Thanks for joining us on this podcast, with the video for those
who watch us on YouTube. It's not the first time we've
had you on this format. We've had the opportunity to talk a little
bit about DeFi before, but this time, we're meeting specifically to talk about
Stake DAO V2, so you've got your Stake DAO hat on and we're going to talk about
Crosschain value capture as well. Just to set the stage for those of you who
haven't seen our first episode, can you introduce yourself a little bit and give
a little bit of an overview of Stake DAO? Sure.
Thanks again, Valentin, for having me on your awesome Cryptoast podcast, which
I really enjoyed the first time.
It went really well. My name is Julien Bouteloup, I have a background in Computer Sciences and
I've started several companies. I left France quite early. I went to the US and then London and I
specialize in everything that is My background is more in Computer Sciences,
so everything that is machine learning, distributed systems, before blockchain, so
in 2009-2008 with a Master's degree and now, I specialize rather in
blockchain, already for a few years. I got into the world quite early, first with Bitcoin in the years 2011-2010, then
after Ethereum and now it's more Crosschain with an investment fund called
Stake Capital, a decentralized exchange platform, retail, called Stake DAO, an
investment fund in everything that is NFT, but more quant, so arbitrage strategies,
equity provider, flash loans, things like that with BlackPool, which
specializes in the world of NFT. In particular, we have for example
Mbappe on Sorare, things like that. And also a system that gives voice to the
people who are in the DeFi, called Rekt.
News, which does very, very thorough investigation on the different things that
happen in the DeFi, to give in fact a kind of global vision and also to alert
certain things that happen in the DeFi. One day, I'll have you over for a third time to discuss your schedule and see
how you manage all these projects. It must be a tight squeeze.
With my head. With my head which is not
very nice to look at. But it's true that it must be quite fast, especially since DeFi, one minute in real
life, is ten years in DeFi, as they say, so you don't have to go
on holiday for too long.
Yes, I often say, "A day in DeFi is
a year in traditional finance. " So we have to stay tuned and we're going
to talk about all that, that's the objective of the podcast, of
Stake DAO and all those channels. Because today, there are the Layer 2
and the Sidechains which are set up. We did a little podcast with Marc d'Aave a
few days ago, on this very theme, the differences between the
different layers of Ethereum.
What is your view on all
these Sidechains and Layer 2? I already have a very
good feeling about Marc. He's a very good person to follow. For those who don't follow him, Marc is very nice technically speaking and also
in terms of a person, whom I know a lot. On the blockchain world, actually, I, I
have the clear white paper which is about three years 2017, four years, where in
fact, already the very vision of Stake Capital, where we were already doing
staking as a service so where we were already doing validation
on all the chains… In fact, Stake Capital's vision at the
time was to go and do liquid staking and to go and do arbitrage
within all these channels.
Right now, we see that now, 2021 is really
actually If 2017 was ASIO, 2020 was the DeFi boom, 2021 is really
the time for Crosschains. That is actually what we
call interoperability. So in fact, thinking… Even me who was or still is in maximalist Ethereum, to think that there will be only
one chain, economically speaking, or even at the business or capitalist
level, it's impossible. Because everyone wants to try to create their own value in the ecosystem, so there
will be many more chains and each of these chains will be able to
interact with each other.
And now we're actually seeing what's going on is that there's a lot of So Ethereum,
which is the main chain where there's a lot of market capitalization and also a
lot of activity, it's starting to be… Already for a few years, but it's
being impacted by its success. Huge amount of transactions… Every small transaction on the
blockchain, on Ethereum costs about… For example, on a transaction on Uniswap or on Curve, is going to
cost around $45, around $40.
So actually, we can see very clearly that the mainstream, the retail aspect on such
a technology is very limited, only on the big fish, the big [inaudible 00:05:06] who
can have access to transfers that, given their transfer amount, don't cost
them a lot of money in terms of gas. Now, what's happening is that there are new blockchains, which are either new
Layer 2 blockchains, which plug in, which connect to Ethereum, or in fact other
blockchains which will either limit or restrict the decentralization I
would say, for example, Binance. Binance is a completely centralized chain
that is a copy-paste of the Ethereum chain with the EVM, Ethereum Virtual Machine,
and what it proposes is that they don't care about the blockchain
aspect, decentralization. It's something that's centralized, but it's something that allows you to
have transactions at a minimum cost. We have a war going on right now, a war that is defined on all the different
protocols that want to try to capture as much of the Ethereum
market share as possible. We're going to go to blockchains that are
going to be extremely fast, so a much more profitable business For example, my
background is Quant, which will be defined in arbitrage strategy or
high frequency trading.
In this case, I would say more
on a chain such as Solana. A chain that will make interprobability
its core business will be Cosmos with Tendermint, where we will have hubs that
will each build their own blockchain or integrate or make what we
call bridges to connect. After that, we're going to have chains
that will try to mix or copy Ethereum's business model a little bit, but bringing
back things that were more on the research side of Ethereum, which took four-five
years to set up, but since these blockchains are completely new, they were
able to implement it easily on their side. I would say for example blockchains like
Polkadot or then after, we have blockchains that focus much more on
blockchain vision systems and decentralized governance worlds, like for
example Tezos, which is much more a governance blockchain and
after tokenized assets.
There, we have a real war. We can see very clearly that there are L2s
that are starting to connect, that are starting to be delivered on the [inaudible
00:07:12] market and other blockchains that absolutely want to integrate the
Ethereum EVM to be able to incentivize people who are on Ethereum to come
on their blockchains to not pay gas. That's it. So there's a real economic
war going on right now.
Precisely, it's true that when we talk
about DeFi, it's very associated, still today, with Ethereum and these Layer 2s
and we'll quickly come to that, but what is the place for you of DeFi
precisely on other channels? You were talking about Tezos. There's also AVAX that's trying
to grab market share like that. Are these serious alternatives or is it
just a fad and then, in a few years, there will be only one left and
it might be Ethereum? I think that's a good question. That is to say that, at the present time, what has happened is that basic research
You have to know that basic research in traditional finance or the traditional
research world takes about 40 years. You have to know that scalability in Ethereum is not just a bunch of buddies or
a bunch of programmers or developers who are going to say, "We're going to think
about how to scale this blockchain. "You have to know that it's fundamental math, so it's research, math that was
created or even invented before the 1980s.
It's fundamental research that
now we're trying to apply. When I think, for example, of privacy transactions, private transactions
allow the blockchain to be scaled. For example, I'm talking about set marks, protocols like Layer 2 that specialize in
anonymous transactions, and this allows us to invent scalability or to bring
scalability to the different chains. We have been through many levels, we have
been through sidechains For example, I'm thinking of protocols like Reden,
protocols that have now completely disappeared because the technology has
evolved, research has evolved, but integrating this research
takes a lot of time. Because it's fundamental
mathematical research. And also the game theory
that we're putting together. That's the beauty of DeFi and blockchain: it's a mix between fundamental
research and game theory. You get into the psychology of people, the
mathematics and how the economic market works, based on the economic wars that
are going on in blockchain right now.
So there, what I see right now is that new chains can easily incorporate aspects of
the fundamental research that Ethereum has put since the 2014s, about six
years ago, five years ago. When you look at ethresear. ch, there you have the entire research
that has [inaudible 00:09:49] built. There's a lot of channels that are
sidechains or new channels that will take the research that's been done and
integrate it directly into the protocol.
Because Ethereum, we see that it took about three-four years to
move on proof of stake. Why?
The technology was there, but in fact, when you want to move 200 billion assets
under management of a market cap on a new technology, you have to make
sure that everything is fine. We can't afford, for example, as Avalanche did or as Cosmos did or other
channels to be off for a day. Because, problems with validators,
problems with transactions, problems with stakes and proofs that
are not on the channel. You have to call back all the validators, you have to have consistency
between them: it's impossible. We are really talking about a market economy and thousands, even millions of
companies have been built on Ethereum. To move, we have to make sure that it is completely secure, safe and that
we can integrate the technology. There are many ways That's what Vitalik
was saying: the only way to scale Ethereum is not to change the core of the protocol
itself, but to set up projects on top of it that will be able to respect or provide
a specific use case for a project.
I don't know, for example, you have
Uber, Blablacar, a French-style nugget. Blablacar doesn't necessarily need to have hyper-fast transactions, but on the other
hand, would need to scale in terms of privacy, to know that people are
not connected to each other. Each use case… For example, Twitter
doesn't necessarily need… I don't know, for example, privacy, but for example much more scalability because
you're sending out a lot of tweets. Every use case, blockchain level, you're
going to have rollup, ZK Rollup like projects You can have zkSync,
StarkWare, Optimizem Rollup… All these different projects will have
chosen an architecture that will allow them to be either very
fast or very private. For example, you can have [inaudible 00:11 :49] like Tornado going to do
zk-SNARKs, things like that. That's what's so interesting. It's a Lego DeFi that's going to go on it. Whether other blockchains will be able to
survive in the near future will depend on how many people they manage to bring
back and capture on their blockchains.
For example, one player who is very good at marketing and business
is CZ from Binance. He, in fact, started from a completely centralized business, the Binance Chain,
was copied, really brutally copied the EVM of Ethereum, turned it into a new Binance
chain which is completely centralized. You have to know that the Western way of
thinking, the European way or the American way, is completely different from the
way of thinking of the Asian world.
The Asian world, what they want is speed and profit and we, in Europe, are still
based on GDPR, privacy, we really have to be careful with data [inaudible 00:12:[51
], which actually allows him, CZ, to go and capture extremely large market shares
on the Ethereum blockchain and increasingly, what he's going to do is
he's actually going to start decentralizing the architecture that he's
put together with Binance, either by investing in several L2-L1 projects or by
putting together his own decentralized Exchange like Binance Chain and as he goes
along, decentralize the different pieces. It's not from a vision of blockchain that is "Your wallet, your currency" where it
lets us say "Blockchain is great", it's that for him, it allows him to save a
lot of money and make even more money. Why? Because by running the Binance Chain, he
doesn't have to go and have fun running his stack, with Amazon DevOps, Google
Cloud, IBM or things like that. It's free. And all the people who are doing
transactions, what happens? It's that those fees go into CZ's pocket
and a little bit into the BNB Token.
For him, it's an Eldorado. That's really interesting
what you're saying. If we were to synthesize this actually,
to make DeFi, what do you need? You want to start your channel tomorrow. I want to start my own. I'm going to make it. What does it actually take? You need incentives to bring people in, you need liquidity, you
need good smart contracts? What is the basis for DeFi? I think that What do you want to do when
you say you want to make DeFi? Are we a person intrinsically speaking, who has
certain values that we want to be replicated in our product? For example, a
really "Eldorado" vision value of the blockchain world which is in a
decentralized world, removing the trusted third party, giving back control, power
and access to people directly who become their own business, that, actually, it's
relatively complex to go out and capture people since you're actually going to be
basing more on the vision technology. If you really want to build a DeFi project and capture market share very
quickly, you need to incentivize.
For example, what Binance did is they took Pancake Swap, where they incentivize,
they have liquidity pools. How did Sushi Swap manage to capture
or become as big as Uniswap? It's by forking the project and creating a token that allows you to
go and do yield farming. What's happening is that
it's a real competition. DeFi is not a game. People think it's a game,
it's fun, stuff like that. You have to know that the people who build
projects in DeFi, even if they say on Twitter that everyone is nice and that
they are there for the future and the vision of the project, you have to know
that behind it, there are huge economic wars, huge economic pressures
and also huge dirty tricks.
In order to create your own channel, you
have to incentivize people to come, right now, unfortunately, or you have to find a
project that makes money In fact, the best way to go about getting the project
used is to find some use for it. If your project really… For example, you have Curve Finance. Right now, the reason why Curve Finance is
used a lot is not for their incentivization, because you have to know
that Curve Finance, the business model is based on distribution, protocol
inflation, the same as Bitcoin. Currently, there are two million Curves
being distributed on Curve Finance. Curve trades at about $3. We're diluting the protocol
by six million dollars a day.
People might say That's what happened in
the beginning, they didn't get the vision. What happened was the token dropped. Why is it going up now, the protocol? It's because they realize the usefulness. When you're able to do
that on a protocol… It's impossible in traditional
finance to do something like that. … to transfer 100 million dollars from one
asset to another without creating a seepage and paying almost
nothing in fees… If you pay $100 in fees, $200 in fees, compared to $100 million in swaps, you
have to know that in traditional finance, what we call MCP, multi-collateral party,
it would take months to go and sign between two banks to check that the funds
are on one side, that the other bank, AML, KYC, lawyers, just to transfer
$10 million between two parties. Now we can transfer $50 million, $100 million, depending on the virtual
debt of Synthetix through Curve.
This is a technological beauty that
allows access to incredible resources. In other words, we can transfer
astronomical sums of money all over the world without having to create
a seepage on the market. What does what? It's that we actually become better
than a centralized exchange. It takes less than 10 minutes to transfer
100 million dollars instantly, without creating a seepage,
without creating a cost. That's where the protocol comes in. And that's why Curve is so widely used right now, because it has a
utility behind it, a big utility. It can be the reason like Uniswap,
the reason like other protocols. If you really want to build a DeFi protocol and control the market, you have
to say: How is my protocol going to make sure that I don't necessarily
have to go out and market it. I'm going to be able to take huge market
share because people are going to find that without this project,
they can't use it. And then, after that, you can incentivize
to make sure that you bring back a lot more growth, because if your governance
protocol is based on the fees that the protocol takes and then redistributed to
the token holders in the governance, then yes, you have to push
You have to push the Right now, for example, on Curve, there's about six
billion assets [inaudible 00:18:33] between 500 million and three days ago,
there was a billion volume in one day. It's exactly the same thing on Stake DAO. Stake DAO, which allows for an exchange
that's built on top of Curve, which also incentivizes people to bring in liquidity
and redistributes all of the profits to the people who have staked the
governance token in the protocol. And precisely, this V2, we're going to talk about it now because to take and
continue with the example of Curve: Curve is on Fantom, Curve is recently on
Polygon, Curve is on Ethereum Layer 1, there are incentives all over the place
and with all these new channels, it's complicated for me, a user, who wants
above all to make profit thanks to incentives, or yield farming to
know where to position myself.
And this is where, in part, you intervene with Stake DAO, especially with V2, where
we can delegate our funds, we can deposit them and with strategies that you have
developed with the Stake DAO team, you will position them here, there, and
change them according to the situation. Is that what's new in V2? Exactly. In fact, in the newness of V2, what we
want to do is build a decentralized exchange, go and take market share from
a Binance, a Bitfinex, a Kraken, a FTX. To do that, you have to make sure that the
user experience and the interface experience is the same as
a centralized exchange. When you log into a centralized exchange, you don't need to know,
"Do I need MetaMask? What is the key? What's the gas? " We, in fact, abstract
as much as possible. That's why it took us three
months to make a platform. The platform before, you
just have to put "V1.
Stake DAO", you'll see
that it was also superb. I thought it was incredible. But V2, it allows you to go much further. In other words, you can invest in DeFi strategies, where the code behind it is
based on smart contracts and the reason why it won't be expensive is
that we do everything for you. Instead of investing in a Curve, in an
Aave where you'll put $1000, you have to know that there, you'll pay maybe $50-100
in fees, in costs on the blockchain.
Whereas if you put them in a pot, we wait for that pot to grow, to
reach a million, two million On a daily basis, we can reach
$5 million, for example. We take all these funds, we deposit them for you and we put them to work, so that
in fact, if before, for $1,000, you paid $ 100 in fees, now you
will still pay the same.
The pot is $5 million, but
you cannot see it at all. It is that we allow with enormous means to
go and invest for you, or place the funds on the DeFi without you
having to do anything. We work you to the max. And behind that, we have boost systems. For example, we have the perpetual strategy which allows us to maximize the
different strategies we have at the moment and now, we are going
to create new products. For example, we are going to introduce
everything that is options, features or leverage, to be able to edger you on
finance, but without you having the knowledge or the technical
base to be able to do it. That is, we will build strategies that
will do it automatically for you. We will maximize your loan on different strategies
by controlling the bots of liquidation, flash loans, liquidation,
market maker, arbitrage All these products, which are account products that basically require Often, the
people who had access to these account products were hedge funds, family offices,
and large companies: Boursorama, BNP, Société Générale, which take the money,
invest it in the financial markets, ask hedge funds to put this capital to work
and then redistribute it to you at zero.
They redistribute to you 10 times less than the inflation that exists in
France, which is surely around 1. 5%.
They give you 0. 01% and tell you: "Great, we're sorry. Instead of going to 0. 03% interest, we're going to go to 0. 01 because times are tough. "We, too, are doing We do exactly the same financial strategies that were used in the
world of traditional finance, except that we use them in decentralized finance
and we give them back to you. We give you back 100% of the profits. 15% of the performances are taken back, but they are not redistributed in our
pockets: they are redistributed to those who have token, to those who
have staked in the governances. That's why it's a system that can't stop
and that has every interest in bringing back much more equity because all the
profits are redistributed to the users. You continue. As a user, you receive
the governance token. By placing under the cover of governance
in what we call our sanctuaries, you receive the rewards of all the
protocols we support on the platform.
So we have strategies. We will build new strategies. We will introduce an order book. We have already introduced the best possible swap in the ecosystem: you can
swap assets as if you were on an exchange. We give you the best rate. Right now, it's that the transaction fees
are cheap, so we're going to introduce We have already done it on Binance, we are
going to release, today I think, Matic, we are going to release
different blockchains. We have also already integrated at least ten blockchains: Cosmos, Polkadot, Solana
We're going to build different bridges between these different blockchains and
then we'll do arbitrage behind them. This will bring in a lot of profit for the
DAO and give a lot of products, like an experiment in centralized finance, but
in the world of decentralized finance. In fact, with Stake DAO, tomorrow,
everything that is direct interaction with Curve or with other native protocols like
that, in quotes, the user won't even have to go there: you'll be the
one doing that exercise? Exactly.
You have to know that, for example, an Aave or (I'm plugging in my cable
because I have a little battery problem.
) You have to know that the primary vision of a Curve or an Aave, for
example, is to be a protocol. It is in fact to have all the boxes in the world or products or projects that can
very well use the direct contracts of Curve or Aave, but the best is that if for
example, there is an SDK or a DPI, they use it and so in fact, Aave and
Curve work in the low level layer… Curve, we, what we want, the vision, is
to capture a huge percentage of the FX. FX trades at 6 trillion a day. If we can capture a small percentage
of that today, that's huge. With a technology that is revolutionary. What is FX? FX is the financial centre where you
have transfers of national currencies. For example, if you want to transfer
dollars to euros, euros to yen, you have to know that in the whole world,
this is the biggest flow. It's huge nations, hedge funds, banks that either want to collateralize, or hedge, or
invest without having access to different products, or also buy national debt and
are forced to go and trade currencies.
If your currency is devalued against the dollar, it is in your
interest to buy dollars. What national banks do is hedge, expose themselves to certain assets on the
financial markets, and today, in terms of volume, we are talking about 6
trillion, which is enormous. After that, there are other products that are even bigger, like derivatives, things
like that, where we're really hitting big markets, but we, at the moment, since
Curve allows you to trade between stablecoins Stablecoins is
what we call stablecoins. It can either be currency
or it can be very good… .
For example, you have a Stake DAO, the price, it's put on Because the ex-SDT,
it's staked in Aave and all of a sudden, you have the same thing
staked in Compound. So you have two different assets,
but they are stable with each other. They just vary a little bit, so
there you have an arbitrage. This can be a pool that can be
created in Curve, for example. So it'll be in the shadows and you'll
be connecting it all to individuals? Exactly, because the goal, in fact, is to have a mobile application, to have a very
simple place Kind of like the Robinhood…
Except we don't stop assets. If you want to trade, we don't stop you.
… a bit like Boursorama, a bit like the
Revolut of decentralized finance, of 2021. A simple application that allows everyone, depending on their background, their
education or their interaction in the world of DeFi, to have access to financial
products that are not governed by traditional finance and therefore
give everyone a chance. What we have done is to give you
access to all the staking protocols. You will also be able to trade between
protocols, staking in those protocols, taking the liquid asset by staking,
investing in another project, leverage, that is to say taking a position [
inaudible 00:27:55], so a big exposure on the market on some assets, but all this,
in fact, we If you want, you can do it directly on the platform, through our
order book that we are releasing, or you invest in a strategy that
will do that for you.
You will have… We are currently releasing an index token,
we are releasing packages that allow you to have an exposure to the DeFi
while having nothing to do. And that's the point, really. Before going on to two or three other points, every time we discuss the new
version, my mind goes blank and I say to myself: "It's going to be
crazy what we're facing. "How do you see this evolution, since
you worked in traditional finance? When you code your new projects, do you say to yourself: "Here we are
disrupting something crazy. "or do you think What
is your state of mind? Do you say to yourself: "This is it, we're
going to be able to give back to the people what was reserved until now for a
very small part of the population who sometimes didn't use it to the
advantage of the collective.
" ? What is your state of mind? I'm a bit In my circle of friends, they
consider me a little crazy in the sense that I've been telling everyone for ten
years that things are going to change. Ten years later, things have changed, but it's not a revolution where the average
person in retail realizes it either. You have to realize that blockchain will be used by 100% of people
when it is transparent. That is to say, at the moment, you use the Internet without knowing that behind it,
it's the HTTP protocol, SMTP for emails… In fact, you are not aware of this.
There is an industrial revolution taking place, like the 2009 crisis, the American
subprime crisis, which caused the world economy to collapse, and this has had
repercussions on our side with what we call a sharing economy:
Blablacar, Airbnb, leboncoin… All this was created because the environment allowed it, because
the financial crisis was there. But did we, on our side, know that it's
new paradigms of ways of thinking, because people adapted to Boncoin, adapted to
Blablacar, adapted to Airbnb without really knowing it, without
really [inaudible 00:30:11]. Now, what's happening is the same thing. It's an industrial revolution, but the
players who are the players of centralized finance, traditional finance, they
will always manage to bounce back. They have enormous capital. You have to know that a Goldman Sachs or a Morgan Stanley, if from one day to the
next they want to kill the interests of the DeFi, they can very
well invest 1 trillion. They have no problem with that. On the different protocols. You're going to end up with interests
that are going to fall completely. What I'm really saying is that yes, change is irrevocable, it's coming
Disruption is coming.
Afterwards, it is not because the vision
of blockchain, which has an idyllic vision, the return of control,
mastery and access to everyone… That's not why we're going to enter a
completely idyllic world, the Eldorado. It means that many of the players who are currently involved or who are going to set
up these projects will become the next leaders of the next wave of finance, which
will become finance DeFi will really be the new traditional
finance, in 10 or 20 years. What I mean by that is that you have to
know that we are here now like in the 80s and 90s, when someone was trying to say
: "Look, there is the Internet coming.
We're going to set up
projects on the Internet. "People are like, "But what good
is the Internet going to do? We don't have the knowledge at all. "Projects like Yahoo! , like Google, like Facebook, like PayPal, which have understood the interest
of the Internet, have been built. Here, you have to know that
it's exactly the same thing. Projects like Curve, Stake DAO, BlackPool,
SushiSwap, Uniswap, ParaSwap All the different protocoll projects, which are
protocol based or even DAP, are going to become the next conglomerates, the next
huge companies in the world tomorrow.
That's for sure. When you have right now, on Curve, one billion volumes in one day, and six
billion assets under management, you do much more volume than, I think,
the top banks in France. You can imagine, this is incredible. It's colossal amounts of money. It's ways and technologies that were
previously unattainable that allow a small team of five people to do a
billion in volume in one day. Even a hedge fund can't do that. Aren't you afraid of regulation, which
could put the brakes on all this? In fact, how is regulation going to work? At the moment, unfortunately I think
I said it yesterday in the chat. It's that for example we heard three-four years ago, Bruno Le Maire who said, "
France missed the call to de Gaulle, missed the digital transition in the
2000s, but rest assured, we will never miss the transition of blockchain
and artificial intelligence. "Right now, what's going on? It's that we're way behind in Europe. Christine Lagarde [inaudible 00:33:11] "In four years, Europe will have its own
digital currency, the digital euro. "The problem that's going on is that China
actually has phenomenal enforcement power.
Because on the triangle of "security, decentralization, speed", they
don't care about "privacy" here. It allows them to go extremely fast to make adaptations or to
push towards innovation. For example, in Shenzhen, which is the place in the world where all the products
are made in China, where there are millions of people, they have tested the
digital CNY for a few months, apparently.
People, on their phone, get cash, kind of like Tinder, and can
pay with that currency. What's actually going to happen is that once people When you're going
to tap into a market with 1. 5 billion people or one of the largest
market capitalizations, the Chinese GDP, that money that's going to be in the
markets, do you really think people are going to continue to go to
the euro or go to the dollar? If you know that you have this economy going up and everyone can
access it on their own… For example, we can really access it. why go to collateralize in the DeFi in
dollars when you pay a 20% premium… Because you have to know that the dollar,
compared to the euro, over the last two years, has lost 20%, which means that in
DeFi, if you have invested and you have not made 20%, you have lost
money, if you are in dollars.
When you're going to have an economy that's going to grow like that,
inevitably, regulation in Europe and the United States is going to have
to go and create new products. They are not going to be able to
constantly regulate an economy when you see your neighbour on the other
side taking huge market shares. What is going to happen? We are going to have to be very quick in
Europe to develop, especially the currency, the euro, and also to be able
to send it to the financial markets. At the moment, we realize I don't know if
they know about this at Europe or at Bercy, but we realize that once
again, the Americans have succeeded. In fact, they have succeeded in distributing the dollar around the world
once again thanks to the blockchain.
Why? even better now, thanks to the blockchain,
the dollar is distributed among all Before blockchain, before DeFi, did
we have access to the dollar? I don't think so.
Now it's distributed throughout the hands. What happened is that the United States, with money printing, printed,
I think, three trillion. Three trillion, they printed
during the Covid crisis. And where did these three
trillion dollars end up? In our pockets.
And we are all consuming it. So we really, urgently need to go and
create our own currency, distribute it on the markets, invest, collateralize,
build products on top of it. And the only way to do that is to go to stablecoins and that's why Curve, the
vision, it's like the game Ris: it says that the financial market in a few years
of the blockchain, of the blockchain capitalization market, will
be 60 to 80% in stablecoins. Why? Imagine when you have a country like
China, the United States, Europe tokenizing their currencies and bringing
them on DeFi, we're talking trillions. It's going to be huge. It's pretty crazy, actually,
to have that understanding. Is that You were talking about it earlier. Do people realize this power, whether in
Bercy, as you said, or in the street? Because you, with Stake DAO, you make it possible, with a bank card, to make an
initial onboarding, to accompany a lambda user who knows nothing about
DeFi in his first strategies.
What is the share of customers who know nothing and who use a
bank card in Stake DAO ? Here, Stake DAO, the economic
progress, it is lightning. We have It's not because I'm also in the
contributors and things like that, but we have about 10,000 customers, just
under 10,000 customers on… People who have no prior knowledge of
DeFi, so they're not using MetaMask, they're not using Web3 Wallet or any
wallet, they're just using email and they bought crypto via [
inaudible 00:37:21] network. Now, if you add in the users
who do know something. We're probably in the 5s, 6s, so probably
in the 60,000 customers on the platform. The goal is to reach half a million users,
but half a million users who really transfer money, who will really invest
in the strategies before the summer.
There are several ways to do this, but
always with a utilitarian approach. We're not really going to do marketing for
marketing's sake, but we're really going to put out products that are going to
make it meaningful for users to invest. I think that I don't want to incur the wrath of the world of politics or
diplomatic decisions or whatever, but I think that at the moment there is a real
need for a task force, a bit like Trump said for the conquest of space, but really
on economic issues and nations and countries and the role
to be played in Europe. It is not to say that the new people in
decentralised finance or the new players because they were not in traditional
finance, because they do not have a background that comes out of ENS or
schools, or they are not enarques, they do not know the issues or the different ways
to go and build a currency or interact, diplomatically speaking, between different
countries on the financial issue.
Right now, if you look at, for example, Maker DAO, which was built by people who
had no diplomatic or governmental responsibilities, who managed
to recreate a central bank. It's really This central bank, it's
mathematically recreated by economic systems, Cryptonomix, and
mathematics and basic research. That's the beauty of it. That is, they have actually
recreated a system. It's a bit like when, after the subprime
crisis, with this crisis, with this movement of finance, of the sharing
economy that recreated new business models that the people who were in
it said were impossible. What was the biggest insurance lobby
that was completely revolutionized? It was the hotel lobby.
Bim! Airbnb. A second big lobby that said it was
impossible because the mafia was too big, because it had been a market like that
for years and years, was the taxi market. Bam!
Uber. Now, the currency market, the concept
of saying, "I have a currency. Of course, this currency is governed by a bank because that's the way it's always
been and because it's the central banks that print money and because it's the
central banks that make it possible to control the States through
their printing of money.
"This one is over. Does there really have to be a
regulated system that does it? Yes, there has to be, otherwise there are players who do anything, but
the old way It's a bit… You have to look at money as an asset. A common good is something that can be used by anyone and that can
be used whenever they want. I always give this example, but I find it
quite nice: if you buy a bicycle in a bicycle shop, you buy
it, you take it home. In the morning, when you go to work, you don't call the bike shop to
see if you can use your bike. It's the same thing. Money is a commodity. Money is not supposed to be given
to a trusted third party now. It used to be.
And money has gone through any stage. You should know that the concept of paying with an asset that does not
move in value is very old.
For example, the tribes in Papua New Guinea, what did they do to create this
aspect of scarcity, this aspect of being able to pay for something with something
that doesn't exist or is very rare? They found the place in the ocean where, at a depth of 30 meters, there were
shells, corals that were extremely rare. What were they doing?
There was only one person in the village who had been trained to dive to such a
depth, so the diver would keep himself [ inaudible 00:41:29] on In fact, it was
often the master of the village who became the most powerful because he was the only
one who could dive and he made necklaces. Necklaces of coral.
And these necklaces represented the market value and their purchasing
power on the market. Now, international currencies have no
value, especially after the oil crisis, after the disappearance of gold, which
can be used to back up reserves, money…
For the moment, we are
printing, but on the fly. We don't even know what the inflation is
in one country compared to the other. So we are going to rely on the dollar. Our borrowing capacity in relation
to the dollar with our euro power. But the dollar, they print three trillion. We're saying, "Well, it's still
worth a little bit of money.
We're going to buy it anyway.
"What happens? All the countries in the world are buying the American debt and we are also buying
it because we are indexed in the DeFi. In fact, the whole world is intertwined,
we don't know at all who the powers are and how the money is managed
and that's why we have to It's not an anarchic question, it's a
question of rethinking the model and I think that the way to rethink the model
can come from the people who have created or who are in research, who are in these
creation of new economies, new paradigms. You don't put people to think differently
when people have been trained to think the same way for 50 or 60 years and when they
have been taught by people who thought the same way for 60-70 years
by their ancestors. It's very difficult to think What
we call "think outside the box".
When you are still educated in this box,
you have been educated, you are also paid by this box, you are not going
to have fun breaking the box. That's what's interesting, and I think
that if we really want to move forward with Bercy or Europe, they really need to
start bringing in people from the milieu where there is a revolution at
the bottom, from those who… we, who set up protocols at Aave, at
Compound, at Uniswap, at Curve, at Stake DAO, where we say: "
That's it, we're fed up. We really need to be listened to, because otherwise, in Europe and in France,
we will be completely out of date. "This is already the case. When you see that China, I think they're putting billions a month into
innovation in blockchain.
I think they're investing two billion or one billion a month in
artificial intelligence. We're like, "Are we going to invest
five billion over the next five years? "But precisely, does that mean that digitizing the currencies we know today is
no longer enough? That is to say, making a euro with all the complexities or the
dollar with all its complexities and all this dilution, digitizing it, whether it's
on stablecoins or directly with a central bank digital currency, wouldn't that be
enough? That's my first question and the second question that is intertwined with
it is: are we talking about DeFi? It's a question that comes up a lot, we often
talk about DeFi, but since everything is arbitrated, in quotation marks, by the
dollar, are we really that decentralized? That is a very good question.
The problem is that all the products we
have in DeFi, they are against the dollar. After that, there are several entities
right now that are trying to accelerate to bring in other stablecoins, but once there
is the Chinese, Japanese, European stablecoin, it will put
the balance back on track. The problem is that all of the products
that are currently being built are in dollars, so it is not really
decentralized, this finance. It's more like American finance
and we're riding on it.
We're actually allowing People don't
realize it, but when you push decentralized finance up and therefore
lock up a lot of capital and most of the capital that's locked up is stablecoins,
you're actually pushing the American economy to go and lock up dollars in the
bank accounts of the biggest American banks and bring back a lot
of value to the dollar. It devalues the euro on the other side. It devalues the other
currencies on the other side. That, we're really doing… Ethereum will never become a currency in the sense of a currency,
because it's way too… It will appreciate in value. What we need to do is create either currencies that are backed on a new
algorithmic system and also with a reserve, for example, Bitcoin, which could
be used as a reserve, like the old gold reserve because it will move in value, but
the more the market capitalization will go up, the more stable they will become
because to move it, you need a lot of capital and you need to
bring in even more people.
That's Different currencies can
be used to create a new currency. I am convinced that we still
need national currencies. That's not the point, because national
currencies allow you to say Given that capitalism is still going on and that it
is very big and that this is what allows, in fact, for innovation and for global
trade, we must keep national currencies. But we have to find a way to properly size and know all the capital that is
in place in the financial markets. Right now, if you don't know when
you're doing an exotic product… You do derivatives, you're
going to do insurance products. In an insurance product or in a pension fund, a package, you will put other
products that you cannot trace because these products are not on chain, so the
whole web of finance is centralized.
This is where it really creates
a risk on the financial markets. In fact, when you have 20 to 30% of the French pension fund, which is supposed to
be extremely stable, because you haven't played with Or the pension system or
the French social security system. You end up with a lot of that which is supposed to be stable and in fact, behind
it, you have a really rotten pot… Exactly what happened in 2009. There, you create uncertainty in the
markets and that's where you completely swing the — where you
create a huge market crash. And that's where you can really feel it. It's still amazing that in a Covid world It's already been a year and a half, with
China starting first, where you manage to have the market capitalization
never reached such a level.
Why is that? Because there's actually a stimulus
distribution where you hand out three trillion and people, what
are they going to do? They're going to invest in
the market and it's pumping. You have to know where that
money is coming from beforehand. This money does not come from anywhere. That is to say, at some point,
this economic bubble will burst. It has to.
You can't just go up. After a while, you fall back down.
It's like DeFi. The DeFi, most of the money that's coming in right now, is fake, because it's people
who have received stimulus or who have received the money that's in dollars
and they're bringing it back.
Basically, the inflation is so huge that
we don't really know what's behind it. So yes, we know how to trace now and if we call the problem, the blockchain dilemma,
on the supply chain, I am sure, on the whole chain, that everything is correct
because I know how to trace, but is my first point of entry really very priced,
accurate and allows to really verify.
That's what we call the Oracle system. Now, you're going to put an
Oracle system on a currency. It's useless. In fact, the ECB is doing a bit of Liquidity Mining in the financial
markets when it does these Yes, but the ECB The ECB is fine, but compared to the US, compared
to China, we are very small. We're going to print packages, we're going
to print money, but it's in our interest to do so because on the other hand, when
you find yourself buying American debt or you find yourself on the American
financial markets, they do it. The problem, in fact, is
a race to the bottom. If you don't do it, you get eaten. That is to say that, at the end of the day, since the Americans are the ones who
set the pace and do it their own way, if they print a lot of capital,
you have to follow suit. Ê If you don't keep up, you devalue
yourself, so it's impossible.
It's shooting yourself in the foot.
So what's going on? All the countries in the world are
printing money and distributing it. This poses no problem, but it is certain that if you tell the ECB not to do this,
given that on the other side, all the competitors are doing
it, it's a bit the same. If a race, the Tour de France,
everyone starts doping. You're the only one who doesn't dope and you want to take the
first prize, so hang on. There's no point.
That's it, actually. That's exactly what it is. I still have one last question, which will bring back a little bit
the technical side. What is the place today of Layer 1, of the
first layer of Ethereum with all these Layer 2s and all these
Sidechains that are coming? And tomorrow, what will be the place of
Layer 2 in a [inaudible 00:49:40] 2. 0? Layer 1s are going to become the
People won't use them anymore. What's actually going to happen is that they're going to become the source of
truth for Layer 2 and other blockchains.
Potentially, you could very well have a Cosmos, a Tezos, a Polkadot or an
Avalanche back on Ethereum State to make sure that if something happens
to them, they're safe. Ethereum can really become
the protocol of choice. A bit like the HTTP of the Internet, but
then if other projects want to bring their seeds and plug into it, they can, but
right now, I really see Bitcoin as a store of money, because Bitcoin is
practically intransferable. It costs a fortune, it's very hard to
transfer, there are no tools Like gold. It's like gold.
Gold, you put in a bank vault. It's very hard to transport. It costs a lot of money.
It's practically very stable. Now, yes, we're talking about going up from 50,000 to 60,000, but that's because
in fact the market capitalization, compared to the world economy, when you
have family offices, hedge funds, banks, they can very well manage to
manipulate the price again. We're talking about a market
capitalization of a trillion, yes. You put in 100 billion, you put in 10 billion: it's possible
through the markets. When you're going to hit 100 trillion, 10,
000 trillion, there to go move the market capitalization of a Bitcoin,
you really have to go. You're going to put a
thrillion on the market. I don't know what savings
they want to make. Except the United States if they want to have fun printing, but
that, people will cry foul. So that's what it is. It's used as a reserve of money, like here, you're going to say: Listen, I,
France, the ECB has a million bitcoins, so it allows us to borrow at such and
such a rate on the financial markets.
That's it. Gold reserves, you say
: "Here, I have this. "People will say: "Ah, you have that? It's useful, it's safe. You're believed, you can borrow at a rate
"That's exactly what has actually… When France is going to say: "Listen, all those who go to work with
their bike, we give them… I don't remember how many packages… We gave them €1,000 to each person who could buy a bike, or an
electric bike in France. People were saying, "This
is good, this is good. And yet, inside, there are still people who say Yes, the world
economy is very bad. China is bad, the Americans are bad. "But what does France do when it gives you a €1,000 package to buy a bike: it goes
and borrows on the financial markets.
And who is lending us money?
It's the Chinese. It's the Saudis.
You have to know that during this financial crisis, there are a lot of
national debts and national assets that have been sold or that have been bought
without knowing it, because they are very tradable on the financial markets,
by Saudi Arabia, by China China, I think during the
Covid, never bought so much. They've never had so much
capacity to borrow in the U. S.
market. That's what every thing that happens, you have to know, actually, that there's
another thing behind it and so our borrowing capacity, our ability to bounce
back Our ability to bounce back on the financial markets in Europe and in France
is based on our borrowing capacity. If we can prove that we have a healthy
economy or that our values are healthy… For example, like in the future, what
is the price of the Parc des Princes? What is the price of our ability
to create nuclear power plants? These are systems that allow us
to say: Our economy is healthy. It allows us to borrow on the financial
markets and potentially later, we can see how many bitcoins the French
bank has in its banks.
OK, it has 100 trillion, 10 trillion. Wow, amazing!
Excellent. Thanks a lot, Julien. It's sometimes a bit complex to follow, especially for those who are not used
to travelling in the DeFi ecosystem. If it was a bit difficult for you, I refer you to the very first podcasts we did,
either with Marc Zeller, as we said at the beginning, or directly with
Julien on the Cryptoast. fr channel. And if ever, in any case, you have very
specific questions, normally, we have articles that should answer
all that on the site. I hope you enjoyed this episode. Feel free to tell us your feedback in the
comments or on social networks directly.
Until then, stay curious and
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