Institutional Crypto Strategies with Arthur Hayes, Guy Young, and Omer Goldberg

Transcript

and then we're going to go higher. And so I think this is a short-term pain. You know, we could retest 76500 in Bitcoin. If you're sitting here right now and your product is not thinking about how it's trying to benefit from the flows of institutional capital coming into the space, I think you're slightly dead in the water. Everybody has some type of stable coin uh strategy internally that they want to take a shot at because if you win it, it really is the holy grail. It's an American thing and stable coins are not for Americans. Stable coins are for everyone else who wants a dollar bank account but can't get one. Americans because he's in a dollar break account. When you see like massive volatility in the market, what are what is the chain reaction in this mechanism that you described, the risk oracle, and you also mentioned AI. Are

we bullish or bearish on that? Cuz I've heard conflicting data. Welcome back to the rollup, your home for technical talks and open conversations that shape the modular future. Nothing on today's show is to be construed as financial advice. You can see our full disclosures list at the rollup.co/ventures. Sit back, relax, and enjoy today's episode after a quick word from some of our awesome partners. Ladies, gentlemen, anons, and dens, it is stable coin season brought to you by your favorite, the best in stable coins, Fracks USD dollar stable coin, backed by the best in the business, the Bidd Fund by Black Rockck and Superstate. This is stable coin season. It is the

yieldbearing stable coin by FRA coming soon to a chain near you. What's going on guys? Welcome back to the rollup. It's America's liberation day. I'm not sure if your portfolio is feeling liberated, but we have here guy from Athena, the man who makes centralized stable coins look like they were from the first era of crypto. We've got Omar protecting the your DeFi bags on chain and Arthur, the guy who makes other investors look normal. Um guys, welcome to the show. It's great to have you, Guy. Omar, it's your first time. And uh how are you guys feeling today on on America's Liberation Day, Rob? Yeah. Not not feeling too liberated yet, but hopefully it kicks in later today.

Good, man. Well, it's all right, man. I at the end of the day, we have a uh a very volatile president. Let's just put it that way. But Omar Guy, welcome to the rollup. We've had Arthur on once before. We love just a brief intro um about yourself. Actually, I wasn't on with you, Omar, but Rob was. Maybe we'll start with you guy. Um, and what you guys are cooking with Athena and now Converge as well. Yeah, for sure. Um, so yeah, my my background before Athena was in Trafy. Uh, so I used to work at a hedge fund uh spending my time looking at uh financials mostly, so investing into banks, payments companies, lenders, that kind of stuff. um was involved with crypto back in 2020 and was more of just

like a retail speculator on the side uh through the last cycle and then uh decided to make the jump into building this after a piece that Arthur actually put out at the beginning of 2023. Uh so he wrote this uh blog post called Dustin Crust and there was a bit of a call for action to say you know why he thought this was a big opportunity uh where you know the reason that the space like wanted an asset like this to exist and um you know I've I've been doing like the the backing behind Athena's product uh by myself as like a a thing on the side and always thought that this could be an interesting thing to turn into a product and when I read uh the piece that he put out it just felt like a bit of a calling uh when I saw that. So

yeah, quit my job after I sort of read that piece and then uh put the team together and we came out about a year ago now just over a year ago about 13 months uh with the initial product and um yeah grew from like zero to just over $6 billion in in that year which is the fastest growing dollar asset that that we've ever had in crypto. So yeah, that's our story. Oh boy. I also uh used Notebook LM to listen to a podcast of Arthur's latest piece BBC and I was uh quite excited to be in the bullish camp, but uh not sure what happened after today's liberation day. We we've got quite a bit of the macro unfolding. Omar, maybe just a quick uh kind of introduction to Chaos

Labs, what you guys specialize in, and then let's jump right into it. Yeah. Um founded Chaos Labs about four years ago. Uh today we're the leading risk platform. Uh we have an AI and simulation engine that powers applications like a GMX, Jupiter, Ether, Renzo, Venus. So everything from real time uh funding rates, interest rates, liquidation thresholds, liquidation balances, uh you name it. uh we probably interacted uh with some of our products uh through your favorite applications and have also the pleasure and privilege of working now with Athena on a couple of new products including the proof of reserve oracle.

Sounds great. And Arthur, no introduction necessary. You've been on before and also we're we're on with the memecoin messiah Miad. Um maybe you could set the backdrop from a macro perspective. You've written a lot about this recently. um you were you know in in your latest article talking about the fiscal domination of the Fed of of the office and the administration now over Powell and the Fed um and was also arguing that tariffs didn't really matter in the crypto markets at least as much as in the stock markets so after kind of seeing things unfold today how has your thesis changed at all or generally how are you seeing seeing the macro backdrop of uh of things these days? Yeah. So, I don't really think my

thesis has changed. Obviously, I'm looking at my charts right now. Bitcoin was at like what 89,000 now to like 82,000 something and change. Obviously, it's a reaction to these across the board tariffs. I was speaking to some of my friends in the stratified world and it's like what was the expectation on the street for these tariffs and there really really wasn't one specific number that anyone was looking for but it sounds like whatever Trump and the administration rolled out is probably worse than the worst case of what people thought would happen in terms of these tariffs and obviously we're seeing that reflected in the markets but I think the good thing with crypto and Bitcoin at the end of the day is it's a very simple equation all we care about is other more

fiat dollars, yen, euros, pounds in the world than yesterday. If so, then we're going to go higher. And so, I think this is a short-term pain. You know, we could retest 76500 in Bitcoin and we'll see what happens at that level. Um, even if it breaks, I'm still buying stuff. So, I think this is a great opportunity to buy things at the end of the day. every central bank is going to be printing because they believe that they need to offset the negative effects of these tariffs. Whether it's inflationary and some companies are doing badly in America or you're in Europe and you have a company that no longer can sell as many goods and whatever. It's just an excuse for the central banks and the finance ministries to print more money and they're going they're already telling us in not so many words and you

know Bloomberg and other relevant publications that these tariffs are very negative. Therefore, we need to provide some sort of accommodation to our economy. So, I expect to see a lot more fiscal and monetary accommodation from every single country around the world as they try to fight back against these tariffs that Trump has put on different nations. Yeah. I mean I for one was kind of brought into light that the US has just accepted tariffs kind of begrudgingly for the last you know few decades uh from you know every country that that Trump had on his list today as kind of this form of soft power um you know the extension of the USD as a global reserve

currency um and so there's been a lot of differing opinions passing it over to you guy curious from from the stable coin perspective specifically about the rates. How do you think about the potential for lower interest rates over the next six to nine months? I think Goldman has predicted three cuts. Um how do you think about that affecting the stable coin atmosphere, Athena's business model, how you see that playing out for crypto? Yeah, I think um it has an interesting effect that works works in both ways, right? Which is like generally when rates go down, speculation in crypto picks up and demand for dollars within crypto pick up as well. So it was an interesting dynamic last cycle when rates went to zero but we added like hundred billion

of stable coin supply. There is a bit of an offsetting factor that works in both directions there. The one piece I would say that um Athena looks very different to something like a circle is that actually the rates within Athena's product tend to actually exhibit like negative correlation to real rates in the real world which is probably the most powerful quality of Athena. Uh, and it's for the same reason that I just outlined there, which is when rates are going down, people are speculating on shitcoins more and then demanding more leverage within crypto to do that. And so, if you really think about it, like Athena existed at pretty much the worst moment in the last 10 years from a rate perspective to have even come to market when we're fighting a hurdle rate that was at the highs for the last 20 years.

Um, and actually when you see rates come down, like we saw in Q4 of last year, rates came down by roughly 70 bit uh 75 pips and funding rates went up by roughly 14% on average for the quarter. So that's actually like the moment that Athena shines, which is Circle's going to be losing $400 million of of uh of revenue a year for every 100 basis points that interest rates come down. And I actually think the rates on Athena's product are going to go up with the demand expansion for stable coins um and then the hurdle rates going down. So, I think we're pretty excited for that moment. And if uh three rate cuts are coming, then I'm going to be uh pretty happy about that. Yeah. So, I guess you're not buying the circle IPO then.

I was wondering the same thing. I was Are we bullish or bearish on that? I've heard conflicting data. I I was pretty shocked by the numbers personally. I um there's a good graph. There's this uh trader called John Brown, I think his name is. People think it's maybe a Paulo uh alt account and you just put a a graph side by side of sort of the supply but then the prof profitability of tether versus circle and tether's at like 14 billion this year and tether and circle was at 10 and something so even though the supplies are like you know not too far off it's like roughly just below half the profitability is like literally an order of magnitude different um which is quite crazy yeah so I think circle has a distribution problem and it's a very

American focused uh product and Americans don't need a dollar stable coin. They have Venmo and Cash App and all these other things and they have the [ __ ] dollar, right? It's everyone else around the world who needs a dollar bank account and that's what Tether is. Tether is strong in China and emerging Asia and these sorts of places is not very strong in America. Obviously, Circle is an American company and it's partnered with Coinbase to distribute their product essentially. And Coinbase to generate users needs to give away yield because they need to compete with Tether who has a better distribution network but doesn't give away yield. So the reason why Circle has to give away yield is that's how they get clients.

And so they basically pass on a lot of their NIM to Coinbase who then passes it on to people who hold Circle with them in custody revenue. And so basically that's why Circle's [ __ ] And I think at some point Coinbase just buys Circle and they're just going to wait for their bright opportune moment where the price is cheap enough to do it. And so that's why I think this IPO is a piece of [ __ ] because again, Circle has no distribution. It's purely against Coinbase and they have no um defensibility on an interest margin unlike Tether and they're predominantly for Americans which already have has a dollar. So, I think it's not really the the strongest use case for a stable coin. And that's why I think Tether, if you want to talk about a dollar back stable coin in a bank account, is a

vastly superior product and will continue to kick their ass. Omar, anything to add there? I I just think generally like what we're seeing is that the stable coin market and and not only by supply but also utility in all of the applications that we work with. Uh the landscape is changing really quickly. I think like one of the things that's shocking to to hear is that Athena and Guy has only been 13 months. It feels like much longer. Um and you're seeing a lot of kind of stable coins that previously were the holy grail in terms of distribution, liquidity, and utility. um you're seeing that market share change way quicker uh than I think anybody

anticipated. So I think it's it's even more so the case. People need to continue innovating, finding the the better use cases and and how to kind of drive that and put that in the users's hands. And uh the circle S1 is interesting and I think it's also an opportunity for them to continue pushing the frontier and try new things. I guess quick follow up on the on the business model um and also tying this into macro is that you know one potential fallout of these tariffs is that we get massive inflation um and if we don't couple that with like cutting rates maybe they do cut rates and this kind of kicks them in the ass to do so. But you know there's one theory that says like there's more pain that's necessary and and like longer term Treasury rates could go up.

Um, and so I guess maybe Arthur from your side, like what do you think the the probability of something like that happening is? And then if that does happen, guy, how do you guys react on the Athena side if if you do see, you know, treasury rates increase significantly? Well, I think Paul already told us what the Fed's baseline view is and he got asked, "What do you think about tariffs?" And he said, "We think any inflationary impact of tariffs is transitory." So that already says he's going to ease even if you know inflation's four, five, six, whatever percent it goes to because of higher import costs America, he believes that's a short-term impact. Therefore, he doesn't have to adjust his bias towards easing monetary conditions. So they've already said they're not even going to

look at them, I think. And it' be and the fact that he even used the word transitory after he got torched so bad in 2022 when he said inflation is transitory and they went to 40-year highs, I think tells you how entrenched their view is that they want to ease rates. And if Treasury um bills and notes and bonds start falling, yields start rising, then that's even more reason why they need to end the supplemental leverage ratio for banks. And the Fed needs to start doing QE for treasuries because the US government cannot afford, you know, four and a half, five, five and a half% yield on the 10-year Treasury when you have a $36 trillion um and rising exponentially debt pile.

Yeah. Yeah. And I think from our side, um you know, we had the growth that we had last year despite the fact that rates were like 75 basis points higher than that where they are now. So if they went up a bit or stayed where they are now, I'd feel comfortable comfortable that we could continue growing. maybe just not quite at the pace that I'd hope we can if rates were going down. Um I think the other piece is that we have added a piece to the product within the last six months which I think gives us a bit of flexibility which is this USDTB product which you might have seen. So that's just a simple wrapper around the Black Rockck Bidd and um Athena now is the largest holder of Bidd um in crypto.

So it's like roughly 70% of the the Biddle product is held within um our our sort of like vanilla stable coin. The cool thing about that is it almost gives you flexibility within the red cycle to just say what proportion of these two things do I want to fill USD with? And so in a moment like now when rates are extremely depressed across the market, so funding right now is actually at the lows that it's been for almost like 18 months. Uh you have the option to just go back into something that looks and feels a little bit like a normal yield bearing T-buildbacked uh stable coin essentially. And so yeah, we always have the flexibility to sort of like match the rest of the market when they they're using that. It's just you have the like embedded option there where if crypto rates go up, USD is like the best

position to sort of capture that piece as well. Yeah, it seems like it's it's pretty clear that if the rates come down and we get more speculation as a result, Athena is very very strongly positioned in the entire stable coin landscape by design. Is that fair? Yeah. What am I missing there? It seems too obvious. Yeah, I'd say it's like a painfully reflexive like project because uh it goes through these wild swings. Um especially on even like the growth profile like if you looked at the growth profile of USD, it goes up in like a vertical line like 3 billion and then it sort of flat lines for a few months and then rates come back and it goes up by like four bill and it's a slightly strange growth profile which isn't sort of steadily kicking up. It just has

these really aggressive um peaks and sort of like flattening periods. Uh but yeah, I think you're right. It's almost by design one of the most like reflexive assets out there. And um I think even even the growth that we had in Q4 of last year, we weren't really integrated in many places. We really only had like centralized exchange listings on Bybit and we've added like four centralized exchanges since then. Um we worked with Omar on the on the RB piece where you know listing USD there. It was a very interesting like levered looping strategy that people were doing at huge size but unfortunately Omar was holding us back and was sort of like capping us as we went to to keep it safe and so I mean that that market I think could have got to like 3 to 5 billion and we did it

in a safe and responsible way working with and sort of took that to one and a half but yeah I guess the reason I'm giving this context is that when I think the market does come back now we've sort of set ourselves up in a bunch of different areas now where it can uh I think grow even faster than it was before. Yeah. Yeah. And I just also think we're better positioned because at the time a like most of the industry was still doing everything manually in terms of the updates. Today we have the the risk oracles so we can uh react in real time or in much higher frequencies and cadances than we ever could before. Uh so this allows us to kind of capture opportunity when it presents itself but also wind things down and be more secure and riskoff when we need to. And I think

that was one of the main kind of limit limiting factors last cycle that we always had to prepare for the worst possible scenario because it would take us at least a week to make any change um across a specifically but every other protocol and since launching edge with a uh I think soon we're going to have the PT markets able to be more flexible on the core Athena markets and same goes for the derivative markets on chain too. Omar, what when you see like massive volatility in the market, what are what is the chain reaction in this mechanism that you described the risk oracle and you also mentioned AI is utilized in that mechanism. What is what does that chain reaction look like when you see volatility? Yeah. So I I think there's a few things. So first like setting the

stage and how AI even is is a part of this. I think early when we started the business all of our risk u models were powered primarily by quantitive signals. So we're looking at volume, price action, uh liquidity, depth, all these things across different markets. But oftent times the the drive or the vast majority of the time the driver to all of this type of price action and volatility in the market is news itself. And when news breaks now, we can react to it uh much faster, right? So if we're already on the topic of stable coins, I think like the canonical example is the USDC DPEG. We're also speaking uh earlier about circle that happened when SVB collapsed. The number one thing that you saw or like immediately was everyone dumping all of their USDC into A

withdrawing USDT. There was uncertainty around the time uh around the stability uh of the peg and whether or not they'd be able to to make everybody whole. And it's the it's exactly these type of black swan events that as a risk manager you always need to take into consideration even if it's the tail uh because our responsibility is ultimately to kind of protect the users and keep the protocol solvent. So two years ago uh we realized that going through governance for every single parameter uh was not what the future uh looked like and that's how we built edge the Oracle protocol and during times like this it's when it really shines. So the kind of guy in Arthur's earlier point uh you have the tariffs uh that that Trump's announced today, interest rates going

down, speculation increases, which is also followed by volatility and all of these kind of mid to small market cap tokens. Um and in absence of being able to have kind of secure real-time infrastructure, you just kind of need to be extremely extremely conservative and shut down business for a lot of these applications. So edge is not just about security for a for GMX for Jupiter. It also lets them be more uh lenient in capture opportunity, capture flow, capture volume and fees um where whereas before there just wasn't an option because it was it was compromising security.

And guy, I can only assume that this has been highly impactful in terms of your risk strategy when thinking about how to design something very resilient and sustainable. Um you know you guys are now have made this announcement around converge which had quite a bit of attention um especially around Trump's world liberty fi and this kind of big institutional push from New York and DC. Uh before we get into Converge, what is the state of Athena's relationships in DC in New York with institutions and regulators and what's kind of happening on the ground floor there with regards

to World Liberty Fi and any of the stable coin oracle kind of DeFi projects that are getting kind of in bed with some of these uh institutions and regulators? Yeah, I think we're we're spending slightly less time I'd say with uh regulators in the US and more focused really on like accredited and and professional institutions who are sitting there. So I think um the macro view that I have and I'm interested in you guys if you guys share the same view is that this cycle we've actually really seen barely any inflows outside of BTC ETFs and then uh Tether going up a little bit in supply. Like if you look at DeFi TVL, we've really just reshuffled the same chips between each other and like taken some from Ethereum, thrown it on Salana, taken some from

Salana, thrown it on parachchain and there isn't hasn't actually really been like real influences that have come into the space uh specifically with like onchain products. Um the view that we had is that Athena's product is actually like uniquely interesting to people within Tradfi because if you take something that's got close to zero volatility and like an 18% annualized return, the demand for that in trad isn't like $55 billion. It's like a few hundred billion. And I think we saw that a little bit with Terra last cycle which obviously didn't uh turn out in the right way. Actually the learning from that was actually a dollar which can produce a structurally higher uh return is kind of a product that can appeal to everyone on earth whether you're a retail individual in Southeast Asia or like a Black Rockck sitting in New York.

So uh the view that we have is that they're like here right now and they're thinking what are we doing after ETFs and you know a lot of these institutions have hired 30 50 man teams who are sitting there and saying what are we doing next after putting up an ETF. You've obviously got the onchain treasury products that they're they're bringing on chain and we're obviously interacting with those in that uh normal stable coin that I described. But I think the bigger opportunity here is actually asking ourselves the question to say what primitives or uniquely interesting like products coming out of crypto can we actually export out into trad rather than us like consuming their products. And we basically coming out with this product called IUSD which I I shared some thoughts on like a couple of months ago in our road map. And really

it's just like a tokenized security of USD which has just got basic KYC and permissioning that sits around it and it just puts it in a format that you can actually export out into trad. So within the next uh call it like 10 days we're going to be announcing the first distribution partner that we're coming out with on their product and they're seeding this with like $500 million of of their funds which is obviously a reasonably chunky ticket to come in to start this whole thing. Don't [ __ ] it up. Um, and I uh, yeah, I think it just gives you a sense of the scale of how big that can get in the right conditions, which is uh, and if you set up the rails uh, in the right way. So that's sort of like the theme that we're looking at. And I think if you're

sitting here right now and your product is not thinking about how it's trying to benefit from the flows of institutional capital coming into the space, I think you're slightly dead in the water, like if you're just focused on like again shuffling those same chips around within DeFi. And uh yeah, we just think we're in a reasonable position to actually provide a pretty interesting product to them. So yeah. Yeah. I mean on that point, Arthur, are you a little bit worried that uh some of these institutions are going to come in and take your lunch as the guy who's been running circles around the rest of the crypto market for the last couple years? like are these guys going to make it more efficient, more mature, harder to to kind of uh do basis trading or or kind of what's your perception on uh on

balancing this new capital with the sophistication that's going to come in and potentially deteriorate your edge, our edge, and those who aren't as uh deep in terms of pockets or in terms of personnel. I mean, I think at the end of the day, it's still a cover your ass mentality at any sort of institution. And so, you had sort of a replay of that with the buy bit um fiasco and hack. You know, they lost one and a half billion dollars. Thankfully, Ben is a rich [ __ ] So, he just reached into his pocket and paid it paid it out. But if you're sitting as a risk manager at some, you know, US or Western European hedge fund and you're running a basis trade and you've got exposure to this exchange that's all the way in spooky

Asia, um, you're going to be [ __ ] [ __ ] your pants because the last thing that you want to have, you you convinced your boss to let you do this sort of crypto basis trade thing. Then some [ __ ] that you've never heard of before just puked one and a half billion dollars and you're [ __ ] your parents worrying if you're gonna be able to afford your Hampton's house because this guy's not going to pay you back. And so I think that just highlights that these guys are really only going to trade on a very few select venues. And so yeah, maybe the basis on the CME and some, you know, lit tradi exchanges or coinbase or something like that. That sort of opportunity compresses, but there's going to be an immense opportunity between, you know, worldwide dexes, uh, exchanges that are

not based in Western Europe and America and the price discovery that basically all of retail does in crypto versus the places where Treadfi feels comfortable with trading. And I think there's going to be even more opportunities to sort of arbitrage the differences between those. And it's going to be even more fun to trade crypto because you're going to have a lot more liquidity to put on two-legged trades in this ecosystem. So, I'm actually excited because because of the myopia of how Western investors think and what they're scared of, we're going to have even more opportunity to make more money off of them, I think.

Yeah. And I think just to maybe add to Arthur's comment, I think uh there is definitely a spectrum of how willing different types of institutions are to like step into things. And I think the point that Arthur was making there around CME versus like crypto native venues is actually the perfect uh comparison here because if you even just look at the basis on CME versus like a Binance, there's like roughly a 700 basis points difference in the last year, which just shows you how much people don't want to actually go and take that credit risk. But you know there is a spectrum between a sleepy asset manager who's managing 10 trillion dollars and then a hedge fund who's managing a few billion and they're like I understand the risk that I'm underwriting and I want to actually um take take that credit risk to get paid

for it. Um so I think that there is like a bit of a spectrum there and it's not going to be you know the absolute largest slowest moving people who who come in and do that first. And I think just to your other comment around are we sort of like concerned that more money coming in reduces the inefficiency, reduces the interest rates, whatever it is. I think that's just like an outcome that uh is natural in any market that's sort of like maturing and growing up. And I don't think the correct response function to there's an inefficiency in the market, someone is going to close it. The correct response is not to like ignore it. It's to say like how the [ __ ] can I profit from that inefficiency being closed, right? And that's all Athena is actually doing, which is saying you're getting paid too much uh

to put on an unlevered cash and carry within crypto. And that number should not be 18% annualized. It should be something that's below 10, I think. And someone is actually going to shove billions of dollars of supply into that. And hopefully you can create some value along the way. And that's kind of the view that we have is it is going to close, but we want to be the vehicle through which that actually happens. If that makes sense. I just want to add to that from like a different perspective. I think a to to echo both Arthur and Guy is still like having agency and and and ability to take risk as a individual trader or uh is still something that's overlooked and big. But I also think one big difference in this cycle is that it's true that there are more sophisticated players that are coming on

chain. Uh but today with the recent advances in AI and products that are coming to market, I think the the average Joe and and traders have access to information in real time that previously they didn't. So this doesn't apply to every single trade. Um but it applies to many. And then I think if there is uh for some of these trades symmetry in terms of the information, then it again boils down to the risk and are you willing to make the move. Uh so I still think there's a lot of opportunity in these markets. Um, and I think that's something that we're going to see more and more as we look at the cycle.

Yeah. Follow up on that, you know, I and and just how we're looking at risk in this market. Um, Arthur, I think you're the most recent recipient of a pardon from Trump. But, you know, you still describe yourself, I think, as like an eastern like like with an eastern hemisphere mindset when it comes to trading in the markets. How like maybe what is the difference between someone that carries a western philosophy versus an eastern philosophy and how how do these differ when they approach risk in the market? I think it's t comes down to how institutionalized the framework is.

So if you think about capital formation, it's it's mostly a United States thing and a little bit of Western Europe. If you look at the largest most successful hedge funds in the history of you know modern finance they're all from the United States and sort of everyone over here are sort of apes you know RENT and Millennium and 72 and all these sorts of guys right um but at the end of the day you know once you start into that sort of western mindset and you have pension funds and public endowments and these sorts of people led your investors you know you can't go to them and say oh yeah I traded on this funky commodities market in Dalian and I guess lost a billion dollars of your money. Like what the [ __ ] are you doing? Why aren't you

trading in New York? It's a liquid, most deepest market in the world. It's the best whatever, right? So I think the bigger you get, the more constrained you get in the sort of the opportunities that you can take. And your investors are really investing in I want a low volatility 7 to 12% return a year. That's what Izzy gives you at Millennium. And he has I don't know however many tens of billions of dollars under management. is one of the most successful hedge funds ever. That's all you need to do. Low low volatility, 7 to 15% and you're crushing it, right? And so why would you go into crypto and risk your career when you could be making 50 bucks a year trading some, you know, [ __ ] long short strategy? You're not. And so I think that's what prevents a lot of these large western

institutions from coming into crypto is because the career risk and the fact that they have to stand up to their investors and justify why they just lost 100 million billion dollars because something funky happened somewhere they're not really familiar with. They're just going to go with the safe thing the liquid market. They know these trades. It's easy. All right. And so I think that's one of the thing that guy is trying to bring these products is. Hey, I'm going to make this very simple for you. Here's a trade you understand. Low of all, I'll give you 15%. Do you like this trade? Here are the risk. Here's how it mitigated them. It's very documented. It fits within your framework. Do you want to get involved or not? Versus, hey, I've got this like latency arbitrage between dexes and sexes, and guess what? If an exchange

goes down, yeah, I could lose 30% of my capital, but yeah, I'm making 30, 40, 50% a year. It's too volatile for these guys. And so I think it's just a function of the success and deepness of the markets in that the investors just don't want to take that risk and therefore the fiduciaries managing it aren't going to take those risks which is great for us as crypto and individuals and sort of non multi-billion dollar hedge funds and that we have all these opportunities in all these markets around the world to really generate significant alpha for ourselves because the big guys just can't do it from reputational perspective.

Yeah. slightly off kind of tangent. Did you take time with Trump and like have to go through a whole process to get a pardon? What happened? No, I didn't. I I can't really get in details, but no, I didn't speak with Trump. It's it's a very standard process of how this sort of works and yeah, we submitted our paperwork and you know, we got very lucky and thankfully the administration granted myself, my partners, and the company a pardon, but there's nothing that funky about it. Okay. Well, won't dig any deeper. All right, guys. Let's talk about Converge. I think this was the uh really really cool announcement that was dropped I think about two weeks ago. guy, you guys pioneered this idea of SUSD and Athena about, you know, as you said about a

year ago, really hit the market hard. Um, a lot of this not within your own what they call execution environment, right? Operating within a different, you know, within Ethereum, um, and and having to kind of go through the trials and tribulations of that. We we have quite a strong thesis here on the rollup with regards to purpose-built chains for specific use cases technically architecting chains for specific design and purpose whether they're app chains or or you know single app or multi-app or niche very specific choices and it's hard to do that when you're operating on a general purpose infrastructure. Then you have the noisy neighbor problem. You have uh gas fees. You have user

experience problems. There's just a lot of things that you can't customize. And I think customization is one of the big big factors when it comes to launching your own chain. Now on top of that when you guys were kind of architecting why this was what you wanted to do. The thesis was very simple. It was like the biggest opportunity here is institutions are coming on chain we believe that there's effectively a barbell approach which I had a really good uh pod with uh Paul from plasma and also ashot and we spoke about this where it's it's very clear it's speculation 247 casino defy gambling. It's memecoins. It's it's everything that you can do onchain.

Right now it's 8 pm here in Brazil. And then it's stable coins settlement. It's it's this it's this payments. It's kind of that infrastructure. And so um you guys have partnered with secured size which seems to be everywhere right now. Um and absolutely making a massive dent in the space. So maybe before we get into the kind of nitty-gritty of all how it works on the tech side and why, walk us through this the decision-m process here because some of the Ethereum Maxi people were like, "Oh, they're ditching Ethereum and here's another vampire attack." And so walk us through your mental framework in the last 3 to six months as to why you guys chose this and just like the chronological story of how

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oracle. Supporting over 100 clients on over 50 chains and offering 1,000 assets. Redstone is the leader for Bitcoin staking and yieldbearing assets. They offer the most robust customizable price feeds available in any model. Join the Redstone exhibition today. [Music] Yeah, for sure. I think um at a macro level, I think the point you're getting to earlier is actually where we started with this, which was I think you're right that there's only two real use cases now for uh crypto and like why blockchains exist. You've got the speculation which is basically memecoins on Salana or leverage on hyperlquid and

then uh you've got settlement for dollars and tokenized assets and so ethereum has kind of like lost that first use case and I think it's very difficult to argue against that right now which uh all speculation is basically moved off onto some other chain whether it's it's Salana or something else and then uh it is still dominant when it comes to stable coins and that's obviously where Athena started and then tokenized assets as well it's where the institutions have come initially to art. Uh the piece that I'm really trying to challenge here is actually that if you think about what's left in the narrative for ETH, it's that institutions are coming to build here.

Uh but it's a pretty weak uh argument, which is they started here, but if you've noticed they've, you know, they take their assets and they bring it everywhere else that goes to Salana like the week after like there's something in in uh the news just last week around Bidd going over there. And what people don't understand is that it's it really has nothing to do with like uh Ethereum being particularly special around that. It's really a decision that's driven by the stable coin issuers and the tokenization issuers. It's actually us who decides where this goes. And I think the really interesting position that Securitiz is in in the market is that they're obviously the chosen tokenization partner for Black Rockck.

And there's ambitions to do a lot more than just bringing treasuries on chain. It's basically every single asset that exists on Earth. Can we bring it on chain and actually start to build financial infrastructure around it? And so we just saw a very interesting matchup here which was you have uh what we think is a uniquely compelling product for tradi which is this IUSD piece that I was describing to you earlier. Uh you've got a uh you know you got an entity with Athena that knows how to build an eco defi ecosystem around itself. All the stuff that we've done on ETH1 in the last year, I think was potentially one of the most impactful things that happened on ETH1 in the last sort of 12 to 18 months. And we basically just want to capture that value by bringing it into our own environment, then actually making a

purpose-built where securityize can bring uh trad institutional flows to come on chain. I think the really interesting thing here is that you've actually got like two different directions of flows where Athena is really bringing crypto native assets and primitives wrapping them up in a format and then pushing them out into trfy to be consumed there which obviously brings inflows into crypto but then uh securitizes bringing traded assets and bringing them on chain to say what else can we do with these going forward and the design space also like open up quite a bit when you start to think about things like uh you know Arthur created the first uh you know popular per exchange that existed out there I don't think it makes sense that retail users are trading options on uh single name equities on Robin Hood. Uh I think that that market should move to perhaps and

that's like the logical end state of where that should go and there's a lot of these different questions of like what are we doing with like trify assets but thinking about how we put them with within sort of crypto primitives and I think that that idea around like per equities is an extremely interesting one that someone's going to do very well in the next couple of years. So anyway, that's the the high level view. We think uh this is like the biggest opportunity this cycle and next, which is how are you bringing institutional flows on chain and we've just got a very uniquely positioned uh business between Athena and securitize which is kind of like leading between stable coins and tokenization and you know those two use cases that I described to you. If you really believe the crypto thesis, you kind of believe actually that the

speculation one should become much smaller and much less significant than bringing every asset on Earth on chain, right? So like right now speculation is the core use of everything that we're doing. But if you really believe in the long distance of what we're doing here, you you'd like to think that stable coins and tokenized assets become a much larger piece of the market going forward. And uh we just think that there's less competition and it's a uniquely large opportunity for us to go and grab. Yeah. Arthur, do you think this is going to be the institutional chain? Is this the is this the place where institutions will come to go onchain? I hope so. uh my bags will greatly appreciate it. But I guess at the end of the day shorts then we don't know where where they're gonna

go and I think it's it's a fool's Aaron to try to predict like how this sort of how this sort of evolves. But I do believe that Larry wants to tokenize everything because they don't think that he likes that or his distribution method and his trading method for his products. he would like to control that flow and take all that revenue that the exchanges tread exchanges make and bring that on and bring them into Black Rockck or completely disintermediate them and altogether and they don't exist anymore. So I think you know if Guy and others visions and their products are really successful there should be no more Treadfi exchanges. should all go to zero and I hope they all go to zero and that all this has brought onchain and into the crypto or blockchain enabled space because if we have the internet if

everyone has a computer why are we shuffling around pieces of paper and in hoboken in New Jersey and you know have all these internet connected servers and all over the world in these traffic exchanges when we have all this great infrastructure that we're building hopefully decentralized uh across the world and I think that's what ultimately asset managers like Black Rockck are going to do because, you know, as much as they love the artifice of Trafi, you know, they they also want to get rid of people that they're paying fees to, uh, especially these exchanges that sort of are the gatekeepers between trading volumes and distribution of their products. They literally can own their own decks, spin it up, and now BlackRock has complete control, vertical integration over origination all the way

to trading of their products. And I think that's what really is the the driver here for an asset manager like Black Rockck. And hopefully we can invest in the technology that's going to power that and own the tokens of the protocols. We can invest in the technology that's going to power that and own the tokens of the protocols that are enabling them to disintermediate their competitors within the trady space. I also think I'll just add that like I think we assume that they're a lot more opinionated than they are, right? These are businesses that are just trying to sell products. like Black Rockck is coming here with the Treasury product and they're saying who wants this and if you want to buy it on Salana cool they'll deliver it to you at Salana and they'll bring it to Avalanche and they'll bring it everywhere. They're

just selling us products, right? And so uh we've also got to remember that they're completely centralized products, right? And so if something goes wrong on some chain, they're not actually worried about the decentralization of ETH because it's a completely centralized product that they'll reissue somewhere else. It's a completely different proposition though where if Black Rockck is putting their own money and their own balance sheet into a crypton native product, they really care about where that money is sitting because if they can't roll things back, if there isn't controls around OFAC, sanctions, North Koreans, all of these different pieces, it's a very different proposition when it's their money versus them trying to sell you a product. And so the existing landscape of the assets that sit out there now and what these institutions are doing on chain, all they're doing is selling you product. And so I don't

think they could care any like couldn't care less basically where where it is. And really the decision is going to be made as I said by like the people who are creating the products and the issuers of these assets. And so when Athena turns around and says the 1.5 billion dollars of bidding our backing, we're going to hold it on our own chain. We we don't care what anyone else has to think about that. That's our decision to make in terms of where we're housing those assets. Um and so that's just the piece that I'm trying to get across, which is like um a I don't think they they care on their side. They're just selling products. and B, it's like apps and issuers and and uh stable coins that basically make that decision. I think something else that we're going to see with the emergence of these

converge, I hope, and some of these other uh L2s and stable coin environments is that we haven't really I mean for the past decade, we haven't really seen any super significant innovation in fintech due to the rails that it's built on. So if you look at all the startups that are kind of big in the fintech space, they're just kind of putting better rappers on very shitty infrastructure. Um but over the past, I would say three years, uh stable coin infrastructure has exploded for most, uh even if you're in America, you can connect these easily to your bank account and move in and out of these different chains. And that actually opens up, um the door for a ton of new consumer like experiences that are not just directly related to speculation on crypto. So, just as an

example, like a smarter savings account, right? Like you could definitely build that today and you couldn't do that three years ago. Um, and Converge is definitely going to be like a good candidate for that, but you can do it on any chain and that's actually huge. So I think this is also the the first cycle where we don't really have many good excuses uh to not build real products uh that build people uh on board that are outside of the tribe of super diehard core believers just people that want better products and don't really kind of live or breathe the decentralization ethos of it. They want just better alternatives.

I think the market agrees with that and like there was an announcement to today um about a new app chain that DTCC the clearing house is is just now thinking about and announcing that's going to increase the mobility and velocity of collateral increase capital efficiencies and liquidities and facilitate the convergence of traditional digital and digital assets. You know you guys kind of beat them to the punch. This is a clearing house that does on the scale of $3 quadrillion dollar of volume in settlement and they're also going in this direction. You guys just kind of did it first and so I don't know if you've seen the announcement kind of what you think about it but just

generally I if this guy this seems like a competitor to you guys and this TAM is massive on the order of quadrillions of dollars. Yeah, I think you're right. Directionally going in the same place. Um I I do think that like it's going to look slightly different. Um I think the optimal setup here is still like yet to be defined, but something that looks like a permissionless blockchain that anyone can come on and interact with. Like I think at a very b basic level, it can't be totally permissioned or else like what are we actually doing here? Uh but I think even if you think about the sequencer that's sitting on something like base, right, in some respects, that's actually a completely permissioned blockchain because if the sequencer on base doesn't want your transaction to go through, then it's not going through. And that's like a single

single entity that's deciding whether that goes through. Uh, one idea that we're sort of playing with here and we're sort of defining what that actually looks like is what if you have an environment that looks like base, but there's some validation of that sequencer between maybe 10 or 20 parties and that those 10 parties could be the 10 largest asset managers on Earth and a few centralized exchanges or whatever those parties are. And all you're trying to put in there is basically saying if there is a $ 1.5 billion dollar hack again from a North Korean and it's Black Rockck's money this time, can you actually roll that back on the sequencer in a circumstance where you know that clearly like this is something that that you don't want to go through? And so I think this is the piece that we're trying to toy with a bit here which is

you know purists and idealists don't like this idea at all that you even have the option to do something like that. But I think if you peel back the like the layers of what actually exists within the space right now and we're actually honest with ourselves, these kind of assumptions sit everywhere like the single sequences on all the L2s right now. And I think we're just trying to find a pragmatic middle ground which is these things can be open. They can be permissionless for people to interact with unless it's like really a criminal act that um is like stealing other people's money and then I think you'd want some sort of like switch to be able to to get in there and roll it back. I think that's the beauty of of building a chain. It's it's funny like you've built the app that's done so well and now you

have to think about infrastructure but you have a lot of options now and I think part of leaving L1 and kind of launching your own chain is to is to build that exactly what you're saying because it fits your use case. There will be other extremely permissionless fully decentralized censorship resistant in environments and that's great. Maybe you would want to hold some of your long-term capital there. Like Bitcoin is a great example, right? But but like you guys aren't trying to build Bitcoin or Ethereum L1. You're trying to build specific idea with a specific custom technical design. So I I see it as like, you know, kind of like [ __ ] with the [ __ ] with the people who who are worried about, you know, kind of uh some level of censorship resistance or

decentralization in the state of like if it seems like what you guys are going to achieve is a permissioned level and a permissionless some sort of like bifurcation there and it seems like kind of both parts will have a different way of managing risk and roll backs. Yeah, I think that's right. Um, and the other thing I'd just like encourage people to think about is like we're obsessed with this idea of decentralization, but like should we actually like pause and think about what we're doing on chain? Like we're we're moving centralized stable coins around and we're trading meme coins. Like those aren't things that like require nation state level of decentralization, right? Like I think a server with like 10 validators is kind of like sufficient for both of those use cases. So I think that there is this like obsession with pure

decentralization the entire time. But if you look at all of the products that have actually done well this cycle, right, you had Hyperlquid which like looks and feels like a centralized exchange based on what you've seen like last week, you had Athena which is you know touching centralized exchanges the entire time and centralized custodians and then Pump Fun which is again like a centralized exchange that settles on chain. Um and so all of these things like I think the market's consistently telling you it's willing to make these trade-offs for decentralization to get better products and that's uh just what you should be focused on which is producing a better product in the beginning. Plus, if if you guys have 10 contributors to the sequencing logic, you're still more decentralized than most of the popular L2s that are out there now. Yeah.

Um, kind of guys, kind of zooming out out of converge and back into the broader state of stable coins, crypto, and speculation. Um, kind of really zooming out to just where we are. Uh Arthur, I was on a pod with Ashot two months ago or so in Hong Kong and he said that you guys were gearing up for the Trump dump and that uh it came and that you guys were actively kind of slowly trimming positions ready for that in anticipation. And then kind of in the recent article you you wrote about how you were reallocating to the space. What does this mean for the market, but also just the general trajectory of where

we're going? Is it the institutions that has gotten you reinested? Is it the macro? What is it that has kind of triggered you to want to reallocate? And where, you know, where do we go from here? I mean, it's very simple. As I said in the the the intro, it's fiat liquidity. I was skeptical that the fiat liquidity emissions would meet the expectations um between obviously Trump election and January 20th when he assumed office and now the market doesn't think they're going to print any money which I think is the the opposite end of the spectrum and so now we've seen you know noise out of the Fed that I believe they're going to start QE sometime this year at least in the Treasury market you have the Europeans

who are going to print euros to build weapons um the Chinese are waiting for the Americans to print and they're going to print more money and the BOJ is cornered and I bet they're going to go back to um buying bonds when the JGB market falls apart uh in the in the near future. So, I think it's just you know the eb and flow of expectations and the pace of of money printing which has gotten uh me more bullish and obviously Maelstrom as as a whole allocating more to the space and you know right now we're I'm mostly just buying Bitcoin at the end of the day, right? I think and you see Bitcoin dominance is slowly creeping up. I don't think that the altcoin market or investors are ready to allocate to the altcoin space yet, but see Bitcoin at 110,000 and higher and I

think those animal spirits will will come back and people will start slinging at money any sort of shitcoin uh out there on the street and you know we'll participate that in that as well. But yeah, my bullishness is more predicated on Bitcoin responding positively to a change in expectations of fiat money creation, you know, from now until, you know, the end of the year. And you mentioned a couple things here like QE is obviously like a big part of that and and Powell signaled that in the last Fed meeting. We're not going to have another Fed meeting where he may or may not cut rates, you know, for maybe a month to a month and a half. You mentioned the strategic leverage ratio that he may issue an exemption. Is that something that he can issue between Fed meetings or do we have to wait for the

next Fed meeting to to get a a word on that? I mean, he can do whatever he wants, right? What what happened in uh with the bank term funding program was an emergency meeting on a Sunday night and him and Yellen issued that statement on how they're going to print $4 trillion, right? So, if the circumstances warrant uh an emergency change in policy, they'll do it. I think that's the point, right? So if this TR tariff thing kicks off and S&P is down 40% or something crazy, right, and some Treadfire guy is about to go bankrupt and the Fed needs to step in and do something, they'll do it. They'll do it in meeting. So I don't think people need to be so beholden to these meetings. But absent that, then when the next meetings in May, and I expect there'll be further clarification on how they view sort of

the the tapering of QT, what they're going to do about the roll off in mortgage back securities in addition to treasuries, what they're going to do about the roll off in mortgage back securities in addition to treasuries, and then what they think about the inflationary aspects of the tariffs, assuming that they continue and they're not rolled back because Trump makes a deal with XY Y different nation. Got it. I got I got one more macro question and then maybe we'll put a ribbon on it with with a final stable coin thing which is and and the macro one is um essentially you know you you've been writing a lot about and and generally through the framing of like is something positive for a liquidity injection? Is it net new liquidity to the system or is it or is

it net uh subtractive of liquidity? And you know, one thing that's looming besides the tariffs, besides Doge and Elon cutting is is this like 10 trillion dollars of treasuries that were issued at at the end of Biden's term to try to pump the market and are now need to need to get rolled over. So when we refinance that 10 trillion, nine or 10 trillion dollars of debt, is that positive or negative to the to the state of liquidity in the system? This not it's neither, right? It's sort of net neutral. they have to do it. The New York government is not going to default on on their obligation. The question is at what rate are they going to do it? If the rate is so high, do they need to have help from other

agencies, the Fed or the banking system to buy more treasury to get the rate down? So, when they refinance, it's not at a higher rate. So, right now, the weighted average rate on treasuries is like 3.3% and what's the 10 year now? I don't know, like 4.2 or 4.1, whatever. Yeah, something like that. Right. So if they refinance the entire debt load today, they would actually increase the interest expense, which is not good for the deficit and uh the plans that Trump and have for the economy, which goes to tell you that something needs to happen.

Either foreigners need to buy more treasuries, the Fed needs to print money, or the banking system needs to buy them. Just one of those three entities needs to do something. And so what are the policy options that are available to them to influence somebody to buy these things at negative real rates in my opinion. Got it. And generally like question of all everyone here like right now the the liquidity injection like money is pretty much created at like the top of the system and then tends to somewhat flow down like get loaned out and reorinated and and extended. Is there and right now stable coins are somewhere towards the bottom of that list like the issuance of stable coins like even if you know black

rockck is still relatively high but towards the bottom in that general hierarchy is is there a world in which like stable coins could move higher up that hierarchy and we could see some larger institutions in the grand scheme of things issue stable coins onchain like a bank issuing their own form of dollar stable coco on chain or something like Yeah. Like World Liberty Finance said they're going to issue Wyoming said they're going to issue their own stable coin. Like whether it's state or national sponsored or federal reserve sponsored like what how how could that look? What is what is there any any possibility or reality to that?

Definitely think it's a possibility. I think uh I'm just slightly more bearish on their ability to take entities that sit outside of crypto to push stable coins and like make headway in terms of grabbing share within crypto native venues if that makes sense. So I think PayPal here is like the canonical example where you can actually think of PayPal's um existing product as basically just being like a private blockchain where they're just moving PYUSD within their own like accounting system. That's all it is. And uh I think you know they've done actually a pretty good job I think of growing to the size that they are but at the scale that there are now you know it's like less than 100th of the size of tether. Um they found how difficult it actually is to integrate into the the moes that people have built up within cryptonative

venues. So I think that people can go build their own stable coins. I think that thousands of entities are going to go try to do it but they're just going to be used within their own sort of closed loop system if that makes sense rather than penetrating within crypto. And the real reason for that is like market structure reasons which people don't understand and I didn't even fully understand before I started Athena which is um you'll never like unsee Tether until every centralized exchange that exists right now and crypto goes bankrupt because every single trading pair on Binance which is the most liquid is denominated in USDT. And so no one gives a [ __ ] if you're paying them 4% uh T- bill yield when a market maker or an HFT entity is trading in and out of the BTC pair with USDT and like saving a

basis point every time that they do it. So that's really like the moat which is like the most liquid and there's no other real axis for you to compete right you you have to be a dollar you have to be liquid and you'll never be more liquid than tether or you pay more yield and that's like the only way that you can think of competing within this market and that's kind of the view that Athena took which is we'll never win those two first two categories but we can sort of try have a have a real shot at the third one and we can try sort of create a wedge over there. So, I'm actually extremely bearish on anyone's ability to actually compete with Tether. And I think uh if you're funding or starting a new stable coin issuer now, that's just backed by T bills. I think

it's just a colossal like waste of your time, energy, and money. And I would recommend against that. Well, I think they'll they'll try. I mean, I think today we even heard the CEO of Bank of America saying that they would issue a stable coin like as soon as it was legal to do so. And it's at least something they're going to, in my opinion, from the discussions we're having with with large financial institutions that everyone's at least thinking about. I mean, if Bank of America say they're going to do it, everyone else is at least thinking about it. And for for them, it makes sense, I guess, for a lot of these accounts, right? Because uh you could just do it cheaper. It's a better UX. You already see kind of users uh especially in America going to other alternatives like Venmo for payments, and that's just business they're losing

out on. So, it's something I think that they're going to try. Whether or not they have a good shot at doing it for the reasons guys said, I think it's a different question. Um, but we're there's what's in the news and what we're hearing and I think everybody has some type of sable coin uh strategy internally that they want to take a shot at because if you win it, it really is the holy grail. I think it's a very America thing, right? Okay. It'd be great for Americans who have a cheaper way and a more convenient way to send dollars around, but again, that's not Tether's bread and butter. Tether's bread and butter is in Shanghai and Hong Kong and Buenosares and other places around they don't give a [ __ ] if there's a JP Morgan Bank of America. They can't use it anyways. And so I it's great for

America and you know Americans will have a cheaper and a greater alternatives if there's stable coins running around. But I don't think that's going to alter the crypto and like non US sort of landscape in terms of how digital dollars are moved around and and it's also not net positive for liquidity conditions unless it exits that closed loop system. Well, they're not it's still a bad thing, right? It's not like they're just creating if there was a loan that they were creating to create the stable coin, there's some sort of issuance of credit to do it, that's fine. But it's really not. It's just okay. Well, you were using Venmo. Now he's using JP Morgan coin. Whoopy [ __ ] do. Who cares? It doesn't really impact us one way or the other. Yeah. Save a few dollars. SLR exemption like fractional reserves for stable coins. Well, the SLR exemption is

basically just allows a bank to buy a treasury without having to put any equity capital behind it. It has nothing to do with stable coins. And so the stable coin and SLR are kind of two distinctly different things in terms of what it means for a bank. They the bank has an SLR exception and then they basically can buy a treasury. It doesn't matter what the price is because they have infinite profitability. Even if the 10ear yield was 1% versus 5% now, I have no capital charge. I can just buy as many treasuries as I want and I create credit to do it. And so therefore, my profitability goes up and if the rates rise and the bonds go down, then I guess put them in the hel bucket and then I guess close my eyes and don't see the losses anymore. And that's what will

happen. I I did see on that point you're making there a very interesting research piece last week which is like what happens if all bank deposits in America left banks and went into stable coins and like that's actually a very scary question because obviously everything kind of works on credit and the whole fractional reserve system requires there to actually be deposits in these commercial banks and it's not the same when a deposit leaves a bank which can be lent out you know hundreds of times afterwards and goes into something that's backed onetoone within a stablecoin. So it's actually extremely dangerous for like the normal functioning of like credit within the US system if a significant amount of bank deposits left into something which is looks and feels a bit like a yield bearing stable coin which is why the Fed has denied any they call it a um I

forgot the term a bank that doesn't do lending. So, a bank that just takes up deposits and yeah, whatever it's called, Caitlyn Long tried to get one passed, but they don't want it to happen because it is fundamentally detrimental to how faction reserve banking works. If you have people who create essentially a bank, which is a stable coin that doesn't do any lending and just takes deposits and pays a yield or doesn't pay a yield. Yeah. And that was a big part of the stable act that is getting pushed through I think this month or later in May. It was pushing back against that aspect because of exactly this problem.

I I I don't know if you guys have paid much attention to kind of what's what's happening there, but I know that Paulo was in DC trying to kind of push for Tether there and kind of get onto the right side of the book. Um, uh, it seems like it's going to be a net positive for for stable coins, but, uh, it seems a bit more favorable to USDC than to Tether, but to author's point, I don't think Tether really cares. It doesn't really matter. It's an American thing. And stable coins are not for Americans. Stable coins are for everyone else who wants a dollar bank account, but can't get one. Americans can get a dollar break account. Stable Coin Act just makes it cheaper. And maybe it's a few dollars less a month that you pay to do the transfers. And that's great for the

voting constituency, but I think for crypto traders, whether it's what is it, the Genius Act and some other act, I haven't read either one of them, it doesn't really matter. Yield or no yield, who cares, right? It's just it's a thing for Americans to help them save money on transferring dollars within their system is not going to impact you. So Andy mentioned this barbell of like speculation on one side and like payments on the other side. Are stable coins not also a mechanism for leverage? And if we can use them to extend credit further, are are we able to le like use stable coins almost as a mechanism to extend credit and further leverage the system? Is that al not also a use case?

Well, then who takes a loss, right? The great the great thing about being a a fractional reserve bank is that when you [ __ ] it up, your national government bails you out. So, it doesn't matter how bad you are at originating loans in your domestic fiat currency. when you [ __ ] up, and you will [ __ ] up because you're a profit- seeeking entity and you want to make more money and take more risk, then you get bailed out and they just print more money and plug your hole. But if I'm a private seable coin issuer and I'm, you know, lending out money, however, I'm lending out money and I go bust, no one's bailing me out, I just lose money. So, I don't think there's going to be net credit extended in a in the reckless sort of way that what you're hoping was generates, you know,

bags and be pumped because there's all this stable coin credit running around. You're hoping too. No, no, the Fed does that for me. I don't need the Fed, the BOJ, I don't need I don't need if it's a public issued stable coin by the state of Wyoming, then maybe the Fed will bail them out. Maybe, maybe. Gentlemen, uh it's been an absolute pleasure. Uh Guy, congrats on the great work with Athena. Uh would love to do a more technical conversation with you and the CTO as you guys roll things out. Uh I know that we didn't get to touch on it too much. Um, but uh, super excited to see more there. Omar, keep up the the great work on keeping all of our bags alive on chain. I've been a victim of many smart contract

slash just random DeFi shenanigans. So, appreciate the work that you guys do and as always, Arthur, it's a pleasure. So, guys, great great conversation. This was fun. Thanks, guys. Infest.