Ethereum co-founder Joseph Lubin: the financial supercycle is ending — decentralized rails and stablecoins are the next system

intelligence cloud building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. Uh we have Joe Luben from Consensus in the Reream waiting room. Joe, how are you doing?

What's going on?

Thank you so much for taking the time to come chat with us.

Hey. Hey guys. Thanks for having me on.

Great to have you.

Great to have you. First time on the show. Would love to know a little bit more about your story and introduce you to our audience. Would you mind uh kicking us off with a little bit of backstory? That'd be great. But I've been watching uh the show this episode and uh that the China story is a is a much longer running story. Please tell me. Um so I'm no China expert, but uh

um

so for many months there have been purges in the military. Essentially, President Xi uh runs most of the country. Uh but Jang Yusa has been running the military and I think they've been purging each other's people inside. Um,

oh, so it's like a purge on purge action.

Yeah, I don't I doubt it's about nuclear secrets. Uh, I I doubt it's about corruption because what is corruption in in that context? Um, but I think it is a a major struggle uh for power uh in China right now.

What uh

what do you think the downstream implications are?

Yeah. Yeah. cuz cuz putting on a tinfoil hat, you know, it feels like if there ever was a moment to invade Taiwan,

it would effectively be now. And and

be now if you had if you had control of the military, but yeah, that you had if you had generals uh who were capable of running the military, but a lot of a lot of the the senior generals have been purged. And so,

and so there's really no one there's no one with there's no one with combat experience left either, right?

Uh well, I'm not sure they had a lot of combat experience to start with.

Yeah, but at least uh at least, you know, any anything. Um but uh

anyway, I uh I am not a China expert, but uh I seriously doubt that it would be a good idea to invade Taiwan. Um unless you're extremely desperate um to create havoc, but

but it wouldn't go well for anybody.

Totally.

Let's focus on just climbing the buildings in Taiwan. That's what I want. More climbing of the Taipei 101, more entertainment, less uh less aggression in geopolitics. That would be my my my pick. Uh anyway, uh back to the important stuff. You your career, MetaMask, Ethereum, uh be amazing dog, by the Wow. I don't know if we've ever had a dog guest somehow.

I don't think so. What's the dog's name?

Uh, it's Liilcoy. Uh, she's uh she's listening.

Amazing.

Good.

But, uh, glad to have you.

Anyway, yeah, take us back take us back to the beginning. Where does the story begin?

Um, sure. So, um, go way back to the beginning. So, my background is technology. Um I spent a bunch of years uh doing machine vision and AI neural networks a long time ago in the 80s and 90s um and lots of software engineering over the years and uh and essentially um I was managing people's money um and doing technology and uh and got very concerned that there was just too much debt in the system um and that we were probably moving into something like a japanification of the American economy and the global economy and that was uh 2003, 2005 etc. Um and uh essentially um what I think I was picking up then was that we were moving into the end of a super cycle. um a Strauss and howl like super cycle. Ray Dalio uh described super super cycle uh where uh the monetary regime and the generational um cycles um uh and this particular super cycle uh started maybe 80 90 years ago at the end of World War II. Um uh and uh essentially um with the rise of technology, with the dependence on centralized institutions uh where trust has been lost um uh with uh lobbyists controlling politicians and and setting policy and uh the financial industry offshoring u a lot of u infrastructure in the US and gutting uh the middle class. Uh we've essentially moved into a period uh where um where it's things are um in need of a change. Um

wait, so that was in the early 2000s and we like fixed all that stuff.

Yeah. Yeah. To totally fixed it. We're fine now. So So what I was picking up on is actually happening right now. We're careening uh towards the brick wall. Um and the end of the the super cycle is here. Um and the start of the next super cycle um is likely in the first couple decades um it's likely to look like uh moving the global economy onto decentralized rails um projects like Ethereum and other related projects and uh and a lot of uh productivity um enhancements in AI. I I think AI is going to supercharge all aspects of science and and we're going to be living in a a world that is indescribable at this point by by say 20 years from now. Um, I am an optimist and an idealist and I think even though we're moving through incredibly difficult times. Um, and I think that's kind of necessary because things are so broken uh that uh they have to kind of fall apart kind of collapse in order to make way for for better systems. Um and so I I uh do believe that the better systems uh will appear and uh uh and that people will essentially have much greater uh agency uh economic, social, political, financial agency um in a world u that is saturated with decentralized protocols. Um, and in a world in which everybody can essentially level themselves up in real time um by interacting with their

uh their AI agent, digital twin, mentor, tutor um partner.

So that's what that's where I think we're going. Uh

I love it. There's a lot of there's a lot of there's a lot of places uh there's a lot of places we can go from here.

Yeah. I mean, I guess what was uh what was dissatisfying about other financial solutions to the end of the super cycle that's been USD denominated, gold, silver, bitcoin, other countries, currencies. Uh why Ethereum?

Um so bigger picture um you can look at it from two perspectives. One is the consumer and one is the nation state. Uh so from a consumer's perspective um we don't have a lot of agency. We don't have a lot of control over our finance finances. Uh the system is kind of set up um to um exploit um the the naive um user or the naive investor. Um I think uh uh with the business cycles that that we continue to see um that are driven by monetary policy um liquidity situations uh we end up seeing cycle after cycle uh where um we get a lot of irrational exuberance in the system and main street gets sucked in and uh um and there's a blowoff top and and there is harm um to to the more naive uh investors and uh uh I think uh with the rise of AI which seems like it's going to take um people's jobs I'm actually convinced that's going to generate a lot more jobs than it takes um with loss of trust in centralized institutions um with this constant cyclicality uh in the financial industry um uh it the the kind of nihilism that we've seen um in uh the Gamestalk space and and memecoin space um is um sort of symptomatic of the frustration I I think that uh uh that people feel uh from a nation state perspective um things have to change. Essentially, America was the last um last military, the last navy, the last uh industrial infrastructure standing after World War II. Uh yet it perceived the Soviet Union and communism as a threat. And so it pursued a strategy of containment and it was willing to essentially pay the bills uh for NATO to uh to protect uh the world against the communist scourge. it was willing to um police uh the oceans uh with its navy uh to enable um to you know to eliminate piracy essentially and enable uh lots of trade. Um and uh that went really well for America and it went well for the world for quite a while. But uh eventually it got to the point where America was uh probably paying um a lot more than it was comfortable paying. it was uh essentially gutted of its uh of a bunch of its industrial complex. Um and so the the reformatting of trade relations uh right now um is uh a symptom of that and it's something that's not just been happening under the Trump administration. It's been happening uh for maybe a couple decades even call it at least a decade. Um and so what the US has to do uh at this point um because there's a lot of debt in the system uh Japan is uh is in a terrible position right now and and Japan could uh uh potentially be um catastrophic for the global economy if uh they don't figure out uh uh their their monetary and uh and bond situation. Um and that's going to be a very hard problem to solve. Um but the US uh essentially uh needs to run the economy hot uh as Scott Bessant indicated. Um so they're looking to to lower interest rates. They're looking to um promote our technology, blockchain technology, uh to enable the economy to run faster. Um and they're looking to dollarize the world uh essentially for free uh with the use of stable coins. So, uh it'll be incredibly valuable for um for citizens around the world to have stable stores of value uh in the form of a US dollar backed stable coin or appreciating uh stores of value in the form of uh Ether and Bitcoin and and some other tokens. Uh and so

how do you how do you process these two things right now? So, you have Americans that are like, I don't want dollars. I want digital assets. I want silver, gold, I want to own the Mag 7, etc. And then internationally, it feels like there's billions of people that are like, finally, I can get easy access to dollars in the form of stable coins.

And

part of that is just Americans have always had the benefit of easy access to dollars and we understand that we're inflating the the currency and there's a incredible amount of debt in the system and and uh just weariness around that. But how do you square those two things?

Um well, different situations. Uh people in in different countries that uh um that have extreme inflation or uh a woman who does her job and uh and has her um her salary or her compensation stolen by her brother or or family members. um those kinds of situations uh can benefit from access to uh to tokens in your own wallet uh that you're fully in control of. Um um a tyrant in in a nation state that is uh exploiting uh the population or financially repressing the population because of excessive debt um doesn't have a lot of power uh if everybody can move into intokens that hold their value. uh in the US uh you know things are are not um too difficult um in in those terms. Uh but the US um is still very interested in maintaining strength uh in its currency. Uh there are different ways to do that. Um the US uh in order to reformat trade relations uh does want to weaken the US dollar or see the dollar weaken in terms of um exchange rates. uh but it wants to maintain the primacy of the US dollar uh and the political power that that holds um by essentially having you know essentially dollarizing the whole world uh via the stable coin phenomenon. Um China, many other nations, Japan's going to have to uh start selling treasuries potentially because uh um essentially you can repatriate your money in Japan and and get decent rates um pretty soon. Um, and so we're going to see a reformatting of uh of uh the carry trade um and uh the Japanese economy. Um and that that just means that we're not going to be able to rely or the US isn't going to be able to re rely on foreign investment in the form of buying treasuries uh into the US. And uh we're going to need that for a while longer. Maybe uh I don't know if we hit 5% or 6% GDP for uh a couple years in a row, we can grow our way out of uh this thing. But uh in the meantime, it's pretty great to have a lot of stable coin companies around the world. They'll be located in the US and they'll be located in other parts of the world um that are essentially using treasuries uh to backs stop their stable. How have you processed uh the uh government's you know relatively recent embrace of digital assets are obviously very excited about them uh in the admin uh the market structure bill thought we'd have more clarity last week there's kind of infighting to some degree what's your position on uh the current regulatory regime what can what can the US uh do in your view that would better serve national security uh and just national interests as well as uh and monetary interests as well as kind of the the interests of the industry.

Um so we are so happy that the United States of America isn't trying to kill us anymore. Uh it's a it is a totally different uh um situation uh from uh from what we were in 18 months ago. Um so um Paul Atkins is doing amazing things u in the SEC. um were um really impressed uh with the openness of of the Trump administration uh of the SEC, of the CFTC. Um and um we wish that um politics wasn't quite so partisan around these issues. these issues are are so fundamental uh to the well-being and growth um and future prospects of the United States and the world. Um essentially uh in the era in the late 90s and and aunts um uh the United States saw uh the internet and the web technologies as uh as strategically incredibly important and they set up safe harbors and they enabled uh the industry to establish itself and thrive. Um and America won the internet essentially. America um has the premier technology companies that that drive the internet. Um and um that worked for the internet protocols. It worked for the web one protocols. It worked for the web two protocols. Uh and now blockchain is web 3. Um it's the decentralized web. Uh and America um has been a little slow. Uh but it is getting its act together. Um, and uh, I, you know, there are a lot of people, smart people on the Democratic side and and smart people on the Republican side, um, that get the technology. Uh, but, uh, I think there's a little bit too much infighting. Um, um, so the, uh, the ethics issues are are funny ones uh, for um, for the Democratic party to raise. Um uh so if there are e ethics issues to be addressed, they should be addressed uh across all assets, not just uh crypto assets. Um uh yield for stable coins. Um you know, the lobbyists are are winning that one uh on behalf of the banks. It would be uh great if people were able to earn yield on their own money uh in any situation. Um, so that's it's fundamental to our industry and and I hope uh hope that's going to uh get through in in some decent form. Um, DeFi is complicated. No doubt about that. Uh, I believe that we will figure out DeFi. Uh, our legislators will figure out DeFi. Uh, it is critically important that we don't get painted into a corner um, uh, that harms and and sort of straight jackets our industry for um, for a period of time. Uh what about on the institutional side with like what's your read on current institutional adoption? It's main obviously completely mainstream now. It's hard hard to find any financial institution that's uh that's at all relevant that doesn't have some type of uh digital asset division. Uh but but how have you been processing it? What what what uh what are you what are you seeing that you want to see more of? All that kind of thing.

Yeah. Uh so 2026 is going to be an absolutely epic year uh for Tradfi on DeFi. Um so our industry continues to grow. We're we're doing this sort of steady slow exponential growth um all the proper DGEN stuff um wallets um layer 2s uh D5 protocols uh etc. Um and I I think uh Trad is going to come in and just cause quantum leaps uh of growth in our ecosystem uh by bringing tons of capital, giant balance sheets um and forcing functions. Uh so um for instance in staking um we're uh we've written a uh an Ethereum improvement proposal designed to to speed up uh the execute um on Ethereum uh because financial institutions need that. Um ETFs need that. Uh and so um we as as a company um got some attention um so this is consensus got some attention um because uh um the CEO of Swift uh at their annual meeting Cyos announced that we were building uh Swift uh ledger um and and we're building uh the first prototype of that and it it's a a large multiaceted multi-year project um but that got a huge amount of attention uh for uh for our company. Um and so um that was in the middle of of a period where the Trump administration displaced the Biden administration. Um Atkins displaced Gensler. Stable coins were already starting to to get very very interesting and exciting uh to different kinds of organizations. And we got uh uh the stablecoin act uh genius. Um and that caused uh best to describe it as a panic uh amongst many banks around the world because they were worried that uh that they were going to lose a significant chunk of their deposit base. Um and it caused a bit of a panic in Swift and uh and they needed to to formulate a solution. Well, the lo the logic there just for uh correct me if I'm wrong and I want clarity for people that are watching that aren't familiar is if you can get yield on stable coins, why would you keep your money in a bank, right? If if if uh or or at least it introduces some very very real competition in a in a market that's been heavily regulated.

Exactly. Or even if you can't get yield on stable coins, you can uh um you can put your money in a money market fund. um essentially on a blockchain. Uh you can access it from your your MetaMask wallet which you fully own and control. Um you can move uh that yielding token uh into a non-yielding token if you want to use the MetaMask debit card uh to pay for something. You can do that in real time. Uh, and so instead of giving your your paycheck over to your bank so that they can earn yield on your back all month long, um, you essentially put your paycheck uh into uh into Ether or into DeFi on Ethereum or on our our linear layer 2 chain. Um, and you're earning um pretty good yield uh all the way up to the moment that you're paying for something um on your debit card. So

how do you um h

how what's your view? I think some people that maybe have a tradi background uh that that uh have processed the rise of of digital assets and decentralized blockchains uh where the cryptocurrency industry originally came out with very disruptive language. There was this focus on kind of upending the system, creating a new system. And you talked earlier about you know the changing kind of world order and the end of this cycle. uh and it feels like this all these things are coming together at an interesting moment in time where uh crypto is embracing tradi you know we have companies going public embracing the biggest financial institutions in the world but from your view you want to then scale you know beyond uh uh ultimately eclipse the industry at least that's kind of the general feeling that that I would get but how do you how do you hold those those uh two things at once and that uh crypto needing to embrace tradi and traditional finance in order to um uh scale beyond it.

So I I got into blockchain in early 2011 uh when it was called Bitcoin. Um and that was a very different vibe. Uh that was a crypto anarchist vibe. Um that was people trying to protect their assets and very very financial uh minded actors uh freedom privacy-minded actors. Um and um when Ethereum formed um in early 2014 um it attracted builders. Um it was essentially hey this this new form of trust decentralized trust that Satoshi invented should be applied to more than just um certain aspects of money. Uh and so we should really make use of this um highest grade form of trust um to undergard all of the systems on the planet. Uh and so uh Ethereum was all always about builders. It was about building platforms on which uh other people could could rearchitect the different systems of the world, different businesses. And so um I don't think there's uh inconsistency um because we've always felt that uh unless we onboard as much of the world as possible uh to decentralized rails um then we we won't have uh have optimized what we can do. Um so we are not Bitcoin maximalists. Uh God bless them. Uh but we are decentralization maximists.

Last question. IPO update. What are you thinking? A lot of stars are aligning. Anything you can uh get us up to speed on there?

Are you guys IPO? Owen, that's great.

Congrats. That's very cool.

That's enough of an answer. I got you.

Uh, very cool. Well, I wish we had more time. There's a bunch of other stuff that uh I'd want to get your thoughts on, but uh we'll have to have you back on again soon. Thank you. Thank you for joining. And um yeah, there's so there's so much going on

right now that I I can tell you you uh you have a lot of thoughts on. Um so anyways, thank you for joining. It's great to meet your dog as well. And we'll we'll talk soon.

We'll talk to you soon.

Byebye.

Cheers.

Byebye.

Cisco on February 3rd, the Cisco AI Summit brings together leaders from Nvidia, OpenAI, AWS, and more to discover the future of the AI economy. The whole thing will be live streamed and we'll be there for a stream. Our