Quadrillions: Unlocking Quadrillions | Don Wilson & Yuval Rooz

Transcript

Hey everyone, welcome to Quadrillions, a miniseries brought to you by both Block Works and Digital Asset, who's behind Canton Network. I'm really, really excited about this. The backstory here is I got to know Yvall and Eric, uh, two of the three co-founders of Digital Asset over the last couple of months. Got really excited about what Canton is building. I think it's very clear that privacy is becoming not just a behind-the-scenes uh talking point, but really one of the main narratives going into 2026. not only a narrative, it's I think consensus is forming that the main blocker between uh you know crypto of the last 15 years and crypto of the next 15 years is privacy and there are many many many many attempts on uh to build privacy in crypto right many people have

done this I'm not going to name all the names but many different attempts to do privacy and uh I think what Canton's doing is really interesting Canton you'll hear a lot of hype about them in the next couple of days and weeks and months and probably years the little known story is that digital asset has been building Canton for the last several years. Many of the biggest names in finance have not only invested in digital asset and in the Canton network, but have actually made trades and participated on this privacy first blockchain. So really excited to partner with Canton on this. The series is called Quadrillions because why stop at trillions? We're bringing quadrillions on chain and uh we've got six episodes.

Very excited for them. We have amazing names. everyone from the CFTC chairman Caroline Fam to CEO of BitGo Mike Belshi uh CTO of Trade Webb, Justin Peterson, Ellie Ben Sassan, uh the co-founder of Starkware, um and one of the founding scientists at Zcash, some amazing names, six-part series. So, yeah, I hope you enjoy it. You will get it in the Empire feed. We've also got a website if you want to send it to people. Quadrillionspod.com. That's quadrillionspod.com. So without further ado, I hope you guys enjoy Quadrillions. Quadrillions is a miniseries produced by Block Works 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 Block Works team may hold positions in companies, funds, or projects discussed, including those related to Canton Network. All right, everyone. Welcome to episode number one of Quadrillions. Very excited to be joined by two legends. We've got uh Don Wilson, founder and CEO of DRW and Cumberland. We've got Yvall Ruse, co-founder and CEO of Digital Asset, the creators of Canton, ex Citadel, XDRW as well. So, Don, clearly you've all did something right. you're still still stuck with him many years later, but yeah, you've all Don, welcome to the

show guys. >> Thanks for having us. >> Yeah. Yeah. Um well, I wanted to bring you guys both on because obviously um there's there's a lot of exciting stuff about Canton coming up. Um you guys have been working on this for a long time, but actually Don, I called a couple I want to start not with Canton, but I called a couple of your friends and said, "What what makes Don Dawn?" and um they said uh look mo most traders focus on the next deal or the next trade and Don is one of the few traders who thinks 10 to 15 years into the future. I'd love to just hear how this came to be.

>> Yeah, I don't know how to explain it, but it's the way my brain works. Um and uh you know, I'm usually way too early on things. Um, so yeah, I I mean I um uh was convinced that, you know, I I used to trade on the floor of the Chicago Merkantile Exchange and I was convinced that if the if the Merc hadn't completely transitioned to an electronic market by the year 2000 that they would be out of business and I was just so wrong. I mean the trading floor perpetuated for many many years after that. Um but um yeah it just uh just kind of how I

look at the world. >> Yeah. Yeah. Maybe give us the scope and size and just a brief history of DRW and then getting into also just your guys' crypto story is pretty pretty historic and getting into Cumberland. >> Yeah. So, so I uh um started DRW in 1992. At the time I was standing in the EUR dollar option pit. So that's three-month LIBORE options, interest rate options. Um and you know my I I mean I wrote all my own risk software uh built my own option uh option pricing uh models. you know, volatility

surfaces, etc. And so I would stand in the pit during the day and then go home and write code uh at night. And so, you know, that was really um that was the edge that we had was just that that we could, you know, manage risk and provide liquidity while uh fiddling around with with models and and software to to do it more efficiently than than other people.

Gradually over time we uh expanded into into more products. Today DRW is just over 2,000 people. Um you know I I think of DRW not just as a trading firm but but also as a uh you know markets innovation company. Um as far as the um the crypto journey, you know, in 2012, some of the uh some of the people who worked here were very excited about Bitcoin and um you know, I I really lean into intellectual curiosity and and so I have

a lot of people who work for me who are intellectually curious and and and Bitcoin was definitely in that category of things that that uh attracted intellectually curious people. So we were having debates in 2012 about you know is this interesting and why is it interesting and and um you know we decided that that it was interesting that there was some small chance that the world could agree that this was digital gold. Um but but more importantly um or maybe as as importantly that that if you could harness this technology to

move to to transact traditional financial instruments that that would be super interesting. So we did a few different things. We we started Cumberland uh that was in 2014 which is our cryptocurrency arm where we provide liquidity in in a bunch of different tokens. Um we um and and we also decided that it would make sense to start a company that would try to um you know build a blockchain that could could facilitate traditional financial markets.

And so that's that's Digital Asset Holdings. Uh and and you've all and Aerys Sarah Nikki both left TRW to to start that company. >> Yeah. you've all you were I'm trying to recall your story from when we had dinner. I if I if I remember correctly, you were a senior trader back in like 2008 or 2009 at DRW and then do you remember when the firm started pushing into crypto? >> Yeah. So I I think I joined it around 910 and then in 2012 as Don said Eric who was uh natural gas trader in New York uh is the guy together with another DRW partner who started Cumberland. they started doing um the trading and at the

same time I was involved with uh start of DRWVC and we started looking so DWVC looks into investments in areas that DRW conducts its business. Um so we started looking in the space. Um I remember we led I think in 2013 or was it 14 we already led a company that was trying to enable uh credit card purchases of Bitcoin. Uh again maybe too early. Um but uh yeah we started looking into the space and you know together with Don met met quite a lot of people and that really helped uh

start shaping some of the thesis to what is needed. You know I think early on uh Don and I were talking a lot about uh clearing house for crypto assets uh back then to make it more capital efficient. But it's really that idea that really started um help us think about well what are the fundamental blocks that are needed to even think about collateral or facilitate those type of activities on chain uh which led really to the birth of uh digital assets. >> Yeah. Maybe guys I'd love to hear the the original so you launched digital asset in 2014. What's what was the original idea? Was it that crypto and capital markets would kind of converge or what what what's the lay out the big

thesis for us. Um I could take a step and and Don can can supplement. I mean again I think that early on if you um really think about what did it mean and even for the most part it still is today uh probably slightly better but still is. You know if you look at crypto compared to traditional markets it's not as capital efficient. um the way that you deploy capital across the different exchanges, there's no real prime brokerage. Um you know, everybody gets to see all of your activity. So, I think the original uh thesis was to create a company that will create an infrastructure to make it more

capital efficient um to conduct business on chain um and really start from from Bitcoin and then uh for other assets. And it's really um through the first two years that we understood that there is no uh real underlying infrastructure that can help facilitate uh that uh and that's why in 2016 we wrote the white paper for Canton. But you know I think the first year and a half two years were really anchored around what does it mean to conduct you know uh trading and capital deployment on chain uh which was and probably still is not as efficient compared to capital markets.

>> Don I'd love to hear your your thoughts on this. Yeah, I I mean the I guess one of the things that I was thinking about in uh in 2014 was um the inefficiencies in traditional finance and there are also inefficiencies inefficiencies in crypto and and you know there are advantages in traditional finance and then there are advantages in cryp in in crypto. And so leveraging the the best of both worlds to uh create more efficient market

infrastructure is um you know is a big opportunity and I think that that's really where we you know where we came out uh of of that initial exploration and and that led to the white paper in 2016. >> Yeah. If you if you go back to 2016 in the white paper because I I remember founding Block Works in 2017 and Digital Asset existed. I didn't know you guys had C. I didn't know what Canton was, but I knew Digital Asset and I knew who you all was and you guys had a brand of uh Yeah, I don't really know what they're doing onchain, but like all of the big institutions work with digital asset when they want to do things in crypto. That was the brand. That was like the oneliner. That was the brand.

How did you guys think about um would Tradfi and crypto converge or would crypto like eat Tradfi? Were they competitive? Were they symbiotic? Like how did you think about that relationship? >> I I mean my my belief was that uh so so at the time there was this broad consensus that um Tradfi would never engage with public blockchains, >> right? Um >> JP Morgan had um what whatever that was called their private chain like there's all the all the private chains. Yeah.

>> Yeah. Still still do. >> Yeah. Um and and my view was that uh public chains the the resilience that you get from moving and the benefits of decentralization that you get from moving to public chains that eventually uh traditional financial institutions would would you know embrace that. Um that was obviously that was a very unpopular view at the time. So, you know, it doesn't entirely answer your question, but but I guess that that um you know, I think it's more of a convergence convergence thesis than a one eats the other thesis.

>> Yeah. I I my my view is that no different than in every other technology, any wave of new tech will always take out of business those that first of all resist it for the sake of resisting it and second of all if you're just in the business of saying doing something is really hard that's why I'm in existence tech will will kind of take you out. Meaning if you're saying hey I'm the only one who can bring investors to companies eventually someone will find a better more efficient mousetrap and you will get out of business right so so just saying connecting A to B is not necessarily a sustainable business model

and and I don't think that here it's any new right so if you think about like for example what Mike Kagny have done with Figure he just said look I can actually fund Heliloc blocks in a more efficient manner. If you look at what Broadri did on Canton, they're saying we can mobilize collateral more efficient. You can and we can keep on giving examples. At the end of the day, they're not necessarily taking out of business. They're just saying we can we can operate a business model that we all know in a more efficient manner. And those that will not take advantage of the technology, they will be taken out of business. So to me it was never either crypto is going to eat you know

tradi or vice versa. It's more the rails of crypto are going to become the new rails and those that don't embrace them are just going to get out of business because they will not be able to be competitive. >> Why did you guys decide to build your own rails? like at what point did you say um let's go build our own rails instead of you know we could just use Ethereum or we could use I mean you guys were around in 2020 like they're all the chains like Avalanche and Salana like like why not just use one of those chains.

Uh my my my view is and you know I on a recent panel I was asked like if I could go back and and change time what what would have been one of the changes that I would recommend to the industry and it was what we've wrote in 2016 which until like suddenly it's in the last few months it's became popular is that you know if I think that what this industry have missed big time is that in order to make Bitcoin networks, which is a censorship resistance that doesn't have a centralized issuer.

You have pseudo anonymous kind of privacy, meaning you get to see everyone's account balances, but you don't supposedly know who they are. Uh, in many cases, most people know most of the wallet addresses and who they belong to, but let's just assume that you don't. When you start thinking about real world assets and how businesses conduct themselves to us, privacy is like a mustave. And this is not just an institutional regulated thing. If you regulated, you have legal requirements to protect your client information and activity. If you are a public company, you have fiduciary duties to kind of make sure you defend kind of your activities so people don't take advantage of of that of that

information. But I would also say that retail like us individuals would much rather having privacy rather than not. Um and and therefore you know the reason to build it is because most public public publicly traded or public permissionless chains at their core do not have privacy as a core tenant. And our view was uh that you need to uh you need to have that as a core of your offering in order to make institutional adoption natively on chain a viable thing. The second thing is

that, and this is not going to be very um very popular what I'm about to say, but one of the things that crypto likes to pitch to the world is that it's immutable. Uh right, like we all say, crypto is immutable. That's why you should use it. And I say it's true until the next hack happens. >> And then we convince a lot of validators to reverse that hack. And you know, suddenly it's not immutable. And the reality is again if you're trying to bring businesses natively onchain um I think that some of the building blocks of crypto haven't been designed to put real world assets natively on chain. In most cases that you will see

today most of the assets actually exist in the trafi world. So what you end up happening when you're trading these tokens is you're really having to take a lot of trust on intermediaries rather than the issuer directly saying that this is your native asset on chain. So there's there's a few just core components in some of the architectures and designs of some of the public permissionless chains out there that we just believe were not going to be comparable or compatible with bringing real world activity natively on chain.

>> Yeah. And and I think you know one of the not all use cases require privacy. Um and so you know one of the things that people love about poly market is you can see you know who has what positions in in which prediction market and who's making the most money and and you know even in equity trading some people like that they like this kind of gamification of like who's winning and who's losing and let's watch it in real time and all this kind of stuff. Um, however, that's completely incompatible with institutional

finance. Um, you know, institutions that hold large positions in equities that are maybe below the reporting requirement or even if they're above the reporting requirement, right, that that reporting only gets updated monthly. Um but for the most part people are below the report reporting thresholds and if they had to broadcast to the world every time you know if they started selling a big position in an equity you know that would have that would cause a lot of uh uh market impact and and that's just completely inconsistent with you know the best interests of the of the asset owner. ers of the

investors. So, um, uh, you know, having that privacy embedded as kind of a core piece of the of the blockchain was something that we viewed as essential to to making it useful. >> Yeah. Have you found that that's actually the case when talking to customers, Don? Like, are there are there clients or institutions who tell you, "Hey, look, Don, like we we get it. We get we get the crypto. Oh, we got, you know, we want to move on chain, we want to trade on chain, but the number one reason we can't do it is privacy.

>> 100%. Yeah. I mean, there's broad consensus from people in traditional finance that the last thing they would want to do is publish to the world, trades they're doing in real time, or, you know, even their collateral and variation margin movement. Nobody nobody wants to publicize that. I >> I'll take it one step further, uh, Jason. I mean like just think about like all these publicly traded companies that have analysts over and over trying to figure out what is their activity. Like just imagine that now like everybody's so excited about stable coins now.

Imagine that they all they all know kind of like all of the payments and which wallets they came from and everybody just got to see all of your activity. It's just not it's just not compatible with how these businesses conduct themselves and how they they operate their business. >> Yeah. You you all do you think the big major use case at the beginning is trading for something for like for Canton specifically? So I don't I don't think that it's just trading although I think that trading and maybe activities related to trading are just going to be much easier to onboard mainly because a lot of those uh um participants and I'll let Don talk for himself but like I'll give you an

example. Imagine that you could start moving assets that you want to trade on crypto exchanges just with privacy. Or you could move stable coins in and out with privacy. Or you could now move from US treasuries into stable coins and extract the maximum amount of yield. Uh because when you sit on stable coins right now, you don't necessarily get yield. I think all of those things are things that the current participants in the market would highly value. So the the delta of convincing them to do that is much smaller. That being said, I can tell you that we operate in insurance, sports wagering, uh mortgages, commodities and

many other places where they are seeing the value. I just think that like the delta to understand the value of privacy and what you can do if you actually bring assets properly on chain is going to be a small incremental delta for those that are already participating in the market. Yeah, I'm I'm curious maybe to dig deeper into privacy. Like it it it seems like privacy is clearly a big problem. Maybe some one could say the big problem in the industry today. Um but it's it's unclear what the solution is, right? You have like privacy coins like Zcash are kind of ripping. You have uh you know ZK infra like Starknet and ZK synced and succinct and other people. You have encrypted computation like uh you know some RCUM is doing it. Um, but then you

also have like what what you guys are doing. So I guess my question is like uh I'm not smart enough to know who wins that game. Like tell tell me why your why your approach to privacy is the best approach. >> Sure. So I think that uh and and and have a lot of respect for Zuko and what they've achieved with with Zcash. I think that it's important to understand that to me cash which is an extremely important asset class. The value of cash is if I carry it in my wallet, nobody knows that it's in my wallet. If I went on the street or in a private room and gave it to Dawn, nobody knows that that transfer have ever taken place. Right?

And that's why still uh the the biggest uh asset in the world for uh certain activity is cash, right? it's not really traceable and I still think that as a human right it's critical that um we have that capability. So I think that to me uh Zcash and and and assets like that are the equivalent of cash onchain. And I'm not here to kind of share necessarily a view uh whether it's a good thing or not but just to understand that is not like if that is not compatible with how people think about electronic movements of money in today's

regulation whether we like it or not. If you are a bank you need to in order to comply with regulation know exactly who sent to who under what conditions. there's uh bank secrecy act that says that above certain sizes you have to report that to the regulator. Those are the laws as they are today. So to me um zero knowledge is more anonymity rather than privacy. To me privacy is saying I can still comply with all of the rules but if you're not a party to that transaction you don't need to know about it. Meaning if I send money to Dawn,

>> only Dawn, myself, and the issuer of the money need to know about that transaction. And if the issuer needs to comply with regulation, meaning I send Don over $10,000, they can still do that because they get to know about that transaction. But Jason, you are not necessarily part of that transaction. So you wouldn't ever know that it's in existence. So I think the privacy for us the definition of privacy is the ability to share information on a need to know basis where in many cases people will call things privacy but really what they're talking about is anonymity meaning nobody gets to see what is happening inside the transaction.

>> Huh. So what you're talking about is the ability to toggle on and off if you need to. >> It's the ability to determine who are the people that can see what's in the transaction. The other thing is and and and and I think that a lot of people will will recognize it happened multiple times already, but um I give this example the inability to really see the inputs of a transaction to me is not a good thing in financial services. Meaning if I have a an um an outcome that is dependent on the inputs being correct as a market participants I would want to see these inputs myself. I don't want to

trust an algorithm to tell me don't worry the inputs are are fine and and I sometimes I give this example imagine you had a black box for zero knowledge that said we can all provide collateral in there and the the black box says the collateral is there it's fine um and we we called that algorithm Sam bankankman freed said yeah the collateral is just there the day suddenly that the market you know melts down and suddenly you need to call in the collateral and you find out that there was a bug and people could have minted collateral out of thin air. You know that's a possibility that have happened already in some ZK implementations and that's why to us privacy is the ability for everyone to

see that what is claimed to be there is actually there rather than to trust some kind of a black box to tell you that it's fine. I'd love to get a little deeper into the Canton story and um maybe here one one of the big questions that I hear asked about Canton is why did it take so long to launch or what have they or what have they been doing for the last eight years right so the white paper was 2016 it's now coming up on the end of 2025 um maybe Don I'd throw this one to you like how did you think about I mean there's so you guys are trading firm right so you're the thing that you value like you look at your bottom line and how much money you're making You probably could have made a lot of money by launching a coin

in 2020. Done some market making on it. Number number goes up a lot in 2021. Like why why why didn't you do that? >> Yeah, I mean the goal here was to was to create a blockchain that would actually be used by would be used by large financial institutions. Um and so there are two things that you need to achieve that. One is the technology needs to have the right characteristics and so we've been talking about that. The other is that you need to approach it in a very thoughtful conservative compliant manner. And um a and so we decided that we needed to launch this as a private

permission chain and wait until the market was ready to uh and and by market I mean large institutions were ready to transact on public chains. And so, uh, you know, I I think that we could have we definitely could have, uh, you know, made a lot of money, you know, selling a token in in 2020. Um, and we would have immediately lost, uh, every single institution that was doing stuff on the chain. Um, and so, so we were just, we just said, you know, the the goal here is to is to we're driving for the end outcome. The end

outcome. The goal is for Canton to be the kind of go-to uh the go-to chain for for traditional finance. And um so one, we were we were super patient. Um uh and you know, we didn't it didn't become a public chain until last summer. Uh and two, you know, there was no premine. Um we uh you know launched it with zero tokens outstanding and and you know the validators on the network started to earn earn tokens and

uh I I still you know even though we could have made a lot of money in 2020 and 2021 I think that this absolutely was the right way to go about it. Yeah, I think I think that Don talks a lot about kind of the the market participants that we wanted to engage. I I actually will will bring another element to it which is once you launch a network uh there's no going back and it's actually really hard to change the fundamentals and I think that and and just the name Canton the idea of Canton is really a network of networks and the nice thing about what Don said is it didn't prevent from us going after the long-term value which is really like all of these implementations that to date

were private now can upgrade to the current version of Canton and still be fully interoperable, right? Fully interoperable with all of the other players that are playing on public Canton. And the nice thing is we it allowed us to really think about what does privacy look like? How do you build applications in a network of network like the current architecture of Kton is probably like second or third generation and once you launch a public chain it's really hard to go back. I really don't envy public permissionless chains that do have a substantial amount of developers and applications really thinking of how to introduce privacy right now without a wholesale

change of architecture which in my opinion will kill the chain by itself. So I think that >> wait what what what will kill the chain you've all >> asking effectively everybody who built to rethink their entire application stack having to rebuild everything from the ground up right and the nice thing is that we actually were able to have customers build applications in their own silos um like I said insurance mortgages commodities sports wagering and now if they upgrade to the current version of canton which they're all doing for the most part. Now they can actually if let's say tomorrow there was a stable

coin which there are now there's you know there are multiple stable coins but if tomorrow there was also some banks that provided payments through canton they can all benefit from that. So, you know, I think that Don came from the very practical of the type of organizations that we wanted to engage, but it also allows you to have a lot of flexibility on really learning and seeing what works and what doesn't work. I'll give you an example. tokconomics I think have been one of the biggest challenges for chains uh out there uh that you know if you're an application that became successful on a very large chain there's really no economic incentives for you given the compatibility of wallets and all the D5

protocols not to just launch your own L1 or L2 however you call it right and gather all of the fees to yourself like why would you why would you send all of your fees to someone else if you're doing the hard work. So there have been actually quite a lot of benefits sitting on the sideline uh and and and seeing what else is going out there. >> So can I ask the inverse of that question which is after all of these years how do you pick you know Q4 of 2025 to launch? Why like why why is now the right time? >> Uh interesting you know I keep on telling people we actually launched Canton in the previous administration.

So a lot of times people think like oh Donald Trump got elected and and that what what made us launch. We actually launched before but we're super happy that we have the current administration. Um so for us we launched Canton when we felt that it was right. Uh we launched it like I said under the previous administration and our view was we've done everything right. We've gotten them the technology to a maturity level that we were confident um was in a way that can you know hold itself without having to rely on any specific uh company to continue the development. We showed that it works in production for quite some time. We thought about the tokconomics.

We thought we can do a fair launch without having to sell any tokens to everyone. So we we went through the checklist and it was just the right time to launch it. So, we did um the other thing and and again I'm not going to I'm not going to talk about necessarily listing dates but again the other thing is a as a community for us uh launching a chain with again a promise of what you will deliver in the future was not something that we were interested in doing. So the focus after launching the public uh chain was to actually build and bring utility to the chain and only when you get to a certain amount of scale also infrastructure support

custodians um you know uh bridges all kinds of other decks as different types of complements to the network. when that is going to get to the right level of maturity, we will actually engage with exchanges in terms of listing. >> Can I ask you guys about the fundrais? Uh so you guys raised 135 million. You guys have had many fundraises obviously, but there was a June fund raise. Uh I think it was 135 and then >> 145 >> 145. >> It was 135 and then a 10 uh a couple weeks after.

>> Oh, there you go. Okay. So, you know, DRW led, but I think it was I think Trade Webb co-led. There were I mean there's some crazy names. There's like BNP DTCC Goldman uh Liberty um Virtue, Citadel, just and you know a lot of crypto native names as well. Paxos, Poly Chain, Circle Ventures, folks like that. For the for the Tradfi names, many of those are names that I've never seen invest in a crypto company. So, how did that actually, Don, is that you picking up the phone and telling your buddy at DTCC, hey, you got to do this thing, or is this how how does a fund raise like that come together?

Well, I mean I mean some of these names were already on the cap table, right? DTCC, Goldman um uh to name a couple were already on the cap table. Um and and you know, Goldman had already built their digital asset issuance platform on top of Canton. And so this was just, you know, kind of reaffirmation that yes, we want to lean in. um you know what you guys have accomplished so far makes sense and and we're excited about the next leg of the journey but but to your point I I mean the thing that actually was most exciting to me was that we got that you know I mean like Citadel was a new name uh on on the

cap table um and you know so we got this mix of very important trad inst institutions along with some very important cryptonnative organizations and to have that group of people come together in the same uh you know in the same round in the same initiative is obviously uh extremely rare. >> Yeah. Yeah. And if I if I can add Jason, I mean I to me um I can tell you that at least the at least the surprise and and I'm not trying to speak on their behalf, but when we started listing the the number

of projects that are happening on Canton to some of the new names, they were pretty surprised that they've never heard of those projects or of that type of activity on Canton. And then suddenly when they saw and had conversations with those companies that you know reaffirmed those projects, I think it was uh extremely exciting that there are people that are actually running real world businesses on top of a of a network. Um and that actually also led I mean a few a couple of months ago we made the first uh native US treasury onchain transaction. a lot of those names have participated or will be participating in

said activity. Um and therefore I think that when you actually understand how markets work and what are the considerations that those type of firms think about um it's it's a much easier conversation than going and saying we're just going to reinvent capital markets >> at that level, right? >> Yeah. >> Or we're going to put Wall Street on chain. I mean to me I think that it sounds good uh but actually understanding what's uh the next layer below that uh is more critical for >> I mean let's go there let let's talk about the scope and the scale here uh Don I saw there was a quote that someone had sent me that said um I think you had said it said in the next 5 years I think tokenization will become the rule not

the exception and you know for people listening hopefully people listening know DTCC but for those who don't um the DTC uh provides settlement services for basically all brokerto broker equity and listed corporate and debt uh transactions in the US like all institutional trades, money market instruments, uh equities, etc. settle via the DTCC. And you guys can correct me if I'm wrong there, but I mean it's a massive Yeah, go ahead. >> You're short you're shortch changing them. They do much more than that. >> Okay.

>> They also they also clear all the equities market and they also are >> they were the original blockchain. It all it clears everything. So >> yeah, and they're also the central security deposit for for all of those assets and that's that's an important component. >> Don, talk to me about the scope and the scale that you're going after here and what you think is realistic in the next couple of years. >> Yeah. So, so I think that that um if you can move stuff, move tokenized, you know, if you can move onchain treasuries equities munis, corporate bonds, um instantaneously 247 and you can uh do financing transactions instantaneously

versus, you know, tokenized dollars, whatever form those wind up taking. um that that the efficiencies that that unlocks as well as the additional resilience that that lends to traditional financial markets is just so compelling that as soon as you can get the kinks worked out I think that there will be a rush towards that and and that's that's what we're going for and and I do believe I mean I I spoke on u uh panel at the at the Washington Fed last week and um and you what I said there was no I think that most uh instruments that are

frequently traded will be traded onchain within the next 5 years and and that's what I think this technology facilitates and that's you know DTCC's involvement in this uh is is a precursor you know a prerequisite to to moving towards that >> don do you think it's just a stepping do you think uh almost replicating these assets or tokenizing them is just a stepping stone to the eventual end goal of issuing these assets directly on chains.

So um uh you know maybe um I I think that there are two ways that this can go. you can uh you can keep DTCC in the mix and you can go through the regular issuance platform and obviously there are going to you know there are uh competitors to DTCC and and so uh you can do that and then those those organization DTCC can put them on chain and then they're freely traded or individual companies could issue uh their stock directly on chain I do worry about uh a lack of fungibility and a

proliferation of QIPs if you have kind of you know five different flavors of the same name that aren't readily collapsible uh that maybe are traded in different ways that could be super disruptive. So I I'm not sure exactly how this is how this is going to evolve. I'll I I'll bring I'll bring an interesting example uh from an issuance we had in the fixed income space uh a while back where we reached out to one of the prominent uh asset managers and they were fine putting $50 million into the issuance and then we said great you can have your own wallet connect to the platform.

They're like what do you mean connect to the platform directly through a wallet? And we're like, "Yeah, you could just have a wallet." And they're like, "No, no, no, no, no. We we use X custodian to manage our assets." I like, "Well, that's the nice thing. Now you don't need X custodian." And they're like, "Dude, we run manage X trillions of dollars of assets. So, do you want us to have all these pipes and all of these reports and all of these, you know, audit reports and, you know, regulatory reports and all of these things that we need to do for the extrillions of dollars that we need to manage and then we're going to have a wallet for this

$50 million. And I think that the reason why I bring this example is yes I am certain that new issuance will come directly into these things but that will happen at scale and maybe the critical word word is at scale is once you have proved the pipes for the big players that they can participate without disrupting their business right because again if you start thinking about the DTCC the I think if I remember correctly it's like $80 trillion worth of assets that sits on their books right now. So what we're like what is like the most successful IPO recently circle 30

something billion. So we're going to have the 80 trillion and then 33 billion like differently. It's just not realistic. So I think that the reason why we're very excited about what we've done with the DTCC, it actually allows you to start showing that you can use better settlement and management pipes under the hood, but also try to have not as much disruption on the front end of how those large traditional asset managers interact with these digital assets.

>> Yuval, what do you think is the It seems like Tradfi and crypto are kind of converging here, right? You have like uh you know stocks trading on hyperlquid and Galaxy tokenizing their equity. You have also the inverse which is like NASDAQ saying maybe one day you can trade you know tokens on on on their exchange like what what is the end state of this do you think? >> Well I would say that stocks do not trade on those platforms yet. Uh exposures to those stocks may be traded on those platforms no different than you could trade uh uh exposure like leverage single name ETFs. these are not the securities. And I think that that's an important thing is because to me the true convergence is when you'll actually be able to trade

Apple, the actual Apple share on those platforms that you are actually if you hold the token, you are entitled to all the rights as an investor of Apple. I'll give you an example. You know like how uh I don't know if you you you remember but like it was always like this like you would own one Bergkshire Haway stock so you get invited to their annual conference because all investors would have well currently these tokens you wouldn't be invited because you're not the investor. So the goal is really to say well if I own one token of Burke I do get invited to that conference because I am entitled to the same rights. I think that when that happens is when you're going to see massive

influx of both institutional and retail to the space because you could you could enumerate on more than just two hands the benefits both at the retail level and the institutional level of being able to move these assets 247 in real time and and we probably don't have enough time. Um, so to me that the true convergence will happen when you could actually manage and hold legal tender natively on chain. >> H Don, do you think you're crypto business could ever get bigger than your tra traditional business?

>> Well, I I think the question is what what is crypto, right? Where do you draw the line? If if equities are tokenized, do you now call that crypto? Like I don't think so. I I think that I think it's just onchain equities. Um and >> so who makes markets for the onchain equities, Cumberland or DRW? >> Onchain equities are that that liquidity is provided by uh by a DRW team. >> Yeah. >> And and we did have that internal discussion of where should that belong. >> Yeah. Yeah. That's an that's an interesting chat. Where else I mean how else are you thinking about just your business developing as this as this space grows?

Well, here I I mean I mean one of the big questions is going to be what does the what what does this do to uh equity market structure and you know you you mentioned equities trading on hyperlquid. I mean I think it's it's mostly single stock perpetual futures which are obviously a derivative. Um, there are some, you know, kind of what I describe as as tokenized IUS that represent different names that are trading at on on some uh some venues. But you know, right now there's this uh market structure legislation that's floating around and and if you look at the um you know how it proposes to treat

DeFi protocols for equity trading there's a right now I think the current language has a big carveout. So, um, you know, if that goes through as is then uh, that's going to really change how the equity business behaves. Um, well, we're going to have to rethink a lot of things. So, um, you know, but there's going to be convergence in many different ways. I mean, obviously the uh the launch of the Bitcoin ETF was uh you know, a huge boon to our ETF trading business. Um, and that's something that, you know, where the ETF business was able to collaborate with the with the crypto team and and um

there's just going to be more and more of that type of of kind of cross uh cross area collaboration that's needed as these things converge. >> Yeah. Yeah. maybe g tying this whole conversation back together and getting back into Canton a little bit. Yval, I'd love to just hear about the progress so far. So, um I'm looking at a poly market that says like pretty likely that a token launches in the relatively near future. Um I'm looking at a I think this >> where where's it trading?

>> Let's see. Yeah, I guess you're not allowed to trade on that market. Um uh 95% chance you guys launch a token in 2025. Um uh let's see. I think this is from the TAI which shows like 550 validators maybe. Is that what it's showing? You've got a bunch of different like 20 to 30 apps maybe it looks like. So maybe just give me like a state of the union on what's going on on Canton right now. >> Yeah. So so the the biggest focus for me and I I would think for Dawn as well. I mean, listen, I'm like I said, I'm not going to I'm not going to talk about listing. I think that for us, whether listing were to take place or not pre and post listing, the focus is going to

be how do we bring real world utility onchain. Um, so whether it's uh stable coin payments with privacy, whether it's collateral mobility uh for trading activity, so I can move collateral 247 with privacy. And then it's continuing to add as many more high quality real world assets as raw material for those builders to be able to interact with. So whether it's uh treasuries, equities, uh um private equity, private credit, uh insurance, all of those things I think are going to be really good assets that will allow you to really build that crypto user experience for assets that are not just cryptonative. um that's

just going to continue being the focus. We've had um I would say that we are extremely ahead of schedule. I would tell you that if I were to look at the projections of where we were hoping to be right now in terms of transactions per second in terms from an activity perspective, number of validators, we're probably 5 to 10x range ahead of schedule. Um and to me that's just really exciting. I think that the tokconomics going towards those that build and participate in the network have been a huge boost uh for the organic growth. Um and that's that's just kind of where we're going to continue to to focus on. Um I am

extremely excited that on the foundation level, I mean there are people in probably north of 40 people every week that talk about how to make Canton better. Uh and that is growing. uh we're going to have more committees in the in the foundation. Uh the newest one that is being uh created is around collateral management. There's a few other use cases that will will will come and it's really about creating standards and then starting to build and bring more more builders to the chain. On the builder side of all, are you looking for existing apps? Like do you want A and Phantom to come deploy or do you want new new new build new builders, new

founders to come? >> Yeah, listen, I think that that existing builders like Stanny have built an incredible platform with a love for a to offer their services on Canton. there are similar services that will become available on Canton. But like the nice thing with things that exist is they have a brand and reputation that they know what they're doing and they are credible. Uh but we're also working you know I you know very very happy to see that like I said a lot of the new builders have been actually able to even fund some of their development by joining Canton early on and participating in the tokconomics. So, it's also exciting to see that new businesses are popping out as a result

of participating in Canton early on. For example, there's there's multiple dexes that launched exclusively on Canton on day one. Uh, and you know, I think you're going to see some very interesting innovation there of actually being able to provide, you know, dexes with privacy on chain. >> Yeah. Uh, Don, this might be a stretch of a question here, but I just read this Rivbit Capital piece that kind of tied together um, uh, like LLM tokens like a you know, compute tokens with cryp crypto tokens and I don't know if you've read it yet, but I can send it to you.

It's quite a good piece. So, this is on my mind and I I yeah, I saw one of your I think it was a tweet or an article or something that you were quoted in that said uh, compute will become the world's biggest commodity in the next five years. And I'm curious if you thought about how that thesis of compute becoming the world's biggest commodity ties in with crypto tokens and what you're building with Canton and or or or are these two separate worlds and you don't think about the convergence? >> No, listen, I I thought that the ribbit piece was great and and I think that they make a very compelling, you know, it's a very compelling narrative of why there these things are uh really there's a ton of overlap. Um, and so yeah, what what I said I I think it was on the

OddLotss podcast uh a couple weeks ago I said that that our thesis is that compute will be the largest commodity within 10 years. Um and you know and so you know we launched uh two sister companies. One is compute exchange and one is silicon data uh which is focused on any and all data associated with compute and aims to to create viable indices to launch derivatives on compute and and so um yeah I I think that that thinking about um tokens in terms of um you know that that interaction between

information content and um and you know compute and crypto tokens. I do think that there's just a broad convergence there and and um a lot of really interesting uh interplay that that is happening and will continue to happen. >> Yeah. Yeah. It's interesting. I'm not entirely sure how it comes together, but um yeah, I'm excited for it. you've all have you thought about this one?

>> Not necessarily compute, but I think that there's going to be and talking about the market structure disruptions. I think that um I think we're going to see a lot of new financial instruments being created uh on chain with agents behind them managing kind of like portfolio construction and those type of things. Uh so I actually see quite a lot of opportunity uh to innovate. And then another thing that where we see AI intersect is that you know we kind of accept that you know the value of blockchain is that it's you know a single source of truth and I always say to people well there's risks to that you know if your single source of truth is

not really good uh you have just blindly trust that bad data is kind of the tr source of truth. Um, so we're seeing a lot of cases where people that build on Canton use AI to kind of like bring much more confidence into the data that goes into the ledger. >> Yeah. Hey, one one thing I'd love to get your take on is uh, Don, I saw you had a market structure tweet after the, you know, big liquidations of a couple weeks ago. Uh, one one thing my co-founder and I were talking about is um implementing like a circuit breaker basically and would is is a circuit breaker in crypto a a good idea or a bad idea and b is it even feasible? And I'd love to get your

thought on that. >> Yeah, listen I think that circuit breakers in any market or a terrible idea. >> Terrible idea in any market. >> Terrible idea in any market. I mean it just prevents price discovery. It prevents risk management. Now, something that the CME has done that I think is is uh you know can be appropriate at times is this kind of you know these these very brief pauses. It can be for you know seconds um that let the order book just kind of collect itself. Um but obviously I mean crypto trades across numerous venues and and they're not you know there isn't a common global crypto regulator. Um, and of course a lot of

this stuff is in the DeFi space and um, so you're not we have to just agree that there isn't going to be one rule that's imposed across all of these platforms. No, I I do think I mean some of the things that I pointed out in that tweet is that platforms should avoid having obvious conflicts of interest and um and one of the things that they should be thoughtful about is how do they make sure that uh customers you know leveraged market participants are able to effectively move collateral around when necessary.

And how do they make sure that oracles are reliable? Um that liquidations are done in a in a fair manner. You know, all those things are very important for the development of the market. Ultimately, I think that the platforms that innovate the best in those areas are going to be the ones that become the most trusted and will win. So I I don't think that this is something that where we need the I don't know IMF to start globally regulating crypto platforms or something crazy. Um I I do believe that that the market will solve these problems.

>> Yeah. Don, are you swept up in the prediction market craze? >> Uh swept up. So, I was excited about prediction markets before anybody cared about prediction markets. And and there was a platform that had some, you know, some some prediction markets on it that we were providing liquidity in. And nobody cared. I mean, nobody cared. And and so then when Augur launched, I was like, "Oh, this is really cool. I love prediction markets. Maybe maybe this is going to be the thing that causes prediction markets to take off." And obviously nobody cared. Um and and you it really wasn't until Poly Market came along and made the whole thing more user

friendly that people started to care and and I think it's I think we're in early innings uh in the development of prediction markets. Um so yeah I'm I and and like right now you know no institution wants to again I mean to this privacy point wants to go on poly market and make some big you know transparent uh you know trades uh about you know what they think. At least most people don't want to. Some people like to go and put on big positions and then tweet about it, but but most don't and and certainly most don't want to broadcast to the market when they're accumulating a position. And so so I do think, you

know there's a a use case for some of these things to be totally transparent. I think it brings along like this kind of uh gamification that a lot of people love, but some of these markets are going to be traded in a more institutional manner. And yeah, >> they're still useful. >> Yeah. Yeah. I was thinking about prediction markets in light of can just learning about Canton because uh there are many funds I think that would love to play in prediction markets right now but probably can't. Um >> yeah I mean I mean I think somebody whoever launches a prediction market on Canton first is probably going to you know attract some some institutional use.

>> Yeah. Yeah. Um you've all done this has been great. Um, anything that we uh should have talked about that we didn't talk about? >> Why we call this quadrillions? >> Tell me >> what. >> Tell me. >> Well, I think I think that it's time for uh the crypto industry to kind of embrace and you know, we've had interesting interaction with some of the platforms. I don't know if you saw the exchange between Kagny uh and DeFi Lama about >> Yeah. the the size of the opportunity is so big that we are still in like the very very first part of the first inning and really we need to start measuring things not in the billions but in the

trillions. So originally we wanted to call it trillions but you know I think I think that it's really just to kind of explain that there is a much bigger world out there and like we're we're we're going to capture it. >> Yeah. Yeah. quadrillions is 15 zeros, folks, in case you haven't been paying attention. So, >> yeah, I I think that after after the the uh mistaken mint of $300 trillion of a stable coin, um we we figured trillions wasn't big enough. So, >> not big enough. Exactly. >> We need to step it up. Yeah. >> Yeah. Well, Don, you've all uh congrats on everything. Um, Don, you built an awesome firm and it's been it's been cool to see you guys grow in crypto and you've all congrats on Canton and I think a lot of people rooting for you

guys right now and yeah, hope hope everyone enjoyed episode one of Quadrillions. We got five more of these bad boys so we got some really good episodes lined up and yeah, keep listening. Thanks folks. >> Awesome. Thank you. Thanks. Nice talking to you. [Applause] [Music]