The Digital Assets Mirage

Transcript

[applause] >> Good to see everybody today. Thanks for having me. All right, cool. Let's get going. So we're talking a little about digital assets today, RWAs and tokenization. So let's get going. Look, you guys are all here for the same reason. And unless you don't know what's going on and have no awareness of what's happening in crypto, we all know that the sort of dominant story narrative right now that's happening is around tokenization and RWAs. All these different things that are going on around institutionalization of digital assets. You know, the the world's been talking about digital assets for a while now. And the last 2 years we've really seen a big explosion of talking about tokenization and all these different things. Even just the last few days we've seen all these different headlines come up, right? Visa and Mastercard now talking about stablecoins, right? We've

got BlackRock for the last 2 years have been talking nonstop about tokenization and RWAs have been really in the sort of like the the frontrunners of all this, right? We've got DTCC now talking about tokenizing everything. And then of course, even recently Nasdaq talking about tokenizing all the equities, bringing things on chain. So, we've seen a tremendous amount of activity and excitement around tokenization and RWAs and all the stuff that's going on, right? And what's it supposed to do, right? I guess the question is it's supposed to pump our bags, it's supposed to make things go up. But for some reason every day I wake up and I look at my BTC bag and still looks like this. And so unfortunately, we're still down bad, but it's all good, right? Now, a little bit more seriously, right? Because of all this, we've seen all of these things happening. People

relentlessly posting nonstop charts and different things like this, right? One, we're at 30 BN assets now, right? Two, we're up 4X since February, right? Even us at Plume, we're not we are not above it, we do it as well. We're saying, "Oh, it's 55 billion coming in the next couple years. What's going on?" So you see all these different posts coming out now and everyone's talking about tokenization. And because you have this up into the right chart while every other chart is going down, it creates a lot of attention. And people focus on it and people get excited and it leads people down a certain path, right? Now, even people that used to talk about things like, you know, fart coin as as, you know, stronger than the S&P are now pivoting to talk about tokenization and RWAs, right? And so just to say, everyone is kind of calmed down this

direction, and big picture, right? We are all sort of coalescing on this idea that tokenization of assets is going to be the thing that comes in and kind of pushes crypto to the next phase, at least one of them. Right? So, going back to this, right? If we look at this again, it's not a joke. It has been incredible last couple of years. This chart again has gone up into the right. We've seen massive growth in RWAs and tokenized assets, right? Even on a sort of more uh lower time frame, over the last quarter, even the last quarter we grew 30%, right? So, we went from about 20 B to 30 B, right? And so, our incredible kind of growth around individual assets, right? Take T-bills, commodities, asset-backed credit, all these things are up 50%, right? So, we've seen a lot of growth in all of

them. But, the issue is if you look around and talk to crypto people or talk to anybody, the question really is 30 B feels like a big number. We see all this growth, we see all this stuff happening, but it still feels contained to headlines, right? If you ask around people in the audience, who's actually using this stuff, who's holding these assets, who's doing things with RWAs, usually it's not a lot of people, right? And it's a sort of a more of a story that we're talking about, and we ask around, it's kind of hard to pinpoint what people are actually doing with these things, right? And if you peel back the onion a little bit and look at what's underneath all of these numbers going up, right? I'll keep them anonymous, but look at one asset, right? 2.8 billion dollars, it's one of the big drivers of the

growth in the last quarter, right? 2.8 billion dollars, looks great, right? 43 holders, right? No one's holding this thing, right? Another one, 1.5 billion dollars in assets, right? Again, looks great, right? 29 holders, right? Another one, 250, great, one holder, right? And so, if you look at this again today, right? It becomes very clear that it actually does mirror what we think about, right? The numbers are big, we feel great about it, but there's not many people actually using these things yet, right? And if you're talking about money, you're talking about assets, you're talking about an asset that you want people to hold and utilize and grow and have a network effect around these things, right? Holders is important part. One user having a billion dollars is probably less useful than 100 people holding $10 each, right? And then all be able to transact.

So, again, same thing, if you look at another way to measure this, right? Monthly transfers, right? One of the biggest assets out there. Six of last month, right? And that's actually down, right? 26, right? 43, and that's up, right? From before. So, just to say again right? Tokenization is a big deal. It's happening. There's a lot of the good things happening here, right? But, if we look at it again, if you look beyond just one level deep, and look beyond just the headline numbers, and look at the other things that complement this stuff, right? It begins to paint a different story, right? And I'm not here to say it's bad. It's here just to say that we are still early, and we need to sort of understand multiple dimensions of this to get a better picture of how this all looks, right? Another thing, people talk about

tokenization from a utilization perspective, right? We can lend, we can borrow, we can do all these great things. The $30 billion in assets today is a report that came out from DeFi Llama saying very, very few of it actually is in DeFi today, right? And you can just go to check out any market, any pool, right? Any lending market, there's always nothing going on with these things, right? It's a great idea, right? No one's doing it yet. Right? And why is that? If you go to this again, big numbers, which are great, right? But, the thing that's missing from this, right? Is what again, going back to what are people actually holding and using today? And going back to this number, 43 people. So, what do we actually do to get this to the right place, right? You need to focus on the user and what people are

actually doing in order to get there, right? And so, when you look across today around the different networks, right? There's one that of course stands out. Of course, it's us, right? If you look for If you sort by networks for who have the most RWA holders out there, right? You can see Plume's at the top here. And the reason why is because I think relative to other folks, what we've understood early on and tried to take advantage of is looking at this, right? We followed the path of the stablecoin. The original RWA, and the only RWA that matters today, and the only tokenization that matters today is the stablecoin, right? And the stablecoin, what they primarily did was they took something that was, in this case, an American asset, a high-quality asset, and what they did was they packaged it in a different way, and distributed it, and

brought it all over the world to give access to different people, right? And by doing that, they changed both how you distribute the product, how you use it, and who ultimately is the consumer of that product, right? And so, when you look at this, you can see one has had massive success, the other one is still growing, right? Obviously, we're bullish on this so we're going to be doing it, but it's still just a thing, right? And again, my friend here, Brian, also says it's like access is the answer, right? Bringing these things outside the world is equally And look at stablecoins, the US user base is not massive, but outside, excuse me, of the US, it's a huge thing, right? And so, going into this, right? Going into an example that we all know today, especially if you've been in crypto the last 2 years,

another review is we can look at McDonald's as an example, right? And we look at McDonald's example of why this thing and how to think about these assets, right? Is McDonald's why it was started in what, the '40s? And it was massively successful, right? And then in the '60s, they wanted to go international. They wanted to take the same thing and bring it elsewhere, right? And what they wanted to do was stick to what they knew what to do best, which is take an American burger, right? Ground beef and cheese and all these different things and bring it to other countries to grow sales, right? And so, what they did was they started off with places they knew, right? Places that were nearby, Canada. This is one of the first McDonald's in Canada, right? It looks like a regular McDonald's that we all know today,

right? It's focused on sort of a suburban experience, right? It's meant for a kind of like a consumery, family feel. There's there's tables, there's cars, it's kind of that type of thing where you drive there and and go with the family and you get burgers, right? That's like what the whole point was. Now, when they this worked in places that they started off with, right? Things are sort of adjacent to America, in Canada, in Latin America, these different places. Now, when they began taking it elsewhere, to Asia, right? To China, to India, it didn't work quite as well, right? And a simple example, right? The consumer in those markets had a different feel and different understanding of what they were trying to do there. So, for example, when they went to Japan, right? They were trying to figure out how to serve it and they put this in

Japan and it didn't really work, right? What they needed to do and had to after a lot of sort of talking with the local community there, they started to realize that this is what they should do. And you look at this, this is one of the first Japan McDonald's in Japan. The distinction between this and the other one is this is in a mall. It's not sort of in a remote, local, suburban environment, right? Where you're driving up with the family. This is in a mall. It's a very fancy place in Ginza, right? Um so, it's a very fancy mall, right? And it's meant to be sort of a high-class experience. It's actually more expensive than other things. It was just a bit targeted a different way. But when they did this and they packaged and delivered it differently, it began to work. And then

it took off. Right? And the thing that really took off after, right? Was when they said, "Hey, you know what? Let's just change the product itself. It's still going to be burger. We're going to take ground beef and buns and sell this thing. We're going to slap some teriyaki sauce on this thing." And when they called it the teriyaki burger, it started to rip after that. And it's been up only ever since, right? You look today, Japan is now 70% of McDonald's international sales for the teriyaki burger or for for McDonald's. Right? Um Same thing with India, right? And we're going to hit the uh the limits of my uh cultural and uh food knowledge soon. But with India, right? The one thing that I do know about it is like they don't eat beef, right? And so selling a cheeseburger there is not a good idea,

right? So you go there you have to change how you deliver the product as well, right? Not only just the product itself, right? Um it turns out most Indian households at the time the vast majority of meals were eaten indoors with your family at home cooked meals, right? So three out of 10 meals are at home. So you had to combat with how do you get this audience outside? And so through a lot of marketing, through a lot of campaigns, through a lot of designing these different elements, you're able to get the consumer out to now nine out of 10 meals eaten outdoors, right? So just to say, if you're going to try and internationalize and take this product and expand it elsewhere, you need to think about how to deliver the product. You might need to change the product, but you have to understand

the consumer and the user. And by doing that for McDonald's, what they did was from primarily taking an American asset, right? The cheeseburger, right? They brought it all over the world, right? And now global and international is 60% of international sales for McDonald's, right? So we're going to grow this one thing, package it up differently, bring it elsewhere, and grow a lot. That's the idea. So today if you look at this thing right across everywhere, Morocco, Japan, the UK, right? Spain, Germany, Turkey, Hong Kong, India, Mexico, all these things look and feel slightly different. At the end of the day, it's all ground beef in a patty, you know, and bread. But they package it up and wrap it in different ways and you can sell it to different people in different ways. And that community can use it and reach it the way they want to.

Right? And so again, going back going back to that, if you want to get this, the number one thing to understand is to understand your user base, right? And the user base outside of the US and the people that you want to reach, right? And by doing that again, two things. You need to understand how to reach them and then what to actually give them. Right? And so if you think about crypto as an example, right? The majority of money today in crypto, right? Is still crypto money, right? So we talk about tokenized assets, we're talking about bringing different assets, right? Often times you look at the biggest one today is Biddle, right? Which is American T-bills and BlackRock, right? You got Biddle, you have things like uh you know, private credit or whatever.

You're taking these things and bringing them to other places, right? And if that's what you're doing, you have to first understand who you're selling to and what they want, right? And so to think about this community first, the question is who are they and what do they want, right? People tend to think about crypto as a monolith, right? It's a bunch of people, you know, in their underwear trading tokens, trading shitcoins, right? Of which I count myself amongst, you know? But really there's many, many different subsectors of the crypto audience, right? Number one, you know, this audience sometimes is is like this is a classic example, right? You know, people paying million bucks for JPEGs of rocks, right? Another one is, you know, here's another one, right? It's a different community people, right? People are, you know, uh it's also in a 60,000% API rebates every

eight hours, right? And they decided to dump 600 mil into this thing, right? I I was one of them as well, right? And then, you know, even this like when people are considering Farcoin like a blue chip token, right? So this is the community that you're dealing with a lot of times. You have to understand who these people are and these are all not the same types of people, right? You've got people that are shitcoin traders, you got people that are sort of buy and hold, you have farmers, all these different things. How to understand how to take this asset and design it for them and reach them is the question, right? And again, it's about how you deliver it to them and then what you would ultimately deliver in order to get the growth that you're looking for, right? And so maybe stepping back really

quickly, what do we do here and what um you we're talking about all this today, right? Yeah, we focus specifically on this at Plume, right? Whereas most people focus on assets, of course we do that as well, but we've been really focused on distribution and how do you think about that and that's why we've been able to get the holders that we have today on the distribution side of things, right? And so if we look back, right? At Plume really quickly to introduce ourselves, um you know, uh you can see um you know, you know, I'm one of the co-founders and CEO of Plume. Um it's my co-founder there, Teddy. Um and you know, we started the company about two, three years ago now, right? So we quickly came out, we raised 10 million bucks in the first round from Han and Galaxy. We raised our series A after from Apollo

and Brevan Howard, a more TradFi element, right? Then after that, we launched our mainnet. Launched with 150 million in assets, uh looping, borrowing, all that kind of stuff against it, right? And then quickly became the number one holder um count by RV holders, right? In the world. After that, we started getting our licensing, right? US licenses, transfer agent, Bermuda, all these different things. And then as a result, you know, we recently announced our partnership with EtherFi, where we're plugging in to EtherFi, one of the fastest growing neo banks in the world, and plugging in our uh tokenization products into this so people can now allocate directly into these assets, right? I think this case of BlackRock, Fidelity, a few others, right? Where you can allocate directly into them, earn yield, and now pass back.

So, that's the idea, right? You have to go to where the consumer is and deliver what they want, right? And so, again, we've done this for a long time now, and we've done billions of dollars in volume through our products, the largest holder base, we've delivered millions of dollars, 30 million plus in uh in yields, right? We have licenses all across the world now, across Bermuda, across the US, across ADGM, right? Across the across the EU. And working with some of the biggest companies out there, right? Apollo, WisdomTree, um DGFT, all these folks, and integrated into places that matter, right? EtherFi, Bybit, Solana, right? Morpho, Perenna, all these different places. Right? And so, that's what we've been able to do.

Um and folks, and how we do this is by taking both elements and both sides of the equation and bringing them together. On one side, you have the tokenization part. So, we work a lot with the big issuers to help them figure out how do you bring this asset on chain? What's the legal structure? How do you do this in the right way? What are the types of products, right? Going through that whole thing. And on the other side, is in partnering with all the points of distribution. One is our community, of course, but two is in plugging into places that are like exchanges, like neo banks, like on-chain elements or whatever like that, and making it composable and usable so you can actually get things. And wrapping this entire thing at the bottom with a regulatory and compliance lens to make sure these things actually are done in

the right way. Right? And so, that's what we do today. Simplified is another way. There are three things that matter, they're assets, there's compliance, and distribution, right? And we're the only ones that sort of weave this entire thing together. Even today, right? When we started the company, it took it took, you know, anywhere between two to three years to tokenize an asset and bring it on chain. Right? It's only gotten marginally better. It still takes up towards of a year and you're talking about weaving together 30 or 40 different partners to make this whole thing happen between compliance, between AML, between tokenization, between custody, all these different things. Right? So, we take this entire thing we weave into one to make it much more easy for people to tokenize their assets on chain. Right? As a result, what we've seen, right? Is we're able to

target all different types of users because we understand the end user in the distribution. Number one, right? The on-chain institution. Grove and Apollo partner with us to deploy $50 million into the A credit fund where they're one of the largest deployers of A credit today on chain. Right? Number two, plug into the exchanges. Right? So, we partnered with OKX to just to to deploy our products into OKX. Right? Um I think we had 40 million bucks coming to the assets through the OKX integration. Right? Also, again, Etherfi, right? One of the fastest growing neo banks in the world. $100 million deposits, right? Coming in from the Etherfi community. Right? Uh and then of course, for the more degen side of things, right? Being able to alter the products uh themselves for the more on-chain audience. Right? So, you guys see we you know you know 33,000%

APY on some of these RVAs, right? Through through using PTYTs. Right? And so, being able to cater the product to different audiences how you grow all these different assets and understanding where they are. Right? So, if you look again at today, where is the money? What are people doing? It's really stable coins. That's the addressable market here. If you look at that, there are three places that broadly hold the money. Number one is exchanges. Right? They hold all the money. Number two, neo banks, fastest growing place where stable coins are are accumulating. Number three, on-chain users. Right? And they each have a different profile. Some are very safe and stable. Number two are a little bit more uh yield seeking but still want to be safe. And number three is, you know, they want to do a lot of general stuff. They want to play around.

They want high APYs. It's really about a headline number. Right? So, understanding each of them and designing products that work for each of them is the answer here and is the game. Right? And again, Plume has been in a unique position. Again, we talked about OKX with the 40 million bucks, Etherfi with the 100 million dollars, and Pendle, we've seen a tremendous amount of success there as well. So, that's the idea and what we're doing here. Right? And the underpinning of this whole thing is compliance. Right? We've built a great regulatory team in crypto. Salman was here yesterday talking to uh to to Taylor as well about uh how they've thought about things. Salman our GC was the former uh was was at the SEC before and the CFTC before that. Right? Um we've been uh sort of testifying, you know, with the um, you know, invited [snorts] to

testify and talk about tokenization and compliance with the crypto task force. Uh, and then of course, you know, a bunch of licenses, right? From our Bermuda license, the SEC uh transfer agent, right? Our ADGM license and all these different things. So, the idea is regulation for us is a key part and a component of holding, but doing this in a way that actually works for the end user and keeping that in mind. Because regulation on its own is just going to re-replicate exactly what's been done already, right? But without having the sensitivities of understanding how people are actually going to use this thing on chain today. Right? And so, for us it's about being on chain and compliant, right? It's about servicing the the LP, right? And making sure the asset issuers ultimately are comfortable to bring these things on chain, right?

And then that leads to this today, which is the Plume Clarify suite. On one side, we've got the Plume institutional stack, right? That allows us to work with big asset issuers. And number two is the Plume on chain element. And underneath again is the compliance stack that we use for this entire thing, right? And so, the idea is by understanding the end user, you can work backwards to build the entire infrastructure that allows us to work, right? And then allows you to take this, right? to this. So, anyway, that's it. Thanks for the time today. Appreciate it. Catch you guys around. >> [applause]