HBAR Foundation Twitter Spaces On Staking Regulation

HBAR Foundation hostes a Twitter Spaces with their general consel and parties that participate in the DeFi ecosystem of the Hedera network to break down the recent SEC crackdown of the Kraken staking services.

Transcription

HBAR Foundation - Brandon
‍Welcome back to another Hedera ecosystem Twitter space, brought to you by the HBAR foundation. I'm Brandon, and I'll be your host. I had plans on doing a DeFi Twitter space this week, but with all the buzz around staking and staking regulation, I thought it was a great opportunity to get an actual legal opinion. So, I invited George, our general counsel at the HBAR foundation, to weigh in. You know, considering Hedera is a proof of stake network, it certainly is relevant. I'd also like to hear from a Stader and Bank Social on the subject as well. After that, we'll get into our DeFi ecosystem, which dovetails well into our staking conversation with the rest of our panel, including HeliSwap, Pangolin, HeadStarter, Leemon Swap, Hashport, and HashPack. If any of our panelists have something you want to add to the conversation, you can jump in at any time, or you can raise your hand, and I'll segue to you. We also welcome questions from the community, so if you have a question or comment, just request to be a speaker, and I'll bring you on up. Of course, none of what you hear today is financial or legal advice. Use it for educational or entertainment purposes only. I do want to kind of give some context around, you know, the whole staking discussion. You know, when we talk about these DLTs, they need a limited resource, to secure the networks. In the case of Bitcoin and other proof of work Platforms, that limited resource is electricity. But there's actually a limited resource that, of course, is built into these networks themselves, and that is the cryptocurrency themselves. So, proof of stake networks like Hedera chose to use that as the limited resource, and that's part of the secret sauce that allows Hedera to be hyper-efficient, along with, of course, the super-efficient Hashgraph algorithm. But those two things allow us to be a thousand times more efficient than even a centralized system like Visa. So, that should be all the justification that you really need for DLT and more specifically proof of stake DLT. When you're a thousand times more efficient than the traditional rails, we really need to make sure that we allow this innovation to take off, which we see happening all the time. But, of course, with any new, um, technology, there's going to be the need for regulators to catch up, and they have to, at the same time, protect the public, protect the consumers, but also not stifle innovation. And we're going to be having that conversation today. So, with all of that out of the way, George, can you give us your professional perspective on the Kraken enforcement action taken by the SEC and regulation on staking in general.

HBAR Foundation – Jorge Pesok - CLO
‍Thanks Brandon. Before I jump in, I just want to say, like you reference, you know, this is not legal advice, it's just my take, and it's definitely not, the position of the foundation but thanks for having me, and ideally, I'd like to give you my unprofessional take because this is wild, it really caught me a little bit off guard. So, SEC settled with Kraken, and as part of that settlement, Kraken has to pay 30 million dollars in a fine and agree to halt its staking program in the United States. So, looking back at this seems to be right in the line of the cases that the SEC has been bringing, kind of related to, like, lend programs at other exchanges, and you've got like BlockFi's settlement and the Celsius action, so it seems to fall right in line with that. So, because this is a settlement, it doesn't really have that much, preference that presidential value, right, but what, you know, but we can learn from it, at least we can glean what the SEC's thinking is through what it says in the complaint and what it points to make its argument that Kraken's staking program was an unregistered Securities offer. Things that, oh, and keep this in mind that with the settlement here, the facts as stipulated by the SEC have not been tested, and it's just one side, one side of the coin, so here Kraken has not been able to put out a statement against it, so take a, take with the SEC says with the, you know, grain of salt, but the SEC pointed to things like Kraken aggregating investors' crypto assets, Kraken purporting to offer stakers and benefits that are not available to investors who stake on their own. This is an interesting point because it seems like the SEC that is making a distinction between us the staking program that Kraken was running versus, just like State individuals staking into a proof of stake Network. In addition, they pointed to Kraken determining the returns for each of the staking pools that they operated and not the underlying blockchain protocol, but none of these factors are likely to be the dispositive, but I think as we try to understand what the SEC is saying here and what this implies for other proof of stake networks or offerings, we have to take them into account.

HBAR Foundation - Brandon
‍Yeah, absolutely Coffee, do you have something, uh, real quick? I am going to give the rest of the panel an opportunity to talk here as well, but if you have a question or comment specifically on what George just said, go ahead.

Leemon Swap – Coffee – Head of Business Development
‍Yeah, I wanted to, I don't know if you mentioned this, maybe I missed it, that Kraken didn't actually, when they settled, they didn't admit any fault, so what does that mean in terms of all these accusations and whether or not they can hold this case as a precedent, since nobody was found guilty of anything.

HBAR Foundation – Jorge Pesok - CLO
‍Yeah, so I can, so you're right about that. Most of these settlements include a statement that the defendant does not admit any guilt or fault, and really that, that's in place for, you know, you can imagine the defendant wanting that language out there so as to prevent an admission of guilt and in follow-on suits that could be related to the same conduct. As far as the presidential value of the settlement, there really is none, it's like I said, this is just one side of the story. These facts, as the SEC presents them, have not have not been tested and will not be tested in court, so we can just use it as a, we just read it as you could view it as guidance or just as you know, leisurely read.

HBAR Foundation - Brandon
‍Alright, Jorge, one question. You know, you said the perspective of the SEC, but there's some dissent within the SEC. What are your thoughts on the dissenting opinion from the pretty much the number two at the SEC, Esther Peters?

HBAR Foundation – Jorge Pesok - CLO
‍Yeah crypto mom? She got it, she got it spot on. It was, it was very, success, it was succinct and to the point. What I think is most frustrating, and she pointed it out, is that there, the SEC keeps saying, 'hey, crypto companies, come to a, you know, come talk to us, register, and then we'll figure it out.' Here it's questionable whether Kraken could even register this product. So there really is no path to registration, so it's a lose-lose situation for a lot of companies in the space. One thing that I, I just want to quote,  Commissioner Peirce when she says at the end, which I think is really valuable, 'Paternalistic and lazy regulator settles on a solution like the one in this settlement, do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down.' In other words, what she's advocating for is, let's have a formal rulemaking process, let's bring, all the crypto companies in on the fold, let's discuss how to regulate the space, in particular, staking program, so at least now that's what she's saying should have been the process, instead of going after Kraken staking program, where, as far as I'm aware, I haven't seen anybody, any customers complain about not receiving their rewards. Seems like folks were happy, making everybody was making money, and go after that program, shut it down, and use that as that enforcement action as your way to put the industry on notice, but really, it doesn't put the industry on notice because, like I just said, that the complaint, everything that it says there you have to take it at face value. Also, there's no way that as the complaint reads, all these staking as a service providers or programs are unregistered Securities offerings. There's just no way that's true, and we'll have to test that out. So we'll just have to see, for example, what Coinbase does if something happens around there.

HBAR Foundation - Brandon
‍Sure, and there's a big difference between what we'll say Celsius was doing, which was essentially acting as a hedge fund and going and investing in all kinds of different things, which there was no guaranteed return, compared to these staking programs where as long as you keep the cryptocurrency secured, you know the staking rewards or at least in the case of Hedera should come in. So what do you think the impacts are for Hedera Native staking in this regulatory environment?

HBAR Foundation – Jorge Pesok - CLO
‍Yeah, look, I'm not sure that there are many impacts. I think at least from my reading, first of all, take a step back, Hedera, you know, really went out of its way from the beginning to try to do things right, even in an uncertain world, right? And that's the same that goes also to staking. So the way it's developed its program, you know, it's not unforeseeable. It was never unforeseeable that staking could be met with regulatory scrutiny, especially, I mean, we all heard about it when Ethereum was going from proof of work to proof of stake, and the dialogue around whether that's going to change its regulatory standing. So Hedera was aware of this and structured in such a way that it put itself in the best position possible to not to have its staking program, or if they can function, be deemed to be in any way an unregistered Securities offering. So, and some of the things that I point to in the complaint that I think makes sense is the fact that it seems like the SEC is making a distinction between staking as a service providers. In other words, custodial centralized players that pool individuals or investors' funds, and as a result of their actions or their efforts generate profit, and then use those profits to pay out these rewards. That's different than from say just somebody that's providing access to the smart contract for staking, and it's just a process server. They're not really doing anything. It's just a front end or something like that. So I think from at least this action, I think that the proof of stake system is fine.

HBAR Foundation - Brandon
‍Okay, well, that's certainly encouraging, and that there is a big difference. There is, you know, you actually providing the cryptocurrency and the staking yourself through your own personal wallet and then going through an intermediary. So there's certainly a difference there. I do see HashPack has a question or comment. You want to go ahead and come on up, and then I do want to get to some of the people that are building in the space that certainly have a vested interest in what goes on with staking. Go ahead, HashPack.

HashPack Wallet – Marc Ugas – Director of Operations
‍Yeah, so I just had one quick question because from everything that you've been saying, one of the main reasons that I think that maybe this came to be was because of the obfuscation of how some of these services were getting the returns that they were promising to their customers. So I guess, I mean, and you know, not to put you on the spot or anything, but do you think that might have something to do with this initiative from the SEC to go after these services because there was actually no way for the customers to actually know how they were getting some of these returns? I mean, for Celsius, it was definitely the case where they were using certain things that the customers were not agreeing to, so I was just wondering if you thought that, you know, maybe catalyzed everything to start happening in that front.

HBAR Foundation – Jorge Pesok - CLO
‍Great question, and I 100% agree. At the end of the day, the SEC regime is a disclosure regime, right? So if they bring an action, what they're really saying is like, hey, there was risk here that wasn't appropriately disclosed, and when you have a program at least recorded program that, well, Kraken's program, that was purported to, they were doing something in the background, not just simply passing on the rewards from staking, they were doing some other acts, we'll presume if you don't know what those acts, that they were doing, or they didn't disclose that, then there's potential risk that those investors are taking without actually knowing that they're taking this risk.

HashPack Wallet – Marc Ugas – Director of Operations
‍Okay, perfect. Yeah, that completely answered my question. Thank you.

HBAR Foundation - Brandon
‍All right, so, and as mentioned, we have some panelists who are building businesses in the space, one with a focus on regulation because they're in credit unions and banking, and the other on staking itself, so I wanted to get their thoughts. John with Bank Social, what are your thoughts on what you've seen come out?

Bank Social – John Wingate - CEO
‍Yeah, so just along the lines of what Jorge was saying there, the SEC, you know, we've actually, without saying too much, we've been in heavy working relations with both the SEC, the NCUA, and tons of regulators at the highest levels. Yeah, the SEC is not here to set, they're not here to set precedent for the most part. They don't like doing that. They like issuing guidance because guidance is something they can change with the next story that comes out. So, you know, don't expect the SEC to come out and create standing or create precedent with, and that's why the Howie test still stands to this day is because they did create precedent with the Howie test and what happened with the orange orchards that they went to court on a long time ago, you know, one thing that I think is important to that we heard from Gary Gensler and our regulator in the NCUA echoes this same statement. We've helped them understand that this is the most important thing in DEFI, not your keys, not your crypto. When you--I mean Gensler specifically came out and said that there's a massive difference between, and to me there's no difference between Celsius and Kraken. Sure, the mechanics behind the scenes may have been different, what transpired may have been different. At the end of the day, it's about disclosures to the end user. It's about disclosures to the customer. When you take somebody's--and this is the same thing for the BUSD issue that's going on now that's about to get the SEC is about to get on--it's one thing to be one-to-one back and tell people you're one-to-one back and operate as an MSB. It's an entirely different thing to tell people you're one-to-one back, not be one-to-one backed, and now be a security that somebody has to rely on you behind the scenes making the right business moves in order for their asset to maintain value on the front end. And when you remove a centralized authority from that and you go to a staking where somebody owns the keys, owns the crypto, and they're staking themselves or somebody is providing rails for staking for them, it's a completely different issue. And I don't personally think that the SEC is doing anything outside of the realm of what current law, current standing, and even current guidance would allow them to do. I think I've spoken with Hester Pierce a few times, and I know that she's a big Bitcoin proponent. I think a lot of the people are trying to get Bitcoin to be front and center in some of these discussions, make it the only, you know, available. I don't think the SEC is going to go that route. I know for sure our regulator in the NCUA is not going that route. They love our self-staking, they love our self-custody at first platform, and so I'm actually very pleased with what's happening here and the way this is shaking out because, you know, crypto was built for self-custody. It wasn't built for, and I see this, you know, all these companies as money grabs, and I'm extremely happy to see that it's starting to go away and that the only thing that's going to be left after the shakedown, you know, totality of circumstances is what matters here, and a lot of times these companies are using words like staking you know, custody. They're bastardizing the word custody even in marketing to help people feel safe that their crypto safe and that they own it. They give you keys to make it look like you own something and you have access to it when in reality, the totality of circumstances when you look at it, is you have no control. And so, at the end of the day, we're extremely pleased with what's happening, and you know, we still continue to build on Hedera with its staking platforms and with our staking platforms because we don't see any issues, again, this is not legal advice or me coming out and saying that everything is, you know, golden. Certainly, though, we do think that the way Hedera has been set up and the way The Regulators are coming at this is the right way from both perspectives.

HBAR Foundation - Brandon
‍Thank you, John. And I'm going to go to Amit next since he is building his business around staking. Even though he's in a different jurisdiction, he serves customers all over the place. If anybody else wants to put in their two cents on some of this staking conversation around regulation and you're on the panel, please raise your hand or we're going to move on to DeFi here in a minute. But Amit, with Stader, of course, your business is built 100% around staking. What are your perspectives around what we're seeing?

Stader Labs - Amit
‍I think, as John mentioned earlier and a couple of other folks were talking about, the positive direction in which this is taking. I think the move is obviously unfortunate for Kraken, but I think it's overall positive for the ecosystem, primarily for three reasons. One, it is going to encourage a lot more decentralized players in this space, be it staking or DeFi or any other kind of crypto ecosystem players. Two, it actually brings in a lot more transparency and over communication with respect to how returns are generated and how users' funds are handled. Three, I think it's very positive in the long run for decentralized staking protocols as well as DeFi protocols like ours, as like any of the, I mean, most of the returns that we are generating are primarily a function of how the on-chain activity is being performed by the node operators or validators. So, those are my three key takeaways from the regulation.

HBAR Foundation - Brandon
‍Thank you, Amit. We really appreciate it. Devrel, I did try to bring you up, but there's some kind of error coming up, so if you want to leave and then come back, we'll try to bring you up again. But, John, go ahead.

Bank Social – John Wingate - CEO
‍Yeah, I just wanted to make one more comment. The builders, the people that are building in this space, you know, don't get discouraged, and the people supporting this space, don't get discouraged. I know that you've heard a few times we talked about we're working with the Hedera team directly with Swirlds on bringing some new technology to the forefront, like decentralized recovery, working with credit unions, regulated financial institutions who are going to embrace, who are embracing, and helping become kind of like an intermediary for crypto, for trusted intermediary. And so, I want you guys to understand that these things are right around the corner, and as you're building, make sure that you're building with the Defi mindset, the people mindset in play, and not the central so many of these companies, so many of these new startups, they're just using crypto as a sexy marketing term to raise Venture Capital funds. Don't build like that. That's not the long-term play here in the crypto space.

HBAR Foundation - Brandon
‍Thank you, John, and we just brought up Berwin. I believe you're with Stader as well, do you have anything you'd like to add?

Stader Labs - Berwin
‍So I was just listening in on the conversation, and what Amit touched upon were the three main points from Stader’s side, and I think we side with John on this one completely.

HBAR Foundation - Brandon
‍All right, sounds good. Okay, we're gonna move on to some pure DeFi now. Pangolin, you guys just launched on Hedera. How did the Hedera version of your Dex launch go from your perspective?

Pangolin DEX – Charles Ferguson
‍Yeah, thanks Brandon, yes, our launch was two weeks ago and a day, and ended up being a little bit of a soft launch because of an unforeseen wallet connection issue. But, you know, launching a network and VM agnostic dex is something we're really proud of, and our Hedera launch was a learning experience for us. But we're all hands on deck until we got the connection issued remedied, and a lot of cross-team collaboration since, uh, a lot of our devs weren't having the issue. It wasn't apparent on their machines, and so a lot of different, we're having people remote into my computer, to be completely honest with you. This is Charles, or Scruffy Chuck, so we had a lot of that going on for several days there. But that said, we're encouraged by momentum that has been that has been remedied, and we surpassed three million in TVL in the last few days here. Just within the last hour, we've actually announced our liquidity incentives, 30 million HBAR, that's going to be starting tomorrow at 4 pm Eastern. Our SAR, our sunshine and rainbow algorithm for single-sided staking with NFT, is running well, and yeah, we're extremely excited to be, you know, one of, one of the things we're most excited about is the collaboration happening with spaces like these, and hearing, you know, sort of you know, very substantive conversations ongoing, and these sorts of conversations don't happen on all networks. So if we haven't had a moment yet to connect, please reach out to me or DM us here at, excuse me, at the official account, and have to take any questions, but that, I think at a high level, Brandon, unless you have any questions, I think that's kind of all I had.

HBAR Foundation - Brandon
‍All right, well, I do actually have a question, and then we'll go to devrel, and finally, we got them up. But, you know, you're the first cross-chain Dex. Have you had customers that use your, Dexes on Avalanche and some of the other platforms that you build on? Have you had any of those customers come over, and use the Hedera version and give you any feedback?

Pangolin DEX – Charles Ferguson
‍Oh absolutely we've seen a lot of flows. You know, we implemented some marketing tools in the last half year or so, as a result of a hire we had made, and so yeah, we've been seeing a lot of traffic flows which is exceptional. You know, there's exciting things happening on many, many networks and Hedera is certainly one of them. Yeah, I think that the big potential draw for those users, especially from Avalanche, you know, we do have a Dex on Flare, is a little bit of a smaller community, but from Avalanche specifically, you know, that's really sort of where it is that we started, obviously. So, yeah, we've seen a lot of users come over, the feedback is that the experience is extremely similar. Obviously, we've really tried to make that the case, such that you don't have to necessarily go through many clicks to change the VM that you're using or the network that you're on, which is sort of the whole premise to begin with when it came to what it is that we were building. But one thing that is novel to Hedera and Flare, actually, but in comparison to Avalanche, is the sunshine and rainbow rainbows single-sided staking algorithm is novel and something that we implemented on Hedera and Flare specifically, and on Avalanche, it doesn't exist in the same way. So, um, the NFT creation and those sorts of things are something that people are coming over to play with, and we're excited to see the long-term effects of that sticky liquidity through those NFTs.

HBAR Foundation - Brandon
‍Well, we appreciate it, Charles, and we're certainly looking forward to those additional awards coming online tomorrow. Devrel, go ahead and ask your question or make your comment.

Community Member - Devrel
‍All righty, thank you. So, I had to leave and then come back. I guess it wasn't working before, huh?

HBAR Foundation - Brandon
‍Yeah, I think it's actually, we're maxed out at 11. It's not allowing me to add anybody else, so I think we're all set now.

Community Member - Devrel
‍All righty, so what I want to say was, the Ethereum merge from proof of work to proof of stake, I really thought that that was Ethereum's transition into staking, a staking regulated thing. But as the SEC is how we test proves that it's not a security, which is why, you know, the current bear market is still kind of, at a low at the floor. It's okay, well, obviously, I think we all are bullish on the next bull run, whenever that is, right? Then making that happen and finding a catalyst such as, let's say, AI. I really think AI is going to be the catalyst for the next bull run, as we see these companies, like Google start to compete over the AI marketplace and what AI is doing for developers. So yeah, that's kind of what I wanted to say.

HBAR Foundation - Brandon
‍Yeah, there's no question about that. It sounds like from what Jorge and John said that we're doing okay as far as the Hedera network in light of the regulation that's coming out. But we're also focused on utility, making sure that we're building the Next Generation DLT that's going to be able to facilitate all the great things we talk about on a regular basis. So thanks for coming up, and we're going to go on to another person here. But John, in the meantime, while I'm swapping out, you can go ahead and make your comment.

Bank Social – John Wingate - CEO
‍Well, three quick questions for Pangolin: Is it all smart contract-based, HTS-based tokens as well, and the ability to kind of...I'll just ask all three of my questions, and you can ask them. Do you have chain-to-chain token swaps, and then how can we list our token? Yeah, token.

Pangolin DEX – Charles Ferguson
‍Yeah, awesome. So it's HTS, yes. We intentionally did not wrap our governance token from Avalanche and then bridge that token. We didn't want to fragment that liquidity. So what we did, we learned from Sushi who had done something similar. I'm not sure, maybe 18 months ago, maybe a little bit less than that now. But so this is HTS native, and then when it comes to getting your tokens listed, it's a DEX, but obviously, we should collaborate on that. So I can share my telegram or whatever it is, slack or email, whatever it is. In terms of getting our teams connected, however, is easiest for your team. And then, oh, the second question was about bridging, correct?

Bank Social – John Wingate - CEO
‍Chain-to-chain token swaps, like, is there any future kind of Dev roadmap to get chain-to-chain swaps? So swap a token on one chain for a token on the other chain and kind of bridge.

Pangolin DEX – Charles Ferguson
‍Absolutely. So actually, we already have instantiated something that we call Bridge swap, which allows for, you know, it's really an aggregator of aggregators. So we work with teams like Li-Fi, Thor swap, Axillar, Squid to unlock liquidity on over 20 chains. Now, Hedera is coming very soon. We're working with HashPack and collaborating with them in terms of getting Hedera as one of those chains. It allows for us to make those swaps from token to token, but it's not implemented just yet. So I did a walkthrough last week, and I had to use two different dapps, so I used Hashport and I used Pangolin. But ultimately, getting from Phantom or Avalanche or anything like that into Ethereum before making that bridge over to Hedera can be done through Pangolin's Bridge Swap. And in the next... Yeah, I'm not really sure the timeline. Let's say within the next six weeks or so, we're gonna have Hashport integrated into that, making it so that you only need to use one dapp.

‍Bank Social – John Wingate - CEO
‍We'd love to be able to do that in our wallet with all chains that you guys support. Every chance, awesome. We'd love that. Perfect.

HBAR Foundation - Brandon
‍All right, HBAR hub, go ahead and ask your question or make a comment.

Community Member – HBAR Hub
‍Thank you! Yeah, I was wondering, I saw a few different comments on the different amount of H-bars that'll be dispersed for this super yield, I think you called it. But yeah, I was wondering if there were any specific details like how long it would be going, maybe I just missed it. So that was my main question. Thanks!

Pangolin DEX – Charles Ferguson
‍Cool, I assume that's for me. Yeah, I guess so. Awesome, so actually we have somebody, his name is Khan, and he's our chief farmer. And so we don't have a technical time frame on those emissions in terms of the 30 million H-bar themselves. It's much more about, you know, if we have different partnerships that come up, such that sort of we're hearing in real time between John and myself. But in addition to that, we have, you know, we're going to be launching tomorrow with several farms that we stated in a tweet just announced about an hour ago. And so, in terms of the time frame itself, it's going to be months long. It's not like it's something that we're going to be sort of exhausting in a day or two. But in terms of a time frame, it's not something that we commit to in terms of a number of days or a number of months. It's really about capital efficiencies. And maybe I'm thinking about the best way to do this, we have, so he's very active on Twitter, his name is Khan, but he's also at Oracle on Twitter, and he's constantly talking and thinking about farming. So you'll find him, we retweet him from this account quite often. So if you have any specific questions, maybe tweet at me, and then we can get him looped in and see if maybe we can answer them specifically.

HBAR Foundation - Brandon
‍Good stuff, good stuff. All right, so we are going to move on to HeliSwap. I know you guys have your lockdrop that's coming up. Max, can you give us some more insight on what's coming up with that?

HeliSwap - Max
‍Yeah, awesome. Thank you guys for having us first of all. Let us also welcome Pangolin from our side to Hedera. It's very nice to see the cross chain capabilities bringing on hopefully new Hedera enthusiasts. So welcome to Hedera, welcome to DeFi on Hedera. We wanted to use the opportunity of this forum to talk a little bit about our lockdrop approach, which is a novel token launch approach to Hedera that we have been working on to bring our own HELI token into existence. And we're actually just two days out from actually starting this lockdrop approach. So it would be the perfect momentum to kind of share a little bit of what's actually going to happen so that the community is aware, and also those partners that I see here. I see Creamies, we have already done an AMA with Stader, then on Wednesday we're going with Hashport. So shout out to you guys. And also, we just wanted to share a little bit of information on how this lockdrop will work. So basically, from the 16th until the 23rd, we have a lockdrop pool open where we have pledged 20 million Heli tokens into it, and then the community can contribute HBAR in a frictionless way, so there's no geographic restrictions, no theft, etc. Agreements that are required, it's just a simple lockdrop approach, and users can lock in their HBAR which is then matched with the 20 million Heli, which will allow us, and that's what we're very happy about, for a more natural price discovery. Since the token is not arbitrarily priced by the community, and then doing, five days you can withdraw and deposit Hbar freely depending on what you actually think would be the future price of value. So, in general, what we're looking to do, and some of you may know, is we're going to launch our DAO very, very soon after we launch the token, and for that, we need to launch the token as decentralized and community-driven as possible. So we worked on this new locked-up approach. We took inspiration from Astroport, which some of you may know, which also had like a lock-up on Terra, some months ago before everything kind of fell apart, right? But so we've been, cooking this up, and, obviously wanted to share some information on that. If you're also interested, in knowing how this could work for a project of yours or a token of yours that you're launching, we can also help on that side. Yeah, and then, yeah, that's kind of the summary of it. So we're really looking forward to seeing, most of you or some of you join on Thursday as the lockdrop goes live.

HBAR Foundation - Brandon
‍I'm in Max, I'm gonna try it out for sure. Well, we appreciate you coming on and explaining it, and we're going to move on to another one of our DEXes that's going to be launching here before too long, but I know the first thing they wanted to do is launch their aggregator. Coffee, how far out are we from doing that? Okay, I don't know, Coffee, you are on mute, but you can explain it here in a minute. But in the meantime, I see that we have Head Starter up here as well. Tudor, with Head Starter, first off, congratulations on the very successful NFT drops you recently did with Earthlings. Great job facilitating that. I see Earthlings down there in the audience as well. You're also very involved with projects that are leveraging Hedera DeFi. What DeFi trends are you following as we enter 2023?

HeadStarter – Tudor - Founder
‍Hey, Brendon, thanks for having us. This is indeed Tudor. Feels like it's been a while since we've been on some of these bases. They're not that the most, Europe and Asian-friendly times, but I'm very happy to be back here with you guys. When it comes to Head Starter, we have, as you mentioned, enabled some more advanced support for NFT sales, and they're done with, via smart contract. And we have some advanced capabilities for minting there with complex allowlisting criteria and rounds, as you saw in the last drop with the team from Earthlings. Now, when it comes to DeFi, as you mentioned, we were sticking to a lot of projects, and there's growingly more interest in building on Hedera. There are a lot of projects, as we have on the panelists today, that are becoming multi-chain, or projects that are seeing some of the unique capabilities of Hedera. We speak to projects every other day since we not only want to help them with their launch, whether it's in through IDOs or INOs, but we want to help them with acceleration. And obviously, a lot of them, when they are confronted with Hedera, they are opening a whole new horizon of opportunities when it comes to the different services that the network can support. Now, it's very weird how DeFi has evolved over the years, hasn't it? With higher and higher overlap between traditional finance and centralized finance, and it feels like the worlds are emerging, and we're kind of like copying some of the best, but also some of the worst practices that both worlds have to offer. Arguably, these boom and bust cycles have been something of dictated by trends and seasons in the crypto space. And with the recent unearthings of some weird practices, especially with FTX and some of the other collapses that we've had in the space, I guess the writing is on the wall for a very strong emergence of DeFi, and probably a DeFi summer 2.0 compared to what we had at the beginning of the last bull market. So I wouldn't be surprised at all to see a resurgence faster than we might expect it when it comes to the DeFi sector, heading or front running the next bull market, as people are anticipating it. And as I mentioned, right, the writing is a bit on the wall, it has now become more and more obvious that self-custody, and there will be a higher amount of accent being put on emphasis being put on DEXes. And we might see a future where these DEXes, and hopefully a lot of the projects that we have on the panel today, or some of our friends in the ecosystem, will become representative when it comes to how exchanges will be run in the future, whether that's with a sort of CDeFi feel or there will be more and more features and functionalities that traditionally are delivered by centralized exchanges that can be fulfilled by decentralized exchanges. Obviously, these steps cannot be very clear without the regulators putting the rules and new laws in writing because obviously, we're speaking to a lot of projects, especially one, the ones in the states, a lot of founders and entrepreneurs are very cautious the way that they navigate the crypto space, just because of the lack in clarity and regulations, so that needs to finally happen. We've gone the route when it comes to self-regulation, but we're at the point where this cannot wait any longer. And we're happy that while the U.S. markets are in a way very against crypto and attacking it in multiple vectors, the rest of the world is probably ready to now accept some of the projects and Ventures that are spreading out from the US, and probably cannot find a good home in the U.S, and probably some of the locations like Dubai, Singapore, with the upcoming regulations from Mika in the European space, these new centers will become places where a lot of these DEFI Innovation can find home. Now, a lot, obviously at this point in time, the crypto Market is very, very large. We're over, one trillion in market cap, in the bear market. So what really moves the markets right now is institutional investors into institutional players, and we see that right now if you look in the, um, over the price action and volumes that we have in the weekend in crypto. So these players, when they want to come into the space, they want to have a direct, decentralized recovery. They want to have some of these features that are institutionally friendly and making for people that, think that there's just a private key that's holding, all the, tens and hundreds millions of billions of dollars of funds and customer funds, making this a point of concern. I think that this our space, in particular, is making strides. As I mentioned, we decentralized recovery and, HashPack has also made some huge strides with the email login, so kudos to them. But when it comes to regulation and the way that we Implement regulation, obviously, we hope that they will be put into a way that really protects your user anonymity, and this has a lot of security concerns. Zero knowledge proofs might come into play over there. On Hedera, we have a protocol layer kyc which can be something that we can use very differently than other chains might start implementing. And obviously, maybe when it comes to DEFI, some of the other trends that we should be discussing are the strides that will be made in the DAO space. Upside Coop is a has been doing amazing work representing Hedera community in the space. I know I've been dragging on. I guess one of the last things that I think will be important to look for in this space going forward will be a real yield. Obviously, at Hedera, we're still a relatively nascent space, um, we have been making strides when it comes to the TVL that we have on stay there on the different taxes, but with emergence of new and new tokens on Hedera, we need to be to make sure that we don't fall in the same mistakes that other projects did before us. So obviously regulations are very important, but also when it comes to the ethics that we put behind the tokenomics, we need to make sure that a lot of them are based on real yields that we don't have like a very aggressive token emissions or token creation that just create inflation and the temporary, boost in attention towards that token. That's why, for HeadStarter, we decided to postpone a bit to the single side is taking functionalities, just to make sure that there are more features that create a sort of circular demand for the token. And yeah, finally, we can open up a discussion. I think it's very important at this time about real world assets on chains and stable coins. This will be the Talk of the Town and who knows, with more and more pressure being put by uh different uh entities on stable coins. Around the world, who knows what's going to happen? Is it CBDC's? Is it wrapped Bitcoin that we will go for stablecoin? Is it commodities? So yeah, the 2023 is definitely an exciting year that where we'll continue building and growing the Hedera of space together.

HBAR Foundation - Brandon
‍Well, that, I mean, we're seeing a lot of those innovations take place right now. We've had digital Commodities exchange, which is a TradFi exchange that's of course trading Commodities that's already being built on Hedera, and they're moving in the direction of pretty much what DEFI is doing, what we're talking about here today. They want to tokenize the assets, they want to use Smart contracts to trade them, so exactly what we're seeing here. And we have, you know, the likes of Larry Fink, the CEO of the largest asset manager in the world, saying that not only is tokenization the future of Securities, but it's tokenization on public networks, so I think Hedera would be at the front for that, and of course, we have Aberdeen on the council as well, so great points all around. And I know you mentioned HashPack, and of course, HashPack is leveraged more than any other wallet within the Hedera DEFI ecosystem. I'm not sure who we have behind the icon there, but what are your thoughts on our Defi space and how things are progressing?

HashPack Wallet – Marc Ugas – Director of Operations
‍Hello, everyone, yeah, so this is Marc, from the HashPack team. So, I mean, I feel like, first of all, like, I'd like to thank everyone. I feel like seeing all these builders here, I mean, you guys are absolutely killing it. It's been actually absolutely amazing to see everything that you guys are outputting out. So I guess, so on the Defi topic, I think that it's been extremely interesting to see all of these new things coming out from everyone here. I mean, everything that Pangolin has been putting out, I'm really excited for everything that Leemon Swap will be putting out, Bank Social, Heli Swap with their new token. I think, it's been really exploding on our end. One of the things that we've been seeing is, constant growth on the usage of these services in terms of staking and so on. And one of the things that we're really focusing on is delivering that top-notch user experience. So, I think it was about a month ago we made sure that for Native staking, we were including the different staking in rewards in detail, so when they were collected and all that because we believe that it's extremely important. And, on the other hand, in terms of more of the regulation side of things, we're following everything very closely, everything that happened with the SEC. From our read, most of the things that have been happening on the Hedera ecosystem in terms of staking and the other services that don't seem to be impacted by this. We're also following very closely the new regulation coming from the European Union, actually from Europe. So, have some main roads on that front with the MICA which is what Tudor was talking about and that's also something that we're really focusing on. Obviously, we believe that one of the main pain points to get that mass adoption that we've all been waiting for is on the education side of things but also on marrying the education with the user experience. So, that's why we brought in the onboarding with the user emails and also like the whole recovery process that users can get even if they lose you know, even if they forget the password, you know they can still recover their own keys using their own email. So, that's really what we've been focusing on, really collaborating with a bunch of projects, figuring out what the new pain points are, and just going from there basically, just keep growing, keep building things. We're working on some new features that I think that a lot of people will have been asking for and we'll be excited to see. But yeah, that's pretty much it.

HBAR Foundation - Brandon
‍Speaking of new features, I know there was a tweet that was put out recently on staking and Ledger and HashPack. Can you give us an update there?

HashPack Wallet – Marc Ugas – Director of Operations
‍Yes, certainly. So, I think it was last week I actually took a couple of days off, went to New York and over the weekend, Tyler our CTO was like, "Oh yeah, so I figured this out, like we can do staking through Ledger." There's a little technicality on that front so we actually put out a blog post so people because this is something that a lot of people have been asking for. So, there's a way around getting staking native staking through Ledger right now but this will only get better over the next, I'd say, four to six weeks which is what The Ledger team has been telling us in terms of the full support of HTs tokens during the native stake in the NFTS and so on. So, that's something that obviously everyone has been asking a lot about. I mean, the amount of replies on our Twitter of when Ledger's taking that, you know, it's been a few months coming but over the next four to six weeks, we expect to have a full support from Ledger on with everything. You know, HTS tokens, NFTs, and a more robust support of Native staking because as of right now, to trigger rewards on Ledger staking, you still have to send a small transaction to the account that you're staking through, but when Ledger starts supporting it more, that's just going to be a lot more seamless.

HBAR Foundation - Brandon
‍Great to hear that's awesome, and I see plenty of people down the audience. If you have any questions or comments, I see some of the teams like a drop, and I know Earthlings down there. They're leveraging Hedera DEFI within their gaming metaverse, so if you have any comments, or Rob Allen, I see you down there as well. So if you guys have anything, you can request to speak, and I'll bring you on up. Also, King Solomon, I know you asked a question, or you had your hand up there a little while ago. If you have anything, just come on up. Tutor, I see you have your hand up, go ahead.

HeadStarter – Tudor - Founder
‍I just wanted to ask Marc on the topic of Hardware wallet since we're talking about Ledger, does he have any Alpha on the upcoming release of a more the Hedera native Hardware wallet?

HashPack Wallet – Marc Ugas – Director of Operations
‍So we've been talking with Adam from Citadel wallet for a while now, and we have, we're in talks with multiple Hardware wallets providers right now. The main thing that we're trying to figure out is, okay, so how do we deliver the best experience for the user so there's not a steep learning curve? I feel like the Steep learning curves is something that is very native to crypto, and that's one of the things that we're trying to tackle. So I guess this is for the Citadel wallet that would be more of a question for Adam or hbar to the Moon, hopefully soon. We talked to him here and there, and it's actually super exciting to see, to be able to leverage all of these services that we have in the ecosystem in a more secure way through the hardware wallets and so on.

HBAR Foundation - Brandon
‍Thank you. Yeah, I'm looking forward to that for sure. Now, of course, Pangolin is getting into bridging assets over as well, but one of our top bridges in the space, of course, is Hashport, and I see Jesse's there. Jesse, how you feeling? I know you had the flu here, all right?

Hashport – Jesse Whiteside – Director of Business Development
‍Yeah, I'm on the nun. Thanks for asking, Brandon. Yeah, happy to be here.

HBAR Foundation - Brandon
‍Alright, so you guys have added some more networks to your Bridge. Can you tell us which ones you've added and why the expansion is important for Hedera Defi?

Hashport – Jesse Whiteside – Director of Business Development
‍Yeah, absolutely. So we just announced the launch of both Optimism and Arbitrum, both are L2 popular L2 networks in the broader Defi ecosystem. And you know, just being able to connect to Hedera to as many of the popular ecosystems that are out in the space, exposing the platform to new user groups and allowing for those user bases to find their way into the network and experience for themselves what many of us here, you know, already know full and well about the performance and security and speed and all those wonderful things. So, it's really just about making sure that that, you know, anyone who'd like to find the network and to find the DeFi ecosystem on Hedera can do so quickly and easily.

HBAR Foundation - Brandon
‍All right, good stuff. So, Solomon, do you have something for us?

Genfinity – King Solomon – Founder & CEO
‍Oh yeah, no thanks Brandon for bringing me up. I think earlier, I know somebody came up essentially about Ethereum with the merge moving to proof of stake not meeting the three prongs of Howie and I don't think that's been officially stated yet. I think the only clarity we've been given and I might be wrong was basically around Bitcoin. The other thing I wanted to say, like, you know, when we talk about, you know, staking and kind of what's come down with Kraken and stuff like that, you know, we see a lot of, you know, I'm curious from like the projects like, you know, that are that are trying to innovate, like, you know, launching a launching an art-based project, which is fantastic, but then at what point do you make the decision to, you know, pivot and maybe launch a token alongside that? So, you know, I would just probably, you know, mention all these projects that are launching like you have great art, you're doing all these things, just really kind of do the due diligence before you kind of take that next leap into what you're doing. It's great to see all the innovation, but I think it always does make sense to step back and really look four or five, six years out, make sure that you can, you know, still be doing the things that you love to do. So, thanks for bringing me up, Brandon.

HBAR Foundation - Brandon
‍Yeah, absolutely. Well, Tutor, you, uh, that's what you do, you facilitate people that want to launch tokens. What do you do as far as due diligence to make sure they're dotting all their I's and crossing their T's?

HeadStarter – Tudor - Founder
‍Well, well, there's really a lot when it comes to tokens. Something that we opened is the Sentinel project, and everybody can visit it for, for some people, in my under the radar, it's fun. You can find that sentinel.headstarter.org. Saucer Swap uses the methodology that we have proposed and opened to whitelist tokens to their DEX, and it's a good starting point and reference point for people that want to start their buy or on some tokens that are already launched. Now, with the evolving and volatile space when it comes to regulations, you can never be too cautious. And a lot of the times, we need to make sure whenever we are discussing with the project and committing towards its launch, we need to make sure that it's a utility token, that it navigates the regulations correctly and in case, a harder Crackdown comes further down the line, that they won't be in the cross, in the cross side of different Regulators around the world. So that's one of the reasons why frustratingly we must Implement KYC when it comes to participating in ITOs, in particular. But, yeah, we want to, we're actually working on a research piece where we'll be providing some more education around recommendations when it comes to tokens and the way that they are being launched and the gamification built around them.

HBAR Foundation - Brandon
‍Yeah, so to Solomon's point, I think your first step if you are thinking about launching a token is probably to get in touch with a Head Starter because that's what they're doing, that's their bread and butter. Hbar Joe, if you want to go ahead with your question and comment?

Earthlings Land – HBAR Joe
‍Yeah, that's perfect. I'm glad Tudor got to speak and that's, with us, you know, having a game and our token steam, we want to be 100% sure to get it right because the token is going to drive the entire game, it's the end game currency. So, it's not just a token to be a token because that's what everybody's doing. It is going to be everything for the game. So, there's been some questions about why the delay, why haven't we released the tokenomics, but I think Tudor just summed it up perfectly in that we want to make sure we get it right, and we want to be ready for any regulations that come in the future so that, um, when they help us get our token and people's hands and the game is running, we want to have it so that it's there, it's useful, and it's not just a gimmick, which you know, we've seen it, seen it before, but when you have a game that is completely driven by that and you're going to have a DEX in the game, um, there's the Leemon Swap side of it, there's the Community side of it, and there's a gamer side of it, so a little bit of the delays there. We're getting a lot of clarity on what we want to do with our partners and people working with us and I think again, Tudor summed it up exactly how I wanted to say it before he got back on and cleared it up, and it goes to also what King Solomon said that you got to be careful not just to throw something out there because people want it now, but to take your time and do it at least by what we currently know, do it the right way.

HBAR Foundation - Brandon
‍Yeah, absolutely, and congratulations on that great drop you guys did last week. I actually talked to Patrick yesterday, so look forward to the weekly update where we're going to put out some new stuff. So I certainly thanked him for coming on as well. HashPack, you got a question or comment?

‍HashPack Wallet – Marc Ugas – Director of Operations
‍Yeah, I just wanted to make a quick comment and praise the word that HeadStarter doing with the Sentinel because I think it's essential to have some sort of a standardized process to basically set the foundation for just a background on the projects that are putting different tokens out. Because right now, I mean the Hedera ecosystem is growing rapidly, but it's still relatively small. But as we grow, we don't have these processes in place. We could see ourselves falling on the same mistakes that a lot of the other ecosystems fell back in the day. So that's actually something that we are really working on from our side also in collaboration with King Solomon and everyone that also participates on this cross-chain spaces where it's like, what can we learn from the other ecosystems that they've gone through? Some of them have been around for so long, and there's so much things to learn from them. And I think that the initiative from HeadStarter in terms of the Sentinel, I think it's great. So yeah, that was pretty much it.

HeadStarter – Tudor - Founder
‍Thanks all for the kind words, guys. Marc and Joe just wanted to say on Sentinel side of things, it's still a work in progress. We're happy to be to improve the methodology, and we'd love for the community and all the other partners that we have in the space to send us recommendations on how to improve it.

HBAR Foundation - Brandon
‍So Solomon, did you think they were going to be that thorough with their answer?

Genfinity – King Solomon – Founder & CEO
‍No, I mean, you know, that's those are the answers that we should be getting at a consistent level in the space, especially the earthlings' answer around tokenomics and releasing a token. And you know, there's so like I said, there's so much innovation in the space. So it's like you want people to innovate and to build and to do things that haven't necessarily been done before. I just think that if, you know, if pro-like just because you're a great artist and you release an art-based project doesn't mean necessarily that you're going to create like the end-all be-all within DEFI. And it takes on, it's a risk-reward thing that every project you know really needs to analyze as much as they possibly can before they make that next pivot or that next leap to really build out their ecosystem because you could build something amazing and, you know, we've seen the SEC, you know, and I think a lot of projects up here said that they're glad that they're seeing kind of these actions take place which I, I agree with because we do need regulations, but you don't want something that you've worked, you know, your ass off for two or three years, being regulated out through enforcement, like, I just think that everybody needs to be really careful about what they're doing, but also still innovate at the same time. So it's a catch-22, I get it, but yeah, that's the only point. But yeah, great answer from everybody up here.

HBAR Foundation - Brandon
‍Yeah, I will say, people that haven't read it, I would certainly go read Hester Pierce's dissenting opinion. I think, for me, and this, I'm not speaking for the HBAR Foundation, this is just the HBAR bull talk, and I think she has the right idea. But either way, like you said, regulation's coming, so we have to make sure we have it online. I have one more question from me personally to Pangolin. So if you provide liquidity right now for one of your pools and you start farming, will you automatically start getting those farming rewards? Or is there going to be an additional step in between that we have to do tomorrow at 4 pm?

Pangolin DEX – Charles Ferguson
‍No, there shouldn't be, Brandon. Let me, I know that our Chief Farmer is listening in. There shouldn't be any sort of migration necessary, but let me, I'm 99% sure on that one. What I can do, let me, I'm frantically texting him, but it's very late in Turkey. Let me, no problem, we can get it clarified. Yeah, let me confirm. I'm 99% sure, but let me, what I'll do is I'll tag you in a response to our thread announcement today, which was about an hour and a half ago, and from there, I'll tag you specifically, but we'll get you an answer and as soon as I get just confirmation from our team.

HBAR Foundation - Brandon
‍All right, sounds good, thank you, Charles. We appreciate your time, and I want to thank the entire panel we had today. They were fantastic. Thanks to everyone in the audience who has questions, who made comments, and everybody who listened in. That's all we have, HBAR Foundation out.