🎙 Synthetix's Kain Warwick: What it Takes to Scale an Ethereum DeFi Protocol

This week, we sit with Kain Warwick, DeFi OG and founder of Synthetix. In some ways, last year wasn’t a great one for the synthetic assets protocol. As many DeFi projects boomed, SNX’s price and TVL dropped. Kain says he was too optimistic about how soon S...

This week, we sit with Kain Warwick, DeFi OG and founder of Synthetix. In some ways, last year wasn’t a great one for the synthetic assets protocol. As many DeFi projects boomed, SNX’s price and TVL dropped. Kain says he was too optimistic about how soon Synthetix would be able to scale with optimistic roll-ups. If he were to do things again, he would probably use Polygon first and move to Optimism once the solution was ready.

But last year was also a time to build on a strong foundation. He’s looking forward to the months to come, when all of that effort hopefully comes to light, with the protocol fully live on Optimism, with perpetual swaps expected to be launched too. He’s a firm believer that Ethereum and its Layer 2 solutions will capture the most value being built in DeFi and web3.

Kain was building back in 2017 when most of today’s projects weren’t around. We discuss how DeFi has changed in that time. He thinks Switzerland-based foundations, and “labs” style companies are on their way out as the infrastructure to start out as DAOs right away is already here. The fact that projects can now launch at the furthest end of the decentralization spectrum, thus mitigating some regulatory risk, means tokens can more directly be tied to protocol value. To me, it seems like DeFi has been building the tools and structures that will allow it to shed more and more vestiges of traditional startups and legacy finance.

The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau.

🎙Listen to the interview in this week’s podcast episode here:


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👀 Only paid subscribers have access to the full interview transcript below.


Camila Russo: Here we are with Kain Warwick, the founder of Synthetix, in The Defiant podcast. Kain, it's so great to have you here. Welcome.

Kain Warwick: Thanks Cami. I think this is my first podcast of the year.

CR: That's amazing. I was looking back. And you were one of the first people I interviewed for The Defiant, back in 2019.

KW: Yeah, I remember it.

CR: Yeah, I had just started doing interviews. I didn't even have a podcast then. It was just interviews for the newsletter. And you were one of the first to come on. So it's about time that we had you back. So much has happened since then. And we'll get into all of that, all the latest with Synthetix, your move to Optimism, and all your larger views on the space as well. But to start I always like to get my guest's background and how they got into crypto, what led them to start the project that they're leading. So let's start there. What led you to found Synthetix?

KW: Back in 2014 I started a payment gateway and the payment gateway wasn't designed to handle crypto alone. It just happened to be a very good use case for it. So basically what we did is we created this iOS app and we deployed iPads into, I think at the time about 700 locations, around Australia. And what it allowed people to do was to go into a local retail store and pay cash for things and get that cash converted into some form of digital currency in an app or something like that. So we worked with a bunch of different people, but one of the immediate use cases that I saw when we started building this out was for the Bitcoin brokerages and exchanges in Australia at the time.

So banks were very adversarial back then. They would shut down bank accounts and do all kinds of crazy things to any crypto company back then, most of which were Bitcoin. They would basically prevent people from taking payments. And so we started rolling this out, I think in late 2015 and a bunch of people that I had spoken to previously, like Asher from Coinjar and the Bitcoin.com guys, started talking to me about using the service. And so I think we started accepting payments for Bitcoin in early 2016 and then throughout 2016 and early 2017 it ramped up and volume started, getting bigger and bigger, and I got deeper into crypto and I started looking into it more.

I think it was like late 2016, early 2017 that we started to see the premium that people were paying in Australia for Bitcoin increase. So previously they'd have to pay a little bit more, like Korea. There aren't huge mining operations in Australia, or certainly there weren't then. So it would be quite a bit more expensive to buy Bitcoin locally than it was to buy it say in the US or in a European exchange. The reason for that is that there just weren't efficient rails to arbitrage these premiums and get money into Australia and out of Australia, et cetera. And so I started looking into the idea of stablecoins. Obviously we had Tether back then. That was the dominant stable coin. This is pre-regulated stablecoins like USDC or True USD, and DAI hadn't launched yet, obviously.

I started looking at the different designs and my view was, coming from a payment background that a closed loop payment gateway, something where you actually paid to transact and those payments went to a collective pool of people who are allowing this network function would be a more optimal design than say, charging borrow fees or things like that. It turns out that isn't the case, but that was the initial design for Havven, which was the precursor to Synthetix. And then at the end of 2018, after DAI had launched and all of the regulated stablecoins had launched, we decided to pivot and go into like a wider range of assets. So Bitcoin, ETH, all the assets we have now.

CR:If you can describe Synthetix very briefly for those who are not familiar, like, what exactly does it do?

KW: Synthetix is a little bit like Maker in that it allows for someone to put up crypto collateral and borrow against that collateral. And what you borrow is a stablecoin that the protocol sort of manages. So in the same way that you put up ETH and you get DAI or Liquity, the same thing, you put up ETH, and you get DAI, in Synthetix you mainly stake SNX, you can stake other things like renBTC and ETH and a few other things, but mainly you take SNX and you get sUSD. So sUSD being the dollar-denominated stable coin within the network. And that part is pretty similar, right. It's just a crypto collateralized, stablecoin, there's liquidation rates and collateralization ratios, and all the things you would expect in a crypto collateralized stablecoin.

The difference is what we also allow you to do with sUSD is convert that sUSD into any other synthetic asset within the network at this oracle-defined price. So we use Chainlink oracles to say, okay, you've got USD, now you wanna buy synthetic Bitcoin. Great. You can buy synthetic Bitcoin. Here's the spot price right now, which is obviously aggregated from a bunch of exchanges all over the crypto economy, and you can convert that sUSD into sBTC. And so basically what happens is the people who are collateralizing this network are now responsible for managing the exposure to all these different assets. Because they're the counterparty to these trades. So it's a little bit more challenging and a little bit more difficult to be a staker within Synthetix than say something like Maker or Liquity, but you get the fees from those exchanges. So rather than paying fees to borrow or some other way of generating revenue for the protocol, it's actually the users of the stablecoins of these different synthetic assets that are exchanging between them, that generate the fees. So that's the primary difference.

CR:Taking a step back on why something like this might be useful for people globally. It's this protocol that allows you to mint assets of all kinds in a decentralized way. So like, what's the bigger picture for Synthetix? Why would this be something that people might want to use?

KW: I think a lot of us, back in the day, had this idea that Synthetix and other things like this, even DAI, would be very useful as a means of payment and a way for people to be able to transact globally. But I think we're still probably a little bit early there. So things like converting AUD into USD or JPY,or FX exchanging and things like that. It's just not that much of a use case yet. I think there's a whole bunch of reasons for that, scaling and transaction costs and all the infrastructure that we need. Most of the use at the moment for most of these things is speculative. And so Synthetix has leaned into this speculative aspect and added much more speculative, volatile assets like Bitcoin and other crypto assets, also things like commodities gold, silver, et cetera. Because the original design of this use case was for people making payments globally, anywhere using Ethereum. But I think, again, we're just not quite there yet. So the speculative use case still dominates.

CR: And why would someone want to speculate on Synthetix instead of just like going to their local brokerage, for example?

KW: So I think the main reasons are that with Synthetix, you have this range of assets that are all Ethereum that you otherwise might not be able to get that much liquidity into. So especially back when we first started, there was not really a good version of wrapped Bitcoin. And even now we have WBTC, but WBTC is custodial and so someone who doesn't want, in the same way that you might not want a custodial stable coin, like USDC, you might not want a custodial wrapped version of Bitcoin, right. So you might want a purely synthetic, purely crypto-collateralized version. The other advantage is you can go from an equivalent wrapped BTC or synthetic BTC into USD and then into a synthetic version of ETH and then into a synthetic version of gold. So you've got this ecosystem of synthetic assets that you can tap into.

But I think the other use cases is other protocols. So we've seen, for example, with Lyra, which is an options protocol, using Synthetix as a way to hedge their exposure to the options trades that are happening within their options AMM pool. So there are a lot of different things you can do when you've got access to this. You can tap into liquidity instantaneously, and you don't need to go to an AMM or need a pool. Synthetix gives you some interesting properties like that.

CR: Very cool. And like I gave you a heads up before, but this is something I'm trying out. I'm interested to hear from my guest what they think makes them defiant? We're all in this industry challenging the old guard, the old finance, old web2. What do you think makes you defiant?

KW: I think historically Synthetix has been, and maybe myself driving this, a bit of a contrarian. If you go back to the very beginning of the project, in late 2017, when we emerged from stealth mode, this idea, the implementation that we took, where we had, proxy contracts, for example, and a very centrally controlled protocol, was really not very acceptable to the community. This idea of progressive decentralization. We were one of the first protocols really lean into like upgradeable contracts and things like that. So I think we believed at the time that this was the optimal pathway and we got a lot of criticism for that. It was really interesting to see. Obviously the industry changed and maybe the pendulum has swung too far towards centralized control of these protocols, but we've never shied away from doing something that was contrarian or doing something that was not really acceptable even within the crypto ecosystem. If we thought that that was the optimal path, I've always tried to look at each problem on its own merits and say, okay, what is the optimal solution to this problem, regardless of what the consensus is in the community about what you should, or can do.

CR: That's so interesting. And so I'm sure if founders and teams who are building something from scratch in crypto have at some point or another had to deal with this sort of criticism, which the community is really not shy of voicing. So what have you learned from that? How to get over the FUD? And internal FUD is something to be wary about. It's your own community is telling you that they don't like your direction. How do you overcome that or what's the balance of listening to your community, but also following your own vision as a founder?

KW: I think you have to have high conviction right. If you don't have conviction in the space, you're just gonna have a terrible time. At the same time, if you are overly convicted and not open to changing your mind based on new evidence, you're also gonna have a terrible time. So it's a very narrow path to navigate where you need to be high conviction, but also very open to new ideas and new concepts. So I think that that's something that you hone over time. And regardless of what you do, there are gonna be people that come in and are... I mean, we have a FUD channel in Synthetix. You can go into our Discord and there's literally people like coming up with interesting ways of FUDing the project.

You just have to lean into that sort of stuff. Right. And say, well, you know, it's gonna happen. You can't hide away from it. I'm in there. I respond to people and sometimes it's funny, sometimes it's dumb. It is what it is. But I do think that if you don't have conviction around what you're doing and, and you don't really deeply think about what the specific challenges are that you're trying to solve and the solutions you're looking for then you can just get blown around whatever sentiment is on crypto Twitter or Reddit or whatever on a daily basis.

CR: I want to go back to what you mentioned about progressive decentralization. I'd love for you to talk about that process of transitioning from a more centralized app to a more decentralized protocol. I'm also interested to hear your thoughts on whether you still believe that's the best approach.

KW: I think back when we started Synthetix, in order for us to do or Havven, I should say, in 2017, when we started implementing the contracts, even the idea of using proxy contracts was really not a thing, right? So proxy contracts are something that allows you to deploy a contract and then make a change behind it. And you can change any of the logic. You can just replace the logic. And so back then the idea was you would propose some concept. And probably Augur is best example. You'd say we're gonna build a prediction market. And then you go and lock yourself in a room for two years or three years, and then you would come out and be like, here you go. Here's our perfectly designed thing.

And you would implement it. It would be immutable code. And that would be it. And in most cases that didn't work out very well. Uniswap is probably one of the few counter examples of deploying immutable code that ended up getting product market fit and even with Uniswap now we've got three iterations of those contracts, but each one was immutable and then replaced by a new factory contract. So that was just not seen as acceptable, to have these upgradeable systems, particularly when the upgrades were managed by a centralized team. So the criticism that we got was very strong by the time we started to get to a point where people actually cared what we were doing. They were kind of shocked. They would find out that the system was upgradeable and they couldn't believe it. If you go back and look at early 2018 comments on Reddit or whatever, some of them were pretty scathing.

We got to this point though, where I think we were able to demonstrate that this was a workable approach. But that was back in 2018 when we didn't really have much tooling, even Gnosis Safe that we use today. A lot of the multisigs in DeFi are controlled by Gnosis Safe, which is not optimal, but it's certainly better than it was back then. The old version of Gnosis Safe, you wouldn't be able to even run some of these complex transactions that are now implemented. So the tooling just wasn't there. So you had to have some central control in order to have upgradability. And we genuinely believed upgradability was the right thing. Today I think we're in a different situation. I don't think you need to launch with a foundation or a not for profit and a centralized team and centralized control.

I think you can do a DAO first launch and come out of the gate very decentralized on different dimensions. You can choose which dimensions make sense, but a lot of the projects that I work with today, I say to them, you know, you don't need to do all of that stuff. The first18 months that Synthetix existed, where it was a not for profit foundation that was essentially managed, had employees, all that stuff. Get rid of all of that. Start from, I think for us, it was like July, 2020 when we got rid of the foundation and we were pure DAO, that's the optimal approach today. But you just couldn't do that back then.

CR: That's so interesting because you're right. Like the OG DeFi protocols, like Synthetix, Maker, the model was this Switzerland-based foundation, which would control the open source protocol and have like different degrees of control over the smart contracts. And you're saying that, for Synthetix, this was the model, but you're saying that today that's not necessary because of how the space and infrastructure has evolved.

KW: Yeah. I mean, first of all, I think the idea of having a foundation Switzerland is just dumb. It's a dumb idea. But it's an idea that was propagated from a few people being successful. And one of the things in crypto, cause there are so many unknowns and it's such an imperfect information environment, you end up with people just forcing you to do things that were already done because it's a bit of an unknown thing, right? Like the Ethereum Foundation is domicile in Switzerland. Okay. Do that thing. At least we don't have to worry about that aspect. Right. Let's just copy that. And so I think that there is a lot of that. And whenever you go against the grain and say, actually, no, we're not gonna do that, we're gonna do something else, there's a lot of pushback in the space.

The idea of a foundation that is centrally managed or any entity, whether it's a for profit company, like a labs style company, I think is a bad idea. And I think that we are slowly moving away from that, but I think most of the new projects that are launching have the ability and should be considering launching as a DAO immediately and not domicile anywhere and not set up foundations, not set up for profit companies, just go and launch it out. It's possible to do.

CR: You're right. Because that's the other model, Uniswap Labs, Compound Labs. They have traditional companies and that's kind of separate from the protocol itself. But I guess the tooling is there and it's definitely what I also think is the next wave. But I can see how that's scary for a founder to just go out there and have this DAO and not follow the traditional steps of even fundraising and going to VCs or maybe that's out the window too. Maybe web3 and DeFi protocols just shouldn't be fundraising via VCs. What's your take there?

KW: We've kind of come full circle on this a little bit. We started with crowdsales, right? The Ethereum crowdsale was just this open crowdsale. MasterCoin and some of the previous ICOs were just very open public sales. There was no pre-seed and seed and all that stuff. They just went out and said, okay, give us some Bitcoin and we'll launch. I think that then there was a lot of pressure over time, between late 2014, all the way through to you 2016, from a regulatory perspective and with a lot of sort of regulatory uncertainty, and progressively more and more of these raises were done privately and done through VCs or angels.

I think that that model has kind of stuck around today. It's been hard to unseat that model. The idea of doing a DAO-first raise on-chain, with no entities, et cetera, is a scary prospect, I think, for most founders. Because it does go against a couple of trends that I think have existed for four or five years now. And so it's not an easy thing to do, even if it is the right thing to do, but this is where I come back to my point about high conviction. If you look at all of the information that you have as a founder today, and you're about to launch something, my view is if you have the conviction that you're going to do the optimal thing, you're going to solve the problem in the optimal way, it's pretty obvious that solution is some kind of on-chain raise.

Directly as a crowdsale. So we started with crowdsales that were only open, no pre-seeds and seed and series A and all this sort of stuff. And I think we've kind of come full circle where we're almost at a point now where we can go back to model. But it's still a challenge. There's still regulatory uncertainty. There's all kinds of issues with it, but it is the optimal solution.

CR: That's so interesting. And then that on-chain raise can be from individuals buying your token? And it can also be, via DAO funds right? Like we've seen this model emerging where instead of traditional venture funds, you have DAOs who are investing in different projects. So that can start to replace traditional fundraising in a way that's more DeFi native.

KW: Absolutely. And I think we've seen that with the amount of capital that's in the space most of the people allocating capital are now much more open to a direct DAO capital raise. I think almost all of the VCs and angels in the space have participated in some kind of direct DAO raise. So I think that that concept is becoming, again, more palatable. People are participating in these capital formation DAOs you also have things like Alen and some of the DeFi launchpads. So Alen is my side project where you can go and get a pool of funds basically from a bunch of people and then have the ability to put that into a specific deal.

So you raise one pool of funds, you put it into a specific deal. So a seed round, for example, for a DAO, and then that could be potentially your only raise. And then the next thing you do is like an LBP or some kind of price discovery event. But again, that's on-chain. So you can have, from DAO generational all the way through every single, component of your capital formation, be totally open and permissionless. Now from a regulatory perspective, there's still a lot of uncertainty there, but I think again that if you're looking at how to solve this problem in an optimal fashion, that's still the way to go.

CR: And so does this mean that like every project should have a token to do that? I mean, they would need to, right?

KW: I don't think every project should have a token. I think there are some things that are infrastructure plays, for example, where it may not make sense to have a token. Most of the things that are coordination mechanisms for like on-chain activity of some kind, should have a token because tokens are the optimal coordination mechanism in my mind. If you have a token, you can create a set of rules. You can ensure that, you know, the people who abide by those rules are rewarded, either through tokens or through some other mechanism, but without a token that's challenging to implement. I think that there's also a component as well of, without a token attention is very scarce in this space. And so competing against projects that have tokens with no token regardless of your view of the value of tokens is very difficult. So you're almost forced into a situation where you need to design some tokenization of a protocol. But I don't think that's necessary in every case. I think that there are some centralized things. If you're running Infura, should Infura have a token? I don't think so. Will Infura have a token? I don't know but it probably shouldn't.

CR: I want to speak about your views on the tokens themselves. Because at first tokens were utility tokens. It was this concept of something that you use within the protocol and you use it to pay for different services and that's evolved into now a token is really a means to have governance and have a say on how things are run and more sophisticated things as a way to incentivize assets and for users to stay locked in the protocol in some way. So there's been an evolution of how tokens are used within DeFi. What's your take? How do you think tokens should be used?

KW: I mean, utility tokens, like Swiss foundations are one of the other dumb crypto memes that I think probably should have been done away with the long time ago. And I think utility tokens are pretty much dead, right. I think almost everyone knows that utility token where it's some payment chip that floats around an ecosystem and you use is just, I think someone coin the term friction tokens at some point. And it's very true. Back in the day though, the reason why people were pitching these utility tokens, they were going to be this little payment method that would float around in their ecosystem, was, in my view, purely from a regulatory perspective. They were genuinely concerned about what the implications would be from a regulator if this token were to accrue any value.

So you had all of these roundabout methods of having value accrued to a token without actually accruing value to it directly like paying revenue or whatever, paying protocol fees to token holders. So you'd have buybacks and burns and deflationary economics and all kinds of things, payment fee burns, et cetera, et cetera. All of these weird things that were devised in 2016, 2017 to get around this. And I think this was one of the things that Synthetix, sort of made more acceptable as well is we just said, that's dumb. That is a dumb way to do things. And actually what Synthetix will do or what Havven will do, Havven, if you hold it and you stake it, will accrue the fees from within the network. When people pay transaction fees, those fees will be paid to token holders. The end.

That's how you actually create something that is self-sustaining. I think that that was at the time pretty shocking to people. They genuinely were surprised by this. These days, it's not surprising at all. There's tons of examples of things where not just people who are doing some action, so Uniswap LPs accrue fees. Great. Okay but examples like Curve, right, where the token themselves accrue transaction fees from the protocol. There's, there's more and more examples of the actual protocol fees being paid to token holders. But back then, that was not a common theme at all. So I do think that's something that has changed for the better. Obviously then Compound came out with this valueless governance token meme as well.

Between Compound and Yearn, I think were the two that really drove that meme. And that is interesting again, but if you look at even the Compound launch, a question that everyone asked of Compound and Robert was when will fees start accruing to this token? Like, okay, great, we can vote on things, but when do people actually start to earn protocol fees? And then there was this question of, OK, well, the governance will decide when we turn on fees and how much to charge and all that sort of stuff. So again, all of these things took time to play out. But back in the day, it was a bit of a scary prospect to go against the grain. And so utility tokens were the dominant meme, but I think it's been replaced by governance tokens and tokens that accrue value, which is obviously much more sustainable.

CR: The way these things are structured does seem like regulatory arbitrage. Because in the end, what the token really is, is a way to represent ownership of a protocol. And that looks a lot like a share in a company. So I think in the end, yes, you're leaving that decision to the community, so it's not centralized. It's not the management team making that decision to have revenue go to token holders. You're decentralizing that decision, but in the end, that's what this new evolution of tokens looks more like. They look more like shares in companies, albeit like a decentralized organization and not a company. And also the other difference is that, it's token holders themselves, the ones who vote on this happening, and it wasn't a centralized decision, but it is starting to look a lot more like stock.

KW: I think you really need regulatory arbitrage when you start from a point where you've got an attack vector for regulators. If you start with a Swiss foundation or a not for profit foundation, domiciled in Singapore or Australia or the UK or whatever. If you start from that point or you start with like a labs style approach where you've got, you know a for-profit company that develops the protocol, but it's somehow supposed to be separate from that protocol and not involved. If those are your starting points, then regulatory arbitrage is critical. If your starting point is, this is a DAO from day one, it's launched as an open protocol, anyone can participate, yes there are engineers contributing and yes, there's people that are designing things, yes there's people that are doing comms within the community and providing liquidity and providing market making.

But all of these people are coming together to create this protocol based on some design. And this is how we did Alen. I wrote a spec for a thing based on a thread that Mariano and I started like nine months ago. And I said, this is a spec for a protocol. It could work. And I put it out there and a bunch of people came together and said, this is really cool. We want to build it, started building it. And then everyone got together and did this fair launch of a token, where it was distributed to SNX holders who helped with the governance boostrapping and then there's liquidity farming and, and all kinds of stuff. But there was never a centralized entity at all in the entire evolution of it. So Alen, doesn't have to worry about regulatory attacks in the same way that Synthetix did when there was this not-for-profit foundation in Australia that had directors and all of the normal infrastructure you have for companies.

CR: Now if you're starting directly from a DAO, you don't need to go through all those hoops and you can just directly say...

KW: Just do the optimal thing.

CR: Yeah. Like our token is going to be staked and token holders will get a percentage of protocol revenue and that's it.

KW: And I think Yearn is probably the best example of this. Because Andre just launched it out, wrote some code and just said, see you later, there was never... And like Yearn paid the price for this. It's amazing now. And I think you can look at it and say did it need to go through that trough of disillusionment and pain and suffering that everyone went through when it was hard to coordinate this thing, but did it emerge on the other side far stronger for it? Yes. Now, could you find a way to avoid that little dip? I don't know. But what I do know is that when you come out the other side of something like that, when you've had this very open and chaotic formation process, if you do emerge on the other side, you are in a far, far better situation. And I think Yearn is probably better positioned than almost any large scale protocol in the ecosystem, because of that process of what the genesis of Yearn was.

CR: I want to go back to the Synthetix story. So we were talking about progressive decentralization and how that to you is not necessary now and I want to chat about your leaving and then coming back to Synthetix and I'd love to get some color on why that decision was made, that you felt you had to come back.

KW: Yeah the Kain abandoning Synthetix meme, I think has kind of taken on a bit of a life of its own. It's not the most accurate thing. And I tweeted about this a little while ago. I said I have a habit of being overly transparent sometimes. That's just the way that I am. I'll kind of throw things out there and I'm fairly open about what I think and how I think, and what's going on. And so the blog post I wrote was a dumb joke, an old dictator appears. It was this dumb meme as well. And I like to make dumb memes and shitpost, but I think what it did is it created in people's mind this idea that I had left and I didn't really leave. What happened was I took a step back from day-to-day governance decisions.

So we had set up this new governance structure, which was really untested. This idea of now there's a bunch of people who are doing this, but the idea of having a delegated democracy, where there's a council of people that is voted in by token holders and those people can make decisions on behalf of their constituents was not a common thing. It's starting to become a bit more common now. I think it will become even more common over the next couple of years. But really you had either direct token holder voting, or you had pure delegation to people voting on individual issues. But it wasn't like this council that was elected for an epoch of some length and they had discretion to make decisions and discuss things and and weigh all the information and make decisions on behalf of token holders.

That was a very different model. And we didn't know how it was gonna go. The first month or so of, it was very chaotic because I had this really stupid idea of let's do a liquid democracy so that people could be removed at any moment if their token holders decided they didn't like the direction they were going. It was a check on power effectively, but it just ended up in pure chaos because the composition of the council would change on an hourly basis sometimes. And no one knew who was deciding things. So it was a very nice thing in theory but in practice it's just utter nonsense and it just didn't work. And so that was the first month of this council which was earlier last year.

I think I wanted to give that space. I wasn't on the council. I wanted to give the council a chance to really step in and start to take control of things. So I stepped back and as I stepped back from that frontline discussion and, and decision making, I lost touch with some aspects of the protocol. But at the absolute low point of how engaged and involved I was, I was still doing like 20, 25 hours a week of work on Synthetix. So I was still having conversations. I was on weekly product calls. It wasn't like I just disappeared and went to Thailand for six months or something like that was uncontactable, as nice as that sometimes. But what it did do was it created some chaos within the core contributors.

At the time I think we had about 20 core contributors and me stepping back and not pushing an agenda and creating this narrative of what we were doing, meant that, these people are spread all around the world, most of them hadn't ever met each other, they were just looking around going like, who is leading this thing? Because the council wasn't in a position to lead yet. So what you had was this leadership crisis. And so when I came back, it was really to help put some leadership around the core contributors, the protocol itself didn't need leadership. I think the protocol was fine. The core contributors, the people who were building and doing things on a day-to-day basis, needed leadership. And I think we've now gotten to a point where that leadership is starting to form. We've got some senior core contributors who have formed this core contributor committee. They help with all kinds of coordination things within the core contributors. And so it's less of a problem today than it was a year or so ago.

CR: Got it. So are you still in that leadership position right now?

KW: So what happened was I basically said I'm going to run for the council. So I think in the epoch that started on the 1st of July, I said we need someone who is going to be a gateway between the core contributors and the council. So I'm gonna run for the council, I'll be one of eight people. I still don't have control, but I felt like after six months the council had proven that it was a workable model. And it wasn't gonna be as much of an issue if I was involved with it. And I'm very opinionated. I have strong views. There were token holders who were pushing me in the background to be on the council. They wanted to see me step in. Obviously I'm still one of the largest token holders.

So I had a view that I could make sure that my own interests were managed within the council, but it's still one of eight votes. So I'm still on the council. I've still been on the council continuously since then. And what that means is that I've had a view into governance decisions, as well as some of the considerations around prioritization and engineering challenges and optimization and all of the background things that have been going on, which I think helps. There are two other contributors who are on the council as well. So they help with that process. But it's still a very fluid and amorphous structure. But I think we're getting closer to something that's workable long term.

CR: What's missing? More structure?

KW: I think, still more structure and processes, and procedures. Even to this day, we'll still be proposing... There was an issue that happened, I had to propose an SIP, I didn't have to, but I thought this was the right approach to propose this SIP that said, if there's a bug, if a critical vulnerability is found, we need a way of bypassing some of our processes and procedures. So we have a process whereby every SIP needs to be presented to the entire community. You need at least five of the council members to be present. It needs to be recorded. There needs to be a public record of why this decision was made. And so there are examples when engineers come to the council and say, hey, there's a bug.

We need to fix it. Right. There's some disclosure from a white hat or something like that. We didn't have a process to bypass this committee and presentation. So I wrote a SIP and said if all eight of the council members are in agreement, if you have unanimous consensus that this thing needs to be done, you can bypass that. That's a process that just didn't exist and it needs people that are very... I'm the type of person who I just get into the details, right. I care about the details a lot. And so you need to be very diligent and mindful of what's going on and seeing where there are inefficiencies and trying to solve it. And it's just one of the roles that I play.

CR: It's really interesting. So through this conversation, we've gone through different mechanisms or innovations from Synthetix that really preceded a lot of the ways that things are done right now. Like using the native token for staking, using delegates for governance, all of these things. Synthetix was pretty early in implementing and liquidity mining was also one of these things that Synthetix was really early to. So I don't think a lot of people realize that this thing that's taken off and that's really moving a lot of liquidity in DeFi today, token incentives, liquidity mining, yield farms, all of that, it started with Synthetix right? So I'd love to go through what the thinking was that led to that decision to start doing token incentives.

KW: So I think that there are two aspects of yield farming right or liquidity mining. One is internal incentives within the protocol. So how do you bootstrap a protocol itself? And then the other is external liquidity. And we did both of them around about the same time, but I think people remember the yield farming within Uniswap more. So we had this issue where we needed an on-ramp into the Synthetix ecosystem. You have this cool property where once you're in sUSD or once you're like in sBTC, you can bounce around between all these different synths really easily. It's very low friction. It's a cool thing. Getting into that ecosystem was hard. There was very little liquidity in and out. And so after Uniswap had launched and it was starting to get traction we were like, okay this is really cool.

How can we leverage this? And so we decided to build this sETH-ETH pool that would be have a lot of depth. And we're like, we'll just pay SNX tokens for people to put liquidity into this thing. And it went from, I think the 50th largest pool to the largest pool by an order of magnitude or something like that over the course of two or three months. And all of a sudden people were like, whoa. There was this idea that liquidity was sticky. It was hard to move. There was a lot of friction for people to move. That was nonsense.

By the time we got to DeFi summer you could click your fingers and have like a billion dollars worth of TVL. So I think that what we proved is that liquidity was very mercenary and that people would move around very quickly. That they were on top of this and that markets were actually much more efficient than people assumed in terms of liquidity provisioning and what have you. And it also was, I think, one of the big drivers for an early use case of Uniswap, which is price discovery and all the things that came later. So it was definitely one of those early experiments that worked out very well for us.

CR: Liquidity being really mercenary, what can projects do to get people to stick around? What have you learned from that so far?

KW: So I think the other facet of this was like bootstrapping Synthetix itself. So we felt like we suddenly had this thing in early 2019, where people were interested in synthetic Bitcoin. There was no way to get Bitcoin exposure on Ethereum back then. I mean, there were a couple of ways, but they weren't very good. So getting synthetic Bitcoin exposure on Ethereum was really cool. It was a use case where people like, OK, cool. Now wrapped Bitcoin has billions of dollars worth of TVL. But back then that wasn't the case. So we felt like we had something that people were interested in, but still couldn't really get people to stake. We couldn't get this flywheel going. And so when we changed the monetary policy and said we're gonna go from this fixed supply of a hundred million tokens, which is another dumb meme.

I think you can go back to the ERC-20 standard to talk about that, because in the token standard, it says, how many tokens do you want? And you just put a number in, and that's the end. Now you have that many tokens, whether it's 50 or 50 billion. So the idea of having a fixed supply of tokens and they're all emitted at genesis and then that's it, I think was, was not very useful. Now what you oftentimes, is people will create a certain amount of tokens and they'll hold some in a DAO treasury, and they're paid out as incentives over time, but Synthetix is actually different. We genuinely change the monetary policy where there are more tokens every week. There's actual inflation. The total supply of tokens on the contract changes on a weekly basis.

It goes up. It's something that people I don't think even necessarily realize. You can still work out what the total supply of tokens will be at the end, and then there's terminal inflation, but it's not a standard ERC-20 token in that sense. And so we worked out a way by paying incentives to people to stake the token, to get that flywheel going and get people to actually learn how to stake, why you stake, what the benefits are, et cetera. I think that that was one of the big drivers of adoption. And I think that that's something that a lot of protocols have now subsequently used to say, okay, well, we'll pay our own tokens to get you to do the internal function, not just liquidity provisioning externally in Sushi or Balancer or Uni or whatever, but also internally. But I still think it's an underutilized mechanism. I think there's more opportunity to use it than is being used right now.

CR: Really? I feel like it's been used so much.

KW: So again the liquidity provisioning externally, I think is overused. The idea of like pool 2s and creating as much liquidity or whatever, paying out tokens to your users or to the people who are providing the service that you need internally. I think this still a lot more... it's one of those things where people are doing it, but they're just doing it the same dumb way over and over. There's a larger design space. Like people haven't explored as much as they could and I think that there's still room for experimentation there.

CR: So interesting. I want to move on to Optimism, because you were first on many things. You were also first on moving to Optimism. So what's that experience been like and why did you choose that specific scaling platform?

KW: One thing that comes to mind as you say, is maybe being first to everything is not the best thing ever. I think this is a very good example of that. I have, I think multiple, sort of allegiances here. I'm aligned to Synthetix specifically. I'm a token holder. I'm aligned to Ethereum more generally, because I believe that the Ethereum ecosystem is the most likely to survive and get through to this next phase. And then I'm aligned to crypto more generally, right? Like even if Ethereum isn't the optimal solution, if it's something else, I believe that what crypto is doing and generally what what's driving this is something that is going to transform society in a very positive way.

So I've got these different layers, right. So pushing Synthetix, which we had to do, we didn't have an option. It wasn't like, we were like, oh let's go do Optimism because it'll be really good for Ethereum. It was like Synthetix needs a scaling solution here. We had a whole bunch of issues that we were facing around latency and oracles and transaction costs. Synthetix transactions have always been very, very expensive. Even back when Gwei was 0.8. I remember putting in 0.8 Gwei transactions, people would still be like, oh my God, this is so crazy expensive. This transaction costs me like $2. And you're like, yeah, look, they're complex contracts, that's just way it goes. By the time got to the peak, like it was costing people $500 to do a Synthetix transaction.

It was just crazy. Right. It was just absolutely cost prohibitive. Synthetix forces you to transact regularly. You have got to claim all the time. You've got to rebalance your collateral ratio. You can't just dump money in a pool and come back six months later. You have to be doing things on a constant basis. And so we had to do this, but even if we didn't, I still think that someone had to be the guinea pig. Someone had to be the project that was willing to say, rollups are the solution. We're going to do this. This is the optimal way of scaling complex, smart contracts. Let's go through the pain. And we did and it was a lot of pain and, I think yesterday was actually the one year anniversary of us being live on Optimism.

It was a long process. We still don't have all the contracts fully deployed on Optimism and transitioned from L1. There's still legacy contracts on L1. So it's been a painful process, but if you asked me, would I do it again Weighing up all of my allegiances that I have personally, even as a Synthetix token holder, even if you said, well, okay, the price action of SNX has been, which a lot of people are very happy to say, terrible last year. Everything else went up 100x and SNX was down 20% or whatever it was, year on year. I still think that I would say, as a token holder, I would vote for us to do that. Because if we hadn't done it and Optimism had waited six months to find someone who was willing to do that, we'd still be six months out from getting to this point of scaling.

Now, I think we have a situation where we're pretty much ready to scale. The whitelist has been removed from Optimism. There's been competitive pressure within the ecosystem. Arbitrum has been forced to do a bunch of things. We're seeing forks of Optimism and Arbitrum, competing with them. So we've got a much more competitive ecosystem. And I think that that just required people to jump in and say, let's do this. Even if that meant a lot of pain in going through that process.

CR: Okay but why specifically Optimism? Why go with Optimism and not Arbitrum or like ZK-rollups or Polygon? There are many different options you potentially could have done. So why this one specifically?

KW: So sidechains, we ruled out pretty early. Obviously we talked to the xDAIt team early on. And we said, we just don't think that this is a good idea to be creating these sidechains, whether they're applications-specific or whatever. I think were a lot of people really excited about that early, and I just was never a big fan of it. I think it didn't make that much sense. So even Polygon, now, in hindsight, if I could do things differently, I would say, actually we would put Synthetix on Polygon straight away and just hold our nose and say, it's not optimal, but it's better than waiting 18 months for optimistic rollups to be ready for production. But in this space where we're, no pun intended very optimistic, right?

We like to think that things will be ready faster than they might be. Se were hoping that Optimism and optimistic rollups would be ready sooner. So that was the reason why no sidechains. In terms of why Optimism over Arbitrum, we knew the team, we liked their approach. We liked how they were doing things, and we just thought their approach made sense. And that was kind of it. And then I think the final question of why not zero knowledge approaches... So the zero knowledge rollups are not ready, is the answer. If we'd been waiting for zero knowledge rollups then we'd still be waiting. They're still not quite there. Starkware, the challenge is that, unlike dYdX, we don't have any off-chain state storage.

All of our state is on-chain. And so Starkware just is isn't the optimal solution for that. Whereas things like Diversifi and dYdX, because they've got these off-chain matching systems and state management systems, it's much more amenable to that approach. StarkNet obviously changes that, but StarkNet is still not quite ready for something as complex as Synthetix. So again, we picked the thing we thought was going to be ready sooner. It was not ready as soon as we had hoped, but I still think, today, the position we're in, we're in a very good position. I think both Ethereum and Synthetix is in a very good position. We've suffered a lot for it over the last year, but ultimately the only thing that we could have done that would've been more optimal, I think would've been going to Polygon first and trying to run things in parallel while we waited to get Optimism ready to go.

CR: From now, how long do you realistically think, all the contracts will be deployed on Optimism and things will be ready to go and scale from there?

KW: I hesitate to make timeline predictions, but I think we're getting very close to what we call the V2 X scope, which was everything up to merging the two networks. We've got staking on both networks. We need to merge those two networks so that the synthetic assets are fungible across both Optimism and L1. We're probably on the order of months away from that process being completed. So once that's completed, that's the end of our V2 X scope. This is like Ethereum one X, versus Ethereum 2. We split the teams and said, okay, the V3 team that's going in building Synthetix V3, you guys go off, don't be distracted by, you know, all the fires that are over here and in this production system, which is now four years old and has a whole bunch of tech debt. Go off in a vacuum, work on a new architecture, new implementations of all of these different systems.

And we'll give you the space to do it. And we won't pull you back into this. Because that was the same thing that happened with Ethereum. It's like these teams were still talking to each other and until the split happened, I don't think that the progress was nearly as fast. Once that split happened and all the Eth2 teams had independence, that's when progress really ramped up. And we saw that process. It's slightly different with Synthetix, but similar to the idea of, you can't be maintaining a production system and also building the new thing. You've gotta have some differentiation. So we did that. I think the V2 X scope is almost done and then the other piece of scope, which is still floating around that hasn't been deployed yet, is futures.

So synthetic futures or perpetual futures that will allow people to have leverage trade Bitcoin with 5, 10x leverage, et cetera, which obviously competes directly with dYdX, that has been ready to be delivered for a long time, but couldn't be delivered until we were on Optimism, just because of latency issues with oracles and things like that. So we needed that scalability. So it's getting close. Again, both of these things are close. I think we're on the order of probably a couple of months for both of them. But I've said that before so I'm hesitant to put out time predictions, unfortunately.

CR: I totally get you. I've been saying a bunch of things about The Defiant too, like oh yeah, it's a couple weeks, a couple months. It's how building goes, right? So what's next will be merging the current Synthetix protocol which is on mainnet, to staking, which is now on Optimism?


So we've got basically two independent versions of the protocol running and so we need to merge those two. We need to implement all of the synthetic assets on L2. So at the moment there's only three. We need to transition all the synthetic assets across. We need to make them fungible across both networks. So there's still a couple of things. You can sit there and theorize all day about how things are going to play out, why things should be a certain way or whatever. Until you're actually dealing with it empirically, it's really hard, at least for me, to reason about what the challenges will be.

So within optimistic rollups, you have this seven-day challenge period, this withdrawal period. Everyone was like, oh, this is a thing, whatever. I don't think anyone really, truly understood the pain of having that within the user experience until they experienced it themselves. I deal with it all the time now. Because I'm doing stuff on Optimism frequently. You forget to trigger a transaction to withdraw the assets and you assume that they're on L1 and then you come back and you're like, oh man, now I gotta wait another week. A week in crypto is a long time. And so I think that what we found is that something that seemed like a theoretical annoyance is actually practically very, very challenging. And so what that's meant is that all of the people that have been working this ecosystem have all been faced with this very practical friction point.

And all of us independently have started thinking oh, you know, how can I get around this? You're a problem solver, right? That's what you do in crypto. You're like, I've got this problem. I keep running into this wall. How do I work around it? And so various people within the Synthetix ecosystem have been thinking about this over the last probably three or four months. And independently we've come up with this idea of, you could actually use synths as a fast withdrawal bridge. And I tweeted about this the other day. You could create a mechanism whereby there's a relayer, that doesn't require a multisig, that uses two contracts that are both on the different networks. And gives you much stronger security. Obviously you still have this collateralized stablecoin underpinning all of it.

So there's different security concerns around that mechanism. But in terms of the bridges themselves, they're pretty simple and straightforward. It's the mechanism to allow the bridges to exist that's complex. And so you could have this situation where since sUSD could act as a fast withdrawal bridge, once the synths are fungible. And I don't think it really occurred to anyone, A, that this would be such a big problem to the point where we started thinking about solutions to it or B, until we started actually doing the feasibility to build a synth bridge across there, we didn't really dig into it enough to be like, oh, wait, there's these interesting properties where I could bypass this big problem that I've been dealing with for the last couple of months. And so independently two or three of the engineers and myself have all come to this conclusion that actually, synths as a fast withdrawal bridge are probably one of the optimal solutions to this problem. So hopefully once we get through this debt pull merge, in the next month or two, then we'll be able to start work on what we call teleporters, which will significantly reduce the friction of dealing with L1, to L2. I think all of us are like, this is a bad thing, but everyone will deal with it. Honestly. I don't think people will deal with it. It's too high friction. It's too painful. It's painful. It's very painful.

CR: This is so interesting. So Synthetix might also become a bridge between Optimism and mainnet? And do you think that this will be only for Synthetix users or maybe anyone could use this bridge?

KW: So it goes back to the point around why we started yield farming with Uniwap. Okay, great, you're in the Synthetix ecosystem. Awesome. You have a bunch of synthetic BTC and you want to get back to L1. Cool. But how does that help the average person who doesn't have a bunch of synths? Well, we actually have a solution to this already on mainnet through Curve, which is cross-asset swaps. So we've got a couple of different ways you can do cross-asset swaps. So you could in theory, using Curve, , or something similar on L1 and L2, , you could start with, let's say wrapped Bitcoin on L2, you could go into synthetic Bitcoin on L2 through Curve through a shared pool. You could then take that synthetic Bitcoin and use a synth Teleporter to instantaneously, or within a few seconds, get onto mainnet as synthetic BTC.

And then you could exit that synthetic BTC through another Curve pool back into wrapped BTC, with pretty low fees. Obviously there's gonna be fees there you might pay half a percent or like 50 basis points, 60 basis points, et cetera. But that seven days... the time value of money in crypto is extremely high. Seven days of sitting there with your wrapped Bitcoin, especially when you think about volatile assets. I think to be honest, this is the thing, you think later like, wow, what an idiot I was. How was that not obvious to me? But like the other day I withdrew a bunch of ETH through the Optimism bridge. And I was like, wait a second, I now have like this weird situation where we've got a bunch of ETH that's transitioning across and the price is moving up and down

It's a bit scary to put your assets in a little capsule and send it off and then wait for it to come back on the other side. I don't think that's a common thing in crypto to deal with. And so it's just a weird piece of friction that I don't think practically that many people thought through. We knew it was gonna be annoying, but it's actually much more than annoying. So I think this is something that a lot of people have been thinking about solutions for. Hop is looking at solving this. Celer. Connext. There's a bunch of people that have been thinking about this for a long time. They knew that this was going to be a problem. Certainly myself, I didn't think it was going be as much of a problem as it actually is practically for my own use case.

CR: After this is done then futures, perpetuals and swaps and so on?

KW: Swaps. Yeah.

CR: I wanted to touch on, to start wrapping up, this big controversy that there was around one of your statements recently. So you said that people you respect have sold out in pursuit of profit maximization, but they'll come back to Ethereum when Layer 2 scaling becomes inevitable. Then Su Zhu, from Three Arrows Capital, took that on. I'd love to hear more on this, on not necessarily this spat on Twitter, which is like really snowballed but just the initial statement.

KW: So I have a view that it's good that Ethereum, the community, takes the high ground in most of these debates. Most of the people who are in Ethereum are pretty high conviction. Certainly the people who've been around for a long time. They're very convicted across a number of different viewpoints. They're convicted that Ethereum is the optimal scaling solution and that we will make the right decisions as a community around how we scale this thing. And we won't take shortcuts or make trade-offs that will have consequences down the road. We'll make the hard decisions and we'll deal with the pain of those hard decisions, like we did with Optimism where we had a year of pain in choosing that path.

But now we're in a position where, this year, everyone's gonna forget, everyone will forget last year. People in crypto have very short memories. So we said, you know what, we'll take that pain for a year as we try to scale this thing. But by next year, you know, the L222 meme, we're gonna be in a position where everyone's gonna be like, oh, this is amazing, and they'll forget that it wasn't like that last year. They'll go into it. And so I think when you have that high conviction, it's easy to sit back and take the high road and say, we're not going to get dragged into these fights around what's better or whatever. We'll let people FUD Ethereum and say that Ethereum doesn't care about users or doesn't care about transaction costs or doesn't care about all of these things that they've been saying. And there are people in the community that do fight back against this stuff.

But most don't. Most just say, well, I'm not gonna get involved in this bickering, I'm just gonna go and keep building and doing my thing. The problem with that is that you have so many new people coming to the space and they see these prominent people taking advantage of Ethereum and taking advantage of the fact that we don't fight back and allowing to make outrageous statements that are inaccurate or outright lies. And there's not really a lot of pushback, because we're like, oh, we're over here building, you know, flowers and rainbows and unicorns and all that sort of stuff. Which is amazing and I love that about the Ethereum community, but we also exist in a marketplace and if we let people take advantage of us, it's going to be a problem.

So I think you have this situation in Ethereum where, we might not fight back enough or fight back as much as we should. And my view was that, if you're going to have these people that are willing to criticize and attack Ethereum when it's profitable for them, our conviction says that, you know, we're eventually going to get position where Ethereum is in the ascendency again. And we take back the narrative once scaling happens. When that happens, these people who are low conviction, who don't really care, who are happy to bounce around and shill whatever thing is going to make them the most money at whatever time are going to obviously come back to Ethereum. And then they're gonna be sitting here pretending like they were Ethereum cheerleaders the whole time. And my point was just that we should be wary of people like that and we shouldn't allow them to exploit us and take advantage of us. And that's it. Obviously for someone who is in the process of doing that, that's not something, that they like to hear. But that's just the reality.

CR: To clarify the bigger point, so you it's about you are very highly convinced that Ethereum is going to be the most likely to be the winning Layer 1 for decentralized finance and web3. And that it's going to scale with Layer 2 solutions based on Ethereum Layer 1, and that we are on the road to get there. As you've said, it's tough right now, but it's like everyone is building towards a period when Ethereum dapps can scale. And in the meantime, what bothers you is investors who have hugely benefited from Ethereum are now cashing out and going to Ethereum competitors in this time when Ethereum is in the process of getting to scaling.

KW: I don't even have so much of an issue with that. If someone decides that they don't like Ethereum anymore and they wanna go somewhere else, fine. You do you. Do whatever works for you. My point was actually more about when we inevitably do start scaling and when Ethereum takes back the narrative, just be aware of who those people were because they will absolutely come flooding back and be like, hey guys, we're back. Isn't Ethereum amazing again. And we need to have longer memories than we do sometimes. And we need to be more protective of the ecosystem. Now, people pushed back on that initial sentiment and said, no, we should welcome people to open arms, whatever. But my view is, if people are going to exploit the Ethereum ecosystem, we shouldn't welcome those people with open arms.

That's just not a great way to approach things. Maybe that's too exclusionary or whatever. As I said, Ethereum's very flowers and rainbows and all that stuff. And I love that aspect of Ethereum. But I also think we exist in a market and I think that we need to be more protective of Ethereum, especially as the stakes get larger and larger. There's a lot of money at stake and there's a lot of value at stake for people to criticize and attack Ethereum. We just need to be prepared to defend against that. We have to be.

CR: Do you see any future where there is more than Ethereum? Like multi-chain future, cross-chain future, maybe Ethereum is good for specific use cases, but other chains will be better for other use cases?

KW: I think my view has been for a while that it will be a winner-take-most situation. I think the chain that can credibly scale and maintain decentralization, will be the chain that most of the value settles on. So right now, in my view, that is very likely to be Ethereum. But as I said earlier, I've got three allegiances. There's the Synthetix one. And there's Ethereum one, and then there's the broader crypto one. If Ethereum is not the right solution, I don't personally believe there's evidence to say that it isn't yet, I still believe very strongly that it is, but if I have evidence to the contrary, I will change my opinion and I'll say, okay, Ethereum wasn't the optimal solution. There was something else that was better out there.

I'll absolutely put my weight behind that. But for right now, at least to me, and obviously I'm an Ethereum OG, so I've got some bias there, but I believe that hopefully, my track record of, changing my mind when the evidence changes, is sufficient for people to believe that I have credibility when it comes to saying that I think Ethereum is the optimal solution right now. But each to their own. Some people think that that's not credible.

CR: Do you have any investments in other Layer 1s?

KW: I don't. Back in the day, when I was trading crypto, going back to 2015, 2016, I definitely had other things. I think I even held some ADA at one point, but not really meaningfully. These days really my focus is on the Ethereum ecosystem. So I don't tend to invest in anything outside of the Ethereum ecosystem.

CR: Got it. Okay. And then to wrap up, for Synthetix. We've talked about near-term goals and milestones that you're working towards. What's the long-term vision? Where would you want Synthetix to be five years from now? What's the end game?

KW: I think that Synthetix is a very novel approach to this idea of creating synthetic assets. It's not a solution that many people have tried, they've tried variants of it, but it still remains, even to this day, fairly novel. So I do think that it's hard to say how that exactly is going play out, but my hope is that what you have are more protocols that are leveraging Synthetix to build novel things. So Lyra is a great example of that. Even Thales, both of these are options protocols that use Synthetix. dHEDGE uses Synthetix. So I think that Synthetix has some very novel properties that we make it very good for protocols to compose, to integrate into their own smart contract suites. The challenge with that historically has been that we haven't had atomic transactions on L1 for a really long time. On Layer 2, on Optimism, we have atomic transactions which means that it's much easier for other protocols to integrate Synthetix. So my hope is that over the next 3, 4, 5 years, Synthetix becomes even more deeply embedded in the ecosystem and more protocols are using it to build novel solutions on top of it.

CR:Do you see it competing more with dYdX or more with Terra, like Mirror and UST or both? What direction would you want it to take?

KW: If we go down this path of being kind of very application-specific as in like, you know, synthetic futures, and that is the thing that drives adoption, then I think the community needs to lean into that. Certainly in the near future, as I said earlier, speculation is a big driver of activity. So in the short term, that may be the optimal path to just keep focusing on that, but what we found is that even while we focus on the trading experience, there's always people coming and turning up. Andre's a great example of this. He turns up, he's like, oh, could I use Synthetix for this? And we're like, yeah, you could. And we talk it through and work out a way to build these sort of more infrastructure-style integrations. So I think that as much as we're pushing the product focus, my hope is that we will also see this base layer of Synthetix utility that people can integrate into. So I think they're kind of parallel paths.

CR: Okay. Interesting. Awesome, this has been an amazing conversation. I'm so grateful for you taking the time and sharing all your views and experience with us. Final final question since this is the second podcast of the year. What are you looking forward to in 2022 for DeFi and web3?

KW: I think the point that Layer 2 scaling is actually working, and we're basically there, you know, depending on, on what your application is, whether it's dYdX on Starkware or Aribtrum and Optimism, I think we're at a point now where we're seeing Layer 2-native protocols being built, and they're doing novel things you just can't do on L1. So I'm very excited to see people really lean into that experimentation and say, okay, we're going to start playing around with novel solutions. And I think we're gonna see some really interesting stuff built out on Optimism and Arbitrum this year.

CR: Nice. L222, or I don't know how you say that meme.

KW: Yeah.That's fine. L222. Yeah, that's good.

CR:All right, well Kain, thanks again. Amazing having a DeFi OG on The Defiant podcast to start the year. Appreciate it. It's been a pleasure as always.

KW: Thanks Cami. Really appreciate you having me on.