The Goal: Financial Freedom w/ Aiham and Tenzent (Silo Finance)

**Speaker A:** Foreign. **Speaker B:** Hello, and welcome back to the Strange Water Podcast. Thank you for joining us this week. This podcast derives its name from a quote by Frank Herbert, the author of Dune Survival is the ability to swim in strange water. Well, suffice it to say that the world of crypto is very strange water, made even more dangerous because it's largely uncharted. And while we don't yet have maps, we can learn from the people who are jumping head first into these choppy seas. And sometimes you're right out there with these swimmers, possibly struggling to keep your own head above water. These are the moments where the questions change from how to keep swimming to why am I even out here? Today's conversation is an emphatic answer by Aham and Tenzin of Silo Finance. Silo is a protocol that provides risk isolated money markets on Ethereum and Arbitrum. And while you'll learn a lot about Silo, we get so much bigger. This conversation begins in the weeds of the borrowing and lending market within DeFi and and ends with an exploration of what binds us to define Ethereum building a legitimately free and fair financial system. Before we begin, please do not take financial advice from this or any other podcast. Ethereum and decentralized finance will change the world one day, but you can easily lose all of your money in the process. All right, let's start the show. AJ Tencent, welcome to the podcast. Thank you for joining me. **Speaker C:** Thank you so much, Rex. **Speaker A:** Happy to be here. **Speaker B:** Awesome. So, you know, I think before we kind of get into anything, even get into Silo, let's just kind of do background. So, AJ would you start us off, give us a little bit about who you are, what, how you, like, learned and became an adult and then what brought you to crypto. **Speaker A:** My name is AJ or Iham, one of the founders of Silo. Super excited to be here. Thank you so much for having us. Well, I've been in the industry for, like, since 2015, read a couple of white papers, you know, all of a sudden turned degen, like instantly, you know, got into a. Had the opportunity to do a couple of startups, didn't work at basically projects that never matured to become a project or a blockchain project. Yeah, my background is economics and growth hacking. So, yeah, that's. I've studied the economics, marketing, you know, and I've been doing that since then. **Speaker B:** Very cool. And Tencent, what about you? **Speaker C:** Yeah, absolutely. So me, you know, still working on the becoming an adult part, but I. I've been in crypto since I would say 2017, 2016 was my first dabble. I started actually middlemanning bitcoin, so just doing like, essentially like my own little freelance business through like, Paxful and those types of services. **Speaker A:** And. **Speaker C:** And I did really well. And then actually I dropped off. I dropped the ball there. And then I came back to the space when I joined a fund and really I started getting involved with a ton of daos more than anything, and contributing and, you know, even, you know, signing on multi sigs and whatnot. But yeah, no, very excited about the space. Silo was probably the project I was the most excited about, you know, like the whole. **Speaker A:** The whole. **Speaker C:** Since I've been into crypto. **Speaker A:** Right. **Speaker C:** And that also comes from the part that I was a big RARI fan. But I'm so excited that, that I got to join the project. **Speaker B:** Very cool. So I think that's a great opportunity to pivot to Silo and so we can, like, have a foundation for this conversation. And what I really want to talk to you guys is about, like, what debt means and why this is an exciting place to be. But aj, would you just give the background of Silo, basically the origin story, what got you excited and into the problem space and then ultimately, what is Silo? **Speaker A:** Yeah, well, the story started back in the crypto summer farming many tokens. And now you need to leverage, you need to take loans, you need to basically diversify your portfolio, whatever. And there's no lending. There's no. There are no lending markets. That's what was really the idea, to be honest, back then. We. I never. I didn't know much about the risk in the current iterations of the lendings back then with AAVE V2 and compound, also V2. And then we got to know when we started thinking about creating lending markets for these super risky, you know, crypto assets. So we got to know the risk involved in the. In the current lending protocols and why they cannot list. They cannot whitelist those risky assets as collateral. So you could not use them to take debt, basically. And then this idea of Silo was created and obviously RADI then was at its prime creating this isolated shared pool, though. So it still was a great idea, I think, and great implementation, obviously. So that was really the idea to fix this problem. Well, who can say a collateral is. Should be used or a certain asset should be collateral or not? Is it governance? Is it the users of the community? For example, Pepe is hot today. Maybe in their community, they trust it as collateral. Maybe someone. They will find someone to provide Loan to be the counterpart risk counterpart for paying Pepe. Who can decide that? Well, certainly AAVE governance can say no, and they have the right to. And they should actually say no the way that AAVE is designed. But maybe they can get a certain isolated market, and then these users who believe in the worthiness of PEPE as collateral, they can actually extend loans to them. So that was really the solution. The solution is create isolated markets. And then these isolated markets, you just connect basically a lender on borrower on the two sides. And then that's. That's. That's how defi can scale, how debt can scale. **Speaker B:** Yeah, yeah. And I think, you know, all of us who. It's funny, Tencent, for you to say that you still have growing up to do when I'm sitting here with a, you know, 2015 or in a 2017 here as a 2021 er, being like, oh, my God, everything I say comes from inexperience. But I think any of us that were around during that time saw Rari as something that was really exciting and different and really showed that you can take these primitive ideas that were obvious and put them into motion and they would work then, at least in my opinion, it was a real tragedy to watch that hack happen and the end of what I thought was a great protocol and a great team. And so Tenzin, you said that that whole episode was kind of important to you and getting excited about Silo and AJ as you mentioned, you've already. The idea was in motion, if not already launched. How did that cataclysmic moment in the Defi lending space really change how both of you saw the entire industry and, like, what lessons did you take away and how you're building Silo? **Speaker C:** Yeah. So, I mean, I can say that for Rari. I mean, the really thing that I hadn't found Silo until after the RARI hack. But for. For me, really, the. It's not so much the hack that changed my perception as much as it was RARI itself, which was, okay, how can we do this in a safe manner? Because I just looked at all the other models and I was trying to get some tokens listed, and with a. And it was just a nightmare and impossible. And. And it's as ahem says, right? It's. It would be irresponsible for them to do such a thing. But I think the Rari hack really taught us that you need some form of structure or commonality among the markets. Right. Like the. The Rory hack is still due to the exact same issue Right. It was still because of the shared pool model that they were able to pair multiple assets that had high risk profiles together. Whereas when you're talking about Silo, we pair things with common assets, which are very trusted assets. Right. So it's ETH and USDC and Ether and Zai on Ethereum, on Arbitrum we use USDC and on Ethereum we use our own stablecoin. **Speaker A:** Yeah, you know, I remember like when we entered ETH global hackathon to work on the idea, to work on the proof of concept, to see the initial response. RARI was there obviously, I think Rari fuse pools and specific. The fuse pools were basically a different version of aave and each version you can ascribe like a risk profile to it. Like this is super legion, this is less. That's. That was the idea. But technically speaking, yes, they all shared the technical infrastructure with a compound fork, each one of them. But technically each fork you could play with it, you could amend it. So that's why the hack didn't really affect every single version of the pool. There are actually a couple of them, but not every one of them because they took the code they created, they made some adjustments to each one of them depending, for example, like if there was a shared pool, a fuse pool for LP tokens that they had to do a couple of adjustments to it, but the adjustments wouldn't apply to every single already deployed pool. So the idea was for us, we know that there is a demand for borrowing against exotic tokens. There's otherwise underserved would be called them underserved crypto assets because simply no one accepts them as collateral. But we didn't like really the, the. We wanted to give kind of uniform way as far as the counterpart. The counterpart taking the risk, someone providing you with, with eth, someone providing you with usdc. And obviously each, each market could implement a curve interest rate, country's rate curve such that if it's super risky, if let's say you're lending USDC against Pepe, I would probably demand an average of variable rates still. But 30, 40% maybe, which we have seen with rarity back then. So we've learned a lot from them. And it happened before. The RARI hack was just really incidental, unfortunately. I think they could have probably, if they had probably they didn't have much interest in continuing the project because you know, things happen, right? Things happen. And these guys are builders, great builders, great innovators and, and probably they lost some interest or something happened, I don't know. But Wasn't really the reason I think of for, for. For losing that business, I think. **Speaker B:** Yeah. And this is definitely not a rari podcast. We don't need to like litigate it. But I, I think you're definitely right that the, the lesson of that was much more in, you know, in about like politics and like legalities and like weird things about like value changes during like the reimbursement period or. Your point is. It's that project fell apart during the social layer and not because of like the concept or the code or anything. **Speaker A:** Exactly. But as far as risk isolation, I think Ferrari got validated. Obviously they had found they had a great product market fit at one point. But this idea clicked in the people's mind and also the silos clicked in people's mind. It was October, November. We had graduated from graduated Eth. Global was. I think it was Cream, the second hack of Cream Finance. And before that was Fuse. I'm sorry, not Fuse. Sorry, which one? On the Binance smart chain. **Speaker C:** Venus. **Speaker A:** Venus. Venus got hacked the same way. It was exactly. It was like AAVE, but then they had white listed Venus. The VXs, I think it was called. So then people started thinking like, oh, wow, I'm. Well, how. Because I'm depositing USDC into this pool. So how come someone borrowed my USDC with something else? Like, so people didn't understand this concept of shared pool. And, and I think it's still. People don't know. I think 90% of DeFi today still don't know anything about risk isolation or the risk of lending in general. Taking a debt, basically. Yeah. **Speaker C:** And sometimes actually when I explain that to people, they're like, isn't that what. When I explained like how Silo works and how we do risk isolation, they're like, wait, that's not how AAVE works. And then they're like confused and then I have to explain to them and they're like, they get really. They're like, oh, wow. Like, I didn't know it was. This is what I was dealing with. Even some people from teams that I will not name didn't. Didn't know a lot of these facts. So yeah, I mean, I think we're dealing with an education. **Speaker A:** Yeah. **Speaker B:** Like, let it, let it be clear right there. This is not a moral statement. It's a factual statement that like with aave, like the whole foundation of that is like you're basically trusting in. They will not pick like whack assets. And their capital base is so big that even if something happens, you're probably not going to get wiped out. And like, that's a model you can run at $10 billion. And if $10 billion is significant in the market, like it is for AAVE and crypto, but in the real world that doesn't work. And for silo, that doesn't work. And like you're, you're kind of answering that with first principles, like, different way of thinking about lending. **Speaker A:** Right. And it doesn't need to be a bad asset, by the way. It could also be a very good asset, but a liquid asset. If an asset becomes illiquid, then you also run a risk of bad debt, which we've seen briefly. We'd seen briefly with when Curve Squeeze happened with the avi, I think was his name attacked the AAVE protocol. But you're right. Yeah, yeah. **Speaker B:** And you know, I think that is, there's, there's a very curious thing that's happening in crypto where we have recognized that if you lock things off of the market, like the mathematical function of that is like the same amount of value is expressed through fewer tokens or whatever, and so therefore the price is higher. And like, we rejoice. Right? Like that, that kind of is like the fundamental principle of eth, staking first principles and then curve and curve locking and all that stuff. And the flip side of that is we are like, soaking up as much liquidity as possible and that makes lending, like, more and more scary as like, crypto becomes like, further and further down this road. And so none of us here are trying to say, like, throw any shade at AAVE or suggest that that kind of model shouldn't exist. But, like, especially as crypto, like, evolves from like four guys who understand what we're doing, issuing two assets to like the entire world entering this open platform, like, it becomes important to deal with this risk and like, these isolated markets are, you know, at least how I can think of the safest way you can do lending. Like, you can only borrow what your collateral is. **Speaker A:** Right. It's, it's not different from what CurveUSD is doing. The primitive, the stablecoin primitive. Each version, you could mint it in a single collateral, name it whatever you want, and it'd be completely risk isolated from another version that is minted by a token asset you don't trust. But just don't use the other one that's completely isolated. **Speaker B:** So actually that's a great segue into the next question I wanted to ask you guys, which is I think there's a lot of really interesting innovations that are happening in the defi lending space. Right. And if we can say that the kind of first explosion of defi creativity and lending space was like aave maker compound, it seems like we're now entering a world where things are becoming much more sophisticated and interesting. And whether that's silos, isolated markets or vendor finance implementing something that some people call call options, some people call unliquidatable loans or you know, even like a third model which is this Curve USD. Right. I think like there's a lot of like more interesting diverse things that are going on here and I guess I'll throw it to either of you when you see like the innovation that's happening in the defi space, like what are the things that are that you think are really interesting and defi native and cool that we should be excited about and what are some of the features that maybe are a little bit more concerning or maybe less safe than we understand at first glance? **Speaker C:** Yeah, I mean the stuff that I'm most excited about would probably be I like, kind of like the math heavy stuff. Right. So I'm really excited about what Curve is doing with CurveUSD and the lending component really that it is and how they've managed to essentially create a, A. It's more, it's more than a, than a dex. **Speaker A:** Right. **Speaker C:** It's now a complete financial product because it has the stable coin, it has the lending protocol and it has the dex. **Speaker A:** Right. **Speaker C:** Although to a limited extent the lending protocol but. But it does. And so I think the one who brings it together will probably win and the one who creates, you know, this, the safest stable coin. **Speaker A:** I can, I can add. Yeah, I can maybe add a little bit. So this is a kind of conversation, I think stablecoin we have not yet. So if you think about defi as it should be like a one big. It should, should be one ecosystem and a sticky one. Once you enter it, you don't need to exit it. That's. That's called the stickiness of this. So you referred, you've referred, I think to debt as. That's why we need this debt, because that's how you take debt. You don't need to. And I think we all agree that this debt either has either to be kind of somehow derived from or backed by eth or a derivative of ETH or something related to eth, but not necessarily something external like USDC or usdt. With all due respect to those, of course, they have obviously solve a big huge problem and they're proved to be resilient as resilient as you can expect from something centralized. But for this, for our ecosystem to continue growing we need a stable coin and we haven't really yet cracked this. And that's why I'm personally excited about CurveUSD as a primitive that's being tested right now despite all the fuss around it and I understand it because of the lack of communications around it. And these guys are you know, OGs, they don't communicate much which is I think important. But they're testing it on production which I really respect. I think that's the best way to test it before becomes something I'm excited about that. I'm excited about fixed rate interest lending, excited about it. I think it. There is, there is a big market. I'm not sure how big it is going to be but it should be, you know, should be something important. I'm also excited about the order book not amms I would say order book exchanges like Carbon from the Bancor team has released something I think we needed. We need kind of like basically a way to match these sellers and buyers and on all in that way on chain. So also you know, so any kind of reliance on anything off chain would be great. I think there are two exciting areas to work on. One of them is the curve, I'm sorry the stablecoin and the other one is oracles still we have not figured that out. We still addicted to centralized solutions. **Speaker B:** Yeah, well yeah, yeah for sure. And I think like the problem with like a lot of oracles and a lot of like anything that touches off chain is that like the technology is still like the math is still being written and like you know and I think like we need to make a lot of progress on like ZK proofs to have any expectation that we can basically like trustlessly communicate in and out of Ethereum with any like reasonable like security guarantees or speed or anything but anyway keeping us within the realm of like lending and defi. So one of the things that I find like particularly interesting about the CurveUSD and how that's going to change everything is that we're changing the fundamental like liquidation engine of debt in this like what they call like the llama or like but in the curve USD form right because when you take debt let's say on maker and you draw closer and closer to liquidation and then you hit that point and then you get liquidated basically your entire collateral chunk is sold into the open market and that that might be more of a. Anyway point is like that's how traditional Lending works, right? And with the like Curve USD, with the Llama construction, you're continuously changing your collateral position to be more stable as your volatile asset goes down. And what that does is takes out these massive sort of Damocles chunks that can completely change the market and move into bigger problems. And so one, I think that. Well, I'll take a pause here and let you guys weigh in. Do you think that this is as big a deal at IAS and transforming how liquidity flows through the system in these moments of high volatility? **Speaker C:** Yeah. So I mean you hit it right on the nail, right. I mean I think that's the most incredible part about Curve USD is actually that its liquidation engine. And I think that also something that is worth noting that I think is really cool is you're removing kind of an off chain component because, well, not removing it, but you're swapping it over to a different off chain component which is, you know, order matching essentially. But yeah, no, I agree. Like if you have loans that essentially liquidate you for nothing, then, you know, liquidations all of a sudden don't become so bad and users might not want to be, might not want to avoid it, which will only bring more traffic to lending. And I see it as an absolute win. **Speaker A:** We still, I honestly still don't understand all the details or the possibilities of it, but I see that it fixes a lot of user experience issues and I can see pure versions of it being very successful, as successful as how much liquidity available. So right now I can see that you can actually use, you can mint because of this gradual liquidation or you don't have to liquidate much. You really don't need super, super high liquidity available in the pool to liquidate. However, the price manipulation still might be an issue because of, you know, so many, so many reasons, so many, many components. But I think it's. Yes, it will provide a lot of. Yeah, it fixes a lot of user, user experience issues. **Speaker B:** So when you guys as a lending protocol yourself, like see this kind of new primitive and this new innovation on like how lending is even possible, when you see it come down the pipeline because we're in Ethereum, because we're an open source world, I'm going to assume that like that's an exciting thing and we all think of how can we build on top of it. But I guess the direct question is when you see specifically CurveUSD and the changes that it can do to lending, how do you think about taking some of those lessons and some of those features and integrating them into your protocol. **Speaker A:** Well, it's still being tested right now. That's why I'm really excited about it. **Speaker B:** Let's be clear, it's like four days old. **Speaker A:** Yeah, exactly. But from a user's perspective, I would like to see lending markets where the counterpart to you, the one lending you basically we're lending you stablecoin. And this stablecoin I would like to have like a pure version either minted by ETH or some LSD that is less decentral, less centralized and that can scale something like LUSD probably. But I think there might be less pressure maybe Yoshua understands a lot about Tencent, understands a lot about the mechanism. L esd I haven't really delved into it much, but I think this type of liquidation doesn't put a lot of pressure on the peg upward probably or something like that. So you wouldn't probably have like Curvy as equal $1, but it will hover around a dollar which is great. And then you don't have to worry a lot about liquidation or like swings in price. So maybe this will scale without having to create, to create the sophisticated, you know, mechanisms to stabilize the peg. You just need to create use cases for it. And the more it gets borrowed out, probably it will stabilize it pretty. Pretty much I would say like dai, the version, the first version of it which was eth, pure eth, but it was like benefiting also from, from DAI being in all these pools and, and stabilizing it. So I would say a use case that I would say I would like to have in our lending protocol is, is have it as actually bridge asset if we, if the mechanism proves to be solid and instead of like usdc, the one we have right now on Arbitrum and if it's liquid enough, obviously it has to be super liquid. So you can liquidate if you liquidate the curve USD in a direct way. So it'll have to be. Yeah, so that's why I'm excited about it now as far as liquidation engine. Yeah we can think about so many use cases about it. But I think what I like about what something that I'm, I'm looking at exactly is having this stablecoin primitive so you can mint this stable coin in any way, in any by, you know, using any collateral. And as long as this collateral is liquid, you probably have a stable, stable coin and, and this ability you can think of, you can create basically stable coins that appeal to with a varying degree of risk. It could be something minted by super risky collateral all the way to very, very stable ones. **Speaker C:** Isolated stable coins. **Speaker A:** Isolated stable coins, yeah, exactly. Yeah. You know, I think it's a. It's a great idea. Why not? I mean. **Speaker B:** Well, I so got it. I think you opened up a can of worms in like a million different directions where we can go. I think, I think like one. One thing that is like, we are a little bit like lost with like this term stablecoin because of like, its association with like, money and dollars and all this stuff. But, like, one way to think of what a stablecoin is, is really just like a protocol that is gathering as much TVL as possible and then is realizing, like, hold on. Like, the whole point of DEFI is like, composability and the ability. Basically what a stablecoin is you projecting your TVL out back into the ecosystem without releasing it from your protocol. And so I definitely see that if you stop thinking of stablecoins as this money that protocols are just creating out of thin air and more a receipt from for the value that is backed by that protocol, then a lot of these concepts around every protocol having a stablecoin and Curve being the beating heart of defi become a lot more, let's say, digestible. So I don't know if that resonates with any of the way that you think. And I know that Silo does mint a stablecoin. And so I don't know. Do you have any, like, philosophical thoughts on like, what stablecoins are and what they mean to you? **Speaker A:** And we're not. We. We did the stablecoin. So V1 is all about experimentation for us. We're experimenting. Obviously. The core business is lending. We needed this stablecoin to see what works, what doesn't work, and how we can learn from it for the future versions. I. We pretty much. We all for decentralized ones. So I'd like. I would love to probably promote one with fully decentralized. But yes, you're absolutely right as far as. So I think a stable coin has to be relatively stable, but also most importantly, decentralized because of any reason. I mean, you don't want a centralized entity controlling it. But as far as user experience, you shouldn't, you shouldn't really worry about much about the peg. You shouldn't worry about the liquidity backing it. You shouldn't worry about all these things. And it's a. It's a long way for CurveUSD to build that. That's why USDC is sticky today and USDT are super sticky because they're everywhere, extreme everywhere really you go. And it's very liquid. So exchanging hundreds of millions of dollars like in even spot doesn't really change anything. So it can always redeem it. And that's, that's something we might, I don't know if we'll have that soon with a decentralized one, but that's what stablecoin should do. I mean we've, we've experienced this in our protocol. We know the limitation of our stablecoin that fell short of what we had theorized for it. **Speaker B:** So the stablecoin is like, you're totally sunsetting it. Should we like not really continue down that route? **Speaker A:** No, no, we're continuing, absolutely. But I'm saying that it, it's not. **Speaker B:** Like where the energy of the protocol is. **Speaker A:** Yeah, no, I mean like has its own problems. For example, it's not super liquid today. So if you want to exchange, exchange it to usdc, well, price impact will, will always hit you. So it's design hat's loss. Now, is there going to be a second version? Yes. Better version? Absolutely. So that's why we've created it. And I think the biggest challenge is to create deep liquidity for the stablecoin at the peg. And that is the biggest challenge really. Now obviously this type of nascent liquidation mechanism that the llama liquidation is, is great because probably you don't need super deep liquidity for basically kind of you don't need that much at the peg, the liquidity, but we still don't know. But the question is, like, how are you going to build deep liquidity for one version of those stablecoins to become the main stable coin? That is the biggest challenge because otherwise if it's not liquid, users are not going to use it. And what do you do with it really? So let's say today you minted this curvy as you minted 5 million of them. What do you do with it really? **Speaker B:** I do think that that is like the problem that we have, right? Is that like, look, why do I hold USDC over every other stablecoin including tether, right? But that I hold USDC not because like it is the most stable, which it is, right. I hold USDC because like, I genuinely believe that like if I need to get out of crypto because like the government's coming for me, like USDC will be the route out, right? Like, I don't believe that like the government is going to go after Circle and be like, we're taking the, the $80 billion that is underlying here. And like everyone who thought that they had good receipts, even though we told you it was legal, like, you know, I believe that if the government is like coming after crypto, like, you know, they'll have good faith, still have like the, the like institutions and the people who like followed the rules that are going to be like the appropriate ways to get ourselves out. And I think the problem that we have in defi is that like, in order for our money to be useful, it has to get out. And like the reason I don't hold any like decentralized stablecoin like LUSD or whatever, it's because nobody in the world is going to take my lusd. Like it's only good for defi. And so I, I think that like the, the big unlock that we all need is that we need like defi to have a purpose in the real world for like real economic activity. And like that solves like a lot of these problems. And like aj, your point exactly that like we need people to take out debt so that like they're stuck around in defi. But the problem is like the only reason to take out debt is either to continue gambling on defi or to take it out of defi. And so I think like that is like kind of the chicken and the egg problem that we're in right now. And so sorry, that was a little uncoherent because of my like point about escaping the system through usdc. But the bottom line is like this, the problem to stable coins as a like philosophical concept is that like it's all well and good, we just need them to be actually useful and you can continue to make them useful in defi. We just need them to be useful outside of Defi. **Speaker A:** Seems like you have some pushback. No, not at all. Actually, I was thinking about two things. Let's say you have a building today, downtown San Francisco, and this building is worth $100 million. And this is probably the polar opposite of let's say curvies ESD minted backed by eth purely by E. Right. These two worlds. So one of them is utilizing the real world assets and which is great topic to even to cover here. And let's say there is a blackrock type or maybe blackrock says like, hey, this is a stable coin right now and we're gonna mint it against this building. We, you know, mint maybe 10 million or 100 million and they go and create your ERC20 token minted or backed by this building, building and they have all the legalities around it. Let's say have a legal framework around it and they, they enter defy and they create 100 million dollar pool or 200 million dollar pool on curve. 100 million this nascent, you know, silver coin and 100 million USDC or even whatever that is now you've all of a sudden you've created actually a, an, a stable coin that is minted by, by this real world asset. So you've, you've got that now. Yes. That will have users, users will probably. Some users will trust it, some user will simply transfer that trust because they trust this company backing it. Right. All these reports or maybe they would in defy we try we as much as we don't like trust, but we actually use trust all the time because you know, we think things will going to continue to be okay. Right. I don't know if that's okay, if that's a good stablecoin to be honest with you. I don't know. Versus a stablecoin backed by Eve. The question is about who is taking the risk and do we understand the risk. And I think Defi should be open to both worlds. Honestly, this idea of canceling each other, that's just weird for me. It's like, okay, that's usdc, don't use it. It's not. Yes. Okay, great. If you don't. Well, if you really don't trust decentralized version of stablecoin, you shouldn't be in DEFI altogether then. **Speaker B:** Well, I think you, this train of thought makes me think of CBDCs, you know, because like the, the way people intellectually engage with CBDCs, it's like, you know, it is anathema to Ethereum. And like if, if a CBDC exists it means like the world is a darker place. And like I don't know. I mean I think that like exactly what you're saying, like if you, you should be able to mint a stablecoin against a real world asset, like the government should be able to mint a stablecoin. Like these are all just like digital assets and like we should all be happy about that. You can choose to use it or not, but we should all be happy about it because like where do you think you exchange and like settle and use digital assets? I'll give you a hint. Right now it's like four chains. In the future it's going to be one Ethereum. **Speaker C:** Well, plus roll up and the L2s. Yeah. **Speaker B:** Another thing that I really think is kind of worth putting out there and I would love to get your thoughts on this is, I'm a believer that the closer we get to true Ethereum, the more likely it is that real people will actually never touch this stuff. And like, CurveUSD is a perfect example where like, I could totally imagine a world where like, in the real world, like, no, humans are actually like, minting Curve USD and like trying to use that at the grocery store to buy apples or whatever. Like Curve USD, all of these things, they're like, they're communication layers for smart contracts, which are just autonomous computer programs. And like, I can just totally imagine a world where just like grandma has never thought about her SSL certificate before she sends her email. No one will ever think about the Curve USD representation of value as they go buy their house. They'll just buy their house. **Speaker A:** Well, that's because of the regulations, right? Probably. Because there's an environment of trust that was created by, by regulating the industry. And I think that's probably what we need. I think it's. And I'm not saying so here's the problem with regulating without losing your privacy. Seems extremely thick, you know, tricky to achieve, number one. Number two, yes, with governments having their own stable coin, all of a sudden they'll. They'll probably even spin their own blockchains, actually. And all of a sudden using decentralized version of a blockchain that is actually not decentralized. But that's honestly the deeper question is, are we ready as humans today? Do we have the mental capacity to understand what it takes to be a free human? I mean, do we really value freedom? Honestly speaking? I mean, we're still. I mean, I'm not gonna talk philosophy much because probably I tend to talk a lot about that, but are we really. Do we really care about freedom? I mean, aren't we all still children, like, always looking for this father figure to kind of belong to whatever that. Be it the government or Elon Musk or Mitch from Curve, although he's not posing himself like that, but we just. **Speaker B:** Say the best example in our space. **Speaker A:** Yeah, exactly, exactly. Because. So, because if you think about it, this decentralization, I think the best thing about it is not necessarily. It's because it's decentralized, because a lot of defi. Is not actually decentralized. It's actually the transparency. It's just simply in the open. At least there's a great level of transparency in the settlements and all the atomic version of these stuff. But, but, yeah, so I, but, but still. So I don't know if, if our, if the group of users Us, the one that care about those things. The couple of millions of people out of the, like, 8, 9 billion people. Maybe that's it. Maybe for now. Maybe it'll take 50, 100 years to actually get there, to get to a point where humans will start demanding decentralization, demanding transparency, demanding those solutions, or demanding sovereignty, basically. But we don't think we're sovereign yet. **Speaker B:** No, I mean, we're objectively not sovereign. And I think what we all just learned in this last week from Ledger is that even of this, that even of us that think that we're sovereign are not sovereign. Right. And I think that, like, I think your points on Phil philosophy are, like, very, very true. And, like, you know, I think some people listening might take issue with them, but I do not, Like, I very much agree that, like, they're like, these ideas of, like, you know, being truly free and stuff are sound good on paper, but are not like, really part of what the human experience want. And what we want is, like, community and dependence on each other and, like, to build together, which is the opposite of freedom. And so I'm with you 100%. The only point I was actually trying to make was that I think that we're dealing with, like, technology that's so early and nascent right now that we're, like, actually tinkering with the wires. And as we get further and further, like, down the development rabbit hole, it's just like these, you know, protocols like Curve or like, Uniswap will be, like, so deep down under the hood and so abstracted away by, like, layers. And, you know, like, I doubt in 10 years, I doubt anyone will ever deposit into Silo. I bet they'll be on their Chase app. And like, the Chase will be say, here's your centralized rate and here's your decentralized rate. And then through the decentralized rate, they'll really be getting that from a decentralized aggregator that is showing that Silo is, like, the best rate for this tranche of capital. And, like, that's the point, right? Like, that's the point of composability and computer science and, like, everything that we're. What we're trying to build here. **Speaker C:** Yeah, yeah. And I'd agree with that vision as well, of the middleware kind of taking center stage for Defi even soon, right? In the. In the near term. And that should be the end goal for Defi right now. Let's remove the financial component from the financial industry and let's just make them run an app. Right? And Run a front end and you know, and then you could get the benefit, the huge benefit of transparency. **Speaker B:** No, for sure. And yeah, I think like just to just tweak what you said a little bit, it's like, let's take the finance out of this so that we can focus on like applications and users and like people that want to do something and not just like continue to like dig into docs so that they can like justify further and further leverage on the thing that they've already like drinking the Kool Aid on. Right. Because that's basically what DEFI is today. **Speaker A:** I, I think dependency or interdependency is actually quite good in society. And that's not the opposite of freedom, I think. So I see that. But then, so here's what I think. And we see that all the time in blockchain. If there's a community that happen to believe in common values and they build together, they all benefit from building together. Although each one of them should remain independent as far as exiting or entering that community and, and preserving all them. There's no, any type of oppression. There's no type of coercion in that relationship. I think that's the highest level of freedom. Not because you need people, but actually we need each other as humans. You basically build together because that's what DEFI is. And that's why I don't understand that the narrative is about canceling each other out. Like, hey, I succeed. There's. There's always be one winner. That's. Defi has proven to be the opposite of that because it's actually reality. It's just one big super app that happens. That this app has to connect to the real world. And the real world is controlled by governments and regulations that. And, and, and then you have. We have to figure this out, man. **Speaker B:** Okay, so I am definitely taking that as like one of my favorite exercises is like what's the most reductive way that you could describe Etherium? And like, you know, the go to example is out of the bitcoin white paper. It's just a timestamp server. Right. But I think aj you just dropped my new favorite one, which is it's just one big super app. But. And I, and I think that, I think you're totally right and I think yeah, I, for me, like Ethereum is just like the property layer of the Internet and like that's super cool and that's interesting. And like all this decentralization, like the whole point of all of this is just to like kind of embed property into the Internet. And like, I think it's really important to recognize that that offers like, capabilities around freedom and choice. And like, look, my in laws are Russian, like still live in Moscow. I've been dealing with like US sanctions for the first time in my life. I was, I went In 2015, I was on the first train of Americans into Iran after the, after the nuclear deal was signed. Like, I very much believe in Ethereum because of like the pain and horror that financial sanctions can cause. And so I'm like a huge believer in that freedom. But I also think that we have a tendency to like, forget that we are humans in the real world that like need to eat and like drive on roads that are safe and like, you know, make sure that there's not arsenic in the water. And the goal here should be to like, figure out how we can create systems that make everything better and not just like think that we're smarter and better and different than like 400, 000 years of evolution that has like led to this moment. And so. **Speaker A:** Yeah. **Speaker B:** Man. Any responses? I'm not really sure how we got here from isolated lending markets. **Speaker A:** Yeah, so how we got to. I think the. I'm going to add to this isolated lending market. It's just another tool in defi to stay in defi and because I believe I've mentioned in this conversation the underserved community. Underserved communities. So I have this token asset. I, I cannot use it. It's simply and, and lending is, is, is a great tool not just to leverage, but also it's sticky because you want to keep using, you want to keep owning this token. Actually we own silo tokens and there is no utility for it right now other than lp. You can lp, but not every user is going to lp. But I would love to use it as lending. Now I don't know if there's someone out there that is going to give me SDC or eth, so I could pay them interest and take that. But at least with isolated lending market, maybe there are 100 people that are willing to give me that. So at least you've created that basically. So it's basically making defi extensible a bit more as a first step for us as builders of a protocol still in exploration mode. So this is what people forget in defi. They want their project to be the top 50, like right away or top 100. Not everyone will make it to top 100, but sometimes you create a lot of utility for a bunch of users and you've done your work really right. As long as you keep building. And so that's how I see Defi. Defi is still probably 10, 15 years away from where we wanted. And you were, you're absolutely right as far as like users don't want to see this shit. They want to see this infrastructure at all. I don't want to know if it's decentralized or centralized. Just give me a user interface and let me swap A to B. And I don't care if one is on arbitrum, another one is on. I don't know, it could be on even totally different blockchain. **Speaker B:** Yeah, no, and I think that is a perfect pivot to kind of go. What I would like to talk about with our closing few minutes here, which is when you think about like the Etherium or the Defi end game, like what does that world look like? And you know you can answer that from the perspective of Silo and like what, what the role of Silo or borrowing is in a robust ecosystem or what it looks like in the real world. But AJ what you just said is that we're like 10 to 15 years from like Defi being mature. And like what I have to say is like we're 10 to 15 years before Ethereum is actually usable for things in the real world. And that comes from an understanding of the Ethereum roadmap and dank sharding and light clients and all of these things that are coming that really change what is on the table. And so again with our last few minutes, I just like to hear from both of you when you look forward and think about what we are all contributing to, to bring the world computer and to bring Defi online. What, what is that world that you're pushing us towards? **Speaker A:** Universal financial freedom. That's what I think this should be about. Unfortunately, along the way, I don't know if we're gonna get there because humans are greedy. All of us tend to be greedy and tend to grab to power if we get even. If you are a founder of a Defi protocol, you're still that human. You're not different from someone taking an office in a powerful government. Universal freedom. Yes. I would want someone anywhere in the world to have access at least to some sort of this, some of the things that we enjoy in some of the countries and this. **Speaker B:** Can I ask you specifically, what does universal financial freedom mean to you? Because I have an idea in my. **Speaker A:** Head, but a position of currency that is not controlled by a single entity and that every human being has the right to use it and it does not lose value because of circumstances that are, that are out of our control as individuals. And you can transact with it, you can own it, you can transact with it and all the tools around it like lending and borrowing. And so technically you could use it to buy and sell and transact and trust it. That is the missing piece right now. Because even if you live in a remote country and you have means, you're, you're free human, as free as possible individually, let's say you're, you're willing to make decisions in your life and you're happier, but you still happen to live in a country where this currency has devalued 30 or 40 or, or whatever because of certain reason that's not gonna, that's gonna, going to limit your, your freedom. So that's what I mean. Like what I mean with, with the, the, the freedom for the human freedom. We need some sort of financial freedom. **Speaker B:** Yeah. And I, what I basically end up saying to every person I'm speaking to is that like Americans experience crypto differently because for Americans what, what we see is like, oh, imagine like the possibilities and the capabilities and like how much better the world could be then. So we should try to build crypto and what huge swath of the world see is like oh my God, I have problems today. Whether it's inflation or capital control or like fleeing violence and like crypto provides answers to real people today. And I think what you're saying is that Defi needs to get to a place where it's providing them just as much to a Westerner who wants to do like forward looking things as like someone who like just cares about like getting food on the table for their family. **Speaker A:** Yeah. And if there's, if the theme of the last 20 years has been about owning the means of production yourself because you're YouTuber or you're Whatever that you're online freelancer, you still, you need this financial, you need this tool in order to, to have this control over your life. Like to have actually freedom in your life. Not control, it's about actually being free. So means of production on its own is not enough because someone can hijack it. **Speaker B:** Beautiful. Man, that is so good. What you're. I just have to repeat it and then Tenzin, I'll let you go. But what you just said is that like we just spent 20 years democratizing like the tools of earning money. Whether that's like YouTube or content creation or whatever, but it is not enough to be able to Generate the money you need to actually own it and then have sovereignty in the system for it to mean anything. And like, I've never thought of it that way. Aj like that's beautiful. And there's even more. Why like Ethereum and crypto is just like the natural evolution of the Internet. Like this is just the Internet. **Speaker A:** Exactly, exactly what we need. It's exactly what hopefully will. That's why I'm excited about the Curve USD, because I'm thinking like, well, at least it's going to give me like a niche. If I believe in Ethyl, maybe I can transact within that world. That's why I think lending is important to that because we want to give it this utility. **Speaker B:** Yeah. Awesome. Tenzin. What, what does the defi endgame look like for you? **Speaker C:** Yeah, hard to follow up. Ahem. But absolutely, you know, agree and you know, always love everything he has to say so. But I would say that for me, right, if our end game looks like the one vulnerability that I see kind of like in the system right now is all of us. When, when you came in and you first bought crypto, you had to go through a centralized exchange and there had to be this kind of third party. And in a certain extent this is what a CBDC will maybe fix depending on how they set it up, but it's the ability to transfer cash directly into the regular system without any sort of barriers or you know, kyc. **Speaker A:** That. **Speaker C:** Would be the end game for like translating money or you know, transmitting money around and then for lending. Really I think we need to remove all of the centralized points of failure that we currently have and that currently exist in most other defi systems that, that work to an extent with, you know, calculating prices and stuff like that, like oracles. We need to create not just a decentralized one, but also it has to be tamper proof because, you know, Uniswap V3 oracles can be great, but they can all be exploited, right? Every single one of them can be exploited. It's just about how much money it costs and yeah, so removing that, removing the, the reliance on bots and you know. Yeah, that, that's probably what I would say but I, I wholeheartedly connect also with the idea of bringing financial freedom to the outside world because I'm, I'm from a third world country as well, but and my buddies who live in Argentina very much feel this and this is the reason they use crypto and they didn't know anything about crypto before but they take their pesos, they turn them into dollars in USDT or usdc, and then that's how they manage to, you know, retain value and not get completely ripped off. **Speaker B:** Yeah, no tens. I mean, I definitely appreciate your second answer, which was essentially, like, defi. Endgame just needs to be, like, more stable and more just secure and robust. And thank you for coming up with another answer, but just, like, for the audience and, like, like, the reason Tencent and I know each other is because, like, my fiance was basically raising money to do medical care for, like, people in Panama that have, like, never even seen, like, a dentist chair before. And Tencent not only, like, gave, like, by far the biggest contribution, but, like, we've just bonded over, like, what it. Why we're even here on this planet and, like, what we can do, like, with our time and our resources. And, like, again, like, all of us are here outside of the Western financial system for a reason, and a lot of us are here because we got betrayed for whatever reason. And a lot of us are here because, like, we see the opportunity to, like, change people's lives. And, like, I can say without a shadow of a doubt after speaking with these two men for an hour, like, that is, like, we're here to change the world. And, like, these two guys are here to make sure that, like, everyone has access to the financial tools you need to thrive in the modern world. And, you know, it's conversations like these and teams like these that, like, remind me why it's important to stick around. So, you guys, thank you so much for the time. I really appreciate it. I really appreciate the thoughts, and it's not often that you can start with what's your defi protocol? And end on, why are we here? And what does freedom mean? So, so appreciate it. Thank you for the time. And. Yeah, I'm in. Thank you. **Speaker A:** Thank you so much. Enjoyed it so much. Appreciate it. **Speaker C:** Thank you so much for having us. Rex, Always a pleasure talking. **Speaker A:** It.