Why 2026 Is The Breakout Year For Neo Finance

Transcript

And there is an exciting component to this as well from a institutional perspective from the kind of traditional finance perspective. Uh there is a time tomarket aspect the intent side you're seeing a lot of like bridges being built between permissioned and permissionless and you know I think that the the devil will be in the details of like what does it mean what is required to move from a permissioned to a permissionless system and vice versa. I don't think like when institutions are coming over there like lack of privacy is going to be support them. So we do need a proper uh layer on top of existing blockchains.

>> As you get more centralization and everyone's piling into the same yield that concentration creates a lot more risk. >> How should we think about these institutions integrating into our system? How important is it that they use an open permissionless chain? What does this idea of Neo finance as the evolution of DeFi mean to you? How do you think about this next set of of um applications and user experiences? >> Welcome back to the rollup. I'm Robbie. >> I'm Andy. Rob and I met at the University of Florida in 2017 where we first found out about digital assets.

>> We learned a lot along the way and we're bringing you face to face with the leaders of our industry. >> Sit back, relax, and enjoy today's episode. >> Ladies and gentlemen, welcome to the show, guys. Good to have you on. Royal Kendall, Alex Richbos, welcome to the show. >> No ladies on this one. I think it's just Pepes and and gentlemen. So, great to be here. >> Thank you for having us. >> Good to be here. >> Thanks for being here, guys. We just had a great panel uh with Apps and Intense. We had Cow Swap, we had Near Intense, Thor Swap, uh and Socket up there. And we were kind of, you know, describing this this, you know, multi-chain landscape as you you heard Andy and I talking before you guys jumped on. You know, we're we're also unpacking this neo finance landscape, which we believe

is this convergence point. It's the evolution of both the legacy financial banking world as well as kind of the old guard DeFi world, which some of it's found product market fit, but a lot of it hasn't. So, that's kind of where we'd like to start is in a multi-chain world in this like new maturation of of teams and projects where we're kind of forced to find product market fit. I'm curious about, you know, what you guys think sticks around and what you guys think is is left behind. And so, you know, maybe that's where where we'll start, but we'll also get a quick intro. Um, I think uh why don't we start with Royal and we'll go around the horn. Feel free quick intro about yourself and then uh and then yeah, tell us what you think stays behind, gets left behind, and what

you think sticks around in this new era of DeFi. >> All right. Uh, hey, thanks for having me on, guys. I'm the Royal Fool. I'm the uh co-founder of Templar Protocol, which allows you to borrow against Bitcoin or any asset on any chain without trusting centralized intermediaries. Um to answer your question about uh what's sticking and uh you know what gets left behind here um you know I I still think that we are very very early as far as transitioning uh the entire financial system onto crypto rails. Um and I believe that

uh ideologically there is a place both for kind of like cyberpunk decentralized uh finance uh that was like the original spirit in which Bitcoin was built uh and Zcash has really kind of resurged under that banner as well. uh in addition to um there's like an undeniable like title wave of assets that are coming on chain uh both in the US and internationally. Um so I think there's going to be a place for uh there's going to be a place for both.

Um, so I don't I don't think it's necessarily uh like my focus isn't like on what quite stays and what gets left behind so much as it is um you know where where are the biggest opportunities. Um, and I think some of the biggest opportunities uh in DeFi are a combination of hitting the assets that aren't EVM native or don't have a, you know, a Salana token.

Um, you know, Bitcoin, Ripple, Cardano, Doge, etc. Um, and in addition to that, a lot of the RWAs that are coming on chain. uh and that's going to require um a number of updates to some of the different DeFi protocols. Um so if I were to actually answer your question on what I think might lose some ground and what might gain some ground uh in the area of lending uh in which we specialize in I think that in the long run isolated modular uh designs are going to win out over uh pool based models cycles etc that are

best handled uh in an isolated framework uh not to mention in my opinion the uh superiority from a risk management and contagion perspective. >> So Alex Cinder, I'm a chief product officer at Block Demon. Uh prior to that I was with Ledger uh for three four years and before that I was a capital markets guy with with NASDAQ uh mostly the technology side. Uh, I'm going to take a capital markets view to your to your question because I think it's it's what I it's what I know well and I think there's actually a good fit there. Uh, what what stays I think it's a two-sided problem, right? You need a supply and

demand equation that works fundamentally, right? So on the demand side, I think you know obviously retail adoption will continue to push. Uh so you'll have you know your existing players like Crypto.com and Coinbase then obviously a lot of the traditional uh players that have the eyeballs today right your Erades your Robin Hoods um your Schwabs your Fidelities of the world that have a very large captive audience with you know with a lot a lot of wealth advisory type of services. Uh and on the product side, what you need to deliver to that audience um on the on

the supply uh is uh is yield opportunities, right? And there's a wide range of these. I think they'll continue to evolve anything from lowrisk full-on staking capabilities, right? Direct staking solutions generating yield uh to, you know, to lend borrow models uh to kind of more Kendall and trading strategies on dexes, uh your cash and carry trades, other potential, you know, long strategies. Uh all of this is start going to start to get more and more productized as we as we keep going, right? We'll start to fit into different risk metrics and will be delivered to the right audiences

um you know based on certain classifications. These models don't exist today, right? Frankly, in DeFi. >> Yeah, thanks guys. Uh yeah, I'm Kendall from Proximity. Uh so what we do is we support teams building crosschain applications, agents, and more using primarily your intents as infrastructure. Um yeah, so I agree a lot with what with what with what with what with what with what with what with what with what with what with what with what Alexander said there. Um I think that like the biggest thing that's changing is we're seeing like the barriers to getting on I think happening more through like you have a ton of fintexs and even banks that are going to start adding in kind of effectively crypto rails and they won't even look like aspect of it. Um but easy way to get access I mean what hopefully will happen is products that exist on chain

really start to prepare a product that's specifically for you know seeing some interesting experiments at the institutional side. USDA is a really good example here. Daylight's anyone that's kind of coming up that are uh you know really just early experiments in that you know as we like finally collapse this like barrier between you know offchain and onchain thanks to you know things like genus bill and you know knock on wood maybe market structure I think that's where we're going to see um you know both both more experimentation and adoption of both the retail and kind of institutional side. um with regard to DeFi. >> Yeah.

>> Yep. Uh so I can go next. Yeah. So a short intro uh like uh so I'm building right now encrypt. Before this I was uh you know at Goldman Sachs. I was working on the AI side over there for like two years. I worked with teams like uh avail the data availability layer and uh yeah I started like doing encrypt.trade like uh 3 years ago. And to answer your question, Alex, Andy, like uh I think everyone else has covered most of the points, but I still think like there are certain buckets that you can put uh the real utility of crypto or blockchain like uh obviously like there are stable coins which I think are the most valuable thing uh like the ability to

transfer assets like crosschain or like uh crosscontinent uh in a matter of seconds is still huge and uh I think it's one of the biggest use cases And uh there are other use cases like uh people love to like one of the major use cases where people use blockchains or crypto is like uh speculation. I think speculation is a very big use case and we are seeing this with all kinds of markets that are created like earlier it was memecoins from the retail side right now it's prediction markets and we see like institutional interest uh as well coming to the prediction markets and uh these kind of things like will evolve with time like there will be uh like more innovative kind of markets that

will be created and uh I think with time people will get exposure to them like every trading terminal every like they need to constantly evolve by integrating all these markets that are already existing or like getting innovated and when you have that front end which basically has all those things integrated like as you see like right now your wallet is that front end. So most of the wallets are integrating prediction markets and already have stable coins in them. So I think that is uh an ever evolving application which has the biggest mode in uh in in in my take like uh obviously like centralized exchanges are at that place but uh in if you see onchain finance like wallets have a very big mode in that scenario

because they are like uh an entry point over there to the user and whenever user uh has assets over there then they can basically send it from there as well and if the applications are accessible from the wallet it basically uh doesn't make the user leave that application and the wallets are moving toward towards a like a new uh banking application or a super app kind of a thing which allows the users to use everything from inside uh the majority of the D5 primitives from there and uh like the yield primitives the trading primitives and uh all these kind of things that are there. So in my take like wallet is one of those applications which has achieved that role right now.

>> Yeah. Yeah, >> definitely. Guys, we wanted to frame this conversation under the guise of this idea of neo finance, which is really this convergence point between DeFi and legacy finance. It's not fintech. It's not traditional finance. It's not DeFi as we know it today. It's not holding your seed phrase. It's not necessarily using a ledger and clicking to sign off every transaction. It's it's really just usually mobile or in institutionalbased user experience uh with you know something akin to what you're used to from a a brokerage or a a mobile app. It's using DeFi underneath.

Alex, you know, you mentioned a lot of experience in capital markets and uh we know that a lot of these assets are coming on chain now through your work with blockcham and you guys are providing APIs and ton of different tooling for that to happen. when it comes to this era of NEO finance as kind of like this next big step for the the onchain industry for for the blockchain industry covering tokenization stable coins etc. Kendall covered quite a few of the other uh interesting private credit vehicles, USDA and Daylight, which are really focused on exogenous yields, not this kind of hyperlooping of CE DeFi that we saw with uh BlockFi and Celsius and Nexo. Really just a more uh

sustainable path forward with the kind of institutional global TWAP on on majors as well as their desire to get in into this asset class. Alex, kind of with that context in mind, what does this idea of NEO finance as the evolution of DeFi mean to you? How do you think about this next set of of um applications and user experiences especially as it pertains to intents and the work that you guys are doing at blockchain? >> Yeah, it's a great that's a great question. uh and I think you know the foundational elements are are are going to shift uh in the DeFi ecosystem to be able to support this momentum and the adoption by the traditional financial sector. So for for this uh kind of neo

finance concept to really exist and mature and continue to evolve. There's three foundational pillars. They're quite boring uh but they're critical right you need reliability. You need scalability and you need security. uh and without without those three things uh you know financial services do not do not function they they will not work uh and scalability is actually also a critical component because the the audience that we're talking about here right like if you think about all the all the users of something like Erade right or you know the Morgan Stanley accounts uh that are out there it's very very different than the current footprint of what is what exists in D5 today uh so the scalability aspect is going to be critical. Uh so those are

the three the boring pieces and then also regulation is very important there but it's not something that we can really control right that is just happening uh you know throughout the maturity of the of the industry. Uh there's a lot of advocacy that's happening in that regard also an important component but I'm kind of taking more of a technical controllable aspect of it. So it's really up to us to build systems in a way where they're reliable, secure and predictable and scalable. uh and there is an exciting component to this as well from a institutional perspective from the kind of traditional finance perspective uh there is a time tomarket aspect right so it's a very steep learning curve these user interfaces and these capabilities are quite expensive and uh quite timeconuming to build and evolve and put

you know bring to that level of maturity uh so we're actually working on building some quite exciting interfaces that are completely pluggable uh into the existing financial services and financial applications that you see today uh and are directly working with some of these players to embed that capability directly into their applications. Uh but again that comes with a certain threshold right like the these have to be audited right they have to be secured they have to be reviewed by their security teams uh tested at scale uh so it's quite a resource intensive uh and a time intensive process that we're looking to expedite and shorten that time tomarket period uh from an adoption perspective uh it is really an exciting time and an exciting catalyst for this and we're seeing a

tremendous uptick in in usage uh and um actually uh integration uh from the larger organizations in the space and it it it will bring uh a you know outsized inflows uh into the crypto ecosystem and this is where also a lot of the liquidity aspects are going to need to be tested uh on chain uh to kind of look at that you know the the current uh behavior of some of these protocols and and systems and what happens to that at at a certain level of scale because as we know right you know outside of staking well even with staking sometimes, right? What we've seen with Ethereum and uh um you know the the um wait times to kind of deposit and

withdraw the liquidity constraints and some of the liquidity constraints of most of the DeFi strategies uh that is going to come under a lot of pressure. Uh which simply means that there's going to be also symmetrical demand on the supply side, right? So more and more supply and the inflow of capital uh to be able to accommodate the retail needs. um which just simply means that the infrastructure has to be robust on both sides of the equation to be able to support this. Yeah, appreciate that perspective because we're we're seeing this happen more and more like for so long it was the institutions are coming the institutions are coming well they're here and they're integrating right and so it it it's validating in some sense that it means some of the foundational pillars the reliability the security we

we are there but as far as tactically integrating these two systems you know the the devil's in the details as as we get deeper and deeper into these integrations and so you know Kendall you mentioned private credit. Um that's one of the asset classes that coming on board. We saw the New York Stock Exchange announce like they want to tokenize. They want to go 247 trading bringing US equity markets. Um and then you know we also see uh you know several more asset classes coming on chain. When that when the New York Stock Exchange made that announcement, it was very contentious on you know crypto Twitter.

People were saying how is this beneficial right? you know, if they come on, well, that's not really, you know, doing that much for some of the cryptonative assets, right? The bitcoins and the ETHs. They're just bringing equities on chain. It's like, you know, they're they're improving their own internal efficiency. If they do it on a permission chain, what does that really benefit this crypto ecosystem we've built for so long? On the other hand, you've got Larry Frink and Davos talking about how it's important that all of this exists on one composable super ledger. you know, hypothetically he was talking about, you know, ETH or another, you know, predominant L1. How should we think about these institutions integrating into our system? How important is it that they use an open

permissionless chain? Is it is it crucial that it all exists on one chain? And would you guys, Kendall, maybe we'll start with you. Do would you say this is them coming on chain? Is this a net positive for the entire industry or does this just benefit, you know, the efficiency of the New York Stock Exchange accounting layer? >> Yeah, it's a great question. I mean, I think the dirty secret about like all of the stuff that a lot of us have been building for, you know, for a very long time now is that it's pretty much all infrastructure. There's very few like real assets. I mean there's a few you know Bitcoin's amazing Zcash you know some of the layer ones and like and increasingly you know assets like a that you know support some of like some of the infrastructure right but like that

primarily we don't actually have that many high quality assets that have come on chain and I think what's really exciting is like now that is starting to happen and it's true most of it comes with caveats like we're not actually anywhere close to I think the the future we all still envision here uh but at the very least we do now have serious players who are responsible for issuing serious assets and also serious regulators that are taking this infrastructure we built very seriously. They do believe it's like at least close to ready for prime time or components of it are. And so we're now able to like go up this this, you know, quality ladder of assets and I think that's ultimately what's going to like make NEO finance kind of live or die is like is it actually being used for high quality finance, right? Um so that's that's one

aspect to it. That's why like I think it is it is very bright sign that this is happening. I think the permissionless permission piece is definitely very important, right? I mean the I think the positive sign is some of the most serious players are pointing to like the value and benefits of like a permission permissionless underlying system. Um you know I I don't have a whole lot of takes on like the permission aspect. I kind of thought we were sort of past that. I guess you know we'll never be fully past that. At the very least I think what is interesting you know you have something like canton which is like more on the permission side but there's actually already I mean in this you even on like the intent side you're seeing a lot of like bridges being built between permissioned and permissionless and you

know I think that the the devil will be in the details of like what does it mean what is required to move from a permissioned to a permissionless system and vice versa. I mean, we've seen a few early experiments with this with like, you know, Ando launched a uh a permission version of uh like fork of compound that like you had to be whitelisted in order to borrow, but you didn't have to be whitelisted in order to lend, which is really kind of an interesting hybrid. And I mean, this is where I think, you know, getting more clarity, like no pun intended, uh you know, with from some of the regulators is going to make a lot of reasoning about a lot of this sort of trade-offs much easier. you know, right now we are kind of very we're still in this gray area. Uh but you know, I think the signs

point to like we're going to be able to sort out a lot of this madness. And you know, again, like the TLDDR from everything I just said is like we need high quality assets. Uh and we need to be able to use all this great infrastructure we built, which is pretty much all it is uh for high quality assets both to create them, you know, to lend against them, to make them tradable, you know, all these different aspects. >> I think these are great points. If if I can I would love to jump in for for one minute because I think there's an important distinction here that can drive the trajectory of the conversation further. I I love the permission permissionless discussion and it's a little bit kind of polarizing in some ways but fundamentally the way we look at it and and for me for a while now

it's not a black and white type of thing right I think per permissionless u capability and kind of where where that permission to permissionless spectrum sits is really a factor of scale at the end of the day right so you can have a permissioned ledger but when you reach you know billions of individual users how permission is that really like what are the controls that you're going to have and how does that how does that scale or you can have a permissionless isolator like Ethereum right but then you know you can today set up a protocol in a vault with a white list you know of 10 participants right and and isolate that protocol and capability to a very constrained user base right and basically run a permission model on a permissionless

ledger uh I think the important aspect of it is you know is really scalability right like how many participants uh in the in the actual financial services do you want to support on an individual basis without intermediaries, right? Because currently the current financial system is hub and spoke, right? Like we solve the scalability problem by introducing intermediaries uh into the equation, but having direct access to something is a is definitely a scalability challenge. Uh and then uh it has to be composable, right? That's the you know that's the next piece of this, right? If if you have permissioned and permissionless networks that are that are composable, right? that you can actually move assets from one to the other under certain circumstances in different settings. Uh that makes for a

much smoother user experience but also a much wider ecosystem. I think that'll be the value proposition of moving things onchain versus keeping in the legacy infrastructure. >> Royal or resp? >> Yep. Uh >> go ahead. Oh sorry uh I was just adding that uh yeah I also think that maybe the privacy aspect is also very important over here. Uh I think uh a lot of infrastructure right now is like transparent and obviously like I don't think like when institutions are coming over there like lack of privacy is going to be support them. So we do need a proper uh layer on top of existing blockchains or maybe uh

like right now new L1 are coming which are fully private by nature. Maybe those are the kind of solution which institutions are looking and there are there are solutions like canon network, Aztec there are that are working on that direction but maybe like we are providing such a kind of a solution where maybe existing blockchains can have privacy like uh because most of the liquidity is there in the existing blockchains like Solana and Ethereum. So I think I definitely think that is also a very big missing piece for uh you know solving the whole problem of that. >> 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? 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. >> 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. Um I think I view this uh permissioned versus permissionless uh question uh like with the framing of the Hegelian dialectic like uh originally there's this thesis of like centralized permissioned finance that's tradfi right and then Bitcoin comes out it's this cipher punk antithesis of the trady

model where it's truly trustless permissionless uh etc. Um, and what we're seeing right now, I think a lot of your framing around the neo finance is what you're seeing like a synthesis of the two, right? Um, so what I think that actually looks like this synthesis um is using uh a permissionless layer as the base uh and then you can add permissioned modules, networks, protocols, etc. on top of the base permissionless layer. Uh so the whole design space is not scale free. Um I

believe it was Alex that was talking a lot about scalability. Uh and I think it's important to realize that um the design for different levels of scale changes right you know at a base layer you do want permissionless because that's how you access the entire world. You know, that's part of the appeal of crypto is that you can get billions of users on board, whereas, you know, in a permissioned model that doesn't really quite scale as well. You're inevitably going to have a ton of fraud and bots that you're going to have to fight uh in this uh you know, permissioned silo. Um whereas like a in a permissionless base, you can build on top of that, you know,

your different walled gardens and the tempos of the world. uh you know permissioned forks of open protocols uh and even in the context of you know you can have a base protocol like a D5 protocol on top of a permissionless layer that has like permissioned vaults on top of it. So the underlying protocol itself could be permissionless but then you could have a specific vault that requires whitelisting um or that people follow certain parameters. So, I think that um there's there's going to be this synthesis of permissionless cypher punk crypto and uh permissioned regulated uh finance that are going to be uh you know

kind of joining together to create uh a new experience and there's going to be a whole spectrum of uh apps for different use cases. You will have the cippher punk use cases that are completely permissionless and decentralized and then you'll have the completely permissioned ones like all the way up to like CVDC. Those will exist in some parts of the world. Um but I think a lot of uh finance in the future is going to be somewhere in the middle. Um >> so yeah, I think that's the exciting uh the exciting uh opportunity here is to you know help shape like everything in the middle. Um, >> yeah, correct.

>> Yeah, I think that's where our focus is, too. I think I mean, we've swung so far to the DeFi side, stayed very far away from the kind of CBDC side if you're going to take it to its fullest extent of the extreme, but it's really somewhere somewhere probably closer to to the DeFi side than closer to the CBD CBD CBDC side in the middle, but over there somewhere. Which actually brings me up to a interesting question for you, Kendall, uh, with through the chain abraction work that you guys are doing at Proximity Labs. How much execution detail can you actually hide and how much like abstraction can we actually build into these applications? Thinking about this thing from from this uh from the context of the spectrum that Royals brought up, you know, how much control

do users really want? where how much execution detail can you hide and h how much abstractions can you do to make this neo finance vision come to life to make it easier than just you know clicking on all of the uh DeFi applications but also not having a full custodial kind of uh interface where do we kind of find the middle how do you think about this >> it's a great question I mean I think it it definitely depends like we were talking about like the complexity you can hide it definitely depends like which layer of the stack you're sort of talking about so uh I think near intense is like first big success when it comes to like simplifying the UX across chains came mainly from that specific piece crosschains, right? Like if you're a user and you have assets on one chain and you want to either use an

application other chain or even just get acquire assets on another chain that was kind of fraught with you having to use like multiple different systems and applications in order to accomplish that. Uh and also you had to like learn how different chains work. You had to think about like have whether you have gas on that chain. You to think about like do you have the right wallet for that chain. uh that there was just a lot of like added kind of mental load for for these users that like basically reduced a lot of like crosschain activity. Um the near intense team which I cannot take credit for because this this this is all them and Alex and his team. Uh they did an amazing job actually building this layer of abstraction for most users where you know using near intense is a simple example which is like okay I have soul I

want to buy hype and you just go there and you just do it and you know you can use your Solana wallet or your hype wallet or I mean they have like any number of kind of options that are available there and they abstract all the complexity of needing to make sure you have the right gas tokens on the right chains and needing to think about like how different these networks are. And I mean even better example is probably like Zcash to you know XRP or something like couldn't be more different uh in how they're constructed right and so that's like the first step right is like for people who already using crypto who are already in one chain have one wallet but uh you can of course like take that a step further too like on the one side you can abstract uh building for developers where you know

if you wanted to build this kind of either chain agnostic or even multi-chain uh which I think are different um type of application then that involved having to I mean as the the other guys in this call block Damon etc. know all too well uh there's there's a lot of work that has to go into that uh connecting the RPCs you know uh like learning how the chains work uh learning different smart contract languages different virtual machines and um yeah I think what's really cool about you know this a lot of this chain abstraction tech that we that is now somewhat mature is that you really can just like learn one set of APIs in one system and then you can get a lot of a lot of interaction for free so that's on like the developer side and then I think you know finally on the

user side like we're going to see basically You know, my my thesis still is like, yeah, uh, everyone's kind of banking app is going to be a route to them being on chain. And I think that like the those banking apps and those fintexs are going to be the ones who are going to be adopting a lot of this chain abstraction tech on half their users in order to basically completely remove that from the experience entirely. They may even hide the fact like they might have, you know, Revolute will probably have Revolute, USD, USD, whatever, like their stable coin. And they probably won't even call it that. They'll just call it USD, right? As far as like the user experience goes. And then that Revolute user might want to pay someone on like Venmo or like Robin Hood and Robin Hood will have Robin Hood USD. And

in the background, what'll happen is there'll be like a swap from like Revolute USD to Robin Hood USD. Uh but the user will just be like, "Oh, my friend has Robin Hood, I have Revolute. I sent them a transfer and everything worked out, right?" I think that's that's kind of like where we're going to go and like all of the kind of, you know, block crosschain like cross asset, you know, different DeFi protocol, all that stuff will be abstracted away. And it's just basically just a lot of work by, you know, teams like Alex and Near Intense and and Black Dean and and a lot of the people on this call to, you know, roll up their sleeves and and uh and build a lot of infrastructure. But, you know, after many years of of uh letting this all bake, we're we're getting really really close.

>> Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. Get a treasure at treasure.io. >> Havachi is fast and private per trading secured by ZK with Celestia underneath. Go to habachi.xyz to start trading today. Trade on anything. Economics, weather, sports, crypto, and more. All on couch.com 247 for the world's biggest prediction market.

>> Yeah. Um I I think it it's really exciting to see this play out because you know this is something that we interacted with at the base layer and I really like Royal Fools uh you know the way in which he's describing kind of the base layer here. We can all interact with it. Kendall you're talking about abstracting some complexity. Before you guys joined it was like okay we've got you know this dimension of choice and simplicity. On the one hand we can give all the users all the choices in the world. It's going to be very complicated. on the other side we can be a very simple but we don't really pass along all those choices and so I'm just curious as you guys are thinking about risk management here like you know because we did see the CDFI you know 2021 2022 a lot of people went to jail

because the money disappeared it all ended up in Docoan's teruna anchor farm paying 10%. That was real easy. There wasn't much complexity about like, you know, what the yield was or where the choices were. It was like, you know, you get 10%. That's it, right? And if there's a financial super app or a NEO bank that's like, hey, here you can earn six and a half percent. That's it. There's no more like there's no more choices or or complexity baked into it. How do we manage risk on that sort in that sort of paradigm? And if you guys have insights into how the Revolutes or the you know the Venmos or you know how how are these guys thinking about risk management from this perspective um open question feel free

any anyone to >> that's a great question I think there's also a parallel to to the previous uh question that Kendall did a really great job kind of going through uh to me it's really a matter of financial incentives and where do you draw the line from ease of use right from abstract ractions from of the complexity from the user to the service provider and and there's risk baked into that as well right so if I'm just you know if I'm just going long on Bitcoin right and holding it in my own ledger you know my own ledger wallet right with with self- custody that's great right that's a very easy model I know the risk right uh that the risk is all with me as an end user and on the

other side of me is a is a public network right uh however if I want to log into my you Neo Bank account to my Revolute account and and to your point deposit and get 8% returns. They're pooling capital, right? They're they have different strategies that they're leveraging behind the scenes. They have liquidity concerns and constraints that they need to manage, right? They have millions of users that they're doing this for. Uh the risk is with the provider. Uh now the question is how much are they charging the user to manage that risk, right? to provide that service uh to uh you know to to manage that capital uh and and there it's really just an economics model and you know as long as there's a very varied

user base with different risk acceptance and you know different levels of uh being informed you're going to have different models that that fit that. Um the interesting thing for for us though this is where I love being uh on the infrastructure side and really building building the tooling around this that from our perspective it doesn't really matter that much right even if you look at the intent model and kind of the solver ecosystem you know that ease of use that's provided by by the solvers you know it's still that you know the solvers are still entities right they still need to manage uh the capital and the liquidity right they still need to interact with multiple protocols to manage their own trade treasury reactor they've serviced the you know the the the intents that

they're servicing it still needs to scale so they will still need the RPC nodes the connectivity the the wallet management capability the bridging to to manage their operations effectively um to provide that service to the user and it's just a matter of like where does it sit like how much are we abstracting away for the user how big of a service is the solver providing and what tools does the solver need to be able to function effectively at scale Yeah, if I can jump in on just the you mentioned uh Luna and in general like the uh risk of you know different yields in finance. Um, I think that this has been a problem since, you know, the

beginning of the beginning of money, right? Uh, how do you properly manage risk? Um, and this is something that is in no way unique to crypto. There's always going to be people who are greedy and are picking up pennies in front of a steamroller. Um and at various scales both at the crypto Luna scale and at like the global financial system scale as you get more centralization and everyone's piling into the same yield that concentration creates a lot more risk. So um what's really important to ensure that you have a robust financial system uh from like a riskmanagement perspective is truly free markets uh and

the ability for those free markets to function when something fails and something else to come back instead. Uh and the idea being that you have uh different sources of yield that um hopefully are isolated from each other and are generally um uncorrelated to the downside. Uh and that when there is a huge black swan event that the contagion from that is minimal. So I'm sure we're going to have more credit blowups. we're going to, you know, we had 1010 and stream finance recently and DeFi as a microcosm of the um of the Terral Luna situation. That's going to happen going forward. But what's important uh

especially in crypto is that you have uh systems that are robust um and antifragile enough to survive those type of events that will inevitably happen. Kendall, anything to add there from the perspective of um just kind of understanding where this is all headed? >> No, I mean I think that that sums it up, you know, quite well. Um yeah, it's it ultimately I think this is where each of like the kind of application developers is going to make a choice based on whatever user group they're targeting is like, you know, there's there's going to be a lot of these applications that appeal to different people. More sophisticated people want more flexibility. Less sophisticated, you know, people might just want like set it, forget it. The big risk of set and

forget it is you don't know what you're setting and forgetting and you know it could blow up right and I mean you know um yeah it's gonna be a mess. I mean definitely our focus is on just giving the tools to the developers to uh you know navigate all these choices. I think like uh it one thing that can be really nice, you know, in the spirit of of what RF said about like decentralization is like if we can create a market where there are going to be a lot of a lot of choices that and then we make it really easy for developers to provide those choices to their users then we at least like create the the landscape in which you know you can have a lot of like hopefully good choices definitely there'll be some bad choices but hopefully a lot of like good choices and

you know a lot of kind of customization based on you know user needs and you know if there's anything if we're going to throw AI in here here it's like I AI is making it a lot easier for people to evaluate a broad landscape of complex choices and decisions. Sometimes poorly, but in a lot of times really well. And so, you know, still still hopeful that there's a future where like yeah, we see blowups, but blowups are a lot more contained and, you know, we make the landscape as competitive as it can be. >> Love it. >> I think we can't we can't forget about liquidity in that context. Uh, another very important aspect and something to think about, right? like we're we're creating the tools and the capabilities to drastically increase the number of options and and products that are out

there today available to the user. Uh the challenge of course is each one of these products needs to have certain liquidity requirements to actually be viable and uh and manage risk in that regard. Um and I think that that that needs to be a conscious thing, right? because to support a much wider surface area of available products, you need to to extend your capital profile and capital locations. So the floodgates really do need to open on both sides. And you know, this is really how we think about the problem. And we, you know, we're just as deliberate about building infrastructure for uh inflows of capital from the large institutional.

This is to be able to actually properly create the liquidity capabilities required for this growth in in in asset profiles as we are in building the infrastructure to bring the the retail demand and in some cases also the institutional demand that is going to be to be buying and investing in these products. Gentlemen, thank you for joining us on the Neo Finance special for the intense day. Uh it's it's been a great uh conversation. I think we we can all agree that the space is changing direction with the influence of legacy finance coming onchain and really trying to tokenize as many assets as possible and bring and bring more sustainable reliable yields onchain doing it in a private compliant manner operating

somewhere in that gray area in that middle ground um through through each of the work that you guys are doing. Guys, thank you for being here with us today and uh hope you guys have a great rest of your day and uh shout out to the intense day special guys. Thanks everyone. Thanks for having us. Cheers to you guys. Cheers. Bye. See you guys.