#14: Alex Mashinsky on Creating the DeFi Industry

Alex Mashinsky is the CEO of Celsius Network, a DeFi platform that offers interest-bearing savings accounts, borrowing, and payments with digital and fiat assets. Celsius shares up to 80% of revenue so users can earn up to 17.78% APY. 

In this episode, we discuss:
- How Alex built three unicorns (billion dollar company)
- Celsius Network
- Earning yield on your crypto
- VOIP
- Cryptocurrency vs. stock market 
- Bitcoin price predictions
- How Alex created DeFi
- The rise and fall of fiat currencies
- Decentralized Buddhism 

Celsius 
- Twitter: @CelsiusNetwork
- Website: celsius.network
- Instagram: @celsiusnetwork

Alex Mashinsky
- Twitter: @Mashinsky

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Transcript

Matt Zahab: 0:07

Folks, today's guest needs no intro. This gentleman is going straight to the Hall of Fame. Ever heard of VoIP? Voice of IP? You know the thing we're using right now to record? He created it. Ever heard of DeFi? Also created it. Ever used Wi Fi and the New York City subway system. You can thank him for that too. What about receiving interest on your crypto? That's also today's guest. This man is a true crypto pioneer and Trailblazer, Present day, he's the founder and CEO of Celsius, the world's leading DeFi platform. I'm very pleased to welcome to the crypto news podcast, Alex Mashinsky. Alex, welcome to the show.

Alex Mashinsky: 0:47

Thanks, Matt. Thanks for that introduction.

Matt Zahab: 0:49

Very, very happy to have you here. I always do, a I tried to do some research on my guests before they jump on and one, I have always been a fan of you, not trying to blow smoke, but I have been a huge fan you for a while and just even in the last couple days during research holy shit have I learned a lot. So thank you for that. Kudos, you're the man. couple of really interesting things before we get into Celsius, the bread and butter of the show. I want to talk about a little bit about your past. I think good place to start would be, as you're in New York right now. And as we can hear the siren sort of buzzing in the background, I'd love to talk about how the heck did you get Wi Fi in the New York City subway system?

Alex Mashinsky: 1:26

Sure, yeah, it's a long story, I'll give you the short version. But basically, my best friend died at the towers September 11. And when those towers collapse, they'd kind of shut down the entire subway system in New York City. And it took years to kind of rebuild all that stuff. And obviously, a lot of people died. And, you know, hundreds of 1000s of people got stuck in the subways without any communication without any. Because back in the day, we only had payphones at the stations, that was only kind of connectivity. And you would stand in line and wait for five guys to make their call before you had any reception. Or you had to leave the station and pay the tall to get coverage. So I decided, I said you know what, I'm gonna do this for the city, everybody's helping with different things. I'm gonna get this project done right and it took several years to just convince the city to even think about the idea of allowing an external vendor to put the signaling in the subways, the New York subway system is the largest in the world over 300 Underground stations. And they just basically kept telling me, we don't need it. You know, terrorists may use it to trigger bombs, we're not going to let you run it. And then they decided to open it to bid and like 200 companies applied to build it, right my idea. And including all the carriers getting together, at&t, Verizon, Sprint, T Mobile all got together and bid against me for this concept of building the system. And we got all the way to like 2007, where we finally won the award, the MTA, which operates the systems, decided that the transit wireless, which my company had the best proposal, it had the least amount of disruption for a while we're gonna do the build out then it costs the least amount of money. And basically, we had to foot the bill, we had to pay like $300 million to build it, and hope that they will come and they are the four carriers because I can't provide the service. The signal belongs to at&t. My job is just to rebroadcast the signal underground. And obviously, when we build it, the carrier said, we're not going to put our service on you. We hate you guys. Because the subway system is like a gym membership. You want to basically when they, when you are an at&t customer and you're underground without reception. It's like you're not going to the gym, they get paid for free. You're the monthly fee without using the service. Well said. So we didn't just put Wi Fi we put the 5g in the 4g services as well. And today, 8 million New Yorkers get it for free. Basically you we got the at&t Verizon sprint to foot the bill and all New Yorkers and all tourists gathered for free. So I love that, you know, I'd say it's kind of similar to what we're doing in Celsius network where we got the institution to pay 10 million in interest a week to 650,000 users so Voice of IP, the subways, Celsius all they all have the same idea behind them of doing good and doing well.

Matt Zahab: 5:11

You're the true Robin Hood. I don't know why Vlad thinks he's Robin Hood, you know, CEO of Robin Hood. You're the true Robin Hood. Vlad, sort of, you know, logical guy. Hopefully we can get him on the pod, but he sort of looks like Lord farquaad. And you know, I saw Dave Portnoy rip him on Twitter. I don't know if you've seen that. But

Alex Mashinsky: 5:27

He definitely can't compete with Celsius because we paid yes over $500 million to our community. And he might give you the service without charging you a fee. But he's not paying anything out. He's keeping all those all the income that is generating from sec lending all to himself

Matt Zahab: 5:45

Yeah, and all this recent Doge bag that he's secured as well, that stand right in his pockets. You touched on Celsius, which we will definitely get to, I want to go back to voice over IP as well VOIP. Now the software we're using right now, using VOIP like, is it not weird to have created so many massive tools and pieces of technology that people use every single day? And like, to my knowledge, not a lot of people like you know, no one gets on the subway and it's like, Oh, thank God for Alex or no one uses zoom and is like all thank God for Mashinsky, like said no, we're not how does that all play out?

Alex Mashinsky: 6:18

Well, I can tell you my own kids don't believe that right there. Like they keep telling me like, Dad, you're not that cool. You didn't create Skype, you know, you didn't create zoom. So I didn't create Skype or zoom I created the underlying technology, the protocol that we're all using, because it's open source, right? I mean, we effectively gave it to the world, right? I mean, something like 5 billion people use it every day. For all voice communications and back in the day, it definitely sounded like a crazy idea. Because the entire internet back in 1994, the entire internet ran on the phone network. So if you went to people and you told them no, you don't understand the phone network is going to run on the internet, they're like. Look, you just don't understand how things work, go back to the books and learn and you'll see that everybody's using a modem to dial in to the internet. But to be successful at innovation, you have to project yourself into the future, you have to imagine that you living in 2030 and say, Okay, well, what does the world look like? What does technology look like? What does my phone or my communication look like? And if you can do that, then you can create that new world in your head. And then you try to bring everybody there, you try to bring the rest of humanity there. Now, sometimes humanity joins you and sometimes it doesn't you you spoke about my successes, these are the three unicorns that I created. But I also created another company called ground link, which was Uber before Uber. And our focus was on the drivers. We wanted the happy drivers equals happy customers and Uber said no, no. Happy customers equals unhappy drivers, if we just subsidize the rates for the customers for the yuppies, who zip around and Uber every day, and we don't care how much we pay the drivers, the drivers are disposable, you know, so and they burned through, I don't know $16 billion worth of subsidies and took the company public. And it's not always the best idea that wins. Many times, if you have enough money, you can take a really bad idea and make it win. Obviously, Uber has never made $1 of profit in his history. And it's an 11 year old company. So you know, being in the right place is very important be the right place at the right time. And having the right technology not being too early, not being too late. And then adoption, you know, if you get mass adoption, you win the race. If somebody else gets a mass adoption, even if their model is wrong or broken it doesn't matter, right as they get to the finish line first and we get to live with the consequences, you know, so there's a lot of bad example of mass adoption. You know, I think Facebook, you know, like a lot of others that are definitely not helping society.

Matt Zahab: 9:31

So speaking of mass adoption, your company Celcius right now, that is one thing that is being mass adopted, DeFi lending platforms receiving the incredibly high interest rates and the general public realizing why am I getting soaked from the bank? Why am I leaving 1000s of dollars in the bank for them to give me you know, half a percent or 1% while I can go over to Celsius and get you know, 10% on my crypto, like it seems like a no brainer. Before we get into that and talk about the mass adoption for the general public. When I told my parents that I was speaking with you, and you know, they're like, tell me about Celsius, I told him everything my grandma was on the phone to was a three way. She's like, there's no way you're gonna get 10% like, no, it has to be fake. And I'm like, well, no, it's true. But that's a great question. So, my question to you is, how does that actually work? How can you give such a high percentage of interest?

Alex Mashinsky: 10:19

Sure. So it's a great question because if you, anyone who will tell you all it's a company secret, or it's a trade secret, I can't tell you, you know, is not gonna win the masses. Right? I think it's very important that people hear and understand the exactly how the yield is created. Because then they can entrust their savings and their financial future away from the bank, you know, we always joke that my job is to unbanked the bank and bank the unbanked you know, like that's

Matt Zahab: 10:51

Love this slogan, love the slogan. Unbank yourself.

Alex Mashinsky: 10:55

Exactly. So, yield is actually created around us all the time. When you give your money to the to your bank, they go ahead and create yield right they issue loans, they do all kinds of like arbitrage and other transactions in the financial markets by effectively using the capital you give them. So, because you effectively agreed to give him your money for free anything almost anything they create out of your money through loans or rehypothecation or arbitrage or market making all these different financial activities, sec lending securities lending which is what Robin Hood is doing mostly right then the order flow management and so on. So all these things are functions that traditional financial markets do, its just that these companies you know, the Goldman's the Morgan Stanley's the the JP Morgan's, do not share with you, the depositor the money that they create. Now, we know, banks make tremendous amount of money two weeks ago, all the banks reported their quarterly numbers. And guess what they reported all time record profits. So and one after the next they all run to Wall Street with their SEC filings and say, hey, look at me, I made 16% return on my capital. Look at me, I made 17% 15%. So most banks are between that 12 and 18% range. So they take all this money and they pay it to their shareholders. They pay it in the form of dividends, or they pay it in the form of stock buybacks. So every bank, Jamie diamond, could have two weeks ago say, okay, enough is enough of being giving too much money to the shareholders, let me turn around and give half of the profits I have to the depositors, right. So I'm going to take the rate I'm paying from 0.1% to 3%, or 4%, right, they can make they can pay you this amount of money and still be profitable. But they choose not to, why? Because we all as a society have been conditioned, your grandmother has been conditioned to the fact that the rates are less than 1%. And you know, just like when elephants when they grow, they tie them to a pole and they think they can't really break away. And when they grow up, they still think that they can break away because their entire lives that were conditioned that you know, even when they're giant elephants, they still can't, they think they can't break away. So that's what the banks have done to us over the last 20 years, they've lowered the rates every year, they've lowered the rates almost to zero. And now we are conditioned to give our money for free. So in, so that's what's happening in the traditional finance world. In the decentralized finance world, it's an open market, meaning the market decides what is the cost of capital the market decides borrowers decide a what they're willing to pay. So the same 16% that bank of america JP Morgan makes on your money, people are willing to pay in the open market. The only thing Celsius has done that is different is that we as a company decided that we're going to take 80% of that and give it to our depositors. So we take it away from the shareholder, I'm the largest Celsius shareholders, I'm actually taking it away from myself and I'm giving it to the 650,000 people use Celsius. Now, it happens that I'm also the largest depositor in Celsius with like over $300 million. So I'm taking it from the left pocket and putting it in the right pocket. But the point is that in 700 years of banking, there has never been a bank in history that paid 80% of its earnings or its income to its depositors. So that's really the innovation and we created that in 2017 before DeFi before all stuff. And people thought we were crazy people like you cannot pay this much money when my own friends told me Alex, if you paid 4%, I would actually give you my money, but you're paying 10% I don't believe you, I don't trust you. But I'm like, that's what the market rate is. I don't decide the rate the market decides the rate. So that's what we live in. But now, because there's 100 competitors to Celsius, you know, we have about 18 billion in capital now there's over 100 billion sloshing around in DeFi so we're still the largest single player, but there's obviously 100 other alternatives. Now a lot of people are much more comfortable with what we're doing because so many other people, so many other companies have replicated what Celsius does

Matt Zahab: 15:47

So tell me do you have, do you not have like a top notch security detail around you at all times? Like you know, all the big bank execs are the you know, I coming at you with spears and guns and knives, like what's going on there?

Alex Mashinsky: 15:59

I said bad things. Yeah, I said bad things about banks every day. And I was actually removed from several conferences, because I publicly stated things that banks who sponsored those conferences, found to be too egregious. And the organizers even though I was invited as a speaker basically say, okay, your speech is over. We don't want you here, you know, you upsetting too many people. So, I think I'm a truth teller, nothing I say is incorrect or inaccurate. And really, it's not just the banks, I mean, now, the Fed and our financial system, Treasury, right. The US government is behave in a completely irrational way. Right? So the analogy is, and think about it right? In every family, we you know, there is this the uncle or the cousin or the sister or the brother, who are this irresponsible spender, right, and they always come to family gatherings, and they always need a loan, and they always are in trouble. And you always have to bail them out or get them out of jail or whatever. And that's how we are behaving. We are borrowing from the future. We're spending money we don't have, we constantly need loans, right? We constantly need to bail ourselves out. And we the United States of America, and we the European Union, we the Japanese government. So really, this idea of modern monetary theory is really like the crazy uncle who's constantly begging for money and begging to be bailed out. Right. And we just keep reflating and kicking the can down the road. So the reason I got so involved with Bitcoin and Ethereum and all these other blockchains is because finally I saw a technology that had finite supply, everything else we deal with has infinite supply, every company can basically issue more and more stocks, more and more bonds or debt, right to infinitive. And what we've seen is that really the financial markets, the NASDAQ, the New York Stock Exchange, are not really fair and unbiased markets, right, they are being effectively manipulated by the free money that is being injected into them by the Fed or by Treasury or by other players. And really, crypto is the free market. And the traditional markets, which people are telling us of the safest and the most open markets in the world are the ones that are being manipulated.

Matt Zahab: 18:35

When you think the last Domino falls in regards to the US dollar not becoming, you know, the global reserve currency? I've listened to a bunch of your stuff and you've always spoke about the Roman Empire and how they couldn't pay back their soldiers. And they saw the only other currencies throughout history and now the US dollar with its reign, what year do you think this happens?

Alex Mashinsky: 18:54

Look, it's hard to say. I mean, every Empire in the history, there were 705 fiat currencies today. And all of them either lost 100% of their value, or the vast majority of their value. So the history of fiat currencies is very, very disappointing. Right? And for us to sit here and say, whoa, we are different. We Are The World's Strongest Empire and that ever existed we're the richest country that... yeah, Rome also the Roman Empire used to be the richest country that ever existed. Same thing with the Portuguese Empire and then the Dutch Empire and the British Empire. You know, I can give you 20 examples, so the dominoes already started falling down, right? It's just that they're not all the same size. The dominoes that are falling down now are the tiny dominoes. And the last the biggest one is the US dollar and they're all going to lean on the US dollar right so Zimbabwe dollar, the Lebanese think it's dinar right, the Venezuelan currency, right. Yeah, I can give it 20 that Turkish Lira lost like 60 70% of its value in the last year. So I can give all, the Argentinian pesah. Right, so, so there's 20 examples of dominoes that are already falling down. Now these are countries that unlike the United States, when they print money, they get immediate inflation because they're not the reserve currency of the world. So it may take 20 years for all these dominoes to fall and lean against the dollar, and then make the dollar fall over. But really it comes down to how long will people overseas will continue accept dollars, even though we are printing trillions of dollars every month, we printed crazy, like by the Biden Administration just announced they're going to spend an extra an additional $6 trillion on top of the 4 trillion that we spend every year as the government budget, right? So in one year, we're going to create more deficit than it took the United States like 20 years to create, right so I think we cannot kick the can down the road without any consequences. I don't again, I don't know if it's gonna take two years or 20 years, but the outcome is guaranteed to be a debasement of the currency and higher inflation. There's no other outcome. And you know, I'm on the Austrian side of economics that's why I love Bitcoin. I love gold. I love Ethereum. I love things that have finite supply. I like responsibility, fiscal responsibility, and I think that just making money right now and letting your kids or grandkids deal with all of the consequences later on, is an irresponsible behavior.

Matt Zahab: 21:49

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Alex Mashinsky: 23:49

Yeah. So last year, I tweeted in the January of 2020, that we will close the year 30,000. And we close the 4am on the first of January of 2021. We hit 30,000. So I missed it by four hours. And people all reached out to me and we're like, okay, you predicted 2020 what's going to happen this year, you know, and then I don't remember what we were at the beginning of the year, but I said we will hit a high of 160,000 this year, but we're going to close the year at less than 100,000. So I think we're about less than halfway there. As far as Bitcoin peaking and I think there's a lot more to go. And we've gone very, very fast from that eight or 10,000 to 50,000 or 60,000. So I don't think anyone says oh, how come we are moving? We were driving 300 miles an hour you know, we're allowed to take a break. We're ahead of schedule, you know, like it's okay. Just go into the stop and and eat a burger and go to the bathroom and then go back on the road, you know. So, I think we are we're doing great. I mean, the adoption this year has been phenomenal. Retail, corporate, institutional. I mean, you couldn't ask for more, right? Banks being opened crypto banks, right? every institution, major institution announcing Goldman Morgan Stanley's city, everybody announcing, hey, we open the crypto desk, we're gonna allow our customers to buy the stuff so I think we're doing just fine and like any market, you need to, for Bitcoin to consolidate. Some people are selling, which is great. But you know, at Celsius again, we're managing 18 billion. We don't see anyone selling we're seeing people buying on every dip. Obviously they, they're earning 6.2% interest. So there's a high incentive to buy more Bitcoin but I still think we're gonna see another run up. And there's definitely a FOMO from institutions for a change not from retail, of basically people who are allocating already allocated into bitcoin purchasing at all different price levels. So you know, I definitely expect us to hit that 150 $160,000 price range this year.

Matt Zahab: 26:37

I hope so, too. That'd be incredible. Nice little early retirements. Obviously the crypto market has done incredible this year, everyone has loved that. So much money has gone into crypto, billions and billions, trillions, maybe not trillions. But you know, trillion ish of dollars has gone into crypto. It seems like a lot of that is being taken from the stock market. Now obviously, we've also printed trillions of dollars. But if so much money wasn't going into crypto, do you think the stock market would be higher? Would it be lower about the same? How do you feel about that?

Alex Mashinsky: 27:08

So value creation is a very weird mechanism, meaning all markets can actually rise at the same time, you think that you're drawing down on gold, and you're drawing down on the stock market, but an asset that has scarcity that has limited supply? You actually don't need that much money for it to double. It's not like if you go for half a trillion to trillion, you didn't really contribute half a trillion dollars of new of new dollars. It's the demand though, the last person to buy bitcoin dictates what the price is for the entire asset class. So we definitely are seeing migration from gold bugs into bitcoin reallocation. And some of it probably has to do with the inheritance like young people like you, they're probably going to get some gold from their parents are going to say I don't want this gold. I was swapping it for Bitcoin or Ethereum. Same time, people that maybe made three or 5x their money on Apple or on Amazon are probably saying, You know what? Let me rebalance. Let me diversify. So there's definitely some money coming out of there. But I don't think it's in the orders of hundreds of billions of dollars coming in. So I think it's currently, there is several trillion dollars worth of cash sitting on the sidelines and it's enough that just a few percentages of that is going to make its way into bitcoin for bitcoin price to double again, you don't need again, you don't need to draw down a trillion dollars from the stock market to buy bitcoin, right. So the Bitcoin market itself is a much smaller market. So it moves on even small changes of demand. So the big question is really, where, at what price points people are going to sell, like, for example, the mining companies, right? Are they going to sell at 70,000 or 80,000, or 100,000? Or they're going to wait for it to go higher, right? Because they're producing a lot of the new Bitcoin. The people that bought Bitcoin at 10,000 to 7000, or whatever are they going to sell at 60 when it hits that all time high again, or they're gonna wait for it to get to go jump much higher? So we know what the supply looks like we know exactly how much bitcoins being created every day. Right? But we don't know how much of the selling is there. How much of the selling is going to show up at different price level because we've never been here before. We've never been at the 70,000 or 90,000 or 100,000 levels. So demand is definitely strong and accelerating, which is great news. And that makes me very confident that sooner or later we're going to flush through all of these weekends and really hit amazing numbers for Bitcoin. It's also, again, it's not that Bitcoin is so great, it's that the rest of the world is printing money so recklessly, that more and more of the smartest and the richest people in the world are deciding everyday, you know what? I thought I'm gonna allocate 1% I'm allocating 3% to Bitcoin, right? They're basically increasing their allocation. And and some people like Michael sailor are like 100%, you know?

Matt Zahab: 30:42

He's a sick puppy.

Alex Mashinsky: 30:44

Was great. We need more ambassadors like him. You know, we, again, I'll remind everybody that in 2017, our top Ambassador was John McAfee, you know, he was our top ambassadors. I'll take Michael sailor any day of the week, to be the Bitcoin top ambassador.

Matt Zahab: 31:06

I love that. He talked about wealthy people putting one to 3% of their net worth into bitcoin, which something that would have been a much more efficient and larger investment would have been $CEL token. What a treat I, every time I look at the charts, I see$CEL token, I'm like, oh, man, you missed the boat on that one. Hopefully, I didn't. $CEL token is up what over 6,000% in the last year. I love going to the leaderboard And you see, you know, the $CEL token leaderboard, the top 500 hodlers. And we have the machine himself with 40 million cell tokens. I love seeing that. Tell me why one should hold $CEL token? And are there any future plans for sell tokens down the road?

Alex Mashinsky: 31:51

Sure. So we really created this for the community, right? I mean, the project was funded by the community with an ICO in 2017. We delivered on everything we promised, we created tremendous amount of value, we created over 300 millionaires. Most of these people, these are not rich people that, you know, cashed out of Amazon and then jumped in here with millions of dollars, our average deposit is $14,000. So these are people that for whom we change their lives forever, right? They believe that we were here to do good and do well. And they helped us bring others, right. I mean, we don't advertise, we don't really do all the crazy stuff that coin base or block fire other people do, right? I mean, we are much more community centric. We rather pay you $40 to bring one of your friends and pay them $40 then give it to Facebook or to Google, right? Why spend money on advertising, if I can give it to you. And if you're having a great experience, you will also bring your friends. So our mantra worked extremely, exceptionally well, like you said, we were masari ranked the$CEL token as the top performing token or coin last year, way ahead of everybody else was ranked their Tia and Bitcoin and Ethereum and everybody else right. So and again, it's because we created so much value for the community, right? It's not because we sold a dream or oh, we gonna learn something next year, right? There's so many projects that are building on the promise. They're creating hype, and people getting excited, and they hope that something will happen. We're adding a billion dollars a month right now in net deposits. So when we say 18 billion, we were 10, we just few weeks ago celebrated the having 10 billion in assets with my and we printed the 10 billion t shirts, and they're already obsolete because now we have to print the 20 billion t shirts. So that's how fast we're accelerating and it's because again, we're giving 80% back to our community to our depositors right now and no one is crazy enough to do that. Binance, you know, is bragging about how they're giving 20% back you know, like so Celsius is a much much much more you know, doing better for our users and we plan to continue doing that. And $CEL token will take care of itself I mean, our utility, which is earning yield on your money doesn't matter if you have gold or Bitcoin or Ethereum or a stable coin. You earn positive yield anywhere between four and 24% right on your money paid in Bitcoin or in Ethereum or in other coin, you can also earn in $CEL, but you can come to Celsius never touched $CEL token, make a lot of money with Bitcoin and never talk to us again, never touch$CEL and we're happy and you're happy, right? So we got to create yield. We gave you most of it. It's a win win relationship. So I think this business model is a killer app. Right? That's the yield is the second killer app of crypto. The first one is store value for Bitcoin, the second one is yield. And I think Celsius does it better than anyone else and again, we have more assets than anyone else, we've paid more interest than anyone else. We've been doing this longer than anyone else. So that's the secret for the $CEL token success.

Matt Zahab: 35:31

One of the quotes you have on, and by the way, you are literally a quote factory, like you gotta, you got to start a book or just have a Alex Mashinsky Twitter, that is strictly quotes. But one of the quotes you had about Celsius and the $CEL token was great asset does well does great pays high yield to combo of a dividend stock, and has crazy upside in the stock itself. And when you think about that, like that doesn't grow on trees, and that opportunity is far and few in between, on the actual stock market. And you guys have intertwined all of that together. It's such an awesome place, what are the next steps for Celsius in regards to the whole worldwide expansion and really getting mass adoption to

Alex Mashinsky: 36:14

So there's only 695 million $CEL tokens, right? And half of them are held by the company. So in circulation is less than 300 million. And so you have to think to yourself, okay, limited supply, even more limited than Bitcoin or Ethereum, because Bitcoin and theorem have inflation, they're creating new Bitcoin and new Ethereum every day. Celsius does not create any new $CEL tokens. So we're adding, we're growing at about 3%. week on week, just the number of subscribers, right? So we're now at, like I said, 650,000, do compounding 3% week over week, right? How far are you going to get? So it's gonna, there's gonna come a time, where you're going to not have enough $CEL tokens, because every week 60% of our community become a thing? says I don't want to be paid in Bitcoin, I don't want to be paid in Ethereum. I want $CEL token. So we have to take our earnings, go to market and buy $CEL token in the market, so we could deliver it to our community. And just like with Bitcoin or Ethereum, the $CEL token holders say, I'm not selling. Why would I sell to you? I know that next week Celsius will be buying in the market. And then week after that, and every week, they have to buy more and more and more. So if I just sit on my hands and wait, the value of the token will appreciate right. So that's the dynamics. That's the basically the tokenomics of the$CEL token. And we still, I don t think there is any other proje t today that does that. Right I mean, there's a lot of proje t that shower governance token on you, they give you farmi g, they give you, but they don't have this tokenomics where it's win win win for every ody, right? Like you said, in Ce sius, you can come and just arn yield, you can earn yield and benefits earn in $CEL token right or buy sell token, right You can also buy the equit you can buy into the equit of Celsius. And when you gave ll that money to Coinbase and i terms of fees and buying Bitco n from them, and so on, did t ey send you any thank you notes and said, hey, here are your hares come participate in our I O you created $60 billion worth of value. Nada, right? At C lsius you get to participate We allow, we basically b sides ICO, we also invited our entire community to come and jo n us in our equity round and o er 1000 people from all over th world bought equity and Celsius they're sitting on the bus rig t next to me. They own equity, they don't own $CEL token, they have coins on deposits th t are earning interest. I's a win win win, all of our nterests are aligned. So that, when you have all the int rests are aligned, it's very e sy to make decisions, ight? You basically look to the left you look to the right, yep, let's add this token let's add t is coin, let's increase th rates and so on. So since it's n amazing ride, I get thank you mails, thank you letters ever day. It gives you tremendous e ergy, you want to work 24 hours a day. And again, this is m eighth startup as a founder. So you know, I think it's a gre t opportunity to really scale his and make it into a global ba k right because today we're stil a niche, crypto market co pany. So we are betting on the 1 0 million people but joini g us right then and changing liv s for 100 million people, enab ing them to getting to financial independence, seeing the ight at the end of the tunnel etting to seeing that that ou can make it to retirement. You can help your paren s who can help your family, r ght then all these things are things that almost like, faded away or disappeared fro our lives. Most young people c n't afford a house can't a ford to get married. Can't fford to have more than one id, you know? And it's all bec use of, again, this inflation p

Matt Zahab: 40:13

One. This has been incredible Alex, one last icing, where most people ju t can't afford to live their ives. question. before we let you go here. You have a quote again, straight from the quote factory goes as follows. You said I was born in communism, I grew up in socialism and thriving in capitalism, and crypto is decentralized Buddhism. How did you work that together? Like where did that come from? That's almost you sound like you got a bit involved in you like where's that from? I love that.

Alex Mashinsky: 40:54

So look, I grew up, I was born in Ukraine. My parents had this old, decrepit house, I had an outhouse, I had to go to the bathroom in the middle of the winter. Ukraine, the winters a serious winter you have to go up the hill to go to the bathroom. So, you know, like, it's not like I was born with a silver spoon and magically, everything I touched, turned into gold. So I struggled through life. I grew up in Israel, my parents immigrated I grew up in Israel went to the military there. And I've seen the horrible things, right? They're both in, you know, before I came to the United States, and when I came to this country, I was like, this is amazing. This place is, you know, most Americans, I say that every day, you're Canadian, so, but the same is true for most Canadians, they don't appreciate what they have, like, you're better off than 99.9% of the population around the world. And most Americans take it for granted. And they complain about, you know, their Tesla and the highways, and they only take two vacations a year and whatever, you know. So my point is that communism, capitalism, socialism, all have their advantages and disadvantages. But today, even capitalism, which works so well, for me, does not work for I would say, 99% of Americans, right? I mean, so we need the fourth system. And what I when I look at the decentralization for me, decentralization is like Buddhism, it's a fourth system in which we can carve or curate our own, in the best way for humanity, right? So we want to take the best ideas out of the existing three systems, and make sure that we don't build another wall street, we don't build another hierarchy that in which people just don't get to express the best they can be. But rather, judge people based on their contribution to society instead of their ability to generate profit or generate money, right, which is how we measure society today. Our heroes today are the guys who became billionaires, the guys who are celebs on TV or whatever, versus the people who's a scientist, the people that took us to the moon or whatever. So I think the thing that is very important for me, is to make sure that what we build here, is done for the community and by the community, rather than going and bragging around, say, oh, you know, I bought Bitcoin at $300 and I'm a billionaire and bow to me, you know, because I got in on the bus before you so I should be worth billions because I get in on the bus 10 minutes before you get in on the bus. You know, that's basically what's happening today. So at Celsius it's all about giving more and more and more, we have never charged a single celsion a fee. Never. Right. So the whole idea that you can create a giant company with 10s of billions of dollars in assets, that pays hundreds of millions of dollars of interest. And never charge a single customer a single fee is a whole new concept, right? And it's very hard for banks or financial institutions to compete with that, because their entire concept is okay, we're gonna pay them nothing to deposit. We're going to charge them for inactivity fees. We're going to charge them ATM to withdraw their money. We're going to charge them on the credit card when they want to use their money. Everything is a toll collector fee approach. Right and that is just, all of us get used to that, all of us get used to the fact that we work super hard some of us work two jobs. Then we give our money to this institution and they rape us and there's nothing we can do about it.

Matt Zahab: 45:07

Oh you're bang on. Alex this is incredible one last question I forgot.

Alex Mashinsky: 45:12

Banks are not your friends Okay, let's put it that way.

Matt Zahab: 45:15

The slogan of Celsius, unbank yourself. You heard it here that I love that slogan. I forgot, I totally forgot to ask this. You are the grandfather of DeFi, you coined it MOIP. Money over IP everyone else went with DeFi. Maybe DeFi sounds a little sexier than MOIP. I guess it does, MOIPs a little off you know, it just doesn't really roll off the tongue nice

Alex Mashinsky: 45:35

MOIP didn't have much choice you know.

Matt Zahab: 45:37

You had to stick with it. Why did DeFi, run and MOIP didn't?

Alex Mashinsky: 45:42

Well, and so the wording DeFi really stands for decentralized finance. And there are very, there are many different shades of decentralized finance. There's a pure version which is okay, I'm gonna use only smart contract there is a Dao, there is no one is in charge. And while that is great for maybe again, 1% of the population that can figure out how to do farming and how to work with metamask and other wallets and what's a private key versus a public key and, and how not to get conned have a rock pool or get stuck in the wrong pool of capital, right? Where you can basically lose all your money. Celsius decided to be your Shepherd right. Celsius is a different version of DeFi where we have a wallet just like your meta mask, we pay you interest based on the best efforts we put in to create yield. But we also keep you safe, right? We know which ones are the safe projects, we know when is the time to get out. So you don't have impermanent loss. And we lend to institutions exchanges DeFi retail, right? We do mining, so we have five or six different sources of yield. And if you tried to do it yourself, you cannot beat the Celsius rate. So once in a while you'll see compound or IV spike higher than Celsius. But if you took the average rates over the last year or two years, well, they didn't exist for two years. But if you take, as long as they existed any of our competitors, you will see that on average Celsius pays more on every asset. So the question you have to ask yourself is okay, do I have time and you have to be able to press the button and be on the computer 24 seven, be in the know of every new project. Or you can just park your coins at Celsius and earn either in kind or in $CEL. In $CEL, no one in the world has beaten Celsius because like you said, we're up over 6,000%. So that's like picking one out of 10,000 projects, right? Who's gonna be the winner? Right? And it's funny, like I was in several conferences and like one of them I think was talking 49 in LA, I was sitting on a panel with a bunch of smart asses. We're all like, oh, I know what, which project is going to win? And I'm like, this is 2018. And I said no, none of you know it because if you knew it, you wouldn't be sitting here talking about it, you would be actually putting your money there. And they're like, well, do you know who's gonna win? I'm like, no, I don't know. And I wouldn't be saying it to anyone. Meanwhile, it was us, so that was like, the irony of the thing. So again, it's not that we Celsius or DeFi are so good. The banks are doing such a horrible job with their customers. The Fed is doing such a horrible job with the dollar that it's not hard to be a winner. It's not hard to deliver this yield and the opportunity for most people is really do you want unbank yourself? Do you want to sever that? It's like a bad marriage. You know, one side is abusing the other side. And you just keep taking it you keep coming and they slapping across the face, and they taking your money and you don't do anything. Right? What kind of relationship is that? So at Celsius, we make, we pay interest every Monday, we make trust deposits every week, right? Whatever we earn for the week, we issue it to everybody on Monday and you can go and verify, we also have what's called proof of community. So you can go on the blockchain and with zero proof verify that what we paid you was 80% of what we've earned. So all of these tools that we've created, I think, are a much better way for the 99%. Not for the 1% was like tech savvy and so on. But these are amazing tool for the 99% to join the crypto revolution. And when we started Celsius our focus was on bringing the next 100 million people, not solving the problem for the guys who hold their keys and know how to farm and the OGs of Bitcoin or Ethereum. They probably don't need my help, you know, but the 7.8 billion people out there, every one of them, there isn't a person on the planet that you ask, okay, do you want to earn more in your money? Who will say no, I'm already making so much money. I don't need any help. You know, I'm killing it all by myself. 99% of those people are going to need a safe and transparent and sustainable mechanism to earn yield.

Matt Zahab: 50:45

Alex, you're the man. This was absolutely incredible. Thank you so much for jumping on. Before we let you go, please tell our guests where they can find you on socials and online.

Alex Mashinsky: 50:55

Sure. So Twitter is @Mashinsky my last name. Celsius.network is the website, download the app on Android or in the App Store Celsius network. And we are everywhere we are on YouTube, sign up, I have an AMA every Friday. So go search for Celsius network and and sign up. We answer we, yo know, we have a guest every wee, we answer viewers questions an there's tremendous amount o content already 1000s of video both created by us and by th community, educating you abou all the good things and the ba things of creating or usin yield. And we'll be in Miami o June 4 at the Bitcoi conference. So come see u there. It's an amazing event I'm so happy that they decide to do it in person outdoors. S it's gonna be phenomenal. So se you soon Miami

Matt Zahab: 51:56

What a treat, folks. Alex Mashinsky, this was incredible. Alex, thanks so much for jumping on. Big thanks to your team for helping set this up. Big thanks to the cryptonews team as well for setting this up. Folks, this is the cryptonews podcast. We hope you enjoyed this episode with Alex Mashinsky from Celsius, that is Celsius network. If you enjoyed this, we'd love you to subscribe. You're gonna have plenty of other guests on the show. And Alex will definitely be on for round two in the near future. Thanks again for listening and we'll see you all shortly. Have a great day. All the best. Bye