Transcript:
slava (00:01.25)
Hello and welcome to the next episode. We are very, very excited for the next guest. I have known this person for years. I feel like we almost grew up a little bit together, but she is way more accomplished and way more successful. I'm so happy to have Mary Catherine later on the show. Thank you, Mary. Hi, Mary Catherine.
mc (00:20.019)
Hi, that is not true what you just said by the way, that I'm more accomplished, but I do feel sort of like we did grow up together in a sense, this is really fun.
slava (00:27.882)
Absolutely, absolutely. So, you know, we always love to start for the audience is like, alternative investing, like how did you get into it? What was, you know, your first alternative investment? Do you remember that?
mc (00:41.063)
So my first job out of college was in an alternative investing group at Goldman Sachs. So my first job was in a special situations group that did distress debt investing. It was on balance sheet capital for Goldman. So there weren't sort of investors and LPs who thought of it as an alternative investment. And I think the first deal I worked on that we passed on, I remember, was actually the series C for Tesla, which was obviously a mistake.
And then the second thing, which I guess is the first sort of real alternative investment that went through was investment in a bunch of wind farms. So they were in the capacity of my job. And then first personal alternative investment was, I don't even, I actually have no idea. I have no idea what it was. Probably some environmentally related startup.
slava (01:29.254)
Okay, and do you even remember what that valuation on Tesla was at the time?
mc (01:34.979)
I don't, I should really, I should like try to figure that out and look it up. I mean, it was, you know, low hundreds of millions, it was like a hundred million dollars. It was pretty low. I know, I know. And it, it was, um, I was a first year analyst and I remember the team was just very skeptical about the pace of adoption of electric cars and that the valuation was expensive and. Um, yeah. 2008.
slava (01:58.926)
What year is that? I mean, it's a long time ago probably, right? Okay. I mean, it's amazing how long ago that is, but not really, right?
mc (02:08.047)
Not really, not really, yeah. I know we're in this weird phase where like so much, because I think we started 2008, 2009, 10, where the pace of growth for companies was so different. So many of today's biggest companies were nowhere near as important, but also it wasn't that long ago. Maybe we're just saying that to not feel old, but anyway.
slava (02:24.47)
Yeah, so.
No, no, so you started with a springboard there at Goldman and now you've had just like a huge career. You know, one of the most important people at BlackRock building up a lot of their FinTech strategy, their blockchain strategy, their crypto strategy, one of the youngest MDs, rising stars there. And then you go on to get a little role at a little company called Uniswap, which happens to be, I guess, you know, changing the world itself and you become COO. So like, tell us like along the journey there, like how do you, what kind of alternative investing have you been doing along the way?
You personally.
mc (02:59.363)
Yeah, so my priority has always been my day job, just to be honest with you. There are one or two people I really admire who I asked for advice on this because they had a lot of friends who were starting companies or an access to a lot of alternative investments with funds or startups. And I remember saying, how do you make decisions about whether you angel invest? And they were like, basically my highest leverage is in my day job. And so I focus as much as possible in making that as valuable and as.
high an outcome as possible. You're in a public company, you only have so many levers and so much control. If you're in a private company and you're part of the leadership team, then I think it really makes sense, right? Because the return on your time is that much higher. But that doesn't mean I haven't done anything. So I generally support people I believe in because consistent with what I just said, I don't spend a lot of time on personal investing, frankly. And so I find that it's most effective to just...
support people who you know either have a good track record or whose perspective in the world you really have faith in. So I've invested in a few venture capital funds, a few startups, and those are the main things and a few things in sustainability that I really believed in.
slava (04:13.527)
Can you double click on that sustainability stuff? Seems like a common thread.
mc (04:18.383)
Yeah, I mean, so a lot of what I focused on at Goldman Sachs was renewable energy and clean technology because there were a lot of policies coming out in the early days of the Obama administration that were trying to incentivize the growth of renewable power. And so I just became interested in how you can drive, now it's not so much the growth of renewable power, now it's more trying to think about the actual price of carbon and pricing the real cost of carbon into the economy. So
I've invested in a couple of little companies that are trying to do that through software. They may not be the best investments, but I feel like somebody really needs to be doing it. So those I really believe in. And then in terms of other investments, like I mentioned, just mostly venture capital funds, to be honest.
slava (05:02.862)
Okay, and then how about the other asset classes like art? So do you invest into art or collectibles, anything like that, or you pass on those?
mc (05:12.463)
Well, I definitely have NFTs. So I became obsessed with crypto. It's funny, I didn't even mention crypto. I started investing in crypto probably 2000. I first bought Bitcoin 2011 when I was in law school when I first heard about it. There's that, right. And so I became obsessed with Bitcoin 2011 because I was in law school and fascinated by areas where technology was outpacing regulation. I learned about Bitcoin, sold it after tripling my money, I think probably like 400 or 450, thought that was genius.
slava (05:22.322)
Oh yeah, there's that. Yeah.
mc (05:41.347)
Then just sort of continue to buy in and out of the markets again starting in 2015. To answer your question about collectibles, I do own a handful of NFTs that I really love. I have a CryptoPunk. I have some MiBits. I have some Artblocks. I have... What else do I have? Some CryptoCovins. I don't know if these mean anything to anybody. Those are collectibles. I consider those collectibles. Then I had a very short-lived...
period collecting antique weapons, which not guns, but like swords and yeah, very strange. That I started when I was like 16 because I wanted to be a war correspondent or a foreign correspondent and so I was constantly, I was traveling as much as I could to the Middle East and going to sort of markets and buying things that have been used in like the Crimean War or other sort of.
slava (06:15.51)
Nice. Wait, when was that?
mc (06:38.503)
Like basically like the Lawrence of Arabia period in the 20th century. So I have a handful of those things. They may not be worth anything. I may have bought all fake stuff for all I know. So I'm not sure they count as collectible. But yeah.
slava (06:41.742)
Wow.
slava (06:50.646)
Well, they definitely count. I mean, is it these things that if they're authenticated real, that could be worth like a ton of money or?
mc (06:58.471)
Probably, but again, I haven't even bothered. It's easier to track the prices of NFTs than it is to hire someone to come value the swords that you have in your living room.
slava (07:06.006)
You have to go on the antique roadshow, I guess.
mc (07:09.499)
Yeah, exactly.
slava (07:12.226)
And so is NFTs like a 2020, 2021 thing for you? Or are we going back to 17?
mc (07:21.123)
17, I had some CryptoKitties. I sold them, but I remember being at BlackRock. And so I had a fintech startup, then came to BlackRock to work on their fintech strategy. And there was a pretty limited interest or understanding of blockchain and crypto. And so I did a lot of like educating the firm. And so I remember presenting on CryptoKitties to Rob Capito as the co-founder and president of BlackRock in 2017.
And everyone just was like, I think I lost the room at that point when I said CryptoKitties, they were like, blockchain, that's interesting. And that's a little unfair because we then did a handful of things over the subsequent years. So I did first get interested in them then, and then my interest picked up again, frankly, not until 2020.
slava (07:52.163)
Haha
slava (08:04.382)
Okay, as like COVID happens and all of a sudden everybody needs NFT.
mc (08:10.04)
Exactly.
slava (08:11.25)
Um, so I mean, you were, as we mentioned, a rising star at BlackRock and so influential on a number of these progressive ideas in terms of how to use tech for finance, how to evolve the business, how to think about blockchain, how to get into crypto. Can you just double click on that, you know, six years and a few minutes as to what that was like?
mc (08:33.175)
Yeah, so I stayed there for six years because I was fortunate to have a really fascinating mix of business building and investing experience. So I mentioned that I started my career as an investor, but really love building things and I'm particularly passionate about fintech and crypto because I am committed to expanding access to opportunity and think that financial services is an area where technology creates consumer surplus, makes things cheaper, faster, easier, more transparent.
And so when I got to BlackRock, they were in a phase of trying to invest more in the fintech business at BlackRock called Alladin, which is an operating platform and operating system for investing and investors. And it's not disclosed how much money is managed on it, but there's tens of trillions of dollars that are managed on it. Many of the biggest money managers in the world use it. And so when I first got there, I was sort of just working in a general, kind of like a general strategy role. And
Larry think was asked in an all hands town hall what he thought of blockchain and I thought his answer was could have been Enhanced a little bit and so I wrote a little memo on what black rock could do on blockchain and crypto and it got forwarded To the CEO of black rock who oversaw technology in the technology business. And so I then you know
slava (09:46.222)
Who did you send to originally? Who did the memo go to first?
mc (09:50.659)
Oh, I sent my team. I sent a team of like the strategy team, like 15 people and someone afforded to him. And I was a year out of business school and didn't really didn't know anybody there and I'm frankly was pretty bored. And so then I kind of got asked to lead the blockchain and crypto effort, which was exploratory. So 2015. So it was exploratory. It was just trying to figure out what is.
slava (09:51.604)
Okay.
mc (10:16.251)
blockchain, what are the potential use cases? Are there companies that BlackRock should partner with or invest in? And so did that, we did a couple things. We did a proof of concept with ConsenSys and Joseph Lubin and the Ethereum team on a credit default swap, smart contract. We did a partnership with Paxos on equities trading. So we did a few things and then just sort of paused frankly, because the technology was a little early stage for a fast follower like BlackRock to get involved in.
But then what happened next was I got to be involved in these sort of hybrid buy-build partner growth opportunities. So the firm recognized that there was an opportunity to invest in digital investing and automated investing that could really scale access to more effective ways for people to save for retirement, to build wealth through whether it was robo-advising or greater access to alternatives. So we invest in a company called iCapital.
that digitizes a lot of the investments, the alternative investment process. So that was one growth area and the other growth area was sustainable investing. And so work that I was asked to start that business and lead that business, figuring out what sort of data analytics and software products should BlackRock build, either as technology or acquire. So it was really fun because, I got to help start these
to businesses that went from zero to hundreds. Everything in a big company is a lot of stakeholder management and kind of matrix. So that at times was frustrating, but ultimately felt like we were building things that were increasing access to economic opportunity and that we're delivering on a lot of the promise of fintech.
slava (12:00.546)
That's awesome. And what year did you end up leaving from BlackRock?
mc (12:07.759)
Last year, so I left in 2021. I had a friend who joined Uniswap Labs, which is a small company. We are only 40 people. We were 10 people when I joined in June of last year. But I had a friend who had joined Uniswap Labs who'd known that I'd been passionate about crypto and blockchain and had this sort of like oversight of it at BlackRock for a long time. And he...
slava (12:20.288)
Oh wow.
mc (12:32.123)
said, you know, I've just joined this company called Uniswap and its potential is disruptive. It allows anyone to create a market for anything and really unlock access to ownership. And these are the things that you're passionate about. You should come here. And I frankly, I wasn't really listening because I was very focused on the same sustainable, the sustainability business. And so I was like, come back to me later. And then I just started getting a lot of calls about CryptoChubs.
Because I think the crypto industry is now in a place where they're looking for people who have a little bit more sort of what crypto is called TradFi, traditional finance experience, and business building experience from fintech or for financial services. And so in early last year, I started considering it seriously. And then I left last spring.
slava (13:19.582)
Incredible. So now you're a crossover between TradFi and DeFi, right?
mc (13:26.459)
That's, yeah, that's right. I guess. I mean, it's funny. DeFi is short for decentralized finance and Uniswap is one of the biggest projects in decentralized finance. So we're a decentralized exchange or trading protocol. Um, uh, the labs is a corporation that built that, but the technology is open source and available to anybody. But I just think it's the future of finance in general. So I don't really think about it as like TradFi or DeFi. I think DeFi has become this like charge term.
That's very misunderstood. And so the way I think about it is just like, what are the future of markets? How can we allow more people to have access to more markets? And I also really believe that in the spirit of alt investing and the growth of alts, I really believe that a lot of the world is going to be tokenized and we're going to have sort of the financialization of a lot of different kinds of things that crypto is going to allow. And so as that happens, you need ways to trade those things to give them a price. And that's what Uniswap allows. Uniswap allows us to trade.
anyone to create basically a liquid price for something that's tokenized. So yeah, I guess it's the intersection of TradFi and DeFi.
slava (14:27.118)
So let's expand on that. Yeah, let's expand on that for a second. So exactly why does Uniswap need to exist? What exactly is it solving?
mc (14:39.335)
So there's a lot of things in the world that have value that can't really be unlocked or traded or exchanged. And, or there are things that have value that can be traded, but they're highly illiquid and the pricing is inefficient. And so that gives power to people who have more information and information advantage and who have access. And also today investing in investments that are less, that are may have sort of smaller market cap or.
or less common, less readily available, and may actually have even higher return potential like startups is really available to people who have access and already have a lot of wealth. And so one of the challenges with contemporary capitalism is that those with wealth build more wealth and the returns on capital are much greater than the growth in incomes. And so we're in a situation where our current system is exacerbating inequality.
And so a way to help address that is to increase access to ownership and also increase the number of things where value can be unlocked. The way is that you can sort of express value and tokens in some senses let you do that. So you can, for example, create a token that might represent membership in a community. And if people value that community, they might buy that token for a certain amount. And you could say, use that token to get into your events or to participate in community decisions.
And so this sort of tokenization, the ability to quickly digitally represent some form of value that today isn't really covered by, by existing asset classes unlocks a lot of value. So what is Uniswap is precisely doing? Uniswap allows you to create Slava. Well, if you, let's say you created Slava token or let's say you create, let's, let's say that you're part of a community center that had, um,
slava (16:26.197)
We should do that.
mc (16:33.287)
that owned some assets like real estate that had a really valuable community that contributed to the town it's in. And you want to make decisions as a community, but also make sure that you kind of manage the existing assets. So today you'd have like a committee of people who would come to board meetings and make decisions and nobody really wants to take part. What you could do is you could create a governance token and you could then embed in that certain decision rights.
or the ability to participate in certain communications. And then, well, why is that worth anything? It's not really necessarily worth anything, unless you can trade it for something that is worth something, it has a liquid price, like Ethereum. Ethereum is the second largest cryptocurrency and has a liquid price, and there's billions of dollars worth of Ethereum that trade every day. So what Uniswap lets you do is take your governance token for your community center and deposit it on Uniswap.
alongside anything that has a liquid price like Ethereum. And then the supply and the demand in that pool of your token and Ethereum determines the price. There's an algorithm that determines the price based on the supply and demand in that pool. So now all of a sudden, this participation in a community that has some value that in today's world is completely intangible has a price. And the price could be five cents. The price could be very, very low. The idea isn't to make daily activities and normal activities expensive or inaccessible.
It's to try and attach some form of value to them in a way that is accessible to everyone and isn't sort of governed by accredited investor rules that require you to have a certain net worth or a certain income to even have access to things. So that's part of what it does. And what really is happening in the scenario I described is Uniswap is a two-sided marketplace for liquidity. So when you contributed your token in Ethereum, you're creating liquidity. And then anybody who wants to swap or exchange those things.
is supported by your liquidity that you provided, as opposed to in contemporary markets or traditional markets where an exchange takes a spread. They maintain a central limit order book. They have a list of buy and sell orders. They match those, which means that the exchange has centralized control over what's liquid and frankly, a lot of impact on price and impact on who participates. So...
mc (18:54.667)
What Uniswap is solving is removing the barriers to what has value and who gets to participate.
slava (19:00.198)
Awesome. Well, thank you for explaining that. And you're not the only one that's doing that in the space. So how should the listeners think about Uniswap versus the others, a few examples of a one inch, whatever. How do you think about the differences?
mc (19:21.459)
So Aave is a lending protocol. So in DeFi, so DeFi definitely has, we're not the only company in building in DeFi, nor is the Uniswap protocol the only protocol in DeFi, to your point. The idea is to have decentralized services that replicate and provide as many financial services as possible. So Aave and Compound are lending protocols. So they use decentralized governance to lend, and now they increasingly also support
traditional financial services institutions that can take part in that. One inch is an aggregator. So one inch is just like a front end that allow that like basically if you're using one inch and you want to trade, chances are you're actually using Uniswap. Chances are you're trading on Uniswap because they are, first of all, they're centralized. They're not decentralized. It's a centralized API. They can kick people off their API if they want to, but they essentially realize, okay, there's a bunch of different decentralized services out there. If we could centralize them and have a single portal to them.
and show you the prices you would get at each of the different options, then maybe that's an opportunity. So Uniswap, in terms of how we fit in, we are complementary to both the things that you mentioned. There are a bunch of other decentralized exchanges. There's a dozen or so on Ethereum. There's a handful on other blockchains. But we have pretty dominant market share. We have about 75% market share in Ethereum. We're on Polygon, which is another chain that's lower cost than Ethereum right now.
were the market leader there too. So one way to think about it is that these two-sided marketplaces, like many marketplaces, have powerful network effects. And particularly in a financial market where that network effect means you get better execution, meaning lower, better price, and a longer tail, meaning more things that you can access and trade, the network effect then is really differentiating for the protocol. So look, I think we're...
the best and the biggest, but there's also facts that suggest that that's the case.
slava (21:23.265)
It's good when the facts are on your side.
mc (21:25.62)
Yeah, exactly.
slava (21:26.718)
And then you mentioned moving to polygon. Are you thinking to add others as well in terms of layer ones that you support?
mc (21:38.139)
Yeah, so today we're on two layer one chains and two layer two chains. Layer twos, which are the scaling solutions that make it easier and faster to trade on, or to do anything really, not just trade on Ethereum. We, the Uniswap Labs team doesn't make decisions about which chains we're on. So that is for the governance system. So Uniswap protocol has a token called Uni. I tell people it's the pink one on Coinbase. It's like the pink unicorn.
on Coinbase and people are like, oh yeah, I have that one. They have no idea what we do. Anyway, so that's a governance token that allows you participation in governance decisions. And those include where we deploy. So we have open sourced the contract and the code needed to deploy the protocol to other chains. It's completely publicly available. And anyone who has Unique or has Uni delegated to them can put forward a proposal to say, we think you should now deploy to, you know.
finance smart chain or we think you should deploy to avalanche. And I'm constantly surprised that people don't do that all day, every day, but. Not yet. No one else has so far.
slava (22:45.314)
And let's say you didn't work at Uniswap for a second and you were a little bit more unbiased. What do you think of the current market? What's going on? What's going well? What needs to be improved? Who's doing good work? You know, who's not?
mc (23:01.517)
in crypto.
slava (23:02.539)
And let's start with DeFi.
mc (23:05.027)
And DeFi. I think that DeFi's biggest challenge is explaining its utility to the world and how and why it has social value. And then also coming to terms with where decentralization is not the optimal user experience and being transparent about where those trade-offs are necessary. Because
I don't know how many people realize that the aggregators have centralized services. And there's such an expectation that decentralization should be a priority, that sometimes some of the services aren't that transparent. And that's not a healthy dynamic. But at the same time, there was Moxie Marlins-Baik who founded Signal wrote a post a couple, like a month ago.
about how some user experiences are compromised by decentralization. And so it may be in Brian Armstrong, the founder and CEO of Coinbase, responded saying he thinks that the future is going to be a mix. And I think that makes sense. The future is going to be a mix. I think it's really important that projects continue to make everything that they do open source and try to have decentralized options for everything that they build. So for example, we build things, we make it possible for people to host them or use a hosted version.
So what do I think is the most important thing is communicating the societal value. I think that who's doing good work, Aave is doing a ton of good work, Aave and Compound I think are the other sort of leaders in terms of builders. They are just turning, really thinking about how to bring traditional markets to DeFi and turning out a ton of new stuff. So there's a lot of good stuff out there. I think...
I don't think it really behooves DeFi to be cordoned off as DeFi because I've noticed that as there's more interest in NFTs now than DeFi, that sort of mainstream interest in crypto is now largely about NFTs. If we keep talking about DeFi as just this sort of corner, it's about disrupting the financial system, people don't realize that it's actually the backbone of everything that's happening, right? It's actually the enabler of so much of what's happening.
mc (25:24.483)
So I think that that's our sort of biggest challenge is communicating that.
slava (25:28.854)
That's interesting because for about a year, DeFi was probably like the hottest thing to say or be a part of, right? Is that fair?
mc (25:38.887)
Well, I think it's still as hot. I think it's true. It's still as hot, but like, but yeah, you're right. 2020, it was the hottest. 2020 was the hottest. And then 2021, because it's, you know, as much as people like to make fun of JPEGs as collectibles, it's a little bit easier to understand. And part of what's so powerful about DeFi does require an interest in what's wrong with the current financial system.
slava (25:41.454)
You know what I'm saying? It was the hottest. It was the hottest. Yeah.
slava (26:05.046)
What, to double click on that, what needs to happen from like a user experience perspective to advance it forward where people aren't talking DeFi as this abstract tech thing, but rather the simplicity of how awesome the experience and the results are. What needs to happen?
mc (26:26.227)
So six months ago when I joined, and this has already gotten better, six months ago when I joined, you would have to convert your US dollars into crypto using a centralized exchange, and then you have to get a non-custodial wallet, like Metamask or something, and then you have to transfer your crypto to that, and then that's what you would then connect to Uniswap and come to our website to use Uniswap, or same thing with Aave or Compound. It's already a little better. Now it's two steps, not three steps, and I think that should just be one step. So what we're seeing now is a ton of applications
wallets. I think that soon wallet will be functionality that's expected in the sort of biggest and core applications. But you'll be able to take your account with you. So rather than like replicating a bank account, your assets will be able to sort of move with you or be represented simultaneously in different wallets. So that's one thing. It's just sort of simplifying onboarding. And then the next thing that really has to happen is costs have to come down. It's too expensive to trade in Ethereum right now.
And so that's part of what's led to the growth of avalanche and polygon. And then I think a third thing is that we do need more kind of trust and safety measures. We do need more ways for people to understand what, when they might be exposed to a scam, how they can avoid what's called a rug pull where someone basically pumps up a price and then depletes it and takes all the, and then takes all the assets.
So we do need some of those measures, but I'm really optimistic that there are companies that are working on addressing, first of all, everyone in the space needs to be improving their onboarding and we're all racing to do that. So that's being addressed. The second on cost, there are layer two's being developed and there's rapid, you see rapid adoption of other chains, which is putting pressure on people to figure out how to optimize gas fees on Ethereum. So I do think there's work on cost. And then third on trust and safety, there are companies bringing up that are specifically addressing.
how can they monitor some of that activity to protect users? How can you better help filter out what might be scams? But part of the whole premise of a unpermissioned or permissionless protocol is that you aren't, you don't really have that editorial input. And so that's part of why I think we'll see more and more sort of like raw, fully decentralized permissionless.
mc (28:47.235)
and then the ability to opt into more curate experiences where users can feel a little bit more protected.
slava (28:51.81)
How much of it, in terms of the trust and safety, your third part, how much of it do you think is gonna come through some sort of regulatory versus just innovation and startups? And probably regulatory is a weird word to use considering it's DeFi, but what are your thoughts on that?
mc (29:08.435)
Well, regulatory is not a weird word to use at all because we think about regulatory all the time and lack of regulatory clarity or some regulatory confusion is one of the biggest challenges in crypto now generally. There are so many different agencies and in different rules that neither of which, none of which necessarily address the activities that create risk in crypto. So I think that good regulation would ideally
enable and support innovation and the growth of this industry that's creating thousands of jobs and has the potential to empower marginalized communities and help more people access wealth. And this is, I mean, in many ways, it's a progressive, very progressive series of outcomes. And so I think good regulation would ideally support that. Bad regulation would push all this abroad because this technology is not going away.
and the potential is too huge and the user benefits are immediately apparent. So I think it's really important then to end up in a good place that when someone's trying to figure out how do they address those trust and safety concerns, that regulators understand what's causing them in the first place. Because what creates market manipulation in DeFi might be quite different activities than market manipulation in traditional markets. And so just applying
Today's reporting rules or other rules that are intended to address tradfied activity isn't necessarily going to solve the problems in crypto. So yeah, for that reason, to answer your question, for that reason, I do think that we'll see technology solutions that will be the most effective because ultimately mitigating market, potential market manipulation, operational risk, systemic risk, enabling tax compliance, all those things are in...
users best in most users want those things and so the winning projects are going to have to Invest in those are partnered with companies that are doing that and then I hope in turn regulators Sort of pay attention and endorse and adopt them rather than trying to preemptively impose outdated rules
slava (31:25.41)
Sure. And just to raise it up a level, what are your thoughts on crypto in general, whether, take it wherever you want.
mc (31:35.975)
I mean, I love it. It's just the most exciting thing to be part of. I feel like it's a historic time in the world where this sort of this intersection of financial markets, technology and culture is allowing people to create totally new businesses with new business models, allowing them to build new communities, express themselves in different ways. So to me, this is the most...
fascinating, exciting thing happening in the world right now. And it doesn't mean you have to be into DeFi. There's so many different ways to participate in crypto. But I think that in the same way that Web2 was about digitization of information and collapsed silos between different types of information, and therefore opened up so much opportunity and collapsed borders and allowed people to think differently and create different kinds of content, I think the same thing is happening now with financial assets and value.
and that we're digitizing value in a really expansive way that's expanding markets. And hopefully we'll bring a lot of people in. I don't think that technology is intrinsically good. And I don't think that blockchains are intrinsically, you know, sort of necessarily going to be better systems. It's really incumbent on the people designing these systems to make sure that they're inclusive and better. And so, yeah, I hope...
It's why I'm working in this, because I hope it's a force for good that shapes all of our lives.
slava (33:07.542)
What, I'm gonna ask you for some specific tokens or whatever companies to invest into, but what themes would you be investing into because of where things are headed three years from now?
mc (33:26.315)
Well, I think that I think I will continue to invest in the layer ones that have the most potential for scale, right, because that's the sort of the foundational layer. So I think those are sort of safer long-term bets. I think layer twos are important.
Picking a good layer two requires a lot of technical expertise, so that might not be the most accessible one, but like ask your friend who's a blockchain developer which one they like. I'm not going to tell you which ones I like. That's what you're about to ask me.
slava (33:56.054)
Can you? Yeah, yeah, we're gonna do both. Yeah, yeah, can you? Well, first, just tell me which layer or twos you like really quick.
mc (34:06.787)
No, I can tell you which ones UNICEF's deployed on, which is optimism and arbitrariness, and they have slightly different approaches. Yeah. So, I'm going to go ahead and end this video here.
slava (34:12.974)
Got it, but then what is a layer two compared to a layer one for our audience?
mc (34:18.339)
Yeah, so a layer one is like the foundational, it's the foundational layer of a blockchain. So that is, that's where transactions are recorded, essentially, and take place. And they have different, they're differentiated in terms of the consensus mechanism that's used. And they have different sort of trade-offs between speed, decentralization, and security. And then a layer two, abstracts that activity. And they have different ways of doing that, that try not to compromise on
security, decentralization, speed, cost, too much. And so people have very strong opinions about which ones are making the trade-offs that they think are the right ones. Other themes, I think that we're in such early days of NFTs that I don't, you know, other than sort of like the bluest chip NFTs, I don't really know which ones I'd invest in, but that...
Some of these like music NFTs, I think are really cool because music's an industry where the sort of value capture is really off balance relative to what it could be. So to the extent that music NFTs help empower more artists, they're pretty cool. And then DeFi, I think that some of the core DeFi protocols are going to be explosive and will be powering financial markets.
slava (35:45.486)
So if you had to guess, how big does the DeFi collective market cap get five years from now?
mc (35:59.151)
I have no idea. I'm not going to guess. I have no idea. I think that a lot of that is contingent on how much of the value in the technology people ascribe to the tokens that give you exposure to it. Because the tokens have different tokenomics. And so you could have huge adopt, you know, you could have some of these protocols get really wide adoption. But that doesn't necessarily mean that the token prices are going to go up and or, you know, some of these
financial institutions need what are called permissioned instances of the protocols. So they need to know everyone they're trading with, they need to know everyone they're interacting with, and it's possible that will change the economics. So it's really tough to know if adoption of the technology is going to lead to how that's going to correlate to the market cap of DeFi tokens.
slava (36:50.59)
And you mentioned layer ones, but I didn't pin you down on which ones you like. So are there layer ones that you would say three years from now are going to be a good hold today?
mc (37:01.491)
So we are on Ethereum mainnet. I think that an interesting sort of dynamic is just people speculating about what's gonna happen with Solana and if Solana has the best shot at competing with Ethereum, in part because of some of the perceived benefits. So I don't know, I'm not a developer, I'm just a business person. So not qualified to opine.
slava (37:27.182)
Right, so as the business person, you must have noticed that we're in Q1. More recently, the crypto markets have dropped a little bit. Bitcoin, for example, is high at 69 now. It's in the 30s. And a lot of things have dropped, some 50%, some more, some less. So is this a good time to buy? Is it rocky because inflation is uncertain and the Fed is unclear?
What's your point of view on 2022 and where we are today in the market today being Q1?
mc (38:00.923)
Well, look, I said to you before that I don't spend a ton of time on personal investing. I spend enough time, I guess, at BlackRock that I try to just put aside enough money and invest in things I believe in for the long term. So as a long-term investor, I would say it's a great buying opportunity. And I would say I tend to value my friendships and family relationships enough to not give anybody investment advice ever. So that's it. I'll leave it there.
slava (38:26.538)
Nice, nice. And when you're saying like a good long-term investment opportunity, like what's that time horizon? We're talking 10 years, 20 years, or what is long-term?
mc (38:39.667)
I don't know. I mean, that's hard to know. That's such a personal decision for anybody depending on where they are in their lives. But you and I were just talking about how 13 years ago, 2008 was a long time ago, but not so long ago. So if you think about how much has changed, if Tesla was worth 100 million-ish dollars then and now exponentially more, who knows what could happen in the next 13 years. So.
slava (39:07.534)
Yeah, it's crazy, 13 years, I guess, is what, 2035, right? So it's not that long from now, but it feels like an eternity away. I mean, I could imagine, like, there being potentially Tesla-sized returns on some of these opportunities right now, right?
mc (39:13.2)
Yeah.
mc (39:26.667)
Oh, yeah. Especially if this is sort of like the new computing paradigm for the world. Yeah.
slava (39:34.09)
And would you be willing to like say a name or two that you want to be bold enough to, we get to listen a few years from now and see how it's doing?
mc (39:42.899)
Oh, well, look, I'm still on a hold and I'm holding on to and still buying Ethereum. So it's a really, it's a conservative traditional choice, but I'm very bullish.
slava (39:55.222)
What is very bullish for Ethereum look like? What is like the upside? How big can that be?
mc (40:04.315)
I mean, I think it depends. You can model Ethereum. You can model basically the gas fees and look at the economics of the network. But in terms of how big it can be, most of the NFT activity is happening on Ethereum right now. So if we think, it really all depends on how much Ethereum, how fast Ethereum can scale and on sort of how layer two solutions on top of Ethereum work. But huge.
slava (40:33.058)
Are you bullish or pessimistic on kind of layer one interoperability?
mc (40:40.667)
By which you mean bridging across different layer ones? Yeah, I think that's really important. So if you mean sort of like, are we gonna be like a multi-chain world where people will do things on different chains? Yeah, I do believe that that's likely. Vitalik had a really good post, I think, on how that wasn't exactly the case and sort of a misunderstanding. He didn't really think that there was gonna be like a, maybe there'd be a few different chains, but not so much like cross-chain activity.
slava (40:42.941)
Exactly.
mc (41:07.971)
I do think that because different ones have different trade-offs and priorities, it makes sense and we see a ton of people building bridging protocols now, which is great because that's really needed. Today's user experience is just messy. You end up having some messes on one chain, that's another chain. And so yeah, I think there'll be a ton of demand for that. But I think that kind of multi-chain experience will just be an embedded part of the best applications. So a good wallet will just give you a good multi-chain experience. You won't really know the difference.
And you might just know that it might even help you trade on whichever chain's cheapest at that time. And they're doing the exchange from one chain to another kind of for you as part of the bridging. So yeah, I think that that's likely. And I don't think that's too far away.
slava (41:52.546)
So you're just so knowledgeable and we all want to be like you. So what exactly are you listening? What are you listening to? What are you reading? What are you watching? If we wanted to copy you a little bit? What can we you know be doing?
mc (41:57.996)
Hahaha
mc (42:06.212)
Well, I listen now is near a podcast, so we start there. Um, what else do I listen to? I listened to bankless, which is a crypto podcast that I really, really like. Um, I listened to Caris Wishers way, cause I really, uh, I like her attitude. Um, what am I reading? I'm reading a book called the future of money.
by a writer named Anwar Prashad, who's a finance professor. And it's just a really kind of balanced take on, well, the future of money. And crypto certainly figures into it, but he's not like a crypto enthusiast. He doesn't work in crypto and he's pretty neutral. So I think it's a good take on the impact on sort of money supply and global financial system. And then I'm reading a book called Tightrope, which is about...
Death of Despair and sort of the failure of American domestic policy to support people struggling with addiction and income inequality and stuff like that. It's by Nicholas Christoph and his wife.
slava (43:07.374)
Wow, and so are you reading both books at the same time?
mc (43:10.683)
Yeah, I always read about two or three books at the same time because I, I don't know, I get a little bored of one and I switch to the other. So the third book I'm reading is a book of poems by Amanda Gorman, who was the, who gave the poet, who read the poem at Biden's inauguration last year.
slava (43:25.678)
Great. All right, well, any final predictions you wanna make for our future?
mc (43:33.057)
that Slava Rubin will be among the best crypto investors and biggest thought leader in alternative investments. That one I feel confident in. I'm willing to make that prediction.
slava (43:40.238)
How about anything crypto related?
mc (43:44.68)
No, look, all I can say, I think it's the future. And I think that people who care about technology or who care about the financial system or making the world fairer should get into it because it's extraordinarily rewarding and fun.
slava (43:58.722)
Well, thank you very much, Mary Catherine, for your time. This has been an awesome journey. You took us everywhere from old weapons to navigating DeFi layer ones, layer twos, and tell us how to make it a much bigger market, your three big statements. So thank you so much for your time. This was awesome. I look forward to chatting with you again.
