Crypto Megan Podcast | From DeFi to TrustFi: "An idea bigger than Bitcoin" | Alexis Sirkia of Yellow

My name is Megan Nelson, aka Crypto Megan, coming to you here at Consensus in Miami with a very special episode. We've got Alexis Tsirkia here, the captain of Yellow and co-founder of GSR. Welcome, Alexis.

Thank you for having me, Megan.

Yeah, I mean, we've already been having such an incredible chat backstage. You've got such a different perspective on this space, which I'm excited to share with our audience today. And, you know, as we're getting into this, Your background. So first we're going to start with your background and then we'll get a little bit more into what Yellow does. You entered this space very early. Tell us a little bit about how you got involved.

Yeah, I was very lucky. I used to work in the European Space Center in French Guiana. I was helping Ariane 5 space rockets. So I was very, a very technically oriented software engineer. And I had a friend from kindergarten, primary school, and And then middle school. And he used to work at Goldman Sachs, and one of his people that reported to him had left to Ripple. And they described it as this very young company in Silicon Valley that was printing money, you know, and they needed a market maker. And I didn't know anything about market making at the time. Then he had been market making for some oil in Goldman, and he knew the whole, the whole dictionary about how to do very professional market making that didn't exist at the time in, in the crypto space. So around 2013, we, we co-founded GSR, and it went well because with his excellent knowledge in market making and my know-how in technology, we created, I think, one of the best fintech companies, which with his financial and my technology, we just outgrew everybody in the space. It was like being professional poker players in an amateur tournament because there was no—

That's a good analogy.

There was no professional people from the traditional finance industry that had an interest because it was a very small industry at the time.

Right. Very niche.

Yeah. The spreads in XRP that we had at the time were like 15% or over 10%, and there was no— it was like $400 of liquidity on each side. It was like the markets were like dry. So, so yeah, it worked really well. Like we brought liquidity to the space, to Ripple, and then to all these other coins, and it worked out really well. And that was the journey.

So GSR, I mean, became one of the top market makers in the space and is still there today. So I like what you described is, you know, you were the perfect combination of tech. And I think in order to have success in a project in this space, you need to have expertise in different backgrounds in order to make that work. So you guys came together, it was the perfect storm. You founded GSR and you saw the need for more liquidity. It was pretty dry.

So that was GSR. And then around 2018, it was already very successful. That was like 5, 6 years later. It was already very successful. And then I started to evolve and see other needs in the space. Just like liquidity was just— there was no liquidity in 2013 and it was very difficult to buy or sell. Anything outside of Bitcoin was impossible. And in 2018, what I saw was this constant problem that exchanges were just falling down and people are losing all their assets to exchanges. And we've lived it so many times, you know, with Mt. Gox, the big one in 2014. And then this exchange that praised itself the most secure exchange, JustCoin it was. Nobody remembers today, but JustCoin, this Norwegian exchange, from one day to the other, it fell, it got hacked, it lost everything.

And Bybit and Coolcoin and FTX and all of the things that we've had to endure in this space.

Bitfinex as well lost all these coins, you know. So, so many exchanges have lost to fraud. And I didn't understand. In Spanish, you say, en casa del herrero, cuchara de palo. It means in the house of the iron smith, we're using a wooden spoon. And we're praising this trustless Crypto, which is like, you can— this alternative, you can have store of value without trusting a government, and you can send value without trusting banks. And Ethereum, you can execute a contract without trusting people or arbitrate without trusting a judge. So we have all these trustless things, and we're not— however, we still need to trust an exchange, right, to trade and keep our coins there to trade. And this is the problem I set myself to solve. And it was like an engineering problem, you know, that we tried to solve. And it was a difficult problem, but we did it. It required about, I think about 500 man-years of engineering.

Wow.

About 100 people, 5 years, I would say, you know, like different people with different attempts and a lot of failure, you know. 2019, one solution didn't work. 2020, And around 2021, November already, ConsenSys published their state channels paper. And we thought, wow, this is thinking outside of the box and this is going to make it. And it was not a— it was state channels is like an evolution of Lightning Networks for Bitcoin, but for Ethereum and any smart contract language. And this solution that seems so simple Eventually, we managed to redevelop about half of the code there, but then we restarted from scratch and—

Wow, that's quite the process.

So many things. And then like around 2022, '23, we managed to get our first prototypes working with this technology. And then we had some amazing people join our development efforts, like Alessio, who was the CTO at Cosmos, he built Cosmos and he joined us. And then we had the CTO of Bybit, he joined us to build this and they joined us. Of course, they joined us, like I'll say transparently, for a fraction of their salary just because of what we were building, you know?

You gotta have something pretty compelling to have people leave their cushy, comfy jobs to come over and build like that.

Yeah. And then, so we built this. trustless protocol between 2 parties. So a trader with a broker or an AI agent that doesn't trust another AI agent, any of these, any of these use cases can use the Yellow Protocol to transact with each other. And I'm so proud of what we have accomplished because it's really what the Web3 space needed, what Bitcoin, what Ethereum needed. to make a successful, complete business.

Right.

Now we can build Web3 businesses that run autonomously, which was the dream of Web3, of Gavin Wood and Vitalik in 2014. With the Yellow Network and blockchain components, like it connects to any blockchain, we can now build complete business, autonomous businesses, which is what we set to do.

And allow them to seamlessly communicate between each other.

Exactly. So for example, a bank like HSBC can trade against Binance without trusting Binance.

Interesting.

So this is one of the use cases, and that's why we're integrating, for example, into the core banking software of many banks. Like about 500 banks are using this core banking and we're integrating into them so they will be able to trade crypto without the risk of of exchanges. And of course it's very compelling for them. That's one use case. But then there's about 500 different use cases of different people that have developed different apps on the Yellow SDK and on the Yellow Protocol and different— and now we see the trend is AI agents because—

Oh, absolutely.

2 agents don't trust each other. So with the Yellow Protocol, these agents can put some lock some tokens on escrow, and there's a smart contract adjudicator that will only intervene if required. So we do our business peer-to-peer, right, without third-party intervention, without the blockchain. And then if we have a problem, then we raise our proofs to the blockchain that will settle the dispute.

Oh, interesting.

It's very technical, but—

Very interesting.

It's very technical. I'm not sure how to explain it.

I haven't heard that method in anybody else's I mean, it is unique to what you've built.

It's unique to what we've built. It's based on Lightning protocol of Bitcoin, but extended this philosophy to Ethereum. And in Lightning, it didn't work because it was not very capital efficient.

Right.

But in this method, because you're only locking the deposit for a very short time of the transaction, it's actually quite interesting and it allows People that don't trust each other to interact with each other, which is our biggest problem in this day and age, right?

Is who do we trust? How do we trust them? And with so many scams rampant and things happening, and it's so hard to know where to go.

So you've built a solution for that, which is the extension of the philosophy of Satoshi, of trustlessness. And what we're talking about later, that everybody's talking about. Centralization, but decentralization was just a means to the goal. The thing we're solving is trustlessness. So now we have like Bitcoin for value and for trans blockchain for transfer of value. We have Ethereum and all the smart contract languages for execution and arbitration. And then we have Yellow for the peer-to-peer part of the business, which is usually what happens. Always there's like business always starts peer to peer, and we only settle or arbitrate if we have a problem, or arbitrate if we have a problem and settle at the end of the transaction. So maybe you I a dispute of sorts. Yes, there's a dispute. So maybe I ask you're a contractor and they ask you ABC, and I settle at the end of the month, you know? Right. And that's Normal way of business, but in blockchain until today, we're settling A, we're settling B, and we're settling C. Everything goes to the blockchain. It means like we are publishing everything. But in the real life, you're a contractor. We do ABC, and with Yellow, how it works, we both sign cryptographically, but we keep the proofs. You keep the proofs, and we keep the proof of A, the proof of B, and the proof of C. Right. I bought one Bitcoin for you for eighty thousand. I bought an Ethereum for you for $3,000, and you owe me a Bitcoin and an Ethereum. And then you don't want to settle, you don't want. So, I will raise this dispute, and I will have this proof that we agreed, and I will raise them to the smart contract, and the smart contract will adjudicate me from your security deposit, will adjudicate me my profits or losses. So, that's one way to do it.

But that's a very interesting concept because we're so used to Settling these kind of disputes with people who decide based on their opinion, right? Or, I mean, this is cryptographic proof that we don't need that intermediary to tell us who's right.

And think about AI agents is the big use case now, because with people, you have like billions of people, sorry, thousands of people, and you can have some arbitration, like human intervention. Like, for example, in eBay, when you're buying something and you don't receive the goods, there's a human being that is going to settle and fix that.

Right.

But with billions of AI agents, you have to upgrade to something that is automatic and—

A more efficient system.

Yeah. So, so our system allows peer-to-peer between AI agents and they can do their business with their cryptographic proofs. And if everything goes all right, they will not need to raise anything to the smart contract. But if they have a problem, they have this option of complaining. And the smart contract, which is like an adjudicator.

Right.

And it's different adjudicators for different businesses. So, for example, for an airline business, there's this adjudicator that knows how to read if an airline booking code is valid.

Right.

Okay. So, you're a travel agent selling me a cheap ticket.

Mm-hmm.

And we both put security deposit and I send you, and you send me the booking code and I say, oh, this is a, this booking code is not paid for or is a fake booking code.

Right.

So the adjudicator will go to the airline and will confirm it's, it's invalid and you will lose your security deposit and I will receive your security deposit.

Interesting.

But if you give me a, a, a good booking code, uh, you'll receive the, the payment of the airline. So this allows 2 agents that didn't trust each other to— so it means that I don't have to go to Expedia, a website that I trust to buy. I can buy, my agent can buy from the best person in town, from the best offer in town. And it allows innovation from young entrepreneurs that have a better way of dealing with things. It's really big when you think about it philosophically. It's, it's, uh, I'm very respectful of Bitcoin, but so it's difficult to say, but the idea is bigger than Bitcoin.

Wow. You heard it here first. I mean, I'm sitting here trying to process this and it is kind of solving the main issue that we have in order to go forward. main barrier to entry that's blocking sort of like the way for the adoption and the mass use of this?

Exactly. So adoption was what I felt so sorry that we've built this good technology, but nobody's using it in the real world. So that was the thing I wanted when I left GSR and built Yellow. That was my main focus. That's like, we need to make it so that Anybody can adopt it. And it's, we seem to have done something right because like just after launch, we have 1,000 developers using our SDK and building apps.

And, uh, that's, that's massive. I mean, that's a hard thing to achieve as a project that's just out the gate, right?

I think so. And the token is doing well and, uh, the people are believing in us. So, right.

I can see why. I mean, so when we talk back about trust, And, you know, people that are behind projects, I believe that with your knowledge and experience and where you come from, what you've built, you know what it takes to build something successful in this space. And it is not easy, as we've seen throughout the various cycles and different projects that came about and they're no longer here. It takes a lot. So I think that with your knowledge and your background, that trust is then established to say, hey, there's something interesting happening here. And it's as if, would you agree that this, it's almost as if blockchain was built for AI agents?

It's exactly the use case of blockchain and things like our technology. It's like the perfect solution for AI agents. And it's great because the technology is now mature for crypto. The crypto technology, including ours, is already quite mature because of so many years of development.

Right.

And now we have this nascent industry, which is AI agents, and we have the perfect technical solution. And it's just an industry that is here to stay, unlike the previous cycles like ICO, NFT, meme coins, and collectibles and all these things we've had. Here it's like a solution to a new industry because AI agents is a new industry.

Right.

And we have the perfect solution, at least for institutional, maybe for retail, I think Visa, Mastercard, they still have Stripe, PayPal, they still have some, some, because they have the retail market already.

Right.

And everything is connected to credit cards. So initially for retail, maybe it's not the perfect solution because Visa is already connected, let's say, and crypto isn't yet.

Right.

But for institutions that don't use credit cards, institutions do big payments.

Right.

And that's the big piece of the pie of upcoming agentic economy. Institution is like 75% of the upcoming industry and retail is about 25%. So crypto is the perfect solution for institutional AI agents and also for AI agents, but you need the two sides. So you need the users to also adopt crypto and that might take longer.

Interesting.

So the theory here is that the institutions are going to adopt this technology before retail I personally think in general, I personally think so because it's a better solution and institutions, they do things at large and banks are not yet connected to Uluru and banks are going to catch up and some banks are connecting already. I was in Money 2020 and I saw that some banks are already giving agentic rails but Because the banking world is so fragmented.

Right.

There's like thousands of different systems. And so we have an edge in the crypto world to give a better solution that is less fragmented and more global. You know, it's the same system. It's the same Ethereum here or in India or in Indonesia or the same Solana or the same XRP, Ripple, whatever. So, so the same network can operate globally in crypto, and that's not the case in traditional finance.

Wow, that's pretty powerful. There's a lot of big ideas and concepts that we've gone through just in explaining, you know, what you've built. But so I want to go back to some of your philosophies now because I found it really interesting and we don't see this perspective often in crypto.

Okay.

And especially not from someone so long in the space, right? So we talk about trustless Trustlessness and decentralization as if they were one. A lot of times, many people equate them as being synonymous.

Yeah.

What's your view on that?

The big, the big thing, the big thing that people spoke about in the early, in the earlier days of crypto, like it was about trustless and removing trust. I have an email that says when I spoke with Vitalik and he describes Ethereum as a trustless Trustless cloud application logic. Okay, that's how. But he never—we never really spoke about decentralization. Decentralization was some buzzwords that came around 2016-17, and all this DeFi. Initially, it was about trustlessness, and we—we always said that decentralization was just the means to the goal, and the goal was always. Removing trust from a third party, giving an alternative where we don't need to trust. So, for example, Bitcoin is an alternative currency where we don't need to trust the government. We trust math.

Right. So, it's the core, one of the core building blocks of the entire space, right?

And blockchain, we don't trust banks. We trust the blockchain to transfer the value. Right. So, we don't need a third party. We have the blockchain. It's still a third party, but it's like the blockchain works. And Ethereum, we don't trust people and we don't trust judges to execute or arbitrate. And so this is the important thing about trustlessness, and it's not decentralization. And I feel that the right word should be TrustFi.

TrustFi. Okay, that's a new one.

Not DeFi.

That's a new one.

And if we would have been called TrustFi, I'm sure we would have had institutional adoption way earlier.

And you would have had everybody on board.

By calling it DeFi and all this degen economy, and institutions didn't want to get associated. If somebody would have, in marketing, would have just said TrustFi instead of DeFi, um, crypto would have gained the popularity earlier from the institutionals because they would see it as technology they can trust, you know. And that's what it is. That's, that's what crypto technology is. It's, it's It's technology that you can trust to execute without people.

Right. I really like that, TrustFi. We should have come up with that earlier. It would have solved all our problems here in the blockchain space that nobody trusts us. No, but so that's very interesting. So what you're saying is that they're 2 separate things, right? And you're saying, we actually spoke about this, that banks are actually decentralized. Nobody would think of them like that.

Yeah. A lot of critics to decentralization initially when the term was becoming popular said, no, the banking system is very decentralized. There's tens of thousands of banks, each with thousands of subsidiaries and hundreds of thousands of people working in this ecosystem. And you can send from one network in Ethiopia, you can send to a different network in Philippines and different currencies and conversions. And eventually the money will get there. The legacy system is not Is this very decentralized more than crypto? But it's not, uh, it's not efficient. It's very— it's more decentralized than crypto.

Yeah, that's a very interesting take. And maybe more decentralized, much more inefficient, yet still decentralized. Um, so, so it's not the same as being, you know, trustless.

Yeah, and trustless. So decentralization is like you have 30,000 computers each, uh, fighting to, to approve the next transaction. And with this, like, blockchain mechanism or these consensus algorithms, and that's one way to solve. But actually, with state channels, we solve trustlessness in a different way, you know. So it's a different way where we actually don't require a blockchain, and we can— I don't need to trust you, for example, when we're trading with each other.

Right.

Because I already have a claim. I have like what they call instant P&L. So my profits and losses are instantly belonging to me and the trader doesn't need the broker. So it's a different way to achieve trustlessness. And there's other ways, there's other paradigms of trustlessness.

Right.

But of course, decentralization is a very strong and powerful and useful one for many use cases like settlement, for example. It's good when you settle something to have a consortium of machines to agree on the truth. But sometimes for certain things, you don't need a third party to approve as long as you can use that third party in the future.

Right. No, that makes sense.

Like when we're making business, we don't need a judge or a notary in most cases. You know, we just—

Doesn't need to go all the way to arbitration.

No, that's only when things go wrong.

Right, right, right. It's a very interesting concept. It's kind of hard to grasp your mind around it because you've been used to operating for so long in a certain way. I would say that that lack of trust, so to speak, is the biggest barrier to entry. It's the biggest problem we have. How do we interact in a way where we don't have to do that? Right. And it seems like Yellow has come up with a solution.

It completes Ethereum. Bitcoin, I would say Ethereum completes Bitcoin. And yellow completes Ethereum. And when I say Ethereum, I say all the smart contract languages like Bitcoin and sorry, like Solana and all the EVMs. And I would put all those in the smart contract languages, which are basically executing and arbitrating. So it's it's the fifth the fifth step after store of value. Transfer of value, execution, arbitration, the peer-to-peer trustlessness. I don't have a name for it, but I'll come up with a name.

You'll come up with something good, I'm sure. TrustFi, just like TrustFi. So I want to transition for a minute to investing in crypto, right? We were talking about your thoughts about that earlier and maybe also what the Yellow Token, the function is of the Yellow Token. So let's start out with maybe that and then we'll transition.

Yeah. So with my experience in in markets and coins. I think in the past we probably have launched or helped about 200 projects at least. I don't know how many, but so many projects in my company and personally, even if personally I have been involved at least in 3 or 4 per year for 13 years. Wow.

You've seen quite a bit then in our space.

Like very, very personally, like maybe 40 projects at least. I don't know, but so many. And unfortunately, if I felt 200 projects, I would say that the ones that really needed a coin to operate is maybe only like 10. Okay. And I'd say that maybe 190, and this is a bit unpopular, Hey, we're going to say it here.

We want people to hear the truth.

I would say 190 projects. We're only using the coin as a means of fundraising, which is really like they should be using equity. Right. Yeah. But because the equity markets are so controlled, a lot of projects, they try to find this utility that is not real.

They try to invent something as an afterthought, not something that actually makes a difference in the Yeah, right.

So the, the real fundamentals of investment, and I think this is investment advice. Everybody says, everybody says this is not investment advice, but I tell you, invest in things that have a solid foundation. And a good investment advice is investing, uh, if you're going to, to, to buy a coin that has a utility Make sure that the utility is stronger, the more valuable that the coin is. And what does that mean? For example, for Bitcoin, the more valuable that Bitcoin is, the more money that miners will spend to secure the network because the bigger is the reward.

Interesting. Okay.

So the bigger is the reward, the more secure that the Bitcoin network will be.

Right.

And same for Ethereum, you stake 32 Ethereum and you don't want to lose those Ethereum. So if, if Ethereum was like 1 cent, 32 Ethereum would be insignificant and you wouldn't put all these resources to, to validate those transactions. And sometimes you would be incentivized to, to fake those transactions because the, the reward is not high enough. So the reward has to be high for you to be a good player and not a bad actor. So cryptocurrency has 3 purposes. One is reward good actors. Okay, so reward miners that sign a good transaction or validators.

Doing constructive work in space.

Making the network secure. validated, okay? Like doing the main utility of Bitcoin, Ethereum, or whatever token, Solana, you name it, to penalize wrong behavior. So, if there's a bad actor, you will— you need to have a valuable cryptocurrency to remove it from the bad actor. Just like in real life, you know, the consequences. The judge is going to penalize you and you're going to have to pay some fine or something, some money, something that—

Right.

It's gonna hurt you, right? You know, so it has to hurt you enough. So for example, in Finland, it's very cool because, um, if you have a, a traffic, um, violation, you have a speeding ticket, the ticket is proportional to your wealth.

Oh wow. So, oh, that's a new one.

If you make a lot of money, so it will hurt you the same as somebody that doesn't make a lot. Oh wow. That makes less money.

That's a crazy concept. Finisher, really? Yeah. Wow. So on the cutting edge over there. I don't know how that would fly in America.

That's the second behavior. And the third behavior, is to bootstrap protocols. So when I'm sending money with Bitcoin, maybe I'm paying a $10 fee, but actually the Bitcoin miner is going to receive a reward from the protocol that is going to make up for the inefficiency. So maybe another $10. Okay, so maybe, or maybe $90 depending on, on, on the stage of the protocol. So initially Bitcoin, most of the reward from the miners was in in, uh, mining fees, and the small percentage was people paying fees. So initially, sending a Bitcoin was maybe like $100, uh, but you, you paid $10 and $90 was subsidized by the protocol.

Oh, okay.

So it allows, uh, the real cost is $100, but it would be inefficient against the competition to spend $100 So initially, protocols like Bitcoin, Ethereum, Ripple paid market makers to do liquidity. So all the good coins are using the protocol to subsidize the capital inefficiency compared to the competition. So to make it equally competitive, to make sure that what you're paying for is competitive compared to the competition. So that's the third use case.

So So, all the good coins are doing— can you give us any examples of specific tokens?

Yeah, for example, Bitcoin. The real cost was maybe $100, but you only paid $10. There's a real cost when you count electricity and what the miners are paying to secure that and to make that safe and all the— all that hardware and everything. So, they got a reward. So, but actually the reward was to do their job was from the protocol. Okay, and Ethereum the same. Initially it was proof of work. And Ripple, uh, so people were using, uh, banks to send money from one place to another. So Ripple said, let's pay market makers to do XRP, uh, let's say USD on one side and XRP Mexican peso on the other side. And then people could send, uh, through the XRP bridge, could send money cheaper. from, let's say, US to Mexico, then through banks because they were subsidizing through market makers the conversion. So, it's always a question of bootstrapping a network until you have enough use, which is something common in startups like Amazon. In all these years, initially they were not making a profit.

Yeah.

And then, so money is coming in from investors to subsidize the startup. So, in crypto, The third, the third use of the crypto, that pure crypto should be rewarding to bootstrap the protocol if necessary. Like, it's always been necessary.

Right.

So in Yellow, we took those 3 very primary use cases. Our primary function is an escrow mechanism between 2 parties. So you put some Yellow tokens as security deposit.

Okay. So that they're involved in the function of the escrow.

Yeah. And the node, will reward you for the capital inefficiency of having put that. So, if we were not putting money, extra money in escrow is actually making us less competitive than somebody— if I trusted you, we wouldn't need a security deposit. So, by having to put a security deposit, it increases the capital— decreases the capital you need. It makes it more capital inefficient. So, then the The protocol rewards for the capital inefficiency, and then you get, uh, so that's the, the third use case. Then, um, rewarding good behavior. So if you're using the utility, the protocol rewards you. If you're a bad actor, as I told you before, you're going to lose that security deposit, and that's going to receive—

That's going to make it hurt.

So that's going to make it hurt. And the third one is bootstrapping the utility from the capital inefficiency. So rewarding good behavior, penalizing bad actors, and bootstrapping. So, so So, when you invest in a coin, you have to think the fundamentals of the coin that are important is that will the utility be stronger if the coin is more valuable? So, that should be—

Interesting. So, that's like the main filter investors should have in altcoins, right?

When they're looking at crypto, yes. And when I was in this panel with these financial guys and they're saying, you have to look at the company, their revenue generation. No, you really don't get it. You don't get crypto. And I got this frustration already for 12 years, and still people don't get it today. How to invest in crypto, and at least the fundamentals. Of course, there's so many things around the project that can go wrong. There's the SEC, there's all these external— You can't control all the other things you can't control. But at least the fundamentals, it should be my, my, my utility will be stronger. If the coin is more valuable. And I'll tell you that 90%, more than 90% of the projects, they fail this.

Interesting. So that's just like the one main filter.

You should check this. Yeah.

The more valuable the coin, the better the investment, basically.

The more the utility.

Right. The more the utility. So therefore it's a better investment, most likely.

Well, it's the number one filter of cryptocurrency. It should have this. If not, it means that you don't need a cryptocurrency.

I mean, this makes life a lot simpler, right? We're here now. We've seen a lot of the altcoins underperform, to say the least. I mean, we are in a bear market, right? Or so many would agree on that. But so this would be the number one filter. We've seen a lot of them disappear and people are wondering, it's a different investment landscape now. There's more tokens and they're wondering, how do we do this efficiently? What do we do now? You know, so, so that would be the filter.

Well, for example, why did a lot of meme coins fail? Because if the meme coin was more valuable, did I have a better utility? The utility of the meme coin was very basic, just like a store of value or maybe like a collectible or—

Membership club.

Membership club, yeah. But yeah, anyway, so—

It's interesting. It's a very interesting filter. Yellow's done pretty well as a token.

Well, we've only launched initially. We, after so much experience with what happens when you list and the exchanges are asking you for some tokens in return of the listing, and sometimes they are quite greedy. They ask you a few percentages of 1, 2, 3, 4, 5%.

Yeah, yeah, so I've heard.

The problem is that there is a lot of demand— sorry, there's not enough demand because the utility is not there, you know. You can't have a startup that has like a billion-dollar valuation. It just— there has been only like 5 startups with a billion-dollar valuation in the real world.

Right.

Like, I think SpaceX, because he put a billion dollars, or there was Jets.com because they were buying But there's only like really been only a handful of— but in crypto, they launch all these coins with really high valuations and exchanges, they just liquidate against the market that doesn't exist.

Exactly.

So to build a successful coin, you have to grow organically and just a successful startup, you have to grow organically and you have to have like some utility in crypto or some sales in a startup. That match the demand. So you have to match supply and demand.

In order for it to be sustainable.

And if exchanges are asking like these huge percentages and they're just gonna dump, eventually there's a big supply-demand imbalance. So we chose initially to only list on our own DEX. And it's done very well. We've done 5 or 6 DEX since launch.

That's pretty phenomenal given the conditions that we're in. I mean, it seems that you have the perfect background to understand the logistics and everything that goes into sustainability in a token, having co-founded GSR, right?

And it's certainly helped, and it certainly helped. I have learned more by seeing the failures than by seeing the people that get it right. The people that get it right, they get it right first. Because of so many different things, and we tried to copy some of the playbooks. But for example, like a coin I love, Lineal from ConsenSys. I love what he's done. I love the integration with Ethereum, the extension. I have the utmost respect for Joseph Lubin, co-founder of Ethereum, you know. Right. So, and I love Lineal, but for me it was Without think, I don't count yellow because it's my own coin. But without counting yellow, for me it was like the best coin launched in the last ten years since Ethereum. You know, like from the from the connection everything. So from the technical perspective, it was the best. Right. But from the launch perspective, I think it was the worst coin in the last ten years. Oh no! And I invested heavily in Lina. So like disclosure, I invested like very heavily in Lina. Right. I lost. Now I'm down at least eighty ninety percent. But I'm still a holder and I still hope that they make really, really well because I really believe in the underlying technology and the fundamental integration with Ethereum and sort of extension of Ethereum, the same as we're building in a different, a different extending Ethereum a different way. Right. And I'm such a believer in Lina, but, you know, their launch was horrible because—

And all of that makes a difference. It's the whole atmosphere in one, right, that goes into launching a token, getting it into the ecosystem.

I wish Because I love this project so much. I wish I would have been with Joseph Loren to help him launch as like co-founder, like help him to launch with all his team. He did so much. And then I met with him, you know, and I said, oh my gosh, like, you tell me next time, just tell me straight, you know. I didn't have his contact.

Oh my God, just as simple as that, right? Just an introduction and maybe everything could have been different.

I spoke with him like 1 hour or something, 1.5 hours, and we had like a really honest conversation because I'm a really Linea believer and all my team loves Linea, my technical team.

I was following it as well. I mean, I also am a fan.

Hopefully they will do well.

Yeah, no, and it's good advice for everybody who's watching this right now to learn from all of these things that you're discussing and actually just to simplify this. Don't have to overcomplicate it, right? There are some core principles and filters that you need to have in consideration.

So Linea was Don't trust me on the fundamentals because you can still fuck it up. Because for me, Linia had all these, uh, the utility and everything that I said before. All your checks applied to Linia. But then there's so many other things that can go wrong, as we saw with Linia in Linia. I don't know if to say Linia or Linia. Me either.

I say Linia because I live in Spain, but maybe it's Linia. I don't know. We'll have to ask him. Um, but yeah, I, I have been following that token as well. We have a trading company and we've been trading the token. So it's, it's interesting. So, wow. I mean, there's so many different things that we've discussed on this podcast just from different perspectives and points of view. Yeah. That I've never heard before in this space.

So, well, somebody has to speak. The good thing is that not being at JSR anymore, mm-hmm, I can speak without the filter.

You can speak freely.

I can speak and I can say that, you know, I can, I don't have a, I can tell like, you know, I don't have these clients. that I'm going to upset by telling them that they should be doing an equity fundraise instead of a token raise. All these gaming— there are really cool games, you know, that they don't have an absolute utility. And sometimes the founders tell you, you know, we just need the money to build the game.

I've talked to so many founders that they pivoted away from the token and they're actually thinking about how do we make revenue? How do we generate revenue when the value of the token isn't there? Because that's all they depended on, right? So that's That's not a sustainable economy.

Yeah, so it's really great to to to be able to open to to speak freely of what you think about the markets and advice and and and and tell people that you know make sure that there is some fundamentals in what you're buying because in crypto it's just like thinner and the the space is already so volatile as you see in Linea like. Even a good project with a good founder and a nice team and like so much money behind the project, even they can—

Have turbulence.

They can perform so well. There's so many ways to lose money. At least look that the basic things are right.

All of the checks that you mentioned earlier.

Well, at least those. There's so many more.

At least those. Those are the main filters, right? Let's get those right. So it's been a really, really enlightening episode. And I think you're Your background speaks for itself, and it's obvious how that transcends into, you know, what you've built at Yellow and all of the knowledge you've acquired over all of these years.

So I haven't built it myself, like, really, like, my team is amazing. I just— we're 3 co-founders, and we had a shared vision. We merged Yellow and Openware, and Openware was building these open-source exchanges that was used by more than 50% of the industry. And so they had the exchange experience and I had the markets experience. And between the two, you know, we decided to merge to build this, you know, with the two different teams and different perspectives.

With expertise from the different industries.

And then we hired the amazing people like from Polkadot and Bybit and Cosmos and all these, Ripple, like our chief evangelist was the guy that—

Wow, that's a powerhouse team.

Yeah, my chief evangelist was the one I was watching the videos in 2013-14 explaining how to integrate Ripple. And so now he's with Yellow. He was a few years, like 2-3 years, like 12 years ago with Ripple. Now he's our chief evangelist at Yellow and he's explaining the community how to integrate Yellow to build their Web3 apps. And yeah, so it's It's my shared vision between the 3 co-founders, and it's the execution of the team. I don't want to appropriate myself from the work of others.

Absolutely. It's a team effort, and it sounds like you've got a wonderful lineup backing this. So that adds to, you know, when you do those checks and you're looking into projects, it checks a lot of those boxes. I'd say for me anyway, I look at the team. I told you, For me, it's very important that you have expertise from all areas and not just one idea that comes out of, you know, people with no experience in marketing.

Yeah. And we are lacking a lot of experiences. Like, we don't have everything we should have. Like, I see other teams with, like, very good fundraising people or people that are, like, you know, so we have a limited skill set compared to some bigger teams in the space.

But the fundamentals are there. The design, the system is ready. The tech is ready.

The product is there. We focused too much on the product, I think. And now we want to focus on telling the people what they can do and just let the value of the network grow organically with the community. The community is our fans.

Oh yeah, I've seen it on X. They are big fans. And I do have to say, I'm so happy to hear this because Because for me as a founder and just having been in the space forever, when you grow organically, when you take the time to do that, it's a painful road. It's a longer road in a lot of ways, but it always— I'm just so— I have such conviction in that it always pays off and that you will always make it to where you want to be that way eventually. And the quick cash, the quick grabs, the quick things have never worked in this space.

Yeah, we have a 4 to 10 year vision. Like, we have like a 4, 10-year, like, vision of the things where, what we would, what we're asking the— now it's a community project. It's not even our project anymore. That's why I call myself—

You're the captain. You're the captain of Yellow. Yeah. We didn't get back to that. That was your intro. Yeah. You call yourself the captain. Yeah. Because you're leading, steering the ship, but there's no, yeah, sort of central figure.

It's a, it's a community and, and, uh, it's a leader, but you know, in a ship everybody, and I really think it's, um, I didn't call myself the Admiral because there's many communities, there's many people steering the ship, the different ships of what is now Yellow. So I lead the community, like I would say the fans, and then tell them about what we're doing and who we had a podcast with and get them excited about what our foundation is called. Layer 3 Foundation is like investing in and who they who we're talking with. But there's actually other— it's amazing to see parallel efforts using our technology. And we just try to help all the people around us too. So I think you cannot be chairman or CEO of a community.

You're disrupting so many time-old things here, all in one podcast.

But what is the right word for a leader of a community? Like initially Vitalik for Ethereum, I would say what? had this role, or, you know, he calls—

It's hard to figure that out.

He calls himself chief scientist, and, uh, uh, some others like Elon Musk, or he has— he's a very community-oriented, um, company person, so he's CEO or something, but he's also like chief engineer because like there isn't really a word when you speak to a broad audience, right? And I just like captain because I already live in a boat, and I just like— and we have the Yellow Navy I like that, the Yellow Navy.

So is that their name then for the community?

Yeah.

The Yellow Navy.

Yeah, yeah. And some guys are first mate and then crew and deckhand and second mate.

That's fun. I really like that. I think, yeah, we've disrupted so many, um, you know, old ideas on this podcast. And, and it's interesting. I think people have to rewatch this several times to really grasp what's been said here because it's powerful. It's powerful. And so now, um, as we wrap this up, Yellow, How can people get involved? How can developers get involved? Where can they go? Where can they find you?

So we have different portals for different people. So on the, the people that want, that are interested about our project, they, and more like developer-oriented, they can go to yellow.org. Okay. The people that are more like business-oriented, and the ecosystem. So if you're an app developer and you want to get a grant, so the grants are being managed by Yellow.com, which is my business partner is managing that ecosystem. And we also run a media arm as part of Yellow.com. And the thing is that we want to give exposure to all the projects. So we have grown the media arm significantly to millions of users.

That's amazing.

And so because every company is a media company, but we thought that One of the things, what can we give like as an incubator? What can we give extra? You know, that is not money, that is very valuable for newcomers. And this is exposure. Oh yeah. So we've really grown and we're growing the media arm of Yellow.com. So Yellow.com is ecosystem and media. Okay. Okay. This is funny. And Yellow.org is the foundation that is just heading everything that is development. contracting different companies. And then Yellow Pro is a showcase of what can be built with Yellow. So it's a DEX, but it's only one of the 500 projects being built on Yellow. You know, we showcase this trustless peer-to-peer, but really it's one of the 500 projects.

That's fantastic to hear that.

So we have like 3 parts for different people that are interested. And just contact us. We have a Twitter. Our Twitter is our X is Yellow. So just go pretty easy. Just go to Yellow on Twitter.

Become a first mate maybe and join the join the crew.

Yeah, or Telegram and yeah. But basically we're looking for if you're a developer and you want to build a Web3 app that is a complete Web3 app without people knowing that they're actually using blockchain because that's That's the abstractions that you can have with the Yellow SDK. You can write an app and you can log in with your Gmail and you don't even know you're using a wallet.

So that's the number one narrative at this conference is how to make it seamless so people don't feel it, right?

So that's what you can do with the SDK. You can build Web3 apps, work on any blockchain, and they are seamless, you know? And so you don't have to choose first, you can choose later. And then If you're, if you're into more like business and you want to create your business and you want to get a grant, then you go to yellow.com. And well, I'm here always to answer any questions and I don't know.

No, I think it's wonderful that you, you know, you as the captain of the ship of the Navy, that you steer us through like this. And, uh, I think there's a lot of things to think about. I think it's great that you're doing this. You're coming out there and you're giving those projects notoriety and, um, you know, eyes because that is what matters in this space to get out there and that you're doing all the right things.

I don't know if it's the right things, and I'm sure we're missing some things, but we just do what we can. And it's nice that now, at least in the US, there is some sort of regulatory framework.

Guidelines.

And these guidelines, this has helped us. We did a Reg S and Reg D public sale initially to launch our token to US people. And now with the text, there seems to be some clarity as well. I think we're going to be able Our legal is still checking, but I think we will be able to to bring Yellow Pro to the U.S. Which is we want to be compliant, you know. But like there seems to be so we I love the current the current market and hopefully you know we can operate in the U.S. as well. Yeah. And people in the U.S. can be part of this journey. You know.

Looking forward to that myself being from the U.S. Alexis, it's been such a great. conversation. I hope to have a part 2 very, very soon and catch up with you somewhere around the world. We're very excited about what Yellow is building and we can't wait to see the evolution.

Yeah. Thank you for having me.

Thank you so much.