Why Stablecoins Are Crypto's Biggest Opportunity | Charlie Noyes & Bam Azizi

Transcript

But the killer app of crypto is a stable coin and the killer app for stable coin is payment. So I'm excited for uh day-to-day payment in US happens in a stable coin is set on a stable coin instead of credit cards or network or a wire network. Uh we are getting there. We're moving in the right direction, but I hope we can get it this year, but I'm a little bit more realistic. So I think maybe it takes a couple of years to get to to that place, but I'm excited. This episode is brought to you by ZK Sync. 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 FalconX, 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. All right, everyone. Welcome back to Empire. Uh I'm still battling a little sickness from death, so uh excuse the nasiliness. We've got uh Charlie, who's a GP of Paradigm. We also have Bam uh coming off an $82 million raise, founder of Mesh. So uh Charlie, Bam, welcome, guys. Thank you for having us. Yeah, of course. Um Charlie, man, I want to start with you, which has nothing to do with stables. Actually, I I was looking for I was like, I listen to some old podcast that Charlie or some recent podcast Charlie's done. I think it's been four years since you've done a podcast. What's the It sounds I don't

know. I feel like the role of a crypto VC is like storytelling and posting on Twitter these days. What's the why why do you take more of a backseat? You know, we hope that our role is more building things than just talking about things. So, taking that approach the last few years, but uh no, it wasn't intentional. Um I think a few years ago, I felt like there was a lot to say on me and some of the topics that we were working on at the time. Uh and for the last few been more heads down. Nice. Nice. Um all right, let's talk about this mesh race. Um, I think I got the number right. $82 million raise. So, Bam, first off, big big congrats obviously. Uh, maybe Charlie on the investment side and then bam, I want to hear about the story of mesh. Um,

Charlie, why is this when I think of like Paradigm's investment lens and framework? It's been more infrastructure and you guys are I mean pretty notorious for leading or investing in a lot of the best I think crypto, but we haven't done a lot of infrastructure historically. Yeah. What's the what's the reason for this for this mesh deal? Well, you know, I think a lot of folks know us for the work that you're probably referencing on some of the more cryptonative protocols that we've been fortunate to partner with like Uniswap and Optimism and Flashbots and those that are sort of more onchain crypto native. Also, Maker Dow uh and Reflexer, two decentralized stable coins that we were pretty closely involved with a few years ago. Um, but we've also always

done more traditional looking companies like a lot fewer folks know, but we also led pretty early rounds in like Fireblocks. Uh, we invested in chain analysis and some of the other infrastructure companies. Um, so yeah, mesh wasn't abnormal for us. Uh, I mean, I met and loved BAM and I think we're really excited about the stable coin story overall and seeing uh, you know, more merchants and payment providers and such adopt it, things like Stripe, uh, acquiring Bridge and and making it a more core part of their business. So, it felt very natural to us. Nice. Did BAM find you guys or did you guys find BAM?

I think BAM reached out to us originally. It was a long time ago, actually. Um, you know, Bam, what's the Maybe you could What's the story of the race? I'd love to hear it because I you guys also did some quirky things which was uh I think you raised entirely in stable coins or or a large chunk of it was in so I'd love to hear the actual story of the raise. Sure. Yeah. H happy to uh give you my side of the story. Charlie keep me honest here but yeah we we got connected to Charlie through one of our investors more than a year ago. Um uh the joke here is like like I have like hundreds of people on the cap table but none of them I got the check over weekend or overnight. All of them I built relationship uh gave them updates

and kind of had conversation to make sure they were the right fit. We are the right fit for the firms. Uh so paradigm is no exception. Um so I was uh basically we met in downtown San Francisco. Before that we met over Zoom first. I really really like the fact that um Paradigm even though it's a big firm um like their their average uh age there is uh like around 30 a lot of young people uh very bullish on crypto and what's going to happen in the future of finance. So um compared to other firms that like more conventional uh that kind of stood out for me. Uh but um what happened is like I sent an end of

the year update to like five firms that I really respected and Parad was one of them. Uh but um and then uh one meeting led to another meeting and then we had multiple offers but um I really really liked what Paradigm did. So they were like I was not just another check for them. Uh they showed me how they can add value post deal. They went above and beyond to make sure they accommodate every single items that was important for me and my employees, my investors.

Um, and they were because we we were both youngs uh young people. We move fast. They're like even though it's a big firm, they're moving as at the speed of startup. Um, so we were able to close the entire deal in two weeks, which was shocking for industry. That might have been a record for for us actually. Why? Why did you guys want Yeah, go ahead, Ben. I asked Charlie that can we close in two weeks because my birthday is in two weeks and said like if you move fast we can move as fast as you. So we did it. Bam. I feel like there's a bunch of founders who are going to take the wrong lessons from this episode which is like oh just email a bunch of updates to a bunch of random VCs like every month and like just tell me if it closed by your birthday. So I

just want to I don't know. Mesh is a fiveyear-old company. Yeah. I was the first check in my own company. Like my previous startup, we raised less than a million dollar over the course of six years. So it might look like an overnight success, but uh it took me 12 years to get to this place. And yes, we don't send updates every month and bother investors. It was a year-end update and then uh the situation was also like great because stable coins and payments are soaring from the users perspective and uh I think we were like you're a nice fit as well for the paradigms portfolio uh bas portfolio because we can work with a lot of these portto so it's a symbiotic relationship nice let's maybe get into

the mesh story B because I' I've spoken with folks I've never we've never met but I've met many folks at mesh over the years And I feel like the story uh and the product has really evolved and I it's like kind of close to my heart I feel like because Block Works has gone through so we're in now year eight of Block Works and we've gone through so many pivots. We started as an events business and layered on the media and then research and then data and adding things and pivoting. Um and so I kind of know that game a little bit but I'd love to hear just like the original story of Mesh and and how you came to be the company you are today. Sure. Um we have to go a little bit back before what happened in MASH. Um so uh my my my life

thesis is find a pain for myself and then find the solution for it and if I can find another like thousand people they have this the same pain then we can easily um build a business on top of it. So I have a PhD in computer science and I wanted to always use my coding skills and my programming skills to solve a problem. So my first idea was um that I co-founded a company called No Password. The idea was bringing frictionless password authentication to life. Um and I don't know anyone who loves password.

So it was an easy to understand like this is a pain for everyone. But to do that you have to build a lot of integrations. By a lot I mean like thousands of integrations. Uh so we uh had no money. So we as I said we raised less than a million dollar over the course of six years. We we had to be cash flow positive in the heart of Silicon Valley and we build all all of these integrations and we sold that business to a public company in US. And when I started Mesh um initially was a B2C application called front. you could connect your Robin Hood, your Coinbase, your MetaMask and manage your crypto portfolio in one place. Uh to do that, you had to build integrations again. So because uh we had a lot of scars in our

back and we knew how to build integrations. We're coming we were coming from like cyber security authentication u background. So we were able to build 300 plus integrations across chains, wallets and exchanges globally. Uh and then the moment we rolled that out the usage kind of skyrocketed uh on the B2C application but it was very very hard to monetize and I gathered my team and told them like we have to make money. It's just it's 2022 everything is down there's no magic wand that they can wave and raise money anymore. Uh like forget about 2021 like that's that's gone. So, and then we realized that our real expertise is in building API integrations, building that

connection layer and it worked for us. Maybe it works for thousands or tens of thousands of other founders as well. So, we launched it on Product Hunt uh September uh 2022. We ranked top three that day, landed five customers day one and feel like okay, this is it. We shut down B2C, we pivoted to B2B. And that's how Mesh Connect born. Um and then after that we raised series A and then series B. We have like market customers like Revolute, like MetaMask, Coinbase and others. Um and um and what we are super excited about is the next chapter of mesh which is using that connection that powerful tool that we have for the

payment use case and believe that's the future. Hm. My really layman's understanding of mesh is like you've got people who hold crypto over here like exchanges and wallets and then you've got over here you got the payment service providers and then those people plug into the merchants and mesh sits somewhere in between I think like the exchanges and the payment service providers. Is that generally the right way to think about it? Yes. Uh it's it's exactly like what you said. We call it like global payment network. So there are many different exchanges, many different wallets. Crypto industry is very fragmented. So we built one API that basically integrates all of them.

So when we go to PSPs as a customer like companies like any PSP like PayPal, Stripe, so on so forth, all all the usual suspects, tell them like instead of going building integrations one by one with all these exchanges and wallets to enable crypto payment, just use um one API. And also our pitch to exchanges and partners is instead of you going building integrations one by one with all of them just integrate with us and we basically cover uh all the big names and the longtails as well for you. Uh so it kind of makes sense to be that network for this fragmented space both on the PSP side and also on the on the crypto side. Um and um and the reason that makes sense is um you cannot use wallet address copy

and paste it for the payment use case. The user experience is not ready for the prime time. I call it the grandma test. It doesn't pass the grandma test. So, uh, if you're walking walking to a coffee shop, you swipe your card or your phone, you pay with your like fiat currency, you grab your coffee, you walk out of the store next second. If you if you want to do the payment with crypto, you have to scan a QR code, copy the wallet address, find the right token, find the right network, and then wait 20 minutes for that transaction to be settled and pay gas fees, and then uh then and only then you can walk out of the store. So we wanted to kind of bridge that gap from experience perspective. Uh and the reason that's a pain is uh the market cap of crypto is

4.5 or 5 trillion. Uh market cap of a stablecoin is 200 billion. Merchants want to accept stablecoin. Users owning their assets in crypto. So as a result of that 95% plus of payment transactions requires two or more manual transactions on the user side. So even if even stable coins are not made equal, you might have USDT, the merchant might accept only PI USD. So you have to do that conversion. So it's like the the analogy in the fiat world is you go to Europe with your Visa credit card that you got from Chase or Bank of America and then you swipe it and it doesn't work because it's a US credit card and you have to convert it

to euro and then pay with it. Uh so everything happens behind the scenes. So the consumer behavior requires you to handle everything behind the scene. They just one click, one tap and pay. That's why network like mesh makes sense here. Nice. Even as a sophisticated crypto user, some somewhat sophisticated crypto user, I think my like lifetime send to wrong or zero address is like get is in the six digits probably. Uh and yeah, even before BAM had sort of executed the pivot uh you know to the payments use case really heavily uh upon meeting initially uh it just felt like very obvious that the future of crypto would require better UX and that like the copy

and paste wallet address like figure out what network select like enter to five digits of uh you know specificity like the amount to send like it's just like not sort of an acceptable user experience for widespread option and I think uh uh mesh is a is a pretty serious upgrade. This episode is brought to you by ZKYNC. In 2024, ZK Sync 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 ZKSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy first design. Join over 20 chains, including Abstract, Sofon, and Kronos in the elastic network. Today, behind ZKSync is the ZK stack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zksync.io/mpire. Thanks to zksync for making today's episode possible.

Is it fair to say like if I try to boil it down, bam, into like this is solving one problem, it's the liquidity fragmentation of stable coins. Yeah. For payment use case. for payment use case. Charlie, did you have a framework that you thought about when investing in mesh? It's like this is the Twilio of stable coins or this is the like what what was your framework for investing in mesh? Uh, I think frameworks can be dangerous and you know, no one ever likes to be described as the Uber forex or whatever, but I think if you were to pick one, hopefully uh, BAM likes this one enough. I think of kind of like Plaid for crypto where you know before Plaid you would like pull out your checkbook, you type in like the routing number and the a details. it maybe you would like wait

for them to deposit something for them to like try to confirm that whatever you entered are actually you because you know your private key is your public key and and all of that and then plaid comes along and uh sort of build the necessary and difficult integrations for you to just do like to add uh API services and to make it like a one-click sort of experience and that's not all that match does but I think if you were to like sort of squint and try to make a web two analogy that might be the best one. Yeah. Bam. How do you think about that? Um, we definitely from experience perspective, we're very similar to plat. You connect your accounts, but the difference is plat is more of a generalist in terms of

like or different type of fintech use cases. We want to kind of be more focused on the payment use case. So, I love Visa for crypto more more than plat for crypto. But from user experience perspective, you're more similar to Plaid. You're you're absolutely right, Charlie. Yeah, Bam. Just this is unrelated to stable coins, but just as someone building a you know a crypto business right now myself, how do you think about the future of um like will will it feels like SAS businesses are getting less and less popular and APIdriven businesses are getting more and more popular. Can you just maybe share some thoughts on that?

And I don't know if you even agree with that or not, but No, I I like I love APIs and I think that's the future. Um uh and I think if you add API plus AI, you get best of the best. But um anyways, your question in terms of like transactions versus SAS, we went through the same type of dilemma and challenges to see like what how we charge the users or the customers. Um we believe that we wanted to have the best of both worlds. SAS is very predictable. You can build projection on top of it and transactions can be very volatile but that's where the revenue is the where the volume is.

So you can again compare like in in analogy you can compare like how plat charges and how stripe charges like as per API call transactions or Twilio as you mentioned and then um then plat is just more of a SAS like number of users connecting their platform accounts to the platform and things in that nature. So to find the best of both worlds. So we decided to charge a minimum fee and then there are basically bips or transaction based model on top of it. So if the volume goes to zero, we still have that minimum fee that we're collecting. So we can have some sort of projection and prediction of the future and also at the same time um getting the the upside of transaction model. So when we have more volume uh we will have uh

more revenue into the door. Um, another thing that kind of is kind of dangerous, it might not apply to every single industry. So, we we did a lot of research, we look at a lot of data. One of the piece of information that was critical for us is uh stable coin is not volatile and it's growing super fast. So when you look at 2022 that everything went down, the stable coin usage was going up and up and up to the degree that now we have more number of uh transactions in terms of volume and number on a stable coin and blockchain than Visa card and Mastercard combined plus 7% on top. Uh so that was um that was uh an important piece of information that helped us to kind of build that

model. So shortest short answer is you need to look at the industry to see what is the best fit for you in terms of like SAS or API uh or transaction based type of model. Uh but if I have to bet on one is is transaction. Yeah. Charlie, do you have a framework for how you think stable coin I it's like stable coins are clearly the the hot thing in crypto right now. Um it's funny actually. I feel like everybody agrees stable coins are the hottest thing in crypto but nobody especially the VCs don't know how to invest in them. It's like do I buy like Athena token? Do I buy like a do I invest in the equity of companies like Circle or AESH or um maybe I'd turn that into a question for you like how do you think obviously you guys just invested

in mesh but you know maybe mesh investment aside like how do you think about allocating and investing in this? Obviously it's like it feels like the trend of the year right now. Yeah. I mean at a high level I think stable coins are probably the first maybe the second after digital gold like sort of lab leak out of crypto into the rest of the world and it sort of feels like uh you know it's happening basically. Uh we're super excited about it. I think uh stable coins sort of rightfully deserve uh all of the attention and excitement that they're garnering. I think even with it being sort of the story, stable coins being the story of the year, like we're probably collectively underrating

uh like how disruptive they have the potential to be. Um and you know, I think you're starting to see folks come around that now, like Patrick Collison and Stripe's annual letter, you know, described them as room temperature superconductors. And I think people are sort of starting to come around to the idea of like this is actually like a real sea change in uh uh possibly like how dollars circulate through the economy, how payments are made, how we think about financial regulation uh and all of that. You know, as to how you invest in them, um depends on what you define as a stable coin. Many years ago, we were pretty involved with folks trying to create decentralized stable coins. It turns out those, you know, were pretty tough to scale like D and Maker. um you know obviously to to some degree but um kind of tough um you

mentioned Athena. I don't think of Athena personally as as much of a stable coin at least today. I think of it more as kind of like a structured product. I think Guy is one of the strongest founders in crypto. Uh and I love Athena personally. But when you say stablecoin to me it kind of makes me think the sort of like core uh you know treasury or cashlike collateral custodial stablecoin model um that you know circle and and tether uh are sort of dominating at the moment. Um and then within that you know the issuers how do we think about investing in it? Uh we're super excited about businesses like mesh. I think there's a lot of surface area for folks to build on top of stable coins and and uh make them sort of like more legible and

useful to businesses to consumers to payment ac um so you got folks like mesh you got folks like Bridge and BVNK and the orchestration folks and others and I think that's like a super fruitful and interesting field especially for founders who are more like fintechrained than cryptorained mesh BAM obviously has both but I think it's really exciting that like it's an actual beach head for just really strong talent to come work in crypto without needing to necessarily be like weird crypto people in the way that like we are. Um I'm really excited about that. Uh and then you know I think obviously the issuers are sort of like an insane business uh model like Tether is up there with you know bite dance and

Binance and others is like one of the greatest businesses maybe the greatest created in the last 10 20 years. Um, and I think they're great businesses. I think they're really tough to compete with. Um, I think that there could be some like incremental opportunity for competition at that layer. Um, but it's kind of interesting. you know, currently they soak up the issuers soak up so much of the economics that it does kind of create this gap where you have folks like Mashion Bridge and others working uh you know, closer to the consumer basically and then you have the issuers soaking up all of the uh economics around yield and the collateral and that kind of thing and and it does create kind of a gap in the middle of the

market and I think it'll be interesting to see how that gets filled. That should change though, right? like you know if Circle or Tether is taking the 5% like there's there's no I I think these fee agreements are are already starting to change. I would guess that the you know and like um what is the VANC kid? Uh Agora Agora thank you. Thank you. Yeah like Agora making it possible to kind of like launch your own stable coin like you got to imagine these fee agreements start changing. Yeah, I mean, you know, when you have sort of like one of the greatest businesses, business models at least of all time created, like it in sense a lot of incentivizes a lot of competition. Uh, you know, I think like the law of financial gravity is is that if you have folks making that much money

uh with those margins, like you're going to see a lot of competition and and like I do think there are a lot of folks trying to chip away at it. Um at the same time like stable coins have really strong network effects uh and the regulatory environment is shifting pretty quickly and the issuers uh have a lot more resources a lot more liquidity etc. Um, you know, if you look back on it, probably like the nearest challenger to the Circle Tether duopoly historically was Binance's B USD stable coin. Obviously, that ran into like regulatory challenges, but um I mean there's a lot of people who like aren't even crypto users. They're like just Binance users. Like there's this like insane stat. It's a few years old now, but like at the time that I saw it, it

was like I think over half of Binance's user base like never exports any asset ever. like they're not even like a crypto user. They're like just a Binance user and beyond that Binance is their bank account. It's not like they have a bank account funneling into Binance. It's Binance is the bank account and obviously insane business and they you know themselves tried to bootstrap a stablecoin on the back of their perpetual business and and their entire customer base and everything and uh you know even for them it was a real fight like it it was sort of starting to get going but it was not easy. It took a lot of capital investment, a lot of incentives and so I agree with you that you know they like the issuers should face some competition but at the same time uh it's not easy. You know there's

sort of real real network effects and uh and uh economies of scale at play here. So this episode is brought to you by ZKYNC. In 2024, ZKSync 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 ZKSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy first design. Join over 20 chains, including Abstract, Sofon, and

Kronos in the elastic network. Today, behind ZKYNC is the ZK stack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zksync.io/mpire. Thanks to zksync for making today's episode possible. Bam. What do you think? Uh, so today it leaked out that Fidelity is launching a stable coin. And uh, like you got to imagine this is just the first of like 100 announcements that we'll see this year. Like every bank is going to launch one, every brokerage will launch one.

Uh, you know, I would bet most of my money that Robin Hood launches one, Monzo, Revolute will launch one, and I' I'd even say that I would guess the Facebooks of the world come back into this. Yeah. Start launching them, too. So, what like what do you think this will look like? Will they all have their own? Will it be FUSD and Bank of America USD and, you know, Fidelity USD and Facebook USD uh USDC? or will will they do partnerships with USDC and just get a bigger revshare? Will they launch their own? Will they launch these consortiums like I think uh Anchorage Robin Hood Galaxy came together to do one? Uh what what's this what is the world going to look like here? Yeah. So as uh you're going to see a lot of

fragmentation. Uh I I'm personally a big fan of Bank of America because BUSD is my initial USD. Jo jokes aside uh I think there would be different type of uh stable coins for different type of use cases in different regions. So we might have non US dollar USD uh or so non- US dollar stable coins that can be used for different regions for different use cases. we will have payment type um um like PIUSD or rep USD that they would work on or be more focused on the payment use case whether it's B2 B2B or consumer type of payment um uh and then you will have this general list like

tether circle as well uh will be around as well but the bottom line is it would be fragmented and um and and I think again if you want to offer a unified experience something like mesh can add more value if there are more fragmentation. So overall the way I see it the future is it would be all abstracted from users perspective. You look at your account on Coinbase you have US dollar and part of it could be USDC part of it could be Pi USD or whatever. Uh but from user perspective they they really don't care like what type of stable coin uh the the behind the scene is getting used. they want cheaper, better experience, more

efficient experience, things in that nature. So, it's on to uh it's up to the platforms to decide what to use to offer that optimum user experience to their consumer and end users. So, I know it's on them to decide, but what do you think it will look like? Like, let's say like if you're in Fidelity shoes, do they do it with Agora or like an M0 or do they partner with USDC and try to take more of the revenue? Would you do it with Tether? Would you just launch all like I I yeah how how would you do it if you were in their shoes? I don't think they will partner with uh Circle and Tether.

They will use M0 and Agora to do that. Um because they need that uh white label service to offer like this is Fidelity stable coin versus USDC and UST. They have a horse in the game. They want to kind of be more focused on their brand versus just diversifying uh on that end. So So we'll have hundreds of these stable coins, right? And they're all called Yeah, we now we have a states like state of Wyoming wants to issue their own stable coin. We will have countries issuing their stable coin and we have banks and brokerages as you mentioned.

So um it would from user experience it's we're going through like a hell period before we Yeah. It's funny even doing Charlie I'm sure you guys see this all the time like on the uh just the on the angel investment side like it used to be oh just send me a wire then it became send me a wire send me tether then became send me a wire send me tether send me USDC then now it's like all right we we accept USDC on base ethereum and Salana we accept tether here we accept uh pyusd as well so yeah it is this little period of hell before uh it all gets smoothed out I I'm very hopeful that we will sort of make everything work. I mean, if you rip back the hood

on like the traditional financial system, there are some incredibly great and valuable business build businesses built basically like turning just a you know a real really bad really messy situation into something that's able to be consumed by APIs and and you know look seamless to consumers and I think the same thing is going to happen in crypto but sort of like across the stack how many assets are issued how many chains they exist on you know how many wallets uh different consumers are using or exchanges and funding methods and blah blah blah.

Like I do think we're kind of in for it uh you know for the next year or two. Yeah. Who will be the winners of this? Uh maybe Charlie I'd throw this one to you and then Bam. I'm curious to hear what you think too. Uh stable coins or fragmentation generally? Well, let's say you get Fidelitycoin and Facebookcoin and Robin Hoodcoin and all these things. Um are the are one of them going to win and they have the distribution so they'll just overtake USDC and USDT? Will USDC and USDT be the winners? Who who wins in this whole game? So, I don't know. Um, if I had to pick an existing player that I think was most likely to emerge as a big winner or like at the top of a power law, it would be Tether because I think the last mile

distribution that they have is is subtly, you know, incredibly difficult to compete with. Basically, um once you reach like a certain level of liquidity and distribution, um you just sort of organically start to spring up like you know the like gas station uh cash in cash out uh or Hala networks or whatever. And and I think Tether is like a lot farther along that curve globally than any of the other competitors are. Um and I I sort of have an inclination that I think they're probably likely to retain that position at least for a while. Um, I think when you get into sort of like US specific stuff and especially like more regulated use cases like collateral for derivatives, um, you

know, payments internal to the United States and and this kind of thing, um, or less global, it's a lot less clear. I think like the banks have a somewhat credible story. The fintexs probably have a slightly better one or at least have another credible story. Um, I think it'll be really interesting to see how USDC responds to this because that's sort of their um, you know, current core lane or whatever. Uh, like a bit more regulated, a bit more US- ccentric. Um, so I don't know. I I don't I don't know who will win there. Um, but I I expect Heather to continue to be an important important player, especially globally by the guest today. Bam, what do you think?

Uh, I agree with Charlie. uh but I've seen u a lot of news about like compliance part of tether like what happened in EU what's happening in US so they need to fix that compliance part um uh to kind of retain their global leadership uh I I I I can I can pick a winner on the on the payment side I think uh for pay specifically for the payment use case I'm very bullish on PI USD and also emerging one which is Ripple USD um because the these Ripple and PayPal they're payment companies they already have the distribution.

PayPal has 400 million users. So um uh they can basically become the payment currency of the world. So if you want to pay for global payment, you want to pay with the stable coin uh you will get basically mandated or forced to use this stable coins because they have the distribution with the banks with the merchants uh globally and uh they can be they can be the leader on that end. Uh what's the reason for Ripple USD? I feel like mo most folks would take the Yeah, most folks would be surprised by that answer. I feel like yeah, at some point like based on the onchain data, repo was a big chunk of what USDC was kind of getting used. So now they started their own stable coin. They do a lot of B2B payment. So most of the USDC

was getting used in what the Ripple network. No, the Ripple as a company was using a stable coin for banktobank transfer, right? And then they were using USDC and then they started um and this is like maybe five years ago not not today market but um they started issuing their own stable coin. uh Ripple has a lot of uh volume that they need to move instantly globally and uh they will be using so far they were using XRP which was not the best use case for XRP because it's volatile in terms of the price but now they're going to use repel USD on top of XRP ledger or other L2s um as a result of that they get high

transaction volume maybe low number of transaction but billions of dollars in transaction volume that's how they can basically become and most of these use cases are payment use case but mostly B2B PayPal is B2C payment if someone wants to buy a pair of shoes or t-shirt online they will pay with um crypto and then behind the scene everything will come be converted to a stable coin you know Jason if I had told you six years ago that most last mile USDT usage would be on Tron you probably would have said that would be surprising too but you know sometimes these outcomes surprise us it's true and it doesn't go away still it still happens Yeah, I wanted to take a moment to tell you about Focal by Falcon X, the AI powered insights engine built for institutional

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Learn more at askfocal.com or check the link in the show notes. Thanks to Focal for making today's episode possible. Hey everyone, Jason here. Earlier in today's episode, you heard me mention the weekly CIO memo from Bitwise. In an industry as hectic, fast, and complex as ours, it's incredibly hard to get an easy, nononsense stream of what's actually moving crypto. The memo comes from Matt Hogan, Bitweis's chief investment officer. He's been on the show before, and he has this amazing ability to take the most complex topics and break them down with clarity. Trust me on this one.

The Bitwise weekly CIO memo is really worth the five minutes of your time. Check it out at bitweisinvestments.com/cio memo/mpire or just hit the link in the description of today's episode to get started. Carefully consider the extreme risk associated with crypto before investing. Hey everyone, Jason here. Wanted to uh just take a quick break and highlight everything that's been going on in the Mantle ecosystem. In just one year, Mantle has seen its TVL surge by over$1,100%, now reaching $1.69 billion. That's just such a crazy amount to think about. More than 225 protocols have made Mantle their home,

while the platform's ecound has invested $ 38.5 million in 51 pioneering projects through strategic partnerships with Bybit, including Mnt as collateral, supporting Athena to scale and the first Ethereum L2 to integrate Ono Finance. They just continue to be on the bleeding edge of L2s. Be sure to stay up todate with what's going on by giving them a follow on X at0xmantle. Special thanks to the incredible Mantle team for sponsoring today's episode. There's two like paths of stablecoin adoption. There's like, oh, everyone in the world is going to like use stable coins at the gas station and like at Macy's and like at the grocery store and things like that. It's like

instead of credit cards, maybe we move to stable coins or some something like that. That one's a little tougher for me to see. Um, but then there's the corporate adoption, uh, which is all all corporates just basically stable coin to stable coin. What gets you guys more excited right now? I mean, when you say, you know, you're using credit cards, like I I feel like a very privileged uh, US person, like I've got a credit card. It like works pretty well. That's correct. Most people in the world do not get their credit card. Uh, so I think that that's one factor. And then you know I think the more interesting question is like what are people settling their bills in on the like what are consumers settling their credit card bill in. Um probably um I don't necessarily I don't expect credit cards to go away in the US definitely but um I

think there is like a pretty plausible case that you might at the end of the month instead of like autoacing uh settle up with your bank in a stable coin. I think that there's a plausible case that banks will do a lot more settlement especially crossber in stable coins. I think there's like a pretty plausible case that when you go to Europe uh and you pay for something the underlying FX route that's taken um you know is over stable coin rails or or uh markets um and so I don't know I I sort of view it as both a commercial and a consumer uh innovation basically agreed I think the prominent use cases for stable coins are crossber as of

today. But again, we are like all privileged living in US or credit card works everywhere. Some people don't have bank account as you mentioned. They have Binance as their bank account. Some people don't have credit cards. Um and they were just using basically the debit card if they have access to it. Uh so there are hyperinflation areas uh or regions like Turkey, like Colombia, like Venezuela that they have to um have a stable coins because if they hold their assets in fiat currency or their their fiat currency, uh it would lose its value 40% 50% a month. Uh so they they have to get paid in stable coins. uh and and they would pick merchants that they

accept stable coins as a result of that because they don't want to go and do the FX every single time. So as a result of that merchants because of consumer behavior has changed they are offering stable coin in those regions. Uh the other piece is like if you're seeing in the news like Ferrari or Lamborghini accepts like Bitcoin or crypto. So luxury goods has a lot of um uh requests for crypto payments. Uh so we're going to have like one big announcement u soon on that end. Um and then there would be like some global uh businesses like Starling and others that they want to accept the stable coin. I'm sure at some point like companies like Netflix or Amazon that they're global uh they have a global presence. They need to leverage

a stable coin uh to be able to collect fees and collect uh all the payments from their customers. Uh and then companies like wise crossber payments uh they would definitely use a stable coin that's like a killer app for them uh instead of just going the FX route or like managing parallel books in different regions um is so 1990s we have to we have to change that. The way I look at it in general perspective which could be could be an interesting angle for your audience is what happened in cloud will happen in stable coin. So cloud computing like when it came it was just mostly tech a start over using it. Uh there was like a bit like if you go and say to bank that

you have to host your data on a cloud. We say like never ever ever never. Same thing kind of happening in the stable coin soon we will see all these banks um uh they were like using regulation as an excuse but mostly was like the reason that we're comfortable with what we have why should we change it but the competition is coming after them. So they have to adopt new technologies like a stable coin. And good good news is blockchain is free. It's global. You can use it day one. There are a lot of tools built around it. So it's easy to leverage a stable coin compared to building it in house. Uh so the same analogy that work for cloud will will be used for for stable coin and blockchain technology. I I like that cloud analogy because there's some crazy stats that I

don't have on the top of my head. like it's like only 20% of companies right now have moved their entire stack onto the cloud. They're still like very like onrem like a lot of the Fortune 500s are very like onrem still and not in the cloud but still the size of you know AWS, Alibaba cloud, a uh you know Azure, Google Cloud are still obviously absolutely massive and I think the same thing is with uh with these stable coin businesses like you can create so many unicorns or decacorns or you know billion dollar topline however you want to measure it even if the uh the market share or like the penetration is only like 5 10% because the TAM of money is so so so large. I call it terraorn.

Terraorn. There you go. Mesh. I'm going I'm going to I'm going to trademark it. But yeah, so um uh I I totally agree with you. So in terms of like but think about the cloud side for a second. A company like Bank of America might still have everything on PERM, but they're using services that they're running on cloud. They might use Salesforce or Slack and others, right? 10 years ago that was a big no no. Like they would they would go to all these software and service providers and ask them to build something for them to keep it on perm.

That has changed. Same thing will happen for blockchain. You will they might not build their own chain initially, but they will use a lot of blockchain based services. Charlie, what chain is all this going to happen on? That's a tough one. It's a tough one. Uh I'm currently in a multi-chain headsp space, I think. Um did that flip like every six months or is that like your your thesis? Uh I wouldn't say that it's a thesis necessarily. It's more an observation that I think talent is surprised like really diffuse at this point. Um there's a lot of ecosystems at at this point with really high quality uh teams building the core

infrastructure and really high quality teams building companies and apps and and and infrastructure on top. Um and it just doesn't feel like they're going to go away basically. I mean like if you go talk to the Ethereum people it's like pretty clear that they're very committed to building their thing and I think uh have a lot of um uh interesting avenues forward in that. Similarly, if you go to the if you go to a Salona conference, like I just don't think that those people are going to like stop working on the thing basically. And I think they're really high quality. Um, you know, similarly, there's I mean there's a lot of pockets of talent out there at this point basically. Um, and you know, in the very long term, like maybe this collapses, but at least for like the next few years, like it just seems

pretty clear to me that these uh these people are all going to keep working on their stuff. And I I expect a lot of them to be successful. Yeah, I totally agree with Charlie. I think the the if you go to Breakpoint or ETC, you see like a lot of win or die mentality. Um so um they are like dying on that hill to make sure that it's going to be successful. But from my perspective, I'm old enough to see what happened in web two is kind of happening in web 3 as well. So the analogy I use on the web two side is programming language, right? like there was always like C and Java and then like there were a lot of like front end versus back end different type of stacks. Uh those type of fight um happens and it's good for the industry

because as a result of that we will see more quality products coming to the market. That said it will be all abstracted from end user perspective and people are building on top of application layers especially with the AI coming in. These are all tools and these are like basically shovels and and things that you use to build things and it really doesn't matter for the person who is living in that house that you're building. They just care that it is built. Um so uh and I agree that it would be there wouldn't be one winner take all. Um it would be a multi multi-chain uh universe. Okay, let's say there's three reasons why an institution like a bank or brokerage or someone

hasn't adopted stable coins. Bucket one is the tech is not good enough. Bucket two is the policy and bucket three is like the brand of crypto. How would you so the tech the policy and the regulations and then the crypto is like kind of crappy brand. How would you bucket those? Um I think policy is number one and uh when so the way I answer it in the from the mesh perspective is we are building rails uh and there are a lot of companies and people are willing to use these rails.

If you're a risk average person you say like this is not safe for me yet to be able to use it. Uh so regulations acts as a core rail. at the moment they become available we can implement them. It makes it safer for more risk averse institutional adoption and they they will come in as well and use your rails. Um and same same for crypto. I think we past the point that crypto was a is a bad uh brand. Uh it was like maybe five years ago you could say this this but stable coin kind of changed everything and luckily the new admin and new regulation coming in changes that. So I I put that as the third p bucket as I I don't think it's relevant anymore. But

second piece is the technology right. So if you are a bank in I don't know in um Midwest and you're a union bank you have to compete with Coinbase with mesh with all these big tech companies to hire web three engineers. So that would like it's a limited pool of resources for people who know the technology and who can build for you. That will change of course uh in the next five to 10 years but initially would be a tough competition uh that banks need or financial institutions need to win. Um Charlie maybe as we think about wrapping up I'd be curious just to get a bigger macro view from you. Um how are you thinking about 2025? I mean the market's been very weird. Feel like the four-ear

cycle is kind of breaking or it's very much intact but it's like this lag in the middle in the middle of a bull market. Like I think everyone's just kind of like what's going on in this market? Not just in crypto by the way, like a lot of uncertainty in the broader global like equities markets too. Just curious how you're thinking about 2025. Yeah, I mean I think in general we're pretty fortunate not to have to think on super short time frames like a lot of the stuff that we talk about internally is uh how much do we feel like is getting built? What's like the quality of talent that we feel like we're encountering uh in crypto or that's coming into it? um you know, how excited is like the next generation of super smart uh college students and and kids and such feeling about crypto? Uh and on

those dimensions, I think we're feeling pretty good. Um I think there's a lot of work to do. Um I think we have some sort of plausible paths to like making crypto have the kind of substantive impact on the world that like a lot of us have wanted to see it have for the last decade or longer. Um, I think like the quality of talent uh and of founders in crypto continues to go up. Like the bar from our perspective feels like it just keeps getting higher each year. Um, and I think that's actually like really exciting honestly. um you know with BAM I think is in sort of what I would consider to be the new class of founders where uh he might be like a bit more uh sort of commercial uh and I don't know

just has pretty high clarity on wanting to build like a a large business and like what the path there might look like. Um, so I don't know on all those dimensions we're like super excited and there are some specific areas like I think uh alongside stable coins personally like the real world asset stuff that's happening I think is super interesting. Um I think people probably underrate the quality of DeFi infrastructure that we've been able to build. Meaning like I think the actual markets and uh dexes and lending markets and all that kind of thing that we've been able to build are like actually surprisingly good. And I'm like I'm personally pretty excited about if we could get a lot more high quality assets onto those rails. I think that would be like really interesting and open the aperture a lot of like the kinds of

activities that you can see happening on chain. Um, you know, put another way, like if you have uh super economically productive uh, you know, equities or debt or whatever that are being actively traded and repackaged on chain, like I think the sort of accessible space of like interesting products is just like a lot larger than it is for memecoins, which look down on or anything. It's just they're, you know, simpler assets in that sense. Um, so I'm pretty excited about that. I feel like that could be uh I feel like that could be another avenue where where you see a lot of um a lot of excitement and and entrepreneurial activity and stuff in the next year or two. Bam. Do you think the uh how do you think about Charlie's statement that like the type of crypto

founder is changing? Because you actually strike I mean it's clear you have a lot of like API experience and fintech experience and stuff like that. But I mean you do strike me as like pretty cryptonative. And historically I have seen most founders who come from outside of crypto try to build in crypto. If they if they don't get cryptonative pretty quickly they do not make it and I wonder if you think that is going to continue or or change. It is changing. um not only changes for founders, it's just crypto would be an underlying or blockchain would be an underlying technology that a lot of these companies are able to use that in the application layer. They get all the benefit of the crypto, none of the complexity. Uh, so that is changing and the reason that a profile like me is

more interesting for a person like Charlie or in general I'm using it as a theme or as an example for a for a thread is because a lot of these web two players are moving to do things on chain. So the opportunity is getting bigger and bigger for founders like me to be able to build and bridge the gap between web two and web three. So my uh suggestion uh and a humble suggestion for other founders is there is no better time to build for uh uh crypto and a stable coin and payment use case. Um if you have an idea, go and build it. Um don't feel like it's too late. You're just the beginning of this journey and uh in the next 10 to 20 years is going to be quite interesting for everyone who

is building uh uh in in in that realm. um might be and might not be as interesting as AI but also is much much simpler in AI in terms of like you can build real world use cases uh with couple of tools you don't have to have the best experience or knowledge to be able to do that so I encourage founders new founders to start building in this space nice Bam Charlie appreciate the time guys thank you thank you sir [Music]