Latest / The Paul Barron Crypto Show / Institutional ETH Staking Boosted By Rate Hikes?💧Lido INTERVIEW

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Institutional ETH Staking Boosted By Rate Hikes?💧Lido INTERVIEW · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Fed rate high could be in order. The real question is,
• 0:03
  Speaker 1: how is this going to affect yields? Today, we'll break
• 0:06
  Speaker 1: it down for you. We've got a very special guest
• 0:07
  Speaker 1: that'll be diving into that. Before we get started, I
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  Speaker 1: get away from the system. Let's get into it today.
• 1:06
  Speaker 1: And today joining me is Keen Gilbert, who is the
• 1:08
  Speaker 1: head of institutional relations at Lido. How are you, Keen?
• 1:13
  Speaker 2: Well, how are you? Thank you so much for your time.
• 1:14
  Speaker 1: Yeah, excellent. Well, listen, we wanted to jump into this
• 1:18
  Speaker 1: whole issue of the Fed because it's possible we could
• 1:21
  Speaker 1: see a rate hike, I should say. And when you
• 1:24
  Speaker 1: look at rate hikes, potentially, what happens if the Fed
• 1:30
  Speaker 1: actually does hike the rate to yields on stablecoins? What
• 1:34
  Speaker 1: do you think? The decision, of course, continues to kind
• 1:37
  Speaker 1: of move back and forth here, but where would you
• 1:40
  Speaker 1: stand on that, stablecoin yields, if it hikes?
• 1:43
  Speaker 2: I think inevitably if the Fed increases rates, you're probably
• 1:48
  Speaker 2: going to see an impact to stablecoin adoption. I think
• 1:51
  Speaker 2: right now, the way the market is, it's very much
• 1:54
  Speaker 2: risk on. I think given the past kind of 30 days,
• 1:57
  Speaker 2: the big price increase you've seen on Bitcoin and ETH,
• 2:01
  Speaker 2: it could be pretty positive for the hardcore crypto assets
• 2:03
  Speaker 2: like Bitcoin and ETH. And you may see some money
• 2:06
  Speaker 2: moving out of stablecoins.
• 2:09
  Speaker 1: What about... ETH staking. I mean, if Fed hikes, if
• 2:13
  Speaker 1: you compare this to staking, and we've seen a little
• 2:17
  Speaker 1: bit of decline in staking numbers, you can kind of
• 2:20
  Speaker 1: see it right there on screen in terms of current
• 2:23
  Speaker 1: newly minted ETH. And then even on Solana, I mean,
• 2:26
  Speaker 1: we've seen this as well. So my question is, what
• 2:30
  Speaker 1: happens to ETH staking if Fed hikes? Because that's going
• 2:32
  Speaker 1: to mean maybe more yield on stablecoins. Would people try
• 2:36
  Speaker 1: to convert to more stablecoin usage?
• 2:40
  Speaker 2: Well, I think, of course, like with Ethereum and staking
• 2:43
  Speaker 2: and the whole economics around it, it's not necessarily going
• 2:46
  Speaker 2: to impact the staking rate for Ethereum right now. I
• 2:49
  Speaker 2: think on average, the staking rewards rate has kind of
• 2:53
  Speaker 2: normalized at around 3%. I think currently it's 2.3%. And
• 2:57
  Speaker 2: to be honest, I'm incredibly bullish on staking ETH right now.
• 3:01
  Speaker 2: And at least from a lighter perspective, I think we're
• 3:03
  Speaker 2: nine and a half million ETH staked. I think one
• 3:07
  Speaker 2: of the previous episodes you had Joseph Shalom on. There's
• 3:09
  Speaker 2: an incredible bullish sentiment around getting as much ETH as
• 3:12
  Speaker 2: possible staked. I think, again, with changes around the rates,
• 3:16
  Speaker 2: that could be incredibly exciting for ETH and the amount
• 3:18
  Speaker 2: of ETH being staked.
• 3:20
  Speaker 1: So, OK, so just to compare here, the ETH staking
• 3:23
  Speaker 1: rate is slightly under that if we were to have
• 3:27
  Speaker 1: stablecoin yield rates that go higher. So I guess my
• 3:31
  Speaker 1: argument is Why wouldn't people just go out and buy
• 3:36
  Speaker 1: stablecoins and put them into a yield-bearing account versus staking ETH?
• 3:40
  Speaker 2: Well, I think the whole thing about having ETH is
• 3:42
  Speaker 2: obviously the spot price or the price exposure to ETH.
• 3:45
  Speaker 2: So you would expect or hope you would have greater
• 3:48
  Speaker 2: price appreciation of ETH. So like I mentioned over the
• 3:51
  Speaker 2: past kind of 30 days, I think ETH has increased
• 3:54
  Speaker 2: by around 30%. You're not going to obviously see that
• 3:56
  Speaker 2: with the US dollar or in stablecoins. So that would
• 3:59
  Speaker 2: kind of be my narrative, depending on the strategy of
• 4:01
  Speaker 2: the fund or you as an individual, you want to
• 4:04
  Speaker 2: get that exposure to ETH. And one of the best
• 4:06
  Speaker 2: ways of doing that is also to stake your ETH.
• 4:08
  Speaker 2: So again, you're taking that capital and putting it to work.
• 4:11
  Speaker 1: Yeah, I think a lot of people miss that is
• 4:13
  Speaker 1: the volatility of crypto right now, especially when you're on
• 4:17
  Speaker 1: the backside of a bull market or a bear market,
• 4:20
  Speaker 1: now possibly going into a bull market. Yes, we've had
• 4:23
  Speaker 1: a little bit of a retracement, but listen, ETH is
• 4:25
  Speaker 1: up significant from around 16, 1700. So you're right. There
• 4:30
  Speaker 1: is a benefit to that. And then you're just adding
• 4:33
  Speaker 1: more fuel to the fire when you're staking it. Cause
• 4:35
  Speaker 1: that's just creating more ETH, which is compounding on itself.
• 4:38
  Speaker 1: So a good benefit there. What about this? You look at, um,
• 4:43
  Speaker 1: 21 of the world's largest banks. Now they're teaming up
• 4:45
  Speaker 1: to get their own stable coin. Uh, the, this of
• 4:48
  Speaker 1: course kind of opens up channels, I think in general
• 4:51
  Speaker 1: and partners included Visa, BlackRock's in, in this, um, What
• 4:57
  Speaker 1: do you think this will do in terms of having
• 5:01
  Speaker 1: any impact on banks kind of rushing to try to
• 5:04
  Speaker 1: steal your stablecoin yields? Or do you think people will
• 5:06
  Speaker 1: continue to stay outside the banking system?
• 5:11
  Speaker 2: I'm, again, and I feel terrible saying this, I'm just
• 5:13
  Speaker 2: incredibly bullish right now. It's a case of they're all
• 5:17
  Speaker 2: building on Ethereum. They're building on Layer 2s based on Ethereum.
• 5:20
  Speaker 2: I think, look, It's a case of rising tides. This
• 5:23
  Speaker 2: is definitely kind of generation one or version one around
• 5:26
  Speaker 2: stable coins. And the fact that these significantly large institutions
• 5:32
  Speaker 2: are taking this seriously, that's for me is the big
• 5:35
  Speaker 2: green flag. If they weren't looking at this right now,
• 5:37
  Speaker 2: like compared to 10 years ago, like I've been in
• 5:40
  Speaker 2: crypto that long, we were never having a conversation around BlackRock, Fidelity, VanEck, WisdomTree,
• 5:46
  Speaker 2: getting involved in tokenization or stable coins. Now we're debating,
• 5:49
  Speaker 2: are they adopting it quick enough? I think for me,
• 5:52
  Speaker 2: that's the big green flag right now in the market.
• 5:55
  Speaker 1: You look at the current state of institutional staking. I'm
• 5:58
  Speaker 1: looking at Lido Institutional right here. Ridiculous amount, current 2.2% APR.
• 6:04
  Speaker 1: When you think about institutions moving so fast into this
• 6:10
  Speaker 1: space and you compare it against one of probably the
• 6:13
  Speaker 1: biggest institutions out there, which has been, in essence, Bitmine
• 6:18
  Speaker 1: when you think about Ethereum, Um, first of all, what
• 6:21
  Speaker 1: is the state of institutional staking? Is this being adopted fast?
• 6:25
  Speaker 1: Is this a slow burn?
• 6:28
  Speaker 2: I would say over the past kind of year or
• 6:30
  Speaker 2: so we've spent a terrific amount of work on education
• 6:34
  Speaker 2: because ultimately institutions are not going to get involved in
• 6:37
  Speaker 2: staking or liquid staking unless they're comfortable with the idea.
• 6:40
  Speaker 2: And I would say over the past year or so,
• 6:42
  Speaker 2: it's been fucked down very much high focused on staking
• 6:46
  Speaker 2: because ultimately these institutions are looking at capital efficiency. Whereas
• 6:50
  Speaker 2: compared to, say, looking at Bitcoin, where the whole strategy
• 6:53
  Speaker 2: is to just get price appreciation, whereas the big selling
• 6:56
  Speaker 2: point around Ethereum and staking is that you can put
• 6:59
  Speaker 2: that capital to work. You also get the benefit of
• 7:02
  Speaker 2: price scarcity. You're taking your ETH, you can put it
• 7:05
  Speaker 2: to work from a staking perspective. Also, you get the
• 7:07
  Speaker 2: added benefits of using ETH on DeFi. So I would
• 7:11
  Speaker 2: say over the past year, you've had the likes of
• 7:13
  Speaker 2: WisdomTree in Europe launching the first Light of State ETH ETP.
• 7:17
  Speaker 2: That product alone has grown by 35% over the past
• 7:21
  Speaker 2: eight months in ETH terms. You have all the excellent
• 7:23
  Speaker 2: work that BlackRock is doing. And then like you can
• 7:25
  Speaker 2: see in your screen right now, SharkLink has been, I think,
• 7:29
  Speaker 2: a terrific ambassador for Ethereum. The work Joseph Shalom is
• 7:32
  Speaker 2: doing along with Joe Lubin. And we're incredibly excited to
• 7:36
  Speaker 2: be working with them. Yeah. Their commitment of staking $ 200
• 7:39
  Speaker 2: million of ETH with Lido is a fantastic endorsement of
• 7:42
  Speaker 2: how mature the industry is becoming from an institutional perspective.
• 7:47
  Speaker 1: I'm looking here at the net staked by project, net
• 7:50
  Speaker 1: ETH staked, and this is validator balances. You've got, of course,
• 7:54
  Speaker 1: Lido setting in at number one. BM & R, number two.
• 7:58
  Speaker 1: When you look at Bitmine... Would you say they're competing
• 8:02
  Speaker 1: against Lido for institutional market share, or is this maybe
• 8:05
  Speaker 1: just a different play because it is a DAT, Digital
• 8:09
  Speaker 1: Asset Treasury?
• 8:10
  Speaker 2: Yeah, I definitely think it's a different strategy. We're very
• 8:13
  Speaker 2: friendly with the guys at Bitmine. They also have Maven,
• 8:16
  Speaker 2: which are the node operators, which are also a node
• 8:18
  Speaker 2: operator for Lido. So we have a terrific relationship with
• 8:22
  Speaker 2: the guys at Bitmine, and we're very supportive of what
• 8:24
  Speaker 2: they're doing. I think maybe one issue that... we're seeing
• 8:28
  Speaker 2: in the market is that there's so much ETH being
• 8:30
  Speaker 2: staked right now where the entry queue is quite long.
• 8:33
  Speaker 2: And actually, from our perspective, that's a huge selling point
• 8:36
  Speaker 2: for Lido. And because the entry queue is so long,
• 8:39
  Speaker 2: that means that you're not actually generating rewards in the
• 8:42
  Speaker 2: first 30 or 40 days. Whereas when we go and
• 8:45
  Speaker 2: speak to clients, especially with the likes of, say, Sharp, Link,
• 8:48
  Speaker 2: and Wisentree, when they go and stake with us, you
• 8:50
  Speaker 2: don't have to wait 30 days to generate rewards. You're
• 8:53
  Speaker 2: generating rewards within one day. So actually all the fantastic
• 8:57
  Speaker 2: work that BitMind is doing and how aggressive they are
• 8:59
  Speaker 2: in staking their ETH has actually been an even better
• 9:02
  Speaker 2: USP for me as I go and speak to institutions
• 9:04
  Speaker 2: and try and get them to stake with Lido.
• 9:07
  Speaker 1: What are you guys doing to increase your market share?
• 9:10
  Speaker 1: When you look at the dominance right now for Lido,
• 9:12
  Speaker 1: this has been one of the, well, it's kind of
• 9:15
  Speaker 1: the OG in terms of ETH staking for anybody all
• 9:18
  Speaker 1: the way back in multiple bull runs. So what about
• 9:21
  Speaker 1: market share right now? How are you expanding it?
• 9:23
  Speaker 2: Yeah, it's definitely been a champagne problem, I would say.
• 9:26
  Speaker 2: Like we're in a fantastic position. Lido is in, I suppose,
• 9:29
  Speaker 2: a battle test protocol. That's well respected. And for us,
• 9:32
  Speaker 2: I think the next big focus is on that institutional element.
• 9:36
  Speaker 2: So we greatly believe that institutional adoption is going to
• 9:39
  Speaker 2: increase over the next five years. So for me, I'm
• 9:42
  Speaker 2: trying to build this ecosystem around Lido institutional and make
• 9:45
  Speaker 2: it as easy as possible for institutions to stake. So
• 9:48
  Speaker 2: that would mean at the custody level, having native integrations
• 9:51
  Speaker 2: with the likes of Fireblocks, Anchorage, BitGo, having ETPs where
• 9:56
  Speaker 2: clients can go on their traditional custody or brokerage platform.
• 10:00
  Speaker 2: seeing that wisdom tree, stake needs product, and just being
• 10:03
  Speaker 2: able to buy units of that fund. And then I
• 10:05
  Speaker 2: think the next big focus will be on the US
• 10:07
  Speaker 2: and trying to get a steep ETF launched as well.
• 10:11
  Speaker 1: I look at this and I wonder, what other ways
• 10:14
  Speaker 1: are institutions starting to use liquid stake tokens to to
• 10:19
  Speaker 1: generate extra yield. Are they getting creative enough yet in
• 10:24
  Speaker 1: the market? Or what do you think?
• 10:26
  Speaker 2: Absolutely. Like to put it in context, around $ 10 billion
• 10:29
  Speaker 2: of Rapp's ETH is used as collateral today in DeFi.
• 10:32
  Speaker 2: So that's a significant amount of money. Or another fantastic
• 10:36
  Speaker 2: example I can give you is actually with SharpLink again.
• 10:39
  Speaker 2: So like you've probably seen in that press release, SharpLink
• 10:42
  Speaker 2: has chosen Lido to stake $ 200 million of ETH. Their
• 10:45
  Speaker 2: plan is to actually use $ 100 million of that and
• 10:47
  Speaker 2: post it as collateral today. And use it in the
• 10:49
  Speaker 2: Galaxy Fund. So that's a fantastic example of where you
• 10:53
  Speaker 2: can actually put your ETH to work, use it as
• 10:55
  Speaker 2: collateral and generate higher returns. So from my perspective and
• 11:00
  Speaker 2: the clients I deal with, that's the conversation that comes
• 11:02
  Speaker 2: up quite frequently. Like how can we put the capital
• 11:06
  Speaker 2: to work? We don't want it lazy capital. We want
• 11:08
  Speaker 2: to generate higher returns. And staking is fantastic at doing that.
• 11:12
  Speaker 1: This brings me to institutional restaking. Do you think that's
• 11:15
  Speaker 1: coming down the pipe? You've got EtherFi pretty much dominating
• 11:18
  Speaker 1: right now. Restaking in general, if you look at the
• 11:22
  Speaker 1: chart I've got here on screen, EtherFi holding a significant
• 11:26
  Speaker 1: position right here on restaked. How do you think this
• 11:30
  Speaker 1: plays out with institutional for restaking?
• 11:33
  Speaker 2: I don't think it's that close to be honest. And
• 11:37
  Speaker 2: for me, there's levels to this. Like level one is
• 11:39
  Speaker 2: native staking. Level two is liquid staking and level three
• 11:43
  Speaker 2: is liquid staking. Okay. And I think I haven't met
• 11:46
  Speaker 2: a client that will skip native staking and go straight
• 11:49
  Speaker 2: to liquid staking. They have to kind of go on
• 11:51
  Speaker 2: that journey.
• 11:51
  Speaker 1: Yeah.
• 11:52
  Speaker 2: And I think right now, all the conversations we're having
• 11:55
  Speaker 2: with clients, it's all around native and liquid staking because
• 11:58
  Speaker 2: they can see the instant benefits. Whereas I think restaking,
• 12:01
  Speaker 2: there's obviously a lot of regulatory questions. There's a huge
• 12:04
  Speaker 2: amount of risk around it. I don't see it as
• 12:06
  Speaker 2: close as people may think.
• 12:08
  Speaker 1: For institutions, at least.
• 12:10
  Speaker 2: For institutional adoption, exactly.
• 12:12
  Speaker 1: Interesting. You look at rate hikes potentially happening. Would that
• 12:18
  Speaker 1: exacerbate Morpho's growth? I mean, we're looking at, this is
• 12:21
  Speaker 1: Morpho's loans right here, USDC, by the way, dominating this.
• 12:25
  Speaker 1: This doesn't just easily get replaced by some bank stable coins. So,
• 12:30
  Speaker 1: What does this look like if Kevin Warsh says, okay, yeah,
• 12:33
  Speaker 1: we're going to go up 25 bps?
• 12:36
  Speaker 2: I think you're right, Paul. Like Morpho is in a
• 12:38
  Speaker 2: fantastic position in the market. They have a huge amount
• 12:40
  Speaker 2: of USEC, USCT, of course, as well. I definitely think
• 12:45
  Speaker 2: that's going to be trending upwards over the next kind
• 12:47
  Speaker 2: of five or six months, depending on how the macro
• 12:49
  Speaker 2: environment plays out. Yeah.
• 12:52
  Speaker 1: Looping yields. This is something that people have been trying
• 12:57
  Speaker 1: and doing successfully. If you think about loop yields right now,
• 13:01
  Speaker 1: especially after a rate hike, is 7% too low right now?
• 13:07
  Speaker 1: I mean, you've got this out on Robinhood. They're out
• 13:10
  Speaker 1: there with these vaults now at 7%. You can go
• 13:12
  Speaker 1: into their stablecoin, not theirs particularly, but the one they
• 13:17
  Speaker 1: offer the 7% on, and go that direction. Do you
• 13:20
  Speaker 1: think that is going to create some competition here on
• 13:25
  Speaker 1: loop yields?
• 13:26
  Speaker 2: Yeah, I think it's funny. It's kind of where the
• 13:29
  Speaker 2: market is at right now. It's like, I can't remember
• 13:31
  Speaker 2: a time where 7.5% wasn't good. I just think.
• 13:36
  Speaker 1: People are becoming- Is it too low? Is it too
• 13:39
  Speaker 1: low with a rate hike?
• 13:41
  Speaker 2: Well, I have to remember, whenever the price or the
• 13:45
  Speaker 2: APY increases, there tends to be risk associated with that.
• 13:49
  Speaker 2: So I think it's your appetite for risk. Yeah. For me,
• 13:54
  Speaker 2: Lida Wern is a great product where it's a curated strategy.
• 13:57
  Speaker 2: We're working with blue chip curators. That's where the API
• 14:01
  Speaker 2: sits right now. If you want to go and chase
• 14:03
  Speaker 2: higher yields, again, that's going to come with higher risk.
• 14:08
  Speaker 2: And I think there's a balance you have to take
• 14:10
  Speaker 2: as an institutional investor and as a retail investor. How
• 14:13
  Speaker 2: much risk are you willing to take for an extra
• 14:15
  Speaker 2: 3% or 4%? Yeah.
• 14:17
  Speaker 1: Of course, this vault, not available in my region, US.
• 14:20
  Speaker 1: So that's something that I'm assuming... maybe gets changed as
• 14:24
  Speaker 1: we start to see regulation start to shift. But first
• 14:27
  Speaker 1: of all, why does Lido now restrict the US users?
• 14:33
  Speaker 2: Of course, it's not us. It's a case of where
• 14:35
  Speaker 2: the regulation is in the US. We would definitely love
• 14:38
  Speaker 2: to be a lot more involved in the US. And
• 14:41
  Speaker 2: I just think where the regulation stands right now, we're
• 14:43
  Speaker 2: not in a position to offer that product. And I
• 14:46
  Speaker 2: do think things are changing in the US. And it's
• 14:50
  Speaker 2: very funny, like I went to the US, I think
• 14:51
  Speaker 2: six or seven times last year, And it definitely feels
• 14:54
  Speaker 2: like the mood and the sentiment and the engagement with
• 14:57
  Speaker 2: institutions and regulators is a lot more positive. But like
• 15:00
  Speaker 2: anything in life, it takes time. Regulation is a slow-moving beast. Yeah.
• 15:04
  Speaker 1: Do you think it matters that clarity goes through on
• 15:07
  Speaker 1: the 15th or the cloture vote gets done on the 15th?
• 15:09
  Speaker 1: Or do you feel like the CFTC and the SEC
• 15:12
  Speaker 1: are going to guide this regardless?
• 15:15
  Speaker 2: I think they'll probably guide it regardless.
• 15:17
  Speaker 1: Yeah.
• 15:18
  Speaker 2: And the important thing for me is that there's engagement
• 15:21
  Speaker 2: from both sides. Right. And once regulators are speaking to industry,
• 15:26
  Speaker 2: that is the most important thing to me. I always
• 15:29
  Speaker 2: kind of get concerned where regulation and the legislator is
• 15:32
  Speaker 2: not engaging with industry enough, where I feel like regulation
• 15:35
  Speaker 2: is not going to effectively do what it needs to do.
• 15:38
  Speaker 2: And that should be to encourage innovation and protect consumers.
• 15:42
  Speaker 1: All right. So we got to talk about the big
• 15:45
  Speaker 1: problem that happened in DeFi not too long ago. Lido
• 15:48
  Speaker 1: froze withdrawals after the DeFi Aave situation that occurred. What
• 15:53
  Speaker 1: do you think DeFi has done since then that makes
• 15:58
  Speaker 1: sure this never happens again?
• 16:01
  Speaker 2: I think it's funny that I think a lot of
• 16:03
  Speaker 2: times in crypto, people have short memories. I do feel
• 16:08
  Speaker 2: this is the first incident in quite a while where
• 16:10
  Speaker 2: people have not forgot. And at least for me at
• 16:13
  Speaker 2: an institutional perspective, we noticed a huge amount of clients
• 16:17
  Speaker 2: getting in touch with us and asking why this has
• 16:19
  Speaker 2: happened and how are you mitigating risk? And I think
• 16:22
  Speaker 2: for us, it wasn't the core protocol. It was just
• 16:26
  Speaker 2: Lido Earn, so a specific offset product that we have.
• 16:29
  Speaker 2: And ultimately, it wasn't a slashing or an incident that
• 16:32
  Speaker 2: was affected or caused by Lido. It was a third party,
• 16:35
  Speaker 2: so Kelp. So for us, I think the big way
• 16:38
  Speaker 2: to show maturity as an industry was Lido stepped up.
• 16:41
  Speaker 2: We put forward ETH to kind of cover people who lost.
• 16:45
  Speaker 2: Then you also have examples like Joe Shalom, Joseph Lubin,
• 16:48
  Speaker 2: Tom Lee, kind of effectively acting as stewards to effectively say, look,
• 16:52
  Speaker 2: we need to mature as a market. And I think
• 16:54
  Speaker 2: that's been widely recognized over the past six months with
• 16:57
  Speaker 2: the price being reflected positively and ETH just maturing as
• 17:01
  Speaker 2: a whole. So I definitely think there's a renewed kind
• 17:03
  Speaker 2: of narrative around ETH where the business development and the
• 17:06
  Speaker 2: protections around it aren't as fragmented as it once was.
• 17:09
  Speaker 1: I would say, though, that this market is really small. So,
• 17:13
  Speaker 1: you know, a handful of artisans such as a Tom
• 17:17
  Speaker 1: Lee and Joe and and a handful of others, they
• 17:21
  Speaker 1: can kind of orchestrate something like that. But once this
• 17:24
  Speaker 1: market starts to scale and something like that were to happen,
• 17:29
  Speaker 1: I mean, there's got to be something that's been done
• 17:31
  Speaker 1: in the DeFi space to kind of avoid this down
• 17:33
  Speaker 1: the road, especially if you think about the scalability issue
• 17:36
  Speaker 1: that's facing us right now.
• 17:38
  Speaker 2: Yeah, I think one of the best examples of that
• 17:40
  Speaker 2: has been like DeFi United saying, look, we need to
• 17:43
  Speaker 2: mature as an industry. We need to adopt new technologies
• 17:46
  Speaker 2: like AI. And ultimately, you're always going to have these
• 17:49
  Speaker 2: hiccups along the way or speed bumps, but it's how
• 17:51
  Speaker 2: you adapt and get back up off the ground. And
• 17:54
  Speaker 2: I think the industry as a whole has kind of
• 17:57
  Speaker 2: shown again over the past year that, okay, you're always
• 18:00
  Speaker 2: going to have these issues, but it's how you kind
• 18:02
  Speaker 2: of resolve and fix them going forward so they don't
• 18:04
  Speaker 2: happen again. And I think that's one thing I'm very
• 18:07
  Speaker 2: proud about is kind of operating in the Ethereum ecosystem
• 18:10
  Speaker 2: where we have the best devs, we have the money,
• 18:12
  Speaker 2: where if these issues were to happen, we can kind
• 18:14
  Speaker 2: of recover as quickly as possible.
• 18:17
  Speaker 1: Keen, can you explain? That's a good answer. I think
• 18:21
  Speaker 1: this is something that we need to, as an industry,
• 18:24
  Speaker 1: especially in these early days, which right now everything counts
• 18:28
  Speaker 1: because making mistakes now could really kind of ruin the
• 18:31
  Speaker 1: roadmap for a lot of these projects. But when you
• 18:34
  Speaker 1: look at automatic native yields, explain, is this a good thing,
• 18:39
  Speaker 1: a bad thing? I mean, it seems a little, it
• 18:42
  Speaker 1: has a feel of socialism almost because it's kind of
• 18:45
  Speaker 1: taken from everyone in spreading this out, how does this work?
• 18:50
  Speaker 2: Well, like in terms of staking ETH, like most of
• 18:54
  Speaker 2: your kind of viewers will know, like Ethereum is a
• 18:56
  Speaker 2: proof of stake network. You're effectively taking your ETH, you're
• 18:59
  Speaker 2: locking it away almost like in an escrow account. And
• 19:01
  Speaker 2: in return for doing that, you're giving a little bit
• 19:03
  Speaker 2: more ETH. So I wouldn't exactly call it socialism in
• 19:07
  Speaker 2: that regard. I would see it as the mechanism for
• 19:10
  Speaker 2: securing Ethereum. You can almost think of it as a
• 19:13
  Speaker 2: dividend or an added bonus for securing the network. Yeah.
• 19:16
  Speaker 2: What's really cool about Ethereum, and I suppose Lido as well,
• 19:21
  Speaker 2: is that it's always focused on driving diversification. So to
• 19:25
  Speaker 2: your point before around Joseph Shalom and Joe Lubin may
• 19:28
  Speaker 2: having too much influence, which I don't really agree, I
• 19:31
  Speaker 2: think the diversification element of using a Lido and you're
• 19:34
  Speaker 2: having 800 different node operators and you have solo stakers,
• 19:38
  Speaker 2: their ability to kind of drive that diversification and help
• 19:41
  Speaker 2: staking grow is really important.
• 19:42
  Speaker 1: Okay. SEC is paving the way for what appears to
• 19:49
  Speaker 1: be two different systems here. I wanted to kind of
• 19:52
  Speaker 1: bring this up here. The SEC proposed to update the
• 19:55
  Speaker 1: rules and forms that apply to registered transfer agents. This
• 20:00
  Speaker 1: looks to be a two-tiered DeFi ecosystem, so almost like
• 20:03
  Speaker 1: an accredited DeFi and then investors versus non-accredited DeFi investors.
• 20:07
  Speaker 1: Is that happening, do you think?
• 20:10
  Speaker 2: I think it's very early days, to be honest. I'd
• 20:12
  Speaker 2: probably have to iterate a number of different times. I
• 20:15
  Speaker 2: would say it hasn't come up much in conversations when
• 20:18
  Speaker 2: we speak to the big wirehouses in the US and
• 20:20
  Speaker 2: the big market makers. But I suppose, again, the US
• 20:24
  Speaker 2: is probably paying a little bit of catch up to
• 20:26
  Speaker 2: the rest of Europe and Asia when it comes to
• 20:28
  Speaker 2: regulation of this kind.
• 20:29
  Speaker 1: Yeah, for sure. Well, listen, Solana has been able to
• 20:34
  Speaker 1: kind of go this because they proved it's capable that
• 20:37
  Speaker 1: you look at voting power to lower issuance. ETH tried
• 20:42
  Speaker 1: to do this, didn't get the support. What does this
• 20:46
  Speaker 1: signal overall for the ETH ecosystem?
• 20:49
  Speaker 2: I think it's an interesting time. Obviously right now there's
• 20:53
  Speaker 2: a huge amount of debate around EIP-8363 and should there
• 20:56
  Speaker 2: be a complete cap or reduction on the amount of
• 21:00
  Speaker 2: ETH being staked. Again, I think the big guys have
• 21:03
  Speaker 2: come out heavily against this, ourselves included. where we think
• 21:07
  Speaker 2: the core economic value of Ethereum is staking, and it
• 21:11
  Speaker 2: comes with the added benefit of security. So for us,
• 21:15
  Speaker 2: when you're comparing, for example, Bitcoin to ETH, the big
• 21:19
  Speaker 2: selling point of why institutions choose ETH over Bitcoin is that, again,
• 21:23
  Speaker 2: you can have a productive asset. If you were to
• 21:26
  Speaker 2: just have a pure Bitcoin strategy, for example, all you're
• 21:28
  Speaker 2: waiting on is price appreciation. And like we know in
• 21:32
  Speaker 2: the market right now, when you're in a bull run,
• 21:35
  Speaker 2: that's fantastic. But when the market is testing the strategy
• 21:38
  Speaker 2: and we see a bit of a bear, that's immediately
• 21:40
  Speaker 2: where capital starts to leave.
• 21:43
  Speaker 1: Yeah, you're exactly right. And that is something that I
• 21:46
  Speaker 1: think everybody's starting to get a grasp around. There's been
• 21:51
  Speaker 1: one trend that has started to, I think, be adopted
• 21:55
  Speaker 1: that starts to get a lot more interest. And that
• 21:58
  Speaker 1: is in terms of fees being paid back to holders.
• 22:02
  Speaker 1: If you look at the Lido token, LDO, if you
• 22:05
  Speaker 1: guys are out there trying to track it, you can
• 22:07
  Speaker 1: kind of see, I mean, the fees are significant here.
• 22:10
  Speaker 1: Is there any potential for a fee switch coming to
• 22:14
  Speaker 1: holders of this token?
• 22:16
  Speaker 2: Yeah. And I would say, Paul, you're not the first
• 22:18
  Speaker 2: person to ask.
• 22:20
  Speaker 1: Let's do it.
• 22:21
  Speaker 2: Yeah. We're getting all this feedback, which one is terrific.
• 22:24
  Speaker 2: Like the market, the ecosystem is heavily engaged with what
• 22:27
  Speaker 2: Lido is doing. And I suppose Lido as a group
• 22:30
  Speaker 2: of contributors, we're listening. So what I can say is
• 22:33
  Speaker 2: probably watch this space. There's a huge amount of work
• 22:35
  Speaker 2: happening behind the scenes. And OK, how can we pass
• 22:38
  Speaker 2: on value to LDO holders? And we've done some things
• 22:41
  Speaker 2: in the past and we're kind of activating right now
• 22:43
  Speaker 2: around buyback programs. Because, again, we personally believe that the
• 22:46
  Speaker 2: price of LDO is probably a bit flat and we
• 22:49
  Speaker 2: should do more to effectively address that. But there's plenty
• 22:52
  Speaker 2: of exciting things in the pipeline to, I suppose, give
• 22:55
  Speaker 2: LDO holders more value.
• 22:57
  Speaker 1: Well, there's definitely the I think the appetite for it
• 23:00
  Speaker 1: has already been shown. We've seen this with a handful
• 23:03
  Speaker 1: of other tokens. Uniswap has started to roll out. That's
• 23:06
  Speaker 1: a good example of, I think, a successful scenario that
• 23:10
  Speaker 1: plays into this market. So I can't wait when we
• 23:13
  Speaker 1: see more projects that go that direction. I think it's
• 23:16
  Speaker 1: going to be good for crypto, you know, for sure.
• 23:18
  Speaker 1: In general, Keane Gilbert, thanks a lot for coming in today.
• 23:22
  Speaker 1: We do appreciate it. And we'll be watching Lido very closely.
• 23:26
  Speaker 2: Thanks so much.
• 23:33
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• 23:36
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• 23:39
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