Rollup TV: Alvara Protocol, Janus Henderson Investors, Money Moves Fast EP7 and Wormhole

Transcript

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[Music] We'll see you around the timeline. Feels good to be back. All right. Bang. Hope you guys like the new intro. We are live. Happy Friday. Markets are chopping left and right. No matter what we go live, we keep bringing you guys the absolute state of things going on. Animal spirits, when you when

you have a 50% decline in open interest, you rebuild the animal spirits from the ground up. Hope you guys are fired up. We're going to have a great Friday, great weekend, great show for you guys today. First up in the back, we've got Dominic Ryder, co-founder of Alva. These guys are going to they're they're going to do something great. We've got him in the back getting set up. We're gonna get him going. Particularly excited today, we've got the head of innovation of Janice Henderson. Janice Henderson is a massive capital allocator and asset manager. Uh they are on Wall Street. Uh they don't play. They're starting to dip their toes in tokenization and internet markets, internet finance. We're gonna get Nick fired up to be on chain. Then

we've got Tony Mclottlin, founder of Ubix. Ubix is uh is another just institutional partner. These guys, they're coming on chain. They're coming to buy your bags. Will you let them? Will you bend the knee? Will you fold to the institutional capital allocators for a certain price? Right guys? Uh and then Dan, co-founder of Wormhole. We're going to wrap it up with a nice crypto native big bang. send it into the weekend hot. Before we bring Dan, our or excuse me, before we bring Dom, our first guest, up on the show today, I want to show you guys a little bit of something that we're seeing in the datadriven thesis side of the industry. Artamedes,

these guys produce great data. Uh we're just going to run a little screen share for you guys. This is part two of their stable coin payments report. Guys, we're bringing you everything you need to know about stable coins uh from the ground up. These guys are doing great work. Stable coin payments hit 10 billion dollars monthly. Up 70% since January. Stable, it's a stable coin super cycle, guys. Uh you guys should already know that. Up 70% since February, 137% since last summer. Uh pretty insane uh that we already have this level of growth happening. Um, all right, let's keep moving. Uh, stable

coin payments climbed from 6 billion in February to 10 billion in August. Pretty nuts. Pretty nuts there. A 70% increase in total. More than 136 billion in payments have been settled since 2023. A Cambrian explosion of stable coins uh coming to the market. Let's speedrun through the rest of this. B2B is driving the market's expansion. Again, since February, B2B volume grew 113%, reaching $6.4 billion per month. Stripe, Tempo, all of these guys, stable chains are here and they're coming and they're capitalizing on the opportunity to facilitate payments representing new nearly twothirds of all stable coin

payments. That's B2B volume. Consumer channels followed card up 36% B TOC up 32% preunding up 61% while peer-to-peer remained stable at 1.6 six billion. As you guys can see, we've already kind of mastered the peer-to-p peer payments market. This is remittances. These guys are sending directly. Now, we're helping people that are typically using some other enterprises or some sort of intermediary to help facilitate their payments worldwide. Now, those intermediaries are using blockchain rails peer-to-peer. We've dominated that market for a while. Tether continues to dominate with a 79% share of stable coin volume. Circles USDC is gaining ground,

increasing 14% to 21% since February. Now you can see the we're really seeing developments in the stable coin market. Tether is starting to take a more regional approach. You've seen USDTO, you've seen USDT uh uh Europe and and gold. These guys are starting to expand and taking a more regional and geographical approach to stable coins. This is how we expect the stable coin market to mature. Tron continues to lead global flows at 48% while Ethereum has bolstered its position up 11%. Guys, Tron is beating Ethereum when it comes to stable coin volume. Even though stable coin assets

are predominantly on Ethereum, I think there's more than double the stable coins on Ethereum than on Tron. The velocity of stable coins and the flow of capital is rapidly accelerating on Tron. Uh the stable coins on Ethereum are predominantly just sitting there farming capital being used for lending and borrowing on Tron. These stable coins are being used for payments. We're going to put together a massive clip of us going through this Armdes uh data. Geographically, again, this is how we expect the stable coin market to mature. The US is uh the US is leading 18.7%. Singapore not far behind 18.4 nearly 14% of all stable

coin payment flows. Uh Hong Kong just about 10%, Japan 8%, UK 7%. round out the top five. This is not emerging markets anymore. Massive data coming out of the stable coin market. Couple more things that I want to show you guys before we get Dom. Let's see. I want to show you guys this. This is tokenized collateral will be the norm within the next decade. I think this is huge. You also see JP Morgan making multiple announcements into a more bullish sentiment. You talk you

have them talking about the end of quantitative tightening. You have them talking about institutional clients now using Bitcoin and Ethereum as collateral. Earlier in the year, not sure if you guys remember, but news out of the administration said that we're going to be able to use crypto as assets to prove our uh eligibility for a mortgage. this is going to kind of open up the housing market for crypto recipients. And now I think this is another massive announcement. What we're seeing is more and more uh institutional capital and access to the crypto markets from these enterprise clients. JP Morgan to allow institutional clients to use Bitcoin and Ethereum as collateral.

We're no longer going to need to sell this collateral in order to gain margin. I think this is a huge development and we're just going to see more and more of this. The last thing I want to show you guys before we get our first guest, Dom, up on the show is that Poly Market said there will be a token. I'm not sure if you guys can hear this video. Um, but it's pretty insane that the CMO of Poly Market, it wasn't even Shane, the CEO and founder of Poly Market who made this announcement. There will be a token to there will be an air drop. You guys know us. We are big fans of

prediction markets on this show. I'm sure everyone is positioning quite lucrative. All right, guys. Without further ado, I think we've got Dom in the back. Let's get Dom up on the show. Let's get him up on stage so that we can have a chat about Alvara. They've got a ton of very, very cool things that are happening. Uh they're building baskets. Uh and they're building uh the platform for uh the next generation of tokenized basket managers. Let's get him let's get him up on the stage when he's ready. I think there's tons of things that are happening in Wall Street as we uh as we get uh the green light for some indices products uh and we get the green light for some of these tokenized basket

products. Uh Dom, welcome man. It's your first time on the show. Appreciate you coming on. More flipflops than uh than the local beach. The amount that they go back and forth on. It's a scam. It's the next best thing. Yeah, they can't make their mind up, but slowly they all come. >> That's right, man. And and they they certainly are. I I'm old enough to remember. I'm sure you are as well when JP Morgan uh who said it was rat poison. Was it Warren Buffett that said Bitcoin? It was rat poison. I think that was Warren Buffett.

But Jamie Diamond was right right behind him, man. They they were to they were tooting from the same horn, both with the same sentiment. >> Yeah, even even a year ago. Um I think it was at the uh they've got this uh banking regulation um Basil 2. Yes, I think >> uh Basil 2 or three. Yeah. >> Yeah. And he was uh even then a year ago he was saying it's uh for money laundering. Um I mean it's like any innovation it's about they need to position themselves before they it's like with uh 2008 obviously Goldman Sachs was selling all of their collateralized debt obligations to AIG American Insurance Group and then only when they had a large enough short

position on the assets that they were selling them themselves did they finally start marking them down as in they wait and confirm and once it's in their interest then you know it's the best thing ever or worst thing ever because they're it's all just the the game and they are king shark. >> Yeah. That's why that's why the the old adage is that these guys fill their bags before they let they lay they let the market rip. Right. >> Well, exactly. Um if uh if they're if they're talking badly about it, that's when you know everyone wants to buy low and sell high until it's time to buy low. Yep. Yeah. Facts, man. Well, you you've seen it all. You've been in the

space for a long time. Uh, but it is your first time on the show, so maybe you could just uh give our audience a little bit of some background, some intro on uh on Dom's lore. How did how did Dominic Ryder arrive to uh the position where he is today? >> I like the lore. Um, so I uh started out on what was supposed to be my gap year. I was going to study sociology at university, but I started a commissiononly uh role as a junior stock broker at a derivatives firm. Um 250 cold calls a day, commission only. Eat what you kill and if you don't kill, >> you're die. Um so I loved that. My my ADHD was just tuned in. Uh and I did

very well. So I I sacked off university and took my chartered institute securities and investments. Uh by the time I left there I was senior trader and head of desk. I then moved to uh St. James's Place wealth management which is a footsy 100 wealth manager here in the UK as associate partner. And then after that I uh joined a VC because going from uh going from derivatives which is about as close to gambling as you can get and still be regulated to suitability reports, financial advice and uh it was just yeah someone has popped my balloon.

Uh so yeah went into venture capital sort of assetbacked investments renewable energy um for just a Londonbased firm and uh yeah I started in crypto full-time obviously I' being an ex-trader I I'd heard of it and I bought it back in like 2018 maybe after it had started dipping and then of course the dip keeps dipping for another two years. Um but uh yeah I um in traditional finance I found that even though I had done very well for myself because I didn't go to university and because I uh was never privately educated and I was

state educated whenever I would give my opinion in um at my VC in particular is very uh nepotistic especially in the UK a lot of uh class and I give my opinion and even though I had sort you know 10 years of very senior positions in finance the immediate reaction that you get is where did you study and where did you go to school aka should I listen to you are you my kind are you from my ilk and so because I you know wasn't university educated and wasn't privately educated it doesn't matter about how much experience I had and how senior my previous positions are I wasn't in the club and so uh that really annoyed me because same thing if I applied for JP

Morgan in Goldman Sachs, the tick box comes up of where you studied for your degree and if you don't tick that box, autofiltered out, never even get get a chance. Um, and so with Alvara, what we've tried to do is create an actual meritocracy where uh fund management is decentralized and accessible where anyone can manage a fund, mint a fund, and even in the future sell the rights to one of these all on one platform. and doing that with a token standard so that it is actually standardized, people can compare apples and apples. Um, but yeah, I think that was quite a lengthy intro.

>> I love it, man. I It's no surprise that you ended up in crypto. Um, you know, there's a group of misfits here and libertarians and just people that uh believe in the meritocracy as it's meant to be uh rather than uh the nepotism that you described. Uh nepotism not just in familial ties, but also ties to uh the incumbents and the institutions uh the people who are uh maintaining power for the sake of maintaining power uh not because they they continue to innovate uh but here around here in crypto we we call it adapt or die and I think you uh you have certainly embodied that that mindset uh and and so has Alvara and so I'd love to dig a little bit deeper into uh some of

the things that you guys have done because you've been able to build some of these tokenized funds products that have existed in the traditional financial space but now are coming onchain. You decided to go onchain first and skate to where the puck is going. And now it's a matter of look, you're innovating quicker than these incumbents are able to innovate. And I think it's just a matter of gaining uh maintaining and growing that distribution channel before these things really do converge. So give us a little bit of an intro. What is Alvara? Why do you think tokenized funds are a financial product uh that will uh thrive on chain? Um and generally, you know, continue the story. Founding Alvara, how is the how's how have you found success

uh on chain so far? >> Yeah. So, I think um there's been a lot of entrance to this uh you know sector of DeFi if you like with uh even going back to 21 you had index co-op. Um >> right >> the main uh the main sort of differentiator and where I spotted people were in my opinion doing it wrong is there's two uh there's two two types of funds traditionally in um sort of asset management. You have passives like Vanguard. Um Vanguard low fees, it tracks an index. you know for a fact you're going to underperform the index by a little bit but that's okay because

you know it's easy and cheap. And then you have the active management. Active management is more expensive because you have a leader. You have someone who you trust who has hopefully a track record um and whatever in order to basically have them ma manage your assets. You know the most famous fund manager in the world Warren Buffett. He's an active fund manager. you invest in Burkshire Haway because of Warren Buffett. If it wasn't for Warren Buffett, you'd stick it in Vanguard um or with somebody else. And so there was a lot of innovation in terms of indexes and passives and you know gaining uh actual exposure to a sector or group or you

know a little niche of of crypto. But passive investing is boring. Like the rock stars are made in active management. Um, you know, that's where your Charlie Mongers, your Warren Buffetts, your uh Neil Woodford, your Terry Smiths, your, you know, giants and characters of the fund and asset management industry. I mean, you know, I say rock stars, I don't think Warren Buffett's been called a rockstar for a long time. Um, but you know, you have uh these people are rock stars within the fund management world. And so, uh, passive strategy is just, you know, slow, steady, and, yeah, but it's just not it's not where the spice is. Uh,

it's also not where the predominant amount of assets under management are. Um, and so no one was really building for that. And the reason why is the fact that to be an active manager, you need discretionary permissions. Therefore, you need to trust a manager in order for them to uh change waitings because that's the whole point of an active manager is with an index, you're constantly invested, which means that you can have no uh leeway or any time out of the market and no flexibility, no predictions of if things are getting overheated, etc., etc. Um with active managers you pay that premium uh for the

manager's insight to that and for the flexibility you trust that uh for example Warren Buffett has had the highest cash levels ever when we had uh sort of the the crash that we saw in 2022. Um and that's because you expect that you know that wasn't just luck. he saw that that was probably going to be profitable because it's yielding 5% and the stock market was overheated at that time. And so, uh, these are the insights that people weren't really building towards. And I think part of that is not a lot of people have necessarily worked in that industry. Um now we're seeing a lot more people enter from traditional finance into crypto but back

in like 212 22 you know these people have paid very high salaries and therefore there isn't really the even sideways step if they want to earn the same amount of money um and have the same security. That's changing as the industry matures, but back in 2022, uh, you know, you it was just sort of the trailblazers and, um, the risktakers. I was going to say retards, but >> you can say that on this show, >> but um, you know, it's a people who, uh, have a bit of, uh, you know, a bit of den in terms of they want to change

something. Um, and that is sometimes revolutionary and it is sometimes There's a there's a very cross line that you need to walk. But so Alvara was built for the active management industry because that's the predominant market. Um, and yeah, the competition was very much leaning towards passive because it is safer. You know, you don't have to trust a manager. However, if you build for the market that is easiest and not for the market that exists, you're never going to actually get mass adoption.

>> You're just going to get niche adoption. It's like when I see um when I see we're a crypto insurance protocol and we ensure DeFi. >> Like what is DeFi insurance? 0.00001% of the market. Like why are you insuring a niche? like there's there's no customers. >> Mhm. >> If you're going to build an insurance protocol, ensure people's lives, life insurance, everyone has it. If they've got like, you know, family, if they've got mortgage protect, that's where that's where we need innovation. Like I just see people shoehorn themselves into what they actually try and target and solve because they go for the easy option, not the mass adoption. And they do that for a reason, but I, you know, that's not not how I roll, I guess.

No, we think big around here. And so you guys have actually taken an ERC standard and used it to your advantage to build some of these products that you're describing. And I'm curious to dig a little bit more into the tech because you talk about the difference between passive investing, active investing, and and how that leads into some of these financial products on chain. We have these token standards and we can really bundle some of these things together. Why was it so important that you guys used this particular standard? What is it about this standard? Give us a little bit of market education around the ERC 7621 so that we can kind of understand more the the prowess and the capabilities of the token standard and ultimately of the the baskets that are

available on Alvara. >> Well, Alvara invented the 7621. Um so we so we had to use it. there wasn't any um like I like I mentioned there's a there's a lot of individual protocols innovating within this sector but nobody has a standardized way of doing this everyone does it their own way and therefore that opens up um sort of comparison risk you the reason why if you look at any fund fact fat sheet like they all have have the exact same way of data they have cumulative performance annual performance and breakdowns and therefore you can look at one fact sheet from one person another

fact sheet from someone else and you can compare them. If everyone is using their own way of coding one of these then it gives the get out of jail free card like oh uh well the reason why uh the Alvara gaming basket has done this performance but the uh index co-op gaming basket has done this performance is because the way it's designed. if it was designed our way, it would have done this. And it just gives that um you know, it muddies the water to make it seem deep when in reality it's just a get out of jail free card. Um and so if you don't have a standardized way of measuring this, then you open up uh these sort of um

loopholes, I guess. Um, I don't I don't want to say exploits because a crypto term, >> you know, has that has connotations, but it is a it's a it's a behavioral exploit. Someone's trying to sell something, they'll hone in on that straight away. So, uh, that's where we saw the demand is uh, we need to have a apples and apples comparison rather than an apples and pears because that way it's the same with um, open C for example. So, OpenC, it doesn't matter if uh you mint a 721 or 1155 off the platform as long as it fits the standard, they pull it through and they aggregate it, >> right?

>> You can mint it on the platform, of course. Um, but they are open to everyone. And so what we are looking to do with the 7621 is not only become, you know, the go-to aggregator, but take the first mover advantage as if OpenC invented the NFT at the same time because, you know, when people think about the NFT and like when Disney came on and did a collection, when Pepsi did a collection, they didn't even think about the fact, oh, should we use the 721 or should we use our own for this? They just did the 721 because the 721 was the NFT and the NFT was a 721. It was obvious, >> right?

>> And so we want to create that obvious choice because for people who you know I would like to say obviously see that that fund funds, stocks, shares and tokenized assets are coming on chain obviously then there needs to be a token standard for that. There needs to be a standard way of comparing these things. If everyone just does it themselves, then it's it's you know, somebody is going to do this, >> right? >> And so that's what we've done. Um, and it also means that we become that go-to aggregator where anybody from any background can come onto the platform, mint one of these through a factory contract to their wallet and become a

manager. It doesn't matter if they have a CFA. It doesn't matter if they have an IMC. It doesn't matter if they have a mast's, a degree. Anybody from anywhere can mint one of these and your performance stands for itself against everybody else. Institution against retail, pleb against genius. Um, it allows for an actual like forlike comparison from every person to the next. And uh yeah, that's uh sort of the the overall I mean in terms of the 7621's functionalities and how it works, the best way to describe it would be like a um like a smart wallet, which is the ERC 6551, but if I simplify it a bit more, um an NFT that can fit infinite

amounts of other ERC20 tokens within it. >> A basket, a container. Exactly. The part that makes it uh unique is the fact that the token standard itself is an interface that allows you as the owner to change the overall waitings. >> Okay. And whenever any outside uh participant or user contributes to that token standard, it automatically mints them an ERC20 LP token representation of their part of the 7621.

>> So every 7621 has a unique ERC20 LP token associated to it like how unis swap v2 works. >> Right. Right. Which means that as a 7621 manager, you earn uh fees from the assets under management. So therefore, you can add liquidity to that ERC20. You can build staking, governance, you can build derivatives, lending strategies, arbitrage, anything that can be innovated on top of a normal ERC20 token. You can build around your 7621, >> which means that us as this very bottom layer infrastructure, allowing anybody to mint these to their wallets. We have the ability for hundreds thousands or tens of thousands of individual subdows and subprotocols

>> all built on top of our infrastructure where we are the aggregator for all of these. >> Yeah, I Yeah, I I get it. I get it. And you've been around a long time and and I can remember when there was decentralized hedge fund products, financial structured products where you could have kind of this open-source nature to them. you could have kind of this permissionlessness nature to fund managers. I remember the likes of Enzyme Finance, Dedge, the these were some of the early innovators in this ecosystem.

Uh and and these guys sort of, you know, they kind of came and went. You guys are sticking around. You guys are surviving. And now we're seeing institutional assets come on chain through this tokenization movement. And I'm just curious and and you know I'm sure we could go on and on but I think we only have time for maybe one more question here and and I want to get your sense of something. The platform as I understand it is is very open. It's very uh friendly and accessible. Um and it's really permissionless. It allows anyone to come in build one of these baskets.

What we're seeing is all of these assets come on chain. These are a lot of enterprise assets. And so, you know, if I go on the platform now, I might see, you know, some kind of DGEN mix of, you know, dog whiff hat paired with SPX6900, right? Like all of these really, really wild combos. But the the potential that we see here and I think you see it, I see it is the potential to also combine some of these things with Biddle like these Black Rockck things uh these AAA rated private credit CLLLO things, these these financial and structured products that have enterprise level scale but permissionlessness nature and and fund

managers that are totally open open access. How do you how do you balance these two worlds where you kind of open these things up for for the long tale of asset managers but maybe you're sticking to the meat of enterprise level assets. >> So we have a we have a phrase in uh in the UK which is look after the pennies and the pounds look after themselves. Um and in terms of sort of uh number one, the ease of the platform and the ability for anyone from anywhere to mint one of these facilitates the mass adoption. It populates the 7621 standard onchain and and everywhere. In terms of the bigger

players, like I say, uh similar to how OpenC does not require because when you uh when somebody mints through the factory contract, 5% as a minimum holds the Alvara token. So, it's a it's not a fee, it's a stipulation. And you'd hope if they're using us, then they're 5% bullish on us anyway. Uh but because obviously institutions have mandates, you know, if they're if we forced a commodity brokerage to have 5% Alvara, they're just not going to use it. And so anyone can code a 7621, we still recognize it and pull it through. It doesn't matter if it's minted through us or not. And then they don't have to have the 5% Alvara. So uh that's why the 7621 is open source and and you know as a

token standard it can't be. What we've uh done which makes it attractive for institutions um whilst maintaining a meritocracy for everybody is that we have taken the same gauge weight governance uh structure of curve finance and applied it to Alvara's um basket LP tokens. So just like you had uh stake dow year, pickle finance, beefy finance, convex all building on top of and trying to accumulate as much VE curve as possible to incentivize the dex pools on curve.

we've applied that mechanic to the LP tokens meaning that if you are a institution or you know a whale or whatever the more Alvara you buy and the longer you stake it for the more voting power you get the more voting power you get the more yield you can send to your 7621 so not only do people get any potential upside but they also earn a yield just from contributing to it which means that you as the manager grow your assets under management which means you earn more fees. The more fees you earn, the more Alvara you can buy, the more you can stake. And it's a self-fulfilling turn style of accumulation incentive.

And just like you had uh the curve wars where you had all of these yield aggregators fighting for as much VE curve as possible to give their DEX pool the most incentives. We've taken that mechanic but applied it to the potential of tens of thousands of individual funds fighting for that. >> Very cool. Awesome. Man, Dom, pleasure. Uh, thank you so much for coming on. Wish we had some more time to dig through some some more of these implications. You know, I think we really got a sense of what Alvara is capable of. There's significant knock-on effects, second order consequences to this. Uh, love to have you on again sometime soon and we can we can talk through those. Um, we're going to keep it moving. Thank you so much, man.

Absolute pleasure. See you again soon. >> Cheers, brother. >> Beauty. Yeah, I I remember Index, Co-op, Dedge, these guys. We even tested some of these things out. They were pretty popular back in 2021. I I do think as this technology evolves, Avara is going to uh pick up right where they left off and continue to to uh pass on uh the torch and and pull it forward. So, we're we're really really stoked. Uh Alvar is a great partner. Um we're going to let Dom continue to move on uh about his day.

Next, we've got the head of innovation uh at Janice Henderson. Nick, uh this one was actually pre-recorded a little while ago, but guys, stick around because this one is an absolute banger. Um you don't want to miss it. There was tons of alpha. I think there's also just a really interesting way of looking at things and I've started to incorporate it in my own mindset when I'm thinking about the convergence of Wall Street and digital assets. So, we're going to get Nick up in just a moment. Uh, and uh, and guys, you don't want to miss it. Uh, we'll, uh, we'll be right back with Nick from Janice Henderson. Let's play the interview.

Nick, the head of innovation of Janice Henderson, a massive player in the traditional financial space. Tradfi, DeFi are converging. It's just just becoming finance these days. So, it's a pleasure to have you on the show and talk about tokenization and all things digital assets over at Janice Henderson. >> Yeah, great to be here. Thanks, Robbie. >> Absolutely, man. Uh, let's jump right into it. Uh, you guys have some pretty significant partnerships, uh, million dollars, if not billion dollars in RWA funds that are going live. Maybe you can start off just by tracing what is the holistic view of crypto from Janice Henderson's perspective and and you know get us caught up on on how you've been

approaching this and seeing this landscape. Look, obviously there are a lot of different threads, but big picture, I think we are heavily convicted that probably the most transformative transformative technology for financial services, you know, over the coming decades is going to be blockchain. And really that means that eventually virtually all of the kind of traditional financial system will migrate onto blockchain rails. Um and so if that eventuality uh comes to pass in 20 years that has a very different kind of set of uh implications for us for our business for

our clients than if it comes to pass in you know 5 years right and the question for us is how do we engage in that uh in a way that is um I would say like responsible to the current re reality which is that the overwhelming majority of the global financial system is not there yet, right? And so, uh, yeah, it's been a really interesting journey and we've done some great things, uh, on the tokenization front and then thinking about, you know, what are the other ways where now there is like real activity that we should be doing and engaging in um, in preparation for that eventuality.

>> Yeah. Okay, that makes a ton of sense. And I think we'll we'll have a little bit more of a forwardlooking future-looking conversation about what the end state looks like in that in that reality because I think we're all sort of operating on a similar premise of going in that direction. Um I want to just shout out some of the statistics of of Janice Henderson uh and specifically the Anamoy AAA clo fund that you guys are working on with Centrifuge. $850 million in total asset value. Um you guys have it currently split between three chains, Ethereum, Avalanche, and Bass predominantly on Ethereum. Over half of it on Ethereum. Um point4% in terms of management fee. This looks like a classic investment vehicle for the the

more passive investor to get some yield. Maybe you could talk a bit about where you're seeing the demand come from to to explore this, put this on chain and and ultimately continue in this direction. Was this something that you guys heard from your investors in Janice Henderson and they were pushing you in this direction or was it something that you guys foresaw before your investors came to you and you wanted to serve them because you felt like this was the best uh to accomplish their their investment goals? >> Yeah. Yeah. So th this ties in really a lot to that kind of journey that I was just talking about where we see things going. And if we oversimplify it, right, there there's really two big pools of

capital in the world today. There's onchain capital, which is massive, right? I mean, you know, even if you take away from that all all the value that's sitting in Bitcoin, there's still a massive pool of onchain capital. And then you have off-chain capital, right? And there's kind of this view or our view certainly that eventually all of this off-chain capital becomes onchain. and you know your comment at the at the outset right like DeFi and Trady that they they cease to mean different things right today though I think a lot of the benefit for investors who want to bring kind of traditional assets like AAAL's uh onchain

it's not so much for off-chain investors to come on chchain because they can already access those assets offchain right and so the way that we see this evolving is that there is a need for very high quality assets to be brought onchain first and the users there are onchain users. So it's large institutions largely who have significant pools of capital onchain already whether that's from protocols whether it's from layer ones foundations all sorts of businesses that are very scaled um you know very dynamic businesses who are doing creative things with the kind of future of finance and the things that can happen when you use blockchain technology but they're sort of been constrained to only digital

assets right and a lot of the use cases and a lot of the kind of businessy needs can maybe be met with some traditional assets. And so that like probably started with stable coins, right? And that you know this is obviously you know very hot topic in traditional finance but the reality is a stable coin from the perspective of like a traditional investor is still a pretty boring instrument particularly if it's not yield bearing right and so how do we move from there into many of the other asset classes that are critical for institutions to manage their portfolios right claos is that sort of incremental uh movement away from stable coins into a higher

yield bearing asset, but that still is very low risk. It's AAA rated. Uh it has very little duration risk. The underlying asset class is incredibly liquid, etc. And so all of that movement was really triggered by us or from us by the the the maker DAO RFP, which was the first like really significant institutional RFP where they wanted to bring a billion dollars of tokenized treasuries on chain. And so we launched JTRSY with centrifugion anamoy to to meet that need and then that very um neatly evolved into AAALLO's uh with Grove and then now additional partners and and users who have come on chain but I would say there's very few cases

really just across the entire ecosystem of significant off-chain capital moving onchain to access off-chain assets. >> Right. Right. Right. Yeah, absolut it it makes I mean it's just common sense, right? Because if you have offchain that entire world you can continue to operate on you're bringing it onchain as the GDP of the internet grows. And I think th this is indicative of the broader trend where you know back in 1999 and 20201 there was internet companies and then there was regular businesses and then ultimately what you're seeing now is regular businesses all operate on the internet as well. And so internet companies, as more and more companies,

if not all of them at this point, become internet companies, they need internet money. And that's where stable coins come in. As the the supply of stable coins continues to grow onchain, it makes sense for them not to go offchain to go find some of these vehicles that you're describing. Makes sense that there's now onchain vehicles. There's internet vehicle in investment vehicles for internet money for internet businesses. and and as the GDP on the internet continues to grow, we're just going to continue to see more and more of this. I I'm just on that one thing I think I think the key catalyst there or the key driver for you know your analogy of sort of internet companies is that >> if if that ecosystem stays closed right and it's just people sort of shouting

into the void about how great their solution is the pace of growth will not be anywhere near as significant as if they're proactively bringing these sort of traditional finance businesses along because as soon as that reaches a tipping point that's when every company becomes an internet company, right? Every financial services firm has to be on chain, but they're not going to do that first. So, this sort of massive growth that we're seeing right now in RWA's is to me like a critical component of that transition that we've been missing and stable coins have started it and now we need to extend it beyond that.

>> So, may could you could we zoom out just for a moment and and could you give us a bit more of a insight into what Janice Henderson does? what what is their typical their their main core business and and why do you think Janice Henderson is one of the more pioneering financial institutions to go into this world? >> Yeah, I mean listen, we're a very traditional global asset manager with 450 billion of assets. We have, you know, more than 2,000 employees located around the globe, heavily US and UK based, but you know, offices uh everywhere and we service a very very wide range of clients, right? But they they all look very much like traditional asset management clients, right? So we have a large business serving institutions. Uh we have a large insurance company presence. We have a

lot of individual investors. We work with a lot of financial advisors uh across the US, Asia, Europe. So we look like a very sort of traditional diversified asset manager. Um and I think uh you know over the last uh 10 years since I've been at the firm and certainly over the last two or three as we've gotten um more and more uh people in management and uh our our boards etc who are really interested in thinking about how we build the asset management manager of the future like how do we really prepare for the next 10 years instead of sort of sitting on our laurels of the business that we've built over the last almost 90 years blockchain is becomes very clear, right?

And and blockchain is is for us part of a larger innovation strategy, right? Um it happens to be the component of that that I think is the most impactful, but it's not like an isolated we should be in crypto, right? It's how do we think about innovation over the next decade? How do we think about how we engage with our clients differently? How do we think about AI? How do we think about our social impact? Right? It's all these pieces. It's just that blockchain is the one that is so uniquely um it's like one of the largest trends going on in the world today that is just very explicitly relevant for financial services firms.

>> Yeah. Yeah. And I I got one quick question and then I'd like to ask you about the asset manager of the future and what your vision for that is. Quick question though on on your uh partnership with uh Maker and with Centrifuge and developing 850 million dollars that represents about 1 billion out of 450. It represents a quarter of a percent of your total assets under management at Janice Henderson. And so when you were thinking about this, were you thinking about this in the way look, we have to put something onchain and start building this out because it's a greater risk if we don't if most of the blockchain is capturing and housing finance over the next two, three, five years and then

beyond, we're going to be caught flatfooted if we don't go and put some portion of our assets and our business on chain. >> Yeah. Yeah. I mean look you're right that from a just pure commercial standpoint revenues to the firm today it it's not a material portion of our business right but the whole thing is if you want to win in the future and you want to win a decade out and you see that more and more uh of finance right our our business but as also our clients are going to move on chain then the way you win is by being a leader being early right and so eventually right the reason that we see all of these assets and all of these businesses moving on chain is

because there's the potential for very significant improvement in the client experience, right? It's, you know, programmatic 24-hour access. It's ease of custody. It's all these other things. And then also cost reduction, like the potential for very significant cost reduction. There's so much cost built into the financial system because of frictions that are driven by intermediaries. And if we can eliminate those or reduce them significantly, that is material. At some point, our clients are like kind of traditional clients. So, not our new clients in the in the kind of DeFi universe, but our traditional clients in the, you know, old private banking universe or whatever kind of area you want to look at. They're going to say, "Hey, listen. We we understand that there's real value here, how do we get there?" And they're going to want to

work with the firms who understand it already, right? And so, we want to be ahead so that when that transition happens, we're well positioned to help our clients make the transition with us. a another part of that transition that's happening at the same time in parallel is this wealth transition that that's happening from this baby boomer generation to the millennials to the zoomers and this is going hand inand it's coinciding with this increase in technology and this acceleration of blockchain AI these sorts of things so getting getting into what is your future state of finance what what do you picture as the asset manager of the future is it more peer-to-peer what how do you how do envision this landscape shaking out.

>> Yeah, I mean the the generational wealth transfer that you're talking about is like the biggest demographic demographic wave that is going to define like major industries and certainly finance, right? There's just an incredible amount of wealth that is going to be transferring over the next 20 and 30 years. And if you go and talk to a 30-year-old about how they engage with financial services firms, their expectations are completely different than a 70-year-old where most of the wealth is today, right? And so you see this with neo banks, you know, you see it with robo advisors, you see it in all these different ways where I think um the client of the future is going to

expect very very very modernized real-time access to their assets, more usability, all of those things, right? So I the way I describe blockchain to people who kind of are not in the space and and why it's relevant to to us is that it's sort of the equivalent of the iPhone which is that the iPhone when it came out created whole internet businesses that nobody really considered until the app store existed right and blockchain is going to do that to finance. We don't know what those things are, right? I don't know what the next kind of breakthrough invention is going to be when the amount of investors that are operating on chain has reached critical mass. The number of products

that are available on chain has reached critical mass, right? But the usability of those assets will completely transform, right? If I can use my S&P 500 investments to make a, you know, mortgage payment like that's totally different, right? And and so that those types of ideas are going to lead to new business opportunities. And so for for us, it's like how do we how do we get there, right? Like we're not going to try to predict what the future's going to look like 20 years from now and build it today. We're going to try to be sort of on the cutting edge of that cresting wave, right? And so what does that mean?

It means us basically continuing to innovate in terms of products that solve real client needs in terms of their investments. Um, you know, our purpose as a firm we say is to invest in a brighter future together with our clients. And what does that mean? It just means a recognition that what we do in asset management isn't being done in a vacuum, right? It's being done for individual people to lead richer financial lives that can lead to richer overall lives. And like blockchain, I think, is very aligned with that core vision, which is how do we make the financial system serve individuals, right? And so I I we don't pretend to know what the asset manager of the future will be. We want to be ready when when we figure it out.

>> Yeah. And it and it certainly is the the way you're talking about and thinking about it is is similar to what we see on a day-to-day basis in the crypto world. We're we're disintermediating and that is leading to capital efficiencies and that's lowering costs and ultimately giving a better experience back to the end consumer. And as we do that and we innovate step by step by step, it ends up as a completely new modern experience that looks almost entirely different from what it looked like before we made made those incremental improvements. And and you're right, we don't know exactly what the end state is going to be, but it's our job to get to this critical mass. So I'm I'm curious, what does critical mass look like inside Janice

Henderson? Right now you guys have 850 million in this tokenized CLLO fund. How much of Janice Henderson's 450 billion in assets do you anticipate to come on chain to reach critical mass? >> That's a complicated question because it depends upon the sort of like the the metric in which you're thinking about that. Right? So there's like the very narrow view of a traditional asset manager. For most of my career I've built built ETF businesses. That's what I've been in charge with for mo most of my career at Janice. And you know that starting 10 years ago, we now have, you know, 40 billion or so of assets. It's a it's a material part of our business. So just like from a pure AUM basis, you need to be in that 5 10 15 20% of assets or revenues or however you want to measure

it for it to start to really drive the business. But the thing is there's the revenues and then there's the growth, right? and marginal businesses from a kind of gross revenue perspective can be very very relevant from a marginal revenue perspective if the growth rates are high right and so already today right what we're doing in blockchain is a core part of our strategy we are like very deeply engaged in it across the organization in many different ways um you know we're talking about it with our investors like so I would say from that perspective from like a focus and attention perspective it already is there right from a tokenization perspective right I think what will

actually happen is that we will be continue to grow sort of tokenized the tokenized business rightw like that that piece of it and that's not going to suddenly eclipse the rest of our business what will happen is we will get to a certain point where all of our core business will be at a point where it just moves on to blockchain rails and the the line will just disappear and we won't be talking about rwas anymore we'll it'll just be like when you buy investment products from an asset manager who is a sophisticated asset manager. The expectation is that that is happening on blockchain rails and therefore you're realizing the benefits of you know cost efficiency, transportability, all those things that we that that we all see as the future.

>> Yeah. Very cool. Uh I I really we're almost out of time. I I this is this has been a lot of fun and really really great. Um, think just to close out, sometimes we do this with with people that you know have have cool takes and I'm just curious just to be a little bit reductive to close us out like what are you bullish on? What are you bearish on? Just in this general without giving financial advice, none of that, but just categorically when you're holistically looking at the space, bullish and bearish. I mean look I I mean a as an organization where where we are putting our bets is in those companies and this is both through like for example our partnership with centrifuge companies that are really really fueling this

transition um uh and so you know I'm not going to come up with a call on specific crypto assets or or any of that kind of stuff as a regulated entity but we see this transition onto like the infrastructure plays in blockchain as being really like the key the key key long-term growth areas and that includes you know payments, it includes stable coins but includes a lot of the underlying tokenization infrastructure as well. >> And what are you bearish on? Anything stick out that you think is just a fad just hype and >> um >> the sectors you know similar like payments, stable coins, tokenization 100% agree. Yeah, look, I I I think that um some of the stuff that has happened

around kind of web 3ish things that are more entertainment driven, I I see a little it's I struggle to see that. Um, the other areas where I just don't understand and maybe there's an incredible opportunity but I haven't gotten my head around is all these people are trying to integrate sort of blockchain and AI and it feels to me, you know, it's a little buzzwordy and again I don't know enough about it. Um, and so maybe there's something there that I'm missing, but um, those are those are areas that, you know, they're certainly not a focus for us. Let's put it that way.

>> Crypto AI is buzzwordy is a nice way to put it. I think I think you're absolutely uh correct on that one. And and you're right, web 3 gaming, like some of these things, maybe they're just early or maybe they got a little overblown. The metaverse, there there's a couple of those things in there as well. But generally the trend we're seeing and and where you know people are putting their m their their money where their mouth is is on payments, stable coins, infrastructure for not traditional finance, not decent just finance to come on chain and disintermediate a lot of the the rent seekers of of you know an old world. So Nick, thank you so much man. It's really been a fun conversation and would love to have you back again soon once we once

we eclipse the four five billion mark on Janice Anderson we start racking getting those numbers up. >> Yeah, thanks Robbie. Good to be here. Hey hey hey.

Heat. Heat. Heat. Hey, heat. Hey, heat.

Heat. Heat. [Music] All right, we're live. Tony, welcome to the show. It's a pleasure to have you on.

>> Yeah, you too. Good to be here. >> Likewise. Well, I uh I'm really excited to have this chat. We've been hearing so much about stable coins and Polygon is is uh the sponsor of this of this segment. Uh and they recently have had a lot of exciting and interesting things that have happened on their chain. 500 million dollars of of uh Bidd has been transacting. People are kind of kind of coming up with uh their their uh uh not quite conspiracies but everyone's speculating as to what this could possibly mean. Uh so there's a lot of excitement around around this as well as the stable coin super cycle that we are that we are calling it. uh you guys are at the heart of this industry and uh powering the convergence of Wall Street and uh onchain finance and digital

assets with uh uh is it Ubix or Ubix. I want to make sure I get the pronunciation right. >> You can you can pronounce it however you want. You could do Ubix, Ubix. You can say Ubix. I don't mind. You can say whatever you like. >> I love it. I love it. Well, we're going to make sure that stable coins become ubiquitous. That's for sure. Uh >> that's the story. >> Absolutely. Well, you know, I I've been in the in the digital asset crypto space here for a while. I'd love to hear uh since it is your first time on the show, how you got into the space. >> Um and uh just kind of, you know, the story about how how you uh how you came to be here uh on stable coins.

>> Yeah. Well, look, I've been I've been working in um you know, what I now call what everyone calls stratfi for 30 years and always always in the traditional payment space. and I've done every kind of uh payment system in the trady space that you can possibly imagine. My very first job was working on traveler's checks, which I'm sure you've never laid hands on a traveler's check because they're essentially gone now. Um but look, I was working on all different types of payments, foreign exchange, um for in corporate cash management the last 20 years for a big American bank, City

Bank. You might have heard of them. >> Mhm. >> And in the last couple of years, I turned my attention to working on, you know, to tokens and chains. But up until the US election really the the story from the US regulators was not very friendly towards public chains. Um there was really a big keep off the grass sign for public chains. But then after the US election uh things changed and um you know it became obvious to me after the election that banks in the in the course of you know in the natural course of things would migrate onto public chains if they were allowed to do

so. And I also realized that stable coins, tokenized deposits, tokenized money market funds, you know, the that this is not the origin of crypto, but those kinds of instruments on on chains would be super super compelling. And so I decided to spend zero more time on private permission chains and uh try to try to try to incorporate stable coins into the regulated financial system in a in a good in a good way. in in a way where look I you know I I kind of think it would be really neat if the if the worlds of trfy and web 3 came together

in a way where peer-to-peer transactions kind of got delivered in a way that the Bitcoin white paper kind of wanted to do you know albeit with a compromise and that compromise is it's going to happen in stable coins which are pegged to fiat currency and not in a non-s sovereign currency the unit. Um, so there's a very strange and interesting synthesis I think will appear between the original ideology of crypto and what will emerge from stable coin ubiquity. >> Yeah, I I'm extremely excited to hear you you describe this vision that you have and how you made the transition from the the traditional financial world as as we've come to call it into one

that is onchain. uh because we also recognize a lot of the same benefits of this technology. And >> you you described this as you were working uh at City Bank and and you sort of recognized how compelling blockchains were. Um but not just private blockchains, you recognized that from the public blockchain landscape, this is where composability and liquidity ultimately coaleses. Could you could you just reinforce in our viewers why it's so important that as enterprises come onchain, why is it so important that they come onto a public blockchain and not one of these consortium walled gardens of a of a private blockchain?

>> Yeah, it's a that's almost like the the critical question. Um the private there's nothing wrong functionally with the private chains. It's an adoption problem you know for for 10 years uh you know the the banks and the the traditional players have been doing PC's and experiments and you know this the experiments are in in one sense they're ridiculous because what what the what the banks and the traditional players say to themselves is does does my use case work on a blockchain and the answer is yes because the blockchains are just like curing

complete computers. So of course your use case works on on a blockchain. >> You have a ledger, don't you? >> Yeah. This is just >> ledger upgrade. >> Exactly. If your use if your use case works on a on a relational database, your your use case works on a on a blockchain. So that's you know, does my use case work on a blockchain isn't a good question. The answer is yes. And actually it works on a private blockchain or it works on a public blockchain. The big difference is that in the private blockchain world, you you have a significant adoption problem.

Now, look look at every look at the dozens and dozens of attempted consorcia in private blockchains and they've all failed or they're failing. >> Mhm. >> And so the truth of it is that the public blockchains already exist. they already have users and so you don't have the the boot problem. Uh all you have to all you have to do is to actually decide to you know it's quite it's quite interesting that what what mental model do you bring to what is a what is a blockchain? I I see a blockchain like it's a venue and it's a venue where people transact in you know a bank in the in the 20th

century didn't find it strange to put a branch on the high street because that's where people congregated to do business. a bank in the 2000s, early 2000s or late 90s didn't find it strange to put, you know, mobile banking and internet banking on the internet because that's where people were doing business. So why is it a strange idea to set up shop in a blockchain where people are congre congregating to do business?

So it's to me it's a it's a natural evolution. You you want to follow your customers where they are. Mhm. >> You want to set up shop where your customers are. >> If you don't set up shop on the public chains, then they're not going to use you. >> Yeah, I think this is a really important point and you you describe this and I think it highlights why the path dependency is so important because we saw such a such an enormous uh capital movement on chain. If some of the private blockchains have been spun up maybe earlier or they had rolled out quicker then we would have seen liquidity coales there. But now that public blockchains have amassed so much liquidity and and again $500

million of you know tokenized structured products on something like Polygon which is a public chain. These are now the the venues as you describe them. >> Yeah. Uh and so this is where we're going to see continued adoption coales around them. Uh and so I I'm curious maybe to learn a little bit more about uh Ubix h how do you help to facilitate the enterprises that you know they have some existing distribution some existing customer base and are now starting to adopt and and kind of make their foray into the blockchain world. what is what is the story and how do you how do you help to onboard some of these

enterprises onto public blockchains? >> Okay, so if you look I I I just um start with very basic building blocks. If you believe that we're moving into a world of tokens and chains, but then if you say to yourself, look, I don't know which tokens are going to win and I don't know which chains are going to win. Obviously, we're on the Polygon Polygon sponsor segment, so Polygon's going to win, right? Um, but let's say that you don't really know which token's going to win and which chain is going to win. The basic thing that you know for sure if you are any bank or any fintech on the planet is that you need a wallet

and you need a wallet capable of connecting to multiple chains. So this is the planning assumption everyone should have. Everyone should get used to the idea that everyone on the planet is going to have access to a wallet which is connected to multiple chains and capable of processing multiple tokens. That's the playing field. That's the arena. Now the the the beautiful merger of TRFI and web 3 is when every bank and fintech offers a wallet. Now I I want to be very clear. I'm not saying I'm not against self-custodial wallets at all.

Self-custod self-custodial wallets are freely available. And if people want to use self-custodial wallets, they should use self-custodial wallets. What is not free freely available is a wallet provided by your bank or your fintech that's not freely available but it will become so this is a firm prediction you know I I firmly predict that every bank and fintech on the planet will offer a wallet because that's the new form factor to deal in this world of tokens and chains.

So, if you just personalize this, if you well, not not personalize it because you're a crypto, you know, cryptonative guy, but your second cousin who isn't cryptonative, if they want to be able to receive a stable coin, but actually they just want the money to be received in stable coin format and then turned into their fintech balance or their or their bank balance, >> then it would be really convenient for your second cousin to have a wallet provided by their bank or their fintech >> and then the stable coin goes into that wallet and the bank converts it into a bank balance.

>> Mhm. >> Now that presents a problem for the bank or the fintech and the problem is there are going to be hundreds of tokens. There are going to be hundreds of different stable coins, different tokenized deposits, different money market funds. The bank has to turn those things into cash. And so this is where a clearing system comes in because in order for your second cousin's bank to give your second cousin cash, your bank needs to turn the tokens into cash. So you can think of Ubix just as a as a black box. Your second cousin's bank gives the basket of tokens to Ubix and we give the bank cash.

Now, how we do that within the blackbox, um, I won't open it up too much, but it's a way of turning tokens into cash without being an exchange. >> Mhm. >> So, we do not act as an exchange. We act as a clearing system, not as an exchange. And that's a very very fundamental difference. >> Yeah. >> Because in an exchange, you're not guaranteed par value redemption. We're seeking to guarantee par value redemption. Like a stable co, if your second cousin deposits five different stable coins from five different issuers uh for 100 bucks each, your second cousin should get 500 bucks.

>> Right. Right. And what the second cousin may not realize is that this stable coin is trading at 1.01. This one's at.99. And they want the $500 and they want to be abstracted away. And basically all this is average out >> at par like you're saying. >> Yeah. >> And this is >> well this is sorry >> go ahead. >> This is the this is the thing about like these different worlds colliding like you know your your world of crypto is one where stable coin is an instrument that trades. Mhm.

>> And my world of 30 years ago from when I started pro when I started working with checks is an is a is a world where these instruments clear. >> And so the the the real answer is that stable coins banks and fintex can actually process stable coins like checks. And that's the way that the so banks and fintex don't want to act as exchanges. When you when you take a check to your bank, they're not buying it from you.

They're depositing the money in your account after getting money from the issuer. So, these these are this is I'm I'm kind of like my my age on this is a is a is a blessing and a curse because, you know, crypto guys don't know checks and traditional people don't know crypto. And so I'm slightly like the, you know, in the land of the blind, the oneeyed man is has got some some some insight because I'm straddling these two worlds of checks and stable coins. >> But between the two of us, we can we can square this circle. We can balance, >> right?

>> And so I I' I'd love to learn more about your world in checks and how stable coins can clear similar to checks. Yeah. because I live in this hyper financialized world where everything is trading and it it's a constant state of flux but your world >> seems a lot more stable a lot more even keel and I think that's what banks particularly enjoy >> well you I mean you will enjoy this as well I mean at the point at the point at which stable coins become ubiquitous what are we talking about like if you add up the if you add up the revenue that the st all of the stable coins make I I mean maybe you get I don't know maybe you get 17 or 18 billion and that might sound like a lot of money but it's

not because the total payments TAM is $2.5 trillion >> so I genuinely so what I think is is happening is this everyone on the planet is going to have a wallet those wallets are going to be connected to multiple blockchains there will be many stable coins tokenized deposits uh many cryptocurrencies tokenized money market funds real world assets sets and this form factor will take over the entire payments tab. Every payment type, domestic payments, international payments, crossber payments, every payment will fall to this form factor because this the the token on a public blockchain is the

generalpurpose technology. If you think about it, the st a stable coin is a use case of a general purpose technology. Um, and I I gave you the analogy that I like to use. Um, I used to have uh an alarm clock beside my bed. I used to have a Walkman. I used to have um, you know, a calculator. And I used to have a landline. >> And now I don't have any of those things because they're all incorporated and subsumed within my phone.

And people at the moment these are so what happens in technology is that the general purpose technology subsumes the special purpose technology. So in payments the special purpose technology is cash, check, credit card, debit card, AC, swift etc. These can all be subsumed within the world of tokens on public chains. And that's what's going to happen. >> Yeah. And once that happens, we're going to see the likes of, like you mentioned, all these different form factors. In the specific case, right now, the the tendencies for a lot of the founders of of companies in the tokenized onchain financial world to

build these everything apps, this one place to rule them all. Robin Hood is doing this. Uh there's several there's several companies that are doing this and they're trying to build everything in in one because it's all right there on our phone. Everything is tap and if you can have a depository institution right next to a financial institution that can't handle trading and investing then we have an opportunity to verticalize this entire stack. And so when you're when you're looking at this and you're building infrastructure to help this, I I I'm curious how just to learn more about the clearing process for stable coins.

>> Yeah. >> And and you were at City Bank and you helped to build the city's regulated liability network before founding. >> Was this when you were using C travelers checks and you were you were working to clear these? I just love to learn more about how this clearing process works because again all of these stable coins from my perspective are in flux. Some trading at par, some trading above or below par very slightly. But if you can go direct to the issuer, >> then you can >> you can mint and redeem these at par and then transfer or clear those on behalf of the bank that is looking to uh >> deliver the end balance to the end consumer.

>> Yeah. what is what is the process to make this happen and and how similar or different or how much can you rely on the infrastructure that you built in this regulated liability network? H how have you been able to extend that in the application of of blockchains and stable coins? So I think I think the most useful thing I could do to get like a deep understanding of of where where do these worlds combine and to do that um I'd like to talk about something which I mean you you don't need to be familiar with it because it's like jargon. It's something called a negotiable instrument.

So here's here's what a negotiable instrument is. You give me 10 bucks and I write on a piece of paper, I owe I owe the bearer of this piece of paper $10 payable on demand signed Tony. So when I write that piece of paper, I've issued a negotiable instrument. Now what can you do with that? So I've got your 10 bucks, right? I put your 10 bucks in my pocket, >> you know what? So I'm fully I'm a fully reserved issuer, right? I'm a fully reserved issuer of a of a of a piece of paper. You know, that piece of paper is now in your hand and that piece of paper is a token.

So what can you do with it? So the first thing you can do with it is you can come directly back to me and say, "Give me my 10 bucks." >> That's a little bit like you going to circle directly if you're an institutional client. That's like you go directly back to circle and get your and get your money back. The second thing with you can do with that piece of paper is let's say that let's say that I disappear and you you can sell that piece of paper to somebody else. You can trade it. Now if you sell that that's a that's a that's a piece of paper where the issuer is Tony and Tony's got 10 bucks in his pocket so he's fully reserved.

So, you can sell that item, but someone might not give you um $1 for it or $10 for it. They might give you they might give it to you at a discount and they should give it to you at a discount because there's counterparty risk on Tony, right? >> I think Tonyy's a good guy. You don't you're not you don't have the >> Well, that that's okay. But you you you might buy it for 10 bucks, but somebody else might buy it for 9.95. And that's that's what the negotiability means. Negotiability means that the price isn't fixed.

So these two modes exist in stable coins, right? So you see that you see the analogy between the piece of paper can go back to the issuer. The piece of paper can be traded. Now here here's the here's the important question. Is the piece of paper intrinsic? In other words, if I had written that I owe you on a on a on a on a clay tablet, does it mean the same or different? It means the same, right? >> Mhm. >> If I etched I owe you 10 bucks into a piece of metal, does it mean something different? Does the medium mean anything different?

Does it mean anything different? Right. >> Right. >> If if I store that IOU on a relational database, does it mean anything different? M it does not >> doesn't mean anything different >> right >> so if I if I represent the IOU as an ERC20 token does it mean anything different >> it does not >> so this is the key thing when people define stable coins they often say it's a crypto asset with reference to fiat currency it's not >> that's not what it is a stable coin is a is an old-fashioned negotiable instrument wearing new clothes >> Mhm. Mhm. So, a stable coin is a negotiable instrument and we've had negotiable instruments for hundreds of

years, thousands of years. And the funny thing is there is one modality of what you can do with a negotiable instrument that exists in checks that does not exist in stable coins. And that modality is you can take a check to your bank and get par value. And you can't take a stable coin to your bank and get par value. >> And why is that? >> Because the banks view stable coins as crypto assets and they're afraid to touch crypto assets because the regulators have defined these things wrongly. Mhm.

>> So if the regulators would say these are six magic I mean these are really magic words. They're are magical words. The following six words banks well banks and in parenthesis fintex banks can process stable coins like checks. Now if if someone in authority were to utter those words, the Fed governor, the Treasury Secretary, the president does a truth social, banks can process stable coins like checks.

Every bank, every fintech on the planet would start processing them like checks. and they would say, "Wow, there's a way for me to process stable coins where I don't have to act as an exchange. I'm going to do that." You know, think of think of the plight of like community banks in America are scared about stable coins causing deposit flight. >> Mhm. But actually if community banks open up wallets for their customers and enable their customers to receive stable coins like checks, it's money into the balance sheet of the community banks.

>> I mean generally these are six magical magical words that will and it will unleash bank and fintech participation. Now if you want to sell if you want to sell your stable coins in exchange do it. If you want to take them back to the issuer, do it. This is a third lane on the highway. >> Yeah. Now, I think you'd agree with the statement that not all stable coins are created equal. >> Yeah.

>> And you know, we're we've got sort of this impending Cambrian explosion of stable coins. >> Yeah. every Walmart stable coin, Amazon stable coin, the we had the uh Wyoming stable token commission, the the state of Wyoming is going to be launching a stable coin, >> stable coins galore, >> this Cambrian explosion, several orders of stable coins, all with different varying uh issuance policies, reserve requirements. the Genius Act did help to regulate and stabilize a certain subset of these stable coins, but generally not all stable coins are created equal.

>> So, kind of a a loaded question, but I I'm curious. Do you think that whether it's the president or some issuer, regulator, will they utter those words that banks should accept stable coins as checks? And if so, how do we know what fits the criteria of stable coins that should be jacks? Is it should it be all stable coins? Should it just be genius compliant stable coins? Or is there some other >> uh uh list of criteria formula in order to process which stable coins meet that those requirements?

>> So, so, so we'll look let's let's work out or let's think about how our civilization has solved these problems in the recent past, right? So in the US there are 5,000 banks. There are 5,000 banks. Every single one of those banks can issue checks. Every one of those banks can issue checks. >> Mhm. >> Now does that mean there's fragmentation? No, there's no fragmentation. >> Right. Because all of those checks are funible >> because you if I give you like there's 5,000 choose five. If I give you a random selection of five checks from the 5,000 You don't give a damn about the issuer.

You don't give a damn about the issuer. You and I'm talking about I'm talking now about a cashier's check. I'm talking about a check drawn on the bank. >> If I give you five cashier check from any bank in the land, what do you do with it? You take those five checks to your own bank. So that that that um quality of you not caring about the issuer is a very important quality called singleness of money. >> It means that a dollar is a dollar. You don't care about the issuer. That's the no questions asked principle.

You you give those five checks into your bank and you don't care about the issuer. So I I say you should be able to give the five stable coins into your bank and not care about the issuer as long as and this is the case with the banks. All those banks we're talking about in the US, they're all regulated. >> So here's here's another parallel. Do you know do you know how many card issuers there are on the planet? uh as in MX, Discover, Capital One, these sorts of >> Well, well, there are 16,000 cards on the planet.

>> Okay. >> Is there fragmentation? No, there is zero fragmentation because like I come from I come from the UK and I come into the US and in the US I use my UK card and I go to Macy's and Macy's doesn't care about the issuer and there are 16,000 issuers. So when I when I see people say well there's going to be a lots of uh stable coin issuers and that's fragmentation I I have to laugh. This is a failure to this is a failure to understand the previous cycles of payments technology.

There will be this I've also hear people say there are only going to be a few stable coin issuers because there's a power law. I have to laugh. So in in the age of checks the market structure is everyone can issue checks. There's no bank that can't issue checks. There's no bank that can't receive them. In the age of debit and credit cards, everyone can issue, everyone can receive. In the age of a faster payments, everyone can send, everyone can receive. In the age of stable coins, I guarantee you there will be thousands of issuers and it will be no problem. No problem whatsoever because you'll be able to take any five

stable coins from any regulated issuer to your bank and your bank will deposit them like a check. No problem. >> So you know the we have to place all I'm asking for is this. Let's place stable coins in the historical context and everything is is quite clear. How things will turn out is quite clear. There's nothing there's nothing in the stable coin that make that will make it depart from history in that respect.

>> Mhm. shifting gears a little bit to CBDC's because >> they this does draw a distinction between stable coins and CBDC's and so when you're looking at CBDC's and you think to yourself oh I think to myself look CBDC is a stable coin but a stable coin is not a CBDC meaning that a CBDC sort of has these centralized properties to it >> stable coins are a wider ider basket.

And so when you think about stable coins in general, all fungeable and issuance, everyone is sort of treated equally. Do you put CBDC's into that category as well or do you draw a distinction between the two? So there there is the distinction that exists between CBDC tokenized deposit and stable coins is uh a kind of it's the reason why people make that distinction is because they're lumping together the issuer with the instrument. So actually what is the instrument? The instrument is a token that can be redeemed at par value on demand.

Who can issue such an instrument? A a non-bank like Circle can issue such an instrument. A bank with a balance sheet can issue such an instrument. Uh a central bank can issue such an instrument. So let's think that again in the in the US context there are different types of issuers of checks. So a traveler's check was issued by a non-bank. There are there are there are small FDIC uh regulated banks. There are big OC regulated banks. You can have a check issued against a money market fund. Um back in the day, your credit card company used to give you a

checkbook and you could write a check against your credit limit from your credit card company. So the check is the instrument that is capable of being cleared. But the issuer doesn't have to be the same kind of issuer. So to to be to answer your question directly in my definition a CBDC is just a stable coin issued by a central bank. A tokenized deposit is just a stable coin issued by a commercial bank. And what we call a stable coin is a pre you know the fact that the stable coins that we see today are preunded instruments doesn't mean that they always have to be preunded instruments.

It's just something the the the the best definition of a stable coin is is it's in the name. It's something which is stable against the the fiat currency. It's something that if if I was to get if I was to give you like a traveler's check and a check drawn against an FDIC bank and a check drawn against an OC bank and a check drawn against a money market fund and a check drawn against a credit card issuer. You don't give a damn about the issuer. the the property that we're looking for. The way that you incorporate stable coins into the financial system is you get to the point where you don't give a damn about the issuer.

>> Yeah. I'm now building on this as we're thinking about clearing these stable coins like checks between issuers and banks >> and delivering fiat. >> How how do you just to open up the black box a little bit if you don't mind? How do how do you actually do this >> uh so that we can understand a little bit more once we now that we've got the issuance, we've got the stable coins, we understand how checks are processed, how do you actually clear these payments? Okay. So, clear clearing there's you basically have two flavors of clearing in the world and you've got the the the smart form of clearing within the cap

the kind of markets area where people have central counterparties and there's margining and there's all sorts of there's all sorts of uh fancy things going on in securities clearing and then you've got very basic payments clearing and check clearing. So check clearing it. Check clearing and stable coin clearing is like this. You're this is going to be my stable coin. Okay. Sta stable coin gets received into my wallet at Wells Fargo. >> Stable coin has to get turned into dollars because Wells Fargo want to give you the dollars. Wells Fargo give the stable coin to me. I give the stable coin to the issuer.

>> The issuer says good stable coin. >> Yep. The issuer gives the dollars to me. I give the dollars to Wells Fargo. Wells Fargo gives the dollars to you. >> That's it's just the DVP. It's just a DVP. The stable coin goes one direction, the dollars go the other direction. >> Mhm. >> Now, the again this this mechanism is only invoked when you want to turn the stable coin into fiat. Mhm. >> There's no again I'm not saying that that's what you should do. If you want to hold on to the stable coin by and then send onwards by all means do that.

>> I'm only talk this my mechanism only comes into play when the token has to get turned into fiat. >> Yep. Understood. >> Now when but but when would that when would that be useful? So, imagine imagine now you're imagine you're a corporation and imagine that you sell $10 million of uh of services per day over your website >> and you've got $10 million worth of stable coins coming in every day. There are going to be many many issuers from many countries. So, you might end up with a wallet with a hundred different stable coins. You don't want a 100 different stable coins. you want to

consolidate consolidate that all down. Now, maybe you want to consolidate into a single stable coin or maybe you want to consolidate it into into cash on your bank account. >> Mhm. >> So, the only place that my thing comes into being is when people want to turn the tokens into cash, >> right? >> And that's not always, that's just sometimes. Mhm. I can imagine a scenario where to the end consumer uh a business person that has a bank account and has a wallet at that bank account. The number that's shown as far as my balance at that bank is a combination. It's a sum of the stable coins and the fiat that I hold at that

bank. >> Sure. >> And I can understand how the >> the number from my perspective won't change. But on the bank's perspective, they might go and facilitate in order to balance their books and they might take the liberty on my behalf to clear some of those stable coins into some fiat in order so that they can efficiently print uh process transactions. >> Yeah. Well, you put yourself again in the position of the CEO of a community bank. If you give your customer a wallet and the stable coin goes into that wallet and it sits there, the stable coin is not on your balance sheet, it's essentially in custody, >> right?

>> You know, assets in custody are not on a bank's balance sheet. So, what you want as the CEO of that community bank is to convert it into money on your balance sheet because then you can use it for lending. So I I would suggest that the first thing that a the first service that a bank is likely to offer is conversion of the stable coin into a bank balance because the bank wants the money on their balance sheet. This is a good service. You know, the the reason why this is good is because if every bank and fintech in the world have wallets and offer that conversion service, then we've dramatically increased the supply of regulated

wallets. That's good. Again, I you know, I've got no problem with people having self-custody wallets if they want to. But on mass, let's say that the US pumps $3 trillion worth of stable coins into the planet. Do we want $3 trillion on unhosted wallets? Look, I I think if that's the case, what will happen is the central banks around the world will will move into a very unfriendly stance against stable coins. And that's not what we want.

We want governments around the world to consider American stable coins a gift. When back in the day when people from America traveled into the rest of the world holding in their hands the American Express travelers check, they were warmly received and everywhere in the world, every bank in the world, every bureau des every hotel in the world accepted American Express travelers checks with gratitude. >> Mh. And the reason why is because when you not you but your parents went into Paris with an American Express travelers check and they took that check to the bank that bank made foreign exchange.

That bank was very happy. Now if the world gratefully accepted American Express travelers checks, it should be the world should be even happier to accept American stable coins. >> Mhm. And and it's super bizarre to me that the the dialogue outside of America is countries outside of America are afraid of American stable coins, but if they catch them in their banks and fintexs, they're a gift and something else happens. Once every bank and fintech have a wallet, then American stable coins will no longer dominate because the distribution

channel will be there for stable coins from every country. And you know, there's no reason when a Japanese yen stable coin comes into America, an American bank or fintech makes FX. >> Mhm. >> So Japanese yen stable coins in America are a gift from the Japanese to the Americans. American stable coins going into Japan are a gift from America to Japan. So these are little bundles of joy. Stable coins I define as being a little bundle of joy. >> I love it. I love it. Um Tony, man, I got I got two more questions and I know we're kind of running up on time, so I want to Yeah.

>> I want to speedrun. I I love the concept that every bank in fintech is going to have its own wallet. Yeah. and and this allows them to take receipt of the the little bundles of joy that we're passing around the world. Will Ubix offer a wallet as a service? Since you're building a lot of the the banking relationships and and you you have experience with stable coins and building relationships with the issuance uh the issuing partners, will you also offer a uh a wallet to these banks?

We deliberately won't because there are many great wallet providers. But what we'll do is we'll go we'll go to market with the wallet providers. So so >> we'll go to market with the wallet providers and the chains and the analytics companies and we'll provide together we'll provide trady with the equipment that they need to capture the bundles of joy. >> Right? Let's just call stable coins bundles of joy from now on. Right? >> I love it. So, so this is the this is the the thing we have to change the go to market, right? So, so wallet providers go to banks and they think they're selling custody and chains go to banks and every bank there the chains go to the banks and they say my chain is

the best. This is this is not the game. >> The the thing that we're selling to the banks and the fintex is the opportunity to catch stable coins and convert them because then they'll make fees in FX. Mhm. >> And our go to market as an industry as a so look I love poly polygon but if you if we try to go to an individual bank and say polygon is the only chain to connect to they'll be stuck for years they'll be okay is it the right one you're you're asking people to make a false choice it's much better to say this to a bank I I just plead with you know everyone in our industry to think about this

Don't ask people to make a decision that they don't need to make immediately. We the bank doesn't know which token or chain will win. What we should do is give them a wallet connected to all the chains. Once the bank has a wallet connected to all the chains, then the natural advantage of each of the chain will come to come to the fork. Some chains will be good for one use case, another chain will be good for another use case. But our joint the the way that we get to positive network effects is we all say the same thing. You know, look, if you're not if the the the baseline, every bank in fintech needs a wallet.

>> Yeah. >> Baseline. Let's start with that. That's the building block. Then the the ch the chain wars and the token wars happen on top of that infrastructure. >> Mhm. >> But let's make the first step first. >> Yeah. Yeah. Well said. Last last question. Uh through the research that we did on Ubix, we we discovered that there is a you're starting to explore the concepts of decentralizing this network. >> Yes. >> What does that look like to to take this clearing network of stable coins and transform it into a decentralized network of of clearing?

>> Yeah. um we we need to walk the talk of uh being you know being in the space and I you know we look we don't want to build a monolith you know the the monoliths that we've got at the moment like the um the card schemes for example they've got centralized rule book and centralized technologies we want to do something different so we will have a rule book we want it to have community governance but in a responsible way >> uh we'll have a technology stack that to begin with will be quite centralized, but we wanted to be decentralized and resilient over time.

So we just want to be look if you were if you were rebuilding a card scheme from scratch today, you wouldn't you wouldn't rebuild the ones that we have today. So our our thing is let's uh use the best technology decentralized technology available but first we have to boot the network. We have to we we went live like in the last week. >> Um you know six months after forming the company we went live. So we have to get things going crank the engine. Um but our machine going forward we want to be progressively decentralized.

>> Makes sense. Tony, congrats on going live. Uh congrats on all the great work so far and thank you so much for for coming on the show and helping educate myself as well as our audience on all of your experience and your insights that you ga gathered over the years. really really appreciate it. >> Well, it's a great pleasure and these worlds are coming together and you know, look, it it just takes a little bit of um of us each moving towards each other's space. So, >> lots of people in Tradfi, they've never seen a stable coin. So, the people in TRDFI um can take a step forward towards DeFi and web 3 by just getting a wallet and experience a stable coin. And vice versa, if you're a crypto dude and you can't get to sleep at night, read UCC

article 3 and UC article 4. >> Put your right to sleep. >> Put your right to sleep. But also the if you get your head around the fact that stable coins are negotiable instruments. So UCC article 3 is the definition of negotiable instruments. If you get your head around the fact that a stable coin is a negotiable instrument, you you make a you the worlds really combine and the future of the stable coin market structure becomes clear. >> Yeah.

>> So this is about both worlds making a slight effort to get to know each other because we're on a collision course, man. >> Yeah. Yeah. I think so. Ultimately, this is converging. It's important to get back to the basics. And I'm going to check I'm going to check those out because uh this was this was a great great uh opportunity to learn about negotiable instruments and and all the things that you brought here today. So yeah, cool. I I really appreciate getting the opportunity to know you, get to know Clearing and uh you know share a little bundle of joy with one another in the form of stable coins. >> Exactly. The bundles of joy are going to be sent all over the world very soon.

>> Yeah. And the banks are going to do quite well via Forex. Uh Forex and the bundle of joy. >> Tony, thank you so much, man. enjoy the rest of your day and have a great weekend and uh >> Thank you. >> Yeah. Yeah. Would love to have you on again soon. >> Yeah. >> Awesome. Cheers. Bye. >> Cheers. >> Love it. Absolut absolutely great conversation. I love uh learning from these people that clearly have uh have gone through history and gone through uh their business experience and business journey um in in such a way in which they've they've picked up so many insights and uh I I love when people can come on and they can share these insights and you know we can learn and we can share all of that information and knowledge with you guys. Thank you so

much guys. Uh we've got one more guest. We're gonna flip the screen and uh we're gonna chat with Dan from Wormhole coming up next. All right, we are live. Dan, welcome to

the show. It's a pleasure to have you on man. >> Great to be here. Thanks for having me. >> Oh, yeah. Uh, you guys just launched Portal Earn. Congrats on the product launch. Very, very cool to see. Uh, just had a great conversation about stable coins with Tony. uh passing around little bundles of joy around the world so that banks can make FX. Uh and I mean you guys have seen quite a bit of stable coins go through the wormhole bridge and ultimately uh anticipate that they'll end up in the portal and on ER. Um man I it you know I would love just kind of a foray into into ER. maybe you could just give us, you know, a primer on this launch and then we can dig into it all all of the all the positive consequences and second order effects as a result of

incorporating this into the wormhole stack. >> Yeah, definitely. Um, so Portal is is kind of the main UI for for people to use wormhole going back to around 2021, about a year after wormholes like v1 launched. Um, portal back then was more of a a token bridge for wrap tokens because that was basically the industry standard back then. And of course over time we've evolved to kind of native uh burn and admin models and that's been integrated into portal. So now comparing Portal now to comparing uh portal to 2021 is basically just a completely different product and the user experience has improved significantly especially in the past year or so I would say and and part of that is we were thinking about kind of our goals

around volume and driving more users and and how do we achieve that and the solution and one of the solutions we came up with was portal earn which we were kind of looking at as almost like an onchain version of Binance earn if you will it's it's a combination of like crypto loyalty programs with things like credit card programs, airline miles, we integrated status and things like this. And the goal is to really reward users. There's already been hundreds of thousands of users using Portal over the years, so why not reward them for doing so? And then on the integrator side, we work with a lot of chains and we work with a lot of asset issuers. Um, and a lot of these these partners of ours are already lining up to to work with us on Portalarn because it allows them to work

with us to really divert traffic to exactly where they want it to go even within their chain. Um, so an example is Uni Chain. We we launched this yesterday with Uni Chain as the first kind of campaign partner and we're able to incentivize specifically Soul and Hype to go to Uni Chain and then even when they land on Uni Chain, we're able to give, you know, not not direct um you know, direction, but suggestions of like, okay, here's a link to this pool that that might be incentivized already on Uni Chain. If you're a user, you know, go check it out after you land on Uni Chain. So you can imagine if you're unit chain, this is valuable because you're getting traffic driven to your chain and you're able to kind of divert that to even the specific parts of DeFi

that that you want to. I I think it's really counterintuitive for people to start to think about bridging something like hype outside of the hyperlquid ecosystem and going into uni chain, but it ultimately makes these it proliferates these assets and it kind of makes them ubiquitous across several different ecosystems and and you really kind of just have assets and bridges and that they ultimately land on on on you know into these pools but it makes up each of these ecosystems and so you're incentivizing some of this activity I also saw some more bridges kind of open up between Salana base. Hyperl is now going to uni chain. When you're thinking about incentive incentives and ultimately like helping people recognize

some of the opportunities in LPS and capital and and where they can put that capital on some of these destination chains like why did you choose Hyperlquid? Why did you choose to to kind of incentivize this particular route? And then how do you make those suggestions? Like, hey, you have Hyperliquid, it's on Uni Chain, you should maybe go into this pool. What's the what's the, you know, if you could open up the black box and tell us a little bit more about the formula that goes into it. What what is that? >> Yeah, it becomes a lot easier to visualize obviously if you if people go to the the URL, it's earn.bridge.com.

Um, and it's you you connect your wallet and then you see a list of activities. Um those activities basically are you know things that you can do to earn rewards and that could be just a general transfer of a token which I think is like a three XP per dollar transferred and then the uni uni chain campaign is bumped up to 10. Um and the reason why so go to that website you can check out kind of how it's all laid out and then for uni chain specifically and then for any other chain a lot of it's actually um conversations with the ecosystem that we're that we're working with. So um in this case RBD team was working with various contributors in the uni chain ecosystem and and kind of the output of that was was driving hype and soul. As a

as a crypto user I would say those are two of the most I'd say high volume popular um assets at this time. So it kind of makes sense that you would want want those assets onto your onto your you know new beginning to flourish DeFi ecosystem. So that's how Uni Chain decided to do this. And then we've got a bunch of other chain launches that are going to be coming as as campaigns on portal. Um and there will be, you know, different strategies even on on our end with with which assets are being incentivized, which kind of DeFi um activities or pools are being incentivized. So it'll it'll vary. And then as we have more and more of these campaigns almost like stacked on top of each other, the the users using Portal

Learn are going to have the the benefit of actually getting to experiment with different ecosystems that they may have previously not necessarily spent the time to to get to know. >> Yeah, it feels like kind of yield farming is coming back too. This is a phenomenon that we're seeing uh really can try just take hold. Um and and I remember this is how I got started because you know I I recognize there's opportunities that if you're looking for them, they are there. Uh and you know someone may be uh surface level aware of something like a hyperlquid asset, but as far as the opportunities that they can make uh as far as earning some of those rewards, it becomes available once you start to look a little bit deeper.

And so, you know, now I think we're going to we're we're going to try to get the the portal up on on the show, but while we're working on that, I'm curious, you know, th this is now another component to the wormhole stack. You guys have vertically integrated several of these components by partnering with a lot of the the, you know, the chains, the assets that are out there and that are in demand. H how do how does ER complement the rest of the wormhole stack? Like you said, a lot of people have been already using portal, but now you're looping in earn.

I mean, generally the interop space is moving at a break neck speed. How what what's your perspective on on the landscape of interrupt these days? And how does bringing earn into this help just round out this this stack as a whole? >> Yeah. Yeah. I'll even zoom out a little bit more than that. like your your previous comment about hype moving to uni chain and away from the hyperlquid ecosystem. It we really look at at at the crypto ecosystem as one economy. Of course, there's sub economies, but we think about an asset like hyperlquid just like we would think about the dollar in in the real world. Like you've got dollars in the US, but there's no reason that doesn't flow to Europe, that

doesn't flow to Asia. Of course, dollars are everywhere, but these sub economies are like blockchains. Um, so that's how we see assets. We don't see any asset like ETH, like soul being limited just to that blockchain. This is all one economy and and wormholes connecting all that together, which is why we're so excited about about working on a project like this. And and I actually previously worked on several blockchain teams. I was in the Polka Dot ecosystem for a while and and a few others. And that was I I've learned a lot zooming out being on wormhole now and we we work with everyone >> versus these L1s. They're all, you know, super competitive with each other fighting over the same users and same liquidity oftent times. So, it's really made me even more bullish on the

industry just seeing how it doesn't really matter what new chains launch. It doesn't matter what new chains win. Um there will be this multi-chain economy and that's that's already kind of been established. It wasn't that wasn't kind of a a generally understood concept back when we started started Wormhole in 2020. So multi-chain is here to stay. That's for sure. >> And then how we're looking at Portal in general and I would say it's it's more about Portal even than Portal earn. Portal earn is like the it's the reward and loyalty program that we're that we're putting on top of this. But even more recently um we just announced Portal Swap just a week ago too. This is a essentially a DEX. It's for samechain swaps. So if you want to swap soul for

USDC on Salana, you can make that swap, you know, from a Salana wallet to a Salana wallet right in Portal, that's actually powered by Mayan, which is one of the top intense based um crosschain swaps protocols, but they also power samechain swaps. So um Portal has gone from being of course a place where you can transfer tokens from one chain to another, but now you can also accomplish another goal if you want to make a swap on any given chain. And this is really for us just step one in growing wormhole portal into a full-on multi-chain trading experience. Um we're looking at this as a long product roadmap. This is step I guess two after token transfers,

swaps, and can't say exactly what's next, but just imagine some of the bigger DeFi protocols in the industry. This is these are the types of products that we're building into Portal. And we'll continue to roll out more and more kind of DeFi products so that when a user comes to Portal, like the way we were thinking about it before is like if you're in New York and you get on a subway, you have a goal. You want to go to a restaurant or maybe you want to go to your office. But we wanted to provide not only that transportation in between, but we wanted to help them accomplish the goal once they reach that destination. So why only provide a multi-chain transfer? Why not allow them to provide or why not provide them a DEX swap on Salana once they reach there?

And then even when they're on Salana, what if they want to do staking? What if they want to do other forms of trading? Um, this is really how we're thinking about the evolution of of portal. >> Yeah. And through this, we can get so much more done. We can accomplish so much more by compressing the amount of events or actions that we can take into a single one. It's less time. It's less thought. It's more innovation. After we're we're through that, we can continue to work down the line and get creative about what what's coming up. Now, after that, I want to talk a little bit more about about what is happening at this earn level and just kind of help users maybe navigate through this program. And so I'm looking at at the

blog post now. Baseline reward rate is 2 XP per dollar transferred and one XP when using stable coins. And so does that mean you get two per dollar no matter the asset, but you get an additional one when you're when you're using stable coins. Is that one in addition to? >> No, it's actually less. So one one for stable coins, two for non-stable coins. >> Got it. >> And then as as you I think in the blog it has this too. And as you go through the if people are going through the UI at all, there's some boosted assets. So these will be limited. So I think right now it's soul only.

>> It is soul earn 3 XP per dollar. >> Yep. So this will continue to also grow into new new boosted assets. And then there's the um boosted chain. So right now it's also Salana and Hyperlid are the two. And then the 10X is right now on Uni Chain. And like I said before, that's we'll continue adding new chains there. Imagine um some of the bigger launches coming up this quarter, new chains that that we're partnered with. We'll likely have a campaign going live with with those launches. So, definitely be on the lookout for if you're going to a new chain um portal is going to help you get there. And why not go through this this program and earn earn points while you're at it?

>> And I'm I'm learning now another way in which we can earn XP is by staking W. And that's coming but that's coming soon to Portal earn. >> Yes. >> Okay. That's in the next release. We This was actually a ton of engineering work. >> Okay. >> It took uh many months. So, we've done a whole first round and then the next the next kind of release uh the next version is going to include staking. >> Very cool. So, I can earn the most if I'm using boosted tokens, boosted chains, I can earn four and a half XP per dollar. If I'm going from Hyper EVM or Solana and I'm bridging Solana, really bridging Solana over to Uni Chain is going to be the probably the best.

>> Exactly. >> Okay. So, they're and and was this something that you guys realized like after some negotiations or conversations with Uni Chain, did they say to you like, "Hey guys, we want to get some Salana over on on Uni Chain. Could you help could you help build out a program that accomplishes this?" I'm actually not familiar with exactly how we we landed on those assets. There's we have a a whole team kind of that's been working on this stuff, but if I were to guess, it's yeah, these are the assets that that someone or some team wanted to to incentivize. And uh and also there's already there's already incentive programs live on Uni Chain. They've been live for I think three or four weeks. So um there's probably some relation to those assets um on Uni Chain as well

within their DeFi ecosystem. >> Beautiful. And can you give us a little bit more insight into what this XP ultimately will turn into? You there's some kind of vague mentions about about it in the blog post tiers and whatnot, but could you allude to like what what this could possibly mean down down the line? >> Um, I would say rewards. That's about all I can say. >> We'll we'll let our audience uh draw the connections at at their at their leisure. Um, okay. I think we Leo, can we bring this up on the on the show? Can we get a view of portal earn?

>> Bang. Okay, >> there we go. >> So, there we go. Uh Dan, you should see this if you click on on the square there. So, we've got full send uh earn XP. We're a little zoomed in here, but we can see this earn XP, go hyperlid, and Solana to uni chain uh boosted tokens and chains. Uh and we can earn activities. And there's all these things that we can do to earn more XP, guys. >> Yeah. If you scroll down, >> yeah, >> you'll see more of these >> beauty. Transfer stable coins, transfer tokens. I mean, this you guys make it easy. We want we want this uh we want XP. We want boosted uh boosted chains, boosted tokens, and more rewards. Um and

so, man, you guys have come a long way. I think uh you know, we saw the wormhole W token launch. We we know where you guys are headed. How how if we're zooming out a little bit more now, how do you think about the I mean the interop space is just so cutthroat, so competitive, like where where are you guys at in terms of market share? What are the routes that you guys are dominating and and where do you what do you think comes next here? >> Yeah. Um market share is interesting in the interrupt space because it tends to fluctuate with new chain launches. Um, if you go back, I think around the beginning of the year this year, we were we were leading. It's basically at this

point, the interop space at the messaging level is a it's a twoman race. Uh, it's us and layer zero. Um, layer zero's done a great job to their credit. We we've done a great job over the years. Chainlink has almost no adoption. They do a lot of press releases, but that's that's about it on the interop side. They've they've done a great job on on the Oracle side. Um, but as far as us and layer zero, we've got two big uh chain launches coming up in the next month or so. So, I I'm expecting a ton of new volume on on the wormhole side in the next couple months. And then as far as what what we're looking at going into next year, there's a couple themes. I'd say institutional assets is one where

we're we're clearly the leader in this in the space. Um, we've got around 3 3.5 billion in in AUM using wormhole right now. And that's teams like Black Rockck, Apollo, Van, uh, Hamilton Lane, and several others in our partnership with Securitize, who's been a great partner of ours for a little over a year. Um, we're going to continue to grow the AUM of the funds that are already using Wormhole, and we're going to continue helping them expand to new chains. Like I said, even these institutions are thinking about crypto as like we are. It's not one chain. they want to launch quote unquote globally across every chain that they possibly can because that's new users, that's new new market share. Um the second category for 2026 is stable coins. Um USDC and USDT are

doing a lot of volume through wormhole now because of Portal. Um, especially on the USDC side, portal makes it really easy for users to send USDC across chains and it's still leveraging the USDC's uh CCTP protocol, crosschain transfer protocol kind of behind the scenes, but leveraging the wormhole front end. And then another thing that we're really excited about within this stablecoin category, um, are these stable coin platforms. And I would I would call out M0 specifically. Mzero, I would say, is still flying a little bit under the radar because they are a platform, but their stable coins are getting headlines. Um, teams like the MetaMask USDC, sorry, MetaMask USD, um, are are using M0 under the hood. There's

there's about five or six different stable coins now that are out on the market leveraging this kind of out of the box. Um, someone compared it to Pump. Fund for stable coins is basically what MZO is. So, they're pumping out a bunch of new stable coins, making it really easy for the the asset issuers. And then wormhole messaging is behind the scenes helping these things be natively burned and minted and kind of natively multi-chain from day one, wherever they launched. >> Love it. >> So, yeah. >> Yeah. I mean, it makes a ton of sense. Um, and this is a balance for you guys and and I'm actually curious just to learn a little bit more about the mentality and the philosophy at Wormhole because let's, you know, XP is great.

Retail wants rewards. That's great for retail, but enterprises, you know, are thinking, you know, they're thinking on the scale of of like you said, launching globally, thinking a little bit different than XP. And so when when you're expanding, you're looking at the strategy broadly and and you're looking at how you can maximize stable coin flows, you're looking at issuance, you're looking and to partner with some of these enterprises. Could you could you describe a little bit more about some of the partnerships that you have with M0 with securityize? How are you leveraging these partnerships to ultimately provide the best experience for enterprise and land more of those?

Are they exclusive partnerships? What are enterprises using wormhole for now? How do you help them facilitate that? >> Yeah. Yeah. An interesting thing after this whole it's been about two years of of these conversations and then in the past year a lot of it started to go live and looking back on it one of the things we realized is that the thought and the work and the extra effort that we put into the security and decentralization of the network ended up paying off a lot. Um we about what was it 2023 Uniswap did a bridge assessment back then when they were making a decision around um unis swap governance expanding to new chains and using a bridge to send that data

across chain and wormhole came out of that this threemonth study that this uh independent group did on bridge security and decentralization and wormhole came out on top of that report Axelr was kind of second they had a one condition they had to update and then layer 0 came out not approved because of the centralization and kind of the security risk of of layer zero at the time. >> Um, Layer 0 probably has made some updates to their protocol since then, but there's a lot of risk in using a two of two multisig to run a bridge that's doing hundreds of millions of dollars and that still happens today.

>> Who does that? Layer zero. Yeah, they have they have this DVN thing that was branded as decentralized, but the reality is that a lot of it goes through a two of two multisig. And when you see these days where they're doing tens of millions of dollars, you know, hundreds of millions of dollars, it starts I'm actually a little bit worried about the centralization risk there. Um, and when we had these conversations and we did a lot of the due diligence with teams like BlackRock, it always came back to the fact that we had 19 independent doxed public validator companies um, running wormholes network including people like Google Cloud, Kraken, and several others. And that paid off for us. It's

it's not easy to run a a 19 a 19 validator network versus a two of two. And the reason is for us to expand to a new chain. Let's let's talk about monad for example. All 19 of these validators have to learn how to use monad. They have to spin up a new node and run a full node for monad. Doing that with coordinating 19 entities versus doing that with two and one of them you run yourself is a lot easier. So there's there's a benefit in being able to expand faster. But when we were talking to BlackRock, they want to know who these validators are, >> right?

>> And then a lot of these institutions want to be able to even legally take action if they had to in the worst case scenario. Um, so so this work that we put in and the thought that we put into the architecture helped us with that unis swap report. It helped us with winning the black rockck deal, the securitiz deal and then now these institutions they kind of see wormhole as the default option because the security is so important and the decentralization is so important and a and a third thing also is just open- source code. Uh wormhole is 100% open source and that's also not the case with a lot of the other interop providers. So you these these institutions want to be able to go into the GitHub and look at what they're using and not be using this

kind of essentially a black box. >> Yeah. Naturally, uh if I'm black rocker security test, I'm thinking the same way. Um Dan, this has been an incredible conversation. I'm glad brought the spicy takes. Uh and Portal Earn is is live as well. Uh so it's been a fun conversation. Um you're our last guest of the day. Wrap us up. Last guest of the week, man. Uh any closing thoughts as we go into the weekend? >> I would say um the timeline's been bearish, but I'm extremely bullish. So, I think people should be positive.

We've got a lot of good macro news coming. Rate cuts are not stopping. Um that Trump wants the economy to do well. I think in general, the next the next six months look very positive for me. So, I'd say stay positive. We're building amazing things in this industry. And I think we just got to keep our heads up and and fight through this the short-term noise and and keep an eye on the big picture. >> Love it. Very cool, man. Stay positive, stay patient, and uh have a great weekend, Dan. Appreciate you coming on >> and have a good weekend.

>> Yeah, we'll talk to you soon. Keep up the great work, guys. >> Cheers, brother. >> All right, guys. Incredible. That's it. Great show, man. Dan, dropping some bombs. has absolutely no remorse. We're gonna clip Chain Link. We're gonna chip M0. We're gonna clip uh Layer Zero. These things are going to make waves. What a wrap. What a show, guys. Thanks for another great week. Uh really enjoyed today's conversations. Talked to Dan. Uh he brought the spicy takes. We talked to Tony from Ubix. Love what he's doing. Love that he was able to bring a lot of experience to the show today. We

could share that with you guys. We had Janice Henderson. We had Nick from Janice Henderson who, man, it's crazy to see. You have Tony, super experienced guy, you know, came from the world of travelers checks, now applying this business logic to stable coins as a cryptonative company, Nubix, but applying a lot of triedand-rue methods that were that were real and made made uh by travelers checks. And then you've got someone like Nick, super crypton native guy, but he's doing it at a traditional Wall Street asset manager and capital allocator and Janice Henderson. So you have you really do have the convergence of these two worlds. It's really really cool to see that obviously we we started off the

show with uh Alvara and uh their ERC 7621 standard. That's it guys. Great show. Thanks so much for joining. Thanks so much for watching. We're going to be back next week with another full slate. You're not going to want to miss it. In the meantime, have a great weekend. Stay patient. Stay positive. We'll see you next time on Rollup TV. Bang. [Music]