← CRYPTO 101
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- [00:00]
Podcast Advertiser
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- [01:24]
Podcast Host
All right everybody, welcome back to the Crypto 101 podcast. I hope everybody's having a fantastic morning, noon or night. Wherever you are in the world, you are certainly in the right place because today we are joined by a heavy hitter in the crypto market, a founder, a builder. Sriram Kanan, the founder of eigencloud is joining us and I couldn't be more excited. So, Sriram, thank you for joining. How the heck are you doing?
- [01:51]
Sriram Kannan
My pleasure. Looking forward to this crypto 101. Yeah. Excited to be here, doing well. How are you?
- [02:00]
Podcast Host
I'm very good. I enjoyed the long weekend for Labor Day. Hopped back into the markets to a lot of volatility and news announcements. So things have been good, but I'm really interested to know about everything that's going on in the Eigen cloud ecosystem. But for those listeners who are new to Eigencloud and maybe haven't seen any of your other interviews, can you give us a little high level on who you are and what you're building?
- [02:30]
Sriram Kannan
Yeah, I'm SRI Ram I started this Eigen Labs, which is the company behind Eigen there. We started this four years back. I used to be a professor at the University of Washington, Seattle where I ran the UW blockchain research lab. A quick overview of what is Eigen Cloud? We announced this branding of Eigencloud like a few months back. The idea of Eigen Cloud is when you think of like the cloud in web applications, you write a program and part of the problem that it's trying to solve is when you write a program, you don't want to also build the hardware and the servers and all the other systems. They have to run that hard, that software. So you use this cloud, which is this public data centers where you can upload your software and it runs all the computation, storage, everything on this cloud. So this made it easy for anybody to come in and build software applications on the Internet. And what we are seeing, what we are aspiring to do at Eigen is to build a similar framework on a platform for crypto builders. You want to build a new decentralized protocol, you just write the protocol and send it to Eigen Cloud. And it should find, unlike the regular public cloud, which is a centralized, non verifiable service, this eigenlayer, eigencloud is built on top of stakers and operators. People who put down. My stakers are people who put down money and then promise that they're running the computations correctly. Operators actually run the computations on their behalf. These could be the same people or different people. And so the Eigen Cloud lets you upload your software and get it run in a decentralized, verifiable manner and bring those results back. So what we did is we took the foundation of the regular cloud as a data center, like a place where you can run the computation. The foundation of EigenCloud is, is Eigenlayer. Eigenlayer is this protocol that lets anybody stake and anybody run operations for networks and services built on top. You call these networks and services avss. AVS for autonomous Verifiable service. Autonomous. So we have Amazon Web Services. That's the biggest public cloud. What is it? It's a web service service that runs on the Internet. Who runs it? Amazon runs it. So it's Amazon Web Services. We call our things avss. What is an AVS versus Verifiable service? Is a service, but it runs exactly as stated. So it's verifiable that it's actually running as stated. So it's a verifiable service who runs it kind of runs on its own. So we say autonomous verifiable services. What do you mean it runs on its own? Anybody can stick and keep it running. And so therefore it is. That's our kind of like the Eigen layer economy is stakers and operators bring decentralized computation to actually serve these services. And what, just like in the public cloud you have the data center which underpins it, but they also have some base level services that Amazon offers, like storage service or a compute service on top of it. And so the same way on top of Eigenlayer in the Eigencloud ecosystem we have a data service called Eigenda and a compute service called Eigen Compute. So these three Eigenlayer, Eigenda, Eigen Compute form the base units of Eigen cloud.
- [06:13]
Podcast Host
That's incredible. And it sounds like essentially to dumb it down for myself, it's really just a competitor or not just, but it's taking market share and competing with the Amazon web services of the world, but particularly for crypto related applications, is kind of how I understand it. And so is this something that you saw a huge need for? Maybe you tried to build your own Ethereum based applications or had some friends that were trying to do it and it was really hard. And so you said, I'm just going to build the infrastructure to make it easy for everybody else. Tell us a little bit about sort of that, you know, that process.
- [06:53]
Sriram Kannan
Yeah, like, you know, one of the really amazing things that Ethereum did is anybody can come and deploy a smart contract on top of Ethereum. So as a deployer of the smart contract, I don't need to worry about that is the trust and verifiability coming from Ethereum provides all of that. You just deploy the software there and then it just runs. The smart contract runs. But this is only possible inside the limitations of Ethereum. Ethereum has very limited throughput, it has very limited programmability. I have to write it in solidity, which is this programming language. I cannot tell each node in the Ethereum network what they should be doing because I only have a limited grade of programmability. And part of what was happening as a professor was we were inventing new kinds of consensus protocols, new kinds of data storage protocols which split the data in different ways to different nodes. Because right now in all the blockchains, including Ethereum and Solana, like every node downloads all the data, which is not a scalable approach. Right. So if you're inventing all these new kinds of primitives, you cannot build it on top of Ethereum. So what happened was there was this whole era of Prof. Chains or Prof. Coins and so they were basically like people trying to build new complex infrastructure and they couldn't do it on top of Ethereum. You have to go and start a whole new layer one blockchain to just do that. And instead of each new layer one and each new layer one has to solve not just the one problem they were trying to solve, just let's say data storage. They have to create a new form of money and like a new wallet and a new ecosystem, a decentralized community. And it's just madness.
- [08:38]
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- [09:29]
Sriram Kannan
All right.
- [09:29]
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- [10:39]
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- [11:46]
Sriram Kannan
That's absolutely correct. Yeah, so it is. That was kind of like a big deficiency in that. Like you had to do the whole thing. But not only that. And you know, one of the things I believe strongly is humans thrive under specialization. Right. You know, if you just look at the long arc of society, it's as we get more and more specialized and you know, that we don't need to do everything otherwise everybody do make their own food and you know, defend themselves, then like you would not have very many interesting things. And so if each person when they're building or each team, each company, each protocol, they can build something specialized and all these specialized things can work together. That's a much richer, interesting, driving economy. And so that's what our vision was, build a common substrate on top of which people can build their own services. So notice we are calling these things services instead of calling them chains, which is what, you know, if you just have to look at what's going on in crypto today is everybody has to call everything a chain to like say it's an album. Otherwise you don't, you know, your token doesn't go up or whatever. But really, you know, the last 20 years of like Web application development. The biggest investment category is software as a Service. It's called SaaS. Right. Like last 20 years, most money was made in just software as a service. And it's because you can specialize in what service you are providing and you can use mix and Match, you know, as an application builder, all these services, and then build, like, very powerful applications. And so that's the similar economy that we envision. And so that was the problem that we were trying to solve when we started this.
- [13:29]
Podcast Host
Yeah. And is it fair to say that the vision has evolved over time and has kind of iterated and iterated? You know, when I first remember hearing about Eigen for the first time, it was a big launch, big token launch. Everybody in the whole world, you know, was learning about Eigen in real time for like, it felt like a whole month. It was like one of the largest metas. And it birthed this whole concept of restaking and shared security. And, you know, I mean, you truly were pioneers in this. And I'm just curious if this was the original vision of the shared security model, but now it's evolved into, you know, compute and data availability. Like, what was the progression of, like, just the evolution, I guess, of Eigen.
- [14:13]
Sriram Kannan
Yeah, that's really interesting. I haven't talked much about the origins, actually. The first white paper, which is never published, it was just internal when I wrote it in 2021, was kind of like unleashing the cloud of crypto. Like, that was the main idea. And the thing is, with cloud, you have this very simple thing that you don't need to worry about all the hardware and the cybersecurity and everything. You just write your program, deploy it.
- [14:43]
Podcast Host
Yep, done for you.
- [14:45]
Sriram Kannan
Yeah, exactly. And so how do you do something similar in Crypto? Because I was seeing, to a limited extent, Ethereum was doing it because you can just write a smart contract deployed on Ethereum and it just runs forever. It's pretty amazing that that's a thing that exists. But how do you expand it beyond the confines of a blockchain and a virtual machine? So that was the kind of original role of Eigenmeyer was to say. In fact, we had the name, you know, before we came up with the concept of staking or restaking, we had the idea and the name Eigen layer, Eigen in German for your own layer. Everybody should be able to build their own layer. And all these layers work together because they're not chains, they're just layers. And that's how the world is built, is layer upon layer. And so that has always been our vision of what these services are. And these services and layers all work together to create a cloud like environment. But there's absolutely been evolution along the way and the evolution was to build this kind of very complex cloud like environment just to take people back into history. So when Amazon was a bookstore and they said, okay, we're selling books, let's also sell, you know, CDs and let's also sell, you know, these other things, they expand one at a time into like various categories. And you know, Amazon was publicly traded and they started talking about, oh, actually we are going to have this thing called Amazon Web Services, which is computation. Because they built some of the data centers for their own kind of purpose. And no, Andy Jassy kind of like figured out that hey, I can rent some of this out to others to use for computation. So that idea that was not well received in Wall street. People were like, what? Yeah, you say, are you figuring out how to model? Are you doing bodyguarding, man? Why are you doing like this crazy thing? And you know, today 70% of Amazon's revenue is from AWS. And so there's definitely an evolution in even like what we think of now as standard. It is cloud. And people are very unclear what this cloud is, why it should exist, why it would be big. And so we are in a similar scenario as we kind of decode how big this can be. Because if you look at crypto today you see maybe two main theses. One thesis is the big chain thesis or is Ethereum going to be the center or is some new chain like Solana or maybe like a Solana competitor like Sui going to be the, the center of action? So that's the big chain thesis in our view. And then you also have the app token or app chain thesis. Is it like the AAVE or hyperliquid or is it the uni? Which of these is going to be like the big application? So it's a very application centric thesis. We think we're building to the third thesis for crypto, which is the cloud thesis of crypto. The idea being that you have this one place in which the scale of computation that you can do is not limited by one computer. It's infinitely scales, just like a cloud can scale. You can have hundreds of thousands of computers and data center grade computation that can be brought back into crypto. So that's the vision and the pivots we've had to make were first we build eigenlayer. To build eigenlayer is a very Complex multi sided market. You have stakers who bring in the stake, you have operators who bring in the computational resources, you have developers bring in building AVSs and bootstrapping this economy is a very, very difficult problem because and very happy to report that we are kind of like nailed this multi sided market. Right?
- [18:42]
Podcast Host
You guys stuck landing, you guys got like $4 billion worth of Ethereum or something already locked up in the system. I think I recently saw it's 20 plus billion.
- [18:53]
Sriram Kannan
Yeah.
- [18:53]
Podcast Host
Oh, sorry, 4 million Ethereum.
- [18:55]
Sriram Kannan
4 million ETH. That's correct, yeah. So the scale of like this platform to bootstrap it is really hard. And one of the ways we helped bootstrapping is by saying, oh, we are building the first service ourselves and that was Eigen da. And we chose that because we saw the Ethereum roll up economics and like, you know, one of the big constraints is the data throughput. Can we remove the data throughput constraints? Super happy to report like eigen da mainnet v2 went live like maybe a few weeks back and the throughput that it can carry is 100 megabytes per second, which is 1000 times what Ethereum can do on dollar taps. So you can fill the fit in 1000 Ethereum during two.
- [19:42]
Podcast Host
You built like a toll road on top of Ethereum.
- [19:45]
Sriram Kannan
Yeah, exactly. So you can just use, you build an Ethereum rollup, but you can now use all the much higher throughput that Eigand brings.
- [19:54]
Podcast Host
Man. So it sounds similar but very different to just like your layer two. Right. Like you know, people know about optimism and arbitrum, you know, base is another big one. But when, when, when I hear this, it's a layer two plus. Can you kind of tell me where you situate between Ethereum and these layer twos?
- [20:15]
Sriram Kannan
Yeah, so we are neither competitive to Ethereum nor to the layer two. So it's a kind of very unique thing.
- [20:22]
Podcast Host
Is it middleware between all of it?
- [20:24]
Sriram Kannan
Yeah, it is the set of networks and services needed to actually build anything in crypto. Like the simplest example of what you need Eigen layer for is bridges. Right. So you want to move data from one chain to another chain. Somebody should run a decentralized, verifiable network that makes sure that the data that you're getting from the other chain is correct. Because I'm going to release a bunch of money here based on you locking up money in another chain. Right. So that's an example which is simple, immediate, easy to understand. But there's all kinds of networks and services that need to be verifiable like an RPC where you send a request and then you know, like what, you know, send a transaction to Ethereum or receive information back from Ethereum. You know, Infura is the leading RPC network. Infura is building on top of Eigen, this thing called a decentralized infrastructure network. Everybody used to come in, like the Bitcoiners love complaining about it. They say, oh, Ethereum is centralized because Infura is centralized. But now that is running as a decentralized verifiable service. A rollup writes data to Ethereum, right? So an arbitrarium optimism. These kind of rollups write data to Ethereum. But Ethereum's throughput is constrained like the data that you can write into an Ethereum block. It's called blobs, right, where you just write data which is unprocessed, that has a limited throughput 100 kilobytes per second. And so what we do is we say, oh, write data to Eigen da, which is staked and secured by Ethereum eth stake and Eigenstake and it can actually validate your data availability. And so all these complex blocks that need to come together to build in the crypto ecosystem and these gaps were all externalized and said oh, you know, somebody else is going to take care of it. And what I can layer does is you can build anything from a chain to a roll up to any other service that is required in the middle, all of them on Eigen.
- [22:23]
Podcast Host
And one of the drawbacks I've heard of just like a high barrier to entry of becoming a blockchain developer is like having to learn Rust to do Solana and then solidity to do Ethereum and then whatever Bitcoins made. And it's like you, you have to learn all these new languages and syntax in order to like, you know, make all these different applications. And then they don't talk to each other. Does, does Eigen layer kind of solve for some of that developer tooling? And you know, if, if I just don't know how to write one language, could I just kind of come to Eigen layer and be an effective developer?
- [23:00]
Sriram Kannan
Yes. So this is why we built our next primitive we call Eigen compute. Eigen compute solving two problems. One is the level of expressivity in blockchain today is limited. Like you can't write, like you said, in whatever programming language you want. So that's a limitation. There are things you simply cannot do. Like for example, you cannot build an AI agent that lives on top of A blockchain so you can build an AI agent which is centralized and you run in your home and then it talks to a blockchain that you can do, just like you can write an AI agent that talks to your bank or your other Facebook or something like it's the same. But a smart contract is powerful not because you run it in your home. A smart contract is powerful because it runs on the Ethereum network and it's verifiable and correct and unstoppable.
- [23:56]
Podcast Host
It runs forever and it runs on everybody's computer.
- [23:59]
Sriram Kannan
It runs on everybody's computer and everybody can be assured that it's running correctly. And because people are assured that these things run correctly, somebody would put $20 billion on like the eigenlayer contracts. Because I'm not running it, nobody's running it. The Ethereum network is running it and making sure that it's correct all the time. And that power doesn't exist. For if you want to program outside the blockchain's constraints, you lose that, you don't get that power. So you're now running a completely centralized, opaque, trust me, bro, service. And this is like. And because that's unacceptable for mission critical applications, nobody even considers that an option. So part of what we're doing with Eigen Compute is say, hey, here's the thing that can run decentralized, verifiable and bring the result back to any chain. So you can trigger a computation. You can write in any programming language exactly as you asked, right? And then ship it to eigencompute. Eigencompute runs the thing, brings the result back, promised with a certain amount of stake that this is actually correct, and then brings the result on chain and trigger and take actions on chain. So this requires a new model of programming, a much easier model of programming on chain where only the token movements need to be written in the contract. All the other things can be returned in like all the application logic other than the token movement logic. Everything else can be written in IM Compute. That makes it relatively universal. That makes it very easy to write programs which are much more expressive. You can just take an existing, like you want to build an on chain Twitter. You may fork like the Twitter open source code and then like actually build your new Twitter on top of it. So you can do some very powerful things. With Eigen Compute. The biggest category of things we are excited about is AI and agents, because that's a thing you simply cannot do anywhere today. So it doesn't matter how hard you try, you're not going to be able to write. Even if you took up the entire Solana or Ethereum throughboard, you can hardly write like a couple of agents. So it's not even expressive. It's, you know, because you don't have GPUs, you don't choose different languages. It's just a mess.
- [26:14]
Podcast Host
Yeah, interesting. And so something like, like, and not to like, you know, call out people, but I think the two largest AI agent things are kind of virtual's protocol and Eliza os and these are like what they call frameworks. So you're saying that those aren't running on the blockchain, but they're running on some kind of centralized server. Okay, yeah.
- [26:39]
Sriram Kannan
And so our hope is both of them and others will all upgrade to our kind of verifiable technology and use it. Because what they've done is build a lot of the other things needed to make it possible. Right. So how does an agent communicate to a blockchain and all these. There's lots of things going on in this and they built a lot of those things. But the agent itself is running on some central unverifiable computer. And this shows up in. If you look at like trading agents and so on, and look at what is the TVL on all of them, it's not much. People are not going to trust billions of dollars with these agents yet. But once you solve this problem and an AI agent runs exactly like a smart contract runs, I mean I could.
- [27:27]
Podcast Host
Totally see then the big banks actually, you know, using something like this to have AI agents. And it's like, you know, all of these, you know, no cogs in the wheels of back office things that are, you know, just data entry or you know, manual processes that are the same over and over that, you know, humans are doing. The AI agents, if they're verifiable and like you see, you know, JP Morgan, all these people starting to roll out stablecoins and joint sort of projects. Like they'll need a service like this.
- [27:54]
Sriram Kannan
Absolutely.
- [27:56]
Podcast Host
I'm curious, do you guys have like. I know you, you know, it's still in early stages, but are you making directed efforts at like commercializing this or are you really focused on like just niche developers?
- [28:08]
Sriram Kannan
No, totally. We absolutely want working a lot on commercializing this.
- [28:13]
Podcast Host
Nice.
- [28:16]
Sriram Kannan
In terms of where we are. Eigen layer is like, you know, fully on. On mainnet with all the features. Eigen da is on mainnet with all the features. Compute is not at on mainnet. Okay, that's coming up. But this is what unlocks this whole era of verifiable agents and we are hoping to have some version of it this year on Mainnet. And so once that is there, the obvious big thing to do is to actually get the JP Morgans of the world excited.
- [28:45]
Podcast Host
Amazing. No, I'm super excited. But I want to go back to what we talked about. This $20 billion of total value locked, that Eigen layer and the Eigen cloud has, is securing. You know it's funny because you know, if you think like aave, right, like AAVE people, you know, they deposit their I think $70 billion of deposits and they're able to earn a yield and it's kind of this two way borrow lend marketplace they're facilitating. But Eigen layer is not like this hard and fast defi like system. Like of course it could enable other defi applications to be used on top of it. But what is that TVL doing? How is it securing the network and what's the purpose of that chunk of change and is it going to grow? Is it supposed to grow? Is it supposed to say fix? What's the deal with that?
- [29:33]
Sriram Kannan
Yeah, it's the. So what is happening in the Ethereum network? So just let's go back to the basics of staking, right? What's happening is people stake eth into the Ethereum network. Why are they staking eth? They're saying hey, I'm going to stake eth and run the Ethereum protocol correctly. And so if you ask like how much is staked into the Ethereum protocol, it's some 140, 50, whatever, billion, right? It's a lot of money that is staked into the Ethereum protocol, ensuring that the Ethereum protocol runs correctly and earning.
- [30:08]
Podcast Host
A yield for that and earning a yield.
- [30:11]
Sriram Kannan
It's coming from Ethereum inflation and they're earning a bunch of ethics coming from that. What the Eigenlayer protocol says is hey, when you're staking you not just promise that you run the Ethereum protocol correctly, but also all these other protocols correctly and you earn a fee for doing all of these correctly. And who are you earning a fees from? Right now the dominant source of yield is Eigen tokens. So people are earning Eigen tokens because they run this Eigen. Programmatic incentives are used to incentivize stakers.
- [30:45]
Podcast Host
And to bootstrap the network.
- [30:47]
Sriram Kannan
To bootstrap the network. But that is the kind of like where we are today is. And then you also earn yield from all these AVSs. Each of the AVS's pay some fee and you're on the same. So that's where the kind of like, that's why people have staked so much into this, is that they're earning this additional yield that is built on top. And one of the new features that went live is redistribution, which is a feature that we built into slashing. So the idea is when you stake right now in Ethereum, if you violate the Ethereum protocol, then you will lose your eth. Your eth is burnt, but eth is burnt, but it is not distributed to the harmed party. So it's just kind of like burnt. And you wonder, okay, you know, well, it seems like a waste instead of.
- [31:42]
Podcast Host
It'S like I sue this person because they wronged me, but I sue them and the government gets the money. It's like, well how's that?
- [31:47]
Sriram Kannan
Yeah, somebody else gives the money, somebody.
- [31:48]
Podcast Host
Else gets the money.
- [31:49]
Sriram Kannan
And this is a problem for Ethereum because Ethereum cannot identify who got harmed because of it. It's a protocol and it can't. But whereas in Eigenlayer you have this idea of these services and some service got harmed. So and the protocol knows its service got harmed and therefore it can distribute the money to the service. And so this is a feature in the Eigendale protocol called redistribution went live on mainnet. But what it does is, you know, for example, you can now use a bridge and you know the bridge, the stakers can promise that they will not violate how the bridge should work. And if it does get violated, you can slash them, take the money and give it to the harmed bridgers whoever was bridging funds and they got screwed, they can receive money. This becomes more like insurance than it is just like slashing and burning your money. Because now if I'm bridging and I know that if something goes wrong I'm going to get paid back. That's pretty cool. So that's a new thing that has gone live and now we have many developers interested in doing new things with it. But this feature also lets us expand beyond the initial surface area, which is Most of the AVs is built on Angular, where infrastructure services like data storage, bridges, oracles, AI networks, these kinds of things. 2 Now you can directly build defi protocols on Eigenlayer because you know, liquidation is now just slashing and redistribution. So you put up your eth and then you borrow USD and if you borrowed more USD than the value of your eth, you could just get slashed and your eth just gets paid out. So this is an unexpected generalization that we did not really build the protocol for but kind of got discovered by builders who are kind of like always figuring out what new thing to do.
- [33:55]
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- [35:32]
Podcast Host
Fantastic.
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- [35:47]
Podcast Host
ZipRecruiter.com zip yeah, it just organically developed. I mean these are living breathing networks with people with all different ideas and walks of life and expertise and this big melting pot. And it's really cool to see just different, honestly, mutations develop and that's how we've all developed. Just we're just a bunch of just different mutations. In fact, actually I, when I was doing a little bit of research on you, I think you used to be a genomics guy, right?
- [36:12]
Sriram Kannan
That's correct.
- [36:14]
Podcast Host
So here I'm talking about mutations of genes.
- [36:16]
Sriram Kannan
Absolutely, yeah.
- [36:17]
Podcast Host
Literally an expert. But no, I mean we, we, we could go down that rabbit hole. But I, I want to stay focused on, on everything going on with Eigen just because it's, it's just crazy. It's really cool and you guys have a lot going on. But I want to dive into this concept of restaking and just like some of the risks, the FUD that are, that is out there because man, there's so many uninformed takes out there of like restaking is going to cause the, the next bare market because it's rehypothecation and it's lending and just look at the charts, it looks exactly like 2008. And so there's like all these things. What, what is restaking? Can you dispel some of the fear FUD around rehypothecation or whatever might be happening?
- [36:57]
Sriram Kannan
Yeah, I think there is a misunderstanding of like what kinds of things restaking enables versus it's about. I think the first thing is understanding what is special about staking into a protocol like Ethereum versus putting your money into AAVE or some other financial protocol. When you stake into a protocol like Ethereum, what you are saying is you are basically saying that hey, this operator, my operator, you know, whether it's yourself or you find somebody trustworthy, my operator is going to run the Ethereum protocol correctly. As long as they do that, I'm not going to lose any money. Now what eigenlayer lets you do is to say, hey, I'm opting in not just into running eth, but also like running these other protocols. As long as my operator, which could be myself or somebody I find to delegate, they're running the operations correctly, I'm not going to lose any money.
- [37:56]
Podcast Host
Okay?
- [37:57]
Sriram Kannan
So it doesn't matter whether I opt into one or five or 10 or 20 services, I'm not going to lose any money. So there's no concept. The similar concept is a mistaken analogy here. It's not like you're using the same money in many ways or is getting double countered or none of that stuff. In fact, one of the core things we did, this is part of like our own evolution is the way eigenlayer protocol works. It has this concept called unique stake. Unique stake is, let's say 10 billion is 20 billion stakes on eigenlayer. Right? And you could say a portion, a portion of this to each. When I'm putting up $10 million of stake, I can say 1 million is slashable by the service, 500,000 is slashable by that service, 1,000 is slashable by this service, and so on. And so that the total is less than what you have put in. So there's no concept of rehypothecation and leverage. And so there's just a mistaken. I think the term restaking was like a viral meme and like it just sounds similar to rehypothecation.
- [39:00]
Podcast Host
Yeah, no, it's good. And people just, I mean they read one thing or they, they take an experience that they've read about or heard about and they just apply it onto anything. Even if it is like, if it doesn't makes sense. It's just kind of like a logical fallacy. So I appreciate you kind of walking us through that. I am curious how you guys are thinking about staking and liquid staking in light of some of the really positive recent comments from the sec. Were you guys kind of like celebrating? Did that kind of come to bear on your business or is this just like, hey, you know, we're, we're just down, heads down, grinding. We're not paying attention to anything that's going on in the regulatory front.
- [39:36]
Sriram Kannan
No, it's a big positive movement from where we were last year to like where we are this year. So I think we were significantly impacted in terms of like our ability to go get Wall street and other institutions engaged in the ecosystem and with the regulatory clarity of okay, what is the role of staking, what is the role of liquid staking? All these things. It helps us a lot. Not just us, but protocols built on top of us. Like ETHERFI is a liquid restaking protocol. Renzo Buffer. All these protocols built on top, they all benefit significantly from this thing, even though the specific regulatory thing was on staking, not on the general. We think of ourselves as generalized staking because we have much more optionality. But it's the same principle that applies.
- [40:30]
Podcast Host
Yeah, no, I love it. Now if we, if we kind of look into the future. I believe I read a quote from you that you've, you've kind of described this project as a 100 year project that is going to upgrade the human species. Which I think is an awesome claim. But what does the world look like in 20, what is that? 21, 25 if you know, if your vision comes true.
- [40:57]
Sriram Kannan
Yeah. So one of the things, you know, maybe I'll share an anecdote. You know, I was in the dinner with a US Congress congressperson and a representative and you know, going around the room with a bunch of crypto founders and asking, why are you in crypto? What are you trying to do? And all the answers you hear are like, hey, I know the state can inflate tokens. Fiat money is not stable. So we want like bitcoin financial access throughout the world, make stable coins usable all over global payments. This is the kind of like everyone else. Yeah.
- [41:39]
Podcast Host
And anybody who listens kind of to the Crypto 101 podcast, it's like those are the same, sort of very common through lines of every guest.
- [41:46]
Sriram Kannan
And then it came to me and then they said like, why are you here? I said, crypto is the greatest upgrade to human civilization since the Constitution. Crypto is the greatest upgrade to human civilization since the constitution.
- [41:58]
Podcast Host
That'll get their ears up.
- [42:00]
Sriram Kannan
Everybody's like, stopped. And they're like, who's this lunatic? And the reason I say that, and I believe it deeply, is if you look at what a civilization is, is just a system of commitments. What is the US Constitution? It's like the Bill of Rights. It's the set of commitments that the system.
- [42:24]
Podcast Host
It's a coordination.
- [42:25]
Sriram Kannan
It's coordination. Yeah, absolutely. So technology for coordination. It's a social system for coordination. And an essential ingredient in the coordination system is who enforces this, conditions of this coordination? Is it a king? Is it a committee? Is it a majority? Even if it's a majority, like, you know, there's a tyranny of the majority. The majority may say stuff that the minority doesn't like. And is it self enforcing? We think of self enforcing coordination as the highest grade, the gold standard of coordination. And that's what crypto lets you build. Right, because once you enter the conditions contracts into code, then you can bind yourself into commitments that are verifiable. Self enforcing, automated, global, instantaneous. It's all the words that kind of like fit with crypto. And so we think it's not just, oh, it's going to make like international payments, 1% lower cost. It's actually upgrading the foundational rails of humanity. So I say this and the congressman stops me and says, okay, this is all great. Tell me in 20 years you gave me more time. You gave me only Chinese. In 20 years, what's going to happen to my constituency? Is the Bronx going to be different brigads? And my answer is you can think of the big themes, the big through lines of what are the biggest problems in society? And you can say the most immediate, the instant that we are in is the coming of age of AI and agents. And if these agents have to be More than toys. They need trust. They need to be, we need to be able to trust them that they did what you said they do. Then you can let them free and they can just do it. Because they're verifiable, they're held to account, they're insured. Like all these properties, you can track.
- [44:28]
Podcast Host
Their actions, you can track their actions.
- [44:30]
Sriram Kannan
You know why they did these actions, all the data transcripts on IVA or whatever. So these kinds of things, things enable you to trust this new kind of concept of AI agents. Eric Schmidt, the former Google CEO, when asked recently, like, hey, can you tell me about some of the issues that are coming up in the agent era? He says, imagine you let your kids talk to these agents. You maybe tried playing with that. You're like, oh, this sounds really good, let me give my kid this. And in six months, three months, they do an upgrade. And then it's a different, it gets you more addicted. It's trying to sell. You like to go and buy stuff. I don't know what all it's doing, right. And so he raises this issue and says this is pretty serious. Like how do we actually ensure guardrails for these agents that actually ensure that you can't upgrade it willinely, you can't, you know, what are the contours of constraints that it has to obey? And so things like what we're building with IGN cloud making things agents verifiable is a big unlock in that space. Equally interesting, it also enables, it's a guardrail on top of agents, but it also creates new things for agents. Like this is another anecdote is the Microsoft CEO Satya, who was on a podcast and the host asks him a crazy question. It's in the Dwarkesh podcast and Dwarkesh says, do you think AI is a new kind of species? Okay. And Sathya smiles and says, yeah, I know even some people in our team talk about these things, but I don't think it's true. It's because an AI cannot own property, cannot enter into contracts, cannot take liabilities, cannot start companies. Only humans and human formed companies can do these things. And our legal infrastructure is not there to support an AI or an agent to actually do any of these things. And think of Ethereum and smart contracts, A smart contract is just a program owning a piece of property. The Eigenlayer program owns $20 billion of property. I don't own it. It's the program that owns it.
- [46:42]
Podcast Host
Right?
- [46:42]
Sriram Kannan
And so that's an insane construction. And that can actually, once you can Take an AI agent and make it like a smart contract. Suddenly it can have its own money, it can do its own things, it can enter into contracts, it can take liabilities, it can, it can have civil, criminal, digital law that it subscribes to. All kinds of crazy things can happen. And this is one of the things we absolutely want to enable on Eigen. And so we are building all the kind of foundational blocks to make it possible to have digital law goal for us live on and constrain these agents.
- [47:15]
Podcast Host
It's going to be incredible, an incredible future and I'm glad you're building it. And if we kind of take a look at the entire landscape, we have Ethereum, which you guys are very focused on, which Wall street is now focused on, but they've got a roadmap that changes, you know, often. And so are you like hand in hand with the Ethereum foundation, you know, following their roadmap? Are there changes that you're expecting with the Ethereum roadmap that might come to bear on Eigen layers? And, and maybe we could just think about like, you know, what's upcoming on that sort of roadmap.
- [47:54]
Sriram Kannan
Yeah, you know, I think we are very excited about like what's going on in the Ethereum ecosystem and the turn that the EF and the ecosystem has taken over the last six months.
- [48:07]
Podcast Host
Yeah, they've really turned, they've turned positive, Very absolutely positive.
- [48:11]
Sriram Kannan
Like I hear words like founder success and like these kinds of concepts which are very core, like business development type concepts in the Ethereum Foundation. It was amazing. Whereas earlier they were like very strongly of the position. We're just a protocol, you do your thing, we don't need to talk to you.
- [48:29]
Podcast Host
Just a bunch of programmers and math guys.
- [48:32]
Sriram Kannan
That is what it was. And the turn is really, really good. So huge credit to Thomas and the team at EF for turning this around. Also the emergence of things like Etherealise, which are, you know, the Wall street arm that is actually going. And they just did their funding announcement today, but they are actually out there trying to go to Wall street, educate them. And I think this is already bearing fruit, like just big time, eight months of work. Right. And because other organizations had these kind of like. Of course, if you're like more like a company, you will have an arm that'll go around and talk to Wall street or Silk, Malia or whatever. So. But Ethereum, oh, we're just a protocol. Like it's just a bunch of tree huggers or whatever. But, you know, now you just do.
- [49:19]
Podcast Host
Set theory on the whiteboards. That's all we do.
- [49:21]
Sriram Kannan
Yeah, exactly. That's why I joined this is because it felt like people like me. But we ourselves talk a lot about Ethereum, but we have had a similar micro journey ourselves from we have purists just worry about foundations, we don't need to worry about neutrality. These are the most important things. 2 oh, we have to invest in our ecosystem. We have to make sure our projects, protocols building on top grow and create value for our users, for the crypto community. What do we need to do to grow the adoption of crypto 10x100x? Like how do we bring new developers into the whole crypto ecosystem? So we are starting to kind of lead on some of those things. For example, we have, I would say the best student program in crypto. Like we did this big thing called Eigen Games. We brought in developers from all the top 50 US universities. We are the main sponsor for Hack MIT, which is the MIT Hackathon, Stanford like, all because we want to get the smartest people know what is crypto, not just be colored by oh, is this some scam or some meme coin great and shitter. So we are definitely trying that in terms of keeping up with Ethereum roadmap. We are excited that Ethereum is being more aggressive in pushing updates faster. And I know if you are other protocols building on top, you may have a different kind of relationship. Our goal is to, like I said, we are already 1000x. Ethereum's throughput and we probably want to be a millionx soon. So our goal is to make, like you said, like compete with cloud, make things verifiable, make society verifiable, make every agent verifiable. So the scope of where we need to go and where tech needs to be is like much, much farther. So we are much more aggressive than Ethereum, than Solana, than any other protocol. Because in terms of what is needed, what tech is needed to actually unleash this new set of applications. So very excited about some of our own things that are coming up. And also Ethereum accelerating is just uniformly better for us. But also even though we are centered on Ethereum, our protocol is built on top of Ethereum. The utility of eigenlayer, Eigencloud is universal, right? So you can use Eigencloud on Solana, on other chains. We announced this feature called multi chain which basically takes Ethereum avss and brings the results into every chain. So our utility is universal and that.
- [51:59]
Podcast Host
Is exactly what the space needs. And you know we're building the infrastructure right now, the groundwork and eventually I think, you know, within six months to 18 months time there's going to be, you know, thousands and thousands of these AVSs that are user facing, that are, that have great, well designed front ends that I could go on my mobile phone and just download the app and I don't even need to know that it's secured by avs. I don't want to know.
- [52:26]
Sriram Kannan
That's a really, really good point. In fact, I would say there are already examples like this. There's an app called Earnify which was a top paid finance app on the App Store. And Earnify is built on top of Opacity, which is an Eigen layer avs. What it lets you do is it lets you if you're working at Cheesecake Factory or Starbucks and you want to have payroll loans, right? So you want to say, hey, I'm going to earn $4,000 at the end of this month, but I want to borrow it right now. You can actually prove to an eigen layer AVS that hey, I've actually logged in for 20 days this month and I'm definitely going to get my at least $2,500 of my salary and I can now take a loan for $2,000 on.
- [53:16]
Podcast Host
Holy smokes.
- [53:17]
Sriram Kannan
You wouldn't even know that it has anything to do with crypto. You go to the app, you download it, it's just $1. Don't but know the app and then you can actually use it. You wouldn't know it has anything to do with crypto.
- [53:27]
Podcast Host
So yeah, I'm so excited for like that sort of. I kind of sometimes refer to it as like the Netflix ization of crypto because you know, when Netflix was around like nobody had to know about servers and you know, websockets or anything. They just want to watch a movie anywhere in the world with a click of a button and have that experience and that's what people want with their money. I just want to be able to utilize my value anywhere in the world with the click of a button. I don't care how it's done. I just wanted to be safe and secure and, you know, credible and you guys are really enabling that. So I am so excited. And Sriram, where can people follow along with your journey? I know you're pretty active on X. You write, you know, articles. Where do you kind of want to meet our audience in the wild?
- [54:10]
Sriram Kannan
Absolutely. I think following me on my X Twitter is the easiest one. It's Hriramkannon My name's Straight and Iginlayer. You know these two are the best places to follow. I'm gonna be starting some blog and other return material but I'll post them on. Thanks.
- [54:28]
Podcast Host
Awesome. Well everybody who's at home watching, I hope you enjoyed. You could find all the show notes or all the information that that Sriram just gave you about where you can follow him in the show notes below. So please check it out. And Sriram, we really really appreciate you coming onto the Crypto 101 podcast to do a tell all on Eigen Cloud. We hope to have you back on again soon when there's some more big updates and some things that you'd like to talk about. But until next time, take care and thanks for being such a great builder in the space.
- [54:58]
Sriram Kannan
Amazing. Thank you so much. Really excited to do this on the Crypto on own podcast. Peace.
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Up, get myself up and ready and go to therapy or whatever. Like even like opening the laptop to.
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