Looking Ahead at the Future of Digital Capital Mar

What is up everyone? Welcome back to another episode of the Dibi Crypto Podcast. And today I am joined by Brent Xu. And he is the founder and CEO of Ume. And that is pronounced like Ume like Uber. This is how we went through it before we started recording. So I am going to try and get that right. So how's it going today Brent? Doing good. Thanks

named camel RV. So his back background is that he was an expert in interest rates and yield curves. He was the first economist that that pretty research showing that inverse yield curve resulted in economic recessions. And he became really disillusioned by the world from the 0809, you know, or gets crisis. You know, he stopped teaching. He became a bit depressed until he discovered Bitcoin. And you

know, he was actually a major libertarian. I started teaching a class on Bitcoin. And everything just kind of made sense. Bitcoin was sort of this new paradigm for how money should transfer. So took Cam Harry's class. And I eventually met Joe Lubin through his class. And through Joe Lubin, I joined consensus. I was an early employee, roughly 20 or 25 employees at a time. He helped

build the company up from a, you know, small startup and just saw the theory of ecosystem blossom in the early days. Eventually I joined a tenderman. The creators of the cosmos blockchain to lead strategy there, build out, you know, most of the ecosystem and the early days as well since the launch of the cosmos network, as well as all the other networks involved. And eventually launched

Oomi as a blockchain built on the Cosmos SDK when the sentiment BFT proof of stake in census and just building on a lot of momentum, shipping a lot of cool products and just gradually building out the Oomi ecosystem, the Oomi blockchain as well as various other subchains that will connect with the main chain. Cool. Very cool. Yeah, I think there's a lot to be said about,

you know, the things you guys are trying to accomplish, especially in DeFi and a lot of people listening, understand DeFi, you know, very simplistically. And some people more dynamically and very deeply, but I'm curious just to understand from a 10,000 foot high level as to what you guys are trying to accomplish. And then we can go into what stage you guys are currently at. Certainly. So

Oomi's a cross chain DeFi protocol that connects between the cosmos and the Ethereum blockchain. And we're building out a suite of DeFi tools that fit in the broader money like the ecosystem, Oomi itself is a base layer chain built on the Cosmos SDK. I mentioned earlier. The problem that we're trying to solve in DeFi is a problem that's someone in here in the broader overall capital

markets. We're trying to bring the debt capital markets, foreign lending, you know, fixed income, just anything that that related into a open source DeFi digital format. So right now, the problem is that in the broader debt capital markets, everything is built on just, you know, slow, slow moving. ceased to hammer down Tesai ly when we remove thatbin. So we want to tell you where exactly we're

looking at chilled and put some some in the middle of the basket from the hides of Fiko i.e. that that table. And actually we can jump below try. So we're involved, you know, crisis, resolve itself and roughly, you know, two months, two months was just enough time to to indicate the fallacies of a lot of this lending bar and that's happened. Which to me shows that

crypto is fundamentally a better infrastructure for facilitating bar and lending because it's transparent. You have a public blockchain or high everything that can, you know, show whether or not, you know, massive re-hypothications are happening. So that's the problem that whom he's trying to solve. We're trying to rebuild the debt capital. We're trying to build a capital market in terms of stage. Our main net is fully

launched. We already have a functioning blockchain up and running and we're anticipating a few major upgrades, especially in the coming weeks. We're going to see a major upgrade to the only blockchain. As well as a lot of new chains that just don't on top of whom we and use the blockchain protocol for, you know, technological infrastructure for building stuff. Got it. Got it. And you mentioned

a term that I've heard used quite a bit recently. Especially after the whole Celsius sort of explosion of re-hypothication. And I think for listeners out there that don't know what that is. If you could give a basic explanation as to what that is and how, you know, it's somewhat of a downfall for the centralization of finance. Certainly. So you can think of re-hypothication in a way

like, let's take a simple example. Let's say you have a hole and let's say you own the home outright and you want to get, let's say, a home-ackery line of credit. So I have my home. It's worth $100. I get a home-ackery line of credit for $50. So, you know, half the value. Let's say $70.70. You know, 70% of the value of the home. And that's

my additional money that I use my home as collateral to borrow. A re-hypothication occurs when you take that same home and you already have that $70 loan. And let's say you've got another $50 loan somewhere else from like another lender. That's not fair because you only have one home and that home can only be used to pay back one of the loans. It can't be used

to pay back both loans because you only have one home. That's in essence what a re-hypothication is. It's basically kind of double spending your collateral. And so, you know, we sort of saw this a lot in the mortgage crisis where a lot of these securities were so complicated that there was just massive amounts of re-hypothication that was happening. And when you think of credit, you know,

as a corporate note, that can't really happen because you have a public blockchain. And it's really hard to like double spend a Bitcoin. When you have a Bitcoin, you can't really say it's like more than one Bitcoin unless you're kind of hiding it behind some centralized infrastructure. So, that's the basis of why I think that blockchain technology is so great at, you know, adding transparency and

just making this whole system better. Got it. Yeah, I think that was a good explanation. I love the movie, the big short and a lot of the things that they taught. And simplified down in that movie were really fantastic. So, I always like to go into really fancy terms like that and try and simplify it down the best I can. And I remember that Coinbase, I

believe, was really the only CVI platform that wasn't doing re-hypothication. And I know that they may or may not be doing it now. But I remember that was part of their value proposition when the whole lending, borrowing trend started. And I really like how that kind of compressed time frame is just a result of technology. And it's a better system to use for these type of

instruments. And I think that this is something that I think is a very great point that you mentioned. Oh, certainly. I think movies do a great job of compartmentalizing knowledge, making things digestible, but also just kind of seeing how our world is put together, seeing how technology is really evolving. And this is sort of an acceleration of all the things that we can do in a

digital format. So I see you're saying excitement for a lot of this stuff. Yeah. So let's talk about interoperability. You know, it's one of the pillars that you guys are really focused on. And I wanted to kind of A, learn, you know, how you guys are approaching it. And B, what you think is, you know, going to happen over the next couple of years here, because

it is it. It is once again another one of those big buzzwords that a lot of people use. And it's such a difficult problem to solve. So we'd love to get a little bit more of your take on it. So it's great that you asked that question. And you know, you mentioned the pillars. So we have three main pillars. One is interoperability. The other is privacy.

And the third is scalability. If we can get all three of these things and blockchain will dominate blockchain will be the new thing that is the foundation for everything and our technological society. So I'll focus on that interoperability part. So we think of interoperability in a specific way. So my perspective on bridges is that bridges are in the current state somewhat flawed. So right now bridges

kind of act as third parties, which can take on the role of sort of and some instances, a glorified multi sick and other instances, you know, complicated, pre lane systems that can, you know, mint and burn assets from one blockchain to another. This configuration has a few challenges. For example, we've seen close to, you know, over the next few years, we've seen a lot of things

that are going to happen. For $1 billion worth of hacks with bridges because of fully configured infrastructure, sometimes they're based on proof of authority networks. And I think the future of interoperability needs to evolve beyond that. And so the way that we think about interoperability is through a very special protocol called IBC, which was created in the Cosmos ecosystem. But can be applied to any chain

out there. It can be applied to any vast minority chain. So the way I think of IBC is I think that it is the TCP IP of crypto. So TCP IP and then is this technology that's used to ferry packs of data from one router to another, basically the thing that connects all of the internet together. We think that IBC can act similarly to blockchains. IBC

is a low level protocol that basically lets you ferry packs of data from one blockchain to another. And what's special is that it can be done really fast, very user-friendly, and it's applicable to any fast minority blockchain. That means watching that comes to consensus within five to seven seconds or even sub-second, sub-second, sub-second, sub-second, sub-second, sub-second. And then we think that we can find out in

some instances. So we think of interoperability from using a protocol like that. Something that can basically attract your transcript opens from one chain to another, really fast, really user-friendly. So in a way, a lot of different approaches to this. And one of the most famous ones that did get hacked, oh, I forgot the name of it though. It started with a P. Was it portal? I

forgot what it was. But basically the way that the bridge and majority of bridges worked is it's a locked up amount of funds and then they give you like a wrapped version on a new chain. And that locked, yeah, I think it may have been wormhole. But that locked token is a honeypot. So what happened was, I remember, it was like $700 million. Was it Brent

where they tricked the smart contract into just unlocking tens of thousands of Ethereum that people had wrapped and moved the dawn to other chains. And they just sort of simply said, oh, no, actually, that's mine. And the smart contract just fed it back out to them. So many really complex issues that come up, and it's a brilliant idea. But I'm curious as to how you think

IBC is the winning route as opposed to some of these other bridging plays that have happened. Certainly. And you're right. Basically, a lot of these bridges inherently just become these honeypots, these gatherings or amalgamations of crypto that gets bridge between one chain to another. And the more complicated the bridge, the more vulnerabilities that they can potentially have, the more you need to audit, the more you

need to basically put on your tent full hat to make sure you're checking out all of the vulnerabilities. And so this is where IBC is different. So with those bridges, your acts rely on like maybe a third party, sometimes like a TLA blockchain or sometimes just a third chain that just relays those transactions from one to another. IBC is different. IBC is actually a module that

sits within the state machine of the blockchain itself. For example, if you're bridging between the Solana blockchain to the Ethereum blockchain, IBC exists as a module within the Solana state machine. And IBC will exist as a module inside of the Ethereum state machine, likely a Ethereum 2.0 or a system-go-art theorem chart. But what's special about that? The security of the transaction from one to another is

directly dependent and correlated until the consensus of that actual chain. So the security of the token transfer from Solana to Ethereum is directly correlated with the security of the Solana blockchain itself. And that's what makes IBC special. You're not relying on like an independent third party bridge, relying on that actual blockchain itself, which makes it a more powerful communication protocol. It makes it more, it has

the ability to be more ubiquitous and more secure and more socially reliable when it comes to keeping your assets safe. Interesting. That's cool. I hadn't actually hadn't known that. That it uses a security of both because like we mentioned, the honeypot aspect just makes it like a beehive for all the hackers across the entire world to go in there. And the crazy part about this is

a lot of these hacks, the funds of just been returned. I think if you've noticed that, some of them have just been like, hey, we're keeping a million dollars worth and here's like 200 million or 300 million back. Like thanks, fix this. And we're going to take our money and go on to the next honeypot. And it's such a fascinating experiment on such a large scale.

So it's cool to see IBC as like a new approach using security of both chains to talk to each other. So let's change gears a little bit. We've kind of dug into where you guys are at, the three main pillars, this is what you're trying to do. You're a sharp guy. You've been in the space for a while outside of what you guys are doing. Let's

talk about what you're excited about. When you get up in the morning, like what is it that you're immediately checking your phone for and you're just super excited to look at. Definitely. So I'm excited about a few things. I'm excited about a three room 2.0. I think that's a major improvement to the ecosystem. I also really like proof of stake to the point where I kind

of favor proof of stake over other protocols. I think that this consensus protocol or this class or group category of consensus protocols is very effective at facilitating fast minority transactions between one chain and another. And with the evolution of proof of stake, I think that's a great thing. I think that more and more new chains will connect to each other. Connecting between a proof of work

chain is actually a bit more difficult. Connect to a proof of stake changes is much more easily facilitated. And then sort of the third thing that I'm interested in is how these new protocols like proof of stake, how something scale like a theory of 2.0 is going to influence the rest of the broader markets. I really think that blockchain is sort of the second coming of

digital capital. Capital markets. I think that our markets are already very old, very legacy structured, very inefficient, very prone to failure, prone to manipulation. I think blockchain really is going to bring a new layer of transparency, a new layer of efficiency, and to more accelerate developments of the broader capital markets ecosystem. And so I patiently wait for this gradual revolution of how, you know, the broader

market is going to change. You're going to see this new paradigm shift for how folks think about value and how folks think about, you know, how economic should be built from a foundational level to where they are today. Well said, well said. Yeah, I like that the idea that proof of stake chains are actually going to be more conducive to interoperability. That's really exciting to kind

of think about. I hadn't really thought that way and how they can play nicer together. And it's easier than proof of work. But also, I think that the meme stock phenomenon with Robinhood and GameStop and everything, really, I think blue the door open on a lot of this like multi-day settlement. So when you people realize, like, wait a second, this isn't an instant settlement. Like this

is just an interface that I'm I'm buying a stock, but it's actually not being settled until like, you know, I'm going to be able to see what I'm doing. Like another day and it was like this, this huge click, you could a light bulb moment across the entire like Wall Street world. And, you know, I thought it was such a fun thing to realize that that

is a legacy broken system. And we're all working on this instant settlement system. And it was this cool example of how all of this can actually play out with something as basic and simple to unwind. And I understand as I get this right now, when I buy this, I get this immediately. And it was such a cool phenomenon that that whole thing that transpired. Well, those

are all the questions that I have for you, Brent, where can people go and learn more? Absolutely. So, you know, feel free to follow us on, umi underscore crosschain on Twitter. That also includes our link tree that that directs you to our website as well as all the relevant links. And in general, you know, we're just happy to be here. We're happy to be here. We'll

be building and supporting the overall community. And all our overall goal is really to bring the $200 trillion debt capital markets to crypto. And we're just doing that step by step piece by piece protocol by protocol. And we appreciate everyone's support and just looking forward to seeing you guys out there. Awesome. Awesome. Well, wherever you guys are listening on iTunes or Spotify, the links that Brent

mentioned will be in the show notes. But thanks so much for coming on, Brent. Thanks so much for having me Steve. Thanks.