Alex Gluchowski on taking digital asset pilots to production

Robbie: Welcome back to The Rollup, guys. I am Robbie and I am proud to host Alex G, co-founder, CEO of ZKsync. Been a little while since we’ve had Alex on, but ZKsync has been cooking. These guys have been building with the future of this industry in mind for quite a long time. Alex, it’s a pleasure to have you back. Uh, you guys just had big news that was released. Prividium Commander is set to go live. Exciting times. Congratulations. Welcome back to The Rollup.

Alex Gluchowski: Uh, thank you for having me. Always excited.

Robbie: Absolutely. And so you guys just made this announcement at Money20/20. Maybe you can just give us a sense of what this is. You’ve been on the show talking about Prividium before. Just catch people up on what are Prividiums and what is Prividium Commander.

Alex Gluchowski: Um, absolutely. So what we just announced is probably the biggest transformation of the product brand of Prividium and ZKsync that we’ve had to date. Uh, what it is. Uh, well, Prividium is a platform for, uh, institutions to run, manage, operate, issue their digital assets. And Prividium Commander is a control plane for the digital assets. It’s the infrastructure that institutions can use, uh, to have full control, irrespective of the chain that they are running on, whether it’s a private chain they have, or a new chain or even a public chain, uh, they can deploy it anywhere and they get the, uh, basically every tool that an institution needs to, to issue, control and operate these assets in one simple product. It’s making it much easier to use and enables them to move much faster on their digital asset initiatives and bring the products and financial services to market faster.

And, uh, this is new to us because previously, uh, you know, you know us as a technology team coming originating with zero-knowledge proofs and then building the blockchain technology more generally. And this is going into the, um, much broader niche if you want, like it expands the product offering, uh, a lot from what we previously had.

Robbie: Okay. Um, I want to, I do want to get into the expansion because that is what we’re seeing across the board, right? Where we sort of started with this deep fundamental roots in the technology in ZK, and that has now been validated by the market and by institutions. And so we’ll talk a little bit more about that. Um, and so, you know, you guys launched this at Money20/20. Uh, and I’ve noticed that, you know, increasingly these payments and banking conferences are becoming increasingly fixated on digital assets. And so I’m curious why you chose to launch this at Money20/20 and why this is really, really important for the institutional FOMO that we’re seeing across institutions as they look and seek access to digital assets.

Alex Gluchowski: Well, it’s very simple. This is where the customers are today. We’re focusing on institutions, on regulated entities, on banks, on various digital asset operators who are coming, who are becoming digital asset operators because they see the writing on the wall. It’s obvious at this point that all of the assets in the world, and especially starting with the United States, are going to be tokenized in, in the course of the next couple of years. And there is a massive race to bring the existing products and services that these institutions have developed for, for many years, and they have their core competencies established there, to these new markets or on these new rails that are a lot more efficient, faster, uh, operate 24/7 and offer a number of other advantages. And, um, these people understand that, that they have to, to adapt or they will be outcompeted by someone who moves faster. And, uh, this is what’s happening. Like the other industries, the traditional finance and the, the, the blockchain industries are merging at a really high pace.

Robbie: And it is very cool to see because of that, that addressable market expansion. We’ve got this thesis that we’ve been talking about. It’s this tokenization supercycle. We have all of these asset and asset classes as a whole that are becoming tokenized. And we’re not on a road, we’re not on a, on a path of tokenization to nowhere. This is one of the things that I heard from, uh, banks at Sibos, and you’re probably hearing around at Money20/20 as well, is that they’re worried that they tokenize and that’s it. And nothing really ever happens. And it just becomes another one of these pilot programs that doesn’t lead anywhere. It feels like we’re really starting to cross the chasm, and we’re starting to take all of that research and development and transform that into actual productive work. So maybe you can talk to us, like take us inside a bank, like in modern day 2026, 2027, as they think through adopting some of these, you know, financial technology standards and transforming onto onchain rails. What does that look like? How do they take what they’ve done in a research and pilot program perspective and actually turn it into a real in-production rails operating at institutional scale?

Alex Gluchowski: You know, you actually nailed the problem statement that we’re solving with Prividium Commander. This is what, what prompted us to, to, to create this as an independent product from the expertise that we collected, working with institutions over the last two years and building the blockchain technology with them. Uh, what, what’s happening right now is everyone is moving from the pilots phase to production phase. The pilots are, the pilots era is over. Everyone understands that digital assets are here. They understand the properties. They know what they can build. Now to bring the, to come from pilot to production is, um, like, uh, building, implementing, executing a whole software project around this.

So like, maybe an analogy I can give you is, um, connected to AI or any other SaaS. Like a pilot is an experiment. A pilot is a small bounded experiment where you just make sure that the, uh, the tool or service or any product you want to use is actually usable for your business. You can solve real problems with this. Um, so if you wanted to use AI, for example, for, I don’t know, video editing, right? You could take a system, deploy it, upload a video, do some prompting and see how it works and what you produce, and then you’re happy with the result. But if you’re working in a large corporation, and especially if it’s a regulated entity, now to move to, to enable this service for everyone in your organization, you have to do a number of things that are unrelated to the product itself.

You have to start by bringing your users and connect it to your user identity system. You’re not going to go and create every single user from scratch in the dashboard of, of the service. You probably have your user directory already and you have different levels of permissions. And for banks that deal with digital assets, those permissions and policies and other control tools that, that they have are actually very granular and very well specced out. So you have people who administer the entire system. You have the, the people who issue assets. You have people who just manage issued assets and can move them around. There are auditors, there are regulatory roles and especially users for the regulators. So they can, or like regulators and auditors separately, who can log in and just view certain types of events, but probably not all of the events and not for all of the users.

So you have to start with, with connecting the, the, the users, connecting the permissions, implementing the proper visibility, implementing the transaction orchestration lifecycle, uh, tools to actually be able to, to make sure that when transaction is initiated, it gets through and nothing blocks on the way. And if something is blocking, if, if you have a transaction that is rejected because of certain policy, you also need to provide the right level of, of feedback to the users and to the administrators, to their supervisors.

So all of that is a massive undertaking, and every complex system that is designed for an enterprise use has a control plane. Trading has a control plane, um, sales software, CRM, have control planes, uh, um, cloud services have, you know, this famous AWS or GCP control planes. Now we’re bringing one to the digital assets and enabling this, uh, uh, this integration to happen in days or weeks rather than in months where the, this companies would be building the systems from scratch.

Robbie: And I got just a one-off question. I’d imagine that as you’re talking through some of these institutions, you’re working with some companies that have been around decades, close to centuries, like, you know, eighty to one hundred years. There’s probably some element of vendor lock-in to the technology that they’re already using. How do you unwind or help them understand the value in this new technology, that maybe they don’t have to rip out their existing systems? This can be a layer on top, but kind of help them overcome some of the traditional SaaS, uh, you know, vendors that, that they’ve been working with and help them, uh, integrate someone like a ZKsync and a, and a Prividium Commander.

Alex Gluchowski: Uh, that is actually true. They work with some of the systems, are decades old, and the, uh, the process is the same as with every other wave of innovation. You don’t start by replacing the old system. You start by installing the new system, the new rails alongside the previous ones. So when they were transitioning from pen and paper to wire in the 1970s, they implemented the wire system, tested it, made sure that it operationalized, and then scaled it out to the entire organization. When they were transitioning to the internet, the same process happened. And now it’s the similar story with digital assets.

So the challenge or the ask, kind of what creates most value for, for these companies that we work with, what we hear them demanding more and more is, we just want a very easy, very lightweight way to start without a full disruption. And they probably, a lot of them, especially the more sophisticated one, ones, understand that this will eventually replace the core systems. Many banks will, or like, you know, many of these systems will go probably from COBOL directly to EVM, bypassing anything in between. We have really, really old systems running. They will be replaced with digital assets. Digital assets bring standardization. They bring open market innovation. They bring the much more granular controls, much more flexibility with the programmability of these assets. It’s obvious that that’s the, the standard that everyone will embrace gradually by first building, then expanding, and only then taking over full control from the previous ones.

Robbie: I want to move a little bit out of order here, and talk about what it takes for a bank to integrate these systems before getting into exactly what the Prividium Commander allows and enables for these institutions. When you’re thinking about, you know, a company or an institution that has already started to do some of this research, started maybe a pilot program, you know, a very small digital assets team of ten people within a one hundred thousand person organization. How, like, what is the thought process that goes around in a, like a managing director’s head when they’re thinking through, you know, we want to build this or we want to partner with a team that has been thinking about this and integrate an existing system and work with partners? How much are they thinking we’re going to build this ourselves versus we’re going to go partner? Where do they draw the line? How do they distinguish the right step forward?

Alex Gluchowski: Well, you always, in any business, not just in regulated financial entities, you want to build systems that are in your zone of genius. That is your core competence. Where you’re competing, you have a competitive edge. You have, like, that’s a special technology that you understand better than anyone else. Uh, in vast majority of cases, that’s not what we, that’s not the core competence of, of these entities, of these banks, uh, doing technology projects, doing, doing IT projects. They are operators, not builders. If they have to build it, they will build it, but they much rather prefer to, you know, most banks now use CRM tools and, uh, treasury management tools and so on from external vendors, because those vendors can build software once and then scale it to many customers and collect feedback and learn from them and improve it gradually, which none of these customers individually can do.

The only exception could be like really large banks, really large financial entities that, that want to have full control, and even then are actually on the forefront of partnering and learning and embracing the most cutting-edge innovation. So there is really very little incentive for, for, for these groups to build up their own tooling. And practically none of them have, have resources. You’re right. Uh, like they have teams of ten people, even less in many cases. So they can only embrace and, and utilize what’s already existing and just connect it to the, uh, to their core businesses and services.

Robbie: I, I think so. I mean, absolutely, from everything that I’ve heard, that, that is the approach. And I do think that once they put out something, even if it’s, you know, a pilot that’s internal, doesn’t really expose them to some sort of revenue or some, you know, allow them to test it out into the market. But what we’ve seen is that once institutions test these things in the market, they understand the opportunity set, they understand the potential revenue that exists, and then it justifies the business case to pour a lot more resources and take it a lot more seriously. So it makes, makes a ton of sense what you’re saying, Alex.

Now, now let’s really dig into Commander. I am very excited because, like I said, it feels like this is the institutional FOMO, the tokenization supercycle. We’ve even coined this term the financial singularity, where TradFi and DeFi finally connect. I mentioned I was at Sibos and I was talking to some of these banks. And I was asking them, you know, about, and look, blockchain was a huge topic of focus, but I was also asking them about stablecoins, because at the time, stablecoins and deposit flight was, you know, something in the zeitgeist. And a lot of these banks were, they were kind of pooh-poohing stablecoins a little bit, but all of them were super, super excited about tokenized deposits. And it feels like maybe the banks were a little bit caught off guard by stablecoins, and now they’re accelerating tokenized deposits in response to the stablecoin build-out.

So maybe you can help us understand exactly the, the three dimensions that you talked about with, with Commander: issue, control and operate tokenized assets. And obviously, when it comes to digital assets, we’ve seen the build-out, we’ve seen how it started with cash and stablecoins. And now we’re starting to see equities. We’re starting to see commodities and some more of these asset classes. Talk us through how banks will integrate, how Commander will help them tokenize, issue tokenized assets, control them and operate with something that they’re used to, but finally connect it to blockchain rails.

Alex Gluchowski: Um, so yes, the tokenized deposits, in particular, is a great example of a function that just gets upgraded from, from internal banking operations, from the old core systems to the, to these new rails, earning them more capabilities. But initially, at least to the internal banking users, it will feel almost invisible. The people will not, you know, they will see their banking dashboards with their current accounts having some amount of dollars. And these dollars are moving and they will not really care what’s, what’s happening underneath. It’s more an upgrade that’s happening for the bank.

Now, the blockchain technology part of, uh, of something like a tokenized deposits is actually the, the simpler one. You know, it’s a simple ERC-20 contract that enables you to move money and to execute, uh, certain operations like mint new tokens, burn new tokens for an account, connected to the events in the core banking system where the money is moving from, from this tokenized deposit account to, to, to outside of it. And, uh, you know, a set of events that are being emitted.

The really difficult, the really complex part for a bank is connecting, like implementing all of the internal functions and procedures that they currently have to run over this, uh, new blockchain technology. So connecting the users, giving them permissions, connecting these permissions to particular smart contract on, on their private blockchain or on the public blockchain, and maybe even to a particular, um, set of functions of this contract. Who can call the mint function, who can, who can call the approve function? Um, in many operations, uh, are not that straightforward. Like it’s not just like, oh, there is one user, one permission. Sometimes you have the more complex policies that you need to orchestrate together, like for certain operations, if you’re minting up to some amount, you need one approver. But for, for larger amounts, maybe you need the supervisor of the department to also approve this and so on. Right.

And then you have the visibility, and then you have the, the tokenization modules that actually call these functions, provide feedback. And they have to guarantee that the function is executed because they’re connected now to the core banking system. You move the money to this kind of special address inside the bank. This operation happens simultaneously, like almost atomically. It has to happen on the blockchain. And you have to make sure that they always execute correctly together or both operations fail.

So all of these integrations is what Commander is for. And it’s also this dashboard, the control plane where the banking people can oversee and execute these operations in a very simple user interface that does not force them to write, you know, JSON, uh, configuration files, or, or connect manually, some, write some services that will call one function or another.

Robbie: And, you know, at Money20/20, you’re on this panel, right, with some heavy hitters. And I am curious about the partner, the launch partners that, you know, will use Commander, but maybe you can’t get into too many specifics. I am curious how different kinds of institutions will use Commander, because it feels like a very flexible platform. Right. And you’re on this panel and there’s, you know, clearing and custody and settlement, as well as brokerages and exchanges. And, and then we’re also talking about banks. And these are different kinds of businesses, right? We kind of have this like catch-all term institutions. But I think, you know, as more and more companies such as ZKsync is, are, are working with these institutions, we’re kind of untangling different, different segments of institutions: brokers, banks, custody and settlement. How, maybe you can just walk us through and, and tell us a little bit of the differences between the use cases, right? How is a brokerage, right, someone who might issue or, or, you know, work on settling different trades, how might they use Commander, maybe for tokenized equities or 24/7 markets? I’d imagine that the way they use Commander is a little bit different than a bank, right, who might be primarily using it for tokenized deposits. Can you untangle these different use cases for us?

Alex Gluchowski: Every single use case. Because actually the most exciting part for me in the story of Commander is that it’s so universal. It actually, it opens the, uh, the adoption path for Prividium to every institution that runs a digital asset business. Irrespective of what they do, they need to control their operations. If it’s, you know, if it’s not a two, two-person firm, they need to manage their users. They, they have permissions, they have the policies, they have the, the auditing operations, they have the, the communication to their existing systems. Uh, that needs to be integrated. Everyone needs that. And this opens the, uh, every business, uh, every regulated institution to Prividium and to ZKsync. And this, this is the largest change in, in our history, because previously we would only work with institutions who needed a very narrow product, who already decided that they are looking for a chain. Otherwise, uh, we kind of didn’t have much to offer them. That’s changing now. We’re setting foot in every door, and that opens massive opportunities for the exec network as well.

Robbie: How this affects ZKsync. You’ve already got applications. You’ve already got institutions that are using kind of like these Prividiums without using Prividium Commander. And so how do these things all on ZKsync, how do they all work together? You know, are these walled gardens? Right. I take it these institutions primarily are going to start there. We’ve also seen, you know, public blockchain adoption. So, so as you onboard more institutions, how do you foresee these interacting with one another? And what does this mean for ZKsync as a whole?

Alex Gluchowski: So this is something very interesting that we learned over the last two years. The institutions actually just want to connect and want to use blockchain services. They, ideally, they would not need to pick a network that they run their operations on. That’s really the desire. They want it to be like the internet. Uh, and, uh, the, they don’t really care how it happens underneath. They care about the properties of these interactions. Uh, but they want an easy way to connect. And they, like the banks and the larger institutions, they want to connect to other banks and other institutions. And from this perspective, they just want to be everywhere where these other people are. Like if they are on Ethereum, they want to be on Ethereum. If they are on other ecosystems, they want to be in those ecosystems. Um, if they, if, if they have some private, uh, chains that, uh, some special consortium, uh, operators are running, they want to connect to those chains.

And we had to, to, to embrace this reality. You know, we can be Ethereum maximalists or crypto, decentralized crypto maximalists and say like, oh, but you have to use this completely decentralized crypto. Uh, that’s not meeting them where they are. So we’re, we have to meet them. We have to show them that we’re going to give you everything. Like you keep your full optionality. You can connect all the chains. Then you can decide, um, the ecosystems that make more sense for you if you’re going into the fully decentralized assets. If you’re sticking to your regulated activities, then you just interoperate and you get all the benefits.

Commander accomplishes that. Commander is, is underlying ecosystem agnostic. It just connects you to, to wherever you need, uh, gives the institutions the ability to add privacy to their, to existing ecosystems on, on public chains. And, um, uh, it kind of leads to the need to reimagine ZKsync and the role of ZKsync in this institutional ecosystem. And this is something we’re thinking about. And we have, uh, a lot of thoughts and there is a lot of work happening. And I, I’m really excited about what’s coming next, because it’s going to be a bigger transformation. But I’m gonna leave it there for now.

Robbie: I can’t help but think that ZKsync is still very appropriately named, as I sort of think through how this ecosystem could look and how ZKsync could be responsible for synchronizing institutions onchain.

Alex Gluchowski: And that’s exactly how I feel. And I really, uh, stick to, to the opinion that ZK is going to be the fundamental technology that connects institutions, elevating trust and transparency in public finance overall. Because what ZK stands for is integrity of operations. It’s, it’s very important in the age of AI. You know, with all the accelerating cyber threats that, that we’re facing, you really want to diversify your defenses. You know, like every investor understands that you need to diversify your portfolio. But if you diversify it in, um, uh, you know, in the wrong way, if you put all of your eggs in one asset class and it’s still kind of one basket, and then there’s one crash and everything goes down. Or if you’re in, sure, you diversify across many homes, but then there is one hurricane in that region and all of them are gone.

Um, zero-knowledge proofs give institutional finance this alternative protection class, if you want. That is very, very different, orthogonal to the, to the existing, um, uh, operational security systems that they use. Uh, it’s a public, publicly auditable, uh, security that is constantly under attack, under scrutiny by all of the world’s researchers. Uh, if something goes wrong, the problems are fixed immediately there. So you know that it’s something you can probably rely on. And especially if you layer these multiple defenses, including the old systems and these new systems and maybe several proof systems, uh, then you really get it, like an independent degree of protection. You know, we recently announced Airbender Prime, uh, the, the fastest, uh, uh, Ethereum proving system, uh, uh, that can prove Ethereum blocks on a single GPU, um, in real time. Uh, I really think that all of the world finance is going to be running on, on ZK in several years.

Robbie: Wow. Yeah. It’s exciting. You know, especially as we see, you know, the, the calls from regulatory bodies to start exploring ZK and privacy options, and maybe rethinking some of the way that KYC is done. Right. Still very important, but modernizing this infrastructure so that it is compatible with where finance is going. And like I said at the beginning of this conversation, you know, Alex, you guys have been building with this future in mind for a long time now. You’re kind of starting to see the convergence with the traditional financial ecosystem. They’re starting to adopt some of these standards and become, and realize, you know, what is at stake here. A lot of other crypto teams, you know, might have been distracted.

How do you feel about the current state of the industry? You know, as you sort of understand where ZKsync fits in, you’re looking at more of the institutional ecosystem and, and, and market segment, right? But again, deep, deep technical roots that underpin ZKsync. How do you balance these two? How do you, how do you, is it, you know, just a lot of education that you’re doing to help these banks and these traditional institutions understand? How do you communicate? Do they, is it effectively establishing trust and allowing you to, you know, be the tech, technical assurance that they’re looking for? Because it feels like a lot of companies in the crypto space are struggling to find their foothold in this convergence. You guys have been able to do that. How, how do you balance and harmonize these two parts of the market together?

Alex Gluchowski: We stay based and customer oriented. We, we are using technology to solve problems. We’re not presenting technology as a value on its own. We’re looking at, okay, we have this various tools in the blockchain world. We have these various cool technological breakthroughs with zero-knowledge proofs, privacy, programmability. What are the problems that are, that, that we can solve best than anyone else in the world? And right now those are the problems that the institutionals are facing. And we see that, that we have a really strong product-market fit there with, uh, um, with blockchain, with ZK specifically and with, uh, the more flexible, uh, products like Commander.

And we have this very long-term mindset. We’re here to make the crypto win and succeed and help transform the, the world of finance. This has always been a dream since the first days of, of Satoshi’s white paper. Like we have to make this impact on the world. We have to make sure that the world is better with digital assets than what it was before. And I think we, we have a real chance of executing that. Uh, may, you know, and in the large part of that is going to be this convergence, the merger of the traditional finance and the, um, the crypto native world.

There will be huge, like vast amount of assets that will be fully publicly tradable with, uh, access by, by anyone in the world, and people who previously were cut off from the, uh, the benefits of the Western financial system will be able to invest, will be able to do savings and, uh, uh, and be much more protected and, and, you know, bear the much lower costs than what is currently available to them in their systems. But we’re also going to elevate the efficiency of the existing financial system. Uh, we’re going to elevate trust across this financial system. We’re going to lower the barriers of entry for, for many players. Uh, and this alone can boost the world’s GDP by some percentage points, because finance is so important and so integrated into every aspect of the business: finance, capital markets, payments, uh, um, investments, all of that.

Robbie: Absolutely. And I think you, you know, you speak to the, the more equitable system that, you know, those who have continued to persist and survive throughout bear markets, throughout bull markets, this is what keeps us going. It is to create and build the more equitable financial system that we’ve all dreamed of for a long time. Technology helps us do that. It lowers the barriers and it levels the playing field. And I think that is why technology matters again. Um, and you guys have been building with this in effect. And I also think that the finance ecosystem is now starting to realize the opportunity. And they have a mandate. I, I, I’m hearing that there’s a, you know, this, this, uh, this phenomenon around 24/7 markets is now creating a mandate within these institutions that they have to go to fulfill this 24/7 mandate. Where, where do they go? How do you get 24/7? You go onchain, you tokenize, you go onchain, you make these assets programmable, you put them into smart contracts, and you synchronize with the rest of the financial ecosystem.

And so, you know, if you’re a, if you’re a, you know, financial innovation or digital assets person within one of these institutions, and you’re not sure, right, but you have an executive telling you that you need a 24, get your, get your investment, you know, brokerage or bank to 24/7. How do you start? Right. You’re listening to this podcast. You know, you like what Alex G has to say from ZKsync, technology matters, right? Where, where do they go to start getting involved with Commander?

Alex Gluchowski: Oh, they just, they, they can talk to us. No one should figure out these things on their own. We have a very capable team. We can help with advisory. We can look, uh, uh, scope a workshop, talk to, to the, like, look into the problem space and, uh, offer, uh, uh, advice on how to best utilize this. And, you know, for some customers, it might not be the best solution. They might look elsewhere, but we’re still happy to help and answer the questions and, uh, help educate their teams internally on the amazing capabilities and opportunities that are being offered by the digital asset space. Just talk to us.

Robbie: Yeah. Yeah. And, and it does feel like, you know, these institutions now, with the proper technology, the proper tools, they are able to do institutional finance onchain, tokenized finance at institutional scale, truly digital assets on their terms. Amazing. Alex, thank you so much. Really appreciate, you guys have been building, uh, with this in mind for a long, long time. Very cool to see the market validate this and, uh, you know, bring this to fruition. So thank you for joining. Congratulations on the launch of Commander and, uh, very, very excited to see where this goes.

Alex Gluchowski: Thank you.