🟢 LIVE from Digital Asset Summit in NYC Day 1

Transcript

Heat. Heat. Thank you. Lord, we'll see you around the timeline. Feels good to be back.

>> I think The Rollup is one of the most premier media brands in crypto and Andy and Robbie are great experts at everything they talk about and it's my favorite podcast. >> Adding it to my library every day. >> Potentially multi-chain deployments. >> We are at Dev Connect day one here. I guess heat.

Heat. Heat. JP Morgan, Black Rock, DTCC, Fidelity, the entire thing was just institutions. It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say.

I'm bullish. >> He said it. He finally said it. So bullish is bullish. I'm bullish. We're bullish. Heat. Heat.

Heat. Heat. Corola is headed to the top. If we're

not already at the top, we're going to the top. >> Roll up is my favorite. >> People from all walks of life, all over the world, all over this industry come together for the roll up. Zoom out. The institutions aren't

coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. >> Welcome to the next. See you on the show. >> We are live, >> ladies and gentlemen. >> Digital Asset Summit day one. We are live here in New York City, the capital of finance at digital assets. >> We're not in the tokenization tower. We're not in the Empire State Center. It is digital asset summit. Behind us, we have an entire suite of booths. Anybody from Anchorage to token terminal to the graph, Optimism for DeFi, Parah, many more. This is the institutional conference of the year.

First stream where Rob has his run of show printed out. He he is going to appear in the field of Adams. >> No longer just bits. >> We've got Tien Lee here, the founder of Pendle to talk about Pendle's institutional strategy. Tienne, welcome to the show. Welcome to New York City. >> Thank you for having me. >> Absolute pleasure, Tienne. Pendle's been around and for for you guys have seen it all. Um, you know, a lot of in just the brief conversations we've had so far today. We've been talking about the evolution. You know, we didn't used to wear suits. We didn't used to be here in New York. It feels like the entire industry has grown up a little bit and matured. Uh, you've been here since the beginning of DeFi summer all the way

through to today. How does it feel different? How do you how do you feel sitting here amongst the institutions? >> Yeah, definitely. It it has matured a lot. Back in the days in 2020 when we started out, yields were in the range of like hundreds to tens of thousands, right? And sometimes it wasn't enough. And then over time, after several rounds of purging and and development in the institutional landscape, yields that are single digit or like low double digit has become a lot more affordable. So that just shows how much progress we've we've developed in the last couple of years and definitely a

lot more uh seriousness in like the security aspect. Uh so like from our perspective these days when we work with an institution it is not uncommon for them to request for audit reports or they even have like their internal auditors to review our contracts and the underlying that they are subject to. >> So very different back in the days like if they see a high APY they would just ape not so much now. >> Yeah. What is Pendle doing with the institutional uh crowds and offers? Like what are they seeing in Pendle that is exciting for them? What about Pendle is getting them to want to use your product

and your protocol and how is that happening? >> Yeah, so we have two products, right? Broadly speaking, like there's V2 and then there's Boros. So with V2, we're starting to see more in interest from larger funds because like this product has been around for a couple of years since 2022, end of 2022. So it has facilitated quite some amount like several billions in in trading volume and um like liquidity deposit. So over time institutions have become more comfortable with the product and then beyond that they are also able to use the PT asset from Pendle to as collaterals on across like different

venues including money markets to lever up and increase their fixed rate exposure. This is something that they are like this is an observation uh and and like more recently we've also partner up with Paxos and the global dollar network to to to get um to work with the first for the first time work directly with a regulated uh stable coin issuer. So in one week we were able to help the the the the market bootstrap uh more than a $und00 million in in TVL. Um because for this market it's not so much points. It's it's real stable coin yield. And I think people are like it's

it's not it's not offering um 20 30% in APY. it is a fairly modest um 8 9% or 6% if it's just fixed rate but yeah funds are comfortable with that kind of exposure because there's there's no points involved and it's pure stable coin yield now with respect to boros right now this product is about 8 months old it is primarily targeting the hedging or the speculation of funding rates the users right now are largely institutional users with pretty sizable funding rate exposure.

It is a bit more sophisticated, but more recently we've seen funds deploying um deploying into positions that cover 100 200 BTC for example. >> Yeah. >> Um we've recently started to see some cracks in private credit. Uh I'm curious how you see the the credit and the yield landscape reshaping onchain. Obviously there's always been evolutions, there's been things yield is somewhat unsustainable. How have you been able to sustain Pendle so long given you know its track record of of several years and what is the correct mental model to think about yield onchain today?

>> I think yield on chain today is fairly compressed across the board. Um because I believe like there is probably some shift in capital formation. However, there are still opportunities um because with several strategies uh like for for example the ones that we see on Boros the there are still inefficiencies in the markets um and and like say on on our on our on our web app like there is there is a strategy tab to explain to users the steps involved in order to log in 10 to 15% in fixed rate by doing cross exchange arbitrage uh funding

funding rate arbitrage um yeah so yeah from my perspective I think with respect to yield across the board it's it's going to be lower for um for foreseeable future but with capital inflow assuming like um there there are new innovations and catalysts to to pull back the liquidity into the space I think we can see pretty healthy improve improvement in in the yield offerings on DeFi. >> Incredible. I >> I mean, we've seen last thing for you. I know you got to run. We've seen um unfortunately quite a few exploits as of late. We're seeing sentiment across the board in DeFi really, really, really be low. I mean, we're seeing DeFi is dead

on crypto Twitter. We're seeing this happening. All while today, Super announced massive partnerships with large scale institutional folks. Sen, how do you think about this dynamic right now with the state of DeFi? Um, where do we go from here? So, so this is my my my view is that like uh over time things will improve but in the m uh in between like some casualties are are quite inevitable to to again this is just echoing the point that I mentioned earlier right like with greater institutional participation more institutional liquidity they're going to do more

stringent due diligence on protocols and and the underlying that they're exposed to right now. Yeah, with with uh some of the incidents in the last seven days, uh these is uh I I think these incidents are good wakeup calls for participants of the risk involved, inherent risk involved in the space, >> but there are also measures that can be taken in order to avoid some of these encounters. Yeah. >> So, so I think it's just a good re reminder. >> Yeah. Ten, thank you for your time. I know you got to go. Uh pleasure to have you on the show. Enjoy your time in New York and uh we'll see you shortly.

>> See you again soon. Cheers. Cheers. >> Bye, >> guys. Um >> the DeFi environment is not is not going away. I I mean it's very clear Pendle's established themselves as the primary looping strategist, the the yield bearer of the yieldbearers, some could say, and they are not going anywhere. The question that I think a lot of these protocols are going to have to face is are they big enough to stand on their own or does it make more sense for something like a Pendle to be acquired as part of a different protocol stack?

Uh I think that is something that I'm excited to kind of see unfold whereas if if if uh Sky or Tether or Circle acquired Pendle and brought them into their stack, what would that actually look like? You know, will this stand alone? And I think that's something that uh we might see more chatter about. >> Look, I'll take the position of uh Pendle standing on its own as a protocol on its own two feet. I think part of the benefit of Pendle is that it has the broad swath of interest rate environments at its disposal and it's almost that aggregator where a lot of the interest rates comes onto its one platform. If they get verticalized into a sky stack or a tether stack, yeah, that's great. That interest rate environment could really flourish. They

could own more of that value acrruel. But I think part of Pendle is that you're getting price discovery or interest rate discovery from the market as a whole. And I think if you if you verticalize, you take Pendle away from the from the existing market structure. Guys, next up, we're going to bring someone else who's very deep into the entire DeFi landscape. Someone who's taken on the unicorn by its horn. >> Is that right? >> Alex Cutler is coming up next for Airdrop. >> Taking the unicorn by its horn. This guy has no shame, no fear when it comes to fighting the unicorns. Uh this guy comes on and he is just attacking unis swap.

But in its own right, Aerodrome is doing incredible things. Uh the number one application uh in DeFi on base uh and in the DeFi market landscape as a whole. They're doing incredibly great things. We're going to get Alex up. Alex, please join us. >> Let's bring him up. Come on over, Alex. >> Yep. >> What's going on, man? >> Not too much. How are you guys? Great. Good to see you. >> All righty, man. First takeaways from D. How you feeling? What's going on? How's the How's the environment? >> Yeah.

>> Well, first I got to say I was watching you guys live streaming uh uh last week >> and I am I am blown away by the amount of energy you guys have. I saw you live streaming the entire policy event last week. I'm seeing you here. Are you guys coming out to France? >> Yes. Oh my gosh. Wow. I think I think you guys are the only folks that I look at and I go, "My god, I think they've got more energy than we do." So, major kudos. >> Appreciate it, man. Appreciate it, man. I've been seeing uh a fellow friend Austin Bareric of of Relayer Capital bulling arrow a lot on the timeline.

Speaking about this kind of UPOD concept with regards to the token design and the revenue design, we have a pretty firm belief here that a lot of this kind of fundamental based investing is returning back to the space. As you look around, there's, you know, more suits here than there are at pretty much just about any conference over the last couple years. These people want to invest in value. How does, how do you think about this? How do you think about creating value from the Aer Drrome perspective? what what is the aerodrome kind of investment thesis here? >> Yeah, I mean I think we're in a transformative moment, right? And I think you saw that at the policy conference, you saw it with the guidance that we just got out of the major regulators. We see it at the the cusp perhaps of of getting clarity. Um we are

moving, I think, uh from a time where the investment game was, you know, will this shitcoin pump? Will this token with absolutely no fundamentals, will I be able to get in early enough and get out fast enough to make some money to a moment where people are actually going to be looking at and we're going to have a new class of investors. Uh looking at can I own the best infrastructure of this space? You know, what can I own that's going to acrue value uh as the space grows by an order of magnitude? What are those mechanisms? What does the token do? You know, what rights does it grant me? And I think as that maturing and new investor class comes in, that's going to cause a massive reshuffleling

of what's seen as investable assets versus not because, you know, 90% of the top 100 tokens right now by market cap don't redistribute any value whatsoever. Do you really think all the funds, all the suits, you know, walking around us today are going to come on chain and buy a token that's a functional memecoin? Um, no. I think we're going to see a massive reshuffleling in the top 100. And I think it's going to be oriented around how do I own a piece of the most valuable infrastructure of the onchain economy. >> Incredible. Um, Alex, obviously things have changed quite a bit. We're seeing more, you know, we're in suits. We we've got quite a bit of institutions walking around here as a DeFi founder and and a prominent protocol in the landscape. I'm

curious, what is your prerogative when it comes to these conferences? Are you here mostly connecting with the institutions trying to get more institutional flow? Are you still trying to win more of the DeFi market share? What are you what are you thinking about as you're here amongst the institutions? >> Yeah, I think um we come to a place like DOS of course to connect with fellow builders um with funds and with institutions. And I think what we're increasingly seeing is that when we're talking about funds and institutions, it is not just uh funds native to the space. uh it is banks um it is entirely new funds that are raising from new types of investors to come in uh and invest in the space and then of course we're seeing a whole new class of asset

issuers talking about RWAs um talking about tokenized equities uh all this sort of stuff that they want to bring on chain and so for us as uh a team that believes that we want to be the unified liquidity layer for all of Ethereum right we want to be the exchange layer basically of the onchain econom economy. We want to be their first stop because we know we can help them build liquidity, deeper liquidity uh better than anybody else in the space. Um we can give them distribution right across chain. You know, ERA when it goes live in in Q2 will be the first truly uh interoperable decks across all of Ethereum. So we can do that for them.

And so we just want to be here to help because we see the opportunity to make the onchain economy the most dynamic real time uh always on uh uh marketplace in the entire world and that's where you can go to trade everything from memecoins to emergent new digital assets to uh tokenized equities uh settle FX transactions all of this sort of stuff and we want to be the rails on which people do that. Te tell us more about this tokenized equities, you know, offering that we could see from Aerodrome as it gets more incorporated into the onchain economy. Uh New York Stock Exchange and and and NASDAQ are entering this space. They're partnering with some of these tokenization teams and they're going to be looking to

access DeFi AMMs and structures and these sorts of things. Tell us more about how you anticipate tokenized equities and these high quality assets entering the space. What is the market structure going to look like onchain? Yeah, I think uh I think from our conversations there's just a ton of people chomping at the bit and I think the big dependency right now is clarity >> and I I I honestly feel based on the conversations that we've had the minute we see clarity or the minute we see like a a innovation sandbox or you know what uh I think some of the regulators said might be the next big pieces that will come out it's going to move incredibly fast. So what will this look like? It's not going to look like, I think, the types of digital uh representations of RWAs or tokenized equities we have

today, which frankly are not very good, right? Uh they don't convey or possess any of the rights of actually owning that equity. Uh you have to worry about the settlement mechanisms. Um and I literally think like it could be weeks or a month after that. you're going to see versions of stocks trading on chain uh fully permissionlessly that actually have a way to connect to the fundamental rights of of owning an equity. And if you do that, then I think you're going to see a massive expansion because uh anybody will have access to these things. Anybody will be able to trade them. It'll be 247. They'll be able to tap into the permissionless nature of DeFi, right? You'll be able to borrow against them. People will build new products around them. And so like I

think this is imminent. Um I think uh if you you can't look at what tokenized assets are on chain right now and and think that's what it's going to look like. It'll be an explosion and it'll of course be fantastic for the infrastructure layers that support it. >> That's one of the things I'm most excited about is just the the the looping, the staking, the composability, everything that we had in DeFi but apply to high quality assets. >> Yeah. Yeah. I I would just push back on the AMM part though like uh I had Yuki on. He is the co-founder of a of a a company called Tenbin. And basically, we were just speaking about how with tokenized assets, AMMs just don't work.

You have to have two LPS with, you know, willing to put up enough of one asset with an with another in a pool. You have to have incentive structures. You have to create this kind of like really just uh incentive frenzy design to actually get any liquidity. And his take was that order books are the only way that tokenized assets are going to be able to trade on chain. Um, obviously aerome has a very kind of interesting A&M structure. You have multiple types from the metadexs to D AMMs. But how do you feel about this? Like is the AMM structure as we know it like the UNI v2 model is that dead? Is are AMMs dying for tokenized assets?

>> I would be very interested to hear why, you know, a bit more about why he would think AMMs would not be uh great here. I mean, look at the direction the industry is going. Um, you know, Coinbase has a great order book for digital assets still. >> Um, what have they done? They've actually gone onchain and integrated AMMs directly into their core exchange. Um, OKX has done the same thing as well. Um, we're talking about permissionless capital formation. We're talking about the composability of automated market makers. Um, this has been growing in relative share to traditional order books, not shrinking. And so I think anybody who's going to come and say, well, order books are going to come in and this is going to be the only place

they're going to trade. That's the same sort of thinking that I guess has caught people off guard is AMMs have ate the world. And you have Coinbase saying it's actually essential for us to distribute AMMs to our customers rather than trying to preserve our monopoly on this sort of traditional type of exchange. So yeah, I don't think there's any competing with permissionless capital formation. Okay. uh you do need proper incentives but that's just about redistri redistributing the value that's being created yeah in those markets uh which we've seen can happen very efficiently onchain as long as you're not extracting value out of those markets to third parties or centralized >> so so you think then that AMMs are still the dominant structure over an order book for regardless of of of the asset type

>> absolutely 100% >> okay um what's going on with bass man um feel like bass was at the top of the world for a bit And now it seems like they're at the bottom of the ocean. They're probably going to surface somewhere in in in the middle. What's going on with base? >> And there's maybe some divergence between the base app and the base L2. Maybe you could just help untangle what's happening here. >> Yeah, you know, I actually see it in the this is like the the cycle of of base, right? Of all chains. >> Everybody faded base, right? Uh they thought it was going to be the Fed chain. There was like, oh, they're not going to have a token. There's no way this chain grows. And then, you know, it takes a year for them to flip every single L2 incumbent, become the largest.

And it just goes through these cycles where people get very very bearish and then get very bullish. Um and so I think we're in one of those moments where people are going like what's going on here? But look, they are still the number one L2 in the world. Uh they still uh have the backing of Coinbase. Coinbase is still building this vertically integrated strategy around them. And what I actually love is like I love that they take crazy bets. you know, whatever happened, you know, with the the base app and with creator coins, we need more people making big bets like that. And I actually, it's kudos to them that they also know when to maybe pivot or shift focus. But I mean, their focus right now is they want base to be the best place to trade everything, the best

place to issue new tokens. And uh I think you're going to be seeing a lot of stuff from Bass this year, >> which by the way is to expand their already existing dominance of ETH L2s. I think to compete, you know, more directly across all chains. And so, yeah, I'm not worried at all. I'm as bullish as I've ever been on. >> Good. Because I'm just going to keep throwing them at you. Yeah. Why would I buy Aerero drone over Hyperlid token? Like, hype is one of my primary holdings. What would convince me to think that Arrow asset is a better asset to invest in than Hyperlid?

>> Uh, I I might not say better, but I would say these are two very complimentary protocols in some ways, right? Um uh obviously you need uh sort of a perpetual primitive in in DeFi very very important and you also need a spot dex primitive right these are two very important portions of onchain speculation capital formation all that sort of stuff and we share more in our DNA with hyperlquid than we say do with with unis swap right because we redistribute 100% of our value just like they do um and so I think like one thing to think about is uh dexes as a market, right, is just as essential as the underlying chains to the overall functioning of the onchain economy. Um,

right now DEX has produced about $4 billion a year in fees. >> Um, chains collectively produce about two billion. Do you know what Dexes are worth today? >> About $5 billion collective market cap compared to chains $30 billion. So, so why has there been a disconnect here? Right. It's because I think the tokens of spot exchanges which again are essential have not been very useful. They have not acred much value. So you know why would I think that an investor might see a DEX asset as potentially interesting especially somebody who's already interested in hyperlquid? Well now we have a DEX asset in Arrow um that is poised to be the hyperlquid of all spot markets across Ethereum. um and

that this is a a category that if it is making two times as much value as the underlying chains should probably not be worth a fraction of those chains. So we've we've got an incredible I think growth path ahead of us and I think uh we have a model right uh that is very much like one of the most successful models in the industry right now. So, if we can show that we're going to own the spot dex market, >> one of the most valuable in the onchain economy, just like Hyperlquid is dominating in their area, um I think that would make you go, "Huh, there's potentially a lot of opportunity." I love it uh with these tokens.

>> I love it. Um so, I saw this graph that had it was it was from token terminal. It had the price to fees ratio um of well, actually, sorry. It it had the um it was basically like the the price to earnings for Hyperlid and Sky, two of the most profitable protocols in the environment. You know, some of the only ones more profitable than than Aerome. And um Hyperlid is valued at like 20x what Sky is or 25x, but Sky makes about half of the amount of annualized revenue about 365. Hype does closer to 800.

>> Y. So is all revenue not equal or like how do we think about the value of a given revenue of of a protocol right because if we're thinking about comparing these things how do we think about >> like maybe just explain why that valuation kind of you know disconnect is happening >> yeah I mean I think as a token holder and you guys fellow token holders probably many token holders out here in in the world there's only one measure for revenue does my token have a direct permissionless claim on that revenue like is there is there no intermediary?

Is there is there no uh permission mechanism? And um >> so I think when you look at what is that disconnect it is you know is that money flowing to a DAO that I in theory have a vote over like a treasury or something like that. I think we've seen that that is basically meme revenue at least from the standpoint of the token holder. They know that there's going to be far more tokens going out and being dumped by team or investors to subsidize the operations than you will ever get directly back. And that is why I think the only way to actually evaluate revenue and defy Llama has a great measure on this is token holder revenue direct flows to you and then you can measure that against new tokens entering

circulation whether that's the team uh going out and subsidizing their operations by selling tokens uh whether that is investors you know who got in early selling tokens whether that's incentives and that gives you the sense of what is the actual like net uh value flow for a token holder. But I think people have gotten away with this for a long time and even fees would be the I I hate anything that looks at fees because if the fees are not flowing to the token, who gives a Um, you know, that is not a number that affects your life at all. And for most of the duration of crypto, every single token uh or almost every major token, the ratio of of cost that you as a token holder are eating to value you're

getting back is infinity. Yeah. And those are not investable assets. >> So in DC, Mike Celig, Paul Atkins, they they announced these five classifications of digital assets. Um, you know, without going into all of them, they they did break down tokenized uh securities and tokenized commodities. Most tokens right now fall into that commodities, but then you've got equities that, you know, are obviously securities. And within that equities bucket, you've got like growth stocks and you've got dividend stocks, right? >> Yeah. >> Buybacks. it would it make more sense to to pay these revenues direct to token holders and effectively issue some sort of dividend given that would make that thing a security most likely. Is that the right way to do these things? Cuz

it's worked for so long in equities if we get some regulatory clarity. Will we see some more protocols go in the direction of, hey, we have this token and we're just going to pay. Maybe it's USDC, maybe it's some stable coin that you just hold this asset and you get these dividend payments every block or every month. >> Yeah. Yeah. I mean, I think um I think value acrruel is super important. Um and I actually think the way in which they've structured it makes a ton of sense, which is, you know, it can't just be a passive revenue distribution, right? because then that's is getting us into securities territory.

But um if you're talking about an onchain asset, you don't want it to be passive. You you want these tokens to be useful for something. You know, in Ethereum, you know, it is helping secure the overall network. In our system, it is about optimizing the network and directing incentives across it. And uh you should use that revenue not just as a yield source, but as an incentive for an essential service uh corresponding to that protocol. And this is one area where I think like hype the token is certainly distributing a lot of value but uh is there a lot of onchain utility and control associated with the token maybe a little bit less so um and I think that is where the the uh guidance that they came out with is awesome and it's great for us because you know you

have to be an active participant you have to be providing value to the overall protocol in order to receive value um and so I think that would be the direction I think more protocols should go These tokens should be useful and that utility and how you use it, the value you provide to the network is reflected back to you. >> Yeah. Yeah. >> Alex Culler, have a great day. Enjoy yourself. I'm sure there's a lot of deal making that is, you know, needs to get done here and conversations and meetings. I'm sure you're a busy guy. Thanks for spending some time with us.

Saw you at in DC last week. I'm sure that was also interesting from the uh regulatory side. Now, this is more of the institutional side. So, you're just kind of hitting it on on all angles and then what? Straight to straight to Paris for some freaking What is it? What's the orange drink? The um appperal spritzes. >> Oh, love me and apparel spritz. >> Some of the spork whale vibes. >> So, he's hitting all the angles here. >> Spork whale is Denver. >> Ken's more of like >> Ken will we'll be in the heart of the DeFi world. >> Well, and I know you guys always like it if I drop a little alpha. So I I will I will be sure to share that um Monday at at can I'm speaking on the the main stage and uh we obviously had a big event out in November where we shared a

lot about what V3 and the new launch of Arrow is going to look like but we held some stuff back including what we think is an entirely new DeFi primitive that will be built into Arrow and uh we're going to be talking about that out at out in CAN on Monday. So maybe we'll have an opportunity to catch up after that because uh we're hoping to make some uh big waves next week. So sir, hope hope folks tune in. Um and uh hope to see you guys out there. Yeah, hopefully with an apperal spritz in hand. >> Yeah, we will see you there. Guys, check out Alex Cutler from uh the main stage at HCC.

>> Ladies and gentlemen, Alex Cutler. Guys, we're going to take a super quick commercial break. Be right back with our next guest to keep the show rolling. We're live here from Digital Asset Summit Day One in New York City. See you in a second. Hell yeah. Hey,

you're okay. Heat. Heat. N. Get out of here. Hell yeah.

Heat. Heat. down.

Okay. Get out of here. feel.

Hell yeah. All righty guys, we are back at Digital Asset Summit day one. Huge news today from Secured Size. Very classic news drop today with security eyes and they love doing this. They love just taking over the timeline when everyone's in in the room together. You know what everyone's talking about and of course Superstate and Securitize decide to launch this together. Um not surprised there that that that it came out at the same time. So NYC is partnering with Securities to build a tokenized

securities platform. It's this direct signal that obviously the NYC is interested in coming onchain and being a part of the onchain ecosystem. From what we understand, securityize has signed anou directly with the NYC allowing them to actually be able to be the core provider of tokenized asset. Securitize becomes the first digital transfer agent on the NYC. It's 2026 and we're getting excited about digital transfer agents. That is a sign of the time, ladies and gentlemen. Look, my take on this is I think that this is a big win for secured size. It's a big win for tokenized uh asset trading. I think secured size is the right one for this position because

they obviously have a the right licenses. They have the right digital transfer agents. They are going to do uh things in the compliant and right ways. I just I just think the NYC is shooting absolutely bullets anywhere right now. They're trying to get their uh brand moving forward in this position of tokenization. And to me, this is more meaningful for securityize than it is for NYC. I think as I said, the NYSC is shooting bullets right now into any tokenization kind of idea and plan.

Obviously, they have a structure to it, but my take is that um again, I think this a bigger win for Securitize than it is for NYC. think they are going to keep expanding their partner sets and really trying to get into this market. >> Look, um this is a this is a win for the end user. Like this is a win for anyone who owns stocks. That that's what's happening here. The reason that we're hearing so much about tokenization is because this is a fundamentally better technology than what we currently have underpinning our financial ecosystem. The equities market uh is trillions. uh it's several trillions of dollars upwards of 10 to maybe 25 trillion.

>> And so what what we have is once everything moves on chain, which it will, we're going to tokenize all of these things. We're going to have ETFs, index products. It's not just the spot assets that will move on chain. We will also have all of the assets that are built on top, all of the derivatives. This is this is potentially a hundred trillion dollars of value moving onchain. I I don't disagree with you that this is bigger for Securitize than it is for New York Stock Exchange, but I think what what it's signaling is that we are ending up with a world where we have hundreds of trillions of dollars of high quality assets on chain and then the value that can be unlocked as a result of tokenization means that we can borrow against these things where

whereas we currently couldn't previously have done that. We can stake, we can compose these assets together and create products that are previously never before seen. These are financial primitives that are becoming invented before our eyes as a result of the tokenization effort. And so, >> yeah, I mean, look, I agree. >> Couple words here from Carlos. Uh, you know, he's been on the show several times. Uh, obviously they announced this New York Stock Exchange partnership. Uh, Securize is named as the first digital transfer agent. Here's the key words here. eligible to mint blockchain.

There there's really one key word here and it's mint >> because this is not backed securities. This is not SPV rapper securities. These are >> blockchain native securities for corporate or ETF issuers minted on chain on the upcoming New York Stock Exchange affiliate tokenized securities platform, the digital trading platform. Uh but there is more to it. I've also been on the show saying that this is the new L1 trade. You may not be able to buy some public token that New York Stock Exchange or NASDAQ has listed on on some ICO platform. So maybe it's more difficult to get exposure to these things, but this is the new L1. The

digital trading platform Securitize and and New York Stock Exchange, they're working together on exactly this. And so as part of this collaboration uh NY is partnering with securitiz uh as the design partner in development of a digital transfer agent. Uh this will uh support onchain settlement of tokenized security transactions. They will collaborate on the standards for digital trans transfer agents. So we will see more digital transfer agents and tokenization agents participating in the digital ecosystem which means that there will be more uh tokenization agents as a part of this offering. Obviously securitizes a design partner for the network itself but then we'll have

transfer agents and we'll have tokenization agents on top. >> Whether this is bigger for New York Stock Exchange or securityize I don't know I don't care. This is a really, really big deal for the infrastructure of the entire equities asset class. We're going to see tons new companies, tons more offerings on top of this partnership. Kudos to Securitize and and New York Stock Exchange. We are going to be having uh Billy uh the COO of Securitized on the show tomorrow to talk about this partnership. Congrats.

Anything more to say there about this or or did you get it all out? >> So, moving right along here. >> We've got >> Hey, happy Tuesday, man. Welcome back to New York. I'll tell you that much. >> I'm glad you're thinking through theseCC's. Uh Andy's got radio voice is what we're calling it. Next up, we're going to move right along. We've got closes $125 million fund. Andy had him on the show, but he couldn't he couldn't get this alpha out of him. $125 million new venture fund backed by KKR. uh co-founder Henry Kravis. Uh they raised another 325 million since early 2025.

Total funding stands at about $2 billion of aum guys. Actually, it was $450 million of yield of um total that was that was listed in this subtitle, but it's not 125. It looks like uh Bloomberg actually got the headline wrong. Um, so they raised an additional 325 since early 2025 and their total AUM is now 2 billion. I think we're going to have their founder Ben Foreman on the show tomorrow to kick us off here at D2. Um, look, I mean, I talked to their principal on their investment team, one of their managing directors, and they are very very DeFi oriented on their

thesis. uh they own a lot of Camino, Jupiter a >> they've invested in Poly Market, Bit Anchorage. >> They did a very early round of Poly Market. So that was one of their big wins as well. And yeah, I mean look, >> this kind of comes in a down market VC slowdown, but this is part of the thesis. This is the take for the parapy race is there's only four or five VCs left in digital assets who will be able to raise sizable rounds enough such that they're able to to lead series A rounds which means they're going to be investing 20 25 million 15 20 million into a single deal.

>> Nope. That's the wrong take. >> That's the wrong take because there's going to be more venture capital firms that are entering the industry. >> There's four or five crypto firms that are left standing. That's an obvious take. >> That's my take. >> There's going to be four or five more VCs that are entering the industry because they're coming from Tradfi. They're coming from legacy finance and digital assets and tokenization are eating traditional finance and just becoming finance. So all of the VCs that are coming from finance are going to be entering this and investing into digital assets. There's plenty of VC funding. Build your startups. Become an entrepreneur. Get funding because there's plenty of money going around.

>> There's literally not that much VC funding going around in the industry. If you look at the chart, it is literally down only since 2021. Like it is at its lowest point right now. >> You're looking in the wrong place. >> No, I'm looking at the data on Blockworks or wherever. >> So, shout out to Blockworks for having us out, guys. Also, shout out to OKX, our partner for today's stream. Absolutely incredible. They are the centralized exchange of the future. You might think Coinbase. We just had Alex Cutler. You might think Kraken because you know they have an IPO coming up sometime soon. OKX is our sponsor today and we are very very grateful that they decided to join us on this journey into the institution

>> sponsors of Formula 1 and other large large sporting events. Guys, we're going to move on from Paraf. Uh we have some more news today from the Balancer side. Uh it looks like Balancer is shutting down which >> this is unfortunate news. >> I say that with a slight Yes, a heavy a heavy attitude here. Balancer Labs >> you know they were around 2020 2021 um they helped pioneer the DeFi ecosystem early on. Um doing things the right way but just exploit after exploit $110 million exploit the legal and financial burden. Um they survived but

they downsized restructured >> TVL went from 3.5 billion to 57 million. >> Yeah, it's not good, guys. I mean, look, there is a growing sentiment right now in this space that DeFi is just kind of like dead and that it's dying. I'll tell you what, guys, we're at D. The institutional part of DeFi is very firmly alive and will continue to be. So, you know what? I have more to say about New York Stock Exchange and securitized because that is institutional DeFi. We talked to a lot of DeFi products. We just had Alex here talking about how high quality assets are going to enter the DeFi landscape.

Maybe it's AMMs, maybe it's order books. The reality is that institutional DeFi is alive and well. It's just happening at the onset of the traditional financial ecosystem. We need the New York Stock Exchange. We need them. And we don't need them, but they're the ones that are pushing on the innovation front. We just don't have the moat in the DeFi native protocols anymore. And so it requires coming at this from >> Hyperlid has a massive amount. No one's no one's competing with them. >> When when we think about like the ownership of these assets, the asset issuers, it's coming from legacy finance. I would have loved to see Bitcoin and ETH and you know some of these these native tokens be the assets

that ended up in the you know trillions of dollars of asset classes and then have them as the native protocols uh or the native assets in these protocols. Ultimately, uh, you know, it it's pushing from the the Tradfi side coming into the DeFi side, uh, rather than the other way around. Poor one out, guys, for Balancer Labs, a true OG. Unfortunately, not going to be joining us for the institutional journey ahead. >> Yeah, unfortunately not. >> Uh, let's continue. Yeah, I mean this one I saw come out yesterday and unfortunately guys I don't know what we're going to get on the stable coin side of Clarity from what I'm hearing is that there's basically rewards for activity based usage. So

>> if your stable coins resemble a bank deposit then you cannot earn yield on those idle balances on those deposits. Um and basically from what we're hearing from the insiders is that this is being seen as too restrictive um for stable coins and for and for these stable coin holders. And so yeah, it's just a bit of unclear as to what's happening. Basically, my take on this is that if you're holding stable coins in any sort of wallet, you're not going to be able to earn yield on them. That's not going to be allowed. It's not going to be a part of the process.

if if you are just simply depositing them into a button or a little pro or a little uh part of the application, you'll be able to earn yield. So, I like the way that I'm thinking about this is that all you got to do is just move your stable coins from like your basic wallet into like a separate part of the application that has the y. >> I don't know if that's the case. I I I'm going off of Miss DC herself, Miss Eleanor Tourett. Um, you know, we had her on in DC and the rumors then was that the yield issue was going to be resolved. The politicians pitched this as a resolution to the yield issue. But I have a feeling Mr. Brian Armstrong has not signed off on this and the rest of

the D5 founders. Uh, I just don't think he's going to be bending the knee to banks because it really does feel like that. Um and so what we have from Miss Tourett is that uh this internal stakeholder email uh of this proposal says that it would prohibit platforms from offering yields directly or indirectly >> uh for holding a stable coin or in a manner that resembles a bank deposit. And so if you're deposited, you know, into these uh these DeFi vaults that are positioned through these centralized exchanges, we've seen them on Coinbase.

They have Morpho pass through. Um that resembles a bank deposit, a neo bank deposit. They're paying yield on that. It's very direct. I don't think Brian's going to have, you know, sign off on this. Uh the restriction would apply broadly to digital asset service providers. They would restrict this very broadly and uh and their affiliates to limit workarounds that would remove any of the marketing, you know, rewards or or or anything like that that is currently being used to circumvent these restrictions. It would bar >> anything economically or functionally equivalent to interest. This doesn't feel like a compromise or or a resolution. This feels like a ban on stable coin yield.

So this is the current state of affairs. The banks um apparently are the next to review this. So uh Eleanor says this is as of yesterday really confirmed actually what happened. Um but I think >> look I think Brian's gonna go with it at this point. >> This is coming. No, I don't think so. I don't think so. >> I think Brian Armstrong is going for it. I I I don't see Brian signing off on this a as of right now. They can just look he can just currently pay the yield according to the like regulatory loopholes in the Genius Act.

>> So he doesn't he doesn't need any legislation to go through. Obviously we want market structure. Yield is getting tied up in market structure. But I don't see Brian who's basically a oneisssue uh voter on this on this. Uh Brian has basically got the the the political moat around his current market structure. He doesn't care. I'm getting I'm getting notifications from Coinbase to bet on March Madness. >> Dude, that's a whole another thing going on. People are not happy about that. >> I I I was going to ask Alex about that, too, cuz look, they're taking bets and doing experimentation, but I don't want to be, you know, I don't want to have my investment account or my savings account next to my, you know, my gambling on on sports. It's very weird. And so, I I don't see Brian signing off on this. He

already has somehow he's gotten clearance to to offer sports gambling, prediction markets, uh weird seeing those screenshots on Twitter that are just like why is my Coinbase account offering me uh gambling and it just doesn't make any sense. So guys, let's keep it rolling here. >> They're searching for a north star. Yeah, let's keep it rolling. >> This is an interesting one, guys. So, Nova Bay stock pumped 19% after a pivot from biotech to effectively a Sky Treasury company. Stablecoin Development Corp now owns 9% of the Sky token supply, which is insane. Uh they they have about two billion Sky tokens, $150

million, and their strategy is tied to staking yield and participating in protocol governance. They have no price or or sorry not just price exposure backed by Sky Foundation, Tether Framework and yeah I mean this was another iteration of these treasury newest digital asset treasury companies. This is a treasury company through and through. They did $134 million private placement. Uh they pivoted from healthcare to crypto. You don't just do that unless you become a major holder which they did. The interesting thing about this one was that they didn't announce the thing, have the market pump, and then get their fills. No, they filled and then shilled, you know, which is is uh something that uh Arthur Hayes

taught us. >> I mean, this is like this is something that Sky, I think, has been holding in their back pocket for a while. >> Yeah. >> Um and yeah, I mean, it just shows that >> I just want to one one piece here. Just funny. Nova Bay Pharmaceuticals. They don't even This is not a major cap or a micro cap. They call this a nano cap >> of of 30 million. >> Very small public company, but I mean look, they're doing this in the public sphere. >> Yeah. And I mean, I think that this may have explained the sky rally from uh it was about like sixish cents to almost 8 cents over the last two weeks. I'm not exactly sure, but clearly they do own a

significant amount of of the supply, which is definitely bullish. And so, yeah, guys, I mean, you know, we've been pushing Neo Finance, pushing bullishness on Sky on this kind of like ecosystem. So, excited to see this come out and yeah, I mean, generally think it's a it's a positive positive thing for the environment. So, >> uh I just want to say it acquired over half of the two billion Sky tokens. That's roughly eight and uh almost 9% of the total supply. Uh acquired at about 6 1/2 cents.

>> There you go. So it was on that rally. You saw the price just kept staying very very very very steady. And so >> yeah. >> All right guys, let's move on. Larry Frink is continuously continuously bullish on Black Rockck and on tokenizing funds. Uh BlackRock is betting billions that tokenized funds will do for Wall Street what the internet did to mail. This guy's going to single-handedly try to tokenize everything and he will not be stopped. Uh I don't even have much to say on this other than guys get out of his way. He's going to do this and it's it's going to rip. I mean >> I think that I think that's the right take. Black Rockck uh you know Larry Frink used his annual shareholder letter to argue that tokenization digital assets could modernize the financial

system while warning that US capitalism is failing too many workers. So you've got these headwinds on one side uh kind of playing into the populist nature of uh the current political environment and then leaning into tokenization as the solution for those headwinds. Uh think also said that uh recording asset ownership on digital letters and using regulated digital wallets could make issuing trading and accessing investments faster, cheaper and more widely available. Um when I was uh walking into the Javit Center this morning >> when you found the entrance >> when I found the entrance it's a very big building digital asset summit is in it's in it's in one one you know reasonably sized section of this

building >> um and so I was walking in and Mike Celig was walking out >> nice >> um and so uh him and I exchanged glances and uh and so part of what I think is happening here is that he is going to try to open up the accredited investor laws. This is something that uh we've been pushing on a lot uh ever since I got into, you know, investing in general. I said, you know, why is it the case that accredited investors get, you know, access to these things, but they let us, you know, go to the we both grew up around the Hard Rock. They let you go to the Hard Rock.

They let you gamble on sports. They let you buy lottery tickets, but they don't let you, you know, in invest into these private placements. Doesn't make sense. So I I think what's happening here is that Larry Frink is pushing uh access investment access at the same time that we have technological innovation to open up investment access and make these things more accessible and more efficient. Uh and so I I would hope and this is where I think look for so long technology was so much faster than policy. >> Now it feels like >> policy is just catching up a little bit and and it's becoming a lot more innovative. Ladies and gentlemen, we're going to take a quick break. We've got some more news, some guests coming up.

We'll be right back just a second. We are live at D1 New York City. Hey Hell yeah.

Yeah, baby. Hell yeah.

Hey, hey hey. I feel okay.

Heat. Heat. N. Hell yeah. Hey Heat. Heat. N.

Hell yeah. Hey, hey hey. Heat. Heat. Heat.

Hey, heat. Hey, heat. I'm down. Hell yeah.

Heat. Heat. Down.

Hey. Hey. You know, hey Heat. Heat. Hell yeah.

Hey, hey hey. I feel okay.

Get out of here. Heat. Heat. N. Heat. Heat. N. Hell yeah.

Heat. Heat. Heat. Hey, Heat. Get out of here.

Heat. Heat. N. Lady. Hell yeah.

Hey, Get out of here.

Yeah, I'm down. Hell yeah.

Heat. Heat. down.

Heat. Heat. N. Get out of here. All right, ladies and gentlemen, we are

back live at DS in NYC day one. We are joined here now with Chip Dempsey, the co-founder of Habachi, also a heralded uh executive in traditional trading, marketmaking, investing space, the new co-founder of Habachi, Chip Dempsey. Welcome to the show, Chip. >> Thank you. I'm glad to be here. >> Awesome, man. How is the conference treating you? What's the uh what how would you uh describe the vibe here and the environment? >> The vibe? Um you know, I'm probably not super qualified to judge vibe because I've spent most of my career in traditional finance, so it's a lot more energetic than than typical traditional finance, but relative to other crypto

conferences, it's hard for me to say. >> Well, give us give us a sense of your background. You know, you've been to some of those other Trad conferences. Uh tell us, you know, where you came from ultimately, what led you to Hobachi? >> Sure. Uh wow, three questions there. Um my background is I was a trader for 10 years. I was an options market maker on the floor of the border of trade. I was a foreign exchange trader in the interbank market. Moved over the technology side. I ran global sales and strategy for uh the back office system for listed derivatives GMI. And then I was the chief commercial officer of the Chicago Border Trade Clearing Corporation. I was an independent consultant setting up exchanges and clearing houses across Africa and Asia

and Australia. uh joined Morgan Stanley's principal strategic investments uh leading investments into market structure and fintech companies and then I was the chief commercial officer of the options clearing corporation that clears all the equity options trades in the US. Uh so that's my my tradefi background but but DeFi and and crypto really bled in when I was at Morgan Stanley. We wrote uh an investment thesis on distributed ledger technology at the OCC. We built a a clearing program for stock loan using blockchain. Uh so the last handful of years I've been very excited about the

technology what it what it offers to traditional finance and being a part of that. Hibachi is uh the first central limit order book for stable coin FX exchange. Yeah, >> right. Most of the most of what happens in FX, the liquidity is is really inner bank uh is where the liquidity is. And so there's credit lines between banks and quoting agreements between banks, but there's no transparency to the public about what the price is, right?

There's no you only the only way that you get access to the price is you ask for a quote. And of course, if they know who you are, they might read you. They're going to spread the quote. That's the revenue model. Um, but you don't have access to see like the order book. A central limit order book is uh transparent for anyone who qualifies to participate. And we'll have KYC and AML screening, but you have access to see the order book. You have access to directly trade with the best offer in the market, the best bid, not just what your bank is showing you. Uh, so that's a big difference. And then of course stable coins are instant settlement so there's not the counterparty credit risk and you don't have to have nostro

accounts in every jurisdiction. So for users it'll be a much better experience. I think the adoption of stable coins which has mostly been US stable coins um has been dramatic and we think that one of the best uses of stable coins will be foreign exchange because of all this legacy time and cost. So that's what we're building at at Hibachi. Be >> before digging into the architecture of FX onchain at Habachi, I'm curious while you're you were at Morgan Stanley, you were, you know, doing some of this research on blockchains for stock loans, these sorts of things. That was mostly research uh and development. It was kind of theoretical maybe, but now we see a lot of this being put into practice.

Correct me if I'm wrong here, but I'm just curious what changed between then and now that ultimately led us to put a lot more of these things into production. >> Okay. Um, it wasn't strictly uh research. We were making investments and it wouldn't be appropriate for me to talk about Morgan Stanley's investments. Sure. Um but I would say that the difference was that at the time we were really looking at how does a distributed ledger um reduce reconciliation costs, right? Because when every bank keeps their own ledger or their own database of the trades that they've done, it might not exactly reflect what their

counterparty's ledger. And so a lot of of really financial services, a lot of the cost and operational risk was really about how do we reconcile when there's an out trade, right? When we have different amounts, different dates, different whatever. Um that's that was for for me uh and especially coming from having been in a back office company that was a huge value proposition. I think that um the idea well the difference between then and now primarily has been the degree to which customers have chosen have shown a preference right the there's so much adoption and I think institutions are

reacting to customer demand um that's a big difference and the idea that these things happen with or without is also a big difference. I think that that traditional finance had was operating with um less of a threat vector uh to if I don't offer this to my clients, somebody else will and other people have. Uh that's that's I think a very big difference. And now we're only I'd say we're only now getting to the point where uh people are talking about replacing the the old rails. So I think you know from my perspective and it's

just my perspective um the idea that 10 years ago if you had said to me there's a real prospect that there will be stable coins that are just a onetoone for the underlying fiat I'd have been like well I don't see how much value that has right and then if you'd say well and this is going to create instant FX settlement and it's going to uproot >> um you know what's today a $9.6 trillion a day volume of transactions. I I would have thought that was fanciful and today I don't think that's fanciful. I I mean my one of the things I think is the right analogy is ground mail, right?

Nobody was complaining about ground. Everybody accepted it takes three to five days to mail a letter. That's just what it takes. >> They weren't saying why aren't these mailmen faster, >> right? and you pay you buy a 29 cent stamp and that's fine, right? You take it to the mailbox. But when email came along, different infrastructure, new rails, instant delivery, free. Um, wow. Does that take off and only after email do people start referring to ground mail as snail mail. Yeah.

>> Right. So the perspective changed and I think that the perspective is >> is changing now. I think foreign exchange really a lot of financial services are having their email moment. Y >> and you know the post office wasn't able to stop it. I think that everybody realizes that it has a place and that's a for me the biggest difference is just sort of the not the eventuality of it but the practicality of it. >> Yeah. I mean there if there was a tagline it would be welcome to the obvious, right? I mean this is this is happening but I'm curious specifically what about the current foreign exchange market that is going to be replaced is the snail mail component that Habachi is doing better like you're trying to sit

here and tell me Chip that you've developed something that is running on blockchain rails that is better than the snail mail version of what's being done in kind of like the more centralized brokerage manner. How is that possible? How is it possible? >> What is it? Oh, okay. So, um well, let's talk about how much of it is replaceable and then I'll talk about why because to me that's a little bit obvious. Like it's instant and free. >> Um the uh you'll get it one day. >> What I what I think is what Okay, but there's distribution, there's limits, there's brokerages, there's there's partners, there's firms.

>> Yeah. So, what is replaceable and what what is currently too entrenched? Okay. So, the Bank for International Settlements uh estimates in the most recent trienal survey that the FX market is 9.6 trillion a day. 13% of that is backtoback. It's not market facing. So, call it 8.4 trillion a day. Uh you take out the forward swaps uh which is really an interest rate trade. It's not a it's not directional currency trade. It takes it down to about 4.8 trillion a day. about 45% of that is the inner bank market itself which I'm I've been surprised by the extent to which money center banks have engaged with us

constructively delighted and shocked um but if we assume that that's not replaceable um which again I don't think is I can totally say that uh then you're down to about two and a half trillion a day little under a billion of that options call it two trillion a day >> of directional non-banktobank FX trading >> okay >> well for market size comparison that's twice the size of the US equity market listed equity market >> and that's split across 4,000 issues right 4,000 shares make up the US equity market we're talking about 10 currency

pairs that's twice the volume so it's a big market it's a big opportunity what can be replaced I think so if you're not talking about interbank which with you're back to 4.8 paint. Um then you're uh you're looking at basically non-bank financial institutions and corporates and a lot of this is because so much of the there's 72 I think banks maybe 73 70 something that are CLS members. So that's really where the interbank liquidity is. So everybody's asking those banks for a price and maybe other people are asking somebody who's asking those banks for a

price, >> but there's correspondent banks and just those relationships. Everybody adds a little bit to the spread. So when you have a central limit order book, what's capturable of that? anybody who has the capability of seeing what they're getting quoted from their current provider and what is the best offer on the central limit order book. So that's going to be a lot of that. I mean I don't think the two trillion is I think that's absolutely obtainable, right? It's 4.8 trillion is serviceable per day. Um I think two and a half trillion is like serviceable and I think the constraints are what's a matter of time is wallet adoption right because you

have to have policies procedures practices uh for how you're going to operate your wallet who has access to the private keys onramping and offramping fiat. So there's an adoption, you know, curve and then um wallets and and contracurrency issuance. Right now of the 330 billion that's that's issued, 98% is US dollar backed. So I think there's a chicken and egg here where you're going to want uh to have a reason a way to use a yen stable coin or euro stable coin before you want to buy it. Um but I think foreign exchange is going to be one of the use

cases that really drives adoption. So we think that that issuance in foreign currencies is going to skyrocket as well. >> So last week uh Andy and I were in DC and and the CFTC was there too. They issued a no action letter to uh to Phantom uh as uh they proposed to provision marketing of software to facilitate trading by its users uh with registered futures commission merchants in introducing brokers and designated contract markets effectively that uh this no action letter says that wallets aren't required to register with the CFTC even though they facilitate some commodities you know trading. Um so maybe that will help uh you know kind of the adoption of these wallets. Uh I I'm

actually more curious on the on the cent central limit order book side you know as more of these banks are kind of talking with one another and getting uh an interest rate or or a rate from kind of like those choice banks that 70 or so that you mentioned. How will blockchain help innovate a central limit order book? Just bare basics like you mentioned settlement times and these sorts of things. Maybe it's pricing. What What are some of the things that get improved as a result of putting a a clo onchain? >> Okay. Um so the direct answer is nothing. Central limit order books are really good the way they are. Okay.

>> Uh and the central limit order book the matching engine will be offchain. >> Okay. >> So really it's how does reporting transactions with we're using zero knowledge proofs. How does that facilitate somebody to know that this is a solvent counterparty? Okay. uh that you know that there's it's really about solveny. Um that's that's the opportunity where blockchains are changing the game and the fact that stable coins are issued on blockchains and you can have this atomic settlement. It's not delivery versus payment anymore. It's like literally atomic that's a big difference. So that's where blockchains are are creating innovation opportunities really through stable coins. So we're a central limit order

book. That's not new. That is a that is an age-old um approach. The fact that there's been this walled garden of liquidity within the banks that where there's information asymmetry and access asymmetry um it's not been to the sort of that cartel of banks to open up access to be transparent about what the price is uh because they make their money by spreading the price. So a central limit order book how is it improved by blockchain? Not at all. It's a great thing on its own. Um, but stable coins on a central limit order book, stable coins are great because of blockchains and and so that's why the combination of the two is going to be I

think transformative. What do you think there's going to be from a catalyst perspective to really bring this market on chain? Is what is going to have to happen for uh for an exchange to come onchain? Is there going to be a is there going to be a moment where something breaks? Is there going to be a clear kind of breakthrough protocol? Perhaps Habachi, what is like the mental model for like why there's any urgency to this matter? >> Well, Rob made reference to it. Uh the CFTC and the SEC chairman Atkins just spoke um indicating their sincere desire and plan to clarify what are the rules, who is subject to them, h how are they being applied. That

is a that is a big difference. that is a big catalyst, right? I think that um whenever there's uncertainty, any organization that has a legal department is going to, you know, ask the legal department what they think and hear back like this might we might not be ready for this or this might not be ready for us, much less our clients. Um I think that is that clarification is a is a big catalyst. I think the um I think a lot of the investments that traditional financial companies have been making into this space and the partnerships that they're building um are I I think Circle is a great example and I'm biased because we're launching on the ARC uh

mainet when it goes live. the um they have established a regulation first uh trusted set of relationships with traditional financial highly regulated companies. So that comfort whether it's uh in terms of what regulation and legislation apply to us and do we have counterparties that we believe understand us culturally and that are a good fit for us and to expose our clients to. I think that there's a maturity a m maturation happening and that's the catalyst. I mean you're seeing it last year there were 200 billion in stable coins issued now it's 330. It it's happening. Yeah. Ship kind

of coming to a close here. What what can we expect from you specifically in the Hobachi ecosystem on the team coming months into mainet? What where are you most prioritizing using your skill set and what are you most focused on? >> Well, obviously we're we're always focused on the needs of our clients and what we're building for them. Now, uh we have a set of pers that are live on habachi.xyz. Um the uh but we're building per stable coins. So there that'll be a riskmanagement market. This will all go live concurrent with the go live date of the ARC uh blockchain and we have a spot

market that's going live for currency conversion. So we're working very closely with uh with Circle in terms of making sure that our technology teams are in sync and that we're reaching out to the users of Circle stable coins. Uh it won't just be Circle, they're really building ARC as a utility. Uh so there are other stable coin issuers who are issuing on the ARC blockchain as well. That obviously works for us. I think there are 10 or 12 contracurrencies that are in development for being listed on blockchain.

So really what we're working on is is building that trustworthy, transparent, accessible, fair, um open FX market. The central limit order book is a enormous component of giving people access to what's on the bid and what's on the offer and being able to directly pay the best offer and hit the best bid. So that's where our focus is is working with our clients on getting their feedback. We have a design partner program that's that's incurring a lot of feedback as we're building. So that's that's where where our focus is.

>> Habachi.xyz. Chip Dempsey, thank you so much for joining. >> Thanks for having your conference. All right. >> Okay. Take care. >> We'll see you again soon. Alrighty, guys. Up next, we've got Pranov from Vanek, a lovely friend of of the show, investor. I am recently a recipient of the VANC uranium nuclear ETF hat, NLR. You'll see in the back of the nest in the Empire State Building, nuclear power you have >> already. If you watched yesterday's show, uh it was very apparent in the background. Uh we we had quite a few really really rippleable clips with our lovely uranium hats on. We might be

down. We might be underwater on the investment, but we're at least we got good swag, ladies and gentlemen. Isn't that what matters in this world? We got Pronov. We're going to talk about what's happening in the digital assets market space right now in 2026. Space is growing. Uh I think the guy's portfolio is probably hurting. Hopefully not too bad. We're not going to troll him too hard, but it's good to have him on. Let's get him on. Prennav, welcome to the show, man. What's >> up, man? Good to see Good to see you. >> Welcome. Yeah, pleasure. >> I was just telling your colleagues that last time we hung out was in your office in Flat Iron. >> Yes, we're in the Empire State now. Okay.

>> We have uh your your hats everywhere. >> Yeah. >> Um and yeah, man. How are you? >> Good. Uh not hurting as bad as you would think, but yeah. >> Thank goodness. Jeez. My goodness. >> How have you been able to avoid uh avoid the pain out there? >> Uh we more or less started derisking our portfolio last summer. Raised a bunch of cash. We've kind of been sitting out a lot of the pain. Um but um now the question is when do we start to redeploy and wear? So that's a good place to be having just dry powder in this market. >> Yeah. Yep.

>> One of the things that you told me last year when you came on was you were expecting this kind of uh development of tokenized equities, these onchain IPOs. It's maybe been eight months since we chatted or longer. >> Um I'm not sure if that prediction has played out. I haven't seen too many. >> Not yet. >> Okay. Okay. Not yet. >> Yeah. Yeah, I mean I think um you know fingers crossed clarity act gets done. And I think that's kind of necessary before real companies decide to tokenize their stock and then ask the question, what could they do with that tokenized stock? Right? That's like the second question they got asked because the first question is going to be like why do I need to do this? Uh but I think once you get clarity act passed, I mean I think was helpful is the uh guidance

that the SEC CFTC put out last week. I think it was last week. Um on sort of what's a token, what's a commodity, what's a utility token, what are the rules for a tokenized equity, those types of things. So I think all of that is good and I think you'll slowly start to see something emerge in this category over time but yeah hasn't happened yet. >> Um yeah Prenav I I mean here we we have uh you guys it says the fund is sitting on 60% cash that you know it might be even more at this point. Um but my my question is like what are you guys waiting for? you know, I I is it clarity before that we see a lot of these tokens uh these equities end up as tokens, but you know, we're seeing kind of the

secular bull market in particular categories. Uh Andy had Tao on the show last week. We're seeing a lot of action there. You know, the the you know, Jensen Hang, you know, is talking about Tao. Um we're seeing kind of these pockets where there does seem to be a lot of action. Are you seeing this too? Are you, you know, starting to think about deploying into some of these SEC sectors? If so, you know, what are some of the signals that you're looking for before redeploying? >> Yeah. So, I think um I'll take a step back for a second. So, >> our strategy can invest in both tokens and equities. We're kind of agnostic to the underlying instrument. Um the world's obviously going through like a lot of change right now in terms of you know beyond just like you know valuations. is really around technology

and the biggest one is obviously how the world is repricing anything that is not in the atoms world anything in the bits world right so software is getting repriced um what the market is telling you even outside of cryptoland is that uh the terminal value of software is lower than it used to be um the marginal cost to build software is less so I think uh the world's repricing a lot of these assets across the board and we need to see weird things shake out you're kind of in this like knife is falling you don't want to catch the falling knife Once everything there settles and the world is able to sort of ultimately understand what's the duration of cash flows available to things that are just pure software which is kind of most of crypto right most tokens are ultimately pure software. So um we need to see where that all shakes

out number one. Number two, um we started sort of developing a different framework around the world, uh for lack of a better word, looking at the products people are building through this scarcity lens because assets that are or products that are scarce will likely command a premium valuation. Um and the the debate is also shifting on what product is scarce and what's not scarce. So you might have thought a DeFi protocol that's been around for five or six years is scarce because of the kind of this Lindy effect or the UX maybe, right? Um, that's probably going to change because in in a world where humans are interact with interacting with DeFi, UX matters a lot. But in a world where AI agents are going to interact with DeFi, other things probably matter more. So all that to really say that uh we're in a transition

period and you want at least for us, we want to be very careful in where we deploy capital before we have sort of a good line of sight of where the world is going. So it's kind of our >> Yeah, I mean we're we've seen scarce assets also take a hit like gold and silver. um you know especially there was a great quote actually I forget who said it but uh it was you know when there's uncertainty in the future people are going into gold and silver and these sorts of things when there's uncertainty now at the present people are raising cash and so you guys were out in front of that and and you anticipate that before we get another wave of you know kind of the software risk on approach we're going to end up with a more scarcity scarce asset approach >> yeah I think the world's being too

simplistic right now which makes sense. Um the world's approaching it as if there's something in the physical world, it's likely going to be scarce or could be scarce. And if you even simplify that further that the assets that are performing well in the world today are things that have temporary scarcity. So memory stocks as an example or things in photonics, right, where there's very clear supply demand imbalance. Maybe things in energy and power, maybe things in liquid cooling, right? The world's kind of like said that's the safe place to be. That's where we're going to hide out. But I think eventually the question is going to be around what are assets that are permanently scarce and the way we're approaching that is I think things that have very strong network effects where incremental user usage makes that moat even stronger for that underlying

product. That's what will become permanently scarce. So one category that I think is kind of interesting in the world of tokens is privacy. >> That's an area that crypto can uniquely offer something that the traditional world cannot. Um so then you're looking at systems you know even ZK where um the privacy element gets stronger as more people join to participate in that privacy element. So very we're very interested in that category because you can see how that becomes incrementally scarce as more people start to use it. Yeah, man. We had um Santiago Santos on the show as of the last month ago or so, and he made this kind of bold prediction that any company that actually uses stable coins or crypto rails as part of their

business, that equity or that stock will outperform pretty much any token. I don't know if you have a similar as as strong of a view, but do you think that tokens are actually the worst way to get upside into crypto today or what's the problem with it? >> Yeah, I think um you can kind of approach that question a couple different ways. The first one is gen generally a company that adopts the technology going to outperform other competitors maybe. Right? Not if the business is garbage, right? So like you got to kind of look at the revenue quality and say is this actually a good business and can they now use stable coins to enhance that core value proposition to their customers and sort of get further ahead in their lead. So like you know for example if you look at

stripe versus its in like versus incumbents or the people they compete against I think what they're doing with tempo is likely going to allow them to accelerate their lead. Um, if I look at just a pure remittance player who's kind of in the legacy world that kind of finally woke up and said, "Maybe I can touch and do something with stables." Well, if your core business is still garbage, like doesn't matter, right? Um, so that's kind of how I think about it. Um, in the token world, I think thing we like to do is like when I look at the top say large caps, um, you want to compare the value proposition of those investments versus large cap equities.

um you know I think I think just asking is this asset better than its competitive public equity tech stock in some ways right but if you look go down the risk curve you look at like token number like 100 or something you find something unique uh that token if you have the thesis right can easily outperform most things in the public equity markets so token selection is all that matters like last year you know if you look at other hedge funds in the crypto space there was a wide wide degree of like performance dispersion depending on which tokens you were in like if you were in some of the privacy tokens that did really well, you had a very different outcome as a fund manager than if you were in I don't know like pick whatever other altcoin, right? So I think in the tokens outside of the

majors, token selection will matter a lot. >> Same thing this year. And and so a as we think about this dispersion amongst these categories, you know, it sounds like you're prioritizing commodities because that's typically where scarcity lays, but even with I'd imagine and and I'm curious to hear your take on this, even within commodities, you're going to end up with some performance dispersion. How are you picking, you know, the the assets within these categories, within commodities, how are you looking at this? What are what are some of the criteria that you're looking at on on what time scale? is generally your thesis as you're going into more of this scarcity asset class.

>> Yeah, I think um we buy into this framework that um flows drives price, price drives narrative and then that that kind of feedback loop serves itself. So we always start with the flows and so any token we're looking at it has to be a product we kind of like and believe in we think has sort of um properties that again AI agents one day will use that product, right? because if you optimize for investments that humans will use, you'll end up in the wrong place. Um, so so again got like the product and and then the properties around the revenue quality. But then we ultimately look at sort of the supply demand of the token and how that token that plays into the business itself. Um, again, you know, most tokens today are still plagued with this overhang of VCs

dumping that token or or vesting and all these things. So you'll end up with a very very narrow list. You'll probably end up with a list of like three to five projects that are kind of interesting that have interesting supply demand dynamics such that incremental demand from net new users or just buyers of token drives a lot of price performance and ultimately those then uh have an interesting narrative that develops over time and that's what's probably interesting. >> Are you are you looking around in the kind of convergence of AI and crypto and blockchain? I'm sure I'm I'm sure you are. Aentic finance, everyone's talking about this kind of commerce, obviously.

Bid sensor has been hot. We've had quite a few people on the show last couple of days talking about subnets talking about it's kind of like decentralized intelligence idea. Are you bullish on any any of this? You guys allocating on the venture side with Wyatt and CO or you guys kind of in investing on the liquid side here? What's the what's your status there? >> Yeah, so I think that's one area that's super interesting. Um without going into like individual projects and everything I think the category within this crypto AI bucket that is again interesting is things around uh censorship resistance or privacy. Um so um the thing that crypto can uniquely offer is access for humans or like people's AI agents to the best inference models uh while

preserving their privacy because I think the thing that's going to be come to the forefront of like most people is things around surveillance. Um you know you saw this happen with this kind of debate with anthropic and and the US government uh which is like should the government be able to use uh the best models to then surveil do mass surveillance of people not making a political case on either side but I think crypto's got a unique place to play there which is uh people some people will want privacy on their inference activity and crypto can play a unique role there and I think there projects in that category that we find interesting that's where we're investing. Um the other things that are like more experimental like you know we'll see right if like there's real demand for it in the world outside of like kind of this little bubble of

crypto people. >> Yeah. Um I'm I'm curious you know you guys are making your investments inside of Van uh you know as far as the offerings that you have to customers um just what does the product stack look like at this point? How has it changed in recent months? >> Yeah I think um simplest way to think about us is uh on the crypto side we have passive products and active products. So passive are all the ETFs um and exchange rated notes in Europe and the active ones are the one I manage uh the one why it manages the venture side uh we have an actively managed ETF product called node that Matt Seagull manages um so that's how we differentiate the world um you know I generally buy into the view that passive outperforms active and traditional

assets which has been the case right so very uh most hedge fund managers have had a hard time beating the S&P 500 or NASDAQ over long periods of But crypto is unique. So you know if you wanted to get exposure to the crypto space and you decided to pick any time frame just allocate on a market cap weighted basis or even an equal weighted basis know you spray and prey that strategy generally underperforms active management for a variety of reasons. So you know I think people have to choose how they want to express their risk but just look at the data when and pick what makes sense.

>> Yeah. What does a a winning portfolio look like over the next year? If you had to you had to just design a portfolio uh from a percentage kind of uh allocation basis, how would you look to allocate that? >> Um so maybe I'll start high level which is we made a case to uh our investors and others that uh let's accept the reality which is AI is the biggest thing happening in the world. Uh AI is the platform. Blockchains aren't the platform. like you know 5 years ago we all thought blockchains were maybe the platform and great businesses were going to be pure play businesses that build on blockchains. I don't think that's going to be the case. Um I think it's likely that most successful companies of the

future are kind of AI native and maybe they can leverage blockchains in one way or another. Um, so we kind of made an active choice to accept that reality and say we're okay investing in pure tech companies where most of the drivers of enterprise value things around what they're doing around AI and maybe they're also leveraging blockchains somehow even if it's going to have an impact of one or five or 10% of their business. As long as they're doing something with blockchains, we should be able to invest in it. Uh, so that's how we're looking at it. We're accepting kind of the reality of the world. Um so so with that I would say an ideal portfolio at this moment would probably have a fair bit of dry powder because I think uh the risks in the near term are far greater than the upside. So it makes

sense to do that. But outside of the dry powder I would probably lean more like 60 70% equities like that you believe in. Simplest way to think about it is look at companies that could be the future mag 7. If you make if you're right on that call there's a lot of value to be captured there. Um, and then I'll have probably three to five tokens I'm going to bet on every year uh that will probably drive alpha in the portfolio and top of the equities that we're betting on. >> You mentioned there's some near-term risks and and that's one of the primary driving forces to have significant dry powder. What are those near-term risks? What do you what are you concerned about watching out for?

>> Yeah, I think in no particular order um anytime there is a new Fed chair that introduces new risk to the market. There's this uncertainty in how the new Fed chair reacts to different market conditions because what markets like certainty markets have known what how Powell does things in different time periods and so that's one uncertainty. There's midterms. Um not going to make any predictions on the war but there's obviously that now happening uh and commodity prices. Um and the bigger ones for me are is really this fact that all risk assets so far have been held up by AI capex, right? how much the hyperscalers are spending and then all the stocks that have performed well are the downstream beneficiaries of that spend all the way from GPUs to memory to so on. Those are the pockets of like those are the areas that have done

really really well. I think there's risk to that AI capex spend to the downside in some ways. I think everyone's like talking about the upside spend but I think the downside spend is is really predicated around the fact that a good chunk of that spend is funded by funded by private credit. There's cracks in private credit. Um, a lot of that spend is funded by the internal casualties businesses. Look at any hyperscaler stock that done too well because their investors are telling them we don't know if we believe the ROI on the spend. So anyways, long story short, I think there's risk to that capital spend on the downside which will then have downstream effects on all the beneficiaries of that spend. So there's just all a lot of like sort of underlying risks that are brewing and I think it's more prudent to have more dry

powder at this moment than than not. >> Bernov, thanks for joining us today. Hey, I hope you have a great conference. Uh, hope it goes well. I know there's a lot of folks here that are either clients of Anak, friends, or friends of you personally. So, thanks for spending some time with us. >> For sure. Thanks for appreciating our merch. >> Appreciate coming on. >> See you soon. >> All righty, guys. We're going to take a super quick break and be back with Sam here of Phoenix Labs and Spark. We will be back in just a second. Hey, hey hey.

Heat. Heat. Get out of here.

I'm down to Hell yeah.

Hey, hey hey. Heat. Heat. Get out of here.

Heat. Heat. N. Come on. Oh yeah.

Hey Okay. Okay.

All All right, we are back from Digital Asset Summit day one. We've got friend of the show, Sam McFersonson joining, goofed on the speaker poster a little bit. We posted a singer on there, but we've got Sam McFersonson, uh, the co-founder of Phoenix Labs in the flesh. Sam, welcome to the show. >> Yeah, thanks for having me. >> Absolutely, man. Uh, quite the energy out here. Uh, a little bit more institutional than the, uh, the crypto native conferences. Uh, what what are you what are you hearing out there? How's the vibes? I mean it's all systems go like uh we're in the bare market supposedly. I guess that you know the prices are down but like all other signals are pointing towards adoption like uh this is crypto becoming mainstream and um you know I've heard

that D is has the most ticket sales this year even than last year. So um everything's going great in my view. >> I think that's right. I mean it is incredible. You've got uh people from all the companies that you would expect to be out here uh from both sides, the Tradfi and the crypto side. Um Sam, USDS is upwards of 12 billion dollars in supply. We were just talking about the newest digital asset treasury company on the scene. Haven't really heard it called that, but uh the supernova uh healthcare company coming into the sky ecosystem buying up like uh 10% of the supply or so. I'm just curious if you could kind of unpack and untangle how all these organizations are working together. You at Phoenix Labs, we've got

USDS, the stablecoin, Spark and Sky are all sort of working together. Can you just help us understand how all of this fits together? >> Yeah, there there's definitely a lot of brands. So, I understand how it can be a little bit confusing from the outside. So, um maybe I'll start from uh the evolution from Maker um and D. So D was the initial stable coin that was launched um under Maker DAO. I previously worked as on the engineering team at Maker and right around uh 2022 there was kind of two main things that were happening as a transition period. One was the rebrand to Sky. So Maker is now uh Sky also the rebrand of D into USDS. But as part of this uh restructuring there was also a governance restructuring um because it

was recognized that uh Dows uh as they were designed where it's just like a a token weighted vote. Um everybody's in one DAO. This wouldn't scale. It was grinding to a halt basically. And so the uh decision was made to restructure into uh a core DAO, the parent DAO which is uh Sky and then form a bunch of subdows of which Spark is one of these subdows. So I I'll preface by saying these things are not banks. These are permissionless onchain protocols, but you can think of it analogous to Sky is more like operating more like a central bank doing issuing wholesale credit to the commercial banking layer which is um Spark. There's also Grove and there's various other uh subdows that are um you know all doing various types of lending

and and focus. So Fenix Labs is a uh is is my company and that is a service provider to Spark because again I mean these things are Dows these are not legal entities and so the the structure is there are service providers attached at the edges of of the Dows. help us understand wholesale credit and how that might differ from you know the the way in which Spark is putting credit and how Phoenix is working together with with Spark. >> Yeah. So you can think of Sky is basically like a liquidity consolidation engine and so Spark and all the other subdows have equal access to a credit line from uh the Sky protocol. So Sky takes in uh deposits um and also Spark also helps on the deposit side as well.

this 12 billion number that you mentioned, this is the total, it's not quite there yet, but it's like 11.6 billion right now, growing rapidly. So, this total deposit amount can then be be deployed on the uh on the other side. So, uh for Spark, we're able to borrow from uh Sky, the grade is currently um uh 345% or sorry, 3 >> sorry 4.05%. It changes a bit. We borrow for about 4% and we are able to earn a net interest margin on top of that. So any um spread that we're able to generate within the like the entire ecosystem um Spark retains the earnings that are generated on that. Got it. And for bullish conditions, this is quite lucrative. So the Spark liquidity layer,

which is our automated allocation system, currently has about 2 billion deployed. It was 3 billion uh right around September during the peak of the bull market last year. And that was generating upwards of 80 million per year in uh revenue um largely from a lot of like um you know yield farming programs like we're we're major LPS into a lot of the ecosystem. So really uh Spark is uh dynamically rebalancing between uh DeFi uh lending markets um CFI now increasingly we have exposure to this is um OTC uh cryptoback loans um through Anchorage Digital a custodian um and we've recently just announced uh Spark Prime which is a CD5 prime brokerage. So really, we're just trying to cover the entire market and then

rebalance the portfolio to optimize the yield. >> And and what does the yield landscape look like? Because we remember where a lot of this was endogenous yield. A lot of it was token emissions. It was yield that was generated within the DeFi landscape and and a lot of it was unsustainable because we had to continue to increase risk, kind of go out to the periphery on these new chains or or take these new risks with looping and wrapping new assets. That is how we drove the yield up or continue to keep it competitive as interest rate uh interest rates you know tended to shift.

Now what does that look like? You know as you're going into centralized finance you're using Anchorage Digital. How are you leveraging some of the exogenous sources of yield outside of the industry and bringing that yield back to token holders? >> Yeah. So um you're exactly right is still a lot of the yield comes from speculation and either that's from um you know some new token launching or um perpetual futures people want to go lever long on various cryptos and so funding rates are are a big uh source of yield um that have been become increasingly popular in this last cycle.

So these these are quite good in uh bull market conditions and we're happy to tap into this to generate a good riskadjusted yield. But um the the other side of this is when we're in a bearish condition, uh the yield kind of dries up in this market and you want to kind of rotate more into real world assets. So this has really been um the key to why USDS has been growing so much as of late is now that the the yields are gone in DeFi. Uh USDS was designed from back in the beginning of the maker days to have real world asset backing. So it can shift this supply into pretty like it's lowrisk stuff. It's like treasury bills, but it gets this the access to the risk-free rate and then can continue to deliver this onchain. Now, what's changed a lot since 2022? Um, there was

this big disconnect with accessibility to uh the treasury bill rates. And so, this is why you see the rise of a lot of tokenized treasury bill products that came online 22 23. um Sky is able to tap into that um and able to uh generate a yield for those depositing into um USDS as well as we're also sitting on top of that with our Spark savings product. We uh generate the same rate for uh USDC. Um we are generating uh 3.3% on USDT. Um so we're able to generate like above market rates in Yeah. incredible and and that's all from you know uh taking the wholesale credit uh you know from Sky

from Spark and and going into some of these RWAS you know one thing I'm curious about is as you're you know lending to these RWAs and driving in that interest on that uh are you taking these stable coins off the protocol offchain and if so how does how does the ecosystem of lenders ensure that you know if they don't have visibility to this because it is offchain that they ultimately do get uh you know not only their interest but also their principle.

>> Yeah. I mean and so you're you're kind of hitting at something that I I think is key to the way we think about the space and what our actual like edge is um within the ecosystem. And so for Spark transparency is what we're obsessed with. So um if fun if if things are moving into funds that um you know are a little bit more complex. First of all, we don't really do that too much at scale, but there are some places where you want to do it. When that uh becomes necessary, you actually want to try and uh expose where all these loans are actually sitting and put this data on the blockchain, make sure there's independent verification. And so, as a rule, we uh for USDS um on Spark Savings web page, you can view exactly where the balances are all sitting. And um so, you

know, it's a mix of um onchain crypto lending. Um there'll be RWAS but these are fairly simple constructions. These are like you know treasury bill products um as well as like AAA uh corporate debt. >> Um so yeah but really as an ongoing mission we're just uh we're we're we're as the as the world comes on chain more and more we want to have the entire balance sheet be like publicly uh visible to everybody so you don't get surprises. >> Makes sense. Um Sam I got two questions left for you. One bearish one bullish. The first one I Well, where do you want to start?

>> Let's go with the bearish. Let's start with end on a high note. >> Let's end on a high note. All right, we'll start with the bearish. >> What do you you know, preface this with everyone is saying stable coin growth is inevitable. You know, all the way upwards of, you know, the White House, Treasury Secretary Bessant, you know, all these guys are saying three trillions of dollars of stable coins. They're going to be buying debt, you know, directly from uh from the Treasury. Uh this is all going to fuel stable coin growth into the trillions. USDS is a main benefactor of that. What do you think is the most prominent risk to the stable coin industry? What do you think could potentially obstruct or hamper that growth of stable coins into

the trillions? >> Yeah, I think this is unlikely, but I think the biggest risk is probably some sort of a political backlash going the other way um with the 2028 election. However, I actually don't think this is uh you know, even just looking at this as like a political um move. I think the the Democrats were largely hostile towards crypto in the last election cycle and it cost them a lot of voters because if you look at who are the constituencies of these politicians, right? There's there's a lot of people that are pro- crypto. They have crypto assets. They want the industry to do good. The anti-crypto, there's not many people, I think, voting based on being anti-crypto. So I think it's just politically a losing strategy and um combine that with um you know continued

adoption with the embrace of crypto these past few years um I think it's all systems go and you know maybe it's not going to be the most friendly environment but I I don't think we're going to return to uh the you know the 2022 uh bear that was uh that was pretty brutal for hostility. >> Yeah. Yeah. Totally. Totally it was and Gary Gendler has been uh evaporated with the recent, you know, SEC guidance and uh you know, finally we're getting some rules of the road. Uh Sam, last question for you and off on a high note. How do we get USDS uh to 20 bill, 50 bill, 100 bill?

>> Yeah, I mean so we have a what I would say is a superior product right now. Um we have the some of the most advanced uh technological automation. So we are operating at a pretty sophisticated level. So you see the recent growth. I think this is 20 billion is is going to be quite easy. I think it's actually quite achievable. I think my projections are by quarter 3 we should be at 15 billion and um from there on it will just continue to grow as the market uh grows as a whole. We're now at 300 billion uh with stable coins. As the numbers that you mentioned uh the 3 trillion um I I firmly believe this is going to happen. This is going to be accelerated by um AI agents and stuff like this. Stable coin payments is is going to be a key driver of this. And so

you think about who all these new users coming in like first and foremost everybody wants access to the US dollar as the world reserve currency. But what is the next thing you want? You want a yield on your stable coins and that's exactly where Spark comes in. So I think um we're just going to continue to compound uh the growth. >> Yeah. Well, one quick followup here. you know, as we're looking at 25, you know, 50 billion dollars in USDS, uh, and we're we're thinking through, you know, some of the the RWA sources of yield that are out there. I'm curious, you know, we had, uh, we had, uh, Prrenav from Van just talking about how, you know, there are AI hyperscalers out there and and, you know, that is sort of at maximum throttle in terms of the investment that these hyperscalers are

making into data centers and and building out power. Is it possible that stable coins could fund or finance hypers scaling and and and finance this AI boom and and seek out a return from that? I is that something where we could start to see stable coins start to integrate more closely and and see a lot more growth driving into these stable coins as a result of these hyperscalers funding the these large buildouts?

>> Yeah, absolutely. I think um one of the uh interesting things in the current market environment is uh lending against GPUs. A lot of these hyperscalers, they can't get enough uh access to um credit to be able to uh continue buying more GPUs and scaling up their operations. So there's a big demand for GPUs and so being able to tokenize these and uh you know offer credit against the GPUs is uh very promising. Uh we're not doing that right now, but it's something we're actively looking at. >> Incredible. Sam, thank you so much for joining. It was absolute pleasure. Thanks for having me. Yeah, love to have you on again soon, guys. We'll be right back. Quick break and we're going to have our next guest. I think it's Brian Pelgro of Layer Zero Labs. We're going to get him up in just a moment. Don't go

anywhere. Hey, hey, hey.

Heat. Heat. N. Hello. Yeah.

Heat. Heat. N. Hey everyone. Hell yeah.

Heat. Heat. Heat. Heat. N. Okay.

Get out of here. All righty, guys. We are back at D New York City, day one. I've got Brian Pelgrino next to me, the co-founder of Layer Zero Labs. Brian, welcome to the show. Welcome to man. >> Thanks for having me. >> Yes, sir. It's a pleasure to It's been a little while since we uh you you guys have launched a chain since since we last had you on.

>> Yep. >> And uh how's that going? >> It's been crazy. I mean, leading up to launch, and again, I didn't realize how much I appreciated leading up to launch was entirely stealth, right? Even internally, 165 people, only 24 people knew about it uh until a week before. So, we told the team seven days before. So, like we talked to nine external parties and this small internal team. And so it was two and a half years of just like just focus on the thing. And then post February 10th, it's like floodgates are opened, aperture gets super wide, and now we just spent the last six weeks speaking to like everybody on the planet, right? Uh so it's been crazy. It's definitely more chaotic. I remember it kind of in the in the early days of of Corlay stuff. It's been great. Uh but it's like taxing. I

love I love product. I love the technology. So I want to be able to spend my time there. Uh but I have to balance both right now. But it's it's been couldn't ask for more. It's certainly better than the alternative. >> Yeah, I mean you guys had quite a quite a partner set as far as uh actual uh institutional folks coming on building on the zero chain. We actually had a good conversation with Alex, the co-founder of ZK Sync last week in DC during DC blockchain summit and he kind of explained how there's this miss misaligned incentive structure where a lot of these banks or or competing institutions won't want to build on the same environment as their competitors.

So Chase isn't going to want to build on JP Morgan. Other banks aren't going to want to be building on other banks chains, etc. This is why we have Ethereum. That's why we had this kind of like credibly neutral blockchain, right? Obviously, all the Ethereum people love this idea, but it seems like Zero and the blockchain that you guys are going to launch is changing this. How do you think about this incentive of bringing these different parties into one environment? >> Yeah. No, I mean, I think for us, for one, I think like Alex absolutely credible neutrality actually matters a ton to to all institutions, right? And this has happened to every um sort of like working group or um you know committee that gets forms like the early parties sort of get all the value and

then it gets less and less. And so we were very clear like one of the things that's very different than like the Ethereum based approach is like the layer 2 is like zones and zero are not owned by some external party. They're not like a layer 2. They're owned by another basian there. There is like there is only the chain right and so the chain itself is this entire holistic ecosystem. And so when you talk to these groups, what we've really cared about is saying, "Hey, we have like a very strong belief that the world is shifting, right? And that like stable coins have paved the way for all assets to come and they are going to move from 75 to 247 and they're going to be globally available, permissionlessly accessible and they're going to trade across sort of like all these assets. So the

institution financial world is going to rapidly shift and as that shift happens uh like who do you need to learn from and understand and make sure that the mechanics like meet the use case of and it's just like okay well DTCC has a hundred trillion dollars worth of assets underpins the entire equity ecosystem does four quadrillion dollars worth of volume and then you move up the stack it's like who's the biggest exchange in the world like it's New York Stock Exchange at ICE and then like who's the biggest market maker it's like Citadel right and so like as we were thinking about each of these pieces is it was go out and get a working group. It was form first party opinions or it was go find the largest and most defining group of that sector and it is not that the chain is like owned by them or run by them or

designed by them right there's not a a you know corpo chain in parliament or anything like that it is it is that you have somebody who actively wants to do something that can meaningfully reshape their business and you have the ability to like understand deeply what that is get them excited about it and make sure you're building the base layer in a way that can actually move all of this stuff forward. So, it's just uh you know the goal was don't be performative like find the best groups and ensure that the technology can actually meet what they need. was from from the existing chain landscape that was out there previously um the L1's the L2s you know everyone that was out there was it mostly someone

that went out formed those working groups that was that the missing piece or what was there technologically also things that were missing just just generally what what did you see out there in the landscape that just didn't really meet the the standard that you were looking for and that these these institutions are looking for >> yeah I I will say largely all of this was driven two and a half years ago by my co-founder Raz, right? And so he's like I mean very very deeply passionate about the underlying principles why when everybody else built interrupt protocols that are fully upgradable and mutable and all these things we were like entirely immutable from day one, right? It was just like we care a lot about that. So he really really was strongly opposed to Ethereum's view that like layer 2 inherit the security of Ethereum, right? uh and he just

painted a picture even back then where it was just like listen like lyrics are never going to give away their keys and if they do give away their keys they're no longer going to have feature parody with Ethereum right like you either force yourself to not have anything that moves forward you're frozen at some state in the past or you will never give away the keys which is clear that what happened to he was every day like comp yelling about this complaining and I was the pragmatist where I was like again I've said this like chill out dude like 50% of all over volume comes across layer 2 these are all our biggest customers, right? And so like ultimately it was just like him being upset that the industry is moving in like a much more centralized fashion to like service some of these demands.

And I sort of challenged him and like well like what would you do right and he ultimately came down to this architecture and so like it came from this core insight around most people were taking ZK as a technology and saying here's an existing system ZK is pretty nent like how do we retrofit it into how do we fit it on top of an existing system which is sort of what happened in interop too right early interop was you have 30 sushi swaps around the you know that exist and they're going to connect them but it's going to be swap here bridge and then swap up there. So, you're paying like 30 bips on both sides for the swap. They're totally fragmented. And then you move to like today and it's like okay well like PYUSD just like just issues their asset and now you know now is like4 billion

dollars of AUM and growing and like you know what I mean like it's much more natively embedded now. It's not being retrofit to existing systems and so everyone is fitting this in and we just kind of took it to the logical extreme and said like who who knows 10 20 years don't know when it's going to happen like assume ZK is solved. if it's solved, what does the world actually look like? And that was the core incentive of the architecture was like build from a ZK first architecture and then we had all of these breakthroughs QMDB faf all this other stuff and then put that all together. And then when we went to the DTC's of the world, I mean Dan stood up on stage at the event he was like listen we've tried and Dan's the CTO of the DTCC stood up and said we

we've tried every blockchain that exists, right? And at best we've been able to get to like a thousand TPS. And once you layer in all the data feeds, everything that we need, you're at like a 100 TPS and it just like doesn't work. And so when we showed him and he forced us to demo to him 2 million transactions per second live, he was like like to you know he's blown away and he's like now you can do something that you couldn't do before. You talk about a group like intercon exchange ny right like the the option before was you you you launch something that like only has partial state on chain if you're launching an ATS and they publicly said they're launching ATS tokenized equities against stable coins well now you have the ability to have that like fully on like complete order book on chain right

you can do the 2 million TPS like NYI does today right and so these things are just like night and day shifts for what people are actually able to do and I think that's been the biggest resonance with a bunch of the groups is you can do things at scale. >> Let's double click on the NY example because they also announced that they're, you know, working on they're they're partnered up with secure ties. They announced something this morning. They're building this out. What does that look like in practice? Is it, you know, their exchange like an application on a zero blockchain? Is it a standalone chain itself? Just anything that you can help fill in the gaps here.

>> Yeah. So, I think ultimately for all the partners, like I want them to be able to speak for themselves, right? Our goal for them is for them long-term to have this ATS like house zero. That's our goal. That's what we want. Same DTCC has a mandate to tokenize hundred trillion dollars worth of equities. We want that to live on us. We want them to be able to build their their sort of like platform that they're building on top of us. Those are our aspirations. Uh I'll let them all speak for themselves on what they're going to do. But again, I I think uh you can hear and in the way that they talk and and sort of uh they're they're excited. Our goal was to get them excited. Now, we have to execute through launch. We have to build the thing uh and we have to get

everybody there. So >> yeah, Brian, when you think about the kind of uh onboarding of new assets onchain, tokenized equities, all all these private credit funds, stable coins, even like what changes from the environment that we've been in of kind of like this chain centric world where we have tons of different crypto assets across different chains, people trying to move them. Now we're introducing kind of like a new third angle here which is like off-chain coming onchain and a lot of like liquidity needed interoperability needed um D5 protocols wanting to use these assets to do looping to borrow against your equities all this kind of like new development

around bringing new assets on chain. What is this? What kind of risks or challenges does this introduce to the interrupt landscape to kind of the fragmentation problem like how are you guys solving this kind of core issue of bringing these new assets onchain and keeping it you know very smooth? >> Yeah. Yeah. So I mean obviously a larger is something like we're 170 blockchains today almost every major stable coin like circle excluded built on top of us most tokenized equities viao most of the tokenized equities issuing via us. So like we've been at the forefront of like how this is happening. We've seen uh both the pain uh that that other issuers have had and also the pain in sort of like the trade-offs that all these

existing chains have have made uh sort of to get to where they are today. And so a bunch of this was driven from that. So like I think there's there's two sides of it. We're we're under no illusion that it's not like snap and there's one chain. There's going to be a bunch of chains. There's actually power in that. Like Tether is probably a perfect example where Tether Tether had saturated $186 billion on ETH, on Ton, on Tron, on all the places where they had very deep liquidity and like UST0 just took them to the chains that they like hadn't gone to yet, right? >> Like in nine months it's done $75 billion worth of volume, grew AUM by one point at like10 billion. Like it's very meaningfully shown that like even to even once you're already have got what

you think are like the most dominant chains the expansion still has like very mean like $10 billion AUM is like 400 something million dollars directly net in their bottom line right like really moves the needle meaningfully same thing PYUSD you've seen it grow now it's it's grown from a couple hundred million dollars to many billions of dollars now so like these things are happening I think it has been proven there is value there for zero itself one thing that we have seen that is is painful uh is one even even today we still don't have nice L2 interop right like has to be done at the asset level it's not done at like the chain level itself for zero everything is like entirely trustlessly interoperable between so like your lending protocol here and your assets that are issued by large institutions

here like all of these things are completely completely trustlessly interoperable and so that side is just going to be like a very nice working well people are very excited about that uh but The goal is, you know, have this hub and people are still they're going to want to be in Ethereum. They're going to want to be in Salana. They're going to want the assets everywhere because an asset issuer's only job is to get as much AUM. It's just distribution. We make distribution as easy as possible with layer zero. And so, it's just like they're going to want to go there. >> Yeah. I mean, I think one of the things that people are going to start to look for in the investing framework for these chains and for these protocols is kind of how you think about where the revenue is coming from. And so, you know, you're

talking about uh things from the asset issuer level wanting to be able to provide them an interface where they can be effectively everywhere where any distribution is required for any user. Uh perhaps there's some there's some fees involved on that or just in gerally using Stargate, there's fees using kind of other providers, there's fees there. There's obviously transaction fees on on the base layer, but the goal is to keep it very very low. Well, I guess what I'm getting at here is there's a lot of compression of fees across the board. Uh block space isn't as full as it's been in the past. The demand is not there.

What is kind of the revenue framework for layer zero? How are you thinking about generating meaningful revenue longer term? Um a lot of competition and pressure from Hyperlquid and teams that are just like solely focused on this on trading. Um other blockchains aren't really competing on fees either. Where are you guys at here? Yeah, I mean listen, Blockspace has been entirely commoditized for a long time. Even on Ethereum, we don't have $100 fees in Ethereum anymore, right? We have like 30 cent fees, right? It's just like night and day difference. Uh so there's there's two sides. Like one, >> even though you only have 30 cent fees, you're still just completely capped on the upper bound. Like Ethereum is not going to magically do a thousand transactions per second. It's doing 20 transactions per second, right? And so part of it is where you're capped out

there. And then on the fee side, base fees have been dimminimous. Like look at Salana's revenue, right? Salana is like 115th of its overall revenue about hund00 million and 1.5 billion is base fee. Everything is state contention which is priority fees and everything is me right. So it is really about how do you take these assets and how do you take uh how do you create real economic activity real valuable economic activity on top of the surface itself. And so our goal as we bring in these institutions, as we bring in the assets to have as much of that economic activity live there, right? That is really what we're trying to do. And so as we work with the institutions, we work with the groups, it's how do we get all of the assets there? How do we make

it the most effective place to run each of these individual flows? Uh, and how do you generate the maximum amount of economic activity? So like very cognizant about it and like very laser focused towards that side because you're right you're you're not going to generate meaningful revenue on just base fee uh block space again for us talking 110,000th of a penny per transaction network. >> That's the whole point. >> Yeah. >> Right. Yeah. And so you're thinking like priority fees um me kind of scaling to a point where people are competing to be kind of first in on on different orders whether it's arbitrage payments etc and and kind of creating that as part of the main main thesis for the revenue

driving. >> Yeah. And so we've also we've talked about like uh three zones that we're we're focused on at launch, right? One is general purpose EVM zone. Think about it as Ethereum and a million TPS, right? It's just like just your general purpose smart contract zone. A lot of comp high degree of composability, adomicity, all of those things. Second is market zone. This is this is why we brought in Citadel, which is why we brought in these groups like an actual underlying full market structure that is owned and internalized by the chain. So 100% of the fees and revenue there is directly owned by the chain. And then the third is on the payment side. And this is why Google cloud and the agentic side, this is why tether, this is why we have those partners is like how do you create um and again all of the all of the sort of

stable coins that we have in general like how do you optimize for that? What does it actually look like from the privacy side for real payments? Um and so for us it's like those are the three things and each of them have their own surface for how value accretes. uh but they are all owned by the underlying chain itself and I think that is that is where the value is going to be driven from >> and and what do those zones how do those zones interact you know is it a bridging experience what generally how how >> so 100% um every so the zones themselves can be different uh different block times in terms of finality so like your EVM zone let's call 400 milliseconds where your market zone might be like 10 millisecond block times right you have immediate finality at so at 10

milliseconds at 400 millconds and then interoperability between them is entirely trustless but it's bounded by ZK proofs on the beacon chain. So if your beacon chain and your proof timing call it like 1 second you're going to have one second trustless interop between any of them. Now interrupt between most of those zones is deposits it's withdrawals it's potentially like taking collateral and using it in some manner. You're going to have one second gaps on those but times for the chains themselves like very very very compressed. >> Got it. >> Definitely measured in milliseconds. >> Okay. So you kind of you can deposit into these different zones uh in order to take advantage of the faster block times and the applications >> read full state again you have you have trustless ability to to move assets to read state to use these things but bound

by the beacon chain timing for proofs >> is this like the ideal idealic version of what the rollup centric road map on Ethereum should have been >> maybe more like what the sharding road map should have been long because like ultimately a zone is sort of like a shard that is owned by the underlying the rollup road app went and it said rather than Ethereum owning all of these, you're going to have a third party who owns them and we're going to externalize that. The problem with third parties oftent times is incentives and that's where you run up again. This is bunch of the third parties now capture a ton of value. Ethereum doesn't capture a ton of value, doesn't have an easy way to price that. And I think um there's a great I I have like a huge amount of respect for Ethereum trying to to push

forward like the values on the underlying but uh I think the tweet was Vitalic was something like over the next 10 years we have to like change the engine as we're flying like four more times. We've already done it once in the merge like we just have to do it four more times. I think the benefit that we have is like we don't have to change like we get to just build from first. So in 10 years like their goal is they will end up in an architecture that like converges towards zero right that that will be the end state will be things that look more like this in the long term um we don't have to change the engine four more times you the ability to just build it from first principles on the stuff like QMDB on stuff like jolt like this is stuff that we have

innovated on the forefront we have uh you know invented on QMDB fafa all this stuff SV ourselves in house um and so I think there's just a lot of advantage of that so the goal is just uh just get it right the first time. >> Yeah. Brian, what have you been doing in the AI space? I'm sure you've been paying attention. I'm sure you've been investing, learning, perhaps coding. Like what's what's caught your attention in in the AI space? >> Yeah, I mean, I I'm I'm a huge AI nerd. I I spent like 2014 forward uh post Deep Minds like Atari agent demo, co-published with Nome Brown. I like published papers, got cited by Deep Mind. So, like I spent a bunch of my life in AI. I love AI. uh internally like as as a nerd myself use it a ton ton of stuff with open claw ton of stuff

with cloud forever internal workflows that I've been running as a company what we've I my assumption my baseline assumption was wrong my baseline assumption was AI was going to bring up the floor of the company overall more than it did the ceiling so our best engineers would use it would get some value but like our our midlevel or lower engineers were going to get the most value out of it and it's been like the total opposite our mid-level engineer is great. The the floor has definitely been raised, but like our best engineers, Isaac, our chief architect, the the one who created QMDB originally, he said like if for him to become at the level he is now at ZK, it would have taken him three years studying under Justin Thaylor directly every single day and instead like three months being

completely obsessive with AI, he then finds like six errors in a 90page math theorem. You know what I mean? like he's like he now is extremely extremely good at a field that is incredibly difficult to become good at. And so like the acceleration of our best engineers in the acceleration of some of these really really hard technical problems uh has just been like night and day. So we are uh you know we mandated a long time 100% usage internally. So every single engineer in the company now even non-engineer is uh regularly using it. Um I very much pay attention to like the space at large. Uh but I think what we've seen is really just our our very very best engineers having like you know

this 100x multiplier which has been crazy. >> Um you know you guys have achieved this you know uh massive TPS number. You guys have the working groups. You have the partnerships and the relationships with the institutions. I'm just curious. I mean all obviously all eyes on the launch of this chain. Is there anything that people can do to get involved and and just generally you know what are you most focused on leading up to the what can people expect I guess is the main question here. Yeah, I mean I think what we what we don't want and I think what you have to try to avoid like you can't you cannot launch a chain and just like here it is I hope people come right like that that that era is gone and so even for layer zero when we built layer zero we were very

opinionated that we had to build Stargate to show people what was possible and like Stargate today has done $150 billion in volume it's been like this cornerstone application and it like set the stage early on for lasers our goal is to do the exact same thing so our goal is focusing on like what can we actually bring to market on day one that drives real meaningful value. And so like of course we're pulling in all of the groups and we have groups like GTE some really amazing groups are coming in and building like great we're really really trying to pull in everybody but our focus is like what can we build that delivers something of real tangible value on day one. So most of my time is spent around like that. what does it actually look like to get to

market and who do we take there and who is going to deliver something or be serious enough to get us there and how do we drive like real meaningful business value and so like that's where my time is spent mostly uh how people can get involved like I view it as >> you know the the difference between paying 30 cents per transaction and paying 110,000th of a penny per transaction is a difference between uh you know like edge and like 5G on a phone right like the class of application what can actually be built is just completely changing and uh you need developers to like take advantage of that. I'm not going to be able to come up with every idea. We're not going to be able to come up with every idea.

Uh that change of what is possible. Same thing as going from like one mehz to a gigahertz on a on a computer on a phone. Uh it's just night and day. The applications are impossible. That's going to take time. It's going to take really smart, motivated people who come in and like are able to do this. And so our goal is like build the canonical approach from day one and then after that is just enable everybody as much as humanly possible. >> Yeah. No changing the plane in midair, huh? >> Yeah. Yeah. Exactly. >> Brian, thanks for your time, man. Hope you have a great conference. I know you have a slam week. >> Thanks for coming.

>> Appreciate you spending some time with us. Congrats on the launch. I'm sure you're heads down. Very busy. So, uh, enjoy the week, man. >> Awesome. Thank you guys so much. >> Thanks, Brad. >> Thanks. >> All righty, guys. Uh, that is Zero. That is their upcoming blockchain launch with the co-founder Brian Pelgrino. Up next, we've got Felix Javin, our local in-house macro expert, also head of content at Block Works. Lot to talk about. Been following Felix's content as unfortunately, >> I'm not sure my overly heavy commodities basket is going to like his dollar rip thesis that he's going to come on and tell us right now. I mean, look, we just had uh just had Prenavon talking about the uh the raising cash argument as

well. Shout out to Chris Perniski, man. >> 60 60% plus in in in Van at the moment. >> Where are we at right now? >> What's going on today in the markets, ladies and gentlemen? >> Yeah, let's get we're going to get a macro update and a and a market update here. Bitcoin. >> All right, hype's up. Hype's up 5% here. >> 39. Felix, please. How are you, buddy? >> What's up? >> Welcome to the program, brother. >> Thanks, guys. Good to see you. Thank you for coming, >> dude. >> Thanks for having us. Just banging them out. >> You guys are grinding over here. This is crazy. >> I get tired after like two of these and you guys are taller in person.

>> I know. I got the I was I was interviewing Ral today and finally somebody the same height I got as tall as well. Yeah. Yeah. >> Did you um did you bear pill Ralph because he's been very very bullish for the last four months and it's just hard. It's just hard. >> Uh no honestly we didn't even talk too much about crypto price. We talked a little bit about the macro situation. Um, >> I don't know. I think he sees it pretty similar to me. It's like obviously oil is a big story right now. What's going on there? Um, >> and you know, it's it's on a knife edge right now. Which way it goes, right? Like >> Yeah.

>> Yeah. >> Yeah. >> I saw >> Yeah. I saw today Iran is charging $2 million for safe passage through the straight of Hermoose. >> Damn. To be I haven't seen many headlines today. I've been too busy. But that is I mean it like Yeah, it >> it's spicy. I don't know. Um I don't like $100 oil right now, right? Like >> yeah, >> at that price you're mostly worried about the inflation effects of that and how the central bank reacts to that sort of thing. Um, but if you get to 150 bucks, you start to talk about demand destruction and like >> yeah, >> you know, you look at any major oil shock say for basically like the 2022 one, we entered a recession pretty quickly afterwards because it just like,

>> you know, oil oil is a derivative of or it's an input into basically everything, right? So, you know, if you have that go up, people start to react to that and change change their consumption habits differently. So, it just has this whole sequence of effects. So, >> yeah, it's dicey. It it it it is and I've been watching some of your shows and you kind of have been uh developing this thesis that's kind of opposite to dollar or fiat debasement where there was kind of this trade that was put on with gold and you know copper and silver and uranium and then all the way across to you know cryptos had it first and you're kind of flipping that now and saying like there might be a lot of positioning that's offside too much into this dollar debasement concept in a more

recessionary environment. ment oil's going up, DXY is kind of starting to go up again. Is that still something that you're kind of uh pretty firm on? How are you thinking about this kind of anti-doll debasement uh um >> or rebasement? >> Yeah, the thing to think and remember about currencies is always a relative game. You're always comparing one currency against the other. Um and this was like the whole debase and trade that was going on for many months there. It was it really it's funny it took hold after the move in the dollar lower and it was just chopping around sideways and that's when everybody got all excited about the base of it and I was somewhat sympathetic to it because it's like look you know if you look at the DXY right

it's a basket of other currencies mostly the euro and like the yen. So it could be that they're all just getting the base at the same time and the DXY wouldn't really reflect that because they're just all getting the based. Um but basically what it is is that whenever bad things happen in the world everybody needs dollars like everybody's everybody's uh the shortages in dollars happen really quickly because every a lot of things are derivative of it right like you know oil gets settled in dollars countries all over the place have US debt and you know if they if they you know need to to shore up their own financial positions um you know they need to sell that US debt and to sell that US debt means they're buying dollars basically is the other side of that trade. So you see this where

whenever bad things happen people need dollars and then yeah on the fact that okay if this bad thing that's happening is an oil shock that's mostly focused on like the straight of hormuse most of the flows that come out of there it's it's going to Asian markets it's going to European markets almost nothing goes to the US is actually largely energy independent so it doesn't affect them as much so >> that oil shock that we're seeing it's it's going to affect the Asian economies a lot quicker and the European markets a lot quicker than the US. So then circling back to that composition of the DXY, right?

>> If most of it is euro and yen and they're getting whacked way quicker and harder than the US, that means a weaker economy for them. That means a weaker currency for them and then relatively it's a stronger dollar. So it's just like a >> it's just like a rate differential thing. Um you know >> on on one side, yeah, I think people are getting a little too far over their skis on the hold the basement thing because of what gold is doing. Um, in reality it's just mostly like Chinese central banks and stuff that were buying gold like mad. Um, >> and so you just had that whole narrative get offside there.

>> Yeah. >> Into something where those those two uh two flows in the opposite direction and I was just like, okay, this is not good because everybody's all in on gold right now. >> And then pretty quickly we've seen Yeah. retrace like 30%. >> Yeah. Yeah. Very quickly, which is like surprisingly shocking for an asset of that size. >> Like trillions of dollars being wiped out on a day-by-day basis. >> I I I had you know I was saying I'm pretty bearish precious metals here. I didn't think it would go down 30%. >> No, at least not in like what like a week and a half or two weeks, right? >> So, so you know with that being said like you know gold's back down I was just checking the price 4,400 today 4420 it and it's retraced so much from that that high point that it had like I guess

try you know help us make sense of this like does it still have a long way to go? you said it was maybe not expecting to to go down that much, but I I'm just curious if you think that most of the DXY and and and this, you know, dollar rise is attributable to the war. If that does peter out in the next couple of weeks, maybe couple of months, you know, is that why we're seeing most most of this because of that uncertainty or do you think that this is sort of the uh the entrance or the initialization of a cyclical trend where we're going to start to see more of these things that lead to a rise in the dollar?

>> Um, no, I don't think my base case is still dollar weakness if what was holding before the war continues. Okay. Um yeah, so it's, you know, it's a short maybe three to four month thing. Now, of course, if yeah, if the whole war resolves itself, I would probably go back to leaning towards the dollar going lower and and you know, game on on the whole gold thing. Um, but yeah, you know, I think there's also some weird technical market structure stuff going on like some people are speculating that some of the Middle Eastern countries are selling their gold positions to shore up their finances. Like, >> you know, think about Dubai, right? Like that whole economy was built on people

coming there and spending a bunch of money and tax haven thing and now everybody's gone. Like that's a pretty big chunk of their revenue out. >> It probably makes sense for them to shore up into something a bit more liquid in the meantime. So there's there's parts of that, but um you know the the big stories at hand I think I think continue which is that we we had globalization and that led to like structurally stronger dollar. Um because the the other side of that equation is is the whole trade deficit thing that tariffs are going after which is that um other countries make a bunch of stuff.

It comes into the US the US pays for that with dollars that goes out to the rest of the world. Um and it's led to that like multi-deade strength. So if we go back to where we were in February and reverse all this stuff, yeah, I'd probably go back to leaning towards dollar bearishness. So it's just a counter trend kind of thing, I think. >> What are your views on the state of crypto right now? Um it's uh sitting, you know, Bitcoin's at 70, hype is obviously quite strong. >> Uh a lot of others not so much. Uh there's kind of an AI trade emerging with Tao and Bit Tensor. Um but really not a whole lot of action. I mean, it's kind of what you'd expect if you're a four-year cycle follower or at least part of that. Um, you know, you would

maybe anticipate that we have six more months of uh finding our our base and then going from there, but people are saying it's going to be shorter this time because the bull market was different. This bare market's going to be different. I don't know. What are the like structural things that you need to see to be constructive on on on Bitcoin? Um, and what's your current view? >> Um, yeah. I I initially was pretty hesitant of this idea of a four-year cycle repeating again and so far look pretty wrong on that. Um >> for now >> for now but I do I do think underlying that you know it's there is a certain degree of just dispersion and maturation in the market. I you know I think I think for now I was wrong on that. But I

think where my beliefs lie is that we will see this further dispersion in terms of the winners and losers. And the the winners that you talked about like hype are starting to show themselves and the the coins that are having trouble making a case for themselves are going to continue to bleed lower. And so maybe it's just more so what it looks like is these these these projects, these protocols and like Bitcoin that have something useful to themselves will continue to either not go down as much during a quote unquote four year cycle or start to really detach higher >> from the stuff that's a bit lost. So that's the way I think about it. Um Bitcoin itself is I think just in a a

little bit of a rough patch in terms of a narrative. >> Yeah. for a few reasons. Like suddenly, you know, the past few months, gold was outperforming it like crazy. So, it's like, oh man, well, like if gold's going up and Bitcoin isn't going up, what's going on there? I thought this was a better version of gold. >> Um, >> then there was the whole proxy of, you know, it's just like a high beta long duration asset, but then it's like, oh, wait, NASDAQ's going higher every day, but Bitcoin wasn't >> everything. And then you had, I don't know, like the whole quantum fears of it related to fears. Yeah. It's just like, >> you know, it's just >> or sailor, right?

>> Yeah. Or it's just like Yeah, it's just a it's just a sailor flywheel thing. >> Um >> I don't know. I think this is probably just the type of stuff we talk about when it's not really gone anywhere for a while. And like >> eventually I think it'll it'll go higher again and then we'll we'll come up with some new sexy narrative for it. But I mean at the base case like there's some fundamental important uses for Bitcoin. Whether it's you're in an emerging country that is being oppressed and you want to leave that country, it's really hard to leave that country with gold bars. It's really hard to leave that country with the financial assets there because with the banks there. So there's still those, you know, evergreen narratives that are really important to Bitcoin that won't go away. They're just

Yeah, I would say they're they're still super strong. So I don't know. It's just it's just a bit of like there's not there's not too much going on and we're all just like grasping the straws and trying to like net out the narratives and figure out what the hell we're doing >> pivoting to AI. >> Yeah, I yeah there's that whole nar. Yeah, like maybe it's just all along crypto is meant for AI agents and I I do see the case. I think there's a bit of like hindsight bias there, but I think it's also valid. Um so maybe my opinion somewhere in the middle between the two. >> Well, what do you what do you do and like volatility is low and like there isn't a whole lot happening in the like do you try to grasp it? Do you find that distracting? Like how do you try to

>> up there? Yeah. I mean, I'm a I'm a macro trader, so I just go where the ball is. I go where the where there's the big plays. And so I don't know like even on my podcast for guidance, people are kind of like, "Oh, why the hell aren't you talking about Bitcoin right now?" >> There's not much to say. Like I >> I I have a perma bag of Bitcoin and it sits there. But there's there's no reason for myself and what I do or what I'm interested in to Yeah. try to grasp at this thing that's just kind of chopping around endlessly. Yeah. Um >> once it's exciting again, I'll I'll start to pay a lot more attention to it. But for now, it's just kind of just waiting out and there's a lot more interesting things to do right now.

>> And and such as like DXY and putting on a trade there. >> Yeah. And like metals or I was uh yeah, all over the place and like different commodities leading into Iran. Um >> yeah, same. I mean, I'm underwater on uranium. Am I going to get out of this trade or how long is it going to take, man? I got taxis in phantom. >> Yeah, that that was the message. So I was I was in a lot of what I would say was this idea of like a economic reaceleration thesis, >> right? Um >> like the copper and the >> Yeah, copper is like >> memory and >> Yeah, I'd say copper is like the best representation of it. Um and as soon as the war hit and we saw oil at 100, I was like well >> that idea is in like you just can't get

e economic reaceleration when oil doubles in a month. You just can't. So I was like, all right, I'm going to take this all off. It's just like it's wrong. Um, >> I'm screwed. >> Yeah. So, so I'm I'm just I'm a huge dollar bull. Like that's just my biggest thing. >> I know. I know. I know. It's not helping. It's not helping. >> So, I mean, maybe Yeah. You need to hope on oil normalizing, I think, for for the idea of this >> because again, copper is a core part like people call it Dr. Copper in macro because it's like a it's a it diagnoses the health of the economy at the time is what the price of copper is doing. And it's it's not doing well right now. So, it's like, >> yeah, economy is not so hot. So, >> yeah, you need you need this whole

Middle Eastern thing to sort itself out. >> We're uh we're like two months out from the new Fed chair. >> Just curious how you're reacting to that. What you know, we should be like >> like Yeah. Like what do you what are you thinking from Kevin Worsh? How how do you >> like anything going into it that that you're planning on putting on or uh what do you think is going to be the result coming out of it? >> Um yeah, there's a lot of hysteria around Kevin Walsh. I think people look at one side of his policies and ignore the other side of of what's potentially coming. So the first side that people are in hysterics about is this whole, you know, he was a huge hawk in 2007 into the great recession. He wanted to hike into basically the situation we have right now. And obviously that was

not a good call. Um, and he's been a huge critic of of QE and central bank policy of like huge balance sheets and that sort of thing. So all that stuff is sort of valid and people look at that on its own and say, "Oh, like this is going to be terrible for Bitcoin risk assets or what have you." But they don't look at the other side of the equation which is that look they Worsh and and you know Fed Governor Steven Moran that whole cohort and and Scott Besson they want to deregulate commercial banks to move a lot of activity from the Fed being the only game in town in in credit markets or or however you want to define it into actually getting commercial banks

ripping again like they were pre8 because after 08 yeah we had to course correct a little bit for sure like those banks were doing a little too degenerative stuff, but I I think they went too far because for the last decade or so, there's been like no commercial bank lending. Um, so they want to deregulate and and find a better sweet spot and get those corporate bank get the credit sector rolling again. And I I think that that'll that'll offset the marginal hawkishness of what the Fed is doing on the balance sheet. So I think it's actually one I think it's a really good thing. I think if people were objective with their principles and not just talking in their book, they would see that there's like, you know, there's there's a whole cottage cottage industry of people who criticize the idea of QE

and say it's bad and it creates wealth inequality and it does. But then you have a guy that shows up and says, "Hey, let's try to reverse that." Everybody freaks out. >> It's like, >> and I I think so I think you can I think you can tow the line and get to a good spot if if you really get commercial banks going again. Um I that's like the core part of the economy, you know. So I think it's just this like return to where we were before. So I'm I'm not putting on any two like specific trades or anything related to that other than just not being in hysterics about it. >> So what does your portfolio look like now? More or less?

>> Ah, a lot of >> Do you have more cash than you would you previously had or? >> Yeah, definitely a lot more cash. Um I yeah position for dollar higher in a few different like you know I think I think the euro so the euro is priced for rate hikes right now which I think is kind of insane. >> That's insane. >> Yeah because like they're they're one of the countries the most exposed to >> to the whole oil >> exactly. So like if it's going if a recession is going to hit because of oil demand destruction it's going to hit there first. So you know why why is the ECB pricing in that many hikes?

>> Yeah. Why would they hike into a recession? >> Yeah. And it's because they're a single mandate central bank. They're their only mandate is inflation. They don't have like a unemployment one like the Fed does. So they're kind of forced into it. But yeah, it's priced into the curve right now. But I I don't really see it being realized. So what that looks like in currency for like because currencies reflect the like future path of of interest rates like interest rate differentials. Um, so I think you have this interesting opportunity where the euro is overvalued relative to what's going to happen.

>> It's like seeming strong relative to the other world's currencies that may cut and >> yeah, >> you know, so they'll hike, you know, go up, but that's not going to happen. You're saying short the euro. >> Exactly. Yeah. Which is just a way to show dollar strength. Like it's again, it's all always relative. So stuff like that. >> Super like short bond, like long bonds, um, US bonds. Um, no, yeah, no gold, depression metals, no commodities. Um, >> do you own any Hyperlid? >> I I have before. Not currently. I just like I love Hyperloop. I I want it's literally just for like weird >> personal finance reasons of like having moved a lot of my capital into like my traditional brokerage right now and just like not having easy and >> yeah, maybe there's like there's dats

like of of Hyperloop, but I just I don't want to get in front of that. Yeah. So if if I had the right amount like >> just the degree amount that I have that I'd be able to put into it is not meaningful enough right now just because of literally personal. So I love I would own it if I was organized with my stuff better right now. I think it's I think it's an awesome protocol. Um >> any other cryptos or just Bitcoin? >> Uh I feel like angel investment stuff. >> Yeah. So so I mean that's my main thing is just like I'm way too much of a trader to be patient for for investing.

So I force myself into something that I have to hold >> and some of them go to zero but at least it gives me exposure to this industry that I work in. Um so that's that's the main yeah it's like Bitcoin and then some angel stuff and then like yeah the vast majority for me it's in my like inter interactive brokers brokerage account. Um >> but I feel like I do need to start moving some more back because now I can trade all these Chadfy per. >> I've moved a lot back. Yeah. Well, I've moved a lot out and haven't moved it quite back yet, but I'm kind of in a similar uh you know, place as you. I' I've moved a lot out and just kind of >> Yeah.

>> Yeah. >> It feels It feels cozy. >> It does feel It feels real. >> Feels like I'm >> Yeah. >> But now it's like I could Oh, I can I can trade oil pers like that's a like I >> I was actually I was an early user of of Aussie because they had FX pers >> currency per and I >> cuz like trading currencies in in either like f on brokerages is either you have to trade the futures of them and then you have to deal with like lot size and stuff and it's just like >> unless you're slinging like a bajillion dollars it's like kind of a nightmare to manage the lot size of it or you have to do like options trades on those futures which is also not that ideal either versus these form factors of like a per is incredible because you can just

>> you can just yeah punt it and so like I love I love per um >> this guy just loves gambling. >> Yeah, for sure. >> Every asset class every day. >> Yeah, I'm I'm everywhere. Yeah, I know. >> Well, Felix, man, thanks for joining us. Uh I'm sure you're slammed here. Obviously, you guys are putting on a great conference. >> I think uh I think folks have been excited about this even in the midst of this bare market. There's a lot, you know, there's this inst in institutional bull market going on. There's a lot of adoption happening. Prices haven't yet caught up or, you know, to be determined how or when. But I think, you know, the energy in the air here is is is not that of a deep deep. So, >> it's kind of crazy. It's Yeah. So, this is the this is our most like this is the

most tickets we've ever sold for any of our conferences. >> And it's like at a time during a traditional bear. It's kind of weird. And it's it's it's packed here. It's busier than last year. It's it's kind of, you know, you hear people talk about the whole institutional is all excited and retail is depressed and you know, you never know if people are just kind of saying that because they need to, >> of course, >> but then you show I I show up here and I'm like, okay, that's actually legit. It's kind of crazy. >> So, it's cool to see and it's it's awesome that you guys are here. This is great. >> Good to meet you in person. Likewise. >> Canadian. Wildly overdue. >> Yeah. Seriously.

>> Well, thanks for joining us. Uh, we've got a couple more sessions left, couple more hours. We're just going to keep firing away. Yeah. >> Going to keep the coffee rolling. >> I am. >> You sure that's coffee in there? >> Save that for the afterbite. >> All right. Well, yeah, keep grinding. I, you know, >> cheers. >> I get tired after a couple of these. I can't believe you guys are just grinding all day. >> Keep it going, man. >> Yeah. All right. Thanks, guys. See you next time. >> All righty, guys. Up next, we've got James from Bloomberg, a research analyst. Felix just completely bare pilled my entire uh uranium bags and all my thesises. Not looking hot. Let me check in on that. Hype's ripping.

>> Let's check in on what our old Urra is doing. All right, we're we're we're sideways today. We're sideways today. We're hanging in there, >> guys. We've got James from Bloomberg coming in. First time meeting James in the flesh. >> I've actually met James before, but it's been quite a while. Good to see you. Thanks for having me back. It's fun to do this. It's fun to do this in person. >> Yes, sir. I'm loving the uh I'm loving the fit here. It's quite the suit. >> Uh >> Tradfi, you know, I'm not wearing a tie, though. >> Yeah, I got the suit last week, so we got to fit the part.

>> You got the suit for this event? >> Uh it was an event last week, actually. >> Double for this week. >> Nice. Very nice. >> So, James, how's your portfolio doing? >> Uh things are fine, you know. It's not too bad. I mean, >> yeah. Yeah, I mean if you if you hold too much crypto, this has been a really bad I don't know what, six months at this point. So, um, fortunately or unfortunately, Bloomberg doesn't allow me to hold too much crypto. There's a lot of restrictions on what I can and cannot hold. So, uh, I'm not personally being impacted by too much what's happening here. >> Good, man.

>> Well, you've been at this convergence between like Tradfi and DeFi for quite a while. >> Um, >> it's like this is your year, man. >> This is wild. Yeah, this is uh I've been like when I would come to these crypto conferences and I'm like I'm interested in the intersection of Trafy and DeFi and I talk to crypto people and they'd be like >> I don't care like it's like okay that's somewhat interesting. Are the institutions coming? And then that was it. >> Yeah. Exactly. >> Yeah. Yeah. >> Yeah. So this year and kind of like the end of last has been this massive massive adoption phase, right? I mean today securityize partnered with the NYSC. Invesco is taking over Super's $900 million onchain fund. These are just two announcements that seemingly normal. Like we've gotten kind of used

to these types of announcements now, which are just bonkers, but price isn't isn't catching up. Adoption speeding up. How do you kind of describe the dynamic of this institutional bull market that's ongoing, meanwhile, a lot of cryptos almost like trying to find itself in its usefulness in the world. >> Yeah. I mean, there has never been a larger divergence between like what's happening in crypto and the way that people are viewing the crypto markets versus like what I'm seeing with the people that were telling me crypto was a joke and not real a few years ago. And now all of a sudden they're like, "We're thinking about tokenizing our fund.

We're thinking about doing X Y and Z. We're going to the DTCC, all these different things." And they're like taking it more seriously now. A lot of it is kind of like the uh, you know, go back to 2017. It was like blockchain not crypto that that and and that's finally kind of happening now. But yeah, it's weird because price is down, but as you said, all these announcements are massive. I was actually just talking with a couple of securitized people right before I came on here and they're talking about like there's a lot of things they couldn't tell me obviously, but they're like talking to a lot of these stratified people to do more and more and more of this stuff. >> And yeah, the price just doesn't care. Like if this was announced in 2020, it would we would have had a god in

Bitcoin. Um, but like the other part of it is on the wealth management side, the advisers, the people that are buying these crypto ETFs, like if you talk to any of these ETF issuers that are issuing crypto specific ETFs, they're like, "This has never been a better time for like advisers asking us questions. Advisers actually putting money into these things." Like, this is as good as it's ever been. And it doesn't matter. Bitcoin is still down, well, not 50, 40%, whatever it is right now. I'm I'm curious with with uh on your take about Black Rockck is obviously, you know, putting tokenization first and foremost from Larry Frink. Uh we had Matt from Bitwise on the show and he was, you know, really deep in the ETF space early on. Now you're the ETF guy, but you know, he he was talking about how uh

BlackRock uh they're I think it was their CFO is Martin from BlackRock that said they're going to Yeah. from they're going to tokenize every ETF in the next three to 12 months. What does that look like on chain once Black Rockck tokenizes all those ETFs? >> So, one, I don't actually know what this is going to look like. There's varying ways that this is going to how it's going to be played out. like if you're using a lot of people are like you're doing um you're whitelisting certain people to hold these things because there are still securities laws like it's not like you can just take this ETF you're subject to all these securities laws and just throw it on chain and like let it trade on Salana or Ethereum or whatever digital ledgers you want to talk about there's rules that you still have to

follow so it depends who you partner with and there's plenty of people out there securitize and uh I don't want to leave anyone out but other people that are like playing in the space of the trady defi overlap um you it's Funny, I was also talking to people from Bitwise and I was mentioning the stuff I was just talking about. They they they've had like serious like record success in the first quarter of this year and it doesn't matter because price is still down but >> 3 to 12 months seems really ambitious to me. I mean, I could see them like tokenizing a couple ETFs in that time frame, but maybe uh honestly I hope I'm wrong. Um the one thing I would like to figure out is like where does the value acrew? Like who actually benefits from these things going onchain and tokenizing? It's Black Rockck is getting

a new distribution channel theoretically, but like is the chain going to benefit from potential new demand? Is the people that are actually facilitating the tokenization going to get most of the, you know, economics that from doing that? I I don't know. That'll be interesting to figure out. Um I won't pretend to be an expert of exactly how it's going to work, but um it's something I'm paying attention to. >> Yeah. You you've been posting a lot about um these new leverage ETFs consistently being filed. Um, I think we I think we talked about this last time being kind of a very frothy uh environment. Has this accelerated or decelerated over the last sixish months?

>> Honestly, neither. Like it's it's it's the same. It's still like a ferocious pace. >> Part of it is people were this is going to go a little off the reservation for cryptoreated stuff, but people were flying for 3x and 5x levered ETFs, which were never going to happen in our view. We never thought people are still trying. I I don't understand like there's they shouldn't be allowed. The SEC has basically called these issuers up. There were some articles that reporters dug on that like the SEC was like, "Stop filing these. You're not going to launch them." And people are still trying to launch. And some of those were 3x Ethereum, 5x Bitcoin. >> Oh my gosh.

>> So like I don't think those are going to happen. But there's tons of other crypto ETFs. Like there we uh I'm tracking about last I checked like just under 150 filings. We have already 100 ETFs here in the US alone. There's a lot internationally. So there's 150 filings that are coming trying to come to market and some of those are like new tokens that don't have an ETF. Yes. Some of them are like Bitcoin with a covered call so you're going to get yield. Uh some of them are like buffered products defined outcome products where you can do things where like you're capping your upside um and buffering your downside. So like there's all these things that have been filed and then levered versions of every product you can imagine. My view I think I said this last time I was on like we're going to

see a ton of launch. We're already seeing we're issuers are not slowing down. The market is down. issuers might not be launching as quickly, but they're still launching the product. >> There's going to be a lot of liquidations 12 to 18 months from now just because >> does number 25 on the market cap list of the largest tokens. Does that need for ETFs? Probably not. >> Um, does it need a 2x inverse and long and a buffer? Like there's just so many people trying different things that I think they're going to liquidate. There's a lot of one thing I am bullish on is index products or actively managed products. They're going to go across like different different um assets to invest in. Um but yeah, we're we're going to see a lot of come to market and we're going to see a bunch of it probably liquidate.

>> How's the market been reacting to the uh new Ethereum or staked Ethereum ETF from Black Rockck? Is that >> been in in interest from the institutional investors? Like how do they think about actually wanting to yield on Ethereum? Is it is something that kind of changes their decision-making process or is it kind of like a cherry on top? >> Um, so it's interesting. Black Rockck is the only one that they're keeping their ETH A product which is not staked. They launch ETHB which is a staking product. Um, and people are like, "Oh, it didn't do well." But like it's in the top like 1% maybe point something percent of ETF launches as far as success goes out the gate with volumes and launches. like people go back to like the Bitcoin ETF launch and the first Ethereum ETF

launches and they're not there, but they're taking in money. There's probably going to be a bunch of money that leaves ETH or their non-stake product into their staking product. But part of the reason there hasn't been a huge massive splash is we already have staking ETFs for Ethereum. Grayscale has two. One holds onto the assets, one distributes, Bitwise has it. A whole bunch of other issuers already have >> staking ETFs available. So like yes, it's a big deal. Black Rockck is the largest ETF issuer. They're one of the largest asset managers in the world. It's just that it's not like groundbreaking in the sense of like this is the first of its kind.

>> Yeah. Yeah. >> I'm I'm curious what you're most excited about in the space because we're just seeing it feels like we're just seeing a lot more of the same. Like what what captures your attention here? >> Um going back I mean I'm the number one thing I'm paying attention to is tokenization. >> Yeah. Um but that's kind of a little bit out of my wheelhouse. It's like I can talk about if they're going to tokenize funds and ETFs, like that's my area of expertise, but also I'm trying to understand exactly what's going. So, I'm paying attention to that, which again goes back to the whole like blockchain, not Bitcoin thing. It's like finally becoming a little bit of reality. >> Um, >> uh, so that's good. And then I I mentioned this already as well. One thing I'm am very bullish on and paying

attention to is index based or actively managed multi-token products. Right now, you have a lot of SMAs and hedge funds that are trading around in the crypto space. Not all these assets are approved into an ETF rapper yet. They will be. They're they meet the requirements. They're going to get launched. The SEC is going through them. We see new assets going into the ETF rapper every once in a while. Um, so like I'm bullish to see like active managers come in the space and launch a product where they're trying to outperform an underlying benchmark index and things like that. So we have Tro Price, a legacy asset manager who I've seen people from Tro at these conferences going back to like 2018, 2019 when I tell people >> crypto asset ETF.

>> Yeah. And uh Bitwise has their index product as well. >> I feel like this is a really nice entry point for people who are like, look, I want to get exposure to crypto. I don't just want to buy Bitcoin. Here's what I'm going to buy. >> Yeah, that's exactly what I mean. If you're an adviser, right, most advisers are not putting 20, 30, 80% of their assets net worth into crypto assets or Bitcoin, unlike Bitcoin maxis, unlike probably a lot of people at this conference where they're overlevered, they're looking at like 1% maybe 5% max and extreme is like a 10% allocation.

And like >> if you're an adviser and it's such a small portion of your client portfolio and you're like, I just want to get exposure to this new up andcoming thing. Maybe you have Bitcoin and you want a Bitcoin allocation, but like for everything else, it's like I don't want to have to know everything about all these different protocols, all these different chains. Yeah. Like just give me the beta exposure. It's kind of like the way I when I talk to advisers and different people in this space, the issuers trying to sell to the advisers, they view it like the dot bubble, right? Like plenty of stuff launched and went to zero, but there's still stuff that came out of there like Amazon and others that went to the moon. And it's like I don't I don't have confidence that I'm going to be able to pick the Amazon of

these >> protocols. Yeah. They almost delegate the decision-m to the uh issuer basically. >> Yeah. Either either either somebody's actively picking or they're just market cap waiting it or using some other waiting methodology to get exposure. >> Could you explain like I'm five how an actively managed ETF would work. Is it just like a hedge fund under a veil of an ETF? >> Yeah. So ETFs the the largest growing sector of ETFs is actively managed ETFs. 80% of the ETFs that came to market last year are technically active. There's some nuance. There's some names that there's some products that are like active in name only. They're not like discretionary where you think of like a stock picker or an active crypto picker where they're picking protocols or stocks.

>> Like a lot of these leverage products are technically active because they're leverage they're actively managing their swaps and these options derivatives they have. We don't need to go down that rabbit hole, but it's basically just like a hedge fund or an SMA or somebody who's launching an actively managed portfolio. They're going to go in and choose the weights. They're going to choose the products they're investing in, whether it's a protocol or what have you, uh, or underlying assets. Um, so yeah, it's basically just an actively managed fund except it's an ETF and you can trade it. >> Um, yeah. H >> has has anyone pled you on faults? >> I am only like I have only just scratched the surface. So I'm close with the Bitwise team I would like to say. So you said you had Matt on. Yeah. Uh huge fan of Matt and and Rasmusen and all

those guys and Hunter the CEO. >> They are fully pilledled on Vault. So when I see somebody that I respect like that that is like allin uh I'm paying attention to it. It's like there's a there's a whole bunch of things in this space where you're going to basically remake the ETF onchain, right? >> And I am bullish in that category taking off at some point. Um I think we're still ridiculously early. >> The other thing I would say to people saying they're going to completely replace ETFs. Like ETFs, they were brand new in 1993. They were a really good launch.

>> The technology is good, man. Like it is really, really, really, really good. Um, so vaults are going to have like a lot of things. It takes a lot to like get adoption of new things and you often times need to be multiple times better than the thing you're replacing. Um, and we're not there yet, but once you get stocks that are onchain and tokenized and bonds and all these things and you could just have a smart contract that wraps all those things, like that makes complete sense to me. You can like remake the ETF. The problem is like what are the fees going to be? We're doing that. You can get exposure to the S&P 500 right now in an ETF for for two basis points, 0.02% on an annualized basis. like the fees right now and everything on chain even centralized exchange platforms

>> they are not good like you're paying like 1% fees to trade in and out of these things like um I I hope all these guys I wish them success but like when you compare it to what the Schwabs and the Nikes and the NASDAQs are doing you're trading pettywide no transaction fee and you don't have to deal with gas or any of this other stuff that's going on chain so I think that we're still a very long way away from that but there's plenty of people building the space and I'm interested >> I I think that's the right take I I'm excited for the day when we have some of these institutional issuers issuing the vaults themselves and and but right now they're still like Bitwise is still issuing the ETFs.

How long until Bitwise issues their own vault? That's when I think it gets a lot more interesting. >> Yeah. And the other part of it is like how many people are on chain right now? Right. >> It's you we we I had a I was having a conversation earlier today. My boss Eric Beltunes, he's a little older. Uh he's not I'm not DeFi native, but I'm more DeFi native than he is. and he was just complaining about how clunky and confusing it is to do some of this stuff. And like once you get to that point where the UI or UX is like so clean just like web 2 and some of this other stuff, there's protocols and stuff out there that is getting there. But like when you're trying to do things in some of these chains, it is like really hard to figure out. And I think as that

gets better, we'll start seeing more adoption. We'll see the people that you were talking about, those issuers actually launch things on chain. in your lovely, lovely company Bloomberg. There has been multiple articles over the last couple weekends with this war going on, this oil mania about this new under the radar perpetuals exchange called Hyperlid. >> I'm not sure what it is. >> Have you heard of this? Yeah, it's it's kind of funny to watch people like some of those people writing those articles also based I mean I won't say they wrote Bitcoin obituaries but they might as well have like just completely lambasted everything going on in crypto and blockchain with Bitcoin and now like they're using polyarket odds to figure things out and like understand where

what the probability of things are and now they're pricing oil on the weekends and looking at futures markets on the weekends on pers and they're just like I'm like you guys this is what this has been building towards this whole time. It's kind of funny. Uh, one thing I will say about that is like I don't know how much this is true, but like I was kind of fascinated about how little over the weekend Bitcoin actually got hit when all of this risk stuff happened. Like in the past when you saw this stuff happen over the weekend, people just sold wherever they could and that tended to be Bitcoin. And usually when stuff bad happened, Bitcoin would sell off hard >> and then tend to rally after as people could hedge otherwise. I wonder how much of these like perpetual contracts on equities on oil and things like that are

like I I don't need to just unload risk so I don't need to just sell Bitcoin. I can actually trade I can actually trade the thing that matters. >> Right. Right. >> More specifically to this like cuz what does Bitcoin care about? What's going on with oil in the Middle East? >> It just becomes like the risk proxy. >> Exactly. You can trade it 24/7. Yeah. >> Yeah. A liquidity proxy, a risk proxy. And I wonder how much of these potential how much it impacted already and how much going forward it will actually limit the you know theoretical overnight or over the weekend >> prospect. >> So Bloomberg is pretty much covering Poly Market and Hyperlid at like the mainstream level now. Like obviously there's a whole there's a terminals and there's a whole crypto arm and and all these things but like as far as like

mainstream news it seems like like the Calstream Poly Markets and then Hyperlid have like kind of broken through. Obviously Bitcoin, Ethereum and Ripple and these but like these more like primitives. It seems like those two are like the big breakthroughs here. >> Yeah, I would agree. I mean the there I wonder what else will be there but that is 100% like the the main thing that I'm seeing. And again the hyperlquid thing is like new as of two weeks ago like like this is not like they were writing about Hyperlid and talking about it like a month ago. It's like oh we can actually understand and look at some pricing over the weekend and we can write stories about it. And same thing happened with Poly Market. Like all of a sudden they didn't care and all of a sudden people were asking about it. We

have clients constantly left and right. You can get on our Bloomberg terminal when you're looking at stuff. You don't even need to go to Poly Market. There's indices and all these these functions that we have in the terminal where you can see exactly what the odds are pricing on various different things for Koshi and Poly Market. >> Yeah, >> it's very cool. >> Um well I'm just we had Prrenav from Van earlier on. He he kind of had the old adage >> huge fan of Prenav. absolutely, you know, tremendous uh episode and and thanks to him for coming on and and and he just repeated the thing, you know, uh flows informs price, price informs narrative, narrative, you know, and the fly informs flows and the flywheel continues. When it comes to the narrative piece in particular, I'm just curious what Bloomberg is looking for

like what are you guys watching out there? We talked about Poly Market and and Hyperlid. these are novel things that came out of this ecosystem. But what is it about those or what is currently capturing the the attention of the zeitgeist that is that is causing them to be included. >> Um it's the only way they can get that data. >> Okay. >> Like they don't you can't get that data really is what it comes down to. Um so it's unique in that sense. The other part of it I would say is like I work in a department within Bloomberg, Bloomberg intelligence. It's the research department. I've been covering the space seriously since 2017. Like I've been a believer in the space. I've been a believer in Bitcoin and crypto long before that. Most of my like professional career, I have been like snarled at and laughed at by most people

within Bloomberg. Like there's a lot of people that still think this is a complete joke. A lot of young people that don't understand things. To be fair, crypto is doing a lot of scams. There's a lot of fraud. There's a lot of like learning lessons that Traded 50 plus years ago about like deleveraging and all these different things. So, it's they have the they have those things right. But like there's also a lot of people that like just don't believe in the space, never did, thought it was stupid. And now even if the serious things are happening, they're they're like not willing to like readjust their priors. Yes. Um there are people that readjusting their priors. We have just hired so I actually have a colleague here who I haven't met in person yet. We just hired somebody to cover crypto markets directly within Bloomberg

Intelligence. So it's being taken more seriously, but still at the higher levels like they're kind of like we're doing this because we have to uh more than anything like they're they're dipping their toes. They're paying attention but we're not like at the front you know pushing things forward. Um, it's more like we're just trying to pay attention, cover it, understand what's going on, and allowing certain people to cover it. There's not like a huge push or initiative for for Bloomberg to lead in the space in any way whatsoever. And I think that's how I feel when I go to Tradfi conferences. There's people like me and others who believe in the space, believe what's going on, but for the most part, people like either don't care or actively hostile to what's going on here.

>> Yeah. >> Um, James, my last question here. I a lot of these coins are getting ETFs. Is there any coin out there that doesn't have an ETF that you think should? >> Uh, depends on what you mean. There's a lot of filings, right? >> So, like there's been filings for like every coin you can pretty much think of. It just takes time for the SEC to go through that process and actually launch them. I'm trying to think of anything that hasn't been filed that I think should >> and the answer is no. Like even the stuff like even hype has been filed, Bit Tensor, like all these things have been filed. um the newer newer kids on the block, I would say. Um so they're going to be here, right? Um and some of them already have trust and uh DATs and stuff that you can get exposure in the Trady

world already. Uh Grayscale has trust for a lot of these things even though they're not ETFs yet. They're going through the same process they went through. So um yeah, no, not really. Like I said, I'm mostly looking forward to the actively managed products that are going to go across. I think that'll be and just passive market cap weighted products that will give you exposure to a broad base of crypto assets. >> Yeah. >> Incredible. Enjoy the rest of your conference. Thanks for joining us, man. >> Thanks for having me. Pleasure to meet you in person. Wonderful to meet you in person. Yep. >> Keep up the great work, man. >> Thank you. We'll see you guys. Enjoy yourself. >> Thanks, James. >> ETFs, ETFs, ETFs, man. >> That's what it's all about.

>> It's on. >> Look, I I think the vault complex is uh it's going to take a while, but I find it interesting that, you know, all these coins already have ETFs. >> I know. >> Pretty much all of the ones that you would think all have ETFs. And so, where does the ETF space go from here? It's still going to be ripe for innovation. Uh, that's where I think vaults come in. >> We're going to tokenize them. >> We're going to tokenize ETFs. >> We're going to tokenize them all. We've got Will Peek, the head of digital assets at Wisdom Tree. He is going to be joining us here for a session on tokenization uh and more. Will, great to meet you, sir. Welcome to the show.

>> Thanks for coming on. Going >> big uh big fans of you guys. We are uh located in the Plume office in the 77th floor of the Empire State Building, our studio. Uh it has the best view in Manhattan. I know you guys are friends with them. Great work in the space. Will, good to meet you, man. >> Yeah, you guys, too. >> How's the conference treating you? How is the kind of general flow here for you? >> Uh, so far so good. I mean, day one, right? It's, uh, you know, seen a lot of people that I know, a lot of new faces, too. Uh, beautiful day in New York. So, yeah, everything's good. >> Great, man. Well, Wisdom Tree is actively pioneering work in the digital asset space. you being the head of digital assets with also an extensive background in kind of general finance

bringing a perspective to digital assets that's probably much needed. People are talking about revenues. People are trying to find product market fit tokenize all these assets 24/7 trading. There's a lot happening here. Where are you focused? Where is the most value happening that you are trying to kind of capture and focus on? >> Yeah, absolutely. So, you know, Wisdom Tree actually in the ETF space were kind of one of the first kind of independent ETF startups, right? So, still founder le when wisdom launched about 20 years ago, the basic idea was a better index and the better structure of ETFs, right?

That ETFs were a better structure than kind of traditional mutual funds. And that was not so obvious at the time and then today it's like very clearly obvious with ETFs taking in trillions and trillions of assets since then. So our approach in tokenization was to try to look out and say what can do to ETFs what ETFs did to mutual funds and pretty quickly we came to uh onchain investments in some way right onchain investments on public blockchains. So our focus has been trying to bring the best of ETFs to a whole new universe of people in a new differentiated user experience that they can't get elsewhere. So for us that could be like our tokenized money market fund which is our largest product in the tokenized asset space. Uh expanding to other variable nav products from there and creating a good investing trading experience around that. Oh, we just had

James Seafart on and he's he's the ETF guy over at Bloomberg talking a lot about these ETFs. Uh the main unanswered question that we had from our conversation with James was where does value acrruel where does value acrue with tokenized ETFs? Um once we have all these ETFs, we have pretty much every ETF that we could have for crypto. We're having a lot more. Uh we're going to end up tokenizing a lot of those. Where does value acrue once those ETFs are on chain? Is it the chain? Is it the asset itself? Is it the issuer? Is it the holder? Could you just walk us through some of the value add benefits of tokenizing these assets?

>> Yeah, absolutely. So, um, you know, the way I think about it is like if you are a US investor who's well served in your like Fidelity brokerage account, let's say, or like your Erade account, right? You're never like the customer journey is not saying, well, I want to buy like a tokenized version of the S&P 500 versus like the existing kind of exchange traded version, the S&P 500. Like it is so cheap and such a good experience to buy like an S&P 500 ETF in your US brokerage account. Like if that's all you're doing as a buy and hold investor, then like there's no reason to like switch, right? The customer journey is actually saying like, "Hey, I want to be on chain for reasons XYZ, right? Like I'm a business that's starting to use stable coins for like 247 payments outside of banking

hours, right? Or I'm somebody who's looking to get like more easily get loans against assets that I have, right? Or I want to be in a self-hosted wallet because that's what I believe in and I'm more comfortable with the user experience." traditional ETFs are not serving those use cases whatsoever. Right? So for me, this isn't about costs or anything like that. It's not about trying to convert people in their brokerage account. It's saying, can I get new enhanced distribution from this and can I create a better user experience and only possible with onchain investments. So having been in this space relatively for a long time, like you start to see that the projects that are actually like being successful and adding value are when you're allowing people to do things that they can't kind of do in the traditional space. That's the the standard that we

try to clear when we bring out new products. Uh today it was announced that uh Invesco is going to be kind of uh joining Superstate as part of their $900 million onchain fund and their USB product. Um what is your take on this? Is this something that Invesco is looking for a direct way to get access to onchain uh capital and and kind of like a user base? Is it a a mutually beneficial partnership? Why would Invesco want to be a part of this? Well, you know, I'm uh compete with both of them in kind of different ways, right?

And I'm friends with both those firms. I think they're both doing great things. Exciting to see that announcement this morning. I mean, big picture, we just see it as more and more people trying to engage in the space uh with actual like people doing things in like a true onchain innovative way like Superstate has done. So, for us, it's kind of like we see it as kind of continued validation of our strategy. And at this point in the stage, we're just trying to grow the pie, right? like we would just like the pie and applicable universe of people who can engage with these onchain assets to be much greater. So I think it's fantastic that Invesco and Superstate are partnering in this way and hopefully I can work with them to just keep growing the pie of people that we can interact with.

>> And when you say the pie, the total quantity of tokenized assets. >> Yeah. Uh the amount of people who would actually use these as part of their day-to-day lives, right? So I'd say right now like distribution like if you actually look at like rw.xyz and look at like the number of holders of these products, it's actually pretty small today, right? So like even though we've got 10 billion dollars in tokenized treasuries, like the number of people that are actually holding them is like smaller than you'd like it to be. So it's like how do we get that number to be a lot bigger? So for us it's liquidity. It's also kind of identity solutions and onboarding where we can add much much wider range of people. So you know 30 million MetaMask users in the US. Can we get all of those people to be able to hold our tokenized funds?

If we can do that, that ends up adding um we think a lot of value for both our customers and ourselves. Yeah, I I do have uh RWA.XYZ. Shout out to those guys. Friend of the show and and uh I'm looking at $800 million in value that Wisdom Tree has tokenized. >> By and large, it's the Wisdom Tree money market fund. >> Could you just talk to us about why that has superseded so many of these other products and >> do you expect this disparity to close or will this continue to grow? >> I expect the disparity to close, but I mean tokenized money market funds are clearly the first example of product market fit after stable coins, right? So stable coins being non-yield bearing looks like it's more non-yield bearing every day right kind of cash that sits on chain and tokenized money market

funds are a very tried and tested vehicle for providing kind of stable value with a yield component as well. So tokenized treasuries tokenized money market funds that category just crossed $10 billion in assets. We think it's just going to continue to accelerate from here. We've seen a lot of acceleration after the genius act which you know gave people regulatory clarity around stable coins a lot of activity energy in the space and uh that's when a lot of ourum has uh grown since then I mean 12 months ago we were at about 30 million today about $800 million in the space so um for us it's really serving people who are using stable coins but would like to get a yield component or would like to have kind of have this to be a backing asset for stable coins if they're a stable coin issuer. So those

are the types of use cases we're seeing. But to your question, I I think anything that can be in an ETF is going to be represented in an onchain version as well. Um and so we see um more and more assets kind of coming into the space over time. >> Well, you mentioned three use cases. Some of them were more cryptonative. A lot of them were to drive greater distribution. You know, uh some some people are more comfortable in a wallet experience. The one that really caught my attention though was that you could borrow against these things. It sounded like DeFi primitives that you know we've used a lot of these crypto assets in DeFi primitives but what we haven't had what I like to call these highquality assets in DeFi primitives you know the the flow as I understand is like first we tokenize all these things then we put

them into DeFi then you can get really creative with how you're structuring some of these strategies as we have money market funds and treasuries on chain are there strategies that we can create with those tokenized representations that are not possible with off-chain represent Yeah, it's interesting. I mean, so the cost of borrow uh in these borrow lend protocols currently would not make like you know leveraging off a tokenized money market fund to necessarily make a lot of sense, right? Because like the yield is paying you three and a half% you're kind of borrowing at three and a half percent. So like you got to factor that in. But like I like thinking a lot about these borrow protocols is just like a way to do like collateral based kind of lending things like flash loans, right? So even if it's not like in this case of like

looping or kind of getting leverage against this like is this a way with software that you could have like coordination of different financial services activities that actually opens up new use cases that weren't even possible right so like I think collateralbased borrowing specifically as you get towards things that are like capital appreciating assets like uh you know a US equity fund for example uh just makes that easier and easier for people to get kind of loans against but also I think you're going to see a lot of new innovations in terms of like how can we like coordinate and make financial services kind of work more snappy like snappier uh using these kind of borrow protocols or things like dexes etc. So that's what we're working on we're kind of very excited about. Uh kind of some of the the looping stuff is like exciting and early but like I I

think there's something more there that we're working on. >> I'm curious how you think about kind of solving the liquidity problem with some of your tokenized funds or any of any of Wisdom Tree's tokenized assets on chain. Right. There needs to be if it's on like a unis swap or an AMM, you have to have LPS providing liquidity either with USDC or ETH or some other asset on the other side of this pair be subject to impermanent loss or there's like order book models where you can have onchain market makers on different purpeses or just kind of like more order book based dexes. But the core of it lies someone has to do it. How do you guys solve that problem? Well, I think market makers are going to come into the space more and more once distribution kind of gets solved, right? So, for us, like

tokenizing existing real world assets, there's like all the liquidity today exists in like the off-chain world, right? And I think the best kind of solutions are going to be ways to find that like port that liquidity into the onchain world where you're saying if somebody's trading like uh S&P 500 tokenized ETF in like the near future, right? say like are they paying spreads that are like 20 basis points wide on change or are they spreading spreads that are like two to three basis points wide and like the S&P 500 ETFs trade at like basis pointwide spreads right now in the existing markets. So that's how we want to like try to make that happen. I think there are specific things that are like nuances with like different models for dexes and like do you have like can you do this in a capital efficient way too right so that's some

of the challenges I think need to be solved I think there are lots of kind of interesting exciting ways that like um people are going to kind of figure out how to do it I mean the big thing though right now the limiter is kind of I don't want to just like blame regulation because it's not because there's been like a lot of like progress that's happening there but like for example we just got this regulatory relief to offer a tokenized money market fund that trades on a 24/7 TN basis. That wasn't possible before. Like that was not possible in the US regulatory perimeter before. It was an 18-month process working with the SEC to get this exemptive relief. We're extremely excited about it. And that's just for a stable NAV asset, right? You want to have that happen with all sorts of variable NAV assets as well in the US

regulatory perimeter. There's kind of like a technical problem, but you also need to create the conditions and make sure you're meeting regs and all that stuff to allow this to happen in the US regulatory perimeter. >> Yep. Yep. And I mean all of us are waiting for clarity of course as well and just kind of the stable coin yield component is also being quite contentious now as of today more news came out. I guess last thing from my side is what is coming from wisdom tree this year? uh what is the what is the next kind of tokenization uh kind of product or suite of products or like what yeah >> yeah I mean we've got um products in the in the hopper but I big picture I'd say it's these things like liquidity and onboarding right if we can solve those we will solve a lot of problems and just

like really scale from here and that's not just a wisdom thing it's going to be like the industry kind of solving these things where you can have these onchain tradable exposures right and then you also want to have it in a way that it's not just like like right now for Being honest, tokenization involves you to go into like one provider and onboarding them and then you need to go to like a second provider and onboard with them. It's actually worse than the traditional world. I would like it to be better and that's going to involve things like kind of attestation based identity. It's going to involve reliance mechanisms, things like that are going to need to get solved and that's what uh we're working on.

>> Um, one last question before you go. A lot of people are thinking about the private credit market. Uh, you know, there was recent news of another private credit firm that are halting redemptions. We're seeing this kind of pop up all over the place. A lot of private credit has already been tokenized after treasuries. It's one of the main ones. Are you worried? Is it something to be worried about the private credit market these days? >> Yeah, I mean I think you want to have well ststructured products that kind of meet the needs of investors and like you don't want to have something that's got like this quarterly lockup that's then going to need to be available for like instant redemption, right? And that seems to be like the problem that a lot of people are like working through right now. So, we've got a a private credit

and alternative income fund, invest in things like BDC's, uh, mortgage reach, things that are already publicly traded that have that kind of trading mechanism already baked in. Um, but, um, it is going to be really interesting to see what happens in the private credit space going forward. I think it's, you need to think hard about it when you want to try to bring illquid assets, things that don't have a bid ass spread into vehicles that are liquid. The ETF industry has taught that time and time and again. It's not like you can't solve that problem with like well structured things and you can't bring more liquidity to that space just like ETFs brought to high yield bonds a while ago. But um stuff still needs to be figured out, right? And I I wouldn't want to be cavalier about saying, "Oh, you could just put in an ETF or in some sort of

very tradable vehicle and it magically gets liquid because that's just not what we see." >> Yeah. Will, thanks for joining, man. >> Yeah, it's my pleasure. >> A great conference. Yeah. >> And uh we'll see you in New York soon, I'm sure. >> Awesome. Make sure you're leading the charge, man. Thank you. leading the charge in tokenized treasuries >> and tokenized money markets. Yeah. >> And tokenized money markets. >> Um just tokenized money markets. >> Just took money markets. But they're they're they're tokenizing uh on all fronts which is really really great to see. Um >> I mean it is the topic. I mean there is no doubt about it. Tokenization is the topic. It is the thing that is getting the institutional folks e excited. It is what is driving value. It is what is driving attention. Guys, we've got Ryan Rasmusen up here, the head of research

at Bitwise. We've pretty much had the full Bitwise trifecta, quadfecta on the show at this point. Uh there's a lot to talk about. >> I think it's been a pentaca. I think uh uh Ryan Rasmus will be our fifth Bitwise. Uh we've had Hunter, we've had Matt, we've had Teddy. >> So maybe it is a quadfecta. Now, >> is anybody else watching Hyperlid out there? You guys feeling bullish today? What's going on? How how we feeling out there today? You feeling bullish about hype guys? >> I am. Tell you that much. >> I had someone in my DM saying that uh that Hyperlquid revenue is down >> and uh I said, "But what they're they've got so much volume based on these non-crypto pairs." And they said,

"Non-crypto, there's no V." Very low V. >> Oh goodness. >> Lot of volume, no revenue. >> All right. Well, we've got Ryan Rasmusen, the head of research at Bitwise. He's going to join us up here now. Um, we got a lot to talk about. He is pioneering a lot of the research that Bitwise is doing into their institutional product suite and more. Ryan, welcome to the show, man. Great to meet you. >> Great to be here. Yeah, I appreciate you guys having me. Yeah, of course. >> You are uh the uh another bit wise face on the show. >> Um a bit younger than than the rest.

>> That's right. They all have great relief. >> Yes. >> No, I'm just joking, man. How are you, man? >> Yeah, I'm doing very well. Yeah, Dass is great. I I enjoy being here and stoked to be here and talk to you guys. Hell yeah. Absolutely, man. Well, we've had, we were just saying we've had the whole trifecta. You you you're making it a quadfecta. We've had uh most recently Teddy. Before Teddy, we had >> Teddy was hilarious. >> Teddy was hilarious. Teddy was great. Teddy's great. >> Teddy, love Teddy. Uh we had Hunter. Uh Hunter, also great. Very very uh uh informative and and great articulation of his points. Before that, we had Matt, uh also great. And so we we're making a quadfecta uh today. And I take it that a lot of their alpha, if you will, their their their expertise comes obviously

they have experience, but you're you're in the trenches. I would have to guess you're head of research at Bitwise. Uh so we've tal you know we've we've spoken to more of the executive folks. I'm just curious, you know, where you're drawing like I want to get I want to get inside your head because you're I think leading a lot of uh kind of the where Bitwise is going potentially. Uh, and so I'm just curious what is catching your attention these days? We talked to Matt a lot about vaults. I want to talk to you about vaults, but I'm just generally what is what is at the the pe the tip of the spear in your mind these days?

>> Yeah. Well, that's a lot of very kind words. Uh would love to take as much credit as is given, but uh but it's of course a big team effort at Bitwise. Uh work very closely with Teddy, Matt, and Hunter on all things uh that we do. Yeah, our research efforts at Bitwise definitely are a big part of what drives product strategy and uh and we spend a lot of time researching new products and helping launch those products. Then we also spend a lot of time working with our institutional partners or clients and and meeting kind of institutional investors where they live. So go to a lot of traditional finance conferences, a lot of summits and and kind of wealth management conferences. was just at an estate planning like dinner at a at a country club last week and so it's a

it's a it's a broad range across the spectrum but you know we're spending a lot of time on vaults right now I think on the onchain opportunity is finally uh having its moment and we've been you know I joined bitwise five years ago as a defi analyst so I at the time was let's bring everything on chain we should just everything we should be doing should be on chain and and it took a long time for us to to get there and I don't think the demand was there at all then but now the infrastructure the regulation in a demand is all aligning at a perfect moment for uh for onchain solutions to really thrive. So we're really excited about that.

>> Incredible. Um and so so the way in which we've been thinking about this on on the show has been sort of an evolution. Obviously we have the convergence of Tradfi and DeFi, but we also have the evolution of okay, first we need highquality assets on chain. That is kind of this tokenization wave that we're seeing happen right before our eyes. A lot of people are very excited about that uh here at the conference. Once these things get tokenized then we can have high quality assets that end up in DeFi uh that you know they end up lend borrow we can borrow against these high quality assets also very excited for this then we can take those high quality the these high quality assets in DeFi we can structure them into strategies that's where vaults comes in the final frontier being AI managed vaults and uh we can get very

very creative with uh the kind of strategies that we're putting together but this is the progression is this the right way to think about this And and then I've got I've got more questions for you on on vaults actually. But I first I want to make sure we have a solid foundation here of how we're thinking about this. >> I think you have a solid foundation of that. You know, the whole technology stack needs to be there in order to uh really bring institutional grade products to market and that's ultimately what will draw in the capital. You know, one reason why we're so excited about vaults today is because there is demand from institutional investors who control trillions of dollars in wealth for onchain yield. It's it's in part because the yield's more attractive relative to some other options, but it's mainly because they see this as a next

frontier. And you you see Larry Frink and Paul Atkins talking about all assets in the world being tokenized and as financial adviserss and portfolio managers and asset managers, it really is your duty to make sure you are up to speed on these things. So I do agree with you that we want to bring highquality assets on chain and we want to have that draw in liquidity and allow us to produce compelling strategies that that leverage this technology. Agentic Finance is really interesting. I was just talking to a colleague of mine, Jeff Parker, I imagine maybe you guys have had on on the show about I think he's coming out tomorrow.

>> Great. Yeah. uh we'll shout out shout out Jeff about aentic AI and and AI managed uh strategies and there's there's definitely pros and cons to that but I do think that inevitably that will be a big part of the market. I think one thing that we're seeing time and time again in our conversations around vaults is that institutional investors want to have at least today a human, you know, guard rail around the strategy. They're used to having risk managers conduct due diligence and manage positions and be able to meet with someone face to face around where they're allocating capital, especially if they're allocating tens, hundreds of millions of dollars. And so I think that's a big part for why we see demand for institutional grade vaults

that are backed by risk managers who have experience in traditional markets, which a lot of our our team does. So I see vaults as kind of the next bastion for funds. I mean, you had ETS really came to market 30 years ago and have grown from zero to 20 trillion over the past 30 years. I think Vault's a multi- trillion dollar market over the long term and we're now in the, you know, very low billions and so that's just an tremendous amount of growth ahead and I'm really excited about it. Yeah, I mean if I was to push back on that, I would say we have a big curator problem involved as shown last week with Morpho and this whole kind of gauntlet resolve USR situation. How do we get over this curator problem? There's a lot of single

point of failure with curators involved. Yeah. What's the kind of evolution of curation? >> Yeah, it's it's a really good point. the uh the the the systematic approach to risk management that's taken in traditional finance can't just be thrown out the door because the technology allows us to uh use permissionless uh smart contracts and and networks that anyone can access. You still have to have the fences and guard rails in place to make sure that as a steward of other people's capital that you're managing risk responsibly. And so I think it comes down to building layers into the infrastructure not that extract value in the way they do in nutritional finance and not that add inefficiencies in the way they do in traditional

finance but are complimentary to the technology that take what is at its base permissionless autonomous infrastructure and bring it to that institutional grade. So I agree there's a lot of a lot of space for improvement in the curator realm of vaults. I think we're going to, you know, bring a lot of that as Bitwise to the space because we have been managing assets professionally on behalf of investors for eight years across private funds and public funds and active and passive strategies and I think you need that experience and you need that kind of uh regulated approach and compliant first approach to vaults and we haven't you know had that yet across the board and so we're that's it's a it's a great opportunity for us and a lot of the liquidity providers and

investors that we're speaking to are really excited about that. >> What how does the curator landscape and the vault landscape change when Bitwise comes into the fold and you guys start curating your own vaults? >> Well, I think one thing that's unique about Bitwise relative to existing curators is that we have established relationships with many of the uh current allocators to crypto, whether they're, you know, smaller firms or large institutional investors. And one thing that we've seen time and time again as we've expanded our product suite is that a lot of these institutions and investors want to leverage the same relationship and the same trust that they've built across their entire allocation spectrum. And so if you think about someone who started

with an investment in a private placement fund and then they allocated to ETFs when they launched and then they had some assets they wanted to stake or they wanted to get exposure through a stake uh staking ETF like our Salana ETF. They want to do that with one partner and now we're extending that into vault. So I think that's where it comes in is the the pre-existing relationship that we have and the the brand that we have among institutional investors does have value and and making sure that those relationships uh extend to new products like vault. So uh you know as much as those of us in crypto you know entered into the space and maintain our our position in the space because it is a way to overhaul the existing financial system and make it more accessible and more efficient. I don't think we can just throw everything

out the window and say have at it. Uh because we've seen what happens time and time again when that happens. >> This is a great segue. You said crypto's entering its kind of institutional adulthood moment. Um the hell does that mean, man? That that doesn't sound like any fun. >> Yeah, it it it means it's getting more serious. Um perhaps a little less fun, but the growth opportunity is bigger. So, it's a trade-off. I think one thing that I found really interesting is like crypto's been able to extend its chaotic uh elements into like DC and regulation of crypto. Like it's not often that you have something that has such like a a big cause and effect in DC as like discussion around stable coin yield.

Like nobody really cared about financial regulation in the past and now all of a sudden it's everywhere because and it's like crypto has this drama it can bring. But I think uh you know in order to graduate to the next level, you do have to remove some of the chaos, replace it with uh with suits, right? Going from like hoodies and basement to to suits in New York and on Wall Street. And that will that's necessary for crypto to grow into what many of us got in the space for it to grow into, which is, you know, a way for uh everyone around the world to access this breakthrough technology and upgrade the financial system. And so in order to have products that someone in a developing country can access yield uh you know yield in in dollar

denominated assets we have to create the infrastructure and you know put that product in a suit for them to be able to access it with lower risk and uh and more benefits. One of the things that Matt brought to our attention was that Black Rockck and Martin Small said you know they're going to they're going to tokenize every single one of their ETFs in the next 3 to 12 months. Matt says this is a foregone conclusion at that time horizon. it will happen. Um I'm curious, you know, why they're doing that. Like we we have talked a lot about vaults, but you know, we do have an issue on the curator side. At the same time, you're talking to trillion dollar asset managers. Like what is the value proposition that they're looking at that they're really excited about coming on chain?

>> Yeah. Well, I think you're you're going to see assets tokenized and then as you mentioned, you're going to see those those high quality tokenized assets be wrapped in vaults. And so, you're going to get more capital efficiency because now you can generate yield and have more robust strategies around a bunch of different offets assets. You can mix different types of off-chain assets which you know via tokenization take perhaps illlquid or difficult to manage and trade and wrap strategies and you can bundle them all together in a vault in a way uh that you just can't because tokenizing them brings them into one you know common wrapper in a way that that they don't exist today between like private placement ETF mutual fund etc.

So I think the the the efficiencies that come with it from a capital perspective are are you know really magnificent and that's why you know not only it reduces cost but it it extends the uh the opport the capabilities of these assets when you bring them on chain and you know Paul Atkins today and and on CNBC and everywhere he goes is talking about how tokenization is the natural evolution of markets to in the 21st century and that's because it takes this this stack that exists today when you're interacting with with traditional assets, even if you're trading a stock in your brokerage account, like the level of handoffs, like the amount of handoffs that occur on the back end of that transaction is is almost hard to to like comprehend. We were building a

slide deck the other day and like there was so many handoffs that we tried to illustrate on a slide, it like ran off the page. And then you look on the other side of that and you say, "Okay, well, there is a there's an issuer and there's a blockchain and then there's a trader." And like it's just those three. And uh I think that is why you see Black Rockck and institutions tokenizing every asset. >> That disintermediation could piss off a lot of people and a lot of companies. >> Yes. I I think it will and I think and I think it probably has. And they've gone through this process of seeing it and saying that's crazy. That's never going to happen being frustrated that it's changing the way that they've successfully operated for 30 years and now figuring out how do we embrace this

technology? And we're seeing stable coins go through the same thing right now. It's like it's pissing off banks because it represents a fundamental challenge to the way that they do business and they're fighting against stable coin yield being passed on to consumers. But ultimately, my belief is that there will find ways whether it's vaults or otherwise to pass yield on to to users and the financial system will adapt rather than block these innovations from coming to market. It it's interesting to see the the approach at Bitwise, how you're essentially disrupting yourself before the market disrupts you. You know, are are you looking at are there other ETF issuance platforms out there that are saying, "Oh, vaults, they're never going to happen." And then you guys come along

and you're saying like, "Vaults are the thing that are going to innovate ETFs and disrupt the ETF market. We need to be pushing ahead before this thing comes and and disrupts us." >> Yes. So, we're building an asset manager for the future, and we believe that is just as important to be onchain as it is to be offchain. I think a lot of ETF issuers have never heard of vaults or they hear vault and they think it's something in like a game or it's some they're talking about like a physical real world vault, you know, in the ground somewhere. And there's so much opportunity in that misunderstanding of what vaults are, that they exist, why they matter, and the fundamental improvements they bring to managing assets. And I think ultimately investors and consumers always want the most

efficient, most uh advantageous product to them. And vaults are so much better than the existing system. And those of us who spend time in the space see that. But most people around the world, whether they're consumers, investors, or asset managers, have no idea vaults exist. And there's just so much opportunity there. >> Yeah. Well, you guys are leading the way. Uh thank you so much, uh Ryan, for joining. >> What's on your schedule this week? How crazy is it? >> Uh it's crazy. It's crazy. Um we've been talking to you know a mix of uh partners that we have here at DA. I love DAS because it brings together so many of our existing partners and uh you know it allows us to you know meet a lot of new new uh partners at that. We have some interesting events happening some institutional dinners with different uh

different firms and different and folks and so it's just great to be here and in the mix and and great speaking with you guys. >> Enjoy awesome to meet you man. >> Yeah thank you for coming on. >> Glad I could round out the the quad factor. >> The quad factor. >> Yeah, that's right. Bitwise quadfecta. There you go. >> Thank you guys. Appreciate it. Enjoy your week. All right. >> Yeah, likewise. >> Cheers, Ryan. >> All righty, guys. That's ETFs, that's vaults, and that is the future of asset management from crypto forward and digital assets forward asset managers. Guys, up next, we've got the co-founder of Morpho, Paul Frambot, the man of the hour.

>> Paul, how are you, man? >> Good. >> Good to see you, buddy. >> You do those interviews like back to back to like down time, man. >> Yes, sir. Big big big week for the vault complex, my guy Paul. >> It was We're in trouble a little bit, man. >> Uh yeah, I guess I I guess you know, like what do you what do you want to talk about? Uh >> um I don't know. I want to talk about what you think is best to talk about, but of course the audience what what what they want to hear about is what happened with Resolve. That's what they want to hear about now. You know, whatever's in your talking spectrum here, we're we're all for it.

>> No. Yeah. So I guess like the result of uh what happened broadly is like you know they got this like huge exploit in their in their their contracts that basically someone activated and minted like tens of millions of of of USR uh which had like huge ripple effect in in the ecosystem and in Moro you know so we have like 1,000 vaults like different like 500 of them are like more than 10k approximately and so out of those 500 we had like 10 that you know were using USR as a high yield building strategy, right? So, you know, in Morpho, every can everybody can come in, create their own vaults, have their own bispoke strategies. Some do like, you know, very borrowing like Bitcoin back loans like yelling strategy, which is literally

like, you know, one collateral assets yielding like 4%. Uh, but some others want to go further on the risk spectrum, right? And they they they are explicit about it and their goal is to bring in some higher yielding assets and some of them under USSR, which obviously when the hack happened was was a problem, right? And so so the the the vault asset managers which you know we like to call curators uh had to deal with this situation which you know I have to say was pretty intense for them for some of them right I think you know many of them were able to to get this right some others you know are still in the situation where they're like resolving the dispute with like USR uh and and and resolve and I'm not exactly sure what is going to be the the outcome of this but

I think in total there's probably don't quote me on that number but $3 million of bad debts in some of those vaults that might be incurred whereas like you know morph is like a 12 billion dollars like you know infrastructure um and what's interesting I I I think in this like um context is to see like the different behaviors of of of the different players and how they've been reacting to the to the events like uh in Morpho we you have some pretty crazy vaults like you do have some you know mimcoins as collateral some vaults that are not surfaced in like any interface do like very aggressive like leverage on on on some assets That's and you know unfortunately they do lose money like you know quite often right but as a function of like being permissionless

that's also like a trade-off you want to accept like we provide the stack for anyone to be able to do the strategies that that that they want right uh I guess on on on the good side of things I think it was for for a bunch of creators that was like also a great you know learning opportunity for them to like improve their setup and everything. I think overall as we see like more and more institutional curators coming in you know I think you guys were just with Bitwise before I think those guys like see an opportunity in that like for them it's very obvious that as the managers are going to come on chain and manage vaults like this for everybody and if you talk to anybody in this this conference it's obvious that no one wants to rely on like defi you know DA

managed like risk management for their assets they all want to they will they want control right they will control on risk they will control on on on compliance for some of them uh and they want to own the stack end to end, right? Uh and so the opportunity for those guys to bring in like institutional guard rails like you know in some cases maybe regulated vaults depending on their their their jurisdiction and I think our job is going to be to on board those players um in in into the morpho stack for them to operate the yield strategy and and the redones uh in this like onchain context and I'm very excited about this.

>> So from the morpho side how how are you guys going to improve the curation process? Are you guys going to be more selective on curators or are you going to work with more institutional folks? Like I I guess what I'm trying to get at here is like do you see any like points where you guys want to improve as a result of this or mostly kind of that was a very risky vault that was you know that was bound to happen. >> So I guess I guess the first thing to make it clear is that we don't the protocol is permissionless. We don't control with a curing that's like the first thing to understand. So anyone can come in and create their own strategy and it's like a fundamental core principle of morpho that the system is open. It's permissionless and and we are

not the one you know managing the risk. We're not the one choosing who's a curator who's not a curator. The system is open right >> uh and we provide infrastructure uh tooling you know for for those curators to to operate. Uh but at the end of the day this this is like you know them like deciding which strategy they get into and and you know depending on their jurisdiction they may offer a certain type of strategies and in some jurisdiction they're not allowed right and we don't want to have like a play a role to play in this we see ourselves like internet protocols you know like we're HTTP and on HTTP you have really valuable stuff for humanity you also have some crazy right like and I I think that's the re that's really what what DeFi should be about is providing this internet financing protocol

And then we we don't have an opinion on how people manage risk or compliance that should be at the edges of the network and they should work with distributors. Like if you take like Coinbase that integrates like like more of a vault, they're obviously have a very different approach. They're not going to list like USR like in their vault obviously, right? Uh or like we integrate with pretty much every single exchange uh like in the world whether that's Binance, OKX, like Gemini, Kraken, like every single one integrates more for vaults. And obviously like none of them are thinking hey we're gonna you know add those like you know rather risky assets as as as collateral but at the end of the day this is not our choice right our our role is to equip like you know the ecosystem with like the correct guard rails for them to

operate the risk management how they see it how they want to do it but we don't want to have a role to play in the operational set of things and the risk decision it's actually very important for us. Yeah, the we've we've heard from, you know, several institutional players that are saying that they're talking to trillion dollar asset managers. They want to get into the onchain management space. They want access to vaults. Um on the on the other hand, you know, we have incidents like what happened with with Resolve. I'm curious, do you think that the vault complex is ready for institutional asset managers to deploy on chain? uh if so like how do we overcome some of these things that you know that have happened that you know the push back is that it's just not quite ready um is if that's the case what what do we need to improve so

that we are ready >> I think it's absolutely ready I think institutions look at USR not thinking the vault stack is not ready what they're thinking is like the risk underwriting is not is not good and I'm going to provide value by providing but it's not a matter of like the vault stack can enable you to underwrite anything right it's the thing you underwrite I think that the markets when we launched Morpho initially had a you know it was pretty slow to understand that morpho is infrastructure and not actually providing we don't we don't do ma like asset management right we externalize that part now the markets fully understand it's like after this event like the question we got was like hey how can I make sure when I come as a trillion dollar asset manager as a very large bank how can I make sure this does

not happen in my vault what should I make sure to underwrite right so I think for them the infrastructure is clearly ready I think they see those events as like hey an opportunity to like do better from the risk underwriting perspective. >> Yeah. >> Do you anticipate the institutions that come on train with billions trillions, you know, obviously they have their own internal risk management system, global risk departments. Do you anticipate that they will also outsource risk management to some of the curators or do you think that they'll take a lot of that internally? >> It's a good question and a question I I get asked all the time. Everybody has different strategies. We've seen people trying to acquire people. We've seen people trying to buy a smaller stake in the company. We've seen people trying to push uh like the risk curators to bring

into their internal team. I think the overall theme is that institutions want control, right? They want to control every single end to end. They don't want to have an upgradeable code function that you know I control or my team controls, right? They don't want the risk to be managed by me. They want to be controlling everything. Once you understand this, they're not going to like they're going to make their entry maybe using some curators as a service, right? But at some point they want to be acquiring part of their team or the entirety of their team or rebuilding the function internally. And how they approach this will be frankly function of like will the people in those institutions like you know what's the culture like are they like more builder energy and are ready to do the zero to

one on themselves or are they more late to market they need to catch up in which case they have to pay for an acquisition and that's the cost of being late in in the onchain asset management business. So, I think we're going to see everything, right? And personally, like the teams I've been working with, we've seen everything already, right? Most of it is not, you know, public in some cases, but we we've seen like pretty much the full spectrum at this point. >> Yeah. How do you think about the evolution of Morpho the asset? Um, you guys are generating more and more revenue. You guys, you know, getting through a lot of these investor unlocks. Where where are you guys kind of at on that side?

>> Great. So, you mean like from a token perspective or >> just from like a use case perspective, the space has evolved. I I mean hyperlquid has forcing the hand of a lot of people to do buybacks maybe or to consider what what your revenue is people are talking about this more thinking about this more there's just more questions about why token you know what you know it's it's a bare market Paul you know >> so so I think few things so first thing to know about morpho is that we don't have equity right we only have the token the morpho token is the only way you can own a share of the network right and the network which is morpho is a credit network our our our our business is to bring together lenders with borrowers in a competitive and open marketplace, right? And we we do this through a

variety of lending markets. You have Bitcoin back lending markets, you have RWA back lending markets, stock back lending markets, you can even have underclaturized lending markets, right? And so if you own the token, you own a share of the economics of that marketplace, right? What you don't have if you have the morpho tokens is like some form of like governance power over like how to manage the strategy or anything. You just have own like an economic share of the network. And so if the the protocol generates fees, you as a token owner, you own a you basically decide you know how much the protocol should charge and what should be the use of that fees. Whether that is you know buying back some tokens or whether that is thinking hey actually buying back the

token is not the best use of capital. the best way to achieve growth is actually to fund maybe this you know team that you know will unlock this amount of of of growth for the protocol. What I believe is the right thing to do is that lending is a fundamental piece of finance in general. Like you know it's called financing for a reason. It's like literally the cornerstone of finance, right? And and I think morph is the opportunity opportunity to be the internet protocol for financing. And if you look at the total size of the financing market, we're like so tiny. Like if we're like a 70 billion market today with just cryptoback loans, but we need to have every single loan on chain, right? And when you think about what's best from a token holder perspective, you want to capture that market. It

would be so lame to start thinking, hey, we're done with the mission. Now the goal is to, you know, we're not there's no more growth to be had. I think the only, you know, profit maximizing, but still, but at the same time like long-term thinking and rational thinking is bu like invest in building more for morpho because the market is so huge. Obviously, if you just look at crypto today, it's like uninteresting to be building on to be frank. It's like so small that it does not make sense. However, when you look at the conference today and like all the players that you know each of like those individual players have like trillions on their balance sheet, then you see a real potential for being this open credit network for the world that will map every single trillions of dollars that is being lent every day with every

single borrower. And so I think every single fee and that's my personal opinion should be invested into building toward that vision, right? because that's the really valuable play for token owners. You want to be owning a share of the open credit network for the world. It's less interesting to own a share of the crypto, you know, crypto oriented crypto bank, right? >> Yeah. Yeah. I mean, I put out the tweet that said if the tokenization thesis is correct and trillions of dollars of assets come on chain in the coming years, which company will benefit the most? And the resounding answers were uh like lending markets and DeFi protocols uh oracles um and exchanges and and I thought that was >> I think that's pretty much it. Like I think you know we've seen in in in crypto in general a concentration

there's actually very few investable assets I believe in in in crypto. I think finance is not about 20 different primitives. You have obligations, trading, options, right? There's only few things you can interact with like humans can trust each other in a few different primitives. You know, obligation being obviously the one that we're targeting with like morpho and and and that in in general and and that's one of the the key fundamental things. I think options will be one. I think you know markets and trading uh will be one and obviously some core pieces of infrastructure like you know uh wallets and and the ones you mentioned as well.

>> Well, Paul, I'm sure it's going to be a busy conference for you. Thank you for spending some time with us today. We'll see you in Ken as well. Uh, congrats on the success and all the growth, man. And looking forward to Ken. >> Okay, awesome. I'll let you guys continue back to back. >> All right, Paul. See you, man. Paul. >> All righty, guys. That is Paul, the co-founder of Morpho, a French legend, some have said. Guys, we're going to take a quick break. We'll be back. It is 3:48 p.m. here in New York City, guys. Stay tuned. See you. Hell yeah.

Hey, hey, hey. Are you okay? Get out of here.

Heat. Heat. Hell yeah.

Hey, hey hey. Heat. Heat. Get out of here.

I'm down. Hell yeah.

um that that Bitcoin sort of reprises another element of that narrative of something that is seen as a diversifier and a hedge against some of the uh you know disruptive fear-based type events that exist in the world. So I I think that those two points of intersection are really important because the impact of AI on everything is consequential and digital assets needs to needs to get calibrated on its niche within that. >> Robbie, thanks so much.

>> Thanks for having me. Thanks so much to Jason and Robbie. Uh Robbie mentioned that privacy was not in his top three for this year, but maybe our next panel can explain to you why it should be. So I want to welcome out our next speakers. Uh take your seats and get rolling here.

Okay, welcome everybody. Got a stacked lineup. We might just run down the line and quickly introduce ourselves and uh and what we're working on within the the privacy space. Starting with you, Yanick. >> Yeah, thank you. Um I'm Yanek Shra, CEO and co-founder at Arum. And what we're doing with Archum is we are building encrypted execution which enables us to take all possible kinds of information, encrypt it and run computations over that information without ever having to share that. Um, and what this technology that we are building enables is confidentiality and privacy on top of

public blockchain networks. And for the first time ever, this concept of secrets, right, proprietary private information, being able to interact with someone else's private information without having to share anything. And that really opens up a whole new design space for onchain economies. Eric. Hello everybody. I'm Eric Cerneki. I'm one of the co-founders at Digital Asset. We're the company behind the Canton network. In the Canton network, we brought privacy on chain in a fully compliant and scalable way. We're processing well in excess of trillions of dollars per month and things like repo, life insurance, uh cash on ledger, and various different forms. Uh and

we're bringing the real world onchain in all sorts of safe and scalable ways. Katherine. >> Hi everyone. My name is Katherine Gu. I'm the head of product for digital assets at uh Salana Foundation. Uh I think many of you know what Salana is. It is a L1 blockchain. It is uh extremely fast, scalable, reliable as a blockchain and uh we're putting a lot of effort into building privacy uh features that could be used by different type of financial institutions. Um and I think going into 2026 we have a very large and growing crowd of FIS being on the network. People like Visa, Mastercard, Western Union, FISA as well as JP Morgan, uh State Street Fidelity of the

world. They're all participating on chain. So that need for privacy is ever more important. >> Finally, Patrick. >> Yeah, thanks for having me. Uh Patrick, I'm the founder of a company called Commonwe. Uh we are working on commoditizing all sorts of primitives for building fast uh and and sometimes private blockchains. Uh one of our biggest customers went live last week uh Tempo if you if you've heard of it. And so we're into the stable coin and uh trading space. So helping to encrypt stable coin and uh generally uh payments transfers as well as uh encrypting uh trading um to prevent me and other sort of abuse of trading that you have probably heard about on blockchains.

>> Cool. So, it's very interesting because we actually have different expressions of the privacy stack uh across our four guests. Like we have Katherine and and please forgive me if I butcher this, but it it's almost as if you're building privacy at the token layer and and and packaging it that way. Uh we have Patrick who is uh building universal tools almost that can enable privacy across many different blockchains. We have Eric who has taken that from a very chain native perspective and baked those privacy controls into the network itself. And then we have Yanick that is probably the most aggressive of the of the privacy preserving protocols in that it's all encrypted compute. So they're all different ways that you can get

privacy on chain. Um so I'm expecting a very nice conversation. So maybe Katherine will we'll start with you. Um, you've spent years around CBC, CBDC's and stable coins and and tokenized assets and you have a lot of experience in talking to regulated institutions about coming onchain. Uh, what do they usually mean when they say they want onchain privacy? Because there's many different forms that onchain privacy can take. can uh have confidentiality with the general public. Uh so it's not on a on a blockchain explorer that you can easily pass or it can be privacy with your counterparties uh or it can be privacy uh against the actual uh the infrastructure nodes uh that they can't

see what's happening. What what do institutions want when they say they want privacy on chain? >> Sure. Um I think all of the above in the sense that uh depends on the institution and the use case you're looking at. I think privacy really means uh quite different things when you get to the nitty-gritty details of how you actually design that privacy feature. And so the way we are looking at privacy is really it's a spectrum, right? It's it's not like you either have privacy or not, but it's like what level of privacy are you looking at? And we actually um just wrote a report quite recently that you guys can take a look on payments.org which is our website. Um and it's a report we just launched uh on privacy this Monday. So the way we look at it is

actually by a 2x2 ma uh matrix in the sense the there's the the sort of um privacy in terms of identity and then there's the privacy in terms of like the amount and balances of transfer the value essentially value against identity. Um I think for some institutions they care only about say hiding the value bit but they can just have the addresses still retain as is i.e. your public addresses are being known you don't need to hide it any further. This is what we call confidentiality right in which you hide the amount you hide the balance i.e the value but you don't need to hide the identity. There are other folks who are looking at the reversal which is more the anonymity set which is looking at hiding the identities of the sender and

recipient but they're fine by leaving the uh the balance and stuff uh on chain. And of course there's the more extreme end which is what we call total secrecy which is essentially combining both identity layer and the value layer to be hidden and private. And I think what's interesting is increasingly when we talk to financial institutions that's actually more and more the desired level of privacy they're looking at because a good example is say uh you know a fund manager creating a pool of student loans and you only want to give to a subset of approved um you know entities then in that specific case if you want to do it on you know mainet on a public chain you don't want anyone else to know exactly

what's going on other than the parties is involved in that specific use case. So you want to hide both the identity as well as the amounts being involved in that specific case. So in any case, I think it's a incredibly exciting and complex topic for us to um you know to to spend a lot of time investing efforts into it and I think as Salana thinking about how do we then present the right solution to them. I think the key is we don't see it as a like a single kind of out of the box single solution that we can just present to any FI and just be like no matter who you are just go and use this single thing. It doesn't come out of a box. Instead, in order to kind of cater for that spectrum sort of um

narrative, what we want to create is a module approach. I.e. we want to have certain thing that's already natively embedded in the network Salana network protocol level things like confidentiality and stuff that we're leveraging ZKS to to use it or other technology to use it. And then there's other things you can create your private execution environment that we also enable and institution can pick and choose. And on top of all of that, we have ecosystem players like Arm and others who are building privacies on top of Salana uh the the infrastructure to present very specific use cases uh and infrastructure. So with that spectrum we also provide them a menu of option if you will. uh and I think the point is as institution you can come mix and match

choose whatever is the right level of privacy to fit for your specific use case. That's how we're thinking about it. >> Eric, I might throw to you next because uh I just want to go back to this idea of confidentiality from the network operators themselves. Uh you do give that out of the box almost when when they're operating on Canton in that uh you know transactions can't be viewed by the network operators. So there's actually no real choice there. Uh how important is that distinction when talking to institutions uh that it's not just simply that well the public can't see it and the counterpart is it's no it is from the top to bottom down it's not possible.

>> Yeah. I mean I I would start by agreeing with Katherine and say it's actually not even enough. Like there's there's even more depth to what she was just describing because that privacy configuration is also contextual. it can change in different different environments. So maybe it's appropriate for this party to know this bit of information this time but then not the next time or maybe this intermediate step in a workflow is important to know but maybe not the ultimate outcome. So that sort of very fine grain configurability goes above and beyond just those base layer like what does the world see and yeah there is also the added value of well sometimes people don't want anybody to know absolutely anything. I think where a lot of these uh approaches coming on top of the

public chains that can be a little difficult is that they start first from this assumption that it actually is additive to provide proofs to everybody in the network. There are definitely times when that is true but it's not universally true. Um and so just that configurability that Katherine started about we we've taken that even further and it's not just at rest it's not just in transfer it's in composition which is also really critical. So if I've combined multiple assets into a DBP or a multi-leg transaction into a complex update, I can't leak any of that information across that update either.

Kind of kind of a silly but I think constructed example is if you were to compose going to a doctor with a stable coin payment, you would not want the doctor to find out how much money you have and you wouldn't want your bank to find out why you went to the doctor. So these things are even more complex and I mean Katherine did a great job but I think it's even at a deeper level than that and giving the tools to the participants to pick the right level for them because it's not universal that privacy is perfect like there are times that you want to disclose information there are places where disclosing data is additive so you would need to give the tools to the participant to figure out the right configuration for them and their purpose. Yanik, I'm just wondering your take uh because you know ARM is really

built on this idea that privacy really needs encrypted computation within the chain architecture itself which is another step forward uh another step further than than what's already been discussed. But uh how can it go too far? like do do you really need there to be a way through removing privacy at at certain levels or is it really a universal truth that it is completely necessary at all times? So I I think first of all um what is important to understand um what what Katherine was was speaking about for example is that um the way you can enforce actual privacy is by utilizing

cryptography and and mathematics right um so so for me it is about removing trust assumptions removing single points of failure and utilizing mathematics to ensure that using cryptographic primitives privacy exists. Um, and it's not like um like what Eric described where um we trusting node operators to not leak information, but instead there's cryptographic guard rails where nobody is able to see any type of information. And I think that matters highly both on the retail and institutional level because these these cryptographic primitives that we've designed basically are constructed around this mathematical game where

there's multiple participants that are playing this game. Um and all of them are mutually distrusting each other. Um, and our algorithms are the most performant and versatile solution to enabling those mutually mistrusting participants to run some computation to to solve a problem together without ever having to share information without ever having to trust each other. And I think that that describes what what blockitional players where I'm able to um problem together without ever having to

share information without ever having to trust each other and I think that that describes what what blockal players where I'm able to Um, Hell yeah.

You know, it privacy is normally something that seems to add complexity uh to all of these situations, but I can imagine that uh I I can imagine that um that operations teams at institutions would prefer there to be not that much complexity uh and it to be uh very straightforward and predictable. Um how are you viewing all of this? How do you square that? >> I think like while there are a few applications that I think do better with transparency, maybe things like social networks or things like that. Uh I think most people in the space or like using crypto products prefer privacy. The problem is the cost of doing so so far has been inhibitive or it has just so so far kneecaped the functionality that it

it hasn't made any sense. Um I think over the last few years there's been meaningful uh improvements on the research side uh that have made it a lot less thorny to use but particularly a lot less expensive to incorporate in these systems. Um so like today this morning we released some research on uh basically verifying a 100,000 snarks um on a single validator set per second. Um, and so we think there's there's a moment coming here soon, uh, similar to the stablecoin moment. I think a lot of, uh, this industry has seen over the last year or two where privacy becomes a lot more affordable and a lot more integrable into a lot more chains. And I think that makes a lot better products, particularly a lot more compelling products for a lot of users in crypto.

Uh, I think the story, at least the whole time I've been in the space, has always been like, what would you use crypto for? And I think a lot of people got their first answer with stable coins recently, which is like it's just cheaper. Like it's shocker. like very well adopted. It's just a lot for a lot of users a lot more uh appealing of a product option. And I think as soon as privacy and some of these other products uh reach that cost uh level that is actually like uh really competes with today's legacy product um that I think it becomes a very appealing option for folks that are doing payments folks that are uh you know trading and doing more on chain where they can actually launch things that uh I think uh really are uh leading leading the pack in terms of a

product experience and I think that's what's been missing for a while when it comes to uh privacy adoption. Yeah. So, I might I might throw this to you, Eric, uh because, you know, I I don't just want to big up Canton, but I can imagine that there are a lot of cryptonative builders out there that would have hoped that they would be able to work with the same institutions that Canton has been able to attract with with with everything that you're doing. So I I imagine that you're in a unique position to to answer what might be the m the biggest misconceptions that cryptonators builders have about what it means to provide institutions with privacy on chain like what have the crypton natives missed that Canton was

able to capitalize on? >> Yeah. I mean I don't know there there's there's kind of a long road. I mean it starts with identifying the actual problem for them. It's not trust. And you know, and even in the cryptonative ecosystem, one of my favorite sort of examples is uh you remember when everyone said Tether was was, you know, bankrupt. There was all this Tether FUD going around. Well, if they had been bankrupt, what would the value of a million validators confirming my transfer to you have been? There's this inherent risk that comes from taking something and putting it on chain. For the cryptonative stuff, I completely agree with you. Everything you were saying before, but so much of the value that's coming to this chain is not cryptonative. and you have this inherent connection between this entity, you need to give them the ability to

provide whatever information they need to provide or have the controls that they need to have or the fiduciary responsibilities that they have to be able to meet every single one of those things under the current regulations. So I think that overwhelmingly what people I'll say don't like about Canton is that we made pragmatic decisions over the past decade to be able to serve finance today as opposed to waiting for research to evolve expense to come down regulations to change uh confidence to build in extremely cutting edge technology uh all that sort of stuff. We were able to meet them where they were today and solve problems for them today.

And I I generally kind of tell that a lot like the Salana story actually. I mean six and a you know change years ago everybody and their mother had a white paper. Here's how we get fast and cheap. Here's how we get fast and cheap. Everyone had acknowledged it and then they showed up and they actually were fast and cheap. Was it maybe the perfect design? I don't know. I'm not going to say that it was but it actually delivered on what it said it was going to do. And they were first to the spot. They delivered that value. They built an ecosystem and the pragmatic approach got to the point where it needed to get to to I I believe genuinely win. Today there are tons of chains that are fast and cheap. They don't have the ecosystem of Salana. So meeting people where they

need to be right now and not needing to change the whole world and solving a material problem has been the core of our ethos. Pragmatic is really the word that comes to mind. So you know like I was I was really really big on Zcash. I am it's still my one of my really big positions in my PA in a crypto context. The zero knowledge fully encrypted total anonymous approach. I'm willing to take that risk because I think that that's the right approach for a cryptonnative asset. When you're talking about a financial institution being the leading edge of really fancy crypto and taking the sort of bug category risk that exists in that space is existential for you. The idea of a stable coin having more in distribution on chain than you

thought was there is not a risk that you can take. Not having total control over your asset in a way that you can perfect the secured interest in that holding is not a risk that you can take. So you kind of have to understand a lot of these very unsexy things and make sure that you can bring an asset at scale on chain and not a representation of it, not a derivative of it. And actually, that's what I find super interesting about the the regulatory arbitrage and the decentralization space is it produces things that do push the envelope, but they do hit a glass ceiling of scale as well because the capital markets can't come into those zones in the way that they've been structured. So, they're changing perception, they're changing expectation, they're changing behavior, but I don't believe that ultimately

they'll get delivered through those paths. And I I think people don't want to face that uh that sort of pragmatic reality of being able to do this stuff responsibly at scale. >> Katherine, I might pose this question to you because to me when I think about what makes crypto really useful is this element of composability. Um at least in terms of what the ecosystem is now because it is so sprawling and so diverse in all these different approaches, uh all these different use cases. Um, but is there a limit to how much privacy that you can add to tokens or even at the chain level or or at the protocol level that all of a sudden that composability breaks down

and you do just have a bunch of wall gardens where that privacy might exist but you can't get that outside of that network like is there a line here? I I think it's an excellent question because um you know whenever we talk about privacy I think important thing is the next followup what is the trade-off therefore and I think this is this why is as I said at the beginning it's a very complex topic right you it we're taking our time to get it right I think what's really important about the Salana ecosystem as a whole as many of you know we are very monolithic in our approach and I think that started right from the very day one when to was starting to build Salana because I think he already

had the vision at the time that this is meant for financial financial instit financial applications right because I remember back in the like six years ago he was talking about NASDAQ of the future and this is what Salana was built for so translating that is really about we want to have a chain that could aggregate all of the liquidity because that's what's the most valuable thing ultimately to a any given network you need to have the liquidity you need to have the flow and the movement and I think fast forward to six years later that is indeed what we have achieved and so to your point as we are trying to think about the different as I said modular approach to privacy there's always sacrifices by no means we're not ever going to achieve the perfect

privacy without sacrificing things but it's just finding the right balance and again giving the different options because we're not here to dictate any institution or any developer to be like you have to go down this path everything is entirely permissionless you can build whatever you want on privacy In the end, it's going to be the market and the users to decide if it that makes makes sense or not. And I think that works out well so far and I think privacy is just as a feature as anything else that we're doing on Salana and we'll follow the same approach uh to have the level of optionality and for for the users too.

>> If I can jump in, I I think you know composability is the hill to die on in the context of real world assets. uh I don't think it's trust when you look at the root of the problem that we have in international remittances and the failures that we have in our settlement ecosystems and all it is because we have a ton of independent systems that have to be eventually consistent and the only way that we do that today is through reconciliation which is really really slow and composability is the way that you make that just guaranteed to happen at a at a technological level at that point you can start doing global finance across n institutions so for us that's been the non-negotiable we have to deliver privacy without sacrificing composability. Uh and I think that again within the context of capital markets

and real world assets and bringing the economy on chain that that to me is the prize of being on chain. >> Yanik, I I I wonder how you feel about this because and and I just want to jump to compliance and as painful as it might be to discuss compliance, this is we're at an institutional conference so it's it's really top of mind for a lot of people. Um but from the outside it certainly looks like crypto has never really solved who needs to worry about compliance. Um like should compliance and data collection sit with apps or frontends or token issuers or is it the middleware providers or is it the bridges or is it the relay nodes? And

I'm really curious your take because if it's all encrypted compute who who needs to be compliant? Yeah, I think that's that's an excellent question. Um, and before I answer that, I think I think what's important to understand really is and and Kine and um Eric were talking about this composability. Um, and in my mind composibility is being able to move from this concept of public shared state into private shared state, encrypted shared state, right? Um and what that what it can unlock for us in an institutional setting is we can say okay um we we have confidentiality and and privacy within

traditional finance as well, right? Um we have lit trading venues and there's dark trading venues that are non-lit. Um and um all of these actually are sort of isolated. And when you want to do something like smart order routing across all of those dark trading venues within Treadfi, um you encounter the darkpool smart order routing problem. Um with shared state and encrypted shared state, we can turn all of those blackbox trading venues into lit trading venues, but all of them exist within this encrypted space. this this encrypted realm. Um now when it comes to compliance, what I think is so important

to understand about all of these cryptographic primitives, including um the the cryptographic primitives that we've been developing over the last years, is that with encrypted execution um all of this becomes multi-dimensional. So I can define an algorithm that specifically specifies when I perform a transfer from my wallet to someone else's wallet here in the audience then the financial institution that is providing the stable coin that is being transferred should also get access to that information right and all of that happens in a verifiable encrypted way takes a few milliseconds that's it there's full privacy full

cryptographic security while there's auditing in is um and that is only the most simple um yeah system you can build with with encrypted execution. You can actually construct systems where you can have um and that is I guess more of future music um down the line in a couple of years. But the way I see this technology evolving not just within um finance but enterprise as a whole is that we can get rid of a lot of um expensive processes um and simply define clear rules um which defines how information is being processed and what are the consequences of um what is

contained within that information and only if certain rules um over which there is collective consensus um are met then this information let's say gets shared with a third party um and I think that is the future where um open open um finance together with traditional finance will move most likely um at at my heart I am um extremely cipher punk um so um I would say um the ideal world that I see is a fully encrypted world where everyone be an individual or be it an organization right has this ability to bring themselves into a strategically superior

position by keeping ownership over all information I think that's what it is at the end of the day and that's what we see on an individual level but also within capital markets >> Patrick I might throw to you because what Yanik is describing is a whole new system Uh, but I get the feeling that traditional finance really wonders whether any of these new systems are backwards compatible with the frameworks that came before. Um, are is any of this backwards compatible or is are we really just building a new world that we had better existing for for the better for the better of the

industry overall? >> I think the space has steered closer and further from that. I think with the early ideas of Bitcoin and some of like Zcash, some of these early like more cyberpunk things, I think it was very much like it's our way or the highway. Uh but now with like all these this focus on real world assets and stable coins, like I mean we've definitely put ourselves in a position where it takes two to tango. So um I think like you can layer on all this crazy cryptography and whatever, but if ultimately like whatever asset issuer it is has the right to stop it or inhibit something at some point, like why add it? Like it's just >> bingo bingo bingo.

>> It's it's a big question and like I love the cyberpunk stuff and like it would be really cool. The problem is I think there's a I mean whether or not it's true, there's a lot of people that think a like it runs the risk of uh really aiding illicit finance and you can take a really strong position on like cyberpunk principles, but if you're if you're not willing to go down with those cyberbunk principles, like you're going to have some very very difficult conversations with some people uh from three-letter agencies. And uh you know, I I think that like the technology ultimately you have to reckon with its impact on society. And I think that um sometimes it it doesn't feel quite like the society that wants to see crypto thrive wants to see um this full

encrypted world be be the world that uh that ends up taking advantage of this technology. So uh I I'm hoping that like we get to that and I think like an internet world that is enabled by that is really cool. But like if the if the user demand is like on these assets that are issued by regulated entities on chain, um it begs the question of like how much uh how close we can actually get to those ideals unless we like really rethink how those assets are actually issued or what those assets are. if we're on like a like a a massive metaverse where like nothing is actually physically tied to anything and it's like a globally native asset um where there is no true ownership like true like creator or manager super interesting u but I think for a lot of the assets we're working with today like

I think you um temporal privacy is much more useful and interesting like can we hide trades before they're actually executed but then after executed reveal u certain information about it is much more compatible with the worldview uh that a lot of the enterprises that want to bring significant value on chain have. Um and so I think there's a question is like do you comply or do you uh choose to go the other way and I I think there's a big open question today in the in the crypto landscape how big is that market for the let's go all the way cyberpunk because it in recent years it seems like that group of people has gotten smaller that it's just not as loud anymore. Yeah. I mean, imagine a scenario. JP Morgan calls a regulator. Great news. Just installed some new tech. I can't see

anybody's balances anymore, but a black box gives me a big thumbs up every time something happens. Like, it's just kind of a ludicrous example, but I think it is telling that this isn't really this isn't really additive. If we're trying to rotate the GDP onchain, it's all extremely additive if we're trying to create regulatory arbitrage and push the boundary and disintermediate and attack and create something alternative above and beyond what the existing system is. And that's fine. There's a definitive space for that, but it's not necessarily the application that I don't know we're working on at Canton. So, I don't have any qualms with it whatsoever. It's just not really eligible to be applied in these contexts. Maybe yet you could add

to my statement but I don't think right now. Katherine, I might throw to you quickly because in how I have viewed Salana's trajectory in that it really did start out as a very retail focused. It was it was the community chain almost. It was very retail heavy beat shift now towards institutional interest and that's because the institutional interest is here. But is there a world where if institutions are coming onchain at scale and they use Salana, where does retail fit into this? Uh and it we don't even have to talk about

Salana specifically, but the chain space overall. Uh how does retail still be catered to when institutions are so powerful in in what they're demanding? Yeah, it's it's basically two-sided of the market, right? You need retail, you need institution and the marketplace is where they meet. In fact, I think it's very important to have both retail and institutional on the same uh platform, whatever that might be in order for them to intact because when we think about institutional use cases, it's not just wholesale financial uh use cases. It's very much there's a small B2B, B2C, uh whatever you have it. I think actually just kind of again tracing back a little

bit of the history uh and all of the things that happened organically I think is very interesting and I think as you're asking the question I was just kind of thinking the the growth or the tra trajectory of how Salana has evolved over all these years sort of like on a macro scale reflects the the trends in crypto overall and what I mean by that is as I said at the very start right like SVM Salana virtual machine the Salana entire architecture was designed to be the NASDAQ and right now we're calling internet capital market. That vision has never changed. We really wanted to create a blockchain that is highly performant that can compete with all the centralized exchanges etc in a

completely trustless permissionless setting and we are achieving that right right now. Now what's interesting is that now you have this amazing high performance scalable infrastructure but because this is a open permissionless network any use case anyone can come in and build and see what will actually succeed and take off and what doesn't and so it just happened to be that there was a period in time that you know whether that's NFT or whether that's meme coins like that actually brought a lot of retail interest and it's actually through that experiment if you will it allows a lot of the retail uh liquidity to come among chain and through that experience they start to have a wallet right they start to understand uh financial literacy in a very different

and interesting way that as a creator of the chain you would not have predicted that like ahead of time but it just happened organically and that's what I think about is very interesting when it comes to market >> we're back >> digital asset summit day one we are here with our final guest of the day Mr. Jim Hilner congrats >> Jimbo. >> Thanks, guys. >> Six in person if you guys didn't realize. >> It always freaks people out, you know. You see me on Zoom, I got the camera like at an angle. It makes me look like 5'2, I guess. And I just freak people out when they see me in person.

>> Man, congrats. Invesco coming in to be a part of Superstate's $900 million onchain fund. Uh we were talking about kind of how you guys pulled this off. Let's talk about what this means. Why why is Invesco getting involved with Superstate? and like what does this kind of enable for for them? >> Yeah, so I mean Invesco is a fantastic partner. You know, shout out to the entire team there. Uh Kathleen, the head of digital assets and and their group. Um you know, as you know, ETFs really popped off. You know, Invesco got involved with Galaxy actually as a partner build those products, but they hadn't done anything on chain. You know, very traditional structure. Build the ETFs like reach out to their existing demand channels. tokenization opens

their entire business into an entirely new customer base that they have zero interaction with whatsoever. You know, I think they've been spending a lot of time looking at the market, diligencing like, you know, who should we work with? Should we buy things? Should we build things? And they looked at Superstate and they were like, you guys have all the right infrastructure. You've done things all the right way. You've built a very seriously scaled business and you've got 300 different customers in, you know, the the Superstate business that we don't have any relationship with. And so, you know, I think it's a happy marriage between the two where, you know, they're amazing at investment management. You know, they run 2.3 trillion in AUM. They're very famous for QQQ. Yeah.

>> But 200 billion of their entire portfolio mix is treasury fund products, liquidity solutions. >> And so, we're excited to have their expertise come onto the fund. um be able to manage the portfolio for all of our investors, make sure that they get the highest quality portfolio management possible and then just give Invesco an opportunity to get on chain in a very material way to launch with a billion dollar fund for them is like pretty exciting. Yeah. Uh but it opens up the floodgates for them to do a bunch of other things with Superstate. We run a lot of great infrastructure that can apply to other asset classes, other types of funds, whether it's ETFs or private funds. So, you'll be seeing a lot more between this this partnership outside of just USB. Um, but it also just represents a big inflection point

for Superstate because uh, you know, we get a lot of phone calls from asset managers that are like, are you our friend or are you our foe? Because, you know, people think that Superstate is really out there to be an asset manager. But we built those products to demonstrate where we are today, which is that we can open up our platform for many different asset managers that are trying to reach this addressable market and to tokenize their products to upgrade, you know, all the funds that they manage in house. And so, you know, it it it represents a a paradigm shift in terms of who Superstate is from a technology business instead of an asset manager.

>> Yeah. >> Um you you mentioned in the in the thread here of the announcement that you know this is uh this partnership is bigger than just a single fund. You said this validates that institutional grade investment products can be built natively on chain with real operational infrastructure, full regulatory compliance and expanded capabilities. So I anticipate you in you see more and more of this happening with superstate funds and and and beyond, right? >> Yeah, no doubt. And and it's it's because of demand honestly. Um you know, you can build as many products as you want, but if nobody wants to buy it, it's like why did you do that in the first place? And you know, we very deliberately started with USB because we knew that there's a ton of demand for just high quality liquid assets to be either reserves for stable coins. you

know, we back Bridge, Fracks, you know, a whole bunch of different uh onchain stable coins as their reserve manager and we've got liquid funds and hedge funds that, you know, instead of sitting on USDC, they put it into USB to earn yield and then we've got, you know, a bunch of protocols that have built on top of the product as well. What I'm seeing now is like everybody's stuffed with T bills, you know, and it's like definitely taken off and it's gotten to a certain scale, but there's a lot of allocators out there, >> whether they're, you know, protocols or stable coin issuers or or, you know, folks that just have assets that are like, okay, how do I start to diversify the investment exposure that I have and it's not just digital assets, but they want more traditional assets. So I think

you're going to see, you know, in the not too distant future a lot of funds that have a little bit more yield, maybe a little bit more duration or a little bit more risk and start working our way up the curve because, you know, three and a half% in T bills is great. Um, but if you run a billion dollar portfolio and you don't need to have all of your assets liquid tomorrow, why not earn 6% in something that has quarterly liquidity or something with 5% with monthly liquidity? And so we're going to meet that demand with a bunch of other funds whether it's Invesco as the manager or some other partnerships that we're going to announce in the coming months. Um because you know asset liability management is what folks are all about in terms of you know managing their their treasuries and >> meaning you know their balance sheets

and T bills is just one part of a diversified portfolio that has to come on chain to meet that demand. >> Yeah. I mean I think that we've had a lot of short duration products in D5 for a long time. I mean the whole premise of DeFi has been you know instant liquidity effectively like you know get it in there get out whenever you kind of want to then then we kind of have this iteration of longer longer duration one month three months but like in traditional world long duration is like five years or like 10 years right we're like at like all right one year is like a lot and so how do you think about the user set of folks who are so used to instant liquidity and short duration how do you think about translating them into wanting to be longer longer longer term

kind of uh yield providers or yield uh you know kind of like acptors is that the same user base is a different user base how does that kind of translate >> a little bit of both and I think it's coming from kind of a few different angles like one is like as a corporate treasurer >> you know if you're Coca-Cola yeah and you've got billions of dollars of cash on your balance sheet you're thinking about okay how do I invest some of it for working capital which means like less than a year >> how do I put some of it to work that can I can lock up for three years and five years and like >> that that curve it's like asset liability management it's like 101 like the Yale model like right it's like how do I like take you know a portfolio and

diversify it across a bunch of different things based off of when I need liquidity and also how to maximize my yield um so there's a lot of corporates that are thinking about that that are sitting on stable coins today um and I think you're going to see more and more as stable coins become you know on the Coca-Cola balance sheet >> they're going to want to do things like they normally do in trady but with tokenized assets because they could just convert it one for I think the second area is you have a lot of like stable coin issuers that sit on billions of dollars and they don't need to have instant liquidity for 100% of those billion billion dollars tomorrow >> despite everybody being in crypto more you know real time 24/7 and and needing instant liquidity >> there's a lot of sophisticated analysis

that people are running that if you're an allocator of reserves behind a large stable coin you're thinking about how do I diversify that and it's things like you know short duration fixed income it's investment grade, you know, maybe high yield debt. Um, depending on the risk appetite. Um, but not all of those need to be converted to, you know, cash tomorrow because if you run a $10 billion stable coin and you have, you know, $2 billion of outflows, you still have $8 billion of sticky capital that still can be deployed a little bit further out. >> And I think the last point I'd make is like really around DeFi. You know, I think our concept of DeFi today, like compound the way it works, a the way it works, you know, even morpho the way it works today is is 247 highly overcolateralized real-time loans with LTVs according to

the risk profile of the collateral asset. I think that's going to change as you get more institutional buyers where you're going to have lenders that are like, I'm happy to take a one-year fixed loan. >> Yeah. and lend out my USDC or USDT or whatever it is to somebody that wants to buy it that has a very similarly structured duration of the collateral underneath the hood. And so fixedterm lending with a maturity calendar I think is going to be the next wave of how DeFi continues to expand. And then you can match the underlying with the the you know you don't have a bank run on an asset tomorrow. You're going to have you know more fixed predictability that you can match with the underlying as well.

>> Yeah. So remind us what everyone that is getting into these tokenized funds like what what does Invesco get by turning this into a tokenized version because you know you mentioned that a lot of these corporations are doing a lot of this already offchain. Uh you mentioned Coca-Cola could basically flip this going from an off-chain vehicle to an onchain vehicle. Is it composability? Like if we're not using the the permissionlessness nature of the blockchain to get instant liquidity on these things and we are taking duration, what are the added benefits of turning this into a tokenized fund? >> Well, it's already tokenized, right? So USB is the fund that we built, you know, two years ago and we've raised, you know, over a billion dollars. Um, you know, it's currently at a billion dollars in AUM, but like billions of dollars of transactions have gone gone

in and out of this product and really set it up the right way with like Bank of New York Melon as our custodian, like Ursen Young as our auditor. So when Invesco looked at this as like is this a product that we could be comfortable putting our brand on, you know, as a $2 trillion asset manager, it's like a pretty big strong validation of what Superstates built for them to be able to say, hey, the only thing that we do is, you know, in a couple of months when this, you know, transition takes place, >> it becomes Invesco shortduration government bond fund and not the superstate short duration government bond fund. Nothing else changes. Still the same technology, it's still the same fund, all the same assets, all the same clients. But what Invesco gets to do now, which enables Superstate to scale, is tap into their broad network. So if

they're in a meeting with Coca-Cola and Coca-Cola says, "Hey, I've got, you know, a billion dollars of USC on my balance sheet that came from some, you know, foreign supplier that we, you know, settled a transaction for, you know, you know, Coca-Cola that we bottles that we we we just distributed to them." Like that's on their balance sheet. And then they look to their adviserss like Invesco and say, "Hey, how do I deploy this?" Well now they have a product on their shelf that they can go and sell. So it taps into that traditional market in a distribution >> business that is set up >> to scale to $2 trillion versus you know superstate has gotten tremendous traction but you know our DNA is not similar to Invesco. So it's highly complimentary combining forces where we

will continue to enable the utility of the asset the technology behind it and the distribution in the in the crypto markets. But Invesco is going to be scaling this tremendously on the traditional side, especially as Genius comes into play and every merchant and corporation on the planet has stable coins on its balance sheet >> and and is there any restrictions that you guys are subject to by partnering with them that you previously weren't, >> you know? >> No, not at all. I mean, that's the beauty of this is like so today the fund is is subadvised by a company called Federated Hermes. Um, and they're, you know, we are the investment manager at Superstate and they're the subadviser.

it's going to flip and now we become just the technology provider and Invesco takes over the whole thing. >> Um but structural wise, you know, client base wise, regulatory wise doesn't change. It does however open up the channel in the future for us to convert this from a private fund >> which is just for institutions only today into a registered fund, right, >> which can be hitting anybody in retail across every distribution, you know, channel on the planet. So did did Invesco like did they buy equity in Superstate or was there any like partnership there or is that public or >> Yeah, I mean the partnership is them inheriting an amazing vehicle taking over you know they're becoming the investment manager and so they charge a management fee on this fund which will now be a new revenue driver for Invesco

as a business. >> Okay. >> So you guys are now like part of Invesco. >> No, we're not. We're just a technology provider to them. So here I'll give a shout out to to securitize. is amazing. You know, they've tokenized the Black Rockck fund. Not too dissimilar in the structure here, the transfer agent to uh Invesco's fund. It's their fund now. >> Understood. Got it. >> Uh follow up on something you said earlier, you know, in regards to this Coca-Cola example. How important is the proliferation of stable coins to this entire model? Is the idea essentially that as we get more stable coins, they start to replace more of cash. we get stable coin native investment products.

>> That's definitely one of the angles. Yeah, for sure. I mean, like with with USB, um it's amazing how 247 there's smart contracts interacting with stable coins and just creating purchases and redemptions. Uh if Invesco compares that to their legacy funds, there's a lot of human beings that do that process today. Um and very little technology. And so this proves the point that like there's a lot of operational efficiency in an asset management product that they can witness firsthand and then apply it to the other $2 trillion that they manage over time. So stable coins I think compatibility there is is certainly a key characteristic.

>> Um but I also think that like the composability of this asset into things like DeFi and into things like vaults is going to be an important driver of asset management going forward. sitting in, you know, a bunch of the sessions here today and vaults is not just a crypto meta, >> it's a trady meta. >> Yeah. >> And they're like, >> how can we use infrastructure to optimize the investment management, >> you know, uh, process >> so that we can custom tailor a portfolio for Robbie versus Andy versus Jim. And instead of me like typing in a bunch of orders, it's like smart contractors do it based off of their risk profile.

Yeah. And the assets that those vaults are going to interact with are going to be tokenized, >> right? And so that's a imperative for Invesco who looks at, you know, mutual funds were an amazing product and still are. ETFs are an amazing product and still are, but like will vaults be the new ETFs potentially. >> That's what it seems like. Bit Bitwise was on here. >> Everyone's saying that >> Bitwise was on here and absolutely taking that point of view. >> They always say that. I >> I'm curious like is like is Invesco looking into Vaults? I know you can't really speak on behalf of them but like as you know it it something you mentioned earlier is that Invesco is now part of kind of the superstate you know team if you will in a certain sense they're advising you on maybe like the

right direction to go with some of these products I'd imagine that's a birectional you know path where you're starting to advise them on what some more of the tokenization elements could look like are you starting to advise Invesco on like hey you should be taking a look at vaults what are what are they saying >> so Invesco is really really forward-looking um and as much advice as we can provide them and be, you know, a great partner, um they already have a lot of these ideas. Um which is fantastic to see. And that's what we like in a partner is somebody that isn't just a tail wagging the dog, but it's like two people combining forces in their respective areas and like building the financial system of the future together. Um, we certainly have a lot more digital native experience at Superstate with our engineering talent,

um, and our operational talent and our marketing talent and our client relationships and the distribution we've already set up. Um, but Invesco attacks it from like a much more institutional level and thinks about things very very broadly. That's very insightful for for Superstate. So, you know, we we definitely come to the table, not just on this product, but on on a whole bunch of opportunities. And um you know, we haven't we we we've been able to drive a very close-knit relationship with a very large institution that, you know, it's kind of funny because we joked with them. We said, "Hey, we we would love to launch this announcement at D and like I want to come on the rollup and tell everybody about it." And we got them moving so quickly that they had in like these are their numbers 97 people at

Invesco that signed off on this project. >> Wow. >> In a matter of a couple of months. Wow. >> So they move at the velocity that Superstate does which is awesome for a big institution like that. And you know I think that means that there's going to be a rapid production factory here of things that we can do together. >> Um but it also you know and this is my challenge to the rest of the industry is catch up to Invesco speed. Um there's a lot of asset managers out there that are thinking about doing similar things and um Superstake can definitely be an enabler to to increase your velocity like we've been able to do with Invesco and uh and yeah, I think you know it's an arms race.

>> Yeah, congrats Jim. Th this is awesome. I mean this is huge is uh pretty funny to see and secure ties have big news this morning, same day, same time. I thought that was that was absolutely hilarious. >> Um we're both moving, you know, and that's what and that's what matters. So, >> and and it's a coalition, right? Like it's not just a super announcement or secure announcement. It's like it's partnerships with the biggest brand names on the planet. >> If you're watching uh if you're watching March Madness, you see Invesco ads like all over the place. So, like this last couple weeks has been pretty cool. Uh thanks guys for uh letting me share this great timing. Thanks for coming on.

>> Massive congrats, man. >> Thank you guys. >> See you next one. >> All righty, guys. I think that about wraps us up for the day here at Dash day one in New York. Rob, full session today. Another one tomorrow, guys. Thanks for tuning in. >> Yeah. No, this was a pleasure. I mean, what I like to do sometimes when we have these marathons is just look back uh just speedrun. So, we started off, we talked to TN from Pendle, co-founder of Pendle. Then we went Alex Cutler. We had started off kind of DeFi native, obviously, Aerodrome right there. Then we had Chip on, they're building FX onchain. Uh then we had Prenav from Van.

Uh then we had Sam uh he was our resident stable coin uh representative today from Phoenix talking about USDS and Spark out of the sky ecosystem. Then we had Brian Pelgrino. Absolute savage. Brian is doing great work. They were able to >> they were able to put together just an in incredible coalition of tons of institutions. That one got Jim. Jim's sticking around to close the show. I'm >> the third host. You know, might as well shut it down with you guys. >> Yeah. Yeah. >> Then we went to our resident macro host. We had Felix uh from Block Works. They're doing great things. Uh uh then we had James Seafart uh the resident uh ETF guy over at Bloomberg. Then we wrapped up super institutional. We had Will Peek, head of digital assets from Wisdom Tree. We had Ryan Rasmusen from uh the head of research at Bitwise. Then

we had Paul Frabert. We got back to DeFi at Morpho. Paul got us an update on the whole resolve situation. >> And then we wrapped up. We had Jim closing out the show. >> Let's get Jam. >> Yeah, you peaked at the top of the at the top of the show. >> Yes, sir. I appreciate it. Bring it full circle. We will see you tomorrow live again at 11:00 a.m. more or less. Guys, day two is tomorrow, guys. See you then.