The Impossible Crypto Device That Ledger Made Possible! [The Untold Story]

But he calls me one day and he says, 'And I know what the next device is.' I said, 'Okay, what is it?' He said, 'I can't tell you. I'm not sure if it's possible yet. Size and shape for credit card. What do you do with value? Stack cash.' Pictured it. It's brilliant.

Now what we did with Stax, let's do that custom display with a technology that's never been used in a consumer device before. And by the way, let's not do a curved display. Let's do a 5 mm 180° on this thing. But the Stax is a fair... you're looking at it on the screen and it tells you that you're sending this value to this address, but what's actually happening underneath is it's changing the address. Leading into the Bybit hack as well because this is exactly what happened. I don't have to have a mathematics degree or whatever computer science degree to understand how can a potential hack that happened or a leak happen and why is it not going to happen.

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Oh, cool.

Yeah, it's a very personal story so I'll try not to make it too long but I moved here to Paris in 2015 to work for LVMH. And right when I moved here, two of the first friends that I made, one was Pascal Gauthier, who was the first investor at the time in this little French company called Ledger. And over time, Pascal became the president and then CEO of Ledger. And then I also met Tony Fadell. And Tony was the inventor of the iPod and the co-inventor of the iPhone. And he started the company Nest. And Tony and I moved here to Paris around the same time. And a mutual friend introduced us and we became friends. So that was 5 years of friendship between Pascal and Tony and me before I joined Ledger.

And then when I joined Ledger, long story short, Tony, if you read Tony's book Build, which I recommend, it's a great read, he has a line in the book where he says, 'When I have an idea, I run from it, and if it chases me down, then I listen.' And I think that it's safe to say, and I'm speaking for Tony here, but I feel comfortable doing it in this case that, you know, the new Ledger device was an idea that Tony just couldn't get out of his head. He said correctly to us. He said, 'Look, you guys have this, you know, very popular in the world of crypto device, the Ledger Nano, which has these two buttons that you click, okay, with your thumbs and a little screen. And, you know, it's great for an early adopter crypto community, but it is not the device that's going to, you know, that's going to define the next generation of crypto use.' And we said, 'Look, Tony, we know you're right and, you know, we're working on it.'

No, but he was the one saying like, 'Hey, here's this could be better.' Yeah. I mean, you know, with, and Tony will use colorful words to tell you something like that, right? So, but he calls me one day and he says, 'And I know what the next device is.' I said, 'Okay, what is it?' He said, 'I can't tell you. I'm not sure if it's possible yet.' Okay, well tell me when you can tell me. So then we're together a few weeks later and he says, 'Okay, you want to know what it is?' I said, 'Yeah, of course.' He said, 'Okay, but you can't tell Pascal.' Like, why not? Because I'm not sure if it's possible yet. Like, it's interesting, but I'm not sure if it's possible. Which, by the way, is foreshadowing for what actually happened in the production of this device. Right? Because he said, 'Okay, it's a Ledger, so it has to denote value. So it should be the size and the shape of a credit card. And then you know what do you do with value? You stack it. You stack cash. So what does a future like stack of cash with the band around it look like?' And he's like we should do a credit card size device with an E Ink screen. But you can do E Ink now with a curved screen. So let's wrap it all the way around the spine where the spine of the device is part of the screen and then you could stack them on top of one another. Pictured it. It's brilliant.

And what I loved about the process after that and again I'm making a long story as short as I can. We hired an industrial design firm from the UK called Layer to do a number of, you know, to take this idea and put it into specifications. And we tried like eight different designs. There was the one that became the eventual Stax. There were like longer and thinner ones. There was one that had the curve around the top of the device. And in the end, the one that we chose, and maybe it was biased from the beginning, but was the one that was exactly what Tony described to me in the beginning. So, if you look at Ledger Stax, it is truly exactly what Tony designed for me in the beginning, which I also really love. It's a special story for me personally.

Now, we found a supplier based in the UK. The technology to do this, what we call an organic TFT. So, a traditional E Ink touchscreen like the one that's in Ledger Flex is silicon on glass. So if you look at your Kindle or your Ledger Flex, that's silicon on glass.

The reason why it's good that you explain that is because, you know, we do a lot of shows and people, I always talk about the Stax. I love it. I use it every single day. Thank you. And so they're like, 'Okay, but it runs out of battery. Like if it has a big screen it has to run out of battery.' People don't really comprehend the fact that it's not an LED screen. Yeah. No, E Ink is a perfect technology for this use because well what are you using your Ledger for? For signing. It's a signing device. It's not the one you're reading your email on. And having a 16-color grayscale E Ink screen, it gives you a very low, a relatively low power screen, gives you all of the kind of resolution and usability that you need, but without drawing a lot of battery. And since it is E Ink, you can change the cover screen to be whatever you want. And when it's off, that's not drawing any battery at all. So you have, you know, normal battery decay for a device sitting on a shelf, which any product with a battery has, but you're not actually using any battery when it's sitting on your shelf.

Well, we found a supplier, you know, the supplier makes a lot of promises and they give us a price. And we actually had, you know, many demo units, hundreds of demo units. So, if you remember back December 2022, we had our event here in Paris and we had, you know, devices in hand. We walked on stage with Tony and we announced it. We took pre-orders and we planned to ship everything in March of 2023 and the supplier, you know, had told us that, you know, that that was no problem, no problem, no problem. Right? Well, March became May, May became July, and then in August, we basically find out that the supplier can't make good on it. They don't have the cash to make good on it. The reason is because the yield on these screens is very low. What that means is if you try to make a 100 screens, how many good screens come out the other side? You know, the way that one of the suppliers described it to me is it's what he called a war against particles, you know, you've got this clean room environment and if any particles, we're talking about, get into the display, then you get defects, you get line outs, you get other problems. So, you know, they were in this state where if they tried to make a 100 screens, they would get two good ones.

So it's a completely different process. So, I was saying this before that you've got the Kindle screen or the Flex screen is silicon on glass. The Stax screen is an organic substrate on plastic.

Okay. You know, you're not going to curve glass. For those of you who don't know, like it's just a marvel as well. Like it's actually mind-blowing that you have a curved screen. You can write your name in there. It shows up or you can just name your Ledger as it is. Beautiful. Yeah. It's a 5mm radius. So, you've got this, it's a tight curve too. It's a 180 tight curve. This technology has been around for 30 years. It came out of Cambridge 30 years ago. There you can see the CEO of E Ink, one of the developers of the technology talk about it if you search 'The Road to Stax'.

I'm proud to announce to you today, Ledger Stax. Tony did choose a very challenging path on this by choosing a display that had never been done before. The Road to Ledger Stax on YouTube. You'll find a little 20-minute documentary that we made. And the best part is seeing the guy from E Ink and Chuck from Plastic Logic talk about this technology. If you're at all technical, you can get more information out of that. It tells a little bit about where the technology came from, how long it's been around, and the CEO of E Ink talks about why this has never been done before. You know, so it took Tony Fadell really creating a use case for this particular technology for this technology to come to market for the first time.

But the challenge was, you know, we had one supplier that went basically went out of business trying to deliver it and then when we picked it back up with another supplier, it was significantly more expensive than we had originally thought it was. So, we ended up, you know, what I, and in the meantime, we started making Ledger Flex. The way to describe Ledger Flex, if you're thinking about it from just a product development perspective, not a how do we market it and talk to consumers perspective, but I don't mind sharing. You know, Ledger Flex is the other end of the risk curve, right? So, Ledger Stax is, you know, whenever you're making a device, if you have a custom display, you know, you have a display manufacturer who's making a display that's custom for your device, that's time, money, and risk, right? Because you're developing something new, it's a new aspect ratio, maybe it's a new something, and it's custom, and now you've got a testing period, etc. So, it takes a little more time, it takes a little more money, and you know, you're probably going to go through a few cycles before you get it perfect. Right now, what we did with Stax is way out on the risk curve. It's like, let's do that custom display with a technology that's never been used in a consumer device before. And by the way, let's not do a curved display. Let's do a 5 millimeter 180° on this thing. Right? So, that's way out there on the risk curve.

Now Flex on the other hand is a screen that has been used before. This screen, this identical screen was used in a Light Phone for Do Kamo in Japan. And so you know there had already been hundreds of thousands of these screens made and we knew that we could just plug one in and it was going to work. So you end up with a device which is a beautiful device. The screen on the Flex is beautiful. It's not as innovative from an industrial design perspective, you know, but you get a device that's affordable and gets you all of the features that you need. So that's really the difference.

I think it's not a pickup truck. I think it's a little bit more but I agree with you. I think what I always tell people is that the Flex, if you want, so I'll be very honest with you. I used Ledger products since 2017, way before we started working together, way before. And I have every single Ledger device. I have like five Nano S like the early flip out versions and I hated the fact that I had to do the buttons on the top but then, you know, it was the most trustworthy. I used it like, you know, and so if anybody uses an X now, you know, or you just use a Nano S. The touchscreen itself is already an extreme upgrade like the fact that the user experience on the Flex is extremely good and very good upgrade but the Stax is a Ferrari, you know, it is. And I'm very happy that we have both.

But I think one, so and I wanted to say two more things. One, you really need the touchscreen these days compared to 2017. We're all doing more and more complex screens, more complex things on our screens. And we're moving into a world of more clear signing, right? It's this, you know, the fact that we have incredible security tools, but then we basically the last step is YOLO, right? We don't know what it is we're signing. We're just signing some hash. That doesn't work. And we've seen it in things like the Bybit hack, you know, that blind signing hurts, right? So the other thing though is I think it's the great thing about this story is you never could have planned to be here. We never would have planned upfront to have both the Stax and the Flex. It's only through the very specific circumstances that actually happened. I think if we'd have known the cost, the real cost of the Stax screen going in, we never would have started the project, right? You know, it's only because we kind of we got very far down this path and we had to solve the problem for our customers because we had designed this product. We promised this product and we wanted to deliver this product.

Correct. That's essentially it. We, you know, we had, it was like I said we had planned to deliver the product in March. March became May. May became July, August. I remember where I was sitting when I was having the conversations, you know, saying okay if we move to this other supplier, and by the way moving to the other supplier didn't, wasn't certain to solve the problem, right? And we had a lot of sunk costs in the previous that we were, you know, millions that we were never able to recover.

Could have. You know, I think that, you know, this is where it's great to have people like Tony Fadell and Pascal Gauthier, you know, next to you, right? Because, you know, these are people who are willing to think big, think long, take risks. And so I would say we took what is a fairly prudent path which is let's carry on and see if this supplier can get this screen because what we also know is that once you deliver it when you improve the yield the price will come down, right? So it's just a question can you improve the yield? Can you? Absolutely. We've improved the yield a ton already. We improve the yield week after week after week, you know, but it's a long process where you're putting mother glass in the front of the process and it's eight weeks before you see the results come out of the oven, right? You know, so you're constantly on this cycle which is also why, you know, why kind of March becomes May, May becomes July because you're hoping that the next batch that comes out of the oven is going to be significantly better and then when it's not you have to deal with the consequences, right? And it's costly at every cycle.

But I think that this, look, if we had only the Stax and it was this expensive, that wouldn't make me comfortable. It's not, you know, I love having a luxury product. I don't want to only have a luxury product, right? And if we only had Flex, I don't think it would really show what we're truly capable of, you know? So, I'm very, very, very happy to have both. It's a new category of device for us, and more will come from this. But secure touchscreens is, you know, that's a thing that Ledger brought to market and that's a thing that Ledger will continue to bring to market.

Yeah, it's a good question. So, let's start with this. For the way, if I'm in your audience, think about this always, think about it this way. What do I need to be secure? What does it mean to be secure? Well, that means that your private key needs to be generated by and stored in a secure element. So, why generated by? Because a secure element has specific technology to make sure that you're generating a random seed. It's got a little entropy unit in there to help create real randomness and that's super important. You know, there was an exploit in Trust Wallet a couple years ago that our team found where they were creating addresses over too limited an address space, right? In other words, like if there's not enough randomness, then someone can guess your seed basically, right? So that generated by, generated computation, right? Correct. Put it on generated by and stored in a private key is an important part of security.

The second is that when you're doing a transaction, the computation needs to happen inside the secure element. Now, the way some hardware wallets work is they store the, they don't, they generate the seed phrase inside of what we call a general purpose MCU. So, imagine the chip that's in the remote control to your TV or your microwave oven. They do the computation there. So, they generate the seed there and but then they store it somewhere secure. They store it in a secure element. Now when they need to do a cryptographic transaction, they extract the private key from the secure element and then in the general purpose MCU that's where they do the transaction then it gets deleted or put back in the secure element depending on how you think about it. That again, that's where you get side channel attacks and if you look on Ledger's YouTube you can learn more about side channel attacks from our attack lab. But basically it means that you're not always, you're not doing the transaction inside of the secure element. You're extracting it from the secure element. You're doing it in the general purpose MCU which is not as secure.

So first of all it's stored in the secure element. Second it needs to stay there when you do the transaction. Third you need to be able to eyeball that transaction on a secure screen. If the only place you're looking at that transaction is on your phone screen you are not secure. And we've proved that over and over and over and over. If your operating system is owned then you can be presented a transaction but what happens under the hood is something different.

When you say own, I just want to, this means that people can control it. They see it. They get access to... Look, there was a big Windows announcement. Microsoft had an announcement just a couple weeks ago that there was a huge exploit where there was a piece of malware that was infecting all extensions basically. And you know, so we all use browser extensions, right? So if you're only using the browser extension and your Rabby or your Phantom or your MetaMask is not connected to a Ledger or you're not clear signing, then someone can change, you're looking at it on the screen and it tells you that you're sending this value to this address. But what's actually happening underneath is it's changing the address and you're now signing a transaction which you can't validate because it just says blind signing and then you're like it's a big hexadecimal, I don't know, YOLO. But what's happened underneath is that the address has been changed and that can happen on your phone or on your computer.

Look I'm not slagging phones or computers like the thing that people just need to understand the facts. You know, if I gave you the task of protecting a billion in gold bars in a building, you're like, 'Okay, I'm gonna start doing this task.' And I was like, 'Oh, yeah, man. Hold on, hold on. I'm going to put a nightclub and a kindergarten and a grocery store in the building, too.' You'd be like, 'Can't you just get another building?' Right? Like, 'Why do you have to do this in my building?' It's the same thing trying to ask your phone to protect your life savings. Don't do that.