StakerDAO Interviews: Luke Youngblood
Interview Transcript
Christian Arita:
Hi, Luke, how’s it going?
Luke Youngblood:
It’s going great. Good to see you again, Christian, how are you?
Christian Arita:
Good, good. Always good to see you too. Alright, Luke, first question, what’s important in governance, what defines whether a protocol has good governance?
Luke Youngblood:
I think it’s important to think about what governance topics or proposals you should vote on first. So, many Defi protocols today are initiating governance for every single action they take and that would be very similar to the CEO of a Fortune 500 company, requiring shareholders to vote for every hire they made or every business decision they made on a day to day basis. So, what I think is really important in governance is to first define what are the key measures that participants should be voting on because we should only be voting on things that are important that require community consensus. So, this might be something like an interest rate model, or reserve requirements for a DeFi protocol. Those are rather important governance proposals and should probably be voted on by the community. But you wouldn’t necessarily want to vote on every hire that a project makes, for example, should a project hire a front-end web developer? That seems like a little bit too much minutia, and it could lead to governance fatigue.
Christian Arita:
That makes a lot of sense. Thank you. Second question for you is what makes a good proposal in your opinion?
Luke Youngblood:
So, a good proposal should have a lot of research behind it. So, it’s always nice when a proposal arrives and there’s some economic research that has gone into the proposal. So, participants in governance can read that research and decide based on the data in front of them, whether they should vote for or against the proposal. Another nice feature of a proposal would be that there is code attached to the proposal. So, if it’s a smart contract upgrade, perhaps there’s a working prototype of code attached so that we know the proposal is feasible or possible to implement in smart contract code. Oftentimes, I’ve seen proposals, where there’s a lot of thought, put into the proposal itself, but it may not be technically possible to implement and so if the proposal passes, that leaves the team or the protocol implementing the proposal with the challenge of actually making a working prototype out of that proposal, that can be really difficult sometimes.
Christian Arita:
Third question for you. How do you make a decision about a proposal?
Luke Youngblood:
So, I typically like to read economic research from key participants in governance. So, for example, the team over at Gauntlet led by Tarun Chitra, they do a lot of really great economic simulation and they will often post their research on compound governance proposals. And so, you can read the research and you can sort of learn whether this proposal would increase stability in the system or perhaps decrease stability. So, I often look for key stakeholders who have written their own thoughts on the proposal as to whether it’s a good or a bad thing, they have their own opinions. And I’ll usually read those and that helps me to make up my mind as to whether I want to vote in favor or against a proposal.
Christian Arita:
Thank you. Two more questions for you. What skills or characteristics do you think future crypto governance leaders should embody?
Luke Youngblood:
That’s a great question. I think there’s this really interesting dynamic where future leaders need to be skilled in multiple areas. For example, a really strong technology leader that has experienced with smart contracts could lead a project but they also need skills in economics and finance and understanding traditional finance constructs, things like bonding curves and interest rate models. Bringing those two skills together, the technology skill set and the finance skill set could be very powerful for a DeFi leader. In addition, I think that DeFi leaders really need strong communication skills, they need the ability to be able to share a vision. So, whether that’s through governance proposals, writing effective governance proposals and communicating the intent of those governance proposals is a very strong skill that must be developed. So. I think having those three things would lead to a very successful project.
Christian Arita:
That makes a lot of sense. Thank you. And last question for you. What are you most bullish about in the Defi ecosystem, whether on Ethereum, tasers, or any other networks?
Luke Youngblood:
What I’m most bullish about are the combination of two things, Proof of Stake consensus protocols at layer one, and the combination of that with decentralized finance applications like lending and borrowing in decentralized exchanges. The combination of those two things is going to be really powerful over the next few years. And I think there’s a few reasons why. For one, it’s clear now that with Coronavirus and a lot of government upheaval around the world, we’re going to be in the next few years, I think we’re going to be in a very difficult and challenging economic situation globally, that might lead to negative interest rates. And we’re already in fact, seeing negative interest rates across Europe. German banks are now paying a negative interest rate to savers that are holding their money there. So, that’s going to drive retail investors to want to find more attractive forms of yield. And they can achieve that by participating in proof of stake consensus, they can earn a yield for helping to secure these new layer one networks, including Ethereum 2.0, which is launching later this year. And then combining that with yield opportunities from decentralized finance applications like lending and borrowing is going to be really attractive for retail investors. So, I’m very excited to be a part of that because I think that, in general, we’re going to see a huge wave of retail interest in decentralized finance. And I think combining that with proof of stake just makes things even more attractive.
Christian Arita:
Thank you for your time, Luke. Always great to have you here.
Luke Youngblood:
It was great to be here. Thanks, Christian.
Christian Arita:
Luke Youngblood, Coinbase custody.
Luke Youngblood
Staff Software Engineer at Coinbase Custody
Luke is the founder and CEO of Blockscale, an early pioneer of blockchain and crypto technologies. In 2018, he helped launch the Tezos network by creating the staking infrastructure for the Tezos Foundation, becoming the largest decentralized proof of stake validator in the world overnight. Since then, Blockscale has successfully generated over 20 million XTZ in baking rewards and operates highly available API endpoints for Tezos that are used by major wallet providers. Luke currently works as a staff software engineer at Coinbase Custody, where he launched Tezos Staking Rewards.
Christian Arita
StakerDAO community member
Christian is responsible for the research, proposal development, and product implementation of STKR, BLND, wXTZ, wALGO products by StakerDAO. Prior to working within crypto full-time, Christian worked at Deutsche Bank in research covering Global Macro and Equity Strategy. Christian graduated from UC Santa Barbara with a degree in Economics & Accounting and he lives in San Francisco, CA.
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