Introduction Voiceover: Welcome to The Story of Money by YAP Cast where we explore the past, present, and future of money. I’m Samantha Yap. Intro CTA - Spotify Follow The Story of Money by YAP Cast to learn more about where money is heading. Intro CTA - YouTube Subscribe to The Story of Money by YAP Cast to learn more about where money is heading. In today's episode, I’m continuing my conversation with Nick Johnson, a prominent figure in the crypto space and the founder and lead developer of Ethereum Name Service or ENS. Before we get into that, let's talk about sovereign identity which we discussed in the last episode. Sovereign identity is a way for people to have control over their own digital identities. Think about it this way: with sovereign identity, you’re in charge of your own data. You decide what details you want to share, and more importantly, you choose who gets access to it and when. So, whether you're signing up for a new service or engaging in online activities, sovereign identity empowers you to be the gatekeeper of your own information. It's a game-changer that flips the script and puts you in the driver's seat of your digital life. Last week, we finished the episode discussing Nick’s perspective on the adoption timeline of sovereign identities. Today, we continue our conversation with Nick and dig deeper into this topic. We'll talk about the challenges and successes of working with a Decentralised Autonomous Organization (DAO), the impact of controlling our own sovereign identities, and what that means for enabling seamless transitions between platforms. Nick also shares his dreams for the future of ENS. And we kick off with a big question: Do or should the people even want a Sovereign Identity? Samantha Yap  00:00 Nick, thank you so much for joining us on YAP Cast. We're really excited to have you today. Why Sovereign Identity? Samantha Yap  22:38 Yes. Do you think people would have been-- Naturally you've built this but do you think people would want something like this? Or do you think that people should want to be able to have a sovereign identity? Nick Johnson  22:56 I think it's, it's desirable. Partly because of the risk that you do lose access to your identity and plenty of people, you know, we probably all know somebody who's had some error or some problem with access to their account, and you can be the most inoffensive, kitten loving person on the planet and still get hit by something entirely random because a system, you know, mistakenly tagged you as someone else with a similar name, or because you know, it took your post, that was absolutely fine and, you know, some AI filter somewhere said, Oh, it looks too similar to this forbidden thing. Or, you know, even because someone took a dislike to you and set out to mass flag everything and the filtering systems decided that where there’s smoke, there must be fire. It's not difficult to find people who have been disenfranchised by this and so I think on that hand, it's quite an easy selling point. I also think that even if you never experienced any of that sort of thing, one of the advantages of a self sovereign identity is that you can take it with you, you can take it from one platform to another, and you're not at the platform's mercy in terms of whether they'll let you export your friend lists, and, you know, reuse your handle and all of those things when you move somewhere else. Samantha Yap  24:22 Yes, no, that's good point. Yes, you've used examples like you know, your passport and driver's license and you know, just all your details and even your social media profiles. How do you think sovereign identities can help safekeep and store money for people? Nick Johnson  24:42 I think that the key thing about a sovereign identity is that it- it rests in you having some cryptographic credentials that you provably own and that no one else can access and those are the same credentials you would use to store or transmit cryptocurrencies and so if we can solve one problem, will we've effectively solved both. What are the risks of sovereign identities? Samantha Yap  25:07 And do you think there are any risks, you know, associated with the growth of sovereign identities in- in terms of that, you know, one-- There could be a single point where all a person's data and life on the web and how much money they have, how much crypto they have, and all their passwords can be found out by cracking into their own-- Into their identities. Is there- is a risk with that? Nick Johnson  25:41 It's-- it's a definite risk.  Yeah, and in some ways, it mirrors the same risks you see with centralized platforms like Google. You know, if someone can gain access to that, or if you lose access to that it can have catastrophic consequences and systems like social recovery, where you nominate some people that you implicitly trust who collectively can help you reconstruct your identity or move to a new one can help with that. But to be sure, it's one of the biggest challenges and I don't think there's a silver bullet on either side of the debate, really. You know that we have the same problem, whether it's centralized or not, is how do you prove the person using this identity is actually the one who created it? Who it should represent and how do you prevent these sort of things? And I don't think we'll ever have, you know, a silver bullet for that. Samantha Yap  26:34 Yes. Sorry, I've just lost your image but I hope it's recording where you are. Can you see yourself and can you see me as well? Nick Johnson  26:44 Your video has been dropping in and out, but it does say 99% uploading so. Does a sovereign identity help DeFi? Samantha Yap  26:49 Okay, cool. I guess Riverside’s Fine. Yep. Cool and then moving on? Um, yes. So what- What potentials do you see with sovereign identities and also the decentralized, finance tools, applications, exchanges and activity growing? Nick Johnson  27:16 Sorry, can you- can you reword? Samantha Yap  27:19 Yep. So yes, I'll reword that. What potential do you see sovereign? I tend to-- So what role do you see sovereign identities playing in the development and growth of the decentralized finance world? Nick Johnson  27:36 I think that building a system that is focused only around finance, and- and not around who you are, and who you know, and what you do is barren. And I think you know, because these tools complement each other so well, because they rely on the same basic requirement for some form of identity, it very much makes sense that these things are going to come out together and it does enable, you know, better usability and more integration platforms, like, you know, you go out to dinner, and you want to split the bill with your friends. Well, that's a lot easier when you all have these identities, you can easily enter or scan than if you're all using the latest decentralized finance but you're still dealing with big long account addresses. Samantha Yap  28:27 And yes, what like- what are lessons that we can draw from DeFi. You're making DeFi and TradFi so DeFi kind of being more like efficient and seamless than TradFi. Yes, what do you have a opinion on that? Nick Johnson  28:51 I think some for better or worse, DeFi exposes, with its transparency, how things work behind the scenes, and sometimes that can be for better because it lets you see that these things, you know, how they're actually built and what your trust assumptions are, and you know, how they could potentially fail. On the other hand, it impacts financial privacy, it also makes it a lot more difficult for people to put together Byzantine schemes that look legit, but aren't. So I think on the most part DeFi’s transparency, transparency in DeFi, you know, decentralization benefits that some people may be put off by the distinct nature of it, I guess and I think the solution to that is to get people using it and discovering its advantages. About ENS DAO Samantha Yap  29:53 Cool, well, um, then to our final part, you know, moving into, you know, our building in the new digital world. You're a part of ENS Labs with- which works with the ENS DAO, Decentralized Autonomous organization, and the overall .eth name project. It's one of the most active DAOs in the space, you know. How is the experience engaging, working with a DAO? How has that been so far? And- and how has that been different to what your-- You've been used to in the past working with big tech startups? Nick Johnson  30:33 I was certainly nervous about handing things over to a DAO. You know, we always intended to progressively decentralize, but you always wonder, is this the right time? You know, what will they do with this power? What will they do with this money? And so forth but I've been really encouraged by how it has worked out. I expected a lot of circular committees arguing over the colors of bike sheds and sort of told myself that, you know, it was worth it for the decentralization and for the- the independent governance and the ability for people to have a voice. It's been a lot less of that than I that I really feared. I've been really impressed by how, how healthy and how functional and- and- you know, basically, sort of just how well it's all works, really and it's, you know, more or less, as a result of people chipping in where they needed to have people with expertise in other organizations coming in and helping build it and thanks to the effort of some of our own amazing rockstars, like, Alicia, we have, I think built a DAO that is independent of ENS labs, and is able to get serious stuff done and, you know, fund serious efforts and so forth, and has come up with its own initiatives that have been extremely productive. So I was nervous, but I think it's worked out well. Samantha Yap  32:08 Yes, I mean, congratulations. I think that's also part credit to you and your- your- you building this and your influence as well. Yes, I mean, can you talk us through because the ENS DAO, it you know, ENS had an Airdrop it launched. You know, these tokens, and it's the DAO kind of amassed a lot of wealth. I don't know what the figure is now but it was hundreds of millions at a point. What did you make of it all when it all happened and grew to this size? Nick Johnson  32:43 So the DAO is responsible for administering ENS, and it gets all the revenue from ens.eth names. So right from the beginning, all of those registration fees were set aside in the multi-sig but it as the sort of one of the multi-sig keyholders, we didn't really feel like we had the remit or the legitimacy to spend that money. So it was all sort of sat there waiting for the DAO to come along. So once the DAO came along, it already had a pretty substantial war chest just from previous registration fees and the popularity of the Airdrop and the amount of attention that brought to the ENS and the DAO, you know, help further boost registrations, I think which has brought in even more. It's, you know, it's been interesting to see how it puts it to use. I've been glad to see that, you know, the working groups dedicated to expanding the ecosystem and funding public goods haven't been afraid to do that, you know, they are actually putting the Treasury to use. But on the other hand, we also have a very long term view of things. So we've established a endaoment, whose goal is to become self-sufficient or for the-- To allow the DAO and become self-sufficient, so that when it's grown large enough, it will be able to fund ongoing operations just out of interest and returns meaning that the DAO isn't always, you know, constantly dependent on- on a certain rate of new registrations coming in and so, you know, it's been- it's been quite encouraging seeing just how much the community has trusted us with in terms of resources, but also how well the DAO has put that to use so far. Samantha Yap  34:31 Yes, it's fascinating to see because it is one of the top and main examples of a DAO, you know, working really well. DAOs have been known to have difficult voting processes for budget allocation and even you know, management of people and resources in time. So, how has-- How have you seen ENS DAO do well in this area? How does it, you know, vote for the right budget and then get things done? Nick Johnson  35:05 So- So voting is something we put a lot of attention into from the beginning, and also just how proposals should you know what the proposal process should be and how it should work its way through the system and so on. I think we've done a reasonable job up front with- with setting levels for quorums, with setting norms around how governance proposals get advanced through the system, and voted on and so forth and so far, it's worked fairly well. We do have the same challenges that every other DAO has but, you know, keeping participation rates high, you know, keeping, you know, new people entering the system and delegating their- their votes to active delegates. But it's been quite gratifying to see a lot of active interest in becoming and remaining a delegate, and in participating in things like the working groups, stewardships and so forth. We've actually got elections for that going on at the moment. Sovereign Identities and Web3 Samantha Yap  36:01 No, that's great and, yes, so that's kind of all my questions. Just got one more on making identity, you know, more private and secure. If we can control identity and date-- Data associated with that, you know, how will that impact and shape the world around us? And especially if we move into the Web3 space? What would that look like? You know, just big picture thinking here. Nick Johnson  36:39 I think control over our own identity for a start threatens the monopolies of large platforms like Twitter, and Facebook, because they rely a lot on switching costs, on keeping people there because everybody else is there and when it's easier to take your identity with you, when you can redirect yourself to a new platform, and people will know where to find you. A lot of that goes away. So they will have to compete a lot more on being the actual best platform rather than just being the one where everyone else is. Excuse me and, you know, I think aside from that, it will just enable new decentralized applications that take over some of this functionality, you know, things that we're seeing now, ranging from- from Mastodon to Warpcast, that are attempting to- to build such platforms without reliance on a single provider. Samantha Yap  37:41 Yes, now that—Yes, you make a good point. It will- it will turn a lot of the tech giants on its head if we start owning and controlling our own data and so, yes, and, you know, just two more questions. What do you think is stopping people from- from owning our own data today or from- from pushing and striving to have sovereign identities today? Nick Johnson  38:09 I think a lot of people aren't aware of the need and benefits for- for owning their own identity until it sort of hits them in the face. I also think a lot of people don't really know that there's an alternative out there and of course, the tech itself is- is quite nascent, and- and needs a lot of development. You know, you can't practically say to somebody stuck on Facebook, oh just go do this other thing, you know, instead, because they still have that walled garden, they still have that enormous switching costs to keep people there and one of the things that will help is building new platforms, you know, like Blue Sky, for instance, which is, you know, federated in a meaningful way and having people just sort of reach a critical mass to switch and at that point, it becomes easier to switch again, or to use a different provider and so forth and some of that may actually come from- from governments, requiring that providers provide some level of portability. You know, we've seen actually good results from data portability laws where Twitter and the like, have to let you download all of your tweets and so forth, you know, any data they hold on you, which is a start, but it doesn't actually let you take your identity with you. Future of ENS Samantha Yap  39:28 And cool. My final question is, what is your dream for the future of ENS? Nick Johnson  39:36 We've always had sort of three increasingly outrageous visions for ENS. The most basic one is that nobody should-- Sorry. The most basic one is that every application should accept ENS names anywhere they accepts an address, and we're not quite there yet, but we're pretty damn close. You know, it's got to the point where people are surprised when it doesn't work rather than just assuming it won't work. So most applications do and when they don't people sort of get on their back, you know, why aren't you supporting ENS addresses here? The second, slightly more difficult one is that end users shouldn't have to deal with Ethereum addresses or Bitcoin addresses or IPFS hashes any more than they have to deal with IP addresses. You don't enter an IP address to go to Google, you shouldn't have to enter a contract address or an account address ever unless you're a developer and that's going to take a while longer, but we are on the right track for it. And the really pie in the sky keeps us going at night, off on the horizon thing is that everything is named via ENS. Everything that's named today via DNS, everything that's named, you know, not named effectively, you know, things in the real world, just everything uses the ENS hierarchy and obviously, that's a bit more of a stretch goal. Samantha Yap  41:04 Yes, that's big dreams and yes, I think you guys are on track and you are-- I mean, yes, the adoption of ENS has been just amazing and incredible to watch and, yes, it’d be fascinating to see where ENS goes with where money heads as well, especially with crypto and how that underpins the development of new industries. So, thank you so much for your time, Nick and yes. Is there anything else you wanted to kind of touch on or is that-- ? Nick Johnson  41:38 I- I think that you covered it pretty well. Samantha Yap  41:41 Awesome. Thanks so much for your time, Nick. This was great. Nick Johnson  41:46 Thank you. It's my pleasure. Outro Voiceover: On this episode, we had the pleasure of talking to Nick Johnson, the founder and lead developer of Ethereum Name Service otherwise known as ENS. We discussed the transformative potential of sovereign identities in decentralized finance and the challenges and opportunities that come with it. Nick shared his insights from working with the ENS DAO, and how they've successfully implemented voting processes and resource allocation. We also talked about the impact of owning and controlling our own identity and data, and how this could disrupt the dominance of tech giants like Twitter and Facebook. Of course, no conversation about sovereign identities would be complete without talking about the barriers to adoption. Nick highlighted the need for awareness and alternative platforms, and we also talked about the exciting future of ENS. So, what did we learn? Well, we learned that sovereign identities have the potential to revolutionize the way we interact with the internet. They could give us more control over our personal information, and they could help to create a more open and democratic web. But there are challenges to overcome. We need to raise awareness of sovereign identities, and we need to develop alternative platforms that support them. But if we can overcome these challenges, sovereign identities could have a profound impact on the future of money and crypto. Outro Spotify Thanks for listening to this episode of YAP Cast. I’m Samantha Yap. Rate and follow this podcast to join us for another thought-provoking episode of The Story of Money by YAP Cast. Outro YouTube Thanks for listening to this episode of YAP Cast. I’m Samantha Yap. 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