E100: Institutional DeFi on Bitcoin - Tycho Onnasch Interview | Co-Founder of Zest Protocol

[00:00:00] :  what is up you? Beautiful people welcome back to the built on Bitcoin podcast where we cover all the innovation happening across the Bitcoin ecosystem and that's we're doing today. But it's it's been a crazy time. Crazy crazy week. I think I saw Bitcoin just dropped to its lowest point in two years over two years with this whole F. T. X. Explosion thing, which really is crazy. There's been quite a few villains, people just mismanaging funds going along and it should should have been not so leverage a bunch of stuff over the past year or so in this bear market, which is my first one and it has been a while to see. But yeah everyone's still reeling from the F. T. X. Thing and it's actually a good time to talk to the founder I have today which is Taiko, oh nash, he is the co founder of something called Zest Protocol which is on chain. Bitcoin capital markets, it's on stacks but lends out Bitcoin to institutional borrowers who want to borrow against the balance sheet and LPS who want to lend out their Bitcoin and get a yield. So it's one of the first Bitcoin products, it's all on chain that's offering under collateralized Bitcoin lending. So super super cool. I'm not usually a finance guy but Tycho made it super easy to understand. This one was fascinating and recover a bunch about his background when it came to choosing a chain. Why go with Stax versus something else and a bunch of other stuff around this protocol and what this actually is that they're building. So without further ado, let's jump in. But first, a quick word from our sponsor. We all know Bitcoin is for the innovators, the revolutionaries and the builders looking to build a better world for themselves and for the next generation, we also know the saying the best time to plant a tree is 20 years ago. The next best time is right now, the same thing applies to building on Bitcoin. If you want to come build with the most active developer community, building new use cases for Bitcoin and it's time you make the leap to learning clarity, clarity is the stacks smart contract programming layer, which enables us to work on defi smart contracts and so much more all built with the safety and security that comes with Bitcoin. Start today by going to start dot stacks dot org. Start dot stacks dot org has a five step journey that will take you from complete stacks, novice to teaching you clarity all the way to finding a job with the web. Three stacks startup. Don't wait another month, year or decade. Waiting to get involved in the Bitcoin ecosystem. Start building on Bitcoin today. Go to start dot stacks dot org to start learning and building today as always, thank you to the stacks Foundation for sponsoring. And now without further ado, let's jump into this podcast with Tyco a Nash, co founder of Zest Protocol. Welcome to build on Bitcoin. Tycho. How are you doing today, my friend. Yeah, great. Good to good to see you and very, very excited to be here. I think we've talked for quite a bit about, about doing this. So, you know, here we, here we are. Yeah, this is, I'm excited for this one. This has been somewhat of a long time coming, but we're waiting for the right time, ideally, you know, test net launching feels like an appropriate time. So, first of all, you know, it's been, I'm sure it's been months and months and months of work. So congratulations for getting to this stage. That's huge. Yeah, Thanks. Thanks very much. It's been been quite uh I guess we sort of started some development around january of this year. So it's like, uh good that we're here now we can iron out all the, all the bugs everyone everyone finds and stuff like that. So, you know, the work definitely definitely continues. But it put a good, it's a good like thing on the horizon for, you know, going to mainland. Perfect. Well, yeah, I'd love to jump in. There's a ton to talk about. Zest will be probably the bulk of this. But I think you have an interesting story to go kind of in the weeds about. And the first way I like to start most conversations is what got you into Bitcoin because the more I asked this question, it sounds so simple on the front end, like what fascinates you about Bitcoin. What got you in and it's like well it could be a bunch of things that could be sovereign blah blah blah, it could be the economy's going to blah blah blah. There's always different angles to Bitcoin. So for you, what was the kind of like carrot that really got you in and intrigued? Yeah, the good good point I think like the first time I so I'm from from from the Netherlands by the way. So I grew up in a little bit outside of Amsterdam but for the first time I heard about Bitcoin, I was still in in secondary school. Um and actually someone in my economics class presentation about Bitcoin and we all had to do like these presentations and so on. I was like yeah this Bitcoin thing and it was quite well known I think at that time remember in the news it was like you know I think like the sort of 2020 11 or 12 like the bull run around that time was like in the in the news and stuff and people were like looking at this, I think the main thing that seemed quite interesting too about it initially was that it's like it's a kind of money, you know that that that yeah, I mean the money should be very simple, right? And like you know, money in the in the current economy is very complicated and this is like a very simple kind of money that exists on the internet in some way and it's sort of, it sort of works. So that was always kind of like a fascinating thing. But it seems like this kind of play thing. I remember back then I was like, let's try and buy it. But I was, I was underage at that time, so it was, it was not very easy to do. So I was like, well that's kind of leave it, right. And then later it kind of kept resurfacing, right, sort of bubbles. I think all of us, uh, you know, experience like a different bull runs and stuff. So yeah, then at some point you've heard it five times and like, let's look a bit deeper into it. Okay. And just, I'm sure my own ignorance secondary school is is that school, high school is like high school, I guess I was like 14 or something back then. Okay. And yeah, that was like, we had like these economics class presentations and uh very cool. Yeah, I think that's one of the things, um, it's so fascinating about crypto because there's so many decentralization, privacy focused pseudonym any is like, unlike any other kind of like career or industry. I've seen, um, you're just judged on your merits like, what do you bring to the table? And so like you're a very young dude. And but you just have, you show up, you have an idea, you can, you know, get in the weeds about whatever you got to build and get to get to go and so um I guess I'm curious of what was your kind of journey going from? Did you go to college? I guess that's an opening question. Yeah. Yeah, I I did, I did. So that was like really when when I got in touch with crypto like really the 2nd 2nd time study in the UK in in in Oxford and at that I said history there, but my friends are in the computer science department and and I I sort of heard about this, you know, in theory of things smart contracting, right? Because I think kevin would just before, before I went there, he had been around um around around Oxford and yeah, they were like for the first time they were like people who are considered sort of very smart and computer science play, who were like talking about this thing right? When I first heard about it more as like, you know, kind of like a meme almost like ha ha money and look how funny and these were like sort of people in my eyes were very serious and who we're looking at it. So that that that that was sort of I think the moment when yeah, when I could have came across it again and that was really like sort of when it's stuck okay, this is like an interesting interesting thing that I found in the saS company after that. So it was like really follow through with it I guess. But then when the company turned profitable around 20 twenty's look back, okay, how is the script? I think going now and then it was like okay now is really the time to do something. Okay, so so help me help me with that journey a little bit. So I'm assuming you're going to college, not expecting anything in crypto, you were doing some other target. And then did you just say you started a SAS company? Did you, did you sell that business? Um Yeah, so so what what what ends up happening there was a SAS company mainly focused on the government, government space and and a lot of non profits for our customers. So uh see what we, what we ended up doing there is like it's still, it's still going and it's now profitable, profitable company. So I guess uh yeah 2020 was like the moment when we can turn it turns profitable and it's kind of like let's get people in there for the long run and not this kind of, you know young guys that want to keep pushing and want to throw it as far as possible because like the market doesn't really want to write. So we yeah, we changed the management so to say and then it was like yeah, onto the, onto the next thing, got it, okay and then when you're starting to decide, I like this crypto thing. Bitcoin looks interesting. You're trying to find maybe some white space of like where you can feel like be a value, what did that kind of transition look like? Yeah I think for me it was really so in in in in 2017 and 2016 I was looking like a lot of curiosity at all these I. T. O. Right? And uh and I was really wondering like okay what what is like the first sort of products going to be that's going to come out of this people will use right? Because this is just like a company with its open attached to it like that that's maybe not not really something very crypto native. And I was like yeah I need to be like an internet first use case but what? Right. And in 2020 it became very obvious right? Because then it was like the five summer right? And like defi exploded. And this made a lot of sense to me because it was like hey what are people doing with crypto like outside of smart contracts? Well they're like you know trading on finance or something right? And now we can do this like in a in like a crypto native way like with with with smart contracts. Um And and and then I sort of you know deeper into it like there was this whole like real world assets movement right? Like basically people like token izing real world assets and then use that in defi right? And people have talked about tokenization for like a super long time and they're like, yeah, at that point tokenized real estate and it's like 27. But what is the demand for that? Really? Right. And now it's very clear that like description native demand that requires like real world assets to be tokenized to do stuff with. And then I was like okay like this D five things like that that that could like pull pull in like a lot of a lot of different different people into the space or a lot of different, you know, use cases or or assets even that. I was like okay, this this makes a lot of sense. Um and um but yeah, then this sort of big gap seems to be like we're doing something with Bitcoin there, right? So it's like there's all this institutional adoption Bitcoin and then they're like this if I think it's really cool. But then they're like, oh wait, it's like a completely different world. So yeah, we won't we won't we won't touch that, right? So I guess that was sort of uh you know around that time I kind of got across stacks as well, like you know, just launching the main and you know, some of the unique features. I was like, hey maybe there is something here where you can do defi with Bitcoin, let's let's just go and have a have a look Um Yeah, maybe I'm front running already. Questions you wanna ask, but now I know that yeah, you're making my job, you're making my job easy. Um Now this is all super intriguing. So were you always, because when you're looking at what you're, what you just said, like you could go to other chains and do similar things, was there something about Bitcoin that you've always kind of had a stronger thesis on. So you're always kind of going to be in either liquid rsk stacks, etcetera and not look at any other chains? Yeah, I mean, I think it's, it's like, I was, I was, I was kind of looking around a bit at that time as well. Right, Okay. What are all the different things you can, you can build on? Like what, what are people, what are people doing? Right. Um and, but yeah, I was mainly intriguing doing something with the Bitcoin and defy because that seems to be like a kind of, yeah, like a miss a bit of a blind spot really. Um and it's okay, how can it actually be done? And then, you know, you kind of remember looking at that rsk or into that around around the same time and then it was okay, but you know, and stacks seem to be much more compelling to me just because of its sort of unique architecture, right? And then really what specifically mean by that is like that, you can read Bitcoin states right from sex, like clarity contracts and that you can and the blocks are produced at the same time. Right? So, and that's like a really unique thing that just, you can't like just add that as a feature to salon or something. Right? Like sort of fundamentally how you set this thing up. And it's like, well if there's going to be any place where you're going to do something at the core and then it kind of has to be here or it has to leverage these sort of unique features. So that was like kind of what, what sort of Drew me drew me two stacks and then of course, like, you know, the great community there and like, you know, then you kind of kind of kind of stick, but I guess they thought was like, okay, what is something that we can do here that you can really only do with this with this technology. Right. And, and yeah, like it wouldn't really make sense anywhere else. Okay, very cool. Um, okay, so I'm intrigued about, you're kind of a cent if you will into building zest into getting hired at trust machines and we probably got into stacks at similar ish times, it sounds like, and there's multiple entities now that sprung up, you know, you have the foundation doing open source work, you have stacks, ventures doing investment stuff. Trust machines spun up to build Bitcoin applications, Although that's what I'm curious about is like, trust machines are still, it seems like it's still kind of a black box, you guys are ramping up marketing and like what you guys actually do on the inside. But as someone who's been in stacks awhile and had a podcast, I pride myself on knowing what's going on and it just appeared out of nowhere like you didn't really have a big brand on twitter at the time. And then you were like, I'm building this thing at trust machines, I'm a product manager there. And I was like, what? How he didn't come in the front door, You came in the back door kind of thing. So I'm curious about what, what did that look like to like kind of technically to go from your idea to them getting the trust machines. Yeah, Yeah, I think, I think it's, it's so first, it was just kind of looking around, right? I was just kind of, and I, I knew like Lewis was the head of growth that was like leading growth at the Tax Foundation and that was like a great, great way. You know, he was like, hey, look at this, look at that. First one was reading the grand proposals, right? That's like the great thing of the stacks foundation, you can like go to the get help and you can kind of read what people propose. And back then it was like really interesting, okay, there's this Blockchain out there, like, what do people want to build? Right? And then it was like, you know, Phillip marketing co being like, hey, this is my grant, this is what I want or from from, from, from Alex, like posting the grand proposal there, or like a pseudo zack from, from alan swap. Right. And it's like, and I was just like, the guy, like commenting on everything. And yeah, and then like the accelerator got started and then I, I basically, I got in touch with Trevor and was like, well, I would love to be a mentor here, right? If that, that's possible to basically to help some of these early teams are first time entrepreneurs and kind of help them think through some of those early decisions of like, you know, kind of one on one stuff. Right, okay. How do you do a fundraising funnel or like how do we stop hiring or what, why did we hire you and stuff like that? And yeah, that was sort of what I, what I was doing this kind of this kind of discovery phase. And then, um, yeah, it kind of became clear to me that no one who was building and the fire was like, one was going to do something with this read access to Bitcoin states right there, like some of these unique stacks, features that are very much like stacks and stacks token, right? Like the deck smile Alex, which is like, great, right? But, but I was like, hey someone like we need to do something with these unique features at some point. Um and yeah, I was sort of thinking a bit about that or like pitching it also to other people, like why would you, why would you not do this? Right. If you're if you're arcade ico and Philip was like yeah it's very complex, like it's all very difficult, I don't think the tooling is there. And so I was like okay right, and then I was I was thinking more about it than I got in touch with with Gina and I was kind of explaining what I was thinking about and so on and she was like, oh well you know this is like in october I guess last last year and she's like, oh well you know, it was kind of getting started with his press machines thing and maybe maybe you should talk because he has like similar ideas right? Or he wants to like build a similar kind of Bitcoin application sort of what you're, what you're thinking about here are describing and yeah, that's um that's sort of when when I then got in touch with me than JB and yeah, back then trust machine was not not announced yet. Right. So it was just like, I mean money was also still like the hero and the only other person building something was chris right? Plastic on twitter building console. Um And yeah, but it was not really, there was no effective environment or something, right? It was just like, well, you know, you've built a company before, you built something before, like you just go right and you just figure it out, right? And then I met my friend Ferdinand and uh a good friend of a friend at the time, but now very very good friend Emily on on twitter who sort of teamed up with the three of us, so then uh then go like let's let's build this, build this thing, right? Um but yes, so that's sort of how, how it kind of all, all kind of came came together and then I guess my official title that machine like general manager, right? It's like there's there's now 44 or five of us but build a different kind of applications but but yeah, it's just more like kind of an entrepreneur residents almost kind of thing, right? It's just like uh yeah, like just just go I guess very cool, okay, well then, yeah, I think that's a pretty good segue to jump into what you're building, so and yeah, what what what is this thing that's so zesty? Uh this protocol, yeah, yeah, what is what is that's protocol, So what we, what we really started with was like, okay, we want to build a Bitcoin yield platform, right? Like using these unique aspects to a lot, Bitcoin in a smart contract and the yield on it and then, okay, how how are we going to do that? Right. And of course the main thing will be like lending right? Like there's quite a large market out there of people borrowing Bitcoin. Like, you know, at that time I was like reading the genesis quarterly reports to kind of figure out like that was a pretty big market and I was like who is borrowing Bitcoin and and have, how are they doing that? Right? And who are who are these people? And then discovered that that's mainly market makers who primarily borrow Bitcoin under collateralized just to get their balance sheet, which makes sense, right? Because if you're going to put up collateral, you probably would want to always put up something more stable and the thing that you're borrowing but in the most stable thing is a bit going right? So um so um so yeah, then then we sort of realized it needs to be like this kind of institutional lending application where where where, where, where people are, people are essentially like pulling pulling capital which can then be lent out to the protocol to institutions right? And then I came across like Maple finance that already done that with UCC and Eve and um but essentially I think that's really the fundamental insight is here like well Bitcoin is money, right? So if Bitcoin is money, then there's companies out there with future earnings a bit going and they benefit for bringing those to the president through borrowing right to invest in growing into their business. Um And uh and today that's mainly market makers right? They borrow a lot of Bitcoin but also other cryptocurrencies right? To to to market make with the trade essentially. Um And we just like sort of like they're leveraging their future future and because they take in the corn to make more Bitcoin with arbitrage and stuff like that and yeah they generate like a really good wrong real yield, but then after that you can you can imagine that will move more into the mining space, right? A lot of miners, you know they aren't going to have future earnings and Bitcoin makes sense for them to borrow Bitcoin, you know sell that cover their operations and sort of make it back over time, right? Um And then after that it could really be like any company that has future earnings in Bitcoin um to uh either borrow against those or sort of headed out right? If you're a luxury company and you're like accepting accepting Bitcoin for your handbag bags right? Maybe you don't want to hold Bitcoin on your balance sheet. So then for every Bitcoin payment, you get to sort of borrow Bitcoin and sort of sell that head jobs I guess the balance sheet kind of risk of holding the Bitcoin so yeah so there's like a bunch of bunch of bunch of different things to think about but it's more like well if this Bitcoin economy is going to be a thing then you know you need capital markets right? That's kind of the very simple insight interesting. Okay yeah describing as a Bitcoin yield platform makes the last sense and I can see how the underclass lending piece is. Just the first little domino or like part you can offer, there's so many more you can offer under that. But yeah exactly at that time it was really also like like block five Celsius or at that time the big ones right? And everyone was like oh why would someone do something decentralized? You know people already use block friend Celsius and they're basically doing this, try to take it in and they ended up right and then they yield and then it was like oh it didn't work so well maybe we do need to do it. And so it was like yeah sometimes you sort of think well at some point this will make sense. But then in crypto always thinks like play out like you know when you think it might play out in years they've had a month. So I think that one that one kind of played off right? So you said future earnings in Bitcoin and I was doing research for this, you said that in one of your recent talks to and maybe I'm just left curve. I don't understand what that means. Mm it's actually good feedback because maybe I should explain it differently. But yeah, I don't know like um what does, what does future earnings and Bitcoin mean? What it means if you if you if you like a minor has future earnings and Bitcoin for example, right? Because they can sort of say okay we we mine we have this amount of hash power so this is going to lead to you know this many Bitcoin earnings, right? They can kind of map that out right to some extent. Um And so that means that they have future, everyone's a bit going right? You can kind of, they can kind of predict, okay, if you just keep going then we earned this much Bitcoin over the next six months, right? And then you can bring that to the present, right? Like that's kind of borrowing their kind of uh basically getting an underwriter to say okay we think your future earnings kind of makes sense. So we will give you those earnings now. Okay, okay I'm starting to get it. So like the Bitcoin, the mining equipment they're using currently is producing hash rate that's producing Bitcoins in the present day relative to their part of the pool or the hash rate to the pool but just like how a bank might lend your business, something based on your revenue or your profits. You can take a look, you're saying take a loan on that and there's like an expectation of profit that the bank can assume is true and you can bring that into the future and then do whatever you want with it, whether you want to expand the business or whatever. Got it. Okay. That makes a lot of sense. Yeah. It's also the same with market makers, right? Like they borrow a bunch of Bitcoin because they've got incredibly smart market making algorithms to move this around across exchanges and to sort of make markets really right. And then that results in Bitcoin earnings and then they actually turn into Bitcoin now too. Okay. That one's confusing me again, but we can but we can posit that's okay. I'm sure I can do my own research and I'm sure that I have enough, you gave me enough data there to understand that. Okay, so thank you for that. That's super interesting. Um then actually, before we go deeper into this protocol, is this the most decentralized attempt at this kind of application that currently exists? Yeah, I would I would think so. Um Yes, I mean of course, what would be something you could imagine that could be potentially more decentralized if you would have like an over collateralized loan, right? Because then you could like Always liquidate the collateral and people could, you know, get get there, get there, get there, get quite back. Um but you know, the reality is that most also in like not real capital markets, right? Like the only a fraction of of loans are over collateralized like 2% or something of all loans in the world are over collateralized. And most are like, if, I don't know, you know, mobile or something borrows right? They borrow against their balance sheet, right? They don't put collateral for their sort of corporate corporate bond because they have like such a good balance sheet where they have such a future earnings, right? Um And so to really grow an economy, you need this kind of, you need capital markets so you need to be able to borrow against future earnings, not against something you already have today, right? That's why we have all these nice things in our house. It's like it's mainly like some sort of financial engineering. Okay. We have, you know, we have a future owners, let's try to bring some of those to the president, you pay like a premium for that. But you know, they can sort of do other things with it. Um And then how, how it works with with that kind of credit, right? Um Is that there will always be some or a little bit of information that that is not public, right? About about credit or about underwriting, right? And and the way that sort of zest protocols is built also building on like other iterations, right? Like maple finance and so on. Is that they see every pool or every bit Cancun on this protocol has like a pool delegates and they are the one doing like off chain due diligence on these on these borrowers to actually check the books right to run all these sort of very complicated uh financial analyses to make sure like that determine their credit worthiness and how much they should be able to borrow at what? Right? And then they sort of, you know, from the pool, they say, okay, well you're you're, you know, say, I don't know, you know, you're pretty good. So you're allowed to borrow as much from that because you looked at the books. So it makes sense. But that that's that's not that's not public, right? And the idea is that you have like a lot of fools with a lot of different pool managers or full delegates, right? They're all competing with each other on, you know, how how good they can, they can underwrite. Right? So it's basically creating this kind of decentralized network of these, of these underwriters who make it all work fascinating. Okay. I have like, I have like four different questions of thinking I can go down a point right now. Um I think I'll go, so you mentioned 2% of the loans are over collateralized, which makes sense, I guess like uh it's very capital inefficient or five or something, right? Like something like that. It's low, it's extremely low. Yeah. And then you mentioned borrow against the balance sheet? Is it, is it safe to think of borrowing your balance sheet? How does borrowing at your balance sheet and taking on leverage are those pretty close, Yeah, for sure. It's it's like the same almost the same same thing. Right? We'll take, yeah, it's you're leveraging your balance, that's what you're doing if you're borrowing against your your balance. Um it's sort of like um well balanced in the future earnings, I guess that's sort of, you know, if you just think about it very simply right? If you're, for example podcast, right? You have some some earnings, right? And then you know that that if you have some some sort of cash in your bank, right? And that also kind of creates some some assets, right? And that that sort of your balance sheet. And then um yeah, borrowing against your balance sheet is basically that, you know, a bank or something is going to look okay, how much cash do you have or how many desks in your background? Right. Where are they worth? And then, Okay, well where we will give you a loan of this? Okay. Yeah, that makes perfect sense. Given me a finance one on one right now. Really? So so um you mentioned the pools, they have different underwriters that becomes almost like their reputation and there's kind of like a they can compete on underwriting requirements, maybe K. Y. C. Versus non K. Y. C. Or how much yield you get? Where's the, yeah. Yeah. So there's this sort of two different, so so they can definitely sort of compete a bit on like what how they will kind of lend right? Like maybe one pool is like, well our pool is like leads to minors, right? And are cool and the market makers right? They have very different risk profiles which will lead to different fields and so on. And and also like the other sort of thing that pools can do differently is that they can either be like permission, the school's right, which is like super pool where anyone can basically add Bitcoin to or it could be a permission one right? Where essentially only wide listed addresses could could do so and yeah that just depends a bit on like you know how the how the sort of delegated the sense wants to organize and just want to be might want to be just institutional institutional other, you know, most of them just wanted completely open. Yeah. It depends a bit on like what the strategy of that specific pool would be. Got it. Okay. And the the idea of the competing, you almost have like a free market of pools that starts to take shape, which I find very interesting in the in the centralized world is their closest corollary like is lending club and it's kind of like crowd sourced ones kind of similar. Is it is it different crypto where unlock something new. Yeah I think I think the sort of main thing to think about is like you know like block fire Celsius or let it and render some of those um you know the ones of old so to say because they were sort of fulfilling this pretty important role in the Bitcoin economy almost. You could, you could say right where people would sort of put their Bitcoin there and then they would, you know lend it out to these kind of market makers or some would lead to minors and so on. Right? And the problem there is that that it's very like opaque right? Because it's like okay you send your money there and then you know they, you sort of lose track. It's like a black box, right? If you put money on sales is you have no idea right, but you still have it like who has it, how, how it works. Um And and and and you know that that could have avoided a lot of harm if that was much more transparent right? Because in the end basically what happened was that I was like, oh we're lending to three hours scaffolds or block fire was like, oh we also lend to them. We have a good relationship with them. But in the end what what appeared is like everyone thought they had a good relationship with three arrows capital and everyone was lending way too much to them and they didn't know that of each other, right? And then um Yeah and then you get, you get you get problems with like 11 goes, one goes under, right? And then what even then happened after that was like everyone was like oh let's take our money away from their massive withdrawals, huge fudge, right? And then yeah then these numbers it's like the classic bank run scenario or in normal finance you have like a I mean that's where the lender of last resort comes in, right? You say like at some point okay, there's a bankrupt, well we have this sort of center entity in crypto, you don't have that. So then poof everything goes. But then that also means that like the most credit worthy players, right, are the ones that actually deserve to have, you know, good good good good loans, they also comfort themselves anymore. Right? It's like the best market makers in the business with the best balance. You could also that sort of the struggle have been no longer you know, access access credit, right? So a bit of what happened in like may uh may of this year was sort of like, well I think like 2008 without any intervention right? It's like the whole the sort of this small crypto financial system that we had just like totally totally disappearing. I really like that sort of crypto crypto sort of capital markets are totally disappearing. And now it's like okay well let's build it up, you know, again, but then on chain right where it belongs. And again like, you know, Maple finances, like done a lot of great work here saying for clear pool and some of these other institutional lending platforms, which is really like the only thing that's that kind of, you know, works in a big way and defy at the moment. And especially in lending, are these are, these are the sort of institutional lending platforms? Um So yeah, I guess if if block five Celsius or whatever would have used the zests rails, right? Or Maple finance rails, like we could have avoided a lot of harm, but but yeah, so here we, here we are, that's that's a good sales pitch right there. Um Okay, interesting. And we've talked about a good, a good amount about the kind of like lending side, like that side of the portion and who that target audience is on the kind of like getting a yield, the Hodler's in some sense. Um who who is that for? And I guess like maybe the question is in like the different pool delegates, but is there like minimums and stuff like that? Where it's like you're going to institution on the lending side, are you going for big whales on the funding side or how do you think about that? Yeah, I think, I think it's it's really for the unit, so at the start with just very slowly kind of would would would scale up like how these, how the, how the sort of zest protocol, you know, pools get, get, get filled up and make loans and right, just kind of like in the beginning, it's gonna be a check. Like does it all work, you know, does it all work according to according to? Um, and yeah, when, when it comes to like the first liquidity providers really like, I think it's, it's most likely that it will be people who are quite definitive, but that I've had this Bitcoin sitting around like, okay, we've been looking for a yield opportunity for this Bitcoin, but the best thing we found so far was, well Putting it on a centralized platform, but we didn't want to do that or we could wrap it and go to basis points on a right, which is like 0.03 or maybe 0.07 or something. You can always look that one up, but it's like notoriously low, right? And it's okay, well then we might as well just not not earning yields with this with this big night. So it's maybe like there's defy savvy users or like defi savvy kind of funds or something right? To sort of have a bit of a duty towards their own investors to go on the field with their, with their, with their assets. Right. So I think that's where, where, where it will start and then, you know, that's like they're probably the more, you know, early adopter sort of slice of the population, right? But if you can then show that it's, it's safe that it's good for Bitcoin right? I think that's the main thing because if you can lend to these, you know, from these pools can lend to lend to uh, you know, market makers that make Bitcoin more liquid, right? Or if they learned to minors that you know, secure the wealth of Bitcoin is better or if, you know, some pools could potentially, you know, lend to Bitcoin based businesses in wherever the world they might be right, Then it's like, hey, this is, this is like a good thing for Bitcoin. So we should not hold orbit, we should like put it to work right to fuel the Bitcoin a company. Um, and yeah, I think that's kind of the sort of sort of thought where we kind of want to want to go. But yeah, initially just to see, okay, who is like the first people that like are asking for this, right? And that's like all those um yeah, that's like people who have done this before, you know another another chain. Perfect. Pretty cool. Yeah, physical designed very, uh, you know, in a smart overtime way, Very safe way. Um Okay, I got a couple more questions. We haven't talked about technically how some of this works, but I think I'm gonna save that. You've talked about it in quite further talks recently. So I'm just gonna link those down below that people want to know about how the docs work or how Bitcoin stacks intertwined. You've explained that pretty well. Other videos. So we won't we won't recap it here. I am curious though because you're at the kind of bleeding edge of trying to push Bitcoin use stacks interplay with clarity and reading, reading, Bitcoin state. What was some of the hardest technical or design problems that had to be overcame while you're building this out? Yeah, I think it would have been great. Great to be here with your friends Ferdinand. But now I think, I think the two, well initially we sort of focused really hard on the contracts and getting contracts design to work also because you know, that's what you need to audit and that will take a long time, right? And now that the audits are complete and so on. But I think the thing that's actually was probably the hardest is like, well if you're if you're building something on the ethereum or or even if you're just doing like stacks, two stacks, tokens, you quite, you have quite a lot of like dev tools that work work very well for you right? In terms of like, you know, it's kind of a hidden work of the defi applications, it's kind of like the the ui right? And like a transaction happens and then you go to the next screen in the UI and we'll kind of, you know assumes that that that works well, but that's like not not the contract, right? That's a separate thing. Um And and there you've got all kinds of braids ap eyes and great tools for for for for the first tax transactions, right? Or for stuff for ethereum or stock on Selena, like you know, you can just plug and play but and then when you want to actually start doing stuff with Bitcoin, right? Or like with like test Bitcoin, right, They need to do electro. Um I need to electron wallet then suddenly realized like whoa, like the last time that people really try to use this was you know, in 2015, right? And it's still like open source is there and not much has happened since. And yeah, so then it's really like okay, we needed to build out a lot of things. Also like with the help of like Hero and the thomas from frontal systems we also had on here at some point, right? He helped us a lot with the data indexing side, but really like the sort of challenge of like okay, you're sending someone through a flow and it's like okay now they send Bitcoin. Well if the Bitcoin is received and send it to the next screen like that is like, you know, that was really, really tricky to do and it still is right that people can use our test that they will they will figure out they will be able to find some bugs, right? That we're like are being fixed right now. But you know, that's how, that's, that's why it's just not right. But, but yeah, hopefully we have like created a lot of things that we like kind of taken out a lot of the weeds, you know, for people to uh, for people to build something similar with less, less friction, right? And that's also why it makes little sense to this like so closely like with with, with, with, with machine guns from cross machines because yeah, already at the start ups okay, like we're really, you're going to push the envelope here and like, yeah, it makes sense to, to, to do that in like a setup where there are like resources as well to, you know, do a lot of underlying work. But normally I guess as an, as an entrepreneur builder, like you can just kind of assume that there is um, yeah, I would say that that's been like the main, the main sort of obstacle. Um, and then it's also like a bit on the other side, like 16 people how it works and why it's like why it works this this way, right? And I think people are very like, they're like okay token in a smart contract and then that and you know, here it works a little bit differently, but it's still kind of pressed to the same same sort of user experience, but, but that's like also a big, big one. We need to really make make people people comfortable and so on. But but yeah that's kind of what we what we want to do in the future too so Okay very cool. Yeah it's interesting that the you know one of the benefits of ethereum is that like because there's so many debs over there you have like the tooling that makes the tooling easier for the it's kind of builds on itself and you don't really think about it. I just want you have the idea and you want to get the building and not realize there's a bunch of little like middleware stuff that's just not there yet. Yeah. Yeah and that's what consensus did as well. That's fair like I mean that's kind of trust me sort of you know sometimes you have to explain it to people like well think consensus but then for building on Bitcoin right? And they consensus built all these great tools for like pure and so on for just making it really really easy to to to do do stuff with the theory or meta mask even for that matter right? Just like how do we okay this blockade thing how do we make it actually easy people to use it to build on it and so on. They became like a massive company with all of these first apps but also just like you know paving the way with with with with good good tooling right? So uh yeah these things take time, right? So that's also what what what people here are working on really hard and yeah, and that's that's why why? Why? Yeah, why we're here. Perfect. Okay. Uh it's been a fantastic conversation. Last question I'd like to end on kind of a positive high note. And so I'm thinking like, you know, stacks with number three, maybe it's number two, you know, it's it's it's hugged up to Bitcoin and uh it's like five years in the future. You guys have been executing phenomenally in your kind of ideal. Perfect rosy colored glasses, future. What does, what does this look like? Five years from now? And what kind of impact has that had on the world? Yeah, no, that's that's a really a really good picture to paint I think. Yeah, I think five years from now, like, gosh, I think it would be, it would be really, really exciting. I think too. I think it's something like zest becomes infrastructure, right? I think that's like the real the real the real thing. So most people, there are a lot of people interacting with desperate people, but they don't know that they're there. They're doing that right? And I guess that could be a lot of different pools that will have different strategies, right? And some are lending to pull their lending to minors and other pools in the market makers and others are lending to businesses in el Salvador or something, right? That like have to journey is a bit going in that way and you know, you have this kind of global capital markets and then as a normal person, I'm just like have my Bitcoin and I'm like, okay, I'm just going to put it in this in this contract, right? And then basically what that contract does is it just takes a little bit exposure to like 1000 schools that all have like some sort of rebalancing way of like fueling fueling the big Bitcoin economy, like in a way that people now investing in E. T. F. S. Right? Or in in sort of a basket of bonds or something like that. Um And yeah, that's I think like really like long term, it's it's the kind of infrastructure for, I mean that's also what happens when you put your money in a in a bank account, right? Just put your money in a bank account and uh which is by the way owned by a centralized entity. But yeah, in the end you basically have a basket of a lot of stuff and that that that creates like a little bit of a little bit of yield in that in that way or maybe more coming coming up. And then here it could be decentralized version where you just put it in a contract and then that puts another contracts, but some other contracts and you know, in the end just kind of makes this whole Bitcoin economy saying go go around, right. And I think that's uh yeah, that's where we really, really uh yeah, that would be, that would be really excited to go there. But yeah, well then the question is like, where does it start right at the start of the day? It's okay. We'll Market makers are very good markets, you know, to, to, to, to to lend to from pools and yeah, and that's like where you can, you can build like a pretty good business today and when Bitcoin economy takes off, then, you know, you're already there. So that's uh I think that's where we uh where I would say like five years from now we'll at some point right? It's a bit, it's not in our hands when this is going to happen. But but when when it does then yeah, we hope to be able to help help fuel it right in the background. That's a fascinating north star when you were talking about the Celsius three hours capital kind of blow ups and stuff. The note I took to remind myself was on change can prevent bubbles and bursts, which kind of popped in my head. It's like when you have the audit ability of something like zest and you guys see that over time, it's not just changing the money that can make things more stable and sound, but because the money particular birth makes everything go crazy. But the fact that you can see an audit, those things that have more transparency actually makes the whole system just has better data to act on, which is so interesting. Yeah. Yeah, for sure. And that's also like an interesting note to kind of, you know, like at the end like maybe actually look and look it up because I always trying to learn that this person by by heart, but it's like the very first sense of the Bitcoin white paper, right? It's like okay what is Bitcoin? Right? And then so she's like writing, it's a purely peer to peer version of electronic catch. Oh wait, a purely servers cash would allow online payments to be sent directly from one part to another without going through a financial institution. That's like the whole that's the first sentence of this whole thing, right that we're doing. And then it's like, well if it's a peer to peer version of payments without financial institution, then why is the peer to peer capital markets like that, that we don't want financial institutions there either, Right? Um And um yeah, it would be a strange world where we have the spirit of beer beer dash that, you know, couldn't exist on the internet. People without financial institutions for them when they left and they need a financial institution and and and and they can't do it through through contracts or through through through pools. I mean, I think that's really what ties it all all together. It's just like the very first sentence of of this, this whole whole thing that we're doing, yep, okay, that's I think that's a good way to end it my man where any closing thoughts that we didn't cover or if not, where can people find out more about? Yeah, yeah, for sure. No, I think yeah, closing closing thoughts. It's like yeah, so last week we we lost this vertical so if you want to get out like well adding any funds to a pool or providing Bitcoin equality like you can you can do so if you need some help definitely have some discord because it's definitely a tricky thing to set up everything correctly and if you want to learn more about boring, potentially like we have a form and it will basically come to my mailbox to explain so that meat and yeah, I guess follow us on twitter like to stay up to date and the current aim is to go to Main net like early, early next year and yeah, so I hope to hope to see everyone there there again, 100%. And what's the links for the Twitter and the website Yeah, for sure. So the website is desperate. A call dot com, that's that's it. You'll be able to find, find everything and the twitter is at protocol. So yeah, pretty pretty simple. Perfect man, Taeko, thank you for doing this. This has been fantastic. I learned a ton. Hopefully people got violators as well. So yeah, I appreciate you coming on time and man, this has been great. Yeah. Amazing. Was it was great to great to do this and then on the next time, right, we can come back when now when we've done a few million in stuff like that. That's right. We can we can chat, we can chat again. So let's just see how that's right. Next year we're gonna see the progression and ascension of zest protocol. So, until, until it hits the backbone of all things and five years from now. That's it. That's it, awesome. Good. It's good to be here and speak some cool. Thank you. Welcome to Built on Bitcoin other things on. But I'll be figure out a way to make it out, make it out.