Why Every Chain, Wallet & App Is Integrating NEAR Intents | Kendall Cole

TRANSCRIPT

David Hoffman:
[0:04] Bankless nation kendall cole is a co-founder of proximity labs that is a research and development firm focused on the near ecosystem kendall welcome to bankless

Kendall Cole:
[0:12] Yeah thank you for having me david excited to be here.

David Hoffman:
[0:15] Kendall we've got a lot to talk about i want to start with this one um how many stable coins will there be i think this i'm reminded of the same kind of conversations how many layer twos will will there be on ethereum and once upon a time i was like saying there will be thousands of layer twos. And, you know, there are quite a lot of layer twos on Ethereum, but a few of them are very large, you know, typical Pareto distribution. How do you think about in the future, how many stable coins will there be broadly?

Kendall Cole:
[0:42] So yeah, I'm, I guess, similar to believers in L2 proliferation. I do think that will become true for stable coins, certainly in the immediate term, if not in the long term. I think that we probably won't see many more brands, branded stable coins like a USCC or USCT, they get really big. I mean, we might see some like OUSD is kind of an interesting initiative, you know, from the bridge crew. But I don't think that's going to make sense for users. I think what's going to actually happen is that a lot of different players are going to issue their own stablecoins, but they're not really going to promote them as an independent brand. They're going to show them as USD or maybe as some kind of indication they're a stablecoin, but they're not going to care that the user knows the full name and the ticker of that particular stablecoin. It's just going to be used as like a piece of, almost like a database entry. An accounting tool. Yeah, exactly.

David Hoffman:
[1:36] It's an asset in a ledger.

Kendall Cole:
[1:37] It's an asset in a ledger, yeah. But I do think that a lot of different institutions, for a variety of reasons, are going to issue their own stablecoin.

David Hoffman:
[1:45] Okay. There's the stablecoin conversation. So maybe a few stablecoins are kind of like the Bitcoin and the ETHs. They're going for the money. They're going for the liquidity, the network effects, the brand, the trust. And we kind of know who those are. I think, as you kind of just alluded to, OUSD from Open Standard, is like this new entrance trying to penetrate that market.

David Hoffman:
[2:08] But anything downstream from that is like kind of turning into just like tokenized deposits like your tokenized deposit is not going to be money but it is a useful tool back end efficiency upgrade for wall street but what about the chains because there's tempo there's arc there's stable there there's plasma similar answer or how do you think about this kind of thing so

Kendall Cole:
[2:29] I would say less, way less on the chains. Like I'm not super, I mean, obviously like certain chains, they have a really unique distribution situation. So like Tempo is definitely the best example.

Kendall Cole:
[2:42] I mean, obviously Circle, they have a lot of influence. And so I think they can probably get a lot of different groups to be using their chain. I think the hardest part is going to be like chain, the best positioning for chains, I think, is credible neutrality. And most of these newer initiatives are like kind of very specific to either an issuer or like some type of player in the broader ecosystem. And I think that aspect of their sort of background and story and ultimately value accrual mechanism is going to like hinder their ability to be that kind of credibly neutral layer and actually like work with all of these different players. So, you know, some of them will do well. You know, yeah, I think Tempo, Arc, like a few of those are going to do well. So, you know, I think like Plasma is kind of taking more of the approach that actually like Nira is sort of taking where like they built a blockchain that's really designed to serve like a different product, like a very specific product in Plasma 1. So maybe they have a shot there as well. But yeah, I think like generally just having like, you know, this, this, if you're backed by an issuer or you have like way too much of an entrenched interest, while that helps you get in that initial distribution, I think ultimately it's going to be difficult for you to be that credibly neutral layer and work with a lot of different parties. So like, I don't actually think we'll see that many of those do as well. And I think, you know, really people are going to use the usual suspects, Ethereum, Solana, some of the major L2s instead.

David Hoffman:
[4:02] Kendall, the reason why I ask all this is because you operate in the world of fragmentation or maybe defragmentation is maybe like the better word. Talk about what you do at Proximity Labs and in and around the near ecosystem. Why is fragmentation your deal? Yeah.

Kendall Cole:
[4:20] Yeah, great question. Yeah, so we're basically a core contributor to the broader near ecosystem. And like most of these similar groups, near intense has been a guiding light for quite some time. And the original thesis that near intense actually kind of came out of was this idea of chain abstraction. And that was something we learned just by running near. It was like, you know, near was made a lot stronger when we were well connected to all of these other chains and ecosystems. But getting the user experience right on that was quite difficult and there was a lot of infrastructure that was missing and then on top of that infrastructure there were a lot of like product experiences that were missing and so like it was that sort of belief set of beliefs that is what led to us to ultimately build near intense and get to where we are now which is connecting I think 35 different chains and there's there's new ones every week, at this point and delivering what we believe is actually like the simplest experience for users who want to forget about which chain they're on and think more in terms of assets. Because I ultimately think that's what's important, right? Chains obviously are important, but really it's the assets that most users care about.

Kendall Cole:
[5:28] So yeah, the goal is basically just to... Initially, the goal was to make it so you forgot which chain you were on. But increasingly, the goal is to make it forget that you're on chains at all. And it's just these really simple experiences that feel more like Robinhood, or a high-quality type of almost a brokerage experience. Than, you know, a typical blockchain or like crypto experience.

David Hoffman:
[5:51] Now, are you guys pointed at just like retail end users who want to be trading tokens or who is like kind of the main customer product or entity that you guys are building for?

Kendall Cole:
[6:04] Yeah, good question. I mean, so there's two splits there. So Near Intense initially started more as like purely B2B. And so the main customers were and still are wallets, trust wallet, ledger, aggregators like Li-Fi, and these type of more... It was more of a pure infrastructure. There was no really front-end sort of component to Near Intents. As of earlier this year, there was the launch of Near.com, which is more of a true end-user product. And so ultimately, those have very different users. Like Nero.com is ultimately just trying to be like the simplest possible experience for any user globally who wants, and right now, exposure to cryptocurrencies, but increasingly real assets and stable coins as well. And even, you know, with integrations with products like Hyperliquid and there's a few others coming down the pipe there. But, you know, I mean, a lot of the most of the volume for Nero intent still comes from all these excellent partners that are more like, you know, B2B2C. And there's some evolution there happening, like some more kind of traditional players that are starting to look at Near Intense as a way just to make it very simple for either themselves or for their end customers to get access to all of these different assets.

David Hoffman:
[7:17] My exposure to Near Intense came in this one-two punch where I was using Infinex more and more, and Infinex is integrated into Near Intense, which is basically how Infinex does its magic secret sauce, where, like, A, I don't need my Ledger anymore. Not that, you know, Ledger's a great product, but I just want to click on my password manager with all my other passwords, and Infinex solves that problem. And then it hosts all of the assets through Near Intense that I would ever want it to. And so I was like, oh, look at this, like, UX upgrade in my wallet experience that I'm getting from Infinex and it's hooked into Nier Intense, which is where the magic comes from. So that was great. And then I saw on the other side of things, Venice hooked into Nier AI. I was like, oh wait, Venice is like getting adopted and it's got this product that's offering to the world. And how is that product being built? Oh, it's being built with Nier in the background. Like there's another point for Nier. I saw all these like different like ways that Nier was getting integrated.

David Hoffman:
[8:12] And then I was, the last part of the story is that I was like just cleaning up dust from old wallets, you know, like accumulated 30 wallets over the years. I was like, all right, let's clear it out. You know, I have tokens on like Monad. I have tokens on, you know, the Ethereum layer one. I got tokens. Where's like one single place I can send it all? And that was the first time I opened up near.com and I was like, oh, let me just send it to the place that can like connect with everything. And so as I'm clearing out all my dust, like I don't have like the destination of where do I send everything ended up just being just like the near.com wallet because it integrates with every single blockchain. And I'm like, oh, and also Nier never exposed me to any blockchain ever. It just showed me, as you were saying, assets only. And so there's this like, Nier just kept on poking up in my world like a little bit more and more and more. And so like talk about just like how that experience is, like where you guys are at with that experience and where you guys are trying to go with it, both with Nier Intense and if you want Nier AI in the back end, but also near.com, the front end retail user experience as I was using it for.

Kendall Cole:
[9:19] Yeah, yeah, absolutely. Well, I'm glad you had that experience. Infinex was and has been an amazing partner in this journey. They kind of saw the vision as we were laying it out. Kane was really great about that.

Kendall Cole:
[9:31] Yeah, so I mean, when it started, it was basically like, okay, we just need to integrate all the chains people want. And that was an enormous amount of work. I mean, my team did not deal with that. That was a massive credit to the Near Intense core team and the Bridge team from Near One that have and still are kind of putting together all these different, you know, as robust as possible integrations with all these different chains. Just like an enormous amount of engineering effort that goes into that. And so like that was, I mean, it was as simple as that. It was basically like, okay, we basically just need to support these chains, step one, and make it so you can actually like interact with these assets in a non-custodial and safe way. Then step two was like, okay, now we need to go out and like recruit a bunch and work with a bunch of solvers and market makers to actually be able to like quote with these different assets. And, you know, basically that took years, right? Like it's, you know, we're kind of coming out of that, that like very long period of just like basically bootstrapping all of the chain integrations and all of the, you know, like the liquidity. And then as a piece of that was like getting integrated into Infinex and into these different players that actually would have end users that are coming and like bringing order flow so that like this, you know, this entire system works.

Kendall Cole:
[10:41] So yeah, that's really what it's been about up until now. And it was kind of like the growth potential for your intent was really as simple as like, we just need to integrate these chains and then the assets on those chains. So, Most of the chains that I think people want to trade on are more or less integrated. There's still others that are coming down the pipe. I mean, there's still a roadmap to be, you know, to kind of be completed there. But increasingly, the focus is a lot more on like, well, just making sure that we have, you know, the best liquidity possible, so that like users are getting the best possible quotes. And that's an ongoing game. Like that's basically an infinite game. I don't think that'll ever end. There's always competition there, which is great. And I think, you know, ultimately makes the end product better for everyone.

Kendall Cole:
[11:20] And then assets and, you know, being able to support all these different assets. And that obviously is going through an insane kind of explosion.

Kendall Cole:
[11:28] You know, I think before it was basically just like coming up with new, you know, cryptocurrencies for people to trade new tokens, which like, yeah, you know, sometimes works, sometimes doesn't. But, you know, now with like the kind of like RWA explosion and like all the serious players actually getting involved there, the SEC coming up with like real ways to issue token, like tokenized assets on chain that are, you know, high quality regulated products.

Kendall Cole:
[11:51] And then, you know, things like Polymarket that are, and, you know, CalShue that have created like entirely new asset classes that are extremely popular now. That's actually given us like a whole new roadmap, right? Is like making sure that all of those things are available to users on near intense in a way that's as seamless as possible. So basically we went from like chain integrations being like the main thing, then to, you know, just like integrators being the main thing to now just making sure that we actually have all of the assets that users like want access to globally, right? Like creating true global financial markets, right? Like I think, I mean, this is a story for near intense is very similar to the story for blockchains in general, which is like the real magic is that we create this kind of stateless financial system where anyone globally can have very easy, you know, kind of ideally frictionless access to all the different financial assets and products that they might want. And so... And we've done a lot of work on the kind of crypto piece of it. And increasingly, we're doing work still on the crypto piece of it, but also expanding into all types of other assets as those come online, right? I think we're still very much in the early innings of all the regulation coming into play and all of these different great groups, like putting together the products and bringing them on chain. And then we want to make sure that Near Intent is able to support all those assets early and often, and then expose those to users through Near.com, through all the partners like Infinex, through whoever it kind of might be there.

David Hoffman:
[13:11] I suppose there was like this original Cambrian explosion with meme coins where there, you know, there was already thousands of assets in crypto, but then meme coins came and it really just like, you know, order of magnitude increased the number of assets out there. But they're all still like inert and fleeting. But like nonetheless, the number of assets went up to like a bajillion, but no one really cared about them other than the meme coin traders. And so they didn't really proliferate. No one really needed to integrate with these things.

David Hoffman:
[13:41] You alluded to it. The next explosion of assets that I'm seeing on Chain is just all the real-world asset stuff, all the tokenized stocks. Robinhood Chain, for example, launched on the first. I'm just looking at the realworldasset.xyz page for Robinhood, and there's 30 assets. NVIDIA, Robinhood Token, Tesla, Robinhood Tokenized Stock, Micron, AMD, and these all have somewhere between $400 and $1 million of liquidity in day one. Still needs to be a lot more. But like if I was interested in integrating tokenized stocks and I'm a chain, well, then I need someone to get me that token on my chain. And I'm assuming that's where near intense can come in and kind of fill that gap of like whether whether I'm even a wallet or a blockchain or even a layer one app on some some layer one, be it like Aave or something on Solana. And I see Robinhood issuing tokenized stocks on one single chain, then I'm like, well, how do I get those assets into like my app? And so I'm sure that like this explosion, this like Cambrian explosion of real world tokenized assets is actually far more of an opportunity for NIR than like meme coins or any other asset revolution before them. Is that correct? And talk to me about this experience that you've been having.

Kendall Cole:
[15:00] Yeah, absolutely. And I think that what you kind of state is exactly right. Like a great opportunity is when like a new chain launches that has like unique, super high quality assets. And so then there's this question for basically everyone is like, how do we make it as seamless as possible to move from like wherever we currently are, wherever our assets currently are into this new chain and like into those new assets. And like, yeah, I mean, so that's, that's exactly right. I mean, I think we're, we're very excited about what Robin has been doing there. You know, only a matter of time before, before that support it'll be in your intents because clearly there's going to be demand, right?

Kendall Cole:
[15:33] So yeah, that's exactly right. Like it, I mean, there's some, like if you look at like the rebalancing of asset movements across chains, like it, I mean, it's constantly changing, right? And I think that change is really sort of what we see as the opportunity. Like there's just, a lot of these different ecosystems have like really been able to entrench themselves in like, and get some like really sticky demand. I mean, I think, you know, Solon obviously has done a fantastic job. Ethereum is still, you know, ultimately the king. Even Tron you know like has like a very unique kind of like role that they sort of play um and so like the more that that exists and that that is true and we don't see that changing I think, we might not see the insane fragmentation that we had of like a billion L2s right which was like an almost like I mean like an impossible to solve problem which is like too much um, but I think we are going to see you know at least a dozen or more of these different ecosystems that are like really I mean hyper liquid another great example right

Kendall Cole:
[16:25] that are just going to be like really entrenched and thriving. And so the interaction between them and like making sure you have this like nice abstraction between them is going to be really important, right? Like ultimately users, they want it. They want to be on a trade on Hyperliquid. They want to be able to like.

Kendall Cole:
[16:37] Like bet on Polymarket. They want to be able to buy Tesla on Robinhood chain. They like want to be able to, you know, use Aave on Ethereum. And then they want to be able to like, you know, transfer, like pay their friends in stable coins on Solana, right? And it's like, so if you want to do all those different things, you need an experience that makes that just feel like one application, right? And so with Mu.com, the goal is for that to be one of those applications, but we also want to power as many of these as possible. Like Infidex, I think he's done an amazing job there as well. Like we want to make all of these different experiences as possible so that users are finally just really excited to use these products that ultimately are just non-custodial and backed by, all these on-chain products, which is the vision we've all been trying to push for for a long time now.

David Hoffman:
[17:20] There's been a handful of companies that are going after the super app idea or the financial super app. Coinbase wants you to be able to... It's basically the thing. Coinbase wants to build...

Kendall Cole:
[17:30] Every shintech, yeah.

David Hoffman:
[17:31] Yeah, Robinhood, you know, any neobank. Because I think everyone kind of has the tools to be like the super app. And I was thinking about this, this was a while ago. And I was like, you know what the original super app was? Layer ones, like layer ones were supposed to be and are the place where like any asset gets tokenized. Well, it's, you know, it's tokenized on Ethereum. Like any financial application is built on Ethereum. Now that's kind of like spread out. And now it's been like fragmented. Ethereum is not really the epicenter that it was once. But nonetheless, it has all of these different apps and things. In the thesis that I, you know, once had for Ethereum is that kind of like in the same way that Bitcoiners have the same thesis where if it's useful, it will eventually become built on Ethereum or excuse me, on Bitcoin. And, you know, if for Ethereum, the same way, like if that's useful, like if it's good, it'll be tokenized on Ethereum, which is still true. And then it's also getting to like, you know, and then there's also perps on Hyperliquid and there's like meme coins on Solana. And so I think like the real manifestation of like this super, the open source super app thesis is potentially being expressed in near.com. Whereas like because of intense, if there is anything that is of use and of interest to anyone because of near intense, you can surface it on near.com.

Kendall Cole:
[18:54] Yeah, that's exactly right. And I mean, I'll leave this to that team to kind

Kendall Cole:
[19:00] of reveal as they're putting it together. But so I think one thing that's not very well known about Near Intense, people think of it as swaps. And that's obviously a huge, the most important part of it for now. But really, Near Intense is a true chain abstraction infrastructure. It's like you can have what is a Near account that's actually custodian assets on any chain and can also then interact with any protocol on any chain.

Kendall Cole:
[19:22] So like Hyperliquid, I think, is one of the early examples where they showed that experience where like you can, the swap can always become a background piece of it where it's just like if you happen to have assets on different chains, sometimes even the same asset on different chains, right? Like you could have USDC on Polygon, but you need to have it. You need to get it to Hyperliquid so that you can, you know, take a proposition that like that's going to just become a background piece. And really, it's the most important piece of technology that was built there is an account that can just actually sign any transaction on any chain and thus use anything that exists on any chain. So it's this really nice primitive that allows Nier.com to go and actually integrate all of these different products that exist on all these different places while keeping the UX very, very seamless. And then like the other really key piece they built there is they have really powerful kind of like gas abstraction where they're, I mean, basically it doesn't feel like you as a user on near.com ever are touching gas fees. The only time you really experience that is when you're depositing from like into near.com from wherever you are, you'll have to, you know, very explicitly on your side, pay that gas fee on whatever chain. But once you're on near.com, like it's all completely abstracted away. Um so yeah that that like core piece is where like basically any chain that pops into existence, uh as long as uh you know near chain signature supports the signature scheme which i mean there's really only two that anybody uses at this point in uh eddsa and ecdsa um.

Kendall Cole:
[20:47] It's not a problem and then you know obviously if there's another one that arose with post quantum or whatever then that uh that team will of course add support as needed and so that means that uh, there's this really great permit basically to have that, like that kind of non-custodial everything app that like preserves the really important properties while also just having, a pretty simple time to basically adopt and integrate all these different apps, regardless of where they are that people might want to use. That's kind of why it's like, yeah, Nier is still a layer one that's really key for building all this stuff on top of, but we no longer have to worry about like, get it convincing all of these different like great app developers to actually come and build directly on Nier. They can build on whatever chain is convenient for them. And then users who have some exposure to an integration of Near Intense or use near.com directly will be able to utilize those products very seamlessly.

David Hoffman:
[21:36] I want to talk about recent current events and how this kind of like near model for the world applies here. So what's going on with Mika right now and how it's just impacting the flows of like crypto companies and crypto users in Europe?

Kendall Cole:
[21:52] Yeah. Yeah, it was a big week last week. That was, I guess, the final sort of deadline for, I guess, I mean, anybody who falls under sort of like the Mika, you know, Mika regime. Definitely the biggest news there was, you know, some of the exchanges and the moves that they had to make. So like the Binance, you know, they were not able to secure their license before that timeline. I do expect they will get it eventually, but, you know, who knows? And so, yeah, I guess like if you're, you know, an EU user, you currently do not have access to Binance, which is pretty massive given that they are the number one exchange or at least were the number one exchange in the EU.

Kendall Cole:
[22:30] And then I think the second biggest news that I saw there was like, so Bybit, which does have an EU and Mika registered entity. But that entity, they had to move users over to it, which creates some friction. And then they also, they don't have perpetual swaps, which is obviously a very popular product that they offer. And so the two of those together actually left, I think, a pretty massive gap where you had all of these people, that all of a sudden needed to either move to a Mika registered exchange or needed to start looking on chain at some of the different products.

Kendall Cole:
[23:02] So I think that was like a massive sort of tailwind for the on-chain space is all of a sudden there's like people who didn't want to move before because it's additional friction and why would they all of a sudden are looking for a home. And so it's an opportunity basically for them to consider like, oh, maybe on-chain has actually become just a competitive product in a lot of ways. And this is an opportunity to do that. So I think that was the biggest news. We're also obviously, we're excited, I think, similar to, you know, Genius in the US, like the fact that Amiga is now kind of in full force, and there was quite a number of sort of, you know, actually regulated and compliant euro stablecoin issuers. You know, I think we're starting to see the similar adoption we're seeing, you know, from US fintechs and banks, where like, they're actually comfortable exposing those products directly to their users. Because now they're like, okay, this is, we understand what this is. We know what a euro stable coin that's actually regulated means and the protections that it has for our users. And we feel comfortable actually giving that experience. And I mean, ultimately, I think that is, this is what's going to make OnRamps as frictionless as possible, is you'll just be able to get access to.

Kendall Cole:
[24:08] These, whether it's a euro stable coin, a US dollar stable coin, or whatever currency, you're going to be able to get access to that directly from your bank or your fintech app. And so getting on chain will be just as simple as moving money to anywhere else you would move money from, from your bank, which is, I think, going to be a pretty magical time.

David Hoffman:
[24:26] I was doing some of the numbers before recording. Only 210 crypto firms operating in Europe received their authorization by the July 1st deadline. That's out of like 3,000. So like 7% got it in time, 7% clearance rate. You know, nice job, victory to Europe for all their compliance. So like, as you said, it leaves a big hole in the market, especially when it's Binance and Bybit. But how does Near.com, I know you're not on a near.com team, but does near.com need to be compliant or is that kind of the whole deal where it's like, oh, maybe somebody owns the front end, but the near blockchain just accepts user inputs. How does near as a project fill that gap left behind in the EU from Binance and Bybit? it.

Kendall Cole:
[25:14] Yeah, I mean, I'll let the near.com team speak to their specific stance there. But as far as near intense, and broadly, and, you know, at least like how we interact with it, like it, the goal is, is for, you know, for near intense to be, to be non custodian, like near intense, the core protocol is in fact, non custodial. And so because of that, you know, that a lot of like Micah does not, or Micah does not specifically, you know, apply to, you know, to at least to near Intense itself. Now, so for integrators, they have to kind of, you know, do their own sort of, you know, legal analysis on like, and a lot of that will come down to like how the keys are managed on behalf of users and, you know, the different aspects there. But I think what is powerful is that Near Intense can be used at least in these non-custodial products that, you know, are able to just, more, more seamlessly onboard users. And so to give an example, you know, of something that, you know, that happened last week on near intense is one of these regulated euro stable coins issued by Manarium, it's called your E.

Kendall Cole:
[26:11] Was, was launched on your intense and also on near.com. And part of the reason that, you know, that that was like kind of an early issue initiative in getting, a euro stable coin listed on near intense and integrated into near intense is that it, But Manarium has done a really great job of making it frictionless for.

Kendall Cole:
[26:32] European bank account holders to use SEPA Instant to transfer funds to, in this case, they transfer it to Manarium as the issuer. And then Manarium gives them one-to-one, no fees, URI as basically in return for that euro. And they do that for both on and off ramps. And so if you use one of the Manarium, you can use the Manarium app directly or you can use Gnosis. I think it's a really great option. Gnosis is doing a very good job of creating an app that's like, I mean, incredibly seamless, no gas fees, all of that. You do have to KYC, but once you do that KYC with them, you can straight up bank transfer euros into Gnosis. You'll get Yuri on the Gnosis chain. And then we support, or Near Intense supports Yuri. So you can deposit that into your near.com. And then you can trade for any asset that support on near.com. So it's actually, I mean, depending on, you know, depending on the day and like the solvers, there's some solvers doing some really tight quotes with USDC. And so that actually unlocks like, using USDC as the underlying pair, that unlocks like really competitive pricing for euros to Bitcoin, to Zcash, to Hype, to all these different assets that are on near.com. And that's kind of just the beginning. Like, I think it's cool that you have that experience. There is still generally going to be that KYC blocker. And I think the next phase is that there's a lot of European banks that are already looking into and at various stages of integration of doing an even deeper kind of integration with euros. And I think.

Kendall Cole:
[27:49] The gold standard for that experience that happened a few weeks ago is like Cash App did their integration of stable coins where like you actually do not even deal with like the blockchains or gas fees or any sort of pricing at all in order to transfer.

Kendall Cole:
[28:02] USDC out from your dollar balance on Cash App. So if we see that same experience moving to European banks, then it won't feel like an on-ramp anymore. It'll just be like, oh yeah, you can transfer from your European bank account into near.com because all you have to do is you'll get an address on near.com. You paste that into your bank app and you just transfer 100 euros and then bam, all of a sudden you're able to buy all these different assets. You're on-chain. You can participate in any sort of application on any sort of chain, which I think is going to be really magical.

David Hoffman:
[28:35] Okay, so this is the part that I get kind of excited about because this shows how silly and dumb and ineffective regulation is. This is me speaking, but you can let me go on my libertarian soapbox for a moment. So all the big fintechs that are no longer compliant in EU, as of July 1st, like six days ago, the grace period for Mika is over. And so now people are truly, if you're uncompliant, you are now illegal in the eyes of the EU. And so now like Bybit and Binance, if you said, have batted out for the market. One of the big reasons why Mika was established was monetary sovereignty. Like the EU was trying to protect the euro as a unit and as a brand and as it's like money, like didn't want to leak value of the euro. And so Mika is supposed to protect the euro. And so there's like a pretty like explicit transaction cap for non-EU stable coins for $1 million of transactions daily in payment value when used as a means of exchange within the EU. So if it's over a million dollars,

David Hoffman:
[29:41] Excuse me, not a million dollars, a million euros daily, then you have to be using a euro according to Mika. And so if you use dollars or any other non-denominated stable coins. And so I would expect that that was one of the main reasons, one of many reasons why so many centralized super fintechs, the Coinbase's, Binance's of the world, just saw all the Mika regulation be like, it's too hard, it's so much. And as a result something we've seen in the stablecoin market are the thinner on-ramps you talked about Monerium but they're just thinner on-ramps that are just like you know app specific so it's like what do we do we get dollars on-chain what do we do we get euros on-chain that's the whole thing that we do we don't do anything else

David Hoffman:
[30:26] And that, to me, like, then carves out, like, a faster way to get on-chain. And the on-chain world doesn't give a fuck about Mika. The on-chain world is decentralized protocols. Like, they are whatever about Mika. They are indifferent to Mika. That's the whole point about being on-chain is, like, if you're on-chain, you are supra to, you know, nation-state borders and regulations. And you kind of see the whole same thing with, like, near AI. Whereas it's like there's certain regulations but the whole idea about being a public permissionless protocol is like you don't really give an F about the regulations and so I'm seeing like the siloed walls of the EU go up and then they make Monerium, you know, Mika compliant and it's easy for

David Hoffman:
[31:12] Monerium to be Mika compliant because it does one thing and one thing only which is it gets

David Hoffman:
[31:17] Tokenized euros on chain and so that's permissible but then they go straight on to near where you can literally do anything, including swapping to dollars, which is likely going to be no offense to Euro holders, but much more of the, the store of value fiat currency that you one would elect to use. And then going back to the whole like on-chain L1 super app idea, like you have full access to the full, you know, might of on-chain applications because, because with like the very thin on-ramp onto near.com and then, you have direct access to the rest of the world, all of a sudden, like Mika regulations just don't matter. Like sick walls that you put up, guys, but like we permeated right through them. And so I think it's just, it's a funny, it's like anecdote for why regulation is kind of silly. And it's nice that it's just like, actually, we'll have like an anecdote to like talk about.

Kendall Cole:
[32:11] Yeah, no, I mean, I think, you know, yeah, anything that's like looks or resembles kind of currency controls and in this day and age is not going to good luck, you know, kind of escaping the forces of the broader market. You know, so I think like the least nice part about Mika is that I do think that I mean, regardless of what the initial goal was, I think like having every currency that wants to be, you know, part of the global community, I think should be tokenized at this point. And that's going to take a long time before it actually happens. But like it's it's super useful, frankly, that there is like a way to get European banks to, you know, to utilize stable coins. So like, yeah, if you're if the goal of the with that was basically to, you know, prevent people from like using USDC or USDT instead of euros, like that's probably not going to have much of an effect. And it may even have like some ways where it like leaks value because it does like actually break down the barrier of getting on chain. But if the goal is like just to make the euro more like broadly useful globally, then I think actually it, you know, it does it does have some benefits. Right. I mean, there are going to be companies at least and probably individuals that like have to denominate their life in euros because they live in the EU and thus like they have exposure to expenses.

David Hoffman:
[33:21] You need to pay taxes in the EU.

Kendall Cole:
[33:23] Yeah. So you're like, I mean, you're going to have currency risk if you're just in the dollar and like, you know, maybe that's a risk you want to take. Maybe it's not right. It'll kind of depend. So like, but if you don't, if you don't have this digital version, then like, I think that you, yeah, your users are going to be like shut out. Like Europeans are going to be shut out a lot of these like really great global, this emergent, like truly frictionless global financial system. So, yeah, I kind of agree and disagree in the sense that like, yeah, if that was, if that was the core goal. That was kind of ridiculous. But there are at least some nice other benefits that I think do help the EU. It's kind of like while we were so excited about Genius, we're like, guys, this is literally going to make the dollar, more important for a longer period of time. Any declining dollar dominance is going to be stemmed by the fact that people want to denominate the internet in the dollar. And this is a way that we can actually make that happen. And yeah, I think that that's the argument I would make for any regulator that's looking at, should we create a pathway to our own currency, stablecoin? It's like, yes, if you want your users to be able to participate in this global economy, then you have no choice but to do it and you absolutely should. Probably look at Genius more than Mika as far as like a way to do that. I mean, obviously, Genius is still coming online so we'll see what it looks like when it's all done and dusted.

David Hoffman:
[34:37] What about confidentiality? At least previously with the pre-Mika era, one could onboard onto Binance and Bybit and then get on chain and those two actions would be separated. And so like at least on chain, like you're not connecting your bank accounts. You're still not doing that with this method but just like Sexes did provide some user identity obfuscation for the on-chain world. How does confidentiality work in the near world?

Kendall Cole:
[35:07] Yeah, great question. Yeah, today was a big day, actually. Today being July 7th, we were able to push out broad support for access to confidential intents. So there's going to be a lot of the near-intents partners. It's been on near.com for a couple of months now, but now the broader set of near-intents partners will be able to support confidential intents. So the way that works is there's actually a shard of Near. Near is a shard of blockchain, meaning not every validator has to process every single transaction, but ultimately it rolls into one set of blocks. And that's done primarily for scalability. But there's also an interesting aspect of that where we can have shards that have specific use cases. The first one actually that was shipped is this confidential shard. And so that actually works. There's basically a set of, rather a subset of validators on Nier that are running basically a parallel version of the Nier blockchain. They're running it within a trusted execution environment, which enforces a set of rules where these validators are not able to actually like view much information about what users are doing. They can't view balances, they can't view transactions or like anything that could be, you know, de-anonymizing.

Kendall Cole:
[36:18] The only way that that can happen is if, you know, basically, I think it's like, I believe it's like either a super majority of them basically agree to de-anonymize a transaction. And that was done for compliance. That was done ultimately if there's a court order, you know, to de-anonymize something. This was important for, you know, getting kind of like enterprises to actually take this product seriously.

Kendall Cole:
[36:40] So that's like one case in which they can be de-anonymized or the more common case is that a user can basically have a a viewing key or they can create viewing keys and then give them to different parties so that themselves and those other parties have the ability to, reveal those transactions. And so that's another piece of compliance there. But by default, nobody other than you yourself as the user with your own viewing key is actually going to be able to view what's happening with these transactions. And so initially that started off where it was literally you just transfer your near-intense assets into this private shard. And then your balance is shielded. And you can just do a simple transfer within that shard to any other user, and those transactions will be hidden. And then the second phase is, of course, allowing solvers to actually come in and quote assets and then trade with users within this confidential shard so that even those trades are anonymous. So the result is that you can custody any asset that's supported on near-intense shard, like in a confidential way. And you can then trade the vast majority of those near-intense assets within the confidential chart. So it's basically a very broad, I'd say it's the broadest by number of assets and definitely number of chains kind of privacy product that exists in the space right now.

David Hoffman:
[37:58] I mean, I'm sure the answer is both, but is this mainly for just retail individual users who want individual privacy or is this more for enterprises who need some level of just like sovereignty over their information in order to be able to integrate something like this?

Kendall Cole:
[38:13] Yeah, it's definitely both. I think like initially it was, you know, like the initial attraction has been just near.com, which is primarily, you know, a variety of different types of retail users. A lot coming from like kind of like the Zcash community, you know, which has been a great partner to Near Intense. But increasingly, and the reason that, you know, I mean, the reason that it's designed the way that it was, was to also be friendly to enterprises. Because interestingly enough, I think they, like the first wave of people who cared about privacy and crypto is like the true cypherpunks, right? Who like, you know, have like very specific ideals that they're trying to uphold. But I think the next wave is not like broader retail. It's actually is like most of the feature requests that, you know, that I think like the industry is hearing is actually coming more from enterprises who are like, well, this is sensitive business information, right? If I'm using the blockchain to move assets around or for my customers to pay me or to like rebalance my treasury or whatever it is, like that is extremely sensitive commercial information. And, you know, I can't possibly imagine, you know, like revealing that to the whole world and to anyone who's looking and you can have their agent analyzing that and like putting together really detailed competitive analysis on me. So yeah, like it very much started more as I think like, you know, designed for like, frankly, a niche of retail, who are these kind of more cypherpunk, like, you know, very privacy focused individuals. But like, increasingly, it is like the focus has very much been on, you know, enterprises and making sure that it's like actually a usable product for them.

David Hoffman:
[39:38] Well, the first time I heard about it, well, not heard about it, but just like saw it impact the market was when Zotl, Zashi, now Zotl, integrated this. And that was where Zcash kind of got its like first big pump was because people downloaded Zashi, Zotl, formerly Zashi, now Zotl. And because of Near Intents and Confidential Intents, like the app just worked better. And then Zcash had its first like big price bump and that's been part of the narrative ever since. That to me counts as an entity, not an individual who is like using and integrating Near products to the betterment of their own product in pursuit of their own ideals.

Kendall Cole:
[40:26] Yeah, absolutely. I mean, yeah, I think that's, and that kind of breaks down to the, Yeah. So initially that wasn't confidential intent. So that was, um, that was regular intense, regular intense. Yeah. Yeah. I mean the cool part about like, yeah. So what users were doing is they'd be like, well, I have, you know, USDC on Solana and I want Zcash and I want to shield it. So they would, uh, you know, use, using Zotl, they would basically, like near intense integrate into it. They'd get an address in Zotl where they could deposit USDC to you. Then that would be swapped into a Zcash and then they could, and then they could shield it and then they could do whatever they want to after that. And so like that was, you know, that, that's basically how it worked up until, you know, fairly recently. And then now there is confidential intents where like they can actually, they could shield, you know, quote unquote, that USDC on Solana before even leaving Solana and then swap to Zcash within the confidential realm. So like even that initial step is kind of like lost, right? You don't even see the fact that that, because on the early days with Zotel, or was actually at the time, that swap between USDC on Solana to Zcash, that would have been public, right? So now even that piece can be, you know, can be basically... Made private.

David Hoffman:
[41:33] With Zashi, now Zotel, it was the hub that was obfuscated. That's once you were already bought to Zcatch, then you could shield it, so the hub. But now, with confidential intents, it's the hub and the spokes. And really, there is that whole idea that you don't really get privacy unless everything is private. If a healthy chunk of society opts out of privacy and they just don't care, and be like, ah, whatever, I have nothing to hide, you actually make it harder for the people who are seeking privacy to seek privacy. Because if there's only 10 people in the world who are looking for privacy, well then those 10 people don't have privacy. You actually need a very large privacy set in the broad sense. And so the fact that Confidential Intense is expanding privacy from just the hub of Zcash and Zexy Asset to the hub and Spokes, and then also just Spokes independently of Zcash and just elsewhere, right? That to me is just like, we are increasing the net privacy on the internet. Did you see Alex Karp's not crash out, fake crash out on media recently?

Kendall Cole:
[42:39] I heard about it. I have not watched it.

David Hoffman:
[42:41] Yeah, he basically was like getting, I mean, he's always very animated. So that's why the media was calling him to crash out. But to me, it made perfect sense. It's just like all of Anthropic and OpenAI's customers are just feeding these two AI super labs all of their data, all of their information, all their alpha. And then these companies are just taking that and turning that into products. And so they're competitive with their own user base because if their user base gives them any alpha, if they're prompt into ChatGPT or Cloud, is that all useful to Anthropic or OpenAI? Then they're ingesting that and like using that as their competitive edge, which was like a huge violation of like a social contract that could be solved with privacy. And I actually think that's like a really big bull case for Venice or anyone doing any sort of thing that's protecting user data from like coagulating into these massive super scalar AI labs. I don't have a question here, but I'm just like throwing.

Kendall Cole:
[43:41] No, no, I mean, it's a good segue to like Near AI too, which I don't think I, I mean, you've brought it up a couple of times. I haven't talked about it, but yeah, I mean that this, it's a similar, like similar goal there on the AI side where the goal is to, you know, have infrastructure where, um, where AI models are run within a privacy preserving way that also cannot actually have any, like basically leak any sort of any of your prompted, like any context that you're putting into the model. Right. Um, so yeah, you mentioned Venice who, who uses it, uh, as like one of the ways they can offer end-to-end privacy where like, yeah, these, so there are, and the early users of, of near AI are basically enterprises. They're like, we, we have to be using these bottles. Um, We have ones that we've identified that we want to use, but we have really serious concerns, either because we have compliance regulations like HIPAA or something.

Kendall Cole:
[44:30] Or just competitive concerns about giving all that information to these model developers. Or also giving them to... I mean, OpenRouter is amazing, but they also do have all these pretty unknown hosters of the models that I doubt enterprises are using too heavily, but a lot of people just see one that's fast and cheap and use it, but that could be anyone. Who's up there and they can like collect as much information as possible. Right. And so basically, yeah, like you, you still get the hosted, like the whole like hosted setup of like people running GPUs for you and optimizing the entire infrastructure. But then also knowing that you have some sort of like technical way that can prevent that hoster from like actually getting access to your information and your data. So like, I, yeah, I fully agree. I mean, I think Alex Karp's concerns are, are very valid. I mean, it's funny. It's one of those things where like, I kind of doubt that like that is even too much of a priority for open eye or anthropic at the moment. Right. They're in such like hyper competition. They're just like we need better models. But like, yeah, absolutely. They have this like complete treasure trove that they will first are using probably just to make the models better, but ultimately will use for like competitive products once they, you know, the margins get squeezed so much that they're like, well, where else is there? What else can we, you know, can we expand?

David Hoffman:
[45:41] I wouldn't be too sure about that because Dylan Field from Figma had some problems that he said because he was a client of Anthropic and then they launched Anthropic Design the design product right afterwards. And so I don't think they're doing it everywhere all the time, but they are definitely identifying high value products that they are seeing grow success in the market. And then like, well, we can make that independently.

Kendall Cole:
[46:10] No, yeah, good point. I mean, we've seen Open Eye Health and they're hiring investment bankers. Yeah, so yeah, for sure. They're going to go for everything. They're going to try to eat everything they can, as they should.

David Hoffman:
[46:21] I want to work back into your neck of the woods on the near ecosystem, just with intense and everything. Of all the things that we've talked about, what is the way that the near ecosystem captures value the most? We talked about there's the growing explosion of stable coins and assets, the assets that other chains and apps want to integrate with, where there's like near intents, like kind of settling between all of this. How does near capture all of the value that is creating with near intents and all the just like the aggregation of everything useful in crypto?

Kendall Cole:
[46:58] Yeah, absolutely. I mean, right now it's actually very straightforward. It's really, it's volume, right? So near intents, the protocol, which is thus near, takes a cut from every single swap that goes through Near Intense. And so that fee varies based on, you know, the partners that are integrating it. There's kind of like a whole, you know, type of, you know, revenue agreement program that exists with these different partners. And then there's near.com, which takes, you know, takes its own fee, right? And then like, just takes like the fee there. And so I think that the average is somewhere around like, you know, 10 to 20 bips, depending on 10 to 20 basis points, depending on, you know, where it's coming from. But yeah, that goes into right now, like the near house of stake, which basically controls that pool and has been, at least quite a bit, been buying back NIR. And so it's pretty straightforward. Basically, more volume that's going through, NIR Intense is going to lead to more potential buybacks of NIR, or at least more control by NIR token holders of, a growing treasury that's just been accumulated from the fees that NIR Intense takes. So, I mean, look, I think ultimately there's a lot of ways to kind of monetize this infrastructure that'll go beyond just swaps. But right now, the North Star is pretty simple. It's like, make sure that Near Intense is creating enough value to all these integrators who have demand for moving between assets, whether explicitly or implicitly.

Kendall Cole:
[48:26] And then just monetize by taking a cut from that. So, um, I, I'd say like, yeah, there are really the two parts of the business, the like near intense as a, as infrastructure. And that is still the dominant one in like an absolute, you know, top priority for, you know, for everyone. Like we have a lot of really great, a great and growing number of partners that are integrating near intense and that's going to continue. Um, and then I do think there are some unique opportunities to create just basically do some experiments and like run, you know, kind of, uh, like popularize some, some like newer products. So like the way that the confidential intense rollout happened, I think, was like a useful demonstration of that, where like it landed on Neo.com first to get the experience right before, you know, making that more broadly available throughout the network. And, you know, that can be another opportunity for Neo.com to kind of capture that revenue directly for the Neo ecosystem.

David Hoffman:
[49:17] One idea I've been working with lately is every business model in crypto is just being an exchange. Like that is actually just the business model. I remember my Bitcoiner friend telling me this in 2021, right after DeFi summer and in 2021, where we had just finished trading food tokens and now we're trading JPEGs. And all the Bitcoiners were back in that era, like kind of ruffled. They had their feathers ruffled just because Ethereum was capturing so much attention. And like, why was Ethereum capturing so much attention? Oh, because it's a fantastic exchange of literally any single asset that you could ever imagine was being traded on the Ethereum layer one. And like, Uniswap was the darling of that era, DYDX at the time. And then like, Ethereum couldn't scale. So the layer twos are like, well, now you can come trade on our chain. And what was the breakout app on top of Arbitrum? It was GMX, another perfect exchange. Now we have like hyper and lighter uh and like what are the biggest biggest uh centralized business models of crypto still being an exchange what are stable coins for payments which is still an exchange like it's a trading a good for for money or for you know being a trading pair you have ave and you know the borrowing lending protocols but that's still a trade

Kendall Cole:
[50:34] That's a swap right you.

David Hoffman:
[50:35] Can still argue that's that's a swap and so like any successful business model of crypto So is doing some form of exchange, which I think actually, if we accept that idea, which I'm not saying is correct, but I think it's still illustrative, you can point this towards Near Intents. It's like, oh, just Near is the platform for apps and chains and issuers, Monerium issuing euro. Gets to be exchanged with any other asset inside of any other app across the rest of the ecosystem. So like, as far as I'm concerned, just near is another form of an exchange, but it's just got a little bit of its own kind of properties that carve out space for it inside of like the crypto verse. How do you, how do you like that, that, that thesis?

Kendall Cole:
[51:19] No, that's a simple, very simple way to say it. Right. And that's why like volume is like, what's the Nordstar for exchanges? Like ultimately volume, right? I mean, you know, you make trade-offs at different times to like capture users and like, you know, optimize the product, but like ultimately, you know, exchanges make money by people exchanging and like, yeah, so you volume, you take a bit of a cut of volume. And then like, you know, as long as you're making that number ultimately go up and like continue to expand in the markets that you can kind of like ultimately create the best product and like a lineup buyers and sellers. Um, yeah, that's, what's going to make, that's, what's going to make it work. And so, yeah, that's, that is, I mean, that's exactly right. That's why I was like, started with like integrating more chains and that's still part of it. Uh, continued into like, you know, integrating industry partners that like can, you know create like have that order flow and that's still a big part of it and then yeah we want you know we want every single asset in the world that people desire it to be available on on near.com and i mean i think that's yeah that's like that is exploding right with like ai is also like you know agents and the different products that are coming out there i think that's going to unlock an entirely new set of you know assets that people want to trade and traders right like agents will you know are and increasingly will be you know will be trading and so like we want to make sure that near intense is just like providing enough value to all those different parties that like we are the exchange in a lot as many cases as possible, there'll be a volume we'll take a cut of volume and then ultimately that'll you know that'll float back to to near.

David Hoffman:
[52:36] Beautiful kendall thanks for coming on the show today

Kendall Cole:
[52:38] Yeah thanks for having me.

David Hoffman:
[52:40] Bankless nation you guys know the deal crypto is risky you can lose what you put in you can exchange it and maybe it goes away but hopefully not uh this is frontier stuff for everyone but we are glad you're with us on the bankless journey thanks a lot