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Rune Christensen

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86

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2018-12-21

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2018-12-21

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1

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1. “And so there's actually two assets that exist in the maker system and make up the whole ecosystem, right? One of them is DAI, which is very much the product, but the other one is maker. And that's MKR. MKR is the administrative and governance token that exists to make exactly these types of decisions using stakeholder democracy. So one MKR equals one vote, and the MKR holders are responsible for making these decisions about what types of assets can be used, what types of fees will be associated with borrowing against them, and in what ratio DAI can be issued against these assets. These are all really, really important questions. And they do this in a completely open and transparent way. And in return for their service, because it's very much a service that they're working to provide to the entire system, in return for their service, that fee that the DAI issuer pays, like I said, when they issue die, if they want to get their collateral back, they return the die.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

2. “This is probably the most important aspect of stability, right? Is who is making the decisions about these collateral assets. And that brings us into the second crypto asset that exists in the system, the yang to Dai's yin.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

3. “A lot of people have nightmare visions of like 2008. The problem with 2008 was that in 2008 they were doing something that was again like a very storied tradition which is debt issued against assets. They did not invent that in 2008.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

4. “That's really cool because there's this flywheel where Dive has already sort of improved the user experience of today's early applications on the blockchain. And that in turn fosters adoption of those applications and increased adoption in turn leads to the tokenization of more things. And as more things get tokenized and become collateral, they sure up stability. And so stability begets more stability and more adoption.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

5. “Anything you can get onto the blockchain can theoretically be locked up as collateral in our system, right? That's like the whole promise. And the idea there is that Know one of the compelling sort of details of DAI is that for every die issued there are assets locked up in escrow. And so every die is effectively backed by these assets. And so one of the really, really important details about die is this idea that there's a lot of different types of assets. So you can imagine supply chain invoices. You can imagine commodities like gold. You can imagine pure cryptocurrencies like Ether or Augur's rep all existing in the same system of credit so that if any single one of them has trouble, the other ones may still be performing and it sort of protects the strength of the entire pot. You see what I mean?”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

6. “Self executing can be a bit confusing, but it's definitely a rules based system that is fundamentally open such that anybody can see the rules and nobody specifically administers the running of the code. And so anybody in the world can take their cryptoassets, lock them up into escrow, and then issue DAI against them. And then that DAI, which is effectively functions like they borrowed, they can do whatever they want, they can start a business, refinance their house, and then later, when they want to get their asset out of escrow, they return the die that they borrowed plus a fee based on how long it was outstanding. It should sound really familiar because it works in a very familiar traditional sort of storied way.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

7. “Yeah, and maybe worth clarifying what is a smart contract if I can offer a definition on what it is, I would describe it as an autonomous program. So it's a piece of computer software that is deployed on a blockchain, it's run on computers all over the world. And what's autonomous about it is that no one party controls it. It's completely trustless. It's run in a trustless environment. And that's really important for the functionality of the system.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

8. “There's tons of different ways you could describe the same thing, but I think the one that is the most, I guess, immovable is the fact that it is smart contracts. At the end of the day, Maker is a system of smart contracts that incentivize people to come together and lock up their assets, their crypto assets, into escrow in these smart contracts, and then they have the opportunity to issue die against them.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

9. “Makes perfect sense because it actually goes to the very heart of open source, in fact, because if you think about the history of open source, and we've talked about this a lot in the podcast, it's been starved for resources. And in the classic model of open source, you had these big corporate players. They needed open source because no one company could be open source because they would never be trusted. And so you have this interesting ecosystem of all these big open source funders from big companies like Cisco and Google and et cetera. And then you had like these open source consortiums and projects. And the really interesting evolution we're talking about in crypto is that we don't actually now have to rely only on those. Your point about banks is quite interesting because you're putting that same framework at the International Global People Transacting with each other level and creating this sort of substrate for everyone to build on, to create that interconnection without having to worry about, well, that bank has a dog in the fight, so we can't trust them if they try doing the same thing kind of thing.”

   2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

10. “Space that we've kind of stumbled across with blockchains is really, really compelling when you're looking at transnational business. The idea of any one player coming in and setting up this transnational non-jurisdictional space seems a bit far-fetched and it seems a bit difficult to imagine. But seeing it as this emergent, accessible space, I think is really, really compelling for not only banks, but like tons of different finance companies and different enterprises in general to suddenly become these transnational actors that they weren't before or that they didn't have access to because they didn't have the resources to build out that capability. Does that make sense?”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

11. “Well, there was no sense, at least in our community, that banks are gone or that their purpose for existence is not there, right? What I'm hoping is that they become actually a lot better at what they're supposed to do and then have a lot of things become automated and a lot of things become just streamlined that they maybe had to spend a lot of resources handling before, right? And every bank is different from maker because every single bank exists inside of some sort of nation state, right? And so you've got a collective of people that all have like a shared agenda. And I think that banks are really important in the whole process of providing for the strength of the nation. And I think that banks will continue to do that and make her basically has no dog in that fight because we don't exist in any single country. And so what I'm hoping is actually that Maker will end up being this really, really low-level sort of warehouse for banks to build on top of and then do what they do best inside of the countries where they operate. You know what I mean? This non-jurisdictional international”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

12. “So basically, it's sort of like this port between kind of the early adopters and the late adopters to help mainstream it, maybe not a port, maybe even a wormhole, however you want to think about it. Adopt and in many cases, I think Chris Dixon actually shared this with me a couple of years ago the strong form of a technology will always quote beat the weak form of a technology. The companies that go cloud native first are going to beat the ones that are trying to do hybrid cloud first. But I think this is an exception because here in cryptocurrencies, blockchain, crypto in general, we have a case where it's a little bit of a moving target. Like these apps are developing as the infrastructure is developing, as the users are developing, they're all kind of happening simultaneously for the first time, I think, in the history of computing versus in the past where there was a bit more of a stepwise flow. So I think that's very interesting. But on that note, when we think about this quote transition phase, it's not ephemeral. It's transitional in the sense of it's creating that port or wormhole. How should traditional finance players like banks think about this?”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

13. “In order for decentralized applications, which are deployed on top of blockchains to reach millions and millions of users, the experience needs to rival that of a traditional Web2 startup. And in most parts of the world, we have credit cards and payments are fairly seamless experience on the web for a lot of people. The stability of stablecoins just brings that experience to these applications. And that's a fundamental unlock that's required for this to scale up.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

14. “That's already happening right now, and it is happening with engineers first. We're seeing other projects starting to integrate DAI simply because it makes their user experience 10 times better instead of having to transact with whatever service, whether it's like a digital goods marketplace or a prediction market in some volatile currency, you can make a loan, for example, in DAI and not have to worry about the volatility risk of the underlying currency. And that's a really exciting early application.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

15. “Yeah, like this collective group of people who have come together to create Maker and see this stable medium of exchange that you could take for granted but is so novel in this context. I think that it creates connections from the legacy world, whether it's the supply chain or finance or whatever, connect back into the blockchain. One of the analogies that I've heard that I found really just stuck with me is that it's a bit like a chair lift, you know, where you start here and then there's this rough terrain that you go over on the chairlift and then you wind up at the top of the mountain, right, the top of blockchain mountain. And I'm hoping that Dai is this sort of funnel that brings people onto the network, makes them comfortable, like gets the wheels greased turning and gets them comfortable with beginning to transact over this network.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Were a lot of people who were interested by blockchains and found them a bit inaccessible and found the community a bit difficult to interface with and found it was really, really unclear how they were to do business on top of this platform. And so for us, one of the big partnerships that we announced over the summer was a partnership with TradeShift, which is a very big, really dynamic supply chain data platform out of Denmark, right? And so having an opportunity to see a traditional startup that has done so much towards digitizing supply chain logistics partner with a DAO”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

17. “Is such a compelling opportunity for them because if you are the coffee grower in Guatemala and you're having cash flow problems, but you have that opportunity to jump into the future when you've received the money that you've been promised by the global supply chain, you can access that money today as debt and then solve that cash flow problem in a way that maybe before you would have to go to like a loan shark or some really, really unsavory extractive technology. And so what we're really trying to do is with this like whole open permissionless system is give people in all parts of the world access to the same sort of high quality financial tools, especially when it comes to borrowing that these big players have in the center.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

18. “I think I can give you a concrete example. So, one of the ones that is really compelling and is actually already, we're building momentum in is this idea of trade finance, right? So if we look at the supply chain, the supply chain is a huge hulking, almost like impossible to comprehend Leviathan of economic activity. I can't remember what it is. It makes up some incredibly large fraction of actual global commercial activity, right? It feels almost like a vascular system in the sense that it's got these huge players in the middle and these huge players in the middle are very plugged into global finance, the brain. Yeah, exactly. But then when you get out to the periphery, you know, like the coffee grower in Guatemala or the shrimp fisherman in Thailand or something like that, it's clear that they're part of the same system, but they're very disconnected and they're very not included. But because they're business people and they have the same sorts of financial needs as these bigger central players, a lot of times they're”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

19. “Existing lives when it comes to economics and commercial activity. And I stablecoin will be incredibly useful in allowing people to have open access to stability, you know, because that's something that sort of everybody is entitled to, I think.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

20. “I think it'll be the same thing for online payments and for just online e-commerce in general, right? Because e-commerce is this thing that's really, really slowly sort of penetrating the entire world. It feels like everybody is online right now, but it's just a question of what are they doing online, right? Like a lot of times they're gossiping and talking to their friends and stuff like that, but are they really doing impactful things? Are they building businesses? Are they really accessing all of the wealth? Because that's a big thing that I almost never see get acknowledged when we talk about these spaces. There's so much wealth in the world that is in the informal economy and it's not being properly registered and recognized by the global financial system. And so a blockchain, which is like this open access, permissionless choose your own adventure story, is such a compelling technology that I could see allowing a lot of this existing wealth and existing assets to be online and be recognized by creating these shared realities and these shared understandings where people can sort of acknowledge each other's property and each other's”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

21. “The phrase that we use a lot in media is like leapfrog. In China, Connie and I wrote about WeChat, but the big story is that they were able to leapfrog the internet phase because they went straight to mobile, and that enabled all these things without the legacy infrastructure.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

22. “I think that the reason that stablecoins matter is actually very related to the reason that blockchains matter, which is that because it has so many implications for other applications, I think will be a really interesting skip level technology similar to how cell phones allowed people in the developing world to sort of skip home internet connections.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

23. “And so people really, really, really want something that just clicks with consumers when that's not how any new technology ever comes out. It's always developer focused first and it's always in the garage and then it's like this whole like nerd scene and then it slowly gets polished over time, right? Right,”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

24. “And not only that, but I think that there is this temptation, and this is something that never gets acknowledged, but the cryptocurrency industry skew is very young, right? So for a lot of people, this is their first job ever. And so there's this temptation to have dessert before dinner.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

25. “And I think it's a really interesting that your motivation was looking at the developer ecosystem and thinking about all the things you could build on Ethereum and then thinking about solving the medium of exchange problem. So it was a very developer-focused lens as opposed to just used as speculative trading instruments on exchanges.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

26. “Getting into Ethereum, thinking about what are the underlying foundational problems here, recognizing that a stable medium exchange was necessary, encountering maker, because we've been around for so long.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

27. “That there was like one website you could go to and see all of the Ethereum projects like the time when people would actually like catalog the internet in the early days right and so I was going through all the projects and when I saw Maker I immediately recognized that this was actually like an upstream problem that needed to be solved before I could really work on anything else. I said, oh, we need to make sure that this works so that way I can sell services on the blockchain. If I want to make whatever I want to make like a server company that's going to accept cryptocurrency, it needs to be able to accept a stable medium of exchange to be able to work because really that's what makes blockchains so cool, all this like open network, it allows for a lot of synergy and each project benefits from each other's success, right? And so a lot of actually”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

28. “So, stablecoins are interesting in so many different ways, and digital money in general. If you really think about it, stablecoin is just a rebranding of money because it just works the same way as money, and money is a very interesting feature in the sense that when you use it, you don't really think about the fact that it's stable. The whole point is that you just use it automatically without thinking about it. But I think what's really telling about why stablecoins are important is actually how a lot of people got involved in the maker project. And I can say from my own personal experiences, when I first discovered Ethereum, you know, I immediately recognized that there was value in a decentralized network that maintained this global state, this global objective state that we could all agree on is a very interesting, you know, there's so much sort of underlying value that we could build up and access here. It was like this wild space. It was like wild, untamed space that had tons and tons of potential, but had not been cultivated in any way. And so when I first got into Ethereum, it was actually so early on.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

29. “It's actually funny because there was a joke that for a while it was like blockchain inside, like everything plus blockchain, or does this really need to be on the blockchain? And then you think of ML inside AI. I mean, it's the same thing that happens with every new technology. People adopt it somewhat superficially before they truly build actual value around that. I always think of that one company's blockchain video where it's like a tomato on the blockchain.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

30. “Currency and money are actually different. It's a subtle distinction, right? Currency are units. These are the things that we can or can't use as money as we want to, but money is much more like a symbol. It's a collective understanding. So I can make currency units. The question is, do people accept them and use them as money? That's on them. And so makers sort of attempt to actually create money. And so we issue all these currency units as debt against assets, just like there's this huge historical tradition of doing, and that currency that we issue is called die, D-A-I. So as we come up to today, if we have this tradition of money creation as debt and then we get into the future and we want the blockchain to actually work. Because this is an important thing, right? The blockchain space has sort of, it's proceeded in fits and starts. It's captured a lot of people's imagination, but there's been sort of a lack of attraction where the rubber actually meets the road, right? And that's, you know, customers, entrepreneurship, these sorts of things.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

31. “Exactly. And that captured people's imagination. But Bitcoin kind of only tells part of the story about what cash is, right? Because Bitcoin, as we've seen, how it's behaved in the wild, it behaves a lot like digital gold. And it's definitely an improvement on physical gold. But if we're going to sort of do things in an intuitive way, basically do things a proven way that humans instinctively coordinate, then we sort of arrive at this attempt to use the Ethereum blockchain to create money, to create a stablecoin.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

32. “Money has this big historical tradition of being at times issued as gold and then at times issued as debt against assets. And there's a huge historical tradition, but that brings us up to today, right? The era of digital money is upon us. I mean, Bitcoin was so cool when it came out and it captures people's imagination and it was originally sold to us as like peer-to-peer electronic cash system.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

33. “My grandmother grew up in India in the generation where gold was literal money. You have as much gold as you have. You put it in a box, a mattress, whatever. The concept of taking on debt was so foreign for her. Like she's like, you can't have credit cards. That's like a really bad idea. But I'm thinking of the example that Yuval Harari cites in sapiens and how we all have these collective myths and fictions. It's actually a driver for economic growth and innovation in the big picture. And he gives the example of a woman who's a great baker, like my grandmother's a great cook. You want to open a restaurant, but you don't have enough actual money now. You can't just take one-to-one what you have. If you have debt and people can invest in you, you can actually create future values. I'm just thinking a more concrete example of what you're sharing.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

34. “Shirt. I guess what I would say is that debt money is very interesting because it allows you to sort of see into the future, right? If you have a good expectation of what's going to happen in the future and you want to access that value right now, you can issue your debt against it. So I think of debt as a really, really interesting sort of time machine that humans have access to. They're able to basically travel into the future, access that value and bring it back to today, and then use it. It's such an interesting sort of like shared reality that we create. And that shared reality is necessarily virtual because it's shared amongst all of our collective understanding. And so by creating this virtual space where we all understand what will happen in the future, we can sort of leverage that today, create money, and then basically all benefit from the increased liquidity to purchase provision, goods, and services and stuff like that.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

35. “And so, like, historically, the way that people have used money in the past is that if I have assets and I can issue IOUs against them, those IOUs can be monetized and effectively debts against my assets. And then anybody can, as long as they trust that the assets are there, they can trade those and monetize those IOUs and start using them as money.”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source

36. “Gold itself is only part of the story of what money is, right? In terms of the day-to-day lived experience of people's lives working with money over the last 5,000 years, a lot of it actually hasn't been with gold currency and it's actually been with debt money. Debt without getting too much into historically how it gets used. Debt is very useful because it is a virtual and can be transferred very easily because it's just records in a ledger. Sounds familiar, right?”

    2018-12-21 · a16z Podcast · a16z Podcast: All About Stablecoins · IDENTIFIED FROM THE TRANSCRIPT · source