LayerZero: Accelerating The Tokenization of Everything│Alex LIM(LayerZero), David Lee(Samsung NEXT)

Key Takeaways

All right, David. We're here now. Uh I would love for you to get started and and briefly introduce yourself to the audience. And about myself, um I want to first say that um I work at Samsung. But everything I say here is my own personal views. I don't speak for Samsung. It has nothing to do with my day-to-day. I as uh as mentioned before, I've I've been around since probably I'm almost embarrassed to say since 2011. Um Alex, I don't know how old you were, but um >> No no comment. >> Exactly. Uh and so just a huge fan of crypto. I've been around. I've seen cycles. I've spoken at multiple Korea Blockchain Weeks. And just here uh you know, I know Alex's boss, the CEO Brian, for over 10 years. I can say that I was an early investor in Coinbase. This is the best team that I've seen in crypto in my 15 years other than Coinbase. And some of the problems that they're working on truly move the industry forward. So, anytime they ask, I'm going to I'm going to answer. Thanks for the kind words, David. All right, let's dive right into soaking David's wisdom. Um as you mentioned, you've been in this industry. You've been writing about it. Uh you've been speaking about it in various places around the world. Um in your past experience, maybe given all the institutional and geopolitical moment, what do you think something that most people in this room misunderstand about where crypto truly is right now? I think the biggest misunderstanding is how is we're right on track. We are right where if you had told me in 2015 that this is what the world would look like, that there would be regulatory attention and some regulatory clarity that there was institutional interest that Bitcoin is trading at I don't know what it is today, 70,000. I would I wouldn't believe them. And I think it's very easy to get caught up in these narratives of 200-day moving average, so forth, so on. But if you zoom out, the fundamental premise of all of this is digital scarcity. Is that what the Bitcoin, the white paper really introduced was this idea that you could you could introduce scarcity using software. And that was like up until then, it was a software is free. You know, I worked at Google, zero marginal cost. Every single copy of software is zero. It costs zero. So, it's a high-margin business. What blockchain did, what the white paper did, was it introduced something that flipped everything on its head. And the reality is I think the misunderstood piece, the underrated fact that is indisputably true, is that it hasn't been hacked. That digital scarcity still exists. There's still a lot of questions, but I think if you look at how far it's come and you understand the math and the technology behind real blockchains, it gets stronger from a security standpoint with more usage. And so, I think that simple idea is is so overlooked in a climate of Bitcoin's down. Bitcoin's down from 100,000. And but if you zoomed out like in 2018, price of Bitcoin was around 10,000. So, we're 7x. That's a venture capital investment, right? And so, every time I came here since 2011, I would come in up markets and down markets. And even in down markets, I would show them the price where it is today, and then I show them the price 3 years ago. And I would say, "That's 3 to 5 X. Like, you're comparing it against last year. You're not comparing it against 3 or 4 years ago." So, the key idea for me is we are right where we should be, if not farther ahead. Certainly, there are challenges that uh Trump spoke about that everybody has spoken about that I can speak about later, but um if you look at the facts, there's never been a reason to be more optimistic. I think that gives great context for my next question, which is in your writing, I find it interesting that you frame Bitcoin not just as an asset, but as a civilizational force. How do you see Bitcoin and crypto more broadly interacting with nation-states, capital controls, and geopolitical power over the next decade? Yeah, you know, I have to give you my honest answer. I don't know. Like, I am not a macroeconomist. I didn't take macro econ macroeconomics in college. Um Which college did you go to again? I went to Johns Hopkins. I had Then I went to engineering school, then law school, but never took a macroeconomics class. So, I Not that that would make me an expert, but this idea, if you just read any history of money, the idea of gold or any peg that creates scarcity in a currency is one of the most powerful concepts throughout all of commerce. And what I like to think is I You know, when I think of crypto, everybody compares crypto to the internet. And I don't think that's the right analogy. I think the right analogy is media. Because in the internet, the internet was a problem of technology development and adoption. You hear this idea, Eric Trump talked about it, permissionless innovation. You didn't need anybody's permission to build Google. You didn't need anybody's permission to build Facebook. Right? But in this world, in media, it's more of a coordinated revolution. You need a media company license to build YouTube. You need a a music label's permission to build Spotify or Napster. And similarly, I mean, I don't know how many people here know what Napster is. I would I would say that Napster was probably the most important product to launch in the history of media in the last 50 years because what it did was it changed everybody's expectations around media. Before Napster, you just buy a compact disc. You may not remember, and you pop it in. It's a physical thing, and you have to buy the whole album. And what Napster did was you could just buy you could download any song. And iTunes tried to make some headway, but it was limited because they had to go to the music labels. And here we are nearly 15 years later, again getting back to timing, after Napster, Spotify launched. Same product. Exact same product. 2006. But their innovation, as the saying goes in science, in science sometimes, progress happens one funeral at a time. And similarly in media, progress happens with one contract expiring after time. And I think in crypto, to the question you originally answered with this idea, you look at one not even a trend, the historical fact of there being something that's scarce as an anchor of currency and frankly just a new generation of internet users, I'm optimistic there will be events, there will be breakthroughs that nobody could have predicted. So, actually over 15 years, I don't know how long your career was, but through multiple venture capitals that you've been involved in so far, you've been able to invest in some of the largest companies in the world including Airbnb, Coinbase, X, Stripe, so on and so forth. So, you've watched the the rise and fall, the internet disrupt and decentralize media as you mentioned, commerce and social connection, and finance has held out the the longest, right? And if you look at a lot of this institutional adoption now of things like I spoke about tokenization of every asset. In terms of this kind of crypto adoption, where is this adoption rate and the the speed where does that stand in terms of your expectation? Is it moving faster or slower in the ways that surprise you or compared to other movements that you've covered so far? I I think the conventional wisdom is it's moving slower, and I'll take the opposite of that. I think it's actually moving faster. And I think related to what I spoke about before, you know, the coordination costs, part of the you know, let's look at what's happening with self-driving in China. You know, self-driving in China, they're far ahead of the US because there is a coordinated effort between the political leadership and the industry, we have to experiment. We have to put it out there. And there are all sorts of studies in the US that say actually automated driving is safer than human drivers. And it's pretty the data is pretty clear. But for many reasons, regulatory, regulatory capture, there's no adoption. That's a coordination problem. Right? But and with finance, you're talking about money. You're talking about capital. And if self-driving is hard, how is a new financial rails, like how long is that going to take? You know, you mentioned Stripe. You know, I was one of the earliest We were an early investor in Stripe, met Patrick and John when they were 19. They talked about what they wanted to do and they're just getting started, right? And so I would say you should have expected this 20-year run of sitting next to the financial rails because another data point is, you know, I'm sure everybody here has bought on Amazon, coupon, what have you, Walmart. com and you think that's the only way to shop. Well, even today after the dot-com boom, so it's about 25 years, online commerce is about 20% of retail. So, it's not it's it's huge, but it's not 50%. Similarly, where are we in crypto, right? Or Bitcoin as a store of value? 1%? It doesn't have to be 100%. It just has to be 10% at the terminal value. Or 5%. And just think of that where we are right now related to that. So, on that note, I'm curious how much of enterprises and big corporations, I mean, you're with Samsung now and you interact with some of the largest um conglomerates and companies around the world. How are they viewing crypto as a potential mechanism to really, again, to your point, invent the way that finance has been developing? As an example, I think Tether is such a phenomenal example of something that just started from completely bottom-up and now became, obviously, the largest stablecoin issuer around the world. Um something that I'm personally interested in thinking about in the future is is Tether and the likes of Circle, so basically non web two enterprise or conglomerate, will they sustain the current dominance in the stablecoin issuance and the market share? Will conglomerates like the Walmarts of the world, with Samsungs and Apples of the world, with such huge amount of user data and trust, would they be looking at crypto and be like, this is a no-brainer, we're going to completely replace how we do finance by issuing our own stablecoin? How do you think about that? Yeah, I mean, I I'm again, I'm not going to comment on sort of what Samsung is doing or and I don't know what other companies are doing. Um but what I can say is that large leading companies of any sort of of of serious scale will generally be the last adopter. And it makes complete sense. You have your advantage if you are a large company is your scale and distribution. You want to take advantage of that. And you your margin of error is much lower in launching a bad product than working at a startup where you don't have the scale and distribution and you need to punch through the noise with a disruptive product. In this four walls, Tether is a giant. You step outside into any boardroom, they don't know what Tether is. Right? So, one of the things I've worked at Google, I've worked at Samsung, every large company, and they get a lot of criticism from startups, you're not moving fast enough, you're not adopting it fast enough. And one of the things that you internalize when you are when you have distribution is that you want to use that advantage carefully. And so I think most companies, if I were to predict just as an outsider knowing nothing about um you know, every large company, you're going to want to make sure that uh the water is warm before I go swimming. I don't want to be the one testing whether the water is warm enough. Interesting analogy. Uh we're almost out of time here. Um just a couple more here. So, you've written about financials and technology booms for decades. When you look at crypto and internet native finance today, what patterns from maybe past books or cycles feel most familiar to what we're seeing now? So, you've mentioned media as an exemplary industry. Um are there specific cycles that are analogous to how crypto has been evolving in the past decade? It it's so hard to say because again, the unique part about crypto is the coordination involved. And that means getting the right approvals and buy-in from institutions where there's no rational answer. It's very similar to the healthcare problem in the US. Right? Healthcare is 18% of US GDP. No meaning No startup really at scale ha- has made a difference. And it's because of the coordination costs. But I think if you look at crypto, particularly this idea of digital scarcity. One idea that I've looked at, you know, I worked at Google uh we invested in Twitter, we invested in Airbnb companies that you just didn't think would Snapchat. They all have similar properties. The first property is they're very polarizing. You The average person, if you looked at it, you they would say it's good, it's bad. And they would have a strong opinion of it because they understand it. The second is a minority thinks 10 you know, people think it's used for scammy purposes. Internet. You know, pornography and gambling. Facebook, meeting other people, uh Snapchat, meeting other people, crypto, scammy money. And the reality is what I've learned is if you look at all of these companies, yeah, they're bad actors, but that's like 5 to 10% of the usage. So, you have that. The third is people ask, there's no business here. You know, there's no business when when we were at Google, people are like, what's the business model? There's no business model. You know, at Facebook, what's the business model? There's no business model, right? Crypto, there's no usage, right? What what's the business model? And the answer is if I knew what the business model was, you would be big companies would be doing it, right? The whole point is that there's no business model. And finally, funny enough, every phenomenon that I've been around, there's always legal issues. It could be major lawsuits among founders. You're only suing another founder if you are talking about billions. If you're talking about a million dollars here and there, you're like, let's settle, right? If you're talking billions, you're suing, right? Or there's a regulatory issue. Okay? Every single company I mentioned falls into that bucket or every single technology. Now, zoom out. Where How does crypto check those boxes? It checks every single box. And so, you know, the the one threat you look at is like quantum computing. You have I don't understand it, but of all my friends, they say, it's an issue, but there are entrenched interests enough to combat that issue. And it hasn't been hacked in over 17 years, which means the network has actually gotten stronger from a security standpoint. And so, I'll just end it by saying, it still needs even though it's a problem of coordination more than technology, it still needs technology breakthroughs. And that's where a company like Layer Zero comes in. I think the the idea Brian in the video, he talked about these three issues, which are really the trilemma problem. You know, the thing has to work at scale, it has to be fast, it has to be secure, and it has to be decentralized. Nobody's done that. That's that's the critique against Ethereum. Are there companies that can contribute to that? Layer Zero is through providing interoperability. And so, I think there will be more companies and technologies um that need to emerge to make this a reality, but the underlying initial assumption of crypto is stronger than ever. Thank you. And just lastly, now that we're wrapping up our time here, um you probably meet with entrepreneurs every single day. And if you were to give advice to any of the builders that are out here or watching this, uh if you were to give any advice for founders and ecosystem builders today, especially in the Web 3 and crypto scene, um around building infrastructure or it could be applications, what should they focus on over the next 5 years? And what should they ignore completely? Th- This is one of my favorite questions. So, thank you for asking it. Um Crypto is so fascinating and so hard for the founder because if you have been involved in a startup, it is so volatile. If there was if early Airbnb was a publicly traded stock, it would be 10 times more volatile than Bitcoin. For the ups and downs. If If the public knew everything that was happening at early Airbnb, it wouldn't survive. Right? And and that's there's a fascinating element to that where it is liquid, right? And the the thing the um phenomenon that I observed is that there are a lot of founders who can think about the price more than they think about the the product. And you ask any entrepreneur, they they worry once the company goes public, there's a price to look at. That's the hard part with crypto, is that from day zero, there's a price to look at. And we're all humans. I don't care what your IQ is, I don't care how mentally tough you are, you're going to be influenced by the price. And so, the way I zoom out for any any founder in crypto, build for yourself. Build what you love. Build something that you would do it regardless of the price. Because I've seen so many founders make a lot of money at the age of 25 to 35, and now it's not working, but they have enough money where they really don't have to work, and they just expect a quick hit. And as Charlie Munger said, you know, making money quickly builds or making money slowly builds character, making money quickly builds ego. And it's so hard to avoid the ego trap in crypto. And the only way you can do that as a founder, in my view, is to do what Brian and the team have been doing. It's what Brian and Fred did at Coinbase. And there's survivorship bias. There are a lot of companies that did that and didn't work out, but that's your best chance of success, build for yourself. That's your only advantage over larger companies. All right, I think that's a wrap. Please give a warm round of applause for David's wisdom. Thank you very much for everyone. >> [applause]