podcasts

Building Web 3 products people want, Eyal of Bancor

podcasts

Building Web 3 Products People Want, Eyal of Bancor

May 2020

Posted by

Jamie Burke

CEO and Founder

As an early investor in Bitcoin and Ether Jamie went ‘all in’ during 2013 founding Outlier Ventures, Europe’s 1st venture fund and platform dedicated to blockchain and Web 3....read more

Eyal Herzog is founder of Bancor Network and a serial entrepreneur with decades of startup experience building one of the first video streaming platforms back in 1998, Metacafe, which rivaled Youtube for a while with millions of users and knows about building digital products that go mainstream.

Posted by Jamie Burke - May 2020

May 2020

Posted by

Jamie Burke

CEO and Founder

As an early investor in Bitcoin and Ether Jamie went ‘all in’ during 2013 founding Outlier Ventures, Europe’s 1st venture fund and platform dedicated to blockchain and Web 3....read more

 He explains his journey in pioneering digital currencies as early as 2012, before he knew even about Bitcoin, and how through this he built his appreciation for long-tail economics and the importance of liquidity that led to Bancor which has become a key part in the formation of the global crypto capital market. We also discuss his new venture DWEB and its mission to allow communities of developers and entrepreneurs to collaboratively launch, own and operate web apps comparable to the Facebooks and Ubers of Web 2 without the need to understand crypto. 

Key themes:

  • Understanding long tail economics
  • Building on evolving protocols and technology stacks
  • How blockchains make it possible to enable the original vision of a decentralized internet
  • Liquidity a world of many digital assets
  • Winner takes all in startups
  • Abstracting token complexity
  • Building Web 3 products people want

Listen on iTunes 

 

Transcript:

Jamie: Welcome to the Founders of Web 3 series by Outlier Ventures me your host Jamie Burke. Together we’re going to meet the entrepreneurs, their backers, and the leading policymakers that are shaping Web 3. Together, we’re going to try to define what is Web 3, explore its nuances and understand the mission and purpose the drivers founders. If you enjoy what you hear, please do subscribe, rate and share your feedback to help us reach as many people as possible with the important mission that is Web 3. So today, I’ve got al Hertzog of Bancor and also, D Webb and one of his more recent projects. Bancor is described as a smart crypto wallet decentralised, simple and secure and it’s really been tackling The problem of liquidity in this long tail of digital asset, it’s great to have you on the show.  

Eyal: Thank you for having me. So a kind of a high level summary of bank or which has been around since 2012. Now, is that right? We’ve been thinking about those those things thing since 2012, and we started to design bank or on aetherium or 2016 and release in 2017. Yes.

Jamie: And you described it as solving a very particular problem, this problem around illiquidity. Obviously, this is to a degree still still a problem now, but obviously, when you first began this initiative, I think you had the kind of foresight to see that in a world where we could live with thousands 10s of thousands of different digital assets, that there would be this kind of long tail and therefore That would be a lack of liquidity for them to kind of function properly at a market level. How would you describe bancor what is the problem statement? I imagine it’s a slightly evolving thing but what what’s the current framing of Bancor?

Eyal: I would, I would love to agree with you that I was so visionary and I saw the future due to liquidity but unfortunately, the reality is less glamorous than that. The reality is that I we hit a wall, we literally hit a wall, when that I saw Bitcoin in 2011. got completely all in so you know, so excited about it about the potential. And in 2012, we thought, you know, maybe we should, we should allow anyone to create a token and then really use this to kind of let use that tokens and we thought about in the context of local currencies and community currencies and That’s what we did. And it was initially very, very successful. We created communities that generated their own tokens and created marketplaces and exchange tonnes of goods and services in to the extent of, you know, community of 10,000 moms extending, you know, making thousand transactions every day buying, like, stuff from each other. So it was very, very successful. But at some point, especially when we had multiple communities, and we started to see the need for liquidity for those user generated token, so when I’m saying liquidity, I’m actually meaning that the most important, I would say challenge for new tokens is price discovery, that’s part of the liquidity process that you know, providing liquidity without price discovery is easy. specking right. So the price discovery is there. The tricky bit in it in this industry, so how do you discover a price of, of a community currency or another? And the answer for price discovery has always been an order book, you have an exchange and orderable. And then you have lost trade. You look at the last trade, you see the price of the asset. That’s the price discovery. The only problem with this method is that it requires, you know, a lot of trading to happen in order for this price discovery to work. So you need to be listed on exchange and you need some, I don’t know market makers or people to really be engaging in trading it and then you can say, Oh, I have liquidity. I have price discovery. And that’s obviously not an option for local currencies. So we needed to find a different solution. We had no choice we had to find a different solution. And we didn’t a lot of kind of thinking and experiments and trials. You know, I can talk for 10 hours. But I won’t. But we ended up in 2016 after being inspired by what smart contract can do, because the first time that I kind of really and I would say, dived into this whole world of smart contracts and the potential was 2016. And based on that, we were able to design a solution that will always allow you to convert one asset to another even if there is no counterparty and that was the big breakthrough of banker because before that, you always needed a counter property in order to buy an asset or sell enough and with bank or we were able to design a system where they Counterparty is a smart contract. So it’s only you that is needed. And in order to do that, we had to build the design, the bankers formula that would make sure that whenever you’re buying an asset, the prices data will go up, when you’re selling it, it will go down. But it has nothing to do with the existence of Counterparty when you buy. Now, if you think about it, it’s almost making price discovery as synchronous. You can think about it in the context of, of a real estate. And then how do you make that liquid. So you know, obviously, if you want to sell your 10% in some house in London, then it might be challenging to find a buyer when you want to sell it. But if using a synchronous liquidity, like in banker, then you just going to sell it to a smart contract. That is going to reduce the price of that token. So maybe in order to get your cash now, you actually sold it for three or 5% below the market price, maybe even 10% because you really needed the money. You know, my father is in real estate. So I know when people really want to sell they will, you know, grab even 50% of the price If they need cash now, because it’s an illiquid market, but let’s say you’re selling to the, to the liquidity pool, the bank liquidity pool, and what happens is that the price is reduced. And that creates an opportunity for someone else to buy it, but not in the same time. So you just create an opportunity for that, that lasts for a long time. And that’s kind of how it works differently and white solve the problem.

Jamie: So this is what you call this kind of formulaic price calculation and this continuous liquidity and and that aggregates into something called Smart tokens, right? That’s kind of the way you describe the innovation.

Eyal: So you know, smart tokens is a generic name for tokens that are able to hold other tokens to own other tokens, which is a concept that I never thought about before I got into bank Bancor, where we kind of needed something like that. We needed a token to own another token to provide liquidity for that master token. And that’s just One of the models that you can use the banker, but but smart token is really a generic name for that. And, and, and you today people use the term liquidity pool for what we are what we have introduced in 2017. Mostly the term liquidity pool, I can tell you today because now it doesn’t matter, that we wanted to use those terms. But back in 2017, the lawyers told us don’t use those terms. It’s like, those are dangerous words, but like what we believe them but today everyone is using that term, they were worried that it sounds too much like too much of regulated terms or something like that. But, but that is how it’s called today. liquidity mostly.

Jamie: So one of the reasons why I wanted you on specifically as a founder is because, you know, you describe yourself as a person Product architect, you know, you’re very much focused on product. And you have a few decades of startups focused on products in particular kind of consumer products. And so, you know, I think it’s you’ve always described, it’s quite funny that you’ve ended up working on something that was based almost like as a financial infrastructure, because that wasn’t necessarily your interest. It was just you had to solve a problem that you came upon. And when you’re talking about a lot of the innovations that you’ve come up with there, that was as a consequence of a project to precursor to a bank, or in a way which was, which was app coin, which you did in in 2012. Right. So that’s when I kind of got those numbers mixed up. So if I kind of look at your, your background, and kind of what led up to App coin, and it’ll be interesting to understand, you know, what, what set you out on that journey as I ended stand it. You’re Israeli born and raised in Tel Aviv, as is, I guess, almost conventional to how you worked in the military in unit 8200. Do you say it that way? Right? 1200?

Eyal: Yeah, H 200. They usually say a 200 a 200. Okay.

Jamie: From there, you ended up founding a number of CO founding a number of different startups. One was a social network in 1998 contact.com. You had huge success with something called meta cafe in 2003, which was a user generated video sharing site, I believe, at one point bigger than YouTube.

Eyal: In the beginning, it was bigger than YouTube, but then YouTube kind of exploded. It was the second YouTube in what is unfortunately a winner. winner takes it all market.

Jamie:  Yes. And so I think when I’ve researched you that the two things that come out as lessons, I guess, That become apparent in how its informed. The next things you’ve done is one is this winner takes all peace and also the power of long tail. And I guess that’s as a consequence, if you look at video production user generated content, this this concept that you have a long tail of content that is equivalent in size to, you know, a handful of larger content creators,

Eyal: I would say that would be good if it was equivalent, but but we found out that the long tail compared to the greatest sheets, so let’s say you take all the videos that are absolutely The Greatest Hits right now, let’s say this month on the internet, the new most amazing videos and you think the longtail the longtail is probably 99.9% of the traffic. That’s the crazy thing. That the greatest hits on video is literally nothing. It’s so small look at Reddit to be That’s the greatest. Look how many views they have there. It’s nothing. We’re talking about billions and billions of videos that are viewed every day and the greatest hits are just a speck in the water.

Jamie: And so that that kind of working within a longtail with with meta cafe, that the kind of next startups is almost like a theme that carries through there with with App coin, as I said, a kind of precursor to bank or in a way which was around user generated private currencies. And I believe that that led to about 10,000 transactions a day at its peak. So what what was it? What is the theme that’s kind of continued through Mehta cafe through to, to App coin and now Bancor

Eyal: no with Metacafe. I was first kind of introduced to the world of user generated media in general. You It can be audio video text, but, you know, obviously video is a huge category in that. And, and that was actually a big Miss for me because I was working on the assumption that, you know, we’re gonna have those amazing videos that people are going to create and we want to platform for that. And if you remember, I don’t know, a long time ago 2001 2002 there was a big phenomena of videos that were sent from person to person via email. That was a big deal. And that has been quite an inspiration for me. Because, you know, I was getting all these videos and I said, you know, email is not the right platform for to do that. Not at all. And and Metacafe a lot of those kind of, I would say impression lingered because I thought, you know, let’s get the platform let’s build a platform where people can post their, their content and we will find the best one and we will show it. It was, again much more like Reddit than it is like YouTube that we’re building essentially a flicker for video just host your video and then you can embed them and search them. And we were building a destination site that would actually bring up the best sub stuff. Now that’s strategy failed miserably because again, I learned that was around 2008 or nine I don’t remember exactly I learned about the longtail about that concept that I did not appreciate before that it was not even that that concept was not even conceived when we just created that. Metacafe. So, so, through this understanding, I realised that I actually you know, I really may or may have gone to the Wrong strategic direction with medical fair, because I missed the understanding of what the long thing really means. And I thought it was a beautiful concept because it really shows you that if you remove the barriers on distribution and publishing, then you can see the beautiful variety of, you know, our culture. And you can see that many, many people have very different interests and people are actually more engaged. As, as their interest is more niche, they get more engaged. So, so I learned about that and I didn’t want to make that mistake again. Obviously, and and when I first saw Bitcoin 2011 I thought to myself, Oh my god, you know, this is just the currency, someone created it. We don’t even know who and everyone’s using it. And here there is also Litecoin, the name coin and all My God, that might be a long tail here as well. And we said that in you know, 20 2012 that this this going to be a multi token world. And that was long before you know everyone issued their own token. And and that’s kind of that was, I think the inspiration to create the app coin to say, No, let’s create a system where it would be really, really easy to issue a token to issue your own coin to use it and see how people interact with it. It was so new, everyone that people didn’t even think about the concept of using non national currencies at that time. This is 2012. And, and that was kind of the division that that the app coin started with. And at one point, we realised that it’s not going to be so helpful if you’re going to let anyone create a token. If that token is not liquid Because if it’s not liquid, it’s like, it’s like creating a local network that is disconnected from the internet. It can be useful you can transfer in your office, all kinds of stuff, you can email internally, you can calendar internally That’s nice. But how much better than that will get when you just connected to all the other networks in the world that is so more efficient and that the same thing goes with currency. If you have a local currency, then it can only buy some local products but if it has liquidity, then it’s it’s money then you can buy anything with it. And and and that was a big realisation that kind of drove us to create bank.

Jamie: And so Bancor was actually created with the same co founders Galya and guy of bank or which was Bancor an evolution of app coin, or was it a kind of separate Project a distinctly separate project that was solving for the problem that you discovered with that coin.

Eyal: Yeah, I mean, it was it wasn’t the same. The same founders, the same teams, but it was a completely new project. We build it from scratch on aetherium. You know, it’s a general rule, you want to build your system. You want to rewrite them after three or four years. But we started from scratch and we built it on aetherium. There was no aetherium in 2012 when we started upgrading, but all of a sudden, there’s this blockchain. Obviously, we noticed that in 2014, that there is a blockchain that actually has built in support for creating tokens. That was the first blockchain that you know, you go to the homepage of aetherium dot, Oregon, hey, create your own, you’re your own token. This is how you do that. So we feel like the world He’s moving toward us. And and that’s why we, we chose to build on ethereal. And we build it completely from scratch.

Jamie: And, you know, I think one of the big challenges when you speak to founders in the space, especially those that have been, you know, trying to build businesses or scalable solutions, over the time period that you’re discussing, you know, from the early days of a theorem is, you know, often they feel this challenge of being at the very edge of a market is you’re building on a, on an evolving stack. So as you say, you know, you work with what’s available at that time. But very quickly, new things pop up, you know, how do you how do you navigate that as a founder when you’re trying to execute on a particular thing, but you have this reliance upon an underlying stack that you can’t necessarily control?

Eyal: So you know, this is I think this is one of the toughest problems that I had to deal with. Because no, I do have a tendency to get excited about things prematurely. I know that. And that’s a problem. That’s a real problem. You know, people tell me Oh, yeah, you see the future. I mean, fuck that. Because, yeah, you know, yeah. Seriously, I mean, I’ve always been seven years too early. That’s, that’s too long. I mean, I’m seven years I’m saying because I created a social network in in 98. And even you know, most people don’t know that that we created I created a company for user generated core user generated content. In 99. Its name was e lol.com. was also you know, in the.com, kind of crazy era. So those two concepts that I got Super excited about in 98, 99. They really matured about seven years later after I got excited about them,

Jamie: and maybe you shouldn’t, maybe you should set a calendar. So every time you have a new idea, set a calendar reminder in seven years time.

Eyal: Yeah, that’s what I did. But the problem is that I’m so excited about it. It’s always like I can’t help myself by going build it. You know, when I saw Bitcoin, I didn’t care about the infrastructure that it just, oh my god, this is going to change everything. Nothing’s going to be the same. I mean, the only time I got the reaction that I had when I saw Bitcoin is when I discovered about the internet, which was 93 or four the remember, but that’s the only time that I had this reaction of all my god, that’s gonna change everything. And I just didn’t have a choice but to kind of build something on that and I’m actually happy that I did because Because, you know, you learn from all that, but the difficult thing is to let go. The difficult thing is to say, Okay, I, you know, put my best years and my best time into that. x. Obviously, that was too early. And we didn’t use the most optimized analogy, there’s so much more now stacks that you can use. It’s time for a rewrite. And that’s the hardest decision in the world because you’re so connected, you’re so attached to what you’ve built. And you’re so proud of it. Sometimes, you know, but, but you it’s very hard to let go and, and what I discovered is that, again, if you if you’re running with something for two years, and it’s not being it’s not exploding, okay? It’s, the market is maturing, you’re making profit Guess everything is okay, but it’s not exploding. That might be a very smart choice to kind of say, You know what? Let’s think. Think about the rewrite don’t don’t even do that. Think about it theorising given all you know everything that you learn all the technologies, all the stacks, all the infrastructure that exists now that did not exist three or four years ago, how would you build it? And that just exercise this thought exercise for me was was really really revealing. Because Because I realised that I, you know, I didn’t want to think about building it from scratch. And when I did go ahead and think about it, then I discovered Oh my God, we can build something so much better, so much simpler with all our experience with avoiding all the the wars that we ran into. So that is, that is How I kind of deal with those situations you just need to consider rewrite after a while, but it doesn’t take away your learnings and your understanding of the wiring that has been established in your brain throughout this period. I mean, if I would not think about conversions between tokens and raise and reserves and and research those, those mechanism, you know, I researched the original bank or the bank or Keynesian idea. I was reached, researching that during the AP Khan days to realise how he connected you know, how he propose to connect different national currencies to each other. So, so all that is with you, and that’s kind of the important thing, I believe.

Jamie: Yeah, I mean, it’s interesting because clearly, there are so many, you know, you’re smart guy, that there’s so much to get distracted on and it’s difficult to determine whether Whether it is a healthy distraction, whether it’s gonna lead to a new breakthrough innovation, or whether it’s kind of kind of take your eye off off a particular roadmap and i i certainly see it in the startups that we invest in who are very early pre seed seed, there’s so much potential in front of them is really difficult for them to kind of focus on, on on product and execution rather than going down intellectual rabbit holes. Yeah. And I think this is this is really why I wanted you on the show, because I know as a product guy, who’s who’s had to solve very complex problems, the does that kind of tension there. So if we look at Bancor I don’t know how you would kind of measure it, its success now, but I think, you know, most people would regard that it is, it is, it is serving the need and the market that existed. How do you kind of quantify it six measure its success at the moment.

Eyal: So in terms of adopting the Bancor formula and liquidity pools the first we’re introducing a white papers and, and the whole idea of liquidity network. And that has been great this is, you know that this is one of the pillars of decentralised finance. It was adopted in many other blockchain. It is used on iOS forum, around a pricing and trading. And the concept just to call a life of its own, which is amazing. bank or specifically is a liquidity network. That is essentially a cross blockchain. It’s designed. This is why it’s not relying on a specific blockchain token. And but but on the liquidity networks token Kind of the base liquidity token, in that we are different than a uni swap, for example, that are just using ether. Or Today we’re in a situation where most of the defy activity is still just on aetherium. And I did not think that it will remain this way. I actually believe that it will happen sooner that we will see more projects happening on other blockchain and succeeding, but that that was taking a little longer than I thought, but I definitely see it happening, especially now. And I think that as the world moves more and more into kind of cross blockchain and decentralised finance, you know that that would actually be great for Bancor because it is the first liquid network that that allowed conversion between tokens on iOS and tokens and ether and vice So I think you know as for Bancor liquidity network, it has a lot of room for growth, especially now that we are by the way releasing bank or version two, that solves a lot of their still existing issues with liquidity networks specifically from the liquidity provider side stuff like impermanent loss and, and and the low usage of capital in those liquidity pools, we were able to come up with a model that solve them, we actually announced it like yesterday in collaboration with chain link. And I think that you know, bancor will shine more and more as we will see more activity that is no longer not just local on aetherium, but across across multiple blockchains that can offer different advantages.

Jamie: Right. And so, you know, you have a new initiative called D WEP. And as I end And it really, this builds upon some of the work that you’ve done at Bancor and I know you referenced how bank or kind of new innovations to happen. So the way that I understand the web is that you are creating a royalty distribution engine, as you call it, which allows for an ecosystem of developers, DevOps, and other stakeholders to be able to collectively deliver a truly decentralised web service. That could be an application, it could be improved form of email where you can remove spam. How does you know what what led to the insight of D web and how does it kind of build on the work that you’ve been doing at Bancor?

Eyal: Interesting that you mentioned email because, you know, most people don’t think about it that there’s only one online service That isn’t decentralised everything else is. The second is fully centralised and own and proprietary and usually a monopoly. There’s only one single service that it’s fully decentralised and it’s the most popular one of the more we all use it. It’s called email. And it’s worthwhile to get some thought, What the hell? Why there’s only one. What Why didn’t the only one and you know if some of the listeners were using the internet early enough, they might remember that it used to be all decentralised. They might remember Usenet newsgroups that were decentralised discussion groups that obviously happening today on Reddit and Facebook groups in a fully proprietary owned and monopolised way. If you look at IRC that was I was using IRC a lot. IRC is a decentralised instant messaging both person to person and group is instant messaging that were become popular only with WhatsApp. Many years later. IRC had all that, all of it, and I was using it, and it was working beautifully. And it’s gone. The both of those services are gone and an email somehow survives. And it’s a very interesting question Why? And I think that they just didn’t have the right technology. They weren’t we didn’t have a sophisticated enough or advanced enough network technology to allow what blockchain technology allows today and blockchain technology if you know if, after nine years of being obsessed with blockchain, I think there are three advantage And each one is based on the last one. The number one advantage or utility or benefit of blockchain, I think you can classify as benefit, the number one benefit. The most important thing is that it’s a global digital ledger that anyone can read from and everyone can, can can write to any public. We’ve never had that on the internet, you never had a public ledger with you. It’s essentially a list of sign digital transaction that everyone can read. And, and you can also write, you know, it might cost you some coin or whatever, but that’s beside the point. The fact that it’s possible. Nice. We had that when the time that we created email and news groups and our IRC, you would have a very different internet today, very different from even the email itself. You wouldn’t have to deal with spam. Why don’t we have to deal with spam on on Facebook and WhatsApp and you know, I Almost never see spam on those places. Why? Because they do have a centralised data store that they use in Facebook and what’s up, and if someone is spamming the system, they can remove all the messages from the inboxes. You couldn’t do that with email. It was way, way too complicated to do it without a single source of truth. Not to mention the message, part of the problem. And that’s you know, that’s that’s the first benefit. The second benefit is that it allows for people for services for decentralised services to send not just information to each other because, you know, email servers send information to each other, use group service and information and RFC servers send a lot of data to each other. But with blockchain, they can send money to each other, they can send value. They couldn’t do that back then they had to deal with a network that the only thing you can transfer between, you know, in a decentralised network is data. That’s the only thing that works. Now, it’s not thanks to the ability to create those public Ledger’s. You can have tokens and currencies in stable coins or what have you running on those Ledger’s. And all of a sudden the internet becomes a medium that can transfer not just information, but also value on also digital assets. And

Jamie: so just on that, what To what extent because I know, again, as a product guy, you’re always talking about removing friction. And so to what extent on the one hand, you know, without coin and the idea that anybody could have a token to now To what extent has your thinking around tokens evolved? How much do you think this tokens need to be invisible Genie, they Should the end user be aware of them actively using them? Or should? To what extent should these technologies and tokenization be invisible or at least the complexity abstracted away?

Eyal: So, you know, I truly think that let’s say we had that on the internet, we had blockchain and those services could send value to each other. I believe that most of the value that you would have seen being sent between services would be stable coins. And the reason is, and I think this is something that a lot of people in our space misses, they don’t get the difference between a speculative asset and a stable coin. And this is the kind of the local terms that we use, but but you know, one that has a price that is kind of fixed over short periods of time over obviously over decades and century can change, but I’m saying, you know, the cost of one hour of unskilled labour in dollar always doesn’t change. at all, you know, over the course of few years, it’s literally the same person and money is, by the end of the day, it is kind of fair, you know, and capsulated labour, if you want to look at this way, then then that token is stable with the value of that, that that it has a stable on the other hand, you have speculative assets, and speculative assets, like shares, right. And their value is, they’re just completely different thing. And even though they’re both using the same mechanism, there’s could be two things that are more different in in their usage, because people use speculative assets in order to predict the future, when people use stable coins or money in order to collaborate with each other. This means nothing to do with each other, you know, collaboration has nothing to do with prediction, predicting the future. And based on that prediction of the future, providing, you know, provide financing or whatever it has nothing to do with you know, Going to the store and I buy bread and I’m buying the labour of the person that actually baked this bread and brought it to the store when I buy a share or even Bitcoin, I’m speculating that that this thing is going to grow and the demand will grow and and and I might lose or when doesn’t matter if

Jamie: you say that the mean is if you separate those two things would you say that you on one hand you have something like app coin, which was this idea that anybody could issue a token for anything presumably with a speculative component to it. And then you have something like Bancor I mean, if you if you go back to as you said the the original the bancor which was this intended to be this supranational currency conceptualised around World War Two I think directly translators bank golden in French, so Clearly that is supposed to be stable. So with bancor was it more around this kind of separation of stability of of price. And then something like app coin was more around the ability to create a digital equity.

Eyal: With you know, without going we didn’t have any notion of price because we didn’t have any, any any liquidity mechanism in place that can support those assets. So, in fact, what happened with the app coin is that the communities that were using the solution would generate their own token and they would say something like, let’s imagine that this token worth one Chieko to the Israeli national currency. So, so one token is one check of the end they they kind of worked on that assumption when they traded a lot of local currencies are like using the same would say and method. And, and really, I think that the local currencies that Shouldn’t be speculative, speculative in local currency that is usually a you know something that that represents labour. However, labour is not always the same and you can see that between countries. So even though Israel has a stable coin called the shekel and us as a stable coin called the dollar, there is a price difference between them, and the price differences are usually a result of their respective economies. So, if people in United States are making amazing thing that everyone in the world wants, then people will need their currency and you will see the value of the dollar going up relative to other world currencies. But, but that does not mean that there are not stable coins because each one in its respective geography is stable and the cost of labour unless obviously, it is Venezuela and the currency fails completely or cases like that. But in the In normal situation, then you have different tokens but different currencies by different countries, but but still price differences between them. And that was kind of how we, we, we looked at it in app coin, but we bank or all of a sudden you have assets that are completely speculative, that are like, you know, the internet stocks of 99. Right? But who knows how big this thing’s gonna be? And what’s gonna be the part of this group or this team in this new future that is being built. This is not about labour. This is not about exchange of value to to collaborate. This is about speculating. And by the way, when when people the easiest way to see if a currency or token is for speculation or for circulation, just look at what people do. If people buy and sell it, it’s a speculative asset. If people are sending it and transferring it, then it says that it’s money that it’s something that is used for collaborations. And, and I think that, you know, in app coin, we had tokens that were useful collaboration, because that’s what you do with local currencies, but with the bancor it was, you know, we serve tokens that were mostly speculative in nature. And and, you know, we helped with their price discovery.

Jamie: Right. So then if we look at D web, on that kind of continuum, we have, as I understand it, an attempt to remove friction that comes from having this kind of speculative layer, in order that people can presumably build services, web services decentralised services that that allow people to participate, and presumably remove some of the complexity volatility and stuff to operate as a business is now

Eyal: Yeah, I think I think this is an excellent, you know, an excellent way to describe it. Because and and to be honest, I never talked about this aspect of it before. But I think you’re right on here that it used to be the case that in order to have any model, any financing model any, any way to bootstrap a Web 3 company was you create your own token, sell your token, find a way for to use that token in your system. And that could have been the only way to raise capital, even in this market in an AP form. And the web is essentially offering in a different way, a very, very different way with the web. It can all work with stable coins. So if the only tokens in the world is a stable token, or you know, bunch of stable token so maybe you don’t want to put your eggs in the wall. One basket, that’s fine. It works perfectly because the web is not about the need to create a token that its value appreciate when the network grows. It’s not about that. The web is about creating applications that end user want to use. And I think first of all, that’s that’s the core of the web. It’s dead simple to build a new app, you actually build your application on Google Firebase. And not everyone knows Google Firebase. But it’s like the simplest way to build an app. You don’t need to think about blockchain and you just use the D word framework takes care of all the nasty stuff for you. But when you use the framework, and you build your service, the way that it is different is that you don’t need to be hosting the service. And you don’t need to be marketing the service. So there’s two key key things that that are the difference. The first thing that you don’t have need to have because you can just take your code or binaries or whatever you prefer, put them on some GitHub and and And from that point, anyone in the world can become an operator of your service. So let’s say let’s talk about the service that we’re building and the web kind of the first service that we build on the on the framework, which is not surprisingly, a discussion group wide discussion group, because that is the first big, large, current category that failed to establish itself as decentralised. Email succeeded, but discussion group failed. And now we have this monopoly platform monopolies that running those things, and we know the problems that are experienced through that model. So with discussion groups, I build a software grade discussion board. And and anyone can and now anyone can become an operator of that discussion group and essentially take myself or put it on their instance of Google Firebase or servers or whatever, and they’re running it. Now. Usually in the old internet. If you would do that. You will get many small d connected, walled garden of services. And with the web, every action that is every event is being registered on the blockchain. So all the operators, they can all write to the same blockchain, but they can all read everything that everyone else is writing. So they essentially have access to the same data set set to the same data store. And, and then it doesn’t matter which user is using which operator infrastructure because they all see the same data on the back end. And that’s kind of the biggest advantage of blockchain that I think people still don’t realise because they’re not many examples of that being being leveraged except, you know, obviously, stuff like Bitcoin that you you can see that everyone is using the same database of who owns how much Bitcoin on the background, but we never took it to the application level.

Jamie: So you made a conscious decision to choose this particular framework is that in order that you can onboard, what you might class, the typical web to developer into this world, what was the decisioning around, you know, picking established frameworks, and in particular those from Google,

Eyal: it’s, as you said, but but I can tell you that we had, you know, really, really tough experience, building decentralised services, it’s not easy. There were not a lot of production decentralised system in the last three years. And we were one of the existing one that actually had to deliver the work with those blockchain and have you know, 10s of thousands of users. And that was very, very challenging and both to build to maintain to keep up it’s, it’s hard and we wanted to make it really simple for for for developer and also to take it outside of the scope of building blockchain applications. That are all around defy. And you know, tokens. I mean, look at the example what are we building? We’re building a discussion board. It has nothing to do with blockchain. But But as you’re going to see, I think it’s creating the best discussion board the world have ever seen. Just because it is using that technology, because it’s leveraging that technology just like it’s like, you might have them best mapping service in the world. But guess what, the first one that’s gonna create maps on mobile devices, is going to create a much better app, you because his app is available on mobile devices is where you need the maps, and not on your personal computer. So So by using this technology, the same application can be, you know, hundred times more, more valuable to the end user. And we’re seeing the same thing if you just take a discussion board, like we’re building right now. And First of all, I love the fact that I only need to focus on building the code, I don’t need to focus about operating it. I don’t need to focus about censoring and policing, the network and legal and all kinds of GDPR. And I just, it’s not. It’s not me, it’s, it’s, I’m building the code. And you know, everyone may operate it in different jurisdictions and kind of deal with whatever they want to deal with it. But But for me, it really simplifies My, my, my work. And what makes it even possible is not just the fact that all the operators that are running my software, they can see the same data. And thanks to blockchain, but that’s not enough because I need to be compensated somehow. And this is where blockchain really shines. Because all of a sudden, I can say, you know what, let’s say that whatever someone generates revenue on this discussion board, let’s say you promote a post so you buy the process, you promote the post, you pay something And the service just generated an income of $1. In the code of the software that I built, where the revenue is generated, there is there is code that says that 10% of whatever is generated through the system is being sent to me, the developer by the royalty distribution engine that you mentioned earlier. So I’m not selling the software. I’m not renting it. I’m not anything. I’m giving it, everyone can operate it. But in the code of the software, there’s code that will send me money whenever the software is generating revenue. And that is something that was not possible before. Now, the funny thing is that the operator does the same thing. The operator that runs the service. The servers also specify, you know what I want 10% of the income that is generated by this online service. But but but you will get it obviously, only for the activity that was generated on the specific operator servers and infrastructure. And, and and at that point anyone that can become what we like to call a marketer. Now, a marketer doesn’t need to build software, and it doesn’t need even to have servers and marketer just need to own a domain. If you ever domain you can become a marketer. And as a marketer, you just point your domain to the operator of your choice. How do you choose an operator based on the quality of service based on the royalties that they demand maybe one 120 percent, they want 10%. You might want to make a decision there. But you choose an operator, it’s an open ecosystem. And then you bring users to use the service through your domain like email providers, does that mean we’re not even inventing something new, this is just formulating, you know, things that we used to do in a very messy way. So you bring users, they can use a service to your domain, they are your users, they actually username is username at your domain, actually, your users as marketers, they’re using the operator infrastructure, which is hosting the developers software. And whenever that user is generating and promoting a post, what happens is that the marketer is getting share of the revenue, the operator is getting a share, and the developers getting share, and they all can all charge as much as they want. And it’s a free market and people will use the best stuff that is priced the most reasonable way. But it makes your service operated by ecosystem. You know, we think we build decentralised application. And that was, you know, kind of my evolution from bank or to the web is that you know, I created a service on banker to create your own token. And it was really cool. We call the creator the Ico It was kind of targeted on content creators, YouTubers, stuff like that. But then I kind of noticed, hey, you know, it’s really nice that everything is decentralised but in order to use greater than or equal from now to the foreseeable future, you probably gonna need to do that through creator dot Ico domain mean everything goes to us meaning we own the service. We run it, we take the decision of where it will go, it’s ours. It’s not decentralised. It’s not like email. It’s very, very centralised, because we always thought about decentralising, the back end. And all of a sudden, you know, this is kind of what I should have been when we said, your service that you access from a single domain. It’s not a decentralised service. It’s very much centralised, the domain can be close tomorrow, and you know, things should not be operated through a single pathway. So So this is kind of how we, we evolved the concept that is really not about tokens. It’s about them. market of performance based royalty distribution, revenue sharing, you’re a great marketer, you’re gonna make a lot of money, you’re great. At operator, you’re gonna do great. You’re great developer, people love what you build, you have a lot of operator of hosting your software, a lot of marketers are free to use it, you’re gonna do great. But it’s a revenue model, revenue based model, rather than a speculative based model, which may be the industry was not ready for back then. But it’s definitely ready for today. A lot of people are making a lot making a lot of profit from the blockchain related the businesses. So we think the market is ready for that.

Jamie: I was just gonna say it’s, it’s a fascinating approach. And I think, you know, for me, what’s what’s so interesting has always been so interesting about the space is the ability initially for tokenization to allow for more open source technology to be birthed into the world. rather than, you know, proprietary technology that kind of dies, there’s and dies with with the health of any given startup. So I think, you know, this idea that you can have ecosystems, build not just stacks of code, but then startups on top and everybody is remunerated. Through royalty revenues, rather than, you know, potentially speculative value, I think is a is a really novel approach, then. And, you know, I think, I think clearly that comes from, as I said, your focus as a, as a product guy, somebody that is thinking about how you can develop things that are usable and where you can remove as much friction as possible. I mean, I could talk to you for hours, and certainly I think D Weber’s, is probably going to give me a few sleepless nights as I try to kind of wrestle with it, its potential, and how that plays out alongside the token space. So I I want to thank you for your time today almost definitely want to try to get you on at some point and and hear about your experience with the web. And if you have any ideas that you think might happen at some point in seven years time, maybe just email them over now and we can speak in six years time.

Eyal: Sounds great.

Jamie: Well, thank you so much for your time.

Eyal: Thank you.

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