Founders of Web 3 Podcast Series-Interview with Sergey Nazarov of Chainlink

Founders of Web 3 is a podcast series hosted by Outlier Ventures Founder & CEO Jamie Burke where he introduces you to the entrepreneurs, their investors and the policy makers that are shaping Web 3.

Sergey Nazarov, Co-Founder of Chainlink, shares how his experiences as an early Web 3 entrepreneur led him to solving the oracle problem. We talk about how Chainlink has successfully abstracted away its complexity to unlock the potential for reliable ‘universally connected smart contracts’ to become the dominant form of digital agreement which allow enterprise and end users to take control of their relationship to their money and data.

Listen to Sergey’s podcast on Apple podcast

Jamie: Welcome to the founders of Web 3 series by Outlier Ventures and me your host Jamie Burke. Together we’re going to meet the entrepreneurs that backers and the leading policymakers that are shaping Web 3. Together we’re going to try to define what is Web 3, explore its nuances and understand the mission and purpose the driver founders. If you enjoy what you hear, please do subscribe, rate and share your feedback to help us reach as many people as possible with the important mission that is Web 3.

So today, I’m really happy to welcome Sergey Nazarov, Co-Founder of Chainlink, Chainlink are all about smart contracts being connected to real world data events and payments, providing a reliable tamper proof inputs and outputs. For Complex, smart contracts on any blockchain, welcome to the show.

Sergey: Thanks for having me, Jimmy. Great to be on the show. Thank you.

Jamie: So just to expand a little bit more on training, we’re gonna go into this in much more detail over the course of the podcast. But effectively, you’re solving for smart contract external connectivity in the kind of middleware problem. So that web developers and FinTech developers smart contract developers on various networks can build fully functional, smart contracts for production use at scale. As I kind of look into the background of the people that come on the show, to add a bit of personal flavour, you offer some words of perspective on life, presumably drawing upon your early years as a philosophy student, which is really interesting to see. And so I kind of pulled out three: genius is one inspiration and 99% perspiration. Thomas Edison. Every new beginning comes from Some other beginnings end Seneca, and this time, like all times is a very good one, if we but know what to do with it by again, Emison. So I think those three are very relevant for web three. And many of the problems that we’re solving for today, the three best ones I’ve admitted some others out, but I don’t know if they fully reflective of Sergey today.

Sergey: Yeah, I think those are all very good ones. One other one I like is “if one does not know to what port one is sailing, no wind is favourable”. That’s also by Seneca, that’s also listed somewhere on one of my social pages. And another one is “we must stand up write ourselves not not be set up” by Marcus Aurelius. And it’s, it’s kind of around, putting things in in a position to succeed, and knowing where you’re going and having focus. I think the thing with the blockchain space, is that there’s so many different ways that the technology can be applied, and the people that are really and creating progress are the ones that are able to focus and make a specific decision about this is the thing that they want to do particularly well. And I think that’s an evolution of the space that starts to mimic would you see in more developed industries where you have people owning a piece of a stack or a certain subset of problems and being very good at solving those problems. And then other people are very good at solving other problems. And so I think in addition to those are very good ones. But in addition to those, the ones that really talk about having a focus are very important.

Jamie: And I think all of them very relevant in the context of being a Founder. And it’s strange, the number of founders I’ve interviewed on the show so far, and a large physical kind of outsized percentage of them have some background in philosophy. So I don’t know what it is about Web 3 and crypto that attracts these types of people. I myself actually did a philosophy degree dropped out though, so that there is something about the space that attracts our type. So the reasons why I’ve got you on the show there are a number. Firstly, I think you’re solving one of the most fundamental problems in Web 3, the oracle problem. Oracle’s as a kind of a trusted data feeds for smart contracts are perhaps the most tangible way, this new web, this new world we’re building connects with the old one. So you’re kind of a chain that you’re both literally and figuratively bridging web two to web three. You’ve also been hugely successful in scaling with ecosystem growth. And of course, that’s the one thing that all founders are trying to achieve in web three. So I think there’s going to be lots of interesting lessons there. You’ve become somewhat of a cult figure in the space and certainly within your community

Jamie: Similarly, as I think you’re aware for us, we entered the space roughly about the same time 2014. And as you say, this is kind of period of experimentation, like pushing the possibilities of technology. But quite quickly, we arrived at the same thing, which is ultimately there’s all data we’re talking about in the new data economy. And you know, a blockchain is just a means to coordinate secure, transport that data.

Sergey: Right, exactly. I think the way to reason about this more more holistically is Where can the tamper proof guarantees of a blockchain be applied? Right? How will they be applied? And that’s really the question. And then you can go industry by industry and sector by sector. And you can reason about what are the requirements that a blockchain based tamper proof system needs to meet for these various sectors, or various use cases. And the various use cases have very different requirements. So that’s that’s the other thing that I think is also important to understand is that there’s a lot of variability because all the different digital agreement types you’d be dealing with, and all the different data types are very different, right? So a system that’s very, very good for payments transmission might not be the best system for making tokens. And the system may for making tokens may or may not be the best system for global trade and supply chains and the system that’s very good for so it’s sometimes more specific. Now there are very good general purpose system And I think that’s smart contracts. Generally speaking as as a layer to manage all the logic involved in these tamper proof contracts, there does need to be a general purpose, globally shared source of truth Golden Record layer that in many ways will eventually replace even people’s use of databases. Because the databases often keeps so many redundant records between parties, because they don’t have an intermediary shared Golden Record that they can rely on as much as their own database. You do I think, need a general purpose system. I think there’s all kinds of things in scalability that people are doing and to help grow adoption there. I think the the way that really helped me think about it was don’t necessarily focus on what block chains are doing today. And really try to understand what are the guarantees that block chains provide, and then maybe even starting at the at the places that you understand best, think about where Can that be applied. The next thing that we worked on was a kind of decentralised exchange interface and a decentralised exchange model where you had one of the first and for a certain time is the most widely used decentralised exchange that was able to not only exchange tokens but layer on revenue sharing and other things. And this was secure asset exchange. And this was the more advanced use of smart contracts for essentially exchange data and and some amount of also revenue sharing where you would be able to distribute fractional kind of payment out to token holders. This led us to start to think more about smart contracts as a general purpose framework. And and that’s when we kind of moved on to make sure that there was a more general purpose system. That’s when we really shifted focus to working on more on smart contract Comm. smart contract comm was a focus on how do we compose smart contracts for various verticals, some of the first verticals, some of the first ones that that we were able to get running was things around shipping things around search engine optimization. So search engine results can be verified from public API’s even. And you would be able to see, if I paid you this much money, you would get my search engine rank to a certain certain ranking. And that ranking would then result in payment to the search engine optimization firm. And the user isn’t holding the payment over the search engine optimization firm in the search engine optimization form isn’t holding the payment and making false promises to the user. So it was kind of like strategically looking for situations where you can create a better trust dynamic on a vertical vertical by vertical basis. Then basically what happened is a number of banks started showing up a number of banks, insurance companies fintechs insure techs, and we started working with them on a number of either using smart contract comm or using a more advanced version of the back end that we built. And we basically arrived at a realisation that what these people needed was an abstraction layer. So they needed a layer Between the blockchain they wanted to use and all the other things they wanted to do with it. So they wanted the blockchain contract to know about something in the real world, like the shipment of a good or the market price change, or weather for insurance, or, you know, whether an ad was viewed on a web page or something, you know, 50,000 different things that people want to do with digital agreements, and the blockchains that they were trying to build this on. This is even I think, before aetherium was live and then aetherium goes live. And you know, it evolves a little bit from there. But I think the thing we realised from from actually working with a lot of these use cases was even if people were able to get some kind of state change working on a blockchain somewhere, the issue that they were going to have was once I get that state change, working by having a private key, replicate some kind of interaction with data, the actual interaction with a data source or sending a payment somewhere that isn’t on the blockchain. is going to have a lot of security issues. And it’s going to have a lot of failures and points where you can really break the model of a smart contract. Because I think the other thing that’s really important to understand is what is the model of a smart contract. The model of a smart contract is not the same as the model of a digital agreement. The digital agreement, basically has a central company with funding with a logo with a brand. And the brand says, trust me, I have a nice big brand I have I have my brand on the top of a big skyscraper in New York. You should trust me, I’m solvent. I can pay you out as needed. You know, here’s my brand, wire card, my brand on a big building somewhere, it’s fine. Everything’s going to be fine. And that’s the model, right? I’m going to run the digital agreement. You’re going to connect to it via API’s. Trust me, it’s fine. I have a big brand. I have a logo. I have some some certification, some sticker from somebody That says I’m a good good person. Good, good thing that’s going to work. Something something happened with me. Right? I have some check box, it’s going to be fine. Right? So that’s the model of digital agreements. And you know, I guess yeah, that that model is an improvement over not having that model. Absolutely. If I have a choice between digital agreements and paper agreements, digital agreements, absolutely. You can automate things with data fine. But smart contracts say something very different smart contracts, say there’s no brand, there’s cryptography there’s a mathematical guarantee that if you do acts according to this contract, you will get why it’s not a matter of a brand or a logo or a certification sticker from somebody. Good marketing. Fuzzy I’m your friend you know we’re gonna we’re gonna not be evil together thing is just like deterministic physics fact of life level stuff. And that is a huge difference. So that difference eliminates the possibility for people to basically not follow through on their commitments, whether they’re a large entity and you’re a small entity changes the power dynamic, whether you’re a single user, and you know, they’re a big kind of entity that monopolised all the data and all the interactions you have with other users. This can’t happen anymore, right? The power dynamic completely changes. And you’re no longer relying on someone’s brand or some some people somewhere, which is actually as brands fail, for whatever reason, as the trust that people have in a brand telling them it’ll be fine. Just don’t worry about it. As that dynamic begins to give way to a better guarantee a cryptographically enforced guarantee. I couldn’t explain to myself Why the hell anybody would choose a brand. I just couldn’t understand it. I would be like it. It would be like saying, you know, I’m gonna I’m gonna throw something and there’s a 10% chance that it’s gonna go in the hole and I can when when a toy, or I can, I can just throw it into the laws of physics work properly. And I know it’s gonna go in the hole at the, at the carnival, and I’m definitely gonna want it to it’s like playing a rigged Carnival game versus a fair Carnival game. Like, why would I ever not play the one that’s definitely going to work correctly. So this is really the nuance that I think people should focus on. And then all the infrastructure that people are building is how do we do that? Right. So how do we represent ownership in a blockchain through tokenization? How do we get that tokenized ownership into a contract where it can earn interest? How do we generate some kind of derivative financial product from that? How do we generate an insurance policy around something like weather? So when you when you start hitting the more advanced use cases, you start to see Oh, okay, I need I need To know what the weather is, but if you want to maintain that guarantee, right, if you want to maintain that cryptographic proof guarantee, you need to extend it to your relationship with weather. You can’t have it stop at the level of the blockchain is doing the state change, find the blockchain did a state change, that’s great. But if the blockchain that is state change and some other system that’s very easy to completely controls that state change. Well, you know, if you average out the amount of actual tamper proof pneus you’ve achieved, it’s pretty low. However, if you can validate and you can actually prove at a very high level of deterministic proof and get and and guarantees that the weather was actually no rain for the six month period of the insurance policy. Then you can make a deterministic truth smart contract for that. category of events. Right? And and that’s really the goal that that that we’re engaged in moving forward, we’re engaged in. How do we take the blockchain infrastructure that exists that many, many smart people are working on? many great people are moving forward and amazing, amazing and very complicated ways. And and how do we extend that to all of these other use cases? How do we extend it to be useful for I want to write an insurance product around the weather so that a farmer can now have weather insurance, even if their local government can support the existence of an insurance company? How do I do securities markets transactions between two countries that don’t trust their respective legal systems because of political issues, and I don’t need to rely on the political systems or the legal systems of those two respective countries that have tension, but I can still do a securities transaction between them because I don’t care about whatever’s going on. I just care about doing that transaction. And I need guarantees about it properly happening, right? How does somebody gain ownership of something and know that a bank or some other entity can simply shut off the ATM and tell them that they can only take out 66 euros per day? And that’s the new relationship that they have with their savings, right? How can we extend all of this functionality to more data, more use cases. And this requires this abstraction layer. And in our language, we’re seeing this as the creation of universally connected smart contracts. That’s what we really see as the next generation of these contracts, is they’re universally connected to everything you want them to actually influence. They’re connected in a way where the reliability that something actually happened out in the real world is so well validated and so proven to the contract, that it meets the same level of guarantees as the contract and Therefore, that’s when you have a smart contract about that category of activity.

Jamie: So a lot of what you kind of described there is in summary, this idea of the Oracle problem. And you know that that kind of articulation of this universal solution is I guess how you describe the changelings approach? How do you solve for the problem of quality of data and this kind of rubbish in rubbish out problem.

Sergey: Yeah, so that’s definitely a complicated problem. But that is the problem that we’re working on and we’re solving successfully in certain verticals. The model of smart contracts is that you have decentralised computation. So you basically have independent parties or entities computing the same thing multiple times coming to consensus that this is in fact what’s going on. Right. This is in fact the transaction that’s correctly sending tokens or coins from you know, address, hate address, be we’ve all agreed on that and so many of us have agreed on it. We validated so much in So many times across so many people that were, you know, with the help of cryptography and and, and certain solving of puzzles and math problems, you kind of arrive at a place where so many people now store that conclusion. So many people have agreed on that conclusion that that conclusion is considered definitive. Right. And so that’s decentralised computation. So the the logical step here would be to say, okay, decentralised computation is getting invented. It’s coming into existence. It’s going into this early to mid state of being polished and adoption. But how do we apply that to this problem of validating the outside world, right? How do we do that? Well, you basically need two dynamics, you need a dynamic where you have multiple independent nodes, entities, computing systems that are independent from each other, validating the world. And then you need multiple sources of data. That should be saying the same thing. So the creative thing around building an Oracle framework, or an abstraction layer, like what we’re doing is that you end up needing to make a very flexible system so that every unique situation that you’re in, whether it’s a smart contract security, whether it’s smart contract insurance, whether it’s something for ad networks to eliminate fraud, they will all have different data sources, they will all have different ways that they want to interact with that data. And they will all have different requirements about the privacy of that data, even when it’s in this Oracle network abstraction layer. And so what you really need to do is you need to build a flexible system that allows you to have multiple independent nodes that meet the requirements of a use case. They don’t meet the fantasised requirements of us. They don’t meet of like of the people building it. They don’t meet the fantasise requirements or even the real requirements of a single use case, right? Because that’ll probably only work for that. Use. case, right? You You make something for smart contracts securities, oops, insurance wants something else oops. trade finance needs a whole different way to interact with data or different dynamics around interacting with data. And and so examples of this are things like, Oh, I’m going to go and I’m going to validate prices from multiple sources using multiple nodes. Okay, great. That can work for crypto data that can work because you have multiple sources. It’s very fragmented. There’s a lot of exchanges, there’s very little locking across exchanges, volume shifts very rapidly, and you need to solve those categories of problems, right, you need proper market coverage of price. You need to make sure that there’s decentralisation of data sources, you need to make sure it’s coming from the source you need to kind of solve a specific subset of validating the outside world using this Oracle mechanism abstraction layer. Then you have other other use cases where you have insurance so if you’re insuring a field of solar panels, let’s say there’s 10,000 solar panels and every hundred solar panels has a sensor? Well, then what you would need to do is you would need to reason about, well, how do I get all those sensors feeding into my contract correctly. So I can properly insure this field of solar panels. So I don’t just want one sensor, right? That’s a big risk. Even if I have decentralisation at the middleware level, I want to figure out a way where I can properly have the different sensors giving me data about this solar panel field, maybe I want the sensor signing the data at the origin and sending them to me that way, maybe that’s the right model. Maybe the easiest way to do that, as is to give some lightweight piece of software to sensors. It’s something that evolves with different use cases, but it always comes down to two dynamics. It’s who is validating the data at the at the decentralised computation level, who are the nodes validating the data and then what are the sources of the data and when you have situations that are single source, so when you have situations where there are less sources Then what you begin to do is you begin to strengthen the relationship as much as possible between the source and the contract. Usually, with the way we approach this is we actually get the source to run the chain like software themselves. And so they’re both the source and they’re signing. And then what you look at is how do we strengthen this kind of relationship between data and the contract. And then also, very importantly, you would want this system as our system does, to prove to people what’s going on. So another big dimension is is the proof that a blockchain or decentralised middleware like ours can provide about what is actually happening with the delivery of data that’s triggering the contract, and this is something our system excels at as well. Because if you’re going to move from the world of I have a brand Don’t worry about it, it’s fine to the world of you know, various in numerous cryptography is proving to you that if you put You know this much value into this contract and you do x activity you will get y output. And that’s not dependent on a brand or a government or legal system or anybody, it’s just dependent on physics and mathematics working properly then you need to prove that to people and the system needs to have a capacity to prove that just like blockchains prove that and and so those are I guess the three dynamics at play there.

Jamie: Obviously at the moment you know, we’re speaking in July and depending on people actually listen to the podcast you know defy is very hot right now it’s where a lot of attentions going you know, chain link and and these kind of things are open source. So in theory, anybody can take them and apply them. But obviously you you also kind of have a business, how do you are you being pulled as a business into defy with that momentum? Or are you kind of actively exploring because defy is primarily on chain right? is a series of on chain events, versus what you’re saying is the ability to connect with effectively off chain data sets, where as a business see you being pulled versus the protocol and how people might be using.

Sergey: So yeah, we don’t necessarily view ourselves as a business, we view ourselves as an open source project, an open source product, that that’s enabling the implementation of smart contracts in a way that they’re gonna become the dominant form of digital agreement. Our goal is to enable that shift and how smart contracts are used for, for things beyond tokenization basically, so our our goal is to take our industry the blockchain industry, into the new world of decentralised financial products, decentralised insurance, decentralised global trade fraud proof, ad networks, fraud proof gaming, and I don’t think It’s a coincidence that decentralised financial products are taking off. When there’s better and better Oracle mechanisms and abstraction layers like ours, I think it’s all very connected. Because even in our case, we have cases where users came to us, we’re able to integrate in a number of weeks didn’t have to build infrastructure, just like they didn’t have to build a blockchain didn’t have to build an abstraction layer didn’t build have to build an Oracle mechanism, which is a serious set of security and computer science problems. And after launching in a matter of six to nine months, we’re able to get over 100 million in value secured. And that’s part of what’s counted in defy, right. And we have other users who are able to rapidly launch new markets, because we can provide new data to them, for them to launch new defy markets in the derivatives category. And you know, those users are great teams, like have a in the first case and then synthetics in the second. And we’re very, very proud that we have something to do with that. So we we don’t really view it as like here’s this business And then that type of thing, we’re very lucky to, to be in a position where we can, for the long term, build an open source product, we have the resources to do that we’re very, very lucky to have those resources, we’re able to deploy those resources to build an open source standard, which is being adopted more and more as a standard. And the goal of our team and our group of people in our body of work is to change what smart contracts are about to essentially redefine this industry, from tokens and exchanges, to everything else. That’s not saying tokens are wrong in any way, their tokens are great tokens seeded this space with value for people to put into contracts, at least in these initial defy formats. But there’s an evolution that needs to happen here. And in fact, it’s the evolution that I have been working on for think over seven years now. And you know, I’ll be working on it for many, many more years, and it’s Something I’m very committed to. And I believe in from a, you were saying before about philosophy from a really more moral point of view and ethical point of view, I think that making contracts function correctly, is really one of the things that more and more advanced societies have done. And then as more and more advanced societies are able to do that, you see, people have more time for art and science and invention, and, and just quality of life improves, and society becomes more civil and more the type of society that you see in science fiction, things that I read, like Star Trek and all these amazing things that are like, here’s the future. So I think our goal is really to make an open source standard that becomes a public good for how people build these contracts the right way. They can do that on a multitude of different environments. And I don’t think it’s a coincidence that defy is taking off new markets and defy are being launched. I mean, we have a very large amount of main net live users. Now I can I can start We say that we’re the most widely used Oracle mechanism right now on public blockchains. And that’s only accelerating into into defy and into fraud proof gaming, I think the way to think about it is once you give people features that they can efficiently use while maintaining security, that is when our space begins to do more cool stuff, right? So what a cerium did was it, it gave these people and ability to make tokens both efficiently and without having to worry too much about the security, right? Like they have to write in security, they have to get an audit, but it’s doable. And that’s why everyone made tokens because all of a sudden, you could make tokens, you could efficiently and securely make tokens, and there was a boom in tokens. I don’t think it’s a coincidence that defy is taking off. The when Oracle mechanisms are around, and I think many of our users are driving a lot of that defy growth and many more of the people driving them During the process of integrating us into their system and, and kind of, I think that’s the really exciting thing for me and for our team is that we feel very proud to have a part to play in how all of these different products are redefining our space. And that’s why we don’t make a defy product. We don’t make a blockchain. We enable all these other people to, to basically combine an idea for a great financial product, a tamper proof contract that isn’t based on brand, but based on cryptography, together with blockchains, because they now have an abstraction layer, they now have an Oracle mechanism for them to make this universally connected, smart contract. And that’s the overarching goal that we have, like our successful outcome is the world is running on smart contracts as the dominant form of digital agreement. There’s the abstraction layer that we made powering the interactions that all those contracts have with everything else in the world. Other payments. systems, other data sources, chains, you know, any number of other resources. And that’s the thing that that we’re devoting our time and energy, pretty much in many cases our life to. So that’s kind of our our priorities.

Jamie: So do you think perhaps this is a philosophical question, but do you think that let’s just use defy as a catch all term that defy has the potential to go over the top of the world as it is the existing financial system, including insurance or as you say, Supply Chain Finance? Or do you think it’s more likely that we’ll see incremental decentralisation of the world as it is, or could both be true?

Sergey: I mean, I think it’s both. I think people are going towards the same place from different directions, just like they were with the internet. So in the internet, you had startups that were starting out internet first and they’re like, I’m internet first and I’m gonna win because I’m ecommerce centre. At first, and then there were some companies that were able to do the proper analysis and do the math and do the numbers and think about this in a more holistic, deeper way. And they said, this internet thing is gonna is gonna force us to really reinvent our business and if we don’t do it right now, well, we’re gonna have a huge problem not just because the startups was because my other competitor would do that. And and so I think it’s exactly the same here like there’s there’s this term internet of contracts that was popular before but isn’t popular now. For some reason. I think everybody will eventually just go towards saying, Yeah, yeah, you know, I was this was my plan from the beginning. Just like everybody eventually got on the internet, right? Like all these corporations that before I’m sure you can find quotes from whoever, wherever in that organisation saying, God the internet, it’s a joke, they laid it all this cable, all the cable they laid is worth this much money, but the value in trough traffic on the internet is only worth that much money. Oh, it’s such a waste or you know, they laid all the broad banded never gets used. You can I’m sure you can find quotes from From all these companies, many of which are dead, some of which still exist and are now powered by, by internet based interactions with their customers internally between the people that work at the company. I think it’s the exact same thing here. I think there’s there’s just, there’s just a new dynamic that you can do on the internet, basically be like, just in the evolution of the internet, you had unencrypted email. Okay, fine. I have unencrypted email. What can I send using an encrypted email? I can only send a certain category of things that I have encrypted email, then I have encrypted HTTPS transfers of credit card information. Oh, wow, I can do e commerce. Now. Isn’t that fascinating? And it’s the exact same dynamic, right? It’s just kind of, you’ll have startups that say I’m crypto First, I’m going to become the world leader in x category of contracts because crypto is the future. And because I have a really competent team that’s able to make really high quality financial products that are based on providing real value. You know, not purchasing users not like something else but but on the fact that my financial product has unique real value to provide, right. And that’s what I’m able to do. And I’m crypto first and crypto is a core value. And those people will get massively accelerated, just like the internet first companies got accelerated when the internet’s value became clear to users and and, and all those other kind of business to business transactions that people care about now. And then you’ll have enterprises that will be sitting there and we talked to a lot of these enterprises and I got to tell you, they’re getting more and more astute by the month really, I’m having conversations with people now that are much more informed than they were a year ago. In the enterprise. Many people have stopped saying, I want to make my own blockchain where it’s just going to be me and my employees and my one counterparty and I’m going to win because I’m going to have an intranet. So a lot of that thinking is evaporating. People are looking for standards. They’re saying, you know what, we use this thing But we also have a capacity to interact with others. And it’s this dynamic around an evolution. The important thing is where do people end up? The real question is, I mean, it is important that the crypto startups succeed. And it’s great that there’s all this value in tokens to let them succeed because you can now build a crypto startup and there’s enough private keys holding enough value to allow you to get a couple hundred million dollars in value secured on your on your product, because you made a good financial product, right in a crypto format in a smart contract format. I think that’s important. You see enterprises going more towards blockchains. I think the really important thing is the fundamental premise around cryptographically enforced technologically enforced contracts. And when does that become valuable? And in what environment does that become valuable? I think that the environment that that becomes valuable and is one of two environments, either it’s the environment where people have been able to see successfully make a value proposition that users are absolutely 10 x beating down the door to get, right. So some insurance company or some insure tech, some financial institution or a FinTech or a crypto startup makes a financial product that gives users access or an ability to use a financial product, whether it’s a derivative, or some kind of less rate of lending returns, like the lending returns in our space are way better than the lending returns in the traditional space. I still don’t know why that hasn’t taken off, maybe it’s because the on ramps into that need to get better. But it’s either that and then people see that somebody like some bank is feeding the other banks, or some insurance companies beating the other insurance company or some insurer tech got acquired by some company because they that’s all they do is this type of product. And then all the other companies kind of go that’s the future I got to get it in gear or alternatively, consumers in mass, come to the realisation that They value cryptographically guaranteed agreements. And the people that value cryptographically guaranteed agreements are the people who have had traditional, non guaranteed brand based agreements fail them. Like I can tell you right now that wire card users or wired card, you know, participants are very sensitive to the concept of a cryptographically guaranteed agreement for them. And I think that in my generation alone, and also depending on how the world evolves, and how many brand based agreements are actually fulfilled, or fulfilled properly versus not fulfilled properly for whatever collection of reasons, and and there’s these two kinds of forces, right? So either people start saying, you know, I don’t really like the concept of only being able to get 66 euros out of an ATM per day. I think I’m going to switch to a private key based store of value with that. can’t happen to me. And why would someone think that? Well, they would think that because the neighbouring country suddenly had that happen, right? When you saw the lockups in Greece for 66 euros per day, wallet numbers in neighbouring European countries like Spain and others, were people worried about similar situations due to debt solvency and solvency questions, their wallet registration numbers 600% growth improvement. So I don’t know which of those is going to happen first. But I think it’s it’s definitely something that both of those are in the cards, what the timeline is on both of those, it’s hard to say.

Jamie: So that’s a really interesting topic that feeds into the next question, which is, where do you see centre of gravity’s emerging? So, you know, typically, web two has been dominated by Silicon Valley and the West Coast. Of course, there’s been an emergence of kind of a next generation of startups coming out of Asia in that context of a demand for these kind of guarantees, the contracting level, where is there a centre of gravity or the centres of gravity?

Sergey: I think it’s really by region, what I see happening is that in specific regions, you see people adopting, sometimes due to regulatory requirements, like in China, where you have certain blockchain networks that are going to get mandated by by governmental sources that people are going to have to use. Just like they have to use certain applications. And there’s a firewall and things like that. And then there’s more permissionless models, where there’s a more public kind of replication of the internet and that dynamic. I think it’s really dependent on geography. And you’re going to have an evolution of different industries, and even different verticals, having security repositories and other people launching vertically focused blockchain offerings. Then you’re going to see the public Internet version of similar infrastructures, then you’re going to see regulated and required kind of use of certain systems and certain other geographies that that’s the dynamic there. That’s there. I think the hopeful thing that I have, actually, is that you can have systems working in different geographies, where, because they’re all based on cryptography, and because they’re all based on this kind of various and numerous concept of technologically enforced contracts, that you can actually still have guarantees across geographies, without relying on a legal system or a political climate or something like that. Right. I think that you’re seeing a number of different blockchains adopted in different geographies, sometimes due to enterprise sales, sometimes due to government regulation. From from our point of view, we’re agnostic. So we support Many different chains has those hyper ledger, aetherium polka dot, you know, a whole bunch of different blockchain environments, many, many more on the way we have over I think over 50, blockchain environments already announced, integrating with us different stages of integration, different stages of going live with them. And so from our point of view, our goal is to enable the usage of smart contracts and all of these environments, and maybe even help bridge the the kind of cryptographic proof that an abstraction layer would need to know about to guarantee that something is correctly happening somewhere else. The more important thing is that whatever blockchain systems, someone builds in their local geography, it’s able to meet the requirements of providing proof to other blockchain systems. And that partly depends on how data interacts with that system. So if you have blockchain systems that are run by a single party, one node, and then that party also gives all the data to the system. I mean, it’s tough to even call that a blockchain system right? It’s is just difficult difficult to say that. And so other blockchain systems might not put a lot of faith in the outputs or the transactions happening on that system. Right. Whereas if you have some other other blockchain system where you have, you know, 15 or 20 or 50, state run entities, all separate entities, all running some blockchain find it’s a blockchain, but it’s not permissionless. Okay, it has that property. But then the question is, how does that blockchain actually work in relation to data? How do the contracts on there are they How are they controlled? So there’s actually two orders of problems right. There’s How does the blockchain work? How do the contracts on the blockchain work? And I think once you meet those two requirements for tamper proof pneus, then you arrive at a place where people can still rely on what’s going on in different chains. Even though there’s different chains and use in different geographies. I think there will be a consolidation around certain types of technologies in certain verticals. For certain types of transactional data, so I think I think that’ll happen. It’s very difficult to predict it depends on what vertical we’re discussing who who the participants are, you know, there’s incumbents who who want to make their own blockchain, but they’re doing it sometimes the wrong way. There’s pure blockchain teams that want to instil that but they don’t have the participation of a lot of the participants. They need the blood, the banks participants and the hedge fund participants. And so it’s those are very complicated questions, but I think everybody’s kind of innovating in their respective geography, to meet the requirements of that geography. But I do see more and more people arriving at standards. So I do see that there will be standards even across across geographies.

Jamie: I think it’s really interesting. It kind of reinforces that idea about where gravity will form. If I if I kind of extend what you’re saying it feels like whilst there can be chains or networks that are designed for a particular To respect certain sovereignties, whether they’re corporate or national, ultimately there will be a kind of a weighting in these systems about how much other networks will trust or apply a weight of trust fullness, to what comes off those networks. And presumably, economic value will flow towards those systems that have the higher level a higher order of trustworthiness.

Sergey: I think it’s a competition between how much you want to do the deal and the risk that you take, right? Somebody wants to buy an asset in some country where they don’t trust the legal system, they have a big problem on their hands, right? So they’re weighing their desire to get the asset versus the risk of you know, I won’t actually get the asset, I’ll just get my money stolen, right. And it’s a relatively similar dynamic. And so the thing that I think people should do is they should architect out their blockchain systems to enable usage both for their internal and local requirements and for usage by the outside world because they need to meet them. requirement if they have any chance of people using it in the future for basically international business, which is the type of business you know, globalisation has made made that the way that people work today, even in the crypto space, it’s a completely global, completely global industry, exchanges and every basically every every part of it. So you basically arrive at a place where if you build a blockchain system, or the smart contracts in the system work in a way that’s very easy to tamper with, you diminish the usefulness of that system for external parties. And that’s a serious loss, right? Because that’s antithetical to what the system is supposed to achieve. So I think as long as the system achieves that and achieves that, at a high level of cryptographic proof, using well made software, well, you know, implementing certain key standards, and importantly, the contracts on those systems interact with data properly, and they function properly as well. If those two requirements are met, both blockchain functioning in a tamper proof manner and the contracts on The blockchain functioning in a tamper proof manner with the help of an Oracle mechanism that that makes that possible. That’s when you arrive at a place where, okay, I have my locally generated chain for my vertically focused kind of use case of supply chains or derivatives in my specific country. But everybody can interact with that, right? So people can still interact with that the global market of stable coin holders can still use my smart contracts on that chain. Will those people eventually say, you know, maybe we don’t really need to run a chain, and we need to go to this larger, bigger public chain that has the scalability properties and the privacy properties, and all these other properties that that we had in our local smaller chain? Yeah, maybe maybe they’ll do that. That’s very possible. Obviously, from what I mentioned, there’s a lot of properties that need to be in those chains for them to do that. But yes, I think the important thing is that in the medium term, whatever people build as their locally focused very enter their industry focused variant. That both the blockchain works in a way that meets the requirements of a blockchain. And the smart contracts on those chains interoperate with the real world in a way that they meet the definition of a smart contract, in the sense that they’re actually tamper proof.

Jamie: Yeah. Well, Sergey, it’s been fascinating talking to you. Thanks for coming on. I think you and chainlink and the team that you have there, your living case study of success in web 3, we reference you all the time in our accelerator and the kind of first time founders that we’re working with. And I think you’re really helping the space cross over into your mainstream industries and break out of just kind of this crypto echo chamber. So thanks for coming on. And I look forward to watching chairman’s ongoing success.

Sergey: Great, thank you very much for having me. Jamie. Great chatting with you again. Thank you.

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