Okay, we're rolling. George Beall from Lombard Finance, how are ya? Doing well. Thanks for having me. Yeah, thank you for joining. I am a huge fan of Bitcoin, Bitcoin bull, of course, and want to get more Bitcoin projects on the pod. And so really grateful that you can be on to talk about what neat things you guys are doing at Lombard Finance. Before we get there, though, we'd love to hear about your background. You have an interesting background that I think that I think a lot of crypto kind of growth people share. And so I think they'd appreciate to hear a little bit how you got into crypto and And more importantly, like why you stay. Yeah, sounds good. yeah, first gone to crypto in 2013 or so when my friends came to school and told me about Bitcoin. didn't really understand exactly what it was at the time, but was very interested in tech and so started to poke around and just learn a little bit. It seemed a little bit more of a novelty at the time. I often say if I went back in time and told myself there's an ETF and it hit 100K, I probably wouldn't believe myself. But was doing a little bit of mining on a small processor, did some trading on Mt. Gox. So started to poke around. From there, when I went to college, I was still crypto curious. a little bit of crypto was doing some trading. And then eventually I co-founded a project called Everpedia, which is now rebranded as IQ Wiki. But it was sort of a Wikipedia competitor evolved into more of like a decentralized Wikipedia. And some of the co-founders are like Sam Kasmeyan and Travis Moore, who are the founders of Frax now. And so all of the sort of co-founders at the time were very into crypto. We were talking about a lot. ETH had just done their ICO and we were sort of talking about what the impact of smart contracts would be for the next evolution of the internet. And just got really excited about the future there. And I think that's when I really got sold on sort of the future vision of, know, this isn't just sort of like a tech novelty, but this is actually the next iteration of the tech industry. That's probably about 2016-ish. Fast forward, ended up going back to school, wanted to finish my degree. And then when I graduated, was looking to go into crypto full time. At this point, this is now 2018, market just crashed. Not a lot of people were hiring. And so figured, okay, I've done sort of the startup side of things. Let's try to learn how to actually like big companies run. What does best in class operations look like? I had a lot of friends that were getting recruited to Walmart e-commerce at the time. They were starting to make their big push into e-commerce. And so joined. as a business analyst there, oversaw a section of the TotalWalmart.com P &L, and so I was focused on TVs at the time. When I joined my P &L, was about $10 million. Over two years, I ended up growing that to about $200, $250 million, improved profitability. Got a touch really sort of like every layer of the Walmart business. And you know, I think as someone who grew up in Los Angeles, know, Walmart's present, but maybe not the most desirable. shopping location, I think you can learn a lot from Walmart in that 95 % of all Walmarts are within, I think it's 10, maybe it's 15 miles, or 95 % of all Americans live within 10 to 15 miles of a Walmart, which is just insane distribution. And then in most other parts of the country besides the coast, Walmart is actually a very core pillar of their economies. So, you know, with that, I think learned a lot about, you know, how you run a good business, how you try to optimize your P and L, how you you know, best look after your customers. After about two years there or so, I was starting to get a little bored of the corporate life. Crypto was now starting to pick back up. At this point, it's now about 2020. And so there's also a little bit more jobs available. Figured it was a good time to get back into the industry. And so I ended up joining Commonwealth to lead go-to-market there. Didn't, you know, exactly have as much like business context in terms of like, quote unquote, crypto BD. Not sure if Crypto BD was really sort of like the meme it was back then as it is now. But just start to talk to a lot of people. Commonwealth was a very early multi-chain project. We were on actually Polkadot first, then later Ethereum, and then eventually Cosmos and a couple other chains as well. And so got to talk to a really wide gambit of builders. We helped EYDX with their governance token launch. We worked with everyone from Axie to Terra to Oneinch. And so got a really good sort of high level view of what was going on within the industry, which was experience and then also really got to see the inner workings of how do Dao's foundations, community governance, etc work. After a couple years there ended up leaving, joined Gauntlet, and then was doing BD at Gauntlet for a short period. And then recently joined Lombard last November to lead strategy. it's been a weaving through a variety of different types of projects, everyone from more platforms to DeFi protocols to Gauntlet and more of a quant lens and risk management. Additionally, throughout that time, I've been an active angel investor. I find it's a really good way to just support other builders within the space, continue to get sort of like a view into what other companies are doing. Yeah, so I've been fortunate to have a lot of great experience and got to work with lot of amazing people in the industry. In terms of sort of what keeps me here, I think the more and more... I have sort of gone down the rabbit hole, learned about the space. And also, you know, I've been fortunate enough to see a good amount of sort of the TradFi side of things. I went to school at Wharton, so a lot of my college counterparts are at, you know, the investment banks, you know, that I think a lot of us don't like these days. And it's just so obvious that TradFi is a very inefficient industry, one that's really ripe for extraction by people who understand how those systems work. There's so many layers of middlemen who will take their fees, those start to add up, know, add on top of that, I've always really believed in the banking, the unbanked narrative of crypto. You know, I think even with sort of just wallets and yield bearing stable coins now, there starts to be an incredibly powerful onboarding mechanism and new financial product that many people around the world have never been able to experience. And I think within that, You know, as a U.S. builder living in a major city, oftentimes it's easy for me to forget who's really the end beneficiary of crypto. It's honestly not Americans. It's everyone else in the world who doesn't have access to even a basic financial system. Even within the US, many people are maybe underbanked. But the vast majority of the world benefits so much more from everything that crypto is building. And I think really just trying to work towards that better future. And every so often, I try to take a step back and look at the industry and make sure we're still working towards that North Star, try to forget about the meme coins and everything else that catches attention on Twitter. Core wallet numbers continue to increase, core transaction volumes continue to increase. We start to see a lot more adoption of these core primitives like stable coins, et cetera. And that keeps me excited. So, yeah. No, that's cool. I think a stat that really drives home the point about who crypto really benefits is Nick Carter's VC fund. I think they co-sponsored a paper on stablecoin adoption. And they go through all the countries that have reasonable or meaningful stablecoin adoption. And one of the countries is Nigeria. And apparently it's like one of the fastest growing places where stable coin is used, which is really fascinating. kind of anecdotally kind of know that, that Africa is a place where it's mobile. Mobile is like the number one way of payment. And apparently it's like mobile payments with stable coin is just huge in Nigeria. And so that's pretty interesting. For those interested, you know, check out Nick Carter's, I forget the name of this VC fund, but they have a really interesting paper on stable coin adoption that I think everyone should check out. But that's really cool. I remember Commonwealth, this was during when kind of DAOs were a big deal back in, I mean, they still are, but everyone thought everything would be a DAO. And I remember signing up for Commonwealth and like participating in a couple of governance. governance votes, I forget with which projects, but that's really cool that you were there early. When you joined Walmart, they, I guess what was, having been a founder at Everipedia, do they recognize that as a, I guess what was their view on that? Like hiring kind of an ex-co-founder of something that was like a competitor to Wikipedia, which is like a huge deal. What was their view on that? it was mixed. Um, I'll, I'll give, uh, you know, Walmart some credit in that, uh, you know, I do think the e-commerce arm of the company, at least for a period of time, um, was a lot more embracing of young talent, the tech industry culture, et cetera, um, than stores was, but also at end of the day, stores makes up, I think 90 % of Walmart's revenue. So. they often would call the shots. I think with that, the e-commerce side, they really tried to lean more towards these people that had tech background were a bit more entrepreneurial. So there was actually kind of a cool culture there. Beyond that, say I sort of developed a reputation with my manager and sort of directors and BPs and stuff as someone who was a little bit more able to get things done. And so they would often be like, hey, we don't think this department's giving us the right love. Just go talk to them, figure out what's going on, and fix it. And so that was a fun bit where I was able to do a little bit more, I don't know, ad hoc strategic work. But think also those skill sets have done well for me as I've moved back into startups where navigating sort of the weeds of an industry and understanding what is the thing that you need to do to get your results, a valuable skill. No, that's cool. I started my career at Amazon a long time ago. And there was a point where Walmart e-commerce was just starting out and they were literally hiring anyone with like Amazon pedigree. And at the same time eBay was starting their kind of entry into kind of fulfillment. And so they're hiring everyone at Amazon. so it's just like, it's kind of funny how things kind of ebb and flow and then, but yeah, yeah, good times, good times. Well. say just on the Amazon node, definitely a lot of my business learnings have been sort of watching Walmart make failures and Amazon execute properly. And so, you know, I do have to give so much credit to Amazon. They're just an absolute beast of entity. Really just demonstrate operational excellence at its best. Definitely something I try and channel whenever I approach projects. You know, that's really cool. I learned a ton. It does fail quite a bit though. There's some very public kind of spectacular failures, but a lot of the failures are internal because they really encourage a lot of experimentation. But you're like structured experimentation that doesn't necessarily go public until much, much later. And there's so many internal failures, but it's like by design. Yeah, totally. Walmart could have failed a lot more earlier on. And I think they didn't realize they needed to be doing more until Amazon pretty much had a real one. But it's such a difficult culture to foster and encourage, like a culture of experimentation. Prior to Amazon, I was at Toyota. And Toyota is the same thing. The Toyota production system is all about you experiment, you improve, you try. And then it's this plan, do, check, act, loop, PDCA is what they called it, based on the lean manufacturing. And then Amazon. hired, lot of, many people don't know this, but in the initial days of Amazon kind of like operations, like I'd say probably like 60 % of the people that were at Amazon were from Toyota. And so, and one of Bezos' favorite books is The Toyota Way. And so it's like, it's, you see it. You see it in how they run their operations. Well, let's kind of pivot to Lombard Finance. And I kind of want to start with the homepage. I think the homepage, gives us a sense on like who Lombard is talking to and like its target audience and I would love your point of view on that. But the homepage headline says infinite possibilities with liquid Bitcoin. And then the subhead is LBTC is liquid, yield bearing, natively cross-chain and one-to-one backed by Bitcoin. Love it. But who are you talking to specifically? And what is it you want that target audience to do the second they read the headline and sub headline? Yeah, so I think there's really two major use cases that are largely the same for both retail and institutional, but of course, slightly different nuances to both of those pitches. Um, but I think it's number one, uh, you know, Bitcoin is now one of the largest assets in the world, not even just crypto assets. Uh, there's very little you can do with Bitcoin. Um, especially when you compare it to other crypto assets like ETH where, you know, ETH just has limitless DeFi integrations. It's on many chains. There's a lot of stuff you can do with it. Not a lot you can do with Bitcoin right now. Uh, so number one is for anybody that's looking to, uh, start to generate some amount of yield. put their Bitcoin to work, know, they're this total or mentality, but they want to start to actually see some benefits and not have it be as passive of capital. So for those types of people, you know, they can bring their Bitcoin to Lombard, Mint, LBTC on any of their destination chains. So, you know, it doesn't matter if you're an Arbitrum user, base user, movement, et cetera, pick your destination chain. And, you know, we're continuing to add new chains each week. And then you can start to, you integrate your Bitcoin within those ecosystems. Sort of number two then becomes additionally people who you know they're up a lot on their Bitcoin they want to get some amount of utility or liquidity but they don't necessarily want to sell and so you know classic like trying to avoid cap gains at least for some period of time and so for those people you know again similarly bring your Bitcoin you can were integrated with Aave, Morpho, Gearbox, Oiler, a couple other lending markets coming soon. And so you can start to then deposit your LBTC into these lending protocols, get some amount of liquidity. Also have some other options that we're cooking up with variety of other DeFi protocols. Yeah, so that's sort of two prongs. It's really this combination of both liquidity and yield. Sort of then the next bit of the yield bearing. So if you think of like WBTC is similar to WETH, then LBTC is Steath. And so, additionally, as different crypto protocols think about security, we're increasingly moving towards a proof of stake world. As EigenLayer has sort of introduced with restaking, there starts to be this question of what crypto asset should you have underlying your... to call security. Go back to 2021, 22, was always, OK, launch your own native token, use that as security. But as we saw within the Cosmos world, doesn't really work super well. You end up having to just have an insane APY in order to justify people to have this in there. Native tokens are much more volatile. That gets to it as if you want to have a lot of economic security, you need to have a ideally a less volatile token and also one with a large market cap. And so if you're launching a new token, you have both a small market cap and a lot of volatility. So it's not a great crypto economic asset. You have to pay a lot of APY. That APY is just token emissions, which then leads to your token price going down. So not a great model. Eigenlayer then came along and was like, okay, we can start to allow people to use ETH to secure their different applications. Primarily more focused on dApps built on top of Ethereum. So you see different AI projects, oracles, et cetera. Then sort of along came Babylon. Babylon is currently focused a little bit more on the chain side. And so talking with a lot of the Cosmos chains, a number of them have already committed to using Babylon. And so then those chains can start to use Bitcoin to secure the chain and sort of tying this all back together. Bitcoin at this point has some of the lowest volatility of crypto assets outside of stable coins. It has the most robust market cap, especially during the recent volatility as markets have gone down a little bit. Bitcoin has been the most resilient in terms of holding its price. There's a number of reasons you could chalk that up to. Not necessarily here to make too many speculations, but the fact that there's ETFs, governments are looking at buying, et cetera, probably just leads to a little bit more price stability. And so then with that, all of a sudden you can start to have, whether it's chains, dApps, et cetera, that are looking to have security via some sort of proof of stake model. they likely would have to pay a lower APY in order to get the same amount of economic security if they use Bitcoin versus even ETH or their native token or something else. And I think that's a really powerful primitive that more and more both chains and applications will start to adopt. So from there, if you are an LBTC holder, you will natively accrue this yields through Babylon in a similar fashion to just holding Steath. Got it. Maybe we can go through kind of the customer journey of, I guess, you know, if you think of all your customer segments, there's retail folks with Bitcoin, and then there's probably institutions, I'm guessing miners would be would vault in there too, that maybe want to hedge their, their Bitcoin or be able to, you know, pull some liquidity out using using Lombard. What is the, I guess the customer journey of someone using Lombard? Maybe we can just walk through that. Yeah, so sort of two options to get LBTC currently. You can either swap for LBTC on Uniswap, Curve or Aerodrome or a number of other Dexes. We have some. BTC and then, So I'm a native BTC holder. Okay, got it, got it. we can go the minting route. So, so yeah. So if you don't have BTC, you can swap for it. USDC, ETH, anything you can acquire LBTC. We have some of the deepest liquidity of any BTC on chain. And so you're going to pay very little slippage. Like I think even if you did a $15 million single swap, it would be like less than 50 pips. From there, if you have BTC, whether, you know, native or otherwise, you would go to lombard.finance. You would connect your wallet and then you would... deposit your BTC into Lombard. Lombard would then go and stake that BTC with Babylon, and then you would choose whatever your destination chain is. So say you want it on Ethereum. You would then say, I want it on Ethereum. Here's my Ethereum address. And then Lombard will send you a BTC minted on Ethereum. But any of our destination chains you can choose for native minting. got it. Okay, so that's kind of two customer segments, the native BTC holder, and then there's someone that wants exposure to LBTC, but then they, but not with Bitcoin, they instead purchase it with whatever swap pair that's available. For that customer segment, why would they want LBTC? Like what's in it for them? I mean, I think you're definitely starting to see people realize that Bitcoin is maybe one of the most resilient crypto assets. There's any types of archetypes, whether it's someone who's been a little bit more quote unquote sidelined, all of a they're starting to see like, okay, Bitcoin's potentially going to get government adoption in terms of strategic reserves. Like think it's a good time to buy Bitcoin. So maybe they just want Bitcoin exposure. Or maybe there's some new coin degen looking to start to rotate profits into Bitcoin. I think especially like traders like Kobe, big advocates of take profits into both like stable coins and majors. So yeah, so whether you're holding Stables, ETH, Solana, I don't know, Farcoin, but you just want a slightly more resilient asset, I think that's for you. And then on more of the Bitcoin side, if you actually want your Bitcoin to be put to work, want to start to earn some yield with it, yeah. for the first archetype, if I swap, I buy LBTC with whatever, why wouldn't I just want to get Bitcoin? I guess I'm trying to answer that because I think that's probably a question that maybe kind of more Web2 people are thinking is, okay, why don't I just buy Bitcoin versus, you LBTC? Like, what is the, I guess, what's in it for that archetype? Yeah, so you know right now we are in sort of the point phase of the project so there isn't explicit real yield yet. But you know if you fast forward You can make a similar comparison, I think, between Steath and ETH. Yeah, some people may want to just hold raw ETH. They just like the security of that, don't want to necessarily do anything else. But additionally, I think a lot of people would rather earn 2 to 4 % depending on where Stake and Yield's at right now in terms of ETH terms. And so it just starts to add a little bit more to your end results. think additionally, say you're someone where you want some amount of Bitcoin exposure, but maybe you want to buy some Bitcoin and then also still take a loan out against it. I don't know if you have a fancy DeFi strategy or you want to make a down payment on a house or whatever. At that point, any amount of yield that LBTC is accruing then starts to also offset any of the interest that you would be paying on that loan. And so it also starts to make some financial flows a little bit more feasible, assuming that you're comfortable. with the layers of risk and there's not that much risk. We've tried to approach things very securely and safely, but there is some additional layer versus just holding raw Bitcoin. Yeah, you mentioned two things there I want to explore a little bit. You mentioned the points program. And so in crypto, a lot of there are some kind of, I guess, campaigns where to participate in the campaign, you earn points and then eventually those points translates to some kind of token airdrop later on. And so I'm kind of backing up in case the audience may not understand what a points program is. And apparently there's one at Lombard right now where they're able to, you know, stake their Bitcoin, receive LBTC, and then they receive points for that action. Is that correct? Got it. And how is that going? Like what, I guess, what metrics are you tracking to tell you if it's heading in the right direction? Um, yeah, so mean it's been going really well. We're up to about just over 20,000 bitcoins staked Translates to about $1.9 billion in TBL. So, you know, that's been, yeah, you know, it's been, I think we just cracked the 2 billion mark and then it dipped back under with the Bitcoin volatility recently. But I think we hit 2 billion just before six months of being live. And so, yeah, it's been just immense growth in a really short period of time, which has been really cool to see. Beyond the other stats that we care about, total number of minters as well as total number of holders. because again there will be some amount of people that swap for it versus directly mint. Both of those have been really strong. I'd have to double check our Dune dashboard to see the latest numbers but I want to say minting numbers is somewhere around 40k plus or minus wallets. I think total holders is somewhere around 80k. So we do actually have a lot of people that have been net swapping into Bitcoin. From there other metrics we really care about are the total amount of LBTC actively deployed within DeFi. We don't want this to just be some token wrapper. You know, the point of all of this is so that way you can actually get your Bitcoin put to work, get it added into different protocols. And so we want a lot of it. think we our goal is usually to stay above 50 percent. I think we're somewhere in the range of like fifty five, sixty five right now. So, yeah, so all across the board doing really well on our metrics. It's been great to see. No, that's great. Putting LBTC to work, maybe we can unpack what that means. I believe that involves a lot of business development and partnerships with other protocols in the space, which is kind of like the area that you're leading. Maybe tell us a little bit about that as a, I stake my Bitcoin and then I receive LBTC. I guess what are my options there and... And then tell us about the, I guess, the process by which, you you obtained these partners to work with Lombard. Yeah, so yeah, we have sort of a couple camps of partners, combination of new chains to deploy on, as well as the individual DeFi protocols. On sort of the DeFi protocol side of things, we have, I believe the latest number is something like 50 plus integrations, 57. Yeah. different projects. Yeah, so that's been a lot of fun, definitely a lot of work, just getting all of the integrations done. From there to give a sample of some of them. So first you can start to do some amount of like Dex LP-ing. So if you had some amount of LBTC and say CPBTC or WBTC, you could start to pair them against each other either on Curve or Aerodrome or Uniswap. And you would earn some passive amount of LP fees from people doing the swaps. Benefit there of doing a same pairing is that you wouldn't actually have impermanent loss, which is often one of the larger drawbacks of doing LPing on Uniswap. And so you don't necessarily have impermanent loss, you end up getting potentially some decent fees. And so, you know, that's one option for people looking to get some additional yield with their LBTC. From there, we have lending protocols. again, Gearbox, Morpho, Aave, you can start to either supply LBTC LBTC and earn some amount of yield from other people borrowing it. Admittedly, that's maybe not like the major use case right now. You can also supply your LBTC and then borrow something against it. So, you know, I think two user flows we see there are either supply LBTC and borrow stables or supply LBTC and borrow like a WBTC or a CBBTC. Swap that for LBTC and sort of loop it that way. And so that way you can get a little bit more. like points and yield on your underlying Bitcoin. From there, we have integrations with Pendle. And so that's sort of like a yield marketplace. So you can start to pick different durations. So I think they have one now that's up in like June. So it's about 120 days or so. You would block your LBTC. You receive PT and YT tokens back in return. You can start to make some yield. If you're not super in the weeds of DeFi, Pendle is going to be maybe a little bit harder to understand, but for people that are more familiar with DeFi. They usually like it. It's a good option for us. From there, we additionally have a lot of vault partnerships. So we have our own DeFi vaults powered by VEDA. Additionally, we've been working with concrete on a vault for Barra chain, as well as vaults for Sonic Movement and others. And so with these, those vaults will start to automatically allocate LBTC across a variety of different yield opportunities on chain. And so it takes a little bit more of the active management out of the question for users. And they can pretty much look at a variety of different vaults, see how those vaults are rebalanced, choose their picture. I guess maybe like ETF isn't like a great analogy here, but like some sort of like index for like on-chain LBTC yield. you. Yeah. And then additionally, really excited to start to roll out OBTC as a collateral asset for perp exchanges as well. And so I think like, as we look at centralized exchanges, Bitcoin is primarily the largest collateral asset that people trade against or trade as collateral on sexes. But when you look at Dex, perps, it's by far USDC is the major collateral asset. Not much Bitcoin is used. And so, you know, I think there's a major opportunity here. as perps on chain start to get a little bit closer to the form factor that sex perps have. Yeah. Now as head of strategy, mean, you're in the weeds in terms of like what, you know, loops and DeFi kind of strategies are available. In terms of education, how do you help kind of new people that, you know, are still learning kind of like what WBTC is, CBBTC, like all of these acronyms? Yeah. I try to be patient, try to talk to people, get out there. I think sometimes teams are a little in their insular bubbles. Space only gets bigger if you really help explain stuff to folks. Everyone's at a different point in their crypto journey. Always just try to be helpful. I think from there, as I start to break it down, one of the big questions with any form of on-chain Bitcoin, and I mean to an extent that even applies to sexes as well, is there aren't smart contracts on Bitcoin. So when you put Bitcoin into something, you have to understand what that thing is, because it's very different from depositing it into a smart contract on Ethereum. For WBTC, there's a two of three, more or less multi-sig. And so any mints, redemptions, deposits, et cetera, has to get authorized by that two of three. For Lombard, we just scaled up to a 14 admittedly, and I should know this. I want to say it's an eight of 14, but I'd have to double check that number. But with that we have 14 of the leading institutions in the crypto industry. So everyone from top validators like P2P and Vigment, top centralized exchanges like OKX, WinRMU on sort of the market making side, as well as Amber and variety of others. And that total is going to scale up to 21. And then on sort of then the other side you have Coinbase, which is more or less a one of one. And so, you know, if you trust Coinbase, you can probably trust CPBTC. And well, like maybe less secure, candidly, I think, like people can probably trust that. Like Coinbase isn't going to wrong anyone at this point. But I think we wanted to really try to offer something that embraces that legitimacy that CBPTC brings to the table, but does so in a more decentralized manner. And so you're not just trusting one legitimate institution. In time, you'll be trusting the joint reputations of 21. And you're almost making a bet that would half of the most reputable institutions in crypto be willing to rug themselves and rug the industry? And that answer is probably no. So I think in that sense, that's where we're able to offer a little bit better security to users. Additionally, from there, we are really strict about all proof of reserves and all underlying. So for some BTC, you're not going to... name names but some folks pretty much it's like if you prove that you own BTC they will issue you the derivative and you maybe have to opt into some like two of two structure where both the holder of the bitcoin and the project would need to sign to actually have the project take the bitcoin back But in that scenario, if the derivative goes to zero and all of a the project's like, need to take the Bitcoin back so we can do redemptions. If I'm that holder, I'm probably not signing that transaction. So you don't actually have access to that Bitcoin. And so we spent a lot of time building out a robust permission system here, partnering with Cubist. And with that, there's a ton of restrictions. The Lombard Consortium can do very few things. And so it's actually very, very difficult for anyone to pull off any kind of attack, even similar to the Bybit hack that happened recently. Honestly, I was a little surprised they didn't have something similar to Cubist in place. So, you know, I think that gets into it from there. Additionally, we're the only project that's had proof of reserves from day one. We want to make sure people feel very confident that all of the assets are there. They can pull them whenever they want. We've always had one-to-one redemptions. Yeah. Got it. So you've described kind of the permissionless, non-custodial kind of securitization of people's Bitcoin. And then the proof of reserves, maybe you can define that a little bit for the audience. What does that mean? Yeah, so I think proof of reserves really popped up as a buzzword for more or less after FTX. it really... triggered this issue within the industry of, a second, like, we don't actually know if some of these entities have the assets that they say they do. And so you started to see entities like Binance, OKIX, most of the big centralized exchanges at this point all have some form of proof of reserves. They pretty much were like, OK, we're going to track all of our wallets that are somewhat in this system, show all of those assets on a dashboard. You can continuously look at that to see how much money is actually in the system. And honestly, that was a really great reaction to everything that happened with FTX. From there, we have started to take a similar approach with Bitcoin, especially again, because of the complexity of Bitcoin not having smart contracts. It's just a lot harder to get that level of transparency. And so we work closely with a number of different partners, including Chainlink and others, to very thoroughly track all of the underlying assets, keep that updated on ongoing basis. And so we maintain a small buffer in terms of operating capital. And so there will always be an excess of one to one for Bitcoin underlying LBTC. And so at that point, people can always feel very comfortable that they can come at any point and swap one LBTC for one BTC. And this is, know, in the, the kind of the TradFi world, this is kind of akin to, you know, a bank having, being able to show proof that they have indeed the funds to be able to satisfy, you know, all the redemptions that might come against it. And so that would be a proof of reserves for, know, within the crypto kind of context. When you evaluate chains in which to integrate and also applications that you want to support or partner with, what are some... I guess what's some of the criteria that you look at? I imagine there's lots of projects that want to work with Lombard. Like what's your, I guess, how do you think about like who to work with? Yeah, great question. It's honestly one that we will have to revisit on an ongoing basis. I think from there, the biggest question is really trying to offer a very large swath of the crypto industry, like the best experience possible. So if there's a chain that the industry has adopted and is very excited about and there's real usage there, we will go to that chain. From there, deploying on chains can be somewhat time consuming. There is a bit of this game of, okay, how do we pick what is the next chain to go to? It's a continuous optimization problem. think from there, yeah. the, let's say you pick a chain to work with. Does the integration, it done by Lombard or by the chain or both? I guess what does that look like? Yeah, so it's largely by our team. We will definitely work closely with the chains to ensure it's a successful launch, but ultimately we will sort of figure out having some sort of bridging integration just so that way, like, you know, we have native minting on a bunch of chains, so you don't necessarily have to bridge around, but we want to enable that it is there so that way no one's really trapped. Bridging, need oracles. Usually try to have some amount of redundancy with oracles. And then we additionally need to start to think about all of the different applications it'll get integrated with. so, you know, because again, we don't necessarily want to just deploy on a chain where LBTC is sitting there, but it's not actually being used. so there's this oftentimes like it's coordinating like potentially upwards of 10 different teams to make a chain launch happen. which can make things slow at times, but is often worth the work. that becomes like a, at least I'm guessing internally becomes like a resource allocation problem of, you know, which chains and application do we want to prioritize? And then there's probably a queue in your pipeline that you guys are addressing. And I'm guessing that this queue is like well overflowing with interest. That's a good problem to have. It's a great problem to have, much better than the alternative. yeah, it definitely keeps our engineers busy. Was there a point where it wasn't overflowing and so you had to do a lot of outbound Kind of prospecting until you had enough pipeline that okay things are now moving Like what was that like when you had to do a lot of that outbound prospecting? Yeah, so admittedly I joined in November and so I think at that LBTC went live in August. By November, I believe we were at about 500, 600 mil TBL. So a lot of the hardest problem had probably already been solved. I'll give a lot of credit to the rest of the team. But I think we saw a little bit even in my earlier days at the company. And then I also have been a friend of Lombard's for a while, was actually an investor early on. And so I was able to see a lot of the work from the outside in the early days. I think some of the big questions were largely on, it's like, how much activity will you actually have? Like BTC5 has been a more recent meme. So some of the chains or protocols or stuff were a little more to integrate a project that they weren't sure was gonna actually have users. I think you then fast forward a little bit towards like September, October timeframe. There were a couple other BTC LSTs, wrapped versions of BTC, et cetera, that were popping up. Lombard was leading, but it wasn't necessarily a clear leader. so then there was also a little bit of this question of some of your larger projects were almost in like a wait and see mode. And so, you know, we just continued active conversations with them. then, you know, ultimately, know, I think is probably the biggest example of this. We're the only BTC LST that they have listed, which, you know, we're really appreciative for that big sign of confidence. Ultimately, as they sort of wrapped up their full due diligence process. They really liked seeing, you know, our security structure, our deep liquidity, an overemphasis on security and transparency. And so some of that stuff you do just have to build up with time. And so it's, you know, long conversations, continuing to do the work and, you know, picking off opportunities as they pop up. Yeah. I'm fascinated by two-sided markets. And in a lot of ways, Lombard kind of has its own two-sided market with people that provide BTC and then they mint LBTC. And then what do they do with that LBTC, which comes, and the answer to which is then like the partnerships that you have with applications where they can put their LBTC to work. How do you think about that internally? Because now you're trying to court LBTC holders, but you're also trying to applications to support LBTC and put the LBTC to work. How do you approach that? Um, yeah, so, you know, I think one easy bit is that pretty much every D5 protocol is thinking about how do I get more BTC liquidity these days? And especially since there is so much LBTC in circulation, and we do have a variety of these vault products, which make it very easy to start to get liquidity flowing into DeFi products. We are positioned well to be able to talk to all of these folks and help boost out Bitcoin liquidity. Like I think even we just recently went live on Sonic. We're already about 7 % of Sonic's total TVL for the entire chain. Yeah. so, yes, that's correct. Yeah. with @AndreCronjeTech and team. yeah, amazing guys. You know, so, you know, that's been helpful. You know, I think movement did some amount of pre-deposit faults and LBTC was the number one asset deposited. And so I think case points of that really just demonstrate there is so much Bitcoin out there. I forget what the exact status, but I think it's like if 5 % of BTC came on chain, all of DeFi's TVL would double. If I got that slightly wrong, I guess double check the exact numbers, but in that direction. so I think if DeFi is going to start to have magnitudes, larger growth, it really needs to start to win over more of this Bitcoin liquidity. And that's really the problem that we're trying to help solve. So, and you know, we're really on the front lines talking to all of the major Bitcoin holders. We have really good relationships with those LPs. And so, you know, it's easy for us to help connect the dots. That was my next question. I think it's like approaching like close to two trillion in Bitcoin liquidity or market cap, which is a good kind of proxy for liquidity. Getting five to 10 % of that to put that Bitcoin to work. mean, that would definitely double the current kind of DeFi, the market cap of DeFi. How are you approaching that? Like identifying kind of Bitcoin holders and Like what is your messaging to them? Many of whom there's probably, you if we're at a segment kind of all Bitcoin holders, there's probably some that are very kind of, I'm guessing, I will never touch my Bitcoin. I will always protect it with my life. And then there's probably some that are like, yeah, I'll play around with five to 10 % of my Bitcoin. And so they're more open to Lombard and other protocols like Lombard. I guess what's your... What does that the segment of Bitcoin holders look like? I'm sure you've done the work and like what's your positioning to each one in messaging? Yeah, so, you know, I'd say like no two conversations are exactly the same. There's definitely some level of... preference in terms of security. Again, there's, you know, your Bitcoiners who will never put it in anything, you know, store their seed phrase scattered across the world in like various safety deposit boxes, you know, whatever. you know, then you have some who, you know, they're very comfortable with Anchorage and traditional custody providers. But even then they want like some structuring of the documents and the control of the accounts. You have others who or very willing to yeet it into whatever sort of on-chain Bitcoin and sort of everyone in between. I'd say from there, so that's sort of like one lens of categorizing people based on their like preference of like underlying insecurity. I'd say like on that bit, we have been seeing more and more interest from folks to get more on-chain. So the people who would never touch it are starting to be interested in custody. The people who are only comfortable with custody are starting to be willing to consider some of these on-chain forms. And so that's been positive to see. I think one of the big bits is a lot of these folks just never thought about smart contracts, never thought about DeFi, didn't really do much. And so it was always just like, I'm not going to look into it. And now that they're looking into it, we spend a lot of time sitting down, walking people through the security assumptions, walking through how the tech very literally works at a very low code level. And as they have that sort of hand holding and they get comfortable with how everything works, some of them will put their own security teams on Lumbar to analyze how stuff is working, at some point get comfortable. And so I think bits like that help with onboarding more and more capital. Then on the other side of things, I think you also start to see sort of... your demographic types. And so you have, you know, you're like ETFs and institutionals, have corporates, you have random whales who just happened to buy some in like 2011 and never sold. You have, you know, liquid funds and your VC funds who've been buying Bitcoin, sort of again, miners, the big smattering of folks. I'd say In a similar fashion, a lot of people are starting to have more more interest in BTC-Fi. I think one of the trigger points was Ordinals and the sort BRC20 phase for listeners who aren't familiar with this. think it was about two years ago or so, people started to realize that you could create sort of quasi tokens and quasi NFTs on Bitcoin. And then you would have to pay some additional gas fees in order to process these things. Some of them went to insane valuations. And at some point, the... security fees for Bitcoin were more than 50 % from these like ordinals and BRC activity and not from the traditional security budget. And so I think a lot of miners especially woke up to this and were like, okay, you know, we are staring kind of down the barrel of like more more happenings, our yield of mining continuing to decrease. We need to find some sort of supplement for this revenue. And at that point, a lot of them have been leaning in more heavily with ordinals and BRCs. And then as they go through that route, they start to realize like, wait, this is really clunky. Like this isn't going to be the future. You know, and so there's some amount of talk about like Opcat and some, some Bitcoin op codes that, you know, may start to enable smart contracts. think those are a little far out. There's still just needs to be better consensus on what is the path forward. But in the meantime, you can start to move your Bitcoin onto Ethereum, onto base and other chains. And so I think that's where people are like, okay, we have all this Bitcoin, let's go get some yield somewhere else. That way it sort of right sizes our business model in some respects. I'm glad you brought up that history because we saw the same thing recently with Runes protocol or Runes Meta protocol, which was kind of like a, think Casey, you know, it created Runes as a response to the clunkiness of BRC 20. And the whole positioning was that, you know, Runes Meta protocol will be like the home for Bitcoin meme coins. And I actually got quite involved in the runes kind of community. I don't know if you see that right there. So that's dog, which is the largest meme coin on runes, which recently actually got bridged to Solana and other chains. So I think time will tell, but we'll see. But I think what we did see recently, probably a few months ago now was that the The mining fees came at one point was larger on runes than on ordinals and on Bitcoin mining. And I think that surprised a lot of folks. So I think that's positive. It shows that there's just kind of progress within the Bitcoin community. And I think a lot of like hardcore Bitcoiners saw that as, OK, this is interesting. And at least now they're open to some level of programmability. very cool. thinking of the Bitcoin community, what is one thing you could say to them to consider, maybe Lombard is the place that I could put my Bitcoin to work? What is the messaging that you would If Bitcoiners were listening to this podcast, what's one thing you would say to them? Yeah, so, you know, think Lombard is one of the Bitcoin DeFi projects that prioritizes security and transparency the most. You know, I do think that really the core of Bitcoin ethos is, you know, this reliance on trustless systems. There is technically some amount of trust in Lombard, but we are probably one of the most trust minimized. Again, if you trust that 10 plus of our 21 eventual validators of top institutions are not going to come together to steal this, which many of these companies are worth many magnitudes more than Lombard is, or the underlying for Lombard is, you can probably trust that it's secure. And, know, with that, again, we have the largest liquidity of any Bitcoin LST in terms of DEXs. We have the most lending protocol integrations. So you have the most opportunities to try to find something to do with your actual Bitcoin. That makes sense. And to those that may not understand kind of like liquid staking, do you have like information on the website or on YouTube or like how do you teach someone what liquid staking is? Because that's kind of a, know, in TradFi it would probably be called rehypothecation, but you know, that's, no one wants to hear that in crypto. So I guess how would you describe liquid staking to a Bitcoiner who may not know what that means? Yeah, so I'll have to double check. We probably have some amount of information in our docs. I know we spend a lot of times on our docs. Yeah, so definitely click around there. It'll be a much more eloquent answer than I'll get right now. But I think ultimately speaking to the Bitcoiner type, Bitcoin is a proof of work chain. Ultimately, Ethereum and other chains migrated to a proof of stake model. You would need to have some significant amount of the underlying capital in order to start to take control of the chain and do any sort of malicious activity. From there, if you end up staking your tokens, those are locked in that staking contract. And so you can't do anything with those elsewhere. Liquid staking ends up giving you a derivative version of that underlying stake. And so you will accrue all of your yield to your specified wallet. But then you also have this derivative token, which is, at least in Lombard's case, worth one to one and has redemptions live. And you can start to use that derivative token elsewhere in DeFi and start to get both the staking yield as well as the DeFi yield. You can also stake directly with Babylon. In that case, you don't end up getting the derivative token, but you would still get the Babylon yield. And I guess then from there, if we want to go one step even deeper. So with Babylon, they utilize this concept of restaking. so ultimately, if Babylon has three chains that are using Bitcoin for security, chain A, B, and C, ultimately, all of the Bitcoin that is in Babylon potentially could be used to secure all three chains, A, B, and C. So Babylon had a thousand Bitcoin, chains A, B, C could each have 1000 Bitcoin of security. If there is a slashing event on any one of those chains, then the total underlying would get slashed. Now, thankfully, Cosmos chains are actually pretty secure. Like I think in the history of Cosmos, there's been one or two hands worth of slashing events across all of the chains over many number of years. Realistically, if you're running the right code and you're just a good validator, then you're not gonna get slashed. It's mostly an operational question versus a risk question per se. And so you can start to then get three sources of yield. You do in theory have three sources of risk, but if you trust that this form of slashing risk isn't that high of risk, then you can be comfortable with the system. Okay. Well, that sounds like a really great place to end. George Beall, thank you so much for taking the time to speak with us and telling us about Lombard. For those listening, Lombard.finance is the place to go. You can put your Bitcoin to use, to productive use for you to stake your Bitcoin, receive LBTC and there's As of right now, there's 57 different DeFi integrations you can put your LBTC to work for or work on, work with. I don't even know how to say that. Anyway, you could put your LBTC to work. Well, George, thank you so much for taking the time to meet. Really fun. Thank you. thank you so much for having me. This has been awesome.