Julian Hosp, CEO of Cake DeFi, on DeFi for Bitcoin and the Current Crypto Market | Ep. 223
In an exclusive interview with cryptonews.com, Dr. Julian Hosp, CEO and Co-Founder of Cake DeFi, talks about DeFi on BitCoin, the future of Binance, and the growing demand for DeFi for institutions.
About Julian Hosp
Dr. Julian Hosp is the CEO and Co-Founder of Cake DeFi. Cake DeFi is a fully transparent, highly innovative fintech platform dedicated to providing easy access to decentralized financial services and applications by enabling users to generate returns from their crypto and digital assets.
Julian was also one of the original Co-Founders of DeFiChain, the world’s first native DeFi blockchain for the Bitcoin network devoted to decentralized monetary applications and services. DeFiChain has since gone on to become a fully decentralized blockchain project with on-chain governance, dedicated to enabling fast, intelligent, and transparent decentralized financial services and applications.
Julian Hosp gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication provided there is a credit to www.cryptonews.com.
Highlights Of The Interview
- The risks the banking system contagion poses to crypto and technology companies
- Julian once recorded a YouTube Live where he sold 10 mil worth of BTC before the price peaked
- DeFi on BitCoin … Can and will it happen?
- The growing demand for DeFi for institutions
- Future of Binance, CFTC’s lawsuit, and Balaji’s $1mm bet
Full Transcript Of The Interview
Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We are buzzing, as always, and my guest is coming in 12 hours ahead from a beautiful place in this world where I have yet to be, that I need to be, and that is Singapore. Today we have Dr. Julian Hosp, the CEO and co-founder of Cake DeFi, a fully transparent, highly innovative fintech platform dedicated to providing easy access to decentralized financial services and applications by enabling users to generate returns from their Crypto and digital assets. Julian was also one of the original Co-Founders of the OG DeFiChain, the world’s first native DeFi Blockchain for the Bitcoin network. He is the full on influencer in the Crypto space. Got a million followers over all of his channels, and his beautiful wife just had two super cute twins as well. If you haven’t seen that pin photo on Twitter, do go check that out. That shit could be on a calendar. He’s also a doctor a whole lot more. He sold millions of dollars on live stream, was a pro athlete, and like I said, medical doctor. Today he lives in Singapore with his wife and three sons. Super pumped to have you on, Julian. Welcome to the show, my friend.
Julian Hosp
Man, it’s an honor. Looking forward to having a nice conversation.
Matt Zahab
It’s been a while. Pumped to have you on. I know, both of our teams worked hard on this to make it happen, and here we are. So super pumped. I got to start with the kids. That picture on Twitter is one of the cutest photos I’ve ever seen in my life. Congrats, twins. What is it like when you and your wife find out that it’s not just one baby on the way, it’s two? Like, explain that feeling, because you’re in the 0.00001% of people who can actually relate to this.
Julian Hosp
Joy. I mean, a bit of I think, being a bit nervous, but I have to say, I mean, it was pure joy. I think where my wife was like, hesitating for a moment was when we found out that our first one was a boy and then there’s two other boys. So it’s like three boys. I think deep inside, for a moment, my wife would have loved to have one girl, but that’s just how it’s meant to be. And now it’s joy. Once the twins came, then it went from being able to handle one. Now it’s like more zone defense. There’s three of them now, all of them. Obviously, the older one can run around. The twins can crawl now. It’s like insane. Sometimes on weekends, yeah, it’s insanity, but really beautiful to see.
Matt Zahab
That’s so cool. Love that. Before we get into Crypto, walk me through your past. Not many people in the Crypto space right now were pro athletes and medical doctors. That’s just so classic. When you’re a young kid, when you’re a young boy and it’s career day in grade four and your teacher is like, little Julian, what do you want to be when you’re older? Most kids are going to say, oh, I want to be a doctor, or I want to be an athlete. Mind you, that was back in the day. Now when teachers ask kids, what do they want to be, they’re like, I want to be a streamer. I want to be a YouTuber, some crazy stuff like that. But nonetheless, walking through your childhood, how the heck were you a professional athlete and a practicing medical doctor and now a CEO of a Crypto company, walk me through that whole history?
Julian Hosp
When I was 20 on my Facebook, I mean, Facebook was the thing. I mean, that’s like 17 years ago, I had this tagline that said, my office is your dream holiday. And that’s how it was because I spent so much time I mean, I also spent so much time Playa Del Carmen, but all over the place. So I had this very reg, very normal upbringing in Austria, very small city called Inspiro Pits, right in the mountains. I had this dream of becoming a professional basketball player and wanted to go to the US. During high school to, I don’t know, become better. When I was 16, I moved to Nashville, Tennessee. And nothing ever turned out of my basketball career. But one thing I really like in the US is just so amazing about this. So Austria is like this small little thing and if you’re really good at something, I don’t know, it’s very hard to get really good at something. And for me, this was just math, it was science. I was just really good at that and in Austria I would have never been able to really kind of utilize that. And in the US, this is just, oh, you’re really good at maths. Like, why don’t you go to the Math Olympiad? And I don’t know, you go district and then you go state and then you go next. And there was always something, right? And suddenly I was like one of the best in the entire country when it comes to math. From that I got a scholarship and I was supposed to study in the US. And I go home. I didn’t have a good kind of relationship at that point. I mean, I’m 17 and a half, so just like a regular teenager, I’m 17 and a half. I go back to Austria. I don’t have a good relationship with my parents. Haven’t seen them in quite a while because I was in the US during all this time for high school. And they just want to take me to Italy, which is a drive for us. It’s just like if you live close to the Mexican border and you just drive over the border in Canada, you just drive over. So we drive over to Italy and we go to a lake there. It’s called Lake Garda. And I go there and I’m not expecting anything. I’m more frustrated that I have to spend this time with my parents and I don’t have a good relationship with them. And I see this kite surfer, had no clue what this was. This was in 2002, 2003, had no clue what this guy is doing. And there are some things in life when you ever experience this, it’s a very magical moment where you realize that you’re really good at something and other people really struggle at that. And for me, I know I try to sport kite surfing, which is like if you don’t know what this is, you have this kite in your hand and you have a wakeboard on your feet and you use the wind as a power and you can really amazing jumps.
Matt Zahab
It’s wild.
Julian Hosp
Yeah. And for me, the very 1st second I step on this board and have the kite in my hands, I know it feels natural. And I have this extreme career over the summer, where I go from not having kite surf the second in my life and I’m becoming one of the best in the world. And then I had to make this decision whether I wanted to go back to the US and study at college or pursue this kite surfing career. I’m 17 and a half, what do you expect? You get paid to travel to all these beautiful beaches, party, have a great life and yeah, so of course I didn’t go to the US back. I became a professional kite surfer and I became one of the best in the world at that. I competed on the World Cup. It was a great time and yeah, to kind of close that. My mom was always very adamant that she didn’t believe that this was going to be my future for the rest of my life. So she was really pushing me to do something, study something. And so, yeah, I started studying medicine. The good thing is, in Austria you can at least for some parts, you can do this remote. And then for the practical work, you always have to be in the clinic. And so I managed to kind of really shuffle around there to achieve all that. I studied a bit longer, as it took me longer than the regular study time just because I was traveling so much. And then I graduated in 2011, so it was also a super long time ago. Now, that was at the end of my kites surf career as well. And I became a trauma surgeon, or I trained to become a trauma surgeon, I would have had to train another six years in the hospital. So I studied for seven years and then I would have had to work for six years and a year in I was just so frustrated. I was missing all this craziness, all the beautiful times I had as a kite surfer, and I was suddenly stuck in this hospital. And so after a year of work, I quit and moved to Asia. And that’s how I then stumbled very early. I mean, very coincidentally, I stumbled over Blockchain, Cryptocurrencies, Bitcoin, and got into this space. And it’s now almost ten years ago, so that’s been the journey. And originally I want to add one thing. Originally I really wanted to build something in this space when it comes to medicine, so I didn’t see the financial value as much as I do today with Cryptocurrencies. That was my original idea as a medical application. I never really managed to get anything off the ground. And so, yeah, that’s how then in 2014 I got into the Crypto space.
Matt Zahab
Such a cool story for the folks at home listening, you got to just Google or not Google, YouTube, TikTok, Insta, whatever, just any type of video platform. Check out what kite surfing is. I’ve never done it. It looks absolutely bananas. When someone is kite surfing on a beach, half the beach is watching that kite surfer literally rip dozens of feet in the air and you’re just like, what is this man or woman doing? This person must have a couple of screws loose because it is crazy. It’s on my to do list, Julian. I got to do it. Why the move to Asia? It seemed like you had a pretty darn good life in Europe. You were traveling the world. Did you previously travel Asia or kite surf in Asia? Why the move?
Julian Hosp
I mean, I was a lot in Asia and the story there is that because I had spent so much time in Austria and I did my high school in the US. I always believe in if you really want to change stuff in your life, the easiest way to do this is you have to change location, you have to change your environment, you have to change your people and you have to change your tribe. And I had a really good friend in Hong Kong. So that’s why in 2012 I moved actually to Hong Kong. I knew him from kite surfing. He still lives in Hong Kong. He was a banker or he still is a banker. And he said, look dude, you always have room to crash, just come over. We have been kite surfing a lot together. So I said, yeah, sure. Then that’s how I then got to Asia. I know I felt like this was the new frontier and I still think it is today I’m not sure if it’s Hong Kong. That’s why I moved to Singapore then in 2015, 2016, so a couple of years after that. But I still think Asia really has it still has that hunger and it still has that like. I think what a lot of countries, especially in the West, had probably a couple of decades ago, asia has right now. That’s why I actually really love it here. And I came for something else. Like, I came just really for the adventure, but then I stayed because I really saw the potential of everything.
Matt Zahab
But you’re also living in one of the highest growth places in the whole freaking world right now. I’ve never been to Singapore. It’s on the to do list, but people say it’s just futuristic, very modern, with incredible people and incredible food and incredible living conditions. It’s just a place people would want to live. And I also heard it’s pretty impossible to get a place there now. So the fam did the right thing. That’s not too bad.
Julian Hosp
You know, what I always think is so interesting about Singapore is Singapore especially it has kind of this contrast. On the one hand, you’re actually giving up a lot of freedoms in Singapore. I think Singapore is one of the countries in the world that has very tight controls of everything. The laws are incredibly strict. The surveillance is extremely tight here, right? So it’s quite interesting to kind of see that. But then, on the other hand, Singapore is economically extremely open. It’s extremely open for new technology, new ideas. So while, for example, the US right now has this crazy kind of crackdown in Crypto, Singapore does the other thing. It says, okay, look, there may be some dangers in Cryptocurrencies, and we have to be careful that we don’t fall for them, but we want to attract a lot of talent. We want to attract a lot of projects. We want to see how this works, right? And because it is a relatively tight, controlled ecosystem, it’s also quite easy to work together with the regulator, works together with the institutions, and so, yeah, it’s just really interesting to kind of see this contrast a bit here, as well.
Matt Zahab
Before we get into the Crypto part, one last thing on non Crypto that I’d love to talk about, and you have a great Twitter. Obviously there wouldn’t be 90,000 people following you, but there wouldn’t be 90,000 people following you if you didn’t have a good Twitter. You have been a big spokesperson for the Fall of the US Dollar. Now, there’s a lot of people in the Crypto space who have this last couple of weeks we’ve seen some absolute craziness, some bananas news in regards to countries like Russia, China, Saudi Arabia, saying, you know what, we’re done with this, we’re going to use the Chinese remedy. I always script the name, but it’s done. Chinese, whatever you want to call it. What’s your whole take on that? Is the US actually screwed moving forward? Do they have enough global dominance to really keep that alive? What’s going to play out there?
Julian Hosp
Yeah, so I have a bit of a moderate view on that. So I do believe the dollar is screwed in the long term, but I think that long term is way longer than some of the Crypto hardliners want it to be. They think, like Bellagi says, in the next 90 days there’s going to be this hyperinflation and dollar is dead and Bitcoin is everything. And I completely think that’s baloney. So I totally don’t think that. I think the dollar is going to like the Lindy Effect. So that effect of when something starts and how long it’s going to last, I think it’s going to be so strong on the dollar and the dollar is probably going to be around for I’m not sure if decades is the right term, but I would be surprised if we don’t see it in the 2030s and the dollar is still not the number one currency. But I also believe the US has fought pretty much every war of the last, I don’t know, 40, 50 years mainly to really support the US dollar. And they’re going to keep fighting every single war going forward to keep the US dollar as the number one currency. So I do think it’s doomed, but I think it’s going to take way longer than most people believe. And so I think a lot of people are just also intellectually honest about it, are dishonest about it, and I think that makes them bad resource allocators, and I think it makes them bad decision makers. And that kind of shows why people are not doing well when it comes to investing. And so I try to be as intellectually honest as I can be. And while the dollar is definitely not a good place to be in the long term. To me, I always compare it to like a melting ice cube. So you don’t want to hold melting ice cubes too long because at some point they’re just gone. It’s still better to have melting ice cubes in a bucket full of holes than having water in a bucket full of holes because the water is gone. You just have to be honest about it. That’s what my moderate view kind of is on all that.
Matt Zahab
I feel like so many of these wealth, allocators that have the notion that the USD is going to be fine forever, I feel like part of that is obviously the bias. They have so much of their capital and their wealth and their clients wealth into US dollar denominated assets. And I feel like the whole strategy of finding other currencies, I feel like it would just be an absolute shit show and they just want to I feel like deep down they know that the USD is fucked, but you don’t want to face the music. I could give a couple of analogies. I have a couple in mind that aren’t probably too safe for the show because we do have a couple younger listeners. But I mean, it is what it is. We’ll get into that later. Let’s get into Cake DeFi. Love the name, by the way. Great name, very catchy, very in your face. Rings a bell, leaves a memory. Why did you and your co-founder decide to create Cake DeFi and a little segue as well? Why the name? I love it, but why the name? Or the inception story of the name? How did that go down?
Matt Zahab
U-Zyn, who is my Singaporean co-founder he’s the technical co-founder. He’s the CTO in the company. And I actually know each other from a past venture, and he just always struck me as this really smart, technical kind of person. And I think I am that great business marketing counterpart to that. So I think that’s where we really are extremely well matched when it comes to any kind of business. Both of us, I mean, he got into Crypto even earlier than me. He has been in Crypto since 2010, so even earlier than me. But both of us. Have just been really fortunate and really lucky in making money in Crypto. And so on the one hand we did manage to get some diversification out of this, but on the other hand, we do really believe in Crypto. So in 2019 when we started Cake, it was really we sat there and said hey look, we have all these Bitcoins, we have these ETH, wouldn’t it be awesome to just like in real estate, right, where you get cash flow on those things and it was just really early at those during that time it was so difficult to do any kind of cash flow. DeFi on Ethereum just started, maker was basically just starting and so for us it was two things. It was on the one hand we wanted to start a Blockchain that built on top of Bitcoin, that brings DeFi to Bitcoin, so that’s how DeFi Chain got started. And then on the other hand we wanted to have a platform that is custodial so people have to trust us, but we’re completely transparent, so that was really important and that’s also why we didn’t get screwed last year when all these other platforms went bust. We actually got even more customers from that because we were so transparent we couldn’t do any dodgy shit. For us everything had to be completely transparent and we said we want to have this one stop platform that provides people access into all those various forms of cash flow. So we started with staking and then we went with lending we did on chain lending, so we didn’t do all this CFI lending, we got into liquidity mining, we got into decentralized tokenization, providing decentralized stable coins and so on, so people could provide liquidity for all that. So we got into all that and it was all centered around yield, cash flow generation and the name at the end it was a very interesting coincidence that actually led to Cake. But for us I wanted to have a fun name was think like if you do something really well, you do something very secure, very like, you provide great user experiences you want and you can put a smile on people’s faces that’s just as good as it gets. And so we want to have a fun name. We wanted to have something like for us, it was a lot about slices as well, because in master nodes, for example, it was all about these slices, like having a slice of the master node, right? So we didn’t want to use a financial term like share. So slice just made a lot of sense there. And so we were playing around with a lot of names there. But then, interestingly, in Singapore, the company Cake, just Cake was available. So that’s why we then settled with Cake and DeFi, because it was a one stop into DeFi. Now, to be fair, today I wouldn’t add the DeFi anymore. And we’re actually looking into dropping the DeFi just because I think today, if people hear Cake DeFi, they think it’s actually DeFi, right, where it’s CDeFi. But in 2019, DeFi didn’t even like that concept, wasn’t even there. So that’s how that name came and that’s how we started that four years ago.
Matt Zahab
And the part that really intrigues me is the Bitcoin, right, is the fact that you guys wanted to start Bitcoin DeFi, which is you still hear that, like Julian, every year for the last four years, we’ve been hearing like, oh, this is the year someone’s finally going to crack the code. And that was back in 2019, then 2020, COVID boom, someone’s going to crack the code, then ETH comes along. Actually, DeFi is going to run through ETH. Are we ever going to see it?
Julian Hosp
Man, I don’t know how often you and I sit there and have lunch or dinner, like dinner, not really, but like lunch mostly, or breakfast. And we just discuss and talk and we’re like, hey, maybe we should have done something around EBM, or should have done something with Ethereum or something, and not with Bitcoin. Reminds me a bit of VR, which is like, it’s always next year. It’s always like, just a year away when VR is going to have its breakthrough. I think the same is with DeFi on Bitcoin. I’m still super confident that we’re going to see this DeFi on Bitcoin. The question is just, are we going to see it this year, we’re going to see it next year. The big thing that most Bitcoin fanatics are not going to be willing to actually admit without CFI, Bitcoin almost becomes unusable because Bitcoin has no ability to function without centralized counterparties. You would always have to meet in person because there’s no way how to settle or how to actually transact to exchange. You can’t do it without centralized counterparties, right? And if you look into Bitcoin’s history, silkroad, right, that’s how it all started. All these things always needed a centralized counterparty and Ethereum doesn’t actually need that. Bitcoiners will not want to admit that, but it’s just how it is. And so I do believe if you really like the crackdown right now that you see in the US specifically, and I don’t think it’s going to stop in the US. I think the cheat seven, the cheat 20s, they all going to get pressured to start cracking down. And if Bitcoin and at the end, many times, people are going to do something, not because they want to, but because they have to. And I think Bitcoin is going to have to open up to DeFi, not because they want to, but because they’re going to have to, because Ethereum is just going to get so far ahead with their DeFi abilities, with the trading abilities, lending all decentralized exchanges. This is just not going to happen on Bitcoin. So Bitcoin is going to need this, and I think that’s going to be the breakthrough. So I sometimes actually say that the regulation that we’re seeing, all these crackdowns may actually be a blessing in disguise for a lot of these DeFi for Bitcoin services that have since come up DeFi chain. I think they’re going to like those services for Bitcoin are going to see a strong renaissance.
Matt Zahab
I love that. And you brought up a great point. And we do need to take a quick break and give a huge shout out to our sponsor for the show. But when we get back, we’re going to talk more about the risks that the banking system contagion poses to Crypto and other technology companies. And how the SEC and other governing bodies are just laying down the hammer on everything Crypto related, specifically Bitcoin staking. If you’re in those fields, you’re hooped. But huge shout out to PrimeXBT, our sponsor and longtime friends of cryptonews.com. We love PrimeXBT as they have developed a robust trading system for both beginners and professional traders. Doesn’t matter if you’re a rookie or a vet, you can easily design and customize your layouts and widgets to best fit your trading style. PrimeXBT is also running an exclusive promo for listeners of the Cryptonews Podcast. After making your first deposit, 50% of that first deposit will be credited to your account as a bonus that can be used as additional collateral to open positions. The promo code is CRYPTONEWS50. That’s CRYPTONEWS50 all one word to receive 50% of your deposit credited to your trading account. Again, that is CRYPTONEWS50 all one word to receive 50% of your deposit credited to your trading account. And now back the show with Julian. Julian, before we took a quick break there, you mentioned the risks to the whole Crypto and technology sector that is currently being imposed by the banking system. They keep bringing down the hammer. Not only are they really just putting a wrench in everything with the absurd amount of inflation, but they can’t get their stuff together and now they’re coming down on all of us Crypto folks as well. You finally saw a lot of Bitcoin narratives pop up. I’m not a news guy. I don’t watch any news, I don’t watch Fox, I don’t watch CNN, I don’t watch any of the Canadian shit either. But I do see the clips on Social and you would see people like Bellagi getting a spot on and CNBC or the Money Network or whatever you want to call it. They would have him on every single time. There’s some US dollar contagion, just like what we saw with Silicon Valley Bank. It’s an absolute shit show right now. What is the next six to twelve months look like? How is this going to impact Bitcoin? You also have a very good take on the future of stablecoins. Give me your sort of outlook over the next six to twelve and moving forward months.
Julian Hosp
We’re just going to see more and even, I think an extreme aversion of what we have, especially over March. I mean, March specifically because January February wasn’t even that much, but really specifically March, I think we’re going to see more platforms, more firms really getting the hammer. To me, it’s very telling that the CFTC goes after Finance and not the SEC, because the CFTC just has way more power when it comes to that. I wouldn’t be surprised at all if there’s going to be some criminal procedures as well. Going after CZ, I would assume that the SEC goes after BNB. So these are just things that we’re going to see more and more. I think anything that has done an ICO in the past, I don’t know, two or three years, probably even all the way back till 2017, anything that has done an ICO, whereas anyone to kind of grab is listed on some platform that serves us customers, I wouldn’t be surprised. They simply go by market cap and just target one after the other.
Matt Zahab
Yup.
Julian Hosp
So it’s just going to be more of the same at the end. What this is going to mean over the next six to twelve months? I think those platforms that have played it conservatively, that have really kind of tried to do it well, I think they’re going to definitely survive. They’re going to have a way stronger kind of form. I think those platforms that have not done ICOs, that have done that have a very decentralized playbook. I think they’re also going to do extremely well because they’re going to be on the other end of the spectrum and in my understanding and in my prediction, decentralized protocols, like even if you try to regulate them, I mean, it’s just almost impossible. So I think the SEC or the CFTC are especially in this case, the SEC is going to understand that. And yeah, I think anything that you believe right now is still safe. It’s going to keep going. And even though, for example, and that’s just obviously a really crazy thought, even though, for example, owning Bitcoin could never be made illegal by itself because all you’re doing is basically memorizing 24 words, just kind of talking about it, and the regulator could talk about it. I mean, you hear this right now in the US on political sides, just talking about these things is going to scare people and it’s going to put pressure on everything. So, yeah, this entire operation choke point, I think it’s real. I think we’re going to see more of that. And at the end, the industry is going to survive. It’s going to make it, but it’s going to look a bit different than it does right now.
Matt Zahab
You also think that, I love this hot take yours. But you think that CZ and Binance are just sort of artificially pumping the market. I’d love if you could dive into that a little bit.
Julian Hosp
So I’ve been very vocal about this since mid December, I’ve been vocal about it probably since end of January, that there’s something iffy going on with BUSD. Now, I want to be very clear here, so full disclaimer. Obviously, as you mentioned, I’m the CEO of a Crypto platform. We are not a direct competitor of Binance, but obviously there are always parts where we do have some competition. So obviously I have a conflict of interest here. Take everything I say here with a grain of salt. I just want to be very transparent and fair about this. Neither myself nor the company has any meaningful exposure either to BNB Binance or BUSD. So just like, really, I want to get this out of the way. Let me tell you a few of the facts. And you can check this yourself, right? Binance in the middle of December, and you can check out these news reports. Comes out and says we’re going to reduce all trading fees of BUSD to Bitcoin, to ETH, and to BNB to Zero. Plus any stablecoin that gets deposited to our platform will be one-for-one converted to BUSD. And you can just do this without any fees. What would you expect would happen to the BUSD market cap in such a case? If trading fees go to zero? So you would expect everyone deposits their Bitcoin. ETH, BNB starts trading against BUSD. There’s no trading fees.
Matt Zahab
No one’s using it, yeah.
Julian Hosp
Plus you can convert all the stablecoins, USDT, USDC, USDP at no charge. One for one for BUSD. The thing that you would expect is man BUSD market cap from that news must be consistently increasing because more and more people would get into BUSD, and the exact opposite happens. The exact opposite. You can check this out from mid to end December, the BUSD market cap keeps not only going down, it crashes. It goes from like 25 billion in a super short time frame to like 20 billion and then to like 15 billion. And right now it’s sitting at like seven or 8 billion. Now, what we obviously know is that in February, Paxos was informed by the SEC that they have to stop issuing BUSD. And from that, obviously, it makes a lot of sense that since then, the BUSD market cap drops even more. But so now comes obviously a bit of the rumor mill here and now a bit the understanding. So if I reflect on my own company, all our profit is spread in three forms. Either we have dollars, we actually have dollars. We don’t do stablecoins, so we actually have dollars, we have Bitcoin and we have ETH. So that’s how our treasury is managed, right? So when we make money, this is how we store our money. I would not be surprised that Binance doesn’t do this similar, just that from everything that we have seen and read from CZ, Binance doesn’t have a bank account or no meaningful way to actually have a bank account. So if you don’t have a meaningful way to have a bank account, what’s going to be your number one thing? Well, you’re going to have stablecoins. And if possible, you actually control a lot of that stablecoin, you don’t take much risk. And maybe with whoever is issuing that stablecoin, you can have a win win situation where you can share some of that interest, right? So you can actually get cash flow on this. So what basically Binance, in having Paxos issuing BUSD has is that Binance actually has a bank account without having a bank account. Now, that could be now here, this is really speculation here. There could be that Paxos itself or the bank the regulator, wasn’t aware how many stablecoins Binance was holding themselves. And you could say maybe out of the, I don’t know, $25 billion of stablecoin, maybe Binance themselves were holding, I don’t know, the majority of them, 20 billion, maybe 20 billion BUSD were Binances, right? And maybe only a small number of stablecoins were actually someone else’s, because you could only use BUSD on Binance. And since trading fees and so on were completely the same as all the other coins, it didn’t make any sense for people to actually buy BUSD when they could hold all these other stablecoins. So my entire kind of theory on the pump after January, and so I came up with this idea in January because I didn’t understand why Crypto pumped so hard from end of December until the end of January. I just didn’t understand it. And to me, the explanation is that Binance knew about the issues with BUSD because obviously there was some communication there they had to get out of BUSD. How do you get out while you create exit liquidity? You cannot trade BUSD into the other stablecoins directly because there’s never enough liquidity. So what you do is you go from BUSD into other stablecoins that other people give you. Why would they give it to you? Because you allow it for them to be converted for free. And that’s exactly what binds did. Plus, you sell BUSD for Bitcoin, ETH and so on, which was happening on the platform at no trading fee.
Matt Zahab
Ofcourse.
Julian Hosp
So you actually create this exit liquidity and as soon as BUSD went into a small discount because the selling was too much of BUSD, the market makers could jump in and could arbitrage this entire thing out, which is exactly what happened. And so at the end and that was to me the key thing, it was never Binance going to Paxos and redeeming their BUSD for dollars because they didn’t have a dollar account. It was probably market makers and many others and so it never really popped up. And so to me that’s just the entire story of Q1. I know this is a very controversial story. I know that anyone listening to this who is like a huge Binance fan, it has actually nothing against Binance. So I don’t want to be there’s nothing critical of CZ here. I don’t think he did anything illegal, I don’t think he did anything shady. I think he’s just really good at money managing, to be honest, right? But I think it just has to say a bit on why did Bitcoin pump so hard in comparison to everything else. And I think that narrative right now that so many people kind of run after, which is oh, this is just because of the banking crisis. Yeah, sure, there’s some to that, but not a 70 80% pump that we have seen. And I think that really has to do with Binance selling billions of dollars of stablecoin mainly into Bitcoin.
Matt Zahab
If Binance goes that’s jeez Luis, the second and third order network effects will not be good for all of us. But let’s hope that doesn’t happen. Julian, we are on fire. I know we are getting a little tight for time. A couple more things here I’d love to get into the growing demand of DeFi for institutions. You’re seeing world class financial institutions starting to offer perhaps, I don’t want to say exactly DeFi, but a sort of a very similar parallel type of decentralized finance in a centralized way. I’m sure you are getting tons of inbound as well on this. What’s happening right now? Why are so many institutions so horny for DeFi solutions?
Julian Hosp
Yeah, what was so interesting, so originally. At Cake, we thought, we’re offering this super transparent product. We’re going to get a lot of high net worth individuals, we’re going to get a lot of institutions who want to use this. And on the one hand, we were completely right. People did want to use it, but we were completely wrong. They didn’t use Cake. And the reason is because it was so transparent, they could just do all this stuff themselves. And we were not black boxing anything. Everything was completely transparent. So the lesson here was we had to give institutions something that was basically a plug-and-play solution, where they could keep the private keys, but they could get access into this entire crazy world of DeFi. And at the end, that’s how last year we started our enterprise arm, where people could come and institutions could come and basically have a copy-paste version that we have at Cake for retail and here it’s for enterprise to me, why is that? Where it’s coming from? Well, obviously any investor, be it small or large, wants to have great yield, wants to have great returns. And yes, I know that Crypto as a whole, but DeFi also over the last year didn’t do so well. But I think many people understand that this could change, right? And maybe we’re not going to see a straight line up, but we can see good returns. And I mean, Crypto has outperformed pretty much any other sector this year so far. And people are obviously hoping that this could continue. And so I think that’s where we’re seeing massive interest. And with the crackdown, a lot of institutions are just worried on who they use, what they use. They tend to be very cautious. With US firms right now, a lot of their custody providers are US firms. So companies get really cautious in this. Yeah, so they’re looking for alternatives.
Matt Zahab
Last story we got to go over, and this is one of the most electric stories I’ve ever heard of. Candidly I didn’t get to see this. I wish I did. I figured this out and found this out after doing research for the show. But you need to tell me about the time where you went on YouTube Live and sold 10 mil worth of Bitcoin right before the price had peaked. You were telling all of your followers, your community, everyone and anyone that you felt a correction was coming, and it did. You were bang on medullion, and that takes a set of cajones to sell 10 mil worth of BTC on YouTube Live. What was going through your head? Were people like, dude, you are off your rocker. Like, tell me the whole thing. I need to know every little detail about the story. I frigging love it.
Julian Hosp
So in 2017, again, I’ve been in this space since 2014 and 2017, there was this insane exuberance, and I was on stage, actually in Austria with the economic minister. He was also on stage with me, and this was in mid December 2017. And I told people, I said, look, I know there’s a lot of hype right now and I don’t want to be the party pooper here, but I’m going to sell a lot of my Crypto holdings because I’m just really nervous right now. And people didn’t believe me. They really didn’t believe me. They just thought I was like, shitting with everyone. And I did sell. And then what happened was the market in January, like, a month later, completely crashed in 2018. And on the one hand, people still don’t believe until today that I sold at that point, but I did. And then I started buying again in 2018, 2019. I bought aggressively during the COVID crash and actually in March 2021. So about two years ago, I actually told people that I really think there is a top right now and that I’m shifting my assets into Bitcoin because I actually think Bitcoin is going to do well. And while I was completely right that this was the top, I completely misjudged how important stablecoins had become. And basically Bitcoin just collapsed like any other coin. And so I was like, crap. This time I really missed the top. I really missed it. And so I was, like, really frustrated with myself. And yeah, so I was like, okay, now we just need to stick it through. It’s probably going to take until 2025 or something until we’re doing well again. And then there was this entire, to me, completely unexpected hype in October, in November of 2021. A lot of it, obviously, with the Bitcoin futures. And I didn’t understand this entire hype around the Bitcoin futures because to me, there was zero value added. Then people were talking about a grayscale Bitcoin future, a grayscale ETF, and so I said, you know, if this grayscale ETF actually gets converted, this is super bearish for the Bitcoin price. People just don’t understand it. These Bitcoins are already sold. If this ETF happens, they actually get on the market and Bitcoin crashes probably by 40%, like, what the actual discount is right now. So I said, this is so bearish. Like, I don’t even understand why people are so bullish, right? And I’m just someone who’s intellectually honest about these things, and I’m not this person who just kind of creates these fake kind of stories. So, again, I have just been incredibly lucky with getting into Bitcoin and making tons of money in Bitcoin. So, I mean, there were times I had over 2000 Bitcoins. I mean, you have to put this back at a time when you could buy this. This was not that much money, right? So we’re talking about $100,000, and people like, sure, I mean, $100,000 is a lot of money, but it’s like, totally different money than 2000 Bitcoins today. Of course. Yeah. So I have this really insane amount of Bitcoins, and I wanted to tell people, say, look, I don’t know if Crypto is going to crash. I really don’t know. However, I just don’t understand why there’s this hype right now. I just don’t get it. Where is this coming from? Like, a Bitcoin futures ETF. How is there any value in this? If grayscale actually gets converted, man, we’re really screwed. Like, I just don’t see the upside. So I said, you know, look, I’m not selling everything, but I just want to show you that I’m actually selling, right? I’m not buying, I’m selling. And I’m saying this as a CEO of a Crypto company. So we’re not an exchange. So I went to Kraken. Kraken has been since 2014. The exchange I’ve always used. I know Chessy, the CEO. I really love how Kraken can operate. I kind of love these principles. So I went to Kraken. I had $10 million in there. I think it was, what, 140 Bitcoins or something, and yeah, just sold them in a YouTube video. And I was talking about this, and people like, they were shitting on me for the entire 25 minutes that I was selling those $10 million, right? And I told people, I said, look, this is not my entire holding. I may sell even more going down the line. I just want to tell you that I just think right now there’s exuberance that I don’t understand. right? And if I don’t understand something and I know the space really well, then I rather have less exposure. And I had insane amount of exposure. This was a time when I had probably, like, 80, 90% of my entire net worth that was liquid in Crypto. Plus I own 50% of a Crypto company. We have no alternate investors, right? I owned this company and this company, like, about a year ago, Cake was valued at over a billion dollars. So I had suddenly such a massive kind of exposure to Crypto. And I said, Look, I love this space. This space is going to do really well. But I’m not sure I feel comfortable having, like, basically 90% of my liquid net worth and 99% of my entire net worth in Crypto right now, and you shouldn’t either. So I was very transparent about this, and people just hated on me. It was insane. And the Bitcoin price was like, 62,000 or something. And for days afterwards, right? This video had, like, I don’t know, tens of thousands of views in super short time. I think it got over 100,000 views in super short time. And people would just have fun staying poor. You’re going to do so bad? Inflation is going to eat everything up. And my answer was I said, look, don’t get me wrong. I atually hope that Bitcoin goes and triples because I still have so much more. I just want to show that I was skeptical and I didn’t think I was going to be right, that the market was going to go down. I mean, if I had thought that, I would have shorted the entire market because I want to make money at the end, right? I didn’t think the market was going to crash. I just thought it was completely exuberant. And to be honest, the experience was crazy. It was crazy to see the hate that you get from people during that time. People just didn’t want to see that. They didn’t want you to make that kind of money. And for them, it was like, oh, you’re going to stay poor and the money is going to get worse, less. And I don’t know, it was just crazy to kind of see this. There was very few people who were like, man, congratulations. Like, wow, you know if I would have that kind of money. It was insane, right? And to me, it was like, look, even if I lose everything else, I have those $10 million like, me, my family. I don’t have to worry about shit, right? It’s like FU money. I don’t know. I’d rather have that than anything else. And it was just an incredible it was a crazy experience, not only during that video, but the reactions I still get today. Really, I still get today. They’re not positive. People are not happy for you. That’s just a trait.
Matt Zahab
Everyone’s jealous. That’s just how life works. Fear and greed, right? Everyone’s greedy. They wish that their feet were in your shoes and were switched on enough to buy Bitcoin back in what do you say? I think 2014. Heck, I wish I bought it too.
Julian Hosp
I wish I had bought everything. I wish I had leveraged. Of course I wish I had shorted Bitcoin in November 2021, but it’s ridiculous. I would have never done that. Of course, I would have never done that.
Matt Zahab
Julian, this was incredible. You’ve been buzzing the whole show. We got to jump in the hot take factory. Before you go, give us a couple of hot takes. Let them fly. Stuff that only you believe in, whereas most other people do not. Give me a couple before we go.
Julian Hosp
I think the main thing that I believe in that most people don’t is I’m very moderate about it. I see upsides in Crypto, I see upsides in Fiat. I’m not this person that says all about Crypto is great, all about Fiat is bad, or all about Fiat is great and Crypto is bad. I see the good sides in both. And just like in anything right now in life, if you are a moderate, if you’re in the middle, if you see good and bad on either side, I feel you’re alone in the minority and that’s how I feel sometimes. So that’s my number one hot take and that’s the key one. And I hope that more join me on this. A bit of a moderate take in everything, not only in Crypto, but like, in life and social issues and political issues and, yeah, just don’t take stuff so extreme.
Matt Zahab
I love that. Julian, what an episode. You were on fire. Learned a ton, had a blast. Thank you so much for coming on. Before you go, can you please let our listeners know where they can find you and Cake DeFi online and on socials?
Julian Hosp
Sure. I mean, socials on Twitter is either my handle it’s @julianhosp or our company’s name is @cakedefi. And yeah, if you want to head over to our company’s website, it’s cakedefi.com. You can sign up and get cash on your Crypto Bitcoin, ETH, DeFi Chain, many coins, so staking liquidity mining on chain lending. Check it out. Thank you.
Matt Zahab
Love that. Julian what an episode. Appreciate you coming on and looking forward to round two in the near future.
Julian Hosp
Appreciate it.
Matt Zahab
Folks what an episode with Dr. Julian Hosp. Bringing the noise. Tons of incredible stories, tons of great alpha. We love to see it. Some spicy takes to everything you want we had it. Huge shout out to Julian and the team for making this happen. To the listeners love you guys thank you so much as always. If you enjoyed this, and I hope you did, please do subscribe. To the team love you guys thank you so much for everything. Justas, my amazing editor appreciate you as always, my man. And back to the listeners. Love you guys. Keep on growing those bags. Keep on staying healthy, wealthy, and happy. Bye for now and we’ll talk soon.
