A tale of two cities: stablecoins and memecoins in 2025

Transcript

Um, thank you all for being here, finding the alternate reality of the Taylor stage on the other side of the floor from uh the other yellow rooms. Uh, and I am very excited to talk about uh stable coins and memecoins today. And broadly, I think where we're seeing market development head. Um, at the time I think I submitted this like uh talk idea uh it felt like the world was a very different place. This was I think maybe like three or four months ago and uh and it already feels like the space has shifted in uh in major ways. The the positive news being that I haven't had to rework the talk uh because things are kind of playing out in uh in a lot of the ways that I think we've been seeing happen uh at Privy for a little while.

So to kick off uh hi I'm Henry. I uh started a company called Privy and we build wallet infrastructure basically for every user for every app for every bank. The point being that self-custody and generally holding digital assets entails having a wallet that you can hold it in. And we believe that embedding that wallet within the product creates much more powerful experiences that enable really anybody to access these rails. So broadly we do four things. This is kind of the inevitable shilling that happens. I'm I'm frontloading it so that we can focus on the other stuff after. Uh but we build user onboarding. This is authentication.

So anybody can come in. You can also integrate this with your own O system. This is embedded wallets. These are basically low-level signers that you're able to integrate into your product in order to automate a number of onchain actions and give your users self-custodial wallets built into uh your client or your server. Uh this is key management and finally integration into any onchain system that you need to power these flows. Um with that I'm going to kick off and kind of talk about what we're seeing in the market and we the way we think things are playing out. So what is the state of the market in 2025? I guess we are halfway through the year. Uh, and it's been quite a year thus far. Um, and the first thing I guess I want to talk about is closing the gap. I think this is like a slide

that I took from our uh our our series A pitch deck. Uh, so this was back in 2023. And I think the question at the time was uh what are you doing working on web3 infra and in fact it seems like web3 infra only serves web3 infra. And uh the very exciting thing is that broadly it feels like we have closed the gap in many ways. uh the space has come an extraordinarily long way these past few years when it comes to the three sort of major problems that I think have hobbled uh developers in crypto which is to say scalability usability and security there's a lot of work left to do uh but broadly I think we've kind of run down run out of excuses for saying like well the infra is not ready enough so my product should be graded on a curve um and as we look top down I think

this past year this past half year has been incredibly impactful in terms of what's happening in the space. So, we're seeing increased activity across the board. Um, from a US- ccentric standpoint, we're seeing regulatory updates as pertains to stable coin legislation. We're seeing institutional capital come in, uh, and you know, uh, I guess while crypto skeptics like JP Morgan actually investing in the space in a really big way. Uh, we're seeing public market activity related to this. Um, and this is obviously all trickling down. uh little shout out to us. We're seeing M&A activity with uh important fintech moving into the space more aggressively and all the opportunities that that opens. Um and this is obviously leading all the path to

fundraising. And here's a a shout out to one of our customers, Slash, who you know, these are companies that are built on crypto rails, uh that are not self-spoken crypto companies, but that are leveraging this infrastructure in deep ways. And so across the board, we're seeing all this activity. And maybe most excitingly to me, we're seeing really impactful product releases and you know uh all all of this as a side note is about a week's worth of news from call it 3 weeks ago. Uh so we've had six months and it seems like the cycle is accelerating and at the time uh Shopify had introduced uh USDC payins with Stripe and Coinbase. I thought man this is a very exciting announcement. It's probably going to be one of the more exciting product announcements of 2025. Obviously, lo and

behold, on Monday, uh I promised somebody from Robin Hood I would I would quote uh I think it's Daddy Vlatty is the uh is the name that they're giving internally to the the suit meme uh that that is occurring here. But obviously uh being able to trade uh private and public securities on crypto rails is also extraordinarily exciting. So we're seeing these rails make their way into products that are really built for uh new types of users. Um so top down I think things are looking very very exciting and in many ways it feels clear to say like the future is now. We've been waiting for uh you know all these signs that the market is ready and clearly these signs are here in front of us and uh and the time to build these products that leverage these rails is is

today. Um and so with that I'm going to move into kind of the meat of the talk which is a tale of two cities. uh we serve about a thousand teams across the space. Through them we have about 75 million accounts uh that that we power and broadly I think you can kind of split it across four main spaces. Fintech and payments, DeFi and trading, social and gaming and what I'm going to call aentic crypto and for the sake of this uh talk and I think a lot of where we're seeing the most activity uh really I want to focus on two spaces. The first is fintech and payments and here I'm going to call this crypto is rails.

These are people who are trying to leverage more efficient basically money movement rails and asset holding rails in order to power underlying fintech and payments infrastructure. So here for example um on our customers that we serve you have folks like Toku. Toku is an employer of record. They enable people to get paid out globally using stable coins. So Privy for example has a Nigerian contractor that we work with and this contractor would much rather be paid in USDC than in Naira. Naira's lost a lot of value against a dollar these past few years and using Privy customer.

So this kind of uh Toku using Privy using Toku using Privy which is a lot of fun for us. Uh we get to pay Michael out in uh in USDC. In fact uh Lightspark is building a payments rail on Bitcoin. Kulupa builds uh card issuance for stablecoin accounts. Blackbird is building a payment system for restaurants. Karza is building a neo bank in Pakistan. Uh these are basically the types of crypto Israel's fintech and payments customers that we serve. The sort of second leg is DeFi and trading. Um and this is broadly crypto as an investment class as assets that are tradable. Uh and this is the world of you know customers like hyperlquid or pump that enable really high frequency trading uh on very cryptonnative sort of

surfaces per and memecoins respectively. Uh this is Jupiter um I think the biggest salonex at this point. uh DYDX, Vector, these are a lot of mobile apps and um desktop apps that enable people to uh trade crypto basically very aggressively. And as we look at it really a tale of two cities emerges, which is to say we've got stable coins on the one hand and memecoins on the other. We've got these two aspects of crypto. And I think a lot of the question for us as infrastructure developers is how do they feed each other? How do we sort of orient our product around serving these two spaces that are both growing extraordinarily rapidly and powering a lot of infrastructure development? And I guess maybe to put it uh in perspective, you know, these are very different markets.

Stable coins uh the core premise might be the first trillion dollar fintech is going to be built on crypto rails. This is the first time that we get to uh build global products in fintech with no sort of landlock because of currency. It's an absolutely massive TAM. Billions of people obviously and um a lot of the LTV for how you consider the user looks like traditional fintech. On the other side, you've got memecoins. This is kind of emergent behavior from magic internet money. It's a smaller TAM uh you know, hundreds of thousands to millions of active users. It has really powerful network effects where broadly markets follow liquidity in a big way.

And the LTV is insane. I would argue that you know trading customers today in crypto are probably some of the most valuable end users that the internet has spawned. These are people who are paying tens of dollars in fees every month without asking questions. And the question then is you know how do we serve both for us as a as a as an infrastructure provider? And I think from that insight you can also kind of glean where I think the space is going in a in a deep way. So we we kind of call this the great crypto recursion. And I think basically the core thesis is that these disperate markets feed each other. Stable coins and memecoins are sort of building a self-reinforcing loops where you have basically the advent of onchain liquidity through stable coins that will enable more

people to trade these assets and conversely people coming in to trade find their way back to stable coins. I think you know to start uh Tether which I guess is the first mainstream stable coin was built as a way for Bitfinex uh customers to keep assets digitally on nights and weekends when they didn't want to revert back to US dollars because then they couldn't trade anymore. So I think that sort of microcosm of how Tether came to be is actually playing out on a much wider scale in the space as a whole. Um so what does that mean specifically? We think these disperate markets will feed each other. Well, first this is through infrastructure and obviously this is very firsthand knowledge that we have as privy but broadly I think building across these two spaces allows us to

serve both spaces better and I will say you know bluntly I think memecoins are kind of showing us where stable coins are going call it a year from now where uh I'll give an example we had uh folks building agentic trading platforms these are basically trading platforms where you want to set up an LLM to trade on your behalf we had to add the ability for people to delegate access to a user wallet to an app signer that basically you're going to give some control to an LLM over to. And in order to do that, we had to build transaction policies so that you could enable the LLM to take certain subsets of actions but not all actions. The fear being if the LLM hallucinates, you'll get completely wrecked. And broadly today, we work with neo bankanks who have the exact same

need. It's very different customer but neo banks obviously have risk committees and one enable multisix whereby uh you know certain transactions over a threshold have to be approved by additional parties. It's the same underlying system that was built for one uh customer type that serves the other. Likewise on latency we have wallets that can sign things either on device in sub40 milliseconds or in a secure enclave in sub 150 milliseconds. And these are latency times that were pushed by trading customers, but that are extraordinarily useful if you're trying to build a consumer grade stable coin experience. So, broadly across the board, we're kind of seeing that the crypto natives show us where the space is going and then that same technology is picked up by people building fintech

more broadly. Um, and yeah, this is this kind of point I was making is across the board where we're we're seeing that play out and so it creates a really good roadmap for us. The second piece obviously is that both feed onchain liquidity. The analogy I like is you know stable coins are to traditional payments rails what Starlink is to call it fiber or coax depending on the country you run in. And broadly we are trying to beam money basically to the cloud and have cloudnative systems to move that money around. And what we're seeing is that while fintech can onboard users massively, you know, we have billions of users that will come into crypto through holding digital assets via traditional fintex. These are customers of Revolute for example or CLA

that are going to hold assets through these apps that they know. They might not know it's crypto, but this is their pathway into digital assets. These are Robin Hood customers who are holding tokenized securities for the first time. Um, conversely a lot of assets and a lot of liquidity is being onboarded via DeFi and there is basically this recursive loop between the two where uh users come in through one door, assets come in through the other and together they kind of fluidify the system al together. So this is the second way and I I think like these markets are really feeding each other and again I think uh fintech is is kind of being fed by tra uh by um DeFi and eventually the two will merge and we're seeing this play out in the wild. uh two examples I think from recent months uh obviously one is

Coinbase and Morpho. So any Coinbase user can now actually take out loans uh on uh their Bitcoin and other crypto holdings via Morpho. So this is you know the DeFi mullet fintech in the front, DeFi in the back. Uh but this is the first merger of these two worlds where uh traditional customers and again you might say Coinbase customers are already kind of cryptoilled uh but are getting access to DeFi primitives and are starting to see the two worlds blend together. And obviously the other one is from Monday where uh people get to buy open AAI stock uh on Robin Hood. And so tokenized securities overall are yet another way in which these markets are feeding each other and you get these insane uh effects of of new sort of emerging behaviors that you wouldn't have seen before. Uh you know this is

kind of the most I think visceral uh exploration of how these two spaces feed each other. But, you know, as a proud uh Fartcoin holder on Salana, you now get to trade your Fartcoin for Tesla X stock. Uh, and so again, the line between the two is blurring, I think, much more rapidly than we could have anticipated uh at the start of the year. And and this is only accelerating. So, with that, how do we take a step back um and think about what does that mean for us as builders? What should we be focused on? How do we actually make uh uh you know good use of these extraordinarily high leverage moments uh in a space that's accelerating very very quickly? Um and I think what I would sort of say is we are in a very special place as you know people like us

attending ETC and who have been thinking about crypto for a little bit which is uh ostensibly we understand these rails in a way that few people out in traditional financial markets do today. And the really core goal is how do we use this strength and how do we make sure that this strength doesn't turn into a weakness. How do we make sure that we don't lose the force for the trees and basically are so blinded by the crypto rails and the uh exciting primitives that we're building that we actually lose the advantage that we have in building next generation financial products in the space. So I think the first rule I have is learn from Apollo.

Um there is a really good book called the secret of Apollo. Um, very exciting subtitle, systems management in American and European space programs. Um, and broadly they talk a lot about how in 1969 when the Apollo missions launched, a lot of the tech that they were using was completely outdated. All the computer systems were like very old by, you know, standards and the space had evolved so much and so they were running basically outdated systems by the time the mission launched. But this was, you know, a 10-year mission plan. And they couldn't afford to rearchitect a mission every time advancements in silicon came about. And this is a mistake I think we see a lot in crypto, which is the primitives are getting better so much faster. Wallet systems are getting better so much faster. And there's a

temptation to say, I'm going to redesign my product now because ZK proofs have improved and I get 10x efficiencies if I actually relaunch it today. And this means teams that should be launching in, you know, six months or launching in two years because they keep redesigning their entire system from the ground up. And yes, they get 10x improvements, but they actually delay launch and delay finding product market fit far too long. So I think the lesson from Apollo is hold yourself to the product spec, have a launch plan, have a set of like guard rails for what you need to achieve with your launch and then focus on mission launch and don't deviate from the plan unless you can't meet your launch objectives. Um, and so that would be the first. I think this is something that we work on a lot with our customers, but

broadly we want to make sure that our tech is futurep proof. We to my knowledge have not made a breaking change in our SDKs since inception. And I think that is about making sure that you don't have to worry about launching and then iterating. Uh but I think a lot of what we try and work on with our customers is how do you iterate in the space even though the underlying primitives are changing very quickly. The second is understand your audience and speak to them in their language. Uh there's this very good presentation from Skyler Richard at at Richards at Ironfish um now a Coinbase company and he describes how crypto people like to talk about crypto products and so you have on the right uh this great marketing for uh an amazing product a processing for P2B transactions with low

fees. Uh you could imagine this launched earlier this week at ECC and in fact uh this is a description of Venmo uh fast safe social payments and so I think understanding who your audience is and talking to them in a language that actually resonates with them is extraordinarily important and it's increasingly important as crypto rails go mainstream as we serve new categories of users and as these users fundamentally may not care about the primitives themselves but care about security care about reliability care about speed all the things that we can serve, but we have to talk about the jobs to be done. And so, you know, the tech is so cool is something that I think we get to geek out on and we should, uh, but it shouldn't make its way into basically how you justify your

core value prop. The third rule is specifically, again, this is, I think, the main change that we're going to see as builders in the space, and that is an evolution of the customers we serve. Making sure we don't confuse B2B and TOC, making sure we don't confuse devs and users. Historically, crypto consumers have been developers. And so, we were dealing with this super concentrated, hyper techchnical customer segment that we could build for and talk about things in a way that most, you know, dennisens of the internet won't think about. And so, I think it is going to be worth rethinking a lot of how you're thinking about your customer base and doing away with some of what has been true in the past. I think a lot of

what is sort of tried and true practice for historically vastly successful crypto products may no longer serve depending on the type of product that you're building out. And so that is something I would urge sort of anybody to kind of reconsider which is as the market grows who are you building for and as you pick a lane so to speak and build in stable coins or in memecoins and eventually into the merged market that is to say digital assets overall. How can you make sure that you are uh really understanding who your core customer is, where they're coming from, how they're making purchasing decisions? Um, so with that, I'm just going to uh maybe synthesize a little bit and and and and and conclude. Um, the infrastructure is ready. We are seeing the market form before our very eyes at a pace that I don't think we could have

anticipated uh coming into the year and even coming into the month. uh stable coins and memecoins are feeding each other and feeding this growth really symbiotically. I think both basically participate in adding users into the space and adding assets into the space and we're getting this sort of liquidity flywheel via the two markets coming together and increasingly I think we'll continue to see a blurring of the lines as Robin Hood and Coinbase have kind of shown us. Um, and the winners uh are going to be the companies that are able to bring the stack to new users. And I think a core focus on product and making sure that the infrastructure that you use using wallet infrastructure like privy basically serves the core product and that you're uh customizing your flows to serve a customer you understand

is going to be I think how you build differentiated crypto products moving forward. So with that uh quick request for startups I think it's a it's it's a bold take but the things that we're seeing as very exciting are um companies that are actually trying to use these rails to build global products that were here to impossible to build. uh conversely companies that are trying to give hyperlocal access to dollar value to loans to uh basically all of the things that we take for granted as I guess westerners and Americans to some extent uh but that a lot of people across the world have never had access to uh obviously there's a lot to be done with tokenized assets of all sorts and um finally I think a lot of what we've seen through social and through you know the last few years of DeFi and sort of

gamified finance um are going to make their into you know broader fintech. So this is stuff that I would urge anybody to think about and obviously if you're building this stuff come talk to us. Thank you. [Applause] I don't know if we have time for questions. Yeah, we have time for some questions if somebody wants to ask. Thank you. It's very insightful and uh always appreciate your presentation.

focus on the product and the and the you know on the market. Um actually two question one is I don't know if it's actually directly related to this but your take you know giving your work in the wallet space I was I always you know I have a inside debate in me what the future of wallet will be whether it's will be a a wallet uh like what preview was doing like wallet as a service or wallet will become kind of a credit card authentication identity when each user has its own in you know unique wallet and it's just taking it from an app to an app and we'll have to to get your take on this and also in a more strategy strategic you know high level view you know a lot a lot of what is going on in crypto right now is financialization of

crypto you know I I came for crypto because of the trust uh layer how do you see you know the financialization merged with you know digital sovereignty empowering the end user and all this stuff yeah uh I mean these are great questions and I would take my answers with a big grain of salt but I'm happy to run my mouth Um I think on the first one the reality is I think both is I guess the the the answer. I think it is inevitable that dominant products and the best product experiences will want to own the account system and this is how I see wallets evolving. Broadly wallets are accounts and in a world in which holding digital assets is not the exception but the norm then this is broadly something that integrates into an account system overall and lets you

hold value. I think a lot of companies and a lot of products and this is kind of the first time in which we're seeing crypto not as an island onto itself but as something that uh incumbents can use to build better products as well. I think as we continue to see that acceleration basically products will want to own their own wallets. So the privy model you know I think is is is here to stay and uh and there's a lot more for us to build as part of that. But I think conversely you see this and I see the two models being very complimentary. You see companies like Phantom that are increasingly becoming consumer hubs and in a sense personal finance apps. And so I really see this as a distinction between B2B and developer tooling, which is what we do, and consumer wallets, which is what a

Phantom or MetaMask do. And I suspect you'll see both. I think it's crazy to think that a user would have one account all across the web. I use my bank differently than I use my social games differently than I use my, you know, grocery store app. And I think likewise you'll have different wallets that you use for different purposes with different expectations as to the MFA requirements, security requirements, signers, pass keys, etc., etc. Um, but I think conversely, users shouldn't have as many wallets as they have apps. So you'll see some consolidation of sort of interoperability across these wallet systems is kind of what I'm seeing uh play out. Um to the second question, you know, I think financialization is here to stay for a little while and I had this debate yesterday uh where somebody said something along the lines of uh all

crypto won't be fintech but all fintech will be crypto and then I think somebody else answered all crypto will be fintech and all fintech won't be crypto. So I I think the debate is out. Um I just think it's really hard. I I I you know I come from from web three to some extent and distributed systems and trust systems as you do and I think it's just really hard to imagine the emerging properties of a world in which the majority of our lives including our holdings are happening online in a way that hasn't been true before. And so I think it's going to take a second at least for our part.

We're extraordinarily excited to see FinTech move into the space. But over time, I think we'll return to some of these questions of like trust systems as more and more comes online, so to speak. Hey, um well, congrats on the stripe acquisition and uh and uh I want to ask about that. So like how how does that change your I don't know road map your users right like right now you were saying yeah memecoins etc was one the others are more fintech I guess stripe maybe plays in the fintech one but I don't know if this changes anything for the for us the dens let's say it's a great question um the

answer is no hopefully it mostly just accelerates our road map it accelerates our road map with regards to broadly the engineering resources that we have access to. You know, Stripe knows a thing or two about writing APIs, writing docs, scaling products globally. Um, it changes our roadmap with regards to money movement. I still think some of the major hurdles in getting onto crypto is moving from fiat to crypto in the first place, getting, you know, from the coax cable to uh the the the the cloud and helping people move their assets. So, those are a lot of the parts that we're really excited to work like very closely with Stripe on. But broadly I think a big part of the acquisition and the thesis was predicated on three things and those were privy is an autonomous independent product in a

sense. We've built a lot for a lot of customers. There is so much more for us to build and the next few years are absolutely essential to the development of the space and us being able to continue to operate as we have is is really important. So that was one. two is uh in a sense stable coins and memecoins which is a big part of our worldview uh are both extraordinarily important to the development of the space. One brings users, one brings assets, one teaches us how to use the tech, one helps us deploy this tech at scale. And I think a big part of the agreement up front, obviously Stripe, you're you're right, has been doing a lot more work in stable coins and in traditional fintech than they have in the DGEN side of the house or the cryptonative side of the house. And I

think a big part of the thesis was we must stay true to our identity as a company and our ability to serve both parts of the market because they feed each other exactly in the way that I'm I'm rolling out. So when I wrote uh the the the presentation proposal for HCC uh we were not talking on Stripe and I had no idea that you know we would then be presenting today in this configuration. Uh but the actual talk itself hasn't changed all that much because of it. Um and then the third part of the thesis was the ability to work with any provider whether that provider is competitive with Stripe or even with Bridge. We need to be able to work with whoever is best for our customers and it is so early in the space and there are so many ways in which our customers want

optionality through the providers that they work with and so those are kind of the three tenets of us working together and ones that we're really excited about. Uh if somebody have any other questions you can ask Mr. Speaker privately because we have no time but uh thank you for the speech presentation.