The Next 3 Years in Crypto - TOKEN2049 Singapore 2024

I think this session we want to talk about the next three years in crypto and vitalic I want to start with you 11 years ago you were a 19 year old computer programmer uh you wrote a white paper on ethereum and ended up contributing to a new world and a an asset class that today is valued at $290 billion in 2024 some of the largest Asset Management firms hold ethereum like black rock is this what you envisioned when you walked into star's office 11 years ago I I mean I have to admit know 11 years ago I was uh not at all sure where um any of this was going again I definitely know saw that uh Bitcoin was uh really promising for the first time even back in 2013 when I went to the uh conference in San Jose and I realized like hey this isn't just like five randos on the internet there's like actually entire businesses and there's people who are like like really serious people that have been dedic dedicating their entire lives to it already right and uh I mean at the time with uh ethereum actually I mean at the very beginning I when I first published the idea I was uh wondering like surely if no one else had already come up with this before me then someone like there must be some fundamental reason why that idea is flawed right and and surely like five very smart cryptographers are going to very quickly come out of the woodwork and basically tell me why I'm completely crazy and that ended up like not happening and I mean actually by the time I was doing my first visit to China and I'm like visiting a star over at okx I know ethereum had uh already been uh several months uh after the Project's announcement it had existed for more than half a year I think uh by that time it was clear that uh this was going to be something big and by that time it was clear some of the directions um in which it could be big if you read the ethereum white paper from way back then right it's uh you know it talks about stable value cryptocurrencies and today we have stable coins it talks about financial derivatives today we have def it talks about decentralized domain name systems today we have ens it talks about crop insurance and today there's definitely subp parts of defi that that do that the thing that it did not predict is nfts I'm sorry but like the whole thing where you're like paying $3 million for a picture of a monkey that's on you but uh I think uh you know a lot of the general categories were definitely starting to be there but like the she scale that it would get to or just how quickly it would get to was definitely something that I think uh kept uh getting uh coming as a shock to me for years to come yeah well great star I'm going to move over to you this is the first time we have you on Main stage at token 2049 I know you and vitalic go a long way back you've told us a lot of fun stories I'd love to hear from you how you met vitalic and your memory of meeting him for the first time yeah actually we met so many times back to 2013 2014 the most uh impressive story to me is it's like 2017 balic come to me say star uh can can we uh list theur your exchange at that time I said no it's a all coin our exchange don't want to list the all coin so I feel shame about that yeah and I think until today uh is most uh uh most important infrastructure to blockchain ecosystem but proved that he's a great vision Builder Community Builder we okx also have our commitment uh to eum ecosystem uh we work hard to contribute uh to the infrastructures thank you Jeremy moving over to you you're no Foreigner to The Exchange business I recall very early days you you were running an exchange and then we were the first to get behind ethereum well before these guys poniac yeah yeah yeah so tell us about that pivot going from The Exchange business over to the stable coin world and what what's your passion that drove that pivot and why did you make it so it's a couple things I think the first is when we got started in in 2013 um we were motivated by a lot of the ideas that were floating around but had not been executed so the idea of smart contracts the idea of putting a virtual machine on a blockchain network the idea of issuing other assets on these networks and the the founding of the company was on this idea that you could build a protocol for dollars on the internet that you could do that on and you'd have programmable money and that was what we originally set out to actually build um and back in 2013 when we started designing this 2014 really there was just Bitcoin and we became very frustrated by the lack of technical progress that was being made in terms of executing on a lot of those earlier ideas and actually I met vitalic pretty early on uh in our office in in Boston um after the white paper had been out and it was very clear like okay this is what we had thought was necessary and vitalic gone and execute it and then um you know we uh really by like 27 17 um we could actually execute on the idea we had done all the work to get licensed to be able to move money between the existing Fiat system and blockchains and we had worked with Regulators to allow us to do that with dollars and euros and pounds over the Bitcoin Network that was a kind of a hack although the product was good it was kind of a hack um but really U once it became clear like actually we could execute on this um we we kind of um discarded other projects that we had going on sold some different products that we had off and put 100% of the focus behind usdc which had gotten um I think pretty good product Market fit by 2019 um you know we worked very closely with a lot of the ethereum D5 protocols and projects and I think that was critical to getting the product Market fit and then just developers wanted to build with it and it was pretty clear to us that like the entire future of the company was going to be built on that interesting very interesting and metalic back to you we can agree there's a lot of global unrest there's a lot of economical and political unrest that that we're all facing give us a little bit about how you see ethereum contributing to the next three years of crypto and how we make the world a better place I think uh one of the truly special things about the crypto space really is just how International it is right and I think uh I mean this was I think even like especially true even in the Ico era right which I mean I think I actually think these days is underrated right because back then it was basically normal for a new project to start and then that project would have a US Community it would have a Chinese Community you know it would have a Japanese Community you know a European community and uh like it would intentionally try to bring together people interested in the project in the ideas from all across the world and you would it would just be a regular thing that you would just have these common project that like everyone all of these people who would otherwise not talk to each other can still be part of right and uh I mean I think uh you know having this ecosystem where like more things are VC dominated is like I think it's definitely somewhat somewhat worse from that perspective but I think uh you know the projects themselves like they uh still have that kind of value right this is uh you know in a time of rising physical barriers Rising economic barriers Rising internet firewalls this is one of the ecosystems that continues to be steadfastly Global and I think that itself is uh a really important type of value that it provides I think both in just uh fulfilling a lot of the basic needs of people who end up being disconnected from Financial systems social systems and all kinds of things as a result of all of these challenges and but uh also just doing its part to keep all of humanity together very cool thank you star you're one of probably the most resilient entrepreneurs in our industry and recently you made the decision of taking the exchange business to now being a web three technology company I know you're very passionate about self- custody I think people would want to hear what's your viewpoint on the importance of self- custody as we move into the future especially with the global economical political unrest uh yeah in traditional Financial system uh the corporate structure or the business structure is always separated to like exchange of business custodian business and a broker business so I don't think the crypto industry will simply copy the trade F structure so crypto is still fundamentally a technology driven industry so there are a lot of new technology will make those typical Market structure is not necessary there will be a lot of battle a market structure so self custody is a great technolog in humans thousandth year of History we make money that is gold or silver we put it back to home under your bed so in digital times when we get money there are third party agents help us manage the money I think self custody technology give people give Human Society a option to back to you hold your money yourself the not key not your money I believe it will be a great beautiful future so self cust doesn't means no regulation no compliance right so we believe the unchain N is a transparent n the industry can do much better activity monitoring then the trade file so that is our company okx believe self custody is a future so we make it as one of our most important strategy thank you Jeremy uh circle usdc is now built in my view at least the most trusted settlement layer in crypto when you think about the next 3 years clearly we have a use case for Sable coins today which is around settlement and value transfer what other applications do you envision now that the stable Network stable coin networks are well adopted what do you what would you like to see in the next three years yeah you know I think um three years goes by pretty fast um but um you know as I like to say we're sort of just kind of hitting the 1.0 vision for what we think this could be which is essentially a world where the marginal cost of storing and moving value goes to zero um and where the the user experience of like transacting over these mediums is as simple and seamless as the other kinds of user experiences that we have with major categories of software utilities on the internet we're not quite there we're getting really really close and so um I think maybe over the next year I think we're we'll get there on on that utility and then I think it starts to get really interesting um you know when when internet utilities made the marginal cost of say storing and moving information zero or the marginal cost of having a Communications uh connection to someone zero or the marginal cost of Distributing software effectively became zero when you get when you when you change the fundamental unit economics um the kind of net World output of that thing goes fairly exponential and and I think that that will be similar with with money and transactions so it strikes me that as we approach that point the velocity of money in the world in the actual economy will increase considerably like the amount of net World output growth in those other areas was like million x over some period of time it was just extraordinary and and we see that so the implications of that are really profound if we have um this incredibly high velocity of money um the ability for people to benefit from that economically is is is significant and to the point of kind of the global nature all of all this we've never had a system of value exchange with that efficiency that is truly anyone connected to the internet um who can participate in that and so the implications are significant there I think the thing I'm most excited about is we're you know we're also like in the very early stages of programmable money and programmable money use cases and and while we have huge advancements that have happened with that with defi um you know we're we're still barely scratching the surface there as well and um I think so I'm interested mostly in what people are going to invent in terms of intermediate value um that has never been invented before and um I I kind of refer to it as similar to like when the iPhone came out like there were a lot of ideas about mobile but until you had the surface area that allowed you to accomplish those things um you really couldn't Envision everything that was going to be possible and I think we're we're approaching a point where robust mature um you know infra for writing code to intermediate value and that where it's effectively frictionless and seamless for users we're approaching that and so I I'm I'm super excited to see what happens there and I think one area in particular I'm I'm really interested in is is onchain credit and credit intermediation um that to me is like real economic output is is time value of money transformation that is how economic growth happens and we we we are not yet doing that much with that um today on chain and to me that's the deepest transformation that can happen in terms of you know increasing global economic prosperity for people is if we can really move unsecured credit and other forms of credit uh onto these onto these networks and so that's something that I'm pretty interested in and now Jeremy what about Enterprise use cases say in Silicon Valley I know they developers who are working within our industry but what about developers outside the industry how do they view stable coins or usdc especially given you guys are regulated how do what's the you know Enterprise use case possib in the next say 3 5 years yeah I think um you know there are a lot of forward leaning payment companies like stripe or you know um neobanks and others that are starting to use stable coins which is great but the use is pretty small um in terms of like Enterprises meaning major companies it's it's very small and we we still have a critical thing that needs to happen and the good news is it is happening which is that um stable coins need to be considered leg electronic money they need to be treated as a cash equivalent instrument on a balance sheet on so an accountant or a finance person in a company can say okay this is digital cash and I can account for it and I can report on it and once it's valid it's a valid form of money legally um and you have that consistently around the world which we will then I think the the the uses by every type of institution will explode right because you need the technical utility to be there and I think we're solving that you need the legal certainty there in order for people to take it on because I can't tell you how many like large companies if you have a conversation they go I don't know what this is and I can't it's like really hard for me to account for this and so therefore I'm just I'm not going to do anything even if the technical utility is strong and what do you think it takes us to get there I mean basically there's there's stable coin laws that are being passed in every major Financial Market Center in the world they're either passed or coming into law over the next 12 months and so I think that's basically how happening so that's the good news uh and so I think technical progress um with infra and ux and legal certainty sets up the conditions for this to be uh pretty explosive in terms of usage uh beyond that very cool thank you Jeremy vitalic there's been this exponential rise of layer twos tell us at a very basic level good for ethereum bad for ethereum how do you view them MH I mean I think ethereum could not have uh gotten to where it is without them right I think uh you knower the ethereum layer 2 ecosystem has just brought such a huge amount of talent to the ecosystem not just in terms of like building out the raw technology which includes proving systems it includes zero knowledge proofs it even includes uh client implementations um but also all of the talent in bringing all kinds of people into the etherum ecosystem that otherwise would not be right and uh like basically ethereum gets to have like several dozen of these sub ecosystems Each of which are individually going out and attracting users um basically at the same scale that uh you know like otherwise a one blockchain would be and uh like they're all bringing this activity in and still being a part of a big greater ethereum ecosystem at the same time right so I think uh so far it's been hugely just in that way and I think like the that theer 2 ecosystem has so much on scaling has also freed up core developers time to you know like one you know like finally get the merge done which uh was done only I think about two years and three days ago so know happy second birthday to proof of stake um also uh all of the improvements in account abstraction um like a lot of the evm upgrades that we've been considering I do think that there are real challenges like I do think that the fragmentation problems that people points to you know they are real and uh there are a number of uh initiatives that actually are already happening to try to resolve that right so uh you know yesterday at some of the ethereum events I uh talked about uh the uh know chain specific addresses cross chain um you know Trend asset movements using liquidity providers cross ler to light clients and all kinds of things that can be uh better standardized uh between layer twos and actually it be continuing to talk about those things actually talking about alignment between Layer Two is and layer one and only another another couple of hours today at the uh E theum Event so it's uh an ongoing uh talk iic of discussion I think you look both on the standardization front and on the uh economic alignment front and so I think uh you know the positives are large and uh we've seen them and uh the challenges I think also the both the uh ethereum and the foundation are taking them extremely seriously and have been working I think already very hard this year to continue addressing them very cool star you talk about I know we' have conversation where you say you'd like to see more applications in web 3 using web 3 infrastructure but with a web 2 front end can you talk to us about that yeah I think in last 10 years the crypto industry create a lot of successful asset like a Bitcoin is one of the top 10 market cap asset in the world there are Bitcoin ETF make people easy to invest in Bitcoin but in the actually in last 10 years the how industry we keep to talk about crypto applications there are some success application like uh RV compound which is a defi protocol but why crypto application move forward very slow so my opinion is there are two major block points to crypto applications first is unchain currency which geres company already did a great job in not so many years so now can you imagine we can and code currency in our apps this is a stable coin make this solve this problem the second I believe is a wallet so most of the crypto wallet like okx web Street wallet metam mask is still a wallet to Native unchain user so you need back up your primary key you need to make sure in hold your life you cannot forget or need your primary key I think the second reason is like a ation reason if any Finance Company build a d app through the current infrastructure their regulator will ask them two major question who is your customer how you manage the activity in your platform so I believe in the next three years so Qui the industry will should create some easy to use wallet also can match trade five regulation requirements so I think yeah okx we have our strategy a lot of other company coinbase do the same thing yeah so we believe there are a lot of new technology like a nail2 uh multi SEC abstra account wallet Pass Key So based on a lot of this new technology it's possible to build a very easy to use the wallets like a web two experience but actually a web three wallet there also a lot of new technology like a ZK zero ladage proof it can allow the wallet use ZK kyz to verify your customer so D app can choose to for example I only service singable customer or I want to exclude a sing customer uh this kind of new technology will make this requirements uh happen yeah so I believe in next three years crypto finance will Ren become a big revolution yeah every company Banks insurance company uh you can build your D app based on the current uh infrastructure also I believe uh stable coin payment uh can be a very success uh uh application in the future yeah wex also has a strategic project uh on this yeah so I think uh three years later when we look back we will find crypto is largest trade asset that crypto will really become infrastructure to everybody's life massive retail user can easily use a crypto wallet which is a kyc that with activity monitoring which can easily finish your payment can interract a lot of banks will develop a d you can use your wallet author authorize your funds to the different DS so it will be uh very exciting uh uh in next three years thank you Jeremy question for you every part of the world has a different need for uh Banking and even crypto for example I grew up in a country called Pakistan very different uh economic status how do you see the adoption of stable coin networks whether you're in the United States people will perceive it very differently banking systems work but then a country where there's hyperinflation or there's a huge population of unbanked what are the trends that you see today or what what are you expecting in the near future over the next 3 five years ways adoption will defer in these different regions and markets yeah a couple things I think the first is nowhere in the world had anyone ever had um a form of electronic money that is effectively has a zero marginal cost to store and move it and it's fully programmable with verifiable approvable code so that's like an innovation that everyone whether you're in the United States or in Europe or you're in Pakistan or whatever like that's just like net new human Innovation that people can build on and will unlock a lot of utility but specifically to the question of sort of the differing needs I mean very clearly you know people around the world would like uh you know a stable value unit of account that is a really efficient medium of exchange um and um you know and I think you know dollar stable coins are providing that and so we see a lot of growth uh right now and really over the past couple of years and accelerating growth in many parts of the world where people just want to transact in this new more efficient medium and and where they want to keep that value in dollars both businesses and and individuals and households um you know and I think you know once these ux problems continue to get addressed as we've talked about a little bit here um and like liquidity becomes like more seamless everywhere and that's a that's a problem that we're helping solve along with others in the industry um I I think that you know I kind of refer to stable coins as over-the-top money um you know over the toop was this concept of you know over the- toop software delivery over- the toop Communications over the toop television it was sort of like well once you had protocols that allowed just anyone with software apps to then do those tasks then it just it went it went really large billions of people could use it changed unit economics and in many cases governments had to react to that and and adapt and so we have over the top money now and I think it's accelerating and it's going to continue to accelerate um I guess my long-term view is that just in a in in Internet scale um kind of forms of of economic activity which we're seeing kind of born out here um it is going to force governments to change fiscal and monetary policy um I don't believe that there'll be as a need for as many currencies in the world um there'll be different competition uh amongst all of that um but I think that the the end result will actually end up being you know a smaller number um of of broadly adopted kind of stable coins and stable coin networks very cool thank you Jeremy I know we have a few minutes left I want to give you guys a power question there's been a lot of volatility in our industry over the last few years and arguably there's been some healthy adoption in crypto and our ecosystems and arguably there's been some adoption that perhaps we could have lived without I'll start with you vitalic how do you do you think we achieve healthy adoption over the next few years I think I'll uh my answer is basically the same as the answer I gave here half an hour ago right which is that the thing we're still early to is um blockchains actually being affordable for regular people right if you think about uh know like like people trading I know the $3 million monkeys uh or like any of these applications that people tends to criticized right a lot of that stuff like it works with 5 with 5 Cent fees and it still works with $500 fees right now if you think on the other hand about enabling um you know people um in countries with challenging political environments to have you know their own independent life savings and to engage in economic activity and transact with the rest of the world then like at 5cent fees that's uh actually a very viable thing but if the fees go to $200 like they're just going to say screw you right and and uh if and then on top of that you know you have all of the costs from the security issues like I think if you added up all of the dollars that people have lost to fees and all of the dollars that people have lost to uh people's coins getting lost or or stolen they probably end up being pretty similar to each other right I mean I could even see the uh security loss as being a bit greater right and I think the Technologies for minimizing both have really improved a lot and so I think the like it's only really basically now that the techology actually has gotten to the point where it is something where you can credibly go and say yeah I look this is something that can uh directly right now improve the lives of like even just uh the average uh man on the street that's just you like dealing with like 10 or 20 dollar amounts with their family right and now that we actually have that scale I think we you know it's up to all of us to like actually build out the rest of the ecosystem and take advantage of it very cool star mhm purely from an engineering standpoint how do we create better how do we welcome better crypto adoption over the next few years uh I would believe in next three years from Individual perspective so maybe buildings of user will get a web stream wallet it will be a easy to use wallet it's a web to experience but fundamental is a self cussed wallet this wallet also can match the rec ations uh requirement from business perspective more and more company will choose to develop a d app or convert their business model from centralized server model to a d app model this business application is transparent and all of the crypto wallet user can engage with different companies D app this will become a great crypto Finance ecosystem yeah thank you star and Jeremy for you I think stable coins in my view at least do welcome and bring more healthy adoption than say the more speculative assets what's your Viewpoint three years out how do we make sure we welcome and bring in more and attract healthy crypto adoption in our markets yeah so it's interesting um I'm very very um optimistic right now about our ability to make really material progress for people broadly um I feel like the and this is just like the hard work of tons and tons of people in the industry and developers who are solving some of the most critical kind of Last Mile problems in terms of privacy security identity naming the efficiency kind of you know scale and efficiency and and so I'm more optimistic than ever that like these these things are going to get solved um and there's great things that are right in front of us right now on that and so as a technologist um by background like I'm very optimistic and so I think we just need to keep doing those things um and if we have you know these sort of legal clarifications that are coming and we keep doing those things um I I see three years from now we're going to be in a in a really extraordinary period of uh it's kind of like in 2004 like the internet finally became like did the things people wanted to say and it just never stopped it just kept really really growing and transforming I think we're approaching that point with crypto thank you Jeremy I could go for another 30 minutes but we have big text saying please wrap up I want to thank vitalic thank you very much star thanks for joining us and Jeremy thank you for the conversation thanks everyone for listening