36 – Stani Kulechov, DEFI KING and Founder of AAVE explains the sector and possible future

Tracey: [00:00:19] Welcome to the Crypto Curious podcast designed to help you navigate the dynamic world of crypto currency. We are here for anyone who is interested in crypto at all. Maybe you've already dip your toe in the water. No. Maybe you don't know anything about it. And this is the very beginning. But we recommend heading back to the early episodes to get your footing. However, if you think you're ready to dive headfirst, then let's do it. So this week the boys have gone ahead and done an interview without me. They were lucky enough to speak with Stephanie Kulikov. So Stephanie was the creator and founder of AAVE Protocol. Now they'll speak a little bit about our veins, so get ready to hear all about it now. I've gone ahead and listen to this interview, so I won't tell you too much about it, but it is a really good one. I didn't expect to love this one as much as I did, but Stenny was amazing and for me some highlights. He really explained defi well. So listen out for that. And he's also got something amazing called the lens protocol. Now, lens protocol is a decentralised social media. This is phenomenal. Have a listen about that one. He also goes into detail about Multi-Chain Wells and how we're going to bridge networks, which is amazing. I won't go into too much and give it away there, but have a listen and see what you think. This is Blake and Craig speaking to Stani, creator of the protocol. 

Craig: [00:01:39] Today, Blake and I are very pleased to be joined by Stani Kulechov CEO  welcome to the Crypto Curious podcast. And thank you for joining us today. 

Stani Kulechov: [00:01:50] Thank you for having me, Craig and Blake. 

Craig: [00:01:52] All good. So I guess we'll kick things off. I'd love to hear how you got started in crypto. What brought you to where you are today? [00:01:58][6.0]

Stani Kulechov: [00:01:59] It was very unintentional. So I've been always interested in technology. I've been basically excited about programming in and kind of like high level programming languages and building applications through my teen years. I then built servers on one of the service I've built into a vacuum cleaner with my brother. When we wanted to create a so-called loan party for our A Counterstrike tournament. So just just kind of like giving some context. Like pretty much if you want to host your own server, you basically had to create this kind of like a money server. But then later I started to get more excited about consumer facing applications and started to build more fintech applications in my early twenties, and that was kind of like a first time I was excited about like very excited about finance at that level that I wanted to actually build something for the public. That's like the challenging part was that you had a lot of regulation in fintech. So, you know, fintech was seen as amazing innovation, using technology to make payments, banking more seamless. And so a lot of issues, but there was a lot of regulation involved. So I went and went to study law instead of computer science doing my last kind of like a years of studies. I started to research blockchain as a kind of like solution to everything as it was like 2016 and so forth. So yeah, pretty much we saw everything in those days. So I started to think of like how to use blockchain in making finance more efficient and creating different kinds of financial applications. And I basically created this idea of using cryptographic assets as a collateral to borrow funds against it so that you don't need to sell your cryptographic assets, that you are in a long position. And that's how like our first application, Edlund was created. [00:04:02][123.1]

Blake: [00:04:03] Yeah, that's interesting. So just for our listeners, you're generally when you so a cryptocurrency you have to pay capital gains tax. However, if you borrow against your assets, it's a way of creating liquidity without having to sell you your crypto so you can stay long on on this amazing asset class. So yeah, that's really fascinating. And I certainly remember hearing about Flint back when it started getting some media attention a few years ago. So how did how did Flint then morph or evolve into RV and what is RV? [00:04:33][30.8]

Stani Kulechov: [00:04:34] So RV essentially is is is basically like a continuation of of inland. So the inland water was more about finding peers. So someone will come in, create a so-called loan request, someone will come and create some kind of like a loan offer. So it was more of like a order matching user matching kind of like idea of a protocol is more efficient version of that. So essentially that you come as a as a supplier and you supply cryptographic assets and then you earn instantly yield. So what happens is that you can withdraw those assets at any time. So it's sun fixed period deposits and then anyone can come and borrow other assets as well. So it's pretty much like pooled liquidity. That's the the innovation there. Essentially, every single version we had in all of it there, there's some sort of kind of like improvement. [00:05:28][53.6]

Craig: [00:05:29] Which is sort of like how would you just for our listeners, like we're pretty familiar with peer to peer lending in the traditional finance space. Would you say this is quite similar, but obviously it's on a theory and it's decentralised. [00:05:39][10.4]

Stani Kulechov: [00:05:40] It's even more further. So like peer to peer model has an issue of of actually kind of like a bit of like chicken and egg and it's just like non-fungible assets. That's, it's a different story, but it's more of actually just making things very simple as you will basically deposit funds into a bank account or something, so you're earning yield. So what we did with smart contracts, we essentially created pools where you can earn instantly, but also you can draw liquidity instantly and you can do a lot of innovation on smart contracts because you're essentially improving the current financial infrastructure. So just to give some more perspective is that when I was building fintech applications, the big difference there was that you will you were you were always innovating on the front end of the applications and finance. So the user experience in innovation, just as you were innovating in the in the back end of the finance. So you're improving the efficiency, you're improving the movement of of capital, liquidity, yield opportunities and constantly innovating. And the the most coolest part is that the whole ecosystem is open, meaning that pretty much everything is built on open source technology. You know, anyone can take the IP code, improve it, make direct contributions, change things and and just essentially create a lot of improvement in that sense. So like they constant innovation, I would say. So that's why when we say that there's a lot of things happening, they find the reason is because the barrier to entry is very low. Anyone, any part of the world can can just develop new things on top of the defi ecosystem. And this is why there is like so many things happening at the same time. [00:07:24][104.1]

Blake: [00:07:25] Yeah, no, it's definitely fascinating. So what made you want to attack this problem of, like, liquidity and lending as opposed to something else? [00:07:33][8.4]

Stani Kulechov: [00:07:34] I think maybe the reason is that it's just so good as a conceptually for me, it's more kind of like impactful. Like I think trading assets itself is very valuable. But I just think that when it comes to access to finance and thinking of impact, you know, the potential that DEFI can actually solve is that everyone gets the same equal opportunity, the same yield. No what no matter where you are, that's like one thing. But then the kind of like a next layer of of thinking, of impact is that how we can empower people in all the world and create loans that are backed and financed from from these and just finance. So like I see a lot of empowerment in credit and lending markets and then for example in trading, but both are equally important infrastructures. I just feel personally that there is more empowerment when when you find as a opportunity, you find as an entrepreneur somewhere around the world and create new opportunities. That's like a very valuable narrative for me. [00:08:37][63.4]

Blake: [00:08:38] Yeah, for sure. Now that's that's that's awesome. Stunning. It would be just really interesting to hear about some of the highlights from your journey and of a over the last five years or so. [00:08:48][9.8]

Stani Kulechov: [00:08:48] Yeah, I think that one of the highlights for us, every single product that is protocol release has been a highlight. So essentially that's our reason we we had three versions to those releases have been quite, quite significant. And there is roughly 15 billion words of value locked and secured by the protocol smart contracts across multiple networks. So that's like a very fascinating highlight. But, but, but also the fact that, you know, our team isn't actually like we're not finance experts, we're basically innovators. And we we basically just tried to solve problems and make finance more efficient. And somehow with people in our team with different backgrounds, we're able to solve like very conceptually big things. So that's like a big highlight for us that, you know, it doesn't matter what's your background, where you're coming from, you know, you can actually solve any problem if you put the mind into it and you have the right people around you. So just that's. [00:09:44][56.1]

Craig: [00:09:44] That's really awesome. Like I remember the days of ETH Land and then every single I know you guys are in V3 at the moment. Question that I had is for our listeners and for me is how does of they work like is it a Dao like what's the governance? So how do you guys get stuff done? [00:10:01][16.8]

Stani Kulechov: [00:10:02] Yeah, that's a very cool question because essentially what smart contracts are in other protocol is is a set of rules based on smart contracts, how the the protocol behaves. The interesting part is that we the the Genesis team who created the protocol, we can't actually change how the protocol acts. So we we cannot change the interest rate curves. We cannot change the risk parameters in the protocol. Those are things that we we can't go arbitrary change compared to, let's say, if you will, be hosting a social media platform or a finance platform with a database, we can we will be able to do that. But the idea of decentralisation is that once you deploy a protocol and it's governed by the idea of a DAO, you have a formalised process of how you can actually change anything within the protocol. And that includes includes their interest rate curves, assets that are being listed into the protocol, even how the protocol will be built and evolve in the future. And this is very valuable because it means that finance in general is such an important infrastructure. So it shouldn't be governed by one company or the creators, it should be governed by the public, the users that are actively using the protocol. [00:11:18][76.0]

Craig: [00:11:19] That's a that's a really key point. We've spoken about that like this whole sectors like power to the people rather than traditional finance. It's in the big banks and governments best interest. Yeah, that's awesome. [00:11:30][10.6]

Blake: [00:11:31] We've kind of touched on, you know, what you the problems that you're trying to solve but would be really interesting to hear a little bit more about one of the products that you have of a ark and how do you see that evolving over the coming years? [00:11:45][14.0]

Stani Kulechov: [00:11:45] Yeah, I think in terms of like the Ark protocol, it's it's a kind of like a new implementation of the the alpha version to markets where we have this so-called White Reserve feature. And the idea of it is that you can create a completely private market. The market itself has been deployed in the theatre network, meaning that you have the same public blockchain transparency. But the key differentiator here is that you have the so-called whitelisting functionality. So the other governance can listing white listers and it means that a white investor can actually decide to whitelist addresses that can interact with the protocol depositors, borrowers and liquidators. And in that sense, what happens is that you basically can create additional requirements on how to join the market. So currently we have as a first whitelist there, there's fireblocks, they're whitelisting, they're basically non-custodial users that has passed their compliance requirements and second whitelist are voted by the all the governance is the bank Seba Sigma regulated bank in in Switzerland. So it's basically I would say kind of like the idea is that we create this kind of like sandbox market for institutions to try the smart contract environment and get the transparency that they get from defi smart contract execution, the governance. And ideally this will give more comfort to understand what is defi and also over long term participate in the wider Defi ecosystem. [00:13:20][94.4]

Blake: [00:13:20] Right? Right. So they would be lending and borrowing from one another or they would be tapped into the large liquidity pools there. [00:13:26][6.2]

Stani Kulechov: [00:13:27] It's, it's the pooled model. So so basically it works in a similar fashion that once you're whitelisted, you can basically deposit assets and earn at the moment. So there isn't like peer to peer model here, but but it's actually completely pulled. [00:13:42][15.5]

Blake: [00:13:43] Yep. Okay, that makes sense. The next one that's really interesting as well that we wanted to quickly touch on was lens protocol. Now it's pretty ambitious problem to solve decentralised social media. And of course, there's been lots happening in that space over the last few weeks. So do you want to give us a quick overview of Len's protocol and kind of what prompted you to embark on that project? [00:14:05][21.7]

Craig: [00:14:05] Yeah, we heard you were the new CEO of Twitter. Stunning. [00:14:08][2.3]

Stani Kulechov: [00:14:08] Yeah. So, yeah, that's very, very it's very funny. That's yeah, I mean, essentially, I mean, what happened in the Twitter is that Elon Musk basically is buying Twitter, meaning that Twitter will be private by Elon Musk. The kind of interesting part is I was joking around that I'm going to be the new interim CEO of Twitter as a kind of like a similar jokey way as Elon Musk posts himself. So what happened in that sense is that I got suspended even though I published a roadmap, a 90 day roadmap to actually state, you know, what kind of things we're going to shape. Part of it was the any button that we wanted to ship later and also our support for Ethereum and S and also integrate with the lens protocol. And that's why that got me suspended and got. You also think that I pretty much lost my access to my my profile, to my audience, my followers. So the the most challenging part here is for me is that's like what we're trying to solve with last protocol is that essentially that you can actually create your profile on chain, which is tokenised tokenised as NFT, so you can transfer store it in your cold storage, whatever. But also you have on chain follow relationships. So every following is a photo NFT as well. So let's say if I follow plague, you know, hits number one pad, I get to follow NFT number one and those photo entities are dynamic. So if make updates content, the after updates will always reflect the latest content. So if I go and look at the NFT in my wallet or Opensea, I will always see the latest content. So it's a permissionless way to communicate with your audience, which is very important. Fascinating. And the idea here is that we wanted to create a protocol which solves the idea of ensuring the profile ownership and gives that back to the users. So essentially every application build on top of the lens protocol, they're curated user experiences for the protocol, meaning that if you bring a new user to your application, the whole network will benefit and same if someone at some other application will bring a user. The value here is fascinating because if one of those applications will go down or they don't display your content, that will be all. There will be someone else that might have a content curation or bring an experience that that supports your content. So this is the, the big value proposition of of lens protocol. And if we if we have the ability to own our own assets, we can also own our own profiles and also our communication channels with our audience is the same way and that's what what lens protocol is about. Yeah. [00:16:59][170.5]

Blake: [00:16:59] So what should, what's the go to market strategy here to build the protocol and they will come and build on top or a, you know, actively seeking out your partnerships with social media platforms to be able to get them to your leverage, your components of of the protocol or how are you kind of attacking that? [00:17:20][21.4]

Stani Kulechov: [00:17:21] Yeah, for us it's pretty much like our idea was to create the protocol and make it as flexible as possible. So the protocol is using a lot of and if those in its structure, the profiles are tokenised enough to his followers, but also it's very modularised. So you have follow modules, you have collection modules, so all content are collectable as NFT is as well. So if you have a latest post that you post and I like it very much, I can collect it and you can set a fee to collect it as an immutable NFT. So essentially you can drop your NFT directly in the protocol to your audience, but we want it to make it as agnostic as possible to any like social media use case. And I think the most fascinating use cases will be the ones that figure out the new way of interacting with the content. And I think we will see a lot of innovation because previously participating and building social media applications is quite hard because you need to get that network platform effect very quickly within a couple of years. Otherwise the the application might actually die in that sense. So but web3 social networks, they are compounding. So over time they every new user will benefit that all the applications within that social graph and because you don't need to as a application developer specifically a social media application developer entrepreneur, you don't need to focus on the platform effect. You can put your focus into building better experiences and you will get the traction if you figure out that experience. That's the whole idea of of getting more people building things. [00:19:03][102.7]

Blake: [00:19:04] Well, that's really fascinating and really looking forward to watching how that evolves over the next few years, for sure. [00:19:10][6.0]

Craig: [00:19:10] I just wanted to maybe bring it back to Defi a little bit. I would love to get your take on Defi. Like where? Where you say the space is that now? Where do you see it in 10 to 20 years? [00:19:20][9.6]

Stani Kulechov: [00:19:20] Well that's that's hard. I mean, like a lot of things happen in just a few weeks in defi. [00:19:25][5.0]

Craig: [00:19:26] Crystal ball does have a crystal ball. Yeah. [00:19:27][1.6]

Stani Kulechov: [00:19:30] Yeah. It's hard. I don't know. I would love to see some some more impact. Impactful stuff like with build a lot of things that already exist in finance. We make it we made it more efficient in the defi ecosystem. I would love to see more impactful things. I would love to see actually something very fascinating like, you know, where we can use the blockchain to empower hundreds of millions of people globally and see kind of like a new economics being built around that. So. I think that's the future of the FBI, where we're not limited into the traditional financial concepts, but we can actually try and innovate something new. And blockchain is as it best. It's a way of distributing ownership very quickly to the users. Any part of the role. So that's the biggest value we can can see. So I would say that probably those things are very fascinating. And now I think Defi is is quite a lot about, you know, getting capital into Defi with different kinds of yield opportunities, but will be fascinating to actually see something where we take capital out of the fire and finance real life opportunities as well. [00:20:40][70.0]

Craig: [00:20:40] That's a really good point. I remember like the first, you know, defi summer to mid 2020 and I really, you know, got a lot of love and it was the gas phase, which is insane. And I would love to get your thoughts on how do you think gas fees? Because I think gas fees are actually sort of stifling the the ability to reach hundreds of millions of people. So like, how do you see gas fees playing a part in the how do you see, you know, layer two is trying to solve that problem? [00:21:06][26.1]

Stani Kulechov: [00:21:07] Yeah, I would say that gas fees let's use like there will definitely a solve. But like the beauty of layer choose is that it's a kind of like a permissionless, you know, there can be as many layer choose as there's people or animals in the planet. So like it's like a permissionless way to kind of like use Ethereum to set all transactions and use inherit the Ethereum security. So I think we're going to see plenty of innovation and I don't think like the like layer two that you choose are going to be a very good place to transact, but also like secure transactions in a in a more like all can use Etherium or any other like later one like avalanche named polygon is is is basically focussing layers use at the moment. So like and there's things like medias that are that is also kind of like trying to get more builders and innovate more layer twos and build new things. So like I would say that's the future will be that we might see a lot of layer choose that are specific. So some layer two might focus on on more of a gaming, you might have a different defi ecosystem, but there is some sort of interoperability between all of them. So that's the kind of like a future I would see. But it's a fascinating idea of like getting more transaction bandwidth and then then at the same time lowering the transaction costs. [00:22:34][87.2]

Craig: [00:22:35] You mentioned a layer two for every animal, because I've noticed there's a bunch of letters popping up like arbitrary optimism, like, do you think we could get saturated with it? And it really like, as you said, only maybe a few will actually win. [00:22:48][13.6]

Stani Kulechov: [00:22:49] Yeah, I guess like there is definitely can be multiple brands, but also like if there are some specific use cases, specific technicalities towards one particular to that, that might happen. So I think there's sort of space for all of them and we'll still see newcomers as well, especially if there's innovation on tech side for sure. [00:23:10][21.0]

Blake: [00:23:10] So you see like a multilayered to world, but does that extend to a multi-chain world as well? Do you think that obviously we see many different chains in the ecosystem or trying to kind of specialise or find their niche? But this is seems like it's going to create tension between or competition between. Layer two is on top of Etherium. How do you see that playing out? Do you think it's all going to shift towards one chain and then everyone's going to build on top of that? Or it's your family going to be a multi-chain world that is used in the broader economy. [00:23:41][31.1]

Stani Kulechov: [00:23:43] Yeah, good question. I think I think that definitely like multichain because, you know, there's there's even ecosystems and I think the challenge shifts are bridging. How do you bridge assets between one network to another. So so essentially like what I hope will happen is that there will be less need of a chain because you have everything what you need. So it so like bridging should be essential. It's the same thing as you will move a move from one city to outer like relocation. So let's say that if you move from New York and London, that will be bridging, but otherwise you will not do that. Like you will not pack all your parks and belongings and move. And that's the second idea. Like I would definitely see more of like growth in layer twos and actually like vertically and horizontally with the bridging. [00:24:32][49.1]

Blake: [00:24:32] So yeah, it would be really interesting as well just to hear we hear a lot of buzzwords and a lot of people hear a lot of buzz words that come out of crypto and defi of course, you know, be really good just to get an explanation of how you see defi three pointer compared to to defi 2.0 and kind of what that means. [00:24:51][18.8]

Stani Kulechov: [00:24:52] Yeah, I really don't believe in the versioning because I, I think like, even like, like I would rather see like some. Something very innovative before and 70.0. I think it's very much the same kind of like making the current financial ecosystem basically like having analogy from the traditional financial ecosystem and make it more efficient in industry using smart contracts and interoperability and so forth. But I, I think like the real tipping on where we actually make a bigger impact to people, I think that's where that that's where my interest is. [00:25:27][34.8]

Craig: [00:25:27] So you're saying it's market buzzwords again, typical crap. [00:25:31][4.1]

Stani Kulechov: [00:25:31] Yes, yes, yes, yes, yes. [00:25:33][1.3]

Craig: [00:25:33] So obviously you're like a pioneer of the space. Would love to know. I think you've mentioned it like, what are you most excited for? Not just Defi but as crypto as a whole. I know you mentioned about lens protocol social like giving back to the creators. What are you most excited about besides those things? [00:25:48][15.4]

Stani Kulechov: [00:25:49] I think in terms of like excitement, well, definitely a web3 social is is a big thing for for for us now. So that's where a lot of focus is on at the current state but also kind of like I'm very interested in the whole like NFT ecosystem. I mean, I've been collecting this quite a lot. I think I have four or 5000 of these and it's something with is very fascinating because it's it's a it represents a lot of like the web culture and it's a form of self-expression as well. So definitely like I think like over the long term, there's sort of value in, in that space and empowering creators. So so that's definitely something I'm very excited about. [00:26:32][43.0]

Blake: [00:26:32] All right. Well, I think that's a really great note to finish on. We just would really like to thank you for joining us today and teaching us a little bit more about, you know, AAVE and Defi. And I think that's really going to go a long way for our listeners. So, yeah, we very much appreciate your time. Steady. [00:26:46][14.2]

Stani Kulechov: [00:26:47] Perfect. Thank you so much. [00:26:48][0.9]

Craig: [00:26:48] Thank you so much, man. It's been great chatting. [00:26:50][1.9]

Stani Kulechov: [00:26:50] Thank you. [00:26:51][0.2]

Tracey: [00:26:51] So there you go. That was Stani. I hope you love that as much as I did. I really took a lot out of that interview. But I want to know what you loved about it. So please do reach out and let us know what you loved about the podcast today.