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- [00:04]
A
Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin. Today we've got a doubleheader. First up is Zach Abrams, CEO of Bridge, the Stripe acquired startup that just launched Open Issuance, a platform that allows every company to launch its own stablecoin. He explains what this means for stablecoins, payments and even AI. Then, in the second half, we're joined by Kenny Lee, co founder of Manta, who reveals why Manta is pivoting away from being just another L2 to focusing on building applications. He makes the case that the L2 wars are a fight for crumbs and that the real opportunity is an app that can bring in the next wave of users. It's a packed show, but before we dive in, let's hear from aptos and Mantle, the sponsors who make this show possible. Aptos is the no compromise infrastructure for global financial markets. Fast, reliable, and 100 times more cost efficient than other blockchains. See for yourself why Aptos is the chain of choice for institutions, users and developers alike. At the Aptos Experience, October 15th and 16th in Brooklyn, Mantle is pioneering Blockchain for banking, a revolutionary new category at the intersection of TradFi and web 3. Follow MantleOfficial to learn more. I'm here with Zach Abrams, co founder and CEO of Bridge. Welcome, Zach.
- [01:31]
B
Hey, Laura. Excited to be here.
- [01:33]
A
Yeah, excited to have you. So Bridge was acquired last year by Stripe, which at the time was the largest crypto acquisition. It's since been eclipsed. We don't have to go.
- [01:45]
B
Yeah, didn't last long.
- [01:49]
A
Yeah, I mean, after the election, just everybody was, like, getting their horses ready for the race. All right, so since then, Stripe has announced a bunch of things like its blockchain Tempo. There's been a lot of eyeballs on their next move in crypto. And today Bridge is announcing a new platform called Open Issuance. So tell me about it.
- [02:10]
B
Yeah, we're very excited. The original idea for Bridge was that we thought that everyone was going to want their own stablecoin. It turned out back in 2022, the market wasn't quite ready for it and we needed more regul. Regulatory clarity. But we're extremely excited. Open Issuance is a platform through which any business, whether it's a bank or a marketplace or a fintech, can create their own stablecoin. And we are really excited about this because the market itself, we think that folks are going to want to control their dollar and they're going to want to be able to program those dollars to work uniquely well for the platforms that they're building. Before open issuance, you kind of had two big issuers, or even today you have these two big issuers that dominate the stablecoin market. 85% of all stablecoins outstanding come from those two companies. But you know, they're, they're very specific in how they run those companies. They're focused on AUM and they control what blockchains that you can issue onto. They control the mint and burn fees that happen. And as a result, a bunch of use cases for stablecoins just aren't possible or aren't economically viable. And so we think this is super important for growing the stablecoin ecosystem. And we think it's super important so that all different types of platforms that want to come and take advantage of stablecoins can do so. So we're very excited about it.
- [03:57]
A
Yeah, so I understand the problem that you laid out there. But then, you know, when, if I think about a world with many stablecoins then it to me sounds like the fragmentation issue that people talk about in defi a lot. So describe what this world would will look like. You know, once this is kind of more widely used. Like is it that it'll be, you know, one way for the businesses themselves and then everyday users won't know kind of this is happening or. Yeah, just talk a little bit about like how this whole world will look.
- [04:33]
B
Yeah, and I'll, I'll go into that and but maybe before talking about that question, I'll talk like more specifically about some of the problems it solves and then the sort of flip that question on like what it would look like if there were only two issuers. And so one of the first use cases for Bridge was cross border payments and we had this company, Zulu, they were one of our first customers. They were moving money between the US or between Colombia and the US and so they would take Colombian pesos, convert them into stablecoins, send those stablecoin to bridge, and then we would convert those back into dollars. That flow of funds is burning stablecoins. That is like the way issuers think of that. And because their businesses are focused on accumulating as much AUM as possible and making interest off of those payments, that is a flow that is not economically interesting to them. And so they charge burn fees to get out of those stablecoins. Well, those burn fees now have gotten to such a point where the cost of moving cross border payments through stablecoin rails at times is more expensive. Than fiat. And as a result, stablecoins are going to be unlikely to solve the cross border payment problem unless there are issuers or folks who want to issue stablecoins that don't care as much about aum. They're using them for payments, use cases to save costs in other places through the system. And so these are the types of problems where you have two folks, a very specific business model. They've done amazing things for this, for this stablecoin space. But the stablecoin space will only be 1/10 or 1/100 the size that it needs to be. Another example is like let's say you're building a bank and you want to pass on rewards to your customers. You know, that's not really possible with current stablecoin issuers.
- [06:30]
A
And wait, but just explain, explain why that is, that's you're talking about. Because the, the Treasuries are held by circle and tether. So. Okay, got it.
- [06:41]
B
Exactly. And their businesses are driven by earning the, you know, taking that yield, that's their revenue. So, so if they give that revenue to someone else, then there's no business. And so they're not economically aligned with a lot of the, you know, neobanks who want to build, you know, competitive products on stablecoins. And so we just view stablecoin issuance as this very important gap in the market to enable a bunch of different use cases for stablecoins that maybe some folks just don't want to enable. Their business models are not aligned with them solving those specific problems. And then to come back to flipping on the question on his head, the other thing that we believe very deeply is that stablecoins are going to be huge. You know, there's going to be many trillions of dollars of stablecoins. And it is, you know, while it can be hard to envision a situation where there are tons and tons and tons of different stablecoins, it's also really hard to envision a situation where there's only two and you have trillions of dollars of stablecoins managed by two companies and everybody is building and issuing and moving money on chain and all this stuff. And it's just two companies that are managing all the Treasuries. The entirety of the world's economic system would kind of topple over by this oligopoly the world will want.
- [08:13]
A
Well, actually explain that because I think what we have traditionally seen in history is that when it comes to business there are a few dominant players in each sector. So why is it that you don't think that that will happen here.
- [08:26]
B
I think that there are some markets where there end up where there are, you know, you end up in like monopolistic situations. But then there are other markets where the market just wants alternatives. It will not allow one company to win the entirety of the market. And like payment processing, which is the business that Stripe is in, is a great example. You know, it the, you know, there's Stripe and there's Adyen, but there's also worldpay and Checkout and so on. The market wants, you know, multiple processors that is like to de risk their business. Some processors focus on like different aspects, you know, different type processing for different types of companies because the market is just so big. And we think the stablecoin market is going to be very similar to that. You know, the systemic risk that would happen if you just had two issuers and they were investing in all the Treasuries would be too great. You know, the market will want alternatives and will want to de risk actually.
- [09:31]
A
So just to understand one thing, so I understand like from the business's perspective why they would do this, but like from the user side, is the user going to be using so many different stablecoin? Like, that's the part where I'm like, I don't think that's going to happen.
- [09:46]
B
Yeah, that's a great question. And there's two answers to that question. So first, we think that all these platforms will have their own dollar that they control and that they benefit from, so that they could program it uniquely for their platform and they can control what blockchains it goes onto. Like, if they build their own L2, they can ensure that it's available on that L2 instantly, that they get the economic benefits from, and they could pass those back to their users. And we are building an interoperability network that will enable folks to move those stablecoins between any of these platforms one for one and permissionlessly. So if you're using Wallet A and you have a stablecoin there and you send it to Wallet B, it will seamlessly convert into Wallet B stablecoin, where they then accrue the yield and so on. And all of this will happen without the user knowing? That's one answer. The second thing is that we believe that stablecoins will just become core infrastructure. And over time this branding of stablecoins will recede into the background and a lot of these applications will just show that you have digital dollars and you will not care who the issuer of those dollars are. You're just, you just have your money in Revolut or you're having your money in dollar app or you have your money in wise or you have your money in remitly and as you send it, these dollars change shape for yield, attribution and control and so on.
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A
And like I imagine there is a cost to all that swapping. So how does that get paid?
- [11:27]
B
So through. Through the bridge. Great question. So through the bridge APIs, we convert everything one for one, so $1 is sent and $1 is delivered into the wallet. We abstract away the gas and any fees that might come from our service. The interoperability network that we're building will not have any bridge fees and will have the ability to easily abstract away the gas that folks might pay so that you can ensure that dollars are delivered. One for one, like a great example is like you don't want, let's say you're sending money between Coinbase Wallet and Phantom or something and you send a dollar you don't want 0.9999-9999-9999 to arrive. And so our APIs and our system abstracts that away.
- [12:21]
A
Okay, got it. Yeah. That's like a cost you're willing to bear because in order to grow the business you can make your money elsewhere, right?
- [12:29]
B
Yeah. And to your point, I do think that like USDC and USDT will remain very popular branded assets that will accrue meaningful amounts of liquidity in defi and trading and this sort of thing. I think that is an area where stablecoins have very material network effects and it helps to aggregate around one party to have better liquidity so you can place deeper trades and so on. And that's like a very important benefit that they bring to the ecosystem. And as a result that's going to become more and more and more important over time.
- [13:13]
A
Okay, so this is, you know, I don't know how you would want to count it, but it's clearly one of the first products that you have been launching since the Stripe acquisition. So why was it that that was like something that you decided to focus on kind of early on? Like, is this something you're hearing from a lot of businesses or. Yeah, I'd just be curious like why this, why you chose to focus here.
- [13:37]
B
Yeah, we, I've, I've spent like my whole career in Fintech and one of the things I really like about Fintech is that it's very financially rational and like an example that the, the, like that easily comes to mind is like Robinhood, you know, Robinhood won. Not because it's like some genius invention but, but, but because they had free trading and everyone else cost $5. And for, for me, issuing your own stablecoin was similar. You know, it was like, let's say I'm building a neobank and I'm sitting on billions of dollars of assets and, and I'm doing that on st. Why would I not want all the economics from that? You know, why would I like outsource the management of those Treasuries, not have my assets segregated in some capacity because that presents higher risk to have it all pulled in one place? And why would I, if I become totally dependent on it, then all of a sudden in year two or year three, if I want to scale and do cross border payments or some other use case that necessitates burning or something, surprise fees come in and so on. Like you don't want to be building Zynga on Facebook and all of a sudden they change your interests and goodbye business. So it just made financial sense to me that folks would want this. And it was hard for me to envision that stablecoins would scale without this infrastructure because it fills a very important gap for folks who will want to build core payments or fintech or bank applications on top of stablecoins. And at first it was like that was it because. Because at the time, you know, we really didn't have folks who wanted it because the perceived risk of issuing a stablecoin was really high. Because this was back in 2022, after Terra Luna and after FTX. And then we've seen over the last six months as we've had regulatory clarity that there has been a ton of interest in building with this platform. And we saw that with native markets and USDH, we saw that with MetaMask, we've seen that with Dakota, we've seen that with Phantom, and we think we'll see that with every major platform that they will want to control their dollar.
- [16:05]
A
Yeah. You know what is so interesting? Back when the Genius act was passed, I was kind of outraged about that clause that the issuers couldn't pass off the interest. But now I'm suddenly realizing that that sort of hobbles them competitively, which is kind of, I don't know how I didn't realize that before, but in a way, like what you're describing is so fascinating to me because it's almost like your individual money market account that you just have in your own wallet or something like that and you like. But it, but it acts like kind of Liquid cash. So that's fascinating.
- [16:40]
B
Exactly. I mean, it really is like a stablecoin really is a better form of a dollar or a better transactional asset. Because today with the dollar, you can either save it by putting it in a savings account, in which case it's harder to transact with and so on, or you can spend it, you put it in a checking account and in which case you get like zero interest and so on. And a stablecoin, you get both. You know, you get, it's like, you know, natively yield bearing and it's very transactional. You can use it for payments and you can issue cards on top of it and so on. Another reason why it makes financial sense, like we thought that these things would become very important, but it's taken a little bit of thought.
- [17:28]
A
Yeah, yeah, no, I love it. One other thing that I wanted to ask about was just the kind of like security bit because in a way that's sort of what Circle and Tether are offering, right? It's like they're, they're kind of managing this reserve and they're making sure it's fully backed and all this stuff. So how have you solved that problem for, for this product?
- [17:51]
B
Yeah, I mean this is, this is like, you know, in many ways that is the product, the product is like, is managing, managing reserves, is ensuring liquidity and is ensuring security. And this is something we've been building like really since day one of the of the company is like we actually ended up issuing our very first stablecoin probably two and a half years ago. Just the business has like, you know, really started to scale and like the, you know, we've had to rebuild and retool the platform, which is what this announcement is about, because of all of that scale. But under the hood, you know, all of the assets are managed with core banks. You know, blackrock is the, is the primary partner we use to manage, to manage the Treasuries. And we have a bunch of other banks that we're bringing online as the platform scales. And then on the actual like, like stablecoin issuance side, every single, you know, all of the smart, you know, at this point we've issued dozens of stablecoins. All of the Smart contract, we have like a standard smart contract that's been audited, you know, umpteen times, you know, and then any additional time, any, any edits end up getting audited again and again and again. And this is like ultimately the core of what we do is like we have to ensure that there are never more tokenized dollars outstanding than there are actual dollars and Treasuries under the hood. And ultimately that's success for us.
- [19:31]
A
And actually I just realized one other thing. Are there any security issues from the side of the customer who was creating their own stablecoin? Like, you know, like I just think about, you know, all these companies, they have these multi sigs and stuff like that. So is there anything just like internally that are would be best practices to protect, you know, their company?
- [19:52]
B
Stablecoin, there's actually like a real benefit to, it's like very beneficial to have your own stablecoin. So one of our early customers who is a Neobank, they issued a stablecoin. They were, they were, you know, they're one of our first and one of our biggest to scale with stablecoin issuance. Pretty early on they actually have one of their customers that lost the keys to their multisig wallet. And because we had issued the stablecoin and it was their stablecoin, they could elect to remotely burn the stablecoin and recover the customer's funds, which is not something that would have been possible if they were building on top of, you know, USDC or usdt. And so, you know, that was a process where we had to work together to do it. You can't just like remotely, you know, they couldn't just remotely burn on their own. But there are these benefits that come and you could kind of think of it as like added security for folks who were building stablecoin based applications to ensure that or to give more protections to their customers in case, you know, something happens on the wallet side or they can't recover their keys or whatever else.
- [21:05]
A
Okay, okay, yeah, yeah, I'm sure that would give like peace of mind. People, you know, like becoming your own bank is like appealing. And then when you really think about the details, sometimes it's like, wait a second.
- [21:18]
B
Yeah, I mean I was at Coin, I worked at Coinbase for, you know, a while and one of the things we would frequently say internally was that Coinbase, Coinbase's like killer feature was password reset.
- [21:34]
A
Pretty much. Pretty much, yeah.
- [21:38]
B
Yeah, exactly.
- [21:40]
A
So I did want to ask you also because it has been a while since you were last on the show and at the time you said that you had a few hundred customers. I think like 300 or something. And you, you know, we were talking about some of them were like gigantic companies, some were really tiny. And I just wondered like since the Stripe acquisition, you know, how has business changed for you? Like how, you know, how I Mean also with the passage of the genius act like I'm sure that you're. There's like very exciting moment in time in stablecoin so I'd love to hear kind of like what it, what it's like, what it's like especially like considering this right back position.
- [22:15]
B
Yeah, I mean after, after the acquisition we very viscerally felt a shift along the adoption curve. Before the acquisition it was like a bunch of folks who had on their own had gone along the journey and decided that stablecoins were going to be super helpful to them. And most of them were small teams developers outside of the U.S. it was like the earliest of the early adopters in Argentina or Mexico or Europe or wherever else. And then after the acquisition it just like immediately shifted and we were talking to large fintechs, we were talking to treasury teams for enormous E commerce companies, we were talking to banks. And so the last year it's really felt like we've gone through like five years of like the adoption curve all at all, all at all at once. And, and you know, it. This is now like manifesting in the customers that we're supporting. You know, it's manifesting in like you know, the other, the other day we announced that we were launching with remitly and we announced we're launching with ramp. There's a bunch of, you know, now banks are like super keen on exploring the stablecoin space. We're doing more and more work with the networks because we want, you know, because stablecoin settlement we think is going to be really important. All of these bits of infrastructure that you know, and use cases that we thought were going to happen are really starting to come together.
- [23:59]
A
So we're going to just clear the air for people, including myself because I also was a bit mixed up on the relationship between the various entities and projects that are kind of interrelated here. So just explain in like very clear terms what the relationship is between Stripe, Tempo, Bridge. You could throw in Privy. Like go ahead and just explain it all for everyone.
- [24:24]
B
It's a great question. So Stripe, Bridge, Privy are. Bridge and Privy are part of Stripe. And you could really think about us as different layers of the stack. So Privy is like the account layer very close to the, very close to the blockchain. Pretty much everybody, actually everybody who builds on chain needs a wallet. They provide that wallet. Bridge is one layer of abstraction. Higher Bridge is like the bank account. Bridge moves money across the fiat world and the blockchain world. We use wallets and we issue stablecoins but we kind of act like the bank, if you think about it. And then Stripe is ultimately. And the application, you know, they're basically taking Bridge services and taking Privy services and delivering them to Stripe customers in ways that make sense for them. And the most obvious example is like pay with crypto via Stripe checkout Stripe, which is, which we launched with Shopify. And so that product sits on the entirety of the stack. And so customers can. Developers can come to, you know, us, and they can work directly with Privy if they just want wallets. They can work with Bridge and Privy if they want wallets and, you know, money movement. Or they could work with, with Stripe if they just want everything taken care of and abstracted away for them. Tempo is the lowest level of that stack. It is the actual payment rail. And Tempo is an independent company outside of Stripe, incubated by Stripe. And it is one payment rail that Bridge will use as folks want to build us. But they can also use Solana or Base or any other blockchain. And the same thing applies for Privy. Privy will provide wallets, but they'll also provide wallets elsewhere.
- [26:23]
A
Okay, so in terms of how much you are working on Tempo, it's like there's another group working on Tepo and they might reach out to you for help or to use Bridge in some way, but you're not, I don't know, giving your input necessarily on that.
- [26:42]
B
Yeah, I mean, they're an independent company building a blockchain that will be a totally decentralized blockchain and payment Rail. And we think that many Bridge developers will want that blockchain because it solves many problems that exist elsewhere. It will be a very good blockchain for, you know, we, we do government aid programs where we send tens of thousands of different payments out all at the same time. It will be a very good blockchain to facilitate that type of activity. And so folks might choose to do it, but if they don't want to use it, they can use, you know, Solana or Base if they wanted to.
- [27:24]
A
And I want to ask this question, but I'm a little nervous that listeners might get touchy about the question. So if you're one of those people, you know, I just have to ask this, but I'd be, I'd just be curious. So, you know, Tempo is going to be this like, payments focused blockchain. What is it about the current options that is not ideal? Like, what problems do you still come across with your type of work that need to be resolved that you think perhaps Tempo could be because they're focused specifically in payments that chain could resolve.
- [27:58]
B
Yeah, I mean, it's a good question. I'll give a couple of examples. And by the way, we work with all of these teams and we think they're all great and we support many developers who are building with them. But on Solana, for instance, when you need to create a wallet that accepts usdc, you have to prime that wallet to be able to accept USDC, which costs cents. I think it's like 20 cents or something like that. And we had a very large developer who is coming to us. They have millions, millions and millions of customers and they wanted to create Solana Wallets for all of their customers. The upfront cost of creating all those wallets was really, really high. And it made it, you know, not feasible. And it's one small thing, but, but it makes it such that that blockchain is really hard for very scaled applications to create millions of wallets for their end customers. Another example that we've run into is just like TPS limitations. How many transactions can we push through these various blockchains? In many ways, we've made tremendous progress over the last couple years, but the TPS requirements of Stripe alone are, you know, an order of magnitude, if not more larger than even the highest performing blockchain today. And so, you know, while a lot of these blockchains are getting better at minimizing gas and getting better at, you know, you know, moving lots of transactions, there's still this like, you know, discontinuous path that we need to get to to be able to handle payment scale applications. And if a bank or if we're moving like serious money, trillions of dollars a day, many, many millions of transactions a day across blockchains, there needs to be something that is built specifically to solve those problems.
- [30:22]
A
Okay. Yeah, I mean, I guess one other thing is just when you talk about that, I'm thinking, well, if you do build a chain that can resolve those problems, then is it the case that you like, would you want to restrict that to payment use cases? And if so, how would you do that? I'm just thinking about, like, I don't know if you're following this little war happening in Bitcoin right now about the NFTs and like, what Bitcoin's supposed to be for. And like, they, some people want a hard fork and it's a whole thing. So, so I just, you know, and like, I'm seeing these arguments on Twitter where people are saying, how can you, how can you limit, like, how people are using this. Like, it's so, so, yeah, it's just another question that comes up when you describe, like, you know, how Tempo could resolve these types of things. Or maybe it doesn't matter. Maybe, like, if they do really have that many tps, then then, yeah, you don't need to restrict it or.
- [31:19]
B
Yeah, I mean, I mean, it is. It's going to be a blockchain that's decentralized and so, you know, people can build whatever they want on it. So, you know, all those folks who are growing dissatisfied on Bitcoin, come, I guess, Tempo and build their NFT applications on Tempo. But, but that's not what we're focusing. That's not the problem. We're focusing. We're focusing on and like the, the Tempo team specifically is focused on like, like we've just really wanted more, a more reliable blockchain that solves a lot of these very little problems. Another example is that gas can be paid on Tempo, will be able to be paid in any stablecoin. That's really nice. So you don't need to acquire these different assets to be able to fund transactions, which is another really complexifying factor to moving lots of money across various blockchains.
- [32:24]
A
Yeah. Yeah, for sure. Okay, so I want to go back to, you know, just like, because you kind of gave a sneak preview of how your life has changed or how the world at Bridge has changed since the acquisition. And I'm sure just what we talked about, like with Genius, and I'm sure you're very. Well, Tempo is not the only stable chain that's launching. So I was just curious, like, you know, based on the conversations you're having right now, because I'm sure you are in a lot of rooms where, you know, like, what the future is going to look like and how crazy it's going to get or how cool it's going to get. So I just would love to hear, you know, based on what you're hearing or what you're discussing with people, what do you think the future of crypto or payments would look like, you know, in, I don't know, a year or two?
- [33:12]
B
I mean, I guess the first thing I'll say is that I have been, like, constantly wrong about what would happen over the course of a year. I did not foresee a year ago, we announced this Stripe acquisition in October. So I did not foresee that we would be in this situation where there's such regulatory momentum that we're seeing basically every fintech do something with stablecoins that there is like this increasingly consensus view that stable coins can be helpful in some way, shape or form if you run a global money business. And so yeah, I didn't see that happening. That being said, if I had to look into my very murky crystal ball, I, you know, the, the payments world is like one of network effects. And so what I expect to happen is that progress will be steady and then dramatic. And a good example of this is like stablecoin settlement across the card networks. Visa and I think maybe just Visa at this point does stablecoin settlement. But right now stablecoin settlement is less efficient than fiat settlement. And the reason is because the banks are paying in with fiat and then Visa has to create the stablecoin and then pay out the stablecoin. So it's an extra step to pay out in stablecoin. But if the banks are starting to settle with stablecoins and then Visa is also paying out in stablecoins then it's much more efficient. And so that like flywheel needs to like slowly be cranked. And then once it's spinning you can get all sorts of amazing things like, you know, imagine you're a merchant and someone pays you and the money is instantly available in your bank account versus T plus 2. Those sorts of things become possible where you actually have streaming of payments into your bank account and so on. But it necessitates slowly building, you know, settlement to Visa settlement from Visa over time. And the amazing thing that's happening now as we shift down this adoption curve is we're starting to see banks lean in, we're starting to see the networks lean in, we're starting to see all the cross border payments companies lean in. And so all these folks that are tying together our global money movement infrastructure are beginning to crank the flywheel. And what I think is going to happen is over the next year to three years is that we're going to start to see a very. Stablecoins have historically been like trading and then they were like cross border. We're going to start to see like 10, 15, 20% of all global money movement shift to these tokenized rails. And this is going to be the core way in which money moves and real success is when stablecoins just become infrastructure. Coming back to our other conversation is that there just is no world where people go to the stablecoin store and pick between 700 different stablecoins. All of this is going to happen with stablecoins converting between a Visa stablecoin and a bank Stablecoin and a Coinbase, StableCoin and Phantom StableCoin, all of it happening under the hood as money moves between all these different parties. And so I'm like, we've long believed that tokenized money is just going to be core global money movement infrastructure. And we've started with some of the earliest use cases, and now we're starting to shift to some of the much more mature and much bigger and much more, you know, critical money movement opportunities.
- [37:21]
A
And out of curiosity, I'd love if you could just pick hypothetical people around the world to describe, like, how their lives would change. So it could be like any geography or, like, type of worker or, you know, family relationship or whatever, but I'm sure there's a few different use cases that you think will be transformed.
- [37:41]
B
Yeah, I mean, maybe, maybe just taking a step back before going into people. I have, like, this is one of the things I love about fintech is, you know, seeing it from, like, I worked at Square pretty early on and just enabling people to be able to accept money a little easier. You know, like a flower merchant being able to accept a card payment, whereas before it was really hard for them to be able to get a card reader and so on, just dramatically changed their lives. And so very small improvements in the cost of doing business, very small improvements in the market. I mean, this is what Stripe did. Stripe, by making it easier to accept credit cards online, dramatically changed the fortunes of people who are building businesses all over the world, because now all of a sudden, they could serve the world, whereas before they were only able to serve folks locally. So very small changes in the way money moves and the way you. In the cost of accepting money and the cost of sending money have these profound ripple effects that sometimes are very hard to notice. Some of the things that we're really starting to see already are that, you know, one of the big things is like, people all over the world for the first time have actual economic choice. You know, like, like before you, if you were, you know, a host on Airbnb or you were, you know, data labeling on scale AI, or you were doing work on upwork, you could only get paid out in your local currency. Now you have economic choice. You could pick the currency that you want to hold. And, you know, a lot of people all over the world are picking right now to save in stablecoins. Another example is like, cards, for instance, have never become widely popular across the African continent for a bunch of different reasons. And because of the instability of local currency, you know, the lack of card Access and the instability of local currencies. Huge swath of the African continent doesn't have access to core services that we just take for granted. Like you, you can't pay for aws, or it's very challenging to pay for Google Ads or, you know, how do you pay for OpenAI? You know, if you wanted to use any of these, these, like, these services, it's very challenging. Now merchants will decline your payments because they don't. They can't get Naira out of the country. So it's very hard to accept those payments. But now if you have a bunch of folks holding stablecoins and they could either pay directly with those stablecoins, which they would love, or you could issue cards on top, and then the stable coins are settled directly to the end customers. Another big thing is like, imagine every consumer deposit is earning 3%. You know, that's a lot of economic surplus that is delivered back to consumers and businesses. And, you know, maybe the last thing I'd say is like, you know, I mentioned this before, but imagine every merchant right now, you know, you're selling something online, it takes you two days to get your money, sometimes five days because of risk and whatever else. Imagine after every single swipe of a card, every single payment, the money lands in your bank account immediately. That saves, like, days of working capital for you. It enables you to operate your business more nimbly. So I think there are going to be this, like. And those are the ones that just come to mind. And like I said, I've been horribly wrong at predicting the future. So there are probably more that are, like, way more profound that, that that will occur over the next, you know, one year or five years or 10 years.
- [41:46]
A
Yeah, a long time ago, I think this might have been, I don't know, eight years ago or I truly don't know. Anyway, Roya Mahboob, who is an Afghan entrepreneur, came on the show and she talked about how she had this like, blogging business where there were all these little bloggers on her site and many of them were women. And in Afghanistan they had a hard time paying the women because a lot of them didn't have bank accounts or if they did, their male relatives would confiscate their earnings. So they set them up with bitcoin wallets and then they taught them how to do that. And obviously the male relatives didn't know how to confiscate the bitcoin and so that's how they were paying them. And I feel like that's an example of it's very similar to what you were talking about with the merchants who suddenly had a way to sell to the world with Stripe. But that's a more, just even more kind of, what's the word? Like, you know, someone who doesn't have access to outside money.
- [42:49]
B
Totally.
- [42:50]
A
Yeah. That would be like another example of how stablecoins could change people's lives.
- [42:56]
B
Totally.
- [42:57]
A
Yeah. You mentioned the like the credit cards that could be created out of people receiving stablecoin payments. And you have a product that you announced in the spring just like that, stablecoin backed credit cards. And that started in Latin America. And I was wondering like, you know, again, why was that like one of the first things that you did? And like, I would love to hear kind of the strategy behind, you know, choosing that, that region.
- [43:26]
B
I mean we, one of the, maybe coming back to this theme of being a bad prognosticator of the, of the future, like many of the things that we have created, it has come from demand from the developers who've been building on Bridge and we've just seen a lot of developers who've been building payouts products. So you know, maybe you're helping a platform pay workers all over the world or they're building neobanks, you know, maybe you're building, you know, Cleva is building with us, they're a neobank in Africa or Dollar App, you know, across Latam and, and all of them want other means to take stablecoins and be able to spend them in the world. And stablecoins are clearly this very important infrastructure on top of which you can build savings and savings products. But then in order to spend them, either you need stablecoins to be accepted, which is slowly starting to happen with you know, Stripe turning it on for all of its merchants and so on. But that's going to take a while to compound or two, you need stablecoins to be interoperable with the networks that exist today. And the biggest of those networks are Visa and MasterCard. The really cool thing that we're doing with them though is that stablecoins are really the first global financial building block. So before stablecoins if you were building a financial product, you build on US banking stack to serve us, Mexican to serve Mexico and so on. Stablecoins enable you to serve hundreds of different countries all at the same time. And so our card issuance product also enables you to deliver a card into those markets. And so I think it's at like 57 or 58 different countries now. So you could build a stablecoin savings product and then launch a card into 58 markets all at the same time, which is completely unheard of before stablecoins.
- [45:30]
A
Wow. Yeah, I honestly was thinking, because I have some people that we pay in that region and I was like, I wonder if they might be interested in this. I did also want to ask because Bridge has its own stablecoin usdb. Talk about how you guys use that.
- [45:48]
B
Yeah, I mean, it's the same way that we've been talking about with the open issuance platform. So USDB is built on top of the open issuance platform and it's mostly meant as an easy way for developers who want to come in and want access to the underlying economics of a stablecoin immediately to be able to access them. Because we know that in order to build world class financial products for their customers, you need access to the underlying economics. And so we built USDB as a means for folks to come in day one, hit our API, convert dollars or other stable coins or whatever else into usdb, earn the economics, and then you can convert back into USDT or USDC or dollars or whatever else when folks want to spend or save or what have you. Ultimately we think everyone, this is kind of like a USDB for us is like a trial product because we believe everyone ultimately will want and benefit from their own stablecoin and we make it so easy to do so that then you could just hit a different API, create your own stablecoin, customize your reserves, and then have much more control over the asset and what blockchains it's on and so on.
- [47:17]
A
Okay. And so just to understand, so basically like if they come to Bridge and they want to use it right away when they start using the API, they could, if they're going to have stablecoins, they could just get USDB kind of quickly and easily. But if they end up using the open issuance platform, then they kind of can create their own. But maybe in the meantime it's like usdb.
- [47:37]
B
Exactly, exactly. And ultimately this is kind of because, you know, most people today, there's a perceived, it feels like a big deal to create your own stable coin, you know, and, and that's because like when people create a stablecoin, it's like news and like people write about it and like, you know, folks are like, oh my gosh, you created, you created a stable one. Ultimately we think that is just going to go away and everyone is going to just think like, oh, of course, when money is on my platform, it's going to be my Money. And when money is on someone else's platform, it's going to be their money. And I would think of USDB as like a graduation path to get folks there because it's readily available and right there out of the box.
- [48:24]
A
Okay. And then I did also just want to ask a little bit more about the connection between Bridge and Privy because I understand, you know, Stripe has its own customers, you have your own customers, Privy has its own customers. But then you also said like customers could also use multiple parts. So are there like specific ways that you've been working together with Privy or is it really just developers choice if they want to work together with both of you or how does that work?
- [48:54]
B
I would say that, yes. So it is first and foremost it's developer's choice. You know, this is like we're just like we're totally. And they share a very similar ethos, like totally in service of developers. And the folks who are building on our APIs, like we have not tried to force any one thing or direction what have you on folks. Like it is ultimately we believe that like all the folks who are building a stablecoin application will show us what is most useful and then we will make it easier and easier and easier for them to scale whatever it is that they want to build. That being said, there are clear ways in which if someone wanted to come to us and use Bridge and Privy together, it's just easier. There's through the bridge APIs you could create Privy wallets, you have one set of APIs through which you can access multiple products. If you want to go down and operate closer to the blockchain, there's a seamless graduation path to do that and to, and to use Privy. And similarly, if you come in and you want wallets and you want to build with Privy, it becomes very easy to come and use Bridge with that. But if you don't want to use Bridge and you wanted to use another partner, you could, you know, Privy is not going to force you to force you to do that. I would think of all of these as like different doors, you know, that folks can enter based on where they are, you know, and what their preferences are. The whole stack works better together. But we're not going to force the stack on anyone. The market is way too early for any of that. We want people to build the best products for whatever their needs are.
- [50:47]
A
Yeah, that makes sense. So I have to ask you because you were part of the winning USDH proposal by native markets. Bridge was. And as I'm sure You're well aware that was a huge deal in crypto like people. Yeah, I don't, I don't know if the Hyper Liquid team expected that, but anyway, so obviously the, the USDH coin just launched and you guys are the issuer. You also offer its global compliance and global compliance profile and Fiat Rails. So just explain what it is that you're doing for USCH and just. I mean, I know it's been a few days, but if there's anything notable to say about what's been happening since launch.
- [51:36]
B
Yeah, I mean USDH is built on top of the open issuance platform and I think this just highlights how much easier open issuance makes the issuance process. You know, like when we sort of won the bid and then we were ready and had deployed the token, I think we won the bid on Sunday morning and we were ready and had deployed the token Sunday afternoon. It did not officially go live and like, you know, with market makers and what have you for, you know, just because the team wanted to ramp up and slowly do some stuff for like another 10 days or seven days or something like that, but it was ready pretty much immediately for the ecosystem. That's amazing. This was this process where when PYUSD was launched it was like years.
- [52:43]
A
And.
- [52:45]
B
Robinhood announced that their rolling out as stablecoin and it still hasn't rolled out. With usdh, we launched stablecoin in hours.
- [53:01]
A
But I just need to understand the timeline because obviously they had proposed it before. So was there legwork ahead of that? And hopefully this won't seem conspiracy theorists, but they even made the proposal like right after, you know, the announcement was made that proposals were open. So it looks like they had actually been working on it before. So like when you, when you give that little time frame, is there more legwork kind of before it that, that you're not counting or.
- [53:31]
B
Well, we had been, we had certainly been talking to the, to the, to the team. I mean, I mean the, the.
- [53:39]
C
The.
- [53:41]
B
Native markets team, they had wanted to build a stablecoin on hyperliquid for a while and honestly Paxos could have wanted to build a stablecoin on Hyper Liquid a year ago if they wanted to, or Agora or any of the other folks in the process. Ultimately I think any of these processes, if there is a stablecoin that's issued on the next blockchain, what's going to happen is some team native to that blockchain is going to be like, oh, I think we should have our own stablecoin. They're going to put forth a proposal to the community and then just like what happened here, a bunch of people are going to pile on, pile on behind to try to, to try to compete. So somebody has to be first to, to, to kick the process off. I, I think that they believe. I don't want to speak for them. I would just say, like, I, I had zero idea that this was going to turn into the, the mud fight that it ended up becoming. But, but, but we had, we talked to the team before and, and, and spent time with them and so on. But, but honestly we didn't know, you know, halfway through the product we had no idea what was going to happen.
- [54:56]
A
Yeah, but, but I don't know if you. So my question was really more like when you say that it just took, you know, a few hours to basically launch it. Like, is that like, for any company that comes to you and they want to launch their own stablecoin, is that the timeline that they should expect? Or does it, is there like a longer time frame?
- [55:18]
B
If, if there is no customization to the smart contract? Yes, if there is customization to the smart contract, then it needs to be audited. And then that takes time. But you could come to us and you could literally be hitting our API and say, hey, I'm getting a bunch of dollars, I want to settle as usdc. And then you can just change an API parameter and then all of a sudden you're settling in your own stablecoin. And that's really it. We just think that this is going to become a core part of stablecoin money movement, that people are just going to want the money to be their own. You know, it is another, another quick example of this is, is, is like imagine you have like bank of America and JP Morgan that are both using stablecoins. You know, bank of America and JP Morgan aren't going to use usdc. Like, they're not going to have deposits that are held at another financial institution, which is Circle, and they're not going to use each other's stablecoins. So like bank of America sends bank of America coin to JP Morgan. JP Morgan's not going to hold bank of America Coin because then JP Morgan's deposits are held at bank of America and vice versa, they're going to want to send the stablecoin and at the end of the day, net settle money so that all deposits are with the appropriate institution.
- [56:41]
A
Oh wait, this is so interesting because now then I am remembering that deposit token thing, which is like a slightly different version of the same concept or a different way to solve a similar problem?
- [56:56]
B
Yeah, and I think deposit tokens are the same thing, whether it's a Stable coin or a deposit token. Ultimately the only difference between the two is whether the stablecoin is backed by cash and mortgages and other things, or cash and Treasuries, but ultimately they're representations of a dollar. And so I view these as like, very, very similar.
- [57:21]
A
Okay.
- [57:22]
C
Yeah.
- [57:22]
A
So I wanted to ask about a couple of other recent bits of news that you guys announced. So the bigger one, I think you tell me, is the Shopify Base agreement, which Bridge was a part of. I also saw you partnered with M0 on the MetaMask MUSD coin. So maybe just kind of wrap it up and, and talk about those two deals and why you think they're important or how they came together, or just whatever you think is important to mention about those.
- [57:50]
B
The two are very different. And we think of a lot of what we're doing is we're just helping to push the stablecoin space forward and doing so with all the developers who want to build using stablecoins. And so Shopify wants to move into more countries. They want people in a bunch of different countries where they can't settle fiat to be able to accept and sell goods. Because just because, you know, it's really hard for Shopify to spin up bank partners and custody and pay out Fiat in XYZ country doesn't mean that person should be shut off from the global economy. And so we view this as like a very big opportunity for Shopify, a very big opportunity for sellers and emergent emerging markets, and just a very important bit of like, you know, turning the Stablecoin flywheel where stablecoins become accepted across Shopify merchants, they become accepted across stripe merchants, then hopefully more people are paying directly with stablecoins and so on. So, very excited, very excited about this. We think this is like, you know, the more and more acquirers, we also work with shafur so that stablecoins can be accepted through all the folks who use shift 4 as a payment processor. So we're very optimistic about what this will mean as more and more folks come online to accept stablecoin payments. And then on the M0 side, they are a different partner. They're helping us issue stablecoins. And we think stablecoin issuance solves this other very big problem in the, in the stablecoin space. And M0 has like a very unique approach and an amazing team to building a decentralized issuance service. And some folks who are going to want to issue, issue stablecoins will want, you know, the infrastructure that they provide, but the backing of Bridge and you know, the money management of Bridge. And so that's how we partnered with, with Metamask to launch and like, you know, it's been a couple of weeks now and it's like very successful and growing and we're super excited about it.
- [60:11]
A
Okay. And just to understand. So basically when you work with M0, then it's almost like it becomes like a white label product. Is that how to think about that?
- [60:19]
B
It's, it's, it's still Bridges managing the funds under, under the hood. And instead of hitting using Bridge as like the issuer and the creator of the smart contract, M0 is the issuer and the creator of the smart contract. And M0 has also built very similar to our interoperability network. M0 has built a bunch of stuff to make the stablecoins that they issue interoperable, you know, and over time, you know, I think you'll be able to move between an M0 network and a Bridge network and you kind of just get to pick whether you're issuing with them or us. And we're kind of indifferent.
- [60:59]
A
Interesting. Wait, so in a way you guys are competitors, but you.
- [61:02]
B
Not. Not. I would, I would, I would. We offer very similar services, but, but people are going to tend to choose them. The audience that will choose and want m0 is different than the audience that will choose and want Bridge, or at least has been historically. And so, you know, I would think about it like different segments of the market like Metamask from the very beginning wanted to work with a regulated, you know, issuer under the hood, but wanted to work with M0 to do the smart contracts and some of the interoperability. And that was their choice and we are happy to support it because ultimately what success for us is that there are more stablecoins and folks fully control the assets that they issue so that the stablecoin space can be as big as it can be.
- [61:55]
A
Okay, so last question while you've been talking. Hopefully I don't have too many people who work at banks who listen to this show because honestly, while you were talking, I just kind of kept thinking like the downfall of banks is going to be pretty fast. Maybe what I just said is a little bit of hyperbole. Maybe downfall is like a strong word, but I just was like they're, they're going to be disrupted so quickly. I don't know, maybe I'm wrong I could be wrong, but point is, the reason that I'm mentioning this is that, you know, as I'm sure you're well aware, we have another technological revolution happening at the same time we have these AIs and I was just wondering, you know, like from these conversations you're having, because I'm sure you're having a lot when you look at these two trends, like, where do you think that could go? Like, what does that future look like to you?
- [62:48]
B
I would say I think that stablecoins and AI make an enormous amount of sense together. I think that I was talking to someone and they were telling me that with each new technology there tends to be a new money movement paradigm that supports that technology. Like the Internet's Internet was like really accelerated and enabled by cards, or vice versa, Cards were really accelerated and enabled by the Internet. I think that stablecoins represent something very similar in this world of AI because stablecoins can be held by non humans. You know, it's, you can't really, you know, non humans can't hold fiat because you need to sort of be KYC'd and open a bank account and so on. Payments can be streamed, money can be programmed. It is just a better financial instrument I think, for this world. But I also think that it's going to take us some time to figure out the right context through which in the right use cases where we begin to scale adoption. I'm really excited about what cloudflare is doing, you know, with their paper crawl and like they're issuing a stablecoin that will be used, you know, hopefully by these agents as they, as they crawl various websites and hopefully that use case scales. But we're in this phase right now of experimentation where people like you and me squint and like kind of see the opportunity. But we need a bunch of entrepreneurs to figure out how to turn the promise into reality.
- [64:30]
A
Okay, well, it's been so fun chatting with you. Thank you so much for doing this and congrats on your new product launch.
- [64:37]
B
Amazing. Thank you for having me on.
- [64:39]
A
Hey everyone, thanks for watching that prerecorded interview with Zach. Next up we have one other pre recorded interview with Kenny Lee of Manta, who's in Singapore. Ed took in 2049. He and I discussed an upcoming pivot by Manta and the future of L2s. Stick around. Over 3.4 billion transactions processed without disruption. More than $1 billion in stablecoins circulating. Over $720 million in real world assets tokenized on chain, all delivered with sub second finality block times under 100 milliseconds and fees less than a tenth of a cent, making Aptos more than 100 times cheaper than other leading blockchains built by the team behind the DIEM project at Meta. APTOS is what blockchain performance looks like when it's built for global financial markets. Discover why Global institutions like BlackRock, Franklin Templeton and NBCUniversal are building on Aptos and see for yourself at The Aptos Experience October 15th to 16th in Brooklyn Mantle leads the establishment of Blockchain for Banking as the next frontier. UR is the access layer that transforms Mantle Network into a purpose built vertical platform. The Blockchain for Banking that enables financial services on chain UR unifies and vertically aligns Mantle's focus on payments, trading and assets. MI4emmeth protocol functions, FBTC supported by developer grants, ecosystem incentives and the industry leading distribution platform through the UR app reward station and BYBIT launch pool. All economic activity within UR will be captured by Mantle Network to further drive value to token holders and establish its significance in Blockchain for banking. Follow MantleOfficial to learn more.
- [66:27]
C
Welcome Kenny hi Laura, thanks for having me here.
- [66:31]
A
So you've been working on Manta, a layer 2 on Ethereum for several years now and you have some news you want to share today about the direction of Manta, so go ahead and take it away.
- [66:43]
B
Yeah, sure.
- [66:44]
C
So hi everyone, I'm Kenny and I've been core contributor over here at Manta for the past probably five years now and it's been quite a long journey with a team of around 40 people all over the world just kind of building together. And one of the reasons why I really wanted to have this conversation is because I think especially now, you know, the landscape for infrastructure is very much changing, especially around thinking about it as a commodity and so, you know, happy to chat more about that. But you know, as, as we think about it and how we want to move forward as a project is we're, we're really starting to focus a lot on the revenue generation side which ultimately just boils down to user acquisition. Right. And really providing like a clear value proposition, which I think has been kind of a struggle on the infrastructure side, but now that we are very much focused on the application side as well, I think we have much clearer sort of goals in mind. So yeah, happy to jump more into detail about that also.
- [67:49]
A
So essentially you are in the process of shifting from solely building this layer two and I know you're not quite ready to explain what it is that you'll be doing yet. But why did you decide to make this shift?
- [68:05]
C
Yeah, and, you know, we can talk a little bit briefly about, you know, what, what direction we're headed in. Happy to, happy to, you know, speak on that more specifically. But the reason why we decided to make this shift is because, you know, when, when Manta launched our L2, we were one of probably four or five different L2s in the space. And I think that was truly a golden age of experimentation on the infrastructure side. And one of the sort of main differentiators we had back then was that we were the first L2 that actually started leveraging Celestia for data availability. And that was extremely unique because every other L2 at the time was fully settling on Ethereum. And so this advantage that we had using Celestia allowed us to enable extremely low gas fees, and our throughput was much higher than, you know, the competitors in the market at the time. Now, Fast forward to 2025, two years later. We're one of probably 500 different L2s in the market today. Right. I mean, you know, don't quote me on that exact number, but it's quite a handful. And I think especially with, you know, the, the way that things are going right now, I think we're, we're starting to see a lot of commoditization in the industry in this space. And so, you know, as a project, as a team, we realize that, you know, there's not really, at least on the innovation side, not too much differentiation at this time. That's sort of the first problem. The second problem is we frankly don't see enough adoption in this space. Right. Like, they think, like, there has been a lot of interest, there's been a lot of trends, there's been a lot of hype, but, you know, just the sheer growth of users, especially moving on chain significantly, hasn't really had that much impact, especially in the recent sort of months. And so we decided one of the ways that we can move forward is not just by focusing on the infrastructure side, but actually thinking about how do we actually acquire more users, which ultimately happens on the application layer. And so that really drove us to the conclusion that, you know, we've got to do more than just continue building infrastructure at this point.
- [70:24]
A
And so it seems like, you know, this trend that we're seeing with like all these L2s, but a few kind of dominant ones, has been going for a while. So I just wondered, like, was there any specific moment where you realize that, like, this this is just going to be how it is and like, you know, it would make more sense if you guys moved more to an application tape focus.
- [70:51]
C
Yeah, that's a really good question. I don't think there was any specific moment. Trying to think. I don't recall exactly how we came to this conclusion, but at the end of the day, I think what really struck us was the, the amount of actual users on, you know, not just our network, but many different networks. Right. Like it's. It's frankly extremely mercenary. Right. Like you see users going from chain to chain and, you know, for their benefit. And I would do so in the same position and so completely understand. But what that essentially means is that, you know, when there's not too many, not enough users in the ecosystem and there's way more L2s, then there's just not enough to go around, right? And so at the end of the day, you're essentially fighting for the crumbs. And instead of continuing to fight that battle, we decided why not just expand the pie? And so expanding the pie in our terms would be essentially building out the use cases that we believe will attract that sort of next wave of users.
- [71:57]
A
What would you say your time trying to build an L2 told you about the future of L2s? What is it that you think the future of the L2 landscape will look like?
- [72:10]
C
Yeah, the future of L2s.
- [72:12]
B
Okay.
- [72:12]
C
So actually, prior to building Manta, I was in the cloud computing space. So I built my first company in that space back in 2011. And so that was my first foray into touching the pure infrastructure level. Pure almost like actual physical servers. And so I learned a lot about application architecture at that point. And the way that cloud computing delivers scalability and uptime at nearly 100% rates is by scaling out horizontally. And there are, especially for Ethereum, that Trilemma that Vitalik has so aptly described in the past. Right. Especially around the scalability side. I think Ethereum definitely focuses on the decentralization and security, but that opens the gap for the scalability, which I think is a Solution on the L2 side. And so that's where I think the value proposition of the L2s come in, in conjunction with Ethereum. But L2s themselves, right, like as individual actors, I don't think will be efficient or sufficient enough to really drive that scalability home. And one of the sort of examples I like to give is Pump Fun on Solana, right? Like, at its peak was probably around 300,000 daily active users. And by you Know that same comparison, if you look anywhere in like the App Store on your iPhone or your Android and you see duolingo, right? Like, that's 20 million daily active users. So almost 100x the amount of DAUs when comparing an average application in the Web2 space with one of the killer applications in the, in the blockchain space. And so I think, like, you know, with the numbers of users that we currently have, sure, an individual L2 can host many different applications and still, you know, have that uptime, but when it comes to scaling out to that massive amount of users that we see in a normal successful Web2 application, I think it's going to be hard pressed to say that one single L2 is able to deliver on that single scalability. And so the way that I see the landscape Playing out for L2s is not one single L2 necessarily taking over the space, but L2s in coordination to provide horizontal scalability. So thinking about applications as they scale up with the amount of users, instead of just, you know, existing on one singular L2, potentially spinning up ephemeral L2s as well, just like you would see in a cloud computing model, to sustain additional scalability.
- [74:54]
A
Okay, so basically, like, there's more reliance on the L1 than like, had been imagined. Is that what you mean? And then like L2s are more like supplemental or something. Is that. Did I understand that how you finished?
- [75:14]
C
I would say the relationship between the L1 and L2 I don't think is going to be too different. But the, but the differentiation between L2s doesn't really make any sense, at least not in my mind. Right. Like, the way that I see it, an L2 is very similar to cloud infrastructure where you have virtual machines, and it's essentially the same thing. If you need more virtual machines to scale out your application in order to serve more and more users, the L2s would essentially act the same way. Right? Like having one L2 today because you serve, you know, 10,000 users and then it jumps to maybe 200 daily. At 200,000 daily active users, you probably will just scale out in terms of the number of L2s that your application exists on.
- [76:00]
A
So you're taught. So, okay, so, but then I guess the question is, are these L2 is going to be application specific or no, I think.
- [76:10]
C
Okay, so yeah, that's a. It's a really, it's an interesting way to describe it because right now we describe L2s as general purpose versus application specific. I think the L2s will be application specific, but it may not necessarily be one L2 per application. Right. It could be potentially multiple L2s per application. So it's like a broader version of specificity.
- [76:35]
A
Okay. So we have seen a wave of announcements of new chains and there's been a ton of commentary on the various choices that these entities made. So, for instance, Robinhood decided to launch an L2 on Ethereum, Strife and Circle chose to launch their own chains. I'm sure you saw the long Twitter conversations that ensued about all these choices. So I was just curious, what's your take on which of these strategies makes sense? What do you think of Robinhood's choice of stripes and circles choices? Yeah, take it away.
- [77:13]
C
Yeah, that's a really interesting question because I guess when you look at Web3 applications, at least specific examples of successful app chains, I think most of them come from not being able to exist on a general purpose infrastructure anymore. Right. And so, like, I think DYDX kind of pave the route for that. And so I think it's very rare to actually see chains later becoming successful application use cases as compared to, you know, the DYDX route. And so I think, you know, whether or not these larger institutions entering crypto will make their own chain successful with their own apps and their own user base. Right. Which already exist leagues ahead of what we see in crypto. I think that's probably a better shot. I don't know if that is necessarily the right example for Web3 native applications though. Right. Because I think Web3 native applications have a very different, I guess, different path. You don't start off with millions of users on day one that you can start funneling into this and start figuring out exactly how the ecosystem shapes out. I think that's the advantage that applications like Robinhood have. And so I don't necessarily disagree with their strategy. It's more so a question of like, you know, are they able to, I think, essentially convert their existing user base into some type of on chain user activity? I do think, like, there is a lot of friction to converting users, and we see that a lot with traditional applications trying to move into sort of newer technologies. We see that a lot with what is it even like, I guess a very crude example of this would be like influencer coins, right? Which you would think that they would be able to monetize their entire user base and all that, but the, the actual user acquisition is very low compared to their actual community. I do think there's still a lot of frictions and challenges, but I do understand why they would do that because they do have a much larger user base starting off on day one for their chain.
- [79:43]
A
Okay. But then for Stripe and Circle to be a layer one, do you, you know, like, explain, like, which, you know, which of these choices do you think makes the most sense and like, why.
- [80:00]
C
In terms of what Stripe and Circle being a layer one and Robinhood being a layer two. Or so I can. I think Stripe and Circle are a little bit different than Robinhood. And so that's why under. That's my understanding of why they went different routes. Right. Robinhood is a direct consumer application. And so, you know, I'll download Robinhood on my phone and I'm going to use that app, you know, to buy whatever I want to buy. But, you know, I'm not going to download Stripe on my phone and then, you know, use it to, you know, pay for everything. Stripe comes up as a payment terminal after I've shopped somewhere. And so I see Stripe more as a platform and USDC and Circle. Right. Like, definitely more on the platform side. Right. Like, I don't download the Circle app to do whatever Circle does outside of mincing usdc. So I do understand why Stripe and US Circle decided to go more of the platform route, which is traditionally what an L1 would be, versus the L2 route that Robinhood took more maybe to focus on specifically an app chain.
- [81:12]
A
Okay, so here we are in this place where there's a ton of L2s, as you mentioned, and you also said you don't think they can all survive. So talk a little bit about the choice you made as a founder and what you feel like these other layer twos will have to go through. What process should they go through to consider, you know, what the future of their L2 should be, especially, like, amidst what looks like it'll be a consolidation period. So, yeah, talk a little bit about how you think about it and sort of like, lessons learned.
- [81:54]
C
Yeah, I think I've talked to a lot of different teams, different founders of these L2 projects, and I think many people are taking various different strategies and only time will really tell. Right. So I can't really say which ones will be good or not. We're going through that experience ourselves. I do see some other sort of potential strategies right now that are in play. You know, some chains are not necessarily focusing on being app specific. They are focusing more on specific verticals. Right. So whether it's entertainment, whether it's DeFi, whether it's Institution, RWA, et cetera, et cetera. Right. Like we're starting to see these sort of verticals emerge and an ecosystem subsequently being built around that. And so that's sort of the first strategy. The second one is going more app specific. In fact, just doubling down on one specific application and transforming the general purpose L2 into that app chain that we were talking about earlier. Third one, I'd say a little bit more skeptical, right? I know things like DATs and stuff are pretty hype right now, but I don't really see, see how that really contributes to continuing innovation and evolution of L2s themselves. And so, you know, maybe that one's off the table for now, but you know, for us, we're taking a more, I'd say, a bold approach because, you know, this type of adaptation evolution maybe is not, it's not new to us. Right. Like for Manta, when we first started, we specifically were building an L1 and we built the fastest on chain ZK proving L1. So this was specifically for private transactions and this was built on top of Polkadot. And at the time we realized that we built an amazing technology. A lot of the innovation around the ZK side that we put together is still in use today by a lot of other projects. So we're very proud of that. But, you know, a technology with no product market fit is ultimately, you know, a great science experiment. And so that's what we realized when we built our L1, because it was, it was a whole. It was one thing to build this, but it was another thing to convince people to come and use this. And so that's when we had our first sort of identity crisis. And we realized that, okay, we need to build something that actually can get closer to the users. And where are the users at the time, primarily they were on Ethereum. And so that was honestly our first pivot. And so we pivoted directly from an L1 over to become an L2. And so we focused more so on the scalability side and started acquiring users in that way. And like I mentioned, right when we launched, we were one of five. Now we're one of 500. And you know, we're starting to see that the industry is consolidating and this, this isn't new. We've seen this in waves with every sort of generation of innovation. In crypto, you see Bitcoin and Bitcoin forks, and then all of a sudden there's this consolidation and now Bitcoin's still around and everything else has kind of fallen by the wayside. You've seen Ethereum and Ethereum killers and these forks as well. And everything kind of fell by the wayside that consolidation is happening historically. And I think the consolidation is happening on the L2 side as well. And so for us, we think that simply trying to be an L2 is no longer enough. I think definitely focusing on the applications, focusing on the use cases, and thinking about how to be more direct in terms of user acquisition is going to be the right strategy moving forward.
- [85:45]
A
There's something that I very curious about. I'm sure you know that there's been multiple various projects that have launched over the years and they don't necessarily like, succeed, but, you know, they have a token and you kind of never hear from the founders again. And, you know, you could imagine they probably are just living off whatever money they had made. So I was just curious, like, you know, how like, you're clearly trying to do something different where, you know, you have this new announcement that you're going to make like a pivot. Why not do like a piece out that, that these others have done or like, you know, what is it that you think the crypto space can do to incentivize people to not do what we've seen so much of?
- [86:43]
C
Oh man, that's a really, it's a really tricky. I guess it's multiple questions, right? Like, one is why haven't I pieced out yet? And then two is how do we not continue to encourage that kind of behavior in the future?
- [86:58]
B
I guess.
- [87:02]
C
It depends on what you came into the space to do, right? Like when we, when we started Manto, we believe that if we could solve the privacy problem, we would truly be, you know, ex, like one of the historical contributors to the space. And, you know, that was very dreamy because again, you know, product market fit. We were quite naive. And then, you know, we decided, okay, we need to focus on user acquisition because there's not enough users in this space. And so we decided to go the L2 route. And then after that, now we are more direct to consumer by going even on the application side. I think at the end of the day, what keeps me going is probably what keeps a lot of founders that are still in the space going as well. Because it's not about just making a quick but and ending it. It's not why we got into this space in the first place. There's tons of money to be made around here. You don't have to start your own project to do that. And so, you know, I think it's a, it's a bigger challenge And a bigger responsibility. And so it's, it's one that, you know, I take very seriously and one that I think my team takes very seriously as well. So I guess that's the first part. I don't, I don't really, I never really thought too much about it. It's just another day that, you know, we have to keep working and grinding. But then the second part about the incentivization, right. I think that's a deeper question about tokens because I think when it came to the Bitcoin and Ethereum eras.
- [88:45]
B
There.
- [88:45]
C
Was a lot of utility, right? You can't deny that there's utility in Bitcoin. If you want to transact on the Bitcoin network, you have to use Bitcoin. So the utility is very clear. And Ethereum, same thing, right? Like you need to use Ethereum no matter what transaction you do on Ethereum. Right. Like it's just used to pay for gas. And it's similar with Solana. But I think that now the bar, the standard for token issuance has definitely been lowered, right? And so we see this emergence of governance tokens, we see emergence of tokens that have zero utility, right. Meme coins and all this other stuff. And I think it's become a little bit normalized to be able to do that. And so that gives a fairly easy way out for the people that do want an easy way out. But I am hopeful in this space because now I think people are starting to talk about token buybacks and revenue and so using that as an indicator of, you know, token performance. And I think, like, if that is the trend that continues, then we are maturing as an industry because now we are thinking a lot more sustainably than before.
- [89:59]
A
So, last question, Kenny, you mentioned that, you know, obviously MANTA is pivoting in some direction. I know you're not quite ready to announce yet, but do you want to give a hint of the direction that you guys are going?
- [90:10]
C
Yeah, sure. So there's a lot of interest right now with institutions, right? I think that institution has been quite a, quite a broad term for a lot of traditional financial services that are starting to explore or enter the crypto space. And so, you know, at manta, we're starting to think in that direction as well. But from our side, we're not thinking specifically just about, you know, how do we attract the money into the space, but more so how do we build new age financial tooling for these customers in this space. And so a lot of the innovation that we're working on internally, which, you know, you'll see in the upcoming few weeks, is exactly around that, building these sort of financial tools that we believe will be extremely useful and extremely valuable for this type of, of customer base.
- [91:10]
A
All right, well, we're excited to see what you guys announce. Thanks so much for coming on Unchained.
- [91:15]
C
Thanks, Laura. Thanks for having me.
- [91:18]
A
Unchained is produced by Laura Shin, with help from Matt Pilchard, Juan Aranovich, Margaret Curia, and Pam Majumdar. Thanks for listening.