We are ready for our next fireside chat and for this one I'd like to bring on Johann who's the chief business officer of Chainlink. So please give him a big round of applause. Welcome back. Thank you. So there's a lot of things I want to talk about but one of the things I'm kind of curious about is just understanding your Chainlink journey.
You've been at the company for many years and you've done so many you've played so many roles and you've done so many different things. So can you walk us through like how you got into the space and sort of how your role has evolved at Chainlink? Yeah, sure. First off thank you for having me. I think Cure events have been really a big milestone for the space.
The first time I actually met a DeFi protocol was actually 2018 at ETHWaterloo. That's amazing to hear. It was obvious back in those days. Lots of great stuff got built with these events. Okay, so I was always very passionate about freedom and freedom tech and also making the world I would say a fairer place right in terms of democratizing finance etc.
So I got into ETH back in 2016 or something like that 2016-17. And back when I got into the space I realized a lot of white papers had very big dreams but there was no way to actually build these dreams. We were missing so much infrastructure from oracles to cross-chain also back in the day. So my first project was actually a cross-chain project. Um I stayed there for 1 year and I realized it was way too early because everything was getting built on Ethereum anyway.
Cross-chain in 2017? 2018.
18 yeah. One chain.
What other chain? Exactly. Um and then I joined Chainlink around 20 18-19 because I realized the biggest issue was not connecting chains together. It was connecting data to Ethereum, basically. So, that's how I started on to this journey.
I've been there for the last 7 years now, and my big mission there has been how do we allow developers to build the things they want on chain. So, it started with data, and it's been you know, it's developed into way more things that we do today. Yeah. And I want to talk about all those things in a few minutes. Um one of the things that I feel like put Chainlink on the map really from every developer's standpoint was DeFi Summer.
And the thing I'm kind of curious about is knowing sort of what was that like for you internally at the company, and what were kind of some of the things that you learned about your own product or what you needed to do for the market during that whole time? Yeah, I I think that was really the start of the whole space we know today. Look, our space is built on the presumption that the system around us has flaws, and the system is going to, like any system before, disappear and be replaced by something better, okay? DeFi Summer was basically came into being because of the COVID crisis. What happened during the COVID crisis?
I think there are two main events which really triggered DeFi Summer. The first one is all the rates went to zero all around the world, and people stopped in many ways trusting their fiat currency. If If you remember, by the way, before 2020, you would speak to the average person on the street that had no clue what inflation was. Right? No one was thinking about inflation.
No one really understood how the money system actually worked. 2020 was a wake-up call for many people in this regard. The second thing is many people had their bank accounts frozen. So, the idea of ownership of your assets actually became a real thing. wasn't theoretical anymore.
It was a very practical reality. These two things brought a ton of people into DeFi. And for us, what happened was we basically went from um I think we had maybe 50 Oracle networks back in 2019. We had we were working with uh I think it was 2020 actually, sorry. We were working with Aave, with Synthetix, etc.
So, we had, you know, five, six users on mainnet, 20 Oracle networks. We ended DeFi summer with more than 1,000 price oracles. 50X. Yes. And we were literally adding For us, adding a new protocol into Chainlink was something big back in the day.
I remember when we had our first integration with Synthetix, our value secured went from $0 to $10 million. It was a big thing for us. Like, you know, I couldn't sleep the whole night. It was exciting. In the following weeks, we started adding one new protocol literally every 2 days, and we saw some protocols like Aave grow from maybe uh you know, $100 or $200 at the launch to billions of dollars in a few months.
So, we saw exponential acceleration during the DeFi summer. And, you know, that's I think here the crisis we saw in the real world brought a ton of adoption to our space. And in many ways, I think we might be at the start of something similar right now, frankly. That's awesome. Did Did kind of It seems like the the biggest surprise was just the velocity and number of people launching different protocols cuz a lot of them were forking each other and and adding small improvements.
But, did things break, or did you realize that something could have been done better from the engineering standpoint or product standpoint? What were kind of the decisions being made during that time for Chainlink? For us, we went from a market which was a very quiet market, right? DeFi. To the hottest industry in the world in the span of 6 months, all right?
That was basically what happened during this period. So, the main thing we saw, which every Ethereum OG will remember actively, is congestion on the chain. It was basically
prices were the craziest we've ever seen at that time. Exactly. Exactly. You had the Uniswap airdrop, you had Compound, you had the NFTs airdrops, you had so many big events which would trigger huge congestion on the main chain. For Chainlink, congestion was something we couldn't afford because we needed to keep pushing prices on chain constantly because we had billions of dollars relying on our pricing data on chain.
And if the price is late, you might incur wrong liquidations or you might accrue bad debt to the protocol. Back in the day, we basically were able to go beyond the congestion, so we were able to keep posting our updates. At some point, Chainlink Oracle's were literally 50% of, you know,
All transaction fees, yeah. all transactions being posted on chain, etc., to keep the to keep DeFi going, to keep DeFi alive, right? I I think this was actually an amazing experience because we built a transaction manager to ensure transactions always get on chain. We built something completely bulletproof which has been working for many years.
Is that still an issue that protocols and infrastructure is facing to this day? That's something we were able to resolve in the heat of the moment back in 2020. And frankly, I'm actually amazed when I look back that we were able to keep DeFi going in these in these conditions which are simply insane, right? Like we we had to push time sometimes to spend like 7 days in a row without sleeping, literally, because the the network was always congested and you had to keep things going on chain. So, those were very wild times.
Yeah. That's crazy and amazing. Um how How do you feel like DeFi has evolved since then in terms of we've obviously seen a lot more maturity and the space is 100 times bigger. Like I mean, just all of DeFi right now back then is smaller than just a stablecoin supply of USTC. Um so, it's it's definitely gone a much bigger um in terms of size.
But do you feel like DeFi is the same to people now than it was back then? And how has the definition of what DeFi what's important in DeFi change for Chainlink? Yeah, it's a great question. So, I'm going to say something a bit controversial here, but I think most of the use cases were actually built at the time. And the issue was that they didn't get much adoption because their time wasn't right, okay?
The thing where the time was really right was lending protocols. That's what really blew up back in the days.
Staking and lending, basically. Yes. Yeah, yeah. So, that's where we saw mass adoption on a huge scale, right? But today we're talking a lot about um derivatives, having equities on chain, etc.
So, we aren't talking about tokenization as much back in the day, but we were talking about giving exposure to folks um for things like equities on chain already, right? We had synthetics, we had different protocols doing that. That didn't get much traction at the time. It's getting way more traction today, right? Another thing that was popping up in 2020 was things like Polymarket.
Another thing was PerpDexes. Another thing was options and way, way more things. So, we actually had tons of use cases that were built in 2020 that are only now getting adopted. And I think because their time is way more like the the world is ready for these use cases today. If If you look at what happened a few weeks ago with the crisis in the Middle East, right?
The crisis obviously happened on a weekend because why not? And
You couldn't trade against that on a weekend, yeah. Yeah. People were doing that on on chain. Markets were closed, right? So, where did people go?
They went on chain. They were able to hedge their position on key commodities like oil, silver, gold on chain. People today are looking for exposure to gold. How do they do that? Well, they buy tokenized gold, right?
They buy XAU on Ethereum many cases. Why? Because buying physical gold is not so easy as people in the Middle East could see uh recently. If you're looking to leave the country in a time of need, you can't bring your physical gold. It's way easier to have it tokenized on chain, right?
So, prediction markets is another great example. Trust in legacy media has been going down more and more, right? Prediction markets have become a source of truth that replaces uh experts uh that come on uh legacy media news to And it's correct most of the time. And it's correct way more
compared to the experts. Exactly. So, a lot of these things their time is just right. They were built before, but they're really flourishing today. So, what does that mean for Chainlink in terms of the products you have to build?
So, you obviously are more than just an Oracle service now. Can you walk us through what other products that you have and sort of how important are these things in addition to the the price feeds? So, for us what we've seen is that all of these uh protocols I mentioned are basically built on Chainlink from perp dexes to prediction markets to lending. All of this is using Chainlink. Now, what do they use within Chainlink?
They use the price data, yes, but they use way more. They use cross-chain. They use things like proof of reserve. They use things like compliance products we've released to enable institutional qualified players to be able to conduct business on chain. they're using like we're experimenting more and more with privacy, which is a key requirement for finance to actually happen on chain.
So, our philosophy has been um bringing the space what it needs to actually win, and this definition has changed over time. It started with data. It went to cross chain with uh the explosion of L2s and uh kind of uh the the ecosystem growing way more than uh than just being on Ethereum only, right? And now it's been with the next adoption of TradFi on chain, it's expanded to things like compliance. How can I ensure I can bring my compliance on chain?
So, what does that mean? Can you give us an example of on-chain compliance?
Absolutely. So, today, if you look at the way people are doing compliance, they're doing most of the stuff manually off chain, and then they update the chain. So, there is always a period of delay between the two, and they have to keep a white list updated manually on chain for things like tokenized assets, etc. First off, it's a very reactive system, where if you have an issue, you update the white list too late, so it's not very productive, it's more preventive, right? And second, it's huge manual labor.
Like you're not saving anything by being on chain, you're actually incurring more costs, right? So, we built a product with um multiple TradFi BMs, one of them is Apex for instance, which is one of the largest uh um fund fund managers in the world. And what we're doing there is ensuring we're able to bring everyone their compliance system on chain through an automated uh Oracle system. So, what happens is our Oracle's are running something called the Chainlink runtime environment, and this environment is able to pull the KYC providers and the compliance policy managers from their system, and then they them constantly on chain. So, instead of some manual off-chain updates that comes every week, you have oracles which are constantly bridging your off-chain compliance systems to the on-chain world to ensure you're proactively managing your risk and your compliance, and this has made tokenization assets issuance and adoption way easier.
That's awesome. Is um is there anything else that CeFi and institutional kind of companies want to be on chain? Like what what is the wish list of they would definitely be more comfortable if it existed other than compliance? I think privacy is a very big one. How do you do that on Ethereum?
So, right now we have our Chainlink runtime environment, which is able to manage a lot of the privacy policies where we can offload a lot of the computation off-chain and then return proofs on chain. So, that's high-level how we're able to do these privacy systems. The good thing here is that it doesn't need uh protocol change on the Ethereum side. It doesn't need to change the chain to adapt to anything. It's just something we can bring in and bring it's opt-in privacy rather than uh default privacy for the whole ecosystem, which from our point of view is the way it should be lent, right?
Um I think privacy has been the big missing part. The other missing part, which I think um the word is going Well, it's not a missing part, but I think it's a killer use case for our space is the decentralized nature of Chainlink oracles and Ethereum is a killer use case today because as we can tell around the world, the countries and institutions are trusting each other less and less, right? So, a few years ago you had a very connected world where you had a trust between countries, you had, you know, alliances, commerce. In the last few years, that's been replaced more and more by mistrust, war, tariffs. So, this neutralize this like neutral, sorry, decentralized layer we're able to bring to allow a neutral infrastructure to settle transactions between countries and institutions.
I think that's been a killer use case we're able to bring that literally no other system in the world can bring. I mean, this is a very interesting point, but the thing I'm curious about is is this something that you pitched to them or they already realized that and that's why they want to to be part of it? That's what they want in many cases. That's what they want. We we do sometimes have to pitch to them and to explain to them, but I think that's really what has Look, decentralization and this neutrality prospect, that's something that many people didn't understand until actually
it when something goes wrong and they're like, I need this for the next time. Exactly. Because in the last few years we've seen way more talk about low latency and you need low gas fees and you know,
Yes, yeah. Yeah, it TPS and stuff that makes a this, you know, a certain crowd very happy, right? But at the end of the day, the beautiful thing about our industry is its decentralized neutral nature, which up to now wasn't very obvious to everyone why we need it, but I think in the next few years it's going to become way, way more obvious and I think that's a great thing Ethereum has done and Chainlink has done that we stay true to this principle and we didn't really ever compromise on it despite all the pressure to be faster, lower latency, lower gas, you know, that's a principle that shouldn't be a negotiable thing. That should be default for our industry. I absolutely agree.
Um, one other kind of question that I'm curious about is obviously we've seen way more interest from bigger financial institutions trying to come on chain and you are likely in the room with a lot of them talking about all the benefits. Um and the thing I want to know is what is making them spend more time trying to do this transition now. Uh which is is there anything that we may not realize that's obvious to us on why everybody wants now a stablecoin, why everybody wants to make RWAs on their thing on on their kind of chain or their assets possible. Like why are they suddenly interested in kind of being more public or non-chain versus just keeping their systems the way they are and just maybe reducing fees or something like why are they deciding to do this now? Yeah, absolutely.
I mean, I think if you look at the history of finance, it's basically adding new layers on top of the existing system constantly, right? Um finance never gets redone from the bottoms up. It gets a new layer over time.
gets bigger and thicker.
Exactly. It It becomes a bigger and bigger stack. And the goal is always I mean, it usually comes back to a very simple principle, um how can I be more efficient? How can I basically improve the ROI of any product at any given time? How can I get more distribution?
Blockchain right now through two key properties is becoming an obvious choice for them and it's been an obvious choice for many of these institutions for many years, but now now they just can't ignore it. The first one is distribution and that's been made obvious with things like stablecoins. The second one is efficiency gain, right? So, we had projects with GTTC for instance. One of those was called Smart NAV.
With Smart NAV, we are able to put the NAV of funds on chain directly for reconciliation across multiple players on what the NAV value of a specific fund is at any specific time, right? The way they are doing this up to now in the industry and the way many people still function is just sending emails of spreadsheets to each other, right? And for those of you who don't know VTC, DTCC secures trillions of dollars. Quadrillions, actually. I Quad- quadrillions.
Oh, interesting. So, so hearing a spreadsheet being passed over email is is definitely uh funny. Exactly. Like those are institutions that literally secures the whole world's value and is there extremely interested in making these processes across their industry way more efficient because the change like if you improve any of these systems by only 1% they secure so much value, the amount of value you get from this 1% improvement is humongous. That's also like hundreds of billions in just that 1% efficiency, if not trillions.
Exactly. And here we're not talking about 1%. We're talking about many times 50, 90% improvement, right? So, it's just a technology they can't ignore anymore because of these efficiency gains. Um another big thing I would say is that you have two different path for adoption of our space.
You have the West and you have the East. The well, you know, like you have countries
yeah. You have countries with institutions that are highly highly developed financial institutions. You have countries where the financial institutions are not highly developed and where average people are just looking for hedges against their fiat currency. They're looking for a way to escape their system because the inflation in their country is 80, 90%. And in those countries what matters the most is how do I get to a safe haven?
In these places that's where Bitcoin has been successful, that's where stablecoins have been ultra successful, DeFi has been successful. Argentina was one of the first places where DeFi got so built up. El Salvador now and
El Salvador, exactly. Because these places it's way more around escaping their um fiat system and their current system. And in our countries it's way more about institutions making their system better. So, it's like these two speeds of uh decent like um adoption of our space happening at the same time. No, that's actually a really good way to frame this thing cuz a lot of them just want to effectively simplify what they have.
The others want to just catch up and get immediately to the the same level without spending 30 years getting there step-by-step. Exactly. Exactly. Um so, I guess my last question to you is with kind of all that context in mind, uh especially kind of from your personal perspective and your own personal time, like where is your time going at the company? What are you excited about for the next year or two?
And um what is it that you want to focus on at Chainlink? Yeah, sure. So, right now um I work on everything that's ecosystems. That's basically my role. And our ecosystem is extremely large.
Um so, we have like 3,000 DeFi users. We have We're working with many blockchains. We're working with many TradFi players. So, in TradFi, we have to work with every part of the stack from custodian to GA to tokenization platform to asset manager. So, we literally manage around 50 different verticals in uh in our team.
What I'm spending most of my time on is seeing how we can get these tokenized assets that are being issued on chain, actual distribution. How do we get them adopted inside DeFi? How do we ensure that we can have tokenized assets being used as collateral, being used for lending, being used in perps. Um so, a great example is the amazing work we've been able to do with uh XStocks for instance. XStocks right now has been one of our key partners.
And they've gotten tons of adoption in DeFi um in the last uh few few months, basically since they started working with us. So, I would say if you want to summarize our um big mission right now, it's how do we bridge TradFi to DeFi? And to do that, you have to become um we're we're becoming the gateway to distribution for all these tokenized assets. That's the way I would view it. Amazing.
Well, thank you so much for this amazing discussion. Uh, please give Johan a big round of applause. Thank you very much. Thank you.
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