The Financialization of the Crypto Ecosystem Is Accelerating featuring Brady Dale (moderator)

hey everybody i'm brady dale i'm a reporter with the defiance uh we're here to talk about financialization let's just go down the row and have folks introduce themselves hey everyone my name is aiden hyman and i'm a co-founder and ceo of chainsafe systems uh yeah okay um at chainsafe we're in a 110 person blockchain research and development firm and our mission each and every day is to build the infrastructure for web 3. you guys really got to eat the mics in this room so like get right up on it hi everyone my name is vanessa gurley i'm the head of portfolio growth at coin fund we're multi-strategy asset manager we invest in early stage projects focused on web 3 and we've been doing that since 2015. [Music] hey guys i'm sam i hope lead developer experience it's super fluid superfluid's a protocol that lets you stream money in real time so basically any recurring payment you can divide it up into little tiny fractions essentially and stream it on a per second basis to whoever you're sending it to cool so uh backstage we were just kind of talking about the topic area and these guys are just sort of taking it so why don't you guys just go back to where you were a second ago and uh and give us the context again so i think what we were talking about backstage is is everything about the money you know we've seen the hyper financialization of what we do in in web 3 whether it's for nfts d5 and any other solutions that we create and so we were wondering is that really where we want to go yeah i mean absolutely that's just such an important aspect that i think we really need to really get in there but i mean everyone's gotten in there okay um basically you know we look at the financialization of crypto as an opportunity to make money but in reality decentralized technologies are meant to commodify the way in which people extract value and what that really means is that you know at the end of the day a more decentralized version of what it is you're making will actually be better to the users and therefore displace you from this industry and people really need to wake up to the realities of what it looks like 10 years from now when we have decentralized versions of all the things that are parasitically extracting value from each and every one of you [Music] yeah so so to build on that i think that we're seeing a really interesting intersection between culture and money in a way that we really haven't seen it kind of happen before um i think it's it's very cool that things like nfts and dows can enable liquidity for people that have a lot of a lot of creative ability in a way that they might have had to effectively sell their soul to a spotify or a gigantic centralized institution in the past so while i do think we need to be careful that this this doesn't become 100 about the money i do think there's a huge advantage to being able to allow those who have creative ability to monetize directly via some of these decentralized um methods like nfts or or things similar to that i agree i think we come from a really bad place where the structures and power and the power structures were so disfavorable to creators and that you know they were not able to monetize anything and now we're going on the other spectrum where they can monetize anything and the question is like how do we determine value about you know what we create what we share how we show up in the world there's a lot of like status symbol also so we think about pfps and things like that if you put your print your crypto punk and you've you know attested that it's yours basically you're just showing up in the world as owning x amount of millions of dollars and so is that a good thing yeah i mean absolutely i think what we're really seeing is that a technology that's meant to be inclusive is being used as an exclusive means of signaling your net worth and that's an absolutely disgusting thing to see in our space you know that is not the point of what we do you know at the end of the day even things like crypto punks you don't own the ip you can't really do anything with it um and so we really need to wake up to the true realities of what it looks like when people are taking advantage of the lack of knowledge that exists and you know what we're also seeing is that people artists that already have millions and millions and millions of dollars are now just creating an nft version of whatever it is they were doing before and that's great that they can do that without their publishers or whatever but that's also taking away from the opportunities of young people of people that are new to a certain space and are really trying to make a name for themselves and so we really need to stop idolizing and glamorizing people who already have everything they need and actually giving the opportunities to the people that need those opportunities which is the point of democratized finance yeah i mean i think it's kind of just a human thing right we like luxury goods have existed for a long time right nice cars that nice doge uh ferrari or whatever that was over there right these these things are things that people have done for a long time rolex watches like i think nfts are a way to in some cases show that you're either part of a community or that you're high status in a way that can be seen by the entire world like you in order to see somebody's nice watch you have to actually meet them in person right to see that if you go on twitter and you see someone's crypto punk profile picture like that that does mean something and it might not be it might not be amazing that it is kind of a status good right it's kind of one of the uglier sides of humanity but i i do think this is just another extension of of what has already existed for a long time um that's that's my take on that we're seeing also another movement in gaming where there's kind of a negative reaction right now to the hyper financialization of gaming and the idea that you can own the assets and trade them and sell them whereas before you were just having fun as a gamer um and engaging with the game so we're gonna see also some tensions here some people will be very excited about it and about the opportunity let's say for play to earn and others to increase their revenues and then some who are in it more for the fun are going to say well this is not what i came here for i'm not here in like a super financialized uh you know competitive world i just want to have fun yeah absolutely and i think that that starts with tooling and so just to show for a second we have a gaming sdk which is non-custodial blockchain agnostic and really empowers people to build games within the unity world that allow them to just focus on what they know which is building fun games and the issue with what we see is that now there are so many blockchains that are going to be incentivizing people just to build games on their chain and in reality we really don't need that we need people that are able to move from chain to chain from infrastructure layer to infrastructure layer as the economics of their game demand and their users demand of them and this is a really scary thing that we're seeing vendor lock be an absolute massive part of our industry and what that really means is that we're just building the same the same thing over again um without people really knowing that we're doing it until it's too late yeah one one question actually i have for you on this is so one big thing with nfts is fractionalization right now right it's an interesting way to effectively get liquidity on these assets that can kind of be illiquid how does that work with like uh like an in-game asset have you seen that like come up as an issue at all yet sorry what the issue being the issue being like if you fractionalize an nft how do you decide who actually owns the nft and then who actually gets to use that in-game asset do you see this as being a problem in the future i mean i think derivatives that people don't understand are always an issue and so i think what it really starts with is educating people and making sure that people understand what a derivative is what it doesn't mean and so i don't think there's really an answer to that question and it really depends how people are fractionalizing things and what platforms they're using to achieve that um because there really isn't a silver kind of bullet for what fractionalizing means but maybe to take a step back and to talk about the mclaren dodge people are somehow proud that a dow decided to piss money away to buy a mclaren to somehow flex how cool their dow is when in reality i'm pretty sure someone told me it's registered in ohio now you tell me how decentralized that is that you have an asphalt driving around in a dodge car registered in ohio that that somehow is going to be a positive impact on our space and so i think we need to come together and to start to take a stand against things like that and to stop glamorizing this opulence that we're seeing and to really do the things that we're all here to do which is truly change the way people interact with the digital world we'll wait just uh just to challenge that a little bit i mean i appreciate the idea of gaming making this stuff fun but i mean honestly i've covered the crypto games a lot and and the the subtextual narrative of a lot of them is they're not really that fun yet on balance uh but what people are pretty jazzed about is that some of these games have enabled people to make money in ways that they've never been able to make money before and in parts of the world in which they didn't have it's a new opportunity in those in those places so i guess it seems like on some level that financialization has been kind of cool it's been low on fun but high on money and that hasn't been terrible for some players i mean hello oh yeah i think the big issue there is that we're really preying on people that don't have a means to achieve their livelihood in a way that we all do here and so what we really need to be talking about is the fact that there are economies in the world that are struggling to survive and what we're doing is basically giving them an opportunity to make some money when in reality we should be talking about why people are okay with hiring people all over the world and paying them pennies on the dollar and that's the real issue here right that we need to be empowering people to take part in our industry and so yeah i mean if it isn't valuable for you to play a game and to make money is it okay that it's valuable for someone living somewhere else and so i think we need to be creating more opportunities for those people to engage in a way that we engage with this technology and not just at the surface layer yeah i think you know decentralization and financialization um have been i mean at least initially we wanted to give access to more people right and so the play to earn movement is sort of achieving that at a small scale but it's not really like the solution right the solution is being be able to engage in meaningful and fruitful sort of activities so that they can earn a living they can increase their their living wage and not just like be a band-aid to um to the to the situation they're in yeah i mean i think so i'm not a gamer myself personally right but i i i do think and this is this again this is just maybe my opinion and i'm not meaning to push back too hard on this but i think that people that are making money in the philippines playing axi are probably happy to have another opportunity to make money that can connect them to the rest of this economy right so i guess i i guess the good thing about it is that it even if you don't feel like maybe gaming is the most highest uh utility use of time right the the um the benefit is it might bring them into this decentralized ecosystem in a way that can let them see some of the more wholesome higher level opportunities um that are available in the rest of our decentralized ecosystem i i think the point of it being a band-aid is really the thing it's not that we're saying that it's necessarily a bad thing however there's more to this complex issue than just let's get people to play these games and somehow make a living out of that and so i don't think anyone is suggesting that it is nefarious or that anyone is really taking advantage of anyone however these are complex issues these are sociopolitical issues that cannot be solved with at the application layer these need to be solved at every layer of the stack and i think that's all that we're trying to say here as opposed to you know we're somehow taking advantage of people in other economies and so that's i think there's definitely no malice necessarily however there's definitely more to this complex issue than a lot of people are willing to talk about and that's something that you know we as a community need to own and be okay with talking about and trying to really explore yeah and one other thing we talked about is um sort of the social um police and police state that we might end up with when we're just looking at uh financial behavior and other on-chain behavior and how would people you know put you in certain categories uh once you know your online activity your sorry on chain activity is determined and i think that's what we're going to see in china a little bit with the digital iran and the capacity of people to surveil your activity and the way you engage in the world financially and otherwise and that's something we should all be concerned about because if we aggregate all the solutions together and we're not thinking about this we might end up in a really dystopian future yeah i mean we need to be careful for sure um we're building like a new global financial system right and we want to make sure that everybody is included in this in a way that benefits them and their communities in a very real and lasting way right um and and one thing to kind of maybe shift gears a bit one thing that i am really excited about is the sheer level of opportunity that crypto seems and web3 more broadly seems to be providing to people in places that you know might not have been like the center of the world before right i've seen so many amazing faces and amazingly talented developers builders and artists even just this this week that are from like they're not from the united states right they're not from like bigger cities in europe they're from everywhere and i'm really really excited by the fact that we can provide all these opportunities to people in all corners of the world um and i'm honestly i'm curious as to what kinds of things you guys are excited about in this like i guess more egalitarian new financial system we're building i see some really exciting solutions about uncollateralized loans so the ability to not have to show already that you have money in order to have more money um so i think uh if we're able to to crack that um that that issue i think that will be really really interesting and everything you see someone here working on that in an interesting way we invested in union finance uh which builds a reputation system in order for you to get uncollateralized roans and there are other projects and i think that if there's massive adoption around that it's going to be super interesting there's another project that's based in latin america called tropicus which is tackling that that issue because you know the founder is in uh lives in bogota so where where defcon is going to happen and for example his his brother could not get a loan and you know he had a very stable situation there and had revenue but um the risk profile was too high for the banks and so he couldn't he just couldn't buy a house um so you know solutions like that that are where there's pooled assets and pooled risk management in order for people to get loans i think will be super exciting yeah definitely access to credit especially for people all over the world for young people i mean being from canada it's a really tough situation we have where you know young people really have no access to real estate in any way whatsoever anymore and it's a really scary situation and there really isn't anyone but our big banks who can potentially empower you empower you to get to that place and so unless you have parents who are able to help you with a security deposit or whatever i forget the word for it but um you're basically until you're in your 40s and that's just how it works in canada now and it's a really bad situation and so if we can empower people to collectively take you know ownership of this new financial system and start to build reputation layers and layers of trust that we can work together to start to create this parallel polis this fairly new polis where we are creating alternatives because at the end of the day that's what this is about right this isn't about forcing people to do and act in a way but creating alternatives for them to achieve the things that they want to achieve in a much more free and a much more empowering way yeah i definitely agree i'm very excited by different like things that can help people get access to capital and i'm also excited by some things in the payments world that i believe can be done better in crypto than they were done in the traditional way so one example of that that i'm excited about i guess kind of within superfluid but also just more broadly is early wage access right like should you really have to wait two weeks or a month to get paid at the end of the month i mean there are people that um are working hourly jobs all throughout the world and sometimes like especially if you start a new job and you've had a little bit of a gap in your work experience you might run into cash flow problems and not have enough food or not have enough money i'm sorry to eat on friday when payday is even though you've already worked and earned your money right so because we're building new financial rails that are more flexible and uh more extensible right we can do things like stream the money in real time and make sure that they have the money that they've actually earned in real time we can do things like provider wage access in a way that's easier than the way we have to do it the traditional ach and financial system so these are the kinds of things that i'm also really excited about more broadly do you guys know about pool together are you familiar with pull together the uh folks don't know it's like sort of gamified savings it's a little ironic when it started it's gotten a little expensive to use because of ethereum fees but um but yeah people could stuck some money aside and sometimes they would win all the interest on a pool it was lossless lottery so kind of a similar thing yeah and i think the ability to generate yields automatically and safe and securely is really something extraordinary especially in this in these times and the ability to safeguard your assets from inflation i think we're going to see a lot of pain in the coming months and i think a lot of people in emerging countries in the u.s and in europe will be able to have a sort of an oasis of stability during these times of financial crisis and i think that's that's incredible and um i i hope everyone will take advantage of that yeah yeah no i i 100 agree um and i think there are interesting ways to use things like nfts to help with some of this stuff um one way is actually um an example that we've seen built at a lot of hackathons called the tradable cash flow so if you have an nft that's receiving a cash flow with superfluid you can make sure that 100 of the incoming like payment goes to whoever the owner is so if somebody wants to sell that up front right or like sell a stake in that they can get capital early by showing that they're going they have proof that they're being paid on chain in some way because you can i mean you can see the chain you can see that the payment is going to come you can get capital early in a way that you might not have been able to before so again these are the kinds of things that i think are very cool any other stuff you guys are psyched about i guess personally what i'm really excited about in the gaming ecosystem is the fact that we can really experiment with new and exciting models that no longer is it just about life and death in our space but rather having fun and trying to empower people to enjoy their experience within the decentralized world and not just think about everything in such extreme ways and so i'm really excited to see what comes out of this huge gaming wave that we're seeing and what amazing dow models what amazing you know streaming models how we really start to understand how these gamified ecosystems work and then what we take and bring into the real world based on these models and so yeah i think bringing fun back into the equation is one of the best things that could have ever happened for our ecosystem yeah and just to jump in on that i think a really cool thing about a lot of these iteration and gameplay and governance models right traditionally you in order to experiment in governance that was kind of a dangerous thing right you either had to risk some kind of revolution in your country or a revolution within your individual company if it's within a company but i think a lot of the stuff that's popping up is gonna is gonna give us the opportunity to generate cool new coordination mechanisms that we haven't even seen before so i think i think you're 100 right and and where we go from there is really up to everyone sitting here today and so i think the really important part in all of this is that this really is just the beginning and i know personally even in 2015 i felt like it was way too late and so it's super important for everyone here to really appreciate the significance that you play in realizing the vision that we really do all share at the end of the day even if some of us are kind of trying to push that back as much as possible to kind of achieve the things that they're trying to achieve yeah it's really exciting to see that this has become unstoppable and um that you know we'll be reaching a billion people two billion people three billion people in the coming ten years and that despite you know the criticism that we put in at the beginning around the extreme financialization of of the sec of this sector this will unlock so much for um the worldwide population right and create a new infrastructure yeah i think one of the really important parts in that is that if we don't want people to tell us how to build this technology then we need to stand up and start educating people and actually self-regulating ourselves a lot better because we're really doing a bad job of actually educating people to understand the implications and i guess that was really the sca the point at the beginning was if we're not educating people and being honest about the implications of all of these things then we're just going to repeat the same mistakes over and over again yeah i i really agree with that you know and i think one thing that people here should recognize is that you you can learn this stuff faster than you think and you shouldn't just assume that because you're new to the space that everybody automatically knows way more than you and that you should just defer to whatever they say right you have a lot of agency um and a lot of times i will i will just happen upon some new interesting uh website in the space new interesting newsletter in the space i'll read something and then i'll bring it up in an event like this with a bunch of other people that i sometimes assume like are way more knowledgeable about me about certain topics and i'll bring something new to the table just because i happen to see this new thing right it's one of the benefits of being early right um and the benefit there is that you really can make a pretty big impact regardless of where you're starting uh we just got the time sort of last few minutes flag so any final thoughts you wanna guys wanna give to the world everybody looks at me starting with me yeah i mean i i think um you know i this this event this is my first eight denver um i've had a really good time it's been amazing meeting everybody in person and i think that the in-person aspect of this industry is actually pretty fun right um my entire experience in this has been through discord and and virtual but you know it's good to come to events like this and meet all of you and you know i'm grateful that you know all of you are here we've had a good time yeah one word about values and governance i think this is the key to the success of what we we're here for so when you're building projects when you're you know putting yourself out in the world think about what you're standing up for and you know if there are any intended consequences around it just you know make sure you thought about it make sure that you're just being thoughtful and uh leading with consciousness in into everything that you do yeah i think thank you for saying that because i think we're we're really missing that um in a lot of kind of these new areas in which a lot of maybe un aware people are coming into this space and maybe just seeing a way to apply their knowledge from the web 2 world but in a web 3 context and it's just really important to understand that that doesn't really work necessarily it can work but it doesn't always work and as like a final thought i think it's really important for each and every one of you to appreciate the duty and responsibility you have as an ambassador for this space and that you know it's not we're not going to make it unless each and every one of you take on that responsibility and truly do take that to everyone around you and help them navigate through this space because without that you know it's it's a lot right there's a lot of conversations going on a lot of distractions and it's really important for all of us to work together and remember that this is a peer-to-peer open source space that happens to be called blockchain technology but it starts with open source peer-to-peer technologies and that comes with an inherent set of values that are incredibly important to appreciate and incredibly important to put into your everyday lives and action that all day and every day [Applause] cool peace everyone have a great night [Applause]