Takatoshi Shibayama: 0:00

Hey, hey, hey, welcome to this week's episode of Blockhead's Blockcast. I'm your host, Takatoshi Shibayama. I'm also the head of APAC for Ledger. I aim to uncover the creative, intelligent, and radical minds who are shaping the crypto industry today. I'm as crypto curious as anybody that's tuning into this show. We're doing this together, guys. Let's go. Mr. Davide Menegaldo, you're the CCO, the Chief Commercial Officer of Neon EVM. Welcome to the show. Thank you, Taka, for inviting me. Yeah, absolutely. Lovely to have you on. So I've looked through your LinkedIn profile. It goes all the way back to like 2014 when you got into a professional, at least in crypto. Could you tell us about your journey into this space?

Davide Menegaldo: 0:49

Sure. Thanks for asking this question. My journey started end of 2013 and the 2014 is when I started looking deep in depth into the Bitcoin ecosystem and mainly the technology and the idea behind that, because at that time it was very confused. There were no materials and information available i mean the quantity of material was extremely limited especially in my native language italian there was almost no material at all and everything was still in english forums and local newspapers let's say international english newspapers so my journey started exploring what bitcoin is from technical perspective but also i found out the beauty of bitcoin beyond just the technical aspect so considering the echo impact but also the social impact of revolution like this one it was something completely unique completely new to my mind but also for many people it's perceived as a revolution and by analyzing and studying deeper into the Bitcoin I decided to launch to be a member of an Italian branch of the blockchain education network which was a student hub internationally created in the US and then they created created the local branches. So I started analyzing, practically speaking, the Bitcoin also from the project perspective with the intention to launch projects. And this was possible with this group of students that we built at that time. It was 2014. While in 2015, I realized that there was the potential to build a company based on Bitcoin. I was the co-founder of one of the first Italian Bitcoin companies called per bit and there we were focused on building a Bitcoin wallet and then using this for charitable donations and insurance purposes so this was the first use case that we found for Bitcoin in particular the transparency in crypto donations but then with the time passed and I realized that some other technologies were built during the time in particular Ethereum I analyzed Ethereum since the early days but I didn't catch honestly the full potential And in 2020, I realized that something important was built beyond Bitcoin. Bitcoin as a method of payment or store of value. Everyone has its own vision of Bitcoin. But what was built on Ethereum was different. It was applications that were mirroring the financial infrastructure, specifically the DeFi ecosystem. And at that time, I saw a big opportunity to come during the DeFi summer into the space. and I started building a yield aggregator, one of the OG protocols after MakerDAO, Compound and Aave, to aggregate the lending yield across these markets to provide always the optimized yield in this space. And with that protocol, we achieved more than $300 million in total value locked, mainly using on-top integrations that were depositing money into IDOL and then into the underlining yield. And this showed us the beauty of this technology, the composability of the DeFi Legos, where every piece is possible to combine every piece together to create better capital efficiency and overall better financial products. And then I had the chance to move, to step into the infrastructure sector with Neon. And in this case, I also started studying Solana, Solana, which in the period of 2022, 2023 is suffered due to several reasons especially related to FTX Alameda at that time was definitely not in a good position but even in this case I realized that Solana still had some untapped potential especially related to the adoption and the extreme execution skills of the developers building there and that's why I started realizing that Neon was the good solution because the world was still mainly focused on the ET space on the EDM side. But Solana had all the characteristics to start dominating also in terms of adoption. And that's why I decided to join Neon initially on the business side and then as a chief commercial officer.

Takatoshi Shibayama: 5:22

So you've been a crypto OG, I would say a Bitcoin OG from the get-go. 2013 is a very early time for Bitcoin. And you kind of went on this kind of journey to understand and find use cases of Bitcoin. When did you start to think there was some kind of limitation of this that you start to look at other things like Ethereum? You know, for me, you know, I always looked at it more for my not programmable money, but it was more like, okay, this is like digital gold or, you know, in the beginning, it can be used as e-cash, but the stability of the price is necessary, right? And obviously, it's a very speculative market. So there's not that a lot of stability in it. So, you know, probably I thought this is not going to be used as a form of e-cash. but more like digital gold. Was that kind of a similar understanding that you had in, you said, 2020? Yeah,

Davide Menegaldo: 6:13

I will say that it is pretty similar. I can admit that time, the early days, I was sort of Bitcoin maximalist because the other technologies were not very relevant. Honestly speaking, many people were just launching coins without a real purpose. Ethereum was definitely one of the exceptions that were created at that time. And in the early days, I believe that the technology was not mature enough to be considered to store money or move money inside Ethereum and that's why I was a bit reluctant about that technology but when the technology became more mature we're talking about 2020 more or less 2019 and of course it was still early if we consider now five years later but in comparison to the early early days it was already much better and then especially I saw the real impact of those financial applications so it was easy anyone was able to just tap into DeFi by doing a few clicks, get Ethereum to pay the gas and get DAI or other assets and generate a yield. Just the use case was not possible on Bitcoin because no one had thought about it or at least was not able to execute on top of it. Now, Bitcoin, even the Bitcoin ecosystem is now more mature. There is Lightning Network, RGB. There are other technologies that are trying to onboard the DeFi applications also natively on Bitcoin so of course a lot of emphasis should be put on that side but still the real primitive was born in Ethereum and one cannot say that and Ethereum was the real initial point for the whole DeFi to understand it was the point where everyone understood that on Ethereum you were able to build much more than just sending tokens from one address to another.

Takatoshi Shibayama: 8:04

Yeah, obviously with the smart contracts, I think the blockchain kind of changed quite a lot. But in the beginning, Ethereum was slow. It was expensive. pretty much up until last year. And that's why all these EVMs were created, L2s were created, so that it could scale up. And I guess one could say that the Ethereum Foundation has been a little bit stagnant for a while. That's why you needed Layer 2s to make it more scalable. Now that the Petra update is coming next month, hopefully, things will be much better. But how do you see the Ethereum Foundation over the times of when you started to look at this?

Davide Menegaldo: 8:41

Yeah, let's say that from the strategy and narrative perspective today it looks like that there is some backlash regarding the strategy that the Ethereum Foundation defined at that time so we all remember the days when the transaction fees were hundreds of dollars just to pay for an NFT or to do a transaction in DeFi well Luckily, today, we don't have these days anymore. So even at base layer, it improved a lot. But the overall strategy of the Ethereum Foundation was very focused on this L2 scalability. And what we realized just as a trial and fail, because what we realized is that those L2s are mainly segregated environments. So there is no real continuity beyond each L2 and this fragmentation is somehow a problem when we talk about user experience because the user is still to move money from one place to another. It's also a potential challenge when we talk about different composability because you are bootstrapping effectively new ecosystems from scratch that have very limited connection with the base layer but also with all the other L2s that are created. I mean, Optimism with the Superchain is trying to solve also the challenge but even today we have several solutions like ZK solutions Optimism, Arbitrum and excluding the bridges that are built and can provide some relief for users there is no real DeFi composability between these ecosystems and overall those builders that created these LCHoos they are retaining most of the transaction fees and these fees are not routed back to Ethereum so at the end Ethereum is providing this high grade of security for those L2s but at the same time it's not benefiting the most let's say the term today is extracting value today the L2 issuers are extracting a lot of value from the L2 that they have launched but at the same time Ethereum L1 is not benefiting a lot from this

Takatoshi Shibayama: 10:53

yeah obviously you can see from the prices of Ethereum as well it's probably you know in a very low level it was probably like the high of 2018 but it was the lowest after 2020. And all these Layer 2s are actually extracting value out of the Ethereum price and then moving it upwards to the L2s. And the ecosystems can't kind of fluidly move from one to another. And it all kind of seems like it's kind of not really benefiting the whole entire Ethereum ecosystem. And also, I know that for your product that you're building, you're making EVM-compatible dApps that can over to Solana. So you're kind of helping that usability of what EVM is into Solana so they don't have to learn a new language, do other new things in order to get to Solana. So tell us about why you chose Solana and what do you think is the benefit of bringing those staffs that are on the EVM chains over to Solana?

Davide Menegaldo: 11:55

Well, while Ethereum has these challenges as of now, this is still confirming that Ethereum on the other side is is one of the leading environment, especially in terms of a virtual machine. So the EVM virtual machine is the dominant one. Most of the L2 together with other alternative layer ones are still EVM compatible or EVM equivalent. So today we have the large majority of developers that have studied Solidity, eventually Viper, still the EVM languages. And even in terms of toolkit, the toolkit toolkit suite is much better defined on ethereum as well as the documentation the tutorials the boot camp let's say the whole collaterals much better defined on ethereum just because they had more years to build such material as well as there are many teams that are still working on evm equivalent or compatible chains so the adoption in terms of developer adoption is still evm based and today with solana rising in terms of metrics interaction like a unique users transaction or volume of course there is much more interest in building using Rust Rust I spoke with some developers and they said that Rust is a beautiful language so no one is saying that Rust should not be used it's a very good one but the main challenge in using Rust is that still the level of documentation the toolkit is not the same of Ethereum and overall the audience size is much bigger when we talk about Solidity developers. So overall, we see the right fit for Neon because we are tapping into Solana with the expectation that since the beginnings, we saw Solana as the promising underlining infrastructure with the monolithic vision that they have to scale at the base level. They provide this novel approach in comparison to Ethereum. And as of now, they are still demonstrating that Solana can scale at base level. I mean, they suffered, of course, from some congestion issues this is clearly visible at the peak of meme coins there were some events but what is very interesting to say is that each time they are moving the barrier higher and higher so we are talking about reaching the congestion at certain grade one day and when it happens the next time it's order of magnitude higher than the previous one so they are still solving these challenges time by time and this is just demonstrating that Solana is a a very innovative but also competitive underlining infrastructure. And the mission of Neon is just to match the good infrastructure as well as the traction on Solana's side with the developer audience that still relies on EVM toolkit.

Takatoshi Shibayama: 14:48

And with all these upgrades that are happening in Ethereum, you know, I've looked through the Petra update, the staking is going to be much better, the fees are going to come down a lot more. Do you think developers are going to just stop doing stuff on L2 and and just say, what? With all the updates, I mean, Ethereum is getting much better, cheaper to transact on. It's going to be, you know, consolidated stakers, staking providers or validators out there to make the transaction much faster. So, you know, do you think there will be more people kind of like going down from L2s into Ethereum base layer?

Davide Menegaldo: 15:21

Let's say that Ethereum L1 was always the first choice for many builders. I mean, even today, there are still builders that don't select L2s but still rely on L1s. one and it's on the one that you have the institutional capital. So the real funds are still there, not in this different and choose that are emerging. I see from the perspective of a developer that there is an opportunity when a new L2 is launched because you might have cheap transaction and fast transaction. That's fine. But mainly the best advantage that you have is the first competitive advantage. So being the first in a net new ecosystem to launch your product, to try to conquer that niche of the market. This is something that was done with the several L2s that were launched. And this is, in my opinion, the main reason why people are mainly building on those L2s. And this is together with in And tell us about the benefits of bridging people over to Solana. So what does

Takatoshi Shibayama: 16:34

Solana have today or in the future installed for them that could be competitive or even better than Ethereum?

Davide Menegaldo: 16:45

Yeah, that's a very good question. I would say that Solana started from non-dominant positions. Of course, everything was available on Ethereum and not everything was available in Solana. Now the Solana market is maturing in terms of DeFi primitives. So we can see most of the primitives that are already succeeding on Ethereum. But still, the speed of innovation, my take is that it's faster on Ethereum just for the reason that there are many more developers that are building there so for a reason of numbers the new primitives are still emerging when they are Ethereum but not only Ethereum but mainly EVM because building on EVM as a developer it allows you to be on multiple chains the multi-chain strategy while if you build on Solana especially if you use Rust you are limited to that environment so you are 100% focused on that layer but you are missing the opportunity from other layers. Today, I see still a multi-chain vision for many developers. So there are no more, let's say, Ethereum maximalists or base maximalists. It's mainly a business opportunity rather than just a personal vision. It's not a religion anymore. Like at the time of Bitcoin versus Ethereum, it was more a religion debate. Today, it's more a business debate. And many builders that are today, we're not talking only about builders but also in a project you have commercial people that are taking business decisions they might see an opportunity in EVM chains and they might see the opportunity in Solana but as of now they are still limited by this language barrier because they have to hire us developers start from scratch with a new code base Neon is let's say the intermediary here that is allowing those developers to tap in Solana without big refactoring of the code or without Yeah. And in the

Takatoshi Shibayama: 18:52

current market, it seems like, you know, retail activity has been stagnant. I think with all the pumped up bond and meme coins, you know, all kind of like disappearing these days, the retail activity has been quite muted. I don't even know when they're going to come back. Have you seen any new developments within the space where it's not just, you know, really just like a copy paste or just build a new dex or another you know lending protocol i mean are there anything that you see in the horizon that um can speak to a a crypto-curious retail class that wants to come in, or potentially come in?

Davide Menegaldo: 19:28

Yeah, that's a very good question. I would say that in our bubble of the Web3, I honestly have not seen recently big innovations, disruptive innovations, more or less. Everything in terms of base, primitive has been unlocked, and there are some more capital-efficient products that are built on top of them. But yeah, to my mind, no real use cases, net new use cases have been unlocked recently. But still we have to remind that the world is larger than the crypto niche because we are in a bubble and we are still just a few users if we consider the whole world. What is relevant from the Solana approach is that they are very retail oriented even with products that are for web to people and not for web free. So this is a focus that is a bit unique because one of the narratives is to be fully focused on for example the smart They are building Solana Mobile, which is, as first reason, is a product for normal users, that it's embedding the web-free part, the application part, like an app store, but it's targeting normal, let's say, users. And on that side, I saw some other applications targeting, let's say, a sort of decentralized Uber or sort of applications that are just targeting Web2, but intrinsically having web-free technology underlining. And I believe that this can be the next big thing because as of now, yeah, the Web3 audience is already aware of the financial primitives and despite there will be innovative primitives, I'm not expecting someone to completely change and reshape the sector. I mean, the sector is now more mature even than four years ago when just landing and the basic DEXs were created. I believe that tapping into Web2 will be the real killer

Takatoshi Shibayama: 21:22

app. Absolutely. For that, we need a lot more chain of abstraction. Web2 people don't really care too much about tokenomics or even tokens for that matter. And we need to kind of abstract all that away so that you have a very simple front end for Web2 people to kind of tap into this. And I thought this cycle would be the time when we see a lot more launches of these type of products where it's built for the Web2, not for the Web3 community. I also haven't really seen a whole lot of adoption is on the commercial app. as well. And you mentioned briefly about those, but, you know, decentralized Uber kind of thing, but we haven't really seen a whole lot of those really become big yet. On the previous episode, I interviewed, you know, like only fans for, you know, AI agents, which was quite interesting. I mean, you have to see like more of these type of things where, you know, commercial people, it's not about finance anymore. It's more about, you know, what other applications can blockchain service. And I think that's the kind of the next wave that I like to see coming forward but what are your thoughts around that?

Davide Menegaldo: 22:26

Yeah, I fully agree and you mentioned AI so let me spend a few words about that because AI is a topic that is still trending and we saw the real bubble in December, January where most of the projects launched just a token without a product and at Neon we analyzed AI since the beginning because we saw the potential in that but still most of the AI applications are basically applications that are barely using the blockchain. Maybe they are using blockchain for treasury management, so it's a sort of automated fund, but this is somehow already available by a yield aggregator. DeFi yield aggregators are still using a logic that maybe is not powered by AI, it's powered by just a smart contract logic, but the outcome is the same, so allocating the funds according to the decisional process that you have set up. I see an improvement, but even AI as a fund manager is not a net new idea that has never existed still AI has some potential to create something new and well if it's new and it doesn't exist we cannot even imagine as of now so we still see the potential in the AI field but now after that the bubble that type of bubble has gone we believe that there are teams that are really building something that will last longer than just that short time hype.

Takatoshi Shibayama: 23:53

Yeah, absolutely. So today we're recording this on the 10th of April and this week obviously we've seen a bloodbath of the markets. There's definitely a convergence so institutions will not really trade a whole lot of altcoins in my view. They'll be looking at Bitcoin. They don't even have to trade the underlying or the actual Bitcoin. They can go to the ETFs and trade on traditional exchanges and And we definitely have lost quite a lot of retail. And obviously, this is not any investment advice or relationship advice of any sort. How do you see the market going forward? Because I think there's a lot of And I was at a few conferences in the past week. And most of the conversations were around, okay, is this sustainable? Are we going back to like a world where maybe crypto doesn't exist anymore? I mean, there's a lot of negativity in the market. And you and I probably more so you went through so many cycles of these. So you probably have a much... stronger heart to kind of go through these markets but what do you think will prevail?

Davide Menegaldo: 24:51

Yeah I mean that's a good question and of course it's very hard to predict how it will go I can just say that yeah I saw some bull and bear cycles and overall the real builders will continue building, especially during the bear markets, because this is the best moment where you have less noise and you can focus on your product and testing and finding product market fit. So overall, the crypto as a whole industry is going just to increase exponentially because it already got the momentum. The momentum, the escape velocity, it's already there, not only for Bitcoin, but for crypto in general, Web3, DeFi, and no one will come back like before internet and after internet the difference is pretty clear and the same before bitcoin and after bitcoin the difference is obvious so as of now I would say that the short term fluctuations of the market will impact on the emotions and the hype but not on the fundamentals and at the end in the mid to long term I still see the whole crypto succeeding and providing real value to people not only for financial instruments, because today this is the first case study. But there are many projects that are going beyond this. I'm thinking about decentralized identity as well as DEPIN, so decentralized physical infrastructure. And regarding this, let me mention a project led by Austin Federer, former strategy head at Solana. And 00 is an interesting innovation because it's combining the the decentralization power and the resilience with a physical network of internet fiber cable. So their mission is to create a sort of a parallel internet just for the blockchain. So the blockchain data as of now is just moving around in the same physical network where you sending a picture via WhatsApp to another person, it's the same network with the same data. And it means that it's pretty clogged. I mean, there are a lot of data that are moving every minute, every second. Having a parallel network that is just used for the purpose of blockchain can increase the bandwidth and reduce the latency. And by doing that, it's possible to empower even zero-time latency actions, and that would unlock additional use cases, not only at financial level, I'm thinking about derivatives, but also in terms of games. Games, to have fully on-chain games, they require almost zero latency. and this might be a solution in that direction. So it's just an experiment that they are doing, but this is just to show how Solana is evolving beyond the technical infrastructure of being a blockchain, but also at physical level, this is a notable example.

Takatoshi Shibayama: 27:50

Yeah, thank you. And obviously, always in a bear market cycle, people talk about RWAs. I think in the previous cycle, people talked about security tokens, it changed the name into the RWAs now. Do you have any views around RWA and its best use cases.

Davide Menegaldo: 28:05

Yeah, real world assets are a very interesting niche and as you said the main focus was T-bills when the yields were low and speaking with institutional funds they were not even prone to risk to be subject to the smart contract risk of DeFi protocol to get 4-5% when the treasury yield of US was already at that level so the risk reward was not convenient for them to tap into DeFi and that's why some protocols started building tokenized real world assets because the beauty here is again the DeFi composability that can unlock additional capital efficiency so the use of ATBs as a collateral to borrow capital or to perform additional actions it's something unique in the way it's done in crypto in a permissionless way without closing days or weekends this is something that has been unlocked already in terms of if we see the TV that is already in tokenized TBLs. But real world assets is much more than just this. It's possible to tokenize from real estate to physical objects. Of course, then you have multiple parties and counterparties. So there is a counterparty risk to be taken into account. And the compliance aspect is also very relevant because here you are mixing the physical world where you detain the asset and and the digital world where you have the proof of ownership of that asset. So many attempts have been done. And as of now, I'm not aware of any super successful product in real world asset, excluding tokenized TBLs. But I believe that the future will include and will involve this type of instruments because overall, you might still have a better capital efficiency by just using a tokenized real estate piece that can be used again as a collateral or for DeFi operations. It's something that you cannot unlock in real life or even at Wall Street.

Takatoshi Shibayama: 30:12

Yeah, no, I totally agree about that. We've come to the end of our show, but do you have any parting messages, anything that we left out that you'd like to discuss?

Davide Menegaldo: 30:21

No, I believe that this conversation was great. We had the chance to discuss from Ethereum to Solana and the full flow of crypto during this period. Thank you so much, Taka, for inviting me. It was a Pleasure chatting with you.

Takatoshi Shibayama: 30:35

Yeah. And where can people continue following you or Neon EVM?

Davide Menegaldo: 30:41

We are on Twitter, on LinkedIn. Neon EVM is the target there. And we also have a website and different social medias. Okay, great. Thank

Takatoshi Shibayama: 30:51

you very much for your time.

Davide Menegaldo: 30:52

Thank you, Taka.

Takatoshi Shibayama: 30:53

Thanks for listening.