Mike Townsend: Today's guest is Bryan Gross. The founder of ICHI. ICHI is a DAO or a decentralized autonomousorganization, which designs protocols that help other crypto projectsparticipate in DeFi more efficiently, specifically. They help solve theliquidity problem for automated market makers like Sushi Swap.  

Mike Townsend: They are solving thisproblem, which I didn't fully appreciate in liquidity. We talked about whyliquidity in decentralized exchanges is such a problem today and how they'reuniquely solving this problem. This is a big deal. DeFi and decentralized tradingand automated market makers are a huge cornerstone of the crypto market, thecrypto landscape.

Mike Townsend: And so solving theproblem of liquidity, creating in a profitable incentive structure forparticipants in liquidity providers for these exchanges is, is super, superimportant. So Bryan was nice enough to describe how they're doing it and whathe thinks the future is. Hope you enjoy. If you do enjoy this podcast in theseepisodes, please share it on the social network you're listening to. Like subscribevery much appreciate it. Here is Bryan Gross.

Mike Townsend: Hey, Bryan, excited tochat with you. I really enjoy what you're working on at ICHI. Why don't westart there in pre-show you were mentioning what you've learned from theproject over the years, specifically as it pertains to liquidity, what maybejust we'll start with what, what ICHI is, why you left IBM. I think you were atlast and decided to help co-create it. Yeah. And welcome.  

Bryan Gross: Yeah. First of all,thanks for having me, Mike. It's fantastic to be here dialing in from New Yorkahead of main net. ICHI it really, it, it began as I was working at IBMblockchain and we were focusing on tracking many things with blockchain, youknow from shipping containers to mangoes, believe it or not.

Bryan Gross: And I always thoughtthat the technology was best used for moving money. And I got IBM to join anetwork called Hadera hash draft, but in thinking about Hadera and the longerterm implications of how to secure these networks and get businesses to trackone, and we really thought that you needed to have a, a, a method of makingpayments that the entire economy surrounding the network could rely.

Bryan Gross: and that that methodof making payments should absolutely cause the network to be more secure asit's adopted. And that's why he was originally created. So I left IBM to, tokick that off. These days we, we really focused much more on liquidity, butthat's how it started.  

Mike Townsend: And so that earlyproblem of tracking, how, how did you go about solving that? What, what was,how did you sort of like first walk through the actual solution?  

Bryan Gross: Yeah, so the, the realproblem was that in a proof of stake network, you know, so this is a networkwhere. you put your capital at risk to secure it. You know, if you don't runyour node properly, somebody's gonna take your stake.

Bryan Gross: Right. That stakeneeds to be really valuable. You need to accrue value to it. But what wenoticed was that once real companies started to transact and settletransactions on the blockchain, they would typically use. Dollar pegged paymentmethods, maybe even completely off chain methods, but if it was on chain, itwould often be a stable coin.

Bryan Gross: And that stable coinwas not what you were staking in the node. And so we just, we needed to make astable coin that would actually accrue value back to the node. Operators arethe security assumptions of the entire network somewhat flawed.

Mike Townsend: And maybe take a stepback for a second. So, so ICHI is a decentralized protocol. You have, what arethe key components of the protocol and the, the purpose, the unique purpose ofit? Like how, how do you sort of think through like value proposition in themarket?  

Bryan Gross: Yeah, so the, thereare two. Stablecoin protocol is called Branded Dollars. There's a second one.That's really focused on all of this idle crypto in the world. So cryptotreasuries have billions of dollars. Crypto projects, users, ecosystem funds havehundreds of billions of dollars of crypto that basically earns no yield. Youknow, you can kind of hold onto it on the hope that somebody buys it from youlater. Provide it to a lending market, but people rarely borrow it.

Bryan Gross: You could put it inliquidity bit. The liquidity provision methods all turned out to beunprofitable. And so we made a system that basically enables you to grow thebalance of any token by creating a vault that manages the liquidity on UniswapV3. And so that's been. Very popular this summer several a dozen or so projectshave launched and many more are on the way.

Mike Townsend: What's the definitionof liquidity. When you say liquidity, what does that, what does that mean?  

Bryan Gross: So liquidity is themoney available for trading, right? So if you have asset a and you'd like toswap to asset B, but you would think that. Meet somebody who wants to sell theasset that they have for what you have, but that's rarely the case.

Bryan Gross: You, you, you usuallytrade against money that has been placed there by another third, likefor-profit actor called a liquidity provider. So the liquidity provider willput some of both assets in the market, hoping that people trade. The money thatthey've made available for trading and then take a fee when they do.

Bryan Gross: And so that's what Imeant by liquidity. You can see then, and generally that's a problem that thedecentralized liquidity provision methods. all turned out to be unprofitableis, you know, people will stop doing it. Then there will not be liquidity andnone of these systems will function.  

Mike Townsend: And why, so is it yourstatement that liquidity providers are not profitable across the board or isthere, and if so, why? Why are they non-profitable?

Bryan Gross: Well one, it, it, itactually, they really aren't that profitable in regular markets to begin with.I mean, there's a small spread between the bid and as price, but they oftenhave an allocation or a long position in one of the, the shares, if it's like aregular market in wall street in decentralized liquidity provision.

Bryan Gross: That's when people putthe money in a contract. Running on Ethereum that contract doesn't know theprice of what they put in the contract. They said the way it learns the priceis when people buy the assets for less than what they're worth, that causes theprice to rise, but it has the side effect of losing value.

Bryan Gross: And so the amount offees that people earned from doing this didn't outweigh the loss in value.Created when these arbitrages come in and, you know, buy your tokens for lessthan market value.

Mike Townsend: Okay. And why wouldn'tthe liquidity providers just raise their prices?  

Bryan Gross: They, they reallydon't have control over the price, the price in a decentralized exchange, likeUniswap is determined by a a curve price, quantity curve that's encoded in thecontract. So they, they don't have control over the price.

Bryan Gross: If they did, thatwould actually be a really big security risk. So it, it's not, it's notsomething that anybody is created in, in normal markets. They, they do controlthe prices and in some new forms of decentralized markets, they do. But even ifyou, I guess there's another side, side effect. If you give people control overthe price, they actually have to do it and they have to do it well.

Bryan Gross: And that is incrediblycomplicated. So you would limit the number of people. Who could provideliquidity to more or less professional market makers. So there's the practicalreason that the systems we're talking about don't support it. Then there's thebigger reason they don't support it, because if you did it.

Bryan Gross: You actually changewho you can use the system.  

Mike Townsend: Got it. Okay. Sothere's a, there's a security risk. If in decentralized markets that liquidityproviders had the, if they had the ability to change prices, that would be asecurity risk, but because the prices for liquidity providers on a curve whichthat curve was set.

Mike Townsend: The creators of thesmart contract initially, somehow it's still resulting in an unprofitablebusiness for a liquidity provider. So the price on the curve wasn't correct.Somehow. Is that the right way to think about it?  

Bryan Gross: Yeah, the, the, thewell, it's, it's more or less fair. The way that the I, I, I would guess thatone of the reasons that they're unprofitable is it's very difficult to reasonabout profit and loss and, and so they add more money than the amount of feescan support without realizing that as a group they've added more than isnecessary.

Bryan Gross: And as a result becomeunprofitable. I don't know. I never really okay. Really thought about that asmuch as just recognized that status quo they weren't making money and that leftmost tokens. Most coins, most projects were very poor liquidity.  

Mike Townsend: And this is, this isacross the board, like throughout the crypto industry that there's just notreally enough profitable opportunities for liquidity providers. Is thatcorrect?  

Bryan Gross: Yeah, so the therehave been two generations. The first was Uniswap it's, it's a project calledUniswap. And they came out with an AMM called Uniswap V two, about three, fouryears ago. And it, it really didn't take off until this concept of liquidityfarming happened and in liquidity farming, Projects would pay people, extraincentives or bonuses to provide liquidity and it became profitable to do so.

Bryan Gross: And so a lot ofliquidity was added, but all of those rewards were inflationary, kind of likeIOUs. So eventually people would cash them in and the project would crumble andit just wasn't sustainable. So it was profitable, but because it was beingsubsidized. The next generation was Uniswap V3 and it advertised that you couldmake your liquidity more profitable by putting the money closer to the price.

Bryan Gross: So in, in, in thatexchange, you can't change the price of the assets, what I meant earlier, butyou could change the price at which you allowed your liquidity to trade. And sopeople would just change that range. so it was a lot closer to the currentprice. But when they did that, it, it actually meant that when the price moves,they sell far more tokens under market value than before and suffer what theindustry is coined in permanent loss took greater extent.

Bryan Gross: And so they'reactually not more profitable. They're just more efficiently, both making moneyand losing money. They can do both faster.

Mike Townsend: Interesting. Okay. Andwhat if I'm speaking to a liquidity provider today, what are they, what arethey, what, what's their attitude? Are they feeling frustrated? Are theyfeeling like this is a great time to be a liquidity provider?

Mike Townsend: Are they focused onany particular technological change coming down the pipeline or, or feature setthat would improve the situation?  

Bryan Gross: Well, many of themhave just stopped. So, okay then looking at major assets trading on uni D threeyou might have a project who's coin or token is valued in the hundreds ofmillions of dollars, but there are a half dozen people, one dozen people thatare bothering to provide liquidity.

Bryan Gross: And then many times,and I don't know who they are, but maybe they're incentivized by the project insome way to do it. Maybe they work for the project or they're a market maker ofthe project. Mm-hmm but they're getting compensation. Outside of the systemitself many times.  

Mike Townsend: Okay. And do you thinkthat there is a some sense and you feel like there's a general undercapitalization, there's not enough money coming into these markets to providegood trading for traders. And, and so we're kind of in this liquidity drought,is that correct? And then we, what solves it?

Bryan Gross: We are, and I thinkeven more importantly You know, I, I, I used to run a, a financial servicesbusiness with Amazon. And the promise of this space was that you could programvalue online in the same way that we made systems that sent messages back andforth to each other, to, you know, organize inventory or take orders in thefuture.

Bryan Gross: We could actually sendmoney the same way as sending messages, but sending that money, that valuerequires liquidity. Without profitable liquidity provision. You put the promiseof the entire space at risk. Cuz if you have to log in with a username andpassword to some bank to trade these things like logging into finance or willbe or Coinbase you've kind of de defeated the whole point of the whole thing,like aside from just traders speculating on.

Bryan Gross: you can't makeapplications that interact with this value and transact or run smart contractsagainst it as the, the liquidity's not there. So it really is a, a problem forthe whole industry. And so that's why we pivoted to focusing on it and, and wedid solve it. So we, we solved it by creating a new form of liquidity.

Bryan Gross: I've called greedyliquidity. And it greedy basically work. Yeah. Greedy. I, I want to come upwith a better term, cuz people might think greedy is a bad thing, but in thiscase, greedy is really good because if, if the liquidity provides.  

Mike Townsend: We have the term, wehave the term charting. So if Charting can exist, then I'm sure greedy.

Bryan Gross: Yeah. Charting's wayworse. Yeah. That makes me feel better.  

Mike Townsend: Yeah. And, andprofitable. So tell me what is yeah, yeah, no, I actually like greedy, I thinkgreedy has kind of a double connotation to it. Like we know the old school wayof the word greedy, but tell me what is it and, and how you're thinking of it.

Bryan Gross: Yeah. So, so basicallythe way it works is it, it figures out what you want to greedily accumulate,right. And the way it does that is it only lets you deposit a single. You know,which would seem obvious, but all the other liquidity provision methods, youcan deposit one of two or more assets and get back the same pool token.

Bryan Gross: So no matter which oneyou deposit, you end up with the same pool token, and therefore the systemdoesn't know which one you deposited. Right. So that's the first problem weaddress is we like, okay, tell us. asset you want to greedily accumulate.Right? And then the second step of it is it just simply won't it tries not tosell too much of it.

Bryan Gross: Right. And this isalso highly intuitive. Like if you know what asset they want and you sell toomuch of it, you may have a problem giving it back to them. Right. So insteadthe system will get it'll start subtracting, taking away liquid. Of the assetyou deposited if it's already sold too much. And then the last thing is, if it,if it hasn't sold too much, if it has a healthy amount then it will place theliquidity really close to the price.

Bryan Gross: So you can earn moretrading fees. Dollar of tokens deposited. And so we, we basically thought ofthis algorithm and we, we implemented it and now we've implemented it withdozens of token. and it's working for all of them. So we're, we're just prettyexcited about it and beginning to get the word out.

Mike Townsend: So let me just try torepeat it back to you. Make sure I understand this. So ICHI would be the marketwhere people would come and they would deposit one. So they deposit Bitcoininto the ICHI marketplace.  

Bryan Gross: Yes. If you hadBitcoin and you're like, well, I I'd really like to have more Bitcoin. Then youpick a.

Bryan Gross: That you can depositBitcoin to. And that vault now knows that, Hey, all of these guys have put inBitcoin and it will track the, the VA. It will allow that Bitcoin to be tradedfor another asset, cuz that's how you get paid fees. But if it starts sellingtoo much of it, it'll stop selling Bitcoin cuz it knows what you deposited andthen it, if it hasn't sold much Bitcoin it'll place the Bitcoin closer.

Bryan Gross: To the, the price, ifthat Bitcoin was trading it's dollars, it'd be the dollar price of Bitcoin. Ifit was trading against another token, like E it would be the E price ofBitcoin, but it'll put it closer to the price so that more people trade intoyour liquidity, the Bitcoin available for trading and pay you fees.

Bryan Gross: And so it's actuallysuper it's a very intuitive algorithm because if I, if I said to. Guess what,Mike, I've got a hundred apples. I really need you to, you know, have the wholetown buying and selling apples today. And you went to the, and, and at the endof the day, I need you to bring me back the apples you have left and you go tothe market and you start selling apples and you start buying apples frompeople.

Bryan Gross: If somebody came upand said, you know what, I'm gonna take all your apples. You'd be like no way.Cuz I have to deliver the apples at the end of the day back to. The guy whogave me the mandate to create a market for apples. I don't know. And, and youknow that if you sold all your apples, you wouldn't be able to do that.

Bryan Gross: But I, you know, Iguess because simpler designs were just easier to implement that just hasn'texisted. Yeah, in DeFi, we're the first to make that.  

Mike Townsend: Why? So, today you'resaying that most people in your example are giving away or somehow trading allthe apples at the end of the day. Like what, why?

Bryan Gross: Yeah. So on like uni Vthree, which is that latest addition, say the apple price is a dollar, adollar, an apple mm-hmm and you go and you tell. Uniswap at what price you'rewilling to trade apples. So you can place the apples on Uniswap V3 between 90cents and a dollar. And if people start buying the apples, then they come andthey swap their dollars for your apples.

Bryan Gross: If the price goes to.80 89 cents actually said it backwards, but say it goes to 89 cents. At thatpoint, you only have dollars. You have no apples left. I actually said itbackwards. Cuz the price would be rising if you were selling apples. So be adollar to a dollar 10. Once it got to a dollar 11, all you would have is, isdollars, no more apples.

Bryan Gross: And as the pricecontinued to rise of apple. you would, you wouldn't be experiencing that priceappreciation anymore. As you have no apples left, you only have dollars. And,and that's how people lose money in this space. They, they don't move theprices around as things trade and they don't sell less as things trade and webasically did an algorithm that would maintain that for them.  

Mike Townsend: So as, as you decreasethe number of apples, somebody has, their price would, would go up accordingly.And that would, that would effectively make it.

Bryan Gross: You imagine theexample, maybe you're, you're making an incredible business selling apples at adollar and 1 cent and buying apples at 99 cents.

Bryan Gross: So all day long,you're making that 2 cent spread. It's fantastic. but then somebody comes upand they say, I have a wheelbarrow. I'm taking all of them. And you find outit's because like the external apple market, it's a dollar 20. And now he'sgonna take all your apples for a dollar and 1 cent and sell them for a dollar20 later today.

Bryan Gross: Listen, listen, doapples are now a dollar 20. You can't have them. right. So is  

Mike Townsend: This, is this kind oflike right, right, right. Okay. So this there's a, there's a funny meme. I sawsomewhere that explained how business school works and it was, it was prettygood. It was like you know, these two ladies that were selling fruit on theside of the road and one of 'em had like, Selling mangoes.

Mike Townsend: And one of 'em had themango for like a dollar each and the other one had it for a dollar, 10 peoplecome up and they start buying her from the one with the dollar. And then theone at the dollar 10 looks over and she sees that and shes it to 90 cents. Andso people start buying from her and then the original person with a dollarlooks over and she.

Mike Townsend: Buys all the man, allthe mangoes from the person at 90 cents. Now she owns all the mangoes and nowshe's raised its $2 for each mango. So there's like a monopoly effect thathappens and seems to be a similar market dynamic that what you're explaining,which is if you, if you buy the market, you then have the ability to set yourown price is that approximately?

Bryan Gross: Yeah. I mean the, the,the, I think that the main point is. There was an external price of mangoes andthe, the one person, the smarter person in your example, better understood thatexternal price of mangoes and, and was able to abuse their businesscounterparty with that knowledge.

Bryan Gross: Right. Hmm. And, andso the similar thing happens here. These automatic market makers don't know theprice of anything. They just learn it. People go and trade with the contract.But since 95 plus percent of trades are done by for profit arbitrages you can,you can bet that nine times outta 10, maybe more you're selling something forless than what it's worth.

Bryan Gross: Right. And, and if youprovided both assets, then you're losing money, both directions. and what oursystem did was simply make it one-sided so that now, if, if somebody's takingyour apples, you know, that you're taking a little loss on that transaction. Ifsomebody's bringing back your apples, you know, you're getting a little gain onthat one.

Bryan Gross: And, and so you justadjust the algorithm so that you suffer fewer losses and you have more gains.And at that point, the trading fees are. To make you break even you'll stillprobably lose money if there were no trading fees, but now you can charge enoughtrading fees that you'll, you'll be profitable instead of unprofitable becauseyou know what a profit and a loss is.

Mike Townsend: Okay. So similar towhat you were saying earlier yeah. That you said the liquidity providers werenot making money because the curve that was set in the smart contract couldn'tbe edited. They couldn't set the price for security reasons and the price wasjust wrong. Now you're is that, is it that you have this additional trading feeon ICHI where people can add a fee and therefore be prof.

Mike Townsend: I should be morespecific liquidity providers can add a trading fee and therefore becomeprofit.  

Bryan Gross: It's just that whensomebody's crew. So what you'll find is that the other system was profitable.As long as people traded both directions and it mm-hmm , you know, they canmake that spread it be. And so for 30 days in a row you would be profitable.

Bryan Gross: But then on day 31,the external price would change dramatically and you'd sell a lot beneath market.and so what this system does now, is it better it better to text that runawayloss situation and just directly mitigates it? It says, you know, guess what I,my, my goal is to not have the beneath 80% apples.

Bryan Gross: And so once you'vetaken 80, you know, 20% of my apple. I'm gonna start charging a lot more forapples. It's gonna be a lot more expensive to get the next 10% or the next 10%after that. Got it. And got it. Got it. It just, it just protects you.  

Mike Townsend: Got it. Yeah. One of themore complicated topics. So I appreciate you explaining it.

Bryan Gross: No, it's really it'sreally, I, I really enjoy the challenge of trying to explain it on basic terms.It's it's such a complicated issue and, and people don't really know what's goingon in these systems. It, you know, money's flying around all over the place andit looks like it's all working, but you know, if you go back and run a profitand law statement, you realize why that the real bankers and the realinstitutional finance hasn't entered yet because.

Bryan Gross: They've done the mathand they know the risk and you have to address these core risks to, to actuallymove the world to it right?

Mike Townsend: Now. What are peopleat? Like Uniswap or any of these market makers? What are they saying? Are theysaying, are they acknowledging that this is a problem? And if so, is itactively something they're working on?

Bryan Gross: Yeah, the entireindustry's been trying to solve this problem. The last couple of years. Oh, okay.And there have been many attempts. So, and, and maybe what we'll find out isthat next month we really didn't solve it, but for right now, it's lookinggood.  

Mike Townsend: Yeah. Okay. And yousay we, as in the community of all market makers, didn't solve it.

Bryan Gross: ICHI the ICHIproject.  

Mike Townsend: Okay. ICHI got it. Andwhere is ICHI now? ICHI  

Bryan Gross: The three, the threethings we did differently was that you can only deposit a single asset. We trynot to sell too much of it and we concentrate. When we, when we, we haven'tsold too much of it, I'm not aware. I'm not aware of anybody else.

Bryan Gross: That's tried that. SoI'm hopeful that that is actually the solution to unprofitable liquidityprovision, it's highly intuitive and in many ways, but you know that this is a,this is a developing rapidly developing space. And even if we solved it, maybesomebody else solved it better. I Don't know. We'll find out.  

Mike Townsend: Yeah. Well, I mean,from my perspective, the more, the more, the better yeah. And this is affectingnormal people or is it typically affecting just traders that are operating onthe margins? I mean, if I'm going and trading, would I notice this as a problemtoday? Or is it more or less?  

Bryan Gross: I, I think that whereit shows up and kind of, you wouldn't directly connect these.

Bryan Gross: But the result is thatwhen crypto projects launch, there's often this run up in price, but then thislong sell off that occurs for the next year or two that demoralizes theircommunity often causes the project to fail. And the, the underlying cause ofthat is poor liquidity. Right? Mm-hmm and the, the expense.

Bryan Gross: of transacting andtrading is what makes many business models that people want to build withcrypto and practical. So the analogy I would use is remember when we used to dointernet and it was like, beep beep beep mm-hmm like the. You can't make Amazonlike our AWS on dialup internet. I know that cuz I was working with them as wetransitioned to broadband.

Bryan Gross: And that's whatenabled those businesses to happen. I think liquidity is the broadband of webthree for the real use cases to happen. You have to have a, a higher bandwidthliquidity. Right. And the thing that you're messaging is this value. and theway that those messages get translated, they get sent, they move from oneecosystem to the next they enable DAOs to share value is with liquidity.

Bryan Gross: So you really know itwhen you don't have it, but you don't appreciate it when it's there.  

Mike Townsend: Yeah. Well, I'm gladthat you and other people are working on this. I don't think I nearlycomprehend or had comprehended the scale of the problem. Where are you guys nowin the development? So you've been around for a few years.

Mike Townsend: How, how do youmeasure progress? Is it on transactions per day or market cap or some, some,some other metric.  

Bryan Gross: Yeah. So this latestapproach. We launched it about three months ago, four months ago. And sincethen around a dozen projects have launched with it. So that's in independentcommunities signing up to have their liquidity managed by our vaults.

Bryan Gross: So yeah, we definitelywanna see that number grow into the hundreds. And then also we want to bring inmore of the the venture funds and hedge funds. , you know, have a lot of cryptoassets that aren't earning yield. This is a new opportunity for them to improvethe performance of their fund and deepen the liquidity for the entire, this webthree ecosystem.

Bryan Gross: So those are the twoareas of growth we're focused on.  

Mike Townsend: And then as far as theproject, when was it started? How do you measure progress? Is it on dailytransactions or total value? Staked or market cap. And, and where are you?Where is each on those numbers?  

Bryan Gross: Yeah, so the, the, we,we really measure it by the number of communities we're helping.

Bryan Gross: So again, that's up toabout a dozen.  

Mike Townsend: Okay. So a dozencommunity. Is there a metric that would be more telling of the scale of theproject? Are these communities like two people, each or hundreds of people? Or,I mean, there must be some way to kind of give a sense for like, how do you getpaid and how do, how do people on the team get paid?

Bryan Gross: Oh, oh, okay. I see.How does all right. Yeah, the the trading volume. Are the next metric. And we,I think that with the current foundation expenses we probably break even ontrading. Like the, ICHI foundation gets a share of the trading volumes at the10% share. probably the foundation's expenses break even in the next 12 monthsbased on that 10% share.

Bryan Gross: So I think after that,at, at that point it's more or less self sustainable as it's, it's making morefrom all the trading fees. As people swap from one asset to another, then it'scosting to.  

Mike Townsend: Got it. Okay. So justso I'm understanding of the business model. So the, the foundation operatesindependently at the protocol and then you and your team are working togetheror independently to grow the protocol, pushing up these updates to thesoftware, and then you personally own ICHI tokens and so as the protocol grows,those tokens will be worth more. Is that how you're thinking about. Personalfinancial accrual.  

Bryan Gross: Yeah. So my company isa contractor of the foundation and as part of its compensation, it did get somemechi tokens.  

Mike Townsend: Gotcha. Okay. Okay.Yeah. And total volume today, or total, where, where is it now? Is it in the,can you give roughly or exactly?  

Bryan Gross: Yeah, the. I thinkaround 20 million deposited, but again, we're mm-hmm I don't, I don't thinkthat's like a, a brag number. It's we're we're from our concern. No, I, yeah,it's not the, yeah, we don't focus on that heavily at the moment as it's farmore important that the it's safe, it's secure that. Communities that are usingit are able to rely on it. And then the, as more communities sign up. Then theother numbers will take care of themselves.

Mike Townsend: Yeah. It's likerevenue, you can't focus on revenue. You can't grow revenue. You can only focuson the parts of the company that you can, you can affect, which is likeimproving customer experience or the product, or et cetera.

Mike Townsend: But yeah, it's good toknow. I just wanted to get a sense for this scale of the project. And this is asignificant change. What's your thoughts on like community at large?  

Bryan Gross: Yeah. Yeah. Andactually one of the things that I would say on that is yeah, the, you, youknow, this, that the first growth ahead of a tipping point is the hardest,right.

Bryan Gross: Once it's proventhere, it has more time, you know, maybe it's maybe. It's been profitable whilethe other approaches haven't for three months. Okay. That's three months.Mm-hmm once it's been profitable and the other approaches haven't for a year,that's an entirely different situation. And the, the speed at which money willflow from unprofitable deposit locations and the profitable ones can be veryrapid once. The evidence mounts. So again.

Mike Townsend: Yeah. Once a, awinner's declared  

Bryan Gross: Yeah, yeah, yeah. It,I don't really think. there's anything that little about value lot. It's justmoney looking for yield. So we'll see. We'll see how it plays out.  

Mike Townsend: Yeah. And do you thinkof other protocols as competitors per se? I mean, I guess, yeah, you would.

Bryan Gross: No, you know, I thinkit, because the, the whole space is so small and it's not even working yet.Yeah. That's good point competitors. The competitor is the status quo. The, themoney limited by governments, the mm-hmm the financial systems that keep usfrom helping entrepreneurs in serving mm-hmm. like great swaths of earth,right?

Bryan Gross: Like this is the cothe competition. Not, not other people in our space, the status quo. Yeah.  

Mike Townsend: What do you, what doyou think of the average retailer? So say somebody has like some 30% of theirnet savings in crypto, like some significant percentage and they're debatinghow to, how to actually preserve it.

Mike Townsend: They could put it on aUSB port, put it in a safe, put it on a hardware wallet on their laptop, put itin a custody exchange like Coinbase. Do you feel it's important for people tobe thinking about gaining a yield, getting return on these. Stakes or notstaked on their assets. Like, is it the vast majority of people who are stakingand earning rewards or at this point, do you feel it's more conservative?

Mike Townsend: People are juststoring it in their own hardware wallets, which, which should people look to dofor resale investors?  

Bryan Gross: Yeah, I'm not I'm notreally even a, a hu. I like retail getting involved with crypto. As a hobby asa curious person, but I'm not a real big fan of all of the speculation andprice in portfolio management.

Bryan Gross: Like people thinkingthat this is their retirement plan or whatever, I, it, it, it's just incrediblydangerous, right? Like there's so many ways that people. steal all your funds.You're basically interacting directly with APIs that were designed forprograms, for platforms to use. And I think it's, if I had, if I had to guessat this point, the crypto side of things, the ledger side of things is notgetting simpler.

Bryan Gross: It's not gettingeasier to deal with or navigate the scams are getting more sophisticated.probably even run by state actors. People are getting their funds stolen,right. And left. I, I, you need a team of security experts to make sure thatyou're doing it right. And so in some ways, I'm, I actually prefer that, youknow, I don't, I would like, I want people's funds to be.

Bryan Gross: Now if they were ableto deal with it all safely fine, but if they're not, it might be better thatthey, that they just relied on services that depend upon the tech that do havethose security teams and do have those measures in place. So are there doing itwith an amount of money that just isn't going to cause them to, you know, hurttheir family's legacy or hurt their chances for retirement?

Bryan Gross: If it goes bad. so Ijust mm-hmm I'm I'm I'm, you know, the, I remember the 2017 crypto craze, andthere were a certain number of people involved that could really understand itand do it safely today. I think that number is smaller than it was in 2017because the sophistication of the tax and the complexity of the space has grownso much that I, I, I just, I find it far more likely.

Bryan Gross: you know, interfaceslike crypto.com. For instance, I have a crypto.com debit card and crypto.comaccount. That's probably how the hundreds of millions or billions of people endup dealing with crypto is that a company is with the appropriate licenses.Yeah. Dealing with the, the people in their appropriate jurisdictions is, is,is actually communicating with the ledger underneath.

Bryan Gross: and the way that it showsup for them is they're just getting a better deal. Like I'm, I'm paying less.When I shop getting a better discount on the stuff I buy, I'm getting moreyield in my savings account. I have more access to savings account or shoppingvehicles than I did before, you know, that type of thing.

Bryan Gross: And, and yeah, andhopefully, I guess what I really hope it ends up is that people around the. canchoose the money that they want to use rather than just being born into it.Right. Like they mm-hmm . I think that if that would be a great freedom for allthe humanity and it doesn't have to be delivered through private keys, it cantotally, you can have a choice of money of crypto from, from any type of userinterface.

Mike Townsend: Yeah. Yeah. Got it. Sopeople are, if they're hobbyists, they're not really that technical orcomfortable managing their own keys, put it in a custody wallet, Coinbase,crypto.com, as you said, most people probably interact with it that way. Do youfeel that even for people who are more crypto familiar, keeping it on ahardware wallet versus putting in markets market makers to get returns, likewhat do you do?

Bryan Gross: The main thing thatpeople to. . Yeah, I just don't want people to think that because they picked ahardware wallet. They're just automatically safe because somebody will fakeeverything. Like the hardware wallet interacts with meta mask. Somebody willcreate a fake meta mask that you can download. And if they intercept yourmessage at that level, then they're gonna send a signal to your hardware walletthat you will sign and you will lose all your or they'll just fake the entirewebsite. Like you'll, you'll think you're using Uniswap but it's a fakeUniswap  

Mike Townsend: Got it. Or they'll doit. So we'll assume. Yeah. Assume let's say you. Right. So you're you're whatdo you do? Like, so you have say you have 50 K and Bitcoin or some, some cryptodo, would you feel, feel more comfortable putting on a hardware wallet storingit, or do you put it in an automated market for Yield.

Bryan Gross: Well, the, the, for,for, for me at this point the, everything would be multisig even like, I, Ican't even execute it on my own. It's gonna require multiple people to sign it.So mm-hmm, just, for me personally, it's kind of even beyond hardware wallet,those multiple people probably all have hardware. And even then it all stillfeel really risky.

Bryan Gross: Right? You still haveto double check everything. The contract adjusts, the actual function calls,replay the transaction and see where the funds end up. I just mm-hmm , youknow, maybe I'm being a bit extreme, but I just really don't want peopleplaying with amounts of money out there that they, they can't afford to lose.

Bryan Gross: And somehow coming backand saying that, I said it would be okay if they did. Because the  

Mike Townsend: Yeah, no, I think Ithink most people kind of feel well. Let's see. So think about it. Most peoplefeel like there's a significant amount of risk associated with centralizedcrypto organizations after Celsius collapsed.

Mike Townsend: I think that they,they Celsius attracted the very simple casual investors to crypto with highyields and a great branded website that looked very secure. You know, why notuse it? A lot of people did. A lot of people seemingly lost a lot of moneybecause of how the funds were managed behind the scenes.

Mike Townsend: Then there's theobvious, Hey, like you're dealing with a loaded gun, you better be responsible.It's on you. And I think people depends on the person, obviously, but many,many people feel comfortable taking the responsibility on themselves. WhereasI, I think people who. Would put money into an exchange, I guess both, bothsets of people could put money that is too large to lose and they could, youknow, lose the private keys or the exchange could get hacked and, or they couldmismanage funds.

Mike Townsend: So there's risk eitherway. Yeah. But it seems like people are gonna, you, we want people to get intocrypto and I think it's I think about it as what's is it better to just have.The crypto in a, in a place that you feel is safe, whether that be managed byyourself or managed on an exchange, or do you think.

Mike Townsend: People should thinkabout it as, Hey, you really should be getting some return on the crypto thatyou have. Like, if you think about money on the, on the Fiat side, like if youhad a hundred K in savings and someone were to say, I'm just keeping all thatin cash. In my checking account, I'd probably say that's, especially if you'reyoung, that's probably a bad strategy.

Mike Townsend: Like you'd want togrow, you know, you wanna have return on that investment. And I, I tend to feelthat that, that similar attitude should be applied in crypto where like, so outof all the crypto, you. I probably wanna return.  

Bryan Gross: So, so I agree by theway now, in the traditional financial world if you, if you went to your, yourbrokerage and there was this fund and it said, I will earn you 18% fixed yield,you know, you're gonna ask the question, where does this yield come?

Bryan Gross: Right. Mm-hmm andthere's gonna be a really long investor perspective on exactly how they'redoing it. Right. And those people have real reputations on the line, not justreputations, but laws surrounding that. And there's that this idea ofdisclosure. So if you violate all that with a crypto savings platform, and yousay, put your coins in here, I'm gonna give you.

Bryan Gross: 18, 20% yield. Wheredoes the yield come from? It's DeFi magic, right? well that come on.  

Mike Townsend: Yeah. That's not agood response anymore.  

Bryan Gross: That's not the waythat you don't put your money there. Right? Don't do it like, yeah. Yeah. I dothink that there will be platforms that better explain the choices that theyfacilitate.

Bryan Gross: People making wisechoices and the people should make the wise choices. on the actual risk andthose risks should be disclosed to them. Right. Right. Right. And I do thinkthat that will result in better savings rates, etcetera, but you don't wantsomebody pretending it's all safe and then taking massive risks.

Mike Townsend: No, of course.Background of course. Yeah. I think at this point, feel people have learnedthat lesson the hard way.  

Bryan Gross: Yeah. So I, the, the,the, these things I guess people. . Yeah. I mean, I think we're, we'rebeginning to see things, structure and things grow, but what I would tell wouldsay is that, you know, now that I've worked in this space and you know, Istarted with, yeah, probably more of the mindset just about everybody shouldhave their own keys, but at this point, you know, I don't know, just one or twohalf dozen dozens of people.

Bryan Gross: Who've lost sixfigures. Signing away, their funds, including members of our team, right.Advisors, people who know, actually write the code. Like it's just the, I justnever want to be in the situation where a month from now, but he's like, well,I listened to that and I set it all up the way you said, and now my life,correct?

Bryan Gross: Yeah.  

Mike Townsend: Yeah. Yeah. Yeah,totally.  

Bryan Gross: So, so I, I I thinkthat the people who are confident who want to take that risk line, they, theyneed to learn everything involved from somebody other than me. Yeah.  

Mike Townsend: Agreed. Yeah. I wasjust curious if thought was on that.  

Bryan Gross: Yeah, so I don't wannagive, and I think by the way, I, you know, I've been to a gun safety class andI don't think I've ever met a guy that was more concerned.

Bryan Gross: The danger surroundingguns than the guy leading that class. Yeah.

Mike Townsend: Right. Usually how itgoes.  

Bryan Gross: Yeah. You know, sothat's the, the I, so again, I think that I'm a big believer in freedoms. Iwant people to have the freedom of speech, right? Any software you want. I wantthem to have the ability, the freedom to organize, you know, join these, DAOsjoin these organizations support, support the the efforts that you.

Bryan Gross: and, and ultimately Ido think that they should have freedom to move their money around and do whatthey want with it, absent a search warrant or, or some other governmentintervention. So. Let's do all of these things, but people just have to knowthe risk yeah.  

Mike Townsend: Governmentintervention that you agree with or that you, that is the justified one.

Mike Townsend: I mean, if the UnitedStates, if the federal government will say, Hey tomorrow, all Bitcoin tradingis, is illegal in. Bann give it all to us. Like, well, then there's gonna be RSin the streets. Bryan, any particular books, people blogs that have influencedyou, it kind of helped you learn more about the space or.

Mike Townsend: Maybe outside of cryptopeople or books or blogs that have influenced you?  

Bryan Gross: Yeah, I think, I thinkin you know, now in the space, it's just, for me, it's, it's unfair. I get totalk with all the founders and other project teams and learn directly from thesource. in terms of one of the people who's I think does a really good job ofletting you peer in is probably Laura and at Unchained.

Bryan Gross: I think that that'sprobably one that I listened to for years before I join the space, because alot of people will, will just geek out on the tech, but, and I totally zeroknowledge proofs and all this stuff. This stuff's fascinating. You know, butthe the governance side of things and the political side of things and the, youknow, what it, you know, the future of money and society side of things, thosethings are just as interesting, if not more interesting to dig into.

Bryan Gross: Yeah. And you know, soI. Somebody who has exposure to both the personalities and the tech and some ofthe visions and, and you know, that, that, that's, that's probably one goodplace to find it. Yeah. But yeah, I'm sure there's more and I just haven't beenwatching is I have a front row seat. Yeah.

Mike Townsend: Yeah, totally.

Mike Townsend: Yeah. Lauren Lauren isa, a good resource. Bryan, congrats on all the progress with ICHI man. I hopeyou guys continue to find success and adoption of, of communities using EI andyeah. Keep me in the loop. Thanks for coming on today. Awesome.  

Bryan Gross: Hey, great questions.And thank you, Mike. It's fun. Fun talking with you.

Bryan Gross: I think we finally duginto what liquidity actually is or where it comes from, but yeah, we solve.Yeah. Appreciate you. Yeah. I, I, I think complex  

Mike Townsend: that, but board tounderstand,  

Bryan Gross: but could you imaginetrying to explain what the internet protocols were gonna create in 95, but noway messages?  

Mike Townsend: I mean, I couldn'timagine. Yeah, you have to dumb it down.

Bryan Gross: This is what we're inand what we're watching is how, what happens when you send money all over theplace. It's really interesting.  

Mike Townsend: It is. It is. And notmanaged by any central. All right, man. I'll let you run. Thank you so much.Cheers.  

Bryan Gross: All right. Talk to youlater.

Mike Townsend: Bye.