Be More Bullish. DAS Asia Day! This Is Where The Next Buyer Is Coming From.

Transcript

17 floor. We'll see you around the timeline. Feels good to be back. >> I think the rollup is one of the most premier media brands in crypto. >> It's probably one of the first rollup episodes, right? Um >> adding it to my library as we speak. >> Potentially multi-chain deployments.

Here we are at connect day one here. I'm guessing from space. Heat. Heat.

JP Morgan, Black Rockck, DTCC, Fidelity, the entire thing was just institutions. It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. >> I'm bullish. >> He said it. He finally said it. >> So bullish. >> It is bullish. I'm bullish. We're bullish. Hey.

Hey, hey hey. The rollup is headed to the top. If we're not already at the top, we're going to the top. >> The rollup is my favorite. >> People from all walks of life, all over the world, all over this industry come together for the rollup.

Heat. Heat. Zoom out. The institutions aren't coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. Welcome to the next. See you on the show. >> Be more bullish. D Asia 2026, how are you doing? The rollup is live October 7th from D Asia, right in the heart of token 249. You guys caught an incredible

stream yesterday at Monat Open event. Today we are coming back at you with much much more. Guys, D Asia is crypto's premier institutional event. It's in Asia this year. Today, October 7th, 500 plus institutions. The stat that got me excited, $3.8 8 trillion in AUM is represented in this room right now. Greater than 60% executive level live from Singapore. Guys, we've got a unit out here. As you guys know, we've been traversing the globe bringing you guys all of the most important conversations from all over these crypto conferences.

This one is built for the leaders of the onchain economy. And big big shout out to Alpaca sponsoring the stream today. You guys know we are one of the biggest proponents of fintech education in the space. Alpaca is one of the greatest providers of tokenized equities. It is the brokerage infrastructure behind 300 plus institutions in 40 plus countries representing more than 10 million accounts. Alpaca Securities Custody is the large majority of tokenized US equity backing over $1.5 billion in real shares. And we are going to chat with Arouche in just a moment. But first guys, let me tell you a little bit more about the stream today and why we're so excited to be broadcasting live from D Asia. If you guys felt the energy in the

room as you're walking up to level three of Marina Bay Sands, you can feel that we are on the precipice of an institutional bull market. You can feel that there is FOMO from the highest levels of institutions in this space. From Tradfry to DeFi, we are at the convergence or the singularity of finance as some people put it. We're going to be hearing from some of the leaders. Like I said, Arouch is going to join us first in just a moment, representing Alpaca, one of the biggest custodians in the tokenized equity space, tons of market share. We're going to be talking stable coins and global payments. We're going to be talking about fintech and enterprise innovation.

We're going to be talking about the investors perspective. You guys know we've been constantly updating our portfolio construction thesis. We're going to keep that in the loop and updated for all of you. We're going to be talking about tokenized capital markets. huge global digital asset policy and DeFi risk management. Guys, as I'm sure you're aware, some of the biggest speakers in the space, some of the biggest minds are represented at D Asia. Jeff, Justin or Arjun, uh, Cynthia, Richard, I mean, all of the institutions from the west, from the east are meeting here at Marina Bay Sands. And so we're going to be broadcasting live the entire day to make sure that you guys are fully updated on

everything and the most important information from the conversations that are happening here both token 249 and D Asia. We are in the heart of the building and this is where the action is. This is where the edge and the alpha are generated in the room today. We're going to make sure that you are kept up to speed and you're not missing a single thing. Like I said, tremendous conversation throughout the entire day. We are going to get right into it. We're going to hit quick standby, show you guys what the main stage looks like for just a moment. Bring up our first guest, Arouche from Alpaca, and we're going to kick off a tremendous day two at Token 249 Singapore in just a moment, guys. Be right back.

>> So, markets are important in that in that sense in terms of like you don't want fragmented pools of liquidity. So, value has to coales somewhere. um the principles to my point aren't changing where it starts to acrue because of the behavior of this new form of asset that I think is is a is a bit early to say and that's where the whole point of habit formation becomes important because when infrastructure develops and when this like we keep citing this new demographic that is coming u into w and like asking for financial exposures in different ways through chat apps through embedded wallets etc that's when you start to see where demand or where value starts to acrew just because of this demand meeting this infrastructure

builder. >> I'm excited about innovation. I'm about excited about taking traditional product sets and changing them. I mean if you had spoken about intraday uh markets uh e essentially money market funds where you can use them on an intraday basis, earn a yield and then get that liquidity back. you can use it as a utility to hopefully manage your your collateral from that perspective. And and that to me is where digital assets is starting to solve a problem because we're becoming innovative around our product set and we're changing the dynamics of the products to suit a 24/7 always on capability because clients have always spoken about real time. real-time

payments have been here and now digital assets is coming to the four to support that and I think we've almost gone a whole panel without talking about AI but I think deep down I want to touch on AI because imagine putting in the guard rails around what your AI could do and then essentially that for a treasurer looking at their positions being able to manage their risk by moving liquidity around with digital assets functioning in the background being able to make a marginal meet a margin call in Asia hours even though it's being called at 2:00 a.m. their time. You know, I think that's where innovation and technology come together to drive new product sets to drive the way in which we can change

the way in which we can view do things differently. And ultimately, uh, to Nichol's point, we're still accessing it via the same portals, the same channels, but we're leveraging the technology in the background to make it agnostic for clients that they're able to manage their risk, manage their portfolios, manage their liquidities without actually having to change the way that they operate today, but making it more efficient for them as an overall perspective. >> Got it. Like, thank you guys for insights. This has been amazing and I think we could talk about this for hours but sadly we're out of time for this panel but you know you can make sure next year we'll be here as well looking at where things have moved and I'm sure we'll probably get closer to the

trillion trillions mark but yep that's it for this panel like hope you enjoyed this one. >> Thank you. >> That was great. Wow. Wow. to discuss our next topic, the future.

of curation. Please welcome Essie Lagavadi, co-founder and CEO of Turtle Club. First of all, thank you so much to the Block Works team for hosting us today.

I'm the CEO and founder of Turtle Group. Over the last two and a half years, I've built a vertically integrated tokenization stack that's helped over 250 of our clients run over 300 plus go to market campaigns. some larger campaigns, smaller campaigns, public, private, in a more hands-on, more hands-off manner. And um and as a result, we've routed billions and billions of dollars of liquidity from over 450,000 LPS uh to various different asset issuers, protocols, and DAPs into space and by extension a lot of the different curators that they've worked with. And

from doing so, we've really um you know, started to learn a lot about the curation space and a lot of the pain points and problems that exist within it and that our LPs have experienced as a result of uh deploying into these different curated vaults and letting a boring market. And one of the big problems that we've identified is that a lot of these curators, they end up provisioning liquidity or raising TVL and underwriting risk second. then it's only when something breaks do these LPS find out what they're actually exposed to.

Um I think you know given the events of last October um this sort of really highlighted that fact uh and given that we've been historically focusing more on the infrastructure side and on the distribution side um and we don't have a curation business ourselves. um we felt it was very very important to to start kind of working and uh and bringing the adults in the room which is why it's a very opportune time to introduce you to our board member uh and the global head of uh DeFi and business development for the GSR group Alan

Coons. >> Thank you very much Essie. Um thank you for coming to our presentation. I mean I'm representing GSR. I'm very thankful to be able to do with together with Turtle this new creation project. I mean background to GSR. I mean the firm has been founded in 2013. So it's like 13 years going on and we probably were the first cryptonative market maker liquidity provider and have seen a lot of stuff going on and not going to talk about the trading side or marketmaking.

That's our core business. But give you some insight what we like about this idea to create hair together with turtle. I mean the last slide that >> All right guys, we are here first guest today's stream powered by Alpaca and we've got none other than Arish Seagel, co-founder and president Alpaca and you guys know them well. Uh we've had uh a couple other guys from Alpaca on the show uh most prominently Yoshi uh a couple of times but uh I mean Alpaca has been underpinning this tokenized equities buildout. Uh you know you guys are working with some of the largest players in the traditional finance space. It feels like what we're seeing in the tokenization super cycle couldn't

be possible without Alpaca. Like I mentioned in the intro, brokerage infrastructure behind 300 plus institutions, 40 plus countries, 10 million accounts. Irish man, first off, welcome to the show, >> my man. How you doing? One correction. I am not the co-founder president of Alpaca. >> Oh my goodness, guys. >> Who do we have doing our due diligence behind the scenes? Alex, we need to fix our due diligence process, please. >> We Yoshi and Hatoshi are our co-founders. >> Okay. >> I'm head of digital assets. >> Head of digital assets. say I'm the co-founder of ITN, the instant tokenization network, which is what we'll talk about today.

>> Yeah, please let let's talk about it because we've covered Alpaca extensively. We've talked about how much market share Alpaca currently has in the tokenization space, but it maybe we can talk a little bit more about that and how it interplays with Alpaca. >> Okay. So, it's right what you say that none of what you see today in tokenized equities would be possible without Alpaca. We found ourselves sort of in the center of everything. Our product suite in terms of infrastructure for tokenized equities is second to none. I'm not trying to blow smoke up ourselves. Like this is just facts. No, no one comes close to the the the products that we offer when it comes to tokenization infrastructure. And that's largely because of it. Okay. Right, which we launched last year at token

2049. So it's a year old product. >> It's the fastest ever growing product at Alpaca that Alpaca has ever launched. We've just passed $5 billion in flows cleared through ITN. Now, what is ITN? >> It's an internal clearing house to Alpaca. >> Uh, and it allows participants to swap between traditional shares and the tokenized versions and all the different flavors of tokenized versions instantly and 24/7. Okay. So, it's the first kind of product of its kind.

>> Mhm. uh and it's it's slowly become essential infrastructure for tokenized equities uh as a whole. I >> so we've continued to develop this thesis around tokenization on this show which is that we're in the midst of this tokenization super cycle. We have this onslaught of tokenized assets that are coming. Equities being one of the prominent asset classes but as well as you know commodities, gold, right? All all of these assets becoming tokenized. But it doesn't stop there. It's exceedingly important that we build out this infrastructure because after things are tokenized, we're not just on this road of tokenization to nowhere. We are tokenizing with a purpose so that these things are more capital efficient. We

reap the benefits. A lot of that is 24/7 markets. We get to collateralize, make these things productive and programmable. And so these tokenized assets are flowing into the protocols that people have become very familiar with, become resilient. And so tokenized equities in particular has found so much product market fit. How does the ITN support the tokenized equities buildout? We're already seeing how price discovery and volume. I I think DeFi is starting to climb in terms of or or not just DeFi but onchain activity is starting to climb in the market share as far as how these equities are being traded.

>> Like the rollups viewership, >> you're the man. we're gonna hire you for the for the head of uh rollup uh um yeah uh uh you know customer support and everything and so I mean as you can like the tokenized equities build out is happening the market share is eating into the traditional brokerages how does it help support this brokerage so that more and more price discovery happens onchain >> okay look so yeah you said a lot of this growth is coming you've seen most of it in per right >> because it's a much easier problem to solve with Per like tokenized spot is actually very difficult. It's a much more challenging infrastructure problem than pers because

>> um you have to touch the trady like actual trady assets and they settle on different rails and they're slow rails. So like crypto defi all works on instantly settled quick rails >> but they have to interop with slow rails. So what you have is like an impedance mismatch between the two infrastructures >> and that's basically largely like everything largely everything we do surrounds this kind of problem this like slow rail to fast rail problem when it comes to tokenization infrastructure >> and ITN is like the core that plugs the two.

>> Mhm. >> Okay. Now why is why is it so difficult um in the traditional like traditional assets what to tokenized traditional assets are very different to bearer crypto tokens right so I would say that we are entering like a new era of uh tokenization right the first like the last couple of years everybody's been focusing on just like wrapping up those assets and like custodying them on chain as a token And now we're entering a new era which is about clearing. Okay? So like we're we're transitioning from tokenized asset settlement and custody to tokenized asset clearing.

>> What is clearing? Most people in crypto don't know what clearing is because we don't have this concept of clearing for bearer crypto tokens. Okay. >> This is the difference between RWAS and crypto tokens. >> When I say bearer crypto tokens like Bitcoin ETH whatever >> right? when you hold the token and you lose the token, it's gone. Right? That's the token is the asset. >> With RWA, it's not the same at all because you have a share that is registered under a transfer agent. >> Okay. >> Okay. The transfer agent ledger is like the source of truth.

>> Okay. >> And that's a a company's cap table, right? >> So, and then tokenizing that >> is a completely different concept to having a bearer crypto token, right? Like if you lose the tokenized asset, you can just like reissue the token and the share still exists on the ledger, right? >> So you that's like one example of interrupt with the trady system. The other interop issue is that in the trady world, you don't have like people don't preund. Okay. So in the crypto token bearer token world the way market makers provide liquidity like if you launch a new token you go and do a deal with a market maker you give them a 0% interest loan here's a bunch of tokens you basically like mint tokens out of thin

air and give it to the market maker to provide uh offers on the order book right that cannot happen in tradi because that there's regulation show which is which prohibits naked shorting essentially what that is is naked shorting basically just inventing coins out of thin air and putting on the offer book, >> right, and selling them. >> That's not allowed in Tradfi, right? >> Makes sense. >> So, how do how do they solve it in Tradfi? You have this concept of post trade settlement. >> Okay. >> Okay. So, you need to there's there's you either borrow the actual asset and then offer it or you pro or the broker dealer provides what's called a locate.

Okay. And a locate is a broker dealer's promise basically to say that I have the reasonable confidence that I'm going to be able to locate that share when it comes to you closing your short. So you can go short to offer on the order book. >> Okay. >> And then uh I'll give you the locate to back that short. Right. >> Okay. >> So now when you apply this to tokenized equities, >> we we don't yet have this concept and we like we'll be introducing this this year. >> Okay. Um, but today with tokenized equities, market makers have to deploy their own balance sheet to preund the tokenized equities to offer them on the order. And that's why you have this like little bit of a liquidity problem still in tokenized equities because it's limited

by the market makers balance sheets. >> And in actual fact, it's the tokenized equities issuers that have to pay the market makers to to deploy their balance sheet. >> Okay. So most you know so we're trying to get away from this idea of paying market makers right and the only way to do that is to offer post trade settlement for tokenized equities for onchain trading. So this is like a new primitive that is going to enter the zeitgeist. >> Yeah. >> Post trade settlement for onchain trading.

>> Okay. >> Okay. >> And doesn't exist in in crypto like uh bear a crypto token world. >> Uhhuh. Yeah. So these are all like elements of a a new kind of like clearing facility. >> And this so you can think of tokenized equities. You can you can think of this whole new like phase of tokenized equities >> as being what I'm calling multimodal. Right? We're multimodal. >> Yeah. We're entering this new world of multimodal equities, right? which requires all infrastructure players and all broker dealers and market makers and everyone all the participants need to now become multimodal.

>> They need to be able to touch the trady system on slow rails. They need to be able to touch the crypto system on quick rails and multiple flavors of token multiple blockchains >> for the same underlying asset. So it's the same it's one asset and it's all these different modes modalities, right? So that's why it's multi that's why I'm calling it multimodal. So yeah. >> Okay. >> So now what ITN is is a clearing house. It's essentially the first demonstration ever of a multimodal clearing house but it only sits within Alpaca.

>> Mhm. >> And so now the industry as we've been trying to scale this beyond Alpaca like a market maker may not be on Alpaca. So they they're with like their prime broker and they need to get their inventory over on the slow rail to Alpaca to sell a a token that they minted on the fast rail. >> Right. So then so that's like becomes multiple broker dealers in in involved but there's no clearing house today that can deal with multimodal situation like that >> right >> right because multiple broker dealers some might be offchain some might be onchain some might be on one chain some might be on another chain and they're all these broker dealers are somewhat desperate >> the the broker Yeah. So like the broker dealers are like in the trady world.

>> Yeah. >> And now they're coming on chain and they maybe they support some chains and not other chains. Maybe they support some tokens and not other tokens. Some venues, some tokens may trade there, but other tokens don't. >> So like a customer acquires a uh Tesla X token on some venue, but the market maker has a traditional share on NASDAQ and they want to settle that token with this share. >> Y >> that's a multimodal problem >> and that is fundamentally a redemption. I want to redeem the token tokenized version. >> Yeah, like the customer mint and burn. >> Yes, the mint. So mint and burn of the token and the share requires a clearing house guarantee to support the mint at time t and the share post trade settled at t+1.

>> So >> and and given that this is represented the source of truth is the transfer agents ledger. This is keeping track of what shares actually exist. Is Alpaca transfer agent that maintains these sources the the sources of truth? >> Malpa does. So uh >> we're so the transfer agent is like the company that is the entity that is responsible for the public company's cap table. managing the table and ensuring that someone recees the fact that like those shares can't be transferred and they do all of this stuff right?

>> And and most of this I mean is offchain, but is it paper? Is it digital? >> Yeah. So, like the transfer agent world is cra it's a crazy world. Like it's all p like it's all like weird old systems. And it's so funny because in the regulations there's some rules around like the transfer agent only needs to be 75% confident that their records are accurate because that's how old school like transfer agent businesses are. >> Then they're not they're typically not like the most regulated and most uh like audited and overseen entities. That's why it's a little bit scary that the transfer agents are now becoming like the a really important part of this future tokenized equities

infrastructure. There's some upgrades happening now. You've seen like uh something that the SEC put out around transfer agents. >> They're modernizing the transfer agent rules. >> Right. Right. And I think a lot of that is getting it at least to digital before we even think about putting it on chain and tokenized. We're getting the transfer agents away from paper and trying to get them into digital versions. >> Yeah. Exactly. So now transfer agents are saying okay I want to use the blockchain as my back end instead of a database or like our paper system whatever >> um and you know affecting so they're going to affect ownership changes based on what the blockchain says but ultimately still there's something called the master security holder file which is like the basically that's the the database source of truth

>> okay recognized by the SEC >> and they're saying okay now our master security holder file is the is the blockchain >> Uhhuh. Uh >> that's what the transfer agents are saying. >> Yeah, the transfer agents are slowly moving to like blockchain native, but >> the there's there's still like multiple ways to do this. Okay, because >> and this gets to that bear aer token conversation. So >> some people will say the token is the share. Okay, but that's not actually true because if it was true that token would be a bearer asset, right? And those tokens therefore would not be uh they would be prohibited by to US persons and UK persons and most people >> you cannot you can't trade like people

cannot trade bearer token bearer securities like everyday retail because it's there's an AML risk. >> Okay. >> If like imagine like back in the railroad days. >> Oh yeah. Because if I had the paper share and you were a, you know, someone was a criminal, you could just give the piece of paper to someone else and then they would own the actual share. Instead, we keep those actual shares locked away in a database that >> you can move, but you have to be >> you have to be KYC. You have to be KYC in order to interact. >> Exactly. You have to be within the system, >> right? So bearer securities aren't good for us like >> the general public. So, so that's why the token like the token is the share narrative is like a completely false

narrative. >> And so some of this I think is just a quick side note on the tokeniz the different ways of doing tokenization. Some of the ways of doing tokenization are this native tokenization where it feels as if the tokenized share is the actual share and then there's other versions of tokenization that kind of do this wrapped version. Maybe it's an SPV or something like that. But you're saying that even the native tokenized >> security isn't the actual share still maintained by the transfer.

>> Exactly. There are some implementations of a bearer asset um like a native token >> uh that is a share and that is that is actually uh one of the one of the companies that does this is metallics >> you know like Gabriel Shapiro he's like >> oh yeah >> like snow on on Twitter >> his company does this and what they've done is they do two types of token actually one is the bearer asset which is an NFT >> and then they have a ERC C20 represent that's for trading.

>> Okay. So they recognized you can't have this bare asset trading out there. >> So we separated the two tokens. >> Okay. >> Right. That's like the proper way to do it. >> Okay. >> If you really want to be like crypto native, >> right? Right. >> But most most transfer agents are not doing that. >> Okay. >> And and so now that we've kind of got this transfer agent, this master security file, we've got these are the actual shares. We can represent these shares with a token and then do that with trading. And those tokenized shares might be at several disperate venues, some of which might be offchain at different broker dealers, some of which might be at onchain venues like decentralized exchanges and liquidity pools.

>> Just fill us in more about how we get to this post-trade settlement, this this world in which we're no longer paying market makers to to provide liquidity. And and look, a real case study of this is a couple weeks ago during weekend market during the weekend there was offmarket hours. There was a big runup in some of these shares that were paired with meme coins and you had these wild price fluctuations particularly on the weekends. >> Yeah. >> While it was very a very low liquidity environment. >> Yeah. until the market reopened and some of these guys started to arbitrage that trade that that tokenized vehicle back to its real price.

>> So talk to us through about how postrade settlement and clearing can avoid these wide price discrepancies ultimately lead to orderly markets. >> Yeah. Okay. This is a great example, okay, of post trade settlement because, okay, so to summarize the situation on the weekend, AMC, >> yeah, >> like token demand went through the roof >> and the markets are closed and like on Friday, they the the issuers had only minted a certain amount of tokenized >> so there was very low supply on chain.

>> Right. Exactly. So now h that's exactly when the market makers all came to us and were like actually they've been doing this for ages but this is another example. They're like okay how do we get more tokens on the weekend right so they came to us and were like we want to mint more Robin Hood AMC and the way that so so the way that that can work is through weekend locates. So, I mentioned before about locates. >> Locates. Yeah. >> The broker dealer would say to the to the market maker, okay, I'll give you a locate based on your inventory that I see at your prime broker or at Alpaca or whatever.

I can see that like you could basically pledge some inventory that you have I have visibility of and I'm going to give you a locate or the broker dealer has visibility elsewhere outside of the market makers uh collateral >> and they and they and they are confident that they can provide a locate. So boom, you can now mint a new token based on a locate and that satisfies regulation show. Um that essentially what's happening there is the the participants going negative in the in the in the ledger right >> and the issuer is going positive >> right >> okay one share and then >> the negative card by the locate and the mint can happen based on the positive share >> yep >> positive share position and then on t plus t at t plus1

>> which is Tuesday actually for a Saturday trade >> um that's when the share can then be settled to bring up the negative back to zero. And so this either the market maker can deliver a share from their prime or someone goes out and borrows and uh that's how that's how the system works. So that's the post trade settlement part of the on trade mint. Right. >> Right. Which happens at time t. >> Yeah. And so it's not that on a Friday afternoon all of a sudden they realize that there's a ton of activity for these tokenized trades. It's that and and they're minting more than you know they're kind of guessing at how much they need in terms of supply in order to facilitate these trades. No, there's actual

work being done over the weekend, right? Do they have a certain capacity that they can reach or is there still some flows that are going back and forth even on the weekend? >> Yeah, every mint has to be collateralized right in a way. So even like that's that's under uh reggg t. So in regggt that governs how broker dealers can uh issue margin and like basically allow people to go negative has to be over collateralized. >> Okay. >> And there's various mechanisms which are enforced by FINRA right the regulatory body for >> for broker dealers.

>> Yeah. So you know they need to make sure that our system is correctly attributing the margin and then the margin system is rules are defined by the clearing house and the clearing house like our membership with the clearing house is governed by like the fact that our systems our margin systems are working as per the rule book and that then the clearing house provides the guarantee. >> Okay. So that was my next question is who's taking on the risk that the the credits and the debits are such that they will net out ultimately at T+1. So in this case, the broker broker dealer is giving the locate. >> Mhm.

>> And it's down to the the broker dealer to like essentially the broker dealer is short, but the broker dealer's customer is the one who's short, right? But the broker dealer is responsible for finding those shares or whoever gave the locate. >> Mhm. >> And in the trady system, as long as these are cleared through the NYSE, which is the clearing house, the the clearing house provides a guarantee to any failure of the broker dealer. Right? So if a broker dealer goes bust and doesn't have the share, right, >> the NSEC will step in and >> right cuz the broker dealer is effectively they're negative, right? So they owe who do who who exactly do they owe the shares to the >> So >> who goes positive, right? The issuers go positive. Yeah, the issuer goes.

>> So the broker dealer goes negative like you said, they're effectively short and then they're pledging that they have the collateral somewhere else based on the locate that says yes, you actually have the shares somewhere else. And that tells the issuer to give them the credit to >> that's right >> provide the shares onchain. >> Right. >> So you provide the shares to another the issuers broker dealer. >> Yeah. >> Okay. So just that happens in most scenarios it's alpaca. Okay. So like >> that is the the alpaca is the issuer >> is the issuers broker dealer and the market makers broker dealer. And that's why I said it is an internal clearing house because everyone's in the same system.

>> Okay. Because because you you can be the issuer for both. You can be the the the issuer and the broker dealer. >> Yes. Well, no, no, no, no. We're not the issuer. We're the issuers broker dealer. >> The issuers's broker dealer. >> Yeah. Yeah. >> Okay. >> So, like um Kraken XT stocks, Ono, Dinari, all of these guys. They're all like we're the broker dealer for them. Those are those guys are the third party issuers, >> right? Okay. Uh and and so in our in our legend, our system, it's like we got the issuers on one side with the market makers on the other side or every retail participant. Right.

>> Right. Okay. So So Alpaca is the broker dealer for both the issuer and the market maker >> in most scenarios. >> In most scenarios and that allows you to do this netting and this clearing because you're the broker dealer for both of these market participants. >> Okay. But that's Yeah. So that was like the first step. It was easy for us because everyone was on already on our system. >> Right. So now we want to expand it beyond Alpaca. So now we've got like issuers who have multiple broker dealers, not just Alpaca. And now we have market makers that have prime brokers outside of Alpaca. >> Uhhuh. >> That have like advanced features that we don't have, right? So they're they want to they have their inventory elsewhere.

>> And so now you have this like multi- like multi-broker dealer like settlement issue and that's called multilateral clearing like multi >> multilateral. >> Yeah. So that's so if uh >> but actually it gets really really interesting. Let's take an example of like you me are doing a trade. Okay. And you have your own broker dealer. I have my own brick deal. >> Okay. >> And broker dealers. Let's use names like >> Charles Schwab. >> Goldman Sachs. Okay. Yeah. I'm with Charles Schwab. You're with Goldman Sachs. >> Cool. >> Okay. Now I'm selling you uh Tesla token. So you're you want a Tesla token and I have a Tesla share.

>> Okay. >> Okay. So Charles Schwab the trade happens. >> Okay. >> And what we're asking the token issuer who could be uh >> and I want the Tesla token. >> Yeah. Right. >> So let's say Coinbase token Coinbase now mints you a new token in response to your request for a >> and it gets deposited into my Goldman Sachs account. >> Yeah. Whatever your Goldman Sachs wallet. Okay. >> Okay. >> Now we the Coinbase hasn't basically would have an agreement. This is like we're talking future state here. Coinbase would have an agreement with uh the clearing house, the multimodal clearing house that the clearing house >> say alpaca.

>> Well, it could No, let's just like leave it unnamed for that. >> Okay. Okay. Multimodal clearing house. >> Yeah. A multimodal clearing house >> guarantees to Coinbase the issuer >> that your mint of a new token is is backed by a guarantee from the clearing house. Like the clearing house will step in, >> right? uh in case there's any kind of shortfall. So it's as good as any kind of trap by trade. And the clearing house is able to provide this assurance because they have the locate >> the well they have a set of rules uh regulated under 17 a which is like the SEC's rule clearing agency rule book right and that's like a really long

process to get that approval right so they have like a a really robust system fully audited regulated and like overseen by these guys right so they they have a margin system essentially that is that allows them to provide this post- trade flex in the system because you need ultimately you need this flex in the system to provide this >> post trade settlement. Okay. >> Okay. So the the clearing house guarantees the mint and on this side the the market the counterparty is Charles Schwab >> right >> Charles Schwab is a member with the clearing house. They have their deposit with the clearing house in which also like is in the waterfall of when uh in the in the failure waterfall the deposit

gets hit whatever. There's a rule book for this. >> Um am I complicating this too much? >> No. So now I have this share and I owe the share post trade. Okay. To and I deliver it to as in like Charles Schwab. >> Charles Schwab. >> So Charles Schwab delivers it to the clearing house. >> Yep. >> The clearing house has already delivered the token to to Goldman Sachs. >> Right. >> All right. So they're like netting and they're they're basically netting Charles Schwab's obligation. Charles Schwab obligated has a has a token obligation and a >> share obligation >> and a share asset, right? So they're netting those to to zero. Yep.

>> Which means that like it's all good and then >> post trade the share comes through. It gets delivered and squared up. The share gets delivered to the mark to Coinbase's broker dealer which is Goldman Sachs. Now Goldman now Coinbase's reserves are complete, right? They're they're fully reserved. >> Coinbase's reserves. Yeah. >> At all times, Coinbase's reserves are fully like fully covered. Y >> but it's just that the share isn't there, but this it's a guarantee with the CCP. The the CCP has visibility of the share, so they provide a guarantee. So, it's like the same thing. >> That's how the Trady system facilitates post trade settlement.

>> Yeah. >> Um >> I think okay, now >> multilateral. So let's say Andy comes along and you're selling the token to Andy within the same settlement cycle. >> Okay. >> Okay. So actually you don't you don't ever take custody of the token. The token goes straight to Andy. >> Okay. >> Right. >> And I don't and Charles Schwab doesn't deliver to uh Goldman Sachs but it goes to Andy's broker dealer which is Morgan Stanley. Let's say >> Morgan Stanley. Okay. >> Okay. So now you have multilateral netting required because Goldman Sachs total obligations and liabilities should be zero, >> right? They've netted out cuz they had an incoming now they've got outgoing.

>> Exactly. So in and this is how we like make the whole system way more capital efficient. >> How it in particular makes it more capital efficient. >> Yeah. Like if I mean ITN doesn't do multilateral today. Okay. >> But in the future state which is what the industry needs. >> Yeah. we need to figure out this multilateral like because again it all comes back to how do we not pay the market makers is because you need to eliminate the capital inefficiencies and this is how you do it. It's netting. >> Yeah. >> So the the NSEC for example um does it has $100 trillion of US equities assets in the DTCC. Right. Okay. Yeah, just to explain DTCC is the is the is the central clearing uh clearing party

for central counterparty for the US equities trading right and it is comprised of the DTC which is the custody piece and the NSEC which is the clearing house >> the clearing piece okay got it >> okay now there's 100 trillion of US equities in the DTC >> the custody and custody yeah >> yeah but the NYSE clears 4.6 six quadrillion >> dollars of flow. >> I remember seeing this stat last year >> which is like how have you do you know any other industry that's measured in quadrillions? That's nuts.

>> Yeah. >> Okay. But it's because there's a so there's a 46x cycle of inventory throughout the year. >> Got it. On a hundred trillion that would mean 4.6 quadrillion, >> right? And but it's netted down 98%. So only 2% of actual capital moves through the system. >> Wow. Okay. >> Because of multilateral netting. This is like one of the financial industry's most insane innovations is multilateral netting. >> Yeah. >> Right. So it makes everything super capital efficient and we don't have that in crypto today. We don't have any concept of that in tokenization.

>> No, because everything just moves >> preunded and like everyone has to preposition capital into the token on either side of the trade. Someone has to pre like have tok uh stable coins preunded and tokenized equities preunded and then the trade happens atomically. >> It's almost like this is very reductive but it's almost like crypto is operating on like debit cards. >> Yes. It's very similar to debit cards >> and what you're describing is like Tradfi operates on credit. >> Yeah, exactly. I built a credit card company prior to Alpaca actually. And so the way that that system works is super similar actually because the de the way debit card systems work is >> you have the you have to have like a lock box uh as a debit card like issuer.

>> Uhhuh. >> And that you have to fund that lock box to fund like to preund all the purchases for all of your debit cards that you issued throughout the day. >> And when you hit that limit the all the debit cards will start to decline. So that's like >> yeah that's the preunding component. So it's like that. Imagine the $4.6 quadrillion dollars had to all be preunded. It just like the system would grind to a halt. There'd be no liquidity in markets. It would be impossible. >> Yeah. >> So, yeah, that's what we're trying to solve here. >> Okay. >> That's fantastic, man. I want >> to clearing manual clearing house. This is like the new thing. I where just draw the line for me on what is real today

and where we're going because I I think we did kind of cross into the future component a little bit. There is some elements of clearing that Alpaca and ITN are doing today. You mentioned market makers >> and issuers the broker dealer is >> they're kind of similar and all on Alpaca's system today which allows you to clear amongst those market participants. where we're going is that we expand beyond Alpaca and ITN is able to clear amongst all broker dealers, all venues.

>> That's right. >> And so just give us a sense of what is online in production today and what is coming out soon based on what we talked about. >> So you can see on our website alpaka.markets/doccks and you can see the ITN like API documentation. >> Okay. >> Uh that's been live for a year. So, it's it's it shows you how you can mint and redeem any flavor of token. And we support BTOS, XTOS, um ono tokens is coming live soon. >> Uh no, it's already live. Ono is already live.

>> Uh >> Robin Hood, Coinbase. >> Yeah. Yeah. All of these like co Yeah. Everything we almost everything is supported on ITN. If it's not, it's in production >> in terms of the tokenization issuers. >> Yeah. It took tokenized minting and redeeming. >> Okay. >> Yeah. From the from the underlying share. Got it. >> Um, so that's all live today. >> Today you have to be a institution that is a customer of those issuers. >> Okay. >> But in the future you will be able to do it directly through what we call a facilitating AP which is so today the AP is like an an authorized participant is like the contracted entity that's allowed to mint redeem with the issuer.

>> Okay. This is a Trafy concept >> we apply to tokenized equities >> and we're introducing a new concept called facilitating AP. So like a retail participant >> could go through a facilitating AP to actually mint redeeming soon you'll get retail access and in fact some like Binance for example as a retail customer you can mint and redeem the B the BTO token from an underlying share. Okay. >> Because and it's all happening through ITN in the background actually.

>> Oh wow. >> Uh the way that it works is like we also power Binance's cash equities, right? >> And so all of those accounts are also on Alpaca, the retail accounts, >> and they're going through Binance as an AP >> to the Binance's issuer. >> Okay. >> And so it's like they're doing the facilitating AP job. >> Yeah. Yeah. So, >> and is this um th this is something that would allow people to mint and redeem uh as a retail uh and go through the facil facility in order to do this?

How h how like necessary or or I guess my question really is like can this happen at any time? Does it have to be during market hours in order to facilitate this? It can actually the minting and redeeming can happen anytime 24/7. >> Okay. So we should see very little price dislocation between onchain and offchain. >> So yeah so long as someone on the on the contra side of that swap >> takes the risk. So what's happening is if you want to swap on the weekend like from token to share >> Yeah.

>> Um you still have you're still holding the share risk. you're still holding the risk on the weekend. It's just that you're changing the modality. You're changing from token to share. So that token to share thing can happen 24/7. >> Okay. >> So market makers do that often like >> um >> but when when the you know 24/7 token markets start to reach maturity, you might see more >> like more of the swapping activity on the weekends. There's no real need for it at the moment, the swapping actually on on the weekends until there's some 24/7 traditional markets that open as well.

Okay, let's I mean we've got about five minutes until our next guest. This has been fantastic by the way, Arouch. I I I I I am really enjoying this when I can actually like learn something new is when it's my when I enjoy this these conversations the most. >> Yeah. >> Um I was at Cyos last week >> and you know they were pretty tight lipped about everything. I was talking to a lot of these banks about their stable coin strategy because it was just recently, you know, oh, AI agents, if you can, you know, maneuver your capital between whatever is giving you the highest APY, it's a real risk for deposit flight out of some of these depository institutions. Anyway, that's all just context. And so, they were pretty tight lipped. I was asking about stable coins, but then I was like, hey, I'm conducting a survey. You know, are

you guys considering launching a stablecoin product? Then they were all all of a sudden once you're conducting a survey, they're all of a sudden way more open to like talk about this from like a research perspective. And so what I found out was that the need for 24/7 markets is what's driving a lot of the demand and innovation from inside of these banks. >> Yeah. >> And so a lot of them are, you know, pretty bearish stable coins, but you know, they're very bullish tokenized deposits and it feels as if they're being forced to go on chain and to tokenize to meet the 247 impetus that is being put onto them. And so it feels as if 247 is like they've now have they now have a mandate that has been given to them by

their executives that say, "Hey, we need to be 247 soon." >> And now they're figuring out how to do that. And going and to tokenizing and going on chain is the way that they found out that they can reach 24/7. So 24/7 feels extremely important and real for all of these institutions. And so you're saying some of this becomes relevant once you get traditional broker dealers and venues operating on a 24/7 market basis. >> I mean just earlier this week OKX announced that they're going to be working with New York Stock Exchange parent company ICE on 24/7. So yeah, talk to us about how because crypto has been 247 for a long time, but what is real on the 247 broker dealer in the

traditional world and how is that going to impact the tokenized equities markets? >> Uh I'm actually on a panel right after this. I need to make sure I'm not late, but we're going to talk it's with Jake from uh HPC, right? Okay. >> And we're talking a lot about 24/7. So the I think what's first of all your the the fiat rail needs to be 24/7 in order for the tok in order for the equities markets to go 24/7 as well right so this this is like a key unlock the banks need to get their together RTP fed now all of that stuff needs to happen like and it needs to reach penetration >> in order for fiat rails to go 24/7 that's a mandatory minimum >> um what I think we'll see though is I think there's still a human element

here that people don't want to work on the weekend like there's still going to be an issue because and what that will result in in my opinion >> is that you're going to see liquidity events >> okay like the Monday New York open will remain the best >> part the best time to get like access to the major liquidity across all markets >> the Friday close >> like these are liquidity events that and uh those are like beneficial for everybody because it's like coaleses liquidity And like people are going to like people are not going to uh everyone's going to have to have their 24/7 operations and trading teams, right?

>> But I think they're still going to be like these spikes, >> but are they going to be more or less relevant to the market than they are today? >> Uh I just feel like there's there's there's like inertia with human behavior. >> Okay. and especially these large fin like finance enterprises. >> Yeah. Yeah. >> I I don't think like yeah you're definitely going to see activity and especially on like the southern hemisphere and like places like other you know eastern whatever eastern hemisphere you know Asia markets they're going to love the fact that like the markets are now 24/7 >> but I think you're still going to you're going to have a lot of that inertia.

>> Okay. I think they will be relevant and unlike NY and NASDAQ, >> they're going to engineer liquidity events, right? Because that's c that's also part of their core advantage as an exchange. >> Like their job is to provide the best liquidity, >> right? >> And like liquidity events are the things that like attract users and issuers to join their exchange. >> Yeah. Yeah. >> So, I think you'll you'll see you'll still see these. >> Okay. Or I I'd love to continue this conversation. If you got more time, just come back later. We'll we'll we'll keep keep it going. We uh we appreciate you sponsoring today's uh today's stream. We couldn't do it without you. Thank you, man. And congrats on the major success like breakout views. I love it. I love

the fact that we we invested >> like by being on the pod like pre pre getting famous. But we we love you guys. We always loved it. >> Absolutely. Have a great panel and uh would love to Yeah, like I said, continue the conversation. Keep working together. >> Okay. Awesome. >> Cheers. quick standby and uh we're going to keep it rolling >> in a way >> or why the deficit is not really a scare. So we do think that real world asset tokenization is going to unlock the global economy uh and pave the way for all things of value, all money to move on chain. And you can see there's been a historical progression here. uh we're finally at a place where

um you know liquid assets are are being are being tokenized but it's still very early and I would say it's in the first inning. Um you can see here this is a a vision of how the future might look. Blockchain composability flattens the US and global balance sheet. Um you know I think that currently today assets uh are very fractured um you know there isn't the fungeability and the ease of I would say transaction between assets and certainly um not between illquid assets.

Um, part of our bigger view for the future is really connected to this idea, and we've had this since 2019, that um, yes, all assets were going to be tokenized, and we've already tokenized or started to tokenize liquid assets. the holy grail for the space is really the tokenization of illlquid assets which hasn't begun yet. So it's very important for me to have a framework when I'm making uh investments in the space because um you know if the if a certain trend is already played out um if it's um

uh you know if everyone is is involved with it then the investment is essentially over. The alpha in this in the investment is gone. So, we're in the first inning of of the tokenization of liquid assets, but I'm looking out 5 to 10 years, and it's the tokenization of illquid assets that I think is really um you know, I think it's the that's the holy grail for blockchains. And you can see it's still very small.

Nothing has been tokenized essentially. If you look at total world global asset total private global assets still very very small and as I was mentioning look liquid assets have begun to be tokenized and you can see currencies 1.3% it's very small and then fraction in the other assets and then illquid no one has even attempted that and this is very important uh I will say that you know if anyone has developed a business that is already making, let's say, 50 to 100 million in revenue, tokenizing illquid assets, anyone out there doing that, um, I'm looking to invest at least 100

million or more into that kind of firm. So, that's not out there yet, but our job is to be early. And so, that's where we think we're going. And you can see here, of course, liquid assets, we all know this, stable coins and even RWAs have been just straight up and to the right. And that's even with Bitcoin and ETH uh being locked in a bare phase. And we know this as well, liquid stable coins have extended US hedgeimony by creating new demand for dollars. And in some of these countries, uh, it's sort of shocking, uh, what percent of the populations hold stable coins in their

digital wallets. We in America don't often, uh, think about these foreign places, but really um, a new source of demand is coming from the emerging markets. um at some point in the future, maybe this is hypothetical, stable coins, um the the growth in stable coins, the dollar value, some portion of that will be used to fund the US deficit. Um right now it's just flow. We don't know, maybe it's some small percent, but when it gets to a very big number, it'll be obvious that stable coins are helping plug this deficit.

And also look, stable coins have become a very explicit instrument now of US fiscal and foreign policy. Um, and uh, Scott Besson has been all over this. And I think, you know, of course, passing of the Genius Act was very helpful in pushing this out. But I think in the back of their mind, um, you know, they want to have control of the dollar flow. And this is largely so that they can continue to maintain the strength of their fiat currency. Uh which of course is connected to the level of the deficit.

Um and as I just said, stable coins potentially provide a new source of financing um for federal initiatives and and this really of course also includes the AI infrastructure buildout. So, it's not crazy to think that some world in the future, and again, we're always thinking about the future, what's going to happen in the next 5 years, that it's possible that this flow of dollars into stable coins ends up becoming uh a source of demand for um the hyperscalers and other and others who need to borrow. So, I think that's just a interesting

thought. I don't know how far, you know, to take it exactly. None of this has exactly happened yet. Um I would say that, you know, our focus is not to focus on things that have happened. Um we're interested in ideas that seem plausible that have yet to happen. Um and you see here of course AI we know this AI spending is driving unprecedented demand for for capital. Uh some people are concerned you know the pressure on the existing interest rates is going to be too severe. Um we look out and it's trillions of dollars of

capital that's needed and where where is it all going to come from? Theoretically it could come from some of this new dollar flow that's moved into stables. Um and this administration as we know has been very aggressive um taking ownership in Intel uh you know and open AI it's proposed uh it's just been we haven't had a US government like this and so the world is blurring a little bit um you know the government's balance sheet um the assets it wants to own and then helping the private sector fund this blowout in AI capex. And so

we're in a position where there is no alternative to the US winning on the AI front, which is, you know, Trump's winning, whatever you think winning means. Um but what it does mean is we we have a sort of command economy and um no risk is great enough you know for us to take if we feel like that um we're at risk of losing the AI race and I think stable coins potentially uh have a place to pay in to play in that in that funding.

Now the US federal deficit in nominal dollars you can see here uh has grown but it's not it's not crazy. Um you know it's 1 to two trillion for the last sort of 10 years or so. The previous period in the 90s and 2000s you know the economy was a lot smaller as well. So those numbers reflect that. uh as a percentage of GDP you can see we're around 6% yes that's elevated from the 90s and 2000s uh still lower than you know post08 when we had a real problem um and I would say you know a little higher but you know

not the end of the world um let's go skip to this for a second and of course a lot of people have been complaining about the deficit right And I remember in 1988 I was in college and this book by Ben Freriedman came out and was called Day of Reckoning. And that book scared everyone basically to think that the deficit spending from the Star Wars of Reagan's Star Wars plan was going to blow up the entire economy.

Um, that was a real fear. I read that book. Every person my age read that book. it was wrong. Um, and you can see how many people have consistently been wrong. You know, the time that Ray Dallio every three or four years is wrong. Uh, you know, and the market just keeps blowing away through everyone's prognostications about here we could face a sudden economic collapse worse than the Great Depression. And this has been going on for 30, 40 years. So, I don't know why this doesn't get more play. Um, but it doesn't. Now, one concept that I've been working with and my team has is this idea that the value

of the asset side of the US government and national balance sheet is much larger than anyone gives it credit for. Now, you're not going to read this at a Goldman Sachs uh piece of analysis or anything. This is just something that I've thought about for 30 years. Um, and in a way helps me explain why all of those people in the previous page are wrong. Ray Dallio is very successful guy, but he's been wrong on this and many others have been wrong. And so I took a look at what the balance sheet of the country is valuing things that don't

have explicit value like the value of what is the value of the fact that our aircraft carriers police the world seas for free. We don't charge anybody anything. What is the value inherent in our legal system? Right? No other country could just gin up and create the legal system that we have. There's a tremendous amount of >> And we're back October 7th, D Asia and we're live with the Franklin Crypto team. Excited to chat with Anthony and Seth today. Uh we're going to talk key themes. Uh what you guys are seeing in

the market, maybe some war stories of uh Franklin Crypto's experience in the industry. I think the t main takeaway if you just look around the room I mean the institutions are here and you guys have led the way uh since uh I mean since you guys have gotten started you've pioneered a lot of the work that institutions have now looked to uh as they've entered the space and so welcome to the show it's a pleasure to have you guys um maybe we can just start with what you guys are focused on what is the most exciting aspect of what you see in digital assets today and where you're spending the most time Seth and maybe we'll We'll we'll get to time.

>> Yeah. I mean, look, I think the the most exciting thing for us right now is that the fact that we're seeing broader and broader sets of institutional allocators show interest in this space. We're we're seeing, you know, on the liquid market side, we're seeing really good revenue growth. We're seeing value capture in tokens, reasonable multiples. >> Yeah. >> And that resonates. That looks like equities, which is really exciting, right? People want fundamental opportunities. Institutions aren't that excited about investing in memecoins. They're excited about investing in real businesses early in their life cycle in a new secular growth industry and that's really coming together as an investable

theme right now. So, we're we're seeing that resonate which is really exciting. >> Yeah. And we we like to say we're in the midst of this tokenization super cycle which is fueling a lot of that growth. Tony, what are you most excited about these days? Well, we're we're sort of going back to basics. Uh so Franklin famous is famous for Benji. So the tokenized money market fund. >> Yep. >> Very simple concept. >> Uh we made our name. It's it's really fun for Franklin Templeton 80 year nearly 80-year-old company to have street cred in crypto.

>> Uh and it was through uh what started off as an experiment in tokenizing a money market fund. that fund has been live and working flawlessly since 2021. Uh people are institutions are now starting to see that as good collateral for all sorts of interesting things. >> Uh and all of this is going to be settled and traded on the blockchain. Uh lots of different protocols. But it's that sort of behavior which is driving usage which is driving KPIs which then turn into revenue which then turn into investable assets back into the liquid uh the liquid token space.

>> Yeah. And and that is ultimately where I think we're headed right this tokenization super cycle. I was at Cyos last week and there was some talk from, you know, some of these digital asset teams within these bigger institutions around, oh, we're on a tokenization path to nowhere. And now I think they're starting to realize that this is ultimately making the entire financial world more capital efficient, more productive, more programmable, and it's unlocking tons of idle capital. >> And so this this tokenization super cycle, it starts with getting these things tokenized, but it doesn't stop there. Then they flow into a lot of the protocols, a lot of the onchain applications and rerate those TVLs, rerate those those AUMs and that entire

addressable market so much higher. And that's what I think we've seen in the market as of recently is that hey, a lot of the same lending facilities, these these exchanges, these things are not just for cryptonative assets. They are for assets. They're they're for financial assets in general. And this is so much larger of an addressable market and and and it's growing the pie in general. The question that ever that always comes back to is who are going to be the biggest beneficiaries? There's going to be winners and losers who are on sides and offsides. Who do you guys think are going to be the biggest winners of the tokenization super cycle?

>> Well, I'll just say the the watch word always is who's going to capture the value? Yeah. >> So, there's clearly value being created by this technology. Who's going to capture it? >> Seth, who's going to capture it? Uh >> well so so it's interesting there's a lot of excitement about tokenizing private investment instruments right so we we've had this wave of excitement about preIPO tokenized equities >> I'll actually take the other side of that when you think about the addressable market I think assets that already benefit from liquidity >> are going to see the biggest benefit from 247 liquidity >> and then when you think about so so what is that that's equities right that that's treasuries So I I think and that that turns kind of the conventional

wisdom on its head a little bit but so so that's number one. I think equities will be a huge beneficiary. Now the push back that I often get is >> well but there's no liquidity over the weekend for like even in crypto assets liquidity goes away on the weekend. It's like well yes except when there's a really important event that happens over the weekend and then liquidity comes right in. So if you look at what happened around the Iran war that's meaningful liquidity finds its way into the market and people are able to to adjust their position. So that's number one. I think equities will be a huge beneficiary. But then when you think about what you can do with tokenization, the composability,

creating new instruments, there are a lot of things that were just really hard to do with traditional market infrastructure. >> But now when you're dealing with a thin infrastructure stack where it's just the the token trading on blockchain rails, >> you can start doing really creative things, right? and Pendle has shown us some really creative things that you can do with with yield in the tokenized world. I think you're going to start seeing a lot of interesting things come into equities that tie into slicing and dicing profit streams and and yield and all types of dynamics and and recombining them.

>> Yeah, that is really exciting because we are seeing this grow the pie moment. feels like there's going to be a whole new ass there's going to be so many new asset classes that are tokenized brought onchain increase the the the addressable market for these applications but then there's you're absolutely right all these exciting non-skeumorphic things that we can't really see until they play out and so Benji was innovative extremely innovative for its time and now we're unlocking what a new paradigm could look like and so when you're thinking you know inside of Franklin Templeton as an institution, but then more broadly about institutions in general. Are they are they starting to think about some of these financial

products that they can create? How are they being innovative? I I take it, you know, the liquid markets are one thing, but how are they thinking about building new products with tokenized? >> Sure. Sure. We're still we're still on the journey >> uh as finance is being upgraded uh with tokenization and the protocol rails >> uh we're still in the midst of building sometimes we use the word the liquidity layer. >> Yeah. uh and that is going to help support the 247 trading uh and the collateralization behind all these trades uh allowing for things to be levered and unwound over the weekend in an orderly way.

>> Uh all of this again goes into the liquidity layer. Once you have that then you can start to build applications on top of that that start to become more consumerf facing. uh there there will always be instit you know structured finance has been around for a very long time. >> Yeah. >> Uh you might say spreadsheets you know were the greatest revolution in finance for a long time. Well this is another revolution. >> Uh but we are just at the beginning of the journey. So there the products that will come >> we'll find out. >> And and Tony give us a sense of the war stories like you know you've had Benji around for a long time. What was the feeling in the room? What were the conversations like when you first rolled this out?

>> Was there some like odd looks? Like what is that for? Why are we doing this odd looks and and and how have those changed? >> Plenty of odd looks. Uh we started the So again, Franklin's been around for 75 plus years and you you don't stick you don't live that long without reinventing yourself a couple of times. >> Yeah. Yeah. Yeah, Franklin is a closely controlled public company but uh you know essentially family you know familyowned with long vision with a long vision. So we can do these experiments. >> Yeah. uh and with you know with the support interest and curiosity of of leadership and all the way down with Jenny Johnson uh we started this just as an experiment of what could be uh I mean

look digital ass the digital digital ledger technology can disrupt asset management >> so that is not lost on us uh and it's our job to stay in front of that and make sure we can use this technology to to help our clients so fine we did now we did this in in in consultation and with you know working with the SEC. >> Uh Ben Benji is uh our money funds. Money funds are regulated of course. >> So we are very regulated. We had to work with the regulators. Uh I think we all had to help help in our conversations with regulators. Uh but we did it and we came up with a rockolid project. uh and

product where the ownership of of the funds are on chain just purely on chain there's no secondary book of records uh so it all worked in the end but it was uh there was some risk in doing it >> and is it still an experiment >> I don't think so >> no it's proven itself >> there's well the the uh the many many of our uh competitors want to have similar projects are starting similar projects tokenized money market funds are becoming table stakes for a lot of asset managers at this point.

>> Yeah. And and so as we think about the evolution, it feels like you guys kicked off maybe this institutional FOMO is something that we're calling it because now it seems as if everyone is now racing to get in and claim some dominion over a part of this market. And so, Seth, I I I think you've got some key themes as far as, you know, some liquid token narratives and things that we want to pay attention to, but also I'm curious from the institutional perspective, what are the key themes? How will institutions enter the market if they haven't already? And what is some of that that green space that is still up for grabs?

>> Yeah. So, it's interesting. Let's start with you you brought up skuorphic and nonsuorphic. So, skuorphic obviously matches what we have today. non-skeumorphic is kind of the new things that come out of the these primitives. So starting with what we have today, um we we already talked about the fact that topline growth, so fundamentals look fantastic. By the way, these businesses are incredibly profitable, incredibly capital efficient. So drops to the bottom line goes into buybacks. We're we're seeing a lot of interest in these fundamental stories. So that that's like squarely skumorphic. When I think about some of the things that are going to start to evolve out of this, so I come from the equities world. I I was an equities investor for 18 years. before launching

a liquid crypto fund in 2020. Um I I think the um the the structure that we have in the equities world where you have analysts that cover particular sectors. I think we're not too far away. Maybe it's one year, maybe it's two years from having a healthcare analyst who has to know healthcare. Maybe it's biotech, maybe it's uh uh healthcare services, but has to know that business inside and out. and then also has to have the the crypto understanding inside and out as well >> and that combination will be a key differentiator and we'll have someone who focuses on healthcare, someone who focuses on consumer discretionary, someone who focuses on AI but that vertical specialization right it so far liquid funds have taken it for granted

that knowing what's happening in crypto is by far the most important element for your investment. I think as we're talking about revenue development, it's going to be about what's happening in the end market, what's happening in the competitive dynamics between the businesses that are using crypto rails to accelerate their business versus the ones that aren't. >> But you're going to have to have a picture of what's happening in that end market that goes beyond just the crypto part of it. >> And that I think is happening in real time right now. And that's going to be really important. Now, if we step out another level from from that, I think you're going to start seeing equity disagregation. So, trading different profit pools within a particular company. And that's interesting from two

sides. It's interesting from the investor side because you can say I want to bet on H100s and I want to short uh Vera Rubins or Blackwells or or you might do the opposite trade there. Great. But then from a management perspective, management is going to start seeing, hey, you know what, the market is putting a higher multiple on this business that we own versus this other business. Maybe we should invest capex into the business that gets the higher multiple, expand that business more quickly. >> And by the way, what you're doing is you're laying the groundwork >> for starting to drive autonomous management of the these businesses, right? where the market is sending signals that drive capital allocation.

So, some really interesting steps that you can kind of start seeing. >> Let's not forget the debt side of the uh structure. Everything Seth just said can also apply to the debt structure of of companies where you can have bonds that are now in theory bonds that are collateralized by the cash flow of very specific projects. Right? So, you can have very uh tailored financing as a large company wants to make very specific bets. uh they can finance it through tailored, you know, tailored uh debt and tailored equity.

>> Fascinating stuff here. I mean, one of the things that piqu my interest, obviously, there's this unpacking and unbundling of some of these companies, especially when it comes to sort of the the uh structures of some of these profit pools and where companies are choosing to invest resources. You also mentioned autonomous management, which is something that I I think and and Tony, you piqu Tony's interest. Andy's starting to smile even as we think about this. And so I think this is something where you guys are ahead of the curve >> and as an asset manager thinking about the future whereas others are still trying to catch up. Talk to me about autonomous management of capital, how you think that is going to look and what

is the opportunity at stake here. So, so in that particular example, I was talking about the management teams of companies starting to to have some of their roles taken over, but it could certainly also be on the the the fund management side. Um, but but I think that's a a little further out. Okay. >> Um, particularly when you think about the institutional business, a lot of it is the human relationships, the trust, the the knowledge transfer over time. But but I think there's a really important dynamic at play which is using AI making sure that look our advantage is the analog data. It's the human data that that we're able to own in a proprietary sense from going to

conferences speaking to people talking to the leads of projects to their competitors putting it all together synthesizing it into a world view. That's what's incredibly valuable. that using AI as a tool to synthesize that >> insanely powerful having the productivity gains from that so that an analyst or an investor that's looking at a particular name can now do that in 20% of the time 10% of the time and be able to to 10x their their productivity and and what the review like all of that is happening right now >> it's the the tools are amazing >> Franklin is the fiduciary >> the portfolio manager the buck stops with the portfolio manager >> yeah my eye, you know, eyebrow was

raising uh just in the sense that if the if the if the agent goes astray, well, it's still on the portfolio manager to be responsible for that. >> Absolutely. Yeah. And and so to wrap up here, take us inside of Franklin, right? Because a lot of what you're describing is is ubiquitous across corporate structures when it comes to healthcare and it come it comes to manufacturing, it comes to these companies, but it also applies to asset management. And so take us inside of Franklin for a moment. What are some of the fastest growing products and verticals inside of Franklin? And how are you thinking about innovating and iterating on those products so that you can continue to stay ahead?

>> Uh I'll take a crack at that. We have many ideas that are um are they three years out? Are they seven years out? Uh but things we're thinking about thinking about the idea of a asset management world where it's not accountbased. So we don't, you and I, we we don't have our accounts at various places. We have all of our assets in a wallet. >> What does that imply? What assets can go into that wallet? Well, they're tokenized for sure. Uh and then how can agent AI agent or AI help with the management of that? How can we still offer advice? Back to the portfolio manager still is, you know, the buck stops there. Uh but how all these pieces come together I think are going to drive

what the world looks like in seven years. >> Yeah. >> Yeah. >> Well, I think everything that we've been talking about requires connectivity. It requires wallets. It requires um everything that we've been building in crypto to to kind of become table stakes to become infrastructure. Um and and we're seeing that happen right now very quickly. And whether it's agents, whether it's humans, that that reduced friction of having everything connected onchain, having wallets everywhere, like we think AI and and crypto are complimentary technologies. And this is where the the rubber meets the road on that complimentary technology dynamic.

It's wallets, its interconnectedness, its crosschain connectivity, something that that's probably going to end up being in the weeds that doesn't get talked about that much anymore, but but it it was a key building block to to get where we are today. That's going to be the key enabler of just inflecting um all of the innovation very quickly. >> I I I think the term here is the financial singularity. Yeah, >> this truly is the convergence between Tradfi and the onchain economy that we've been talking about for so long. You guys and and the entire Franklin team has helped pioneer this and is now a steward of the rest of the institutions that are looking to come on board. Seth, Tony, guys, thank you so much for joining. It was an absolute pleasure. Pleasure.

>> Yeah. And would love to have you guys on again. >> Enjoy the rest of uh your DS. We're going to have a quick standby, send you guys over to the main panels and uh we'll be right back with our next guest. user experience to brokerages. We have a faster settlements to stable coins. We have so much more um capabilities to offer volatility on all aspects. Uh to them, their their thought is a more enhanced version of financial uh assets and trading sector for for the world. >> Great. Well, I I want to jump to the question that animates the heart of this panel, which is how we will unlock tokenized equities at an institutional scale. And and the question really is what will it take or when do you think

we will reach a point that tokenized equities have hit escape velocity? In other words, the vast majority of equities start moving onchain and we really start to see this unlock at institutional scale. And I'd love to hear again from each of you about that. >> Yeah. So this is what we spend basically all of our time on at Alpaca for tokenization. You have to let's like let's educate the audience how tokenized equities work today and then you'll understand the limitations. Everyone's talking about trillions are going to come on chain. Trillions are going to come on chain.

But like we build the plumbing for this stuff and with today's pipes, that's a fantasy that there's going to be trillions on chain because the way tokenized equities work today, market makers have to preund the inventory for each token. This is like the main issue. So market makers have their balance sheets and they are responsible for generating an irr of around 25 30%. And that means that if they're going to deploy their balance sheet to preund a token to make markets, they need to have enough flow to generate like to turn their inventory and generate the spread and their revenue to cover the air IR.

And if they can't, which is generally the case today, the issuer of the token has to pay the market maker to provide that liquidity. Now the way this works in the crypto world is the cryptobearer token issuer will like invent some tokens, give it to the market maker and they'll make it they'll offer on the order book. You can't do that with tokenized equities because that's against regulation show, right? You can't make it short. So how did that's that problem is unsolved today. It's only solved by preunding. Someone has to buy up the token and then offer it on the order book. Today, the DTCC custodies 100 trillion in assets and the NSC side of the DTC, which is the clearing house, clears 4.6 quadrillion

dollars of flow every year off of 100 trillion of assets. So there's a 46x turn of inventory every year. And the way that that is the way they do that is they actually net down all of the obligations in all the trades 98%. And so only 2% of capital is required to generate that 46x of turn of inventory and that is facilitated by post-trade settlement. It's the opposite of preunding. So broker dealers and prime brokers and all these market makers, they don't preund like nobody preunds trades on an institutional level in trading.

So in order to unlock all of that flow onto the onto crypto rails, we need post trade settlement for tokenized equities. This doesn't exist today. The only form of post trade settlement that exists today for tokenized equities is through Alpaca's ITN. And that's why we've grown so much. We launched ITN last year uh at token 204.9 and we've just passed $5 billion of flow like last couple of weeks ago. It's been the fastest growing product Alpaca has ever launched. It's a huge success. It's because we provide this facility to incind mint redeem between the token and the share and the share sells post trade. So that we need like this is the this is

the first example of what I said earlier multimodal facility. It's a multimodal clearing house. So we need to create a clearing house for the whole industry that's not just within Alpaca. That is a multimodal clearing house. And that's the key unlock to getting the 100 trillion train. >> I I agree with agree with that a lot of that and and be talking my own book. We massive provider of post trade services to most of the most of the streets. So I would wholeheartedly concur. Um but um I think there's two things we're missing here. So the first one is really around to our previous conversation about standards. Um we don't downgrade in institutional capital. Um we don't we don't go for the less good option simply

because it's new and flashy. Um we have a very strong thing called fiduciary duty which means that not only do we need to know what we're buying but we need to evidence that it meets the standards that we've sold to underlying investors. Um ultimately for institutional scale to come in and what we're really talking about there is 40 acts and ETFs and um you know both passive and active asset managers to be buying um these assets. we need to be meeting the standards that they are at today and tokenized equities are getting there but we're not we're not quite ready to your point the plumbing isn't totally there but also around essentially the full life to you know the full end to- end life cycle for a tokenized equity from everything from issuance to underwriting to trading in

secondary markets everything needs to be available and it needs to not only meet the standards that we have today but it needs to surpass them the second piece of the puzzle which again comes a little bit about the post trade piece but is also around secondary markets, right? Um, one of the big issues with tokenized equities today is that trading is now happening in siloed pools of liquidity which is creating I guess large dispersions in price discovery um and bid ask spreads which are objectively worse than what you can get in the traditional space. Again, this comes down to fiduciary duty. The easiest way of evidencing good fiduciary juicy as a buy side manager is to demonstrate that you've had best execution. Um it is

demonstrably hard to do that with a tokenized equity today because of the nature of um how much liquidity the air actually is in the secondary market. I need to be able to pick up the phone as a buy side manager and say can you give me a half a yard? I need to meet marginal or I've had a half a yard inflow and I can't that is the net portion. It's not the gross inflow. I need to meet that that that buy right and we're not at a stage where we have that secondary liquidity. I think we're getting there. I think what Alpaca is doing particularly about you know moving you know being able to take essentially underlying issu uh underlying stocks and then into token these are things where we can you know we can take that to the next level and basically port liquidity

from traditional markets particularly traditional market makers but to your point that doesn't work on a pre-und model whatsoever. Um, and so like these are like I would basically post trade standards and then also kind of secondary liquidity and execution. If we can hack those three, I think we're in a really good place. The next piece of that, just to add, is integration into the operating models of those institutions. Broadidge, we run the books and records for a large portion of corporates and banks and and asset managers around the street.

settlement, source of truth, all of these things matter. I can action a trade, but I need to see it settle in my own internal books of record that day. And ultimately today, those integrations need to happen. And that's really what we're trying to work on at Broadridge to accelerate is integration from these institutional books and records to the blockchain and to issuers and market plumbing like the likes of Alpaca. >> Got it. Any other thoughts there? I think I think a lot of the gap um that you sort of mentioned is also a little bit of a legal infrastructure problem at the end of the day, right? Because you've got this sort of post trade stuff that's very common and tread fire that people are used to. Therefore, you can you know you don't have this instant settlement problem of essentially handling stuff back and forth. So I

think a lot of it just comes down to the fact that you know on the blockchain we're also very we are used to this instant settlement thing. We are not we we're used to the blockchain as source of truth. But in in the Treadfi space, we kind of get the laws and the regulations as a source of truth. If I do a trade with you at the settle at the end of the day, I'm going to have pretty large problems, but it's just not a thing currently on the blockchain. And that's creating this sort of like you need to preund, therefore this is capital inefficiency, this is liquidity problem. So yeah, I think I think tokenized equities is very exciting from a retail perspective, but very poorly implemented. It is very exciting from institutional perspective but it's very difficult to get to that scale is what

I'm thinking. Yeah. >> I think so I was say what we're describing there is blockchains are really good for settlement but for trading. >> Yeah. >> So a lot of that trading needs to happen in different venues and then settlement sits on the blockchain. >> Yeah. I actually mirror a lot of what Arouch is saying. I'm one of the uh key kind of practitioners that faced this preunding problem uh when we was trying to scale for example Xtocks and uh a couple of other players in tokenized equities. Um well one of our benefits of course Mento has one of the largest treasuries. So we have 2.5 billion in in treasury um to enable this preunding and you see some of the leaders essentially they have treasuries and that's why they are leaders because they have to

subsidize the free funding. Um but obviously that model doesn't scale to trillions right like to like even with a treasury of 2.5 billion that's not enough um for for the subsidy of this industry uh to grow. Um you're quite right about the post post settlement kind of innovations that were needed. uh and I think uh beyond that I I think one of the ways we've been always thinking about it is well our industry and our user base uh for for for us has been you know generally people come to crypto because they're highly speculative. So one of the ways we can offer subsidies or or drive that subsidy is through le uh the people who desire leverage right so to match them with market makers of cost and match those cost of capital but

at 25% that's still very high bar uh for many of these assets and we're back Asia guys and none other than our friend of the show Chris Yin co-founder of Plume these guys put on the tokenization tower every single day Chris man welcome Welcome. It's a pleasure. >> Thanks for having us as always. >> Absolutely, brother. It's uh it's a it's a pleasure to partner with you guys. Absolutely crushing it. And uh you know, no doubt in uh in in Asia here out at out at D. Um you know, none other than uh Fidelity is the most recent partner.

So, we're going to be chatting about that. But then also just broadly the vault complex, which feels like it's primed for institutional capital. Talking just hundreds of millions of dollar clips fired into these vaults. um give us a sense of how it's going but but most importantly tell us about this partnership with Fidelity. >> Yeah. Yeah. Thanks for having us and look excited to be out here and and great to uh see you guys out here doing such great work too. So bunch of great folks and so uh a lot happening um especially off the heels of Korea. Um so yeah real quick uh I think the main thing we were uh doing here and announcing with our partners and our friends were uh the Fidelity folks. And so Fidelity um for those who don't know is one of the biggest asset managers in the world right they've got over 7

trillion dollars in asset under management about 19 in assets under under custody. And so they really do a variety of things from managing different funds, managing other money, but really uh you know, one of the the forefronts of of financial innovation in general. And I think we are partner with them and excited to to bring out um you know, one of their bond funds. It's called um FBND, Fidelity Total Bond Fund. It's an ETF over $28 billion in this ETF managed offchain. It's been around for 20 years and it's just the next phase of it. So we put into one of our vaults called uh uh NBND. Um and we're seeing that go live soon and uh you know, get into a bunch of places. So we had a good dinner with them on Monday kind of our first official kickoff working with them and you know brought a

bunch of our distribution partners from uh some exchanges uh you know our our partners and friends of Etheri at Pendle bunch of other places and so it's been great to uh to get everyone together and get this thing going. Yeah, absolutely. And so you guys now have this institutional partner that is responsible for actually, you know, the the management of this of this product and then you're now responsible for tokenizing it. And so give us a sense of like the division of labor here, you know, when you're thinking in terms of this bond fund, adding subtracting, what gets involved into this, that's all them. Give us a sense of how that works and then where you guys end up taking over and then bringing it on chain.

>> Totally. Look, I mean, really, it's two things. I think when you're selling a product on trying to bring a new asset to market, what you're trying to do is just, you know, really introduce a product to a new audience, right? And if you take any product and you're sort of, let's say you're selling this thing in the US and you have a market there, if you want to bring it to Asia or Europe or LATAM or wherever you want to go, you need to understand how to how to distribute it to those people, not only messaging wise, but maybe the the sort of how the product is designed, how you look at it, where it goes to, all those different places. And so by being um more onchain folks ourselves, right, we have a very good sense of who are the different communities out here, who are

the user types, where are they, where do they want to live, live, how they want to interact with the products, how to express that message as well. Maybe some people want to live on chain. That's totally fine. They they like the looped asset. It's interacting in maybe one of our vaults on commino or morpher, whatever it might be. Other folks may be different a different category of user. They want to live on um in the centralized exchange. They want to live in a custodian. They can't feel like going anywhere else. And the use cases too. They want to buy and hold. They want to use collateral to trade and other things. And so that's the kind of thing we we really help them with is understanding where to put this asset, how to develop those relationships, how to figure out the right story for those

things as well and interacting with chains, curators, exchanges, um you know, MM all these different people to make the asset look and feel right for the cryp native audience because at the end of the day, offchain assets don't always match exactly what we're looking for on chain. The onchain audience is used to high APY, low risk, right? um you know instantly liquid products and so a lot of times it's structuring and finding other people to play a part in that supply chain to make sure we can deliver the right end user experience and it ends with a vault which at the end of the day abstracts away all this stuff because then you push a simple button right you you you swap in your stables you begin earning yield and behind the scenes we have all these partners coordinating so that's what we really help them with they own the asset

under underlying it we respect them a lot and uh you know very grateful to work with them on this and I think what we do is we help them take it to market this way build a brand build a reputation and build a story for them on chain. So as the market for this grows exponentially over the next couple years, they are in prime position to capture that. >> Yeah. And one of the key light bulb moments, I'm sure, for them was understanding the distribution partners that you guys have on chain because ultimately, you know, they've got billions of dollars into this fund. You need to move the needle a little bit in order for it to make a, you know, a difference to them to actually go ahead and do this work. And so give us a deeper sense of the distribution partners that Plume works with on a

daily basis where you guys are distributing all of these different tokenized products. which one of those ultimately got Fidelity over the line, right? You don't want to show favoritism to your different partners, but give us a sense of the of the stack of distribution partners and then ultimately what led Fidelity to that light bulb moment. >> Totally. I think I think it really was us spending time with them to understand what they were looking for at the first point, understanding how they thought about the fund, how it's grown, understanding the history of it, so we could help them construct a similar analog to how to build that for them in the onchain world. And then after that is I think it's helping them understand the spectrum of different people here, right? and introduce them to different partners whether it's centralized exchanges you know we had uh you know

great folks from Coinbase Kraken by bit um you know Bitket Binance OKX all the all dinner the other day right uh whether it's the onchain folks right so whether it is you know kamino or pendle or morpho um >> and even our friends at etheri in a different use case for the neo banks right and helping them understand how to think about each audience and then more importantly how to use them at different times to stack that holder base I think a lot of crypto what people are familiar with is we have a big vault 100 million bucks comes in next day 100 million bucks goes out, you know, and so how do you build a holder base that is is um is durable over time that can grow with you, right? Uh and and build a long-term durable asset that has the brand recognition behind Fility and gives them

the flows, the inflows that that they deserve for it. So, and so I think that's really what it is, understanding what that is, helping them understand how to think about the landscape. And I think for them from us, from our side, hearing their commitment to that story because it's not the easiest thing to understand because what we're talking about is a is a longer term plan interact with tons of different partners and building a base one piece at a time instead of saying, "Hey, look, we can bring you a billion dollars and that's it, right?" It's more saying, "Look, we'll stack this day by day, but the money will stay and it'll grow with you over time rather than it being an in-n-out thing." >> And I think that duration is something that is competitive edge for Plume in particular because a lot of people are

thinking about crypto. They're in, they're out. They're not really thinking about the long-term holder perspective that allows this wealth to compound over time and allow these products to to to really understand and appreciate those network effects. >> That's right. >> What what I'm curious about is like, you know, you you tokenize this product. It's already got $28 billion as part of it. You bring it on chain and you unlock that to a new set of distribution partners. Is there a path here where you onboard more of the traditional players? Let's say there's been, you know, someone some institutions already got a billion dollars into the fund. Is there a path for switching them from the off-chain version to the onchain version?

>> That's right. There there certainly is. I mean, it's going to take some time, right? But we've actually I've actually been excited how quickly some of those conversations coming along because it's not just I think there's two two archetypes there. You have one that's bringing the traders that are already there and bringing them on chain. The second is a customer that has access to maybe a different Fidelity product, right? But wants this one, right? So maybe they have interaction here, but because of whatever reason they can't get into this one well, right? They're actually very excited to go direct to this asset on chain because again, they know it's from a brand they trust, right? A technology they trust, they know it's backed by these folks. And so we're seeing a lot of those types of customers that are really interested.

So I think when we talk about growing the pie and building more liquidity on chain, bringing more assets on chain, a lot of it comes down to this distribution. And so I think it's, you know, building the story first, showing them the velocity, showing the use case, and having just time in the ground for the asset. And then we're seeing a lot of these customers around developer. But I think we begin to bring a lot of those offchain folks on chain as well. And then that is just step one because after that you know this already but this becomes a building block to whatever we do next. Right now you have a user you have a programmable asset the looping and I think that grows the whole ecosystem. That's the approach we've taken. That's why you know a bunch of our partners are excited to work with

this. >> So extrapolate this out for us a little bit right you guys have this product now onchain tokenized available for all these distribution partners and you talked about you know how deeply integrated you are with several applications across the ecosystem. Neoanks I think is extremely exciting because that allows them to offer yield and an earn product to a retail consumer base and then you can kind of be the yield backend for a lot of these different neo banks and products. And so as you think about developing more of these products how much is it like okay we're going to put together these different vaults. Maybe we're going to take the tokenized you know bond fund from Fidelity. We're going to mix that put that in with into a vault with maybe some of our other products. How do you think about combining chopping up and

and and splicing together some of these different products% I think I think you're you're alluding to exactly the way we're thinking about it which is I think you still need to start out with a clean version of the asset and a standalone involved because it's a clean expression of that they people get to understand it and you can begin to understand but of course like you said the minute it becomes understandable now you want to make it useful across other things and I think that's where we've seen some of our other vaults take us again you mentioned the etheri vault it's a combination of several things in that vault right um and I think outside of just new assets I think vaults and um the way we think about it is vaults are just one expression ultimately of bringing asset on chain. What really to

build an audience for a new asset on chain you need to use all the tools available at your hand right number one is you know you have pers for many things right you have vaults which is just kind of more buy and hold you have spot right you have funding rate you have you have different uh kind of yield strategies you can put together from trading from trading products and so there are many ways to build it so I think if you use all those things together to do it once now we in my opinion start out with the foundation build a base for that and then you begin to use it across all these different all these different layers and that gives that that again that's how you stack the user base in that way so you have a durable base and durable mode while

still getting the upside of, you know, the sort of crypto the crypto leverage or being able to loop and all these kinds of things on top. So you have both and not just sort of at the whims of of the market at the times. >> Yeah, absolutely. And so as you're thinking about, you know, building out the product stack, there's kind of like product market fit, I guess, is a is a huge thing, you know, component of how you're deciding which products to build out, right? And if you're looking at the market as it exists today, you're looking at, you know, again, some of your distribution partners and that those kind of span DeFi and onchain yield, right? Yep. >> As you think about what these next the next set of products are going to unlock. How do you think about expanding your set of distribution partners? You

already mentioned some centralized exchanges. I can imagine how you know this tokenized equity buildout, right? Maybe we're going to be going back and forth. We're going to be trading these tokenized equities with a stable coin, call it Tether Circle, but >> eventually we're going to get to a point where we want to be earning yield on our margin and on our collateral that we're using to trade these tokenized equities. And so as you're thinking about adding new products, how are you thinking about adding new distribution partners? >> Yes. Yes. Look, I think every new channel um brings a new type of user and every new user has a new use case, right? And so we're seeing it today. Whereas crypto today, people generally think as a monolith, right? It's uh the the memecoin trader or whatever, right?

But it turns out there's a lot of folks, right? You have maybe your sort of more classic BTC whales, right? You have yield farmers, you've got memecoin traders, you've got more in-n-out liquid funds, and all of them have different profile of thing. And so as a new channel opens up and brings in new users, the needs and things that they want also change. And so you have to find products that adapt to that. So we're seeing a lot of new folks coming in from the payments world, right? That brings a new set of users, new classes. We're seeing even just like, you know, take a look at a lot of trading. There's still new trading, new new traders coming in on board. And so those products are also bringing new things. And so I think that's where we're going. And I think a few things I mean, we're

we have a couple new vaults coming. I think it'll be pretty exciting. You know, we're working with one of the um one of the largest uh you know RB protocols on Salana and using our infrastructure now to expand ETH ETH mainet um and going from there. And so, you know, take them to ETH mainet and working with different uh different other partners of theirs to do looping and lending and replicate a lot of success they've seen elsewhere, right? We've seen other ones who are taking a very traditional asset manager, right? Uh coming on and you know multi-billion dollar fund, bringing their assets on chain and then also partnering in a deep way where they're not just to tokenizing their assets, they're putting skin into the game as well, right? They're also um you know committing part of their fund to buy back the assets and provide

liquidity because they're committed to the story, right? And so I think those are things that I think we see that are really exciting that are coming on chain. Um and uh you know, we're looking forward to introducing those products. Yeah, absolutely, man. And so, as we sort of wrap up here, just got a minute or two left. We've been doing this segment and if you've watched the show and you you've obviously seen it, we are exceedingly bullish, right? We feel like we're on the precipice. There's this institutional FOMO, institutional bull market. You guys are leading the way in that. And so, we've got this saying, be more bullish. And so, we've got this segment that we've been running with. I'm going to pose sort of this situation. I want you to be more bullish. Okay? And so the situation here is that we are entering a world where we

are going to have potentially agentic money moving across different onchain products that are giving us the most yield, right? And I think fiat depository institutions, call them banks, are particularly worried that we might see some deposit flight out of their out of these banks and into right something like a fidelity fund that you know yields a ton more APY and a ton more yield than a typical depository institution right and so that is the setting we are going to get a world where we're seeing products that are generating you know 6 7 8 9% yield for end users get the benefit of agentic money movement across depository institutions into high yield funds and

products. >> That's right. >> Be more bullish. >> Oh man. I mean I think uh the second case on that is you know once everything in the world is money right and not just a stable coin not just equities but even holding you know tokenized versions of sneakers tokenized holders of Pokemon cards whatever those things generally yield and using that as a base currency as an asset for many things. I think the world is going to go absolutely nuclear, right? We're collapsing the entire world into a single marketplace. Whether it's different chains, doesn't matter, but it's all on chain and all run by machines. And the velocity of money today, the vast majority of dollars are just sitting around doing nothing. Even if they're even if we move them from a depository bank into a vault that just sits there, that's one piece. But the

ability to actually layer on top all the all of this money in just increasingly exciting ways is going to be nuts. I mean, you look at dayto-day on the internet, data doesn't sit still anywhere, right? It's moving around. is getting traded and transferred all around and updated and um and and that's going to happen to dollars and every time the dollar moves around, it generates yield. It does something with it. And so the idea that we have assets of any kind that we like instantly accessible with the click of a button and all of it earning yield doing different things and trading all kinds of synthetic versions as well. I think that's the most exciting thing. The idea that you can merge a real world asset with a cryp native asset and create something net new and a new derivative ass to me is going to be

>> totally non skumorphic. Yes, that's huge. Go ahead, put it on. Look at that camera. We got to say you hire, you know. >> Yes. I love it, Chris, man. Appreciate it, man. Great partnership. We love working with you guys. And uh we're going to hit a quick standby, show them the main panels, but Plume Chris is the man. And we'll be right back from D Asia. Guys, don't go anywhere. We'll be right back. And we're back, guys. People are

excited. They're loud. And we are here at D Asia. We're here with Connor Milner. And uh man, you just had a huge announcement on the stage. Uh Connor is CEO of Hair. And today GSR announced alongside Hair that Turtle uh committing $100 million of deployment capital is Anchor Liquidity. So Connor, welcome to the show, man. It's a pleasure to have you. Tell us a little bit more about how hair is going, what the partnership looks like with GSR, what is Turtle, and tell us a little bit more about this $und00 million check. >> Yeah, it's very exciting to be honest.

It's uh we we want to curation as a as a model has uh has evolved a lot very quickly. >> Yeah. >> And I've seen there's essentially two roles that being well served. You know, we're seeing hedge funds come on chain be acting as curators taking risk and yield is effectively their product. So they're incentivized to push the yield as far as possible because that's where they're paid. And then on the other side, we see stable coin scalers. So they're partnering with net new stable coins and trying to distribute them across other chains. But I think there's a space for a model in which it's more like an investment bank.

>> Yeah. >> Um because we're we're seeing a lot of assets coming on chain needing credit facilities needing needing needing uh to take leverage on these assets need to build real use cases because a lot of these assets that are coming on chain are essentially saying we need a vault curator but there's no use there's no need there's no there's no there's no use cases. There's nothing there's nothing to do on chain. It's just a dumb vault or or of product. So we want to come in and offer an end to-end service where we support net new assets from origination. So work with tokenization platforms um on on that and then also figure out ways of producing a full GTM and uh bringing it all down to deep by composability and enabling enabling these assets to drive on chain.

>> And it's essentially the the next step in onchain finance. You know, it previously it was native native crypto tokens and uh and meme meme coins and now we're seeing some uh some solid assets come on chain and and we need to have the right infrastructure and partners to enable everyone to feel comfortable taking on those risks. >> Yeah, I think that's huge and I I think what you guys are doing is providing a lot more variety to the to the vault space. So the first two vaults, one was hair USD earn that was powered by a uh mostly around USD stable coins but again fixed rate yield and then hair gold which I think is really cool because that shows really what my opinion is like the power of DeFi in the onchain financial world which is you you take something that is you know is a

commodity doesn't have any native yield component but you put it into a vault onchain and you add yield to something that already has an investable value proposition and And that's exactly what you guys did with uh Paxos Labs and the hair gold product. And so maybe you can help help us understand like where exactly this $100 million is going to go. Are you going to put it and deploy it into you know the the USD product or the gold product or is this going to go to a net new vault product? Yeah, it's again it's all about enabling onchain finance and I think >> like there's there's risks involved but I think if you're not willing to allocate your own your own capital to these products then it's hard to convince other LPS and other capital allocators to to deploy. So that's why

uh it's it's been great working with a GSR team to to have that confidence in in what we want to build, but also we can build that confidence into the market. Yeah. Because effectively for us, risk is our product. Risk is our business. Um that's why we call ourselves the the credit desk of of Unchained Finance because we are essentially bridging that risk between the the buy side and the sell side and and effectively building products around that. So the the $und00 million is is going to be distributed across all of our products. Okay. enable us to bring net new uh vaults or products to the market and have some resting liquidity so we can have you know first loss capital if there's any events where we do lose uh capital if there's some if there's some bad debt scenarios and um and that's yeah that's pretty much it.

>> Yeah. And so tell us about how you see the vault complex at large evolving right cuz what you're talking about is bringing credit right which is fundamentally like a leverage kind of element and credit element to the vault complex. And so give us a sense of where the vault complex is today, what you think is lacking and how hair helps add this credit component ultimately make vault that much more productive. >> So so vaults exist onchain credit has existed. It's about putting all the pieces together. Okay, that's the that's that's the that's the most difficult thing. And also the reason why we're doing it the way we're doing it is because we're going to be we want to we want to advance the space. We we see this as multi- trillion dollar opportunity. Um and it doesn't it's it's

infinitely scalable but what you need to be essentially you need to be a risk taker and be the ones who are going to say okay we're willing to go and take take on this and underwrite um some of this some of these opportunities but essentially a vault can be any any any structured product any product um you know so it can be it can be a fund it can be a a savings account it can be whatever you whatever we want to cut and dice it to be um and the the other thing I think is great about onchain finance is the transparency um adding that transparency component publicly uh you know giving risk reports, risk ratings, using third parties risk analysis to build confidence in the market is just uh is exactly what we want to what we want to see. And so it's not about it's

not about reinventing the wheel. It's about using that's why we partnered with Ray because using the existing infrastructure that's tried and tested and then >> 10xing that that's that's the real piece. >> Yeah. And so you know you guys again have have added variety to some of these vaults. I I'm curious where you think this goes like we will see equities we will see commodities we will see all of these things how is the how are the curators going to handle that right like from your perspective how quickly can you extend the product stack to ex to accept some of these different sort of asset classes >> the extension phase will be around market demand so if there's a influx of demand then you structure it accordingly okay

>> um I think one of the problems is we have this over supply issue okay Um but um the equities and it's it's good. I'm pleased you gave them the real categorization cuz RWA is I think we should kill this term now. >> We've been saying the same thing for a while. >> Let's let's just let's just kill it today. But um but you know these products are coming on chain. We're seeing it. Um it's interesting for me. It's who the the issuers are of these of these assets as well because we're seeing exchanges now being the net issuer. Um do you have do you have legal tender? Do you have ownership of this asset? um as well. I think all of these pieces are very important, but again, it's it's about assessing market demand and and for us, it's about positioning ourselves so that when the market demand

is there's an influx of demand, we're there to capture it and and then service the market. >> Are you seeing demand for securities lending right now like equities lending in which you can put these things into a vault and turn again like the real unlock feels like again on gold, you turn gold, which is not a yield bearing asset, you added a yield component to gold. Equities, same thing. have real value propositions, real, you know, investable thesis, but don't have a native yield component, but you can add that by putting it into a vault if you have a source of yield and you have people that want to borrow, right, and generate some yield from this. Do you foresee uh an evolution and a market dynamic that allows you to generate yield on securities?

>> The thing is is is we can also like I said about the influx of demand, but the demand is created because also we are we're taking on risk from our side. >> Yeah. Yeah. >> Right. So, um you know there may have been demand for this in the past but okay if I lose capital because of some third party actors made a mistake what what am I left holding the bag? >> Yeah. Yeah. >> So for us it's about creating those structures um in which you you know these LPs and these and these capital allocators can feel comfortable. Um gold is an amazing product. I'm I'm I'm going to be the biggest pactus labs shill you could ever imagine. Uh it's it's an amazing product because one it's you know hard hard commodity but also that we can turn this into a a yield product.

A yield product that's accessible globally is like uh for me for me it's it's it's the essence of why I why I'm excited about onchain finance. It's it's accessibility. It's net new net new types of products but also it's actually um a positive sum game you know bringing this type of uh bringing this type of opportunity to the market. Yeah, absolutely. Conor, man, appreciate you coming on. I'm glad that we can make it happen. Congratulations on the 100 million bucks. Uh guys, we're going to send you to the main panels. Be right back. Don't go anywhere. We're going to be right back with Alex Cutler And we're back. D Asia 2026 live from

Token 2049. My friend Alexander Cutler, the man of the hour, the man bringing tokenized equities to the masses, the man that is bringing liquidity to everyone and everything. Alex, welcome to the show. Good to see you, my friend. >> It's easy to do intros for you, man, because you're really doing it. You're really out here doing it. And I am I just can't tell you how excited I am to bring Arrow not only to mainet, >> but to bring it everywhere. >> Yeah, man. >> Give us an update. >> I mean, it's a crazy moment. Uh, as of this morning, uh, we are 2 weeks away from launch, right?

>> Let's go. >> And this is a launch we've been building towards, uh, for over a year now, and we are super excited. So the all new era will go live um in about two weeks. >> Um it'll go live on base on optimism on arbitum and of uh Robin Hood of course and mainet Ethereum. >> And it's very much designed to be right the single definitive spot exchange >> of not just Ethereum >> but the onchain economy. Yeah. >> And this is because we see spot exchange as the single biggest opportunity onchain. Last year in 2025, spot exchanges did about $5 billion in fees.

>> And that's close to the amount of fees generated by lending, by the chains, by derivatives combined. So, you know, we want to go uh launch the big V3, connect liquidity together across networks and dominate this moment in spot exchange when trillion dollar markets are beginning to come on chain. Yeah, I uh I'm really excited for this because I I can't help and look, we've got uh a PERPS platform coming on just after you, but I feel like the ratio of expressing a thesis in a financial market, the ratio of PERS to spot is maybe reaching a local top and I think we might start to see that flip back and I think

especially as we're tokenizing additional asset classes and we're bringing highquality equities in particular on chain. I mean the moment has never been more real than it is right now for this launch. >> Yeah. I mean look um derivatives and in particular hyperlid right have proven that there is demand for these types of onchain products. >> Um but derivative markets allow you just to speculate right on the price of a given asset right it has to derive a price from something. So, especially when we are now tokenizing real world assets and we're bringing things like stocks onchain that don't trade in 24/7 venues, um we need just as much as we have want an onchain CME, we need a an

onchain NYSE or, you know, NASDAQ, right? Because you need um deeply liquid spot markets, real world assets in them, things that actually represent the underlying. They aren't just like derivatives or rappers or things like that. And those will be the foundation on which these types of markets I think increasingly price. Yeah. Um in which uh even derivatives markets increasingly tap into. But yes, I think uh we've seen what's possible now with a derivative market like um Hyperlquid that wraps 100% of the value and says, "Hey, look, we're the onchain CME. Come find us. You know, you can bet on the growth of the onchain economy." I don't think anyone's done that for the uh stock exchange

vertical just as critical to the onchain economy. So that's what we've been building for the last year to go do. >> Yeah, absolutely. And so take us through the the sequence of events that have taken place, right? Obviously this was a big moment you've been working towards for a long time. Aerrome has been live on base. You guys have been absolutely crushing and you know you made the decision. I saw audits wrapped up, no major holdups. So we're we're forging ahead, right? You mentioned that we're about two weeks away and we will see an on a number of chains. You mentioned Arbitum, Robin Hood, Optimism, Ethereum, mainet. Give us a sense of what is going to unfold over the next two weeks as we ultimately culminate in this big go live moment.

>> Yeah, I mean I think let's take a step back to four years ago when we first launched Belladri. uh we were five basically anonymous guys right who had met in a discord but like we aligned around this shared vision of building better systems that redistribute 100% of the value and we have never been first to market but we believe we brought the best product to market and that is far more important so when we launched Veladrome so this is like a preview of I think what's coming yeah when we launched Drrome we were up against billiondollar incumbents >> with VC backing Mhm.

>> And it was through the quality of the product, right? It was through the combination of technology and economics that we were able to win dominant share first on optimism, becoming the largest exchange there >> and then of course launch and become the dominant exchange on probably the single most important uh chain of the last cycle. And so for us, this moment of bringing these two exchanges together, unifying them around a single token. Yeah. A token, by the way, that represents a 100% claim on the current and future productive value of the exchange. And now going from servicing about 15% of the addressable spot market uh to something four times larger, I think is super exciting. And the other

thing that I think is super exciting about this moment, I mean, I was just looking at uh DeFi Lama yesterday. I saw this. >> Yeah. So over the past 30 days, right, Aerotrome exists on one chain. That chain does about 15% of onchain spot volume. >> 1515. >> Yeah. Yeah. >> Yeah. And uh we are doing over the past 30 days more revenue than any other spot exchange. We are doing more revenue year to date than any other spot exchange. And in our lifetime, we've done more revenue than any other spot exchange. So we're doing that while servicing a fraction of the market, >> 15% of the market and generating more revenue than anyone else in the market.

>> Yeah. I mean, you know, I think we look at the competitive set and we we see them as being capped out on growth, right? They already service every chain. Uh they service every type of pair. They've been everywhere uh for quite some time. We have just started, I think, our growth journey. And so if we're already leading on uh revenue today and we're going to be able to enter new markets that represent 4x and by the way at a moment in which uh we're not just like eating away of the existing pie but we're growing it through things like tokenized stocks and FX um I think we have a tremendous opportunity to shock people I think much like people were shocked by Hyperlid and that was the type of token and platform

and asset that didn't just get the attention of onchain audiences but uh tradition traditional investor audiences as well. >> There are a little a lot of similarities in the community and in the structure of how you've put together this token. And so I I I want to talk about first maybe what to expect because you've you've you know already alluded to how exciting this this is this the opportunity at stake here. I'm curious about Robin Hood and maybe we'll talk about tokenized equities, we'll talk about for forex and maybe you know some of the other chains here, but I'm curious was Robin Hood always in the cards as you were looking at kind of the the onchain landscape and where to launch and and what is what can

we expect? I mean obviously there's been so much activity and so much excitement around what's happened there. Maybe it's it's subsided a little bit but I don't think by any means is it going away. And so was it always the case that you were going to launch Aerero Drrome was going to launch on Robin Hood chain and and what can people expect in terms of the flows once Arrow is live? >> Yeah, I mean I think we've said from day one, you know, going back to New York when when we uh announced this last fall that our goal is to be the exchange layer of Ethereum and of the onchain economy. And so our intention was always to ensure that our platform uh existed anywhere people are issuing new tokens, anywhere people are trading them. And so

of course when you have a player like Robin Hood come on chain in such a significant way we expected that uh obviously we would be there servicing them and the building the same type of deep liquidity mode that we have on base on chains like Robin Hood on chains like mainet Ethereum and of course we also recently launched on ARC. Um >> so yeah that was always the plan. In terms of expectations, I mean I think what we have shown from day one is uh we focus on one thing and one thing alone.

Uh a DEEX is powered by liquidity. And if you win liquidity uh you win more trades, you win more fees, uh you win then more revenue and then you can inject that value right back into the system. >> And so uh we will use the same edge that we use to uh that we use to win chains like optimism. Mhm. >> Uh chains like Bass to win increasingly large shares of chains like Robin Hood um and mainet Ethereum which is just capitalizing 100% of the productive value of the decks in a token wrapping it something in excess of just trading fees alone and rewarding liquidity providers with it. And you know I expect liquidity providers to make the same choice they have on uh other networks which is if you are taking on the risk

of your capital you are making those markets do you want to get paid a buck 50 on the dollar a dollar or 75 cents on a dollar and where we launch the product people prefer our platform uh for exactly that reason and we expect it to be no different on any chain that we we launch. >> Yeah. So you've won market share on chains before, but I I think we understand, you know, liquidity begets liquidity. And you guys have been the market leader on base for a while now. And so it's a little bit of a different competitive dynamic after you've already won the market. Now you're going and you're launching as a fresh new exchange on some of these new chains. And so give us a sense of you know what is different to the approach of hey we've already won

this market you know we are continuing to maintain that versus we're going to be launching new and it's time to now >> bootstrap liquidity and grow liquidity from you know from from the from the jump on these new chains. >> I mean hey look we're just getting back to our roots here. Um you know when Veladrome launched we probably had few million dollars in TVL deposited in us and look we were looking at folks like curve like unis swap like balancer and going you know my god wouldn't it be incredible if we could go toe-to-toe with them in this one single ecosystem and uh what happens is it just starts building up right because if you do have a better product if you can reward liquidity providers better they will

come they will consolidate that creates that growth flight Um same thing on base. We were not first on base. Uh this is actually something most people forget because uh we have taken such a dominant share there. 60 70% of the onchain volumes. People think we were just there early. I still today get asked, hey, did you used to work at Coinbase? Is that how you guys manage that? And I said, no, we just showed up with a better product and we started chipping away at market share. Um, and so yeah, we will enter these new ecosystems just like we entered the ones that we expanded to prior. And the most amazing thing is is like those were moments >> where we were still a small team. We were on the first and second version of our DEX operating system. What we are

going to launch is our third and uh the most ambitious one we have yet. And now we've got a proven track record. And so I think it's going to be a lot of fireworks and I think uh a lot of people will be watching and frankly I think it's going to be a lot of fun. I think we haven't seen a big disruption like this in DeFi in some time. >> How fast is this going to happen? Like is the switch going to flip? I I got to imagine you guys are already talking to liquidity providers and and understanding preferences, right? >> Obviously people want 100, you know, 100 cents on the dollar. So that part kind of goes without saying, but when it comes to migrating potentially, right?

There are maybe some logistical and operational considerations that you know are important to understand ahead of time. How are you approaching those and how quickly should we anticipate some of these flows happening? >> Yeah, I mean I would think about it this way. Um, and I don't think I've actually talked about this on a podcast before, but you know, we have of course existed on base for for quite some time. So that means we work with everybody. Every major market maker uh participates on our platform. Every major project uh participates on our platform. Uh token issuers launch on our platform. And these are um players that don't just exist on base. They exist on mainet Ethereum. They exist on Robin Hood. They exist on arbitum. And for years, long

before we even had a plan to expand, they would ask us, beg us to come, please deploy this in these other ecosystems because we know this is the best infrastructure. We have the same choices on base that we do on Ethereum mainet, but we choose Arrow because it's the best place to launch. It's the best place to earn, it's the best place to trade, and we want this uh access to this uh in markets like mainet, Ethereum, Arbitra, and Robin Hood. And so very much it's even less of like we're going out there and we're having to, you know, line these people up.

These people have been trying Yeah. asking for it. They've been trying to get us there for some time. I think this week we've just started announcing some of the folks who will be migrating over to Arrow on day one. And so I think in some of these markets it's going to happen very very fast, right? And you're going to see this sort of catalyst sort of moment. You're also going to see that great moment of a pool, you know, with like a $100 in TVL in it and uh infinity APR, you know, for those folks who want to get in there early and make those markets. >> So, yeah, I think it's going to happen very very quickly. And the exciting part to us is like look, >> even if it goes slowly, this is all marginal growth for us. Um, and uh, if we can just continue to chip away at it,

you know, I want to see us by end of year having doubled our share of onchain spot volumes at the very least. Okay. >> But I think it could go much bigger than that. >> Um, I think it all depends on what happens next. But uh I've looked at it like in the past 30 days for instance we went from 150th of the uh share of onchain stock volumes in AMMs to about 1/3. So this is the way in which we eat markets. We're growing our share of onchain stock volumes. We're the number one FX venue on chain. We're the number one Bitcoin venue on chain. And the only thing I think that's been holding us back at moments from winning an even larger share is just not even competing in some of these markets.

>> So we're so excited to bring this product, you know, to everybody across EVM. >> Just uh I I mean super exciting times. Just a couple more questions to to kind of close the loop here. When you look at a multi-chain approach, do you have to approach these chains differently? Do does the deployment on mainet look any different than the deployment on Robin Hood? I mean certainly um the composition of of activity on the chains are very very different right um I think on base you see it heavily weighted towards um blue chip liquidity towards um FX liquidity and volume and increasingly tokenized stocks right on mainet you see the same kind of deep pools on blue chip

liquidity um wrap Bitcoin I think you're going to see a lot of um RWA's issue first on mainet Ethereum. So that's very different. And on Robin Hood, of course, today it's very much longterm, right? It's it's memes, it's launchers, and it's that type of thing. >> Yeah. >> Um, so yeah, it will be a little bit different in each market. Um, but I think we will go after our uh bread and butter in in each, which is building that deep super efficient liquidity on the most efficient pairs, right? >> Um, and uh we know what happens when we do that, right? Slowly liquidity providers move uh over that creates these compounding network effects and you win more and more volume more and more share but we want to compete for everything right.

>> Yeah. >> Um uh exchanges are winner takemost markets >> and uh we intend to take the most. >> Yeah. >> La last question for you and and you know I think you're alluding to what people can expect on some of these different chains right probably on Robin Hood these pools are going to have a little bit less liquidity to start with. they're a little bit more nent which means higher APYs on mainet right could be a little bit different depending on the the asset distribution that we're looking at last question here is you know as you grow market share and you grow volume is that directly correlated to the revenue in the sense that these are growing at a very similar pace you know a linear growth model on volume and share equates to a linear growth in

revenue or you know it is incremental in the sense that you get a couple more% percentile market share in tokenized equities that leads to an exponential growth in revenue. How how do these two pieces of the puzzle work together? >> Yeah, I mean um I think if you're talking in aggregate of of all onchain spot volumes, yeah, the relationship will be very direct. Yeah. >> Um but in terms of attacking particular verticals, no, not necessarily right. like a a great deal of the liquidity on mainet Ethereum for instance today is stable stable or correlated correlated pairs right these have a tremendous amount of TVL >> um they do an insane amount of volume but they don't produce a ton in terms of

fees because they're stable swaps right so what that means though is for you to uh win those pools over reward them at a premium it's not terribly expensive because they're not producing a lot of value right now in fact they're producing even less now that uh platforms have begun to tax the earnings of liquidity providers so we can outpay and win those LPs over and that will be you know less of a contributor you know to massive shifts in fees and things like that. Um uh but on like Robin Hood, yeah, attacking some of these more longtail 1% highly lucrative pairs that will move that other needle. But I think for us, as long as we are growing >> and yeah, we want to be number one

>> uh volume. We want to be number one fees. We want to be number one TVL. Uh we know we're already number one on revenue, but we want to run up the score there. And I think it's probably, you know, in about that order and how we want to attack things. >> Alex, you're the man. Uh appreciate every time you come on on. I I I love the perspective and the ambition uh of which you you attack these markets and uh I think the market is starting to uh you know, it's forwardlooking. I think it's starting to realize the opportunity at stake. But honestly, I I I'm incredibly excited uh and I think the market is as well for the launch of Arrow.

>> We're super excited and I just wanted to commend you guys, too. um wa watching your growth uh over the last year, watching the what last month that you two have had. I mean, it has been an incredible journey to feel like I've been able to be uh alongside of So, congrats on all the success uh for you guys as well. >> We're we're on this journey together. Thanks for coming on, man. >> Alex Cutler, we're going to hit the main stage real quick and uh we'll be right back with our next guest. It's going to be Vlad from Lighter. Stay tuned. US derivatives on any of these systems, Salana Hyperliquid Ethereum Arbitum whatever. Um, I don't really think that's a question, just kind of a matter of time. Um, you know, to me, the bigger

question is like, well, again, what's the right way to trade? And and we actually know the answer to that question is there's not one. Um, different markets prefer different things, different kinds of speed bumps, makers, takers, last look, whatever. Um, different regulatory requirements, uh, and these things. So to me what's so exciting is you know I look at right now like across the Salana Foundation and ecosystem we're engaging with folks in Australia in Hong Kong in Singapore in Europe in Asia uh in the US obviously and we want all of these capital markets to to come on chain and each of these places have different requirements and they operate under different regimes and they need that programmability uh in order to to deploy. Um, so what excites me is they can meet all of their local

requirements and then also have common uh routing layers for things like liquidity provision and taker routing so that the user experience whether you're on Phantom or on MetaMask or whatever JP Morgan or Morgan Stanley or or Erade rolls out their kind of brokerage products built on top of these systems will have a single API endpoint that can tap into all of these liquidity sources and dealing with all of their underlying regulatory regimes. >> David, what's your view? Look, I would say I don't think I'm breaking news here right now when I say that it's pretty obvious that Hyperlid's been working to get into the US. Um, Krakens's made some announcements about that. There's clearly something going on here. Um, I think the next 12 months are going to be

pretty pretty big for Hyperlick in that regard. So, I'm also not breaking news, I think, when I say that the administration all the way to the top is focused on this and and consider this to be a priority. Uh, that wasn't a fun day for me when I when we heard that. that uh the president made that comment about hyperlquid but um there's no question this is where this is moving and I think what's also clear um and again I don't think I'm breaking news we're back live D Asia on top of token 2049 Vladimir Novakovski we're going to be chatting onchain derivatives obviously Vlad you're friend of the show welcome again and uh lighter leading the way when it comes to the onchain derivatives market I mean on options are coming soon you

guys made that publicly known. Congratulations. And uh we're going to be chatting about everything else that you guys have. Uh just got a few minutes here today, but an absolute whirlwind uh the last couple of weeks. Um I mean major announcements all across the board. What is capturing most of your attention these days? What are you most focused on and what are you most excited for? >> Yeah, good to be back. We're a long way from a tokenization tower, right? >> We are. We brought the tokenization tower to to Singapore. Uh yeah, we're uh you know, as you mentioned, options a big priority for this quarter, like starting out with binary options and then ending up the quarter with kind of full option suite, you know, European options for uh crypto and RWA. So that's that's a big one like trading pers and

options from the same balance sheet. Um you know, onchain with kind of the low latency that we offer is is going to be pretty amazing. Um it's uh like a full circle moment for me is like I started out trading options back from my dorm room before joining Citadel. So um so that that that's something I'm spending a lot of time on. Um and then you know just like being kind of deep with the CFTC right like working on like kind of the final stretch of uh you know getting in uh to the US with you know with the licenses there.

>> Yeah. And so chairman Celig you know he he made this thing this announcement he said big things coming and he posted this video that clear rules of the road are coming very soon please share as much as you can about the work that you're doing with chairman CLI and the rest of the CFTC. >> Yeah. So, you know, I think onchain per obviously like the space we're most interested in here, right? And um you know, like they they now I think you know it started out with um centralized per cryptonative assets. how they've, you know, kind of adding support for uh equity per right but then onchain per like the challenging parts of that

are figuring out like you know how to think about things like ADL for example in the context of um all the rules you know there's like 43 different rules that you have to uh comply with right so just kind of working through those details like how like you because ADL you know a lot of what it does um does um you know there's like very sound risk management if you implement it correctly but it's just kind of mapping that to to the frameworks in the safety core principles. Um so we're spending a lot of time on that. I mean I think there's going to be there going to be other things rolled out by the agency like what we saw yesterday is um kind of around like leveraged uh you know

leverage trading which uh I think is is an important point and there they're going to be I think more things we'll see around like equity >> perh >> but for us the huge game changer will be onchain per right like just to to if you can I mean a couple years ago it would have been hard to imagine that you know US regulator is, you know, actually has like deep understanding of of onchain finance and we're almost there. >> Yeah. T tell us how you're thinking about some of the recent developments from Robin Hood. They announced Bitstamp as uh off-chain per sort of >> centralized, >> right? Right. Offchain centralized per

they're still very much interested in an onchain per venue as well. and you've got a deep partnership with Vlad and Robin Hood and so talk us through just your your perspective as you continue to work through this partnership. >> Yeah, you know like Robin Hood has a number of different uh products obviously starting with a wallet which we're the exclusive partner for onchain purps there. Um so you know the wallet right now is not available to us customers. So that that's you know one natural path there. Um, and then once we're able to operate in the US, like we we can plug into other parts of their stack as well. And you know, like

they're very uh, you know, I've been an adviser to Robin Hood come back to uh, 2013 >> before they even launched the product. So from that, they've always been very careful about being compliant, right? So they're certainly not going to plug in a venue that doesn't have CFTC approval. that was never going to be um you know part of the plan but once we have this unlocked kind of with the CFTC then it'll be great for their customers to access the liquidity and the low costs and have it be on top of Robin Hood chain right so >> so from our perspective everything's going according to plan you know we can't like you know like the end of the day we still have to go through the full process with the regulator and that's

always been Robin Hood's approach that's our approach too, right? Like we're not looking for like a quick shortcut to uh >> um you know do something that that may not stand the test of time. We'd rather go through the process um get the license and then that's going to be a product available for many years to come. >> Yeah. Abs. Absolutely. And so don't rush it, do it the right way. Um and I think you know you like you just mentioned you've been an adviser to Robin Hood since 2013. I think that's maybe a a little known fact flying under the radar. And so, you know, help shedding some light on that. And I I think, you know, we're all anticipating uh the regulatory approval of lighter by the CFTC in the United States. Correct me if I'm wrong, but this is not an if. This

is a when. And there are developments in the works to make this happen. Give us a sense of what changes and maybe if you can the timetable. Is this something that we can expect in 2026 or is it 27 2028 in which we should anticipate lighter coming to the United States? >> Uh I think that it's you know >> it's not weeks and it's not years. So we're talking about months. >> Okay. >> Uh you know I think >> um like to your point we don't want to rush the regulator. You know, our our whole approach is building things the right way, like going in through the front door, you know, going through the process line by line, kind of rule by

rule, educating them, working with them how, you know, on how, you know, DeFi works and also learning from them as well, right? On how kind of think about risk management for, you know, in the context of a DCO. So you know I I would say like yeah like it's not weeks and it's not years it's it's a month >> and and what changes right we are on this path to regulatory approval of onchain decentralized per in the United States. I I agree with what you said earlier about the the the thoughtfulness that this regulatory agency and this entire regime is putting into their regulational their their guidance.

Right. They're finally listening to the industry, to partners such as yourself to understand best practices. Once lighter is available and onchain decentralized per regulatory approval in the United States, what changes from from the landscape of someone who's looking to get exposure to these derivatives, >> right? Right. And by the way, it's not just per right like onchain derivatives broadly. options >> um would you know onchain options would be part of it as well but what changes is that you're going to have institutions like the citadels of the world right can uh who only trade on licensed venues from their balance sheet like you know it's like I think the way

that it works right now is that you know somebody might have like an offshore um part of their fund and they're kind of running a separate book there and then they're, you know, they're they're trading on, you know, crypto exchange that may be hedging somewhere else. Like imagine if instead of all of that, you can have one balance sheet from from the US from the kind of blue chip institutional players on chain, right? That that's like a massive unlock. I mean, liquidity can go up by orders of magnitude. >> Yeah. And that ultimately creates more capital efficient markets. And liquidity is something that these regulatory industries the the these agencies are looking at fostering. They want regulator they want orderly markets.

They want consumer protections and they want capital formation. And you know bringing these solutions to market can ultimately help them accomplish their mandate. I want to ask you about options. This is a strategic priority for lighter. Do you think options is a bigger opportunity than per >> I think it's similar size magnitude like I think in in the US for um you know for equities I think we've seen how big that market is and and so and I I think you know bringing the efficiencies of onchain finance to that market is a huge unlock. I think it's like similar order of magnitude.

>> Okay. Um but you know there's some markets that have not been explored much yet like fixed income um you know I think as well as things like compute options right like and as well as like data future. So I think like it's not either or right for us like I think we we're building kind of infrastructure for the future of finance and um you know whether it's spot assets you know um tokenized stocks options like fixed income like it's like you know the infrastructure works across all these asset classes. It's, you know, we right now we're already like by far the highest TPS um, you know, LT on top of

Ethereum, but we can actually do orders of magnitude more, right? So, we can actually sequence all those transactions with within the lighter infrastructure, >> you know, and again, I think having all that happen in a capital efficient way is is just such a massive unlock that like we're just getting started. >> Yeah. and and having these markets composable with one another increases the capital efficiency to another degree. Last question for you here. It's really just a comment because I I mean we we've been been saying this uh we've had this saying on the show, be more bullish. There was something that just really piqued my interest. I saw it hit the wire just last night and it was that the the CME is winding down their

24/7 markets out of lack of weekend staffing. Could you ever imagine a cryp an onchain digital assets company making some sort of announcement like this? >> No. I mean, actually, you know, I remember like back when I was in Tradfi and uh you know, like friends from like like normie friends would tell me, hey, you know, thank god it's the weekend. I'm like, no, like I hate the weekend. I want to trade like I want to make money. >> So, it's like that that's kind of I think part of why we all like onchain finance because that's always been part of the ethos.

>> Yeah. Yeah. Absolutely. Vlad, thank you so much. I think quick one today. You're the man as always. Lighters coming to the United States and uh everyone better watch out guys. Quick uh word to the main panels and we will be right back. Don't go anywhere. >> Companies that represent the protocols that we're talking about here today. Um want to hear a bit about why specifically the asset that is is underlying your your DAT, you know, the best one as you go and pitch investors to to get that capital. So, uh, David, starting with yourself, why is why is Hyperlid the best asset to build a DOT around?

>> Well, um, the best is a strong word. I think, um, dating back, as I said in my opening remarks a year and a half ago or so when we we got involved in this, um, to be honest, and I've said this to a bunch of people publicly, I was really not looking to be the next Michael Sailor knockoff. You know, the world had plenty of those. there were all these deals getting done last summer and I didn't feel like the world needed another debt. Um, but the more I got to understand Hyperlquid, the more I understood that the token in a lot of ways is equity like. Um, owning the token is something that equity style investors will want to do. Um, and many of those investors will not own a token

on a decentralized exchange. And at the time it was the only place to really buy hype. Today there are a few ETFs out. Coinbase has it. So there are some other places. None of them have the liquidity that our DAT does by even close. Um so you know we convinced ourselves pretty quickly that we were actually solving a scarcity problem here that the world needed us to solve and the proof was in the pudding. We um you know mid late June we set out to raise $300 million for this idea. Um when we announced in mid July we raised $888 million. So, we weren't the only ones that felt this was a good idea. We closed in December.

Since then, I think we've done about a a billion six through the ATM and in in more issuance. We're one of the few DATs that are trading at a premium to this day. So, I think that um the world needed a hype DAT and I think, you know, if I'm going to pat myself in the back, we kind of got there first and that, you know, being first is valuable when it comes to this sort of stuff. So, you know, I think that's a, you know, it's a pretty straightforward concept and so far it's worked. >> Yeah. So, uh, by the way, thank you, David, for not doing a Michael Sailor knockoff and not making AI videos. Um, I I do I do enjoy watching those videos. I also am not making any AI videos.

>> I keep those private. Yeah. Um, in in terms of, you know, how I I think about the opportunity for Forward. Um, you know, what's so cool about Salana is it's this very heterogeneous thriving financial financial market. And so, we at Forward today are doing a whole bunch of things taking advantage of uh the capital markets on Salana above and beyond staking, which I'm just going to take as as uh table stakes here. Um, so some of the cool stuff we're doing at Forward, for example, is you know, we we announced an investment in a company called Enri. It's a reinsurance company. Um I think they have something like3 4 $500 million uh of assets capital they've raised on Salana that's underwriting reinsurance and paying getting premas forward uh invested in HR and then we

actually now are taking advantage of our uh ability as a publicly traded company with access to cost of capital from from banks uh and we're able to borrow at pretty low rates. were able to then put put that money to work on chain in protocols like uh onyc uh and earn earn the spread. Um those proceeds are using to cover GNA. They also that gen produce profits which we can use for acquisitions for buying soul for whatever else. Um that's I know the public example we've talked about. We're doing a number of other things that I believe are not yet public but are in kind of the same general shape. Um, and we can do all of these things actively to produce excess return for our shareholders above and beyond the vanilla staking rate for Soul. Um, you know, my our our CIO Ryan and I, we

talked about this a lot, but like we kind of think about Forward as just Soul++. Um, our goal needs to be to outperform Salana both in in bare markets and in bull markets. Um and certainly on a nav basis we have done you know forward in its current incarnation is just over a year old and uh we have objectively outperformed uh soul staking rate in terms of nav accretion pretty substantially uh over that over that period. >> Awesome. All right couple minutes left here. Want to close out on a positive note and just hear uh from each of you uh starting with you David. What is one thing that the hyperlquid community could you know learn from the Salana community? What's what's one positive thing that Salon is, you know, doing really right that we could learn from?

>> Look, the obvious one, and I hate to come back to what we've already talked about, but, you know, the decentralization path has worked well. Um, and I think that um, you know, there's no doubt Salana um, has sort of reached the point of being ubiquitous in the crypto world. You you meet the guy on the the guy on the street who doesn't know anything about crypto. Uh, he or she knows Bitcoin, he knows Ethereum, and they now know Salana. And that's that's in of itself super valuable. Um, and it's Salana has done that in a relatively short period of time compared to the other two. Um, and you know, I hope Hype gets there one day. Hype's different. You know, the man on the streets heard of Amazon. They might not have heard of AWS, and that's okay. AWS

is still super valuable, and that's in a lot of ways how we think of Hyperlid. But Salana, you know, the the decentralization they've created plus the the sort of ubiquitous the the sort of being in that in that category with with the two others is is very impressive and very hard to hardly replicate. >> Um yeah, look, I think the the pretty obvious thing the Hyperlid team really got right was just insane focus from day one on perpetrating like and slot community. We we missed it like no no no no question about it. Um we were very slow to react and and you know a lot of things that were unoptimized in the VM and consensus um bunch of other things that are necessary to get to that level

of performance to do perpet trading at scale. Um but you know as Anatoli likes to say steel sharp and seal um and I think we've gotten ourselves given ourselves a little kick in the butt. Um and today you know trading uh per on Salana uh really does rival Hyperlquid in the experience in basically every way. Um the volume numbers are not quite there yet, but if you actually just go use the products at this point like Phoenix and others, uh it's very comparable. >> Awesome. All right. Well, thank you both for joining for us. That was really great. And uh yeah, that's all the time we have. Appreciate it, guys. Thank you. >> Thanks, Felix. Good job.

Down. Up next, Hyperlid in conversation with Jeffrey Yan. Please welcome Jeff Yan, founder and CEO of Hyperlquid Labs,

joined by moderator Shauna Devans, research analyst of Blockworks. Good afternoon everyone. I'm Shauna Deans. I'm a research analyst at Block Works and over the past year I've had the privilege of leading our team's coverage into Hyperlid.

I'm extremely grateful today for the opportunity to talk with the one and only Jeff, co-founder and CEO of Hyperlid Labs. Jeff, how are you doing today? >> Great. Uh thanks for taking the time to interview do this interview and uh really appreciate all the research you put out. I know you've been super early the ecosystem writing about it and I think a lot of the stuff that the insights you've shared I know have kind of you know either come true or kind of helped people realize what's already true. So you know really appreciate the good work you you do. >> Thank you. So hopefully we're going to use this time today to get into Hyperlquid what's being built and what's still left to build. But I did just want to start with saying thank you for the incredible amount of work that you and the team are doing and the principles

that you have. I mean, it's hard not to get inspired by it. You notice it when you interact with Hyperlid. You notice it in Singapore. And I feel like most importantly, you also notice it in the industry like compared to to three years ago, there's so much more optimism. It feels like protocols actually value their community and the token. And I think that is in no small part due to the example that you guys have set. And if anything, you probably set the bar too high. >> It's it's a team effort. I mean, when I say team, I mean like everyone building on the protocol. >> Yeah. So I just wanted to start with saying thanks for that. And on the topic of the amount of work you guys are doing, I wanted to start with just saying this year Hyperlid has shipped HIPP4 which is outcomes portfolio margin

which has been expanded into a native borrow lend protocol priority fees and also HIPP3 star on testn net. So I'm curious broadly how you'd contextualize everything that you've built and maybe what the overarching strategy is for your decisions. Yeah, the overarching kind of strategy I guess is just to build the tools that ultimately can house all of finance. I think you can say that all you want, but if if someone wants to build something and they can't do it, then well, they're going to build elsewhere. So, uh, the goal is really just to be useful. And so, I think that's probably the the undercurrent of of all of this. So it's like looking at

what can be done today and what people builders who want to build you know feel like the gaps are and kind of noticing the commonalities there and that's like really good feedback for how the protocol should you know overall kind of what direction it should go in and I think a number like a sort of important property you always want is that the primitives that are ultimately built that there aren't too many of them so that it's like complicated and there's you know it's like it's like an unclear how things work together. They should be kind of very surgically precise, but also like each primitive should be broadly useful in many ways and they should compose well with each other. So like portfolio margin is a good example of how like a borrowing and

lending primitive can compose with a trading primitive like pers or spot. And uh I think that that kind of interaction always it well one it's nice because it just unlocks a lot for people to build but it also just feels more elegant. It's like the right way, the way that finance should work, right? Like fewer things, but they work together. Well, >> yeah. One thing that I noticed, there seems to be a lag between when you guys build something and when maybe the community and public understands how important it's going to be. Like HP3 comes to mind that even on testnet, it was apparent that this would enable the market creation of any asset with the price feed. But it was only until Trade XYZ and Shoku kind of did an amazing job

with execution that people really started to understand that. Do you think there's anything similar now in what you guys are building that it it's going to take a while until people really understand how important it's going to be? >> Yeah, it's always hard to predict how long it will take and I think some things may just never take off because maybe they're just, you know, maybe something about the world is not quite as um as it seems. But uh I think every one of these things is primitives. I think has some crazy large story. Similar to HIPP3 like yet to be written and kind of like you said waiting for someone to come and really execute on on the the implementation which which is the hard part. Uh and I think yeah HIPP4 is like one example where I think people

often ask like why you know why can't you trade options because options are so important uh in the traditional financial world. And I don't think the answer is not that pers are better than options. They're actually very complimentary and just serve different purposes. Um and I think HIPP4 is kind of I think the primitive where you option like or options or option like payout curves can can be built and scaled to a point where it's um it's it's useful for users. So I think that would be I guess that would be the the parallel here and I I hope that that's another story that has yet to unfold. >> Yeah. Um on the uh on the topic of HIV3 that has clearly been one of the growth stories of hyperlquid and open interest of real world assets is up from 300 mil

in Jan to 3.9 billion today. So 13x increase and along with that it seems like tradi is slowly starting to understand the vision of hyperlquid especially when you think of stuff like 24/7 trading and preipos. Um, and with that the framing of Hyperlquid changes, right? I think it's funny because when I started writing about Hyperlid in 2024, the most natural comparison was protocols like AO and DYDX. And over time that shifted to Hyperlid being compared against the major crypto exchanges. And now it almost seems like Hyperlid is being compared to traditional giants like the CME and NASDAQ. So I'm curious what you think of that framing and also does it change the

way you think about strategy? Yeah, I think none of the framings are perfect because it is interesting because I do think the protocol is something genuinely not being attempted when when I look around. I don't I don't actually see a perfect comparison. And I think that's a good sign because that means we're not building we're not all like working out something that's really like going to happen regardless of whether we're the ones to make it happen. It's cool that it genuinely feels like there's not a clear comparison like you said that the kind of target keeps moving and I think maybe that's a sign of just people realizing that it's multifaceted but I think really it points to the fact that uh it is a lot more akin to like public

infrastructure something like the internet or or Linux or something like that where it's you don't you don't need like 10 different attempts at the same thing you really just need like one neutral system and then all these names that you mentioned actually I think ultimately are not competing but rather could benefit from the technology if it fits their use case and I would I think going forward I think that's the most helpful and productive framing like we're not here to you know as as a community we're not we're not here to like displace anyone we're just here to kind of empower them and of help them help their users >> yeah I mean it it has taken a while for people to understand the vision one thing that helps is just the amount and quality of teams that are now building

on Hyperlid for example, Kraken, right? So, another thing that I wanted to ask about is HIPP3 star which is on testn net. So, for context, HIPP3 star is like HIPP3 in that it allows deployers to list their own markets, but it also has additional permissions, right? Such as being able to whitelist who is allowed to trade on the exchange. and u payword the parent company of Kraken already publicly announced that pending regulatory approval they want to use that to offer hyperlquid to US citizens. So I'm just curious if you could talk a little bit more on HIV3 Stardexes and what your vision is of how they'd interact with the broader hyperlid ecosystem.

>> Yeah, this kind of goes back to the earlier question about primitives and like which primitives should exist. And so it really is kind of it's not any different from any of the other things we've discussed. It's they're they're are builders and they want to build these really cool things and it's not possible currently with the suite of permissionless uh primitives available. And so HIPP3 stars uh an attempt at distilling all of that feedback into a few modifications. And I think whenever possible it's nice not to kind of reinvent the wheel, right? It's like HT3 broadly works. and actually has many desirable properties that um deployers may want. And I think ultimately it's kind of the transparency and the the self-custodial nature, the kind of

redundancy and resiliency of the system are just like really positive properties regardless of you know which specific regulatory regime you might be trying to operate under. And so I think taking these this as like a very solid foundation and then um adding opt-in controls that a deployer may decide to use that ultimately lets them deploy the markets that they want to deploy. Like that is kind of the the entire motivation behind it. And I think it synergizes well with all the existing um onchain functionality that the protocol already serves.

>> Yeah. I I think you said once something along the lines of there's no such thing as decentralized finance and traditional finance. There's just finance and the system we have is just a fundamental improvement. And I think that shows with HIV3 star, right? Is is you're just giving people and institutions the option to build on top. You're not taking away anything, right? It's purely additive. >> Um, so zooming out from just per Hyperlord's vision has always been to be the house of all finance. And I think what you guys did differently than other L1s, L other L1's they started very general and then they tried to improve their performance down the line versus what you guys did was you started with a hyperformant L1 that was hyper

specialized on purp and then you built out these building blocks right we were talking about you added spot you added outcomes we also now have a native borrow lend I'm curious how much is left to add in terms of the block or is it more about just improving the performance of what already exists. >> I think it's both. I think there will always be a performance problem. Uh it's a good problem to have, but as you know, I think with every order of magnitude increase in usage, that's obviously a huge unlock and and something we should welcome with open arms. But I think it leads to a new a new set of kind of hard technical problems. So I don't think that will ever stop. And but that but that's the best problem to have, right?

like any any L1 wants the problem of like there way there's way too much organic demand for the chain in block space like can we solve that and uh I think they're uh it's it's a really fun engineering problem like really you know that's why we're always trying to work with the best engineers in the world I think it's probably the most interesting problem in the world if you're interested in high performance systems there's no there's nothing more satisfying than like building something and realizing that it's not good enough because instead of a million people using it now there are 10 million people like that That's like just such such a good feeling. Um but yeah, in terms of like the other part of just primitives themselves, I think the yeah, the list should not be finite. I think if anything's there's no reason for for

something that needs to accommodate the entire the entire global financial system to kind of at some point decide like this is it, right? Like this is uh from now on this is set in stone, right? Like that's just like not that's not a kind of practical way for a protocol to to evolve and accommodate its users and builders. So on the improving the infrastructure side, one recent thing that you added that I think a lot of people are maybe misunderstanding or downplaying the importance of is priority fees. And those work in two ways, right? You have read priority fees that allows traders to stream uncommitted uh order flow from the me pool. And you have write priority that allows traders to attach hype bribes to their orders to get priority in the queue. Um and I think this does

two things. One, it burns hype. Almost 180,000 hype has been burned from it. But also more importantly, I think when you compare Tradfi, the latency competition there is very capital intense. It can cost hundreds of millions of dollars just to be able to compete. So priority fees are a much more fair way to to bring this competition to Hyperlquid. So I'm curious if you could maybe talk a little bit more about those priority fees and what your thoughts on them are. >> Yeah, that's that's a good way to put it. I wouldn't view it as bribes. I would view it similar to how Ethereum had this kind of um this shift from I don't remember what year it was, but the um and I don't remember what the EIP was

either, but previously fees were basically paid to validators and now the um the vast majority I believe of the priority fees in Ethereum um are kind of like protocolized burns. Um, so I I think the bribe was more of like how you would label the previous system, which I think is toxic and kind of unhealthy and it's in in an analogous way to the kind of uh what you're talking about the like latency arms race in a in a more traditional setting. Um, I generally think the the motivation behind priority fees is like can we find a more efficient way for markets to clear so that the um the alpha that's associated with uh like a kind of incidental

technological advantage is not uh does not have outsized importance relative to your actual unique alpha that you're bringing to the markets. So the in some sense it's impossible to internalize unique alpha like that's like unless unless you have some like radically crazy new innovative market structure. I think the fundamental point of markets is that like people that have different alpha kind of come in and transact and then the the output of the market is like you know the wisdom of the crowd. It's like the sum of the the signals from all the participants. But there's a certain class of alpha like you mentioned the like microwave towers or the sort of like transatlantic fiber cables that kind of let you let you see something that happened in uh you know

Chicago and then place the trade in Tokyo or whatever. Um like that stuff is very obviously zero sum and in some sense negative sum because the people who specialize in make placing those trades need to compete with each other to go go faster and faster even though the if you're adding a single microcond or whatever to the to the time in which like a a specific uh ticker updates its BBO like that's like not that's like not real value no matter what someone tells you like that's just not valuable to the world. Um and the I think priority fees are basically an egalitarian attempt at basically taking these negative externalities and internalizing them so that the system is more accessible to

anyone. So now in like if you have an alpha and tradfi and you have like you do not invest the baseline minimum in latency then you just cannot express your alpha and the market does not get your signal. So um with the system the vision with a system with a truly fully fleshed out and like you know evolved to its final state um priority fee system uh anyone can come to the market with minimal infrastructure investment and trade on on equal footing with everyone else. >> Yeah. So you're basically internalizing what otherwise leaks in trady to these capital intensive processes.

>> Yeah. It leaks to some combination of like the toxic participants. I don't know. Toxic is like not a not a normative word here. It's just like generally what the what people call them. It's just like they're they're picking other participants off and like the it's like some combination of them and then like the I think in a super equilibrium state. It's like the people laying the cables or like building microwaves like ultimately collect all the HFT profits which is like kind of absurd if you think about it but is that's just like what the what that set of incentives ultimately um converges upon. Another very important part of Hyperlquid has been its neutrality in that you guys are very focused on building the infrastructure but also creating these economic incentives for other builders to build on top and we've

seen uh very successful builders like Trade XYZ and Phantom integrated. So it's clear you're only focused on the infrastructure side. But hypothetically, just because you have such a deep understanding of market making, Trafi and also Hyperlquid. If you were a builder and you were not allowed to work on the infrastructure side anymore, what would you build? >> Yeah, I think it would depend on I would just look around at what hasn't been built and is like really, you know, has potential. Uh, and I think that that just depends on what the other builders are are doing. And I think at least this specific moment I would maybe look into options because I feel like they're I just hear a lot that people want to trade these. I think that per by and large satisfy a lot of users but they're

genuinely users who who see the pers you know trade per but just say like you know that it doesn't satisfy like all the views I want to express about markets. So I think there's like that wasn't obvious to me a year ago like I it wasn't clear whether everyone who's trading options really would just prefer purpose. I think the answer is no. So I would look there. I think HIPP4 is like a very um sort of like obvious uh way to build options protocols. You kind of inherit the spot like order books and you know portfolio margin like you said.

You also have the per venue to kind of hedge your options delta against um if if you're kind of on the market making side. So, um, yeah, I think it's just like what how do you take that form factor and make it something that's broadly appealing because I don't think this has really I don't think anything options like a sort of convex payout style um product has really reached escape velocity in crypto. Um but it clearly has in Trafy and so like trying to understand that gap and see and also give us feedback like give or in this scenario give the whoever is building the infrastructure the feedback on like how can HIPP4 be augmented or extended to to really fulfill this kind of vision. Yeah, I think when HB4 came out, it was viewed as basically bringing

prediction markets hyperlquid, but I think it's much more than that, right? It's about the composability of having this within the same ecosystem where you have perks, you have spot. Um, and that's where the value unlocks, right? Combining it with things like this. Um, another thing that I wanted to ask you about was privacy because privacy is a narrative and a meta right now and there's a lot of discussion whether it's beneficial for blockchains to be fully public and transparent and there was a study that looked at hyperlquid order flow. It looked at TWAPS. took T-waps that were hidden and T-Ws that were publicly telegraphed to the market and it found contrary to what a lot of people think that the public tabs had

better execution because it allowed market makers time to kind of absorb that flow. So I'm curious broadly what your thoughts on that are and um is there a need for a private layer to be built on top of Hyperlid? >> Yeah, my thoughts are a bit controversial here. I think I've expressed them in various like tweet essays uh over the past few years, but um I approach it more from like a first principles thinking. It's like if you know if you look back back to before electronic trading, you trading was done in pits and people were yelling yelling at each other and um trying to get the best price and it was by and large like not you know first in first out. It was like tallest person, loudest person gets

a better fill. And like if you just compare that to like electronic markets, like what the core difference uh other than the throughput increase is and the fairness is that uh it everyone can see everything that's going on. like you don't need to be tall to see all the people in the pit. Like you can just look at the you can anyone sub can subscribe to the the feed and get the data and then the you know I think it's not at all controversial to say that this is like a causal there's a causal thing here where like when everyone sees the order book the order book itself becomes more liquid because everyone knows what's going on and can incorporate that into their um their algorithms. So I don't see why, you know, that's like a very clear win for transparency and and openness uh and

electronic systems. I don't see any reason or priority to believe that that the line should be drawn there that the that like the current setup of order books is the optimal level of transparency. And so like if you like a hyper liquid is just um you know it's built with order books on chain from day one. This is primarily actually a sort of um this actually comes from the principle that order books should not be run by a privileged central intermediary which like by and large is still how order books are run even in in crypto. Um there's just like some fundamental philosophical thing there where it's like someone who's operating order book has a lot of power and like if a truly global neutral financial system should not concentrate that power in one hand.

Uh but anyway, the uh a sort of like side effect of that when it comes to like execution quality is that the order book is open. Um it's and it's open more so than trady because you can not only see the total size and per perhaps the number of orders and the orders themselves, we can actually see the addresses associated with each order. Um and you it's quite interesting because the crowdfi is not actually like fully aligned on exactly what should be shown. If you look at um markets in Brazil for example is a very interesting thing where the um whether intentional or not the the order book uh feed also publishes which broker um many of the orders are associated with. Uh and this detail in and of itself it's like very

it's a very coarse classification of orders but uh it leads to a ton of downstream like interesting things you can look at on the Brazilian um exchanges. And so Hyperlink is just kind of like that but like you know many many steps further where it's like now you have the finest one of probably the finest grain thing you could probably ask for which is like an L4 order book of um literally like all the the onreen addresses and I think if you just draw that trajectory like it should by first principles lead to more efficient markets. So it's cool that like papers kind of um people kind of like see the same results empirically. It's like and and I think in trans fact people do know this sort of like if you look at the leverage ETFs uh they need to rebalance every day to stay at their leverage

ratio you know two or 3x or whatever so price goes up they need to buy more if the price goes down they need to sell and they by and large choose to do this on the closing auction and so like that's like some sort of like example where um empirically you get better execution if you just tell the world like this is our this is our um specification uh for the contract and we are going to execute in this way according to this formula and then the market makers can say okay like this flow is exactly what it's going to be you know every day and like I can I can sort of like account for that and then like provide liquidity competitively knowing that this flow is coming from a like a non-toxic source. So um I guess many answers I guess I kind of gave

empirical and a first principles argument for ultimately uh why transparent markets are better uh for the end user in terms of executing large size. Yeah, I think it's also about fairness, right? Because in traditional platforms are also centralized exchanges. It's not private. That data exists. It's just you it's a matter of who's getting it and who's privileged enough. Um so having it public is is fair. And also yeah, I've noticed in my research comparing Hyperlid to like traditional exchanges, it it just is a world of a difference. It's completely different on Hyperlid. it's just completely accessible versus um the amount of gating payments needed in TRFI. Um another thing that I wanted to ask you about the community and um you

always mentioned that Hyperlid is more than just Hyperlquid Labs like the community is part of the broader Hyperlquid team and I think a lot of us appreciate that because we consider ourselves part of the community. So, I'm just curious um as a co-founder and CEO, do you have any feedback for us specifically like what we're doing well, but also if there's anything we could be doing better to support Hyperlquid? >> Yeah, it's hard to give super general feedback because the community is so so diverse and um all I generally think everyone's amazing and couldn't be more proud of what what people are doing. So I don't have like any broad sweeping like feedback. Uh I don't think there such feedback exists. But um I can say

one thing I like I hope that people continue to uh to focus on is just is just remembering the the underlying values of what like why we're building what we're building and that the point of the thing we're building is to ultimately help end users and not get caught up in whatever uh you may get caught up in whether that's you like you know beating some competitor or uh whatever proving a point or things like that. I think ultimately it's like, you know, we should we should stay humble and we should remember that, you know, just three years ago, Hyper League was nothing more than than an idea and a small group of people working day and night to make it happen. And we're very fortunate with the growth we've all had up to this point, but I don't think that means we should, you know, feel

complacent or better than other protocols for whatever reason. So, but yeah, I'm not saying that people aren't doing this already. Like, I'm just like if there was something I guess that might be helpful to say, I'll do that. I'm curious how you guys measure success as the infrastructure layer. I think it's easy to say for the builders and the deployers because there's a lot of responsibilities on them and often times they have the role of distributing markets especially with HB3 and HB4. Um, so I'm curious how you measure your success on the infrastructure layer. Are you looking at any metrics or >> uh we do look at metrics uh not as much as you guys do in your research but we we do look at it broadly. Uh

I personally measure success more qualitatively just like are there net new cool things that haven't been ever built before that are being built and if the answer is yes and those things are cool and like users are using them because they prefer to then I think that's the biggest win possible like there's infrastructure exists to be used and built upon so that would yeah there's nothing that brings me personally like more more joy and kind of fulfillment than seeing seeing these like 0ero to one qualitative shifts you know whether it's like HIPP3 kind of like 24/7 markets like all these there have been many such examples uh in in this you know short few years

>> and and I think the quality of builders that are choosing to integrate and work with hyperl speaks to the qual quality of the underlying infrastructure right >> hope so >> all right I have one more question Um something you've said is that building hyperlquid is similar to playing go in that it's impossible to calculate all the outcomes and exactly where the path is going to be but you can look forward maybe one two three steps ahead with high conviction and then follow your intuition based on that. So I'm curious what you think what are the obvious next steps for Hyperlquid.

>> Um well mentioned options I think that's very obvious. Uh you know have spot per options. I feel like that's kind of the trifecta of like probably you know assets kind of like levered linear kind of vehicle and then some sort of like convex vehicle. I think those three cover the bases on on trading. Um, so there's kind of like uh obviously per the famous like well what what hyper equity is like well known for but I would hope that it kind of grows to kind of cover everything right so I guess we didn't actually talk about the spot side I think that is very obvious as well to me that this is this is a huge unlock uh we talked about portfolio margin but portfolio margin is by and large as useful as

uh as the assets which are supported so if people in the world tend to hold a specific thing and then you can use that thing as collateral then it's super useful and so got to get the things on the chain not just not just the prices so it's kind of like less I think it's harder to bootstrap that kind of network effect because holding things in and of itself is not an like an economic activity so um it's understandable that it it takes more time and then I think also there just it's a lot harder to actually tokenize a real world asset rather than you can do purpose is like tokenizing the price of the real world asset which is like in some sense a lot more elegant and like simple and is like more like a mathematical problem. So um

it makes sense that it takes time but it also to me feels very obvious that you know on the way to housing all finance or like being the infrastructure that um various financial institutions all plug into there's got to be a high quality uh asset issuance layer. >> Yeah. I mean if you think about it one year ago HIPP3 barely existed. Now it's become basically everything people talk about. I could definitely imagine a year from now spot and options on hyperquably dominating conversation.

>> Fingers crossed. Yeah, knock on wood. That's that's yeah it's a tall order but um I know there's some really talented teams working on it and I hope you know if any of you all are know teams that are interested in doing this stuff but haven't thought about deploying on hyper liquid I think it's a really valuable proposition because if you're yeah if you're issuing assets or you're trying to like define these options like contracts convex contracts like the only the thing you really want is for people to use the product and I think that that's what building on hyperlut also brings is like you tap into this existing very you know global expansive um network of market participants.

>> Awesome. I I think that's all the time we have. I just wanted to say thank you so much for being here. Thank you for what you're building and >> yeah, thank you for the thoughtful questions. I hope the discussion was uh was insightful. Hyd is the riskreward of DeFi broken? Please welcome Sylvio Busonero, senior protocol strategist of Blockworks.

All right. All right. Hello everyone. And yeah, very big shoes to fill here. But yeah, I'll be quick and hopefully talk about something interesting and interactive. So my presentation is about the riskreward of DeFi. today is something where a lot of people have an opinion. So, are the rates too low? Are the rates too high? What's driving that? We're going to see that. And yeah, so the core idea I want to start with is that DeFi today is earning less than one monthly bill treasuries. We see that

when we plot historical returns and we see that today DeFi is earning um less 1% more than 1% less than treasuries. So and this has been true for some months now. So people in the industry have been questioning this phenomenon say asking why is that the case and where does it come from? We can see even if we plot different kind of assets from the less risky to the uh other end of the risk curve. So we have quite a few assets that are yielding less than the tib bills. We have some assets in the RWA space mostly that yields that have a risk premium in the

single digits and we have very few assets like ONIC in the reinsurance space that have a doubledigit risk premium. So again if we plot these categories we can see that stable coin lending so they have and the morphos like more liquid markets are below and are like the kind of more liquid and less risky assets in crypto and on the other side there are RWAs like reinsurance which are kind of uncorrelated with crypto and have a much higher return. One thing that is very important to understand here is that these assets enable leverage and so as a matter of fact most user use leverage

because the game because of the game theory of the lending market pushes borrower to max borrow most of the time. So we actually see a lot of variability between what's the headline yield and what people do actually get on chain. So there are two views here. uh lenders are underpaid for the risk they take and the risk premium as a reason and I'm going to see these two arguments now uh examining one simple example of lending against BTC let's suppose can be CBTC or WBTC a very liquid collateral on an isolated market like morpho so very

standard assumptions um and this is the defi as vania Yeah, as you could get it. So on the side of lenders are underpaid, there is this article by Luca Prosper. is a great article which says okay if we model with classic financial theories this collaterals with random jumps theory uh we kind of have that lenders are underpaid by 200 to 400 basis point which is a lot and so I think the interesting point he makes is that he justifies this phenomenon by say there is a big regulatory arbitrage going on of the fact because of the fact that issuers cannot share yields uh directly

with depositors you they they get to over uh overoperate these lending markets and there is too much liquidity in these lending markets. However, the rebuttal here which I kind of agree on is that prosperity models a high loss given default of liquidation. So for him in the business model liquidation are kind of a bad events for lender but this is not really the case uh because liquidation are actually a very very healthy phenomena and the more liquid the asset the rest the the more liquidations the less risk in in the market. As a matter of fact we don't see uh a lot of bad depth when it comes to almost any bad depth when we comes to

highly liquid collateral which makes also the estimation uh harder on on the other way. The other argument brought forward by monet supply uh from Spark is that the real risk is technical. So when you're lending against CVBTC, you're kind of taking the risk of the custody chain of Coinbase. You're taking the risk of fundamental fundamentally something going wrong with the assets. So actually like the I think the the key bottom line is that as a lender you you kind of um you are losing money if the assets get permanently underpaired and liquidations fail to to function.

Uh to support this view there is also this chart by friends at curing which shows how much hacks have impacted yields in the recent years. So they estimate now a current three basis point. So this is like the aggregate losses on the whole market. Um and so you can kind of frame it as as an expected loss from hacks. And yeah, this is a very nice shape uh declining. I think the problem with that is that you really don't cross a river that has an average depth of 1 meter, right? And you as a lender, you cannot choose to pay these three basis points, right? You either pay zero or you can pay a lot.

And so I think this is very solid but it is just not enough for the institutional allocator and also uh generally speaking uh it's not really that we we are comparing to the two same things right we stable coins are very liquid um they have almost instant liquidity uh on the other side uh that the product is really built differently we have issuers that keep the float so when you are holding and using stable coins you're taking also the treasury risk and as I said this these risks this risk and yield is not passed through users unless there are like partnerships um like offchain that we don't see like like we saw in some

markets USDG Aina etc and third like I said users are leverage so actually the the the level of leverage in the market means that the rates are higher and we can overlap these with the very different structures of protocol So of course we know that a pool model is very different from an isolated model like morpho and is very different from an RWA uh facility where the risk is shifted offchain. um all these facilities are like in the same kind of environment on chain environment but they are built very very differently and I mean this has been a debate and I I speak with all people also at this

event and everyone has a different take which I find very interesting I don't think though like I think it's very important as a debate to have because if people don't understand if the yield is good if there are no like benchmark and comparison then they would will not allocate insights to defy. So this is a problem for the institutional investors that need to convince the board that we want to make the case for DeFi. Uh but this yielding yes than what we consider risk-free. This is a big deal for new banks uh maybe like the new new kind of players that are aggregating yields and providing them to users. And finally this is also a problem for users that take these yields um at the on the other

end. We are creating the most open and transparent financial system but we risk to recreate the same problems of traditional finance of like 20 pages prospectus that are really unintelligible. So to be honest I don't I don't know what's the what's the answer here. I don't have the assessment. I think the the problem is this is a symptom of the fact that as an industry we cannot agree or on the on risk. generally speaking. So we are we are working on that as block works. Uh most people don't know that we have a risk team and we do work with the risk uh with protocols like Athena and Spark and we are building a

risk layer standardized transparent updated real time and legible by institutions which is supposed to bring clarity and transparency to these markets. Again, as a third party that does not manage money, our goal is to uh you leverage our data and our knowledge of DeFi to provide this information at scale uh to all the players we saw before. So, we're already in talks with a few the with the partners, issuers, integrators, etc. And we're going to launch this product uh in Q4.

So, I guess that's it for me today. If you want to discuss, you can find me after the panel. I have still a lot of time left. So if any of you has questions, I love to hear them. Uh otherwise, yeah, talk is over. Any question for the audience today? >> Okay. I think uh it's a good question. Um

I mean definitely you could see better the split between the the stable coin risk and the DeFi part which kind of is like overlapping right now. I think one thing that is closing the gap is actually players like Spark Groove that have a balance sheet where they allocate both in DeFi and in Trafi and so they do the arbitrage. So I think that channel is what mechanically going to set the rate. Now should it be the same rate? I don't know because you have higher liquidity uh on the other side but you have more contract and custody risk, right? So it's kind of a balance between these two.

All right, no questions. Uh well, thanks for listening and let's chat after All right, guys. We are back live. Dash

Asia Token 2049. We're here with the man, the myth, Fibu. Welcome to the show brother. >> Thank you. >> It's good to see you. And uh >> man, Salana, you know, has been able to play the barbell quite well. You've got I mean, you recently flipped Robin Hood in terms of tokenized equity volume, but then you've also got pure trenches culture. Feels like FOMO has been able to sort of like bring the trenches to high quality assets. So maybe you could just, you know, you're now chief product officer. Maybe you could just help us reconcile like the two worlds that are currently coexisting on Salana.

>> Yeah. I think it's pretty cool. We have Yeah. The barbell being tokenized equities and meme coins. That's what you mean. >> Pretty much. Yeah. I mean, they've pretty much been able to pair right together. Yeah. >> You know, as one unit. >> Yeah. Uh what's happening on chain in the trenches is really cool right now. You have a lot of innovation for the first time in launchpads. Um, so you have obviously stock pairings that they're and with these reflections where they're sending out dividends for lack of a better word um from from transfer fees. Uh, we have some new models like with transfer hooks being utilized. I saw one yesterday where they're like restricting what venues uh certain coins can trade on programmatically, which is

pretty interesting. >> Um, >> why would why would you want to do that? Why would you want to restrict potential trading activity, volume, liquidity? It's it's well I mean I you know for for memecoins it's just about finding new >> okay >> new new narratives and new ideas >> new ways to stick it to the man a little bit. >> But yeah I think what's what's amazing about the salon ecosystem is it's really really good at fast following. >> Um I don't I do think in some areas we lead and other areas we don't. But in those areas where we don't, you see the ecosystem just generate like an infinite set of ideas and then just run it then with so much ambition and speed that anything that's happening in crypto will happen on Salana eventually in in a big way. And um and that's what I've been

seeing, you know, in the memecoin side. Yeah. And and we've seen sort of this oscillation from like this very wide decentralized ethos, you know, we're going to maybe do a grants program and, you know, give you a little bit of an idea as far as the applications that we want to see on the chain all the way to, hey, we're going to fully like vertically integrate build out these apps ourselves because we know our technology the best and so we might as well be the app layer and be the ones to build those apps on our own technology since we've got, you know, the deepest understanding of it. Where do you balance the line right now? Like where do you where do you you know when you see kind of whether it be the intrinsic apps or it be the fast follows and you see the growth of these applications as

chief product officer. How involved are you when it comes to like hey these are the products that we want to see on the Salana ecosystem versus kind of just you know giving some principles to the ecosystem and letting them you know be creative and innovate. Well, I mean I think of the foundation in this context as just a participant just like any other. Uh we have ideas just like other teams have ideas. Um I think in years past uh we were kind of hesitant to build some of those out but uh this year coming into this year we felt like the world was changing a bit and uh we should maybe experiment and and see what we can do as well. Um there is a line we don't want to uh compete

with the ecosystem. So that's something that we don't do for sure. Uh we want to bring bring distribution to the products and protocols that people are building there. >> The strength of Salana is clearly the that we have a very robust builder community. That is what makes Salana great. And uh it shows up you know not in just the way we were talking about where we have this Cambrian explosion of ideas every time there's a new meta that forms on chain but also in every part of the financial stack there's competition there's like three four five different you know uh players that are trying to win you know the even the most tiny parts of the market structure on Salana and that just leads to a better user

experience. So, um, I think decentralization is Salana's competitive edge and, uh, and it's becoming just like so much more accentuated because all of our competition is basically the opposite of that, you know, like all the ones that you guys love to cover. I know Andy's not here. I was going to uh you know talk to him about his mega glazing of uh Vlad and and and Robin Hood over the last couple months but like we we we really take it like decentralization seriously in the sense that it produces better products for users.

>> Yeah. And I think in that sense we can you know crowdsource ideas you know there's creativity in every single person and that we can ultimately culminate all of that and and tapped into like this you know collective creativity by >> we don't have to even we don't have to do anything like it's um you we have multiple billion dollar companies as well as many startups that are wanting to you know create their own sustainable businesses and when they see things happening anywhere in crypto or in trad Y they want a piece of that and that's just the entrepreneurial spirit that exists in our community. Um and it's at this point it's basically irre irreplicable. Is that a word? No, it's it can't be uh

>> replaced. >> It cannot be replaced. Yeah. >> Irreplaceable. >> Irre No, no, no, no. That's not uh No, this is a different word. But anyway, uh No, it can't be replicated. >> Okay. >> Not replaced. It can't be replicated. We have a little bit of jet lag. It's been It's been a long two days, but I hear >> Yeah. Yeah. >> The the the thing that I I I also think, you know, can't be repl like these things are path dependent, right? >> And and I've kind of been on the show and you're right. I mean, we we cover, you know, people and projects from all walks of life. I think we have been, you know, although sometimes we do give more coverage to, you know, certain aspects of the industry. We are still some, you know, I I think >> hold ourselves to be extremely

open-minded and allow ourselves to be proven wrong. And I'll tell you kind of a preconceived notion because of this path dependency is like I've thought of Salana as like the memecoin chain for a long time and when it felt like there was like this onchain capital markets push it was like how are you guys going to overcome this memecoin trenchers branding but like the numbers don't lie. You guys have flipped Robin Hood and tokenized equities volume. Maybe some of that is driven by like this unique vantage point that you have of combining these two strengths, >> but again like you know give us a sense of where where you're at now and where you're going. Decentralization is the moat. You guys have this diverse builder community which allows you to tap into

this collective creativity and kind of be one of the fastest ecosystems to build these non-skeorphic use cases that you don't really see coming until they're real. So that is definitely part of the edge, but give us a sense of like where that is now and where it's going. >> So I I want to reframe what you said a little bit. I I and and you know, I think memecoin chain is like said in like an insulting way, but I want to reframe memecoins as like basically cryptonative assets. >> Sure. And um and in that sense like the reason that we won memecoins is because the people who are deploying tokens and who are trading tokens in size and with a lot of volume and velocity um are uh

like these are the things that they want to uh engage with across all of crypto and that activity just settled on Salana because the technology was superior. Uh and so it's it's more that like the vast majority of users who are using crypto today are using Salana because the things they want to trade or interact with are happen to be on Salana. Um but the reality is we are there's everything is happening on the blockchain. Like if you look at RWAs for example, we've consistently uh been growing that like we've grown maybe 2,000% in the last 18 months to two years. Um, we're one of the leading chains there. We're leading in payments in a whole bunch of ways.

Um, there's many, many things happening. I think memecoins are just like the the most the thing that has the most retail adoption. >> Sure. >> Um, so it doesn't it actually doesn't bother me when people say that cuz it just says that like what users want to do in crypto today is happening on Salana and that's totally fine whatever that is. >> Yeah. >> Um, equities as an example in my like what's happening right now is more theoretical than real. I think you know like like our uh what's like the the the pairing meta is driving a huge amount of the volume for these things right how sustainable is that on any chain I don't really know um but it is giving an opportunity for us to go out and source equities and source RWAS and and kind of

list them and um but yeah I think uh I don't know I I like we're still waiting for that moment where people that don't have access to these can trade it on chain. I think that's like more of a philosophy than like what's actually happening. But um anyway, it's it's all happening on chain on Salana. >> I think one of the things that you're getting at is that the protocols and applications that have been built for cryptonative assets have now shown that they're resilient and the asset classes is somewhat irrelevant to the to the app. Like like for instance, you could look at something like a FOMO and think, oh, this was built for memecoins or cryptonative assets. But then when you look in practice, this is actually

something that's gotten a lot of product market fit in equities in tokenized equities and and the same is true for you know several different classes of applications. We'll hit lending markets right these were built with cryptonnative assets in mind because they're programmable once you tokenize a new asset class it ends up flowing into the same D5 protocols that have shown resilience and Lindy with cryptonative assets but now with new asset classes. Yeah. >> And and this is what we're seeing play out and you know as this what we're calling this tokenization super cycle rolls on it is going to continue to flow into the same DeFi applications that have already proven themselves with cryptonative assets. I think what you're

saying is that Solana has proven itself as resilient and lindy when it comes to cryptonative assets. There is no difference with the infrastructure as it applies to different asset classes. >> Yeah. And you said this way better. I'm my jet lag brain is like at 100 out of 100 right now. But um yes, the infrastructure is identical and that infrastructure we've built for many years. Um everything is a token and therefore like I think we've honestly I think we basically discovered all the possible use cases for tokens. >> Sure. >> Um over the last like you know 10 years.

Uh so like all the things that work for crypto and all the things that work for me coins will work for equities will work for other things >> that are permissionless. Um, and we don't have to rebuild that. We're not starting from scratch. That infrastructure is battle tested over many years. >> Um, and uh, and so when there's a new thing that emerges, it just it just plugs in to to this this entire stack that exists on. >> I like I like that framing. Everything is a token because it it kind of gives us a sense of familiarity with what we already know and just allows us to apply that mental model to right an asset class or multiple asset classes, you know, with with tons of latent value

still to still to come on. The the let me see if I can squeeze a little bit more out of your jet lagged brain here. I the thing that is not yet like everything is a token but the thing that's not yet ubiquitous is like 247 >> like I I was at Cyos and he was at Robin Hood we kind of divide and conquered last week >> and as I was chatting with like some of these banks I was asking about stable coins and trying to get you know a little tidbit of like >> you know oh yeah we're worried stable coins are going to pull a lot of deposits out of our you know fiat bank system if AI agents can you know navigate and you know deploy these these things pro programmatically. I didn't really get that, but I did get the idea

that their they now have a mandate to go 24/7. Like all of these banks, all of their brokerages, they all it feels like the execs are just breathing down their neck to go 24/7 and that is driving >> their demand for like tokenized deposits and like some of their tokenization initiatives. >> Yeah. >> How should like the So the topic that I'm I'm trying to get to is 24/7, but like right now Okay. Sure, everything is a token, but we're not quite at the point where everything is 24/7.

>> Yeah. >> And I think one of the things that, you know, Salana and these tokenized equity platforms have going for them is the ability to trade when other things are down or offline or offmarket hours soon. That is going to become table stakes. >> So, how do you anticipate Solana is going to interact with other 247 venues once everything is 24/7? Well, I I don't I I do think 24/7 is one of the value props of onchain, but it's certainly not like the only one. It's not a defensible mode because of what you just mentioned. Um, but I think if anything, it's just going to have a it's going to be a huge boon for all the

other things that people are doing on chain. Like right now, uh, because all tokenized equities are basically not primary issuance, they're secondary. when you buy during the day in US market uh open hours, they're sourcing liquidity from uh the equities markets and bringing it on chain. Yeah. And then when it's off hours, it trades in an AMM or whatever and the price can get dislocated and it's quite bad for traders. It's actually like >> you know uh and it's not a solvable problem right now >> um in the in the way that these are actually constructed. Uh so yeah like like I think equities catching up to where onchain is would just be a huge boon for liquidity on chain. Um keeping prices you know uh in parody um but like

to me the benefit of of onchain is um not just 24/7 but it's also a non KYC venue. So that's a big part. It's global so it works anywhere. like you know permission markets that go 247 in the US, they're still not going to be accessible to people here or in India or Nigeria or wherever. Um and then lastly like you know these traditional venues are not solving uh like for the many other things that people might want to trade. >> Um and so I I like to me I don't know it doesn't I I think it's a good thing.

It's not it's it's it's really not a problem. Honestly, what's interesting about uh if you look at the data, the uh across all crypto assets, not just um equities, trading volume falls off a cliff after the market closes. >> Mhm. >> If you look hour by hour across >> crypto volume as well. >> Yeah. Yeah. Yeah. Exactly. >> Huh. >> Um so it's it's quite it's quite interest. I'm not I'm not exactly sure why that is. That's just something I've noticed >> that uh overall like a lot of the liquidity that exists in crypto is fleeting. it kind of exists during market open hours for various reasons then it goes away. Um so you know like once we get 24/7 on the trady side I think you're going to see like a 3 to 5x

increase in like total volume on crypto >> which would be awesome for the network you know just generates a lot of revenue. So >> yeah absolutely and and maybe that's the last thing that I'll ask you about here is the revenue meta which look pump is firmly within like absolutely crushing. Hyperl is doing incredibly well. Like there's a select few assets that are doing incredibly well around the revenue thesis and the revenue profile. It's durable. It's working. >> On we've kind of been talking about this portfolio construction thesis. Like on one hand, you know, you've got the revenue meta and like those projects that I mentioned are doing incredibly well and leading the narrative. On the other hand, you've got like hard money.

Bitcoin, Zcash have been doing well in this regard and they're kind of benefiting from monetary policy. On the other hand, you've got like legitimization of the industry and you know, President Trump is up there, you know, shaking hands with crypto founders like, you know, feels like this is the real time for onchain businesses to thrive. So, there's applications that are doing incredibly well on Salana. Give us like the sole thesis though because it's not quite hard money. It's not quite part of the revenue meta. Maybe you can describe like the sole thesis for 2026. So I think the strategy of Salana is a little different from others. I think it is more of a venture strategy and actually if you talk to asset allocators, there's a great

bitwise report uh uh that came out recently uh where they interviewed a lot of allocators and they put Salana in like in the venture you know technology bet um you know portion of their of their portfolio. Um, we are, in my opinion, very early and we're very focused on market share and we think that where we are today versus where we're going to be in 10 years is literally 1,00 one 1,000th of, you know, the trading volume and the TVL and all those kind of things. >> Uh, and and this is not just conjecture.

If you look at if you just added up all the assets that exist on chain, you compare it to what's in the real world, we're not even >> 0.1%, you know, of the way there. >> Um, and there's still a lot of maturity of the infrastructure needs to happen. Like, yes, you know, there's been some interesting moments like a couple weeks ago, we passed ny and total number of trades on chain in a week. >> Uh, but uh, but there's still work to do and we've been in a process for many years of speeding up the chain. we call IBR IBRL increase bandwidth reduce latency that's kind of our like guiding technical principles um and the chain is going to get remarkably better over the next you know 2 3 years and I think our just our general point of view is like

given what's coming and we and like I think we I think we're right in terms of like crypto if you're in crypto you are right this is the future um how do we make sure that we win over 10 years and not right now and I think for me uh like that's getting every user on Salana and every asset on Salana and uh and once that happens okay there's a lot of ways to to monetize >> uh and I think focusing on that for the network would be a mistake we're already 65% of market share of like just transactions >> but we're not in terms of DEX volume and other you know per so on um so I think our main philosophy is just continue to win market share for you know and when

these things go a 1000x the revenue will work itself out and uh I don't know we don't we don't feel super worried about it. >> Yeah, >> makes sense. Building building long-term games win long-term prizes. Biboo appreciate >> appreciate it. >> Get some rest. Take it easy. Appreciate you joining us. >> And uh we'll see you next time. >> Y >> All right, guys. We'll send you back to the main panels. We're going to get our next guest real quick and we'll be right back. >> Um it's definitely interesting. So, we hold the goal in Singapore. we issue the tokens and that physical goal is that that token is actually uh um deliverable. So you you accumulate a thousand tokens you can go to go to the bank and say give me that kilobar go. So that's something that we have been rapid

uh working on. Um and obviously equities is the next uh spot that we are carefully considering. Um what we haven't got through our minds is obviously the current trading requirements for tokenized equities has been very much in the retail space. We're trying to extrapolate that and say would institutionals uh institutions have that same requirement and you know I think you know both Amy and Armani spoke about liquidity which is critical right >> and something that really bothers us as well right because as an exchange managing liquidity is 101 for us right and and bit you know crypto assets for it it already being funible in exchange in exchanges is a huge amount of um liquidity discussions right

>> so how do you manage uh public tokenized equities that are potentially different issuers, different chains, uh, and and maybe different transfer agents, etc., etc. So, I think that's a complexity we're sort of working for for for it to clear up before we decide what we want to do. There's real there's really a question out there of like even is there a new service if you're fragmenting that liquidity where some of the market participants can help aggregate that take the different tokens and and really help to create some of that liquidity for a client where they can't access it them on their own.

Armani, for backpack in particular, where are you seen? Yeah. Where are you seeing the most demand is on the retail side? And I'm guessing obviously international you're going to have a new, you know, US arm probably live already or soon to be. Um, yeah. Where are you seeing like the most demand? Is it on the retail side, the institutional side? Um, >> the short answer is is both. >> Okay. I could tell you just from a personal operator's point of view, nothing drives me more crazy than having to settle cash fiat when we're trying to manage manage uh uh like you know just portfolios uh uh in a brokerage account, right? We have a bunch of cash just sitting in a clearing brokerage basically doing nothing because we don't want to uh uh be waiting for banks,

holidays, weekends, T+1, T plus2 settlement. But you can just keep going down the security stack and you have even the clearing brokers themselves have their own institutional margin calls potentially and and and it it's like the collateral piece is really I think the thing that I'm personally itching for. Um and I think you know you have these different models that give you different things and I think on like the transfer agent the DTCC side of things if I could swap out my entire backend for those today I would. Um and it would like 10x improve the operations of our business. Um and so on the product side certainly all of our demand for our tokenized products is on the retail side but from just the internal

implementation details of running backpack itself. Um I think a lot of people would feel similarly um because it's really about being able to move in not just tokenized stocks but also tokenized dollars. Um, and I think slowly but surely things like USDC and other stable coins are starting to become, you know, get get the regulatory approval and rulemaking put in place to be able to use things for like USDC as collateral for example on like, you know, uh, a derivatives exchange or for kind of securities, you know, lending and margin and these types of things.

So, um, there's still kind of steps to get there, but uh, there's enormous demand on both sides. has the demand been for like what would you say is like the killer use case of tokenized assets and tokenized equities? Is is it the trading aspect? Is it the is it using it as collateral? Like what >> yeah where you is it both? Maybe there's no black or white answer there but yeah I would say it's both. I mean I think the thing that is most interesting to me is real-time risk management. >> Sure. >> Right. This is really if you look at stable coins like what did stable coins really you know uh create on the trading side of things. It wasn't just 24/7 markets. It was also real-time liquidation systems things like perpetual futures. That's a huge

departure from the way futures work today. We have margin period of risk. You have margin calls all these things right. Uh but when you have, you know, real-time liquidations, real-time portfolio margining, uh real time, you know, value uh uh uh quantification, you just have much more efficient systems, right? You'd have less cap collateral for the same trade. Uh I guess in the, you know, retail speculation side, you have higher leverage, but just the existence of the perp I think really shows like, you know, it's hundred billion dollars plus traded every single day. That's what the real- time collateral and settlement really unlocks. Um, and I think, yeah, I think that's going to be just there's gonna be tons of second order effects on that beyond just the trading side of things.

And then just the most hilarious thing right now happening is just meme coins. It's like you have all these me who would have thought you put stocks on Salana, you get a bunch of meme coins paired against stocks and then people go crazy. Like we see it every day we list an a new stock on Salana, right? We list like, you know, P USA and in one day it does more 24-hour volume than NASDAQ. Uh, and you see tons of meme coins being created off of it. It's like, it's so silly, but you know, I love the saying. >> All right, guys. We got Christa Lynch from Grayscale here, and we're excited. >> Yes.

>> It feels like an institutional bull market, and uh you guys are leading the charge. So, welcome to the show. >> Thank you for having me. >> It's a pleasure to have you. Like I said, we've had uh your your uh your partner, Zack Panel on several times. Uh he's always a pleasure. And we've chatted Zcash. We've chatted several things that you guys are, like I said, leading the charge on. You're the inkind transaction queen. So, we're gonna be chatting about that. >> Maybe we can just start. What What are you most excited about? Because Grayscale's got a very broad product suite. You guys have been around a long time. >> Give us a sense of what you're most excited about, where you're spending most of your attention.

>> Yeah. Well, you hit on two of them. So, I would start off with inkind. Very flattering introduction. Uh, by way of introduction, I've actually been in ETFs for many years, not just crypto, but actually fixed income ETFs before this. So, I have a lot of experience with the primary market for ETFs. That's how they're created and redeemed. Now, typically that's not available to end investors. That's really only an institutional market that's facilitated by something called an authorized participant. But what we're finding for the crypto products is we've actually been able to partner with authorized participants and other facilitators to open the doors to individual customers who want to put their tokens into the ETF. It allows them to get margin, collateral, institutional custody. With all the news about hacks recently, a lot

of people feel more comfortable with that. And so we've been very proud to be able to facilitate that for our clients. Now Zcash, it all ties in nicely >> because we've just launched an ETF on Zcash. So we can now also offer this in kind capability for maxis potentially who have Zcash laying around and want to put it into an institutional grade solution. They can now inkind it into the ETF. >> Okay. And so in kind transactions, let's just start holistically. you're talking about. We have a a bare instrument, a spot asset that represents the token, the the you know asset itself, and then we've got an ETF, which is this vehicle that is going to live on a brokerage and and the inind aspect to this allows people to redeem and swap in and out

between the ETF and the asset itself. What are the implications of this? What is the value proposition of an inind transaction here? >> Yeah, so it's really caught on because of things like tax planning. For example, if you have a big position and you want to ensure that your family gets it if something happens to you, this is a way that you can put it into a brokerage account and have those rules and regulations surrounding it. Then there's also those who like the convenience of having everything in one place. Now, we originally thought that the Bitcoin and so on ETFs were really going to be more for the user who was afraid or hesitant to do some of these cryptonnative actions like opening a wallet. But we are increasingly finding that in kind is something that is very appealing to cryptonative investors

wanting some of the benefits of being on the traditional rails. Now to take it a step further, we've recently had some conversations especially here at token 2049 about then retokenizing that to bring it back to the digital rails. Now if that catches on, it remains to be seen. Uh but you know, you can really take things full circle and I think that's some of the conversation that we're having here. and what okay so I think from a regulatory perspective this is now possible with some of the tokenization exemptions yes that we've seen out of the out of the SEC and so I mean for one it's it's really really you know encouraging that we're now seeing very thoughtful regulation they're listening to this industry and they're allowing us to experiment a little bit and see what investors demand and so

we've seen a couple of products like this go live what is the demand for these products that you've seen and what is the value proposition position for, hey, you know, I could go get Zcash on chain, but I choose to get in an ETF, but then I'm going to retok and bring it back on chain. What is the the value proposition of this? >> Experiment is the perfect word cuz I think we're still really finding the highest and best use cases. We're still finding our way as tokenization becomes a reality. Now, we filed to tokenize two products last week. We actually went for 40 act funds. They're Bitcoin and Ethereum covered calls, and that brings onchain the ability to get yield in a traditional vehicle. Now to answer your question on why would someone then take a token, put it into an ETF and then

retokenize it. I think the use cases are going to continue to play out. But what we have heard is that allows for the best of both worlds. Potentially one could get the uh you know brokerage account, the tax planning, succession planning, things like that. But then in addition to that, they could continue to live on chain which might be their preferred way to interact with investments. >> Okay, makes sense. And and I take it that, you know, there is now going to be some new use cases that, you know, the the wisdom of these people dream up and we're going to see all these non-skeumorphic kind of use cases that are extra creative on top once we see that come onchain.

>> The inkind transactions as well. I take it and and maybe there's some data on this. I'm just curious. Does this help kind of close any dislocation in prices if you do see the ETF sort of diverge from the spot asset? Now with ink kind you can kind of arbitrage that more easily. >> Yeah. So inkind exactly is typically how grtor trusts are created and redeemed when and these are grtor trusts for context. When the SEC first approved Bitcoin ETFs there was a lot of hesitation around allowing broker dealers to touch crypto. Now authorized participants which are this necessary actor in the creation redemption process are also required to be broker dealers.

And so we had a conundrum on our hands. Now, how the SEC dealt with that was saying that we could only do this in cash. Last summer, they had a change of course, and that's when they decided, okay, we've gotten comfortable. We're going to allow inind and it really opened the doors for this type of transaction to be possible. But yes, to answer your question, creation redemption is exactly how they're able to keep ETF shares trading at NAV. And so we're very excited to be able to bring some of our previously uh private placement vehicles into the the two-way flow of creation redemption to really trade at par.

>> Yeah. And this ultimately helps capital efficiency, capital formation, and and this is a mandate of the regulatory agency. So it makes sense now we're going into this direction. You know, you you mentioned that the value proposition of a lot of these vehicles is, you know, tax planning, estate planning, secession planning. you know, we've got an audience that is moderately cryptonative and has, you know, some experience in the traditional markets. These are people that have, you know, accumulated wealth primarily in cryptonative vehicles. And so maybe they >> understand at a high level the idea of tax planning or estate planning, but can you give us a little bit of a deeper dive into the tax or or yeah, the tax benefits of these vehicles beyond what

someone can get through spot assets? I think the reason that tax comes up a lot for inind is because now we can't give tax advice, but generally speaking, people have gotten comfortable that if you're putting token into a 33act grant or trust, your basis transfers and that's not a taxable event. So, it's not like you're selling your assets in order to get it into the ETF. >> Now, once it's in the ETF, because it's in a brokerage account, perhaps you have an adviser who can help you put it to work. Even if you don't, you still have the same kind of structure around those shares. if something happens to you, you know, you can say, "Who is my account going to?" That doesn't really exist on chain as much as it does in the traditional broker world. Now, a second benefit that we're seeing is for some,

they're then able to put the assets to work. Some programs will allow for these shares to be used as margin and collateral. So, if you have Bitcoin laying around that you're not able to harness, you could potentially put it into the ETF. your adviser potentially would be able to give you a better mortgage rate, you know, better loan rates, some things like that when you bring held away assets in scope to your bigger financial picture. Uh, and then additionally potentially use it for margin and collateral to put it to work further. >> Got it. And you guys aren't advisers. You're not part of that complex, but you do create these products that advisers would then recommend and deposit into.

How do you work with the financial adviserss at large? How have you seen the evolution of that industry? I mean we're talking we hear people talking about you know agentic you know asset managers and advisers. How do you see the the evolving landscape of the financial adviser you know world and and how have you evolved your own strategy to to prepare for that? >> Yeah. So we aren't ourselves advisers but we work in lock step with them. It's a ton of education. That's really been the name of the game for the past few years, honestly. But, uh, it's been funny to watch the evolution go from us being like, "Will you please have a conversation with us?" And them not picking up the phone to now them they, you know, inundate us in our our emails to, "Please educate me. Please tell me

more. My clients want this. How can I give it to them?" So, that 180 has been very uh nice for us to see. >> It really does boil down to education. Now where it's going, I think there's overwhelming demand from their end clients, especially as clients become younger. As the younger generation becomes older and becomes their client base, they are asking for digital assets. We actually did a study with the Harris poll, which is a think tank that looked at how the younger generations interact with investments and overwhelmingly their first experiences are digitally native, whether that's a token or whether that's some sort of crypto asset. Uh but you know if you think about my investment experience it was logging into my Fidelity account and buying S&P 500. That is not the case for the younger generations and advisers are

having to pay attention to that. >> And and where are we on this financial education journey for these adviserss you know at least they have the impetence to you know reach out and and you know they hear the demand from their customers like hey I want these assets I want these products and then they have to go and educate themselves on these things. How far along are they? Like, you know, I get I gotta imagine they understand Bitcoin, maybe ETH and Salana and Hyperliquid if they can wrap their heads around it. Yeah. But like when it comes to some of the more creative vehicles that we're seeing emerge, how far along are they on that journey?

>> We're still pretty early days. A lot of our conversations center around Bitcoin and Ethereum, but they ask very good questions. They are getting into the nitty-gritty. They're asking about all the nooks and crannies of staking, if it's Ethereum, Salana. Uh I've been very impressed by the level of rigor and a lot of these conversations have persisted for over a year before they will give their clients access and that's because they really want to be comfortable and diligent. Now we've developed some educational tools that I think have been helping them a lot. We've gone around the country in the US doing something called cryptoconnect. >> Okay.

>> It's a halfday series for advisers to educate themselves. Gayscale.com has the stack which Zach who you mentioned is a frequent author of. They're really bite-sized articles to help people that are not crypto native or even if they are understand the talking points of whatever the trending topic of the day is. >> Yeah. How how much of the financial advisor landscape has been unlocked? >> And and I guess just to dig into that a little bit deeper, like have are there any kind of mandates that prevent financial adviserss from exposing their clients to some of these products before they reach, you know, some sort of critical threshold of Yeah. Yeah. So maybe you can just explain like what it takes to get a financial advisor from you know non cryptobearing in terms of the product offerings to ultimately you

know taking the leap and offering those products. >> So I think the familiarity of the ETF has been very very helpful. They are much more comfortable investing in something that feels like a stock than going straight into the token. That said they look at things like liquidity. They want to see that the the product is sizable. They want to make sure that their investor can get their money out if they need to. And so typically they're not going to engage unless the product is $100 million or so. That's kind of like the starting talking point um or the starting conversation point, but these ETFs have quicklycliped that uh so that hasn't been a problem. But they do look at things like liquidity spreads. They are very very robust in their diligence and and I've actually

found that to be quite refreshing. >> Yeah, absolutely. which is you know like uh it it is I mean refreshing to say the least because you you've got you know a new uh cohort of market participants that are very familiar with assets and markets in general now bringing their expertise into this industry um and so it is sort of like this you know uh colliding worlds melding of the minds and ultimately everyone is better off. How much of this of this financial advisor landscape do you think we've unlocked when it comes to the amount of liquidity that's out there and it's you know capital that these clients they just trust their adviserss to go ahead and allocate >> I mean you know h how much are we

talking that's still out there to be on board >> I think there's a ton left to go so some of our conversations have just started to come to fruition we're on a couple of platforms now but you know a couple of platforms how many hundreds of them are there Um, so I think that there is a lot of room to go. Like I said, a lot of our conversations are still centered around Bitcoin and Ethereum too. So once you get them comfortable with one asset, then they start thinking, okay, there is more. Let me learn about that. So I think we're very very early innings there. >> And when it comes to introducing them to a new product like a Zcash, >> you know, are they >> we just heard about Bitcoin, now we have to hear about Zcash. like what you know and and are somewhat you know taken a

back or they now like you said they're they're they've now got the the proactiveness to come to you and in search of new products. >> I think it goes both ways. If you think about it the advisor's role is to bring value to their customers. So for those who have gotten more uh educated about the asset class then they might be willing and able and ready to go beyond it. But will their platform support it? It is there is a lot of diligence that has to go into that. But like I said, clients are also part of the conversation. They drive the conversation. So if they've had success with Bitcoin, they might be hearing about Zcash thinking this privacy thing is real. I want to get involved there, especially with things like AI and quantum computing entering the conversation. So again, advisers have to

listen to their clients. >> Yeah. And that's a big part of the value proposition of Zcash. We've said that this is a very natural reaction to the AI surveillance state. This is effectively AI resistant money. Um, and people are uh very much looking for a source of ownership and sovereignty and they're looking at Zcash for exactly that. Just kind of zooming out here. Uh, I'm just, you know, curious as far as how you see the industry like what is coming up next when it comes to the product suite? Anything that you can share? Uh, and then just Yeah. broadly. Yeah.

>> So, I think that convergence is the name of the game. I also spend a lot of time at traditional finance conferences. I'm actually going to Washington DC next week to go to probably the, you know, most traditional of conferences you could go to. And I guarantee we're going to be talking about tokenization, 245 trading, 24/7 trading. Uh, so I think convergence between traditional finance and digital finance is going to be the way of the future. I think tokenization is going to be an important part in that. We actually just hired a head of onchain asset management, Seth Pledo, who's going to be leading our tokenization efforts. We filed for two tokenized products, so we're in it.

Yeah, >> like I said or like you said, um you know, the innovation exemption is a positive byproduct of clarity not getting passed, but it has created this sandbox for us to experiment in. And I think that experiment we shall and we'll see some cool things coming out of it. A >> absolutely. And you you've le led the way. Grayscale has led the way when it comes to pioneering some of these products and ultimately onboarding some of the traditional capital market allocators that have brought a ton of uh legitimacy into the space and liquidity into the space. And so as we sort of continue to embark and and and you know chug along it's I I'm curious like what is the north star? What is going to continue to drive you and ultimately continue to stay ahead? Yeah, I think

I'm excited about all of the opportunities to innovate ahead. Even just being here at Token 249, there's so much buzz around opportunities, things that we can build. We don't necessarily know which one is going to be the highest and best use case, but we're going to find it. Uh, and so I think that tinkering, finding what what do clients need and building things that help them get there. That's really the name of the game. We can build so many cool things, but ultimately it needs to fulfill some sort of client need. So, I love being at events like this, hearing what's interesting to people, and and broadly speaking, we're having a lot of conversations here about bringing assets that are not as accessible, making them more accessible, whether that's via tokenization, whether that's via an ETF.

Uh that is another theme that runs strong. >> Yeah, absolutely. Well, we've said for several months now that we are in the throws of an institutional bull market. It feels like we're on the precipice of a big broad bull market as well. um and you've certainly helped to uh steward this institutional bull market. So, thank you so much for coming on and and for all the great work at Grayscale. >> Thank you. It was great talking to you. >> Absolutely. Likewise, guys. We're going to hit a quick standby back to the main panels and we will be right back. Don't go anywhere. that kind of grew by first spending probably the first year or so of its life figuring out how to get liquidity and trading volume before then it started being put in asset management products and earn programs and things

like that which is uh black rockck bidd when it launched basically no TVL growth you know there was sort of some initial seating kind of just stood there for a while >> and then Athena came out and put uh you know as part of the basket uh bidd inside of it, right? And that was the main catalyst for the initial TVL growth. The that catalyst created a ton of liquidity for Bidd, right? Because now I have this liquid 24/7 tradable asset that I can redeem for Biddle. Uh so I have the non-atomic money market fund. I have the atomic onchain liquid thing. And so crypto people are like,

"All right, I'm fine holding this kind of risk because I can at least trade the liquid thing if I need to get liquidity immediately." Um, that created this feedback loop where even though when Athena started delevering and and kind of it had this kind of growth and then shrinking in in sort of assets, Bidd didn't really shrink. it'll actually continue to grow because there was now people started to build other liquidity sources and you started to get this network effect like once you have the ability to have easy entry and exit into an asset >> um then other people start integrating it it starts becoming a default yield source and so I think what you're seeing with a lot RWAS and what you saw with tokenized equity is you saw this >> quiescent period of no usage for many

years right where like there was ton of tokenized equities that just had no demand no onchain volume and then slowly people started finding more liquid rappers for them. In this ca in some cases it was centralized exchanges offering them directly. Um in some cases it was neo banks who you know neoank users who buy stocks are different than say a Robin Hood or a active retail brokerage user right who might be constantly trading an active trader and finding those integrations of these passive buyers mixed with these active buyers. So I guess all I'm really getting at is I think in DeFi it seems like for an RWA to be successful it has to a first find paths to liquidity so that crypton native users are willing to

buy and hold the asset and then after that it starts getting integrated in a lot of less traditional places and grows its asset base. >> Got it. Yeah it makes a lot of sense. Coming back to you cafe also curious from your perspective right I mean sitting at SBI and having this you know vast portfolio of investments like what's your overall view right now in terms of I mean you also invest between infrastructure um application layer as well like what what is your what are you seeing from the mix of your portfolio in terms of how much of um your portfolio is actually actively on chain and like the challenges or catalyst that they're looking at to bring more more and more of their products on chain. Yeah, I I want to kind of e echo to terin's point that you actually before RWA before bidd

stable coin followed a very similar path right initially you know it was a option for you to park your capital and the centralized exchanges when you're not trading right and then it then becomes liquid enough for you to on between fiat and stable coin and people start to use this a tool to to get yield so that that there was a very similar path And to your question, I think um this is a once this is a generational kind of timing that the infrastructure is being upgraded, applications are being migrated to a more efficient kind of rail. Um and SBI as a Trefi uh company, what we're doing is also step by step.

We bring our assets on chain. Um we launched the first uh bangbacked stable coin yen stable coin in Japan two months ago and then uh following that we launched the first uh Japanese equity fund that's tokenized and available on public blockchain um in July and now with those assets we're aggressively building use cases around the asset we brought on chain and of course like on the new rail things are done differently. You need a blockchain native or smart contract native risk management framework.

And that kind of led us to uh the investment into you know a a leader in the space right you know gauntlet that they they do risk management in defi before risk management defi was a business right so that's kind of how we do we >> uh on one side we continue to invest and complete our stack the other side we bring our business on chain and working with our different layers of portfolio companies. >> Got it. Yeah. And and switching topics a little bit, but you touch upon this in terms of risk management. Um, I actually caught a chance to catch your one of one of your interviews regarding uh on the AI side. Would love to get your take

right now. I mean, it's been a couple of weeks or months now, so I'm sure you know you've been um love to get your views in terms of the risk in terms of AI on the security side with the blockchains, different applications, but also the opportunity, right? What do you see right now? Um we also would love to you know get the same um answer from Cafe and I'll just preface this by you know we work a lot with different financial institutions and payment companies especially on the AI agent side a lot of is on the identity settlement um and then also different types of settlement protocols but also how do we aggregate top of funnel stuff for the different agents on the trading side we see a lot of different projects who are trying to kind of you know um make their

way in the space but you know over to you would love to get your thoughts right now. >> Yeah. So, I think obviously earlier this year was sort of a the time where crypto had the arguably was the first industry to take a lot of the brunt of AI related security hacks. >> Um because it's obviously the easiest thing to monetize, right? You have a hack, it's much easier to monetize compared to any other industry, right? It's like, >> okay, I hack a credit card company. Sure, I have people's databases. Sure, I can get the credit card numbers, but they could stop me much more easily, right? So, crypto is always the first, but I would say the positive view of this is by being the first one to be attacked, you've had to spend much more time honing your defenses. And in

general, you defend with the same tools, right? It's like you build AI defense tools that are built around monitoring, alerting. You build AI defense tools around auditing, special purpose uh kind of verification. And I think the most important thing that probably I would say has happened in the last 6 months is that the open source models and the open source um frameworks, environments, and harnesses have gotten so much better to the point that you can start using them in production. And one of I think the problems with the kind of closed source model world and crypto agents is often times you do really want to give these agents scoped access to private keys,

private information, participating in multi-party communication, tees, etc. But you want to really scope what they're allowed to do. And most of the closed source models, generally speaking, either get full permissions or none. You can't really get them to be like exactly customized to your cryptographic setup to which permissions you want for what chain to how much you want certain uh restrictions to occur. The open source models, one way that's really nice about customization in them is that you can actually build your own permissioning system. You can build your own or your own threat monitoring. And I think what you're seeing is that you know the attackers obviously had a

chance to to attack first but now you're seeing a lot of defensive tools being built. Um everything from live formal verification like every time you know for instance for us every time we deploy smart contract we now are generating formal formally verified proofs of some properties like live in CI that was like not even possible two years ago. Two years ago, you had to hire a PhD to write you the spec manually for whatever formal verification language you're using to even use it once like an audit, right? It's like the dream of having continuous audits and continuous threat monitoring. I think like we're entering the world where now people are actually doing that and the model improvements

have gotten so much better. That's possible to do that. So I think the optimism on the security side is the defenders have learned how to use the same tools to their advantage. I think on the kind of larger scale side I think agentic asset management still is a little bit like almost there but not quite and it gets down to these permissioning security types of issues. I'm sure like Cafe probably has a lot of thoughts on this. So >> yeah. Well, yeah, adding permissioning to the to to onchain finance is like kind of uh breaks the superpower of real time composibility and programmability

and that's what really makes uh DeFi, you know, special, right? Um but also we we see some of the use cases in a more controlled environment with those permissioning not breaking the composility and also with smart contract um like defined same boxes like vaults giving the agents like well you know define the gut rail to do things that cannot go too off right so I think that's uh an an area we're very interested interested in in we we will bring some use cases uh demonstrate those.

>> Fantastic. I think our time is actually up. Yeah, about 40 seconds left but really appreciate everyone. All right, guys. We're back live from Digital Asset Summit Asia here at Token 2049. We are on the home stretch and we are live with the digital assets business lead at Swift, Avalon Ingram.

Welcome to the show. >> It's an pleasure to have you. Uh Swift's blockchain based shared ledger is live. It went live in July. Um and so we'd love a catch up on how things are going, what it was like to go live, and generally how you're doing here at Token 249. Well, I mean, for Token, I wore very comfortable shoes. Normally, it would be an insensible pair of shoes, but we're in sneakers today. I think fits into uh the general flow of Token any case. But in terms of ledger, um 9 months, an absolute roller coaster. As you know, we announced that we were going to build a blockchain ledger at Cybas last year. To think that 9 months later, we actually have a live blockchain ledger. um 17 banks

transacting live transactions sort of blows blows the mind a little bit but I think it is a very strong indication of market maturity >> uh institutions are backing this I think I read a statistic that since 2020 banks have spent something like a hundred billion on tokenization right I don't think it's anymore a question of will this space be something that is institutionally adopted that that question is now definitely out the window exactly exactly Right. >> Amazing. And so this has been live since July. You made the announcement at Cyos last year. I was just at Cyos last week.

Um and it was so exciting to see a lot of these the largest financial institutions in the world all in the same room and tokenization digital assets. This was the center of the conversation. And so these banks have actually started to transact on Swift's ledger. This is a blockchainbased solution. give us a sense of what have the primary use cases been so far and maybe just compare and contrast what people are using Swift's blockchain for and what people typically use for anyone who's unfamiliar. What do people typically use for and what are they using the blockchain for?

>> The way that I would rather position this is if you think of Swift as a technical operator um for lack of a better analogy the plumbing right today we have messages that are able to be transacted. I think of that as akin to, you know, a letter being addressed to you with really important documents inside, right? That's kind of the the swift message. What that swift message doesn't have the capability of doing today is moving a digital asset. We need a blockchain for that. So for us, this is a technology upgrade, a very necessary one, because the market indicators are that digital assets are are here to stay. Uh we've in fact been exploring in the space for the last 10 years, if you can believe it. I think we're all a bit fatigued around

sandboxing. So getting something to the market that was going to actually start to see real world transactions was really important, which is your point of use cases. >> One of the more interesting dynamics within our working group of banks is talking far less about the technology and really starting to talk about business outcomes. I think for a long time it was very much stuck in like the technology conundrum like how we make blockchain work, what does this all mean? what is a smart contract that's sort of been pushed to the side and what we're really focused on now is what is the business outcome and I think what we're seeing is a lot of excitement around uh corporates so your large multinational corporates who have bank

accounts all over the world saying surely I can optimize the way that I manage my treasury >> which is a very similar problem statement to a bank right like how do I optimize my liquidity so that I can you know put capital into yield bearbe bearing instruments that give me a little bit more something for for my buck right as opposed to sort of this trap liquidity. So I would say for banks primarily it's going to be like liquidity optimization which sort of echoes for for a corporate treasurer. >> The retail space we're not really focused on right now.

were probably more in the wholesale interbang phase but arguably if you can solve something that is of like 100 billion or 10 billion you could arguably solve something for 100,000 or a thousand right >> absolutely and that is downstream of some of the solutions that you're working towards today and I think you're you're speaking to one of the greatest value propositions of the space which is to unlock so much of the idle capital that is sitting there rigid not generating not as productive as it could be and that was one of the things that I heard at Cybos last week was people are so excited to unlock this idle capital.

It's more money for the companies themselves and ultimately more money for their customers as they're able to save on some of these fee structures. Uh you're also speaking to something that I think uh just puts even more emphasis on the problem which is that very soon and this is again something I heard last week was uh the impetence for 247 markets is extremely important. Again, having something idle and locked in a world of 24/7 simply won't work. And and we're we're working towards uh an environment where these things are more rapid, they're more online, and ultimately um we unlock so much so much of that idle capital. Um and we're seeing a lot more of this globally

connected environment. And I think a lot of the companies and the institutions that are excited for 24/7 like us in the States are also here in the Asia market. We're here at token2049 in Singapore and so many I think five of the 17 banks that are live with the Swift ledger are based here in the Eastern Hemisphere. Maybe you can just give us a sense of what it's like. What is what is different about orchestrating across financial institutions in the West and orchestrating across financial institutions in Asia? >> Well, Robbie, I've been based here for seven years, so the the likelihood that my answer is going to be biased is pretty high. Um but what stands out for me is probably your regulator. Uh one who's very much forward thinking, always

about innovation, always creating an environment of collaboration, saying come to me, let's try and and think through this problem together. So a lot of the banks this side of the world have a vast experience already in the tokenization space. They've been doing it for a very long time. And that's not to discredit anything that's happening in the west, but certainly we've seen a lot of it. The second thing from a payments innovation perspective in Asia that rapid movement has been happening for years. So I think the agility of payment teams within banks in Asia has long been very uh robust because you know the way in which I could pay for a taxi if I'm leaving the conference is probably about five or six different

ways that are all really accessible to me and I don't have to think about living in Asia. In fact, now when I travel abroad and I'm like, "What do you mean you don't have a QR code?" Like, you know, "What do you mean I can't do that?" Or, "What do you mean there's a limit?" It's so far beyond my realm of reality right now. So, yeah, I think that kind of experience, the pace of movement in Asia has set them up really well for this kind of exploration. >> Okay. And so, it it sounds like Asia has been far ahead for a long time. And it actually made things quite easier over here because they've already overcame so much of that educational hurdle and they've already started to, you know, put some of those sandboxes into practice. And I take it a lot of that

was fueled by some of the regulatory environments as they exist in Asia and and as they exist in in the West. And so help us sort of understand what it was like to come here, work with some of these pilot banks. How were those conversations a little bit different than the conversations in the West? I don't know if they were that vastly different. I think you know we're as I say talking about the technology a little bit less. Maybe the starting points for some of the organizations is a little bit different right because of the amount of exploration they've already done in some of these pilot programs that have been happening for years. The starting point from an expertise perspective is maybe a little bit different. the conversations

themselves, whether you're talking about west or east, they're customer focused, right? What do we what can we solve for our customers? What is the big unlock for them? What is the big unlock for us, right? Do we need a blockchain to do this? I think is a really big question. >> What is already available to us within traditional rails that could maybe just be optimized? So I think we've been challenged and and the reason why when we run a working group we try and keep it very jurisdictionally diverse is to make sure that we're taking everything from all the different regions learnings but at the same time you start to see the commonality of of of trouble problems use cases >> it's a very thoughtful approach to to to

build a diverse group and and experiment within several of these jurisdictions. Um, and I think there's also a knowledge that spans uh the onchain digital financial world as well as the traditional financial world that you're talking about. And this is what people in this conference are calling the financial singularity where these two ultimately converge and come together. And again, this was something I heard at Cyos as well as at this conference is the difference between stable coins and tokenized deposits. Now le uh Swift's ledger um is primarily geared for tokenized deposits as I understand it.

Maybe you can give us a highle sort of educational lesson on the difference between tokenized deposits and stable coins and then also how tokenized deposits maybe interact with stable coins. >> Yeah, I mean I I would say firstly on the interaction piece right now I don't really see any sort of intersection between the two. What I would rather say is different each of them really applied to a different use case. Right? So typically where I see stable coins being activated within banks, a lot of consorcia based stable coins, right? There's a lot of conversation around those becoming a settlement asset. You wouldn't talk about a tokenized deposit necessarily in the same way, right? It's it's a a commercialized bank deposit or tokenized

commercial bank money, right? So they they have different features. Uh, of course, a tokenized deposit is a liability of a singular bank. Therefore, generally speaking, not interchangeable. So acts as a bit of a wall garden. You have portability with with a stable coin. Obviously, assuming that whoever is going to be the receiver of your stable coin is happy to happy to receive it. Um, when you look at our model, I would look at it as commercial bank money rather than a tokenized deposit in the traditional sense. We don't necessarily require that the bank actually has a commercialized solution to their own customers. They're not necessarily tokenizing their customers uh deposits, but what you are in fact

doing is tokenizing funds on a private on a private ledger. Uh, that is a starting point, right? I think the the view that we have is the world is going to remain hybrid. There is still multiple forms of value today. There's still multiple systems today. That's not new just because there is now a digital wrapper over these things. That nature, I think, is only going to grow. There's going to be more variability. There's going to be more variety. And variety being the spice of life, that's obviously very important. >> Um, so I think there's going to be a huge coexistence in the space. And for me, it's going to be use case driven. If I h if I'm a bank and I have to further fragment my liquidity to use stable coin

X versus being able to hold that money on my own balance sheet, that might be a good use case for me for that particular kind of transaction because it's 10 billion. >> Okay, >> that might be slightly different if I'm talking about some of my retail transactions where actually I'm more interested in that case around speed or or cost uh as I see it. Okay. So, you don't see stable coins and tokenized deposits or commercial bank deposits competing with one another. You see them being used for adjacent orthogonal use cases.

>> Yes, absolutely. And I think as we start to get a little bit better about articulating each of these business cases, I think there will be a natural division on where to use what. But let's also remember there's jurisdictional differences on how we look at these things, right? Generally speaking, however, a tokenized deposit being commercial bank money remains commercial bank money, right? The way in which we look at stable coins from jurisdiction to jurisdiction does actually differ where there's a general agreement around the credential treatment of of commercial bank money. So, I think there is a little bit of disparity. You know, if I think about can I send a stable coin to this jurisdiction? Is it allowed? We don't have so much of that

question when we talk about commercial bank money. >> Right. Okay, that makes sense. And and as I think about commercial bank money, whether my, you know, money is deposited into one depository institution or another, I don't think about those as disperate. But what you're saying, I think, is that these are ultimately representing liabilities on these commercial banks. And so they are somewhat uh individualized uh because they each represent the deposits at that individual bank. >> Exactly. Right. and and Swift helps to connect all of these together. >> Quite right. So, we're essentially acting as an interbank liability registry, right? So, bank A sends bank B $100, we record that. A bank B sends $80 back, we record that. And sort of we're

acting as that sort of true state of those different interbank liabilities. So the by separating the payment execution from the settlement layer, you're actually able to then devise that after a certain period of time, settlement window is then closed, bank A owes bank B or bank B owes bank A, right? So because you've been able to decouple those two things, you're actually not interchanging those particular tokens. But I must stress as well that this is an MVP, right? This is what we needed to do to really take a first step of saying let's try and do something in this space that is going to be foundational that is going to get us out of sandbox pilot etc. Start to have

real world um I guess application of these things uh real world curiosity around all of it real world learning and then we can kind of grow from there. So tokenized deposit sure today what could it be in the future I think some of that's going to depend on regulation as well how we see different jurisdictions think about things like deposit tokens e-oney tokens CBDC's even how does that then start to shape our ledger in the future >> and the CBDC point you know speaks to the jurisdictional conversation that you've been speaking about as well and helping to orchestrate and interconnect all of these is something that uh Swift is going to be thinking a lot about very I I'd love to hear a little bit more on

how you've unbundled the settlement from the execution because you know when I conceptually think about a ledger I think that you know we're going to settle these balances across these different accounts on this ledger but that's not necessarily what's happening. You're still settling the uh deposits on these individual rails on on the pre-existing swift rails. So maybe you can just describe what parts of an interbank transfer are still happening on the traditional swift rails versus what is now happening on the blockchain.

>> So some of our design principles when coming into this from the banks was let's also reuse as much of our architecture that that it's already there. So first off banks are still reusing the messaging layer. what we're recording on on the chain is really the necessary information value uh currency parties involved and so forth okay and then we're keeping that record state and we're essentially doing netting right so that we understand after that particular window has closed and what you could imagine with a smart contract is I could define that based on my counterparty right you know counterparty who I've known for a long time and I have a credit line with I might say do you know what I'm happy to do my settlement with you every 3 hours for another you may

say well actually I'd rather manage that from an exposure value perspective so at 100,000 you know we want to end that settlement and we want to force that now it doesn't necessar we orchestrate the settlement but we don't complete that settlement so what would then happen is a bank will still initiate a settlement instruction as they do today and that will either happen via their correspondent banking accounts or it will happen via RTGS right so that that is where it follows the traditional rail But a lot of that has to do with availability of unchained settlement venues, right? Um, so I think by using the existing architecture, it's already regulated, it's already accepted as a financial standard and it's already

widely adopted. >> What it gives you is the ability to really experience, you know, at least parts of this, but to also start to decide what is it that we need in the future. Okay? And what we clearly need is onchain settlement venues. Um, and that and that's also one of the inhibitors to the 24/7. >> Banks are looking to settle their interbank liabilities 24/7. They need those those venues available to them to allow that interbank settlement to happen at any point in time. >> And and what do those look like these onchain settlement venues? Because it sounds as if that is like you said the inhibitor to not only 247 but also a fullyfledged endtoend solution for these banks. What does an onchain settlement

venue look like? Do they exist right now in form or is it simply a matter of adoption? But but I I take it these are still not sufficient. Maybe you can help illustrate what one of these looks like. >> Look, I mean I think they they're called different things in different jurisdictions and you could also argue does it need to be on a blockchain or do we just need the RTGS to operate 24/7? >> And RTGS >> sorry real time gross settlement system. Okay. Right. So essentially banks holding accounts at at the central bank. So settling in central bank money. >> One could argue that if you are able to interact with that RTGS at any point in time, >> does it need to be on blockchain? I mean it would be more elegant and it would be

more beautiful but arguably not a necessity if you're at least getting realtime notification of the settlement having completed. >> That would that would give you an onchain settlement venue. >> Exactly. Exactly. um well not onchain and if if it was just 24/7 but you know we could through an API I mean really being simplistic about it through an API you could then receive a notification to say settlement has completed >> and do you anticipate that most of these banks will uh coalesce around a particular solution >> I think it will be jurisdictionally uh different um I think we have a very key well so from what I've seen anyway you know wholesale CBDC's is something that we're very comfortable with in Asia.

What we're seeing happening more within Europe is really a consorcia based stable coins but also still a keenness around um CBDC's. >> What that looks in other parts of the world I think is going to be a little bit different. UK you have an FMI token right a synthetic CBDC. >> Do we see start to see more of these like omnibus accounts at a central bank? That makes a lot more sense. I think it's going to really be jurisdictionally different. Yeah. For us, the important role that then we play is to not make a model so rigid that if you're a jurisdiction that favors a CBDC, we're like, >> "Sorry guys, like you're out." You know, for us, it's about having a flexible

model that that sort of respects what should always be the case as jurisdictional difference. >> Yeah. The flexibility and the generality. Um and and like you said, variety. I mean, that's the the spice of life as you mentioned. And and so part of that is is continuous adoption. Uh you started with 17 banks, right? There's thousands, tens of thousands of banks out there in the world. How do we increase the number? Right? You you've picked off a select few. You've you've cherrypicked a select few. Um I take it and we like to talk a lot about network effects in this industry, right? Once you start to develop a critical mass, all of a sudden there's going to be tons of inbound and you know people be banks will be knocking down the door to be part of this network as you start to

think about what this continuous adoption process looks like. How do we ultimately take 17 banks as part of this pilot program for the Swift ledger to700 and then 17,000? >> Yeah, it's I mean it's a good question. Firstly, I the banks came. So, we we had a working group of just over 40 uh banks. Uh one of our conditions was having a tokenized deposit platform or or a private ledger to begin with. So, you then start to filter around the group because not everyone has that same level of maturity to be able to participate. So, there was sort of a natural selection that took place in the first instance. some banks ready to move, other banks, you know, that then got themselves to a point of maturity

that they could join a little bit later on. I think when we started out the year, we were thinking, you know what, test with about like six banks, see how it goes. What we hadn't anticipated was the demand to sort of rise to to 17. Um, our intention right now is not to look at critical masses, the number of banks that we have on board. For us, critical mass is probably better measured by is there customer value in this? Um, is there enough for there to be recurrent transaction volume? Is there enough that there is at least a demand from an adoption perspective?

>> So, I think for now we're to be honest with you, I think both ourselves and the banks are very much in the learning phase. This is the first time that they're really using a ledger where they're now starting to interchange use tokenized deposits for cross border >> that it is a step change even though it's still commercial bank money and so what you will have is an iterative process what I anticipate is that each bank will decide where in that iteration makes the most sense for them to join because let's also be honest about the investment cost here you know for every bank yes we can talk about the large banks that are that are already participating. What happens when you're talking to a bank that maybe just has

one or two correspondent banking relationships, does it make sense for them to lay down a private ledger to to participate or do we get to a space of maturity within the ledger itself where that doesn't become a necessity anymore? So I think there is probably going to be a perfect storm coming very soon where we start to see like a nice little balance of adoption versus necessity for for for the banks themselves in terms of value proposition. >> It's a very exciting point in time as we've graduated from the theorizing to the education to the sandboxes to ultimately putting this into practice from the announcement at Cyos last year to ultimately where we are now 9 months later with this pilot program live. Very

exciting times. It feels like we are on this inflection point where a lot of those metrics that you mentioned, these north stars are starting to develop and these banks are starting to take notice and the demand is certainly there. Avalon, I really appreciate you spending the time today. It was a very insightful conversation to understand how Swift is thinking about this from the interbanking lens. Really appreciate you taking the time. >> It's my absolute pleasure and thank you for having me. >> Absolutely. Love to do this again sometime. Guys, we're going to send you back to the main panels for just a moment and then we'll be right back with our next guest.

Up next, in conversation with Justin Sun. Please welcome Justin Sun, founder of Tron, joined by moderator Michael Epalito, co-founder of Blockworks. All right, guys. Give it up for Justin. Justin's son. Oh, man. How are you, Justin? Are you enjoying uh Token 2049? >> Yes, definitely. >> Yeah. >> Yeah.

>> Well, thank you for joining us at uh our very first inaugural D Asia. Um, I thought I mean I want to ask you a lot about the growth of Tron, uh, stable coins, the phenomenal success that you've had with Tether, but actually I was thinking it would be fun to start maybe going back to Tron is one of the very few, I would say, a handful of maybe around 10 successful ICOs of 2017 era. >> Um, you were one of the very few founders that has kind of rode the different waves of crypto. So >> tell us what was it? What was it? Was it treasury management? Was it growth on the tether side? What's responsible for the success of Tron?

>> Yes, I think so when crypto is very small, right? Just like um so most of the industry um actually um if you are doing the things at the right direction, it's very easy to get success. So uh especially when uh a technology is at early stage, right? Crypto I think is a big uh one of the biggest example. So you can see right um uh as a hay invented um per right and it's got very successful you know binance doing the same thing you know is become very

successful and even now right today we see hyper liquid you know very successful um it's all depend on the um um purps right so the the be Um, basically the idea comes from like uh uh when crypto first invented basically um and stable coin I think is the same thing right. So we we know Tedar is the first one in the industry doing uh stable coin and USDC uh is doing another one and right and then later we have D you know USDS

and then everyone started doing a stable coin right so even Tyler is still the most biggest stable coin but USDC still get some shares um I think The reason is because at that time crypto is so small and is uh increase like dramatically right after that. So that's why um if you uh keep doing the right things with right decision at right moment uh you uh uh will scale um by yourself you know uh that's what we have seen on TR you know at that time there is a a very important

um thing in the industry is you just can't move your stable coin even Though you know you have the concept of your stable coin but how can you move your stable coin at that time there's only bitcoin ethereum you know tether is based on bitcoin ethereum bitcoin is super slow and ethereum there's uh there's always traffic jam right so uh very hard for you to move stable coin so uh tru actually is the first blockchain uh in the crypto industry we basically says there, you know, we have we have a network, you know, instant uh offer instant cheaper transaction and and you

can just get your stable coin in one seconds, right? So, uh today it's not a secret anymore, but at that time, you know, we are the first one in the industry have this kind of the uh uh features, right? and of course and is scale you know today. Um so I think the next uh um very important uh direction we're going to go is uh uh RWA. I think it's very important. I think uh stock uh tokenized stock is the future.

>> Uh because like one of the reason people are trying using stable coin is because they are uh uh um based in Asia and they want to get US dollar exposure. Um and of course I think getting exposure to more and more um uh US-based asset is is the way. So um so I think next half next year u for the whole year we will focus on tokenized stocks and see how it can be done on TR network and and um let's see how it plays.

>> Okay. I want to maybe focus on two things here which is the growth of tokenized equities and how that might drive the adoption of stable coins and then also just talk about the increasingly important geopolitical role that stable coins play. >> Yes. >> To start with tokenized equities you know your observation of BitMEX using you know needing a dollar settled asset was that was a huge part of what drove the growth of Tether and ultimately Tron in the early days. So now this probably feels like deja vu all over for you again where we're starting to see equities come on chain and the United States adopt this and other governments potentially. So walk us through how do you think this plays out over the course of the next several years? How big of a catalyst is equities for uh stable

coins? >> Yes. Uh I think is especially a big opportunity today. uh if you are a issuer of course I think you can issue on on Tron that's will be a a great idea and I think it will uh scale right and uh and for us you know uh we also you know happy to collaborate with all the issuers around the globe um and the regulators you know uh uh financial institution uh to issue stable coin on top of Tron and issue tokenized stock on top of Tron because I think this is a

perfect way uh we can get um um people outside of United States uh get uh US dollar and US assets exposure. Um I think of course AI era like everybody seems to be totally convinced by by by this uh narrative right before that like lots of people is doubted about that like why I need uh US stock accounts right something like that but after you know AI um narrative I think everyone knows right that's AI is the way to go and you know if you want to get age probably you need to have some AI

assets. So so so that's you know uh I think uh why tokenized stocks has be become like I think one of the uh most important direction the whole market is going to go. So, so that's why uh I think as uh um as a protocol has been successfully introduced uh stable coin into uh the blockchain ecosystem. I think that's our opportunity and also our mission to further uh introduce tokenized stocks into the system.

>> Do you have a sense of the magnitude? So I think stable coins really became a thing around 2019 and they grew from a couple hundred million to 100 billion within a couple of years. Do you expect a similar sort of quantum or are we going from I think it's around 300 today to 600 or is it going to be 3 trillion? What is the what would you if you had to guess here? >> Yes. So I think today um so basically yes um crypto stable coin uh grow from at that time when I first introduced the uh stable coin on TR you know uh we grow from you know I I remember the first like one 100 million

you know we we we take some celebration you know um But after that right uh today is close to almost hundred billion dollars. >> Yeah. >> Um in around I think 2018 uh something we we uh we introduced that um so eight years right so we grow from almost zero to like 100 billion dollars. Um but for the stocks today I think most to today RWA um the total assets I think probably around 5 billion five six billion >> for for the whole whole industry for the

tokenized stocks. Um um I think uh it's definitely has the potential uh to uh grow to over like uh I I think at least uh 100 billion I think in the next five years probably >> um because you know just think of all the uh stocks you know will get tokenized you know is SpaceX right like um uh Tesla, Nvidia, you know, all the major stocks is uh it's all trillion dollar companies, right? So, so uh it's actually like I think open the uh the

window for uh for the Asia investors to get exposure to all different uh US dollar uh based assets is uh fantastic opportunity. M >> so I definitely believe you know uh uh 100 billion dollars is not that far. >> Yeah. >> All right let's talk about the other aspect of stable coins which is kind of the role it plays in exporting like certainly the dollar when it comes to tether and you know one you know you kind of remarked at the beginning that crypto was so small in the beginning right it's this tiny little kind of backwater industry. Yes. But now, you know, I think the the statistic is that

if Tether were a sovereign nation, they would be the eighth or ninth largest holder of US treasuries. So, that obviously puts them as a very significant player within the kind of grand scheme of geopolitics as are I'm sure you it's been an adjustment um from the Tron perspective having so much tether issued on Tron. So, how has it been evolving as a leader of a protocol that is simultaneously becoming very important to a government like the United States to China? How do you thread that needle and how have you had to grow into that situation?

>> Yes, I think eventually uh what we do is just offering the uh customer or the community uh the product they want, right? So, uh, Tron, uh, is a decentralized blockchain. >> We are back. Digital Asset Summit Asia. We're keeping the vibes and the energy high. Although, we are in the home stretch and this is probably my 12th interview of the day. We've got Terrun, >> absolute OG, in the house. Looking as >> how you guys doing?

>> As good as always. Um, >> wait. So, I have a question for you. >> That would actually that would that this is phenomenal. Yeah. So you guys were started with the name the rollup under the idea there's going to be L2s, lots of rollups. As we've seen recently, there have been some bunch of L2s that shut down. There've been some cringe marketing around it. >> Yeah. >> Uh what do you what are you guys doing? Are you guys now a P podcast cuz you're about rollups like the finance rollups or like what's the what's the what's the >> Yeah. you know, the rollup is sort of like this intellectual shelling point where everything sort of, you know, this it's a knowledge roll up. you know, we're a fintech live show and we have a a specialty and a focus on digital

assets and tokenization and uh the rollup I think is uh it it's still indicative of you know like where you know kind of ideas are shared people are are trading different you know opinions and I think in that sense is very much still applicable but um that was born out of uh road map and that has sort of >> I mean has it totally been dismantled? >> No, it's just more like there's just going to be like five rollups, right?

There's not going to be 500, >> right? And so you've got abstract and like blast that have rolled down, but then you've got >> but then you've got uh you've got lighter, you've got Robin Hood like these are I mean you know we're probably months away from Robin Hood L1 but >> base lighter Robin Hood >> any other L2 map arbitum obviously >> but >> after that it's like real dead zone >> maybe this is I and I hope you've read it maybe you haven't but the new Vitalic paper like >> have you taken a look just what are what are your thoughts?

>> So I think the idea of being like the world's record of cryptography makes a lot of sense because like that's kind of like in an AI world like the registry of like identity or things that are very hard to forge that is publicly available hard to get over is much more important than like the compute you can do with it. It's like I have people's identities. I have their assets, but I'm not like I don't care how it gets used because in some sense compute has become just such a commodity that is just like, you know, I think like the smart contract compute thing I think at some level is like no one really cares that much about the compute itself. Like there was obviously this huge rush to

get to higher throughput, higher transaction rates, better bandwidth usage, dot dot dot, right? But I think now we kind of know what the limits are of that for blockchains and we also know that like AI stuff can do a lot more. >> Okay. >> And so instead it needs to be kind of like the idea of like this like cryptographic safety net. >> Um and I think that's that's kind of what he was getting at. Now there are a bunch of technologies that still haven't been made as efficient that he highlights in that article that I think are you know that's like what the next thing will be. But I'm um I I sort of think it's like better than trying to be the world computer cuz like the world computer means like everyone

is sharing the same agent. Everyone's sharing the same AI. Like the the kind of dumb but simple way of viewing it is like imagine if you had to share a single chat GPT window with everyone you know and you always were fighting to like write a prompt, right? Like >> that's kind of what the world computer is. That's where the contention is. And in some sense it's like actually it should be reserved for these things that are actually like extremely important like identity asset transfer things that are like not super computationally heavy but you care about the security of them more than >> Okay. So, we're moving away from the world's computer vibe and more towards this like decentralized cryptographic record of account for identity and some

of these other things >> and also like for agents to like prove they did something correct for you. Right. >> Okay. >> Like I think that's the idea is like the compute doesn't need to be on the chain. It can be done offchain as long as you can verify it. Right. >> Okay. I see. And I think the idea then is that it's less about like how do you maximize compute throughput and stuff and more about how do you maximally be the safe hardest thing to break, right? Like in a world of agents that are constantly trying to hack you. >> If it can be the thing that is the most safe, then it that is its value. >> Yeah, it I mean that is absolutely valuable. I I I saw Vitalic at uh this OKX event a couple of days ago and he was describing the evolution. There's

another roll up. >> OKX. >> Yeah, Xlayer. >> Xlayer. They had a partnership with New York Stock Exchange. >> Yeah. No, no, that that's what I mean there. But I, you know, there's like a handful of rollups that matter, right? Like the ex like the exchange rollups like >> Yeah. And and it sort of feels like every, you know, successful like financial application these days is uh is potentially a rollup. And the thing that um the thing that Vital was getting at when you know he was on stage at this OKX event was effectively like hey um we've gotten you know bots are you know on average bots are potentially like one of the counterparties that we've been interacting with in the next couple of years it might be

the case that okay you know for right now humans are primarily writing code where these bot where us and bots are transacting eventually Maybe bots are the ones that are writing the code for the venues. And then he says in another two years, maybe it's going to be the fact that we don't have applications at all. Like there will be no applications. It's just going to be bots streaming quotes. Maybe humans are, you know, kind of one market participant in that which feels like it completely dismantles roll-ups in general because you if there are no, you know, if we go from there's roll-ups and those are kind of ecosystems of applications and then it's like well the best ecosystem is just one killer app and then it's just like there's no apps, it's all just bots streaming quotes. It feels like that is

totally away from like any sort of roll up. It's everything's just on the L1. Maybe there's some arbitrary complex thing that's offchain and settled. >> I I mean, think about it this way. In a world of very good agentic coding where you trust its security, you can literally oneshot a rollup on demand and then destroy it. Like I make a roll up >> like ephemeral roll >> ephemeral rollup that is made just like out of two prompts. And so in that world, you don't need this like persistent state you're paying a lot for, right? Like if you look at the rollups that shut down, it was purely economic. They were just paying a huge cost and they had no demand.

>> Whereas if you're made on demand, you don't have to like pay this cost to just stay alive, >> maintain and persist. Yeah. >> And so I think that aspect is extremely important. I think I'm going to go off the bully pull pit instead of like, you know, we could have talked about all this institutional whatever. But my my dream a little bit beyond the Vitalik post >> is there's a very famous uh set of old papers from initially the 1970s but then sort of like the 2010s >> on a thing that is the only thing I've ever seen that's sort of like one step beyond what blockchains are which is this thing called very simply quantum money. sounds sort of

>> quantum money >> which you know given given all the the overhype and quantum stuff it sounds fake but it's not >> okay >> it's it's basically a way of doing something like a blockchain uh except instead of you having a a private key you have a one-time private key you can generate a one single use private key for yourself and maintain a lot more privacy inherently >> but also you so it's like you own some private information that's like analog state about yourself almost like your biometrics that that can generate on demand a private key that you can use as as an identity in a smart contract type of thing.

>> Yeah. Yeah. >> You need a quantum computer to do it. So like >> why why do you need a quantum computer? >> So you need this thing to not be able to be uh manipulated. So think about when you make a private key normally on your computer, you take >> some input which might be like the time of day and you put that in a random number generator. The random number generator generates a random number which goes into private key secret key generation. Now if I could reverse engineer that I could figure out what the seed you used was. If I could then I can reverse engineer how to generate your private key. So like for instance there was this very famous Ethereum attack where there was um this vanity address maker you

know it would like make the first few and basically it turned out the vanity address thing used much less entropy. So like you could just sweep through all the possible things and figure out someone's private key by just like learning what the secret key is >> by basically saying like normally maybe there's 128 bits of entropy. The vanity address thing was only searching like 20 bits, >> okay, >> and looking for any any key it got with the prefix. But I could just sweep through all of those to the 20th combinations, like a million combinations, >> figure out the secret key, and then >> you're >> Mhm. Mhm. Mhm.

>> Quantum money inherently is built around the idea that the secret key >> is a quantum state in the input to a secret key that is you can't fake. >> It's unknowable. >> Unknowable, but it's unique to your >> Yeah. So that and also the notion one of the things a blockchain is built to do is to not allow you to double spend >> right. >> Um quantum states have a natural property which is called the no cloning theorem >> which basically says I have a quantum state like this can if I try to clone it exactly >> it'll violate some fundamental physics.

>> There's something little that has to be different when I try to copy it. By copying it I'm changing it in some way. >> Okay. So this is a usual quantum type of thing of like I interact with the system, I I change it, right? Like I I measure it, I change it. This means that someone can't clone my my my personal state that generates money at all. >> And there's much stronger guarantees in a block. A blockchain really relies on hash functions not colliding, not getting the same thing. >> This is actually a sort of stronger property. Now >> to use these things, you need a quantum computer. There's you need to have that quantum state be measurable and accessible. But if you have that, I think you have the strongest form of cryptographic guarantees.

>> Okay. >> And I think that's the ultimate version of this. And there's a lot of designs for how to do it, but until you have, you know, quantum computers still don't, you know, everyone in crypto is always thinking quantum computer breaks >> breaks stuff >> Bitcoin, right? But there's actually a thing that's beyond blockchains that you could basically rebuild a new form of money. Um, and it's it's been known for a while. It's just that we don't have quantum computers, >> right? The the prerequisites for it. >> That's fascinating. And so are you saying that I I I understand how it's maybe one it goes beyond Vitalik's paper because that is still based on, you know, some very deeprooted, you know, fundamental properties of cryptography.

Are you saying that it invalidates fatalics paper or are these compatible? >> So I will say the following two things. One thing about classical cryptography, not quantum cryptography, is it fundamentally relies on certain computational problems being very hard to solve, >> but then it's very easy to verify that you have the right solution. >> Okay. >> What we're learning in the current AI world is that sometimes some problems we thought were very hard >> to solve are actually very easy to solve. And uh so then that's bad because that breaks the computational assumptions. Now so far for instance openi released all these math problems I solved today. They didn't solve any big cryptography ones. There's like one tiny

one that might have affected security of an old crypto system. >> Okay. But in the last few weeks, people have broken a bunch of crypto systems that people have been trying to build for the postquantum world that quantum computers can't break. Like mle, which is a a kind of classical crypto system that people thought would be postquantum and and people found a AI found a way to break it, >> right? >> So everyone's thinking about this postquantum thing. How do I bolt on this thing that can't be broken? But if you actually went directly to quantum money, it is inherently resistant to >> Yeah. by the properties of >> the properties. Yes. And that to me is the the next level. Like if you want something you have this like real guarantee that AI can't break in some sense is like you have to go to that.

And so I think that to me is where the puck moves once we have a quantum computer. Fine. Break Bitcoin whatever. >> What do you do next? >> Yeah. >> This is actually where I I see the world going. >> Very cool. Again, not institutional, not like No, that's >> but like it's like to me I'm just thinking like 50 years in the future, what is the thing that exists and if we have quantum computers and AI figures how to break all the assumptions we know for existing cryptography, this thing will still work. >> Yeah, >> which is awesome, >> right? I I love it.

>> Tun boys, we show >> you can make a cameo. >> Come step in. >> You can make a cameo. It's your show. >> Wow. Look at those glasses. >> Let's Let's get in there. >> I'll uh I'll switch out for you. >> All righty. >> That was uh That was fantastic. >> Yeah. Yeah. Yeah. I mean, uh I I I I'm I'm sure it was didn't meet the uh you know, the institutional uh theme of today. >> Questions that are not institutional. >> I I really did. I really did enjoy it. >> All right. So, good to see you, buddy. >> How are you? You've had a rough few days. Maybe maybe you should tell the audience about >> Yeah, guys. Um, so I don't know if you guys have ever seen me wearing glasses, but I have glasses because all my contacts are in San Francisco. Um, they

that's where all my suits are. I spent a good bit of cash on some nice suits. Some kind of like your style suits. Kind of a light baby blue. A bit much. >> I was I was telling him earlier, peep people, you're not a suit if your suit has color. >> That's what I'm saying. This is the only suit. >> Different kind of. >> Exactly. It can't be a black suit. This is the only suit that I left in my apartment in New York. You see, I was at Newark and I had to go to JFK and I had no bags. Spent 72 hours in airports. Anyways, >> so I asked an important question. >> Yeah. >> Before we started, which is >> you guys are the rollup. You started around the rollup centric and like we've obviously had this kind of like L2's dying stuff.

>> Yeah. Abstract, >> but your name is flexible. You could be a financial rollup like a PE rollup. So like what type of rollup are you now? I that is a fantastic question because people are asking me that now and some folks have been like you guys need to change the brand name and I'm like well maybe but I kind of see it as rolling up information like you can be like it's like it could be journalistic it could be like an informational >> you too coordinated on your answer >> roll up which also that alpaca pin is fire um so yeah I don't know >> he said you're a knowledge roll up >> yeah that's kind of gross I'll be more like I don't know I'm just trying to make some money here you know do well by the world uh help people change their

lives You know, >> I mean, all these tokenization people are kind of building these SPVS that look like rollups, so you might as well you could lean into some. You could lean into some. >> We're a tokenization roll up, if you will. Uh, I got to ask, man. Um, you know, you've you've been in the game for such a long time. Um, obviously have positioned Gauntlet as a company uh in the upper echelon as well as just like have been a part of so many successful deals and uh, you know, you've had a lot of early investments into crypto. How do you maintain a level head uh post e economic? What does that even mean? Um how do you maintain a level mind? How do you how do you build a company and build a portfolio and think about things after you've kind of like, you know, grown

through the the years of crypto and all that comes of it? >> I think that's kind of a weird question. I think the main thing is like I got into this because like interested on the research side and technology side and like you know wrote a lot of academic papers like you know >> obviously >> obviously I think now that's kind of like changed I think obviously the AI world has changed that value of that >> but on the other hand you know the thing we were just talking about um which is what happens if all cryptography breaks like suppose AI breaks like the assumptions of everything we know, breaks Bitcoin, breaks Ethereum, breaks ZK, like everything's gone.

>> What do we have left? And so the thing I was kind of pitching at Robbie because Robbie was asking about my thoughts on the Vitalic blog post about Sure. Sure. >> like where Ethereum goes, >> cryptographic world computer. >> Exactly. >> Sure. >> There's one step beyond that because like everything in Vitalik's post is sort of assuming all of classical cryptography is safe. >> AI doesn't break it. Quantum doesn't break it. So you might say, let's just like take the kind of very scary part of the world that doesn't happen. There's no cryptography left on Earth. >> There's still one thing left that we have known about as a society for a while, but we can't do until we have a quantum computer. Exactly the thing that will break all of cryptography. There's a thing called quantum money, which I it

sounds like a scam, which is like the worst part about it, but you know, it's 1974 Weezner. Uh, and there's basically a way to make a blockchain like system that is inherently resistant to quantum computers. It's it's it's it's you actually use nature and quantum states to guarantee you some sort of like cryptographic like properties. >> Okay. And so in that lens, right, you know, you off the top there, right, kind of grounding on the academic, you know, roots that you have, you know, Robin and >> I didn't even answer your question.

>> No, but this type of thing is that was the answer. That was what I was looking for because you know Robbie and I spent I mean you you know we would call you up to get on the podcast like two two years ago and we would freaking pick your brain about the ins and outs of like some intricate esoteric blockchain thing and it would be like an hour long and I I'd come out and be like wow just blew my mind and like I just learned like that now I know about that little part of the blockchain stack you know we were obviously like modular guys modular bowls that was a fun era that was a fun time but like that era kind of like molded us based on also being a part 2017 era which was like the core like libertarian side. So yeah, I just

feel like I don't know if that even matters anymore like like um maybe we're in a point where the tech starts to matter quoteunquote but like it seems like across the board we have really good technology and it's now just like such a financial industry, right? It's >> but I I imagine that swings back at some point as as these things become more relevant or no? Look, as someone who runs a company and an investment fund, for my company, I focus on the end users, you know, like getting people's assets on chain, getting them yield, right? Like very basic stuff. >> On the other hand, though, on the optimism side, I think like, you know, generally speaking, everything about AI and crypto has been everyone being kind of like it's going to ruin everything, whatever, right? Sure. Going to hack

everything. my AA agent lost all my money because it like read a tweet and then fullported my portfolio into some dog that went to zero like whatever you know those are all the like doomsday scenarios. >> Yeah. On the other hand, the question is what happens if it does break everything and the the fact everyone you know I think we have a little bit of our head in the sand of like okay well I guess we just sitting ducks and I think the answer that is not true that there is actually there are things that we can be optimistic about even if all cryptography breaks.

>> Good. So you think that that the root of that just to kind of close here because I know we're coming up here. You think the root of that kind of sentiment or dynamic is more so on the quantum threat or on the risk of kind of we built all this for it to not be good enough in the future versus just the >> kind of financialization and the institutionalization which is not the right word of >> I think that financial institutionalization is proof of success right it's like product market fit like people actually want to use it because it's better than the existing thing they have >> yeah yeah >> but I think the thing that motivate a lot of people who have been in crypto for a while is like this kind of futuristic notions of money.

>> Sure. >> Like what happens when money is programmable? >> In 2011, that was like not possible to think about. What the do you do with programmable money? I I like I don't know what I do with it. >> Yeah. >> Right. Like the idea you needed all the people who like wrote all these concepts 10 years before people ever built any smart contract code of like what a smart contract was, how to think about >> reasoning about it and like That futurism was what drove people even though they didn't know why or what it could be used for. And in some sense in institutionalization means there's no there's not much futurism. We kind of know what that looks like, >> right? It's Yeah.

>> But on the other hand, there's like all this other stuff that I think is like the next stage and that's I I think that's kind of what that Vitalic post was getting at. Although like he got into the weeds on like where whereas I feel like the the more better TLDDR is like no one really wants a world computer that much, right? Because like a world computer is like imagine you take all your friends and you shared one chat GP GPT window and you're all prompting at the same time and oh you might get queued behind them. >> Yeah.

>> You pollute each other's context. You can't >> that's a world computer. >> Yeah. At some level, the cryptographic world computer needs to separate things. It needs to permission things and it needs to like not the compute isn't the most important thing, >> right? If you think about the smart contract 2017 era, the compute was the product, right? Like the fact I could do all this computation on my assets. >> Y >> was what made it better than Bitcoin right at that time. Why stable coins worked. >> Yeah. >> But I think we're now at the like, okay, compute's not the product anymore. AI has kind of like replaced that. I can have my AI make me a rollup on demand just for one application then destroy it.

>> Yeah. >> Why the do I need to keep paying for keeping the roll up alive? >> Yeah. >> As you're seeing all these rollups shut down, that that's kind of a >> the rollup is not shutting down, ladies and gentlemen. >> Not this roll up. >> Thanks for your time, man. I'm glad that I got to get here on time. Guys, we're going to take a quick break. We've got Sam Kasmine. I believe he's the last guest of the show. Take a quick standby. Be right back. >> Nice. >> Same for same for stocks, right? So if you think about most of the traditional stock exchange they trade Monday to Fridays they don't trade during holidays weekends they don't trade 8 hours a day but for a long period of time during the day there's no trading there's no excess there's no hedging there's no risk

management right uh so liquidity risk actually is actually very high the inability to access the market as and when you need it as and when there's world events happening interest rate movement corporate news coming uh industry news that may impact a particular industry, stock prices will move, right? But now if you look at traditional exchanges, they don't have the ability to allow for that. We do we provide for firstly global access, right? So a lot around the world, I mean you don't experience this in Singapore because you can get access to many different platforms. But for many people around the world, they have no access to things like US stocks, Hong Kong stocks, Korea stocks, etc. you want to buy the top 10 companies in let's say Taiwan you

can you can access that uh and by coming to our platform you know we give you access to all those things and then second thing that we provide is 247 liquidity right so again that's something that traditional exchanges cannot provide uh and that's something that's critical for any institutions or any retail trying to do a proper job in terms of taking positions as well as hedging their risk position Okay. So that brings us to what institutions need and we actually found out what is actually behind your product. So for example, taking equities FX or money market funds as an example, where can bring assets on chain create

the most value for institutions and what is still needed for adoption at scale? Well, so if you look at the products that are very popular, I mean if you look at tokenized assets, they have grown close to three times year on year from last year to this year. So you reach about 30 billion in terms of total market capitalization and it's growing very rapidly. Right? So tokenized stocks is the fastest growing asset class within that area. Um the products that are most popular, I mean in the initial instance are always the liquid products, right? So your treasuries, your money market funds because they can be used for collateral purposes.

Um and you know you can once the asset is put on chain then you can use it uh in the D5 space to generate different yields. You can engage in different structure and different strategies. That's much more flexible. You can do transfer on a 247 basis. Um that happens instantaneously. So all those things can happen once the asset is put on chain. Right? Which is why if you look at many of the traditional financial institutions they are trying to do a lot more bring a lot more of the XX onchain. Uh if you look at the entire back office of financial institution today actually the middle and back office function right where you do things like reconciliation settlement custody a lot of things can be

redesigned and reimagined with a combination of blockchain and AI right so because AI you know you can do analytics very quickly blockchain is immutable so you can actually replace a lot of mid and back office function including settlement clearing custody etc etc with those function which I think financial institutions other than giving their clients the ability to trade 24/7 by moving assets onchain are also looking at cost efficiency >> utilizing AI and blockchain on that front >> okay so Richard where do you think the bigger opportunity lies making existing markets more efficient or creating

market structures and products that aren't really possible today. >> Well, I think there are several key opportunities, right? So, if you look at global assets distribution, the the largest market cap market is in the US now, right? So, but even with the largest market cap, many people around the world don't have access to that and it's in a different time zone. Uh for many people, especially in Asia, you want to trade US assets, you have to stay up really late throughout the night to trade it throughout the night. Um so I think that's one uh global access is a problem in many parts of the world especially in places like I mean I visit many parts of the world where financial

inclusion is extremely low uh less than 20%. Meaning people have no access to even basic banking system right payment system domestically crossber basis is very very uh arcade in most instance and added to that they have no access to all this international exposure. So I think that's one thing. Uh by putting assets on chain, you allow a lot of people around the world to have the ability to access those assets on a 24/7 basis anywhere else in the world. The second thing is liquidity, right? So I mentioned 24/7 trading which is important for traders and investors, but the global liquidity is something else,

right? So by allowing that global access a lot of your domestic products especially the very attractive products right your good companies that previously does not have the same type of audience globally now have a better chance of gaining greater global attention and getting access to that global liquidity right so those are both important elements uh but I mean there are certain prerequisites right so if a asset itself is a very illquid asset, right? By introducing putting it on chain, not doesn't necessarily bring in much more >> liquidity in the asset, right? It really depends on the riskreward profile of a particular asset. Certain assets are

meant for more yield play, more dividend play, etc. You can't say that, you know, by putting those ass. >> All righty guys, we are back here for the final guest at Tokyo 249, D Asia, Sam. Sam, good to have you, buddy. >> Always great to be here. I'm a little bit jet-lagged, but I'm still energized. Um, how's how's the event been so far? How's the week been? >> Uh, it's it's been great. I I also had a what, 22 hour total total trip. So, it's it's it's far getting out here. Uh, always worth it. Token 2049, the organizers, Alex Fisk, all of them.

They're >> honestly some of the best to ever do it. Um, we've been coming for a few years and I just saw an hour ago they announced on on Twitter they're coming to New York in June 2027. So, it's going to be a huge one. >> It is. It is, man. So, I mean, Sam, we we're obviously running our weekly show called Stabled Up and talking about stable coins in institutional assets on chain tokenization. I was just there at the Hood Summit last week in in Houston with the Robin Hood guys. they were, you know, it seemed like the crowd was a little bit upset at the lack of kind of uh crypto news, but very clearly there's just this kind of massive sum of capital and allocators coming on chain, you know, specifically bringing stable coins

on chain. Um that open US dollar network launched uh I think you you all saw that that was a couple days ago. Um I believe they launched across a couple chains. Um, and you know, they're starting to see a bit a little bit of traction. You know, I wanted to kind of uh talk about where you think that these stable coins are actually going to end up living. So, if you think about like the this kind of breadth of assets coming on chain, seems like stable coins have kind of been like the opening of the floodgates for the broader set of assets. Um, when you think about like like the actual life cycle or the existence of stable coins and tokenized assets on chain, I know this kind of like a very like open-ended question, but how do you see those things actually existing on chain? Is it

similar to crypto assets? Is it similar to the way that they exist in traditional financial system? How do tokenized assets actually end up having a life cycle of their own onchain? >> Yeah, it's a I mean, it's a good question cuz it's so wide like green field. No one's really been able to figure it out because it's so early. Uh I saw the open USD stuff. FRA is actually one of the uh consortium members. We have the ability to mint and redeem at zero bips. Um the interesting thing about it is that it's it's a payment type of stable coin, right? So they they intend to take fees from how I understand it based on uh payment volume, right? Cuz a lot of the payment uh companies uh that Stripe and then the others Mastercard Visa they're

they're all payments. So that the flows rather than the stock of of the of the currency is is what gets them their their main cash flow. I think the most valuable important thing for us at Frack is we're actually turning our uh FRANET NeoAN platform into an app store. So it's actually going to be the first NeoANK with an app store. The reason for that is there's so many things going on like you said everyone depending on what kind of uh user you are whether you're if you're retail or you do stable coin heavy uh transactions uh or you just want to hold equities RWAS these kind of things they all need slightly different flows right you you need to be able to either mint or redeem like equities right and hold them uh you or if you're

a business that is using a NEO bank or a platform to accept payins and payouts of like stable coins and crypto you need it to look slightly different. You need compliance. You need invoicing. You need accounting. You need balances. Uh and so we haven't been able to build a one-sizefits-all solution. No one has. Right? If you look at like Ether's cards, right? Uh Athenas, Plasmas, right? All of these really popular cards, they're retail consumer oriented uh products, right? They are optimized for the consumer payment uh gateway, right? Like you, me, right? we want to buy stuff, we want to sell stuff.

They're not optimized for a uh business accepting or doing anything with. In fact, the the the selling point is business doesn't even know they take stable coins. That's great, right? But at the end of the day, eventually, one thing that we're actually really interested about is >> eventually businesses will want to do something with with like digital assets rather than only go through Visa or or uh Mastercards, Rails, like only do that, right? Um and we've been like we've said before and getting close to announcing um we've been working with a few large ones.

>> Um they the extent of their involvement isn't just we'll just take it through Visa. They actually want to do direct custody of stable coins, regulated stable coins. >> Interesting. >> Um actually accept them and even in some cases be able to uh extend credit or do receivables with them. M >> so like the the very first instances of lowrisk regulated digital assets not like give me your bitcoin or your meme >> and these types of things. >> Exactly.

>> And there's no real neo or like integrated like platform that makes it easy to do those things. So Fraxet has been expanding a little bit in that area where you can essentially soon be able to download different kinds of FraNet apps like an invoicing app like a there will be a card app obviously but then other things as well like uh a receivables app so you can actually upload receivables and then if you have a entity that wants to extend credit right you can actually receive credit and then the payment of the receivable goes directly to that KYC entity these kind of things that no one else is doing right that that businesses actually want to be able to do with stable coins with lowrisk digital assets and then maybe eventually they'll want to do them with

uh tokenized securities, right? As like a step two or thing down the line. Uh these things we're seeing a lot. >> I like it. I like it. And I like this app store perspective and I also like this whole idea of the perception shift being like nah, we're going to hide it to no, we're going to embrace it. Maybe not publicly through our marketing but through our comms and through our our decision-m. So, Etherfy also you mentioned on the NeoBank side, they just launched their or they announced their first stable coin uh powered by the Athena guys with their white label product. Curious a your take on that, but b specifically because we had that we had the cast CEO Rags on. Guy's a bit of a character for sure. Uh high on his own supply a little bit and I'd tell him that to him. So,

you know, but but I think he's smart and I think he knows what he's doing. He's built a successful company. The one thing that we agreed on was this kind of verticalization and this owning of of the stack. And I think it was actually you maybe who said this was like why are you going to build an entire neo bankank around circles stablecoin? Why not build or you know an an entire neoank around your own right? And I think um Athena and we spoke to guy about this as well. And so you know as much as I'd like to be all like everyone's going to win. It's all you know sunshine and roses when when all the NEO banks start competing for similar customers and launching stable coins and having similar offerings you do start to see a commoditization and obviously competitive forces at play. So just give

us your take on uh etherf stablecoin launch and this kind of verticalization of the neo bankank stack and like how that kind of leads into this newer world that we're seeing of owning the whole thing because in traditional financial services there's been no such thing as stable coins such that you're building your neo bank on the US dollar rails. You don't get yield from holding the I mean well you do right if you hold the tea bills but you there's a lot of other things that you can do wi with a >> fintex had to partner with banks essentially right they weren't all the bank then you're just a bank right so exactly and and whenever your typical bank usually it came with you used boomer tech and it wasn't very >> exactly yeah I actually was just at the announcement with u Mike and guy I saw

it downstairs before coming up here >> look I I think it I think it's great I like the positive some mentality I I actually like to think frack kind invented the positive sum mentality last uh cycle when we were like we'll create curve pools with everyone let's do like joint yields you know like everyone wins right and and we kind of you know invented that uh whereas you know the the the terra model you know I'm with die will die my hands were yeah the opposite there didn't really work out um I think it's interesting I actually don't know how it will work because Athena has their own card as well right >> um But again, it's I do agree that people are finally seeing like, oh, FRA

issues a stable coin. FRA also is building a NEO bank. They are >> capturing a good amount of the the the actual platform. >> Uh I think I think we're right on that and I think that that's what we're seeing. Um I don't exactly know what the what EUSD will do in terms of synergy. I I think the current announcements early, but I'm pretty curious to to see because it's pretty interesting. I'm not sure. Uh I'm not sure how the economics of it will work. Um but hey, as long as it's two friends and they both are growing together we >> just because Athena's got a a card and a stable coin and a fancy bank offering.

>> That's so so so yeah, that's the only thing that confused me and that's where it led us to our fracket app store idea. actually you have to just >> because we were like we were like at first so etherfy accepts FRA USD you could spend it in there. >> Sure. >> We wanted to actually think do we build uh a EtherFi app inside of our Fraet Neoank so you can actually import your Etherfi card and then you can actually interact with the vault inside of FraNet. Uh and then we thought well that is a cool feature. We could just have a general card application that lets you import those or uh someone else or even FRA can also launch their own card. So you have

like multiple cards in this neo bank and they can interact with each other. Maybe maybe the best one for rewards depending on what you're actually paying it roots through it. In order to build something like that, by the way, it's actually a very different architecture. You have to actually be able to build on the runtime layer as we call it. on not the blockchain cuz it could be on multiple chains but on the actual layer on the neo bank that can compose with rails compose with stripe and also can compose with the different compliance flows because like if you're going to import or you're going to start uh getting an etherf card if it can really work in like the fraet platform you have to be able to pipe the KYC and

reuse it without actually doing it every single time then you're just actually just signing up multiple. >> Yeah. So, um you know, is there a FRA card coming? I is that something that you want to even step your feet into? Cuz it almost feels like um you know, people give layer zero some flak right now cuz they're like, oh, we interoperate all the chains and then like they're launching their own chain. It's kind of like, well, why are you launching your own chain to compete with all the chains that are are your clients? And I'm not, you know, whether it's positive or negative, I don't really have a take. It's just what some of the sentiment can be. The tokens ripping, I'm happy for them. Um I I own a little bit. I'm sidelined though unfortunately. It size. That being said, uh you know, when it comes to fraction,

it's like, all right, you if you're if you're going to be kind of this aggregator of sorts of all these offerings and kind of bring people together into one place, you know, why launch your own card? Is is that a smart move? >> It's it's a great question. Something we were talking about a lot. So the short answer is there will be a FRA DeFi card. it will not work the same way as other DeFi cards, >> okay, >> have worked. So, we'll we'll wait until announced how how it works. But there we go. We got some roll up there. >> So, so there will be a FRA card coming >> inside of uh as as an as an independent Fraet app that you can download and put into your uh Fra account, but >> it won't work exactly the same way as >> the other ones. And what's what's

interesting about that is uh >> there will be certain places that there will be very very very lucrative to use it and not because of subsidies because of a different mechanic that that we're building. Um and then you can use it with new DeFi primitives and things like that that uh curve pools different things that we're we're not for especially because you'll be able to spend the fra USD underlying. So, we'll be able to do some really kind of interesting things like extend pre-wipe credit for for certain things and uh it'll be it'll be really unique. But the cool thing about it is the way our platform is going to work going forward is that uh if you have an etherfi card or if you have a uh plasma card or something like that um the neoank

platform is crosschain and multi-chain and supports a bunch of different features. You can import and interact with uh some of those cards >> uh load them up, do certain things on offramp uh through fracket. >> Okay. >> Yeah. And and so like for example, you've probably seen or you had Stan on, right, for for the a right example, right? Where it's like they have go, they've got the app, they're going to have the car and it's like here we go. >> Exactly. So, so we were thinking like are all of these apps are they very siloed because the and and the only thing that's composable between them is the part on chain like like the token or like the location that you lend >> right >> and the way that we've rearchitected

fraet is that the KYC the identity and everything is shared among different fra apps so that actually like if you have a fraction account you can uh onboard and actually deposit directly into a and earn in like a regulated manner, withdraw it uh with your account, sign up for a card. You don't have to KYC again. Uh you can actually get a card uh through Rain through Persona and it's actually really interesting. You could think of it like an iPhone, right, with like the app store. >> Um you just download multiple types of apps. You can also just use those independent apps and then you will not get the benefit of the entire composable ecosystem, right? You could just only use the A app for example or only use uh Ether 5. Sure. And so Sam, one of the

concepts that we had heard about from the I believe it was the SEC, it was um it was Hester Pur, one of her last things before she resigned was this idea that they were going to do this potential ZK KYC passport where the the whole concept here is that with tokenized assets, you want to have the asset issuer and be the KYC uh mandated platform, obviously with the bank that's holding those assets and then whatever kind of tokenization platform form and then once you have that singular ability to have your KYC verified, you can trade it on what they call tokenized tokenized securities venues, TSVs anywhere on chain on any blockchain uh

across a variety of venues. And so the whole concept is like KYC once and not have to KYC for every blockchain and every uh trading venue. Trade on UniS swap, go to Hyperliquid, go to a go to Aerodum, whatever you want to do, right? Um, you know, is that something that you think that Fraxnet could serve a purpose for? Because I I could see value if I like, all right, download FraNet. We manage all that for you. If you want to sign up for the Ether card, we we'll do it on your behalf. We'll do that card and then we'll aggregate them all for you. You have to think about what card you're going to spend it on because we know if you're doing travel, you know, we're going to have an AI agent or something optimized what the best path is, etc., etc. Is that a value prop? The

fraction environment is almost like a AI harness, right? This is what I mean. This is what I'm talking about. >> All the cards. It has all of those >> cuz like for me it's like okay, why do I need to sign up for another card, another card, another card just to add them into fraction, holy what's the bot is like Apple wallet, right? >> My Grockbot is like my Apple wallet where it's like I have it controlling all my other agents and I don't ever go on cloud anymore. I don't really go on Gemini anymore. I just use my Grockbot. So very similar like could use this. >> I I I think that's actually the end game. We're actually even more better positioned to do exactly that because because of FRAUSD, we have direct relationships with Superstate, Wisdom Tree, Securitize, you name it. Like Midas just added uh FRAUSD as

subscription assets. So now they have a Fracket account, right? Just all of these issuers. >> That's what I mean. >> And so we're able to if you have a Fraet account, you can actually uh through us premint and and mint and redeem because we at FRA Inc. because of we issue FRAUSD, we have the direct relationship with all of them. Right. Exactly. And so we can already provide essentially a password ID to be able to do that. And I wish eventually they uh we could do it with ZK, but it's always it has to do with the end issuer. Uh we'll we'll have that that account and be able to one account for Axnet can do all of these things, but until the actual uh RWA issuer, right, is like sure a ZK proof

is fine. uh kind of hearing that right now is you'll have to you'll have to like accept your fraet permissions sharing your you know legal name and address and all this stuff but we would be in that prime position to do it now which is what's really exciting. >> Yeah, 100%. Uh last thing we had just a couple seconds here um you know we were talking like six months ago about when the bowl was going to start. I'm pretty bowled up man. Where you at? >> I think you might win this one. I think I think you might win this one. I think we have a few more months, right, till the end of the year.

>> Yeah. Yeah. >> Uh it's looking like you're going to win this. >> I don't know if we're going to get all highs, but I think we can get a nice Q4 rally. >> Yeah. I'm pretty excited. >> I think alltime highs would be a stretch. Um but I think >> even with a rate increase, right? Even with one rate increase, there might be a second one. >> I know, which is nuts. >> And you still probably >> It was a bullish hike. Isn't that Isn't it funny how we do these things? >> They write themselves. >> They write. All right, Sam. Thanks for your time, man. >> Thanks, man. >> All righty, guys. That about wraps up the day here at D Asia. I have stories to tell. I've got war stories, horror stories to tell you guys. Had a guy on Twitter just respond to my picture of me

in Dubai saying, "Yo, was that you screaming at the flight attendant or sorry, at the airport worker uh not screaming, but you know, yelling uh saying that you changed my flight without my consent?" I I responded to him and I said, "Yes, that was indeed me who was yelling at him at 2 a.m. in Dubai." Actually, it was more like 9:00 p.m. Time zones are all messed up. We're here. Tomorrow, we are live from Privacy and Quantum Day uh with Near and Quantis and Zcash teams uh here in Singapore. Tonight, we're going to an insane dinner in an underground gold vault uh with names and locations that cannot be disclosed. I mean, even though I kind of just did. Um, and yeah, I mean, I'm glad to be back. I'm glad to be here. Expect

a ton of content. I expect a ton of things. My bags are in San Francisco. My dignity is gone, but my brain and body is here. Thank you for being a part of the show. Shout out to Robbie. Shout out to the whole team. And, uh, my lovely guy, Alex, is going to bring me something for for you guys that I think is very important. Do a little shout out. Uh, and Sam, we're doing a giveaway here for $2,49 >> for token 249. to be more bullish. One lucky winner is going to get this $2,049 for token49 rollup giveaway. You have to scan the code. You have to find us to get a ticket. These tickets are limited in quantity. We only printed a couple hundred of them. We're giving them out

to special people. So, find me, get a ticket, scan the QR. Some people are worried about a scam, but >> it really is a bull market. >> It's definitely a bull market. Uh, all you got to do is like, you know, put in your email and follow us on Twitter, something basic. Guys, we love you guys. Thanks for being a part of the show. Thank you, Sam. And, uh, signing off to tomorrow. See you guys then.