Latest / CRYPTO 101 / Ep. 736 How Aerodrome Became a Top DEX on Base and Ethereum

Transcript

Ep. 736 How Aerodrome Became a Top DEX on Base and Ethereum · CRYPTO 101

0:09
[SPEAKER_00]: Alright everybody, welcome back to another episode of The Crypto 101 podcast.
0:13
[SPEAKER_00]: I'm your co-host, Bryce, as always.
0:15
[SPEAKER_00]: Join by my good buddy, Brendan.
0:17
[SPEAKER_00]: How's it going, no man?
0:19
[SPEAKER_01]: Fantastic.
0:20
[SPEAKER_01]: Tell you what, I'm stoked for this podcast.
0:22
[SPEAKER_01]: I know the listeners are going to like this one too because we get lots of questions.
0:26
[SPEAKER_00]: Yes, big time.
0:27
[SPEAKER_00]: And I know you are a very, very active trader on aerodrome, which is the largest decentralized exchange on base.
0:34
[SPEAKER_00]: Incredible about what's going on.
0:37
[SPEAKER_00]: I've certainly tinkered with aerodrome, but I know you're setting up liquidity pools and doing.
0:41
[SPEAKER_00]: uh... in insane strategies and so who better to bring on uh... then essentially the founder of dromos labs the CEO of dromos lag labs alix cutler uh... who's responsible for developing uh... aerodrome and vello drom and so many incredible technologies here in crypto um... Alex welcome to the show hey guys thanks so much uh... for for having me and uh... glad to hear we've got some uh... active users on the the pod today
1:09
[SPEAKER_00]: Oh, indeed, indeed, look, base has been, you know, they blew on to the scene in a big way, a couple years back.
1:18
[SPEAKER_00]: And, you know, arrow drum has been V hub for liquidity there.
1:22
[SPEAKER_00]: So we want to kind of just take one quick step back.
1:24
[SPEAKER_00]: We don't need to spend the whole episode on it, but just a few minutes just getting
1:28
[SPEAKER_00]: introduced to you.
1:29
[SPEAKER_00]: You know who are you?
1:31
[SPEAKER_00]: How do you kind of come into building Dromos labs and let's kind of color this with the transition from Velodrome to Aerodrome, why you chose base and kind of give us that lay of the land before we dive in.
1:48
[SPEAKER_02]: Yeah, happy to start with a little bit of background.
1:51
[SPEAKER_02]: So, I think like many builders in crypto and defy, since we're out here on the frontier, you know, it's been anything other than a straight line, right?
2:05
[SPEAKER_02]: So I started my,
2:07
[SPEAKER_02]: career, initially working in politics in campaigns at both the state and federal level, shifted from that into technology.
2:17
[SPEAKER_02]: So I got to spend about six years working for Apple, which was an extraordinary privilege.
2:24
[SPEAKER_02]: spent another six years working in kind of an idea of style boutique consultancy, working across a variety of industries, but still primarily focused on the tech size that got exposure of course to the meta, to Microsoft, deeper into Apple and things like that.
2:43
[SPEAKER_02]: And I think the beginning of my journey on chain was really the pandemic, right, and we were all of course locked inside our homes not much to do.
2:56
[SPEAKER_02]: And so I started really accidentally because I built a gaming PC.
3:00
[SPEAKER_02]: You know, I hadn't done something like that since I was a teenager,
3:12
[SPEAKER_02]: So once I did that, you know, I had had a friend in my ear for a long time about crypto and defy.
3:18
[SPEAKER_02]: I would not say it made a ton of sense to me.
3:22
[SPEAKER_02]: And I think we all kind of remember that moment when these things would, you know, you'd meet that first evangelist where you'd tell you about the amazing things happening, whether it's, you know, Bitcoin or defy and what this technology unlocks.
3:37
[SPEAKER_02]: didn't really hear it until I was like, he was like, well, you should just use that gaming.
3:42
[SPEAKER_02]: You see the start mining, right?
3:44
[SPEAKER_02]: And so I did.
3:46
[SPEAKER_02]: I started mining, you know, when it was, you know, not being used to play cyberpunk and Rocket League and other things.
3:55
[SPEAKER_02]: And that was an extraordinary moment, right, because it felt like you were creating value from nothing.
4:01
[SPEAKER_02]: You know, certainly, you know, the energy and things like that, but, you know, that was also a moment, kind of rippuring bull market where everything you own would go up, you know, 10%, 20% and up from there.
4:14
[SPEAKER_02]: So that was pretty incredible, but you call it kind of the gateway, right?
4:18
[SPEAKER_02]: And then it was like, well, what is the purpose of these tokens?
4:22
[SPEAKER_02]: What do they do?
4:23
[SPEAKER_02]: And then that's when I, you know,
4:31
[SPEAKER_02]: Right, and that's when I started to use those tokens to get involved in things.
4:34
[SPEAKER_02]: So exactly what it sounds like, right now it's been doing eye-urgeum, right?
4:39
[SPEAKER_02]: I started providing liquidity, right?
4:42
[SPEAKER_02]: I go out and I procure curved tokens, right, or convex tokens.
4:47
[SPEAKER_02]: I walk those tokens.
4:48
[SPEAKER_02]: I participate in those protocols.
4:51
[SPEAKER_02]: And then those protocols reward me, permissionlessly, right?
4:55
[SPEAKER_02]: For my contribution of value to that overall system,
4:59
[SPEAKER_02]: And I think you have to do the stream.
5:02
[SPEAKER_02]: Yeah exactly.
5:02
[SPEAKER_02]: So as you feel that, right?
5:04
[SPEAKER_02]: You didn't have to ask anyone's permission.
5:07
[SPEAKER_02]: You know, there's no centralized party kind of telling you what you're worth, they're not worth.
5:12
[SPEAKER_02]: You're just adding value and then getting value out proportional to your contribution.
5:16
[SPEAKER_02]: That was like a light bulb off going off sort of moment for me.
5:21
[SPEAKER_02]: And I knew all I wanted to do was to go as deep into this world of D5 as well.
5:27
[SPEAKER_02]: possible, and quit my job.
5:30
[SPEAKER_02]: Not really with any plan, I certainly would have had no idea that I was going to end up, you know, founding a company or building a protocol, but just in going deep in, I met, you know, a handful of other guys in the discord, you know, we are all part of that dow.
5:48
[SPEAKER_02]: Um, that was a sub-dow of, of, uh, a deck's called solidly on, on Phantom, and we saw an opportunity to take, uh, those foundations that the founder of that Andre had created to launch a deck's, right, um, uh, sort of improving on that model in Velodrome on optimism.
6:07
[SPEAKER_02]: bedding pretty hard on uh we thought the next big area of growth in defy was going to be a ethereum l2s so you know we wanted to build on optimism then which was one of the top etheltos and uh you know veletron quickly became the largest decks on optimism which was a huge deal because
6:28
[SPEAKER_02]: You know, we were five unknowns who didn't raise any money and, you know, suddenly we're taking on a billion dollar incumbents and, you know, certainly in our own little neighborhood and an optimism, but didn't that meant we were well positioned when we saw a coin base was going to come on chain, they were going to build an e-felt to, you know, they needed the type of liquidity infrastructure that our product provided and so yeah, we put a ton of effort into deploying error drone as sort of a sister protocol.
6:58
[SPEAKER_02]: on base.
6:59
[SPEAKER_02]: And of course, I think the rest of this history, you know, base become one of these single most successful chains in history.
7:05
[SPEAKER_02]: It took about a year for them to become the top ETHL2 in the world.
7:10
[SPEAKER_02]: And we have worked very closely with them in power trading and liquidity infrastructure on base.
7:17
[SPEAKER_02]: And so that has meant that, you know, air drone depending on the days, the second or third largest decentralized exchange anywhere on chains.
7:25
[SPEAKER_02]: So it's been a pretty
7:28
[SPEAKER_01]: Yeah, I want to dive into that a little bit more because they're especially in the heat of the last bull market.
7:34
[SPEAKER_01]: There were so many different options to choose from.
7:38
[SPEAKER_01]: And I'm not just talking about L2s, right?
7:40
[SPEAKER_01]: There's there's a lot of really hot L2s in the last bull market.
7:43
[SPEAKER_01]: There were different ones that were launching their tokens in that time period.
7:48
[SPEAKER_01]: But also just a million L1s, huh?
7:51
[SPEAKER_01]: Oh, I guess I got you off.
7:52
[SPEAKER_01]: I was going to say a bunch of L1s, like Salah says.
7:55
[SPEAKER_00]: Absolutely.
7:56
[SPEAKER_00]: Exactly.
7:56
[SPEAKER_01]: And it made it show, I think, for developers, they had ample opportunities and options to say, oh, I could choose this or this or this or that.
8:04
[SPEAKER_01]: And you could have had your hands on anything and everything.
8:08
[SPEAKER_01]: You could have chosen any L1, any L2,
8:11
[SPEAKER_01]: But you still decided to say, hey, we've, we've seen success with Eldrome.
8:15
[SPEAKER_01]: We're going to choose between all the options we have.
8:18
[SPEAKER_01]: We're going to choose base.
8:19
[SPEAKER_01]: Can you narrow us in a little bit more about maybe why you didn't choose other locations, or specifically why you decided to double down on base?
8:29
[SPEAKER_02]: Yeah.
8:30
[SPEAKER_02]: It's a great question.
8:31
[SPEAKER_02]: I mean, that really starts when.
8:35
[SPEAKER_02]: we were just beginning to imagine, and we are a sub-dow on phantom, which is of course an old L1 of solenoid.
8:44
[SPEAKER_02]: Now it's comes on, I know.
8:46
[SPEAKER_02]: Yeah, but it became sonic, yes, yeah, right?
8:49
[SPEAKER_02]: And so we knew that we had some interesting technology and we didn't sort of like the prospects of solably or phantom at that point.
9:01
[SPEAKER_02]: but that was still point in which all of the energy was around Altail ones.
9:06
[SPEAKER_02]: And so, optimism and arbitrum being the two like leading EFL twos at that time, like everybody was saying, you know, if you're gonna take this technology, you're gonna deploy somewhere.
9:18
[SPEAKER_02]: So if you got to go to have land, right?
9:19
[SPEAKER_02]: You gotta go, stay on Phantom.
9:22
[SPEAKER_02]: You gotta look for that next big Altail one to go to play on.
9:26
[SPEAKER_02]: and what we've tried to do from the very beginning, right?
9:29
[SPEAKER_02]: So, uh,
9:31
[SPEAKER_02]: constraints are really helpful.
9:33
[SPEAKER_02]: So because we didn't raise any money, because we were extremely resource constrained, because we were just that handful of folks in the discord.
9:42
[SPEAKER_02]: We had to place a bet, right?
9:43
[SPEAKER_02]: We couldn't just go anywhere and everywhere.
9:46
[SPEAKER_02]: We had placed a bet.
9:47
[SPEAKER_02]: And our bet was that even if the cycle collapse, which famously it did, in the day, like Velodrome went live, it was like straight into the Luna collapse.
9:58
[SPEAKER_02]: So this was like,
9:59
[SPEAKER_02]: You know, the beginning of like six months of some of the words pain, you know, we've ever felt in the industry.
10:06
[SPEAKER_02]: But we wanted to bet on a sector of the on chain economy that we thought had the potential to grow even as the overall pie was shrinking.
10:16
[SPEAKER_02]: And that when the pie started to grow again, that the growth would happen in a disproportionate way in that area.
10:26
[SPEAKER_02]: So our bet was on ETHL2s, we thought it combined a lot of what made these all tell one successful and cheap and fast and, you know, a native token to help incentivize, you know, growth and activity.
10:41
[SPEAKER_02]: with the benefits and network effects and security and all that sort of stuff of Ethereum.
10:46
[SPEAKER_02]: So our first bet was optimism, right, as a bet on that thesis.
10:52
[SPEAKER_02]: And we were validated, right, because almost every one of those old L1s that people were saying, you had to go, you know, deploy here, look at this tiny corner.
11:03
[SPEAKER_02]: Why would you deploy to a dead chain?
11:04
[SPEAKER_02]: Well, those are
11:07
[SPEAKER_02]: right and all of that sort of stuff went away and we were expecting that bubble to pop in many ways and so after that point exactly to your question here we had a lot of options of other places we could go and frankly by that point because we had achieved a
11:29
[SPEAKER_02]: you know, stunning degree of success, given our humble origins, we had a lot of financial incentives, you know, people would come to us and offer us, you know, checks to come deploy on their chains.
11:43
[SPEAKER_02]: And so we would continuously decline those offers.
11:47
[SPEAKER_02]: And I think I've seen many, many, you know, smart builders and projects just feel like they have to chase every offer.
11:58
[SPEAKER_02]: and that divides your attention.
12:00
[SPEAKER_02]: And at missile lines and sentas and all that sort of stuff.
12:03
[SPEAKER_02]: So we stayed focused on optimism and Belgium started expanding across the optimism superchanged, right?
12:09
[SPEAKER_02]: Because there were all these other ones like Inking, Crackin and Sonya and things like that emerging.
12:15
[SPEAKER_02]: But for base, we were betting on, well, this is, you know, a Fortune 500.
12:22
[SPEAKER_02]: You know, this is one of the most successful consumer crypto companies in the world.
12:27
[SPEAKER_02]: And they're going to come deploy in ETHL2.
12:31
[SPEAKER_02]: And so we think there is an opportunity.
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[SPEAKER_02]: There is a strong likelihood that this will be one of the most successful chains in the world.
12:39
[SPEAKER_02]: Now, it's important to remember that that was not a popular opinion at that time.
12:43
[SPEAKER_02]: Just like we kind of went against the grain and betting in ETHL2s in a moment whenever one was betting on alternate layer ones.
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[SPEAKER_02]: most of crypto Twitter was saying, oh, this chain will never grow.
12:58
[SPEAKER_02]: This is going to be a fed chain.
13:01
[SPEAKER_02]: They're not going to have a tokens, so there's not going to be incentives and things like that, but our bet was on the ability of Coinbase to vertically integrate their chain, the distribution channel for that chain, for the builders on that.
13:16
[SPEAKER_02]: And of course, I think we were very much validated there because
13:20
[SPEAKER_02]: you know, we don't see it happen very often in the space where within a year every single chain, you know, whether it was an alt l1 or an ethyl2 has been lapt by a new entry and that is what ended up happening on base.
13:37
[SPEAKER_02]: And you know, base on some days is doing more volume than Solana.
13:40
[SPEAKER_02]: It's doing more volume than a theory and main net.
13:44
[SPEAKER_02]: And, of course, the vast majority of that volume that is happening on bass is happening on aerodrome.
13:48
[SPEAKER_02]: So, that, once again, when there was kind of like nothing other than like a thesis to support it, paid substantial dividends.
13:58
[SPEAKER_02]: And I think it's a long time before some of the incumbent legacy exchanges, I think.
14:04
[SPEAKER_02]: leaned in to base, but by the time that they did, it was kind of too late, right?
14:09
[SPEAKER_02]: We were to establish a powerful vote there and really across the optimism superchained as well.
14:18
[SPEAKER_01]: You know, all that got me thinking, you know, base is obviously, as you said, comes from Coinbase themselves, right?
14:25
[SPEAKER_01]: A really big popular exchange, especially for retail traders and investors.
14:31
[SPEAKER_01]: Recently, there's been another one of those that has popped up at the time of recording this, Robin Hood changed, just launched.
14:38
[SPEAKER_01]: And I'm curious, do you view that more as like a threat or is that more an opportunity for you to get plugged in somewhere else, additionally?
14:47
[SPEAKER_02]: Yeah, I mean, I would frame it in two ways.
14:51
[SPEAKER_02]: One is it is fantastic for the Ancheon economy that more traditional businesses, right?
15:00
[SPEAKER_02]: Are coming on chain in a variety of ways, right?
15:04
[SPEAKER_02]: So certainly it was a very big win for Coinbase to come to play a chain.
15:09
[SPEAKER_02]: It's a huge win for Robinhood to do that.
15:12
[SPEAKER_02]: And I
15:13
[SPEAKER_02]: Because Robinhood, I think, is going to be pursuing a very similar strategy as Coinbase.
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[SPEAKER_02]: That is now a distribution channel for on-chain products and builders to millions of paying Robinhood customers who would love to have access to some of the things that are happening on-chain and might not otherwise.
15:34
[SPEAKER_02]: So I think it's great for the on-chain economy.
15:36
[SPEAKER_02]: I also think it is great for Ethereum.
15:39
[SPEAKER_02]: Right.
15:39
[SPEAKER_02]: And I am still a very much bullish on the project of Ethereum.
15:46
[SPEAKER_02]: And there was, frankly, an incredible bidding board, right?
15:50
[SPEAKER_02]: Like both Robinhood and Coinbase would have had three options.
15:54
[SPEAKER_02]: One is they could have built their own proprietary chain, right?
15:58
[SPEAKER_02]: That would have been divorced from broader Ethereum or broader EVM.
16:03
[SPEAKER_02]: And there could be good reasons for them to do that.
16:06
[SPEAKER_02]: But they
16:09
[SPEAKER_02]: or they could have built on like Solana and I know Solana competed fiercely to win Robin Hood's business.
16:19
[SPEAKER_02]: But in the end, both of these companies, you know, chose to build on top of Ethereum, chose to build etheltos.
16:26
[SPEAKER_02]: So I also think Robin Hood, like Coinbase, is a great bullish thing for the broader project of Ethereum because it does allow businesses to sort of
16:37
[SPEAKER_02]: build their own old twos, capture a portion of the value that they produce while still giving back to the core Ethereum project.
16:45
[SPEAKER_02]: And that sort of infinite scalability as more and more businesses, more and more institutions come on chain.
16:51
[SPEAKER_02]: I think it's really critical and it's very different than what a, you know, monolithic, old L1, no matter how fast and performant it is, can provide because you can't kind of optimize it around a particular.
17:03
[SPEAKER_02]: So, you know, arrow, you know, our next big phase, which I'm sure we'll get into here eventually, is that we are launching, you know, the combined arrow drum and velodrome into a single change in arrow.
17:18
[SPEAKER_02]: And we are extending that exchange.
17:21
[SPEAKER_02]: to main that ethereum and to circles arc and I think our intention very much is to be the dominant on chain exchange of the broader EVM and so I think we will be very interested in capturing any pockets of activity on chain that we see right and I think we have kind of our
17:49
[SPEAKER_02]: Any growth across the EVM and trading is a fantastic thing for all of us to take.
17:56
[SPEAKER_00]: I love it.
17:56
[SPEAKER_00]: That's super informative, kind of towards this next question as well about like, I guess these etheltos have kind of been contentious, if you will, in the Ethereum community, just because, again, this is just my outsiders looking in like Ethereum value is flat to negative over the course of the past like five years.
18:17
[SPEAKER_00]: Sure, it's gone up, sure it's gone down, and a lot of people are scapegoating etheltos,
18:22
[SPEAKER_00]: And saying, well, that's where all the, like, they're siphoning off value.
18:25
[SPEAKER_00]: They're siphoning off fees.
18:27
[SPEAKER_00]: Now, the burn isn't happening because people aren't even really transacting on the theorem.
18:30
[SPEAKER_00]: And so I saw some discussion.
18:33
[SPEAKER_00]: I think it's just a proposal at this point.
18:35
[SPEAKER_00]: But where the Ethereum foundation, or maybe now it's eth labs, I'm kind of confused with what's going on there.
18:42
[SPEAKER_00]: But they are saying that they're going to renegotiate how much the L2s are going to pay the main chain.
18:49
[SPEAKER_00]: So how do you debug this for us here?
18:52
[SPEAKER_02]: Yeah, I think there's a few things going on here and like I would approach it from the principle first of will a overarching network of ethereum.
19:07
[SPEAKER_02]: do much better if there is the ability for traditional businesses to come on chain, still build on top of Ethereum versus building their own competitive chains or going to something like Solana?
19:25
[SPEAKER_02]: Yes, that is absolutely a win for Ethereum.
19:30
[SPEAKER_02]: And it is something
19:37
[SPEAKER_02]: And if you imagine a future, like, you know, Brian Armstrong said, Coinbase is bad is that the next five years, 10% of global GDP comes on chain.
19:46
[SPEAKER_02]: You know, we're talking about many more bases.
19:49
[SPEAKER_02]: We're talking about many more,
19:52
[SPEAKER_02]: Robin Hood like chains and them operating at a scale, right, that is so much larger than they art today, such that there is a lot more value flowing back.
20:03
[SPEAKER_02]: And that is much better than that value flowing elsewhere to other chains.
20:09
[SPEAKER_02]: So,
20:11
[SPEAKER_02]: I think the issue, the L2 roadmap, was that, like, you know, I think Fatalex said this, we did not need a hundred like VC backed copy-paste generalized chains that just recreate the exact types of things that are happening on the main net of theorem.
20:27
[SPEAKER_02]: These chains need to have a recent to exist.
20:30
[SPEAKER_02]: I think base and Robinhood are great examples of chains that have a reason to exist in the sense of,
20:38
[SPEAKER_02]: You know, they can service the bad at which these things are built in these companies can distribute So I think mostly L2 road map.
20:46
[SPEAKER_02]: That's fine.
20:47
[SPEAKER_02]: Like there's a bunch of junk chains just like there are a bunch of junk L1s, but like That can go away.
20:53
[SPEAKER_02]: We should continue to scale the L1 and then like, you know, I do not know the correct balance in value back
21:02
[SPEAKER_02]: to the L1 or value back to ETH versus value to be able to be captured.
21:08
[SPEAKER_02]: But the principle is that there should be a way for businesses to build on top of Ethereum, contribute something back that is hopefully proportional to what they gain and allow the network to scale infinitely versus a more monolithic or a competitive block chain infrastructure.
21:30
[SPEAKER_00]: And just one quick follow up because on that, like people can't really build on the main chain because it's too slow and like it will not support and the fees will get high if like everybody's building on it.
21:41
[SPEAKER_00]: Is that kind of like the the basic principle.
21:44
[SPEAKER_02]: Yeah, well, I mean, if anybody, you know, was using eat the main net, you know, back during defy summer, you know, you could.
21:54
[SPEAKER_02]: 100% making.
21:55
[SPEAKER_02]: Yeah, you can be making a swap.
21:57
[SPEAKER_02]: And suddenly, you know, you're just not paying attention.
22:00
[SPEAKER_02]: And yeah, $250 of your $1,000 went to a fee, right?
22:02
[SPEAKER_02]: And that is not.
22:09
[SPEAKER_02]: scalable to onboard the world, right, or onboard or even create new interesting applications and primitives.
22:18
[SPEAKER_02]: And so now it's like very much clear, right, it's going to be a dual-prong strategy that
22:24
[SPEAKER_02]: that the ETHO1 already, like in the last year, is becoming faster cheaper, more performance.
22:30
[SPEAKER_02]: And that is good.
22:31
[SPEAKER_02]: And there will be even more of that acceleration.
22:34
[SPEAKER_02]: And that means more activity can live, right?
22:37
[SPEAKER_02]: Instead of on the ETHO1, and more than economic activity and value will be captured, by the token.
22:46
[SPEAKER_02]: But you do that in parallel with ensuring that
22:49
[SPEAKER_02]: Yeah, you win Robin Hood, you win Coinbase, you bring BlackRock, you bring everybody on board via the L2s as well.
22:59
[SPEAKER_02]: Because you'd much rather be capturing something from that versus that slight fitting value out of your ecosystem somewhere else, right?
23:06
[SPEAKER_02]: If Ethereum gains nothing by anything that happens on Solana and that could be an alternate universe where every single corporation is building their own thing and it's contributing absolutely nothing back.
23:19
[SPEAKER_01]: I want to go back to that Brian Armstrong quote that you mentioned a little bit earlier, because I've seen that float around, I've seen you mention it, but it's this idea that the goal is to brain 10% of global GDP on-chain.
23:32
[SPEAKER_01]: And again, I've seen you reference that before, but can you walk me through what has to be true for that to actually happen?
23:40
[SPEAKER_02]: Yeah.
23:41
[SPEAKER_02]: I mean, I think a lot of the foundations are already there, right?
23:45
[SPEAKER_02]: You know, we've spent years and years.
23:47
[SPEAKER_02]: Sometimes this is seen as like, I don't know, it's like presented as a bad thing, right?
23:55
[SPEAKER_02]: But it's actually, it's still directionally correct.
23:57
[SPEAKER_02]: We have been spending years and years building the infrastructure needed to provide a better foundation for the global financial system than the
24:09
[SPEAKER_02]: Right.
24:09
[SPEAKER_02]: So that means, you know, chains had to get faster and more performance.
24:15
[SPEAKER_02]: That meant we needed to build a software that was much more secure and immutable and tested with powerful indie effects and billions of dollars of capital secured.
24:31
[SPEAKER_02]: It means we needed to like even experiment, right?
24:34
[SPEAKER_02]: these economic models and token models and figure out what works and what doesn't look.
24:39
[SPEAKER_02]: So now most of the infrastructure is in a really good place to onboard much more, right?
24:46
[SPEAKER_02]: And much more means capital certainly, but it also means users, transactions, activity and things like that.
24:54
[SPEAKER_02]: So much of that work has been done, it will continue to happen, but we're in a strong place.
24:59
[SPEAKER_02]: So that's one thing that need to be done, but the other, some of the other powerful catalysts here is like, oh, look, what has there been to do on chain, right?
25:10
[SPEAKER_02]: There's a handful of assets that are interested assets that
25:15
[SPEAKER_02]: have some form of utility or some sort of clear value proposition.
25:20
[SPEAKER_02]: The rest of what's been going on on chain, you know, basically as long as there's been defy, is frankly, shitcoins.
25:28
[SPEAKER_02]: It's garbage.
25:29
[SPEAKER_02]: It's tokens used as extraction vehicles.
25:33
[SPEAKER_02]: It's very, very rare.
25:34
[SPEAKER_02]: You can point to a token that could be assessed on a fundamental basis
25:43
[SPEAKER_02]: And there is a case probably for a small network of things like meme coins, but you know, you don't need that many and we know most meme coins go to zero very quickly and they make a handful of people very rich and they make a lot of people very poor and so with the clarity act, right, which we're on the verge of.
26:06
[SPEAKER_02]: we are going to see and we are already seeing like the issuing of U.S. equities on chain.
26:14
[SPEAKER_02]: And not kind of the like wrapper versions or synthetic versions that sort of experimentation we've seen so far, but like what Coinbase announced, right?
26:22
[SPEAKER_02]: This is a tokenized
26:23
[SPEAKER_02]: equity in which things like dividends are available to you as a user of it, things like voting rights.
26:30
[SPEAKER_02]: And so that is a whole new asset class that could come on chain in size could be traded faster and cheaper than via traditional venues could unlock the power of composable defy and new financial primitives, built around it.
26:47
[SPEAKER_02]: And then we're talking about
26:51
[SPEAKER_02]: Um, right now today like on base and on erasure, um, you can get a rate that is better exchanging U.S. dollars to euros, then the best of the upstart financial tech companies like why is off for you each day, right?
27:08
[SPEAKER_02]: And so it's only a matter of time where more and more of this sort of payments processing or effects infrastructure comes on chain as well.
27:16
[SPEAKER_02]: And so I think about it in terms of a lot of the stuff is already coming true.
27:21
[SPEAKER_02]: Brigadier Tory clarity is going to only accelerate.
27:24
[SPEAKER_02]: The mix of asset classes are going to be issued.
27:26
[SPEAKER_02]: I mean, it's going to be a gold rush.
27:28
[SPEAKER_02]: You already have coin days and Robin Hood, you know, ready to issue stock.
27:34
[SPEAKER_02]: You're going to see every major institution wanting to issue their own, like
27:37
[SPEAKER_02]: types of stable coins, more global stable coins, because they kill even see like government issued stable coins on chain.
27:44
[SPEAKER_02]: And then that is how you get there because when these things are on chain, it's real time, it's super cheap, it's global
27:54
[SPEAKER_02]: accessible, it's permissionless, and that is in the end just better technology than what you can get in traditional financial systems.
28:02
[SPEAKER_02]: And so that is how I think we eat away at, you know, that number of 10% of global GDP.
28:10
[SPEAKER_02]: And, you know, if you need any more like case for this,
28:14
[SPEAKER_02]: Every single major financial institution, including some of those like most skeptical or those who have been, you know, maybe most trying to throw a wrench in this collective project.
28:26
[SPEAKER_02]: They're hiring people at the most senior levels to lead the digital assets and tokenization strategies, right?
28:31
[SPEAKER_02]: the battle I think in many ways has been one.
28:34
[SPEAKER_02]: And so now it is just a matter of time.
28:36
[SPEAKER_02]: And I know you don't get this vibe if you're just reading crypto Twitter because those are the jaded, you know, people who've been here for a very long time, but you get none of that fear uncertainty or doubt if you're out at these conferences and you're talking to banks and asset issuers and major institutions.
28:57
[SPEAKER_02]: They know they need to build around it.
28:59
[SPEAKER_02]: Otherwise their businesses will be disrupted and it's like so insanely bullish I've like never been more bullish.
29:06
[SPEAKER_02]: Don't mistake the crypto Twitter noise for for signal.
29:09
[SPEAKER_02]: You know just like we had a thesis We ignored everybody on crypto Twitter and you know that's you'll the dividends let's advice like everybody Don't listen to anybody on crypto Twitter.
29:20
[SPEAKER_02]: It's a lagging signal
29:22
[SPEAKER_02]: Like, you know, uh, make it a bit less right, I got to spend a lot of time on there, but I at least put it in a box of like, uh, this is telling me what has just happened or is retroactively happening, not what is about to happen next.
29:39
[SPEAKER_00]: you've done a good job of like dissociating and compartmentalizing that.
29:45
[SPEAKER_00]: Exactly.
29:46
[SPEAKER_00]: But, no, I mean, that was awesome.
29:49
[SPEAKER_00]: There's so much to unpack there.
29:50
[SPEAKER_00]: And I think like, also, by the way, on the concept of like all these banks and asset allocators and stuff coming in, I saw, I think it was two days ago, Vanguard just posted one of their first posts for like, we're looking for a head of digital assets.
30:06
[SPEAKER_00]: everybody on crypto Twitter of course goes crazy because like you know two years ago your CEOs said you're never gonna have these ETFs even tradable then that CEO left a couple you know months after that got replaced they rolled out the ETF access and now they're looking for like a head of crypto which is just like man you know.
30:24
[SPEAKER_00]: They're really starting to bend the knee, if you will.
30:27
[SPEAKER_02]: Yeah, and if you've been around long enough, if you've studied technology and like you should, I think at some point, just think about this as better tack.
30:36
[SPEAKER_02]: Better tack, if it is more efficient, if it's more globally accessible, it wins.
30:40
[SPEAKER_02]: But it does not feel like it until it does, right?
30:43
[SPEAKER_02]: Like, there's a very funny,
30:46
[SPEAKER_02]: common thing of like, you know, with the iPhone first drop, right?
30:49
[SPEAKER_02]: And the iPhone was totally, was a major leap beyond like what smart phones were up until that point.
30:57
[SPEAKER_02]: And you have, you know, Steve Palmer just like laughing his ass off being like, nobody's going to use this thing.
31:03
[SPEAKER_02]: Yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yaddy, yad
31:16
[SPEAKER_02]: and I think it is very, very obvious what is going to happen that does not mean you won't have a whole bunch of people who say it's not going to happen, but to your point they leave and then unless those businesses want to go under, those businesses get really, really serious about ensuring that they're not disrupted here.
31:37
[SPEAKER_00]: totally.
31:39
[SPEAKER_00]: But to our, to play devil's advocate or to the counterpoint, just to touch, I still think there are some structural barriers to injury for some of these institutions.
31:49
[SPEAKER_00]: I don't think any of us could deny all the hacks that have happened, which I think scared people out.
31:56
[SPEAKER_00]: Maybe some of the lack of KYC on the different liquidity pools.
32:00
[SPEAKER_00]: You've got, you know, of course, custody issues, different compliance issues that hopefully those things are more technical, the Clarity Act, if it passes finger cross, 50, 50 coin flip right now according to Polymark art odds, you know, that stuff will get smooth out.
32:13
[SPEAKER_00]: But like, I feel like it's the the constant hacks.
32:17
[SPEAKER_00]: What do you think?
32:18
[SPEAKER_00]: What is it that's kind of the barrier to entry?
32:22
[SPEAKER_00]: And also what role does Dromo's labs have to smooth some of that over or responsibility relative to Ethereum developers or Coinbase or like these centralized institutions?
32:37
[SPEAKER_02]: Yeah, it's a great question.
32:39
[SPEAKER_02]: I mean,
32:41
[SPEAKER_02]: I think much of the barriers, or at least the biggest inflection point will come with clarity, right?
32:51
[SPEAKER_02]: And we'll come, not even just United States will be a major player here, right?
32:55
[SPEAKER_02]: Because we very much do set many of the global rules and standards, but there are clarity-like bills moving through a number of different countries, like South Korea's a major one.
33:08
[SPEAKER_02]: one of the highest rates of like digital asset ownership in the world like per capita.
33:14
[SPEAKER_02]: And what that does is, you know, these businesses are businesses are hyper-conservative to your point.
33:20
[SPEAKER_02]: They're not going to take a ton of risks, right?
33:23
[SPEAKER_02]: They want to know the rules.
33:25
[SPEAKER_02]: And I think that is one of the biggest unlocks.
33:27
[SPEAKER_02]: It doesn't mean of clarity doesn't pass, it doesn't happen.
33:31
[SPEAKER_02]: It just means that there's a slight discounting or need to happen in slightly
33:38
[SPEAKER_02]: to the hacks though, absolutely man, that is a major tax on the growth of our space.
33:44
[SPEAKER_02]: I don't think it will be the biggest limit because an institution doing due diligence on chain can figure out the difference between, you know, a mutable smart contracts that have held billions of capital for four years, right?
34:01
[SPEAKER_02]: You know, billions of capital means the bounty.
34:04
[SPEAKER_02]: for North Korea for any threat after it has been billions if they find something if they break that that is a pretty good bounty to have existed for years and not been broken.
34:18
[SPEAKER_02]: So I think they'll be able to differentiate but if it's more on perception and like you need a lot of buy-in within these orgs from people who will not go in and do that due diligence, it's a major issue but here's my take on it.
34:33
[SPEAKER_02]: Um, I don't think anything about like the last year brutal hox right has anything in particular to do with like, uh, is mythos out there on the on the loose, you know, and we just don't know it yet or the proliferation of these, um,
34:49
[SPEAKER_02]: sophisticated models or things like that.
34:52
[SPEAKER_02]: And the reason I don't think it has anything to do with that, at least it's not a direct or substantial contributor, it does drop the cost.
35:00
[SPEAKER_02]: It's like probing and social engineering and things like that.
35:04
[SPEAKER_02]: But almost every one of these hacks, you can basically point to it was a single or double point of failure, whereby there was tens or hundreds of millions of dollars at risk.
35:20
[SPEAKER_02]: If what's just say YouTube, right, we're on a multi-sig, and it was a two of five, right?
35:28
[SPEAKER_02]: And you guys were securing, you know, a hundred million dollars of capital.
35:36
[SPEAKER_02]: That means somebody, the bounty on you guys.
35:38
[SPEAKER_02]: That which just means they need to either crack your computer or get into your home, and find you guys the bounty on you is so large.
35:47
[SPEAKER_02]: that like if somebody spends $10 million to break each of you because they'll make a $100 million, they'll get you right like it's it's not hard and so the issue in our space is these things should have been gone all along time ago.
36:03
[SPEAKER_02]: It is absolutely negligent in my opinion to continue to have centralized dependencies like these inherent in systems that controls substantial amount of value.
36:16
[SPEAKER_02]: I think it is up of course to everybody individually.
36:19
[SPEAKER_02]: to do that on that that discounting yourself, right?
36:23
[SPEAKER_02]: I wouldn't deposit anything with a multi-said, even with a time lock or anything like that on a day.
36:29
[SPEAKER_02]: It could broke my capital.
36:30
[SPEAKER_02]: I haven't done that in a very long time.
36:32
[SPEAKER_02]: Not since I was just bumping around the pausing and the random stuff in defy summer.
36:38
[SPEAKER_02]: Um, but it's also up to those protocols like, if you're going to have the level centralized dependency, I'm saying, your operational security budget has to be as big as a centralized like bank that is securing an unbelievable amount of capital.
36:54
[SPEAKER_02]: Right?
36:55
[SPEAKER_02]: And we've designed from the beginning of out those things.
36:58
[SPEAKER_02]: Right?
36:59
[SPEAKER_02]: We do not have multi-sigs or centralized dependencies.
37:04
[SPEAKER_02]: We are probably one of the most extreme in trying to drive those out of our system.
37:09
[SPEAKER_02]: We built entirely new technologies such that we don't even have like a centralized API or indexer.
37:15
[SPEAKER_02]: We don't have a Google Cloud instance or AWS instance.
37:18
[SPEAKER_02]: We're not using
37:21
[SPEAKER_02]: But I think that is incumbent on us because you could you could grab me and Five other co-founders.
37:29
[SPEAKER_02]: You're not getting the half a billion dollars locked in erasure.
37:32
[SPEAKER_00]: We don't have You're gonna get into the cool hat in a wallet.
37:35
[SPEAKER_02]: Yeah, we've got some great.
37:38
[SPEAKER_02]: We got some great hoodies And yeah, you can go to my ATM with me if you want, but I if you're gonna be a bit disappointed because we didn't raise money and we didn't allocate ourselves stoke and so You know
37:50
[SPEAKER_02]: building a public good, you don't quite have the same up side, but yeah, we need to build better systems and in some ways it might be good that we're washing out the stuff here and people are learning painful lessons.
38:02
[SPEAKER_02]: Now versus like clarity institutions come on chain and let's say the cycle structure continues.
38:10
[SPEAKER_02]: That means we might be at the tail end of the bear here and we all know
38:16
[SPEAKER_02]: Let's take up the trash now, let's send lessons, you know, and then hopefully everyone who's still building here goes no more shortcuts.
38:24
[SPEAKER_02]: And every fund investing in them says, no shortcuts.
38:28
[SPEAKER_02]: You're not getting a check if, if like, there's a multi-sign that's controlling value and stuff like that.
38:35
[SPEAKER_00]: Yeah.
38:35
[SPEAKER_01]: Well, you know, I want to I mean, well, first and foremost, I think all of that's a really good point.
38:41
[SPEAKER_01]: And I think it's important to pay attention to that.
38:43
[SPEAKER_01]: And I wish more projects and founders had that kind of approach to this because it's very easy to think, Oh, we'll just cut corners.
38:51
[SPEAKER_01]: We'll do this.
38:52
[SPEAKER_01]: We'll do that.
38:53
[SPEAKER_01]: Nothing will actually happen to us or our customers.
38:56
[SPEAKER_01]: before you know it, the carelessness catches up to you.
38:59
[SPEAKER_01]: And it's happened too much.
39:00
[SPEAKER_01]: And so I think, you know, we're definitely on the same page there, but I want to try and object on one thing before we switch gears.
39:07
[SPEAKER_00]: I wish just more people knew about exactly what you're talking about, right?
39:10
[SPEAKER_00]: Like, oh, where the centralization rests and so on, is there a resource or a website where we can kind of go and see like,
39:17
[SPEAKER_00]: this would be a great, you know, tool that somebody should build if you're listening your developer and you're like, oh, wow, I want to build something in crypto that's useful.
39:23
[SPEAKER_00]: This would be useful.
39:24
[SPEAKER_00]: Like what are the centralization components of every different protocol that has a vault or like where can we find that?
39:32
[SPEAKER_02]: Yeah, you know, this is an increasing
39:37
[SPEAKER_02]: Increasing movement and it became a topic of hot conversation right because they're you know the lack of standards or transparent reporting is been an issue right in our industry just pure forever and there are a few lenses you can take on.
39:53
[SPEAKER_02]: There's a lot of work we need to do around token transit, right?
39:56
[SPEAKER_02]: Of what are these tokens good for?
39:59
[SPEAKER_02]: What are they not?
40:00
[SPEAKER_02]: Who owns them?
40:01
[SPEAKER_02]: You know, when are they unlocking and going to be sold and things like that?
40:06
[SPEAKER_02]: And like block works has been doing a ton of work around token transparency and that this framework.
40:11
[SPEAKER_02]: So is like our gone has done some incredible work here around, you know, token ownership claims.
40:18
[SPEAKER_02]: Like what is the token actually good for what rights does it give you and things like that?
40:23
[SPEAKER_02]: And then I'm having difficulty remembering the name, but I could definitely follow up with it, but Token, Bryce had something that was looking at the centralization risks for protocol, like auditing and scoring them, and I'm having difficulty remembering.
40:43
[SPEAKER_02]: Then there's some conversation of like, our people gonna come together and solve some of these things, but I guess I haven't.
40:51
[SPEAKER_02]: kept up, but defy scan.
40:54
[SPEAKER_02]: Defy scan.
40:56
[SPEAKER_02]: Yep, defy scan.
40:58
[SPEAKER_02]: You can find them on Twitter.
41:00
[SPEAKER_02]: And this is attempting to look at the security assumptions in centralized risk vectors.
41:07
[SPEAKER_02]: Almost like L2 beach does for L2s, right?
41:10
[SPEAKER_02]: It says like, you know, here's the time lock, security council infrastructure, what stage of decentralization.
41:16
[SPEAKER_02]: They're trying to do this across defy and I think
41:20
[SPEAKER_00]: Token Bryce was a better name, but defy scans pretty good too.
41:23
[SPEAKER_00]: Yeah, right.
41:27
[SPEAKER_01]: Well, you know, one of the other areas that's completely different from this, but one that I think people have had.
41:34
[SPEAKER_01]: very different kinds of security related thoughts about is datts, right, treasuries, in the bull market, everyone loved them.
41:43
[SPEAKER_01]: This is the best thing ever, or accumulating more, and it's great.
41:47
[SPEAKER_01]: And then now that we've entered into a little bit more of like a bearish extended period, all of a sudden there's a little bit more skepticism, there's a little bit more thoughts, you know, if people have seen Michael Sailer sell, um,
41:58
[SPEAKER_01]: two different times here in the last month and seeing how some of these other treasury companies have acted and they're like, well, you know, maybe maybe I do have second thoughts on this, but I'm curious, for the eighth deaths and treasuries specifically, like what are your thoughts on those, things like sharpling, bitmind, the other ones?
42:17
[SPEAKER_02]: Yeah, I mean, I would guess I would say,
42:28
[SPEAKER_02]: was garbage like in look the the root of the problem is again tokens and the incentives created there because of the tokens are not useful for anything right if they do not have any on chain utility rights if they do not accrue any value all these doubts were were exit vehicles like for foundations and teens and to a trap
42:53
[SPEAKER_02]: you know, more investors, but it was like it was another exit vehicle and tokens fundamentally have just been used for exit vehicles, right?
43:00
[SPEAKER_02]: And we've created this dashboard, this net token value flows, but it shows basically a mountain of value into the token divided by a mountain of value out of the token, then
43:12
[SPEAKER_02]: teams and investors and incentives and things like that.
43:16
[SPEAKER_02]: And hopefully it comes as a surprise to no one, but like 90% of tokens in the top 100 are infinitely cost vehicles.
43:25
[SPEAKER_02]: That means if you're holding it, there's just more and more value being extracted from you, you're subsidizing the cost of these things and you're not getting anything returned.
43:34
[SPEAKER_02]: Why would a DAC DAC or equity vehicle want to hold any of these things, right?
43:40
[SPEAKER_02]: Like they are the worst assets you could potentially buy in the universe of investment assets we can even leave crypto as I.
43:48
[SPEAKER_02]: On more interesting assets, right?
43:51
[SPEAKER_02]: Like hype.
43:53
[SPEAKER_02]: fight the crews in extraordinary amount of value.
43:57
[SPEAKER_02]: Um, hype is a useful token.
43:59
[SPEAKER_02]: That makes sense in the context of a dad, right?
44:01
[SPEAKER_02]: That gives, um, uh, an entity with the equity structure and the ability to like procure more investment to procure, pay a piece of that network.
44:11
[SPEAKER_02]: Um, uh, a great vehicle.
44:14
[SPEAKER_02]: And it also creates a new stakeholder, right, in this group who can then, you know, have a financial incentive to ensure the success of that network, right?
44:23
[SPEAKER_02]: And I think the hyperdab is a great example of this, but likewise with Tom Lee and Ethereum, right?
44:29
[SPEAKER_02]: like Tom Lee is buying an extraordinary amount of Ethereum.
44:32
[SPEAKER_02]: Ethereum is again another great asset here because it does actually produce guilt and value and it does actually have on-chain a mutable rights and now Tom Lee is incentivized like we have this
44:46
[SPEAKER_02]: You know, you made the joke earlier about what exactly is going on with the EF, but like even in Vitalik talking about, you know, we need to change kind of the direction and the focus of the EF.
45:02
[SPEAKER_00]: Yeah, that is a good thing.
45:03
[SPEAKER_02]: Yeah, exactly.
45:05
[SPEAKER_02]: You know why?
45:05
[SPEAKER_02]: Because there shouldn't be one single centralized anything that is responsible for or incentivize for the success of the broader network.
45:14
[SPEAKER_02]: So, you know, whether it's
45:18
[SPEAKER_02]: you know, hey, if the EF is cutting back, it's like institutional relation side.
45:23
[SPEAKER_02]: Or if it's cutting back, it's like support for like defied builders and things like that.
45:28
[SPEAKER_02]: So it can focus very much on the core mission of the underlying like technology stack.
45:33
[SPEAKER_02]: That is great.
45:34
[SPEAKER_02]: And you know, who has a financial incentive and means to support.
45:41
[SPEAKER_02]: much better business oriented outreach, right, or much better institutional, how rich palm lead is, right?
45:48
[SPEAKER_02]: And that's how like a decentralized network should actually operate.
45:52
[SPEAKER_02]: And it's actually pretty similar to how we operate, right?
45:55
[SPEAKER_02]: Like we only get rewarded as a team, right, by virtue of being users of our own token.
46:02
[SPEAKER_02]: 100% of the revenue goes to the token, we have to use the token each week just like anybody else.
46:07
[SPEAKER_02]: So in building the new era, right, which will be launching soon, we are not the only contributing development company to this technology stack.
46:17
[SPEAKER_02]: There's another one.
46:18
[SPEAKER_02]: in Wonderland, and Wonderland is an amazing set of builders, some of the top theory and builders in the space that have contributed to things like the core of the theory and set to hop this optimism and things like that.
46:31
[SPEAKER_02]: And they are incentivized to contribute through their own VE era position.
46:36
[SPEAKER_02]: So they are an E will stay colder as us.
46:39
[SPEAKER_02]: within the system.
46:40
[SPEAKER_02]: Coin defense insurance holds a large VE era lock position.
46:44
[SPEAKER_02]: They are incentivized to say, wait, we are, right?
46:47
[SPEAKER_02]: And those types of tokens, I think make a lot of sense in equity vehicles, most of them do not.
46:56
[SPEAKER_00]: Yeah.
46:56
[SPEAKER_00]: That's a great point.
46:58
[SPEAKER_00]: And I think it's kind of like worth, you know, we'd be remiss if we didn't ask a little bit more about sort of the liquidity fly wheel and kind of wrap up the conversation on just, you know, the arrow token, right?
47:10
[SPEAKER_00]: And of course, nothing that we ever say is financial advisor should be construed as such.
47:15
[SPEAKER_00]: It's all educational in nature.
47:16
[SPEAKER_00]: So we don't want this to come off like a sales pitch, anybody who's watching.
47:20
[SPEAKER_00]: I'm just really
47:21
[SPEAKER_00]: you know how you think about the arrow token because like you said 100% of the revenue gets driven back to the token it's not like a simple buyback in burn there's there's these locked you know voting escrow rights like you said there's no pre-mine no early founder allocation like so just talk about how the arrow drum token like you know works and how it exists and why it's unique and we can kind of put a point on the conversation there.
47:48
[SPEAKER_02]: Yeah, no, thank you for the question.
47:50
[SPEAKER_02]: I mean, I think from the very beginning,
47:56
[SPEAKER_02]: We've always tried to keep in mind the first principles of the space, right?
48:01
[SPEAKER_02]: And we've tried to design a protocol that we think is reflective of those first principles.
48:07
[SPEAKER_02]: And not just because it is a virtuous thing, right?
48:12
[SPEAKER_02]: But because that is how we build better systems and in building better systems that share value, that is how we actually go out and disrupt
48:22
[SPEAKER_02]: these heavy, well-funded incumbents in, in, track-fi and traditional institutions that things like that.
48:30
[SPEAKER_02]: If we are just recreating worse versions of traditional firms and institutions, this project will fail, right?
48:37
[SPEAKER_02]: Because we do not have their resources, we do not have their way, and if we are just creating worse versions of all of that, then we will fail.
48:46
[SPEAKER_02]: So that means from the very beginning,
48:50
[SPEAKER_02]: um, we have tried to orient the entire protocol around the token.
48:56
[SPEAKER_02]: That means that token is maximally useful.
48:59
[SPEAKER_02]: It means it is a claim on 100% of the value that the the protocol creates.
49:05
[SPEAKER_02]: And that's important for a few reasons, right?
49:10
[SPEAKER_02]: But I think one of the one of the most important ones is that it aligns our incentives.
49:15
[SPEAKER_02]: with those of every other participant within this system.
49:18
[SPEAKER_02]: So how do five guys in a discord, you know, scale all the way up to being the second or third largest decentralized exchange without raising a dollar VC capital.
49:29
[SPEAKER_02]: And by the way, going up against not just incumbents valued at multi-billion dollars, but incumbents who have billionaire investors, you know, like invested it in their success.
49:43
[SPEAKER_02]: that was in building a system in which we were equal participants to everybody else, right?
49:48
[SPEAKER_02]: We weren't going to go out and attract capital and compromise our incentives, if we said everybody, whether you're a random DJ in farming tokens, whether you bought it off the market, you are in the same equal footing as the team, as Coinbase ventures who made the largest liquid investment they had ever made, you know, buying the token off chain and then locking it
50:13
[SPEAKER_02]: But I like this a lot, not just because it gives competitive edge, not just because it aligns incentives, but because, you know, it never puts us in the position of what I think most token projects do, which is like they give themselves a bunch of tokens that aren't really good for anything.
50:32
[SPEAKER_02]: they won't say that, but they aren't really good for anything.
50:35
[SPEAKER_02]: They get a bunch of people really excited about it, right about the time that tokens are unlocking.
50:40
[SPEAKER_02]: They sell those tokens so then they lose their incentive to continue to make the thing successful and then they retire to like a beach somewhere, right?
50:49
[SPEAKER_02]: And there's grave yards of dead protocols and chains that have made people fabulously rich this way.
50:55
[SPEAKER_02]: So
50:56
[SPEAKER_02]: From the very beginning, we did that, right, 100% of the value goes to the token.
51:00
[SPEAKER_02]: That token is given out each week to liquidity providers.
51:03
[SPEAKER_02]: Those are the people putting up the the tokens that people need to trade against.
51:08
[SPEAKER_02]: Those liquidity providers they create more value and fees.
51:11
[SPEAKER_02]: That goes back to the token.
51:13
[SPEAKER_02]: And so you create this flywheel where the incentives of those three groups are aligned and scaling for the overall growth.
51:20
[SPEAKER_02]: But
51:21
[SPEAKER_02]: What I like to say is like if this, you know, seems too heavy, right, the way I like to put it is, in this space of like derivatives and perpetuals, right, there was a period of time out that long ago that, you know, we had this rolling cast of characters of GMX of D right DX of hype and things like that, but there was no single like breakout winner of the category.
51:48
[SPEAKER_02]: until, of course, hyperliquid.
51:50
[SPEAKER_02]: And hyperliquid shares a number of these values.
51:54
[SPEAKER_02]: It's not the exact same, but it's pretty close.
51:56
[SPEAKER_02]: They did not raise any money, right?
51:59
[SPEAKER_02]: They did not sell tokens.
52:02
[SPEAKER_02]: And they distributed 100% of the value that the protocol creates back to the token.
52:07
[SPEAKER_02]: In this case, of course,
52:10
[SPEAKER_02]: Um, and in doing so, right, they have become the undisputed leader, right?
52:16
[SPEAKER_02]: Not just of one of the top revenue producing protocols in D5, but the leader of their category.
52:21
[SPEAKER_00]: And so one of the things done that properly, companies in the world, like I saw, like, per employee, they were like, insanely, I think there's like 11 people that work there.
52:30
[SPEAKER_00]: They're making billions of dollars.
52:32
[SPEAKER_00]: It's crazy.
52:32
[SPEAKER_02]: Right.
52:33
[SPEAKER_02]: Right.
52:33
[SPEAKER_02]: It's unbelievable.
52:34
[SPEAKER_02]: But that is the power of these aren't chain systems.
52:37
[SPEAKER_02]: And I think one of the things that they did exactly right was distribute 100% of the value to the token that has made them the leader in that sort of category of derivative on chain like derivatives exchanges.
52:49
[SPEAKER_02]: And with us, we're doing the same basic thing and principle for spot exchanges.
52:55
[SPEAKER_02]: And with our expansion, right, across EVM, we very much want to win spot exchanges, which by the way, they produce more fees even than derivatives exchanges.
53:06
[SPEAKER_02]: It's just the tokens have not captured any of that value to date, and so we want to take those same principles, apply it to spot exchanges, and use the flywheel of value similar to how they did to dominate that category, just as decisively as hyperliquid is dominated there.
53:24
[SPEAKER_00]: I love it.
53:25
[SPEAKER_00]: And if you show me the incentives, I will show you the outcome.
53:29
[SPEAKER_00]: And I think that the outcome here for AeroDrome is, you know, extremely bright, extremely promising, you know, full disclosure, you know, I'm a holder, you know, Brendan's a holder.
53:41
[SPEAKER_00]: So we're in your corner.
53:42
[SPEAKER_00]: We want you guys to succeed and thrive.
53:45
[SPEAKER_00]: We've talked about it a lot in our podcast on our newsletter and stuff like that.
53:48
[SPEAKER_00]: So look, we really, really, really appreciate the hour that you spent with us today.
53:54
[SPEAKER_00]: The last thing I'll ask is just, where would you like to drive listeners?
53:58
[SPEAKER_00]: Do you want them to go to a discord or a telegram?
54:00
[SPEAKER_00]: Do you want them to go to your ex, read a blog or just use the website?
54:05
[SPEAKER_02]: Yeah, I mean, you can find me on AtWagme Alexander on Twitter.
54:12
[SPEAKER_02]: You can find ErrorDrom on Twitter as well at AtErrorDromFi.
54:18
[SPEAKER_02]: And if you want to check out the website, especially if you want to read all about the big new launch that is coming, all the exciting things in the V3 protocol that are new, I would go to arrow.xYZ, and we've got a lot of good content there.
54:34
[SPEAKER_00]: Awesome.
54:36
[SPEAKER_00]: Last last question.
54:37
[SPEAKER_00]: When is the the big arrow update?
54:41
[SPEAKER_00]: July something?
54:42
[SPEAKER_02]: Yeah, it's the hashtag when we got to get the end here.
54:47
[SPEAKER_02]: Yeah, so we are currently in audit, you know, and I think, you know, we talked about the security side of things.
54:55
[SPEAKER_02]: The audit process is something we will not rush in any form.
55:01
[SPEAKER_02]: So we've got another round of audits coming back this week.
55:05
[SPEAKER_02]: So I think we'll have an update to share there in the next week or two.
55:09
[SPEAKER_00]: Okay, sorry, Crypto 101 listeners, I tried to sneak it in there at the end, but he's an iron lock box.
55:15
[SPEAKER_00]: We have no official date yet, but Alex, again, thank you for your time.
55:19
[SPEAKER_00]: Everybody go follow him on Twitter, or X, and start making some exchanges on Aero Drum.
55:25
[SPEAKER_00]: Hopefully we get you back again soon, next quarter and a couple quarters, and we'll talk about some of the new updates and some of the success you guys have been having.
55:32
[SPEAKER_00]: Sounds great, thanks for having me.
55:34
[SPEAKER_00]: Awesome, thank you everybody for listening and come back.
55:36
[SPEAKER_00]: Same time, same place next week for some more great guests.
55:40
[SPEAKER_00]: Thanks.