E161: Sui Founder Explains Why Ethereum & Solana Will Be Left Behind

0:00How do you define product market fit? The infrastructure to support DeFi ecosystem is working. You see how quickly people can build on Sui. Proving how your stack is working correctly. Product market fit. We just want that to be a lot more. The bigger, more complex adoption. What does that look like? A bigger or much bigger adoption? And where do you think it's coming from? Yeah, well, I mean... Evan Cheng is the co-founder and CEO of Mistin Labs.

0:25Evan Cheng:The creator of Sui, a next-generation Layer 1 blockchain. formerly an engineering leader at Apple and Meta. He's now building the foundation for the future of Web3. What's 3.0 is really doing differently from Ethereum or Solana? Before 3.0, most of the major L1s follow this motto of the measure. 3.0 basically come out and say, well, wait a minute. That only works well when these assets owned by all these accounts are basically the same. And that is most definitely not what real world wants. How different it is to be building a blockchain for retail users versus institutional users. If you build it right, it doesn't make any difference.

1:01Usually it's the wrong rules that have to be followed. If you've done it right like we have, these are just in a lot of way configuration. Do all major chains converge or do they specialize? I think it's too early to say that. What we can only do is based on our analysis to build the most full-featured platform to enable everything to happen, then the market will sort itself out. Give me some examples or some numbers in terms of what SWE has been achieving over the last year despite the token going down with the market. Yeah, I mean, I think we…

1:36Hi everyone, this is the little bit that I know none of you like that can help us make a huge difference for this show and we want to take it next. 71 % of the people who regularly watch When Shift Happens have not subscribed. And so all I'd ask you if you want to make a huge difference is the following. If you've seen this show before and you like it, help me, help my team, Hit the subscribe button and we'll continue to build this show for you. Thank you. Yeah, flying here was 16 hours, so it's bad enough. You did New York to... Ah, New York. Yeah, to wreck. Solid. Yeah, I forgot how long that was.

2:15I mean, the 16 hours is probably okay, but the time difference is brutal, I feel like. Yeah. Well, don't think about it. Don't think about it. Yes, don't talk about it. just just just grinds through close your eyes go through it yeah are you staying here for uh until friday night i'm flying out like early early morning like 1 a.m and on saturday or something like sf no no back to new york ah so you live in new york yeah i'm mostly in new york now you moved to new york yes interesting when did you move to new york it's about four or five months ago why well it's more of a shift too I mean it's personal reason as well as work right I think it's just better to have a presence in New York well New York is where it's happening right it's where the shift is happening

3:08Evan Cheng:where the shift is happening where all the shit happens and all the money shit happens yeah no it's a lot of reasons yeah we we were together about a year ago i think yeah in palo alto exactly where it's only a year it's less only feel like it's like 10 years ago something oh tell me what happened that makes you feel that it was 10 years ago uh no no it's just uh it's just you know constant learning constant and it's not, it's just so much happened, right? It's like, I think we're entering into what people describe exponential kind of change era. You're seeing the shift, right? The shift really is happening.

3:58The shift, guys. Yeah, shift really is happening. I mean, there's also shit happening right now in the market. Well, there's political shit and all that stuff, right? There is an underlying shift. There's an underlying shift, right? You can confidently say, in a couple years you wouldn't recognize what the world looked like compared to say even as early as as recent as 2024 you have 2025 it's really when all people are still only playing around with chat TPT answering some questions and stuff too everything is automated everything is agent everything is moving faster than ever the blurring of lines of everything and what is the decentralized rails rowing that is going to be one of the biggest questions that we will see that happen.

4:57Scary or exciting? No, it's exciting but it's unpredictable. How do you deal with unpredictability? When you're building something, you need to make decisions? You don't know what's going to happen? This is when I think we have advantage of being first principle thinkers and builders. We didn't build something that solved just the current problem. Remember back in the days, it's like, oh, well, I still think the EVN chains, they're building the solution for something, solving the problem of those days, right the the ICOs the DeFi the early DeFi's and as as as soon as you get into something like AFT's kind of start breaking down and they then they you know even Vitalik say right the L2 evolution was a very much of a point solution for current problem and those of us has been saying no that's absolutely the wrong way thinking about it right and the whole Swiss design philosophy behind it is not to solve the current problem.

6:05And this is the reason why we didn't come out and say, well, let's just use DM and launching another version of the same blockchain everybody's familiar with. What has changed the most since our last conversation? I think, you know, you're starting to get some clarity on what is going to move the needle and what doesn't. What doesn't move the needle is pretty much pretty clear, right? It's like the crypto native ecosystem, the DGN stuff didn't really grow enough to sustain the overall ecosystem, right? We didn't see DeFi become 10 times bigger. We didn't see, we see 10 more chains getting launched.

7:00we've seen 10 times more mincoins or 100 times more mincoins, we didn't see 10 or 100x participants. We didn't see liquidity increase accordingly. We see what is interesting on this side is the institution's interest in the technology finally being unlocked. So the GNS bill with stablecoin, which we all know that's only the simplest form of tokenized asset. Now the shift is the next... part is okay what is real world asset what is the tokenization actually means right i mean but you fast forward to what's happening on the ai front where everything's automated and all that you're seeing the early signs of agent using cryptos to do the to transact between them to and potentially coordinate and you realize right almost like we went through this sort of digitization of everything what's that what 10 years ago now we're talking about maybe the tokenization of everything for the future, including exchange of information and assets and coordinations and all that is going to happen.

8:11So on one hand, you see this great potential opportunity is starting to take shape in some way, but we're quite not there yet. And there's a lot of confusion in the market. how do you adopt a new technology it's not clear cut like anything at the beginning on the other hand you see the early adoption all the people excited about it sort of kind of getting a little bit disillusioned like why is not Ming coin making everybody rich why is degenerated gambling not making this become real what does this all mean together so it's a very interesting kind of situation happening How do you personally feel?

9:00We feel good, right? We feel good where we're always building for the, right? As somebody who thinks about building for the general, like the bigger ambition, right? How does this become the rail for everything? What does the world look like when everything's tokenized? all the agents are talking to each other and humans and agent identity becomes blurred, corporation enterprise identity and consumer identity become blurred. It's good, right? We build for the right thing, right? We took the long path to building something. If you look at it from a couple of years ago, you say this is you're too far ahead of the curve people don't understand why you need to build a blockchain that's different right why you have to shift from a kind of account based model that mindset of ledger keeping track of movement to object based model where you describe something that's much more complex and composable but I think it's going to show we're making the right bet we're seeing the sort of like the early days of internet where the AOLs of the world has just stopped being good enough not quite able to move beyond supporting the early stage of internet to how do we have better infra to allow everything moving on the internet it's the same thing happening so So that's, to us, is the right, it's a good, it's a good thing that's happening for us.

10:58Week one. I want to thank our partners who help us make this show possible. I'd like to thank our friends at Jupyter, the DeFi super app. Anything you want to do on chain, from trading to earning yield, you can just use Jupyter. Personally, I'd recommend getting the Jupyter wallet on either your laptop or your phone, 10 times faster and 10 times cheaper than the competition. You're going to love it. Thank you to the awesome team at Castcard, my go-to card to spend my stablecoins directly with my Apple Pay to buy anything, food, coffee, hotel night, or plane tickets without having to use a bank ever again.

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11:40What's the AOL of crypto? Well, we still believe our position hasn't changed. The current account-based blockchain before SWE, all the other models are going to be wrong, going to be proven insufficient. Do you think that an Ethereum or a SOCNA can't accommodate? Well, just think about it. Can you have a single rail that allows you to do everything? In this complex world where you say certain things have to be configured, that is visible between a few parties. Some things can be completely hidden. The current world would be, okay, if you use Ethereum or Solana and all that, you can have support, maybe confidential transfer or something, but everything else will be public.

12:26But how do you form, they also have kind of maybe ways for you to build completely private interaction between a few parties. but then if you break it down what if I need something in between what if I need some transaction to happen between parties that's completely private but have the outcome be settled on chain and can be used how do we have programmably configure confidentiality say between these parties visible between these other parties not visible and have everything being automated you know the policy be designed by smart contract, enforced by smart contract by the chain. So you start to see, well, you're going to have to use a lot of different rails, potentially use a lot of different solutions for a complex transaction between complex sets of parties and counterparties.

13:26You start to understand that model wouldn't work. So we're seeing the same thing happening with the early adoption of something like Canton. It's just private party. You need a separate step for reconciliation. It's not even atomic. Can you explain Canton? It's private party. I think most people, even I don't really know what it is. It's private parties. You have Goldman Sachs, all those financial institutions. They say, between us, we can share freely, but it's still very much, it's a transaction record, it's all kept that way. But you can't have the asset potentially being used in a public way because it's still controlled by a single party.

14:10So you still cannot break through that. That's their model. And we will build something that allows you to have the private parties to keep that information private between those parties but have the outcomes settle on chain. So you can blur the line between those two. You want to have the... You want to broaden the distribution. You want to have broader participation.

14:50That kind of one-size-fits-all kind of approach doesn't work. we've seen that happen either everything is public or everything is private doesn't work Zcash for example solved the problem between maybe two parties that want to transact in a completely private way but you can't fit that in a general workflow because you're moving say asset from right because if you want to have some parts being public, some part being private it, you kind of have to use multiple different solutions. And if you have to use data to record, provide more information for potentially for compliance and all that, you have to use yet another solution or maybe more solution that's sitting on top of other solutions.

15:47Then you actually have not achieved the efficiency. Because as you kind of Each one of these are sort of in silos, right? Coming back to the private party models, right? Each one is silos. Everybody understands this, right? If you're capital silos, you're not really achieving the efficiency. And we've seen that in sort of moments in firsthand. What happened in the crypto market when you have the liquidity being fragmented and how dangerous that is. When things are fragmented, you are not going to have a holistic view of potentially your counterparties. You're not going to understand all the risks involved.

16:32So all these models just break down at some point. When did you first understand or understood that there was this huge wave of institution that would happen and that everything would need to be built differently. Well, you don't really understand. You kind of have to make a bet. Right? If you look at, I mean, it's like back in the days, I probably used this example before, when people's companies start embracing internet, right? They're using it in a very careful way. They will have intranet using the underlying technology, but completely internalized and private to help share information within the company.

17:21within a company that's dead. Apart from the largest corporations, most of them don't maintain internal infrastructure on RAM. They use the cloud, they use AWS and all that. So a lot of you are coming out of, well, you kind of look at what's available today and you anticipate what the world look like. And you have a belief and you push for that to happen and you build great infrastructure, build great solutions and you work on making sure adoption happens. And once you've proven this is a better way to do things and you see what happens, the shift happens and everybody else adopts the same solution.

18:11Has we proven yet that this is the right way? I don't think you can... No. Nobody has proven anything. This is the reality of our industry. Nobody has proven anything other than, well, you have this early adopter, early experiments of kind of open finance where everybody can participate. I think we all can agree DeFi is only pretty much the one that has some proven value because there's kind of changing for some people lending. How do you make your asset be more efficient? How do you make your personal finance be more efficient? Change the way you think about your personal finance in some way.

19:04Stablecoin has proven some value, but it's so small in the grand scheme of things. So the volumes are growing very fast but it's nowhere at the point where it's proven. People sentiment on the industry is very linked to how the market is doing. How the tokens are doing. Yeah. The tokens are not doing that well right now. The reason we have this podcast is to try to understand And whether times are good or times are less good, what's happening behind the scene and underneath that can help people build conviction or keep their conviction in different companies or projects? The SWEET token is down like all the other tokens.

19:58Yeah. Most of them, at least. Tell me what's been happening. Give me some examples or some numbers in terms of what SWE has been achieving over the last year, despite the token going down with the market. Yeah, I mean, I think we have built our core low-level infrastructure, the technology, right? We're building out the stack. So we built our SWE for coordination, for execution, smart contract. and we build words on top of that that allow you to have kind of a decentralized data for you to control the data access then so we build seal which is allow you to kind of own the policy and how your data can be can be viewed by others or by yourself right so it's a paradigm shift in encryption at rest and the policy for decryption travels with the data.

21:05So we achieved that. We built our debug, which has shown within the three ecosystems, the common, the query layer, a lot of the protocol can leverage. The common order book, a lot of the protocol leverage. That's a very different model from pretty much anybody else, where each time you're starting a new protocol, you kind of have to solve your liquidity problem, maybe build your own order book or whatever. So we've proven a lot of these things. We had a kind of active ecosystem. We've grown a lot of adoption in DeFi. We have a lot of people believing in us. We have a lot of companies that are building on three.

21:56We have all those are great. So we have sort of like the early proof of product market fit in certain areas. We definitely had a lot of kind of a build of brand and reputation. We have earned a lot of trust. We have also learned a lot, right? What didn't work well. And you see us kind of reacting very aggressively on addressing those things, those issues. Yeah, that's what we have done in this cycle. And I think everybody would say that for a cycle, it's not bad, right? We definitely have a lot of, very high expectation for ourselves. So it's really, we want to do a lot more, right? So for us, it's really preparing right now to get more of these re-adoptions, to get people unlock more liquidity, unlock more developers to make sure people adopt a holistic view of the three platforms, the three stack, all these.

23:08How do you define product market fit? You said, we've shown that we have product market fit, but you probably must have some... I think there's a difference between people trying out some stuff and things actually getting some traction and working. How do you define that actually it's working? And can you give us some examples of what's working? Yeah, I mean, I think...

23:36So the infrastructure to support DeFi ecosystem is working, right? You see how quickly people can build on Suite and kind of realize their product visions on Suite. We're seeing enough of a variety of different type of products being built. We're seeing Alchemy, they can build a real ad exchange on chain. We see kind of an Athen stock exchange using 3Yuan warriors and seal for blind auction. We see all this sort of thing. So from proving out your stack is working correctly, that enable others to build, that kind of product market fit, the proof is there. We just want that to be a lot more, right?

24:34A lot, a lot more, right? Now it's what the bigger, more complex adoption that yet to be proven. We're confident, but those will take time to build up. Thank you to our friends at Paradex for supporting this show. Paradex is the leading perpetual decentralized exchange with zero fees, deep liquidity, and privacy. Trade on Paradex by using the link in the description down below. At When Shift Happens, we're huge believers in freedom and privacy is at the core of it. That is why we partnered with Zashi Wallet, the easiest self-custody wallet for private transactions. You can send, receive, and spend Zcash without middlemen or surveillance using Zashi, the wallet that was built by the team that launched Zcash in 2016.

25:27Big thanks to our sponsor, SumSub, the leading full-cycle verification platform for crypto, trusted by 8 out of 10 of the world's largest exchanges. If you're building in crypto, you already know, fraud moves fast and regulators never chill. SumSub gives you full cycle verification in one stack, KYC, KYB, transaction monitoring, and even full travel rule compliance across 1 ,800 plus virtual asset service providers. Their AI flags suspicious behavior and account takeovers in real time, before damage is done. Check the link in the description down below to learn more. What does that look like? a bigger or much bigger adoption?

26:08And where do you think it's coming from? Orion can do everything. Yeah, no, no. Well, this is one of the reasons I'm here, right? This is why we're talking to people. We're seeing a real interest in kind of financial institutions in using our Rails, our platform, for issuing new kinds of assets on chain and increase access, enable access to different kind of customers to provide more efficiency, right? So the way you think about it is like they have the same product, but they want to open distribution in a different, right? There's a web tool doing things, right? Their customers are comfortable with web tool using an app or website to get access to their money market fund to go.

27:01But now they maybe have another distribution that's on chain. And the benefit of that distribution may be it's T plus zero rather than T plus one will faster and that will allow them to have customer shifting from one to this new rail, new way to get access and making the money work more efficiently for them. And I think that's the key thing. so the shift from t plus one to t plus zero is going to be massive the velocity of my need they're unlocking right and then you're adding on other type of commerce opportunity using stable coins and and and all that so that this type of adoption will blow things up we believe because now you're the center now opening the door for on-chain products to hundreds and thousands of your customer that are not your early adopter not your DJ how close are we from this happening how much do these institutions really understand but take a lot of time versus they think holy shit if we don't really do something really quickly like we might just get left behind you always even among institutions you have You have companies that's more early adopter mindset versus the ones that's just comfortable saying, you know, going alone and careful observer and follower.

28:39And then the ones that's going to be left behind, right? Like anything, not everybody's equal. So for us, we think we have the early adopter mindset partners that's going to make this happen very soon. we probably will have other things that will have things that are coming very soon and we're going to see how big how successful these will be and whether that's you know these trickle scene or it's a floodgate we're definitely hoping it becomes a floodgate and open up and everybody come in and get excited and you see the great adoption and and everything just flows through And mind you, this is in a lot of ways, maybe it's not entirely new because people have been talking about RWA tokenized asset for a number of years.

29:39But we are seeing what happened in the previous years. You have the sort of like assets and property don't really move much. People, companies have issued RWA on chain, but they're not really seeing the buyer. enthusiasm for them because it's not really kind of more valuable or more attractive in some way. But we're starting to see new attempts that's much more attractive. Like I say, something they're familiar with yet better. And that will hopefully get a lot of adoption. And yeah, And we believe that's at the leading edge. What's the dynamic between these institutions and players like Ethereum, Solana, or Sui?

30:36Is it these institutions that realize, oh, I need to do something and these are the one, two, or three first things that I need to do? And I understand that a chain or another would be able to help me or not? Or is it the blockchain world, Ethereum, Solana, Suite, that has huge business development efforts to go to these institutions and explain to them and educate them on how, first, what blockchain does is better for them, but second, how our blockchain is more well-suited for what you need? It's more the latter, right? it's always been even among the early adopters they have to sort of do their homework to understand what's possible and then at the same time they need to be educated by what the different solution offer for them and you have this match you know kind of happen for both sides to come together to part to you know result in meaningful partnership it's rare it's you know sort of one side you know can make that happen usually it has to come together

32:05how different it is to be building for a blockchain for retail users versus institutional users if you build it right it doesn't make any difference right this is a thing interesting I was thinking it would be yeah you can this is no No, right? I mean, what is retail users' needs that's fundamentally different from

32:32from, say, institution needs, right? Usually it's around rules. When we talk about what their needs in institution has more like, you know, kind of a requirement in certain rules that has to be followed. They have more reporting requirements and all that. If you've done it right, like we have, these are just, in a lot of way, configurations. This goes back to what I said earlier, it's not one size fits all. If you're building a blockchain where only possibility is everything's transparent on chain and all that, then you're going to sort of institution come in, try to adopt it, then you're going to have to sort of build things on top of that to allow that to happen, to make that possible, to hide certain information, to provide checks and balances, so to speak.

33:30It's definitely doable, but if you didn't do your homework right, you didn't build your infrastructure, lower-level infrastructure right, that's going to be more complex, won't be more difficult. Then it comes down to Okay, did you enable this type of configuration in a relatively easy way? Do you allow things to be composable? I think what we're seeing in the other blockchain is composability really isn't there, right? Because how they represent assets tend to be fairly rigid, and that makes things difficult. So we think we have the advantage here. Do you think that's enough? No, it's never enough, right?

34:26I mean, we have seen this play out in the history of evolution of any kind of technology. Just building a better technology is never enough. You have to educate people. You have to show what's possible. and sometimes there are things outside your control. If you build technology and people are not willing to adopt or maybe regulatory reasons they are unable to adopt or the market is not attractive for them to adopt or you're not really solving a problem that's on top of their mind, all these reasons can kind of limit adoption. So it's never enough, just build it right. And to be clear, right, you can build an inferior solution, but you're already an adopter.