Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
#11 Ex Core Ethereum developer Christoph On Governance, DAOs and Tokenization | POT: The Cryptocurrency Podcast
92 Plays2 years ago
Ethereum is probably one of my all-time favorite projects and an absolute trailblazer in the blockchain space. Getting the scoop from someone who was there at the start is pretty awesome.
That's exactly what we got by sitting down with Christoph Jentzsch, a key player in Ethereum's early days.
The Early Days of Ethereum - How it started
Christoph stumbled onto the early blockchain scene while hunting for cheap GPUs for his PhD, which led him to Bitcoin. Christoph worked alongside Gavin Wood and Vitalik Buterin as lead tester during the early days of Ethereum and wrote thousands of unit tests to ensure the stability of Ethereum clients.
They weren't looking to beat Bitcoin at its own game. Instead, they wanted to see what else blockchain could do—like running apps and contracts on it, not just coins.
Building Ethereum was like assembling a plane mid-flight. The team was figuring it out as they went along, driven by the dream of a platform where anyone could build their own decentralized apps.
The whitepaper, written by Vitalik Buterin, was eventually turned into a Yellow Paper by Gavin Wood. That is to say - a technical spec sheet that one can take a write a client for.
Etherum was "launched" by hundreds of people starting a client at the same time, and inputting a certain value into the console.
The Original DAO
Then came The DAO, a kind of radical, leaderless venture capital fund built on Ethereum. It was Christoph's baby, and it started with a bang, pulling in a massive amount of money.
But then, a hacker found a loophole, leading to one of the most infamous hack in crypto history. The community faced a tough choice: let the hacker win or hit the reset button with a hard fork. They chose the latter, causing a split in the Ethereum world but saving the project from disaster.
Asset Tokenization
The DAO was a lesson in the highs and lows of pushing tech boundaries. It showed the potential of decentralized business but also the need for a balance with real-world rules. That's what Christoph is tackling now with Tokenize.it, making it easier for companies to manage ownership and investments without getting tangled in red tape.
With Tokenize.it, Christoph is all about bringing the spirit of The DAO into the legal daylight, making it super easy for companies to go digital with their shares. It's a bit like having the best of both worlds: the flexibility of blockchain and the security of following the rules. He's starting in Germany but has his sights set on changing how business is done everywhere.
This podcast is fueled by Aesir, an Algorithmic cryptocurrency Trading Platform that I helped develop over the last 2 years that offers a unique set of features.
Recommended
Transcript
DAO and Decentralized Governance
00:00:00
Speaker
DAO governance is messy. And in terms of people, I like to show DAO stands for dudes arguing online. Sometimes it's just what it is.
Introducing Christoph, Former Ethereum Developer
00:00:18
Speaker
What's up, everyone? Welcome to Proof of Talk. I'm your host, Andre. And I'm here with former core Ethereum developer, Christoph. Christoph, lovely to have you here, man. Thanks for the invitation. Great to be here.
Clarifying the Ripple Hack
00:00:29
Speaker
I was actually just reading before the podcast about the Ripple hack. I'm not sure if you've read about it. Yes. I just barely read a tweet. So no in-depth knowledge about the hack, exactly only a tweet. So it turns out that the Ripple itself wasn't hacked. It was just one of the co-founder's wallets, well, several of the co-founder's wallets that were accessed with the known authorized access, but nothing on the Ripple itself. So that was nice to see. Yeah.
00:00:58
Speaker
But still, they should try their best to secure their keys, but can happen to everyone. 100%, yeah. And I feel like these kind of stuff always have been plaguing the crypto space since the very beginning. Because it's a technology that continues to evolve, there's always going to be a vector of attack that you haven't thought about, even if it's something as simple as social engineering or anything else that might be. Right.
Early Ethereum Development Insights
00:01:22
Speaker
But in any case, I really wanted to talk to you a little bit about your experience as an Ethereum developer. I feel there's a lot of stuff there and I just wanted to get a bit of an understanding of what it was like back in the old wild, wild days. What was it like to be an Ethereum dev?
00:01:40
Speaker
Sure. Very different than today. I got into Bitcoin in 2013. This was just cook accidentally. I was doing my PhD in theoretical physics. I wanted to do some computer simulations and was searching for cheap GPUs. I was stumbling upon those GPU miners. Back then, they were selling their GPUs for FPGAs later on ASICs.
00:02:03
Speaker
So that's how I got into Bitcoin. And at the time, I could read everything which existed, like there was not much, Bitcoin, white paper. And it's important because Ethereum was started by Bitcoiners. So all of those people were Bitcoin people. They loved Bitcoin. They loved freedom. They loved this idea of decentralization, censorship resistant, permissionless ecosystem. This was the core of Ethereum.
00:02:27
Speaker
And so when Vitalik wrote the white paper, which I highly recommend for everyone to read, because almost everything in there, it's like a prophecy that is fulfilled today. Like he spoke about your tokens. He spoke about domain name systems like ENS today. He spoke about DAOs. The only thing I think he missed were NFTs. So that's the only thing you cannot find in there. But everything else basically happened. And the core idea, and it's important now from the story,
00:02:55
Speaker
It was not about creating another Bitcoin, just as better features. It was not about creating another virtual currency. For all of us, it was totally clear Bitcoin is that digital currency, the one and only. And this was how it was at the time. And now we just have this tech, blockchain tech, which hasn't been
00:03:16
Speaker
use that much for other things than the currency itself. And what else can we do with it? And so we tell you the idea about this Ethereum virtual machine or basically a way of putting code.
00:03:28
Speaker
little code pieces into the blockchain or on the blockchain. This made it possible to create decentralized applications. Ethereum was only and all about decentralized applications. So Ethereum was a tech stack for building those decentralized applications. And in the beginning, it was not just Ethereum. There was also something called SWARM and RISPR for decentralized messaging and decentralized file storage. And the vision was, let's build a complete tech stack
00:03:55
Speaker
So you can build an application which 100% runs on this new tech stack. So I called it a new internet or someone later on called it Web3. I think Gavin Wood was the first who termed Web3 together with blockchain in this context.
00:04:10
Speaker
And this was the idea, building a platform for decentralized application, but more or less.
Ethereum's Initial Vision and Crowdsale
00:04:15
Speaker
So we started building, I joined in XAML 2014. So I was one of the first developers we hired right after the crowd sale. So the crowd sale happened in XAML 2014. I just came in right after that. And I was joining the team of Gavin Wood. He worked in the Berlin office and built the C++ client. And so how you can...
00:04:39
Speaker
how it was back then, we didn't get this white paper. But based on the white paper, you cannot write any theorem client. This is more a vague idea of what could be possible. And I think it is
00:04:52
Speaker
Gavin Wood is underrepresented or underappreciated in the Ethereum community for what he has done. Because the masterwork of him was to write the yellow paper, which is a technical specification of Ethereum. Bitcoin doesn't have such a thing. There you only have the reference implementation, the C++ client. But here we have a written down at a time of like 15 to 20 pages, very technical, very mathematical description of how Ethereum works, from consensus mechanism to Ethereum virtual machine to all the details.
00:05:20
Speaker
And based on this paper, he wrote the C++ client. Then Jeffrey Wilke wrote the GOG line, today known as Geth. And Vitalik wrote PyEtherium, the Python version. And in the community, there was a Java version, I think one more written in Haskell. So basically different one. Developers just took this specification, I can build this, and started building.
00:05:46
Speaker
My job was to be the Ethereum lead tester. So I did write thousands of tests where you could prove that your client is behaving according to the specification. And in the beginning, it didn't. And even the specification was not complete. So it basically had lots of issues, like things like division by zero is different in Python than C++ and so different results. And you could probably define it. And then this definition needs to be
00:06:15
Speaker
uh applied in those clients so i would basically sort of given you mistake there metallic mistake there i was just pointing out all the mistakes uh either in the specification or in the clients was a lot of fun um so i was very independent i didn't have a team under my under myself later on i hired one developer but
00:06:33
Speaker
I loved my job. I was working as a freelancer being every other week in Berlin in the office. And Berlin was really the headquarter of Ethereum, kind of. This was where most of the people were coded. And you still had Vitalik traveling around. We had some people sitting in London, the guest team, some of them sitting in Amsterdam.
00:06:52
Speaker
So, but I could still say Ethereum was built in Europe if you want, like at least the core of it. So this was like a really fun time. Vitalik was leading by example, I can say sometimes, he just wrote the Python client, he was answering questions and overall vision, but the technical lead really was
Decentralized Launch of Ethereum
00:07:09
Speaker
given.
00:07:09
Speaker
Gavin was the one who wrote the specification. The first working client in my tests were also based on the C++ client. So this was one year, and I think there was one, we solved tight minor issues. There had been Christophe is not finding any bug for I think three or four weeks, then we can launch. So the launch was always delayed because there were always new bugs, new problems that we had to test that tested working. Okay. And until the test was stable, then you could say now we can launch.
00:07:35
Speaker
And the launch itself was also nobody did dare to push a button. Nobody had the authority to launch Ethereum. So you're already deeply influenced by this Bitcoin mindset of pure decentralization and no single point of authority and so on. So this was shown also in the development, meaning there was, even though Gavin maybe was the technique of the strongest, it was still a community project, lots of open source contributions. And this was
00:08:03
Speaker
there was no clear leader, even though Vitalik may be from a mind like visionary and given from a technical perspective. But in the end, what happened now comes a bit of history, details which are still shown today, like minor things which happened, which influenced
00:08:19
Speaker
The present a lot. So one thing was initially the thought was all the three main clients, which was the Python client, guest client, and C++ client, were actually audited and then released at once. Ethereum is starting. You can choose one of those three clients and get going.
00:08:36
Speaker
But then for time reasons, the security audit company could only do one client at a time. So it started with Geth. Geth was ready and C++ was not ready yet, even though at the time C++ was more stable.
00:08:51
Speaker
more performant, I would say C++ at the time was the best client. So how come they choose go first then? Yes, that's the story now. So guess was audited. And so then everybody started to need to relaunch Ethereum now. They're waiting for so long now and the crowds there was over a year ago. So let's just launch with Geth. And let's say the other ones, you can still use them, they're just not audited. So they say, okay, no big issue. So then Ethereum was launched by having a
00:09:21
Speaker
your blog posts, which describe how you create the first Ethereum blog. And as an input parameter, you needed a hash of a certain block in the testnet. So this was basically when this block came in the testnet, you use this hash, put it in a script, and then you start Ethereum. So actually, there are hundreds of people who started Ethereum at the same time. After about one hour or so, they found each other in the peer-to-peer network. And then the longest chain, of course, was the valid one, and they continue to build it on top of this. This is just how the launch happened.
00:09:48
Speaker
The issue was a bit about communication. The communication was you can use any client, but the only one which is audited was the guess one. So it was like the official one. So everybody thought guess is the official Ethereum Foundation client should use this one. And I remember Gavin was not happy about this. And then he had like 90% guess and 10% pie Ethereum and the C++ client. It kind of never changed. It is basically this little thing just continued to be like this. And then the C++ client got audited.
00:10:18
Speaker
But a big release was made. Now you can use C++, but nobody cared to switch. So they had their gas client running, so why switching? And this is why C++ is always minority client. And then comes the next thing. Ethereum Foundation was about to go bankrupt. I mean, this was a nonprofit. They didn't make any income. So they only had the money from the crowd sale and what they gave themselves in ETH. You can still find it in the history of the blockchain, how much the ETH dev wallet has in ETH.
00:10:46
Speaker
The saying was, we have about, I don't know, three or four months left. This was fall of 2015. And then we are bankrupted. Like you should all look for a new job and we have to look for something new.
Ethereum Foundation's Financial Challenges
00:10:58
Speaker
And Ming came as the executive director and she decided to cut off everything, which was not absolutely needed. And among this was the C++ team completely. Because if you have one client, maybe you should have three. One is a NAS. So basically, Python, Geth, marketing team, this was Stefan to all at the time.
00:11:15
Speaker
Everything was like fired and only the core was remaining. After that was DEFCON 1 and then the Ethereum price went up like 10X and then the foundation had money again. So this was, and then you could technically give could have hired them back, but then Gavin started like East Core, which later developed into Polkadot and Parity.
00:11:35
Speaker
the first Parity Polkadot. And so they all went their own way. I was doing Slocket, I was also leaving because the C++ team was basically canceled completely. So this is why we today have basically a total gaff like maturity when it comes to client diversity.
00:11:51
Speaker
This was the early days. It was exciting, fun, one of the most fun part of my work history, I would say. Lots of fun details, but exciting time. And most of those people, pure visionaries, and you always say they didn't join for the money.
00:12:06
Speaker
that some people think Ethereum was just a money crap. Absolutely not. The price of Ethereum was still so low that even those who got Ether as a payment, they get paid something like 50 to 100K a year, which is a normal salary for a developer or for someone working in a company. So reasonable salaries, but paid in ETH, ETH wasn't worse much back then. Even after the launch in 2015, ETH was like 50 to 80 cents. So it was still all very, very low and people who joined didn't join for the money.
00:12:34
Speaker
And it was not built as an ultrasound money. This whole narrative about Ether being money and ultrasound money and EIP 1559, all those things which happened later, they made Ether-like money, but it wasn't in the beginning. The beginning was just, we described it as oil, oil to run those applications. But the whole point was running applications, not being money.
00:12:57
Speaker
Right. And that makes a lot of sense. And also, I'm guessing people at the time, you're mentioning ETH was like 50, 80 pence. They were being paid in ETH, but there was not a lot of use case for ETH as money. So probably people still have to sell a good part of their monthly or yearly payments. So it's not like they were sitting on this ETH and then eating, because you can't just eat ETH, right?
00:13:19
Speaker
Right. They just found out like rich people. So maybe some of them, maybe it's Joseph Lubin. It's just Joseph Lubin, he paid for most of it. So he was like the rich guy there. But nevertheless, they, I remember when like each went up from 50 cents to two euros, everybody was selling. Like this was like crazy. This was a full X.
00:13:37
Speaker
That's why the ETH distribution is still pretty good. ETH was sold in the beginning. Every time it made a 5X or 10X, people were selling like crazy. Meaning, ETH is fairly distributed. You still have some backholders, you still have someone who holds long-term. But you should not think about all the ETHs becoming millionaires because of their work for the ETH Foundation back at the time. Maybe some, sure, but not all of them.
00:14:01
Speaker
Oh, yeah, 100 percent. Just like think about the Bitcoin pizza guy, right? Like he spent 10,000 Bitcoin buying two pizzas being delivered to his apartment. And, you know, sometimes he's like you said, it's more than money. Sometimes it's about the idea itself. I think if you're so early into Bitcoin and, you know, and you spend 10,000 Bitcoin to buy yourself two pizzas, you're fully aware that you might end up, you know, just banging your head on the table 10 years down the line. But you're willing to do it anyway to help with the adoption. So it's it's always
00:14:29
Speaker
a bigger idea at play. And I think that's what's fascinating about the way Ethereum itself came to be where it is today, which is like the world's largest supercomputer in a sense. And I think going back to your point about gas and oil as what you're actually paying for when it comes to transactions, that's effectively you're paying for the compute. It's pay as you go for the compute, for the privilege of using this machine in a fair and transparent way.
00:14:59
Speaker
And yes, and either was the currency to be used to pay for this compute to the miners back then. So this was the idea. And this is exactly how it was executed. And yes, the money narrative came much later. Right, exactly. And when it started, because maybe people are new into the space, it never supposed to be proof of stake. It was always proof of work, right? Well, it was
00:15:20
Speaker
The plan was always to have proof of stake at some point. Even in the very beginning, naively we said, it will take us six to 12 months to implement it. Then we switched to proof of stake. That's why there was this thing in there, why Betty always had this freeze. I forgot the name.
00:15:39
Speaker
Issuance would go up over time exponentially. So the people have to switch to and have to fork out this East bomb if you want to call it. So this is how we wanted to force them to move to proof of stake because they would have to hard fork away from the current chain because there was like a expiration date set for the chain. So, but it was always postponed by hard forks done to just postpone the state until we actually had proof of stake. Proof of stake is of course way better than proof of fork.
00:16:09
Speaker
Was there a reason for kicking it off with proof of work if you're planning to move to proof of stake at some point anyway? There were always vulnerabilities found and ideas like how you could attack it, not secure enough. I think we could have done it earlier, but I think the price of ease increased and so the network price was higher. And so we became more like.
00:16:30
Speaker
cautious. Otherwise, you could say, just bring it in. If there's a little bug, you can fix it later. It doesn't need to be perfect, but now with billions at stake, it needs to be perfect. They started research groups and they wanted to make 100% sure it was super, super safe. Every time the research was going on, price was going 10X, they became even more cautious. It got delayed, plus some more research was done, more answers were given.
00:16:56
Speaker
more opinions until we had the final spec for proof of stake. It took way longer than anticipated. It would have been great if you would have done it way earlier, but it's just how it is.
Transition to Proof-of-Stake: Security Concerns
00:17:06
Speaker
I remember when there was the transition to move to proof of stake that the whole process was, we're going to try it on this testnet for a couple of weeks, move to this other testnet, and then move to the third testnet, final testnet, and then eventually go on the mainnet.
00:17:23
Speaker
They did that directly to Maynet. They started the beacon chain, which was the truly proof of stake chain, but without connecting it to the execution layer and letting the proof continue to run. I see how it goes for one or two years and then basically make a real switch. So super cautious, but I can understand why.
00:17:41
Speaker
Yeah. How's that for a CI CD pipeline right there? That's crazy. Oh, was that kind of the, the start of the process? Like you guys testing things early on. Did you always have this approach of testing across multiple test nets and then eventually making a move to the main net?
00:17:56
Speaker
Okay. And was it different to kind of test with a, does it make a difference if it's in the early days and you got a smaller test net with less nodes? Is there like. Sure. You can't test for different things, but as I was voting mostly like unit tests, integration tests, the things on the client level and.
00:18:13
Speaker
Those tests were very simple. The JSON5 was pre-stayed, transaction, post-stayed. And all those clients would run them and see if they have the same result for the same transaction. So later on, we had those test nets and then also some other test frameworks we were using. But then I was leaving end of 2015 to start Slockit and then later to DAO. So I was not responsible for that part anymore. But today, they have a more advanced testing infrastructure than we had back in our days.
Christoph's Current Engagement with Ethereum
00:18:39
Speaker
Right, yeah, I bet. How many people are with Ethereum right now, like working on Ethereum? It's probably... I think 50 to 70 is something in that range, but I'm not 100% sure. Since I'm not working at a foundation anymore, I don't know. It's just the last number I hear when I ask someone something in this range.
00:18:53
Speaker
Right. Do you still follow along with the development? Do you kind of follow the project? Yes, maybe not as closely as I should. So I'm following along, like looking at the EIPs, looking at the main developments, but I'm not part of the development group directly. I'm not contributing code anymore. Would love to, using the time. Do you ever vote on EIPs?
00:19:14
Speaker
Not anymore. Since I'm not too involved, I think if I really want to, if I code, if I contribute, if I look at all the details, I can have a very strong opinion on things. Otherwise, yes, sometimes I do give a vote if it's more like economic features and things which are more high level. If it goes down to the code, I think the ones who are building it or using it should be the ones voting for or against it.
00:19:38
Speaker
And that makes sense. That totally makes sense. Look, I gotta ask you, why Solidity as the end language for people to write the smart contracts in?
00:19:48
Speaker
So the idea came from Gavin Woot and he asked Christen Reitweissner to build it. So Christen Reitweissner was the one doing it. And it was more, C++, all those object-oriented languages like Java or C++ had a similar style. And in this style, he basically said, well, we need something owned for the small contract. Like in the very beginning, I was actually writing in bytecode.
00:20:11
Speaker
So if you go down to the smart contract, it's just bytes. So this, the Ethereum virtual machine describes how those bytes are executed. So then since we needed some other language to write them in, all of those different clients had their own language yet.
00:20:25
Speaker
I think it's called Serpen from Vitalik himself in the Peisens line. The Go client had a language called U10, the Mouton, from Czech Republic. Almost nobody used it. And then C++ had LLL, low-level Lisp-like language, from Gavin. This was, as the name says, similar to Lisp. This had a suite of smart cognitive languages at the time.
00:20:48
Speaker
And then Gavin Wood said, let's make a new one which is more suited for this. And then he asked the right person to build Solidity. I think it's a nice one. It's readable. It's easy. Of course, the devil is the details. I don't think it's a bad language. So then later on, people came up with things like using WebAssembly or Ethereum.
00:21:11
Speaker
way of WebAssembly, then you could write them in Rust or some other known languages with existing compilers, which would then compile to an Ethereum version of WebAssembly and which then could compile to EVM bytecode. So there are still many ways out there, but I would still think, I don't know the numbers, but I guess still 90 to 95% is solidity. And I think it's fine. It's not a bad language. If you think about coding for the EVM,
00:21:38
Speaker
There are other blockchains which have other features that the EVM has changed so much, like look at DFINITY or now called Internet Computer or, yeah, Fool, I think it's called, like they're building completely new different kinds of VMs. There you can have a different language for writing those contracts, which makes sense.
00:21:55
Speaker
And I'm not a big fan of using things like Rust or other stuff because you cannot use all of it, like just importing all those features Rust has. You cannot really use on-chain anyway. So we'll just use it the same style and maybe just some features of it. So I think it makes sense to have their own language for just small contracts.
00:22:17
Speaker
Right. Yeah. And that makes sense. So you wouldn't think that Rust's kind of memory management features would help create, I don't know, like cheaper transactions and stuff like that. Maybe. I want to say, I think the nice thing about Rust, you can at compile time, it can check if you have some memory errors or other things. So that's really nice about Rust. I actually like Rust a lot, but you would have to make
00:22:39
Speaker
It's not a language, maybe, of it, which uses a lot of it, but not all of it, that it can directly, ideally compile to, or maybe over, use a map assembly to EDM bytecode. I just sometimes feel I don't really know what's going on on the way there, and I hope it's still what I've bought at the beginning. With Solidity, it feels a bit more direct. This was written for the Ethereum version machine.
00:23:03
Speaker
pretty directly what I will get in bytecode when I will put this line of salinity in there. So I think this is not always another way of more abstraction if you go to Rust or other languages. But if you're making a virtual machine which is directly targeted at having the smart condors written in Rust and using all those Rust features and so on, then it makes sense. But for Ethereum right now, I would not recommend it.
00:23:27
Speaker
Yeah, yeah, that makes sense. I did see something, uh, developments on a Viper, which is a Python-like language to use for EVM. And it was really, I was following along last year and the interesting thing is that they've kind of gotten to a point where it's big enough that there's some community behind it and some people are using it, but there's also risks associated to that. There was a, there was a hack, a
00:23:50
Speaker
relatively big hack. I don't remember for what chain it was at the time, but they were using Viper and the Viper language itself had an exploit in the way it handled some information. So it allowed people to kind of exploit some of the Viper methods and the way it compiles itself. Right. Things mature over time and Solidity is really mature, even though they have not released version 1.0 yet. Still, it's very mature compared to others.
00:24:20
Speaker
Yeah, that's true. That's correct.
Creation and Impact of the DAO
00:24:23
Speaker
And you're also one of the founding members of the DAO, like the DAO, the actual DAO, which is fantastic. And you wrote most of the smart contract code for that. Is that right? That's correct.
00:24:35
Speaker
It's always hard to say who are founding members. I described myself as the author of the DAO. I wrote the white paper. I wrote the smart contracts together with others. We had about 18 contributors, but only two to four were really active. I was doing the initial version of it. We had some team members who then contributed also. This is a super long story if you want to make it short.
00:24:59
Speaker
The DAO was a very exciting experience, one of the most intense or if not the most intense time of my life for sure. I told you about it, I was leaving Ethereum end of 2015, I would start my own business and
00:25:15
Speaker
We wanted to do something called Slockit, but the idea was to use Ethereum as a base layer and connect smart devices such as door locks and other locks to it so people could pay to open a lock, which can then be used to rent something out. This was the basic idea, like a decentralized Airbnb, if you want, or a decentralized Uber, whatever. The sharing economy was going big at a time, because let's have a decentralized version of it by connecting those smart devices to the Ethereum chain, you could pay to use them.
00:25:44
Speaker
This was an initial idea. Then I pitched this in DEFCON 1 in London, first big Ethereum conference. And at the time I was thinking about, I didn't want to get VC money. And so I was writing a smart contract where we would make a token sale. And in the beginning, it was like people would give us money. They would get a token and get dividends from a project. So then lawyers said, well, be careful. And dividends sounds like a security. But then I continued to write a smart contract.
00:26:13
Speaker
having the idea of why simply issuing a token is boring. Let's have the money stuck in the contract and we have to make proposals to get it out. We need $1 billion for that project, $100K for this, $500K for this, and then they would vote on yes or no, the token holders who could get the money. At this, then the next version of this idea was let everybody put money in and let everybody make a proposal to get money out.
00:26:36
Speaker
And if the talk holders vote for it, so be it. And the overall narrative was, you will build something we called the USN, universal sharing network. So this was this decentralized sharing economy network built on Ethereum. And everyone could contribute, we as Locket, maybe some others as well, some other companies building other kinds of logs or doing a marketing campaign or whatever. It would all make proposals to the DAO to do something for it. And every time the product or the protocol would be used, a percentage would go to the DAO talk holders.
00:27:06
Speaker
This was the basic idea. So, very open, actually decentralized, autonomous organization. Everybody could put money in. Everybody could ask for money for doing something for the DAO. So, it could make money. This was the idea. I pitched it at DEFCON1. People loved it. It had about 5,000 people on Slack. This was back then. Everybody used Slack for community management, like today Discord.
00:27:29
Speaker
And so we had Stefan Tuar, who was also a former Ethereum member. He was leading the communication department of Ethereum, chief communication officer. And he did a very good job in presenting it out to the world and making a nice website, blog posts, meetups, and all of that.
00:27:46
Speaker
And then we had, of course we didn't do it. We actually had a security audit of the contracts. We did everything we could. In the end, the DAO was launched. And when I say it was launched, I say, I tagged on GitHub, the code is version 1.0.
00:28:02
Speaker
that it's released now. And then there were, I think, dozens of DAOs deployed by various people. And then the DAO community voted which one they would choose as their DAO. And the name, the DAO, is also a fun side story. He never actually named it the DAO. He just said, we don't have the authority to give this thing a name. The token holders need to vote for it.
00:28:23
Speaker
But token holders can only exist after they put money into the DAO. So the DAO was just basically a working title, the DAO until it was given a name. And the idea was that once it's live, they can vote for a name, whichever happened.
00:28:38
Speaker
Absolutely unexpected. A lot of money did flow into the DAO. And during the time, the narrative changed again. It's always so important to see the narrative you know today is very solid, the narrative, something got started. So the DAO was started with the narrative, let's build a universal sharing network and everybody can contribute. People put money in who want to be part of this universal sharing network.
00:29:00
Speaker
Then it reached like $5 million, $10 million, $20 million, $30 million, like crazy. And then the narrative changed towards, well, if you want to put money into apps built on Ethereum, now the data was almost no app at all. So to adapt this application, most likely all the depths of this application would be funded by the DAO. So it became something like a venture fund, which would only invest into these applications built on Ethereum.
00:29:30
Speaker
And this was the new narrative. So everybody who was planning on maybe doing an ICO or something was now saying, well, let's just ask, make a proposal towards the DAO and let's see if you can get some money from the DAO, because now 30 million, 50 million, 100 million, 150 million. Then the ETH price went up. It was, I think, 220 at the top.
00:29:49
Speaker
So you basically had people pitching their projects to the DAO to get money. Exactly. That was like someone building, I think it was something like an electric bike. And there was all kinds of projects who then thought about let's pitch to the DAO. And this now changed the narrative. Now it was something like a decentralized investment fund, if you want to, but technically it could be a charity. It could be like what we intended, universal share network, could be everything. It's just basically a, you know, it's like,
00:30:14
Speaker
Tons of people, about 20,000 Ethereum addresses. We don't know how many people are behind it. And putting in 14% of all these, or about 150 to 200 million, depending on the ETH price. And they could fund about everything. So after that, people called for like a stop. Let's say we have to double check everything. What have you done here? And some people were super excited. I was super scared. And we didn't really know what to do. And so lots of details. I think there are some books you can read about it. The best one I think is The Cryptopeans by Laura Sheen.
00:30:45
Speaker
She describes in detail what happened. And she's making a very good research. So Cryptopeans by Laura Sheen. I have this book here in the back if you want to see it, but you can find it. So Cryptope. And long story short, there was a bug in the contract. So in the bug in the contract, there was a hacker who exploited it. He got about one third of all the ETH into a so-called child DAO. It's like a sub
00:31:09
Speaker
account, they could not take the money out until I think it was 40 days or something like that. And during the 40 days, you get a chance to do something. So it was a very unique situation. Usually if something like this happens, you can do nothing. Like you mentioned a ripple case, if the money is gone, it's gone. Like he can make a transaction every second or every block if you want to. And so you cannot really freeze anything. You can do the hot fall. There's like no way of doing anything. But in our case,
00:31:35
Speaker
There's literally zero apps on Ethereum. The money frozen in this account for 40 days. You're thinking like, we technically could do something. So let's see what can be done. And so we could not change the DAO. There was an idea about a soft fork, just like that the miners would not execute any transaction to the DAO, which was canceled because of the DDoS vulnerability. Also long story short, there was a very contentious discussion in the Ethereum community.
00:32:00
Speaker
Rightfully so. I was feeling like hurting my baby by even proposing a hard fork because it was going against everything you stand for, kind of. On the other side, Ethereum is governed by its users. Everybody can run whatever code they want to. And offering them the option to have a version where the DAO token holders would get their money back was a viable path.
Aftermath of the DAO Hack and Ethereum Fork
00:32:25
Speaker
So we basically tried to open up the path
00:32:28
Speaker
convinced the developers to build this version and then there was an on-chain vote. Only a very few ease holders participated. It was also non-binding. It was more like a
00:32:38
Speaker
like a signaling of what people wanted. And so most of them voted in favor of the hard fork. So it's mean the Ethereum Foundation put the option in as a default that you are on the new version of it. You could always switch it off. And so, but most ventures are default, some actively decided for it. And so we had this hard fork and now we have Ethereum, Ethereum Classic. Ethereum Classic, the ETH was not returned and there the ETH hacker still has kind of the ETH from the DAO. And on the
00:33:06
Speaker
The main net, or just today the main Ethereum chain, all the token holders got their ease back. So this was very intense, very contentious. I still think it was the right thing to do to give the users the choice to run this client or this client. They made the decision.
00:33:22
Speaker
Both of them are existing today, real value and market value happened on main Ethereum, which is fine. And yeah, this was a story. It's the top of the iceberg. No, that is intense. It always pops up and it's always super fascinating to talk about that. Did you have any opinion at the time whether the fork happens? Did you have any opinion whether ETH, well, ETC or ETH is kind of like the right choice to go about it?
00:33:52
Speaker
Well, I was biased. I mean, I was the one writing the code which caused the bug. I didn't want to have people losing their money. And I was also very important. In the beginning, we thought, well, even those 5,000 people on Slack, if each of them is giving 1,000, that's 5 million. And this is all like our community, our people that meet at our Ethereum conference.
00:34:14
Speaker
the us playing around is funny internet money. So it's basically just a game. Of course it wasn't, but it felt like it was just a little community. But now when it went up to $150 million, I heard stories about a guy working at a bakery in Paris, investing his life money in it. I don't know how much, hopefully not his life savings, but very normal people heard about it in newspapers, putting money into it. And I didn't want them to lose their money.
00:34:40
Speaker
Like, you can maybe tolerate if someone make 100X on Bitcoin and had to play money and losing 1% of his money because he played around with Bitcoin and put some money in it. But this was now real people with real money. And I didn't want them to lose their money. This was just too harsh. And so I was in favor of the hard fork. I was in favor of giving the money back to people, but I can fully understand everyone who was against it. But in the end, it was about a choice.
00:35:06
Speaker
those who run the Ethereum client to be made, like exchanges, users, those who run a node, they can decide which Ethereum they want to support and use. And this was certainly the right thing to do to give this choice. And they did make a clear choice towards what is now called main Ethereum, where the DAO token holders scatter ETH back.
00:35:27
Speaker
Yeah. Well, it was a very unique situation because you don't really have that anymore today happening. It would not be possible. Absolutely. It would not be possible. It's one thing that people have so many misunderstandings about this hard fork. The hard fork was not a rollback of the chain. This was not like we set all the transactions until like before the DAO.
00:35:48
Speaker
This was only the ETH related to the DAO was giving back to those accounts. It's like a little, little piece of state we called irregular state change. And not like a global state change. We didn't change all the other accounts. Everything would like the apps would just continue to run. Everything was smooth. The transition was super smooth. This was just a little change in this particular smart contract system.
00:36:11
Speaker
which is not like, if this would happen on Bitcoin, you want to make a hard fork on Bitcoin, you'd have to roll back the complete chain, which is insane. So this is why it's most possible at all. Also, we had those 40 days where the money was frozen. If you would not have those 40 days, it would not be possible. And today, there's so many applications running on it, so many coins on it, so many stable coins, even coins backed by gold or all those kinds of things. So if you would make a split today,
00:36:39
Speaker
There is so much damage done. And all of those projects we have to decide on which chain they would redeem the token for the real world assets, be it a real dollar or a gold token or like equity or bond or whatever. There's so much stake behind it. The damage would be immense that I think even if you have like 5% to 10% of all E's at stake, you would not consider a hard fork anymore today.
00:37:02
Speaker
Back then, it was better. I mean, like you said, there's just so much stuff built on it right now. Not to mention that it's incredibly easy right now for a hacker to get away and cash out that money. You've got so much in DeFi build that you could go and you could anonymize your tokens. You could throw them in a mixer. Well,
00:37:23
Speaker
I don't want to say no one's going to find out because eventually people will find out. And I feel like this is one of the things that ExchangeRite exchanges are good apps. Like they kind of come together and they always kind of follow the trail and block whenever they see a fraudulent transaction going in. In the case I was mentioning before with Ripple, it doesn't seem like that has happened so far. It looks like the attacker was able to
00:37:45
Speaker
split the funds and kind of launder them through Binance and OKX, I think. But yeah, going back to that, it wouldn't have been possible today. And I'm also biased about it, right? Because I always thought I was for the hard fork and I think ETH, well, the Ethereum, the current Ethereum chain is Ethereum. I never really considered Ethereum classic to be Ethereum in any way, shape or form. Like it's kind of
00:38:15
Speaker
you know, the difference between Bitcoin and Bitcoin Cash. That's the way, the same way I look at Ethereum and Ethereum Classic. I look like, well, it's kind of there, but it's only there to like mess things up. You know, it doesn't really help with anything. And they have actually several hard folks after that for other reasons. So I don't consider Ethereum Classic as a legitimate chain. For me, it's Ethereum because the chain is more than a technical part. It's also a community. It's like
00:38:42
Speaker
the users and all of that, and they are clearly on this chain. Yeah, yeah, 100%. So I just also wanted to move forward with tokenize.it, which is like the latest thing that you're working on and you've actually,
Tokenize.IT and Legal Tokenization Solutions
00:38:59
Speaker
you've recently developed. And I think it kind of feeds in with the whole idea of decentralized organizations with moving from
00:39:07
Speaker
different ways and exploring different ways of how organizations can fund themselves. Tokenize.IT is obviously about tokenization of assets. Do you want to give a high-level overview of the vision behind it? Sure. This actually now links to the DAO a little bit because the DAO was maybe the most extreme form of a decentralized autonomous organization. No legal entity whatsoever, like in terms of
00:39:37
Speaker
directly related to the DAO. When we had the digital entity in Germany, we actually also had one in Switzerland, but this was not yet linked to the DAO. So total freedom. But I also learned over the years, looking at what other DAOs have done, and I admire many of them. There are many good ones and I like, for example, the E&S DAO doing a great job. But
00:39:57
Speaker
Today, I believe, which I didn't believe back then, so I changed my mind on that point, is that a DAO is not suited for building a product or starting a startup kind of. Like we tried to do with the Universal Share Network or disrupt them, Airbnb and Uber. I don't think the DAO is the right way of doing it. I think DAOs are very good at, for example, maintaining a protocol such as ENS or even a blockchain protocol.
00:40:26
Speaker
for managing public goods. You don't have big changes in what it is. It's more about ownership and maybe some...
00:40:34
Speaker
some governance that is needed, but only minimal governance, because our governance is messy. And in terms of people, I like to show, thou stands for dudes arguing online. Sometimes that's just what it is. And so it is okay, similar to how a democracy is good in protecting us from the worst case scenarios,
00:40:56
Speaker
but not the most efficient form of government, if you want to make good and quick decisions. So their dictatorship is much more efficient. But this is super dangerous that if you have a bad dictator and you have a lot of them in this world, they can cause a lot of harm. So that's why democracy is so much better and it prevents us from this, even with much less efficiency, but beep, beep.
00:41:17
Speaker
we rather have less efficiency than a bad dictator. And similarly, this is Dao's. Dao's are like this super democracy, not efficient, but can maintain a certain vision and also the standards or maintain a protocol, public goods and so on. But if you want to build a company and build a product where you have to find product market fit, iterate very quickly, there actually a dictator is a better way of doing it.
00:41:40
Speaker
Of course, this is now a talk about extreme. I hope me as the CEO of the company, I hope my employees don't see me as a dictator, but I'm still, we still have this strong hierarchy. I still consider myself as CEO of tokenize it, I'm making decisions, of course, taking into account all the
00:41:57
Speaker
opinions and inputs from as much employees I can get or customers, sure. But I can quickly iterate, I can raise funds to specific investors. It's just a better way of building it. Eventually, if you're super successful, you have huge market share, it would be a dream of me if then tokenize it would become a doubt.
00:42:15
Speaker
And then it would be just maintaining something which could be even considered as a public good, which is managing company shares. In our case, it's participation rights, but it's similar. So this is more like the end state, not where you start with.
00:42:31
Speaker
And so with this in mind, I still think we should tokenize those company shares. And ideally that would be something like a global private legal entity type, which doesn't exist because you don't have any global government. So if you look at now each different nation state, you have the LLC in the US.
00:42:51
Speaker
And in England, we have the Saal in Switzerland, GMBH in Germany, and Estonia. And so they all have their different kinds of entities. And there is no other way that to customize the solution for that particular type of legal entity. Right. And those are all limited liability companies.
00:43:08
Speaker
Yeah, exactly. Those are all like the first kind of limited liability companies as private entities before you, those are not public companies, they're not traded anywhere and so on. So they're cheap to start. And so in Germany, we have built a solution which just didn't exist before, how to tokenize a GMBH. And the details, I mean, I think your listeners, none of them are like mostly Germans, so I don't want to get into the German legal issues, but
00:43:33
Speaker
It boils down to the token represents economic ownership in the company. So a token holder has to accept the same economic rights as an actual shareholder. The only thing she doesn't have, what he doesn't have is voting rights. So in all governance voting rights, only the actual shareholders and the token holders
00:43:55
Speaker
get economic participation rights. And with this, you can do fundraising with private offers for VCs, business angels, and so on. You can do a public offer. Now I'm skipping over what happened after that out. They need those ICOs, crazy sales.
00:44:11
Speaker
raising billions of dollars by selling a token. And unfortunately, many of them have been like fraudulent scams and so on. But if you have the GMBAs, you can technically do something similar, but you have a real project behind it, a legal entity, you are
00:44:27
Speaker
liable, at least in part, for what you're doing. And so you can do a token sale in public according to regulations. So in Germany, we can raise up to eight million euro per year. There's something called, like a little prospect. It's called the ad papier for Mazzone's blood, super nice long German word. So it's basically like a prospect, but smaller, the mini version of it.
00:44:49
Speaker
And it only is about three to four pages. And with this, and someone who has a poker license, you can do a public fundraising. And we are using this token for it because maybe Germany is the best example because their bureaucracy is so bad. If you do any change in your cap table, you have to go to the notary.
00:45:05
Speaker
So if you want to have like a thousand crowd investors, there's no way of going to do notarys of them. That's why most of the ways you can invest in a startup as a retail investors, they're giving out some bonds or just basically a debt loan.
00:45:22
Speaker
And so that's not a real investment in sites like you can participate until the IPO. And so we have created something that can have retail investors inside your private company or LLC, in our case, GmbH. And this I think is very special. And also employee participation. So we do those private offers, public offers, employee participation, all using what we call GmbH token.
00:45:46
Speaker
And our goal midterm is to do this for all those private legal entities in Europe. So being a solid as these and so on. So right now we're just in Germany, we hope can grow over the next couple of years, then we will have built something where each company has certain characteristics of a DAO, meaning your company, a normal legal company with slight limited liability and you have
00:46:09
Speaker
You're fully integrated in the normal system so like this tax accounting and all the all the rules and laws but you still have a tokenized version of the company that can easily issues tokens you can
00:46:24
Speaker
public offer, private offer, employees, community members, advisors, you're super flexible. And that's where I want to get, and later on, I hope in the future, to also give them voting rights, or maybe they do some informal voting, so they do voting, and if the CEO doesn't do what, because he's not legally bound to it, they have, also today, they have the opportunity to convert their token into a wheel share.
00:46:47
Speaker
With this, they will become actually shareholders with normal voting rights. This is more like a worst case scenario, because then you stop having a token and you are back to the notary. But it's the only way to get voting rights. So I'm basically working still on this DAO thing, if you want, but just coming from the other side. Basically taking normal legal entities, helping them to tokenize themselves and moving towards the more DAO-like governance or DAO-like company form in the future.
00:47:18
Speaker
That's what I'm currently working on. It's super exciting. And we have, this has started last summer with launching the product, the first version of it. Now we are, the public fundraising part will start about most likely in March. And then people, then our customers can use this. If more than 50 companies signed up, um, already they have raised over almost 3.3 million now. Um, but two points speak from tokenize itself. So the rest is outside, outside companies. So it's starting quite okay.
00:47:47
Speaker
not yet going viral. Here, advertising, use tokenize it if you're in Germany and having a GMBH. I'm here to help you. If you're planning to run away from the notary, just use tokenize it. Exactly. It's so much better, cheaper, and flexible, and there's so many reasons. Those who understand what a token can do, they immediately get it, how much better it is. It's a token on a public Ethereum chain. It's an so-called ESE20 token, which is a common standard for tokens.
00:48:12
Speaker
It's not deep tech, but it's legal tech if you want, but this token can do so much. So that's what we're currently working on. And I hope that one day you become something like maybe you know, AngelList or Carta in the US. So maybe like AngelList or Carta, but a web3 based version of it, at least for Europe.
00:48:33
Speaker
And I think that's what's super fascinating because you've moved from, I think like the DAO was this idea of how would I build a decentralized organization with no boundaries? Just pretend legality just doesn't exist, doesn't come into it. This kind of idea, like beautiful, perfect kind of idea if there was no government to tell you what to do or what's the security and what's not a security. And then tokenize it, it's like taking that idea and making it work within the current legal framework.
00:49:03
Speaker
100% put it right. That's what we are currently doing. Also, I like one term. I think Gavin Wood said it first, or maybe the only one who used it, he described Ethereum as not being illegal, not being legal, but being illegal.
00:49:20
Speaker
So what does the word illegal mean? He described a system who cannot care, like the internet. The internet is neither legal or illegal. It's just a system which cannot care. You can do whatever you want on it. Of course, you are accountable for the one who running a server, hosting a website,
00:49:38
Speaker
doing a trade, offering some e-commerce, whatever. They are responsible for what they are doing, but not the internet. You can do everything you want on the internet, technically. And then only on top you can judge if this is good or bad. And Ethereum is similar to this. Ethereum just exists.
00:49:53
Speaker
the system who cannot care. And some would argue, well, at a doubt, they cared. Well, yes, the community sometimes cares. But now, today, I would say, Ethereum as a tech cannot care anymore, because there will be no hard phone anymore, for the reasons I described before.
00:50:12
Speaker
And similar, I think, was the DAO. The DAO itself, the smart contract, I mean, was like a system who cannot care, just existed. And then people can do whatever they want with it. And so you learn that the SEC has a different opinion on those things. So you have to do it a little bit different. And now we're trying to, as you said, work within the legal framework which exists, obeying the law, giving normal users legal certainty.
00:50:37
Speaker
and still having the benefits of having a token which you can issue and not such a fake token. There are many so-called utility tokens, which I think are so badly designed because of the law. It's ironic because the law should protect those investors, but because of those laws,
00:50:54
Speaker
Those founders said, well, we cannot give them dividends. We cannot give them voting rights. We cannot give them exit participation and so on. So we have to somehow say there is a capital supply and you somehow need a token to use the product, thereby giving the token a value and link it to the value of the product. So if everybody uses it, the value of the token goes up. So artificial links, basically. And the investor did get something
00:51:18
Speaker
worse than he gets with, let's say, a GBH token. He actually gets dividends. He actually gets extra participation like real economic rights. And most of the founders, also back in the ICO bubble times, they wanted to give those token owners actually economic rights. They just feared the SEC. And that's why they didn't.
00:51:37
Speaker
So it's ironic that the SEC caused investors to actually get less rights because it would be a security. And then if you look at the setup, this is now describing a little bit of what happened after the DAO. All those ICOs, at least those who did a little bit of the right, they created a nonprofit
00:51:55
Speaker
Just because you don't want to have two cap tables, like one for-profit cap table where you don't know, are they the ones profiting if the project is successful, or are the token holders the one profiting if the project is successful? Having two cap tables is a very, very bad idea. Because as an investor, you never know where the value is. So that's why they choose a nonprofit.
00:52:16
Speaker
Even though I think it was ironic, I know some VCs investing in a non-profit getting a donation received. Because it's basically a donation legally to a Swiss non-profit. And it's insane. In getting this token, there on paper it stands, this is nothing, will be nothing, will be used for nothing, you will get nothing for this token.
00:52:36
Speaker
This is just an entry in our database and not more. And you pay 5 million for it. This 5 million, they give you as a donation receipt to just donate it to this nice foundation here. It's an insane model. It's crazy. Think about it. But that's what happened and billions went into it over 2017 and 18. Then 18, 19, 20 security token popped up. But the first ones, I would say some of them badly designed by keeping the contracts as they are, just putting a token on top.
00:53:03
Speaker
By this, there's no real benefit. There's only this. You also now have to have a wallet and have to make a private key, secure, and transfer the token when you write the signed contract. It did make things more complicated, not easier. And you have the old system plus the new system. So you should not put old wine, a new wine and old...
00:53:23
Speaker
This is a, I forgot the English word for it. The decanter. Yeah, exactly. So it's like they're saying in the New Testament, the Bible says it already. So you need to think of things, you need things, you just think it from scratch again. That's what you tried to tokenize. You have completely new media set up, which is fitted for those tokens, which makes them easily transferable without the need of signing any contract. That's something which is completely new. It is not needed to sign a contract when you transfer the token. And even though you're transferring a security.
00:53:53
Speaker
Yeah, we did a little legal hack to get there. No, that's fantastic. So would you then say that Germany is, from a legal standpoint, kind of clear enough so that crypto companies can operate and can use the legal framework effectively? Or do you expect it to change? No, I think it's not as I wanted to be, like if I could change the rules, I would. But I would still say they are clear enough.
00:54:20
Speaker
So for me, at least for what we are doing, when I cannot judge every edge case, there are certainly some edge cases that people don't know what to do. But for what we are doing with tokenize it, I do not have any open questions. I get the security, like we tweeted as security. We know what are the laws behind how you can offer issue securities. They're not as I want them to be, but we know what they are. So meaning we can.
00:54:42
Speaker
they build a product that just keeps use in those legal requirements. I don't think there's as much legal uncertainty as of today, only for some edge cases. That's incredible to know. We incorporated our company in the Netherlands at the time, I think in 2021, and we were hoping that Netherlands was going to be at the forefront of crypto legislation adoption.
00:55:09
Speaker
But then we also came across the same kind of issues that you've literally just mentioned everything you want to do for a business from a legal standpoint you need a notary and sometimes you need to be physically there we were lucky because we were allowed to have meetings over video call.
00:55:26
Speaker
So we didn't actually have to go to the Netherlands, but in many cases, you would actually have to be physically with a notary doing all these things. It's crazy. We don't have that in the UK. In the UK, you can incorporate a company for 20 pounds in an afternoon if you want.
00:55:43
Speaker
That's nice. And if you pay so much money for this, also if you do some fundraising, I recently heard someone who paid, I think it was 40K for the notary and 30K for the lawyers for a fundraising round. I mean, I also was participating in a round recently, it was a 7.5 million round.
00:56:00
Speaker
And they paid 30K for the notary plus lawyer. So it's not only expensive, it's only super inflexible because you cannot do crowd investing or employee participation. We would have to go to the notary for every change in your cap table. And you could think of Ethereum as the alternative to the public commercial registry, which in Germany, we have the so-called Handelsregister, which is a public commercial register. And only the notary can make any changes there.
00:56:30
Speaker
And you could think of Ethereum being the digital version of it. Anybody who has the private key has certain rights to make changes themselves. Being the CEO of the company who can issue tokens or be the token owners who can trade those tokens or sell them. So it's a much, much better system. So we hope you move towards that, that all securities in the future live on Ethereum or maybe maybe layer two or other chains.
00:56:54
Speaker
and have those characteristics which a token has. Now, sometimes we get these questions, why do we have to use a blockchain? And finally, I have a really good answer to it. Because if we wouldn't, this would mean the startups, which are our customers, if we close doors, the database is gone, they don't know who has how many shares and it's all a mess. But because they are traded or they're existing on a public chain,
00:57:21
Speaker
They can use whatever wallet they want. The tokens are ESE20 tokens. They can easily transfer them. The contract, of course, still exists, the legal contracts, meaning they don't need us at all. We recently had a case that one of our customers made a change directly on Etherscan. He connected his wallet to Etherscan and changed the owner wallet of his token contract. He didn't need us at all.
00:57:45
Speaker
So the nice thing is you don't need tokenize in the future to maintain your token and your rights and paying out dividends. All of this can happen without us. We are basically only a convenience function at that point. So that's nice. You can only do this with a blockchain.
00:58:00
Speaker
Yeah. And that's fantastic. How does the, how do the dividends work? Do you say is almost like staking in a way you get rewards in your wallet? Is that how you're envisioning it? So for security reasons, what we did is we have a smart contract where then there are payouts, they pay into a smart contract and every token holder can get their share. And so we take a, we take an on chain snapshot of the, who has how many tokens at a certain time. And the issuance will also happen exactly at this time. And then they have time to get their, like
00:58:31
Speaker
pull their dividends out. We use pull is better than push for security reasons, because if you just add drop it, you don't know if they still have their keys to basically give money into nothing because someone lost their keys. If they pull it, they have to make a transaction that by approving that they own the keys.
00:58:48
Speaker
Yeah, that's a good point. So they could do anything. They could just go to Etherscan, connect the wallet, call the function, and get their tokens. They could do this, or they can use our interface, which is a nice app. Or actually, there exists some automated user interfaces, auto-generated user interfaces for smart contracts. So I saw them recently. Etherscan, you could say, is one of them. But maybe they're the nicest, and there's some which are just making the look at the ABI, or like the interface of a smart contract, an auto-generated interface to it.
00:59:18
Speaker
So then connect your wallet and can push those buttons and see the functions which are available. And they would see something like pay out dividends and you click it and then you get some money. So meaning it is, you can use it with our tokenize it, but of course with us, it's much easier.
00:59:32
Speaker
Right. Well, it sounds like there's also almost once tokenization solutions are going to become more popular and I'm sure that they will. It's almost like another gap in the market, having a solution to handle, to automatically interact with functions that, you know, maybe you don't want to, or maybe like a feature in tokenize it, IT just having automatic, you know, pulling of these assets via a script or something, because you could easily do a script to do that for you if you wanted to.
01:00:01
Speaker
Sure. I sometimes like to call it crypto-native companies. It's a new kind of companies which are built on those different railroads, basically. They are built on on-chain based on smart contracts. They can do all those things. And I hope in five or 10 years, maybe even earlier, you have a complete software stack for crypto-native companies where you have accounting and all of this done, and they look at things on-chain, they get your dividends through the payout, and you have a way better backend than today, which is basically just paperwork.
01:00:32
Speaker
Yeah, exactly. I think it's going to be the norm, like having immutable data on an immutable kind of infrastructure. That's what you want. And I think it more than enables that, and it should be used more for that kind of stuff. Anything that you would like to announce, any kind of new things that you're building on, any releases for tokenize it that you want to let people know?
01:00:58
Speaker
Well, the next thing that's coming up is our main feature, which is crowd investing. You could call it ICO if you want. I don't like the name ICO, but people invest in your company in a legally sound way. We hope to release this at least in this quarter. Let's stick with this quarter. I don't want to give you a specific week.
01:01:19
Speaker
But that's I think the biggest one coming out. And then by the end of the year, we hope to get to build a secondary market for those tokens. There are lots of things to do before that. So maybe it will be 2025, let's see. But this is our current roadmap and heads down building.
Wrapping Up and Future of Tokenize.IT
01:01:34
Speaker
Sounds incredible. I wish you best of luck with that. I think it's a solution that a lot of companies need that maybe they don't realize they need it right now. And do you have any socials that people can follow along and can learn more about it? Yeah, so sure. Tokenize it HQ on Twitter. But if you just Google Tokenize, you'll find us on LinkedIn, Twitter.
01:01:56
Speaker
Not yet Farcaster. I think that's why we're starting next. Go to Farcaster, let's see. My personal Twitter is what I'm using the most, the C-H-R-JENCH. Try to find it maybe on Google or on Twitter, C-H-R-JENCH is G-E-N-T-Z-S-C-H, a complicated German name. Not many vocals. My dear, I'm mostly using Twitter if I use any social media. Maybe it hopefully will change in the future to Farcaster or Lens and all those other nice protocols. I hope they get traction.
01:02:25
Speaker
Awesome. Well, thanks a lot for the conversation, Christophe. It's been genuinely super interesting and it's been a pleasure to talk to you. Likewise. Thank you. Thank you. Thanks, everybody. Bye.