Reject Nihilism, Build Solutions w/ Sam McCulloch (USD.AI)

Rex Kirshner (00:03.783) Sam, welcome to the Signaling Theory Podcast. Sam (00:06.892) be here, Rex. You're like one of my favorite people in this industry. I'm always happy to come and chat with you. Rex Kirshner (00:13.703) Well, thank you, man. I feel like in a lot of ways we grew up together, especially like in our podcasting arcs. I think you beat me to the punch a little bit, but the last like three years was a lot of like side-by-side podcasting. Sam (00:26.412) Mm-hmm, yes, lot of arguments. Rex Kirshner (00:28.477) Yeah, well, those cooled off a little bit when there just became less to argue about. But anyway, man, before we like really jump into it, can you just give a brief introduction of yourself and who you are and just like give us the audience a foundation to let them know who's talking? Sam (00:44.418) Yeah, so my name is Sam. I'm currently growth lead at USDAI and I've been working in this position since September. And it's really a great protocol, like project overall that I love. Before that, I ran Leviathan News, also Flywheel DeFi, and so had been a long time, like you said, working in media and kind of in the industry. And it was... I had a lot that happened this past year from some family medical events to just other things happening with my companies. And so it was a big transitionary year. I think one of the things that has made it so great is that ending up where I am now at USDAI, which I know we're going to get into later on, but it's really a breath of fresh air to be in a protocol which has like not just just hype but seems like it's gonna make a significant impact long term and that's kind of like brought me out of my low state that I was in over the summer. Rex Kirshner (01:50.141) Well, man, I am sorry to hear about your low state, but I'm happy that you're out of it. yeah, I mean, think you kind of put us on a good path, right? But just to give some context. So I reach out to you. know you've been working for USD.ai and if you've been listening to this podcast, you've heard me bring up USDAI like many times, because as I know, you know, I think what you guys are doing is both interesting on the standpoint of like how do evolve stable coins, but also on like, hey, how do we start to use this technology for things that are not just like introspective of crypto and actually like enable things in the real world? And so of course I want to get to that. think many in the audience might just be interested in like everything from the basics of what is it, what are you guys doing to where are going? Why is it just regular project stuff? But when we were organizing this conversation, something that you said to me was like one of the reasons that you're most excited about USDAI doesn't even really have to do with the project, but it has to do with, to put it crassly, right? Like the vibes and that what you've seen is a real rejection of a lot of the financial nihilism that seems to be pervasive. And I don't even want to say financial, right? Like, I don't even want to say crypto nihilism. Like look around. Sam (03:13.581) Nihilism in general, yeah. Rex Kirshner (03:13.819) right, like politics, like cost of living, all this stuff, right? Super nihilistic. And so like that's where we should start the conversation. So, you know, I'll give you the floor in case you just like have an idea you want to start us off with. If not, no problem. I'll ask a question, but just can you talk a little bit about like the financial nihilism that you were experiencing and living in that drove you to find some change? Sam (03:30.123) I have it. Sam (03:36.781) Can I ask you a question? Sam (03:40.693) You came in in 2017, right? Rex Kirshner (03:43.261) I wish, I don't know. No, I came in in 2020, except for I wasted 2020 on Cardano and Tezos and things that, just everything that you lose money on to learn what's real. Sam (03:48.109) It's funny. Sam (03:56.111) Do you remember how you felt then? Rex Kirshner (03:58.461) Yeah, man, for me, first time I was, like Uniswap and Hayden Adams was like, oh my God, this is interesting. And then it was like the curve wars where I was like, okay, this is different. Like this allows us to push the boundaries in a way that like something new and interesting and that has never been seen before might happen. Sam (04:21.015) Yeah, was more about finding consensus and alignment and how can we direct these distributed communities to working towards some intelos, right? That at the end of it, these are fun games that we're creating, but at the end of it, we're gonna have some greater good come out of it, right? Rex Kirshner (04:41.819) Yeah, for sure. mean, just like to the curve wars, right? Like the idea turned into like a whole, you know, like just shit show a little bit, but like it was, we have a decks, like how can we build a better decks that's more sustainable? That's more efficient. Like it was about building better solutions at the foundation of all of the like memeyness on top of it. Sam (05:03.455) Mm-hmm. Yeah, and I think that kind of sentiment that there's something positive ultimately that's going to come from all this development, I think is, we've almost lost the plot on that because I can think about going back to... my entrance into the like working full time, which is back in 2017. You know, I had known Bitcoin for a long time, but I really like, I believe that it would make a difference in the world. And I think that's what has kept me here for so long is that like all the time and effort and money and opportunities that have been chosen to like remain here for so long. It really like, I have to believe at the end of the day that it's working towards something positive and good. And that's why I see the current malaise, you said in the beginning that there's just nothing to argue about anymore. Maybe that's a byproduct of the current malaise, really, we've almost descended into this broader nihilistic view of what these markets are for and who's going to use them. And it's something that I really struggled with over the past year. Because look at it, we've built some really cool things. think you talk about the base infrastructure of creating Uniswap, Curve, Aave, the plumbing that makes everything work. We've gotten to a point where it would be extremely difficult to make a product that's 10 times better than what Uni V3 or V4 or the current Curve. designs or Aave, right? It's really hard to beat those incumbents because they've been iterating for several years now. And the market knows what works. We know how to set up token sales and raises and we know how to direct liquidity. We know how to make swaps work. But I think we got to the point where it's like, okay, like we've kind of maximized all of these internal rails of Sam (07:12.832) lending and swapping derivatives with hyperliquid that came out last year. What can we do next? And I think this is where the massive opportunities are, because now you don't have to worry about... Okay, how can I build a front end or how can I get liquidity going for token or how can I deploy stable coin? These things are like trivial now. And so a lot of the hardest problems that we've needed to work through to just get to the point where we can build functioning apps that can compete with. companies and groups, institutions in the wider world, we're just at that point now. And so I think it pushes the difficulty level higher because the questions that we have now are not technological of, can we build a hyper efficient A Yes, we have those, or we're lending markets. The question now is, can we find viable business models which can outcompete? what's in TradFi or in the wider world due to the technical gifts that we've been able to develop through all this like DeFi and other technology that we have now, even stable coins, which is like just another rail, right? Can we now implement this to build great companies that make a difference? Rex Kirshner (08:37.039) Yeah, I love that sentiment. And I think that there are people like you and me included that still think like that. I just I don't and I could say that like, sure, the same people that are today just like mask off like it really is about extraction and whether it's like a really cynical like scammy level extraction to These things that are more dressed up that look more like investments, but at the end of the day, right? Like, I can name names as this conversation goes through, like, you know, Celestia is a great example, right? Where there's a lot of interesting technology there, maybe. but the, at the end of the day, like it's really hard to look at what happened and not see that as a VC scam, right? Where that is how does a VC create an asset that they can dump onto retail that, that's the product, right? And so. I don't know, guess that stuff was happening in 2021, but that, at least in my experience, wasn't why we are here, right? And it feels like that's why we're here today. And I think there's opportunities to be better than that. Like maybe some things are turning around, maybe they're not, but do you just have any thought on like how we got here? Sam (09:56.909) Well, I think a lot of the path towards launching a token or some sort of copycat has completely dried up. The market is very smart. We've got years of data now to justify valuations for different projects. all the pipelines of the academic who has an idea that they've been working on for 10 years and wants to try it out on crypto, and so they launch a token. That's gone. The builders who want to fork something and launch it on a new network, I we've discounted that at this point. And a lot of the middle ground that was available. for many years, right? Where the easy gains were, where you could just throw money at the wall and it would stick somehow, have just evaporated. And so really now it comes down to like, can you identify fundamental value on one side, where you have like real companies, real projects, real protocols that are delivering value? Or on the other side, it's all made up and there is no value. And it's just this like Keynesian beauty contest. determining who's gonna be the last buyer at the highest price. Rex Kirshner (11:11.357) Yeah, but like, what do you think happened? Like, did we, just like exhausted all the good ideas in 2022 and it happened to coincide with, uh, SPF just like completely screwing us all. And then there was just like nothing easy left. So all that was left is like chasing after our own tails or like this didn't feel like this in 2021. Sam (11:32.992) I think a lot of but I would say a lot of the easy problems have been solved when it comes to like DeFi at least. Like look what's left. You have restaking, which is quite possibly the most complicated thing I've ever heard of in my entire life. But it's not really because there's an entire like ZK industry that exists where the smartest people in the world are. Rex Kirshner (11:39.322) Mm-hmm. Sam (11:58.998) fervently trying to deliver privacy in some regard, but they're hamstrung by legal. And so there's still lot of hard questions to be solved. The issue, though, is how do you communicate that narrative in a very easy way? Like, have you seen this book that they gave out at ETH Denver, I think it was, about like how to explain ZK technology to a five-year-old or like Eli on five? I think it's like Zama or one of the other privacy-focused networks we're giving away. And I've tried to read to my kid, but it's my six-year-old, it's very hard. Even them trying to like break it down to something that is like very easy. Rex Kirshner (12:27.898) No, no. Rex Kirshner (12:39.718) Yeah. Sam (12:47.909) still requires a lot of math. And so I think those concepts are hard to translate. And they're just not like normie coded concepts. And then the things that are like easy to understand are just exploited. And it's just a max extract machine. And I think the markets wise up on that as well too, like meme coins are relatively dead as people move back towards like Polymarket and Cal-She and other places where there's... Rex Kirshner (12:58.108) Mm-hmm. Rex Kirshner (13:15.313) Well, let's take a moment on meme coins. Why do you think that that seemed like, I don't think you and I ever really thought that was legitimate, but why do you think it got the entirety of the momentum and the energy of the entire crypto industry for 2024 and 2025? Sam (13:38.38) I'm sure there's a lot of like wash trading that's occurring through there. It's very easy to, especially when you have a billion dollar Mucoin to move money into it by pushing the price up and then somebody who already owns the tokens can sell out of it. This is just my belief, but I think it's like illicit funds flows. Rex Kirshner (13:51.314) Mm-hmm. Sam (14:03.231) And it was really like the first time where, because in order to make it work, it's almost like the meme coins work as an illicit funds flow in the same way that tornado cash does. Is that the more buyers and sellers that you have, the more volume that you have relative to the position that you need to exit, it masks the volume that you're doing and you can hide the many different people who are like owning your, owning the token and gives you like a more efficient way out. Rex Kirshner (14:12.295) Sure. Rex Kirshner (14:31.457) Can I just give some evidence of that? Which is, do you remember the Bybit hack? It was around East Denver last year, so like February, March-ish. And one of the things the North Koreans did was they took a huge amount of capital, like hundreds of millions of dollars, transferred it over to Solana and just yeeted it at like hundreds of different meme coins. And so like, you know, who knows like which of the wallets that own those meme coins were part of North Korean like Sam (14:52.521) Yeah. Rex Kirshner (14:59.645) the same people that just use that to launder the money. And my first thought was like, my God, what if this is all volume on Pumped Up Fun? What if this is the purpose of it is to take illicit funds and wash it through? No, man, I'm just a lucky guy who really understands memes and culture. Sam (15:10.603) you Sam (15:23.605) Yeah, those are for the ones that run. Like at the bottom level, it's just people trying to max extract, like the pump and dumps. But what's unfortunate is like how prevalent this type of culture has spread to the rest of the industry. I was shocked at the recent statements that Brent Armstrong and then I think one of the other Coinbase product employees made about Zora, which is Coinbase's... Rex Kirshner (15:29.607) Mm-hmm. Sam (15:52.012) kind of crown gem of the base ecosystem. Just saying that like, creator coins are like 24 hour tokens. Like there's no expectations that they're gonna hold value in the long term. They're just gonna get pumped and dumped in this like really short period. And so that's the only thing that really matters is like how early you can buy them and like, like whether you can sell before you get completely dumped on by like the people who are, you know. sniping them at the beginning or I don't know it just it seems like a terrible product to sell like there's no way that I could go to people who have not been in the industry for a long time and be like go buy these things you're gonna lose money you're gonna lose like 90 % of your money in the next day but at least you're gonna have like fun doing it Rex Kirshner (16:33.229) Mm-hmm. Yeah, how much do you think like this is a reflection of we'll use FTX right as the inflection point but like how much do you think this is a reflection of post FTX and then post like the just, you know wealth destruction of 2022 2023 that was related to interest rates, but like also had other factors just led the the good faith actors who were really interested in building things to, you know, like either quickly or slowly walk away from crypto and walked into things that kind of had more societal legitimacy and, and, know, seeming upside things like AI and like private credit and, and the things that really popped off since FTX. And then like all that was remaining is the people that were here for just not the best reasons. Sam (17:26.855) I think it's a longer problem than what you're talking about. You go back to the ICO boom and this type of production of worthless assets that were being used for illegality and... pumping and dumping still existed then. think what happened is that the means of production became hyper efficient and it got to the point where anybody can launch anything for a dollar essentially or less, right? And so anybody can start their own token and... And it really like back in 2018 or even 2020 to launch a token and to get significant size and draw attention and narrative and capital. You needed a white paper back in 2018. You needed partnership announcements. Like there's there's still like a guise of actually trying to make something back then that started to fall off in 2020. And then by the time we got to pump fun, it was just like anybody can make a token. Rex Kirshner (18:34.394) Mm-hmm. Yeah. Sam (18:34.908) have at it. It's totally free market. I think that the... And look, I'm not discounting. There's people out there who generally enjoy trading these things. I'm not discounting any of their experiences or what they want to do in the market. I'm not trying to moralize here. I'm just saying that there's the voices that speak very loudly about those types of circles, and now... increasingly being dragged in with the sports betting that takes place on like polymarketing and calcium. I just don't think it's healthy long term for the industry. even, know, and Vitalik kind of sees this as well too. He posted about this the other day about how like, you know, Ethereum is not DeFi, like it's bigger than that. And it's not, it's not pump fund, shitters. It's much bigger than that, which I, which I wholeheartedly agree. I think there's like some like deep moral good that the Rex Kirshner (19:16.539) Mm-hmm. Sam (19:33.886) the development of the networks represents. I will say that the... that this kind of flattening of the curve when it comes to the difference between meme gambling and sports gambling and investing in stocks is really detrimental overall. And it goes at, it's... I'm a boomer now, right? And so I have kids and I think about what their financial education would be. But if you're raising an entire generation of young men to gamble their fortunes away, whether it be through mean coins or sports betting or through zero-day options, it's not healthy and it doesn't really lead towards long-term wealth building. So I don't know. I don't think there's any fixes for it and I don't think you can do anything at this point. Rex Kirshner (20:24.764) Yeah. Sam (20:31.23) I think this sports betting you definitely could do something like I'm very against the explosion of sports betting through Polymarket and Cal Sheet. Rex Kirshner (20:38.749) Yeah. Yeah. And like, I refuse to get into like a political debate on this show, right? Because like, the only thing I've learned in the last 10 years is that like we're peon, we're ants that don't matter and just get stepped on, right? So like, whatever, right? It doesn't matter. I do... Sam (20:53.577) Yes. Rex Kirshner (21:00.113) think ultimately any solution to ramping gambling comes through politics. It has to come from society saying, yes, this is possible, but it's the same with drugs or just straight up crime. It's all possible. We need to collectively decide if this is something that we allow loosey goosey, society is worse off for it, and we need to come together to figure out ways to. one, reduce incentives and two, reduce the things that are pushing people into it. Sam (21:32.778) I fully recanted my pro marijuana stance in this day to day. Rex Kirshner (21:39.655) Mm-hmm. Sam (21:43.402) I think when I was my 20s, I was very forward. was like, just let people do what they want. But then I get to now, and maybe it's just I'm getting old and I'm 40 now, is that I just don't think it should be legal in public places. We ban smoking wholeheartedly in this country, yet when I walk around, there's just constant, constant marijuana smoking in New York City. it's... one of the worst things that makes overall life in Rex Kirshner (22:14.715) Okay, dude, I'll give us two minutes for this politics stuff, but do you feel the same way about alcohol? But what's the difference? Sam (22:19.431) No, no, because like, there's, you, I mean, but you can't drink, like, you can't drink in public in most places, right? You can't, no, but a bar is like inside and it's a commercial venue. What I'm talking about is like... Rex Kirshner (22:27.077) Is a bar not public? Sam (22:33.561) Typically anywhere you walk and this is and this is kind of like my belief about the gambling as well to sports game It's like I just don't think it should be so publicized like it should like if you want to gamble if you want it if you want to do these these vise like I just don't think that we should normalize vice is my point and when when it comes to either polymarket or pump fun or Rex Kirshner (22:40.797) Hmm. Sam (22:54.117) smoking marijuana. I just don't think it should be like a public event that we celebrate and then we commercialize. like the arguably the the integration of sports betting into being one of the largest advertisers for all of the the different sports has been terrible, right? Like overall, it's yeah, like when it was when it was like when it was something that you had to go to Vegas for or like you knew a guy who would get you who would get you the bets. Rex Kirshner (22:58.909) Mm. Rex Kirshner (23:11.175) Yeah, terrible for sports, terrible for people. Sam (23:23.943) Right? It's not open, it's not exposed, and it doesn't define the entire system. Because now people just talk about betting lines, right? And it's, you you have people in the stands who are yelling at players because their props aren't being hit. Or the players themselves are taking the dive. And this is the thing that Polymarket enables, is if you become a big enough celebrity, you can essentially like... push the market any way you want to, right? Like specifically, again, Brian Armstrong on the earnings call coming out and reading every single word that was in the polymarket betting line. Like it's this normalization of vice, which I think is very demoralizing and just overall like bad for society. I hope that like, think it's like, I don't think the Dems would have done anything differently had Gary Gensler been here. They just would have looked. Rex Kirshner (23:52.85) Yeah. Rex Kirshner (24:00.444) Yeah. Rex Kirshner (24:10.78) Yeah. Sam (24:20.625) blind eye or maybe just shut things down entirely. I don't think that's the right path, but I do think that there needs to be some limitations on what can be done. Rex Kirshner (24:34.887) Well, dude, drafting off these limitations, right? I think you and I are 100 % aligned on sports betting, just any sort of, how do I phrase this? Like something that many in our industry point to and say, yeah, but this is good. Look at something that we've brought to the table that adds something new is betting on political outcomes. Right. And I'd love to get your take on that. Personally, my opinion is like, Maybe, maybe, maybe there is some sort of way that putting money on political outcomes exposes some information that was hidden before by pulling shirt. Maybe. I just think that gambling is bad and this is horse shit. Dude, someone just made $400,000 on the Maduro thing. What is good in that? Sam (25:16.009) Mm-hmm. Sam (25:34.674) I think, look, I don't have an issue with large-scale political events. And I do think that having markets where you can speculate on those things is healthy and efficient. But I have issues with vice-like markets. So anything that death markets, which are absolutely bad, right? And nobody has death markets because they would just enable assassinations. I don't like sports betting because we know scientifically that the increase of sports betting leads to a decrease in the savings rate, more domestic violence. Just every bad outcome that you can think of is increased by more prominence of sports betting. So, and I just look at the numbers and I just don't think that it's a healthy thing to pursue. And it's not even, I think it should still be legal. I just don't think that it should be public. It is my main thing. Like you shouldn't be able to advertise these things. You shouldn't be able to, you know, integrate sports betting into the sports itself as advertisers. it's just, mm-hmm. Rex Kirshner (26:31.665) Yeah. Rex Kirshner (26:49.117) But for example, right outside of sports betting, one of these stories that I was tracking was there's a Twitch guy, his name's like Hassan something, whatever. Yeah, Hassan. I was tracking this like kind of interesting thing where there was a market where he was, the market was, is Hassan going to go to Zoran Mamdani's inauguration? And you know, like, Sam (27:01.609) the sun. Yeah. Rex Kirshner (27:18.235) to the point I'm trying to make. I don't know if this was all theater or not, but he's like reading this on stream. Like I didn't even know this was like, I'm not going to tell you guys if I'm going or not. Like this is total bullshit. People are going to make money if I go or not. And like, there was like significant amounts of money placed on that. And like, I don't know if he was involved or not. don't know if made decisions on that, but like, why, what, what good is that? Like where. Sam (27:33.481) I, I, Rex Kirshner (27:42.991) If you were going to make the argument that that's exposing some information that like traditional things like polling or whatever, like wouldn't expose like. Why is that anything but extractive? Sam (27:57.801) There's a fine line when it comes to these like more esoteric markets If you actually look where all the volumes going on kaoshi and polymarket, it's all in the sports gambling like ninety ninety 95 % plus of all volumes on kaoshi or towards sports markets on polymarket. It's probably like close to 40%. There is a bit more diversity in polymarket, but overall prediction markets have just become the new places to bet on sports. Elections only take place at fixed terms. And so it's really hard to get enough liquidity on these more esoteric markets, because how do you hedge out on... Rex Kirshner (28:25.531) Mm-hmm. Sam (28:39.624) The smaller the market is, the harder it becomes to hedge and like the less incentives there are for market makers to come in and provide liquidity in the markets. No, but somebody has to make the markets, right? Rex Kirshner (28:45.789) I don't think gamblers are worried about hedging, right? Rex Kirshner (28:52.507) Yeah. Yeah, I don't know. We might be getting a little too far off course here. I guess what I'd ask you is like, how much do you understand this conversation to be we having to be about crypto and something that crypto is enabled versus like this whole gambling thing is happening outside of our sphere and like we have some Venn diagram area, but like this isn't a crypto like Polymerc. It's not really a crypto story or crypto problem. Like if anything, all that is is a story of like, Hey, look, we can replace credit cards. Hey, look, we can replace ACH. Sam (29:20.232) Mm-hmm. Sam (29:24.024) I think the ultimate point that I was making on all this is that the narrative that we need to reclaim and that we have for long time, especially with Bitcoin, is just buy and hold. Like HODL. That was Bitcoin and it still is Bitcoin's narrative. It's just buy and hold. And if you have leverage or if you have any sort of way to be liquidated, you probably will be liquidated like people were in 1010. Rex Kirshner (29:36.156) Mm-hmm. Rex Kirshner (29:48.071) Mm-hmm. Sam (29:51.497) And we've kind of like moved away from this very simple just like buy and forget and come back in 30 years and you'll have a lot of money. And we turned into this, you have three seconds to make 10 % and then you're gonna be wrecked, right? And you lose all your money. I think we can move past that. And it just comes back to... Rex Kirshner (30:10.055) Mm-hmm. Sam (30:15.954) the ability of our industry to show what can be done. Like I said, we already know that Aave is great. If you want to come in and invest in crypto, start with Bitcoin, but if you want to go down the curve, you have ETH, Solana as the L1s. But then when you get DeFi, it's really easy. It's like curve and Aave. I don't know if I can recommend anything else other than those two. Because those ones make money, right? And like even though Kerr's been like flat for years, like you do get a yield on it. and there's much more out there if you want to put investment time into, but like if I'm going to go recommend to my friends who don't actively work in the industry to buy something, I would be hard pressed. Even recommended Kerr, probably just recommend Ave. I would just... Rex Kirshner (31:04.418) I mean, I wouldn't definitely not recommend Curve. I would probably not recommend Aave either. Sam (31:09.35) See, that's the thing is like, there's nothing that you can say that is like, okay, this is a company that is gonna be our protocol or token, which is gonna be worth billions and you should put your money towards. And I think like this next year is where we break that. There's a lot of new either consumer apps or. Rex Kirshner (31:20.349) Mm-hmm. Sam (31:32.94) like mine which are creating new asset types and facilitating new types of debt markets that are using the rails that have been built over the past half decade and taking the knowledge that has gone into all the wins and losses especially the losses to design better products. Yeah. Rex Kirshner (31:51.664) Mm-hmm. So before, I do, that's like where I want to end this conversation because there is a lot of reason for optimism. But before we get to like, what are the things that are exciting? Like last thing I kind of just wanted to pick your brain on over what's called this like crypto winter or whatever, right? Like just this lot, this most recent lull is like the, we've seen the outside of meme coins and gambling, the thing that has gotten the most energy and really driven price the most is these treasury companies, right? And like starts with Michael Saylor, then it's like dead silent for a long time, except for like Michael Saylor on his crazy throne, just like yelling at people. And then is this total explosion, like in one month of last summer. And like maybe it's gone, maybe it's coming back, I don't know, but. Like one, like, do you have any hot takes on just like what happened there? Is it good or bad? And more like, interestingly, do you think that this structure is going to be an important part of the story moving forward? Whether the industry like goes in more positive, optimistic ways or continues to be like nihilistic, do you think these treasury companies are part of that story? Or is that really just kind of like financial leeching? Sam (33:11.91) Mm. I think that it gives a really interesting opportunity to access institutional capital in projects which might not be able to because of say securities or other investment committee related reasons. Just for example, let's take something more esoteric that's not Bitcoin, right? Because now we have Bitcoin ETF, we have an ETH ETF. Let's go down and choose something like hype. Rex Kirshner (33:41.511) Mm-hmm. Sam (33:46.544) It doesn't, it doesn't, it's not supported by a lot of exchanges, even today. It's still very hard to acquire if you don't actually go onto a network somewhere, engage with DeFi, go onto Hyper-EVM or into the hyperliquid exchange itself. Like it's very difficult to access through there. And so bringing it to market through one of these dats, I think is like, It's a good way to provide access to investment funds who have strict no crypto policies to be able to buy that asset. So I think there is some benefit for that. Rex Kirshner (34:24.613) Isn't that kind of crazy though? Like to have a strict no crypto like policy, but like, it's totally chill to go buy something that all they do is buy crypto. Sam (34:34.683) you know, like at some point, yes, but, they do that for legal reasons, right? And that they could be sued or, you they, they, ha Rex Kirshner (34:43.921) I mean, it's kind of like. Sam (34:47.685) Yes, it is a bit wild. it's a bit wild. I think that's probably the most interesting thing. I mean, we've always sat at the more esoteric end of this. We're not deep into Bitcoin, and getting into ETH is probably the deepest that we get. You and I have always been way down the... curve into the deepest products. And so that's kind of how I see it. I'm sure there's a lot of benefits for the promoters of these things, and that's why they became so popular. But ultimately, if they are to survive, there has to be some benefit for the issuing company or the issuing protocol to be able to wrap up all these assets and put them into a bath or whatever. Yeah, I don't know. I think it's too early to tell. They've been around for... Rex Kirshner (35:17.405) Yeah. Rex Kirshner (35:28.06) Mm-hmm. Rex Kirshner (35:32.509) Yeah. Sam (35:38.661) I mean, other than MSTR or strategy, they've only been around for like a year or so. I don't want to make any prognostication on them yet. Rex Kirshner (35:45.854) Yeah. And look, like I'll put my cards on the table. I hope I'm wrong. But like I just saw a naked extraction and total bullshit. Like, don't I don't know what else to say. Like that we figured out how to do the token, the VC like wrapped token pump and dump on retail that by convincing them that this is really going to change the world. Like I think we just found a new form factor with like even less educated retail, which are like the boomers at pension funds. Sam (36:15.783) I think that know what I think the thing that people figured out that coming into this year is that the margins on pretty much every single product in crypto we're gonna go to zero as as TreFi comes in because they're way smarter than any of us and when they're doing due diligence or setting up any type of program like they're not gonna allow for these fees to be extracted like their their whole job is to prevent extraction Rex Kirshner (36:25.979) Mm, mm. Sam (36:45.171) and you know yeah or to capture extraction themselves yeah and so like you you look at the evolution of what's happened i'm just going to talk about like defi things here is that like you know lending rates have compressed on stable sorry i'll give them lending next but on swaps like swap swap rates have come down to like what they're like one basis point now for stablecoin swaps for volatile swaps they're mostly at like 0.05 Rex Kirshner (36:45.787) Or to capture extraction. Rex Kirshner (37:06.269) Yeah. Sam (37:12.699) five basis points and then lending itself, like there was this arbitrage where like people just weren't making any money at all on Aave for years. Like you could borrow USDC or USDT at like 1%. That's been closed, right? It's now 5 % and it matches the treasury rate. And I think people's just expectations have like matched what's out there in the wider financial world. And so now the question is like, so we have these systems, they're pretty relative to what a bank could offer or what a private credit fund can offer. Like, what's the benefit here? Like, why would anyone want to come use these more difficult systems that have like shitty UX, like terrible, like no customer support? Like, if your money's gone, you're gone. Rex Kirshner (38:00.093) Mm-hmm. Sam (38:02.384) you're wiped out, totally wrecked. Like why would people want to come use these in the first place? And so I think that that's the kind of defining like positive moral good question that we have to and other founders have to figure out because it's very difficult one, right? It moves away from just like, okay, how can we mimic what's already been done on Wall Street and in the banks and in private credit and how can we move towards creating something new and novel? to thousands of times and providing benefit back. Because I think many of the projects that you talked about, hindsight's always 20-20, but Celestia sounded like a great idea in the moment. Eigenlayer had it sounded awesome when they were promoting it. And maybe they have great marketing teams. Maybe they were just always hungry for new ideas. Rex Kirshner (38:35.581) Yeah. Sam (39:02.554) But, you know, I think that, you know, over time these, the valuations reset and we kind of have the hindsight to look back and say like, oh, well, maybe I shouldn't have been valued at, what was it, like 50 billion or something, or like, however much the valuations are, like these really silly things. And it comes back to earth. And then also coincides with Vesting Cliffs as well too. Rex Kirshner (39:18.685) Yeah. Rex Kirshner (39:31.035) Well, which I think brings us back into like a little bit of nihilism, but let's let's let's step away from that. Right. And like I would love to hear kind of like your personal story and then transition us into like USDA AI and what you're doing. like talk to me through like what what was going on in the summer that like kind of like led you to this realization that like, my God, this everything like I'm surrounded by nihilism, but Sam (39:35.289) You Rex Kirshner (39:59.804) You know, it's still a choice to either surrender to that and be part of that or to find something that like you believe in and like remind yourself that there's real value here and we need to build the things that have real value into products that people use. I mean, just talk to me about like how you found USDA and like what really drew you to it. And then we'll just talk about what you guys are doing. Sam (40:21.008) So I think being a media creator requires some sort of level of like, pseudo-masochism. And especially like, especially working in this industry where it's so volatile in terms of attention. It just, it requires you to endure through a lot, a shit ton. There is a point probably around FTX where the viewership crashed across all of crypto media and never came back. Go and look at the view counts on the largest podcasts or shows, like pre-FTX, post-FTX. It just dried up. And I don't know if everybody was botting their views, but... Rex Kirshner (41:08.733) You Rex Kirshner (41:14.525) They're definitely botting them now. Sam (41:17.286) I can tell you with Leviathan, it just fell off. There was a six month period where it just went down and then it kind of leveled out and it never came back. And so it's really hard. So I spent three years trying to build a media company. First through Flywheel and then trying to get Leviathan up and going. But it's very hard. It's probably harder than launching a stablecoin or launching an L1. Rex Kirshner (41:20.935) Yeah. Rex Kirshner (41:47.025) mean, BlockWorks is essentially dropping their media. Sam (41:47.175) anything else. Exactly, yeah. Like there's very few media outlets that exist anymore, especially ones of quality. And it's just, it's a very tough business. And so my company, Flywheel, we had worked with Frax and then we kind of supported Synthetix and a bunch of marketing. We had a buyout that was gonna take place in April and that fell through. And so all of sudden we didn't have any customers anymore. And then my wife had a stroke in May, like May 1st, around the mid-third. And so she was in the hospital for a month and then there was a bunch of recovery. it was a really tough summer. The stroke was very unexpected as it would be. You know, just, I had a lot of time to think during that time period, a lot of time to like kind of wonder, should I be here? And the answer is always yes. Like I don't know how many times you've had the... I'd say every two years or three years, especially after like layoffs or like losing money or having your startup go under, you're like, man, maybe I should just like buy a business somewhere and go try it somewhere else, you know? Rex Kirshner (43:09.981) talking to my wife a lot about just like, if I bought like two subways and that's like what we did. Sam (43:15.53) Yeah, what if I what if I buy this like sandwich shop? I actually looked into that when I'm in Miami and like 20 when I had a bit of money in 21 I was like, you know, what should I get out? Like I can buy a sandwich shop that's already like generating money and I can just like hang out and Come in and talk to happy customers all day. I didn't pull a trick on that But there's always there's always that exit and I always think about it, but I never get around to it And yeah, I didn't know what I was gonna do actually I I was I was a bit of a loss and kind of wandering through the desert. Sam (43:52.198) Yeah, I mean, I'm, and that's why finding USDAI was like such a blessing because one, I needed it, and two, was lucky enough to find. really just amazing people who had gone through the same struggles a bit more successful. Still have gone through struggles before and had kind of noticed the industry even better than say like you or me with Dave and Connor, our founders. And I think that as you get older, you learn that like most of your startup ideas are probably bad and other people can execute better. And you're really lucky if you're ever the one in charge and it's your idea to take and lead. But when you do find the people that have it, you should be a moth to a flame and try to hang on as fast as possible while it grows brighter and brighter. Yeah. Rex Kirshner (44:58.191) Yeah, man, no, that's good. And I think, you know, like we're both Russian adjacent, right? Like they take New Year's very, very seriously. And so I'm sure you as well, but like in my family, we just had a lot of time reflecting over last week, right? And, you know, the thing that I walked away with was that it is, it's the easy thing is to be like negative and nihilistic. Like that's easy. You're going with the flow. Like right now it's particularly bad, like my entire adult life, like things have been bad, man. Like we're the generation of the financial crisis and then COVID and then like whatever we're in, you know, like it's easy to be nihilistic. The hard thing is to like make the choice to be positive. and, you know, I think like a lot of good things flow from that. you know, I'm glad like when you found the. kind of like external things that made that a lot easier, but to like have kind of made that same leap that I did maybe a few months before me that like, I don't want to be nihilistic. I don't want to be negative. Like I want to find the things that are good here that I believe in. And like, I want to be part of the story of how everyone comes to see those valuable things despite all the crappiness. So, um, like I'm happy for you for sure. And I'm glad you found the place and, um, you have any reactions to that go for it, but. Sam (46:05.157) Yeah. Sam (46:24.963) Yeah. Rex Kirshner (46:25.115) I would love to hear just like, what is USDAI and why did this feel like real? Sam (46:32.293) Well, just to finish up on your last comment, you know, the great thing about this industry is that people either wash out because they scam and pop a dump too long, and they either run out of money and get broke and they have to go find money elsewhere, or maybe they do make some money. There's always waves. Like every couple of years, you have waves of people who get wealthy and then just disappear and you never hear from them again. I'd say 90 % of the people who I was friends with or came in in 2017 have retired at this point or are no longer doing it. But the people that remain, especially longer than two years, it's almost like when I was living in Moscow, The expats that come for 18 months, they stay, they have fun, and then they go home, because they don't want to live there. But the people that actually stay and live around, they stay there for a long time, because it's not an expat-friendly... And I think it's the same for crypto as well, you have to extremely, it's probably the most competitive industry outside of maybe like AI. Because anybody can come in, anybody can build. And there's a lot of turnover in terms of like projects and ideas, like things flame out really quickly. People make up a lot of money and then just like leave and I don't know, become influencers. different industries or... Rex Kirshner (48:02.715) And people that are not prepared to handle like large mature organizations are honestly, for the most part, the people that are in charge. And I think that's a big problem that we have too, is that like we're just not mature enough as people to be the industry that we want to be like touching global banking rails. Sam (48:20.165) Yeah, well remember, the waves that I've seen is that when I came in 2017, most of the industry was a bunch of hippies of these early Bitcoiners who believed in the mission and just had bought a bunch of BTC or ETH and all of a sudden became really wealthy and were like, oh, I'm gonna go live in Costa Rica and have a yacht somewhere, right, or Puerto Rico. Then the next wave that came in was a mixture of actual builders, like very smart people, academics who didn't know how to build companies, and then also scammers as well too. And that took a couple of years to get washed out. And then the third class was probably FTX-ish, where you started to have much smarter people come in. their job was to build trading systems or to start this like max extraction path. Like SBF was like the first of the max extractors, right? Like at scale. And his generation is mostly in jail now. Him and the Celsius founder. Rex Kirshner (49:18.161) Yeah. Yeah. Sam (49:29.601) Those guys are paying the price for what they did. it really enabled, the ability to do so at scale became so widespread through Pumpfun and other places that now everybody's able to do that if they want. The returns on it have gone down. Thankfully, you can't post it at SPF. Nobody's gonna allow for billions of dollars to flow into an entity without having very tight compliance. Rex Kirshner (49:55.4) Well, except for that Hayden guy who got like multiple world leaders to issue coins. Sam (50:01.794) Yeah, that's the weird thing. I think that if you're in elite circles that have a lot of money, you can only do that once, right? I mean, those types of scams you can only do one time, at scale, into those people as well, because they become smarter and they just don't know. They're essentially preying on new blood into the industry, which we had a wave of due to Trump and all of his other... Rex Kirshner (50:12.189) I don't know. Rex Kirshner (50:26.781) Sure. Sam (50:31.832) cohorts and like post that like I'm sure they saw themselves being dragged through the mud and even even like even all like the world liberty were liberty fine or Trump coin like it's all gone like they don't talk about it anymore like it's like all the all the hype that they were bringing to it and pre inauguration like really faded out in the first six months and it's gone and it's gone now like how many times do you actually hear like Rex Kirshner (50:47.41) Mm-hmm. Sam (51:00.566) anybody Trump adjacent talking about crypto anymore. Rex Kirshner (51:04.507) Yeah, you know, I had like a really big belief that if we didn't see like real legislation, like the whole like securities commodities thing resolved, like all of that legislation done in the first six months, it was just not going to happen under Trump because, you know, like, say, like, I don't really care what anyone's perspective on Trump is back then or now, but it was just clear that like, There's going to be so much controversy and like between just like the global geopolitical stuff, the Epstein stuff right now, like the idea that everyone's just going to like come together to define like Trump's coin is like, it's not a security is it. I don't I think we, you know, this is the crypto president. Like we like we bet we didn't bet wrong, but like our bets not going to pay off. Sam (52:00.972) I think there's always too much risk in putting funds with characters or people. Protocols are much better to put money towards, especially when they're transparent. I think this is one of the defining features of the whole AVE. Rex Kirshner (52:06.236) You Sam (52:17.06) kerfuffle that happened was that Ave is not Stani and Ave is not Mark and like regardless of the parents fighting over a couple of million dollars and the direction of who controls the IP like Ave is going to persist and you know mommy and daddy will figure it out eventually but that makes me even Rex Kirshner (52:33.116) Mm-hmm. Sam (52:44.516) That makes my like belief in what they're doing like even stronger after all this even when like you have internal Struggles in Civil War ball to the top, which is very rare Like honestly, it's very very very rare that this type of situation happens like that. can just be worked out You know, I'm sure they're I'm sure standing mark is still talking and happy and you know working Rex Kirshner (52:49.19) Mm-hmm. Sam (53:09.184) know, these things do bubble over time. And just gives me even more trust in the system going forward, which is what you want to see. And I think all the issues that we've had, especially in how do you build a business and how do you drive value? Or how do you drive value to a token while building a business at the same time? Is the eternal question of what we're at, stage that we're at. crypto right like all the all the questions of the the token equity model splits like where does the value go it doesn't go to a labs company or does it go to the token holders and how does that get separated and what's the legality behind it I think we're getting closer to having an answer you know obviously with with with Uniswap flipping the fee switch hopefully that puts some of the questions around what labs is doing behind Rex Kirshner (53:44.637) Mm-hmm. Sam (54:03.851) Aave's gone through this over the past month. But the good thing is, like we have a blueprint on how to build in DeFi, which is build as much on chain as possible, like limit any sort of external equity governed entities that could extract value and just try to be as on chain as possible. And I think the builders that have had that mindset and continue with that will be rewarded. the greatest. Rex Kirshner (54:35.677) Yeah, I keep trying to turn this into like a positive conversation, but like man, the flip side of that is like, look at Lido, right? Like they built everything on chain and in so many crypto native ways, like they're so admirable, but like they have just been like bleeding and now hemorrhaging market position and like TVL and like therefore revenue basically since Sam (54:40.641) No, look. Rex Kirshner (55:03.535) at least Eigenlayer maybe earlier. you know, I think to me that's a reflection of like, don't want mom and dad to be fighting. We don't want these like off-chain extractive elements, but like we can't just build shit on chain that's like really cool and expect like strong enduring businesses to be built because the technology is cool. Sam (55:25.461) Exactly. that specifically for, it's not just LIDO, right? There's many competitive parts of the industry out there where you may have built the technology first, but it doesn't mean that you've created the services or actual economic value. know, look at how the flashbots played out, right? Rex Kirshner (55:38.757) Mm-hmm. Mm-hmm. Rex Kirshner (55:44.946) Yeah. Sam (55:45.528) Look at how, like, there's, it's a commodities business and it's always a race to bottom in fees. And so what lighter provides is replicable by every other LST and then the LRTs with the restaking. But that's not the end game. Look at what EtherFi had to do to become relevant again in 2025, which was build this entire like Neo bank on top. I think they saw the writing in the wall that even if we even if we had took half of light as market share away, like what are we going to do? Like our earnings are capped. We can't we can't make any more money. And so like we have to build a functioning business that is going to bring users in to build on top. And I think that's the same thing for stable points as well, too. Like Rex Kirshner (56:21.373) Yeah. Sam (56:32.775) I think that the stablecoin business is just as hard or harder than... actually it's harder. Stablecoins is much harder than staking. Because at least staking you could have some sort of technological advantage, but with the passage of the Genius Act, everything's been commoditized now to the point where... Rex Kirshner (56:49.657) I agree. The one thing I'll push back on is like the point of at least Ethereum staking is that like any jabroni with a raspberry pie can do it. So it's like you can't build technology to it. Like that's the point. Sam (57:00.129) Yes. Well, I'm talking about like the staking providers, right? how much material difference is there between a LIDO or an EtherFi or any of the other major... Rex Kirshner (57:04.87) Yeah. Rex Kirshner (57:13.839) In terms of staking technology, like almost zero. Sam (57:17.451) Right, so the only thing that matters then is like what services on top can you provide your users or is liquidity, is your liquidity pool that people can tap into for swaps or lending like more substantial than everyone else. And that's kind of where Lido is at the moment. Yeah, EtherFi has great incentive system and they're building great products now with their new banks. But. Yeah, I think the juice got squeezed really fast. Same thing for stable coins as well, too. That was a big meta for a long time, now there's like, anything on chain for stable coins has just been squeezed out. Yeah. Rex Kirshner (57:49.692) Mm-hmm. Rex Kirshner (57:58.802) Yeah. Well, here's like where I'm bullish for the future. And it's the same story with EtherFi as it is for what you're doing with USD.AI, which is like we need, we can still use the same primitives, the same models, the same technology that got us to where we are. Right? Like in the EtherFi case, that's the staking in the USDA case, that stable coins. Like this stuff cannot just be like self referential and masturbatory to the things that we've already built. Sam (58:28.547) Mm-hmm. Rex Kirshner (58:28.551) Like we need to start using this technology as a tool to do things in the real world. Right. And so for ether fi, what that means is let's take our capital base and use that as a platform to start building like real services that touch like they're it's like literally a bank card. Right. For USDA AI. And you can say this better, but it's like let's use stable coins to like fund something in the real world that's providing real value that's extrinsic to crypto. Sam (58:45.911) Yeah. Rex Kirshner (58:56.957) And like we can have a whole conversation about like, is AI a bubble and what does that mean for GPUs and all this stuff, blah, blah, blah. Like that's a whole, it's totally irrelevant, right? But like what you're doing that's really cool is saying the product here is not crypto. Crypto is something that we're using to enable something that people actually want for things that are related to their businesses. Sam (59:17.41) Yeah. Sam (59:21.603) You know, I think the core question that we're solving at USDAI is like, how can we out-compete banks and private credit on cost of capital? Like, can we offer lower interest rates with better deals than what they're offering? And I think the answer is yes, right? Because like, let me just... Okay, we're going to switch to USDA. Like what we do at USDA is we take, we're essentially like Aave, but for GPUs. You take a GPU, you tokenize it, you turn it into this NFT, and then you bring it to the protocol and then you borrow stable coins against it. Much like you would go to Aave with Bitcoin or ETH or any other type of asset, you deposit it in. the custody of the asset is transferred to the protocol in that sense where like when you borrow against your ETH or BTC or whatever your collateral is inside of Aave, you no longer have control over it. It's yours if you're able to pay the loan back, but it's no longer in your custody. It's now in the custody of protocol, which should act programmatically. And so it's the same thing for us. Like we're taking... Like everything that's a part of our ecosystem has already been done by everybody else, right? We have a two token model, which was pioneered by Frax and then really sent turbo by Athena, where you have a stable coin which doesn't receive any yield. And then there's a state version, which has some sort of lockup, which does earn the yield, right? That's already been done many times. The whole idea of this like NFT borrowing. like collateralized lending, know, Avi really ran out the door with it. What had been done through USTI is previously in the company called Metastreet, which Connor and David founded, they really, they had developed oracle-less NFT lending on way worse collateral, on like punks and literally valueless NFTs that lost 99 % of the value, but they, Sam (01:01:32.311) they were able to structure the financing in a way where ultimately people made money on the financing, even with the value of the punks and all the other NFTs that they're supporting essentially going to zero. so, know, like... All those things really allowed it to pick and choose what the best models were to come and say, okay, here we have an asset, which is the hottest asset in the entire world. Trillions of dollars are going to be spent on GPUs and infrastructure build out in the next five, like, yearly. We're spending billions of dollars just on GPUs. NVIDIA has the highest market cap of any stock in the entire world. they have like $50 billion worth of, they're like $50 billion and maybe more, sorry, I think it's 500, I think it's $500 billion of like back order demand for their chips, right? And this is over the next like five years or so. It's just incredible how much demand they have. There's not enough money. It's sucking up all the money in the world as people recalibrated and are just needing hundreds of billions of dollars to build data centers, which is having knock-on effects downstream of pushing up energy prices or putting strain on water. I don't know. We'll figure it out. But the main thing is that there's this massive demand for this one asset. And you have to ask the question of how do we apply DeFi to this? What's the one thing that we can offer that other people can? And really, for us, it's like speed and this programmatic loan distribution. like I said, the company that I work for is called Permian Labs. We're a development company. All that we do is issue the token, issue the GPU, the server. Sam (01:03:35.554) Because like Nvidia server is worth these like B300s. You there were some, something between like 30 to $50,000. All that we do is take that server, put it into an NFT and a legal wrapper. And then that NFT now represents the title to that server. And then you can take the NFT and then come to the protocol, deposit it in and get back stables, right? Which like on its face, it doesn't sound that complicated, but there's a lot of technological work happening in the background. And the great thing about this is that for us to issue the NFT, we can do that for free, right? It doesn't cost us any money to issue the token to the server, right? And then more so, the person taking the loan doesn't have to pay anything except for gas on Arbitrum to borrow the money. Now, take this into comparative. Rex Kirshner (01:04:12.05) Mm-hmm. Sam (01:04:34.262) value against how much you would have to pay to go to a private credit fund to get a similar loan. The credit fund itself is probably having to spend hundreds of thousands, if not millions of dollars to perform an investment analysis or credit analysis on your company. They have to look through all of your financials. They have to look through the founders. They have massive compliance they have to go through. It's very expensive. And this is what sets the floor on the loan size in the industry right now at like 25 or 50 million dollars, right? For us, like we can issue loans to a single GPU, right? Of, think our smallest loan size has been like $500,000. So there's like an order of magnitude difference when it comes to fees. And then. If you have the chips and they're already installed, we can issue the NFTs in a week, right? So there's a massive speed difference here too. And so our offering when it comes to what others are providing, I personally think it's a more competitive offer. And this is probably the first time that I've been able to say this looking at any other type of product in DeFi. comes to lending. So we've taken all the architecture, we've taken all the infrastructure rails, and we've packaged it up in a way where now we can actually say we have a better product offering. We can out-compete the banks, we can out-compete private credit now. And that's what makes it such a rejection of the nihilistic viewpoint now, is that like... Rex Kirshner (01:06:01.565) Mm-hmm. Sam (01:06:13.121) We're actually doing something, right? We actually have a real product that can move outside of our little industry and take on the behemoths, these multi-billion dollar giants and actually provide lending, hopefully one day to the Metas and the Googles and the Amazons and the blue, sorry, the core weaves of the world, right? The largest listed companies in the hottest sector in Rex Kirshner (01:06:14.333) Yeah. Rex Kirshner (01:06:34.588) Mm-hmm. Sam (01:06:42.695) of AI, right? It's it's eye-opening and it gives me a lot of hope for our industry long term. Rex Kirshner (01:06:43.964) Yeah. Rex Kirshner (01:06:49.797) And just the last mile piece here, is like what, in the case where a borrower defaults and like you need to liquidate their collateral, I mean, that seems like a challenge, no? Sam (01:07:04.339) What happens in other? Rex Kirshner (01:07:06.609) will they sell your collateral into the open market? So you're going to the server farm, taking the specific GPU and then putting it on... Sam (01:07:10.881) Exactly. Sam (01:07:21.719) We just sell the title. Somebody else buys the title. They become the new owners. Rex Kirshner (01:07:26.139) And then, like, so if I buy a title from USD AI in a liquidation and like I physically want that, then I take this NFT and try to find the server in the real world and hope that they're going to honor that NFT. Sam (01:07:43.362) Oh, no, mean, so the legal gymnastics that make this whole thing work is that we turned a data center into a warehouse. And with the definition of a warehouse in commercial law, you're able to do this thing called bailment, which is issue a like a document of title. against whatever asset is in custody. typically we use this for commodities trading, so for grains or oil or gold. You can buy all these things and own the title for it and it sits in a warehouse somewhere, but you don't actually have to go and like... Rex Kirshner (01:08:13.009) Mm-hmm. Sam (01:08:27.743) pick it up, you can just hold the title for a while and sell it somebody else. And it's the same thing that's happening here, where the GPUs never leave the data center. They stay plugged in and running the whole time. just that the owner of the title changes. Just like with crypto lending, if you have BTC in Aave and you get liquidated, it goes up for auction and... somebody just buys on the open market, they become the new owners. Right? Correct, right? Because typically they're like arbitraging away the value. Rex Kirshner (01:08:58.061) Right, but they actually take custody. Rex Kirshner (01:09:03.567) Yeah. And so is the idea here that if you own the NFT, is Tidal, like you can then decide what data is flowing through like specific GPUs. Like what's the benefit of owning this GPU via NFT? Sam (01:09:15.125) Well, let me... They make money. They're like magic boxes that make money. Rex Kirshner (01:09:22.653) So they're selling their services to Google and it kind of doesn't matter who the owner is. And Google might want to be the owner because then they'd be just be paying themselves. Sam (01:09:37.505) Yeah, the way that the industry works is that there's two types of contracts or two types of ways that you can make money. There's like burst rentals where it's like an Airbnb. It's just Airbnb in owning a GPU. I promise you that's how it works. Same thing. You buy the GPU. right? You rent it out for some money. The value of the GPU depreciates like a house, right? And you use us to take out a mortgage like you would with a house. It's literally no different, right? And people come and rent your GPUs. Sometimes you make more money on short-term rentals, but you really want to get a long-term contract with these GPUs so that you can say like, okay, I've got the next three years locked in. I know exactly how much money I'm going to make. Rex Kirshner (01:10:09.148) Mm-hmm. Sam (01:10:28.48) It's entirely similar. There's no difference between buying a house and renting it out versus buying a GPU and renting it out. Rex Kirshner (01:10:36.873) And so I guess like what you're saying is the way all of these AI companies works is no one actually owns GPUs. They're all owned by third party people and they just buy the capacity as they need them. Sam (01:10:48.218) like the way that they structure, like it depends, right? So there are, when you get into the bigger companies, say like CoreWeave or other, Nebius or Iren, right? What you're buying is you're buying their equity and you own the chips through the equity purchase, right? And they may have some like bond deals as well too. But that's primarily how they have. Rex Kirshner (01:11:07.577) Mm-hmm. Sam (01:11:13.448) you can have ownership representation through there. In the smaller deployments, you might just have a data center which allows outside investors to, a variety of outside investors to like buy chips and install them there. And then those chips would be owned by those investors. that's, yeah. Rex Kirshner (01:11:15.261) Mm-hmm. Sam (01:11:34.27) So we're working with both. We have listed companies that we're working with. We have smaller individual investors that we work with. But at the end of the day, it's all asset-backed lending. it's essentially like just taking out a mortgage for your house or taking a car loan. Yeah. Yeah. Rex Kirshner (01:11:48.094) Yeah, yeah, no, no, it makes sense. then again, like if I buy this NFT, right? Like, let's look, like, look at me. I'm not in a data center. don't like, right. But like I can maybe go to USD.AI and liquidation sale by the NFT that represents the GPU. And then like, what can I like stake that to earn the revenue that that GPU is earning? Sam (01:12:14.78) So typically the larger borrowers are going to have locked in contracts. And like the people that are going to buy 25 to $50 million worth of GPUs are a very specific type of buyer, right? And especially if you get into bigger, like if we do a $500 million loan against some AI equipment, there's probably one or two people that can actually buy that. Rex Kirshner (01:12:29.287) Mm-hmm. Rex Kirshner (01:12:42.471) Mm-hmm. Sam (01:12:42.918) if it needed to be liquidated. At the smaller size, there's a bunch of people. Like you have $5 million worth of GPUs that I can get today and they're already installed and I can have them run immediately. Done. Sign me up. There's a three month backlog at Nvidia to get new chips and I can get those today. Like somebody will buy that. As you get bigger, there's a bit more risk, but at the same time, like that risk is offset by... almost always at the larger size, like anything above $30 million is gonna have a long-term contract. So it'll have an off-take agreement with OpenAI or Oracle or any of the other buyers of compute that locks them in. And again, there's so much demand for this compute right now that somebody's gonna buy the chips. Yeah. Rex Kirshner (01:13:20.274) Mm-hmm. Rex Kirshner (01:13:36.446) Yeah, no, I mean what I'm like understanding is that this whole thing is built on like the peculiar peculiarities of like how the AI chip industry is working right now and like we can have another out and long conversation on how that works and that'd be interesting and it's great but like that's kind of not really what's interesting from a crypto perspective what you're doing which is what's interesting is like Sam (01:13:57.898) Well, I think that... Rex Kirshner (01:14:03.331) No judgment on how another industry works. That's how it works. What you're coming in is you're coming in and saying, we're going to provide you the tools that crypto has built, the primitives that crypto has built to enable the way your industry works. Like we're not going to come in here and try and change it. Like you, we just want to enable you with better tools that before sure were offered, but like you need to have like real size and relationships and like time and all this crap, right. To access. Sam (01:14:32.864) I think it's a bit more nuanced. think it's that if you're competing with... there's no way that crypto can compete with the banks because banks are, you know, subsidized by the government and they socialize losses, right? What's so interesting about the AI industry and specifically like the GPU infrastructure industry is that the banks are not involved. They just, according to the rules, they're not able to touch... anything having to do with like providing mortgages to GPUs. It is, is, I wrote a long article about this, about how Basel regulations and laws, which is what governs the banks, prevent the banks from providing lending. so, you know, banks essentially are a subsidized way of issuing debt and socializing risk across all of society, right? And this is why people get so angry at the banks when anything bad happens. But that's their job at end of the day, is that they're a way for governments to kind of push and prod the economy how they want, and then socialize those risks in case anything goes wrong. And so with the GPU industry right now, all of the investment is through private credit funds and private investors. Rex Kirshner (01:15:44.349) Mm-hmm. Yeah, I agree with that. Sam (01:15:57.566) tech companies like Metta and Amazon. And so, like, a lot of people who might feel that the industry is running hot, there's billions of dollars being invested, maybe there's a bubble. What I would say is that the government's not involved in any of this. If there was a collapse tomorrow, the people that would be most directly affected are private credit funds. Maybe Metta would lose a good deal. of its free cash flow for a long time. But those tech companies just amassed billions and billions and billions of dollars of cash over the past years and had nowhere to put it. And finally they do. So they're still in a really healthy position. If you look at the Amazon, Metas, Googles, right? They have these businesses outside of the infrastructure that they're that generate a Rex Kirshner (01:16:28.561) Yeah, Markey cops as well. Sam (01:16:54.109) lot of money. And so there's not a ton of risk that comes there. The risk, if anything, is like downstream in credit, like private credit. And if there was a private credit blow up, the government's not going to step in. and investors would lose money, but those are private investors. It's not the public who's socializing the losses. so the reason that we're able to compete is because there's no banks involved. We can go toe to toe with every other private credit fund out there on equal terms. Rex Kirshner (01:17:14.267) Yeah. Sam (01:17:26.149) And the government is not subsidizing this industry like they do with any other type of industry. And so we're able to come in and provide competitive rates, lower cost of capital, faster loans, using the deals, using the rails that we have. And that's, and that's what gives us the edge is that when, when in a pure free market, like we're seeing with this GPUs right now, like we, we have the better lending product. Rex Kirshner (01:17:49.99) Yeah. Sam (01:17:50.272) It's plain and simple. that's what gives me, and so like, but it's such a special case, right? It's like, to do this, you have to find like a really tiny niche. Well, not in ours, I mean, it's a big niche, but like, you have to find this like one lending niche, because like lending sucks. Like the lending business is a terrible business, right? And we've seen this with DeFi over the past couple of years. Like, let's talk about all the failed lenders. Like, wasn't it Maple? Maple blew up in 2022, right? Rex Kirshner (01:18:20.369) Yeah, mean, you know, essentially because they were giving out bad loans to things in the real world that, yeah. Look, I, I told. Sam (01:18:23.759) adverse selection adverse selection but there was what was what was the what was the company that was giving like loans to bike companies in africa Rex Kirshner (01:18:34.833) I think it was maple. Sam (01:18:36.573) No, wasn't Maple, it was a different one. the type of loans that people were sourcing were the worst. People came to crypto, and this is an ongoing problem that we have, especially for DeFi, is people come to us when they can't get loans anywhere else. And that's a terrible place to be in, because you don't want to lend to those people. You want to lend to people that are going to pay money back, and you want to lend to people who have... Rex Kirshner (01:18:53.476) Right. Sam (01:19:02.929) as much of that money guaranteed either by the government or some other institution, right? Because blowups do happen and when the blowup does happen, you as the lender are gonna be affected immediately and it could destroy your entire business. you know, the fact that like an entity like Aave or Morpho or, you know, like Euler, have been able to like lend at scale for so many years now and not have any. Sam (01:19:36.467) majorly systemic issues is really incredible. Because if you... Rex Kirshner (01:19:41.66) Yeah, but like, man, like you're it's it's because that everything's on chain and within their control, right? Like it's easy to build that kind of product where you're essentially set. Like it would be a lot easier to build like this biz, the USDAI years ago. If you're like, okay, every GPU that is in our system has to be in custody in a warehouse that we own. Like that's a whole different. Sam (01:19:48.159) Crap. Sam (01:20:11.679) Well, okay, but the question I keep bringing this up is like our cost of capital is lower and you have to ask the question like why right? Like how can we offer cheaper like assuming people want the same returns whether they give money to a private lending company or whether they give money to a to us, right? And so the way that we deliver those returns Rex Kirshner (01:20:11.773) world. Rex Kirshner (01:20:17.437) Mm-hmm. Rex Kirshner (01:20:26.076) Mm-hmm. Sam (01:20:39.761) is through the incentive structure, the two-token model that we have at USDI. So by splitting the token into two parts where you have a staked version where not all of the USDI is ever going to be staked, we think that at maturity, at scale, it's probably going to be somewhere maybe between hopefully 20%, somewhere down towards like 10, maybe even five if we have hundreds of billions of dollars. But even that little slice, like 5 % of people who choose to be in the non-yielding stablecoin at any one time, that means that yield that they're kind of deferring goes to the stakers. And so the return of the stakers can increase and we can offer cheaper loans. Rex Kirshner (01:21:24.943) Mm-hmm. One of the reasons you're offering cheaper loans, is because you're just not doing the due diligence. Right. Sam (01:21:34.72) No, that's not true. No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, Rex Kirshner (01:21:38.151) Didn't you? Yeah. Rex Kirshner (01:21:47.133) Mm-hmm. Rex Kirshner (01:21:53.181) Sorry, sorry, I'm gonna cut this because I didn't mean to ask that in that inflammatory of a way. Let me just. Sam (01:22:03.857) And like, look, I see this with Connor and David is that like, they've gone through and watched all of the blowups from every single stable coin that has occurred over the past five years. And they've seen what works and doesn't work. And that's why like from the ground up when they were building this, they were able to take everything that they were doing with the NFT lending previously, and then merge it into what the stable coin can offer now. And I think it's a really Rex Kirshner (01:22:15.207) Mm-hmm. Sam (01:22:32.125) like necessary problem to ask is that like, how are you not going to blow up like every other non treasury backed stable like stable coin that's ever existed? That's that's that's gotta be the number one question you have to ask. Rex Kirshner (01:22:40.284) Mm-hmm. Rex Kirshner (01:22:45.469) The question I was really asking was like, you you said earlier that one of the reasons you're able to deliver a better product to GPU owners is because private lending companies need to spend like hundreds of thousands, if not millions of dollars on expensive due diligence. Right. And like, honestly, not much of that as a regulation based because like that's kind of the point of private credit is they're unregulated. So they do like whatever they want. And like, they're not just doing that. Sam (01:23:10.836) Mm-hmm. Rex Kirshner (01:23:15.269) like out of like boring routine, right? Like they're doing it because like that's important to lending. And I'm not saying like what you're doing is wrong in any way. It's just a choice that like part of the trade, part of how you're delivering better cost of capital is one by the two token model, which diverts some of the yield into like blah, blah, blah, everything that you just said. And the other part is, that you're reducing costs. by doing due diligence in a way that is inherently lighter than how private credit does it. Sam (01:23:53.673) Well, the only thing we don't, okay, so if you go to a private credit firm, they're lending against the business, right? They're lending against the equity and the assets that you have in the business. And that's what makes it so expensive. We don't lend against businesses. We lend against the value of the hardware itself. So like our biggest question that we have to solve when it comes to underwriting is like, are we valuing these chips correctly? And two, Rex Kirshner (01:23:58.587) Mm-hmm. Rex Kirshner (01:24:04.827) Yeah. Sam (01:24:22.756) the people that are borrowing, we think that they're going to have enough income to pay the loan back? Because these chips lose 60 to 70 percent of their value in three years. So if we make a wrong decision and all of sudden they're not making enough money anymore and they can't pay down their loans, there's real risk there, especially in the first year. So our number one priority at the end of the day is What's the value of the machines? And so, you know, we're working with a lot of people in the industry to figure this out. We talk to secondary market suppliers. We get like daily or weekly updates on how much these chips are selling for in secondary markets. And then more importantly, and this is kind of the hard part, is like, how do you model the rental rates over long periods of time? Right? Can you provide conservative forward projections on how much money these people are going to make? two to three years out in the future. And that's the really hard part, right? Because you have to get into the weeds of what their business is, who they have off-tick contracts with. But that's a very different question of then let me do due diligence on you, the founder, everyone in this company, because the company could go bankrupt and then what? The private credit firm has to sue them, try to get assets back. We don't do that. The reason our system works is like, Rex Kirshner (01:25:30.791) Mm-hmm. Rex Kirshner (01:25:44.626) Mm-hmm. Sam (01:25:50.695) If there's a liquidation event, like 30 days and you didn't pay, okay, now you're like at threat of liquidation. After 60 days, like boom, you're done. It automatically liquidated. Somebody's gonna come in. It's programmatically sold. We have this auction system and the assets just move on to somebody else. We hopefully get all the money back to ensure that the lenders stay whole. you know, like everything just works smoothly. But again, like I say this, we haven't had any liquidations yet. So. Rex Kirshner (01:26:14.685) Yeah. Yeah. No, man, I hear you. And, know, we've been going on for like an hour and a half. I don't know if my audience has the Joe Rogan attention span. So I want to just kind of wrap us up here. But I want there's been something that's burning in my head since you said it that I just want to address, which is that we encrypt will never be able to compete with the banks. And like, I am so one billion percent on board with you. But I also want to say that like Why would we ever compete with the banks? know, like in my opinion of what crypto is and why I'm so stoked on what you guys are doing in USD.ai is that crypto is not a business, right? Like the internet is not a business. Like open source public goods, credibly neutral things. These are not businesses. They're tools in which you build businesses on top of. And like I don't ever want to say like we're going to compete with the banks. What I want to say is that the banks are going to build tools that make lives for their customers better by building on top of both the primitives and the settlement rails that we're building in crypto, and maybe using some of products or whatever. I think that, again, I've been looking for an opportunity to... Well, no, this whole show so far has been looking for opportunities to say, we got to stop building tokens. the product with some fancy thing behind it, right? like let's start building tools that empower people to do things in the real world and like I want to say like my Hope to get out of this nihilism and like how I could see us recovering from all of this meme coin goodwill destruction is like in the same way the internet originally everyone was like this is just for porn and like whatever and then it like now it's not even question that this just Rex Kirshner (01:28:15.995) makes our lives probably better. don't, might be making it worse, I'm not sure, but like, no one questions it. It's just like how we function. Like that's, think the path for Ethereum at least, if it's successful. Sam (01:28:16.542) It's... Yeah. Sam (01:28:30.962) Yeah, just to get into the hippie-dippie parts of what's being built, the reason that we can exist in the first place is that we can, at USDA, are able to craft a narrative around why we think value should flow into the vaults that we have. We can tell people that, we're going to... facilitate this lending, we need you to deposit a billion dollars worth of stablecoins tomorrow. And if done right, that type of broad consensus building is really Rex Kirshner (01:29:07.591) Mm-hmm. Sam (01:29:16.06) what this whole platform is for. And coming back to the prediction markets, which we were talking about earlier, this is the point in prediction markets when they're not used for sports betting, is that they allow people to find consensus on a certain topic or idea. And I think a lot of people tried to use this for like non-financial topics. So... you know, like Constitution Now or like, even that one's financial, but like, how can we find distributed consensus on certain topics or ideas? It becomes much easier to do on a crypto network because anyone can participate and you're able to quickly find what works and what doesn't work or like where public sentiment is or is not. Rex Kirshner (01:29:39.421) Mm-hmm. Sam (01:30:03.517) And that's really the most valuable thing, right? At the end of the day. It's like we, like all the things that you and I talked about about 2-Token Modeler, these are just games, right? They're just fun games that allow us to, in theory, direct that value that we're gathering into different ways, right? To direct people to different ways. And so it's almost like there has to be a narrative. Rex Kirshner (01:30:26.695) Mm-hmm. Sam (01:30:31.741) You kind of explain the narrative openly. People direct capital your way or some type of value. And then there's outcomes that happen from that. I think that's the most important part. And that's why even eight years on now, or soon to be nine years, I still think this industry is worth staying in and building for. Rex Kirshner (01:30:56.057) Yeah. No, man, I hear you. And I think, yeah, maybe the biggest problem we're having is that like, it's been nine years, like we're, I'm 30s, 40s, like maybe we're just too old for this industry. Sam (01:31:12.337) the sun's going down and it's red in the camera. No, I don't think so. know, a couple of things that I think happened was that this, when you have a technology like Ethereum, right, like, or Bitcoin or anything else, right, what we're trying to do in finding this consensus or aligning values, at the beginning requires like deep technical expertise. for the system itself, for ETH itself, but as the kind of technical foundation is set up and established, that technical expertise stops becoming so valuable, and now you need people with actual financial experience. Like Connor and David are co-founders, like they both worked at banks. They both did, like David was doing... Lending for high net worth individuals against like timeshares and art and like really garbage collateral, right? So he had already been working in like in finance Seeing the nuts and bolts of how this happened and then was able to bring this and then slap it on to crypto rails which is kind of the the beauty of what we need to do going for is like we need experts who understand how to compete with these different systems to like come in and then use all the technical foundation that we've built over the past five years, ten years, to then give them an edge somehow. Rex Kirshner (01:32:39.965) Yeah, I totally agree. And I think that's, for me, that's the underlying like current of this nihilism is that what I'm seeing is not gonna attract those people. And like, you know, I think that is, frankly, you could say that about basically anything on this planet in 2025. Like, I don't know, man, it just seemed like a hard year. And maybe if you're an AI, it felt different, but otherwise it's just. Like there was a real sense of like, man, like, I don't know if things will ever get better, but if they do, it's going to be in a while. And so I think, I think like society needs to let that out. Like I have hope for 2026 and like hope that just things will get better and that like we can be a part of that. But you know, Sam (01:33:28.029) I think things have never been better than where we are now. It's the easiest it's ever been to come in and build anything in crypto. And now it's legal too. Rex Kirshner (01:33:38.789) Yeah, man, it's legal, sure. No, man, like, I don't know what to say. Like, I'm more embarrassed than ever to tell people I work in crypto. Yeah, for sure. Sam (01:33:45.277) Really? No. I... But it's the wrong stance to take. I feel more... Rex Kirshner (01:33:54.206) Yeah, I'm here. Like I'm putting my face on the internet. Like I'm associated with it. Like I know I'm just saying that like if you don't have that sense of like it's embarrassing to say I work in crypto right now, like maybe I need to come hang out with your friends. But like, you know, in my in Los Angeles where there's not that much crypto stuff and I hang out with like my wife who's a surgical resident and all of her doctor friends, like it's embarrassing. It is. Rex Kirshner (01:34:25.819) And like, have to understand that, Like you have to... Sam (01:34:25.948) Remember, I understand that. I understand. I think it's just like the type of people who do crypto in LA versus the type of people who do crypto in New Rex Kirshner (01:34:36.711) Sure, but you know, whatever. We don't need to go on on this. Sam (01:34:40.762) No, no, no, no. Look, look, look. Again, I think that at the end of the day, both you and me are people who are driven towards working towards positive moral outcomes that benefit society at large. And I think the difficult part in this industry is clearly defining what those positive outcomes are. And once all the games have been played and the incentive structures have been run and figured out, where do you make an impact? And I think that's difficult, right? Either you stop at Bitcoin and say, hey, Bitcoin's enough, and the maxis are right. You don't need to own anything else. Or there's something else that can be found that's positive that isn't just building yet another casino for people to gamble with. Rex Kirshner (01:35:22.236) Yeah. Rex Kirshner (01:35:38.248) For sure, man. And you're talking about you're in my journey right now, right? What I'm more lamenting is that when we're looking for people like Connor and your other co-founder to come in, if you're outside the industry looking in right now, how can you not think it's just about gambling and scams? And there's a whole side of the industry that you and I don't talk about, is like really scary scams where people are like... Sam (01:35:38.614) and yeah. Sam (01:35:58.651) and Trump. Rex Kirshner (01:36:07.113) like old ladies like buying like thousands of dollars of Bitcoin to send to like someone that is Sam (01:36:11.282) don't get me wrong, a good friend of mine was scammed out of like 400k just this past like a month ago. Rex Kirshner (01:36:16.261) Yeah, like, yeah, there's so many stories like that. There's so many stories. And so like, I just, I hope we can get back internally to our energy of 2021, which is like, we know there's a lot of crap, but there's a lot of things to be excited about. I hope we can project that outwards and like get the people that like I'm, I'm losing, you know, steam here, right? Like that's. That's kind of what I'd say is like the hardest part for me about the general sense of nihilism is like, this is the image we're putting out there and like, because of that, I think we're trending harder in this direction. We're not digging out of it. Because the only people we're attracting are the scammers. Sam (01:37:02.08) I think it's easy to get to seven or eight figures scamming. There's very few people who can get to eight or nine or 10, like SPF. But to really build value for the long term and keep it, it requires a dedication and a good moral compass and... Rex Kirshner (01:37:21.947) Yeah. And we need to figure out how to get those people interested in joining us. Sam (01:37:26.904) And also you have to move to New York because like, what we're doing is finance in this little bubble of DeFi, right? Like the Ethereum builders are off in Switzerland or wherever they hang out, you know, designing their, again, like you can choose to go off and build ETH on your hippie retreats, or you can put on a suit and come to New York and build for DeFi. That's mine. Rex Kirshner (01:37:55.035) Yeah. And what I'm just saying is those two groups are a minority in our industry right now. Like that in terms of the external perception of our industry, like I don't think that's debatable. Sam (01:37:59.982) Yes. Sam (01:38:05.658) Yeah, or you can join the LA CryptoKabal. Rex Kirshner (01:38:09.979) Yeah, I mean, maybe I just need to vape more and get a broccoli haircut. All right, man, this has been awesome. Before I let you go, like people want to learn more about USDA. I want to hear more from you. Just can you plug, like, what are the best places to learn more and follow? Sam (01:38:25.446) Yeah, the best place would be come to our Telegram, USDAI, or come join it, like come message me on X, and then join our Telegram. I mean, we're always there, like we're super open. I'm happy to do one-on-ones with anybody if you have any questions or anything. You know, we have some great content on the website that we're creating. I think that, again, I think it's really special. And I think that, you know, we have nothing to hide, right? So it's, it's a... We want to make the world a better place and we want to capture a bit of the boom that's happening right now and then deliver it back to crypto people because everyone's like yield starved at the moment and we've max extracted and passed yield back and forth from each other for too many years now. It's time to take it from TradFi. Rex Kirshner (01:39:13.598) Very sure ma'am. Alright awesome. Well Sam, thank you so much for the time and have good rest of your day. Sam (01:39:19.015) Thank you.