{ "episodeId": "SLP659", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "shehzan_maredia": { "name": "Shehzan Maredia", "role": "guest", "tag": "SHEHZAN" } }, "segments": [ { "speaker": "stephan", "time": "00:11", "start": 11.13, "text": "Hi everyone, and welcome back to Stephan Livera podcast, brought to you by Bold. For American listeners, you can buy Bitcoin at getbold.io. Now, joining me on the show today is Shehzan Maredia. Shehzan is CEO and founder of Lava, and I thought this would be an interesting conversation for listeners because this is a DLT-based lending product or platform. form and, we're gonna get into all the details around that, but first of all, welcome to the show, Shehzan." }, { "speaker": "shehzan_maredia", "time": "00:35", "start": 35.06, "text": "Thanks for having me. I'm a big fan of the show, I've been watching it for a while." }, { "speaker": "stephan", "time": "00:38", "start": 38.35, "text": "Well, thank you. so yeah, let's, I guess we, we won't get deep into the technicals to start, let's just start with a bit of an overview. What is Lava? What are you doing? What's the broad opportunity you see?" }, { "speaker": "shehzan_maredia", "time": "00:50", "start": 50.33, "text": "So Lava is building the most secure way to borrow against Bitcoin. So it's really a product for Bitcoiners, I call them like base Bitcoiners, Bitcoiners that have a lot of their savings in Bitcoin, they don't wanna sell, but they want some expenses that they need to fund, and so they can borrow against their Bitcoin. And unlike the custodial products that are available in the market, honestly a lot of them have gone bust over the last few years, Lava is non-custodial, so you don't have to trust us With custody of your funds, you have confidence that when you borrow against your Bitcoin on Lava, that we don't trade or re-hypothecate your funds, and you actually have cryptographic guarantees of that, not just legal or reputational assurances from us, which is really the big selling point for Bitcoiners that can make them feel more secure, when they're borrowing against their Bitcoin that their collateral is safe. So Lava is a borrowing platform, for Bitcoiners, and really when a Bitcoiner comes to Lava, we wanna be their, like the product that serves their journey from borrowing against their Bitcoin to how they spend plus, plus after they borrow against their Bitcoin." }, { "speaker": "stephan", "time": "01:56", "start": 115.84, "text": "Gotcha. And so just, you know, before we dive into the technicals, but just give a bit of an overview of the process. Like, I guess what most people are used to is this idea that, okay, maybe you sign up on the app, you might deposit some Bitcoin. Borrow against it, and now you've got stablecoins or fiat in the traditional system, and after that loan term, you need to pay it back You know, is that the basic fundamental, flow? Can you just talk us through that?" }, { "speaker": "shehzan_maredia", "time": "02:25", "start": 144.98, "text": "Yeah, for us, like security, for me especially, has been like the biggest reasons for building this product, just building a more secure product. But I would say, we have the best user experience of any loan product. It's really seamless. You can, use our desktop app or mobile app. You download Lava, you just decide how much you wanna borrow. There's no documentation required. It's globally accessible. you lock your Bitcoin into this A new address, like a smart contract, let's say, we can, we can go into the details of how that works. It's on chain, you're not bridging your Bitcoin, you're not giving up custody of it, and you get dollars back almost instantly. depending on how much you're borrowing, we might wait for a certain amount of time for the Bitcoin transaction to confirm, but you get your dollars almost instantly, faster than any other platform. you literally just answer like two questions and you get a loan. it's super easy. Your loan So like digital dollars, all of that is fully abstracted away from the user. So they just receive like a dollar, and then they can move that dollar peer to peer, or they can withdraw to their bank account. Lava has global off ramps built into the app, or a user could take their dollar, digital dollar, we have a card, they can spend it directly from Lava if they want to use our card, or they can even swap it into other forms of digital dollars, because now there's like dozens of different digital dollars that people want to use. We have one, Circle has one, Offers zero fee swaps that are, also like, you know, private as well, that someone can access. But most of our users, once they come into the app, they either borrow, they use our card to spend, or they withdraw their money to the bank account." }, { "speaker": "stephan", "time": "04:03", "start": 242.52, "text": "I see, gotcha. so that's the overall flow, and then, in terms of inside the app, people can flip between Bitcoin and stablecoins or between your, is it Lava USD?" }, { "speaker": "shehzan_maredia", "time": "04:17", "start": 257.34, "text": "Yeah, a lot of it is USD, but it's really fully abstracted from a user. Like the way I kinda think about stablecoins is they're just different payment rails, and you know, we can kinda talk about this more, for dollars, right? They're just like a different payment rails, just like in the traditional fiat world we have. ACH, wire, you know, Swift payment rails, stablecoins are just like a different payment rail. we try to like, just like how when you use a banking app, they abstract away your interaction with these different payment rails, we try to do the same thing." }, { "speaker": "stephan", "time": "04:47", "start": 287.32, "text": "I see. And, I guess there has been a lot of interest in lending recently. It's something I'm seeing a lot of people talking about it. I'd say it's one of the big topics, you know, in recent- Months, let's say. What has been your experience there? Are you seeing a lot more interest in this, this cycle, this time around?" }, { "speaker": "shehzan_maredia", "time": "05:10", "start": 310.15, "text": "I mean, we've seen a lot of interest in it since we started, and we've only just been growing, but I can definitely see that at least on social media, it's become a bigger topic recently." }, { "speaker": "stephan", "time": "05:21", "start": 320.64, "text": "Yeah, and then obviously there's a lot of comparisons with, you know, what went on last cycle with the, you know, the blockfights and the ftxes and Celsiuses of the world," }, { "speaker": "stephan", "time": "05:33", "start": 332.94, "text": "Do you have any comment on that? Do you think that, you know, it's sort of like we're just gonna see the same kinds of things play out again and again? Where do you, where do you see that going?" }, { "speaker": "shehzan_maredia", "time": "05:42", "start": 341.75, "text": "I mean, a lot of what happened in the last cycle is what inspired me to start Lava. So- Previously, if you wanted to borrow against Bitcoin, like in 2022 or before, you had to give up full custody of your funds. That means literally giving your Bitcoin to a custodial lender like BlockFi or Celsius or FTX or Genesis or one of these companies, right? And then they would take your Bitcoin, you wouldn't have no idea whether they're rehypothecating it or not. In fact, they were. and these companies lost tens of billions of dollars in customer funds all together. Like, it's very rare to see a whole industry collapsed like how, you know, we saw, and unfortunately it was actually the bitcoiners who lost the most then, because it was mostly Bitcoin back loans that these companies were making, not other forms of crypto back loans, right? and really like because of seeing that, for me, I got into Bitcoin primarily because I cared about its, like, the ability to self-custody my wealth, and, you know, for me personally as well, the majority of my savings, almost all my savings are in Bitcoin, and I want- I want to be able to borrow against my Bitcoin without, giving up custody, without, while knowing that, hey, if I'm giving up my Bitcoin, do I have confidence that my lender isn't trading my collateral, right? They're not rehypothecating my collateral. are the rules of the loan going to be enforced automatically and reliably for me? and that's why I started Lava, because I saw that people were able to achieve the same kind of experience that I wanted in other ecosystems, but with far weaker assets, right? Like ETH or something like that. I wanted to do that with Bitcoin, and that's really what we've built at Lava is a way that you can see these custodial lenders, you can see they have so much adoption, but you can see they're so, insecure, and the way they build their products is not really aligned with the ethos of Bitcoin to start. and with Bitcoin being not just the best form of money, but also programmable money, we were able to build a system that is more secure and gives people more cryptographic guarantees when they use Lava, that their collateral is safe. So It really solves all the problems that cause these custodial lenders to fail, and I, I already see that like a lot of our customers come to us, some of them have been stacking Bitcoin, some of them lost their Bitcoin, when they were using like BlockFi or something like that, and they're like, \"Okay, I don't wanna make the same mistake.\" so I actually think that we're- Preventing a lot of those people, we've seen a lot more adoption even than some of these new custodial lenders that are popping up nowadays as well. so I think Bitcoiners are aware of the problem and, and now have a solution that can solve it." }, { "speaker": "stephan", "time": "08:17", "start": 497.19, "text": "Right, and, one other question on the overview side before we get into maybe some of the technicals, can you give an overview for us on, on the interest rates and the costs? Are you charging an origination fee? What's the typical interest rate people are charging? What are the loan sizes you're offering?" }, { "speaker": "shehzan_maredia", "time": "08:32", "start": 512.34, "text": "Yeah, I mean, for loan sizes, we have like, we started lending partners now, we can do any loan from like a hundred dollars to hundreds of millions now. We've, we've, like, we can talk about how we do the capital side later, but we're able to fund loans of all sizes globally. our rates are the lowest in the market, so depending-- the rates kind of depend on the loan amount and the duration of a loan, but they can range anywhere from five percent to eleven percent, today, and there's also like an" }, { "speaker": "shehzan_maredia", "time": "09:02", "start": 542.46, "text": "between like one to two percent that gets charged on loan. When you go take a loan on the app, you will see all of this before you borrow against your Bitcoin, so you know exactly what fees you're getting into. there's no like early repayment fees or anything like that as well, or no like no hidden fees. All the fees are like right available to you when you go borrow on the confirm page." }, { "speaker": "stephan", "time": "09:26", "start": 565.57, "text": "I guess one other question on the flow, will-- is there a way to roll over? So let's say you do a loan for one year and then you wanna do another one to take, you know, to automatically pay off the first year and start a second year loan?" }, { "speaker": "shehzan_maredia", "time": "09:39", "start": 578.71, "text": "Yeah, exactly. Yes." }, { "speaker": "stephan", "time": "09:41", "start": 580.79, "text": "Okay, so basically you do have that feature." }, { "speaker": "shehzan_maredia", "time": "09:44", "start": 583.97, "text": "there's a lot of like ref- Yeah, I kind of like group all these, once I kind of think about it, like you're taking out a loan, there's ways to close a loan, and then there's ways to like refinance loans, right? And the refinancing could be extend-extending it, adding collateral, removing collateral, borrowing more, partially paying down a loan. All of these are kind of like the features we have." }, { "speaker": "stephan", "time": "10:03", "start": 602.75, "text": "Yeah. And then, while we're talking about structure, I might as well also talk about LTVs. So what kind of LTV are you offering? What's the range that you're able to-- that the loan, that the borrower is able to stay within?" }, { "speaker": "shehzan_maredia", "time": "10:16", "start": 615.58, "text": "So right now, like all loans, we, we initially let borrowers like customize their initial LTV, but we just realized everyone was choosing like fifty percent as their initial LTV, so that when you go in the app, like default, that's how, like that's the LTV you get, but if you want like a custom LTV, you can get that as well." }, { "speaker": "stephan", "time": "10:35", "start": 635.32, "text": "Gotcha. So I guess just for simple terms, you put up ten thousand dollars worth of Bitcoin, you can borrow five thousand dollars of stablecoin, as an example. Yeah, yeah. Okay. okay, so, yeah, let's talk a little bit about the technicals and what exactly the trust and security models are. As I understand with DLCS, there is a price oracle, so you're at least putting something there. But I guess, can you just give us an overview how is the DLCS model being applied here in the lending context?" }, { "speaker": "shehzan_maredia", "time": "11:03", "start": 663.1, "text": "Yeah. so I- I think like in general the way I kind of think about it is, you wanna make sure when you're borrowing against your Bitcoin, you wanna make sure you're using a secure system, so a system that can't get hacked, right? 'Cause that's also a big risk we've seen custodians get majorly hacked. You wanna make sure there's Low risk of bugs, and you also want to make sure, that there is low like trust, like risks as well, right? and really I think what people really care about more, mostly on the trust side, is Do I know that my Bitcoin isn't being traded, right? Like, do I know that when I'm locking my Bitcoin up, that it isn't being rehypothecated and traded, because that's exactly What the custodians were doing a couple years ago, and some custodians still are doing today, that is risking customer funds. So when you borrow against your Bitcoin on the rehypothecation guarantees, you literally can see, you can independently verify on chain that your Bitcoin is locked in this address, right? And it isn't being traded, it isn't being rehypothecated. You go to Lava, you open the app, we literally show you in green, like, \"Hey, click this button, go to mempool. dot space. blockchain. info, whatever Explorer is, or your node, whatever you wanna do, you can figure out that your, your, your collateral is not being traded and rehypothecated. And that is like extremely strong cryptographic guarantees that your collateral is safe, that it's, you know, it's not just legal or reputational guarantees from us, it's cryptographic guarantees that you have. Yeah. and so" }, { "speaker": "stephan", "time": "12:35", "start": 754.83, "text": "can you explain the liquidation and margin call aspect of it and what, what are those levels and then we can sort of get into how that's implemented at the DLT level?" }, { "speaker": "shehzan_maredia", "time": "12:43", "start": 763.28, "text": "Yeah, I That stuff I think is like a little bit, I guess like more straightforward. Like any lending system, you're, you're taking out like o-over collateral though, right? So you're locking up more collateral than you're borrowing, that's why you can get, That's why the lender wants to make sure if you don't repay the loan, and if the capital goes to, the collateral value goes to a certain threshold, that they can liquidate it. obviously we, we give people notifications ahead of time and- People can add more collateral ahead of time as well. but let's just say you got to a level where the loan needs to liquidate or even expire, ex-expiration is a common thing. Sometimes people are at the end of the loan term and they're Like, oh, I don't wanna repay my loan, I just want it expire, and some of the Bitcoin will go to the lender and some of it will just come back to me automatically, right? And you need like some way to know the price of Bitcoin to decide that. and so we just use, every like lending system, every loan system has a price engine, like a price server. in Lava's case, actually, like the price server is private, because it doesn't know anything about the user, and that's kind of like the real like differentiator, it's" }, { "speaker": "shehzan_maredia", "time": "13:52", "start": 831.73, "text": "like the price based on when to, how much to liquidate or how much to expire of a loan. And the nice thing about DLTs is that these, like I said, these price servers can be fully private and they reduce a lot of these This gets like really technical, I don't know how technical you want me to go, but, in like Ethereum, you also have these like pr-a concept of these like price servers or oracles for other smart contract systems, like the- Aetherium adjacent to what Lava is, but in those systems, these oracles have to attest on-chain the price of the asset, which is not scalable. It's also unreliable because, you know, what if the transaction doesn't get in the block? It also creates this whole like issue called like miner extracted value, like oracle miner extracted value, which because DLCEs, and what Lava is doing don't require these on-chain attestations. you kind of remove all this like scalability, reliability, and kind of security risks that these contracts, these similar parallels have in Ethereum. That's like very technical, but-" }, { "speaker": "stephan", "time": "14:55", "start": 895.32, "text": "Yeah, gotcha. Okay, so let's, let me try to explain as I understand DLCS. Now you're the expert, you tell me what I'm getting wrong, but the general idea. So, I guess if we go back to that example. So let's say- I bring ten thousand dollars of Bitcoin and I wanna borrow five thousand dollars worth of dollars, stable coins, on the platform. And as I understand DLCS, it's like my App is signing all these states based on the different prices, and then at the end of the loan term, I guess I'm kind of oversimplifying a bit, but at the end of the loan term, the price oracle is gonna broadcast something out, and then that will-- that price will make one of those states valid, and then that will sort of- help enable me to, let's say, take back my Bitcoin at the end of the loan or give some, some, some back to the, to Lava or whatever, right? If I got that right or do you wanna elaborate a bit there?" }, { "speaker": "shehzan_maredia", "time": "15:51", "start": 951.35, "text": "Right. And that kind of like the broadcast term is what I am- Trying to be precise about it, does the oracle doesn't have to broadcast on chain, and that's like kind of a very core benefit of DLTs versus even Ethereum smart contracts. It, it renew-- like it makes sure that Bitcoin doesn't have this oracle MEV thing, and also makes sure there's no scalability or reliability concerns. So it's actually a, I think a more superior form of doing advanced scripting, on chain." }, { "speaker": "stephan", "time": "16:20", "start": 980.08, "text": "I see. And so when we say it's not broadcast, is it just where exactly is it published somewhere or like, can you explain that part?" }, { "speaker": "shehzan_maredia", "time": "16:28", "start": 988.45, "text": "Yeah, it's, it's just like, off-chain like signature for you. Yeah. So All these systems, they're just, it's, it's always, it's so similar to Lightning, it's like off-chain, communication that settles on-chain ultimately. So off-chain execution, on-chain like settlement." }, { "speaker": "stephan", "time": "16:47", "start": 1006.81, "text": "Gotcha. And so, I guess, yeah, com-coming back to those, that example, you know, for example's sake, the price of Bitcoin drops, I don't know, really, a lot, like sixty percent or whatever. I get liquidated, one of those, states that I signed back at the start of that loan is now valid based on what the price, oracle has, put out off-chain, and then at that point The Bitcoin would go to, I guess, on Lava's side, and then on your side, you, you would need to, let's say, sell that back for fiat to pay back your capital provider, et cetera. and in, in the other case, well, I mean, if you could just walk us through the, like, those different cases just to get a, a loose awareness of that?" }, { "speaker": "shehzan_maredia", "time": "17:32", "start": 1052.39, "text": "Yeah, I mean, so basically, let's go through the life cycle of a loan. So you initiate a loan, happens like atomically, you lock your Bitcoin, you get your stable coins, and then, you know, you, you, you take your dollars and you withdraw it to your bank account, use a card, whatever you wanna do with those dollars after. At one point maybe you wanna repay your loan, right? So let's, let's say you wanna close your loan. How does a loan close? You can repay it, you repay your loan, and you get your Bitcoin back atomically. Maybe you don't want to repay your loan at the end of your loan term, you don't want to refinance it and, and keep it open for longer. You can either repay it or you can just let it expire, in which case, based on the price, the, some amount of the Bitcoin goes back to you and some amount of it goes back to the lender. and then there's a case where, okay, during the life cycle of a loan, if your collateral drops a lot, and there's like a time period where you can add collateral, let's say you don't," }, { "speaker": "shehzan_maredia", "time": "18:30", "start": 1110.17, "text": "to the lender, and that's all based on the price of Bitcoin, and then basically the idea is that the price of Bitcoin is being attested to by this like price server, this liquidation engine, this oracle, whatever you want to call it." }, { "speaker": "stephan", "time": "18:43", "start": 1122.67, "text": "Back to the show in a moment. This show brought to you by CoinKites dot com, the creators of the best Bitcoin hardware security devices such as the Coldcard Mark IV and the new Coldcard Q. Now, we use Bitcoin hardware security devices to keep our keys offline, our private keys offline. Now, the way these work is you can do that setup, write down your twelve or twenty-four words on the seed word cards, and keep that secure. Now, you can use this device to interact with the Bitcoin network work using software such as Sparrow Wallet, Electrum, or Bep2 Desktop or Nunchuk as a few examples. Now, you have a range of security features that you can use with these devices such as passphrases, you can use seed x or my favorite is multi-signature. Now, if you're starting in a basic way, just start with the device and the USB-C cable, plug it directly to the computer and use it that way, and then later improve your setup. But I believe these devices are great at helping secure your coins. Especially as you start to migrate up into multi-signature security. But don't be disheartened or don't be, scared away. They are accessible, and I think you actually do learn about Bitcoin in the process. So to get yours, go to coinkite dot com, use code Livera to get a discount on your cold card. This episode brought to you by Galloy. They are building banking software for the Bitcoin age. So if you are with a bank, a fintech, or a startup looking to offer some kind of Bitcoin product, whether that is a Bitcoin collateralized loan Deposit accounts or payments, Galloy can help you. Their latest product is called Lana. It is a loans management platform, and you can use this to come to market quickly and offer a loans or Bitcoin collateralized lending product for your customers. Now, Galloy have a lot of experience in the space. They started with Blink Wallet in twenty twenty, and they've since grown this to become a community favorite over time, and so they have a lot of experience making things work in a secure, reliable, and scalable way. So if you need assistance coming to market quickly with a Bitcoin banking product such as lending or deposits or payments. Talk to the team at Galloy, you can email them, the email is biz at galloy dot io, or go to the website galloy dot io. And now back to the show. And then can you explain for us how it works in the case of, let's say, topping up collateral or partial repayment of the loan in fiat? So back to our example, let's say I borrow five thousand dollars. Let's say I, I earned two and a half thousand dollars and I wanna partially repay that back, is that possible? What does that look like in the DLC?" }, { "speaker": "shehzan_maredia", "time": "21:19", "start": 1278.87, "text": "That's just like updating it, you just like kind of update it with your lender, and you're You're just like, it's, it's like these, like all these like refinancing features. So you can kind of like update, it's, it's, you can obviously sim-similarly think about it to Lightning, how you can kind of update the channel state over time, right? It's like a very similar concept." }, { "speaker": "stephan", "time": "21:36", "start": 1295.92, "text": "Gotcha. And then similarly with adding more collateral. So let's say, you know, the price dips a little bit, and I think, okay, I better add some more collateral, so I'm gonna add another, whatever, five thousand dollars worth of Bitcoin" }, { "speaker": "stephan", "time": "21:50", "start": 1309.69, "text": "into" }, { "speaker": "shehzan_maredia", "time": "21:54", "start": 1313.85, "text": "Of this is, I honestly don't think we're doing like very much like fin- I don't think we're doing any like financial engineering right. Like we're taking like a very, like people borrow against their equities, people borrow against their houses, people borrow against their gold all the" }, { "speaker": "stephan", "time": "22:07", "start": 1327.06, "text": "time." }, { "speaker": "shehzan_maredia", "time": "22:08", "start": 1328.02, "text": "We're just taking the same features of those loan, systems and just- making, implementing them in a more like smart contract cryptographic, way so that users can have more guarantees, because like that's the beauty of Bitcoin is like a cryptographic system, right? It's not just enabling peer-to-peer pay-payments, it has these like programmable qualities to it. What we're just doing is embedding a loan contract into a smart contract, if that makes sense. And so all like the financial like functionalities there that you would wanna see in any loan system Some when you borrow against your equities, all of those like features are there, they're just embedded into this smart contract so that users can have more cryptographic guarantees, and also I think, users can have just like more, security guarantees. I think the fact that it is more, non-custodial is even better from like a, a bug/hack risk perspective because you're not just giving your Bitcoin to this person to just custody, and if their custody setup fails, your Bitcoin is lost, right? You're embedding it into this smart contract that's formally verified, that you You have a lot more guarantees on security as well." }, { "speaker": "stephan", "time": "23:18", "start": 1397.53, "text": "Yeah, interesting. And as you say, it is, it's definitely different from what- Kind of is already popularized in the space, at least in the Bitcoin world, where people might be familiar with, let's say, the multisig lending based startups or just straight up custodial startups, where this is like, maybe it's a bit of a new technology that people aren't familiar with, but that technology, this DLC underlying- What you're doing with Lava, it can arguably, you know, and does give a certain assurance to the borrower, the customer in this case, that his coins aren't being rehypothecated, that they are still in that DLT contract on chain. So it's definitely a different thing. So I-- but I guess maybe this is, interesting. Have you found any challenges communicating that to customers? Are they unsure about this because, hey, it's a whole new concept? Except it's not what I'm used to. What have you found there?" }, { "speaker": "shehzan_maredia", "time": "24:16", "start": 1455.83, "text": "No, I think people really understand it. Like, honestly, like I think when we communicate to people that it's really resilient from bugs, just because of the way the system is built and you know all the output conditions ahead of time, I think people really understand that. I think that's like a very unique property of any Bitcoin native application, just the way Bitcoin is built. It kind of forces this like, Like output, like you have this like kind of guarantees on all the output conditions in Lightning or even, Lava or DLCs. So I think people really understand that. I think people love the fact that they, Lava is like the only place they can really go where when they borrow against their Bitcoin, they see it on chain. I think people, people love that, I think that makes it very clear to people 'cause they go to like mempool.space and they see their collateral address, they see the money moving from their wallet to this address, they see like the stable coins being" }, { "speaker": "shehzan_maredia", "time": "25:07", "start": 1506.74, "text": "And so kinda like the proof is there. I think people really appreciate that. And I think, outside of that, people really, we, we have like the lowest rates, people really like that, that too right now. they're very like, I think, I think other than- Like Lava is the place where you get these cryptographic guarantees about security, you get the lowest rates, and you get privacy, and you get the fastest experience to get a loan. So actually we've, we've seen a lot of growth honestly, for us actually the challenge is kind of like talking to all the customers, and we're, you know, we're hiring people, we have like less than twenty-four hours in which we communicate to any customer inbound, so we're just trying to keep that, maintain that, and really provide the best product experience to, like Bitcoiners essentially." }, { "speaker": "stephan", "time": "25:49", "start": 1549.36, "text": "Okay. And so the, so, yeah, we've spoken a bit about the oracle aspect of it and the DLT aspect of it, now- One concern people might have is, let's say, how, how much coin do they wanna keep, you know, hot or internet connected, let's say, on their phone versus like, you know, hardware wallet support. Is that a concern you found people have, especially for larger amount loans, like if we're talking, you know, millions of dollars or whatever? Are they just, are they literally just running it off their phone with the keys there or- Yeah." }, { "speaker": "shehzan_maredia", "time": "26:21", "start": 1581.34, "text": "Like, when, when the collateral is locked in that smart contract, that's not hot, right? 'Cause it's just right. And, you know, we have, we, we do have people, so it basically depends on how do you get from your where your Bitcoin is when it's not locked in that smart contract, right? So Where/how do you get from your, whatever your self-custody or even custody setup is, to the smart contract? The smart contract is really secure, it's not hot or anything. So that's That's fine. And then how, where, how do you get back, right? But that's a totally separate problem. Then it becomes a problem of like, how do you, how do you deal with like your own custody setup? Because we, we're actually enabling ways, it's not really said, but it's enabled of people just being able to take any custody setup and just directly move money to the," }, { "speaker": "stephan", "time": "27:08", "start": 1628.46, "text": "I see. So you could like directly withdraw your, let's say at the end of the loan, you could directly withdraw them into your multisig or" }, { "speaker": "shehzan_maredia", "time": "27:14", "start": 1634.35, "text": "wha-whatever but honestly, like the majority of Bitcoiners don't, they just use like single stake, right? Anyways, alright. Yeah. so- So I" }, { "speaker": "stephan", "time": "27:27", "start": 1646.98, "text": "guess most users are just comfortable with just the phone app, for the security aspect of it." }, { "speaker": "shehzan_maredia", "time": "27:33", "start": 1652.63, "text": "Yeah. But or, yeah, exactly. So I mean, honestly, like most Bitcoiners- Literally just use like single sig to custody like, I've, I've talked to people who custody like hundreds of millions of dollars of Bitcoin, maybe a billion plus in just like a single sig wallet, so yeah." }, { "speaker": "stephan", "time": "27:48", "start": 1668.48, "text": "Yeah, I mean, to me that's crazy, like I just, I would never even, you know, but hey, people wanna, people gonna do what they're gonna do, and so" }, { "speaker": "shehzan_maredia", "time": "27:57", "start": 1676.8, "text": "it becomes like a totally separate conversation, right? Like we can have like, probably like a whole episode about self custody and all these custody things, But I, I would say it's like, outside of the con-context of like the loan si-side of things, if that makes sense." }, { "speaker": "stephan", "time": "28:12", "start": 1691.52, "text": "Gotcha. okay, so Let's now compare what you're doing with what orig- what already exists out there in the market, and I, as I understand, there's maybe a few different categories that we can sort of talk about, like in the Bitcoin world, let's say, there's, you know, the Unchained Capitals and the Lendens of the world, there's HodlHodlLend, there's Debuffy, I know there's a new one in Europe called Firefish, and then, oh, there's LenderSat as well, I think they're Also, so that's kind of in the Bitcoin world, and then I guess you've got the custodial style stuff, and then you've got, let's say, more shitcoin, wrapped Bitcoin style stuff as well. So do you wanna just give us a bit of an overview? Where does Lava fit into that ecosystem?" }, { "speaker": "shehzan_maredia", "time": "29:02", "start": 1741.86, "text": "Yeah, I mean, I think that if we really look at like the, the comparison, like what we get questions when users come to us, and they email us or they message us, and they're like, \"Oh, how are you different?\" The, the real things people ask us about is like the non-custodial, which I think Lava is like really uniquely stands as the best. so they're usually evaluating non-custodial with custodial or, bridge custodial. So basically like the two forms of custodial, right" }, { "speaker": "shehzan_maredia", "time": "29:29", "start": 1768.68, "text": "Like a few ones you mentioned, like Lighten or, let's say like the Strike product is a really good example, of like what those two companies are the ones people generally ask about, and then in kind of like other, the other custodial, it's like custodial bridge, they ask us about, wrapped Bitcoin. So like, there's like WBTC and Coinbase BTC, so CBTC, and you can go take those wrapped versions of Bitcoin, which are custodial, onto Ethereum and then borrow against it on an Ethereum protocol. Does that make sense? Gotcha. Yeah." }, { "speaker": "stephan", "time": "30:03", "start": 1802.75, "text": "So I guess just for listeners who aren't as familiar, these wrapped Bitcoin protocols are usually like, I think a BitGo is behind And like WBTC, and that's like a very, very historically popular one that's been around for a while. As you said, CBTC, which is Coinbase's version of that. And then, I guess there are some of these different protocols that people are using. I, one I'm hearing about now, I haven't ever used it, but I've heard this called Morpho, and apparently there, there are, you know, lower interest rates available on that, so that's why some people are into that. And then various other kind of, kind of, in You just have to think of it as a custodial Bitcoin, you know, wrapped Bitcoin or bridged Bitcoin, right?" }, { "speaker": "shehzan_maredia", "time": "30:47", "start": 1847.34, "text": "Yeah, exactly. Honestly, in my opinion, You know, when you use like, so I think the real difference is between something like a Strike or Lightning and a Coinbase or whatever, like a wrapped Bitcoin thing, Coinbase BTC or Strike BTC, they're both custodial, but when you go and borrow against it on Ethereum, you're taking on All these like risks of Ethereum smart contracts, which are way more risky than like Bitcoin smart contracts, but you're taking on that, then you're also taking on this. So all these Ethereum protocols, they don't offer fixed interest rates, they offer variable interest rates, and the interest rates, see, while the interest rate, you know, for a lo- like a loan. Might be lower than maybe some of these custodial lenders. What you're really seeing is you're taking on a lot of interest rate risk because the lending, the lender capital on the other side, isn't locked in. So when the lenders want to withdraw, interest rates spike, and they spike based on the liquidity on the other market. It's a horrible like financial product. There's like a reason why It TradFi doesn't offer variable rates, they, that are based on liquidity in the market. Sometimes like you'll get a loan in TradFi where it's like a variable rate loan, but it varies based on SOFR, like the Fed, like the Fed rate. There's Never a tra- a tradfi product where you get a loan where the rate depends on the liquidity on the other side. So in, in Morfino's case, if the lenders, like the stablecoin lenders, want to leave, they want to withdraw their funds, the protocol guarantees them that they can withdraw their funds at any time, so they have to spike interest rates and margin call their current borrower base. So it's super risky, and this happens all the time. so I think it's a very bad financial product. You're taking on all these like Ethereum risks, and then Also taking on custodial risk, right? and so you're not, you're really getting like no benefit in using those products, So then, that kind of is how, why Lava is different, right? Lava is fixed rate loans, it's non-custodial, it uses this, formally verified Bitcoin smart contracts. It's, it's honestly just superior in all ways to, these Ethereum protocols and these wrapped protocols as well. Also, bridges are just like insanely risky, like there's been like billions in- hack- Oh, there's bridge" }, { "speaker": "stephan", "time": "33:09", "start": 1989.48, "text": "hacks all the time, yeah." }, { "speaker": "shehzan_maredia", "time": "33:11", "start": 1990.96, "text": "Exactly. So, I mean, it, that, that's just like a horrible product. there's custodial Bitcoin backed lenders, so there's Strike recently launched a product, and there's like Lendin. Strike like literally tells users, \"I, I think that product is, it's very fascinating to me because I was surprised that they launched it.\" I was surprised because they launched it without telling users. Where the Bitcoin is custodied, which I think is like not great at all from a transparency perspective, and they also, don't, like, they rehypothecate, but they don't really tell you how they rehypothecate, so it's like very low transparency. it's like worse than like the custodial. But I guess, I mean," }, { "speaker": "stephan", "time": "33:49", "start": 2028.76, "text": "to be fair to Malas and them, it's probably, it's like early days for them, and they're probably still figuring it out. Like, it's not like they've been offering this loan product for" }, { "speaker": "stephan", "time": "34:02", "start": 2042.07, "text": "As, as you said, I mean, there is the categorical difference of it's a custodial product versus self-custodial DLT style." }, { "speaker": "shehzan_maredia", "time": "34:10", "start": 2050.0, "text": "Yeah, I mean, you obviously like, you know, you lose privacy when, versus when you use Lava, you lose custody. They're rehypothecating, so you're taking on like rehypothecation risk, and you already saw what happened with that in like, you know, 2022, yeah, I mean, like I think they, they have higher rates than us, also, take slower to use, like you give up all this documentation. They're not global, they're not even available in most places in America, so I think there's like very clear benefits of, of like using, like Lava versus, versus them as well." }, { "speaker": "stephan", "time": "34:45", "start": 2085.3, "text": "Gotcha. and I guess in a similar bucket, but let's say TradFi, like the TradFi world may welcome in, may enter this in a, with a bit more Gusto, let's say, and they may start offering competitive products as well, and obviously this will be kind of a, another form of custodial, but they might be able to offer different things, or maybe for the normies, they might be more comfortable with that kind of product, so do you have any thoughts on that, like if, let's say, large US banks were to start offering this or elsewhere around the world?" }, { "speaker": "shehzan_maredia", "time": "35:20", "start": 2119.87, "text": "Maybe work with TradFi to fund, like, as on the lending side, if that makes sense. Yeah. So," }, { "speaker": "shehzan_maredia", "time": "35:27", "start": 2126.78, "text": "yeah, I think like if there's gonna be like, I think there's TradFi, the way I think about it is like there's banks, like people with capital, right? Like dollars to fund loans, and they will work with a, a variety of these different loan products, and we work with them too. And then, you know, what Bitcoiners should care about is like the, how they want to get their custody set up, like, right? Like, there will be like someone like Strike or them, like now Bitcoiners compare the rehypothecation or custody risk versus Lava's non-custodial, non-rehypothecation, and they can kind of choose. Which one they want to choose, right? But I think TradFi is already in this game, it's already funding loans. so it's not like TradFi's not here anymore." }, { "speaker": "stephan", "time": "36:08", "start": 2167.57, "text": "Correct. yeah, I, I guess what I'm saying is more like if they were to directly offer it themselves as opposed to participating on the cap-- on the capital side. so maybe, maybe we'll see that happen later this cycle, for all we know. I mean, if there's a ton of interest in lending and a lot of money to be made here, then, you know, Your thoughts, on, you know, why these people are offering this and why the, you know, b- I, okay, let me back up a step. For a while, one of the criticisms of these Bitcoin backed loans was, \"Oh, look, the rates are so high. You know, it's, depending on times in the history, it might have been fourteen, fifteen percent, like very high interest rates or even higher.\" And the argument I've heard is, look, it's, it's coming down over time, but, you know, we're just not there yet. What's your perspective on that? Do you agree? Disagree? How do you see it?" }, { "speaker": "shehzan_maredia", "time": "37:07", "start": 2226.56, "text": "yeah, I think like a lot of lenders, I actually think like we've reduced, like, I think one of the reasons why we have lower rates is because of some of our, the benefits of Lava, that it's like very secure, even from a lender's perspective, they know that the collateral setup is secure, it can't get hacked, there's like reliable guarantees about liquidation, so that's, I think that's been able to be a, a feature for us, it's been able to enable us to offer lower rates. And then the other thing that I think Of course, and Lava's ability to fund larger loans and offer lower rates has just been the amount of capital that is moving into the space, regardless of like politics, like the recent election in America, where a lot of the capital obviously in the world is in America, right? Opened up the room for more people to fund loans as well, and that's obviously like benefited Lava and increased our ability to offer rates at loans at lower rates and also higher loan amounts, and that's only happened like that, those floodgates have kind of opened and that's, you see the trend is on rates just going down over time, just based on supply of capital increasing." }, { "speaker": "stephan", "time": "38:17", "start": 2296.52, "text": "Yeah, I see. And I think it's probably also fair to say that when people compare typical loans, like, okay, why the home loan rate is so much lower than these Bitcoin loan rates? I think Maybe the uncomfortable answer is that really those home loan rates are fed subsidized. They are government, they are effectively fiat subsidized loans, whereas up until more recently, a lot of the Bitcoin loans weren't so close to the Fed printer or not so close to the money printer, and therefore people were Not as easily subsidized, and therefore you're paying a higher rate for that." }, { "speaker": "shehzan_maredia", "time": "38:50", "start": 2330.17, "text": "Yeah, I mean, honestly, like also depending on like your duration and amount, the rates on Lava are lower than, than what you could do getting against a house. and, you know, I'm, I'm like a, I'm like a very basic Bitcoiner at heart, I think over time Yeah, this used to be more of a meme in the Bitcoin culture, like sell your chairs, sell everything, like hoard up Bitcoin. I think, like, I think as that, as more and more people do that, they will kind of gain the benefits of kind of like shorting fiat, and being able to save more in Bitcoin and access like the lowest rates available. I think Bitcoin is just like the best collateral to, to as well, because it trades 24/7, it's global, it can be stored very securely, especially with Lava, you have like really good guarantees about, that you're not gonna lose your money by even like lending on the dollar side against a Bitcoin secured loan, so, Yeah, I think, I think it just like makes a ton of sense to, to grow Bitcoin's adoption as collateral. And I think this helps lenders, they get a like low risk loan that they can fund and earn a yield on dollars, but it really helps Bitcoin because I think Bitcoin's in this phase where it's growing its adoption as a savings asset, and one of the main things we need is, people to just be able to save more in Bitcoin, right? And having a very easy, global, secure way for people to be able to borrow against their Bitcoin, actually increases like Bitcoin's rate of adoption as a savings asset, and I think it's like, a very powerful tool to have." }, { "speaker": "stephan", "time": "40:22", "start": 2421.86, "text": "Yes, I mean, I agree that it's, it's great that there are options. I would caution listeners though that, you know, I think the days of big bear market drawdowns aren't totally behind us. Like, it could totally-- I mean, none of us knows where the top is or where the bottom is, but just as an example, I could totally see, you know, hitting a top of like, I don't know, two hundred and fifty or something like this, and then crashing over the next year to like, I don't know, ninety K, just to And then there'll be all these people who, you know, because everyone feels like a genius in the bull market, right? And so there'll be a lot of people who just think, \"Oh, it's safe now,\" you know, corporate adoption, nation state adoption, we're never gonna, you know, supercycle or whatever. Like, it just-- I would just say, you know, people should be wary, but, as long as you are, you know, but at the same time, listeners of the show, I treat you as big boys and big girls, you" }, { "speaker": "shehzan_maredia", "time": "41:21", "start": 2480.94, "text": "I agree. I mean, I think that my, my goal is not to convince people to, like, borrow against their Bitcoin, right? I don't wanna like convince people to, I just wanna say, okay, if you do wanna borrow against your Bitcoin, then I wanna explain that, okay, Lava is the most secure way for you to do so. that's like, I never try to like give financial advice on whether or not someone should make a financial decision in terms of, you know, I think buying Bitcoin is a great decision, you know, I think, for some Focus on that, it's like, it's just kind of talk about like security and, and what, what products are available and where you get more security benefits." }, { "speaker": "stephan", "time": "41:59", "start": 2519.29, "text": "Gotcha. Okay, let's talk a little bit about the stablecoin aspect of this because, You know, it'd be good to just hear a little bit of your thoughts on why, you know, you selected X, Y, Z, why this stablecoin and not the other, and what are the ways you foresee the users, the end users of Lava? Flipping around between them. So let's say they get, I don't know, USDC, but they want Tether or whatever, they want different coins. Can you just explain a bit of your thinking there on stablecoins inside of Lava?" }, { "speaker": "shehzan_maredia", "time": "42:28", "start": 2548.23, "text": "Yeah, yeah, I can definitely like explain. And I think there's a lot of like misconception that Bitcoiners have towards stablecoins. And I think that really, I, I really separate everything in Bitcoin from everything in crypto, right? I think they're just like orthogonal technologies. Bitcoin is, You know, like a new savings asset, it's new money, and stable coins and kind of crypto, crypto broadly is just a casino, but stable coins are just like a new payment rail for, for dollars. They're just like a fintech technology, and I think Bitcoin is more like a revolution in savings and money. and really what stable coins are at a high level for like the Bitcoiners who haven't played around with them at all, they're just these like digital dollars that you can send to people, and the kind of the benefit is they're KYC dollars, to be frank, is like you can, I can send you stablecoins and you can receive them without having the KYC, right? So I think that's like one of the benefits, they're like kind of permissionless, in that respect. And, what you really want when you borrow, like when you use a stablecoin, if you're actually holding any amount in it, is you wanna make sure that stablecoin is like legitimately backed by like short-term treasuries, because then you know that it's, you have confidence. There used" }, { "speaker": "stephan", "time": "43:47", "start": 2626.61, "text": "The, the big example from last cycle, but, there is a difference of course between the backed, you know, the fiat backed stablecoins, and of course, people should understand there's big differences in censorship resistance. All the, basically the big stablecoins have surveillance, they have forms of control or where the provider can disavow or freeze those coins. Obviously, that's different to Bitcoin, but like you said, for people who, who need to interact in the fiat system, because, hey, we're not on the Bitcoin standard yet. then these are a tool that people are choosing to use." }, { "speaker": "shehzan_maredia", "time": "44:21", "start": 2660.99, "text": "Yeah, exactly. I, I think there's like so much to talk about with stablecoins because, and some of the listeners here definitely probably don't know the whole history of like algorithmic stablecoins versus like Back stablecoins, I don't consider like I think algorithmic stablecoins, I think people have learned from. And so now, even if you look at the trend, right? People are using actually dollar back, like treasury backed stablecoins, And, yeah, and then in the context of those, I think stablecoins are just like a better payment rail to move dollars. I think that's why they're seeing adoption. I don't think stablecoins need to be on Bitcoin. Bitcoin's focus is to be this new money, this new savings asset. It doesn't really need to be, like a tokenization platform, if that makes sense. and I think, I think one, it's like worse for Bitcoin because there's all these like centralization risks that come from these like fork issuers, which you briefly mentioned The other platforms are kind of optimizing for being like fast, instant ways to move stablecoins, and the, the kind of technology requirements to do that is much different than what Bitcoin is trying to optimize for. and when you use like stablecoins on Lava, the kind of the benefit is you can get your loan capital disbursed to you anywhere in the world instantly, You can move money like permissionlessly, you have a dollar back stable coin, you can withdraw money to fiat if you want, so you can move between payment rails, right? You can move between your digital dollars to, Your bank dollars, you can even start, paying through card payment rails like Visa, for example. So you kinda have this like interoperability, but we kinda try to abstract all that away. It's all dollars, and you're trying to-- We're, we're gonna figure out the easiest, fastest, cheapest way for you to move those dollars and spend those dollars." }, { "speaker": "stephan", "time": "46:05", "start": 2765.38, "text": "The lead sponsor of this show is BOLT, the best place to buy, sell, and save Bitcoin. For listeners in the US, BOLT lets you secure your financial future with complete peace of mind by integrating a low Bitcoin only brokerage with next gen multisig vaults. With Bold, you can smash buy Bitcoin or set a DCA plan for only zero point nine nine percent fees and seamlessly deposit the Bitcoin direct to your Bold Vault. The Bold Vault is a two or three collaborative multisig where you hold two keys and Bold holds one as a redundant backup protecting against loss or theft. You can use Trezor, Ledger or cold card hardware wallets to spin up a Bold Vault in just a few minutes and the Bold Vault is the only collaborative custody vault available with zero monthly fee. They're also offering zero fees on your first ten thousand dollars of Bitcoin buys and twenty five dollars of free Bitcoin when you buy a hundred dollars of Bitcoin or more. Try Bold today and upgrade your stacking experience over at getbold dot io. And now back to the show. I see. So with these, I mean, when we're talking about stablecoins and flipping between them and being able to-- Because for some users, this is their off-ramp, right? They're holding Bitcoin, they wanna borrow against that to get some digital, you know, fiat-doll crypto dollars, let's say, or stable Offering some of that by either tapping their card somewhere or getting it into their bank account, again tapping or getting physical cash to then, pay in the shops or whatever. but then some of the concerns and things people have to think about now are What are the exchange rates of these coins between each other, the stable coins? is there like a slippage of, you know, if you're doing larger amounts, are you gonna end up paying a slippage because you're converting and there's like in the background some swap server and they're taking a cut? and, you know, fair enough, I mean, people aren't just gonna provide services for free, but the end customer, the end user has to think about, well, how much am I paying for that? and then, I, I presume some of There's, you know, shitcoin chains, you need kind of a small amount of that coin to be able to move the coin around, so it's kind of things like that. So can you explain a little bit of those and how those are being abstracted away in, in, in Lava?" }, { "speaker": "shehzan_maredia", "time": "48:13", "start": 2893.24, "text": "Yeah, I can explain all that. So, one, all the gas, Lava is like, still so surprising, we're still like the only self custody app where we've abstracted away gas fees. Like, even in crypto, these apps haven't done that, but we built this whole like system where, you can kind of designate another fee payer, which is us, like, fully trustlessly to pay your gas fee. so there's no gas fee or any of that stuff when you use Lava. All payments using digital dollars are zero fee, and instant" }, { "speaker": "shehzan_maredia", "time": "48:42", "start": 2921.68, "text": "That, that can explain that side of things. And so I can maybe even explain like the different use cases that we see people do and the kind of like the, the experiences people have. So if you borrow against your Bitcoin, some people want to withdraw those, digital dollars to their bank account, and we have, off-ramp support within Lava, where you can connect your bank account and kind of directly just send money there. same day, same day withdrawals are supported as well as like delayed withdrawals, and it's zero fee for withdrawals, which" }, { "speaker": "shehzan_maredia", "time": "49:11", "start": 2951.46, "text": "And we see a lot of people that, in America for, or like any, a lot of countries, but in America in particular, people just withdraw their money to their bank account. I, I kind of view like a card as like another way to kind of like off-ramp, so we have, we can issue people a card, and we're gonna be doing a lot of stuff with the card, like rewards and all these type of things, but you can use that to like kind of interoperate with Visa, and you really get the same, like, you can add" }, { "speaker": "shehzan_maredia", "time": "49:42", "start": 2981.58, "text": "And, you can kinda spend like anywhere in the world. So we have that. We see some people move the stablecoin, like digital dollar balance that we have on Lava just peer to peer, and it's like zero fee instant payments for those people, which is cool. And then some people will take their digital dollars, and we already have like this like swap engine into Lava, where some people will take their digital dollars and swap them for another form of digital dollars. The only people that do this are traders that use Lava. so they'll usually like take Lava, and they'll swap it to like USDC or something like that, and then they'll go move it off Lava, 'cause we don't support like all these like shitcoin casinos, they'll go send it to like Coinbase or something, right? And then go trade it on Coinbase. so we have a form of users that-" }, { "speaker": "shehzan_maredia", "time": "50:27", "start": 3027.21, "text": "Does that as well. Gotcha. And sometimes, so just" }, { "speaker": "stephan", "time": "50:29", "start": 3028.67, "text": "a quick question on that, when people are changing, changing Lava USD out into, let's say, Tether or USDC, these kinds of things. They still have to think about what network it's traveling on, right? Like, I mean, some of these different services, they say, \"Oh, only pay on Ethereum to this address,\" or \"Only pay using Solana or Tron or whatever, you know, shit, shitcoin chain.\" How does that work in the app? Like, are you just recognizing from the address type what it is or what-- how does that work?" }, { "speaker": "shehzan_maredia", "time": "50:57", "start": 3057.47, "text": "Yeah, exactly. We just, we have like actual like safety protections built into the app, so we try to protect users from sending to a wrong address and Once like a, a user swaps, like Lava USD, which is our own staple coin, because we didn't wanna give all the yield back to, you know, Tether or Circle, we wanna figure out ways to kinda reward customers with that. it's also like Lava USD, it's like, it's own thing. Basically, we've, like, launched like a- Back digital dollar, very similar like USDC, like regulated, audited, the reserves are held at, short term money market funds, custody by BlackRock. it's just like a, a competitor to USDC, 'cause my view is that stablecoins are fintech technology, and it's like, you know, you have like a service like Cash App or PayPal. Like Cash App doesn't just use like PayPal's bank account, right? Like they all have their own, like kind of, treasury and like routing" }, { "speaker": "stephan", "time": "51:49", "start": 3109.28, "text": "details or whatever," }, { "speaker": "shehzan_maredia", "time": "51:50", "start": 3110.08, "text": "yeah? Yeah, exactly, yeah. And like that's important because, like, you don't wanna just be, we don't want everyone to be, using stable coins that are just owned by USDC, which is effectively Coinbase, right? and so I think it's good to have like independent, differently issued stable coins that all like interoperate with each other at zero cost, which is how like fiat work works When you send money from a bank to another bank, it all kind of interoperates seamlessly. But, and all the users really think about is this is the dollar balance, right? The dollar balance. So is-" }, { "speaker": "stephan", "time": "52:22", "start": 3142.2, "text": "Yeah. So my only question there is, is there any kind of slippage there, like if we're doing, once you're doing larger amounts, is there kind of like you're paying a percent there because you're going from one type of stablecoin to another or whatever?" }, { "speaker": "shehzan_maredia", "time": "52:35", "start": 3154.91, "text": "No, it's all like zero fee. All like, I, I, my view is like all" }, { "speaker": "shehzan_maredia", "time": "52:42", "start": 3161.97, "text": "Free onramps, so like if you wanna convert like bank dollars to digital dollars or like just add money to Lava, it's zero fee. Wanna move it back to your bank account, zero fee. If you wanna move it within Lava, zero fee. If you wanna pay with the card, it's zero fee. If you wanna go put it into a USDC, it's zero fee as well. And then moving that off platform is also zero fee. Gotcha." }, { "speaker": "stephan", "time": "53:02", "start": 3182.36, "text": "So in a sense, Lava is eating the fees on that, but you're making it on, you know, the Gotcha. Okay, interesting. so I think you were touching on this before about common types of use cases. Now, as I understand this market, generally speaking I'd say there's probably two main categories, right? At least my understanding of it, I'm curious to hear what you think, but my understanding is you've got the people who, you know, they have a lot of Bitcoin, but they don't have a lot of fiat. You know, hey, a lot of people are in that, you know, use case because hey, they're bullish on Bitcoin, so they're borrowing against Bitcoin to pay life ex-- living expenses or something like this, or and maybe some of them are doing it in a short term sense because they've got a Same thing. So that's kind of one bucket in my mind, and then the other bucket, which I know is quite, prominent, and especially during bull market, is basically people wanna lever up, right? They wanna borrow against some coin, get some digital dollars or stable coins, whatever, and then again, buy Bitcoin. So What are you, what are your reactions on that? Is that what you're seeing?" }, { "speaker": "shehzan_maredia", "time": "54:13", "start": 3252.73, "text": "Yeah, I mean, so the use case, it's like, why do people borrow against Bitcoin, right? we've actually seen like a very diverse- Use of funds, we just talk to users all the time and like what they're doing, it's been super interesting to me. We've had people literally, I'm not gonna like name their names, but they're popular people on social media that have borrowed against their Bitcoin to buy a house, which is pretty cool, because, you know, maybe they don't have fiat income and like the way mortgages work, especially- It might be hard" }, { "speaker": "stephan", "time": "54:40", "start": 3280.35, "text": "to prove income, that kind of thing. Yeah, you" }, { "speaker": "shehzan_maredia", "time": "54:42", "start": 3282.13, "text": "have to prove income and- you know, it's like also like a big kind of hassle to get a mortgage as well, there's like all this like documentation required, and like people have just come to us like, borrowed against their Bitcoin, bought a house, so essentially like a Bitcoin mortgage, right? Which is kinda cool. and similarly, you can do the same thing with like buying a car. So that's like one-time large purchases, like Taxes, people, people, a lot of people did it with taxes, so they, they didn't wanna pay their taxes, they didn't have like fiat to pay their taxes, so they borrowed against their Bitcoin, so they effectively like took like a, converted their tax payment into a mortgage, or like a Bitcoin mortgage, which is kinda cool, right? so they did it with taxes, people done it with cars, houses, vacations, so we've had people do it with, with that college tuition as well, so we've had people take these like one time" }, { "speaker": "shehzan_maredia", "time": "55:36", "start": 3335.7, "text": "alone, and kind of fund them with their Bitcoin collateral, but kind of like, you know, fund them with like a loan essentially, which is pretty cool. that's like the majority of volume, and then some people have borrowed against their Bitcoin, they kind of borrow like very frequently to fund like daily payments, which is pretty interesting. So not like large one-time purchases, but, but like day-to-day expenses. So they might borrow like monthly or whatever to And then spend with a card. Does that make sense? Like, you, you borrow- Yeah. As the" }, { "speaker": "stephan", "time": "56:02", "start": 3362.48, "text": "off-ramp kind of thing, yeah." }, { "speaker": "shehzan_maredia", "time": "56:04", "start": 3363.82, "text": "Yeah, exactly. And then, yeah, some people will borrow and then they're gonna go and do the whole like trading experience, right? Like, they'll borrow to buy more Bitcoin or they'll borrow to go- Move that money into like a fidelity or something and trade like equities or move that money into the shitcoin world and trade whatever they wanna do. So that's been like another, like another, another use case of, of lava loans as well." }, { "speaker": "stephan", "time": "56:27", "start": 3386.75, "text": "Yeah, interesting." }, { "speaker": "shehzan_maredia", "time": "56:29", "start": 3388.57, "text": "like the same product kind of serves, like at least like the, yeah, different" }, { "speaker": "stephan", "time": "56:33", "start": 3393.03, "text": "uses, yeah. From all the way from Deejays all the way to, you know, responsible individuals. Of course, I encourage listeners, please be responsible, but, look, it's, it's your money, it's your life. So I guess those are the kind of the key, questions I think. I guess how do you, do you see, I g- okay, here's the question I've got for you. A lot of Wealth today is in, like, Boomers in their TradFi broker accounts, right? It's not on chain per se. But do you see the, let's say You know, this market of, let's say, on-chain, finance really growing a lot over time. Do you think it's that those boomers will come, or maybe it's the, as the wealth passes down to their children, that they will be the ones who sort of really embrace, you know, doing, you know, Bitcoin finance and on-chain things?" }, { "speaker": "shehzan_maredia", "time": "57:28", "start": 3447.63, "text": "Like, I totally think boomers, they're, they're already coming to lava. Like, we literally talk to people who are like, kind, like so surprising, like, you know, I thought we wouldn't get these like younger users, but actually, like, I, I tend to think that Bitcoin has like a relatively, like, from like an age perspective, like old user base, but they're really early adopters. Like, Bitcoin is," }, { "speaker": "stephan", "time": "57:48", "start": 3467.65, "text": "like the tech-savvy boomers and Gen X people maybe." }, { "speaker": "shehzan_maredia", "time": "57:50", "start": 3470.47, "text": "That, that's the people that seem to have Bitcoin. Relatively like tech savvy but like o- an older aged crowd, and they use lava, like they, I, I've been just like so surprised, 'Cause that's not what I thought when I was" }, { "speaker": "stephan", "time": "58:05", "start": 3485.39, "text": "right. Because the stereotype is like d gents on X who are all like maybe twenties and thirties and they're just kind of gambling on things and that's kind of the stereotype, right? Even if it's not necessarily true. That's what" }, { "speaker": "shehzan_maredia", "time": "58:15", "start": 3495.24, "text": "people think crypto is, right? Like that's literally what, like, crypto is, but not Bitcoin. I think Bitcoin is like a little bit more like serious crowd and, and actually, I think that's why like people--" }, { "speaker": "stephan", "time": "58:24", "start": 3504.03, "text": "Yeah." }, { "speaker": "shehzan_maredia", "time": "58:24", "start": 3504.37, "text": "A lot of our users come in and they just already know about" }, { "speaker": "shehzan_maredia", "time": "58:34", "start": 3513.51, "text": "These people know about Bitcoin smart contracts, Bitcoin's great, like, not that much, it's like I know, but like they know, like, vaguely about it, right? They know like the val- I think it's actually really fascinating to me how much people know the value of seeing your collateral on chain, so they kind of understand like a block explorer and like how Bitcoin kind of like addresses and all that kind of stuff works. Yeah. That's pretty cool. and then we've actually had like people, like, a lot of people that like email us and like talk to us, like" }, { "speaker": "shehzan_maredia", "time": "59:03", "start": 3543.49, "text": "Without talking to us, and then like later message us telling us that they really liked the experience, and oftentimes those people end up being like an older crowd of people. Yeah. I think that it goes to show, like, I think the, the audience, the user base of Bitcoin is very different than the user base of any other asset, if that makes sense." }, { "speaker": "stephan", "time": "59:24", "start": 3563.93, "text": "I see. And it, you know, it could also just be a thing of like if you're early-ish or maybe, 'cause as I understand, Lava is relatively new as a company, so maybe your early adopters are going to be the more tech-savvy people who kind of already know Bitcoin stuff, but maybe as, you know, as you grow and as the bull market progresses, then you'll start to get more, quote-unquote, noob customers who maybe aren't as tech-savvy about Bitcoin and don't really understand all these technical things about Oh, Block Explorer this and D L C that and so on." }, { "speaker": "shehzan_maredia", "time": "59:57", "start": 3596.79, "text": "Maybe, I mean, I think we've done like a pretty significant amount of loans, I would say probably the reason for this is, is because we serve Bitcoiners that have enough Bitcoin that they wanna borrow against it, right? And so, so- It already" }, { "speaker": "stephan", "time": "01:00:10", "start": 3610.12, "text": "selects for the more tech-savvy, let's say." }, { "speaker": "shehzan_maredia", "time": "01:00:12", "start": 3612.8, "text": "Yeah, I think like, I don't think it's gonna change because, I mean, we've been doing loans for, for a while now, And yeah, I think that it's going to, to stay this way, just because of like the, if you become a Bitcoiner, it becomes such a big part of your portfolio that you think about borrowing against it, like you've already started to now understand about Bitcoin, right?" }, { "speaker": "stephan", "time": "01:00:33", "start": 3633.02, "text": "Yeah. And I guess now, obviously, you know, podcasts and articles and all this new stuff, people are doing their own research and figuring out, okay, what are the different options, what do I wanna go with, and so on. So, yeah, definitely an interesting time. so I guess if we had to answer the question, do you think- DLCs are a technologically superior way to do Bitcoin loans. I presume your answer is yes, or how would you answer that?" }, { "speaker": "shehzan_maredia", "time": "01:00:59", "start": 3659.33, "text": "Yeah, I think so. I mean, I don't think it's, it's all about just like DLCS, and I think like DLCS are gonna be, are gonna change in the concept over time because, you know, we, we, we can go very technical, this might be like its own thing, like covenants and Bitcoin scripting, functionality changes will affect how we want to do, how we can improve like the speed to initiate a loan and all these other types of things over time, but ultimately I think leveraging like DLCS, Bitcoin smart contracts, Bitcoin scripts is, is definitely a more superior way I don't see like a downside to it. That's, that's why I started Lava is 'cause I was like, \"This is like only asymmetric upside, right? Like, you build this product, it's-- you see stuff on chain, it can be global, it can be more private.\" I think that we have like substantial advantages in our product that enable us to offer lower rates to people, and so I, I do think it's like a more, like superior, and that's why I think we see also like people borrow against their Bitcoin on Lava for various different use cases, right? because it's not like a, I, I don't think it's as much of like a trade-off thing, I think it's a, it's just like a superior technology thing." }, { "speaker": "stephan", "time": "01:02:08", "start": 3728.18, "text": "Yeah, so, yeah, it'll be interesting to see where that all goes and, you know, if more people come to this because, yeah, maybe cheaper rates or they really like the non-rehypothecation aspect of it, I think it's arguable, I mean, this could also be another point as well, because there's a lot of talk about are they rehypothecating coins and paper bitcoins and proof of reserves and all these kinds of things, but actually with DLCS It actually already solves some of those problems because you, you know, it's not being rehypothecated. So I think that's, that's certainly, an interesting trend and, it might, help alleviate the future FTX, style scenarios" }, { "speaker": "shehzan_maredia", "time": "01:02:53", "start": 3773.36, "text": "Yeah, I, I mean, I totally agree. Like with Lava, you know for a fact that you're not borrowing against Bitcoin, and then like your Bitcoin is being rehypothekated. You have proof. I think that's like super valuable. Yeah." }, { "speaker": "stephan", "time": "01:03:10", "start": 3790.46, "text": "so I guess one other thing, it could, could it also just be because DLCS are relatively early? Like, I know, was it Tadz Drajda, I think, came up with the idea like years ago, but, it seems like- Maybe some of the startups that were using DLCS haven't really hit a certain level of traction, until, until more recently, I guess." }, { "speaker": "shehzan_maredia", "time": "01:03:33", "start": 3813.88, "text": "I don't know if they're like that early. I mean, they've been like eight years, nine years now, so, Yeah, yeah." }, { "speaker": "stephan", "time": "01:03:40", "start": 3820.31, "text": "Oh, yeah, sorry. I mean, yeah, I mean, the DLC technology has been around for a while, it's just that the startups actually leveraging it. Yeah." }, { "speaker": "shehzan_maredia", "time": "01:03:48", "start": 3828.17, "text": "I think, I don't think that's like, I don't think it's more of a technology. I think the technology's been like audited, tested pretty well. I think more it's like a, I think people like- You know, we're all in Bitcoin, we think about it every single day, like all day long, right? But, why, why Lava? I mean, a lot of the big lenders kind of proved kind of the demand for lending like three years ago, but then they blew up, right? And then- You know, kinda like Lava started, we built this tech, and then it was like, kinda like how do you get capital? And now capital. I think it's like a perfect timing with like the demand being proven, the tech being built, and the capital moving in to fund the loans. and also I think like Bitcoin getting to a certain stage, like- Where now there are these like big, big, like people, Bitcoin has become like a pretty big part of people's portfolios, so where like the demand for borrowing against it has become, Like a thing people start thinking about, right? Like now it's, it's a bigger asset, it's like a hundred k, per coin, and now people actually want to figure out ways to, to still fund expenses with it, right? In the beginning it was more a collectible, a small part of people's portfolios, but like we talked to so many people and they just like bought Bitcoin early and now it's like retired them. Like literally, there's so many people who've just retired on Bitcoin, and now they're like, especially as like the price has gone up Not" }, { "speaker": "stephan", "time": "01:05:09", "start": 3909.95, "text": "sell it, but like fund expenses that they have. So I think it's like, yeah, yeah, interesting stuff to see. So, yeah, look, let's, close up. If you can just let people know where to find you and, yeah, that'll be a great spot to finish." }, { "speaker": "shehzan_maredia", "time": "01:05:23", "start": 3923.0, "text": "yeah, just if you go to lava dot x y z, it's our website, you can find everything about Lava there, and you can always email us. concierge at lava dot x y z. My email is shehzan at lava dot x y z, so feel free to email me directly if you need." }, { "speaker": "stephan", "time": "01:05:40", "start": 3940.56, "text": "Fantastic. Well, yeah, thanks for joining me, and, yeah, I'm interested to see where all this, Bitcoin lending goes this cycle." }, { "speaker": "shehzan_maredia", "time": "01:05:47", "start": 3947.15, "text": "Thanks for having me on." } ] }