Loading summary
Transcript75 lines
- [00:00]
Podcast Host (Ad Read)
If you've been sitting on a business idea, Shopify is the place where you can actually make it real. The thing I like about Shopify is it takes the scary part out of starting. You're not just sitting there trying to figure out a website, payments, checkout, inventory, all these little things that stop people before they even launch. When I think about building a storefront, the biggest thing is friction. You want someone to land on your page, like what you're selling, and be able to buy without getting stuck. That's where Shopify is huge. Shopify checkout is built to help more customers finish their purchase. And when they come back, they're. Their details are already saved. One tap and they're done. The cool part is Shopify powers millions of businesses worldwide, from huge brands that you know, like Mattel and Gymshark to small businesses just getting started. So whether you're building the next big brand or launching your first product, the infrastructure is already there. Once that part is handled, you can focus on the real work. Building the brand, getting attention, and bringing people to your storefront so the business can grow. That moment when someone actually buys, that's when the idea becomes real. With Shopify, nothing stands between your idea and a real business. So go make it one. Start your free trial today at shopify.com crypto101 that's a free trial at shopify.com crypto101 One thing I love about summer is everything's just getting easier. You're outside more, you're taking vacations, and it's the time where you're really not trying to overthink every outfit. You just want stuff that feels good, works, and, and sometimes it's a little cool. That's why I keep coming back to Quint's. They make those pieces that you end up just wearing all season. For me, it's the 100% European linen shirt and the matching linen pants that has become one of my go to beach vacation outfits. I've gotten so many compliments on it. It's breathable, it's comfortable, it looks put together, but it still feels relaxed. You can literally wear this thing going to the beach all day, walking by the water for a sunset, and then head straight to dinner later feeling completely comfortable and looking fashionable. And that's really what Quince does. Well, their 100% European linen pants and shirts are easy to wear, perfect for summer, and the price is unbelievable. And they start at literally just $34. They also have soft tees you can wear all day, plus lightweight cotton Sweaters that are perfect for when the temperature drops a little at night. Everything at quints is priced 50 to 80% less than similar brands. They work directly with ethical factories and cut out the middleman. So you're paying for exceptional quality, not the brand markup. And it's not just clothing. Quince has become one of those brands people trust for home travel and everyday essentials, too. You've heard me talk about their website before. It's super fun to scroll around. They literally have everything. So make your summer wardrobe easier. Go to quince.com crypto101 for free shipping on your order and 365 day returns. Now available in Canada too. That's qu? N c e.comCrypto101 for free shipping and 365 day returns. Quints.comCrypto101.
- [02:59]
Bryce (Co-host)
All right, everybody, welcome back to another episode of the Crypto 101 podcast. I'm your co host, Bryce, as always, joined by my good buddy Brendan. How's it going, my man?
- [03:09]
Brendan (Co-host)
It's fantastic. Tell you what, I'm stoked for this podcast. I know the listeners are going to like this one too, because we get lots of questions.
- [03:17]
Bryce (Co-host)
Yes, big time. And I know you are a very, very active trader on Aerodrome, which is the largest decentralized exchange on base. Incredible about what's going on. I've certainly tinkered with Aerodrome, but I know you're setting up liquidity pools and doing insane strategies, and so who better to bring on than essentially the founder of Dromos Labs, the CEO of Dromos Lags Labs, Alex Cutler, who's responsible for developing Aerodrome and Velodrome and so many incredible technologies here in Crypto. Alex, welcome to the show.
- [03:51]
Alex Cutler (Founder and CEO of Dromos Labs)
Hey, guys, thanks so much for having me. And glad to hear we've got some active users on the pod today.
- [03:59]
Bryce (Co-host)
Oh, indeed, indeed. Look, Bass has been, you know, they blew onto the scene in a big way a couple years back and, you know, Aerodrome has been the hub for liquidity there. So we want to kind of just take one quick step back. We don't need to spend the whole episode on it, but just a few minutes, just getting introduced to you, you know, who are you? How'd you kind of come into building Dromos Labs? And let's kind of color this with the. The transition from Velo Drome to Aerodrome, why you chose Bass and. And kind of give us that lay of the land before we dive in.
- [04:37]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, yeah. Happy to start with a little bit of background. So I think, like Many builders in crypto and defi. Since we're out here on the frontier, it's been anything other than a straight line, right? So I started my career initially working in politics and campaigns at both the state and federal level. Shifted from that into technology. So I got to spend about six years working for Apple, which was an extraordinary privilege. Spent another six years working in kind of an ideo style boutique consultancy working across a variety of industries, but still primarily focused on the tech side. So got exposure of course to meta to Microsoft, deeper into Apple and things like that. And I think the beginning of my journey on Chain was really the pandemic, right? And we were all, of course, locked inside our homes, not much to do. And so I started really accidentally because I built a gaming PC. You know, I hadn't done something like that since I was a teenager, but you know, when locked in a house, why not build a PC and play some video games? And so once I did that, I had had a friend in my ear for a long time about crypto and defi. I would not say it made a ton of sense to me. And I think we all kind of remember that moment when these things would, you know, you'd meet that first evangelist, right? You'd tell you about the amazing things happening, whether it's Bitcoin or defi and what this technology unlocks, but didn't really hear it until I was like. He was like, well, you should just use that gaming PC to start mining, right? And so I did, I started mining, you know, when it was, you know, not being used to play cyberpunk and rocket league and other things. And that was an extraordinary moment, right, because it felt like you were creating value from nothing, you know, certainly, you know, the energy and things like that. But you, that was also a moment, kind of rip roaring bull market where everything you own would go up 10%, 20% and up from there. So that was pretty incredible. But you call it kind of the gateway, right? And then it was like, well, what is the purpose of these tokens? What do they do? And then that's when I, in 2021, kind of defi summer, brought those tokens on chain, right? And that's when I started to use those tokens to get involved in things. So exactly what it sounds like Reddit has been doing on Airdrome, right? I started providing liquidity, right? I go out and I procure curve tokens, right, or convex tokens. I lock those tokens, I participate in those protocols, and then those protocols reward me permissionlessly, right? For my contribution of value to that overall system.
- [07:50]
Bryce (Co-host)
Nice little passive income stream.
- [07:52]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, exactly. As soon as you feel that, right, you didn't have to ask anyone's permission. There's no centralized party kind of telling you what you're worth or not worth. You're just adding value and then getting value out proportional to your contribution. That was like a light bulb going off sort of moment for me. And I knew all I wanted to do was to go as deep into this world of Defi as possible and quit my job. Not really with any plan. I certainly would have had no idea that I was gonna end up founding a company or building a protocol. But just in going deep in, I met a handful of other guys in a discord. We are all a part of a DAO that was a sub dao of a Dex called Solidly on Phantom. And we saw an opportunity to take those foundations that the founder of that Andre had created to launch a Dex, sort of improving on that model in Velodrome on Optimism. Betting pretty hard on. We thought the next big area of growth in Defi was going to be Ethereum L2. So we wanted to build on Optimism then, which was one of the top Ethel 2s. And Velodrome quickly became the largest Dex on Optimism, which was a huge deal because we were five unknowns who didn't raise any money and suddenly were taken on billion dollar incumbents and certainly in our own little neighborhood in Optimism. But then that meant we were well positioned. When we saw Coinbase was going to come on chain, they were going to build an Ethel too. You know, they needed the type of liquidity infrastructure that our product provided. And so, yeah, we put a ton of effort into deploying aerodrome as sort of a sister protocol on base. And of course, I think the rest is history. You know, base has become one of the single most successful chains in history. It took about a year for them to become the top eth L2 in the world. And we have worked very closely with them in power trading and liquidity infrastructure on base. And so that has meant that, you know, Airdrome, depending on the day, is the second or third largest decentralized exchange anywhere on chain. So it's been a pretty incredible journey.
- [10:19]
Brendan (Co-host)
Yeah, I want to dive into that a little bit more because there, especially in the heat of the last bull market, there were so many different options to choose from. And I'm not just talking about L2s, right? There's, there's, there's a lot of really hot L2s in the last bull market. There's. There were different ones that were launching their tokens in that time period, but also just a million L1s. Huh?
- [10:41]
Bryce (Co-host)
Oh, I guess I cut you off. I was going to say a bunch of L1s like Solana Sei Sui.
- [10:46]
Brendan (Co-host)
Exactly. And it made it so I think for developers, they had ample opportunities and options to say, oh, I could choose this or this or this or that. And you could have had your hands on anything and everything. You could have chosen any L1, any L2, but you still decided to say, hey, we've seen success with Velodrum. We're going to choose between all the options we have. We're going to choose base. Can you narrow us in a little bit more about maybe why you didn't choose other locations or specifically why you decided to double down on base?
- [11:19]
Podcast Host (Ad Read)
You know what slows teams down more than anything? It's not always headcount, budget, or even the tools themselves. It's when the way work gets done lives in someone's head and never actually gets documented. Then someone new joins a new platform, gets rolled out, or a teammate leaves and suddenly everyone's doing the same process in a different way. That's exactly the problem today's sponsor, Scribe, was built to solve. Scribe is a workflow AI platform that captures any workflow in real time and turns it into a step by step documentation. Automatically. You just turn on the extension, do the process like you normally would, and Scribe builds the guide as you go, capturing every click, step and screenshot. And it's already trusted by over 80,000 enterprises, including nearly half of the Fortune 500. With our team being remote, I have definitely had moments where I've had to explain the same setup or process more than once to a colleague, and it always feels like something that should have been documented the first time. With Scribe, what could take hours of writing, screenshots and cleanup can be ready to share in under a minute. Scribe also automatically redacts sensitive information like names, email, emails and account numbers from screenshots. Admins can enforce that across the team so nothing slips through the cracks. Plus, anyone following the process can get real time on screen guidance showing exactly where to click inside the actual tool. And Scribe doesn't just document workflows, it uses AI to suggest ways to improve them, helping you spot redundant steps, bottlenecks and places to simplify to book a personalized enterprise demo this visit Scribe how/Crypto 101 that's S C R I B E dot how slashCrypto 101 are you curious about the economic forces shaping your daily life? The Planet Money podcast from NPR makes sense of the economy in ways you'll actually understand and enjoy. Guys, you love listening to the rundowns. I get some of that information from this NPR Planet Money podcast. Especially recently with the war going on the straight of Hormuzzi, you're just kind of getting those updates as they come from these guys. They put out a ton of awesome content. It's a different perspective from crypto101, but still a great listen. So go over there and check out the Planet Money podcast. If stuff like current events and the finance world interest you, each story on Planet Money starts with a question. Recent episodes ask why Pokemon cards are growing faster than your retirement count. Questions about the war. Just like we talked about recently a lot on our program. For the job market, to the stock market, to prices at the supermarket. Planet Money explains it all. Planet Money is a different kind of world where the complex economy somehow makes sense, where human stories supersede abstract theories so you can learn, laugh and be entertained. It's econ, but just down to earth. The hosts go to unusual lengths to explain the economy. They've published their own book to track the global supply chain. They've shot a satellite into space to understand the economics of the private space industry. They've gone inside a live book auction to show how ideas get to market. It's the kind of show where you learn something, probably laugh and walk away seeing the world a little differently. And I think if you like crypto101, you'll enjoy Planet Money. So maybe check that out. Follow NPR's Planet Money podcast and understand how money shapes the world.
- [14:36]
Sponsor Voice (Eureka Ergonomic Ad)
This episode sponsored by Eureka Ergonomic here's something nobody talks about when designing a home office. Why is it so easy to find a beautiful sofa but so hard to find a desk chair that doesn't look like it came from a corporate office? Most office chairs look like they belong in a sad cubicle, not in a thoughtfully designed home. They're bulky, overly technical, and can completely throw off the look of the room. That's why I like Eureka Ergonomic. Their leather office chairs reimagine what executive seating can look like with a modern furniture inspired design, clean silhouettes, premium leather finishes, and a refined aesthetic that actually elevates the room. So instead of feeling like a random office chair you dragged into your home, it feels like a piece that belongs with the rest of your furniture. And Eureka Ergonomic. Finally, an office chair that works hard and looks like it belongs. Visit eurekaergonomic.com now to find a chair that finally fits your space and your workday. That's Eureka. E U R E K A Ergonomic E R G O N O M I C COM Yeah, it's a great question.
- [15:37]
Alex Cutler (Founder and CEO of Dromos Labs)
I mean, that really starts when we were just beginning to imagine Velodrome. Right, Right. So we are a subdao on Phantom, which is, of course, an alt L1 of solid.
- [15:51]
Bryce (Co-host)
Now it's called Sonic.
- [15:53]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, it became Sonic.
- [15:54]
Bryce (Co-host)
Yes.
- [15:55]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah. Right. And so we knew that we had some interest in technology, and we, you know, didn't sort of like the prospects of Solidly or Phantom at that point. But there was still a point in which all of the energy was around alt L1s. And so optimism and arbitrum being the two, like, leading eth L2s at that time. Like, everybody was saying, you know, if you're going to take this technology, you're going to deploy it somewhere, so you got to go to Avalanche, right? You got to go stay on Phantom. You got to look for that next big alto one to go deploy on. And what we've tried to do from the very beginning, right? So constraints are really helpful. So because we didn't raise any money, because we were extremely resource constrained, because we were just a handful of folks in the discord, we had a place of bet, right? We couldn't just go anywhere and everywhere. We place a bet. And our bet was that even if the cycle collapsed, which famously, it did, in the day Velodrome went live, it was straight into the Luna collapse. So this was like the beginning of six months of some of the worst pain. Pain we've ever felt in the industry. But we wanted to bet on a sector of the on chain economy that we thought had the potential to grow even as the overall pie was shrinking, and that when the pie started to grow again, that the growth would happen in a disproportionate way in that area. So our bet was on Ethel 2s. We thought it combined a lot of what made these Alt L1 successful and cheap and fast and, you know, a native token to help incentivize, you know, growth and activity with the benefits and network effects and security and all that sort of stuff of Ethereum. So our first bet was optimism, right, As a bet on that thesis. And we were validated, right, because almost every one of those alt L1s that people were saying you had to go deploy here, look at this tiny corner. Why would you deploy to a dead chain? Well, those are Mainly dead chains now. Right. And all of that sort of stuff went away, and we were expecting that bubble to pop in many ways. And so after that point, exactly to your question here, we had a lot of options of other places we could go. And frankly, by that point, because we had achieved a stunning degree of success, given our humble origins, we had a lot of financial incentives. People would come to us and offer us checks to come deploy on their chains, and so we would continuously decline those offers. And I think I've seen many, many smart builders and projects just feel like they have to chase every offer. Right. Every time there's cash in hand, you got to go for it, and that divides your attention and it misaligns incentives and all that sort of stuff. So we stayed focused on optimism and Velodrome started to expand across the optimism superchain. Right. Because there were all these other ones like INC and Kraken and Sodium and things like that emerging. But for Base, we were betting on, well, this is a Fortune 500. This is one of the most successful consumer crypto companies in the world, and they're going to come deploy an ETH L2. And so we think there is an opportunity, there is a strong likelihood that this will be one of the most successful chains in the world. Now, it's important to remember that that was not a popular opinion at that time. Just like we kind of went against the grain in betting on Ethel 2s in a moment when everyone was betting on alternate layer ones. When Coinbase announced Base, initially, most of crypto Twitter was saying, oh, this chain will never grow, right? This is going to be a Fed chain. They're not going to have a token. So there's not going to be incentives and things like that. But our bet was on the ability of Coinbase to vertically integrate their chain, be a distribution channel for that chain, for the builders on that. And of course, I think we were very much validated there because we don't see it happen very often in the space where within a year, every single chain, whether it was an Alt L1 or ETH L2, has been lapped by a new entry. And that is what ended up happening on Base. And Base on some days is doing more volume than Solana, it's doing more volume than Ethereum mainnet, and of course, the vast majority of that volume that is happening on Base is happening on Aerodrome. So that bet, once again, when there was nothing other than a thesis to support, it, paid substantial dividends. And I think it took a long time before some of the incumbent legacy exchanges, I think, leaned in to base, but by the time that they did, it was kind of too late, Right. We had established a powerful moat there and really across the optimism super chain as well.
- [21:24]
Brendan (Co-host)
You know, all of that got me thinking. You know, base is obviously, as you said, comes from Coinbase themselves, right? A really big popular exchange, especially for retail traders and investors. Recently there's been another one of those that has popped up at the time of recording this Robinhood chain just launched. And I'm curious, do you view that more as like a threat or is that more an opportunity for you to get plugged in somewhere else additionally?
- [21:54]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, I mean, I would frame it in two ways. One is it is fantastic for the on chain economy that more traditional businesses, right, are coming on chain in a variety of ways, right? So certainly it was a very big win for Coinbase to come deploy a chain. It's a huge win for Robinhood to do that. And because Robinhood I think is going to be pursuing a very similar strategy as Coinbase that is now a distribution channel for on chain products and builders to millions of paying Robinhood customers who would love to have, you know, access to some of the things that are happening on chain and might not otherwise. So I think it's great for the on chain economy. I also think it is great for Ethereum, right? And I am still a very much bullish on the project of Ethereum. And there was frankly an incredible bidding war, right, like both Robinhood and Coinbase would have had three options. One is they could have built their own proprietary chain, right, that would have been divorced from broader Ethereum or broader evm. And there could be good reasons for them to do that. But they could be Alt L ones, they could be their own thing or they could have built on like Solana. And I know Solana competed fiercely to win Robinhood's business. But in the end both of these companies chose to build on top of Ethereum, chose to build eth L2. So I also think Robinhood, like Coinbase, is a great bullish thing for the broader project of Ethereum because it does allow businesses to sort of build their own L2s, capture a portion of the value that they produce while still giving back to the core Ethereum project. And that sort of infinite scalability as more and more businesses, more and more institutions come on chain, I, I think is really critical and it's very different than What a monolithic alt L1, no matter how fast and performant it is, can provide because you can't kind of optimize it around a particular SO arrow. Our next big phase, which I'm sure we'll get into here eventually, is that we are launching the combined aerodrome and velodrome into a single exchange in aerosol and we are extending that exchange to Mainnet, Ethereum and to Circle's Ark. And I think our intention very much is to be the dominant on chain exchange of the broader evm. And so I think we will be very interested in capturing any pockets of activity on chain that we see. Right. And I think we have kind of our initial launch set locked in here. But yeah, any growth across EVM and trading is a fantastic thing for, for all of us, I think.
- [25:02]
Bryce (Co-host)
I love it. And that's super informative kind of towards this next question as well about like, I guess these eth L2s have kind of been contentious, if you will, in the Ethereum community just because again, this is just my outsiders looking in like Ethereum value is flat to negative over the course of the past like five years, sure it's gone up, sure it's gone down. And a lot of people are scapegoating ETH L2s and saying, well, that's where all the, like, they're siphoning off value, they're siphoning off fees. Now the burn isn't happening because people aren't even really transacting on Ethereum. And so I saw some discussion. I think it's just a proposal at this point, but where the Ethereum foundation, or maybe now it's Eth Labs. I'm kind of confused on what's going on there, but they are saying that they're going to renegotiate how much the L2s are going to pay the main chain. So how do you debug this for us here?
- [25:58]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, I think there's a few things going on here and I would approach it from the principle. First of all, will a overarching network of Ethereum do much better if there is the ability for traditional businesses to come on chain, still build on top of Ethereum versus building their own competitive chains or in going to something like Solana? Yes, that is absolutely a win for Ethereum and it is something that the L2 roadmap and sort of the L2 model allows them to do uniquely. And if you imagine a future, like Brian Armstrong has said, Coinbase's bet is that in the next five years, 10% of global GDP comes on chain. We're talking about many more bases, we're talking about many more Robinhood like chains and them operating at a scale, right, that is so much larger than they are today, such that there is a lot more value flowing back and that is much better than that value flowing elsewhere to other chains. So I think the issue with the L2 roadmap was that like, you know, I think Vitalik said this. We did not need 100 like VC backed copy paste generalized chains that just recreate the exact types of things that are happening on mainnet Ethereum, these chains need to have a reason to exist. I think Base and Robinhood are great examples of chains that have a reason to exist in the sense of they can serve as the bed at which these things are built and these companies can distribute. So I think Most of the L2 roadmap that's fine, there's a bunch of junk chains just like there are a bunch of junk L1s, but that can go away. We should continue to scale the L1 and then I do not know the correct balance in value back to the L1 or value back to eth versus value to be able to be captured. But the principle is right, that there should be a way for businesses to build on top of Ethereum, contribute something back that is hopefully proportional to what they gain and and allow the network to scale infinitely versus a more monolithic or a competitive blockchain sort of infrastructure.
- [28:36]
Bryce (Co-host)
And just one quick follow up, because on that people can't really build on the main chain because it's too slow and it will not support and the fees will get high if everybody's building on it. Is that kind of like the basic principle?
- [28:51]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, well, I mean if anybody was using eth mainnet back during DeFi summer, you could hundreds of dollars. Yeah. You could be making a swap and suddenly you're just not paying attention. And $250 of your thousand dollars went to a fee. Right. And that is not scalable to onboard the world. Right. Or onboard or even create new interesting applications and primitives. And so now it's very much clear, right? It's going to be a dual pronged strategy that the ETHO one already, like in the last year is becoming faster, cheaper, more performant and that is good. And there will be even more of that acceleration. And that means more activity can live, right. And settle on the Etho one and more of that economic activity and value will be captured by the token. But you do that in parallel with ensuring that you win robinhood, you win Coinbase, you bring BlackRock, you bring everybody on board via the L2s as well, because you'd much rather be capturing something from that versus that siphoning value out of your ecosystem somewhere else. You know, Ethereum gains nothing by anything that happens on Solana. And that could be an alternate universe where every single corporation is building their own thing. It's contributing absolutely nothing back.
- [30:25]
Brendan (Co-host)
I want to go back to that Brian Armstrong quote that you mentioned a little bit earlier because I've seen that float around. I've seen you mention it, but it's this idea that the goal is to bring 10% of global GDP on chain. And again I've seen you reference that before, but can you walk me through what has to be true for that to actually happen?
- [30:47]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, I mean I think a lot of the foundations are already there, right? You know, we've spent years and years, sometimes this is seen as like, I don't know, it's like presented as a bad thing, right? But it's actually, it's still directionally correct. We have been spending years and years building the infrastructure needed to provide a better foundation for the global financial system than the one that exists in the traditional world. Right? So that means chains had to get faster and more performant. That meant we needed to build software that was much more secure and immutable and tested with powerful Lindy effects and billions of dollars of capital secured. It means we needed to like even experiment around these economic models and token models and figure out what works and what doesn't work. So now most of the infrastructure is in a really good place to onboard much more. Right, and much more means capital certainly, but it also means users, transactions, activity and things like that. So much of that work has been done, it will continue to happen, but we're in a strong place. So that's one thing that needed to be done. But some of the other powerful catalysts here is like, well look what has there been to do on chain, right? There's a handful of assets that are interested, assets that have some form of utility or some sort of clear value proposition. The rest of what's been going on on chain basically as long as there's been defi is frankly shitcoins. It's garbage. It's tokens used as extraction vehicles. It's very, very rare. You can point to a token that could be assessed on a fundamentals basis and would appeal to an allocator in a traditional system. Right? And there is a case probably for a small network of things like meme coins, but you don't need that many. And we know most meme coins go to Zero very quickly. And they make a handful of people very rich and they make a lot of people very poor. And so with the Clarity act, right, which we're on the verge of, we are going to see, and we are already seeing the issuing of US equities on chain. And not kind of the wrapper versions or synthetic versions experimentation we've seen so far. But like what Coinbase announced, right? This is a tokenized equity in which things like dividends are available to you as a user of it, things like voting rights. And so that is a whole new asset class that could come on chain in size, could be traded faster and cheaper than via traditional venues, could unlock the power of composable defi and new financial primitives built around it. And then we're talking about things like global fx, right? Right now, today, like on base and on aerodrome, you can get a rate that is better exchanging US dollars to Euros than the best of the upstart financial tech companies like Wise offer you each day, right?
- [34:14]
Bryce (Co-host)
Oh, wow.
- [34:15]
Alex Cutler (Founder and CEO of Dromos Labs)
And so it's only a matter of time where more and more of this sort of payments processing or FX infrastructure comes on chain as well. And so I think about it in terms of a lot of this stuff is already coming true. Regulatory clarity is going to only accelerate the mix of asset classes that are going to be issued. I mean, it's going to be a gold rush. You already have Coinbase and Robinhood ready to issue stocks. You're going to see every major institution wanting to issue their own types of stable coins, more global stable coins. You'll even see government issued stable coins on chain. And then that is how you get there. Because when these things are on chain, it's real time, it's super cheap, it's globally accessible, it's permissionless, and that is in the end just better technology than what you can get in traditional financial systems. And so that is how I think we eat away at that number of 10% of global GDP. And if you need any more case for this, every single major financial institution, including some of those most skeptical or those who have been maybe most trying to throw a wrench in this collective project, they're hiring people at the most senior levels to lead the digital assets and tokenization strategies. The battle, I think in many ways has been won. And so now it is just a matter of time. And, and I know you don't get this vibe if you're just reading crypto Twitter, because those are the jaded people who have been here for a very long time, but you get none of that fear, uncertainty or doubt. If you're out at these conferences and you're talking to banks and asset issuers and major institutions, they know this stuff is coming. They know they need to build around it. Otherwise their businesses will be disrupted.
- [36:08]
Brendan (Co-host)
And.
- [36:08]
Alex Cutler (Founder and CEO of Dromos Labs)
And it's like so insanely bullish. I've never been more bullish. Don't mistake the crypto Twitter noise for signal. Just like we had a thesis, we ignored everybody on crypto Twitter and that sealed the dividends. That's advice I give everybody. Don't listen to anybody on crypto Twitter. It's a lagging signal. Like, I gotta spend less time on that.
- [36:33]
Bryce (Co-host)
I gotta spend less time on that.
- [36:34]
Alex Cutler (Founder and CEO of Dromos Labs)
I mean, look, I still spend a lot of time on there, but I at least put it in a box of like, this is telling me what has just happened or is retroactively happening, not what is about to happen next.
- [36:45]
Bryce (Co-host)
Yeah, you've done a good time or done a good job of like dissociating and compartmentalizing that.
- [36:52]
Alex Cutler (Founder and CEO of Dromos Labs)
Exactly.
- [36:55]
Podcast Host (Ad Read)
Listen.
- [36:56]
Sponsor Voice (Eureka Ergonomic Ad)
Can you hear that? Yeah.
- [37:00]
Alex Cutler (Founder and CEO of Dromos Labs)
That's the sound of money doing business. Tens of thousands of fintech and finance professionals cutting deals and courting investors. So come and meet them live and in person this October at Money20 20, the place where money does business. Search Money20 20 USA to find out more.
- [37:20]
Sponsor Voice (Aura Ad)
Most people don't realize how much their personal information is being bought and sold every day. Data brokers are making billions, pulling details about you from public records and the Internet and then packaging and selling it, usually without your consent. That's how your information lands in the hands of scammers, spammers, even stalkers. It's why you get endless robocalls and why ads seem to follow you everywhere. That's where Aura comes in. Aura actively removes your data from broker sites and keeps it off. They also instantly alert you if your information shows up in a breach or on the dark web. But Aura goes beyond data protection. With one app, you get a vpn, antivirus, password manager, spam, call protection, dark web monitoring, and even up to $5 million in identity theft insurance. All backed by 24, 7 US based fraud support. Other companies might sell just credit monitoring or just a vpn. Aura gives you all of it together at the same price competitors charge for just one service. Start your free trial today@aura.com Remove. Protect yourself now@aura.com Remove.
- [38:21]
Bryce (Co-host)
But no, I mean, man, that was awesome. There's so much to unpack there. And I think like, also, by the way, on the concept of like all these Banks and asset allocators and stuff coming in. I saw, I think it was two days ago, Vanguard just posted one of their first posts for like, we're looking for a head of digital assets.
- [38:40]
Brendan (Co-host)
Yeah.
- [38:40]
Bryce (Co-host)
And everybody on crypto, Twitter, of course, goes crazy because like, you know, two years ago your CEO said you're never going to have these ETFs even tradable. Then that CEO left a couple, you know, months after that got replaced. They rolled out the ETF access and now they're looking for like a head of crypto which is just like, man, you know, they're really starting to bend the knee, if you will.
- [39:03]
Alex Cutler (Founder and CEO of Dromos Labs)
If you've been around long enough, if you study technology and you should, I think at some point just think about this as better tech. Better tech. If it is more efficient, if it's more globally accessible, it wins. But it does not feel like it until it does. Right. There's a very funny common thing of when the iPhone first dropped and the iPhone was totally, was a major leap beyond like what smartphones were up until that point. And you have Steve Ballmer just like laughing his ass off, being like, nobody's gonna use this thing, yada yada yada. And BlackBerry, guys, is that great movie, the BlackBerry movie, if you haven't watched that one, just going like, well, why would anybody want this if there's no keyboard on it? This stuff is only obvious in retrospect. And I think it is very, very obvious what is going to happen. That does not mean you won't have a whole bunch of people who say it's not going to happen. But to your point, they leave and then unless those businesses want to go under, those businesses get really, really serious about ensuring that they're not disrupted here.
- [40:12]
Bryce (Co-host)
Totally. But to our to play devil's advocate or to the counterpoint, just a touch, I still think there are some structural barriers to entry for some of these institutions. I don't think any of us could deny all the hacks that have happened, which I think scare people out. Maybe some of the lack of KYC on the different liquidity pools you've got, you know, of course custody issues, different compliance issues that hopefully those things are more technical. The Clarity act, if it passes, finger crossed, 5050 coin flip right now according to Polymarkart odds, you know, that stuff will get smoothed out. But like I feel like it's the, the constant hacks. What do you think? What is it that's kind of the barrier to entry and also what role does dromos labs have to Smooth some of that over or responsibility relative to Ethereum developers or Coinbase or these centralized institutions.
- [41:11]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, it's a great question. I think much of the barriers or at least the biggest inflection point will come with clarity. Right. And will come, you know, not even just United States will be a major player here. Right. Because we very much do set many of the global rules and standards. But there are clarity like bills moving through like a number of different countries. Like you know, South Korea is a major one, one of the highest rates of digital asset ownership in the world like per capita. And what that does is these businesses are hyper conservative to your point. They're not going to take a ton of risk. They want to know the rules and I think that is one of the biggest unlocks. It doesn't mean if clarity doesn't pass, it doesn't happen. It just means that there's a slight discounting or it needs to happen in slightly different ways or things like that. But it will be a major catalyst to the hacks though. Absolutely man. That, that is, that is a major tax on the growth of our space. I don't think it will be the biggest limiter because an institution doing due diligence on chain can figure out the difference between you know, immutable smart contracts that have held billions of capital for four years. Right. You know, billions of capital means the bounty for North Korea for any threat actor has been billions. If they find something, if they break that, that a pretty good bounty to have existed for years and not been broken. So I think they'll be able to differentiate. But if it's more on perception and you need a lot of buy in within these orgs from people who will not go in and do that due diligence, it's a major issue. But here's my take on it. I don't think anything about the last year brutal hacks has anything in particular to do with is mythos out there on the loose, you know, and we just don't know it yet or the proliferation of these sophisticated models or things like that. And the reason I don't think it has anything to do with that, at least it's not a direct or substantial contributor. It does drop the cost of like probing and social engineering and things like that. But almost every one of these hacks you can basically point to it was a single or double point of failure whereby there was tens or hundreds of millions of dollars at risk. So think about that. If, if. Let's just say you two right, we're on, on A multisig and, and it was a two of five, right. And you guys were securing, you know, $100 million of capital. That means somebody the bounty on you guys that which just means they need to either crack your computer or get into your home and find you guys. The bounty on you is so large that like if somebody spends $10 million to break each of you because they'll make 100 million, they'll get you right. Like it's, it's not hard. And so the issue in our space is these things should have been gone a long time ago. It is absolutely negligent in my opinion to continue to have centralized dependencies like these inherent in systems that control substantial amount of value. I think it is up of course to everybody individually to do that. Discounting yourself, I wouldn't deposit in anything with a multi sig even with a time lock or anything like that on it. That could rug my capital. I haven't done that in a very long time. Not since I was just bumming around depositing into random stuff in defi summer. But it's also up to those protocols. If you are going to have that level of centralized dependency, I'm sorry, your operational security budget has to be as big as a centralized bank. That is securing an unbelievable amount of capital. And we've designed from the beginning without those things. We do not have multisigs or centralized dependencies. We are probably one of the most extreme in trying to drive those out of our system. We've built entirely new technologies such that we don't even have like a centralized API or indexer. We don't have a Google cloud instance or AWS instance. We're not using traditional web2 infrastructure. But I think that is incumbent on us because you could grab me and five other co founders and you're not getting the half a billion dollars locked in Aerodrome. We don't have the ability to give it to you.
- [46:08]
Bryce (Co-host)
It's a cool hat and a wallet.
- [46:12]
Alex Cutler (Founder and CEO of Dromos Labs)
We've got some great hoodies and yeah, you can go to my ATM with me if you want but you're gonna be a bit disappointed because we didn't raise money and we didn't allocate ourselves tokens. So you know, when building a public good you don't quite have the same upside. But yeah, we need to build better systems and in some ways it might be good that we're washing out the stuff here and people are learning painful lessons now versus like clarity Institutions come on chain and let's say the cycle structure continues. That means we might be at the tail end of the bear here, and we all know what it feels like when things turn. Let's take out the trash now, let's send lessons, and then hopefully everyone who's still building here goes. No more shortcuts. And every fund investing in them says no shortcuts. You're not getting a check if, like, there's a multi sig that's controlling value and stuff like that.
- [47:09]
Bryce (Co-host)
Yeah, yeah.
- [47:10]
Brendan (Co-host)
Well, you know, I want to. Well, first and foremost, I think all of that's a really good point and I think it's important to pay attention to that. And I wish more projects and founders had that kind of approach to this because it's very easy to think, oh, we'll just cut corners, we'll do this, we'll do that. Nothing will actually happen to us or our customers. Before you know it, the carelessness catches up to you and it's happened too much. And so I think, you know, we're. We're definitely on the same page there.
- [47:37]
Bryce (Co-host)
But I want to interject on one thing before we switch gears. I. I wish just more people knew about exactly what you're talking about.
- [47:45]
Podcast Host (Ad Read)
Right?
- [47:45]
Bryce (Co-host)
Like, oh, where the centralization risk and so on. Is there a resource or a website where we can kind of go and see? Like, this would be a great tool that somebody should build. If you're listening, you're a developer and you're like, oh, wow, I want to build something in crypto that's useful. This would be useful. What are the centralization components of every different protocol that has a vault or where can we find that?
- [48:06]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, this is an increasing movement and it became a topic of hot conversation. Right. Because, you know, the lack of standards or transparent reporting has been an issue. Right. In our industry, just period forever. And there are a few lenses you can take on it. There's a lot of work we need to do around token transparency. Right. Of what are these tokens good for? What are they not? Who owns them, when are they unlocking and going to be sold and things like that. And blockworks has been doing a ton of work around token transparency and they have this framework. So as Argonne has done some incredible work here around, you know, token ownership claims, like, what is the token actually good for? What rights does it give you? And things like that. And then I'm having difficulty remembering the name, but I could definitely follow up with it. But token Bryce had something that was looking at the centralization risks per protocol, like auditing and scoring them. And I just Am having difficulty remembering. And then there's some conversation of like, are people going to come together and solve some of these things? But I guess I haven't kept up. But defi scan.
- [49:29]
Bryce (Co-host)
Defi scan?
- [49:30]
Alex Cutler (Founder and CEO of Dromos Labs)
Yep, Defi scan. You can find them on Twitter. And this is attempting to look at the security assumptions and centralized risk vectors, almost like L2 Beats does for L2s, right? It says like, you know, here's the time lock, Security Council infrastructure, what stage of decentralization they're trying to do this across Defi and I think it's a great project.
- [49:54]
Bryce (Co-host)
Token Bryce was a better name. But defi scan is pretty good too.
- [49:57]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, right.
- [50:01]
Brendan (Co-host)
Well, you know, one of the other areas that's completely different from this, but one that I think people have had very different kinds of security related thoughts about is dats, right? Treasuries in the bull market. Everyone loved them. Like this is the best thing ever. We're accumulating more and it's great. And then now that we've entered into a little bit more of like a bearish extended period, all of a sudden there's a little bit more skepticism, there's a little bit more thoughts. You know, if people have seen Michael Saylor sell two different times here in the last month and seen how some of these other treasury companies have acted and they're like, well, you know, maybe, maybe I do have second thoughts on this. But I'm curious for the eth, DATS and Treasuries specifically, like what are your thoughts on those things? Like Sharplink bit mine, the other ones?
- [50:51]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, I mean, I guess I would say, look, 90% of what we saw around DATS was garbage. Look, the root of the problem is again tokens and the incentives created there. Because if the tokens are not useful for anything, right? If they do not have any on chain utility rights, if they do not accrue any value. All these DATs were exit vehicles, like for foundations and teams and to attract, you know, more investors. But it was like it was another exit vehicle. And tokens fundamentally have just been used for exit vehicles. Right. And we've created this dashboard, this net token value flows, but it shows basically amount of value into the token divided by amount of value out of the token. That includes teams and investors and incentives and things like that. And hopefully it comes as a surprise to no one. But like 90% of tokens in the top 100 are infinitely cost vehicles. That means if you are holding it, there's just more and more value being extracted from you. You're Subsidizing the cost of these things and you're not getting anything in return. So why would a debt or equity vehicle want to hold any of these things, right? Like they are the worst assets you could potentially buy in the universe of investable assets. We can even leave crypto aside on more interesting assets, right? Like hype. Hype accrues an extraordinary amount of value. Hype is a useful token that makes sense in the context of a dad, right? That gives an entity with an equity structure and the ability to procure more investment, to procure bigger piece of that network a great vehicle. And it also creates a new stakeholder right, in this group who can then have a financial incentive to ensure the success of that network. I think the hyperdad is a great example of this. But likewise with Tom Lee and Ethereum. Tom Lee is buying an extraordinary amount of Ethereum. Ethereum is again another great asset here because it does actually produce yield and value and it does actually have on chain immutable rights. And now Tom Lee is incentivized. Like we have this, you know, you made the joke earlier about what, what exactly is going on with the ef. But like even in Vitalik talking about, you know, we need to change kind of the direction and the focus of the ef. Yeah, that is a good thing. Yeah, exactly. You know why? Because there shouldn't be one single centralized anything that is responsible for or incentivized for the success of the broader network. So you know, whether it's, you know, hey, if the EF is cutting back, it's like institutional relations side or it's cutting back, it's like support for like defi builders and things like that. So it can focus very much on the core mission of the underlying like technology stack. That is great. And you know who has a financial incentive and means to support much better business oriented outreach, right. Or much better institutional outreach? Tom Lee does. Right? And that's how like a decentralized network should actually operate. And it's actually pretty similar to how we operate, right? Like we only get rewarded as a team, right? By virtue of being users of our own token, 100% of the revenue goes to the token. We have to use the token each week just like anybody else. So in building the new arrow, which will be launching soon, we are not the only contributing development company to this technology stack. There's another one in Wonderland. And Wonderland is an amazing set of builders, some of the top Ethereum builders in the space that have contributed to things like the core Ethereum set to Optimism and things like that. And they are incentivized to contribute through their own VE arrow position. So they are an equal stakeholder as us within the system. Coinbase Ventures holds a large VE arrow lock position. They are incentivized the same way we are. Right. And those types of tokens, I think make a lot of sense in equity vehicles. Most of them do not.
- [55:30]
Bryce (Co-host)
Yeah, no, that's, that's a great point. And I think it's kind of like worth, you know, we'd be remiss if we didn't ask a little bit more about sort of the liquidity flywheel and kind of wrap up the conversation on just, you know, the arrow token.
- [55:44]
Alex Cutler (Founder and CEO of Dromos Labs)
Right.
- [55:44]
Bryce (Co-host)
And of course, nothing that we ever say is financial advice or ever should be construed as such. It's all educational in nature. So we don't want this to come off like a sales pitch to anybody who's watching. I'm just really curious, you know, how you think about the arrow token, because like you said, 100% of the revenue gets driven back to the token. It's not like a simple buyback and burn. There's, there's these locked, you know, voting escrow rights. Like you said, there's no pre mine, no early founder allocation, like so just talk about how the aerodrome token, like, you know, works and how it exists and why it's unique and we can kind of put a point on the conversation there.
- [56:22]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, no, thank you for the question. I mean, I think from the very beginning we've always tried to keep in mind the first principles of the space, right. And we've tried to design a protocol that we think is reflective of those first principles. And not just because it is a virtuous thing. Right. But because that is how we build better systems. And in building better systems that share value, that is how we actually go out and disrupt these heavy, well funded incumbents in tradfi and traditional institutions and things like that. If we are just recreating worse versions of traditional firms and institutions, this project will fail because we do not have their resources, we do not have their sway. And if we are just creating worse versions of all of that, then we will fail. So that means from the very beginning we have tried to orient the entire protocol around the token. That means that token is maximally useful. It means it is a claim on 100% of the value that the protocol creates. That's important for a few reasons, but I think one of the most important ones is that it aligns our incentives with those of Every other participant within the system. So how do five guys in a discord scale all the way up to being the second or third largest decentralized exchange without raising a dollar VC capital? And by the way, going up against not just incumbents valued at multi billion dollars, but incumbents who have billionaire investors invested in their success. Well, the only way we could do that was in building a system in which we were equal participants to everybody else, right? We weren't going to go out and attract capital and compromise our incentives. If we said everybody, whether you're a random degen farming tokens, whether you bought it off the market, you are on the same equal footing as the team as Coinbase Ventures who made the largest liquid investment they had ever made. You know, buying the token off chance chain and then locking it and participating it for four years. But I like this a lot. Not just because it gives competitive edge, not just because it aligns incentives, but because it never puts us in the position of what I think most token projects do, which is they give themselves a bunch of tokens that aren't really good for anything. They won't say that, but they aren't really good for anything. They get a bunch of people really excited about it. Right about the time the tokens are unlocking, they sell those tokens. So then they lose their incentive to continue to make the thing successful and then they retire to like a beach somewhere, right? And there's graveyards of dead protocols and chains that have made people fabulously rich this way. So from the very beginning we did that, right? 100% of the value goes to the token. That token is given out each week to liquidity providers. Those are the people who putting up the tokens that people need to trade against those liquidity providers. They create more value and fees that goes back to the token. And so you create this flywheel where the incentives of those three groups are aligned and scaling for the overall growth. But what I like to say is like if, if this, you know, seems too heady, right? The way I like to put it is in the space of like derivatives and perpetuals, right? There was a period of time not that long ago that we had this rolling cast of characters of gmx, of dydx, of hype and things like that. But there was no single breakout winner of the category until of course, hyperliquid. And Hyperliquid shares a number of these values. It's not the exact same, but it's pretty close. They did not raise any money, right? They did not sell tokens and they distributed 100% of the value that the protocol creates back to the token, in this case, of course, in the form of buybacks. And in doing so, right, they have become the undisputed leader, right, not just of one of the top revenue producing protocols in DeFi, but the leader of their category.
- [60:56]
Bryce (Co-host)
And so one of the profitable companies in the world, like I saw per employee, they were like, insanely, I think there's like 11 people that work there. They're making billions of dollars. It's crazy, right?
- [61:07]
Alex Cutler (Founder and CEO of Dromos Labs)
Right. It's unbelievable. But that is the power of these on chain systems. And I think one of the things that they did exactly right was distribute 100% of the value to the token. That has made them the leader in the sort of category of on chain, like derivatives exchanges. And with us, we're doing the same basic thing in principle or spot exchanges. And with our expansion right across evm, we very much want to win spot exchanges, which by the way, they produce more fees even than derivatives exchanges. It's just the tokens have not captured any of that value to date. And so we want to take those same principles, apply it to spot exchanges, and use the flywheel of value similar to how they did, to dominate that category just as decisively as, like Hyper Liquid is dominated theirs.
- [61:58]
Bryce (Co-host)
I love it. And if you show me the incentives, I will show you the outcome. And I think that the, the outcome here for Aerodrome is, is, you know, extremely bright, extremely promising. You know, full disclosure. You know, I'm, I'm a holder. You know, Brendan's a holder. So we're in your corner. We want you guys to succeed and thrive. We've talked about it a lot on our podcast, on our newsletter and stuff like that. So, look, we really, really greatly appreciate the hour that you spent with us today. The last thing I'll ask is just where would you like to drive listeners? Do you want them to go to a discord or a telegram? Do you want them to go to your ex, read a blog or just use the website?
- [62:39]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, I mean, you can find me, I'm at Wagme Alexander on Twitter. You can find Aerodrome on Twitter as welldromefi. And if you want to check out the website, especially if you want to read all about the big new launch that is coming, all the exciting things in the V3 protocol that are new, I would go to Arrow XYZ and we've got a lot of good content there.
- [63:09]
Bryce (Co-host)
Awesome. Last question. When is the big Arrow update July something?
- [63:17]
Alex Cutler (Founder and CEO of Dromos Labs)
Yeah, just the hashtag when we gotta we gotta get at the, the end here. Yeah. So we are, we are currently in audit, you know, and I think, you know, we talked about the, the security side of things. The audit process is something we will not rush in in any form. So we've got another round of audits coming back this week, so I think we'll have have an update to share there in the next week or two.
- [63:44]
Bryce (Co-host)
Okay. Sorry, crypto 101 listeners. I tried to sneak it in there at the end, but he's an iron lock box. We have no official date yet, but Alex again, thank you for your time. Everybody. Go follow him on Twitter or X and start making some exchanges on aerodrome. Hopefully we get you back again soon next quarter in a couple quarters and we'll talk about some of the, the new updates and some of the success you guys have been having.
- [64:07]
Alex Cutler (Founder and CEO of Dromos Labs)
Sounds great. Thanks for having me.
- [64:08]
Bryce (Co-host)
Awesome. Thank you everybody for listening. And come back same time, same place next week for some more great guests.
- [64:15]
Sponsor Voice (Eureka Ergonomic Ad)
Thanks.
- [64:26]
This episode sponsored by Eureka Ergonomic why should your standing desk make your home feel like a fluorescent lit cubicle? You've worked hard to make your space feel warm, clean and intentional, so your desk should fit right in. That's why Eureka Ergonomics stands out. Eureka Ergonomic creates standing desks, ergonomic chairs, and workspace furniture that look beautiful in your home and feel great to use every day. Choose from designs that blend into your home while giving you the height, adjustability and support you need every day. With Eureka Ergonomic, you're not choosing between style and comfortable. You get both. Visit eureka ergonomic@eurekaergonomic.com that's E U R E K A ergonomic E R G O N O M I C dot com and find a standing desk that works hard without making your home feel like a cubicle.
- [65:17]
Sponsor Voice (Aura Ad)
Most people don't realize how much their personal information is being bought and sold every day. Data brokers are making billions, pulling details about you from public records and the Internet and then packaging and selling it you, usually without your consent. That's how your information lands in the hands of scammers, spammers, even stalkers. It's why you get endless robocalls and why ads seem to follow you everywhere. That's where Aura comes in. Aura actively removes your data from broker sites and keeps it off. They also instantly alert you if your information shows up in a breach or on the dark web. But Aura goes beyond data protection. With one app, you get a vpn, antivirus, password manager, spam call protection, dark web monitoring and even up to $5 million in identity theft insurance. All backed by 24. 7 US based fraud support. Other companies might sell just credit monitoring or just a vpn. Aura gives you all of it together at the same price competitors charge for just one service. Start your free trial today at aura.com remove protect yourself now@aura.com remove.