Jake Yocom-Piatt, Project lead for Decred: Crypto Ego Management

Jake Yocom-Piatt is the project lead for Decred. In this conversation, Jake and Anthony Pompliano discuss how he was early in Bitcoin, why he stepped away, how Decred works, how different people in the Decred ecosystem make money, why experts shouldn't be deferred to, and why managing ego is so important in the cryptocurrency industry. -----If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

• 0:01Speaker 00

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

• 0:12Speaker 00

  Jake Yocom-Payet is the project lead for Decred. In this conversation, we discuss how he was early in Bitcoin, why he stepped away, how Decred works, how different people in the Decred ecosystem make money, why experts shouldn't be deferred to, and why managing ego is so important in the cryptocurrency industry. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow

• 0:56Speaker 00

  a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. Alright guys, I'm here with Jake Bang Bang. Thank you so much for taking the time to do this. I'm super excited to help people understand more about Decred and what you guys are building.

• 1:17Speaker 01

  Oh, thanks for having me Anthony. It's great to be here and it's always a pleasure to speak to new people about blockchain technology and in particular Decred.

• 1:29Speaker 00

  Sure. So, I think you've got kind of an interesting background for somebody who's working on a non-Bitcoin project. Let's kind of go through your background a little bit so people understand the context and perspective that you're coming at this from.

• 1:42Speaker 01

  For sure.

• 1:42Speaker 00

  Maybe give us an overview.

• 1:44Speaker 01

  Yeah, yeah. You know, a little overview is always helpful. So, I've been working in the blockchain space since effectively late 2012.

• 1:54Speaker 01

  And the way I came into the space was prior to working on, you know, on Bitcoin products, which is something I did for a few years, I had been running a company that ran an encrypted online backup service called Cyphertite. It wasn't spectacularly successful, as I expect you can can can guess by by the fact that I no longer do that. So I moved from there to Bitcoin because, you know, in 2011 and 2012, I saw Bitcoin. I'm like, wow, this is some really, this is some really cool stuff in the sense that allows you to store and transmit value without a bank account. And then, as a result of that, I ended up

• 2:34Speaker 01

  pivoting my team that had been working on the backup product over to over to create a from scratch, full node implementation of Bitcoin. The idea being that it's effectively, you know, a full on, you know, a full on replacement for Bitcoin Core for anyone who was interested in doing that.

• 2:52Speaker 00

  So talk a little bit more just about like the time with Bitcoin in the early days.

• 2:57Speaker 01

  Oh, for sure. And so it was really interesting. We showed up, we tried to participate with, you know, with the Bitcoin Core guys at first. And, you know, we encountered, it was, it was kind of rough sailing on that front. We tried to, you know, help them bring up, you know, get some tests fixed and try to port things over to OpenBSD, which is one of my favorite operating systems. And, you know, we encountered, you know, some pushback or some indifference. And we were like, well, you know, this is really cool. This is an amazing project. You know, maybe we should, you know, go do our own thing. And so from early 2013 until probably like mid 2015, I had anywhere between, say, two and let's

• 3:37Speaker 01

  say, you know, 10 engineers working on BTC Suite, which was an alternative to Bitcoin Core in the sense that you could, you could host, you could.

• 3:48Speaker 01

  Process the whole blockchain, host all the blocks, have a wallet, and do all of the normal day-to-day things that you would expect to do just with a different technology stack, sort of like, you know, you could look at it as a second implementation of TCP/IP. And we did that for a while, and it was a really, it was a very interesting time, and, you know, we had an opportunity to build out and understand a lot of the details and nuts and bolts of how Bitcoin worked. And it was very informative, but, you know, there were some, you know, there was definitely some rough spots. One of them being that, you know, the Bitcoin Core team, you know, which ultimately sort of, you know, filtered over to Blockstream and, you know, is now split between, you know, there's some mixing there. They obviously weren't particularly keen on us generating

• 4:33Speaker 01

  a competing software implementation of Bitcoin. So, so that ended up sort of putting us at odds with people who would, in, you know, in normal circumstances, we would be not at odds with. And that, you know, that process actually ultimately fed into what became Decred, you know, in, in early 2016.

• 4:52Speaker 00

  Got it. And so what was kind of your first reaction when you came across Bitcoin? Like, what, like, what caught your attention?

• 5:01Speaker 01

  What really got my attention is, is that, you know, I've run a number of different businesses for a very long time, and I've seen all sorts of things happen. And what I, what you become very acclimated to is this idea that you must have a bank account, and that's the only reasonable way to store and transmit value in a modern economy. You're pretty much forced to, you know, have that perception if you run a successful business, because, you know, how else are you going to receive wire transfers, send wire transfers, process credit cards, and all of that? And it's this very, very central idea. And when I saw Bitcoin, I thought, wow, this is neat in the sense that, you know, you can get, you can get away from that system, but still have much of the same, you know,

• 5:45Speaker 01

  much of the same user experience you would have. That is, that, you know, there's some sort of measure of what you have in your account, and that you can send things, you know, from place to place without, you know, without the drama and friction of, say, making a wire transfer. And, you know, if you've, if you've spent much time at banks making, making wire transfers, it can be a real, serious pain, depending on your bank and what kind of a system they have.

• 6:08Speaker 00

  For sure. And so as you're working on Bitcoin, you eventually leave and go start Decred. Maybe talk a little bit about, like, what was that initial problem? Like, really just describe to us, you're sitting there and you're like, you know what? I need to go build something else. What was kind of that original problem?

• 6:29Speaker 01

  Well, the problem we ran into was really that the ecosystem, you know, anyone who's familiar with Bitcoin, especially from the earlier times, knows that it was a full-on open source project from, you know, from zero. So the developers were not getting paid. The people working on, you know, working on Bitcoin, the Bitcoin Core devs and others, were working just because they really enjoyed it and they were passionate about it. And, you know, I have a lot of respect for that. But at the same time, I showed up with a paid, you know, a team of people who I was paying to work on this stuff full-time. And that, you know, that really led to, you know, sort of a competitive vibe between our team and then the existing Bitcoin Core guys.

• 7:14Speaker 01

  And then that, you know, that process ultimately fed into things like Blockstream. And then what I ended up experiencing was effectively that Bitcoin, you know, as brilliant as the idea of decentralizing timestamps and decentralizing the storage and transmission of value is, was, you know, in terms of how it operated, the operation of it was very centralized. There was, you know, effectively a central planning committee. And, you know, even though the members of the central planning committee are, you know, very bright people and very hardworking and had been grinding at this stuff for years, it was still a central planning committee. So I found it challenging, you know, it created sort of a cognitive dissonance for me to join a project that I thought was so cool,

• 7:59Speaker 01

  I thought was really cool because it was decentralized, only to find something else centralized that wasn't so cool. And that is really what led me, you know, to make Decred. I felt like I had to engine, you know, one way to do this would be to say, stick around and complain and like, fight with people and try to gain influence and do the usual political thing. But I figured, you know, in light of, you know, in light of this technological land rush that we were experiencing, it made more sense to, you know, to try to innovate and go, we're gonna do something else new and kind of get away from Bitcoin as opposed to, you know, say, trying to fight with the central planners and, you know, and diminish their influence.

• 8:37Speaker 00

  Got it. And so what was the original idea for Decr, like that solution where you're like, "Okay, I see a problem. I'm gonna go create the solution." What, when you left to go build this, what was that idea?

• 8:49Speaker 01

  The idea was, was actually, there was, there was a paper that was pushed on me by, by, by a, an online identity that goes by the name of Inksoc. Inksoc showed up and pushed me very hard to look at this thing called Memcoin 2. I was looking at Memcoin 2, and the thing that really drew me in was the hybrid proof of work, proof of stake consensus algorithm. And what really I thought was the real killer feature of it was not only did it act as a security mechanism on the chain, that is, it's like a two-factor authentication, you have proof of work and proof of stake validating the chain, was that it also blended in a decision, an explicit decision-making mechanism via voting for the people participating

• 9:29Speaker 01

  in the proof of stake system. And that property is really what made me go, "Wow, okay, this is, this is legit. I want to run this ball," as opposed to, you know, some other, you know, some other project or, or focus on some other area. Because I had experienced, you know, sort of that, you know, that I'm never gonna be one of the Bitcoin Core or Blockstream guys, so I'm never really going to be able to, you know, to penetrate what I saw as a central planning committee. So as a result of that, I was like, "Well, how do I, you know, how do I create a system that's more open and is more sort of, you know, decentralized, just like, say, the Bitcoin, you know, the Bitcoin idea itself?" And that's, you know, and, and Memcoin 2 is really ultimately how I did it. And that,

• 10:14Speaker 01

  the hybridization of the proof of work and proof of stake, there's definitely some details to it. And it took me a little while to have those details sink in to, to understand exactly how, you know, how important it was to hybridize these things, you know, in the way that they were hybridized.

• 10:30Speaker 00

  Got it. And so as you take that and you start building D-cred, like walk us through the design of how it is today.

• 10:39Speaker 01

  Yeah, what we did is we focused, the first thing that we focused on is really getting the consensus mechanism right. And the consensus, getting this, getting these consensus changes in place, it was non-trivial work. The work started in February 2014, and it took until February 2016 for us to get something ready and, you know, push it out the door into production. There was a process where, you know, I worked with Inksoc and Taco Time and a couple of my other developers for that two-year period where, you know, where the work was being done. So, once the consensus mechanism gets out the door, a lot of the rest of the features in the Memcoin 2 paper were, were cool, but not like, wow, this is

• 11:21Speaker 01

  gonna blow your socks off. So, in terms of making the engineering decisions, a lot of the engineering decisions were actually proposed in the white paper. And, you know, the decisions ended up going like this, which is that proof-of-work is a great mechanism for securing a chain. But, you know, and it's a very fair game, right? If you and I have two normal computers and we both hash, that's a super fair game to compute a hash puzzle. But, the meta-game of producing the ASIC, you know, the ASIC hardware is really not very fair, and it's incredibly centralized. So, that really sort of makes proof-of-work a bad decision-making mechanism. And if you look at the original Bitcoin white paper, the original intention was that proof-of-work would act as one CPU, one vote. And, you

• 12:05Speaker 01

  know, that ultimately became kind of broken as a function of the ASIC game. So, so the decision seems to have been made to go, what can we do to add proof-of-stake to this in a way that's coherent, so that proof-of-stake acts as a second authentication factor of blocks? And the interleaving of, you know, of this approval process is, is really pretty interesting. Every block has five tickets vote on it. I'll, I can get into the details of the tickets, but I'll just start. So, five of these tickets vote on every block. And if the proof-of-work miner doesn't include the tickets, they lose subsidy in proportion to the number of tickets they include. So, for example, if you, if you only include three of five tickets, you only get 60% of the subsidy as a proof-of-work miner.

• 12:51Speaker 01

  And then also, right, because you're including these votes and you ask the question, what are you voting on? Well, you're actually voting on the previous block's proof of work. So that, for example, if somebody makes a proof of work block that's, you know, bad, for whatever reason, whatever anybody's definition of bad is, it can be invalidated in the next block by the proof of stake voters. And that, you know, and that, the interleaving of these two things is really, you know, it's, it's really very carefully chosen and, you know, very carefully executed. It ended up being quite a, quite a pain to modify Bitcoin to the point where we could incorporate these changes.

• 13:27Speaker 00

  Got it. And so if I'm somebody sitting at home, right, I'm an institutional investor or a large family office, or even just a retail investor, what does this mean for me? Right? Like, like, how is this different than Bitcoin? And what are the ways that I can interface with Decred?

• 13:47Speaker 01

  You know, as, as an investor, there's a lot of different ways you can interface with a project like ours. You know, there's the proof of work component. So if you're really keen on doing mining, you can buy, you can set up a mining farm, you can buy a bunch of ASICs, and you can mine Decred to acquire it. That's one way to interact. Another way to interact is, you know, via the proof of stake mechanism. Our proof of stake mechanism is opt-in. So you, you're welcome to hold Decred and, you know, not participate in the governance. But if you want to participate in the governance, we actually reward the people participating in the governance. So if you opt into the staking system, you lock your coins up for a, for a, you know, a pseudo-random amount of time. And then over, over time, your tickets in this ticket pool end up getting picked

• 14:29Speaker 01

  to vote. And when that occurs and your vote gets included in a block, you earn a subsidy. So there are proof of stake systems out there that are almost entirely passive. But this system is, you know, it's, it's semi-active, where you have to opt into the system and then you actually have to maintain a service online to vote. And the reason that, that investors might care about this is it allows you to create semi-passive returns. I'm not going to say passive returns because they are not passive. You actually have to do stuff. And the whole, you know, what is interesting here is is that proof of stake systems offer, you know, offer investors an opportunity to generate returns in the native asset that, you know, that, you know, that they're investing in. If they invest in something and it's, you

• 15:14Speaker 01

  know, they get, I don't know, EOS or Decred, they can participate in the staking process and earn, you know, a return. And so that, that is a, that's an attractive component. The other attractive component is the decision making is what we're trying to do with Decred is we're trying to make all of the major project level decisions subject to stakeholder approval and, you know, input. So let's just say I propose something that was totally, totally, you know, crazy and nobody really wants it, wants it to happen. The stakeholders have an opportunity to go, whoa, whoa, whoa, we are not doing that in a way that's similar to many, you know, like, you know, normal corporate voting power. So what it does is I feel like, say, you could

• 15:58Speaker 01

  characterize Bitcoin as being sort of a blend between a corporation and a bank. But we go, we, we take on an aspect of a government and we also add some extra, you know, sort of existing corporate features. The idea being that, you know, say if you own 10% of the stake, you have roughly 10% of the say when it comes to voting on things. Whereas, you know, whereas pure proof of work, someone who's a proof of work miner might not hold any of the coins. They might sell them all as soon as they get them. But if you have 10% of the mining power, you still have 10% of the sovereignty. So what we're doing is we're taking the sovereignty that you might have vested in a pure proof of work currency with the proof of work miners, and we're giving it to the proof, the people who participate in the opt-in proof of stake

• 16:40Speaker 01

  system. So that means that, you know, hey, if you're an active, if you're an activist investor and you really want to change, you know, change the way the game is running, you can definitely do that. And you have formal sovereignty in our system as opposed to sort of informal sovereignty where it's like, oh yeah, well, you know, we'll do the dance when you ask us to. It's hardwired sovereignty. Got it. And so.

• 17:02Speaker 00

  When you talk about this hardwired sovereignty, like, why is that important?

• 17:06Speaker 01

  Well, okay, so this is a, I'm gonna make a minor detour into nation-state politics here.

• 17:10Speaker 00

  Okay.

• 17:11Speaker 01

  Is the, you know, say, huh?

• 17:13Speaker 00

  I love detours.

• 17:15Speaker 01

  Detours, okay. So this is a detour. So the detour is this, is that the 2016 US presidential election has demonstrated, you know, that there's a lot of acrimony that can come up in governance systems. People get very upset about things. But if you look at what's happening is people end up becoming very, very upset about, oh, there's one candidate in and, you know, I don't like him, and then, oh, I like that guy. And so it becomes, it becomes this question of arguing about personality as opposed to policy. So there's this preoccupation with policy, and I feel like hardwiring decisions to, you know, some kind of a token, whether it's de-cred or something else, is incredibly important because it gets us away

• 17:57Speaker 01

  from what I consider to be one of the major weaknesses of nation-state politics, which is that people can argue like cats and dogs and, you know, get their candidate in. But at the end of the day, it's, it's, it's a soft sovereignty system. You get that representative in, they promise to do A, B, and C. Oh, I'm gonna, I'm gonna deliver on A, B, and C. And they get into office, what do they do? D, E, and F, and totally ignore A, B, and C. And so that sort of disconnect, that soft sovereignty, where you're relying on someone to do something that they promised they'd do, creates all kinds of problems in nation-state politics and in, you know, sort of collective decision-making as a whole. I mean, this is an incredibly common problem that I, that I'm describing here. It doesn't matter if we're in the US or any other place. A lot of times, people get elected and don't do

• 18:40Speaker 01

  what they say they're gonna do. And so we're trying to sort of run the ball backwards on that front and go, what can we do to actually hardwire the sovereignty of the various people participating in de-cred such that this is literally impossible to do? And that's actually how we make consensus changes. As opposed to, you know, as opposed to saying, hey, Jake, we'd really like you to make a consensus change. What we do is we pre-program that consensus change. Deploy it and then if the stakeholders activate it, that code goes hot and it activates. If they don't, it doesn't activate. So what we're doing is to some extent, we're taking the levers of power, you know, in the system and actually directly connecting them to the, to the stakeholders and making them,

• 19:24Speaker 01

  you know, directly sovereign as opposed to going, hey, I'm a representative. Trust me. I'll do what you want. And then, you know, and then boom, they don't do what they're supposed to.

• 19:34Speaker 00

  Got it. Makes, uh, makes a lot of sense. Um, you've got some interesting thoughts on, uh, on experts. And, uh, I think that there's, uh, some tangentially related things, uh, when we defer to experts with what you're talking about. Maybe just give us a, uh, an overview of kind of why, um, just deferring to experts isn't always the best strategy.

• 19:56Speaker 01

  Deferring to experts is something that's like super common in, in most, most governments and most cryptocurrency projects, uh, that are, you know, that are currently in existence. And the reason is, is that experts know something way better than the average person does, right? You know, you know, math, you know, science, you know, you know, uh, English, you know, uh, bad guys who, you know, uh, fly black flags, whatever it is, you're an expert. The problem, the problem with experts is, is that experts, just like everybody else have agendas. So that in, in many cases, even though an expert might have a lot of valid, you know, or valid or valuable opinions and input,

• 20:34Speaker 01

  their ultimate judgment they render is often very similar to a normal person's in that they end up rendering a judgment based on their own personal opinions, more so than their, you know, the sort of the cold, the cold logic of their expertise. And so I feel like too, you know, too much of the world around us is, is currently run by experts and the experts act as oracles, whether, whether as small groups or, you know, individually like to say that I'm an expert in, uh, you know, I'm an expert in bad guys overseas.

• 21:07Speaker 01

  And then, you know, what that, what that ends up doing is creating an environment where no one else can have and is allowed to have an opinion on how that process works or how we, how we deal with what some people claim is a problem. And with Decred, we're trying to get away from that in the sense that, hey, I'm an expert, but I'm also an opinionated person. So my expertise is always going to be colored by my opinion and my, you know, and my self-interest. So what we're trying to do with Decred is we're trying to decouple the idea of expertise from, uh, you know, from, you know, we're trying to decouple the expertise from the decisions made so that, hey, if there's a bunch of experts who show up and want to have an opinion, that's great.

• 21:47Speaker 01

  We like that, but we don't want to put the decision-making power in the hands of the experts because it's, uh, it's really just not very, you know, I feel it's not productive to do that because you're just sort of back at square one. You may as well put a random group of opinionated people in charge of something as opposed to try to solicit the, you know, the input from a number of people and then make an informed decision, you know, based on the input of a larger group.

• 22:11Speaker 00

  And so a lot of these experts have ego. And I think that, uh, there's a lot of egos in crypto. Before we started recording, we were talking a little bit about kind of the, the trade-off between ego and decentralization. Maybe elaborate on that a little bit as well.

• 22:29Speaker 01

  Yeah. I mean, if you look at, if you look at how the, the Satoshi, the Satoshi identity operated, the Satoshi identity clearly had a very, uh, under control ego. In the sense that Satoshi put forward an idea that has led to all of the, all of these, you know, this whole new asset class and all of these sorts of, uh, you know, wonderful, wonderful projects in the asset class. And that was done without going, standing up and going, I am so-and-so and I, you know, I need all of this fame and attention. And so if you look at how things started in the space, it started with someone, someone, or I think it's much more likely a group, standing up and saying, here's this, you know, brilliant, you know, here's this brilliant piece of technology. But.

• 23:14Speaker 01

  In order to really make this technology pop, you need to not have the ego. The idea of Bitcoin is that you can decentralize timestamping by turning by turning it into, by turning an oracle, which is normally a bank, which creates these timestamps into a game. That's a, you know, the idea of replacing people who are normally incredibly important, like banks, with a game is a very, you know, low to no ego move. And it would be, you know, I'm frankly, I'm surprised no one has stood up and said, hey, that was me. And, you know, this is, this is my technology and, you know, everyone should sort of like, you know, you know, lay down and worship me. That hasn't happened. And what we end up seeing is, is that there's, you know, there's so much money in the crypto space

• 23:57Speaker 01

  that money typically comes along with big egos. And, you know, I have an ego, you have an ego, everybody's got an ego. But the, the, the path forward that I feel like Satoshi laid out sort of implicitly by merit of Satoshi's actions is that having a giant ego is not, is not the way forward. Because if you have a giant ego, you want to be in control all the time. If you want to be in control all the time, that's not very decentralized. And we're sort of right back at square one, which is, you know, sort of the, the banking system. And to get away from this idea of, of centralization and this concept of one person or one entity has to be in charge all the time. You have to be ready to kind of, you know, step back a little bit and go like, I'm going to relinquish some control

• 24:42Speaker 01

  and I'm going to let go and I'm going to acknowledge that not just I am the, you know, like I am not the, the only person who is allowed to do something. I'm, I'm sort of turning this into a collective thing and sharing it. And so I feel like the, you know, even though there's all of this ego and the space is rife with ego, that the real path forward is to be very tight with your ego so that you can sort of discover that path forward in the same way that say Satoshi did.

• 25:10Speaker 00

  And so I guess really like, how big of a problem do you think that is when it comes to crypto? Like, are the egos, uh, and really like this toxicity, I think is like a recent debate on Twitter. But, you know, how detrimental is it?

• 25:26Speaker 01

  I think it's important for everybody to have egos, but that a lot of the toxicity or perceived toxicity, I mean, and am I right to say that you're referring to, was it Blue Matt's comments?

• 25:37Speaker 00

  Yeah, I think that's what kicked it all off. And then there was a quite a threat after that.

• 25:43Speaker 01

  Okay, yeah, I only I only dip my toe in Twitter every so often. So, you know, my my perception of this is that the, you know, just the existence of a central planning committee ends up precluding things like this from happening. You know, it's like as soon as you have a sort of a, you know, a cast of monks who are like, you know, these are the techno monks and only these people can touch, you know, the the good book, that immediately creates this, you know, this atmosphere that, hey, maybe initially it's all pretty, it's all pretty chill and everybody behaves. In the long run, someone with a giant ego is going to show up and then turn it into, you know, a, you know, popularity

• 26:25Speaker 01

  contest and a sort of a, an extension of their ego. And then that, you know, that is ultimately what makes it toxic. And I feel like, I feel like the toxicity is even even the term toxicity is like, it's a little loaded, it's a little heavy right now. But the problem is, the problem is real and keeping your ego under control, I think, is the, is really the right path forward for the crypto space, despite the giant egos that are present in it.

• 26:52Speaker 00

  Got it. And so let's go back to Decred. Where do we go from here? Like, what do you see as kind of the next two to four years of Decred? Like, what is that evolution? And where do you think you can get?

• 27:07Speaker 01

  Yeah, I'll talk a little bit about, you know, the, just the high level bullet points of what we've already done. So what we've already done is we've already tied consensus changes to on-chain voting. That's, that's a very important, you know, system. And that's been running since April 2017. The other thing that we've done is we've added an off-chain decision-making tool called Politea, where what we're doing is we're in the process of putting all of our major project-level decisions up for vote, for vote by the, by the same stakeholders who are voting on-chain. And, and those two major milestones sort of, you know, you know, they're, they're points on a line. And what we're trying to do is we're trying to make the entire governance process

• 27:49Speaker 01

  As we're trying to, or I'm trying to remove myself from it and also just remove the, you know, the human component of it. So that, for example, if the stakeholders want to do something, the money flows, stuff happens, and there is no per, single person, including myself, who can be like, "Oh, no, that's not going to happen because that upsets me," or that, you know, "triggers me," or whatever. And so in the next two to four years, our goal is to complete this process where what we do is we make the stakeholders fully sovereign and we remove, you know, any and all centralized points of control from the system. So the next thing that we're working on right now is decentralizing the treasury. So when we launched, we went live

• 28:30Speaker 01

  with a treasury. The treasury is a Nevis LLC, and it, uh, it, it receives 10% of every block reward. So we've accumulated something like 600,000 DCRIT in there, and I am one of the managers of that LLC. The direction we're going is, is that we are going to ultimately dissolve the LLC and take these funds and put them into a special, it's effectively a, you know, a hardcoded smart contract where if people vote for, uh, you know, vote for funds to be allocated a certain way, they will be allocated that way. And that ends up, uh, you know, that ends up putting the control of the treasury in the hands of the stakeholders, which indirectly it is in their control right now, but it is a soft sovereignty system. And so I'll just be completely forward

• 29:14Speaker 01

  about that. But we've actually already had a vote to confirm that, you know, the changes that we're going to make in order to decentralize that. So that's one of the major things. Something else we just finished with, we have activated light, um, the Lightning Network support on, uh, we have it on testnet, and we're going to start deploying it on mainnet here in the next few months. Um, that is a very useful system, as any Bitcoiners are aware, in the sense that it allows for microtransactions and allows you to defer settlement to the main chain and, uh, you know, do a lot more things and, you know, actually have a lot more privacy. So you can buy a cup of coffee and not have somebody know what your net worth is, or look at all your UTXOs that are linked.

• 29:54Speaker 01

  The other direction we're going is privacy. We are going to be adding some on-chain privacy tools here. We will have a release in the not-so-distant future. I know I've been talking about this for a long time, but this time I mean it. It's going to happen this summer.

• 30:11Speaker 01

  The privacy approach taken by other projects like, say, Monero and Zcash is definitely admirable. I like what both projects are doing, but in our case, we're going to be taking a different path. And it's really more of a practical path. It's easy. I'm a privacy nut. It's very easy to get off in the weeds with privacy, and I feel like we're going to take just a very practical approach with this compared to, you know, I feel like, say, Zcash and Monero, that's their forte. That's the privacy. They have to really be on the cutting edge, the bleeding edge, and we don't really have to do that. So, you know, we're going to take a different tack with our privacy. The other thing that has been proposed but not built yet is a decentralized exchange

• 30:53Speaker 01

  that's substantially different from the existing ones, where what I tried to do is I tried to take what I learned from, say, Bitcoin, which is decentralizing time stamping, or, excuse me, gamifying time stamping, take Decred, where what we've done is we've gamified decision-making formally, and then take that and go, how do we answer, you know, how do we deal with the process of exchange, especially as an altcoin? Bitcoin really didn't have to deal with this problem because its main exchange sort of worries are about its exchange with US dollar and other fiat currencies. In the case of Decred, we have to worry about, you know, exchange with Bitcoin and other cryptocurrencies. So, the question of how do you make that

• 31:33Speaker 01

  exchange process more fair, you know, just a better game overall, is something that we've been working with, where we were going to be doing pseudo-random order matching, so that it's not first in, first out, because that promotes things like, you know, racing to build, you know, microwave relay towers and so on, you know, the things that you see in the fiat world. And it's just overall sort of a, you know, it's not a fair game. And then eliminate the rent-seeking. We wouldn't charge any, you know, trading fees. And then also, just to lower the barriers to entry, because anyone who's run a project knows that it's very, very difficult to get on certain exchanges, like you need to have a whole bunch of, you need a market maker, you need a volume. And then also, you know,

• 32:15Speaker 01

  this first-in, first-out order matching that's, you know, that currently exists.

• 32:21Speaker 01

  Forces you to have an experienced market maker as opposed to, you know, being able, someone being able to casually trade and, you know, participate in the market making process. So, so those are the big broad strokes of what we're doing. I guess if there's one more I would talk that's a little bit further out, it would be that we're planning to sort of iterate what we're doing with our treasury, which is turning it into a decentralized entity, a decentralized autonomous entity. We're planning to deliver that tech to standalone entities on the Decred blockchain. That's a little further out, that's not right immediate, but that's probably, say, 2020.

• 32:57Speaker 00

  Got it. And so what do you think the biggest challenge is going to be there as you kind of move towards that?

• 33:04Speaker 01

  I think moving that direction, you know, one of the, one of the biggest challenges is doing things in a way that is, that doesn't jam, you know, fill your chain with junk. The Bitcoin developers have done quite a, you know, Bitcoin Core guys in particular have done a very good job on this front in that by capping the block size, what they've done is they've prevented, you know, the situation from you must have a debt, you know, your node in a data center, which is really kind of awful for decentralization. And the hard part about doing all of this blockchain work is really sort of engineering it in a way that it doesn't end up becoming a sort of a flaming mess.

• 33:46Speaker 01

  You know, I'm, I'm, I'm not very partial to, I'm not very partial to it, you know. The way Ethereum has engineered things has led to basically, if you, if you offer people the ability to create tokens, which are effectively their own blockchains or coins inside your coin, your coin is going to grind to a screeching halt after a certain amount of time because your chain is going to be full of junk. And I think that that is really the, you know, that is the component that makes this difficult. That is that you have to bound things and then operate within those boundaries. And that, you know, from an engineering perspective, that's really, you know, it's, it's a serious challenge.

• 34:23Speaker 00

  Before, uh, before I get into the rapid fire questions, anything that you think the detractors believe about Decred that you want to clear up or you think are misconceptions?

• 34:33Speaker 01

  I think that there's, you know, there's certain, there's certain groups or projects that are keen to, you know, cast Decred in a negative light for things like, for example, we had a, you know, we launched with a pre-mine. And I think that it's very easy to, you know, it's very easy to sit on the sidelines and criticize, or for example, you know, try to, try to ding us because we were recently, Decred was recently geo-fenced by, by, what is it, Poloniex in the, you know, for US trading, which I find just ridiculous from the perspective of, you know, from a regulatory perspective. When you consider that there are projects that raised, you know, tens or hundreds of millions of dollars of US investor capital and, you know, apparently they're somehow

• 35:18Speaker 01

  less regulatory, less of a regulatory risk than Decred where we raised no, we raised no money and we had a small pre-mine so that, for example, Company Zero, the company that I, you know, that I own and operate, is incentivized to continue developing Decred for the foreseeable future. So, you know, this, I feel like there's a, you know, there's a certain amount of, there's a, there's always a negative focus on the pre-mine, but it's like you have to do these things in order to make the chain work and to incentivize people to keep participating. And then, you know, there, there's this other sort of, you know, regulatory nonsense where it's, you know, despite, I made a real serious effort to avoid, you know, even violating the spirit of any of the existing securities regulations and despite that, you know, here

• 36:03Speaker 01

  we are getting geo-fenced on Poloniex. So it's like, you know, I can only do so much, I can't control external parties, but that's, you know, that's the world we live in and that, things like this are also why I think that the, having a proper decentralized exchange is super duper important.

• 36:17Speaker 00

  For sure. All right. Rapid fire questions. What do you think is the most important company in crypto other than Decred?

• 36:25Speaker 01

  I would say Blockstream.

• 36:26Speaker 00

  Why?

• 36:29Speaker 01

  Because they have they have an enormous amount of influence over the largest, you know, largest market cap cryptocurrency and, you know, what they do will will determine sort of, you know, a large amount, it determines an enormous amount about the the rest of the ecosystem.

• 36:46Speaker 00

  Got it. What what's the one regulation that you would change or improve if you could?

• 36:51Speaker 01

  I would make it, I would make it clear so that I would make it clear that a cryptocurrency is not a security unless you're unless you're either selling people promises that you can't reasonably deliver, you know, financial promises, or you're taking, you know, investment from people. Those two things to me are a real trigger and I feel like I feel like, you know, it's a, it just needs to be clearer. This, you know, this idea that anything could be a security just creates a sort of like a legal rat hole and you end up paying lawyers a whole bunch of money for nothing.

• 37:24Speaker 00

  Got it. What um, what do you think your most controversial thought in crypto is?

• 37:28Speaker 01

  That the path forward is not to have a giant ego. That does not say that, you know, there's a lot of big egos in crypto and I feel like having have keeping your ego under control is difficult and it's counterintuitive.

• 37:42Speaker 00

  What uh, what about aliens? So before I usually end this, let you ask me a question I asked about aliens. Believer, non-believer?

• 37:49Speaker 01

  Oh, oh, big time believer. The universe is too big. There's too many planets. There's too many, too many star systems. There's too much, you know, there's too much stuff out there for there not to be other life. I think it's, remember what I said about having an ego? I think the idea that we're alone in the universe is a reflection of people's ego that they want, you know, say humanity to be super unique. And I just view us as mostly mostly hairless apes that fight about a lot of stuff.

• 38:17Speaker 00

  I love that. What uh, what one question do you have for me?

• 38:20Speaker 01

  If I had one question for you, it would be?

• 38:24Speaker 01

  What is the most difficult part of running a podcast like this so regularly?

• 38:29Speaker 00

  Well, I'm releasing an episode a day, which is obviously a lot. I don't have very many challenges with getting guests. I've got more questions that I could think of to ask. I think it's more the operations stuff. And so I've got the folks over at the Blockworks group who are helping me. You know, but it's just the tedious work of, you know, which episode is going to go live? Is it edited? Do we have the intro? All of that stuff can become a little difficult. And especially at the frequency in which we're posting these. But I think it's important work and frankly, I'm learning a lot.

• 39:11Speaker 00

  And so I don't plan on slowing down anytime, but I'd say that's definitely the hardest part.

• 39:17Speaker 01

  Yeah, I mean, I mean, for me, it's a, it's no joke and I have a lot of respect for the fact that the fact that you're able to do this day after day after day. And I mean, you know, I, I have my own days and I can't, I can't deal with some of the stuff I do.

• 39:31Speaker 00

  Yeah, well, look, it's, somebody told me a long time ago, the, the whole key to this game is just showing up every day. Right? So if I just keep showing up.

• 39:42Speaker 00

  Then that's half the battle, right?

• 39:44Speaker 01

  Yeah, showing up is half the battle. That is a spot on.

• 39:47Speaker 00

  Exactly. All right, man, listen, this has been a ton of fun, Jake. I really appreciate you taking the time to do it. And I think people are really going to enjoy hearing more about Decred and kind of understanding the logic behind some of the the decisions you guys have made, where you are and where you're going. So, so best of luck. And then we'll have to do this again in a few months to check in how things are going.

• 40:08Speaker 01

  Sounds good, and I appreciate you taking the time out to, to do a podcast with me.

• 40:14Speaker 00

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