Ava Labs President on Curve Finance Exploit, Future of Asset Tokenization

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right. Joining us now for more analysis is a labs president John Wu, welcome to the show, John. Hi, Jen. Hi, Lawrence. How are you? Good morning. All right. Now you heard the top of our show first before we dive into um what we're going to talk to you about today. We want to get your reaction on yet the next yet another D I exploit with curve. Yeah, it's a very unfortunate a setback for the space. Um and it's never a dull moment even yesterday on Sunday when I first heard of it, I started reading about it and you both have done a great job of um talking about exactly what happened and the story is still unfold. Folding. So we will ultimately see, but I think there's a couple of things we can um take away from this, like with all systems that require code, there are mistakes. Um sometimes they human, sometimes it's in the, the programming itself and this is not the first time. So it really highlights the need for better security audits, perhaps oversight and hopefully one day, maybe, um even artificial intelligence can be used to more efficiently review their contracts and make us more secure. I was just gonna ask, I mean, are, are, you know, does this bring up the, the whole, you know, now we have this whole A I boom happening and, and all this excitement around it that this is a, a prime opportunity before these things are, are brought into the, into the wild that uh you know, we can have something that would uh you know, uh like almost an audit system that would grade the code and say it's been checked uh by A I for exploits or more than just grade. Yes, that's a great idea, Lawrence uh more than just grade. But, you know, A I can actually do things a lot faster and iterate and can continue to, you know, test the code and can um as generative A I does, it can learn from itself. So ultimately, I think it could be used as a tool to bring more security and fewer exploits to the space, which is super important because I mean, ultimately, what curve is used for is for predictable and stable lending and borrow. This is why curve exists and it's so needed and defy so assets can move around. Um you know, this is also I think part of the reason why, you know, some of the initiatives that all the labs is doing with real world assets, token, traditional assets like uh private equity or foreign exchange or uh commodities or real estate. They are far more stable in terms of asset pricing. So they could also be used to solve this problem in terms of making it more predictable and stable for lending and borrowing in the ecosystem. So John, you, you, you, you did the transition for us uh into kind of what you guys are doing here with tokens and, and I have to ask here because we of course, have an sec that has made it clear that they're going to scrutinize crypto that they, that for the most part, anything that's not Bitcoin is a um is a security jury is still out on Neath as far as I'm concerned. II I don't know how they'll eventually take it. Um And to be, to be honest, I'm not sure about Bitcoin some days, but um how, how will this uh a as you tokenize real world assets? How do you see that being ex uh traded when it seems that the sec views things uh you know, is going to say, look, these are securities obviously, and especially if you have tokens that are backed by securities and therefore, it needs to follow regulation. How do you do it in a decentralized manner when you have uh an, when you have AAA regulator that says we want to be at the center essentially overseeing all these, all these trading uh actions So that's a great question. And there's a lot in that, obviously it was a long question. Um No, it's great. I mean, and we have to the first question. Tell me, I, I tell a lot, I asked a lot of questions. So, I mean, tokenization of real world assets, you know, the tokenization part is really a wrapper for the underlying asset, whatever the asset is, whether it is a security, a uh a commodity, um a a painting, what the tokenization does is it's a wrapper for the right of ownership and it's in a Blockchain, you know, think about it, there was a time when ownership was represented via paper and then it had to be digital. And now this is just a different type of wrapper for represent renting the ownership. So that's a distinct difference. Um And from the previous court case, uh at least, you know, the district uh result from ripple, um they came out and said there's a difference between the underlying asset and the way it's transacted. So if you're gonna wrap that asset in a tokenized version, uh and put it on the Blockchain, you still have to use the proper licenses and regulations and, and use the right methods that that particular asset type would need in order to uh transfer just like it does in other forms when it's wrapped in just zero ones or by uh paper to represent the the underlying value of the asset John, you, you brought up ripple there. How are you, you know, Ava as a US based company, how are you looking at the partial win that ripple received over the sec? How's the rest of your company looking at that as you continue to build your business in the U SI? Mean, there's been so much said by so many people. I won't repeat any of that, but I think the big takeaways are, it brings more clarity, which is great, but it's not conclusive and there's a long road and I think what it did do was provide a catalyst for Congress. And it's not coincidental that just in the last week or two, you've seen so many bills being pushed or moved and voted on to help regulate, bring clarity in a comprehensive way to the space. So, from that perspective, initializing or catalyzing Congress to get involved is a good thing. So uh getting back a little bit to asset tokenization here, uh how, how do you see it ultimately though uh for, for the consumer at least, I mean, like it's one thing when it's institutions buying and selling these uh tokenized assets. Uh But do you see how do you see consumers purchasing and, and selling their, their tokenized assets? Do you see them on, you know, going on a coin base for instance and, and doing it that way or do you see it uh uh private D five versions of it if you will or you know, or would it require creation of new institutions to, to make it happen? So let's go through the benefits of tokenization, then we can answer that question. Um After we go back to first principles, you know, basically the tokenization, if you broadly speak brings value in terms of creating more liquidity, providing better access for individuals. And obviously, it provides a lot of efficiency and that efficiency in the code or in the automation of the work flow or the way things are save, saves a lot of money. A lot of cost, the efficiency benefit is being seen today. You've got JP Morgan doing JP Morgan Guardian. Um you have, which is the uh project with Goldman Sachs and a whole bunch of others. You also have um uh the labs, how KKR tokenize a sliver of their um health care fund so they can provide more access to accredited or qualified investors. So the efficiency side I think is becoming clear to the institutions, the access side is just starting to happen, it's going to first happen to accredited and qualified. Um But ultimately, the thing that they need to make to get the most benefit of tokenization is liquidity and that liquidity will happen with um current players such as securitize, that have the uh the broker deal licenses and have the right A Ts and have the necessary uh call it compliance um in order to transact that now the issue is from a commercial perspective and awareness and adoption of that is still lagging. So this is why the foundation of avalanche has um basically initialized with this um visa program to to basically help uh create lubrication. And so that the places with the proper licenses can have some liquidity for the new people that access these hard to find tokenized assets. John, you're doing all the transitions for us this morning. It's such a, you're just such a great guest to have on a Monday morning. Tell us more about your new initiative that you just mentioned. Avalanche Vista. So Avalanche Vista is um from the foundation and it's a $50 million effort for basically once uh uh institutions, whether that be banks or asset managers could be, for example, the KKR uh situation has agreed to tokenize, you know, just like a uh traditional bank in, in the regular um will uh you know, takes um the initiative to have green shoes or other things to, to make sure that there is uh call a demand for it. That's really what it's there for. Um it's not there for necessarily to, to hold them if they can, you know, just provide that initial liquidity and allow places like, you know, again with licenses like securit ties to affect the secondary transaction, you know, they, that is the purpose of vista. And um I think to support these project launches with liquidity, but also all the labs will support it with help integrating uh into a subnet or helping them grow and learn the benefits of tokenization such as, you know, what we did with Spruce and T Wellington and Wisdom Tree, where they effectively have an institutional um D I ecosystem to tokenize whatever assets they desire. John. Before we go, I got to ask you about the metaverse. I know you're a big supporter of the Metaverse and web three gaming. Given meta's recent report that they lost billions of dollars on their metaverse division. We've seen UGA labs uh not really publicly launch their other side metaverse yet. What's your outlook on that? Are you still bullish? How's your partnership with Alibaba going? Thank you for asking that. Um We're very excited about our partnership with Alibaba. Um You know, we have to remember that each um the metaverse is defined differently by different people, different companies and different regions of the world. A lot of metaverse is associated with uh real estate, virtual real estate, others search search associated with a background for gaming. Um One thing is for sure if you look at gaming as a proxy, um There are about 3 billion gamers in the world. 1.5 of those are in Asia and Alibaba uh is trying to create a metaverse where it's there is a virtual real estate component, but also makes it fun and there's a gaming aspect to it. And um I think we're very bullish on that aspect of it, how it's properly defined going forward. I think it's going to evolve and ultimately, you know, it's a digital world. Um My kids play in uh effectively a metaverse called Roblox all the time. So I think we're going to move towards that. So depending on how you define metaverse, um we are gonna move to a world, we're just going to be more online than we were before, especially the younger generation. I gotta ask you a quick follow up here. Uh Is anyone using it? I know you're, you're helping to enable businesses get into the metaverse. Are they actually doing this or given the market, given what they're seeing happen with more mainstream companies like meta? Are they kind of just staying on, on the back burner waiting to see what it is? Um I, I can't say it is, you know, it's so abundant that you turn and or you go somewhere online and you can just find places to go. But it, you know, people are experimenting and understanding the value and how companies can create incremental revenue for themselves and how users um can find great uh entertainment if you will. I think it's very, very much in the early stages but things are happening. All right, John, thanks very much for joining the show this morning. Thank you. That was a lab's president John Wu.