David (4:21)

That's also kind of the surprising thing. So I think maybe what might have been funny to you when you heard me react to the existence of this, like, $3 billion network that heard of, is that, well, he had also started it like almost a decade ago. And you were doing all of this work prior in closed doors, behind. Behind, you know, closed doors. And then you're doing the token thing last, which is when a lot of the crypto natives pay attention because, like, oh, now it shows up on Coingecko. So now it's like real to us. But nonetheless, a lot of work had been done behind the scenes, at least.

Yuval Ruz (4:51)

Yeah. And listen, I think, I think hand on heart, it was pretty hard decision in 2017 not to do an ICO. It was a really hard decision because it was extremely enticing. Look at eos. I mean, you know, but we can talk a lot about maybe Vitalik's post from two days ago, which I actually think is an incredible post in a very positive way. To be clear, our view was that we're trying to launch something that will run different types of financial services. In 20, 30, 40, 50 years and doing the ICO in 2017 seemed to us like a very short term kind of solution to a problem that we were not ready in our opinion to kind of tackle. And as a result of that we decided not to. And even in the pre mine era we decided again we were not ready. And again I think that it's taken us quite a lot of time to really think about what is the right way to take this to market. And again, time will tell if being patient and really learning from what the industry have done well and not so well. You know, there are advantages to, you know, coming last. There's also disadvantages and we can, you.

David (6:11)

Know, explore both hey Bankless Nation, It's David. If you're hearing this, that's because you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research and just deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Bankless directly. So if you're interested in getting extra content all while skipping the ads or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if you signed up for Bankless Premium and there is a link in the show notes to get started. Cheers to a good 2026. Few people in crypto put real skin in the game when they make public top or bottom calls. The Defi Report is one of them. The week before the October 10th flash crash, Michael from the Defi Report emailed his entire newsletter saying he's going aggressively risk off and sold the majority of his book from crypto into cash. This is when eth was about $4,000 and Bitcoin was 110. Michael runs the Defi Report, an industry leading research platform built on data cycle awareness, risk management, transparency and most importantly, scalability. Skin in the Game we like Michael at Bankless. We like his analysis and that's why you hear him on the Bankless podcast about once a month. And the Defi Report is giving Bankless listeners one free month of access to the Defi Report. So if you're looking for some sharp data driven analysis to make better informed decisions around your portfolio. You can learn why and how Michael called the top and what he's doing next. All in the Defi report Pro. Check it out. There is a link in the show notes.

Ryan (7:45)

Yeah, I think for, for the rest of this episode we really want to explore basically maybe part of the reason we we hadn't heard about Canton until now. But just to give some context in terms of why we're having you on today. So David and I are just curious explorers of everything that happens in crypto. There's a lot of noise out there. Occasionally there's some signal. We see Canton with these big relationships it seems like. So on that roll up that David was talking about that that's our weekly episode, it was, there was a headline, the dtcc which I'm told settles quadrillions in assets every year. This is the settlement layer for the largest securities network in the world that the world has ever seen. You know, hundreds of trillions of assets. And they selected Canton Network as part of their trial. So it's like wow, that's big. And I showed the price chart to David and there's this token called a CC token. This is actually on chain. That's the Canton token. This morning there was news of JP Morgan coin actually deploying to Canton as well. If you go to real world assets RWA xyz, you see Canton in the standings as far as a network that has some real world asset issuers. And so we gotta figure out what this thing actually is. Right. Because it's bizarre to be doing podcasts in the space and like not to actually know. So I think part of this is just us coming with an open mind and trying to figure this thing out. Maybe actually that's good framing. So you mentioned the Vitalik tweet and for. For those not familiar, Vitalik put out a tweet this week. I assume Yuval, this is what you're referring to. Basically gave a direction a north star, let's say for Ethereum and the Ethereum network. And I'll this a long post. I'll paraphrase it. It's basically Ethereum exists to provide freedom. It's a freedom maximization tool. That's its end goal. It's never going to be the fastest chain in the world. It's not going to do all of the things that Tradfi might want it to do, but it will do something that's crucially important, which is maximize censorship, resistance, decentralization and provide sovereignty and freedom to anyone who deploys an application on Top of it. You said you really liked that post. Talk about why. Why'd you like that post? And what resonates with you about Vitalik saying that? And how does Kanton fit into the story here?

Yuval Ruz (10:05)

Yeah, listen, I think the reason why I like it is because it's a very honest post, and I think that that's something that this industry I wish was more focused on, is really focused on. Listen, we're trying to solve a problem. This is the problem. This technology is extremely unique. I think it has very different applications that can be used. We as humans like to put frameworks because it's easy for us to grasp concepts, right? So we created these terms of decentralized and permissionless and open, and all of these terms, which are good terms because we need to find frameworks, how to kind of discuss different topics. But clearly there's a lot of shades of gray in the world of openness, decentralization, you know, censorship, resistance, like all of these things. And what, what. The reason why I like Vitalik's post, it is very honest around what is the North Star, Ryan, as you say, of Ethereum, which is very noble. I actually see a lot of merits in it, and it actually explains, at least, at least as the reader, what is Vitalik trying to solve. And I don't know if Vitalik controls Ethereum. I don't think he does. But at the end of the day, he is the creator and as a result, create good guidance. But I think that the reason why I like it, also for selfish reasons, is because it, you know, ahead of this, ahead of this podcast, I was going to say he's trying to solve a very specific problem. And the post was very clear about that problem. I think that we never came and said we want to replace Ethereum. That was not the mission statement of what we were trying to do. Our view was that as we were looking at Bitcoin and even then Ethereum, we actually felt that the technology has an opportunity to make financial services more competitive, more accessible, and more efficient. And I think that that's the problem that we're trying to solve. And therefore, comparing us to Ethereum is not really relevant because we're not, at least. At least, again, when I read that post, are not trying to solve the same problem. Right? So a lot of times people will say, decentralization, permissionless, most important features in the world. And I do think that they are important features. But then they will say, but RWAs is the most important opportunity out there. And I'm like, okay, but the Second, you have the world, real world, unfortunately, you open yourself to censorship, resistance by the issuer. Doesn't matter that you put it on a decentralized infrastructure. And Ryan, David, do you guys use stablecoins?

Ryan (12:59)

Yeah, of course you do.

Yuval Ruz (13:00)

Cool. Okay, well, the issuers of those Stable coins, pretty confident having the Smart Contract, a feature that allows them either to freeze your Stable coins or to in some cases even burn them out of your wallet. So what does it matter that it runs on permissionless infrastructure? I mean, there are reasons why it's good that it runs on permissionless infrastructure, but you're not getting what Vitalik is putting in his post. You're not getting that ultimate right, freedom from corporations. It's just not, it's just not happening. And therefore I, I just think that if I go back to the post again, it's like, to me, you know, what I was hoping to discuss here is what is the mission of what we're trying to solve? And as a result of that, we had to take design decisions that are aligned with that problem.

Ryan (13:50)

Maybe we could talk about those design decisions in a minute. So far I'm not sure that I've heard anything that I drastically disagree with. Actually, I don't think David or myself would say that a USDC stablecoin, a tether issued by a centralized authority with, you know, the ability to kind of revoke and censor in the Smart contract, we wouldn't say that as Max Bankless, of course, that particular asset, nor really any real world asset that we've seen. There are crypto native assets where that might be true and then there are real world assets. And I guess by the nature of what you're saying, real world assets aren't the max censorship resistant, Max Freedom type of technology that Vitalik is talking about, at least on the individual level. Maybe the platform that an asset issuer deploys to, if you start thinking, yeah, like maybe that's, maybe that's different. So so far I don't object there, but it, I guess maybe that it depends on how far you want to take that. So is your implication, Yuval, that therefore Ethereum is a bad place to deploy real world assets relative to alternatives? Say an alternative like Canton or you know, an ark like Chain from Circle or a Tempo from, you know, Stripe? Is that what you're saying?

Yuval Ruz (15:12)

No, not at all. But, but it's a, it's a good question. So, so my, my, my, my only point is that as long as we are in agreement that the second you have an issuer, you are exposing yourself to restrictions beyond the permissionless world. That's it. I mean, the second you are putting your trust in an issuer. And by the way, that issuer doesn't have to be literally an issuer of a stablecoin. You could take all the different issuers of tokenized stocks. In many cases, it's really like a derivative. It's not really the stock. But you are putting your trust. Ryan or David, I think I can't remember who you used to, because I was listening. But you were saying here, look, I bought on my favorite super app. I bought stocks while we were talking.

Ryan (16:04)

That was David.

David (16:05)

It was Ondo was the issuer of tokenized Google.

Yuval Ruz (16:08)

Yeah, I mean, again, you're taking counterparty risk. You are putting your trust in a company that actually is holding. So my point is.

David (16:17)

But that's also the product that I'm buying. So when I buy Google Equity, I am placing my trust in not just Ondo, the issuer of said equity, but I also Google who is the issuer of the security in the first place. So the product I'm buying is already trusted to begin with.

Yuval Ruz (16:33)

Exactly. That's kind of my point. And therefore the question is, what is the problem now that you're trying to solve? We're already in agreement. I hope that the second that we move from pure crypto assets, and to me, again, an undertoken is not a pure crypto asset. Ethereum is a pure coin asset. Right. Bitcoin is a pure crypto asset. The second you move, you are effectively giving up on some of these pure intentions that Vitalik have put in his post. And then the question is, okay, well, if we're going to, you know, relax some of those features, well, then you're starting to move into kind of like an optimization problem. And what I mean by that is we start asking ourselves, well, if we think that there is a massive Tam opportunity in RWAs, what are some of the things that we think we have to solve for in order to get massive adoption? Okay. And again, I am trying to explain we're moving away from this pure world. And the first thing already in 201516 that we said would be privacy. And I don't want to conflate privacy with anonymity. To me, privacy is the ability to share information on a need to know basis. If you sign a contract, you remember in the confidentiality clause, it will say it's the parties to this contract that knows about this contract. You are allowed to share it with your lawyers, with your accountants, and then it has like these special clauses. If you got subpoenaed by a court or by a regulator under those special circumstances you can reveal it to them. That to me is privacy because I can see the contract, I can see the content of the contract and in special situation I'm even allowed to share that information with others. Anonymity is slightly different, which is nobody gets to see the information. And again for us this is. Don't take this as me saying anonymity bad, privacy good. It's again it's a design decision that we said if I want XYZ buy side firm to start managing their equity portfolio, their fixed income portfolio on Canton, privacy, not anonymity is critical. If I want JP Morgan to do payments on Canton, privacy critical, anonymity not going to work. That's critical. Again a design decision we can be disagreed on, but that's kind of one of them. The second thing, and I think this is, you know, maybe where, where, where we're going to start becoming a bit more controversial, but hopefully not is we believe that the laws of physics do not agree that you can run all of the world financial services on a single ledger. That's our view. I'm happy to have conversations. And what I mean by that is when you think about Ethereum, Solana and some of these other ledgers, effectively all transactions go through a single consensus mechanism. And as a result of that it really forces the design to do a few things. First of all, take a lot of, of the activity off chain because there's a lot of activity that why would I run it through the most expensive database in the world? And by the way, when I say that this is not an insult, it's a very expensive database because it gives you very unique features that are worth paying for those transactions. But that means that a lot of transactions are not, they don't live to that level of importance and therefore let's do a lot of things off chain which to me is a bad outcome as a result of that because of what we're trying to do. That's one thing. And then second of all the reason that it, it, you know, it, it's not good is because it, it will eventually create what in my opinion happen in Ethereum. And I think that a lot of the L2s will say they are a good thing for Ethereum. I personally think that they were a bad thing for Ethereum because in my opinion if you are an asset on one L2, you are not composable with another asset of another L2 you have to use solvers, you have to use bridges. And let's just hopefully agree that solvers and bridges are not the value proposition of blockchain composability. And as a result of that, rather than creating a really nice model of a global composable world, which is, in my opinion, the whole value proposition of blockchain, you have effectively bifurcated an incredible ecosystem, which in my opinion is not a good outcome. So, by the way, the reason for the name Canton is really this idea that the world is first of all not homogeneous, it's actually heterogeneous. Different applications, different geographies, different use cases have different requirements. So if you think of a lot of our R and D, most of our R and D is in Switzerland. If you think about the Swiss federated system, they all have their different cantons, they don't even spell canton the same way in every place. Different tax rates have different rules. But when you take a train, you don't feel like, I'm going from one country to another, I'm still in Switzerland. Right. So the idea was, can I actually create something, not to be mistaken with L2s, but looks similar. This idea that I can create all of these different cantons that have different requirements when it comes to privacy, when it comes to accessibility, when it comes like, I can, I can have very, very open configuration and all of those different things. But at every given point of time, if I wanted to compose a transaction across different cantons, I can do that atomically. No bridges, no solvers, and I have effectively get a user experience as if I am on a single layer one. Just by the way, the technology that we're using to do this podcast takes the same architecture. We use the Internet, we call the Internet a single Internet, as if it is a single network, but it's not. The Internet is a protocol that actually connects multiple networks together. So Canton kind of draws a lot of kind of inspiration from that. And that's really, I would say, kind of like from a technology perspective, some of the major kind of design, the economics and the tokenomics is a whole different. We can talk about the language, there's a lot of different minutiae and what are the complexities that privacy also create that I wish we didn't have to deal with, but there are challenges as a result of that.

David (23:44)

Yeah, yeah, I think we've been just kind of talking about the contours of the different philosophies around Canton. Network versus I think probably what our listeners are more familiar with with Ethereum. And other public permissionless chains. I do want to kind of just dive actually straight into that conversation and make some of these things a little bit more tangible and concrete kind of. As I understand it, Canton has done some pretty solid BD work to win some. Some business with things like the dtcc. And as I understand it, as I'm guessing so there have been some architectural choices that Canton has made in order to make these partnerships work. And I'm wondering if we can kind of just go into what are the big properties or features or differences about the Canton architecture that somebody would. Would make note of that's meaningfully different from a public permissionless blockchain like Ethereum. Like, what are, what are the things that, like, are worth highlighting? Like, oh, this is very different than some of the philosophy from Ethereum. What should we talk about first? I'm sure there's at least a handful of them.

Yuval Ruz (24:46)

Yeah, I would say. I would say that the easy one. The easy one is privacy. To be honest, I would say that privacy is, is probably the easy one. I will mention a point that is not necessarily technical design, but actually a governance design feature that is, I think, just as critical. I think that, you know, we want to envision a world where there's no regulation and everybody just get along together and then, you know, the rubber hits the word, you know, the road. We see AAVE protocol fights, we see swap and, and, and the reality is that governance is just as critical. So if you are the DTCC or you are any one of these large financial institutions, whether we like it or not, honestly, like, this is not, this is not about, like, my personal opinion, but the reality is that the DTCC, given the fact that they do actually sit on $100 trillion worth of assets, are extremely, systemically critical to the US economy. And as a result of that, they are highly regulated. And as a result of that, it makes their life very complicated. Running the DTCC is not a trivial task. We can say that they can do a lot of things better, and they probably could. And I don't think that they would even disagree with that. That being said, they do actually have quite a serious responsibility on their shoulders. And I think that as we launched the network and this is again, you know, looking back and saying, I think earlier, David, I was saying to you, like, hey, patience might have been the right decision or not, but one of the things that we looked at throughout the years is governance of these networks. Right. And I'll give. I think it was in your episode you were talking about Quantum resistance with Bitcoin. And I think you guys said, no, no, they should definitely start looking into it. Right. And there was. Well, I think that was the same episode that I was listening to. And it's a great point. I mean, at the end of the day, these networks have to evolve. There's no way even we working on something for 11 years before launching it. I can promise you we did not get everything right. Not even close to that.

David (27:13)

Yeah, I would say the Ethereum philosophy is largely in agreement with that. Ethereum has always been rough consensus. But the ability, the only blockchain as I know it that can't upgrade because it's so incredibly radically cypherpunk is bitcoin. And also on privacy as well. Ethereum in the long term, roadmap does actually intend on being a private blockchain in a pretty cypherpunk fashion. And so I'm not sure if these are the things that I think are really differentiating Canton's philosophy from some of the other.

Yuval Ruz (27:41)

I didn't, I didn't, I didn't mention, I didn't mention anything. I was mentioning the bitcoin. But my point is for US governance and the ability for people that are putting significant bets on the network and want to run systemically critical infrastructure, want to know that there is governance of a network and of a code base that they can see evolve and improve at a pace that adheres to the fact that they have these responsibilities. Definitely. Again, I took that example with Bitcoin. Sure. And then, and then that's the most extreme. And then you have all shades of gray in terms of smart contract chains. Definitely evolving. It started as a proof of work. It's no longer work. It has done improvements over time. The question is, what is your governance model? So we launched the foundation in the US under the Biden administration and we said, well, the people that understand where the puck is going from a technology perspective are the crypto native companies. And they. It's critical to have them at the table. And at the same time, you need to get the tradfi organizations that again, I'm not here to say should we get them on chain or not. We are trying to do that. That's what we want to do. And if you want to do that and you want them to use your technology, you have to get their perspective. You have to understand what are the daily problems that they deal with. You need to understand what are bank holding regulations and what does that mean? Does it mean that there's any impact on the features of Your technology like so I think the governance of Canton have been another very helpful component in the choice. And then scaling, scaling. And then the last thing that I would say is again, when you launch your own canton, you have full sovereignty and control over your canton. What I mean by that is think again back to the, the design of the Internet. You know, if a country outside of the US said hey, we want to block LinkedIn for whatever reason, they can do that, right? You still use the same Internet protocol, but you have sovereignty and control, right? You have, you know, you have the same protocol, but you have sovereignty and control over your canton. In a public permissionless network, you do not have that. And as a result of that, you have to do a lot of things off chain as redundancy. I'll give you an example. There was the SUI hack, if you remember. I can't, I can't remember what, what, what. It was some kind of a protocol and everything. And you know, the reality of that hack is that hacks are bad, right? People lose money, not a good outcome. And if you remember, they decided to kind of fork and kind of reverse the hack. But I think what did they prove? Well, they proved that blockchains are not immutable. Immutability is a social construct. It's not.

Ryan (30:56)

Can I just say one thing on that? They prove that some blockchains aren't immutable or some blockchains are much less immutable than others, or some social contracts are much different than other social contracts for blockchains. Would you agree that's true?

Yuval Ruz (31:10)

Yeah, I agree that that's true. But as long as, as Ryan, as you stick to the fact that it's a social contract and not a guaranteed. And that's kind of where I go back to the design features that I don't think in today's world a regulated institution, top tier regulated institution would be able to go to their regulator as of right now and maybe that will change in the future as of right now and be able to say, I'm choosing this chain because they have a very strong social contract. I don't think that they would be able to convince a regular. We're going to put our books and records, we're going to forget about TradFi off chain books and record. We're just going to put our books and record on that because they have a very, very, very strong social contract. That's just a personal view that I have and I don't. Again, and this is while agreeing with you about certain chains have a very Strong social contract, but at the end of the day it's not a technical design, it's a social contract. And that's the difference. That's, that's, that's just the reality. So when you even look at some of the announcement recently on native native equity on chain, when you read the fine detail, you always still have to have an off chain redundancy in case that social contract or something else breaks. So our view, and this goes back to kind of where we were a while ago, is. But wait a minute, anyway, you're taking risk on the issuer. Any way you are exposing yourself to, to censorship or something that they can do to you, then why not actually give a very strong technical guarantee that said issuer has full sovereignty and control over their ledger. No third party can fork their ledger. And by doing that they can actually do everything on chain, nothing off chain. Right. So again, it's not trying to say this is bad, this is good. We're just saying, hey, you've already put a lot of trust in the issuer. Why wouldn't you just actually then give them also technical capabilities of them saying great, I can actually have full sovereignty and control over my ledger and now I will let it intraoperate or be composed on a fully permissionless infrastructure maybe. Ryan, I have a question for you if you don't mind. This is for you to ask me a question. Would you say that layer two that have a centralized sequencer is permissionless? Is it public, is it private, is it open and have a centralized sequencer running by one company?

Ryan (33:56)

Yeah, I think the thing that a layer two when designed, it's not, it's not quite a binary. But the thing a layer two does when it's designed and it reaches kind of stage one, stage two maturity is it gives users a specific set of property rights, particularly the property right to be able to withdraw their assets at any time. And so the centralized sequencer, the operator can't freeze those assets. Now they could still censor grief attack in the short run, but even with kind of a properly designed L2, you can kind of get around that. So the thing that is preserved in a layer 2 design is Ethereum grade or close to Ethereum grade user property rights. I think if your argument is that, well, real world assets already sacrifice property rights to say the DTCC or to the nation state or to circle as an issuer such that it's all overkill anyway to try to preserve property rights for real world assets. That's only necessary for crypto native assets Then I think I maybe partially agree. I have some reservations, but it reminds me of a debate that we actually had between two professors on this exact subject. And I'll throw you that episode after this one. We'll include in the show notes for any listeners. But it was Omid and Austin Campbell. And basically Omid said, no, real world assets do require decentralized, permissionless blockchains. And Austin said, I don't see why that should be the case. They don't at all. And they went on for an entire hour about this very issue. It was a great debate and I think both of them had valid points. But I could see you're. It seems to be the case that you're making. Yeah, you're falling on the Austin Campbell side of the argument, which is, hey, like, once you already have real world assets, then you don't really need to like max preserve decentralization and property rights because you've already given that up in the first place.

Yuval Ruz (35:56)

Yeah, so. So by the way, I 99.99% agree with what you said. The only slight distinction is I don't think you give up property rights. I think what you're doing is you're giving up potentially short term inconvenience. That again, Vitalik's approach is saying should never happen. What I mean by that is if I hold something at the dtcc, it's legally mine. I have full property rights over it, but I am exposed to DTCC freezing it, doing something, and if I think that they've done it in an illegal way, I have all the rights in the world, unfortunately though, to resolve it outside of onchain. That's my point. So I haven't really gave up property rights, but I'm taking operational risks with respect to this asset.

Ryan (36:51)

I get it. But even then, with the DTCC example, you still have your legal property rights, but that those legal property rights are conveyed to you by the operating system of the United States of America and its legal framework. And for a pure crypto native asset, it's outside of even the United States of America's jurisdiction. Right. It's super national. It's. It, it doesn't have a jurisdiction on any nation on the planet.

Yuval Ruz (37:15)

That's the entire idea that, okay, 100% agree on that. But that, but my point is an RWA and an L2 will subject you, in my opinion, on a centralized sequencer to the same risk with the dtcc.

David (37:28)

Yuval, I know in the Canton architecture there's something called a super validator. So it seems like There's a two tier architecture in the, in the network and we've seen this architecture in other ecosystems before. Like Dash famously has nodes, but then master nodes, they have like master nodes as a little bit more power and control. Can you define what a super validator does as opposed to just a regular validator? And like, what privileges does a super validator have?

Yuval Ruz (37:56)

Yeah, so, so the, the unfortunate of finding different names for, for different things. So, so here's, here's where, here's where privacy becomes tricky. So when you want to do. And, and, and I'm taking maybe a bit of a sidetrack to explain. So there are certain, there are certain things that, you know, there's an approach that using encryption you could solve for privacy. There's all kinds of regulations. Again, whether we like them or not, they exist that would say, hey, David, if I took your personal information, I encrypted it with the best encryption in the world and I send it to Ryan, I have invalidated your privacy. That's it. And I'm going to say, well, but Ryan cannot decrypt it. And they would say, well, not today, but potentially in a year, maybe if Ryan sends it to his Chinese friends, they will decrypt it today. Like, the reality is, I have given your information. Maybe it's not readable today, but it's readable in tomorrow. And the reason why this side story is important is because the approach we take for privacy is that, David, if you and I do a transaction on Canton, Ryan will never have the zeros and ones associated with this transaction on his node. It will never even make it there. And therefore what we're trying to say by that is that the validators, not super validators, and we'll get to the super validators in a second. It's the nodes at the edge. They are the ones that actually do the validation. On the business logic of a smart contract, it is not the super validators. The super validators in, in, in the case of Canton do two operations. One is they are the validators of Canton Coin, which is a fully public, permissionless asset. It's a crypto asset. It has no issuer. So those are. And everybody gets to see all those transactions. That's one. But the second thing that the super validators do is, is they offer effectively that trustless, permissionless, decentralized composability layer. So think about them as kind of like the post office on steroids. They see a transaction, they give you a guarantee that all the counterparties to that transaction will have that information of that transaction delivered to them. They have no idea what they have delivered, but they give you that guarantee. Right. So the super validators are those that run kind of the glue, as we talked before, that stitched all the cantons together to give you kind of this one ledger experience. And they also validate the Canton coin transaction. That's, that's what they do. Now the super validators on Canton are, can vote for protocol changes. There's, there needs to be super, super majority votes to do those things. But that's, that's how the, what the super validators technically do on Canton.

David (41:01)

Can I be a super validator?

Yuval Ruz (41:03)

A hundred percent.

David (41:04)

How do I do that?

Yuval Ruz (41:05)

So the way, the way that we decided. So if you, if you look at most of the. So, so for, for. Let take me take a step back. So the super validators get paid as part of the tokenomics and we should talk more deeply about the tokenomics that get, they get paid for doing their work. Now in a lot of chains to become like a super node or whatever, you have to stake a lot of money. We don't do that in Canton. We actually don't. So I'll give you an example. And by the way, maybe it's an offer right now. So if Bankless wanted to become a super validator, we would actually love that because our view is that becoming a validator is a commoditized product. Right. It's at the end of the day what we mean by a commoditized product is think about Bankless like you have to interview people, you have to do marketing, you have to think about your business where being a validator or being a minor is not, it's not free, you have to do something, but at the end of the day you run servers. And as a result of that, the approach we took from a go to market perspective was we much rather the super validators being people that have contributed positively to the network. And what I mean by that is I can write tomorrow a proposal to the network to say I think Bankless could be one of the biggest growth engines to the network and we're going to agree that they're going to do things together with us. And as a result of that, I want to nominate them as a super validator to the network. That's it.

David (42:43)

And so I can't, I cannot, I can't be a validator to the network unless I get approved by the other super validators.

Yuval Ruz (42:51)

Yeah, no different. And that validators on every network can censor other validators.

David (42:57)

I don't know about that one. The whole idea of the Bitcoin or Ethereum or even. Yeah, not Solana, but like Bitcoin or Ethereum is like, you know, you can just add yourself to the network. You can either be a node and hear transactions and rebroadcast transactions or. Or you could be a mining a miner and add blocks to the chain. It sounds like adding blocks to the Canton chain is permissioned by approving other validators in the network.

Yuval Ruz (43:25)

So all bitcoin miners run bitcoin cash consensus. No, they made a decision that they don't want to do that part of them and they decided we're not going to look at those transactions.

David (43:35)

I don't think you can equate the bitcoin fork wars to a enshrined property of voting for approval for adding a new network, new node to the network. Right now. I can go add my node to the bitcoin network right now during this podcast.

Yuval Ruz (43:52)

But you see, David, you are now making a distinction of. Because it's a code versus a governance thing of the network, the outcome is the same. I decided that a group of people decided that they want to change the code, a group of people decided that they want to change the code and a certain group of people said, no, we don't. And they forked as a result. And now you have bitcoin cash and you have Bitcoin. Right?

David (44:19)

Yeah, Bitcoin cash forked off of Bitcoin. Yeah, yeah, and Bitcoin. But actually the bitcoin just declined that update and is what it has always been.

Yuval Ruz (44:29)

I guess my point is that again, you're back, David, in my opinion, to the world of social contracts.

David (44:37)

Yeah, yeah. My, my favorite thing, my favorite thing to like yell at bitcoiners about is like, yes, I agree that Bitcoin doesn't have a social contract. Bitcoin's social contract is to not have a social contract. And so yes, ultimately, at the end of the day, there is governance over all of these systems. But the decision to formalize it and put it as code, formal code in the system versus allowing it to operate at a higher level is a very important distinction for how this network manifests down the road.

Ryan (45:04)

Yeah. And the governance, I would add the governance surface area for something like Bitco lesser. So for Ethereum. But even Ethereum is very slim. And there's only kind of the binary choice of. Is this existential enough for us to fork? Yes. No. If so, we fork. Yeah.

Yuval Ruz (45:20)

No, no. Listen, listen. At the end of the Day, by the way, I'm not disagreeing. It is very different and I'm not trying to actually minimize. It's important. But here, here, I'll take it, I'll take it a step further. We think that if anything, Canton actually allows. Right. The whole idea of, of, of blockchain and everything was democratizing finance and allowing everybody to participate. The average person on the street cannot become validator on Sui or on Solana, where actually if someone thinks that they can add value to Canton as small as they are. And now you could look at the super validators on Canton. These are small crypto firms that actually added value from early days and participated, didn't have to stake tens of millions of dollars, which to me is not very accessible. So I'm not, I'm not here to debate that. It's not significantly different. It is factually, as you kind of stated, David, but again, it comes from a different place. We want that the super validators, those that run the consensus on Canton, are going to be those that are aligned with the network, not because they staked a bunch of dollars, but actually they, because they put blood, sweat and tears into the network. And as a result of that, we think that the network should reward them back for that.

David (46:38)

One concern that I have with this model is like, I agree that it's admirable to allow people to enter the system regardless of the amount of capital that they have. And while you know ethereum, you need 32 ETH, which can be prohibitively expensive for some, ultimately at the end of the day you can still stake 3 ether and receive the same rewards as somebody who stakes 32 or 300 ether, so at least that is equitable. Nonetheless, one worry that I have is that if we are voting for inclusion on super Validators Yuval, when I asked you, it's like, can I join, can I join the network tomorrow? What I kind of mean is like, can I, the amorphous individual who might exist in Africa or Australia or Asia, can I, the individual, join the network? And to me that answer is no, because you have to get approved by the governance body. And ultimately at the end of the day when you allow for formalized governance of who can validate the chain versus not, what I start to get worried about is like, oh well, somebody with friends and influence and knowing the right people in the right telegram group can probably get involved with the network much better than somebody without any of those things. And so that is a different vector of privilege. If you're like on one side of a Concern like you need an exorbitant amount of capital to stake Ethereum to participate in Ethereum. That's one drawback of Ethereum but like a drawback of something with formalized voting is like oh well this can just become a cartel of insiders allowing only their insider friends to get into the network.

Yuval Ruz (48:07)

David, I'm sorry, I was trying to stop you. We were talking about super validators. We're not talking about people joining the network.

David (48:15)

Yes, super validators with. I'm assuming super validators are the ones that have the rights to publish the blocks, correct? Yes, that's what I mean.

Yuval Ruz (48:25)

Okay, but that's not. To join the network and participate on the network. To be clear. Anybody, anybody can do that. And again go through the list of super validators. They are not all DTCC like Goldman Sachs like companies.

David (48:42)

Is there, is there a published list.

Yuval Ruz (48:44)

Of Supervalor 100% I'll, I'll add it. We'll, we'll add it to the.

David (48:49)

If you have who, who are some.

Yuval Ruz (48:51)

Who are some. Let's see you have that are not like the big, the big, the big players.

Ryan (48:58)

Even the big players.

Yuval Ruz (48:59)

Any of them.

David (48:59)

Any of them. Yeah. Like a sample size.

Yuval Ruz (49:02)

Okay, so you have copper brawn, Braille trade, Web Broadridge, DRW digital asset. Trying to think about. I'm trying to give you some names that you wouldn't even know because they are you know, ferment, kiln, figment, republic, zero hash, chainlink. I mean I can, I can keep on going. So you know, so Yuval.

Ryan (49:32)

I'm not even sure that I share the concern that David has around super validators because I'm not from everything we've discussed so far, I don't think the Canton network is trying to compete with an Ethereum or Bitcoin for the crypto native freedom maximizing self sovereign type use case to begin with. And so I, you know the apples and orange thing comes to mind. You can't compare apples and oranges. I always say well you can compare fruit. And so but like I'm not even sure if, if Canton is a blockchain is the same is even in the fruit category the way say a bitcoin or Ethereum are or like even, even Sui for that matter. I understand like I don't think Sui is competitive with a bitcoin or Ethereum. I want to run through some of the more crypto native reaction that I've heard with Canton and I haven't taken a horse in this race because I don't really understand what's going on? But I'm seeing a lot of crypto natives react very strongly against Canton, as if it is coming to kill Ethereum or replace Ethereum or Bitcoin or it's an erosion or a compromise with our crypto native decentralized values. So this is a poster on Twitter site ETH and says why Canton is the antithesis of crypto values and why it's definitely not the only chain with privacy. It claims to be a public decentralized chain, but it's run by super validators that need to be vetted and approved. A permissionless DAG with no globally verified state. It claims privacy, but it rejects ZK as black box. Claims verifiability but you cannot replay or audit full transaction history. Claims super validators can't censor, but regular validators can only observe shards, claim self custody compatibility, but everything is meaningfully permissioned. It claims neutrality, but is a surveillance machine. And as a side note, the Token distribution is 75% held by the team and early investors. So no public verifiability. It's not censorship, resistance, not credibly neutral, it's not forkable, has no real privacy. I'm not even asking you to respond to all of those claims.

Yuval Ruz (51:45)

I'm sure if you could have defined contradiction, that tweet would be one big contradiction within itself.

Ryan (51:53)

Okay, okay, but I'm not even sure if that's important at all. Because given that what you're saying is, hey, we already start with the premise, which is Austin Campbell's premise and that debate I was referring to earlier of we have a real world asset and the real world asset, its property rights are secured by the DTCC and the United States of America. And if you take that assumption, you don't really need a max decentralized chain for real world assets. Thus the Canton network makes some trade offs on that domain. Like, is that what you're saying? Because if that's what you're saying, I don't understand why the crypto natives and cypherpunks, why their feathers are so ruffled.

Yuval Ruz (52:38)

Yeah, yeah, I think that tweet came from a person who should, I don't know, think about anger management or being at least consistent. It just seems like because it's a surveillance machine, but you can't see anything. I mean like, it's just like it's just so contradictory within itself that it's not even worth, in my opinion, responding to it. And this is. I'm actually, there are some good anti you could look at someone that I was going back and forth with yesterday. I'm actually very much in favor of being kind of like very open because like I said, we haven't gotten everything right.

Ryan (53:12)

But who are the good critics? Who are you going back and forth with? Just curious.

Yuval Ruz (53:16)

I don't know his name, but I can find, I can find Yesterday we were having back and forth because I.

Ryan (53:20)

See you on my timeline once in a while and you do go back and forth with these people and I'm just like, sometimes I enjoy the conversation and I'm not sure exactly what's going on next time.

Yuval Ruz (53:28)

But, but, but here's, here's my only challenge to what you said, Ryan, is the following. When it comes to an asset, you are opening yourself to the censorship, or let's just say the issuer doing certain things that you wish they didn't. Where I think I have a disagreement, and this is important, is that Canton Network as a composability layer is public permissionless, meaning no one. If I didn't do anything wrong with my DTCC treasuries and you didn't do anything wrong with your usdc, no one, no one can prevent us from composing that transaction between one another. Right? And that's the only disagreement that I have with you is that that composability layer, what the super validators are running, is a trustless, permissionless place where everybody can come and participate. Now you could say to me that the super validators can censor transaction and decide that they don't want to allow you to compose. And I would say we're back to the conversation I have with David. These are all the social contracts that technically speaking, the validators on Ethereum could, if they were able to coordinate something, decide to censor one party if they all came together and decided we're not going to accept packets from David. Technically speaking, zero probability likelihood, but technically speaking, possible, Right? So again, I'm not, I'm not going back to that specific thing, but my point is when it comes to the asset, that's the only thing that we give issuers of asset much stronger guarantees about sovereignty and control over their assets. It's that composability layer that no single entity control and can censor. So as long as I meet the requirements of the SMART contract and what am I allowed to do with them and how am I allowed to interact with them, I will be able to compose a transaction in a trustless, decentralized manner.

Ryan (55:42)

Trustless, decentralized manner. That's where we get into the semantics of what do these words mean a little bit. What I'm thinking of is the dichotomy between something we've talked about at Bankless since Inception, which is like there's decentralized finance and then there's also open finance. And sometimes these things are conflating. And I put something like Canton more in the open finance kind of track. That's what you're maximizing. So the ability to compose transactions, you know, the, you know, some of the permissionless nature of it, it's more on the open finance side. And I don't mean, by the way, transparent because obviously privacy is preserved in your setup, but it's less maxing on things like decentralization. But maybe you can answer the meta question here again about some of the crypto natives who have their feathers ruffled. Another is a crypto lawyer, Gabriel Lexnode, on Twitter. If you've seen him, and he says this, this is some back and forth with him. He says Canton is the establishment's last best chance at co opting crypto and perverting it to lock in their monopolies. And he is quote, teething a NASDAQ super validator participation, I guess, governance forum post. So this presumably is the Nasdaq and they're saying, hey, we want to be members of the Canton network. We want to do the. We, we want to submit our application to be super validators to, to governance and for a vote. And someone like Gabe, he's saying that this is the establishment co opting crypto and, and trying to lock in their monopolies. And this again, this is a common sentiment that I'm seeing among some of the crypto native. What's your meta take? Why are they bothered by this?

Yuval Ruz (57:19)

Can I, and then I'll give you my answer. Can you tell me like, and I, and I reminded you in the beginning, right after you announced that I'm coming. What was your announcement right after me? You remember how everybody was excited that JP Morgan issued a money market fund on Ethereum? Like if, if, if NASDAQ just came out with a PR saying, hey, we're going to do everything on Ethereum and we are going to run validators and we're going to do staking. Do you think that Gabe would have posted the same question? No.

Ryan (57:48)

You're saying bag bias. You're saying there's some tribalism and bag.

Yuval Ruz (57:51)

Bias going on and that's fine. But not in Bankless. But that post might.

Ryan (57:56)

We never have bag bias.

Yuval Ruz (57:58)

No.

David (57:58)

We never ever have back bias.

Yuval Ruz (58:00)

No, no. But by the way, that's fine, it's all good. But again, to be honest, I have to say I really, really, I think this conversation was one of the better ones that I had. And to be honest, it shows that you guys came prepared. But again, I, you know, we're trying to solve a very specific problem and you know, you could say that a lot of the crypto natives on X are varying. I will tell you there are some fairly large crypto native funds that are bag holders in Canton. And at the end of the day, at the end of the day the question is, do you believe that our approach, our go to market is capable of bringing more financial transactions on chain? You know, there's this thing in crypto that I actually find a bit interesting, which is everybody talks about how this technology is going to free us from intermediaries. Come on, that's not an honest statement. All that this technology is doing is creating new intermediaries. I have to say that a lot of the intermediaries that have been created in crypto are even more centralized than the ones that they're talking about removing. To be clear, and I'm not going to get into names, there's no point. That being said, the reason why I really like this technology is that it removes the barriers and the moats around competing with the old intermediaries. That to me is exciting. Not because I think it's going to by definition disintermediate and remove the old guard, but it will say to the old guard, either improve and offer better products to your customers or someone else will take you out.

David (59:50)

I agree with that. Yeah, but that, that marginalizes intermediaries and it reduces the take rate that intermediaries are able to have. And it's a check on power on intermediaries, which I think a lot of people would say is pretty directionally congruous with saying remove intermediaries.

Yuval Ruz (60:08)

Yeah, but, but just to be clear, a DeFi protocol is an intermediary. Sure, right, totally.

David (60:13)

And the governance token that governs my position in AAVE is a counterparty to me. If we want to really expand what an intermediary is to include a smart contract that has governance.

Yuval Ruz (60:26)

And my, my only point is I honestly like where I have a lot of, a lot of room to have these back and forth. For example, Ryan and David, I'm actually, I understand that we, we don't see eye to eye on a lot of different things. And I'm not saying that in a negative way, but it's a very, it's A very. At least it comes from, hey, I'm starting with a different set of assumptions or things that I think the world should go or what I am trying to accomplish and we end at something rational aligned with it.

Ryan (60:57)

I'm still actually honestly struggling to find what we might most disagree about because so far I've maybe found a handful of partial disagreements. But I haven't been able to put my so long as a Canton network is acknowledging the trade offs that it has made versus something that is maximally decentralized like a Bitcoin and Ethereum. That seems fine to me and a position to take which is like, hey, real world assets don't necessarily need the four to five nines of Ethereum level decentralization. So here's an alternative. It's called Canton. That also seems fine to me. Maybe I want to frame the critiques from crypto natives, the people like Gabriel who were just mentioning. And let's remove bag bias from the equation. Let's say that's not in play at all. Okay. And let's say there's no tribalism actually in play way. Let's say there's some values bias and let's say a crypto native. Maybe someone like Gabriel genuinely thinks it would be better for the world to actually bypass the DTCC in some way and to have an actual tokenized equity that's disruptive of all of the existing institutions and that that is best done on Ethereum and he is supporting say Ethereum or pick your other, you know, your crypto native, your, your max decentralized crypto native network because he believes in that value. Do you think that that is a rational argument for why real world assets on something that is max decentralized.

Yuval Ruz (62:27)

It's rational, but it's not practical. There's a law in the US that says that equities in the US cannot be permissionless. They cannot be. Be a bearer instrument. I mean, I don't, I don't know. I, I don't know. I don't know. And, and I think David, you called it out on, on.

Ryan (62:40)

On.

Yuval Ruz (62:40)

And that's the point where you said we're going to talk to you like full circle. I mean, I don't. This is why I keep on coming back. You can have a permissionless asset on Canton. You could, you could design it if you wanted to.

David (62:54)

My point is the Canton token is a permissionless asset, right? The Canton token is like similar to Ethereum or Bitcoin, right?

Yuval Ruz (63:00)

You could have a permissionless. I guess my point is we are trying to maximize real world assets on Canton with regulated institutions because that's where the deep balance sheet is and this is where most of the usage is. That's what we're trying, we're trying to bring on chain capital markets. That's what we're trying to solve for. So the reality is you're not allowed to have a bear, you know, a bear equity token as of right now in the US it's just not possible. Right. And that's just a reality. Will there be derivative products on Canton that are permissionless, that try to mimic the return of U.S. equities? Probably, but that's not a U.S. equity. You know, I give this example, David, when you buy on, I don't know if I don't know your age, but like there was a time where going and being invited to the AGM of Berkshire was the hottest thing. So what you would do is you would buy one share to actually get the invite because you're a shareholder. Right. I don't think you get the invite if you buy on the finance. I don't think you are recognized by Berkshire as a shareholder. And again, this is not a stab at Ondo. Ando has done something incredible, but it's solving a different problem. It's like, hey, a lot of people around the world, maybe Ryan, to Gabe's point, do not have the freedom to access exposure to Berkshire Hathaway. Right. And they are enabling that. And that's admirable. It is, it really is. It's a good thing. It's a good thing for the world. But Wellington is not going to hold it because part of their thesis is, hey, if I'm top four shareholders on a cap table, not only I want to be invited to the agm, I want to make all kinds of very important votes with respect to how to manage that company. And that's again a different problem that is being solved. So that's why I'm saying it's not, it's not a, it's not that it's irrational to have that value. It's not practical with what we're trying to solve. And that said, that's just a very, a very different. Yeah, it's a, and, and, and I, and that's my point. I don't understand the point about taking stabs at it. I don't think you're going to see a post by me trying to say that we are, we have been able to create what Ethereum have fail to create. It's just not true. Here you have Me on the record. It's not true. It's not our intention. And if anything, I would love for Canton and Ethereum to collaborate because I think that there's very interesting things to do together.

David (65:44)

First, it's just a pastime of crypto to debate about ideology and how ideology shows up in architecture. And so that's just one of the things that we're doing here. I think one of the reasons why Canton is ruffling feathers with some of the hardcore cyberpunk people is, you know that when we created Bitcoin, when we created a blockchain, a public, permissionless blockchain, we created something completely net new that not only could you do the old thing of, like, create a asset, but you could also do these new things, these new properties, smart contracts, you know, public permissionless stuff, you know, the individual. I got ideologically inspired by Ethereum when I was running a mining computer in my dad's bathroom, when I was thinking, like, yo, I'm processing global transactions in my bathroom. That's pretty cool. No one's ever done this before. And I think a lot of people like me and other crypto natives, when they look at the architecture of Canton and they see the words super validators, and then somebody on a podcast asks you, who are the super validators? And you list off a bunch of company names. Not. Not Average Joe, who's running a validator from his Starlink in the middle of Idaho, which there's. There's somebody on the Ethereum network who is literally doing that. All of these things was like, oh, no, no, no, no. These are the old things. We have the old companies, the old Delaware C Corps that are validating the network, that have the ability to make transactions that I don't. I can't add to the blockchain. And these are just all the old things that they're using the new technology to upgrade the old systems, which I think we all agree definitely needs to get upgraded. Like, Coinbase has its whole, whole slogan as upgrade the system. And I see that's what Canton is trying to do, is like trying to upgrade the system, but it's doing it inside of the confines of the old rules, which doesn't feel very, like, rebellious or inspiring or inclusive of the individual to participate. It's like, oh, let's stay inside of the old rules. So, like, equities, they need to have. Equities can't be bearer assets. So let's make a blockchain that doesn't even bother with bearer assets as, like, a core Promise and let's actually bend the whole platform to kind of sit inside of the container of the, of the old world and I, and, and we're ultimately in the same industry. And so individuals like me and other like cyberpunk Maxis are just placed next to you. And that's kind of, I think the source of friction here is like we're in the same space, we're in the same industry. And it was different when Canton was, you know, working behind closed doors, working with his partners. But now it's got a token page on Coingecko and for some reason that matters, that places it alongside of all the other blockchains that are also on Coingecko. Right. And now you guys are, you guys are advertising on Blockworks, which has a crypto native audience. So it's one thing to have the architecture be highly congruous with securities laws and traditional finance needs and the rules of governments. And doing it over there where J.P. morgan's quorum is. I don't even know where J.P. morgan's quorum is. It doesn't have a Coingecko page, but it's somewhere way over there and it doesn't bother me. But now, like you're in our, you're coming into our world, you're doing the blockwork sponsorships, you're on the, the Coingecko page, like all this kind of stuff. And so there's, I think that's why you have to contend with some of these very deep questions is you have the old style architecture, but you are marketing it to our industry, which we value. The cypherpunk maximalism of Bitcoin and Ethereum. And that's going to be a reoccurring theme, I'm guessing, in your life because you're, you're trying to penetrate into the crypto native world which has a certain set of values which doesn't resonate with some of the architecture of Canton. That's kind of my diagnosis right now.

Yuval Ruz (69:34)

Yeah. So first of all, I would say that I had to bet that if I had to put Poly Market bet on. Do you listen to music on Napster or Spotify? I'm pretty sure that I can make the right bet of where you listen to music. My point is I don't think that Canton is the old guard architecture. I think that I've listed a few names. There are Dexes with privacy that trade wrapped Bitcoin and wrapped Ethereum on Canton. So I mean, pretty sure that it's not the old guard that is doing that. I can Tell you that a lot of crypto natives love the fact that now they can move Bitcoin and Ethereum without everybody front running them, by the way. So I actually don't think that we only service the old guard. The system was not designed to conform to US equities laws. It was designed to enable use cases that have to comply with it. And that's very different. I mean, again, I think that the approach of most crypto to today have been a very binary view. It's not that this is how technology is designed. This is how the world should operate. And they have almost kind of become like this vertical solution. I'm integrating a social contract and a worldview into the technology. And if you don't believe in my social contract and my social view, then you're wrong. And honestly, to be honest, on maybe on a personal level, I think that that's a bit, a bit of problem more generally speaking in the world today, that it's like this tribalism and it's like this binary view. You either are 100% here or you're not. Right? Like you were a liberal until you decided that, you know, certain, you know, genders cannot play in certain sports and now suddenly, whoa, you're all the way to the other side. And I don't know how I brought that topic here. But my, my point is, my point is that Canton does not take, hey, let's copy paste the old architecture. It is trying to be very pragmatic that there is very interesting things like defi. There's very different. There is very interesting business models and use cases that are very crypto native. That would love, and I think you would agree with me to bring the old guard balance sheet to take advantage of them. No different than how Bittle was celebrated, how Benji was celebrated. When any old guard firm comes into all of these crypto native, they celebrate it from here till tomorrow. Right? Like it's the big deal. And by the way, it's rational. It makes sense. They do sit. They could actually enable quite significant transactions. So I'm not sure I agree with you that we have just copy pasted the old architecture. I totally understand why people are upset with us. I'm, I'm, I'm okay to, to, you know, to take the heat about it, but like, come on, I mean us, us advertising on Block Works. I mean, like I said, I mean we have dexes that are being used by degens that want to trade with privacy. I actually don't think that that's a bad thing.

Ryan (72:50)

You know, Yuval helped me understand one app, one dashboard. I've been looking at a lot in kind of the real world asset generation that we're living through is RWA xyz. And so this lists all the different networks and some of the value of RWAs on chain real world assets. Of course, the Canton network is showing here. You guys are listed quite high. There is two different sections in the real world asset league table. One is distributed networks of which Ethereum is number one. And then BNB chain and then Solana and Stellar. Many of the names that listeners will recognize. And then there's another category that's not distributed. It's called represented. And so Canton is in the represented category along with other, what I kind of think of as real world asset chains like Provenance, which we haven't talked a lot about on Bankless. But then you have Zksync era over there. What are they trying to get at? And then another question on real world assets, the website is Canton. It shows represented asset value of 380 billion on this website of real world assets, which is a lot. But it's all from Broadridge dlr, which I have no idea what that means. This stuff is all foreign to me and I worry a little bit that some of these metrics are gamified or they're not categorized completely. Well, help, help us make sense of this.

Yuval Ruz (74:16)

Sure. So first of all, if, if you don't know who Broadridge is, if you ever received a letter to do a proxy vote on an equity, it was probably delivered to you by Broadridge.

Ryan (74:28)

So I vote on all of my proxy votes every single time.

Yuval Ruz (74:33)

So they are a small company that is running the back office and middle office for 70% of the US fixed income market. So it's, they, they, they do important things. They're, you know, they're not necessarily like always in the news. It's not like front and center, but they, they do process and manage a big chunk of the U.S. u.S. Market. You know, you say that $300 billion is a big number and it is a big number, but actually when you look at the global, global repo market on a daily volume perspective, it is about, I think today, ten and a half to eleven trillion dollars every day. Only in the US it's five and a half trillion dollars every single day. Okay, that's, that's what it is. So $300 billion, right. Is not even 10% of that. It's close. It's impressive, but it's not that. So what Broadridge have done is they move Treasuries on Canton. The ledger is the legally binding position and they are processing 300 plus billion dollars of collateral movements on Canton. Now if people think that we gamify the numbers, I understand because if you had your eyes on crypto numbers, right, and that's what you're measuring yourself against, suddenly this number comes and I totally understand why that would seem like that.

Ryan (76:03)

But yeah, it's like, like 380 billion. It's bigger than all of the stablecoins on public crypto networks.

Yuval Ruz (76:09)

So just, just. So again if, if you think that we, we forget about we because digital assets have nothing to do with publishing these numbers. But you can go and look, I can't remember what is the market cap of Broadridge, but if I recall it's let's say around $30 billion or something. It's publicly traded. You can go and listen on quarterly earnings to Tim Goke, right? And if you think that he talks about Canton in his quarterly earnings and about dlr, I think we were talking about rational. It is not rational to think that a CEO of a $30 billion company would gamify numbers to get some attention on a website. For what benefit? Like for what? Forget about that argument. We use not we, but like let's say us as an industry. And yes, I know maybe I pissed off people that I'm now putting us, me in our industry. But you see David, I listen but think about like do we use oracles? We do. And it goes back into the RWA conversation that we had. Well guess what? We do trust those sources of data that publish it. Why don't we do it now? Because the number is big. Like that's why we don't trust the number. Like that to me is not rational. And again like I try to approach these things unemotionally. I can recognize why suddenly when you see a number like this you're like what the hell? Like what is going on? For 10 years we barely scratched the surface. Suddenly like one name puts $300 billion. And I'm just saying like go listen to the quarterly earnings. It's a publicly traded company. I find it to be highly, highly not logical to assume that a publicly traded company will risk their reputation just to get some street street cred on a website. That's my view, right? And you know that's, that's the number. And by the way, that number is going to get bigger. It's going to get bigger quite significantly. And what you will see, and by the way, this is the double edged Sword of privacy is that we plea the customers or the people that build on Canton, please publish the data out of your products. So you're going to see other numbers. There's seven life insurance companies that are issuing life insurance policies and annuities on Canton. I mean, I'm going to start publishing the numbers and the values of those contracts. And again, people will say we're liars. But then I say, yeah, sure, life insurance companies are also liars, but you're going to see more and more people that have been building project on Canton starting to publish the stats. And that's the difference. And I think, I think maybe now, Ryan, if I kind of circle back to why I think people are annoyed, we took a very different approach. We felt that unfortunately it took us this long to build the technology. But I think that one of the things that is unfortunate in my opinion in crypto is that crypto created so much noise before nothing was built.

David (79:24)

Right.

Yuval Ruz (79:24)

We mentioned EOs. Just think about it like we just kept on coming up, you know, with VCs backing us and going like we're going to change the world and we're going to do this because look, I have some scientists from Stanford that came up with proof of monkeys type of consensus. And as a result of that, we're going to do XYZ and we decided, no, we're going to build stuff. We're going to onboard assets, we're going to onboard companies and when we have something real to show, we're gonna show it. Right? We're not gonna come up with futuristic. You know, like I, I, I responded yesterday on trip on, on, on, on X to the founder and CEO of the founder of Polygon. Look at their numbers. That's incredible. That's real stuff. You can only admire when people do real things. So I accept the criticism, I understand the suspicion, but I'm just trying, Listen, I'm giving you my version of it is we decide to build stuff, we decide to decide to take it into production. We launched the network and now we're going to go full steam ahead and we're going to show all of these partnerships, all of the relationships, all of the assets that have been built and all of the application and expect more to come.

David (80:37)

I want to actually go back to that. You gave me that transition. The, what we were talking about which inspired this podcast on the weekly roll up show was the, the announcement that Canton Network is one of the DTCC's first pilots to tokenize securities. And so December 17th, DTC announces a partnership with Digital Asset. That's, that's the company behind Canton Network to enable the tokenization of DTC custody to assets on Canton, starting with a subset of U.S. treasuries. Now I think every single blockchain under the sun is trying to get tokenized assets on their chain right now. That is the meta, that's the game. And I don't know if dtc, the DTCC has any other blockchains that it's working on a pilot for, but that makes me very interested in this because I want tokenized securities. I want tokenized securities to go on chain. Can you talk about just how that relationship was fostered and what we can expect out of that announcement in 2026? It says starting with U.S. treasuries, but like I just kind of want the S&P 500. What are we going to get this year out of tokenized securities on Canton?

Yuval Ruz (81:38)

Yeah, so let me start and be very clear. The DTCC is a market neutral financial market infrastructure. So what's important for me to say here in front of everyone, we have no exclusivity. Canton is not going to be the only network that they do this on. We were very fortunate to be the first, but we're not going to be the last. At least that I don't have that kind of a guarantee that I'm the only one. And I expect that based on, you know, customer demand and opportunities, there will be others. That's just one second of all. I mean, you know, I can only, I can only discuss what was shared, which is Treasuries. You know, my hopes is that equities, you know, will be there as well. Actually, to be honest, when you start thinking about the dtcc, they also sit on munis and corporate bonds and other assets. The a hundred trillion is not just the equity market. It's you know, a pretty sizable portfolio of assets. So my hopes is that all of them, because it's not just trading, but I think, David, what you're going to see is the next generation of ETFs and other products that are natively on chain. So to me that's extremely exciting having these assets, you know, that's, you know, we've been working and knowing the DTCC for a very long time. Again, we've been trying to bring capital markets. And if you try to bring capital markets, like I said, you go to where the balance sheet is, where the concentration of assets and the dtcc. If you could describe a capital markets black hole meaning all masses centered there, that DTCC is It they are the biggest by far. Just to give you a sense, I think the Europeans are in the 30 to 40 trillion just to give you a sense of the magnitude in terms of size. So you know, we've been working and talking to the DTCC for a very long time and like I said, have been very fortunate that they selected Canton first.

Ryan (83:42)

Now one asset that's not settled by the DTCC is the Canton asset itself. So this is the ticker is CC and you tell me this looks like a relatively new asset. The price chart at least goes back to November. It looks like on the, on the screen that I'm looking at, it's worth over $5 billion at the time of recording. And I, I'm wondering what role the CC token has in the Canton network and then also what's kind of the, the valuation behind it. I understand you can't necessarily get into investor's mindset, but this is the debate we have about all new crypto native assets is well, are they money, are they store of value, should they be valued as a utility token or by the revenue they produce, discounted cashflow, that type of thing? What can you tell us?

Yuval Ruz (84:32)

Yeah, so to me, on a personal level, one of the things that really got me excited about crypto is that back to allowing others that historically couldn't is that if a network becomes kind of a backbone of financial industry or subset of a financial industry historically the common person, you, you know, the three of us wasn't able to own a share of that, of that infrastructure. And, and really what crypto showed is that you could actually create financial model where everybody can actually participate. Now that's just ownership. But the, the value in my opinion, and again the value in my world of a smart contract net chain is the utility that gets generated on it. And I think that, I think, I think, I think also you, you started talking about it in some of your podcasts is like there has been too much, too many promises and not many deliveries of what I would say real cash flow businesses with an exception of a few. I'm not saying that there aren't any. We mentioned aave very impressive business. There are businesses but for the most part I would say that there haven't been really long, you know, sustainable business models that came on chain and therefore my belief is that long term gravity and physics win meaning if you're not going to be able to actually drive utility through your network, it goes to zero long term. That's my personal take. And as a result of that, what we're trying to do and we've talked for an hour and a half is about what we're trying to optimize as much utility. Different asset classes, different use cases. Canton Coin is a utility that is being used to pay for those transactions. And one thing that we have done different is that the utility is denominated in US dollars. And again, the reason for that is that we believe that if you're a large institutional player that is going to put a significant piece of your business whether we like it or not, or we should think that we should start adjusting our currency to be denominated in ethical is a very interesting conversation. At the moment it's not. And CFOs and controllers do projections in US dollars or fiat. It's just a reality. So the amount of Canton coins that you burn are always denominated in US dollars. So as Canton coins rallies, you would have to pay less Canton coins for a transaction. But there is a mechanism in Canton which is called the burn mint which is effectively says if you don't burn enough where the price is effectively the chain is very inflationary which should correct the price down to where is the right equilibrium of the current utility in the network to the valuation of the network, if that makes sense. So if the price starts depreciating but utility stays at the same level, the network effectively becomes deflationary and hopefully you become. You get an upward pressure and, and really over time the reason why we, we decided that is because we said if we don't, if we don't bring utility to this network, we think that the market cap of this network should go to zero. That's our view. Which is very counter to how some of the networks that I would say don't even process a hundred thousand dollars of fees a year, you know, have some crazy valuation. To me that is not good for our industry. It creates a false dichotomy of what we're trying to solve. So Canton Coin is a utility to pay for transactions. The transactions are denominated in US dollar and there is a burn mint equilibrium to try to bring the price or the market cap of the chain to some kind of an equilibrium value compared to the utility that runs on the network.

Ryan (88:52)

Yuval, this has been great. Thanks for joining us. I feel like it's accomplished the mission of fact finding of what the Canton network actually is. I hope that a lot of listeners understand it the way I understand it now. Your ideology and why you're doing this. Maybe the last question to close us out. So the year is 2030. What's Ethereum doing? And what's Canton doing?

Yuval Ruz (89:15)

Man, why didn't you send this to me in advance? So, you know, I think that in 2030 what we're going to see is that defi on Ethereum does it atomically from assets that have been, you know, minted on Canton. And that freedom and access to asset could be interoperable between those two networks. I think that you're going to see Ethereum continue to build upon. I think that you will see certain elements of privacy gets introduced in different forms. And I think that Canton will be driving, you know, not 300 billions, but potentially a few trillion of dollars of settlements every day.

Ryan (89:58)

Well, we'll have to leave it there. You may have ruffled some feathers with the final answer, but we'll save that for X. Yuval, thank you so much for joining us. We'll talk to you soon.

Yuval Ruz (90:07)

This was awesome. Thank you.

Ryan (90:09)

Bankless Nation. Gotta let you know, of course, none of this has been financial advice. Crypto is risky. So is tradfi crypto. You could lose what you put in. We're headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the Bankless journey. Thanks a lot.