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- [00:00]
Host
Foreign. Well, I'm joined now by an incredible guest. Very honored to have Justin Barlow join us, who's the head of BD Business Development and Investments at the SAY Foundation. Justin, thank you for joining us today at the Crypto Hedge Fund Summit. How are you doing?
- [00:24]
Justin Barlow
Thank you so much for having me. Doing well.
- [00:26]
Host
Good. Good man. Well, hey, look, I'm, I'm excited about what's going on at say. I'm staking some say, so full disclosure, I have exposure. I always like to be forthcoming and transparent about that. But I've been really excited about what you guys have been doing. You know, we spoke with Jay, Jay Yog, who's one of the co founders over there at, at say some time ago, and we were just very, very impressed. And so we want to, you know, get into what's going on at the SAFE foundation and how you're developing that and investing in the ecosystem. But before we do, we just want to get acquainted with you personally. You know, how did you get into this industry and what were you doing a little bit before? Just high level.
- [01:08]
Justin Barlow
Yeah, I mean, I am lucky enough to say that I am probably part of this sort of first generation of true crypto natives. Had gotten to crypto when I was quite young, was really one of my first sort of forays into the professional world. So launched a fund originally back in 2017, so just about eight years ago now, had gone into crypto a little bit before that. And that fund is really dedicated towards, you know, basically a full sort of long, short strategy. Right. So a typical hedge fund entirely on the liquid side and ran that for a number of years. What, what ended up happening was I sort of continued, you know, running that fund for again a few years, spent some time in the sort of long form, research and content side of things, spent some time with some tradfi institutions like Millennium Management in New York in the endowment at my alma mater, University of Southern California, and then actually upon graduating, built and sold a startup in the space and then went on to spend a few years over at Solana helping build out that ecosystem from 2021 up until mid to late 2023. Wow.
- [02:27]
Host
And to leave Solana to go to say, it must probably say something about the protocol, maybe the, the future that you saw both kind of going, you know, kind of what, what pushed you from Solana over to say.
- [02:40]
Justin Barlow
Yes, I mean, look, obviously sort of a number of factors that, that go into it. But for me, what was particularly was this idea of really combining the sort of two parts of the dominant ecosystems that you have today. Right. The sort of speed and throughput and low transaction fees that you see on a chain like Solana with the sort of tooling and infrastructure and mind share of the evm. One thing that was sort of abundantly clear over these last eight years in the space is that the vast majority of developers are EVM native. I think in the last sort of Electric Capital Report, which tracks developer activity, it was something like 90% of developers are native to the EVM. And what this means is that there was sort of a glaring gap in the ecosystem for a highly performant. Right. Low fee blockchain that was EVM compatible and SEI filled that gap.
- [03:36]
Host
Yeah, it's interesting. It seems like a lot of people are trying to attack that in different ways, whether it's sei. I've spoken to folks at Move where it seems like they're trying to build some kind of SVM where it's like it's compatible between both. What kind of gives you the conviction that say's approach is the right approach?
- [03:58]
Justin Barlow
Yeah, I mean, look, I think first and foremost, you know, the, the product was first to market, right. Which I think matters a lot. SEI is the only sort of EVM compatible, high throughput, layer one blockchain that exists on today. And so being the first to market, as you know, in crypto matters quite a bit, right? Totally. So that was one thing that was particularly interesting. And the speed at which the team actually shipped the product was incredibly, incredibly inspiring and also bullish. Right. We saw the team go from announcing sort of the idea of the product to actually having it live on mainnet, you know, in the course of less than a year. And this stands out a lot to me as someone who's been around the space for a long time. Typically timelines in crypto actually take much longer than what people expect, as opposed to actually being shorter. And that was an amazing thing to see up close as SEI's mainnet went live with that full EVM support with SEB2.
- [05:01]
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- [07:56]
Host
Yeah, that's awesome. And, and I love it. And no, I'm, I'm really kind of interested now as somebody who's really responsible for a lot of the business development activities and the investments that the foundation is making. Like, zoom us out to a high level. How does it work with a foundation, you know, and the protocol and like the builders. Are you guys the ones building it? Just kind of walk us through this because I think it throws people for a loop. They're like, oh, say it's a company. Right. And well, there's a company, but there's also a foundation. And so if you're investing here now on behalf of the foundation and doing biz dev, let's just get everybody's head around that.
- [08:33]
Justin Barlow
Yeah. So I mean, you know, simply from like this high level, most sort of blockchain teams that, you know, you see, whether it's names like Solana or aptos or swe, et cetera, they tend to follow this structure where there is a labs entity or something similar to that. Right. That is sort of the core driver of sort of the tech side of the protocol is normally sort of the first organization that spins up related to a particular protocol. And then you have a foundation side in our case and in the case of a number of these other names, the foundation side is not building the protocol. We are not, you know, the company or anything behind say what we are is basically a sort of nonprofit organization that is meant to sort of drive. Drive the growth and development of that particular ecosystem. And so what does that mean? That means things like the sort of marketing and go to market functions, the business development. Right. The investment side and sort of everything kind of in between there on the business side sits at the foundation. A lot more of the sort of technical work sits at these labs organizations and then obviously with contributors from the ecosystem, sei, like a number of other chains is fully open source. And so anyone is able to really go in and contribute if they want to.
- [09:55]
Host
That's awesome. And when you're kind of doing these exercises to, to develop, you know, more activity or more like, what are the KPIs that you are really looking for? Are you looking for More corporations to build on it or more individuals to download wallets. Is it kind of an amalgamation of all that?
- [10:12]
Justin Barlow
Yeah, I mean, you know, every sort of sub team within the organization has its own goals. But generally speaking, the idea is, you know, driving things like fairly active users, things like on chain, sort of volume and liquidity, things like unique assets on the chain. Right. So things that are only available, you know, here on saved and ultimately, you know, obviously trying to, you know, also onboard both, you know, real users. Right. The end users, like consumers using a Dex product or a game or a social network, but also some of these more institutional users. Right, to your point. So banks, asset managers, etc. They may have their own use cases for the network, whether they are, you know, more consumer facing or whether they're internal.
- [11:02]
Host
And do you see kind of like a certain sector particularly thriving on, on the, say, network? For example, you know, a lot of these early Defi applications found a product market fit on Ethereum, but Ethereum couldn't help really scale the Deepin stuff, the physical infrastructure. So that all kind of switched over to Solana because of that kind of inherent advantage. Do you guys have kind of a similar play in the market?
- [11:31]
Justin Barlow
Yes. I mean, SEI's kind of core, you know, infrastructure all certainly relies on defi, Right. And Defi is really one of the underpinnings not to just SEI as an ecosystem, but really all of the major ecosystems if you, if you stop and take a think about it. Right, totally. And so Defi is certainly one of the strongest categories on sei. And what's interesting is, to your point, you know, Defi applications were, you know, obviously first kind of started in the Ethereum ecosystem, but simply because of the tech stack in the Ethereum ecosystem. Right. And the resulting fees as well as speed of transactions, etc. There were a lot of design trade offs that people had to make early on when building Defi products. A great example of this is the concept of an amf, right, an automated market maker. This is a concept that is super common in crypto, but really doesn't exist in the sort of traditional finance world. And why is that the case? It's really because of how sort of slow and expensive it can be to build a fully on chain order book on a network like Ethereum. And so in SEI's case, a lot of these opportunities that previously were just not available to developers on the EVM are now available. Right. So that means building things like fully on chain order books, if it's defi. Right. Building on chain social networks, if it's social, right. Or similarly things like games. Right. And sort of games that have fully sort of on chain components that otherwise would just be prohibitively expensive on, you know, Ethereum, for example.
- [13:04]
Host
No, this, this brings up a great point and it's actually something I've kind of always wondered, but I guess I've never really asked. But in terms of like, so say, is EVM compatible, Ethereum virtual machine compatible, but it's not a layer two like Optimism or Arbitrum or Base, right, Which are EVM compatible, but these are layer twos that kind of rely on the consensus of Ethereum. So I guess the question is what separates SEI from a different layer two.
- [13:35]
Justin Barlow
Yeah, so I mean you hit on really the core point of it, which is that SEI sort of exists with its full stack independent of the Ethereum chain itself. So what does that mean? It means transactions aren't batched and posted to Ethereum. Actually all of those transactions in every part of the sort of life cycle of a transaction happens on sei. And so when you really take a look at what people sort of look for and what they really need when they're talking about developing on Ethereum, at the end of the day, what they really care about is that there is a sufficiently decentralized network that is able to interact with the Ethereum virtual machine, the evm, as we were just saying. Right. Beyond that, what they really care about then is fees and throughput and speed and all these things that we've been chatting about now. But ultimately most users, end users don't even know or really care about where their transactions settle. What they care about is having applications that are decentralized, that work well. Right. And have a good user experience.
- [14:39]
Host
Do you think that one day, like for instance, I've seen some commentary around Uni chain and it's like Uniswap sort of chain that is going to bring all of the EVM stuff together or I don't know if it's just all layer twos, but maybe you could comment on like this idea of one day, are we going to obfuscate away the user having to know, oh, I'm transacting on Solana or say, or Ethereum or like it gets confusing. Can I just go to one one Stop Shop Defy application, make a request for a trade or whatever and then like not have to worry about where it gets routed through?
- [15:16]
Justin Barlow
Yeah, I mean, look, I think we are still a ways away from that being sort of the mainstream, right? You have applications and tools, names like One Balance, for example, come to mind where they kind of abstract a little a lot of this, you know, crypto nativity away and let you really just operate with sort of many chains, you know, from one interface. But yeah, I mean, look, there are, I think at this point I saw something like a thousand plus chains, right? And every time you have to add sort of support for additional chains, it is additional development work, right. There are edge cases you have to look out for. And so, yeah, I think, you know, there's definitely a world where you have many chains kind of interacting. But SEI is, you know, what we call sort of a monolithic chain. Right. And we see that, you know, there's an opportunity for people to do everything on one chain and they're not constrained by throughput or cost, which is really a big piece of the reason why you have so many of these layer two chains.
- [16:14]
Host
Yeah, that's actually a good point. So if we take a look at some of the areas that, that you guys are investing in right now, or maybe putting out, you know, requests for proposals of the kinds of investments that you'd like to make, where do you kind of see these, you know, these placements over the next 12 months?
- [16:31]
Justin Barlow
Yeah, I mean, look, as far as, you know, investments for us, I think we are, you know, a general purpose chain. And so we're going to continue to invest in a number of different verticals. So I mentioned things like DeFi, I mentioned things like social things like gaming, et cetera. But you're also going to see us kind of putting some, some chips behind some emerging verticals, things like AI, right? Where obviously there's a ton of excitement, there's a ton of sort of progress happening on the tech side. And we think SEI is very well suited for AI products just based on, you know, the performance that we've been talking about. Another area that is particularly interesting to us, that we were very early to kind of plant a stake in the ground in is D side and that's decentralized science. So we recently launched a $65 million DECI fund that's entirely dedicated towards investing in D side and decide related projects.
- [17:27]
Host
And then how does, you know, you know, so for instance, the 65 million bucks from the foundation, like where does the money from the foundation come from? Is it like as people use the chain, you know, a certain amount of the transaction fees go to the foundation or were there like some initial investors to kind of, you know, get things rolling?
- [17:48]
Justin Barlow
Yeah, I mean, crypto companies and when I say crypto companies, I'm referring more to layer one and layer two. Blockchain foundations have a pretty unique structure. Right. It is not like a traditional company where you charge every user and revenue goes directly to that company and then those sort of revenues go towards paying expenses. In the case of crypto, the revenue that happens from transaction fees actually goes to the validators and ultimately the people who are staking to those validators. Right. The end users. And so the question is, how do these companies get funding that really happens through the tokens behind these projects. Right. And so say, you know, for example, in our case the say Labs team raised, you know, multiple rounds over the last few years from top investors like multicoin and jump, crypto and asymmetric and you name it. And that type of funding, right, that really is driven by the underlying token is what is used for, you know, day to day operations, investments, you know, et cetera. Right. And so having that sort of liquid asset, being that token on the balance sheet allows you to make investments and ultimately hope to accrue more usage and more value to your chain.
- [19:03]
Host
Awesome. Well, that definitely gives us a lot of good perspective on kind of how things work. And the DSI fund sounds really interesting and I know a couple people that have been kind of getting involved with dscai. Where can we go to learn more about some of the DSI stuff that's going on with say, network?
- [19:22]
Justin Barlow
Yeah, I mean I can find the exact link and we could probably put it overlaid on the video or something here. But if you just look up say DSI, it should be probably results number one through 20, I would imagine because it was pretty highly publicized given that we really were the first to kind of make a, a sort of major investment here. But yeah, I mean on our end we have sort of an open forum where if someone is building on say and looking to build a D side project, people can just apply directly. Right. Get in touch with the team and ultimately receive resources if we think it's a fit for, you know, funding from the foundation.
- [19:57]
Host
Awesome. And yeah, we will type this in the chat box. It's blog SEI IO and it looks like there's, there's a whole bunch of information here that the blog posts on, on dscai, which I'm, I'm excited. I've got this open. This is going to be my, my lunch reading here today because I gotta get smart on D side. It's one of those trends and themes that I'm just seeing people kind of you know, it's catching my attention and catching my imagination and it's like, it's, you know, the AI stuff was really big with AI agents and I think D side could be, be next. Look, you know, we're excited about everything you guys are doing. Is there anything I failed to ask anything that you guys are working on that really excites you that, you know, the good citizens of Crypt Nation here deserve to hear?
- [20:43]
Justin Barlow
Yeah, I mean, think one. First of all, you've done a great job. So no gaps, but one thing that we could add on here that may be interesting for people to look into is called say, giga.
- [20:53]
Host
Okay.
- [20:54]
Justin Barlow
And so say GIGA is sort of an upcoming upgrade to the network that will allow for SEG to be the sort of highest throughput, highest, you know, TPS chain in crypto by a very large margin, particularly on the evm. So that means, you know, transactions capacity of something like 200,000 plus transactions per second. And a lot of great progress has already been made there recently. The founder of of say Labs, Jay, who you mentioned that you just met with, actually posted something on his X account detailing some of the internal testing that has already happened across a decentralized network of nodes. And it's really inspiring. This is a pretty landmark moment for a crypto that really unlocks kind of the next evolution of products that again may have been constrained previously by throughput of their underlying chain. And if you look at kind of examples in the web, two world names like Google or Facebook, et cetera, these numbers are now getting to the spot where something like a Google could actually run on blockchain Rails and can do so without hampering user experience. So I would definitely recommend people looking into that. We have not yet set the date for the full release, but we are building in public like I said, and so there are frequent updates coming from the same Labs team.
- [22:19]
Host
I love it. That's awesome. And no, definitely appreciate you kind of coming on and giving us the rundown. I got Giga up here as well. I'm going to be reading through that. Really excited about everything you're building and to kind of be the icing on the cake, know you say has, I'm looking@staking rewards.com right now between about a 4 and a 5% staking rate. So if you guys at home own it like I do, I stake it, I earn a little bit of a yield and I think it's a great way to kind of offset some of the volatility and get some, get some more coins for coins that you guys love. So a lot of good things going over there at the SAFE Foundation. Justin, we really appreciate your time and we hope to have you back back on at some point in the near future to discuss more.
- [23:04]
Justin Barlow
Thank you so much and yeah, we'd love to come back.
- [23:07]
Host
All right, take care. And everybody watching. We're going to be back with some more great guests in just a moment.
- [23:22]
Justin Barlow
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