theCUBE + NYSE Wired: Crypto Trailblazers | Xin Song, GSR

Sei Labs Co-Founder Discusses Innovations in Blockchain Technology Jay Jog, co-founder of Sei Labs, joins theCUBE’s NYSE studio to explore groundbreaking developments in the decentralized finance world. With experience at leading tech companies such as Robinhood and Facebook, Jog sheds light on Sei Labs’ mission to revolutionize the Ethereum virtual machine through the introduction of the first parallelized EVM. In this insightful conversation, Jog discusses the challenges and solutions of scaling blockchain infrastructure. Hosted by Furrier of theCUBE Research, the discussion delves into how Sei Labs enhances transaction throughput, enabling concurrent processing to improve efficiency. The exchange highlights the significance of smart contracts in bypassing traditional processes, as seen in transformative real-world scenarios such as the GameStop saga. Key takeaways from this session include the pivotal role of parallelization in blockchain, as Jog explains, increasing transaction speed will lead to more inclusive financial access. The conversation also touches on the evolution of cryptocurrency payments and assets exchange, and how Sei Labs’ technology facilitates this progression. As Furrier notes, Jog’s experiences emphasize the transition towards a more accessible and efficient decentralized financial system. Find more SiliconANGLE news and analysis https://siliconangle.com/ Follow theCUBE's wall-to-wall event coverage https://siliconangle.com/events/ Learn about the latest theCUBE events https://www.thecube.net/ 00:00 - Scaling the Future: Bridging Technology and Finance Through Parallelized EVM 03:45 - Optimizing Blockchain Efficiency: A Study of Throughput and System Architectures 05:50 - Enhancing Financial Systems: The Role of DeFi Transparency and T+2 Settlement 08:11 - Embracing Digital Transformation: The Rise of Stablecoins and Tokenized Culture 10:11 - Building Scalable Crypto Solutions: A Silicon Valley Approach 12:46 - New York and Sei Labs: Catalysts in the Crypto Revolution 15:11 - Role and Influence of Smart Contracts 17:46 - High-Throughput Blockchain Solutions: A Comparative Study of Solana and Ethereum 20:30 - Sei's Path Forward: Strategy, Innovation, and Future Directions #SeiLabs #CryptoInnovation #BlockchainTechnology #EVM #DecentralizedFinance #theCUBE #NYSEWired #CryptoTrailblazers

Xin Song, GSR

Sei Labs Co-Founder Discusses Innovations in Blockchain Technology Jay Jog, co-founder of Sei Labs, joins theCUBE’s NYSE studio to explore groundbreaking developments in the decentralized finance world. With experience at leading tech companies such as Robinhood and Facebook, Jog sheds light on Sei Labs’ mission to revolutionize the Ethereum virtual machine through the introduction of the first parallelized EVM. In this insightful conversation, Jog discusses the challenges and solutions of scaling blockchain infrastructure. Hosted by Furrier of theCUBE Research, the discussion delves into how Sei Labs enhances transaction throughput, enabling concurrent processing to improve efficiency. The exchange highlights the significance of smart contracts in bypassing traditional processes, as seen in transformative real-world scenarios such as the GameStop saga. Key takeaways from this session include the pivotal role of parallelization in blockchain, as Jog explains, increasing transaction speed will lead to more inclusive financial access. The conversation also touches on the evolution of cryptocurrency payments and assets exchange, and how Sei Labs’ technology facilitates this progression. As Furrier notes, Jog’s experiences emphasize the transition towards a more accessible and efficient decentralized financial system. Find more SiliconANGLE news and analysis https://siliconangle.com/ Follow theCUBE's wall-to-wall event coverage https://siliconangle.com/events/ Learn about the latest theCUBE events https://www.thecube.net/ 00:00 - Scaling the Future: Bridging Technology and Finance Through Parallelized EVM 03:45 - Optimizing Blockchain Efficiency: A Study of Throughput and System Architectures 05:50 - Enhancing Financial Systems: The Role of DeFi Transparency and T+2 Settlement 08:11 - Embracing Digital Transformation: The Rise of Stablecoins and Tokenized Culture 10:11 - Building Scalable Crypto Solutions: A Silicon Valley Approach 12:46 - New York and Sei Labs: Catalysts in the Crypto Revolution 15:11 - Role and Influence of Smart Contracts 17:46 - High-Throughput Blockchain Solutions: A Comparative Study of Solana and Ethereum 20:30 - Sei's Path Forward: Strategy, Innovation, and Future Directions #SeiLabs #CryptoInnovation #BlockchainTechnology #EVM #DecentralizedFinance #theCUBE #NYSEWired #CryptoTrailblazers

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More from theCUBE + NYSE Wired: Crypto Trailblazers

Xin Song

CEO

GSR

play_circle_outline From Ripple Liquidity to Crypto Diversification: GSR's Journey with CEO Xin Song at the Helm

play_circle_outline Liquidity explained as crucial for user experience on exchanges, likened to Uber's model.

play_circle_outline GSR's clients include token issuers, exchanges, and provides full-service capital market support.

play_circle_outline Emphasis on maintaining regulatory compliance and building trust within the crypto space.

play_circle_outline Future for Ethereum includes improved trust measures and a roadmap for broader adoption.

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Xin Song, GSR

Xin Song

CEO GSR

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John Furrier

>> Welcome back everyone to theCUBE here at our NYSE studios. Of course, we have our Palo Alto Studio connecting Wall Street, Silicon Valley. This is our Crypto Trailblazers series, part of our NYSE program and community where we break down all the action, leaders who are making it happen, bringing this next generation crypto infrastructure as the financial system is replumbed or recast, re-engineered as money goes digital, digital physical, physical AI, physical crypto, you're seeing the convergence of the systems coming together, the core crypto with mainstream. That's been the topic. Xin Song is the CEO of GSR. Welcome to theCUBE. Thanks for coming on.

Xin Song

>> Thank you, John. Absolute pleasure to be here.

John Furrier

>> You're the CEO, you have a very multifaceted company, and I want to get into what I was talking about in the monologue there, intro, the mainstreaming is happening, and obviously the global climate has been good outside the United States up until this year or this past regime. Now the United States kicks in stable coins, the money system is leaning in, that's my feel.

Xin Song

>> 100%, yes.

John Furrier

>> Before we get into that, explain what GSR does, because you guys have all the pieces. You've got VC... Go ahead.

Xin Song

>> Sure. Look, we've been in the space for 12 years where we're older than Ethereum actually, so we were set up in 2013 initially to be the liquidity provider for Ripple XRP on the consensus ledger, and then helping them with the on-demand liquidity project, which is solving for remittance movements being faster, cheaper, better across border. First client in 2013, but with the ICO boom in 2017 we diversified hugely and we've served to date, inception to date probably 600 token issuers. We have 180 live plants today and we serve half a dozen regulated exchanges in the world in terms of being the liquidity provider, making sure the experience is good for all the participants. So that's our core business, but we've expanded hugely beyond that as you touched on earlier.

John Furrier

>> Explain the liquidity angle, because I think this is the key right now, super important. The liquidity with stable coins has set the table, it gives a lot of confidence, certainly excitement. What does the liquidity mean for folks watching? How should they understand the role of liquidity in what you guys do?

Xin Song

>> The way I like to talk about it is any exchange is like a two-sided marketplace. Think of any consumer app like Uber going into a new city, as a taker of liquidity, i.e., a rider, you want to have the best experience. What does that mean? That means the supply of the liquidity, which is the driver, that's who we are, we have to sit there with our app open, we have to make sure that there's density of supply in any given radius of where the takers are, and you get that great experience. In the Uber it's how long does it take to hail a cab, with exchanges it's how can I transact reasonable volumes as an institution in a small space of time with the minimum amount of slippage, with minimum transaction fees and minimum spreads. So those are our KPIs, spread, steps and uptime.

John Furrier

>> You mentioned Uber because one of the things we've actually interviewed all the Uber engineers, it's a hard data problem. You got people, places and things, you got drivers, they're all independent riders at any given time as long as they have, it could be anyone, and they want to go somewhere, so you've got maps, cars, and they had to build a really complex system to do that. And distributed computing, that's great, now you've got decentralization. Are we there right now? Where are we on the infrastructure? Because Uber only happens with mobile. It only happens with the two-sided marketplace. Where would you peg our progress in the decentralization side to full flowing money, crypto, liquidity, crypto to stable coin, crypto to fiat or stable coin, there's multiple liquidity angles?

Xin Song

>> Yeah, absolutely. I think the infrastructure's come a long way since we were just getting started in the space. If you think about the trading use case, first and foremost perhaps, we've gone from no transactions happening on chain to about 15 to 20% of all crypto transactions happening on chain now. How has that happened? Well, Ethereum's been a huge part of that. We're here to celebrate 10 years of Ethereum. Moving from a proof of work chain to a proof of stake chain, and therefore becoming more efficient, allowing more throughput by having layer two scaling solutions on top of that, yet remaining secure and decentralized. Having trust, having people be able to trust that my asset's going to be safe and my transactions are going to happen with reasonable speed and reasonable cost. That then enabled the DeFi Summer of 2021 where there was an explosion of trading, borrower lending protocols, et cetera, and finally people were able to transact peer to peer with relatively low or round costs that created the emergence of the automated market maker model of exchanges, but that was still clunky, liquidity advisors had to come and suffer impermanent loss there, and the capital efficiency wasn't great. Now we've gone a step further and built central limit order with style experiences on chain. We've seen that happen in the most recent year with perpetual swap, DEXs, gain huge amounts of traction. So it's come a huge way and we've been a big contributor in the ecosystem.

John Furrier

>> And who are your customers? Who do you serve?

Xin Song

>> As I said, historically, we've served primarily token issuers, that means the corporates in the world.

John Furrier

>> ICO?

Xin Song

>> Yes, exactly.

John Furrier

>> When I want to put a token out there?

Xin Song

>> Yeah, that means the entrepreneurs that are building something.

John Furrier

>> Utility tokens?

Xin Song

>> Yeah, utility tokens, either infrastructure layer or application layer, 600 since inception, 180 live, and then exchanges. Those have been the two main end markets. But we've broadened from being just a liquidity provider to being a full service capital markets partner. That sounds kind of funky, what does it mean?

John Furrier

>> Yeah, so tell me what it means.

Xin Song

>> Think of us like an investment bank for Web3 digital assets. People ask us, "What does GSR stand for?" We often joke it means Goldman Sachs Reinvented.

John Furrier

>> I love that. I'm going to use that.

Xin Song

>> Exactly.

John Furrier

>> It's very memorable.

Xin Song

>> A couple of our co-founders happen to be Goldman employees, or Goldman Sachs Retirees, that's the other one that we use.

John Furrier

>> Retirees who came out of retirement.

Xin Song

>> Exactly.

John Furrier

>> This is what's exciting because people are coming out of retirement if they retired early and made some money or if they have domain expertise, they've seen the movie before in the centralized world. So they say okay, they can see the white space, they see the opportunities, and they can go after them. So I have to ask you, you got DeFi and TradFi, two of the concepts that are kicked around. I'm from a tech background, so to me it's back-end, front end. The front end of the market in this world, the TradFi, is booming. The demand for crypto is high, retail is high, ETFs are forming, and you're seeing all the institutions who have a front-end thing, whether it's credit or other things, are putting products together.

Xin Song

>> That's right.

John Furrier

>> So you're seeing the old guard leaning in refreshing with the new guard, and that's shifted the mindset from mercenary or missionary. expression, are you a pirate or a ninja?

Xin Song

>> I like that.

John Furrier

>> Okay. So pirates would steal and pillage things and basically take over. Missionaries are much more mellow or more technical, partnering. So I think we're in a missionary market.

Xin Song

>> 100%.

John Furrier

>> You agree, okay.

Xin Song

>> Yeah.

John Furrier

>> Explain why that's important.

Xin Song

>> I completely agree. It's got to be the focus on quality now, quality issuers. What does that mean? That means real product market fit, real adoption, no fake volumes, no use cases that are solutions looking for problems, in fact, that's what we've seen, because any foundational technology that is disruptive will have this kind of shift, and now the business models are becoming clearer.

John Furrier

>> There's always an underbelly in all new trends, there's always things happening, but I think that's important because I think adoption is key, but what I find fascinating coming from Silicon Valley here now, living here in the studio and working out of here, is that this money on the table, you can't ignore money. There's real money to be made. Share your thoughts on that because if you go back to the ICO days, it was a promising market, people were enthusiastic, but people were just taking their tokens and converting it to fiat. And some ran to the hills, bad actors, but then it went through the nuclear winter phase, but people built businesses, so now this money, Wall Street does not ignore money.

Xin Song

>> No, of course. And the network effects that are available by having a token that incentivizes adoption means those network effects are amplified more so than the Web2 space, but just to double click on what you said earlier about pirates versus missionaries, I like that because we've always tried to do the right thing. We've tried to be very regulatory forward. We're the only market maker to have a payments license in Singapore, to have acquired a broker dealer shell here in the US where we're expanding rapidly, to have no action letter in Switzerland, to have a registration in the UK FCA. Why? Because we've all come from regulated markets. We understand that it requires people that are consistently delivering on promises, obligations for the KPIs I mentioned earlier, so that we have orderly markets developed in a healthy way. And that means we've expanded from just being a market maker to being a full service partner. That helps hold the hand of any entrepreneur trying to build in this space from inception until maturity. That means the first institutional ticket in to help guide them, but it's also helping them to achieve mass adoption by being involved in digital asset treasuries.

John Furrier

>> Capital market service is essentially funding in liquidity.

Xin Song

>> Exactly.

John Furrier

>> It's the concept. It's interesting you bring up that long game view. There are folks in crypto that I've worked with, the leaders, the ones that are winning now, especially as it's going mainstream... And by the way, it's more migration coming in, new migration coming into the sector. The long game players got it. It's like they can see the future. And they're visionaries, I guess you can call them visionaries, but they did the work, because they knew that if they don't do the work, the regulatory piece could be a fatal flaw.

Xin Song

>> That's right.

John Furrier

>> Explain why that's important, because there's no shortcuts here. You guys took the long game approach.

Xin Song

>> Exactly. We have to be long-term greedy here. There are plenty of firms that have been speculative, have made a quick buck and gone away, we don't believe that's the way to have real progress in this field. I think institutions coming in and having mainstream adoption, we're just at that inflection point. We've been waiting for this for 10 plus years. It's encouraging. My old employer, BlackRock, issuing tokenized money market funds bill on Ethereum, that's a game changer, because-

John Furrier

>> It's validation.

Xin Song

>> Oh, it's validation, but it's more than that. It solves our own pain point as well as trading firms that don't want to take counterparty credit risk of exchanges, because we've seen what happened with FTX a couple of years ago. We get to solve that problem because, one, we get to park these assets at banks that give us legal protection. Two, we get to enjoy yield on top of that, and so it's security. And that's going to build trust and more adoption.

John Furrier

>> Trust and adoption is very critical, and also confidence, right?

Xin Song

>> 100%.

John Furrier

>> When you have trust, confidence and adoption, then the money's flowing, the system is built. And what I find interesting and I love about this market is that you have communities, which Ethereum's got a great community and all crypto infrastructure players have community, especially around all the flows, but when you bring in real institutions, it's almost a team sport in the sense of figuring out, because you have now domain expertise. You were a BlackRock, so you saw the machine work there, and now you're on the crypto side coming into the mainstream. So what is your perspective on as the BlackRock's come in, as the JP Morgan Chases come in, as these in institutions come in, they're going to bring something to the table, what is it that they bring to the table? And if you're Goldman Sachs Reinvented, GSR, they're coming in too, so are they a friend or foe, or is it more tongue in cheek?

Xin Song

>> We're friends. Trading counterparties, we have great relationships with them, but I think it's a new paradigm. I think these firms coming in brings validation, as you mentioned earlier, and confidence begets confidence, that's the main thing. For example, we could talk about Apollo. Apollo is another firm that has made big splashes in this space, tokenized private credit, ACRED, but combining that brand and that capability of being a top tier private credit fund and then mixing that with the composability that DeFi offers to be able to add leverage through a looping mechanism on Morpho, that's a very unique combination that wouldn't be achievable-

John Furrier

>> I like where you went there, let's double click on that, because a lot of people ask me, "Well, why are they re-plumbing the system?" Because I try to explain to people, "Look, this is infrastructure. This is financial plumbing in a new thing." Why not keep the old way? What's the benefits of the new system?

Xin Song

>> You cannot stand in the way of progress. Let's take New York Stock Exchange as an example. Let's think about before the 70s the underlying plumbing was paper-based, literally securities were kept on paper, that created problems because, hey, look, the volume got so large that the exchange had to stop trading on a Wednesday just so we could shuffle the papers around. That moved to a digital system. We could trade five days a week. Now what's happening is that's all moving into a decentralized ledger. That's more efficient. That enables more liquidity to happen, that enables more efficiency of settlement instantaneously. That's benefit to the underlying users.

John Furrier

>> You mentioned credit, you mentioned leverage, what other things do BlackRock of the worlds get, Apollo, JP Morgan Chase, what other things do they get from leaning into this privatizing, say, funds you said? Things like that are happening.

Xin Song

>> It's happening. It's happening. It's also increasing their reach because why are some funds only able to have subscription redemption cycles once a month, for example? Again, it comes down to efficiency, how do you measure the NAV of a fund? Sometimes it's difficult because these are not always easy to market.

John Furrier

>> It's impact and efficiency really, the impact being money and efficiency being in how you do it.

Xin Song

>> Lowering the barrier to entry so that more people can access this where it's appropriate for them on a risk-return perspective, of course. We still have to have KYC and credit investors, I think protection still should be there, but where possible, all else equal, lowering the barrier of entry, more investors in, more money, as you say, that's incentive for everyone. It's a market-driven economy that creates good competitive effects, so more access, more investors and money, more liquidity, and ultimately more efficiency. That means instead of settling T plus three, T plus five, you can settle instantaneously. That's also money. Time is money. Where interest rates are where they are, that's money.

John Furrier

>> And the ownership of assets and making leverage in those, real-world assets are coming on chain too. Basically, it's digital convergence in real time. We're finally seeing the cliche of digital convergence at a first-party level. All right, let's talk about the Ethereum 10-year anniversary celebration. A lot of progress has been made over the past few years, a lot of debates, this versus that. Solana, Ethereum, other tokens are out there, and multiple chains. There's a lot of competing philosophies. So how would you grade Ethereum now and are they in a good spot? Is there a to-do list in your mind? What's your thoughts on Ethereum?

Xin Song

>> Look, I think they've achieved phenomenal success in the last 10 years, but there are still plenty of things to do, there's plenty of wood to chop, but let's celebrate the success first. So first programmable blockchain with smart contract technology, a 10-year track record of being relatively stable and reliable, and confidence that creates, that's huge. And.

John Furrier

>> Ecosystem is pretty massive.

Xin Song

>> Yeah, ecosystem. The density of developers there and the amount of talent that's creating application layer protocols there, that's probably second to none. Of course, there are competing chains, and some of them are monolithic chains that are able to also transact higher throughput at lower costs, but it's a trade-off, security versus efficiency, and so I think that's where they stand today. They've also managed to switch from proof of work to proof of We were talking earlier about me mining Ethereum in my apartment with graphics cards, and that heats up the room. That's lowered the energy usage of Ethereum. That's important to people these days, right?

John Furrier

>> Yeah, of course.

Xin Song

>> We want to be conscious of the environment. So huge progress. What else do they need to do? Well, okay, they've attracted retail users from the DeFi applications, they've attracted institutional investors to believe in the stable coin narrative, a post-genius act, the issuance has been huge. So what are we at today? 300 billion dollars of market cap in points of which Ethereum has a 55% market share, that's pretty impressive.

John Furrier

>> Yeah, it's significant.

Xin Song

>> But how do they continue to build trust? I think there's a couple of initiatives happening. One is this trillion dollar security initiative where they're talking about how can we have enough confidence that if we have a trillion dollars secured on the network that it's not going to break down. So if a billion people can each hold $1,000 of value on chains, that's real prime time adoption. And then other security measures that they're going and executing on. I think there's still a huge road map ahead of us to really get to mainstream adoption, but we've come a long way.

John Furrier

>> Well, great to have you on. Again, this trailblazer program is fun to celebrate the people who have been there, done that, and continue to work on the key things. My final question for you is, one, to the builders that are watching, people who are building apps, building technology, whether it's infrastructure or smart whatever the layer of the stack, what does liquidity mean for them? If you're successful and you guys are doing well and continue to chop wood, as you said, your success enables them to do what? How would you answer that question?

Xin Song

>> That's a great question. I think the interesting thing about liquidity and digital assets is it's such a fundamental component of how the system works. If you think about securities and stocks, how my smartphone works has nothing to do with the value of the manufacturer of the smartphone in the stock market. However, Ethereum, you've got to pay gas fees, you've got to buy and sell. So liquidity providers are critical because we're the picks and shovels. We make sure that liquidity is everywhere it needs to be consumed. We're streaming that to now brokerages and payments providers, and the stable .

John Furrier

>> You're a key piece of the puzzle.

Xin Song

>> We're a key piece of the puzzle. You have to have that liquidity to be able to use the network so that it has value, that's where we come in, that's where we partner with our clients and hold their hand. And we're a little bit like the top tier banks that bring companies to be listed on New York Stock Exchange and IPO. If you want quality partners, if you want to be a top tier player in this space, the missionaries, as you said, not the pirates, then you have to work with quality partners as well.

John Furrier

>> Well, I was supposed to be in Singapore for the F1 and the big event, Ethereum last month, missed it. Next time I'm in Singapore, I'll definitely see you. Thanks for coming on theCUBE.

Xin Song

>> Hit me up. Great to meet you.

John Furrier

>> GSRs here in theCUBE. Again, breaking down all the action, liquidity is a big piece of the puzzle for builders and for the ecosystem. Money's flowing, people are building, value's being created and extracted, efficiency and impact seems to be the theme. Again, Ethereum's got to continue to do the work, continue to chop the wood. I'm John Furrier. Doing our part, chopping the wood here in theCUBE, wall-to-wall coverage. Thanks for watching.

Xin Song, GSR

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John Furrier

>> Welcome back everyone to theCUBE here at our NYSE studios. Of course, we have our Palo Alto Studio connecting Wall Street, Silicon Valley. This is our Crypto Trailblazers series, part of our NYSE program and community where we break down all the action, leaders who are making it happen, bringing this next generation crypto infrastructure as the financial system is replumbed or recast, re-engineered as money goes digital, digital physical, physical AI, physical crypto, you're seeing the convergence of the systems coming together, the core crypto with mainstream. That's been the topic. Xin Song is the CEO of GSR. Welcome to theCUBE. Thanks for coming on.

Xin Song

>> Thank you, John. Absolute pleasure to be here.

John Furrier

>> You're the CEO, you have a very multifaceted company, and I want to get into what I was talking about in the monologue there, intro, the mainstreaming is happening, and obviously the global climate has been good outside the United States up until this year or this past regime. Now the United States kicks in stable coins, the money system is leaning in, that's my feel.

Xin Song

>> 100%, yes.

John Furrier

>> Before we get into that, explain what GSR does, because you guys have all the pieces. You've got VC... Go ahead.

Xin Song

>> Sure. Look, we've been in the space for 12 years where we're older than Ethereum actually, so we were set up in 2013 initially to be the liquidity provider for Ripple XRP on the consensus ledger, and then helping them with the on-demand liquidity project, which is solving for remittance movements being faster, cheaper, better across border. First client in 2013, but with the ICO boom in 2017 we diversified hugely and we've served to date, inception to date probably 600 token issuers. We have 180 live plants today and we serve half a dozen regulated exchanges in the world in terms of being the liquidity provider, making sure the experience is good for all the participants. So that's our core business, but we've expanded hugely beyond that as you touched on earlier.

John Furrier

>> Explain the liquidity angle, because I think this is the key right now, super important. The liquidity with stable coins has set the table, it gives a lot of confidence, certainly excitement. What does the liquidity mean for folks watching? How should they understand the role of liquidity in what you guys do?

Xin Song

>> The way I like to talk about it is any exchange is like a two-sided marketplace. Think of any consumer app like Uber going into a new city, as a taker of liquidity, i.e., a rider, you want to have the best experience. What does that mean? That means the supply of the liquidity, which is the driver, that's who we are, we have to sit there with our app open, we have to make sure that there's density of supply in any given radius of where the takers are, and you get that great experience. In the Uber it's how long does it take to hail a cab, with exchanges it's how can I transact reasonable volumes as an institution in a small space of time with the minimum amount of slippage, with minimum transaction fees and minimum spreads. So those are our KPIs, spread, steps and uptime.

John Furrier

>> You mentioned Uber because one of the things we've actually interviewed all the Uber engineers, it's a hard data problem. You got people, places and things, you got drivers, they're all independent riders at any given time as long as they have, it could be anyone, and they want to go somewhere, so you've got maps, cars, and they had to build a really complex system to do that. And distributed computing, that's great, now you've got decentralization. Are we there right now? Where are we on the infrastructure? Because Uber only happens with mobile. It only happens with the two-sided marketplace. Where would you peg our progress in the decentralization side to full flowing money, crypto, liquidity, crypto to stable coin, crypto to fiat or stable coin, there's multiple liquidity angles?

Xin Song

>> Yeah, absolutely. I think the infrastructure's come a long way since we were just getting started in the space. If you think about the trading use case, first and foremost perhaps, we've gone from no transactions happening on chain to about 15 to 20% of all crypto transactions happening on chain now. How has that happened? Well, Ethereum's been a huge part of that. We're here to celebrate 10 years of Ethereum. Moving from a proof of work chain to a proof of stake chain, and therefore becoming more efficient, allowing more throughput by having layer two scaling solutions on top of that, yet remaining secure and decentralized. Having trust, having people be able to trust that my asset's going to be safe and my transactions are going to happen with reasonable speed and reasonable cost. That then enabled the DeFi Summer of 2021 where there was an explosion of trading, borrower lending protocols, et cetera, and finally people were able to transact peer to peer with relatively low or round costs that created the emergence of the automated market maker model of exchanges, but that was still clunky, liquidity advisors had to come and suffer impermanent loss there, and the capital efficiency wasn't great. Now we've gone a step further and built central limit order with style experiences on chain. We've seen that happen in the most recent year with perpetual swap, DEXs, gain huge amounts of traction. So it's come a huge way and we've been a big contributor in the ecosystem.

John Furrier

>> And who are your customers? Who do you serve?

Xin Song

>> As I said, historically, we've served primarily token issuers, that means the corporates in the world.

John Furrier

>> ICO?

Xin Song

>> Yes, exactly.

John Furrier

>> When I want to put a token out there?

Xin Song

>> Yeah, that means the entrepreneurs that are building something.

John Furrier

>> Utility tokens?

Xin Song

>> Yeah, utility tokens, either infrastructure layer or application layer, 600 since inception, 180 live, and then exchanges. Those have been the two main end markets. But we've broadened from being just a liquidity provider to being a full service capital markets partner. That sounds kind of funky, what does it mean?

John Furrier

>> Yeah, so tell me what it means.

Xin Song

>> Think of us like an investment bank for Web3 digital assets. People ask us, "What does GSR stand for?" We often joke it means Goldman Sachs Reinvented.

John Furrier

>> I love that. I'm going to use that.

Xin Song

>> Exactly.

John Furrier

>> It's very memorable.

Xin Song

>> A couple of our co-founders happen to be Goldman employees, or Goldman Sachs Retirees, that's the other one that we use.

John Furrier

>> Retirees who came out of retirement.

Xin Song

>> Exactly.

John Furrier

>> This is what's exciting because people are coming out of retirement if they retired early and made some money or if they have domain expertise, they've seen the movie before in the centralized world. So they say okay, they can see the white space, they see the opportunities, and they can go after them. So I have to ask you, you got DeFi and TradFi, two of the concepts that are kicked around. I'm from a tech background, so to me it's back-end, front end. The front end of the market in this world, the TradFi, is booming. The demand for crypto is high, retail is high, ETFs are forming, and you're seeing all the institutions who have a front-end thing, whether it's credit or other things, are putting products together.

Xin Song

>> That's right.

John Furrier

>> So you're seeing the old guard leaning in refreshing with the new guard, and that's shifted the mindset from mercenary or missionary. expression, are you a pirate or a ninja?

Xin Song

>> I like that.

John Furrier

>> Okay. So pirates would steal and pillage things and basically take over. Missionaries are much more mellow or more technical, partnering. So I think we're in a missionary market.

Xin Song

>> 100%.

John Furrier

>> You agree, okay.

Xin Song

>> Yeah.

John Furrier

>> Explain why that's important.

Xin Song

>> I completely agree. It's got to be the focus on quality now, quality issuers. What does that mean? That means real product market fit, real adoption, no fake volumes, no use cases that are solutions looking for problems, in fact, that's what we've seen, because any foundational technology that is disruptive will have this kind of shift, and now the business models are becoming clearer.

John Furrier

>> There's always an underbelly in all new trends, there's always things happening, but I think that's important because I think adoption is key, but what I find fascinating coming from Silicon Valley here now, living here in the studio and working out of here, is that this money on the table, you can't ignore money. There's real money to be made. Share your thoughts on that because if you go back to the ICO days, it was a promising market, people were enthusiastic, but people were just taking their tokens and converting it to fiat. And some ran to the hills, bad actors, but then it went through the nuclear winter phase, but people built businesses, so now this money, Wall Street does not ignore money.

Xin Song

>> No, of course. And the network effects that are available by having a token that incentivizes adoption means those network effects are amplified more so than the Web2 space, but just to double click on what you said earlier about pirates versus missionaries, I like that because we've always tried to do the right thing. We've tried to be very regulatory forward. We're the only market maker to have a payments license in Singapore, to have acquired a broker dealer shell here in the US where we're expanding rapidly, to have no action letter in Switzerland, to have a registration in the UK FCA. Why? Because we've all come from regulated markets. We understand that it requires people that are consistently delivering on promises, obligations for the KPIs I mentioned earlier, so that we have orderly markets developed in a healthy way. And that means we've expanded from just being a market maker to being a full service partner. That helps hold the hand of any entrepreneur trying to build in this space from inception until maturity. That means the first institutional ticket in to help guide them, but it's also helping them to achieve mass adoption by being involved in digital asset treasuries.

John Furrier

>> Capital market service is essentially funding in liquidity.

Xin Song

>> Exactly.

John Furrier

>> It's the concept. It's interesting you bring up that long game view. There are folks in crypto that I've worked with, the leaders, the ones that are winning now, especially as it's going mainstream... And by the way, it's more migration coming in, new migration coming into the sector. The long game players got it. It's like they can see the future. And they're visionaries, I guess you can call them visionaries, but they did the work, because they knew that if they don't do the work, the regulatory piece could be a fatal flaw.

Xin Song

>> That's right.

John Furrier

>> Explain why that's important, because there's no shortcuts here. You guys took the long game approach.

Xin Song

>> Exactly. We have to be long-term greedy here. There are plenty of firms that have been speculative, have made a quick buck and gone away, we don't believe that's the way to have real progress in this field. I think institutions coming in and having mainstream adoption, we're just at that inflection point. We've been waiting for this for 10 plus years. It's encouraging. My old employer, BlackRock, issuing tokenized money market funds bill on Ethereum, that's a game changer, because-

John Furrier

>> It's validation.

Xin Song

>> Oh, it's validation, but it's more than that. It solves our own pain point as well as trading firms that don't want to take counterparty credit risk of exchanges, because we've seen what happened with FTX a couple of years ago. We get to solve that problem because, one, we get to park these assets at banks that give us legal protection. Two, we get to enjoy yield on top of that, and so it's security. And that's going to build trust and more adoption.

John Furrier

>> Trust and adoption is very critical, and also confidence, right?

Xin Song

>> 100%.

John Furrier

>> When you have trust, confidence and adoption, then the money's flowing, the system is built. And what I find interesting and I love about this market is that you have communities, which Ethereum's got a great community and all crypto infrastructure players have community, especially around all the flows, but when you bring in real institutions, it's almost a team sport in the sense of figuring out, because you have now domain expertise. You were a BlackRock, so you saw the machine work there, and now you're on the crypto side coming into the mainstream. So what is your perspective on as the BlackRock's come in, as the JP Morgan Chases come in, as these in institutions come in, they're going to bring something to the table, what is it that they bring to the table? And if you're Goldman Sachs Reinvented, GSR, they're coming in too, so are they a friend or foe, or is it more tongue in cheek?

Xin Song

>> We're friends. Trading counterparties, we have great relationships with them, but I think it's a new paradigm. I think these firms coming in brings validation, as you mentioned earlier, and confidence begets confidence, that's the main thing. For example, we could talk about Apollo. Apollo is another firm that has made big splashes in this space, tokenized private credit, ACRED, but combining that brand and that capability of being a top tier private credit fund and then mixing that with the composability that DeFi offers to be able to add leverage through a looping mechanism on Morpho, that's a very unique combination that wouldn't be achievable-

John Furrier

>> I like where you went there, let's double click on that, because a lot of people ask me, "Well, why are they re-plumbing the system?" Because I try to explain to people, "Look, this is infrastructure. This is financial plumbing in a new thing." Why not keep the old way? What's the benefits of the new system?

Xin Song

>> You cannot stand in the way of progress. Let's take New York Stock Exchange as an example. Let's think about before the 70s the underlying plumbing was paper-based, literally securities were kept on paper, that created problems because, hey, look, the volume got so large that the exchange had to stop trading on a Wednesday just so we could shuffle the papers around. That moved to a digital system. We could trade five days a week. Now what's happening is that's all moving into a decentralized ledger. That's more efficient. That enables more liquidity to happen, that enables more efficiency of settlement instantaneously. That's benefit to the underlying users.

John Furrier

>> You mentioned credit, you mentioned leverage, what other things do BlackRock of the worlds get, Apollo, JP Morgan Chase, what other things do they get from leaning into this privatizing, say, funds you said? Things like that are happening.

Xin Song

>> It's happening. It's happening. It's also increasing their reach because why are some funds only able to have subscription redemption cycles once a month, for example? Again, it comes down to efficiency, how do you measure the NAV of a fund? Sometimes it's difficult because these are not always easy to market.

John Furrier

>> It's impact and efficiency really, the impact being money and efficiency being in how you do it.

Xin Song

>> Lowering the barrier to entry so that more people can access this where it's appropriate for them on a risk-return perspective, of course. We still have to have KYC and credit investors, I think protection still should be there, but where possible, all else equal, lowering the barrier of entry, more investors in, more money, as you say, that's incentive for everyone. It's a market-driven economy that creates good competitive effects, so more access, more investors and money, more liquidity, and ultimately more efficiency. That means instead of settling T plus three, T plus five, you can settle instantaneously. That's also money. Time is money. Where interest rates are where they are, that's money.

John Furrier

>> And the ownership of assets and making leverage in those, real-world assets are coming on chain too. Basically, it's digital convergence in real time. We're finally seeing the cliche of digital convergence at a first-party level. All right, let's talk about the Ethereum 10-year anniversary celebration. A lot of progress has been made over the past few years, a lot of debates, this versus that. Solana, Ethereum, other tokens are out there, and multiple chains. There's a lot of competing philosophies. So how would you grade Ethereum now and are they in a good spot? Is there a to-do list in your mind? What's your thoughts on Ethereum?

Xin Song

>> Look, I think they've achieved phenomenal success in the last 10 years, but there are still plenty of things to do, there's plenty of wood to chop, but let's celebrate the success first. So first programmable blockchain with smart contract technology, a 10-year track record of being relatively stable and reliable, and confidence that creates, that's huge. And.

John Furrier

>> Ecosystem is pretty massive.

Xin Song

>> Yeah, ecosystem. The density of developers there and the amount of talent that's creating application layer protocols there, that's probably second to none. Of course, there are competing chains, and some of them are monolithic chains that are able to also transact higher throughput at lower costs, but it's a trade-off, security versus efficiency, and so I think that's where they stand today. They've also managed to switch from proof of work to proof of We were talking earlier about me mining Ethereum in my apartment with graphics cards, and that heats up the room. That's lowered the energy usage of Ethereum. That's important to people these days, right?

John Furrier

>> Yeah, of course.

Xin Song

>> We want to be conscious of the environment. So huge progress. What else do they need to do? Well, okay, they've attracted retail users from the DeFi applications, they've attracted institutional investors to believe in the stable coin narrative, a post-genius act, the issuance has been huge. So what are we at today? 300 billion dollars of market cap in points of which Ethereum has a 55% market share, that's pretty impressive.

John Furrier

>> Yeah, it's significant.

Xin Song

>> But how do they continue to build trust? I think there's a couple of initiatives happening. One is this trillion dollar security initiative where they're talking about how can we have enough confidence that if we have a trillion dollars secured on the network that it's not going to break down. So if a billion people can each hold $1,000 of value on chains, that's real prime time adoption. And then other security measures that they're going and executing on. I think there's still a huge road map ahead of us to really get to mainstream adoption, but we've come a long way.

John Furrier

>> Well, great to have you on. Again, this trailblazer program is fun to celebrate the people who have been there, done that, and continue to work on the key things. My final question for you is, one, to the builders that are watching, people who are building apps, building technology, whether it's infrastructure or smart whatever the layer of the stack, what does liquidity mean for them? If you're successful and you guys are doing well and continue to chop wood, as you said, your success enables them to do what? How would you answer that question?

Xin Song

>> That's a great question. I think the interesting thing about liquidity and digital assets is it's such a fundamental component of how the system works. If you think about securities and stocks, how my smartphone works has nothing to do with the value of the manufacturer of the smartphone in the stock market. However, Ethereum, you've got to pay gas fees, you've got to buy and sell. So liquidity providers are critical because we're the picks and shovels. We make sure that liquidity is everywhere it needs to be consumed. We're streaming that to now brokerages and payments providers, and the stable .

John Furrier

>> You're a key piece of the puzzle.

Xin Song

>> We're a key piece of the puzzle. You have to have that liquidity to be able to use the network so that it has value, that's where we come in, that's where we partner with our clients and hold their hand. And we're a little bit like the top tier banks that bring companies to be listed on New York Stock Exchange and IPO. If you want quality partners, if you want to be a top tier player in this space, the missionaries, as you said, not the pirates, then you have to work with quality partners as well.

John Furrier

>> Well, I was supposed to be in Singapore for the F1 and the big event, Ethereum last month, missed it. Next time I'm in Singapore, I'll definitely see you. Thanks for coming on theCUBE.

Xin Song

>> Hit me up. Great to meet you.

John Furrier

>> GSRs here in theCUBE. Again, breaking down all the action, liquidity is a big piece of the puzzle for builders and for the ecosystem. Money's flowing, people are building, value's being created and extracted, efficiency and impact seems to be the theme. Again, Ethereum's got to continue to do the work, continue to chop the wood. I'm John Furrier. Doing our part, chopping the wood here in theCUBE, wall-to-wall coverage. Thanks for watching.