Pod Insights Bankless 190 - Sergey Nazarov on Chainlink’s CCIP About this episode Sergey Nazarov is the co-founder of Chainlink. Chainlink, you might know as the price oracles for DeFi… providing DeFi with the data it needs to know prices. More ambitious than just prices, Chainlink is aiming to become the interoperability layer between all of TradFi and all of DeFi, acting as a gateway between onchain and offchain data. We’re going to explore that vision today on Bankless.
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✨ DEBRIEF | Ryan & David unpacking the episode:
https://www.bankless.com/debrief-sergey-nazarov-chainlink
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TIMESTAMPS
0:00 Intro
7:30 The Chainlink Vision
13:59 Offchain Computation
20:35 Why Chainlink Is Here
28:20 Offchain Trust Maximization Technicalities
31:31 Oracle Networks
38:53 Dynamic Automated Inception Marketplaces
45:45 CCIP
1:08:20 Why Swift Is Important
1:14:45 Banks to Blockchains
1:25:18 DTCC Explained
1:31:58 5 Levels of Crosschain Security
1:38:40 Crypto in 2030
1:44:40 Closing & Disclaimers
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RESOURCES
Chainlink
https://chain.link
CCIP
https://chain.link/cross-chain
The Five Layers of Cross-Chain Security
https://blog.chain.link/five-levels-cross-chain-security/
SmartCon Virtual Signup
https://smartcon.chain.link/virtual
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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures
Transcript 17,425 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 We want the whole world to run on blockchains, which means the whole world's value has to go into blockchains, which means banks, asset managers, sovereign wealth funds, family offices, everybody has to be connected to and utilizing blockchains for their favorite flavor of financial products. So this is, you know, about as big an opportunity as I can imagine for banks because they're going to be able to generate huge amounts of assets, put them on chain and give them to a global market as long as that global market can connect to their chain, which is by the way what CCIP does.
0:40 Ryan Sean Adams? Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman and we're here to help you become more bankless. Bringing banks to blockchains. How do banks and crypto networks communicate? And why should they? What's the prize available for both of them? We brought on Sergey Nazarov from Chainlink to help answer that question. A few takeaways for you in today's episode. Number one, why banks and crypto live in separate worlds and how to bridge them. Number two, we talk about banker tech. What is SWIFT? What's the DTCC? How you even heard of that acronym? Number three, what do decentralized oracle networks like Chainlink have to do with any of this?
1:25 Ryan Sean Adams? Number four, why uniting banks and blockchains can produce a $100 trillion market, maybe higher, what Sergey calls securitization 2.0. Number five, what makes a decentralized network? Sergey has five levels of security that you need to hear. And number six, will crypto happen fast or will it happen slow? Of course, you're listening to Bankless because you think crypto is inevitable, but how many years do we have to watch it all play out? David, why was this episode significant to you?
1:56 David Hoffman? During this episode, listening to Sergey, I had the old bankless thesis, the Protocol Sync thesis in the back of my mind, Ryan. And I think he was articulating a version of that when we asked about why there is this incentive for banks to bridge their assets into the world of crypto, into the world of blockchains. Sergey has this vision that as soon as these two systems can talk to each other, and of course, he thinks that CCIP, the new protocol from Chainlink, is the way that these two systems talk. Once that happens, all of a sudden, there's just this gravitational flow of value on-chain, where banks go from being off-chain to on-chain. To me, that's the Protocol Sync thesis playing out.
2:37 David Hoffman? Blockchains are these new, lower-ledgers than banks. They're a ledger deeper than the banks, deeper than the central bank even. And all of a sudden, the value of whatever banks hold on their ledgers can be expressed on-chain. And that is the Protocol Sync thesis. Eventually, incredibly neutral, decentralized, larger networks will eat up all the smaller ones. And banks are the smaller ledgers, and Ethereum and all of its Layer 2s are the larger ledgers. And we just need some sort of path, pipe, to bridge these two forms of communication, communicating states around ledgers. That's the entire thing I was thinking about while Sergey was going on. But I didn't dare bring up the Protocol Sync thesis because I'm not sure he's familiar
3:22 David Hoffman? with it. But we'll have to talk about that in the debrief.
3:24 Ryan Sean Adams? Yeah, I agree. It's very much a Trojan horse going on. We're getting them hooked on a blockchain, I think. There's a ton of wins for traditional finance, once they realize this. And I think Sergey's thesis is, all we're missing is the glue. How do you connect banker tech and blockchain? So that is the source for today's discussion. Yeah, and David, we have so much more to unpack during the debrief. This is our first Chainlink episode ever, which is somewhat interesting, and there's maybe a backstory there. We'll save that for the debrief, though. And if you are a bankless citizen, that is available for you now on the Bankless Premium feed. Some disclosures before we get into this episode. Nothing to disclose. Neither David nor myself hold any assets that are relevant to the show. Of course, we are long-term investors.
4:05 Ryan Sean Adams? We're not journalists. We don't do paid content. There's always a link to all Bankless disclosures in the show notes at bankless.com/disclosures. We're getting right to the conversation with Sergey, but before we do, we want to thank the sponsors that made this episode possible, including Kraken, our number one recommended crypto exchange and the best way to go from bank to blockchain. Go check them out.
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6:39 David Hoffman? and fully EVM-compatible. Faster transaction speeds and significantly lower gas fees. So visit arbitrum.io where you can join the community, dive into the developer docs, bridge your assets, and start building your first app with Arbitrum. Experience Web3 development the way it was always meant to be: secure, fast, cheap, and friction-free. Bankless Nation, I am super excited to introduce to you Sergey Nazarov, the co-founder of Chainlink. Chainlink, as you know, provides all the prices in for DeFi, providing DeFi with the data that it needs to know what prices are. But really, Chainlink is much more than just prices for DeFi. Chainlink is aiming to become the interoperability layer between all of TradFi and DeFi, the gateway between off-chain and on-chain data. And we are going to explore
7:22 David Hoffman? that vision of Chainlink today with Sergey, the co-founder, here today on Bankless. Sergey, welcome to Bankless.
7:28 Speaker 00 Thank you for having me. Great to be here.
7:30 David Hoffman? So I started off this conversation talking about, I think, what everyone understands Chainlink to be inside of the crypto context. It powers a lot of the information that many DeFi apps need to work even at all. Like, we need to know the state of prices for many, many DeFi apps to even function. But I think if we just focus on that conversation, we would really be selling the Chainlink vision kind of short. The Chainlink vision is much more than just prices for DeFi, or even just data for DeFi. Maybe you could start to open up the conversation of where Chainlink, the ultimate vision for Chainlink, and why it's created such a powerful movement behind it, and what it's really looking to do. What is the Chainlink vision?
8:09 Speaker 00 Sure, so Oracle Networks are a environment that does computation in a trust-minimized way about everything that you want to make trust minimized or have consensus about that is outside of a blockchain, right? So blockchains generate this unique computational result of this decentralized consensus, where multiple independent nodes agree, basically do the same computation and the computations all match up. So they arrive at consensus on what is basically a trust-minimized computation, because no one can manipulate that computation, no one can change it, no one can modify it, as long as it's done according to the protocol of that chain.
8:52 Speaker 00 But blockchains only come to consensus about three things: private key signatures, token ledgers, and state machines. So these are the three things that blockchains arrive at consensus about. This is like the universe of what they're able to do, and this is why blockchains for so long have been focused on tokenization, because that's a native capability. There is, however, a lot of other things outside of blockchains that would benefit from consensus proving things about them. And this extends to random numbers, various computations, any and all data, communication and connection between chains. And this is what Oracle Networks do.
9:36 Speaker 00 So all Oracle Networks don't have a chain. They don't make a chain. Chainlink doesn't have a chain. It is an Oracle Network kind of framework that has generated over 1,000 Oracle Networks live on production, securing value and processing over $8.5 trillion worth of transaction value. And the way it's done that is every distinct problem that you have, you can generate a unique Oracle Network to solve that problem. So for example, you need market data about a certain price of a certain asset, or you need a random number computation, or you need some connection to another chain.
10:19 Speaker 00 In the Chainlink world, what you do is you make an Oracle network that generates a service, basically. A single, specifically focused service that's made up of multiple independent nodes with multiple independent key holders that are following the protocol of that service. If it's a data service, then the Oracle network is computing the aggregation of data from multiple different places and making that data, in Chainlink's case, resistant to various manipulations, such as flash loan attacks and others. And this is why Chainlink data is so widely used. It's because you can generate Oracle networks that reliably prove things about market data.
11:03 Speaker 00 But Oracle networks extend to basically every computation outside of a blockchain that you would want to make trust minimized through the use of consensus. And so that's what Chainlink has now expanded to do, both in terms of going beyond market data to be the largest provider of proof of reserves, the largest provider of various other types of data, and then moving on to various computations for gaming, automation. Very soon, we're releasing into mainnet something called Functions, which is going to have a lot of very critical capabilities for people to access various external systems. And most recently, what has gone live is the Cross-Chain System, which once again uses Oracle networks
11:47 Speaker 00 as basically a validator set to compute cross-chain communication. And that communication includes both the movement of value and the movement of messages, basically data. And then the very important thing that CCIP can do is it can combine the value with the messages so that when you send the value, you can tell it what to do when it reaches its destination, which means you don't need to be at the destination with your own wallet or your own address. You can just instruct the system that you want the system to do something with your value when it reaches the destination, which is, you know, just an advanced feature that Oracle Networks, once again, do computations around. So...
12:30 Speaker 00 I think this is the thing that isn't super clear to people because the main use case of Oracles for the past couple of years has been DeFi market data. Basically because DeFi boomed. And so the Oracle Network computing method that Chainlink invented and originated is something that was very widely used for that. But actually, it's very widely usable for everything else that you need to do a computation on, that you need to prove with consensus. And that extends both to all data, all computation that's off-chain, so computation that chains aren't able to do, and now all cross-chain communications.
13:14 Speaker 00 And the important thing is that this all uses the same Chainlink kind of Oracle Network security model that has already secured so much value. And that's why people are also prone to rely on it because it has stood the test of time for over four years on production, and the amount of value transacted, and the amount of protocols secured. But it isn't just about market. It's kind of like AWS was at some point about S3, but then it had a lot of other things that cloud computing could do. That's kind of where Chainlink is now, where it originated by doing the computations around market data because there was a lot of demand for that. But now it has expanded far beyond that to many other types of computations.
13:58 David Hoffman? As we progress in this conversation, I want to fill in that gap between where Chainlink has been, where it's frequently known to be, and the very expansive vision for itself, which is almost limitless, I'd say. Starting with Chainlink and just the price of Oracles for DeFi, and then expanding to just like general off-chain computation. Well, off-chain computation is like everything. That's almost anything. It's a very open-ended use case. And I'm wondering if you could try to just shed a little bit more light on just like, when you talk about off-chain computation, what does that mean? Like, is that how, can we define that a little bit better?
14:41 Speaker 00 Sure, so what I mean technically speaking is trust minimized off-chain computation. So it doesn't mean every single computation that you don't have any trust dynamics around. So if you want to run a private GPU for yourself to play a game, you don't need trust minimized off-chain computation. Just like you don't need a blockchain to run a GPU for you to play a game on your personal computer, right? So you don't need, there's no trust issues, there's no value transfer, there's no big problems. What I mean by off-chain, trust minimized off-chain computation, is basically the spectrum of all computations outside of a blockchain that need to be made trust minimized to create what we call the verifiable web. So I'll give you an example.
15:26 Speaker 00 If you have a DeFi protocol and the DeFi protocol ingests DeFi market data, basically. Well, not DeFi market data, like market, market data, crypto market data from a chain link network. That isn't where the DeFi protocol's interaction with off-chain computation ends, right? That's kind of actually where it begins. Then you need to automate the protocol, right? Because the protocol doesn't know a lot about, doesn't know what time it is. There's various conditions that need to be triggered that the protocol doesn't know about itself. So then you have chain link automation. And then the protocol, let's, let's say the protocol has some asset that needs to be, that want, that they want to be purchased by a bank. And the bank needs the asset to comply with identity data.
16:12 Speaker 00 So now you need another piece of data added to the asset, right? And then, let's say you took the asset, you made it, you injected proof of reserves into it. You proved the price of, of the asset that the, that's the reserves are proven for. You've added the data about identity so the asset can be sold to the counterparty that requires it to have identity data, so they know who they're buying it from, because they can't buy it otherwise. And now you need to move it to their chain, because that's where they, that's where they want it when they buy it, right? So they send you a stablecoin using CCIP. That transaction triggers the purchase of the token we just talked about from the DeFi protocol and sends it over CCIP to them. So this is just some examples of the trust minimized computation
16:57 Speaker 00 that can't be done in a single server by the creator of the asset. Just like the market data can't be fed by them. The proof of reserves can't be fed by them. The automation can't be done by them. The cross-chain can't be done by them. More importantly, they don't want to do it because it's an extremely complex and security sensitive process, which takes, you know, tens of millions of dollars to create any one of these services and then millions of dollars to audit it and, and huge amounts of resources from nodes to run it, right? So generally, application creators don't want to create infrastructure. They want to create applications with the help of good infrastructure. So if we, if we just go to DeFi already today on production, multiple DeFi protocols use multiple separate Oracle networks for distinct purposes.
17:41 Speaker 00 For providing different types of data, for providing automation, now for providing kind of cross-chain connectivity. So that's a very concrete example in today's world. In the future world, you can see a lot of trust minimized off-chain computation, creating the verifiable web. The, the real question is, what are the computations that people need to make trust minimized in order to create the verifiable web, which is what we call this kind of vision of the internet that we're all excited about? And how are they going to do those computations if a blockchain doesn't do it? Right? A blockchain will allow private key signatures. It'll allow tokenization. It'll allow various conditions around that tokenization,
18:26 Speaker 00 such as DEXs, DAO votes from tokens, conditional statements about what would happen if an Oracle network were to provide it with data or were to create automation for it or were to do something else, right? Or some other system. But the... The real kind of point is that trust minimization is a spectrum, right? In DeFi, we have hypersensitivity to trust minimization because there's a lot of, you know, distrustful, paranoid, smart people that understand how the world actually works in this part of the world. Then there are people that weren't distrustful until Silicon Valley Bank, right? And now we've kind of converted them more.
19:11 Speaker 00 And they're like, okay, I understand what you were saying. You know, private keys are good. And so the real thing that's going to happen, in my opinion, is that more of the world is going to realize that a verifiable web and trust minimization are what they want. The reason they don't realize it now is because they don't have the option, right? Like, if stable coins were ubiquitously available, if they had remained stable, which they unfortunately didn't remain that stable during SVB. So if they were ubiquitous, if they were easy to get, and if they were stable, I think that many people would have migrated onto stable coins as a store of value during SVB, right?
19:54 Speaker 00 Because it has all these superior properties, and it has this trust minimization about actual control of the asset. So I think that we are really in a kind of world where more and more people will move towards the verifiable web. I also think that AI will accelerate that big time, because the amount of distrustful, bad, dishonest information and stuff that will bombard people will increase. And so computations through blockchains and computations through oracle networks will become more valuable in that world. Does that all make sense? Does that answer your question, or not really?
20:34 Ryan Sean Adams? No, Sergey, that's really helpful. And actually, in getting into this episode, I don't think I was ready for kind of a rabbit hole to go down, but it strikes me that I don't think Bankless has actually gone down the oracle network rabbit hole. And I'm kind of prepared to in this episode. That sounds like a rabbit hole we should go down. So I want to set like some overarching, you know... And aiming for this and maybe zoom out, right? So we live on this, you know, internet with a lot of unverified computation, right? So we don't know what exactly to trust. And I think in kind of the traditional world, most people don't see a need for verifiable computation because they already have trust networks set up.
21:15 Ryan Sean Adams? And most of these traditional trust networks take the form of like reputation. You know, it's coming from XYZ institution who has a reputation and I can trust it. Right? So that's one trust network that the tradfi world turns to. Another kind of source of trust is probably the legal framework, the legal environment. Right? I can trust this because this information source, because if they do something wrong, they'll be breaking the law and they'll be fined and they'll be penalties and somebody will go to jail. And in order to avoid that, they will not do that. So therefore I can trust this source. I think what we have been focused on primarily at Bankless and in crypto so far
21:57 Ryan Sean Adams? has been really a more trustless or let's say trust minimized on-chain data set, which is the blockchain essentially. But what you're saying is you're making the argument that blockchain data is relatively, it's very powerful and it's incredible and it can trust minimize a lot of things. But its aperture is somewhat narrow in that we could do stuff with private keys. We can do stuff with tokenization. And there's this whole world of other data, of other compute that also needs to be made more trustless on the spectrum. And you're saying that's kind of the void that oracle networks really fill. And so I think my main exposure to chain link going into this episode
22:42 Ryan Sean Adams? was a subset of that off-chain data that becomes more trust minimized, which is price oracle data, right? So thank you very much, Chainlink, power so much of DeFi. And so we know the price of ETH on chain, thanks to Chainlink oracles. And what you're saying is that's only the tip of the iceberg. There's a whole bunch of other data sets. That the world needs, that the internet needs, that need to be digitized and made trust minimized, that where it's not a good use case for the legal system, or kind of the reputational trust system to maintain. And you're saying that's what Oracle Networks are here for, and that's what you're executing against. Is that like a useful regurgitation in kind of that,
23:27 Ryan Sean Adams? you know, 30,000-foot view of what Chainlink is here to do?
23:32 Speaker 00 I think that is useful. Thank you. Yeah, that's a good summary with a few small caveats. One of the caveats is it's not just data. It's off-chain computation, whether it's related to data or not, including communication between chains. So all trust minimized computation and data aggregation is a subset of trust minimized off-chain computation that has simply gotten significant adoption from the trust minimization-sensitive DeFi user base. And it would actually, it actually makes sense that the people in this industry, in the blockchain industry, are very sensitive to trust minimization because that's the unique defining property of the products in this industry.
24:16 Speaker 00 So it makes sense that something like this would find its adoption in a world like blockchains. So that's the first caveat. The second caveat is that Oracle Networks greatly increase the use of blockchains. And blockchains increase the use of Oracle Networks. Because as you start interacting with Oracle Networks, you'll find that a lot of the data storage, settlement, value transfer aspects of your relationship with counterparties, peers using your system, you know, institutions on your platform, whatever it might be, that a blockchain has an important role to play.
24:57 Speaker 00 So not only can Oracle Networks feed information into blockchains and enable them to do much more in the form of DeFi, GameFi, decentralized insurance, you know, a huge number of other things. But they can also connect existing systems to use blockchains. So they are a conduit through which existing infrastructures, existing Web 2 systems, existing bank systems. And this is what we've been doing with SWIFT and many big market infrastructures and many big banks. So it's a bidirectional relationship. And the bidirectional relationship creates greater trust minimization,
25:38 Speaker 00 leading to a verifiable web that is immune to various manipulations of, you know, keeping people's money, reneging on contractual arrangements, being subject to AI manipulation. Basically, manipulation-resistant web. That's what verifiable web is. You want to be manipulated? You want to take the chance? The bank's not going to give you your money? You want to take the chance? The insurance company's not going to pay you? Okay, you can stay on the manipulatable web and take your chances. Your alternative now that we're working on and that I think our industry is working on, whether or not it talks about it, is a verifiable web, where you can verify that your assets are within your control at all times, that the insurance company has no choice but to pay you.
26:24 Speaker 00 And to your point about the legal system, it absolutely is about not leading the legal system. So I'll give you a fantastic example, my favorite example of this, which has nothing to do with tokenization. It has to do with crop insurance. So there are places in the world that will experience drought. Experience drought will continue to experience various exogenous weather events unrelated to anyone doing anything wrong in that place. And that will affect various farmers. And those farmers have no way to get insurance, basically because their local legal system does not allow insurance to exist. Doesn't allow it to exist. No insurance company can generate insurance in the legal frameworks available to that country, basically. Yet these people need insurance. They have an internet-connected Android device.
27:09 Speaker 00 With the help of stablecoins, with the help of smart contracts, with the help of oracle networks, you can give them a completely parallel system of contracts. The oracle networks verify the weather, triggering the smart contract. The smart contract executes the state change, which is the value transfer method, the settlement method, to take the stablecoin from the capital reserves of the insurance protocol and give it to the farmer.
27:37 Speaker 00 This is what I think will change in the world, where there will be this massive leapfrogging in emerging markets. In developed markets, it'll be different because there's a huge amount of problems. And you're right that people don't realize that these problems exist. But I can promise you, they realize them when they go wrong. And it's in those moments that our industry, I think, shines and will continue to shine. And unfortunately, based on the world, the way the world is built today, it's going to continue to go wrong quite a bit, which is both sad. But in a certain sense, it's an opportunity to create a better, verifiable web and a different way for the world to work, if that makes sense.
28:21 David Hoffman? Understanding how this works technically, I'd like to go into that a little bit. And the base iteration of Chainlink, which is just like provide price oracle to DeFi, is a pretty simple concept to understand. There's just a smart contract that provides an output. And then other apps consume that as an output, and that's how it works. When we expand Chainlink's vision for just generalized off-chain computation that we want to create trust minimization, I start to lose my ability to actually understand how this works technically, because there's so many different kinds of off-chain computation that we would like to trust minimize. How do we have like a nearly infinite spectrum
29:05 David Hoffman? of types of things that we would like to come to consensus on? Computation that we would love to come to consensus on? How do we make that into a standard? How does that actually become trust minimized when there's so many different types of data out there? How do we actually like make this into a consumable system for applications and people just to organize around? Does my question make sense?
29:29 Speaker 00 Yeah, your question totally makes sense. So I would just clarify what it is that Chainlink does and what it makes possible. And even to your point about consuming the price data, I'll just use that as an example to show that it's not exactly as simple as that. So basically, you need to create a node network. You need to create a validator set. In the case of price data, you need that validator set to be made up of high-quality nodes with reputation that proves that they are high-quality and reliable. Then you need that validator set to connect to various data sources for which you also have a reputation. So what Chainlink does is it not only allows you to combine various nodes into a validator
30:11 Speaker 00 set that you then define as doing a specific computation from a specific set of data sources, but it also allows you to define how that validator set will manage various risks. So I'll give you an example. When FTX happened, there were a number of data providers that were weighted toward FTX as a price source. So not only were the Oracle networks within Chainlink operating correctly, but the Chainlink system, the Chainlink network, and the way the whole system works basically ended up seeing that there was a skewed result coming from a few data providers that were heavily weighted towards FTX. Those data providers were removed and replaced with data providers that were not weighted
30:55 Speaker 00 towards FTX. So Oracle networks are actually about a few things. They're about combining nodes into committees, into validator sets, that do very specific singular computations. Singular. So a single Oracle network will generate a single aggregation of a single price pair, right? And that's what it'll do. And the Chainlink network and framework, it has launched over 1,000 Oracle networks on production that have secured value successfully for over four years, processing 8.5 trillion in transaction, the majority of that from market data.
31:32 Ryan Sean Adams? So Sergey, Chainlink is an Oracle... it is a network of Oracle networks. It's not... Just one singular network.
31:40 Speaker 00 Absolutely not. We do not have a single network that will not scale and that's not secure. And the people that build single, you know, I hope we'll have time to talk about the five levels of cross-chain security. Well, I'll explain the different types of networks you can build. But, but no, Chainlink is over a thousand Oracle networks. And if you count the staging, the test net, some of the private instances, it's thousands of Oracle networks.
32:03 Ryan Sean Adams? And each Oracle network has a specific function, has a specific set of inputs and a specific set of computation inputs and a specific set of computation outputs.
32:14 Speaker 00 It's a way to create focused validator sets that are focused on generating a specific, you could call it a decentralized service. So just like you have centralized web services, Chainlink is the way to create decentralized services. And each service is very specific. And then what you can do is as the value secured by that service increases, you can increase the amount of nodes in that service, you can increase the amount of data providers, the variety of data corrected to that service, you can increase the cost that the node provider is willing to bear to broadcast transactions. For example, the Chainlink network, when Ethereum gas went to over 2,500,
32:58 Speaker 00 was one of the few things that continued to broadcast without missing any updates. And that's because each of those services were properly incentivized and because there was basically a focus for each service to do that. So each service can be configured with the amount of nodes, with the amount of data, with the conditions that it has to meet. And if the service doesn't meet those conditions, it suffers reputational damage. If the node doesn't respond, it suffers reputational damage that makes it less likely to be included. So it's not about, it's not about a single network. And Chainlink doesn't have a chain. And Chainlink isn't us forking some chain and changing some configurations.
33:40 Speaker 00 Chainlink is a completely separate method of generating consensus that we put together with somebody called Ari Juju. who used to be the chief scientist of RSA, one of the largest security companies in the world, and now has gone on to be Chainlink's chief scientist. So this is not us repackaging blockchains. This is not us even making a single network. This is about making millions of individual decentralized services that can be combined into highly advanced decentralized applications. So that the way that decentralized applications are built is the same way that web applications are built. If you look at advanced web applications, if you look at Netflix, Uber, these things are made up of thousands of services.
34:25 Speaker 00 Each service has a distinct role to play and a distinct focused responsibility. And this is how they scale, and this is how they create security, and this is how they create separation of concerns. And if you look into it, it's basically called service-oriented architecture. So this is the evolution of every infrastructure thing ever. You start with one big system that no one can replicate. Then you pull the system apart into smaller pieces, then into smaller and smaller pieces, right? So what Oracle Networks are, are they are all the small pieces that do all the computation for data, off-chain computation, cross-chain communication that smart contracts need to go beyond just tokenization.
35:08 Speaker 00 And even the more advanced forms of tokenization are beyond tokenization because real-world asset tokens require proof of reserves. If you want to sell real-world asset tokens to banks, they require identity. If you want to send them to a bank chain that's going to buy them, you need a cross-chain bridge that's actually secure, not two servers glued together to look like a decentralized whatever. So this is more important than data. Data, it's just like, you know, platforms like Salesforce, the whole Salesforce thing started with a CRM. Amazon Web Services started with S3. Microsoft Windows started with Microsoft Office. Every key computational platform starts with a few use cases that define it
35:52 Speaker 00 and for that short period of time, explain to people what it is. But they're actually much more. Cloud computing is much more. SaaS is much more. Operating systems are much more than Microsoft Office. Oracle Networks are much more than just the aggregation of market data. Does that answer your question?
36:14 Ryan Sean Adams? It does, yeah. And okay, so really quick, though. So these services that individual Oracle networks are providing, are they subject to market forces? So, you know, somebody's buying the state like, how does the, how do we know when to kind of expand the validator set? Is it, is it managed kind of top down or bottom up with respect to market forces?
36:36 Speaker 00 Users can come and make those decisions. And the whole system is made to be increasingly configurable. So basically, the point of the chain link network is for the creator of an application, or a bank, or an insurance company, to be able to decide their own security needs and represent those needs in an Oracle network. So if you have a test net, you can use one node with no value, right? If you go to production with three, you know, with a hundred dollars or with a million dollars, you need at least three nodes. You know, they're guidelines, basically. But the point of the chain link system, you know, if you go to 100 million,
37:20 Speaker 00 you definitely should be past seven nodes. If you, if you go to a billion, you're definitely past 20 nodes. Do you want to include zero knowledge proof technologies? Do you want to use trusted hardware execution environments in the nodes? Do you want the nodes to, you know, kind of reach certain levels of gas payments to make sure your transaction gets in? All of these things can be configured because the point of the chain link system is not for us to give people a single monolithic system that dictates that they cannot do anything other than what the system dictates. That is not the point. The point is for people to configure and define their own services, just like they configure and define those services when they're making web applications. The, the point is to go from a couple of thousand Oracle networks
38:05 Speaker 00 to millions of Oracle networks so that a junior developer can make a DeFi application in under a week with all the data, all the identity, all the connectivity to the 50 other chains where their customers might be to buy their thing. It should be as easy to make a DeFi application as it is to make a web application. And that means that people, we cannot possibly make a system that fulfills all those requirements. The only way to do that is to make a flexible system where the creator of the application defines what the service does for them. And so that's what Chainlink does. And with a security, from a security point of view, it allows the nodes and the security
38:47 Speaker 00 to scale with the amount of value in the system for that specific service.
38:52 David Hoffman? Everything I've come to understand about how protocol scale always falls back to this pattern of pushing complexity to the margins. I think that's kind of what you articulated. There's not this central Chainlink org that is saying, hey, let's add this new data to the dataset. The idea for Chainlink is that it scales just by allowing the market to express, hey, there's two sides of this market. There are people that would like to have this data and then service providers to supply this data. But I think the question that Ryan was really getting at, and the thing that I would like to know is like, how do these, how does the inception moment of this relationship happen between the supply and demand side of this two market, this two-sided marketplace? It's like, how does, how do we come to consensus on the form factor of the data?
39:37 David Hoffman? So if there is a new data, somebody, some dev comes out there and it was like, hey, I would like to have some sort of trust minimized data fed to me. How does the supply side answer to that demand? And how does the demand side actually say like, and this should be the format and it should look like this and it should look like that? How does the, just the inception moment of a Chainlink Oracle network come to be defined?
40:01 Speaker 00 So we're going to be announcing some exciting things about how that works in a more automated, scalable way at the SmartCon conference coming up very soon. And there, the answer will basically be a dynamic automated marketplace. And so that'll be something that's very exciting. And we've gotten to the point where we can make that. The answer right now is basically threefold. A, there's a good chance that the Oracle network you need already exists. You can sign up and use that Oracle network and pay fees into it. And those fees go into a shared pool that increases the security of that network. So basically, option A is someone's already made a service like this and they're open
40:44 Speaker 00 to you using it as long as you pay into its security. So that's option A. Option B is you can contact us, we can help you figure it out. You know, there's different frameworks, there's different data scores for different data sources. And basically, you know, because Oracle Networks are still early in how they're understood and how they're built and really, from what I can tell, no one else really builds these things in a secure, reliable way, as you can tell from all the bridge hacks and all the other things. Right now, it's still kind of complex. There's a number of frameworks that we can help people understand and use. And then the third way is you go and you do it yourself. So the third way is you take the chain link network system, you take the docs, you take the code,
41:27 Speaker 00 and you go to node operators and you combine network on your own. That is what we are looking to make much easier. That is what's going to become much, much easier. Because now there's been over four years of experience in our community with node operators, you know, in how and what it takes to make a great Oracle network. And so we have various, you know, things we're going to be releasing that'll make that self-service path much easier. And that's the real goal. So the real goal is that you can go, you can define your parameters, and the system can automatically generate an Oracle network for you against those parameters, without you having to, you know, pull down code and organize with node operators.
42:10 Speaker 00 But, you know, the thing I can definitely tell you is that we, with making over a thousand Oracle Networks on production, are very far ahead on that dimension. The closest other people are are basically taking two servers, you know, calling them decentralized, and hoping no one notices that there's only one person running the thing. And then the other place where people are are they can make one network. So they generate one network, and they say, "My one network does one thing, and it does it for everything ever in my whole system." And the reason people do that is because they don't know how to make multiple networks. So we are farthest along in the ability to generate separate, independent networks in an automated way that each have their own distinct security properties, responsibilities,
42:55 Speaker 00 and methods. And that's actually what...
42:59 Speaker 00 What the protocol continues to expand to do, so it has a kind of core consensus method, and then it has all these expansions into making specific categories of Oracle Networks, which the community and ChainLabs are continuing to help expand into more categories, so that you can have more types of services.
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43:58 David Hoffman? Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly-growing ecosystem home to Ethereum. Vitalik has shared its excitement for the Cello Layer 2 on the Cello forum, so has Ben Jones from Optimism. But why? The Cello Layer 2 will bring huge advantages, like a decentralized sequencer, off-chain data availability, and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum, and more real-world use cases for Ethereum without compromise. And real-world adoption is happening. Active addresses on Cello have grown over 500% in the last six months. With the Cello Layer 2, gas fees will stay low, and you can even pay for gas using ERC20 tokens.
44:41 David Hoffman? But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forum. Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum. You know Uniswap, it's the world's largest decentralized exchange with over 1.4 trillion dollars in trading volume. You know this because we talk about it endlessly on Bankless. It's Uniswap, but Uniswap is becoming so much more. Uniswap Labs just released the Uniswap Mobile Wallet for iOS, the newest, easiest way to trade tokens on the go. With a Uniswap Wallet, you can easily create or import a new wallet, buy crypto on any available exchange with your debit card with extremely low fiat on-ramp fees, and you can seamlessly
45:21 David Hoffman? swap on mainnet, Polygon, Arbitrum, and Optimism. On the Uniswap Mobile Wallet, you can store and display your beautiful NFTs, and you can also explore Web3 with the in-app search features, market leaderboards, and price charts, or use Wallet Connect to connect to any Web3 application. So you can now go directly to DeFi with the Uniswap Mobile Wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap Wallet today on iOS. There is a link in the show notes.
45:46 Ryan Sean Adams? Okay Sergey, so we talked about the vision for Chainlink and the potential of all of these massive oracle networks, and we've talked about the technicals of how it works. Want to get into some specifics here, and one specific use case that I think is very relevant for Bankless listeners. What I'm about to say is somewhat ironic in that this entire podcast is called Bankless, and yet I'm about to ask you how the crypto system, the Bankless money system that we've created on blockchain, how we can connect that to the TradFi banking world? Because I think you potentially have a solution here. So of course, what Chainlink does, the expertise, is brings off-chain data and compute back
46:30 Ryan Sean Adams? on-chain. It's almost kind of this interoperability piece that can be leveraged as an interoperability piece between TradFi and the existing banking system, and crypto, and DeFi. And I'll just bring listeners' attention to the fact that, yes, crypto has gotten a lot bigger, and I think since the time you joined, Sergey, and I know you've been in crypto for a very long time, you've probably watched it grow from multiple billions to now a trillion dollars in terms of market cap. And, you know, we Stand back, we look at that and we're pretty proud of that. Yet, outside crypto, in the traditional banking system, we've got tens of trillions of dollars and hundreds of trillions of dollars.
47:15 Ryan Sean Adams? And there's this opportunity through real-world assets, through interoperability, to connect the bankless system to the bank system. And even if you look at what banks actually are, they are private ledgers that are maintained by institutions, by banks. And we have, in crypto, we have open, permissionless, public ledgers. And so, connecting these two is something I know Chainlink is working on. Can you give us the high level, though, for folks that might ask the question of, like, why is this a good thing? Why should we want to connect our blockchain systems to our TradFi banking systems?
48:00 Ryan Sean Adams? What are the wins for both sides of the equation here?
48:05 Speaker 00 Yeah, sure, absolutely. So, yeah, you're right. I've seen a lot of the things in this industry. So just to be clear, I've been in the industry since 2010. So I think I've seen it below 100 million, from what I remember. Definitely when Bitcoin was well below 30 bucks, like way before even low single digits and maybe even lower than that. I don't remember exactly. But generally speaking, there has been this friction with the banking sector. I think, though, the reality of the world is that money is money and value is value. And the more that value that flows into the blockchain industry is, the better. And realistically, what all of us really want, I think, is a verifiable web that's backed by a set of protocols and standards that are immune to manipulation.
48:50 Speaker 00 So what we're doing with something called CCIP is creating a single Internet of Contracts where all the different chains, whether they're bank chains or public chains, can connect to each other. So the problem of our industry is not whether the value is in a bank or whether it's in a crypto wallet. It's that all of this value is disconnected. And this was something that happened in the Internet as well. You had a period in the Internet where you had these disparate, different Internet technologies. And everyone was running different databases, different LAN networks, different networking technologies that didn't communicate with each other. And you had these kind of siloed, different pieces of the Internet. And then you had something called TCP/IP come along
49:34 Speaker 00 and basically unify all these disparate, separate technologies into a single Internet. So regardless of what database you were on, regardless of what LAN network you were running, regardless of what networking technology you wanted to use, you could be part of the single Internet. And even today, people use different technologies that they connect to the Internet. So this is what we're seeking to do with CCIP. CCIP is the Cross-Chain Interoperability Protocol. It's a message transfer, data transfer protocol, which, as you can tell, we have a huge amount of experience with, of the relationship between data and blockchains. And so the CCIP protocol does two very important things. The first thing, from the point of view of the banking sector,
50:16 Speaker 00 is it gives them a single way, a single place, a single integration that can connect them to thousands of chains. So with one integration, they can eventually connect to thousands of chains, instead of having to integrate with all of those chains natively, which, by the way, they don't want to do, they won't be able to do, and they will absolutely need to interact with those chains because all of those chains will be their sources of liquidity, their sources of customers, their sources of users. So every bank will have its own chain. So first of all, the banks need to get on multiple chains in order to just transact with each other in bank land, in the banking sector, in capital markets. So that's problem number one.
50:57 Speaker 00 Problem number two is, how do you get any blockchain technology to transmit data? Whether that's data about the movement of a token, whether that's data about messages and events. So it's really all data for us, whether it's the movement of a token or whether it's a message. Taking this approach actually has a very powerful result, where you can combine data with value. So what that means is that not only can you connect an existing system into all of the chains on CCIP, by connecting your existing system that doesn't even have a blockchain into the CCIP system. So not only can you do that, but then, and this is what we did with Swift and some of these big market infrastructures, like the DTCC and many others,
51:41 Speaker 00 you can actually use your existing APIs, your existing things like Swift Messages, to define what you want to do on a blockchain. And then from your existing systems, you can send those transactions into CCIP. And what this does is it reduces the friction for banks, asset managers, CSDs, exchanges, that power and hold trillions of dollars, to integrate with blockchains. And the reason that's important is because the net value that can flow from those places is in the hundreds of trillions of dollars. That's what we're talking about. So our goal with the banking sector is to allow them to integrate with chains
52:26 Speaker 00 using their existing infrastructure, which by the way, they will never, they will never get rid of that. They will never replace it. They have infrastructure in there that's 50 years old. I'm not kidding you. So they're not going to replace it. The only real approach is to connect it. So that's what we're doing. And then the second key step is once they all have their own chains, and once they're transacting with each other over CCIP, how does the value from bank chains, how does the value from Fidelity, how does the value from Citibank, how does the value from huge banks flow into public chains so that DeFi protocols can be used from a bank? You folks can think of banks as wallets. They're huge wallets
53:09 Speaker 00 with huge amounts of money and huge amounts of users that all of us want to use DeFi. That's what we want. We don't care where the value comes from. We care that the value turns into this reliable blockchain-based state.
53:26 Speaker 00 And so that's what we're facilitating by reducing the friction that banks have to go through. And we're reducing the friction massively. Also, the other thing that's quite meaningful is that the banks are in the financial products and asset business. So I actually fully expect these banks to generate high-quality real-world asset tokens. And those real-world asset tokens can then be used in DeFi to diversify the collateral of DeFi. So on the one hand, you will have value flowing from banks into DeFi protocols, making them successful. And on the other hand, you will have various real-world asset tokens flowing into DeFi protocols to diversify their risk.
54:10 Speaker 00 So that if you have another crypto downturn, everything doesn't go bananas all at once. Because at least 20% to 30% of the protocol is backed by treasury bills or gold coins or whatever the hell they decide to back them with. But the point is, it's not crypto backing crypto backing crypto in this recursive loop of, you know, sudden death if the prices go below a certain point on a certain small time period. Which also we don't need, defining our industry.
54:40 David Hoffman? Understanding and trying to get a model for what you're just articulating about how the many, many banks are able to use Chainlink to engage and interact with the many, many, many chains. The model I have in my head is a little bit kind of like something like Zapier in the crypto world, for instance. What does Zapier do? You can load up a handful of wallets. It will tell you the state of all your tokens across all of your networks, all in one place, right? And so it's an aggregator of a bunch of information that kind of just makes using crypto just a little bit easier. There's a bunch of these products out there. And so it kind of feels like that's a little bit of what Chainlink is doing for the banks. Where, hey, you want to do some blockchain stuff?
55:22 David Hoffman? Just we are the aggregator and manager of your interactions with all of these many, many different chains. But the question I have is, how do, so if the banks want to do something like more narrow or more specific, like... Stablecoin transfer, maybe a stablecoin transfer between Ethereum or one of its layer twos and a bank. Or, I don't know, like start to do something a little bit more expressive, like starting to engage in a DeFi app. The constraint around Zapper or an aggregation layer is that you actually don't have the full power and weight of what you would otherwise get if you are just using Ethereum layer one directly, direct with your MetaMask. Like, there's a little bit of like loss in translation when a bank has to go through an aggregator like Chainlink
56:07 David Hoffman? to take an action on chain, because there's only so much of information that can be passed if you're also being an aggregator. I'm looking at your face and it sounds like you're confused or disagreeing. I think the thing I'm trying to get at is, how can the banks use the full power of something like Ethereum? While it has to go through Chainlink in order to access it?
56:32 Speaker 00 Sure, so let me explain. I think you've described some kind of aggregator that's an interface for end users.
56:39 David Hoffman? Yeah, it's just like a metaphor, not like a comparable.
56:41 Speaker 00 We're not that.
56:43 David Hoffman? Yes.
56:43 Speaker 00 I just want to be clear, we're nothing like Zapper. I don't know what Zapper is, but we're nothing like that. CCIP is a very low-level protocol. And as a low-level protocol, what it does is it allows you to define how you want to interact with specific chains, specific contracts in those chains, and specific functions in those contracts. So I'll give you an example of something we actually did. So with Australian New Zealand Bank, which has over a trillion dollars in assets under management. So I would just take note that that's one single bank with the total assets under management of our whole industry. And there are thousands of these banks. So just to be like super duper clear about what we're saying with the meaningfulness of this type of work, right?
57:27 Speaker 00 So you have one bank, which you guys can think of like one wallet, that has a trillion dollars basically rolling around in it. So there's this one bank, but the one bank runs on existing infrastructure, right? So what do we do? We enable the bank to use its existing systems, let's say Swift messages.
57:46 Speaker 00 Allow them to define their desired interaction in a language and in a method and in a message that they already have in their systems. So they've already trained thousands of people on this. See, the difference between banks and crypto startups is they have existed for decades and they have thousands of people already doing things a certain way. And they don't want to teach them new stuff. They just want them to do the same stuff. So let's say you can take Swift messages and you can in those Swift messages define, "I want to go to blockchain X, I want to go to smart contract Y, and I want to trigger function Z." Okay, great. You've defined that in a format and in a way that you're used to and that your system and your employees and your security practices and your signing system.
58:30 Speaker 00 Because another thing that Swift is, is it's a signing infrastructure to sign transactions. So now you've signed this message that says, "I want to do this." Great. That goes into the CCIP system. The CCIP system interprets that message and basically sees that you want to take a stablecoin from your chain
58:48 Speaker 00 to another chain and you want to buy a carbon credit. You want to buy a carbon credit real-world asset. So now the CCIP protocol takes your stablecoin, it sends it over to the target chain, it sends it to a specific contract, it triggers a specific function as a low-level protocol. Triggering that function with the requisite amount of stablecoins gives it back the carbon credit token, which it then sends back to the chain from which your transaction with the stablecoin originated. And great news, you've now bought a token from another chain with a stablecoin from your bank backend without ever having to go to that chain. So let's compare that to how the world works and let's maybe make clear
59:33 Speaker 00 how this other thing that you told us about could use this. So in today's world, you have to go to your wallet, you have to take the value out, you have to put it in a bridge, you have to use the bridge. Then you have to take it out of the bridge, you have to put it in the wallet, and then you can use the application. Whatever you get from the application, you have to go back into your wallet, go back into the bridge, send it over the bridge, take it out of the bridge, then you're done. We have condensed all of that into one transaction, into one step, so that you never need to go to that other chain. You need to never, you never need to make an address. You never need to make a wallet. You never need to integrate. You never need to understand what it is. You just need to use CCIP. You can even use it from your existing infrastructure that your couple of thousand employees know how to use.
1:00:16 Speaker 00 You can even define what you want to do in your existing languages and your existing messaging standards. And then you receive the token on your chain with, with, with minimal cost to you of integration. So that's the goal for banks. What web three systems like this aggregator you mentioned or web three wallets can use this for is let's say you were building some kind of aggregator of DeFi stuff in a wallet. Well, in the public chain world, CCIP would be very useful because you could allow users to use multiple different DeFi protocols on multiple different chains without your wallet or your aggregator integrating with those chains.
1:00:56 Speaker 00 You could just send the value, trigger the transaction, receive back whatever you wanted also through CCIP. So, so you see how similar the dynamic is, right? So we're building this kind of interoperability and liquidity layer in public chains and in private chains. And then when the wall between these two places goes down, it'll be very natural for them to transact. And so it just makes sense to get both of them on the same interoperability standard. Does, does, does that make sense?
1:01:25 David Hoffman? Yeah, totally. And I've started to get in a couple of other podcasts that we've done. This term called intent has come up. Uniswap X is using now intent. Some bridges are using intents where the idea is that people are just signing their intent to do something. And then third party service providers come and fulfill that intent. They do the, all the complex stuff in order to achieve the goal of the intent signer. It sounds a little bit like what, what you're describing where some bank is just saying, hey, I want to-
1:01:55 Speaker 00 We're very far ahead, very far ahead because it's not about intent. It's about execution. I could have some intent, someone else can have some intent is very nice. Execution, right? You want to send value to a new chain that you never were on, that you don't have a wallet on, that you don't have an address on, that you don't want to integrate with? All you want to do is you want to get something from that chain. You want to buy a real world asset coin? You want to buy a carbon credit? Execution, done.
1:02:20 Speaker 00 You did one transaction through CCIP. You sent the value. You triggered the contract. You received the token. And it came back to you. You don't need to worry about other service providers. You don't need to declare intent. You define what you want to happen. It happens. You receive what you wanted to receive. Or you could even string together smart contracts to become cross-chain applications. Because the smart contracts can basically use each other as services. Similarly to how TCP IP allows different databases and different clouds to use each other as services. So it's not about declaring what I'd like to happen.
1:03:01 Speaker 00 It's about executing transactions reliably and securely at scale. With a very high level of security guarantees.
1:03:09 Ryan Sean Adams? Yeah, the way I understand this basically is CCIP. It speaks SWIFT, which is what the banks speak. And it also speaks blockchain, which is what the blockchains speak. So all of the banks continue to speak SWIFT. And also interact with, communicate with, exchange data with, swap assets with the blockchain. And I'm imagining that, and when I say the blockchain, I mean all of the various chains. Whether it's ETH mainnet, or Layer 2s, or Cosmos, or whatever blockchain has kind of liquidity. And the banking system wants to interact with. I'm imagining a world, I'm not saying that the banks will do this right away.
1:03:52 Ryan Sean Adams? But I have some money in my Wells Fargo account right now. Say I have $1,000 inside of my Wells Fargo account. It's all kind of banked money. And full confession, Bankless listeners, yes, I still have a Wells Fargo account. We're working on it, all right? Going bankless is a process. So I have that $1,000. And over on some Ethereum Layer 2. There is this DeFi yield product that can provide 8% yield. And it's relatively safe. And so if Wells Fargo sets it up correctly. There could be a button inside of my Wells Fargo user interface. Such that I can click. And say deposit funds into XYZ compound money market.
1:04:35 Ryan Sean Adams? You know, it'll be abstracted for users. It'll be very, very easy for users. But that's effectively what I'm doing. And the Wells Fargo Swift platform connects through CCIP. And out the other side, my funds are actually deposited into some Wells Fargo tokenized stablecoin money market account that is now yielding 7%. And as a user in my bank account in Wells Fargo, I don't have to know about all of the mechanics of what just happened. I just see an update that says, okay, now you're yielding 7% on your $1,000. That kind of thing is what's possible with CCIP. And again, the banks don't need to know how to interact. They don't need to learn how to interact with every single chain out there.
1:05:20 Ryan Sean Adams? You guys take care of the interoperability layer. Is that, am I on the lines of what you're doing here?
1:05:28 Speaker 00 Yes, you're absolutely on the right track there. Whether it's Wells Fargo or a brokerage account, I don't know if Wells Fargo would share the 7% with you. I think they'd keep as much as they could and they'd give you something else.
1:05:38 Ryan Sean Adams? They don't do that right now, so.
1:05:40 Speaker 00 Yeah, exactly. So I like your analogy. It's absolutely right. I would just switch it to some kind of brokerage or investment manager account that can't keep your returns for themselves, which goes to your earlier points about bankless and stuff and that type of thing. But yes, so you should be able to use various DeFi protocols from any number of interfaces, which will essentially act as wallets, that the CCIP protocol will integrate into all the chains simultaneously. And then, let's say that you decided that you wanted to take your stablecoin out of the DeFi protocol X and move it to protocol Y on blockchain Y.
1:06:21 Speaker 00 You want it to go from protocol X on blockchain X to blockchain Y protocol Y, right? And that is also what CCIP does. So then when you decided that I don't want to be in this blockchain anymore with this DeFi thing because the yield has gone down. I want to be in this other blockchain with a different DeFi protocol. Then CCIP would also move the value between those two chains. And likewise, trigger the, you know, contribution of your value into, into that other protocol. And this, this will accelerate bank adoption. This will accelerate the quality of the user experience. This will accelerate various web to enterprises integrating blockchain technology.
1:07:05 Speaker 00 And very importantly, it'll create a global, single, shared liquidity layer. That is the same liquidity layer for banks and DeFi. And that's the extremely powerful thing. It's the ability, like, think about what it means if all the people in Wells Fargo or all the people in Citibank or all the people in every brokerage can suddenly easily access DeFi assets. Think about how much value can flow into DeFi. I mean, we see huge amounts of value flow into the industry when like one thing like PayPal or something just lets you buy some token. I mean, you know, that's just the tip of the iceberg of what's possible. If all the world's systems that secure value were connected into blockchains and able
1:07:50 Speaker 00 to access the value in blockchains in a seamless, efficient, secure manner. And then you would, you would also allow people to move value across chains without them even knowing that they're moving the value across different chains. They just know that they went from one application to, they went from protocol X to protocol Y. They don't even need to know what chains the protocols are on. What, what they need is the user's value from the decentralized, trust minimized financial product.
1:08:16 Ryan Sean Adams? Yeah, absolutely. So, so I think obviously you see the, the vision here and we see the vision and many of our listeners will, will see the vision. The question as far as whether the banks see the vision yet, and this is a very interesting headline actually from Swift, swift.com. Swift unlocks potential of tokenization with successful blockchain experiments. They're just Describing, I believe, a tokenization experiment that they conducted with Chainlink. And I want to get into kind of SWIFT in general, set the context of like, in order for the vision that you were just talking about to become true, the banks actually have to believe it too, and they actually have to adopt it. What is our progress on that?
1:09:00 Ryan Sean Adams? And can you explain to crypto-native listeners that just they barely know that SWIFT exists? Why is SWIFT so important to us? Can you give us the 101 there and school us on SWIFT in general? Because we don't speak banker on bankless here, Sergey. So you're going to have to tell us why SWIFT is so important and how that leads to adoption by the banks.
1:09:23 Speaker 00 Sure, sure. No, it makes sense. Many bankers don't know why SWIFT is important either. So we will be speaking bank infrastructure. That's what we'll be speaking. So SWIFT has been around for over 50 years. They are basically a PKI, a private key infrastructure, that signs the most transactions about value in the world to transmit messages about how value moves between banks and corporate treasuries and other banks. So the first thing that SWIFT is, is it's a big signing infrastructure, where just like you have private keys that you sign your personal transactions with, SWIFT private keys are the original transaction signing thing that initially replaced something called telex machines.
1:10:08 Speaker 00 So this is even between before faxes, or maybe it replaced faxes. It was definitely there to replace telex, which was the way that messages were transferred. The private keys probably came later. But the point is that SWIFT is the world's largest, most value processing private key infrastructure that basically is the private key signing infrastructure of 11,000-plus banks. So that's the first thing that SWIFT is. The second thing that SWIFT is, is a... Basically, a messaging system and a set of standards for defining how banks communicate with each other about value and certain other types of information, sometimes identity information, sometimes governance decisions.
1:10:51 Speaker 00 But basically, it's a way for banks to send information to each other. The third thing that SWIFT is, that your listeners might find interesting, that I found interesting, is that it's actually not a purely for-profit organization. It is an entirely member-owned organization, where the voting power of the members is determined by their transactional usage of SWIFT.
1:11:14 Ryan Sean Adams? No way.
1:11:16 Speaker 00 Yes way, yes way. The voting scheme of SWIFT is that your transactional throughput determines your voting power, and the board membership decisions are determined by that voting power.
1:11:32 Ryan Sean Adams? That's pretty clever, that's pretty creative, that's an interesting governance decision. So like, who are the big transactors here? Who are the big...
1:11:39 Speaker 00 Citi is a big one, a few other big ones. Here's the thing, right? The real thing with building systems is, why would you throw away something that works, first of all, that has a track record of securely processing things? Can you integrate with it? SWIFT has a lot of very great properties for security, for signing messages. It has wide reach and wide integration, and, you know, I just thought it'd be interesting for you guys to hear that it is not a purely for-profit entity. It is the only international entity I know of that has a transactional-based voting scheme.
1:12:15 Ryan Sean Adams? And it is very much, it's very much international, right? So this is not just a kind of a US thing?
1:12:20 David Hoffman? It's a decentralized organization with liquid, fluid governance that operates a set of standards.
1:14:38 Ryan Sean Adams? Still to do on the CCIP roadmap, but we have the ability to speak banker. And that's interoperable with blockchain. So we've got kind of that that middleware, that interoperability layer covered. Okay. What after that, back to kind of the question, how are we going to get the banks to come into crypto? Is it is it simply a sense of, is it simply a matter of building up kind of the use cases or building up the liquidity of crypto? So this looks like this headline looks like it's a successful proof of concept in a pilot. Right. Through SWIFT, a press release from SWIFT, which is a pretty big feat, I think. But what's it going to take for the banks to actually adopt crypto? Do you have a sense of that, Sergey?
1:15:22 Speaker 00 Banks are driven by a very strong profit motive. Their ability to generate profit from making real world asset tokens, stable coins, and selling them to various family offices, hedge funds, and large global asset manager clients will, in my opinion, fundamentally kick off what I call securitization 2.0. Securitization 1.0 was what led to the financial crisis because people got a little bit too excited about a specific category of securitization, namely mortgages. But the fundamental economics of securitization make perfect sense when you think about what it does.
1:16:04 Speaker 00 What securitization does is what everyone talks about with real world asset tokens, but it actually takes it a step further where you can basically turn anything into a financial product. Guess who is really good at turning things into financial products? Banks. Guess who makes a ton of money from turning things into financial products? Banks. Once banks are able to transact with each other and make money by turning everything they can get their hands on into a financial product. See, here's the thing. The thing is that the system, the blockchain system, the proof of reserve system from Chainlink, the price data, the cross chain, all this stuff
1:16:43 Speaker 00 should make it so that you cannot have this opaqueness and failure of securitization. So securitization can work if you can manage the risk of bad information, not having information, and not understanding the risk of the underlying asset. You see?
1:17:03 Speaker 00 So banks will be driven by their profit motive to transact with each other and to transact with other asset managers about various real-world asset tokens, which they are very well-equipped to create and which they are already creating. And I know because we work with many different banks creating them. These real-world asset tokens and stable coins will increase the amount of private key, public key holders that interact with crypto and will increase the amount of value in public blockchain DeFi. So it is net beneficial to everyone that we arrive at a world... See, the world we want to arrive at is not where there's like a siloed cottage industry of some kind of separate little thing.
1:17:47 Speaker 00 We want the whole world to run on blockchains, which means the whole world's value has to go into blockchains, which means banks, asset managers, sovereign wealth funds, family offices, everybody has to be connected to and utilizing blockchains for their favorite flavor of financial products. So this is, you know, about as big an opportunity as I can imagine for banks, because they're going to be able to generate huge amounts of assets, put them on chain, and give them to a global market as long as that global market can connect to their chain, which is, by the way, what CCIP does.
1:18:31 David Hoffman? Right. Just to fully understand this, the idea is that banks have assets using the Chainlink CCIP network. Chainlink the CCIP network will actually mint the ERC20 token that will represent some ownership over the assets, or how does that work?
1:18:46 Speaker 00 No, no. They can use existing standards to mint their tokens. They will probably use standards defined by their, you know, local financial system, by their existing system or whatever standard they come up with. Chainlink enriches those real-world asset tokens to make them real-world assets that are connected back to reality. So, for example, would you own a gold coin that got audited once a year to tell you if the gold was there? I wouldn't want to own that gold coin. I would want to own a gold coin that every single time the gold in the gold vault changed, my gold coin knew about it.
1:19:27 Speaker 00 And my gold coin knew that it was backed second to second by a certain amount of gold in a vault somewhere. And you only get that with proof of reserves, which Chainlink is the biggest provider of. So we will not generate the base token contract. We will not deploy the token. They will deploy the token using existing tokenization standards on whatever blockchain technology they want, for the most part, which will be with Ethereum technology, using things like the ERC20 and other similar standards. We will then, already as we do today for the most gold coins, stable coins and other types of coins that require connection with reality, we will provide critical data into those coins.
1:20:12 Speaker 00 Initially, the data to prove what the coin is backing is there, then identity data so that the coin can be purchased by other people that require identity to purchase it, then various daily price updates and so on. Then CCIP will allow various wallets and other contracts on other chains to purchase that token through the CCIP system. Then the token will go over to the other place and be exchanged in their DEXs and their smart contracts for whatever it's exchanged for, and then CCIP will bring back whatever it was exchanged for. And this is what we've already done with Australia New Zealand Bank, that trillion-dollar
1:20:55 Speaker 00 under management bank, and that is just one bank that we're working with. So that is what the Chainlink system overall will do, is it will create the real-world asset in the sense that is connected back to reality, it will allow the movement to another place, it will allow the return of what it was exchanged for, and then also the thing that was moved, the real-world asset token that now resides on a different chain, CCIP will allow it to remain updated with the status of the gold, with the status of the price, with the status of the identity, with the status of whatever else it needs. And this will be the thing that defines the next wave of securitization and the next wave of real-world asset things, because those things will be heavily connected with
1:21:40 Speaker 00 the world. And that is one of the things, as you know, that Chainlink is already very capable of doing.
1:21:47 David Hoffman? Yeah, you said the word enriching. I really like that. You're bringing data, off-chain data, of course, which is what Chainlink does, and imbuing tokens that are on-chain with their real-world anchor. And so, like, bringing the... I like how you said this, bringing, like, reality and enforcing it into the token to make sure that, like, there's a growing fascination in the world of real-world assets these days in Ethereum land. And I think what your perspective might be is that, well, in order to be truly real-world assets, we need to make sure that they are actually correctly mapping on to reality. And that requires all these real-world assets to have their real-world anchors. And that's the service that Chainlink is providing.
1:22:29 Speaker 00 Otherwise, it's not a real-world asset. So you make your real-world asset. It has to be a real-world asset. Otherwise, it's, you know, just something you say has something, which it may or may not have, at which point you're not doing much more than whatever the system does today, the current financial system. Then you need access to people that will buy the thing, right? So you'll need to be on the CCIP network, which we're looking to make the largest global single liquidity layer across all public and private chains. And then you will need that real-world asset to remain updated, to remain enriched. And in that sense, it achieves what in the banking infrastructure world is called a golden record. So you want it to remain a golden record, because, you know, that, once again, that's the value of the real-world asset.
1:23:15 Speaker 00 And by the way, it remaining an enriched, updated golden record is how you manage risk. So think of it this way. Imagine if in 2006 and '07, every single mortgage holder had their own smart contract that represented them individually. And every time they got a mortgage, and every time their credit score went down, and every time their bank account stopped getting paychecks, that smart contract would be updated. If you had that level of clarity about what was packaged in those mortgages... You would have not had that type of crisis. Because the only reason that happened is because the underlying assets that were represented by the paper, represented by the mortgages, and the underlying holders and the underlying capacity to pay and the underlying, you know,
1:23:59 Speaker 00 fundamental risk was completely disconnected from reality. So I'm not saying let's engage in the securitization party just for fun. I'm saying the logic of turning things into financial products so that people can diversify away risk and participate in various aspects of the economy makes sense. The problem has been properly managing the risk of those products, which now with the help of Oracle Networks Blockchain, CCIP, we can solve that problem even as that asset moves between different holders. Because what happens before is that the person who originates the financial product might know a lot. And then they sell that to an investment bank.
1:24:42 Speaker 00 And then the investment bank sells it to an asset manager. And the asset manager sells it to another asset manager. And in this process, data is lost. You cannot understand what is going on with the product, what the status is, what is its current risk. And that is the problem. That is the systemic financial risk problem. That if you can solve that, you can have reliable, scalable financial products that don't get disconnected from the underlying reality too much. So that you don't have these big busts, or at least not as big. Does that make sense?
1:25:18 Ryan Sean Adams? Yeah, completely. And I think we have one last stop on this train ride before we kind of zoom out and take a look at maybe the next 10 years and wrap all of this up. At the risk of adding more banker lingo to this conversation, I'm actually going to do that because I do think people in crypto need to understand what systems like SWIFT are and what institutions like the DTCC are. And the DTCC stands for the Depository Trust and Clearing Corporation. And I know this is another... Source of that TradFi banker liquidity that we've been talking about this entire episode.
1:26:01 Ryan Sean Adams? Can you give us a quick summary on what the DTCC actually is? And what possibilities there are in working with kind of that data set or that institution? And blockchain and crypto, why is that interesting to us and why is that important?
1:26:20 Speaker 00 Sure. So the DTCC is the clearing and settlement of the United States, which is the largest, the clearing and settlement system of the securities industry. So like all the equities, you know, all these types of stocks, all these things are cleared and settled through the DTCC. And that is mandated by law. So they are the legally mandated clearing and settlement system of the United States. And in that sense, they are, if not directly, in a certain way managed or controlled by the by the US government. They are kind of like the Fed of the securities industry. They settle two to four quadrillion dollars a year.
1:26:57 Ryan Sean Adams? Did you say quadrillion?
1:26:59 Speaker 00 Quadrillion, quadrillion. That's right. That's what I'm talking about. This is what people need to understand. I'm not talking about another trillion. I'm talking about quadrillions in transactional throughput that could touch our industry. If we are able to create the security and reliability and unique properties that our industry can create. And it doesn't matter where it comes from. It doesn't matter if it comes from an asset manager or a crypto wallet or a bank. Everybody will be on a single global internet of contracts, just like everybody is on a single global internet. And the sooner we get there, the sooner our industry will grow.
1:27:41 Speaker 00 And that's what this is about. It's about getting the whole world's value. And in order to get the whole world's value, you have to work with the systems where the value resides. And you have to create a path for them to integrate with this trust minimized blockchain powered world. And just so you know, the people in the DTCC and the people in SWIFT, they want reliability. They want. security they want to be immune from various financial issues like the 2008 financial crisis where there's this disconnection from reality because the data about the underlying assets risk is inaccessible or unknown to the majority of the market they do not need these problems they want to avoid them so all of this technology that we build in the public blockchain industry
1:28:25 Speaker 00 will eventually make its way into powering the whole global economy because the DTCC swift ANZ bank many other big banks many other clearing and settlement systems will decide that this is the superior technology for value to flow through basically because it's better for a high integrity financial system better execution markets best execution markets actually and and and it's a better way for things to work so just to answer your question the DTCC is a clearing and settlement system through which because there's no blockchain and all of these people need to settle they settle through the DTCC
1:29:03 Ryan Sean Adams? is it like a database does this to CC
1:29:06 Speaker 00 basically
1:29:06 Ryan Sean Adams? does CCIP does this look like another just data source like a database almost like a private chain or something like that
1:29:13 Speaker 00 so um CSDs which is what the DCC is a CSD clearing and settlement
1:29:18 Ryan Sean Adams? okay
1:29:18 Speaker 00 clearing and settlement depository
1:29:20 Ryan Sean Adams? okay
1:29:21 Speaker 00 is is something that um I think can continue to exist in the blockchain world because they have various value added services they provide and they have a legally mandated responsibility to make the transactions legally binding you see
1:29:37 Ryan Sean Adams? I see yeah
1:29:38 Speaker 00 so because there is no block like how does security trades get settled they go through DTCC do they use databases yep that's the technology they use
1:29:49 Speaker 00 but beyond that what they do is if something is settled through the DTCC it is considered a legally binding settlement which obviously when you're dealing with trillions of dollars is important you can't settle a billion dollars today and find out that it wasn't settled tomorrow right So our work with the DTCC and the SWIFT work and in other work that we're excited to get to a certain point with them is the ability for DTCCs to interact with various chains and for them to enable the settlement that happens around those chains to be legally binding and to use the various services and additional properties of a CSD.
1:30:26 Ryan Sean Adams? But would this allow us to get in a world where the regulators allowed it, a tokenized security from the DTCC on-chain?
1:30:35 Speaker 00 Absolutely.
1:30:36 Ryan Sean Adams? Yes.
1:30:36 Speaker 00 Yes. I am not here to make things harder. I am here to make things easier and to make them move faster to the benefit of everybody. The difference is that our industry understands the benefit of this technology sooner and it will be a huge beneficiary. Imagine if you could have tokenized equities that were considered legally accepted.
1:30:59 Ryan Sean Adams? Right.
1:31:00 Speaker 00 Fantastic.
1:31:00 Ryan Sean Adams? Yeah.
1:31:01 Speaker 00 And then imagine the amount of stablecoin transactions that that would generate and the imagine the amount of key holders, private key holders that would purchase stablecoins and then there's a percentage of those people that would purchase Ether, would purchase Bitcoin, would purchase all the other crypto things. So this is all about one big Internet of Contracts, which is what we're trying to build. We're trying to build it by enriching all of the contracts with the relevant data so that they are a superior financial product that is not prone to disconnection from reality but that is connected to reality. Then we are trying to create a secure, reliable system that meets the highest level of security,
1:31:42 Speaker 00 what we call the fifth level of security, in how those assets move across different chains and how they are triggered from existing backends. And then we are seeking to make sure that the assets continue to remain properly updated.
1:31:59 David Hoffman? Surya, you earlier talked about these five levels of security that you wanted to bring up, and you just talked about the fifth. Maybe you can quickly walk us through this idea that you have these five levels of security, and how this fits into this understanding of what we've been talking about today?
1:32:13 Speaker 00 Sure, great, thank you. Yeah, so I think there's a trend where there is a number of people claiming decentralization, for bridges, for various things, where that decentralization doesn't exist. And, you know, your audience is a very astute, thoughtful audience, so I just wanted to make clear the framework that we've come up with and recently released. So, for cross-chain security, we feel there are five different levels. The first level is a single server, a single node, run by a single key holder at level one. So that is the lowest level of security, and you are at the mercy of both that one server getting hacked, that one key getting hacked, or the key holder deciding to do something malicious. Then you get to the second level of cross-chain security, where a person who is running a bridge with a single server
1:32:58 Speaker 00 basically gets asked, "How is this decentralized?", and their next solution is to make two servers. So now they make two servers, but they control both servers. Examples of this, you know, are things like multi-chain, where you basically had multiple servers under the control of one key holder. So in this second level of security, it doesn't matter how many servers you have if they're under the control of a single key holder. It's kind of more distributed computing, or a certain level of decentralization theater, if you call it decentralized, while it's distributed, right? So now that's the second level. The third level is when you've actually reached the point of generating a single network of multiple independent node operators
1:33:42 Speaker 00 that have independent private keys, running independent nodes. So a single network. And this single network is superior, obviously, to the multiple nodes controlled by one key, and this is the beginning of any kind of decentralization.
1:34:00 Speaker 00 The issue for most people that make a single network for a cross-chain bridge, or really any Oracle network type service, is that they don't know how to make multiple networks. So their strategy is to pass all transactions through a single thing. And this strategy does not work for scalability reasons. And also, it creates a big honey pot with a lot of value, where your risk is now the risk of everyone else, and you're all at risk together, even though you only had a little bit of value in the system. So economically, it also doesn't make sense. But beyond that, what you actually have is you have a single network that's trying to process all the world's cross-chain transactions. How on earth could that work? If that could work, you would have a single global chain
1:34:44 Speaker 00 processing all the blockchain transactions. But you don't. You can't even make a layer two that can process all the layer two transactions. You have to make people make layer threes. And then eventually, we'll have to make people make layer fours, and fives, and any number of other layers. Because if blockchains could scale, then there would be a global chain. So the creation of a single network that will scale to process all cross-chain transactions, you know, I just don't see it happening because it's just not something that this type of technology seems to be able to do. We began at the third level over four years ago, and we very quickly, as a very considered and purposeful decision, went to level four,
1:35:29 Speaker 00 which is the creation of multiple distinct networks. So now, you're not even talking about distinct nodes. You're talking about multiple separate networks that are separate from each other, each network doing its own specific service, running its own separate bridge, with its own security, with its own scalability, as a separate distinct service.
1:35:51 David Hoffman? Kind of feels like a shard.
1:35:53 Speaker 00 Right, it's separate. It's completely separate and it can scale and you can manage its security separately and you can scale its security to the value it secures and you can scale it up to the maximum degree that you could scale anything up because it's just that one service for that one purpose, right? You're not going to get better scalability than that. Then at level five, which is the level we reached with CCIP, we have multiple networks working together for one service. So every CCIP bridge is actually three Oracle networks. It's a committing Don, an executing Don, and a risk management network. So you have-
1:36:30 Ryan Sean Adams? Wait, wait. When you say Don, decentralized Oracle network, D O N-
1:36:34 Speaker 00 That's right, yes. That's right. So you have these three networks, all executing every transaction. And by the way, these three networks can be split into two groups. One group is the transactional group, that's the committing and executing Don, that basically process the transaction and check each other. Then you have the risk management network, which is actually written in a different language, on a different code base, as a completely separate implementation. So we have two separate implementations that together run three separate networks, and the nodes in the risk management network and the executional
1:37:17 Speaker 00 and committing networks are different nodes. So the executing and committing Dons are one set of nodes, and the risk management network is a completely separate set of nodes. And so the reason that I'm bringing this up is because I think it's just important, you know, to your earlier points of end users being educated about the differences in the security and the risk that they're taking with various systems. So basically-
1:37:45 Speaker 00 The reason that all this value flows through Chainlink in the form of data and transaction execution from data, and the reason, you know, top protocols like Gave and Synthetix or others are going on to CCIP in addition to the banks, which by the way have done a lot of work evaluating our security as well, is because this level of decentralization actually provides real security versus what we've seen with some people that they claim decentralization, but the amount of actual decentralization is close to nonexistent, which creates real risk. And this real risk is something we as an industry do not want. Because what I don't want to see happen is the word decentralization become a way for
1:38:27 Speaker 00 people to attract value and then that value is not delivered. I think it's very important that as value flows into our industry, under the guise of being secured in a decentralized way, that the decentralization is there and that the security is actually created.
1:38:42 Ryan Sean Adams? Yeah, absolutely. And, you know, as we often say on Bankless, may the most decentralized network win, for sure. And we think they will in the long run. Sergey, this has been fantastic. I feel like at the end of this podcast, I now speak fluent Chainlink, which I didn't know as much about Chainlink as I do now entering this episode, and also fluent TradFi with respect to learning a bit more about SWIFT and DTCC and seeing the vision for the traditional banking system and security system and crypto and how they all fit together. And I think you guys are doing some frontier work there, which is very exciting. I want to maybe ask this last question as we sort of zoom out. And you mentioned earlier in
1:39:26 Ryan Sean Adams? this episode, you've been in crypto for a long time, 2010. I mean, that's over 13 years as of now. And I want to ask you about the next 13 years, or at least the next 10 years. So by the time we get to 2030, you've watched crypto grow from basically zero dollars in the millions or, you know, single-digit billions to what it is now, a trillion. What is the next? 10 years going to hold for us if you zoom all the way out. That this concept of securitization 2.0,
1:40:03 Ryan Sean Adams? marrying crypto with the existing traditional finance system. Where do you think we will be by the end of this decade in 2030 in our progress with crypto? Could you could you paint us a portrait of the of the landscape here?
1:40:17 Speaker 00 So I generally have two ways that I think about this.
1:40:21 Speaker 00 There's the fast case and the slow case. So the slow case is that the quality of crypto systems, the user experience, the scalability, the privacy, the connectivity, the ease of use from all of those things gradually increases. And I think when the industry crossed 200 billion, there was no turning back, basically. So we're well past that point, and I think the industry is big enough for very smart people to build great applications for decades. So the crypto industry is not going to go anywhere. And you have the slow case where the quality of the applications continues to increase and gradually attracts more users and gradually grows the industry. So that's one world. And in that world, you have various profit motives from banks, and you have various profit motives from Devi applications.
1:41:06 Speaker 00 And, you know, you know, maybe there's some more asset bubbles, or maybe people print some more money or something. And then, basically, there's all these market dynamics that feed the natural growth of a technology industry because its experience, its speed, its
1:41:21 Speaker 00 privacy is all getting better, right? All of that is getting better, and so you're getting more users because the the experience and the value to the user is increasing, and the market is big enough to attract great people to build great things, right? So that's the slow case. The fast case is more SVBs, more Silicon Valley Bank, more credit suites type failures, more more big monumental failures that may not be able to be muted by governmental intervention and which may lead to significant
1:41:57 Speaker 00 financial pain for society, significant political tension, significant international problems, because the fundamental promises of the system are not sufficiently backed.
1:42:15 Speaker 00 And the realization of those promises not being sufficiently backed is a painful realization that if it happens, and if it happens in a way that cannot be managed by governments, will lead people to realize the fragility of the systems in which their value exists, the systems in which, you know, their economic life exists. And at that point, a cryptographically guaranteed world, a verifiable web, will be extremely attractive. It will be so attractive that anyone who doesn't cryptographically guarantee your economic relationship with them, anybody who can't verify for you how you relate to your assets
1:42:57 Speaker 00 in their system, anyone who isn't part of the verifiable web, will be at a disadvantage. It'll be like not being on the internet. That is the fast case. So the slow case is we keep doing what we're doing, we keep building what we're building, we keep improving how we're improving, and we provide so much value that the industry grows. And I think that type of growth is to the, you know, 10 trillion plus world, gradually. The fast case is the very fast adoption of blockchains, oracles, smart contracts, CCIP, and so on, for the world to work in a cryptographically guaranteed, verifiable way.
1:43:41 Speaker 00 We understand that, we appreciate that, because we understand that alternative exists. The reason I believe this is that most people don't know that alternative exists, and the pain for them to want it hasn't happened yet. But if it happens, it exists, and so it's so much better than the alternative. I've not met people that understand the alternative and say, "Let me go back to the old system." I haven't met those people. So I think it's very clear to me that there just needs to be something that acts as a forcing function to get society into this cryptographically guaranteed, superior state. And I think the way the world is structured, unfortunately, there's not as much...
1:44:29 Speaker 00 Reality backing things as people would like to believe. And once reality connects with that, our industry will be the way the world works. I am pretty sure about that.
1:44:41 Ryan Sean Adams? Well Sergey, this has been absolutely fantastic. It's been a pleasure having you and certainly a long time coming. I think the parting message of crypto is inevitable. The only difference is whether it happens fast or it happens slow is a great message to leave listeners with. Thank you so much for joining us on Bankless today. It's been a pleasure.
1:45:01 Speaker 00 It's my pleasure being here. Thank you for having me.
1:45:03 Ryan Sean Adams? Bankless Nation, got to remind you of course, none of this has been financial advice, never is on Bankless. Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. Now we're on the frontier of banking, it seems like. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.
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