Balancing Innovation and Simplicity as a Crypto Founder | Kain Warwick

like empirical evidence is the most valuable thing that you could have in the world, right? All of the theories, all of the models, all of systems you can build to try and understand something, nothing is as powerful as empirical evidence. And so if you go and build a thing and say, do you like this? And everyone says no, you go, hmm, okay, interesting. If you go and build something and then you keep building and building and building and extending and extending and extending, and you come back and you say, do you like this? And they say no, you've wasted 2 years of your life, right? It's crazy.

All righty, everybody, what's up? We got Kain. Kain, no longer introducing you as Synthetix. We've got Infinex, right? Awesome.

That's right.

Is it a dictator of— benevolent dictator of Infinex, or we're dropping the dictator?

Unfortunately, I think we front ran that whole thing. There was never a dictatorship. We went straight to decentralized governance. So I didn't even get a chance to be the dictator, unfortunately.

So fancy. So boring too, but that's okay.

A little bit.

Dude, how does it feel to be like an ETH OG still out here, as Chamath would say, in the arena? Or I guess maybe that was Teddy Roosevelt who then, who originally said it, but we can credit him.

Yeah. You know, it's interesting. I've tweeted about this a little bit, right? Like coming out of the bear market, I definitely feel underexposed to ETH and even BTC, you know, for a whole bunch of reasons, like just structural reasons, especially on the Synthetix side. You know, one of the challenges with Synthetix is that there's like built-in leverage, right? But, you know, in the bear market, you've got to pay that debt down. And so a lot of my ETH and BTC went to paying down debt in the Synthetix ecosystem, you know, like late '22, even into '23.

So your own debts or the debts?

Yeah, paying down. Yeah, everyone's got their own debt in synthetics, right? Like, you know, this built-in leverage, you got to mint sUSD against SNX, right? So, you know, leverage is a dangerous drug. And even when it feels, you know, like it's not that much leverage, you're still levered if you're borrowing against volatile assets. So, you know, definitely last cycle, some lessons about high leverage there. And, you know, trying to basically rebuild the ETH stack again.

I mean, dude, if you feel underexposed, I definitely feel underexposed. If you're underexposed, damn. How does it feel like maybe less on the investing side, but just on the building side? I mean, we were talking about like we were kind of laughing before we hit record about this, this Kobe piece. And, you know, I feel like a lot of Blockworks employees were like, who's, who's Kobe? And I was like, man, that's, that's That's a trip. And I bet a lot of people are like, who's Caden? So I mean, how, like, how do you think about just still being out here building, like still trying to like get attention and like do, you got to do the marketing thing, you got to go hire the people, like how, how's the grind right now?

I think it's interesting, like the OGs know the OGs, but new people that came in, you know, during the late bull and stayed through the bear often don't, right? You know, so Kobe's an interesting one, like he's had his account locked on Twitter for a while now. I'm not sure exactly how long, but, you know, that cuts off attention, right? Like, that's the main, you know, point for people knowing who you are, right? Especially if you're not tweeting much through the bear market, you're not on people's radar. I think the interesting thing on the ETH DeFi OG side is like, you know, the 3-year DeFi bear market that was you know, foreshadowed by DeGen Spartan, has turned into like the 4-year DeFi bear market. Like, it's still going, right? Like, I don't think DeFi's had its resurgence yet, mainly because ETH hasn't had its resurgence. So, you know, NFTs, I think, took a lot of the wind out of DeFi last cycle, and meme coins have kind of taken a bit of the wind out of the sails of DeFi this cycle. So, you know, there will be a moment where DeFi has its resurgence, but it hasn't happened yet. And so, you know, if you're a DeFi OG like, you know, Robert Leschner or, you know, obviously people know Hayden. I think Uniswap is so big that you really can't avoid knowing who Hayden is. But, you know, there's a lot of people that were, you know, pre-DeFi summer that the average person in crypto today who's slinging meme coins would not know who they are. Yeah.

Yeah, it's interesting. One of— I was asking one of our employees the other day about about Aave. I mentioned Stani because we're talking about speakers for permissionless. They're like, oh, Stani, like he's, he created Lens, right? I was like, yeah, well, and Aave. He's like, oh, Aave. I think I've heard of that. I was like, oh man, living in a different world right now.

Yeah.

Like, what's the decision? What was the decision like to, you know, if you look at like Stani's got Aave and Lens, Leschner's got, he was doing Compound, walked away from that to do Superstate and kind of handed over the keys to Jason over there. You know, Hayden's still doing doing Uniswap, like, what was the decision like to— you're not doing Synthetix at all, right? You're 100% on Infinex.

Yeah, that's right. Yeah. Not even on councils anymore. It's so bad that I forgot to vote in the last election. They're going to string me up. You're fully out.

That's good.

Yeah, I'm fully out. Like, I knew that Epoch was getting close, but like, we were so close to launching with Infinex that, you know, I was like, I've got to vote and then I was like, oh man, that was yesterday. Oops. So yeah, it's really hard. This is, I would say, probably the third time in my career where I've had two different projects or companies running. There was a period where Blueshift, my payments company that I built in 2014, that was an on-ramp to crypto in Australia for a lot of the crypto exchanges and brokerages. I was running Blueshift and starting Haven at the same time, and it's just a nightmare. It's really, really hard to split focus, and you sort of do a disservice to both. So it didn't take too long. I think it was somewhere in 2018 where I went to the Blueshift board and I was like, look, I just can't do this anymore. I need to hand it over to someone else. I'm not doing a good job of kind of running this. And, you know, I think it's kind of a similar situation where I just had to like say goodbye to Synthetix. And, you know, even things like there were many years where I read every single message in Discord, in the Synthetix Discord. You know, I was responding to everything. You know, I was, I was really on top of all the different governance things. And over the last year, as Infinex has ramped up, especially once I took over as the working group lead, it's just been impossible. And so I'm like, I can't even stay in touch with what's happening, at which point my opinions are no longer informed opinions. So you can't really trust them. But people will. So it's actually a net negative for me to come out and say something that's uninformed, and then people go, oh, he's probably right. And like, I was never probably right, but now I'm definitely not right. So you just have to let it go and let governance kind of play itself out.

Nice, that's great. Yeah, I remember, I think it was summer 2020, or maybe it was fall, maybe it was the end of 2020, you guys were debating what to name the Synthetix front end. Like, when I when I think, I still almost, when I think of Infineon, it's like, oh, it's the Synthetix frontend. So tell me, take us through that journey of being like, hey, Synthetix needs this, like, better, like, frontend needs like a good user experience for Synthetix all the way into like now. I mean, you said like I was doing the, I was in the little test group and like, that's when I had this like, oh shit moment of like, oh, this is a full, this is a, this is a platform. It's got like best-in-class account abstraction. It's multi-chain deployment. Like, Take me through that journey of going from like Synthetix front end to, oh wow, there's actually a massive opportunity here. Yeah.

So the original thesis was that we have solved the protocol level functionality problem, right? And in order to solve that, there were a whole bunch of things that needed to go right. We needed L2s, we needed, you know, even 4844 was part of this, right? That like you needed cheap enough, fast enough execution that an exchange that was running on an L2 could compete credibly with a database. Like the delta wasn't so large that it was like, I'm only using this for ideological reasons. I'm not actually using this because it's a better experience. And a whole bunch of things like liquidity and number of assets and number of markets and all of that stuff over, it took a long time, took longer than we all thought it would. But eventually we got to a point where it was like, okay, this thing is real, right? And you look at dYdX, you look at GMX, even Hyperliquid now in synthetics. There's a number of different exchanges that on paper can compete with a centralized exchange. And yet if you go back a year ago, and this is where I sort of had this realization, Binance is still beating all of the on-chain exchanges 50 to 1 by volume, right? So we're in a bear market. It's only crypto native people left. We've got the tech, like the tech is there, right? And yet despite all of that, we're just getting absolutely chopped up by Binance still, right? And so I was like, all right, something has to change here. There's something wrong. Like, what is it? I went back to first principles and I was like, it's actually the onboarding experience. People who are used to trading on Binance are used to the Web2 auth. They're used to a username and password and, you know, MFA and all of that stuff. And there's a lot of them that just don't trade on-chain or don't do on-chain transactions at all. And they're still crypto natives. They've still been in crypto for years. Their version of crypto is just Binance though, right? Trading perps or spot on Binance. And so I was like, all right, let's, let's actually test this. Let's build a centralized wrapper around a decentralized protocol and see if we can bridge that UX gap. That was, that was the original thesis, right? It took about like 3 weeks to realize that that was insane and not a good idea, and that we actually didn't even need to do that really, that we could potentially not make it completely centralized. And so I think that by the time we got to like late last year, we had realized that there were a number of different infrastructure plays that have been built in the bear market that could allow us to connect them together in such a way as to bridge the UX gap without requiring centralization. And so that's when we were like, all right, let's pivot to Infinex. And once we realized that, that we could actually bridge this UX gap and build a UX layer on top of DeFi, it was like, well, it feels silly to just build this for an exchange, right? There's a whole bunch of other stuff that is very useful, right, for us to do. And so, you know, whether it's like yield-bearing assets like Athena or lending like Aave or, you know, spot swaps like Jupiter or Uniswap, there's just too many things that what you can do with this to focus on a perp DEX. And so that's what happened. So we basically got to a point where we're like, this needs to be an actual platform, not an exchange play.

Who's the we here? Do you have co-founders or is it like a small team and you're the solo founder?

What's the—

who's the we?

Yeah, it's a good question. So when I first started this, the person who was building it with me was working in my family office and I was like, hey, do you want to build this thing with me? You know, should take us a month or so to just build like decentralized front end on top of Synthetix, right? A level of like insanity that's required, right? Yeah.

So it was just the 2-year anniversary of like launching Blockworks Research and Mike and I dug up some old messages to each other and we're like, we think, we think it'll cost $200K and we'll need 3 people and we could probably run it like that for a while. And now we are like, you know, 25 people and millions later.

Like, I'm like, all right. I think, you know, there's a level of like irrational exuberance that's required to, you know, start something, right? That like if you knew how painful it would be, you never would start.

I would never do it.

Right. And so, so that, you know, there was definitely that component, right? I was like, oh, a couple of people together, throw an interface up, you know, we should be able to smash this out in like a couple of months, right? By the time we realized what the actual opportunity was to build this UX layer on top of DeFi, I was like, okay, now this is a multi-year exercise. We started, you know, I allocated more capital to it. I've been bootstrapping it myself, but I allocated more capital to it and we went out and like acquihired a couple of teams and, you know, we've built a team now of like 35 people. So it's a big, it's a big crew that are running this. Yeah, I put in about $25 million so far. Now we haven't used all of that. Like, we're not insane, right? But the reason why I did that was because once I realized, I was like, all right, this thing is way bigger than we thought. It's going to need a lot of funding. It's going to need, you know, a lot of people. There's a lot of infrastructure that needs to be built. And I just wanted to make sure that we had no constraints, basically. And at that point I was like, all right, I'm all in. So the person who started it with me was the working group lead. When we launched the governance process. A bunch of things have happened in the interim and it just got to the point where I was like, this thing is too big. I need to actually step in and run this working group. There's too many people. It needs someone who's experienced in DeFi, experienced in crypto. And I was like, all right, time to step up. It wasn't my intention. Had I known that I was going to be running this thing and sleeping 4 hours a night, I probably would have just said, I'll let someone else do it. But, you know, once, once I realized the opportunity, I was like, all right, I got to dive in.

Yeah. So the way you describe it is interesting. The way you describe it is like the UI or the UX layer for DeFi as opposed to Binance on-chain or something like that.

Yeah, I think that the thesis is basically that you have a bunch of people building protocols, right? And, you know, some that we're very close to, right? And they probably wouldn't be offended to hear this, but like one good example is Wormhole, right? Wormhole has built this very solid protocol, right? It powers a bunch of things. It, you know, is being extended to support like cross-chain queries. Like it's a really hard thing to build at a protocol level. And then you use the Portal bridge interface and you're like, this is incredibly painful to use, right? And I don't think that would be surprising for them to hear, right? Like it just is. We now that we've built this UX layer and we have the platform, right, we have already started working on bridging functionality and the bridging functionality that we built. There's an early demo which you'll probably get access to because I think you're in the testing group. You'll probably get access to it in the next couple of weeks. It just works. And the reason why it just works is because we have a bunch of middleware that we built We've abstracted gas, we've abstracted all of these things. And so we can be a lot more opinionated on the flows that we're enabling. Right. And we've just got a lot of people who are very focused on the user experience and we sort of see it as the platform is ready. Our integrations into other protocols that are on-chain is where the secret sauce is. Right? Like, that's like our ability to integrate something and build a better frontend experience end to end from onboarding all the way through to, you know, on-chain transactions is where we're going to win. And we've got the right team for it. We've gone out and looked for people that have that domain expertise rather than people who are, let's say, you know, on-chain focused, right? Whether it's, you know, programs on Solana or smart contracts on Ethereum.

Yeah. How much easier is it to build now, going from like 0 to 1, than it was building Synthetix in the beginning?

It is a lot easier. There's certain things, certain tooling like Cannon, for example, is one of the tools that we use for multi-chain deployments. It just makes it a lot easier. Is it easy? No, it's still very hard, right? I think the challenge is, right, that in the early days of Synthetix, we were struggling you know, to deploy 50 contracts onto mainnet, right? Like that process would take us like several days sometimes, right? You can go back and look at, you know, hey, we started the deployment in Discord and then like 3 days later it's like, and we've just finished the deployment. I'm like, good job, right? And so, you know, that process was really hard. Now though, we're talking about simultaneous cross-chain deployments on, you know, 5 EVM chains and Solana. Synchronizing a bunch of middleware and a bunch of off-chain infrastructure and having all of that go live. When we did our launch, there was a countdown timer, which for me as like a DeFi OG was petrifying because I've never seen anything in DeFi actually launch at the right time. And so there's this countdown timer and we're like counting down. It's like, this feels really dangerous. And then the countdown timer ended and it worked. It was all deployed, it was all there and it just worked, right? So, you know, yes, it's much easier to build, but I think the scope of what we're trying to build has gotten much, much larger. But for the user, that's great because it means that we're actually trying to solve the user experience problems that previously we couldn't even tackle because it was just too hard to even get stuff on chain. So, you know, the scope of what we're trying to do is much larger. So I think the difficulty is probably equivalent. It's just the experience that you get as the end user is far better now.

Yeah. Can you tell me like as specifically as possible, like what you guys are using? Like, do you like, like what did you say, Canon or like do you use Privy? Like what are these apps that make it so easy and like what are the tools that make it easy?

Yeah. So the architecture is, and this one of the big decisions we made was to go with passkeys. So we had a number of delays and I think that, you know, obviously delays are never great, but sometimes they play into your hands. And I think in this this particular instance, it definitely played into our hands. So we were originally using a couple of different options for key management and how we synchronize keys and how a user would execute a transaction, right? So there's a bunch of different ways you can do this. Keys in browser, things like Privy, you know, but what we realized is that Passkeys were actually ready. And so we decided to go with Passkeys and The advantage that we have by launching with Passkeys only and no passwords is we will never have legacy password support. If you are a platform that launched last year, let's say prior to June last year, you didn't really have an option. Passkey support was not there. You had to actually launch with passwords. And so you now have this dual-track system where you have legacy users with passwords that you've got to wean off onto Passkeys because it's just that much better of an experience. But you, you know, it might take you years to do that. So by delaying launch and waiting for the cross-platform Passkey support to get better, and it's, I would say, very good now. You know, there's a few little gaps, but for most platforms, especially on Apple, it's very robust. So Passkeys is the starting point. A user has a Passkey. The Passkey is similar to like an EOA or a hardware wallet or something like that. You've got this cryptographic scheme that is connected to a platform that stores keys. The platform that stores the keys is called Turnkey. It's made by the same people who built Coinbase Custody. So the Passkey connects to your own signing key that's then connected to an on-chain account that's cross-chain. So you have an account that's deployed to Base, Optimism, mainnet, and then Solana as well. And that key that you have is an EOA that's stored in Turnkey that allows you to interact with your account. And then we use Gelato for gas abstraction. So basically you have this like gasless signing mechanism where you log in with a Passkey, we create a session for you, and then within that session you can do a whole bunch of things, right? You can claim your points and you can do swaps or trades. Like, this is obviously future functionality, but you would just sign in once with a Passkey. Once you've got your session initiated, then you can do a whole bunch of things. If you then decide that you want to do something that requires some kind of like auth escalation, then you would need to sign in with your Passkey again and maybe use some other MFA. Or maybe you use an EOA or some escalation process to withdraw, right? And so we can build kind of a role-based security system that looks more like what you would expect in Web2. Yeah, right. So you can have sub-accounts and, you know, you can have, okay, you're allowed to do, you know, these functions, and then you've got an analyst who's only allowed to do, you know, a subset of those functions. So there's all kinds of things that we can do where we can leverage all of the work that's gone into like Web2 auth and Web2 security and replicate that, but with still the account living on-chain.

Yeah, it's really nice. Maybe I'll share my screen in a second and show people the, just like the onboarding. It's actually really, really clean. Let's see, what is the— okay, so that's the stack. What about like the integration layer? Like, so, okay, so once you're in, like you guys want to launch the ability to bridge between like, you know, Optimism and Polygon and Solana and then do a swap and then maybe like take out a borrow. Like what, how do you think about integrations with different people? Like for bridging, right? Do you like, do you build a bridge? Do you like partner with Wormhole? Like swapping, like, do you do like a, I don't know, I don't even know how like Uniswap hooks or whatever, like how do you think about integrating?

So at the moment, it's a very kind of ad hoc manual process. So for our initial bridging, we're using Wormhole. So we've basically used Wormhole CCQ, a combination of CCQ, which is their cross-chain queries, and the standard Wormhole bridging, which other people use but then have built like liquidity bridges on top of, right? So we don't have liquidity bridging yet. We likely will either partner with someone that has liquidity bridges or build our own liquidity bridges. But the way that the architecture works is you have an account, it's yours, right? Your assets are in that account on any number of chains, right? On any one of the 6 chains. So you could have USDC on 4 different chains, right? But it's the same account controlled by the same POA, right? That's stored in turnkey that you control via your passkey. So for you, if you want to, you know, move funds from Base to Optimism, all you need to do is just authorize that with passkey. right? And then the platform itself figures out the routes and where things need to go. Once we've got functionality that's being integrated, for example, Curve swaps. So, you know, stablecoin swaps, because we've started with stablecoins, you know, USDC and both wrapped and bridged USDC, we need a way to do, like, you know, stablecoin swaps. That's kind of the most obvious functionality. So what we've done is we've created a piece of middleware, like a smart contract that lives outside of your account, right, that you can opt into enabling. So you can say, okay, I want to upgrade my account to support Curve swaps, right? And then you've got the Curve contracts that live outside of that. And the advantage to this is that you don't have your account with, you know, specific permissions. You've got another, another contract that's been deployed that basically understands the interface between the smart account that controls your funds, that holds your funds, and Curve. And so we can then upgrade that integration if Curve changes. So it's basically these middleware contracts that sit outside of your account that are a bridge between your account and Curve, your account and Uniswap, your account. And you have the ability to enable these and set permissions on like a per you know, protocol level, like a per-integration level, or opt out of it. You can say, actually, I don't want to integrate with Cream Finance, which I guess apparently no one knows what that is today. I sound like a boomer, but, you know, you might be like, look, that's too high risk for me. I don't— I want to switch that off, right? That functionality I don't want. And so you have a lot of granular control when you go to your security settings of like which features do you want to enable? Which ones do you not want to enable? Which ones do you want to require escalation? Which ones are you happy to do, you know, with just a simple passkey sign-in?

Huh, that's really cool. Do you think that, like, if you play this out maybe 3, 4, 5 years into the future, you guys will start having to chip away at the stack? Like, you'll go deeper into building some of those protocols yourself to maybe capture more of the flow or have better margins or whatever, whatever it may be?

I certainly hope not. Yeah, that would be dark. I really hope we don't have to do that. Like, there's so much innovation, you know, like my example before, right? There are people that are crypto native, right? Or whatever we would call that. They're on crypto Twitter. They just live in Binance. So the only functionality that they ever get from on-chain activity is what Binance gives them, right? The like scraps that Binance throws them to say like, oh yeah, you can do this now, you do e-staking. Or whatever, right? But like 95% of the fun on-chain things, Fantasy.top, right? Probably not going to get integrated into Binance, right? That level of innovation, those on-chain games and on-chain protocols that are being deployed every day, you want to be able to access. But for a person who's lived in Binance their entire life, they're like, I don't know about this MetaMask thing. I'm just not doing it. And even, okay, so you say fine, Privy, right? So you can sign in with Privy. There's really harsh trade-offs with that, right? There's a level of risk around custody, et cetera. So the onboarding process for a lot of these protocols that have been trying to bridge the UX gap, in my opinion, makes some trade-offs that I think are not ideal.

Right?

So we would love to be able to integrate something like Fantasy.top. Are we going to build something like Fantasy.top? No, like, we're just not, right? It's a lot of effort to do that, and we're never going to be able to outcompete all of the innovation on-chain. We just want to be able to give that innovation a larger audience, right? To bridge the UX gap. So we become the UX layer so people can be easily onboarded. Everyone's got an Infinite account, there's a ton of TVL, all their assets are stored in there. And I'll give you another example, right? Like, from 2021, all the people who got onboarded into NFTs, right, but were not onboarded into good OPSEC, they didn't have hardware wallets, you know, they, they, uh, they FOMO'd into NFTs and it was enough FOMO that was created to get them on-chain but not in a safe way, right? And so the amount of funds that were drained and lost and, you know, seed phrases, etc., if something like Infineon had existed back then and NFTs were integrated into Infineon, we would have just connected you to OpenSea or to Blur or to whatever, you know, whatever, whatever NFT platform you wanted to trade on and you wouldn't be able to get phished because passkeys are much more resistant to phishing and to, you know, bad links and what have you because you're actually in this kind of walled garden that protects you from someone being able to get you to— you can't sign a transaction. There's no malicious signing. You're not signing random transactions. You're only touching things that are already vetted and you've opted into, right? And so, yeah, you can go and sell an NFT on OpenSea, but you can't accidentally sell the wrong NFT, right? Because the integration's been done properly. And so, like, literally hundreds of millions of dollars would have been saved through that NFT mania if something like InfiniteX had existed.

Hmm. Who— where do you get the TVL from? You guys are— so you're like, what, 80 million, 85, 90 million TVL right now?

Yeah, almost, almost 90.

Almost 90 after what, 6 days, 7 days?

Today is the 8th day.

8th day. That's good.

Yeah.

And how many users, like 10,000 roughly?

There are about 7,000 accounts. Created. So one interesting thing, right? We had 200,000 people on our waitlist, right? And we were kind of curious to see if anyone had worked out how to do a bot farm to passkey onboarding. And it turns out that you actually kind of can't. The tech isn't there. Passkeys are so new that like bot farms haven't worked out how to do it. And there's like browser-based constraints and stuff. So, you know, could you just sit there with a team of 20 people in front of laptops pressing buttons? Yes. Of course, right? Like the phone meme of like 100 phones on a big wall.

There's much easier things that you can go Sybil attack right now.

Exactly. So one thing is we deliberately created an incentive scheme that didn't incentivize Sybils. That was step one, right? And then step two is POS keys are actually a really resistant measure against Sybils. And so we have I think 7 or 8,000 users, of which about 50% have deposited funds, which is great. I like, you know, we're paying all the gas, you know, we're not having sybils come in and like drain gas, etc. So, you know, it's been a very sort of efficient process and we're getting a better sense of like how many actual users do we have because yeah, of course you can create a couple of accounts and there's some people that are like name squatting, but you know, it's not like orders of magnitude out. Our user base versus the actual humans that are using the protocol.

Yeah, let's, let's go into sybils right now. So you had this tweet thread. We can, we can link in the show notes if people want to read the whole thing. It's from May 3rd. Said, man, LayerZero, you're really going to make me write up another thread, huh? And it's about sybils. So just talking about how, like, no one wants to reward these sybils, but depending on the game, sybils are either not a big deal or catastrophic. If the game has capped rewards per address or non-linear reward scaling, sybils must be killed with fire. But if the rewards are not scaled or uncapped, then sybils have no advantage. In fact, they're disadvantaged because it costs more than just doing all the activity on one address. I won't read the whole thread, but maybe you can just expand on like, yeah, your thoughts on just like sybil attacks and like sybils and like, I don't even know if I'm pronouncing it right after all these years. Sybils.

Sybils, right? Yeah, that's right. You'll say sybil. Yeah. So, so the The— like, this comes from a long, long history of learning lessons in building incentive schemes, right? Like, we did, we did so many of these different schemes in Synthetix to incentivize different behavior in different ways at different times, you know, in different groups of users. And one thing that I learned and one thing that I've said many times, you know, in Discord and on Twitter is like anything that you build that can be gamed will be gamed. Crypto is the most adversarial place. You know, the incentives are so powerful that if you build something that's gameable, it will be gamed. It's not like, oh, let's hope that it's not gamed, or maybe no one will notice. Like, if it's a genuine thing that has value, people will game it, right? Like, there are thousands of people scouring crypto at all hours of the day looking for the most minute advantage. Like, from a market efficiency standpoint, you know, gaming incentives in crypto is a very efficient market. So, okay, what do you do with that information, right? Well, you have to really be informed when you're designing an incentive scheme, right? You really need to take that into account. If you just YOLO build something and hope, you're just going to get run over, right? And so the challenge is though that there's trade-offs. Like, it's trade-offs all the way down, right? So if you say, okay, we're going to avoid sybils, really the only way to avoid sybils is to do a linear distribution, right? But then that, uh, you know, helps whales, right? And so you're gonna have a situation where people either say you're just saving the whales, right? You're protecting whales and giving them a huge advantage, right? Or you have a situation where sybils run over all of your users and take everything. And there's no avoiding that trade-off. Like, it's a very clear trade-off and you have to pick where you want to be on that continuum. The problem is people try and have it both ways. They sort of say, let's build a thing that kind of incentivizes sybils, right? It makes it look like we're, you know, uh, disadvantaging whales, right? Because then that the optics will look good. And then people turn up and they get nothing and they're like, what just happened? Right? Like, all my money was stolen, right? And it's like the sybiling ends up looking good for metrics as well, right? And so, you know, when you're a project that's out there that's designed an incentive scheme that absolutely incentivizes sybils and knowingly goes out and talks about the metrics that you've incentivized for the sybils to do, and then gets to the very end of that game and goes, Oh man, how did— I don't even know what's going on here. How did this happen, right? Like, sorry guys that you got nothing and that a bunch of bots got everything. This is crazy. How could anyone have predicted this? It's like, no, no, everyone could have predicted this. You did this on purpose, and then you talked about the metrics, and then you sit there and play dumb and try and pretend like you had nothing to do with it, right? And so you either have to be honest with the community and say, we're going to do a distribution that disadvantages sybils. The trade-off here is that Yes, there will be some whale accounts that get a lot, but at least those whale accounts will be real people, right? It won't be a bot farm. Now, at the end of the day, all of this is inefficient, right? And all of this inefficiency comes from the fact that you cannot get tokens in the hands of your users other than giving them away for free. And like, that just is a terrible idea. Like, it's a, it's a fine idea as like a slight bonus. For some people that were early and paying attention, right, as your only mechanism for aligning yourself with the community. It's horrific, right? And we see what happens. The community is like, you've given away a bunch of money to people who are mercenary and have dumped it. I actually care about this project and I'm aligned. I got nothing. Now I hate you. Like, no one wins, right?

I saw your tweet, the Dimension airdrop. And you're, I think you mentioned, and you're like, because I wasn't in the Discord and didn't click confirm or something, like I didn't even get this, but I, you know, but I was early supporting. I think that was you, something like that.

So yeah, I think it was actually my kids, they're Pudgy Penguins holders. And, you know, it's my responsibility to go and claim the airdrops that all the Pudgies get on their behalf because they're 7 and 4. And, you know, I don't, I don't want them to get to 18 and be like, Dimension's worth $1 trillion and you missed the airdrop, you idiot. So, but yeah, again, like, you know, you have to, you have to set up the incentives in a way that actually gets you the behavior that you want, right? If you set up the incentives in a way that gets you the behavior that you don't want, but then pretend like that's not the case, people will see through it. It's, you know, people aren't idiots.

So what's the, like, what's the behavior that you want? Early activity.

You want alignment. You want alignment, right? Like, we have a solution to this, right? Which is like, yeah, you want— like, if you care about my project, you should be able to, uh, get alignment with that project, right? So the problem is that people are too scared to let people get alignment, to, to get tokens other than giving them away for free, right? That's the only mechanism that we're willing to, to use. And so if you're only willing to give away tokens in order to get the right number of tokens to the people who are aligned, you have to give away so many tokens that it actually ends up hurting everyone, right?

Like, why is that? Can you explain that?

Okay, so, so let's say you have, uh, let's say you have 1,000 people, right, who are aligned with your project. And so you go and you create an incentive scheme that is intended to get tokens in the hands of those 1,000 people. Yep. But you can't sell them tokens. You have to give them away for free.

Because of the, because of the regulations around selling.

Because, because of interpretation, like, because everyone's afraid of the uncertainty and lack of clarity, right? Like in theory, I mean, there are solutions here. Echo, for example, right? Like Echo is trying to solve this problem of, okay, how do we do this in a compliant way given that we don't have clarity, you know, trying to find a way through this. Right. So, you know, I'm bullish on that. Right. I'm bullish on anyone who's trying to solve this. But just throwing your hands up and saying, well, the regulations are unclear, so, you know, we just got to try and avoid anything, to me doesn't make sense. Right. I think there are ways to let people who are early to your project get alignment that don't involve selling all the tokens to VCs. Like, that's not the way to do it either. Right. And so, you know, let's imagine a hypothetical project that has 1,000 people in a Discord. right, that are super bullish on this project, right? The easiest way would be to say, hey, all of you people who get this project, we're going to sell you tokens at the seed round about, let's call it $30 mil or something, right? And you just sell them tokens and that's it. Done. End of story. You lock them up for 6 months or 12 months or whatever. They've all got alignment. They go out and they're excited about the project. They use it. They tell their friends, you know, they help build hype. Like problem solved, right? But you're too concerned to do that because of regulatory uncertainty. And so you say, look guys, I know there's 1,000 of you in the Discord and I know this is an early stage project and, you know, we think the val is $30 mil or whatever, but we can only give you tokens. So we want you to go out and do a bunch of weird stuff, right? Jump through these hoops, deposit TVL, do all of this stuff, right? And we're going to drag it out for as long as possible. right? Because we want to game the metrics. And so we do all this stuff, we come up with this convoluted scheme to get tokens in the hands of these 1,000 people that were early, right? Process kicks off, a bunch of people come in and inevitably game this incentive, right? They're either whales with TVL that are just trying to extract value. They don't care about the project, they're just looking for the thing, or they're bot farmers or sybils or some combination thereof, right? And they turn up like locusts. And they take this free pile of money that's been put there and they leave like a couple of scraps, right? And the 1,000 people that were in your Discord are sitting around being like, this is all I get. What's going on here? Like, this is not— I would have given you money for the thing.

And now, you know, you've actually given away your, your early diehard cohort and community is now pissed at you.

And then they're burned. Yeah, they're burned. They're like, guys, like, come on, you know, I would happily have spent $1,000 to get $1,000 worth of tokens, right? Instead, you forced me to go through this thing and I didn't even get what I expected to get. I got some far less, right? So I get $10 worth of tokens for jumping through all these hoops, right? And meanwhile, they're watching VCs buy the tokens at the same val and like, you know, they're losing on both sides, right? They've got people now that have got a ton of tokens. You've had to give away 15-20% of the token supply to try and get 1% in the hands of your 1,000, you know, best people, and it didn't even work. Like, this whole structure is just broken in so many different ways, right? And so, you know, the end result is that we need to try to find a way to get people alignment with the project early enough when they're still early. And, you know, we have to find a solution to it because, you know, and again, ECHO is one solution to it. I think there are other solutions to it. You know, we're trying to think through how we can do it because just doing these, you know, yield farming games is never going to be enough and you're never going to get the alignment. And so it's an incredibly inefficient way of getting alignment with your Yeah.

Can you put on your like crypto historian hat and like, when, when did this flip? Because so, you know, there's a lot of like the— there's all— okay, so Echo is a solution. There's like a quick tweet here that would say ICOs were the solution, which some would say is right and some would say is wrong. And then you could say maybe ICO, like the post— it all kind of flipped post-ICO era. But I'm very curious to get your take on like when this— it's capital formation and community alignment are the two things we're talking about here.

Exactly. So, you know, back in the ICO days, right, um, you would do an ICO, you would do a private sale, it would be very compressed into like a 3 to 6 month window, right? It wouldn't be a multi-year process, right? It would be a 3 to 6 month window. You propose some scheme, you would do the ICO, you would also carve out tokens for an airdrop, right? And, and, you know, that was a bonus to the community that were paying attention. It wasn't the only alignment that they could get, right? And this is the critical thing, right? It was, it was like, hey, if you really love the project, buy tokens. And also if you do these things which will help us, you can get some extra tokens as a bonus for your support. Cool. Done. Right. And then go out, do a TGE. You know, it's all rolled up. It's a single sale. The delta between the cheapest price that was bought off market and the TGE price would be, you know, 3x, 4x maybe, you know, maybe the earliest people who went into the seed round bought tokens at $0.10 and it listed at $0.30 or $0.40 or $0.50. It wasn't like people were buying tokens at $0.00001 and it lists at like $0.50, right? Like that's insanity, right? And you can read Kobe's post if you want, you know, much more details of why that breaks down. Okay, so ICOs, cool, plays out, gets to like early 2018. ICOs were really starting to fall off for reasons, right? There was a ton of inefficiency, a ton of grift that was, you know, that had crept in.

EOS had $4 billion, well, yeah, $4 billion raised and then, yeah, cooked.

And then, you know, just a zombie chain for the rest of time, right? And yet when you look at that, and I made this point in a tweet a few months ago, if ICOs had kept going, The market would have realized some ways, and this was already happening, right? There were people that were starting to dig into structure of ICOs and trade-offs. Vitalik proposed GICOs, right? These staged, which was very aspirational, maybe a little bit too—

Vitalik, aspirational? You don't say.

I know, right? Yeah, maybe a little too right curve for everyone, but the rightest edge of the right curve, right? So like there were people that were proposing solutions to this, right, to better align the incentives. If the market had been allowed to play out, I think we would have gotten there, right? There was irrational exuberance, a blow-off top. You know, the market would have figured it out in the bear market. People would have kept doing ICOs and they kind of did, right? But that's not what happened. Instead, you had this like chilling effect of regulatory scrutiny saying like, you can never do this. There's, you know, can't sell tokens. They're all securities or they're all this or they're all that and all of this confusion about what you could and couldn't do, right? The Dow ruling, et cetera, et cetera, right? The Dow report. And so through the end of 2018, it basically drops off to almost nothing, right? And then you have this resurgence of ICOs as IEOs, the initial exchange offering.

Right, the Binance Launchpad.

Binance Launchpad, you know, everyone was doing this. Poloniex, like, you know, people— the problem there in my mind is not necessarily the structure. There was a, a sort of misalignment of incentives on the exchange side, right, where the incentive was to just push through as much as possible through these launchpads because they were getting a free carry, right? 3%, 5%, 10% of the tokens in these deals, right? And so, you know, there was no alignment of incentives. It wasn't like they were investing in the ICO alongside of everyone. They were literally saying, we have a platform that we can launch you through and we get a free carry, right? So, you know, you get a free option, you're just going to pump out as many of those options as possible, right? And so there was a lot of toxic flow. Through that. And then people were like, okay, that's bad, right? Let's try to realign incentives again. And so Balancer launches LBPs, and there were a few other on-chain mechanisms like, like this where it was like, you know, and this started with Uniswap. The, the starting point was that we had people that were doing these like single-sided pool things or like, you know, there were a couple of different schemes that people came up with, like inject liquidity, like initial liquidity, you know, launches. Right. And then Balancer was like, we've got a better solution to that. And so there was this iterative process on, in on-chain launchpads, right, to kind of replace the IEO. And then I think people got to the point where projects were like, we're too scared to even do that, right? Even that's too risky. And that probably ended, I think, like 2020 or whatever. Like, and there's still a few examples, but it's basically been since like 2021 I would say, where there was no way for anyone to get early alignment with a project at all. Right. Like it just switched off almost completely. Right. You know, I can't think of an example in the last—

You had Coinlist. Coinlist did a couple actually successful.

Yeah, Coinlist. But remember, Coinlist was not open, right? Like there's still this gated KYC. That's true. Yeah. You know, it's not, it's not like, like if you have 1,000 people in your Discord, the likelihood that those people have Coinlist accounts is pretty small, right? So that early stage of life, I mean, it's not bad, don't get me wrong. Like Coinlist, you know, and same thing with Echo, right? I think Echo is a little bit easier for people to, you know, get access to than Coinlist. So it's definitely more open. But the end result is that like we've had a period since, you know, maybe the middle of the last bull run all the way through the bear market where basically everyone just stopped doing this, right? They, you know, and then also NFTs popped up, right? And so people were going into NFT mints rather than into, you know, protocol sales or protocol launches. But people are starting to figure out that there is like latent demand for this and that people are frustrated with the dynamics that are in place where, you know, VCs buy tokens at, you know, pennies on the dollar. And yeah, they're locked up for a year or whatever, then they get some liquidity. But like the end result is the vast majority of token appreciation happens privately now versus publicly.

And it's, you know, if you think back a couple of years ago, like retail was making— I mean, one of the premises was that retail could make the money before the venture crowd got in. And now it's like, I mean, if you're doing— I think you might have tweeted this or someone else tweeted this, like if you do, if you get into a seed round, especially if it's infrastructure, like you're printing a 10x.

Okay. It's like it's always positive EV, right? And it's funny, I've had a couple of debates with people about this. They thought that hot take was a bit off. And, you know, it's interesting though, the people that are trying to claim that it's much harder are all like seed investors. So it's a little self-serving to be like, oh, this is actually much harder than another crowd.

It's people who did a lot of angel deals but did them into CeFi companies who did like CeFi apps or centralized whatevers where there's no exit. Like there is no— there's— I think Selkis tweeted this. There's like 6 companies in crypto that have ever exited and like 3 were to FTX or something like that. Like, yeah, exactly.

So yeah, exactly. Like, you know, there's, there's the liquidity trade-off, I think, in tokens changes the dynamic, right? Which is why treating them like equity is a bad idea. They like whatever structure you think needs to be in place to protect investors. It's different to equity structures. You can't just, you know, try and overlay it completely. Right. And so, yeah, like, you know, I've joked about this, right? Like, you know, you talk to a seed investor and they're like, no, no, no. Like, you don't understand, I've done like, you know, 10 or 20 angel checks and only like 3 or 4 of them have been 50x. And it's like, yeah, exactly, 21. Like, what? Like, I'm no mathematician, but like, I think you're doing okay, right? Like, they could all go to zero after that and you're gonna be fine, right? So, um, you know, it's, it's just really positive EV, uh, to go into seed rounds. That said, it does change depending on the cycle. You know, as you get further into the cycle, seed rounds go from 20 to 30, you know, in the deep in the bear market, there were seed rounds that were going at 15, 20 mil vals. Now it's popped up to 30, you know, whatever. But it'll, it'll get— I mean, Element was probably the most crazy one last cycle, 320 mil seed round, you know, so.

Yeah, so I saw my first $50 million seed of the cycle. I was like, oh, we're We're back.

There's a few floating around. There's a few. Yeah, yeah. It's a good— it's a good early bull market sign when seed rounds are getting inflated up.

I actually think one thing that could happen, especially as you know, this is— we're recording this on May 20th, which is like this ETF day. The Bloomberg guys, I don't know if you've— because you're in other time zone, I don't know if you've seen this yet, but the Bloomberg ETF guys, did you see this?

I haven't seen it yet. No.

Okay. So the Bloomberg ETF guys, Eric Balkunas and James Sieffert, I think is his last name, flipped their— they're basically—

their probability of that from 25% to 75%—

ETF getting approved went from 25% to 75%. And then, you know, the SEC seems to be backing down on some stuff. I actually think one prediction that will probably come true is some, some, some brands, some companies or projects, whatever you want to call them, will get back to an ICO— not an ICO style, but like they will do seed round or Series A or Series B, and they will launch a token that retail can buy at a similar price. I would assume they end up marking it up a smidge. So let's say they raise their Series A at $100, they'll probably sell it at $150 to retail. But even that is a much better model, I think. And I think that'll come this year.

I think the challenge, right, the trade here is that back in the day, you know, like the Haven ICO, right? FDV at ICO was 60 mil FDV, right? Now at the bottom of the bear market, it got down to 3 mil. So it was dark times, right? But, you know, it's sitting at 3 mil FDV.

That is nuts.

Yeah, it's pretty crazy, right? Yeah. Yeah. 2nd of January 2019. I remember it very, very well. And, you know, after BTC fell off a cliff in late 2018, it just didn't recover. But then it started grinding up from there, right? You know, so I think it's it's just, uh, just below a billion, sorry, FTV now, right? So, um, you know, it's, it's recovered significantly from, from where it was. But even the ICOs that were doing, you know, $150 mil raises, right, there were crazy things like PumaPay. I remember in like early 2018 did $150 mil raise. That was for 75% of the tokens, right? So, you know, the FTV was low, was plus 100 mil. Yeah, yeah, the float was there, you know, and yeah, it got crushed and disappeared and whatever, right? Who knows what happened to that $150 million of ETH? I mean, by the time they abandoned ship there, that $150 million of ETH was probably down to $20 million. So it's probably gone, right? You think about, you know, you raise $150 million, you start spending $10 million a month, ETH goes from $1,000 to $80, and then, you know, you look around at the bottom and you're like, how do we have $50 left? What happened, right? And so, so, you know, all of that is to say that like the even in 2017, 2018, as you know, excited as everyone was, the level of awareness that crypto had back then was tiny compared to where we are now. And so the FDVs of these ICOs, even, I mean, EOS is a different story. But if you look at like most of the normal ICOs that were a single ICO, the FDV was like sub $300. Right? And most of them were like 30, you know, 20, 30, 40, 50 FDV. And so today though, if you were to try to do that, I don't think there's enough room for all of the demand, right? If you try to do a 30 mil FDV ICO, I just— for a credible project, it wouldn't work, right? So you need to ratchet it up and say, okay, we're selling half the tokens. So, you know, there's just a different structure unfortunately that's required. I don't think you get away with selling half the tokens at 30 mil. Um, obviously you avoid the low float stuff, right? And the low float stuff is directly the result of only being able to give away tokens. If all the tokens you sell are locked and all the tokens you give away are unlocked, then if you only give away 10% of the tokens, there you go, right? And like, if you even lock up some of the ones you gave away, it's even worse, right? You got a 3% float or something like that.

Well, what's the solution here? Because like founders who don't have, you know, $25 million to put into their next company, like, are— I think the second-time DeFi founders or second-time infra, whatever you want to call it, like second and third-time crypto founders can do it right. Like they know the game and they can do it right and they probably have enough capital to do it right. But what doing it right looks like as a first-time founder is you're basically saying, I'm taking regulatory risk. And I'm putting my middle finger up to all these VCs who on paper are about to make me go from, you know, I was working at Facebook as a PM and now I'm about to have $250 million on paper.

Paper.

Now it's—

yeah, on paper.

But I'm like, you know, now I'm worth $100 million when my friends are worth like, I don't know, they're still grinding at Goldman or something.

So, yeah, the thing is, though, right, like the low float games feel good, but it's actually so detrimental to alignment, right? Like, and this is, this is the thing where it's like just layers upon layers upon layers of misalignment, right? So you have this low float thing where it's like, oh hey, you know how you were early when we were selling tokens to VCs at $30 mil and you were sitting there in the Discord grinding away, helping us, you know, refine the product or whatever? Well, how does $10 bil FDB sound? For you to buy the token. And it's just like, well, that sounds terrible, but I guess YOLO, whatever. Like, I'm still bullish, right? And so you end up buying the token because you're like, FDV is a meme, the market cap's really $100 mil, it's going to be fine, right? And then, you know, unlock, unlock, unlock, 3 years later, uh, you're 80% down, right? And so like, you just kill the community, you kill the alignment. Like, the whole point of tokens, the entire point of tokens is alignment with the community. If you break the alignment, and not just break it, but break it in multiple compounding ways, you— it's worse than having no token. You might as well just be an equity project, right? Um, and never launch a token and never have that alignment. Um, you know, it's, it's, it's diabolical.

So if you're a first-time founder, would you raise it? Let's say, let's say I have term sheet for $100 million and a term sheet for a billion. What are you doing?

So here's the thing. As a first-time founder, you have far less leverage than it even looks like you do on paper, right? As a first-time founder, you have to follow the meta. Investors are looking for a reason to disqualify you, right? They're seeing tons of different seed rounds. So if you go out and you say, hey, everyone's doing a $30 mil seed round, right? That's the median. And, you know, the range is $10 to $50 or something like that, right? Like the 99th confidence interval, whatever. So you go, okay, so I'm going to nail it. I'm going to hit the median. I'm going to do a 30 mil raise, right? I'm going to do, you know, 10% of the supply in the seed round. I'm going to do this. I'm going to do a 15% airdrop. And you literally go and just copy-pasta the entire meta, right?

You do the points, you do some restaking.

We're doing everything. Like, we're just, we're like, literally, I've got like 1 through 10, I'm doing it, right?

Right.

And you, and you don't deviate at all, right? What do you get from that? What you get is horribly misaligned incentives, right? At the end of it with your community, right? But you actually raise the money because at no point in that 10-point list did you get disqualified, right? Whereas if on point 3, you're like, well, actually we're not going to do points, we're going to do an LBP. Right. And like most investors just go move on to the next one. Yeah. So it's like, so unless you have some leverage in the market, you're just going to disqualify yourself. Now, how can you get leverage? You can have prior credibility from like a prior startup or something, you know, as you say, second time founder, but it doesn't have to be crypto founder. You could have come from something. You could have like a really deep network. You're ex-Coinbase and, you know, like people know you and they know you're credible or whatever. So like you can get more leverage, but even the people with the most leverage The only way that you can really break the meta is have your own money. If you have your own money, you can be like, well, I'm doing my own meta because I've got my own money and I don't really care what you think, right? And then the irony of that is then people go, wait, wait, wait, you've got your own money? Like, take my money. Like, come on. Like, I want to play too, right? Like, and so you can break the meta. So someone has to break the meta, right? And we've seen this already. Like, you know, Robert Leschner, right? He broke the meta. He's like, actually, I'm not going to do— I'm going to do this other thing. I'm doing RWAs. I'm going to have this whole structure. And like, he's like, I saw that last meta and it didn't work for what I want to do. I'm doing new meta and I'm bringing my own money and I'm doing my own thing and you can come with me if you want, but like, I don't care. Right. And that's very powerful because, you know, people are like, okay, well, if you don't care about me, then I definitely want to be in. Right. And so, so it's like, you know, once, but once the meta is broken, once you've actually done it, then you've got this situation where it's like, okay, you've broken the meta. And now other people can follow that meta because that's a new playbook, right? So someone has to break the meta for other people to be able to say, well, I'm just doing what Robert did with Super Stake, right? Or I'm just doing what Racer did with Friend.Tech. I'm going to airdrop everything, right? Like once the meta is out there, then you can kind of do it, especially if it's been successful.

That's why I was happy to see you doing NFTs. I still love NFTs.

I love it. Me too. Me too. I think NFTs are bullish.

And so, yeah, maybe— I mean, tell us how you're breaking the meta. You've got, like, my understanding is you got— you deposit the USDC into the Infinix wallet, you get— you, you, you can stake that and you can earn points, I think governance points or GPs or something.

Yeah, governance points.

Yeah. And then you're running this 30-day campaign right now. What's the name of it?

So Speedrun the Waitlist. So we've got this big waitlist, right? And we were like, these people are mainly bots. How do we find the real people? If we just start letting random people off the waitlist, they might not be real, right? So we need a way to sort of figure out who's real, who's actually aligned, who's doing the thing. And so you earn governance points. And now that we've got a list, a ranked list of 3,000 people where if we were to enable Athena today, for example, right, then we would say, okay, Athena's enabled, the top 100 people get access do it. And then the next day, the next 1,000, and then the next day, the next 1,000. And so it's a way for us to do like a staged rollout of new functionality so we can test it without just throwing it to everyone.

And you've got a set number of these points, right, that you're giving? It's like 400 million or something, or 377 million, I think was the number. And there's set number of points, and those points are—

and they convert to the deposit. Exactly.

Okay, that's right.

Yeah. And so, yeah, it's not like, hey, we're doing points and then like next week we're going to do more points and we're going to inflate you into infinity, right? Yeah, I guess so. Yeah.

Yeah.

I mean, the everyone strategy, right? Like, it's like we've got points. People want points. What if we just keep giving them more points and they'll keep doing stuff for us, right? Like, it's hard to wean yourself off that, right?

If you're like, wait, you see this narrative starting to turn after Eigenlayer, like what you said, like you No, it actually works in the inverse too. You need someone to break the mold and do something right. But you also need one of the, the loved people to do something and piss people off. It's like, I think people are seeing that on Twitter saying, oh, like Eigenlayer can do something wrong.

Yeah. So, and, and, you know, on some level, right, it was like this false promise, right, of like, we're going to do this thing, right? We're going to, we're going to, you know, have this great scheme to give you alignment, right? And then it turns out to be bullshit. And people are like, you rocked me, right? Like, I thought we were aligned. You, you know, you did the thing, you got everything that you wanted, you got the metrics, you were able to do the raises, you got the high FDV, and now I get nothing. That's not a good trade, right? And this is the, the downside to the points meta, right? Back in the day, you used to say, well, we have 100 million tokens and we're going to give you 10 million, 10 million of those tokens to do X, Y, Z, right? And if you do it, you get them, and that's it, right? Like, it's very clear. But then, you know, as soon as points were invented, it was like, well, we can just give you infinite points, and the conversion ratio, you don't know what it is. And then by the time you work out what it is, we've already got everything we want, and, you know, we're off into the sunset.

So I keep— I keep interrupting you. Tell me about the points to tokens to NFTs. Tell me about this whole flow.

We have this governance process, right? And we've got points. And so we've had a proposal distributing some points. There's a fixed number of points. And so we're going to distribute some points to different people in the ecosystem. And then the community was like, no, don't distribute to them, distribute to the— and it started this war of like, who's— where are the points going to go? And there were like 5 or 6 different counter proposals, right? So, you know, this is a well-known governance problem, right? If you, if you open things up to decentralized governance, then yeah, you have a situation where, you know, there's crazy stuff can happen, right? So this is still a thing that's being like discovered in real time, like what people's sensitivity is to it, what people's issue is.

Yeah. I have a question that probably most of the listeners won't find that interesting, but I'm just curious as like a founder, like how are you— what are the lessons that you learned from running Synthetix and just other companies like the non-crypto companies too? Like how do you run this company? Like, do you have like Are you a meetings guy? Not a meetings guy? Do you hire a big leadership team right now because you're like, fuck, this is my 5th company and like, I can't be— like, how do you, how do you run this company? What are some of the lessons learned?

I'll give you just one lesson, literally the one most important lesson, which in spite of 20 years doing startups, I didn't learn when I started Infineon, which is to build something simple and iterate. There's a tendency, I think, in everyone, right, to want to build the perfect thing, right? I want this thing to solve all of the problems at every edge case and, like, it has to do all of the things, right? Now, most of the time you have constraints and you can't do that. You have trade-offs. You're like, well, we can't solve X and Y. We have to, you know, pick one because we've only got $100, right? And it's going to cost $100 to do each of them. And so, we've got to choose one. Right? The challenge, I guess, as an 8th time founder, right, especially one who's had some success, is I felt like maybe I didn't have to have trade-offs this time and maybe we could try to do everything. And so what we ended up doing, and this was a problem that ICOs also fell into back in the day, they would raise $30, $40, $50 million and they were like, we have infinite money, we can do infinite things, right? And so they would lock themselves in a room for like 3 years, and they would come out and be like, look what we built, this beautiful palace in the sky. And people would be like, this is absolute nonsense, garbage. This doesn't— this is not what we wanted. Like, you guys have been locked in a room for 3 years, the world's moved on. You're building something that's like, eh, for a different era, like whatever, right? And like, there's many examples of this. Augur is a great example, right? Like just going off into the wilderness for like 2 years and coming back and being like, look what we built. And everyone's like, guys, like, and it just never got used, right? And it's the problem of like not building a thing and testing it. Like empirical evidence is the most valuable thing that you could have in the world, right? All of the theories, all of the models, all of the kind of systems you can build to try and understand something, nothing is as powerful as empirical evidence. And so, if you go and build a thing and say, do you like this? And Someone says no, you go, hmm, okay, interesting. If you go and build something and then you keep building and building and building, extending and extending and extending, and you come back and you say, do you like this? And they say no, you've wasted 2 years of your life, right? It's crazy. We started with this idea of like trying to build everything and we actually tied ourselves up into knots where like the thing didn't work. The security model was like way too convoluted. No one understood it. Which is super dangerous when it comes to security. Like you want something that's simple, right? And so what we've done over time is to pare back a lot of the stuff that we built and actually simplify it. And we've now got a security model that is much more simple. And so we've built something that, you know, right now the platform is the feature. It doesn't do anything. It just is an account that you can deposit funds into. And that is very simple. And yet we've gotten great feedback from this is an easy thing that I can deposit money into. Right. If we were trying to do 10 different things and 80 different features, it would obscure the signal. You wouldn't even know, like, does the core thing work? And now we know, we're very confident that the core thing works.

Yeah, we— yeah, that's, that's really good. Yeah, I almost— we, um, so when we launched Blockworks Research, um, 2 years ago, and, uh, the idea was like, you have all these tabs open, you've got like Messari and Token Terminal and Artemis and like all these all these platforms like CoinGecko and DeFi Llama and all the, all these platforms, too many platforms, like bring it all into one place. And if you can just bring all that information into one place, it makes it easier for the user. And that what you don't realize on that thesis is like, you're trying to go build the, like an average of all those 10 products, essentially. And the better product strategy to do that took us that we had to learn the hard way was like, you have to do one thing better than all of those people.

Exactly. Yeah.

And then get the users in that way.

It's a spray and pray model of like, you know, just try and do everything and hopefully that will work. And it's like, no, like you haven't solved a problem for anyone, right? You're a worse version of everything, right? And that's, you know, again, it's a very first-time founder problem. right? Of like the first time you build something, you know, your intuition is wrong, right? Like as a person, as to like what, you know, very few people get that intuition right. You know, obviously there's places like Y Combinator and stuff where they like beat that out of you and like say like simplify, simplify, simplify until you're finally like, okay, fine, we'll simplify. Right? But the tendency is no, I want to build the perfect thing. I'm so excited. Like, don't you know what this could be? Right? But building a— you don't build a complex system in a vacuum. You build a complex system out of small parts. Yeah.

And talking to customers as much as humanly possible. So what exactly?

Yeah.

Okay. Now that you've built like centralized companies with just equity and then crypto companies with tokens, would you ever build a company without tokens again? Thinking about it simply from the perspective not from the community alignment perspective, but the liquidity founder liquidity perspective.

From a founder liquidity perspective, like, still no, right? Like, I think that tokens, especially in crypto, if I was to go and build a TradFi business, I don't know why I would want to do that, but, you know, I wouldn't tokenize it. It doesn't make sense, right? But, you know, certainly within crypto, you cannot compete in the market without a token. It's just impossible, right? So, you know, if you're building something that is designed for institutional people, fine, maybe you can get away with it. But the alignment that your competitors will have, even if it is aimed at institutions, is just far larger, right?

So, yeah, it's interesting. Kain, man, anything else? It's a great chat.

No, all good. It's always good to chat. Hopefully you guys can chop this up into something that's workable. I'm sorry about all the interruptions. New office. I've learned, I've learned a good lesson about not sitting in a glass box in the middle of 30 people.

Yeah, right. You guys, you guys should go play around. I onboarded onto Infinex. That's Infinex. Infinex.xyz. Yeah, there's a sign-up button. It's really cool. I would say this and there's Kinto. Are like the two best onboarding experiences that I've experienced. And it's like, it's not even a, hey, I feel like we're moving from like one year to the next. It's like a 10x improvement over like any other application. So it's, yeah, it's cool. Congrats, man.

Thank you very much. Yeah, it's been, it's been a slog to get here, but always excited now. Exactly.

Be well.

Thank you, sir. All right, talk soon.