I'm Mike Arrington from Arrington Capital and this is Joe Lubin. Anybody not know who Joe Lubin is? First time I met Joe, real... Joe, why don't you tell a little bit about yourself? I've known you since 2018, I think. We first knew.
No, since 2018. Yeah. Or 17.
Something like that. Yeah. Um, sure. Hi, I'm Joe. I work at a company called Consensys. Consensys builds lots of the infrastructure for the Ethereum ecosystem. We think of Consensys as Ethereum first. But because we publish a wallet called MetaMask, we're a pan-blockchain ecosystem company as well.
Let's... we're going to talk about a lot today, but I'd love to start out with macro because it might just sort of, you know, what's going on in the world. It might frame our discussion a little bit. What do you think about the Middle East? Who's going to win?
Who's going to win? Hopefully the world wins. Hopefully clear heads will prevail. Hopefully there will be rational considerations rather than eschatological considerations. So there's a lot of factors going on. Some of them are economic, geopolitical, spiritual, religious, etc. And I do think that there is a chance that if we are all very fortunate, especially people in the region, it's possible that Iran is able to shift their perspective sufficiently so they become a welcome member of the Middle East community and then the region turns into a region of milk and honey for the next millennia.
Yeah. It's the center of the world. And economically it should be very strong. Have you read the book? A lot of ships go through that area.
Yeah. Well, not so many now, but... have you read the book The Fourth Turning?
Um, I've read parts of The Fourth Turning and there's a new book, The Fourth Turning is Here, and I've listened to lots of Neil Howe podcasts and when Bill Strauss was around, yeah, all lots of that stuff. So it's a very powerful framework for understanding why we are in the end of a super cycle, what that super cycle is all about and I don't know that it says that much about what the next super cycle is going to be about but you and I can explore that.
Yeah. Yeah. Have you read... familiar with lots of that material?
Are you familiar with lots of that material?
Yeah, I'm paranoid. I have a paranoid personality and so that stuff speaks to me. But I just think I'd be surprised if peace broke out in the Middle East, but you know, who knows?
Good point. I think we're going to move through a very complicated period. So end of a super cycle means that there is this theory that Strauss and Howe shared around generations around this idea that there's an 80 to 100-year super cycle consisting of four generations. One way to think of it is as sort of hard times create strong men. Strong men create good times. Good times create weak men. Weak men create hard times. But it's more sophisticated and complicated than that. And the super cycle that we're in runs through four turnings. The first turning essentially happened at the end of World War II where America came out of that war as the only viable military and industrial base on the planet. And so they were able to write the rules of the rules-based order for the super cycle that we're in. And the first generation of the first turning represents a new social contract, a new system of the world, a new hope, etc. Second one just grows that. The third one I sort of see the cracks emerging in society and the economy. Technology gets really powerful and enables people to cheat and start stealing better and fooling people etc. and then all hell breaks loose by the fourth generation and the system in the world just careens into a brick wall and smashes apart. But while all that's happening you've got different technologists, different philosophies etc. forming and maturing and growing and so my thesis is that the next super cycle will consist in the early phases of decentralized protocols and hybrid human-machine intelligence.
That was a pro move. You just segued right back into the topics we want to talk about like perfectly. I will say that for somebody who claims to have only skimmed the book, you seem to know quite a bit about this.
It's a great book. You guys should read it if you haven't. Fourth Turning. Yeah. So, the super cycle stuff is also mirrored by Ray Dalio from a pure monetary debt perspective. So, this is the end of a monetary regime as well. There's a guy named Peter Turchin who has a thesis that super cycles that sort of map onto these super cycles are actually produced by an overabundance of elite, meaning there are just too many talented, gifted people to fit into the powerful positions of society. And so they're twiddling their thumbs. They're spinning up open source or other things and they're trying to figure out how they can get their rightful share as the nature of the economy shifts. Yep. Okay. You know, we'll come back to the Middle East a little bit, but more on a crypto topic. But, to start things off with, you know, we've been through some cycles. I think people in this room have been through. Hopefully, you've been through some cycles in crypto. To me, something feels different right now. It's not a fear and greed issue that we had in 2022, for example. It just feels like a lack of enthusiasm issue. And I it might be AI is sucking all the air out of the room, but what do you think about that? Do you think I'm wrong or right? And then how do we fix that?
Yeah, I think you're right. And there's a lot of things going on simultaneously, but I think what you're pointing at is a disillusionment or disenchantment in the crypto ecosystem proper where the degens don't feel like, hey, we are the vanguard and it's all about us and we're creating a new society. We're exiting the old society, we're creating a new society where it'll be DAOs and unicorns everywhere. And I think that's fine. I think that there were a lot of philosophical forces and factors starting in 2008, 2009 when decentralized protocols were unleashed onto the world. And a major characteristic of at least the Ethereum ecosystem and the blockchain ecosystem is innovation. But we have been an extremely immature technology for a long time because it's really hard to take a world that's been operating for millennia based on top-down command and control and trust imbued by authorities into intermediaries and sort of shared via these ledgers, these centralized databases which basically record who owns what and who has what rights and privileges. So trying to shift from that to bottom-up trust where everything is legible, permissionless, you can upload your applications or your data or your assets to this decentralized global ledger and you're flipping the trust vector of the world. And centralized trust is really capricious or selfishness involved, control involved. Bottom-up decentralized objective trust is a much better form of trust. And so we have this idealistic way of thinking about reformatting the world. And now suddenly as our technology starts to collide with the real world in the form of traditional finance, in the form of machine intelligence which I wouldn't call the traditional world but it's a major factor, suddenly we have to figure out how we can keep this idealistic dream of building decentralization-based societies alive and I think that's going to continue to grow and flourish but also how do we bring 400 years of financial innovation in traditional finance onto 10-15 years of decentralized protocol and decentralized finance innovation and really bring these worlds together and create a much more unified world where the shenanigans, shall we call them, of geopolitics and finance, you know, retail's largely been fleeced by sophisticated financial actors since it started. And so how do we bring all that together and enable the good actors in traditional finance to make use of better technology and build better systems and so it's not surprising to see that people who loved DeFi and NFTs and the good forms of meme coins, it's not surprising to feel like, hey wait what about us? Are, you know, are $4 trillion worth of native digital assets going to get totally trampled by the $700 trillion of more traditional public securities? And yes, they are. By the way,
You've said in the past, unless I'm misquoting you, that you think DeFi is structurally safer than TradFi. Is that... DeFi is structurally... Can you explain what you mean by that? And if you still agree with yourself?
Did I say that? When did I say that?
Okay, let's go with it. Let's go with that. If I said that what I would have meant was that our ecosystem has been immature for a long time. And it is getting more and more hardened, more and more mature. If you think about the different exploits because of all the great security smart contract auditing that we've been doing, there are much fewer exploits that happen in a smart contract context or on protocol and most of them happen between seat and keyboard or at centralized exchanges, things like that in multi-sig things. So it's the humans that are the weak points. So we still have a lot of work to do but I think Vitalik articulated 9 months, 12 months ago that if you look at the fact that we're at the end of a super cycle that financial systems and monetary systems are inflating, cratering, financial repression is a mechanism that is designed to enable governments to spend freshly minted money and harm the interests, the purchasing power of most of the population that can't hold assets that hold their value. That in that context it may be safer in many parts of the world to put your money in a blue chip DeFi protocol or a vault that is carefully managed by a curator rather than putting all your capital into some of the many banks in the world in some of the many nations in the world that are rapidly eroding purchasing power.
Okay. So, so I guess I was right. Fair enough. But when we talk about decentralization, we look at like what happened to ETH in 2016 when it split instead of something more drastic. But you know with Arbitrum and the Kelp hack, they've... Arbitrum froze ETH. Is that... is it even DeFi anymore? You know, and also we were talking about Iran and you had mentioned the US has several hundred million dollars of crypto of theirs that they've taken recently in stable coins, both Tether and Circle aided them in that. You know, I don't know. Is this DeFi anymore or is it just a Frankenstein monster?
Certainly DeFi. There's a lot of DeFi in what you just articulated. I think your question is how much decentralization is appropriate in which applications or which use cases and how much decentralization is appropriate or necessary in the global stack, the global financial stack. Is that...
Also yes but also you remember back in the day purists, you know, if something happened like a hack it wasn't considered necessarily an illegal immoral act. It was simply the protocol doing what the protocol was programmed to do, right? And that, you know, those days seem long gone now. The idea of freezing assets, you know, and even turning back chains seems to be more understood now. So that flavor as well, but yes, you understood the question.
So you're talking about opinions of different actors, not accepted wisdom. And there are different tribes and factions in our ecosystem. So if you look at the Bitcoin maximalists who understand that for a long time Bitcoin has been finished and perfect and didn't agree or wouldn't admit that all human constructs are situated in a social construct essentially and you can't really... like physics is maybe not situated in... even physics is situated in the social construct because... but Bitcoin interestingly has come to face the reality that if quantum computers become viable very soon that what they projected as inviable is actually something that they need to consider because Bitcoiners were crypto anarchists and were mostly focused on protecting their financial interests. And if something comes in and threatens that, then yes, it's okay to upgrade the product.
You just painted Bitcoiners with a broad brush. I'm going to let all that go.
I did. I did. Fair enough. You painted our whole ecosystem with a broad brush. So, I'm going to get to other tribes. Yeah. So, the Ethereum, different Ethereum tribes, some of them were crypto anarchists. Some of them came... we all came out of the Bitcoin space essentially. And with the DAO we faced this dilemma which was basically the Bitcoin philosophy versus what I would call the more native Ethereum philosophy where Ethereum was more focused on building a platform, a decentralized platform for decentralized applications. And that's something that needs to keep evolving that has huge surface area. And so the fact that Ethereum at layer 1 remains rigorously decentralized and must in order to preserve credible neutrality and censorship resistance, that's a social construct. That's something that we have to be vigilant about and maintain.
In this case we were talking about Arbitrum which is not... which is the L1.
So interesting. So the world needs a rational decentralized source of truth and trust at the base level and Bitcoin is one of those and Ethereum is one of those and those are the only two rigorously decentralized for some definition of the word rigorously. And then above that you can have sufficiently decentralized platforms. So stable coins or GENIUS compliance stable coins are a certain class but then properly decentralized stable coins like certain forms of DAI and liquidity and size. So, we need more of those rigorously decentralized stable coins that are based on Ether or Bitcoin because we actually don't want to be rug-pulled by President AOC if they come into power and they decide that the different government agencies can make life difficult on stable coin users potentially and on up the stack. So there are lots of corpo chains, there are lots of layer 2s and each of these have different degrees of trust inherited from layer 1 and different degrees of governance or different kinds of governance. So it's a... you know we're going to build Web3 as an extension of Web2. We're going to migrate a lot of Web2 onto Web3, onto decentralized rails and much of the economy onto that. And it's going to look in different ways like geopolitics, like national borders, like economic regions, like supply chain situations. And so it...
Okay. Yeah. You need people governing lots of things. I think you gave me a great answer to that. All right. MetaMask... you said it's not a neobank. Can you... I thought it was a neobank.
It's definitely not your grandfather's neobank.
So, it's a new kind of neobank. So, MetaMask started life...
You wanted me to say that. I wasn't going to say that.
You wouldn't give it to me.
Yeah. I'm sorry, but I gave it to you back there then.
Neo-neobank. It's a new kind of neobank.
Okay. So MetaMask started life as a sort of digital authority tool where you could go to different websites, no, Web3 websites.
When did you launch MetaMask?
Okay. I think 17 or 18 was when I first started using it. And it's much different now but yeah. Go ahead.
It's very different. So it started as your digital authority wand where you can go to different sites and you can basically sign transactions, sign messages and it evolved into more of a wallet, more of a portfolio management tool and now it's a pretty full-service new kind of neobank that you can own and you can control. We publish it. We make it perpetually available to use for free. There are some value-added services that we charge for. So we charge for swapping and some other stuff. And it now can enable you to access perpetuals, equity per Hyperliquid, prediction markets. We have a debit card that is incredibly cool because instead of sending your paycheck to your bank so you can use your debit card, you can take your paycheck and you can deposit it into an account in MetaMask and put it into DeFi instantly. And the minute you buy dinner or something using your debit card on the Mastercard network, a little money gets swept out of that. So, you're earning...
Do you have it in your wallet right now?
I have it in my wallet. Yeah.
