Live from Token2049, a premier crypto event organized annually in Singapore and London, Josh Kriger sits down for an insightful conversation with some of the leading figures in crypto. In this episode, Yohan Lee and his team at Sandbox share how they’re achieving steady growth even during the bear market, as well as the exciting stuff they’re doing in Singapore and Asia. Max Kordek of Lisk tell us what he sees blockchain development going and how Lisk is contributing to the space. Jeff Morris Jr. of Chapter One shares how NFTs can affect the subscription space and why you don’t need to start with decentralization for everything. Meanwhile, Jagdeep Sidhu of Syscoin explain how DAOs are going to be the critical piece upon which our future structures will be built, and what Syscoin is doing to evolve the sophistication of DAOs. Join in and get the latest scoop from some of the biggest voices in crypto today!
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Listen to the podcast here
Edge Of Asia 3: Token2049 & All That Matters, Feat. Yohan Lee (Sandbox), Max Kordek (Lisk), Jeff Morris Jr. (Chapter One), & Jagdeep Sidhu (Syscoin)
In this episode, we are bringing you a very special one filled with content curated from our travels to Southeast Asia and beyond. Stay tuned for some amazing interviews with incredible folks. We will cut from one conversation to the next, introducing each guest as they arrive to give you the feeling that you are right there with us, jumping into each engaging conversation as it emerges. Stay tuned.
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This is an exciting event. It's a melting pot of music, gaming, sports, entertainment, and Web3. Naturally, I have some of the crew at Sandbox representing from Asia here, Yohan and George. It's great to have you guys.
Thanks for having us.
We love to learn a bit about each of you and your journey in terms of getting involved with Sandbox. Let's start with the OG, Yohan.
It's nice to meet you. I'm Yohan. I am the Global Operations Manager for The Sandbox. I joined The Sandbox in 2019 in the early days. I have been sticking around. It's not something that happens in the crypto scene where someone worked for a blockchain company for more than three years because here in the industry, 1 year is like 10 years in a traditional market.
I've heard that. The comparison went through like dog years.
It's like Interstellar. It's a different planet here. I began my role here in The Sandbox as the lead in Korea. I have been leading marketing operations and overall our activity to expand Sandbox there for the last few years. It was 2022 when I transitioned to Global Operations so that I could have a global experience and come to this great conference.
George, what about you?
I hit up Singapore and Malaysia. I have been doing Malaysia for not so long and am moving to Singapore, so it's a new experience for me. All that matters is a very interesting space for that. I have been in the crypto space since the last bull bear in 2016 to 2017. I had a bit of a career in the Web3 space. I've done ICOs and a lot of blockchain advisory but The Sandbox was the first NFT I ever bought, which was interesting.
I knew the head of China at the time. We are decentralized. The head of Hong Kong China was based in Malaysia. We are friends, and he told me about The Sandbox, and that's how I got in. I bought my first NFT. He then said, "I need some help in Malaysia." That's how it all began. This was in 2021. I have been here since, and now I'm going all in The Sandbox.
It has been an exciting year for Sandbox. Matthew was one of our keynote speakers for NFT LA. That was in March 2023. I'm sure there's a lot to catch up on, starting with Alpha Season 3. Tell us a little bit more about what's going on there.
Back then, when we met with Matthew, we probably had Alpha Season 2 launched. In Sandbox, we first launched VoxEdit in 2018 and Marketplace in 2019. In 2020, we launched Game Maker. The Alpha Season was the first playable game content on The Sandbox that we launched in November 2021, which was Alpha Season 1. We launched about eighteen quests back then. In Alpha Season 2, it was 38 quests. For Alpha Season 3, we launched in mid-August with 98 experiences. It's almost 100. We should have maybe created 2 more to make it to 100 but it’s 98. There are more than 650 quests to complete. It's time-consuming to finish the whole journey.
In Alpha Season 3, in this season, there are games using IPs like Steve Aoki, Snoop Dogg, and Walking Dead also. You can come and play The Walking Dead game on our Metaverse platform. It's giving us a good boost in terms of user acquisition, also. In the 2021 summer, our total registered number was only 200K but throughout the year, through several offices, we now have almost 4 million accounts created on our platforms. That's a part of the content. We are not crypto-based or speculative in the project. Our focus is on creating content for the users to enjoy. Thanks to that. We were able to make steady growth even during the bear market.
George, am I allowed to ask what your favorite quest is from the latest batch?
To be very honest, I like the S Aoki one because I brought it up a lot. A lot of people, when they want to come into the Metaverse, they are not sure what they want to do. How does a musician or an artist come into the Metaverse? I felt that if you look at it, it's an innovative form of storytelling to give people an idea behind the artist. They place quest and games and get to know a bit about the history of the artist as well. From there, they create more of a connection with their favorite artists. We did that with Snoop Dogg as well as with his Villa. S Aoki is another one.
In many ways, one of the unique things about the Metaverse when it comes to user-created content or brand content is that advanced or expanded storytelling. Another example was we were speaking about movies. There are independent movie makers who want to go into the Metaverse but we told them, "What if now your storytelling could be two-way?" It's because movies are all one way. You are telling a story in one direction to an audience but you can then add on that Metaverse experience, and people can be a part of the story and expand it. These are things that we are working on. Maybe some companies are experimenting with it. To me, that would be my favorite.
Just to add, one of the key attributes for Alpha Season 3 is play to earn. Users can complete this quest and earn those points and EPs, and they will be given the right to earn tickets so that they can win raffle tickets. They can join the raffle to get the Alpha Season 3 ticket. Once they have the ticket, they can get 500 $SAND in reward as a basic. If they hold any of our existing NFTs, they will get additional $SAND as a guaranteed reward. Finally, there's a leaderboard in Alpha Season 3. If you are the first place, you will receive 30,000 $SAND, which is closer to $30K. If you play our Alpha Season 3 for three months, there's a good amount of reward.
It's a very competitive amount of value to be created, especially depending on where in the world you live and the cost of living. That could be extremely meaningful. That's exciting, guys. This is my first trip to Singapore with the whole team that's here. It's a hospitable country. Everyone is so friendly. The food is amazing. It has an interesting architecture. There's a lot happening here in Singapore. A lot of people are asking, "Are you moving here?" I'm like, "I don't know, maybe." You came on board for Singapore and have been here a while. Can you give us a sense of what's going on the ground in Singapore and why it's become such a significant blockchain hub?
When it comes to Singapore, it has always been a regional hub for all businesses, especially when it comes to technology and innovation. It has been spearheaded a lot by the government as well. It has been voted for two years and running to be the top technological hub in the world. It’s because of that the acceptance of technology is big.
A lot of companies here are very open. The conversation is easy. Compared to other countries that I have been with or managed when you talk about blockchains, some countries are still like, "Is this legal?" That's the conversation. In Singapore, it's, "What can we do?" There's a different starting point. It's that openness and desire from the smallest companies to the biggest companies to innovate their business.
I have been here for two weeks, preparing for the introduction of The Sandbox in Singapore. We've already launched an academy. We've got DBS in the same span of time because all this was pre-negotiated. More than that, I've met every kind of company you can think of. I've met so many of the biggest household names here of telcos, funds, etc. they all want to talk. They all want to do something. The conversation's like, "We want to do this or that. Can we do this?" That's a good conversation to have in any country if you think about it. Other countries will be more like, "Tell me what you want."
Yohan, you have been here a little bit longer. I have an observation. You can comment on it. You could agree or disagree. I went to one of the national history museums. It came clear that the whole history of Singapore, which is fascinating, you got these great waterways and an economy based on building bridges, imports, and exports. Why not extrapolate that to the Metaverse into the virtual exchange of goods and services? It seems like a very open culture about trying new things and being innovative. What are your thoughts there?
I agree. Every country has its own attributes. It's important to capture those values into the Metaverse to make it more appealing for players and partners. I believe that Singapore has always been the leader in terms of innovation. They always strive to be the most innovative country in Asia. What we are discussing at the moment is not fully decided but we are preparing something like a Singaporeverse. In The Sandbox, what we have been doing since early this 2022 is we have been doing a LAND sale with the team of each region that we are expanding.
For instance, in Hong Kong, we have a market there also. We launched the Mega City within our Metaverse, where we introduced all of our Hong Kong-based partner companies and IPs. We are doing the same with Korea also. We are launching Kverse with all the entertainment companies, sports companies, and companies from the financial sector, media, and crypto. We are introducing them in the Kverse in the designated location. We are doing the same for Singapore. We are in the process of building the narrative. We will see how that goes. I hope that our story will be appealing to the Singapore market and our partners.
It sounds like you have some fun jobs. George, what are you looking forward to here in the forthcoming quarter or two?
Now, that's a combination of things. The key thing is to try to have some innovative experiences for the market. We are building that. The academy is one. That's our educational. That's not a common thing in The Sandbox globally but we want to build creators and builders. It's not just about the tech. It's also about the conversions of art with tech. That's where the academy comes in because we teach people who walk at it Game Maker. We want to do more of these initiatives. We got some cool stuff that we are planning for that people will be excited about.
Any hints?
Alpha Season 3 has interoperability with BAYC and Gutter Cat Gang. The point is that a lot of these NFTs are these communities that are coming in, and we make them interoperable. There are some things that we are working on in this space as well. It's a big use case for the Metaverse to be interoperable with other projects as well. We are going to see a lot more of that because Singapore is not just for Singapore-based companies. It's for companies throughout entire Southeast Asia. There are many huge projects in Southeast Asia. They meet and convert here.
I'm excited to connect and bring new communities in and the opportunity to do so in a conducive place like Singapore for the next two quarters. Why the next two quarters? It's because we are in a bear, so it's probably the most accessible time for companies to collaborate with us in a sense because we are building. This is a time when real builders are here, so we don't have to deal too much with the speculators and pumps and dumpers. They are all not there. It makes the conversation a lot more constructive. In the next two quarters, we want to take advantage of the bear and do a good implementation in Singapore.
You are more than welcome to come to join us in March of 2023 at NFT LA. I'm sure we will have a lot of the US representation from Sandbox there. It would be amazing to have you on a panel, talking about what's going on in Singapore. Let's work on that. Meanwhile, if folks want to stay in touch with you or get involved in Sandbox and all the exciting stuff you are doing in Singapore and throughout Asia, what should they do? Where should they go?
The easiest is to connect with me on LinkedIn or by email. It's George@Sandbox.game. It's very easy. That's meant to be easy to connect with. LinkedIn and email are great to connect as well as our Twitter.
Visit our website. All the contact information is there. For Singapore and to join our initiatives here, please contact George, who is our Head of Singapore.
Thank you, guys, so much for spending a little time together. We are looking forward to seeing you around town. We wish you the best with the next phase of The Sandbox journey.
Thank you so much. Thank you for having us.
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I get to spend some time with Max Kordek, CEO and Cofounder of Lisk. Max, how are you?
It's a pleasure to be here. I'm very good.
It's fun out there on the floor. Is this what you expected for the return of TOKEN2049?
Yes. I know the organizers pretty well. They always make their latest conference better than the one before. I have been to London and Hong Kong before, and they were already amazing but this one trumps them all. I'm excited to be here. There are already many great people and great minds building in the space. From here on out, it's going to be a very established event here in Singapore.
I can see that. We would like to iterate too. You always got to improve in this space and take it up a notch. They have been extremely hospitable to us. We met some great people as well, including yourself. I would love to get some more background on you and Lisk for our folks that aren't maybe as familiar with what you are doing.
I have been a long-established crypto guy in space since the end of 2012. In 1/3 of my life, I have been in crypto.
That's like 70 dog years. In crypto, that's a lifetime.
That's a lifetime, for sure. In 2016, I created Lisk, a Web3 application platform where we enable JavaScript developers to build their own crypto applications essentially. For that, we developed a software development kit that they can use to easily do that. It took us three years to get to a stage where we have a stable blockchain but then it will take an hour to get there with our tools.
The next step is to build a platform for these Web3 applications so that we don't only enable developers but also empower users in using these new use cases being established. It's a pretty long journey already being from 2016 to here. It took longer than expected. The platform is just launching early in 2023 but now is a pivotal time for us because we are finally here with the product and can showcase what we have been building for so many years involving so much research with over 60 research papers. I'm happy to be here.
That is a serious build you got going on. It's not for the quick flip.
No, the hustle's real. I'm always thinking long-term.
That's great. As a long-term thinker, I'm curious. Where do you see blockchain development rising? What are the areas that we should all be thinking about where builders should be focusing their energy?
There are two paradigms to build blockchain applications. One is via smart contracts, and the other is via app-specific chains. It's what we enable, what customers enable, and what Polkadot enables. Smart contracts are a great way to get started in the space but to build scalable and user-friendly applications, they are going to be app specific. You have much cheaper fees. You can fine-tune your blockchain and user interfaces right to your use case.
By app-specific, do you mean web-friendly and downloadable apps?
By that, I mean that 1 app list on 1 blockchain in contrast to many smart contracts living on the same blockchain. That's the future of blockchain development. That's something developers should focus on. We see it with dYdX, one of the most popular Ethereum applications moving over to the Cosmos site chain. It's being app specific.
It helps clear the cobwebs, clutter, and traffic jams to have your own. With that comes some challenges technically in terms of maintenance. It sounds like Lisk is helping with that.
Yes, definitely. Why it didn't get much traction so far is because it's much more work to build your own blockchain. The main advantage of smart contracts is that it's easy and fast. You don't have a lot of maintenance to do. You deploy it once, and that's it. In our case, it's different. Therefore, you get a wide range of other advantages. What we do is we are providing all the tools necessary. We got them pretty well done to the point where it's easy to deploy your own blockchain and maintain it.
What does that mean from a staffing perspective? I'm sure there's variability based on the type of application you are building but using Lisk once, it's like, "Lisk, for me, I like the name. I like guys with German accents. I'm going to go with Lisk." What's the level of effort in terms of building on Lisk for different types of applications?
First of all, what we focused on was to build everything in a very accessible programming language at JavaScript. With that, there are twenty million developers out there already who can speak that language. Especially for businesses, it is important so that they don't have to rehire talents. They can use their existing pool of developers. If you want to build a blockchain application on this, for the user interfaces, you need your designer and frontend developer always.
For the application itself, it would be very good to have one person being a bit more on the research side of things. It could be a developer as well but understanding more the theoretical assumptions of a blockchain and a regular backend developer. It doesn't have to be elite what you need for solidity development, for example, because one small mistake can mean the loss of all the funds.
That's good because developers are hard to find. The elite ones are quite expensive.
If you don't have the elite ones, you are going to get hacked at one point. That's the biggest advantage for me. With your own native protocol, you have much more flexibility in terms of securing yourself because you can rely on existing proven development tactics and strategies. Also, let's say if there's a hack, you could, through a decentralized governance vote, somehow get it back because, on your chain, all the users collectively have all power you need. On Ethereum, the governance is separated from the use cases. If your smart contract is losing money, you will never see it back.
As we are having interesting conversations here and generally about the types of projects that want to work with you and build both traditional blockchain projects and infrastructure but also NFTs, what gets you excited? What are some of the use cases on top of the list that you are looking forward to seeing?
As I mentioned before, the platform will launch in early next 2023. The Lisk community essentially is still at this point cherry-picking because they can replicate existing use cases from other platforms. For example, DEX, the regular NFT marketplace, and so forth.
There are all those basic stuff that every protocol needs.
There's a huge opportunity for people to join Lisk because a new ecosystem is being established with it. It's one which has been in the creation for many years. It's not going to be some fast stuff being shipped there. It's going to be high quality. What I'm excited about two blockchain applications being built that fit the NFT area is One Collective and the other is Enevti.com. They are exploring new ways of NFT interactions. Enevti.com, for example, they are looking into using NFTs for celebrity communities. If you are a celebrity and want to create NFTs for your own community to incentivize them to become more active, interact, and engage with your content more, you can issue NFTs for that or issue an NFT also to attend an event they've organized and stuff like that.
Do they have any specific celebrities that are backing them yet, officially?
They are Indonesian-based. We all don't know these celebrities.
They are really cool people.
They are cool people. My girlfriend is Indonesian. They are the best people.
They are well-dressed, have good style, and are charismatic celebrities. It's all the attributes you want in a celebrity.
These interactions with the real world are very interesting. NFTs now live mostly in the digital world with nice pictures or give you maybe some access within Discord communities or so. The link to the real physical world will empower a whole new world, and NFTs can shine here. Not only with these celebrities but also with real-life events. I heard about the famous F1 Amber Lounge. It's launching its own NFT here. With that, it comes with a lifetime membership. People are exploring and experimenting with that in the real world.
I like lifetime membership NFT use cases because you get to see on the blockchain the whole history of that NFT and their interaction with that community. They can pass it down. There's tremendous value there in these lifetime NFTs that I don't think people realize. With a membership pass, you could lose it or re-up it. No, you just got this NFT that's there. You can frame it, show it to people, and flex it.
That's the most important part. Like many people, they always say like, "I can build it in a centralized database as well," but with the blockchain, you can prove that you own it. Let's be honest. People, especially in Asia, want to flex. They want to show what they have.
I think it's everywhere. In the US as well.
I'm from Berlin, and Berlin is not like that. It's all black. Everyone is the same. You can't get a table at the club. You have to wait for hours and might not get in. It's very different.
For those reading, Max is wearing all black from head to toe, including his watch.
It's a typical Berlin outfit.
I need to get over to Berlin. The Bright Moments crew was over there for a while. I don't know if you stopped by that gallery.
Quite a few times. A friend of mine was involved with the one. They have weekly meetups.
That's great. They started in Venice. We did some live shows with them back in the OG days. I got my New Yorker and Venetian. I didn't get a Berliner. I assume you have a Berliner. Did you sell it? It's okay.
No, I had the golden ticket to mint it but I was not in Berlin. You had to be physically at the event. I sent it to my COO. I said to him, "Can you claim it and send it to me?" He didn't claim it because he couldn't make it to the event. He sent it to our legal lead. He claimed it, and it was worth $1,000 or something. He didn't want to send it back. He wanted. If I had asked him, he would have but I was like, "I wasn't there. Let's gift it to him. It's all good." He's very proud of it. It's pretty cool.
"Maybe I will deduct that from your next bill or something."
Germany has very high Employment Laws. There are not too many options there.
It's just benevolence. That's a fun story. Bright Moments is a cool Web3 venture. Max, it's fun talking to you as well. If people want to learn more about Lisk and explore building on your exciting new solution coming to market, where should they go? What should they do?
They should simply head to Lisk.com. Their developers will find all documentation they need to start building with our SDK. The users will get all the information about our upcoming platform so that they can start benefiting from this great technology.
What was the timing there approximately?
Early in 2023. I can't specify it any further.
Thanks so much for hanging out with us. I hope you have a fruitful remainder of your trip to Singapore.
Thank you, and same to you.
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I'm with Jeff Morris Jr, ironically, whose office is down the street from where I live in Los Angeles. I was at your office for LA Tech Week. Jeff, it's great to see you here in Singapore.
We travel across the world and get to hang out. I'm excited. This has been an amazing event.
What's your take here? Tell everyone what you are feeling. What do you think about the vibe here? What have been some a-ha moments or surprises?
People make the trip to Singapore here because they believe in the space. US crypto events sometimes can be a bit noisier, so people come here. The biggest thing I've realized is how important this region is. If you look across neighboring nations like Vietnam and Philippines, Singapore has a lot of crypto interests. There's this real adoption in Southeast Asia, so it's cool to be on the ground and see what's going on here.
What got you going with Chapter One? What's the origin story there? Maybe also give a little bit of background about yourself and how you decided to start Chapter One.
I was the VP of Product at Tinder, which was a crazy place to be. We ended up becoming the top-grossing app in the world. The consumer internet was all ads, and then it became subscriptions. We were part of that movement. I was excited about NFTs because we were selling digital products at Tinder, where there were super likes, boosts, and things that people used for dating.
This idea that people could value digital products the same way you could value anything physical was exciting to me. The a-ha moment for me was I was into crypto but the real moment for NFTs was CryptoKitties, and I ended up becoming obsessed with crypto. I was a seed investor in Dapper Labs and Compound Finance in the graph and some other things. I always like the experimental nature of NFTs. It's on the fringe of everything consumer now, and I have always been attracted to that.
When did you start Chapter One?
We started in 2017. It got started in 2019 when I was doing it full-time. V2, in which we have ten people on the team now, is entirely focused on crypto. This is where we've started the fun of trying to compete with every other venture fund to win competitive deals. It's a much different team and process now.
Given your unique background, I'm excited to dive into your thesis, what you think of the space, and what the formula is for winning moving forward. The immediate question for me, because I've thought about it is, what is the dating application related to NFTs? Is there one? We've seen some adult companies get into the space. From a more mainstream dating perspective, is there an NFT use case?
I've thought a lot about what more governance is and how you build a positive, safe community. You could probably do that through ownership and tokens. We had a huge trust and safety team in the Philippines. It was a constant challenge to keep the platform safe. You could create a cool distributed model there. From what I've seen, most people go to Tinder to go on dates. There's no crypto mindset when you're using Tinder.
In NFT, we always talked about giving someone digital roses or something like that within paid products. You are always trying to create ways for people to stand out and flex. We joked if we had it because the highest price skew you can offer in the App Store is capped at $1,000, and we are like, "What if we made digital bouquet roses that were $1,000?" I bet there would be a bunch of our power users that would pay and get someone's attention. Maybe in an NFT form, that could be pretty interesting too.
I can see that. Taking the conversation a little broader, what's your investment thesis on Web3? How has that thesis evolved over 2021?
It's funny because when I started investing in crypto, the thesis was largely the same and said, “We need to do a lot of work to make crypto more accessible.” Part of that is better products and designing better on-ramps for consumers. There's still a small percentage of the internet that has interacted with crypto, although it's growing in the US.
Twenty percent of Americans own Bitcoin at this point, and we have more mainstream awareness and the everyday utility of consumer use cases. On the developer side, there are 18,000 developers worldwide who are in the crypto industry. There are fifteen million developers broadly on the internet. How do we create better tooling to bring more developers into the space because you need developers and end users to reach its full potential?
Broadly related to NFTs, having worked on subscriptions for so long, NFTs are the next evolution in terms of a better business model. If you think about subscriptions, you join Spotify and Tinder, and you contribute to the network, and maybe you churn. You don't participate in any of the upsides of the network. With NFT communities, you have so much alignment with the communities to grow the network. Subscribing when you churn, you probably participate in a positive. It's a positive financial outcome from churning, which is cool.
NFTs are the next evolution in terms of a better business model for subscriptions. Click To Tweet
I can relate. My background is I was one of the Cofounders of Territory Foods, the prepared meal company upfront ventures back. I have been into LA, and it was all about decreasing churn and increasing recurrence subscription revenue. For us, it was about building community. We had our gyms. We had fridges at gyms and yoga studios throughout the country before COVID. It was a way of meeting the consumer head-on where they already exist. I wonder. How do we do that with digital products?
What you said starts with the community and aligning incentives. Crypto and digital assets broadly are an easy way to do that and make that available in a cross-border way to anybody in the world. One of the big challenges now, which I'm trying to better understand, is that there's no mobile crypto for the most part because we have such restrictive policies in the App Store and Play Store. Part of this comes down to having the right distribution to meet consumers where they hang out. It's pretty obvious that we all interact with our phones so much. This space is all about aligning incentives with your end users, so that's exciting.
We are at this inflection point. I talked to WhaleShark bout it in terms of not only the NFT and crypto community but the global economy. As you are looking forward, what are you thinking about these days?
We can't control the macro environments entirely in the space. There's some part of the space that depends on some better fiscal policy and more liquidity entering the space. What we can control is utility and making sure that we are building products that consumers want to interact with every day. We are thinking a lot about, “What the big unlocks for crypto in 2023 are.” It's always a conversation. We had DeFi summer. We had NFTs in 2021, so what are the next big events for this space?
I've heard about NFTfi and DCI. They did a panel about that in LA. Are these things that you see coming? Are there other unlocks you are thinking about that maybe haven't hit the mainstream conversation?
I think a lot about where we have product market fit and be pragmatic about understanding where consumer adoption is now. The consumer side NFTs are the unlock. That's where onboarding happens for mainstream consumers. You have to have more utility to attract more folks. On the enterprise side, there is a lot of institutional interest in fiat-backed stablecoins for cross-border payments and many other important use cases. We've always taken the point of view and it's slightly controversial that you don't need to start with decentralization for everything. There's a lot of the world that prefers to ease their way into crypto and, over time, choose their own path as to how decentralized they want their experience to be.
I would argue that point of view was more controversial. Now people are like, "BAYC is coming. Let's just deal with it."
It was probably controversial a few years ago. I am in a lot of Telegram groups with a lot of very hardcore decentralization maxis. I got a lot of pushback on Dapper Labs. As an example, who on day one, they accepted credit card payments and did not allow self-custody. It turns out that it was an effective way to onboard more people into crypto. It's like, "What's more important? Is it onboarding the next billion people? Is it keeping a smaller space for more OG crypto folks?" I would argue that the next challenge we should all be excited about is to bring as many people into crypto as possible and, over time, show them the benefits of self-custody and all these other interesting parts of the space.
Burning Man is an interesting metaphor for the space because there are all these OGs, and then they are like, "Where are all these new people coming from?" Now they are like, "We got to figure it out. We got to all get along. We got to all hang out together." Inclusive only gets you so far.
Every ecosystem and technology revolution has this concept of early adopters. It's the responsibility of those people to continue to educate people on the benefits of what decentralization stands for. We are seeing a lot of this with censorship around the world and all these important topics that crypto can help solve. We should educate people but we can't assume that mainstream adoption cares at all about these topics. That's the point that I have been trying to make.
You are right. If you look at the ecosystem as one example, there were tradeoffs for near-term performance. We had lower gas costs. We had higher throughput initially but we had a lot of mainstream adoption of people who wanted to buy NFTs. They were happy to own their first NFT and do it in a fairly cost-efficient way.
I'm excited about projects like Magic Leap. Others are trying to break down these barriers. Getting into more specifics, are there any investments that you made that you are excited about that are public at this point that you can share with us?
Probably the most relevant to this audience is that we collab around Dust Labs. If you follow DeGods or know about Uts, DeGods was the number one NFT Solana project. Frank and Kevin, I've known Frank. He's an amazing Founder. They are building a lot of tooling to help projects better monetize their communities and also create more engaging experiences. We are pumped about that. Outside of that, there's a well-known writer and Founder, Antonio Garcia Martinez, who wrote this book called Chaos Monkeys.
He's building a product called Spindle. It's a boring nuts and bolts project but they are trying to create an attribution product for marketers to better understand what's the downstream impact of things like airdrops and any incentive models so you can understand what customers are doing if it's driving retentive behaviors and cohort analysis that you do in any Web2 product.
We may have to have both of those guys on the show at some point. I'm sure you could help us out with that.
Antonio is incredible. He would be a great guest. If you follow DeGods, Frank is just a character.
I have been wanting to have him on the show for a while. It's very cool. If folks want to learn more about Chapter One, put their pitch into the mix, and get your thoughts on it, what should they do?
I'm @JMJ on Twitter, so give me a follow. Our website is ChapterOne.com. We have on the landing page a way to submit your company. We will read any email you send.
As a product guy, that's not too surprising to hear that. Jeff, thanks so much for spending a little bit of time with us. I hope you have a fruitful trip in Asia. See you back in LA at NFT LA.
Thank you. I appreciate it.
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I am with Jagdeep Sidhu, President and Lead Developer of the Syscoin Foundation. It's great to have you here, Jagdeep. Thanks for joining us.
I'm excited to be here.
You guys specialize in machine learning, artificial intelligence, client-server development, and distributed systems. You have many years of software development experience. You guys are looking at the future of blockchain and DAOs.
DAO is a critical structure to figure out how we are governing our future structures like who are going to be the new banks in the new world. Centralized exchanges will end up being, at least in the 5 to 10-year plan, will be the banks. The trading will happen on a chain on scalable infrastructures like the perpetual trading decks and stuff that are creating up, and the dYdX is the zig-zags. In terms of building, I want to build an ecosystem. I want freelance systems where people can get work done. It has to be global.
It needs to disintermediate the people in the middle that are saying, "You can do the work and get paid this much." It needs to be a direct market, lenders, and borrowers. Smart contracts can get you there. The problem is you always have this situation where there's counterparty risk. In every lending borrowing market, there's always this risk of, "I will give you some money but you could just walk away, especially if I don't know who you are."
We experience that across the entire industry.
It happens all the time. It has happened in humanity since the beginning. It’s because we have this autonomous finance mechanism that we can innovate past that now. For example, with DAOSYS, here's what we wanted to do. How Uniswap works are you take your two tokens, create an LP token, and put it into the smart contract?
You are earning residual income while providing liquidity. Aside from the impermanent loss issue, there's a real innovation there incentivizing people to provide liquidity while someone else can borrow that liquidity. Take that concept and throw it into a DAO-type idea where you put the money into a smart contract, borrow against that position, and lend it to someone to build something.
DAOs have always sounded great on paper to me. I saw posts from a friend on Facebook, "This is the year of the DAO." Didn't we say that in 2021 and 2020? This is a level of sophistication that makes sense because it sounds great on paper to be part of this cool DAO. Governance and thinking about trust, what comes first, the chicken or the egg, gets complicated.
Andre Cronje left because he was saying, and even Vitalik echoed this, "Voting on a chain in the typical DAO governance models doesn't work." There's a conflict of interest when you create new tokens, how well it is distributed, and how easy it is to accumulate a large chunk to sway opinions. Voting in a DAO model, in a typical company structure, you can have shareholders and all that stuff and vote on a direction. We think that's a bad model. It's not going to lend to anything great long-term. The other thing is that a lot of DAOs end up creating speculative tokens. They say, "The token goes up, and the DAO is more powerful. It can do more stuff."
That's also speculative. It's not conducive to long-term growth. In our model, it's maybe not even a DAO. It's a financial management tool with blockchain and smart contracts. You are not getting a speculative token out of that. You are creating a position in yourself by locking your collateral and borrowing against it. The key thing here is that there's no counterparty risk. Meaning if you lend out your capital, you have an LP position. Everyone else's position is also in there. They're also lending and borrowing. That whole thing is indexed and rebased. Meaning the treasury is growing on its own. As people are churning DeFi, there are interest rates.
Is there still a problem of run on the bank where everyone big whale pulls out, and then everyone else pulls out?
No. It's your own collateral and position. You are an isolated risk. Someone else's position doesn't affect yours. You come in there as a bank and want to lend out and build something or do some real estate or whatever. You could do that. You all have to lock up for a certain time. There's inherent time risk at the beginning but the time risk is isolated because now there's no counterparty risk when you are borrowing or lending. If the guy does some work and never ends up doing the work, the DeFi market is going to pay you back. This is like the central bank setting an interest rate, which is now the DeFi market. The central bank is saying to the bank, "This is your interest rate. You go to the market and charge a different interest rate."
Now the central bank is the DeFi market that's charging, and it's giving you an interest rate on your loans as a bank as you come in as a person and lend out. The counterparty risk is removed because it's isolating time. Over some time, your loan is going to pay back itself. Not only if the guy did some work, gave it back to you, and you got some value out of it. Your loan will also be paid back on its own. That's the innovation. There's no governance and speculative token. It's a tool we want to use to create a flywheel effect of growth and economy going.
Not only are you building on the ideas of the last few years but you are working with some of the earlier pioneers.
Some of the original Olympus DAO people were working on this spec but they went in a different direction. They went towards monetary mass and a stable form of currency and that thing. You have to incentivize people differently. In that model, you have to create speculation that it's going to monetize and stabilize and that you have to create more ROI.
The whole thought there was original founders thought it could go in two directions. You can go the monetary mass way or the building direction, which is what the DAOs should go. Not a DAO shouldn't be trying to incentivize you to create a monetary mass because that's a different tangent. We saw Olympus DAO is still going but it's not what it cut out to be. There was this whole untapped market of, "Let's create a builder market or a decentralized freelance market where people can get stuff done, and there's no counterparty risk. There's only time value."
You guys have a fund that you are rolling out. I'm curious to learn more about that fund. What industries and subsections of the blockchain industry do you think what you are doing applies to? Are we talking about social DAOs, creator DAOs, and art DAOs? Are there different use cases you have in mind?
In terms of the DAO, it's a blank slate. People can come in and create their own DAOs. There are different layers, the treasury management.
There's ConstitutionDAO and BlockbusterDAO. They can all use it.
What we are saying is that we found a way to make a treasury management system that's upgradeable in a way that we don't have control over the upgrades. That's a big problem in the DeFi space now. It's, "Who's got proxy control over the smart contracts?" We created a treasury management system that lets you upgrade the core components while retaining the security of the funds.
You are creating features and cloning an existing feature into a new one. People can opt-in by moving their value into that new smart contract. The original one remains immutable. That's our thought process instead of giving proxy control. The DAOs can be built on top, and our DAOSYS is an example of leveraging that treasury management system to build a DAO system on top.
How does that relate to this relaxed testnet ecosystem fund?
We are announcing a $20 million ecosystem fund through partners that, as we roll up layer twos, there's going to be a ton of protocols and stuff being built on top. We are a layer one. We are like Bitcoin, and Ethereum put together in one box because we've got the Bitcoin security, smart contracts, and layer two on top. There are a bunch of projects and new projects coming. They need to bootstrap funding. They have seed raises. They have token events. We have partners interested in those, especially if they are nice, interesting ideas with white papers and nice people too, with their docs and all that.
We bring them to the ecosystem fund, and we have that. It's the first time we are announcing this SYS Labs, which is like a structure from the Syscoin Foundation that will take these projects and also build our own projects that will be funded and build the Syscoin ecosystem, leveraging DAOSYS to create a flywheel effect of growth. The long-term vision there is to create a new corporate environment, which is governed by the holders of Syscoin itself through social governance.
A constitution in the company will be set up to say the funds used to create the ecosystem growth will be governed by the Syscoin holders of layer one. If you are a layer one, you have direct alignment in the growth of the ecosystem, different than having direct governance on some new contract you create with Josh tokens, which may not be distributed in the same way. There's a conflict of interest with Ethereum itself because Ethereum's goals are different than Josh DAOs goals.
We are creating a direct alignment with the actual Syscoin ecosystem directly, where the holders of Syscoin can end protocol vote on where things go. It's a social construct in a way where we are not beholden or tied in case they say to turn around and burn everything. It's a social construct. We are going to do it within limits. If you say go and fund a ZK initiative, create Bitcoin miners or do something like it, we could do that.
That sounds exciting. How can people learn more about what you are doing and get involved?
We have been around for a while. We refreshed the website. It's Syscoin.org. There are links to Discord and Telegram. We got a huge community. A lot of OGs are with us in terms of they've known us or building with us. We've got a lot of people who can help new people have the contextual knowledge to get people from 0 to 100.
A lot of people there have been around a long time that knows the pitfalls that new investors might fall into when they get into these spaces. It's the knowledge curve of, "Do you believe in some of these Ponzi ideas coming out?" and how to filter them out. The community is a tight-knit couple hundred thousand people now, but a tight-knit community of people helping each other and growing together. There's Discord, Telegram, and Twitter. All those are good mediums to connect with us.
Thanks for sharing all that. That's an exciting announcement. I'm going to check out the new website after this interview and look forward to keeping tabs on what you guys are doing in this space to evolve the thinking, technology, and sophistication of DAOs. It's great to have you here.
Thanks for having me.
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