Stablewatch: Yieldcoin Growth Is Accelerating (Here’s why…)

Transcript

Definitely those two projects which showed a lot of people that uh people are interested in just having their stable coins being put to work and get some yield, right? >> You are either subject to reporting live which is impossible or you try to still report your actual holdings once a day, once a week. >> One thing before the chart went down 95%. I am an investor in that one. That feels bad, man. Feels still up somehow but feels bad. Welcome back to another episode of Stabled Up, our premier weekly show covering the ins and outs of digital

dollars, stable coins, and the future of decentralized finance. >> Show is made possible by FRA and FRA is powering the financial engine of the internet, powering FRXUSD and genius compliant stable coins. This is the stablecoin super cycle made possible by FRA. Now enjoy stabled up our weekly stable coin show. >> Welcome to this to to the world TV stable coins year in in review 2025. Um Halco pure tour of stable watch guys. You built an amazing platform. Your data is amazing. Your work's great. You do great great great work. Stoked to have you guys on. Um boys your brothers. How did this start? How did this happen? How did you guys build stable watch? What's your backgrounds? talk to us about kind of what happened here and how you got to

stable watch and a bit about the origin story. Guys, welcome on. >> Sure. Yeah, very happy to be here. Thank you for having us and a big fan of the show. So, uh yeah, really glad to be here. Um yeah, TLDDR like last year uh I've been uh managing some small fund with a friend. I've been more on the venture side of it and Phyavore uh Alan Big. Yeah, big thanks to you. The guys did amazing work on the liquid side. Uh we closed all the position last December and we started looking to way is how to utilize uh the profits with stable coins and just get uh less risk exposure with our portfolio and this is the time I find out that the space is

not saturated yet. So early this year um there was not that big of a market cap for the whole category. Uh however people really wanted to get exposure of into stable coin somehow because we uh had this acquisition of uh bridge by stripe and this also those yield bearing stable coin category was somehow a proxy to get exposure into all of that. This is how I perceive it. Uh however what's been lacking is or was until we launched stable watch uh was the data around all this kind of a products that's one thing and the other is risk profile of those and while we're not telling directly if

we think that this or other coin is AA or triple B we still try to help people understand what are the risk areas associated uh with each of uh this type of assets and early this year everybody been thinking about like stable coins as like one very broad big category. This is not what we think and also now regulators in US uh they also made this uh distinction between payment stable coins. So the ones which are not sharing any interest um with its users like USC or USDT uh the the two giants but there are many more of those and the yieldbearing

products and are those stable coins actually uh and and you can argue about that. Uh definitely those projects would like to call uh themselves stable coins but not all of them are. There's a lot of regulatory arbitrage actually and there's like much more nuance into it. Regulators also seen it. That's why the GDS act is actually talking rather only about >> the payment ones. Um and this >> Sam from FRA he's laid this out so many times on the show and he's probably been on three or four times like there's two types of stable coins. There's the genius compliant now and like there's like these yield bearing ones. And so it's very it's very clear that that's happening. We're going to get the history of the or the year in review for yield bearing up uh here shortly. Halo,

I want to give you a chance to introduce yourself, give your side of the story. How did Stable Watch come about? You and your brother, who's the smarter one, who's the who's the more business savvy one, who gets the more who gets more chicks? Talk to us about what's going on here. >> Oh, yeah. So, like nice to meet you guys. So, so I think TLDDR is uh I think for clarity you know P is the founder so he does all the you know kind of like flack and hard work uh right we are literally like shouting at him in internal chats and that our role as usual and for me I have been like you know doing full-time P5 since like 2021 and before that uh I was doing uh FX and rights for like emerging markets uh in a huge institution so went from trading

illquid stuff to trading highly speculative liquid stuff you So it's like one and a half and obviously once you used to do finance in the past it still chases you. So so sooner or later you realize that everything we do here uh are various riskings or kind of like various takes on some old concept of finance uh that we'll try to solve under new constraints. Uh right because what blockchain gave us was insane transparency and insane speed. uh but at some trade-offs uh and and this was basically very very uh interesting things. So throughout like the few years was lucky to work on a few projects and we we like all the crazy things it started

completely randomly which means he wanted to move from the telegram channel to more like data and then we started into data and then at some time we realized that hey actually we have more data than anyone else uh just through like you know pure force of like sheer will you know so so it was like a very nichian thing I I I would say >> Robbie and I met at the University of Florida. He's not here in in university. And I had a bit of like a a marketing background and I just we just got on a call one day and we were like, "Dude, we should start a podcast." This was like April 2020. Um, and then we just filmed our first show and then, you know, the rest is kind of history. So, that's a it's awesome. It starts small and then

you realize you get this edge in data as you're saying, Helo, and you guys have a lot of desire and and obviously you get the point of what we're doing here. You've been here for four or five years now. you personally at least as you see the vi the vision of value. So guys, thanks for being here. Let's kick this off year in review. Let's start with yield bearing stable coins, guys. Um Ptor, you did a great job there explaining kind of how they work and and how they're a little bit regulatory different than uh Genius Compliance stable coins. Um they've obviously caught a huge bid. I mean January we started at seven and a half billion dollars in total supply, TVL for top uh yield bearing stable coins. We topped out in November uh just after kind of the whole 1010 thing uh about 22 21

billion there just slightly down closer to the 20 billion mark now. I mean guys what a year 3x or so on yield bearing stable coin supply. Um what are your you know uh reactions here Leo? If you scroll down just a bit you can actually see the uh stable coin names and the colorings. Um but potaur kick us off here. Did you expect this? What led this? Why did we see a 3x in yield bearing stable coins uh supply given that we had a a rate cutting year this year with the Fed? Um you know we we had different kind of quantitative tightening from the macro level that's come to an end but clearly there has been demand for these assets. Talk to us about what happened this year.

>> Yeah. So, uh, yeah, we definitely like expected it because this is like amazing category and and we realize it's pretty much earlier than than a lot of people in the market. That's why we've bet with all this data and research on this category. And I don't know how many times I've heard it in this space, but we're very early I believe with this yield bearing space as all of the um credit and this type like private credit like CLOS's this type of instruments I believe they're going to be tokenized in the next few years and there's a lot of push of the thread players to actually common chain everybody from the big names is not even experimenting they actually like having the department departments which are working heavily on

coming and tokenizing stuff. So, so this is happening already. So, I assume that we got still really um a lot of upside when you look at TF at at the total market and what happened is um even slightly before this year uh we had only two players really focus on on the category. So Sky but before the um the rebranding so still as a maker with savings die and then Etheina and uh the SD actually savings die been really great product work for quite some time but not so many people been interested uh about it but then a lot of hype came when Athena um guys tokenized the uh the

delta neutral trade right we've seen a lot of investors being killing each other to to get into the the round etc. And at that point of time that was big alpha which could be tokenized and actually the yields at the beginning of uh of SUSD been very very high and relatively risk adjusted to say if you compare it to like whatever other options you had in the D5 market at that point. Um but over the time what the the biggest uh unlock for growing the category being definitely those two projects which showed a lot of people that uh people are interested in just

having their stable coins being put to work and get some yield, right? that maybe they don't want to have like ETH exposure or at least not directly and they feel much more safe if the asset is somehow associated with having this PEG or whatever kind of support at around one uh $1 level uh right so that been it and the other trigger actually as I said earlier been the um bridge acquisition by stripe so people realize hey I can't really got exposure into this stable coin space anyhow >> what I can do to to you know calm and and get some yields whatever how I can get exposure and I be I believe this is why we um we've seen this growth and if

you look at this chart you're going to see that actually like big part of it is the market as other YBS's because beside like 3x growth when it comes to the uh TVL at the moment we also experience I think like >> 30x or even more growth of projects which are uh providing such services. So at the beginning of the year they've been few and I remember I like did some some research and made like Excel file I found more than 100 of them in April like this post really boomed on on Twitter and from that time still each month you can see quite few projects new projects come to the space most of them

are actually replicating models which are not scalable not not safety either so there's a lot of stuff that be really >> and and we saw Different events shape this market this year, right? Like for example, Sky just launched their OEX incubator. That's probably going to shape the trajectory of their growth next year. Athena had that hardcoded 1010 event where had a not saved their ass and Binance not have screwed them over probably in some way, the whole market structure would look different for them and they they got a big TVL decrease uh from that as well. Um, and just kind of seeing a lot of sentiment readjusting. Uh, Halo, from from your side, but the more specific teams here, I'm gonna put you on the spot a bit

here. Where do you expect the the majority of growth to come from from the SUSDs, SUSD, build, syrup, USDC or USYC? Um, or others kind of where are you placing your bets for growth for 2026 based on what happened this year in 2025? And just any other thoughts to add on to P2 there? I I would say as follows uh it depends whenever we are going to look into DeFi uh and having more from DeFi or are we going to look into external sources. I think with like because I I think Ethina has been the flagship rate for the past two years, right? Literally Etheina went from called from being called with very dubious names I will not quote here into being the biggest, you know, thing in

DeFi and when and and it's worth maybe jumping back to some kind of like defi archeology. Uh so Ethina has been the flagship say delta neutral or like the basis trait. So the guys were insanely smart enough to realize that you have lots of free food on the table. you can tokenize and you can grow because the rates have been very very easy to farm and to get uh and to get insane yield over the risky rate. So any risk takingaking was really worth it. And if you remember guys if you have been here before let's say 2022 and 2023 early on uh when GMX was the biggest per platform they have their tokenized LP position that some people also tried to build delta delta neutral about they all blew up.

>> Yeah, RIP man. because all from GLP they all started to lose money. So it was very interesting to see how people will going are going to extract money from Delta neutral this year. I was like very curious to see if and when and how. Uh but what was interesting is that Athena basically said hey we have found the alpha which was hidden they made it public and they let it grow insanely high. uh which means if we discover any new source and we manage to mine this source of alpha uh from any new source in DeFi but I think it's up to Ethan up to anyone else to once again find it grow right >> he's on team Athena how could team

Athena bowl I'm gonna just I'm gonna just fade that completely I did miss the Athena seed round they didn't let me in so I as an investor I must FUD them um I must go with the uh build black rocks and securitize. I think that's going to absolutely explode next year. And then I would actually go with USDS. I think OEX is going to come through. We've been having the framework guys on every couple of weeks and they've just been sky filling me till non-stop. Um now >> yeah sky peeling is great and I think sky pilling is like the best of both world because sky if you look into sky sky is actively managed uh and sky is coded which means most likely if you

don't want to chase good stuff uh sky is is doing that for you right so you see uh and it's like completely transparent but you can see sky specking in real life and you can see where the guys were and quite often the sky team is in the hot safe stuff before anyone else uh And that's very interesting, right? But then when we think about build about offchain assets, >> this is like very something you can like talk for hours about uh because >> technically we are porting real life fields onto blockchain uh which is super cool. We are still very early uh and right now the cost of doing so is still expensive. When you look inside the cost of setting up things, tokenizing the level of expenses is crazy high. Uh so

if this continues to grow uh if consumer says we want faster, better, cheaper, more transparent, everyone wins. And I think >> if we want for this sector to win, we also need to kind of like tell guys we like it, but you want more, more transparent and cheaper. Uh and then suddenly you basically open that and like democratize access to lots of like instruments to the people. >> Well, that's why I like these NEO bank plays. I I like the plasma one thing before the chart went down 95%. I am an investor in that one. That feels bad, man. feels still up somehow but feels bad. Um, Kraken, Coinbase, all these kind of neo bank apps, they get that democratization of access to stable coins globally and like now they're doing with tokenized equities. It's just going to keep growing, guys. So, this is

yield bearing stable coins supply. Uh, we're going to switch to the heat map because I'm a little bit confused as to what's going on with this heat map. So, we're gonna have to ask our local risk manager Halco here and founder of stable watch Pear about about this heat map coming up. But yeah, I mean guys, it's clear that the yield bearing stable coin supply is going to grow next year. Um, and we'll see where we end up. I I I would expect 100 billion to be in sights. To be honest, >> Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again.

>> Looking for yield that stands out? Infinifi 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. 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. >> Yeah. So, so let's switch to the Oh, okay. We waiting. Yeah, we have it. So, uh, as you can see, there's like one huge winner, uh, and and really easy to spot it. And we'll add, uh, I would need to add something to to what Halo said about Etheina. It's like, okay, the strategy is great. However, it's like pretty much the alpha is over. Too many

people at the moment are like, right? So, I think Ethina is definitely going to come up with with some new ideas. There's strata, new trench product. So, the team is doing uh, great. However, like this strategy not gonna provide the same kind of returns at it used to and you can just see it uh at any other ecosystem which don't have SUSD deployed they always have they always has some um local option some smaller team going to do it but the yields is never at the same level as when SUSD been launched >> and their converge chain too man I mean at terminal shut down there's is terminal decks. I I don't know if you

guys saw that they announced that they were shutting down converge. I haven't heard much from that. That was supposed to be like the Athena securitized chain. Um I don't know, man. They're they're I not one to stomp on any graves. I think Athena is going to do great, but I'm uh I hear what you're saying Per. It's the 1010 just kind of shook a lot of people out of that per farming trade. I think the purpose farming was super active and I think it it shook a lot of people's boots about Athena. We'll see. We'll see their their comeback and if they can create more alpha. Obviously SUSDS 791% here. Build gold 200% syrup 2500%.

What are we looking at here? It's an over overview of yield bearing stable coins market leaders uh showing supplies and colorcoded 365 day supply chain indicators. Okay, gotcha. >> But thing is worth adding here. It's all apples and oranges, right? Because you know yield bearing stable coins is a gigantic bucket. You can throw in lots of things. uh it's kind of like you know saying fixed income or like bonds are like one thing and obviously you look inside and everything is different. So very quickly we realized right and we kind of like came with like all the categories of you could say uh state yield bearing stables technically uh technically of those uh even themselves they do not market themselves as yield bearing stables but more of like uh tokenized yield assets because they both

say we may not necessarily be stable. some of our principle may be at risk because we are doing risk kind of like risk takingaking within some frontiers right so so lots of those things should be a little bit volatile while by design the same thing you look into trfa you look into all those like you know bond ETFs credit ETFs they all are volatile they all change over time they may go they mostly go up sometimes not right and and with the yield bearing stables how to call them uh we we also have the same right that You may see yield brings table A offering 4% and B offering 8% but you need to answer right what's what's inside right so so technically you know

looking into the most flagship thing right uh one of those could be some kind of like very safe wrapper of either like offchain assets and maybe safe positions uh something else could be a black box so you may have more black boxes that were like more tested so so the same Athena that we mentioned or you may have actually like evil black boxes. So the infamous stream, right, which you know ended horribly >> and and it's as you even said yourself, right? Uh with those black boxes uh come great risks uh because lots of assets we can price onchain and real life. Those strategies uh face lots of new problems because once again think about ratifi you run a fund. You have fun units. You

report your NAV once a day, once a week, once a month maybe. Now think about Athena and peers of Athena which are also tokenized strategies. You are either subject to reporting life which is impossible or you try to still report your actual holdings once a day once a week. >> Uh and that's where this problem that you described in other comes from where you may have a divergence between the book value or like the actual market value of the product and the market expectations. Right. Which means if >> Yeah. Ethena hadn't been kind of like hardcoded uh it would have repriced under the market panic and could have exactly triggered a big spiral. Uh some

protocols like a when we've like hard coding the price thinking we believe into kind of like book asset value and whatever happens happens but this is a massive trade-off and this is a massive challenge and I think if this is misiest uh we will all also pay a price. So so we have to like be very very careful. >> Yeah it's DeFi after all isn't it supposed to be permissionless? appear to uh add there. >> Yeah. So when you when you look at this chart um one thing to add is when you manage like any money like one of the things you you should care about is the concentration risk and why Ethere is experiencing this uh draw down in the TVL uh quite massive is because the whole yield is coming only from one source. So this trade right on the

exchanges with the the basis trade and then there's a neutral position and um kind of people who are using all those products those are pretty much sophisticated people who are here in D5 for quite some time because uh hey we don't have any new real users uh for the last few months probably and those people know that they you know they don't want to lose money and the only option to diversify your portfolio and pretty much in secure spots with it is uh sky so susd and that's why you can see that at the moment this is the biggest yield bearing stable coin is one thing the other is that it experienced the most growth and I think two factors

add to to it here one is that the portfolio is really diversified actually sky used to allocate through spark and spark liquidity layers one of the sub dials into ina but they withdraw uh all of the positions when >> before 1010. >> Yeah. Yeah. So before that and around that time that's it. Um but it's not only in DeFi actually we like work on the risk side with a lot of clients and our stance is that uh DeFi at the moment it's not as scalable uh for really large capital. That's why what is happening you can see that a lot of >> tokenized assets but

>> yeah CLS and T bills and treasury bonds and all these types of things right pushing that with grove and >> and even with rates coming down Per now it's like T bills were like the standard like the set like the one all be all USD bills but now it's like well rates coming down we need to look at some CLLOs's and stuff as well guys we're we're going to flip to the yield paid out by yield bearing stable coins uh chart but Please feel please because it finish. So as you said like growth and like overall Sky is doing really great work when it comes to diversifying the portfolio and letting you as user in whatever part of the world can be Africa where you can zero option to tap into US

uh financial markets and especially like credit like large institutions and uh growth in sky invested in JA for example and thanks to that uh you can you can say that they're lending money to Burger King for example. Not many talking about it, but like really huge things happened this year uh to in our space mostly thanks to Sky and this is pretty pretty not like widely known what Sky is doing because like those are really really hard to understand if you're going to look at >> right and all of those governance um governance writeups from the sky it's it's pretty complicated to comprehend all of that. So hint from our side look

and and follow stable watch and something like sky learning tender maybe is calling to your home uh Q1 but uh when you're going to look at the yield paid out um we cross like cumulative YPO for this year this number for this year is like 135 mil but uh from the start so you could say one and a half year we already paid more than one billion uh of yield paid out And you can think that it's great number. My prediction also is that we're going to cross that seal this year with it. Actually, we had a market at Koshi on that. So, you can bet on this pretty pretty cool. Uh yeah, feed with our data. Um and this is great for the space, but we get much much higher.

This is not even like 1% of what uh what is paid out by tripay institutions with any dividend like payment out like lending. >> Yeah, we're like a still a small niche for like you know 100 people that's online like what do you think about it realistically and we are literally like the alternative of the alternative solutions. Uh so so we may be thinking well like you know uh because I think it's worth lots of us uh come from various backgrounds uh and for like average person anything beyond $1 million is a number hard to imagine so especially like you know billion uh sounds impressive but then you compare ourselves like the entire defy to steal

traditional managers and we say hey I've got like one billion say oh wow that's so cool like it's like baby number call us like 20 billion you know and then you realize like entire D5 like there's like stable coin supply is still nothing right compared to the lot of things which like traditional finance. So uh assuming if we are believing that like blockchain is like a future rail uh we are so early that when you think about this graphs about the scale we are as much on on the left as you can imagine right it's still everything is like in front of us. Yeah like literally like very bullish. Yeah. So the core trends here guys um SUSD growth all the way through October 1010 then compression um

other other yield bearing stables slight growth big growth also compression general growth and compression following the market. It's quite interesting how even though stable coins are stable coins and they're yield bearing stable coins are meant to be a dollar and hold that value. They also kind of trend with the market like it was up a bit in Jan and then it kind of pulled back as you can see a slight pullback when the market pulled back into March. Bitcoin pulled back down to 75k or so and then we rode it up to 125 into October. Stable coins yield paid up and grow. Now we pulled back a bit.

This is a super leftrain like super smooth brain question but what's happening here? Why is this happening? I think >> I think yeah. >> Oh, go ahead. Like yeah like many many things here going on >> few factors but like what one of this probably is that we see that like with any wave of like new cool technology there's a lot of like you know helicopter money coming to this space. So if we see that topic is held because the market condition is great, the more VCs also going to pump money into the market, the more projects of this kind going to come up uh with some additional incentives etc. Um we actually stable only real yield. So whatever

>> you can see here this is only real yield. There's no like additional governance tokens or whatever. But still my a lot of users are coming to the space because of launches of those new products. They also want to earn points or whatever kind of another incentives. Um so this is the the one stuff uh and uh the other is that's yeah uh it's just very much dependent uh dependent on the market uh as you say uh before because it's still um big part of this capital is coming from retail steel uh I would say that uh yeah some part those are institutions this capital is actually

much more sticky at the moment Even if you could think that it's mercenary because mercenary capital is always looking for the the best risk adjusted option. So that's why it stays with with Sky for example, but retail is uh much more likely to move out and move in just based on emotions. And this is mostly what we are experiencing here in in this chart. Yeah, maybe not. Oh yeah. >> Yeah. Ho, right before you do, I'm going to show you another chart that's going to allow you to tag team your thought here into the APY conversation. We'll flip this over into the APY chart. Talk to us about some of the risk adjusted returns, why why this chart emulates the crypto market and then we'll kind of get

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Go to habachi.xyz to start trading today. >> Sounds great. Sounds great. Sounds great. >> So, please take take uh anything that you may I don't mean to uh get in the way too much. I'm just trying to move it along. Keep show as >> Yes. I think that's a great chart. I I think something that makes a lot of sense when you look even at those both charts is we can literally see right that we mentioned different assets different risk profile. Another thing that we saw in the previous chart is remember we are still a niche uh and one of the things that we are offering here is regulatory arbitrage. So we still may allow people uh that weren't able to access institutional level of like products to access those finally. uh whether you are non non-American or

maybe you were like you know maybe it's like American only Europeans only uh $100,000 up only uh very hard to get into the fund because of like regulation custodians much easier to access uh however uh lots of things we see here is the site to quality and there was like levels of like margining which means we need to remember that one of the biggest yield platforms right now is pendal that allows you to and you have some like oil in very simple saying you can leverage up on your stable coins. Uh which means whenever people are risk on you see for the stable coin supply to go up because people are willing to leverage up right usually the risking uh moments of the

risk are the same moments where people unwind their provision burn the stable coins because some stables are issued by providing capital with the other stables. So you have those layers of like wrapping which is some form of like margin right and this way >> modification kind of >> yeah kind of kind of right so so that's why where people are risk off they will be exiting their position which means tokens are burnt if the tokens are burnt the supply goes down when they are risk on uh we can see this uh go up again. >> Oh leave it to the stable watch risk manager to to to tell you to it like you're five years old. Porter had me confused. He's like, "Ah, there's factors." And I'm like, "Dude, go on, tell me how it is." Um, okay. So, then

parlay that into the APY, right? So, you're you're explaining how when the risk is on, the the supply increases because looping, right? Pendle, a morpho looping, etc. There's all these different types of opportunities available. Also, just more desire. Um I found that when speculation is high as well guys the rates to borrow on a go up on morpho go up because people are willing to borrow stables to go get yield or to go buy more coins and then when it goes down it goes down. So then how do how do you think that impacted this chart here talk to us about some of the APYs that you see here how it kind of uh panned out this year as far as what is this the 30-day average APY compared to to TV.

What one thing worth noting here is this is the uh the net API without any tokens incentives, right? So no points here, no like token rewards, it like pure like dollars paid out. >> Uh I think the most important thing is on one hand uh we can see the APY. So worth answering like why some things are at like three and a half 4% right and why some are much higher. Another thing is if we go to the right we see we have the logarithmic scale of the supply and obviously we have one obvious huge big winner which is SUSDS because SUSDS is managed to keep the yield uh at like four and a half% ballpark while being

able to scale up to almost 10 bill right lots of stables they sometimes struggle to cross one bill or as we see so with like maybe with with Etheina or maybe with Maple Right? You have this kind of like maximum level of scalability where then your alpha dries out and you cannot beat the >> kind of like in memecoin trading right boys. It's like hard to break the one the one bill mark in the memecoin bull run in 2024 you know sorry for the uh in you know random injection there but it's like you've got this one billion mark were what five stable coins couldn't get over this year. Yeah.

>> So, so, so for them it's kind of like question of scalability, right? How much can you on board with your yield compressing and at the same time we have uh assets like for example uh I think build build is like the most I could say obvious one that could be the ballpark of a risky rate. So at some time you are thinking do I want to enter into more risky endeavors? All right. uh or should I just retreat into something that's a proxy for a risk-free proxy because still you know smart contract risk uh middleman risk but it's still some kind of like a safe park right and is suddenly your uh complex product maybe beats the risk-free rate at 50 beeps you

need to start to think is it worth it because it has been if and that's it and that's it and and once once again you see sky right that has been outperforming the RF tokens while being able to scale up uh to like 10 of 10 bill which is which is a huge huge huge feat I think no one has done this >> and there's one important thing to add to this I think because almost no other venue got the same kind of guarantees for you as a user to to make you feel safe because how the like skies model work is that there's uh internal for the ecosystem internal risk capital you can call junior risk capital the junior trench which stars or subd need put into work so they can actually uh manage the

disguise balance sheet, right? And that means if that the incentives are totally different from what you can see some curators in whatever kind of market like morph or whatever else do. Um, so I I'm not tell those products are not great, but the incentives are just uh much different because >> you could seen what happened with the stream finance >> and I think a lot of curators got like no understanding what's going on like behind it like we've been tweeting about like for quite a long time that hey guys you shouldn't really be aping into this.

This looks pretty dangerous actually and you should be really careful looking into betting but people didn't want to listen. Um and the incentive of such curator is just to max out the TVL incentive of those few uh parties which are managing the sky balance sheet uh as different because they put their own capital into work that if they going to uh like be misaligned or they're going to uh not practical move and go ahead too much ahead of the risk curve their capital going to be wiped off first and then the system going to close position meaning that uh you know it's it's it's loose for them and hopefully not for

users and there's not system like this anywhere in the space uh besides uh only a actually within the the app recently made some like insurance fund but I I haven't like d too to too deep into it so still >> I think yeah this is very interesting when you think I think sky is the kind of like biggest trailblazer of like forcing managers put put their neck and put their money on the line which means uh sky right now has the like subdows you put like spargo hobex which means whenever any of the subdows is deploying money they need to put their own capital on the line >> first so you so they cannot put depositors money into a product without

them being the first lost tranch which means if they lose money first they lose their own money and only then everyone else gets killed So we cannot be responsive. Many protocols do not do this which we actually should change. >> Yeah. Can I ask you about that? >> Like syrup USDC sitting there at 5 and a half% well over the two bill markish one and 1.8 2.2 range looks like because that's about where build is around that 2 point something range. What what is the additional risk associated with SER USDC that allows it to have the five and a half percent rate compared to um the other like the USDE and the USDS that are clearly a bit bigger but can't get the same average T

uh APY or even like what happened but that created that outcome >> I think you can I think the best answer would be for anyone looking into those products would be to read the documents you know and people don't do But quite often and quite often you have to describe like properly right what is going on uh but technically right uh Maples uh Maple's idea is they have their own you could say in a very simple term how to say this they have their own internal curation system where they provide collateralized loans for trusted parties. So for you as a user, you basically trust them that they will be

able to pass your money to the private borrowers at post collateral and in general you trust because they have been operating well in the past uh years and you basically are betting that the skill of the team and the skill of the allocators and hopefully the skill of a legal department. >> Trust me, bro. So we're just trusting growing all over again here. I mean >> there is some degree right between tradeoff right between uh between black boxing and openness and and this is the biggest challenge for 2026 you know.

>> Yeah. U one one more thing for you guys here on this chart. Um well actually first I have never heard of USYC. What is USYC? >> I've never heard of the thing. I can look it up but I'm curious if you >> Yeah. Does the does the tokenized money market fund it's it's some product of uh of circle. So pretty much you got the treadfi uh exposure uh kind of similar to if you'd invest into be or whatever kind of asset which holds ts. So here it's not t yeah money market funds. Uh I would say similar bracket.

>> I should have known that circle's big one. So they're growing growing that in addition to USDC. Um, okay cool. I guess guys, who do we expect to be leaders in this category next year? And I think in terms of APY and I think rooted the question is rooted in rates are coming down. Trump is bringing in a new Fed share next year. The ECB just also said that they're adjusting for a rate cut cycle. These yield bearing stables are going to need new forms of yield. However, as we discussed, when speculation is rampant and markets are doing well, yield is increased and the amount of expansion,

supply also increases. And so, when you get rate cuts, you also typically get market expansion because of liquidity injections and generally people get more bullish. So, I'm seeing a recipe here for like some pretty strong growth. Like we said, I think we'd get to maybe a hundred billion in 2026 for total TV. I think that would be a massive win for yield bearing stables. Um, and then I guess the question is here, what's going to change in the yield component? What do we expect knowing that we're going to get a rate cut cycle? Is that going to be reduced yield or increased yield? I kind of laid it out. I think there's multiple arguments to be made. And then who do we see really kind of rising to the creme of the creme here in terms of TVL and yield next year? Who would you

guys be placing your bets on? Kind of two question. >> Yeah. So um I think really that the best position because of uh just no concentration into one strategy like one position is sky and and that the growth still going to be like accelerating um as there's like few factors for it there going to be a lot of credit creation right especially in the US and like big um not only financial but whatever kind institutions in US are looking always for more money from XL/ Twitter to like Stripe and and some others. They always look for new private credit lines to expand the business.

This is this is how it's how it's going, right? Like everybody wants to see S&P chart going up. So, they need more money for this expansion and this money definitely can be fined um in the US market from like legacy thread institutions. But I believe that some part of this money actually going to be funneled through amazing uh capital coordination place which is crypto and from places who can coordinate this uh in a good way like sky or like maple actually which also like provided a lot of uh great uh great moves in like last years and growing in TVL um into this private market. So, so uh private credit

market definitely going to help us grow the category. Um this is one thing. The other is that we need to look for like more um niche specific places to allocate this money. And this year I think the two um most interesting things we've seen being USDA where the guys trying to um lend the GPU power, right? then you can fund that as a retail person. But of course there are also like some larger LPs interested in that and probably more of the like yield bearing vehicles are going to be working with this type of venues to try to also get this type of yield and acting as kind of p on pond or so or just a money

manager uh while they're diversify their portfolio. some other interesting venture as a as a daylight and I just expect that >> this is just so funny. Sorry to interrupt. Like I just we talked to Vance and Michael a lot. We talked to AJ from Serotonin. Rob and I h are having this conversation like every day for the last two weeks. like, "All right, our brand is completely shifting focusing on these and everyone just keeps saying M0, Daylight, USDA, Sky, um you know, you know, a couple others and like this this like tokenization stack and like this is all you got to pay attention to 2026 guys like >> it's just it keeps happening. Keeps happening."

>> Yeah. But there is something also interesting. I have like my own theory uh that comes straight from the trenches. Uh which means if you get the rate cuts people get more greedy because there is like easier to get the money. Uh if people are greedy uh people are more willing to embark onto a risk and I would say something there is one thing that we need to recall what happened in 2020 or 2021 we had insanely low rates close to zero. It was the golden age of DeFi. Why? Because depositing money in any lending protocol was beating lots of things with regards of risk, right?

Because when you think about the risk rate, I have to say this lending markets and all these kind of like most organic more most like current DeFi protocols, they quite often have a curves hardcoded, right? Which means your interest rate is a function of utilization. high utilization, high level of interest rates, people uh borrowing a lot. Uh that means when suddenly in comparison to anything else, those rates look very very good risk adjusted. Right? If your risk-free rate is 4% and big lending platform lending is 4%, it's not great. If your RFR is 1% and you can go here to DeFi and you can lend at 5%, it's 400 bips over the risk rate. It's insanely good.

>> That is where DeFi shines. when like rates gets around 2% 1% and DeFi is way higher it's like it's because right now it's pretty much the same and people are pretty bearish on Twitter about I saw some tweets like 4% 4% on money market what are we doing here guys >> all right come on >> but then we have like 1% on money market or maybe zero point half because they need to cover the admin costs and suddenly you know going to the most trusted D5 protocols and getting 4% 5% 6% on like the most basic activity Beautiful times.

>> Peter, I mean to to uh cut off your last point, do you want to finish that up and maybe close us out here guys on just generally your vision for 2026? What what you're seeing here kind of your maybe some like goals or targets for for the space for um stable coins in general and also for your company stable watch like what do you guys have up your sleeve? >> Uh sure. So finishing the the prior thought like with uh BSDI daylight and and so on like the bottom line is like we just need more sustainable business models. I think like the next big narrative I mean that that been uh true for B markets always is you need to make money. You need to have actually real

functioning business. But I believe while interacting more and more with institutions and there's more institutional money coming into the space uh just the way like you will need to have real business touching like real humor like companies problems and so on and this type of companies do that and there's a lot of opportunities especially around like um private credit uh lending activities and so on to come to the space and and boost this um and as you said that uh uh Vans and and the team been been speaking about this recently. Uh and about OBX uh this is also big acceleration point for Sky Custom I believe as the OBX as accelator going to be looking for more teams like

I think USDI or this type of of a venues to say which uh will be able to structure their product silo risk. So all of the uh balance sheet managers from the sky side or the sky will be able to allocate into it. Um so I think this is the biggest uh unlock for the whole ecosystem actually for the next year and especially for Sky but there going to be quite few new exciting products um in the space uh and especially Sky and all these subdows going to be profiting out of this. um all of these new ideas also can do

pretty well and all of those people who are not already diversified with their yield strategies with their balance sheets they going to um keep losing and we already see that in in those TVL charts. So until they going to switch into similar mode to uh to sky which is diversifying the balance sheet uh they will have a hard time in the next year. So this is it and for for us at stable watch specifically uh you can expect that actually like we're going to be providing much more info around the um sky ecosystem. We're working on some new dashboards as we believe that yeah this is one of the most exciting things in

the space uh at all and we want to stay on top and provide all of the info um to our users around that and we thinking of >> here we go yeah of quite few new formats to to provide you alpha and try to help you mitigate uh all of those risks. Uh so this is it and quite sometime soon in Q1 you can probably expect some some one big news from our side but I I please >> sounds like somebody got a payday. Yes sir.

>> Maybe hopefully. >> Awesome conversation today Perhalco. Uh great vibes great year for the yield bearing stable coin space. I'm glad we focused on this today. um kind of the traditional genius comp um stable coin space is interesting too but really this yield bearing space is where a lot of activity is at uh Quantum Cowgirl interesting X handle is this recorded yes it'll be posted on the rollup um YouTube uh shortly after this call ends tonight uh probably a couple hours it'll be up there I'll share it with the stable watch guys I'm sure they will share it there'll be some nice clips going out guys we're gonna be live for one more guest here talking about base and the Coinbase system update recapping some of the stuff with BAP. It's been

stable coins year review stabled up episode number 14 brought to you by our lovely friends at Frack Porto Halo boys. Incredible work on the company. Looking forward >> Thank you. >> Thank you very much guys. Thank you for having us. Great. >> Always a pleasure guys back. Welcome back anytime. Go Sky. Go Yield Stables. It's going to be a big 2026. 100 billion baby. 100 BILLION. ALL RIGHT boys >> later. >> Let's go. Thank you very much. Bye-bye.