Michael Rosmer - DEFIYIELD: The Wall St. Era is Over! How To Control Your Digital Assets & Invest Safely

Full transcript: Michael Rosmer on London Real

2:44 This is London Real. I am Brian Rose. My guest today is Michael Rosmer, the entrepreneur, investment strategist and decentralized finance experts. You are the co-founder of DeFiYield, a safe and secure investing dashboard that allows users to manage their assets across blockchains to generate returns in crypto and access the best token swap rates available. Throughout your career you’ve worked helping companies become more financially efficient, secure and flexible by using your expertise in international law, tax and infrastructure.

3:13 At DeFiYield your aim is to help users succeed in DeFi by generating the best yields from their digital assets while also ensuring they are protected from scam projects and malicious actors, something you believe will fuel mass adoption and bring a wave of new investors into decentralized finance. You have called the birth of DeFi the biggest financial revolution in the last 100 years one that will bring a complete restructuring of our entire financial system. Michael, welcome to London Real.

3:39 Thank you, happy to be here. It’s great to have you here. I can’t wait to get started today and I just want to start by saying the DeFiYield is one of our portfolio companies here at London Real Ventures, and inside the ventures our mission is to invest in cutting edge digital asset ecosystem protocols while giving our partners like you marketing exposure across London Real media platforms and our DeFi Academy students and alumni. Our aim is to heighten awareness, create customers, build communities by leveraging our global audience, an extensive network.

4:07 Michael, super excited to be working with you guys, super impressed with DeFiYield app technology and man, I can’t wait to get into it today. Just a quick background of why I’m here. I just gave you a walk through this place and you know I ran to be the next mayor of London last year on May 8th, I realized I wasn’t going to be the next mayor of London and I was like, okay, what am I going to do? I knew I was going to keep having great conversations, but I looked at DeFi and I thought, wow I hadn’t been paying attention and I looked at the DeFi summer of 2020 and I thought, wow, everything finally happened, and you know we had Max Keiser here in 2013, I had Andreas Antonopoulos here and 15 17 and 19 talking about the future of money, the internet of money, but it hadn’t really happened yet and we hadn’t used the word DeFi and then I looked at this and I thought, this is no joke.

4:57 You know, from my Wall Street experience I was like, this is real. Total value locked, and so we went all in on the space the DeFi Academy, everything. I’m wondering, your maybe history with DeFiYield? You’ve said that what we’re going through right now is the biggest financial revolution of the last 100 years so how do you see this emergence of DeFi or even Web 3.0? Sure, so it’s a great question.

5:21 I think if I was to try and contextualize it, I think, like democratization of finance is probably the underpinning of it when you’re talking about what went on in DeFi summer, right? It was like, basically, I mean, you have a sophisticated financial background so you can kind of understand how things work. For so long you’ve had a set group of players who can participate and it’s great for them. You know, it’s fantastic, you get to make lots of money, but normal retail people could not participate, and I look at that in two ways.

5:58 The one way that you know somebody in the West might think of things, as they might say, okay, great, you know, I can see how the big Wall Street banks could participate, but you know, I as an individual couldn’t, and you get, like, you know, a little bit through Robinhood where people can invest at lower fees and stuff, doesn’t really actually scratch the surface of all the stuff going on below but you know, I’ve lived in a whole bunch of different countries around the world. I’m married to a woman who’s from you know a country who doesn’t have a sophisticated financial system, and I think what a lot of people don’t appreciate, which is the bigger story by far is the fact that the whole financial system has basically been limited to like a billion or two people in the world, and there’s been an entire segment of the world locked out, locked out in terms of getting financing for projects, locked out in terms of being able to invest locked out in terms of being able to even do like basic transactions right?

6:51 And so DeFi changes all that. It creates a situation where you can be somebody in Africa and Uganda and you can raise 100 million dollars for some DAO to invest in different projects and you can go and you can invest in whatever, right, literally any startup project that could go on to be a billion dollar project a year later and make incredible yield, and then what happens from that is those people then take the capital back into their own local ecosystems, and you get this redistribution it’s kind of like, you know, when you think of what do you call it, like a, you know, like some sort of a plant that it pollen like turns into seeds and you blow it and they spread out all over the world, right? And then those seeds plant a whole bunch of new ones.

7:40 That hasn’t been the case if you think about venture capital. I mean, for the last how long the place to go has been San Francisco. Now it doesn’t matter that much, and then you get all these people in third world countries who could never get a visa to go to the US or UK or someplace like that. Those people can now go on YouTube and they can learn about this and they can build composable infrastructure, basically little smart contracts that build on what other people are doing.

8:05 They can go on GitHub and they can see somebody’s work and they can say I love this but I’d like to make a little change in it, and they can make the change and launch it a week later for no cost, and all of a sudden people can be excited and join in. Like, this is it’s just like massive democratization of finance in a way that we have never seen in the history of the world. Yeah, they used to call it private equity, and that pretty much says it right there.

8:29 I mean, you have to be part of a private club, and I ask my students sometimes, I’m like, raise your hand if you got offered a chance to be involved in Facebook Series A round, I think was two thousand twenty seven million in 2005 or something, and nobody raises their hand. I’m like, of course you didn’t, because even in San Francisco you had to be part of the best of the best, the Peter Thiel club, to even get a look at that. Now, potentially everyone in the world can get a look, and like you said, maybe everybody can participate and create code and be part of this economy maybe even work for some of these companies in these remote places, and you don’t need a passport or you know special access to finance.

9:04 Yeah, it’s pretty exciting what’s happening. I worked in banking for 15 years so I know the racket in a nice way. I mean, I worked at Bankers Trust. We had a balance sheet, we were doing these kind of highly complicated fixed income derivatives, and we were making a lot of money, but the point is only us and maybe 10 other shops that were doing that and you needed a balance sheet 10 000 employees a direct line with the Fed and tons of infrastructure, and when I saw what was happening in DeFi I thought wow, here’s like, you know, six guys and a dog in Tel Aviv or eight girls and a cat in Singapore, and they just created, you know, a Uniswap and they’re putting it out there and people are using it, and I was just like, man you know, there’s a lot of potential here.

9:43 Yeah, it’s also some potential problems tons of potential problems. Yep. And so you know before we jump into DeFiYield stuff, you know, other things that people need to understand, you know, maybe from where we’re going to now. I mean, like you said, finance traditionally has boxed out billions of people around the world. Also, we’re seeing this evolution of something now called Web 3.0 from Web 2.0 some people understand that, some people don’t.

10:08 How do you start to explain that to people? Yeah, so you and I were obviously having a bit of a conversation around this and I like to quote Gavin Wood on it. For those who don’t know, Gavin Wood was the original CTO of Ethereum. He wrote the original yellow paper. He did a lot of the early coding.

10:24 He’s doing a project called Polkadot now, and I love Gavin because he’s a builder, like in general. Okay, the reality is that DeFi and crypto represents a lot of opportunity for investors and things like this, but I have just enormous respect for people who actually build stuff. The reality is it’s hard. Just like it’s not an easy thing to do, but it also really makes a difference and especially when people are innovative about it. You know, I think there’s a lot of people who, it’s just so easy to take somebody else’s code and fork it and it’s basically the same thing again, and it’s like, all right, like, yeah maybe you can make a million bucks off doing that, but that’s not where the real value lies, right?

11:02 The real value lies in building, and so I respect him a lot for that, and he goes and gives this narrative in 2014 after Edward Snowden had released all the documents that he did, and he makes this comment about how we live in a world where we know we can no longer trust any centralized institution, and obviously we’ve got a lot of stuff going on in the world right now. We’ve just come through, you know, 2020, 2021 with COVID. We’re going through this thing with Ukraine, etc., and a million other things and I think one of the things that disturbed me going through a lot of that period was seeing the degree of institutional trust that some people have that they still haven’t realized this, and the problem is I watched something earlier today and they were talking about, you know, central bank digital currencies, and, you know, the ability to control things.

11:51 It’s like some of this stuff is kind of innocuous where you don’t care about it until you need it. And there’s a conversation on Twitter a little while ago, somebody was talking about decentralization and like, does decentralization matter? It’s like, well, centralization doesn’t matter until it matters. Yeah, and when it matters, it really matters. So to me, decentralization is at the heart of Web 3.

12:16 And the truth is there’s a lot of things that are put under the banner of that aren’t decentralized. You know, open c is not decentralized. A lot of things are not decentralized. Even some of the, like, main networks are not very well decentralized Some of that is just a function of time, because decentralization is a progressive process. If you were to go back to the original Bitcoin, like, you know, Satoshi was the only person running, you know, a Bitcoin miner, right?

12:39 Because he was the only, so it takes time to get there, and that’s understandable but at the core of the technology is the ability to be open permissionless, decentralized, so that if you disagree, like somebody’s censoring these transactions, okay, great, I can fire up my own server and I can process those transactions and I can allow it to go through, and whatever, and nobody can stop me. It’s not like I have to get permission from someone. So I think that’s the core, and you know, the key mechanism I’ve heard you talk in various different interviews about it.

13:13 It is when it comes up a lot, is the concept of consensus, right? You say, okay, well, once we have many people all over the world working on some problem, how do we agree on what is the, I want to say, the truth, but it’s not really the truth. It’s like, what is the correct order of the transactions, what happened, etc., to the accuracy of the data, I guess And that’s consensus, right? So consensus is of course the key piece of technology that’s necessary in order to make decentralized systems work And again, to quote Gavin, he did an interview recently and he was saying, you know, you can build, actually, I’ll give two anecdotes he said that I thought are worth repeating.

13:54 One is he said, you know, it used to be if you wanted to give money to your uncle, you’re sitting there on the couch with them and you pull out your money and you hand them some money. No problems. It’s like today you have to trust a bank to send money to your uncle. You shouldn’t have to trust a bank to send money to your uncle, and equally, you and I are sitting here conversing. That’s great.

14:12 Well, today most of the communication you have to trust Zuckerberg to communicate with someone. You shouldn’t have to trust Zuckerberg to communicate with your friends, and somehow along the way governments have made it as though this is normal, this is proper, right? They create this narrative of, like, well, what if that person is doing terrorism? And it’s like, look, for the last few hundred years you weren’t concerned if they handed their cash to their uncle.

14:35 Whether somebody was doing terrorism, who the hell are you to get in there and be involved in this And of course, what we know, you know, this very well is anytime you create systems that are permissioned, eventually the person who decides is the person you will least want to decide. And so it’s really, really important for the future of the world to build systems that are open and transparent and so on and so forth and trustless. That’s like one of the big things that gets talked about, but you’re probably the first guest I’ve had that actually really defined that and said you don’t want to ever have to trust any institution when you go to have a peer-to-peer transaction or a peer-to-peer communication.

15:13 Because that always introduces potential problems, right? Because there will be a point where you can’t trust that institution based on things that happen, yeah, in the market or in the world, and that goes with information systems with value transfer with lots of different things. Yep. Talk to me about the events we’re seeing in the world right now. Do you think when people, you know, in war zones or people in countries that are going into war or even people in countries in the G7 that have accounts suspended because of protest?

15:45 Do you think that makes them sit up and wake up about the trust protocol they have in their finances and start looking into, you know, crypto assets or DeFi as new options? I think so for sure, so, and I think this happens on two levels, right? So the one level is for the individuals, right? If you’re somebody in Russia today, and I mean, I have part of my work that I do is helping people with international business and finance and things like this, and I talk to people from Russia, and it’s like a they woke up and their US dollars and euros are not accessible.

16:18 Let’s keep in mind these are people who have nothing to do with the war, nothing to do with Putin. These are not people who, like, you know, all their oligarchs, whatever. This is just normal people, right? And they wake up and suddenly they have no access to that money they’re used to getting money from YouTube, they can’t, they’re used to getting money from Patreon or some payment process or Visa, Mastercard exactly, they’re shutting down. Exactly, everything is cut off.

16:39 The ruble has gone down massively, right? The stock market in Soviet Union or not, so Russian has basically gone down to close to zero in a lot of cases, right? Like 90 some percent. Yeah, it’s big ones. Exactly, right.

16:52 Interest rate’s gone up from, like, eight percent to 20. Yep, which crushes the real estate market as well. Yeah, so suddenly you’re in a situation, and you’re like, as an individual you’re saying, where is my store of value? Like, those people have to transact. It’s not like they’re going to stop transacting, right?

17:06 You have to go and buy bread, you have to go and get gas, you have to, whatever, and so what do you trust? Well you could say, well, what’s the next country? Which happens to be China, right? RMB, UnionPay, Alipay, we pay these things but after all these institutions just betrayed you, are you going to go trust China? Probably not.

17:25 So I think probably what you’re going to see is the emergence of a big crypto shadow economy that will develop in those parts of the world And I hope that happens. I think that’s actually a really good thing in the world, but then we have the other side of it, which is, what about all the other countries, right? If you’re any country in Latin America, in Africa in Southeast Asia, you’re used to holding U.S. dollars as your reserves, and you just watched one of the biggest countries in the world.

17:52 Okay, granted, the GDP is less than that of Spain, but still 1.4 trillion dollars a year or something, with 600 and whatever billion dollars worth of foreign reserves lose access, like that And you’re saying, hang on a minute, that doesn’t sound so good. I was holding my money in U.S. dollars or euros because it was supposed to be safe. This is a massive betrayal of trust. Massive betrayal of trust. And so then the question is, what are you going to go to?

18:22 And your options again are probably Chinese RMB, which some of them will, like, Chinese reserves are going to grow dramatically over the next 10 years, guaranteed. I think that just as COVID accelerated the work from anywhere the Ukraine war has accelerated the move to Chinese RMB and Chinese power. Chinese is going to do well out of this, which is really stupid for the West. It’s like they’ve weaponized the financial system, and you’ve probably seen this again when they try to clamp down too hard on something, it doesn’t, it reverses on them.

18:53 It, like, gets attention and people go out somewhere else. But the other thing is going to be, okay, obviously, the news was El Salvador, you know, declaring Bitcoin as actual currency, right? There will be other places. Now there will be other places that say even if they don’t declare it as currency, they’ll say, you know what, I think I’d like to hold some Bitcoin reserves on my balance sheet, because I don’t have to worry about sending it through the banks.

19:15 I don’t have to worry about this, and it won’t just be Bitcoin, because once you start holding Bitcoin, you start to say, well, hang on a minute, Ethereum’s pretty secure and with eth2 I can earn yield by staking it. So that’s basically like holding a government bond. Right here there you go. Yeah, right. Yeah, exactly.

19:34 Yield, exactly. So then what happens? You start holding these staking assets, you provide security to the network of Avalanche, Polkadot, Polygon, Ethereum, like, just start running down the list, right? And we’ll see how long that takes. We’ll see at what scale it is, but I think it’s the big Western countries or developed countries, I guess, you know, Japan and stuff are not Western I think have taken for granted their position and not really recognized look, like, you can just look demographically.

20:08 What’s happening, Africa is the only place that’s increasing in population The productivity is mainly coming out of Asia. Over time, we’re going to have an Indian Ocean-centric world for trade, right? And then if you’re like, you will lose that power, and you should be like, Vitalik wrote a great piece a little while ago, but legitimacy, I don’t, you say, no, no, I haven’t seen it, it’s great. He said, you know, legitimacy is the most scarce resource, and I think there’s a lot of truth to that, and it’s like you’re eroding your legitimacy with these people.

20:39 It’s really, you know, it’s kind of like, that you can spend 20 years building a bridge or building a reputation in 15 seconds destroying it, and they just don’t have that perspective. These things are precious, super, super precious, and they’re throwing it away. And so, you know, hopefully that’s a win for crypto. It should be a win for crypto. And so you think governments and even corporates and even individuals will start putting Bitcoin, Ethereum, other layer ones or other assets on their balance sheets over time?

21:10 Yeah, yeah, I would say, like, over the next 10 years. So, like, I don’t think that in the next six months we’re gonna see this flood of people doing that, but yeah, over the next 10 years I think that They’ve just, they’ve destroyed the trust, and the trust is literally the foundation of all of that. And so I mean, what’s the whole point of Bitcoin, right? It’s that, hey, listen, we don’t have to trust that you’re going to change your monetary policy. It’s that the monetary policy is built into the protocol.

21:36 And so yeah, I think that over time it’s going to go that way, and I think that if they were the only ones, it was only the Western countries, then they could say, okay, great, let’s regulate it, let’s try and, you know, box it in, etc. But the problem is, what they don’t, in their arrogance, realize is that there’s 1.1 billion people in Africa, there’s like between India and China who both now are saying they’ll trade with Russia in RMB. This is a third of the world’s population, like, what are we talking about here?

22:05 Yeah, you can’t exclude this much. It’s almost this European or American European-centric view of the world that’s been maybe true for hundreds of years. It’s going the other direction, and maybe they’re not realizing that, and not realizing that they need to build trust with these currencies, with these people, and it will go one way. This act in Canada, you know, what Trudeau, using the Emergency Act again, shocked and surprised a lot of people that a Canadian citizen might have their financial accounts suspended and even their crypto seized.

22:34 But again, another big wake-up call of not being able to trust a government. Seemed like a really another big wrong move by a Western government. Yeah, that signals to people you might want to own some crypto. If I was in Ukraine or Russia right now, I would want some stablecoins on my MetaMask wallet just to survive. Like, I would want that I can walk across the border with it.

22:53 I can do some trades with it. But you know, I don’t know if people were late to this realization, but I think a lot of people were. But you know, at the same time, what happens is you go through that, and all of a sudden, again, like the trust is broken, so now people start to say, hang on a minute, like, let’s make it, and you know what’s good about crypto is, as soon as you start using crypto, you realize that not only is it safer but it’s also easier.

23:20 Like, try sending a wire transfer today, such a pain in the ass, you know, whereas you just go onto your MetaMask and you put in somebody’s address and you send them USDT or USDC or DAI or us whatever it is, right? And boom, you know, it shows up there a few seconds later, and you’re like, well, that’s easy. Yeah easy button things. Yeah, when my Academy students start using it, they struggle to get the wallet set up, because at first it’s a little bit hard, but once they do, it’s like they’re like, wow, this is the way banking should be.

23:48 I want to ask you about something called self-custody, because it’s an important thing that again I don’t think I’ve really talked about as a point on this broadcast or this show, and it’s an important point, and probably goes right into what you guys do when you have all these new options of finance. One of the things you have is the ownership of that self-custody. And we were brought up in a world where the banking system was there, and whether we were told overtly or not, we always knew we could call the 1-800 number and get your account back.

24:14 I told my mom she’s 78 by the way, she’s in San Diego, she’s got a MetaMask wallet, she’s got stablecoin, she’s got Ethereum, and I gave her some Chainlink, you know, because she gave birth to me, and I said, mom, you know, if you went back to Phoenix, Arizona, where she grew up and went to the Bank of Arizona and said I had a account when I was 14 years old, can I, you check me, I think there’s 73 dollars there. I’m like, mom, they would actually probably go find that account, and they’d come out and be like, here’s 20 30 40 60. And they’d pay you.

24:40 And that’s a great example of maybe that little bit of a insurance option or insurance policy you have with the old-school banking system is that they will go find that asset. You don’t have that with these new crypto assets per se, and that’s a beautiful thing, and it’s also something for people to be aware of It’s probably also why you guys are in business as well, with DeFiYield. Talk to me about that concept of self-custody what should people know about it?

25:04 Because there’s that famous phrase, not your keys, not your coin, right? What are your thoughts on? Yeah, so I mean, maybe let’s back up and I’ll tell a story about my experiences. and something that I think is so, there’s, you can have crypto that is under custody of someone else. So when you mention, okay, in Canada they seize Bitcoin or something, they can’t seize somebody’s crypto from their own hardware wallet or something like that, what they’re talking about is you have money on an exchange, and they call the exchange up and say, hey, freeze this guy’s crypto, and this is a licensed institution who has shareholders.

25:39 You know, they’re like, are they going to endanger their whole business for you? Probably not, right? So really what’s going to happen is they’re going to say you know, off you go, which is a surprising shame that that happened, but it did happen. Exactly, right, exactly. So If you want to be in the world of crypto according to what we’ll call the Web 3 ethos, you want self-custody And actually this was what got me interested in DeFiYield, because back in probably 2018 I had had a couple exchanges where I was keeping all the money in, you know, my own wallet, but what I would do is I would transfer to a centralized exchange to cash out into fiat And there was two Canadian exchanges, Quadriga and Einstein and I transferred there, hit sell, exit, and I’d done this multiple times over the course of, I don’t know, two years or something, right?

26:32 And the times before you got the money had started to increase. I’m like, okay, I don’t really need the money, it’s not that big a deal for me. I can wait. The exchange rates are better here than somewhere else so whatever. Well, during the time from that time where I put the money in until I got it, they basically exit scammed.

26:50 Turned out there was like a whatever 163 million dollar scam. The guys didn’t have the money you thought you had the money, right? Because it’s there, but no, didn’t have the money. And yeah, it was a huge controversy. The guy had apparently gone to India and died, and then, you know, whether he died or not, who knows, but when the company started looking, they discovered, whoa, this money doesn’t exist.

27:11 And so that’s an example of institutional trust, right? You shouldn’t be in a position where you have to have institutional trust. And I always thought, look, if you believe in crypto, great, but centralized exchanges are antithetical to crypto. They happen to, even today, still serve a useful purpose. The reality is just that, you know, a lot of stuff is better to do on a centralized exchange, but that’s not the ideal.

27:37 And so I remember the first time my co-founder showed me Uniswap and I’m like, this is the greatest thing in the world, because I can keep my money in my wallet and I can swap and exchange it for something else. How fantastic is this, you know? Unfortunately I wasn’t somebody who lost a lot of money because I wasn’t keeping a lot of money on the exchanges, but I’d lost some and I thought I don’t ever want to go through that experience again. That’s awful.

28:02 And here off you go. So it’s true, there’s a lot of problems, or I’m not going to call them problems. There’s a lot of responsibility. Yeah, that comes with self-custody. Now I think to some extent that’s actually really good for society.

28:16 You’ve had Jordan Peterson on here. He talks a lot about the importance of responsibility. And I think we live in a society that people need to normalize taking more responsibility. So that’s good. At the same time I also think that the degree to which we have problems today is a function somewhat of the immaturity of the ecosystem.

28:36 So for example we will probably come up with social recovery wallets over time. There’s people working on it. It’s not that far away, and just quickly to explain what that’s about. So when you get a crypto wallet, it’s first of all worth understanding that a wallet is not a wallet in a physical sense. I’ve had some people who are like, oh, this my hardware wallet, my crypto store here.

28:56 No, your crypto, your secret recovery phrase is stored on here, your private key is stored on here, but actually the crypto is stored on the decentralized ledger, and so you can lose this, you can throw it into the water, and so long as you have that key, that secret phrase, you can go and recover it on any other device, and that’s no problem. So the risk is really that you lose that phrase. That’s really the risk. And so you say, okay, well, what do you do?

29:23 You maybe write it down in 16 different places and hide them and put it in your safety deposit box or break it up into different pieces or try and memorize it or whatever it is that you do, right? And it’s cool that you can memorize it, because let’s be honest, when in the history of the world, if you think, go back to World War II, you had all these Jews who were trying to get their money out of Germany, and you know, people were trying to bring what physical jewels or something like this, they could get caught, it could get confiscated. Here, literally you can memorize that 12-word phrase and walk across a border, no one has any idea that you have it at all.

29:56 You go to the other side, you plug in your MetaMask or whatever, you put in your phrase, and you’ve got all your money. Amazing. Yeah, a billion dollars, you could walk across a border like that, nobody has any idea. Cryptography at its finest. Absolutely, yeah, absolutely.

30:10 It’s fantastic. So that’s really cool. But of course, if you lose that phrase, it’s really bad. So a social recovery wallet is the idea that you could basically name, let’s say, 10 of your friends and that if you have a problem you could get 10 of them and it would automatically recover your phrase for you. Right, and say, okay, great, based on my friends they all identified yes, this is me, okay, and you could have some sort of like threshold encryption or something that would release it to you.

30:40 So I think we’re going to get a lot more of those solutions that will address many of the problems that, yeah, it’s a rocky experience right now. Let’s be honest, like, it’s there’s some friction. It’s, I learned, I got, grew up in a world of you know 1980s and early 90s computers, and I remember MS-DOS, you know, typing stuff out, and it was, that’s kind of like what cryptos were like today, right? But you know, now we’re in Web 2, and you know we’ll get to the advanced version of Web 3 where the usability is really high as well.

31:10 Yeah, I always told my students, like, right now I haven’t set up the you know cold wallets and the hot wallets and I always tell them, look, there’s innovation coming here, because so many people are having challenges with it. It’s going to be a very different landscape in 24 months and that’s good. There’ll be other options, but yeah, it’s amazing what you said, you could literally memorize a phrase and walk across the border. You know, my boys are young, they’re four and five years old, and they love stories about pirates, and one of them asked me the other night, I’m telling you, and Michael was crazy.

31:36 He said, he said daddy, why does a pirate have a treasure map? And I just stopped, and I’ve been talking to crypto people all day and I’m like, that’s like their private key. They have a bunch of assets they didn’t trust anywhere, so they buried it in an island, and they have a treasure map, which is like kind of a 12-word key. The problem is, is sometimes they can’t find the treasure, and so you go out of your way, and I see students do this sometimes, to try to hide these security keys everywhere, and they hide them from themselves.

32:00 And so it’s an age-old problem of trying to store your assets in a way you can trust, but obviously this invention of cryptography means that it can be protected with some information that you can memorize. But I agree with you. I think it’s important fundamentally for us humans to have a real relationship with our money, and we haven’t had it for a long time because we were told consciously or subconsciously that you’re not smart enough to manage your money.

32:21 That’s what the financial professionals do, the banks will do it, and I agree. When you make people really responsible for it, maybe people have a new relationship with it, and maybe they understand it better. My daughter’s 17. She owns an asset, you know? She owns, you know, Ethereum.

32:35 She owns a stablecoin that she can earn yield on. I don’t know about you, when I was 17 I didn’t own any assets, when I was 27 I didn’t own any assets. So we’re going the right way, I think, you know, as far as that piece. How does the, this, these ideas and realizations get you into DeFiYield, because you’re starting to maybe scratch your own itch a little bit or solve some of the problems that you’re seeing in the ecosystem? Yeah, I think with the company you found it.

33:01 Yeah, so I guess, you know, just going back to the original. I got my first experience as it well, my first experience at Bitcoin was a non-experience of Bitcoin, unfortunately. I first was, I remember sitting in a car with a friend gone and hung out late at night going out to some restaurant. I was like, hey, did you hear about this Silk Road, you know, like, oh, this Bitcoin thing, you think we should buy, and it’d just come down a whole bunch, and we’re thinking, like, ah, now, like we were too late, you know, this, and then it, like, spiked up to 1200 or whatever, and so we didn’t buy, we didn’t take advantage of that, but then what I started using it for was actually buying stuff online.

33:39 I had to pay for some servers and things like this, and got this experience. Wow, this is, you know, pretty easy, this is pretty nice. And it’s funny, because I look back at my wallet history now, and you know what, I was paying out a hundred bucks or something for a server, is like 67 thousand dollars something now. So yeah, seems painful in that regard. Could have just kept that money.

34:00 And anyway, forget about the servers. But so that was that experience, but I think obviously you go through 2017, and what was obviously a bubble, however, resulted in making a lot of money, and a lot of really interesting discoveries, and I remember looking at it and thinking, like, okay, so you know there’s clearly a good opportunity in this space. This is the ICO boom, the ICO boom. Absolutely, people are floating coins left and right, raising hundreds of millions in capital.

34:32 Some projects look viable, some just look like a white paper, and we don’t hear from them, but clearly it was a use case scenario. So you’re seeing that? Yeah, I mean, obviously at that point in time there was nothing really tangible being used. Right? It was like they didn’t really, if you think, it was pretty late in 2017 that we started to see more use of stuff like Tether.

34:51 Right? So mostly the trading pairs were Bitcoin back then, and it was pretty difficult to get in, you know, just was just not as sophisticated in an environment, and really you had like Ethereum and Bitcoin were kind of the real projects that were doing something. Right? And it took some time to go through and actually start to develop what ultimately came out in 2020 as being really great. And so we kind of knew, okay, there’s some opportunity there, but you have to figure out what that opportunity is, and I think as an investor that was myself and my co-founders.

35:28 We’re investors, and we started to see in 2020 wow, you know, there’s some good investment possibility here. Holy Chainlink is doing this cool stuff, and I understood the oracle problem and some of these, but the big thing was wow, we have this non-custodial ability to do lending, non-custodial ability to do swaps you can earn yield, and when, as soon as you have swaps, you have yield farming, right? Liquidity provision and I, as from an investment perspective, I had kind of traditionally come from, like, a value investor perspective.

36:05 So for anyone who’s not familiar, what this means, basically, is you’re paying attention to, like, what are the cash flows of the company, what are the underlying assets, and when you have a non-productive asset, such as Bitcoin, right? Bitcoin’s a non-productive asset. It just sits there. It’s like, okay, how much is this worth, how do you figure this out? Well, suddenly with DeFi you could actually earn yield.

36:26 Well, now I can suddenly think, this is great, there’s some great possibilities here. Now you have weird stuff, because it’s like SushiSwap, Sushi, what the heck is that? You know, I remember going to my wife one day and I was like, yeah, you know, I’m staking some cake on Beefy. It’s like that, I bought through PancakeSwap. It’s like, what the heck is that?

36:46 You know, it’s like, oh, well, cake is the, you know, Uniswap of BSC. It’s like, what, this is some sort of alphabet soup jargon here, but I was earning, you know, whatever it was at the time, 800 percent or whatever yield at the time. This is great. And so that was like the early experience, was us as investors just exploring this. And as soon as we decided, all right, we’re going to deploy hundreds of thousands or millions of dollars, you start to think, well, I better figure out that I understand what’s going on here, so let’s hire some technical people who can go and can audit smart contracts.

37:22 Let’s start looking into it. And then natural evolution, I think, for us, and it turns out to work really well with crypto, because one of the powerful things about crypto is the community, right? Is we start, we created the first Telegram group on yield farming, which exists today. It’s great. Anyone who’s interested can go and sign up.

37:42 And we started to talk to people about, you know, what their experiences are, where’s the best yield, etc. For the last couple years we’ve done a daily APY report. We put on Twitter so people can follow it, and we started to open source our research, right? So we have a CFO who goes through and researches from one perspective. We have technical people who review the smart contract.

38:02 At first it was fairly, like, fairly simplified. It’s not like a full audit like you’d see nowadays. We have a really sophisticated audit team, and we’ve audited some of the project top projects, like ParaSwap and Olympus DAO version 2 and the bridge for Harmony and stuff like this. But at the time it was, you know, simple to try and make sure we don’t lose money. And yeah, that was kind of the first step, and then from that step started to be, well, you know what, it’s kind of complicated.

38:29 We need some tools to do this better. We need to keep track of what’s going on with our portfolio. We have money all over the place. Where is it? How much have we made, how much we’ve lost?

38:39 Nobody really knows. You’re tracking it on Google Sheets or something like that, then you’re worried about rug pulls and exit scams and people front running and, you know, flash loan attacks and stuff that you have to try and figure out what all that is right. And so we said, all right, well, let’s build some tools, and again the same principle, right? If we’re going to build something for us, we might as well open source it for the community. We might as well make it available to everybody.

39:02 And yeah, so that was kind of the start of DeFiYield. I guess. Wow, and so when did you know it was going to be something that was going to start being used by everybody. Potentially they were going to be plugging their MetaMask wallets in and their hot wallets in and using your dashboard? It’s a good question.

39:20 You know, so I think for us there was a real turning point, which was a really bad experience. Actually it’s in our book for anyone who wants to go check out, they can read the Wall Street arrows over it’s a great book about DeFi, and so we were somewhat more risk-averse, I would say, than some of the investors in the space. Some people are just total degens willing to go for the million eight percent APY, you know, farm for two days and get out, hope that you don’t get scammed and jump on to the next one.

39:50 We were not quite so crazy. You know, we had money from previous businesses and you know, once you’ve made the money you don’t really want to lose that money. So we were being fairly conservative, and one of, I remember specifically, I was in Dubai and I was walking with my one co-founder, and we were talking about there was a project called Compounder, and it was paying about a hundred percent a year on stablecoins. Sounds great, right? I mean, 100 on stablecoins, stablecoins, you don’t have to worry about the volatility.

40:21 There’s something called impermanent loss. We’ll probably talk about it later, but we’ve kind of discovered that when you have two coins that are volatile, you get this impermanent loss, and if you’re stable, going to stablecoin, you really don’t have that. So we’ve eliminated that risk, and it’s like two days later or something, they rug pulled and it was, like, collectively lost like 1.2 million dollars or so. Yeah, not a great day. Rug pulls when they just disappear the protocol.

40:49 Yeah, so normal. I mean, there’s different ways that they can rug pull, but one of the most common ways would be doing something like infinite minting, which is basically your tokens are in there and there’s a token pair, right? And so they will print like a billion of this token and sell it, and as a result it just drains all the other, the liquidity from the other side out, and off they run with it. So that’s one way. There’s migration functions and contracts that they can take something and they can migrate it to some other contract that allows them to change something.

41:21 There’s a bunch of different ways but bottom line is it’s some sort of a scam where the people built it from the beginning in order to run away with people’s money, and I don’t remember what the total was. We’d have, we have a REKT database and you could look it up. I think it was 17 or 34 million or something. It was stolen from this particular one, and there have been a variety of them since then. But yeah, all right, so that made you wake up and say, all right, we need to make sure this doesn’t happen again to us and to anybody else, and so that’s when you started building some of the tools and DeFiYield.

41:53 Yeah, yeah, I think that was like a really big turning point, right? We were working on some things before then, but it was, yeah, it was a big wake-up call. And so that was probably around, so that would have specifically been in November of 2020 if I recall correctly. It’s always the painful lessons that get you to actually create change, and you know, build the best stuff. You know, it’s usually not when you win, when you create something, you know, amazing.

42:21 It’s usually when something hurts and you’re like, okay, how can I make sure this doesn’t happen again? Yeah, and I see a lot of innovations with you and so it’s interesting how you talk about, you know, because I’ve been teaching this now for almost a year, and it’s hard. There’s not a central place to plug in and find out where all your yields, where your liquidity pools? I want to see all my NFTs. I want to see all of these different chains.

42:42 I want to see my AVAX. I want to see my Polygon. I want to see this, and I always say you guys built what I wished MetaMask would have built, or you know, it’s the technology that I really need that I feel like I should be able to plug in and see, and you guys have built it and more. especially when it comes to your scanner and your REKT database, because I think in real time you guys can plug into any address and then find out if there’s any bad history in that, and I know that tech is coming.

43:08 What’s the best way to talk about some of this functionality? Can I show the front page every? Yeah, absolutely. go ahead and show. I want to put this up on screen, because this is something that all my students have been using now for months.

43:19 Inside the DeFi Academy, I use it. All my team here uses it, and that’s by choice. And this is the front page of it, and you can see, you know, the left-hand column where you’ve got all the different features there, pools, staking, yield, and then what’s really impressive on this front page is all of your networks, and maybe that’s what we call out right away, because I think you guys, I’m guessing, started with Ethereum, but now you’ve got quite a few protocols, 18 chains now.

43:47 That’s impressive. Yeah, it is. I mean, and I’m just looking at them here you got Phantom. We just had Michael Kong here. You got Avalanche.

43:54 We’ve had both of their founders here. Polygon, we’ve had Cendeep here. Terra obviously really doing well right now, top 10, change UST is doing great with our algorithmic stablecoin, Moonriver. We actually went in on the parachain Polkadot auction on some of the things they’re doing. Solana obviously I mean, there’s a lot of protocols here, and some I’m less familiar with.

44:12 Boba and KCC. And I mean, I’m guessing this takes a lot of work to code, but you wanted a one-stop shop where people can go in and plug in and see everything they’re doing. Yeah, yeah, our vision, if you think about it, is to say, okay right now, how many DeFi users are there? A few million. I think MetaMask has like seven million registered users, something like that.

44:34 Now if you just compare that even to crypto, the last I saw Coinbase had 78 million users. If you think about how many people are hodling stocks, it’s, you know, a bunch more, right? And so DeFi has been the fastest growing technology in the history of the world. We figure it’s going to grow at least an order of magnitude, probably two orders of magnitude more. Well, two orders magnitude would be tough, just world population constraints, but you’re talking about a billion users.

45:05 And so the question is, all right, like, what are the barriers to bringing on a billion users? And to me, based on talking to all kinds of people and my personal experience, I think it’s kind of obvious that number one, the usability sucks. It’s just really, there’s a lot of friction to getting started, and even once you get started there’s a lot of friction to continual engagement with it. The second is safety. Right, people are concerned about losing their money.

45:34 I talked to a hedge fund manager a little while back, and he was saying to me, hey, where do I get two percent interest on my bank deposits? Well, aside from that being sad, let’s recognize that it’s really hard to get two percent interest on bank deposits in most parts of the world, and so I was like, well, you probably should put the money into stablecoins, and the immediate question is, isn’t that dangerous? It’s like, well, it can be, you know, certainly it can be.

46:02 And so you have to be able to address that and figure out how do we make it not dangerous. So our mission is to provide a single place that people can go and they can manage all their DeFi investments. They don’t have to do anything else. They don’t have to go to 20 different Telegram and Discord channels. They don’t have to follow stuff on Twitter.

46:21 They don’t have to go and sign up for this here and this here and this here and record some stuff on Google Sheets and try and pull it together. You can go to one place. Super simple, great user interface, great user experience, and you can do all of your DeFi investing, and I wouldn’t even just say DeFi and say all your crypto investing, because we include NFTs and things like this. Yeah, so that’s kind of the vision of it. And so in order to do that, what do we need?

46:48 Well, we definitely need integration with all the protocols that people are going to use, and I think, you know, so we’ve got 18 chains right now. We’re adding, I think we’re supposed to be up to 30 by the end of the year or something like that. And we have, realistically, most of the major ones that you would want at this point, but we’ll continue to add more. But I think the part that I’m most proud of, and to speak of the kind of the technical challenge, is we’re the only ones in the industry who have both EVM and non-EVM compatible chains.

47:15 So it’s one thing to say, okay, well, I have Ethereum, and now I’m going to do Ethereum compatible chains, to add Terra and Solana, which are not EVM compatible, is quite a technical thing. And so one of the things that we did over the first year of our development was just work hard on building the underlying infrastructure that would allow us to do some things that other people can’t do or at least can’t do easily. And so I’m really proud of that. I mean, we have a great technical team and they’ve done an awesome job.

47:43 And so we’re going to continue. Yeah, it’s super impressive. I met Matt, one of the guys on your technical team. Super impressive. And again, I’ll go back to this dashboard view, because you know it has some basic features here, where it’s got like net worth, 24-hour P&L, and just like all the basic stuff that you would kind of hope to see on a dashboard, which right now doesn’t, I really exist in DeFi, like you said.

48:05 You got a wallet here, and maybe you’ve got a PnL software over here, and maybe a tax plug-in over here, but that has APIs of the different, it’s just messy. And again, sometimes you result to a spreadsheet. You know, I won’t lie, I got a spreadsheet out there as well. So it’s like, but I don’t, when I have to, when I get to use your stuff. And again, we’re going to go to some of the other features on the sidebar.

48:24 You can see you’ve got NFTs, pools, staking, and then again you’ve got your scanner, you’ve got your IL calculator, which is really important, and we’ll touch on that a bit, and then you got your REKT database and your scanner, of course we’ll talk about that, but again some great features. And again, we’ve been road testing this, and all of my students use it now for their yield swaps, for their liquidity pools, and then just show us that their hot wallets are set up. That’s what they use they use kind of screenshots from what you guys are doing.

48:51 I’d love to jump in and here to where you show people how they can look at liquidity pools and even the yield farming opportunities here, and there’s a slide that we have up there that shows explore opportunities, and you have literally things from Curve and Uniswap, and this is another great feature, because I found early on, and my students were saying, how do I know where to go to do these things? I have to check four different top protocols, and I can’t compare them in real time, and you know, maybe walk me through here, but you guys have a drop-down menu, and you can select here, you know, LP stakes and you know, IL, and stuff like that, and maybe just talk about some of those features? Yeah, so again, just, I always like to zoom back to the overall mission of, if you want to have a single place that people can go, what is one of the first things they need, and that is, okay, what do I buy, what do I invest in?

49:40 Right, which again, like, you basically go on to Twitter, you go on to Discord, you go on to Telegram, you talk to some people, you try and, like, scuttlebutt around it. It’s hard, right? So we have, like I said, since 2020, been doing this daily APY report, which is, you know, useful, but you gotta go check out our Twitter every day, and you know, it’s always changing, and things like this. So we’re building this page, which is the explore opportunities page you’re talking about.

50:09 We have a certain amount of it integrated now, and we’re rapidly improving it, where you can just go and you can filter it. It’ll show you literally thousands of possible in this case, particularly yield farming opportunities. Maybe just quickly to explain yield farming so people understand so the idea of yield farming is that in a normal situation let’s say that you’re going to swap two tokens, right? So I don’t know, you want to convert from Ethereum to USDT there will not be an accurate match of who’s buying and who’s selling, right?

50:43 And so what happens is somebody is the market maker normally and they facilitate this proper match. Now in decentralized finance, what happens is anyone can deposit token pairs. So you would deposit Ethereum and USDT in this example, and your funds would be used to help facilitate that swap from one to the other, and so there’s fees charged when you swap from one thing to another. So the person who deposits their funds in there, they get a percentage of those fees, and that’s going to be based on how much swapping there is, as well as how much money there is in the liquidity pool.

51:16 So it’s great because you’re holding these funds anyway. You can be earning some yield on them. You’re helping somebody else to do some sort of a transaction. It’s all non-custodial. Nobody has to hold your money, you don’t have to hold their money, etc.

51:29 Everything’s good, and so yeah, it’s just, it’s a great way of being able to earn some yield off tokens you would probably hold anyway and yeah, I think I had Tara and Chitra from Gauntlet on the show, and he was just like, he said Brian, I was amazed by how much demand there is for liquidity pools and how people really want to provide these two tokens out there and earn yield via liquidity pools. He never thought that would be such a big market, from even retailers but there’s lots of opportunities, and it’s also, there’s tons of opportunities everywhere, but it’s hard to compare them all. Yeah, exactly.

51:58 That’s one of the common questions I get from people is, hey, where do I find the good yield on X or whatever, right? So aggregating all that information, which actually again is actually a really technically challenging problem, like working on figuring out okay, how do you aggregate all this information and how do you show the yields in real time and make it accurate, and all this, very, very tough. But anyway, that’s one of the things our team has worked quite hard on and continues to work on.

52:22 And so once you have that list, then you can filter it, because again, are you going to scroll through 50 pages of stuff? Probably not. So you can say, all right, show me all the stablecoin pools, I only want to deal with stablecoins, or show me the single-sided pools, I just have to worry about one asset, I don’t want to have to worry about two assets, or show me the ones that have such and such security rating. We’ll talk about the scanner in a second, show me whatever.

52:44 And so you can filter based on the parameters that matter to you, and then right in one click you can add liquidity, you can remove liquidity. We’re building a feature called multi-harvesting, which is where normally what happens is that you deposit into a variety of pools, and you have to harvest your yield, so you have to go and claim the rewards that you’re getting, and every time you do that it consumes some gas, and it’s kind of a pain, so we can with one click harvest across all of the pools that you’re in on a given chain, and so it saves you some gas, which is nice, and just is an easier user experience, right? So that’s one of the functions that we’re building in there.

53:18 Nice. One of the things you have also is the impermanent loss calculator, and I won’t dive into the deeper part of this, but it’s something that always comes up with liquidity pools. It’s something that takes a little while for students to understand, but the good news is that there’s a slide here, and people can go in and they can actually learn, because you guys have videos right here about impermanent loss, which takes you know a few weeks to really understand, and I’m coming from a former Wall Street derivatives trader with an MIT degree, and it still takes a little while to get used to, but if you’re going to be in the old farm business, you need to understand it, and you guys walk through all the details of IL.

53:53 Yeah, this really goes back. I was actually one of the earliest tools that we built, because we were again yield farming ourselves back in DeFi summer and realizing, hang on a minute, we’re not making the amount of money we’re supposed to be making here, what’s going on, and discovering, oh, there’s this impermanent loss thing, which might or might not affect you, right? It depends on the pool, and so we developed the most sophisticated impermanent loss calculator in the industry that you can play with all these parameters.

54:16 You could figure out, okay, what’s really happening here, and therefore you can make better decisions. And probably, realistically, we’ll probably build some intelligence into our explore opportunities that we’ll just aggregate that for you so you don’t have to actually use the calculator. That’s super cool, and again, people can dive in and really see how deep you guys go on that. It’s super impressive, and all my students are looking at that now when they do their liquidity pool trade in week three, we get them right into that, because I want them to experience that, because it’s a big part of DeFi.

54:46 I want to throw up a quick slide, because this is the biggest question I get inside the DeFi Academy. And the biggest complaint is gas. All right, and again I only have four weeks with my students for our first course and I really push them into these DeFi protocols, and I tell them just pay the gas, get the trades done on ETH, because that way you’ll at least understand what DeFi is, and if you want to migrate over later to an AVAX protocol or whatever, you want, great, but right now pay the gas.

55:10 And we’re putting a slide up here that you guys literally track the gas prices. There’s a seven day history. I think it even goes back further. You’ve got your instant gas your standard gas. This is really helpful, and I’m sure it’s a feature that a lot of your people asked for probably.

55:26 Yeah, I mean, obviously, so anyone who’s actually done DeFi, you’re going to quickly discover, just, again, give some background for anyone who isn’t familiar. Probably people are, but any time you do a transaction on a network like Ethereum, Avalanche, Solana, et cetera, there is a fee associated, and it’s what they call gas, right, which means you have to pay some ETH in order to do that transaction. And unfortunately, in ETH in particular, the prices went nuts.

55:53 So what unfortunately had happened by, say, the end of DeFi summer was that if you weren’t playing with 10 grand at least, the gas costs would eat up your profit, so you really couldn’t make any money. And anyway, so it’s important to know, okay, what are the fees, how much, how are they changing, is this likely a short-term spike or is they gonna go down? So hence you have the history there, and I think it’s, yeah, it’s useful for people to know that this is the case, and then they’re gonna start to make decisions.

56:23 Of course that can help them to reduce the gas fees, and some of our tools will help with that. Super helpful, and again, like, I don’t see that anywhere else. You know, it’s like, it’s just like, boom, it’s click, that’s upper right-hand corner, and bam, you get to see it, and it’s, I don’t know, it’s also just somehow comforting to have a dashboard. You know, every entrepreneur wants a dashboard, and when you have that you feel like more in control of your business.

56:43 You know, like, I can check this, I can check this. It’s like being, you know, the Starship Enterprise, you know, Captain Kirk’s on the bridge, right, because that way he can know what’s going on, he can see the Klingons in the front, he’s got the spot, can tell him this. It’s like you want that dashboard, and I feel like DeFi hasn’t had it until what you guys have built, and that way you know everything’s there, you can check everything, and I don’t know, it’s somehow calming, and you know what’s going on, you can make quick decisions, you’re not quite, not waste a lot of time.

57:07 It’s interesting, you know, I have paid a lot of attention over my life to productivity, and it’s interesting how really simple differences in behavior make a big difference in how you’ll act, and I noticed this myself using our platform. Realistically, okay, I’ve got my MetaMask set up on a bunch of networks. I can click to switch from one network to the other to see my balances, but just being able to go to one page and see them all, not having to change between them, is a big difference.

57:38 Right, even though you’re like, okay, well, it’s like two seconds to change it, it’s like, yeah but it’s really not. It’s really like, this is so much better. That one simple thing, and then you add into it some of the stuff, like, I mean, you pointed out the historic balances. I think this is something nobody else has this and are you making money or are you losing money? That’s not an immediately apparent thing.

57:59 So again, it’s super technically challenging to put in. We spent months being able to be able to show you, like, are you making money or losing money, how much are you making, what about impermanent loss, what about all these things? But it’s really important, and it’s especially important, you know, we’re talking about bringing on big players. If you’re running institutional capital, 100 million dollars, do you think you can do this without being able to show your clients a P&L?

58:22 Not at all, not at all. And so you’re like, okay, well, how do we keep track of this? Are we gonna do it manually? You know, so having an automated solution to do that is just so much better, massively helpful. And I’m on MetaMask, and I’m on multiple chains, and I don’t go and check.

58:37 In fact, when I pop over to the default, I’m like, oh yeah, oh, I see my iraq’s position. It’s like, oh, I’m reminded of it. You’re right so because you just don’t bounce around to your wallets and change your things, and if you do, you take a look at it. The human brain is not very good at tracking P&L. That’s why I think most crypto day traders make they lose money because they’re, they remember that they always talk about the one trade that made money.

58:58 They don’t actually know their monthly P&L. I came from Wall Street, where, Jesus, everybody on the floor knew your daily P&L. They knew in Tokyo before you got in, and the managing director was sitting at your desk when you got in the morning if your P&L was bad. So I come from a place where daily P&L was how we judge people. and I get my students to do monthly P&Ls, and that’s what we post.

59:17 I don’t care if you had a great Shiba trade. What’s your monthly P&L? It’s like, is there money in the till at the end of the month? If not, then that probably wasn’t a successful trading month. So yeah, you guys track that really well, which is really important, and not many softwares do.

59:31 There’s also the NFT section, which is amazing, and it shows our recent NFT mints, because you guys got the 1155 protocol NFTs in there, which is great, and some other, some of their wallets don’t have those. So that’s great. The staking, super important, because so many people are doing more staking these days. Steven’s a huge thing. Absolutely, it’s massive.

59:50 I had Dan Tapiero here of 10T Holdings, and he was talking about Kraken and he told me on camera on the livestream that he said Kraken will make 400 million dollars this year off staking, and he said, we didn’t even have any P&L for staking at the first of the year. That was last year, he said. So we’re smart guys, we didn’t even have anything estimated for staking. It’ll make us 40 million, he said, we’ll make 1.8 billion in cash this year. I was like, okay, you’re telling me too many numbers, but obviously it’s a big market, it’s blowing up.

1:00:17 But none of this is actually some of the super exciting and cool stuff you guys are doing, because it gets better, because the feature where you actually go and scan these protocols is something that I think is almost next level, what you guys are doing. I mean, what you have, we just talked about is important, and the market doesn’t have it, but this scanner feature is interesting, and I think I’ll pull up a scan you did on SushiSwap, sure, and it’s quite a detailed diagram, and again people can obviously check this for themselves as well, but what are we seeing here? Because we see the SushiSwap protocol, which by the way, it’s a protocol a lot of people use.

1:00:54 People probably never even dug down and found out, well, what actually happens there, and that’s what you guys do, right? Yeah, yeah. So once again, going back to, you know, an experience of losing a bunch of money, which is a terrible experience, right? But unfortunately, I mean, we did some research, and according to our surveys, like 75 or 80 percent of people, sorry, in DeFi had lost money to some sort of hack, scam, fraud, whatever, right? So it’s a big problem that has existed.

1:01:26 And I liken it a little bit to, remember, in like Windows XP days, where there was just tons of malware and viruses, and people started moving to Apple just because they got to avoid it. But today, what do we have? Well, because of all the virus scans, they’re so good that there aren’t really all these problems. And if you listen in Congress, there’s like, they bring this up as an excuse to try and regulate crypto, right? It is oh, people are losing money from rug pulls and flash loan attacks and hacks and scams and all these sorts of things, like if the government has their way, their solution to this will be regulation.

1:02:02 And you have to be aware, regulation will come. Regulation is coming for sure. It is, but to the extent that we as a community can clean the space up ourselves, we don’t need that regulation. And let’s be honest, that’s a much better solution. I always think that we should look for solutions in technology before we should look at some sort of a regulatory solution.

1:02:22 Obviously, there’s, you know, I don’t want to fly on a plane that isn’t under regulation. It, you know, strikes me as being a good thing, but it’s kind of the story of, if you’re a doctor who’s a surgeon, you want to certainly do surgery. If your hammer you want to pound a nail. Right, same idea with regulators. And so I’m really excited about what we’re doing in that space.

1:02:42 We have built a very sophisticated audit team. We had some of our top investors Stephen, the founder of Harmony, for example, cyber security background, saw what we were doing, loved it, invested Kain, founder of Synthetix, one of the OGs in crypto, saw it, loved it, invested A bunch of, like, really sophisticated people have come in specifically because of seeing the cyber security side of what we’re doing and so how does this, how does this work? The basic idea is that if you wanted to be in a position where you were to look at a new protocol and you say, wow, the yields are really good on this, it looks really exciting, but is that a scam?

1:03:20 Is that a rug pull? How are you going to figure that out? Well, the answer is you typically either wait for an audit to come out or you do an audit yourself. Now for someone who has no idea, an audit takes usually a few weeks and can talk cost 10 to 150 000. It’s an expensive, slow process.

1:03:40 The way that it works in crypto is usually the best yields are early on, and there’s a whole bunch of reasons for this. They provide liquidity incentives and things like that, so you want to be able to get in on that opportunity, but you’re like, do I take the risk or do I miss out on the opportunity? You know, which way do I go? You shouldn’t have to make that choice. You should be able to choose, hey, look, I can see what the risk is, and I’m going to make the decision accordingly.

1:04:06 So what we’ve done is we’ve essentially automated the smart contract audit process. Now there’s some nuances of how it’s different, because it’s specifically from an investor standpoint. So when an audit gets done normally the project itself is paying for the audit, which has some biases involved in it. We were the first ones to do free audits for the community, where we’d ask the community which audits we wanted done, our team would go and do it we’d open source it for people, and so we’ve done a number of them.

1:04:32 You can go and check out some really significant protocols. But being able to come and do it from the standpoint of what are the risks to you as an investor that you might lose money on this, and specifically that it’s a scam, right? Like, obviously, okay, the token just might not perform well. The market, that’s okay, that’s going to be what it’s going to be, but this is malicious or not necessarily malicious, but it could be careless coding, bad security.

1:04:59 Absolutely, and there’s lots of that that happens. I mean, you’ve got to respect some of these people who do flash loan attacks. These are very, like, people have thought through just insane little nuances of vulnerabilities, so you want to identify those as much as you possibly can. And so our process will go through and it will scan this contract in, like, two seconds. You’re mentioning you can put in anything, it’s any on certain chains.

1:05:23 We’re gradually rolling it out to the various different chains but yeah, anyone that’s on a chain that we support at the moment, and it will be eventually all the chains. You can put the smart contract address in there, you can click the button, and in, like, two seconds it will come back with a security score for you. It will tell you what the issues are, whether they’re high risk, low risk, medium risk we’ll show you where in the code it’s something wrong.

1:05:45 We’ll give you a recommendation on how to change it. So, like, we have all sorts of developers who love it, because they’re like, hey, I want to run my code through here to figure out if there’s a risk before I deploy the code, because maybe I’ve been careless, right? Which is, it’s great, I mean, I think that’s a wonderful thing. The added part to that that we’re working on, which is going to make it really, really cool, is realistically people are kind of lazy, right?

1:06:11 It’s the way that it goes. So is every person going to take every smart contract and put it in there? Probably not, right? So what we will do instead is the moment you connect your wallet to our platform, which, again, the hardware platform is non-custodial, so you know that’s great. You don’t have to trust us with any of your stuff, but it will scan your wallet, and it will look at any of the different smart contracts that you’ve approved, and it will tell you, hey, this is high risk, so maybe you should do something about it, and if there’s some sort of change in the smart contract, it will notify you that that’s going on.

1:06:45 And if you go to swap or add money to a liquidity pool or something, it will show you before you do that what the security scan is. Because we did research internally, one of the good things about our scanners, we can scan every contract on Binance Smart Chain, and we found that, like, eight percent of the Binance Smart Chain contracts were honey pots. What’s a honey pot? Yeah, what’s the honey pot? So a honey pot is where you can buy it but you can’t sell it.

1:07:08 And so what do they do? They say, hey, everybody likes Shiba, let’s create a fake Shiba and hope that somebody randomly clicks on the wrong thing, they’d buy it, we’re going to get the money, and off we go. So you want to know that in advance, right? So again, it’s like, Umar, the founder of ParaSwap, saw this. He’s like, we love this, great, I want to invest with you guys.

1:07:26 And so he’s one of our great partners. We love Umar, we love ParaSwap, they’re great. And yeah, so it’s super cool technology, nobody else has it out there. I don’t think that anybody else realistically is going to build it just because you have a bit of this innovator’s dilemma situation for auditing firms. They’re making millions of dollars off of doing paid audits to be fair, what we do is not a full audit.

1:07:48 Like, if you were getting an audit on, say, your project, they’ll look at things like gas efficiency. We don’t really care about that. We’re just carrying from the perspective of the investor. Right, right. But yeah, they kind of like, what are they going to kill their business to go and do that?

1:08:03 And so I think it’s a really valuable service we’re providing to the community to the ecosystem. I’m really hopeful that it will basically be like, like doing what virus scans have done for the mainstream computer industry, and just it’ll change the incentives, because people will say, well, you know what, it’s not worth it, because everybody’s using this software, we’re not catching their money anyway, so we’re just not going to make the scams. And that would be a really big win for us.

1:08:27 If that happens, I have, like, one student a week that has suffered a scam you know, plugged into something wrong or did something wrong, and that adds up. I mean, that’s, know, 50 students over the times, and we usually workshop it on the call, and sometimes it’s a lot of money, and it’s just like, we’re all walking through it and listening and learning, but, man, I mean, this would help a lot. And I’m looking at this SushiSwap evaluation. You’ve got a security score here, you’ve got the total issues found, you’ve got, you know, all these different ways, and you know, boom, like, all this data is there.

1:08:57 You’re showing safety scores, privilege scores, economic scores, social sentiment scores. I mean, it’s a lot here. Yeah, yeah, that’s version two of the scanner that you’re showing there, so people can’t, unfortunately, play around with that, but you can play around with the other version of it right now. Right, and, like, I said, it’s super, it’s like magic when you punch it in the first time. I remember going around showing it to people, is like, hey, check this out, you know, grab this token, like, wow, that’s amazing.

1:09:22 It’s just unlike anything else that is out there. It’s amazing, and, like, when I first heard, I was gonna call you and Matt and Gabriel I was like, when you guys showed me that, I was like, wow, you know, you got my attention, and I’m sure that got a lot of people’s attention, because it was something very special. Obviously, some real human thought in there, some innovation I know you probably have AI helping too, but it’s, and like you said, probably something that maybe someone else doesn’t recreate in the space, so we have amazing first mover advantage.

1:09:47 One thing I wanted to also show, while we’re on this subject is this REKT database, because this is something I guess you’ve built over time, and, uh, maybe you can explain what’s on the screen, because I’ve just kind of put it up here. Shows those total funds lost at 3.1 billion. Explain what’s going on here? Yeah, so as part of, you know, kind of what we’re doing for the community, as well as part of building the smart contract scanner, we had to go and study how are people losing money.

1:10:19 So our team keeps track of every major hack and scam that takes place in the industry, and we catalog them here. You can go through, and you can sort by, you know, who were the auditors who allowed that to get through. So you know, you can find out if somebody’s maybe a good audit or a bad auditor. You can go through and you can see what the types of vulnerabilities were there, and our team has manually verified but gone through the code and said, okay, like, what happened in this code, and that’s allowed us to build a database, what we call our weakness pedia of vulnerabilities in smart contracts in order to build this smart contract audit scanner.

1:10:52 So it’s a pretty cool thing, just to see, you know, what’s happening with the REKT database. It’s amazing, and, like, you people can go see the numbers. It’s like Poly Network 600 million, August 10th, Vulcan Forged 140 million in December, Boy X, High Speed, Cream Finance, Badger DAO. You guys got the details, and again a human has gone in here to check them, and people can go through this, and again you’ve compiled the total, uh, attack vectors, uh, from 2021 so you got 304 exit scams, 182 honeypot cases, 91 platform specific exploits, 25 flash loan cases that you were talking about, uh 19 access control.

1:11:27 You’re smiling, right, because you’re like, it’s pretty amazing. It is, absolutely. Yeah, it’s called cool data, it’s pretty cool data, and like, again, you guys have it all right on top of a pretty badass dashboard as well. I mean, it’s impressive, it’s really impressive. Which you guys have done, and so people can go and look at that and just get a feel for some of the major ones and really get up to speed too on maybe what it looks like there in the sometimes uncertain world of DeFi.

1:11:53 A lot of people in DeFi, even that have been there for a while, won’t know those. No attacks. No, yeah, maybe we could talk about those attack factors, because we mentioned rug pulls, we mentioned the honey pot, platform specific exploit, or maybe a flash loan. Is it worth explaining what those are to people, because you know, flash loans happen when you do something like a Uniswap swap or maybe. So, yeah, so a flash loan attack is requires understanding first of all is what a flash loan is.

1:12:24 So there’s a really, really cool innovation in DeFi which is if you understand that in an Ethereum block there is a whole bunch of transactions right, and what they discovered is, oh, you could borrow an unlimited amount of money provided you paid it back in the same block. And so basically blocks get processed as a bunch. Right, so because it’s basically like, if I borrowed and I repaid it all in one block, it says that nothing really happened, right? And what happens if you don’t repay it?

1:12:56 Then the first transaction just gets nullified, and there’s no big deal. So because of the fact that you can borrow an unlimited amount of money, a normal person could become a super whale for, you know, a few seconds, right? And what this allows them to do is, for example, manipulate pricing oracles. Okay, so what’s a pricing oracle? Pricing oracle is basically a piece of software that is recording from some sources the price of a given asset.

1:13:25 And so, I mean, there’s a variety of different ways, and sometimes there’s 17 steps involved in a flash loan attack, so you know, without getting into, like, the super complex nature of it, what would possibly happen is you would take a flash loan. You would run over here, you would buy something, you would run over to this other place, you would then sell it, driving the price way down. Then you would go and you would take something else and you would buy it at a super low price.

1:13:50 Then you would come over here and you would repay your loan. And then you could take that, and you could go over here and repay your loan, and you basically extracted a whole bunch of value. And there’s stories, there was a recent one, somebody got 17 million dollars or something, and you know they got it over the course of, like, one block. One block. Yeah, it’s all flash loans.

1:14:05 As long as you’ve repaid the loan by the end of the block, you’re good, right? Yeah, exactly. So I mean, it relies on the fact that the nature of the smart contracts are relying on some piece of pricing data from one source, and you can manipulate that for a very brief window, which allows you to then go and buy something at a different price than it should be over here. And it’s an interesting question, because is this some sort of a crime? Well, technically speaking, like, you didn’t steal from somebody.

1:14:33 You know, it was just sort of sophisticated arbitrage. But the bottom line of it is people lose a bunch of money, and there’s a bunch of money that goes to somebody else. And so, you know, this is like a very loose idea of how a flash loan attack works. Right, now That’s super helpful, and so that basically, you know, we saw the honey pot, and then we saw the flash loan attack and the rest are rug pulls. You kind of explained them earlier, but it basically means that someone always intended, maybe of taking the money and running, and they can do it in a variety of ways printing, you know, infinite number of tokens and going it or disappearing or dying in India, but these things still happen they happen, probably more in quantity these days because there’s more coins But the idea is to just be scanning these things and take a look constantly.

1:15:21 Yeah, so you can protect. Yeah, and This is really important. Maybe just to, because some people will ask this question, they’ll say, hang on, wait a minute, like you know, did you guys just go and scan all these, con like, which ones are scanned, which ones are not scanned etc. It’s worth noting that this scanner is live. It’s like real time, so it’s not like we had to scan that contract, and hey, we decided not to scan this other contract.

1:15:41 You know, you can take any smart contract address, you can put it in, and it will, in real time, scan the current status of that smart contract and return the report, so if something gets updated, you’re scanning the current version. Doesn’t matter if somebody launched a new smart contract yesterday, you can take it and you can scan it. It doesn’t matter. It doesn’t rely on us having gone and, like, built a database, and maybe the database is outdated or something.

1:16:03 It doesn’t work like that. So that’s worth understanding for people, because it makes it way more useful than if we just had some static database that we were building and constantly trying to keep updated. Also, makes it a little more trustless, right? Yeah, yeah, absolutely, very important, right? So you guys are just putting that out there empowering the people to look.

1:16:18 Last slide that I’m gonna throw up is like roadmap for you guys, because I know you’re constantly developing. You have a big team of developers, but what’s coming down the line that you’re excited about, and that we should know? Sure, sure. So yeah, to your point, we have a great team. We’ve got over 40 people, makes us one of the largest teams in crypto.

1:16:38 I think really, really fantastic developers, really fantastic team and it shows in the tech. It really does. Thank you, thank you. Yeah, I mean, they deserve a lot of credit They do a really, really excellent job. So I’m super happy to have them.

1:16:52 Very grateful for their hard work So a bunch of different things, I would say, that The one thing that we’re really aggressively focused on is making sure that we support all the protocols. So there’s a lot of work that’s going into that. Probably our biggest weakness in our tech as of today, as I sit here talking with you, is just not as many integrations with protocols as we would like. So you’ll go and you just not be able to see certain protocols, in say, in terms of your yield farming, you’ll see the tokens but you won’t see the liquidity pools.

1:17:23 And so that’s one of our top priorities that we’re, we have, we, the good, again, one of the advantages that we had is we were able to spend a bunch of time building some infrastructure that allows us to integrate protocols much, much quicker than everybody else. So we’re rolling out like a thousand protocols over this year or something, which is a lot. So that’s the first thing. The second thing is, of course, expanding our smart contract scanner, and this means first of all, the version two that you’re showing there, opening that up.

1:17:50 Number two is rolling it out onto all the at least, all the other EVM compatible chains. It’s more difficult to put it on to Solana and Terra and NEAR, things like this, so EVM compatible chains, that’s second part. Third thing is on the usability, accessibility of launching a mobile app, so that’s a big deal. I think everybody should be able to do it from their phone, because that’s where we live today right? So that’s challenging, right?

1:18:14 Yeah, yeah. It’s a whole other thing of development, right? So you have to have a team who’s specifically working on that. At least the back end tech is a big deal. So then we’ve got working on a token launch.

1:18:27 So that’s a big deal. We self-funded the project ourselves with the first one and a half million dollars, and so that was kind of the start. Then we raised a small seed round, and so we’re gonna go and do something public, and so that’ll be in the next little while. And then the last thing, which is really technically challenging but I think is super important to the ethos of the project and drives a lot of the really long-term value, is we’re decentralizing our entire infrastructure.

1:18:55 So right now what we have is pretty centralized. Yeah, it’s not custodial, but you know, we’re running all the servers essentially, and this is, it’s useful for rapid iteration of development but if you think you want to be totally trustless we don’t want to be a single point of failure within the system, and we’ve brought on as investors and advisors some of the top cyber security experts and ethical hackers and things like that. It’s really cool and we’re going to build what is essentially sort of like The Graph or Chainlink for security, so it’s a, our own network that is interoperable with all the different chains out there and helps to provide all the functionality that our suite of services do, whether it’s historical data and security, to people, and you don’t have to rely on any single point of failure.

1:19:40 So that’s a big project. Wow, are you going to be expanding the team a lot to do all these things? Yeah, I mean, the goal is to double our staff, so you know, we’ll see how quickly that goes. We were hoping to do it in three months, but might be a little longer than that. It’s you know, it’s very hard to hire talented people to now today.

1:20:00 Like, there’s just lots of demand for developers in the space but even when the market’s off, it’s still hard. Yeah, I mean, you know, and this is one thing I tell lots of people, like, if you’re a developer today, like, you should be learning how to do development for smart contracts and crypto etc. There’s just so much opportunity out there. If you learn to be good, like, you know, you’re invaluable Yeah, it’s blockchain is what you know, Dan Morehead from Pantera Capital said, it’s, he’s telling all the kids these days just blockchain.

1:20:28 You know, do it on the blockchain, learn about it on the blockchain. I told my daughter the same thing She’s like, but I’m going to get a liberal arts degree. I said, great, don’t, what did Mark Twain say? Don’t let your school get in the way of your education. There you go.

1:20:38 Yeah, learn about blockchain on the side, you know, it’s all going to be part of what you do going forward. You know, I would be, I would be not doing my job if I didn’t have you talk a little bit about some of the things you know about, which is also taxation, while you’re here. Is there anything on DeFiYield and DeFiYield app that we didn’t cover in here? Again, people can plug in there, super simple, and go plug in their hot wallet and be on it right away and check out all these features.

1:21:04 Right now they can see the dashboard, they can see v1 of the scanner, they can see their NFTs. Just finish up on the app. Anything that we didn’t mention or thoughts there? And then I want to pick your brain a little on sure. I mean, I think that you know, the way that I think of this, of the dashboard, is number one, finding the best opportunities to invest in.

1:21:25 Number two, being able to use the scanner to identify is this risky or how risky it is, etc. Number three, actually doing the investment, and number four, tracking the status of your portfolio. I think as long as we wrap those four things up really well, we’ve got a super usable, fantastic product for people, and that’s really what we’re focused on at a core. So you know, I think you covered pretty, pretty well those different features. Yeah, again, it’s that P&L is right there.

1:21:51 You have access to go ahead and make those swaps if you want to. You can go ahead and check everything out on the scanner, and then you can monitor everything. The dashboard feature is super important. I’ve never used the Star Trek analogy, but I’m going to give you guys that one, Captain Kirk on the bridge, right? I love it.

1:22:07 Absolutely, we’ll take it and reuse it, and it’s so important, like you said. I mean, and I have all these other tools, but I never use them, which means I don’t know, which means I’m a little insecure. I can’t tell you exactly what I’m doing on, you know, the AVAX chain on my MetaMask wallet, but when I plug into your app I know, because it shows me on the front page. So yeah, that’s super helpful. You guys also announced some big partners coming soon.

1:22:29 You had some big people also in invest in you, and is there more of that coming? Yeah, I mean, I think we have a, we have a vlog backlog that will probably get announced. We have, you know, a large number of the centralized exchanges are invested in us. Coyote Ventures Okay, X Blockchain Ventures or Block Dream Ventures, I guess they call themselves, you know, one of the partners from Coinbase, et cetera, et cetera. So yeah, quite, quite happy with the support that we’ve gotten from the community in that regard.

1:22:58 And then a bunch of, bunch of big funds and some others. So yeah, there will be ongoing announcements that we’ll do in that regard to keep people up to date. Good stuff, and keep an eye out for liquidity events and tokens in the future. People want to jump in on that. In the meantime, they can also jump in on the app and who knows, people that use that, you never know what happens via drops and stuff, right?

1:23:20 So yeah, absolutely, absolutely. People who are early adopters might end up getting some rewards for doing that, right? Which means all of my students So exactly. So yeah, you’re welcome. I’ll just say to all of my students, look, like I said, I’d be amiss if I didn’t ask you, because you got a lot of really interesting core IP, and I haven’t had anyone here that could just give me even a short synopsis of what people need to think about when it comes to, say, taxation and crypto.

1:23:45 You know, it’s something that I’ve never really had anyone talk about, even from a general standpoint. I know you spent a lot of your time. You are, you know, I talked about offshore investors. What do people need to know about tax and crypto? Wow, a big topic.

1:24:00 So I mean, it’s worth noting that my expertise is especially international, right? So I try to be a bridge between countries. In other words, you can go into countries and you’ll find lots of great experts. Now, it turns out on crypto, not so much right now, but it will emerge What they fail to understand is, like, how, what happens when you go from one country to another, right? And so we my one company plays that role of figuring out what happens from one to the other for somebody who’s going to invest in crypto, and then also maybe somebody might consider relocating as well.

1:24:35 I think there’s a few things that they should be aware of. So first of all is just the difference between is this a capital gain or is this earned income? Because that’s really different tax consequences, and a lot of people don’t kind of get that. Hey, look, you know, you may have to actually pay tax here because you’re earning ongoing yield, and unfortunately, in the world of crypto it’s really hard to keep track of that, right? That’s partially where the P&L calculator comes in.

1:25:02 I mean, if you just kind of think about this really simple scenario, let’s say that I go and I deposit CAKE on Autofarm and I’m earning yield, and the yield is paid partially in CAKE and partially in AUTO tokens and it’s technically accruing every block, but I only claim it whenever I claim it. Okay, when am I taxable on that income? Was it when it accrued? Was it when I claimed it? Was it when I sell it?

1:25:28 What’s going on? Like, this is a, like, really big kind of Pandora’s box that you’re opening up, because maybe you claimed it, and then the value went down, and then you have, you know, all this stuff. Good news is that there was a recently, you were mentioning Tezos, there was a case in the U.S. somebody had earned staking yield on Tezos, and the IRS decided that they wouldn’t treat it as income until it was sold kind of the analogy that if you were to grow grain in a field, you don’t actually get taxed until you sell the grain, which is amazing.

1:26:03 So that could be a really big advantage for people in the staking space. Like, that’s a huge opportunity. It’s like, imagine if you had a piece of property and you didn’t have to pay tax on the rental yield and, tell you, I don’t know, when spent it or something, right? That’d be great. So understanding just the difference between capital gains income and wrote earned income is very important The next thing is understanding that, pretty much, when you swap from one token to another, usually that’s a taxable event unfortunately it’s not always true.

1:26:33 Sometimes if you’re in France, for example, they don’t tax swaps from one token to another, which is pretty cool. It’s like the only good thing about the French tax system. And there’s some other places, like Netherlands has kind of this box three income, and you can run down the list Then to understand that, for a lot of people who start getting quite into crypto, it might make sense to have it in a company, because if you have a lot of earned income, you can write things off against it.

1:27:00 You get different treatment, right? You can defer, so that’s pretty important to understand. And then look, one of the beautiful things in our world today is you don’t have to live where you were born. I often will say to people, you know, imagine you’re an alien and you come to the earth and you can pick anywhere in the world. Where are you going to choose to live?

1:27:22 Like most people live based on where they’re born, where they went to school, where they got their first job. But hopefully you’re going to choose the place that you think is amazing. And you have a lot more freedom to do that today. And with something like crypto, earning money in crypto makes it easier than ever, because this is totally location independent and now you can stack on top of that, you know, I live in Dubai. Dubai has zero tax.

1:27:47 So imagine if you’re making money in California and you’re paying 50 tax on it. The compounding rates a lot lower than if you’re doing this at zero tax. So this unlocks just a world of opportunities for you And so I think, just without getting into lots of complex details, because it’s a big topic and it’s very, like, specific to where you are. There’s different rules around the world. That would be kind of like the high-level starting point that I would want to understand.

1:28:16 Yeah, and you go into detail on this on many of your videos on Offshore Investor and your YouTube channel, and I’m sure Citizenship Services, and you talk about Dubai where you live, Portugal, Puerto Rico, Thailand. Obviously this whole capital gains versus earned income is really important, and then again, if you do live in California, though, you’re probably a U.S. citizen, and you’ll probably be taxed globally. And maybe a really important thing just to ask you now is that, you know, I have students ask me all the time about taxation, and I always say, you know, how did they get Al Capone?

1:28:45 You know, it was the IRS that got California. Absolutely, and they never actually got him for murder, though I’m guessing he might have committed. If you and So anyway, and on Wall Street we say there’s only two things that are for sure, and that’s death and taxes. So Now you’re on the blockchain. You’re probably going to pay taxes on these transactions And you probably should pay taxes, and if you’re a U.S. citizen, you’re going to pay them globally.

1:29:07 And is that a conversation you try to have with people, and just say, look, this is happening, understand what it is, be proactive about it or at least understand it, because it might affect your trading decisions. Yeah, yeah, I think you 100 should be aware of it, and you should 100 be proactive about it, and when you’re aware and you’re proactive, then you can start to do things to minimize it. I don’t know if you’ve ever heard, there’s some great Tony Robbins math that he talks about the value of deferral.

1:29:32 Have you ever heard this? No, no. So what he goes through and he explains is he says, all right, imagine that you started with a dollar and you could double it each period for 20 periods. 1 becomes 2 becomes 4 becomes 8, and so on. After 20 periods, you add about a million bucks.

1:29:46 Okay, imagine that you instead, each doubling period, you had to pay 33 tax, so one becomes two, but then you pay 33 on the ones, that’s 1.67, then you double it, and so on. At the end of the same 20-year period, if in the first example you had a million, how much would you guess you have paying 33 tax? One way, I guess it’s a lot less than a third off that, right? I don’t know, I would guess like 200 grand. Okay, okay, I mean, it’s, you know, a reasonable guess, right?

1:30:16 So your first instinct is right to say, you know, someone might say 670 000 or something, because we lose 33 percent. Much lower, much lower than 200 000. 660 years, I don’t know, 28 thousand dollars. It literally costs you over a million dollars over that time period, and the numbers are somewhat disingenuous, because nobody’s really starting with a dollar, and nobody’s really doubling each period, although in crypto you might, right? But the whole point is there are tools and ways to plan this that, even if you paid the 33 at the end, you’re comparing 670 to 28.

1:30:47 You’re way ahead, way, way ahead, and that just gives you such an advantage in opportunity and in life, and being able to fund things that matter to you. Like, I tell a lot of people I’m kind of frustrated with a lot of wealthy people in the world and in crypto as well, which is, I think, that we have a world where wealth should be a lever for your values in the world, and it should be used to bring those things into the world. And I think a lot of wealth is wasted on wealthy people.

1:31:19 Meaning that, like, what are you doing with your money? What is the cool stuff that you’re doing? Hopefully you’re doing some really cool stuff. Like, why do you make money in the first place? Hopefully to make your life better, in the lives of other people better, and how do you feel you can do that?

1:31:30 You know, probably not by buying the S&P 500. Once you’ve made 100 million dollars, like, you know, who really cares? And so your ability to do that quickly, easier, have greater impact comes from doing better tax planning. I don’t think you should lie or, you know, do tax evasion or something illegal, or something like that, but if you’re aware of it, then you can make decisions proactively, like you said, that put you in a position where you can preserve and advance the things that you believe are important in the world.

1:32:02 Yeah, and you should do that. You should do it absolutely. I get into these discussions with people about, you know, some people today, there’s a kind of attitude against rich people and making money and entrepreneurship and things like that. And there’s, like, this idea that paying taxes is patriotic. And I’m like, paying taxes is absolutely not patriotic.

1:32:20 It’s absolutely patriotic to pay the lowest amount of tax possible, and the reason is this. What they’ll come and they’ll say is they’ll say, oh, well, you know, we need these services to exist. Well, they’re running a two trillion dollar deficit. They’re paying for those services whether you contribute to it or not. So what’s the difference?

1:32:35 It’s not like somebody didn’t get their medical treatment because you didn’t pay as much in tax. But, you know, what does happen? You have the money that you can contribute to somebody’s medical treatment who wouldn’t have gotten it otherwise. On top of that, they’re really wasteful with their spending. I mean, medical costs in the US are about 18 percent of GDP.

1:32:53 You know what they are in Singapore? Four percent of GDP, in a country where the GDP per capita is lower and their medical outcomes are higher. Like, why are you encouraging this system that’s highly inefficient? That seems to me incredibly irresponsible. I don’t think that’s, like, actually a good thing to do.

1:33:10 So instead focus on deploying your money as efficiently as possible. Like, don’t, I’m not saying go and, like, just blow it on bottle service or something, but you can do a lot of good with that money, and you kind of have, like, a moral obligation to the world. To that, I was in. We were talking earlier about Washington DC, and you have a great little thing around the office here. And I was walking around the, it’s like, at Abraham, or sorry, George Washington’s house.

1:33:40 Okay, and they have this place where they’re showing, like, the history, and they’ve got the big sign that says no tax without represent our, no taxation without representation. I’m thinking to myself, like, this is exactly what’s happening to Americans living abroad today. No taxation, like, it’s literally what you fought the Revolutionary War over, and you guys are busy doing this. Like, what are we talking about? Have we learned nothing?

1:34:03 This is crazy. And but there’s, like, a media narrative that’s against this stuff, and so yeah, it’s a good point you make. I had a guest on the show named Patrick Bet-David, and he made a comment a couple months ago. He said, you know, when you give the money to the government in taxes, you’re saying that they can do a better job with that capital, and most people would probably say they can’t, right? So as an entrepreneur, how can you empower that capital?

1:34:26 How can you empower other people with that capital? You can probably do it at a much better rate. The government wouldn’t have created DeFiYield. And so, you know, you can create all this innovation and do amazing things with that capital. So every time you choose to not pay it to them in taxes, you can do more with it.

1:34:40 And when the government trusts you to do that and trust that innovation and hasn’t been bogged down by the spending machine that empowers some great things, and we’ve gotten to a place where it’s, there’s something wrong about it. I just, of course, made my two sons American citizens, and I’m sure they’re gonna be mad at me for the rest of their lives for that. But Caden, Damon, sorry, it’s too late. But yeah, it’s some really important questions as we go into this crypto and DeFi world.

1:35:03 This whole global taxation thing is going to be questioned even more, you know. There’s a really interesting, have you ever read the book The Sovereign Individual? No, I’ve heard it but I haven’t read it. It’s a great book to read. I think a lot about, out of it, what crypto is going to mean in terms of organizations with DAOs, like DAOs are one of the coolest things going on, and a lot of people aren’t kind of aware of it.

1:35:23 It’s decentralized autonomous organization. Actually, one of the things that will decentralize all of our stuff and have a doubt for DeFiYield In a world where you have DAOs running things. The whole game theory for governments changes quite a lot, because just think about this, Uniswap last I checked had like a four billion dollar treasury, making like 400 million dollars a month. Who’s paying tax on that money? It’s held by a decentralized autonomous organization.

1:35:51 It’s based on many, many token holders around the world who uniquely have no legal right to the profits of that DAO. So, whereas in a company you can say, well, you’re a shareholder you’re legally entitled to that money. You’re not, as a token holder of that DAO, Yes, you have the power if there’s enough people to vote to distribute those funds in a certain way, but you know how can you enforce taxes on that DAO? Like, I’m sure there’s going to be a big fight over it, right?

1:36:20 There’s going to, you know, the governments will go after it for sure, but it’s just really going to be interesting to see how things change. In that book, their theory is essentially that, because it will change the negotiating place of certain individuals relative to governments, governments are going to have to compete for people’s tax dollars instead of simply being able to confiscate them. And it’ll be interesting to see what happens, because that’s going to be a big fight over the next 10 to 20 years.

1:36:46 It will be. And as the people become these global citizens and work from all around the world. This whole, you know, being a citizen means less now. Of course, if there’s, you know, wars and conscription, then that changes everything. So we’ll have to, we’re really trying to find out what it means to be a citizen in a country.

1:37:03 But the data was fascinating. We’re going to see how all that stuff develops as well. But I hadn’t thought about that taxation issue. That’s very interesting. Last thing I have to ask you about is regulation while you’re here.

1:37:11 President just made some call-outs on what he plans to do on crypto, obviously. I’ve studied, you know, Gary Gensler and what he said at the SEC over the years. Now it looks like the FDIC is getting involved, and that’s just in America. We’ve got places all over the world trying to regulate it, or not. I mean, I know we could probably do a whole episode about this, but what do you see or people should know about regulation?

1:37:34 How can they affect it, or how it’s going to affect them? Yeah, okay, a bunch of things. So number one, regulation is coming. If you don’t think regulation is coming, I think you’re naive. So that’s the case.

1:37:49 Then the question becomes, what are they going to regulate, and what are the consequences of that? So I think, first of all, people should definitely be taking some action proactively with their senators, congressmen, politicians, mayors, governors, whatever it is that they have in their country, to steer that in a direction that is, let’s call it, good for freedom, right? Say that that is a direction. I mean, I guess whatever people think but I would say that’s what you want.

1:38:16 I think number one, they are pretty legitimate in the fact that they’ll come for stablecoins because what is a stablecoin, really? It’s like you’re a bank, and so not being regulated as a bank seems unlikely over time. So Circle was probably really smart with USDC. They’ve gone the public company route, audited financials, all this sort of thing. Like, but they will come for that.

1:38:40 What does this mean for you as an individual? In my opinion, algorithmic stablecoins or stablecoins that are more removed from them are better over time. So I tell people all the time, like, be aware that they can freeze USDC and USDT They can just stop it. So being in DAI is better, being UST is better, you know, there’s various ones. So that’s an interesting just perspective.

1:39:03 UST is the algorithmic type of calling on Terra. Yeah, yeah, yeah, which you can earn in Anchor Protocol twenty percent. Yeah, we just did a whole show about it with Alex Fazel, SwissBorg, and it was like you know, nineteen percent over the last year, pretty steady yields, and show people how to do it, and you can monitor it on DeFiYield app. It’s awesome. So yeah, yeah, absolutely.

1:39:21 So I think that’s one thing they’re gonna come for. Obviously they’re coming for exchanges. Exchanges are a really easy point, I think. They’ll go after all the crypto to fiat on and off ramps. It’s a really obvious place that they’ll go after.

1:39:35 I don’t actually believe that they’re gonna make crypto illegal. I think that if you just think from an incentive standpoint, I try to view the world through mental models that partially include incentives as a big driver. Every senator and congressman at this point in time, their kids or their grandkids are holding crypto. You can’t just wake up and be like, hey kids, that thing you’re holding, that’s illegal? Like, that’s not gonna happen.

1:39:58 I think what they will probably do, because I think they’re highly influenced by lobbying, is all the big banks see that. Okay, they added 1.7 trillion dollars of net worth to the crypto market cap over the last year or whatever. We want in on that money. We have powerful lobbies. We’re going to go to the government.

1:40:16 We’re going to say, hey, guys, we’re late to this game. Do you know what? It’s kind of the Wild West out there. We can clean it up You know, never mind the fact that we caused the 2008 financial collapse. Never mind the fact that we’re fine for money laundering to the tune of tens of billions of dollars.

1:40:32 That none of that matters. The point is we can clean this up, and we can keep people safe, and we live in a culture of safety-ism, right? It’s not a good thing But we own a culture of safetyism, and so what they’ll probably try and do is put crypto essentially in brokerage accounts They’ll say, okay, we’re fine with you buying and selling crypto, so long as it’s in a custodial account that we know it went in and it came out. There’s no money monitoring involved.

1:40:55 We know where the source of funds is. We can understand that. They’ll probably be fine with it, and I suspect they’re probably going to try and create, whether they know it or not, yet, some sort of a schism within this, where they say, hey, here’s, like, the good Bitcoin that could have been cycled through Iran or Russia or whoever we dislike today, and here’s the good Bitcoin, which is clean and green and whatever the narrative happens to be at that point in time.

1:41:20 I suspect that’s what’s going to be, what will happen. And it will probably be bad for the markets in the short run. I think it will probably drive innovations, like, it’ll push for real decentralization, which has not happened to the extent it should have. So far, it will push for things like privacy and true fungibility, because a lot of these things are not actually truly fungible. And that’ll be, like, quite a war, though, over the course of 10 years.

1:41:46 That’s my opinion, and you know my crystal ball is always broken. I can totally be wrong, but that’s what I see happening, and that’s, like, 10 years that this plays out. Probably, right? Yeah, gosh, having custodial accounts, it’s like everyone out there is cringing, right? In crypto because it’s almost the opposite.

1:42:03 It’s totally antithetical, right? Yeah, there’s a trust component, there’s the custodial component. It’s like it pulls it all out. But, you could see why they would want to do that, and they are very strong forces, these lobbies, and I worked for the banking industry for 15 years. And let’s be honest, it’s been a, it hasn’t really changed much in 500 years, and it’s a racket.

1:42:23 It’s almost a psychological racket, you know? And people just, oh, the bankers are this, and the banks do this, and they’re really interwoven into, to your, the DNA of your everyday life in a way where people don’t even understand, and they kind of control and influence all of your interactions because all your interactions are financial in some way. And, you know, getting that monkey off your back is going to take time, and they’re going to fight to stay in that business model, and there’s real money involved with big shareholders, and, like, you said, ties to, you know, federal reserve systems and fiat currencies, and it’s going to be a struggle.

1:42:58 Yeah, and I think, you know, this whole thing about you can’t trust these institutions becomes true because which institution that’s a large public company is going to disobey the government when the government comes and says, here’s what you have to do. None of them will. So just realize that’s the way that it’s going to be, and you better expect that. You’ve made your plans accordingly, and that’s why it’s really important. I really encourage people all the time to do stuff non-custodial.

1:43:25 Like, I’m like, when PayPal started accepting Bitcoin and stuff, it’s like, dear God, please do not hold your crypto in PayPal, please do not do that. Like, that’s just so anti the whole point here. So I would much rather you’re in Binance than in PayPal, and you know, much rather that you’re on your own wallet than in finance. So do that. To the extent that you can support projects that are early stage projects that you’re helping to actually build something.

1:43:56 And then, you know, it’s even a greater extent if you can build projects. That’s awesome. Like, there’s so much stuff that can be built out there right now, and it’s so easy to get involved. You can go and join somebody’s Telegram and Discord and start hanging out and asking questions and come up with ideas and join the team. One of the things I love about crypto, I don’t know if you’ve noticed this, but you probably have there’s such a variety of people with so many different backgrounds.

1:44:21 I interviewed the head of research at Bandcore, and he’s like a molecular biologist and organic chemist by background. I interview somebody from Eric Argonne and he’s a molecular chef by background, and you’ve got this whole group of people from different spaces who are all contributing into building this thing that is hyper innovative, super fast moving, coming up with so many positives It’s great. Yeah, yeah, it’s an amazing space. There’s a lot of love and positivity in the space and hope in the space, you know?

1:44:56 I mean, I’ve been doing the show for 10 years, and you know, a few years ago we got to the end of the show, and I’m always asking my guest, are we going to make it, you know, like, I don’t know, we’re going to make it, we need more love, we need to do this, and in this space there just seems to be sometimes lights at the end of the tunnel, you know. We’re seeing positivity, transparency, a future model that might work, a comparative model to what’s going on. And so yeah, I like being in this space for that reason.

1:45:18 It gives a lot of optimism. And yeah, just to finish on that point, you said, you know, whenever you give any big organization some power, at some point it can and will be co-opted, and, you know, we went through this whole thing with, you know, freedom of speech and information in 2020, and, you know, we lost our PayPal account and we had our issues with YouTube, and you know, you could question why it happened, or you could just say, well, why don’t we create a system where it doesn’t happen? You know, because it’ll all, there’ll always be a version of this happening in the future.

1:45:45 And that’s just the way that it happens when you have a trusting system. Yeah, yeah. I tell everybody, it’s like, if you care about freedom, you should care about crypto. Amen to that. I was speaking to Dan Held, and he said, Brian, without financial freedom, there’s no other freedoms really.

1:46:03 Yeah, how can you have freedom of speech if you can’t even, you know, have your freedom of finance, and he has a very good point with that. You know, I’m really a big advocate that people should have, as a basic human right today, the right to have a bank account, to send and receive money, and nobody should be allowed to interfere with it. I don’t care if, even if you think that they’re doing something wrong, great, arrest them, deal with them in the courts, go through due process, because the problem is, in a modern age, where you’re eliminating cash and where so much of commerce is global, right?

1:46:35 You’re sitting in Philippines and you’re earning money working on Upwork or something. Your ability to transact is your ability to live. Like, you’re literally denying somebody the right to life if you’re denying them the right to have those financial instruments. And so yeah, that infrastructure is just super important, and it should be neutral, and it should be open. It should be permissionless.

1:46:57 And yeah, people will abuse it, but they’ve used cash for the last however many years. Wasn’t that big a deal and find some other ways to police it, because going after your livelihood is not an acceptable solution. Yeah, it’s a basic human right. Yeah, and we actually have the chance to give that to billions of people. Exactly, and I agree.

1:47:18 Like, let them have that right, and then go do what you would normally do in the courts. I mean, you know, humans have some now agreed-upon basic human rights, and this is one of the one that’s still not there. Yeah, so we need to make it happen. Exactly. Michael, just want to say thank you to you and the team, and you know, it’s Matthew and Gabriel as your co-founders.

1:47:36 And yeah, you guys doing an amazing job with DeFiYield. Super excited to be part of this journey with you. Again, I love talking about your app. I love my students using it, and every time I see what you guys are doing. It’s just groundbreaking stuff.

1:47:49 So you guys should be super proud about what you’re doing, and the future looks super bright. So thank you for coming here and talking about it. Any final thoughts from you as far as the DeFiYield itself or anything in the future for people, just to remember in this space? I think that, like I said at the beginning, this is the biggest financial revolution in the history of, in the last hundred years, for sure, and it’s such a big opportunity. Anyone can participate in it.

1:48:20 Yeah, there’s a bit of learning curve, but on the other hand, it’s never been easier. You can jump on YouTube, you can go to people like you, and you can learn these things, and just over time you can imagine that there’s going to be more and more value that’s going to be added to this space. This is the dot-com boom over again. How many people wish they could have gone back to the dot-com boom and bought Amazon, right? They would feel like, you know, it’s like, oh, I missed it.

1:48:48 You don’t miss this one. Like, there is a lot of opportunity there for people who are willing to get involved, and you should, either ethically because you think that it’s good for the world, or opportunistically because this is where the money is, and it’s so so good to be able to participate, and it’s such a rich community, and that’s really, really valuable. So hopefully we can play a part in that and really help, help make it easier for people. But whether you do it with us or without us, I think it’s really worth getting involved in, in this space.

1:49:21 Yeah, I definitely agree. I don’t care if you’re 17 or 78, you know, you can get involved and be a part of the space and protect your future. For people that want to get the app, to help you develop it, do anything. What’s the best way to find you guys? follow you guys?

1:49:37 So of course you can go to DeFiYield.app and you can go and connect your wallet and start using it. You can join us on Telegram. We’ve got DeFiYield.app Telegram channel, pretty easy to name. You can check us out on Twitter. Again, defyule.app, so you know, pretty, pretty universal, I would say.

1:49:54 Those are the three main places if somebody wants to really get in touch, probably the best is through Telegram. And yeah, we’d love to talk to you. Boom, there you go. All right, great stuff. Thanks for coming to London.

1:50:03 Appreciate you sitting down. All the best to you guys in the future. Thank you, and just excited, man. Thanks for a great conversation. You too.

1:50:09 Cool, fantastic. Boom. All right, we’re out of here. Thanks so much. See y’all next time on London Real Bye.