Permissionless: America’s DeFi Renaissance | Eugene Chen & Merlin Egalite

Transcript

I do think that clarity in the US will also um create and push people to innovate and uh increase their usage and their exposure toward crypto in general just because they they need uh they need it and now that there's more clarity more fintex will be able to integrate that into the payment system into uh to provide earn and borrow saving account uh to their users. So, I think it's great for us, but it's also great for any country in the world. Quick shout out to today's sponsor, Katana. We'll hear more about Katana and their pre-eposit campaign later today, but for now, let's get into the episode. Hey everyone, quick disclaimer before we get

into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and the views expressed by anyone on the show are solely our opinions, not financial advice. our guests and I may hold positions in the companies, funds or projects discussed. Hello beautiful people. Um so yeah, today super excited to have a panel about uh the DeFi Renaissance in America that we've been seeing the last uh you know couple months. Um, so yeah, just to kick off, uh, maybe I'll let you guys do a brief, uh, brief intro about yourself, your project, and, uh, maybe like sort of your presence in the US.

Sure. Uh, I'm Eugene. I'm the co-founder and CEO at Ellipsus Labs. We do a bunch of different things in DeFi on Salana. We have a order book decks called Phoenix. We're the largest market maker on Salana. and uh we were working on the Atlas layer 2 blockchain. Um we started the company more than 2 years ago, 2 and a half years ago in New York City. We've never really considered leaving and it's really great to see uh so much of crypto coming back to the US and back to New York City in particular. All right. Um Merlin, co-founder of Mofo. So Mofo is a lending protocol deployed on multiple chains. Um it's one of the largest one with $6.5 billions of

dollars in total deposits. Uh we are the largest spending protocol on bay and uh I've been integrated by multiple um like central US centralized exchanges, fintex and and uh US-based protocols. Awesome. Um yeah, and I'm Monet Supply. I work for black analytica. We're a risk uh firm in DeFi. Um, I'm the only American on the team, but we are hoping to expand in the US, uh, when we can. Um, so maybe the next thing I'd be curious about is, um, thinking about sort of the new sense of regulatory clarity that we're starting to get in the US. Um, do you guys have a sense of what American DeFi might look like once

we have some of these key pieces of legislation like stable coin bill, market structure, a little bit more ironed out? So, first of all, I think it depends what actually passes. It looks like the stable coin bill is pretty likely to pass. Uh, market structure seems kind of up in the air. I'm not super plugged into what's going on in DC necessarily, but uh my sense is if we get both of these bills passed, almost no matter what they look like, it will at least provide some foundations for uh knowing what is what is like actually permitted.

There's a lot of carve outs in these bills for um you know sandboxes for innovation which I think is is quite positive even if we might uh disagree about you know some definitions around the margins. I think like one theme of uh operating in DeFi uh in America over the last uh three years or so has been everything is a gray area. Everything is all up to interpretation by the regulatory agency. And uh we've always viewed that as basically an abdication of uh responsibility by by Congress and now it seems like they're actually taking it up. So uh I think almost almost any regulation here is is likely to um uh to to be a good thing. We're going to have a little bit less uh

discretion by the regulatory agency which is uh something we'd view as friendly today but not guaranteed to be friendly uh in perpetuity. Right. Um I think like um uh US regulation is becoming clearer and uh with the genius act etc. is uh it will push people to innovate and they use more and more stable coin because now they you can do it or at least you know the rules and you can play with them. um so I think it's great for US companies, US-based companies, but at the same times because of u that clarity on stable coin, it can like um like increase the reach of stable coins, US

dollar uh based uh stable coins into other countries. So when I'm I'm thinking about the uh we deployed on world uh which is not not accessible yet in the US most of most countries are like in Asia East Asia, South America um Africa and there's a lot of usage of USDC USDT um on on on those um on those platforms and I do think that clarity in the US will also um create and push people to innovate and uh increase their usage and their exposure toward crypto in general just because they they they need uh they need it and now that

there's more clarity more fintex will be able to integrate that into their payment system into uh to provide earn and borrow saving account uh to their users. So I think it's great for us but it's also great for any country in the world. Nice. Yeah, agreed. Um, you touched on the idea of like FinTech offering uh savings accounts with stable coins, which I think is it's interesting because one of the maybe the most talked about parts of the stable coin bill is um potential prohibition on regulated US stable coins paying interest. Uh it's almost like sort of a way that the the banking industry is getting a little bit protected. Um so I'd be curious if you

guys have a view on, you know, is that positive for DeFi? Maybe it it like carves out an area where you can have a niche or is that going to hold DeFi back if they do prohibit um paying interest on stables? Maybe I can take this one. Uh so it's true that you can't provide uh the uh the yield from the TBLs backing the stable coins but if you create your own product for instance on top of Mofo uh if you lend lend out those USDC or USDT you can earn the yield. So you integrate you can integrate that in the saving account. Um so there's another way to kind of expose users and and get access to that yield.

It's not through like the yield of the tails but through the the yield that you can get from like landing those assets on on defy protocols uh such as mofo. This is something that we are seeing more and more um and and it's easy to to build now that that um I mean defi is mature enough to offer those use case and also have that abstraction layer that even a web two engineers or uh because fintex and centralized exchanges do do not really uh have um often web three and smart contract engineers. So you need that abstraction layer, but once you have it, you can provide access to like anyone on in the world to like almost risk-free rate via lending.

Yeah, I also think it's not super likely to be a huge deal. Well, I think the the main thing that is happening here is if you legitimize the stable coins and you ensure like uh basically like government says they're they're safe, the government's not going to try to the US government's not going to try to rugg all the stables at some point in the future. The product market fit for the US dollar around the world just like so insanely high that this like marginal 4% just doesn't matter whatsoever. uh you know in more than a hundred countries uh around the world the currency that people want to hold their savings in is the US dollar. They will go through hell and high water to get access to the dollar over the native currency um in in in their local and they're just not sensitive whatsoever to you know 4% um

4% of marginal yield. Um but yeah, it obviously creates some inefficiency in the market and I think the you know permissionless uh innovation layer in finance or or DeFi is is is quite likely to uh compete that margin down. Yeah. Yeah, definitely agreed. Um you guys both work with protocols that are like super integrated with the stable coins. Um, and I would say that USD has been kind of the the standout, like the most demanded um, stable coin and possibly some of this regulatory clarity in the US might cement that. But, um, do either of you see any like sort of upstart competitors like any other um, foreign

currency stable coins that users are, you know, excited about that might challenge uh, USD and your your protocols. I imagine you end up in a world where uh you know like you have at least 90% 95% US dollar dominance. There might be some other currencies that are used for uh remittances or uh yeah you know some some local currency that needs to get cashed out too. But to the extent that people are holding savings on chain um for the vast majority of people I think it's going to be dollars for a very long time. I think even within the um uh the crypto world, the crypto community, uh talking about BTC or Ether or other coins as stores of value, uh we still think we still see almost everything denominated in in dollars.

And yeah, I think there's a good reason for that. Yeah, I I I think I agree that um the dollar will still continue to um to to be the prevalent um assets stable coin in in the place. when I'm seeing like the European market uh we don't have like um I mean uh euro stable coin that have like a product market fit right now um with ma etc. is like it's taking a lot of time. Uh it's um there's a lot of hurdles for um wannabe champion in Europe and we have circle that I think we'll try to push more on that

front but it's still like just barely scratching the surface while like when we um we compare to like USC and US uh USDT their market shares like is phenomenal. So I don't expect like a euro stable coin to or even other um other currencies to um yeah overcome the US dollar anytime soon. Nice. All right. America will remain first for stables uh with any luck. This episode is sponsored by Katana. If your assets are sitting idly, they're dead. Katana is built from the ground up to bring your bags back to life. Be early to Katana by joining the

pre-eposit campaign before mainet opens at the end of this month. Follow the link in today's show notes to get started. Today's episode is brought to you by Ledger, the global leader in digital asset security. Celebrating 10 years of innovation, Ledger is trusted by 7 million users, secures 20% of the world's digital assets, and remains the most secure hardware wallet for your crypto and login. Follow the link in this episode's show notes to grab your Ledger today. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Uh maybe I'll pivot here. Um I think the US used to be a little bit of a dirty word for crypto and and crypto projects in particular. You would always um try and sort of duck whether you had a US presence, whether you had people

working there or providing services there. Um have either of you guys felt the vibe shifting on that? Are you are you more uh willing to present as like you know a US crypto enterprise or having a US presence being willing to serve US users? I mean for what it's worth, Ellipsis Labs has always presented as an American company operating proudly out of uh New York City. Uh but definitely feel the vibe shift. definitely feel or you know see many more uh companies that you know spent a very long time saying on Twitter like oh we are technically based in the Cayman Islands or whatever you know erasing all of their old tweets and saying we're proudly American again. Um

I mean I think at the margin it's definitely good for the US to you know onshore innovation to the extent that it's um that it's possible but I think right now is very much just uh you know vibes and it is coming from uh the expected future behavior of the regulatory agencies. Um there I think a lot of poor incentives set in the previous administration where we heard so many stories of hey like you're going to go try to engage with a regulator in good faith and then you know a month later they hit you with the wells notice because you know you let them know that you exist and that turned out to be the actual mistake. uh we hear a lot more of what seems to be like more productive engagement with the uh regulatory

agencies and uh I view that definitely as a as a step forward right on on our side um so the MO association is a French association so sorry about that um but um uh so we started we we still like a French association but now we are expanding in New York What we are seeing right now is like there's a big FOMO from institutions in the space especially in in in America to go on chain ASAP and so there's a huge work on education um um on our side to do this and and but to on board them on chain and do that education you need to be there in

person. So there's like a strong push on our side to uh dedicate a lot of lot more resources uh especially in New York which is like the like the biggest financial place where you can and so we are expanding our reach here. We do think that the biggest growth factor for us is the US is in New York. uh of course we don't like we don't forget the rest of the world South America East Asia which are like big markets as well um but uh this is definitely something that we have in mind and uh also the for instance our GC is uh US-based and uh because US is kind of leading like the regulation and so um

it's more important to have like a like fully compliance on on the US soil and And because the rest will can and will be somehow derived from what the US does uh on on on on their like uh in this region. Yeah, maybe uh maybe I'll p or sort of pivot to talking about um compliance a little bit and different trade-offs that you might see with that. Um, so the US is, at least perspectively, it's going to be ironing out its regulatory um, system a lot more. There will be a lot less gray areas. Um, but there's also going to be, you know, more potentially

more rules to follow, uh, rules of the road that you need to kind of adhere to. Um, so how do you think that you'll be able to compete, um, with other protocols who might be in kind of more wild west jurisdictions? Do you think that could be a competitive uh challenge for you or maybe a competitive advantage? I think what most teams really want is just uh you know a clear set of rules that need to be followed and you also really want to live in some incentive system where uh other folks are not rewarded for taking on significantly more risk. Um where you know you're not like penalized for following the rules. So, uh I guess

like the cost of compliance definitely uh definitely comes into play here. I think no matter what with any of these uh crypto businesses, there is always going to be some offshore jurisdiction where they're willing to be extreme or forced to be extremely extremely lax on enforcement or regulation altogether. Uh, and I don't think the US should ever attempt to really compete by being um, you know, the the easiest regime to comply within. The US has all these other advantages like the most capital in the world, the most talent in the world, uh, center of the global financial system. That should be more than enough to compete in um, uh, in crypto. And I think for companies that

are operating in the US, those are advantages that uh we're uh we're able to use. And you know, if there's like some cost of compliance, if you're like not allowed to do fraud, like okay, like fine, we'll we're pretty okay with that. So my hot take is um protocol should not have a flag or a nationality. So you should build protocol in such a way that is they're credibly neutral and you can on top of it like build any and and comply to any jurisdiction and any rules that u and so and but leave the protocol without enshrined compliance and not specific because you can't cater to all

regions and all jurisdictions. Um so protocol should not be unregulated and you should regulate apps which are um I mean perhaps US-based perhaps Europe based and then at the app level you do uh the the the compliance checks and you enforce the rule that are like aligned with the specific uh jurisdictions of that specific region. Um you can also have like build the protocol in such a way that you can um have flexib that is flexible enough so that you can have a compliance at the protocol level. Uh but um for instance uh unis swap before the hook you can

create whatever the whatever hook you want uh with like whatever the rule that you want as well and so you can be fully compliant for like the US regulation but also the re European regulation and and unis swap does not have to write those um those rules in advance. it's up to builders on top of of unis swap to create that. Uh same example with like the v2 of mofo. You'll be able to it will be like a intentbased lending protocol. So you'd be able to say hey I want only to trade with um people that have like kawi one two and three but others will say like I want to trade

with anyone and I don't care if they have like a kawi or not. And and this way you have maximum maximum flexibility. You're credibly neutral and you enable anyone to build on top of you. Yeah, I I really um kind of align with that idea that ideally the protocols are neutral and you know it would be great if we could have people operating on the same protocols all over the world and and deal with localization and sort of regulatory stuff at a a different level. Uh, one one question that I'd have is, um, because the US has such well-developed capital markets and just so much capital sits here, do you think there's a an angle where maybe the

US's regulatory regime becomes sort of internationally dominant and people model it based on what the US needs? So you kind of solve the localization issue that way or do you think it'll still remain very fragmented from a regulatory perspective? Yeah, it's an interesting question. Uh we like we see this pattern in I guess like other areas of regulation that are uh you know super global. The one that comes to mind is like air traffic control whereas like the US sets the standards and most of the other uh regulatory bodies in the world like mostly follow the same the same rules. Um

uh but finance is one where I think different different loces have different opinions on how freely capital ought to flow. Uh how much restrictions there should be on um you know capital formation. even things like starting uh like incorporating a company in the US looks very very very different from incorporating a company um elsewhere. Um uh and then especially because we're seeing all these different countries kind of jockeying for position one way or another with respect to crypto and crypto itself becoming so politicized not just in the US but uh globally. I'm a little skeptical that we're going to get some like unification of all the roles, right? So

I think that there there will be some sort of convergence among countries because if you at the like totally the opposite of the uh US regulation that means that you cut basically all your like um companies and and you cut yourself from the the capital that you can get access to uh from the US which is like a I mean uh most of our investors for instance are in based in the US. Uh so a lot of like the the innovation and the capital you can get even in Europe or any other uh in another place in that planet uh come from the US actually. So I think there

will be a convers take some time. Um I I think the that won't be a big problem. I mean even US regulated and public company like Coinbase are using permissionless market and permissionless pro protocol. Again an example is like the the Coinbase product um uh crypto backload product. They're using CBBTC USDC market on top of Mofo. Um Coinbase is regulated in the US. Uh they have like their own KYC and compliance checks. uh but behind the scene they use a permissionless protocol and they get access to uh global

liquidity uh which allows their users to get access to the cheapest and best rates and we have even institutions reaching out and how can you get um how can retail users get access to a better rates uh than what we can get in Trafi and the reason is that you have that global access to liquidity Um, and you have like many lenders into that depositing uses into that market. And so, uh, if you cut yourself on that, you're basically like undermining like the the growth potential and, uh, the the potential innovation that you could like um, yeah, you cut yourself from that. Shout out to today's sponsor,

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devices, Ledger Stacks and Ledger Flex, introduced the world's first secure touchcreens, making it easier and safer to manage your assets. Alongside Ledger Stacks and Ledger Flex, they have also launched the Ledger Security Key app, offering a safer alternative to traditional password management. Follow the link in today's show notes to get started with Ledger today. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Maybe one other like sort of question I have here is is kind of how how that sort of like localization to different regulatory regimes in the US but also uh in other places will work. Um both of your protocols are uh permissionless. They're

non-custodial. So there's pretty strong argument that you're not performing like sort of the typical regulated financial industry functions. Um you're just you're basically publishing code which is you know protected in most places as like free speech. Um, so I've seen I think A16Z is known for this, but I've seen it come up in in many places where people uh posit that frontends will be kind of the touch point where regulation from the US and from other places kind of comes into play. Um, do you do you think that D5 frontends might be the target of, you know, regulation, be kind of treated more like a broker dealer, or do you think that there's some, you

know, key differences between a front end and a and a BD that that makes it not going to be where the the regulation really uh meets the road? I mean I think there's like a philosophical difference for sure but I think just practically from the regulator's point of view uh if your job is if you view your job as uh consumer protection or uh compliance with some regulatory regime uh and then you want to enforce on some like vague uh some some vague thing that's like a protocol plus a front end and whatnot uh you need some handle that you can enforce on. And so in the past we've seen uh you know going after uh developers of the core protocol but uh

one thing we've been able to do with crypto is uh build these systems that are truly immutable these uh you know immutable smart contracts on the blockchain. So uh you know you can't necessarily take them down. That feels like it's part of the you know like regulatory arbitrage uh uh landscape. uh frontends in practice tend to be far less decentralized and far easier to censor than uh immutable smart contracts on the blockchain. And so I think that's like a natural area for a regulator to look at as if I don't like this you know class of activity that's the handle I can grab uh and do whatever enforcement I need to do on there. Of course, we know that it is possible to make uh effectively

immutable uh frontends that themselves live on decentralized architecture. So, uh I think if there's like mass movement towards uh enforcement against folks who are hosting DeFi frontends, then we're just going to see those uh also disappear into the ether. So, I don't think it's going to be particularly effective necessarily. uh and the regulatory apparatus is just going to have to figure out how they're going to how they want to deal with things that are actually effectively decentralized. totally separate question for protocols that uh are you know upgradable behind the the multi-IG um upgradeable behind even something

like uh governance uh those I think one could make a much stronger argument for them being custodial custodial and controllable and enforceable on nature. Yeah, I I I think it's um the logical conclusion that um with the previous commands um if you if you have like um immutable governance minimize protocol, it's just a piece of code, right? Uh that run autonomously etc. So how how do you regulate that? I don't think it's the right way. I don't think we should and I don't I don't think like technically it's possible especially if it's immutable to have all the rules of all the jurisdictions

uh written and shrine and deployed and that will and if it's immutable that means you can't upgrade and uh regulation is something that is dynamic that adapts over time that adapts like depending on the region so you can't like having everything enshrined on chain Um so the only solution for me is like indeed regulating front ends uh that are like behind the scene behind behind the front end. You have a company, an association, organization that is like um registered somewhere in a specific region uh with specific rules and this is where we should apply like the the the regulation because it's like

you have like physical persons behind that and it's way easier to apply the the uh the rule that you want but not at the protocol level. It's it it does not make sense and it's as if we were trying to regulate like SMTP or TCP IP protocols. It to me it does not make sense. Yeah. Yeah. Agreed. So maybe one other aspect that I find super interesting that might be unlocked with more clarity in the US. Um in the past couple years we've seen uh a lot of developments in sort of tokenization bringing um real world assets onchain uh letting people kind of uh use them in

DeFi uh stuff of this nature. Um but so far it's mainly been basically a thin wrapper where you have a fullyfledged product like a T- bill or some other sort of ETF and then you wrap it in a token and you can transfer it on chain. But that's the extent of how much is really happening on chain. It's just being wrapped. Um do you think that sort of more clarity in the US and maybe in other jurisdictions as well will let more of the capital markets process come on chain too like kind of a more fullyfledged uh internet capital market uh rather than um just wrapping you know assets that have already been issued and

kind of serviced offchain. Yeah, I think if we get more clarity on market structure, we're going to see a lot of this stuff just like totally explode. Um, you know, security has been this dirty word in American crypto for for quite some time. And this there's kind of this like catch 22 where a lot of these crypto tokens or crypto projects like, oh, there's no securities, which in some sense means like everything we're dealing with is totally valueless and totally circular in nature. uh and like that does not make for a good financial system, right?

The financial system inherently is like quite positive sum because there's like different risk transfers and value transfers that are happening. Um but a lot of the but if the if the assets are all worth zero in the terminal state, then you're no longer playing a positive sum game. You're playing a zero or maybe even negative sum game. So I think it'll be a huge unlock when we bring like real securities on chain. It's unclear are those going to be uh you know totally permissionless. you know, we do have this regulatory apparatus in the US that cares not only about uh investor protection, retail, especially retail investor protection, but also market integrity. Um, and so yeah, I just don't really imagine a world where everything gets like yolo shoved onto the chain.

But there's like a few properties of uh, you know, real assets being on the blockchain I think are quite desirable. Uh the first is just the the friction of moving things around on the blockchain is super super low. Uh you know very high relative to changing uh entries in a database but very low relative to the traditional financial system. So just like huge unlocks in you know friction and I guess like the the physics of assets moving around. Uh and the second thing is in crypto we figured out how to deal with these longtail assets. Um, not to say that traditional finance will never figure it out. Uh, in fact, like it should be much easier for them to copy

crypto than it is for crypto to copy tradi. But, uh, there's, I think, a lot of potentially underserved markets that have not been digitized are like quite inefficient because of that. Uh, and it's plausible that bringing them onto the blockchain uh, will increase the liquidity for these types of assets. Uh so I think all of that is is um is is quite exciting and it'll be nice to get away from this purely zero sum meta that we see in crypto where uh you know all the tokens are valueless and you have to even say that they're valueless. Um and like okay so then what is the point of

of uh trading them? You have to pre there's some utility. We all know there's there's no utility for any of these things. Uh they're not money. Um and so like yeah having a real things to trade uh is is going to be huge for for DeFi. Our theis at uh at Moro is that the the whole financial system will come on chain. That's for sure. There's no doubt. Just because it's cheaper, more efficient, you get access to global liquidity. There's the you'd get u better rates, better trade execution. um and it's running every day uh the whole year. So there's no doubt on that front.

I think right now institutions are coming more and more on chain but there's like some hurdles that um prevent them to move fast. So of course there's the regulation that is becoming clearer. So on that front it's became it it's better and better. uh there's also the just like the as I said previously the uh the education part where uh they need to form and and and teach their employees about that tech which is new and there's still like a lot of paperwork and and also right now um I mean we are token to tokenizing money market fund on chain but then there's no use case on chain because

there's no liquidity not enough liquidity to lend against those uh uh those apps assets etc. It's usually to side in marketplace, right? So you need to have to okay we tokenize asset now that let's create the use cases on chain. This is something that we've tried to do with Mofo where now there's um this uh you can put sacred um so to tokenized money market fund from the from Apollo uh fund and uh they it's the polygon um organization that borrows against this USDC and leverage to get access to uh the yield from the the acred money market fund. Uh but that's

just like the baby step the the the the first like proof of concept. Now we need to scale that um get uh get um get to a point where we just need to we just have to repeat that playbook and onboard any fund that want to do this and at some point it will be just a common practice and we will be able to to scale this and bring a lot lot more new fresh liquidity on chain. So it will take time. Uh don't I don't expect this to um I mean I expect this maybe to take one or two years uh to do that but anyone everyone is talking about it and is willing to do it

and asking also how they can repeat that. So this is a great thing. We just need to execute and and then do our part to to educate those. Do you worry about what happens if we take like all global assets and we put them onto this like permissionless leverage layer that's like super co-mingled? Sorry, I did not get the question. So, we're going to take all the assets in the world and then we're going to put them into like one giant pot of leverage. Uh, do you worry about like what could happen if we do that? So, that's uh that's a good question. I I I think it's too early to worry about that. I think it's a potential uh the this the thing is because it would be on

public blockchain or at least like you have like much more transparency than on like uh the current traditional uh financial system you'd be able to spot that and raise the alarm much earlier than you can do in like uh right now in Trafi. So if there the the whole financial system is overleveraged at least we'll see it and not at the last minute. I'll pop into I I think the transparency aspects um is far and away better than it is in traditional finance. So I feel like regulators should actually uh in some ways prefer that because they'll have much better line of sight into kind of where leverage is building up in

different parts of the system. Um and then also you know a lot of finance is uh like there's so much sort of uh credit extension between counterparties because stuff doesn't settle atomically. You know one half of a trade will settle and then basically the other person owes you money until their leg settles. Um and in you know financial crisis suddenly nobody trusts each other and the whole economy seizes up because uh that sort of extending credit to your counterparties doesn't work. So I think uh I think functionally like there's a lot of uh a lot of benefits we can get out of permission. Yeah, transparency makes sense. Uh I just worry that you

know crypto is always incentivized uh one taking on way more complexity and then two taking on uh more risk. there's always like kind of um uh well a lot of teams are willing to take on risk to to grow in the short term. Um and so and you know already within crypto we've seen things like that go uh wrong or maybe even very wrong and uh when those things happen I'm grateful that crypto is not dealing with real assets and so you know who knows what happens when we do.

Yeah. There's there's not really doovers in crypto. Like when money's gone, it's it's gone. So I think technical risk also is um challenging for sure. This episode is sponsored by Catria. Catria is the first zero knowledge rollup to enhance the capabilities of Bitcoin block space, enabling Bitcoin applications and unlocking Bitcoin's full potential as a programmable financial platform. With Citria, developers can now tap into Bitcoin's liquidity to build scalable payment systems, privacy solutions, and more. Citria is currently in its testnet phase and is approaching its mainet launch. To learn more about Citria, follow the link in today's show notes. As always, investments in blockchain technology

involve risk terms and conditions apply. Do your own research. So, we're coming up on time here. I guess maybe to close up, uh, I'd be curious if you guys could share what you think is like the five-year vision of how DeFi is going to develop in a more kind of regulated context. Do you think we're going to have a lot of convergence between DeFi and Wall Street or do you think that there's kind of still going to remain like parallel systems uh or you know, kind of any other thoughts you have about next couple years?

I think it's uh not really possible to predict anything on a fiveyear time horizon in crypto over the next year or so. Uh I think the pretty clear themes are increased adoption of stable coins uh both in the US and around the world. Uh we're seeing tons of uh traditional institutions uh you know really getting into into crypto there. I think to them is like pretty clear that uh there's like huge downside risk if you're not participating. Uh and then yeah, I think a lot also is going to hinge on this market structure bill what ends up in it and uh if it ultimately gets passed, right? Uh so as as I was saying

previously um I think like the whole financial system will undoubtly like go on chain that's for sure within a two years time frame. um like five years I agree it's it's it's a bit long uh two years time frame I think any large funds will have like at least tokenized their fund that's for sure I expect also to have companies like large companies originating bonds on chain so not tokenizing but like onchain origination I think this is a big step that we need to to uh to to to have so that like the the financial system can like go faster on chain Um I think like by two years all fintex will have like uh in the back end um

defy just because it's much more efficient you you provide better experience better product to your users and if you if as a fintech you don't you don't do take the leap uh you'll lag behind um I'm pretty sure of that. I think wallets and fintex will converge into the same category. So fintech will integrate wallets and and all the features that come come with it and wallets are understanding that they are not just a gateway to uh defy but they have customers and if they embed uh the classic fe fintech features they will retain more uh users and we'll be able also to also to monetize. So I

think I I see a big convergence of all actors. Some will be faster like centralized exchanges and fintex uh and and and some others will take like we'll do step by step because of their regulation constraints and their they have like a reputation um their reputation at stake but uh but it will come and uh and we're already seeing the demand. Awesome. Well, I think that's good as places as any to wrap up. Uh thanks everyone for uh stopping by. [Music]