Gasless Crypto, Finding Narrative Market Fit, and Surviving Hype Cycles | Jack O'Holleran, Skale

Tokens need to have properties that help them capture value, right? And so SKALE, one, there's a staking component. You can buy SKALE tokens, stake in the network, get rewards, participate in fees from chains. You don't have the resources, no matter how big you think you are, to be totally general purpose. So you need to go after that first bowling pin. It knocks over the second two, knocks over the last ones, and then you get so big you can knock them all over. We're in the top 5 of all blockchains almost every single day in terms of unique active wallets and transaction volume.

All right, everyone, welcome back to Empire. Fun episode. We're sitting down with a longtime friend, Jack O'Halloran. O'Halloran, longtime friend, but I don't know how to pronounce your last name at this point, so I'll give you the background in a little bit. But Jack, welcome to the show, man.

Hey, pleasure to be here. You know, it's one of those real simple Irish names, easy to pronounce.

So I've got like a Jewish-Polish last name. You've got the, like, like The Jewish-Polish people don't know how to pronounce the Irish names, you know. It's—

you're lucky you got the Jano. I'm missing that. I could be like, oh, maybe, but it's not as cool.

Oh, oh, what did your friends call you as a kid?

Jack. Jacko. Jacko. Yeah. All right, guys.

So, so for the listeners, for context, known Jack for a while. Jack is CEO of SKALE Labs. SKALE Labs developed the SKALE Network and SKALE blockchain. For anyone who is around and Jack, correct me if I'm wrong on any of this, but for anyone who's around in the like 2017, 2018, 2019 bear market, Scale was one of the like big— and hopefully I'm not offending anyone here, Jack— like one of the big companies and upstarts. Like your co-founder Stan, brilliant technical guy, was working at what was it, Alamo Labs, and doing like crypto cryptography and quantum-resistant stuff in the '90s, just crazy gig brain developer. And then I feel like in the last couple of years you guys have actually not really like taken off in the what I'd call the crypto Twitter narrative. So I wanted the context of this episode. I just wanted to have Jack on to like catch up with a friend, but also a co-founder of a network where I feel like they've been building for several years but haven't really taken off in the narrative. So, Jack, hopefully that is not an offensive way to tee up here.

No, no, I actually— I love that because, you know, someone said to me the other day, is like, Scale has the best product market fit. A developer told me this. He's like, you have the best product market fit in the entire industry. Like, you're leading, like, everybody picks, all these developers pick Scale, love Scale, but we have the worst narrative market fit. And so I think it'll be kind of fun to talk about narrative market fit today. And, and, you know, and one of our strengths and weaknesses is we've just been so committed to making the best product and helping developers and that's a strength. It's also weakness if you're not following the narrative market fit. And but, you know, sometimes the tortoise wins the race. So I'm as optimistic forever or as ever, you know, about SCaLE, you know, continuing to win the developer market and, you know, and having a stronger presence.

How is SCaLE evolved? So maybe it was— I'd love to talk about that. Maybe just give us a little bit of context because I think people will probably they know the Solanas of the world and the Arbitrums and the Optimisms. And for folks who don't know SKALE as much, like, can you just give me the backstory and also maybe the pre-SKALE backstory as well?

Yeah, yeah. Well, let me, let me tell you one thing that like the aha, whenever people are like, well, what's going on with SKALE? I haven't seen you in a year or two. I'm like, oh, well, we're in the top 5 of all blockchains almost every single day in terms of unique active wallets and transaction volume. We had 88 million on-chain transactions last month. We've had over 600 million on-chain transactions in the history of the network. We're averaging around 4 million unique active wallets a month. So we're nailing it. So like people here, they hear that like, whoa, well, how come I'm not hearing about you every day? And it's like, well, if you're a game developer, a blockchain game developer, you hear about us every day. If you are a developer in AI doing Web3 application, you know all about SKALE. Our developer awareness is really, really strong. So, you know, and so are on-chain metrics because we have 250-some projects that have, you know, signed to build the network and, you know, only like, you know, only like a certain fraction of those already live and producing those metrics. So I think, you know, we have those. And so back to your question, like, that's the, oh, aha, like this matters. It's not just a story. This is a top 5 category leader in 2 major categories of blockchain. Well, we started back in 2018. I come from enterprise software, worked in machine learning and AI as a founder since 2008, worked in mobile cryptography before that, and, you know, B2B enterprise software entrepreneur and built, you know, really successful companies. My co-founder, Stan Kladko, also like really successful scientist turned researcher, you know, at Stanford and turned entrepreneur as well. And we were trying to solve a problem for ourselves. We were trying to solve the problem of scalability of Ethereum. So, we didn't build SKALE to follow trends or narratives. We actually built it for us as developers that each of us had applications we wanted to build. And Stan deserves the credit for coming up with that architecture and vision, but that's really our genesis and how we got here and what we're doing. And we've never really fit in a category because I think we have a bit of a hybrid solution. But, that hybrid solution, that's what happens if you put 10 people in a room and they can't hear or see what the other people are doing. You're going to probably have 10 different answers. If you have 9 of them in a room and they're all collaborating with each other and these other ones are not in the room and they're just building what they think is the best thing, you might have 9 similar things and 1 dissimilar thing. And, that's really part of the story of scale. Mm. Okay.

So you were actually the first person to ever kind of pitch me the idea of this. Like, what? So I'm going to reference other blockchains because people know them pretty well. Like, like what, what OP— what Optimism is doing with like the OP stack or Arbitrum is doing with like L3s and stylus and stuff like that. Like, you were actually the first person to pitch me that idea, which was like Ethereum network here, SKALE network here. You've got like the validator network. And then you've got the SKALE chains up here built on the SKALE network, which really, I mean, I'll be honest, at the time I didn't fully understand it, but it looked cool on the whiteboard and now I'm seeing everyone doing it and I'm like, oh my God, that was what Jack was pitching me many, many years ago. So what do you think you guys have gotten right over the years and what do you think you've gotten wrong over the years?

Yeah, that's a really good question. So if you think about what SKALE is, it's— and I'll try to keep this as simple as possible. It's many, many blockchains that actually all share one unified validator set. So, there's one validator set, but at any given time, there's a different committee or set of those validators that are working on each of those chains. And guess what? It's also anchored into the Ethereum mainnet. So, there's added security because there's a lot of network functions. It's almost like an eigenlayer where these SKALE nodes are getting security based off a staking mechanic in the ETH mainnet. Okay. And so, you have the secondary network that gets security from Ethereum, because that's where the staking operations live, and also assignments around, hey, which nodes work together. But at the end of the day, we have lots of these chains that can horizontally scale, and they are all based off one pooled security, one set of validators. And so, people are like, oh, sidechains aren't secure. Well, they're right, because you just have this small set of validators. Scalechains, one of the biggest things we got wrong, people are like, oh, it's a sidechain. Well, they didn't understand it's actually this entire modular network leveraging pooled security principles, leveraging, leveraging containerization techniques like you see in like EigenLayer and other networks that have come after the fact. Networks like Celestia, like leveraging horizontal scaling and modularity, which we've been doing this since 2020. And so what we got right is I think we were early in seeing where the future was going. We also used to have you can have a small chain, a medium chain, a large chain. And we come from enterprise software, right, where I was, you know, I built a company that was a world leader in the AI machine learning category and across the entire life science biotech category. And enterprise software is all about configuration and, you know, making things like fit for, you know, that's what you need. It's so sophisticated. So what we got right was the structure. What we got wrong was like the world wasn't ready for sophistication. Guess what was successful? Just like one single proof-of-stake sidechain and one monolithic layer 1. And we're like, we could have launched that easily back in 2020 and then continually like added these features or introduced them. And, you know, we kind of went— we saw this world. We're like, hey, well, that's not going to scale. And we lose security properties if we don't do ABC things. So in a way, in the short term, we made mistakes because we were so true to our vision for the best product. In the long term, I think that's going to serve the network and all the participants in the network very well. But, it was an interesting lesson that being better is not as good if you're more complicated. Yeah.

Do you wish that you—

And you don't fit in a neat category.

Do you wish you just got to market faster and just said, look, let's— I mean, you tried to build the Lamborghini instead of just trying to maybe get the Toyota out to market and then expanding on that? That's probably a horrible analogy, but like, do you wish you just got to market faster and then built and built and built and built, as opposed to maybe like waiting and trying to build this Lamborghini, like in the—

Yeah, well, and I think, I think we, what we built, we built, we built fast.

Yeah.

I think it would have been whatever we would have built even faster if it were just, you know, like just the engine and the wheels and the steering wheel and some brakes. Instead, we built you know, so we could have got to market faster. The other part was the communications. There wasn't a category for us, right? And so it was an interesting thing. And I know a lot of people listening are really on top of narratives and like this narrative market fit. But, you know, as a builder and somebody who's like been an entrepreneur in the tech space for a long time, like I look at all these things, I'm like, wow, like these are like very simple things that people are just grokking and we're building this you know, next step and what, you know, everyone's going to need. And, you know, for us, success is going to be really dependent on can we take advantage of the first mover advantage, right? Are we going to, are we going to fumble the ball? Are we going to like take it in the end zone? Because when you have horizontal scalability, when you have modularity, when you have cost effectiveness and high security, it's amazing for developers. But you have to build market share and at some point you've got to inject yourself back in that narrative. Be part of that. And that's one of the reasons why we just brought on a new CMO who is a former CMO of Arbitrum. You know, we're boosting our game in different areas as a, you know, as a project and as a core team. And, and but yeah, these things are very critical. But yeah, it would have been, you know, in retrospect, we should have been communicating a Toyota because everyone understood Toyotas and we could have even been keeping the Lamborghini a little bit like behind the product marketing lens. You know, if I had a magic wand, I could go back and do it all over again. But I think we're great where we are, to be honest. You learn from your mistakes and you're better and stronger for them.

So yeah, tell me more about— it's funny, even with Blockworks, like we've seen us be in the narrative and out of the narrative over the last— we launched them 7 years ago. It's like Sometimes, you know, we were this like institutional media brand as the institutions were coming in and then like the institutions left in a bear market and it's like, oh, well, maybe you don't— people don't care about the institutions anymore. So it's like these narratives change all the time, but I think you have to try to build for this, the endgame. What— maybe you could tell me more about this narrative market fit that you see.

Yeah. By the way, we met— we met— a little history for people. We met in 2018 at the MultiCoin summit in New York. And you guys, like, I gotta say, just hats off to you for executing. But I think it's a great example of like staying true to your vision, right? All of a sudden there was an institutional market and people that were, you know, smart people that wanted to learn. And that market wasn't there for a while. It was like, well, how do I just, you know, help these like novices and, you know, understand basics of crypto? And you guys were like, no, there's a sophisticated market. There's smart people that want deep, rich information. And, you know, you stuck to your guns. And that's, that's what we're doing. And I, you know, so you did a good job.

I, I, so I appreciate the kind words, Jack. Using that maybe as a kicking off point, I'll change my question. What is the— so if Blockworks, for Blockworks, it was this institutional crowd, that is X for scale, like that is Web2 developers, that is gamers. Like, what is the thing that you guys have been building for that maybe hasn't come into the market but is just starting to come into the market? If that if that question makes sense.

Yeah, and you know, we kind of, we've, we, it's, we call them HPDs at SKALE, High Performance DApps. Okay, it's kind of a dorky name, but so it happens when you work in software for too long, you start making acronyms. And so think about it, like what applications care about, like having zero gas fees? What applications care about like incredibly fast finality, instant finality with like incredibly fast time to finality with high throughput? High transaction volume. It's games, it's AI applications, it's Web3 social applications, it's DePIN applications. All right. And this category was not, you know, it's still not well represented and like the metrics around it are not appreciated. I think you look at, you know, hey, I think part of that there's a reflexive element that if you buy crypto tokens, you probably are involved in DeFi. And what's the main category you use? You use DeFi. And if you go look at the DeFi Llama top 100, almost matches the top 100 market cap. Not to talk too much about prices, but I think there's an element of— for us, we're building for developers. We're building to solve a problem. And I think there's an element where this market— and you look at Amazon back in the day, people are like, oh, well, you're building this. Well, who wants that? Well, people really severely underestimated the TAM of that market. And the product market fit for their brain. And, you know, I think people like SKALE and other similar projects that are chasing this, you know, high trend, high, you know, lots of users, lots of transactions, not big transaction size, low size, and sometimes zero, more smart contract execution for, you know, different values that you're for on-chain mechanics that impact money and value transfer. Like, this thing is still, you know, a little bit, you know, under wraps.

Tell me more about this narrative market fit that you think maybe you guys haven't fully nailed and maybe why. Like, I think other people like Solana or Arbitrum or Eigenlayer, Celestia, like they're in the narrative, right? They're on crypto Twitter. They're very much in the narrative. Like, what do you think? Why do you think that happens like that?

Yeah, I think there's, there's two reasons. Number one, things are made simple for people to understand. So, back in the day, it was like you either had to be a Layer 1 or a Layer— you had to be an ETH killer Layer 1 or Layer 2. And we were hot back then, but all of a sudden, it was like, no, you're not a Layer 2 unless you do a rollup. And if you have a different integration model where SKALE still brings a lot of value back to Ethereum, but it doesn't— it's not a rollup. And because it just brings way too much cost to the end user and to the developer. And so for us, we made decisions not to optimize the value capture of ETH in the short term, but to optimize value capture for developers and players and users of applications. And so the Layer 2 community was like, you're not a Layer 2 if you're doing finality and consensus in your chains, whether it be your app chains or your sidechains or your shards. And so, we kind of were not involved in either of these categories. So, you have market-leading kind of like reports of who's leading each category and we just weren't even in them. So, that's one is that people need like simple clear boxes to put things in. The other one is if you think about it, there's always continuing investment from venture firms, okay? And what are they good at? Like driving awareness. Oh, news cycle. So-and-so just raised at this valuation. Oh, around this thing. And then Token goes live and Token goes live at billion dollar, billions of dollars of valuation and people are hunting airdrops. And so what's happening is venture firms are funding the next categories and they're also, you know, creating a system of hype around those categories. And so I think this is something that's going to be changing in the market where there's going to be more focus and narrative attention back to fundamentals as opposed to okay, what's hot and new and shiny? And because in typical software, no matter how good and how on narrative you are in enterprise software and other software infrastructure categories, you're going to have to post metrics, you have to post revenue, you have to show product market fit, you have to do all these things. And to get that, you need to be 10 times better than the prior solution for companies to rip out what you have. And in crypto, people are like, well, this is iteratively better. This is 1% better, 2% better, because this firm did this. And these firms— hey, I'm friends with a lot of these firms. We have 14 of them that participated in SCaLE, and I'm an LP in a lot of these funds. They've got to deploy capital. And hey, we're all— there's great projects that are being funded, but that's also capturing narrative. And so one answer is also continually raising money and getting the flywheel going by getting those voices. But yeah, those are, I think, two reasons. Long answer to your question.

Can you fix it?

Well, I think markets naturally fix themselves. Okay. When I'm talking about the problem, can SCaLE fix its position? I think we're in a phenomenal position now. So I think markets fix themselves. And I talked about like this, you know, push back to fundamentals. Well, what happens is when we have the weekend like we just had, right? This is not a fun weekend. Like anybody, you got up Saturday and you're like, oh, that was bad. You get up Sunday and you're like, what happened? You wake up Monday and you're like, it got worse. It was a horrible weekend in the markets. Things like this actually end up driving more value into fundamental proof, right? And so, and we look at these market cycles, when you look at the cycles we've had, we're like, well, no, the cycle will repeat itself. On these schedules. Well, the reality is each time on those schedules, there's been really clear data points that smart people running funds are like, oh, look at the metrics of DeFi, for example, in 2020. Look at the utility. Look at these things happening. We have confidence in these things, right? And these things where people could have like provable confidence brings in big institutional money. And hey, like meme coins are great. I think they're going to do a lot of things for community building. They're almost like the more accessible version of NFTs. So, not to knock them, but a lot of that is not— there's no fundamentals other than community. And hopefully, they evolve and they start doing more things that drive fundamentals, and I think they will. But that's a long way of saying that markets have a natural way of driving— I started my career in the mid-aughts and definitely saw that happen following the 2000 bust and the 2008 bust. You just see this, like, you know, attention back to value capture.

The only pushback I'd have there is that in crypto, for one reason or another, and for better or for worse, price tends to drive narrative. And narrative at this— because the industry is so nascent, it's like price drives narrative, narrative drives fundamentals. So what I mean by that is like token starts going up, narrative becomes this, this thing is hot, this category is hot, whether it's modular, whether it's restaking, whether it's the return to monolithic chains. And then user— like developers start building on that thing, build better applications, and then more users come in and then the fundamentals happen again, for better or for worse, for one reason or another. Maybe it doesn't always look like that. But if you think about that in context of like a scale, maybe because then you weren't plugged into a narrative, the price of the token didn't go up. So then maybe the excitement didn't happen, which didn't cause the developer, right? That flywheel kind of broke down. So I don't know.

Yeah, yeah. And I'll just say one. Yeah. So two things. So one, I think I'm looking at this right now. I'm not talking about scale. I'll address scale in a second. And also when it comes to scale, I like even for lots of reasons, I can't talk about any price things, but I'll talk more about our our narrative, but— and can I just— don't address price. But so when we look at— when I look at this, I think crypto in 10 years is going to be far more boring. And the analysts and the type of things you see in traditional equities and securities market, there's a lot of less sexy things that are driving market appreciation, right? People are like— and I think in 10 years, crypto is going to be looking a lot more like that because these blood in the markets and maturation in general is going to be driving more and more value. Now, is it going to happen overnight? No. And I think I just— but I do think like the pendulum swinging back or not swinging back, it's moving now into a point of fundamentals. But It's not entirely like we're not going to get a 10-year shift in 60 days. So, so for projects that like, you know, hey, are we legally and for all these reasons like, you know, and we're a decentralized project, we just focus on fundamentals. And but big piece of that is how many community people, how many people do we have in our community, how big is our following, how many people are staking and participating in the network governance, right? So we need, you know, we're not focused on price. We'd be focused on these other things around awareness. And so, those things you need narrative market fit. And so, for us, I think you say, "Can we fix it?" I think it's almost like a movie where we were hot and then all of a sudden, we weren't involved. But, all of a sudden, we stuck to our guns and the narrative is naturally moving back to us. But, you can't just wait for that to happen. You have to do marketing. You have to do awareness programs. And, that's why we hired Andrew Saunders, the former CMO of Arbitrum, go and make that happen because there's a lot of things we weren't doing. And I have to look back and I'm like, in a lot of ways, our project was, you know, I think a little naive in that we just, you know, we just said not build, not build and they will come, but like build it, grow it, get real fundamentals and everything takes care of itself. And that's just not the way things are. So you do have to get out and inject yourself into narratives and do the things that you can do in a compliant fashion to drive your awareness. And I think we're doing a lot of that. And naturally, you look at SKALE. SKALE is a modular pooled security blockchain with horizontal linear scalability. Like, we meet a lot of these really sexy themes. We also have this gas-free nature that I think is going to be— we're going to have a ton of competitors trying to do this almost like decentralized SaaS model for for, you know, chain payments and, you know, gas subsidies.

Yeah. So that's actually the next thing I was going to go into is maybe we could talk about this gas-free idea because I feel like gas-free has been thrown around for a while. It's like you get the users to pay. So right now the users pay for gas, right? Everyone knows how that— how the current model works. I think your guys' idea, as I understand it, is you get the developers to almost subscribe to scale in what feels like a B2B SaaS model in a sense, and that covers the gas fees of the users. So I think, I don't know how much, I'm curious if you guys have metrics on like how much gas you've covered over time for users. I don't know if that exists, but yeah, maybe you could just tell us about this, this model and like, why is this the best model to make users like not feel the pain of gas?

Yeah. Yeah. Well, one metric that's so big, it's almost unbelievable is If you look at the gas consumption on the SKALE network, we have saved— if all that was spent on the Ethereum network, it's over $7 billion in gas fees saved. Okay, it's a high number. Now, but it's a little apples and oranges because guess what? Gas just costs less in SKALE because there's not finite capacity. The other thing that makes SKALE that I think makes a true gas-free network Every chain has the ability to essentially utilize what are called relayers, where you can subsidize gas. So, at the wallet level, I can— you're playing a game like, oh, I'm not paying any gas fees. Guess what? Someone's paying it. But what's happening is the unit economics suck because the validators still are getting paid for each transaction. In SKALE, the unit economics are really, really good because what happens is developers rent a part of a chain. Okay. Like, oh, I'm going to buy SKALE tokens. I'm going to deposit it into this contract, stake it in this contract. And then over time, you know, I buy it 12 months, 1/12 every month that I put in is going to go to validators. And so you're actually renting a piece upfront. Now, it's like renting a car. And instead of like paying by the mile, you're paying by the month. Well, you might not even drive the car or you might drive at full speed the entire time. You pay the same amount. And so, the unit economics end up being really good because people are— validators don't need to compete with each other to get paid on each transaction. They're actually getting paid by running their server in the network. And they work together in unified validation where they're all actually monitoring each other. And everyone that meets the score and is a good actor equally splits the pot. And the thing is, so this is one of our challenges at scale. We do a lot of things. And imagine back in 2020 where it was like, oh, you're like a layer 1 or layer 2. And we're like, oh, we're doing all these sophisticated things. We're not really well understood. But that, I think, is the biggest strength of the network. And that's why, you know, if you go in, you're like, oh, we're X amount faster and we do this X amount better. And then you talk to a developer and they're like, well, what happens after my gas grant subsidy runs out? They're like, oh, well, then it costs this amount. And on scale, they're like, We're like, well, what happens when, you know, your gas subsidy is going to run out from a grant from this other, other chain that's offering you a grant? And they're like, oh, well, it's going to cost this amount. Like, well, in SKALE, it's only going to cost this. You know what it'll cost. So you can just— the unit economics are so much more superior for high-performance applications.

How is that economically viable for you guys then?

Tokens need to have properties that help them capture value, right? And so SKALE, one, there's a staking component. You can buy SKALE tokens, stake in the network, get rewards, participate in fees from chains. Now, instead of having a gas fee, what happens is a developer says, hey, oh, it costs this amount, I'm going to go rent this chain space. Now, they may be paying, it might be 1/100th of might be 1/10 of Solana or 1/1000 of Ethereum, but the way the network works in the economics, it's still economically viable. The more and more applications that come, and the more the network is congested in the sense of how many chains there are, the higher price the chains are. There's actually a linear scaling curve for the economics. Just like riding an Uber or Lyft, like surge, everybody wants a ride. Guess what? The price goes up. You know what? More drivers come and the surge gets pushed back down because they're like, oh, it's surging. I better get out there and stop my coffee break. Well, in SKALE, there's a certain amount of chains in the network. And if we're over that, the price per chain is set at a 50% load. If the network's at 80% load, it's going to cost a lot more than a chain space rented at 50% load. It also incentivizes more validators to set up more nodes. It drives the price back down to the median. So that median price was set for like, you know, years of— we hired economic PhDs, we had Wall Street people working on it, we had Delphi Digital did a big— back when they were— before they were doing the other stuff, they were an analyst firm and they had a lot of really smart modeling people. And, you know, that is— that's how the token captures value is an intelligent and accurately set median price point to ensure that the price is good for developers and there's big value capture still for validators and stakers.

Curious to think— curious to hear how you think about like the ecosystem developing. So I feel like different networks, chains, L1s, L2s, whatever you want to call it, have prioritized different things and that's led to almost different cultures of the chain. So like some chains and have focused on gaming, some have focused more on enterprises, some have focused really strong on DePIN or DeFi. How do you think about BD and like ecosystem growth?

Yeah, and I think, you know, you like Crossing the Chasm is one of the like— it's an old book, but it's like one of the best books of all time around like, you know, how to build a market, how to build a product, how to, you know, how to, how to go to market. And, and there's something called the bowling pin approach, right? Like, you don't have the resources, no matter how big you think you are, to be totally general purpose. So you need to go after that first bowling pin, it knocks over the second two, knocks over the last ones, and then you get so big you can knock them all over. Okay. And, and so for, for SKALE, I think, and for other projects, you have to look at what are your strengths? Okay. What are, what is your chain better at than other chains? And then you have to say, okay, well, how does that match up to industry segments? And types of developers, types of applications. For us, we're like, wow, lots of users, lots of transactions. And that first pin is gaming. SKALE is consistently in the top 1, 2, or 3 in the gaming core metrics. There's over 120 games that are signed up on SKALE. I think only less than half of those are live today. Every quarter, huge amount come and join the ecosystem. And, you know, so that was our big bowling pin. And I think as others were like, wow, like, we have high fees, but we've got a lot of DeGen community. And, you know, but we have some good security guarantees. Let's go after DeFi. But that same DeFi project trying to support gaming, it's impossible, right? It's like literally impossible. You look at rollups and rollups are going through a similar thing. They're like really strong in DeFi, but Even if you have a 1 penny or a half a penny transaction in gaming, you're toast. There's no way any game that's going to be publishing things on-chain wants to pay half a cent or a penny. So, there's promises of, hey, let's give you this grant for some period of time. And then, the more and more people start using it, the more transactions, the less— greater the cost for trans— or the lower the cost for transactions. So, that is a— it's a bet, but it's a bet some people aren't willing to take as a developer. And they're like, well, let's just go where we know the fees are low and the performance is good and security is But I think you're right. Like, we're seeing this kind of, you know, maturation where we have industry-specific builds because of those reasons and because of the philosophy. Jeffrey Moore's Crossing the Chasm philosophy.

If you could only pick 2 out of 3 of these, so I'll give you on-chain gaming, very like speculative crypto native, like DeFi meme coin crowd. And then like the enterprise crowd that, you know, people were kind of lusting after in the 2021, 2022 days. What would you— if you had to have two of those kind of move on to SKALE and start building on SKALE, one of them says, "I'll build somewhere else," how would you prioritize that?

You know what, the way we look at it is we look at, you know, high-performance applications like gaming, Web3 social apps, which we all know I think are still failing to deliver. Web3 AI applications, there's 14 of them building on SKALE already. I think there's going to be some real winners there that build great things, get users, integrate the power of blockchain and AI together. And not like, hey, like doing decentralized inference or other really sophisticated, like deep integrations, but high-level app-level integrations where you use GenAI and, you know, tokenization and smart contracts together to build really cool, you know, user acquisition strategies and products. I think those, those categories are like really sought after. And then we think about DeFi as this foundational base to support that. You need to have this like minimum viable DeFi to let people swap in all these ecosystems without needing to bridge out. Okay. And then I think our DeFi approach is actually backwards. Most people, let's start with DeFi. Let's go really heavy into DeFi. For us, we're like, hey, let's go really heavy into gaming, Web3 AI, et cetera. And then, you know, peel back and now there's a huge, you know, Sushi just went live on SKALE. There's a big, big push. There's all these rewards and incentives. And, but the goal isn't to be a top 10 chain in DeFi, it's to be minimally viable to like have really healthy DeFi, but DeFi that's not a circular reference of people trading. It's supportive to actually like, you know, millions of users using applications, needing to swap, needing to bridge, needing to, do other activities. Now, enterprise, I'm happy to opine on enterprise, but go ahead. And I think—

Yeah, yeah, yeah. What's your take on enterprise? Is the juice worth the squeeze?

So I think I worked in enterprise my whole career before crypto, like up until 2017. I have a lot of friends that are in Web3 enterprise. And one of the terms is pilotitis. We're stuck in pilotitis, like, oh, let's try this. Let's do these pilots. To me, one of the issues for enterprise adoption is that decentralization is one of the biggest values of a blockchain, right? And a crypto. And if you're just selling on the fact that you have like programmable money and smart contracts and immutability, trustlessness, transparency, enterprises don't care as much about that. Okay. And so I think the good, the best enterprise play right now is B2B2C. It's the enterprises. And that's like blockchain to businesses, to consumers. So blockchains that are targeting enterprises that are targeting consumers. And so you think about big major sports leagues, big major brands, people who service millions and millions of people and can utilize NFTs, you know, games, smart contracts, programmable money, and like kind of these like top layer values of blockchain to really drive growth on the consumer side. That makes sense.

Yeah, it does make sense. What are your thoughts on— I mean, you spent a lot of time in AI and Silicon Valley in the pre-hype days, I would say. Like, what do you think about this intersection of AI and crypto? Yeah.

And I, you know, hey, go check out my Blockworks article op-ed I wrote on this. It's pretty— you know, I think it's great. But, you know, my thesis there was You know, one, AI is going to have this huge support in blockchain, really just helping people build faster. So, we're seeing this today like Web3 is actually a customer of AI in so many ways where I know our core dev team at Skale is building so much faster because they're leveraging blockchain to write code. Okay. Number one. Number two, we're going to see these lightweight integrations where it's more you know, you know, hey, AI models, you know, interacting at the app level for people that are, you know, you know, building applications to, oh hey, like, you know, make your NFT and then, you know, do XYZ thing and utilize block, utilize the AI engine and create like a fun consumer application connecting these things. Or hey, like, you know, pay in this marketplace to like train your avatar to do XYZ things for you. Now, the deeper level where these things are like the marriage, which is what I wrote about in Blockworks, was the marriage of AI and Web3 that's like, hey, we're having like transparency around the inference models. We're making sure that this AI engine is doing what the community wants it to do. And there's transparency around ABC things and we can vote to actually make these things more left or more right or more transparent or more, you know, ABC, like that, like culmination is still a ways off. Hmm. But the second piece, I think we're finally getting into this. And like I said, there's 14 applications on scale that are already blending these things together. And I think we're going to see some like big consumer wins in the AI space that leverage blockchain as like a feature.

Say more about what that means. Like what are some of these 14 folks doing? What does that actually entail?

So, a lot of them are using like, you know, decentralized, like using, you know, ChatGPT or like, or GPT-esque, you know, cores and they're creating applications on top of it. So, if you go to GPT Store, there's something like, oh, there's thousands of applications. Now, imagine within this, I'll just come up with something like, Let's say I have an application and I want people who are really good creators in certain categories to help train these models for the artwork, or it's chefs. I want chefs to help train my— How do I motivate them? Oh, the more they participate, they're going to capture tokens by being core-level, deep-level creators. On the inside, I'm going to capture users by having a tokenization to like, you know, airdrops effectively to like get people to utilize my product. And then I'm going to have like some voting or governance feature. So you kind of systematize a loop of usage and contribution where you've got like workers and you've got users and you've got a system just like a blockchain but within an application. But the center of that application is you know, a large language model.

That's interesting. Maybe putting on your— anything else on like the BD and ecosystem growth side that you want to talk about?

Yeah, you know, I just want to say like, I, as a builder, like we have, you know, over 250 projects that are, you know, signed up building on SKALE, over 1,000 developers. Like there's a lot, like this was like, I've been calling it the Red Wedding weekend, you know, like Game of Thrones. This is not a weekend we just had. But, you know, from a builder perspective, like, there's more people than ever building. And I think they're building in more and more categories. And we're going to start seeing breakout use cases. And I think gaming is already breaking out. We're not seeing the success of like gaming tokens yet, but gaming traction is really growing. And I think the other pieces are following. You know, you look at like DePIN, I think we're finding more and more use cases. Like there's one on SCaLE that It's called Xord. It has, you know, tens of thousands of people all over the world that are like, you know, downloading this Linux kernel on their computer that effectively is like a localized node, this physical infrastructure that's capturing all this like sentiment data within their realm, like the country they're in and the social media they're in. And then, then it uses AI to like come up with like trends and predictions based off this like hyper-decentralized data capture that's only possible with decentralized physical infrastructure. So things like that, we're actually seeing these things come to light. And I'm from a BD and go-to-market, just more and more people building than ever before. So it's exciting times, really positive.

Nice.

Good stuff happening.

What about, I guess, putting on the founder's hat again, I'd love to hear you talk about just macro and running a company in this? I mean, yeah, we had the jobs report, Japan. Like, we're recording this on August 6th, so the market dumped, what, 20% and then has been rallying a little bit since then. But it's, I mean, just a crazy last 72 hours. What are your— like, how do you think about running a, running a company in crypto during this time?

Yeah, I think, and you probably deal with this too, like, one, you've got to pull your emotions out of it, right? I think I've learned that from working in the space so long. You have to be emotionally connected over 30- and 90-day rolling averages because you can't just ignore markets and not emotionally have any engagement with them. But, if you are being pulled around every day by the market and you're trying to make long-term plans and lead people, you're not going to do a very good job. So I think that's, that's like one perspective. And the other perspective is like there's business strategy. It's like I got to tell you, like a lot of projects cut costs back in 2022 and the projects you see here today are ones that cut costs. And, you know, because the other thing is like you need to play aggressive when markets are up, no matter what, if you're Coinbase or if you're, you know, a fully decentralized DAO-based DeFi project, you have a budget to spend on marketing, right? And customer acquisition and user acquisition. But if you spend that into like 2022, like doom and gloom, you're just throwing that money away. You're like burning it on fire, right? You need to keep the lights on. You need to be doing things and keep spending into like tough times. They say don't cut marketing and down markets, but crypto is very specific, right? But you need to— but if you're spending it, then the market's up and everyone's spending it. Well, it doesn't do you any good. You're like, You're way— it's way too saturated. So, there's a timing element too that I think for anybody running a project has to be really aware of. And, that gets informed by your emotional sentiment and analysis and the people you talk to. So, you always have to be forming opinions so you can make moves on the chessboard. And, for us, we're decentralized, so we only have a certain amount of power and control, but we play a huge role in the project. And we play a role with our budget at ScaleLabs Inc. But yeah, it's— I gotta tell you, man, it's the skill set to do well in your job or my job or lots of jobs. A lot of it is like being able to like deal with turmoil and like try to know what's around the corner.

Yeah. You ever— do you ever listen to The Founders Podcast by David Senra?

No, I don't.

It's a good— it's a good, good podcast. But there was an episode the other day on Rolex and I talked about how Rolex is a big international brand, but the thing that kind of really boosted them in the US was 2008, 2009 market obviously tanks and you get this recession, big global financial crisis, and Rolex doubled down in the United States on marketing when all the other watch brands pulled back and they started spending more than they'd ever spent. And they really doubled down on brand awareness marketing, which I guess was a huge fight internally because everyone said, no, we need to do performance marketing. We need to pull back the marketing budget and they pushed heavier in the bear market. So I don't know. Yeah, yeah.

It's like, you know, and it's all bets, right? It's like, when are you— when's the right time to do it? If you do it too early and too aggressively in the wrong places, you just lose it. If you do it in the right way, at the right pace and at the right time. And that's the question because you— and hey, I'll tell you, like, even if you're like booking conferences 6 months out or whatever, like everything is twice as expensive for anything you want to get. Like, you're getting advertising, you're getting— no matter what it is, like, you've got to be early. And, you know, and so that's— I think that's a great story with Rolex.

And, uh, Jackman, this is a great chat. Anything else that you want to cover, um, that we should have talked about that we missed?

Yeah, you know, I just, uh, I think we covered a lot of topics. I think you and I always have a fun time chatting. It was fun to be able to do it publicly. Now, one thing I want to ask about is, like, Give it— give us all the update. Is there going to be a golf tournament at Permissionless? And are we just doing, you know, uh, are we just playing? I think— what are we doing? I think we've got it all.

I mean, yeah, the idea with Permissionless— and shout out Santiago for pushing me on this— was, uh, you go to all these conferences and you're just fucking wiped by the end of it. Like, heavy drinking, shitty food, staying inside the whole time. And yeah, we're trying to make Permissionless be like a little more health-centric. So we're doing it in Salt Lake, a lot of great outdoorsy stuff, good hiking. We— the pickleball tournament is live, so you can sign up for that. We're doing a big pickleball tournament.

I'm signed up. I'm signed up for the pickleball tournament. Andrew and I are— well, we're— at least we've applied. So, you know, we can, we can get that acceptance pushed through.

I know a guy who knows a guy. Um, we gotta go. We got a golf scramble. Mike was like, I'm doing the golf scramble. I was like, dude, I don't—

I gotta get in the golf. Okay, I need to go. I need an invite for the golf scramble. I gotta get in.

Well, I told Mike, I was like, I think we got a conference to run. Golf is like an all-day activity.

I'm pretty sure you can't just like— yeah, I think the golf has to happen like the day after, maybe the day before or something. Yeah, or like 2 days before. But it's gonna be— would not be good for you guys setting up a conference, I'll tell you that. But that'd be fun.

It's the most excited I've ever been for a conference. And it's crazy, like, I mean, it's a always been a conference for like kind of crypto-native crowd, founders, execs, and crypto builders, developer, big developer audience that comes, a lot of investors, both crypto-native and non. This is the first year we've ever had a lot of policymakers, uh, really coming out in droves. So from congressmen to senators, which we haven't announced anything yet, but, um, it's been cool.

I'm excited. I say it's a great city too because it's easy to get around and it's like beautiful. The worst thing about conferences is when you have to drive like 45 minutes to go to each leg and you're like, you know, so I think it'll be, it'll be really good to the activities around the conference.

Don't sleep on Salt Lake. So, Jack, man, this has been great. I appreciate you. Congrats on everything you've been able to do at Scale. It's fun having you on the pod.

Awesome. Thank you.

Cheers, man.