Deniz Tutku
In recent decades, technological innovations have changed the way we think about finance, networking, and personal security. Among the most impressive achievements of this time are the development of blockchain technology and Web3. What started as a cryptocurrency concept quickly grew into a profound transformation of various areas of the economy and social life.
To delve deeper into this rapidly evolving landscape, I asked John Lilic to share his perspective on the evolution of blockchain technology and Web3. Exclusive insights from the Executive Director of Telos, a key contributor of ConsenSys and Polygon, and one of Web3’s top 150 angel investors.
I found out about the Bitcoin center sometime in late 2013. At this point, I had already moved to New York, mostly because, at that time, the only robust community where there were BitDev meetups was New York. I mean, there were some meetups in Amsterdam and San Francisco, but New York was having lots and lots of BitDev meetups.
So I went and met a guy named Nick Spanos. He was one of the biggest commercial real estate brokers in New York; he used to own a real estate agency called Bapple. He was an early Bitcoin guy and was also involved with the Ron Paul campaign. So I met a lot of these libertarian guys early on because of Bitcoin. They found out about Bitcoin through this newsletter circulating, which was called Run to Gold, advocating the benefits of gold relative to the fiat monetary and fractional reserve monetary systems.
So he rented a place, a massive venue right next to the New York Stock Exchange on 40 Broad Street, and I volunteered there. I spent all of 2014 as a volunteer at the Bitcoin Center. It was an educational center. We used to just do open, peer-to-peer trading on the street there, right on Wall Street. There was a bunch of media coverage later. Morgan Spurlock did a big, basically hour-long feature that was on CNN.
Nathaniel Popper, the New York Times writer, was there all the time. He wrote his early book, his first Bitcoin book, basically by coming to the Bitcoin Center and meeting everybody. Later, Chris Canuzziari created a film called Banking on Bitcoin, which went on Netflix. I’m actually in that film. So it was just a focal point for Bitcoin at that time, and I was fortunate enough to be volunteering there. Of course, we were doing meetups every week, multiple days a week, and so early Bitcoin and crypto pioneers would come: Bryan Armstrong, Jesse Powell, and the CEO of Kraken.
That’s where I met Joe Lubin and heard about Ethereum. He told me he was starting this thing called ConsenSys. The first employee of ConsenSys is a young lady named Ashley Taylor. So that’s where I met Joe and Ashley, and I started working for ConsenSys in early 2015. Although, I was following Ethereum throughout the middle part onward of 2014. So I spent six years intensely working at ConsenSys from 2015 until the end of 2020.
While I was at ConsenSys, I was doing a bunch of things, I helped build our enterprise business. So basically, ConsenSys in October 2015 signed a global partnership with Microsoft. We helped develop the enterprise Ethereum Alliance with all the big Fortune 500s who joined. We formed partnerships with big corporates around the world, including RWE, the largest utility in Germany. I helped develop a bunch of projects. I did biz dev for many years and fundraising as well. And, by, let’s say, 2016–17, I was doing lots of research on L2.
I found a guy on Twitter, this guy named Mihailo, who at the time had a few hundred followers. He was like this obscure kind of, I mean, a little bit weird, but super cool guy. And he was talking about scaling Ethereum with a Swiss army knife solution. In other words, multiple scaling solutions in one network. His original concept was called NETH. He was living in Belgrade, Serbia, so I would go to Belgrade in 2016–2019.
He was doing a lot of research, I was hanging out with him. He became like one of my best friends. He was going to take NETH forward on his own, and I pitched it to ConsenSys, but our VC decision-makers decided to pass on it. So I left at the end of 2020. At that point, Mihailo had gotten with the MATIC guys, a couple of Indian guys who launched a POS Plasma side chain in 2017.
And together, alongside a few other kinds of well-known Ethereum people — a guy named Hudson, Pete Kim, the guy who built the Coinbase wallet, RSA, the bankless guy, and later Mark Cuban, myself — we became kind of the face or the advisors of Polygon. We rebranded, and then the whole thing kind of exploded in 2021. So that’s kind of the story of Bitcoin Center, ConsenSys, and Polygon.
In terms of pivotal moments, there’ve been lots of them, I would say. But definitely, let’s say, from 2010 to 2012, I was doing lots of e-commerce. I was doing all sorts of different e-commerce things, like buying domain names and doing search engine optimization. I had a payment system on my website, so I could accept credit card payments. I would take orders for various items before Amazon sort of ate the world.
Then I would plug into the manufacturers, who would drop-ship directly, and I would earn a small commission. Well, one day, the bank shut me down. They closed my merchant services account and frozen my bank account, froze my money for nine months. They said, We know you’re not doing anything illegal, but you’re hurting our reputation. At the time, I was with a big bank in the UK, very famous for laundering tens of billions of dollars of Mexican drug cartel money. It was an unbelievable moment towards the end of 2012.
But actually, it wasn’t so funny because my money was frozen. My business died. I didn’t have any money, literally none for nine months. I had to get my dad to Western Union money just so I could buy groceries. And I thought having a bank account was like a human right or something. But that’s where I learned it’s not, and how fragile the whole thing is. So in some weird way, I got canceled. But it was at the time the worst thing I couldn’t even do.
I was so stressed out, but it turned out to be a great blessing because it forced me to look for alternatives. I quickly realized PayPal is not an alternative. And I discovered Bitcoin sort of in the early part of 2013. I got obsessed with it and that was kind of like a pivotal moment.
I would say the biggest thing is in terms of how I’ve seen the space evolve — just the level of competition. It’s tremendous. In the very early days, there weren’t many of us, and some great people were working very hard and being very talented, but it wasn’t anything like today. So the level of competition, the intensity, the pace at which innovation happens — just everything’s happening so much faster. We now have quantum physicists who are in our space, for example. So the level of competition has increased significantly, and the pace of evolution and development has increased dramatically. So those are two of the main, I would say, changes.
What excites me about that trajectory is just going into the future; obviously, we’re approaching quantum, we’ve got AI, and we’ve got a convergence of lots of tremendous technologies. So I think everything is going to get way more weird and exciting, and I’m very curious to see how it all sort of develops.
I always say that my investment thesis, my entire strategy, is to be stupid and be lucky. So that’s kind of like what I do. I’m stupid, and I’m lucky. Stupid in the sense that you don’t want to like mid-wit, a lot of things. In other words, when you meet really smart people who have a great work ethic, you should invest in them. It’s very simple.
And maybe what they’re doing doesn’t work out, but you should still invest in those people. And so it’s less about the project and more about the people, for me. I think as long as I stick to that recipe, eventually, I’m gonna get lucky. And that’s pretty much my entire strategy.
I think ZK is part of the future of blockchain because you sort of think about AI, and you think about AI and blockchain. So intelligent systems are going on chain, sort of like doing all kinds of things, competing and out-competing. I mean, you can imagine, when we get to a certain point, that all financial institutions will be offloading decision-making as far as how they go in the markets and compete with these two super-intelligent systems. And those systems will necessarily demand fully provable infrastructure. Fully provable is important because it’s one of the things that ZK can kind of enable.
There’s the scalability side of things and sort of data protection, but also makes it very hard or essentially impossible for others to improperly manipulate the system and/or make claims that are not true, against which you assume risk. Where, in fact, with a fully provable infrastructure, it’s very, very hard to do that. So I think once you sort of see that, it’s very hard to unsee it. So fully provable infrastructure is something that I think AI will necessarily demand. And that’s kind of why I think ZK is the future of blockchain.
Concerning SNARK Proving ASICs, I mean, I think we have a ways to go. There’s going to be an FPGA interim step, in other words, programmable chips. But basically, you look at Ethereum right now in its current state, and it’s quite a poor ZK execution environment for a lot of reasons. Likewise, you look at some of the competing monsters that are coming, like Aleo, Monad, and others. These are purpose-built ZK systems that sort of happen to be blockchains rather than a blockchain that was created 10+ years ago where a ZK ecosystem has since emerged. Taking a hardware/software co-design approach from the start is very critical, very important so that you can accelerate effectively. Eventually, the dream is to get to a system-on-chip design, where the entire ZK system is on a board.
So, the proving is done by the ASICs. It’s done in a hyper-efficient way at a low cost. In doing so, you can achieve some of these performance characteristics, which are going to be necessary for the user to have a good experience. I think in particular proving, and doing proofs are hard and they’re very expensive. They require a lot of computing. The extent to which you end up with software, hardware that’s specialized in this direction, and the extent to which you then optimize software in a code as a hardware-software co-design approach I think is the way to get to a place where you can do ZK proofs efficiently, quickly, and cheaply. So that the user experience is fast, low cost, and not cumbersome and expensive like what we have today.
I think the single biggest, why I love Solidity, I think it’s great. The vast majority of developers on the planet don’t use Solidity. And so the extent to which VMs can go in a direction where you can program in any language, I think, is very exciting. I think that’s sort of the future and it seems inevitable. Solidity also has limits. I mean, you can reach the limits of solidity pretty quickly. We did so at ConsenSys even in 2015, and 2016, trying to experiment with some stuff.
So I think as the community moves forward, and I’m not just talking about Ethereum, I’m talking about Web3 in general. As we try to onboard the rest of the world and all the rest of the developers in the world, we have to be mindful that the vast majority of them don’t use Solidity. So, how can we make virtual machines in such a way that other programming languages that developers are using can be utilized as well? I would say that’s probably the biggest area that I’m paying attention to.
Collaborating with large corporations is interesting on the one hand. I mean, the ones you mentioned — that’s in the context of partnering with my nonprofit. And so in that context, they’ve all been very, very helpful. We built the first coding school in Afghanistan for girls. It’s been about 10 years now. We put hundreds of them through the program. We’ve employed many of them. And so the large corporations have contributed donations — cash donations, donations in kind — and also employed some of the girls who qualify. So they’ve been nothing short of spectacular. And we hope to continue working with them.
Being an early member of ConsenSys and Polygon there’s this tendency towards bloating the organization. People feel good once they’re successful, once there’s some validation. And the first kind of instinct is to hire tremendous amounts of people. At ConsenSys, we went from 60–80 people, maybe, to 1,800 people in like, I don’t know, a year and a half. And I think that was a big mistake. So growing too fast and adding more people doesn’t necessarily add better results. Lots of the innovation that happened was just small, two- or three-person teams. So I think fighting and resisting that tendency, I won’t.
I love Polygon very much. I think it’s a great project, but they also hired a tremendous amount of people. They hired a huge number of people at Polygon Labs and have publicly been winding that down. I mean, that’s public information. I think, resisting the urge to hire a tremendous amount of people when you don’t have to isn’t to say you shouldn’t hire. You should hire, but you should also be smart. You should also take into account that maybe less is more sometimes. And you should be hiring proportionate to your growth and what your organization needs. I think that’s the biggest lesson.
The guy I’m inspired by the most right now is Alberto Garoffolo, the ZK lead at Telos. He’s the guy who developed Snartor. The wonderful, very smart guy works tremendously hard, super easy to get along with, and he’s just wonderful. He’s got a partner in crime, a guy named Daniel Di Tullio. A mathematician, very humble, super nice. And then the guys at Pono’s Technologies. So Slobodan, the CEO, Milos, the CTO, a few of these other guys. Very, very smart. I mean, they’re all PhDs. They work hard and they’re very humble. And those are my heroes these days.
I guess the thing I’m very proud of, is the work we did at ConsenSys early on. It started with a few of us in a small co-working space. And of course, Ethereum was just a baby. Today, it’s a global network. I’m very, very proud of the kind of growth we’ve been able to accelerate.
Likewise, at Polygon, very proud of Mihailo. I saw him working just day and night. He was like a broke student. All he did was research for years, and he stayed with it. He didn’t like to deviate and chase ICOmania and all these other things. No, no, he just stuck to it, and eventually it paid off. And I think his determination is very inspiring for me. So he’s somebody that I’m very proud to have worked with and helped enable to some extent. But really, he helped enable me.
And then, of course, the nonprofit Code to Inspire. I’m very proud. We’re 10+ years into it. We’ve been grinding through, we’ve put 700 students through the program, and we’re gonna continue working there. I’m very proud of Fereshteh. She’s the founder. I’m her co-founder, but it’s her project that I’m just supporting. And yeah, she’s somebody I’m very, very proud of in that organization. I hope we’ll continue for many more decades.