Bringing Ethereum Apps to Canton: Heslin Kim on Building Zenith

0:00Kinsa Durst So welcome to Panoramic Content Suite Singapore Edition alongside Token2049 at the MBS in the backdrop. A little bit of haze but still a beautiful, beautiful scene. But got a special guest here today with us, Heslin Kim, a co-founder, CBO of Zenith. He took time out of his valuable day to be with us. So thank you for joining.

0:21Heslin Kim I wouldn't choose to be anywhere else right now.

0:23Kinsa Durst Yeah, we go way back but I'll maybe let you do the intro in terms of who you are and how you ended up as the co-founder of Zenith today.

0:32Heslin Kim Sure. So I've been in the space for about 11 years. I've been threading the needle between enterprise blockchain use cases and Web3 throughout that entire period of time. I was with one of the first companies building tokenization standards on chain called Polymath. We did ERC-1400. That's co-authored by Fabian Vogelsteller. He wrote ERC-20. That was an interesting journey because it was the impetus of tokenization of RWAs. We called them STOs back then, security token offerings. So a little bit of history lesson for everybody here.

1:08Kinsa Durst Good old days.

1:09Heslin Kim Yeah. So I've seen the ups and downs of what tokenization promised, what actually came to fruition, what was built in the bear markets when there was no meta or narrative or trend around that, and then what's sustainable over this period of time. So I was at Polymath as VP of BD for about two years. Then I was at Tokeny Solutions, the creators of ERC-3643, which we'll talk about in a little bit. And then the Distent with Euronext Stock Exchange Group, had my time in venture and other things, and then spent my time with Republic as head of growth and ecosystem. And then I found this company that was doing really interesting things. It was a Finnish R&D studio, Finnish Labs Entity, MiCA compliant, EU regulated, but a R&D studio in Finland who had a phenomenal track record.

2:01Heslin Kim They had done something like 50, 60 different protocols. They did back in full stack for Zcash, for Aleo, for StarkWare, for IPFS, for Solana Foundation, the Ethereum Foundation. They were building out a really interesting solution. They were here with me, decentralized ZK optimized GPU clusters for the lean Ethereum vision, ETH 2.0. And I wanted to invest. So I left Republic, joined this team, was working on that for about two years. When ZK started falling off, I told the team we need to go up the stack from infrastructure up to a direct product B2B. So we started scoping out what it could look like to forward build the Beam Chain concept that Justin Drake articulates.

2:47Heslin Kim And what could that look like for institutions to pilot in a sandbox in 2023, 2024, because they would need to forward build these production institutional pilots take years and years at minimum half a decade to get anything off the ground. So if you're going to prepare for lean Ethereum, and then you're going to go to the broader market and try to consume, you know, be the world computer, well, you might as well try to start bringing and onboarding the largest institutions in the world in a phase where they're going to be ready for when that adoption comes and when that is in production. And so we went out to EF and we proposed this and the broader, you know, groups around the Ethereum organizations and didn't get so much love. I think it was the wrong era. It was pre Ethereum institutions, Ethereum, systems, ETH labs.

3:35Kinsa Durst Being too early is a thing.

3:36Heslin Kim It's yeah, it's kind of like the story of my life. And so around Q1 2025, a paper came out. Paper came out authored by a board member from Canton Foundation, as well as the CPO of Digital Asset Bernhard Elsner. And it was called Polyglot. How do you turn the Daml smart contract language and Canton mainnet runtime into a multi VM solution? How can you open it up to EVM, MoveVM, SVM, other VMs that might come out? And so I took this back to this R&D studio and said, can you figure this white paper out? Can you can we build this? And they said, hell no, we don't want to. We don't want to build this. This is totally against the ethos of what we were doing with the world computer with decentralization.

4:26Heslin Kim They're deep, OG cypherpunks. My co-founder has been around since 2012. He launched one of the first Bitcoin exchanges requiring KYC in the EU in those days, sold it around the Mt. Gox era. He's a board member of dozens of different companies. You know, he's deep cypher on that side. Cypherpunk mailing list days. Oh, wow. Wow.

4:52Kinsa Durst Very, it's hard to find, impossible to find him online.

4:55Heslin Kim Yeah, yeah. He's pretty pseudo anonymous these days. But you know, well deserved. But he's an impactful figure and he makes tremendous moves and he understands the space very deeply. So, you know, it took a while to convince him. When I saw Republic do the Series B in Digital Asset, it's really what struck the catalyst because Digital Asset I've known for 10, 12 years doing this STOs, these RWAs, this tokenization side, they were at the back end of almost every major DLT infrastructure. For anyone who doesn't know DLT, that's distributed ledger technology. It's basically private permissioned enterprise instances that they're running for pilots, for POCs.

5:42Heslin Kim Some of these went into production. There are multiple DLT instances just like there were L1. So you saw R3 eventually got scooped up by Corda, nice acquisition. A Digital Asset is a remaining, you know, vestige of that pass as well. They had this smart contract language called Daml. That was basically the smart contract layer between many of these DLT solutions that build the infrastructure, the network, but didn't have smart contracts on top. And then Digital Asset provided Daml, which was written just six months after the Ethereum white paper too. So that's a pretty interesting historical on that side. And so, you know, having worked alongside them tangentially in the open Web3 space on the Ethereum side, seeing this entire space grow over the last decade, seeing this polyglot paper about, you know, is it possible to enable EVMS, VMOVM in the Daml runtime in this Canton network L1?

6:37Heslin Kim I knew the difficulties that I interface with when I got RFPs/RFQs from the broader institutions all across APAC and EU and MENA who were using a Hyperledger Fabric stack implanted with Daml smart contract language who wanted to use token ERC-3643 tokenization software. So you talk to the corporate strategy team, the BD guys, they're not technical at all, right? I'm a developer, but just a business developer too. So I can understand their mindset when they think, oh, it's just tech, we can make it all fit together. But it doesn't, and it hasn't for a decade. So that's why they released the paper, send it over to the R&D team. You know, they were like, we lost a couple employees because it wasn't on the same vision in ethos to go, what it, Corpo, Corpo slop.

7:28Heslin Kim I like to call it Corpo punk though, because we're embedding, we're embedding a bit more in Ethereum into Canton, a bit more Canton into the Ethereum sides. I think that, that, that middle ground is really where the industry is headed over the next five, 10 years. I don't look at things in meta or narrative on a, you know, three months, six months, one two year basis. Even if I'm thinking in growth terms, I'm thinking in the next cycle. So not even this cycle, but the one after, what are things going to be like around then? It's been 10 years already. So here we are. That's the, that's a genesis of Zenith basically.

8:06Kinsa Durst Amazing, amazing, incredible. Yeah. I would love to dive into Zenith, but it seems like right now, given the market and industry and the current administration in the US that's allowing for this massive adoption of institutional crypto, it seems like for many, many years, we were too early and institutional adoption was kind of bleak as I would say. But right now at this point, it's hard to even keep up with all the new announcements that's going on. I think just even past week, year, super exciting. We did tap into, we had Ethereum institutional co-founder on here yesterday as well, kind of diving deep into this, but love to hear how you see synergies or differences between let's say institutions working with Ethereum, institutions working with Canton, where Zenith fits in between all this lively institutional adoption scenario going on.

9:02Heslin Kim Yeah. I think from a framing perspective, it's important to understand what the Zenith tech is. So we basically build out EVM extension environments for Canton mainnet. It's actually, this is not marketing jargon, it's the first atomic EVM that's ever been built in a non-EVM L1. So it uses state block production finality of the EVM runtime in Solidity and the Daml Canton network consensus is processing all those blocks with the EVM bytecode. What it allows for is basically atomic settlement between assets that can live natively in Canton mainnet with anything assets, protocol, application, contracts that are living in the EVM state.

9:49Heslin Kim So from a product topology perspective, we offer the deployment ability of bespoke customized chains. So it's not just a single instance that you can deploy many subnets to Canton now in the EVM state with different kind of parameters. You can do open public permission lists, you can do open public permission. So it's KYC KYB AML gated, but then people have broader access to the application level. You can do private party isolated, private permission isolated instances where it's a single holdings company, they do single KYC AML across their broader group, but they're only doing payment channels between different entities abroad. They don't need to necessarily onboard or have overlapping administrative features and functionality. It's pretty cut and dry.

10:36Heslin Kim But then you go into private permission multi party. That's when you've got multiple institutions who all want to obfuscate their counterparties, the flow, the transaction state, the balances and everything that they're doing. And then that's when you know, Canton starts playing a major role in institutional adoption. The reason that you see the DTCC coming out now, it's an interesting little historical context about the DTCC as well. They acquired a company called Securrency in 2023. Their OG tokenization providers like the Securitize, Polymath token ease of the world TokenSoft as well. Vertalo, some great, great teams out there have been around a long time. They got picked up in 2023 by the DTCC, but it's a EVM based stack. So 80% of their technology stack I said I'd reference again is based on ERC-3643 from the Tokeny team.

11:27Heslin Kim They open sourced it. That was picked up by Securrency and that's the back end of DTCC stack. 20% of that is novel code in architecture that they have to build towards different L1s. So when you look at the use of Canton and what DTCC has given a green light to, 114 trillion in assets they're going to be bringing on chain, you know, small little number. They do something like 3.4 quadrillion dollars in volume on an annual. I've never heard that number actually verbally spoken out loud quadrillion.

12:01Kinsa Durst I've heard of trillionaires but not quadrillionaires yet.

12:04Heslin Kim So yeah. I mean, I think there's a couple of people in that trajectory.

12:09Kinsa Durst Right. We'll see. We'll see who gets there next.

12:11Heslin Kim Yeah. But that's the kind of volume we're talking about in traditional capital markets. So it's funny when we talk about, you know, onboarding institutions and like the things that are going on now and everyone's competing over, you know, a few billion in RWAs here. A few billion there. A hundred billion. We just clipped out. Good on you, Avax, with the Goldman deal. But you know, Apex Group is a 3.4 trillion dollar fund admin. They're intending to do a hundred billion on chain for tokenized funds by June 2027. They acquired Tokeny Solutions. They're launching a chain called T-REX. And then you've got instances like this that are coming on. We're talking to asset managers in Korea that are saying, hey, we want to do 120 billion in assets. We want to park them in public DeFi.

12:56Heslin Kim How can we engage there? The interesting thing is that going from DTCC and looking at what is acceptable at the moment, Canton and Stellar are the only ones that they've opened up and said these are the chains we're explicitly using. There's broader ones that are in the working group that you know that are going to be announced later. But specifically those two, it's because Daml and Canton side and Soroban and Stellar side the privacy guarantees embedded in the transactional layer that other chains don't because they're open public permission lists. And they may be bolting privacy solutions on top. It's just not there yet. We've got Kohaku open SDKs coming with Ethereum and different implementations of like Tornado Cash and Railgun and privacy pools and things like this.

13:44Heslin Kim But in-state encryption directly between counterparties on Mainnet is not a thing yet. So DTCC is willing to use the Cantons and Stellar of the world. Most broader central securities depositories are looking in the same fashion. But right now there's still a divide. So people are so bullish on RWAs and institutional involvement. But the majority of the world's capital is parked in these clearing houses that are built on Hyperledger Besu, a DLT instance in EVM, or like a Hyperledger Fabric instance globally. And these sit in isolated environments that can't connect to anything else. So our sweet spot for Canton Network is straddling this line over the next five years, 10 years, the time frames I try to work on, to onboard any clients who are potentially EVM native.

14:38Heslin Kim So you've got all the ERC tokenization standards, 1400, 1404, 3643, CMTA, ST protocol, DS protocol, just down the list. Anyone who has already been building, these are not things they typically deployed in the last three months. These are pilots they've been running for three, four, five years, even a decade. They put massive amount of capital and opex down to get these things live. Anyone with EVM dependencies that they're looking to access open DeFi, mature robust protocols that have been nation-state level tested and broader L1 infrastructure, they want to access that. They want to access some boring lending applications that just spun up out of an early stage venture accelerator and you've never heard of these guys. We work in a trustless world, but there's trust embedded and you need to choose the counterparties that you have faith in, especially on the corporate institutional level when you start engaging with them.

15:34Heslin Kim And then thirdly, I think the client list that we were most excited about, which we thought would come much later. Are these much broader and larger institutions who are Hyperledger Besu EVM based wanting connectivity with Daml? Because when you get out of the private

15:53Kinsa Durst environment that Hyperledger fixes them and come to more open, collaborative, interactive, composable by environments.

16:02Heslin Kim Private as well.

16:03Kinsa Durst Private as well.

16:04Heslin Kim And so DTCC is one of those. I think you know you have PMF when the likes of the DTCC cold call emails you and says, "Hey, we'd like to figure out how to work together." That's a good place to be. So any institution using a Hyperledger Bessu stack isolated, they want to connect to Canton. Canton used to be called the global synchronizer. It's basically an accumulation of 10 years of digital Asset's DLT Rolodex, bringing them on chain and saying, "Now you can have broader connectivity, all the customizations and parameters you had in these isolated environments, bring it to a broader network, and we're going to start plugging you in as the network of networks to have connectivity across isolated financial markets." What do we do? We provide all that EVM layer, all that 10 years of EVM that's been built, both on the institutional side with these broader CSDs, stock exchanges and large asset managers, corporates, enterprise, as well as the DeFi ecosystem.

17:01Heslin Kim So bringing them to the table. And then instead of having to leave Canton and going to Ethereum and then back to Canton if you're moving assets around, accessing the DefiLlama's top 50 of the world, then now you can do it in a single leg in a 400 millisecond hop, same consensus accessing Daml-based DA registry assets with EVM runtime, Solidity-based code, the broader DeFi tooling of the world. So this is what we unlocked. I think we've got some serious momentum and things we're announcing in the next couple quarters. But the extent and scale of this, we're at $2.8 trillion, $2.8 trillion market cap as a total industry, DTCC is $114 trillion coming on chain in the next foreseeable future.

17:51Heslin Kim But this is not going to happen in the snap of your fingers. It's not going to happen tomorrow. It's not going to happen next week. It's a journey. And when in crypto, we're so used to something taking meta and trend and thinking that this is immediately going to happen. But it's the long haul. You've already been here a couple cycles and you plan to stick around in a couple more cycles. It doesn't matter anymore.

18:15Kinsa Durst The ball is rolling and it's like it's not going to stop anytime soon. It's going to keep compounding on itself.

18:22Heslin Kim Yeah. Well, it's a Sisyphean ball. You're like pushing that huge rock up the mountain. But up at the top of the mountain is the zenith. So that's where we're headed.

18:30Kinsa Durst There you go. There you go. Top of the mountain. I did want to ask in terms of maybe for the audience as well, what these institutions are looking for or looking to unlock by coming on chain. I know there's a lot of tokenization happening 24 seven markets is a big narrative. This is what some of the core trends or core assets that you're talking with all these institutions that they're looking to unlock through working with you guys working with zenith coming online on.

19:02Heslin Kim Yeah, I think that when we can point to most directly, which is now public, is the tokenized Japanese government bond working group. So they're looking to basically bring that repo market on chain. It's a 16 trillion dollar market. 1.6 trillion in volume. It's like BlackRock Japan, State Street Japan, JPX, Osaka Stock Exchange, all the megabanks, MUFG, SBI, SMBC, everybody's in there. And low and behold PMF, the only two L ones they've chosen are Canton Network and Avalanche, Avalanche is EVM, Canton Daml. They've got all this code base in EVM already that they're plugging in on the Avalanche side. The ST protocol by Progmat was already written in EVM over the last six, seven years. Now they got a rewrite it all and Daml doesn't make sense.

19:50Heslin Kim So Zenith becomes the conduit for that. What is it unlocked? So in the Japanese government bond ecosystem and these numbers are rough Grok estimates. So bear with me here. It's about- Very Grok-user.

20:01Kinsa Durst Yeah, I'm not into any of the other ones. Oh, nice. Oh, wow.

20:05Heslin Kim Yeah. I can get out of that later. So it's about, it's interesting because as far as the number and breakdowns, about 241 days of the year where that collateral is entirely inaccessible. You've got a nine to five market. You've got 16 hours a day between day windows where there's inactivity. You've got weekends, you've got public holidays and throughout that entire period of time, it adds up to an inordinate amount of inaccessibility for that underlying collateral. If you can bring those bonds online and have 24 seven, not just 24 seven, but 365 engagement and using that as collateral, what can you do with it? Well, inherently you could tie it up into DeFi and borrow against that.

20:52Heslin Kim So what does that look like when you borrow against that in some of the world's most robust, stress tested DeFi infrastructure? You borrow a cash leg out of that in a probably USD denominated stablecoin. You park that stablecoin and then go buy a tokenized money market fund, which is probably the most broadly accessible RWA that exists these days, unless you consider stablecoins RWA's. So then you're getting three and a half percent interest on what would have potentially been idle capital for 240, let's just give 200-esque days a year on three and a half percent on 1.6 to $16 trillion worth of potential assets. And that becomes a significant cost efficiency and revenue generating opportunity for streamlining idle capital, idle collateral that now you can turn into an actual new business line, basically.

21:49Heslin Kim And so when you look at just broader financial assets in general, the open accessibility that you now have to turn that collateral into mobilized collateral, it's not just sitting there doing nothing, but you can actually take it into a form where you're earning yield on it, you're earning interest on it, you're using it to do perps or anything like that. I think the world is your oyster here in terms of optionality of what's going to open up when the world is tokenized. But this is B2B. This is very B2B interaction. I think when I talk about a 10-year horizon, I'm talking about finally when consumers, it's going to be so abstracted away. Who cares about which L1 it is? Who cares which wallet infrastructure you're using? We don't need to worry about easy PSA.

22:38Heslin Kim What was Justin talking about in terms of the cryptography, where we are in that state, the privacy element of everything. These kind of things no one in the layman world wants to even discuss. There's that funny saying, my mom thinks that I work at Bitcoin. It's like we need to get to the phase where people don't even care. Crypto is just something that's out there, just like the internet, people use it. They don't need to.

23:06Kinsa Durst I mean, at this rate, it seems like crypto won't be a common knowledge at some point, probably in a year or so, agents will do all the thinking and figuring out how to manage your assets. It's just going to be in the back burner. Everyone's working on it, AI working on it. But it sounds like we're finally putting together the AI, not AI, but crypto infrastructure, the institutional infrastructure of a regulatory support to make that happen, make that future happen.

23:36Heslin Kim Yeah. The main thing is that the regulation is the key blocker. This new administration, like you pointed out, is the reason that we have got this open access now, US's first mover. If these things go into place, if GENIUS ever even gets broken up into chunks of bills that don't get passed, that unlocks the rest of the world as well. And then everyone's talking about T plus, three, two, one, two, zero. Zero doesn't mean a few hours in the day. Now you're turning this capital collateral that's totally idle into something that's moving on a millisecond, millisecond basis or any yield. So hopefully we all feel the ramifications and upside of that as well.

24:16Kinsa Durst Yeah. So I'm looking forward to the near, hopefully very near future. I think one of the things that institutions really care about is privacy and control. But there's a lot of narratives going around with Zcash pumping, obviously some of the privacy protocols that you've mentioned as well. But curious how you guys are approaching this vertical on the Zenith side of things.

24:40Heslin Kim Yeah, definitely. I mean, we've got some incredible pilots coming out with EVM privacy baked into a public permissionless stack around Q1, Q2 next year with some of the biggest institutions who will be using that and who actually built it and approached us to do those pilots. Institutionally, privacy is the only way forward. So that will be the crux of every L1 success if they want to adopt broader FIs and corporate enterprise using their solutions. But I want to point out something for the broader layman and crypto participant when they're using Zcash shielded, unshielded pools. I'm a huge privacy advocate. I think autonomy and sovereignty and cypherpunk [unclear] is why I got involved in the industry.

25:26Heslin Kim But to be frank, if you look into what does that actually entail, if Mossad wants you, Mossad is going to get you. Encryption only works once the encryption reaches the network. But there's Pegasus-level zero days, nation-state-level attacks that are pre-encryption that are just floating around in your Wi-Fi, in your broader networks that are far before you interact with that on-chain activity. So privacy is really a construct. It's Orwellian nightmare that we live in. You can't get away from it. So just know that the man is always watching. It is the prisoner's dilemma here.

26:13Heslin Kim There is no real privacy. It's just a meta.

26:18Kinsa Durst But in terms of what the institutions require, you guys provide that, all the components and privacy needed for institutional transactions. And that's why they're working with you guys on Zenith.

26:29Heslin Kim Yeah, exactly. I mean, from a banking infrastructure level, everything that Canton has is also been built forward thinking about this for the last 10, 12 years. The co-author of [unclear] co-authored libsnark, which became Zcash. He was working with Eli Ben-Sasson at the time. But nation-state-level activity surpasses any kind of corporate function. If you're going to be able to enter and breach three-letter agencies of different government organizations internationally, they're not engaging with financial activity of smaller multi-billion dollar asset managers. So it's all a totally different level. But I just wanted to put that out there that privacy is a construct. It's an ideology.

27:15Heslin Kim It's a goal. But it's not really achievable. I mean, it is on certain parameters and different levels. And what we need to do as an industry is break up what does privacy mean? In which element? Which part of the stack? Who is the end user? What is privacy actually? From a consumer perspective, from a client perspective, customer perspective, what is that privacy for you? Is it going to protect you from Mossad? No. Is it going to protect you from your other corporate entity who is trying to steamroll and front-run you on MEV or something like that? Yeah, definitely. But there's a stark distinction. And I think, especially within the broader crypto community, thinking that Zcash is providing you with full autonomy and that it's going to be the next store of value on Bitcoin because it's private.

28:03Heslin Kim If they want to know what your shielded pools are, they're going to know what your shielded pools are before you ever even shielded them. So come on, let's be real.

28:11Kinsa Durst Yeah, I think we need a full podcast, another episode on the topic of privacy. But yeah, thank you for the high-level intro. And is there anything you would like to kind of push out to the audience that are here in Token2049, maybe some announcements or what you're looking for in terms of collaboration here? I'm sure you're super busy with meeting stacked, but yeah, if there's any messages that you want to send out, go for it. Yeah.

28:38Heslin Kim I mean, over here at Zenith, we just announced our public permission list testnet last Monday at KBW. Feel free to come stress test, come deploy, reach out if you ever want to access this environment. If you're an institution, if you're an enterprise, if you're just retail, come try this out and see where we're trying to interface and bring this very corporate, very institutional type of activity into the broader retail, the layman, the commercial community. I'm excited for when we go from FIs into enterprise, when we go to B2B2B, to B2B2C, or just directly to B2C. That consumer level is going to be exciting. That's where we're headed. I want to take you on a journey with me. Come join at Zenith. Follow me on Twitter, Heslin Kim. Follow Zenith at ZENITH, F-D-N, Zenith Foundation on Twitter, or Zenith on LinkedIn.

29:31Heslin Kim Thanks.

29:31Kinsa Durst Yeah, we'll include the links below. Thank you so much for hopping on. Happy to have you.

29:36Heslin Kim It was panoramic. Thank you. It was amazing.

29:37Kinsa Durst Panoramic. Very much.