SPEAKER_00: 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. Keane Gilbert, Head of Institutional Relationships. Thank you very much for joining our show.

SPEAKER_01: 0:32

Thank you so much for having me.

SPEAKER_00: 0:33

Before we go into, you know, Lido and where you work and knowing about what's next for Lido, I really like to kind of know more about you, how you got into crypto, and how's your journey so far?

SPEAKER_01: 0:45

Sure. So I started my career in crypto about eight or nine years ago. And I started my career in Deloitte doing like financial services, capital markets consulting on crypto based in Dublin. And so I was in Deloitte for around a year. Then after Deloitte, I had the opportunity to join ConsenSys. I was there for five and a half years, mainly working on Metamask Institutional and Fiora staking and typical kind of startup vibe doing anything and everything. So like I said, did that for five and a half years, absolutely loved it. Then after ConsenSys, I joined a small startup for a while doing portfolio and risk management for crypto funds. And then after that, I'm in Lido. currently as a contributor, mainly focusing on Lido institutional. So my responsibility is to grow adoption of Steeth among institutional users. So by that, I mean different crypto funds, asset managers, hedge funds, like really anyone who has a significant amount of ETH. And we obviously encourage them to stake it with Lido for the added benefits of liquidity and capital efficiency.

SPEAKER_00: 1:46

And during your time at Deloitte, what was the catalyst for you to say, okay, I'm going to leave this job and then join a crypto company?

SPEAKER_01: 1:55

Oh, that's a good question. I don't know if it was intelligence or stupidity, to be honest, because obviously you go into like a big four firm, it's safe, it's comfortable. Your biggest problem every day is just to make sure you're billable. And I think for me, like leaving Deloitte was more around like the partnership structure. For me, I wanted to kind of have skin in the game. I wanted equity. I wanted to get my hands dirty. Whereas when you join these big four structures, it's very much level-based. Whereas for me, I just want to do something a bit more rough and ready. And that's kind of why the startup vibe suited me. Don't get me wrong. Consensus was a heavily funded startup, thanks to Joe Lupin and all the work he was doing. So I do remember at the time kind of making them leaving, thinking this is probably a crazy decision, but it turned out to be probably the best decision I've made from a career point of view at that time.

SPEAKER_00: 2:42

And you joined ConsenSys in May 2018. So I would say you're generally a very early adopter of crypto or early joiner of crypto. I remember back then there wasn't really much of an industry. You know, there was a lot of ICO projects, but there wasn't a concept of like service providers or there was a more tech industry. builders, but not much service providers. Obviously, ConsenSys would probably fall into more of a solutions provider at that time. So, you know, what is it that you got interested in crypto and also major or found your way into ConsenSys? Because as you mentioned, ConsenSys is a very well-funded company that had branches all over the world. I would say probably the bar to get into ConsenSys was quite high, even despite, you know, being very early in the space.

SPEAKER_01: 3:32

Yeah. Yeah. And to be honest, it was probably something similar to Deloitte. So like at the time in Deloitte, most of the work was just proof of concepts. Nothing was really going into production at that time. It was a huge amount of kind of education. And like, you know, ConsenSys has kind of iterated over the years. Like when I first joined ConsenSys, it was a lot more of a service-based business doing consulting. And obviously today the business has shifted to doing a lot more product-based work with like MetaMask, Infura, Linea. But at the time, For consensus, you are still doing education. And when I was in consensus as a sales guy, it can be very hard to speak to clients during a 30 minute meeting, spend the first 15 minutes educating them, another 10 minutes talking about use cases, and then probably another five, 10 minutes trying to close them. And from my experience, it can be very difficult going from education to clients actually willing to invest and spend money. So I would say consensus didn't really start getting a lot of traction until that education phase with clients was completed. And they knew that this was the use case or this was the technology that solved the problem. And that's where kind of the velocity really started to pick up. So like you mentioned, May 2018, I would say things probably didn't pick up until May. two or three years later, where clients were comfortable with the technology and they didn't have to be sold on the technology.

SPEAKER_00: 4:56

And what kind of clients did you face back then? Because back then, and I also, after jumping away from my hedge fund career, I've started a company to provide enterprise solution using blockchain. And I remember back in those days, I went to like Philips, I went to Lendlease, all these different types of companies to pitch the idea that blockchain could be used in various ways. And obviously, it was a long, long sales cycle for them to even understand. And the only thing that they can benchmark against is all these crazy ICO that's happening. And they're convincing them that there's a legit way to use blockchain rather than pumping tokens, right? So, you know, what was the vibe back then? And then also, who are the types of clients that you were talking to?

SPEAKER_01: 5:39

Yeah, that's a really good point. Like the whole ICO bubble, especially when you're trying to speak to serious people. and you see all this craziness happening in the background and all the conversation was just around Bitcoin and ETH and the price. And I think when you're dealing with serious people, like the price is obviously important, but they're thinking in decades, they're placing long strategic bets. So when all that narrative is going on, again, it can be quite difficult to build trust. Maybe back to your original question, like the type of clients was really anyone and everyone who would listen because you're trying to build a business. And not to be kind of flippant about that, was the case of course you would focus on industries that had the most amount of money and for consensus those clients would have been financial services so like trade finance firms insurance was a popular use case back then we would have done a huge amount of work building like taught leadership eminence around like okay you work in insurance here are the top six use cases that you should start looking at today and obviously when you were looking at insurance use cases just for example a lot of it would have been like smart contract based automation i would say not the most successful use cases in the world, but they were the ones where these industries were willing to take a look at and place a small investment at the time. So I knew, again, the kind of model would have been like a 12-week proof of concept. So if you could get people to start the journey with a proof of concept, maybe they'd move on to like a pilot project and then eventually you would be lobbying and pushing them pretty hard to go into production for something real and tangible.

SPEAKER_00: 7:10

Yeah. You know, I think for a lot of the listeners, I mean, obviously, you know, blockchain technology has matured quite a lot since you and i joined the industry and people are looking to institutions to build blockchain rails whether it be for payments etc i think a lot of people are kind of hitting that wall today because there is obviously a use case for payments use case for rwas use case for stable coins etc there are certain segments in the blockchain industry that institutions are starting to adopt but there's other elements that i feel like blockchain can be useful And I think right now is the time where I think people need to move from just selling stuff to the web three people into the web two. And I think that's what you're doing at Lido as well, but you were probably doing that, you know, your timing consensus, you know, how would you frame the, your sales strategy in terms of selling, you know, something like staking or something like whatever blockchain solution you're building to institutions that are very stuck into pre-blockchain. What kind of methods do you find are useful in building out the framework of selling to these institutions?

SPEAKER_01: 8:25

Yeah, so I would say it's very different than what it was five years ago. Like I said, today I don't talk about what blockchain technology is, whereas before you always had to talk about, okay, DLT and Where are the nodes located? Okay, decentralization. like interoperability. These are all quite big terms and you could comfortably spend an hour-long meeting explaining this to someone and at the very end, they still won't understand what you mean. So again, I think things have come quite a long way. It's a little bit like no one talks about the internet anymore. Everyone just believes that it works. There's trust there. And I think that's kind of where things are right now. It's a lot more use case-based and very specific and quite niche. And that obviously kind of comes into what I would do at Lido. So liquid staking is quite a niche topic. So for those that don't know, if you were to kind of look at native staking, for example, so this is obviously a proof of stake with your ETH, you take it up, you lock it in, secures the network at a really high level in the simplest terms. The issue with native staking is you're locking up that capital. So from a capital efficiency point of view, if you're a crypto fund, locking your ETH up, only getting 3%, it's not the most exciting thing in the world. But from a liquid staking perspective, a LIDO-staked ETH, what effectively happens is you would go on the LIDO website or to a partner like Fireblocks or Copper, you take your ETH, you stake it, and in return, you're given STETH or Steeth. And you can think of that as a certificate of deposit. And that basically represents the ETH that you staked and your staking yield. And what's really cool about Steeth is that you can go deploy it into DeFi or use it as collateral on centralized exchanges. So suddenly you have that liquidity piece. So you could go and So you're steeped for USDC, which is obviously critical if the market is going through a bit of a turbulent time, you can get out of your position. Or like I said, you could use steeped as collateral and borrow against it. So suddenly you could be going from a 3% yield up to 7, 10%, depending on the type of strategy you want to deploy. And I think that's kind of where, from my perspective, we're at right now. We have to go and present quite unique solutions to, I wouldn't say experts, but I would say people who have quite a strong understanding of what they want to do. want from the technology.

SPEAKER_00: 10:37

And do you have any trouble convincing people to own ETH to begin with, or is that already a a beginning point for most people and then thinking, okay, how do I make my capital work?

SPEAKER_01: 10:48

So it's funny. I've always said to people that like Bitcoin was the gateway drug. Like Bitcoin is always number one. Everyone understood it. And I'd say ETH and Ethereum was always number two. And all the crypto funds and everyone we speak to, they're the big two. It's Bitcoin and ETH. I think the narrative around Bitcoin is obviously a lot clearer in the sense of digital gold. I think Bitcoin is always the one that starts conversations internally and then they soon look at Ethereum after that.

SPEAKER_00: 11:16

So for a lot of the institutions that would potentially hold ETH, what would their objective be? So I understand one use case, so you could be like ETF providers that would hold ETH as an underlying asset class, but for general corporations like companies that are traditionally not in the kind of crypto space, what is their use case of holding ETH?

SPEAKER_01: 11:38

So yeah, like you touched on the ETF piece is obviously exciting right now. There's a huge amount of conversations happening in the US around like staking being added to ETFs But a broader strategy that we're seeing for a lot of companies is just adding ETH to their treasury. So I think that's something you've probably seen that ConsenSys is doing right now. And they're kind of going down this micro strategy route for ETH instead of Bitcoin. And we're starting to see that more and more. There's a number of kind of public companies that have ETH on their balance sheet right now. And I would say five years ago, that was just impossible to even comprehend. Like I couldn't imagine being in early days of consensus and Deloitte and actually hearing a public company holding crypto on their balance sheet. So to be at that point now is really exciting. I think the next wave will obviously be what percentage of their balance sheet will be in crypto. Right now, it might be between one, five percent, depending on, again, the risk appetite of the firm. But I think eventually you're going to see that grow. So will it be 50-50 with Bitcoin? Who knows? There's obviously companies that have stronger views of Ethereum. It could be 100% ETH. But I think for me, that's the really exciting development over the past 12, 24 months, that companies now are willing to hold crypto in their treasury.

SPEAKER_00: 12:50

And for institutions, would they think Bitcoin, I think easily they will think, as you mentioned, they will think Bitcoin as digital gold. But in the institutional mind, more kind of your traditional institutions, would they think Ethereum more like silver? Or is it just, I'm is gonna hold a top biggest market cap of crypto in my balance sheet.

SPEAKER_01: 13:11

Yeah, and that's a funny question because I think the Ethereum foundation and a number of kind of serious contributors to the EF They're trying to refresh that narrative for Ethereum right now. So you look at what the EF is doing in terms of the changes they're making from a BD perspective. You obviously have Ethereum Alliance. The Enterprise Ethereum Alliance is doing terrific work in terms of acting as a BD function for the EF. I think they're still deciding on what that narrative could be. Like I remember again in the beginning when I got into crypto, I think the narrative for Ethereum was like the new internet. And I think that was sufficient for a period of time. Now I think the EF and Ethereum generally speaking needs to build a stronger narrative. And I would probably say silver is not it. I remember like digital oil was the other narrative used for Ethereum for quite a while. But I think the new narrative needs to be a lot stronger and cleaner.

SPEAKER_00: 14:04

And what do you personally think it should be? Ethereum obviously is the first blockchain to have smart contracts. It's the most built upon base layer blockchain there is, but obviously there's a lot of noise around newer blockchains because they're faster. cheaper, more flashy. Every crypto market cycle, there's a new foundation that captures the audience, right? And Ethereum is 10 plus years already in its inception. So for you, what is the, because you're part of the Ethereum foundation ecosystem, what do you think the narrative could be? Especially when you're speaking to institutions, what do you think would catch their heart? I think for me, the

SPEAKER_01: 14:44

one that's always worked well is that ethereum has two things that's going for it it has the most developers and it has quite a large amount of money behind it so in terms of the market cap and i think for me when i'm speaking to these funds or asset managers and they're looking to place a bet on what's going to be their chain of choice i always say the same thing you're going to place the bet on the protocol that has the most amount of money behind it and the most developers because ultimately the Where the developers go, that's where you're going to get the use cases. That's where you're going to get the output of the technology. And I think today that still is Ethereum. I think everyone would agree competition is rife, like you said. Solana is competing quite aggressively. You obviously have L2s to offer a significant amount of value. But again, to me, I think Ethereum is still poised to be in a terrific position going into like 2026. Right.

SPEAKER_00: 15:37

And I've noticed that the senior management of Ethereum Foundation have changed. Obviously, in early May, there was the Pectra update that made significant changes to the Ethereum blockchain itself. What do you think, for you, is the next change that needs to happen to see Ethereum do 10x, 20x from today?

SPEAKER_01: 15:57

Again, I think a lot of people think these changes or iterations are a bad thing. And I really disagree with that. I think iteration is a terrific thing. It's a sense of maturity. And I think that's where Ethereum is right now. It's maturity. it's kind of realized that, again, all the ICO hype and the NFT bubbles, that's not going to attract serious people, especially if the goal is to bring in institutional capital. So for me, I think it's a terrific thing that the EF is going to have this very hard conversation and realize, okay, we need to iterate and we need to improve. And for me, I think the next big iteration should focus on business development for the EF. And that's been feedback we've heard from a number of large asset managers in the States that the BD function needs to improve because obviously you have the likes of Solana and the Solana Foundation. And in fairness, they do terrific work. It's quite structured. It's well presented. And now I think... Ethereum needs as a whole. And like I mentioned, you do have these terrific groups like the Enterprise Ethereum Alliance and Ethereum Alliance now driving that BD effort. And like anything in BD, you're not going to see the immediate results of that probably for another year. And that's why I think at the foundation level, these structures are now in place, whereas 12 months ago, those structures didn't exist. So that's why I have kind of big hopes for 2026 that, okay, the foundation is now in place. You have intelligent and quite passionate people in these BD roles and the results will probably show themselves in a year's time.

SPEAKER_00: 17:24

And Lido being a part of it, you have been championing this staked ETH for, I'd say, four years now. But right now in my mind, and maybe I speak for many different people, is that Lido is just staked ETH, right? So would there be other iterations of Lido going forward or Or is it going to continue driving this state D as a single product?

SPEAKER_01: 17:46

I think if you're to do something really well, you have to focus on it entirely. And that's been the decision of Lido and the DAO. And to really double down on ETH, our commitment is that ETH is going to be number one. And I think, again, to do that well, you have to focus on ETH. And don't get me wrong, in the past, there was liquid staking tokens for Solana, and the DAO made the decision to kind of sunset that offering with the pure priority of being ETH and liquid staking.

SPEAKER_00: 18:12

And how are you guys working with the Ethereum foundations to champion this liquid staking?

SPEAKER_01: 18:18

I would say there's a good level of interaction there, like the team or the contributors speak to the foundation members. It was actually quite cool. Recently, Vitalik was in Dublin for Eat Dublin, which was a huge success. So to have the founder of Ethereum in Dublin speak over three days and to just kind of hear his vision was terrific. But in the broader sense, like the interaction between contributors that lie down the foundation are quite strong.

SPEAKER_00: 18:43

I see. So you just mentioned that you're going to double down on, you know, the building out the Ethereum stake deep product, but is there like a next iteration of the business? Or, you know, is there something that you guys are kind of, I wouldn't say expanding, but even more doubling down?

SPEAKER_01: 18:59

Yeah, so I suppose the next big thing for Lido is Lido v3 and SDLaults. So if you think of Lido today, one of the big selling points, and this is kind of why Lido existed, was to support decentralization for Ethereum. And again, to just kind of recap. So if you go on the Lido website, just take your ETH, it's decentralized across a number of different node operators. So that would be the likes of the P2P of the world figman kiln and then we have community staking modules for solo stakers so the whole mandate has been to decentralize ethereum as much as possible from an institutional perspective the feedback has been they love that idea support decentralization that is terrific but they have issues around not knowing where the eth is being staked and again i think that's a pretty fair criticism in the sense of if you're a black rock or a fidelity you want to know where your eth is being held you want to have slas or in in place with the node operator. So the whole idea with Lido V3 and ST Vaults is to kind of move away from being a liquid staking protocol to providing liquid staking infrastructure. And at a high level in terms of ST Vaults, it's all around customization. So the idea that you can choose the custodian for your vault, the idea that you can choose the node operator for your vault, and the ability for you to choose if and when you mince teeth. So maybe to kind of give you a practical example from an ETF point of view, the issue The issue that a lot of these ETF issuers will have is obviously dealing with redemption requests. So the idea that, okay, you'll have to have a certain portion of the assets under management unstaked. So from the issuer's point of view, that's obviously not exciting. You're only staking 50%. From the investor's point of view, you're only getting half the yield. With liquid staking, you could have 100% stake product because you're able to mince teeth to handle those redemption requests and to offer liquidity. So the idea would be you would have ETH in a vault, redemption requests would come in, Steeth gets minted, and it could be sold OTC. Or what we would love to see more is having a full Lido staked ETH ETF. So everything is in Steeth at the very beginning. But the idea that we're kind of pitching with ST Vault is the idea of customization and choice. Whereas before with Lido Core, a lot of these institutions, again, as much as they love supporting decentralization, that lack of customization wasn't really appealing to them in the same way that ST Vaults were.

SPEAKER_00: 21:22

In the current environment, you talk about ETFs, so obviously the US is the largest market and this current administration is completely more open. And I think they already mentioned that native staking is not the staking that the crypto industry has been championing to work for. So aside from the US, obviously, is there other markets that you see ETFs that are open or the regulatory environment is open for staking?

SPEAKER_01: 21:49

I think the best example is Europe. So staking has been allowed in European ETPs for years. I would say after that, I'll see Asia to a degree, depending on the country that you're looking at. But by far, Europe is the most mature from a regulatory point of view. Like you have FanX, Ethereum ETN, you have Bitwise, you have a number of different products that exist today. I would actually say the market is flooded with these Ethereum staking ETPs. But from my perspective, they're flooded with products that are only 50% staked, 60% staked. And this is kind of where I would see a big opportunity for Lido Staked ETH, is that if you were to find an issuer that was to add seat to those products, they could make better products for their clients. Or if we were to find an issuer that was willing to launch an a steep ETP, they would be able to launch a 100% stake product. So from my point of view, Europe is in a terrific position. They've laid down the foundation. There's clear regulatory alignment. And that's why I think you'll see a lot of global issuers start in Europe first, test out the use case to make sure it's able to handle the redemptions and the structure works, and then wait for the US to open up and see what they set from a staking perspective.

SPEAKER_00: 23:01

And what is the common pushback you hear from these ETP issuers that are like 50% staked on ETH? Why is it hard for them to kind of move to LIDL? and hold Steeth instead of the native token?

SPEAKER_01: 23:16

It's been a couple of different elements. So the first is like custody support. So that was something a year ago, the coverage at a custody level for Steeth wasn't great. And now I think we've ticked all those boxes and there's terrific coverage. The second would be market makers. So the market makers just couldn't trade in Steep and they needed to be educated. They didn't know such a priority. So I think right now we've kind of ticked that box. And then the final piece, Again, kind of back to education, it was getting these big asset managers comfortable with the idea of additional smart contract risk with Steeth and interacting with a DAO. So getting people comfortable with this WebTree concept of a DAO contributors, everything being on chain and kind of showing that, look, this is a WebTree world as the WebTree use case, but it is applicable for kind of traditional financial institutions to leverage. And a big part of my job is getting these institutions comfortable with interacting with a DAO. And I would say we've made a huge amount of progress in the past year that as we engage with these institutions, they are far more comfortable than they ever have been interacting with a DAO. And that's just a testament to all the hard work of the people who contribute to Lido, all the work they're doing to create a very strong brand and create that professional image.

SPEAKER_00: 24:36

I mean, look, as a person in the industry, to me, it's a no brainer. But as a traditional institution, my question would be like, yeah, if I'm interacting with a DAO, what is the recourse that if my funds get stuck or slashed or, you know, or even the tech just doesn't work and then I can't get my ETH back. I mean, what would be the recourse that I have against the DAO?

SPEAKER_01: 25:00

Yeah, well, hopefully it would never get to that point, but I think it's fair. It's a fair view. I think, look, like Lido has been around for a long time, like you mentioned. like 23 billion market cap, over 9 million each staked. Like Lido is as battle tested as any protocol out there. And I think from a recourse point of view, you have to also remember that like if Lido goes down tomorrow, again, I should also say like nothing is actually staked with Lido. Lido is a middleware. So in terms of users wanting to get their eat back, they will have no problem. There's also a dedicated insurance fund. And the final thing I would say around the comfort level of dealing with a DAO, One of the big initiatives that Lido has done over the past six months is to launch the Lido Ecosystem Foundation. And this is a standalone entity where institutions can engage at an easier level compared to just interacting with the broader DAO. So this kind of goes back to that maturity point of view that the EF has gone through. I think Lido is going through the same thing where there's no more traditional structures in place where institutions can face off against an entity that they're more comfortable dealing with.

SPEAKER_00: 26:06

And is it created just because of that? Or is it trying to create like a different ecosystem where a lot of things are kind of built on top of like Lido?

SPEAKER_01: 26:15

I think there's probably two parts and that is one of them. Ultimately, from a business perspective, it was to just make it easier to sign contracts and get deals over the line. And again, to kind of cut down that education journey. So instead of spending two or three months educating people on a DAO and how a voting, how an Aragon vote works, we can say, look, send your NDA to this foundation Here's a PO box. Here's the address. That's a lot more traditional and it builds comfort. So ultimately what I'm trying to do as a sales guy is cut down the sales cycle so we can sign deals, bring more people into the ecosystem and ultimately get people staking more ETH with Lido.

SPEAKER_00: 26:52

Yeah. Just out of curiosity, because I am also, you know, an institutional salesperson. I mean, what would be the typical sales cycle? How long would it be? Just to give the audience kind of a sense of like how institutional businesses are done versus retail.

SPEAKER_01: 27:06

So it would really depend. So like on the integration side of things, that could take eight to 12 months. So by integrations, I mean like getting, say, steep listed on a custodian. Like the sales cycle for that is quite long because ultimately you're When you're dealing with like MPC wallet provider or custodian, there's a number of different internal teams on their side that needs to get comfortable. It's the risk, it's product, and there's so many other people that need to kind of sign off on that final number. From an ETF issuer perspective, I would say it's probably slightly longer, maybe just over a year from experience. From speaking to a number of issuers and answering questions, I think one ETP issuer in particular, we answered over 500 questions just to get them comfortable with Steeth and LDO. And I should say really intelligent questions, by no mean were they stupid, but like when you deal with public companies, this is the lift you're going to expect. I would say the quicker wins, where we can do a little bit more velocity and speed, they would be more on the crypto native side. So the crypto funds who already hold ETH, on-chain businesses, they would be the ones where I would say are the quicker wins. Whereas the big asset managers, the public companies, the QCs, They have huge teams, compliance, onboarding functions and strategies that you have to follow. And they are like long term deals.

SPEAKER_00: 28:25

I mean, pretty much the same experience I had, you know, with Copper, even with Ledger as well. I mean, I would say the typical sales cycle would be six to nine months, even if they're crypto native. And forget about traditional hedge funds. I mean, that'll be, you know, much longer after multiple RFPs and et cetera. Yeah. We're kind of like towards the end of the conversation, but Keane, do you have anything else that you'd like to share with the audience? I'm sure there's tons more that you guys are working on.

SPEAKER_01: 28:53

No, thank you so much for having us on. Like what I would say, if anyone wants to learn more about Lido, like, please visit the website, reach out to me. Always happy to kind of connect with people in the industry.

SPEAKER_00: 29:02

Great. Awesome. Thank you very much for your time. Thanks for listening. If you like what you hear, give BlockCast a like and a subscribe on your favorite podcast channels, Spotify, Apple, wherever they are. For all your juicy Web3 news, keep updated on blockhead.co. You can also catch Valentine's Daily Views on the market on BRN. Catch you all in the next episode.