0xResearch Cross-Post: Building the Future of Global Payments | Paul & Zaheer

Transcript

I think the the era of drawn is going to end one way or another. Um, especially kind of with these kind of now increasingly kind of nonperto-ear use cases. I think you just have kind of a very very large universe of of use cases that like Tron just isn't built for. This episode is brought to you by Aries Markets. To learn more about Aries Markets, follow the link in the show notes below. Quick shout out to Permissionless 4 coming this summer to New York June 24th through June 26th. We'll have speakers from all across the industry including Hayden Adams, Kyle Samani, Guy Young, and more. Get your tickets today by following the link in today's show notes and make sure to use code Bell10 to save 10% on your purchase. See you there. Hey everyone

quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. Hey everyone, this week's episode is a crossost from ZeroX Research. We sat down to discuss Plasma a chain focused solely on providing stable coin infrastructure. We dive into why general purpose chains aren't optimized for stable coin settlement plasma's architecture, and how they will mitigate spam, and more. Enjoy.

What's up guys? Welcome back to another episode of Zerx Research. Today I am joined by Paul from Plasma and Zahir founder of Split Capital. Thanks for coming on guys. Thanks for thanks for having us. Like um I guess before we get started, do you guys want to give a short introduction? Um so here maybe we can start with you and Split Capital and then we can dive into Plasma more deeply. Well, yeah. Um so I've been the founder of split capital. Now it's a hedge fund in the digital asset space. Um it kind of focuses across across uh themes and sectors. Um and you know mostly focuses on discretionary uh investment strategies. Um and you know I've been in this space now for about seven eight

years eight years now. It's kind of crazy to say that out loud. Um focusing you know from DeFi to you know more of the philosophical arguments for crypto. Um I actually met Paul a few years ago. Um and it's kind of the connection and you know uh the introduction to to plasma. So cool. Yeah, I I used to work at Darabid way back in the day. I was kind of an involved on the on the Darab research um side of things which is how I met Zum initially now. I think that was probably I don't know 5 years ago now or something. Um I used to play poker way back in the day. Um and and that's kind of how I got into into crypto um um somewhat early on. um then very active onchain, kind of went

through really kind of the kind of early genesis period of of of DeFi. Uh was was pretty active in in in that um kind of across the the the the the spectrum there. Um then built a company on the institutional side of things um called Alloy um building IMS PMS software um and and and now uh uh a bit more on the on the cryptonative cryptonative side. um again in uh in building plasma. Fantastic. And um I guess what was the idea behind plasma? Why did you why did you decide on um building out a new stable coin uh chain? I think you have this very unique combination of kind of

the the most massive most kind of clear TAM market which is stable coins and then infrastructure that like just in a path dependent way kind of ended up being the the standard infrastructure but isn't actually kind of the the the optimal solution for this. And so I think this very much comes from like a a thought process being like what do we think stable coin kind of rails and stable coin settlement onchain like like what does that look like in a year or two or three and I think it's going to look vastly different than than than it does today. I mean it's it's basically mostly driven by by by ETH mainet and andron and those are really the the the two the two chains that that

really matter at scale. I think both have their kind of unique idiosyncratic um issues and I think like neither actually are kind of in a position to like really win this in in a massive way going forward. And I think you you just have to make somewhat different choices by by just being very focused on on stable coins and uh that requires like the the laser focus on it basically. I think the like there's massive value and and definitely kind of a place for for generalized chains. Um obviously I think those kind of continue to to to be like key pieces of of kind of base layer infrastructure. But specifically for stable coins, you just have a lot more kind

of create creative kind of space you can you can work in if you make the kind of very clear choice that this is the only thing we're focused on. like we want to be the best rails for moving stable coins from A to B, MRE demon and asset issuance. Everything else we we don't care about. Um everything else we can kind of ignore, make trade-offs on and and um I think that is massively valuable and and not something that anyone has has really done and and and that's a massive disconnect to I mean stable coins basically didn't really used to matter. Um if you look at like the pre2020 era um most of the volume was like non-stablecoin related and that's changed in a massive way but like

depends on how you measure it but like more than half of of of block space consumed is consumed by stable coins and and a good chunk of that by by stable cocoin transfers actually and and so this is kind of the one massive massive PMF that that crypto has and it's not being served um as as well as it could be and I mean plasma is pretty much the the answer to that. Sorry, very long monologue. Uh but but that's kind of how we get to Plasma in a nutshell. That makes sense. Um Zahir, I kind of want to pull you in here because you have well this pod is going to be kind of unique because we have both the technical side the founder side as well as we have an investor in the protocol. So what um pulled you into Plasma? Why why did

you say this is a good opportunity and I wanna I want to be part of it? Yeah, it's easy to sometimes, you know um, support a friend when they're when they're starting a new endeavor, right? Um, but I think, you know, obviously my my my stance on plasma is kind of evolved from that uh to one where it's you know, um, very seriously been like the most interesting um, kind of investment opportunity. U, but also, you know, more specifically the most interesting kind of use case for crypto um, that I've seen in in in a long time right? I think um this is kind of like I'd say the last like eight months in particular has really been the the and more specifically last three in

particular has been the uh stablecoin era if you will um where I think it's a confluence of things right you're kind of ending the crescendo of multiple years of DeFi um you know and up only kind of you know ponzomics into uh investors kind of coming out of a out of a groove with um you know protocols that don't make money. Um, and then you're also kind of met with at the same time an administration that is actually kind of pro crypto um or rather pro, you know, very pro crypto. Um, and you know it's a pretty bipartisan issue at this point. And you're getting the one piece of like core, you know, crypto technology that is universally, you

know, I'm talking, I'm talking, you know, uh, VC tech and crypto, um, and policy is is adored, right? you're kind of in the right place at the right time more than anything else um in in terms of uh you know how you're kind of looking at this this whole landscape as an investor and I think um there's a lot of things you can fund that will theoretically make money um but I think what matters more is well what happens after a year two years 5 years of of putting you know uh money behind an investment right um you know does it actually have a tangible value right and I think you know in the 2019 era when when a lot of people were kind of investing into protocols, right? Like a lot of those things did like pretty well

actually on in reality um only because valuations were pretty cheap and and things ran quite hard in 20 20 and 2021. But I think um you know plasma tends to to kind of change this a little bit because you know it's it's fundamentally a different different approach in terms of you know what the longevity of a protocol can look like right um and not taking you know shorter term wins to to you know uh at the expense of the long run. Um, and I think that's kind of what differentiates it more than anything. I think um, you know, knowing Paul and the rest of the team, spending more time with them and and you know, kind of getting to learn learn more and more about how they think about the product has been probably the most interesting you know, kind of uh, let's just say

advancement I've seen in in terms of crypto maturity uh, in the last couple of years. Um, which I think, you know uh, is kind of being adopted and seen by the market, right? I think you're seeing this kind of narrative shift also in in terms of, you know, where people are actually getting optimistic and bullish on stable coins. Uh whereas in the past you know, being being bullish on stable coins meant you're you're just cashed up because you're just out of the market right? So um it's it's probably also a component of that, right? But um yeah for sure it's also kind of now um it's also just kind of become substantially more interesting. Um, and and and I think I mean it's it's so obvious that like stable coins just have incredible kind of EMF now. Um, and and and I think

especially going forward, right? But like it's still like stable coins are pretty small. I mean, you're talking about like what 1% of of of of M2 money supply. Like it's not a massive massive massive share right now. I mean 240 billion a lot of money but like in in the grand scheme of like global commerce um it's not really and I think we're kind of now in in the beginning of of kind of really seeing kind of those quote unquote real um things coming coming onchain um and and you're seeing um onchain kind of commodities trades right where like um um Tether recently did their their first kind of oil um um trade um that that was kind of fully settled in in USDT um and and and and you're kind of really seeing um a lot of

those like very very kind of real financial use cases basically kind of at least kind of start to to consider settling on on on stable coin rails and I think that only accelerates and I think that is kind of the the the one mega trend that that that's going to continue happening where you just see more and more actual commercial activity be settled in in in basically digital USD I want to get a bit into that. Um because I feel like most people when they think of stable coins, they think it's just payments, which um is a very good PMF, especially for some countries.

And like being able to hold the dollar is fantastic. Um especially in some countries. But curious how you're specifically thinking about what that PMF will evolve into becoming and if there's anything that people are not thinking about that isn't like very clear to the average person. I think I mean I think you kind of have different categories, right? I think payments are obviously massive. Um but I mean kind of by definition I mean um global payments volume is is larger than than global GDP and and and and so like um whenever you like you can just like make up incredible sounding numbers and and can kind of make them work basically in terms of in terms of time. Um and and and I think and you're kind of seeing a lot of different angles in terms of like

where stable coins are going to be integrated in in in those stacks. And I think that is true on the consumer side of things, right? Especially internationally and in terms of remittances and and kind of international kind of payment flow. I think that's a large component. Then you you do have kind of the commodities B2B and especially with high friction jurisdictions where like it's just very very annoying, expensive and slow to kind of engage with traditional banking rails and and and um and and I think that that's kind of a massive component.

Um obviously I think you just have basically we've invented a kind of better, faster, cheaper way to to move value globally. And I think that is it's very obviously better than than kind of the the legacy system. And I think like things like this always take more time um than than you think or like I think it's it's it's pretty small now and and and I think it's going to like grow massively. it probably takes some time to like actually kind of take meaningful share um from from from kind of real uh kind of non-stable coin uh denominated payments for but I think it's inevitable that that it happens in basically every category and so I think kind of really

the the the future state of the world is is basically going to be that the Al Salvadorian pharma interacts with uh with uh stable coins and and so does the hedge fund in in Dubai and so does the multinational shipping conglomerate that kind of moves uh oil or gold or palladium um from from uh the Netherlands to Zimbabwe. I think all of that like those are massively different use cases obviously, right? And like a massive kind of spread between all of those. I think the end status all of them are going to touch stable coins in in in some capacity. Yeah. I think you know to to add to that you're also seeing this kind of

uh in terms of product decision making as well right where um now that now the question really gets asked right like well you know we have 50 different kinds of stable coins and I'm jumping the gun a bit here but I I think this is probably one of the questions you'll we'll kind of get to but um you get to the point also of you know why do you even have so many stable coins or why do you even have so many different kind of actors right and I think you know to to answer your question to go from like payments up here right and then you know why is this the only focus that we have today I think you know when when I hear this from the plasma team more than anything else it's it really goes from you know okay today you know between ETH and Tron

um you know payments are generally understood in the stable coin landscape but what happens when you start looking at every other part of the stack right and you say like you know it's no longer peer-to-peer payments or like you know me sending money to my family it's more so every piece of commerce that like can be done digitally, right? that doesn't need to, you know, use some sort of uh you know, Fed wire or, you know, a similar kind of, uh, banking, you know banking rail, right? So, I think that's that's kind of the longer game that that that, you know, the plasma kind of vision focuses on, right? It's not so much the, you know, only the focus of let's figure out the the Tron Ether, you

know, payment network and and and get to that uh day one, but it's instead the longer tail kind of what are all the downstream implications of a stable coinbased economy. This episode is brought to you by Aries Markets. Aries Markets deployed on Apptos in 2022 and is now the largest lending protocol with $280 million in TVL. To learn more about Aries Markets, follow the link in the show notes below. I want to take a step back and Paul give you the chance to explain kind of the tech stack and the architecture of plasma. Um sure. No, happy to do that. Um it's basically I mean the the approach we've taken um is is basically like what would what would a chain kind of need to look

like to to be like the perfect product for for stable coins? and and that that involves a couple kind of different different aspects basically where um on on on one hand fast and cheap is is is kind of a given. I don't think anyone wins on on on fast and cheap. I think it's just kind of table stakes to to to have a chance um basically. Um, and so I think that's actually not terribly interesting. Um, because I mean everyone has to be fast and cheap otherwise you have kind of no no way of kind of even being being in the arena and and um but then you can you can you can do quite a bit um on on on the kind of actual kind of protocol level feature set that kind of enables just better

stable coin functionality basically. um and and uh for us I mean plasma we we've kind of built our own our own consensus um that is fast stuff and PFTbased um and and have full EVM compatibility um there's likely going to be a layer on on top but TBD and and um that is that that is critical to kind of be very easy to to integrate um wherever uh like payments is an integrations business the way I view it and so like anything you can do to make it easier to kind of integrate with existing infrastructure existing payment providers and all of that is is is is critical. Um but to kind of get get back to like why is why is Plasma unique and kind of like how do we differentiate from basically just any

other fast EVM chain? There's plenty right? of like a very long list of fast and cheap EVM chains and and um some of them are great, some of them are like not like I think the interesting part is like like what's the kind of delta between just a plain vanilla ref um and fork and and what we do at at Plasma on one end we we have zero zero fee transfers um at scale um and and so um we don't need to subsidize transactions um and and and we have some resistance um through some relatively complicated mechanisms So you can actually move USDT um on on on from from from A to B without kind of needing to worry about kind of the the fee for that. And a lot

of use cases are priced out basically or just uneconomical if you don't have that. Um and and then so that that actually opens up um the the the kind of target use case um quite a bit. um we'll have confidential payments um that are both privacy preserving and and and um don't don't have regulatory issues basically like you do like you do want to like tow the line um in a way right but like you don't want to be you don't want to just become uh a money laundering tool I think that that's an outcome that that none of us are interested in in in in any any capacity um we have native support for for custom gas tokens um and and so I think that that's kind of a massive a massive of um UX um unlock

um plasma is going to be deeply integrated with on and off ramps um where we've um uh have kind of relationships with with with some of the the largest on-off ramp um providers and and I think are going to like be um working on that extremely heavily, right? because I think payments still like everyone still has kind of traditional banking um considerations and and and so um you do also need to make the like switch extremely easy um and and and I think that that's critical. I think all of this is kind of really driven by kind of a focus on on UX that like is not just geared towards kind of the average crypto den even though like we welcome them obviously I

would kind of count myself as as one of those but um I for like truly kind of going the next step I think you you need to make this very palatable to to to a very wide range of of of of users and I think uh um that that very much kind of informs how we how we think about what we're building. I I think if I can add also, it's just like, you know, you're not compromising any of the the the kind of core functionality as well, right? Like you're not um you're not taking the broad-based approach of I mean, this is also why you're an opinionated uh you know, stable coin, you know, purposeful stable coin chain, right? Like you're not you're not trying to fit the whole party under the tent uh in a way. And I think that that part really sticks out

right? It's like if your core future I mean it's it's ironic right like something Paul mentioned earlier right where it if an insane amount of block space is just consumed by one application in most cas it's literally just tether um then you should really start parameterizing around that one phys you know singular application in a way right and and building up only for that you know singular application in terms of uh you know throughput right if if if I go to a bank right and like my bank is like you know obviously trying to offer me services of of varying varieties, right? But like at the same time like I don't need my bank to be like my ger too, right? Like I don't need my bank to you know you know do my taxes and you know that that would be nice actually but you know or you know

like give me a haircut or whatnot right? So I think that's kind of the this weird stance that we take as as an industry where um you know there's very clear PMF for one specific use case in crypto. why are we not building around this, you know, and why why is this not you know, getting a real kind of uh glance? And I think we're starting to see this emerge, right? I think Plasma is kind of the first one that that's that that's come to market on this, but we're starting to see this theme and this aha moment kind of emerge for a lot of investors and builders across the space. um just you know by virtue of of being an investor in plasma. the amount of inbound I get from like people that want to build on the chain or have you know this this you know all of a sudden

kind of uh you know light bulb moment of hey what if I built this on top what if I did this what if what if I was not constrained by like just the EVM or just you know a general you know purpose blockchain right um that's when things start getting a lot more interesting and and you know really the ethos of of of cryptos you know why I was really interested in this kind of conversation is it really does go around the money first Right. So, um I think you know this is also you know kind of the the core focus which is how do you redefine how do you change the money in in the best way possible instead of like rehypothecating six different forms of leverage. Right. Um which is something Paul and I know all too well but at the same time is not necessarily the I think

I've done I've done my fair share of rehypothecation for sure. Right. But it's not necessarily you know the the the interesting thing for a lot of people. Right. Yeah sense. Um Paul to to continue on the hot stuff. I wanted to ask about hot stuff. Now nowadays I see many many um hot stuff inspired um consensus protocols consensus mechanisms. Why is this the case? First of all, like from your end why do you think that's the case? And um secondly, what are you guys changing that is unique specifically for Plasma?

Yeah, I think I mean odd stuffing kind of in general BFT based um consensus uh it just has advantages, right? I mean it's it's fast, it's cheap, uh you have deterministic finality uh which you kind of need, right? Like you can't do payment flow and and have probabilistic um finality. Um even if you have like 189 like if a transaction is final, it needs to be final. um and and and and so um I think it's kind of the the clearest kind of uh framework to to to use on on the on the consensus um um side of things um for that. I think that's also why a lot of people kind of choose um those those BFT based um consensus mechanisms because they they work, they're

scalable, um they're pretty battle tested at this point. Um and then so you just you just have kind of a high degree of of of confidence um in in in this kind of actually achieving what you what you set out to to achieve. Um, first on on the consensus side of things obviously the the kind of free stable coin um um transfers introduce quite a bit of complexity on on our end to to actually handle, especially given that like um if you have kind of a super naive implementation of this. Um then you just open yourself up to like just get spammed and and and and then taken taken down basically like 7 seconds after after launching a chain. Um and so you do need some kind of um um um um some some uh some complexity um um

around that. Um um basically um and and um I think for us like we've kind of made a couple of small changes to just kind of the I mean basically there is no like super standard hot stuff um implementation, right? But like um there's no like one this is fast hot stuff and you you just you just copy it right? I mean it's it's basically a paper and then and and and a concept and and so um by its nature is is kind of custom because you kind of take the core concepts and and then um build both the implementation yourself um and and and um I'm technical enough to to be dangerous. I'm not technical enough to kind of um um chat about like deep deep changes to to to to fast stuff um

consensus um mechanisms. Um but like basically consensus has to enable the the feature set um that that that we kind of just discussed basically. And so I think all of the tech is not a means like in and of itself, but I think it's very much kind of it's it's a tool to kind of actually achieve what we set out to to to achieve. And you don't want to kind of I think there's a lot of there's a lot of cases in crypto, right? Um and and and um a lot of very sharp people who kind of build stuff because it sounds very cool on on on the technical side of things. Um I think for us, we're very much we're quite practical um on on on that side. were like really like this is like what we are pretty opinionated

on kind of a very good product looks like and these are kind of the tools we we need to to actually get there. Um but I think the the tools aren't the the end goal but the the result is is the end goal basically. Quick shout out to today's sponsor Aries Markets. Aries Markets deployed on Aptos in 2022 and is now among the top 10 lending protocols across all blockchains with $280 million of TVL. Aries Markets has expanded its product suite to become a fully integrated DeFi hub, combining lending borrowing, and more. In 2024 alone Aries introduced several new features to better meet the needs of its users including native USDT support, an incentive program, and more. Click the link at the bottom of the show notes head over to Aries Markets, and tell them that I sent you. I want to chat

about the zero fees because I've heard well, many people brought this up to me and said, "How are they dealing with spam is the first question." And the second question is um how are they going to end up making money now? Um over the past year, people have finally realized that these chains and these protocols they need to make a little bit of money. Um and how are you guys going to do that? As far as I understand, it's not all transactions that are zero freeze. It's just like payments. But maybe you can chat a bit more about that. Yeah. Um so it's it's transfers of USDT or USDT zero. Um and and and so it's kind of that select kind of category of of transaction. Um basically um the the the

spam is is kind of really the the main technical challenge. Um and and because like like I said like if you have like the the the most kind of naive implementation of of this um then you just suffer from from livveness um issues basically like inevitably and and and and so um we'll likely enforce minimum balances um at at the beginning which is kind of the the most kind of it it's practical, it makes sense. Um it's it's not massively complex. It's not the ideal solution. Um and it is also not kind of the the the end solution. Um you then have kind of way more of a complex approaches um that they kind of also kind of deeply intertwine with the the

consensus side of things where you kind of segment transactions into kind of being being real. You can have some sort of like um um um especially around like the kind of very high flow generators you probably have some sort of whitelisting functionality to kind of prevent just like any address being able to like spend 17 million transactions. um in in in one second kind of clog up your your your entire chain and you kind of have hybrid approaches between those. Um we'll start with kind of the the the simplest approach. Um but uh but then kind of pretty quickly iterate to kind of more complex and and kind of more fit for purpose um solutions basically in terms of how we make money. Um very good

point. Um, I think you you do need to when slow and and volume on on the payment side, I think that that's absolutely critical. I think you do I think it's very much real that you do price out kind of certain certain use cases where Tron isn't even that cheap anymore, right? I mean, it costs you $3 to to to to do a to do an ERC20 transfer on on on Tron, which is actually kind of insane, right? Tron has in the last couple of weeks at least kind of consistently actually been more expensive than Ethereum. Mostly driven by just no one using Ethereum anymore, but that's a kind of a different topic. Um, you do have a kind of lot of transactions that like aren't just the simplest stable coin transfers.

I think you do have a lot of demand on just the transfer side, but I think that inevitably kind of leads to demand for like more complexity as well. And there you just have kind of the normal gas feem concept, right? And so, um, it's still going to be like revenue generating on on on the chain level. Um and then so kind of meaningfully kind of actually drive like specifically validator revenue, right? Because like you do need validators to make money. Um, because we'll launch with a permission validator set most likely um at at the beginning, but then pretty quickly open that up. Um, so so anyone can kind of permissionlessly run run a validator. And um, that only makes sense if it's economical to to run one. So if if you lose money on running a validator

um then you just won't and I think that contradicts what we kind of set out to to achieve which is kind of having a very large um set of of validators um because like I think this has to be decentralized and and kind of in in in in the hands of of kind of anyone who's interested in in having it. That makes sense. Um so here you kind of brought this up as well, Paul, you also just brought it up. [Music] Um, how many how do you guys So, it's not just going to be an issuance and settlement chain. You want I mean the majority of the block space will likely be tethered or like USDT dominated. Um but you still want other applications building. That's true for a lot of chains. Um, yes. Yes. Yes. Um, so that's um but you still want other applications

to launch on it. Do you want this to be generalized but also like with a stable coin focus initially or for the I mean I mean look it's going to be permissionless to build on plasma right and so like we're never like like I think permission chains have a horrific track record and I think that is not a coincidence right and so like we like and we're very opinionated in terms of like what we think is is is valuable to kind of a stable coin ecosystem and and like uh I think that that that's fine to be opinionated on Um, in the end, anyone can build whatever they want to, right?

And and like um um um um so like we won't kind of uh permission the chain. Um because I think that is like why are you building a blockchain if it's permissioned? Um I've not heard a good response to to to that question. Um and and and then so um I'm I'm not keen to just like build a a slow and annoying to work with database. um like it does have to be permissioned but um it's very focused on kind of anything that is stable coin adjacent and kind of actually in service of making you know the the the core mission better more usable um and I think that has to include lending functionalities that has to include obviously kind of swapping of one stable

coin to to to the other um that that has to um yield has to play a role right because you do have kind of savings product on on products on on on chain and you do have like all of those kind of categories and like I'm I'm I'm like this is not an exhaustive list um that are kind of very much in in service of of what we set out to do. Um and then so we're kind of very actively fostering that. Yeah, there's not a world where you're you're you know, I mean, you could launch an NFT marketplace on plasma, but like would you want to? Probably not, right? But um I think that's kind of the idea, right?

Like um you know, again, if you think about the way that uh Ethereum broadly, but you know Salana and the rest of these kind of generalized uh blockchains have kind of gone and now to like more specific apps in particular, right, like Hyperlquid right? Um, I think you're seeing more and more of this like why am I trying to like build a chain that's, you know trying to fit like 70 different standards instead of just focusing on the one thing that I actually care about if I'm like building a sick product. Um I think that's kind of the that's kind of the vision, right? So, so it it's not to say like the only thing that like Plasma is going to focus on is payments right? That's probably the case at the outset. But the idea being that like

anything adjacent to stable coins is is kind of uh an interesting kind, you know, uh space to be in. And I I think also, you know, when you look at the stable coin market broadly, you're you're you're really seeing a massive bifurcation between like, you know, what what we see at like, you know, the let's just say native level or even like peripheries of the native level of crypto, right? uh and people just not even knowing like what they're transacting with outside of knowing that like there's some representation of a dollar um and that I can have it like digitally and anywhere, right? Um they couldn't care less like what actually is happening within reason. They just want to know that they have some dollars or some safety or some sort of value

somewhere that they can like liquidly withdraw and like not pay an insane fee basically, right? Um so I think to that universe of people that's like where where this product becomes like materially more interesting right um obviously the implication and also like between Paul and the rest of the team and at plasma and even the investors you know is that you know there will be more of a component to bridge across the rest of crypto to these people right um you know like like you said you know having uh uh you know sort of money market having you know the opportunity to do more with stable coins than than just uh transfers Yeah, I think that makes sense. Um we've brought this up a few times. Tron and Ethereum are the leaders at this

point. I'd say Tron more so, um especially for payments. I know most of dollar defy activities on Ethereum. Um first of all, how will you compete with Tron? Because as far as I understand they just have a massive network at this point and it's very, very difficult to kick them off. Um and secondly, we're now getting a few more competitors. I feel like base and USDC's relationship is interesting. Um on top of that, we have One Money Athena, I think Caponey's on Mega E. There's a lot of new stable coin um focused protocols or chains launching COEX. Yeah. Yeah. What's the I guess Yeah. I think I mean I think those are

two very very separate questions to to an extent. Um I think the the era of drawn um is is is is going to end one way or another. Um I think especially kind of with these kind of now I think in increasingly kind of non peer-to-peer use cases. I think you just have kind of a very very large universe of of use cases that like Tron just isn't built for. Um and and I mean it's it's pretty centralized, right? I mean you have 27 validators. uh his excellency Justin Sun um I think is is is is running a a non-zero amount of them and and and and so I think you do kind of have just risk of holding a lot of inventory on on on um and and and

so I think um it's kind of showing showing cracks to to to an extent. Um Tron is incredibly good at kind of the the the the local ground game. Um well like I mean like I've I've spent time in these places where like you you go to the kiosk in in El Salvador and and you can pay with USCT on Tron. Um that that's kind of the the standard use case and and so um they are like very very deeply entrenched and and like genuine respect for kind of how how they executed all of this. Um, I think in in the end, you know, things happen slowly and and then all at once. And I think a kind of a similar thing is is going to happen on on the Tron side of things, but I think it kind of very much

had its time in place. And I think that is that is in the past and and and so I think you can win against them. It also requires kind of local ground game and it especially requires kind of deep integrations to ex existing kind of infrastructure on on on the payment stack basically. Um, but I think it it kind of inevitably happens basically. Um, in terms of other chains uh, there's a lot of very good teams building this. I think most of them kind of have different different approaches um, than than we do. And I think that that's fine. I think all of us can kind of co coexist. I think one one money guys are are doing interesting stuff.

Codex is doing interesting stuff. Um um um Athena um is is is doing very interesting stuff. We actually worked with them pretty closely um and and and and then so um we'll also have Athena on on on Plasma um and and I think like this can very much coexist like I don't think we're super competitive with them specifically. I think for us we're kind of very much we're taking a pretty opinionated and and different approach to to most of those um um kind of products where um like like we're very much not kind of just building kind of a developer platform um on the top of existing infrastructure but like um um like we're not just kind of an OP stack um um um um kind of out of the box chain which but

like don't even mean mean that negatively. I think that that's probably a fair choice. Uh but um um we're kind of very much like rebuilding the infrastructure layer underneath that um itself and and and with one specific goal which is like getting to stable coin flows and that means I mean as we discussed kind of means custom consensus means custom execution layer means deep vertical integration into kind of actual existing financial infrastructure. Um and then so I think it's not about like wrapping the existing experience into into into better tooling, but it's very much kind of rethinking the very base layer. And I think that is a a somewhat unique approach that I think most of

those examples um um don't really have which is fine and can work and kind of and can also coexist. I think there's one thing that that that you you know said in particular when we talked about Tron earlier, right? It's like Tron was not purpose built for stable coin transfers, right? Um, Tron is very much, you know, kind of an ETH clone in in a way, right? Um, even the naming convention TRC20. Um, but I I think that's that's like the key point here, right? Which is um if you look at like the bifurcation of let's just say the most of the tether market, right?

it's between like Ethereum and Tron and a lot of this really, you know especially on the Tron side is just for for simple transfers and is very much a uh, you know, network effect kind of game. It's not so much that it's necessarily the best technology that's being kind of built out there, right? And I think people haven't really felt the need to to necessarily rethink this until recently when stable coin transfers are getting substantially more expensive. Um and obviously you know the the the dollar velocity that's kind of increasing on stables is is is you know moving exponentially at this point right so I I think this is kind of the the core thesis which is you know we're

we're we as an industry are rethinking you know what are we actually doing in terms of building around a better system than than the one we built let's just say nine years ago right um and and how should we rethink you know core core purposes right Um it'd be a very different ballgame if the only if the considerations between uh applications were more evenly split, but it's very obvious that stable coins uh in terms of trans in particular are like you know the overwhelming majority of the use case at least in terms of directional proportion of of mind share. Traders, AI enthusiasts and deans, listen up. The game is changing and desk is leading the charge. To celebrate their launch, Desk is running a trading campaign with three major highlights. 38% of their token supply will be allocated to airdrops.

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Morpho today. Paul, you guys are going to have Ephena um also on Plasma. Yes. How many more stable coins? Anybody? I think I mean I think Ethere is is very much complimentary to to USCT. I think like like I think like people talk about stable coins as kind of one of monolithic category and I think that that's kind of mostly the the wrong way of thinking about it but I think stable coins actually kind of split into a bunch of like subcategories like you're even seeing it from like the both stable act and and and a genius act and like you have this kind of very clear of bifurcation into like payment stable coins basically and and then kind

of everything else. Um USDT in my opinion is the absolute apex payment stable coin. Like there's absolutely no second best one singular chair um etc. ETC but um you you then have kind of different different like I think USD for example is is is is a very different product um than than USDT. Um actually on the surface it looks like it's kind of like competitive and and and the same product. It isn't. One of them is a savings account type product and and the other one is kind of very much kind of a just kind of a payment stable coin and and and then so we're very keen to kind of work with great teams and like we are working

with with a lot of great teams um who are kind of building in and around stable coins um some of them have kind of their their own stable coin products some of them don't uh but um I I don't kind of view that as as massively competitive to to USDT I I you know qualify that also by saying like I think even within the category of stable coins right like everyone is coming to market with their own stable coin variation right um but I think the reality is it's like you know outside of these two core products which is this like you know digital dollars and and digital savings account like there really isn't you know a good need for 50 different versions of USD right um and I think you know something that like is very important to

also understand in terms of you know the the product decision for for plasma picking USCT is also you know what what game are you really trying to solve right are you trying to solve you know domestic issues within the United States in terms of like dollar transfers like ultimately not right because the system works pretty well like you know if you're a bank you don't need to to be able to create a better sort of uh you know USD kind of transfer mechanism that already exists you can do it for free right um this This is quite literally the master account kind of uh uh direction. This is something good for for us to talk with uh uh Felix on on on the on on the money uh sorry on the margin uh podcast. But, you know, I

think it's it's more so the game of really trying to figure out, well, this entire universe of of non-American dollars, non-American uh, you know, money transfer that exists, how does that basically get changed and how does it go from fiat systems, right, of you know, this is a really incredible one, but this is one that's like very personal, which is like the Hala system which is very commonly used in in the Mina region. It's like I send money to some guy, some guy credits some other guy on the other end and takes like a 5% spread, right? Like the most arcane like form of money transfer possible, right?

I think that's essentially the the the the goal and focus as opposed to saying like, hey, we have 15 different versions of USD that need to like basically, you know, service American bank accounts or you know, replace Venmo or whatever it is, right? Like that stuff works pretty well as it as it is, right? Um, this is also why you don't really see, you know there's non there's it's a very big difference in terms of, you know, the the the stable coin kind of growth between different issuers in a way right? Um, this is why some work and some don't. And, you know, why why the network effects are so strong for, you know, our our favorite green uh uh stable coin. Very good. Um, we're getting a bit spicy, but yeah, I agree with you completely. um especially on

that non non US payments side. I I find it sometimes most of the team is American and it's very difficult to explain to them that um like I come from a country where there's horrible inflation. Um we care about the US dollar and we want that and I want to be able to hold that send that relatively easily and be able to pull it out whenever I can. Um, and like you said that's been the that's been the growth that you've seen on USDT on the other and I guess that's why Tron has also done very very well because they managed to capture that side. Um, I have two more questions. One of them is why Bitcoin Plasma is related to Bitcoin in that it is using it for security. Um why did you guys decide on doing Bitcoin

and not something else? I think if if you take the approach that uh stable coin rails at at massive scale need to be kind of credibly neutral decentralized and kind of have kind of the the the the stronger security assumptions. Um you you can't really not build it on Bitcoin um is is is my view. I mean it's it's very much kind of the most lendy the most robust blockchain um where like there's no Bitcoin reorging um and and and like like it is kind of the one apex kind of blockchain in in in my view it happens to be very limited in what you can actually do on it right which is like why plasma needs to exist basically

um if if if kind of Bitcoin had a very very kind of wide range of of capabilities and we think it's probably a good thing for for Bitcoin that doesn't then plasma wouldn't need to exist. Uh but but it doesn't and so you kind of need to build on on top of it. Um and and um our strong conviction is I think we can um if you optimize for having kind of a true decentralized and and safe product then uh there's no way around Bitcoin. That makes sense. Um so here you brought this up a few times and I want to really really talk about it. There's been um my fear with the regulation is that now we're going to get like you said 15 to 20 different stable coins per bank and

then already I feel like the stable coin is um ecosystem is a bit too um I guess why there's just way too many of them. It's not easily funible. You can't you're taking on different risk with different ones. Um to both of you guys, how do you see that space consolidate? And um yeah that's it. How do you see that space evolve and consolidate? What what do you think? What would you bet like the next two years will look like? Next two gets very complicated. Um because I think that you're right, you're going to see more issuance of new stable coins than less, right? It's going to be like worse before it gets better kind of thing. Um but I think the world and everyone knows and their bones, right? Like so so this

is the kind of like calculus. This is going to be a bit of a long-winded answer, so um going to preface this, but this is going to be the kind of calculus for most financial institutions. It's like, oh my god, Tether makes x amount of dollars. Why don't we do this? We have a balance sheet. We could do this right? And we could take it down. But again, it goes back to the original point, which is they don't understand why Tether is the best, you know, stable coin that Tether does not service. You know, if you think about it from the you know, yield perspective, which a lot of stable coins go and try to attract right? Nobody cares to get the yield right? billions of dollars. You know there's there's since the election there've been something like $30 billion in new stable coin issuance on Tether

right? That's another $30 billion that's saying I don't care about the yield. Just give me the best most liquid product that is always available and I can have it in my local jurisdiction and people will forego whatever yield they can get on that, you know, same amount of dollars, right? So, so that's kind of point number one, right? People are are the stable coin issuers of today especially the new ones are kind of popping up. they don't really understand the fundamental reason why Tether is winning which is Tether is much more of a replacement of the the Euro dollar system broadly than it is anything else right it is creating the ability to have dollars offshore while the American government is very happy right sub subliminally um without actually needing to kind of go in and intervene and then

the other you know to take the other side of the argument right which is you know okay then let's look at the domestic stable coin issuer and circle right circle you know businesses fundamentally different like after we saw the perspectives for the S1 we realized very quickly as an industry I mean we knew this right but you know as an industry that circle is not a great business right it's not like tether these two are not the same at all right um number one they give away almost the overwhelming majority of their revenue for their largest partner which is Coinbase and they'll have to do this for every single new kind of uh you know fintech company or bank that they want to work with because obviously you did it for one you can do it for all of the us, right? If it's Coinbase has the

bargaining chips, then Binance is going to do the same thing, right? And then so on and so forth. So, you know, Circle's game is very much flood the market with the with the supply of USDC and pray to God that like, you know, once the the the velocity gets to a trillion dollars plus, right, that then maybe it'll be you know, the the law of large numbers gets so insane that like you'll still make some money. Um, funny enough, they pulled their their IPO a few days ago. obviously probably more related to tariffs and than anything else but still you know it wasn't met with a ton of you know uh positive reception whereas Tether a private company that's is is very much moving in the right direction and and kind of hitting a lot of traction within the US right and you saw this with the outcry of of you know kind

of uh the circle team really pushing tether to uh you know kind of get eliminated from any sort of stable coin regulation by banning foreign issuers. America is not dumb, thankfully as a as a as a legislative body, broadly speaking. Um, and and really they understand that you need a sort of, you know, offshore dollar system to exist. You just want to bring them into the fold just enough to where you have purview, but you don't want to, you know, kind of fully meddle in that system. This is also why Tethers existed for so long, right? um you're not going to have you know a hundred billion dollar plus uh you know uh stable coin exist or or dollar system exist without you know obviously the government knowing knowing about its existence right um I think you know these these

two things are are are really critical in terms of the the kind of ongoing uh you know push and and I think you know Paulo gave an interview I think to Forbes I don't know when it was but the the article released today right uh in which he highlights you know it's like He could have a bunch of, you know and I really appreciate his insights because obviously he's running the best fund, but he could have a bunch of different opinions. He could give out the yield, he could do this and that and you know, I'm sure he's thought about all of these different approaches but he kind of has always harped the same thing, which is people just want stability in their dollars, right? People want to know that my, you know dollar will exist tomorrow in the same way that it existed today and that it's

going to be good anywhere in the world that I go and and and want, you know and and can transact in that, right? They don't want, you know, a store of value. That's what Bitcoin is for right? In terms of, you know, having like a sort of hedge against inflation. They want, you know, digital dollars so they can go and and and uh, you know spend that money basically, right? So, I think this is the the kind of fine line that that, you know, people like they get too cute with it. They try to put everything into one package, right? But they don't understand fundamentally the reason why Tether, you know, is doing so well and why it's kind of the only game in town in a way. and and will probably be the the largest winner across the next number of years, right? Um with

really, you know, the competitors kind of dying out fundamentally hinges on the fact that you're not going to have 50 additions of the same dollar, right? You're not going to have 50 different you this is why banks don't haven't ever issued their own currency. In the past they actually did this. So this more than 100 years ago in the US, you know different banks issued their own currency until the the practice was standardized across the board, right? So people realized very quickly that it was a bad idea to have different people issue different types of dollars, right? The same thing will happen here. You know, that's going to fundamentally, you know, happen. What does that look like? Does it look like Tether plus government or something like this? Maybe. But it's going to be very hard to replace the global source of USDT. Very longwinded

answer, but that's kind of my my my push for this in in full agreement, by the way, um with with all of those points. Paul, what about you? How do you see that space apart from what's here mentioned um shape? I I fully agree. I mean I think you like stable coins are kind of massive network effect um and businesses as as kind of Zah mentioned like you need you need you need to know for a fact that what I'm holding here as kind of a digital representation of of a dollar is actually kind of universally accepted.

And like I don't want to like go around with my JPM dollars and my and my Fidelity dollars and my Franklin Templeton dollars. I think all of those probably make sense in isolation, right? But um like you do have kind of that that very strong preference where like I would just like to hold the most liquid representation of a tokenized US dollar product. Um and you have one choice um in in that category and that is USDT. And and so I think you I think I'm actually like a lot of people are kind of very very negative on like we should stop like launching new stable coins. I I think like experimentation is experimentation is is good. I think like uh like is probably a net good that like as an industry like try different

things. Some of them probably work, some of them don't. Um I think like we should welcome that regardless. Um I I don't think any of that is actually too threatening for for USDT. Interestingly enough, I think it is pretty threatening to to USDC, right? But like I mean as as kind of Zah outlined where I think USDT is kind of the international Euro dollar and then USC is kind of the domestic um USD product. I think Fidelity and and and uh Franken Templeton and and JPM like all like those types of entities kind of launching US dollar products. I think that massively threatens USDC. um it doesn't threaten USDT at all because they're just fundamentally different

products. And then so I think if I'm in in circle shoes, I'm really I'm I'm I'm really not too keen on kind of having a thousand more stable coins coming out of the US from like large financial institutions in in the US. I I like I would hate to see that. If I'm USDT, like I don't think it matters basically. Um it's interesting. It's good experimentation. Um, and I think that there's likely going to be kind of lessons learned in in in in what works and and and what doesn't. I think if if I can qualify that also like um you know there's some game theory also around uh circle kind of pushing their S1 now in particular um you know in

terms of getting an IPO out because I think ultimately they probably see the writing on the wall that you know other people are going to try to play this gambit as well. Um well one thing that like we we kept mentioning is is this idea that you know you have stability around the world if you have USCT right um but it really is a very fundamental point that like when you go to a kiosk in you know Istanbul right in the Grand Bazar or in Dubai or wherever it's like you only see two things there buy Bitcoin USDT there's nothing else and until that stops being the case until you start seeing USDC you know pop up tents in these different places and like it's more widely used and more widely adopted. Like it's not even a conversation, right? It's not and you

know and that goes on for every other stable coin, right? This is not so much that that it's circle hate or you know USDC hate as it is you know what what game are you really trying to play right? Like are we trying to recreate Venmo or are we trying to recreate the Euro dollar system, right? Um that's kind of the that's kind of the the the bifurcation of those. Funny enough, I think I think the the the TAM for Euro dollars is like probably two maybe three orders of magnitude larger um than the the the TAM for kind of just domestic USD products, right? And so I think um you also just have like a a massive delta in kind of how large this this market actually is, right? And and I think you know when you think about plasma in the context of this, right? Um

we have $240 billion of stable coin uh you know issuance in total, right? an outstanding supply. Um 150 plus billion of that is in Tether's hands, right? Um even that is a kind of tiny drop in the bucket uh of you know where global liquidity kind of goes to the you know the tagline for for all the the plasma guys is always trillions. So this is the coin term that that has been used across the board for all the plasma you know you know people in the ecosystem the community whatever you want to call it. Um but I think that's that's it's a very salient oneline one word kind of thing which is what happens when multiple trillions of dollars of of value kind of come online on chain where people find

out that this is the best form of you know uh censorship resistant you know money that you can kind of create in terms of uh you know USD stability um what does that look like then you'll start dwarfing 2002 $200 billion in stable coin volume and I think that's the that's the broad focus and and you hear this a lot and I hear this a lot on the investment side more than anything of you know uh products coming to market trying to be like we're here for the next 100 million users right but but you know fully seriously this is this is kind of the goal right what happens when you know the the one product in crypto that is consistently growing even in the face of tariffs or bad market or whatever you there's still more stable coin issuance every single day what

happens when that market you know becomes in or you know 10x the magnitude basically right um and if anything you know you're seeing new stable coin initiatives come to market this is you know a feather in the cap of of companies like you know tether and circle right this is people acknowledging that this is a great business this is a great product and like we should be competing in this right so competition is good in that lens as well um but I think people you know broadly you know the takeaway from from this podcast or or kind of the vision for plasma or stable coins in general should always be you know what happens when so much more of my life is is actually using, you know, stable coins if I'm basically outside of the US. That that is kind of the takeaway and and that's what you can start

dreaming up in terms of scenarios of what, you know, the the future of plasma or or tether can kind of look like. Perfect. Um guys, we're going to end it up, but before we do that, um Paul, where should people go to to read more about Plasma and learn more about Plasma? uh to plasma.to um or to docs.plasma.io. Um that that's kind of the the kind of most the most detailed kind of uh content we we have out there.

Um we're pretty active on on Twitter um at Plasma FDN. Um and and uh I'm Pauly Punt on on Twitter. Um and so um feel free to to to yell at me in my DMs there. Very good. is here. We'll we'll link Paul's PSN and and you know his his his carding username and whatnot but uh I'm I'm split Capital on on Twitter. Uh feel free to reach out if you have anything interesting on the stablecoin side or or otherwise. Um we've been hosting like a bunch of different kind of roundts for for stable coin related stuff. I I think you know it's also funny. It's like we talk about the the the universe of stable coins like we're finally getting

to the point where regulation starting to matter in crypto. So it's also interesting for all the other implications of you know where crypto goes from here in the US and the west in general. Yeah. Um and I think actually I mean not to kind of open up a kind of more major point here. I think like stable coin regulation is basically downstream from all of crypto. Well like stable coins are so deeply entrenched in kind of how the entire kind of crypto system operates, right? Um and and so I don't think anyone can ignore stable coin regulation. Um and and and because like it touches everyone even if you have nothing to do with stable coins because they just run the crypto economy and and and then so that's also why I mean I was actually kind of keen to kind of talk about some of the regulatory

capture attempts from from from Circle but maybe that's kind of for for a future um um discussion. And I think all of that is incredibly bad for crypto. And I think we need to ensure that um like you have offshore issuers um that are kind of capable of like continuing to to kind of um do be this massive net benefit. No, I completely agree. Um we had D um which is one of our conferences in New York uh maybe a month ago. Um, and that was what everybody was talking about the Stables Act and the Genius Act. Um, like every and maybe like 60 70% of the conversations that I

was in, people were talking about that and they were also talking about the attempted regulatory capture, Paul, as you mentioned. Um, obviously it hasn't worked out as far as I understand. I don't I'm not gonna lar but I think as a as a crypto industry I think like it's it's upon us to like take a very clear stance on this. I think this like no matter what you do in crypto, I think this is extremely relevant for everyone and and I think we should be ensuring kind of o open and safe access to USD denominated um kind of crypto markets and I think that is in everyone's interest and I think the the the kind of wreck capture is is is very much against everyone's interest like it's very it's

kind of similar to kind of the the AI model of regulation. um um debate, not to like again kind of go on a massive tangent, but um um I think you also want open source AI models to to exist and you don't want to like regulate them to to death and just kind of have everything in like one or two centralized hands and and I think uh um the same thing very much applies to to to crypto. Yeah, that makes sense. Um go ahead. I was just going to say the last company that tried like some, you know, nasty sort of regulatory capture that one was even more egregious with FTX against Binance and and other, you know, offshore exchanges.

It's just always like bad bad karma to do these things in in my opinion. I I I like that Paulo um went to DC and went to New York and he had like a very sharp suit and he took pictures in front of like all um also found it funny when he also found it funny when he said we don't have to um IPO the other week like in a tweet which was um okay guys thank you so much for coming on this was fantastic.

Thank you for having us.