How Tokenization Will Rebuild Capital Markets

Transcript

It's endless in terms of how the capital markets, how the the financial system changes uh once everything is on chain. The capital markets are going to be forever changed. [music] It really is like in in a way that people are not quite thinking about yet. Eventually, we're going to sort of converge on the best method uh possible for this. Uh I think those people uh those groups will be rewarded to be able to say, "Yeah, our tokens really represent the shares now. They are the shares." If we live in a world where all those shares are tokenized and we have stable coins, right? What's stopping us from the order book itself being fractional.

[music] Nothing said on inflection point is a recommendation to buy or sell securities, tokens, or any other assets. Nor does it constitute a solicitation or offer to invest in any fund, product or financial instrument. This podcast is forformational purposes only. The views and opinions expressed by hosts and guests are their own and do not necessarily reflect the official positions or views of their respective employers or affiliates. Hosts and guests may hold positions in companies, funds, tokens, or projects discussed.

Hey everyone, welcome back to Inflection Point. I am joined by the first time by with Gabriel um co-founder and CEO of Dinari. Um Gabriel, how are you doing? >> Doing well. Thanks for having me, Mark. >> Yeah, um thanks for joining. Um so, you know, quickly before we kick off for listeners who may not know, can you tell us a little bit about yourself and Dinari and what you guys are up to? Yeah. So, we founded uh Dinari, my co-founders and I founded uh Dinari in um 2021 now. So, it's it's going on our fifth year. Uh and the idea was to uh create a compliant um framework for

tokenization because we really believe that the world was going to tokenize which we're finally seeing after uh working on this for so many years. Uh and in that world of where everything is going to get tokenized, we needed uh places where um these uh tokens that represent the various assets can trade um in a compliant fashion uh in a way that really rewards investors um so that we can start creating platforms that are truly these omniasset uh platforms, right? Omni asset trading platforms. We we think that's where the world is headed. Um that's where wealth management is headed. Uh to sort of

break down these sort of traditional barriers across the different asset classes uh and geographies. Um so we're finally starting to see bits and pieces of that come to fruition. Uh so we're really excited by that. Uh I myself uh I was in biotech before uh the company was relatively successful. Um and my co-founder Chaz uh he also took a company called Legal Zoom uh public and then uh Brandon Oie who uh founded a company called uh Crunchyroll which he sold to Sony. Um so all of us had some uh background and experiences with wealth management and how terrible wealth management can be at times. Uh

and we just believe that the world was headed in a direction where everyone could benefit from a more transparent um financial system. Um but also things like capital markets really coming on on chain so that uh it can be available for people of all geographies and asset classes. >> Okay. Nice. Wow. 20 2021 that's a very long time in crypto years. I I will say you still you still look rejuvenated and uptitum despite all of that hardship of you know living through multiple cycles and operation choke point. Um um that's that's really fascinating. That's that's seems like a pretty stacked co-founder lineup there. And um so you know you've you've you've given me some of the

background. What's like the quick 30 second elevator pitch for somebody who doesn't know about tokenization? What what would you say? What would you say to that when you're trying to sell it? >> Tokenization. So, let's let's take um capital markets for a second, like public shares, right? It used to be denoted on pieces of paper. Now, it's on a database somewhere in ones and zeros. And tokenization is the next evolution of that where it's uh ones and zeros, but it doesn't live on a single server. It lives on uh many different servers. And it can represent multiple different asset classes, not just a particular asset class like public shares. So what it represents is

a universal language for all asset classes. So whether it's debt, uh whether it's um real estate, uh whether it's uh public shares, private shares, theoretically tokenizing all of these different asset classes allow these assets to talk to each other uh and be managed on a single platform. Okay, nice. And you know, I think institutions are finally starting to wrap their head around uh tokenization 5 years later. Um, you know, it's it's all the rage right now. I've done up this graphic here. You know, you can critique it if you want. Um, this is basically illustrating the SEC's tokenized

securities taxonomy. I've, you know, there there basically two major categories here. there's the issuer sponsored model and in the third party sponsored model and I've and within third party sponsored it again breaks down even further I've I've placed dinari under the third party sponsored model but under the custodial section you think that's an an accurate placement uh so we do uh predominantly uh live in the custodial category uh depending on the asset but we also have issuer sponsors assets uh where we work directly with the issuers Again, tokenization is really a protocol that allows different asset classes to live together and speak uh with one another,

right? So, um all of these parties, they're creating tokens that represent assets and uh depending on the situation. Uh like for example, Dinari is a registered broker dealer that can do the custodial assets, but we're also an SEC registered transfer agent that can work directly with issuers. So we do both. >> Yeah. Let let's let's double click onto that because as far as I know you were the first let's let's just use this term broadly tokenization platform um to be awarded a FINRA broker dealer license and combined with the transfer agent. We I can see that you're really you know

going vertical integration with the stack. Do you see this as you know let's just call it your regulatory moat in this space? >> I believe that uh so certainly doing things the right way um there is a moat um to to that because uh there is a way to scale things um in a way that if you're kind of on the fringes and trying to skirt around regulation you're just not going to be able to scale as much. Um, so I think the moat is in um not only the regulatory and having a good relationship with the SEC and FINRA, but it's also the scale that you can get to um uh playing with the players that are

uh doing things the right way. >> So let me let's expand for the audience. Can you elaborate on what the reason and the benefits are for obtaining both the transfer becoming a transfer agent and also having the broker dealer license? >> Oh, because the vision is quite simple, right? We want to create the plumbing to uh allow a matching of orders and trading across multiple asset classes. So like as a broker dealer, we can do the custodial model for say uh NMS uh securities or public shares uh private shares maybe in in certain uh

circumstances, but we really wanted to also be able to work directly with the issuers whether they're issuers of uh specific funds uh they wanted to tokenize or the company itself. um uh we wanted to sort of gain access to the ability of starting to mix different asset classes on a single platform >> and so so the I mean the broker dealer it obviously lets you it lets you go into the market it lets you purchase shares on behalf of your clients which in this case is typically a b a B2B style model versus maybe some of the others try to go B2C um you know can you can you talk about why you took this approach instead of direct to consumer.

>> So we were really focused on uh making sure that whatever platform that we created really started to break down the geographical uh barriers that exist in uh asset management and access to assets today. Um and one of the things that we found is there were all these uh players um in various regions whether it's Argentina or Pakistan or UAE or whatever that already had access to um the investors in those uh regions and all they really wanted access to was compliant um uh access to US shares or US equities or something along those lines. Uh and so it didn't really make sense for us to necessarily compete

against those uh uh groups. uh we wanted to just enable uh everyone uh to sort of broaden the access. And so by creating our API and SDK uh that people can just sort of plug into and then get tokenized uh shares uh the uh scaling happened much faster than if we were to have gone sort of B to C. And I would argue that we would not have done as good of a job uh in terms of marketing it and educating the markets and uh things like that in the different geographies um like our partners have done.

>> Yeah, I that point really resonates with me. Um, you know, I'm from I'm from the Caribbean and a lot of islands have the same issue where there's wealth management platforms, asset managers, but not an easy way to get direct access to specifically US um, US funds and indexes and stocks etc. So that that and also I think it's worth highlighting that dinari is not competing what's necessarily already on chain. You all are, like you mentioned earlier, the back end, the plumbing, the regulated infrastructure to help other businesses.

So, you're more com maybe, and you correct me if I'm wrong, but you're more competing against other maybe international brokers. >> I I think um so you're asking me who we're competing against, and I don't think about that very much. So, it's I have to uh think about that for a second. Um honestly we don't think of any international brokers as competition. Um uh they they are actually potential partners. And we have had situations where initially they came to us and said saying like oh you're competing against us or your

partner you know is competing against us or something like that. But then we really explained no like it's actually beneficial for us to all use the same network like because it pulls liquidity across different countries and different asset classes and things along those lines and we can offer them assets maybe they can't get access to today and so people that started out um being somewhat adversarial have come over and become partners uh to us. So I mean that's kind of we really believe in this sort of rising tide lifts our all boats um type of model in our B2B TTOC uh network. And so, you know, I I think really what we're trying to do, even for brokerages that

are already active in various regions, they have to get their shares somehow, right? Um, and it's usually some kind of clunky mechanism like depository receipts or something along those lines that are not real time that have a bunch of fees added on top and things along those lines. So like we have found that all all of our partners uh benefit uh not only from sort of the fees contracting because we don't have as much overhead um but they can also offer it cheaper to their uh clients and still offer the same experience to their end users wherever whatever platform they already have. Um so I think it's actually uh been really beneficial to a lot of our uh wouldbe competitors.

>> Okay. Um I love that story turning competitors into allies. Okay. Coopetition maybe. Um, so, so then how does the business model work if uh are you I know you're not, but I'm going to ask. Are you charging fees to the end users? Is it from the API? What what is the actual business model here? >> Yeah. So, our partners uh which are the companies that are uh integrating with our APIs pay us an API fee. That's it. That's our business model. We don't uh uh put fees on top of trades. Um uh we do enable our partners to charge some um uh trade fees if they want to right on their platform but uh we do not charge

them or the end user any trade fees. >> Um so who you know when with this broker dealer license it is it is dinaris has a subsidiary that has the broker dealer license. Correct. This subsidiary would then go out into the market when when the end user your the broker's customer places an order for let's just say Tesla then the subsidiary will go out do find the best execution and then hold that on behalf of the client in this custodial model. Correct?

>> Um the so if there's the API that's a cost to dinary. So the API fee is is expected to cover those costs. Yes. Yes. >> And and so another thing is this is a clear distinction between dinari and a lot of the other tokenization platforms. I'm using that word. Um the chart I put up earlier, dinari is a custodial model but onetoone and I mean not only that but it's al because you're also a transfer agent. You can get you have redemption rights is a direct claim on the underlying security. Um dividends is another aspect and I want to touch I

want to ask a question on that more and then also governance corporate actions right um on the dividends front how how how does that work the the users paid out in USDC um yeah how does that work >> yeah so today uh the user is paid out in uh USDC um uh or uh we have a protocol I'll call USD plus which is really just USDC that is yield bearing. Um so we we uh kind of give it to them in kind of a savings account form and then they can convert it to USDC one to one. Um uh that's relatively straightforward. Um but tomorrow

you know in in the forthcoming months uh we want to give our users more flexibility. So there may be other stable coins um that the dividends can be uh issued in. >> So so the user right now it's automatically paid out in USD plus um and the it is automatically and the it's it's already yield bearing. It's yield bearing as is correct. >> Yeah. Yes. So in a sense this is this is an advantage to holding um a to a stock onchain through dinari versus maybe through a traditional broker.

Oh yeah, we really want uh our users to earn as much as possible, right? And h on your end, how does the conversion process work? The the c the company, let's just say it's Apple who pays a dividend. They will distribute the dividends. How how does it work in the background between Apple's payout and then the user receiving that USD plus? So we received the dividend as the uh broker dealer on behalf of our uh users and then we convert that into stable coin. We have a partnership with circle um uh to do that uh today and USD plus and USDC are one to one exchangeable. Um so um the conversion I guess technically the process uh uh today is we receive the

dividends we uh mint the USD plus and we issue it out and then there's USDC that also backs it. >> Okay. And is is that um is that process a cost to you? A meaning any kind of is it or immaterial? >> Uh we have optimized as much as possible so that it's immaterial. >> Okay. Okay. Love to hear that. And then following up again the corporate actions like I I as a I as a holder of of of a daenery tokenized stock I can vote on just like a you know if I would have my with my regular brokerage and I do that through my brokerage as regular or is there is there another method with this

now? So, uh you can vote um with your with your tokens um uh in sort of an onchain voting uh type of a thing and we translate that into sort of the traditional protocols uh when they're when they're voting that can be done. Uh so it's actually fairly seamless if you are experienced with the wallets. But like there's a nuance point there in in your question there of uh corporate action is not just about voting, right? Uh corporate action is also stock splits, right? Um so for companies that are doing really well, they may uh split their stocks 1 to 10 or something like that uh if you're holding a bunch of tokens uh traditionally like um in in the synthetic model from the chart that

you uh put up, how does that happen? Because you're the number of tokens are not changing uh in your wallet. And so like one of the things that we had to do is create a system where whether it's stock split or uh ticker changes or any kind of corporate action like this um or token like you will actually see the number of tokens change if there's a 1 to 10 split in your wallet. So like it really is ownership in the truest sense um of like anything that happens to the underlying stock you will see reflected in the token. >> Okay, that makes sense. and and so when when when you're partnering up with these with these brokers from around the world in Argentina, Pakistan,

etc. But then, you know, they their their their clients are retail. Um, but then if we're looking at a little bit more, maybe we're looking at somebody a little bit more sophisticated trader who only wants exposure, right? Is there any reason to hold this kind of tokenized version versus a synthetic? So again, um even if you want economic exposure only, right? If your token and whoever is providing the token isn't properly taking account uh corporate actions, you might be out financial exposure as

well. So again, if the stock splits 1 to 10 and you have one, everyone else has 10 tokens now, right? And uh the denominator has changed and the price has changed and things like that. Okay. Um what what is the value of this one token then, right? Um and is it the same as the 10 shares or is it not? Um so like there are these kinds of questions that come into play. There's also uh you mentioned this earlier in terms of best execution. Um there's uh something called MVBO right um uh which is an actual um enforced thing in the US that you had you have to as an investor be offered the best price possible uh for a given

asset. So, uh, none of these tokens have that. And so, we've actually seen price dislocation happening on, uh, various, you know, platforms, uh, where MBBO isn't guaranteed. And so, um, you may be holding a token that is synthetic that represents Tesla or something like that, but the price is $10 higher or lower than, uh, the actual um, share itself. um as a sophisticated investor, you know, that should really give you pause about owning some synthetic tokens.

>> Yeah, that's that's actually a pretty valid point where we're where, you know, we're seeing some of this this dislocation and maybe probably liquidity issues with preipo stocks, specifically um SpaceX, which is debuting very soon. And and of course I I I found out that Dinari is also going to be listing uh SpaceX stock onetoone backed on the same day that it IPOs and available for all of your clients. Um care to talk a little bit more about that? >> Yeah, so again um there's a right way and a wrong way of doing things and um we've seen some platforms already offer space shares in token form. Those are not real. there's no way you can

actually, you know, back that right now. Uh, right. And so, obviously, we're launching as soon as the market opens on Friday. Um, as a broker dealer, you know, we have access to SpaceX shares. Uh, we're going to, uh, mint those tokens. We're going to make them available, uh, to as many platforms um, and partner platforms as possible on the same day, which is really unprecedented, right? uh this hasn't really happened for um especially in a high-profile IPO like this for it to be available to people around the world on the same day of the IPO. So, we're really excited about this. I am sure there's going to be some kinks that you know we have to work out and uh things along those lines

because there always is because um people may not be aware of this but like even on the US stock exchange for an IPO like this there are liquidity issues on the day of the IPO. takes several days, you know, for some kinks to get worked out. Um, but we're going to do our best and we're certainly going to make it available to as many investors as possible on as many platforms. Um, but uh I think what people can be assured of is uh the onetoone backness of Dshares um is going to remain true even uh for these um very soughtafter tickers on IPO day.

>> Yeah, 100%. That's amazing. Where was this technology when when I was younger looking for this to have inst instant access to probably what is the hottest IPO I would say ever most overs subscribed in terms of absolute in terms of absolute dollars that that's that's crazy. >> Um and you I mean you and you also just mentioned kinks um one one thing that I was uncertain of is off our pricing. So, you know, we um let's just say weekends. Let's it's 3:00 a.m. on Sunday, right? And I have my dinari SpaceX token.

>> Um you know, how how is the price determined there? The the traditional markets are closed. There's also live synthetic pers like how how are you combating this? So um this is why the more brokerages that are connected to us the better um uh the price discovery becomes uh right because uh when the the traditional markets are not open the price is really determined um by the the order book that dinari uh has on the dinari financial network ef um and so all the uh partners that have plugged in um some some somebody in Pakistan might want to sell their space shares or uh somebody in

London might want to buy the uh SpaceX shares on a Saturday morning or something like that and we match and we do the best that we can to match those orders. Um and so similar to like after hours trading um there isn't really a market order uh there's limit orders that you can do and those limit orders get matched with one another. Um and so the price discovery is really just the the market forces uh in the purest form. Um and we have market makers that uh facilitate the liquidity. Um, but it really is for people that want to uh put in limit orders uh on the weekend. Uh if there is a matching order on the other side, it will execute.

>> So that's interesting. You you mentioned DFN and you mentioned you also have market makers to to help with the price discovery. Um you know, let's just let's just stick with the SpaceX example. SpaceX is listing on Hypercore, correct? Uh that's one of the places, >> one of the places it's it's listing multi-chain. >> It's it's multi-chain and it uh as you remember we have um we have partners in over 85 countries um of various platforms that have integrated onto our APIs.

>> Okay. So the the the DFN is for the off-chain order book matching whereas maybe hyper core is just for you I can I can think of it as different market makers for on different chains as well as offchain and you aggregate all of this using DFN to do that best order price matching. Is that is that a fair way to categorize? So you can you can think of DFN as an onchain order book um that aggregates liquidity across all the different chains and all the different platforms.

Um again we've done it this way because we want the best experience for uh the end users right um and so for there to be just liquidity on this chain or this chain or this platform or something like that is actually not a great experience uh for the end user. Um and so ultimately no matter what platform it is in the liquidity flows back to a centralized limit order book um that handles this um obviously on the weekends right when there isn't a bigger order book offchain um that is uh backing the liquidity um and so the DFN does does that run simultaneously

if it was during market hours Wednesday at 12 does it run simultaneously or does it only turn on after after hours and weekends? >> It runs simultaneously, but it is designed to be smart enough where if there is a better price offchain, it just uh takes the offchain liquidity um rather than uh matching orders purely on onchain. >> Okay, that's awesome. Um so, so this this seems to me like it's the offchain and onchain worlds are finally converging. This is SpaceX is pro, you know, like I mentioned before, probably the hottest IPO and to get instant access is is actually insane. Um, is have do you have any takeaways from from

this from this year from when you got the license? Any any learnings to get to this process? So, there were any number of ways that we could have tried to take shortcuts along the way. Um, I would say, uh, especially if you're operating outside of the US only, you know, you're you're you didn't get proper licenses. Um, you know, maybe it's a synthetic thing, so you don't really get voting rights or anything along those lines. Uh, we really stuck to our guns over the years to basically say we were going to do things um the right way. Um, and now people are finally recognizing that that makes a a huge difference. Um, so like that's that's really uh exciting for us.

Like tomorrow, Friday morning, you'll be able to go and buy SpaceX shares. Yes, on uh on Hyper Core, Hyperlquid, but also on you know a platform like Facet uh which is like a neo bank platform out out in UAE or uh Pakistan or something like that or like um uh uh any like neo banks that you might be familiar with or wherever you're banking or something along those lines that are partners with dinar you'll be able to gain access to. It really is kind of an unprecedented thing, an unprecedented time. And this is not like some of these um uh tokenization platforms, they will say, "Oh, if you're somebody in Argentina, just be happy that you're getting any

synthetic, you know, uh price exposure at all." Uh type of a thing, right? Like, and and that's just kind of a weird attitude to have. like those people actually deserve the the access and the rights uh to the underlying shares which is what we provide with these shares. Uh and I think for the first time really in history this is going to happen across you know 80s something countries on IPO day where people are actually going to get exposure to the shares not just the financial upside but the the shares and that's something we're really excited by. Yeah, there's huge advantages over the the onetoone backed versus synthetic and specifically your version of the onetoone backed because there is the SPV

model where maybe it's you don't have direct claim on the shares itself but you have clears through and then you have counterparty risk added on top of that. There's a lot of issues there. But then there's also the um where they're tokenizing share entitlements which also gives investors you know you know dividends corporate I assume um what what are the trade-offs here because this is actually one comparison I'm not super clear on like what are the trade-offs between the dinari model and then the tokeniza tokenization of security entitlements.

Uh so in in effect um from a practical uh standpoint of the user I think at at the end of the day I don't think there's much of a difference um honestly uh and and to us there's different groups that are trying to do things different ways um and I think the entitlement side of things like the DTC efforts and things like that are really good. Um I I think you know they're very compliant and legal and things like that. Like right now retail uh can't get access to those things. That's one of the limitations of uh of the platform, but I believe they're working on that.

To me, these efforts are all great uh because we're all on the frontier. There are no established answers for how this is going to go. But by doing it in a compliant way, we're setting ourselves up for a future where the tokens are not really representing anything. They are the shares themselves. Like we're going to get there. Just like we made the transition from paper to ones and zeros on a server. Like today we none of us says uh show me the paper certificate that backs my share on Robin Hood or you know whatever the platform I have shares on uh is right. Um, that's because at some point we decided the

ones and zeros are sufficient enough for them to be the shares themselves and we were going to get rid of the paper. The same thing's going to happen for tokens. Tokens today, you know, we're saying, "Oh, it needs to be backed or, you know, it needs to represent entitlement or whatever." But really, um, to me, this is just kind of an artifact of a transition that we're going through. I think if you're doing things the right way, uh eventually we're going to sort of converge on the best method uh possible for this. Uh obviously dinari uh has an approach to what we think is the best uh method. I'm not so arrogant to think that there aren't others um who are trying to do things the right way um as well. And I think those people uh

those groups will be rewarded um to be able to say yeah our tokens really represent the shares now. they are the shares, right? Um there's nothing that needs to be backed. And what an amazing thing. All of a sudden, shares went from just digital to like now programmable digital, right? Um uh and they are the shares themselves. You own the token. That is the share. That's the rule that dinari uh is has established for all of our tokens. Um, and we're just working with the regulators to make sure that that gets completely codified in the future where we will say we no longer need these ones and zeros on this server. Um, the token itself is going to be the share.

>> Yeah, I'm looking forward to that future. Um, so, so this is in effect. I mean, you know, we've talked about the synthetic model, we've talked about the per model, we talked about their trade-offs, I've just mentioned the DTC model and there's the dinari model. But you you you you've mentioned a future where the token is the share itself. Are you are you seeing what Dinari is doing now maybe similar to the DTC as a stepping stone to that future? Um yeah 100%. We're uh all the things that we're uh having to do offchain uh right now where the offchain syncs with the onchain in this mirrored fashion or the custodial model uh we're doing uh to make sure that we're remaining compliant uh with all the current um uh

regulations around uh around these shares. But again, just as we made the transition from paper, I think we're going to make the transition from the ones and zeros to uh tokens. uh and that's uh that's just going to take time for the regulators to get comfortable that uh groups like dinari uh and DTC are doing things the right way that the tokens are you know not hackable they're not uh fudgeable um they can represent the shares without um it running a foul of uh securities laws and concerns and AML and all this stuff and If if we do things the right

way long enough time for a long enough period of time, then eventually uh the regulators are going to feel comfortable saying, you know, tokens tokens are the shares themselves, not not the the ones and zeros that back it, right? The it's a weird concept even today of like the shares that are backing it are just ones and zeros on another server just like the tokens are. So, it's it's kind of a a weird place to be and but I understand like we don't want to harm the end investors. So, we want to make sure that we walk before we run and that's where we are right now. We're kind of going from crawling to walking uh now and um we are working with the regulators to

make sure that this transition is as smooth as possible. >> Yeah, 100% agree with that. Couldn't have said it better myself. And yeah, I definitely agree. is a bit of a quirk that these ones and zeros represent these other ones and zeros. And then [laughter] I remember when I now got into asset management and you know simultaneously I was reading the Bitcoin white paper and you know um Bitcoin was you know 10 minutes maybe an hour in reality settlement and then I back then it was t plus three settlement days and I thought wow this is so old and I started to look into why and it was this layer duct tape onto this layer and I was like oh this is so messy and you know then I was like oh um you know blockchain is so much cleaner and then now I realize okay

we're kind still duct taping this stuff again right now in the at least in the intermediary process you said until we reach that end goal that you just spoke about and so you know we're coming up on time here but on that note of end goal what is in your opinion the number one thing that you're looking forward to that you can do with tokenized stocks on chain that you can't or are limited to do on with traditional brokerages >> oh boy that list is endless [laughter] Um here here are a couple of things I'll just throw out there for um uh for people to think about today. When you look at exchanges NASDAQ, NY um MEX, IEX,

um all their order books are whole shares only and always against fiat. So like Apple uh shares are traded in whole shares uh against the dollar, let's say, right? If we live in a world where all those shares are tokenized and uh we have stable coins, right? What's stopping us from the order book itself being fractional, right? So like we think of fractional shares. Oh, fractional shares kind of exists on broker dealers and things like that.

That is all uh the broker dealer having to do all this extra work. Duct tape as you said, right? um where they're having to buy the whole share and they're kind of giving pieces of their shares to their user and things like that and it's really messy. Ever when everything is onchain including the order book, there's actually kind of just a seamless um transition onto, you know, the order books actually being able to handle fractional shares. Okay. Once that happens, there's something really interesting um that's uh possible all of a sudden, which is instead of the order book always being like Apple to the dollar or Nvidia to the dollar or something along those lines, can it be

Apple to Nvidia directly? Can can you start having uh order books uh uh in pairs that are uh share to share? Because as you uh you know from your own experiences, you know, if in the wealth management context or something like that or asset management context, you want to move out of one asset into another, you're settling to fiat first and then going into this other asset, right? Well, is it possible for us to swap directly? Because swap is a na a native term in crypto, right? Um we all understand it. Uh well, if that technology comes to the capital markets, something really interesting happens like interesting questions start being asked. Okay. Uh as as a um as a average let's say um

uh investor that is not part of a fund or something like that, you know, I'm just retail. Okay, I have certain amount of money in Apple. I want to move it into Nvidia today. I have to move it into fiat. I have to wait for that to settle, which we say t+1, but it's really not if you have any amount of money uh that's, you know, larger than like a few hundred bucks or something like that and then you're going to go into this other asset that is a taxable event today. But all I wanted to do is pull money out and then put it into another asset.

Okay. If all of a sudden down to the orderbook level you can swap from Apple to Nvidia directly where I never settled to fiat um or uh or anything that could be considered as fiat like stable coin or something like that. Is that a taxable event because I I kept the money in the capital markets? Right. And that is like a really interesting uh question that we're going to have to answer um in a legislative fashion uh once this technology exists. I believe it's not a taxable event and it shouldn't be a taxable event because it overwhelmingly benefits the end investor as well as the capital markets for them to keep the money in there.

They didn't see any liquidity out of that, right? Um and so there are these interesting questions like that I think people are not quite thinking about yet. Um but all of these uh once the technology really shifts over all of these questions come into play and I believe uh we'll answer them in a way that really benefits the end uh investor. >> I love that. That's super interesting. I definitely didn't think about what happens to portfolio management when at the order book level, you're they're they're directly dealing with the fractionalized shares instead of having to put it on their own books from like DTC or whoever else. That's super interesting. I'm I'm already thinking or if I want to come out of Nvidia, I just

want to decrease risk. Nvidia to S&P 500 tokenized ETF just slightly decrease risk without having to hit that cash leg. Or then even if I want to do that cash leg, you bring up that very interesting point about what is a taxable event. If I put it into a bond ETF, which is to me could be effectively cash, is that a is that a taxable event? Okay. Fascinating fascinating future we have ahead of us. Oh, the capital markets are going to be forever changed, you know, by by onchaining. It really is like in in a way that people are not quite thinking about yet. Um and and I like I said I think it's going to be for the benefit of the uh the end and the investor. Um but it this is not oftenimes people talk about tokenization

it's like oh it's just a wrapper and like it's not really anything new and things like no people are not really thinking about the deeper implications um of when the entire system shifts over to onchain um how does it benefit us? >> Yeah. I don't you know I I was thinking maybe you were going to say lending or something to do with margins. Maybe you're going to talk about some kind of like yield process protocol or like I mean there's a list of things you can do with programmable stuff and then when you say people aren't thinking deeply enough about this I think yeah they're not thinking about the programmability of it but it seems like even I wasn't thinking deeply enough about this either. So you when you really get down into the weeds, it's really a

foundational level change of the of of the capital markets like you just mentioned. >> Yeah, it's and that's that's the mistake that I uh see a lot of institutional uh investors um thinking about tokenization making is they're they're trying to abs they're trying to really apply tokenization just to the framework that we have today. they're not asking how does a framework fundamentally shift as a result of this uh technology uh change and so I would encourage all of us to think about that um because there's some really interesting you know edge cases and things like that that you know a couple of these things that I've mentioned uh thus far when you start thinking about it's just like oh it's

it's endless in terms of um how the uh capital markets how the uh the financial system changes uh once everything is on chain and that's what I mean it's like when you ask about the end state. Yeah. >> When everything is on chain, >> all of these things are possible. And yes, you mentioned some of the other interesting things in terms of atomic lending and borrowing and all these kinds of things, but like you know how atomic lending and borrowing in intersects with, you know, fractionalized order books and think uh in instant settlement and all like there's really interesting things that you have to start answering questions about um when you when you think about that end state. all really exciting and all I believe um going to be ultimately beneficial.

>> Yeah, 100%. I can tell you're very passionate about this. You've given me and my AI agent a rabbit hole to dive deeper in tonight. Uh I'm I'm excited to do such. But um thanks so much for your time, Gabe. This was super insightful. Uh where can people find you and learn more about dinari? >> So dinari.com is definitely the uh place to start. Um if you want to uh start trading you can go do so. app.dinari.com um is the the interface uh by which our broker dealer uh operates. Uh and then of course you know SpaceX shares are going to be available uh starting tomorrow when market opens. Um so that would be 9:30 Eastern um in the in the US uh uh time. Um, and as you mentioned

on Hyperlquid as well as all of our partner uh platforms. Um, so I would go check it out. >> Okay, awesome. Thanks so much, Gabe. Um, and for listeners at home, if you've enjoyed this, uh, please, you know, whatever media you're listening on, Apple Five star, Spotify, like, YouTube, leave a comment. It it really helps us out. Um, and thanks for listening and we'll listen we'll tune in again next week. Cheers.