Solana Will Win The Race To Tokenize The Stock Market
Summary
Investment Theme: The podcast discusses the potential of Salana in revolutionizing financial markets through its high-performance blockchain network, aiming to solve inefficiencies in current crypto systems.
Market Insight: Salana's unique combination of Proof of Stake and Proof of History mechanisms allows for high transaction throughput, positioning it as a strong competitor in the blockchain space.
Company Discussion: Salana Labs, akin to the Ethereum Foundation, focuses on building products that enhance network functionality, with a goal to decentralize control and foster innovation.
Opportunities: The network's ability to handle high transaction volumes makes it suitable for applications like trading tokenized stocks and NFTs, with potential to disrupt traditional financial systems.
Key Takeaway: Salana's ecosystem is growing, with significant revenues generated from transaction tips, and it is poised to play a major role in the tokenization of stocks and bonds.
Future Outlook: The podcast highlights the potential for Salana to facilitate rapid financial innovation, with a focus on decentralized trading and the possibility of future ETF inclusion.
Transcript
[Music] Hey everybody, welcome to Live from the Compound. My name is Downtown Josh Brown. My co-host Michael Batnik is here and we are super excited to welcome our guest today, Anatoli Yakabeno, who is CEO of Salana Labs and co-founder of Salana, a high performance network powering internet capital markets, payments, and crypto applications. Prior to Salana, he was the team leader for developing operating systems at Qualcomm, distributing systems at Mesosphere, and compression at Dropbox. Mr. Yakimento, welcome to the show. We're so happy to have you. >> Thanks for having me. >> Yeah, man. This is going to be fun. I have so many questions for you, but I already own a bunch of Salana. Did I make a mistake? Should we start there? >> Oh, man. I don't I mean, who knows the future, right? Yeah. Okay. >> I hope not. Like I you know I'm in the same boat as you. >> Okay. >> No, you're not. >> You're you're in a much bigger boat. >> All right. Uh let's start with the origin story of Salana. Tell us who were the original founders, including yourself. What was the idea behind it? And uh what what was the what was the thing that you said was missing that drove you guys to say, "Let's put this thing out into the world?" Um, so I I mean I' I've been aware of crypto since Bitcoin. I think everyone remembers the 2008 financial crisis and kind of banks in Greece seizing people's money and stuff like that and Bitcoin was just kind of created and and became aware like people became aware of it on the internet. Uh but I as an engineer I was always skeptical of how it's going to work, how it'll actually scale for payments and thought it was a neat experiment. But engineers miss things all the time like the social aspects of how a company grows, right? It it's just something really really hard to predict and especially with things like crypto where it's a bunch of network effects you don't understand. So, it took me until 2017 to really be interested in crypto. And this again again came from a very engineering lens. I had a kind of a true Eureka moment. Um had two coffees and a beer at Cafe Sole in San Francisco and that mixture didn't sit well with me at all. So, I was up till 4 in the morning and this idea popped into my head that there's a way to take a bunch of the stuff that I work I didn't work at Qualcomm but Qualcomm has built over the years and cellular networks were built on um and apply it to blockchain and my back of the envelope kind of calculation. >> Wait, stop. So Salana, the name derives from the place you got a the place you got a a bad mixture of caffeine and alcohol. Uh Cafe Sole. >> Well, uh Salana the name came after I initially wanted to call it Loom. >> Uh but Salana the name comes from a town me and my co-founders lived in while we worked at Qualcomm. All three of us. >> So coincidence that the cafe sole part of it. Okay. >> Yeah. >> Are you trying to not pay them royalties? Is that what's going on right now? Okay. They're not watching. >> Yeah, I don't think so. >> All right, continue. >> So, I uh you know, if this is a very I don't know how technical you guys want me to get, but a super brief lesson in physics. If everyone remembers your high school physics, >> two powers transmit at the same time or the same frequency, they interfere, right? Because electromagnetic waves interfere. You can't have radio at on the same frequency at the same time. So the first cellular networks that were built used this thing called time division multiple access. This I'm talking 1G networks. They would give each tower a clock and they would alternate by time. So that would prevent that collision. And Bitcoin and and proofof work networks like Ethereum at the time have the same problem. So if you have two block producers, two nodes that make a block, if they make a block at the same time, the network is in this noisy state where you don't know what's the actual state of the network. They have to go resolve that and figure out who is actually supposed to be next instead of at the same time. So that creates these gaps and how much information you can transmit. And my dumb Eureka moment was that there's a way to build a clock in these systems that could coordinate all these nodes and use the same time division multiple access kind of hack that cellular networks did. >> So for so for people who are not in the crypto world but are in the investing world but curious about crypto, this is solving the main problem when you talk to people and they say if Bitcoin's so great or if crypto's so great, how come nobody's using it? Well, a very big reason is it's inefficient based on the Bitcoin proofof work architecture to have enough transactions happening at once. And so Salana to you is a way to solve for that. And your part of the answer for how this scales up to the point where millions of transactions can ultimately happen in in a in a crypto format. >> So that was kind of this Eureka moment. I quit my job, raised money, and uh got a bunch of my friends from Qualcomm that were, you know, I was blessed. Broadcom was trying to acquire them, so morale was down and people were looking to leave. >> What year was this? >> This was 2017, 2018. >> Um, >> so you so you raised money like how how did that work? Was that the the investors got got tokens or equity or or what exactly? It it was a sale of future token. So no equity because the goal is to build a decentralized network where the initial company that built it has very limited control and like direction of the whole network. And right now Labs doesn't employ any engineers that even work in the protocol anymore. The main thing that Labs does is we're working on this secondary project called Seeker which is a cell phone thing. Um >> so Sal so Salana Labs is sort of like um operates like the the Ethereum Foundation. It's it's more of like an advocacy and a central intelligence repository for people that are working on their own projects. >> Labs is more like I would say closer to consensus where we build little products uh that hopefully get bigger and actually create fun you know user functionality on on the network. you know, go get users, make money, but the goal of those products is to >> become their own companies with their own equity table and cap table and earn their own, you know, place in the world. >> So, this is one of the first questions I wanted to ask you then. This gets into one of the first questions on the SC. So, this is con conceptually how I think of decentralization. I think of Bitcoin as being highly decentralized at this point. Maybe I'm wrong, but I feel as though there were enough people early on amassing a lot of it and tons of miners. So, it's very difficult to change the consensus on Bitcoin. You had a Bitcoin cash fork many, many years ago. You probably aren't going to have another one of those of any meaningful size because like you just can't get everyone into a room to make an agreement. Okay, that's a good thing. um because they can't take Bitcoin off the rails. And then you have the opposite which is Ripple which basically looks like a corporate security. I know they spent 10 years telling the Supreme Court that they're not, but like just for argument sake, where does Saul sit on that spectrum from total decentralization to decentralized enough but with some guiding central government looking at how it how it works? Um there is no guiding central government. It's uh so there's kind of two two things that you have to kind of understand. >> Um Bitcoin is extremely simple. So you can still make changes like SegWit was a change. >> Okay. >> Uh right. And so if you if you propose a change that is so obviously correct that it doesn't impact any of the you know all those key stakeholders, the miners, the users, the exchanges, etc. that everyone's like, "Oh, yeah. This is an obvious bug fix." It'll get rolled out immediately because it's not controversial. It's when you when you end up with controversial changes that there isn't a single tiebreaker that says we're pushing this through despite everyone's objections. >> Okay. >> So, if in and in that sense, I think it's better to think of it more like an open source project. You know, Lionus may be a tiebreaker on the a lot of the decisions in Linux, but even he doesn't have he can't push a change that's going to break a bunch of other companies like Red Hat and IBM and Intel and things like that. So, >> okay, >> I have influence as an engineer because I can propose a change that is obviously correct and people are going to be like, "Oh, yeah, we should fix this." And it gets rolled out in 6 months. Is that by is that by virtue of you having been the creator though or is that by virtue of whatever power you have over x number of salana or both? >> It it is just by virtue of me making a persuasive argument as a good engineer. >> So nobody cares about because I was a creator or how much soul I had. If if I was a bad engineer, all the other smart engineers working on this would tell me to f off like immediately. >> Okay. >> And yeah, >> in 2017 when you raised money for this thing, this is this is pre-NFTTS. This is as far as I know like predefi exploding. What was the vision behind building this? Was this like if we build it they will come or did you have a specific problem in mind that this was solving for? Yeah, I had this idea that was uh ended up being more correct than not. And that was that um like Bitcoin kind of be created a a store of value if if you buy into that narrative. And I I think you know at this point it's kind of obvious that it works. >> Yeah, it worked. >> And Ethereum was really going after settlement. And I never in my I had like a bit of trading experience. So I bu all these bots that would trade on interactive brokers and um whenever I thought I had an algorithm at work, data would slow down, my trades would take a little longer to land and the system was completely a black box. So I didn't understand why my things were failing. So as soon as I kind of had this idea of what Salana could be in terms of performance and latency, the thought that popped into my into my mind was that it's a like Linux for trading. I have the entire stack open to me as an engineer. I see exactly where the data is going. Everything's available to me and nobody can actually withhold any of this from me because the network is decentralized kind of from engineering principles from from the get-go. So me as a trader putting on my trader hat, I felt that this could be a fair open trading system for anybody in the world to to trade. So I went after this. Let's build a execution layer. Let's get a decentralized uh a DAX at the time what they were called working on it as our demo project. So this was our first demo was let's build a little DAX and then almost build a network around it. >> I want to ask you about what's unique about Salana relative to I think there's a pretty good understanding at this point even amongst casual people about the the idea behind Bitcoin and why it works. Um, ETH is maybe a little bit less well understood, but still fairly understood. Um, you guys have this unique uh mechanism for consensus that I've seen described as a combination of proof of stake but also proof of history and those two things working in concert with each other. So just for the non-crypto native people who genuinely want to understand why is the proof ofstake part important and then how does that combined with proof of history to make Salana so unique >> so what proof of work uh to understand proof of stake I think it's important to understand proof of work so >> which is mining calculating equations okay >> the way bitcoin works is it uh forces uh a block producer somebody that creates a block to go spend a bunch of energy and because that energy is not free, you just can't create it out of thin air. It it uh solves this problem called the civil problem where um you know how you get spam like you get infinite number of messages, infinite number of uh >> there's no cost. >> Yeah. Because there's no cost to send it. >> Yeah. So if there's no cost to create blocks, I could flood them flood the network with infinite blocks and the whole thing stalls and you get a failure. Um, so they use energy to do this and it's very simple and elegant and I think this is part of the strength of Bitcoin is how simple it is to understand a Bitcoin white paper and because of these principles but it's uh slow like in terms of the number of transactions you can push through it and it's expensive like you're spending a lot of money on the security of the network which is this energy thing. So proof of stake is this alternative. I think Cosmos was the first major proof ofstake network that was live and then I think probably us right after that and then Ethereum transitioned to proof of stake. It's a way to use the same ledger. So you build a blockchain just use the blockchain to do for the civil problem and this kind of recursive self-referential thing is complicated. It's hard to understand. the white papers are have a lot more corner cases that they have to cover and and things like that. And the assumptions that you can make of these networks are are harder to make which is why um proof ofstake networks like Ethereum, like Salana, like basically everyone else have a lot more uh algorithm churn. They they just change more because you always want to keep improving all these parameters and make it faster and things like that. Um but it is much much cheaper and as as >> proof of stake is that the own the owners who have stakes in the thing itself are responsible for the functionality of the network like very simple we own it and therefore that's consensus. >> So yeah it's simple to describe except when you think about it well who says how much soul I own. the network and how is the network secure? Oh, it's based on the soul that everybody owns and stakes. So, you have this kind of looping problem. Um, and you can solve it and it's been solved. Actually, I think before even Bitcoin came out, this Barbara Liskov wrote this paper, Byzantine fall tolerance and things like that. So, all of this stuff is possible. It's just much more complicated and >> okay >> equal proof of history part >> and the proof of history part was this Eureka clock idea that I had after two coffees and a beer. Um so that was this idea to use time division multiple access all the stuff at Qualcomm that has been around I think since late '7s at this point. Um, >> okay. So, it's that combination that makes Salana as functional as as it is relative to other consensus mechanisms. >> It uh it allows us uh so the thing is I'm not a consensus engineer. I'm not a I mean I'm a consensus engineer. I'm not a consensus researcher. And the property that actually is important out of all this combination is that the network can use all the bandwidth that you allocate to it. So if everybody's on the network has like 10 Gbit transa 10 like how you get your cable connection on the internet Comcast is selling you 10 gigs or whatever. If everybody on the network has a 10 gigabit node, you can actually use all 10 of it for to send transactions which would be millionTPS or something like that. And This is kind of the key property that um I was bad at explaining to uh VCs and things like that but turned out to be extremely right because all the next generation networks that are coming online now you like are targeting this specific property that nodes have to be able to use all the bandwidth available to them. And the next version of uh the Salana consensus was built by these uh bleeding edge researchers out of ETHZurich. His professor and his team was uh I think aqua hired by the ANZA team that's working on on consensus right now and that's rolling out I think the end of the year. >> Anatoli we don't get to speak to engineers that often let alone the founder of one of the largest blockchains in the world. Quantum computing stocks are having a moment right now. I don't know anything about quantum computing other than that the stocks are going vertical and one of the things that people just off-handedly say is that they're going to crack the Bitcoin blockchain and they're going to steal all the the co the coins. I don't know why they wouldn't go after the treasury first, but whatever. Um, is that complete BS? Um, and how might that impact how does Salana fit into that? Like are you guys hackable as well to the extent that Bitcoin might be in this world of quantum computing? every major protocol is hackable to a quantum computer that can crack the uh elliptical curve like uh discrete log problem which is but uh this is a problem that would require like million cubits uh at current technology like error levels so we're very far from >> what does that mean okay >> so the the problem with quantum computing is that and this is what everybody talks about like oh we've solved the error airbound on like the Microsoft thing was all about solving the amount of error that you start accumulating the more cubits you add to uh to the to the system and it's extremely hard and the thing is that um it's going to take a really long time to get even toy examples that can solve a much smaller version of the like discrete log problem like with much fewer bits than what Bitcoin currently uses. it it's just going to take a monumental effort on the technology side and the quantum side. So there's going to be a lot of kind of uh notice that oh man these guys just broke the discrete log problem at 64 bits or something like that and it's going to take an insurmountable more time and effort to get to 128 bits from that. And like I've said, Bitcoin will coordinate around an obvious bug that everyone needs to solve. So, as soon as we get there, >> it's like survival, like self-preservation. Everyone that's got a lot at stake, they're going to have to work together and come up with a way to fight this off. >> Exactly. Uh my my guess of what's going to happen and uh you know, if quantum computing works, it's going to unlock a massive amount of wealth for the world. Uh because to me, like the the the biggest problem like a you know, this is how my brain thinks of technology. We've solved Newton's laws of physics exceptionally well. We can measure things that are basically like we can see with an eyeball and how fast they're going really really well. But as soon as you get to something really really small, um the amount of interaction between all the tiny particles creates such a large computational problem that it's impossible for us to solve. And this is the blocker for us for curing cancer, for doing all the little diamond age molecular stuff that you read in sci-fi where you take a pill and it cures everything. You need to understand physics at that micro level to the same degree that we understand cars like moving at 50 miles an hour, >> right? Like we can we can model that like you know we can build a skyscraper that's two miles high because we understand all the physics in that building really really easily. But we can't cure cancer, right? >> Do people tell Do people ask you I'm sorry to follow up on Michael's question though. Do people ask you like is this something I need to worry about in the next 3 years or 10 years? And I know you don't really know the answer, but like is that the kind of question that you get? >> Um, yeah. And my and there's so much hype that it feels like it's 5 years away. It would be awesome. Like it would be awesome if we're 5 years away from that much like QC because I think it would really be a fundamental change to the amount of wealth we can create in the world. It it would be huge. But my gut is probably 20 years kind of like fusion, you know. It's just it's just hard. It's a really hard problem. But yeah, >> so I want to bring bring things back to uh the 21st century. So my first awareness of Salana was in the NFT moment in 2021. And I think that's probably the same for most people where it's like, okay, there's this thriving marketplace for NFTTS. We don't have to spend a lot of time on NFTs themselves, but Salana was like the currency on the OpenC platform that people who had never heard of it just decided, I'm going to start I'm going to start transacting in Salana because I really want this digital baseball card or whatever. Um that was a really big moment for the protocol itself probably for you. Um I wanted to ask you was that deliberate positioning Salana in that marketplace or is that just something that happened organically because this protocol is uniquely suited for that amount of transactions to take place? How did that whole thing happen? Yeah, I think we got um a bunch of things kind of came to head was NFTTS launching on Ethereum which caused the network to spike in fees. Like nobody wanted to pay 20 $30 for a transaction when interacting with with uh NFTts that are at the tail end. So when you have a big launch and the value of something is tens of thousands of dollars and this the change in price is tens of thousands of dollars, people just don't care about the $30 fee. So, they're still doing it, but that blocks all the small tail end artists that want to launch and experiment and they just don't have the opportunity to have this kind of big pop. So we've been around I think at that point for about a year and a half and one of our product engineers built this kind of small NFT standard and auction mechanism and just released it as open source software and people started forking it and creating NFTts and running their own auctions and it just kind of blew up all of a sudden. >> Were you surprised? Yeah, we didn't you know like again I'm an engineer so I look at NFTs I'm like why are people doing this but this is uh this is a you know this is a generic technology that is a very simple escrow mechanism that could be used for selling anything >> and >> it ended up that's those same NFTs ended up being what uh like Helium which is this uh decentralized uh Verizon if you want to think of a decentralized cell network tower they're building 5G networks. They created an NFT for every cell tower that they have. So to me, it was like, okay, great. This is a general purpose technology. Let's see what happens. But the the reason why it took off, I think, was because you had this tail end uh of artists that wanted to create stuff that were blocked on Ethereum effectively, and we gave them free tools and unblocked them, and it all kind of snowballed after that. >> Let's talk about the Salana ecosystem today. um how big is the market currently? Is total value locked a relevant metric or like how do you think about the the size of the current Salana ecosystem and um what do you personally monitor so that you have an understanding of what's happening what the supply demand is just love to hear about your own creation um directly from you >> um so a lot of my kind of you know none of this was something that I thought of before I started Salona, but through the ups and downs and through kind of the the crashes and the trauma that you know we got through the through building this the thing that I really care about is like basically team runway and whether they've been able to raise capital building a product on Salana or they now have revenues and they never need to raise capital again. So these are kind of the the KPIs that I started really caring about you know I think about a year into because you quickly realize that teams can launch a token but if there is no product market fit there's no revenue behind that token it will go to zero like if you cannot build a sustainable business around it and have some of those economics go to the token I'm a traditional you know uh in you know intelligent investor kind of person like it's got to have something. Now, Bitcoin doesn't have any of this. And I think the trap that a lot of crypto founders fall into that Bitcoin doesn't have revenues, therefore I can build a better Bitcoin or, you know, a gadget that kind of is Bitcoin plus something and it's going to work just, you know, have value simply because of that. And I think that's a really false premise because >> the reason Bitcoin has value is totally separated from the technology at this point in a lot of ways outside of the simplicity aspect of it. Maybe >> Salana has value being generated by by way of uh staking fees and some of that is acrewing to the to the token itself which is what propagates that value. So not just staking fees when uh if you stake a validator and you run like effectively think of it as a small business you run a a validator that is high performance and can make blocks transactions that submitted to your block producer pay a tip to that validator so you can collect all the tips and these are substantial I think last year it was over a billion dollars and I think it's an I think it pressed if I'm not mistaken you can go on blocks.com on Salana and see the total revenue generated by by tips. I think it's over a billion this year already. And similarly for applications, if you build a DAX, right, a decentralized exchange like Radium, you can collect fees for the Radium token and those are revenues that are going to the to those token holders. So, it's a very very boring traditional let's look at the revenues and the multiples and figure out is this a sustainable product and where is it going in growth and things like that. What do you think is the what do you think is the largest application right now of Salana in the real world? And then what do you think is the biggest opportunity in the future either as a technology or as a currency or medium of exchange? Like what would you tell somebody is the bullcase for Salana use? Not price but but use. >> Uh the largest is probably trading. um like this is where most of the revenues come from and a lot of that used to be NFTTS but now it's all it's memecoins and to me that's like you know I when I was working on those DAXs and thinking about financial markets my focus was let's get equities and real trading and compete with NASDAQ because we can offer an open fair version of it and what took off was memecoins but if you >> does that upset you or excite you like are you like I can't believe I did all this hard work and they're trading shitcoins or are you like all right they're they're using it >> as a founder you know I don't know if you ever been a founder but 18 months into any project you you either you're surviving right your goal is still like you're just trying to survive get to the next stage whatever that is so any kind of usage is good like you you're almost forget about like your ego is totally stripped away at that point >> but what about now we're eight years we're eight years Okay. So, people are using Salana to create their own tradable assets and many of those are other coins or meme coins. Um, but that's that's right now a lot of the uh activity in the Salana ecosystem. >> Yeah. Yeah. And again, Block Works has all the stats on like I think how much of that I think it varies, you know, 10 to 40% depending on the day. The from how I think of it is that you know if you look at iOS vast majority of applications are games loot boxes >> too >> those are stupid you know uh Steve Jobs had to like say we don't need you know 10 more fart apps in the app store and I kind of think of it okay these are fart apps and that's fine because >> and you have fart coins >> yeah there's fart coins people can do whatever they want this is their you up up to them to build their own businesses or or run their own activity. They're adults. Um our goal is to unblock whatever use cases that we, you know, we think are important and getting regulated equities and and things like that on on chain is like these big hurdles that the foundation can work on and like talk to regulators and companies and get them across the line. >> Can we can we ask you about that? So when Robin Hood announced that they wanted to tokenize non-traded stocks such as shares in SpaceX and Starlink and Data Bricks and some of these really sought after private companies that had not yet gone through the traditional securities IPO process and Robin Hood said we've come up with a way using a layer two on sitting on top of ETH where we will create liquidity for people who own those shares and people who don't but want to we'll build this marketplace. Um, forget about the controversy around that. A lot of the startups weren't thrilled uh with that idea. But putting that aside, were you surprised that Robin Hood opted to build via ETH as opposed to Salana given Salana's obvious advantages toward high volume transactions? Well, I think that same day that they announced it, XStocks launched on Salana and I think is 90% of of volume I think is going to X stocks right now. >> Okay. >> I think that >> tell us what X what is XOX? >> It's a similar thing. It's a a project that effectively gives you price exposure to um equities like there's there's a bunch of them. So you can go buy a XT Tesla stock on DAX right now on Jupiter or some other DAX on Salana and trade them and I think >> it'll mimic it'll mimic the price of Tesla but it's a tokenized version. >> Yeah. Yep. So I think they're up to a few hundred million of volume per day. Not per day, sorry, per week at this point. Um Okay. So so it's it's growing. And I think in the initial launch, the first week, like 40,000 wallets interacted with them and like bought or sold XT stocks. So there is demand for this. And to me, these are baby steps in terms of these aren't actual real stocks and all the all the problems that you guys are aware of between actually getting a person a real stock on chain. >> 100% agree with you that that's really lame. Big part of that is regulation so slow and the goal is to get rid of all these layers and you know just have a real stock. >> You think Salana will play a big part in the tokenization of stocks and bonds? >> That's uh my Yeah, 100%. Like I mean that's my dream like this is what it was built for. >> And the difference between I would say okay I'll make the difference between Salana and Ethereum is that you can just launch the product on Salana. On Ethereum, you have to announce an L2 for it first. >> Okay, got it. Got it. >> Look, you don't need all this extra infra. You can actually just go reuse all the smart contracts, everything else that's available and go mint the asset and it'll get usage immediately. And I think that kind of rapid innovation will accelerate products being launched on Salana much faster than think think about like what happened with uh like you need a a big company like Robin Hood to first support NL2 then this product ID and then whole go build a whole bunch of usage for it and acquire users and all of this. That's a much slower process than a small company like Xtox go just go go goes and creates these assets and mints them and gives users exposure. So that cycle is just much much faster on Salana. So to me it seems like if you have financial innovation it's going to happen much faster on Salana as as we've seen and yes companies are going to want to own the entire stack for product reasons or revenue reasons or whatever but I think if you're targeting kind of the rapid release and kind of these in disrupting the incumbents it's likely going to come on the on Salana >> Anatoli what's your take on the size of the market in terms of Salana like we we we're calling it a market cap because that's just shorthand that's what we know >> number of shares outstanding times total price and we're doing that with the coins >> but the difference between the coins and real equity is that >> theoretically if if everybody want to sell Apple now I know that's you know this is make believe but there's a floor to the price where private where a group of buyers would say wait I I want to buy the whole company so like it's not so with Salana theoretically if everybody I don't want to sell again. I know it's not it's just it's not equity is my point. Like how do you think about the size of it? Is market cap the right word or is that are we are we sort of confusing the >> just for context before you answer as of this month the market cap whether it's appropriate or not you're about to tell us is considered to be $127 billion in US. Um basically the price $234 times 545 million tokens. But yeah, but people will compare this with with the market cap of a company. It's like these are not the same things. >> Yeah, we'd love to get your take on how appropriate that comparison is. >> So, this is where proof of work, store of value is separate from proof of stake is because you need to have the underlying coin and a proof ofstake network like sole or ETH to create blocks. And creating blocks is a normal revenue generated business. People pay you to add their transactions to the blocks you create. You actually have revenues that you can tie back to the underlying coin. And to me, proof ofstake networks should be valued just like any other company. You can look at revenues. There is no central corporation that can make decisions for it because it's purely defined in software. The entire protocol is defined in software. How you interact with other block producers and you agree on this is defined in the software that you download. That's it's all open source. So you have full control over that. You can fork it at any time and do whatever, make changes to it, which is different from Apple, right? I can't go say, I'm going to take my iPhone, completely change the business model on it, and now it's part of it's mine, right? You don't have that capability because it's a closed system that Apple completely controls or even Google, even though they release some of the software, their stack is fully controlled by them. This is the this is the decentralization aspect where there's no essential person or company that can actually make changes to the business models in the network that doesn't exist in Salana but you do still have revenues you if you run >> so what so is the revenue of the network the right way of phrasing that question like what >> compare to compare that to the market cap >> this is how I think of it I think the block works guys were the first ones to actually start listening to me or maybe thought the same way and they've done a lot of work on data collection to figure out what are actual revenues. What happens like if you buy a bunch of soul, you stake it and you run you run your own block producer. There's cost associated with that. How much revenue can you actually capture? And that's >> that's a cost of good soul cost of goods sold is like how much does it cost us to mint a block relative to how much revenue are we taking in? It's almost like a profit margin calculation. >> Yep. Totally. Okay. So then >> okay >> and this is very different from proofof work networks where the only you have to spend electricity to make blocks and generally those don't generate enough um revenue to even be substantial or to cover the cost of the electricity. they're they're purely running on the inflation and you have like uh I think it's important people to understand that like stake like proof of stake staking rewards and you think of inflation you have to separate that from revenues because this is just tokens moving around in a black box. So pure network rewards and pure network inflation is not actual revenue. It is effectively an incentive for people to stake and run these businesses, but it is uh a fee on people that don't. This is the best way to think of it is like if you don't do it, you're actually like losing money. You're you're being diluted by people that do. So, you're forced to go make the do the work effectively. >> Is the token scarce or becoming more scarce? Are the units being created faster than they can be burned? Uh cuz I think a lot of our viewers think like investors like and there so if somebody wants to have some money in quote unquote invested in Saul and they have no intention whatsoever of transacting with it. What is the bull case for why Saul tokens will appreciate in value over time? Not a prediction but like why would they? If the network activity grows and more tips are generated on the network, then more people are going to there people areing willing to pay more dollars, right? You're you're making your Kelly optimized portfolio some amount of going as treasuries at risk-free rate and there is this other thing you can go and run a validator that has revenues. What percentage of that portfolio should go to that? You do your own calculation, right? So if the as the tips increase you will allocate more towards that business versus treasuries. >> Okay. So so but is the are we still growing the amount of tokens in the world as fast as we were a few years ago or has the growth of the amount of tokens slowed so that people can start thinking about this as an accumulation asset? Um I think so if you're just if you're not staking and not running a validator then inflation is a cost to you. So you can think of it as a fee. >> Um >> Okay. >> Right. So >> if you >> if you're running a validator, it's like you've got a a a cash flow coming as a result of tips and and staking fees. >> Correct. >> Okay. Got it. you think we'll see an ETF based on Saul at some point uh in the next few months or or year? Why do you think there isn't one yet? >> Um I mean there's been like a bunch of filings with the SEC and it seems like they're very receptive to the idea, but I don't don't know inside their their head, right? But everything that I know about the curate SEC administration is that they were extremely frustrated that the process was so bad in the last administration. and I just kind of want to simplify it and make it faster and simpler. Um, okay. So, it looks like the rules that they are proposing >> for kind of these standard rules for how a crypto asset becomes an ETF um seem pretty normal to me and like pretty straightforward. >> Do you get calls from the ETF like the asset managers who would love to have you attached to a a fund product that they launch? >> Uh, not anymore. I mean, initially they did and like >> okay >> I uh this isn't like a it's not this is >> you want to be you want to be an engineer not a not a mogul not a financial >> good for you. Hey Natalie this has been so much fun for us and and Michael and I have learned so much. We really appreciate it. Um is there a specific place that you would send our viewers and listeners if they want to learn more about the mission of of Salana? Is there a URL or a social media? >> Salana.com. Super easy. >> That simple. All right. Thank you so much for doing this. We appreciate it, guys. Thank you for watching and listening. If you want to learn more, go to salana.com. We'll talk to you soon.
Solana Will Win The Race To Tokenize The Stock Market
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Transcript
[Music] Hey everybody, welcome to Live from the Compound. My name is Downtown Josh Brown. My co-host Michael Batnik is here and we are super excited to welcome our guest today, Anatoli Yakabeno, who is CEO of Salana Labs and co-founder of Salana, a high performance network powering internet capital markets, payments, and crypto applications. Prior to Salana, he was the team leader for developing operating systems at Qualcomm, distributing systems at Mesosphere, and compression at Dropbox. Mr. Yakimento, welcome to the show. We're so happy to have you. >> Thanks for having me. >> Yeah, man. This is going to be fun. I have so many questions for you, but I already own a bunch of Salana. Did I make a mistake? Should we start there? >> Oh, man. I don't I mean, who knows the future, right? Yeah. Okay. >> I hope not. Like I you know I'm in the same boat as you. >> Okay. >> No, you're not. >> You're you're in a much bigger boat. >> All right. Uh let's start with the origin story of Salana. Tell us who were the original founders, including yourself. What was the idea behind it? And uh what what was the what was the thing that you said was missing that drove you guys to say, "Let's put this thing out into the world?" Um, so I I mean I' I've been aware of crypto since Bitcoin. I think everyone remembers the 2008 financial crisis and kind of banks in Greece seizing people's money and stuff like that and Bitcoin was just kind of created and and became aware like people became aware of it on the internet. Uh but I as an engineer I was always skeptical of how it's going to work, how it'll actually scale for payments and thought it was a neat experiment. But engineers miss things all the time like the social aspects of how a company grows, right? It it's just something really really hard to predict and especially with things like crypto where it's a bunch of network effects you don't understand. So, it took me until 2017 to really be interested in crypto. And this again again came from a very engineering lens. I had a kind of a true Eureka moment. Um had two coffees and a beer at Cafe Sole in San Francisco and that mixture didn't sit well with me at all. So, I was up till 4 in the morning and this idea popped into my head that there's a way to take a bunch of the stuff that I work I didn't work at Qualcomm but Qualcomm has built over the years and cellular networks were built on um and apply it to blockchain and my back of the envelope kind of calculation. >> Wait, stop. So Salana, the name derives from the place you got a the place you got a a bad mixture of caffeine and alcohol. Uh Cafe Sole. >> Well, uh Salana the name came after I initially wanted to call it Loom. >> Uh but Salana the name comes from a town me and my co-founders lived in while we worked at Qualcomm. All three of us. >> So coincidence that the cafe sole part of it. Okay. >> Yeah. >> Are you trying to not pay them royalties? Is that what's going on right now? Okay. They're not watching. >> Yeah, I don't think so. >> All right, continue. >> So, I uh you know, if this is a very I don't know how technical you guys want me to get, but a super brief lesson in physics. If everyone remembers your high school physics, >> two powers transmit at the same time or the same frequency, they interfere, right? Because electromagnetic waves interfere. You can't have radio at on the same frequency at the same time. So the first cellular networks that were built used this thing called time division multiple access. This I'm talking 1G networks. They would give each tower a clock and they would alternate by time. So that would prevent that collision. And Bitcoin and and proofof work networks like Ethereum at the time have the same problem. So if you have two block producers, two nodes that make a block, if they make a block at the same time, the network is in this noisy state where you don't know what's the actual state of the network. They have to go resolve that and figure out who is actually supposed to be next instead of at the same time. So that creates these gaps and how much information you can transmit. And my dumb Eureka moment was that there's a way to build a clock in these systems that could coordinate all these nodes and use the same time division multiple access kind of hack that cellular networks did. >> So for so for people who are not in the crypto world but are in the investing world but curious about crypto, this is solving the main problem when you talk to people and they say if Bitcoin's so great or if crypto's so great, how come nobody's using it? Well, a very big reason is it's inefficient based on the Bitcoin proofof work architecture to have enough transactions happening at once. And so Salana to you is a way to solve for that. And your part of the answer for how this scales up to the point where millions of transactions can ultimately happen in in a in a crypto format. >> So that was kind of this Eureka moment. I quit my job, raised money, and uh got a bunch of my friends from Qualcomm that were, you know, I was blessed. Broadcom was trying to acquire them, so morale was down and people were looking to leave. >> What year was this? >> This was 2017, 2018. >> Um, >> so you so you raised money like how how did that work? Was that the the investors got got tokens or equity or or what exactly? It it was a sale of future token. So no equity because the goal is to build a decentralized network where the initial company that built it has very limited control and like direction of the whole network. And right now Labs doesn't employ any engineers that even work in the protocol anymore. The main thing that Labs does is we're working on this secondary project called Seeker which is a cell phone thing. Um >> so Sal so Salana Labs is sort of like um operates like the the Ethereum Foundation. It's it's more of like an advocacy and a central intelligence repository for people that are working on their own projects. >> Labs is more like I would say closer to consensus where we build little products uh that hopefully get bigger and actually create fun you know user functionality on on the network. you know, go get users, make money, but the goal of those products is to >> become their own companies with their own equity table and cap table and earn their own, you know, place in the world. >> So, this is one of the first questions I wanted to ask you then. This gets into one of the first questions on the SC. So, this is con conceptually how I think of decentralization. I think of Bitcoin as being highly decentralized at this point. Maybe I'm wrong, but I feel as though there were enough people early on amassing a lot of it and tons of miners. So, it's very difficult to change the consensus on Bitcoin. You had a Bitcoin cash fork many, many years ago. You probably aren't going to have another one of those of any meaningful size because like you just can't get everyone into a room to make an agreement. Okay, that's a good thing. um because they can't take Bitcoin off the rails. And then you have the opposite which is Ripple which basically looks like a corporate security. I know they spent 10 years telling the Supreme Court that they're not, but like just for argument sake, where does Saul sit on that spectrum from total decentralization to decentralized enough but with some guiding central government looking at how it how it works? Um there is no guiding central government. It's uh so there's kind of two two things that you have to kind of understand. >> Um Bitcoin is extremely simple. So you can still make changes like SegWit was a change. >> Okay. >> Uh right. And so if you if you propose a change that is so obviously correct that it doesn't impact any of the you know all those key stakeholders, the miners, the users, the exchanges, etc. that everyone's like, "Oh, yeah. This is an obvious bug fix." It'll get rolled out immediately because it's not controversial. It's when you when you end up with controversial changes that there isn't a single tiebreaker that says we're pushing this through despite everyone's objections. >> Okay. >> So, if in and in that sense, I think it's better to think of it more like an open source project. You know, Lionus may be a tiebreaker on the a lot of the decisions in Linux, but even he doesn't have he can't push a change that's going to break a bunch of other companies like Red Hat and IBM and Intel and things like that. So, >> okay, >> I have influence as an engineer because I can propose a change that is obviously correct and people are going to be like, "Oh, yeah, we should fix this." And it gets rolled out in 6 months. Is that by is that by virtue of you having been the creator though or is that by virtue of whatever power you have over x number of salana or both? >> It it is just by virtue of me making a persuasive argument as a good engineer. >> So nobody cares about because I was a creator or how much soul I had. If if I was a bad engineer, all the other smart engineers working on this would tell me to f off like immediately. >> Okay. >> And yeah, >> in 2017 when you raised money for this thing, this is this is pre-NFTTS. This is as far as I know like predefi exploding. What was the vision behind building this? Was this like if we build it they will come or did you have a specific problem in mind that this was solving for? Yeah, I had this idea that was uh ended up being more correct than not. And that was that um like Bitcoin kind of be created a a store of value if if you buy into that narrative. And I I think you know at this point it's kind of obvious that it works. >> Yeah, it worked. >> And Ethereum was really going after settlement. And I never in my I had like a bit of trading experience. So I bu all these bots that would trade on interactive brokers and um whenever I thought I had an algorithm at work, data would slow down, my trades would take a little longer to land and the system was completely a black box. So I didn't understand why my things were failing. So as soon as I kind of had this idea of what Salana could be in terms of performance and latency, the thought that popped into my into my mind was that it's a like Linux for trading. I have the entire stack open to me as an engineer. I see exactly where the data is going. Everything's available to me and nobody can actually withhold any of this from me because the network is decentralized kind of from engineering principles from from the get-go. So me as a trader putting on my trader hat, I felt that this could be a fair open trading system for anybody in the world to to trade. So I went after this. Let's build a execution layer. Let's get a decentralized uh a DAX at the time what they were called working on it as our demo project. So this was our first demo was let's build a little DAX and then almost build a network around it. >> I want to ask you about what's unique about Salana relative to I think there's a pretty good understanding at this point even amongst casual people about the the idea behind Bitcoin and why it works. Um, ETH is maybe a little bit less well understood, but still fairly understood. Um, you guys have this unique uh mechanism for consensus that I've seen described as a combination of proof of stake but also proof of history and those two things working in concert with each other. So just for the non-crypto native people who genuinely want to understand why is the proof ofstake part important and then how does that combined with proof of history to make Salana so unique >> so what proof of work uh to understand proof of stake I think it's important to understand proof of work so >> which is mining calculating equations okay >> the way bitcoin works is it uh forces uh a block producer somebody that creates a block to go spend a bunch of energy and because that energy is not free, you just can't create it out of thin air. It it uh solves this problem called the civil problem where um you know how you get spam like you get infinite number of messages, infinite number of uh >> there's no cost. >> Yeah. Because there's no cost to send it. >> Yeah. So if there's no cost to create blocks, I could flood them flood the network with infinite blocks and the whole thing stalls and you get a failure. Um, so they use energy to do this and it's very simple and elegant and I think this is part of the strength of Bitcoin is how simple it is to understand a Bitcoin white paper and because of these principles but it's uh slow like in terms of the number of transactions you can push through it and it's expensive like you're spending a lot of money on the security of the network which is this energy thing. So proof of stake is this alternative. I think Cosmos was the first major proof ofstake network that was live and then I think probably us right after that and then Ethereum transitioned to proof of stake. It's a way to use the same ledger. So you build a blockchain just use the blockchain to do for the civil problem and this kind of recursive self-referential thing is complicated. It's hard to understand. the white papers are have a lot more corner cases that they have to cover and and things like that. And the assumptions that you can make of these networks are are harder to make which is why um proof ofstake networks like Ethereum, like Salana, like basically everyone else have a lot more uh algorithm churn. They they just change more because you always want to keep improving all these parameters and make it faster and things like that. Um but it is much much cheaper and as as >> proof of stake is that the own the owners who have stakes in the thing itself are responsible for the functionality of the network like very simple we own it and therefore that's consensus. >> So yeah it's simple to describe except when you think about it well who says how much soul I own. the network and how is the network secure? Oh, it's based on the soul that everybody owns and stakes. So, you have this kind of looping problem. Um, and you can solve it and it's been solved. Actually, I think before even Bitcoin came out, this Barbara Liskov wrote this paper, Byzantine fall tolerance and things like that. So, all of this stuff is possible. It's just much more complicated and >> okay >> equal proof of history part >> and the proof of history part was this Eureka clock idea that I had after two coffees and a beer. Um so that was this idea to use time division multiple access all the stuff at Qualcomm that has been around I think since late '7s at this point. Um, >> okay. So, it's that combination that makes Salana as functional as as it is relative to other consensus mechanisms. >> It uh it allows us uh so the thing is I'm not a consensus engineer. I'm not a I mean I'm a consensus engineer. I'm not a consensus researcher. And the property that actually is important out of all this combination is that the network can use all the bandwidth that you allocate to it. So if everybody's on the network has like 10 Gbit transa 10 like how you get your cable connection on the internet Comcast is selling you 10 gigs or whatever. If everybody on the network has a 10 gigabit node, you can actually use all 10 of it for to send transactions which would be millionTPS or something like that. And This is kind of the key property that um I was bad at explaining to uh VCs and things like that but turned out to be extremely right because all the next generation networks that are coming online now you like are targeting this specific property that nodes have to be able to use all the bandwidth available to them. And the next version of uh the Salana consensus was built by these uh bleeding edge researchers out of ETHZurich. His professor and his team was uh I think aqua hired by the ANZA team that's working on on consensus right now and that's rolling out I think the end of the year. >> Anatoli we don't get to speak to engineers that often let alone the founder of one of the largest blockchains in the world. Quantum computing stocks are having a moment right now. I don't know anything about quantum computing other than that the stocks are going vertical and one of the things that people just off-handedly say is that they're going to crack the Bitcoin blockchain and they're going to steal all the the co the coins. I don't know why they wouldn't go after the treasury first, but whatever. Um, is that complete BS? Um, and how might that impact how does Salana fit into that? Like are you guys hackable as well to the extent that Bitcoin might be in this world of quantum computing? every major protocol is hackable to a quantum computer that can crack the uh elliptical curve like uh discrete log problem which is but uh this is a problem that would require like million cubits uh at current technology like error levels so we're very far from >> what does that mean okay >> so the the problem with quantum computing is that and this is what everybody talks about like oh we've solved the error airbound on like the Microsoft thing was all about solving the amount of error that you start accumulating the more cubits you add to uh to the to the system and it's extremely hard and the thing is that um it's going to take a really long time to get even toy examples that can solve a much smaller version of the like discrete log problem like with much fewer bits than what Bitcoin currently uses. it it's just going to take a monumental effort on the technology side and the quantum side. So there's going to be a lot of kind of uh notice that oh man these guys just broke the discrete log problem at 64 bits or something like that and it's going to take an insurmountable more time and effort to get to 128 bits from that. And like I've said, Bitcoin will coordinate around an obvious bug that everyone needs to solve. So, as soon as we get there, >> it's like survival, like self-preservation. Everyone that's got a lot at stake, they're going to have to work together and come up with a way to fight this off. >> Exactly. Uh my my guess of what's going to happen and uh you know, if quantum computing works, it's going to unlock a massive amount of wealth for the world. Uh because to me, like the the the biggest problem like a you know, this is how my brain thinks of technology. We've solved Newton's laws of physics exceptionally well. We can measure things that are basically like we can see with an eyeball and how fast they're going really really well. But as soon as you get to something really really small, um the amount of interaction between all the tiny particles creates such a large computational problem that it's impossible for us to solve. And this is the blocker for us for curing cancer, for doing all the little diamond age molecular stuff that you read in sci-fi where you take a pill and it cures everything. You need to understand physics at that micro level to the same degree that we understand cars like moving at 50 miles an hour, >> right? Like we can we can model that like you know we can build a skyscraper that's two miles high because we understand all the physics in that building really really easily. But we can't cure cancer, right? >> Do people tell Do people ask you I'm sorry to follow up on Michael's question though. Do people ask you like is this something I need to worry about in the next 3 years or 10 years? And I know you don't really know the answer, but like is that the kind of question that you get? >> Um, yeah. And my and there's so much hype that it feels like it's 5 years away. It would be awesome. Like it would be awesome if we're 5 years away from that much like QC because I think it would really be a fundamental change to the amount of wealth we can create in the world. It it would be huge. But my gut is probably 20 years kind of like fusion, you know. It's just it's just hard. It's a really hard problem. But yeah, >> so I want to bring bring things back to uh the 21st century. So my first awareness of Salana was in the NFT moment in 2021. And I think that's probably the same for most people where it's like, okay, there's this thriving marketplace for NFTTS. We don't have to spend a lot of time on NFTs themselves, but Salana was like the currency on the OpenC platform that people who had never heard of it just decided, I'm going to start I'm going to start transacting in Salana because I really want this digital baseball card or whatever. Um that was a really big moment for the protocol itself probably for you. Um I wanted to ask you was that deliberate positioning Salana in that marketplace or is that just something that happened organically because this protocol is uniquely suited for that amount of transactions to take place? How did that whole thing happen? Yeah, I think we got um a bunch of things kind of came to head was NFTTS launching on Ethereum which caused the network to spike in fees. Like nobody wanted to pay 20 $30 for a transaction when interacting with with uh NFTts that are at the tail end. So when you have a big launch and the value of something is tens of thousands of dollars and this the change in price is tens of thousands of dollars, people just don't care about the $30 fee. So, they're still doing it, but that blocks all the small tail end artists that want to launch and experiment and they just don't have the opportunity to have this kind of big pop. So we've been around I think at that point for about a year and a half and one of our product engineers built this kind of small NFT standard and auction mechanism and just released it as open source software and people started forking it and creating NFTts and running their own auctions and it just kind of blew up all of a sudden. >> Were you surprised? Yeah, we didn't you know like again I'm an engineer so I look at NFTs I'm like why are people doing this but this is uh this is a you know this is a generic technology that is a very simple escrow mechanism that could be used for selling anything >> and >> it ended up that's those same NFTs ended up being what uh like Helium which is this uh decentralized uh Verizon if you want to think of a decentralized cell network tower they're building 5G networks. They created an NFT for every cell tower that they have. So to me, it was like, okay, great. This is a general purpose technology. Let's see what happens. But the the reason why it took off, I think, was because you had this tail end uh of artists that wanted to create stuff that were blocked on Ethereum effectively, and we gave them free tools and unblocked them, and it all kind of snowballed after that. >> Let's talk about the Salana ecosystem today. um how big is the market currently? Is total value locked a relevant metric or like how do you think about the the size of the current Salana ecosystem and um what do you personally monitor so that you have an understanding of what's happening what the supply demand is just love to hear about your own creation um directly from you >> um so a lot of my kind of you know none of this was something that I thought of before I started Salona, but through the ups and downs and through kind of the the crashes and the trauma that you know we got through the through building this the thing that I really care about is like basically team runway and whether they've been able to raise capital building a product on Salana or they now have revenues and they never need to raise capital again. So these are kind of the the KPIs that I started really caring about you know I think about a year into because you quickly realize that teams can launch a token but if there is no product market fit there's no revenue behind that token it will go to zero like if you cannot build a sustainable business around it and have some of those economics go to the token I'm a traditional you know uh in you know intelligent investor kind of person like it's got to have something. Now, Bitcoin doesn't have any of this. And I think the trap that a lot of crypto founders fall into that Bitcoin doesn't have revenues, therefore I can build a better Bitcoin or, you know, a gadget that kind of is Bitcoin plus something and it's going to work just, you know, have value simply because of that. And I think that's a really false premise because >> the reason Bitcoin has value is totally separated from the technology at this point in a lot of ways outside of the simplicity aspect of it. Maybe >> Salana has value being generated by by way of uh staking fees and some of that is acrewing to the to the token itself which is what propagates that value. So not just staking fees when uh if you stake a validator and you run like effectively think of it as a small business you run a a validator that is high performance and can make blocks transactions that submitted to your block producer pay a tip to that validator so you can collect all the tips and these are substantial I think last year it was over a billion dollars and I think it's an I think it pressed if I'm not mistaken you can go on blocks.com on Salana and see the total revenue generated by by tips. I think it's over a billion this year already. And similarly for applications, if you build a DAX, right, a decentralized exchange like Radium, you can collect fees for the Radium token and those are revenues that are going to the to those token holders. So, it's a very very boring traditional let's look at the revenues and the multiples and figure out is this a sustainable product and where is it going in growth and things like that. What do you think is the what do you think is the largest application right now of Salana in the real world? And then what do you think is the biggest opportunity in the future either as a technology or as a currency or medium of exchange? Like what would you tell somebody is the bullcase for Salana use? Not price but but use. >> Uh the largest is probably trading. um like this is where most of the revenues come from and a lot of that used to be NFTTS but now it's all it's memecoins and to me that's like you know I when I was working on those DAXs and thinking about financial markets my focus was let's get equities and real trading and compete with NASDAQ because we can offer an open fair version of it and what took off was memecoins but if you >> does that upset you or excite you like are you like I can't believe I did all this hard work and they're trading shitcoins or are you like all right they're they're using it >> as a founder you know I don't know if you ever been a founder but 18 months into any project you you either you're surviving right your goal is still like you're just trying to survive get to the next stage whatever that is so any kind of usage is good like you you're almost forget about like your ego is totally stripped away at that point >> but what about now we're eight years we're eight years Okay. So, people are using Salana to create their own tradable assets and many of those are other coins or meme coins. Um, but that's that's right now a lot of the uh activity in the Salana ecosystem. >> Yeah. Yeah. And again, Block Works has all the stats on like I think how much of that I think it varies, you know, 10 to 40% depending on the day. The from how I think of it is that you know if you look at iOS vast majority of applications are games loot boxes >> too >> those are stupid you know uh Steve Jobs had to like say we don't need you know 10 more fart apps in the app store and I kind of think of it okay these are fart apps and that's fine because >> and you have fart coins >> yeah there's fart coins people can do whatever they want this is their you up up to them to build their own businesses or or run their own activity. They're adults. Um our goal is to unblock whatever use cases that we, you know, we think are important and getting regulated equities and and things like that on on chain is like these big hurdles that the foundation can work on and like talk to regulators and companies and get them across the line. >> Can we can we ask you about that? So when Robin Hood announced that they wanted to tokenize non-traded stocks such as shares in SpaceX and Starlink and Data Bricks and some of these really sought after private companies that had not yet gone through the traditional securities IPO process and Robin Hood said we've come up with a way using a layer two on sitting on top of ETH where we will create liquidity for people who own those shares and people who don't but want to we'll build this marketplace. Um, forget about the controversy around that. A lot of the startups weren't thrilled uh with that idea. But putting that aside, were you surprised that Robin Hood opted to build via ETH as opposed to Salana given Salana's obvious advantages toward high volume transactions? Well, I think that same day that they announced it, XStocks launched on Salana and I think is 90% of of volume I think is going to X stocks right now. >> Okay. >> I think that >> tell us what X what is XOX? >> It's a similar thing. It's a a project that effectively gives you price exposure to um equities like there's there's a bunch of them. So you can go buy a XT Tesla stock on DAX right now on Jupiter or some other DAX on Salana and trade them and I think >> it'll mimic it'll mimic the price of Tesla but it's a tokenized version. >> Yeah. Yep. So I think they're up to a few hundred million of volume per day. Not per day, sorry, per week at this point. Um Okay. So so it's it's growing. And I think in the initial launch, the first week, like 40,000 wallets interacted with them and like bought or sold XT stocks. So there is demand for this. And to me, these are baby steps in terms of these aren't actual real stocks and all the all the problems that you guys are aware of between actually getting a person a real stock on chain. >> 100% agree with you that that's really lame. Big part of that is regulation so slow and the goal is to get rid of all these layers and you know just have a real stock. >> You think Salana will play a big part in the tokenization of stocks and bonds? >> That's uh my Yeah, 100%. Like I mean that's my dream like this is what it was built for. >> And the difference between I would say okay I'll make the difference between Salana and Ethereum is that you can just launch the product on Salana. On Ethereum, you have to announce an L2 for it first. >> Okay, got it. Got it. >> Look, you don't need all this extra infra. You can actually just go reuse all the smart contracts, everything else that's available and go mint the asset and it'll get usage immediately. And I think that kind of rapid innovation will accelerate products being launched on Salana much faster than think think about like what happened with uh like you need a a big company like Robin Hood to first support NL2 then this product ID and then whole go build a whole bunch of usage for it and acquire users and all of this. That's a much slower process than a small company like Xtox go just go go goes and creates these assets and mints them and gives users exposure. So that cycle is just much much faster on Salana. So to me it seems like if you have financial innovation it's going to happen much faster on Salana as as we've seen and yes companies are going to want to own the entire stack for product reasons or revenue reasons or whatever but I think if you're targeting kind of the rapid release and kind of these in disrupting the incumbents it's likely going to come on the on Salana >> Anatoli what's your take on the size of the market in terms of Salana like we we we're calling it a market cap because that's just shorthand that's what we know >> number of shares outstanding times total price and we're doing that with the coins >> but the difference between the coins and real equity is that >> theoretically if if everybody want to sell Apple now I know that's you know this is make believe but there's a floor to the price where private where a group of buyers would say wait I I want to buy the whole company so like it's not so with Salana theoretically if everybody I don't want to sell again. I know it's not it's just it's not equity is my point. Like how do you think about the size of it? Is market cap the right word or is that are we are we sort of confusing the >> just for context before you answer as of this month the market cap whether it's appropriate or not you're about to tell us is considered to be $127 billion in US. Um basically the price $234 times 545 million tokens. But yeah, but people will compare this with with the market cap of a company. It's like these are not the same things. >> Yeah, we'd love to get your take on how appropriate that comparison is. >> So, this is where proof of work, store of value is separate from proof of stake is because you need to have the underlying coin and a proof ofstake network like sole or ETH to create blocks. And creating blocks is a normal revenue generated business. People pay you to add their transactions to the blocks you create. You actually have revenues that you can tie back to the underlying coin. And to me, proof ofstake networks should be valued just like any other company. You can look at revenues. There is no central corporation that can make decisions for it because it's purely defined in software. The entire protocol is defined in software. How you interact with other block producers and you agree on this is defined in the software that you download. That's it's all open source. So you have full control over that. You can fork it at any time and do whatever, make changes to it, which is different from Apple, right? I can't go say, I'm going to take my iPhone, completely change the business model on it, and now it's part of it's mine, right? You don't have that capability because it's a closed system that Apple completely controls or even Google, even though they release some of the software, their stack is fully controlled by them. This is the this is the decentralization aspect where there's no essential person or company that can actually make changes to the business models in the network that doesn't exist in Salana but you do still have revenues you if you run >> so what so is the revenue of the network the right way of phrasing that question like what >> compare to compare that to the market cap >> this is how I think of it I think the block works guys were the first ones to actually start listening to me or maybe thought the same way and they've done a lot of work on data collection to figure out what are actual revenues. What happens like if you buy a bunch of soul, you stake it and you run you run your own block producer. There's cost associated with that. How much revenue can you actually capture? And that's >> that's a cost of good soul cost of goods sold is like how much does it cost us to mint a block relative to how much revenue are we taking in? It's almost like a profit margin calculation. >> Yep. Totally. Okay. So then >> okay >> and this is very different from proofof work networks where the only you have to spend electricity to make blocks and generally those don't generate enough um revenue to even be substantial or to cover the cost of the electricity. they're they're purely running on the inflation and you have like uh I think it's important people to understand that like stake like proof of stake staking rewards and you think of inflation you have to separate that from revenues because this is just tokens moving around in a black box. So pure network rewards and pure network inflation is not actual revenue. It is effectively an incentive for people to stake and run these businesses, but it is uh a fee on people that don't. This is the best way to think of it is like if you don't do it, you're actually like losing money. You're you're being diluted by people that do. So, you're forced to go make the do the work effectively. >> Is the token scarce or becoming more scarce? Are the units being created faster than they can be burned? Uh cuz I think a lot of our viewers think like investors like and there so if somebody wants to have some money in quote unquote invested in Saul and they have no intention whatsoever of transacting with it. What is the bull case for why Saul tokens will appreciate in value over time? Not a prediction but like why would they? If the network activity grows and more tips are generated on the network, then more people are going to there people areing willing to pay more dollars, right? You're you're making your Kelly optimized portfolio some amount of going as treasuries at risk-free rate and there is this other thing you can go and run a validator that has revenues. What percentage of that portfolio should go to that? You do your own calculation, right? So if the as the tips increase you will allocate more towards that business versus treasuries. >> Okay. So so but is the are we still growing the amount of tokens in the world as fast as we were a few years ago or has the growth of the amount of tokens slowed so that people can start thinking about this as an accumulation asset? Um I think so if you're just if you're not staking and not running a validator then inflation is a cost to you. So you can think of it as a fee. >> Um >> Okay. >> Right. So >> if you >> if you're running a validator, it's like you've got a a a cash flow coming as a result of tips and and staking fees. >> Correct. >> Okay. Got it. you think we'll see an ETF based on Saul at some point uh in the next few months or or year? Why do you think there isn't one yet? >> Um I mean there's been like a bunch of filings with the SEC and it seems like they're very receptive to the idea, but I don't don't know inside their their head, right? But everything that I know about the curate SEC administration is that they were extremely frustrated that the process was so bad in the last administration. and I just kind of want to simplify it and make it faster and simpler. Um, okay. So, it looks like the rules that they are proposing >> for kind of these standard rules for how a crypto asset becomes an ETF um seem pretty normal to me and like pretty straightforward. >> Do you get calls from the ETF like the asset managers who would love to have you attached to a a fund product that they launch? >> Uh, not anymore. I mean, initially they did and like >> okay >> I uh this isn't like a it's not this is >> you want to be you want to be an engineer not a not a mogul not a financial >> good for you. Hey Natalie this has been so much fun for us and and Michael and I have learned so much. We really appreciate it. Um is there a specific place that you would send our viewers and listeners if they want to learn more about the mission of of Salana? Is there a URL or a social media? >> Salana.com. Super easy. >> That simple. All right. Thank you so much for doing this. We appreciate it, guys. Thank you for watching and listening. If you want to learn more, go to salana.com. We'll talk to you soon.