Why Apollo Created Their Onchain Credit Fund | Christine Moy, Carlos Domingo & Tarun Chitra

Transcript

I'm excited about more more traditional assets on chain, but I'm more excited about what are the experiences we can develop in a future world. Like I could have a portfolio designed just for me, like just to my risk profile, just to my spending profile that says every penny of my earnings is yielding up until the moment that I use it. And that is absolutely a 10x experience compared to like what exists today. I think it's really interesting that we're here, you know, sort of building the foundational pieces to actually like what will be 10x financial services in the future. At least that's what I'm building towards.

This episode is brought to you by ZKSYNC. Join the Elastic Network today at zksync.io/mpire. Thanks to ZKSync for making today's episode possible. I wanted to take a moment to tell you about Focal by Falcon X, the AI powered insights engine built for institutional crypto. By leveraging AI, Focal empowers institutional investors to streamline research, anticipate market shifts, and make sharper investment decisions. You'll hear more about Focal later in the show. Hey guys, Jason here. Just to let you know, we have Permissionless 4 coming up in June from the 24th to the 26th at Industry City in Brooklyn. This is a conference for the developers and builders where we'll be focusing on the DeFi renaissance, applications, token

design, and much more. Click the link in the show notes to grab your ticket today and use code Empire 10 for 10% off. All right, everyone. Welcome back to Empire. We have a very special episode, one that I have been trying to some of these folks have been trying to get to do an EP empire episode for years and we finally made it happen. We have uh Christine Moy who is the partner head of digital assets, data and AI strategy at Apollo. We have Carlos uh the founder and CEO of Securitize. We also have Tun who needs no introduction. Founder and CEO of Gauntlet. So, welcome to the show, folks. Thanks for coming up.

Really excited to be here. Finally. Finally. Christine, been trying to do this for years now. I'm very excited about this. I was just waiting for this moment. Just waiting. This is the moment. This is the big moment in time, actually. And so, what we're going to be talking about, um, I sent out this tweet the other day. It was about private credit is coming on chain. I got more DMs saying like, "What does that actually mean? What like say more about private credit on chain?" A couple days later, the three of you and some other great partners launched Acred, um, which is bringing credit on chain. So, I thought this is would be a perfect opportunity to talk about this. Um, Christine, I think I'll pick on you to actually just give us a primer on private credit. And the reason I'll pick on you is hopefully some Empire

listeners are familiar with Apollo. Um, but if you're not, it's a uh give or take 750 billion fund, the 800 pound gorilla in this space. Um, and so I'd love for you to maybe give us just give us the primer on before even onchain private credit, just tell us about private credit. Yeah, sure. Um, you know, private credit means many different things to different people. So, I'll just start by saying that private credit is any type of lending that happens outside of the public bond markets. So, we're talking about mortgages, business loans, assetbacked financing. Uh it's it's actually how companies, real estate developers and borrowers of all types get access to capital without going through

traditional banks or issuing public debt. Um lending of this type of of private private credit lending uh was once dominated by banks. But over the last decade and a half uh especially after the financial crisis, firms like Apollo have stepped in to meet that demand and probably like with more efficiency and more flexibility than what banks can typically offer. Um, and so you know for for Apollo as you mentioned we are a $750 billion asset manager with businesses not only in credit but also equities, real assets and retirement services. In the context of private credit, we're not just a buyer of credit. We're actually one of the world's largest originators of private credit actively creating loans

and financing solutions across the entire economy. So like Apollo, we have 16 distinct originations platforms that we've either incubated and created or invested in or acquired. And we touch every part of the credit markets like from corporate lending to consumer lending, aircraft leasing, uh real estate, uh mortgage financing, insurance, the whole like the whole spectrum of credit risk across many different industries. And so, you know, for our part at Apollo, um, you know, through this credit, we help drive the financial system forward because we're providing essential credit to companies, uh, for for companies and, uh, you know, basically entities to thrive. And then,

you know, I guess the distinctive Apollo thing is that we capture excess spread. um you know we generate more return per unit of risk uh than than than others by sourcing our credit deals directly through these proprietary originations channels rather than just buying buying credit on the market like other asset managers do. So, you know, that's like kind of one of the really distinct things about Apollo as a business that, you know, we have proprietary originations. We have it at scale across industries. Um you know for our part uh many companies have been working with us to develop creative financing solutions because like you know we essentially have like the whole toolkit and we're

you know quite flexible in sort of how we can build solutions for for companies um and to help to help grow their businesses. And then the other significant thing is you know for our part especially as investors and for those that invest with Apollo uh we have significant alignment and this is a differentiation with asset managers uh as well in that you know we definitely can't guarantee returns of you know the things that we're investing in but we can guarantee that we are investing alongside the investors who invest in Apollo as in our actual balance sheet capital is being allocated to the same investments to the same uh credits that we're allocating to our funds and and and that's really differentiated. So,

you know, our philosophy in investing is purchase price matters. Like we're we are historically value investors. Structure matters and alignment matters. Um and so, you know, basically, you know, we're not we're not chasing yield blindly. Like we're really focused on how we structure our deals and how we you know, basically structure those deals uh with significant downside protection for ourselves and then also for investors. Let's uh let's get into this product. Um I'm going to read I'm on Securitiz's website right now. I'm going to read the press release because it's a mouthful and then I'm going to need one of you guys to explain what this product actually is. So, uh, Securitize and Gauntlet have launched a levered RWA strategy powered by Morpho using Acred on Polygon, the tokenized

version of an Apollo managed multi-asset credit fund and securitizes S token vault technology. So, while crypto folks might know what that is, tell me in layman's term, uh, maybe Carlos, I'd pass it to you. What What did you guys just launch? What is this product? All right, let's uh let's break it into pieces first. The first piece is that we have a high quality credit product from Apollo. That's the the where the second piece is that we've put this on chain uh through tokenization and that's the the the role we did. And the the third piece is that we need to be able to figure out how to you know borrow onchain uh using you know a D5 protocol like Morpho

against uh a tokenized private credit fund which naturally it's a it's a permission token because obviously represents a security while while the the D5 protocols are permissionless and anonymous. So and then the fourth piece is somebody needs to manage the process the liquidity etc which is where where Tarun and and his team uh come into. So this is kind of like the the streamline. So we have a private credit, we put it on chain and then this whole s token thing that we mentioned on the on the press release is basically a mechanism that we have to basically be able to to mint uh you know a permissionless token that can interact with DeFi out of a permission asset like uh the ACE fund and this token basically tells you that the asset exists. So, so the investor

has actually purchased the the tokenized fund and the tokenized fund is basically locked into a vault for as long as this s token thing is sitting on the D5 protocol. So, you're not going to be able to rehyperate it and lend against twice and in case you need to liquidate it, you know where to go to liquidate it because you know in D5 you need to have a liquidation mechanism. And then the the final portion and maybe Tarun can go into more detail is how do you recursively, you know, iterate this loop. So I have 100 units of private credit that yields 10%. Then I borrow uh you know USDC against 80% of it at 6% interest rate. So now I have 80 units and I owe I earn 10% but I owe 6%. Then you go and purchase more of the other

one. And then you kind of keep recursively iterating and and creating like a leverage position that gives you a much higher yield than the original asset. So that's uh the summary of uh what we have the four players if you want which is Apollo um as uh Gauntlet and Morpho have brought together on top of the Polygon blockchain. So Christine maybe I'd actually throw it to you to just you know you we've known each other for a while. You used to before Apollo you were running crypto and blockchain at JP Morgan. Why does this and I think since DeFi summer you started to get pretty excited about moving some of the stuff on chain. Why does this matter?

Yeah, I mean I like I would say tokenization of real world assets has been my life my life's work at this point. Uh I've been working at it for a decade. Uh as mentioned been a at Apollo here for three years but previously spent almost a decade at JP Morgan building out their blockchain program. Um and like quite proud of the work that I did there tokenized treasuries tokenized dollars. I think to date some of the systems that I've created like intraday repo have tokenized over $2 trillion on permissioned Ethereum blockchain networks. Um and so you know have spent a lot of time you know kind of thinking about the intersection of CFI and DeFi if you will. Um I think the case for tokenization is rooted in like how we fundamentally modernize the

creation distribution and the management of assets. Um, you know, I think, you know, overall like the way that it started in 2016, 2017 was that, you know, tokenization most obviously would bring automation and uh, you know, the reduction of reconciliation and the reduction of cost to the administration of assets like that was sort of the starting point for how like a lot of the traditions um, you know, justified like their journey in blockchain if you will. But I think over time what we've learned in the past few years of of doing tokenization is that the unlock is so much more. It's so much more than the cost savings. I mean the cost savings, the automation, the reduction of the

reconciliation, like it's table stakes, if you will. And by the way, it's important table stakes because you know what really what you're talking about is for an institution that adopts tokenization, you have the killer cost base in that your cost base is like near zero near zero scale compared to the operations of significant financial institutions that have thousands of people working in operations in finance reconciliating do like doing low value tasks if you will. However, you know, overall like you know, tokenization I think brings together like really important things like multi-asset interoperability. Um, you know, and we started you started mentioning it when we're talking about sort of the

beginnings of stable coins and the broad adoption that we have there. Sort of the drift towards like treasury tokens and money market tokens that you know pioneers like Black Rockck and Securize and others have driven. um now you know kind of adding another layer to the cake with Apollo's private credit fund and you know we'll see what's next but en essentially what we're doing is that we are creating multi-asset interoperability allowing different assets to be programmable program programmable together on the same operating system and that's really powerful right because especially as someone who spent like a decade in like sort of the trenches like the underbelly of of tradfi operations what you learn is that different assets live in

different siloed systems. They don't interact well first of all like on their own they're on an overnight batch basis like and you know take multiple days to settle. Uh they don't interact with each other and so if you're exchanging one asset for another like that's like an operational nightmare unless you invest in bespoke technology to connect them. Um but in our case like here uh we're we're bringing all these assets. It doesn't matter if you're born on chain or if you were, you know, tokenized onchain from like a legacy system. You're all in the same operating system.

Um, and basically, you know, you're able to program unique experiences like you're able to essentially like, you know, have the Lego blocks, if you will, of you know, t like taking assets, taking waterfalls and programming them at the scale that you can to build like software. And so, let me ask you one thing on this. So, like, okay, let's say I'm a 70-year-old manager of a private credit fund who's worked on Wall Street for 40 years. And I'm like, Lego blocks? Like, you know, interoperability?

Well, the reason I asked this is because last week I was talking to the a 70-year-old manager of a private credit fund, uh, and I was talking about kind of using the language I think that Christine is using, and he said, "I have zero clue what you're talking about." He said, "I've he said he said, "You know what I want? I want more people investing in my fund." Yeah. So, I was just kind of talking through like why tokenization or what you get from tokenization, but why uh at Apollo we're tokenizing our funds. We're really focused on expanding access to private markets. As we mentioned like or I as I mentioned like we're in the business of generating excess spread per unit of risk. This is alpha that we generate that for our investors that have

historically just been the domain of large sovereign wealth funds and institutions. And now we're focused on expanding this alpha generation for a broader audience that are not necessarily sovereign wealth funds and pension funds etc. And significantly I'm focused on reaching the next generation of investors that very clearly is cryptonative and wants to have a total diversified portfolio on chain. Um and so you know part of this also is like a discovery on you know like this like anyone that you speak to that is like of this generation they are they are growing quickly growing to become like the future leaders of the world. They will also inherit wealth as well as well

as create their own. The way they invest is not the same way as the way our parents invested or our grandparents invested. Their first investment was probably Bitcoin and like you know some NFT and like some altcoin, right? I'm not going to use any profane language, right? So like they have no pro like preconceived notions of what are the markets and in fact they you know are drawn to the crypto markets. So, you know, like to net it, I would say that like the reason why tokenization is compelling is we're learning about the next generation of investors. We're modifying and um, you know, evolving our products to, you know, kind of accommodate that and then more significantly expanding people's ability to access alpha generation.

J one thing I would add to you could say to a 70 year old asset manager that wants to increase their AUM is that one way you could increase your AUM is if you could produce higher returns right it's pretty obvious so if you have a credit fund and your credit fund is returning 8 to 10% and there is a mechanism that investors can access the credit fund and then leverage it to go to 15 20% they will actually generate more aum for you because leverage means you're going to borrow money to invest more in your funds So, and and you could actually see it with the with the first strategy we deploy. We have x amount of millions of dollars in in the acretate fund and that went up by uh x% because by leveraging we have to purchase more

of the same asset. That's how you actually increase the yield, right? So, so that increases the AUM. Now, the question is how do you actually do that efficiently and safely, right? And if you were in traditional finance, it would be like a complete nightmare. Um, so you will have to go to this uh 70 year old person. You will have to talk to the investment manager or somebody in the in the back office of their firm. You have to say I want to subscribe to this fund. It will take you like two weeks to get the subscription process and settle the trade done. Then you got to find somebody that wants to lend you money against the asset. Then you once you find that person, it's going to take another two weeks for them to send you the loan back with the loan papers and

the cash in the bank. Then you have to go back to the same 70 year old asset manager and say I want to resubscribe to your fund for 80% of the previous amount because I got more dollars and it's going to take another two weeks. Then you have to go back to the lender another two weeks and it's lit and then you have to figure out how to manage all these positions in a way that if you need to liquidate them you can actually do it in an efficient way which might not even be feasible uh because maybe the the liquidity profile of the asset is not there or you cannot unwind the loans quickly because they're all paperbased they're not automated etc. So, so I think I'm going to be Oh, I was going to say one day I'm going to be a 70-year-old asset manager. Will you keep

me keep me current? I should have said the 70-y old we need to do to to your point about is this for cryptonative or is for everybody. Well, today is for cryptonative because you have to be cryptonative to interact. But the same way that we're taking, you know, cryptonative stuff like Bitcoin and creating ETFs that anybody can access to, there is a world where you take these structured products that you can create with, you know, uh, people like Gauntlet and Morpho and and etc. And then you repackage it in a way that a traffic person can just click a button and boom, invest and then be invested on that particular strategy that somebody else is managing for them. Yeah. So, and then you don't need to understand crypto because I think if if if what we're

building in crypto is only for crypton natives that have know how to use wallets and you know smart contracts and stuff like that is not going to scale right. So, you need to use the technology but then you need to repackage it in a way that you abstract out the complexity of the technology. Yeah. The only thing I would say is like if I were talking to the 70-year-old, I would say two things. One is how hard is it for you to get LP and GP loans? It's like how hard is it for your LPs to borrow against their positions and finance themselves, maybe to commit to your next fund, maybe to invest in another investment? Generally speaking, LP and GP loans are kind of a pain in the ass. And Carlos kind of gave you the reason. A, there's a legal document at every step. B, there's sort of like a

waiting time in between. It's not often times you can't subscribe whenever you want. There's not this kind of like continuous thing where it's like, hey, I want to give you another dollar. I want to redeem 50 cents. I want to give you another $10. You can't really do this kind of like back and forth. Um, and then I think the third thing that's really important is that credit quality and credit standards are very different in traditional finance versus onchain. Um, I think in general lending against uh LP stakes is a a very established business in in traditional finance, but it's kind of one where generally speaking, I think the the risk premium is extremely high because you're forcing

the lender to take this kind of very high duration risk and usually it's a single lender. So, usually you can't pull together many lenders. And I think one really important thing about the crypto aspect here is in crypto you basically you know when you think about uh the the kind of vehicles for doing this and maybe I'm frontr running your questions like vaults they're effectively creating SPVS for uh a particular strategy and and and I think like in some ways that makes it a lot easier than in traditional finance where it's like oh I have to figure out like what legal entity has to own this thing in order for me to borrow against it and oh does that legal entity exist

somewhere where I have to think about the tax considerations more efficiently. And like I think there's a lot of stuff that these kind of onchain kind of vehicles actually do a lot better that people are probably not thinking about. This episode is brought to you by ZKYNC. In 2024, ZKYNC took a step toward a multi-chain future by transforming from a single L2 into an everexpanding network of ZK chains, the elastic network. To onboard the whole world into crypto, many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose ZKYNC for unmatched security, scalable

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partners 10T, Maven 11, and Spartan. Now available on Jupiter, Rock is the native token for transactions within the Zenrock ecosystem and secures Zenrock's decentralized custody network. The first application launching on Zenrock is ZenBTC yieldbearing Bitcoin on Salana. ZenBTC will be live in April 2025. To find out more, you can follow Zenrock on X or click the link in the show notes. Taran, can you walk me through I mean I'm pulling up for people watching on YouTube, you'll be able to see it, but I I pulled this from your website. Can you walk me through the actual user flow and like yeah, what this actually looks like? Yeah, for sure. So, imagine you are a subscriber to uh Acred onchain. So

let's just start with like hey there's a smart contract that securitiz has made that allows you to mint shares in a credit and I should have said this apart is Apollo diversified credit securitize fund token right correct so we we have taken we have created a tokenized version of the actual Apollo fund that contains the same underlying of the trfy fund and that asun said you can subscribe on chain to mint a token that represent the LP interest in the fund. depending on how much money you've put in. Yeah. All right. Back to your turn.

So, you have you have this RWA. You know, the RWA every quarter, let's say, pays you a 5% coupon. I'm making up the numbers just so we keep example simple. Now, you say, "Hey, I would love to get 10%. I would love to get 2x leverage. I want to borrow against my RWA position. Uh, borrow some cash and maybe I would reinvest it in in the RWA." And so this is where I was talking about sort of this notion of LPGP loans which is what I would tell the 70-year-old like you have definitely done that as a fund manager who survived that long. Uh and so the question is like how hard has it been for you? Uh and so the idea is you can you can take your RWA and just

like a crypto asset you can deposit it into the vault and when you deposit into a vault all the people on Morpho who are supplying USDC to uh earn yield can actually now lend to you and the role of the curator and the vault manager is to say hey this is how much USDC we want this is sort of the loan to value like you know if you have $100 of the RWA are we going to let you borrow borrow a 50 against it or we're going to let you borrow 80 against it. That sort of loan to value ratio is an important feature of you know how much leverage you can get. And so what you can do after that is you, you know, you deposit your RWS collateral, you borrow say $50 against

your $100 of RWA. You take that $50 and you mint more RWA shares. And now you notionally have $150 of RWA, but you're also obviously paying a carry cost and that you're paying borrow. Um, and the main thing is that in that process, you have had to create new RWA shares. And to cryptonative people that sounds like who cares? That's calling a function or that's like calling, you know, like that's like I staked and I got new tokens, right? It's not. It it seems like such a obvious thing in traditional finance that that process is extremely slow and annoying and like you know not fun and the idea that you can kind of do that repeatedly to do this

type of leverage without you know to Carlos's point earlier each time you want to get leverage you probably have to have this like back and forth get another legal agreement you know the the fund manager might be like hey show me who your lender is before I let you mint. Let me do some diligence on them. I I think like in general the fact that crypto lending is overcolateralized um makes this a lot easier. Obviously, you have to manage liquidity and know how much leverage to make sense. But the other thing I think that's actually really important to think about the DeFi trad, right? like the a private credit

fund will usually offer you liquidity on some regular time interval. It'll also pay you dividends or or kind of yield on a regular time interval. So for instance, you might get a payment every month. Crypto people have been and and just generally the internet has been born off people having demand deposits whenever they want. And this is not just in crypto, this is in fintech too, right? Arguably most fintech companies are effectively a wrapper for the end user that handles this this continuous time to discrete time payoff, right? Like I can go to my bank account online and or I can go to say Square or Venmo and I

can send someone money immediately, right? But in reality, what is Venmo getting paid for? Right? They're getting paid for holding their duration risk of like, oh, I'm going to hold this amount of money, wait till the bank opens, submit the transaction kind of uh and then handle it for the user. But to the user, they make it look like that settlement process already happened immediately. And in some ways, I think the the crypto to trady interface is also going to have the same kind of duration matching problem, right? of you have these funds that are offering you a lot of yield, but they're not paying you yield continuously like staking yield.

They're not paying you yield continuously like a lending protocol where you can just deposit immediately or with withdraw immediately. And so I think the original D5 protocols of 2019 2020 were so focused on pooling everyone together, pulling all the loans together, pulling all the borrowers together that you couldn't do this kind of duration matching as easily, right? you you couldn't you couldn't say like, "Hey, Apollo has a loan that pays me monthly. Someone else has a loan that pays me every 3 months." Uh, well, we're just going to put them all together and, you know, the credit quality is the same. Obviously, that's not that's just not going to end up being a great deal for either the borrower or the lender.

And in general, I think what how Defi has evolved is it's it's figured out how to isolate things and now you can kind of do this, you know, tradi discrete time fixed duration type of product matching with crypto continuous whenever you want to deposit withdrawal. Let me ask something on that term because I I think I'm following you. Okay, so here let me let me repeat it back. I just want to make sure I'm following. So you got a AC credit is collateral. Acred gets to tokenized into Sacred via securitize. Sacred is deposited into a gauntlet curated vault. The vault then borrows USDC via Morpho. The USDC is then used to buy more Acred and you repeat basically within Gauntlet's risk

framework. So my two questions um there and these might be really dumb questions would one one is like this is just a levered up strategy. So, how do you think about the risk management there? And then the second, and you're talking about duration um like traditional credit funds settle, I don't know, monthly or quarterly, but a vault, I would guess, reprices collateral on a blockby-block basis. So, how do you kind of reconcile that duration and kind of liquidity mismatch in in gauntlets models? Can I just want to add something that because before the the vault uh comes into play which is what Tarun is doing there is another complexity which Tarun mentioned it which is the the try funds whether it's acret or you know a money

market fund or something like that are are not 247 instant mintable and they don't have a a real time nav that's not how they are but crypto protocols assume that you can mint things instantly or or with a much higher frequency and that you have real time enough information etc. So when people talk about tokenization, they think, oh, this is just like issuing a token uh that represents something. And there's actually like a a complete misunderstanding of the complexity involved in basically briding this this gap uh operational gap between assets that are on chain that are for the most part instant uh 24/7 available uh etc.

and and the underlying which is not like that. uh and there's this gap you have to cover it and some of the the way you cover the gap is technical some of the cover they cover the gap is not just technical it's you know things like you know transfer agency what do you think when you issue shares and you the share of the underlying is not available yet how do you account for that this is fun admin this is why we purchase a fun admin business because fun admin is a huge component of you know the tokenized version is not 100% going to replicate the nav of the underlying because it's a mismatch in terms of issuance of each asset uh and and how money gets deposited here and gets invested there etc. So that bridging that gap to try to take into crypto and make the the the

tokenized assets crypto friendly. It's a there's a huge complexity involved that most people don't understand which is why by the way solving for those things actually allows people like Tun to be able to create this vault and and use it and it doesn't necessarily work for first generation of tokenized assets that we were doing which were basically replicating the same thr processes and not having uh crypto friendly uh you know processes. Yeah. I mean, I think a a maybe a trit way of putting it is the first versions of of RWAs were a lot closer to NFTTS and the second version were a lot closer to memecoins in the sense of they had more liquidity. they kind of it's like a

lot easier to deal with composabilitywise and you don't have to build a whole separate stack you know like I think you know NFTs had to build their own total separate stack and then once people stopped using them like that stack also kind of fell and so I think h being able to have this kind of liquidity um aspect to RWA I think was just not there. I mean Christine probably can speak to that. Christine's like I love this memecoin comparison to what we're doing. This is great for my compliance team. Exactly. Not not exactly the same. I will say that this is the difference is because we went from Christine said at the beginning the our tokenized assets bring two advantages. One one is pure efficiency or we're using a better ledger and therefore because this ledger

is better then we have less reconciliation uh issues. We have a a single source of truth. We reduce some uh operational manual work that can be automated etc. that's um more like an efficiency play that this new generation of RWA, at least from our side, we're focusing on how the tokenized asset is better and that's something that the non-tokenized asset doesn't do, which creates new products like the products we're doing here with uh with Tarun and his team. This is a new product. Basically the the the vault that gauntlet manages you can see that as as a as a different products and structured product that happens to use a crate behind the scenes but it's a different product and you could just subscribe for that you don't have forget about a crate

I mean the behind the scenes there is a buying of a crate but you know in reality you should think of it as I'm buying a new structure product that is a leverage um you know uh a bolo crate fund the same way that there is 10x ETFs and there's normal ETFs right then you have an ETF and you have a 10x ETF and you pick the one you want depending on your appetite for for risk. So and then in innovation innovations that create new products versus innovations that provide efficiency for existing products are you innovation that creates new products 100 times better and they they go really really really big because it's a much more important process because you basically expand the the you know what the products do as opposed to make

them the same product but just better. So yeah. Yeah. And and also if I might add like and I think this is Terrun's point as well like the fact that we are making traditional assets interoperable with open architecture is the key point um in that we don't like I think as Tun said and as Carlo sort of built on the early generations of RWA tokenization you know my work included were you know kind of like bespoke systems that you know were behind walled gardens. Um I think the the power of building something um and enabling assets on an open architecture is that the speed the velocity of innovation is incredible.

Right? So like if you if you think about it like you know when when you think about innovation at a large financial services at a large bank you have like one team and they have like one set of ideas and they have like a waterfall process takes like a while for it to get tech to get prioritized from a budget perspective. It takes at least a year to build um let alone like kind of getuction right. I mean the velocity of innovation in the crypto space is is significant because what you have is open source code, open architecture that's well understood. Um you have smart contract libraries that have already been audited uh and are composable and thus this is the Lego blocks part that maybe the seven-year-old 70-year-old doesn't

understand, but like you can put together things that have already been battle tested and usable in new ways. And then you have teams that have a diversity of experience and background coming together with a common mission of building the future of finance. And so like you know this is at least like what we've experienced in you know launching this um you know or watching Terrun and Carlos launch this and that you know seeing Gauntlet securityize Morpho Polygon all come together and like you know very very professionally and single-mindedly mission focused to come together and develop you know something

something new that like I said like all of us TRDFI people in tokenization have been dreaming about for the p for for the entirety of the time that we've been building. If we weren't like if we weren't focused on building traditional assets on open architecture, then we might as well have just been building web 2 software or we might as well have just been you know kind of doing like the things that we're doing conventionally. So I feel like we're really at the at the edge of like where you know this all all of my life's work um will accelerate. This episode is brought to you by ZKYNC.

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ZenBTC will be live in April 2025. To find out more, you can follow Zenrock on X or click the link in the show notes. So, Taru, maybe Taru needs to address the the risk management portion of your question because we digress from that. I think it's an important component here. I would say one one way of thinking about again I I want to kind of compare the like traditional finance risk management to to onchain risk management in that traditional finance of for these types of products thinks in terms of a fixed duration. And they think in terms of payback periods. They think think in terms of subscription times. They think in terms of withdrawal

requirement like you know you can't redeem whenever you want. And onchain everyone thinks in terms of continuous time right they're like I have a per I'm paying a fee. I'm earning a fee. I have I'm paying a fee, right? No one thinks in terms of these like fixed durations like discreet times like oh I have a one month expiry type of product. Right? I think the failure of options to some extent in cryptos is is related to this. But one reason this is important is the risk management actually boils down to figuring out how to do this kind of continuous time like crypto onchain thing versus discreet time I'm paying you quarterly type of thing. And you can think of how you think about RWA lending is hey on day zero you know you

subscribe on day 30 you get you know a yield coupon you get 5% or something on day 60 maybe you get 2% on day 90 you get 8% right like whe whether it's explicitly paid or whether it's burned divide dividends let's ignore kind of the complexity but you can intuitively think about it as like I own this asset on a certain frequency I either get direct payments or I get um kind of you know the the supply changes. Now when you're borrowing or lending against this, you basically have to think about people who are suppliers in the market, they are getting a a continuous interest rate, right? So if you go deposit on Morpho right now as a

supplier, you're you might see 3% interest and then you know in 2 minutes you might see 3.7% interest and 2 minutes later you might see 1.5% interest, right? Like there's a variable interest. And one important thing is you should really be thinking about lending against um these kind of fixed rate products using these variable rate products as almost like selling an interest rate swap. You're you're trading this kind of like variable rate product for the fixed rate product. And you need just like in the normal interest rate swap market, you need to account for the liquidity of the the fixed rate product, right? Like if the fixed rate product has no liquidity, then you have to be very careful about how you think about how much of the

variable rate product you're willing to allocate against it. And so a lot of the the way we think about the risk for RWAS is how reliable is the fixed rate product you know how how much can you trust that you get this particular dividend stream and then based on that how do you split that dividend stream across the continuous time so that the the depositors they're able to be like okay I can deposit and withdraw kind of freely um you know I'm not totally locked in you know my capital didn't get so locked into this discrete hunting that I have to wait you know if say there's a $100 that is available to be lent and all $100 was lent against acred then you know depositors who are like I

put in money to earn some yield suddenly couldn't withdraw right it's it's already locked into this loan so you have to think about these liquidity constraints and I think in a lot of ways the RWA to to DeFi problem is a lot like interest rate swaps and and that's really the the first order model you should have for the risk of this is is this variable to fix transformation because I I think fundamentally that's the hardest part. Obviously, you have a ton of risk in terms of issuer risk in general, right? Like, right, the issuer could rug you. They could not pay dot dot dot. Obviously, in the Apollo case, I think no one's really worried about that. But I I think in the, you know, they're they're they're obviously, you know, there's a long tale of issuers and

in in many cases, you do not want to do this. But if you have confidence in the the dividend stream, the fixed rate portion, then you can start thinking about the risk and liquidity profile of your users in terms of how frequently are people depositing, withdrawing, what's the interest rate curve look like so that it's attractive to to lever, but then also how do you make sure that the depositors aren't locked in for too long and that they can withdraw and and this boils down to looking like an interested swap. Tun, how do you think about liquidation cascading and like who who who actually sells the underlying credit and like how are redemption gates and kind of like the smart contract liquidations coordinated? Like tell me about the because leverage good on the way up, leverage maybe we've seen it be

bad in crypto on the way down. How how does how does that liquidation cascade? Yeah, so I think one important thing to understand about RWAs is they're not like your traditional DeFi liquidation. Well, it's funny to call it traditional, but uh they're not like your traditional thinking that I was like I was like a grandmother's DeFi liquidation. I was like a liquidations have become the norm in my head and then there's Yeah. Yeah. Yeah. Yeah. So So basically a first off you need whitelisted liquidators, right? You you need someone who's actually able to redeem the S token and Carlos can talk a little bit about the redemption process from S tokens. We'll talk about that next. Yeah. Yeah. Uh but but you need someone who's able to redeem for the underlying and willing to hold to maturity. So they have to basically

redeem, you know, someone's loan defaults, there's a bunch of S token, uh they redeem it, then they have to hold until the next redemption period. And so the liquidator actually does hold duration risk, right? There's no flash loan for liquidating an RWA effectively. And generally speaking, again, this boils down to credit quality, like how much does the liquidator trust that they're going to get to fix payments? how much do they trust the issuer? Um, and the other thing that's actually kind of important to note is that um, basically you have to there's there's no like immediate price for this to to Carlos's earlier point like right you have this kind of infrequent nav oracle

that is maybe it's daily even but it's not it might not be like you know the the the most you you might not want to actually use it as the the correct liquidation price. you may want to use a trailing 30-day average. You may want to use a a T-W of it because it's kind of this like thing where it doesn't move and then it jumps depending on um credit quality depending on the quality of the asset. And so the liquidator is also taking this kind of that type of risk, right? It's not an asset that's whose price is is spot priced in the last block. It really is kind of this kind of slow thing. So the liquidators have are taking credit risk, right? they are they are a credit risk lender but arguably

they are doing it for an asset that has a real yield right like versus an asset that doesn't and the cascade is actually much worse because in these kind of onchain things there is actually a much tighter loop between the price of the asset and the thing being liquidated and that causes the cascade very quickly right like I buy I buy the collateral from the lending protocol I immediately send it sell it in a DEX maybe it pushes the DEX price down 10% % and then that causes some other loans to go down. You don't have that immediate feedback loop. So, from a liquidator standpoint, it's actually more attractive if you're willing to trust the credit quality of the uh asset. And so, yeah, Carlos probably should should probably mention

the the redemption process. Yeah, there is a lot of uh things here to touch, but um yes, so one of the challenges we've had to try to figure out how to integrate RWS with um with DeFi is that first the the RWS themselves are not necessarily uh you know real time pricing, real time minting, real time liquidation etc as DeFi is. So that's you have to bridge for that. And then the second one the D5 protocols themselves are supposed to be you know permissionless where anybody can become a liquidator and liquidator goes and sells the asset because the is fully liquid on chain etc. And this is not the case for RWS. So so this S token construct is is a way to kind of try to

bridge for that where you know the what you're liquidating basically is the the S token and and there's a number of ways we can liquidate for that. we can just mint uh you know uh the USD which is liquid uh and then they hold the asset um as collateral etc but the liquidators need to be trusted partners if you want and trusted sources and then ultimately we can liquidate against Apollo in a it's in a monthly basis for your for your fund so Apollo the entire quarterly the entire fund has a quarterly 5% redemption and so far because the tokenized portion is a smaller portion of the total we fit within that 5% So and then but that ultimately has to be a holder of Apollo that triggers a

liquidation with us that we trigger back with with Apollo and that has to be a wisted participant. So there's a number of complexities involved in in making this happen as opposed to pure permissionless liquid assets in in crypto that you can use as collateral. I think that what's interesting of this product is that this is the first time that anybody uh as far as I know can actually solve for all these different problems. how to curate the vaults, how to have some mechanism for liquidation that is acceptable, how to integrate the RWS with the uh with the vaults, how the to leverage the the existing USDC pools there to pull liquidity to be able to lend against the asset, etc. So this is why this is more it's a lot I know you

said at the beginning Jano that the the pressure was a mouthful but this is there's a lot of complexity in in making this happens with multiple components that have been developed over time by different entities that now come come together but yes liquidation is an important thing and then I will finally say one thing which was also mentioned here this is not going to work unless you have reputable issuers because to some extent you're taking some risk against the issue right whether it's duration risk risk, whether it's the credit risk, whether it's the liquidation risk, etc. So, we as securityize only work with tier one asset managers, whether it's Apollo for credit, we also work with Hamilton Lane, we work obviously with Black Rockck and other people like that.

And then I think that the reason we have more partners that want to use those those assets and take some degree of risk uh of using them as collateral for lending and things like that is because of the quality of the issuers that we work with. There's a lot of private credit in crypto a lot uh that you know has a lot of defaults very regularly that they are doing loans to a I remember one like few months ago one that defaulted was like a loan to um a Malaysian motorcycle company that was buying motorcycles to create like an Uber for motorcycles in Malaysia. This is great but you know those loans obviously pay a very very high interest but have a very high probability of defaulting and in the case of defaulting the loan this is like a complete disaster for this type of projects.

Liquidation is a different problem because you basically liquidate the asset and you always have a way to somebody take it take the credit risk temporarily until they can actually liquidate with Apollo and as far as Apollo doesn't default on their loans we're safe in the entire processor. I wanted to take a moment to tell you about Focal by Falcon X the AI powered insights engine built for institutional crypto. With Focal, you can create charts and generate answers to questions in seconds. Used by over 80 funds with more than $10 billion in assets under management, you'll feel like you have a team of analysts at your fingertips. Ask focal questions like, "What's causing the uptick in liquidations? How much Bitcoin did Michael Sailor buy last

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Trade the latest and trending tokens at your fingertips, all while discovering captivating web3 stories from the top industry leaders and influencers. With token.com, you can earn points for tasks on the app, including on every trade you make. Just scroll to watch and tap to invest. Thanks to token.com for making today's episode possible. Let's talk about just the product market fit so far and the early traction and the the users maybe. Um, I'm I'm curious what kind of the uh well, first off, that's only for accredited investors today, right? Like you can't just some any individual on the street can't just go buy it, right?

It's accredited investors. Accredit investors only one fund for accredited investors in the US. Yeah. So so so what kind of investors are are buying a credit today? Is it cryptonative accredit investors? Is it crypto funds? Is it credit folks who are doing things on chain? Like who are the buyers of this today? Is it uh cryptonative as as I mentioned at the beginning to access these products and benefit from the advantages of you know uh more frequent issuance or more frequent dividend distribution or leverage products uh through the the gauntlet vaults et you have to be cryptonative today. So we we've gone from in the past if you ask me three or four years ago we were trying to to use tokenization as a as a efficient

mechanism to democratize access to alternative assets which I still believe ultimately is the goal that anybody can actually access these products in a more efficient way that tokenization obviously uh brings you to kind of like start focusing on crypto first because you know tokenization at the same time adds friction token management stable coins um you know smart contract interactions and stuff like that that the non-crypto native are not necessarily ready for. And then on the the other thing is that crypto now is really big. So it's a it's a huge market uh you know three plus trillion dollars as Tun said there's $250 billion in stable coins out there that are lending towards extremely risky volatile assets that could actually be you know getting

a safer yield lending against these type of products etc. So I think the the crypto economy defi also is like 100 billion plus and defy didn't exist at the beginning when we started with tokenization. So that was this is was not even a thing. So, so I think to today we're focusing for crypto. All the product, all the customers we have today for a crate, for scope, for vital, for anything are all crypton native people um that are accessing these products as a better way, safer way of generating returns as opposed to some much higher risk strategies that they can still do in crypto that involve dealing with other type of assets. Is this yields that are not correlated to the crypto ecosystem? Um and then you know separately uh you know I think if you as

I mentioned like the building blocks it's like you know you started with stable coins you know then then there's you know some yielding treasuries and money market uh assets and then this is higher yielding than that. So, you know, I think it's it's about, you know, both corporate treasuries and retail or like accredited investor uh semi-retail um audiences diversifying uh diver diversifying against crypto exposure and then building like a total portfolio on chain if you will. It's also crypto hedge funds that today they they basically use defy as a way to generate uh yield. Right. Right. And then this is a way that they can generate a pretty decent yield because the the credit fund

itself is like 8 to 10% but then with the leverage strategy from gold gauntlet goes much higher and then and it's a much safer than generating yield through farming points in vera chain or whatever which you can generate yield as well but you know obviously taking other type of risk. I was talking the the I imagine one of the big users or um buyers. I was talking to um three people who really loved this product when you guys rolled it out and I was telling them that you guys were coming on the podcast and uh they all said that they're they plan on buying this in size. It's um it's basically three different founders who have been in the industry for a very long time, very high net worth individuals who typically get access to like products like this through, you

know, they bank with either UBS or Morgan Stanley or JP Morgan, but they're extremely cryptonative and either they run funds or they've been running companies in the space for several years and uh so it'll be cool to see that start to happen. Yeah. And and by the way, what they will get from JP Morgan or from UBS will be the original Apollo fund, not the leopard. Uh yeah, exactly. Exactly. Exactly. And this this by this uh website you're showing uh by the way these guys are great. We we partner very closely with them and they try to track all our products closely and always have updated information. This is missing uh inc. Uh we have also an integration of the Apollo fund with the the Kraken web um uh chain inc which is this is missing poly this is missing polygon too. No I

think they're still working on it. Love love love the team. They're still working on it but the overall aum of the fund is about $und00 million which which makes it which is small in the larger scheme of asset management but it makes it the largest private credit fund on chain from a traditional asset manager right now. How many holders make up the 100 million? I don't remember offhand, but I think the really interesting part about the the holdings is that you have holdings that are like, you know, in the 10 to $25 million range, but then you also have holdings that are like at the minimum, which is 50,000.

Um, and so, you know, that also is super compelling, I think, because it speaks to the scalability of the product in that like, you know, you want to do like a $25 million clip, you want to do a $50 million clip, you want to do a $100 million clip. It's like the same process and the same operating costs as a $50,000 clip. And that that speaks to like our ability to expand access to private markets as we mentioned. I think I can answer to that why this discrepancy because we obviously obviously I'm not going to disclose here who the holders are because this is confidential information but we're the broker dealer of the fund. So we obviously see every single investor. We have kind of like a two ends of the spectrum. We have individual investors

that are creative investors that are cryptonative that actually are investing $50,000 here instead of putting it somewhere else. And then we have a foundation that wants to diversify their uh you know their their treasury management and maybe they already hold like a $100 million on a tokenized and they want to put 10 or 15 here. Yeah. Yeah. Yeah. Here's the other thing. There's even like a segment of like fintexs that want that like currently they're expanding access to US dollar assets to like you know their local region. So let's call it like Africa, Eastern Europe, like some parts of like Southeast Asia where you have like PE investors that are hungry for US dollar assets and they're already

providing access to US dollar stable coins. It's interesting in that not only is it a crypto diversifier for a broader audience um you know it's basically like an access point for you know higher yielding US dollar assets which like that was surprising like to kind of see that as well. Dumb. I was just checking when we release this. We released this at the end of January. So, this has been in the market for slightly over three months. So, if I want to buy if I want to buy this, let's say I get off this podcast, I'm sold. You don't need to reach out to anybody. You go to our website security.io. You create your own account there. You have to pass KYC. Uh you have to prove that you're an accredited investor. Similarly, like if

you go and buy any other financial services product, this is a is a brokerage account. And if I want to loop like let's say the does the looping happen. Do you have to KYC every time that loops? No, no, no, no. This is the beauty. This is what Tarun mentioned. You don't have to resubscribe. You don't have to send papers again. You don't have to KYC again. You don't have to do anything. You do it once. You you wireless your wallet with us and then you buy a crate and when you buy a crate the the looping thing is not like on automated on the website. You connect your wallet and click this. This will come soon but for the time being you just have to reach out to us. uh and then we will basically send the money to to to the vault, the

gauntlet vault to do the looping and then you will get back all your all your holdings. But the the whole registration process is all online. It's all automated. There's no manual intervention and nothing needs to be done again. You don't have to sign legal documents again. You don't have to uh KYC again because otherwise it will get on the way of you don't have to sign loan agreements because the loans are on chain. So what's what's the yield right now? Apollo has 9.5 I think. And then what about once what what about if uh it then loses you probably know that better than me. It's it's closer to to like 16% right now. I mean it depends on the the current interest rate. So this is why I mentioned this like fixed versus variable trade-off. You are get when you take the lever strategy you're taking a

fixed rate product and you're getting a variable rate product. Why are you getting a variable rate product? You're paying a variable rate interest to a D5 protocol. And so you're and and so but it it's in the 16 to 16 plus percent. That's cool. Um, so one thing I would just add in terms of this like cryptonative versus not is if you look at the history of crypto since say 2015ish at the end you kind of have this bull cycle right where you have this huge asset accumulation and then kind of you know kind of something pops and then usually there's always some innovation at the end of each cycle that like keeps people some fraction of the people who came on chain to search for yield. they keep their assets on chain versus

leaving. And you know, after the ICO boom, you could argue it was sort of like stable coins and tether. After the DeFi summer, it was lending protocols. You know, after the NFT boom, maybe it was, you could argue it was L1's. But this time it really does feel like people are in moving into RWAS whether directly like via subscribing to products like this or whether it's indirectly via say buying you know things like Athena that hold a lot of BL where they're rappers around an RWA and some you know I I'm not I'm not I'm just saying that like from a you know tradi standpoint someone who doesn't want to know how Athena works they may view it that way right they might just be like hey look it's it's basically a rapper

and I basically think if RWA's become attractive enough and high enough credit quality that it keeps people on chain after a cycle, you know, they kind of serve as this natural baseline yield that people have been talking about in crypto and like in general I don't think has existed, right? like there hasn't really been some some baseline yield. You could tell your 70-year-old private credit fund guy that like, hey, like crypto, if you if you were willing to use stable coins, you're guaranteed a 4% yield just like outside crypto except it's easier to use. You could never really say that before. And I think like that is sort of hopefully what this

current cycle kind of brings. But by the way, we're digressing, but the the Athena comment you made is very relevant because that's exactly what they do with Bidd. They use Bidd to have a baseline yield that depending on where the funding rate is in crypto, they can just make a much higher return with the basis trade or default to the the middle which is the Fed rate. So, so that's the So, I agree with Ter like you're going to have I think you know money market funds are tokenized treasuries which is a more accurate terminology because they're not money market fans they're private funds and then private credit are kind of like two ends of the spectrum in terms of yield and liquidity for yield bearing products and then in between there's a

bunch of other things that we're also working now that are very interesting because they have yields that are in between but probably liquidity profiles that are closer to treasuries than than credit etc. And then I think what I want to see in the next months is like a a variety of products in this yield curve uh you know liquidity spectrum risk spectrum that fulfill all these different use cases as a base layer for people to leverage them to do all the stuff in crypto that in the case of crypto rates not being where they need to be. They can always default to this set of products depending on your appetite for risk risk liquidity etc.

All right. Maybe as we think about rounding out this conversation, guys, I'd love to think about the next like three to five years. Um, so we've got, right, Black Rocks, Bidd kind of proved out treasuries. Um, uh, right, Franklin's done a lot with money market funds. Um, obviously Christine, you guys are owning this kind of private credit moving on chain. I'm curious, I don't know who to kind of direct this question to, but curious what asset class is the next domino to fall? I mean, realistically, if I think about who's having the biggest liquidity crunch right now, it's private equity. I mean, just look at the secondary sales and kind of activity there. Likely, I'm sure a lot of those LPs wish they had

easier lending facilities than they do. And I I I think like I think there's going to be just a my my kind of guess is like crypto is really good at like the zero duration risk but high fee market. And I think as you see with private credit crypto is kind of like pushing into the longer duration risk, you know, medium fee market. Uh and I kind of think like it's gonna move in that direction. It doesn't it doesn't seem like it's going to go to like I I don't know if I'm personally at least I I don't know if I can get excited for the 10th time in 10 years about equities on the blockchain. I was going to I mean can you pick up can you

pick that apart because I've seen a couple companies raise here. Van just did that deal like what what what do you think about this equities coming on chain idea? So it depends on what equities you're talking about. So if you talk about public stocks um I think that could be pretty exciting if so let's let me just say something else before. So what Tarun said about oh private equities having liquidity cranks and people want to borrow against or liquidate their LPS stakes etc and maybe crypto and tokenization could play a role there. That has been the original narrative for tokenization that is particularly well suitable for illquid assets that you can then provide fractional ownership and then make them more liquid. This is why people got excited about real estate back in the

days or about tokenizing paints or like fine art. But that but that thesis didn't that thesis didn't play out. It didn't pan out because tokenization doesn't make anything liquid by itself. So if the asset is inherently illquid, the fact that you put it on a better ledger and you can move it around easily, which is what tokenization does, doesn't actually necessarily means that this asset is going to become liquid magically overnight. So we've gone in the opposite side of the spectrum. The the most successful tokenized asset is the dollar, which are stable coins. This next most successful one are tokenized treasuries like Vidle, which is again the next one is still tiny compared to stable coins. So that's has a lot of room to grow. And then we're coming down on the spectrum of yield liquidity and

this is why credit now is taking off and I believe things in between credit and treasuries will will take off. So if you think about what's the other highly liquid um asset that exists in the world is public stocks like US public stocks those are the most liquid assets after the dollar after treasuries. So this is not about tokenizing the you know the cap table of securities. I've always been told like, oh why don't you tokenize security? It's like sure for what? Like who's going to buy that? Like what I'm going to do with it? It's not going to be liquid and so is it does it make sense to do it just to have our cap table on a better ledger like a blockchain or can I provide any um you know additional utility and functionality to the token. So with

public stocks there is a possibility that you can actually do things that you cannot do with today when you buy stocks from Robin Hood which are readily available. So it's not an accessibility problem necessarily. is more about can you do something else? Can you maybe access it from different parts of the world? Can you borrow against them in a more efficient way because they're liquid or can you create derivative products that are difficult to create in trai uh etc. So I do think that you know ultimately will happen. It's a very challenging thing. I don't know if you guys follow the the filings that people are doing to the crypto task force but there's a huge debate about what type of regulatory rules need to be modified for public stocks to be able to trade on chain and settle on chain separated from the national exchanges. Uh so I think

from a regulatory perspective is very tricky but it could unlock a lot of new use cases. I would I guess I would add one thing which is like I want to see centralized per equities before I believe that the tokenized things will have demand like you kind like that's a much simpler thing to get around and like even to do that. Yeah. Yeah. Yeah. Yeah. But it's taken forever, right? like there is it just feels like stuff like that if you're especially cuz like I do really think the the current equities demand is just like you you do kind of have this like cold start problem with a lot of these onchain products and I I think it's like really hard to to get over the

liquidity problems for equities unless you have um kind of good good redemption Robin Hood hopefully right that's what I'm saying I want to see that first got to imagine to me that's the thing. Yeah. Yeah. Yeah. I mean like I'm I'm excited about more more traditional assets on chain but I'm more excited about what are the experiences we can develop. So you know just a brief example like today when Apollo pays me like my salary into my bank account like nothing happens like I get like dollars into my account. I like kind of think about how much I have to pay for my credit card bill and I have like a dollar balance left. nothing really happens to it unless I like take five steps, five to 10 steps to move it into treasuries or you know if I was

really entrepreneuring like I would move it into Apollo investments. I don't because I'm busy working. Um, like in a future world, like I could have a portfolio designed just for me, like just to my risk profile, just to my spending profile that says Christina needs like 10% of her, you know, account to be stable coins, 20% to be treasury tokens, 25% levered private credit, 25% like Athena, and then every time I get paid like direct deposit like converts into stable coins, auto deploys into do that pie chart that's customized to my, you know, risk profile. And what that actually means is that every cent of my

earnings is fully invested in yielding like without me having to do anything. And then, you know, if I use like, you know, my crypto wallet connected debit card, I go to Nou, I like buy sushi, like you know, that's like an autocon convert from tokenized treasuries into USDC and then like off-ramp to to pay the sushi company. then every penny of my earnings is yielding up until the moment that I use it. And that is absolutely a 10x experience compared to like what exists today. Um and so like that applies to like people in first world countries. It applies to people who are unbanked and underbanked. Uh it applies to corporate treasuries. it applies to Dows like and so you know I think it's really interesting that we're

here you know sort of building the foundational pieces to actually like what will be 10x financial services in the future at least that's what I'm building towards a good vision that's a good way to end it well Christine Carlos Tun congrats on uh congrats on getting this done this is such a I feel like I've been talking to many of you known many of you for years and it's cool to finally see the three of you come together and make this happen so big congrats good all right thanks thank you so much for for the opportunity. [Music]