In an exclusive interview with cryptonews.com, Anthony Georgiades, Co-Founder of Pastel Network, talks about Web3/NFT security, the importance of decentralized storage, and the current state of the NFT market.
About Anthony Georgiades
Anthony Georgiades is the Co-Founder of Pastel Network, a fully decentralized, developer-friendly layer-1 blockchain serving as the preeminent protocol standard for non-fungible tokens (“NFTs”) and Web3 technology. While performing his duties as President, Anthony is also a General Partner at Innovating Capital, a technology fund focused on disruptive companies and digital assets that have incubated Pastel Network since day one. Anthony previously spent time on the investment team at First Round Capital and on the operations teams of various startups. He studied finance, management, and computer science at the University of Pennsylvania’s Wharton and engineering schools.
Anthony Georgiades gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication, provided there is a credit to www.cryptonews.com.
Highlights Of The Interview
- Web3/NFT security
- The importance of decentralized storage
- Struggles creators face in the NFT space and solutions to addressing those challenges
- NFT use cases beyond art, such as within DeFi
- The current state of the NFT market and where we’re headed
Full Transcript Of The Interview
Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We are buzzing as always and today my guest is coming in hot from the one and only Nantucket. We’d love to see it. Today we have Anthony Georgiadeson the show today. Co-Founder of Pastel Network, a fully decentralized, developer friendly layer-1 blockchain serving as the pre minute protocol standard for nonfundable tokens and Web3 technology. While performing his duties as President, Anthony is also a general partner at Innovating Capital, a technology fund focused on disruptive companies and digital assets that has incubated Pastel Network since day uno. Anthony previously spent time on the investment team at First Round Capital and on the operations teams of various startups. He studied finance, management and computer science at the University of Pennsylvania’s Wharton and engineering schools. Been a hot minute. Pumped to have you on, Anthony, welcome to the show, my friend.
Anthony Georgiades
Yeah, great to be back here.
Matt Zahab
How sweet are summers in Nantucket?
Anthony Georgiades
There’s nothing like it. It’s beautiful.
Matt Zahab
It’s all world, eh?
Anthony Georgiades
Yeah, it’s great. Definitely feels like a good part of the country, for sure. Very much so summer vibes.
Matt Zahab
How does it work going from Boston to Nantucket? Is it just you jump on a quick ferry, take a PJ? Like, what’s the most sort of common means of transportation?
Anthony Georgiades
Yeah, I actually go from New York, so there’s a bunch of flights, a bunch of easy flights. There’s ferries you could drive and take the ferry across through Boston that make it very accessible. I think a few years ago it was a little bit harder to get here, but nowadays, I think post COVID, it’s become a hot spot.
Matt Zahab
Besides the obvious things, why did it blow up post COVID?
Anthony Georgiades
Well, I think if you think about it, you have a couple of large cities around here. You have New York, Boston, some of the other East Coast cities. And if you’re on the West Coast, there’s a lot of outdoor activities, there’s a lot of things to do on a day to day basis. But the northeast, there’s not so many destinations like that. I think obviously you’ve had the post COVID trends. A lot more people are getting outside, hiking, swimming, being a lot more athletic and whatnot. This is just a really kind of good hub for a lot of that stuff.
Matt Zahab
What a treat. What’s the golf course? Nantucket Country Club or something. You ever been there?
Anthony Georgiades
Yeah, there’s Nantucket Golf Club and then there’s Sankaty.
Matt Zahab
I’ve heard those are absolute tracks.
Anthony Georgiades
They actually have a public course made a comment, which is really nice as well.
Matt Zahab
Yeah, if I go out there, the clubs will definitely be coming with me. But hey, I’m sure you and I could spend a whole pod on golf, but let’s jump into that to some good tech, crypto NFTs and finance stuff. I think a good place to start, you have a great Twitter and you are very vocal in regards to the current state of the US economy, how much of a shit show it is, the bank runs. You have some great threads where you sort of relate these to earlier times in life where we’ve seen certain patterns and certain similarities. Let’s just jump right into that. What’s your two cent on the current state of the US economy sort of the global economy, all the bank runs? Like, what the heck is going on right now?
Anthony Georgiades
It’s extremely complicated. Right? I think that the biggest thing that’s made this confusing is we live in a debt based, non free risk asset market. And the way that everything has been structured so far to date has been predicated around this idea that effectively you have an external party who is going to control both M0 monetary base and M2, the broader money supply. Historically those have been relatively stable entities. We’ve been able to use economic theorems to predict how printing of money would flow through the economy, how we might be able to control things like inflation and interest rates and things like that. And whereas before the monetary base itself, money being held through the system was more responsibly held by banks and financial institutions who would basically shore up balance sheets and seek profitability. Today, going back to really the onset of the fractional reserve system, M0 has been multiplied throughout the credit system. And the issue is we’ve been through a tenure of extremely low rate, high persistent low rate environments for a significant amount of time. So when you’re in a scenario like that and you’re a banking sector, you’re running a bank, whatever it might be, and you’re seeking yield, it actually adds a compounding parabolic effect in terms of how much a single dollar gets multiplied through the system. Guys getting posted as collateral, as being lent against and so on and so on. And so we’ve seen a little bit of a cascading factor here. It’s a little, what I would say scary. And there’s a little bit of a paradox with respect to both how the Fed has effectively managed the inflationary pressures. Now, if you go back to early November 2021, right? For almost twelve plus months, they had been saying that inflationary pressures are highly transitory, they’re caused by supply chain disruptions and very systemic short term pressures that are going to subside and everything’s going to go back to normal. Right? Things are costing more money because ports are shut down in China, and it’s harder to get raw materials, and there’s basically a supply chain. Ingested inflation that’s driving a lot of assets to be completely hot right now. So when you’re getting guidance that inflation is going to be effectively reversed on its own, and not only that, but the Fed guides that there will be no interest rate hikes for the foreseeable future. If you’re running a bank, if you’re a chief risk officer, if you’re effectively in charge of monitoring the overall book itself, the book of assets, the book of hedges, whatever it might be, and you get that guidance and you’re also seeking and grinding out every single basis point of yield, you’re not necessarily thinking about diversification. You’re not thinking about hedging. So a lot of people are looking at the banking sector and saying, these guys were negligent. They were grossly negligent in terms of the assets they were purchasing and how they purchased it. But the thing that people forget to see is that it isn’t necessarily a symptom of negligence from the banks as much as it was terrible gross guidance from the Fed, in tandem with allowing the fractional reserve system to grow nearly 20X in a few years because of the printing of money and because of how that money gets multiplied throughout the system itself. Right?
Matt Zahab
What’s the solution here? Again you’re always told, everyone’s always told, don’t worry about things that are out of your control. Obviously this is way out of year and I’s realm like you and I cannot perhaps you could, but me, no, there’s not a snowballs chance in hell that I can have any impact on this whatsoever. But there’s millions of average Joes like myself who are trying to figure out what’s the next step. Is it just going to be exponential inflation. Are we finally going to see rates raise even more? What’s going to happen? Or is it just going to be a never ending cycle of just money printers always just going to go burn. We’re just going to keep printing and printing until a chocolate bar is $10.
Anthony Georgiades
Yeah. Inflation on its face value is not a bad thing, which is why we have target inflations that range in ebb and flow from anywhere from as low as 2% to as high as 5%. Right? Inflation at its core is somewhat of a positive for the broader growth of the economy itself. And it means things are kind of moving in the broader right direction, grabbing and flowing. You don’t want to have a deflationary period. On the flip side, you don’t want to have this period of hyperinflation where things run out of control. So I think the problem is and a lot of the federal policies that we’ve seen to date have been very politically originated as well, it’s not necessarily such a shock by any means that the policy completely 180 flips from transitory to non transitory. Right? The Fed officials are some of the smartest economists in the world. They know what’s going on. They know that there’s a balance. There are some supply chain driven factors that are going to wane and there are some demand driven factors that they can control. Right? By basically getting some more slack in the labor market by basically increasing the rate of unemployment. Right? People think unemployment should be a low unemployment is good. A low unemployment is good to a certain extent because obviously too high of effectively employment rate per participation rates will make it extremely difficult to actually seek a procure participation in certain jobs which in and of itself strives the cost of living for everyone else. Right?
Matt Zahab
Never thought of that before.
Anthony Georgiades
Yeah, that’s a huge reason if you think about it, right, think about the last couple of years. Just look at the developer market. There was very low unemployment rates and also a kind of weird participation rate that we haven’t seen before. A lot of that has to do with more of the gig economy type jobs, a lot of the contract jobs. So participation rates are really hard to decipher and get through. But yeah, when there’s not an off, when there’s not enough actual demand for jobs out there and people are effectively trying to fill those slots, what do you think happens in terms of the overall compensation or the starting wages or whatever it might be? We have one company in particular in our portfolio that’s a manufacturing business. During COVID it was very difficult to get people to come work. And we actually increase the dollar per hour by 2X. We increase that wage by 200%. So that’s great for employees but what people don’t realize is that cost doesn’t go into an abyss. It just doesn’t just sit there. Pass through to goods, it passes through all the way to end products. And a lot of that’s also what drives inflation as well. So it becomes this kind of spiral effect that goes out of control. Back to your point. I think that the thing is, overall the system we have today is not sustainable. It’s not reliable. And the money printer can keep going and keep going until it can’t. And we might get out of this scenario right now. We might be able to ease our way out of it. We are still living in a debt based economy globally. But that’s not to say that we’re going to be able to do this again. Right? We saw what happened with obviously the debt ceiling crisis and they’ve been playing debt ceiling roulette since as long as we can remember. Of course, there’s some sort of omnibus resolution, they’re going to figure out a way to extend things, which is what they did and what they’ll do time and time again. But as the world starts to maybe look at the US dollar, as we did with post Russian sanctions, one thing that people don’t necessarily look into a little bit more. But it’s not necessarily so surprising that a lot of countries in the Middle East decided to rebase their assets with, instead of the US dollar, the yuan or some sort of other asset, right? If we’re going to sanction Russia, what’s going to prevent us from sanctioning something else? And this goes back to some of the principles of money and really of crypto and digital assets, these sort of decentralized goods that can’t be controlled. A dollar is supposed to be completely permissionless and censorship resistant, and all of a sudden my dollar is sanctioned. Right? It’s a scary thought. And so there’s a lot of things going on right now that I think, generally speaking, as the Fed moves out of this weird time, what could really prevent this from happening? You have to have basically sustainable monetary policy. And if the Fed really wanted to do its job to an extent, that a lot of and I’m not a professional economist, so a lot of this stuff, what does my opinion matter? But from what I hear from a lot of individuals that have really studied this and focused on it, is what’s critical at a point in time like this, you really do just need at some point in time to completely rip the band aid. And when we’re looking at the banking sector and what’s happened, and again, in an effort to battle the same inflation that the Fed spurred, it destabilized the system. So to provide more stabilization to that system, the Fed now had to create some sort of new tool or new policy, which then ultimately resulted in more money getting pumped in the economy, which ripped off about 30% to 40% of all the tightening that they had put into place. They almost have their hands tied here. So they could either just rip the band Aid, try to handle things in a certain fashion that would basically for sure, curb inflation, as well as enable the Fed to really reset its balance sheet in such a way that it might be sustainable moving forward. Now, that would be very painful for a few years, but it seems as though they’ve decided to continue to be reactive. They’ll look at the data as it prints. They’ll look at the CPI data, they’ll look at the labor rate data and they’ll stay reactionary and on the course in that respect. The last thing I’ll say on this point is I think on the positive note that we haven’t seen the full effect of yet, the Fed did raise rates very fast with extreme velocity and they held rates for a good amount of time. And those accumulated weight of rate increases should be enough to support some of that resetting and getting us back into a more comfortable position, which is honestly, it’s fascinating to watch. Obviously, the economic data versus the market data. People don’t realize if you’re buying stocks in this type of world, a lot of times bad economic data right now is good for your growth stock portfolios because bad economic data means the Fed’s doing their job. They’re going to reduce rates faster and that’ll fuel growth of high risk growth on assets.
Matt Zahab
Interesting. Crazy world we’re living in, dude. That was a great breakdown by the way. Thank you for that. Let’s jump into the bread and butter to the show the crypto stuff. Now I want to jump right into Pastel. You and the team created next gen NFT focused blockchain, certifiable, authenticity, permanent storage, very low fees, great community. What was the need behind this? There’s so many not NFT focused blockchains per se, but blockchains that are doing a decent job of housing the NFT world. Why did you guys create Pastel?
Anthony Georgiades
So if you go back a few years, 2017, 2018, you had a rise in general purpose layer-1ss. You also had basically new emerging standards like the ERC721 standard on Ethereum. It became very clear that there was a lot of innovation and focus on a very specific aspect of the digital asset world and what that future might bring in terms of fungible, tokens use cases around DeFi use cases around financial products. Products that have extremely high turnover and require kind of high velocity, high transactions per second. If I want to run a DEX it needs to be as fast as possible to prevent a lot of execution risks around front running certain attack vectors, things like that. So I need a super fast blockchain for that. I need something with thousands of TPS. If I want some sort of product that might work from a point of sale transaction, the same thing, I need instant settlement, right? I need quick remittances, cross border, etcetera. And so there’s been a lot of tremendous innovation in that aspect of the world. But one aspect of it, especially when the ERC721 standard emerged, had to do with really this concept of not necessarily fast moving data, but maybe slow moving data that is not necessarily just changing an account ledger. Matt owns this, now he transferred it to Anthony. And these are fungible products, etcetera, that can be done in a trivial way. Now, speeding it up and preserving a lot of decentralized assumptions is difficult. But now what if you say that I have a significant amount of data that I also want to store on chain and I want to be able to transfer in a completely trustless, decentralized fashion? And now you start to sacrifice a lot of assumptions with respect to the amount of data you can store in a specific block. How you authenticate that data, things like that. And so the point being, when we looked at really what the future of the NFT ecosystem was going to be, and we’ve seen it as PFPs, we’ve seen it as projects of 10,000, and we’re really just getting started with respect to a number of new emerging use cases. Gaming skins, gaming products, real estate, people put deed of trust on the blockchain, legal products, IP. We’ve seen, obviously use cases with Nike and Starbucks recently as well. All of these use cases have certain assumptions around the type of data that needs to be preserved and how it needs to be preserved. And really Pastel was born out of the vision for the demand and need for these types of use cases in the Web3 ecosystem, but also that there was a giant gap in a hole with respect to how existing general purpose blockchains like layer-1s like Ethereum and Solana could solve these problems. And so, more specifically, what am I speaking about? Right? The things that Pastel solves, Pastel is a completely decentralized layer-1 blockchain, and it’s operated by a series of validator nodes. We call them supernodes. These are similar validator nodes like you’d see on Ethereum or whatnot. But they also require users to run clients that have a significant amount of storage requirements and a significant amount of compute requirements, because they’re doing and providing certain infrastructure which I’ll speak about in a second in a very robust manner. They’re not necessarily just storing the state of the blockchain and transactions and facilitating simple DeFi, dApps and things like that. Supernodes on Pastel service really kind of two core protocols that we’ve integrated with across the ecosystem. The first is Cascade. Cascade is a totally decentralized permanent storage layer. And this, as you can imagine, is extremely important for NFT use cases. So, as we’ve seen NFT use cases today, just very simply put, take FTX, for example. FTX created a series of NFTs, and they had basically just simple token IDs living on various blockchains. Those token IDs, which you could swap in a very easy way, they don’t hold the data. They don’t hold a board ape or a file or a game or whatever it is. They just have a reference or a pointer to an off chain storage provider. In this case, FTX was doing it, I think, in like AWS on S3, right? So all the data was stored in a centralized server. So when FTX goes down and they’re unable to actually their AWS account is seized, all of those NFTs, those photos are lost. So if you go to click on one of those NFTs, the picture now says basically it takes you to the link of the bankruptcy proceeding site. Well, that NFT that you thought was completely decentralized, permanent living forever is now in the abyss, right? I still have my token ID, but from the smart contract collection that actually minted that ID. But what does that do me if the data isn’t there? And so this is something that we kind of foresaw as being a problem in the space. And so the way that cascade works is when you mint an NFT, let’s say we have a partnership with OpenSea, for example, right, as you mint an NFT on the Ethereum blockchain. And the way it works right now is some of our partners include Polygon, Polkadot we’re doing a lot in the parachute ecosystem right now, Avalanche as well, with various dApps. So these players are able to actually make a Web3 API call, send the data to our network. And what our network does is we take in a file. Imagine it like we run it through like a shredder. Right? So now we’ve taken a file, we’ve broken it up into a bunch of different pieces. We then run all those pieces through a bunch of photocopiers. Think about it that way. And again, it’s much more sophisticated than that. We use LT encoding techniques and algorithm called RaptorQ. I mean, yeah, it’s really intensive stuff. We copy all that stuff a bunch of times. And then we randomly distribute and shard each of those copies of pieces of the original file across every validator on the network itself. So every validator is responsible for holding a random fragment of chunks for every given file on the system. So those chunks will live there forever. Right? We have other things like storage challenges, which prevent validator nodes from not storing what they’re supposed to be storing, and something called self healing, which enables us to recreate chunks if for some reason there’s a catastrophic event and 50% of the supernodes go down all of a sudden. And so we’ve really designed this to be a completely permanent, decentralized, highly redundant and honestly privacy preserving store solution for these types of use cases. And again, this could be a collection of 10,000, it could be PFPs, it could be on chain decentralized exchange data that we need to take snapshots of, which we’ve been doing with a couple of DeFi projects and whatnot. And so it’s really exciting, and it’s one of those areas of the market where it doesn’t sound sexy, it doesn’t jump out to you. Right? It’s not necessarily really hot thing per se, but it’s absolutely critical to the long term viability and longevity of really what Web3 is supposed to be.
Matt Zahab
Wow. Lot to decompartmentalize there. That was great. We’re going to take a quick break, give a huge shout out to our sponsor of the show PrimeXBT. When we get back, we’re going to jump into more NFT stuff use cases beyond our current state of the NFT market. Struggles that creators face in the NFT space and solutions to addressing those. But before then, huge shout out to PrimeXBT. Longtime friends of cryptonews.com and longtime sponsors of the show. PrimeXBT offers a robust trading system for both beginners and professional traders. Doesn’t matter if you’re a rookie or a vet, you can easily design and customize your layouts and widgets to best fit your trading style. PrimeXBT is also running an exclusive promotion for listeners of the Cryptonews Podcast. After making your first deposit 50%, that is five 0% of that first deposit will be credited to your account as a bonus that can be used as additional collateral to open positions. The promo code is CRYPTONEWS50. That’s CRYPTONEWS50 all one word to receive 50% of your deposit credited to your trading account. Again, that is CRYPTONEWS50 to receive 50% of your deposit credited to your trading account. Now back to the show with Anthony. Let’s jump into the more consumer focused aspect of this and some of the struggles that creators are facing in the NFT space. It is incredibly difficult to mint non basic NFTs. And then there’s protecting their NFTs, protecting their rights, the decentralized storage aspect which you talked about in security. How are you and the team helping creators face these struggles? Because there are dozens of them and it’s an absolute gong show right now.
Anthony Georgiades
Yeah, definitely. So one thing that I mentioned, obviously our storage protocol cascade. The other aspect of it is something called Sense. And this will segue into your question, but Sense is also another protocol that these supernodes are running and it’s our near duplicate NFT detection protocol. And we say near duplicate for a reason, because of how it’s being built. We spent the last few years developing and researching and really iterating on a deep learning based model that’s actually a series of models which enables a user whenever they upload an NFT. And what we end up doing. We take that NFT and we transform it into effectively, you can almost think about it like a fingerprint. So we run it through five different models and we basically use the outputs of those models to concact this long, almost kind of array of digits. It’s like a multidimensional vector. So cool, it’s crazy. But when we have this vector or this fingerprint, it it enables us to then use statistical techniques to compare really the probability that a vector is somewhat similar to another vector. And really when I say vector, I mean the original file all the way down to the fingerprint of it. So this is an extremely powerful tool that’s robust against crazy transformations. So if you go to our YouTube, for example, the easiest way to visualize it is you go to our YouTube, you look up our video, we do a side by side comparison of our tool versus the OpenSea tool. And you can just see the OpenSea one is basically they’re looking at perceptual hashes. And if you upload a file, then you add a little dot and you upload it. It picks it up as a duplicate. That’s easy to solve, that’s easy to do. But when you have a file and you add certain changes, sometimes it can be invisible, sometimes it could be more robust, like blurring out certain blobs of it, adding basically random filters or all these different pieces of data around it, right? OpenSeas fails that challenge. They’re only looking and saying, oh, it’s not a duplicate, we don’t see this image anywhere else. Our system is a little different. It will basically assess the probability that two images are similar to similar. So it takes the original, gets the second one, it says this is roughly 70% similar, and then it actually gives you the list of images below it, right, of, hey, we picked it up as this one. It’s a potential duplicate of this, right? This is extremely important for a lot of emerging use cases, especially those that deal with copyright infringement and things like that. The fact that this system runs in a completely decentralized way, it can’t be tampered with, but we’re not enforcing any of the censorship, right? If OpenSea was to use this tool, we would just give them the data. We would say, hey, this image is a potential duplicate of this one. Take a look. You decide if you want to basically prevent it from getting listed. They might say, hey, anything that has a probability of being a duplicate greater than X percent, we’re not going to let list. They allow their team of curators to assess the relative rareness. So I bring that up to kind of segue into this consumer facing tool that we’ve developed called SmartMint. And SmartMint is a no code, easy to use, minting platform. Basically any creator around the world can go into SmartMint, create an account completely free, and basically upload their data if they have a series of pieces of digital art, if they have a game or a video or some sort of 3D renderings, whatever it might be. And they can create a custom smart contract that they own. We obviously do all the coding and stuff on the back end. We basically just deploy it and relinquish ownership back to them. But it enables them to simply click, hey, I want to mint this on Solana or Ethereum or Polygon or Binance or whatever, right? So they don’t have to deal with all the different intricacies of these different blockchains and how to mint things. And what’s my smart contract standard for Ethereum? How do I work with that? Oh, I want to deploy something on Solana. I have to figure this thing out called Metaplex. How does this whole thing work? Right? That’s all abstracted away. They just click a button. I want to mint it on this blockchain, type in whatever sorts of properties or attributes or traits, and these would be difficult characteristics and things to actually solve if you wanted to code it, you have to do it in a certain way and sequence it across every single token within the collection itself. But then all that data on top of it gets stored on Pastel’s cascade or storage system and also runs through Sense, the duplicate detection system. And they get to basically add that data as metadata fields to the underlying token itself. Click a button, deploy the contract. They can basically, if they want to create a Drop, they get a website that says, hey, here’s my Drop site. They can market it, have people mint NFTs. From that Drop, you can create an Open Collection contract, click a button to go list it on OpenSea, and so on. And so really, this tool is meant to basically solve the two issues of the marketplace right now, as we see it. Number one is, if you wanted to create custom smart contracts, you can’t really do that on exchanges. You can’t go to OpenSea and create a custom smart contract. You’re beholden to their existing contract standards. A lot of times you’re basically just deploying an NFT to an Open Collection contract that OpenSea owns, and you’re very limited in terms of the trades, characteristics, attributes, metadata fields, and whatnot you can add. If you wanted to do all that fancy stuff, the only way that you could do it before was really to effectively figure out yourself how to actually deploy a smart contract. You have to figure out how to work with things like Infuria or Alchemy or in the case of Solana, figure out Metaplex standards. And it’s just a massive technical barrier for most creators or curators or collectors even. So, we created this tool to really bridge that gap and provide for the ability for users and creators to empower themselves and not necessarily be limited by existing exchanges, but also not necessarily face the challenges of a lot of the technical implementation details that persist today.
Matt Zahab
That takes so much friction. The onboarding process, the actual process of being in the weeds. It’s crazy, the amount of use cases. What about the current Save The NFT market? It’s been dead and dire for heck, a while now. I guess when BLUR popped off, what would that be? Five, six months ago? You know, that was some news, but I feel like post BLUR, there hasn’t really been anything big like what’s going on. You think we’re ever going to see a little uptick or a little change? Or are the art based degen NFTs, are those valuations and metrics here to stay and just going to be buzzing close to the ground for the forever future?
Anthony Georgiades
I don’t even know if we’ve even seen yet the onset of art based NFTs and digital artists coming into the space, because, again, there’s a lot of these technical challenges that they have yet to face. We’ve seen, obviously, a ton of PFPs and images, but most of the liquid collections like Moonbirds right, that’s not a digital artist based collection or even Board Ape right? They were able to capitalize on an interesting part of the ecosystem at a really important point in time in history, ownership of NFTs as membership to exclusive communities. When the world is basically rampant with COVID and lockdowns and things like that, and we’re coming out of that and people are seeking communities, people are seeking engagement and online channels and things like that. And getting access and owning one of these NFT, me, that exclusive community base, I can tout it as my profile picture. I can get access to this discord server. I can speculate on the future utility that will come from holding this NFT. So I do think that we’ve moved away from that aspect of the world and I think there will be some with staying power, of course, certain collections, certain communities that continue to prove out to be a lot of very successful Pudgy Penguins, even. Actually, it’s one of the NFTs that I bought a while ago. I put it on my Telegram photo and a bunch of other things, and I kind of did it as a little bit of like a joke bit. But it forced me to follow what they’ve been doing, and they’ve actually been doing a tremendous job building their community, just building effectively decentralized governance. And I’m actually very impressed with how they’ve been able to actually build in this time. And I think that that’s one of the important things. So you will have some of these communities that are governed by that have constituents, stewards, who are long minded in terms of what the project can and will be. We’re continuing to develop out these community based membership ownership as membership type channels. But I think for the most part, we’re moving away from that. And I think to the point earlier, digital art, we still haven’t really seen a tremendous emergence and entrance of digital artists globally. We’re making use around NFTs. A lot of it has to do with the limitations that we talked about, from technical challenges to also just, I need to get Ethereum to my account to pay for gas. Now, how do I do this? Got to get wire money from my bank account to Coinbase, Coinbase of this and that. So there’s a lot of these things that have also inhibited and made these things a little bit harder to solve. But then beyond that, there’s so much building going on and innovation happening around, really what I’ve view as the long term true use cases of NFTs, which for all intents and purposes, were the origins of the ERC721 standard to begin with. When the ERC721 standard came about, it was actually to help facilitate a lot of security token offerings. Where you might need to post certain assets on chain, and those assets were not going to be fungible. There are more use cases being discussed around DeFi and just general financed and financial products that would be basically unique and certified buy NFTs themselves. And so we haven’t really seen a lot of those take extreme footholds yet, but we’re starting to see a lot of progress and innovation in that aspect of the market.
Matt Zahab
What about non NFTs for a sec here? What’s your take on what’s going to happen for the next six months? By the time this episode air is going to be pretty much end of June, so I guess Q2 is wrapping up. Q2 Q3 H2 of 2023. Any hot takes for us finance wise can be TradFi, can be NFTs, crypto as a whole, specific DeFi areas. You can go super crazy, perps, whatever, but any forward thinking hot takes in an economic sense.
Anthony Georgiades
Listen, I love a lot of what’s going on in the crypto and Web3 space right now across the gamut. There’s so much happening in terms of specific kind of tokens or trends or whatnot. It’s obviously always difficult to predict. Our investment strategy is we’re stewards of the network that we get involved in injective protocol, for example. I’ve been extremely impressed by the work that they’ve done, and they’ve been a project that’s really just upheld the ethos of consistent innovation and building. We run a validator. We’re a market maker on their DEXes and things like that. And I think that for projects in the DeFi world, will start to see much more interest in decentralized trading. Whereas in the past, you had 90% of volume roughly was transacted by about maybe 5% to 10% of wallets you’re going to see much more retail interest and demand for decentralized exchanges as a means of both trading and buying crypto assets. So I think a lot of the DEXes that are true DEXes that are completely decentralized and aren’t just some kind of centralized funnel to an L-1 or L-2, will continue to reap the benefits of a lot of this debanking and regulation by enforcement that we’re seeing. People are getting scared. I’m getting calls for the first time ever from our investors not asking me how to buy Bitcoin, which would be interesting in and of itself, but how can I buy Bitcoin and how can I get it off my exchange and where should I store it? Because I don’t want to store it on Coinbase. And that’s something that I really never expected to hear, that you have basically traditional financial LPs institutions, etcetera, who are themselves very skeptical of the existing system. And so I think that basically will further support a lot of the progress, volume and interest in a lot of the decentralized exchanges and communities and ecosystems.
Matt Zahab
Interesting. Yeah. Crazy times ahead. That’s for everyone listening out there. Great point by Anthony. If you do have your coins on. Exchanges and whatnot, grab yourself a ledger or a Trezor or some type of cold wallet. Get it off the exchange. Write down your seed phrase in pen or even better, on something like a seed secure something that will still be alive. If your house burns down, give it to people you trust, or maybe not, but store them. Don’t do stupid shit. Be smart about it. And if the house sort of falls down, you will at least be in control of your own stuff. I really hope it’s not coming soon, but it’s not looking good right now in regard to that.
Anthony Georgiades
Well, the thing about it is this, right? It’s easy to just basically, a lot of people I find, well, they don’t necessarily practice what they preach, right? It’s easy to preach these things, but to put them into play takes time. And the problem is, things unfold so fast, right? You have money on Silicon Valley Bank, the next day you can’t withdraw it, right? And fortunately, that bank in particular, every depositor was made whole. But that might not necessarily really be the case if an exchange is seized. And we’ve seen firsthand what can happen with banks like First Republic and also within the crypto world when a run starts, especially when now, today, you’re on your phone and it’s so easy to make withdrawals and pull money off, it’s impossible to effectively stop the run without just effectively freezing all withdrawals. And at that point, you’re out of luck. So to your point, the best way to really be safe is to just take the time, take a weekend, take a few days. I’m constantly just rotating things. And it’s obviously an investment, but it’s an investment in terms of that time, in terms of preserving those assets and knowing that they’re going to be safe and secure and they’re not susceptible to on chain centralized entities that could go belly up or could be told to shut down at a Whims notice.
Matt Zahab
So true. Again, if you’re going to dance in the crypto arena, you got to unbank yourself. And these are things you don’t have. To do in traditional finance. This is why we pay high fees and give a lot of points to the ones running TradFi. But if you’re going to join Web3 and Crypto and Blockchain and do it yourself, you got to do it yourself. So it’s the way she goes. But Anthony. Great episode, man. Really appreciate your time. This has been a lot of fun, learned a ton. Before we let you go, can you please let our listeners know where they can find you? Pastel network and Innovating Capital online and on socials.
Anthony Georgiades
Absolutely. So definitely follow me on Twitter. It’s @panthonylg you can follow obviously, Pastel Network @PastelNetwork. And then the same with Innovating Capital at @InnovatingCap. Both of those BIOS are also in my bio as well, so you can find those there, obviously check us out across our socials. If you’re following Pastel, join our Discord. Join our Telegram. We’re constantly talking about updates. I always say, look at her GitHub. The proof is in the pudding there leases. Just so much going on. Speaks for itself. That’s the beauty of this industry. You’re not a centralized Web2 company where you’re behind a curtain. What are you guys building? How are things going? Everything’s there, everything’s open source. You can see. Try yourself, test yourself. Is it working? Is it not working? But yeah, I would say definitely Twitter and for Pastel, definitely get on Discord and take a look at your GitHub.
Matt Zahab
Love that, Anthony thanks a lot, man. Really appreciate it and can’t wait to have you on for round two.
Anthony Georgiades
Sounds great, man. You as well.
Matt Zahab
Folks, what an episode with Anthony Georgiades, Co-Founder of Pastel Network, dropping knowledge bombs left, right and center. Current NFT market, NFT native blockchains, US economy, you name it. Decentralized storage, NFT security, we covered it all. Hope you guys enjoyed this one. I certainly did. If you did, please do subscribe. It would mean the world to my team and I. Speaking to the team love you guys. Thank you so much for everything. Justas my amazing sound editor. Appreciate you as always, bro. And to the listeners, love you guys. Keep on growing those bags and keep on staying healthy, wealthy and happy. Bye for now and we’ll talk soon.
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