Our Speaker Series is an opportunity for major figures from crypto, technology, business, and finance to discuss top-of-mind topics with leaders at Coinbase. Brian Armstrong, our CEO and co-founder, recently spoke with Kathleen and Arthur Breitman, the co-founders of Tezos.
Transcript:
00:01
we have a very special
00:03
pair of guests here today for our
00:05
speaker series
00:06
arthur and kathleen breitman
00:10
kathleen is the co-founder of tezos
00:12
previously she was a senior
00:14
strategy associate for r3 which is a
00:16
blockchain consortium
00:18
with more than 70 financial firms and
00:20
she also has worked at accenture
00:22
bridgewater
00:23
and the wall street journal arthur is
00:26
the creator of tezos
00:28
previously arthur was the research
00:29
engineer for google x
00:31
and waymo and in his early career he
00:33
started
00:34
as a quantitative analyst for goldman
00:35
sachs and morgan stanley so
00:38
please give a big warm virtual round of
00:40
applause welcoming
00:41
kathleen arthur thank you
00:46
yeah we’re very glad to have you here
00:48
it’s always good to have
00:49
more opportunities to learn about
00:51
different assets in the crypto ecosystem
00:53
and you two are some of the most
00:56
interesting founders out there that have
00:57
driven a lot of innovative
00:59
new ideas on the tezos blockchain so
01:02
looking forward to getting a chance to
01:03
learn more from you today
01:06
i guess just to kick it off so you know
01:08
i like to ask a lot of our guests about
01:10
how they got into crypto their journey
01:13
you know i guess for each of you what
01:14
initially caught your attention what
01:16
what did your path look like to come
01:17
into the crypto space
01:19
for me it was really the confluence of
01:22
many of my centers of interest
01:23
like really a lot of them political
01:25
philosophy uh
01:26
economics finance mathematics computer
01:29
science
01:31
yeah and i have a less inspiring story
01:33
which is more or less that arthur um
01:35
was bit by the bitcoin bug something
01:37
like 2011 or so
01:38
um we got married in 2013 and i had
01:41
something of a if you can’t beat him
01:42
join a moment
01:43
um and that turned out to have been
01:45
great timing because we were still
01:46
pretty early to the space
01:47
um so i got pretty interested in this
01:50
but mostly it’s through
01:51
um through a bit of a war of attrition
01:54
if anything else yeah
01:58
so as a yeah a married co-founder pair
02:01
here and
02:02
what was the founding moment for tezos
02:05
how did the idea happen how did it
02:06
launch everything like that
02:08
you know in in 2012 13 there was a meme
02:11
going around in bitcoin circles
02:13
which was very powerful which was that
02:14
bitcoin was not an algorithm it was a
02:16
ledger
02:17
it was a set of utxo and that’s what
02:19
mattered and the underlying algorithm
02:21
could be
02:22
always swapped out with some other
02:24
algorithms so long as it preserved the
02:25
property rights associated with the
02:27
utxos
02:28
and then it turned out um to be a lot
02:30
more political and a little more complex
02:31
you don’t just switch an algorithm like
02:32
this
02:33
if you try to do it with hard forks you
02:35
bring up um
02:37
influential minorities can have a lot of
02:39
power uh
02:41
in its process so this reason’s
02:42
governance question and the idea of
02:43
tissues was how do we actually make true
02:45
to the idea of having a ledger where you
02:47
can swap the underlying protocol
02:49
without changing um the nature of the
02:51
ledger there was also a meme going on
02:53
that was
02:53
um basically like embracing every new
02:56
token that came up
02:57
um you know litecoin zcash all these all
02:59
these um i guess
03:00
older alt coins if you will um kind of
03:02
came to the floor at that time and there
03:04
was a big push in some parts of the
03:06
bitcoin community to say like
03:07
this is fantastic we’re going to have
03:10
like these new informations that are
03:12
realized through these new coins and
03:14
then bitcoin will just merely absorb all
03:15
these innovations
03:16
and and you know at the time arthur was
03:18
like but how and
03:20
uh and he thought it was quite senseless
03:22
that like you’d have to basically boost
03:23
up an entire
03:24
network and and create a ton of
03:26
legitimacy around this each time you
03:27
wanted some sort of innovation to be
03:29
legitimized
03:30
um a much more i guess pragmatic way to
03:33
do that would be to have um some sort of
03:34
formal governance mechanism
03:36
uh to imbue new innovations into the
03:38
protocol so i think it was a it was a
03:40
it was a hodgepodge of reading things
03:42
that arthur thought was wrong on the
03:43
internet
03:44
um is is the long and the short of it um
03:46
but it’s really more thematic towards
03:48
like how do you consolidate network
03:49
effects in um
03:50
a currency that basically has to
03:52
bootstrap itself through legitimacy on
03:53
the internet
03:55
yeah i remember these exact
03:56
conversations early on in bitcoin and it
03:58
was like
03:59
um you know in theory any kind of
04:01
innovation could be
04:02
merged in but it turned out that the
04:04
upgrading process was more difficult
04:06
than i think anybody anticipated just
04:07
due to all the various
04:09
constituents miners and exchanges and um
04:11
the
04:12
core team and everything like that so i
04:14
i’ve heard tezos described as the first
04:17
self-amending crypto ledger is that kind
04:19
of that concept that you were just
04:21
referring to about
04:22
sort of upgradability and um you know
04:25
i i guess as far as i understand it was
04:27
also the first
04:28
layer one protocol that had some kind of
04:30
on-chain governance is that right
04:33
yes so we’ve had we there were protocols
04:35
before which had engine treasuries but
04:37
not really junction governance like uh
04:38
like this where you can have binding
04:40
decisions that upgrade the chain
04:41
automatically
04:42
you know this concept of self amendments
04:44
it’s actually you know it
04:45
of course it didn’t come with uh it was
04:48
exploited by philosopher peter suber
04:50
who finds it and uh godol was fascinated
04:52
by it
04:53
it’s also a concept you have in ai one
04:55
of the most fascinating
04:56
um concept in mathematical ai is a thing
04:59
called a girdle machine
05:00
uh by researcher jorgen schmiduba and
05:03
which describes in the eyes that
05:04
improves itself
05:05
by looking for patches alongside proofs
05:09
that the patch actually makes the
05:10
machine better at what it does
05:12
and so there was an inspiration here of
05:14
saying how do we get a system that can
05:16
progressively improve itself uh by
05:18
building upon its own rule as opposed to
05:19
breaking its own rules
05:20
it also harkens to like some basic
05:22
tenets of political philosophy
05:24
like we we now recognize that like
05:25
representative democracy is something
05:26
that we all
05:27
you know enjoy and benefit from mostly
05:29
in
05:30
developed countries um and there’s a
05:33
kind of logical way to like how do you
05:34
actually
05:35
group a bunch of people together and
05:36
then progressively recognize rights over
05:38
time
05:39
um and the idea of amendment processes
05:41
come from that as well so
05:43
um it’s it’s founded in obviously like
05:45
very quantity things and more practical
05:46
things that pretty much anyone who’s
05:47
taking a civics class would understand
05:50
yeah it reminds me of constitutional
05:52
amendments or something like that so
05:54
there’s a certain amount of elegance in
05:56
sort of creating something saying
05:57
i know this is a great start but we know
06:00
that it’s not complete and it has to
06:01
have some kind of
06:02
upgrade mechanism built into it i get so
06:04
it sounds like
06:06
um you know tesla’s has had a number of
06:08
it’s worked right like you you all have
06:10
upgraded the protocol
06:11
um based on these governance mechanisms
06:14
four times as far as i understand it and
06:16
i mean five times okay
06:19
it’s like a couple weeks from now like
06:20
maybe your drinks are expected
06:22
ten days from now that will be fifth
06:24
upgrade yeah all right all right
06:26
awesome so yeah maybe you can talk a
06:28
little bit about um
06:29
what are some of those upgrades been and
06:30
i guess maybe even more importantly
06:33
um what have you learned about on-chain
06:35
governance that
06:36
you know what what went well what didn’t
06:38
go well were there any kind of
06:39
unexpected
06:40
um game theoretic outcomes and that kind
06:42
of stuff
06:44
yeah so in terms of upgrades we’ve had
06:46
an upgrade to the consensus algorithms
06:47
there was a research team that was
06:49
working on our
06:49
consensus algorithm that found a a
06:52
better way safer way uh
06:53
to do it to get faster confirmations and
06:56
so we had to roll out of that one of the
06:58
upgrade
06:58
actually uh upgraded contains algorithm
07:00
which means one block we had the old
07:02
consensus
07:02
and next block the protocol
07:04
automatically changed it toward and was
07:05
um
07:06
operating on a new consensus it was a
07:07
seamless transformation it was not like
07:09
another chain
07:10
that’s launched and then we moved from
07:11
one to another it was the same chain
07:13
that changed it on consensus algorithm
07:15
so i think that was a big deal
07:17
we’ve also had just like in general
07:18
optimization going on
07:20
i would say um the cost of gas on the
07:22
network has
07:24
fallen by a uh sorry the gas limit has
07:26
basically increased by
07:28
about an order of magnitude since a lot
07:29
and it’s been just progressive and
07:30
progressive improvements
07:31
on uh on the platforms we’ve had uh
07:34
better instruction in our language
07:35
and the fifth upgrade which i was just
07:37
mentioning called edo is coming up
07:39
it’s the one which has the most
07:41
significant upgrades um uh
07:43
ever in the la in in the history of uh
07:45
of this protocol and probably
07:46
uh every like on chain upgrade because
07:48
very because there’s
07:49
anyone doing it at the moment um and it
07:52
has
07:52
uh first class zero knowledge proofs
07:55
which are directly integrated into smart
07:56
contracts so it makes it very easy
07:58
to write smart contracts that i can use
08:00
these proofs and the concept called
08:01
tickets
08:02
which is generalization of signatures
08:04
for smart contracts so you know usually
08:06
a user could do a digital signature you
08:08
can do that with a key
08:09
it lets a smart contract do it and it
08:11
makes it very um easy to write
08:12
composable smart contracts because you
08:14
can
08:14
kind of pass around these pieces of data
08:17
which have been signed by contracts
08:18
and verify that they’ve been signed bank
08:20
contracts it’s a very useful piece of
08:21
technology and it’s inspired by some of
08:23
the work
08:24
that was done um on capabilities and you
08:27
also see some of that in
08:28
the libra language actually uh move
08:31
mm-hmm yeah and you know beyond that
08:35
like what we’ve learned i mean geez the
08:37
participation in the network um it
08:39
basically we set like a really high bar
08:41
for there to be any um
08:42
any amendment to the network and we’ve
08:44
been i think
08:46
very positively encouraged by the fact
08:48
that a lot of people in texas ecosystem
08:50
which is which is quite large
08:51
um have come out to vote um if you will
08:54
um so participation has been um really
08:57
really high uh which is fantastic
08:59
i think people are empowered uh by the
09:01
sort of system that was
09:03
laid out in the original um you know
09:05
original design
09:06
and so you get a lot of enthusiastic
09:07
participation you get a lot of good
09:09
spirited debate
09:10
um but uh you know there hasn’t been any
09:12
major
09:13
contention around any anyone upgrade but
09:16
i think we’ll truly see like the power
09:17
of the process and the power of the
09:19
community
09:19
um if there if there is one um uh you
09:22
know
09:22
in in in the coming proposals if there
09:25
is you know something a little bit more
09:26
contentious
09:27
motivation typically north of uh like
09:30
north of 60
09:31
okay that’s great and have you seen any
09:34
kind of minority uh group
09:36
you know fork off uh minority fork
09:38
happen or anything like that
09:41
yes people who well there’s there too
09:43
there are people who did not get money
09:44
they wanted it from the foundation who
09:46
created forks
09:47
they didn’t really go anywhere uh one
09:49
was created by the former uh
09:51
director of the tisos foundation johann
09:53
givers called tz libre
09:55
and the other one was called dude uh
09:57
from people who was a block explorer
09:59
uh and uh didn’t receive a grant
10:02
approval
10:02
um so and and decided that that was the
10:05
end of business
10:06
it’s funny because the um position paper
10:08
actually anticipates um
10:09
uh some of the some of these types of
10:11
affairs so you know it calls out
10:13
explicitly like hey you know one nice
10:15
part about having a platform to
10:16
legitimize upgrades is that
10:18
people who don’t go through that process
10:20
are immediately suspect right like
10:21
um you know if you’re not trying to
10:23
immediately go through
10:25
uh the classic channels your your
10:27
intentions and your motivations
10:28
um should be called into question right
10:30
like you don’t think that you can
10:32
actually um i i guess appeal to the
10:35
to the reason of of the token holders
10:37
one thing that people sometimes miss
10:39
about
10:39
they say it prevents force but of course
10:41
it doesn’t try to prevent sport i mean
10:42
the whole
10:43
code is open source so you know it is
10:44
meant to be copied if you want to copy
10:46
it and use it
10:47
uh what it does is that it gives you a
10:49
legitimate procedure
10:50
for determining which fork is canonical
10:53
which is very important by the way if
10:54
you issue assets
10:55
you know if you issue an asset like usdc
10:57
or security
10:58
token on a chain and there’s a fork you
11:01
want to know which fork you’re going to
11:03
honor
11:03
um and if you just if you have a loose
11:06
not well defined
11:07
procedure for forking it’s big it’s it’s
11:09
a big problem
11:10
so the difference here is that one one
11:12
branch has the legitimacy of having gone
11:14
through
11:14
the governance process it’s a tool for
11:16
ratification more than anything else
11:18
yeah yeah makes sense and i mean really
11:20
the same things happen in companies that
11:22
happen in countries right it’s like
11:24
there’s often disagreement about hey how
11:26
should we move forward and if you have
11:28
some kind of a process to resolve that
11:30
then
11:30
hopefully majority move forward in that
11:32
one unified direction and
11:34
um it minimizes the kind of need for uh
11:36
forks breaking off but
11:37
they still happen i guess that’s that’s
11:39
just life here and there
11:41
um so i think a lot of you know a lot of
11:43
people ask me
11:44
they’re they they’re thinking you know
11:46
what’s going to be
11:48
the winning blockchain right there’s
11:50
there’s sort of like store value that
11:52
use case and
11:52
digital gold and i think bitcoin is
11:54
probably going to be that for
11:56
um forever um and then there’s also like
11:59
medium of exchange there’s the app
12:01
platform
12:02
there’s sort of other categories of
12:03
where other blockchains might
12:05
come in and meet those needs and i’ve
12:08
seen
12:09
there’s you know you’re aware of all the
12:10
ones out there i’m sure dfinity and eth2
12:13
and polkadot and cosmos and
12:17
i guess i was just wondering how you
12:18
think about that do you feel that
12:20
tezos is in a competitive landscape with
12:23
ethereum and all these other ones
12:25
um are you trying to do you watch the
12:27
user adoption numbers and do you think
12:29
of it as a competitive thing or do you
12:30
feel like it’s
12:31
um something different than that
12:35
i have very complex thoughts on
12:39
um to be brief i i think there’s two
12:42
maintenance in this space which is
12:43
application platform versus
12:46
uh store of value uh primarily
12:49
and the main difference between store
12:50
value notification platform is that in
12:51
the application platform
12:53
what you are what you s what you’re
12:55
trying to
12:56
try to kept your rent for competition
12:58
that you’re putting around
12:59
smart contracts so if a bunch of people
13:01
use applications you’ll say okay
13:03
that will um they will people will
13:06
demand
13:06
the token because they need to use it
13:07
for those competition the problem is
13:09
that
13:10
historically costs tend to go down and
13:12
if you have something like the cost of
13:14
secure value competition those things
13:17
over time
13:18
keep going down and i think it’s very
13:19
hard especially in a um in an open
13:21
source environment to maintain rents
13:23
it’s been possible so far in this space
13:25
because um
13:26
the ux and the technology for uh
13:29
interpretability between chains or
13:30
scalability
13:31
has been very very bad and very lacking
13:33
but now that it’s coming i think there’s
13:35
actually going to be a race to the
13:36
bottom in terms of the cost
13:37
of running daps and if you’re relying on
13:40
the cost of running dev as a rent
13:42
it’s a bad model um the the model for
13:44
store value is a lot more defensible
13:46
now of course the difficulty with the
13:47
model for uh store of value is that
13:49
um it is very much winner attacks most
13:51
or winner decal
13:52
uh so that’s basically the bitcoin
13:54
maximum diseases i do think that we do
13:56
see different store values that exist
13:58
um and that differentiates themselves
13:59
based on some of their properties you
14:01
know just because there’s bitcoin
14:02
doesn’t mean
14:03
there’s no gold and just because there’s
14:05
bitcoin doesn’t mean there’s no other
14:06
cryptocurrencies
14:07
and at the end of the day i think that
14:08
even though uh people talk about
14:10
application platform
14:11
if you look at ethereum prices for
14:13
example they’re about eighty percent
14:14
correlated to bitcoin and so if some
14:16
for some reason it was a completely
14:17
different asset that had its value
14:19
because there’s applications on top of
14:20
it
14:21
um you wouldn’t see this level of
14:22
correlation and so i think fundamentally
14:24
everyone treats these cryptocurrencies
14:26
as source of values and in a way
14:28
applications are more relevant
14:30
not because they derive not because they
14:32
drive values through rents
14:33
but because they’re part of a beauty
14:34
contest where people have decided that a
14:36
beautiful application you know
14:38
a beautiful cryptocurrency if it has
14:40
smart contracts it has depths and that’s
14:42
you know what makes it beautiful in
14:43
historical value so it’s
14:44
it’s very weird dumb dynamic which is
14:46
more based on narratives and
14:47
fundamentals
14:49
yeah yeah makes sense i guess
14:53
so how do you think about increasing
14:55
user adoption on tezos
14:57
whether that’s the developer community
14:59
or just end users and it sounds like
15:01
you’re maybe you’re driving for that
15:03
app platform use case is that right
15:06
yeah that’s right and i would say that
15:08
so in terms of like
15:10
user adoption and dapps i would say like
15:11
today of course you know crm is
15:13
a leader but it and it’s uh it’s a
15:15
function of two things one is uh
15:16
building network effect first and that
15:19
matters great deal
15:20
but the other one is that um the
15:22
developer ecosystem uh the tool
15:23
infotainments really really lag
15:25
among all the you know among um all the
15:28
uh difficulties that the product went
15:29
through the one thing that was
15:30
pretty much sacrificed was the developer
15:32
tooling and it didn’t really get
15:33
together until maybe
15:35
uh and until then most of the use cases
15:36
were kind of like these big um
15:38
use cases which are important but not
15:40
very visible in terms of transaction
15:41
volume
15:42
so you know like that includes
15:43
tokenizing billions of dollars of real
15:44
estate it includes being used by a
15:46
branch of the french army
15:47
so these are not small um use cases but
15:49
they’re not um
15:50
they don’t drive like a lot of a lot of
15:52
many many people to use it
15:54
but since june since uh the developer
15:56
ecosystem system kind of came together
15:58
and it’s been about seven months the
15:59
number of uh calls for smart contracts
16:01
and this chain
16:02
has basically increased by 50 every
16:04
month so i don’t know if the trend is
16:06
going to continue but it’s def you know
16:07
there’s definitely a before and after
16:09
uh the developments tooling came around
16:11
wow
16:13
okay um
16:16
so i guess you know one thing i think
16:18
about a lot is how do we get
16:20
you know the next 100 million how do we
16:22
get a billion people using crypto every
16:23
day
16:24
to access the open financial system and
16:27
um i’m curious to get your view on what
16:29
the blockers are to making that happen
16:31
you know i
16:31
i probably you probably do the same i
16:33
watch those graphs of like
16:34
crypto adoption versus the internet you
16:36
know and it’s like we’re in 1997
16:38
roughly and um there’s scalability and
16:41
there’s privacy and there’s all these
16:42
things but what do you think are the
16:43
keys to
16:44
getting a billion people using crypto
16:45
every day
16:48
um i mean arthur probably has really uh
16:51
pronounced views on this but like my
16:52
my very simple um diagnosis is that
16:55
there’s been a fetishism around
16:56
the word blockchain and around the
16:59
crypto space
17:00
i think that we’re kind of maxed out on
17:02
people who are you know sort of true
17:03
believers in the original mission
17:04
um the next goal is to actually just
17:06
make cryptocurrencies facilitate you
17:08
know better marketplaces facilitate
17:10
better
17:10
um you know transfers of value and to
17:12
kind of uh make the user experience
17:15
so seamless that you don’t even realize
17:16
you’re using a cryptocurrency um i think
17:18
to date a lot of projects that have
17:20
um tried to use uh cryptocurrencies in
17:22
application
17:23
have put you know the word blockchain
17:25
front and center uh
17:26
you know in an effort to kind of um uh
17:28
you know
17:29
look sexy and new um i think the real
17:32
value is going to be built by
17:33
things that you know elegantly tuck
17:35
those things away to the back and merely
17:37
um facilitate a better experience for
17:38
people
17:39
uh using using automated smart contracts
17:41
and things like that so
17:42
um that’s that’s my uh that’s my lunch
17:45
diagnosis
17:47
yeah and i will say the obvious you know
17:49
for the next billion people scalability
17:50
is of course a good uh
17:52
is a big uh you know it is a big deal uh
17:55
i’m back in 2017 i wrote a blog post uh
17:57
on scaling tizzles and i was
18:00
i said look um at this point sharding
18:02
doesn’t seem like a very immature
18:03
technology
18:04
it’s not it’s not it’s not a good road
18:06
map and they’re uh technic scalability
18:07
techniques that come from uh
18:09
zero knowledge proofs which are very
18:10
interesting and should be adopted and so
18:12
today um you see basically this type of
18:15
uh
18:15
scaling being pushed on ethereum
18:16
sometimes instead of starting as um
18:18
zika roll-ups for example so i do think
18:21
that actually you know like
18:22
in the past three years i think that
18:23
there’s been actually a lot of progress
18:24
on this and a lot of skilling solutions
18:26
including charting
18:27
have become a lot more practical so in
18:29
some sense i’m less worried about
18:31
technical aspects of moving the sharding
18:33
because
18:34
you know this is a space as open source
18:36
all the research is public
18:37
a ton of like smart people are working
18:39
on this um
18:40
including people directly in the desert
18:42
system so i think the technical
18:44
challenges are going to be solved and
18:45
they’re not the main issue
18:46
uh one of the areas which has failed
18:48
user i think has been uh user experience
18:50
uh well you know especially wallets uh
18:53
and you know even though there are some
18:54
some good wallets out there i think we
18:55
can still do a lot a lot better instead
18:57
of the uh
18:58
experience yeah i think you know uh
19:01
one of the things i’ve been working on
19:02
is mobile applications i have like three
19:04
projects in the works right now and like
19:06
the
19:06
the the basically transition from like
19:08
desktop to mobile is like ah you know
19:10
it’s still pretty hairy uh for any
19:12
cryptocurrency that you need to transfer
19:13
on mobile which is increasingly how we
19:14
interact with the world right
19:16
so um it’s basic stuff like that like
19:18
you know trying to get better
19:19
infrastructure
19:20
and things like this um but yeah i think
19:23
that’s a good list
19:24
i feel pretty satisfied that that’s all
19:26
my problems yeah
19:28
yeah yeah i mean it makes total sense
19:30
like i think
19:31
you know the early protocols of the
19:33
internet tcp
19:34
and smtp and all these things um people
19:38
early people were into those and i guess
19:39
they were maybe even playing with the
19:40
protocols but
19:42
the web went mainstream once people
19:44
didn’t need to even know what those
19:45
things were the average person has no
19:46
idea what tcp ip is
19:48
they don’t need to know they don’t even
19:49
know how electricity works but they can
19:50
still use lights
19:52
um so i think you’re right crypto needs
19:53
to protocols in some way need to kind of
19:55
fade into the background and they’re
19:57
the next billion people are like i’m
19:59
using this because i want to pay my
20:01
my rent or my family in another country
20:03
or whatever and they don’t even care
20:04
that it’s happening in crypto underneath
20:06
exactly i mean i i was at a conference a
20:08
few years ago and some
20:10
nice lady you know stood up and she was
20:11
like i took a six-week course in oxford
20:13
to find out what blockchain was and i
20:14
still don’t know what it is
20:15
i’m like yeah like really you don’t have
20:17
like you don’t have to know it
20:18
like i don’t send an email and say like
20:20
i sure do hope tcpip works
20:22
um you know i i just assume that it’s
20:24
going to work and it i
20:25
am blissfully aware of the intricacies
20:28
of that um
20:29
so i you know i aspire for a similar a
20:31
similar experience
20:32
yeah cool well look i think if you think
20:35
about crypto happening in three phases
20:37
where
20:38
first it’s you know money and digital
20:40
gold
20:41
then it’s let’s build all the financial
20:43
services like d5 and things
20:45
and then third is let’s build new apps
20:48
um whether that’s the next generation of
20:50
social media companies or games or
20:51
whatever
20:52
i mean that’s a really cool kind of
20:53
framework to think about and
20:55
it sounds like you all have been
20:57
basically building some of those early
20:58
apps
20:59
on tezos and um i’d love it if you could
21:02
tell us a little bit about that kathleen
21:03
i
21:04
i’m hearing you’re working on a
21:05
collectible trading card game
21:07
um but yeah i’d love to hear and archer
21:09
i think you’re working on
21:10
like a algorithmic stablecoin a robocoin
21:12
anyway
21:13
what are what are you all building on
21:14
top of tezos kind of eating your own dog
21:17
food here sort of to test out the
21:18
platform and build these companies
21:20
yeah so um i think i have like the less
21:23
creative
21:24
less creative story here basically one
21:25
of the largest contributors to the
21:27
tesla’s foundation’s fundraiser in 2017
21:29
was a gaming company
21:30
um and i was kind of surprised by this
21:32
because it didn’t really
21:34
occur to me that that might be an
21:35
interesting um piece of software for
21:36
them and so we met with the the team and
21:39
we were asking them like hey what’s
21:40
what tickles your your fancy here um and
21:43
they kind of explained some of the
21:44
intricacies of
21:45
their largest game to us um and it
21:47
basically sounded like they were running
21:48
a small
21:49
completely digitized economy um and they
21:51
had the same
21:52
problems with transferring value that we
21:54
see in our traditional economy
21:56
and so i had a moment where i was like
21:57
oh my goodness you know we talk a lot
21:59
about how cryptocurrencies are going to
22:00
revolutionize finance but we have these
22:02
entirely
22:03
um digitized systems that we could
22:05
improve today
22:06
right and um that got me started on
22:09
doing a survey of the different types of
22:11
games that exist and how
22:12
um you know broken they have become in
22:14
their transition from visible to digital
22:16
uh collectible card games were by far
22:18
the most interesting for me
22:20
um so collectible card games are the
22:21
genre of things that descend broadly
22:23
and spiritually from magic the gathering
22:26
which was
22:26
around 26 years and uh and so i i you
22:30
know
22:30
looked at the different gaps in that i
22:32
thought that collectible card games were
22:34
fun and interesting because they had
22:35
these small economies but they are
22:37
very much replicated from the physical
22:39
limitations of the original magic
22:41
format from 1995 um so i teamed up with
22:44
a guy who’s like a you know proper
22:46
economist but also a world-class magic
22:48
player
22:48
um and i said design you know the most
22:50
fun game that you can and we’ll take
22:52
care of the economics on using a
22:53
cryptocurrency
22:54
so that’s been in the works for about
22:55
two years and we hope that that will be
22:57
um you know out this year we’ve been
22:59
working really hard on that
23:00
um but basically the thesis behind it is
23:02
like these um markets for cards um
23:05
are sort of marred by uh the transition
23:08
from the physical to the digital
23:10
uh we think that a cryptocurrency could
23:11
facilitate a much more efficient market
23:13
using things like auctions and bonding
23:14
curves
23:15
um to imbue fairness and also like get
23:17
people excited and creative
23:19
in format uh so yeah we’ve been working
23:21
on that and in tandem with that we’re
23:22
working on a few other games that are
23:24
far less complex
23:25
um but i hope we’ll introduce the
23:27
concept of basically owning
23:29
your own uh you know stake in a game and
23:32
having some sort of um way to more
23:34
easily trade value in these games
23:36
yeah that’s really cool i mean it feels
23:38
like this concept of
23:39
nfts and non-fungible tokens and has
23:42
started to
23:43
get more traction again recently it sort
23:45
of flared up with like
23:46
cryptokitties and then it died off a bit
23:48
but now i’m seeing more traction with
23:50
that
23:51
um there’s like you know people doing
23:52
lebron trading cards i think one of them
23:54
sold for like seventy two thousand
23:55
dollars uis or something
23:57
in nfts and just more broadly it’s kind
24:00
of exciting to think about
24:01
um you know creative people whether
24:04
they’re musicians
24:05
or artists or designers or whatever
24:08
they’re
24:08
there’s a weird dynamic out there in the
24:11
traditional market
24:12
where um you know musicians tend to have
24:14
like all these middlemen and they don’t
24:15
get they don’t
24:16
it’s not a direct relationship with
24:17
their fans where they get they’re able
24:19
to monetize more effectively
24:21
and so i think it’s very interesting how
24:23
crypto can play a role here there’s a
24:24
lot of people kind of asking like
24:26
how can how can i directly sell these
24:28
things to my
24:29
fans if i’m a creative person and
24:32
actually get the royalties from it more
24:33
directly without so many middlemen so i
24:35
think that that’ll be a pretty cool
24:36
area for crypto to watch yeah yeah if
24:39
you look at like licensing agreements on
24:40
and so forth they’re right with um
24:42
very highly politicized you know
24:43
disagreements between that people who
24:45
actually create the content
24:46
um and the distributors and like as as
24:48
the internet becomes more pervasive
24:50
we find better ways to you know capture
24:52
and send value um i think it’s just
24:53
logical that there’s going to be a lot
24:55
more for
24:55
the people who are driving the bulk of
24:57
um you know folks of these platforms to
24:59
basically own a share instead of being
25:01
beholden to um to gatekeepers right
25:04
absolutely yeah it’s it’s a cool area
25:06
where crypto can really help out
25:08
um arthur it sounds like you’re working
25:09
on something called checker as well can
25:11
you tell us about that
25:13
yeah so checker is essentially think of
25:16
it as a software library for smart
25:17
contracts
25:18
um it’s a tool that lets you uh build
25:21
synthetic
25:22
synthetic assets so one of the things
25:24
you can do is this is a robocoin
25:25
um if you try to build a cinematic asset
25:27
that is going to follow an index
25:29
so you know the index could be um the
25:31
price of a uh fiat currency for example
25:33
so you could track that
25:34
um and what it does essentially is it it
25:37
replicates it replicates it with a
25:39
collateral in cryptocurrency
25:40
um and and he does this by automatically
25:43
finding
25:44
a clearing rate so the closed product
25:46
will probably make her doubt and die
25:48
and you make her dow and dies his
25:49
clearing rate is called a stability fee
25:52
but unfortunately it’s only positive and
25:54
it’s set by governance
25:55
so the difference in uh checker is that
25:58
the fee is set algorith
26:00
uh algorithmically we find automatically
26:03
the right
26:03
rates um using something like uni swap
26:06
uh
26:06
on on the chain which is i think a big
26:09
advantage
26:10
uh we don’t have to have all these boats
26:11
and all these governments so there’s no
26:12
tokens
26:13
with it it’s just like a pure software
26:16
uh it also allows a fee to be negative
26:17
which is important if you have a
26:19
scenario where
26:19
a lot of people want to hold your stable
26:21
coin because it’s useful because it’s a
26:22
minimum exchange
26:23
you need an account or your robocoin in
26:25
this case um
26:27
more so than people actually wants to
26:29
maintenance then you have
26:30
a regime whereas if he’s negative and
26:32
that has actually happened to make her
26:33
dao
26:34
which means it broke the peg and the
26:36
only way they were able to restore that
26:37
was to start
26:38
wrapping um like uh simple coins like
26:42
usdc
26:42
instead of a pure collateral so they
26:44
lose some of the um
26:46
interesting i say i would say original
26:48
property of
26:49
of of dying i make it out
26:52
the neat thing about this is that with
26:54
very minor tweaks you can do a lot more
26:56
than just
26:56
uh synthetics you can also do uh lending
26:59
with it
27:00
so um one thing i uh i
27:03
was pointed out to me by a researcher in
27:04
the space and it just like blew my mind
27:06
is that
27:06
um if you have a if you do a synthetic
27:09
on a token that exists on a platform
27:11
you basically have a lending
27:15
system very similar to uh to what
27:16
compound does for example
27:19
awesome i mean it really sounds like
27:21
there’s a pretty broad ecosystem and
27:23
different types of activities happening
27:24
on tezos today with
27:25
there’s new tokens being created it’s an
27:27
app platform we’re seeing stable coins
27:30
um you know decentralized exchanges i
27:33
guess you know teslas was also one of
27:35
the first blockchains to do proof of
27:36
stake
27:37
if i’m correct about that and um
27:40
you know a lot of people have asked that
27:42
about that you know hey how do we make
27:45
bitcoin mining more energy efficient and
27:46
things like that there’s a lot of debate
27:48
up out there about
27:49
what’s the actual amount of energy used
27:50
i think some of it is just fud
27:52
but it’s does seem like proof of stake
27:54
is an attractive option for that
27:56
um you know have you all seen any
28:00
you know there’s still i guess some
28:01
people have question marks about it it
28:03
seems like it’s working though
28:04
very effectively on on tezos and do you
28:06
have any thoughts just about proof of
28:08
stake and staking
28:09
generally well i remember in 2017
28:13
i walked into a fancy dc office and i
28:15
was you know hey
28:16
this is tezos it’s proof of stake and
28:18
then bc was like isn’t proof of stake
28:19
impossible
28:20
i said well maybe with that attitude um
28:22
but we think it’s perfectly possible
28:24
so um it’s definitely been like a big
28:27
180 in terms of the attitude around it
28:28
and obviously we see a lot of projects
28:30
coming to the forward with something
28:31
that looks proof-of-stake-ish
28:33
um so i i think it’s accepting gospel
28:35
it’s something in work
28:36
yeah no it used to be that
28:37
proof-of-stake was treated uh you know
28:39
was treated on par with uh
28:41
you know with perpetual motion it was
28:42
like no it’s been proven to be
28:43
impossible you’re breaking some
28:44
environments
28:45
and actually what what people meant by
28:46
that is that there’s a property in proof
28:48
of work that you do not replicate in
28:49
proof of stake
28:50
which is that if you you know if you
28:52
live under a rock and you connect to the
28:53
network for a very first time
28:55
um you will have to uh trust someone
28:59
uh to give you one branch of the network
29:01
or a set of people you’ll have to boost
29:03
track in some way
29:04
as opposed to say i’m completely
29:05
agnostic i look at all the possible
29:07
chains and i pick the one with that with
29:08
the highest private work
29:10
uh and this was like built as an
29:12
insumable argument
29:13
and the point is that it you know it’s a
29:16
it’s it’s a fun property
29:17
it’s not really valuable it’s definitely
29:19
not valuable it’s definitely not not
29:21
worth
29:22
the cost and security properties of
29:24
proof of work if you
29:25
get you know if you decide that you
29:26
don’t care that much about this property
29:27
you get a lot better security properties
29:29
for your chain and you get a lot
29:30
lower cost so it’s not just like um
29:33
lower you know it’s not just lower
29:34
energy cost it’s also like
29:36
a lot less um you have all this
29:39
inflation you make better money by
29:40
having proof of stake to be honest
29:42
and uh this probably is not that’s
29:43
useful like if you’re adopted as money
29:45
uh which branch you’re on is not a
29:47
question it’s a branch that everyone
29:49
uses
29:49
you know you go to your grocers you pick
29:51
up your groceries and you don’t have to
29:52
ask this question because your grossery
29:54
expects
29:54
a payment in one very specific branch so
29:56
unless you imagine that somehow
29:58
you know the world is going to
29:59
completely go dark for a month and there
30:01
will be no network communications
30:02
whatsoever
30:03
in which case you need some sort of like
30:04
manual restart uh it’s not a real it’s
30:07
not a real problem it’s like it’s not
30:08
worth
30:08
paying this much for this property yeah
30:11
it’s great to see i
30:12
improve state probably has some
30:14
important scalability improvements there
30:16
as well so
30:17
it seems like all around better and it
30:18
feels like mo you know a lot of
30:20
blockchains are going to move to that in
30:21
the future so kind of
30:23
kudos to all for helping pioneer that
30:25
and making it safe i think that that
30:26
actually drove the
30:27
whole industry forward quite a bit um
30:30
and of course staking was one of you
30:32
know teslas was the first asset where we
30:34
offered staking rewards on coinbase too
30:35
so
30:36
i know people have really enjoyed being
30:38
able to earn yield on their assets
30:39
and um you know that’s been a huge win
30:42
for us as well so
30:43
big thank you on that um i guess
30:46
do you see do you you know there’s a
30:50
number of different um
30:51
blockchains out there like it’s uh the
30:53
industry is having a lot of innovation
30:54
right now
30:55
including some of the things that you
30:56
all have done around governance and
30:58
stake proof of stake and everything
31:00
do you feel like the the industry is
31:02
eventually going to consolidate a little
31:04
bit and we’re going to have
31:05
i don’t know two or three major
31:07
blockchains powering the whole ecosystem
31:09
or do you think it will
31:11
be dozens eventually
31:15
it depends on whether we’ve been
31:16
powering i think that just running
31:18
application
31:18
is going to be very very commoditized
31:20
and very cheap and so sure you’ll have
31:22
dozens of applications for
31:23
running like some dap that does
31:26
something that doesn’t require a ton of
31:27
censorship resistance necessarily
31:29
uh and then which will interact with
31:31
other chains so yes it will be tons of
31:33
shape but it will become undefined and i
31:34
don’t think there will be a lot of
31:35
value in those chains fundamentally i
31:37
think uh however there will be a lot of
31:39
consolidation in the store of value uh
31:41
uh aspect
31:44
got it and well is there any kind of
31:46
interoperability concern there around
31:48
um this application could be run on
31:50
these three blockchains
31:52
but there seems like there’s some value
31:54
in getting critical mass on one chain in
31:56
terms of interoperability
31:57
do i have that right or do you disagree
31:59
you do but it’s you do but
32:01
it’s largely due to existing technical
32:03
limitations which are being actually you
32:05
know
32:05
which which are being solved yeah cool
32:08
yeah yeah i always just keep wondering
32:10
if um
32:12
there’s there’s enough really good teams
32:13
now working on different sort of
32:14
next-gen blockchains
32:16
that i keep wondering if somehow they’re
32:18
going to join up in some way but
32:19
um anyway maybe definitely i think i i
32:23
think we’re past
32:24
we kind of like has a time where someone
32:26
can say like i have a new cool algorithm
32:28
a new consensus algorithm i’m going to
32:29
launch a whole new chain for this
32:31
um i think it would end earlier than it
32:33
did i kept going longer than i thought
32:35
it would
32:36
but i definitely think we’re going to
32:37
see a lot of consolidations where people
32:38
who want to
32:39
build something new will join existing
32:41
team and then seeing projects as opposed
32:42
to just like
32:43
launch an end new token well i think
32:45
that’s because a lot of the space has
32:46
been like
32:47
solutions in search of a problem and as
32:49
you see
32:50
things actually being used um yeah i
32:52
think there’ll be sort of a
32:53
consolidation towards like
32:54
things that are useful i know it sounds
32:56
kind of silly but um but you know i i i
32:59
basically think a lot of this was
33:00
um narrative driven uh 2017 2018 and now
33:03
we’re seeing a lot more applications
33:05
that actually demand um
33:06
you know differentiation yeah makes
33:09
sense
33:10
cool yeah one of the other things i
33:12
think about a lot is like how do we make
33:13
these
33:14
these new uh decentralized apps more
33:16
usable
33:17
and um you know it’s first
33:20
first you have to kind of win the
33:21
developer audience make it easy for them
33:23
to build the apps but then
33:24
how do we make it more usable for you
33:26
know those billion people
33:27
um coinbase is i you know we’ve been
33:29
thinking about decentralized identity
33:31
for instance
33:32
um how can you how can we surface these
33:34
apps you know inside the coinbase
33:36
product in a way that
33:37
people you know they can just click
33:40
almost like
33:41
through an app store or app gallery and
33:42
like click it and it works and your
33:43
identity and your payments are already
33:45
connected in like
33:46
if you look at wechat um one of the main
33:48
things that helped that app
33:50
app platform take off was that your your
33:53
identity and your payments were already
33:55
connected the minute you clicked into an
33:56
app so there was no
33:57
quote unquote sign up you didn’t have to
33:58
add your credit card or something like
34:00
that
34:00
um i think today a lot of these apps it
34:03
takes like you know 30
34:04
40 clicks to sort of figure out how to
34:07
use some way to interact with it and
34:08
despite that they’re growing which is
34:10
kind of amazing
34:11
so how do we how do we make these
34:12
decentralized apps even easier for the
34:14
next
34:15
billion people what do you think i would
34:17
say the main pain points on honestly
34:18
these days uh to use an app uh the first
34:20
one is uh obtaining the uh obtaining the
34:22
cryptocurrency and so you know coinbase
34:24
is solving this type of uh a problem but
34:26
it’s by far the main point but we might
34:27
imagine that
34:28
when people cross that hurdle then then
34:30
things can get smoother from there on
34:32
uh the second hurdle i say is i would
34:34
say ski management and wallet management
34:35
which still uh
34:36
needs to be desired um uh full custody
34:40
for apps is not ideal uh it makes the
34:41
app somewhat centralized
34:43
but uh self-custody is also difficult
34:46
people tend to lose their keys uh people
34:48
are are bad at managing private keys and
34:51
so improving this area i think will go a
34:52
long way
34:54
yeah yeah the custody piece is
34:56
interesting that you brought up because
34:58
um you know people doing self-custody
35:01
there’s a benefit in that
35:02
often it’s easier to go you know
35:04
distribute those apps globally
35:06
that uh they’re treated more like
35:07
software companies than financial
35:09
service companies
35:10
and i guess also when doing self-custody
35:12
it’s easier to
35:13
enable people to connect to any kind of
35:15
decentralized app out there because it’s
35:16
sort of
35:17
again it’s like loading a website or
35:18
something it’s more like a software feel
35:20
to it
35:21
but then the security and sometimes
35:22
people lose those coins and they get in
35:24
so people want to use a custodial
35:26
solution like coinbase
35:28
but then you’re more in a financial
35:29
services realm so the innovation
35:31
sometimes
35:32
um gets slowed down a little bit so
35:34
anyway i always find that interesting
35:37
um let’s see so
35:41
i mean like
35:44
so tell us a little bit more about this
35:46
new proposal i think you mentioned
35:47
there’s a fifth
35:48
upgrade coming and um i think is this
35:50
the liquidity mining
35:51
proposal that’s being discussed like is
35:53
there anything you can tell us about
35:54
that and just what you want the
35:55
community to know about it
35:57
yeah yeah so that would be the sixth uh
35:58
the six upgrade now uh
36:00
i don’t i don’t see i i don’t know if
36:02
the city name has been announced yet but
36:03
uh
36:04
it’s it will start with an f um yeah so
36:06
there’s this concept here of
36:07
liquidity baking uh it’s basically
36:09
similar to uh uh some of the liquidity
36:11
mining
36:12
ideas that uh we saw a lot of them we
36:13
saw over the summer uh
36:15
on ethereum and the general idea is uh
36:18
initially you know bitcoin innovated by
36:20
having a block reward pay for public
36:21
good which was the security of the chain
36:23
you know you have inflation and you use
36:25
that for this public good and another
36:26
probably good for
36:27
a currency that wants to be a useful
36:29
store of value means of exchange
36:31
is to have liquidity that’s super
36:32
important and
36:34
by um using this type of uh of
36:37
technologies you can have
36:38
this permissionness decentralized uh
36:41
liquidity provision which is like
36:42
provided as a public good
36:43
and it’s very very simple like it’s
36:45
super religion how you can have like
36:47
three or four lines of code uh change
36:49
you just take a very small part of the
36:50
block reward
36:51
and you just put it inside a constant
36:54
formula
36:55
market making contract so something like
36:57
like a unit subcontract
36:59
that’s all you do and uh if you
37:02
take for example uh you know 1 16
37:05
i think is a proposal when 17th of the
37:07
block reward
37:08
and you move it there essentially um by
37:11
an arbitrage
37:12
you might expect around like 117 teams
37:14
of the coins which are currently being
37:16
delegated to moving to that school
37:18
instead and so it’s just like a few
37:20
lines of code um
37:21
you could get like on the order of like
37:24
uh
37:24
a few like dozens of
37:27
of of millions of tears of liquidity on
37:30
on both sides just with like five
37:31
numbers of code
37:32
and and and through the work of like um
37:35
all the participants in the network so
37:37
that’s really like that that is the
37:38
power of decentralization i think it’s
37:39
really really neat
37:41
yeah it’s cool okay so
37:44
um if people want to learn more about
37:46
tezos or
37:47
um you know developers want to get
37:50
engaged um
37:51
yeah where should people go if they want
37:52
to learn more about tezos or especially
37:54
developers if they want to go
37:56
learn how to build a tesla’s app or get
37:58
something out there where should they go
38:01
um there’s the developer portal on
38:03
this.com it’s one of the first links
38:05
it’s still being revamped uh it’s a
38:06
little uh
38:07
uh it’s it’s a little rusty i would
38:10
recommend going to the stack exchange
38:12
this is a stack exchange.com
38:13
or just join uh the different chat rooms
38:15
it’s uh it’s very chat centric community
38:17
as opposed to just like
38:18
one big website because it evolves so
38:20
much uh so there are chat rooms on riots
38:22
uh there are chat rooms on telegram
38:24
they are uh and all of that is
38:25
accessible through uh to the website
38:27
business.com
38:29
okay cool and you all have built now not
38:32
only
38:33
a new blockchain but you’ve built
38:34
several blockchain
38:36
apps and companies um projects like i
38:39
guess do you have any advice for people
38:40
who want to
38:41
try something in this space and and go
38:43
learn it and build something what would
38:45
you tell them to do
38:47
um have a lot of conviction in what you
38:49
do because it’s a very long
38:51
weird and mysterious industry and uh
38:53
there’s a lot of trends that go up and
38:55
down
38:56
and you know if you have some faith and
38:58
things that you want to do and spend a
39:00
few years on it i think there’s gonna be
39:01
a lot of payoff
39:02
um but uh sort of chasing what’s popular
39:04
today is is often not the way to go
39:06
about it
39:08
makes sense are there anything you want
39:11
to add
39:12
that that the turkey sent me up i would
39:14
say also uh thinking first principles
39:16
i think it’s really important to
39:16
understand the technology to understand
39:18
why things are
39:20
uh where they are don’t think in terms
39:22
of analogies just because
39:23
you know the same word is used in two
39:25
different contexts doesn’t mean they
39:26
have
39:26
anything to do with another really like
39:28
uh try to sing very analytically about
39:30
the problems
39:31
yeah awesome well i want to say a big
39:35
thank you to
39:35
you both i feel like you’re one of the
39:37
best entrepreneurial teams out there in
39:39
this space it’s been awesome to see
39:41
so many great minds attracted to
39:43
building in this this industry and y’all
39:45
are such a great example of that
39:47
tesla’s has driven a lot of innovation
39:49
in the industry i feel like around
39:50
governance and proof of stake and you
39:53
know it’s
39:54
inspired other blockchains to to move
39:57
faster and try
39:58
adopt some of these ideas so i think of
40:00
you as very innovative in the space and
40:01
you deserve a lot of credit and
40:02
recognition for that so
40:04
big thank you and we feel the same way
40:06
about coinbase and completely
40:08
legitimizing the space right so i think
40:10
i think your mission has been just as
40:11
hard if not harder
40:13
so you know mutual appreciation society
40:16
runs deep
40:17
good good cool well thank you for being
40:19
on the program and uh hopefully
40:21
people find it interesting they can
40:22
learn more and watch it on youtube so
40:24
thank you so much and thank you for
40:25
everything you’ve done for the industry
40:27
thank you
40:40
you
#Coinbase #Cryptocurrency #Tezos #ArthurBreitman #KathleenBreitman #DeFi #Blockchain #CoinbaseExchange #CoinbaseApp #OpenFinancialSystem #CryptoForAll #Finance
