Funding Open Source & Decentralized Development, from Enterprise to AI Agents – San Francisco 2025

[Music] hey everyone um I'm teore from Edge City and I'm really excited to talk to Paul Bro today so Paul is the global blockchain leader at ey by day and by night he is the chairman of the ethereum Enterprise Alliance where he's focused on the sole purpose of getting more people and Enterprises into ethereum and into our ecosystem so ey has been an early leader in the Enterprise side of this space and uh Paul you've actually developed two products Nightfall and Starlight both open- sourced and so maybe to start you could actually just give us an overview of what they are and importantly why you decided to build them in the open yeah fantastic question uh so at ey one of the early things that we we came we we got into the blockchain business I got into the blockchain business actually about 13 years ago when I worked at IBM and and I started to figure out decentralized Computing distributed computing and I went down this blockchain path for a while we started on bitcoin and one of my colleagues said you know I met this guy he wants to do like Bitcoin but programmable and I was like that that I want to do that and so uh I worked on a little bit uh IBM's first blockchain at the time was called Adept which was built on an alpha version of ethereum and it was it was truly for me kind of a bit of a life-changing experience all the cool things you can do with it and uh I wanted to really make that the focus of my career IBM did not so IBM and I parted ways and I ended up at a dynamic technology company excuse me I mean erns young a big Global accounting firm and uh believe it or not though they wanted to fund an invest in blockchain and we started thinking through kind of where should we go what should we do and and we came we came I came we came to a fairly quick realization of two really important things number one private blockchains are stupid right there is fundamentally no point in a centrally managed decentralized electric like the hint is in the name right this did not stop I I should say this did not stop companies spending literally billions of dollars over the last 10 years trying to somehow make this impossible idea work um the second issue though is that uh Enterprises must have privacy so I used to go around saying and I was completely wrong I used to go around saying that ethereum would never have a scaling problem until it fixed its privacy problem I was completely wrong about that apparently people have actually quite a high tolerance for low privacy uh especially when it comes to uh kind of able tokens there's there's some stuff that you can do but for business users it's important and if you think about a business agreement every business agreement is actually really really simple it's easy to describe I have money you have stuff right and we're going to exchange my money for your stuff under the terms of some kind of an agreement and both of those things are very important uh the money the stuff right how much I'm getting who's paying for it is really important but also the terms of the agreement like if we can if you can see the terms of my agreement you don't even really need to know what I'm buying or how much I'm paying because it's already specified in the agreement so our hypothesis was we need to fix this we need to to make this work and we need everybody in the industry to adopt it and the way you get people to adopt stuff is you make it free and open source so that is what we did we built two products one about the money and stuff it's called Nightfall it is a zero knowledge Layer Two Network for ethereum where the zero knowledge is for privacy not just scalability it's actually we call it a ZK ZK rollup because we have one layer of zero knowledge for scalability and one layer of zero knowledge for privacy and then and that covers like the money for Stuff part you can put tokens into it it'll move them around you can give them to other people secondly you we we created something called Starlite and what Starlite does it allows you to take a solidity smart contract one of these like basic basically sort of business rules automation tools and turn it into a zero knowledge circuit and I mean I thought I was good at math I I don't have the faintest idea I barely understand how zero knowledge works in the first place the idea that you can actually turn it into like a programmable circuit still blows my mind but you can it runs as a black box on chain and so now between Nightfall and starlight you have all the tools you need to build complex business agreements and run them on a public blockchain with privacy that's awesome I'm curious about the experience of like you don't often hear about private Enterprises or um especially you know Big Four firms doing kind of public goods like this or building in the open what was the experience of like doing that internally how was it received how did you you know convince the powers that be that this is the right thing to do Etc so a little bit of indoctrination and a little bit of luck uh and a little bit of stubbornness kind of all came together I I personally am very much a star-eyed Optimist like I the last the last big white paper I wrote when I was at IBM was called device democracy and it was just about this idea that you know distributed computing would actually kind of restore the fundamentally decentralized nature of the internet and that would kind of bring us back to a somewhat more democratic kind of U model of of our machine interactions this was 12 years ago um and uh you know I I've always harbored that sort of level of idealism convincing others to go along with it turned out to be uh quite a challenge there was a little bit of good luck which is that a big firm like ey they have almost no history of building software like really none whatsoever so unlike a place like IBM where you have a you know very strong opinions about how license should be used and what kind of licensees should be done and and all of this stuff I I got a bit of a clean slate and in doing that although there was a lot of skep ISM I was able to do something that to this day I'm very very proud of the stuff that we did at ey for Nightfall and starlight it's not just open source it's public domain and to me that is a really big deal because I think one of the most pernicious Trends in open source has been these like specially written licenses that are contain little landmines in them right that make it difficult for you to actually build a commercial product or an asset on top of it and so you know I I not only did I eventually succeed in convincing my colleagues that we should go open source I convinced them to kind of go all the way we we got the third base on the first date and uh um and and we then went sort of full open source and public domain on the grounds that if there was no license agreement other companies would not need to call in their lawyers they would not have to review the license agreement that gave it to them for free and we would be removing a significant piece of friction from the process of adopting the technology by the way I was completely wrong about that too do you think some of the Enterprises that you work with or Enterprises in general care about the ideals of you know in the public goods or ethereum space like do they care about decentralization is it something that they're thinking about or I mean there you know like you told me earlier there are still people building private blockchains which kind of just Buggles my mind like what what's up with that so there's this joke about a phrase attributed to Church Hill he didn't actually say it but he said you America can always be counted on to do the right thing but only after exhausting all the other options we're sort of living that time at the moment I hope uh but um one of the other factors in here is like large companies in some ways can be counted on to embrace public domain once they've given up the idea that they they themselves can be the monopolist right the starting point for all large businesses and we I used to hear this phrase a lot when I was at IB I'm like what's our fair share of the market the correct answer if you're a large company so your fair share of the market is zero right one of the sort of kind of bizarre fantasies that large companies have is that their brand name will somehow entitled them to a share of a new market this never turns out to be true but they start in that direction they move along they do care when you try to explain it to them they do start to care about the fact that like if I'm not going to be the monopolist I want to be in an ecosystem where somebody else cannot be cannot make me the monopolist what I always tell them is like you don't want to wake up tomorrow Tom morning as a taxi company in a ride sharing world like that's not a happy ending that's a very unhappy ending yeah yeah that makes sense I find Enterprise very interesting because it's to me reflective of mainstream adoption in an interesting way that I don't normally think about I'm very much in like a crypto Twitter you know bubble um I'm curious for ethereum specifically like how is it being discussed I feel like right now things are changing quickly the last few months especially there's a recent discussion on Twitter about like the possibility of ethereum kind of falling into the Linux trap of being something that's foundationally important but has no real perception in in mainstream culture or Consciousness do you feel like that's a worry or are people like how do people when people hear the word ethereum if they're like a CEO of a big Enterprise what are they thinking so I I hope ethereum fall what whatever this like Linux trap is I kind of hope we fall into it one of my theories is that actually infrastructure becomes indispensable when it becomes invisible and used by everybody which is actually a good description of Linux and by the way I I think you know uh and I talk about this a lot on Twitter because it really bugs me like that that the state of discourse on crypto Twitter um ethereum one it's game over I I'm I'm sorry if you're from a different blockchain ethereum one uh and uh it is um thank you it's like 58% of defi lock value 85% of real assets are tokenized on ethereum there are something like 50 l2s operating in the ecosystem so uh ethereum is is hugely successful and what I talk to Enterprise leaders about is listen this is not about what the best technology is ethereum is the biggest ecosystem when you sit down to write a business application you're like wow what's the coolest operating system no no no you write it for Windows or for Mac because those are the operating systems that people have and you want to sell stuff to them what is particularly good uh about the ethereum Foundation is that they behave like stewards of mission critical business infrastructure they have delivered every 3 to six months for the last few years a significant hard Fork without downtime no one there is no other blockchain of remotely any size that can can can match that and so when I see people like well they should move faster no thank you Enterprise leaders do not want that we would like reliability and consistency and and and and performance right uh of a dtcc or a New York Stock Exchange I want ethereum going down to be about as frequently as you hear about the New York Stock Exchange not functioning can you talk more about the ethereum Enterprise Alliance like what how is it structured what do you guys do what's the Mandate and and and your role as the chairperson I am the chief spokes model and the goal I'm the chairman and and the goal behind the Enterprise ethereum Alliance is is to basically Drive adoption inside the business in inside businesses right now ethereum is and and ethereum users are very very focused on Financial Services I get that and and Enterprise adoption is accelerating because regulatory approval is happening and that is a very very good thing but over time we need to go past like just the money and the tokenized assets I think ethereum becomes this infrastructure that is used by all businesses for B2B agreements and I want to share with you just one of my favorite stories about how incredibly powerful smart contracts are and and I I talk you know one of the things I do in my chairman role is I go around and tell people how powerful it is for business users five years ago Microsoft asked ey to develop a new procurement system for the Xbox video game network Microsoft buys billions of dollars of video games from thousands of different companies every year that are resold to Xbox video game users and the contracts are complicated right they they all have different terms and conditions uh you get paid after a certain amount of time you get paid a differing percentage it's not like the App Store where you just get 70% for everything it kind of depends on what you negotiate and this was proving complicated for Microsoft to keep track of it took them 45 days after the end of the month to give people their account statements we took all of those smart we took all of those paper contract and the Legacy system and turn them into ethereum smart contracts running on a permission Network we cut the cycle time from 45 days to 2 minutes cut the cost in half and improve the customer satisfaction and that's just a prototype what we did five years ago on a private chain we can now do today on public ethereum and so I want Enterprises to see this not just as a financial tool not just as a payment system but as a mechanism for running their business with scale and speed and incredible efficiency that's an incredible example and really helps me understand how this will start to get like Enterprise penetration um is it possible to do that now um are your products live like would you be able to create that like fully private on on chain on mainnet yes in fact we just launched a couple of months ago our first ever Smart contract product that runs with privacy on the public network and it's for renewable energy purchasing renewable energy purchasing for those of you who don't know is super complicated what happens is you you set up an agreement with like a big generator a multi-year agreement where you're going to buy a certain amount of solar power wind power at a fixed price and then there's all these rules in it like there's a minimum that you'll buy each month and so on the problem is that actually what you buy you don't get to the electrons that are in your lights they aren't necessarily your local organically sourced artisinal electrons they're whatever is coming from the power system near you you and so there's a monthly reconciliation between you and the power company and the power company the generator we can take all of that business logic we turn it into a a privately run smart contract that runs on Shan and and and do the same for these as as we did for Microsoft which is better faster cheaper yeah that's awesome um so one thing that enterprises I imagine are thinking a lot about right now like all of us is AI and um I know the folks in the ethereum ecosystem and at the foundation are thinking deeply about this as well I'm curious from your Vantage Point do you see any interesting use cases of possibilities emerging at this intersection of AI agents Enterprise use cases and um you know onchain absolutely and I'll just give you one example AI is going to completely reshape Supply chains the way that Supply chains work today is there are some very simple rules you go into a Walmart you pull the last bag of potato chips off the shelf and that triggers a reorder and Walmart has a bunch of rules or Target or Kmart or there's no more Kmart anymore Walmart or Target or whoever you bought it from they have some rules like hey you know this location we don't stock more than like one case of potato chips or or something like that the problem is these rules are set at a very crude level by an analyst somewhere using relatively simple kind of algorithms if you go to a little single store sole proprietor Bodega it doesn't work like that the shop owner knows like you know uh he's next door to a school and when school lets out the demand for like potato chips at 3: in the afternoon just disappears and so uh he may not reorder very many if it's like you know the 20th of May and school's almost going to be done for the summer so he is very smart about it because he can apply a lot of brain power and he knows every single kind of item in his inventory what if AI can do that at scale in a supermarket or a Target you have this intelligent system as I don't want to say as smart as you or I but doesn't need to be but it's very focused on hey I'm the brain in charge of this section of shelf right and I'm going to keep track of all of those things then you need to order it so I see AI I see blockchain becoming the the infrastructure on which we do a lot of transactions and AI being the brain power that gets applied in enormous ways to all of these millions of small decisions that govern kind of what stuff is where it is How likely it is that we're going to find it on shelf and so on yeah that's super interesting so there's like the the chip shelf agent who triggers the smart contract that's like oh hey by the way we've learned from the last you know 50 years of data that around this time this might happen and then there's kind of this cascading set of events yeah that's really cool um okay so I think we have a minute um just to wrap up I'd like to kind of get a sense of your prediction over the next couple of years first of all how how many of the you know Fortune 500 yeah the like S&P 500 are using some kind of unchain smart contract do you think in some capacity right now oh 1% very few what do you think will need to happen to get that to like 50% use case so I used to have a hypothesis that what would happen is that companies would sort of dip their toe in the water and they would start with something that was not risky like tracking inventory and then they would step up to something more complex like having a whole procurement contract process on board I was wrong about that it turns out that actually because of the immense success of stable coins the first thing that's going to happen is companies are going to start buying stuff and sending money using blockchain and crypto payment rails because that's way cheaper and they're just going to save money by cutting Banks out of the transaction processing Loop then they're going to say you know what I'm on chain all of my business partners are on chain let's let's step up to Smart contracts and so on so I I think it's going to be the explosive spread of stable coins and the quick savings on Bank fees and we're seeing that by the way uh sap which is the world's biggest Erp system if you know who knows what sap is that's all of you guys have probably had like post Erp implementation trauma therapy it's but sap has a wallet there's a there's a crypto wallet in s4a and ey became the first company to get a crypto payment that is going to spread like wildfire and then it's going to trigger this like path forward to Smart contracts and business assets and more complex Solutions amazing all right Paul thank you so much two more thank you [Music]