ETHMilan26 - The Future of Digital Money Has a Liquidity Problem

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English or Italian? English. >> Yes, English, right? English. English. Okay. >> So, Sha like one line. >> Yeah, feel free. Go for it. >> One line, guys. Okay. Yeah. As Joe said, I'm Berlusi nickname obviously unfortunately product leader chain. So I joined the chain two years ago exactly before mainet launch so I could ship mainet with the engineers and funny times and then uh since that I work basically on all the dabs you see on beer chain launching an L1 is tough so you know doing it is just the first start of the job and then you really need to survive in this market and that's what we are doing working hard every day before that I was founder co-founder sorry and CEO of Smiley Finance an option protocol Bachas and

that's how my journey started. >> Hi, I'm Lorenzo on the other side. I'm one of the three co-ounders of USDT Zero, which is the main interperability protocol for Tether tokens. Uh we are the third largest holders of USDT on the planet and we are basically the largest bridge in the world for moving your USD tokens around. U we launched in January 2025 and one of the first chains which on which we launched on was bear chain. Exactly. Uh before that I've been working in D5 for the last five or six years. I've also been involved in a bunch of uh development and products on the tether side of things being involved in a bunch of the old native deployment

standard as well as alloy which uh is a CDP protocol uh built with tether gold as collateral. So I'm as defi native as you can get probably which is why I look 45 even though I'm 27. So yeah, definitely the five panel. So what can we discuss about I think liquidity at the moment is a huge topic. Is a huge topic because it's no longer just DeFi. That's the cool stuff like when we talk about stable coin now is also trady using it way more traditional finance and agents also. So the rates are exploding but at this point the unified liquidity thesis or how to make it works properly becomes even more

relevant. So you as USDT zero knows the best out of >> a little bit. So basically the the the for those who don't know the way USD0 works is pretty straightforward. We basically allow people to move USDT assets between Ethereum mainet and 25 other chains uh without any uh rate limiting. So you can move $1 or you can move a billion dollars uh in one transaction in a fully permissionless manner. So uh it's totally decentralized. Obviously, we we process KYC and and um compliance checks, e-flow enforcement requests come in, but on a protocol level, it's fully permissionless to use. Uh and the most important thing and also the coolest thing is that it's basically completely

free to use. So, you can move $100 million and only pay five cents in gas fees. And this has happened multiple time over the next over the last 15 months since we launched. Um to give you an idea of the sizes that we're seeing, we're both an interoperability protocol and a stable coin obviously because the interoperability protocol is what moves those assets around and the stable coin is the the token that actually lives on the network itself. Um we launched in January 2025 and over the first three four weeks we moved between 200 and 300k uh so 200 $300 $300,000 between bar chain in Ethereum because we were pretty small. Uh since then we grew pretty massively. Uh right now we are averaging

out between 150 to 100 million dollars moved between our chains every single day. Uh we've moved more than 96 billion since inception which basically makes us uh the fastest growing interrop provider in the world which is very cool to see and definitely not because we did something right. It's just because people want to use USDT and people need access to liquidity, right? And they need access to a version of liquidity that they can tap into um from any chain that they want to work with in a very easy and straightforward fashion and that doesn't charge them obnoxiously high fees like 50 bips for a crosschain transfer because it's it's kind of impossible to sustain otherwise. Uh that's basically what we've been doing in Berchain since day one. I think I was

reading numbers. like three billion dollars moving in and out of Bara since the launch. So it's pretty cool. >> Yeah, definitely agree. Exactly. If I can maybe expand on top of that when you launch any ecosystem on a on DeFi let's say in crypto liquidity is major and there are a lot of stuff that you don't see like even for me when I joined Berchain as I said I was building protocols before options so you know for me kind of the ecosystem was you know there granted you know all the UX developer UX all the tools everything's there so you know you go through the chain you're like okay I have some liquidity there that's done when you launch it you discover the other way there's bunch of other stuff the other side of the story like so launching launching a chain with liquidity is

first and foremost a technological problem that that's like granted but that's you need to solve first otherwise you do nothing like even deciding let's say launch bar chain I I need to pick a few stable coins I need to pick the bridge I need to pick the oracles I need to pick the decks and the landing market those are the very you know the backbone pieces you want to have otherwise builders like Joe comes and say what what do I do on the chain nothing but the chain with just a token that and we saw many of them actually you know proof of stake chain with just the token that's it some farming of the of the LST and that's it and that's the first step and then you have all the go to market though and that's where all the discussion on how can you move in how

can you move out what to do becomes really something that impacts your business and economics in Berin we took a slightly different approach uh we try to wrap some tokens into our own so we have hon that is our own stable coin uh It's a wrap of USD0, USDC and USD. We decided them for different properties each one else. But basic basically idea was to give you both on ramp and off ramp as fast as possible. Now USDT zero is accepted in many places. USDT in general is accepted in many places. USD not for instance but at the same time give you the max economic benefit out of it. So that user can also at the end of the the economic value trickle down and user can get it. So we try with this

different design. uh any kind of war to be honest like even after the peak at the peak we had 700 million TVL clearly now is way lower but still we still have a lot of honey and stable coin TV compared to other chains and L12 even after all the exploit and all the >> and and to be fair the the whole honey play was something very interesting for us to see as well because we literally launched in the last uh in the last 15 months like 20 chains right so have we seen any possible versions of go to market for a chain any possible iteration and permutation of the system.

And as somebody that has known about bear chain literally since it was invented, I guess by by Smokeoky and the others, I always liked a lot the the setup that they created, right? Like bar chain worked in this very interesting model where they were kind of in uh vertically integrating a bunch of protocols and a bunch of important D5 primitives uh including the stable coin itself and amongst all of the all of the different primitives or per dexes and markets etc. I thought that integrating the stable coin in the way they did was the most interesting one because making a stable coin is super hard. There's people think that stable coins are the new gold mine of of how you make big revenues and so on and so forth. That's not how it works. Tether makes a lot of

money not because they've been working in this industry and they built this industry from the ground up since 10 years ago, right? And only in the last three they actually started making significant amount of revenues and so on and so forth. So I I always recommend people not to try to build their own stable coin, but just build on top of stable coins that are already successful and already easy to to to integrate because liquidity is the problem, right? Like it's very simple to say, oh, I'm going to make my own stable cocoin as a network and it's going to be successful. Well, that's not the case. You could see it on the hyperlquid side of things where everybody was super excited about USDH. Everybody thought USDH would have been the next big thing and now Coinbase and Circle just bought it over because it was just easier and everybody was

happy because now there's no more fragmented liquidity. um it's just very challenging but with only it was very cool because you're basically as you said you're wrapping a stable coin which means that you're directly tapping into the liquidity that we circle and have built on our own and you can just leverage the liquidity up and enjoy all the benefits while giving the users a better experience because then you're trying to converge most of the chain liquidity against Hony because this way the routes are more efficient the way the whole uh ecosystem can trade in and out of of assets is easier But at the same time, you can, as I said before, you can basically leverage up all the advantages that having USDT and USDC behind it helps. Obviously, we like USD Z more. I'm sure you can agree on that.

But, uh, it's it's definitely something that that worked out pretty nicely. And I also think that what you guys did on the crosschain side of things was very interesting. Like the whole boy campaign where people could block collateral one chain was a good experience. I love both USDT and let's say I love both of them. >> Nothing else. >> Yeah. And so you touch actually interesting point the crosschain stuff because you know like okay we said stable coin stable coin are at least from some big and smart guys sold as a problem like minting and redeeming is kind of sold but the rails are actually now becoming the cost of probably even know for people not just doing defy no like I don't know how much uh you you heard about agents no but definitely a

lot but you know there is a huge part of it in crypto is now payments for agents and that's a new race totally new that we didn't till what some months ago kind of >> six months ago I guess >> yeah something like that so what do you think in term of exactly crosschain raise whatever I see that on beh and then I give you my two cents but I definitely >> so my take is that building a stable coin in 2026 that doesn't have crosschain capability is kind of insane because it's and this is something that we got to give to to to to some other other competitors that moved way faster than we did on our side, you need to give this UX improvement to users. If I'm if I'm a merchant, if I'm a hedge fund, if

I'm a large centralized exchange, it shouldn't matter on which network I'm accepting an asset. It should just matter that I'm accepting a certain asset. Like if I'm if I'm going to Bota and I'm paying uh with um for my tacos with with USD on Tron, it shouldn't matter for the end user and for the guy that receiving the payment. If that payment happens on Tron, on arbitrum, on Polygon, Vera chain or any other uh any other chains. But the only way you can get to that point is if you build those railways that you were talking about uh that are basically what our whole job is which is creating these railways that are efficient removing friction as much as we can and at the end of the day free to use and this taps into the second thing that you were talking about which is aentic payments right there's two

part of aic payments in the way I see it first of all we need more performant blockchains there's not there's not going to be a way around it we can probably survive on 10,000 15,000 TPS's if just humans are using But the moment that you're going to have hundreds of millions of agents that are transacting between each other and paying for services and basically getting getting their own needs served by themselves and effectively paying with us all over the place. You're no longer talking about tens of thousands of TPSs. You're probably talking about single digit millions of TPSS or transaction per second. So this is the per the first part and I'm extremely happy they don't have to fix that because it's extremely hard to do and there's very few teams that are actually understanding the the system. I I think

they we're seeing a lot of high performance blockchains launching lately. Monad Mega Zero chain which is going to launch soon. Um what we are taking care of on our side is to be able to give those agents the tooling to actually move between our supported chains in the most in the easiest way possible. And USD is fully agent compliant if you will which means that we have already we're already running tests on with with agents that are arbing the peg of USDT between uh I think it's arbitum polygon and uh uni chain it was and ethereum of course and you're basically just giving thousand bucks to an agent and telling him try to make it a thousand one and then the easiest way to do it is go on dexes and arbing up the price of which is always

slightly different and because we charge no additional fee on top the transfer um every single AR opportunity becomes a favorable one assuming that you're on chains where gaspies are very are very cheap uh and agents do it do it every day uh and we are spending a lot of time and a lot of energies in developing a new toolkit that can be used to integrate stable coin payments and crosschain stable coin payments on our side across the agent stack we're working closely with the tether AI team with Cubac and so on and so forth and uh it's a very difficult problem to solve I have to say but it's a funny one And uh the pace of innovation in this in this space is insane. Like it's every time every month goes by and I become

five times more efficient because I use AI and LM in a in a better way and my developers are getting 30 times more efficient every month which is amazing but it's also extremely scary and difficult to to track. >> Yeah, I guess the the new hot tokens are the cloud tokens not the crypto tokens unfortunately. But maybe we can transact there. >> Everybody's going to AI anyway. Just me and you left. >> It's just us. Look the room. This is the crypto space left. I mean you touch something super cool that is the gent payments the rails whatever. And I think on my side what I could touch maybe and then you could definitely expand is all this is some sort of like in the past we used to call it also chain abstraction or like I just I just use it. It happens. I don't care even with agents

even more like they just use it. It happens. I don't care how they do it and what they do behind the scene. But this also bring a lot of risk. We saw it recently know exploits bridge exploits. Uh that's definitely something this is part of when you launch a chain that you learned know that you you see the infra and how complex it is and how difficult it is to not just make it works but keep it making it working securely like we launched like for instance Bachain as layer zero's main bridge. So we work a lot with them amazing team we love them. Uh that's also why USDT was a super good USDT zero was a super good fit for us.

But at the same time when you touch this beast you dig into the technology super complex and it brings a lot of active vectors that we don't see. So agent makes us more efficient but they're actually making more efficient many other actors in the space. Unfortunately on our side we are dealing with that since the one with actually tons of security that has been always for us critical everything we do our computer all the web to security we put actually web to security quite I high from the very first day like when I joined we were doing a lot of smart contract stuff but I was like mate this is easy like that we solve that that's we know our smart contract not going to get that many issue actually we got zero issue on our smart contract ever since even when we had billions of TVL is the web two

side of it is the social engineer of it that scares us. What's your take on that then? >> So, especially after last month, we turned even more paranoid than we were before. Um, as I said before, I've been in Defi since 2020 and I've I've literally seen it seen it from from DeFi summer from the first time Sushi Swap launched and so on and so forth. And I remember exploits existing and some of them were very large, some of it were smaller. But all the exploits that happened, you could understand how how we got to that exploit. In the last, I would say six months, it's been increasingly difficult to actually track all of this. There are more and more protocol getting exploited

faster and faster for more and more amounts of money. I think the first big one that we've seen and that kind of started this whole new year of exploits was the Bit Hack uh which was like a 1.2 two 1.3 billion dollar exploit >> usual >> uh which happened again because of the same problem because people do not understand how many vertically how many product products you have to trust or if you're doing it smartly you're not trusting them you're verifying them but not everybody does it are involved in operating a system right like just for us zero um we are relying on multi- signature solutions we're relying on safe but how how much can you trust no safe right like I'm pretty sure that nobody try to hack the NOS safe to steal $10 million. But how about hacking the

Nazosi safe to then hit us and effectively still walk away today with $3.6 billion. It's it's a different setup. >> Interesting amount. >> Yeah, it's pays for the beer, right? Uh and and and this is basically 99% of our work, right? Like we we just hired a marketing lead three weeks ago because we never needed one because we're built on the most needed asset on the planet, which is Tether. Um so all of our all of the people working in our company and all of the efforts and by far the widest expenses we have are to make sure that the system that we're running is secure and when you actually dig deep into it you understand how large of an attack surface exist when you're trying to make a protocol like that is your secure you

have the multisync you have the RPCs you have the DDNS which are effectively imagine them as the nodes that verify transaction between one chain and the other um you have the smart contract themselves which again we were talking before um it used to be that if a protocol had $2 billion in TVL for two years, you were basically 99% sure it was unhackable because if there was any way to hack it, somebody in North Korea would have figured it out before then. Now this this doesn't it's no longer true. Like we've seen GMX getting hacked nearly four four years after launching GLP when GLP was securing billions of dollars and only thanks God we got we got hack they got hacked uh when it was only $50 million which was still a recoverable amount. It's it's very

scary. And you talked about agents like agents that attack protocols are always going to be easier to achieve and are going to do more damage and they're going to come faster than agents that are going to be built to defend protocols. And I don't know, I think we're in a very as somebody that has literally seen it all in DeFi. I've I've never been more doubtful of where exactly we're going, right? Because if you can make 5% on a on a T bill or 4.5% on a T bill, why would you want to deposit into a lending protocol on chain that could get exploited that could have Dow problems and so on and so forth to make 5.2%. It's the math no longer adds up. So we'll see how we go from there, but it's it's challenging.

>> I totally agree. I guess the Trump trade ended up with inflation killing the yield in DeFi, but you know, I would have guessed >> exactly geopolitics and politics is not for crypto people, I guess. Actually you said something very interesting on agent that I totally agree like to hack you need to get it once right one path right somehow to make something secure you need to get all the puff right and agents are very good at do some stuff right and some other randomly so clearly they're stronger at attack than defending I have though also a different point of view not different like a counter take compared to maybe some people in the industry that I also think though on the other side like defa super exposed and over time this is making it the most

secure industry on earth like not now clearly getting hacked but why we got hacked because new agent stuff okay people are using them as crazy they're breaking things in six months that would have broken most of them I think the rest of like web two companies are actually way more like okay maybe Google not those huge guys not but all the others you know they don't really have that level of security don't have people thinking about security as much as we do at least the good team do in defi it's or like you know is a is safer per se somehow the perimeter so somehow they get in less or they get hack impacted less or if they do you know they cover if you get uh if they if an actor gets in and crack of your computer and and encrypt everything you don't really say

out loud no you just kind of try to solve it >> under the rug and say nothing happened nothing to see here we're going to make it back >> onchain you know you have all the data so it's difficult to say no nothing is happening it's I think it's also the most secure way to actually build a resilient infrastructure, right? Like I don't know if you ever read it, but there was a book called The Internet of Money written by Andreas Antonopoulos about Bitcoin, which was the very first book I ever read about Bitcoin and also the last which which was extremely was using this this analogy and was saying that um he was talking about CBDC's which are in one way what we're talking about here, right? like system that are closed and that nobody sees what's happening inside and not transparent so on so forth. And he was

comparing those systems to like a bubble guy, somebody has always lived his whole life in a bubble that then gets thrown into the real world and sees what happens compared to Bitcoin which was effectively he called it a a flock of suing rats. I think he called it basically saying rats it's very difficult to kill rats because they've been they've been around for so long and they've been surviving so many things and now built a resiliency on top of it and that's probably the end goal that we're all hoping to to get to. Uh it's just I don't know it's starting to become a little bit far away considering that now every single large entity in the world is either trying to use AI to to do something something shady or using AI to defend from somebody else doing something shady with you. And u we've

seen it with with Mythos launching with with OpenAI launching the version of Mythos. It's just the amount of exploits is going is going up parabolically. And I do expect a little bit of some contraction at least for the next six to 12 months in DeFi just because we're going to see who who's who's upstanding after after everybody gets hacked and then probably we're going to use those as the building blocks for the next part and the next future of of the centralized finance which by the way it's not decentralized in any way anymore. is just onchain finance which is very good still because it's transparent and permissionless. It's not decentralized. It's something we were building in 2020. That's for sure.

>> Totally agree. But before we end, I don't even know what's the time. So Joel give five minutes. I want to actually switch back to stable coin with something that relates neither to be Russian is we are global US based and nor to USDT that is euro euro stable coin. No actually we are here I saw the supply is growing as crazy. The usage is growing clearly not comparable. I said for us unfortunately it's still not something major I said to say we will try we will try to have something >> takes time to get to level >> exactly it's still not something cool for beer chain is not in our road map I meet unfortunately but what do you what do you think on your side that you have way more >> so from a from a geographical perspective USDT is by far the largest

and most used stable coin on the planet. Um, my take has always been that the reason why Tether, and I can say it because I've been working with the Tether guys, but again, I'm outside of it, so I can say nice things about them without feeling like I'm patting my back. Um, they they were the only team and they were the only stable coin company in the world that understood what the real product market fit for stable coin is, which is not us. Like the US, Euro, we can use stable coins and they help us, that's for sure. But this is for It's not a killer product.

Like try go speaking with somebody that lives in Zimbabwe or in Argentina and is used to lose 40% of its money every year because of inflation and you give them USDT and then we're all surprised. Why are they using it so much? Well, because it's it's basically a lifeline for them and they change their life. So on on a on a geographical scale, I guess we are extremely more interested in those developing markets than we are on something like the US or Europe. We are definitely not touching Europe because of Nika. Nika is a is a piece of of legislation that defines how stable coins should behave in Europe and it's in my opinion a very poorly written piece of legislation because it was written without speaking with the people actually invented and use stable coins

every day. Um in in America on the other side you have the Genius Act which is a little bit better and Tether and is is now launching has launched and is now developing hard USAT which is their domestic uh stable coin. um whose CEO is Bohe which used to be in the administration. They're an amazing team. They are some of the best that we've ever worked with. USD Zero will be the way UST moves between chains as well. So you're going to have genius compliance stable coins on network and then our infrastructure will be the one that moves those networks those those USAT tokens between chains. I think the first chain on which it's going to launch on is Cello because it's already been announced and I cannot say the others otherwise they killed me otherwise legal team kills me but usual stuff. Uh and um

so yeah, for us our our main uh attention still lies on developing markets and how we can what we can do and what products we can build so that people that are making that are maybe making $10 a week can not only keep using our products but use them without uh having to sell a kidney for it because sometimes we think oh 50 cents is nothing. 50 cents maybe six hours of works for somebody somewhere in the the planet right >> super aligned interesting road map actually me I I I'm a bit more bullish though on fintech usage I don't know you know I'm a believer I'm a believer I'm a believer fintech will start using stable and at that point the world will change >> I think they will but again for sure they will the question is how they will

they use it right like we're in a world where and I know that because I think there's a big presence of PayPal USD also on on their chain >> huge I remember The first time I heard about PayPal USD, it was it was crazy. Like my non-crypto friends were coming to me and they were like, "Hey, you don't understand. I can now send stable coins on PayPal." I'm like, "You know what a stable coin is really?" And they actually learned it because of it. And definitely we're going to see with the Western Unions of this world, the monogram, the the people of this world building their own stable coin. My take is that it will still look I don't think the market will change from where it's looking like like right now. You're gonna have Tether that is going to be dominating most of the market because

it's betting on the right people and it's betting on on people that really need to use Tether which are Latin America Asia Africa, all those places where this is a real killer product. And then we're going to see stable coins launching across Finex that are going to be able to um to be used but not to the scale that USD is used right now. At least that's I mean I'm a bit biased obviously but uh that's kind of how I've always seen it. very interesting and so actually what I learned from this is that instable coin technologies is becoming again the core part because if everyone launching stuff and then rap and then change slightly and adjust to regulation and like people use as you said interesting some somehow they also

kind of create a lot of hype that didn't didn't was not was not fulfilled >> rightly so if you have 400 million users you should create a bit exactly and so building the technology is what it makes it cool and actually you're positioning very your company because with all this knowledge you're getting that's probably the right bet. >> I hope so. The the the main thing for us I think there's two things. there's technology like you need to build periphery products that make using your stable coin easy and the second thing is knowing how to manage the reserves and I I I do not think there is any stable coin on the planet that again I'm biased but that manages the reserves in the way tether does it because they are I mean they're buying a lot of gold they're buying a lot of bitcoin and then they

are the 17th largest holders of ts on the planet so they are literally edged against any scenario >> they are more similar to a central bank than just singing treasuries Cool. It was a super cool chat. I guess Joey, you want me to wrap it up? >> Good opening. Good. >> Absolutely, guys. Thank you so much. Thank you so much.