January 23, 2025 • 59 mins
Kiln operates as a staking-as-a-service platform, primarily focused on Ethereum, enabling users to stake assets programmatically, managing validators, rewards, and commissions through an API-first approach. In addition, it offers white-label solutions that allow institutional clients to integrate staking functionalities into their own offerings, with unified API for all assets and rewards, making it easier for businesses to provide staking services without developing the infrastructure themselves. With more than $13bn worth of assets secured, Kiln has proven its reliability, having no slashing events thus far. Moreover, Kiln widget offers a no-code experience for launching custom earn options, integrated with every major wallet and custodian.
Topics covered in this episode:
- Laszlo’s background
- Founding Kiln
- Enterprise-grade validators and slashing
- DevOps & infrastructure maintenance
- ETH staking and custody
- Liquid staking and restaking
- The evolution of staking providers and requirements
- DeFi yield
- Institutional investors
- Kiln roadmap
Episode links:
Sponsors:
- Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.io
- Chorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.one
This episode is hosted by Friederike Ernst.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
From running a node on your computer, a solo staker to like
being a institutional grade operator, there's there's a
couple of things that differ. We tend to over perform the
network a little bit. We do MEV interest timing games,
you delay a little bit, block proposal so that you can get a
little bit more MEV and then like we are the largest
(00:20):
independent node operator. Welcome to Epicentre, the show
which talks about the technologies, projects and
people driving decentralisation and the blockchain revolution.
I'm Frederica ANZ and today I'm speaking with Lazo Sabo who is
the Co founder of Kin, an institutional great rewards
platform which offers staking and defy access.
Before I talk with Lazlo, I'd like to tell you about our.
(00:41):
Sponsors this week If you're looking to stake your crypto
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They support over 50 block chains and are leaders in
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(01:04):
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You can stake directly from yourpreferred wallet, set up a white
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their SDK for multi chain staking in your app.
Learn more at Chorus .1 and start staking today.
This episode is proudly brought to you by Gnosis, a collective
(01:25):
dedicated to advancing a decentralized future.
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(01:47):
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(02:10):
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Start your decentralization journey today at nosis dot IO.
Last, though, it's a It's a pleasure to have you on.
Thanks for having me. So you've been in this space for
quite some time, but maybe let'sfocus on what happened before.
(02:32):
So tell us about your journey leading up to Founding Killing.
So I I'm I did an hospitality school, so nothing related to to
tech or or even crypto. Then I discovered Bitcoin in
2014. I had a in I had found this guy
very interesting in in Japan actually that was building BRG
(02:55):
wallet. I don't know if you remember it
was one of the largest Bitcoin wallet at the time.
And, and he explained me Bitcoinand and you know, digital gold
the the old story behind it. So I, I bought my first Bitcoin
back in Europe and and then in 2016, I had a childhood friend
that started to work at consensus.
(03:15):
So consensus in 2016 was workingat the on variable, which is
basically trying to to do a decentralized stable coin, like
a type of maker at consensus. And yeah, I was just mind blown
by this idea of like world computer Etherium decentralized
applications. So I, I invested it in Etherium
in some ether in 2016, but I never, I never really came from
(03:37):
for, for the, the, the, the financial aspect of it.
I was, I've always, and I think still very bad at like managing
my own money. Maybe I shouldn't say this on
the podcast, but so now I came for the kind of the tech and
then like 2017 was the crazy ICOperiod.
And, and then I was just formal.I was already an an entrepreneur
(03:58):
since 2015 because I launched mytech recruitment company ten
years ago. So also when I started to to
look at at block chains and and crypto in general.
And in 2017, I was just two things.
First, frustrated to not work with the engineers I was
(04:19):
working. I was sorry recruiting for other
companies. I wanted to build products with
them and not recruit them for other companies building Co
products. I want it to be, you know, on
the other side of the of the river.
And then also I was just formal by the blockchain and crypto
echo system as a whole. I think I did a first meet up in
(04:43):
2017 in Paris. And when you do a meet up, like
you just find bunch of nerds builders all together.
And I was like, OK, a week afterI was like, I'm done with
recruitments. I, I, I'm still sure of this, of
this company in the South of France, They're still, you know,
good friend partners. And I'm like, guys, I need to, I
(05:06):
need to, to try to, to build a company in blockchains.
And that's what I did. There's a lot to unpack here.
So how how kind of coming from ahospitality background, how did
you get a lack up in kind of tech recruiting?
Yeah, there was I think just my,my, my friends in Marseille,
(05:30):
Salsa friends at the time just went to be and said, Hey, we, we
want to build a company. We don't know what to build.
We just want to be entrepreneurs.
And because we don't think we, we any other companies will will
like to hire us. We we are not recruitable.
(05:54):
This is a great start start for tech recruitment company.
Kind of like trying to kind of help unrecruitable people.
That's right, exactly right. You're the best consultants
because at least you, you, you can, you can tell not to, to,
(06:14):
you know, candidates not to, to look like us at the time so that
they had they get more chance to, to get hired.
But yes, and, and it came to me and, and I was still finishing
my hospitality school. Say, Hey, you are from Paris and
tech is, is very centralized in France and you might know more
(06:35):
companies that want to recruit engineers.
So do you, do you want to be part of the journey?
Why we find the engineers You, you have this relationship with
the start-ups that want to recruit.
And I'm like, yeah, well, guys, OK, but you know, I need to
finish my schooling and everything.
So if it doesn't work after months because I don't have time
or I'm not just delivering, you know, we'll shake hands and,
(06:57):
and, and, and you'll move on. So that's we, we started and it
kind of worked and, and then I got just very, very excited
about the tech industry in general.
I like and and very excited about engineers.
For me was. Kind of the.
Good people, the artists of likethe 21st century.
(07:18):
It's like, I think that it was the best part of my job is like,
sometimes it was a hard job. Recruiting is a hard job.
You have to, you know, scrap numbers on LinkedIn and then
call like 100 people. There's 70 people that won't be
interested or even not answeringyou with 27 people that are, you
know, answering you but say they're not interested.
(07:40):
Two people that literally insults you.
It's like, oh, where did you find my number?
And maybe one person saying like, Oh yeah, maybe this job
might be interesting for me. So it's a hard one, but
sometimes you have a discussion with 30 minutes an hour.
Was an engineer talking about like AIO at the time, you know,
blockchain and and you, you, youjust like find this person so
(08:02):
passionate. It's like, wow, if I get to work
with this person every day, my life would be better.
That that that's, that's a supernice blockchain origin story.
Let's talk about how you honed in on kind of the staking space
because kind of kin kind of started off any theorem staking.
(08:22):
So how did you identify this as a target for your for your own
company? Yep.
So 2017 eighteen from the recruitment background, the only
thing I knew was like I try. I was trying to put C VS on
Shane wallets for candidates that would certify the fact that
he worked for this company and on this mission and and was the
(08:42):
next employee he would he would show certification there maybe
with zero knowledge. You would, you know, kind of
like a decentralized professional ID.
Then we of obviously people would try to expand this to the
French state in 2018. They were like, what the fuck
are you talking about? So, so then we pivoted and in
2019 we did our first blockchainas a service platform at the
(09:06):
time in France, consensus actually had a office in France
and and most of the proof of concept being done were on
private blockchain. So I kind of like we're
deploying like private theorem, Quran, Corda, these kind of
stuffs where it's like today sounds, sounds terrible.
And I think I think they were and in but I was looking at the
(09:29):
staking space from 2018. I had friends at Cosmos like
Gotima and, and others that launching or even like, you
know, the Ogs like Chorus one stick fish P2P.
They were launching validators or participating in the Cosmos
network. For me, it was just too, too
much of a retail market. I didn't understand it right.
(09:51):
Like I couldn't grasp the, the, the understanding of it and
seeing at the time buys and shells.
Joe Le Lewis explaining that theplatforms exchanges at the time
in 2019 and 2020 will be able tooffer staking to their users
while retaining making it as a business model.
(10:14):
I was like, OK, now I understandit like AB to B type of company
that you'd leverage to then havelike indirect hundreds of
thousands of millions of users. So in 2020, the first staking
product we launched was for Pocket Network.
Is there a decentralized RPC network?
(10:35):
We were offering RPC ourselves. So like, wow, if you can
decentralize it, this is this isgenius.
So like Michael the CEOI met himin Berlin, actually in Berlin
blockchain in 2019. And I was like, wow, this guy is
so smart, so bright. And if, if the future is
decentralized, the access of blockchains are decentralized,
(10:55):
that that could be, we could potentially be part of it.
And in 2020 it comes to ATHC in Paris.
We do in advance and together inoffice.
And and then he covet it. And he, he comes to me and say,
hey man, like I, I need the professional infrastructure
company to offer staking to my investors while deploying nodes.
(11:19):
And it's a pure proof of stake network.
So that's not a delegated proof of stake network, meaning that
every X number of tokens in thatcase was like 15,000 number of
token, you have to launch another validator.
So we're not running one validator on pockets.
We're running like thousands of tedators actually, right.
It was a, it was 4 of tenements at a time.
(11:40):
And anyway, we build this, we was like, OK, we didn't find a
market on, on our PC. So let's focus on staking in
summer 2020. We, we ready to launch the
product. We launch the product and you
know, it's defy summer, so bowl price goes up.
The demand for staking is just like insane.
(12:01):
And suddenly we from zero customers and, you know,
struggling with blockchain for for two, two years, two years
and a half. Like we had like 50 customers in
two months right from everywherein the world, like US, New
Zealand, Europe. So, yeah, we, we, we, we, our
product was terrible, but we found, we found the market that
(12:22):
was the first staking product welaunched.
And then Ethereum was a very natural evolution for us because
Ethereum was the first major pure proof of state network,
right? You would have to run a
validator every X number of token as on pockets every 33 you
(12:42):
have to run a validator. So we were, we were good at like
running validators at scale on neon pockets.
It's just, it was a much bigger protocol to secure a much bigger
playground. So we, we launched our Etherium
operations when the B country launched in December 2020.
(13:02):
And quickly we, we also had Lidoas a customer.
So I have to shoot out to the Lido team for trusting us at the
time because we're, we're not known at all and we owe them
quite a lot. And then yeah.
And then, you know, guess can can give you more details about
the rest and rest is history. But that's that's how we
started. Give us some neons for what it
(13:26):
takes to kind of run a validator, kind of add an
institutional grade for clients.Because kind of, I think a lot
of people will have experience with kind of like running kind
of like an Ethereum or Gnosis chain or so validator.
But usually it's pretty, there are some challenges and these
(13:47):
are kind of the networks on which it is super easy to kind
of run nodes, right? Kind of like there's a lot of
networks where kind of running anode is extremely it, it kind of
it, it requires very close maintenance and the professional
expertise. So kind of give us some nuance
to kind of like what it takes tokind of operate this as a
business. No, that's a very good question.
(14:09):
Yeah, First off, you're right. There's some block chains, for
example a theorem or Cosmos where it's easier to run
validators than like on TON, forexample.
For those who know Ton, we love TON.
It's a, it's a fantastic block chain.
It's just harder to to operate in.
And yeah, I mean the even on let's say a theorem from running
(14:33):
a node on your computer, a solo staker that you mentioned to
like being a institutional gradeoperator.
There's there's a couple of things that that differ.
First, we tend to sometimes other and I mean sometimes, but
on regular basis over perform the network a little bit.
(14:53):
I guess that's our the first type of advantage that we offer
our clients, meaning we, we do, we do MEV.
We introduced where the some of the ones that interest timing
games in I think September 2022,if I recall, because there was,
(15:14):
there was papers from the foundation, but not nobody
really like put it in productionso that you, you delay a little
bit the block proposal so that you can get a little bit more
MEV. And then like we did a lot of
research was like how the network will be impacted by this
and with all the, definitely allthe operators and the foundation
(15:34):
themselves so that we work hand in hand not to slow down or not
to impact Ethereum as a whole. And, and, and we found like kind
of a recipe. So that, so I mean, this, this
is the first advantage. The second is definitely so the
rewards, right? The rewards part.
And in, in on chain rewards, launching yields, there's always
this like risk and rewards components.
(15:56):
So rewards like you, we try to, to over perform the network a
little bit. This is the case on Ethereum.
There's also the case on Solana and other networks.
The risk cards is also very, very important when you try to
be institutional, right. So you what you're trying to
offer first insurance in case ofslashing.
(16:18):
So this, you know, I think 3 to $4 million is the total amount
of that has ever been slashed onthe beacon shade, which is quite
minimal if you, if you look at like you know, the number of
billions asset our states. But still we, we try to, to be
(16:40):
insured in case there's a slashing events for clients so
that they are sure their clientswill be paid back.
Then we try to have like internal security measures.
We, you know, try to avoid double, double voting, double
proposing. And we, we double signing and we
(17:00):
have a couple of, and we published some blog posts with
the foundation on this. Actually, even our monitoring
validity monitoring tool is opensource.
You can you, if you're a solo Stoker, you can use it, but the,
the you, you'd never want to be slashed, right?
And, and slashing measures are like a Swiss cheese.
(17:21):
It's couple of layers. It's, you know, double slashing,
double voting prevention. It's definitely insurance, it's
definitely monitoring at different level, external and
internal monitoring. It's the signing.
We, we use Web 3 signer, but we might use like more type of HSM
(17:45):
signers when, when we, we sign locks in in the future and you
decouple the signing from, from the validated infrastructure and
then you spread this validated infrastructure across the globe.
And, and lastly, you, we use different validated clients,
Prism, Lighthouse and Tekhu. We were one third, one third and
(18:07):
one third. So we'd like splits, but we
realized that if you run a majority clients, so for
example, Lighthouse and Tekhu, sorry, Lighthouse and Prism,
sorry that I have like more than33% of the of the network.
You might in case of a large slashing events, a bug on the
clients, the you know it, it might be very damaging for all
(18:32):
infrastructures. We, we decided to actually
reduce drastically the Lighthouse and Prism exposure
that we have and run a majority of Teku by the clients.
Anyway, I hope I don't go too much into the weeds, but all of
that is how you differentiate offrom being a solo staker.
Maybe we can just very quickly kind of give some colour to the
(18:55):
some background to the slashing discussion.
So kind of the background here is that kind of if you double
sign, you're always slashed, butkind of if you just if you're
validated, just goes down and stops kind of attesting and
proposing blocks, then you're slashed based on how much of the
network kind of goes down with you.
(19:16):
So kind of if you're just a Sodostaker and kind of you lose
power on your on your server or something that's that actually
doesn't get you slashed a lot. But kind of like if you and half
of the network go down, that is actually a very stashable event.
So kind of you want to prevent, you want to prevent kind of your
users to be penalized that way by kind of being caught in a
(19:40):
situation where they are a part,they are a large part of the
network or they are part of the large part of the network that
kind of goes down, right? Yeah, that's right.
But so so you, you you said it like being down will be always
less damage able a part of a larger part of the network goes
down at the same time than beingslashed.
(20:02):
So we have a mantra eternities like better be down than slash,
right? And and there's there's a couple
of events that you you. It's OK to be down or you're,
you're fine to be down, right? Yeah.
Then like avoiding session events.
Tell us about the team that kindof that it that it takes to kind
of operate this. So kind of, I just know this
(20:23):
kind of from our side, kind of we operate a number of nodes and
kind of like archival nodes and so on.
And I know there's a that our dev OPS team, they do a lot of
monitoring and they have kind oflike they have on call duties
and and so on. So, so, so how how is that set
up with within kiln and how manypeople do you have dedicated for
(20:46):
kind of just maintenance of infrastructure?
Right. So we have a team and
infrastructure for us is two sides is is like running the
nodes, but it's also sticking data, which is also like setting
you apart from like being a social, like a social staker
like for example. And I'm happy to come back to
it. But if you're an ETP or an ETF
(21:06):
and you offer a stick ETP, then you need the granularity of the
data to get taking reconciliation.
What's the NAV, what's the, the,the rewards on, you know, daily,
weekly, yearly basis. The the data needs to be.
And that's actually a very, verytricky part indexing.
I mean, you know this right? But, and in block shins, you
have two types of data. You have like the execution
(21:29):
later data, smart contracts and the consensus layer data and
consensus layer data. We very few in this in on the
planet to just like index it because it's usually means you
need staking data, right. So it's basically it's usually
like institutional staking providers that that does it.
So we have a team of 15 DevOps just to running, you know, all
(21:49):
the infrastructure running the nodes on 47 different chains.
And as you mentioned, there's, there's on calls, so 24/7 they
have an application on their mobile and they can be waking up
at 4:00 AM on Saturday morning. And, and, and that rotates in to
(22:12):
today. It's mainly concentrated in
Europe, but in the future we could, we could have teams
across the globe. So that's, you know, maybe like
you, you don't get waking up in that 4:00 AM in the on Saturday
morning. So and then on the data part,
it's, it's another 15 other people they're working indexing
(22:33):
20 different shades. So that's, and it's valid and
agnostic, right. So we don't, we don't only index
our validators. A lot of our clients actually
are using our data to index other providers because they're
using 123 or 4 providers, because they want to spread the
risk, because they, they want tohave more coin coverage and so
forth. But they're still using our data
to, to, to index the, the network and then get the NAV,
(22:57):
get the, the, the, the rewards on all these validators and so
forth. This being said, you know,
coming back, that's a recruiterstalking, It's not about like
number of, of engineers at the end, right?
This is never about the, the number of engineers.
It's always about like spending a lot of time to finding the,
the right engineer. So you might say, oh, 15 and 15,
(23:19):
oh, 30 people, a lot of it. It's a big team.
Well, I mean, but the number of things they're doing, it's quite
a small team, I can tell you right.
And, and we are we and I, I meetevery one of them.
I know all, all of their names. Some of them I've been working
for, for for five years and and some the ones, for example, in
(23:41):
charge of Ethereum and our Ethereum infrastructure school
emixes or Sebastiano. He's doing a lot of research
himself. He's doing open source with our
Ethereum validator. Watch her being like, what are
you doing tool to to monitor Ethereum validators?
He's he's doing open source withcomic boost.
So basically the preconf projectpast PECTRA that we'll, we'll,
(24:08):
we'll use working a lot with thefoundation doing some research
about the impact on MEV, for example, the network and so
forth, like so on and so forth. So, so they're not, they're not
only dev OPS, right? They are protocol specialists in
a way, yeah. Yeah, absolutely.
Can you give us an an idea how much of the stake ETH is stake
(24:32):
via KIN and kind of compare thisto other networks you're also
operating on? Yes.
So in total we have 13 billion assets that are staked on the
platform. It's don't want to.
So we have 4.6% of the FM network, which means in I don't
(24:54):
want to wrong the numbers. I think I think would mean like
between 5 or 6 billion of assetsor so dollars of ETH for the
states through validators running fourteen 9000
evaluators. And yeah, that's, that's, that's
I think kind of about it. We we say that we are the
(25:16):
largest independence like node operator, meaning you still have
like large platforms like Coinbase.
You can argue maybe Binance they're running modems than than
we do. But like as an independence
staking provider, yeah, we, we, we tend to say on a theorem,
we're the largest. What are your biggest clients?
(25:37):
Yeah. So we work with exchanges,
wallets, custodians, asset managers, so the, you know, the
ETFETP like and new banks and you know, maybe maybe the banks
and the like that are coming into the space and and we have a
couple of direct clients. It's, it's, it's a small portion
(26:00):
of a business, but when you go on Ledger for example, or you go
on Safe you, you you know Safe has a marketplace and you can
stake directly through DAP. So you will see kiln there most
that I would say that's five to five to 10% of our volume, 90%
of our volume. It's actually our white label
(26:22):
infrastructure that is used by, I don't know Bit Panda that is
used by Kunbi's wallets that is used by you know five blocks and
alike so that their customers either retail or institutional
customers can can stake. We shall probably stress that
(26:44):
kind of like all the staking that you guys do is non
custodial. So I mean, kind of like if you
kind of have funds on an exchange, on a centralised
exchange and kind of you let them stake for you, kind of they
are in custody of your funds, but you are never in custody of
someone's funds. So kind of how does this work on
a technical level? Yep.
So the exchanges and in exchange, for example, we use
(27:06):
our AP is that then like points to evaluators and our AP is
automates the flow, the stickingand then staking flow and also
give them the right data, right?Hey, today you have staked this
number of amounts and you have earned this number of rewards
for this number of customers. A wallet will use, for example,
(27:30):
safe will use a smart contracts and we have a smart contract
platform. So that on a theorem, for
example, you can stake 32 ETH a validator.
If you want to stake validator, that's how you know you are for
example, Co swap is on also the the it's the white label
solution that is used for the the swapping engine on on on the
(27:52):
safe interface. We are now the the the white
label solution for the the staking engine on, on, on on the
safe dashboard. For now, you can only stake 32
ETH, so a validator, but maybe in the future you will be able
to stake any amount of ETH if you don't have 32 ETH to stake.
And in that case, we have a smart contract that pulls
(28:15):
customers funds and then redirect to a validated that's
validated agnostic. For example, some of this smart
contract on chain rewards management platform is used by
Condes Cloud, for example, in and they're running the nodes,
but the the for Coinbase wallets.
(28:36):
But they use our smart contract platform to offer pooling
staking so that their customers non custodial can stake any
amount or consensus is offering 32 ETH staking while using our
our smart contract on mini mask.So yeah, that's, that's the type
of non custodial staking that wewe can also offer to our to our
(28:59):
customers. Custodial staking is the
exchanges, the asset managers and some of the the custodian
that are regulated custodian or non custodial staking for
wallets or technology custody. That's super interesting.
Kind of I want to come back to that in just a second, but maybe
kind of let's zoom out a little bit.
(29:19):
So kind of when we look at kind of the evolution of, of staking
on Ethereum or maybe even, you know, preceding the, the switch
to proof of stake on Ethereum, what do you see as kind of the
major milestones kind of in the history of proof of stake in
this ecosystem? Yeah, that's, that's a good
(29:44):
question. I think.
I mean, the first, I remember doing extension like these sort
of staking, right? Like the first staking protocol
were like 2013, 2014. We're, we're kind of the first
iteration of stake. And then like in 2014, 2030 for
(30:05):
2014, theorem already speaks about proof stake in the white
paper. And they say it's going to be
next year, right? Next year for, for the next 5
years. And and then in 20/17/18, you
start to have, I would say the, the first proof stake network
that launch at scale. So it's Cosmos, it's Tezos in
(30:29):
2020 and basically in 2027 to 2018 is like, hey, we we're just
going to do like a smart contract platform.
We're thinking it's not going tobe scalable.
At the time, the scalability wasnot yet, I would say part of the
discussion or even like, you know, technically available or
(30:51):
in 2020, you start to have smartcontract platform using staking
to say we're going to be a proofof stake network and we're going
to be scalable on L1. So that's Solana.
And then in, in in the end of 2020, a theorems 546 years after
saying that staking will be the end game, finally launched the
(31:11):
beacon chain. And, and two years after
launching the Beacon chain, they, they move, you know,
finally from proof of work to proof of stake in that's kind of
the history of proof of stake network.
The history of adoption of staking I would say would be
that we feel that until 2019-2020 it was and even even
(31:36):
ahead because Lido also was, wasa wells to retail type of type
of adoption. I would say since 2019-2020.
Then the adoption became very platform, right.
So you you would start staking from an exchange, you would
start staking from a wallet, youwould start staking from a
custodian versus you invested inthe IC O of Solana and you would
(31:57):
delegate directly to a validator, right?
Like nobody, none of the Ledger fire blocks safe or it turned
out Coinbase or buy bit at the time would tell you, Hey, by the
way, you have, you know, Solana on that platform.
So you can start to stake. This came a little bit after.
And so the IT was very platform adoption, I would say from 2020
(32:22):
to onward. And and now you really seeing
because they everybody say ho inthe institutional adoption, what
institutions means, right. But you're really seeing like
traditional financial institutions that are and will
start to stake and, and it starts with the ETPSETF, right.
So for example, in Europe we have Vanek as a client.
(32:46):
Vanek is, is, you know, a traditional financial
institution in the US that has ET PS product in Europe and can
start to say you have a ETH staked ETP so that you invest in
a theorem, but you also invest in a theorem that get rewards
annually mistaking and it's not yet available in the US, but you
(33:13):
know, you might argue that maybethis year or the next year now
that's the administration is changing and it's becoming pro
crypto stinking is going to comefor these products.
So, and, and then you know from,from from now on, other
institutional type of players will, will start to offer
staking the banks, the new banks, the banks, the, the, the
(33:37):
other large pension funds and edge funds.
And, and we we have very meaningful discussions with
these players who were looking at us like crazy DJNS 3-4 years
ago. Yeah.
I, I, I totally hear that. One of the things that kind of
no one I think initially kind offoresaw was the emergence of
(33:59):
both kind of liquid staking and then re staking.
So kind of with liquid, liquid staking, the idea is that kind
of you, you stake and for instance via Lido and you kind
of get a representation of your stake choking back.
So you can use that as collateral and you can have
leverage up how, how do, how do you view that because kind of
(34:24):
you, you don't offer that to your institutional customers,
right. So there's some opportunity cost
for them there. So we do, we do offer liquid
staking to our customers. And, and there's, there's two
offering we have it's, it's one if you're a retail platform, an
exchange of wallet, you can offer liquid staking.
We do liquid staking as a service with pooling, right.
(34:44):
So let's say you're an exchange,you want to launch their your
own E ETH, the name of the exchange or the name of the
wallet ETH. And in that case it's, it's very
similar to white label Lido if you want.
And we do offer liquid staking for institutions, ETF and the
like with we tokenized the validator, right?
(35:05):
Because we think the ETF needs liquid staking because you, you,
they can't stake us more than a specific amount of the of the
ETF of the farm because you know, they still need to be
liquid on a daily basis. They have t + 1 and T + 2
redemption requirements. And the way for them to stake
(35:27):
more would be to use liquid staking solutions, but they
don't want to use pooling solutions, commingling solutions
because it would mix jurisdiction, right?
Like when you stick on Lido, forexample, you have people from
all over the world sticking on, on in the Lido pool and we think
it, it doesn't fits them. So we, we, we did is we, we
tokenized the validator and we represent it with an NFT.
(35:50):
And this NFT can be can be traded from one ETF to the other
or from one ETF to a market maker.
Anyway, coming back to liquid staking, I think it's it's a
fantastic product and Lido really explain to the crypto
market with the the adoption of the product that it's a needed
product. And it the first staking is is
(36:11):
is the first it's the primary rewards, the risk free rate, if
you will, of crypto. But it's not D5, right?
It's, it's a, it's a protocol reward where liquid staking
became the 1st T5 product and start to flow this reward back
to lending boring protocols or liquidity, providing our, you
(36:35):
know, options and, and and risk free rate protocols and so
forth. So liquid staking is very
needed. First of all, 'cause you, you
need of you need liquidity, but you also you might need higher
source of rewards and you, you can't combine this this staking
rewards with, with other type ofrewards if you don't have a
liquid staking token. So yeah, I think, I think your
(37:00):
liquid staking is great. Of course, it introduces a bit
more risk, right? What are these risks?
So of course there's more contract.
Bye. You know, staking is the, the
risk of staking is quite low. I told you it's, it's 33 to $4
million slashed on dozens of billions of dollars of, of
assets are staked on, on liquid staking.
(37:23):
You, you start to have a complexsmart contract and we, we, we
build this smart contract ourselves.
So I can, I can tell you there'sa rest there.
It's not risk free. Then of course you can mitigate
it using great auditors and, and, and using continuous smart
contract monitoring tools. And of course the, the security
standards from like 3 years ago to now completely changed.
(37:44):
I think the industry is, is is is much more, much more mature
in that regard. And then re staking, yeah, I can
talk about re staking as well. But I, I see maybe just this, I
see staking as the the use of the staking position
horizontally and I, I see restaking as the use of the
(38:06):
staking position vertically, right.
Like you, you think you oh, sorry, the other way around
anyway, But basically, yeah, restaking embedded by Agnaire
was explaining to the market, asLydo explained, you know, to the
market that, you know, liquid staking was, was a thing and was
(38:27):
the primary D5 source primary D5protocol.
That's, you know, re staking could be used to secure other
networks or other applications that needs decentralization.
It's quite complex. And I'm sure you've launched
Federica your your chain. So you know, it's complex to
launch a chain and to manage a network, right?
(38:49):
You have to manage, go to markets or you have to manage,
you know, a lot of validators and do these two things at the
same time is, you know, actuallyvery, very time consuming.
It's it's often not at all the same thing.
(39:10):
And what's your chain and your token is getting worse if you,
if you don't focus on go to market.
So I can hear your calm and say,hey, if you are a start up, if
you're a project and you want touse the decentralization, this
validation marketplace, we already have a set of validators
that you can use and you can usea platform or marketplace to
(39:31):
bootstrap your decentralized application and project.
Yeah, that's that's that's very compelling.
Let's see you know how it and where it enhance with the
maturity of all these AVSS and startup that is launched with
with Aguilera. Not symbiotic is the kind of the
second mover on the theorem and Babylon on on Bitcoin, But but
(39:54):
that's interesting from a a a startup project digitization
application point of view. That's also interesting from the
other side of the marketplace. It's like, hey, I have Heath, I
have Bitcoin and suddenly you introducing this new type of
rewards on the market. This is not staking plus defy,
(40:15):
it's staking plus staking. It's two type.
I get it rewarded two or two, two times or three times to
secure one. Two or three network was the
same security pool coming from Ethereum or Bitcoin.
Yeah, the you know, that's, that's a very interesting
concept. And and that's something that
(40:36):
our clients, even if they are taking the time to use or
integrate these products, they're still they're looking at
on on regular basis. And, and I'm I'm confident this
ecosystem will grow. Do you think it potentially
messes up the security of the underlying protocol, in this
(41:02):
case Ethereum? Yes, it could for sure.
Leveraging the security of Ethereum with five or ten
different networks with the samesecurity pool that could mess up
Ethereum. That's that's a, that's a very
good point. And I think it's hard to tell
(41:24):
where the guardrails should be. Is it at the protocol level?
But then it's not really permission less is it at the,
you know, the, the Dow level, the community level, maybe
combination of all of that. But you know, leveraging on
Ethereum should be prevented somehow because you, you're not
(41:47):
yeah, you, you, you are playing with the security of the
network. So that's the risk for sure.
But you know, does like an Oracle protocol or a stable coin
or anyone building around Ethereum or even Bitcoin now
won't want to leverage the security of the underlying
(42:08):
protocol. I think they, they, they should,
right? I think, I think it's a, it's a
interesting mechanism that they they should leverage.
How do you see the staking ecosystem kind of evolve over
the next, Let's talk about long time scales in terms of
blockchain, let's let's say overthe next 5 to 10 years, how how
(42:32):
do you think it's going to evolve?
Is it going to be all kind of institutional grade staking
providers or do you think we'll still have some solo stakers?
Or do you think the pendulum will actually swing the other
way and kind of we will have a majority of smaller stake,
smaller solo stakers or staking providers?
(42:56):
Yeah, that's, that's, that's a very good question.
And I'm still hopeful in the like decentralization aspect of
it, even if you know, there willbe consolidation.
And I mean, I'm, I'm not, you know, playing on for, for, for
the kiln flag and out because ofcourse, you know, having, having
(43:16):
more part of the, of the market is, is one of our objective.
But, but, but as well as like keeping the network
decentralized. I think the difference between
Bitcoin, because if you look at Bitcoin today, mining, like
mining, is a clear consensus mechanism that push the small
players out of the network, right?
(43:38):
It's like if you don't have like3, if you don't pay your kilo
water three to four cents, while, you know, having like
great ASIC infrastructure to runit to validate the, the Bitcoin
network, then you're just out. And today, you know, they, they
like Frank, Frankly, Bitcoin might be validated by 4050 main
(44:02):
companies, if, if not less like,you know, there's, there's a lot
I, I, I can lease to at least three companies that have more
than 10% of the, the, you know, validation power on Bitcoin.
I can list you only one company that has this on, on, on
Ethereum. So I think proof of stake in
that sense is, is a better consensus mechanism to keep the
(44:24):
network decentralized because even in five years or 10 years,
it will be easier and easier fora solo staker to run a validator
on his computer, right? Which is the, the main
difference from proof of stake, though all had happened.
That's, that's the question she asked in the 1st place.
(44:44):
I think there will be definitelya combination of it.
I think that there will definitely be consolidation
because you know, these ETF example, they will, they will,
they will start to, to use one, two or three or four providers
and they will need, you know, performance insurance.
I mean, everything in social grader that mentioned to you
earlier, which a solo staker cannot provide, but maybe, maybe
(45:08):
there's a, there's a solo stakertype of aggregator that helps
them to decentralize also their staking sets because they, they,
they have the incentives to keepEthereum decentralized.
If you, if you think about it aswell, right?
And I think a part, a part of the, the validation poet will,
(45:28):
will be run by solo stakers and the ones that are
decentralization maxi. And we need them, right?
We need them to keep Ethereum decentralized.
So by the way, the one of the reason we are doing, we're
offering liquid staking productsand, and D5 products to our
customers. We can talk about it later is
because of course they are askedit, but also because like we
(45:49):
don't want to be in a world where we, we have to keep
growing on the staking business.And it it actually could
potentially hurt the decentralization of the network
itself that we we are trying to sink her in the first place.
There's efforts under way kind of in the Ethereum ecosystem to
kind of make staking easier in terms of capital requirements.
(46:13):
So currently you need 32 ETH, which is $100,000, and kind of
the idea is to kind of reduce this markedly.
What are your thoughts on this? I think it's great.
I think it's great. I think it also advantage us in
a way because it concentrates the, I mean, we, we won't have
(46:37):
to run that many validators anymore.
We, we will be able to merge validators 1 to another and run
as much as 64 validators 2048 ETH.
I don't know, please, I'm not, I'm not sure about the
calculation, but I think that it, that's it.
And, and, and these 64 validators, this 2048 ETH versus
(46:59):
32 will kind of auto compound, right?
So you will have kind of like validated pools in a way at the
protocol level, which is pretty compelling also for the large
players, but it's also compelling for a solo staker
because now the the requirement will be much lower.
So I think it's great. I think it's going the the right
(47:21):
way. A little while ago, you kind of
ventured outside of kind of yourcore staking business and you
kind of launch killing Kifi, which kind of lets your same
clients kind of tap into defy yields.
Tell us about that. Yep.
And actually you remember we, wehad a discussion, I think we
(47:43):
were in Prague together conferencing and that was the,
the beginning of our discussion.I mean, we, we think like, and
we think it's, it's evident thatstable coins will push the
payment markets and the value market in general to a non chain
(48:03):
future. At least that's what's that's
what we think, right? Like I like this quote from
Safe. Let's put the GDP on chain.
Yes, let's put the GDP on chain.If we need to put the, the GDP
on chain, stability in these transactions need to happen.
And that's why it's stable coinsare there and the stable coin
market already found problem. Like I think there's 170 billion
(48:26):
stable coins in circulation right now, USDTUSDC and and
others. And we've, we realized that most
of our clients had, and most of their users, most of their
clients had a lot of step one onthe platform, but wouldn't
access rewards, wouldn't access yields.
(48:47):
And there are some fantastic yields, you know, on, on, in,
in, on chain. The first ones are provided by
lending and boring protocols such as more for I'm saying them
first because I love them. I it's not only because they're
French, because I think it's a fantastic protocol and maybe
maybe one of the best, if not the best one out there.
(49:09):
And, and there's Ave. and there's compound, of course,
and, and there's, there's many others.
And on the other side, there wasonly 4% at the time when we
start. I think now it's, it went up to
six, six, 7% of stable coins that are were getting interest,
right, which if you compare it to a theorem, sorry a theorem,
it's 30% of of assets that are staked.
(49:30):
And if you compare it to stakeable assets, all POS
assets, I think it's 45% of all POS assets that are staked.
So this this stablecoin rewards market is very immature at least
10X when we started 10X less mature than than the staking
markets. So we thought, OK, we'll as we
(49:51):
did for staking, we'll provide the infrastructure for these
exchanges wallet custodians, newbanks, banks to offer table con
rewards. So that's how we, we start Cal
D5 was we, we, we aggregated wasour own smart contract bolt
infrastructure, the main lendingand boring platforms so that
(50:13):
the, you know, these exchanges, wallets, custodians can start to
monetize this while offering 10 or 15 different protocols on 10
or 15 different assets, stable coin assets.
And now we're expending this to,to other, other type of, of
rewards on chain. For example, if you want to lend
(50:34):
if and get close to 8 or or 10% type of, of rewards and not
you're not happy of the 3% staking, you want higher type of
yields. We, we also offer that and, and
maybe just lastly is like, you know, retail customers, they,
they need usually one click experience.
And if you want to keep them on chain, which is all of our
(50:55):
product do is like keeping them on chain.
You, you need to simplify this experience on chain.
So if, if you want to end up what that's one of the reason
why a lot of customers were sitting on exchanges not moving
on chain because the UX is it's not as good as, you know, I was
like the exchanges that can justbuild a front end and use of
omnibus set up in the background.
(51:17):
Whereas now you can start to build with pass key, you can
abstraction. The onboarding is getting much
better. And also the on chain
experience, The one click, you can rebalance from any yield
position to, to the other on chain in one click, whatever
the, the asset, whatever the D5 protocol, whatever the chain is.
And that's, that's something we,we, we heavily working on.
(51:39):
And and that's something that will that will increase the
adoption of of these products, Andre.
How do you evaluate which products to include in this?
Because kind of like you're in away this is a huge endorsement,
right? Because kind of like if, if I
I'm your client, I kind of expect you to kind of do the due
(51:59):
diligence on these protocols. Yeah, that's a, that's a very
good question. And you would be disappointed of
the answer because frankly, we started to to take the ones that
our clients wanted and also the largest one, right?
Like you, you, you know, we assume that's Ave. and Morpho
(52:22):
great protocols. When we start to, to, to offer
them to our users, then it, it starts to get tricky when
specifically, I guess of Marfa, for example, when you have like
different volts, different risk profile that are managed by
strategists and curators that are a third party that that is
managing the risk. So the risk is not even managed
(52:43):
by the protocol itself. It's managed by a third party.
So in that case, you also need to, to assess the risk of the
third party. So what are we doing now
naturally is like as we did for smart contract in the beginning,
we, we had only security team outside of our company, right.
We're using auditors like the spare bits and the likes and and
(53:08):
continuous monitoring tool wherevendors like exergate.
But, but now we have a security team in house and we, we still
use these external providers, but we we definitely need an
expertise in house. It's going to be the same for
risk in D5. We, we assess external vendors
(53:29):
and we are building a risk team and in house.
So to say, hey, why are we pushing this type of vault on
Mofo managed by this creator? Was this risk rewards approach
versus the other? Because, because, because the
(53:49):
it's not the only creator that managed volts on Morpho.
So, so that's, that's where we, we building at the moment and,
and, and I guess that's what ourclients as well will require in
the future. Yeah.
That, that, that makes a lot of sense when you look at your
client and I mean you kind of you have your ear to the ground
here, right. So kind of when it comes to
(54:11):
institutional investors and so on, are they in it just for the
yield or do they also kind of believe in the underlying asset?
Do you think kind of in, in in US, how much do you think this
capital is mercenary? It's hard to tell.
It's hard to tell. They definitely have to run a
(54:32):
business right and and they see the revenue opportunity.
So in that sense, but it's I don't think mercenary is the is
the is the right word? Because if it's if it's a short
term, like a a platform that is thinking 1020, thirty years
ahead and say, Hey, actually thethe world is going to or the
(54:52):
transaction on this planet will be on chain.
So I, I still want to be there in 20 years, cannot offer a
yield that is short term, right?If they don't believe, for
example, I'll give you an example.
If they don't believe in Bitcoinstaking, I can tell you I'm not
going to cite some platforms, but they won't offer it
regardless of the revenue they can make, regardless of the
(55:15):
amount of Bitcoin they have on the platform, which is much
higher than any other assets because they, they, they're
thinking long term, right? They're thinking, well, I mean,
I don't really understand the risk yet.
So I don't want to offer it to my users, even if I know the day
they will launch it, it will be a success because, you know,
suddenly people can start to have heels on on Bitcoin.
(55:37):
Same for stable coins. So we, we tend to think that
most of our largest clients, largest platform, they think
long term. So they they really still assess
the risk and I don't think master is the the word here.
They're you're thinking, OK, is this source of yields
sustainable is basically for more clients lending makes sense
(55:59):
because there's Boris on the other side of the spectrum and
it it will essentially make thiseconomy better.
OK, I'm I'm I'm able to to support it and same for us.
Like we we're thinking long term, we would we definitely
need to to grow our roughly and and the yield we offer on the
platform. But if we have one fuck up,
(56:23):
let's say like it's the end of our business and if we treat our
customers or their customers badly, it's the end, right?
So so that's a good point. I think like, I, I think because
we're starting to, for example, on Avid Morph, we're starting to
see fintechs actually using, integrating the, this
infrastructure to the credit lines, right?
(56:45):
And, and, and you, you working in a way on this infrastructure
as well, where basically, you know, you have a wallet, you
have a card, you might have EF on the wallet, but you still
want to pay on USDC or Tedder orbasically stablecoin so that you
can pay real life. We're starting to see proper use
(57:05):
cases of that in the background.You need to land your ETH
against USDCUSDT and then you, you have a credit that where you
spend your money in real life. So I think, and by the way, I
think moving forward, the biggest part of the adoption is
going to come from these use cases because we think all the
Fentex, the new banks, the Stripe and the like, and we
(57:30):
have, we, we're seeing that theydid do, of course, a big push on
stablecoin. We'll offer these type of rails.
And in that case, it's like a saving account, right?
You will need your saving account close to your, to your
payment accounts. And that's what we, we trying
to, to provide. We, we call it the saving
account for the world. I hope, yeah, I, I hope we'll,
(57:54):
we'll make it happen. I think this future is is
exciting to to us. Yeah, super cool.
So what? What's on the road map for Kin
in the coming year or so? Yeah, definitely.
And I haven't think any type of rewards on the platform on chain
and then seeing on chain movement, right.
(58:15):
I think like for example, exchanges, the first stack of an
exchange that will move on chains the earn section because
they don't need low latency of trading and the earn section can
move on chain before the others.So we'll definitely push the,
the, the exchanges to, to move on chain, at least the earn
section at first, because that'sour topic.
And we will also look at institutional adoption
(58:39):
worldwide. the US is now openingup post election with the
administration changing, though we were still waiting for, for
more clarity. But the, the hope and excitement
is there and we'll, we'll try tobuild this saving account for
the world while, you know, stillwe, our mission is to
(59:02):
demonstrate value creation in digital assets.
We think once you're on chain, of course we have a business, of
course we'll make revenue, but at least everyone will see how
much we're making our commissions and if, if we're
really driving value to our clients.
So that's what we'll we'll try to do.
Cool. Those are super nice parting
words. Tell us, where can we send
(59:24):
listeners to kind of find out more about killing?
Yes, please go on our website kill dot fi stake on our dabs
directly on the website or PRR partners marketplace say for
Ledger, we have a Twitter accounts, LinkedIn for the
movers and you know in conferences if you go on
(59:47):
conferences and you see a countyshirt, please come and say hi.
Cool. Thank you so much for coming on
Last Look. Thanks for the echo.
From running a node on your computer, a solo staker to like
being a institutional grade operator, there's there's a
couple of things that differ. We tend to over perform the
network a little bit. We do MEV interest timing games,
you delay a little bit, block proposal so that you can get a
little bit more MEV and then like we are the largest
(00:20):
independent node operator. Welcome to Epicentre, the show
which talks about the technologies, projects and
people driving decentralisation and the blockchain revolution.
I'm Frederica ANZ and today I'm speaking with Lazo Sabo who is
the Co founder of Kin, an institutional great rewards
platform which offers staking and defy access.
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Last, though, it's a It's a pleasure to have you on.
Thanks for having me. So you've been in this space for
quite some time, but maybe let'sfocus on what happened before.
(02:32):
So tell us about your journey leading up to Founding Killing.
So I I'm I did an hospitality school, so nothing related to to
tech or or even crypto. Then I discovered Bitcoin in
2014. I had a in I had found this guy
very interesting in in Japan actually that was building BRG
(02:55):
wallet. I don't know if you remember it
was one of the largest Bitcoin wallet at the time.
And, and he explained me Bitcoinand and you know, digital gold
the the old story behind it. So I, I bought my first Bitcoin
back in Europe and and then in 2016, I had a childhood friend
that started to work at consensus.
(03:15):
So consensus in 2016 was workingat the on variable, which is
basically trying to to do a decentralized stable coin, like
a type of maker at consensus. And yeah, I was just mind blown
by this idea of like world computer Etherium decentralized
applications. So I, I invested it in Etherium
in some ether in 2016, but I never, I never really came from
(03:37):
for, for the, the, the, the financial aspect of it.
I was, I've always, and I think still very bad at like managing
my own money. Maybe I shouldn't say this on
the podcast, but so now I came for the kind of the tech and
then like 2017 was the crazy ICOperiod.
And, and then I was just formal.I was already an an entrepreneur
(03:58):
since 2015 because I launched mytech recruitment company ten
years ago. So also when I started to to
look at at block chains and and crypto in general.
And in 2017, I was just two things.
First, frustrated to not work with the engineers I was
(04:19):
working. I was sorry recruiting for other
companies. I wanted to build products with
them and not recruit them for other companies building Co
products. I want it to be, you know, on
the other side of the of the river.
And then also I was just formal by the blockchain and crypto
echo system as a whole. I think I did a first meet up in
(04:43):
2017 in Paris. And when you do a meet up, like
you just find bunch of nerds builders all together.
And I was like, OK, a week afterI was like, I'm done with
recruitments. I, I, I'm still sure of this, of
this company in the South of France, They're still, you know,
good friend partners. And I'm like, guys, I need to, I
(05:06):
need to, to try to, to build a company in blockchains.
And that's what I did. There's a lot to unpack here.
So how how kind of coming from ahospitality background, how did
you get a lack up in kind of tech recruiting?
Yeah, there was I think just my,my, my friends in Marseille,
(05:30):
Salsa friends at the time just went to be and said, Hey, we, we
want to build a company. We don't know what to build.
We just want to be entrepreneurs.
And because we don't think we, we any other companies will will
like to hire us. We we are not recruitable.
(05:54):
This is a great start start for tech recruitment company.
Kind of like trying to kind of help unrecruitable people.
That's right, exactly right. You're the best consultants
because at least you, you, you can, you can tell not to, to,
(06:14):
you know, candidates not to, to look like us at the time so that
they had they get more chance to, to get hired.
But yes, and, and it came to me and, and I was still finishing
my hospitality school. Say, Hey, you are from Paris and
tech is, is very centralized in France and you might know more
(06:35):
companies that want to recruit engineers.
So do you, do you want to be part of the journey?
Why we find the engineers You, you have this relationship with
the start-ups that want to recruit.
And I'm like, yeah, well, guys, OK, but you know, I need to
finish my schooling and everything.
So if it doesn't work after months because I don't have time
or I'm not just delivering, you know, we'll shake hands and,
(06:57):
and, and, and you'll move on. So that's we, we started and it
kind of worked and, and then I got just very, very excited
about the tech industry in general.
I like and and very excited about engineers.
For me was. Kind of the.
Good people, the artists of likethe 21st century.
(07:18):
It's like, I think that it was the best part of my job is like,
sometimes it was a hard job. Recruiting is a hard job.
You have to, you know, scrap numbers on LinkedIn and then
call like 100 people. There's 70 people that won't be
interested or even not answeringyou with 27 people that are, you
know, answering you but say they're not interested.
(07:40):
Two people that literally insults you.
It's like, oh, where did you find my number?
And maybe one person saying like, Oh yeah, maybe this job
might be interesting for me. So it's a hard one, but
sometimes you have a discussion with 30 minutes an hour.
Was an engineer talking about like AIO at the time, you know,
blockchain and and you, you, youjust like find this person so
(08:02):
passionate. It's like, wow, if I get to work
with this person every day, my life would be better.
That that that's, that's a supernice blockchain origin story.
Let's talk about how you honed in on kind of the staking space
because kind of kin kind of started off any theorem staking.
(08:22):
So how did you identify this as a target for your for your own
company? Yep.
So 2017 eighteen from the recruitment background, the only
thing I knew was like I try. I was trying to put C VS on
Shane wallets for candidates that would certify the fact that
he worked for this company and on this mission and and was the
(08:42):
next employee he would he would show certification there maybe
with zero knowledge. You would, you know, kind of
like a decentralized professional ID.
Then we of obviously people would try to expand this to the
French state in 2018. They were like, what the fuck
are you talking about? So, so then we pivoted and in
2019 we did our first blockchainas a service platform at the
(09:06):
time in France, consensus actually had a office in France
and and most of the proof of concept being done were on
private blockchain. So I kind of like we're
deploying like private theorem, Quran, Corda, these kind of
stuffs where it's like today sounds, sounds terrible.
And I think I think they were and in but I was looking at the
(09:29):
staking space from 2018. I had friends at Cosmos like
Gotima and, and others that launching or even like, you
know, the Ogs like Chorus one stick fish P2P.
They were launching validators or participating in the Cosmos
network. For me, it was just too, too
much of a retail market. I didn't understand it right.
(09:51):
Like I couldn't grasp the, the, the understanding of it and
seeing at the time buys and shells.
Joe Le Lewis explaining that theplatforms exchanges at the time
in 2019 and 2020 will be able tooffer staking to their users
while retaining making it as a business model.
(10:14):
I was like, OK, now I understandit like AB to B type of company
that you'd leverage to then havelike indirect hundreds of
thousands of millions of users. So in 2020, the first staking
product we launched was for Pocket Network.
Is there a decentralized RPC network?
(10:35):
We were offering RPC ourselves. So like, wow, if you can
decentralize it, this is this isgenius.
So like Michael the CEOI met himin Berlin, actually in Berlin
blockchain in 2019. And I was like, wow, this guy is
so smart, so bright. And if, if the future is
decentralized, the access of blockchains are decentralized,
(10:55):
that that could be, we could potentially be part of it.
And in 2020 it comes to ATHC in Paris.
We do in advance and together inoffice.
And and then he covet it. And he, he comes to me and say,
hey man, like I, I need the professional infrastructure
company to offer staking to my investors while deploying nodes.
(11:19):
And it's a pure proof of stake network.
So that's not a delegated proof of stake network, meaning that
every X number of tokens in thatcase was like 15,000 number of
token, you have to launch another validator.
So we're not running one validator on pockets.
We're running like thousands of tedators actually, right.
It was a, it was 4 of tenements at a time.
(11:40):
And anyway, we build this, we was like, OK, we didn't find a
market on, on our PC. So let's focus on staking in
summer 2020. We, we ready to launch the
product. We launch the product and you
know, it's defy summer, so bowl price goes up.
The demand for staking is just like insane.
(12:01):
And suddenly we from zero customers and, you know,
struggling with blockchain for for two, two years, two years
and a half. Like we had like 50 customers in
two months right from everywherein the world, like US, New
Zealand, Europe. So, yeah, we, we, we, we, our
product was terrible, but we found, we found the market that
(12:22):
was the first staking product welaunched.
And then Ethereum was a very natural evolution for us because
Ethereum was the first major pure proof of state network,
right? You would have to run a
validator every X number of token as on pockets every 33 you
(12:42):
have to run a validator. So we were, we were good at like
running validators at scale on neon pockets.
It's just, it was a much bigger protocol to secure a much bigger
playground. So we, we launched our Etherium
operations when the B country launched in December 2020.
(13:02):
And quickly we, we also had Lidoas a customer.
So I have to shoot out to the Lido team for trusting us at the
time because we're, we're not known at all and we owe them
quite a lot. And then yeah.
And then, you know, guess can can give you more details about
the rest and rest is history. But that's that's how we
started. Give us some neons for what it
(13:26):
takes to kind of run a validator, kind of add an
institutional grade for clients.Because kind of, I think a lot
of people will have experience with kind of like running kind
of like an Ethereum or Gnosis chain or so validator.
But usually it's pretty, there are some challenges and these
(13:47):
are kind of the networks on which it is super easy to kind
of run nodes, right? Kind of like there's a lot of
networks where kind of running anode is extremely it, it kind of
it, it requires very close maintenance and the professional
expertise. So kind of give us some nuance
to kind of like what it takes tokind of operate this as a
business. No, that's a very good question.
(14:09):
Yeah, First off, you're right. There's some block chains, for
example a theorem or Cosmos where it's easier to run
validators than like on TON, forexample.
For those who know Ton, we love TON.
It's a, it's a fantastic block chain.
It's just harder to to operate in.
And yeah, I mean the even on let's say a theorem from running
(14:33):
a node on your computer, a solo staker that you mentioned to
like being a institutional gradeoperator.
There's there's a couple of things that that differ.
First, we tend to sometimes other and I mean sometimes, but
on regular basis over perform the network a little bit.
(14:53):
I guess that's our the first type of advantage that we offer
our clients, meaning we, we do, we do MEV.
We introduced where the some of the ones that interest timing
games in I think September 2022,if I recall, because there was,
(15:14):
there was papers from the foundation, but not nobody
really like put it in productionso that you, you delay a little
bit the block proposal so that you can get a little bit more
MEV. And then like we did a lot of
research was like how the network will be impacted by this
and with all the, definitely allthe operators and the foundation
(15:34):
themselves so that we work hand in hand not to slow down or not
to impact Ethereum as a whole. And, and, and we found like kind
of a recipe. So that, so I mean, this, this
is the first advantage. The second is definitely so the
rewards, right? The rewards part.
And in, in on chain rewards, launching yields, there's always
this like risk and rewards components.
(15:56):
So rewards like you, we try to, to over perform the network a
little bit. This is the case on Ethereum.
There's also the case on Solana and other networks.
The risk cards is also very, very important when you try to
be institutional, right. So you what you're trying to
offer first insurance in case ofslashing.
(16:18):
So this, you know, I think 3 to $4 million is the total amount
of that has ever been slashed onthe beacon shade, which is quite
minimal if you, if you look at like you know, the number of
billions asset our states. But still we, we try to, to be
(16:40):
insured in case there's a slashing events for clients so
that they are sure their clientswill be paid back.
Then we try to have like internal security measures.
We, you know, try to avoid double, double voting, double
proposing. And we, we double signing and we
(17:00):
have a couple of, and we published some blog posts with
the foundation on this. Actually, even our monitoring
validity monitoring tool is opensource.
You can you, if you're a solo Stoker, you can use it, but the,
the you, you'd never want to be slashed, right?
And, and slashing measures are like a Swiss cheese.
(17:21):
It's couple of layers. It's, you know, double slashing,
double voting prevention. It's definitely insurance, it's
definitely monitoring at different level, external and
internal monitoring. It's the signing.
We, we use Web 3 signer, but we might use like more type of HSM
(17:45):
signers when, when we, we sign locks in in the future and you
decouple the signing from, from the validated infrastructure and
then you spread this validated infrastructure across the globe.
And, and lastly, you, we use different validated clients,
Prism, Lighthouse and Tekhu. We were one third, one third and
(18:07):
one third. So we'd like splits, but we
realized that if you run a majority clients, so for
example, Lighthouse and Tekhu, sorry, Lighthouse and Prism,
sorry that I have like more than33% of the of the network.
You might in case of a large slashing events, a bug on the
clients, the you know it, it might be very damaging for all
(18:32):
infrastructures. We, we decided to actually
reduce drastically the Lighthouse and Prism exposure
that we have and run a majority of Teku by the clients.
Anyway, I hope I don't go too much into the weeds, but all of
that is how you differentiate offrom being a solo staker.
Maybe we can just very quickly kind of give some colour to the
(18:55):
some background to the slashing discussion.
So kind of the background here is that kind of if you double
sign, you're always slashed, butkind of if you just if you're
validated, just goes down and stops kind of attesting and
proposing blocks, then you're slashed based on how much of the
network kind of goes down with you.
(19:16):
So kind of if you're just a Sodostaker and kind of you lose
power on your on your server or something that's that actually
doesn't get you slashed a lot. But kind of like if you and half
of the network go down, that is actually a very stashable event.
So kind of you want to prevent, you want to prevent kind of your
users to be penalized that way by kind of being caught in a
(19:40):
situation where they are a part,they are a large part of the
network or they are part of the large part of the network that
kind of goes down, right? Yeah, that's right.
But so so you, you you said it like being down will be always
less damage able a part of a larger part of the network goes
down at the same time than beingslashed.
(20:02):
So we have a mantra eternities like better be down than slash,
right? And and there's there's a couple
of events that you you. It's OK to be down or you're,
you're fine to be down, right? Yeah.
Then like avoiding session events.
Tell us about the team that kindof that it that it takes to kind
of operate this. So kind of, I just know this
(20:23):
kind of from our side, kind of we operate a number of nodes and
kind of like archival nodes and so on.
And I know there's a that our dev OPS team, they do a lot of
monitoring and they have kind oflike they have on call duties
and and so on. So, so, so how how is that set
up with within kiln and how manypeople do you have dedicated for
(20:46):
kind of just maintenance of infrastructure?
Right. So we have a team and
infrastructure for us is two sides is is like running the
nodes, but it's also sticking data, which is also like setting
you apart from like being a social, like a social staker
like for example. And I'm happy to come back to
it. But if you're an ETP or an ETF
(21:06):
and you offer a stick ETP, then you need the granularity of the
data to get taking reconciliation.
What's the NAV, what's the, the,the rewards on, you know, daily,
weekly, yearly basis. The the data needs to be.
And that's actually a very, verytricky part indexing.
I mean, you know this right? But, and in block shins, you
have two types of data. You have like the execution
(21:29):
later data, smart contracts and the consensus layer data and
consensus layer data. We very few in this in on the
planet to just like index it because it's usually means you
need staking data, right. So it's basically it's usually
like institutional staking providers that that does it.
So we have a team of 15 DevOps just to running, you know, all
(21:49):
the infrastructure running the nodes on 47 different chains.
And as you mentioned, there's, there's on calls, so 24/7 they
have an application on their mobile and they can be waking up
at 4:00 AM on Saturday morning. And, and, and that rotates in to
(22:12):
today. It's mainly concentrated in
Europe, but in the future we could, we could have teams
across the globe. So that's, you know, maybe like
you, you don't get waking up in that 4:00 AM in the on Saturday
morning. So and then on the data part,
it's, it's another 15 other people they're working indexing
(22:33):
20 different shades. So that's, and it's valid and
agnostic, right. So we don't, we don't only index
our validators. A lot of our clients actually
are using our data to index other providers because they're
using 123 or 4 providers, because they want to spread the
risk, because they, they want tohave more coin coverage and so
forth. But they're still using our data
to, to, to index the, the network and then get the NAV,
(22:57):
get the, the, the, the rewards on all these validators and so
forth. This being said, you know,
coming back, that's a recruiterstalking, It's not about like
number of, of engineers at the end, right?
This is never about the, the number of engineers.
It's always about like spending a lot of time to finding the,
the right engineer. So you might say, oh, 15 and 15,
(23:19):
oh, 30 people, a lot of it. It's a big team.
Well, I mean, but the number of things they're doing, it's quite
a small team, I can tell you right.
And, and we are we and I, I meetevery one of them.
I know all, all of their names. Some of them I've been working
for, for for five years and and some the ones, for example, in
(23:41):
charge of Ethereum and our Ethereum infrastructure school
emixes or Sebastiano. He's doing a lot of research
himself. He's doing open source with our
Ethereum validator. Watch her being like, what are
you doing tool to to monitor Ethereum validators?
He's he's doing open source withcomic boost.
So basically the preconf projectpast PECTRA that we'll, we'll,
(24:08):
we'll use working a lot with thefoundation doing some research
about the impact on MEV, for example, the network and so
forth, like so on and so forth. So, so they're not, they're not
only dev OPS, right? They are protocol specialists in
a way, yeah. Yeah, absolutely.
Can you give us an an idea how much of the stake ETH is stake
(24:32):
via KIN and kind of compare thisto other networks you're also
operating on? Yes.
So in total we have 13 billion assets that are staked on the
platform. It's don't want to.
So we have 4.6% of the FM network, which means in I don't
(24:54):
want to wrong the numbers. I think I think would mean like
between 5 or 6 billion of assetsor so dollars of ETH for the
states through validators running fourteen 9000
evaluators. And yeah, that's, that's, that's
I think kind of about it. We we say that we are the
(25:16):
largest independence like node operator, meaning you still have
like large platforms like Coinbase.
You can argue maybe Binance they're running modems than than
we do. But like as an independence
staking provider, yeah, we, we, we tend to say on a theorem,
we're the largest. What are your biggest clients?
(25:37):
Yeah. So we work with exchanges,
wallets, custodians, asset managers, so the, you know, the
ETFETP like and new banks and you know, maybe maybe the banks
and the like that are coming into the space and and we have a
couple of direct clients. It's, it's, it's a small portion
(26:00):
of a business, but when you go on Ledger for example, or you go
on Safe you, you you know Safe has a marketplace and you can
stake directly through DAP. So you will see kiln there most
that I would say that's five to five to 10% of our volume, 90%
of our volume. It's actually our white label
(26:22):
infrastructure that is used by, I don't know Bit Panda that is
used by Kunbi's wallets that is used by you know five blocks and
alike so that their customers either retail or institutional
customers can can stake. We shall probably stress that
(26:44):
kind of like all the staking that you guys do is non
custodial. So I mean, kind of like if you
kind of have funds on an exchange, on a centralised
exchange and kind of you let them stake for you, kind of they
are in custody of your funds, but you are never in custody of
someone's funds. So kind of how does this work on
a technical level? Yep.
So the exchanges and in exchange, for example, we use
(27:06):
our AP is that then like points to evaluators and our AP is
automates the flow, the stickingand then staking flow and also
give them the right data, right?Hey, today you have staked this
number of amounts and you have earned this number of rewards
for this number of customers. A wallet will use, for example,
(27:30):
safe will use a smart contracts and we have a smart contract
platform. So that on a theorem, for
example, you can stake 32 ETH a validator.
If you want to stake validator, that's how you know you are for
example, Co swap is on also the the it's the white label
solution that is used for the the swapping engine on on on the
(27:52):
safe interface. We are now the the the white
label solution for the the staking engine on, on, on on the
safe dashboard. For now, you can only stake 32
ETH, so a validator, but maybe in the future you will be able
to stake any amount of ETH if you don't have 32 ETH to stake.
And in that case, we have a smart contract that pulls
(28:15):
customers funds and then redirect to a validated that's
validated agnostic. For example, some of this smart
contract on chain rewards management platform is used by
Condes Cloud, for example, in and they're running the nodes,
but the the for Coinbase wallets.
(28:36):
But they use our smart contract platform to offer pooling
staking so that their customers non custodial can stake any
amount or consensus is offering 32 ETH staking while using our
our smart contract on mini mask.So yeah, that's, that's the type
of non custodial staking that wewe can also offer to our to our
(28:59):
customers. Custodial staking is the
exchanges, the asset managers and some of the the custodian
that are regulated custodian or non custodial staking for
wallets or technology custody. That's super interesting.
Kind of I want to come back to that in just a second, but maybe
kind of let's zoom out a little bit.
(29:19):
So kind of when we look at kind of the evolution of, of staking
on Ethereum or maybe even, you know, preceding the, the switch
to proof of stake on Ethereum, what do you see as kind of the
major milestones kind of in the history of proof of stake in
this ecosystem? Yeah, that's, that's a good
(29:44):
question. I think.
I mean, the first, I remember doing extension like these sort
of staking, right? Like the first staking protocol
were like 2013, 2014. We're, we're kind of the first
iteration of stake. And then like in 2014, 2030 for
(30:05):
2014, theorem already speaks about proof stake in the white
paper. And they say it's going to be
next year, right? Next year for, for the next 5
years. And and then in 20/17/18, you
start to have, I would say the, the first proof stake network
that launch at scale. So it's Cosmos, it's Tezos in
(30:29):
2020 and basically in 2027 to 2018 is like, hey, we we're just
going to do like a smart contract platform.
We're thinking it's not going tobe scalable.
At the time, the scalability wasnot yet, I would say part of the
discussion or even like, you know, technically available or
(30:51):
in 2020, you start to have smartcontract platform using staking
to say we're going to be a proofof stake network and we're going
to be scalable on L1. So that's Solana.
And then in, in in the end of 2020, a theorems 546 years after
saying that staking will be the end game, finally launched the
(31:11):
beacon chain. And, and two years after
launching the Beacon chain, they, they move, you know,
finally from proof of work to proof of stake in that's kind of
the history of proof of stake network.
The history of adoption of staking I would say would be
that we feel that until 2019-2020 it was and even even
(31:36):
ahead because Lido also was, wasa wells to retail type of type
of adoption. I would say since 2019-2020.
Then the adoption became very platform, right.
So you you would start staking from an exchange, you would
start staking from a wallet, youwould start staking from a
custodian versus you invested inthe IC O of Solana and you would
(31:57):
delegate directly to a validator, right?
Like nobody, none of the Ledger fire blocks safe or it turned
out Coinbase or buy bit at the time would tell you, Hey, by the
way, you have, you know, Solana on that platform.
So you can start to stake. This came a little bit after.
And so the IT was very platform adoption, I would say from 2020
(32:22):
to onward. And and now you really seeing
because they everybody say ho inthe institutional adoption, what
institutions means, right. But you're really seeing like
traditional financial institutions that are and will
start to stake and, and it starts with the ETPSETF, right.
So for example, in Europe we have Vanek as a client.
(32:46):
Vanek is, is, you know, a traditional financial
institution in the US that has ET PS product in Europe and can
start to say you have a ETH staked ETP so that you invest in
a theorem, but you also invest in a theorem that get rewards
annually mistaking and it's not yet available in the US, but you
(33:13):
know, you might argue that maybethis year or the next year now
that's the administration is changing and it's becoming pro
crypto stinking is going to comefor these products.
So, and, and then you know from,from from now on, other
institutional type of players will, will start to offer
staking the banks, the new banks, the banks, the, the, the
(33:37):
other large pension funds and edge funds.
And, and we we have very meaningful discussions with
these players who were looking at us like crazy DJNS 3-4 years
ago. Yeah.
I, I, I totally hear that. One of the things that kind of
no one I think initially kind offoresaw was the emergence of
(33:59):
both kind of liquid staking and then re staking.
So kind of with liquid, liquid staking, the idea is that kind
of you, you stake and for instance via Lido and you kind
of get a representation of your stake choking back.
So you can use that as collateral and you can have
leverage up how, how do, how do you view that because kind of
(34:24):
you, you don't offer that to your institutional customers,
right. So there's some opportunity cost
for them there. So we do, we do offer liquid
staking to our customers. And, and there's, there's two
offering we have it's, it's one if you're a retail platform, an
exchange of wallet, you can offer liquid staking.
We do liquid staking as a service with pooling, right.
(34:44):
So let's say you're an exchange,you want to launch their your
own E ETH, the name of the exchange or the name of the
wallet ETH. And in that case it's, it's very
similar to white label Lido if you want.
And we do offer liquid staking for institutions, ETF and the
like with we tokenized the validator, right?
(35:05):
Because we think the ETF needs liquid staking because you, you,
they can't stake us more than a specific amount of the of the
ETF of the farm because you know, they still need to be
liquid on a daily basis. They have t + 1 and T + 2
redemption requirements. And the way for them to stake
(35:27):
more would be to use liquid staking solutions, but they
don't want to use pooling solutions, commingling solutions
because it would mix jurisdiction, right?
Like when you stick on Lido, forexample, you have people from
all over the world sticking on, on in the Lido pool and we think
it, it doesn't fits them. So we, we, we did is we, we
tokenized the validator and we represent it with an NFT.
(35:50):
And this NFT can be can be traded from one ETF to the other
or from one ETF to a market maker.
Anyway, coming back to liquid staking, I think it's it's a
fantastic product and Lido really explain to the crypto
market with the the adoption of the product that it's a needed
product. And it the first staking is is
(36:11):
is the first it's the primary rewards, the risk free rate, if
you will, of crypto. But it's not D5, right?
It's, it's a, it's a protocol reward where liquid staking
became the 1st T5 product and start to flow this reward back
to lending boring protocols or liquidity, providing our, you
(36:35):
know, options and, and and risk free rate protocols and so
forth. So liquid staking is very
needed. First of all, 'cause you, you
need of you need liquidity, but you also you might need higher
source of rewards and you, you can't combine this this staking
rewards with, with other type ofrewards if you don't have a
liquid staking token. So yeah, I think, I think your
(37:00):
liquid staking is great. Of course, it introduces a bit
more risk, right? What are these risks?
So of course there's more contract.
Bye. You know, staking is the, the
risk of staking is quite low. I told you it's, it's 33 to $4
million slashed on dozens of billions of dollars of, of
assets are staked on, on liquid staking.
(37:23):
You, you start to have a complexsmart contract and we, we, we
build this smart contract ourselves.
So I can, I can tell you there'sa rest there.
It's not risk free. Then of course you can mitigate
it using great auditors and, and, and using continuous smart
contract monitoring tools. And of course the, the security
standards from like 3 years ago to now completely changed.
(37:44):
I think the industry is, is is is much more, much more mature
in that regard. And then re staking, yeah, I can
talk about re staking as well. But I, I see maybe just this, I
see staking as the the use of the staking position
horizontally and I, I see restaking as the use of the
(38:06):
staking position vertically, right.
Like you, you think you oh, sorry, the other way around
anyway, But basically, yeah, restaking embedded by Agnaire
was explaining to the market, asLydo explained, you know, to the
market that, you know, liquid staking was, was a thing and was
(38:27):
the primary D5 source primary D5protocol.
That's, you know, re staking could be used to secure other
networks or other applications that needs decentralization.
It's quite complex. And I'm sure you've launched
Federica your your chain. So you know, it's complex to
launch a chain and to manage a network, right?
(38:49):
You have to manage, go to markets or you have to manage,
you know, a lot of validators and do these two things at the
same time is, you know, actuallyvery, very time consuming.
It's it's often not at all the same thing.
(39:10):
And what's your chain and your token is getting worse if you,
if you don't focus on go to market.
So I can hear your calm and say,hey, if you are a start up, if
you're a project and you want touse the decentralization, this
validation marketplace, we already have a set of validators
that you can use and you can usea platform or marketplace to
(39:31):
bootstrap your decentralized application and project.
Yeah, that's that's that's very compelling.
Let's see you know how it and where it enhance with the
maturity of all these AVSS and startup that is launched with
with Aguilera. Not symbiotic is the kind of the
second mover on the theorem and Babylon on on Bitcoin, But but
(39:54):
that's interesting from a a a startup project digitization
application point of view. That's also interesting from the
other side of the marketplace. It's like, hey, I have Heath, I
have Bitcoin and suddenly you introducing this new type of
rewards on the market. This is not staking plus defy,
(40:15):
it's staking plus staking. It's two type.
I get it rewarded two or two, two times or three times to
secure one. Two or three network was the
same security pool coming from Ethereum or Bitcoin.
Yeah, the you know, that's, that's a very interesting
concept. And and that's something that
(40:36):
our clients, even if they are taking the time to use or
integrate these products, they're still they're looking at
on on regular basis. And, and I'm I'm confident this
ecosystem will grow. Do you think it potentially
messes up the security of the underlying protocol, in this
(41:02):
case Ethereum? Yes, it could for sure.
Leveraging the security of Ethereum with five or ten
different networks with the samesecurity pool that could mess up
Ethereum. That's that's a, that's a very
good point. And I think it's hard to tell
(41:24):
where the guardrails should be. Is it at the protocol level?
But then it's not really permission less is it at the,
you know, the, the Dow level, the community level, maybe
combination of all of that. But you know, leveraging on
Ethereum should be prevented somehow because you, you're not
(41:47):
yeah, you, you, you are playing with the security of the
network. So that's the risk for sure.
But you know, does like an Oracle protocol or a stable coin
or anyone building around Ethereum or even Bitcoin now
won't want to leverage the security of the underlying
(42:08):
protocol. I think they, they, they should,
right? I think, I think it's a, it's a
interesting mechanism that they they should leverage.
How do you see the staking ecosystem kind of evolve over
the next, Let's talk about long time scales in terms of
blockchain, let's let's say overthe next 5 to 10 years, how how
(42:32):
do you think it's going to evolve?
Is it going to be all kind of institutional grade staking
providers or do you think we'll still have some solo stakers?
Or do you think the pendulum will actually swing the other
way and kind of we will have a majority of smaller stake,
smaller solo stakers or staking providers?
(42:56):
Yeah, that's, that's, that's a very good question.
And I'm still hopeful in the like decentralization aspect of
it, even if you know, there willbe consolidation.
And I mean, I'm, I'm not, you know, playing on for, for, for
the kiln flag and out because ofcourse, you know, having, having
(43:16):
more part of the, of the market is, is one of our objective.
But, but, but as well as like keeping the network
decentralized. I think the difference between
Bitcoin, because if you look at Bitcoin today, mining, like
mining, is a clear consensus mechanism that push the small
players out of the network, right?
(43:38):
It's like if you don't have like3, if you don't pay your kilo
water three to four cents, while, you know, having like
great ASIC infrastructure to runit to validate the, the Bitcoin
network, then you're just out. And today, you know, they, they
like Frank, Frankly, Bitcoin might be validated by 4050 main
(44:02):
companies, if, if not less like,you know, there's, there's a lot
I, I, I can lease to at least three companies that have more
than 10% of the, the, you know, validation power on Bitcoin.
I can list you only one company that has this on, on, on
Ethereum. So I think proof of stake in
that sense is, is a better consensus mechanism to keep the
(44:24):
network decentralized because even in five years or 10 years,
it will be easier and easier fora solo staker to run a validator
on his computer, right? Which is the, the main
difference from proof of stake, though all had happened.
That's, that's the question she asked in the 1st place.
(44:44):
I think there will be definitelya combination of it.
I think that there will definitely be consolidation
because you know, these ETF example, they will, they will,
they will start to, to use one, two or three or four providers
and they will need, you know, performance insurance.
I mean, everything in social grader that mentioned to you
earlier, which a solo staker cannot provide, but maybe, maybe
(45:08):
there's a, there's a solo stakertype of aggregator that helps
them to decentralize also their staking sets because they, they,
they have the incentives to keepEthereum decentralized.
If you, if you think about it aswell, right?
And I think a part, a part of the, the validation poet will,
(45:28):
will be run by solo stakers and the ones that are
decentralization maxi. And we need them, right?
We need them to keep Ethereum decentralized.
So by the way, the one of the reason we are doing, we're
offering liquid staking productsand, and D5 products to our
customers. We can talk about it later is
because of course they are askedit, but also because like we
(45:49):
don't want to be in a world where we, we have to keep
growing on the staking business.And it it actually could
potentially hurt the decentralization of the network
itself that we we are trying to sink her in the first place.
There's efforts under way kind of in the Ethereum ecosystem to
kind of make staking easier in terms of capital requirements.
(46:13):
So currently you need 32 ETH, which is $100,000, and kind of
the idea is to kind of reduce this markedly.
What are your thoughts on this? I think it's great.
I think it's great. I think it also advantage us in
a way because it concentrates the, I mean, we, we won't have
(46:37):
to run that many validators anymore.
We, we will be able to merge validators 1 to another and run
as much as 64 validators 2048 ETH.
I don't know, please, I'm not, I'm not sure about the
calculation, but I think that it, that's it.
And, and, and these 64 validators, this 2048 ETH versus
(46:59):
32 will kind of auto compound, right?
So you will have kind of like validated pools in a way at the
protocol level, which is pretty compelling also for the large
players, but it's also compelling for a solo staker
because now the the requirement will be much lower.
So I think it's great. I think it's going the the right
(47:21):
way. A little while ago, you kind of
ventured outside of kind of yourcore staking business and you
kind of launch killing Kifi, which kind of lets your same
clients kind of tap into defy yields.
Tell us about that. Yep.
And actually you remember we, wehad a discussion, I think we
(47:43):
were in Prague together conferencing and that was the,
the beginning of our discussion.I mean, we, we think like, and
we think it's, it's evident thatstable coins will push the
payment markets and the value market in general to a non chain
(48:03):
future. At least that's what's that's
what we think, right? Like I like this quote from
Safe. Let's put the GDP on chain.
Yes, let's put the GDP on chain.If we need to put the, the GDP
on chain, stability in these transactions need to happen.
And that's why it's stable coinsare there and the stable coin
market already found problem. Like I think there's 170 billion
(48:26):
stable coins in circulation right now, USDTUSDC and and
others. And we've, we realized that most
of our clients had, and most of their users, most of their
clients had a lot of step one onthe platform, but wouldn't
access rewards, wouldn't access yields.
(48:47):
And there are some fantastic yields, you know, on, on, in,
in, on chain. The first ones are provided by
lending and boring protocols such as more for I'm saying them
first because I love them. I it's not only because they're
French, because I think it's a fantastic protocol and maybe
maybe one of the best, if not the best one out there.
(49:09):
And, and there's Ave. and there's compound, of course,
and, and there's, there's many others.
And on the other side, there wasonly 4% at the time when we
start. I think now it's, it went up to
six, six, 7% of stable coins that are were getting interest,
right, which if you compare it to a theorem, sorry a theorem,
it's 30% of of assets that are staked.
(49:30):
And if you compare it to stakeable assets, all POS
assets, I think it's 45% of all POS assets that are staked.
So this this stablecoin rewards market is very immature at least
10X when we started 10X less mature than than the staking
markets. So we thought, OK, we'll as we
(49:51):
did for staking, we'll provide the infrastructure for these
exchanges wallet custodians, newbanks, banks to offer table con
rewards. So that's how we, we start Cal
D5 was we, we, we aggregated wasour own smart contract bolt
infrastructure, the main lendingand boring platforms so that
(50:13):
the, you know, these exchanges, wallets, custodians can start to
monetize this while offering 10 or 15 different protocols on 10
or 15 different assets, stable coin assets.
And now we're expending this to,to other, other type of, of
rewards on chain. For example, if you want to lend
(50:34):
if and get close to 8 or or 10% type of, of rewards and not
you're not happy of the 3% staking, you want higher type of
yields. We, we also offer that and, and
maybe just lastly is like, you know, retail customers, they,
they need usually one click experience.
And if you want to keep them on chain, which is all of our
(50:55):
product do is like keeping them on chain.
You, you need to simplify this experience on chain.
So if, if you want to end up what that's one of the reason
why a lot of customers were sitting on exchanges not moving
on chain because the UX is it's not as good as, you know, I was
like the exchanges that can justbuild a front end and use of
omnibus set up in the background.
(51:17):
Whereas now you can start to build with pass key, you can
abstraction. The onboarding is getting much
better. And also the on chain
experience, The one click, you can rebalance from any yield
position to, to the other on chain in one click, whatever
the, the asset, whatever the D5 protocol, whatever the chain is.
And that's, that's something we,we, we heavily working on.
(51:39):
And and that's something that will that will increase the
adoption of of these products, Andre.
How do you evaluate which products to include in this?
Because kind of like you're in away this is a huge endorsement,
right? Because kind of like if, if I
I'm your client, I kind of expect you to kind of do the due
(51:59):
diligence on these protocols. Yeah, that's a, that's a very
good question. And you would be disappointed of
the answer because frankly, we started to to take the ones that
our clients wanted and also the largest one, right?
Like you, you, you know, we assume that's Ave. and Morpho
(52:22):
great protocols. When we start to, to, to offer
them to our users, then it, it starts to get tricky when
specifically, I guess of Marfa, for example, when you have like
different volts, different risk profile that are managed by
strategists and curators that are a third party that that is
managing the risk. So the risk is not even managed
(52:43):
by the protocol itself. It's managed by a third party.
So in that case, you also need to, to assess the risk of the
third party. So what are we doing now
naturally is like as we did for smart contract in the beginning,
we, we had only security team outside of our company, right.
We're using auditors like the spare bits and the likes and and
(53:08):
continuous monitoring tool wherevendors like exergate.
But, but now we have a security team in house and we, we still
use these external providers, but we we definitely need an
expertise in house. It's going to be the same for
risk in D5. We, we assess external vendors
(53:29):
and we are building a risk team and in house.
So to say, hey, why are we pushing this type of vault on
Mofo managed by this creator? Was this risk rewards approach
versus the other? Because, because, because the
(53:49):
it's not the only creator that managed volts on Morpho.
So, so that's, that's where we, we building at the moment and,
and, and I guess that's what ourclients as well will require in
the future. Yeah.
That, that, that makes a lot of sense when you look at your
client and I mean you kind of you have your ear to the ground
here, right. So kind of when it comes to
(54:11):
institutional investors and so on, are they in it just for the
yield or do they also kind of believe in the underlying asset?
Do you think kind of in, in in US, how much do you think this
capital is mercenary? It's hard to tell.
It's hard to tell. They definitely have to run a
(54:32):
business right and and they see the revenue opportunity.
So in that sense, but it's I don't think mercenary is the is
the is the right word? Because if it's if it's a short
term, like a a platform that is thinking 1020, thirty years
ahead and say, Hey, actually thethe world is going to or the
(54:52):
transaction on this planet will be on chain.
So I, I still want to be there in 20 years, cannot offer a
yield that is short term, right?If they don't believe, for
example, I'll give you an example.
If they don't believe in Bitcoinstaking, I can tell you I'm not
going to cite some platforms, but they won't offer it
regardless of the revenue they can make, regardless of the
(55:15):
amount of Bitcoin they have on the platform, which is much
higher than any other assets because they, they, they're
thinking long term, right? They're thinking, well, I mean,
I don't really understand the risk yet.
So I don't want to offer it to my users, even if I know the day
they will launch it, it will be a success because, you know,
suddenly people can start to have heels on on Bitcoin.
(55:37):
Same for stable coins. So we, we tend to think that
most of our largest clients, largest platform, they think
long term. So they they really still assess
the risk and I don't think master is the the word here.
They're you're thinking, OK, is this source of yields
sustainable is basically for more clients lending makes sense
(55:59):
because there's Boris on the other side of the spectrum and
it it will essentially make thiseconomy better.
OK, I'm I'm I'm able to to support it and same for us.
Like we we're thinking long term, we would we definitely
need to to grow our roughly and and the yield we offer on the
platform. But if we have one fuck up,
(56:23):
let's say like it's the end of our business and if we treat our
customers or their customers badly, it's the end, right?
So so that's a good point. I think like, I, I think because
we're starting to, for example, on Avid Morph, we're starting to
see fintechs actually using, integrating the, this
infrastructure to the credit lines, right?
(56:45):
And, and, and you, you working in a way on this infrastructure
as well, where basically, you know, you have a wallet, you
have a card, you might have EF on the wallet, but you still
want to pay on USDC or Tedder orbasically stablecoin so that you
can pay real life. We're starting to see proper use
(57:05):
cases of that in the background.You need to land your ETH
against USDCUSDT and then you, you have a credit that where you
spend your money in real life. So I think, and by the way, I
think moving forward, the biggest part of the adoption is
going to come from these use cases because we think all the
Fentex, the new banks, the Stripe and the like, and we
(57:30):
have, we, we're seeing that theydid do, of course, a big push on
stablecoin. We'll offer these type of rails.
And in that case, it's like a saving account, right?
You will need your saving account close to your, to your
payment accounts. And that's what we, we trying
to, to provide. We, we call it the saving
account for the world. I hope, yeah, I, I hope we'll,
(57:54):
we'll make it happen. I think this future is is
exciting to to us. Yeah, super cool.
So what? What's on the road map for Kin
in the coming year or so? Yeah, definitely.
And I haven't think any type of rewards on the platform on chain
and then seeing on chain movement, right.
(58:15):
I think like for example, exchanges, the first stack of an
exchange that will move on chains the earn section because
they don't need low latency of trading and the earn section can
move on chain before the others.So we'll definitely push the,
the, the exchanges to, to move on chain, at least the earn
section at first, because that'sour topic.
And we will also look at institutional adoption
(58:39):
worldwide. the US is now openingup post election with the
administration changing, though we were still waiting for, for
more clarity. But the, the hope and excitement
is there and we'll, we'll try tobuild this saving account for
the world while, you know, stillwe, our mission is to
(59:02):
demonstrate value creation in digital assets.
We think once you're on chain, of course we have a business, of
course we'll make revenue, but at least everyone will see how
much we're making our commissions and if, if we're
really driving value to our clients.
So that's what we'll we'll try to do.
Cool. Those are super nice parting
words. Tell us, where can we send
(59:24):
listeners to kind of find out more about killing?
Yes, please go on our website kill dot fi stake on our dabs
directly on the website or PRR partners marketplace say for
Ledger, we have a Twitter accounts, LinkedIn for the
movers and you know in conferences if you go on
(59:47):
conferences and you see a countyshirt, please come and say hi.
Cool. Thank you so much for coming on
Last Look. Thanks for the echo.
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