LIVE From The Empire State: Canton Co-Founder Joins The Show

Transcript

[music] [music] >> 17 [music] 7 4 >> [music] >> We'll see you around the timeline. Feels good to be back. >> [music] >> I think The Rollup is one of the most premier media [singing] brands in crypto, and I love listening [music] to them. I think Andy and Robbie are great experts at everything they talk about, and it's my favorite podcast. [music]

Potentially multi-chain deployments. We are at Def Connect Day 1 here at the Consensus from Base. >> [music] [music] [music] [music] [music] [music] [music]

[music] [music] >> JP Morgan, BlackRock, 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. I'M SO BULLISH. >> He is bullish. I'm bullish. We're bullish. >> [music] [music] [music] [music] [music] [music]

[music] [music] [music] [music] [music]

>> Corolla is headed to the [music] top. If we're not already at the top, we're going to the top. We're on fourth floor today. We're going to be on floor one and then we're headed straight to the moon, boys. >> [music] >> The roll-up is my favorite. >> [music] [music] [music] [music] [music]

>> Floor five, zoom out. Institutions aren't coming, they're simply here. Take control of the nation of crypto, guys. Get right, let's go. >> [music] >> Welcome to the nest. See you on the show. Yes, sir. It's day two from the nest, live from the tokenization tower, the home of Neo Finance. >> The roll-up, live from the Empire State Building. >> First guest today. Welcome to day two. Pretty stoked. Guys, we got to give a shout-out to our boys at Plume. The nest wouldn't be possible without the Plume team.

Um they are actually absolutely cooking with their nest RWE vault product. Yeah. Um brings you the best yields off-chain, on-chain. Uh does a lot for you with their nest product and Plume, the RWA chain as well. Guys, we're live day two here. And our RWAs are a flagship of our Neo Finance thesis and everything that we have happening in New York, in the Empire State Building with Neo Finance tokenization and digital assets. Yep. Uh I'm pretty I'm pretty excited to have our first guest today. Good, man. Uh I think he just entered the building.

Good, man. Well, we got uh today's topics coming up. Uh we've got a full list of suite of topics from news to the uh state of affairs with Canton network and more. Um yeah guys. >> 15 minutes here before our first guest is going to join the show. Why don't we cut to our first segment? There we go. >> uh get started here. All righty, guys. Um, man. Yep, yesterday was the first first show here. Uh we had so much production work go down the last couple of days. I mean, it's been a 48 hours of of a journey. We're here again in the Empire State Building where the the leaders of digital assets and finance

converge. Um it's a beautiful day here. Guys, let's get rolling in. You know, uh yesterday we were talking >> Before we start, guys, Plume. One more time. The on-chain asset manager that you all need. Shout out to Plume. Check them out. Check out Plume. Again, guys, thank you so much for uh being a part of the show here today. >> we're we're talking about the next day, too. Obviously, Plume is instrumental in uh shaping the nest. They've been our launch partners of this office in the Empire State Building. And they are part of the DeFi space because it's about high-quality assets on-chain, putting those into DeFi mechanisms, and ultimately having a more efficient, more robust system for finance. Uh I want to ask you about day one. How do

you think day one went? >> Yeah, it was it was amazing. Well, I mean, we had a regime shift uh conversation here that really kind of laid the groundwork for what's coming in the future of this industry, of our show. Uh really was able to bring insights there that we have had and that we've been fostering for a while. Um and so it was very happy to be able to have that conversation open publicly um and kind of move through it. Uh we've got markets and weather today to cruise through. We've got timeline reactions, news. And yeah, we've got the Canton co-founder join the show. Shout out to Powered by Trezor. Shout out to Trezor, one of the best hardware wallets in the game, uh powering our topics. Today's topics by Trezor.

Um yeah. We're going to get right into it. It's another warm day in New York. I mean, come on. And you called it a slicker earlier. Slicker beauty, baby. Um let's Let's go over. Here we go. Before we get into the weather, let me tell you about Frax. Frax is the leader in stable coins, the future of digital money. FRX USD is live. Check them out at frax.com. Guys, it is a freaking slicker beauty today in New York City. Uh we're getting 74° on the uh uh uh on thermometer. I mean, it feels warm. I mean, it's it's shorts and t-shirts weather out.

Powered by Relay, some of the best cross-chain swaps in the entire ecosystem. A little bit of wind today. We got the fan in here cooking. Yeah, this is not a normal March after the the brutal brutal February. >> by snow. pushed back the launch of the Nest just a little bit. And uh now I'm glad that we did because now we have some beautiful weather that we've uh been fortunate enough to launch with. Um look, day one yesterday was incredible. Obviously, uh the Nest launch pumped the market. We literally uh you know, almost said that you know, the war has basically ended as a result. Oil came crashing down.

>> Yeah, oil did nuke. Hyperliquid is up. Yeah. Let's check the markets. So, let's go ahead and check it out. Yeah. We got uh another another green day here today, guys. Uh Bitcoin sitting at 70,782. Up quite a bit on the day. Ethereum sitting at 2071, back above that 2K mark. Solana just barely holding that $75 support. Uh Chainlink and NEAR also up. We are going to announce here today Chainlink is our sponsor for the DC Blockchain Summit.

And so, we're extremely excited about this because DC is somewhere where a lot of action is happening. There's plenty of things that are coming up from DC. We expect lots of announcements that are going to be coming out. Michael Saylor, Hester Peirce, who has been on the show. These are people that are doing extremely big things in DC. They're fans of crypto. They're fans of the entire digital asset convergence and evolution that we're seeing take place. And we're extremely fortunate and grateful to Chainlink for partnering with us in the DC Blockchain Summit. Also, shout out to the Digital Chamber themselves.

>> Yep. Big fans of the Digital Chamber and all the work that they've been up to over the over the Guys, I got something for you today. We're green. We got some bear spray. We're we're just going to exterminate bears all year long here in the nest. If you guys are watching, go ahead and go out there and get yourself a can of bear spray. a can of bear >> That that is a legitimate real can of bear spray. Um >> you should be >> We don't really support bears around here. I mean, you know, we'll see how this how this next couple months shake up, but Um yeah, this is outdoor safety, self-defense. And everyone needs a little self-defense against bears. So,

guys, this is bear spray officially sponsored by the Rollbit of course by Zama, who's powering all crypto prices, digital assets markets today. Um so guys, that's what's going on in the markets, and we're bullish as as you said, oil prices came down quite a bit. >> are down. Hyperliquid was first to discover price uh sentiment around oil. Yep. >> We saw that happening on the weekends. Also, as markets are closed in the traditional world, we're seeing Hyperliquid capture price discovery as the venue of choice for oil traders.

And generally, uh, Hyperliquid is is, uh, doing quite well. Um, and so, man, there's there's a lot to be excited about, which is why Yep. if you're, uh, if you're taking a look at what's around here, you don't need to be worried about the bear spray, uh, because you shouldn't be bearish. Bear are bear bears are done. All right, guys, that's the market for today. Uh, we actually have our first guest, Eric. He's in the studio. We're going to rip through some some of the news. Then we're going to get Eric up on the show. Um, and yeah, let's let's keep this thing rolling. Do it. You know, part of what Before we do, let me tell you about near.ai, the blockchain for AI. Iron Claw is the private, self-hosted version of Open Claw. Check it out at near.ai.

You guys can try out, uh, Iron Claw yourself. Near is the blockchain for AI. And guys, as as I said, we've got quite a few news topics to cover today. Starting off with privacy for Bitcoin, StarkNet rolled out a STRK-20 announcement, which allows privacy-embedded ERC-20s. So again, as we just talked about with Zama, who powers our digital assets market pricing, uh, StarkNet has has has just launched something quite similar. Um, it is now the the market is now one click away from privacy. We spoke about this yesterday, Rob. We need privacy on chain. We need it to have this kind of next leg of institutional adoption. Uh, privacy is very important. Well, we're

going hear a lot more from our first guest about how institutional privacy can work and why it's so important to these institutions. >> Yeah. Um, you know, we said yesterday about how banks don't like sharing their payment their depositors' information with other banks. Uh, blockchain is inherently more public place than some people may realize. >> Yep. >> Token standards are extremely important, especially as we're embedding privacy, uh, into the chain itself and into the asset layer. Remember, part of the Neo Finance thesis is also having an asset-centric view of the world, right? We've, uh, been part of the rise of DeFi protocols and chains. Usually, you have a chain. First thing you get is you get a lending protocol. You get a decentralized exchange. Maybe you get a yield aggregator or vault protocol on that chain. Now, we're seeing those

primitives at the asset layer. And that is causing us to take on a more asset-centric view of the world, which means these token standards or these asset standards are becoming increasingly important, especially as we add in more token primitives like privacy deeper into the protocol itself. Shout out to StarkNet for uh doing exactly this, listening to the market, and embedding privacy deep into the stack. Uh Canton also doing uh good work on the privacy side, especially for institutions. We're going to be speaking with the co-founder of Canton in a bit.

Before we do, Yeah, I mean, just just just something to add real quick on this. I think this is like privacy and anonymous swaps uh is going to be something that they're really trying to uh kind of uh pioneer here. Could really The idea here is that if you're a whale, you don't want to have your transactions shown publicly. I mean, I think this is just like pretty important from the from from the StarkNet perspective. So, guys, shout out to them. Um and we'll keep we'll keep it rolling. We thought this was cool, newsworthy. Up next is something pretty interesting. Paolo Ardoino put out uh this article about this AI-augmented BCI system, uh decoding neural signals to text with 98.3% accuracy for speech-impaired patients.

So, uh imagine you're a patient who or or you know, a you know, you you're you're mute or or or you can't uh properly function from the speech perspective. Tether is now uh taking a $200 million majority stake in Blackrock Neurotech. Um the use case is targeting ALS and paralysis patients, enabling communication through brain signal decoding. And as you guys have probably heard, we talked about this at our Nearcon uh San Francisco livestream, uh multiple companies are working on this sort of technology. It's it's almost part of the telepathy complex, where we're trying to read the brainwaves themselves, communicate those into

natural language. You can ultimately use those for a variety of things like prompting AI. Uh we talked about how Alter Ego is the company that launched this. It kind of kind of looks like these ear buds that fit into your ears. They go on your temples, and then all of a sudden you can communicate with people without ever speaking words. Uh this is obviously going to start with medical research, where we saw Neuralink, uh but there's all kinds of emerging technologies that >> Yes, sir. >> are seeking investment, and uh Pilot Ordinal is there to uh do exactly that. Guys, we're going to take a quick break.

We've got Eric here. We're going to get him set up, get things dialed in. We'll be right back in in just a second. >> Mhm.

>> Mhm. >> All righty guys, we're back here. We've

got Eric Saraneky in the office, in the nest, in the tokenization tower. Uh we're going to be talking about the rise of institutional blockchains, Canton. It's going to get fiery, it's going to get spicy. Eric, you're the first ever guest on the show >> Truly honored. >> in the office. You're live on air now. Welcome to the Welcome to the tokenization tower. Thank you very much for having me. This is exciting. Yeah, absolutely, man. Uh it's been a long time coming, uh but we're excited to have you. Uh and you guys are doing some great work in the space, so we're we're excited to chat. Maybe you can just tell us a little bit about yourself first off. Uh you know, what is some of your background and and uh generally how you ended up uh with Canton Network?

Yeah, sure. So, um uh I'm one of the co-founders of Digital Asset. I've been doing this 12 years. Prior to that, I spent about a decade at DRW. I got to join DRW super early, like down in the pits, paper sheets, fist fights sort of a thing. Uh I was like that uh University of Chicago football fraternity guy. So, I could do math in my head, but I can get in a fist fight at the same time. It was kind of like right place and time for me to go into the pits. Uh and I've been in Bitcoin since 2010, and I helped start Cumberland with uh one of the original pizza transaction guys. So, just kind of like you know, I I I've been lucky enough to have a auto you know, a group around me of people that have been super early into the space, and I just, you

know, kind of been very, very active in it. Um and we had kind of a dual mandate in Cumberland, which was market make and provide liquidity, which would bring more institutional demand, but also invest in the things that we thought was missing, or build the company if it didn't exist. And really, that was the origin story of Digital Asset was we were looking for things that were really going to bring institutions into the space to adopt and use these ecosystems, not just speculate on them, and we didn't really see anything that was taking that seriously. And that that goes all the way back to late 2013, early 2014, formally incorporated DA in '14, and left uh uh DRW for that not that long after.

So, how did you find Bitcoin early on? Yeah, I've been asked this a few times, and like my my actual memories are a little bit later than when I actually got started. You know, like I I will jokingly say something like oh, well, you could buy drugs with it online, but the Silk Road was 2011. Right. But, uh I'm trying to remember where I got in a little bit earlier. I think it just had to do with some like very early street transactions and kind of doing cash swaps for Bitcoin. I you know, stopped doing that once I saw the source of some of these Bitcoins, but you know, just uh I think it had a lot to do with that peer group that I had at TRW and some of the people that were very early. It was just kind of in the zeitgeist somehow

over there. Yeah, yeah. So, on our first episode uh here in the nest, it was yesterday, it was just Rob and I and we were talking a lot about how uh there's a regime shift ongoing in the space, uh right? We we're seeing the rise of the professional. We're seeing the the institutions come on board. We're seeing just this general uh shift in terms of token structures, equity structures, um how people are positioning their brands, all of that. Uh Canton has obviously been you know, it's been at least 3 years that you guys have have been creating this this uh entity and this blockchain. You guys have seen this coming.

What is this regime shift from your perspective? How would you describe this kind of maturation and growing up phase that that the industry is currently in? What's going to be gone? What's here to stay? Like what are we going to, you know, what what are our do's and don'ts? Yeah, okay. Well, I mean, not not to disagree with my gracious host to begin with, but uh I don't really agree with the sea shift. I mean, I think that it's more kind of a a growing awareness more than a than a shift. Like going back to the Cumberland days when we started this thing, you know, the Cumberland thing, I didn't start anything else. The you know, those are institutions. Those are really big firms. You know, people that are trading this for size are really big firms. You look at what Binance and Coinbase and OKX have become, they are

huge firms. These are institutions by every definition of the word. And you know, so if if, you know, if I agreed with the premise, what I would say is that that the children grew up and became really valuable. Uh but I think that it's always been the undercurrents from the beginning. I've personally rejected this sort of it's peer-to-peer censorship resistant decentralization disintermediation. That narrative has never resonated with me. Probably to my own financial detriment cuz I've never been as sort of like Yeah. psychologically committed to this like these other ecosystems. Uh and I've spent, you know, 12 years, you know, along with many other people building Digital Asset in Canton. So like that's really where my my passion is focused has been most of that time. But I I think it's more

the space has been very young. I won't use like negative words like juvenile or childish, but it has been for a very long time. And they're getting kind of squeezed out by Well, the next era of evolution is much larger scale and that is driven by different participants, generally speaking. And they have a different set of requirements. And so just kind of everybody waking up to that. Uh and even if it's yourself, I mean, think about it if you're a Bitcoin OG and you're getting, you know, threatened of being kidnapped in Paris right now. Like it it's a very visceral real moment of something that you've probably thought about a lot, but suddenly became very real. And that's partially driven by the global awareness. I mean, look out your window. Everybody here knows what Bitcoin is now. So like that sort

of general global awareness, people understanding how they can start to attack it, what it means for individuals. All this sort of stuff is kind of coming together at the same time. So I I think it's mostly just everybody waking up to what they already knew. And so you're saying the institutions were kind of already here. Yeah. Uh everyone's sort of waking up to that. Uh you see Bitcoin as sort of just another asset class. Yeah. Um nothing like uh truly groundbreaking in a certain sense. Nothing It It is, you know, It It's groundbreaking in the sense that uh you know, you have this distributed ledger technology. Maybe that's a bit more groundbreaking. But as an asset class, an alternative currency, we have gold, right? We have we have these sorts of things. What What is the mandate that you set out for Digital

Asset in Canton. Given the thesis that you already explained, right, we kind of have this opportunity to work through the emergence of this new asset class with new technology, what was the value that you saw it could provide early on? And and how did you set out to to support that with Canton? I mean, I I sometimes say this is like we're the last industry where when I click the button in my phone, it doesn't actually happen. Yeah. I I think about every other thing in the past decade that has completely changed around, you know, the phone in my pocket yet somehow finance still.

Mhm. And and that's true whether you're trading, you're moving money, like the front end of everything has moved unbelievably fast, but the back end hasn't budged an inch. >> Mhm. And you know, there's a lot of entrenched reasons for that, but it's always been trying to close that gap. Because sometimes it does actually happen for you when you click the button, but the way that that happened is someone used their balance sheet or someone plugged a hole with risk capital or someone is extending some credit at the last mile to make that happen. And so it's it's not that these experiences aren't creatable, but they're not really scalable. And when you like zoom out, it's almost mind-blowing how much capital sits in the system to just kind

of hedge these risks. Mhm. And I always think about the latency of the system and the capital that sits there as being a tax on humanity. Mhm. And it's not really accretive to anybody. There isn't anyone like absolutely printing money because of these latencies. Like generally, if you're one of these intermediaries, it's your balance sheet that you're putting up front to kind of help facilitate this. So it's not really to a lot of people's benefit that it's happening. It is a general tax. And that's what kind of sets the scene that it's actually possible to fix the problem. Cuz you're not fighting against a lot of entrenched interests. You have other incentive and cold start problems, but you don't really have like activist people against it. Mhm. Mhm.

Like sometimes in health care space, we spent a lot of time looking at the healthcare space early on. Often the entity that has the capital to fix the problem benefits from the problem and so it's just there it's like a non-starter. But in capital markets generally speaking the problems in this system are that we already live in a distributed ledger, but our protocol for consistency is reconciliation. Mhm. And we have an opportunity to upgrade that into something that's actually a real-time reconciliation system. Yeah, and I that's part of why I think we feel like this technology is inevitable. Uh not the asset class, but the technology itself is sort of a net net positive win-win for everyone that tends to adopt it and more so as more people adopt it as network effects and liquidity start to build on these

networks. Do you would you agree with that sentiment? Do you think that it's essentially a no-brainer tokenization, digital assets, lower settlement times, uh greater understanding of where the risk lies at any given point? Uh ultimately this is a benefit beneficiary benefit benefit to all of the institutions that tend to adopt this technology. I would have agreed with you 5 years ago. But I think that uh you know, again, I'm we've been in this 12 years. This is kind of my third or fourth sort of corporate blockchain cycle that I've lived through and they've all failed.

You know, to be clear, we are definitively not one, but you know, I've seen a number of you know, these these corporate blockchain cycles come and go and for me what I find so compelling about all these public networks to be spicy, the tech is often really quite poor. Mhm. I mean, maybe not the actual implementation, but like the design. We're going to be the network for the world, but we're one we're one singleton vertically constrained system. Like it it's just kind of like very naive. Um but the tokenomics are really interesting because you have these cold start problems in any network that you like can you name the first 10 apps that came into the internet? You know, there there are only first-mover disadvantages in some of these networks. If you're

going to be the adopter, you're going to be the builder, you're dealing with the worst version of the tech, you're dealing with an ecosystem that doesn't have users yet. You don't have the asset you want to interact with yet. Like so, creating a financial layer of first mover advantages, where technologically there are only disadvantages, I think is something that you really have to embrace. And it was something that we did quite thoughtfully as part of the Kanto network. Like it was just tech for a long time to make sure we really ironed out like can the tech meet the actual requirements of the users? Are there no obvious reasons to veto this or prevent us from using it or, you know, like all that sort of stuff. So, just when there's not a lot at stake other than kind of a pure tech vendor system, like really iron that design

out. And that was the first, you know, 5 to 7 years of our of our lives. But then, you know, for more than the past 3 years, probably the better part of the last four and change has really been about designing the tokenomics and refining the tokenomics. And that's where I think that the combination of the two is what will win. One without the other, I don't think has much of a place, and it's easy to just say it's just the tech. But you know, to be quite empathetic to these institutions, if I am someone that runs a business at a large institution, I'm getting P&L'd and paid annually. And if I have to make a three- or a four-year sort of tech bet, that's hard to do without something like it just I'm going to take on costs and I'm going to take on risk to eventually remove cost

and risk is a very difficult calculus given the incentive structures inside the institution. So, you have to kind of recognize that and meet that where it is, and create an incentive structure that matches their incentive structure. And aligned incentives is at so many layers of the stack. It's not just, you know, like hype where you burn all the fees or like in Kanto and we burn all the fees. It's not just at that layer. You have to think about, well, who's getting them? Where is it being distributed? Who's earning it? What can they do with it? There's so many elements to it, and and we learn more every single day. Yeah.

Yeah, I mean, it [clears throat] seems so, right? You guys are collaborating with, you know, JP Morgan, DTCC, a lot of these institutional folks at scale. And this is aligned with this kind of ongoing current gap in sentiment, right? Where you've got these kind of crypto Twitter token bear market ongoing where there's this the you know, on the on the other side you've got this kind of institutional scale tokenization stable coins. Everyone's running a POC for a blockchain or some sort of application. You guys seem to actually have the same positioning right now from a brand perspective. It seems like institutions love you guys. JP Morgan, DTCC, on the validator side, on the on on on that kind of side. And then on the retail sentiment side, people on on on Twitter and across kind of

conversations they're like, "Is Canton a blockchain? What is it? It's private. It's a black box. You have no idea what it even is. You know, who's running this thing? Is there any censorship resistance?" And so you've got all this really interesting place to be. What do you have to say to that? Like like >> You earlier said that Canton is not a corporate chain. You've gone through multiple >> But that is for sure what what they would kind of box you in as. What do you have to say to the position of Canton with regards to this kind of gap in sentiment at large in the industry? Why does Why does crypto Twitter hate you guys?

Uh I mean, Look, I'll I'll give you a good faith answer, but let me give you a shitty spicy answer first. It's because they're looking in the mirror and they realize the emperor has no clothes. Okay. You know, they're they're holding something that they can't actually explain the path to delivering the vision that they've been sold. And it's a scary thing to do. Like it's it's tough to put your own money, your own personality, your own identity into something, which is what these communities have all been great at. It's like sucking up all this sentiment and interest and you know, G whatever you're on, you know, like screaming it every morning on Twitter. Like that that's that's an incredible thing.

But then at some point there's got to be some substance there, right? And a lot of these things don't really have substance. You know, there there's so little creativity or iteration over the original idea. Even even ETH, which I think has produced an outrageously different outcome to Bitcoin, the design decisions are almost identical. >> Yeah. Almost identical. And I lived through a period, so the way I tell it is not necessarily the way that they felt it or they they believe it or any of that sort of stuff, but from my perspective as a very early Bitcoiner or a Bitcoin maxi, it was always Bitcoin plus smart contracts. And it was proof of work. And it was like, "We're going to have sound money, but with programmability." They found product market fit in a very different zone.

They found it in DeFi. >> Yeah. But then none of their incentives, none of their design, none of their structure, none of how they think about the network, none of that is built for DeFi. And then downstream of ETH, it's, "Well, how can we compete over consensus mechanism?" Cuz it was slow and expensive for a short period of time. There is so little experimentation outside of it. I'm so like pumped. I know you guys are hype boys, but I love hype. I think hype is great because it's like Hey, Base is completely completely centralized, so why can't we do the same thing and like just kind of Yeah. But actually provide value and focus on value and drop some of this religiousness. And like so so it it's just it's so interesting to me that where people apply their religious filter. Yep. And it's very clearly being

applied to us where it isn't being applied in other ecosystems. Or maybe you've lived through it a little bit more directly in the hype world where it was probably being religiously hit over the head too for a while until the value was so overwhelmingly obvious that they couldn't ignore it any longer. And I think that the the things that will stand the test of time and already have, are the things that are pragmatic and deliver value to the user, which is not a I don't think that's a hot take at all. Like what why does almost everybody access the network through Binance and OKX and Coinbase or Fireblocks or you know, MetaMask. I mean, these are all directly intermediated experiences through an institution.

why why do they dominate? Because they provide real value to the user. And like they do every day, they get better at those things every single day. Yeah. Uh you know, so I just I I get it. Like there's this kind of I'm holding a bag on something that I don't know how to justify why it should be worth more. >> Yeah. And that game is kind of shifting very quickly under people's feet. And you know, we may or may not stand the test of time, but you know, I believe that we have a very differentiated and thoughtful alternative to what you might already have in your bag. Yeah, I mean, we were talking about the evolution of of kind of the structure of tokens as of this new administration post hyperliquid. Obviously, we love that, but um you know, we we were talking

about how the how the pendulum has shifted so far into the direct calculation of what your revenue is right now. And and doing PDE ratios and really a a lot of like very short-term oriented financial modeling. Whereas in the past, what we've been sold by influencers or institutions or anyone with a platform is this Metcalfe's law rule of network effects on L1s and how blockchains have this kind of special property where uh you know, you're able to scale based on the number of users. This should you know, create more transaction fees, build a more resilient kind of uh overall blockchain that is worth a lot.

The pendulum has shifted so far away from that, away from any optimism in this kind of bearish phase towards this like what's your what's your 24-hour uh you know, fees and revenue on DeFi Llama? What does that look like? And then how can we kind of like make a valuation uh game based on that? And so I you know, I kind of think the pendulum will kind of shift back towards more somewhere in the middle where like revenue is welcomed, but also we're understanding that we're very early in kind of like this liquid venture type of of investing. So to put you on the spot a bit here, Kadena network, I think it's trading around 3 to 4 billion, in that kind of range. I thought it was 5 and 1/2. 5 and 1/2.

Thanks thanks for correcting me. Um why is Canton worth 5 and 1/2 billion? I know it's really low right now. It's crazy. Okay. Um >> [laughter] >> Yo. You don't think so? I mean come I mean look at look at the multiples on fees that some of these other ecosystems are getting. >> Yeah. Okay, let me let me build it let me build a story from like first principles. >> hear it. No, no, please. >> So so um you know, I I don't know that the pendulum is going to swing back all that much because you have an audience coming in that's just a lot more thoughtful and they're going to make longer-term decisions. Like the idea of just kind of these waves of retail coming in and out and letting people out of their

liquidity, they've been taught the lesson too many times that that's not going to work out for them. Yeah. Right? So I think that what you're similar to your liquid venture statement, you know, imagine if you're going and raising money in the valley, you you have to make like a credible business argument, even if it's early. Here's what I do, here's the problem that I solve, here's how I'm going to capture some portion of that value that I solve, and you're going to get graded on every round through some progression of those metrics and they may evolve, but they're the metrics get harder and harder as you go up the value chain, right? They don't they don't get easier.

Yeah. So I don't I don't really anticipate that if we think that the the value of these worlds are going to expand, whether because they're facilitating higher value things or because the tokens themselves are more valuable, that you won't be held to a higher standard as we go. So I actually think it's more likely that the pendulum hasn't swung far enough, honestly. Um >> I like it. And then, you know, in terms of like how did we do this? I mean we launched, you know, foundation in the US, peak Gensler hunting heads, digital asset headquartered in New York City.

Uh we have publicly traded financial institutions that were part of the launch. Um, they'd never held crypto before. It's on their balance sheet. You know, we wanted that. Like, we wanted it to be an ecosystem that that was eligible for people. And one of the things that we said is, "Well, can I do like a discounted cash flow analysis on the value of the token? Like, how what would I have to design to make that possible?" And I think that being able to be able to map how what happens in the ecosystem directly translates into value of the token. If you don't have a really strong story about that, then I don't think you really have a story at all. So, I actually think that the pendulum hasn't gone far enough. Um, and then, you know, in that regard, you know, there are two things that we

really focus on in the network when we think about the success of the ecosystem. And we are not a company. It's not centralized. It's not run by a couple entities. It is truly a decentralized ecosystem. But, if you were to think about it like you would a publicly-traded company, Yeah. you would kind of care about roughly two things. You would care about revenues, top-line revenues, and that they're growing, right? So, for us, that's burn in the network. Fees, every dollar of fees is burned. So, that's a one-to-one relationship. That's automatic. That's in the protocol. There's no discretion. Every single time someone uses the the network, and it has fees, those fees are burned. So, that is like a uh baked-in sort of thing. So, we're always trying to grow fees or burn, period. And then, just like any other company, you

would say, "Well, what's the quality of this revenue? You know, are you you know, is that positive margins? Do you have high churn? You know, there there are many different ways to think about the quality of revenue, but one of the ones that we're really focused on are like the durability of the things that are driving the fees. Right? If you to pick two extremes, if one is meme coin trading, which we expect to come and go with fads, and, you know, be hotter than and then disappear at some point in time, it's not very durable, right? We don't really know what the long-term, you know, high-water sustained mark of activity in that is on the complete opposite end of the spectrum, payroll is insanely durable. Maybe there are more

companies, maybe there are more employees or less, but that happens without failure, right? Bank financing happens without failure. Repo happens without failure because that's part of that bank financing. So, we are trying to be as deep into that inelastic side of the curve or that durable side of the curve as we can be. Are we 100% there? No, we're not. We're still, you know, somewhere in between the two. But, that is our constant drive and focus is to push the quality of that burn as far to the right in that spectrum as possible. The reason is that you should get better multiples on fees the further into the durability side of the the curve that you are, right? And right now when you look at these other ecosystems, they are getting insane multiples on fees

>> Yep. that don't even translate to value to the token holder. >> Call them out. Who? I'm not going to >> Call them out. I got you. >> going to name the names because they don't have burn mechanics >> Yeah. that are, you know, you're you're double dipping. Validators get the emissions and the fees, that's double dipping. That's a classic example of a Bitcoin design decision that leaked into the other ecosystems that doesn't belong. >> Yeah. Right? If I have permanent emissions and I have fees that go to the validators that's double dipping. >> Well, then you just can't count the validator emissions as any sort of protocol revenue. That's just not That's just inflation.

>> but I just mean part of the speed run to zero fees in a lot of these networks is that there's no structural reason for the fees to exist. Like if you got rid of fees in one of these top 10 networks that don't have burn, the validators are still going to be there. Mhm. >> And are the fees that are generated on Canton's network is it primarily paying like the equivalent of a gas fee trying to get uh settlement onto a shared block space or is it something that's a little bit different because you guys are coordinating transactions amongst institutions with durable >> It's any update. Any update on the chain generates fees. and we've set the price pretty high. Like it's expensive right now, honestly, because I think that this like speed run to negative, you know, fees is nuts. I think that it's not

really thinking about the long term. Um but one really important thing about the fees in the network is that they are not paid to the validators. They are paid to the app that you're interacting with. It's kind of like interchange. So, you know, if if the minimum fee in the network were a high number, and your use case meant that that was an untenable thing, well, the app that you're using could choose to pass through its revenues to offset some of your costs, right? Like think about the way interchange works. You use your credit card, generates a lot of fees, you're getting points or cash back, and that's a very competitive market as people think about how to play with that margin for customer acquisition cost and how to balance their their margins versus CAC. Right? So, um the fees in the network go to the apps in the

network, which is a fundamental, I think, mistake of the other ecosystems. >> All All the other uh incentives are primarily going for the validators to upkeep the network. But so so then >> It's over weights. Right. And and we've had some of our most viral moments on this show talking about how uh staking rewards are are over inflated, >> Insane. uh overpaying for security. There is some sort of minimal viable uh what what is that incentive in the Canton network to incentivize validators to participate? >> talk to security about the kind of termination of that program with the validators upcoming, I I believe the end of the month or Yeah, so the original design of the network is that the only sort of like permanent emissions that go for not really doing anything other than

providing infrastructure goes to what's called the super validators. All the validator and the app rewards are earned pro rata to your activity in the network. But because we did a completely fair launch, we did zero tokens in the beginning, no pre-mine, no pre-sale, nobody had anything. If your rewards are generated based on using the network, you're not listed anywhere yet cuz I couldn't go give 5% of the float to an exchange to get listed. And I can't buy them on the market. Like how do I use the thing? So we had a bootstrapping issue. And so into all the validators we added an emissions element to it to help this initial sort of bootstrapping. Yep. And it was the remainder of if there is activity rewards, if there's anything left, pro rata distribute that to the

infrastructure that exists. >> So the effect it was effectively like a block reward similar to Bitcoin. >> that's right. And when listing happened and there was sufficient distribution of inventory into the market so people could buy it on just about any major exchange on Earth and there was a broad distribution of it already, there's no need to continue to just distribute the block rewards. >> The block rewards that are not significant distributed. And especially since there's already this other reward mechanism designed in there which is all around activity in the network. All right, so if you're an active validator in the network, you're making significant, you know, returns from a from a rewards perspective. Uh, but there was no need to have this incremental block reward. So that's that's what's been phased out.

>> Yeah. So we're just going to the original white back to the original white paper structure of all this stuff. Like I said, we've learned through, you know, hard lessons learned. There's not a lot of people that have gone down the path that we have. >> Yep. And so we've bumped into some realities along the way that the thing I'm most proud about our community is that it is insanely proactive about making changes. And we have a So the foundation is like an open governance thing. Anybody on Earth can join it. If you guys wanted to join the foundation, I would love to have you. You honestly can join. Uh, it's structured the same way that like the Linux Foundation is. So there's a membership fee, but you guys are less than a few thousand people so your membership fee would be very reasonable.

There you go. And you can then participate. Weekly there is a tech and ops call. There are marketing calls. There's a tokenomics review. There you know, there's so many things. In the to In the weekly tokenomics meeting, we sometimes have 150 organizations show up. >> Wow. I don't I can't remember the last time we had less than 100. Nice. So I was there. And it is a lively, active conversation. We cover a lot of ground. We discuss a lot of contentious things. And, you know, then we actively vote on these things and and make adjustments as we go. Um and I think that that's a very important part of a lively, thriving ecosystem is that you can see we intended A, we got Z.

Should we try something different? And I think that if you don't acknowledge that it is a bit of a living organism and that you don't have the right machinery in place to adjust that organism in a fair, truly, like open way across a bunch of different participants, then it's it's very hard, very hard to actually acc- accomplish your goals. So, I was going to ask the question if you would expect some validators to drop off since that subsidy is no longer being but I would imagine that, you know, over 100 people, you know, join these calls, these you know, 100-plus organizations joining. You're comfortable with, you know, the amount that is going to continue and the people that are going to drop off every, you know, you you won't struggle with that.

>> if I remember correctly, I think this got got approved before the end of the year. And I think we're two of three step downs into the process so far. We still have a waiting list in excess of 1,000 validators to join the network. Very cool. Um and and when I say waiting list, like a lot of people maybe just a touch on one like fairly fun thing for people Oh, it's a permission to blow It's not. It's just rate-limited, you know, like we're just trying to do responsible growth. >> Mhm. It's There's no No one's getting KYC. No one's getting put through the wringer. No Like, it's just Okay, you you fill out a form online, you get prioritized against anyone else.

You know how you get to the top of the list? You're on testnet, you're ready to go. Yeah. That's like the number one criteria. Is your node actually running? You know what you're doing? You're ready to go? You have something to do? Cool. You're on the top of the list. Like, it's it's not it's not really very scientific, you know. And And it it it speaks to the amount of fees that you guys have flowing through the network now that people aren't going to drop off and they're no longer getting the subsidies. It means that you guys are generating significant fees to incentivize validators to continue joining the list. One of the primary sources of fees that I I had imagined, you mentioned them earlier, the repo market. You guys are doing there's some varying numbers here, but as of December 2025, 384 billion dollars

per day. Uh maybe more or less now, but on the scale of hundreds of billions of dollars per day via this partnership with Broadridge, this distributed ledger repo program. Yeah. Um what is you know, 384 billion dollars per day, what does that roughly equate to in terms of fees? And generally, I I'd love to understand more about how you've been able to bootstrap this repo program via Canton. >> like maybe just give us a bit of an education on what's happening first. >> you're you're not going to expect this answer. Okay. Zero. Zero fees. Zero fees.

So It is not Oh my gosh. >> currently doing anything through the mainnet. It will. Okay, but they've been in production for >> [snorts] >> well, I'm probably going on six years. Yeah. Um and, you know, one of the cool things about Canton is that it's this unlimited horizontal scalability ecosystem. And what's different about Canton versus, you know, we've seen a few iterations of that in the past. Again, I'm I'm not going to pick on anyone cuz I think that conceptually they're all very, very in the right direction, but execution they didn't hit it. The big delta is that we have global composability across all these subnets.

So, no bridging. Right? Like think about your experience on the internet. I've got one browser, I hit N websites. Mhm. Right? That's really the way that Canton works. I don't need a node for that subnet. I don't need a wallet that works with that subnet. I have a wallet, I hit N apps in the ecosystem. If I want to compose a bond at Goldman into a repo transaction at Broadridge, I can do that. That happens over the global synchronizer. Those things are coming. So, we're hitting these fees before we've even put these large-scale institutional things in some attached rate over the global synchronizer. The thing that will draw that into composing over the global synchronizer is the cash leg. So, today the cash leg on on that whole use case goes fed off-chain. So, it's it's the security,

it's the workflow, it's the prep, it's all that sort of stuff has material benefits for people before we even include the cash leg to it. When you say goes fed, you mean like the Fed wire transfer. Okay, so that's all that's happening. >> Yeah. But a lot of the operations is taking place on chain? Trade confirms, the scheduling, the the the asset itself, right? The settlement of the asset itself, all of that that is all on chain. But the cash leg is still going Fed wire. Okay. >> Because Okay. Stables today, they're we're just starting to get guidance that you can use them in capital markets context without massive balance sheet hits, but it wasn't true for a long time. Right. Right. And and

so even even then after that guidance, I think there'll still be some blockers to it, but that's why I'm so excited about stuff like JPM Coin and all that stuff going live cuz I think that's where you'll start to really see intraday repo, weekend repo, and I don't know if you've been following all the pilots we've been doing, but doing a repo on a Saturday morning for 2 hours is going to be incredible. Like the amount of adoption we're going to get for that sort of stuff. >> you tell us like what are some of the knock-on effects of that? We've talked high-level about how this, you know, lower settlement times, you you know, lower custody risk, counterparty risk, ultimately that's, you know, money saved, money earned, greater liquidity, you can move this money faster, higher capital velocity. Like specifically around like reserve management, right?

And like the change in the structure that these firms are going to have to undergo as a result. What is that actually What kind of value does that unlock? >> I'll give you I'll give you a few examples and I'll try to kind of jump on both sides of the aisle. So, let's start with I think our audience is is a little bit more crypto native. So, you know, I don't know that a lot of people realize this, but you can't at scale create or redeem USDC off hours outside of Fedwire hours. We used to be able to, but with the death of I can't remember if it was Signet or or Silvergate. I can't remember which one was the real backbone to a lot of this. But, the the creation redemption of USDC on a Saturday at scale, unless you co-bank with them, is very very very difficult.

Now, um what that means is if you're a large liquidity provider or a venue, you know, like an exchange, you have to carry what you guess your liabilities or working capital needs are going to be every day after the Fed closes and every weekend. I don't know if you guys remember, but Trump coin went nuts off Fedwire hours, and the market literally didn't have enough stablecoin liquidity to trade it. There's like a really great article, I forget where it was published, but I think Galaxy was lending billions of dollars of stablecoins to liquidity providers cuz they happened to have had the excess, you know, in that off hours, and they were delivering them to people to be

able to do it. So, this is material. It might be a half yard or a yard, 500 million to a billion dollars every night, every weekend. In the best-case scenario, you didn't need that much, and you lose some interest. The worst-case scenario is you miss the trade cuz you don't have enough working capital, right? The returns on missing on trades are way better than the interest on a risk-free bond, right? So, the So, the worst-case scenario is you need the money, you can't mint the money. Right? But, once you have an 24/7 repo facility, I can sit in a treasury 100% of the time, and I can deliver it to the issuer at any size,

and get stables minted from scratch, use them, and return them, and pay for 6 hours of interest if that's how long I needed the working capital for. Right? And that that's true in crypto markets, that's true in capital markets. Um you know, if you're talking about payments use cases, do you know how much pre-funding in the world is just kind of pre-placed in a different location? >> going to be my question is is so teams are or treasuries are over compensating with how much cash they might need over the weekend because they know that they can't get >> does this. You do this in your personal life.

Yeah. Why isn't every single penny of your PA invested 100% of the time? Into Canton. Well, because >> [laughter] >> Because you know, maybe you're going to go out at night you need some cash but you can't draw off your money market fund, right? And you're not going to pay the 42 and 1/2% interest charge to borrow cash against your credit card or whatever it is. Right. Right? So like you don't you sit over allocated into cash at all times, but if you could guarantee that I'm in a risk-free overnight rate and at any time I can materialize that into the form of cash that I need Correct. Cuz it might be a deposit, it might be a credit card payment, it might be cash, it might be a stablecoin. So

it's really any form of cash that you need. Mhm. Then that becomes like a very interesting optimization to do. And you know, for you know, for us maybe that's not going to make like, you know, the difference between a two-bedroom and a three-bedroom apartment for us, but for a international corporate that's doing this in you know, 152 jurisdictions around the world, this is a material number. Mhm. Yeah. So Eric, this is a good kind of segue into let's just talk about the size of this operation here. So if Canton is to succeed in its vision and mission, I think the repo market is doing 10 to 10 to 12 trillion dollars a day in total.

So that's one market, but just give a give us a sense of how big this, like, the broad TAM of something like Canton really is. Like, um, you know, let's let's think about the repo market, the uh, kind of treasury market, uh, the equities market. Just give me a sense of the bank financing, payroll financing, durable manufacturing. Like, how big are we talking here as far as like we're just scratching the surface of bringing this this type of activity on chain. Um, and then maybe just walk us through like what you see as the evolution of making that, slowly chipping away at those percentiles. I I I think that the number that I would say is like a ludicrous number, right? And and an argument I've been making with a lot of the you mentioned DeFi Llama before, but

with these types of institutions is that the way they've structured the reporting is it's all like knives out. Like, "Oh, I'm doing better than you." instead of like arms together, how much of the world's GDP have we rotated on chain? And I think it should be a joint mission for everybody to be rotating as much of the world's GDP on chain as we possibly can. >> Yeah. And so right now it's measured in probably sub basis points of the world GDP that's online. And we should be in the percentage points in the next, you know, couple two to three years. That would be an astronomical change to the world if we managed to pull that off. I don't think you'll ever get to 100% just as like I don't even think we have really 100% of finance on the internet today, you know?

So, I I'm not sure that that number is ever going to be bigger than 15-20%. But even if you got to 2%, it would make a material difference in the world. Um, and then, you know, to your question about like what's the path? Um, you know, when you have a TAM that's that big, the biggest problem is that you start to lose some focus. You could kind of go after anything and everything and then accomplish nothing whatsoever. And so, for us, you know, I try to keep this as tight as possible in our go-to-market motion. In every market I want four things and plus one. So, the the four things are I want the short duration government bonds in every location.

I want the commercial bank deposits in every location. I want the stable coins in every location. And I want the repo and spot uh bond markets. And not just individually, but all of them working together seamlessly. So, that I could go in and out of any one of those things as a lending transaction or a spot transaction at any time of the day. Now, if I have that in two jurisdictions, I now have a very interesting international settlement market. I could do a US government versus gilt settlement at scale cuz the bond markets are very deep.

And if that happened to have been part of an FX element, someone could go into a commercial bank deposit. If it happened to be part of, you know, permissionless payment, someone could go into a stable coin. Like, whatever that may be, I think you start to completely rewire the international capital market system with those four things. In addition, I think you also want the equities markets because it's just an obvious sort of where are people directing a lot of their money uh part of the equation, but it's not necessarily an enabler of the other four like those other four build upon each other. So, equities are still incredibly important because it's a massive sort of wealth draw, but it's not the same as the other. But, the equities market has very very similar characteristics. The lending market's very important, not just the spot market, you know, all the

creation redemption market for when you talk about like ETFs or baskets or structured products. So, it has almost the exact same dynamics um and they all play off of each other in very interesting ways. But, it's not necessarily the same sort of like international commerce enabler that getting the cash movement around the world correct would kind of do. So, largely bonds and cash of, you know, kind of every form and their fungibility and then the most obvious asset class that you would, you know, go in and out of with that cash. What does the fee landscape look like uh when you're primarily dealing with some of these, you know, cash cash assets or bonds, these are doing tremendous amounts of

volume on on a very frequent basis, but they're accustomed to relatively low fees. Who who are? I might be getting that. Yeah, so I I'm Well, let me just I guess I'll I'll frame it in terms of a question. Like, what is the current landscape of fees? What What are they accustomed to charging now and paying now? I think that's is the right question and then where can that go with Canton? I mean, things are calculated in basis points, generally speaking, in finance, right? I mean, it's it's very rare with the with the exceptions of like Swift infrastructure or you know, sometimes in the exchanges trade infrastructure that you're paying like a flat rate a message. Got it. Right? But generally speaking, the moment you get off the

infrastructure, you're in Bips land. Yeah. Right? So, I think that really where Canton stands as a direct alternative is to the existing messaging infrastructure that we have that plums all these things together. And you know, there there I think the long-term opportunity is for us to figure out sort of unit economic exchanges for like Like, if you think about the current price to use Canton network, think of it as like the peak variable rate. And we'll figure out ways to do kind of like unit economics in exchange for removing variance. Yeah. I I would anticipate we'll figure stuff out along those lines. We've We're having a bunch of conversations, but it's too early to like say that we know exactly how that's going to work. Yeah.

As we kind of come to a close here, just speaking to the Canton community at large, token holders, the validator network, the team, the the ecosystem, what what's next? What is the, you know, we we just talked about what that kind of cracking down on Bips by Bips to get the 10, 15, 20% of assets on chain in those four categories. That's going to take obviously a while this year, 2026, you know, first half of the year what what are we looking at what what are we looking at what >> year in the United States we will have all four.

Boom. All four in production. Uh and the second half of the year we will have them in various forms and at greater fidelities of production. This stuff is happening right now. Beauty. Um Eric, my last question for you is you know Canton was a fair launch. Uh Like what how do you how do you personally like I'm sure you have a bag, right? You might have bought some. >> I actually don't. >> So like how do you >> any Canton tokens. All the Canton coins that I have I've purchased on the open market. >> Okay. Got it. Right. Okay. I mean all the Canton that you purchased are on the are on the open market.

>> this from other content Canton members as well. >> I have equity in Digital Asset. I'm a founder of Digital Asset. Digital Asset has tokens. But it's a part of DA's balance sheet. It's not like it's in my wallet. >> Okay. Right. I I have the same claim to that that I would any cash or distributions that the company would make to all shareholders. And any Canton coin and I I know this to be true for every other employee of Digital Asset they've purchased on the market. There you go. I mean I I I've got an open plea out to people in the ecosystem to build me a gentic TWAP bot so that I could just buy every like 30 seconds for the next 100 days.

You know, stuff like that. Like I cuz I I really don't ever want to get caught in a situation where it's like I'm working with so many companies to help them go live. What's insider information? Like it just it's terrifying to me. >> No, of course. So just okay, how do I take all decision-making out of it? Just do a massive long-term constant continuous TWAP. You know, that sort of stuff is kind of where my my personal interest is on this. And uh and yeah, absolutely. I'm moving my balance sheet into it. And I also we're doing everything I can for me to get paid on chain, for me to rotate all of my investments on chain, all the things that I automatically do with all my cash, directing on chain. Anything that's like in any way comparable to the dividends that I get, I'm the first in

line to participate. Um so, yeah, I mean, we're we're trying to do everything that we can to, you know, eat our own dog food. >> Practice what you preach. Eric, thanks so much for coming on, man. >> Thanks for coming on. First guest in the nest. That's awesome. Live from the nest. Yes. Super. For joining. Guys, that wraps us up for today. Uh first guest in the studio live from from the tokenization tower powered by Plume. Ladies and gentlemen, we'll see you guys tomorrow. Thanks for joining. >> [music] [music]