Quadrillions: Stablecoins: We’ve Only Just Begun | Mohamed Afifi

Transcript

A lot of the difficulty is building on stable coins which today is super expensive. It's super fragmented. So some of these cool platforms that are out there today working with some unique chains and and other unique uh uh companies are really building sort of unique solutions for uh different segments of the market. So I think we're just starting honestly in terms of like scratching the surface of where we're heading. >> Quadrillions is a miniseries produced by Blockworks and is sponsored by Canton Network. Nothing on this show is a recommendation to buy or sell securities or tokens. It's forformational purposes only. And the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the

views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in companies, funds, or projects discussed, including those related to Canton network. All right, everyone. Welcome back to Quadrillions. This is episode five of our series with Canton. Very excited to have uh Eric Sariniki, co-founder of Canton, back on the show. We've also got Mo uh who's one of the co-founders of Hi-Fi. HiFi is a financial infrastructure platform. They provide software uh the software layer for programmable money. And they uh are sitting at the backbone of a lot of stuff happening in stable coins, which is what I want to make episode five all about. I think stable coins have gone from basically zero to 300 billion in assets over the last, you know, really

like five years. Um, but I think the message of this episode should be we've really only just begun with stablecoin. So, we want to basically spend an hour exploring stablecoin. So, Eric, welcome back. Obviously, good to have you. And Mo, welcome to the show, man. >> Thank you. Thank you for having me. Um, really excited to be here. Um, close friends with with Eric and the Canton family. So, um, very very grateful to to be a part of this episode. Thank you. >> Eric, you have any nice words that you want to say about the show, about me right now? I'm kidding. I'm kidding. Let's um Eric, I will throw it to you maybe for uh to you know, you've been in the industry for so long. I think you've seen you've seen pre-stable coins to now, you know, you saw the early beginnings of stable coins where is

really just like Tether being used to trade crypto as like a a pair asset to, you know, moving into emerging markets and now it's kind of becoming not just this thing that crypto funds used to trade with, but it's becoming like a big B2B uh infrastructure play. maybe give me like almost the state of the state of the unions for stable coins as you see them today and like really talk about the evolution of where they've gone and where you see them going. >> Yeah, I mean I'm going to rehash a little bit of your summary, but yeah, I mean way way back in the day early early crypto trading Cumberland days, it was very difficult to get a bank account at all. So to hold your cash holdings anywhere and then in particular to move it across the the exchanges. the

exchanges were in all sorts of uh pretty difficult to reach jurisdictions as well. So it just kind of further exacerbated the problem. So moving money around, rebalancing, participating in different ecosystems that was a major early driver of the of the adoption of the stable coin and with DeFi that you know amplified even further, right? So being able to do those types of activities onchain and uh and to be able to interact with those you know use cases directly using a stable coin that opened up a whole new ecosystem of use cases. It's great to see this evolution.

It's great to see that maturation right. So from that early kernel and seed of uh immediate utility and demonstrating what you know an onchain money vehicle would look like and then growing into this everexpanding B2B ecosystem all the way up into the the recent CFTC announcement about uh exploring stable coins for variation margin in trad context. So it's it's really demonstrating what a 24 by7 programmable money vehicle can do and uh you know from humble beginnings and a very discreet use case up to a very broad and and generally useful uh mechanism.

>> What do you guys think? I remember um remember May 2020 when Paul Tudtor Jones called Bitcoin the fastest horse in the race and then that kind of like took the career risk down for hedge fund managers to own Bitcoin. I feel like there was some moment in time in the last year or two where that happened for stable coins. Um, and it just feels like I don't know at some at some point in the last year or two, stable coins have just have seen this parabolic growth. What do you guys Maybe Mo, I'd be curious like where do you think what was that Paul Ter Jones moment for stable coins? >> Yeah, I think I think from our perspective it's really seeing um how it's removed the friction from the payment systems today. Um, so it's no longer um just just involved in crypto

and DeFi. there's actually real utility with regards to crossber payments and that's sort of where we're seeing a lot of the inflection today in in the adoption. I think um the experimental technology um was experimented with a few years back. Uh even when we first started this company four four and a half years ago, no one really wanted to listen to us as it was relating to stable coins and now it's sort of the hot hottest thesis uh out right now. But uh in terms of in terms of what we're seeing um you know they're no longer experimental technologies. They're they're in production today. They're they're moving immense value around the world. Uh processing large volumes on a daily basis for some some some massive uh players in the space and and we see it sort of um as an enabler and and

helping sort of the bank infrastructure out. I think um there's this context and a notion of where people might have heard the term uh uh stable coin sandwich before and we'll dive into that deeper in terms of what that actually means. But I think as more infrastructure companies are are providing services that are sort of abstracting the complexities of building on top of stable coins, we'll start to see more of that adoption happening. Um, but initial use cases really are trending towards crossber payments. Um, and a lot of corporate treasuries as well that are starting to get involved. >> Yeah. What was the moment? What was the reason what that like kicked off this uh fervor of stablecoin interest? Was it was it just the understanding that like uh you know regulation and clarity like

you know genius was actually happening and we just needed good regulation or was there like a a use case problem or a tech problem that got solved? What do you think kicked it off? >> Um I think a couple things baked into sort of your question. I think the first the first step is obviously getting clarity from a regulatory perspective. Um no more are the days operating in sort of a gray landscape with genius now here you know there's no turning the pages back. We're not going backwards. So um stable coins are here and I think that sort of gave the confidence and the trust to the rest of the world to start interacting with stable coins uh for those that weren't already sort of exploring how they can deploy them into their workflows. Um but I think some of the early adopters are those that are

really understood the value of uh of what a stable coin is right and sort of that nonvatility risk uh having it issued by a trusted partner with reserves. So once a lot of issuers also started uh coming into the market and and and sort of giving that trust to the community uh is where we saw sort of that hyper hyper adoption inflation happening and then as other participants are popping up in the ecosystem other infra players other liquidity partners you start to see sort of this interoperability layer which sort of takes and abstracts away uh a lot of the difficulties building on stable coins which today is super expensive it's super fragmented so some of these cool platforms that are out there today

working with some unique chains and and other unique uh uh companies are really building sort of unique solutions for uh different segments of the market. So I think we're just starting honestly in terms of like scratching the surface of where we're heading. Um but in terms of the early days I think definitely regulatory clarity uh was something that helped catapult the adoption. >> But can can I ask you Mo I mean you guys were building before that right? So like >> that's right. Yeah. What what kind of what was the early genesis of the idea for Hi-Fi? Like like what even before you had that clarity? You must have had an inkling for this. So what kind of gave you that sense?

>> Yeah, really it just goes back to like some core fundamental issues with the financial system today, right? So like slower settlement times, right? The high cost, the fragmentation of the networks and we saw that you know a lot of these problems were solved by the inherent technology in blockchains today. And we really wanted to like pull that value out and give real world utility and real world value to to the world. Um and and that's sort of what we spent the first like three two and a half years of the company trying to figure out. But it was really a lot of these these issues that you see in traditional finance in the financial world today.

>> Mo, how did you think about if that's the problem, what should the business model be? Like do you know probably one idea is like let's go compete with circle and tether. Another is let's become an infrastructure provider. Like uh you know Eric mentioned the stablecoin sandwich. There's this whole stack of stablecoin infra that's getting built out. Like how did you think about what is the right place to play in that stack? And actually I'd love to just hear your take of like what that stack looks like today. >> Yeah. Yeah. So we saw like in in the beginning in the early days like I mentioned we didn't really know how to extract that value but we saw that stable coins like real utility was within payments. Um, so I think for us, we wanted to envision a world where anyone can dream or or or want to deploy

stable coins into existing workflows in a really simplistic manner. And and how do they do that today, right? It's going through different providers, working with issuers, going through wallet infrastructure providers, working with corresponding bank relationships and and building out your own compliance stack. And again like having all these pieces that you sort of need to build out to have these like production grade enterprise level compliant flows ready to deploy uh that sit sort of adjacent to traditional financial rails today. And and the way we thought about it was like okay we know that you know it's difficult to build you know on on on say a stable coin issuer today right you can't go directly to them and how do you bring fiat uh uh onchain and how do you

solve for the compliance risks and adhering to BSA and AML uh regulation so we thought let's try to bring a lot of these components inhouse and sort of piece together uh all these fragmented areas where we can provide sort of this API solution where customers can come in and sort of think about like, hey, uh, I want to build a remance application to send money back home, uh, to to Nigeria. How could we do that? Again, like you would need multiple uh, correspondent relationships. You might need interoperability and bridging and swapping between coins and and different blockchains. But again, like where can we provide the most value to our customers? And it took time like meeting

with customers, listening to them, hearing their problems and sort of building out this interoperable system where you can come to us with uh USDT on Tron and and we can swap it into USD USDC or USDCX on on Canton and then liquidate that out to another local market. So we really wanted to like bring this connective tissue to allow developers and other corporations to to build and deploy stable coins onto their workflows in in the most seamless manner. I'm sure you guys had an idea of like who the customer set would be for this like no maybe you know you you create this you think it's going to be remittance apps sending money back to Nigeria like you said what has it actually been in practice like who are the developers and the founders who who actually build on hi-fi >> yeah it's it's really a broad range so

we we service two cohorts uh uh mainly so the first one think you know financial institutions traditional crossber payments companies remance applications and then on the second hand think of uh corporation ation, a large Fortune 100 or a Fortune 500 looking to um uh enhance their cash management system or their treasury management operations to earn yield on idle cash, right? To be more efficient in remittances across subsidiaries around the world or have the opportunity to uh go in and out of uh uh tokenized treasuries more efficiently, right? Like for example, there's a number of uh of of pro projects and programs that we're working on with some clients in Japan

that are looking to uh have the ability to go in and out of tokenized treasuries more more efficiently. So, we're able to work on on a really cool project with with Eric and the team uh in terms of tokenizing treasuries and leveraging high-fi rails and stable coins to go in and out of these treasuries. So they're able to earn that that that that that yield on that idle cash and have more efficient money movement flows around the world. So it's a really broad uh uh spectrum of clients. We even have like twoerson developer teams that are YC that are building some like really cool things that we couldn't even imagine, you know, just two years ago. So I think like what I'm most excited about is seeing some of these unique use cases start to pop up. Um and I think the future's bright. What do you think in

terms of uh let's let's dig into crossber payments a little bit more. Um is it's a use case that everybody talks about, right? But maybe you can actually tell me like what specific parts of the uh supply chain of like a crossber payment stable coins actually help with. Um and then there's a second question that I would have later on which is in related to that which is you know you've got these companies like transfer wise and Western Union and remitt are those people just going to use stable coins to keep market share and to drive their cost down or are there going to be new competitors to to Western Union who pop up who who end up doing better than them. So maybe yeah two-part question there.

>> Sure. Um so for the first part regarding like crossber payments like we're really seeing this pop up obviously uh is in emerging markets where it's hard to access US dollars. Um but with that being said um leveraging blockchain stable coins for for crossber transactions really gives you the the opportunity to do uh two core things and that's number one is to uh uh increase your velocity on transaction time. So a lot more efficient in terms of moving money globally by essentially being able to bypass the Swift network completely.

Uh number two is is reduction in cost right without intermediaries and with gas with gas fees near zero. Uh it's extremely costefficient um for companies to leverage stable coins today to move money you know from the US to Singapore or wherever uh their use cases may may demand. Um, in terms of the second part of your question, uh, some of these large crossber payments companies today, I think are are just scratching the surface like I mentioned in terms of deploying stable coins into their workflows. And I think it's it's not a matter of of do they need to do this? It's a matter of when will they do this because if not, they will be left behind. There will be new technologies that evolve and that will capture that

market share from them. So unless they start to innovate leveraging stable coin benefits, um then it's going to be really hard for them to compete with the next wave of of fintech companies that are that are popping up because I think over the next like five to seven years, every company will be powered by stable coins. >> Yeah. I mean, I was going to say something along the lines of like in general when you find these disruptive techs, it's always both, right? You get some new entrance that come in and carve out really differentiated businesses within that new capability. And there are those that find ways to leverage it to be just more efficient over their existing edge. And some of those, you know, some of those existing incumbents in this motion, you know, where they have a tremendous amount of edge is like last mile connectivity and even a

physical footprint, you know, and and uh existing customer relationships and processes. And those things are those are a lot easier to imagine going away than in practice they really are. You know those are very durable sorts of relationships that people have grown accustomed to and have used over you know a long period of time in their in their own life. So it generally tends to be both is my understanding. >> Eric, how do you see the market for stable? So right now the market I should have looked this up before this but the market share for um stable coins is roughly what USDC and tether own like I don't know 80% market share right now maybe 80 85 um but it's been falling um how do you think about like the market share of these and you know if Mo is successful and hi-fi builds and

thousands of people using it you're going to actually have this proliferation of stable coins you're kind of seeing that already like CLA is launching their own stable coin uh Cloudflare is launching their own stable coin so maybe we get millions of stable coins what is the market share of these stable coins look like in like five years. >> I think I said it [sighs and gasps] with Belshi when we were on and Justin like this tweet that I can't unsee which is you know congratulations we've invented hyperfragmented money and and so I'm sorry for repeating myself a little bit but I >> it's clear that we will have more before we have less. Yeah, >> I don't know what the consolidation path looks like, but generally speaking, there's going to be some either

aggregation or consolidation because people don't really want to be aware of these distinctions. So where there might be implementation details under the hood and it's abstracted from the user, I could see how that could be durable when it's something that is exposed to the user and is, you know, fragmenting liquidity because you would list Bitcoin versus C versus T versus N other things. And I could see that being uh, you know, counterproductive. So, I'm I'm not really sure what the endgame is, but at least an abstracted experience over a single currency, I think, is probably where we land at some point. Um, whether that's aggregation or consolidation, I I don't I lack the

crystal ball to say clearly. >> Mel, what do you think? >> I couldn't agree more. I think there's going to be a world where every country will have their own stable coin and that's when we'll really have like global interoperability. Um and at this stage I I I I see stable coins popping up every other day and um they each have sort of a unique purpose or unique use case. Um so they claim but I think you know in the long run I think there will be some sort of consolidation where only uh dominant uh stable coins in within each country are sort of going to be the winning ones.

>> Yeah. I mean, we kind of like have synthetically many stable coins today. >> Yeah. >> This is not, you know, apples to apples are exactly the same, but you know, when I'm inside Venmo, I'm in their ecosystem. You know, for all intents and purposes, I'm moving. >> You're technically sitting in their stable right now. >> That's right. I mean, you know, I'm sitting in their bank balances. I'm moving money across their customers. You know, I'm I'm in this I'm in this like loop that is very much a Venmo loop. And then when I hop across that into into cash app, that's a different loop, right? So like we we already have this today when you think about commercial bank money to an extent, but again as it's abstracted to the user, it's dollars, right? It's not Venmo dollars

or or Cash App dollars. It's dollars. >> So should Venmo launch? Well, I guess they they've done it. PYUSD. Like what is the why should PY What is the benefit for PayPal to have PYUSD? I mean, I I think that what it allows them to do is is to experiment with, well, what are the ways to think about the incentives that we build around this ecosystem? And they're in control of that. It allows them to think about, okay, well, should there be some feature of this thing that would make it more advantageous to integrate with our system for some reason? It allows them to have the uh agency to make those changes instead of having to rely upon somebody else. But at the end of the day it might turn out that it's like

actually as long as these you know general stable supported these things it would be fine. That might be a finding or it might be no we have sufficient edge here and doing this oursel in our ecosystem that we'll maintain this and keep it going. Um but I I think that if if everyone goes into it with open eyes saying I'm I'm doing this to figure out everything that I need to know to make a a long-term strategic decision about are we doing our own? Are we doing others? Are we doing both? How do we make that work? If if if it's understood under that context, then I think it could be a really powerful >> Yeah.

>> motion for them. >> Mo, do you think every tech company should get a stable coin? >> Uh, no. I do not. I think every every tech company should work on um ensuring that stable coins are invisible in their in their end application to their users. I think that's where we're going to see uh real mass adoption happening. like Eric mentioned, um, you know, if we can eliminate and abstract the the complexities of interacting with some of these applications that involve blockchain and stable coins today and sort of have it be invisible in the back end and have the front-end experience be something that consumers are used to, then I think that's just going to help as well in terms of of of of mass

adoption. And I'm not sure if if if if having your own stable coin will sort of help solve that. Should FinTech have their own stable coins? Like should Revolute and Robin Hood? >> They could for the reasons Eric mentioned just to have more control over like testing and seeing what could work instead of having you know limitations by some issuers then having your own stable coin obviously gives you more flexibility to work your own programs. But um if if if that stable coin is wrapping another stable coin then like what do we really solve? >> I think I think what people don't know the answer to yet. So, like the only the only part of your question that I kind of reject or or like I'm reacting negatively to is the should like I don't really know that I know whether or not it makes sense for them or not to do it

because what's evolving. I think what the these networks are doing a really good job of doing is kind of breaking down vertical silos into more horizontal services. Like even if you look at the prediction markets that are onchain, they're getting integrated more through like on onchain smart contract interfaces. So that's even becoming more horizontal the way you would interact with it as opposed to going to the thing, logging into the thing, depositing your money with that thing. These are increasingly becoming more like from my wallet where I have my assets, I interact with this marketplace. And so in that evolution, it's not clear to me yet what the like horizontal components are and how you might carve out like a subset of that that is relevant to your marketplace or

your venue. So I don't think anybody can say with certainty yet and and I'm totally in favor of people pushing the boundary of that understanding and and helping us all kind of see how the how the chips could fall. Um I I I think it's too early to say definitively one way or another. >> Yeah. Eric, what decisions and thesis around stable coins did you guys have when you guys were thinking about just basically the stable coin strategy for Canton? Like how did you build out this strategy? What is the strategy? Is it just the same as all the other chains or is there like some unique thing that you guys did?

>> Uh there's definitely I mean we're we're a fast follower here for a lot of others. You know fast follower in you know kind of air quotes. >> You got to do the obvious things. You got to get USDC on. You got to Yeah. >> Right. So I think that there there are elements that are obvious which is that for a general purpose L1 neutrality is is really important. So making sure that we are supportive of many and that we don't really push one or another that all of them have equal footing and and equal opportunity in the in the broader ecosystem. That that's a very obvious and important one. The other is to figure out what we could offer that's differentiated to those to those issuers so that they have a reason to come and it's not just another sort of tick of the box. And for us, we're we're

generally pushing two two narratives there. And one is around just the added privacy layer to what you would ordinarily already do. So unlocking new opportunities or improving interactions over existing opportunities. you know, think about um how easy it is to see where someone might get stopped out of a perp dex or the types of uh bets that people are making in prediction markets, right? So, being able to help people protect that information through things they're already doing or think about the use cases that everyone's talking about going into international remittances, corporate treasury, stuff like that, they all all of those things benefit from privacy. And the other the other avenue is around the connectivity into the capital markets layer. So being able to interact in those with those stable

coins with things like treasuries and you know Mo was mentioning corporate treasury but there's also just you know improving the backend of those assets. How do we create and redeem them? How do we think about connecting repo markets to the stable coin uh creation redemption process stuff like that. So so thinking about how the wholesale capital markets make the product better and thinking about how the features of the ecosystem give them access to new opportunities or improved opportunities. >> Yeah. What about um I I was reading your guys's announcement with Circle and uh you didn't just you didn't just bring you know the announcement wasn't oh we have USDC on Canton it's USDC X what is the uh what is the difference with USDC X I'll let Circle speak to this because that you know this is very much their

motion but uh they are experimenting with ways to bring USDC into more ecosystems and to make it more broadly available and we were really happy to be part of this initial launch. around the X reserve. It's it's attempting to find a middle ground between totally permissionless, you know, bridge risktaking moving of USDC into different ecosystems versus interjecting Circle a little bit more directly into that process. So, um it is um it's part of their motion to help them broaden access to USDC into more and more ecosystems and give those those local ecosystems uh an opportunity to express USDC a little

bit more uh in the local variant and give it a little bit more local edge. But for all intents and purposes, it's USDC, right? It's really >> that's really the most important thing to understand. >> Yeah. Mo, can you tell us about like the stack that you guys have had to work with at Hi-Fi? Like do you work with Circle? Are they are are they a partner or a competitor? Like Tether partner competitor, Anchorage partner competitor, bridge partner compet like how do you think about the kind of the ecosystem and the landscape of these stable coin players? >> Sure. So um a lot a lot of the ones you mentioned we work closely with um in terms of Circle uh even tether. So, the way our system is sort of set up, we're we're pretty agnostic as it relates to stable coins on our platform. Um, think

of us as sort of like that distribution layer for stable coin issuers to help other businesses connect into the infrastructure to deploy stable coins out into their existing workflows or build new ones like giving uh the Lego blocks to to allow builders to build on top of. Um, so for us, we're pretty agnostic like I mentioned as it relates to issuers and and different stable coins. uh even in terms of our our our blockchain support as well. Like that's part of like uh the beauty within our system. It's that it's completely interoperable between many different blockchains agnostic as it relates to stable coins. Um and in terms of our stack um we're we're we're working closely obviously with correspondent banks around the world. We work closely

uh with the circle payments network uh as well. Uh we also work closely with uh Visa to uh allow us to pay out to 170 countries. Uh something we're super excited about. So um based on uh our network of of providers and that we work with and are integrated into our system, we have many different routes that we can route flows to and from. Uh and it's dependent sort of on on the corridor uh and the demand and the use case uh in terms of how we route that. For example, if we have a large FI that's coming in, very focused on uh permission based transactions or having that privacy element. Obviously, we'd be working closely with the Canton team to move flows over over that over over Canton

network. Um but yeah, in terms of our stack, like it's really interoperable and we want to remain that way because for us, we think, you know, what was exciting is that we don't know what's going to get built on stable coins in the future and we want to be there and play that pivotal shift. when folks are thinking about how do I deploy, when do I deploy, what stable coin should I deploy with, we want to give them that optionality in order to explore and build on top of. >> Yeah. Mo, how important is privacy as a, you know, I'm sure when you're talking to folks, you're pitching the the features of the Hi-Fi platform. How important is uh yeah, basically privacy for these developers and the founders for what they're building?

>> Extremely. I mean, if you just think about you as an individual and how important privacy is to us as people in everyday world, right? Like why does that change when as it relates to payments or transactions over a network? Um, so what we're seeing is is sort of this this large interest in in in privacy and and private transactions. Uh, obviously we're we're we're pitching it as well to large financial institutions that are looking for help with intraank settlement. Um because for them, you know, why would one financial institution want another financial institution uh to be able to see their transactions publicly on a ledger? It just doesn't make sense. But with permissionbased blockchains uh like

Canton, you you have the opportunity to not only have the counterparties have the visibility, but you could also invite regulators uh if needed to sort of have that same level of visibility as well. So having that control um and that privacy uh is sort of really important for for large institutions today. >> Eric, can you maybe talk about what you guys have seen on the ground with like as stable coins have started to flow onto the network? What is the I don't know why Yeah. why do customers like using using Canton? Yeah, I mean privacy is like one of those things that's been talked about for a long time, but then being able to actually use it in anger is something it's not just an experiment in Canton like it it works at scale. You

can use it without worrying about things like minting bugs and zero knowledge and stuff like that. So you can really you can really step into it and make it part of your your whole your whole strategy. you can present it to your customers in a very transparent way. Like in for example um you know you don't have to go to them and kind of apologize and say well we have privacy but it's anonymity so I'm not really sure how you would be compliant in it. people can go to those issuers and those customers and give a very fullthroated support of it which is you'll see absolutely everything that's going on for your coin on the network but others won't you know and that allows you to be compliant in these ways and it allows you to create something that feels and looks exactly like a bank

account does on web two today and so just like being able to have these very clear consistent statements about why this is appropriate for her to use it I actually the the the the emotion I experience most often is kind of like relief you know like there's I think that there's this like growing understanding that okay, I can kind of get away with this. I can kind of get away with this, but like at some point this is going to matter enough that I can't and I I won't really know what to do at that point. I hope someone kind of bails me out. That that's a that's kind of a common in the back of their head concern that I see fairly consistently with people in other ecosystems. And then being able to be presented with, no, no, it's cool. Like, yeah, keep scaling. Here's your path to doing this

in a responsible way. and being able to bring more stuff on chain and not hide everything in one giant omnibus account but actually segregate customer accounts and give them better forms of control and visibility into what they are doing because you don't have to try to offiscate that on chain like it helps them improve their product offering to their customers as well and that that that's where that's where I think it kind of becomes like a win-winwin across the board. So that that that that to me those are the most fun conversations. >> Yeah. Mo, is there anything broken in the stable coin stack today as you you know you guys are deeper into building this infrastructure than most? Like what what what's not working? Like what what still needs to get built? Is it or maybe it's not even a tech problem. Maybe it's

a liquidity problem. Um or maybe it's a last mile problem. Like I'd love to hear the Yeah. the things that aren't working as we go into 26. >> Yeah. Um I think the ecosystem is still fragmented and that's sort of uh some of the pain points we hear from a lot of customers is they need to go to a certain wallet provider to provide certain types of wallet capabilities. They need to uh build on top of base or build on top of Canton or ETH and um you know it's taken them hours of development time. So I think that fragmentation is and the interoperability piece is is sort of still missing that is going to enable that next generation of applications and UX to be built out. So like from an

infra perspective I think it's really fragmentation. I think liquidity is pretty is getting solid if it's not already solid. But in terms of having uh like I mentioned like stable coins being visible for the end users and the applications, I think there's still like an opportunity to build out that middle infra layer. >> Yeah, it's it's still too too tribal. That that's how I kind of say this to a lot of people is that you know when I think about uh you know really good wallet experiences that you find in general blockchain space today that fragmentation is starting to get really cumbersome. You know, like if I go to pick USDC, I'm scrolling through tons of options. And you know, ultimately all I really want to do is send some money to

a friend or a business or buy something or settle a transaction. And I think what's preventing that experience from getting built into a lot of these wallets is that a lot of these wallets are born out of certain ecosystems. So they're quite tribal and that fragmentation um benefits their flavor that they prefer. If you were to abstract all those chains and just say to a user, hey, send a hundred bucks from Eric to MO and then you expose features that they care about. You want it to be fast and cheap. You want that to be private or shielded. you want that to I don't know get sent as cash or onchain like if you expose kind of that high level of an

option a lot of these chains would get abstracted into the same bucket and it would become hyper hyper competitive very quickly because to the user when you take the kind of religiousness of the specific flavor of chain that they're that they're interested in that feature that gets surfaced to them is very crowded in some of those zones more than others so I think that's part Part of why you haven't seen that experience get built yet is that there's this like local vested interest in the wallet that came out of this ecosystem or came out of that ecosystem. And at the end of the day, the thing that ultimately will win is just like Eric Mo 100 bucks private.

Eric Mo 100 bucks cheap, you know, and then that that wallet has agency to determine where that would go. >> Where do Agentic uh Agentic payments and Aentic commerce come into this? Like if you read the Cloudflare announcement, I think they're I forget what they're calling it, Net Dollar or something like that. Like the main reason that they're launching it is, you know, quoteunquote agent commerce and if you talk to the Stripe team about their vision for Tempo and stable coins, it's a lot around, you know, AI to AI payments. I'd be I don't know if you guys have thought too deeply about this, but um yeah, curious curious how you guys see this world developing.

Um I definitely we believe that there's definitely going to be a world where um AI agents are going to be swallowing up payments for for for retail and consumers and institutions as well. So we're actually working on on deploying our own AI agents uh in 2026. But in addition to just having like AI be um sort of another channel for like payments to be executed, we want to also like think about AI for the user experience as well. So again like going back to like basics and like foundations of like you know getting onboarded onto the platform and going through like KYC and KYB how could we enhance that through AI today which is a little bit outside of scope of like agentic

payments that you're that you've asked about but we're seeing we're seeing sort of the developments in the early stages of AI agents start to come to market um that will be you know executing payment transactions for on behalf of individuals. So, uh, we're starting to gear up for that, but I think we're still sort of, uh, in the developing phase. >> Yeah. Eric, any thoughts on this one? >> I try not to comment on AI stuff because it's like a whole another deep niche >> of the world that I will only sound very stupid comment. [laughter] It's far from my my expertise.

>> That makes two of us actually. That makes two of us. What about um maybe a maybe a different place that we could go that'd be really curious to get Eric your take on is uh general general purpose change general purpose chains versus specialized chains and we've talked a little bit about this in the other episodes that we've done but maybe with uh how do you guys think about there are some payment and stable coin specific chains I think plasma another one was stable you know we see circle is launching um I forget what it's called arc I think it is their own chain um how do you guys think that these payment and stable coin specific chains will develop and kind of what are the pros and cons of those?

>> I mean, I'm super interested to hear Mo's point of view on this as someone who would be kind of, you know, more of a chain shopper than anyone. But my my my point of my point of view on this is that uh I think what you're seeing is is a common symptom of the fact that a lot of the chains that we have today just don't quite work because they don't offer configurability at certain important layers. Like if you look at a lot of these corporate chains, they want to fine-tune, well, what's the right amount of decentralization so that I can make some trade-offs about finality times or, you know, should I pick specifically who the validators are so that I could get sort of more deterministic or responsible behavior out of people or do I want to configure the fees to be in a stable coin instead

of the native currency. there are these kind of you know ballpark halfozen configurations that are driving a lot of L1 and L2 design and it's because when I go to use uh you know mainet L1 generally speaking those are predetermined for me and I I don't really I can't I can't configure that but the but the really sort of nasty um outcome of that in my opinion is it's not like there's this tendency that people think okay I'm going to build an L1 it's kind of like building a product or a platform form, but building a network is a whole another beast.

Network effects and ecosystem of compliments and the tradeoffs of what's good for the goose may not be good for the gander sort of a thing and and those sort of difficulties and trying to play that off of each other. The concept of building networks and network effects is a is a very tricky thing to get right. Not to say that people can't figure this out for platforms or products. Of course, many many successful companies have. Um, but I I think it would be better and this is a hallmark design choice of Canton that you would give people those configuration options within the same network. So it's completely possible to build something that has all the attributes of Arc or Tempo or any of these other systems in Canton and that it would still be

natively composable with everything else in the ecosystem. And that to me is really what's missing from a lot of these general purpose networks is that they're really not network of networks. And for the ones that tried to be network of networks thus far, um there's no composability across the subnets. So it it's it's the it's the process of okay, today you do this other thing and then you're in a bridge scenario to the rest of the world. Well, at that point, maybe I should just do my L1 or L2 because I'm not really part of the bigger network.

So, that that to me is kind of the just so many of these things proliferating is saying to me that that stuff um uh isn't really quite working for people today. >> I I would give an an I'll give a different point of view from what we're seeing from like a market perspective is excuse me. Um, a lot of times customers don't really care um, you know, which blockchain, you know, you're operating on. They just want the fastest and the cheapest method uh, to move money uh, leveraging the technology. Um, so with that said, there's there's always a question out there of like does the world need another L1? And I'm not sure the world does. there's there's plenty of plenty of options out there in terms

of specialized L1's and L2s um doing similar and different type things, but I think like we talked about earlier is like we're going to see sort of this consolidation happening where there's only going to be a few uh chains that are going to be specific to specific use cases that are just doing things a little bit better than the others. Um for our system it's again like one of our key factors is that we try to remain interoperable but um I could tell you that there are times when those configurations that Eric mentioned are are some sort of hurdles that our team is working to get over. Um but again from a market perspective a lot of people just don't care or know.

>> Yeah. Yeah. That's really interesting. Um maybe as we start to think about wrapping this up. Like I'd just love to hear uh any you guys are so close to the metal with a lot of what's happening with stable coins, is there anything that's starting to feel obvious to you um Eric and to you Mo that you think maybe the rest of the industry is missing? >> Oh god, obvious. No, I'm I'm not so egotistical to believe that [laughter] point of view should be considered obvious. Um, no. I mean, some some pattern I mean, if you're saying what are some things that stand out to me, what what some of the things that stand out to me are that uh a lot of what's driving stable coin flows right now are things that uh look a lot like a flow that could be

contained inside of like a Venmo or something like that. So, there's an incredible amount of sort of price pressure on these chains because the alternatives uh the tech requirements for the alternatives are very low. uh you know some in many ways like in the stable coin sandwich for example it's a even self-contained right like I just need a location to do this and I'll you know I'll take it with me and and I think that that's producing a lot of leverage to those to those entities driving those flows and that's creating a lot of downward price pressure on fees in the networks um and a lot of the stuff that has tremendous value like if you think about ETH's fee structure when you think of all the things you can

compose in ETH and all the DeFi use cases and all that sort of stuff that could justify a much higher fee than something like a stable coin sandwich workflow. So again, just kind of having this universal one price to do everything in the network is creating some interesting dynamics uh on these chains. And I don't know if that's good or bad or healthy or otherwise just that you kind of see a pretty pretty strong uh price war going on. Um and a lot of that just comes from very low barrier to switching costs and um and a lot of agency from entities like Ki. Uh so that that seems to be happening at scale in a lot of different areas. And the other is just that we are starting to scratch the

surface on the use cases that are outside the the casino. It's barely even landed yet. I mean, you see headlines every day about exemption here, you know, asking for approval to do this there, but those flows haven't really turned on yet. And the scales of those things are massive. So, it's kind of tempting to look at the current trends and go, "Oh, it's growing but modestly or not fast enough or whatever that may be, and they're not taking into account that these early stable coin workflows are helping prime the pump for acceptability of being in these ecosystems and using them and getting accustomed to using them and depending on them in certain ways. And then that's opening up the aperture to much bigger opportunities.

>> Yeah, well said, Eric. I I'll just um layer on top of that. I think like you mentioned um it's these opportunities that we don't see today. That is what's super exciting for us here. Every day um we're having conversations with new builders or new organizations that are looking to deploy stable coins in unique ways. um you know we talked about cross border we talked about remittances but payroll is also starting uh to pick up um so there's there's new use cases in different parts of the world that we're seeing start to happen and you know I think these type of like infrastructure companies providing the tooling the picks and the shovels for builders to actually build and deploy stable coins are going to be critical uh for the next

wave of adoption in order to uh allow builders to deploy sort of those unique experiences is for for for retail consumption or even uh B2B use cases. >> Yeah, 100%. Uh Mo, Eric, anything that we didn't talk about that you think we should cover here? Mo, could you could you talk about what you think the biggest one or two corridor opportunities are for you in terms of like not TAM because you know that that's just kind of an exercise in numbers but more this unique combination of there's an audience that's ready willing enable there are the right enablers in place like the right on and off ramp

components and you know that it's kind of underserved. Do you feel like there's a there's a zone on the map for you? >> I think I think Japan um into the US for tokenized treasuries is a huge opportunity that we're just starting to discover and explore. uh currently um with Japan being the number two holder of US dollar treasuries in the world and uh with their current economic situation, I think there's an immense opportunity to help institutions and large banks in Japan sort of go in and out of um the capital markets and tokenized treasuries really efficiently.

Uh so there are some pilots that will be um kicking off in early Q1 that we're super excited about. Um the other one is uh the UAE. Uh so I actually just spent uh the past three months in the UAE building up our operations there and our presence and uh with with Durham backstable coins now uh approved by the central bank for crossber movement. I think there's an opportunity there to unlock um some unique remittance corridors. For example, there's about $4 billion a year that flow uh to the Philippines. uh and that's just one specific corridor that we're seeing uh sort of that large uh money movement happening. But I think as start as countries start to spin up and dominant

um local currency backed stable coins start to uh come to life, we'll start seeing more opportunity to unlock sort of specific corridor crossber remance use cases. >> Nice. Awesome guys. Well, this is this is great. Eric, thanks for joining again as always. And yeah, Mo, a real pleasure to have you on, man. Congrats on everything with Hi-Fi. And I know it's just very early days uh with what you guys are building. So yeah, congrats. >> I appreciate it. [music] Yeah, thank you guys. >> Thank you.