Yuki Yuminaga on Why Tokenized Assets Are Broken Onchain

Transcript

All right, you guys. We're live in the tokenization tower with a 10 bin co-founder Yuki Yumanga. Yuki, it's good to see you again, man. >> Good to see you, Andy, as always. >> Welcome to the tower. >> Yeah, thank you very much for inviting us. I I didn't know it was live. I just came in and I was like, "Damn, this is an amazing setup Andy got here." So, yeah, thanks for inviting. >> Thank you, Yuki. Thank you. Well, we brought you here today to talk tokenization. I think there's a lot of information that we can talk about and share and just kind of help educate people. I put out this tweet today and I'm going to pull it up. I just showed it to you and I said, "If the tokenization thesis is correct and trillions of dollars of new assets move on chain in the coming

years, which company will benefit the most?" What would you What is the right kind of like mental model to think about the beneficiaries of this massive asset movement on chain? >> Yeah, so I think I will break it down into two level. One is the issuing side of things. Obviously, if you bring those asset on chain, well, issuers are also going to be doing a lot of work to make that happen. And so, if you ask like, "Okay, what is the biggest beneficiaries?"

Well, issuer will have to be one of them. Same as like stable coin issuance. Like, Tether is one of the biggest company because stable coin is the biggest biggest asset on chain. So, I would say that issuer is definitely one of them. But, there's also another sort of like the downstream beneficiary of that, which in my opinion is sometimes might be overlooked, is the lending protocol. >> Okay. >> A lot of the time when we think about like asset tokenization, we should be asking ourselves, "Why do we tokenize this this asset?" And I think my general thesis around tokenization has been that we should tokenize assets that any assets that people would like

to hold. That people would like to keep in their positions and maybe for, you know, hedging their macro exposure or hedging their US dollar exposure, whatever that might be. Some some assets that they're willing to hold. That's what I think is an asset that are good to be tokenized. But if you also have an asset that are uh good to hold, you'll generally create incentive for people to collateralize it. And that's when the lending protocol would come in so that people can use those DeFi existing DeFi venues like Morpho or Aave Horizon or even just Aave probably to collateralize those tokenized asset and then do more strategy on top of it. Whether be using that to finance their strategies on

chain or whatever that might be. So, my my general two take is one on the first level is the issuers that would obviously benefit from issuing those assets. And then two are the downstream uh protocols that enables those assets to be collateralized like lending protocol for example. So, that those two are where I think is probably the where the most of the benefit will go. I would just add one more thing is that exchanges. Because I think the first point that people will be thinking is that, oh, well, exchange should also benefit from that. And yes, they would.

But if you compare that to the extent of like, let's say, the perp trading volume that is happening on RWA assets. Like oh and and maybe even some of the like meme coin and those crazy volatile assets. Like arguably exchanges benefit more from very volatile asset exposures. But on the other hand, for assets that are very volatile, it may not be the best asset to hold on chain. There's reason why people consider gold as like the the the the value value preservation because it holds value. It it doesn't just drop like 20% a day. And I think, you know, there's there's there's that aspect of like the nature of assets that

makes some of those like, you know, asset tokenization to make a lot more sense. And so, I think exchange does benefit, but I in my opinion, like exchange already have perps. And I think perps to a very large extent already benefited those exchange without even tokenizing those assets. Yeah, so I think I I consider these two as a kind of a separate dimension. Yeah. >> Okay, so from the top, issuers and the kind of like lending protocols or the DeFi protocols on chain that are recipients of those assets coming on chain, boosting their TVL, allowing people to collateralize them, borrow against them, loop them, use them in

whatever platform. And so, is it fair to say that the mental model that we've been having for valuing on chain protocols um is been restricted to just in the crypto asset landscape? Like like our mental model is like you have ETH, Bitcoin, and stablecoins as the collateral assets and, you know, a handful of others, and that is what the market size is. But you're saying that if this thesis comes true, the market size is not just going to be the crypto assets, it's whatever assets we can tokenize and bring on chain, that will be the new market size or the new TAM for these on chain protocols.

>> 100%. That's That's the future that I'm trying to fight for right now because and and and this kind of get into like a lot of the the core problem that I see in the market right now, which is that you you have a lot of tokenized assets that are ranging from, you know, private credits to tokenized funds and then to commodities and and many many other type of assets extending from that. But one of the biggest problem with those assets that is sitting on chain right now is the liquidity of the assets.

Um the price discovery and the main liquidity sources has always been sitting off chain in the traditional markets, which is where most of the institutions are hedging their positions and holding their balance sheet right now. If we going to see a future where those tokenized assets are going to come on chain in a way that start to make sense for people to allocate those capital on chain, we have to make sure that we can at least even the playing ground between the off-chain liquidity venue and the on-chain liquidity venue.

And right now, we're not there at all. We're we're very far from that. >> Okay. Okay, so practically speaking, this looks like whatever the liquidity depth is across a certain, you know, pair of markets in the traditional NYSE, CME, etc. You're You're basically saying our goal as an industry with what you're building at at 10Bin is to basically equal this. Make these as equal as possible or as close as possible. >> Exactly. So, as close as possible in in in terms of both the pricing of the asset itself, as well as the liquidity of the asset. Now, let me start with with the pricing part. So, um

for for a lot of the market maker who are observing the the market very closely, they might know this, but uh a lot of those tokenized assets, some of the biggest one, like for example, tokenized gold, right? They're they're the most like famous, notable one out there. They have been notoriously been traded um either in a discount or at a premium against the actual market price. And this this kind of premium is not like just, you know, 20 bips or whatever. It it can be anywhere in the range of like 1% potentially. So, it's a really significant one. And I think until like last week, I I I remember Tether Gold was trading at around like 1% below the market price. So, a lot of this is caused by the frictions associated with

the the tokenization procedures of the existing assets. And these procedures can include like, okay, how long does it take to settle the trade? Like the market maker will put the money into the the hands of those issuers. How long does it take to get that tokenized asset back to the hand of market makers? Every seconds, every hours that take to get the asset back to the hands of market maker is opportunity cost for the market makers to use that capital to make money elsewhere. >> Of course. >> And on top of that, they may have to even pay a half a percent to either mint or maybe redeem the assets. And that basically start also eating into the margin of market making businesses of making this asset liquid on whatever exchanges that they're market making.

>> Mhm. >> So, that kind of like you see like the pricing and the liquidities are extremely intertwined in a sense that the the way in which this tokenization happens on chain would directly impact how this asset how liquid this asset is and how the asset will be priced on chain as well. >> Yeah. Yeah, and there was actually a recent article, I think it was in the Wall Street Journal or a a similar post about kind of how institutions are actually kind of like resisting this 24/7 trading because they have to kind of redesign their infrastructure for fast for you know, instant settlement for not T+1, T+2. And so, this article kind of went on to say that it's likely

that retail will be kind of the initial users of this kind of 24/7 trading. And then eventually institutions will kind of get on board. I feel like this kind of goes hand in hand with what you're saying here, which is that there are all these kind of liquidity and reserve management issues that happen when you tokenize hard assets. So, for example, right? Like when you're tokenizing gold, you know, you have your gold stored in a vault in Switzerland somewhere and you get this kind of note. Maybe you could just like walk us through like like what is the tokenization process right now for hard assets? And then like where do you see that as being broken?

>> Yeah. So, um I guess I wouldn't necessarily say it's like broken in the sense that, you know, TradFi has been dealing with this for like many many tens of decades of, you know, so so in in a TradFi standard, I guess it might not necessarily be broken. But to kind of answer your question, um yeah, like you would have basically um either put in the you can either put in the physical good like in the case of gold like physical gold or just give the USDC and then they the issuer would take the USDC, purchase the gold uh from the brokers, uh and then will store it either in, you know, the the the the Switzerland uh custody that they have uh or recently there's a new new one popping up in Singapore. There's

a bunch of like gold uh physical custody uh solutions out there and you would just like store there and then you would reflect that storage in a form of like tokenized asset and then you would basically receive that. Now, this process uh depending on how big of the order is, if the order is like relatively small, they might be able to do it like maybe in less than like couple hours, for example. Okay. But if the order is like big, then it might take like 1 day, maybe even longer, 2 day depending on how big the how big that order is. And and when I say big, it's not even like like crazy big. Like it could be above like few million dollars, then they will start to have to do this entire processes and then it can't take like 2 days, 3 days to settle that trade. So,

now in terms of like the broken part, um the reason why I think it's extremely broken is because you have a market that is already very liquid for those assets. Like gold is one of the most liquid assets. Like no one should argue about that. But the reason why it's not liquid on chain is because every time we bring those assets on chain, we are re-bootstrapping the liquidity on chain at the same time. We're like, "Oh my god, we have this tokenized gold. Oh, let me bootstrap an AMM liquidity. Oh, we need to incentivize the LP so we can get like $20 million sitting on the LP pool doing nothing."

And And And the reason why I say doing nothing is is not not because like they actually don't do anything. It's just because the the price of gold doesn't move that much. So So like compared to like some meme coin, the LP won't be able to make as much like LP revenue, you know, right? If If If there's not that much trade happening. So like them putting their money there is like strictly, you know, negative return if the if the volatility is not that high. So anyway, that a lot of this like incentive cycle, if you if you just kind of follow the path of logic here, you'll realize that re-bootstrapping LP on chain and liquidity on chain is insanely challenging. And this is what Tether and Paxos have been doing already for the past, you know, 5 years, right? Half a

decade already. And yet we haven't really reached a point where the liquidity we can ever say is the same off chain. So that's why I think That's why we are trying to basically come up with a better better solution or different solution so that we can provide alternative pathway to to access that that liquidity off chain and then we can, you know, hopefully facilitate a better tokenized assets that can be more efficiently used on chain across like lending protocol, DeFi protocol, etc. >> Okay. And I'd like to get more into Tenbin exactly what you guys are doing.

Before, I'd like to do a just quick education and kind of ask, why do we even need to do this whole process of tokenizing these assets, bringing them on chain, having their represents representation on chain, why can't we just trade perps with them? Like I guess you're saying that there's a collateralization, there's this capital efficiency unlock. Like walk us through like the perps to direct tokenization spectrum here. >> Yeah, yeah. >> I kind of like why do we need tokenized assets? Like why is something that is actually important?

>> Yeah. This is actually a a great question because I, you know, before I started Tenbin, I also asked asked myself a lot in terms of like this like perp question. I think one of the biggest reason why I believe tokenization is very important and I kind of alluded this earlier in the conversation is the store value. Like if if I think that the asset is a store value, like Bitcoin is one example, um I might be using perp to speculate the short-term volatility of the assets, but I won't be using perp to hold the net worth of that assets on my balance

sheet. Like I wouldn't be comfortable if I had >> have like a 1x long, 1x short on something. >> Like I wouldn't be comfortable if I had a 90% of my net worth sitting on a 1x long position on perps, right? Because anything could happen on perps. >> Understood. >> And and we have seen that many, many times already. So I don't think the market needs a better educations on the danger of perps and why you shouldn't hold 99% of your net worth in perps. And if you are, you should be diversifying some of that capital, I think. So that's why I think the tokenization part would really shine here.

>> Yeah. And so when it comes to tokenizing equities, there's kind of a whole nuanced conversation to be had there about ownership, about rights. But as far as what you guys are focused on at Tenbin, is it more around gold? Is it more around metals? Things with less kind of like equity-like nuances or >> Yeah. So, um we we we are actually currently focusing on uh precious metals, commodities, and a yield-bearing FX assets. So, like like like a like a non-USD uh currencies, etc. etc.

Um and I and obviously like I I say yield-bearing because a lot of those non-USD assets are very yield-bearing uh to varying degree. So, so yeah. And that's also very exciting uh product that we're trying to trying to bring on chain. Yeah. >> Yeah, I mean let's talk about uh tokenized gold, right? It's had this It's had this huge run in terms of price and in terms of kind of like overall usage on chain. Let's talk about the tokenization process that you're trying to implement here, right? From what I understand, it's this kind of concept of tokenizing the CME future contract of a given hard asset rather than actually dealing with the physical of it itself.

>> Yeah. >> How does this work? Could you kind of unpack the mechanism of tokenizing CME futures and what that means? >> Sure, sure, sure. So, um uh to to kind of like uh give some uh example here, um what we are doing uh at at as a as a Tenbin protocol is effectively providing users the spot asset exposure to whatever commodity, precious metal, FX assets that we bring on chain, right? So, it's all spot exposure. However, we will, instead of holding the spot asset in the inventory in a in a in a custodian, which takes a huge, you know, drags and settlement delay, what we do is we would effectively hedge those

positions uh immediately, near instantly, on CME futures, which we set up the account for. And and by doing such hedges, what we can do is that we provide those hedges and and this obviously depending on the asset, they would have a different basis premium or discount associated with the with the pricing of the assets. And if it is if the basis is is above the spot price, that's called premium. If the basis is below the spot price, that's called discount. And depending on that asset, it would have either premium or discount. And what we do is basically we manage that

premium and discount. Sometimes, if the asset is is is basically trading at a discount on futures, that discount would effectively be translated into a yield for the assets because the discount would over time converge to the spot, which is called a basis decay. It's a it's a it's a phenomena on the future side. And we will capture that decayed and that becomes the yield for that tokenized assets. On the other hand, for premium, premium will also decay eventually to the spot price, but this premium is effectively a cost that we have to bear as a as a protocol to perform those hedges like like like a like a hedging the the gold price on on on CME.

This basis is something that we will effectively cover by using the USDC collateral that user would deposit on chain. So, at all times, the protocol would be kept one-to-one in value between the asset that is tokenized in spot spot value and the collateral that we hold in USDC value. So, every assets that we hold on on chain off chain would be backed by USD and USDC. And some of the premium premium basis premium would effectively be covered in full or in part by the yield that we generate. Like a let's say I don't know whatever T-bill rate or some

some some low risk rate that we generate on chain with the USCC that we hold on the protocol collateral. >> Okay, so effectively the strategy is you never have to actually own the physical underlying. I'm a user, I come on, I want to have $10 million of tokenized gold exposure. You're able to provide me that exposure in price up or down on the beta of that, and you're basically running a strategy that is hedging any excessive volatility in gold and using the the premium or the discount to either

pay to own that contract or get paid to own the contract, and then you're taking the stablecoins that I would deposit into the protocol and using those in you know, low risk treasury instruments. And so you're providing me with the upside or downside of that asset that I want to own and then like a receipt token as well. >> Yes. >> That's right. So you will receive the token and then depending on the assets, it could be either yielding a very low amount of API or yielding a very high amount of API.

Now, to give us some example here. >> Yeah. >> Gold is known as notoriously one of the higher premium assets on on on futures. >> So more expensive to hedge? >> to hedge. And and what that means is that the the prospective yield on those on those assets by default is going to be pretty pretty low. Like it's it's not going to be anything crazy. Like if we can, you know, offer anywhere in the range of 0.5% or 1% or whatever, like that would be great already. Because typically if you go to like a if you actually lend out physical gold, you may get like 2 to 3% per year, but you will have to lock up the gold like for

like half a year to 1 year lock up period, which is not liquid. So, um we're we're not doing that, but we might be able to still offer like a little bit of like a little bonus yield. So, it's like it's like a really small, but better than nothing kind of things. For something like um Brazilian real or or some of those like other currencies, they natively have a lot of yield. Like Brazilian real T-bill rate is sitting around like 14% right now. And so, that yield uh is effectively what we will be able to capture with our uh hedged CME positions plus the on-chain yield combined we'll be able to get roughly around like 13 to 14%, and that will get translated back

to the yield for the asset holders. >> Right. >> And this uh and this is not only just Brazilian real. We can do with the Mexican peso, Swiss franc, euro, whatever uh assets that we decide to pursue. Um and this is very exciting because now we we not only have an assets that are I guess yield bearing to whatever degree, uh we also have an assets, and I think I haven't got to that part yet, but we have an assets that can be liquid uh immediately on chain. I think that's probably the most important uh value proposition that we're trying to provide as a as a asset tokenization protocol.

>> Okay. So, couple questions here that come to mind. First, how does this break? Right? Like um we have a scenario where there are excessive volatility in an underlying asset that people want to uh hold through Tenbin, and they want to pull out, they want to sell, they're you know, kind of freaking out about the price. Yep. You guys didn't hedge enough or you had or you hedged too much like I know you thought about this like where where does this model break? Like if there's too much volatility, if you guys spend too much money on hedging, pay too much in premium, then you guys kind of lose money over time. Or is or is there like a catast- like like what is the

what is the thing that you're worried about from the risk management side of this? >> For sure. So, obviously what like for any asset issuance protocol, one of the biggest concern is bank run, right? People will be like, "Oh my god, assets depegging." Like everybody start withdrawing the capital, etc. etc. So, let's kind of just walk through what could be the possible scenario here. So, for from our protocol side, we we we basically optimize for maintaining that USD USDC collateral as much as we can, we will keep it in the form of USDC. And this is something that hopefully we can uh you know, people will be able to use

more uh more frequently in the future, but we are effectively trying to maintain as much of the USD uh collateral in the form of USDC. Mhm. This enables us to effectively redeem uh those uh let's say tokenized gold or whatever assets back to USCC atomically and instantly on chain um up to let's say 70% of the entire protocol TVL. If you have a hundred million dollars, we will be able to process potentially like 70 million dollars of the redemptions.

>> Mhm. >> Let's say in a in a day or so. And and this is something that we will try to achieve and and optimize into the futures where entirety of the protocol or close to entirety of the protocol can be maintained in the form of USCC. And that way we can offer the on-chain liquidity as fast as possible, faster than anybody that is available in the tokenization space. And that's also one of the things that we're trying to optimize so that we can uh we can we can basically process any of those like redemption withdrawal demand as fast as possible, as instantly as possible. Now, in a normal circumstances where there's no that kind of like, you know, bank run type of scenarios, what we offer by default is that any minters,

redeemers that are working with our protocol, a lot of them are liquid funds, market makers, etc. They will be able to receive atomic minting and redemption of those tokenized assets up to like a quite a big size of a margin. And that is what we provide. And this is very important because once you get an once you get access to atomic redemptions, that means that now you you you let's say you're a liquidator on Aave or Morpho, you can liquidate a big big size of the underlying tembing as a collateral that is that people used to borrow money, they can

basically liquidate all of it near instantly, atomically on Ethereum. And that's that's the kind of like the the the the property that we try to provide for our tokenized assets. And that is also another way of saying that we want to reduce, if not eliminate, the reliance on AMM liquidity as much as possible. Like we frankly we do not want to rely on on those AMM liquidity because I've seen and I you've seen with the the Aave USDT swap as well. Like like I've seen a lot of the crazy that happened with those AMM swaps in large size and it just doesn't doesn't work.

And I I don't think it, you know, if you're going to bring like hundreds of different assets tokenized on chain it's going to be even worse. >> Yeah. Yeah. >> Yeah, so you just want to avoid these kind of endless derivative tokens of tons of different tokenized assets and then having to create a liquidity pool for each and every single derivative. >> Yes. Yes. Yeah. >> Yeah. So we want to try to avoid that, yeah. >> And so basically your platform would be the only venue to mint or redeem these assets. They wouldn't go trade them on any external exchanges, but they could use the receipt token or that or that tokenized asset in other DeFi protocols as you kind of work through partnerships and integrations there.

>> Yeah, so the only secondary liquidity venue that I'm actually very excited to push is Autobook. >> Okay. >> Yeah, that that's where I think in general like long-term we have the solid atomic liquidation guarantee from the primary issuance protocol and then we have the Autobook exchanges, let's say like hyperliquid spot or whatever spot exchanges that people can you know, people who who have the inventory can park the liquidity, market make it, or whatever they want to do with it. I think I'm basically skipping that AMM going straight to the spot Autobook and and I can skip it because our protocol can provide that atomic

liquidation guarantee. >> Yeah, I'd like to ask you about what happened actually with the Aave trade just from your MEV roots and perspective there. So there's a $50 million Aave trade that returned only $36,000 in Aave tokens which exposed massive MEV extraction, about 44 to 47 million dollars captured by bots. >> Yep. >> What does this say about the state of AMMs, about the state of Ethereum's execution on chain? What happened here and what's your take on this? Who's at fault and what what is the underlying kind of like lesson?

>> Yeah, for sure. So to to kind of start with the the conclusion, I think a lot of you guys probably seen the the debrief and and and and the news there. I was actually digging through the chain when I when this happened exactly at the moment. So I I also Yeah, yeah, I also I also made a lot of posts about it. Uh So, I think in conclusion, AMM will exist and will continue to exist. But, I think the usage of AMM will be over time somewhat more specialized {slash} maybe a little bit more marginalized to a certain extent.

And when I when I say marginalized, it's not that nobody's going to use it. No, a lot of people are still still going to use BTC ETH pair on Uniswap. A lot of people are still going to use the stablecoin swap pair on like curves, etc. But, when I say marginalized, it means that there's so many assets out there and there and in my opinion, there are only certain assets that would make sense to stay on AMM and and have some liquidity. Like for example, meme coin because they're not going to get listed on some spot exchanges. So they would just much prefer to have liquidity on on on AMM. You have some of the major blue-chip tokens that have that already have a lot of people holding it and they don't mind putting the LP token into those AMM pool and just like hold of it forever. They're

like a diamond hands. They were they were willing to hold BTC ETH LP pair because they think they're like highly correlated, etc. etc. There are assets that are LP aligned, aligned with the liquidity providers. There are assets that are aligned with the token issuers and they're they're like small enough that they can just deploy a small pool and then still be able to trade it. But, you have this a massive gap in the middle, which is the assets that are not blue-chip, but also not a meme coin. And these are the assets that I think is going to have a bit of a tough time because you're like you're asking the foundations like, "Okay, you you you can continue incentivizing those pool, but people are not willing to park their let's say, I don't know, Ave versus USDC pair on on a AMM.

But then if if if the if people are not willing to park it there because maybe Ave is like more like a trading assets versus like a value holding assets. If they're not willing to park there, then where are you going to source the liquidity from? Well, you got to source it from order book or some sort of like a market maker OTC type of stuff. Um and that's when the AMM assumptions start to kind of fall a bit weaker because those assets that are not necessarily favored by those big LPs holding like hundreds of millions of dollars, it often time doesn't get as much love on the AMM side.

>> Right. >> Yeah, and this is where I think the AMM when I say marginalized, AMM may have a bit more specialized role in the in the DeFi space for for for certain assets, but may not necessarily be the so like the solution for every assets in this like broad range of assets that we see in the crypto space. >> Yeah. Okay, so so kind of a shift towards central limit order books for spot trading. Obviously, that's what derivatives trading is run on now. And and then that's also your thesis for tokenized assets assets as well. Is that they will be primarily traded on order books rather than AMMs because you you just want a market maker that has the inventory, can put it up, make a market

on an order book. Does you don't have to incentivize the pool and you kind of get this better trading experience for your traders also who want to do limit orders and kind of have a club interface. And then it also is the the same place where you trade perps, too. >> Yep. >> It's kind of all in one. >> And and we want to we want to make sure that while market maker do all of this, they can rebalance their inventory frictionlessly and feelessly on our on our protocol. And they don't have to wait. They don't have to get like some big fee on minting redemptions. They don't have to have 1.5 million dollars of inventory minimum cap to redeem their tokenized gold asset for example. Like they don't have to face any of that limitations and just seamlessly mint and

redeem, mint and redeem, mint and redeem. >> So when you say marginalized, do you think that the that we've seen the maximum growth of AMMs as a as a utility in the DeFi space? Like is the shift going to happen rapidly? Like like are AMMs dead? Like what's happening here? >> So I think I want to just to clarify. I think on Ethereum AMMs still makes a lot of sense. >> Okay. >> But you are starting to see this already. But on on other chains AMM is making less and less sense now.

>> Because they're faster, cheaper, you can just do order books or what? >> You can do prop AMM. >> Okay. >> Yeah. So so instead of just doing a normal AMM and you let the searchers and and the market makers to pick off the passive liquidity, you can simply just do a prop AMM where you are the market maker, you are the maker yourself, you are the one that is managing the LP position like, you know, adjusting it 14 times per second or 14 times per block. You are effectively using your inventory or whatever vault that you have for example to manage those capital to quote the assets so tight in the range that you can basically kind of replicate the market maker activity that you

already do on on order books but on like an app prop AMM structure. So that's that's another pathway that I can see but that would be more for like a fast chain because it's not going to work for like Ethereum it's like 12 blocks or a 12 second block so that that's not going to doesn't going to work. Yeah. >> Yeah. And so in CowSwap's model they they have this kind of fill or kill orders, right? Based on their solver network and and their intense architecture. Do you think that this was a fault of that architecture?

Is it a user error? Is it Aave's front end error? Is it a combination? Who's to blame here? >> Yeah, so to to to be honest, I think uh assuming that the users actually ticked off whatever front end warning that Aave and Curve already gave them, obviously it's a very irresponsible thing to to tick off a 99% slippage, but you know, assuming that they did, I think I would actually attribute the biggest problem here to the user itself.

Because I I I think we we should like with with just like a, you know, uh normal knowledge of everybody, like we should know that in any market you market dump $50 million is going to crash the out of the market. Like there's there's going to like, you know, like a hairpin type of things, right? >> Yeah. So like >> I mean I mean you do it on Binance, you're going to get the same thing. Except that maybe, you know, less worse than on chain, but still you're going to like get a very bad slippage out there. So I just think that uh you know, uh doing a market order on a $50 million on chain on Curve is personally I think it's a very irresponsible thing to do.

>> Yeah. Yeah. Well, you can I really enjoyed this conversation because we've kind of taken this like tokenization as a really big important trend that is going to continue to grow, and we've kind of explained the intricacies of how it's happening, kind of how Ten Bins approaching it, and then now got it into some of the intricacies on chain that are going to need to improve such that we can actually facilitate the onboarding of all of these assets on chain. So let's just kind of go a bit a bit uh uh, deeper here into these changes. What other market structure or infrastructure changes do you anticipate being required to facilitate global markets on chain, right? We're talking

about making this equal liquidity depth and liquidity profile from off-chain and on-chain. We talked about prop AMMs, AMMs, order books. What else? What other infrastructure changes need to change on chain to facilitate the trading of of tokenized global markets? >> for sure. >> So, um, I cannot say the same thing for equity. So, I'm going to be mostly talking from my understanding of the broader commodity markets, FX, etc. Um, but first and foremost, the the requirement of having an instant redemptions or instant liquidations and minting facility on chain is is a must for a market maker to say that, "Oh my god, this asset is so easy to rebalance

on my inventory." In fact, I may not even keep that much inventory because I can just mint, redeem, mint, redeem so fast on chain, right? Without any fees. >> Amazing. So, that's the base requirements that we have to have. >> And then on top of that, it would be amazing. Obviously, I mean, we already have a great order book like Happy Liquid, for example. But, you know, it would be amazing if there are, you know, a lot of interesting prop AMMs that would be able to make the market for these kind of assets, let's say, natively on base or BNB or Solana because that would make the, you know, the work of market making these assets a lot more efficient than just like parking idle on a on a AMM pool there.

Um, and I think, um, obviously, with with with that on top, if we have a aggregator that also like plug in a lot of those like prop AMM shops, that would be able to like kind of a better uh sort of like reflect not not reflect, but better recreate the environment by which you will be basically trading on order book, but except it's going to be on chain during dealing with all those prop AMM managed by uh either liquid funds or vaults or some automated strategies out there. Yeah.

>> Yuki, as we come to a close here, uh thinking about where we go with tokenized assets, >> Yeah. Yeah. Yeah. >> with tokenized treasuries, stablecoins obviously being more in the non-speculative bucket. >> Mhm. >> And then thinking more about kind of like what this more speculative bucket looks like, tokenized equities, tokenized commodities, what is what is kind of like the core pillars of the foundational growth that you see that is going to happen over the next 2 years? What is the the driving forces mhm of tokenized asset growth on chain, right? And I kind of like give you a bit of context here. I think part of it is that we live in a much more entropy acceleration uh version of the world where, you know,

there's a headline one day and the next day and the next day and it just continuously kind of like creates this world where people want to speculate 24/7. >> Mhm. >> They want They want to have access to markets on on the weekends because there are headlines that are coming on the weekends that are driving market volatility and they want to be able to act on that whether to get a competitive edge on their peers, other firms, etc. That's just like one part of my thesis driving the tokenized asset trading 24/7. What are some of the core pillars that you believe are driving this trend and will continue to drive this kind of tokenization supercycle?

>> Yeah. So, I would I would maybe touch on two points. One is what you described, which is the the 24-hour 24/7 settlement. I I think that's actually extremely important. Like with the growth of like RWA perps, right? Like those HIP-3 and those like tokenized those traditional asset perps, with that growth, it actually lays a really fertile ground for projects like us to bring those actual RWA assets, those tokenized assets on chain, because now you have the perp version and you have the tokenized asset version. And you know what people do when you have the spot and the perps, there's a lot of interesting things that can happen between them, right? Um

I'm not going to delve too much there, but you know, there's a lot of interesting stuff that can happen there. And then, so so that's one. And then another part is that and this is a maybe like few few more years down the road, but uh what what I believe uh to be the future of those tokenizations that once we can equal the playing ground, as I mentioned earlier, equal the pricing, equal the liquidity, and people will be like, "Wait a minute, these assets are, you know, as good if not better than those off-chain assets." We want to make those tokenized assets effectively better and more useful than whatever that is sitting in the off-chain counterparts. We want to make sure that these assets are like, you know, like when they're in the in the

custody, they might be not doing anything. But be because they're now tokenized on on chain, they can do so many things. And that's what I want to make those tokenized assets be. And that's what I think would it ultimately drive the broader adoption of asset tokenization. That is not just within this like crypto market-making circle, but like beyond, maybe even like to the retails and those like family offices and Asia's and they're like they they never touched those, you know, Bitcoin before, but they actually may start touching those tokenized gold before gold gold for the first time on chain. Like the first asset that they touch may not be Bitcoin anymore.

>> Or crypto asset in general. >> Or exactly, or crypto asset. The first asset they touch maybe is the tokenized assets. And I think that's where I want to pursue. And that's not going to happen if the assets on chain are strictly worse in pricing and liquidity than the off chain counterparts. >> Ladies and gentlemen, I think it's fair to say do more with your assets is a very simple pitch for tokenization. Do more collateralize borrow lend loop and more. Yuki Yumeno, thanks for coming out today. Great conversation. Congrats on the raise. Some big names there.

Ladies and gentlemen, that wraps up for Rollup TV. Let's give some love to Yuki. >> Thank you very much. Thank you. Thank you. Thank you. Thank you. Thank you. >> All right, guys.