Takatoshi Shibayama: 0:00

Hey, hey, hey, welcome to this week's episode of Blockheads Broadcast. 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.

SPEAKER_01: 0:28

Welcome back to another episode of Blockcast. Today we have a guest, Mr. Case Manai, co-founder of 10 Protocol. Welcome to the show. Awesome. Thanks for having me. Yeah. And 10 Protocol, as I understand, is a Ethereum layer two with the privacy element to it. I really like to go into deep within that and understand the characteristics of 10 protocol because I've been seeing a lot of privacy uh change, especially this year, as institutional adoption is happening. A lot of institutions require privacy. They don't want everything out there in the open in the wild. So, you know, I'd love to kind of dig into that. But before I go in, Case, I'd love to understand how and why you got into crypto because, you know, that's always the thing that I always ask of people in the beginning.

SPEAKER_02: 1:11

Yeah. Um, okay, good questions. I guess, like a lot of people, I got into crypto via Bitcoin um back in 2012. I was on holiday in Miami, and um I I stumbled across two things on that holiday. Um I met my wife and I found out about Bitcoin. It's like, you know, back then, the way you had to find out about Bitcoin was via word of mouth, right? And um, yeah, one of uh one of my friends' brothers who came on the trip with us, he started talking about this thing, and you know, I didn't take too much notice. But when I got home and researched it, it kind of blew my mind, right? It's it, you know, now it's kind of like just an acceptable thing. Oh yeah, digital currency. But back then, it was such an abstract concept. I mean, like, it forced you almost to question what money was. Like nobody had really questioned it before, and nobody talked in terms of, well, this is fiat money. It was just like, well, this is money, right? This is dollars, this is pounds. And no one really questioned what that meant. And once you go down the rabbit hole, it just blows your mind, right? And and and and and and today, and still today, I think like the the Bitcoin white paper is the most elegant white paper ever written. It's kind of insane that he nailed it with like, you know, there's no like v1 or point one or or whatever draft white papers. It was just like, here it is for the world. And it's just like, it just blows your mind, right? And then, you know, if that wasn't enough, Vitalik and Co. come along and deliver Ethereum. And that's really, you know, when you're like, okay, wow, this is, you know, there's no going back now, right? This is huge. This kind of changes everything. You know, we're we've got Rails that could potentially replace money, potentially have a global currency, one that isn't controlled by one single entity. Um, it just works in a way where anyone can just spin up some software and be part of the validation, right? And then to go from that to, okay, how about a global computer where it's not just money, but anything can everything, right? And yeah, once you go down that rabbit hole or once you've been bitten by, you know, the Ethereum bug and the Bitcoin bug, you know, you're you're full on sort of in crypto. So and and I got into this when I was working in banking, right? I was working at UBS when I first found out about crypto. And you know, to be in a bank and start preaching about Bitcoin, which is what I was doing, and you sound like a bit of a psycho. It just doesn't mess. Like, no, it just sounds like an insane person saying, look, I've got this thing, I've got this little miner at home. So I actually bought a miner from Butterfly Labs. Um, I don't know if you guys uh came across them at all, but um, yeah, I bought a mine and I was mining Bitcoin at home and I was coming in and going, look, I made 200 bucks today, and I just seemed like the crazy person in the in the room. Um and it wasn't until like literally like a couple of weeks ago I messaged an old colleague just to see how he's doing. And the one thing he said to me was, Do you know what, Case? I should have listened to you when you were talking about Bitcoin. But yeah, anyway, that's yeah, that's it. I I and then like, you know, I I left UBS, I joined R3 because um, you know, R3 at the time was like this intersection of institutional plus crypto, right? They kind of understood sort of like the potential for crypto, the potential for blockchain. You know, we had some real OGs at R3. Uh there's this guy, Richard Gendal Brown, who's like a really prominent talker on decentralization in Bitcoin. We had Mike Kern. You guys probably remember Mike Kern, yeah, so one of the OG with Bitcoin core devs. So, you know, we had guys like that. We had um one of the the the founders of um Dogecoin. I I can keep going, in fact, of like the alumni at R3s is insane. Um and yeah, we were sort of, you know, we so we came together to try and sort of solve this problem of look, we've got this amazing tech. How do we get institutions to get on board with this as well, right? How do we bring this to the whole world? And yeah, so we started building Corda. Um, yeah, and that's yeah, I guess that's my my story of how I got into crypto and how I landed up at R3 solving institutional stuff.

SPEAKER_01: 4:44

Yeah, I guess we kind of share a similar background. I think I was still in investment banking, although in the buy side investing in you know distressed products uh back then. And then when 2008 happened, I kind of saw the real flaw in the whole system. And I thought, okay, there there has to be something better than this. I mean, this is not going to work. I mean, you can't have this thing over and over. And kind of, you know, obviously I didn't stumble upon Bitcoin until much later in 2016, um, maybe partially because I'm in Asia. I'm not really sure. But um, you know, it it was a very eye-opening moment for me, also when I kind of read the Bitcoin white paper and I thought this is the answer, this is the antidote to this flawed monetary system. And um, I really wanted to kind of create like an alternative financial system based on this. Uh obviously the world has changed quite a lot since then. Um I'd be very curious to understand like why you went from Bitcoin, people's money, to having institutions adopt blockchain, which is kind of like uh a little bit of a bit different because you know, for me, I I didn't want to do anything with institutions. I wanted people's money. And three is more like an institutional blockchain where you know bank banks and central banks will be able to create um you know funds and using that to create C B D C or whatever they may be. What made you kind of decide, like, okay, I want uh I'm I'm gonna go from Bitcoin to Dakota?

SPEAKER_02: 6:10

Yeah, um, yeah, it's a it's a good question. So you're right, they do seem at odds with each other. But I guess the question was like, you know, what do you do, right? Sure, so you know, Bitcoin was amazing. I was back then one of the few people actually using Bitcoin for for payments. There's like an interview with me on the uh on the internet somewhere, me buying coffee with Bitcoin. It's probably like six figures now that I bought that coffee for. But it was like, you know, what else do I do with this, right? Uh, you know, I I I guess like I didn't feel comfortable enough to go and sort of dive into, you know, open source development and start contributing. I was working in banking, that's what I knew. It felt like, you know, that at that point in time, you know, the only thing you really could do was find a company that was trying to tackle something at the intersection of, you know, where your skill set happens to be, plus this amazing new thing, right? So that was the appeal for me. Even though you're right, they kind of are, they kind of are at odds with each other. But at the same time, you know, we had Mike Kern on the team, we had Richard Kendall Brown, and these guys were really prominent in the Bitcoin community, but it just felt like, you know, there was this opportunity for it to expand beyond sort of like, you know, this um this small cypherpunk sort of movement, right? Because even if though it's the people's money, it's not going to become global money without everyone being on board, right? And so it felt like, you know, that was a good starting point to kind of get some movement, get things happening, get people talking. Um, yeah, and it it just made sense. And the banks were throwing huge amounts of money at us to kind of solve these problems. So, you know, it felt like you know, we were putting it to positive use in that sense. Also, at the you know, while we were at R3, it was when um, you know, Ethereum was around as well. But honestly speaking, even though Ethereum had like this phenomenal promise, the most prominent use case at the time, do you know what it was? Gambling. It was crypto kitties, like that was it. That was everything. It took up all the block space, like you know, Ethereum was running incredibly slow, it was incredibly expensive. And we kind of looked at this and thought, huh, well, maybe this isn't the future after all, right? I mean, it just it just didn't make sense to us. I mean, obviously it's it's it's come a long way since then, but that back then it felt like unusable. I mean, when I turn up and sort of do boot camps with with banks, it's the example I'd give. I'd be like, well, you don't actually want to be using Ethereum because it's just crypto kitties, it's gonna cost you hundreds of dollars to do one transaction, it's gonna take all this time to settle, and it just doesn't make sense. But obviously, you know, since then we've had all this scaling with L2s and incredible releases, and you know, it it's different now. But at the point, at that point in time, I guess it was difficult to kind of see where this was going.

SPEAKER_01: 8:35

Yeah, I totally get that. And um, you know, obviously, I don't think institutions want to be associated to retail, um, you know, I I guess in their sense, retail blockchains, and they wanted to have their own blockchain. And I think that was kind of the birth of the um, you know, the kind of institutional blockchain space, uh, which we saw earlier on. And I was kind of looking at it from the side eye, thinking, okay, how is this going to, you know, scale? How is it, you know, would banks, would governments really want to be on the same blockchain, or do they want their individual blockchain of their own? And I've started to see, you know, JP Morgan and a few, you know, different banks kind of coming up with their own chains. But I I would really like to know, like, when you were there, like what were the um difficulties of kind of you know, rolling it out, scaling it out, and then what led you to kind of uh you know develop or move on to build 10 protocol?

SPEAKER_02: 9:29

Yeah, okay. So yeah, I I completely agree with you firstly. And giving up control is a hard thing to sell to any centralized large little entity. You want us to decentralize away our power, our control? No chance, right? Which is kind of why you saw a lot of banks trying to develop, you know, like JP Morgan with Quorum. It, you know, so that makes all the sense of the word. And now you see it with with with the with L2s, right? You see like Deutsche Bank trying to spin up its own instance because no one wants the you know give a giveaway control. So, in terms of like with Corda, I think like the biggest difficulty in scaling wasn't actually uh a technical problem. It was more an understanding problem or more an educational problem. It was more about we know this tech has promise. Everyone seems to be talking about it. What do we do with it? Right. And it was really difficult to begin with to find the killer use case, right? Like, you know, we we tried all sorts of things, and you know, they'd get to sort of POC stages and people would be like, okay, well, this is good, and you know, give themselves a pat on the back. And but it it was never sort of like the killer use case that would sort of take off in a huge way. And it and it took a while for us to sort of get to the point where we're like, okay, well, this is what actually makes sense, right? This is where you want mass decentralization. And there's one use case that all that that always stood out for me. Uh can I talk about it a bit? Yeah, of course. Please do. Okay. Um, and that is um trade finance. It's like on the face of it, anyone that doesn't understand trade finance, it just sounds like this boring thing, like, you know, finance between banks and buyers, like, who cares? But it's it it's what oils, the wheels of global trade. Without trade finance, nothing's happening. Because you typically have this problem where you have buyers and sellers, right? Sellers build some sort of commodity, um, I don't know, like LED screens, right? And you have buyers. And just like in the blockchain world, there's this mutual distrust, right? Nobody really knows what what each other's balance sheet looks like, what each other's intentions are. So when a buyer turn turns up and says, Hey, we need to order a million LED screens, the seller's gonna be like, okay, well, this is a great order for us. Um, okay, should we go and start manufacturing these screens at a great expense to us and take the risk? The answer's obviously no, right? I have no real guarantee that the buyer is gonna pay us. You know, what if there's something wrong with the spare core? You know, there's just no, there's no trust, which is kind of like the one of the key problems a blockchain solves, right? Usually distrusting parties. So typically banks get involved, have an issuing bank and an advisory bank, and they issue a letter of credit, and that letter of credit kind of acts as a guarantee that the issuing bank representing the buyer will honor the agreement and pay in the case of the buyer defaulting. And the seller sees this and he's like, Okay, well, great. Now I can manufacture these screens and get them delivered. And all of these sort of like steps happen, and eventually everyone gets paid, goods are received, and everyone's happy and the world and the world keeps moving. And yet this problem today largely exists on paper. It's still sort of bits of paper, someone turning up with a letter of credit with a with like it with like a wax stamp almost saying, like, here's my uh here's my proof um that the bank's gonna back this. And it and and then the reason it's uh it's still done on paper is because it's really hard to centralize trade finance and build one system because by definition, it's global, it's global trade finance, it's it's miss it's mistrusting parties. So who who who builds the system? Who sets the rules? Who controls the database? Who decides whether they can delete an entry or not? Um, who decides who can be on the network? Like what if the okay, so US sanctions Iran? Okay, so they they kick Iran off the network, but China still wants to trade with Iran, right? So what happens then? So it's this great problem to decentralize. And and the real kicker is you can't centralize it because it's too much power in the hands of one centralized entity. Imagine you've got this screen in front, this glowing screen, and you can see every agreement in the world, every trade agreement, right? And where things are moving. I mean, you used to work in banking, right? So you'd have a field day, you'd be trading off the back of that data constantly. I'd be the ultimate insider tool. So it's that's when we sort of realize that, okay, well, here's the sort of problems we should be decentralizing. This is the key institutional use cases. Then everything started to click and things started to scale because we knew what we were scaling for. But even then that came with difficulties. But that's kind of like once we solve the problem, well, what is this tech used for? And and I think we still have that problem in the in the public space as well. Like it's still it's still there's still like a lot of debate about what is this tech actually used for, right? Is it is it is it DeFi? It is DeFi, sure. But is that like the extent to it? Is it NFTs? Is it institutional stuff? Is it just payments? Is it is it is it gambling? Are we just really building the world's greatest casino? I don't know. But yeah, anyway. Um, and I I I think I probably missed the end of your your last question.

SPEAKER_01: 14:01

No, so what did you find while working on Quarta and trying to kind of scale it and develop it that you may potentially hit a wall and then thought, okay, maybe we should be going at it in a different way. What were those kind of moments?

SPEAKER_02: 14:15

Yeah, okay, yeah, good question. So that there was a technical issue, which is um, you know, the our initial original client were banks. Banks are well capitalized, right? But once we started to scale out and and roll out these systems to, you know, to solve solve things like trade finance, what you find out is well, not everyone's a bank, right? Trade finance also involves buyers, sellers, some of them small. Now, they don't want to have this overhead of running another network because the way Corda was developed was everyone had to run their own node. Okay. And that's added infrastructure, right? Oh, no small buyer, you know, how do you turn up to a small buyer and go, well, you know, or or or or a farmer or something, right? And go, well, look, this is what you're gonna have to do now. You're gonna have to run this node. What are you talking about? It's so it it it just so there was this technical issue where it it kind of didn't scale out in the sense that not everyone could run a node. Now, so what you'd have to do instead is say, okay, well, can I rely on others running nodes for me? But then there's a trust issue, right? And then there's the issue of, well, how decentralized can this thing be that you no longer worry about who's running a node, right? And that's really kind of like where Ethereum shines, because Ethereum is so decentralized that you don't care. Like no one executes like a big DeFi trade and goes, well, hang on a second, who's running the nodes? No one cares to solve problems. There's so many people running nodes. The economic incentives, the slashing, all that sort of stuff protects it in such a way that no one cares anymore. And that's like, you know, that sort of decentralization we couldn't really achieve with Corda to the point where you solve something like trade finance and no one cares who's running the nodes. So that's kind of where you hit a block where it's like, okay, where do we move to next? Like, where's that next logical place to do this sort of thing? So that was one thing. The other thing is um I think it's great, you know, having a network with just institutions and and stuff like that, but that's not all the liquidity in the world. That's the liquidity between institutions. But if you're going to build something like a truly global replacement for finance, then it has to be all-encompassing, right? It has to bring in everyone. No matter where you are in the world, if you have an internet connection, if you have some sort of liquidity that you want to put to use, then that's where it should be. Everything's sort of, and we all know this, right? Uh having come from banking, everything sort of gravitates, liquidity gravitates towards liquidity. And so it becomes obvious, which is okay, this is where we actually have to go. And obviously, at that point in time, there was this huge hurdle, which was the regulatory hurdle, right? And it was still difficult, but it was clear from conversations I was having with banks that they were trying to nudge us to, okay, this is good, but what about that space over there? That looks really cool. What those guys are doing. Is that that's that's is that the innovation perhaps? And I I guess to a degree they're all right, because one thing you can't replace with a private system is that mass open source movement, that mass innovation that comes from tens of thousands or hundreds of thousands of developers all across the world thinking about similar problems but in different ways, nudging the space forward, improving things bit by bit. Right? You can't you can't do that in a controlled system, right? And you know, so it just became apparent that, you know, this is where the liquidity was gonna be, this is where the mass innovation was gonna be, and this is where decentralization truly was to a point where you no longer even think about it.

SPEAKER_01: 17:23

Yeah. And and there was a lot of discussions, um, you know, many, many years. I mean, I guess, you know, throughout me being in this industry about debate about whether decentralization is important or not. Perhaps institutions don't really care too much about decentralization and they'll rather keep it, you know, within their closed network. However, you know, then that that information that is being kept uh may not be you know always true because of that. And I always kind of vouch for more decentralization. Uh, but there's always arguments about you know centralization versus decentralization, and it's not that important, but uh obviously we can go down this rabbit hole, but uh it seems like that that was kind of your focal point uh of like kind of looking at Florida and saying, okay, let's go to the most decentralized network there possibly is, which is uh Ethereum. And now uh with 10 protocol, you have also uh added in the privacy um element to it. And as I kind of alluded to in the beginning, you know, there's been a lot of chains out there recently uh um designing for institutions, adding in the privacy element to it, but they're all kind of uh built quite differently. Some, let's say maybe this is not institutional, but like back in the day we all had like Monero and Zcash and all these kind of you know different types of privacy blockchains. So now more privacy blockchains built for institutions. How how they kind of differ amongst each other? And how do you think Penn Protocol does it in a way that institutions would prefer?

SPEAKER_02: 18:56

Yeah, so I I think like when we talk about privacy, firstly there's like the the the right to privacy that that's sort of like embedded sort of human right, and that's a very powerful thing. That's the sort of thing that the cypherpunk manifesto talked about. It's what sort of everything we built sort of started with that was sort of the founding principles. And then there is privacy in a more sort of, you know, if I order something off Amazon, um, can you see my orders? If I am playing a game of poker, can you see my cards? So kind of like almost like this softer form of privacy, but still very important. And I think some of the original work was like Zcash and Monero, was tied deeply to the Cypherpunk manifesto definition of privacy. It was all about sure, we may live in times where most of our governments are benevolent. But what happens in the future, right? You know, things can quickly change. We need to have a payment system where we can still sort of operate um without the government seeing everything. We do all our payments because they may cut us off, they may use it against us, and so on and so forth. And that's a really powerful thing. And I think that's a problem well worth solving. And I think Zcash and Monero. And the other um like member wimble and the other privacy tokens and that specifically solve for you know, I want to send money to you, no one should know about it, no one should know who me and you are, no one should know how much has been sent, etc. That's one thing. Then there's kind of like, yeah, the the more general form of privacy, which is really just trying to replicate what web two does, right? So if we if if if we just go quickly on a journey of like um, you know, prior to web two, prior to web one, I'm I'm old enough um to remember a time where I didn't have an internet connection. And when I had a PC, my interactions with a PC were like me just interacting with a with a box, right? I played solitaire and Minecraft, I wrote documents and blah blah. And it was just me and my and my PC. Then uh web one came along, um, and we moved from that to web servers, right? Where now we could all sort of pull from a web server, we could all operate on data sitting on a web server, and then web two came along and it sort of like exploded, and we have the Amazons of the world and the Facebooks and everything else, and everyone's sort of like sharing with each other, and it's all happening via these centralized web servers, right? And what we do today is we trust these web servers to maintain privacy for us, right? So we trust that Amazon's not going to leak our orders, we trust Facebook is going to keep our photos secure, um, and so on and so forth. Now, when you sort of decentralize everything and now it's no longer Facebook running your servers, but it's Bob and Alice and anyone in the world can come along and run those servers, you've got a problem, right? Which is they can just look at what it is that's sitting on that server, and suddenly you can't build an Amazon, you can't build a Facebook. So you end up with this really constrained design space that we've all been operating in where we can't do, we call it Web3, right? That sounds that you know, that suggests it supersedes web two, but we can't supersede web two because we can't do what web two can do, which is we can't solve that key problem of data access controls, keeping things private. And that's the problem that is still being solved for. That's the problem that 10 protocol is solving for. It's how we can have mass decentralization where anyone can run a node, yet still we can build things that you typically see in web 2, right? And I think the the key thing though is how you make that programmable, right? You don't want to sort of say, look, it's it's a blanket private box and you know, no one sees anything or it's really restricted. It's it should be as simple as a developer coming along and thinking about it almost in terms of like a web 2 application, which is, you know, we're playing uh we it's a game of poker, right? Well, I'll add some code in so that only the each individual player can see their own cards. And if I try and see someone else's cards, that fails. I can't see that. And that's it. It's such a simple thing to sort of talk about out loud, but it's such a difficult problem to solve because everything's transparent. So that's kind of like the thing we're solving for, which is like, how do we solve for the easy stuff first? How do we kind of like you know allow things like poker to to to exist?

SPEAKER_01: 22:55

Yeah, so basically we're we're kind of like with Web3, we kind of went back a little bit on the privacy part because blockchain was so transparent that we kind of missed the element that was quite needed, which was the privacy part where your your data could be hidden away and all your important data. I I'll just give an example, like let's say your digital identity can be hidden away and then not be able to for the rest of the people to see. You know, your analogy of like poker playing is is one of them. I mean, obviously in web two, I play poker games online. Obviously, I don't see people's uh hands, but that's a given, right? But in web three, I guess you can see the people's hand if you if you just do it as is. So I I truly get that. So when when we go into in institutions, now, you know, for uh just when we're talking about then when now on Gcash, obviously you can't see the transactions that are happening, everything is kind of hidden away. Whereas for for the institutions, not everything needs to be hidden away, you know, and certain things are can be made transparent, and then certain important things can be kind of undisclosed. And then how do we my question is like, is it for the blockchain to actually decide what gets hidden away, or is it the institutions that can decide, you know, what part of that transaction or what actions that they're taking can be hidden away? I mean, is that something that's programmable, or are a lot of these uh chains are building with you know their idea of what privacy should look like and then building it for institutions? I mean, that's kind of I haven't really seen clear um you know difference between all of them yet.

SPEAKER_02: 24:33

Yeah, and and I think yeah, you really nailed it, which is it shouldn't be the chain that decides. It it can't be a blanket rule for everyone, right? It just doesn't make sense. So it it does need to be programmable. So you need to have this idea of you know programmable privacy or programmable cryptography, which is really you you're placing the power back into the hands of the developers, um, which is when they build something, they should be able to decide um, okay, what bits of functionality need to be private and which shouldn't. And then it's kind of like the end users come along, whether it's institutions or anyone else, and the way they interact with that smart contract and the paths they take, and depending on what it is they're doing, it then decides for you, okay, this should be private or this should be transparent, right? Like in the just a simple example, like AMM, right? It may make all the sense in the world for the liquidity pools to be completely transparent so people can see, okay, there's a bunch of liquidity here, you know, I'm not going to get hit by some major slippage or whatever else. But I want my actual transactions, my actual trades on that pool to be private with with with the tech we built. You can do that. You can, you know, choosing plain solidity, you can say, okay, well, this should be public, this should be private. Now anyone coming along gets the benefit from from that fact. I think like a uh a good example recently is uh so you guys are probably familiar with with um James Wynne, right? He's like uh uh quite a prominent um perk trader. He had a spectacular run where he went from some small amounts of money to like a hundred million. But ultimately it felt like his downfall was um was that his position got hunted down because in a world where you can see everything, it's very easy for these things are zero sum. It's very easy for someone with more capital to say, actually, no, you're not gonna be winning against me today. And they know where liquidation levels are because it's all on chain. They they can see everything, right? And it's just so easy to come to come in and sort of wipe someone out. And that doesn't sit well because you know, we're we're not rebuilding the new version of finance if that's what you can do, right? And there has to be safeguards against that. You have to be able to programmatically programmatically turn up and say, look, you know, things like liquidation levels, they need to be kept private. Everything else that can be transparent. And then you immediately solve that problem of liquidation hunting. And suddenly it's a much it's a much more much more level playing field, right? So yeah, it really comes down to this ability to developers to sort of, you know, take requirements and not be constrained and you know, just build in a way that says, yep, this is private, this is public, because this is what functionally makes sense for this particular use case.

SPEAKER_01: 27:02

And I have a read through your website, and uh, and a lot of the blogs that I read through had very good analogies and kind of like kind of perks my uh imagination a lot. I think it was really good writing on a lot of these um blog posts. Um and one thing that I kind of noticed before you know speaking to you was that there was a kind of like a spectrum of what privacy is needed. So you had like on-chain games on one spectrum and you had like digital identity and health data on the other spectrum. And then I think the the blog mentioned that you know what you're trying to solve for is like your online games to you know DeFi transactions, the financial institutions. And obviously it's a big, big range in itself, and obviously you don't have to go into the digital identity and health data, but why why do you think that that last bit most the highest spectrum of uh confidentiality is not what you're going after, and it's more on the other side.

SPEAKER_02: 28:01

Yeah, it's um it's mainly because of a tech choice for us, right? So I'll quickly walk you through the technology that we're using. We're using something called a trusted execution environment, which is um leveraging hardware to provide privacy. So it's you know, it's also known as sort of secure hardware or enclaves. And the idea is we're we're basically leveraging this component inside uh a CPU that is almost like it's this sort of incredibly secure area that almost treats the operating system as hostile, right? And anything that goes in, it's sort of encrypted and it gets operated on, it gets executed on, and then you get the result back out. And depending on how you've written your smart contract, it either gives you a result or it doesn't give you a result, and so on and so forth. Um, and these things are sort of like widespread, they're in they're in my mobile phone, they're I mean, I'm on a MacBook right now, it's in my MacBook, it's kind of secures my data. They're widespread, they're everywhere. But they're they're they're not perfect, right? And they they suffer from these things called side channel attacks and um that have been exploited recently. And because of that, there's kind of like this this mistrust. It's misplaced in many senses because almost all of these attacks have happened in a way that is not covered by it's not part of the threat surface of any of these secure hardware devices, which is if you have physical access, well, of course you're going to be able to break it. Because ultimately you could take out an electron microscope, right, and start looking at how things move, and you're always going to be able to break it. But these things aren't designed to be operate securely in the hands of an attacker, right? When you know, I have my mobile phone with me and so on and so forth. So, you know, when you look at like how banks are using trusted environments, it's always running in the cloud somewhere, and that kind of keeps them secure. But anyway, because of this sort of like misplaced trust um and this sort of potential for misuse, it doesn't make sense to sort of go after use cases like like healthcare records, because if that leaks, then it's disaster, right? Whereas like if you're playing a game and that leaks, then yeah, it's not it's not really the end of the world. Okay, it kind of sucks, but it's not the end of the world. But having said that, if you're running a trusted execution environment in the cloud, then to kind of break into it would cost you millions of dollars, right? You'd have to execute some sort of mission impossible style operation to hack into one because you'd have to break into Google's data centers or Microsoft's data centers, you'd have to get through all their security, you'd have to find the right server that is happening that happens to be running the virtual machine that your node is running on. It's like it's genuinely mission impossible. It costs you tens of millions to execute. But people still kind of had this misconception, and they still sort of point to this fact that it was hacked when it was physically present. So, because of that, there is this mistrust, and you can't go go after these potentially high-value use cases because ultimately I would love to see a world where everything is running on the same, you know, this, you know, this vision of sort of Ethereum being a world computer, right? I'd love to have everything genuinely running on this world computer where you can deploy AI agents, and an AI agent has access to absolutely everything, can it can sort of you know execute the most optimal decisions on your behalf and it knows everything about you and it keeps you healthy and it's you know it it makes your life X many times better because of it. But yeah, it's sort of like we have to start with the easy stuff first, right? And and build trust. So I'm a big fan of like the other privacy-enhancing texts as well. Like MPC is really cool and ZK is really cool, and FHE, I think, is the the holy, the holy grill because it kind of gives you the same functionality as you would with a trust execution environment. ZK and MPC don't, they solve a different problem, but FHE does. But the the problem is FHE isn't quite at the point where you can actually do anything meaningful. It's it's too slow, it doesn't scale. And the reason we went with TEEs rather than spend time researching FHE is because we want to be pragmatic about it. You know, as a team, we we you know we come from the institutional space, it's all about being pragmatic, it's about using technology that works today, that you can leverage today, that you can make money off of today, that you can solve problems for today. Solving research problems doesn't really sort of like move the needle forward, particularly in a space where everyone is constantly saying, Well, what's next? What's next? Why are we not, you know, it's been X many years that blockchain's been around. Why is it not taking over the world yet? And it's because we refuse to take these pragmatic decisions, right? We refuse to use something that just works today. Like it's that sort of, you know, it's like, you know, perfection is the enemy of good or whatever the phrase is. It's like, sure, that's that's the North Star. We'll work towards it, but let's let's let's make some pragmatic choices today. Let's get things moving. Let's move more of web two over to web three. Let's show institutions what we can do, let's show the world what we can do, let's show how this tech is incredibly useful, incredibly disruptive. But we need everyone on board with like this idea of let's just be pragmatic about it. And so, yeah, so we yeah, so we chose TEEs, and that's kind of why we today we have to solve the gaming problems first while we slowly move forward to the more sort of hardcore things.

SPEAKER_01: 32:50

Yeah, yeah, you actually took the word right out of my mouth, the pragmatic. That's kind of what I was thinking about because there's so many blockchains built by PhCs and super complicated and hasn't seen much traction because of its you know difficulties around it. It's not just the privacy part, but it's a lot a lot to do with programming languages and how the blockchain is is um is is um you know kind of no, I think the pragmatic approach is always to me the best approach. And I I really do believe that uh this is the way forward for a lot of not just institutions, but for like any any ecosystem to build upon. Just my last question is uh what has the ecosystem built on 10 protocol uh as of today, and then where do you see it going in in the future?

SPEAKER_02: 33:36

Yeah, okay, so it's it's a real mixed bag, um, as it as it should be, because um in an ideal world you build the tech and people leverage it in the most interesting, the most entertaining, the most you know, beneficial way, right? So, okay, uh so one is um House of Ten, which um which is I and I've talked a bit about poker, and so it made sense that you know poker ends up being one. So it's uh fully on-chain poker, so you know, completely decentralized, completely smart contract driven. There's like no oracles, all the randomness you're generated by the smart contracts, and so on and so forth. Poker's an interesting game, right? It's something that most people know, it's got a global brand, and um but we kind of said, okay, poker's also broken, right? If you play online poker, the chances are you're playing against bots or you're playing against people colluding. I I used to play poker a lot um back in London, and uh one of the games I met someone and he had pretty much industrialized cheating on an online poker. Um he had like the equivalent of a trading floor in London where we had all these players and they were all playing online poker and they were all sort of like sharing data with each other, joining the same tables, colluding, and you can't you can't compete against that. You know, you turn up, it's it's game over. So we said, okay, well, so putting it onto a blockchain also doesn't help, right? You can you can still collude. Well, what if we adopt that? What if we lean into it and say, okay, look, we'll just have poker played by bots, right? And we'll have players stake on the bots, we'll have players train bots, we'll have players bet on bots. And, you know, the advent of LLMs really enabled that in a meaningful way, right? We, you know, we we brought along a bunch of AI agents running um, you know, GPT, Gemini, Deep Seek, and so on. And we had them all in a room playing against each other. And suddenly you had um a game of poker where, you know, typically it's five, six, seven people, right? Being played, played, of course, in quotes, um, by tens of thousands of people. And it became like a really communal thing, a really exciting thing where people sat at this table and sort of betting on these players and the outcomes of hands and the game in general. And you know, to a degree, I think that's kind of like the world we're moving towards. Everyone just wants to bet on everything, it's hyper-gamplification everywhere. Um, look at what's happened with um with polymarkets and Calci and all the other, you know, we just want to bet on stuff. That was one thing we built. But then on the flip side, we have some really serious use cases. Like I talked a bit about trade finance, and we have some really serious professionals from you know, all with major banking backgrounds building a solution called Havana, which is trying to solve the problem I mentioned at the top of at the top of the cast, right? Which is um trade finance and letters of credit and that sort of thing. So it's kind of like opposite ends of the spectrum, but they both sort of come together on this one network and it kind of makes sense. Yeah, we we have um we have governments, we have MOGs um signed with a bunch of governments across the world building sovereign L2s, so they're getting involved as well. So yeah, there's um there's there's a lesson, yeah, there's some really interesting things sort of across the spectrum of what you'd expect.

SPEAKER_01: 36:28

Yeah. I also saw in a blog that it was a battleship also built on uh your chain as well. Seemed quite interesting. But uh yeah, no, this was super insightful. Thank you very much for sharing about 10 protocol. Uh, where can people follow you and uh and the developments of 10 protocol? Yeah.

SPEAKER_02: 36:45

Um so we have a a Discord. The link to that is on 10.xyz. Our Twitter handle is at 10 Protocol. Um so yeah, give us a follow. Um, we're launching mainnet very, very soon. Um some really exciting things that to come. Um so yeah, please come along, join the community, get involved. It's as well as solving serious problems, it's also really entertaining and everyone's having a lot of fun. Yeah, great. Thank you very much for your time.

SPEAKER_01: 37:10

Thank you, and thanks for listening. If you like what you hear, give Bloodcast a like and subscribe on Spotify and Apple Podcasts. And for all your juicy web3 news, keep updated on blockpad.com. Catch you all in the next episode.