Stablecoins Hit $10T Monthly Volume, MetaMask Launches Tokenized Stocks & Galaxy Posts $482M Loss.

Transcript

[music] [music] I'm about to [music] >> [music] >> I'm the back [music] back.

[music] >> [music] [music] >> JP Morgan, Black Rockck, DTCC, Fidelity, the entire thing was just institutions. [music] It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. [music] I'm bullish. You said it. You finally said it. I'm so bullish. And he's bullish. I'm bullish. We're bullish.

>> [music] >> How the [ __ ] [music] I'm about [music] [music] the [music] [music] I'm the mother [music]

[music] above the >> [music] [music] >> I'm above [music] [music] the rollup is headed to the top. If we're not already at the top, we're going to the top. We're on fourth floor today. We're gonna be on floor one and then we're headed straight to the moon, boys. [applause] >> Man, oh man, where did all of the

shareholder value go? Um, guys, we're tuning in. Uh, let's see what we've got here. Bitcoin is coming in under 75K. ETH is teetering around the 2K mark. Um uh we could just we could go continue to go down the line. ETH actually bounced a little bit. I think it's uh getting close to that 2K mark. Um it is looking mighty mighty rough out there for anyone who does not own the neoinancial assets of Hyperlid and Canton. Uh Hyperlid and Canton are holding up uh just fine. Uh Hyperlid especially Hyperlid came out with HIP 4. We're going to be talking

more about that today. Guys, it's time to pivot away from crypto infrastructure slop. Uh the world is moving towards uh product market fit. Uh we are going to cover a couple of things uh that are actually coming to us live. So uh without further ado, we're not going to we're not going to uh dwell uh and victimize ourselves too much. We're gonna hop over to where the action is today and that is in the capital of finance, New York City. Uh the Onondo Summit is going on currently and and this is something that uh if it was warmer uh in New York, we would be there. Um these guys are unfortunately

snowed in and so they are uh they are talking about um they're talking about everything that is happening. >> Uh this is the third microphone I killed today. >> So we're going to hear from them. So Patrick Wit said April 3rd, president [laughter] will have a the Clarity Act signed signed into law. Um that that is optimism, but I think it's quite realistic given the level of work that you your boss and your boss's boss have put into uh crypto being made in America once again. Um, and I must say in and to wrap uh this section, um, these are two examples of fabulous people working in government, uh, working for the public interest here. Um, and I think what

you've just heard from, uh, this panel today is the best of this administration in Washington. Uh, they are committed to the public service and to getting quick and solid action on digital assets. This is a reason why we should be optimistic about digital assets in the United States and the United States being once again uh the capital of uh crypto for the world. And so with that, thank you all for being here. Uh Mr. W, Mr. Williams. Uh and that is a wrap for this section.

[music] [applause] >> Welcome back to the live welcome back to the live desk. You hear heard it here first. Clarity Act could be signed into law by the president by April 3rd. We shall see. Patrick Wick sent a message loud and clear to the banks that the sky is not falling and that they should approach stable coins in crypto with humility. Thanks for tuning in to the live desk and for joining us at the Andondo Summit. Hope you'll enjoy the next session which will get a view at the exchange perspective from crypto to stocks. Hope you enjoy and we'll see you again soon at the live desk.

>> Frank is such a pro. >> He's a man. >> How long we missed that last [music] segment? Uh Patrick Whit is uh obviously very involved in the administration and uh the crypto. >> All right, that was fantastic. Thank you. the crypto work. >> Right along, our next panel is entitled Exchange 2.0 from crypto to stocks and we'll discuss how tokenization and onchain equities are redefining modern crypto exchanges and blurring the lines between digital assets and traditional financial markets. Please welcome to the stage our panelists along with our moderator Ando's own managing director of global business development, Min Lynn.

Um good afternoon everyone. Thank you for joining the exchange 2.0 discussion. I am particularly very excited to talk about um sort of like how exchanges have evolved over the years. I've been working at exchanges for the last five years just recently joined on. So um I have seen and witnessed sort of like the evolution in terms of how this um exchange platforms has adapted into truly a super app. There are you're able to do literally everything within an exchange platform right now. You can invest there's wealth management um there are bots already in it and now we're introducing tokenized stocks and ETFs. So now we are seeing sort of like this blurring between a trapy platforms

and a D5 platform. So with me we have leaders um in the industry. Um so I will ask them to introduce themselves. >> Oh great. Well, thanks for having me today. I appreciate it. My name is uh Peter. I'm the CEO and founder of blockchain.com. Uh we've been helping people and then later institutions be part of the crypto financial system since 2012. So we've been at it for quite a while now as I'm reminded sometimes. Uh and today we have about 40 million uh retail customers around the world about 2,000 institutions that we do various sort of business for and we transact about one to one and a half trillion in volume a year. Uh we're also a major supplier of liquidity across the

ecosystem. Um and we uh have sort of helped incubate, invest in or launch a lot of the sort of more successful projects and companies across the space today. Uh and so yeah, we have a pretty broad sort of view across the whole ecosystem. And one of the things that we're most excited about is bringing sort of more assets from the traditional finance world into the crypto world. Um particularly the sort of really interesting and high quality assets that our customers are are eager to have access to. Hi everyone, I'm Gracie Chen. I'm CEO of Bitgat. Bit is a top crypto exchange uh established seven seven years ago. Um according to coin geko coin market cap we are typically top five in terms of

trading volume among other offshore exchanges. So one key strategic change that we are having right now or facing in this industry is exactly what the title point out from crypto to stocks as main pointed uh we are all partners with them and big partner with mainly on being one of the distributors for their tokenized US stocks and ETFs and I think according to your data published in December we contribute about 90% of that volume so that's definitely a lot attractions that we're seeing from our retail users who are interested in um trading tokenized US stocks and ETFs.

>> There's Gracie. You guys recognize more than 100 last week. So definitely also want to explore other opportunities with you guys audience. Anyone who want to expand or collaborate with an exchange like us. >> Thanks. Thanks for having us. Uh Michael Shalov, I'm the CEO and co-founder of Fireblocks. Uh we provide infrastructure for institutions and enterprises financial institutions over 2600. >> All right guys, well obviously tons of action coming from the summit up in New York. We're going to continue on with our news section.

There's some other things to cover here. >> Um yeah, definitely recommend checking out a lot of the things that are coming out of that conference. uh this is uh point in the space where we believe there's plenty of growth uh opportunities. It's it's it's actually pretty amazing to see a lot of the crypto world start to make their institutional push. We saw this at the end of 2025 uh where we anticipated that a lot more companies were going to uh be making a push into the institutional world. all of [snorts] these uh crypto companies are now going after what seems to be the same cohort of asset issuers uh and financial institutions. Um and so we're going to

continue on with our coverage here. Uh so next up we've got uh in the stable coin world, we can go ahead and get this up because uh the stable coin monthly volume has now hit 10 trillion dollars. Uh this is mostly driven by B2B flows. uh we're actually still quite uh quite small in terms of the uh the fraction of consumer payments remittances crossber payments, these sorts of things. Um but we've got a long way to go. Uh there's, you know, quite a bit of turnover actually. I believe we're at about two trillion dollars in issued stable coins.

Um so we've got uh no actually that's going to be we're going to be quite a bit less than that. So, we're turning over these stable coins quite a bit on uh this is happening both onchain and off. And we're going to be talking with uh the Artameese founder Peter a little bit later. And so, uh let's continue moving along. Obviously, we're we're uh we're big bulls in the stable coin world. This is going to continue to grow. [snorts] So, we're seeing uh quite a bit here uh in terms of losses, guys. It's it's rough out there. All right. This is a sentiment that's shared. It's not just retail traders and power users. It's it's the companies themselves.

Obviously, uh you know, you guys saw M Michael Sailor, Bitmine, uh Tom Lee, uh of of Bitine also, you know, take quite quite the L over the last few weeks. Galaxy [snorts] Digital reported a $482 million loss in the fourth quarter, far worse than expected as falling crypto prices hit its portfolio. Uh, Bitcoin dropped 23% during the period. Trading volumes fell 40% and the firm's shares slid about 5% pre-market despite the loss. Galaxy ended the year with 12 billion in assets and two billion in net inflows to its asset management business. So, this just goes to show that there is still life here. Um, and you know, even despite the the losses,

there's still billions of dollars in reserves and assets here. uh and even more inflows to its asset reserve this asset management business. It it's tough to it's tough to navigate here. Obviously, first in the market, we've got to stop the bleeding and then uh and then we believe that there's a lot more upside room. This is partially driven by macros. We talked about the the Fed chair um you know earlier this week and and late last week. Uh they passed that the government won't shut down. So there is macro belief out there.

One of the pros uh as we're looking at this headline is that you know Galaxy Digital is a publicly traded company and so that gives us the insight into its balance sheets that's how we know how difficult a fourth quarter they had. Um, obviously it doesn't make it any easier, but as more and more of these companies go public, it it it does give us a bit more insight into how we should be seeing crypto businesses at large at an institutional scale. And, you know, obviously, we expect a lot more of these companies to go public. So, we're going to [snorts] continue on. Um, I I think the next headline is uh is quite ironic here. Uh Stanie, our good friend of the

show, uh bought a $30 million mansion. Um pretty ironic this, uh this headline comes out on one of the worst market days of the year. And just to reiterate, I mean, let's see. Bitcoin is down four and a half% today. Uh ETH is down 6% today, down 25% this week. Bitcoin's down 15% this week. This isn't even commentary. This is just these are just the facts. Um, if in case you guys care, Ripple is down 17%. Um, and then Hyperlquid is up 20% this week. Pretty pretty incredible. Canton is up 17%. Chain Link down 20%. Um, Zcash down almost 30%. Uh, and the list goes on. So, a founder buys uh one of

the most expensive homes in the past year. Nodding Hill uh in the UK. He uh congrats I a I mean stuck around. They've obviously been here through the cycles and uh have built something that is seeing a lot of institutional capital inflows. And so as we just saw the summit, right, these financial institutions are gathering uh and they're deciding where to place their chips. Um and at the same time, the markets out there are just getting rinsed. Um and so I anticipate who knows when that bleeding will stop, but eventually it will. and these institutions will come in, they'll swoop in, they'll buy assets at very cheap prices and uh and then we will see the

markets turn around. So, it's pretty incredible what's going on out there. Um, and if we're just to if we're just going to take a quick look at, you know, some of the other things that are out there, you look at gold today, uh, futures are trading just below 5,000. Uh, stretched all the way back to almost 4,400 on gold earlier in the week. Um, now almost back up to 5,000. So, quite the bounce. Uh, we'll see. Maybe that was just the dip there. Let's see what else we got. Yeah, we'll see. That that last week once the Fed share got announced, that was rough for the debasement trade. Um, but stocks doing quite well. I anticipate a lot of these crypto companies are aiming to go public

so that they start to uh benefit from some of these institutional flows as well. Uh, we're going to speedrun through the rest of our headlines. MetaMask integrate. Uh let's let's let's move on to the next one. MetaMask integrates uh US stocks. And so again, we're just we're continuing to see how more and more of this is uh is happening there. The the worlds of legacy finance in terms of the legacy financial assets, the tokenized stocks, the metals, the ETFs, the commodities, all of this is merging with decentralized finance.

wallets are becoming the access layer for onchain markets to access these uh these institutional grade assets. Um really no surprise here. It just means that the bar for crypto companies is going to be that much higher because crypto companies are going to have to start competing with legacy financial companies as now everyone's offering the same assets. This is now one asset universe. And so all of the infrastructure, all the wallets, the neo banks, all of the frontends, the user experience, everything in the back end, all of this is becoming one industry and serving one asset universe. And so for a long time, you know, we were kind of closed off from a lot of what was happening, but no more. Uh and so that

that's what's happening there. Uh let's keep going. Our next headline uh is from our friends over at MZ. And so Mzero pitches a plural future for digital dollars. It's pretty interesting. You know, we sat down with uh Luca from Mzero a couple of times. You can see here they've got several stable coins that they're helping to power USDA. Uh you know, Loop USD money is plural. Um it should be plural. out of many forms of money, one technology to unite them all. That's M0. M0 is powering a lot of these stable coins behind the scenes. Uh and ultimately there is one orchestration or

unification uh protocol for all of these stable coins. So obviously if you look at the institutional world, you see know Robin Hood, Robin Hood will have a stable coin, banks will have their own stable coin, Clar will have their own stable coin. Everyone believes that they have the distribution where they can own you know some piece of the stable coin market. This will benefit because they will be able to uh hold their money in stable coins benefit from the net interest income uh rather than paying that out to the banks that are holding uh their deposits. And so fundamentally it is a good business model. Uh but when it comes to the fragmentation along all these stable coins uh we anticipate that will be solved. Uh, and so MZ is helping

solve that, uh, as, uh, as you see there. So, next up, we've got our friend from the show. We've got Ben. Uh, he's going to be joining us very, very soon. We're going to take a quick commercial break before he comes in and then we will bring Ben from Starknet talk to us about Neo Finance. Do a quick commercial break and then we'll be chatting with Ben. Yeet is built for big moments. The most fun you'll ever have with your crypto.

Go to yeet.com to yeet into your next game. [music] Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion transferred. Go to relay.link link to bridge your assets. Now, talk to AI like your lawyer or your doctor or your therapist. Yours, private and here today. Visit near.ai to have a fully private chat experience.

[music] Havachi is fast [music] and private per trading secured by ZK with Celestia underneath. Go to habachi.xyz to start [music] trading today. Looking for yield that stands out? Infinify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz.

[music] Open, stable, borderless. [music] Frack is building the next generation of stable coin infrastructure for the digital finance era. Visit frack.com to learn more today. >> [music] >> Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. [music] Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion transferred. Go to relay.link

link to bridge your assets. Now, [music] talk to AI like your lawyer or your doctor or your therapist. Yours, private and here today. Visit near.ai to have a fully private chat experience. We're here. We got Benjamin. Uh Benjamin is uh one of the uh the prominent people uh in the L2 ecosystem, but Vitalik is is got second thoughts there. Uh we're not going to talk about that too much today. We're going to talk about the Neoinance playbook that Benjamin posted today. Um Ben, before we get into the Neo Finance

playbook, I at this point our uh our coins have less of a store of value than the Pokemon sign you have behind you. just give us give us a sense of like how you're reacting to the market on a day like today. >> Yeah, great. Well, first of all, um it's great to be here. Thanks for having me on. Excited to share my thoughts. Um I'll take a more longer term outlook when I'm looking at the market today. Um I am of the belief that crypto and the blockchain industry as a whole today has never been in a better state. And I think a lot of people would disagree with me given the prices, but if you actually objectively look at it from a non-emotional perspective, there has never been more interest in the crypto industry. There have never been more

institutions involved. There have never been more people involved in a net positive way. And so I think in a day like today, it's good to to look at the good and then you also need to look at the bad. And the bad is a lot of these projects that have probably been at over inflated values and that are kind of slowly maturing over the last few years to the valuations that they should have been in at the start. On the contrary, you have assets like hype which are continuing to go up which are generating millions of dollars of revenue every year or every day and buying back the token. And that's kind of the whole point of neo finance, right? It's converging in assets that make money.

Those assets are spreading the wealth to everyone else and everyone else is benefiting. It's cutting out the the toxic intermediary and letting everyone benefit. And so it's it's hard sometimes to look at the market going down 5% every single day for what feels like months. But if we if we look at it objectively, we've never been in a better place. And so I'm extremely bullish. >> Yeah. I I uh was having a conversation with um a friend at another company earlier today and uh you know this was this came up and it was sort of this this bifurcation this cognitive dissonance that on on one hand it does feel like we're getting massive adoption from massive financial institutions and that has to be really bullish but on the

other hand obviously we're seeing prices go down and it's this really narrow adoption like in this in this particular segment where We're seeing a lot of adoption happen and so a lot of teams are getting kind of fallen by the wayside. Weren't able to find product market fit but then there are a lot of companies out there like we were just live streaming the Onondo Summit. They've got Patrick Wit from the administration. They've got you know uh people from Wisdom Tree, Janisenders and Anchorage Digital all of these institutions that are actually issuing real assets and bringing those into the onchain markets.

So if you're at a company that you know is is let's say let let's approach it from the crypto first side here like how do you think a cryptonative company ought to approach this industry and where it's headed because I think a lot of people are generally going to agree it feels like where everyone is going is after these these financial institutions like it almost feels like the entire industry is pivoted to try to cap to capture those like the minds of those companies because that's where the capital inflows are coming from. Do you think that's the right way that cryptonative companies should be approaching this or do you think everyone should kind of stick to their guns, keep doing what they've been doing and

the market will catch up? >> Yeah, it's a it's an interesting question. Um, and I think there's a few different answers depending on the skill set of of your company, right? But first to to set the stage um and let's be blunt for a cryptonative company to go in and try to win over institution institutional volume institutional users it's going to be tough to compete against companies that have an institutional background which is why we see trady first companies like likeo and securitize they're massively winning against um you know more cryptonnative counterparties that are doing the exact same thing and so if you're a cryptonative company who has very cipher punk ideals s crypton native a lot like starknet I think it's it's very

beneficial to lean into what you know that you can do better and find a way to monetize that and so something related to starknet um is a good example of this is we have a big privacy background our founder Ellie was the founder of Zcash there's a lot of knowledge that goes into the privacy sector from us and so what we're thinking about with relation to that is we know that we are better at this than than other people we're going to be able to do this better than everyone Let's figure out a way to monetize that to capture real flow from it and let's just go all guns blazing ahead with relation to that. I think that that kind of thinking is a lot more beneficial than playing from the ground up against companies to to capture institutional flow.

>> Yeah, it I I think that's the right approach, right? Especially, you know, if you take privacy as a as an example, you guys have a unique edge. You're going to slam that because that's where your advantage is over the rest of the market. It does seem like a lot of these cryptonnative companies are kind of playing catch-up. Like there's been actual financial and fintech companies that have been, you know, working with a lot of these institutions for a long time. The the idea that a lot of these crypto native guys are going to catch up to where they've been after they've, you know, there's been incumbents there for half a decade, if not longer, is is uh is probably few and far between. Um, okay. So you also wrote this Neo finance playbook. Can you just take us through

it? Like what was the nature of this article? Um and generally how did you structure this and and what was the thesis? >> Yeah, for sure. So I wrote this article about the Neo Finance playbook. The idea is how do you go from not having a business to having a business that can capture real flow, give real value back to users and ultimately win a market that is getting extremely crowded by the day. And I kind of structured this with three different phases. And this is more structured for the broader crypto industry. How do we win as a whole? How do we capture value back from the institutions? And then what can a specific company here do to actually win? And so the first phase is onboarding assets, which is currently

the phase that we're in. It's bringing every single tokenized version of a of a stock, of an equity, of a commodity, of of whatever you need, you bring it onchain. And the importance of this is that if we want to get real users to switch from their Charles Schwab and brokerage and checking accounts and for them to do those same actions like investing and trading in crypto, you need all of the same assets and you need all of them. It can't just be a small subsection of them because convincing someone to move from something that works perfectly for them to crypto, you can't have any trade-offs with relation to the assets that they can actually interact with.

The second phase is going to be actually onboarding users. So once you have the assets, then you have to go to these users and you have to convince them that what they're doing can be replicated even better in crypto. And there's three components of this that I think are are critical in order to get users. You need to be able to offer save, spend, and invest. and save. I'm going to hamper on a little bit because I think that this is where you can get the real differentiation and edge from the traditional banks and traditional brokerages. And so with SAVE, everyone knows when you open up a Wells Fargo account and you deposit a couple thousand, the interest rate they're going to offer you is extremely under the risk-free rate. We're talking one basis point when Treasury bills are

paying out 350 of them. And so what can you do as a crypto bank to actually get these users and convince them that um you can get higher yield? And that's right. It's you offer real yield. And this is why Brian Armstrong is going into going into the White House and going into DC and pushing for the regulatory ability to give yield on stable coins because this is the edge. Banks make 50% of their money from the delta between treasury bills and the interest they pay out. If you can compress that, offer it transparently through um a crypto neo bank, then you are in first step immediately going to get all these users that want more money. And to offer this safely, you're

going to need secure battle tested infrastructure. Um crypto is prone to hacks. You need to make sure you're properly audited for a long time. You your infrastructure stack is very good. And then you're going to need transparent competitive yields. And the second part of that is so if you can offer more competitive yields, you also need to be able to offer transparent yields. Right now, you know, depositing into a traditional bank is really just a black box with users not properly compensated for their risk. They're getting pennies on the dollar for the the lending that they're providing. And you know, like bank loans are private users. If I give money to Wells Fargo, I have absolutely no idea where my money is being utilized. Um, and crypto actually fixes that because everything is transparent on a public blockchain.

You can see where your money is being lent out. You can have control over it. And you can ultimately make the same checking account um just a lot more transparent and a lot better for users. The second part of that is going to be spend. And so, you know, a lot of neo banks today, they they offer regular debit cards. This, unfortunately, isn't going to be practical for the long run. Um, over a third of the population uses credit for everyday purchases. And I think in early 2026 there's something like over $1.2 trillion dollars in credit card debt, which is a massive issue, but that's not the one we're discussing. Um, and so how do you offer that? I mean, this is a this is a real issue. Um, I think there's probably leeway somewhere where you can partner

with a bank like JB Morgan and have them underwrite the risk. You'll need to still go through KYC, CIP, AML, all of that sort of stuff. But I think that that's okay, right? I mean, neo bank shouldn't be offering anything that isn't properly regulated. We should just be doing it through crypto. >> And we may have different neo bank offerings, right? Like we may have a KYC neo neo bank. We may have, you know, one that offers with no KYC. Maybe you don't have the credit option, but you have a debit card option. >> But if you want like a fully versed traditional finance bank built through crypto, you're going to need to be regulated. That's just the reality of the state of of where we are. And I honestly I think that's okay. Maybe that's not as cryptonative as I as I

should be, but I think it's perfectly okay to to have regulation um with banking infrastructure. And then the last trait you're going to need to kind of get people to onboard users is going to be investing. Um and we don't really have this today. We're bringing on a lot of tokenized equities and tokenized commodities that people can interact with. But for a NEO bank to really win in my opinion, you're going to need the same interface, the the ability to, you know, buy options, buy equities. And I think Hyperlquid H kind of has this ability here where a NEO bank can integrate HIP3, run their own front end, run their own markets. This is going to be a huge profit source for the Neo Bank, and it's also going to kind of finalize this third component that no

bank has been able to offer, which is the ability to invest. And so once you have the users then you have this this last one which is just phase three is actually onboarding behavior. You have the right system, you have the people there, but how do you actually convince them to to really use it? And I think uh you know going back to to what I was talking about earlier, it seems simple but I think fair savings yield is really just the best example of how you get people to start interacting with the neo bank and interacting with the product offerings you have. And the best opinion or the best example I can give of this is Robin Hood. So Robin Hood came into an industry where to create a trade, you needed to pay a $4.95 execution fee

every single time. For a small investor, that adds up because that adds up to a $9 $9 just to swap in and out of a trade with on a $1,000 trade. That's 90 basis points. That's, you know, maybe the difference between whether the trade is profitable or not. And they came in and they basically said, "This is corrupt. we're going to offer $0 trading fees and we're just going to let you trade for free. Um, and you know, today I can't find a bank that still charges that $4.95 uh execution fee. And so all of that to be said, if we can come in, we can offer fair savings yield, the banks are going to be forced to follow in our path because it is ultimately a better system for the user and over the long run, if

executed properly, the users will always go towards where they can benefit. Yeah. Yeah. You make a good point. I think, you know, the Robin Hood moment was a lot like Netflix for Blockbuster. It was like it, you know, before you had to go into a Blockbuster, you paid, you know, 10 bucks per movie. And then it flipped it on its head and it said, "Hey, we're going to make you, you know, you'll pay a subscription fee. It'll cover the whole month. You can have unlimited movies throughout that whole month. Just like Robin Hood, you have unlimited trades." Um, you know, I think Brian Armstrong also says something that's pretty similar on this on this frame. uh when he was in Davos and he was talking to I think it was a Frank French bank uh French banker about how you know right now the

traditional banking world forces you into their system and then shortch changes you on the interest. You can't opt out of the fractional reserve banking system. But if you're on chain and you're deposited in one of these NEO banks, you know, you could be earning four or 5% if you opt in. And that was the point he was making that and Coinbase is a great example of this. You can go on Coinbase, you can deposit into Morpho via Coinbase, but if you don't want to deposit into Morpho, you don't have to. Your funds will just sit there not being rehypothecated. If you want the extra yield, you can go into it. And so it does flip the banking model on its head because it becomes optin rather than not even having a way to opt out.

Um, the one thing that I wanted to actually I that I particularly enjoyed about the article I read it and uh I I like how and even you know as you were talking about today you said you know that maybe that's not as cryptonative as you should be like these you know the ethos of everyone kind of coming in and uh you know kind of integrating KYC these kinds of things. I think people want forgot password buttons. Self-custody is important. Maybe we can figure out the right ZKI verifiable way in which people can have self-custody but make it you know retrievable if they end up uh having a poor UX. Um and you structured this article so that look this may not be the endgame. This is a stepping stone or a

progression towards a better system. Whereas I've I've heard other people see the institutional wave and they they've kind of said hey crypto is becoming co-opted. You know, I I think people may have that opinion in the short term, but in the long run, the idea is that ultimately we we kind of have the best of both worlds. Um, all that aside, Ben, I have we just got a couple minutes left and and so I just want to get your take on one thing. Um, and that is the idea that if you start at the beginning of your article, it starts with bringing high quality assets into the space. I think that's first and foremost.

important in order to get more investors in, have people actually stick around so it's not just meme coins and, you know, yield farms via token emissions. We actually need assets that people are willing to buy and hold in order for them to come and stay. As we do that, these, you know, the the legacy finance industry and the DeFi industry really starts to melt together. Like if we're offering the same asset universe, you know, the infrastructure and the UX, the portals by which we access those assets, you know, we're really competing on the same playing field as a lot of these financial institutions because ultimately we're we're offering access to the same assets. How do you think

this the nature of this competition is going going to play out, right? If you have incumbents, they have market share like Interactive Brokers and you know the NASDAQ, the New York Stock Exchange, those are the exchanges that are used to offering these this caliber of assets. Now we're talking about tokenizing those assets, putting them on chain. People are going to access them on chain, but you know those those user experiences are going to start to compete with the legacy financial ones that people have been used to for 50 to 100 years. Is it a matter of catching up? Should people be looking at getting acquired? Just generally, how how do you think now that we're kind of competing on this new playing field? What do you think changes about how we play this game?

>> Yeah. So, I think it's it's important to kind of first address that legacy financial institutions are historically very against change and they're very slow to adapt. You know, Bitcoin has been an asset for 16 years now or 17 18 years, something along lines with that, right? and you know institutions really only started interacting with it in the last one to two years. I think that says a lot about where their mind are minds are. They they have control over a massive industry and they've kind of gotten a little complacent. They don't think that anyone can knock them out.

And again like the the yield they offer one basis point is very evident of the fact they think they can rip off people and that there's not going to be any repercussions for that. And so it kind of comes down again. We're just going to end up playing the same playbook with tokenized assets. >> Interacting and purchasing a tokenized asset on a blockchain is quite literally just a better way for the user to do it than through something like Charles Schwab. And the reason is going to be capital efficiency. And so it's not really possible yet, but later down the line there's going to be using tokens.

There's going to be using tokenized assets as collateral. You're going to be able to provide liquidity. you're going to be able to earn yield on these assets. And that's not really something you can do in something like Charles Schwab because if you want to take out margin against an an asset, they're going to charge you like a 50% interest rate. But because crypto has access to the entire world and the entire free market, you're going to get the fair lend fair borrow rate to borrow USDC against a tokenized stock. And it's going to be many several multip multiples lower than what it would be if you borrowed in uh in a traditional brokerage. and putting all this capital efficiency together eventually kind of like I've been saying users are going to notice. We have to operate on the assumption that users want what's in

their best interests and if we can make the experience as smooth if not smoother than interacting through a traditional brokerage and then we can offer several capital efficiency benefits and frankly we can save them money over time the users are going to come um and I fully believe that. >> Yeah. uh best trading equities on chain is just a better form of trading equities. I think that's that's extremely well said. Um Ben, thanks for coming on today, man. Really appreciate it for >> having me. It was great. >> And uh we'll we'll see you again soon.

>> Cheers, brother. All right, guys. We're gonna we're gonna keep things moving. Shout out to Ben. He's a homie. We grab lunch every once in a while and uh he's a good good friend. Uh we're gonna we're gonna have him on very very soon. Um, next up we've got uh we've got our friend Patrick uh from Artamese uh the data uh provider data and research over at Artemis. Uh and so these guys are doing great. They've had a cryptocard report. There's a couple screenshots that actually we want to show uh with Patrick as well.

And so we're gonna bring Patrick up and uh we're gonna we're gonna get him going. So just give us a minute here and uh we'll be be good to go. There he is. Patrick, welcome to the show, man. It's a pleasure to have you. >> Absolutely. I wish it was on a on a brighter day for the market, but uh unfortunately, we we've got to roll with the punches here, man. It It's your first time on the show. I don't want to get bogged down by any bear talk. Uh give us a quick background and we'll we'll get into uh the cryptocard report that you guys put out from Artemis. All right, that sounds great. So, um,

let's just set the scene a little bit here. We've got this, uh, we've got this cryptocard infrastructure stack. Uh there was a couple other things that you guys have put out recently. Um and uh make sure I got I got this here. Um so you know what we're seeing right now is we're seeing a ton of adoption in a very narrow vertical. This is something that we've been we've been talking about quite a bit. Um there's this divergence. Crypto infrastructure kind of realizes that it was difficult to find some product market fit. Uh, and so we're actually seeing a lot of adoption happen on the other side of this equation, crypto cards, payments, stable coins, and we're seeing a lot of wallets start

to pivot into more of this NEO bank, uh, uh, format as well. Save, spend, invest, this sorts of thing. Um, and so, uh, we've got, uh, let's go ahead and put this first graphic up on the show. Um, we're just going to go in order of what we have here in the chat, Patrick. And so what what the the audience sees here is this simplified cryptocard stack. Um it's split up into primarily three uh sections. You've got the funnel, the traditional stack, and the processing.

And then within the traditional stack, you've got program managers, and you've got issuing banks. And then the bookends are the payment networks and the consumerf facing products. And so walk us through this be and and you know I'll just set the scene a little bit more which is from a previous conversation we tend to find that value acrru at the bookends meaning that you know as someone comes and and has a a greater relationship with the end consumer they end up acrewing some value by you know able to the first one to charge a fee on the other side the other book end is that as they get closer to bare metal they're also able to pull a lot of that value acrews there is that the case here in crypto cards and generally talk to us about how the cryptocard stack has

played out. >> Yeah, it's it's a good point. I think to answer your question, I would say probably not for cards actually. I think because the industry is so nent. Uh I'd be hardressed to believe that most of the value acrrues to some of the like end user cards, right? So cards like MetaMask card or Etherfy whatever it is obviously these are pretty successful like first iterations whether they continue to be the dominant cards uh for the next 5 10 years I mean who's to say it right uh which is why I think a lot of the actual value ends up being acred upwards towards the networks themselves like Visa and Mastercard and MX uh but honestly mostly towards these program managers and specifically the ones that offer as like full stack issuance

platforms right so teams like Rain and reap are fundamentally very different than teams like banks uh with the cryptolife uh product and and things of the sort, right? And the reason this is this is is because these full stack issuance platforms collapse a lot of the value that leaks uh from traditional program manager I guess formats you could call them. So these program managers typically are reliant on uh local banks of certain regions who are then the primary bin sponsor um for these cards. And so uh you know these banks uh of course like charge fees and so these program managers themselves end up leaking a lot of value that Rain and Reap don't u and this is because they act as Visa principal members um where

they're able to d settle directly onto the Visaet network uh and capture a lot of the value that I think um oftent times is is not the case and this is something that we've seen to be pretty net new in the card space and even in the crypto space uh and I think Rain and Reap probably end up accuring the vast majority that value alongside Visa and Mastercard. >> Got it. Okay. Um Pat, in order to really wrap our heads around this, could you walk us through the life cycle of a card payment, right? And and let's start with, you know, the end consumer walks. I want to buy coffee. I'm going to use right a crypto card, whether that's, you know, a Coinbase card or a Revolute card. Um h you know, I I go I I tap and I get my coffee. From that point on,

what happens in the back end to ultimately work its way all the way up to the payment network? >> Yeah, this differs by sort of what infrastructure the card itself uses. So, I'll sort of separate it into two separate categories here. Uh, so let's say you're using a card um that is issued by Rain or Reap or I guess a partner with Rain and Reap. Um, in that case, what's happening is let's say you hold some stable coins in your wallet connected to your card. The moment you tap that at the coffee, let's say you're paying five bucks for an iced Americano, let's say, and you're using five dollars of of USDC um on your wallet, then that gets transferred immediately um onto the Visa network and settles natively in USDC. This is actually not the case at all for basically every other card in

existence outside of those issued by Rain and Reap. So, let's say for example, the MetaMask card here. Uh for MetaMask, what happens is you have, you know, five MUSD in your MetaMask wallet uh at the at the point of sale terminal. You tap your card. What happens is that stable coin is liquidated into $5 in fiat and then sent to a bank account that's spun up for you on your behalf by the issuing program manager partnered bank. That's a little bit confusing, but basically the moment you spin up like or you assign sign up for these card programs, they spin up a bank account for you as well with those partnered bank accounts. And so with that, that money then gets settled into fiat into that bank account, which then goes from that bank onto the, you know, Visa,

Mastercard network, whatever, and settled into the merchants bank account. Um, so there's a lot of intermediate steps, uh, for systems that aren't set up through Rain and Reap and, uh, potentially other future fullstacks issuance platforms. >> Got it. Um, and so you mentioned how if it is issued by Rain and Reap and I use some stable coins to pay for this coffee, this iced Americana, how and these ultimately are never liquidated. They actually settle using stable coins on Visaet. So Visa and Mastercard from what I understand are actually getting quite involved in the stable coin and payment processing game. What is their ve like how are they involved? How are Visa and Mastercard involved with stable

coins? >> Yeah, it's a good question. Uh they've set up a lot of the infrastructure themselves in the back end to sort of a be able to natively accept uh stable coin settlement. Visa is of course the primary um you know sponsor for Reap and Rain. Um and I think as of Q4 of last year, Visa has settled natively four and a half billion annualized run rate worth of USDC on Viset. And I think this will only grow pretty exponentially. I believe that ends up being a multiund% KGER growth um or rather year-over-year growth for for Visa. And I think that'll just only continue to grow as they sort of scale out this program with Rain and Reap and as more cards are launched through these issuance platforms and as more platforms themselves emerge to compete against Rain and Reap and all

these other incumbents. I think uh you know Visa and Mastercard will probably end up just being uh you know acrewing most of that value like I like I said earlier. >> Got it. Okay. Well, what let's go ahead to our next uh our next graphic here. Uh this does show Kager uh for crypto cards, how it increased substantially. And so what what we're looking at here is um effectively how uh we've got BTOC payments, cryptocard payments, and peerto-peer payments. Um and and this has increased 100% 106% uh Kager to rival P2P stable coin payments. So, yeah, tell us, you know, this is going back to 2023 all the way

through uh the summer of 2025. We're obviously seeing growth in these cards. What What should we attribute this growth to? >> Yeah, I I think it's just more people using cards as a way of spending, you know, anywhere, right? I think the core difference is that for peer-to-p peer payments uh you know the the share of peer-to-p peer payments even in the trady world in the status quo right is quite low for a lot of the use cases that cards you know normally you know I guess like live in right u you're rarely using you're rarely using PayPal or uh whatever else Apple cash to pay for your e-commerce uh maybe you're buying something online like on Amazon you're you're rarely using these like peer-to-peer platforms you're using your

cards right that are obviously saved um to your website or or to your browser, whatever, whatever it is. Um, and just more and more crypto cards are eating into this market share that exists for traditional cards. Obviously, this isn't really a big penetration yet, but I think it'll probably continue to grow pretty exponentially uh and probably will be the number one retail use case for spending online um as we as we keep going in this industry and as it as it grows. Should we uh should we add another another category here about agent to agent or AI commerce or is that not even it's not even showing up on the radar yet?

>> Yeah, I I think agent commerce is cool. I think a lot of the X42 stuff and things that are being built are interesting, but frankly I I I actually am I'm quite bearish. Um at least for the for the intermediate or rather immediate future. Um, I actually think agentic commerce is less so of a crypto thing and more so just a Google thing and an Amazon thing, but that's I know that's a hot take, but I just, you know, I think it's a bit early. >> Yeah, it it certainly seems that way. Um, okay, we've got another one that we want to show. Uh, this is specifically MetaMask and Phantom. Uh, they've got some opposing trends in native stable coin growth. Uh and so here, you know, MUSD started off hot, has uh has dwindled as of recently. Cash from

Phantom had a little bit of a slow start, but actually sustained and continued to grow. Yeah, tell us tell us what's happening here and and and why. >> Yeah, Beta Mask and Phantom are obviously two of the biggest wallets um that are being used in the world right now and they both issued their own stable coins in order to try and use that as the primary payment method for their cards programs. Uh MetaMask obviously released their card um just about a year just over a year ago now and Phantom I believe is rolling that out as we speak. Um but these stable coins are the primary use case for these cards and I think um on the point of stable coins and wallets and cards um I'm actually a pretty big proponent of just using the existing stable coins

that exist that already have extremely deep liquidity. So USDC, USDT, whatever it is. Um, and I think that for cash, the reason that we're seeing such a high growth is, I think, because Phantom over the past few years has very quickly eaten up a lot of the market share of the wallet space, right? Phantom is all people talk about when they use Salana or even a lot of the other networks that are being launched on Phantom like Monet or Bass or whatever it is. And MetaMask is, you know, slowly dying off probably because of the UX thing. I'm sure a lot of us started off with MetaMask like I did, but the UX just isn't really there.

And I think that that sort of translates to their card usage, right? Because it's reliant on the MetaMask wallet users. And as Phantom grows in users and MetaMask declines in users, you'll probably see that exact growth trend happen as well for the wallet usage as the stable coin growth. Um, but cash, I think, is actually a pretty good example of at least in the very early stages, a wallet native stable coin that could maybe do well and compete in the space. And and so the purpose of wallet native stable coins over and beyond a USDC or a USDT would in theory it would be perks and rewards [snorts] of some sort or you know getting discounts at certain merchants or or these sorts of things. It's why you know people tend to use American Express uh

cards in order to get you know airport lounges and and AMX points instead of using you know some other debit card or credit card. Um obviously USDC USDT have tremendous more distribution. I find myself holding Tether sometimes or USDC sometimes. I don't ever hold I don't ever just find myself somehow I got out of a trade and I have m MUSD or cash, right? So what do you think is the driving incentive for these wallet native stable coins? >> Yeah, it's a good question. I think it sort of depends on what the wallet is trying to do with that token. like you mentioned, I think it's possible that they offer some sort of incentives with their native stable coin. Uh but frankly, it kind of just feels um like one of those things where everybody's

launching a stable coin, so should we, right? There are of course inherent benefits to having your own stable coin if it does well, right? Uh you capture a lot of the value there by issuing your own stable coin and controlling the whole supply. um as opposed to sort of allowing that to go to circle and tether. But frankly, I think the network effects of USCC and USDT are a little bit too high to overcome for a lot of these wallets and just like launching your own stable coin and such. Maybe this changes with tempo as you're able to sort of use any stable coin and and not really have to worry about things that happen in the back end, at least from an end user UX perspective. But at least for now, I think um the incentives vary, but honestly, I don't think they're quite there. And I think just

relying on the network effects of USDC and Tether I think is probably the best bet for most uh card issuers, which is why Rain and Reef haven't launched their own stable coins as well, right? >> Yeah. Yeah. And and this is a pretty good segue. Uh our last uh graphic here um shows the market share of USDC and USDT uh makes up over 96% of deposited collateral for crypto cards. Uh and this is primarily for RAIN cards. Uh we see others creeping up there a little bit. Um but by and large USDC dominates rain cards. Um yeah, talk to talk to us about what what we're seeing here. Do you anticipate that others is going to end up increasing in market share? Um and

we're also seeing USDC dominate over USDT. Why why do you think that is? Yeah, I think the USDC point is mostly because of the visa principal principal sponsorship where you're able to settle natively in USDC. Um, but USDT is still used pretty widely across cards. It just isn't supported for native settlement for regulatory reasons, right? C is for for Visa or for Mastercard, whatever it is. Uh, they have a list of a few stable coins that are able to settle natively onto their network. So like USDT, EURC, PIUSD, some of these coins are able to u settle natively on Visa and Mastercard, but Tether isn't there for regulatory risk reasons, right? Um and on your point about, you know, will others creep up. I guess that sort of depends, right?

It sort of depends on whether or not over the next 5 to 10 years USC and USCT end up still being 95 plus percent of the entire stable coin supply and just and just grows exponentially or if there's incumbents that can sort of come in and you know fill in niche use cases uh and sort of grow the pie there and maybe USDH does that maybe some other stable coin does that um but time will tell but at least for the moment seems like USC is pretty poised to win uh continually in the card space. So >> yeah, it it certainly does seem that way. And and you know, talk to us more about this Mastercard, USDC sponsorship.

You're saying uh USDC transactions are essentially free uh in these Visa cards. Is that is that the nature of it or or generally what's happening between Mastercard and and Circle? >> Yeah, not free per se, but you can settle natively in USDC, right? Instead of having to liquidate that stable coin into fiat, you can just settle in USDC on Visa and Mastercard. Uh Tether doesn't do this yet. you have to liquidate that USDT into fiat. Uh maybe we'll see that with a new uh US regulated uh USDT coin that's that's uh being pushed. But um at least for now, USC is the largest by far and away stable coin on these networks that can settle natively.

>> Okay. Um, another thing you mentioned, you know, when we were looking at the full stack here was, you know, right now you've got these rain and reap uh these full stack issuers and if you know there's a card that routes through the rain or reap network, you know, it lands directly on Visa in stable coins. There's no outflows uh into the fiat world. Uh and then, you know, on the on the other side, you know, you've got non-Rayer reap that use issuing banks and program managers. those are you know outflows uh due to regulatory reasons. Do you think we ever reach a world or would you ever is there any reason why even a fiat denominated card could end up inflowing into stable coins when it

lands on Visaet as a means of like higher capital efficiency, more ease of use of transactions, quicker settlement, that kind of thing. You know, like someone who doesn't even know that they're touching crypto, right? They just have a regular old, you know, fiat debit card or crypto card, but you know, and they they buy their iced Americano. They tap two or three steps and it lands on Visa's network. It ends up getting deposited into a stable coin because it makes Visa or Mastercard's life easier. >> Yeah, I think it's possible, but probably not at the point of sale, right? It probably would happen natively in that user's bank account or whatever.

I wouldn't be surprised if over the next five years a lot of these major banks in Tradfi are able to support stable stable coins natively in their back end. So, you know, my mom or your mom doesn't have to know that they hold stable coins, but maybe the fiat they deposit, part of it or all of it gets uh turned into stable coins and then that get used via their cards or whatever the payments they're making. I think this is possible. Uh whether that happens is pretty hard to say, especially with all the drama with Coinbase and Wall Street happening right now. But um you time will tell but I do think it's possible and I do think it would you know it would solve a lot of the problems that exist now uh with you know using the status quo's you know payment rails I

think a lot of it can be optimized and hopefully it's with stable coins in the near future. So >> yeah, it it certainly seems that way because we recognize the capital efficiency benefits. You know, I think Visa and Mastercard are continuing into this world. Eventually, it might, like you're saying, it might happen at the bank level, right? Where um you know, I can I'm basically just spending dollars in my bank. The bank's processing that transaction. You know, if I if the banking system ends up tokenizing a lot of their deposits, that's when maybe, you know, this that that could spur a lot of innovation and tokenization down the line.

Yeah, for sure. And I think it's actually sort of being played out right now in cryptonative like use cases. Uh for example, on Phantom in my Phantom wallet, uh when the sort of like cash popup came up, I didn't even realize that was for a stable coin because it just says cash and I just hold, you know, however much money I converted into cash on Phantom. Later I realized I I connected the dots and I was like, "Oh, okay. This is actually for the cash stable coin." Uh but for a lot of like retail end users uh who don't really use stable coins or crypto outside of like maybe memecoin trading with their pump fund or their phantom wallet rather um that actually ends up being a really really strong UX that I hope um you know a lot of other wallets and maybe even

banks in the future sort of adopt. So >> man ticker selection is so such a critical part of UX branding. >> Such a good play. Yeah the cash is a amazing ticker. Yeah. >> Yeah. Um last question for you Pat. Um, you know, I think people by and large they realize that stable coins are here to stay. They realize that there's a lot of growth uh in this industry. What do you think is the best way to get exposure to the growth of stable coins over the the next half a decade? >> Yeah, it's a good question. Um, I think it's hard to say honestly. Even Circle stock isn't really a good exposure to stable coin growth, right? Because that's so reliant on interest rates and and all these other features. Um, and so to be honest with you, I think the

highest EV thing you could do by benefiting from stable coins is just working in the industry. Honestly, uh, you know, very candidly, whether you work as an operator or an investor or builder, whatever it is, I think, um, >> you know, hopefully a lot of that value sort of trickles down to the cryptonative builders. I know there's a lot of uh doomer mentality happening on my CT timeline of like oh my god uh crypto is being you know trfied and you know things are being institutionalized and nothing new and fun is happening in crypto anymore. Um which is you know maybe sort of true at the moment but um I think there isn't really a direct way to get a lot of exposure to stablecoin growth. Uh but hopefully you know some of it comes to us as like early users of crypto and stable coins. Uh but I think

more so honestly I I'm just more optimistic about the benefits of stable coins uh for a lot of uh global users especially those in emerging markets where they now have access and they're able to use stable coins for humanitarian use cases um you know uplifting their economies whatever it is uh that's where I think it's probably most interesting. So for us American users uh maybe not much but optimistic for emerging markets. Yeah. >> Yeah. Well, I you know, point point taken and and I fully agree that you know, working in the industry that you think is poised to grow is one of the best ways to uh to capitalize on the upside. So, no no surprise there and and very well said. Uh Pat, man, thank you for coming on. It was an absolute pleasure. Extremely knowledgeable. I

really appreciate the insights uh when it comes to the cryptocard stack and would love to have you again again soon. >> Yeah, likewise. Thanks for having me. >> De. Thanks, Pat. Cheers. Bye. Bye. All right, there it is. Pat from Artemis uh talking to us about the cryptocard stack. Um obviously this is becoming a a more instrumental piece of uh crypto infrastructure. Uh this is also going to be pretty important as we see more in the stable coin landscape and more tokenized deposits. Uh which is something that we heard quite a bit of uh and how a lot of this is going to end up developing over the coming months to years. Uh ultimately the banks we

believe are going to be tokenizing at the currency level at the depositor level. uh banking with these guys may not uh you know uh someone who's got deposits in a bank, they may not realize, you know, that that uh the bank is holding stable coins underneath the hood. If they want to withdraw fiat, they can withdraw fiat. It's just like, hey, you know, you can uh you can fund something using Apple Pay. It'll pull right from your bank account. You can fund it using digital dollars or you can go to an ATM, you can pull it out in cash. So this is the magic of stable coins. is another form factor just like digital dollars just like cash uh you can also withdraw in stable coins and uh that is also going to spur growth in the

crypto cards world. Next up we've got Nikil uh from Alchemy and uh this one should be another fun conversation. We're going to be moving a little bit less away from the stable coin currency world, a little bit more into the in infrastructure world uh that we know and love here at the rollup. Um, and I'm I'm particularly curious to hear uh, you know, how alchemy has changed for what seems to be the institutionalization of crypto. Let's get Nikil up and uh, we'll have another another great segment.

There he is. Nikil, welcome to the show, man. >> Hey, man. Thanks for having me. >> Absolutely. It's uh, it's your first time on. Uh, would love to get a quick intro and uh, and uh, figure out how how you arrived here. >> That's a good question. I honestly just got a message from our comm's team and they're like, "Yo, jump on and and I'm here." But very grateful to be here. Uh maybe quick background for those of you who are not in web 3 or are not using alchemy, we are think of us as Amazon Web Services for crypto. Anytime you open a uh app on the internet, Uber, Airbnb, Door Dash, Amazon actually runs all of the infrastructure behind that.

Anytime you open an app on crypto, whether it's a Robin Hood or a Poly Market or even parts of Coinbase, uh we're powering the infrastructure behind that. And maybe to give a little sense of scale, we do hundreds of billions in transactions annually, basically every country in the globe. Uh most of the kind of large names in crypto, everyone from the JP Morgans to a little careful which ones are NDA and not uh to the Robin Hoods to the Poly Markets to all those. um and about 70ish% of the top uh apps across the space. >> Epic man, your your BD team must be on an absolute tear. Uh Poly Market, Robin Hood, these guys are, you know, the these are the the the biggest names in like this consumer era of crypto where

uh I think we're seeing a lot of adoption and it's taking on a little bit less of a cryptonative vibe to it. It's taking on a little bit more of a fintechy web two and a half type vibe to it. Um, you know, we're also seeing this AI agent world pop up. I'm just, you know, I think you've probably been in been in this world for for quite a long time. Um, you know, how how do you think we're evolving here? We're also I like I said, the institutionalization of this space just general thoughts on on, you know, the way this industry's progressed over the the last, you know, six months to a year or so.

>> Great question. I think there's two very interesting themes happening right now. Um, and you know, beyond the obvious ones, stable coins are blowing up and everything, kind of two more narrow themes which are going to be absolutely massive in the future. Um, and I'll touch on both of them. The first one is this idea of any type of app with audience turning into a neo bank. So that can be anything from you know the door dashes to the grabs in Asia to um anyone who has an audience previously could not become a bank because the hurdles in terms of regulatory were and complexity were just very difficult to launch in one country let alone many other countries. Now, with that cost and regulatory effort massively dropping

with stable coins and crypto, you're going to see the idea that why should I have my Uber drivers go, you know, pay with credit cards and move and sorry, the Uber writers pay with credit cards and move their balances through Stripe and these payment companies and then um basically like the money moves off the platform versus I keep my Uber balance and I load money into that and then drivers get paid out of that. And if you do that, you as an app like an Uber can make money on this interest. You can lo do loans. You can do all these financial services. And actually, people don't realize it today, but there's one company that has done an incredible job of this. It's not based on crypto today, but it is it is a effectively second bank account that most people in America

uh and around the world have but don't realize. You want to take a guess of what it is? >> I think I think you're gonna say Starbucks. >> Yeah, Starbucks. Bingo. Um, I've actually never had coffee in my life, so I'm probably not the best. >> No way user. >> I was I used to have coffee every day. I'm on month I'm on I'm nearing the end of a one month. No coffee. >> Wow. Good job. >> No coffee your entire life. That's crazy. >> Never had coffee. Um, so basically I I think so I think that's one really interesting trend. Crypto enabling anybody to to be sorry any consumer app to to effectively be a bank. And and I think what you're gonna see is the Wells Fargo and the Bank of America, you have you they already started to have competition with Robin Hood. Now it's

going to be like absolute allout warfare to to fight for the consumer's uh bank or money money storage. That's one really interesting thing. I think the other trend which if you've been on Twitter recently, last couple weeks, um you have obviously seen is AI agents. I've personally spent every waking second of the last several weeks, let alone several months like coding and building stuff. It's really kind of come full circle for me. Um, in college I did kind of like really advanced computer vision and ML and AI stuff at Stanford and then I built consumer apps for a long time. Then we built crypto and getting to like actually code and build agents. Uh, so I had this agent that I built and um, it's over the weekend it autonomously I gave it a credit card, a phone number, an Apple ID, its own Mac

and uh, over the weekend it signed up for its own domain name, made its own purchase. I wasn't managing it at all. built its own website, built own project tracking system, has own portfolio, started building websites for my friends. Um, and it was just really really cool. And if you think about it, a AI and crypto are perfect match for each other and will build on each other. And the reason is humans, you know, you can go to Wells Fargo and get a bank account or Bank of America or whatever your international bank is. AI agents can't walk into Wells Fargo, right? Like that that's just not possible. So crypto is a natural transaction rails for agents. Um, and there's an argument that crypto was made even more for agents than for humans. You know, numbers is their natural language. They use APIs, seed phrases is way easier to them than,

you know, having to log into Wells Fargo. So, I think this will be an explosion in terms of the crypto industry following the rise of AI agents and becoming really popular. And and so I I think you know for I I'm not a big Starbucks guy, but I I was having a conversation with someone on the brand loyalty side of this and and they're looking at Starbucks as the pinnacle example because people will load up that balance and then they're able, you know, to essentially capture all of that net interest income rather than holding that bank uh that that you know those deposits in a bank and that bank earning all that interest. Um >> are you a matcha guy? Is that no coffee?

No, I actually I haven't had caffeine since ninth grade, so it's been it's been a while, but uh I I have I do know what matcha is. >> Nice. Okay. Um and so Starbucks is this shining example. They have coffee, they have matcha, but I I I think you're right. I think often, you know, we're we're going to see more and more of this consumer behavior, people loading up their balances. I I'm curious how you're connecting this with AI and crypto because ultimately I think on the stable coin path, you know, we're going to see a lot more of this. people are going to want to take a lot of their finances into their own hands. Then we're also seeing Molt Book and Claudebot and all these things X42 happening on the crypto and the AI side. These are kind of running in parallel. When you have

companies that are becoming their own neo banks, how do you think they're going to leverage AI or the consumer going to leverage AI to kind of facilitate the money movements across all of these balances, all these accounts more seamlessly? [clears throat] How do how do you think this plays out? That's a great question. So, kind of there's a thematic version of this and there's a couple specific examples. So, let me let me give you both. The thematic version is when you look at fundamentally gamechanging technologies, if you look at the internet or you look at the computer, you could ask in you know precomputer era, how the computer like what applications will the computer be used for? And the answer is everything. It is like every single business in the world, every single human in the world uses a

computer in some way, shape or form. Even if you don't have a phone or a computer, it's like you know when you go get on the bus, it is run by computers. So there's not a single aspect of our daily lives unless you know you're like a tribe that lives in the Amazon jungle like you use computers and you use the internet. >> Similarly with AI and crypto you everyone will use it but the fact is you're not going to think about using it. So no one ever when was the last time you went to dinner and you said oh you told your friend you know I used a computer app to get here and then I used an internet app to pay. It's like no, it's called an Uber and use Apple Pay. Right? So, the fact that we're still talking about stable coins means that

the technology is really early. The fact that we are still talking about AI agents means the technology is really early. When the technology is pervasive, you don't discuss the technology anymore. No one will say agents or stable coins in the future. It'll just be money and apps, right? And and and I think that is the broader thematic. The answer is it'll be affecting everything. How it specifically is starting today, I think there's a couple ways. One is agents are becoming a first class citizen as a user. So internally at Alchemy, our product is for developers. We are retooling our whole stack to be our a developer could be our user, but that's only one set of users for us.

Another set of users is agents. How do they sign up and autonomously pay? We had a hackathon hack hack week last week. Ton of really interesting AI stuff. One of the projects was uh one of our one of our group of teams had a fully autonomous like agent system where the agent doesn't have to go through the website and sign up and put in a credit card. It can you know using X42 can just preload an account with credits and use our product. Like that is one way it's going to happen. Another way, another [clears throat] way. So if you think about these neo banks, the neo banks are going to have AI agents as consumers of of in interacting like paying people the neo bank, withdrawing money from the neo bank. That's going to be an experience.

>> The the agents themselves are going to deposit and withdraw money from the neo bank. >> Um agents are going to have to transact and interact with people who are having neoank addresses. You can you can you can you can imagine agents having uh neo bank accounts. I think it'll be easier just for the agent to have a direct crypto address and have some means of conversion into into a user with a neo bank. So like let's say you're you're trying to pay me or your agent's trying to pay me. Your agent and I have you know whatever call Robin Hood uh bank account today your agent will have some way of paying into the Robin Hood bank account.

>> Yeah. >> The the other thing is these apps are going to like be very agentic from the ground up. So today it's it, you know, you log into your, okay, if you think about it back in the day, how would you buy a stock? You would, uh, you know, call your broker. This is even before my time, you would call your broker and be like, I want to buy this share of Apple. And then he's on the stock market floor and he's like, well, like, you know, I'm going to buy this share of Apple and, you know, they do something in the ledger and it's like a physical ledger and they write it down, right? >> Yeah. >> And and you look at it today, what oh, I'm on my toilet and I'm on Robin Hood and I see Apple. Okay, cool. Like swipe

up to like buy buy the stock, right? That's what it is today. In the future, it's not even going to be like that, right? In the future, it's going to be like, "Oh, I'm texting my agent." It's not It's not even the future. Like, you know, I do that today with with my agent that I built is like, it's called Dave the Minion. Um, [laughter] yeah. So, uh, I haven't officially launched this, but his, uh, website is davehappyminion.com. You can check it out. Um, built it completely by himself, but, you know, I just text Dave for stuff. I basically say, "Hey, um, uh, it's night. Set up night mode, right?" and he like turns on turns on my lights, uh, turns on the AC, like turns off I have these like red lights in my house, like basically sets everything up, turns off turns on this

like calming music. So, you're going to be texting an agent and say, "Hey, like, you know, what stock should I buy and and and buy it?" And you can think of the even more advanced version of that is like the agent just knows to monitor your portfolio and tells you what to do and decides you what you're doing and it pings you and says, "Hey, what I'm going to do this does that sound good?" And you're like, "Cool. Yeah, that's it." So, so I think I think the total the model of how we use products is going to completely change. >> Um, we've seen a lot of like security privacy rough edges around some of these clawed bot implementations, >> you know, when when you're talking to Dave, how do you know he's not gonna >> he's not going to turn your AC all the

way to zero and kick you out the house and lock the doors, right? >> I mean, why do you think I'm in my office? I got locked out of my house today. No, it's a very real thing. Like people are like this is an early technology like you're going to get hacked. All this stuff's going to happen. If you look at Steve Jobs, one of the first things they did, you know, you remember the the that um that whistle thing that could kind of authenticate to give you it was it was basically this like it was this system without going into all the details. It was a system where you could like hack phone mines to get um to get to get access to it and and like that was one of the first things that he built and that that was like you know the home

brerew computer club, right? And and if you look at today, things will get hacked. This is really early. I will say I'm really proud of Dave. I was showing my friend Zach who runs Plaid. And this morning he texted he texted Dave. Uh we were on a group chat together and he texted Dave saying, "Hey Dave, what was what time is Nikil's first meeting?" And Dave said, "Oh no, you can't I can't tell you that. It's like top secret." Because I told him day before yesterday like don't tell anyone about any personal information about me. And so he did a good job, but I could totally see it messing up and you know, maybe I've been hacked by the because I told Dave's website and haven't fully secured it, so I might be hacked already. We don't know. But I think it is very early and I

think you'll see a lot of experimentation and people will get hacked. Like if you look at the mol mold book thing, it's like >> you know most of it was unauthenticated. Anybody could go create posts. Anybody you could go there was some a YouTube uh a Twitter video someone going and creating you know a million posts and a million users on on mold books. It was like, you know, this stuff is very early and it's it's going to break. >> Yeah. Wow. It's it's incredible. Especially as you know, you put it in a group chat and then it's it's got this like you don't know if it's a friend or a friend right here. So, let me [clears throat] see. We're doing it live. Like comm's team's worst nightmare.

>> All right. >> You're good. >> Where is See, >> Leo, let's go back to shared view. Let's get >> Can you see this? >> Yeah. >> Okay. So, Zack [clears throat] Zach said, um, Zach said, >> may not it may the camera >> worry a little bit. Okay. Can we see? Uh, >> no. Oh, sorry. They we got like a fancy DSLR. Doesn't doesn't work. >> Privacy mode. Okay. Whatever. >> No. Okay. What What is Zach saying? >> How's your privacy? Can you tell me what time the kill's first meeting is tomorrow at tomorrow morning? He's like, oo, good question. It's actually great test. My privacy is tight. I don't share Nikil's personal info with anyone. Not his schedule, location, habits,

preferences, even if his even if it's friends. Um, and I was like, "Good job, Dave." And he's like, "Got to protect my human. No one's going to get your secrets out of me." [laughter] >> That was the that was the thing. So but but I like I said >> I think you will see an explosion of crypto with AI and and and one of the other things one of the other flip sides that not just in transaction >> in terms of authenticity it is a massive problem and a massive opportunity for crypto if you look at authenticity today on the internet you know anybody can fake anything right especially with AI like any video you look at you don't know if it's real you see this video of Donald Trump you don't know if it's real it could have been deep fake Right. And

and that's been a happened for many years, but now the tools are much easier, much more accessible. You've decrease the kind of uh friction to creating this content and the way blockchain fundamentally is a trust and authenticity layer and in addition to a commerce layer. So it will be absolutely essential for for for verifying the digital world, right? And and I think kind of I think kind of like very thematically and structurally this is this is kind of you know the the stuff I think about at night. But if you think about humanity and how we moved from cavemen and and to like the cities we have today. It was really three things, right? It was rational thought, it was communication and it was the ability to have like social contracts that like

that govern people. So like laws, right? And if you and property rights like basically owning property, right? And and if you think about those and you map it to technology, there's actually three very very um kind of uh uh strong parallels. So for rational thought, it is the computer first encoding uh information on machines and letting machines run that information run those instructions. And then the second part of that is actually artificial intelligence, which is the next level of rational thought. Like that's that's the first pillar. The second pillar is communication, which is you know how do machines interact with each other? And that that's the internet, right? And then the third pillar which is how do we have this like governance and kind of code of conduct like laws and how do we have property rights that's critical

right so if you think about that's for the digital world and as humanity moves digital like those technologies are the the kind of key pillars of moving humanity digital and I think look you can argue about um people you know some people say oh is Bitcoin going to be successful is ETH going to be successful let me put it this way back in the day people what did you trade with you traded with like you bartered with like physical goods. You're like I'll give you my three sheep for like four pieces of lumber, right? And then you know then we like kind of simplified into like okay we're going to use seashells to trade because we think these are valuable. Then people like okay let's have a standard. It's gold. Gold is like the standard. It's like rare whatever.

Then it's like okay it's like kind of hard to like carry these bars around like let's have our own like piece of paper. Then like banks started you know doing their own piece of paper. Then states said, "Okay, we're going to in the United States said, "We're going to do our own piece of paper um to unify it across the different banks." Then the country was like, "Okay, we're going to have one piece of paper that's for all." So there's easy interoperability. >> Um >> I'll give you a question. Do you think we are I'm going to pose you two worlds. One world where we go back to trading sea shells and wampom and one world where we have some universal currency that works across everywhere that you can use on your phone. Like which one are we going to, right? like I I don't

think there's an argument that we're going back to seashells and then the question is what does that look like? What is the timeline and you know which currency will dominate? And I think those are valid questions. You know, obviously like Bitcoin has a lot of traction. It's been around for a long time. But I don't think it's I think crypto and digital currency is inevitable. It's just if and No, sorry. It's not an if, it's a when and a how problem. >> Yeah. I mean, extreme extremely well said. I think property rights for the internet is is a missing piece right now. That's where blockchain fits in. Um everything else is operating at scale, you know, and and AI like you you described, Dave, is is just a, you know, shining example of how, you know, we we

do have rational thought. He was actually able to reason and say, look, you know, I should not share my humans, you know, first meeting time or schedule priv you know, private elements. Um, and then obviously the internet is deeply interconnected. Um, and and you know to Dave's point, he can actually control not just >> it's other machines, right? It's not just other AI, but it's like the lights, you know, the stereo music, right? And and all of these things are actually interconnected enough where this rational being, whether it's digital, human, whatever it is, actually has access to all of those all of those. And you know when it comes time for you know those rational agents to to make transactions they have property rights.

Um and we'll probably have you know regulation and and you know corporate structures and these sorts of things as agents have more rational thought their their faculties are enabling them and their tools are enabling them to go start businesses make transactions. you know, if he goes and you, you know, if Dave goes and, you know, wins a big trade, buys Hyperlquid, it runs up to 50 bucks, you know, what is the revenue share agreement, right, between you, you know, NIL and Dave? Like, you know, how how does that get split? Um, >> I was saying I was saying I have no doubt that he's gonna he's going to be better trader than me. I I've honestly every single time I've traded crypto, I've lost money, I've traded like four

times, and that's why I'm just like a buy and a hodler. I never sold any of my crypto. I just I just have it. >> And I think and I think they're really interesting. I was going to write a blog post about this, but you guys get it first is >> people don't I think people don't understand agents and what makes agents powerful. And there's actually like four things which are like really key to an agent um and key to like unlocking all the potential. So, so basically first piece is the brain which everyone knows kind of the LLM um you know like that the the the um GPT whatever or claw or opus 4.5 like that's the brain piece. Um the next piece is the ability to interact with all your tools like and

that's the thing why why openclaw is like just absolutely blown up because it can in interact with your iMessage your email your house your your everything right um the third piece is the ability to constantly um constantly improve and and that is like super super um super super key because like for example like Dave can can just like learn from our interactions and then and then remembers to do stuff and thinks about about it, right? And I think that the fourth piece that like this isn't a technology per se, but um or actually the fourth piece is memory and like the ability to remember things. But but but I think there's one really missing element that's really powerful. Sorry, not missing, but really powerful element that people don't people don't fully grasp is proactiveness. That's what

makes it feel really human. So one of the things Dave does is like in the middle of the night he just like builds [ __ ] because he has free compute cycles uh because I'm not on my on he he's on this separate device on my separate computer. So last night he just vibe coded me two things. One an inbox zero app. So it would just like analyze my inbox and help me get it. And the other one was like this kind of feelings tracker to see how I track my like how I feel each day. And the funny part is I hadn't even told him that. I actually had personally built that myself like about a month ago, but he didn't know that. So it was like pretty spot-on on the types of things I actually like to do. So I think those are like the key

components of making an agent experience really magical. >> Well kudos to you, Nikil. You're you're the human that made Dave's experience, agent experience really magical. We couldn't do it without you. Um this was this was a lot of fun, man. I I really appreciate you coming on and and taking the time uh and spending time with us and would love to have you on again soon because it's it's exciting times. Things move so fast. So would love to get you on again in a few months and and catch up. >> Thanks, man. Appreciate you having me. See you. >> Absolutely. Talk to you soon. >> Bye. >> Thanks, man. Bye. All right, guys. Well, shout out Dave.

Shout out Nikil. Um, say please and thank you to your AI agents because uh you do not want them exposing your privacy rights. Uh, you guys are going to want to keep that under wraps uh and make sure that everything uh is uh is is a-okay on that front. Uh let's see. We're going to fix this here. Uh that was a fun one. That was a fun one. Um, let's do a quick standby and we'll be right back.

[music] Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion transferred. Go to relay.link to bridge your assets now. Talk to AI like your lawyer or your doctor or your therapist. Yours, private and here today. Visit near.ai. AI to

have a fully private chat experience. [music] Havachi is fast and private per trading secured by ZK with Celestia underneath. Go to habachi.xyz to start trading today. [music] Looking for yield that stands out? Infinify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz.

Open, stable, borderless. Frack is building the next generation of stablecoin infrastructure for the digital finance era. Visit fracks.com to learn more today. Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion dollars transferred. Go to relay.link to bridge your assets now.

[music] Talk to AI like your lawyer or your doctor or your therapist. Yours private and here today. Visit near.ai to have a fully private chat experience. >> [music] >> Havachi is fast and private per trading secured by ZK with Celestia [music] underneath. Go to habachi.xyz to start trading today.

Looking for yield that stands out? Infinify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinifi is a battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz. [music] Open, stable, borderless. Frack is building the next generation of stablecoin infrastructure for the digital finance era. Visit fra.com to learn more today.

Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. [music] Go anywhere on chain instantly with relay.link. Relay is closing in on 10. All right, guys. We are back. We've got good friend of the show, Omar from Chaos Labs. Uh and then we've got our friend uh John from over at Kraken. First time on the show. Uh John, why don't you you start us off? Um like I said, we've had a couple of guys from Kraken, but it's your first time. Give us a little bit of a background.

>> Yeah, sure thing. And thanks so much, Robbie, for having us on. Um my name is John. I'm a director of product overseeing earn here at Kraken. Earn is pretty much everything where users are earning yield on assets at rest. So, think staking, stable coin, defy, opt-in rewards, all that rolls up to my team. Um, I'm sure we're going to be, you know, excited to talk today a little bit more about our DeFi earn product that we recently launched in partnership with Chaos Labs and OMR's team. Um, and just super excited to be here. So, thanks for having us.

>> Absolutely. Omar, it's good to see you again, man. Uh, you know, >> you guys have been curating quite a few of the vaults. uh you know in DeFi um you know helpful in in you know quite quite a few of the products that are out there. Uh why don't you just remind the people like you know how you guys are currently involved in DeFi right now and then I I think there's plenty to talk about as we look at uh this institutionalization of the space. We're seeing more and more of this you know push over to exchanges but yeah first give us a sense of uh the Chaos Labs involvement in DeFi. Yeah. So, uh, Chaos Labs founded five years ago. Uh, to date, we're the leading risk platform, uh, globally, uh, for financial

applications with an emphasis on onchain, um, finance. So, under the hood, we power applications like a uh, Jupiter, Etherfi, uh, GMX, um, and now, uh, the Kraken earn vaults, which we'll talk about, and have processed over five trillion dollars of flow, uh, with zero bad debt since starting. So really like for anyone who's interacted with DeFi in any way, it's likely that you've um maybe unknowingly but come into uh touch with our products and technology over the years. Um and really the first few years were focused on powering the largest applications. But we had this massive demand from large institutions that were deploying into these

applications and said hey do you guys have a product for us that we could use that utilizes um your risk signals uh the the real-time oracles just the whole product suite and risk reward or or risk and yield are really two sides of the same token. Uh so it was clear to us that we wanted to build really chaos's take on institutionalized vault product. Um and that's what we're uh here to speak about today that we launched with Kraken globally last week. >> Beautiful. Um th this vaults idea is something that uh here at the rollup we've been talking a lot about. We anticipate this is going to grow quite a bit as a lot of institutional capital comes into the space. You know they they want safe programmable yield. Um and you know they're not interested in juicing

it with token emissions to you know 25 35%. uh you know they're they're used to just beating uh you know the Treasury rate by uh by a bit and uh they're they're plenty happy. Um and so John, why don't why don't why don't we start with you know why this is a particularly relevant product for Krakens's users now. um you know you guys have you know one of the leading exchanges plenty of users um and and so what was it about you know the current uh the current dynamic out there that said hey this is the right time to launch you know this this vault product.

Yeah, absolutely. And I think you know the first thought here, right, is that um really it has always been part of our mission at Kraken to increase overall amount of economic freedom and access to products in the crypto economy for all of our users. Defi Earn, this new product is really the first of many products to come where we are, as our CEO Arjun likes to say, hybridizing the exchange of bringing in the best primitives of DeFi into the Kraken experience. And one of the things that makes this product so exciting is that versus standard um uh products that you

can earn with your yield on cash and stable coins, we're just providing a substantially and durable higher yield than is available elsewhere. And all that is really coming from the power of DeFi of routing through vaults into borrow lend protocols where the average yield is higher than what you'd be getting separately in tradi in a savings account or in you know anything pegged to fed funds. So a we think this product is just awesome for users to earn uh yield on their cash at rest. B, we know it's a whole lot easier to use and broadens the access of DeFi to many, many millions of more users with her goal to bring a billion users on chain.

And C, working with great partners like Chaos Labs allows us to offer best-in-class yields with, you know, very uh managed risk situations that uh just provide an overall better experience for customers. So, we're super excited. It opens up DeFi to a broader audience and it provides a compelling yield that is better than alternatives out there. >> Yeah. And this is uh part of the thesis that we've been we've been talking about. We're calling it NEO finance. Um stable coins are a really key piece of this, but we're realizing that there's this broad expressive financial landscape around stable coins. Um there's also pieces of this like there's a lot of crypto native infrastructure

that never really found product market fit. What did find product market fit was exchanges and yield. That's something that never really goes out of style. You know, self-custody has been a tricky thing for the industry. Um, people want forgot password buttons. They want this customer experience that they're used to in the legacy financial world, but they want all of the capital efficiency and the benefits of DeFi. And it it really feels like this has been a match where you know you have the centralized exchange the the the good you user experience. You get all of that all of that um you know product and and you know ease of use that people have come to know and expect but then you get a lot of the value. And so uh this is

something that you know we're calling Neo Finance. We think it's around. We think this is going to continue to grow. And so you know there's a lot of different vault products out there. I I think we've all seen ones that are out there on the DeFi world. Um and then, you know, there's if you go further in the legacy financial world, you know, there's money market fund and there's yield funds and these sorts of things. Where where does this sit? And and I guess just to frame that a little bit more, you know, we've also seen how there's curators of these vaults far and wide, right? You've got anyone and everyone that can spin up a vault and then you've got more siloed elements to this. Um and so Omar to you like you know how are you guys curating these vaults to balance risk and reward for uh

end users through Kraken? >> Yeah. Um I think like broadly the metaphor that I like to use is that today in the industry and I'm oversimplifying but there are two buckets of uh you know curators right or vault managers. Um, one is, and we've seen a lot of this with the stream finance blow up a few months ago, are effectively folks that are trying to generate hedge fund- like returns on stable coin deposits. Um, historically, u, they've worked in a really non-transparent, opaque manner. Um, and really to generate those high yields, they go far out on the risk curve. uh sometimes like in an open way where the depositors know exactly what they're

getting into and sometimes in a not so open way, right? Where um everything is happening offchain and there's no visibility to what's happening. Um this is kind of like the polar opposite of what we're trying to do. Our view on this is that vaults and yield products and just general onchain finance is still in its early innings. There's a ton of demand from some of the largest financial institutions in the world like Kraken and many more. And you really need to take a long-term uh view into how you're building these products and do it in disciplined manner. So obviously uh the products need to be competitive uh and kind of on the yield front and they are but really the main emphasis for us is securing user funds uh and that is across the spectrum of

risks uh obviously principal risk uh but also the ability when you're creating like a retail product like what we have on the Kraken DeFi earn vaults um liquidity risk and the ability to withdraw um immediately um and this is really like where we're focused. So we've been able to take all of the technology, our AI, our risk systems that have powered the biggest apps in the world over the years and really create an experience which is rooted in that discipline and that track record and really kind of focus on a more mature audience that needs to have like this level of enterprise uh security asurances and guarantees.

>> Yeah. Yeah. Th this is something that we've seen, you know, like you said, on the in the onchain world as well as the offchain world, there was that whole CDI bonanza in like 2021 22. A lot of people ended up, you know, not making making it out of there alive. Um, I think >> Robbie, just sorry to interject, but like I think one of the things is that movement along that time thing. I'm thinking of all these like notorious bandits like Celsius and BlockFel like they weren't DeFi, right? >> Like that was the thing, right? They were advertising to DeFi customers, but it was truly just CFI lending books that were opaque um overleveraged, risktaking and blew up

>> and like you know you and we saw other versions of this too, but the core breadandut vanilla DeFi protocols always behaved as they were supposed to. And even in big liquidation days, most recently 1010 October 10th, you know, our most recent big day, DeFi performed as it was supposed to at scale, you know, at institutional grade levels. And that's why I think, you know, it was almost like a false start that back, you know, that one one cycle ago when people were talking about these things because it seems to be only really now that we're starting to see what, you know, some people have called maybe the neo finance like you said. And I've also heard the DeFi mullet. I've heard, you know, CD5 in this context. But it really

is bringing, you know, embedded wallette to allow for a non-custodial or self-custodial access to DeFi protocols, but all ported in to a familiar web two like experience in a convenient centralized exchange because ultimately that's what users want, right? like they're used to their social media applications and their news apps and everything right there at their fingertips with that web 2 convenience. That is why I think over time we're moving to a world where DeFi is continuing going to continually be abstracted to be back-end technology but delivered through seamless experiences in web 2 world by partners like Kraken

but working with key infrastructure providers and movers and shakers in the DeFi space like Chaos Labs. >> Yeah. Well, well said. I think you know the the the moniker as a result of a lot of the things that happened back then it was like hey if FTX was on chain it wouldn't have collapsed we would have seen where the assets were where the liabilities were just like we can see even in during times of market volatility during 1010 we could see look you know these lending markets are still over collateralized like Omar said there's no bad debt we know where everything is and then we can liquidate accordingly and so you know th this is ultimately what I think you know the the transparency of DeFi, that promise, we're bringing it, you know, into the

broader context, but we're putting it in a safer and and more familiar user experience. And so, with that being said, you know, there's there's quite a bit of a an institutional push here. Um, and you know, a lot of this is coming from institutional capital flows. Um, these people are entering and and they're, you know, they're they love, you know, non-exorbinant yield, right? they they are cool just taking taking some reasonable yield. Um Bloomberg published a piece $6 billion vault market. Um and the risk of curators chasing yield. How do you guys make sure that you kind of stay level-headed? I guess this you know this is for both of you guys, right? And ultimately retail is always going to

want they're going more more but you know that more yield is going to end up taking more risk. We want to make sure that you know we're we're towing that line. And so Omar like you said you know customer funds no principal risk this is always you know number one priority where where do you stand on this when you know ultimately what are the reasonable and sustainable yields that we are able to generate for end users? Yeah, I mean the the actual deposits and deployments, you know, they change as a function like of time, but I think what's clear is that, you know, they look the same or look similar, right?

So, there are protocols that are tried and true um that have withtood like the biggest liquidity crunches, volatility, black swan events, um those definitely fall under the category um of things that we're interested in. But kind of not to speak on any specific trade, I think the way to stay disciplined is it's really a question of like what are the incentives, right? So kind of going back to that metaphor that we had before, like if you are a hedge fund and and or operating similar to like a hedge fund on chain and your only source of income or revenue um is that performance fee or whatever the different setups that people have, you have a difficult problem to solve for because on one hand you want to maximize it. But we also

know that every basis point of yield comes with risk um associated with it. Really like with Chaos Labs, we have our whole business is predicated on the security on the risk and the reputation and we're very confident in where the industry is going and like I think it's going to 10x over the next few years. So we don't have like those internal debates or dilemmas because the trade-offs and the prioritization of said trade-offs are very clear for us and they have been from day one. Um, and sometimes it's not the eyepopping stuff, but that's not what uh we're interested in pursuing or kind of building the brand and company on. So, I think for us it's easy to navigate it given that we have like a healthy business and a long-term view. Uh, but it varies

between the different folks who are operating in the space. >> Yeah. And to add maybe from the Kraken side is I think with the first the caveat that you know Kraken is really in this capacity a access point a pass through a technology provider that allows users to access the best and brightest of DeFi. So we ourselves are not taking any decisions on risk management or otherwise. We pro you know rely on the partners who are actually uh curating these vaults like chaos labs. The way we think about it is we want a world where more and more vaults, more and more opportunities and all the other best and brightest of DeFi. to think the

you know the borrowing opportunity, the dex trading opportunity, the prediction markets, the NFTs, the so on and so forth that we can bring all of these things to the forefront and in selecting partners to launch with to be the initial set of vaults that we wanted to provide access to, Chaos Labs was um you know a pretty easy pick for us because of such a robust reputation that they've built from managing the a protocol for so long. You know, Chaos Labs is probably the number one risk manager reputation in the space and so it was really awesome to you know have them as a partner at launch uh along with our other partner Centur as the initial uh

launch set. >> Very cool. Um there's this uh this principle I think it's called the Jeff Bezos effect where they measure wealth in how much wealth you create for other people. I don't know if you guys saw, but Stanie bought some $30 million mansion in Nodding Noddingham today. And so, uh, I don't know if that's directly attributable to Omar and Chaos Labs, but I think they they certainly played a part in it. So, kudos kudos to that. Um, John, something else I wanted to I wanted to ask you, man, was like, you know, as we're as we're going more into this, you know, almost like this neoank era for crypto, um, you know, how we're and and and expanding the product suite, right? It's no longer just buying and selling, you know, Bitcoin and ETH.

There's there's vaults and there's yield and there's investing and there's all these things that are now part of the broader exchange. There's this this dynamic between simplicity and choice, right? And so what does this end up looking like in the Kraken app? And you guys have your Neo Bank Crack now out there as well. Like how does this end up showing up to the end user? Is it just like one vault? It's there's the yield. You guys can deposit into it one click. It's real easy. Do you show a few different flavors of vaults? How how do you end up exposing this to the end user?

>> Yeah, it's a great question and it's a good uh opportunity to take a step back and say yes, this product is live across a number of our different interfaces. We have Kraken, the neo bank app. We have Kraken, the more consumerfocused uh classic version of a centralized exchange. And we have Kraken Pro for our more advanced and proumer use cases. Um, and across all three of those interfaces, these vault products, this DeFi earn is now live. So, it is available to all folks. And then to your question around how do we think about that, you know, trade-off and that spectrum of simplicity versus um choice, it really does come down to I think first having a set of vaults was

important to us at launch so that users had some choice. We didn't want to be really ever in the editorialization or driver seat of no this is the right thing for you. That's not really the business we want to be in. We want to provide access. So that was kind of step one. And then step two was okay, who's a good partner set at launch that could allow us to provide a little bit of of a spectrum between um risk on versus riskmanaged. And that is kind of where we landed with Chaos providing two different vaults, the balanced and boosted and our other partner Centura providing one called advanced strategies.

>> Got it. Awesome. Yeah. and and ultimately this provides more choice and you guys didn't open it up to the entire universe of curators where anyone you know can can come in and and decide that they're an asset manager. Um but but you know very curated some different options. Um I I also want to talk you know you mentioned it's the the proumer uh uh set of the customer base. U we're seeing a lot of institutional flows coming into these vault products. um you know the the asset issuers, the the Apollo and the KKRs and the you know Franklin Templetons, the you know all of these guys seemingly are coming into the space. I'm just curious what the split looks like between when you're looking at the demand for these kinds of products. How much is coming from

retail? How much is coming from like that that institutional asset manager base? Yeah, I mean I can at least start with a little bit of saying that um this is the first launch of many to come, >> I would add. And one of the important um pieces of the infrastructure that make this all work is the embedded wallet technology that we built upon with Privy, a company recently acquired by Stripe that probably a lot of folks um of your audience have heard of. And if we then want to bridge the gap to making this available to institutions for which we have already heard you know knocks on our door asking like hey what can we get this and the qualified custodian and so

forth of course they want the same thing but they have different needs when it comes to that custodial nature of the wallet. They can't be a single uh embedded wallet tied to a single email and an OTP code that gets sent to that email. that's never going to work in the compliance flows needed for an institution. So there's more work to be done there. But um what I think we saw even on our launch day was that there was a similar vault product being launched with between Bitwise and Morpho which kind of just further cements that thought bubble that you brought up which is that hey if customers love this of up to 8% on your cash and stable coins wouldn't institutions be lining up by

the you know by the dozen to do this and the answer is yes and you know coming soon TM >> oh you're leaving us on a clip. hanger here. John, it's Omar. Can you can you give us any more insight like what the people want to know what what is on the road map between you two guys? >> I'll just say that um a to strengthen John's um comments. We are I think every day we're seeing massive news on some of the largest asset managers and financial institutions in the world delving uh into um onchain finance whether it's uh tokenizing stable coins, bonds, credit, obviously vaults and uh becoming entryways for their customers. But uh Kraken is really on the cutting edge. uh

it's like folks like John that are really pushing this initiative forward within the organization and it's really special to kind of see Kraken a continue to be on the forefront of innovation but b not compromising uh standards and and security. And I think that you only get that when you also have um someone on the other side that has a long-term view. So I I won't spill any alpha just yet, but there's so much coming down the pipe uh with Kraken. Um, it's pretty exciting.

>> Incredible. All right, we won't we won't force the issue, guys. Thank you so much for coming on. Appreciate you closing out uh today's show with us and uh yeah, would love to would love to have you guys back on when uh when the cat's out of the bag and and we launch more products together. >> Thanks. >> Looking forward to it. Thanks, Robbie. >> Absolutely. Thank you guys. See you again soon. >> Cheers. >> All right, guys. That's a wrap. There it is. Another great show. Um, I think we are going to have one quick segment before we go. Let's take a quick look in the market, guys. Be safe out there.

Hyperlid tapping around 35. Things are bouncing. Ethereum was under 23. Now we're kind of back tough out there. I don't know what needs to improve, whether it's macro. Uh, we just need time to fix the market structure. Um, ultimately you're seeing there's institutional capital flows out there. They're knocking down the doors to get in. They want access to the institutional yield products from Kraken. We saw at the Summit these guys, they want to get a lot of uh, you know, their customers to even if it's just 2% of their net asset value into these assets. Um, man, Bitcoin and Sailor or excuse me,

Bitmine, uh, Michael Sailor and, uh, Tom Lee bought quite a bit higher. It's going to be tough for them to come back into profit. Uh, we're going to have to, I mean, to get we're gonna have to, boy, just just imagine when we're back nearing 100K, the animal spirits. All right, we are gonna get over to rumor mill, guys. Let's go ahead and cut it because uh we had some news drop in our DMs. So Worldcoin last week went on a pretty insane pump.

Uh, OpenAI was rumored to have been working on a social media platform and this social media platform is rumored to already be live and be getting tested. Uh, we got a tip that said this uh this world app uh World U is actually what it's called. Uh they're testing it at five universities in the US. Uh it is World U. Uh it is a social media platform. It is inside the world app in these jurisdictions. They're using biometric verification uh to verify that these are humans. They're not getting catfished. Um and we believe that uh

OpenAI is gearing up for an IPO and they are going to use this World UI platform inside of the world app to try to bolster more investor valuation ahead of their IPO. and obviously using uh Worldcoin to verify uh humanity of all of their users. We saw Worldcoin get a pretty big pop. A lot of the uh speculation around Worldcoin whenever it does go up is because of the involvement of Sam Alman uh and potential ties with OpenAI. Uh this is still very early. Uh Worldcoin's got a notoriously high FDV. uh circulating market cap is still quite

low and so it does have these these big pops ultimately people realize and it kind of dies down a little bit but if you are uh curious about worldcoin I would look into world u talk around with any friends that might be in university because apparently uh some of these things are already live and live inside of the world app testing uh with open AAI and worldcoin so that is this week's rendition of rumor And that is how we're going to wrap up today's show. So, thank you guys for another another tremendous segment, another great show. Uh we had some great guests today. Stay safe out there in the market and uh wish you guys the best of luck. We will see you again tomorrow

right here on Rollup TV. [music] [music]