Yo yo yo. Yo, Mr. Robert Leshner, welcome to the stream, man. How are you, Mr. Thread Guy? I am doing well, dude. I'm excited to have you. I, you know what's funny is I listened to you with Haseeb on The Chopping Block, but I don't know that much about your lore and so I just hear your like modern takes. And so I was doing some prep and I listened to an Up Only episode which was like a high stakes one because you were like 15 hours out of this exploit in one of the Compound contracts. And yeah, dude, it was a wild listen. I thought you handled it really well for what it's worth. That was like 5 years ago.
Yeah, that was like ancient history when it comes to DeFi. DeFi has had like 10 lives since then.
Yeah. I mean, and then what? April was like the worst month for exploits ever. It's like some things don't change, right?
Yeah. I mean, it's funny like DeFi is constantly going through this ebb and flow of being resilient, battle-tested, and more trustworthy than CeFi, to it being, you know, fragile and unpredictable and less trusted than CeFi. And, you know, it's this constant ebb and flow that's been happening pretty much all the way back to like 2017, 2018 really. And it never ends. You know, like in 12 months, we'll be like, 'No, DeFi is like so much safer than anything else. Like that's what you have to use.'
The thing that was so crazy about it to me was that you were discussing the bug and that there was this exploit because there was like a greater than sign was missing, or equals to, and it's like that specific. Hundreds of millions of dollars are getting airdropped to somebody because there's like one character in a contract that was overlooked.
Yeah. And just to break it down for the people listening that don't know what we're talking about real quick. You know, it was like 2020, 2021. But basically there was an upgrade of the Compound protocol that somebody in the community had written. Like one of the early things about Compound as a protocol was that the actual development of it was sort of crowdsourced, right? Where it was like, hey, anyone can add on to this thing, which is very different than how most teams are building DeFi protocols today. I think a lot of people have learned from this, but it was distributed development which is hard to QA, right? Even with auditors involved. And there was an upgrade, everyone reviewed it, it looked good, you know, it passed, it was implemented. And there was this incredibly hard to find bug that started basically miscalculating how many reward tokens people were going to receive. And so most people got zero and some people randomly just got buckets of tokens. And you know, it was patched as quick as it could be, but for like days it was spitting out all of these tokens and things were going crazy. And this was the human era of DeFi security, right? Like back in the day, we didn't have AI. You literally had many different teams of people analyzing smart contracts and reading through them and hypothesizing the risks and hypothesizing the attack vectors. And it was very different than now where I think we're entering a very automated era of attack and defense.
Thank you for the explanation. And I didn't give you a chance to do this. Can you give us like a quick lowdown intro into who you are and then we could talk about some of the fun stuff you're doing now?
Yeah, so people in crypto generally know me for like one of four things. The first is in 2017 I began work on the Compound protocol. This is before DeFi was a phrase. I was actually in the group chat when we came up with the word DeFi.
Who came up with the word DeFi?
It was actually Brendan, one of the founders of Dharma Protocol, which was like a 2018 era early DeFi protocol.
And somebody, he just ripped DeFi and everybody was like, 'Yes.'
He was like, 'We need to come up with a name for what all of these what we now call DeFi founders are building.' He was open to suggestions. People were tossing ideas out there. There was a bad name. There was like OpenFi. There were some weird ones. And a couple people latched on to DeFi and they were like, 'Yeah, DeFi.' That's the name. And ever since, this was like 2018.
Yeah. So people know me as like one of the first people to explore what we now call DeFi. I built Compound. Second, some people know me from Robot Ventures. It's an early stage venture capital fund that's been active in the space since 2018. We do lots of pre-seed investments. Oftentimes it's a founder's very first check because, you know, we just like founders. We're not, you know, 'Oh, you got to show tons of traction.' We bet on people. Third, people might know me from The Chopping Block. It's a podcast that I host in the space. And fourth, I'm the founder of Superstate in 2023. I left Compound to start Superstate. What we do is we tokenize assets. We bring them on chain. And the sort of catalyst of that was, you know, as a DeFi founder, I looked around DeFi and I was like, 'Hey, the ceiling on how big this stuff can get is actually limited because the only assets that we're putting into DeFi are like the same assets we've always been putting into them. It's like other protocols, governance tokens. It's like crypto-native things. That's an enclosed ecosystem.' And my theory was like to really build this up and to grow as a space, we needed trillions of dollars of assets on chain. Otherwise it could never really take off. And so I left Compound, founded Superstate, and for the last three years, I've been trying to tokenize assets, bring them on chain to make them usable in DeFi.
I want to talk about Superstate and let you talk about it a little bit. I think you did an interview with the New York Stock Exchange, maybe it was a good one. But I want to ask like, you know, crypto's been pretty boring for the last six months and some change. Exciting couple days here which we can talk about, but I've been trading commodities and AI stocks on Hyperliquid. And I'm curious like, do you feel like what Hyperliquid is doing has like vamped what you're trying to do at Superstate?
You know, yes and no, right? So it's proving out a market which is like people want to trade anything at like 3 in the morning, right? That is clearly the future. That's clearly what everybody wants. That's clearly where it's going, right? I think people have wanted that for like 50 years. It just has never really been possible, right? People want to speculate and hedge on everything at all times, right? That is a very pure demand that people have. There's going to be a lot of flavors of that. The first versions of this are, you know, with basically unregulated derivatives that are not KYC-based that anyone can access. There's really good qualities of that. I think there's a market for that. I think there will always be a market for that. People also want, you know, what I will call regulated compliant versions of that, right? Almost every single product starts off with like the Napster era where it's like, hey, go totally wild, right? And that proves everything out. It proves the user experience. It proves the demand. It proves roughly how it's supposed to work. Almost everything starts off with a wild west to it. And eventually, everything winds up with what I'll call the buttoned-up versions of it where after we prove out why it's so awesome, we get the things that grandma uses, right? Like from a risk perspective, from a UX perspective, from a credibility perspective, we almost always get the mature version of something in the end that actually claims the whole market. And I think like trading, we'll call it RWAs or real world assets or securities or whatever you want to call it, you will be trading all of that stuff at 2 in the morning, 7 days a week, in your pajamas, right? Just like you already are proving out that you could do that today as a society. I just think that the version of that that most people are going to use in 10 years is not going to be the self-custody, clicking from your wallet, censorship-resistant, no-KYC thing. It's probably going to be the thing that's offered to you, realistically, by like a Coinbase or a JP Morgan or whatever. Both will exist, right? Neither's going away, but I think we're going to trend more and more just like almost every innovation in history. We're going to trend from the YOLO era of it to the hyperscaled era of it that 99% of the world feels comfortable using. The early adopters are like, 'Yeah, I will jump through crazy hoops. I will figure out how to use this brand new system.' 99% of the world doesn't think like that. And so I remember like in the early days of DeFi, there was no institutions. The early adopters of it were the craziest people on earth, like the people that were like, 'I trust the smart contract is done right.' The people that were willing to use a smart contract with their money for the first time. That was a different breed, you know. And now everyone's sort of comfortable with it and it gets packaged into way more usable form factors.
I have a bunch, but I want to ask you this first because I just thought of it. Like when you look at where we are in 2026 from where you were in, you know, 2017, 2018, group chat coined the word DeFi. Are you, how satisfied are you with how DeFi has evolved? Has it beaten expectations, underperformed?
Yeah, the answer is yes. Here's my take from about eight years of DeFi, right? And this goes to my earlier point which is like people's opinions of it ebb and flow. In like 2018, no one trusted me. Okay, like when we launched this, when certain protocols were first launching, nobody wanted to interact with the smart contracts. It was considered a little bit crazy, right? Like you had some really early adopters of Compound V1 and Uniswap V1 and Curve and all these things, but these were the crazy people and everybody trusted a centralized thing more. They all trusted Coinbase more, right? By the time 2020 came around, people were like, 'DeFi hasn't had any issues really. It has started to scale.' And by this point it was sort of like max experimentation. I would say DeFi Summer, like 2020 and 2021, was in some ways a local maxima and a very good mark for DeFi in that nothing had really gone wrong. For the most part, there were some rugs, some bad things that happened, right? But for the most part people saw how resilient it was and people were trying new things all the time. It was non-stop people launching protocols that no one had ever seen before where it was massive experimentation and really a lot of confidence that it can work. And so everyone's optimism for DeFi was just through the roof. Then everything CeFi collapsed. I mean, Terra blew up and then it took down Three Arrows Capital and then it took down Celsius and it took down BlockFi and it took down Genesis and it took down FTX and it took down all these other things, right? And people were like, 'CeFi is a scam. You can't trust anyone who holds your money for you. The only thing you can trust is a smart contract.' And that was a really interesting era. It's like bear market 2022, 2023 where nobody wanted to trust a centralized thing. And DeFi in its creativity was almost at an all-time low. People weren't trying new things, but everyone knew that smart contracts could work at scale for creating a financial product and a financial market. And you know, for better or for worse, the post-Trump election era, it's like the comeback of CeFi. I mean, CeFi has been coming for the market like unbelievably aggressively for about 16 months now. And I think in some ways, especially with the vulnerabilities that have been happening, I think the ratio of optimism for DeFi relative to CeFi, it's almost at an all-time low since I've been around. The momentum that the CeFi guys have is really high and the angst on DeFi is really high too. And I think DeFi will come back because at the end of the day, we're going to enter an era where a new protocol written with the tailwind of AI that's as secure as it can get against any possible threat. We're going to have ultimately scalable, ultimately resilient protocols, which is what people want in the first place. I just think DeFi is at a slight disadvantage right now because all of these contracts were written in like 2018, 2019, 2020, 21, 22, 23, 24, 25. And now you have like Mythic that's like, 'Oh, I found a thing that...' Well, you don't even know what it is really, right? The ability to find vulnerabilities now is higher than it's ever been. And the developers haven't caught up yet, but they will catch up and eventually we're going to have this wave of, you know, I don't want to call it 3.0, but we will have a wave of DeFi probably in a couple years where you're like, 'Yeah, you can build a global system that's always on, that always works, that's super safe, that you can't steal from, you can't tamper.' It's a really good backbone to do stuff. But, you know, I think it's going to take a while.
You know, the 2023 era was nuts because I mean, you also didn't like SVB happened as well. Banks were going down.
Banks, it wasn't just crypto exchanges. It was like banks were getting run. Everything was going down.
And I just remember people were like, 'If you keep money on, you know, if you keep $1,000 on Coinbase, you're a retard.' Like, it was like no one knew anything about anything. I forgot about SVB happening. It was like you couldn't trust anything.
Yeah. Like USDC hit 85 cents or something like that.
I sold my USDC when it hit like 90 cents. I didn't know what I held and I'm like, what the... Yeah, that's crazy. You know, I want to ask you this, like going back some of the Superstate Hyperliquid stuff is like, okay, you know, I think a lot of the speculators are sick of hearing every VC come on the mic and be like, you know, we're bullish on crypto, but like just tokenized stocks and stablecoins. But on the other hand, the product that Hyperliquid Trade XMZ has offered is incredible. And to be able to trade like commodities and to be able to trade, you know, these stocks and Korean stocks. Hopefully, it's wild the amount of liquidity you could tap into. My question for you and you could get a little bit technical on this is like if I'm long HIM on a perp position on Hyperliquid, what am I actually trading and what do they as an exchange actually hold versus if I were to buy like HIM stock from Superstate assuming, hypothetically, if you guys had tokenized it?
Yeah, it's a great question. So, you know, you're really asking the difference between what happens between essentially on-chain derivatives versus stocks in the traditional system, right? Because you can make a derivative on anything, right? And crypto has done an amazing job in creating perps, creating derivatives in honestly a better form factor than all of TradFi had ever invented prior to this. Like perps are honestly better than monthly and quarterly futures that expire and go away, by a lot. Yeah. By a lot. Like perps are a genuine innovation that came from crypto. Kudos to BitMEX for pioneering that many years ago. But perps are just derivatives, right? And in a derivative transaction, it's essentially zero-sum. Okay? So for every dollar that Thread Guy makes, I or someone else is losing a dollar, right? And you're basically either directly interacting with someone else on the other side of a trade or with multiple people through some pooling mechanism, but you're basically creating a market where for everyone that's long, someone else is short. Yes. And when there's more people that want to go long than want to go short, you have to figure out a way to balance this and perps use an interest rate to attract the other side of the market, right? But it's basically a wager between two sides, right? Someone's going to make money and someone's going to lose money, right? With a stock, it's naturally net long versus with perps, it's like they net out and it comes to zero. And the expected value of everybody collectively is zero. One side's going to win, one side's going to lose. Yes. With a stock, the stock itself, there's more shares of it than zero, right? And the underlying stock, it's kind of like a naturally net long position. You own a share of a company, right? It might be a bad company and the people that own the shares of it, it goes down, but you're essentially not betting against a counterparty. You're literally betting against nobody besides your opportunity cost, right? It's like a natural long product versus a product with EV zero. Yeah. And so, you know, there's no funding cost when you own a stock. You can hold it for 50 years and you're like, 'I own the stock, that's it.' Versus with perps or derivatives, you can't really do that. And so the easiest way to think about it is, you know, if there's a stock token, there's a lot of different versions of stock tokens. We're still in an era of great experimentation. The approach that Superstate takes is like when it's a token, you're on the company's books and records. You can call up the CFO and be like, 'Hey, am I a shareholder?' Yes. Like, yo, Thread Guy, you are on the company's records. You're a shareholder. Have you gotten our annual statements? Yeah. There's other tokens where you can't really do that. And there's a couple layers of SPVs so to speak between you and the company. But you indirectly own the company shares through other tokenized approaches. But when you hold a stock token in general, you're long the company stock. And so either you bought it directly or someone else bought it on your behalf and is custodying it and then minted a token against it. But in general, stock tokens are like you're just long the company and there is no other side to it. Like no one's going to lose if your thing goes up.
Got it. Thank you. And so to follow up on that, it's like it feels like everyone everywhere is talking about on-chain capital markets going to eat everything, tokenize everything, BlackRock, every major financial institution talking about this. But it's still, I mean, it's niche. It's very niche. It's just like a bunch of VCs and maybe like bleeding-edge traders that are at all exposed to this. Like why and what does the trajectory from here look like? And maybe like how does it impact us?
Yeah, I mean it is niche, right? I think every new technology wave starts off niche, right? Like DeFi started off niche. I mean listen, back in the day I would try to explain like, 'Yeah, we're going to use smart contracts on a blockchain to build a financial marketplace' and people looked at me like I was an insane person. Yeah, right. And the people that were reading white papers and commenting on Reddit threads for this stuff, it was really niche, right? It was a couple VCs and a couple crazy people, right? And now everyone knows it, right? The internet when it came out, I had a crazy uncle who was like, 'Oh, have you heard about this worldwide web thing?' And I was a kid, but I was like, 'What are you talking about?' You know, like it was niche until it became huge, right? Everything starts off niche. The people that are excited about this niche right now because yeah, it is a bunch of VCs and if you're a nerd for financial infrastructure, yeah, that's niche, right? But the reason why people get excited about it is because it sort of illuminates what the world's going to be in the same way that the people that were using DeFi were like, 'Yeah, you're going to be able to do stuff on a blockchain whenever you feel like it.' They sort of saw this future. The future that people see with this tokenization thing is solving a bunch of problems that people kind of right now have, which is, you know, if you've ever tried to transfer an asset that's not a crypto token to somebody else, it's like running into a brick wall. It is like so try transferring stock to somebody that's not a token, right? Like you can't do it. You think you own these assets and you sort of do, but you can't do anything with it, right? And so your assets don't feel like they're your own, right? You feel like you have the economic right to them, but if you want to move from one broker to the other, it's kind of shitty, right? So that's one of the things that people see. They also see this thing where they're like, 'Well, crypto works 24/7. Why can't everything work 24/7? Why don't my stocks work?' And yeah, TradFi is slowly chipping away at this and making everything work a little bit more 24/7, not weekends, but everything is getting towards more always-on, but it's still a far stretch away from the way that Hyperliquid works, or anything on-chain. People are like, 'This is the future, how do we apply this to all of the assets?' And lastly, there's this element of innovation that just does not exist in TradFi that's never really existed. It's like negotiating with all of these different partners and signing these extremely long contracts and only being able to do these small tweaks to make something a little bit different versus in crypto it's like major tweaks, go wild, add whatever programmability you want, invent something totally new, it's incredible. And so, people see tokenization as solving all these things where you're like, 'Yeah, let's just turn stocks and bonds into tokens and then it's always on. You can move them to whoever you want whenever you want. They're really yours.' And if you want to build new stuff with them, the assets become building blocks that anyone can go out and build a killer app for. You haven't really been able to build any killer apps with stocks in like 150 years because you're not allowed to even really program them. The biggest innovation of 50 years was Robinhood which is setting fees to zero, right? Like no one has ever really been able to experiment with stocks and assets as the sort of building block. And so tokenization is going to let anybody listening to this podcast say, 'You know what, I'm going to be an asset hacker and build a totally new way of interacting with these things.'
That is, man, it's just a refreshing take. Tell me, on the other contrary, what incentive, like why would Nvidia want their shares tokenized or these major public companies?
Yeah. I mean, at the end of the day, a company doesn't really care about the plumbing of these markets, right? Like the only thing the...
company cares about is like, can more people buy my stock? Like that's a good thing. Like every company wants more bid for their stock.
Right. Every company wants more, you know, stock price because like at the end of the day, the higher the stock price, the lower their cost of capital. That just means they can raise more money or like they can borrow more and they can do all these amazing things. They can go out and buy more companies. Like every company that's publicly traded wants their stock price higher and the more people that can buy it, the more tailwind there is to it. So like they don't care about how it all works. They don't like honestly you call a CFO or a CEO like they have no idea how the stock market works.
Besides like we're publicly traded that is good.
So who are you PvPing here? Is it the brokerages?
Yeah. It's interesting because all of this stuff is going to like upgrade in parallel, right? So like brokerages are going to upgrade, you know, like the exchanges are going to upgrade, the custodians are going to upgrade, like everything is going to move to slowly, you know, towards full tokenization.
But it's just like everyone's sort of like competing to like get us there.
Got it. So it isn't even like you winning doesn't mean like Schwab loses. They just get better actually.
Yeah. Yeah, I mean like theoretically with tokenized stocks like Schwab could be like you know withdraw stock to your wallet or withdraw stock to Coinbase or like you know all these other features or you know withdraw stock to your you know AI agent or like deposit stock from your AI agent like by tokenizing it you like turn on like a huge aperture of creative new product ideas that like just don't exist.
So Schwab might be like incredible really excited.
That was a really good pitch for it, dude.
Let me ask you this. Outside of tokenized stocks and stable coins, is there anything in crypto you're excited about?
Man, I have tunnel vision. So, this is like part of the problem with me is like, you know, I like latch on to something. It's all I think about for like five years and then I'll get like super excited about something else, right? But like I have like years left on tokenization because like we're still like pretty early in the journey.
It's fair. I mean, that's how you have to be to win really hard, right? Is like bull tunnel vision. And so, do you find yourself like I mean, you're working on something really cool. Do you find yourself, you know, 10/10 happens? Are you depressed about crypto and upset about the state of the industry? Like, do you find yourself in these doomer spirals?
10/10 was like a non-event for me personally. Like I like didn't have any market like positions on like you know like I'm not like on a daily basis I'm not really trading. You know like I'm in a couple group chats where like people were like 100% demoralized on 10/10 and like it felt really bad cuz like all my friends were like what happened this sucks right? But like I personally like didn't really notice 10/10. The after effects of it were like pretty negative. Like the attitude like got like a little bit more sour like every week for like three months.
Yeah, it got really angry.
Yeah, it got really angry. Like but like I almost like didn't even notice 10/10 happened. The thing that you know I did notice honestly was like the Kelp hack. Like the Kelp hack and like there have been so many hacks in April. Okay. Like April was such a like hacky month, but like Kelped out I was like this is going to leave like a bruise on like the face of DeFi for like a while. I was like institutions are going to be scared, regulators are going to be scared. I was like this is a little bit demoralizing because like so much of the vision that I have at Superstate is like bringing stuff onchain so that it can do DeFi. It's not like tokenize something so that like I can shave 12 cents off of some TradFi business, right? Which like yeah, that's a benefit of tokenization, but my whole like vision for this is like so that you can bring it on chain into a DeFi protocol and it can do DeFi stuff.
And honestly, like within 12 hours, you know, I was hearing from like institutions who were like this DeFi thing, like are you sure about this? Like really, you getting phone calls?
We had like a lot of questions like what does this mean? Like what's this mean for DeFi? And I was like, okay, this is an event that like I am like saddened about like at a very deep level.
So what do you tell them when they call you?
Yeah. I mean what you can tell them is that like fundamentally this doesn't like lessen the value proposition of DeFi, right? I think the reason why everyone's so demoralized is that like this was, you know, one of these like it makes it to like the front page of Bloomberg events where it's like millions of tokens created out of thin air and like biggest DeFi protocols in existence get exploited because of it due to a bug in one system that became a bug in another system that became a bug in a different system. Da da da. Like it didn't look like it was like a single weakness. It looked like 15 weaknesses like all at once. You had all these vaults blowing up. It was like insane. It like the reason why it was so painful is it didn't feel like a single failure. It felt like 15 failures. And like 15 failures all at the same time feels like an indictment of the whole approach and interconnectedness. And like the interconnectedness is the value proposition. It's also like the noose in some ways, but like it's the biggest advantage.
I see what you're saying. Yeah. And so the attitude from like external like when I was talking to like public companies we're talking to like you know investment bankers their view is like oh this interconnectedness doesn't work like it's bad like yeah there's interconnectedness in like TradFi but like everything is siloed in like its own little way right and like the interconnectedness is like all the stocks drop at the same time you know not like oh a failure in one silo destroys every other silo. Like yeah, there's like collateral damage when like you know the great financial crisis happens and it dominates a bit, but like it just like blew a lot of credibility. I think like in a way that it shouldn't for anyone in the know, right? But like for anyone who was like looking at this from the TradFi side, they were like, 'Oh, DeFi.' Like I'll take a look at it in like another couple years and it like reset the clock of like serious like institutional credibility that I think we're building towards and that credibility will come back like trust me like promise you like it is a fact like in like 18 months everyone's going to forget this and everyone's going to be like DeFi is rock solid like how do we build on top of this.
