From running a node on your computer, a solo staker to like being a institutional grade operator, there's there's a couple of things that differ. We tend to over perform the network a little bit. We do MEV interest timing games, you delay a little bit, block proposal so that you can get a little bit more MEV and then like we are the largest
independent node operator. Welcome to Epicentre, the show which talks about the technologies, projects and people driving decentralisation and the blockchain revolution. I'm Frederica ANZ and today I'm speaking with Lazo Sabo who is the Co founder of Kin, an institutional great rewards platform which offers staking and defy access. Before I talk with Lazlo, I'd like to tell you about our.
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Deploy on the EVM compatible Nosis chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at nosis dot IO. Last, though, it's a It's a pleasure to have you on. Thanks for having me. So you've been in this space for quite some time, but maybe let's focus on what happened before. So tell us about your journey leading up to Founding Killing. So I I'm I did an hospitality school, so nothing related to to
tech or or even crypto. Then I discovered Bitcoin in 2014. I had a in I had found this guy very interesting in in Japan actually that was building BRG wallet. I don't know if you remember it was one of the largest Bitcoin wallet at the time. And, and he explained me Bitcoin and and you know, digital gold the the old story behind it. So I, I bought my first Bitcoin back in Europe and and then in 2016, I had a childhood friend that started to work at consensus.
So consensus in 2016 was working at the on variable, which is basically trying to to do a decentralized stable coin, like a type of maker at consensus. And yeah, I was just mind blown by this idea of like world computer Etherium decentralized applications. So I, I invested it in Etherium in some ether in 2016, but I never, I never really came from for, for the, the, the, the financial aspect of it. I was, I've always, and I think still very bad at like managing
my own money. Maybe I shouldn't say this on the podcast, but so now I came for the kind of the tech and then like 2017 was the crazy ICO period. And, and then I was just formal. I was already an an entrepreneur since 2015 because I launched my tech recruitment company ten years ago. So also when I started to to look at at block chains and and crypto in general. And in 2017, I was just two things. First, frustrated to not work with the engineers I was
working. I was sorry recruiting for other companies. I wanted to build products with them and not recruit them for other companies building Co products. I want it to be, you know, on the other side of the of the river. And then also I was just formal by the blockchain and crypto echo system as a whole. I think I did a first meet up in 2017 in Paris. And when you do a meet up, like you just find bunch of nerds builders all together.
And I was like, OK, a week after I was like, I'm done with recruitments. I, I, I'm still sure of this, of this company in the South of France, They're still, you know, good friend partners. And I'm like, guys, I need to, I need to, to try to, to build a company in blockchains. And that's what I did. There's a lot to unpack here. So how how kind of coming from a hospitality background, how did you get a lack up in kind of tech recruiting?
Yeah, there was I think just my, my, my friends in Marseille, Salsa friends at the time just went to be and said, Hey, we, we want to build a company. We don't know what to build. We just want to be entrepreneurs. And because we don't think we, we any other companies will will like to hire us. We we are not recruitable. This is a great start start for tech recruitment company. Kind of like trying to kind of help unrecruitable people.
That's right, exactly right. You're the best consultants because at least you, you, you can, you can tell not to, to, you know, candidates not to, to look like us at the time so that they had they get more chance to, to get hired. But yes, and, and it came to me and, and I was still finishing my hospitality school. Say, Hey, you are from Paris and tech is, is very centralized in France and you might know more companies that want to recruit engineers.
So do you, do you want to be part of the journey? Why we find the engineers You, you have this relationship with the start-ups that want to recruit. And I'm like, yeah, well, guys, OK, but you know, I need to finish my schooling and everything.
So if it doesn't work after months because I don't have time or I'm not just delivering, you know, we'll shake hands and, and, and, and you'll move on. So that's we, we started and it kind of worked and, and then I got just very, very excited about the tech industry in general. I like and and very excited about engineers. For me was. Kind of the. Good people, the artists of like the 21st century. It's like, I think that it was the best part of my job is like,
sometimes it was a hard job. Recruiting is a hard job. You have to, you know, scrap numbers on LinkedIn and then call like 100 people. There's 70 people that won't be interested or even not answering you with 27 people that are, you know, answering you but say they're not interested. Two people that literally insults you. It's like, oh, where did you find my number?
And maybe one person saying like, Oh yeah, maybe this job might be interesting for me. So it's a hard one, but sometimes you have a discussion with 30 minutes an hour. Was an engineer talking about like AIO at the time, you know, blockchain and and you, you, you just like find this person so passionate. It's like, wow, if I get to work with this person every day, my life would be better. That that that's, that's a super nice blockchain origin story.
Let's talk about how you honed in on kind of the staking space because kind of kin kind of started off any theorem staking. So how did you identify this as a target for your for your own company? Yep. So 2017 eighteen from the recruitment background, the only
thing I knew was like I try. I was trying to put C VS on Shane wallets for candidates that would certify the fact that he worked for this company and on this mission and and was the next employee he would he would show certification there maybe with zero knowledge. You would, you know, kind of like a decentralized professional ID. Then we of obviously people would try to expand this to the French state in 2018. They were like, what the fuck
are you talking about? So, so then we pivoted and in 2019 we did our first blockchain as a service platform at the time in France, consensus actually had a office in France and and most of the proof of concept being done were on private blockchain. So I kind of like we're deploying like private theorem, Quran, Corda, these kind of stuffs where it's like today sounds, sounds terrible.
And I think I think they were and in but I was looking at the staking space from 2018. I had friends at Cosmos like Gotima and, and others that launching or even like, you know, the Ogs like Chorus one stick fish P2P. They were launching validators or participating in the Cosmos network. For me, it was just too, too much of a retail market. I didn't understand it right. Like I couldn't grasp the, the, the understanding of it and seeing at the time buys and shells.
Joe Le Lewis explaining that the platforms exchanges at the time in 2019 and 2020 will be able to offer staking to their users while retaining making it as a business model. I was like, OK, now I understand it like AB to B type of company that you'd leverage to then have like indirect hundreds of thousands of millions of users. So in 2020, the first staking product we launched was for Pocket Network. Is there a decentralized RPC network?
We were offering RPC ourselves. So like, wow, if you can decentralize it, this is this is genius. So like Michael the CEOI met him in Berlin, actually in Berlin blockchain in 2019. And I was like, wow, this guy is so smart, so bright. And if, if the future is decentralized, the access of blockchains are decentralized, that that could be, we could potentially be part of it. And in 2020 it comes to ATHC in Paris. We do in advance and together in office.
And and then he covet it. And he, he comes to me and say, hey man, like I, I need the professional infrastructure company to offer staking to my investors while deploying nodes. And it's a pure proof of stake network. So that's not a delegated proof of stake network, meaning that every X number of tokens in that case was like 15,000 number of token, you have to launch another validator. So we're not running one validator on pockets.
We're running like thousands of tedators actually, right. It was a, it was 4 of tenements at a time. And anyway, we build this, we was like, OK, we didn't find a market on, on our PC. So let's focus on staking in summer 2020. We, we ready to launch the product. We launch the product and you know, it's defy summer, so bowl price goes up. The demand for staking is just like insane.
And suddenly we from zero customers and, you know, struggling with blockchain for for two, two years, two years and a half. Like we had like 50 customers in two months right from everywhere in the world, like US, New Zealand, Europe. So, yeah, we, we, we, we, our product was terrible, but we found, we found the market that was the first staking product we launched. And then Ethereum was a very natural evolution for us because Ethereum was the first major pure proof of state network,
right? You would have to run a validator every X number of token as on pockets every 33 you have to run a validator. So we were, we were good at like running validators at scale on neon pockets. It's just, it was a much bigger protocol to secure a much bigger playground. So we, we launched our Etherium operations when the B country launched in December 2020. And quickly we, we also had Lido as a customer.
So I have to shoot out to the Lido team for trusting us at the time because we're, we're not known at all and we owe them quite a lot. And then yeah. And then, you know, guess can can give you more details about the rest and rest is history. But that's that's how we started. Give us some neons for what it takes to kind of run a validator, kind of add an
institutional grade for clients. Because kind of, I think a lot of people will have experience with kind of like running kind of like an Ethereum or Gnosis chain or so validator. But usually it's pretty, there are some challenges and these are kind of the networks on which it is super easy to kind of run nodes, right? Kind of like there's a lot of networks where kind of running a node is extremely it, it kind of it, it requires very close maintenance and the professional
expertise. So kind of give us some nuance to kind of like what it takes to kind of operate this as a business. No, that's a very good question. Yeah, First off, you're right. There's some block chains, for example a theorem or Cosmos where it's easier to run validators than like on TON, for example. For those who know Ton, we love TON. It's a, it's a fantastic block chain. It's just harder to to operate in.
And yeah, I mean the even on let's say a theorem from running a node on your computer, a solo staker that you mentioned to like being a institutional grade operator. There's there's a couple of things that that differ. First, we tend to sometimes other and I mean sometimes, but on regular basis over perform the network a little bit. I guess that's our the first type of advantage that we offer our clients, meaning we, we do, we do MEV.
We introduced where the some of the ones that interest timing games in I think September 2022, if I recall, because there was, there was papers from the foundation, but not nobody really like put it in production so that you, you delay a little bit the block proposal so that you can get a little bit more
MEV. And then like we did a lot of research was like how the network will be impacted by this and with all the, definitely all the operators and the foundation themselves so that we work hand in hand not to slow down or not to impact Ethereum as a whole. And, and, and we found like kind of a recipe. So that, so I mean, this, this is the first advantage. The second is definitely so the rewards, right? The rewards part.
And in, in on chain rewards, launching yields, there's always this like risk and rewards components. So rewards like you, we try to, to over perform the network a little bit. This is the case on Ethereum. There's also the case on Solana and other networks. The risk cards is also very, very important when you try to be institutional, right. So you what you're trying to offer first insurance in case of slashing.
So this, you know, I think 3 to $4 million is the total amount of that has ever been slashed on the beacon shade, which is quite minimal if you, if you look at like you know, the number of billions asset our states. But still we, we try to, to be insured in case there's a slashing events for clients so that they are sure their clients will be paid back. Then we try to have like internal security measures. We, you know, try to avoid double, double voting, double
proposing. And we, we double signing and we have a couple of, and we published some blog posts with the foundation on this. Actually, even our monitoring validity monitoring tool is open source. You can you, if you're a solo Stoker, you can use it, but the, the you, you'd never want to be slashed, right? And, and slashing measures are like a Swiss cheese. It's couple of layers. It's, you know, double slashing,
double voting prevention. It's definitely insurance, it's definitely monitoring at different level, external and internal monitoring. It's the signing. We, we use Web 3 signer, but we might use like more type of HSM signers when, when we, we sign locks in in the future and you decouple the signing from, from the validated infrastructure and then you spread this validated infrastructure across the globe.
And, and lastly, you, we use different validated clients, Prism, Lighthouse and Tekhu. We were one third, one third and one third. So we'd like splits, but we realized that if you run a majority clients, so for example, Lighthouse and Tekhu, sorry, Lighthouse and Prism, sorry that I have like more than 33% of the of the network. You might in case of a large slashing events, a bug on the clients, the you know it, it might be very damaging for all
infrastructures. We, we decided to actually reduce drastically the Lighthouse and Prism exposure that we have and run a majority of Teku by the clients. Anyway, I hope I don't go too much into the weeds, but all of that is how you differentiate of from being a solo staker. Maybe we can just very quickly kind of give some colour to the some background to the slashing discussion.
So kind of the background here is that kind of if you double sign, you're always slashed, but kind of if you just if you're validated, just goes down and stops kind of attesting and proposing blocks, then you're slashed based on how much of the network kind of goes down with you. So kind of if you're just a Sodo staker and kind of you lose power on your on your server or something that's that actually
doesn't get you slashed a lot. But kind of like if you and half of the network go down, that is actually a very stashable event. So kind of you want to prevent, you want to prevent kind of your users to be penalized that way by kind of being caught in a situation where they are a part, they are a large part of the network or they are part of the large part of the network that kind of goes down, right? Yeah, that's right.
But so so you, you you said it like being down will be always less damage able a part of a larger part of the network goes down at the same time than being slashed. So we have a mantra eternities like better be down than slash, right? And and there's there's a couple of events that you you. It's OK to be down or you're, you're fine to be down, right? Yeah. Then like avoiding session events. Tell us about the team that kind of that it that it takes to kind
of operate this. So kind of, I just know this kind of from our side, kind of we operate a number of nodes and kind of like archival nodes and so on. And I know there's a that our dev OPS team, they do a lot of monitoring and they have kind of like they have on call duties and and so on. So, so, so how how is that set up with within kiln and how many people do you have dedicated for kind of just maintenance of infrastructure?
Right. So we have a team and infrastructure for us is two sides is is like running the nodes, but it's also sticking data, which is also like setting you apart from like being a social, like a social staker like for example. And I'm happy to come back to it. But if you're an ETP or an ETF and you offer a stick ETP, then you need the granularity of the data to get taking reconciliation. What's the NAV, what's the, the, the rewards on, you know, daily,
weekly, yearly basis. The the data needs to be. And that's actually a very, very tricky part indexing. I mean, you know this right? But, and in block shins, you have two types of data. You have like the execution later data, smart contracts and the consensus layer data and consensus layer data. We very few in this in on the planet to just like index it because it's usually means you
need staking data, right. So it's basically it's usually like institutional staking providers that that does it. So we have a team of 15 DevOps just to running, you know, all the infrastructure running the nodes on 47 different chains. And as you mentioned, there's, there's on calls, so 24/7 they have an application on their mobile and they can be waking up at 4:00 AM on Saturday morning. And, and, and that rotates in to
today. It's mainly concentrated in Europe, but in the future we could, we could have teams across the globe. So that's, you know, maybe like you, you don't get waking up in that 4:00 AM in the on Saturday morning. So and then on the data part, it's, it's another 15 other people they're working indexing 20 different shades. So that's, and it's valid and agnostic, right. So we don't, we don't only index
our validators. A lot of our clients actually are using our data to index other providers because they're using 123 or 4 providers, because they want to spread the risk, because they, they want to have more coin coverage and so forth. But they're still using our data to, to, to index the, the network and then get the NAV, get the, the, the, the rewards on all these validators and so
forth. This being said, you know, coming back, that's a recruiters talking, It's not about like number of, of engineers at the end, right? This is never about the, the number of engineers. It's always about like spending a lot of time to finding the, the right engineer. So you might say, oh, 15 and 15, oh, 30 people, a lot of it. It's a big team. Well, I mean, but the number of things they're doing, it's quite a small team, I can tell you right.
And, and we are we and I, I meet every one of them. I know all, all of their names. Some of them I've been working for, for for five years and and some the ones, for example, in charge of Ethereum and our Ethereum infrastructure school emixes or Sebastiano. He's doing a lot of research himself. He's doing open source with our Ethereum validator. Watch her being like, what are you doing tool to to monitor Ethereum validators? He's he's doing open source with comic boost.
So basically the preconf project past PECTRA that we'll, we'll, we'll use working a lot with the foundation doing some research about the impact on MEV, for example, the network and so forth, like so on and so forth. So, so they're not, they're not only dev OPS, right? They are protocol specialists in a way, yeah. Yeah, absolutely. Can you give us an an idea how much of the stake ETH is stake via KIN and kind of compare this to other networks you're also
operating on? Yes. So in total we have 13 billion assets that are staked on the platform. It's don't want to. So we have 4.6% of the FM network, which means in I don't want to wrong the numbers. I think I think would mean like between 5 or 6 billion of assets or so dollars of ETH for the states through validators running fourteen 9000
evaluators. And yeah, that's, that's, that's I think kind of about it. We we say that we are the largest independence like node operator, meaning you still have like large platforms like Coinbase. You can argue maybe Binance they're running modems than than we do. But like as an independence staking provider, yeah, we, we, we tend to say on a theorem, we're the largest. What are your biggest clients?
Yeah. So we work with exchanges, wallets, custodians, asset managers, so the, you know, the ETFETP like and new banks and you know, maybe maybe the banks and the like that are coming into the space and and we have a couple of direct clients. It's, it's, it's a small portion of a business, but when you go on Ledger for example, or you go on Safe you, you you know Safe has a marketplace and you can
stake directly through DAP. So you will see kiln there most that I would say that's five to five to 10% of our volume, 90% of our volume. It's actually our white label infrastructure that is used by, I don't know Bit Panda that is used by Kunbi's wallets that is used by you know five blocks and alike so that their customers either retail or institutional customers can can stake. We shall probably stress that kind of like all the staking that you guys do is non
custodial. So I mean, kind of like if you kind of have funds on an exchange, on a centralised exchange and kind of you let them stake for you, kind of they are in custody of your funds, but you are never in custody of someone's funds. So kind of how does this work on a technical level? Yep. So the exchanges and in exchange, for example, we use our AP is that then like points to evaluators and our AP is automates the flow, the sticking and then staking flow and also
give them the right data, right? Hey, today you have staked this number of amounts and you have earned this number of rewards for this number of customers. A wallet will use, for example, safe will use a smart contracts and we have a smart contract platform. So that on a theorem, for example, you can stake 32 ETH a validator.
If you want to stake validator, that's how you know you are for example, Co swap is on also the the it's the white label solution that is used for the the swapping engine on on on the safe interface. We are now the the the white label solution for the the staking engine on, on, on on the safe dashboard. For now, you can only stake 32 ETH, so a validator, but maybe in the future you will be able to stake any amount of ETH if you don't have 32 ETH to stake.
And in that case, we have a smart contract that pulls customers funds and then redirect to a validated that's validated agnostic. For example, some of this smart contract on chain rewards management platform is used by Condes Cloud, for example, in and they're running the nodes, but the the for Coinbase wallets.
But they use our smart contract platform to offer pooling staking so that their customers non custodial can stake any amount or consensus is offering 32 ETH staking while using our our smart contract on mini mask. So yeah, that's, that's the type of non custodial staking that we we can also offer to our to our customers. Custodial staking is the exchanges, the asset managers and some of the the custodian that are regulated custodian or non custodial staking for
wallets or technology custody. That's super interesting. Kind of I want to come back to that in just a second, but maybe kind of let's zoom out a little bit. So kind of when we look at kind of the evolution of, of staking on Ethereum or maybe even, you know, preceding the, the switch to proof of stake on Ethereum, what do you see as kind of the major milestones kind of in the history of proof of stake in this ecosystem? Yeah, that's, that's a good question. I think.
I mean, the first, I remember doing extension like these sort of staking, right? Like the first staking protocol were like 2013, 2014. We're, we're kind of the first iteration of stake. And then like in 2014, 2030 for 2014, theorem already speaks about proof stake in the white paper. And they say it's going to be next year, right? Next year for, for the next 5 years. And and then in 20/17/18, you start to have, I would say the, the first proof stake network
that launch at scale. So it's Cosmos, it's Tezos in 2020 and basically in 2027 to 2018 is like, hey, we we're just going to do like a smart contract platform. We're thinking it's not going to be scalable.
At the time, the scalability was not yet, I would say part of the discussion or even like, you know, technically available or in 2020, you start to have smart contract platform using staking to say we're going to be a proof of stake network and we're going to be scalable on L1. So that's Solana. And then in, in in the end of 2020, a theorems 546 years after saying that staking will be the end game, finally launched the
beacon chain. And, and two years after launching the Beacon chain, they, they move, you know, finally from proof of work to proof of stake in that's kind of the history of proof of stake network. The history of adoption of staking I would say would be that we feel that until 2019-2020 it was and even even ahead because Lido also was, was a wells to retail type of type of adoption. I would say since 2019-2020. Then the adoption became very platform, right.
So you you would start staking from an exchange, you would start staking from a wallet, you would start staking from a custodian versus you invested in the IC O of Solana and you would delegate directly to a validator, right? Like nobody, none of the Ledger fire blocks safe or it turned out Coinbase or buy bit at the time would tell you, Hey, by the way, you have, you know, Solana on that platform. So you can start to stake. This came a little bit after.
And so the IT was very platform adoption, I would say from 2020 to onward. And and now you really seeing because they everybody say ho in the institutional adoption, what institutions means, right. But you're really seeing like traditional financial institutions that are and will start to stake and, and it starts with the ETPSETF, right. So for example, in Europe we have Vanek as a client.
Vanek is, is, you know, a traditional financial institution in the US that has ET PS product in Europe and can start to say you have a ETH staked ETP so that you invest in a theorem, but you also invest in a theorem that get rewards annually mistaking and it's not yet available in the US, but you know, you might argue that maybe this year or the next year now that's the administration is changing and it's becoming pro crypto stinking is going to come for these products.
So, and, and then you know from, from from now on, other institutional type of players will, will start to offer staking the banks, the new banks, the banks, the, the, the other large pension funds and edge funds. And, and we we have very meaningful discussions with these players who were looking at us like crazy DJNS 3-4 years
ago. Yeah. I, I, I totally hear that. One of the things that kind of no one I think initially kind of foresaw was the emergence of both kind of liquid staking and then re staking. So kind of with liquid, liquid staking, the idea is that kind of you, you stake and for instance via Lido and you kind of get a representation of your stake choking back.
So you can use that as collateral and you can have leverage up how, how do, how do you view that because kind of you, you don't offer that to your institutional customers, right. So there's some opportunity cost for them there. So we do, we do offer liquid staking to our customers. And, and there's, there's two offering we have it's, it's one if you're a retail platform, an exchange of wallet, you can offer liquid staking. We do liquid staking as a service with pooling, right.
So let's say you're an exchange, you want to launch their your own E ETH, the name of the exchange or the name of the wallet ETH. And in that case it's, it's very similar to white label Lido if you want. And we do offer liquid staking for institutions, ETF and the like with we tokenized the validator, right? Because we think the ETF needs liquid staking because you, you, they can't stake us more than a specific amount of the of the ETF of the farm because you know, they still need to be
liquid on a daily basis. They have t + 1 and T + 2 redemption requirements. And the way for them to stake more would be to use liquid staking solutions, but they don't want to use pooling solutions, commingling solutions because it would mix jurisdiction, right? Like when you stick on Lido, for example, you have people from all over the world sticking on, on in the Lido pool and we think
it, it doesn't fits them. So we, we, we did is we, we tokenized the validator and we represent it with an NFT. And this NFT can be can be traded from one ETF to the other or from one ETF to a market maker. Anyway, coming back to liquid staking, I think it's it's a fantastic product and Lido really explain to the crypto market with the the adoption of the product that it's a needed product. And it the first staking is is is the first it's the primary rewards, the risk free rate, if
you will, of crypto. But it's not D5, right? It's, it's a, it's a protocol reward where liquid staking became the 1st T5 product and start to flow this reward back to lending boring protocols or liquidity, providing our, you know, options and, and and risk free rate protocols and so forth. So liquid staking is very
needed. First of all, 'cause you, you need of you need liquidity, but you also you might need higher source of rewards and you, you can't combine this this staking rewards with, with other type of rewards if you don't have a liquid staking token. So yeah, I think, I think your liquid staking is great. Of course, it introduces a bit more risk, right? What are these risks? So of course there's more contract. Bye. You know, staking is the, the
risk of staking is quite low. I told you it's, it's 33 to $4 million slashed on dozens of billions of dollars of, of assets are staked on, on liquid staking. You, you start to have a complex smart contract and we, we, we build this smart contract ourselves. So I can, I can tell you there's a rest there. It's not risk free. Then of course you can mitigate it using great auditors and, and, and using continuous smart
contract monitoring tools. And of course the, the security standards from like 3 years ago to now completely changed. I think the industry is, is is is much more, much more mature in that regard. And then re staking, yeah, I can talk about re staking as well. But I, I see maybe just this, I see staking as the the use of the staking position horizontally and I, I see restaking as the use of the staking position vertically, right.
Like you, you think you oh, sorry, the other way around anyway, But basically, yeah, restaking embedded by Agnaire was explaining to the market, as Lydo explained, you know, to the market that, you know, liquid staking was, was a thing and was the primary D5 source primary D5 protocol. That's, you know, re staking could be used to secure other networks or other applications that needs decentralization. It's quite complex. And I'm sure you've launched
Federica your your chain. So you know, it's complex to launch a chain and to manage a network, right? You have to manage, go to markets or you have to manage, you know, a lot of validators and do these two things at the same time is, you know, actually very, very time consuming. It's it's often not at all the same thing. And what's your chain and your token is getting worse if you, if you don't focus on go to market.
So I can hear your calm and say, hey, if you are a start up, if you're a project and you want to use the decentralization, this validation marketplace, we already have a set of validators that you can use and you can use a platform or marketplace to bootstrap your decentralized application and project. Yeah, that's that's that's very compelling.
Let's see you know how it and where it enhance with the maturity of all these AVSS and startup that is launched with with Aguilera. Not symbiotic is the kind of the second mover on the theorem and Babylon on on Bitcoin, But but that's interesting from a a a startup project digitization application point of view. That's also interesting from the other side of the marketplace. It's like, hey, I have Heath, I have Bitcoin and suddenly you introducing this new type of
rewards on the market. This is not staking plus defy, it's staking plus staking. It's two type. I get it rewarded two or two, two times or three times to secure one. Two or three network was the same security pool coming from Ethereum or Bitcoin. Yeah, the you know, that's, that's a very interesting concept. And and that's something that our clients, even if they are taking the time to use or integrate these products, they're still they're looking at
on on regular basis. And, and I'm I'm confident this ecosystem will grow. Do you think it potentially messes up the security of the underlying protocol, in this case Ethereum? Yes, it could for sure. Leveraging the security of Ethereum with five or ten different networks with the same security pool that could mess up Ethereum. That's that's a, that's a very good point. And I think it's hard to tell where the guardrails should be. Is it at the protocol level?
But then it's not really permission less is it at the, you know, the, the Dow level, the community level, maybe combination of all of that. But you know, leveraging on Ethereum should be prevented somehow because you, you're not yeah, you, you, you are playing with the security of the network. So that's the risk for sure.
But you know, does like an Oracle protocol or a stable coin or anyone building around Ethereum or even Bitcoin now won't want to leverage the security of the underlying protocol. I think they, they, they should, right? I think, I think it's a, it's a interesting mechanism that they they should leverage.
How do you see the staking ecosystem kind of evolve over the next, Let's talk about long time scales in terms of blockchain, let's let's say over the next 5 to 10 years, how how do you think it's going to evolve? Is it going to be all kind of institutional grade staking providers or do you think we'll still have some solo stakers? Or do you think the pendulum will actually swing the other way and kind of we will have a majority of smaller stake, smaller solo stakers or staking providers?
Yeah, that's, that's, that's a very good question. And I'm still hopeful in the like decentralization aspect of it, even if you know, there will be consolidation. And I mean, I'm, I'm not, you know, playing on for, for, for the kiln flag and out because of course, you know, having, having more part of the, of the market is, is one of our objective. But, but, but as well as like keeping the network
decentralized. I think the difference between Bitcoin, because if you look at Bitcoin today, mining, like mining, is a clear consensus mechanism that push the small players out of the network, right? It's like if you don't have like 3, if you don't pay your kilo water three to four cents, while, you know, having like great ASIC infrastructure to run it to validate the, the Bitcoin
network, then you're just out. And today, you know, they, they like Frank, Frankly, Bitcoin might be validated by 4050 main companies, if, if not less like, you know, there's, there's a lot I, I, I can lease to at least three companies that have more than 10% of the, the, you know, validation power on Bitcoin.
I can list you only one company that has this on, on, on Ethereum. So I think proof of stake in that sense is, is a better consensus mechanism to keep the network decentralized because even in five years or 10 years, it will be easier and easier for a solo staker to run a validator on his computer, right? Which is the, the main difference from proof of stake, though all had happened. That's, that's the question she asked in the 1st place.
I think there will be definitely a combination of it. I think that there will definitely be consolidation because you know, these ETF example, they will, they will, they will start to, to use one, two or three or four providers and they will need, you know, performance insurance.
I mean, everything in social grader that mentioned to you earlier, which a solo staker cannot provide, but maybe, maybe there's a, there's a solo staker type of aggregator that helps them to decentralize also their staking sets because they, they, they have the incentives to keep Ethereum decentralized. If you, if you think about it as well, right? And I think a part, a part of the, the validation poet will, will be run by solo stakers and the ones that are
decentralization maxi. And we need them, right? We need them to keep Ethereum decentralized. So by the way, the one of the reason we are doing, we're offering liquid staking products and, and D5 products to our customers. We can talk about it later is because of course they are asked it, but also because like we don't want to be in a world where we, we have to keep
growing on the staking business. And it it actually could potentially hurt the decentralization of the network itself that we we are trying to sink her in the first place. There's efforts under way kind of in the Ethereum ecosystem to kind of make staking easier in terms of capital requirements. So currently you need 32 ETH, which is $100,000, and kind of the idea is to kind of reduce this markedly. What are your thoughts on this? I think it's great.
I think it's great. I think it also advantage us in a way because it concentrates the, I mean, we, we won't have to run that many validators anymore. We, we will be able to merge validators 1 to another and run as much as 64 validators 2048 ETH. I don't know, please, I'm not, I'm not sure about the calculation, but I think that it, that's it. And, and, and these 64 validators, this 2048 ETH versus 32 will kind of auto compound, right?
So you will have kind of like validated pools in a way at the protocol level, which is pretty compelling also for the large players, but it's also compelling for a solo staker because now the the requirement will be much lower. So I think it's great. I think it's going the the right way. A little while ago, you kind of ventured outside of kind of your core staking business and you kind of launch killing Kifi, which kind of lets your same clients kind of tap into defy yields.
Tell us about that. Yep. And actually you remember we, we had a discussion, I think we were in Prague together conferencing and that was the, the beginning of our discussion. I mean, we, we think like, and we think it's, it's evident that stable coins will push the payment markets and the value market in general to a non chain future. At least that's what's that's what we think, right? Like I like this quote from Safe. Let's put the GDP on chain.
Yes, let's put the GDP on chain. If we need to put the, the GDP on chain, stability in these transactions need to happen. And that's why it's stable coins are there and the stable coin market already found problem. Like I think there's 170 billion stable coins in circulation right now, USDTUSDC and and
others. And we've, we realized that most of our clients had, and most of their users, most of their clients had a lot of step one on the platform, but wouldn't access rewards, wouldn't access yields. And there are some fantastic yields, you know, on, on, in, in, on chain. The first ones are provided by lending and boring protocols such as more for I'm saying them
first because I love them. I it's not only because they're French, because I think it's a fantastic protocol and maybe maybe one of the best, if not the best one out there. And, and there's Ave. and there's compound, of course, and, and there's, there's many others. And on the other side, there was only 4% at the time when we
start. I think now it's, it went up to six, six, 7% of stable coins that are were getting interest, right, which if you compare it to a theorem, sorry a theorem, it's 30% of of assets that are staked. And if you compare it to stakeable assets, all POS assets, I think it's 45% of all POS assets that are staked. So this this stablecoin rewards market is very immature at least 10X when we started 10X less mature than than the staking
markets. So we thought, OK, we'll as we did for staking, we'll provide the infrastructure for these exchanges wallet custodians, new banks, banks to offer table con
rewards. So that's how we, we start Cal D5 was we, we, we aggregated was our own smart contract bolt infrastructure, the main lending and boring platforms so that the, you know, these exchanges, wallets, custodians can start to monetize this while offering 10 or 15 different protocols on 10 or 15 different assets, stable coin assets. And now we're expending this to, to other, other type of, of
rewards on chain. For example, if you want to lend if and get close to 8 or or 10% type of, of rewards and not you're not happy of the 3% staking, you want higher type of yields. We, we also offer that and, and maybe just lastly is like, you know, retail customers, they, they need usually one click experience. And if you want to keep them on chain, which is all of our product do is like keeping them on chain. You, you need to simplify this experience on chain.
So if, if you want to end up what that's one of the reason why a lot of customers were sitting on exchanges not moving on chain because the UX is it's not as good as, you know, I was like the exchanges that can just build a front end and use of omnibus set up in the background. Whereas now you can start to build with pass key, you can abstraction. The onboarding is getting much
better. And also the on chain experience, The one click, you can rebalance from any yield position to, to the other on chain in one click, whatever the, the asset, whatever the D5 protocol, whatever the chain is. And that's, that's something we, we, we heavily working on. And and that's something that will that will increase the adoption of of these products, Andre. How do you evaluate which products to include in this? Because kind of like you're in a way this is a huge endorsement,
right? Because kind of like if, if I I'm your client, I kind of expect you to kind of do the due diligence on these protocols. Yeah, that's a, that's a very good question. And you would be disappointed of the answer because frankly, we started to to take the ones that our clients wanted and also the largest one, right? Like you, you, you know, we assume that's Ave. and Morpho
great protocols. When we start to, to, to offer them to our users, then it, it starts to get tricky when specifically, I guess of Marfa, for example, when you have like different volts, different risk profile that are managed by strategists and curators that are a third party that that is managing the risk. So the risk is not even managed by the protocol itself. It's managed by a third party. So in that case, you also need to, to assess the risk of the
third party. So what are we doing now naturally is like as we did for smart contract in the beginning, we, we had only security team outside of our company, right. We're using auditors like the spare bits and the likes and and continuous monitoring tool where vendors like exergate. But, but now we have a security team in house and we, we still use these external providers, but we we definitely need an
expertise in house. It's going to be the same for risk in D5. We, we assess external vendors and we are building a risk team and in house. So to say, hey, why are we pushing this type of vault on Mofo managed by this creator? Was this risk rewards approach versus the other? Because, because, because the it's not the only creator that managed volts on Morpho. So, so that's, that's where we, we building at the moment and, and, and I guess that's what our clients as well will require in
the future. Yeah. That, that, that makes a lot of sense when you look at your client and I mean you kind of you have your ear to the ground here, right. So kind of when it comes to institutional investors and so on, are they in it just for the yield or do they also kind of believe in the underlying asset? Do you think kind of in, in in US, how much do you think this capital is mercenary? It's hard to tell.
It's hard to tell. They definitely have to run a business right and and they see the revenue opportunity. So in that sense, but it's I don't think mercenary is the is the is the right word? Because if it's if it's a short term, like a a platform that is thinking 1020, thirty years ahead and say, Hey, actually the the world is going to or the transaction on this planet will be on chain. So I, I still want to be there in 20 years, cannot offer a
yield that is short term, right? If they don't believe, for example, I'll give you an example. If they don't believe in Bitcoin staking, I can tell you I'm not going to cite some platforms, but they won't offer it regardless of the revenue they can make, regardless of the amount of Bitcoin they have on the platform, which is much higher than any other assets because they, they, they're thinking long term, right? They're thinking, well, I mean, I don't really understand the risk yet.
So I don't want to offer it to my users, even if I know the day they will launch it, it will be a success because, you know, suddenly people can start to have heels on on Bitcoin. Same for stable coins. So we, we tend to think that most of our largest clients, largest platform, they think long term. So they they really still assess the risk and I don't think master is the the word here.
They're you're thinking, OK, is this source of yields sustainable is basically for more clients lending makes sense because there's Boris on the other side of the spectrum and it it will essentially make this economy better. OK, I'm I'm I'm able to to support it and same for us. Like we we're thinking long term, we would we definitely need to to grow our roughly and and the yield we offer on the
platform. But if we have one fuck up, let's say like it's the end of our business and if we treat our customers or their customers badly, it's the end, right? So so that's a good point. I think like, I, I think because we're starting to, for example, on Avid Morph, we're starting to see fintechs actually using, integrating the, this infrastructure to the credit lines, right?
And, and, and you, you working in a way on this infrastructure as well, where basically, you know, you have a wallet, you have a card, you might have EF on the wallet, but you still want to pay on USDC or Tedder or basically stablecoin so that you can pay real life. We're starting to see proper use cases of that in the background. You need to land your ETH against USDCUSDT and then you, you have a credit that where you
spend your money in real life. So I think, and by the way, I think moving forward, the biggest part of the adoption is going to come from these use cases because we think all the Fentex, the new banks, the Stripe and the like, and we have, we, we're seeing that they did do, of course, a big push on stablecoin. We'll offer these type of rails. And in that case, it's like a saving account, right? You will need your saving account close to your, to your
payment accounts. And that's what we, we trying to, to provide. We, we call it the saving account for the world. I hope, yeah, I, I hope we'll, we'll make it happen. I think this future is is exciting to to us. Yeah, super cool. So what? What's on the road map for Kin in the coming year or so? Yeah, definitely. And I haven't think any type of rewards on the platform on chain and then seeing on chain movement, right.
I think like for example, exchanges, the first stack of an exchange that will move on chains the earn section because they don't need low latency of trading and the earn section can move on chain before the others. So we'll definitely push the, the, the exchanges to, to move on chain, at least the earn section at first, because that's our topic. And we will also look at institutional adoption
worldwide. the US is now opening up post election with the administration changing, though we were still waiting for, for more clarity. But the, the hope and excitement is there and we'll, we'll try to build this saving account for the world while, you know, still we, our mission is to demonstrate value creation in digital assets.
We think once you're on chain, of course we have a business, of course we'll make revenue, but at least everyone will see how much we're making our commissions and if, if we're really driving value to our clients. So that's what we'll we'll try to do. Cool. Those are super nice parting words. Tell us, where can we send listeners to kind of find out more about killing?
Yes, please go on our website kill dot fi stake on our dabs directly on the website or PRR partners marketplace say for Ledger, we have a Twitter accounts, LinkedIn for the movers and you know in conferences if you go on conferences and you see a county shirt, please come and say hi. Cool. Thank you so much for coming on Last Look. Thanks for the echo.