Fireside Chat with Vivek Raman and Kartik Talwar

[Music] We're going to jump right into our next fireside. And for this one, I'd like to bring on Vivec from Etherealize. And we're going to go do a round two of institutional capital and uh see if uh we can get some more predictions. So, please give Vic a big round of applause. [Applause] It's all good.

Hello.

All right. It's been a pretty impactful last few months with Etherealize and uh you've been in the news a lot and uh we want to cover all the things that you've been up to. But the thing I want to start off with is actually asking you how you got into the Ethereum ecosystem and what made you become such a big advocate uh and sort of convince the Wall Street people to uh look at this thing called ETH.

It's well first good seeing you. It's first time meeting Cartek way long overdue. Um thanks for supporting us. Uh it's it's it's a different kind of journey into Ethereum. I mean I I I would say it's a pragmatic journey.

Um, so I'm a pragmatic maxi, not a just like ideological.

Good thing we're uh we're at an event right now

that tried to do a pun. Um, no, I spent my first like 10, 11 years on Wall Street right across the river. Um, and I hopped around a I was at Morgan Stanley, UBS, Dosha Bank, Namira, uh, in the engine room on the trading floors trading really, really just complicated products like credit, credit derivatives, loans, bonds on Yeah. CDS. I mean, everything really.

And it was one of the coolest places to to work right out of school for a decade. And it's some of the I smartest, sharpest, hungriest people, but it's literally the most technologically backwardst place I've ever like I just thought every every year I was like, "Oh, they're gonna modernize the bond market. They'll modernize the stock market. Like all this stuff will be digital." And just kept getting worse.

And I was just like after a decade, I was like, "This this is never going to upgrade ever." And um I drank the Kool-Aid while I was on Wall Street and I thought Bitcoin ETH were a scam. So like that's that's that that's where I started. And then I finally somehow, no one no one does this, but I hit the eject button, like exited Wall Street, exited New York City.

What year is this?

2019, 2020. Uh, hit the eject button, landed in Austin, uh, and then met this guy who worked at this thing called the Ethereum Foundation randomly and he was working under this guy named Danny Ryan on this thing called the merge. And I was like, okay, this this thing's kind of cool. Let's actually like dive in. I have I'm doing nothing now.

And this and then I just it just clicked the second I saw Ethereum. The sec I did my first unis swap transaction. I was like well this is the answer to upgrading the entire financial system. Like it just made all the sense in the world. So why why am I an ETH maxi?

Why am I on the mission to convince um Wall Street to use this technology? Because it's the only way Wall Street's ever going to upgrade its systems and it's the clearest product market fit. I don't want to I don't want to put a wet blanket on Ethereum. Like Ethereum is a world computer. It can do anything.

It can absolutely do everything. But like I think we need to focus on big use cases and I think upgrading the global financial system is a pretty big use case and it's a pretty cool mission and it was uh it was ironic because now I'm back in New York City talking to all the banks again and kind of doing the same thing but from a side

perspective. Well, so that's an interesting point. So is there a claim that the best way to operate the existing financial markets and just the tech is simply offer something that's just faster to iterate? Or is it the fact that like you genuinely think that the tech stack is so archaic that you need a much more programmable operating system so to speak to let all the financial world be represented again? No, I I I think it's the only way to upgrade the Finch system.

Like,

is it an upgrade? Is it a replacement because you're effectively swapping?

No, it's an up I that one thing I think cryp this is where the pragmaticness comes in. One thing that the crypto native people that have been here way longer and are I don't know are way more deep in the ecosystem than I than I have been. Um they say you replace things. That's not a good sales pitch. No, we're we're we're upgrading financial system.

We're like making everyone's lives better. We're making everyone across the river make more money. Um, be able to do more trades, be able to just you're improving the flow of of assets and funds, and that's that's a very very good thing. So, it is an upgrade, but like we have we also have to remember that the US capital markets are the best capital markets in the entire world. So, if we're not doing something that's radically better for everybody, then no one's going to have any uptake.

And that's why it's been hard for four years. I've been trying the same thing. Like Etherealiz started a year ago, but that's because I spent three years coming back to Wall Street being like, "Hey, do you guys want to try Ethereum?" And I literally got kicked out of all like I burned a lot of reputation. I went to all my friends.

I was like, "Hey, look at this ETH thing and Ethereum thing." So, I've been rejected a lot. So, last year when I stopped getting rejected and suddenly people were like, "Wait a second. Like, Black Rockck just took a money market fund and ET

say like what was that flipping point? Is it

It was last year. It was the ETH ETFs getting approved and Black Rockck tokenizing Bidd. Um that's when people started paying attention and when people started pay pay like I've traded long enough you sense an actual inflection point. I was like this is the actual inflection point and so started doing a lot of diligence for Etherealiz and and got the grant from Vitalic and the Ethereum Foundation which I'm very grateful for. Um it kickstarted a lot of things because Wall Street won't take you seriously if you're just a dude walking in but if you're like hey like uh there's a whole ecosystem behind us they they care and there was no one else really representing Ethereum to Wall Street at the time.

Yeah. Um, so I did that and had ridiculous uptake and then obviously the election happened and then it was it went from trepidation to complete FOMO and I was like okay let's like let's like supercharge this effort and we have a window and the risk is that the window goes the risk is that the window goes badly and like the wrong technologies or like centralized technologies

you don't want just the loudest mount to be the winner. Yeah.

No, because then then we don't upgrade the financial system then it all breaks again. We had we had a shot at it last cycle. um it ended in FTX and uh so so clearly that didn't work. So I was actually use a real system that's decentralized and I I think Ethereum is the only option there. There's there's nothing else that even comes close and so that's something that's really really deep and important to me and and that we need to integrate with Wall Street ASAP.

Now the windows open.

Yeah. Some would say there is no second best

there. I I read I read today um it's one of the best framings. I've never met a a a ETH maxi that ever became a Bitcoin maxi, but we've met a lot of Bitcoin people that become ETH people. Like ETH really is the the endgame because it's it's the technology and it's the asset. So, I mean, there is a reason we're seeing it now finally after like a year of just bang the drum on this that people are starting to wake up.

Wall Street is starting to wake up and be like, "All right, great. We have we have these Bitcoin treasury companies. We have Bitcoin ETFs. We get digital gold." But you can do a lot of stuff with this ETH thing.

So, a lot of what's happening is like rotating into what the actual endgame is. And it's cool. It's inspiring.

I mean, it's awesome for us to see because we've been trying to do this every year and just seeing what the sentiment is, what people are thinking, how the conversations go and suddenly like everything just starts to work and you start getting yeses and uh it's it's a very visible inflection point from kind of all all ends. Um I guess my obvious question to you which I think the audience would love is uh what is Etherealize and uh what are you building? We had a really open mandate when we started. I mean first when we started the ETFs had launched and Anthony Pompiano was the representative and he went on CNBC and talked about Bitcoin and Salana and that that was like a breaking point for a lot of the a lot of the community. So uh some some OGs Grant Hummer one of them um tapped me and was like hey you're a new guy you want to you want to take it there in Wall Street.

And I was like that sounds awesome trying this for a long time. So let's actually formalize it. So when at that point Etherealiz's main mission was I mean for better or worse evangelizing Ethereum to Wall Street. So like going and talking about ETH the asset why it's a a great store of value asset um talking about the Ethereum ecosystem and what you can do with it. I mean Bass had launched already 44 4844 had happened already.

So you can point to L2s you can point to customized blockchains tokenization was happening. So there's a lot of case study to go run around with. So I did that for several months. um but that that doesn't really accomplish Ethereum's potential. So after especially after the election and after like we we got some good traction and launched and saw that the community and I thank the community like everyone was really receptive and encouraged um then it all comes full circle.

Danny Ryan that happened to to be around. And so he and I linked up and I was like, "Okay, maybe we can together turn Etherealiz into both an evangelism and marketing um company but also into a product company." Like let's actually build the things that can bring Wall Street onto Ethereum from tokenization to trading to settlement because if that doesn't happen this this cycle in this window of opportunity, it might never happen. So like there is a lot of urgency like ETH price going up is great. the Ethereum ecosystem being in vogue again is great.

I think that was like a lot of just running around and evangelizing

rough last two years.

Yeah. But now it's time to build like now now we have this window and there's a window where Ethereum can be the clear winner. So yeah, what is Etherealiz becoming now? Like we're going to race to rewire as much of Wall Street infrastructure as possible um and put it onto Ethereum rails and that it's going to take a lot of like it's going to take a lot of dirty work, a lot of back office stuff, a lot of uh building, but we want to do all that. So that's that's what we're now becoming.

So is there a particular set of product that you kind of are going to announce or launch or or is it a key thing like what's the category of support for kind of financial institutions and Ethereum or just onchain stuff that you get to work on?

There's three I leave it purposely open because I think crypto's also done this thing and pragmatically that we've historically built things and said hey use this and then no one's allowed to

solution looking for problem.

Yeah. So I'm trying to we're trying to do the exact opposite. We are doing the exact opposite. We're going around finding all the problems across Wall Street and we're like, okay, there are patterns here so we can build some solutions. So what are the what are the tool sets we can have?

One are um uh different ways of tokenizing assets. I mean this only works if we tokenize the entire world of assets and put them onto Ethereum um ideally on Ethereum L1 and then they can trade everywhere across L2s and apps and everything. So tokenization on L1 is is one big thing and then all the different mechanics because there's a lot of different kinds of assets um equities, fixed income, etc. Second is you have this arsenal of L2s. So these can trade either on L1 or they can trade on L2s and L2 customization.

We don't have to reinvent the wheel, but like connecting the dots between institutions and L2s, that's really important. Um the fact that Robin Hood picked uh Ethereum is great. The fact that Coinbase picked Ethereum is great. The fact that JP Morgan's deploying stable coins on base is great. It's not great that Circle and um and uh Stripe chose L1.

So like there's still there's a lot of wood to chop there, but L2s are another tool in the toolbox. And then um the third thing is privacy. I mean that privacy was literally illegal um which is wild uh for the last several years and now Hester Pierce is doing speeches about how things on chain need to have privacy. So that's an very very open design space to have institutional grade privacy. ZK proofs are now ready enough to be able to bring to production.

So we're working on that product suite too. So, a mix and matching all of all of that should be able to like make Ethereum a black hole for institutional assets and um and trading. So, that's what we're working on.

That's awesome. I mean, that's a pretty good set of obvious kind of problems that you get to to uh supplement. Um walk me through what are their reactions and just general asks when you talk to financial institution and you kind of propose, hey, you can now do this on chain or as a set of contracts. um what's kind of the set of things that they're looking to do now um like in the immediate term and also any common concerns that you keep hearing and um whether that's like just misinformation versus like just lack of capability.

Yeah, like it's it's been an uphill battle and now it's starting to become downhill. At first it was just why would we even use public blockchains? Why Ethereum and like Ethereum's been around 10 years? They're like well the price is down. So we had to go like we're like okay well let's go try and help fix the price and and help.

And we did a lot of stuff for that too. I mean, I think the treasury companies are a really good thing. Um because I actually think they're going to be the stimulus package that go into ETH L1, DeFi. So, we're actually going to see like every the next complaint will be fees are too high and uh and TVL is going to cycle repeats.

Yeah, the cycle repeats. But um no, so now now that the windset are back, uh they want to tokenize everything. They want to tokenize everything and then upgrade their systems. But that's the problem space. Like it it is pretty cool because no one really knows what they want.

That's scary in some sense, but it's also an unbelievable opportunity. So that's why like half our team is are people like Danny, Ryan, and Zach or Grant who are like the deepest I mean it's a dream to have all those people on an engineering side. Danny is a product manager for the entire ETH 2.0 merch effort um and helped sort of get us to prove a stick.

Yeah, D. It's insane. And the but the other half is is really really really really esteemed Wall Street people and that's that's also equally important like people that I dreamed to work for when I worked on Wall Street. They're all they're all helping grow the Ethereum ecosystem. So we have to use capital markets expertise and what's technologically possible and think about like what is the right architecture and then bring that to people.

So it's on us to define as well but which is a cool problem statement.

So one thing um so institutions coming into into the Ethereum world has been like a very recurring theme today. We've had at least three talks on this um that that kind of ended up touching on this. My um question to you is as we kind of think about this and if you're proposing more more financial should be on chain um what is a version of fragmentation that looks like yeah I guess what does fragmentation look like now? Uh is that a problem? Does it matter?

Do we kind of care if everything is represented there in their own way? Um, and we have to kind of think about bridging or just the same asset could be called something else by two different places. Um, do we get a weird world where now everybody has their own thing and we have to come make things compatible or is that not an issue?

No, it's a huge issue. I I like my whole pro the reason I came in pragmatically again is because I want to make the financial system better. There is a there are a lot of worlds where a lot of versions where the financial system ends up being worse because you have a bunch of blockchains are worse than centralized systems um on almost every single account except for security and decentralization of things that actually matter. So if we have like halfass blockchain centralized servers that have some tokens on them that have to talk through trusted parties to other centralized that's that's not a good world. We may as well just go back to NASDAQ.

Again the the bar is very very high uh for the US capital market. So yeah I mean you had asked earlier what are what are um barriers that we're seeing. One is privacy. People want their assets private. I think that's solvable.

Now one another one is KYC and identity. That's also going to be solvable. They'll be standard but yeah third thing is is fragmentation of liquidity. And that's why like as many wins as we get, I'm also I feel the most urgency I've ever felt now that things are going well for like ETH narrative because yeah, when you see Circle and Stripe having L1's, you're like, okay, well that's going to fragment a lot of liquidity. So like that either you need trusted bridges and then you're back to I mean uh or

Yeah,

it's not an upgrade. Yeah, but the the only way this works, which I generally believe, is if we dump all the assets on Ethereum L1 and then have a bunch of different L2s um that can plug with various custom customization and then you're going to have interop. You're going to be able to bridge in and out. All that bridging that everyone complains about like you have an AI agent do it. It's not like it's just contract call.

So like this isn't that

that actually is a contrarian view. Yeah, it's that is if it's bridge risk as long as the bridges are secured by Ethereum L1 and you have the security guarantees of L1 that is going to be abstracted away. That does not seem like that's a problem. It's a very easy like FUD thing. Wallet it can be abstracted at the wallet level.

It can be abstracted away at I mean AI level just people can build like that as long as assets are in Ethereum L1 we are future proofed for a better financial system. If we have 50 different L1s with different kinds of assets, I don't know. That's that's

I think the funniest part about this thing is that the four people have asked this exact question to have all given four different answers. So, we have no consensus on this. Looks like we just have to wait for some more of these things to launch to uh to actually see uh in real life how what happens um in terms of looking at the the surface area for what you can do with implementing smart contracts in just Ethereum. um for the financial institution. It feels like the way you've kind of talked about in the past answers has been like we just want to tokenize assets and it's obviously a massive market.

No one no one can dispute that. But is that like the best we can do is just representing something as as a token and let people swap that easily or do we get to unlock actual new benefits and uh features that are not possible? No, that's like again Danny Danny Ryan is like a a dream to work with and one of the most like esteemed principled people in the whole ecosystem. And the reason he I mean could have done a lot of things. The reason he came to be a co-founder of Ethereal is because he was like we need to build utility and real use cases for tokenized assets.

So yeah, that's that's a that's a prime mission and first we had to token we had to get the assets onto ETH1 but yeah there will be applications. I love the app layer. Like I' I'd love for the next 10 years of Ethereum to be the app layer, but the but the first year has to be get all the institutions, get all the assets, get everything into this ecosystem. But no, I can think of a billion. Wall Street has created financial instruments for their entire existence.

Like financial instruments are just smart contracts. Um so it's not going to be hard to create amazing applications from

applications are same as just different instruments here as like exotic kind of types of bundles. Is that same

definition bundles trading like like derivatives every like you can create real use cases that are not possible in today's financial system using smart contracts. So if you have the assets everything else is possible. If we don't have the assets then again where are solutions looking for problems but yeah we will be creating utility for tokenized assets. It's that that is a prime directive. It's not just tokenize things as a vandy metric

and mostly for my curiosity what are the steps involved in represent tokenizing an asset because uh the tech part we can understand but what about the legal side of uh this

that's that that's the dirty work that I want to do that people like yeah I mean we have we have we have big legal team we have big like it is cool that we got called to Congress to go testify about the clarity act like we have a presence in DC now so it's a lot of things I mean we have to do regulatory work we have to do legal work, but I want to do I mean it's all a puzzle. I mean it's all a solvable puzzle. But the but the good part like we need frameworks too to let people do this easily or or do we just not have a good way of doing that?

Yeah, we we need frameworks so we can define the frameworks. Like it's the most open the SEC will ever be. It's the most open the administration will ever as long as we're responsible as long as we like self-p police and mean well and actually want to create good things there is an opening for. Again, I just think the windows open. either it goes a bad way and all these like random tokenized rappers and everything blow up and this technology never goes anywhere or we meaningfully change the financial system for good forever and yeah I feel a lot of pressure to do the ladder so yeah we're we're tackling all fronts not just engineering because that's ironically might be the easiest part.

Yeah. Um, no, it's it's

absolutely like

convincing other people on the legal side is probably the the harder one here,

but it's possible now. So, I'm pretty bowled up by that.

I mean, I think that's a it's a perfect note to end on because uh I think this is this is the hope we've been looking for and uh this is the right window of opportunity. So,

thanks man. Vic,

thank you so much and please give him a big round of applause. [Music]