Full transcript: Sandeep Nailwal on London Real
2:37 Brian Rose: This is London Real. I am Brian Rose. My guest today is Sandeep Nailwal, the entrepreneur, software developer and cryptocurrency pioneer. You are the co-founder and COO of Polygon, the scaling solution known as, quote, Ethereum’s Internet of Blockchains, with over $10 billion in locked value and now one of the world’s top 15 cryptocurrencies. Your platform has successfully addressed major scalability issues while maintaining incredibly low fees.
3:03 And your recent $250 million acquisition of Hermes Network was the first complete merger of one blockchain network into another and transacted entirely in tokens. The billionaire entrepreneur Mark Cuban stated that after Bitcoin and Ethereum, Polygon is, quote, destroying everyone else. And he’s made a large investment in your company. And you’re also the founder of India’s Crypto Covid Relief Fund and have donated $15 million to UNICEF India. Sandeep, welcome to London Real.
3:30 Sandeep Nailwal: Thank you so much for having me here.
3:32 Brian Rose: I want to get into the detail of exactly what you guys do inside Polygon. But before we start, I’m sure there’s a lot of people joining us that maybe know a little bit about crypto. Maybe they bought some meath, but maybe this is new to them. And I thought maybe we do just a quick acceleration through the concepts of maybe Web 1.0, 2.0, 3.0 to maybe explain why this matters so much.
3:57 I still remember sending my first email in 1989. I was at MIT and they called it the Athena Network. And I was really excited, Sandeep, and I sent an email to my brother at Stanford. And then I didn’t use it for four years. I still, I think, remember my first browser in 1995.
4:14 And then I remember joining Facebook and YouTube, like, you know, in the mid-naughties. But now we’re going to this concept of Web 3.0. And it’s a major shift in the philosophy of what we do on the Web, not to mention all the exciting stuff you guys are doing on the blockchain. How would you explain this kind of thing to your grandma or to people on the streets when it comes to this concept of 1.0, 2.0, 3.0?
4:38 Sandeep Nailwal: I would even go back, you know, then the Internet itself.
4:41 Like, you know, I mean, if you go, let’s say 200, 300 years back, right? I mean, all we had was a king, right? And then there were empires. And then the king was the only institution. And whatever king said was the law, was the bank, was the treasury, everything was king, right?
5:00 But then, you know, somewhere in 200 to 300 years back, we started, you know, the whole world like basically slowly and steadily started shifting towards these nation states. Right. And then our governments became institutions and, you know, our banks became institutions. Everything today, like, for example, and this is continued till today and everything that we see today is in the form of an institution. And globally, if you see the like, you know, in the last 200, 300 years, this cycle of evolution happened.
5:33 And then, you know, you know, ups and downs in that. And it has reached a place today where the institutional trust globally is at all time low. Nobody really trusts any kind of institution, be it government, be it bank, be it media. Nobody trusts, you know, anybody. The reason is that, you know, these institutions have been running in a kind of a centralized mode, like at max delegated mode, where you have a core set of people who run that institution.
6:03 And then sometimes, you know, like in government, people will vote for something and then some delegates will actually choose the core people and things like that. But eventually, like the reason being, the problems are there is like, you know, a lack of transparency, corruption and all those things are there. Secondly, the individual’s participation in these institutions also, you know, becomes smaller and smaller. And this is this technology, like I always say to people who want to get into the technology that don’t think of it as a technology.
6:37 First of all, think of it as a paradigm shift in how we human beings can collaborate. Right. Previously, as I was explaining institutions. So the one way that we interact, if I have to sell land to you or a house to you, I will go to a registrant party registrant registrar’s office who registered it in your name. Right. So the registrar becomes the institution and all that.
6:59 So because they are also ensuring your your ownership of some things with blockchains, two things get changed radically. One that the ownership is secured, you know, in a very sovereign way on on on the digital platform itself like that is on the Internet itself, the ownership. Nobody nobody needs to ratify your ownership. You don’t need any any third party or any central party to ratify your ownership for anything. Be it asset in future, it will be a right now it’s digital assets.
7:33 In future, we expect that more and more, you know, physical assets will also come in some form of with this ownership. And the second thing is that whenever you are interacting with any application, any network, that network is although that network, if you can think of it as an institution itself, but no central party is running it. You don’t need to trust any central party to do it. Right. So if you are participating in the network, for example, Bitcoin or Ethereum network, you can also become a validator or a miner and then, you know, start running the network.
8:07 So network is not owned by any central party. And these two things kind of completely and radically change how we human beings interact with each other. So when you remove that kind of mental barrier of that, this is some core technology and all that. This makes your life much easier. And then you can go deeper into it that what exactly is happening. Right.
8:25 And you can understand, OK, Bitcoin would try to solve this for currency, like, you know, which is a simple business logic. I pay to you 100 dollars. My balance goes down by 100. Your balance goes up by 100. Right.
8:38 And then how you can apply the same concepts to Ethereum, which can process much more complicated business logic that, you know, I, me and some people, some more people sign on something. Then only we pay to someone and all that. All that complicated logic can be can be used. So so now coming back to in the context of Internet also. So the same thing, the same, you know, concepts of institutions and ownership being being decided by some other party to complete ownership in the hands of the user is this evolution from, you know, basically Web 2 to Web 3.
9:15 Web 1 was very primitive, but Web 2 basically all of the listeners will understand that, you know, in Web 2, for example, you think that, you know, you have an email ID. You think that you have a bank account and you might think that you have a social media network, but a social media account. But at the end of the day, you don’t own any of them like you. You own a social media account because Facebook is allowing you to or Twitter is allowing you to have that account.
9:40 And Twitter, if they don’t like, they can even shut down the Twitter account of the president of America. So, you know, there’s this illusion of you owning something is like completely, you know, not true. Similarly, your banks like, you know, we all have in our lives one day or the other, you know, have seen times where we think that we own the money in the bank. But then the bank completely goes for a toss of one fine morning you wake up and your life savings are gone.
10:07 So we think it’s you own the money. You don’t own the money. The bank owns the money on your behalf. And same thing is with your email. If something happens and some malware comes to your account and some, let’s say, some terrorist is using your email.
10:20 Gmail might block your email for the entire life. So you don’t own these things. Any of the things that you feel on the Internet you own, you don’t own actually. And the same thing like, you know, this web three with the concept of blockchains brings brings you brings into onto the table that here in this in this, you know, paradigm, you own. You have a native ownership via a small few character key.
10:47 You have the native ownership of assets. You have the native ownership of some accounts and all that. Once something is in our account, nobody beat president of America or we know beat president of anywhere. They can’t do anything with that. That is the fundamental paradigm shift that that we see from, you know, web two to web three.
11:06 And in web three, you will have these dabs. You will right now the technology has not reached that place. Right now you have currency. You have banks. B five is basically essentially nothing but that additional banking system in your control and you control or your assets and everything.
11:21 And then, you know, in future, very soon you will have these social networks and and, you know, and then different kinds of like email services and things like that where you will own them completely. Your data will not be sold to the advertisers. And then, you know, if at all you want to sell it, you will be the one who will be receiving the money on that. So this is this fundamental shift, not only in how we human beings interact with each other, but the way our Internet is evolving into web three.
11:50 Brian Rose: Do you think us as humans on this planet are even ready for that paradigm shift? I mean, do you think some of this is just going to have to be born of new generations because we’re so conditioned to these institutions that, you know, most people don’t even know how to have a relationship with their own money. You know, and then you give them D five platforms and this and, you know, it’s like, oh, I’m not used to this. Sometimes they want, you know, the insurance of having a big brother looking after it.
12:18 Well, of course, there’s the downside that you don’t own it. So is this shift itself going to be a difficult one mentally for us as humans?
12:25 Sandeep Nailwal: Yeah, it is. It is going to be. And you are right.
12:28 It will be a generational shift. But the fun thing is if you look deeply these days, the generation, the technology is moving so fast. I say that the generation changes every six or seven years instead of every 20 years. Right. I mean, if I talk to my brother who’s like seven, eight years younger than me, like his.
12:47 The kind of apps he used, the kind of like the how their friends interact, their dating life. Everything is completely different than than what I, you know, I’m used to. Right. So good thing is, yes, this is a generational change. But then, you know, the generations will change very, very fast.
13:06 So generations are changing very, very fast due to this technology. The VR, like, you know, six, ten years younger kids, they are spending more and more their lives on virtual reality where they own assets. Like gaming industry, very few people know that gaming industry is so big that there’s a there’s a documentary in Netflix, which which has a very famous kind of section which says that gaming is basically bigger than in the U.S. Because you have this basketball NBA, like National Football League, they’re famous, like, you know, like American football and the entire Hollywood and few more of these entertainment industries combined like gaming is this bigger.
13:50 And, you know, this hundred thirty hundred fifty billion dollar revenues in gaming industry and, you know, the these these users are spending more and more time into these. And now with this concept like play to earn in the in the gaming industry, in the industry that, you know, you guys must be hearing, you know, because now you have a secondary global secondary market where you can, you know, play a game, earn some assets and then sell it into the market and play, you know, use this play to earn kind of model. People are spending 10 X more money into these gaming into these gaming assets.
14:24 So gaming industry is also poised for this huge explosion into 10 X 20 X bigger size than what they are today. So definitely, yes, this is a generational shift. But then generations are changing very fast and are, you know, generation like maybe 10 years younger kids. They’re already doing this. Already we call the some of these kids crypto native and there are already examples where kids are like these people.
14:47 Even now I have become like because I use so much I’m like much more comfortable paying and owning whatever I have in crypto instead of like, you know, converting into bank and transferring registering accounts. It’s just too much of a hassle. It’s sooner or later it’s going to be in that way. One another thing you said that, you know, we are used to having some big boss watching and, you know, protecting us from our own mistakes and all that. Those are actually application design patterns. You can easily build those patterns where you, you know, in let’s say two, three, four years, you will be able to choose a custody account, which actually, you know, where you own some asset.
15:27 But then you also have a custodian who provides some level of security on top of that. Let’s say you own some asset or you want to own, like, let’s say real home on, you know, on blockchain. So, you know, a primary question is what if I lose my key, right? And somebody just takes away the ownership of my account, ownership of my house. But, you know, the design patterns will evolve in a way that, you know, for this kind of asset, you will have one set of key with you.
15:55 But then you will need four or five different signatures, maybe two, three signatures from your family members, one or two signatures from the local government. And then you will be able to transfer. So even if you lose your key, it’s okay. You know, you’ll be able to recover or maybe add a new key and then there will be more people to pay. So these are application design patterns.
16:13 They will eventually evolve into much more comfortable systems like you were just mentioning.
16:18 Brian Rose: Yeah, no, that’s a good point. You can actually engineer them in yourself and pay a proper fee for them as opposed to them just being rolled into the institution. I think Vitalik Buterin has his ETH locked up in a cold storage system that needs family members to approve before certain chunks of it can be moved. So I know some people or that’s being offered out there already to a certain extent.
16:38 I want to start by asking you a question that one of my students asked me. And I was actually in the banking industry for about 15 years. I started back in the 90s in the derivatives market on Wall Street. And we were doing all sorts of complicated option trades and repo trades. It was kind of the Ave of its time in some of these options market at the time.
16:57 But I had to have a big balance sheet and 20,000 employees and a direct line to the Fed to create these products. And when I watched what you guys were doing about a year ago, I thought, wow, I’ve never seen this rate of innovation, the amount of value locked and the rate of growth. And I thought, if, you know, if four guys and a dog or five girls and a cat in Singapore or St. Petersburg or somewhere can create a DAP as opposed to having to be somebody at Bankers Trust where I worked at Goldman Sachs.
17:26 This is going to move so fast. And so we started out your smile. I’m going to get to you in just a second. So we started an academy and I started forcing my students to put on small trades so they can get familiar with them. So they put on a yield swap.
17:40 They put on a liquidity pool. They put on these things and even in just tiny small size so they can get experience with it because I think it’s a great way to get to know a trade just why you can buy $20 worth of gold and you can get to know it. And one student came back to me with this question and it made me think of you. He said, Brian, where did my youth go? That was a common question.
17:59 Where did my youth go? And it reminded me of there’s this book called Guns, Germs and Steel. It’s an old school book. It was written by an author. And it all started with a question from somebody in Papua New Guinea.
18:09 When he said to this author, he said, how come all you guys in the West have all this cargo and stuff? And he had to go through like a thousand years of history to explain it. And my student was frustrated, Zendy, because they were doing Uniswap for the first time and it provided an amazing service that you couldn’t get, say, a year and a half ago. But they were paying so much in gas fees. Some of my students were staying up till three in the morning to avoid the gas fees.
18:34 And I thought that would be a good question to ask you, is where did my youth go? The reason you guys are in business, the reason you guys are so popular, and why is that a question people ask? And why do people struggle with this?
18:48 Sandeep Nailwal: For sure. So, you know, first, the first part of your statement that, you know, that people are doing like this here, the rate of innovation is so fast because at the end of the day, we call it something called composability.
19:02 So one smart contract can interact with some other smart contract. And if you see in the span of like six to ten months, actually, smart contract developers were able to build everything that is available in the traditional finance industry. The traditional finance industry has taken like hundreds of years to build these complex products and all that credit default swaps, interest rate swaps, and this and that. All of that has been built, you know, within a span of six months on blockchain.
19:34 Brian Rose: So, congratulations. It’s impressive. It’s impressive.
19:39 Sandeep Nailwal: It’s called financial engineering on on steroids, basically. Right. So, so that’s the first part.
19:47 But the second thing that you were saying that, you know, where did I where did my youth go? So first of all, I would I would I would like to say that why it is like, you know, why the gas fees is so high. And then we can go into what other mechanisms are possible to, you know, kind of make it more palatable, at least for the retail users. See, at the end of the day, Ethereum is basically the goal of Ethereum is basically to become a world computer. And I tend to call it like the global settlement layer.
20:23 So where all these big trades and big, you know, like complex financial transactions will be settled. And that’s where that’s that’s our philosophy is that Ethereum is going to be that layer. Why? Because it’s extremely decentralized and extremely secure. That means so many people are running the full nodes in the network that, you know, when you are transacting, when you’re doing or processing a transaction logic, a large number of people are executing the same logic.
20:54 So obviously, you know, in order to incentivize people to keep this extremely secure and decentralized, you know, you have to pay for this service, which the whole network, you know, you are essentially when you pay it, it goes to the miners who are mining the, you know, or kind of creating these transactions, combining them and, you know, putting them on the block. And then the block size, you can imagine that already the whole for the whole world, it’s like in a single block, we can have roughly, I think, 300 to 400 transactions. Right. So, you know, obviously, you can imagine that this is for the whole world.
21:34 So people have to compete to become a part of this or to buy a part of this block space, because it’s extremely, again, the reason is extremely decentralized and extremely secure. So, but then, you know, how the retail users who have less than, let’s say, $500 or $1000 portfolio, and they want to do these smaller trades, how do they do? How can they do these or interact with the blockchains? So for the same thing, you know, there is something called layer two scalability, and that’s what we are working on.
22:06 So layer two scalability simply means that, you know, we keep the layer one Ethereum, like imagine that this is the Ethereum layer one Ethereum. And then what we do is we create a parallel blockchain on top of, you know, which is running on top of this, which derive some security parameters from Ethereum. And then instead of you transacting directly on Ethereum, you transact on this layer, right, as a retail user. And that, you know, you do, let’s say, thousands and thousands of transactions.
22:33 And then what, let’s say, for example, Polygon, but we do, we combine all these transactions, batch them in a cryptographic way and put one transaction on Ethereum. So whereas, like, you know, you would have paid thousand transactions and thousand transactions would have to compete to get this block space. Now, only one transaction and some data goes there, which is a condensed form of these hundreds of thousands of transactions. And only now this goes into Ethereum. And that provides you additional scalability benefits.
23:03 And so much so that, you know, I think many of the applications like Aave, SushiSwap and many others have saved like millions and millions in gas fees by using, you know, Polygon. And then they have, you know, kept these network effects closer to Ethereum. And yeah, that is the layer to scaling. And that’s where Polygon and teams like Polygon are trying to, you know, scale Ethereum. There are various different ways, different tradeoffs of security and decentralization, everything.
23:33 But that is on the higher level what Polygon and other layer two solutions are trying to do.
23:38 Brian Rose: I think you’ve been in the past made a comparison, like you might go to the mall and use your credit card and, you know, buy different things and get receipts for different things. But then at the end of the month, you just get, you know, one debit off of your account and pay for that. So it’s a way of you’re aiding all of those transactions, but it still gets settled on that Ethereum blockchain layer.
24:01 Sandeep Nailwal: Yes, something like that also. And there can be multiple analogies, right? So, I mean, the analogy I gave is that, you know, when you go to a smaller or kind of a large, you know, kind of mall or, you know, who has some internal financial setup or financial system setup. And, you know, you are doing your your buying stuff and all that. So you swipe your credit cards and all that. And then, you know, credit card companies basically collect all that transactions.
24:30 And then, you know, in T plus two days, they settle and all that. Right. So basically, you don’t settle everything on the larger banking network. You settle a lot of these things on this credit card, like a smaller and closed network and then, you know, settle back to your bank account monthly. Like, you know, for example, from bank, you submit into a credit card account, like monthly.
24:51 Right. So that can be one analogy, loose analogy, though. There can be like, you know, you can also think of it like your Venmo account. I don’t know in UK people use Venmo or not, but it’s like basically you have a wallet where you deposit your money from your bank account to this wallet. And then using this wallet, you can anywhere just scan a QR code and make your payments and all that.
25:13 So instead of you using an adding bank accounts, you know, with those complex bank account number and then I have a C codes and whatnot. You simply transfer it to a wallet with which you can phone numbers by phone numbers, you can transfer money with each other. So that is also one analogy where, you know, your bank is basically the Ethereum level and this wallet is like Polygon. Right. That can also be one analogy.
25:38 Brian Rose: I remember when I was early on, I asked someone I was I was new to the space. I said, well, Polygon replace Ethereum. And they said, no, Ethereum is like cash and polygons like PayPal. It just gives you an easier way or more convenient way to use something you’ve already used. Now, maybe that’s not the right analogy.
25:56 Sandeep Nailwal: But you want to try it. It’s very relevant. It’s very relevant that Polygon is not there to replace Ethereum. Polygon is just a transaction layer on top of Ethereum, which, you know, aims at providing faster transactions on Ethereum so that these smaller value transactions like we don’t recommend like a billion dollar or a hundred million dollar transaction happening on Polygon. We recommend these smaller like five hundred thousand ten thousand up to ten thousand or twenty thousand kind of transactions happening on Polygon, maybe even up to hundred thousand dollar transactions.
26:30 But if you want to transact, let’s say, you know, ten million dollars, you know, you can you can easily pay that fifty, sixty hundred dollar gas fees on Ethereum and be more secure on that. Right.
26:41 Brian Rose: So the biggest complaint I get from my students is not I don’t understand what a yield swap is or the liquidity pool makes me nervous. Or I option scare me. It’s all gas fees like they hate the gas fees. Now, of course, they’re doing small trades and the gas fees sometimes are as big as the trade.
26:58 But I’ve told them that, look, over time, there will be competition and the fees will go down. And, you know, Sandeep, we waited for the London hard fork to happen. We’ve been promised ETH 2.0, but I haven’t seen the gas fees dropping. And the question to you is, what were these things supposed to bring? And will Ethereum ever be able to lower the gas fee significantly?
27:19 Or is it already innately in the way it was built impossible to drop them down based on the demand?
27:26 Sandeep Nailwal: I feel that, you know, that’s the like on Ethereum, even when the each 2.0 comes in and then the gas fees on Ethereum slightly go down. But the demand will be so high, like, for example, this EIP 1559 came in. And then, you know, for some days, the gas became really low and all that. But then now suddenly these NFTs exploded to the scene.
27:48 And then now, again, we have this $500, $1,000 transaction, or $1,000 transaction gas fees, you know, is there. So, you know, for all these use cases which are low in value, I would strongly recommend, you know, even your users to use Polygon, something like Polygon, right? I mean, they can transact that almost like insignificant gas fees and get that experience. And we are already seeing that, like, you know, I think these applications like Aave and SushiSwap and all that, their number of users of these applications on Polygon chain are much higher than the number of users that they, you know, on the on, let’s say, on Ethereum.
28:32 Brian Rose: Yeah, a lot of my students are already doing that. I want to ask you about, well, first of all, when is the 2.0 coming? Because they told us end of this year, early next year, but you don’t believe that.
28:44 Sandeep Nailwal: Yeah, so I mean, see, ETH 2.0 is a very large project, even like people also have these misconceptions that, for example, end of this year, it’s not ETH 2.0 was supposed to come end of this year. It’s the merge with the proof of stake that is going to come end of this year.
28:59 And then, you know, like, but the eventual move to ETH 2.0, where you will have this like 64 shards and all that, that might take like three to five years somewhere. But then now the next step, next big step is to get the merge into the proof of stake system. Right now, Ethereum is still proof of work, which is, you know, as everyone knows, is not very good for environment and whatnot. And we expect this to move into a proof of stake kind of a network where the energy requirements go much, much lower.
29:34 Brian Rose: Okay. Now, but you’ve even said even the 2.0 happened right now, the network can’t handle the volumes that’s necessary. Is that right?
29:42 Sandeep Nailwal: Yeah, our thesis is that even if, see, what is ETH 2.0? ETH 2.0 is basically current chain, but 64 such chains, like the current chain.
29:50 And the demand right now, if you see the, like, right, you know, what do you want, like, gas fees to be maybe like $1, $2 and the, you know, the gas fees for transactions, you know, is like $500, $600 right now. Maybe even yesterday broke all records and it was like maybe $1,000. So if you want to have a gas fees somewhere of, let’s say, and this is very layman terms. I’m not talking very deep. There are a lot of nuances to it. But then in a very layman term, you can think that, you know, the gas fees is like now today, $1,000.
30:28 And, you know, the ideal gas fees people would want is would be maybe sub $1 to do a transaction, right? Even $1 is a big fees to pay for this. So if you see, if you see, see it this way, the gas fees is already like thousand times higher than what it should have been. Maybe even in the stable times, if you say gas fees should be like gas, when gas fees are like $200, even then from $1 to $200, it’s like 200 times higher than that. And what E2.0 is doing is basically it is adding 64 such shards instead of one such chart, right? Instead of one such chain, you have 64 chains.
31:07 So basically you will get 64X scalability, but you already, the demand is 100 to 500X of that. So even if when that comes, the gas fees will become lower, but it will be still significantly high enough to be prohibitive for a large number of small use cases. So that’s where that’s that’s that’s our core philosophy and thesis is that polygon that, you know, this layer one will act as a settlement layer, but eventually the business activity will move towards the layer two like like polygon.
31:39 Brian Rose: Okay. And you have polygon solutions for most of the major dApps and most of the major applications. So it’s easy. And you said before, I think if you’re an Ethereum developer, then that means you’re a polygon developer. What did you mean by that?
31:51 Sandeep Nailwal: So because, you know, one of our core design philosophy has been that we have kept the polygon development ecosystem or development mechanisms so close to Ethereum like it’s like almost 100%. You just need to change like one or two parameters and then boom, you can deploy on polygon chains. You don’t need to learn anything new. And we understand that developers want to build cool things. They don’t want to keep learning more and more things about infrastructure.
32:19 Right. So we wanted to use our kind of the, you know, compound on the on the network effects of Ethereum and so that the developers can simply take your existing code, deploy it on on on polygon and then start using this scalability benefits.
32:33 Brian Rose: How important is it to build relationships with developers? I mean, you know, one of the reasons Ethereum is hard to replace is because, you know, they have so many people that develop on that platform and have for many years.
32:46 You guys are probably some of the best, I think, when it comes to facilitating them, listening to them. How do you how do you do that? And why is that so important? Because the end user doesn’t really see that sometimes.
32:58 Sandeep Nailwal: Yeah. So I mean, the reason for that, I would say, is because we also come from Ethereum community. We are hardcore Ethereum developers.
33:05 And, you know, we have been into the community and kind of learned the ethos from there. And then we are applying those same ethos on the polygon side of things. And so, you know, we have a very heavy focus on on on on hackathons and, you know, providing very close handed support to the developers, you know, trying to do as much as we can on the documentation side and all that. And, you know, incubating and helping developers grow because it’s like still a very closely knit community.
33:32 And once, you know, those developers grow, they kind of tend to help, you know, more people who are joining new and all that and kind of becomes a trickling down effect. But yeah, but then these are the few things like hackathons and providing very close handed support to developers is what we do.
33:49 Brian Rose: OK, I’m going to ask you the question I’ve asked my last four guests and and I’ll tell you what they said before you have to answer it. Will Cardano replace Ethereum? Now, I asked this from Dan Morehead, who runs three billion dollars for Pantera Capital, asked to Scaramucci, who owns a billion dollars with a Bitcoin.
34:08 I asked a Scott Melker, a bunch of people. And strangely, most and we’ve got Charles on the show coming up here in another week or so. A lot of them said that Ethereum was the Microsoft Office of Blockchain, as in it might not always be the best software. But since it has the most adoption and it’s woven in to, you know, the DNA of the world, that it’s going to be here even if something better replaces it. What do you say, Sandy?
34:36 Sandeep Nailwal: Yeah, I mean, I personally don’t feel that, you know, Ada or Cardano or any other platform for that matter would be able to replace Ethereum. Probably because of the same things that you are saying, it’s so tightly woven in that, you know, even if you speak to developers today and we speak to a lot of developers, almost 100 percent of the blockchain developers, their first blockchain is Ethereum blockchain. And then second thing is 95 percent of all the developers, when you speak to a blockchain developer, he says that I am a blockchain developer.
35:10 Actually, he means that he is an Ethereum developer. So it’s so tightly woven in. And then it’s like, you know, I don’t know about the Microsoft example, but, you know, people give an example of it being the JavaScript. So EVM being the JavaScript of the system. So JavaScript is also a programming language, which is not very optimal, was designed in a haphazard way.
35:33 But then, you know, somehow it kind of clicked and then, you know, it still remains the most popular language in the, you know, in the web programming space. And, you know, that’s why a lot of people are trying to copy the EVM effects like the same, like they are trying to implement the base blockchains are different. But then they are adding these, you know, adding these EVM features on top of their blockchain so that they can try to attract Ethereum developers, you know, which in the short run, definitely they will be able to get some, you know, initial developers.
36:11 But then eventually, in the long run, the kind of the decentralization and security that Ethereum provides and proven kind of existence, you know, through these hacks and attacks and whatnot, you know, that that’s what in the last six, seven years has got Ethereum slowly. That confidence where institution can put billion dollars on Ethereum blockchain, right? Like for any other blockchain, I don’t see them reaching anytime soon at a place where, you know, institutions are putting billions and billions of dollars of their hardened capital and all that.
36:48 And the second thing is also, if you see, apart from these things, you know, if you see like on Ethereum, the wallet alone has had like maybe 800 million to a billion dollar worth of attacks, like the DeFi on Ethereum, for example, has had, you know, probably one to $2 billion worth of attacks. And then we have some standard design, you know, mechanism that how you should build the smart contracts and all that. Imagine all these new like Cardano now launching smart contracts or Solana or any of these blockchains who are launching these things, these smart contract platforms right now, because the funds and capitals in these platforms are so low that hackers are not even looking into it.
37:40 When they reach a particular point where, you know, it becomes start start becoming lucrative for hackers, then a lot of hackers will start, you know, kind of hacking and exploiting these smart contracts. And it will take a long time for these communities to reach a point where, you know, you can stably and securely build these smart contracts, the wallets and all those experiences. Ethereum has already gone through that. And, you know, with the solutions like Polygon and all that, you have the scale also now available on Ethereum.
38:07 So why do you need any other blockchain? Only in the short run, because right now we are in the bull market and some of these applications can, you know, have those, you know, projects, grow money around on the projects and those projects launch and their token goes like a pump and all those kind of things. And then, you know, everybody is happy and that’s why they are able to attract the developers. Once this kind of extreme hype dies down and when it will come down to fundamentals, Ethereum, you know, is like way, way far ahead of anything else.
38:40 And it has had those perfect storms multiple times with the ICO boom, then D5 boom and then NFT boom and then, you know, DAO boom right now. It’s very, very hard to replicate for any other blockchain.
38:52 Brian Rose: Okay. So you won’t be building second layer solutions for Cardano or any other chains at this point?
38:59 Sandeep Nailwal: Not any points or not any time soon.
39:01 And I don’t think that unless like somebody is comprehensively able to replace Ethereum, which, you know, we are I think we are one of the most aggressive, aggressively adopted blockchains. So first, you know, before replacing Ethereum, many of these blockchains would have to replace Polygon, I think, and then they can really attack Ethereum. And then I think, you know, projects like ours will provide ample cushion for Ethereum in terms of scalability for anybody to replace or even think about replacing Ethereum.
39:38 Brian Rose: Okay. What do you like better, bull markets or bear markets? Because like you said, when the bulls are happening, lots of new things are going on. But the bear market is when things get stress tested and a lot of when the good development happens during bear markets, right?
39:51 Sandeep Nailwal: Yes. So it’s a balance.
39:52 Like the both balance are balance is important. Like, you know, two years of bear market, then, you know, two, three years of bull market is the perfect mix. Like, you know, you then build because and bull markets are extremely taxing. Right. And I mean, I mean, I can’t, you know, I can’t tell you I just wanted to before joining this call, I wanted to, you know, tell somebody from my family to give me a coffee because, you know, I’ve been on this constant calls for I don’t know how long.
40:19 And it’s been like days and days, those like this that we had 12 hours, 13 hours of calls and, you know, all this stuff apart from the usual work. Oh, you know, it’s very taxing. And I always keep saying I tweeted about it also that, you know, this somebody should do a deep study on the effects of crypto on the on the mental health of people working in it, because there is no Saturday Sunday. There is no Christmas. There is no Diwali holiday. There’s no there’s no holidays like 24 cross seven, right? It’s like too painful and too stressful.
40:50 I mean, if you see in the traditional world also like that, you know, traditionally, the most taxing industries have been finance industry, the investment sides of things or the tech industry, which where you are building this new tech and crypto is basically merger of these two. And that too, without any breaks, like it’s not like, you know, the market ends at 4pm and then everybody can go home and all that. And weekend, it doesn’t open and there is a Labor Day holiday and freedom, Independence Day holiday, nothing works all the time and more so on these holiday times.
41:20 So it’s very, very taxing. And the bull market means you get media requests and the bear market, you don’t. But the bull market, people talk about it. They want to talk about it. Usually means retail or investing, maybe retail that shouldn’t be investing or investing.
41:32 And then we and then that tops out and then you can get back to work in the bear markets.
41:38 Brian Rose: But you went from a 200 million market cap up to 15 billion this year. That is good for business though, right? For you, because it also means more people, more people involved, etc. I mean, how has that changed your life and polygon?
41:54 Sandeep Nailwal: Yeah, I mean, in terms of our ability to swing big, it has done wonders for us. Like, we recently acquired Hermes, which is like a 250 million dollar acquisition. We are doing more with like, I mean, I can only say that, you know, that Hermes acquisition is like basically a tip of the iceberg. And, you know, there are so many more things coming over there. And yes, it allows us to swing big.
42:23 Now we have multiple offices all across the world and then multiple teams working multiple solutions. And I think, you know, it will be one to one point five or two years of, you know, hard work from our side to fully blossom polygon into, you know, something really, really big. And we like this kind of organic slow growth, like, you know, like, for example, people, as you were saying that, you know, people remember polygon that this year we became from 200 million to 15 billion dollar valuation.
42:52 But if you see, we have been working hard and, you know, perfecting these, building our infrastructure, building these tooling and all that for last two and a half years. It’s just that, you know, it kind of because we were from India, nobody really gave too much of attention to this. And then, you know, when we kind of reached that tipping point and the industry and the Ethereum gas fees were going crazy high, you know, we were suddenly in the belly of the beast.
43:25 And then, you know, we started running and then it ran crazy. And, you know, but the thing is for any big project, you need multiple such, you know, upward cycles. You always grow up, plateau, grow, plateau. And then, you know, that’s what we focus on. And then, you know, we are already that success was baked in one year back.
43:43 Now we are working on things which will result in our success in the next six months to 12 months.
43:48 Brian Rose: Yeah, there’s that old expression, the harder I work, the luckier I get. So you guys were putting in the work and, you know, you did all the developments and then it happened and there was part of Marketfit and you guys took advantage of it. But it wasn’t exactly like you bought a lottery ticket to be there. Talk to me about this purchase of Hermes, because when I saw it, I put my old investment banking hat on and I thought my first reaction, Sandeep, was who advised on that?
44:15 Was that Goldman Sachs’ advice? And then I realized, oh, my gosh, this is a completely token transaction. It’s sizable. It was notable. Talk to me about how that happened and that gets you what, in the ZK zero knowledge space, a little bit more.
44:29 But tell me about that merger. It was impressive, really.
44:33 Sandeep Nailwal: Yeah. So basically, I mean, as you at the start of the session also said that Polygon is a multi-chain Ethereum, right? So we intend to add multiple types of chains. There will be zero knowledge chains.
44:46 There will be a bigger zero knowledge smart contract execution engines. There is already proof of stake chain. There is already a Polygon SDK app chain kind of architecture and all that. So we are basically building all of these different, different, different architectures and developers will be able to choose what they like the best for their applications. And the Hermes acquisition is a step in that direction because on zero knowledge, we believe that we had like our competitors or not competitors, meaning the other players in the zero knowledge space had already had a head start of like a six to twelve months, right?
45:30 And we needed to become at par with the existing zero knowledge solution providers. So the inorganic way of doing was to merge with multiple such platforms and to get this zero knowledge expertise within the Polygon umbrella. And that’s what we have done in the last three to four months. As I said, that Hermes is basically the tip of the iceberg. There is more stuff coming.
45:57 And in terms of this acquisition, what we actually did is we spoke to the Hermes team and they also know what we are doing. They know that the capability of Polygon in terms of its business development. And it’s, you know, it’s not only about building a technology like, you know, many of the projects feel that, OK, you know, we build the technology. People will come. But then it’s also about business development.
46:23 It’s also about, you know, helping and supporting the ecosystem developers and all that, building the entire ecosystem around. And they realize that we are pretty good at that. And they have this expertise on the Geordi Balina. He’s basically, you know, he’s one of the legendary Ethereum developers and white hat hackers. He has helped, you know, people and build languages like Circom and all that.
46:47 So for us, it was a perfect mix in terms of like getting them for their competency and the skill set. And for theirs, it was very it was a good step in terms of getting them all this, you know, visibility in the community, as well as access to, you know, hundreds and hundreds of these clients who can actually build on the solution. So it was kind of a perfect mix. And we discussed and they discussed with their token holders. And I think they got an overarching approval from their community.
47:20 And then we decided and then again, like from the polygon tragedy, like some tokens were moved into a smart contract and then whoever owns happiness, they can go and swap. And that’s again, like, you know, comes back to the paradigm shift in how human beings can collaborate. Like previously, if you had to do it, you would, you know, you would need like extreme level of like regulatory hand holding and, you know, informing multiple of such institutions to support the, you know, swaps.
47:49 And, you know, submit multiple kind of such paperwork here and there. But here in the blockchain space, like it’s all available on blockchain. You don’t need any more transparency than that. Like, you know, just move the tokens and you can see who’s moving what and, you know, who’s claiming how many tokens. So, you know, it was very simple in that sense.
48:10 And we are happy that we kind of pioneered this thing and, you know, kind of hopeful to do more such things in the coming days.
48:18 Brian Rose: So, no Goldman Sachs involved in that. No SEC involved in that. You guys just got it done.
48:24 Sandeep Nailwal: Yeah, I mean, and how do you even involve SEC?
48:27 Because, you know, like we, this entity is like polygon entities based out of BVI. Hermes entities based out of I think two, three entities like Cayman or Dubai. And then, you know, both the teams decided to share IP and then merge the token into this. So, you know, SEC doesn’t even come into the purview of this. So, yeah, I mean, it’s like all the way and unless and until like the, you know, most of the governments across the world come together and, you know, create a global framework for it.
49:00 It will remain hard to kind of understand. We involved all the legal kind of help and everything like to make it completely compliant and everything. But then, you know, how do you there are no guidelines for anything like that till now. And yeah, so that’s why the blockchain is the ultimate guideline.
49:17 Brian Rose: Any advice to people that are going to go do mergers out there?
49:20 Anything you thought, you know, do’s and don’ts of doing a deal like this now that you’ve done it and had a couple of months to process it?
49:28 Sandeep Nailwal: Do’s and don’ts, I would like one of the biggest challenges comes is that when you have two listed tokens, like, you know, how do you decide the peg? And, you know, there are a few ways of deciding the peg between these two tokens, because both have a fluctuating value and you know how volatile these markets are.
49:47 So it’s hard to kind of get on a pricing. But then, you know, projects should see the kind of intrinsic value and try to freeze on some price between the two teams and then reach a consensus. And once you reach that consensus, don’t think about it, like whether you’re like one token goes, you know, like crazy up. Don’t think like, you know, you ended up paying a higher price or lower price, whatever. And especially in terms of like how the team synergies, I think the good things is that, you know, both of our teams have gelled well and we have kind of we are building polygon in a kind of a conglomerate way.
50:23 So it’s like the world’s first decentralized conglomerate kind of thing, which have these small, small entities like Hermes and there will be a few more announced and they are working in a very autonomous way at their level. But since they use MATIC token, so all the value their network accrues, you know, eventually goes back to the MATIC token. And that’s how I think it’s like a very new paradigm in that sense. Think of it like a multiple autonomous entities working together.
50:50 But all of them actually, the value accrual is actually going into the token. And since there is like on the decentralized platform, you don’t need to make revenue. So you don’t have any distrust issues that people are creating revenues and not displaying it and displaying or kind of contributing back to the main umbrella. So because there are no revenues, all the things, all the teams are working to make the or going to make sure to kind of make sure that the value accrual of these activities goes to the MATIC token.
51:19 And then you don’t need any kind of oversight and all that. I think it’s it’s like much more symbiotic, you know, as you would imagine, or as you would expect to have it in the real world in the crypto world. Once you get into this, you get understand this business models of proof of stake and all that. It’s very, very symbiotic. We don’t even need to kind of, you know, intervene into the autonomy of the individual teams.
51:45 They can fully build themselves. They have token allocations and all that. If they grow their value accrual or their activities add to the value accrual, everybody benefits. So it’s very kind of a symbiotic environment.
51:57 Brian Rose: Wow. So like the first block chain conglomerate and each one has its own kind of like sub equity piece where they can get motivated by that.
52:05 And even though it’s all under the MATIC umbrella. Yes. All right. A couple of last questions. I might be losing you a little bit on frame as well.
52:12 Just go. Okay. I’ll just get you a little closer there. Perfect. You know, you’ve spoken about valuing a token and the fact that you have a governance token.
52:21 And, you know, compound blew up in the DeFi summer last year when it put out that government’s token and then people could earn compound with the yield swapping. And I was wondering if you could explain how someone values a token compared to any like a Bitcoin versus an Ethereum versus a polygon or a MATIC coin. Because you, I think, look at MATIC as owning something that will then pay rewards in the future because you own part of the infrastructure.
52:45 But not every token is the same in that sense. Maybe you could explain what you meant.
52:50 Sandeep Nailwal: Yeah, it’s actually very simple. If you if you kind of very simple and very concrete in the for any proof of stake system. See, polygon is a is a transaction based system.
53:01 Like so we are saying that, you know, Ethereum is on the settlement layer and we have polygon which actually contributes like, you know, which can process a lot of transactions and put it back on Ethereum. Right. So how. So first of all, how any proof of stake system makes money is all kind of a cruise value, I would say, is that let’s assume that there is a proof of stake chain and it is it is it is generating. Let’s assume $10 million in the gas fees.
53:33 OK, so all that gas fees goes to the people who are running validators who are running the chain. Right. And let’s assume that 5% is a good market return rate so that, you know, if you are getting 5% return, people would be willing to stake the tokens and then get that 5% return. So in order to get 10% or $10 million as 5% of the of the of the overall staked value into the network, you would need $200 million staked in the network. For any proof of stake network, how proof of stake validators make money or earn money is by the gas fees. Right.
54:09 And if a network imagine a network is generating $10 million in gas fees and 5% return is a general, you know, as we say in the finance financial terms. Let’s say it is a risk free rate of return. I’m trying to calculate or I’m trying to demonstrate how to calculate the intrinsic value of a network. Right. So let’s assume 5% is a risk free rate of return. So for in order in order for for all the validators to earn this $10 million by staking their tokens.
54:41 They and this to be at least 5% of their of the return, you know, in terms of the return, it should be people should be ready to or willing to stake $200 million. So if you stick to like the all the validators are staking $200 million worth of let’s say magic tokens and the network is generating $10 million in gas fees. That means every validator will get roughly 5% of their return. Right. So, and then we generally say that 50% of these proof of stake systems you stick 50% of the tokens available in the fully diluted market supply.
55:14 Right. So if 50% of the tokens are staked, that means 100% of this network will be $400 million. Now, look at it as backwards. Right. So there is a network which has $400 million market cap and 50% of its stake tokens are staked.
55:30 That means $200 million tokens are staked worth of tokens. And then this network is generating 10% or 10 million in gas fees every year. That means everybody who has staked their tokens of whatever value they are making 5% in the return annually. Right. So in this scenario, a network which generates $10 million gas fees, its intrinsic market cap will become $400 million.
55:55 And then you can add a premium that stock markets add to it. Right. So now with polygon, see how polygon value approval will work. So you have this Ethereum blockchain in the middle and you have these multiple small, small, small, small chains around it. Right.
56:10 And all of these chains are generating some sort of revenue. Right. So the intrinsic value of this, of the intrinsic value of polygon would be that the total transaction value transaction fees that is generated in all these various different kind of chains. And then, you know, if it is 5% is the good return, then, you know, multiplied by, let’s say 20 and then 2x of that. So that will be the, let’s say all these networks start generating $100 million in gas fees, then the intrinsic value of the network would be $20 million.
56:52 Right. So, and then you can add a premium to it. So that is how these proof of stake networks generate transactions. So for polygon to generate, polygon token to generate value or, you know, or have value approval, all we need to do is, is to get more and more and more applications building on top of polygon so that they generate more and more transaction fees, which goes to the validators. And validators are incentivized to stake the tokens into the network to get that transaction fees. That is how our valid network generates value. It might be complicated, I don’t know.
57:27 Brian Rose: No, it makes sense. In what rank do you think polygon will be in market caps, say 12 months from now? You’re at 15 right now.
57:35 Sandeep Nailwal: I don’t know about 12 months, but in two to three years, our goal is to become the number three. And we are very clear on that. I think we have everything to become number three.
57:46 Bitcoin, Ethereum, polygon.
57:48 Brian Rose: Okay. All right. Couple final questions. What’s Mark Cuban like? And is it important to have him early on and talking about you guys, et cetera?
57:58 Sandeep Nailwal: I think it’s really amazing. Like, you know, and I think he’s like a remarkable human being at this age. Like, I don’t know, he must be above 55 or 60 or something. I don’t know. But he’s like so hands on when we had the call with him.
58:13 He understood so many things in their intricacies, like, you know, what validators need, what the transaction fees, what DAP developers need, what users need and all that. He had kind of this mind map of this entire market in his mind. And it was very remarkable. He also understood some of the intricacies of zero knowledge technology. So, you know, like, I mean, for me, it was like really inspiring. And I kind of tried to decode that how he has like so deep, deep knowledge of it, of like, you know, this technology or this industry, which, which must not be more than 5% of his attention, because, you know, he has this sprawling businesses and empire and whatnot.
58:55 And he still knew very deeply what things were happening. And I think the reason for that is he’s very hands on. He kind of like, you know, he’s not like, you know, just reading some things and all that. He just gets into it. OK, let me, you know, spend some money, buy something, sell something and things like that. And I think that’s what makes him very different.
59:15 And then his investment, like, you know, I mean, it has a lot of impact within the crypto industry. Also, people understand him. But, you know, when I now these days, I Google Polygon, I think most of the top results are like Mark Cuban invest in Polygon and all that. So his, you know, digital footprint footprint is like so much bigger than whatever all we are doing. So that is also very, you know, very interesting.
59:39 Brian Rose: Yeah, it’s great. It’s great having his name there. Sandeep, where are the rest of the Indian DeFi companies and the blockchain companies? Where are they? I don’t see many of them out there. Why is that? And how did you guys make it?
59:54 Sandeep Nailwal: No, I won’t say so that there are not many DeFi companies. Actually, if you see one of the more famous DeFi companies like Instadap, who’s the DeFi, this thing, I think they have the second or third largest. This thing, they are also Indian team. Then you have this, you have like some other companies like, you know, ex-Polygon members have created like, you know, we have DeFi dollar by, you know, two members of Polygon. There is another project, Unilent. And there are other projects in the blockchain space also, which are, you know, becoming more and more popular, like EasyFi is there, which is the Polygon team.
1:00:36 And then QuickSwap, although it has like American Indian partnership QuickSwap recently listed on Coinbase. And there are a lot more, like, I think even like, you know, Biconomy, for example, is another team, which is not DeFi team per se, but they are also blockchain infrastructure team. And they have also a fairly decent name. They have a UK guy and a few Indian guys as their co-founders. So there are quite a few teams, I would say, from by Indians and from India, which are, you know, fairly deep in the space. Frontier Wallet is another.
1:01:12 Covallant has a, but although they are based out of Canada, Covallant is also there.
1:01:17 Brian Rose: But you guys had to really do a lot of home growth and work really in the trenches. You didn’t get, you know, a Silicon Valley VC or, you know, a lot of that, that some of the other bigger projects get. But also, I think you said that’s maybe why Polygon is so good because you built it that way.
1:01:33 Sandeep Nailwal: Yeah, I mean, for us, co-founders, it has been really a very, very hard journey.
1:01:37 That’s why, like, you know, we were recently joking that we still don’t realize that where we have reached. And, you know, we still have so much hunger in us because we, you know, got these things very slowly, like, you know, with a lot of fighting. Whereas, like, you know, if you would have simply got, like, let’s say, 16Z on day zero, you kind of, like, you know, start thinking of yourself. As a bit entitled and things like that. And yes, like, that’s why I tweeted also yesterday or day before that, that, you know, we don’t, we didn’t have VCs.
1:02:05 We didn’t have professors, you know, to bring reputation. We didn’t have, like, influencers talking about us on the TV. All we had is users. And that’s true for us also, that, you know, we have done it in a very hard grind way. But, you know, like, we also are fully cognizant of the fact that, you know, and we don’t really count on our laurels at all.
1:02:29 Like, we are more hungry, I would say. All of us were co-founders. We work like crazy, you know, crazy men. We keep joking about it. Like, all four of us are working, like, 12, 15 hours a day.
1:02:41 And then, you know, the goal is very clear in our minds that we want to be, we want to go where we want to go. Like, as I mentioned, that probably become the number three player. And that number three is actually not like a market cap goal or anything. It’s just that it gives us a tangible, measurable goal. Otherwise, like, you know, you can only reach there if you have adoption.
1:03:02 And, you know, people really use your blockchains. And then the kind of tickling, tickled down goals are to get, to become the most adopted blockchain network. And probably have 100 million daily average users in all of polygons, multi-chain, you know, system. So, yeah, I mean, we had a very tough time in that sense. And good for the overall, I think this has been my personal mission also, that when we were starting from India, like, nobody really, everybody thought that we were some sort of scammers because previously, previous to that, two, three Indian projects had come out and they were scammers.
1:03:37 And then kind of this narrative became because there were a lot of Chinese projects also, who like were not really good projects are more of like money grab schemes. And, you know, that and then combine that with the 2018-19 extreme beer market. Nobody really was willing to, you know, invest in us and all that, like many investors now write that they passed on, you know, Matic at that point, we are used to called Matic and today we are like 1,000, 1,500X up then that.
1:04:08 So, yeah, I mean, it’s been tough, but good that, you know, we’ve been able to do. And then now there are every VC in the space wants to have an India shop where they want to, you know, kind of find the next polygon, right? So, and it has made the life of Indian entrepreneurs like slightly easier. And yeah, that’s why we want to, you know, keep going, keep going and make it like really big. So, Indian entrepreneurs are get more respect globally, which they absolutely deserve, because I think Indian entrepreneurs have like a lot of entrepreneurs I meet, they’re absolutely world class, like whoever are doing in Indian space is just that, you know, we have we don’t have that much vibrant funding environments like you have in, let’s say Shanghai or, or, or, or Silicon Valley, definitely is the biggest.
1:04:58 So I think if those funding circuits and everything evolve in India, India will definitely be, I mean, it’s already one of the top three, top four startup spaces in the world, but it will, it can emerge even higher than those ranks.
1:05:12 Brian Rose: Yeah. Sandeep, on a personal level, how do you deal with a sudden increase in wealth? You know, I’m guessing you and your founders are, are now billionaires and everybody on my show now is about billionaires. And I’m wondering, some people deal with it differently than others.
1:05:29 How do you deal with something like that?
1:05:32 Sandeep Nailwal: So, I mean, first of all, like none of us really sold our tokens, our medic tokens, basically, we actually just sold enough to be financially secure. I think we, you know, everyone is now or of our co-founders are like, you know, secure that we don’t need to fight for the money in our lives. Like we have a, you know, good cushion, financial cushion. But beyond that, I think we all of us are very heavily invested in medic tokens.
1:05:59 And that’s why, like, you know, that keeps powering us to, you know, and this is also one, sorry for this, but this is also one pattern that every project should see that the founders should have a long term, you know, token unlocked schedule instead of like, you know, very fast, because then founders end up selling those tokens and they have no incentive to build the product, right? So that has also worked in our favor. And then in terms of the personal wealth, I think it has been because I personally come from a very, very humble background.
1:06:31 So, you know, I am especially using that personal like wealth to kind of get give my family some experiences, especially my momentum. I recently flew them. They were first time they sat in an airplane in their lives. And then, you know, in the last six months, there have been first time when they really ate in a five star hotel and all that. So those kind of experiences has been very kind of rewarding for myself internally that okay, you know, and then my mom specifically, you know, she has seen a lot of hardship in life.
1:07:08 So now she sees that, okay, you know, everything is settled and, and, you know, we can do what we want. So that is a very nice feeling. I think I’m just spending like whatever money I am spending. I’m not really much of a like a materialist guy, like, you know, you can see like, I’m still like pretty, you know, remaining humble backgrounds. But yeah, for my family, I want to have a good house and, you know, make sure that my parents have good health care and they can, you know, experience life, whatever they want to do.
1:07:39 So that’s where my, you know, spending is going into. Unless your question was into managing wealth, like how I’m managing wealth, was that the question?
1:07:47 Brian Rose: No, it was more of just how you’re dealing with it. It sounds like you’re too busy to deal with it too much because you’re trying to create something, right?
1:07:55 Sandeep Nailwal: Yeah, maybe, maybe in two, three years, I will be fully like till now.
1:07:59 Also, I don’t really fully realize that, you know, what we have, like what kind of wealth this is like, because in crypto, like, you know, as you were saying, everybody’s a billionaire and all that, because anybody who was in the last, who was there in the, in the last two, three years, and they had some capital, they invested even like 10, 20 million dollars somewhere. They made 10, 20 million dollars in 2017 cycle and invested somewhere, they would have like half a billion dollars a billion, like NFTs. Somebody bought an NFT of like, you know, thousand dollars and it’s like hundred million dollars today.
1:08:29 So people have like, this money doesn’t really feel that big in this industry because everybody is almost like a millionaire, right? Which is in the real world is like unheard of. So, yeah, I mean, I think in a few years only we’ll be able to realize that how big it is.
1:08:44 Brian Rose: Yeah, let’s finish on NFTs. You mentioned it there. What’s the future of these?
1:08:48 I mean, obviously, you guys want to be heavily involved in transacting those pieces. Do we even understand NFTs right now or what they’re going to become in the future? What do you see? And I guess gaming is alongside of that.
1:09:02 Sandeep Nailwal: Yeah, I mean, see, the current NFTs, the abstract art NFTs, like boardings and all that, I don’t know how they, they are going to or this bubble will remain for these NFTs.
1:09:13 Like, you know, some of these NFTs like board ape and very abstract art, 16 character NFTs are going into millions. But I do feel that the gaming NFTs and brand NFTs, like, you know, you might have seen the Dolce & Gabbana like, you know, launch that is happening on Polygon. And it is really, really, really, you know, amazing. I would recommend everyone to just go to Dolce & Gabbana Twitter and then, you know, see the video of the assets that they are going to, you know, NFTs now.
1:09:42 And I think eventually where this is like the real, real artists like Dolce & Gabbana, you know, designers and all that creating hand woven, handcrafted items and they becoming NFTs. And, you know, basically, all these collectibles are basically for human beings, these are like basically show off kind of thing, right? You are, you get to brag about them and all that. And then when these kind of exotic things from these high level designers and all that, people can buy those NFTs and can, you know, show off.
1:10:16 And then that is also connected with some physical experiences. For example, the Dolce & Gabbana NFTs are actually connected to a physical dress. And then, you know, you get to invite it, you get invited in the, you know, actual events there. I was actually invited in the NFT drop and I also went there and then I met Vin Diesel and then, you know, PDD and some of these big Hollywood stars and all that. So that kind of like when an NFT carries those rights also apart from the art, I think those are kind of going to create a lot of, you know, brand loyalty and engagement.
1:10:53 And that is where the brands are going to use it. Like we are seeing so many brands right now trying to do this. So many sports league, all of the sports league are trying to do that. Cricket, for example, in India, like, you know, Rario is like one of the ecosystem partners. They have launched cricket, NFT cards and all that.
1:11:09 So I see those are the areas like brand loyalty and engagement. These three would be the real, like, you know, like value adding things for NFTs. This abstract art, board apps and all that, which will have their niche market. But I think the larger market would be, you know, brand and loyalty and engagement stuff.
1:11:29 Brian Rose: Yeah. And your single biggest challenge as a COO now is acquisitions for the future and making sure you guys are in the right place at the right time for the next couple of years.
1:11:40 Sandeep Nailwal: Yeah, definitely. Like, you know, I mean, first of all, we kind of let go of all these CXO tags. So we like, you know, we for our co-founders and everybody is some sort of contributor. So it’s a decentralized set up. So now, like, you know, nobody’s a CEO, nobody’s CEO, because there are so many intelligent people have joined with this with these acquisitions.
1:11:58 And yes, like our current like goal, I would say that we have already done, you know, the acquisition and all that. We are set for the next one year of rigorous building, one, one and a half years of rigorous building. And then, you know, going out and launching these solutions in the market and, you know, getting ready for the next, you know, 50 million to 100 million users. So, yeah, we are set for that next, you know, kind of my attention is on making sure that our current momentum stays with our current level of solutions, plus the future solution that we are building.
1:12:34 Their execution basically goes in a smooth manner and able to, you know, kind of provide whatever teams need to make sure that they deliver what they are planning to. So those are kind of my goals.
1:12:45 Brian Rose: Fantastic. And I know you always want to decentralize everything. You want to put it out to the network to where it’s owned by other people and you guys are in control.
1:12:54 I like how you guys took off the titles from yourself as well. I guess that shows the proof is in the pudding. Final thoughts, Sandeep, for anybody listening, whether they’re new to this space or they’ve been using Polygon for a while. Just, yeah, anything you want to add?
1:13:10 Sandeep Nailwal: Yeah, I mean, I would say that, I mean, I want community to be more and more educated and I would recommend more and more people to read the base of this, like, to understand the base of this technology.
1:13:22 And first of all, like, don’t get into it, thinking of it as a technology, think of it as a paradigm shift and then read, you know, like, for example, mastering Bitcoin and then read, you know, the Bitcoin standards to get the basics of it. And then, you know, graduate into Ethereum, like, you know, just understand that, okay, this is Bitcoin, why this network or this decentralized network to do this, you know, was important. And then realize that this is one small business logic where, you know, you are just transacting.
1:13:52 It’s a small transfer. And then realize that how this paradigm can be applied to these complex business logics over the Internet and then how blockchains are solving ownership and, you know, censorship resistance and transparency. And, you know, realize that how the DAOs are going to be, you know, how DAOs are going to basically, everything on blockchain is basically run by a DAO and how these DAOs are going to be fundamentally changing the way the human beings interact.
1:14:22 And another suggestion from my side would be that getting or being a part of DAO is very easy. Just, you know, find out a few DAOs that you like. If you like NFTs, you know, follow Flamingo DAO or Pleaser DAO and whatnot and see what they are doing, you automatically start living this life. And I generally say that, you know, you don’t learn blockchain by learning it. You learn it by living it.
1:14:46 So start living it. So that’s my only advice.
1:14:49 Brian Rose: Which means owning it or living it. What does that mean?
1:14:52 Sandeep Nailwal: Living it means like, yes, owning also small parts and then experiencing it on the communities, on Twitter, on Discord, be a part of those communities and see what all is going on.
1:15:02 There’s a lot of drama. I’m pretty sure I can guarantee you you’ll be entertained. So, yeah, join those communities and your learning will automatically accelerate.
1:15:11 Brian Rose: That’s great advice. Don’t learn it.
1:15:13 Live it. And you’re talking about the book Mastering Bitcoin by Andreas Ansonopoulos. He was on our show in 2015, 2017, 2019. He was talking about the Internet and money in the future. And it hadn’t happened yet.
1:15:26 But he has some great, great interviews that people still go back and watch. I’m sure you maybe watch them from back in the day. And he’s going to come back on the show. But look, it’s fantastic to see all the technology catching up with all the things he was talking about in the future, you know, before people were using words like DeFi. So, yeah, look, we really appreciate everything you’ve done.
1:15:45 My students told me about Polygon first because they were using it because it worked and it was cheaper than what I was asking them to do. So clearly you guys are solving problems out there and I appreciate what you’re doing. You guys are super forward thinking. And yeah, just I’m wishing you all the best.
1:16:02 Brian Rose: Thank you so much, man.
1:16:03 Sandeep Nailwal: Thank you so much for having me here. Thank you.
1:16:06 Brian Rose: All right. Fantastic stuff. Check it out.
1:16:08 Polygon, go get involved. Thank you all for watching and we’ll see you next time on London Real. Take care.
