It's not good or bad. It's just technology, right? And in fact, if you, if you look at all the, the analytics that we have, it's an incre- you know, with crypto, you can generally find the transactions. And it, and it leads you to the bad guy, whereas, you know, fiat is pretty obvious. So had the opportunity to work closely with ex-CIA officers, military officers. We go down and say, look, this is how it works today. Fiat has failed us. Fiat.

• 23:38Speaker 00

  The sanctions regime that we have today is just not working. I mean, before I came into crypto, I just did a lot of research and I looked across the OFAC sanctions list. And the amount of violations that we've seen amongst the banks. You know, people don't know it. Even Berkshire Hathaway got in trouble for funding Iraq. Oh, sorry, Iran. Take, take a look at it. So the existing system's not working. However, this technology that we have, I believe, is an improvement. And, and I don't know why, you know, we're focusing on a technology. We should absolutely focus on the illicit actors, right? And, oh, here's the other trick. We don't need legislation for regulators to go after illicit actors. They're fully empowered. So when you hear regulators say it's full of hucksters or fraudsters, that's great.

• 24:22Speaker 00

  Please, please, from the bottom of my heart, go after them, right? You have the power to do that. Please do it. And you'll hear, as you know, any crypto native will tell you, we have no time for fraudsters in our space. They're stopping us, they're slowing us down. So that's my take, my friend.

• 24:37Ryan Sean Adams?

  Where do you think that energy is coming from? Sort of the anti crypto energy, just, just in general? Is it, is it, is it a place of just not understanding? A place of ignorance? Is it a place of fear? Or like, once again, is, is it sort of some malevolence towards crypto? Coming from like, I don't know, an undetermined source?

• 24:56Speaker 00

  Yeah, I think it comes back to a lack of control and understanding. And I think if we were to step back and look at first principles and values, you know, obviously the technology that we work in every day is actually very congruent with American values of accept of like providing additional access to markets. So, you know, I think time is on our side. I think we're going through elections here shortly. I think as, as time moves on, you know, you know, we're going to be in a very good spot. I'm, I'm very long-term bullish.

• 25:24Ryan Sean Adams?

  What's your take on what the regulation should be with respect to crypto then? So I'd like maybe just to steel man the arguments a little bit, like against crypto and in favor of the existing banking structure that at least the US and the West kind of has today. Right now, they have the power to freeze bank accounts, let's say. In a, in a crypto world, they lose that power. They can't freeze an individual's Ethereum address necessarily. Maybe they have that power versus stablecoin like USDC and Tether. But if it's denominated in Bitcoin, if it's denominated in Ether, they lose that ability. There are as well, privacy mixing types of.

• 26:08Ryan Sean Adams?

  Tools and many and the vast majority of usage of those privacy mixing tools are,

• 26:17Ryan Sean Adams?

  you know, basically people wanting just individuals wanting privacy so that, you know, somebody can't like connect all of their, all of their addresses together and drive their full financial history. And yet that can be used by actors that are, you know, like acting against the US. It can be used by terrorists. It can be used by North Korea and indeed has been in some small cases. So like, what do we do about this? Because if you, if you say that crypto is a permissionless censorship resistant technology, it's a money outside of the existing fiat system, right? That can sound scary for someone who is trying to like centrally control

• 26:57Ryan Sean Adams?

  the, the flows of money across the world in order to stop the bad guys. So, I mean, is there, is there some merit to the national security arguments that the, the critics of crypto, of crypto might, might be making here?

• 27:12Speaker 00

  The important thing to do is to have very clear guidelines and definitions, right? And, and so like, let's look at it a couple of ways. There's a difference between technology and individuals that use that technology or entities that use that technology. And so we need to have an activities based regulatory regime. And so a couple of the things that I'm trying to advance in my work is as follows. Clear guidelines, right? So today, what is a security and what is a commodity? It shouldn't be that hard. And what I'm trying to push through are working with regulators to come up with clear empirical measures about which goes into

• 27:52Speaker 00

  which bucket. Okay. If it goes into a security, wonderful. We have, we have a lot of regulations that, that, that apply. Perfect. If it goes into a commodity, guess what? The CFTC still has full authority to police for instances of fraud, manipulation and abuse. And we really, really owe it to our entrepreneurs that I deal with every single day to give them that clarity, right? The other thing that we need to have very clear guidelines are, is what is the separation between technology?

• 28:21Speaker 00

  And entities and activities, right? And so like, what does that mean? The internet today, right? It's nobody controls it. It's it's available for use. Bad guys use it. Good guys use it. I don't think we want to take it away at this point. I think it's here to stay. Right? But you know, regarding crypto, what are the what are the properties upon which, you know, a technology is not controlled? It is technology available to all? That doesn't mean that you shouldn't, you know, ruthlessly pursue any kind of illicit activity that uses that technology. Right? And so if a bad guy is using the internet today, well, go after the bad guy. You're not going after the internet. Right? And so working closely, you know, which is which is separate and distinct from an entity that builds technology for something nefarious. That's different. Right?

• 29:07Speaker 00

  So really working on with regulators to come up with clear guidelines around that. And frankly, lawmakers as well.

• 29:14Ryan Sean Adams?

  I'm wondering how this argument is is landing. It's it's been something that I I've been thinking about a little bit, you know, like it it felt like very much the the United States in the 90s was all about finding ways to export freedom, export a kind of like democratic principles to the world. And the the US government of the 1990s saw the internet as a way to do that. And now we're in 2024 and we see this kind of like rising, let's call it authoritarian axis. Right? That's just rising throughout the world and in other countries. And like from my vantage point, Chris, like crypto is instilled with values of of freedom,

• 29:56Ryan Sean Adams?

  values of of democracy, values that the the United States, our nation was founded on. And this is a confounding factor to authoritarian regimes. Any free society should be wholly embracing of this. Right? It's a problem if you're Russia. It's a problem maybe if you are CCP China and you're trying to maintain totalitarian control of of your capital and who uses your money system. Why would it be a problem for a democracy that is trying to advance freedom? And I I haven't heard a coherent response like on that point from from DC. They just kind of continuously point to, well, crypto is full of frauds and hucksters and look at Sam Bankman Fried. But do you think that argument can land over the long term?

• 30:40Speaker 00

  You know, I was at BlackRock's Digital Asset Symposium yesterday, and they had a human rights activist on stage, and that's the exact point he made. It was that these dictators, these regimes, they are scared to death of crypto. Why? Because it espouses all of those true American ideals that we believe in. So I couldn't, I couldn't agree with that more.

• 31:02Ryan Sean Adams?

  How about TradFi, Chris? So we're moving maybe from your Iraq, Iraq era in the Marine Corps to kind of like Lehman Brothers into Citigroup. So what's your sense of the relationship between crypto and TradFi now in 2024? So are we making progress? Is TradFi starting to really understand the potential here? It felt to me like the Bitcoin ETF was maybe a breakthrough moment, but like maybe, maybe, you know, like it's happened before that. Anyway, what's kind of the temperature and how well TradFi is responding to crypto at this point?

• 31:40Speaker 00

  Yeah, it's a great question. I think within every single TradFi shop, there's the resident D-Gen at this point who's trying to advocate to get things off the ground. I think the Bitcoin ETF is a really, really big deal, right? Because it's, it's so funny. Like, we made a lot of progress in explaining how Bitcoin is not a security, but then we make it a security by wrapping it in an ETF, and it's starting to scale. I'm very excited about the ETF as well. But, but, you know, I think a light bulb is going on now. I think when BlackRock really engage, like BlackRock moves, moves markets. When I was at Citi, they're, they're the biggest, most important client in the world. When they say they want something, it generally gets done,

• 32:25Speaker 00

  whether that's through a regulatory lens or otherwise, because, you know, they, they're huge and they represent a huge amount of wealth. So that's a big deal. That said, it's going to take time. The banks are going to be constrained by their ability to embrace crypto because of these things called the Basel rules. I don't want to get too technical here, but like there's capital that they have to hold against their exposures. And that capital is just too high. And so it's very difficult for them to be profitable. So it's going to take them a long time because these Basel, these capital rules are going to hold them up. But, and again, we go through these crazy cycles where it's like, oh, Bitcoin blockchain, not Bitcoin and like public, no private.

• 33:06Speaker 00

  So I think like currently there's a little bit more focus on this like private DLT stuff. But everyone knows where we're going. I think Sandy articulated it brilliantly. We're going to end up in a, in a, in a, in a public arena. And I think TradFi is going to come along. It's just going to take some time. And, and there will be naysayers because it's scary. But tokenization is important for, for TradFi right now because of, because it addresses some real utility, which is quicker settlement, lowering risk. But yeah, it's just a process and they'll come around. But it's also scary, right? Because it undermines business models. A lot of TradFi is predicated on intermediaries. And now you don't need them as much in certain places.

• 33:47Speaker 00

  I don't think you're going to get rid of intermediaries because some clients want that high touch. But other, other folks are going to say, I, I don't need that intermediary. I can go direct. So it'll be a process.

• 33:59Ryan Sean Adams?

  So Chris, you said Black, BlackRock being the size that it is. BlackRock gets what BlackRock wants and BlackRock at some point wanted a Bitcoin ETF. And poof, there we go. We have a Bitcoin ETF. I've heard Larry Fink talk about tokenization as well as kind of like, you know, some excitement for BlackRock there. I, I imagine he sees kind of a, you know, like a budding growth opportunity. But another, another thing kind of on the list for BlackRock and you tell me might be the Ethereum ETF. And we're going to talk about Ethereum a lot in kind of the next part of the conversation. But does BlackRock want an ETH ETF? Because if so, you know, that, that bodes well for our chances here. Do you have any takes on this?

• 34:40Speaker 00

  Yeah, so let me flashback to back in the day when, after the global financial crisis, Dodd-Frank came out, right? And Dodd-Frank was very prescriptive about what was required for the regulators to execute. It's so funny, because the CFTC diverted away from that playbook once, and that was because BlackRock didn't like the level of asset protection that the law was delivering. And so they said, we need to change, you know, guys, regulators, we want you to better safeguard our collateral. And that was the only real deviation from that playbook with the CFTC back in the day. And so, yes, I think BlackRock is focused

• 35:20Speaker 00

  on the ETF. I think the correlations that we saw that stood up in some of the court rulings that we saw with DCG stand up. I think it's not a matter of if, it's a matter of when. But I think the challenge, and by the way, I think it's gonna, I think the TradFi mind really understands Ethereum, because like Bitcoin, it's like, okay, what makes Bitcoin special? All right, there's 21 million coins that can't be any more than that. So like, it's limited supply, totally, okay, I get it, store of value. Then they go to like Ethereum, and they're like, wait a second, you're telling me that there's yield on this thing? And I can have smart contracts? That's pretty cool. And so I do think that ETH as an asset class is going to be super appealing, as people take the

• 36:04Speaker 00

  time to really understand it a little bit. And so I'd look, it's a matter of when, not if, and hopefully sometime this year.

• 36:11Ryan Sean Adams?

  So you're doing some work on that front, Chris, at CoinFund. And that's where we get into kind of the more financial geekery point in the conversation. I think this could be absolutely massive in terms of advancing TradFi's ability to understand Ethereum, and maybe their ability to build products in the Ethereum ecosystem in general, and based on Ether as a productive yield-bearing asset. And I'll just maybe frame this up for Bankless listeners, and kind of like, give folks a sense to the extent of my understanding, and I'll be kind of dependent on you, Chris, to sort of take us forward. So after our conversation... With Sandy from Franklin Templeton, we were just having a chat after the fact and she said,

• 36:55Ryan Sean Adams?

  you know what you got to check out, Ryan, this is going to be, and David was there too, this is going to be massive for crypto is there is a new, I'll call it a benchmark, but you might use a different word like reference rate, for instance, for crypto, that this guy named Chris is heading up over at Coinfund and it's called Caesar. And I said, okay, well, tell me a bit more. And she told me more and I said, well, that sounds a little bit like LIBOR for ETH, right? A reference rate LIBOR, which I understand is kind of like a big deal in traditional finance. And I said those words, not fully understanding actually what LIBOR is used for in TradFi,

• 37:37Ryan Sean Adams?

  just knowing that it's one of those things that is incredibly important. And I'm wondering if you could kind of take up the conversation from there. Both tell us what you're building and why it's relevant for Ether and Ethereum and what you think the potential is here, but maybe start the conversation in this this context of when somebody talks about a LIBOR for ETH, what are we talking about? Like, what is LIBOR? Maybe we should start there.

• 38:04Speaker 00

  Yeah, let's step back. So, interest rates drive, they're the pillar of modern day finance, right? There's nothing more important than interest rates. You turn on your Bloomberg in the morning, they talk about companies a little bit, but they mostly talk about the Fed and they talk about interest rates because interest rates drive everything.

• 38:25Speaker 00

  The thing about interest rates previously is that they're very centralized and highly controlled, whether that's the Fed that sets rates, they do it a few times a year. You know, it's not open, it's not transparent per se, and people are always betting, what's the Fed going to do, right? That is modern finance, like it or not. LIBOR was a rate, and I said was, because it was incredibly important back in the day. It underpinned hundreds of trillions of dollars in underlying financial assets. Right? It underpinned loans, it underpinned hundreds of trillions of dollars in derivatives. Everything keyed off of this rate.

• 39:06Speaker 00

  And this rate was set by a bunch of, it was the London Interbank Overnight Rate. So it was a function of the rate at which banks lended to each other. And the funny thing was, was that it was determined by a handful of traders at a couple of banks, where they would submit bids every day and that rate would be produced.

• 39:30Speaker 00

  Over time, it suddenly leaked out that that rate was being manipulated. And think about it, you have hundreds of trillions of downstream products that are going to, that people either have to pay or receive based on this rate, highly controlled and totally manipulated. Insane. And so after that, and I don't even think they understand yet just the financial consequence of this manipulation. Go back and you can read about it.

• 40:00Speaker 00

  But fast forward to today, there's been a lot of rates reform across traditional finance. They've replaced LIBOR in many cases with a new rate called SOFR in the US. The other thing about rates is that they're very regional, right? So you have Eonia, you have Sonya, you have all these different rates throughout the world set by different governments.

• 40:20Speaker 00

  But let's fast forward now to why this Ethereum, why Ethereum staking is so incredible, right? And by the way, in traditional finance, even today, the largest derivatives market in the world is the interest rate swap market, interest rate derivatives. This is a $500 trillion market, right? Just to like, I mean, the size of this is incredible.

• 40:46Speaker 00

  And why? Why are interest rate derivatives so important? Because they give incredible utility, right? If you want to go get a mortgage, you know, you can get a floating rate or you can get a fixed rate. Well, you know, how do you get that fixed rate? Somebody swaps fixed versus floating, right? So it gives incredible utility to the consumer. So before the merge, we were sitting around at Coinfund and we were just like, wow. When we go through the, when we transition from proof of work to proof of stake, oh my gosh. We're going to have the first real interest rate in crypto. And this is going to be incredible because and really what it comes down to, it already exists. Right? Like it's out there. You can observe it. It's on chain.

• 41:31Speaker 00

  But if we can build social consensus around an observation period, right? You can compose so much around it, right? And again, how do we bring in all of that utility of whether it's the interest rate swap market? There's a bunch of different applications I'll get into, but the whole idea here is that with, with proof of stake, you essentially have a kind of like a LIBOR, but it's global in nature. It's open source. It's completely observable and completely replicable. And if you build social consensus around a standardized snapshot, you can effectively build like what we have in traditional finance,

• 42:16Speaker 00

  which is a forward curve. So you can project that rate in the future. And you can build all next generation financial products around it. And so really there are two primary use cases for a benchmark of this nature. And maybe I can talk through before I get into that, maybe how we constructed it. But, but really there's two fundamental use cases. One is for benchmarking and the other one is to transfer risk.

• 42:43Ryan Sean Adams?

  In, in one way, it seems like this reference rate is kind of like what we in crypto would call an oracle. Right? It's kind of like a data feed that power, you know how like chain link oracles power so much of DeFi? You know, LIBOR was essentially a reference rate that powered many of the, we'll call them contracts, TradFi contracts in real life. Is that a useful way to think of that for a crypto native like LIBOR just being sort of like an oracle?

• 43:13Speaker 00

  Not really an oracle. So like an oracle would deliver that rate to a smart contract. Does that make some better sense?

• 43:19Ryan Sean Adams?

  Okay.

• 43:19Speaker 00

  Yeah. So, so it would, like, it's more, it's more of a price itself rather than an oracle.

• 43:24Ryan Sean Adams?

  It's more of a price itself rather than the oracle. And, and yet, maybe the way it was related in my mind is that it, that rate really matters, right? Like, it sets a lot of the, I guess, you, you said there were hundreds of trillions of dollars that were underpinned by LIBOR. When you say underpinned by, by LIBOR, what, what do you actually mean? So how is this price feed essentially being like fed into the hundreds of, of trillions of dollars? And what happens, or what did happen in the case that there's an inaccuracy?

• 43:58Speaker 00

  Yeah. So one of the most prolific products in traditional finance is something called an interest rate swap. Okay. We call swaps something different in, in crypto land, but in traditional markets, a swap is a derivative. And usually it's with where one side pays fixed and the other side receives float. Okay. And so, or you can have something called a basis swap where it's floating versus floating, which I'll get into in a second, right? But why would somebody want to receive or pay fixed? It's because they have a view on where those interest rates are going. And if somebody wants to hedge themselves from a spike in, in, in the rate,

• 44:43Speaker 00

  well, then maybe they're going to pay fixed and receive floating, if that makes sense. Or the opposite way around, where they want to understand, where they're, where they're keen to have, receive a fixed cash flow, they're happy to pay a floating rate. And so like a good example of that is like a fixed rate mortgage, right? People want a fixed rate mortgage. And so what the bank does behind the scenes is they'll swap out fixed for floating in order to give that, that product out to a consumer. And so interest rate swaps, and I guess I think you guys had Simon on from Volts back in the day, he talked about this market. But it is the largest derivatives market in the world. Or you can have a view on two different floating rates. That's called a basis swap, which is floating versus floating.

• 45:24Speaker 00

  And so like, you know, I can talk about why that's applicable in Ethereum land, but, but this is a very, very, it's the most common, most prolific derivative in the world.

• 45:36Ryan Sean Adams?

  Okay, and I called that an oracle earlier, and your comment was, maybe it's more like, think of it as a price feed, but it is determined by, you said, a handful of traders, right? And you were talking, you kept using the term "was" for LIBOR, because it sounds like maybe it doesn't exist in the same form it used to. I recall, was it 2012, that kind of the LIBOR scandal, you know, took hold or became evident and became public information, and it was essentially being corrupted, right? So, this is sort of, like, the traders who were corrupting it, like, what were they doing? What benefit? Were they sort of corrupting it in ways that

• 46:18Ryan Sean Adams?

  would give them an advantage, or how exactly was it being corrupted back in 2012?

• 46:23Speaker 00

  So, they would have a, traders would have a book, and they would be positioned in that book to make money, depending on whether that rate went up or went down. And so, or people within the bank would have certain positions where, like, if the rate went up or down, they would stand to make or lose a lot of money. And so, there would be, you know, according to public documents, they would whisper in some of these folks' ears, and say, "Hey, you know, bump that rate up." And a little change could result in billions of dollars of P and L. And so, there was manipulation of that rate, and when they submitted those, their levels to create and settle that rate every day, it reflected

• 47:06Speaker 00

  the risk that they had on their books, and so that they could profit in certain cases, rather than lose money for their own books. But the downstream implication was just massive.

• 47:16Ryan Sean Adams?

  This was a huge scandal at the time, right? Like, what happened in Tragify when this was revealed?

• 47:20Speaker 00

  Yeah, huge issue. There was all types of fines, billions of dollars of fines to the various banks. You can go back in history and look at it. And then, there was a number of benchmark reforms, where LIBOR was essentially phased out in favor of rates that were more transactional-based. One of them was called SOFR, as an example. So, there was, I mean, it was a massive, massive issue, cost-

• 47:47Speaker 00

  Cost the banks billions of dollars in fines and then even more money to try to figure out the way forward. So it was a huge challenge.

• 47:54Ryan Sean Adams?

  Yeah, I was gonna ask you because it's so fascinating because in crypto, we're all about creating corruption resistant protocols. And it sounds like this price feed in particular was not as corruption resistant as it needed to be. And I'm wondering with some of these other reforms, like the sofa that you mentioned, are they, I guess they're trying to add a layer of corruption resistance through better protocol design, just trying to translate this for crypto natives a little bit, and through regulation, right? And so that's kind of like, I guess, the traditional financial system, that's their way of doing it. Hey, we'll kind of design this a little bit differently. We'll add additional regulation. We'll put some more kind of like checks and balances. And are these new reference rates,

• 48:39Ryan Sean Adams?

  these new benchmarks, are they more corruption resistant? Are they better? Did they like, quote unquote, fix the problem that was with LIBOR? Or do they still have like some holes in them as well?

• 48:51Speaker 00

  Well, I guess time will tell, but they tend to be more transactional based now. But you know, this is just one of many different rates. I mean, look at the Fed itself. It sets rates as well. And I think the point with traditional rates that we see is that they're very centralized, right? And wouldn't it be amazing if we had decentralized rates that were more transparent and observable? So, you know, is anything perfect? Maybe, maybe not. But they're trying to get away from this like dark room. They're trying to abstract and eliminate an ability to manipulate. But I don't know, we'll see, we'll see how it goes.

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• 53:20Ryan Sean Adams?

  Okay, so now, let's get back on course where you're going, Chris, towards what you're building with Ethereum and with an ETH of reference rate and kind of what I called earlier the LIBOR for Ethereum. Could you just talk about in broad strokes how it's designed? And then we could talk about like what it does and what some of the applications might be. But how's this designed?

• 53:43Speaker 00

  Yeah, so before the merge, before the movement to proof of stake, we realized that, gosh, these validators, and at the time, it wasn't the close to a million now, but they're receiving rewards every single day. And they're receiving those rewards in the form of emissions and transaction fees. And if we're able to look across, now it's between 900,000 and a million different validators, and if we were to take those rewards, those emissions, and those transaction fees, take the mean and annualize it, we would essentially have this, and I don't want to use the word risk-free rate, but we'd have this like standardized rate for Ethereum. And if we can build social consensus around

• 54:28Speaker 00

  it, you can really build on top of it. And so, there's two components to Caesar. There's those emissions and transaction fees.

• 54:39Speaker 00

  Emissions are a function of the number of validators. And we're watching this this number grow. There's a lot of talk within Ethereum circles around, you know, you know, what's the end game here? But generally speaking, the more validators you have, the lower the emissions. Okay. And then you have transaction fees and transaction fees come from existing supply. Those get rewarded to those 900,000 validators. And when you step back and we started observing this rate, it was fascinating. Because of course, as you saw more validators come on, you see the baseline rate come down, the emissions come down. But those transaction fees were really, really interesting.

• 55:19Speaker 00

  The first thing that we identified was during FTX, November of 22, right? Massive spike in the rate. And why is that? It's because those transaction fees went through the roof. People were willing to pay whatever they had to pay to get those assets off of the exchange on chain, get them safe. Right? So it jumped, you know, up to like 7%. It was, it was, it jumped materially. Fast forward then to March of 23. Another like massive spike. And we're like, gosh, what's happening? What's happening? And wouldn't you know it, SVB happens.

• 55:58Speaker 00

  And again, whether it's the activity between Tether and USDC, or again, fear of something terrible happening. Look, I gotta get my assets on chain. We again saw those Ethereum transaction fees go through the roof and the rate spiked materially. But then the one thing that people don't get, and like I show them the graph, we can maybe put it in the show notes. But we saw the staking rate go through the roof in May of 23. And you know what happened in May, right?

• 56:31Ryan Sean Adams?

  What's that?

• 56:33Speaker 00

  Pepe, right? So Pepe started happening and you saw that all this activity on the layer one. And again, those transaction fees went, went very, very high. And so this is really important because this rate is now showing a lack of correlation to like external macro market factors, which is, which is very important. But anyway, that's how it's constructed. What we do is we take the mean annualized return of emissions plus transaction fees. And what we see is something that's really interesting. Right now, like yesterday, the print for Caesar was about 3.5%. Okay. And people are like, oh, that's terrible. ETH staking rates are so awful.

• 57:17Speaker 00

  TradFi rates are so much better right now. But that's actually not true. Because there's a concept of something called a real yield. And when you adjust for inflation, you'll find that, that this Ethereum rate Caesar is actually very, very competitive when it comes to the yield that you can get through traditional finance. So that's the construction.

• 57:42Ryan Sean Adams?

  Okay. So, so many questions about this then, Chris. And like one, one basic question is, so there is sort of a percentage yield on like websites like ultrasound.money, for instance, right? So if I go to ultrasound.money right now, I see the issuance reward that you mentioned, that's about 3% per year. And then, yeah, I think I also see a transaction reward and you can kind of calculate the, like how much ETH yield you have, or if you deposit your funds into like a Rocket Pool or a Lido, you know, you generally know what you're getting. You're getting like 4%, you're getting 4.2%. How are those numbers different than Caesar?

• 58:26Speaker 00

  Yeah, so it all depends like what we really need to do as an industry, the most important thing we could do is is build social consensus on an observable rate. Because if you have social consensus, then you can start like I'm an old naval officer. And if you look at like containerized shipping, right? Like ships are really hard to pack back in the day. And then all of a sudden, one day is like, guys, like, listen, if we put them all in a box, we can really stack them and we can build all types of things. And so those rates, they use different types of methodologies. You know, our methodology is transparent and online and we're not competing with them in any way, shape or form. But what we've done is we've laid out a methodology and we've used some of the regulatory.

• 59:09Speaker 00

  There's, there's, there's principles around constructing a benchmark. It's called these, it's called an IASCO principle. So we've followed IASCO principles in creating this rate, ensuring that there's sufficient redundancy, etc. And then when you institutionalize a rate, you have someone who administers the benchmark, then you have somebody who calculates and distributes it. And so we've got a partnership with CoinDesk indices.

• 59:35Speaker 00

  You know, what we do is like, we're trying to find like the, the baseline return across the ecosystem. And so rather than take a small number of validators, we try to take as many as possible. And then what we do is we've actually found that some of them, some of these validators don't operate very efficiently. And so, and that's okay. And so what we're trying to do is take that mean annualized return, standardize it, and then allow institutions to use it as a benchmark upon which they can build like, you know, why was LIBOR so adopted? It was because it was a standardized rate.

• 1:00:16Speaker 00

  And if that was the standardized floating rate, then you can also build, because everyone observed it socially, then you could observe these products were okay. Hey, I need a fixed rate, so I'm going to trade fixed versus floating.

• 1:00:30Speaker 00

  Today, when you go to a staking protocol, right? Do you know what rate you get?

• 1:00:37Ryan Sean Adams?

  It's like their pool, right? The rate.

• 1:00:40Speaker 00

  Yeah, you get what you get and they take five or 10%, right?

• 1:00:45Ryan Sean Adams?

  Right.

• 1:00:45Speaker 00

  As we get into more of an institutional market, I think things are going to shift a little bit because a lot of institutions are going to say, well, wait a second. I want you to to achieve the the minimum standard, right? If you earn above that, then yeah, I mean, you you earned it. But what what consumers will want is they're going to want transparency of a third-party calculation. And of course, that provider can price, you know, either above or below. But that's a much more sustainable, transparent model than, hey, you get what I get and I take 10%. By the way, like, having been around for a long time, when you have a model like that, pretty soon, people are like, oh, I don't want, I don't want you to take 5%, you know,

• 1:01:30Speaker 00

  show me a better price. And then those fees get compressed very closely to zero. I think by introducing benchmarks, it's actually going to be really healthy for the staking community, because they can price relative to that benchmark. I think what you'll find is that most professional stakers outperform that benchmark. And then consumers want a third-party transparent benchmark rather than saying, oh, what's my rate? Well, I don't know, whatever I get. Well, what is it? So that's one instance. And then you can actually get even more sophisticated. And remember that that thing I talked about fixed versus floating? If you have a standardized rate, you can say, well, wait a second. You don't want 3.5%? Well, you don't want this floating rate?

• 1:02:14Speaker 00

  What if I pay, you know, if I give you a fixed rate of 3%? Right? And you can do that through swaps. And so I think you're going to see a lot of, a lot more sophistication around the staking industry. Because like, this is like, this is what makes Ethereum great. The staking yield is is a beautiful structured product and and so many, so many things can be composed around it to meet the financial obligations of of the consumer on the other side.

• 1:02:43Ryan Sean Adams?

  I see. So this is just a mass standardization. It's it's kind of the mean, it's kind of the average of of all validators, basically. And it's not specific to one pool like Lido, and it's not constructed in like, kind of like a, we don't really know how maybe ultrasound money sort of derives its percentage. This is meant to be a standard representation of how much yield. The average staker will get at a particular period of time. Is that right? So if Chris, if this says like 4%, if the Caesar says 4%, then that's basically what the average staker is making. Less any fees that they pay to a third party. That's kind of like the 4% is sort of the number, you know, of ETH staking on that particular, for that particular time period. Is it like, how often is it refreshed?

• 1:03:28Ryan Sean Adams?

  Is it like daily? Is it like, you know, minute by minute? Is it hourly?

• 1:03:33Speaker 00

  Yeah, so we can do it fairly often, but what we do is we publish it once a day. We publish it at 4pm New York. We calculate it over a 24 hour period. We start calculating it right after 1 o'clock. We look back 24 hours and then we produce it at 4pm. What we don't have yet and what we're really excited about is a forward curve, right? And so we have the baseline rate that we set every day, but now the question is going to be, hey, what's it going to be like in three months? And, and as you start seeing derivatives trading, and we're hopeful that that's going to happen pretty soon, you can start having this thing called a forward curve and that will start informing a lot of really interesting applications.

• 1:04:13Ryan Sean Adams?

  So Chris, you hesitated when using the term risk-free rate to describe this. And I want to talk about what risk-free rate actually means in traditional finance and why you like, reach for that word and then also kind of hesitated or put a caveat around it and applying it to this particular instance. My understanding of like risk-free rate from just an investor perspective or like, you know, your business class 101 is that is kind of the, the cost of capital, the cost of, of money. So you can evaluate all your other existing investments if you are making more than the risk-free rate, let's say, which is again, determined generally by, by kind of like the Fed.

• 1:04:56Ryan Sean Adams?

  And that, you know, that's where you get the rate. And so if the Fed is, is paying 5% interest as you're paying now and you make an investment and that investment is only yielding like 4% annualized per year. Well, you're not doing very well on that investment, right? Because 5% is the threshold. That's the risk free rate. Like, why would I do any other investment at less than 5% or less than the risk free rate? So it's kind of like, call it the cost of capital in general, anything you consider investing in, it better make over 5%. Why? Because if you can't make over 5%, just put in T-bills. You know you're going to get the money back. The US has a money printer. It's going to pay you that 5%.

• 1:05:37Ryan Sean Adams?

  So your investments need to be making 6, 7, 8, 9, 10% and out on the risk curve. That's why the concept of risk free rate is so important. And it's generally for the entire world because the US is the, you know, the global money, basically, is kind of determined by the Fed rate. And so that's the concept of risk free rate. Chris, would you add anything to that?

• 1:05:59Speaker 00

  No, I think, I think you nailed it. So if I'm, by the way, I wouldn't even say like the risk free rate is risk free at this point. There's been a couple of things that we've seen over the last few years, but um, yeah, in theory, if you don't take any risk, that's the return that you should achieve, right? And we've, and the other thing is like, you did talk about how the US is a global reserve currency for sure, but like Ethereum is actually truly global, right? And in a way, we constructed this in a similar manner, right? If I have capital, what's the minimum that I should be able to achieve without, you know, liquid restaking or anything else? We can talk about that another time, right? So what is that baseline foundational return that I should receive? And like, that's how we constructed Caesar, right?

• 1:06:42Speaker 00

  Because you should be able to achieve pretty much that mean annualized return.

• 1:06:46Ryan Sean Adams?

  Yeah, so I want to apply this to crypto then, Chris, and maybe you were, you were kind of going there. So basically, when I think about the fiat world and the traditional finance world, or just, you know, general investing, any sort of investment I want to make with my dollars, right? It better achieve more than the, you know, the whatever the Fed's paying, the risk free rate. And at least I view this in a similar way in the crypto ecosystem, the crypto economy. I sort of have selected for myself Ether, the asset as kind of the denominator, right? As kind of like the, the unit. I use. I know others use Bitcoin and other things, but like for me, it's it's actually

• 1:07:27Ryan Sean Adams?

  Ben Ethereum the the entire time. And so the ETH rate. And so if I am making an investment in, let's call it a some yielding product that's taking my ETH and like restaking it, something in Eigenlayer, let's say, or if I am taking my Ether and I'm selling that for some sort of alternative investment in crypto, say a token, I want to go buy some some hot DeFi token. Well, my risk free rate is actually basically what Caesar is saying. So it's, you know, if it's 4% right now, the investment that I'm about to make had better make over like using that equivalent ETH and my 4% in a token investment. Otherwise, it's not worth it for me. Why? Because I could just take my capital.

• 1:08:10Ryan Sean Adams?

  I can, you know, transmute it into Ether and I can get the kind of the internet bond yield, if you will, of the Caesar rate. And I'd be quite happy with that. So from that vantage point, I kind of have started, at least from my own calculation, to consider the the yield on Ether, the Caesar type of rate, to be the the risk free rate for me and kind of the cost of capital rate for me. What's your take on that? Do you think that Caesar can be used in in that way? Am I alone in thinking this? Does it really depend on how the world basically thinks about Ether as an asset in comparison to Bitcoin or other assets? Yeah. What's your take on this overall?

• 1:08:53Speaker 00

  You said it much more eloquently than I could have ever said it, my friends. That's exactly what we we set out to design.

• 1:08:59Speaker 00

  You know, if you're and when in finance, you're taking, you take risk and you want to be rewarded for that risk. That's something called the efficient frontier. This is exactly it. Like if you have capital, you know, what's the what's the minimum you should achieve in crypto? It's hopefully it's Caesar. Now, what gets really interesting is how does this rate compare to Fiat? Right? And everyone's like, oh, you know, 5%, yeah, treasuries are at 4%. Again, when you adjust it post EIP 1559, and you look at inflation, this is actually a very, very interesting yield because it outperforms fiat from a real yield perspective. And so now you start thinking about even productionalizing, like, how can you express a view on this rate?

• 1:09:45Speaker 00

  Well, maybe I have a view that like, that that rates are going to come down in fiat,

• 1:09:50Speaker 00

  you know, versus Ethereum, you can actually do a swap, a basis swap, floating versus floating. And I think that's going to be a really interesting on-ramp for rates. As you look at East relative performance to other rates around the world, like, super, super interesting going forward.

• 1:10:09Ryan Sean Adams?

  So talk about real versus nominal returns a little bit in kind of the fiat context, which you just kind of cascaded a little bit, and versus the Ethereum context. So Chris, correct me if I'm wrong, but when people are talking about nominal rewards versus yield rewards, or sorry, nominal interest versus like, real interest rates, right? If you take something like a treasury and you are receiving 5% in terms of yield on your interest, that is the nominal yield, right? It's 5% as nominated in US dollars. The problem is if inflation and your purchasing power of those dollars decreases,

• 1:10:52Ryan Sean Adams?

  then you have to kind of like subtract that from and get the real return. So if you are 5% nominal return, but inflation in any particular period of time is 8%, well, you're net losing in terms of real returns 3%, right? So you kind of like do the math there. You're only making real returns if the inflation is kind of less than the nominal return that you're getting. So ideally, like 5%, inflation would be 3%, all right, I'm making 2%. Now, this depends on some calculation of purchasing power, right? Which traditionally, we also depend, I believe, on the US government for that calculation with like, Some form of a consumer price index type of calculation.

• 1:11:36Ryan Sean Adams?

  We don't generally use, I mean, correct me if I'm wrong in finance circles, but we don't generally use like issuance as the inflation rate. So the supply of money, if you go look at kind of like base money, M zero or M one, the supply of fiat money. Man, that's a weird denominator and it's not generally what people mean when they say real returns, is it? And yet I think you are using that as as sort of issuance as the denominator for Ethereum. And you're saying, well, positive real returns because the protocol itself is issuing less than than the kind of the the actual return on the on the yield. And what Caesar says, and therefore it's it's always real return.

• 1:12:18Ryan Sean Adams?

  I'm wondering if you could you square that a little bit for me because we don't have this notion of pricing, I guess, do we? Or CPI inside of an ecosystem like crypto. Does that line of questioning even make sense to you?

• 1:12:32Speaker 00

  Yeah, I guess so. It's I guess it's just a much more pure, cleaner observable calculation to do with Ethereum, right? We, you know, post YIP 1559, you go to ultrasound money, you know exactly, you know, how inflationary or deflationary Ethereum is. And, you know, the point that I'm just simply trying to make is that this is very transparent. It's very open. It's very easy to to see that the real rate here does just fine against the real rate of traditional of, you know, things like like treasuries today. So a lot of times in crypto land, we get very focused on nominal rates. But I think if you step back a little bit, maybe it's a little bit more interesting.

• 1:13:11Ryan Sean Adams?

  What do we make of these spikes? So, you know, I think listeners will be looking at, or if you're watching this on YouTube, you'll you'll see kind of the the Caesar historical values on the screen, hopefully. And when you were talking, introducing us to Caesar, Chris, you you mentioned these various spikes, you know, one in kind of like the October, November 2022 period of time, where we jumped up from something like, it looks like, like, you know, 6% to an 8% or something like that. And there's some other spikes and these are primarily like usage based spikes. I would think because the bulk of this is not consensus rewards that is sort of issuance. The bulk of this is in Ethereum, what we call MEV or transaction fees, right? So it's like the ordering of transactions, the tips people.

• 1:13:56Ryan Sean Adams?

  It just indicates, I would guess, a time when the the gas fees on Ethereum were particularly high and so they spike up. This is a much different set of values than you'd see for like a Fiat LIBOR type of rate, which I would imagine would be dependent on like Fed policy a lot more, wouldn't be as spiky. I don't know. What do you make of this and what should we learn from from the spikes?

• 1:14:20Speaker 00

  So it depends, right? LIBOR had a counterparty risk element to it. And so when the banks were really teetering, those rates had had idiosyncratic impact. But this is really important because why are rates important? One of the reasons is for risk transfer and hedging. Okay, our entire derivatives industry actually started with agriculture and it was it was designed to hedge against price. Right? So let's talk about the use cases because this is very important. Today, you have a lot of people who are focused on tokenization. You have layer twos that have to pay gas. You have exchanges that subsidize gas. They get very, very nervous when gas prices spike materially, right?

• 1:15:04Speaker 00

  And that's a bad day for them because it's coming out of pocket. Okay, so gosh, wouldn't it be wonderful if they paid a fixed rate and received floating? Because if they're receiving floating and gas prices, transaction fees go up, well, they're hedged because they're paying that fixed rate and they're receiving floating. All right, so that's one side of the trade. Who's on the other side of the trade? Who would want to receive fixed? Well, remember those stakers? You know, they have big teams, they got to feed them, they got to pay them. What rewards do they get if they're staking? Well, they're getting these variable rewards. And so if the if if the rate goes way down, how do they run a business?

• 1:15:47Speaker 00

  Right? And so what they want to do, they would love to receive a fixed return and they would love to pay floating because that allows them to run a sustainable business model. Or you take it a next step further. If they receive fixed, they can actually pass that on to a consumer that wants a fixed rate of return. And so it unlocks a lot of opportunities. And so now you have a two-way market that's starting to form where people, some people want to pay fixed, some people want to receive fixed because it helps their business model. And that's the beauty, and this is the reason why interest rate derivatives and traditional finance are so big, because you have a two-way market where you have people that are trying to hedge real risk.

• 1:16:31Speaker 00

  And you can only do that if, I mean, you can create the most liquid products only if you have that social consensus around a standard. Look, you know, there are ways you can design things much more specific and bespoke, and that's fine, and people do that all the time in structured finance. Or you can have a baseline reference rate that allows people to help accomplish their goals. And so that's why these spikes are so material. That's why people need to figure out how to hedge against these spikes. Otherwise, they're taking risks that doesn't help their business model.

• 1:17:05Ryan Sean Adams?

  What's the early way we should be kind of thinking about this then, Chris? Is it a bit more like a typical commodity, like an oil, let's say, or like, I don't know, wheat? You mentioned derivatives were basically based on these types of commodities. And I can imagine, at least right now, with respect to Ethereum, you could have some parties that are purchasing block space or denominated in ETH that want to just hedge various positions. So, for example, just this week Reddit added Ether and Bitcoin to its balance sheet. And according to its SEC filings, one of the reasons it added Ether is to store value, but also because it anticipated purchasing blockchain, block space in the future, right?

• 1:17:48Ryan Sean Adams?

  So it's like buying some Ether in order to purchase it. And so you can imagine, let's say, we get into a world where all of the banks, you have like Coinbase and such, they're going to need to settle some transactions on Ethereum in some way, and so they want like to kind of hedge those types of positions. And so they might purchase a product like this, right? And it'd be similar, I guess, to maybe an airline or something that is looking At the, you know, the cost of fuel as being an important, you know, cost of goods in terms of providing its product. And it wants some hedges against that. And so is that where you kind of start to see this market evolve? Because if we go all the way to sort of dollars, right?

• 1:18:32Ryan Sean Adams?

  It is, dollars are much more than a, than a commodity, right? It's like, well, I mean, you just gave the example that's very consumer centric of how a mortgage interest rate is kind of, you know, moves from a floating to a fixed. And then I can, you know, take a mortgage out at a fixed rate for 30 years in the U.S. Because of these derivatives products, basically. But I don't know that we'll get there. Or like, we certainly won't immediately with Ethereum, at least I don't think. Is it more similar to the commodities type case?

• 1:19:03Speaker 00

  Yeah, so those are the businesses I ran in TradFi. And to your point, airlines hedge their, hedge their gas or their jet fuel all the time. So this is an obvious, beautiful example of, of ways that industry participants can mitigate their risk. Couple of things to unpack. Number one, like I see this as a rate, just like any other rate. And for that matter, like the ETF, right? It fits really, really cleanly into legacy systems. So I do think it can be pretty easily adapted. The regulatory construct should be very clear as well. Interest rates are commodities under, I know it doesn't sound like it, but like, under, under the law, interest rates are commodities. That's why we have futures on interest rates, like the Euro dollar contracts.

• 1:19:49Speaker 00

  And so literally we're working with a number of different regulated exchanges, futures exchanges right now, on offering fixed versus floating contracts, you know? Or the other one that's really neat right now is total return. And, you know, getting back all the way to the ETF, right? The ETF is going to be awesome. The problem with the ETF is it's going to be really, really hard to give yield, which is like, one of the greatest benefits of Ethereum is yield, right? And so why is that? It's because like bonding and unbonding and redemptions are going to be, you know, there's going to be some liquidity risk on bonding and unbonding periods when you have to unstake versus liquidity risk. And so my sense is that the SEC is not going to allow staking out of the gate.

• 1:20:33Speaker 00

  If you look in Canada, the Canadian regulators have approved 50% staking. So it's kind of like a partial return, not a total return. And so it's going to take some time to enhance that yield for ETF products. And so, you know, in the meantime, I do expect for a, for a very, for a number of them, we're already talking to a number of players in the space and how can you deliver like truly benchmarked total return institutionally? Because that's, that's what we want, right? Like, you know, do you want to have like just ETH sitting there? You know, if you read it, no, you want ETH plus yield and you, and you want to make sure that that yield that you, that you receive is,

• 1:21:14Speaker 00

  you know, for most institutions, benchmarked and, and, and very observable. So that those are some of the things that we're, we're looking at. But yeah, this is very much like a commodity and, and that hedging. This is what's exciting about these next generation products that are coming in, right? We're going to allow industry participants to hedge their risk or to, to express market views on the direction of, and what is this? It's about, it's about the vibe, the liveliness of Ethereum. Ethereum gets very busy, rates go up, right? And so, yeah, very, very exciting applications going forward.

• 1:21:51Ryan Sean Adams?

  That's very interesting. Yeah, Ethereum gets very busy, rates go up and sort of the, the cost of capital for the, the crypto, I guess ecosystem of the crypto economy kind of goes up and you have to reflect that in all various ways. Is this a, is this a price feed that can be used? It sounds like definitely in, in traditional finance. Can it also be used on chain as well? And yeah, like is it, is it kind of ambidextrous in that way? It's with off-chain and it can be on-chain for DeFi?

• 1:22:22Speaker 00

  Yeah, totally. I'm super excited about some DeFi applications. We're integrating with a couple of Oracles as well. We're delivering it. I've got partners at CoinDesk that deliver it via API. So, so yeah, it's totally applicable on-chain. We're excited about that. Like, we're crypto natives, always want to do whatever we can to help the DeFi ecosystem. It's one that we love. So, so for sure. And you can see those same products apply on-chain as well. So yeah, very excited about that.

• 1:22:54Ryan Sean Adams?

  How do you make sure you don't become LIBOR and get corrupted in that way? Are there some mechanisms against that? Is it sort of more on-chain? Is it more auditable than something like LIBOR was?

• 1:23:07Speaker 00

  A hundred percent, yeah. I don't, I don't touch this thing at all. We have the methodology. We run it very clearly. Everything is transparent. So, a hundred percent, like, everything here is designed to, to read off the beacon chain and produce those results. And so there's no manual intervention or anything else. Again, like, if there's one thing I can emphasize, we need social consensus around a benchmark. You know, we designed, we designed it one way. We threw something out there. If not, if, if our rate, I, I like the way we constructed it, but like, the industry needs a benchmark, or a series of benchmarks, so that we can build and compose and allow people to hedge risk.

• 1:23:48Speaker 00

  But of course, you know, unlike LIBOR that was centrally controlled and manipulated, you know, the methodology is public. It's on our website. Happy to walk anyone through, you know, what we observe anytime.

• 1:24:01Ryan Sean Adams?

  So it's social consensus around that benchmark is the important thing. And, uh, yeah, I, I'm wondering, going back to like traditional finance and Sandy who set up this conversation, she was, she was very excited about this, right? What are the wins for traditional finance when we have social consensus around a benchmark for Ethereum rates and Ether rates? Like, you mentioned the ETF, so possibly this gets used in that to have us, have it like a more productive yielding asset inside of a future Ethereum ETF. Like, what else? Why, why was Sandy so excited about this?

• 1:24:37Speaker 00

  TradFi understands rates, right? It is a huge part of traditional finance. The thing that they struggle with are all the operations around custoding of ETH and, you know, safeguarding and all other stuff. This is a fully synthetic, right? It's just a rate. You don't have to, you know, you don't have to, to, you know, you don't have to hold that ETH to earn the rate. You can find a dealer that will trade synthetic products or futures products that allow them to get access to this very exciting real yield that we talked about, right? So you kind of abstract all those operations. You give them something that they, they get like, oh, it's just another benchmark. Okay, I can trade that. I think it's going to go up.

• 1:25:22Speaker 00

  I think it's going to go down. I think it's going to perform this way or this way against these other rates, which is like, again, the largest derivatives market in the world. So that's interesting. The other thing that they love is like this whole idea of you get what you get and I take 5% or 10%. That doesn't work for the traditional mind. They say, hey, listen, no, you're going to pay me relative to a benchmark and, and that's what I expect. And so those are the two things, whether it's the total return aspect or, you know, what I just described, that, that is really appealing. Like, like, you know, the ETF is, you, you take it, you make a security and it fits into their, into their ops. Here's just another rate.

• 1:26:01Ryan Sean Adams?

  Just another rate, and yet you can build so much in traditional finance. Obviously in DeFi, you can build a lot into it, but in traditional finance, you can build so much more. I guess it's, you know, coming full circle on, on this conversation. You said at the beginning, there were like $500 trillion of derivatives built on top of these, these types of rates in traditional finance. Those derivatives, right? It's not like, like if you add up all of the accounts, there's like, there's not like $500 trillion in actual money that people are, are custoding, right? It's just like the contract value of these derivatives. And I'm wondering if you could fast forward a little bit and forecast how this could maximally work with Ethereum. So could we come to a place where Ethereum is, say, worth like, you know, $5 trillion or something like?

• 1:26:46Ryan Sean Adams?

  That that's the like the base money of Ether. Maybe that's like Ethereum's equivalent of, you know, an M zero or something like that. And then we kind of go all the way up and then we have a multi trillion dollar, like tens of trillion dollar markets of derivatives built on top of Ethereum in the way that it's it's built on top of, you know, TradFi reference rates. Could you see a world where that's the case? And what would have to happen to get us there?

• 1:27:13Speaker 00

  A hundred percent. I mean, such a no brainer. As markets mature, derivatives markets tend to be much significantly larger than than things like spot markets. So, yeah, you know, it, look, it's early, right? But but you could definitely see if we do have a social consensus around benchmarks and you're start and you're able to compose. And, you know, if you see the adoption of Ethereum, like we think there's going to be, and you see continued explosion across layer twos and and applications, the need and desire to to to hedge risk is going to be, you know, profound. And so, you know, to the extent Ethereum keeps building like it's building,

• 1:27:56Speaker 00

  I think, yes, you're going to see, you know, a possibility of trillions of dollars of derivatives so that people can avail themselves of of risk management. Like, this stuff needs to be managed. And and so, yeah, super excited about that that future state. And hopefully, we can help get there.

• 1:28:14Ryan Sean Adams?

  You know, another form of social consensus that I think is important in general in TradFi and crypto, anywhere is sort of like a, you know, central meme to kind of illustrate illustrate the concept. And I think Bitcoin has really taken off in TradFi under this meme of like gold, right? It's like it's like gold, except it's digital gold. One meme that we've been kind of early on at Bankless, we've been talking about it for years because I think it really fits. And when I say meme, I don't mean that this just it's just a narrative. It's just a way of describing what's actually going on, right? We're not building this out of a whole cloth. We're sort of like synthesizing what the thing is. And we're using an analogy is Ether as an internet bond, basically, right?

• 1:28:56Ryan Sean Adams?

  There is kind of like when you stake it, it becomes a treasury, right? When it's unstaked, it's kind of like a dollar. And then you build these global reference rates on top of it. And you can build the massive derivatives markets. And so I'm, I'm, I think that is a meme that is catching on and that will catch on. Again, crypto natives are always early to these things, but TradFi, I think, will catch on to this. And I'm wondering how the Caesar rates like can help with that. Do you, do you think it will help with that? Do you think it will sort of cement this in, you know, you've got Bitcoin, that's the gold. And you have Ether as the internet bond. And look, it has this, you know, like daily reference rate and we're building derivatives on top of it. And they go, oh, okay, I, I see it's, it's kind of like the dollar. It's kind of like a bond.

• 1:29:39Ryan Sean Adams?

  It's kind of like LIBOR or the other rates that they've been familiar with. Do you think it helps in that cause?

• 1:29:46Speaker 00

  Totally, right? Like, again, the traditional mind, as you start looking at Ethereum, there's two things that like jump off the plate. First are smart contracts. You're like, wow, all this DeFi stuff, wow, it does stuff better than I can do in traditional finance. But then the other like really, really cool thing, if you're, if you have a traditional mind is this yield. And you're like, wow, this, this is, I get this. I understand yield. I understand the internet bond. And what we're proposing here with Caesar is, okay, traditional minds, here is something else that you understand. It's that composable observable benchmark that you can, that you can build upon. And you can build upon it to hedge your risk. You can build on it to speculate and to, and to take risk.

• 1:30:29Speaker 00

  And so it like feeds so naturally into like how this market, how an internet bond meme will evolve. I mean, it's, it's just such a no brainer. So very excited about it. I think you can see just the amount of, of utility it would bring to the, to the ecosystem. Because again, it's about, about, about risk management and, and there's just so much utility for all the players. And, and look, I get even more excited as the busier that Ethereum gets, the more activity, the more you need something like this.

• 1:31:00Ryan Sean Adams?

  We, we still haven't seen like a, a scaled out version of an interest rate swap type of, type of product in, in DeFi or in crypto. And like, what do you think is necessary to get there? Why, why haven't we seen that yet, Chris?

• 1:31:15Speaker 00

  It's because you don't have social consensus around standardized benchmarks. Right? It's really hard to, you know, most DeFi exchanges, et cetera, like they, they benefit through volume and scale. And again, getting back to the containerized shipping reference, you can only build scale through standardization. And so hopefully, and again, like I hope that by offering some standardization, you know, those DeFi protocols will be able to, to put much more activity and volume through, um, and also attract a new generation of users. And those users are not using it just to degen. They're using it maybe to hedge risk and to actually, you know, deliver real like utility.

• 1:31:59Speaker 00

  So yeah, I, I think that's the reason is we've lacked these standardized benchmarks um, across the board.

• 1:32:07Ryan Sean Adams?

  I, I, I'm wondering, Chris, as you think about a standardized benchmark and Caesar, how does CoinFund think about this as a product? Is it sort of like, um, is there revenue being, being built off this? Or is this like a public good? As I was looking at some of the, how the other benchmarks are made, it's basically like banking consortiums and financial consortiums that kind of come together. And I think one of the rates you mentioned, the SOFR rate, looks like that is secured by JP Morgan, I believe, right? So it, you know, are these like public goods for anyone to use? Like, why is CoinFund even doing this?

• 1:32:46Speaker 00

  Yeah, I, I think, I think it's a combination of a couple of things. So we have a commercial relationship with CoinDesk indices. They, they go out and they license it. And so there are some economics for sure at stake. But I also do think that, you know, we haven't made any, you know, we haven't made any money yet. In time, you know, we do think that it's going to also offer utility. So I don't think like making, making some money and also providing utility are like mutually exclusive. So that's, that's where we are today.

• 1:33:17Ryan Sean Adams?

  Well, as we end this then, Chris, um, this has been really, really cool. Actually, it got nerdy, but I like and geeky, but I think most folks will be able to kind of keep, keep up with the flow of the conversation. It's a really interesting product you guys are building. Just want to end with this. So like, who are you looking to talk to about Caesar? Who, who should get in touch with you? Who should start thinking about integrating it? What are the next conversations you'd love to have?

• 1:33:41Speaker 00

  Yeah, we've spoken with a number of different industry participants, everyone from TradFi to exchanges to emerging DeFi protocols. And so, yeah, anyone who's interested, you can reach out to me, PerkinCR97 on Twitter, or I guess we call it X these days. And yeah, I just think there's so many, there's a vast amount of applicability. So happy to partner with anyone to help them get this off the ground.

• 1:34:07Ryan Sean Adams?

  All right. And we are happy to promote the narrative of either the internet bond at Bankless, of course. Very exciting times. Chris, thank you so much for joining us.

• 1:34:17Speaker 00

  Thanks, Ryan. Really appreciate it. And again, thank you so much for educating so many people. You provide an incredible public good, and I just want to say thanks again.

• 1:34:26Ryan Sean Adams?

  Hey, we wouldn't be doing anything else. It's just, it's never boring here. And we are speedrunning the history of finance. I think benchmarks and reference rates are the next area that we have to cover here. So thank you for your work in putting this together. Bankless Nation, we'll have some action items for you. So Chris sent me a whole list of details about Caesar itself. We'll include those, including some articles on the concept that you can go research. Got to end with this, of course. Crypto is risky, so are reference rates. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.