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Money Flooding BTC Market | Alts Doomed? #CryptoTownHall Partner: MELD
Recorded: July 5, 2023 Duration: 0:56:48Space Recording
Short Summary
The discussion highlights significant innovations in the crypto space, such as non-custodial banking and hybrid exchanges, alongside trends like increased institutional focus on infrastructure and zero-knowledge technology. The shift towards decentralized exchanges due to stricter KYC policies on centralized platforms is noted, as well as the challenges of blockchain interoperability. Meld's successful $45 million fundraising through innovative methods underscores the dynamic nature of capital acquisition in the industry.
Full Transcription
Hey guys, just crashed.
Started again.
Let me get the guys in.
Hey, Brian, let me know when you can hear me.
Yeah, I can hear you.
Hey, man, yeah.
So I'm actually a crash at the worst time,
because you're talking about gaming, Web 3 gaming,
which is honestly the thing I'm most excited about.
AI is trying to take the shine away from it,
but I think it's way underrated in terms of users and use cases,
way underrated.
It makes the most sense.
I don't think it takes the shine away
because I was looking at a tool just recently
and imagine this with AI now for game developers
that actually democratizes game creation.
Because as you know, making a game is super expensive.
With AI now, I can draw a level like a five-year-old wood,
just drawing with my finger in the air, kind of very floppy,
draw a window, draw a door here, draw the pathway, et cetera.
And the AI can then just fill it in and create the level, just like that.
So it's actually going to make it so we're going to see probably a lot more games on the market very soon.
But will also make the experience, Hanney, I've just sent you an invite Patty as well.
Will it make the experience more interesting, though?
I think it can because the player agency that I was just getting into, with interactivity with the game, you can actually customize your experience to an infinite level with games now, with AI.
So you could literally, you could talk to it and it could learn about you and create the game in a way that you Mario would be interested in based on your online profile.
But then, I've never, actually, Ryan, interestingly, I've never heard you talk about gaming. Does it fit the criteria? If you look at the questions you sent and I've got them written down. So I've got, is there a network effect? Yes, I think gaming and network effects makes, you know, that's probably the easiest argument to make. Does I have a community where a game is all about building a community? Is it a protocol? Does it have real users?
Obviously, otherwise why would anyone be on a game unless it's played to earn unless they make money which is not which is not
A sustainable is it decentralized? I think the concept of decentralized gaming will take time to be completely decentralized
But at least is there a path towards decentralization? Generally games do have that and will they survive regulation? Again, that's not my area of expertise and
But if I had to guess, I'd say it should.
Generally, if they're decentralized,
generally if they really decentralized,
then probably they've got a higher chance of surviving regulation.
If they're not decentralized,
if they're centralized companies that have, you know,
done a token instead of equity,
then I mean, you know, we can see what the future is.
When you talk about generating fees or monetization,
I think monetization in gaming is, again, an easy argument to make.
So I would say gaming fits...
Or your entire criteria.
Yeah, I never hear you talk about it.
Yes.
No, no, I'm a big fan.
As I said to yesterday, I'm a very big fan of gaming,
but I'm not a big fan of individual games.
Why?
Because I think one in a thousand games will actually become successful.
You can make that argument.
You can make that argument about anything.
Exactly, which is why instead of investing in the actual projects, I'll invest in the protocols, I'll invest in the exchanges, or I'll invest, because I think that trying to choose a winning game, it's much easier to pick a studio where I know a studio in its lifetime will make 10 games, then all of a sudden I've got a one in 10 chance of actually capitalizing on it.
So for me, when I look at a game,
I very rarely invest in games now,
but if you come to me with a gaming studio with smart people
and say, look, we're looking to build play to earn gaming
or NFT gaming or whatever else,
generally I'll take a very, very, very serious look at that.
All right, cool.
I'm just pinning all the tweets, by the way,
and tell you your boy Fred is sending me your tweet
about the five coins that survived multiple cycles.
You got BTC, XRP, light coin, doge, and ETH.
and then it's got a link to your YouTube video.
So that's for anyone listening.
I've pinned, and let me call it,
I'll say your co-host,
but I've pinned all the tweets at the top.
So we got a few tweets there.
The first one is,
the first two is if you want to sponsor the show,
come on as a sponsor,
and I'll talk about today's sponsor
or work with Ancubator.
There's an email in the pin tweets above.
That's the best way to contact us.
You can also DM us as well,
me and ran,
and the team will attend to it on Twitter,
but preferable is to just hit us up on, um,
on on on via email and then another pin to me is today's sponsor who's our sponsor you don't
not you don't know meld you didn't look into them i did no okay okay yeah yeah that's pretty cheesy
man i think i think i think i'm an investor i haven't had time to check i'm almost certain we invested
i'll have to check with the team but they're they're really cool go ahead yeah i've been speaking
to them i've been speaking to them i had actually chat to them today um
The concept that they're doing is, I think, I mean, you know, what they are is a regulated bank.
in Lithuania, but it's a non-custodial bank.
So you hold your money in your own non-custodial wallet,
but you get banking services through a regulated bank.
So it sounds to me like it's the best of both worlds
because you've got a regulated bank on the one side,
but you never give them custody of your assets.
You've always got custody of your assets
because they link in through a crypto wallet.
So to me it sounds like a groundbreaking concept.
I actually asked a lot of tough questions
because I wanted to make sure that this thing could actually work.
And it's actually quite interesting.
It's not functional yet.
So people can only sign up for the waiting list,
which is, yeah, I signed up for the waiting list
because I want to just be one of the first people that actually tests it
and you can get an airdrop as well.
But the concept of a bank that is completely decentralized
where you have custody of your own assets is is a use case that makes sense and i think they've
got their own layer one as well no yeah they've got a layer one which is an avalanche subnet um which is
i also questioned the guys as to why they needed to have their own layer one they explain to me i think
yeah very very very good project we've got we've got myself on the wait list
We're gonna be asking them a few questions.
One of them is, I wanna understand the concept
of having a layer one focus on defy
or when you have a purpose specific layer one
and what advantages it has.
So that's probably the first question that came to mind.
But for anyone that wants to check him out,
it's a pin tweet above.
The name is M-E-L-D.
Definitely check him out.
But let's go back to the point
is that we've talked about Web 3 gaming, Brian.
I do wanna go to, we've got Hanney and Josh here as well.
Guys, I go to you, Josh, first.
What are some other narratives that are interesting to you?
You know, gaming is one, and that's somewhere I'm deploying a lot of capital.
AI is an easy one, so I want you to avoid it because it's too easy.
What else comes to mind?
Are layer one still something worth exploring, or has that ship sailed?
This is too many big guys, and it's too difficult for layer ones to make it, for new layer ones to make it.
Yeah, it's a great question.
I mean, I'm just looking back at something I read earlier this week, which was a research piece from Binance.
And credit to Binance, they've got a pretty decent research arm.
And in this paper that they released, they were asking institutional investors, where are you going to be putting your money over the next year?
So dollar for dollar, where are you going to be putting your money?
And over 50% of them said that they're going to be putting money into infrastructure.
And that was over layer ones, over layer twos, over defy, over gaming.
Yeah.
But then they drilled into more specifics and they said that over 50% of them were looking
at wallet and custody innovation as a particular niche to investing.
And then following that, the next biggest niche was 25% of them were looking at zero
knowledge in some capacity as an area of investment for them.
You know, I would make big bets on those areas.
I may be biased because we are very much in the infrastructure wallet and custody game.
But if you boil down, you know, to everything that's gone wrong in the space over the last, you know, however many years, but particularly in this year, it's all come down to the problem of trust.
And so anyone that's building anything that is removing trust from that conundrum.
So you don't have to trust the service provider.
You don't have to trust the application to do what it says you're doing.
You don't need to trust the yield generating app that says it's doing X when, in fact, it's lending your funds out to Y.
Any application that is removing trust and building insecurity, I think is a really, really solid bet to make.
And we've seen the practical...
complications and implications of getting trust wrong this year.
And whether it's FTX, whether it's Celsius,
there's just so many examples of...
lack of transparency,
but too much trust being put
into service providers. And so anyone
building something that is trying to
solve that problem, I think it's a really
solid bet to be making if you're
seeing that kind of product suite
being built at this specific time in the market.
So you're going back to kind of the
foundation of what made
crypto interesting. You know, blockchain
solves the Byzantine
General's problem. And that's something
that we've kind of forgotten about
this solution. But
looking at a criteria that you'd follow to be able to determine which projects are worth paying
attention to is there anything specific that Rand mentioned that he missed or anything that
he mentioned that you disagree with?
You know what? Ran and I were in Texas a couple of months ago, and this is kind of the stuff that we spoke about when we were speaking primarily about what we're doing at Credo, right, which is building on-chain trustless infrastructure.
And all of the trust points that Ran is talking about here, all of the things that are important, I think they're absolutely spot on.
Right.
And we talk a lot about community, but in reality, what we're talking about is users.
Is there a use case for this thing?
And will the use case scale?
And if it does scale, does the benefit of the additional usage accrue to the token?
and can it actually be decentralized as a use case over the long term?
So, you know, at the risk of agreeing too much with RAN, I think his points are really,
really spot on because, you know, people are looking for, or they're looking past the buzzwords.
They're looking past people pretending to be decentralized that actually aren't.
They're looking past projects that just raise a token for the sake of raising a token.
Does the token value to your product?
Does it do something that you couldn't do if you didn't have that token?
And so I think really those categories that ran outlined are pretty much spot on in many respects.
But I very much would also overlay some particular kind of themes or verticals in the cryptospace,
whether it's infrastructure or zero knowledge, as particular directional areas of investment,
because that's where the future is being built.
I think that every investor is going to come in and it's going to look for the verticals that
interest them. And you mentioned some very good verticals. I don't know if you mentioned it was a survey
or whatever it was, but I imagine that where you got that information from was from a survey of
institutional investors. Because what it sounded like is that it was institutional investors trying to
solve the problems that they face or that they experience when entering our industry, right?
Right. And so and so I think that
Ultimately, every investor is going to come in with their thesis.
Some investors are going to come in with the institutional thesis like you mentioned.
Some are going to come in with a gaming thesis.
Some are going to come in with an entertainment thesis.
Some are going to come in because they just want better money.
Regardless of what they're coming in for, I think that the questions remain the same.
Does it have network effect?
Does it have a real community?
Does it have real users using the protocol for what it's designed to do?
Is it going to be decentralized or is it already really decentralized?
Will it survive the regulators?
But right, right.
There's one point you're all ignoring.
And Haney, you know, you guys build a lot of products that have real use cases.
Is the regulatory aspect of it?
Like with Gensler doing what he's doing, with the SEC's initial ambiguity
and now they're aggressive nature of what is considered a security,
How can a project determine or how can an investor determine if a project ticks the regulatory box?
Well, they can do the best that they can.
Now, obviously, one of my feces for the end of the cycle is that Gary Gensler is out at some point.
But regardless, you know, you've got to look at the token that you bought and be quite critical and say, you know what, like,
If it's decentralized, the SEC is going to have a harder time to attack it.
If it's proof of work and it doesn't have yield, staking yield, the SEC is going to have a harder time attacking it.
If it didn't do an ICO, the SEC is going to, or an IDO, then the SEC is going to have a harder time attacking it.
So, you know, there's no perfect project.
But you've got to ask yourself a question.
Actually, sorry, there is a perfect project.
It's called Bitcoin.
The second one is Ethereum.
But you've got to ask yourself a question and say, look, you know,
am I reasonably comfortable that my token can survive a regulatory attack?
Now, I know that 80% the tokens that I invested in in this last bull market are not going to survive a real regulatory attack.
And that's why I sold them.
Haini, I see you on mute.
Jump in, man.
I think it's a very, very wide world.
So for background, we...
We have products all over the place.
We have them from in Australia and the Middle East and Europe.
We're obviously working on products in the United States.
And regulators are different.
The US is such a public process, which is very unlike most regulators in the world.
All of these ETF applications have gates that are public.
The public gets to comment.
And so the normal public average investors get to see the regulatory process much more in
detail in America than elsewhere.
But I can tell you that behind the scenes, it's all the same.
It has...
It has taken a very, very long time for numerous regulators to get across the line.
I remember certain regulators, China being the very, very big example of this,
where they were incredibly negative a couple of years ago.
Now they've turned.
Britain, the UK, with the FCA, seems to be doing the same thing.
And so you're not going to, especially with a global product,
really be able to tick all the boxes and all of the jurisdictions.
And that's okay. I think it takes some time to get there.
One of the things that we think a lot about is there are different products that are appropriate for different kinds of customers.
So we're the largest issue of crypto ETFs globally.
But something that people don't know is that we also do tokens.
Because at the end of the day, we don't think people wake up in the morning and want to buy a defy index ETF.
They want to buy exposure to decentralized finance.
But perhaps that's better available to you through a Solana program in your phantom or an ERC20 token in your Metamask or an ETF and ETN, ETP, etc.
And so given that, I think it's best to just take a step back and think about these products more in terms of accessibility on a region-by-region basis can sometimes –
lend itself to different product forms.
And so not everyone needs an ETF.
Some people would rather have a token.
And on the regulatory front, it's constantly moving, constantly in change, in the U.S. and elsewhere.
And we see a lot of those kinds of updates happening behind the scenes more.
Sorry, not Ryan.
Hany, and by the way, Scott, just to ask you a question on who the hell is Paddy.
Paddy is Rand's researchers.
I know he doesn't have a profile picture that you approve of, Scott, but this is how he got on stage.
I'm done 100% dots here.
I love his profile picture.
It's the best picture I love it.
I love it.
I don't know what you're talking about.
You want to hear a very cool story.
I like, I like how when Rand wants to say something, he'll repeat it until he give him the chance.
Like, you want to hear, you want to he, you want to hear, you want to hear, you want a he, wouldn't stop.
I'm going to mute everyone's mic soon.
Here we go, mute everyone.
There we go.
You can't mute me, bro, by the way, but go ahead.
Yeah.
I don't feel you, dude.
I used to look at Paddy Pirate tweets and think to myself, wow, this guy is so smart.
And I used to tell my team, please invite him to our research group.
Like, let's hire the guy.
Let's get him into our research group.
And the whole team kept it completely quiet from me that Patty is Patty, right?
Because obviously his real name is not Patty.
If you mean him, he looks like anything but some kind of Irish Patty.
And one day, one of the guys walked in and whispered him in me.
They said, you know that Patty is that guy sitting in the office.
I'm like, bullshit.
Yeah.
How can he be so smart on Twitter and so dumb in the office?
Ouch.
I'm kidding. I'm kidding. I'm kidding. I didn't say that. I didn't say. I didn't say. I was being funny.
No, he's very smart. Very, very smart. But the irony is that I was trying so hard to get him to come to come work for us because he, you know, his tweets are so bloody good.
Turns out he's sitting in the office next to me. He's actually one of our researchers. He just didn't want us to know what the account was.
Well, I just followed your pirate out. I find him.
I followed your pirate on this.
I've just, I've followed, I followed him before because I follow all the speakers we invite,
but I just unfollowed him just now.
Patty, just said a question for you, and I want to go back to Haney.
Question for you is different narrows.
Your Rand's researcher, which already kind of discredits a lot of what you're saying,
but I'll give it the benefit of the doubt.
What are some narratives you're interested in now?
Is it something we talked about yesterday, and if you're the guy behind...
Yeah, go ahead.
Paddy, go ahead, bro.
Give you a speech.
I'll tell you my favorite narrative is the Dex narrative.
I think it ticks a lot of the boxes that Run has been speaking about.
In particular, the Making Money box.
Obviously, many of these dexes are generating...
huge fees. I have a trad-five background. So when I look at investing in tokens, I think of it as if I'm investing in a business.
So the most important thing for me is do they generate revenue? Are they generating fees?
And I think that I think the Dex narrative is being underlooked of it.
There's a lot of Dex tokens on the market that are very undervalued.
If you compare the fees that they're generating to their FDVs, I wrote a tweet on that today.
I also think it's an interesting one for the regulation box because obviously we're seeing
these centralized exchanges like buy bit, Q coin in the last week, come out and they're coming out with stricter KYC policies.
And I believe that this will lead to a lot of crypto traders moving to these dexes.
Whether or not.
How long this lasts?
Like how long these...
But we don't...
But Patty, Patty, we don't have enough dexes.
Like, because it says one thing that Rand didn't add is that how red or blue is the ocean.
And, you know, I was asking, Hanney, I'm like, hey, you know, Leo, I think it was Hanney or
Josh.
Like, layer one's, it's already a lot out there.
It's just really difficult for layer one coming now versus six years ago.
And it can't a similar argument be made for dexes?
Yeah.
I think so, definitely.
What I think, though, is that there's a lot of opportunity.
It may not be long term, maybe not in a five-year outlook,
but certainly leading into the next bull market.
I mean, your GMXs, your gains, there's a protocol called mucks.
Can I add something here?
Yeah.
I think that by nature,
crypto is made to be traded.
So like if you think about generally,
what we're talking about here is we're talking about different types of currencies.
Like every one of these crypto is actually a different type of currencies.
Now,
ultimately,
I think the trading use case in crypto is always going to be there.
Because it's just the trading of different types of currencies.
it's,
I think at its core, you need the chains, but then the layer above that is the trading,
because ultimately that's what we do all day in crypto.
It's not only speculating.
It's actually even when you just think about use cases, you're trading one token for another token.
You need a layer two tokens.
You'll trade a layer one token for it, et cetera.
So I don't think that that use case is ever going away, which is why my portfolio and I is very, very, very heavily weighted because of Paddy to the Dex's.
Correct.
I love the Dex argument.
I love, love, love the Dex arguments.
And you see it because the problem isn't just with Bybit.
It's that Binan.
And just for the audience, Dex is a decentralized exchange.
So Binance is centralized.
We've got something like Uniswap is a decentralized version of Binase.
Go ahead, honey.
Mara, if Dex is a decentralized exchanging.
Tell me about six.
What's a centralized exchange?
Well, guys, what about a hybrid exchange?
And I'm not going to hijack it right now,
but I've got a slightly contrarian view in the long term on what exchanges will look like.
I totally agree with you guys that in the medium term...
Dex's are the hot area. People love to trade. They want to trade in permission as ways.
But there is a new future emerging and that is a hybrid exchange and I'm happy to talk about that in a second.
But I think it will take time to get there. If you open the Uniswap app on your phone, it looks and feels almost like a wallet.
So a lot of the talks on infrastructure investments and wallets and things like that,
Dex is a really an interesting position right now.
In addition to that Binance, Coinbase, other big, big exchanges are getting attacked,
and we're seeing a lot of that volume start flowing over to Dexas.
And I would, I agree completely. I think they're undervalued.
I think people don't realize just how much traffic and how much use and how much revenues all of the Dexas are doing.
But from an accessibility perspective,
they're available to anyone with a mobile phone, anyone with an internet connection, anywhere in the world.
And that's a very, very powerful thing.
The one thing that I think we sort of touched but didn't cover, because I think it's a deeper problem.
I'm a big fan of all the different layer ones and what they're capable of doing.
I'm a big fan of everything else.
One of the major issues that we have yet to solve that causes an intense amount of friction against growth in the space is the fact that
every single blockchain that we have, every single product that we have is a completely different ecosystem.
They do not speak to each other in very easy ways.
Bridging is incredibly difficult.
It's prone to hacks.
And when we throw out Bitcoin, Ethereum, Solana, Avalanche, that's four different systems that actually completely live in silos on a pragmatic basis.
Because again, no one...
Bridges are difficult. People have trust issues with these kinds of things, et cetera.
And I think that's one of the biggest problems when everyone has a Metamask wallet,
but Metamask only exists for the Ethereum ecosystem versus everything else.
Honey, I agree with you, and I think I would have shared the same thesis as you,
but have you ever used Layer Zero and Stargate? Have you ever used the...
the layer zero protocol.
I'm not,
I'm not, just to be clear,
I'm not invested in layer zero.
I do hold some tokens in Stargate
because I believe in the thesis.
But I think Stargate changes the game.
And I'll tell you why I think Stargate changes the game.
So can I say one caveat and then I'll,
I will let go.
I just want to,
I am,
I'm a Dijan myself.
I'm very,
very comfortable with all of this.
I deal with a lot of normal regular users
where oftentimes we are their first introduction to crypto.
So when I say a lot of what I say, I'm talking about an average person because that's actually what we need.
My thesis is, and what I spend everyday thinking about is how do we get crypto to a billion users?
And so there's a lot of the usability things that I think about and we're absolutely not there yet.
I think we get there with racked assets.
I think we get there with better UI and UX.
And that's where I'm coming from, not me personally or my personal views or what I do.
I think that there's three phases to this revolution.
So I'm going to agree with you that we're nowhere near the ability for the regular user to use protocols like Uniswap or Stargate or even Metamask.
You tell a normal user to use Metamask.
It's like, what are you talking about?
It's crazy.
Even what I consider sophisticated users can't use Metamask.
I think that this revolution happens in three phases.
First one is centralized.
Centralization, I think that's where we are today.
That is just getting used to the idea of crypto assets
and getting people to migrate from the traditional financial system
onto a finance, crack, and Coinbase, whatever it is.
The next phase is getting semi-decentralized.
And I think someone here, I didn't know who it was or interjecting, but he said, it's a hybrid world.
And I think that was Josh.
Go ahead.
Yeah.
And then very much in the future, I think what happens is we land up going to a decentralized world.
Now, I think that we have a long time, a lot of building left to do before we get the totally decentralized world.
I think that Crito is a great example of that.
Like Cretto is building stuff that...
I don't know how far they are on their roadmaps,
so please forgive me if I say it wrong.
But when their stuff is ready,
it brings everything that we get in the centralized world
to the decentralized world and as easy to use.
I don't know how far they can comment about it.
I'm just saying I think the revolution happens in three phases.
And even though we've been here for, you know, give or take 12 years or 11 years, whatever, however long you want to say, I think only now we're really starting to build at a fast enough rate for adoption.
And there's a long way left to go before we can actually get adoption of decentralized protocols.
You need a PhD to be able to use some of these decentralized protocols.
And the problem is that if you make a mistake, you lose too much money.
So, yeah, that's the problem.
Ran, I was going to say, go ahead.
Sorry, I was going to say, I mean, for me, even personally, I'm pretty far down this rabbit hole.
I've never touched 99% of this stuff because even for me, I just don't feel like it's ready and I'm disinterested.
So...
If I don't care about layer zero and Stargate,
which I've literally never heard of Stargate, no offense,
then that's a pretty good sign of what the mainstream probably.
And back to the decentralized exchange conversation,
I think that a lot of value will go to Dexas, as you said,
and a lot of volume, but that doesn't mean that they're investable.
And I'm not saying that they're not,
but the tokenomics have to be perfect for actual value to accrue to the tokens
and for you to want to hold those tokens as an investment.
which goes back to your point that, you know, 99% of this market, as you know, I believe, and you do too.
You said their currencies, I would say it's just a bunch of casino chips, and we're hoping that a lot of people still want to come to the casino.
And so, like, I think that Dexes will grow in volume, but that doesn't mean that there's money to be made investing in them.
That's the challenge.
Well, I think ultimately, I disagree with that. I disagree with that completely.
I think if you believe...
that, then you must also believe that Coinbase and Binance are not good revenue generating companies.
If you don't think investing in the centralized exchanges is a good money-making investment, then the same would translate to Dexas.
But, hey, Haney, do you do you buy Coinbase stock as a good corollary from BNB token, investable?
No, because BNB is a good corollary to Binance plus Ethereum plus a bunch of other things.
I don't think they're the same thing at all.
Come on, guys.
Right, but that's what I'm saying.
So I can understand.
Just for two minutes.
Just, look, it's 12 minutes past.
Just until 14 minutes past, whatever the hour is, wherever you are.
Can we just for two minutes just be really honest with ourselves?
Yes.
You have the two minutes.
Crypto is a casino.
A hundred percent.
Stock markets, stock markets are a casino.
There's no difference between draft kings or I don't know who the big casino
Cesar's Palace and the NASDAQ other than what they get you to believe that you're playing.
There's no difference.
Come on, it's all casinos.
You know, are you going to tell me that people invest in companies because they think they're going to make a P.E. of a hundred?
It's a casino.
I mean, I deal with a lot of family offices and institutional investors who aren't looking to gamble, who are actually holding some of these tokens for the long term.
And they do a lot of research.
They're not touching 99.99% of it.
Yeah, hedging is not gambling.
So preservation of wealth is very different to creation of wealth.
So I think it's mostly a casino, but not just...
Mostly a casino is very different from it's all a casino.
Look at stable coins.
Look at the functions that they actually serve.
Look at what people are actually doing with this.
I mean, all the exchanges, I mean, all the exchanges are casinos.
They allow us to take bets on certain things.
What's the difference between an exchange and a casino?
Again, if it's a casino, then Schwab is a casino as well,
and interactive brokers and Fidelity are casinos as well.
Then that's a different definition of casino.
Because what ends up happening is, no, not everyone is losing the money.
The house does not make money off a few.
There's very, very different things here where,
I absolutely am not gambling when I'm buying Bitcoin on Coinbase.
I'm making something that I believe in for the long term.
And I'm comfortable holding that.
Yeah.
I'm not disagreeing with you. I'm just saying, I mean, listen, if we've seen massive volume spike,
let's say theoretically on uniswap, in theory uniswap token should go up as a function of that
business improving, but uniswap goes down as a function of the entire crypto market dropping,
which does happen with stocks as well. It can be a baby with the bathwater situation,
but I'm just saying that depending on how these tokens are structured and how, you know, what the supply is and such,
I believe a decentralized exchange could do exceptionally well while its token could still trend down indefinitely.
I want to touch on the, guys, I want to touch on the hybrid exchange.
And before that, I just want to remind the audience as well, Mel, the founders are about to come up on stage.
I've pinned their tweet.
So they're a Lithuanian bankers ran and sad, but they're not just a pure bank.
It's kind of, we're talking about that hybrid model.
So they're a brand, they're a bank with self-custody as well.
They've got their own.
Layer 1, they've got their own wallet as well.
So the founder, the CEO, will be coming up on stage.
Surely I've pinned their tweet, check them out,
Smeld Finance.
And then if you want to, similar to Meld,
if you want to come on the show and chat to us
or work with our incubator,
so come on as a sponsor or as a client,
check the pin tweets for the email or just DM us
to come up on stage.
But Josh, since we're talking about hybrids,
the concept of hybrid protocols.
that's what a hybrid exchange is man absolutely i think for a long time we've looked at
venues or exchanges as binary right you're either a centralized exchange or a decentralized exchange
And what we've done, and when I say we, we are a credo, we're the incubators and builders of Ankex.
And Ankex is a fully hybrid non-custodial derivatives exchange.
What that means in practice is that we get the best of both worlds.
You get the high volume.
I want to take a step back without getting a bit deep.
So when you talk about something being hybrid and getting the best of both worlds,
is that just more of a step towards decentralization?
So we live in a centralized world.
blockchain introduces the concept of decentralization and hybrid is pure just it's just it's
another way of saying transitioning so anything that when you say hybrid in web three it just means
it's centralized but it's slowly decentralizing is that a fair way of it of explaining what
whatever hybrid project a hybrid protocol is sometimes but in the case of an exchange no so the hybrid
essence of it is is essential why is that why would we want a centralized order book and
and all of the exchange infrastructure to be centralized because it is low latency,
it is easy to trade against that can be co-located.
So, you know, simply put, you can have professional traders with the best infrastructure
trading at speed and at scale.
That's what you get from a centralized exchange stack.
But this is the important part.
Why is it hybrid?
If you make the entire thing non-custodial, if you say you can connect your crypto wallet
to it, you never have to deposit your...
assets on the exchange and get worried about what they're doing with them, that piece can be
decentralized. So all the settlement, all of the custody, all of the collateral management can
take place on chain. So you've got... So the example I gave of Meld being a centralized bank
with self-custody, would you consider that to be a hybrid model? Absolutely. Yeah. So if you're
leveraging some centralized solution or service that Meld would be providing, but you're able to access
it with your wallet,
That's, you know, again, the theme of the best of both worlds.
Something centralized can be accessed through a decentralized piece of infrastructure, i.e. your wallet.
And that's, that I think is going to be the future for a long time for many use cases, because not everything can be decentralized, right?
Some services create enormous benefits for users when they are provided.
as a service to end users.
And that could be the banking model that Meld have the non-custodial derivatives model that Ankex has.
So this hybrid model is at the end of the day, it's a big benefit to users.
And it may, in some business cases like exchanges or banking, having this hybrid model is just a reality of the nature of the service that they can provide.
Yeah, Josh, I mean, one people don't realize real quick, Mario, we're talking about this as a theoretical. First of all, this exists. A lot of people don't realize EDX markets, which is the much discussed exchange presented by Schwab, Fidelity, and Citadel is non-custodial wallet. It effectively is this. And that's what's coming from Wall Street. They're not custody assets. It's non-custodial.
Well, Ken, we're talking about Meld and we're talking about you and the concept of hybrid models.
We'd love to get your thoughts on what's been discussed so far before we dig into Meld.
Sure, sure.
I mean, I think certain parts of hybrid models are important, but I think that if you come from the DFI space, if you come from crypto, then certain parts of that should have a line in the sand.
So the non-custodial part should be a line in the sand.
You might want to be able to connect your wallet to something and be able to sort of transact or get some sort of benefit out of being centralized for speed, but you always want to maintain custody of your asset as much as it's humanly possible.
So handing off that custody, I think, is where the line should be drawn in regards to allowing other entities or other protocols to handle your assets.
Ken, can look, I, I, you're going to like this.
It's going to be a very simple question because I'm in, I fucking hate Defi.
Why?
Because I just don't understand.
It's not an area I'm very passionate about.
Unlike Scott, Scott, for some reason, really enjoys it.
But Rand seems to be a big fan of you guys.
And I was just looking at your website.
I was trying to understand what Meld is.
If anyone in the audience, just go to meld.fi, if I,
or just check the Pintweet above, they're a sponsor for today.
Okay.
And first, I think, I don't know if we invested or not,
I have a company called IBC.
So you can tell me maybe afterwards if we invested,
because I have a really strong thing we did.
You didn't.
Oh, okay, there you go, so I'm wrong.
All right, so I'm just having a look at what you guys do.
And I know that you guys raised a lot of money, so congratulations.
And essentially, the elevator pitch that Rand said is it's a bank with self-custody.
as well as a built-in D-Fi protocol.
I added the second part in.
Is that a good elevator pitch?
That's one perspective.
That's the kind of D-Fi or the Trad-Fi perspective that you would see into it.
So Meld started out as a lending and borrowing protocol,
where we wanted to make it so that you could take your assets,
lock them up into a smart contract, stay non-custodial,
and then borrow Fiat against it as opposed to borrowing process.
crypto against it, right?
So today you can go into Avey, you can take your asset,
you can borrow a stable coin against it,
take it into a coinbase.
and then take that out into your bank account.
You can do that.
Good luck in trying to explain that that's actually debt to the IRS.
It's not going to happen.
So what we're trying to do is we're trying to make all of that fluid process where you keep all the defy side.
So you can lock your asset up into a smart contract.
You can borrow, you can get some liquidity out of your asset in a safe way,
and then you're able to bring it onto the banking side.
So we started out lending and borrowing.
But we saw that none of the Fiat providers would touch us because we were a DFI protocol and we were focused on non-custodial and sort of decentralized.
So we had to follow the path to get our own electronic money license to be able to achieve this.
And it also helps in the sense that when you go through this process, you then have your money in the banking system.
And life is just a whole lot easier when you want to move stuff around when you're already in the banking system.
Going from bank account to bank account, it's easier.
So the starting point, defy, then we moved into the fiat side of things.
But if you're interested in the fiat side as you're kind of like gateway into the crypto world, then it would work like that.
but we started from crypto and then moved into finance or into chat five.
I know Ryan and Scott will probably jump in.
So I want to ask my second question relatively quickly.
One of the points that Rand mentioned was surviving regulation.
And that's something that's a lot more, you know, a lot higher on any investors' criteria
after what we saw in the last couple of weeks.
How are you guys surviving regulation or how will you survive regulation?
So regulation, there's two ways you can approach regulation.
You can approach it from a legal opinion or you can approach it from legal precedence.
And legal opinion is an uphill battle.
Legal precedence gives you a bit better sort of foothold.
And so we wanted to go through the process and we started in Europe because we were able to move into an electronic money license.
And it sort of followed our set of values because it's kind of non-custodial.
And we went with the way of having an existing license that has legal precedent for doing this.
So the license that we're operating on.
is a license that currently does this,
and the central bank is familiar with it.
They know that it's happening.
They're comfortable with the activities.
They're comfortable with how it's being operated today.
So we wanted to start from this legal precedence perspective.
Outside of that, I mean, when you're talking about the US, the US is a completely different animal.
I think that, you know, the SEC and Treasury are on a warpath.
And I think that if you want to go up against them, then you better have some insanely deep pockets.
So right now we're not offering, we're not planning on offering in the US.
The rest of the world is ready to jump in front of the US for this stuff.
Okay, so when you talk about the use case of self-custody is a really easy one to explain now,
especially what we saw with banks in the last few months.
But how do you explain to the average, Joe, you know, if they're looking at, well, at Meld now,
what are things they could do today, just for the average user, what are things they could do today that they could relate to?
So this...
Meld solves a major problem for people that have crypto currently.
So it's not a problem.
It's not solving a problem for people that are not using crypto.
What we provide is we provide, one, the ability for you to get liquidity out of your assets into the real world.
And two, we provide predictable...
cheap method of moving your assets between crypto and fiat.
So we charge a half a percent for all crypto to fiat transactions.
How does that compare?
How does that compare other exchanges?
Other exchanges, I think it's similar to some other exchanges like Binance and Coinbase
because they're actually padding the actual spot price as opposed to getting the best spot price
and then putting a specific transaction on top of it. If you're talking about something like MoonPay,
then we're like four or five percent cheaper. Holy shit. Okay, yeah, continue. So yeah, no,
the point here is that
Non-custodial, it's imperative. You have to control your own assets, your coins, your keys.
We wanted to follow this thesis. Started it back two years ago, and it's been proven because of the FDPS.
So, so, so, so, so can I want to, I want to take, um, Iran's six simple questions when looking at a project.
Let's, let's play the game now.
Sounds good.
So, uh, first one is, is there a network effect?
Is that something that would apply with Mel?
Because you've ticked the box, which I think is the most important one,
you've ticked the box of having real users.
In terms of having a community, I looked at your socials.
You've ticked that box and you're working on it as well.
The decentralized box, I would say you kind of tick the box in terms of being a hybrid model
where self-custody is the concept of decentralization.
You've got your own layer one.
So you've ticked that decentralized box.
Generating fees, you've ticked that box as well.
And that's an easy one to explain.
So the one that I would ask you for,
and I'll give you the mic,
are you building somehow, building a network effect within Meld?
So there's three points there.
Before your answers.
Before your answers, I mean, the question is whether we're talking about investing in the product or using the product.
In this case, I'm not going to comment.
This is the question for as an investor.
I'm the, I'm the investor.
If it's an investor in by and selfish question.
Yeah, yeah, yeah.
But if it's using the product, I'm...
Yeah, yeah, yeah.
You don't want a comment, man.
Yeah, yeah, yeah.
You don't want the SEC to reach you in South Africa.
So, Ken, this is for me.
I'm in Dubai.
I'm chill.
So in terms of, is there a network effect?
Please, go ahead.
Yeah, so the network effect is effectively threefold.
I can talk about two of them.
First is we are a lending and borrowing protocol to start with.
So we are liquidity.
We're a liquidity pool infrastructure provider,
similar to compound and Avey.
So the network effect happens through the lending and borrowing process
where you have three actors, right?
You have people that are supplying,
you have people that are borrowing,
and you have people are liquidating.
There is the opportunity.
Everybody makes money along the way,
and our job is to harmonize the network and harmonize the protocol.
The second is when you have your own blockchain and you can do a very, very low cost set of transactions, you can provide other types of services and other types of features.
We want to be able to provide staking and be able to provide ways of yielding.
I know some people have a problem with yielding these days in the U.S. because they've been burnt so many times.
But I think yielding is a key component to what we're talking about,
both yielding now in traditional L1s, things like Ethereum, Avalanche, et cetera,
and also secondary, structured products, things like this,
more sophisticated instruments for people that are much more,
sort of much less risk-averse.
So this ability for you to be able to invest in these different types of assets
and at the same time have the basic components of being able to sort of lend, borrow, transact,
This is the network effect, this ability for you to be able to transact cheaply between different people and be able to lend and borrow between different people.
And then the question I have next is something I read.
And that's more of a compliment to you guys, men.
Are you the largest Avalanche subnet right now by Valid account?
Correct. We are.
Oh, shit.
Decentralization is super important.
Essentialization.
Good for you, bro.
All right, well, you double tick that box.
And then the other thing about, one thing I want to ask you about is that about the
irdrop that you guys announced, just then I'm looking out on your Twitter.
And I think it's yesterday.
Let me see the date.
Yeah, you've announced yesterday.
Do you want to tell us about the airdrop that you have?
Yeah, so this is in combination to getting the word out.
So we want to make sure that everybody knows about the Meld Neobank.
We want to get as many early access signups as we possibly can.
So as part of that, we decided to do Meld AirDrop.
So we're making it possible for people that are going to sign up for the bank,
getting early access, that will give you a boost in regards to getting from getting assets,
getting meld tokens in the air drop.
Usually doing on-chain activities, doing social activities,
all of these will give you boosts in regards to getting meld from the air drop.
And if this sort of spills over into getting more customers for the bank,
that's the sort of important thing.
Like I was saying earlier, there's a network effect here.
If you have a bank account,
If you have the debit card and you're using it, other people are going to see that.
They're going to know that.
And they're going to be able to sign up as well.
So, let me let me do your. Ken, Ran, you said at the beginning of the show that you spoke to Meld.
And you're a big fan of the project.
You went on the waiting list as well because you can't use the product yet.
You've just got a waiting list and ask Ken when the product would be ready.
What do you like most about Meld?
Well, again, I say I'm not, you know, around the token, I have no views.
I haven't researched the token.
I don't even know what the token does.
But in terms of the concept of having a non-custodial wallet linked to a regulated bank account
where I can start doing fiat banking using proceeds from my non-cristodial wallet,
that for me is a game changer.
I mean, just think about being able to, to, you know, transact as freely with your...
with your crypto as you can transact with your fiat,
not without actually knowing the difference.
Imagine being able to just take whatever fiat you have,
quickly move it into stablecoins,
have it generate a yield while you're not using it,
and then when you need it,
you can move it back into fiat.
When is your product going to be ready?
And then I'm going to ask you a selfish question about the bear market.
I'm going to move away from the product and then start asking questions.
Yeah, so we'll go into early beta access in August.
We're expecting to get our license approved in September.
And the lending and borrowing protocol goes into TestNet in September.
So everything should be put together and be live out of TestNet or early access in October.
And how many people do you have on your waiting list?
How much have you raised?
Give us some numbers, impressed.
Okay.
Impressed the audience.
So we have around 25,000 people signed up already.
When it comes to the raise, so we raised.
Hold on, you've got 25,000 people signed up already.
Yeah, yeah.
They signed up to use the platform.
Everybody needs this.
Okay.
This is, you know, where can you get this?
I mean, all of our competitors have died on the vine.
All of our C-Fi competitors, BlockFi, Celsius, Voyager.
Oh, true, yes.
Everybody's gone.
Yeah.
Right? Your signature is gone. You know, SPF. Have you launched? Hold on. Rand, you got a mute. You got a hot mic, man. Have you done the whole, did you do a whole campaign on like trust is dead in C-Fi and time now for D-Fi solutions to what happened last year? Have you done an aggressive campaign to kind of put this in people's face?
Not yet. So I'm actually in the middle of writing an article about this right now as a result of prime trust where we can actually say, you know, the thesis has been proven over the past year and a half. All of this idea of centralization and C-Fi is just a horrible idea.
So we will be talking about this and we will be going into this.
You've got to be so aggressive.
You've got to be quick and be aggressive about it, man.
Be very aggressive.
The time is now.
And the next question I have is, sorry, not question first.
Keep giving us some things to impress the audience.
It's all about 20,000 people signed up.
How much did you raise?
You raised money in the bull market, didn't you?
We raised money in the bull market through two ways.
We had a private token sale where we raised from just private individuals who raised $35 million.
And then we also invented a new method of funding for crypto projects.
So it's called an ISPO where you do an initial stake pool offering.
So we were the first to do this and you basically set up a bunch of stake pools on a proof of stake blockchain.
And then you keep the block rewards and in exchange for a fixed amount, you then give your token in exchange for those block rewards.
So we did that.
And when we did it, we got 100 million staked on the validators in the first 24 hours.
And after three months, we peaked at 1.3 billion staked.
And we raised 14 million out of that.
How much did you raise total?
Jesus fucking Christ.
You guys raised $45 million.
Yep.
Yeah.
Man.
Well, we demonstrated, right?
We demonstrated that we could do financial innovation.
So we created a new method of being able to do...
Rand, did you know this?
Did you know they raise $45 million, right?
I know this because I spoke to the team this afternoon, but not before that, no.
That's fucking mental.
We don't advertise it.
We don't advertise it.
You should advertise a lot more.
Like, this is such a beautiful flex.
Who's on state?
Who's using your account now?
Who did I bring up?
So head of marketing is in the mail account now.
What's head of marketing's name?
His name is Yusuf.
Yusif, can you hear me?
You can speak, man.
Don't be shy, bro.
It's not Yusuf, it's Josh.
But yes.
Ah, Josh.
Are you in marketing as well?
I'm the head of community.
Okay.
Ah, sick man. All right, well congratulations to have your community. Tell Youssef, man, to flex the head out of what you guys are doing. And how much you raise, but also how you've innovated with your raise and how you're a solution to all the centralized solutions that died over the last 12 months.
Yeah, I don't, I'll finish my centers, man.
I'm just telling Josh to tell Yusuf to not listen to Ken and just go aggressive with marketing, because that's pretty cool.
Yeah, I want to ask Ken a question, actually, because Ken, something you said was so interesting to me.
I think everybody saw, obviously, the collapses of Voyager, Block 5 Celsius, FTX, those centralized...
obviously authorities and platforms,
but you hinted at the fact that you're writing something about prime trust,
which I think has gone wildly sort of underreported and discussed,
but the fact that that was a custodian, so much bigger than all of those, right?
Because the custodian has one job.
that they put right there.
And there was no yield explosion.
There was no greed.
There was just literal, I mean, stupidity and then fraud to cover it up, obviously.
And it's something that we discussed very closely here.
But I want you to, can you give us a bit of what you're writing about there?
Because I'm so interested in that story.
Yeah.
Yeah, I mean, there's two parts to it. One is custodians, like you said, they have one job. They should not screw this up.
But the point is, when something like a custodian goes down, they take down so many other organizations with them.
So the remnants and those sort of the small players and the organizations that are kind of trying to do some of what we're trying to do when it comes to lending and borrowing.
They're using these types of custodians.
They're running into these types of problems.
So the custodian is actually worse.
It's more like an FTX in the sense that it's got so many tentacles into so many other projects that when it goes down, it takes so much else with it.
And so many of these platforms dodged that bullet and people don't realize how close it came to affecting so many more consumer-facing platforms.
I mean, everybody's praising, obviously, a number of them for switching from prime to, I mean, Fortress may have problems too, I don't even know, but switching from prime to others.
But the real story there is they were a month away from potentially being insolvent.
Yeah, and it just ties back into this basic idea.
Take control of your assets.
Stop expecting a license to sort of mean something that people are actually going to sort of trust.
People should be trusting in what they have control over.
But, Ken, do you have solutions for the flaws in self-custody?
Is there decentralized ways to be able to quote-unquote reset your password?
Yeah, so this is something that we started.
We were working on something like this right when the ledger debacle came out.
And then when we saw the community reaction to ledger, we decided to kind of take a step back from the cliff and say, hang on.
Let's do a bit more work on this before we do this.
I'm not very technical, but is there centralized ways of doing what ledger is doing?
Ledger's finding a partially centralized solution.
Well, I mean, if you're dividing your asset up into three centralized entities, then it's a centralized solution.
The challenge here is that it's a high-risk thing because if you're giving your keys to, even if you're dividing up, you're giving them to a regulated entity.
That regulated entity, there's a jurisdiction, there's a governance body that sits on top of them that can demand those assets.
You saw it today with Crackett.
They were demanded, they demanded the user data, the IRS demanded user data from Crackett.
So what it needs to be is it needs to be the same kind of mechanics that you saw with ledger,
but it has to be in a fully decentralized manner.
It has to be in a way where nobody can get access to it.
That's what we're looking on.
Man, I forgot your sponsor because we started just chatting and kind of got carried away.
But yeah, man, I appreciate your sponsoring.
What do you think of the chat?
Do you like the structure that we do this, how we do an AMA at the end?
I think it's great.
I think that I would actually like to see even more sort of challenging questions and sort of hot topics.
I think there's a lot of problems that are happening and there's a lot of things that are the root cause of what you guys talk about.
Yeah.
Things like the war in Ukraine, the fact that, you know, the central bank of Russia had their assets stolen from them or taken from them.
These types of topics have kind of rocked the financial world, and they're also causing the SEC and Treasury to behave in a unique way.
So it's all connected, and I think it's cool that you guys are actually asking these really, really hard questions.
Yeah.
Yeah, I just, if I knew defy, if I was a bigger defy expert like Scott, if I was as boring as Scott, I'll be able to ask some tougher questions.
I had a few there, but you seem to have a good answer for all of them, including the...
Well, I kind of put you on the spot with the...
You talk about the advantages of self-custody, but there's obviously one big disadvantage.
But at least you guys are working towards solving it, so that's probably the best answer you could give.
Well, I mean, think about it this way, right?
When Celsius went down, when FTX went down, you know...
What do you think people would, there's no recourse.
There's no, there's no way you can get your assets back.
There's no way for you to do anything about it.
At least when you have self-custody, you have the opportunity to make decisions.
You know, you decide, okay, I'm going to take this, I'm going to put this in a safe or in a safe deposit box,
or I'm going to make copies of it and give it to my family or however you're going to handle your self-custody.
You have a choice.
When it comes to centralize, you have no choice.
You don't know what your assets are going to be used for.
You don't know how they're going to be held.
You have no choice at all.
So I think that the ability to have choice is much, much more valuable than zero choice.
all right well ken i'm gonna ask your audience give us the thoughts on the comments bottom right corner
i don't think you'll have enough time because when i end the space you can't comment anymore
but give us your thoughts on on the discussion with ken and what you think of meld um any tougher
questions i could have asked put them in the comments bottom right corner otherwise if you want to
come on stage similar to how ken was here just hit us up um check the pin tweet and email us or
dm me or ran if you want to check out meld
We brought up Josh, who's running Meld's account.
It's that red circle.
And the other red circle with the ugly logo is the Crypto Town Hall account.
So you could check that, follow it.
Because that's why we're going to start hosting the shows on the red circle called Crypto Town Hall, the ugly logo of a mic.
Otherwise, yeah, we'll see you all tomorrow morning.
And Scott, don't you dare protect the logo, man.
Don't you dare.
Okay, cool.
Scott, mute.
Cool, bro.
Don't do it.
Don't do it.
It's an ugly longer.
I'm literally just messing with you to see when you'll end it.
Okay, okay.
All right, guys, I'm going to end it now.
I appreciate it.
Actually, we find out, I want to get Patty's final thoughts.
We've got a researcher here.
Patty, give us to maybe a 30 second overview of where you think the market will head over the next six months.
Go ahead, Patty.
Well, easy question.
