How DeFi Lost the Plot | ETHSofia 2026

[music] [applause] Not sure which one to take. All right. Do we have Mark somewhere or is it a oneman show? It's okay. I can uh I can give you some uh some perspective as um how we frame that uh that fireside chat.

Right. Both uh Mark and I have been doing DeFi through various projects, various involvement for essentially uh since DeFi exists, right? Since 2018 roughly. Um and we've been uh at a personal level and professional level going through a lot of experience. Hey Mark.

Uh so yeah we figured we would uh discuss uh reflect on our experience where the space is heading the evolution of the industry that we witnessed over uh uh yeah or I don't know seven eight years something like that for you too Mark even more actually uh you're even more of a granddad than me in D5.

So how is it going?

Yeah I'm hold officially. Can you can you hear me?

Uh yes I think maybe you could use a little volume boost. uh if we can do that but else it's good

I think it's on your side I think on the I'm on the maximum on my side but probably you have a amazing sound engineer on your side that will help us right

yeah we we we are good now we are better thank you backstage

thank you for the technical team [clears throat] the conference cannot exist without you guys uh I'm really sorry to not be here in person I'm in Tokyo currently And uh I hope I can be here in person next year.

You better be. Um so yeah, where do you want to to to get this started? Uh what do we tackle first? Um the governance topic maybe I think could be interesting uh with your experience. It was a very yeah it was a very interesting year uh last year on this topic because we witnessed basically the death of all Dows uh with the the death of the Aido that was basically the role model and the template for the industry uh in terms of having a decentralized governance with uh other contributors uh that are not part of the funding team that meaningfully contribute to the project that failed and now we are in in a new status quo where we have to define how do we do this decentralized and it's a very interesting topic where we can discuss together brief because I know we have different mindset about that and different paradigm you are more on the let's make things immutable because humans are fluid and if the code is immutable at least it won't change in the bad direction while I'm a bit more optimistic on human nature even if history have proven me wrong in the past years.

Yeah. I know exactly that's why I wanted to bring this topic and I feel like you know we came from a very extreme end of the spectrum but I feel over the years we are starting to meet in the middle if you if you follow what I'm saying right um and especially

yeah we are getting old and softer briefs we have to do something about it [laughter] [gasps]

but yeah um maybe uh because you know we understand what we're saying you went over a lot of topic rapidly but um you know last year uh governance wise a lot of um subjects kind of became forefront right so there was this question of for instance intellectual property is the DAO of a given protocol actually owning the property the intellectual property of the protocol so we're talking you know the domain the brand uh and and potentially the revenues that are generated by um you know the front end and any services that is provided here and um of course the topic started on a uh governance but it propagated Ed, you know, pretty much through the whole space, right? Because after what happened in in Avi, um, essentially big governance were kind of forced to take a stance on this and explicit uh, what is the status on um, the ownership of that IP.

I think it's a good sign of maturity of the ecosystem. If you look at the industry, the main question if you put aside all the ego, the drama and the the the social media commentary about the the topic. What it all boils down to is when you own an asset, a decentralized asset, a token, what do you actually own? Because on the offchain world, when you own a stock, when you own some equity, the answer is very simple. You own a share of the world pie and that give you voting right that give you liability that give you responsibility and a share of all the upside and also all old side.

When you own a token what do you actually own and that was a question that was left unanswered in the industry for more than 10 years now. And I think what we did last year is that we forced the actual debate and uh we are in a situation where the market is punishing uh not answering this question. So if I own an asset and I don't actually own anything and no claim on the upside, why would I own the the asset in the at the end of the day? And the market corrected for that. And I think the market has privileged the the asset that has interesting value and finish the other ones.

And I think that makes sense is and it's a sign of maturity.

Yeah, I mean uh definitely quick geeko check will agree with you rapidly here. If you look at uh everything that has been performing well over the last few months, you're talking essentially DeFi token where you have a form of direct claim on the revenue or burnback mechanism or essentially where owning the token give you exposure to the upside of the protocol. Uh and and that was indeed a big topic in in the AI discussion as well. Uh maybe another kind of I just topic uh you've probably seen uh the jumper token announcement made me think of that or you know where literally the tagline when they announced the token was like it's only a token there is no equity and so the whole uh equity uh governance token debate I feel here too like people are finally starting to understand the lesson u you know my personal personal perspective has always been pretty much that if there is equity I'm out of your game because your token will always be worthless. Uh but this perspective was pretty fringed uh a few years ago and I feel now it's starting to be more widely understood that um yeah the the dual equity and token structure is just essentially a recipe for disaster.

That is completely right. Uh there's only you and me, right? Nobody is listening to us obviously. So I can say everything, right? Yep.

Now [laughter]

you have a

So I've been an investor like since 10 years in Jumper and it's very funny because 10 years ago there were only equity and absolutely no token and now it's a full 180 degrees uh turn uh in their strategy. And I think the best I could say about this specific topic and this specific situation is that at least it's clear now and you are as you just said you have to pick a side. You cannot play both uh both game and that's the the best outcome. So either you go full on on the token or you maintain some equity but having both will be finished by the market and I think that's the best for every investor that are involved around you. even if you change your mind after a decade like uh they did at jumper.

So I was hoping you know I agreed to this panel because I was hoping to get some alpha out of you as well. So does this mean um as your upcoming project is going to be pure token no equity? Is that a safe assumption to make?

Yes. Yes, I can say it like uh 100%. Uh so uh I know there's a a small banner saying a China initiative but that company actually doesn't exist anymore and I'm the co-ounder of AI which is a landing product that going to release this year. That's another alpha for you Bis and uh we going to have a token and that's the only way to capture the upside and I went a bit maximalist on this because you know me and you know what I did in the past 10 years. I don't like confusion or uh playing on both side of this kind of stuff.

So I went as far that the team has no access to the upside of the product only the tok token has. So if I want some side related to well I need to have some tokens because I will be treated exactly the same way than everybody.

Nice. Uh is there anything about the token mechanism you can you can share um share off yet? you know, kind of like from your learnings of what came through at AI, I imagine this token wouldn't just be, you know, a token that exists and you can vote with it. I imagine it has a bit more context to it. Maybe some um mechanism as to how it's coming to market and so on.

Yeah, you you can ask away. I It's only you and me today, so I can share all alpha obviously. No. [laughter]

Yeah. Yeah, I mean

the what I can say is that is that uh all IP everything that we discuss and we that we add some drama about uh on the AB ecosystem will be sold before the first block of the protocol. So there's going to be a foundation that going to have full control on the IP. Uh the treasury will be under full control of the token holders. Uh all revenue from block one will be under the control of the token holders. uh there's not going to be any confusion about what we do because I think we owe that to people uh supporting us uh in our journey as builders in the ecosystem.

Yeah, nice. I mean at least uh the the foundations are covered, right? Um yeah, I don't I was hoping maybe uh but probably I will I will know it with the paper but you know I've been thinking a lot about that and on my side at Polaris uh token wise we are essentially um initiating bringing to life a mechanism that I don't think have been seen before on mainet um and it's essentially this idea that uh there is a continuous emission mechanism of polar with like an auction system but essentially the way to tap into that auction will be burn the uh core collateral of the protocol. So to burn the PE token that is used to back the stable coin. So you know we're really viewing it as like we essentially ask you to perform the most synergetic action possible you can do in front of the protocol and that's how you bring new polar in existence.

And we really like that angle because you know from the other side it's like essentially for every polar that is circulating you know there was some core collateral of the protocol that was permanently burned you know so you the protocol was strengthened by bringing into existence that token. Uh really excited about that conversion mechanism. Um but yeah imagine you have probably interesting thing too but yeah you don't have to if it's too early you don't have to share yet. [snorts] It's a bit early to talk about the the tokconomics yet but what I can say is that we both in a very comfortable situation because we arrive to the market now that mean that we can learn from a full decade of mistake that has been done yeah in the past and we can avoid and dodge uh those mistake with our project I would say like a very simple example I don't think anyone releasing a token from now on will agree to release like 7% to 12% of their supply to Binance so they can dump the token on day one. I think people learn their lesson and uh that's the kind of thing you will not see again and that's for the best for every investor and every participant uh alongside the journey of builders.

Yeah, definitely a lot of broken eggs over the year. uh maybe maybe to get a bit more at the personal level uh because you know essentially you've been involved at high level in various projects for like 10 years and essentially it took you 10 years to cross that step and be like okay now I'm I'm ready or maybe it was the opportunity also the the situation that emerged out of the the um a events but like uh yeah what made you made you cross that uh that mark you know what made you feel really that you are um because I know you I know that if you made that move you're confident you know ASI is not going to be a footnote in the history of DeFi. I mean from my perspective but obviously my perspective is biased and I have my personal experience and probably in the the public it's uh it's not seen the same way but from my perspective I started to uh to manage things uh a bit more than 3 years ago when I launched the ACI because people probably remember that 3 years ago D5 was in a very dark place. Uh it was the FTX crash. It was the Celsius crash.

It was the uh BlockFi or whatever uh CD5 uh was crashing back then. Uh Gensler was trying to put us in jail. Uh and it was very hard back then. And even inside a uh the founder of a decide to say, "Okay, we're not going to do DeFi because I'm scared to go to jail and I will go do a social media called Lens." Uh, I don't know if people remember Lens, but it was a something a few years ago.

And I was like, no, I want to do DeFi. I don't care about doing Instagram on the blockchain. That's not my thing. I I want to build the future of finance and I want to beat the the banks at their own game. And that's what I'm aiming to do for the past 10 years.

So, I will launch my own project called ACI. And we're going to do a real decentralized lending protocol. And it was a massive success because if you remove what happened after the end of 2025 and you look at what we did, it was an absolutely massive success and what happened at the end of last year was basically the perfect opportunity for us to remove the people that were not aligned and restart the project. And if you look at the Asia team, you have BJD labs that run the A8 code days. You have ACI that drove uh strategy growth and uh managed the a protocol with a large success for more than three years and you have caus that are driving the risk management.

So you end up with the best version of what we did in the past in a new uh setup and ready to to go to the market. So for me it's not a new day. uh the new path started three three years ago.

Yeah, that makes sense. Uh it's always like when you start to switch to the builder side. It's a bit of a similar story for me about three years ago when I started the collective and I had to manage you know a Swiss association. It's not a protocol but it taught me a lot of things and and put me on the path. Um and yeah definitely uh maybe just because it's also like a strong parallel that I see in our story here is uh it's it's about the people that you have on board right and and for me what made me cross the step at Polaris and be confident that you know I can with my colleagues bring this to market is is similar to you you have your BGD devs that have strong experience on AVI well on the Polaris studies was you know the original liquidity developers that have very strong experience bringing an imit able stable coin to mining it and already did twice.

Uh I probably wouldn't be as confident to do it uh without literally the most experienced people in the world when it comes to immutable stable coin. Um so yeah, it's really about I think like this convergence of you know your personal experience, the people, the market context, all of this kind of tracing a past that becomes too bright to ignore, right?

I completely agree with you like 100%. Um so yeah I gave for the fire side something about the instant coming. So I guess we need to touch on this right. Um so uh maybe like you know the the broad because I remember

you want the official story or the spicy one. Yeah, on on the PC, the Institute in general, you know, like just to bring some quick context, but you know, 2020 DeFi was really like a punk uh um nerdy DeFi, right? The people that were doing stuff on chain were not wearing a suit. Let's put it this way. Uh and and it wasn't, you know, very formalized or anything like that.

Then there was this whole discourse about institutionals are coming. And uh what I like to say uh as a short version is institutional came but it turned out they were even more than the deans right because as soon as institutional came what happened they got fleeced into the the um stious situation into into whatever else was happening. Um so essentially they didn't prove to be uh such efficient allocators and they certainly did not trigger the mo of all bull markets that uh the crowd was expecting back then. So like how do you reflect on this whole you know like let's say last five year you know institutional approach and and coming into the the D5 space.

I think I agree with you 100% on this. Um and if you look at the amount of due diligence and who is specialized on the institution uh in the ecosystem they are pretty like I would give you an example because we are French associate general first partner on blockchain for their euro stable coin was me Capital probably you guys they are not in Bulgaria but you guys heard of them because they are not so far from you guys at some point. Uh and obviously it was a huge failure that led to bad depth and you are like a bit amazed or at least I am a bit amazed that a bank like so general which is the large one of the largest bank in the world will just uh say yeah so some guys in some random country with no prior experience no license nothing will manage money for us and there's been like so many stuff like that there's zero zero amount of due diligence there's zero amount of uh seriousness uh being done like that and for me the most of the critics I will have is on our side because the institution they are what they are and we have to work with them or adapt to to them maybe but also they not going to change much what's my main critic is is how much we have been willing as an industry to bend the knee uh to allow them to come and I think that's uh that's show a lack of both ambition and self-confidence from the industry to to say okay I will cave to every demand and I will become like a worse varion of myself so I can please you and I do not agree with that at all. Uh one thing that I'm extremely uh disappointed about is oh we lost the the war on privacy. It's no becoming absolutely impossible in most of the world to not to to acquire or sell crypto without showing your passport when we know that your data will be leaked eventually by those partners.

And that will put you and your family in danger because some criminal will get that data and try to to to attack you. And we live in a world where we just accepted that. Well, you want to buy Bitcoin, show your passport. And that's something that I do not agree with at all.

Yeah. Luckily for us, you know, the the the P2P networks are still going strong and and there are options for every kind of participant, but it is indeed pushing um the people that are seeking privacy towards more uh complex workflow, I would say, to to acquire or sell the the crypto. Um but yeah, going a bit back on the institutional thing. So essentially your story your short version will be the the emperor came in but we realized midway he was completely naked and uh that that definitely matches

and also it's not working very well if you look at the data.

Yeah.

Yeah.

It's pretty pathetic. Like morpho for example which is the big institution lending protocol they have like 12 billion and among that there's maybe 4 billion of actual institutional money. when you call the like let's be generous and say Coinbase is is an institution which is for me not net new money from the ecosystem because obviously Coinbase user are already in the ecosystem but let's be generous about that if you put like Coinbase on top of Robin Hood on top of so general on top of whatever they have you have like 4 billion out of 12 and at the peak under my tenure of a we had 75 billions So orders of my nature more than that. So those guy they uh bend the knee and accepted any thing for not so much growth.

It's not it's not very impressive so far.

Uh yes. So essentially they bended the knee to a naked emperor. Let's [laughter] let's summarize it like that. I think it captures it well. So, uh, I've been told we have we don't have much time, but do do we have time for question or is it like end of fireside?

Where are you?

Oh, questions. Okay, Laya, you have some questions for us. Okay, just a second. Leila is coming on stage. Well, this is not a question.

It's more of a comment, but maybe if someone has a question, we have time for one. The comment was that you that European Union Parliament needs more people like you to gain lead in front of the rest of the world. But the person is afraid that your ex experience would be against European Union citizens. So maybe you want to comment on that.

Okay. Uh the European Union understand the question

is probably the most dangerous institutional project ever contemplated in the history of humankind and must be must be limited at all cost. It is destroying entireties of countries and p robbing them of of their capacities to self-determine which if you ask me is a crime against humanity. So am I interested in what the bureaucrat thinks.

Uh my answer will be in on the same vibes. Uh I think the European Union is an amazing idea. Like I think the idea of communism is amazing, but I think everyone in Bulgaria know that the execution of some ideas are not the the best.

So we can wrap it up.

Uh if you want it to be the last start. Yeah. Or we maybe we can have another question. [laughter]

No more questions unfortunately because now we are moving to the lunch break. Thank you so much Token and Mark. It was amazing. [music]