‍Crypto Market Conditions Impact on the Hedera Ecosystem - Twitter Spaces hosted by HBAR Foundation

Welcome to another Hedera ecosystem Twitter Spaces brought to you by The HBAR Foundation. In this discussion, we'll be talking about how Hedera fits into the current tumultuous crypto space with our main guests, Mance Harmon, CEO of Swirls Labs, Shayne Higdon, CEO of the HBAR Foundation, and Elaine Song, VP of Strategy at the HBAR Foundation.

They take questions from the audience, so request to be a speaker to join in on the conversation. Keep in mind that none of the information shared should be taken as financial advice, and only be used for entertainment or educational purposes.

The panel will be discussing the recent revelations about FTX and its impact on the Hedera ecosystem, as well as how The HBAR Foundation is positioning itself in the short and medium term. Tune in to hear insights and perspectives from the leaders in the space.

Transcription

HBAR Foundation – Brandon - Host
‍All right, welcome back to another Hedera ecosystem Twitter Spaces brought to you by the HBAR Foundation. I'm Brandon, and I'll be your host today. We're going to talk to some of the leaders in our space about how Hedera fits into what's a very tumultuous crypto space at the moment. Our main guests today don't need too much introduction with this audience, but I'll do it anyway. We have Mance Harmon, the CEO of Swirls Labs, he's going to be joining shortly. Shayne Higdon, the CEO of the HBAR Foundation, and Elaine Song, the VP of Strategy at the HBAR Foundation. Just a heads up to the audience, Shayne's going to be leaving in about a half an hour, and as mentioned, Mance is going to be coming a little bit late, so take that into consideration with your questions. We have several topics and questions ready for the panel, but we welcome questions from the audience as well, so simply request to be a speaker, and I'll bring y'all on up. As always, none of what you hear today is financial advice. Use it for entertainment or educational purposes only. With all of that out of the way, Shayne will start off with the elephant in the room. What was your initial reaction to the revelations that came out about FTX?

HBAR Foundation – Shayne Higdon - CEO
‍Thanks a lot, Brandon, thanks everyone for joining, and good afternoon, good morning, good evening to all of you. It's been it's been a tough couple of days for a lot of folks, and you know I'm assuming you were shocked like the rest of the world, and certainly I was. And as we continue to see this onion being peeled each and every day, it's just shocking the lack of controls that were in place. I'm sure you guys saw the latest CEO comment, the gentleman who restructured Enron, etc., saying you know this is just unprecedented. You know what's good from the HBAR Foundation's perspective is that we had limited visibility or knowledge of FTX's operations, because HBAR was not listed on FTX. So, these current events highlight the need for us to have sensible regulation and centralized entities in the digital asset industry, the custody con assets. So I think that you know, like you, largely shocked, no exposure to FTX's, so we feel like you know we're in a position of strength from that perspective, but certainly want thoughtful regulation to come into the market. I think it's going to take some of the money that is you know on the sidelines, and there's a lot of it, and bring it into our space.

HBAR Foundation – Brandon - Host
‍All right, so that addresses the HBAR Foundation specifically, but how do you think the FTX fallout, in contagion, impacts the various parts of the Hedera ecosystem?

HBAR Foundation – Shayne Higdon - CEO
‍You know, it's certainly being felt throughout the industry. I mean, we're seeing, again, I think it's Genesis today or yesterday that's you know certainly stopping you know withdrawals. We haven't been directly impacted, and so we do sympathize though with those that have, and you know when you've got that amount of assets, it touches a lot of people. I think that you know, one thing that did was a big brand partnerships with you know, media, sports teams, individual you know stars that really promoted this, and I think it you know it only speaks to how FTX which was a cantralized was run, and not to the digital asset industry specifically as a whole. And so, if there's no better advertising for decentralization, it's this.

HBAR Foundation – Brandon - Host
‍Yeah, absolutely makes perfect sense. As mentioned a little bit ago, I do want to say Shayne's going to be leaving in about 25 minutes, so if you do have any questions for Shayne, try to make it in the first part of the conversation. This next question or comment is going to be for both Shayne and Elaine. How is the HBAR Foundation positioning itself for the short and medium term considering these revelations right now? Shayne, real quick, I'm sorry, you were breaking up pretty bad there. You might want to put if you can get onto a Wi-Fi or something like that. I'm not sure if everybody was having the issue or if it was just me, so I'm going to let uh Shayne address this or I'm sorry, I'm going to let Elaine address this real quick, and then maybe you can come back in a second and your signal will clear up again. Yeah, we can hear you fine. So, how is the HBAR Foundation positioning itself for the short and medium term?

HBAR Foundation – Elaine Song – VP of Strategy
‍Yeah, so I think the key thing to remember is the purpose of the foundation, which is to accelerate and encourage growth within our ecosystem, both for developers and founders, and also of course our community. You know, I think as the market changes, and you know we enter into more uncertainty, I think the way we support our teams and like the various components of our ecosystem will naturally change as well. I think one thing we're really excited about, and it's less impacted by the market, but actually more impacted by the work we did this year in 2022 with all of the amazing teams that have entered our ecosystem, is to focus next year on continuing to grow and nurture those teams. So, there's a concept that exists and that's become more popular in the VC and PE world, which is the concept of an operator. Right, so in addition to providing capital and resources to startups and founders, these funds also provide support in the form of the expertise of individuals who have experience building these products, running these products, and so I think that's one thing that we're really excited about next year is how we can leverage the amazing expertise that we have within the foundation to continue to provide hand-in-hand support to our teams who are building. So, I think what we're hoping to see is the continued growth of our ecosystem, of our communities that are forming even within the broader Hedera community, and then starting to see more services, more products, more use cases come to market in 2023. And I think when we look at what towards the end of 2023 and what the next bull market will look like, you know, we've seen this in cycles past, the kind of growth and development and the maturity that happens during the quiet of a bear market tends to kind of explode with the run-up to a bull market, and that's definitely one that the foundation is looking to position our ecosystem in.

HBAR Foundation – Brandon - Host
‍Yeah, it makes a lot of sense. We do have a question here, 0.0.Monkey. If you want to come up, let us know who you want to ask the question to, and make your question or comment.

Creamies – 0.0.Monke - Founder
‍Yes, hello. Thank you for having me. I'm a creator in the space. I've been here for almost a year, maybe eight months. I just wanted to say you guys are doing a great job, first of all, the foundation, kind of, bootstrapping the ecosystem with liquidity and just helping people and bringing people on board and you know bringing other creators and teams from outside of the ecosystem. My question is mainly the community has been talking about this, and we're in spaces a lot and we do a lot of efforts to kind of onboard retail, and we were wondering why it's the, I don't want to say it's difficult, but we feel like the trend is a lot of support is going to the creators that are outside of the ecosystem, but we have so many that are building in the ecosystem that have been here for a year, maybe eight months, where we feel like okay, I, we understand what you guys are trying to accomplish, but we feel like it's been a little one-sided as far as like support for people from outside of the ecosystem rather than people who have proven themselves and won't go anywhere if their project, let's say, hits a hardship during their progress.

HBAR Foundation – Brandon - Host
‍Okay, this one might be good for Shayne. I hope we have his connectivity issues straightened out. Shayne, do you want to take that one?

HBAR Foundation – Shayne Higdon - CEO
‍Yeah, so Brandon, can you hear me now? I'm sorry, Shayne. Thank you. Okay, okay, good. Um, so, you know, listen, I, we certainly want to make sure that the projects that have been building on Hedera uh, continue to do that and are successful and you know, whether it's, you know, so many of the applications, like Zuse Marketplace and others, that you know, have built and provide opportunities for creators to lean into, you know, a marketplace, a set of users, we want to continue doing that. I am unaware, um, and maybe there's something specific I'm not aware of that we haven't been funding key projects that are successful. I just, you know, um, it certainly our intent is to build these economies on you know our network.

Creamies – 0.0.Monke - Founder
‍I guess the point was, um, a lot of people in the community, creators, consumers alike, we were kind of worried because we understand you guys are kind of, uh, heads and shoulders above everything that's happening in the ecosystem, so it's hard for you to gauge where the real value is coming from. Um, we were kind of wondering what the methodology of choosing the, how you say, the grantees were and if we could help and assist in that.

HBAR Foundation – Brandon - Host
‍Yeah, perspective is a big part of it. Um, they are trying to take the big picture view. Um, I know there's been plenty of projects that we're building in the space from early on that have gotten support from the HBAR Foundation, and of course, we're trying to bring people over from uh, other networks as well or other ecosystems as well. I do want to welcome Mance up. I hope your night's going pretty well, man. Um, how are things going?

Swirlds Labs – Mance Harmon – Founder & CEO
‍Hey, Brandon, I'm well, thank you. Thanks for hosting me here tonight.

HBAR Foundation – Brandon - Host
‍Absolutely, and thanks for coming. Uh, the next thing we want to get into, you know, the latest happenings will inevitably impact regulation and possibly even legislation for the crypto space. What are your thoughts on how the regulatory and legislative landscape will change going forward? And, of course, this is open to anybody up on the panel, but I'll start with you, Mance. What do you think the regulation is going to look like or legislation going forward?

Swirlds Labs – Mance Harmon – Founder & CEO
‍Well, what I can say is that I viewed this as the silver lining of everything that's going on right now, especially with FTX, right? I mean, it's been a brutal but six months now with all of the, uh, with all the collapse, and so many people that have been hurt through this process. Uh, that's obviously all of that is a bad thing, but the result is that the regulators, not just the regulators, um, but the, the Congress, uh, and the public at large is now demanding regulation. What's it going to look like? Who knows, right? I mean, the problem here is that, well, the good news leading up to all this is, there's been a lot of education, right. There have been a lot of projects, including Hedera, and associations, that have been interfacing with the regulators for several years now, and so the regulators themselves are far better prepared to try and do meaningful regulation without destroying the, the ecosystem, the, you know, the crypto ecosystem at large. So that's the good news. The bad news is, there are a lot of angry people right now, and, uh, and, and so you just don't know what impact that's going to have on the tone of the, uh, the process that we have to go through here in the next six to 18 months to get meaningful regulation, but you know what doesn't kill you makes you stronger, right? That's the old adage, and I don't think that it's going to kill the ecosystem. I don't think anyone wants to kill the ecosystem as long as they don't overreach and there's regulation that works. Then I think we're going to come out of this in a much better place, and it's not too far around the corner now. Everyone can see it's just around the corner.

HBAR Foundation – Brandon - Host
‍You kind of mentioned how you're engaging with the legislators and the regulators. Should the community engage with their representatives or in any of these coalitions that are advocating for reasonable legislation and regulation?

Swirlds Labs – Mance Harmon – Founder & CEO
‍It's an interesting question. I think it can certainly be helpful to be honest with you. I'm thinking in real time here. It probably would be a good idea for there to be some guidance about exactly what that kind of engagement would look like and what should be said, so that's a brainstorming exercise. But I think it could be helpful and there just needs to be somebody, whether it's us or one of the larger associations, providing that guidance on what to say. That should happen. And to be honest with you, Brandon, I haven't gone to look recently with the associations to see if they're already proposing something that the general constituents should or could do. That's an exercise that we should take.

HBAR Foundation – Brandon - Host
‍Yeah, and I know our community has a lot of fantastic opinions about this stuff and I'm sure they could bring some value. Shayne, do you have any opinions on how the community could get engaged in this conversation?

‍HBAR Foundation – Shayne Higdon - CEO
‍Yeah, great question. So a couple things I want to point out. One is that I think that, yes, we should all engage with our representative and demand investigations into FTX to make sure that we have a measured and thoughtful response. I mean, the HBAR Foundation is certainly doing that. You know, comforted that many of the reports coming out indicate that the approach that regulators such as the DOJ, the SEC, and the CFTC are opening investigations to these events. I think that regulation is absolutely going to be good. When you think about the height of the bull market, where the crypto economy was two trillion dollars, I mean, that's less than 2% of the total economy size of the US. It's a quarter of a percent of the global GDP, so I mean we have just touched the surface. There's so much money sitting on the sidelines, and so I think if we're going to respond, and I would advocate that we respond to our regulators, to our senators, and our state's House of Representatives to make them aware of the innovation happening in the space. I think that is key, and that's where we focus our time and attention, is on the innovation, the use cases, solving real problems with real use cases on the network. And we believe that these enterprise, this enterprise focus, the DeFi focus, the things that we've done as a network over the last four years are going to begin paying dividends in the years to come from being able to have these live use cases running on the network where we become a destination. And I think that many of the regulators and certainly the folks in government don't necessarily appreciate or understand all that has been built in a real way.

HBAR Foundation – Brandon - Host
‍Yeah, agreed, agreed. May, I saw you had your hand up. We're going to go to May. And then we'll go down to H-Bar bulll.

HashPack Wallet – May Chan – Founder & CEO
‍Yeah, absolutely. I think this is a really interesting discussion, and the question of what we can do as a community that maybe isn't particularly chum chum with the regulators and the senators. If there's a way that we can reach out, you can reach out to your local representative and the people who are making the policy. I think that is absolutely something that we should do, but in the meantime, as people who are participating in the community, I think it's really important for us to hold ourselves to a higher standard. And I think the Hedera community is excellent at doing that, where we look at a project with a critical eye and we don't just assume that when a project promises the moon, that it's going to go there. I think that's something very unique in the crypto space, where our platform and the people who are building in it and the people who are excited about it are all very critically minded and looking for the long term, probably more regulation-friendly than most of crypto because we're here for the long term. We're here to build something that will last, and not just looking to line our pockets. So I think from a community standpoint, one thing that we're doing really well as Hedera, as Hedera fans, is that we look at projects and we talk about them, and we hold them to a higher standard. And when there's something that isn't quite right, we talk about it on social media or in private, and we try to make everybody more accountable for their words. And I think that if the regulators are providing us guidance from above, then the community can also push those standards from below. And you know, we can come to a happy medium where we find less problems like FTX and other projects that aren't doing things by the book, doing things a little bit on the shady side. These are not crypto problems specifically. These are people problems or community problems. So I think that we can really have an impact just on the individual level if we hold ourselves to that standard.

HBAR Foundation – Brandon - Host
‍Thank you, May, and next we'll go to H-Bar bull. If you want to go ahead and ask your question or make your comment.

Community Member – Hbar Bull
‍Hi. Uh, first of all, I'd like to say I am an H-Bar bull and Brandon, you're definitely the, uh, your the-H-Bar bull. My question is to Mint, or I guess, in general. So recently, I heard that there was a problem with mirror nodes getting bad data. And I'm kind of curious from the side of a mirror node. Right now, I guess I feel like that's a big vulnerability in the network if the data is corrupted, then any meaningful information about the network for outside users might be altered, meaning that the interaction with the network won't be as safe. And I was curious what the long-term view of mirror nodes will look like. Do you anticipate that it'll be a market-driven solution where a bunch of people will host mirror nodes for some money, and how you think certain business models for them would succeed.

Swirlds Labs – Mance Harmon – Founder & CEO
‍The vision has always been that mirror nodes are managed and deployed because there is an economic incentive to do so, outside of Hedera providing those incentives. You know, there are use cases and applications, products that could be built that sit on top of a mirror node that consume the information that is in a mirror node and is enabled by the fact that the mirror node tech exists in the first place. That you couldn't actually go to market or build the application, or you couldn't do it as efficiently as you can if you just as a part of the product host a mirror node, you know, that part of the ecosystem has to mature, obviously, and it's still not there today, but that's always been the vision, is that the mirror nodes exist. They may have to be subsidized in the short term, but there will be companies that build products and services around them that are enabled, those products and services being enabled by the fact that the mirror node tech exists and can be used in various ways. And that the market itself would provide that capability and make money from it. So that's the vision, that's the goal, but as the community knows, we're just not there yet. It may take several years to get there.

HBAR Foundation – Brandon - Host
‍And we do have some really good private solutions for mirror nodes with LedgerWorks and Arkhia. So if we have any representatives from Arkhia or LedgerWorks down there, if you want to go ahead and come up, we'd love to hear your opinion on the mirror nodes. Uh, so I'll go into another question, and then we'll go to Cataclysmo. Exchanges have been talking about proof of reserves a lot over the past week, understandably, and though it's a slightly different concept, FIS has a feature called proof of reserve, which uses Hedera for their USDC stablecoin payment options. Can we talk a bit about this and the other ways that Hedera can help add trust, not only to the crypto space but to traditional finance as well? Mance, do you want to start off with that?

‍Swirlds Labs – Mance Harmon – Founder & CEO
‍So the USDC, you know, I was frankly, Christian, Christian, are you with us?

HBAR Foundation – Brandon - Host
‍Yeah, Christian, if you want to uh request to be a speaker, I can go ahead and bring you up. I did see him down there a little bit ago.

Swirlds Labs – Mance Harmon – Founder & CEO
‍I see him there now. What I'd like to do is lean on Christian because I think he knows more of the details of this USDC implementation than I do.

HBAR Foundation – Brandon - Host
‍Okay, I just uh invited him to speak.

Swirlds Labs – Christian Hasker – CMO
‍Hello, I, I wish I did know, Marshall. I don't know, I don't know too much about it, um, other than I have um had a little bit of back and forth with Si and the bill from FIS, and the idea is for stable coins that you want to make sure that the stable coin itself is backed one-to-one for each stable coin dollar. So if you have 100 in uh stable coins, you want to make sure that they are backed by 100 real dollars. So they are building a real-time, and this is the biggest difference between the proof of reserves that you hear from things like Binance, which take a snapshot of um an account, which holds the assets, uh, you know, maybe it's once a month, once a quarter, to real-time with um Hedera consensus service, so you can always see that there are real dollars on the balance sheet backing real uh USDC in this case. Um, so beyond that, like architecturally, how they're doing it, I'm not entirely sure, but that is the goal, to have a real-time system that's always logging uh this data to Hedera consensus service.

HBAR Foundation – Brandon - Host
‍Thank you, Christian. Is there any other ways that we're adding trust, um, either to the crypto space or to traditional finance? I know that Aberdeen has some things going as far as the tokenization of their funds, uh, anything else on that uh that thread?

Swirlds Labs – Christian Hasker – CMO
‍I mean, I think the biggest area that we're starting to see explode, and uh, the team is currently in Egypt at Sharm El Sheikh for COP 27, is that in the sustainability markets, you have a lot of opacity to do with the actual data itself coming from either sensors or coming from people self-reporting or coming from the tokens, the carbon offsets ensuring that they are not being sold to multiple parties the same token multiple times. So, you know, those are all things that distributed ledgers, and especially Hedera with both consensus service and then token service, are ideally suited to solve. So, I think that was the one that sprung to mind.

HBAR Foundation – Brandon - Host
‍Yeah, that could certainly be the first step, you know, almost as a proof of concept that can be used elsewhere. I'd like to go to some of our audience questions. We have Cataclysmo, if you want to go ahead and make your comment or ask your question, we'd love to have you.

Community Member - Cataclysmo
‍Hello. Uh, my question is for Mance. When you found Hedera, how far did you see the ecosystem being or, you know, your uh, how far do you see the ecosystem being as in comparison to how what it is from that right now in 2022?

Swirlds Labs – Mance Harmon – Founder & CEO
‍Yeah, so when you start a company like this, you always kind of hope for the best. In other words, I sometimes call it, you hope that lightning strikes and you have fantastic success. It's so we clearly had a vision for having a large ecosystem and growing this into a global platform that the world could use. But it's like what's the old adage, you eat an elephant one bite at a time. And that's what we've been doing. We had a big, big vision from the very beginning and we knew that some parts of that vision looked very different than the rest of the market of platforms out there. And governance is a great example of that. You know, so we've always believed that the tech was really important, but if any of you have watched any of my videos where I've talked about the value proposition of Hedera, it's always both. It's the technology and it's the governance model. And the thesis that we had from the beginning was that over time governance would become more important than the technology. We just didn't know how long that would take. And now here we are, what was it, five years later since we started Hedera? Anyway, longer than that for Swirls and just Hashgraph in general. And it's all playing out in front of us. And so the governance of the network and the way that we've approached it has put us in a position of real strength and gives us the opportunity to take market share, if you want to use that phrase, to sort of take market share in a way that the other platforms just are not as well positioned to do. We don't know what the regulations are going to look like, but what I can say is that we have a degree of optionality because of the approach that we've taken and where we sit as a network. All of our nodes are KYC nodes today, right? Every single node is a known node. We are an open platform but with a permissioned set of node operators. And that just puts us in a better place in terms of optionality than fully open, permissionless networks depending on how the regulatory environment shakes out in the next six to 18 months. So we've always wanted a giant ecosystem. We wanted to be a global player. We've had a good degree of success while also being very conservative and clear-eyed in terms of how the landscape would evolve over time. And it's now playing in our favor.

HBAR Foundation – Brandon - Host
‍All right, I am going to go to Captain Brando after this, but that was a perfect segway message to one of the ones on my list. You know, when discussing the issues that are arising in the crypto space, lack of effective governance has been brought up recently. For example, FTX didn't have a board overseeing their operations. Hedera has focused more on governance than pretty much any other platform out there, at least in my opinion. Do you see the renewed focus on governance as a validation of your strategy?

‍Swirlds Labs – Mance Harmon – Founder & CEO
‍No question at all. The average person is now getting a primer on the importance of governance and corporate controls and they care about it in a way that they didn't previously. What I've read is that there are a million accounts on FTX that have lost money and every single one of them is upset that there was no good corporate governance at FTX. The market is educating itself on the importance of the decisions that we've made. We kind of understood that would happen, we just didn't know how long it would take or when it would happen. And now it has, so it's plain right into our favor.

HBAR Foundation – Brandon - Host
‍That's one of the things I overheard Chamath Palyhapatia talking about how FTX came to them for investment. One of the things they required was an overseeing board. When FTX came back and said no, that was a deal breaker and he was done with it. So it makes perfect sense. Captain Brando, I know you've been waiting patiently. Go ahead and bring up your question or comment.

Community Member -Captain Brando
‍Hey everyone, I really appreciate the opportunity to talk to you guys here. I have one comment and then I have a question. My comment is about how we're talking about regulation. The concerning thing is that I don't think this was a regulatory problem with FTX. This was a problem with fraud. We've seen similar frauds in some of the most heavily regulated industries, such as with Enron and Bernie Madoff. So my concern is that we're going to get a knee-jerk regulatory reaction and it might not be a step in the right direction. You know that DLT provides a really good solution for this, which is transparency. If FTX had been more transparent, none of this would have happened. My question is for Shayne. I'm just curious, as we're talking about market conditions and volatility, are you guys implementing any strategies or how is the HBAR foundation handling the market volatility as it grows?

HBAR Foundation – Brandon - Host
‍Unfortunately, Shayne has left but Elaine might be able to answer this one.

HBAR Foundation – Elaine Song – VP of Strategy
‍Yeah, absolutely. I have a comment regarding regulation. I think at a high level, getting some clarity and uncertainty from the regulators has been much needed. I do share your concern that their reaction will be misplaced. I do think, hopefully, the ideal and balanced and necessarily nuanced reaction will be clarity on what needs to be regulated. Right. And I think what you're actually starting to see now are centralized and regulated entities that should be regulated understanding and evolving what their position is in the market. So, I think if you look at products and companies like Robinhood or Coinbase, you can see that their strategy is shifting in terms of who they are and what they are to the ecosystem. Right. If, for the last eight years, Coinbase has been primarily an exchange, a trading venue where you can buy, sell, trade, and invest in crypto assets, you're starting to see them now move actually more into an enabling on-ramp. Same goes with the Robin Hood non-custodial. You're starting to see them take on what essentially kind of banks you for KYC, which is that entity that manages and protects the consumer. So, I think you know as you see that continue to grow and you see, hopefully, what we mean when Shayne says meaningful regulation, kind of appropriately pointed regulation, then you know hopefully you'll be able to protect and advance the benefits of DLT, which include the decentralization, the transparency, in addition to maybe some of the maturity of the market that necessitates consumer protection. As for what the foundation is doing, as I mentioned before, our response to the market is less of a response to the current ongoing market and more about focusing and building on top of what we've already accomplished, which is to identify gaps in the ecosystem, fill them, and then make grants towards projects and teams that we think are really important in the space. So, what we'll see next year and what you've started to see more of is the operator mindset within the foundation, where we're helping to nurture these projects, bring them to market, help them in their new phase of product, and really allow them to grow. When it comes to the actual treasury, we're actually pretty standard. We've always adopted a very conservative kind of treasury management process. There really hasn't been much change in terms of our strategy with regard to managing that treasury, just because we've always been very conservative.

Community Member - Captain Brando
‍Thank you. I appreciate that.

HBAR Foundation – Brandon - Host
‍And thanks for the question, Dr. Dark. Go ahead and ask your question.

Community Member – Dr Dark
‍Thanks. Uh, so I speak with investors, pretty much every day in the space, and after Luna, there was a lot of skittish behavior. And after FTX, there are a bunch of people that are going to be on the sidelines now for quite a while in Web3. I was wondering, you guys speak to the Enterprise council members, the large use cases. I'm wondering how their perspective has changed this week. If they're going to put the brakes on things, if they've had conversations where people maybe can't get involved in the space or it looks bad now, what are you hearing or are they just going on as usual and this is totally unaffected? What have you been hearing and talking with the large enterprises or the council members?

HBAR Foundation – Brandon - Host
‍Mance, do you have any insight?

Swirlds Labs – Mance Harmon – Founder & CEO
‍Yeah, it's interesting in that we really do live in two separate universes in some sense. There's everything that's going on in the retail market and in the world of DeFi from a retail perspective. And then there's Enterprise and the applications and activities that are associated with Enterprise. By and large, they don't overlap. I mean, there's they, of course, know what's going on, they see the news, especially with FTX. FTX is on all the major news outlets, so that's it's the biggest one. But the activities that are associated with the council members, for example, and the conversations that we engage in with the council members really have nothing to do with the retail market. They have nothing to do with the price of HBAR. They only are concerned with the specific business problems that they want to address, and that's it. That's where they focus their interests and attention. I would say that it has had not - the FTX thing has only been out for less than two weeks. But I'm predicting that it's going to have zero impact on the progress that is already underway and will continue to be made. Here's just a little observation: the crypto winter this version, this cycle, really started in late spring. I mean, it started earlier this year, maybe sometime in Q1, and accelerated through the middle of the spring and into the summer. Over that same period, the number of applications that I'm aware of, projects underway with enterprises that are council members or other organizations associated with our council members, has skyrocketed. It's like it's the inverse of the crypto market token. The aggregate token price. So, what I'm seeing firsthand is sort of an inflection point in actual interest in building use cases outside of what's mainstream crypto. And that comes at the same time as the crypto meltdown. So, it's a really interesting juxtaposition between the two. It's a fair question to ask if everything that's happening now with FTX and all the fallout that's still going to happen over the next two months - we're not out of this yet, right? FTX is just a big domino. It's going to start another whole row of dominoes falling, just like Terra Luna. And it's going to be interesting to see what happens over the next couple of months, but again, the two worlds are kind of independent of each other, and I don't anticipate there being any problems.

HBAR Foundation – Shayne Higdon - CEO
‍Brandon, let me add to that. I mean, I would wholeheartedly agree with Mance. I think if you compare and contrast this to the .com bubble, which is orders of magnitude greater than what we're living through right now in the crypto winter, you had companies that were probably 12 to 15 IPOs a day, and you had companies that were ipoing with zero revenue and a big problem promise of product. And at the end of the day, they all had raised hundreds of millions of dollars and folded. You know, you have a lot of various tokens and things being propped up artificially and don't have the substance, the use cases, the real true network traffic. You know, and I believe that Hedera and this ecosystem will emerge from this bear market stronger as a result of our focus on, you know, both enterprises but real use cases, real marketplaces, new and old, that are emerging in web 3 and web 2. And when that happened, I believe Hedera will be a destination because people are going to no longer be able to not look at what is being built and wonder why what's over there. And I think we're going to be in a fantastic position, and I am incredibly excited by what has occurred.

HashPack Wallet – May Chan – Founder & CEO
‍And just to close the loop on this whole talk, too, where Mance is very much into the enterprise side and has great insight, which I'm so happy to hear about. But on the retail side here with the NFT marketplaces and the token economy that is starting to grow on Hedera, while the entire crypto economy was going downhill, Hedera actually has been going up. We've seen something like 60% month over month growth in monthly active users. We've seen millions and millions of dollars come into the Hedera ecosystem. And every single NFT mint is bigger than the last. We are seeing projects come in from Solana and Algorand and XRP that are seeing the light of Hedera and seeing what we offer as a platform and seeing the integrity that we bring to the ecosystem as a whole. And I think that, you know, even though the entire world is in a bear market, Hedera has been growing at all fronts.

‍HBAR Foundation – Brandon - Host
‍That's really good, May's, given the perspective from retail and Mance, Shayne, from the enterprise side. But Mance, do you think there's going to be any stigmatization of DLT in any areas, if it's not going to be in enterprise? Is it going to be elsewhere that we're going to have a stigmatization of DLT in any way?

Swirlds Labs – Mance Harmon – Founder & CEO
‍Well, short term, for sure, right. I mean, the average person doesn't know anything about DLT except maybe they know a little bit about Bitcoin and they think it's somehow associated with fraud and scandal. And of course, historically, there are a lot of instances where it has been. And now they hear about this, they hear about FTX, and celebrities that are drawn up in this. So, yeah, short term, for sure, there is a problem with the reputation of crypto at large. I think that will resolve itself when and if the use cases go live. Right, the use cases outside of what's caught up in what we see today and over the past couple of years will re-emerge and be important. I think that when there's a broader set of use cases and people start realizing value through those use cases that they wouldn't have otherwise been able to realize, that's when the industry moves on and we mature in some ways that will just take time.

HBAR Foundation – Shayne Higdon - CEO
‍But also think about this. We still, as an industry, don't have the killer use case that is being widely adopted yet. The user experience in our space is going to have to get markedly better for the normal person to be able to use and understand it. Right now, it's still so technical to do an NFT. While if you're more technically savvy, you might think that this chain is better than that chain for creating an NFT or creating this or creating that, the fact is that the normal person still doesn't know how to do it. They still don't necessarily know how to apply it to their life, and that's what excites me. When the killer use case occurs and the user experience is improved, someone using an application from their phone will have no idea if AWS as a cloud service is backing it, nor should they. They don't need to know which chain their app runs on, they just need to know that it's solving a problem for them. We want to be the place that has those apps that can help them solve those problems in an easy and compelling user experience, so that we get more adoption of that app.

HBAR Foundation – Elaine Song – VP of Strategy
‍One thing I definitely want to point out is that we like to separate retail and enterprise as if they're completely isolated and separated, distinct user groups or ecosystems. But as crypto grows and Web3 matures, we're seeing that very few of these issues impact just one community, whether it's retail or institution. While I 100% agree that the crypto market and the FTX implosion won't impact how an individual governing council member thinks about why they're using DLT, what Mance is pointing out is that many enterprise use cases are designed specifically to address a business problem or a clearly articulated problem. I think that it is important to understand the intersection and interplay between different user groups and components of the ecosystem within the broader user community. It is much more complex now and we are going to continue to see this. One of the big issues that is coming to light right now with the FTX implosion is the small but very tightly connected interweb of liquidity, which is causing issues like Gemini earn and Genesis. We will have to see what the next three to six months brings to light, but it is possible that the Alameda and FTX situation is not a new situation, but rather a downstream byproduct of 3ac and Luna. These issues are not necessarily entirely independent. It is important to know that retail and enterprise are not entirely distinct and that the problems they face may be different, but they are all part of a symbiotic relationship in terms of what products need to be built and what problems and solutions will be solved. If the products, services, and problems are clearly identified and the root cause of each of these problems is clearly identified, and the products and solutions being built are directly tied to addressing the identified problems, then market movements or issues with other use cases should be less impacted by market moves that are tangential to the actual product. However, there are still data points that should be considered as you build something. In the next year, we may see more mature lending products and liquidity management solutions come to market, which is a byproduct of institutions reacting to the retail experience of the current issue. All of these factors are interrelated and part of a symbiotic relationship.

HBAR Foundation – Brandon - Host
‍Thank you, Elaine. Now I want to do rapid fire and try to go through some questions, so both the panelists should be ready and the community that are looking to ask questions. Guac Hbar, go ahead and ask your question or make your comment.

Creamies – Guac - Founder
‍Hey, thanks Brandon, thanks for having me up here. I just have two brief comments and a question, I hope that's all right. So my first comment is really just towards uh, so I came into the Hedera Hbar space like back in January 2021 shortly after, sorry, around that period. I was early after Google was announced as a governing council member and you know, I just loved the fact that uh, you guys were what the tech was doing and the whole enterprise relationship and adoption that was going on kind of made me really bullish towards Hedera. My only initial uh, like um, what do you say, uh, the only thing I was a little bit uh, wary was is the was the whole regulator, the regulatory slash um, you know, being a little bit on the cautious side of things, especially in the height of a bull market, right, where you see other projects like rapidly growing, uh, I was initially very skeptical about the whole old thought process that you guys were, you guys were going ahead with, but I'll be honest, I'll be honest, especially in now and you're seeing it in a bear market, you're seeing all these crypto firms and crypto businesses who are just flying far too close to the sun and just getting absolutely burnt, right, um, whether they're through their own mistakes or through just like complete mismanagement or whatnot, and um, so the whole point of it is just, I just wanted to say that it's uh, it's now I see it like, I see my eyes are actually wide open and I really respect that you guys have stayed committed towards um, towards your goal and your vision of being as compliant as possible. I do agree that while it is a very slow and long and arduous process, it is the best process, and I really respect you guys for for maintaining that. Now, my second comment is more geared towards the HBAR foundation. I've been in the NFT space since it started on here. I've absolutely loved it. I spent almost my entire life on here in the communities, and uh, you know, I'm part of a project myself, and we, what I've noticed is like, obviously, the HBAR foundation, they want to bring in projects From other ecosystems, they want to onboard them onto Hedera, which is totally understandable. It makes sense and it is the play. However, what I am noticing is that some of these projects that are coming in here just don't show much genuinity that the core builders that are building out their projects on Hedera are showing. It is really sad to see that we've had a couple of projects that have come out here that are completely irresponsible and the way they have interacted with the community has been so negative. It just made me feel that the actual builders on here, the people who are trying to create as much value as they can for the retail ecosystem, just feel a bit neglected. That is just my thing. I really hope it does change and I hope my whole argument does get proven wrong. I'm all for it, I'm just very vocal on that point. My question is for Christian, especially. Christian, I know that back in January 2022, you said that this year 2022 would be hyped the substance. Do you think now that we're coming to the close of 2022, do you think that hyped the substance and the whole marketing that hedera has pushed has worked?

Swirlds Labs – Christian Hasker – CMO
‍That is a good question. I would say that as far as Hedera, our goal was to make sure that Hedera was everywhere we could be in 2022, telling the world about the technology and the unique attributes as far as governance. We upped our spend, we've done a ton of online ads, we've done over 50 events this year. So, from that perspective, yes. However, in a declining market where the bull market became a bear market fairly rapidly this year, I'd say no. However, I do believe that we are incredibly well positioned to come out of this bear market with a lot of new users and a highly differentiated offering from others in the market.

HBAR Foundation – Elaine Song – VP of Strategy
‍Can I respond to the two comments that he made real quick?

HBAR Foundation – Brandon - Host
‍I do want to see if Mance is there any way you could give us an extra five minutes? I know you might have a hard stop here, but okay, all right. I'd like to get to at least a couple more questions, Mitchell, and Jim, but go ahead Elaine.

HBAR Foundation – Elaine Song – VP of Strategy
‍Yeah, and I just want to address this because I think it's actually a sentiment that was brought up a little bit earlier in the call by zero dot you know monkey, or I'm not quite sure how you pronounce it.

Creamies – Guac - Founder
‍Yeah, monkey is actually my project partner.

HBAR Foundation – Elaine Song – VP of Strategy
‍Yeah, yeah. So, so first of all, I think I think this is good feedback for us to hear right because, you know, from our perspective, we actually think that, um, and our being the foundation, we actually think that we um very clearly favor um projects that have been in the Hedera space um for a while, and so to actually hear that the sentiment's a little bit different, it's definitely noteworthy for us um so that's definitely something that I'll take back to the team and and try and get a better better understanding of, um, you know, I think to be honest um, there was a lot like there is, there is value in bringing in um other ecosystems right because when we think about um, um, like the strength of a community, there are kind of two major vectors around that right, one is size, and one is actual like loyalty and passion and engagement, and so you know our our strategy has been to to focus on um both of those those components. Now again, like I said, this is something that I'll take back to the team and get kind of a better understanding of um, but I will say that you know first of all the fact that you feel that way is definitely not our intent um, you know, we definitely think that we're able to both grow the ecosystem um, and bring in new members of ecosystem from other, perhaps other chains or other networks, while also uh nurturing internally um, so maybe that's something that um we haven't been quite good at so you know take this as that's not our intent to make you feel um unappreciated, and so I do apologize that that's the that's the takeaway um, I will say one thing, and I do feel like I have an interesting experience in this which is the reason I chose Hedera um as I was looking for like new career opportunities from the exchange was precisely because um, kind of what Hedera had done and not done um, you know, in like the four years leading up to um, you know, like 2021, and I think one thing that you know we talk about at the leadership level at the foundation is the fact that our response and our strategy in this market will fundamentally be different than what our pere ecosystems are doing because we're fundamentally coming from a different place right so um, you know, I think other ecosystems and um, other products, and you know let's say you know other exchanges are taking um maturity as a way to almost slow down right, they're looking at potentially maybe um, policies or strategies that were too aggressive with the growth um, and using maturity and more due diligence to kind of slow down and be more um be more deliberate about what they do, we're completely opposite right. Because we're already mature, we're already responsible, we already have solid governance, we already have a clear understanding of what it means to be good stewards of the ecosystem and the capital, so our response with regard to using maturity to be more diligent is actually going to enable us to be faster. Right, we're not using maturity to slow down our strategy, we're actually using it so we can be much, much faster and more aggressive than other ecosystems. So I think that's one thing that is fundamentally different about Hedera, which is our strategy coming out of this bull market. It's the complete opposite of what other ecosystems will need to be doing.

Swirlds Labs – Mance Harmon – Founder & CEO
‍I would say just one thing. Um, so we've taken this position and it's well understood by you all and by the community at large. One person that never gets credit that probably deserves it more than anybody else for the regulatory position we've taken is, or was, the General Counsel of Hedera, Natalie Furman. She's never online, I mean she does interface with the community very often, but I'm not even sure if we've ever had her on one of these forums where she's talked to the community. But she really is sort of the architect of all of this. We had the good sense to make her employee number four when we were starting Hedera, and that represents how important this position was to us at the very beginning of all this. But she's the one that helped navigate all of this, you know, this morass of what Crypto is and the lack of regulatory clarity and help us put in place, you know, the foundations and then keep us in place through the ups and downs to get to where we are today. It was not easy. Right, when you're in a bull market and everyone, all the token prices are exploding and everyone is wanting you to do more and more and more, it takes a really special person to draw a line and articulate all of the reasons why it's a really bad idea to compromise, and she, as much as Leemon and I, is responsible for where we are today in terms of our regulatory posture.

HBAR Foundation – Brandon - Host
‍Thank you, Mance, and this is going to be the last question. Mitchell, if you want to go ahead and ask your question or make your comment, go ahead.

Community Member - Mitchell
‍Thank you for allowing me to speak. To spin and branding of a stigma and misconception with retail developers and project writers that are developing different projects and different chains, there's a misconception and a big stigma that Hedera is centralized. As a retail investor and onboarding many different investors from different chains, including developers, their biggest issue that I'm running into is, once again, that misconception that Hedera is centralized. Is there anything in the, you know, in the plans where there's a not rebranding, but sort of more branding or marketing regarding the reality that Hedera is the most decentralized chain? There's many developers that don't want to come over because of that stigma that Hedera is centralized and it's a false narrative. And I just wish Hedera would do a marketing or branding blitz, especially now that many chains are falling in and developers, and artists, and are looking where to go, they're looking to find a new home. And you know, I continue running into that false narrative and stigma that Hedera is centralized when we all know it's not. And I'm just wondering if the Hedera branding or marketing is going to do anything about it.

HBAR Foundation – Brandon - Host
‍Mitchell, I actually put out a video on this a long time ago that, you know, from a practical standpoint, Hedera in many ways is more decentralized than a lot of the platforms. Christian, do you have anything to add? Do you have any plans along these lines?

Swirlds Labs – Christian Hasker – CMO
‍I do and I am empathetic to that view. From other folks, and I try to educate them around definitions of decentralization. Leemon will be giving a talk during ecosystem week, which I believe is scheduled for December 5th, all around decentralization and how Hedera is the most decentralized public ledger out there. But when folks say that, they really mean that Hedera does not have permissionless nodes where anyone can spin up a consensus node and run it. And I do believe that in 2023, as we methodically roll out community nodes where, for the first time, entities other than governing council members will be able to run nodes on the network, that will also help sort of change the tide of that perception. Similarly, staking that is just rolled out, you know, until very recently, Hedera has been a proof-of-stake network without staking programs for the public. So these types of developments that we need to be loud and proud about, that Hedera started off relatively decentralized and the goal is to become more and more decentralized over time, which contrasts with other projects that start off very decentralized and consolidate power over time. That is a narrative that, yes, we will, you know, hammer home in the market, and I think it's going to be a long slope of progress, but over time we'll win out with that message.

HBAR Foundation – Brandon - Host
‍Thank you, Christian. And I want to get to all the other people that have questions, and I see May has her hand up, but I do understand that people do have other things going on. I want to do this again, hopefully as soon as possible, because I think we got a lot of thought leadership out of it. But I also want to thank Mance, Shayne, Elaine, and everybody else who came up today on the panel. Thank you to those in the audience who participated, asked questions, and everybody who listened in. That's all we have for the Hedera Foundation out.