BULLED UP AT Avalanche Summit DAY 1

Transcript

[music] [music] [music] [music] 17 floor. >> [music] >> We'll see you around the timeline.

Feels good to be back. >> I think The Rollup [music] is one of the most premier media brands in crypto and Andy and Robbie are great experts [music] at everything they talk about and it's my favorite podcast. >> Adding it to my library as we speak. >> Potentially multi-chain deployments. We are [music] at the connect day one here. I'm guessing from base. [music] [music] >> [music]

[music] [music] >> Heat. Heat. >> [music] [music] [music] >> JP Morgan, Black Rockck, DTCC, Fidelity, the entire thing was just institutions.

It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. >> I'm bullish. >> He said it. He finally said it. >> I'm so bullish. And he's bullish. I'm bullish. We're bullish. >> [music] [music] [music]

>> Heat. Heat. [music] Heat. [music] [music] Heat. [music] >> [music]

>> Corola [music] is headed to the top. If we're not already at the top, we're going to the top. >> Roll up is my favorite. >> People from all walks of life, all over the world, all over this industry come together [music] for the roll up. [music] [music] >> [music] [music]

[music] >> Zoom out. The institutions aren't coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. [music] >> Welcome to the mask. See you on the show. >> Yeah. >> So much. >> All my homies hate AI surveillance. All my homies love privacy, Rob. >> All my homies love privacy. >> All my homies hate surveillance and they love privacy. They love perpetuals in the US and they love avalanche. They love the Wall Street coming on. Shane, it's coming.

>> Aback summit day one. We're going to be talking RWA. We're going to be talking per in the US. We're going to be talking about quantum resistant private equities. We're going to be talking tokenized equities. We're going to be talking about the tokenization super cycle and onchain dollars. >> Man, guys, welcome back to the rollup. Today is Wednesday, September 16th. I am already losing my voice. The day has not even started. And we have had the most insane week known to mankind. >> This is my sixth espresso. >> Last night, we did a photo shoot. 10 a.m. >> In New York, we did a photo shoot. >> I've never seen Robbie laugh harder. >> The day before we had Hunter Biden on the show.

>> Yeah. Yeah. I mean, Hunter Biden was uh >> we have a special guest that we're announcing at the end of today's show. >> Yeah. So, guys, schedule today, give you the the rundown. Today is Wednesday, September 16th. Happy Wednesday. Happy FOMC day. Uh big big day for the macro enjoyers out there on the show today. Um >> look, I'm bold up, man. I I'm zooming out. I I don't really know what's going to happen today, this week, or next week. Robbie can give you his take. My take is much higher by the end of the year. I'm giving it a 20 to 25% chance that Bitcoin hits a new all-time high by the end of the year. 25 20 to 25% chance. Now, with regards to the day, FOMC 2:30, I believe, or 3:00 we get the decision, and then 3:30 we get the

presser. >> 2 p.m. and 2:30. >> Sorry, 2 and 2:30. We'll be live at the Circle Arc mainet event. Before we get there, let me tell you about today. We have an amazing lineup. We got Zack Pandle from Grayscale. We've got Janice Henderson, Nick. We've got Sandy call from Franklin Templeton. We've got Stani from a Carlos Simo from Securize Kevin from Ter and Guy from Athena. >> Rob Kman from Broadidge. They're doing trillions of dollars >> 300 bail on canon. That's why you know whatever. And we have that from about now. So 10:00 a.m. to about 1:00 we're going to be here. Then we're packing our bags taking a Uber black XL banging Kevin Gates. I don't get tired. And we're going straight to Arc mainet

launch. straight to Arc mainet launch interview started about 3:45 400 p.m. We got Jeremy Aair the circle CEO. We're going to drop that. So that's a little teaser for you and we got about 2 and a half hours over there at the Ark event. >> Yeah, there'll be more announcements coming from us there as well as more teasers of huge guests. Guys, this is the roll up. Today's Wednesday September. >> Get it out, Junior 16th. And we're gonna have a great day. Let's get it, man. >> I love it. I absolutely love it. We're fired up. You guys can tell it's been an absolutely incredible week. We started off Monday evening with uh Hunter Biden.

Um then we had the Clarity Act stream and then we came back right after the vote that we called that. I mean it was obvious but like no people were still up to their wits end believing this was going to pass at the very end. I can't lie, I was pumping it like I was like let's pass this thing. Let's go for the sake of like humid humility. But >> I I think the main takeaway that we have been preaching, look, there were several evolutions as far as whether this thing was likely to pass or it wasn't likely to pass. We went back and forth a little bit. Ultimately, I think >> the decision and takeaway that we came to was that this didn't really matter for prices. Sure, this mattered a lot for some onchain businesses that are looking at market structure and looking

at regulatory clarity to enter the industry. This mattered a lot. They're going to continue to work on a regulatory path and I think we're actually in good hands with the CFTC and the SEC fantastic hands. >> The point is that we've been preaching is that this was not going to make a significant material impact on price to the downside. The only thing that could have happened was it got a surprise yes and we went up to the upside and so the most likely outcome is what happened and it was basically a nothing burger. Bitcoin is pretty much at 76 or so, which was where we were at before over the last couple of weeks, and we're still there today. I do think the FOMC decision today is going to make a much more material impact, but I do think

this downside is relatively priced in and the only material significant impact could be to the upside. Sure, we are going to get a little bit of volatility, but I do think because the odds and expectations for FOMC is very similar agreed >> to the odds that the Clarity Act were to go through was about 85% to 15%. >> This thing is pretty much already priced in. The surprise outcome that would catch people off sides is the one where they hold rates steady and we surprise to the upside. But I do think even if the most likely outcome takes place and they do decide to hike rates, we're going to absorb that relatively quickly and you're already seeing the momentum take hold of the market in some of the leaders

today. >> Look at near Venice. >> I mean look, we had Dan on the CMS holdings guy and he's talking about look you you know this market's got life if when we get a little bit of a dump and we turn around the leading assets continue to get bid. That's what's happening today. This market has a lot of life in it. I'm telling you, it has a lot more life than people think. We're long. I mean, dude, I'm all in. I mean, I Anyway, can a quick story though, the I I just want to say I think we're in the last couple weeks of disbelief. And I think the evidence around that is the amount of negative catalysts that we've seen that have not moved the market down.

>> Yeah. >> Right. And this was sort of the story around Bitcoin, right? sailor and stretch and strategy was down in the 70s and this was a huge negative headwind that we were facing and Bitcoin really didn't react too poorly and so now that we are continuing to clear these hurdles clarity act not not going through maybe FOMC decides to hike rates these are continuous negative catalysts that ultimately subside until there's no more negative catalysts left and we're holding the levels that are important to hold until there's no more negative catalysts and then I think momentum takes hold. Hey brother, let's give some love to Robbie on the sounds. Man, this guy's macro genius.

>> Cheers. >> Come on. Let's give him some love, man. This guy's dialed. I mean, this guy's dialed. >> I mean, if we're just gonna talk macro, I heard that maybe, you know, we're going to revalue the gold in Fort Knox to pay off the national debt. >> Reval it. Just like mark it up. >> So, I mean, it's still valued at like $30 an ounce. >> Oh. >> To like value it at fair market value would basically give us enough money to pay off the national debt. >> All right. All right, so guys, we go into this talk about money out of thin air. >> We go to this arcs arc uh setup event yesterday, right? And Rob and I are in this Uber black um you know, we're banging I mean Rob's playing boy Cardi like we're full bull market energy and the market's down like 8% yesterday.

We're like but we're still so bowled up that like we're like we're already in the euphoria phase and the market is in disbelief. I can't tell if this means that we're going to make a lot of money or if we're completely wrong is out and we're in hope >> and so and so. Okay, sure. we're in hope. And so we get there, we don't really know where we're going. We walk up, there's like tons of security guards. The first thing that I notice is there's just like endless models and producers walking out of the door. Like you got all these production guys. You got like tons of models getting out of the elevator, walking out the door. We're just kind of like walking in like looking like not like scrubs, but we look decent. Backpack like we just look like we're ready to go to work. And the

security guards are like, "Yeah, you guys are in the wrong spot. Like I don't think you guys belong here." here and we're like, uh, fifth floor, uh, circle event. Okay, got it. Got it. Anyway, we walk up and we get there and it is a fullblown production. Like, I felt like I walked into a construction site. It's like 5:00 p.m. And I've never experienced this before. And I didn't realize that the way that these rent uh rent to conference comp like, you know, companies work is they literally set up till the last hour the night before. like it's just absolutely bonkers. And so we're in there. It's like a full construction site. Anyway, we get pulled upstairs into like this like what felt like it was, you know, like the nest like it was like this like eagle's nest

at top of everybody kind of looking over and like you got the production guy, you got the circle comm's team and everyone's just scheming. And for like 30 minutes, Robbie and I just sit on on the wall like kind of like flies on the wall. We're just like let's absorb. So, we kind of got got to learn about a bit about how these processes work and I don't know through that I just realized that like you can just you can just like set up an entire conference the night before and like that's totally expected and these guys probably run like a eight figureure business doing last minute conference setups of an entire building. It was just like shocking to me like I don't know it was just and it's not like they were unprepared and that's why it was last minute. The reason why they

were setting up until the very last hour is because they probably had another conference at the same venue the night before or a different model or whatever. Yeah. >> All of these events and they just constantly stay booked. I mean, I think it speaks to the uh level of tenacity that New York is going through right now. Like if I own a building that is a venue space, I'm probably booked out for months. Every single day I'm breaking down a conference and setting up for the next one. >> Yeah. And I came here. I came here last night at 10:00 p.m. which, you know, got my hand in the cookie jar a little too deep. And they were still setting up at 11:00 p.m. Broader and I were here till 11:00 p.m. trying to figure out what to do. And I was like, damn.

>> Got my head in the cookie jar a little too deep. Yo, guys. GM Mr. Lighter GM Ryan Nordic Nature Avalanche Summit starting imminently. We have our first guest pretty much ready to go here according to Alex. Not sure where he's at. Uh but again guys, we have an amazing lineup uh for you. I mean we are beyond stoked, Rob. Um so yeah, I mean we are we are really looking forward to it and um I'm excited. I mean our first guest has been on the show before >> um from Janice Henderson, the head of innovation. And so we're going to bring up uh we're going to bring them up in a little bit. I think it might be two of them, a double guest, but we're not set up for that. So we're going to

do one guest. Let's make sure our producer gets a message that we only have. >> We can also just take a turn. It's >> could take a turn. >> It's all good, guys. 1250. >> 1250 on Zcash. >> Uh, Circle is is looking strong today with their with their announcement. Good morning, NOCSM. I know we're a little bit early today. Uh, but we're pretty much going to be live most of the day. So, feel free to come and go as you please. Hope you have a successful day. Hope you have make make it a powerful day. N OCSM. Make it a powerful day, please. >> Absolutely. >> Good morning. Good morning. Good morning, >> guys. big big week. We are on hump day.

It is Wednesday. Uh in the middle of a very big week, but it feels like we have the momentum to absolutely take us through. And uh we're going to do exactly that. We're getting uh we're we're getting we're getting looks tossed our way from all over the place. We've got a big old >> girlfriend, man. Chill out. All right. >> A big old [laughter] >> guys. Stay strong. the comm's managers from uh companies that have recently gone public. We're going to be talking to their CEO in a little bit. uh guys talk about with all these tokenization companies like and the best thing is that like okay so conversation with Franklin Templeton right >> it is one direction >> not the boy band like it's a single

direction and then securityize is a separate direction it's a separate conversation it's a separate idea by Tom >> I bet I bet yeah and um you know speaking to somebody like Janice Henderson completely separate conversation >> speaking to guy from Athena that is also another like layer >> I mean I'll just I'll A stania another layer. >> I I I do want to give a big shout out to Avalanche. >> Let's do it. >> It is not every chain that has been able to survive through multiple cycles and continue to put themselves in a position where they can pull together a cohort of companies and speakers such as the ones that we're going to talk to today. Like like we talked about, you know, I I

think RWA hub from a went live just a few minutes ago and we're going to be having Stani on. It's an exclusive partnership between Tether, avalanche. And this is exclusively for RWAs. And so we're going to speak to several RWA providers. We also talked about tokenized equities. Securitize is going to be coming on the show today. >> We're going to talk about some of the tokenization exemption conversations that we've seen floating around, which I think are extremely pertinent given that Clarity Act failed. >> And so these are very relevant conversations. You're absolutely right that all these kind of take on a different flavor, but generally I think we're looking at tokenization broadly and I think Avalanche has continued to put themselves in a position they sort of saw what was coming and they've been

able to reinforce their positioning at the heart of tokenization. That means tokeniz up at 10 a.m. >> Sir, I'm think I'm I'm not catching a cold, but I am definitely run down. >> Oh boy. Um, I am on a half of a bloom. >> I'm on water and that's it so far. Uh, [snorts] but good morning to you. Good, good morning, Z Gambles. Uh, hi. You are the best. Thank you, Kazim. You're a legend as well. Uh, KY confirmed. Okay. Not interested in that really, buddy. Um, but good luck on the trade. Uh, if you don't own any Zcash, I would highly recommend Zcash.

>> We're going to bring up our first guest in just a moment. I think we were told that he was ready, but uh, our producer is not making eye contact with us, so we're going to have to check in on that. Yeah, our our producer, Alex, is a little bit rund down. I think he had a triple milkshake last night and a double cheeseburger and fries probably past midnight. Uh, and then also woke up [laughter] at probably about 7 a.m. So, yeah, it's been a long week for the boys. >> You know him. He is the guy in the intro video with two syringes of jello shots in Las Vegas. >> Yeah, that's him. That's him. Guys, I'm curious in in the chat to all you guys watching like questions, you know, what do you want us to answer about your portfolio, about the markets, about

Avalanche, about the event. uh what questions you want for you that we want uh us ask the guests just kind of anything that you want guys we have a long show today happy to help out >> um >> like we said Avalanche has been able to maintain their positioning >> uh through multiple cycles and obviously we've seen you know we've seen meme coins and NFTs and Avalanche has kind of you know gone through their gyrations as well now they're focusing on tokenization >> but what's the value acrruel thesis here man like for a change >> that's a good question we have or one.

>> That's the question. How are you going to make money? >> I I mean, you know, obviously, we've seen the >> the issues with Ethereum's monetization strategy, how, you know, even after the success of a Robin Hood L2 that has not been able to scale Ethereum revenue. >> Sure. Then at the same time, you do see L2s that were able to negotiate revenue share programs like Arbitum, right? and they're actually building what seems to be a more sustainable revenue strategy because as you know their clients scale they scale their revenue >> and so I'm curious like what is the right monetization strategy here for someone like Avalanche that finds themselves positioned at the center of

tokenization? >> Yeah, I mean I'll go quick here because I think our first guest is going to come up solo. Um, I don't I look so I think Ethereum, Zcash, Bitcoin have reached a point where it's like I don't think they need to make money. And that sounds crazy for Ethereum specifically, they don't need to make money. Every other blockchain is not in that position because they do not have the same level of credible uh neutrality. And I think that that they're going to have a far more difficult time. Um, however, the the scale here is the enterprise B2B maximum scaling possibilities of a blockchain. like there is a potential here for [clears throat] excuse me for Avalanche to have numerous numerous L1s if you will that's kind of their uh

their enterprise SAS model and you can scale this rather rather a big with a licensing type of deal >> so you know with licensing Rob with kind of uh paytoplay subscription models >> and these these can scale to multiple tens of millions of dollars ARR and hundreds of millions of dollars ARR but we're talking like you're closing deals with JPM, with uh Deote, with um you know, >> KPMG, like you're closing deals with like those and there's only so many of those names, >> right? And I I think it's important that as the adoption of those products by those customers, those high-profile

customers, as they scale up, the adoption of these products, >> the revenue also scales with that adoption as they scale their use and the earnings that they generate from these products. Yeah. >> Um guys, we have our first guest uh Clement from Tranch Trunched. Uh, Trunch builds real-time onchain securitization for fintech leaders, excuse me, lenders, fintech lenders, building real-time onchain securitization. So, we're going to bring up Clement. Uh, and, uh, we're going to get today's slate of interviews started.

>> Yeah, let's do it. Rob, >> Clement, welcome to the show. It's a pleasure to have you. >> Thanks for coming on. >> Thank you for having me. >> And, uh, man, you are our first guest here at Avalanche Summit. And so, maybe you can just help us take us inside. What are you feeling? What is your reaction to Avalanche Summit today? And we'll get into everything that you guys are doing at Trunch. >> Yep. >> Um I mean it feels great to be here. Um I think by background I spent um over a decade in finance. So um it's definitely interesting to be um >> um part of a crowd like this one, not having a crypto background originally.

>> Yeah. >> And um I guess I'm surprised that as I join the crowd, it feels very much like a finance conference to me. um not not not a big difference with the ones I used to um attend in my previous role. So um really exciting to um to see the dynamic. It's um the conversations are very much of a technical nature and down to earth and about how to actually make it happen at a institutional scale. So um I feel quite comfortable in my element really and um yeah looking forward to catching up with a lot of um potential partners.

>> Yeah. Are you French by the way? What what was the giveaway? >> I don't know. [laughter] You're just handsome and your name's Clement. I figured that that that was the case. >> Thank you. Very flattered. I'm very French. Yeah. >> If I may, Clement, um I don't mean to derail the convo too much, but I have been to France numerous times, ECC. >> And in my previous era, I was a ledger in the backpack type of guy, >> and that was my security. And it's evolved since then. Multi-Is custodians, exchanges. I was very like very self-custodian maxi. I'm just curious like can you genuinely describe the the self- custody situation in France and specifically Paris as safe? Can you give us a straight up like what is the un like what's what's the feeling from the

French people specifically the crypto community there about the situation? I mean it's an interesting question that's somewhat topical for us because we um one of the one of the good things about building institutional um you know I don't want to call it defi I almost want to call it onchain institutional finance is that you don't have to ask yourself that question very early on >> uh because you build with a lot of um guard rails and effectively centralization at first that then becomes decentralized most of your clients have a third party custody because They work out of regulated funds, so they don't sell custody their wallets if you do a deal with Janice Anderson, for instance. Um, you know, no one's going to need to uh break into the

home of a Janice Anderson portfolio manager to try to steal their ledger because they just don't have one. So, it would be pointless. But there comes a point where um because you play a role um along the lines of security agent and your institutional clients ask you to have a backup in case everything goes wrong and you need to pull some form of stable coin into a secure wallet, then the question of the multi-IG um does come up. >> Yeah. >> And it touches large sums of money. And um if any um if any you know malevolent individual is watching this video, you should know that there is no point in trying to um break into the house of someone who holds that ledger because those transfers can only go to a

dedicated protected custodian wallet. And I think going forward that's going to be the model. You're not going to have founders with a multi-IG having the ability to control sums of a decentralized protocol whereby if someone you know steals those keys they can get access to the funds. What happens in a institutional protocol is that the multisig can be used during a lockup period to sweep funds to a protected another protected ring fenced address that is itself likely to be custodied by a licensed custodian. Um, it will never be the case, I think, that a large institution puts hundreds of millions into a protocol where the exit is fully permissionless.

At least I don't see it yet at this stage. Um, and so I think for that reason, a lot of um, you know, crypto mobsters are going to be out of business soon. >> Yeah, that is good news. I'll tell you that much. That is good news. >> I appreciate the in-depth explanation as well. >> Yeah. You know what I'm thinking about is as you sort of describe it, it's not quite permissionless. It's not quite DeFi, but it is onchain. So maybe you can help us understand where exactly it is on the spectrum of, you know, cuz we've seen fully self-custodial permissionless DeFi kind of all the way on one end of the spectrum and then obviously the traditional world has centralized, you know, uh, forms of traditional finance, but this is kind of

in the middle. Help us understand where it lies on the spectrum. Where do institutions currently feel like they should be on the spectrum of decentralized finance? >> Yeah, of course. Um I think at a sort of high level um putting more permissions is adding friction. >> Mhm. and protection and and there's probably a utility curve, you know, like an optimal point where, you know, units of um friction that you can remove by um removing permissions. And the whole journey to bringing institutions on chain is about finding the right point of equilibrium where you meet the amount of security that is their minimum requirement whilst

removing as much friction as possible within that. And the good news is um for someone like me who comes from asset back credit and used to deal in SPVS and the various um trustees and agents that you have to appoint around a special purpose entity when you launch a fund or you issue a security. There is actually maybe 80% to 90% of the friction that can be removed in the value chain of bringing a security to its buyers without compromising with the core security of it. And I think um bringing institutions on chain is exactly about that. So if you think about the original promise of um replacing finance entirely

with crypto, you can't achieve all that unfortunately. um you will still see some points of centralization and control but I would say limited to the very core purposes of of you know what's good about regulation and what's good about legal protections whilst utilizing the full potential of blockchains in order to remove the unnecessary intermediaries right >> any entity any agent that's currently clipping a toll clipping a fee you know sitting on the back of the beast um not adding particularly a ton of value to the experience there's an opportunity to displace all that and to turn things to real time to remove opacity from private markets to add efficiency and therefore liquidity uh to those markets whilst

ensuring the same if not better um protections and legal enforcibility and certainty >> there there's several intermediary layers right and we've been digging deep into the transfer agents the custodians right those are one of two of many layers in this security value supply chain >> y >> in your opinion maybe we can to short circuit this. What would you say are the most important layers that are very important to continue to keep in that supply chain? And then conversely, what do you think are the least important layers that are right for intermediation that are just rent seeking and can be removed from the value supply chain?

>> Yeah. So, I have a pretty strong view about this. I think the tokenization industry to date has built almost exclusively for the distribution side and I think that's a function of the core thesis having been to date there are a bunch of billions sitting on chain um there's a good case to be made that those millions billions are in the hands of a few big whales and you know big Dowos and they want to decorrelate away from crypto and seek better yields um in the real world. So that's the real world asset thesis. Um that's great. There's definitely a big market there, a big industry and the whole premise of that

is well if I can find the simplest way of uh taking a security that's interesting for its yield and you know risk and return trade-off aspects put it on chain in a way that people can buy it with stable coins. I'm done. And then if um those stable coin buyers um need liquidity, I need to come up with some backstop liquidity frameworks, some marketplace where I can, you know, sell with a liquidation oracle and stuff. And that's definitely what a lot of people have been building around the value chain to bringing yield to liquidity to idle capital and conversely is maybe five times longer than that.

Because if you think of what a fund is, like you need to launch the fund before you tokenize it. Before you launch the fund, you need to launch a whole bunch of securities that you need to issue which the fund is going to buy offchain. And in order to issue those securities, you need to find real world economy participants like small businesses and consumers who like need some value out of the creation of that security. And at Trunch, that's what we do. We tokenize receivables and loans made to small businesses and consumers. And so therefore we remove the security issuance rails. We don't need a security offchain. It's created originally and natively on chain. We don't need um a fund to buy that security. We certainly

don't need a share class of that fund to be wrapped into a token so that it can eventually be distributed on chain. So we remove the fund and its agents, the issuance framework and its agents, the clearing house, you know, the a whole bunch of agents around that, the calculation agents, the note registars, the the auditors, all of that can be removed when you go all the way down to the asset, the bedrock of the asset. And I think that's where blockchains need to be deployed today. And that's the most important part of the life cycle in my view. Yeah. Can I ask you just kind of how you're thinking about uh getting users? Like what is the user profile and then how are you going to turn these users into money? Like what's your what's your thought around like what is

the user worth to you and what is your cost of getting a user? What does that business profile look like for your company? >> Yeah. So in that sense we're um we're a bit of a boring um business >> which is great which is bullish. That's actually amazing. That's what we need. >> I'm glad to hear it. Um I I would love to do something fun and you know worry about a completely random consumer who I'll never meet you know interacting with the app and and borrowing from it but that's not I think a realistic go to market for us and so instead what what we decided to do is to build universal rails whereby any fintech lender in the world with an existing product that's great and that's loved by a lot of people to say well okay I can white label the trunch protocol and where

today I lend through stripe into a virtual Iban and I have these coming gold accounts, you know, and eventually I hit the account of that consumer or small business. It's an opportunity to tell them, hey, launch your product in a stable coin version, but the exact same product otherwise same T's and C's, same repayment mechanics, same fees, but your customer opens a wallet. >> Yep. And I think to answer your question, a lot depends on the ability of large companies today to have a wallet and a stable coin offering, whether it's their own coin like Revolute announced last week.

>> Yeah, man. >> Or like CLA did already a year ago and we're not sure what's happening there. Um, or whether it's a general purpose stable coin that everyone ends up adopting. What matters is that if I'm a client and I go to some fintech because I need to borrow to buy my car, um I have an option to borrow in fiat or to borrow in stable coins. And if I borrow in stable coins, it should be a bit cheaper. >> Sure. It's obvious to make it cheaper because if you use tranch at the back, everything is cheaper. You save at least a percent on the overall cost of debt. >> Yeah.

>> And you connect the capital in a much more efficient way. So much so that the capital itself makes more money than the pension funds. you know ultimately make through the Goldman Sachs, SPVS, etc. old analog value chain. So both sides make more money. >> Yeah. >> All you have to do is offer that product into a wallet denominated in stable coin and that's the job of the great fintex with great product teams. We just provide the infra in a white labelled way. >> Got you. The the stable coins I think are getting built out at a rapid pace.

They're getting accelerated. My question and it actually goes back to your original question around custody particularly in France and Paris for sure but that's more so the the individual >> self custody has gotten a has turned quite a bit in terms of it its value and favor >> but >> right and and so Clement I think what what you're getting at is institutional custody is just as important to think about as individual custody and so you mentioned that you know the two pieces here are pretty much a wallet and a stable coin rails >> you mentioned a lot about the stable coin rails and I think there's, you know, companies out there that are doing a lot of the leg work to ultimately bring that to fruition. But what about the custody piece? What does institutional custody look like? Are

there providers out there that can help institutions at the largest scale spin up a custody experience in a wallet that we're not worried about, you know, these things getting hacked or data leaks or or any of this? Is is that available to us today or do we still have to work towards it? Um, honestly, so I think I know a lot about this by now because I I spent a lot of my time trying to make our products work for institutions and sometimes I'm a bit frustrated that I consider that it's incredibly easy in my view. Uh but I'm always disappointed by the slow pace in getting it done at at some institutions out there because I don't see much more risk in that versus some of the custody of private instruments, private market instruments

that they have in place at the moment. Um the answer is is is sort of twofold. Crypto assets have their own regulation. In Europe for instance, it's markets in crypto assets. So a stable coin um to be custodied if I'm a institution with a fund, right? My fund is regulated by AFMD for instance and so I have obligations as to the method of custody of any asset that goes into my fund. >> If my asset is USDC then my custodian needs to have a Mika license. >> Yep.

>> Now if with that stable coin I buy a trunched vault token. Our vault tokens are securities under mythid. So they are also an ERC20 token but they're not regulated under Mika. They're regulated under Miffid. >> Okay. >> And so for the cash leg to buy the instrument, you need to have a Mika custodian. But for the instrument you buy, you need to have Northern Trust, right? A mythid custodian, an old world custodian. Except that custodian needs to have a wallet. >> Sure. And those are the two completely different things. And people think it's one thing when when institutions approach the this, they think I need a wallet. But no, you need a mythfit custodian with a wallet on one side and you need a Mika custodian for stable

coins on the other side. >> And the problem today is that most custodians don't have one team for both. >> Yeah. Yeah. That's I mean we are just at the point Robbie calls it the legitimization of this space. I mean it's very much entering this regulatory we consider it now a tailwind for the industry rather than a headwind. But that's not to say that it's still a bit of a puzzle. It's still a bit of a serious part of your business of any business. So, Clement, I really appreciate you joining us. First guest of the of day one. Have a great summit.

Thank you so much here. >> Great to meet you. Thanks for being open. >> Thanks for having me. >> Really appreciate it. >> All righty. Rob, take away his thoughts overall. I mean, look, you know, part of the reason why I I am so curious about this institutional custody is because our next guest, Zack Pandle from Gayscale said this is the number one thing holding back the tokenization super cycle. >> Yeah. >> Okay. And so what I think Clemente said around, you know, the separation between two different regul regulated custodians, one for the cash leg and one for the stable coin leg. I think this is incredibly important and I think it speaks to what our next guest, Zach Pandle, said months ago about the number

one thing holding back the tokenization super cycle, this institutional custody framework. So, um I I think it's incredibly important and I'm excited to talk to Zach, not only for this institutional custody conversation, but also because >> we're euphoric around Zcash and Grayscale just launched their Zcash ETF. >> So, Zack panel, thank you, >> Zach. We started off the show today. It was good to see you yesterday. >> It's good to see you. >> We started off the show today and we were like, and people are going to, you know, people in the comments, oh, you guys, you know, got to act more serious. You know, you can't have any fun. And I'm like, I don't know how, but I'm euphoric in the disbelief phase of the cycle. H how do we get here, Zach? Where are we at? Why are you so bowled up?

>> Well, look at there's a lot to say. Great to see you guys. Well, I think one striking thing for me is during this bare market phase, one of the things that you saw was institutions keep building, keep leaning in to digital assets in all sorts of different ways. You know, we've been at today at the Avalanche event, you know, yesterday uh at a Canton event, a lot of banks, a lot of institutional investors. They work out different cycles uh than the the crypto market cycle, than the retail cycle. Everything takes a while. Everything takes committees, takes processes. So, they just keep building ahead. And it's been a pretty linear process. Price is just catching up to that institutional growth reality for the asset class. [music] I think we're just getting started. So re rebuilding uh from a market price standpoint, but

from a market infrastructure investment uh standpoint, it's kept going this whole time. >> Zach, I want to get your reaction to the Clarity Act failing to reach closure. How big of a deal is this? You know, now it seems as if we're going to get some rulemaking from the SEC and the CFTC. Are we better off or did you know just what is your reaction to Clarity Act kind of failing to go through Senate? How big of a deal is it? >> Look, not the outcome that Grayscale hoped to see. Um but not a big deal from the standpoint of crypto markets more more broadly. I would have loved to seen a bipartisan achievement uh if for our country, you know, ahead of election. It would have been amazing to uh to see a piece of bipartisan legislation get over the line. Uh that that being said,

everything just keeps uh moving forward. Grayscale has been at this game for 13 years working cooperatively with regulators. We've made huge strides uh over that time, especially on the ETF side of the things where our business operates. Things have gotten so much easier, so much clearer uh over time and we're going to see the SEC, the CFTC drive things forward with rulemaking as you know from this point forward. We needed Congress to draw that division of responsibility between the SEC and the CFTC for the long run. We're going to have to wait on that uh detail, but reggg crypto transfer agent rules, maybe the innovation exemption that we've been waiting on, these will help move the industry forward and we're going to see that building continue. So, not a really

a big deal uh for the crypto market here in the US. >> Yeah, and I think we we saw the relatively not a big deal reaction from the market, too. We're pretty much at very similar levels to where we began a couple weeks ago. Um, I I you know, there's a few different ways to describe the landscape as as we see it out there today. You've been on the show multiple times. We've described this as a tokenization super cycle. We've also said that this is the legitimization of the industry. We had President Trump up with leaders of the industry shaking hands and and basically saying that these things are coming to the US. And I think there are onchain businesses that stand to benefit from this legitimization of the industry. And we've also described this at varying lengths. I just heard you say the

institutional growth reality. We've maybe used more aggressive language calling it institutional FOMO. How like where are we on this spectrum between, you know, institutions and and and the regulators taking this seriously on one end all the way to, you know, institutions and regulators fomoing into this industry. maybe you can help bring together what a more balanced approach or mindset looks like to articulate where this industry is today. >> Well, it's exactly where it ought to be.

You know, Bitcoin is 18 years old uh this October, a reaction to the financial crisis and the weaknesses that we observed in the mainstream financial system uh at that time. And crypto definitely went through a move fast and break things period. a new technology adopted all over the world and then it took a little time for institutions for the rule book to catch up but that's where we are uh today we have demonstrated the use of the technology people all around the world get benefits of bitcoin stable coins tokenized assets all these different use cases of public blockchain technology now we're building a wholesome uh rule book uh again not just in the US but all around the world for this technology to push deeper into uh the center of mainstream uh finance

so I think we're exactly where we ought to be. It looks pretty linear uh from the standpoint of Grayscale, you know, not something that just happened uh recently, but something that's been playing out over a decade uh and will continue to play out over the next decade. We're we're here for it. >> I love I love the take because I think you're right. I think we are everything is always where it should be. And if you you kind of think about the physics and the higher powers that be, I don't know if you guys touched on the SEC exemptions. Um, but we got word about a week and a half ago through the rumor mill, which is I've come to learn has gotten me a little bit of deep water, hot water sometimes, but sometimes that's good. Um, and through the rumor mill, we heard that it was very unlikely

from DC insiders who told our sources that look, clarity is unlikely to come. It's it was, you know, prediction markets were saying this. It was kind of, you know, written in the stars in that way. However, what we did explicitly hear was that chairman Paul Atkins is specifically working on tokenization innovation exemptions that he has ready to fire off imminently as soon as today, tomorrow or Friday or early next week. What is your take on these tokenization exemptions and implementation of rule by innovation rather than by enforcement?

What's your take here? >> Well, there's been an unbundling of the elements of the clarity act into rulemaking. We we need these rules. The technology is there. Many different types of institutions, users are using the technology. We just need a a clear framework. So, we're going to get that in an unbundled way rather than through legislation. And that's uh that that's okay. you know, reg crypto. The first step step is about issuance of of tokens, using blockchains for capital raising the transfer agent rules. It's amazing that we've made transfer agents exciting again, but it is kind of exciting to see these uh rules modernized and very important for a institution like Grayscale that does ETF issuance. We really are at the heart of those uh those legal uh issues. We have uh lawyers working on these types of

things. So, we're we're grateful to see those roles. We'll see what we get on innovation exemptions. I I can't comment on it until it uh comes out. But this is to me is more about uh the onchain ecosystem. Once you tokenize an asset, where can it go? What can it do? How do we bring these assets to life? And you know, we know we I've seen Stani here from a already uh today. You know, getting uh lending a utility out of tokenized assets is one of the many elements of that uh story. So um we're going to get those rules. We're going to tokenization is going to continue and we're going to increasingly bring those assets to life. that'll bring value to users and ultimately investment value to the tokens that are in Grayscale products.

>> Yeah, that's amazing. I I would like to ask about that because Robbie and I were just, you know, talking about broad I mean, we've been just running around thinking about tokens on one side, onchain businesses and store value at this whole barbell thing. We've been outperforming. It's probably not going to outperform forever. It's going to become too consensus and then it'll be over, but it's not over yet. And so when you think about a chain like Avalanche or a broad kind of like L1 base layer chain that is clearly in the middle of Wall Street coming on chain, what is the thesis? What is the tokenization and the value acrruel thesis for something like an avalanche?

>> Yeah, great question. When I think about this tokenization mega trend and then put it back to the blockchains, what's striking to us is that they have much different design uh structures and I think of canton maybe at one extreme where institutions remain at the heart uh of it. And maybe that's not surprising. High finance institutional finance isn't going to want to take the institution all the way out of the process. At the other end of the spectrum, you have more peer-to-peer DeFi networks. Ethereum, Salana, they're more of that pure DeFi uh vision.

Avalanche to me is an interesting hybrid approach in the middle of that spectrum, offering different trade-offs for different types of uh users. Um customiz uh customizable uh in that way. I think it's going to have a great fit for lots of different types of uh uh for users uh businesses that want some degree of ownership and control but want some element of that DeFi. So different blockchains for different uh types of uh customers, different uh use cases. I think Avalanche carves out a unique uh niche. That's why we think it will be one of the long run winners in a crowded space.

>> Uh a little bit more on this. The the part of the context around this question was uh Robin Hood's success generating lots of fees and lots of earnings and Arbitum earning a revenue share B and as Robin Hood's fees scale so does Arbitum's revenue share. However, Ethereum does not scale with the success of its L2s. It has a very static uh cost for its block space and and and so we call into question the monetization strategy of these chains.

Maybe there's a different monetization strategy depending on where the chain lies on that spectrum. But what do you think should be done about the monetization strategy of a chain that is looking to partner with institutions and bring on magnitudes of tokenized assets? What is the correct monetization strategy? >> It's a important question. It's a deep question. We're not going to answer all of it uh here today. Let me say one uh thing from the perspective of of traditional finance. When you look at traditional financial markets, you have lots of different types of assets and you have commodities, gold, oil, natural gas, electricity, and you have financial claims, stocks and bonds that are about

giving my cash flow uh back. It's relatively simple in traditional finance. Those things live at two different ends of the spectrum. In crypto, we blur the lines between these two different types of assets. The hype token for the hyperlquid platform is both a cash flow asset and a commodity with utility in the context of the network. There are other things that are more at the poles. Um let's say uh Zcash for example is definitely a more uh commodity type of asset that's used for the function of money. So it's a tough topic but that's how we think about it.

a spectrum from commodity to cash flow assets and I think there is some complexity when we look at crypto uh not straightforward in all cases but different ways to acrue value and no single right answer for all the tokens. >> I like that tank because I think hyperlquid came out obviously was like look we're going to do 99% buybacks but the reality is like look I think they are at a point now where they can pull that down to 90%. And I think the market would probably flinch and be like, whoa, I thought this was going to go on forever. Like, but then if it's like, no, we're going to take that 10% and we're going to build the house of all of finance and we're going to use that money to scale the team, scale the product, scale the, you know, whatever.

Okay, great. Fortunate thing with them is that their core team is just so, for lack of a better term, damn wealthy that they'll they have infinite runway. And so they kind of have a privileged position, but then you go down the line and look around, look across the room, and it's really a business by business conversation. Like Paul, the CEO of Morpho, came on our show. I think this clip, you know, went pretty viral. And he's like, "Look, I'm not doing buybacks. I'm I'm shooting for a,000x here, for 100x here. I'm not shooting for a 10% 5%, you know, cash back payout or a dividend to all my holders." So, I like the take on different strokes for different companies. What I think is the uh dependent variable here or the constant is generating revenue, is having a business, is having a product

to sell, is knowing your LTV, knowing your cost of acquiring a a user, a customer. Do you agree with that? >> Well, I would quibble slightly and I would say there are businesses and there are blockchains and they're not necessarily exactly the same thing. And I do believe that some things that are uh really decentralized, they're just open- source software that we've posted out on the internet and they don't require a centralized operator, they need to have different mechanisms by which value created flows back to investors than a centralized business with a team that's building for something for growth. And again, it's a bit of a a spectrum. Again, grateful to see the SEC come down very thoughtfully on these questions around things like um uh reg crypto. very thoughtfully

addressed these uh topics and I think it's something that we're going to increasingly need to think hard about that there isn't just centralized companies or there just isn't decentralized blockchains there is a spectrum and we need to think about when it comes to the application of laws uh where do they where do we draw the >> line we're coming up on time here but I got to ask man we're in the worst public perception of AI founders that we've ever seen since the inception of AI guys are there was a Time magazine cover with a claw prompt that said is is safe or something to that effect. Zcash has this reflexivity to it where as AI doom increases, Zcash seems to love it. What's happening here? Like what is like what is your AI

surveillance? All my homies hate AI surveillance. All my homies love privacy thesis. Why is this working so well right now? >> Well, it resonates wi with me. Look, I want to say that we are AI optimists. you know, public opinion on this uh topic is incredibly lopsided. Uh we count us among the excited and enthusiastic about AI. That being said, new technology does create new risk. There's a kind of dark side of the force uh if you uh will and surveillance risks are an important one. We need to think about what are the tools that help us uh defend our ourselves that help us give user autonomy. In our view, Zcash is a very special piece of uh technology that

helps ensure user autonomy in a world of potentially highowered AI surveillance. And this is a mega trend in society, well beyond crypto, well beyond technology investors. Uh you mentioned all your homies, you know, uh you know, certainly my circle of uh friends and neighbors is talking extensively about these topics. I think they will feature prominently uh in the midterm elections. And this is something that we see when we look back at history when there is new piece of technology. So Zcash is one part of that story. We think an important part of that uh story and we think it's one that's going to play out over the coming years, not not just a short-term trend.

>> Yep. >> Zach quick segment today. We appreciate you spending the time. Thank you so much. >> Stay bullish, man. I love your content. I I love being bullish and being optimistic. I think the industry still is kind of 50/50 on optimism versus pessimism, but I think we'll see that flip to 100% and uh I think we'll be in good in a good spot. So, I really appreciate that. >> Us, too. Great to see you guys. Always appreciate coming on. We'll see you, >> man. So bullish. >> All right, guys. Let's keep it going. We've got our next bullish. So bullish, [laughter] man. Just like unreal, >> guys. I mean, we're long Zcash. So, we're having fun. I mean, we're just long digital assets. We're just long We're just long innovation. We're long tokenization. We're long stable coins.

We're long like regulatory tailwinds. We're just along this notion that this industry is in its crossing the chasm phase and the next speaker that we're going to speak to is going to just illustrate that even further. Rob Krugman of Broadbridgeidge. We were at the Canton Summit yesterday. Rob youall is on stage doing his opening. Perhaps Rob was there as well. And Yuvall drops the bomb that Canon is known for which is $300 billion of repo markets settled. Broaderidge repo market settled on chain. We're here at the Avalanche Summit. I know Broaderidge is in bed, if you will, with Canon, but I'm sure Rob is going to tell us more about their

plans, what they look at, and how they view this ecosystem. Rob, >> love the jacket. Thanks for being here. >> Nice. I wanted to be nice and bright this morning. Thanks for having me. >> Yeah, the uh interesting. I will actually correct you though, $380 billion a day repo. And we expect that will be close to a trillion dollars by the end of the calendar year. So, a lot of momentum and movement on that area. what's going to drive that? You know, >> we're just bringing on more and more banks to the ecosystem that are seeing the value and kind of going from overnight to intraday. Um, and so, and there's a huge amount of efficiencies that can be realized through that process, which is great.

>> I also will say kind of your other question about like different chains. We're completely agnostic. So, we'll be we announced our DLX solution a few weeks ago, which is an expansion of what we do in repo and we can support 18 different blockchains already. So Rob, can you give us a little bit of inside baseball because I think our audience understands kind of the tokenization supply chain as it relates to commodities and equities. These things get held and then they get tokenized. And I think we're relatively familiar with that, but the repo market is pretty specialized. Can you help us understand how the repo market currently exists today and what the tokenization supply chain looks like for a repo? So, so really the repo market is, if you think about it, it's it's overnight loans that banks give each other to make sure they

have enough capital on hand to continue operations. And what we do with repo is we take what is an overnight loan and we can break it down to much smaller pieces. So the actual loan could be in a much smaller number of hours versus >> hours versus hours, but versus overnight hours, less interest to pay, more efficient use of capital and the ability to do that. And so as we think about the tokenization of other types of assets, right? So repo really is based upon treasuries, right? Tokenization will make that an easier process. The cash leg of transactions will move from fiat to stable coins, deposit tokens and money markets. But really any type of tokenized asset can be used as collateral, right? That's what we've seen kind of in the crypto space and then bringing that to real world assets,

whether it's equities, whether it's bonds, whether it's going to be real estate or other types of products, allows those assets to work for you even when you're not using them. There's one feature of stable coins and tokenized assets that I'm I'm curious how much of a benefit it is. It's a couple different ways to explain this, but words like programmability. Y, >> right? H how important is the programmability as you're looking to upgrade from the repo market as it exists today to a tokenized one. We also hear about idle capital and and so how much more efficient how much money can you save by making this repo market atomic or programmable? What is the right way to think about this?

>> I I think there's a few things. I think programmability, you know, one of the ways I often go to when I think about programmability is how are you going to ensure proper regulatory rules and obligations in a decentralized market and it's going to be through smart contracts. It's going to be how do we actually program these into the assets so that no matter where they trade, certain obligations or information needs to be insured before an actual trade can happen. And that'll provide massive efficiencies. the day think about all the people at institutions that are responsible for that whether it's KYCL OFAC other things embedding that into the actual contract and the asset itself very very efficient I think the other the other side of this is how the asset can work for you and defining that programmability into the

asset as far as how it can be lent who it can be lent to where it can be lent for what periods of time and it's not just around lending for collateralization it's also what what can you do with it so broadidge you know one of our largest businesses our governance business where we help with things like proxy voting and corporate action distributions. Okay. And think about how that can be codified into a smart contract and could potentially, you know, you can move and that actually a value proposition that could be sold independently and distributed independently, which is pretty exciting to think Yeah, Robin. I mean, it just gets me so excited to hear you so in the know and just bowled up on this technology because we've been here for 10 years and everyone starts, you know, you get trading, you get some Bitcoin,

you but in our era, we were reading books about the Bitcoin standard. We were reading books about this technology. We were understanding the nooks and crannies of how smart contracts work, why this technology is so powerful. And we kind of have lost that a bit in this new era of trading and memes and speculation, but it's coming back. And ironically, it's coming back from institutional allocators who just get it. And so I just want to say I appreciate it. On the note of kind of what Robbiey's saying here, what we heard yesterday at the Canton Summit was composability, but specifically across separate ledgers. Let's say ledger composability. We're talking, you know, banks into a brokerage into the DTCC into blockchains into the settlement

into the Broaderidge internal ledger. We're talking about the composability of all this as this big breakthrough. What is this like what's happening here? Like what does this mean? >> I think you know one of the challenges and I just talked about it. I was just on stage in the other room. One of the challenges that I think the DeFi community needs to understand about the trifi community is simply just turning something on is really complicated. >> First of all, there are regulations. Just because an asset is tokenized doesn't mean it doesn't actually have to comply with regulations. And so, how do we bring those things on? And it's not just it's not just one ecosystem.

There's different things that need to happen. I'll give a really interesting example. Think about books and records in an institution, right? So Broadbridgeidge on our infrastructure, we have about 300 million accounts in North America that basically run in our post trade infrastructure, right? So settlement clearing, books and records and reporting. If you think about onchain activity, a lot of that stuff is transparent because it's onchain, right? There's obviously permission versus permissionless blockchains and what you can see, but you can see a lot of information and a lot of data. the thought that tomorrow every single firm is going to rebuild all the downstream services that walk off of that, work off of that, it's just not feasible. So what, for example, what we're doing is we're saying to our clients that run our infrastructure, we're going to make this really easy. Here's a turnkey solution.

You're going to have connectivity into all the new trading venues. We're going to provide wallet and custody infrastructure. Either you can choose a qualified custodian or you could custody the assets yourself. And we're going to take all of that data and information and we're going to integrate it into the exacting books and records. Wow. >> Now, the reason that that's so important is if you don't do that, you essentially have two different institutions operating at the same time by consolidating that information, statements confirms tax regulatory reporting, all the other things that have to happen are now automatically integrated into the system. And we'll see, listen, longterm, could we hit a place where tokenized assets are larger than traditional assets and we flip the switch and we use onchain for every it could be. But I think, you know, let's not strive for the perfect

>> let's try to get it out there and get it running >> 1%. You know what I mean? >> And that's where we are. Like this year I've been calling 2027. This is the year of the unlock. And what I mean by that is globally there is not a broker dealer that is not thinking about how do you roll out Walt and custody infrastructure and then the other pieces that go with that. That's what everyone needs to make this happen. Whether you're a public company, a private company, an asset manager, everyone's interested in tokenizing assets because the value proposition. But if the only people who can buy, and I don't mean to dismiss the only are the 750 million people globally that are active in crypto.

>> Sure. >> That would be a shame, right? by turning on the brokerage industry in the banking industry. Now, you're unlocking this for billions of people around the world, likely through an experience that they may not even know that they're actually dealing with tokens. It's just going to be an extension of what their bank, what their broker already does. There'll be more products available. It'll be seamless, which is what I think everyone wants. >> Yeah. Yeah. >> Um, you mentioned that the repo market, uh, at its core is this overnight lending between banks in order to facilitate, you know, capital needs. And so what I hear you suggesting is that the banks themselves don't need to upgrade their infrastructure for tokenization. You can do that on their behalf. Is that correct? That for the banks that are on our infrastructure, absolutely. Even for the banks that are

not, we're trying to make it easy for them by providing a solution. We announced our our wealth solutions, for example, in the US and Canada. And essentially what that does, it provides wallet and custody capabilities either through us or a partner. It um provides for connectivity for trading and for liquidity. and it provides consolidated reporting and then handles all the governance activities we already do for these institutions whether it's proxy helping to facilitate corporate actions disclosure around prospectuses and other types of materials as well. >> Got it. And so between these banks and these infrastructure providers such as Broadidge how does the value flow because as we talked about and we heard from the summit yesterday this is a $13 trillion daily industry as far as I understand you guys are doing $380

billion of repo every day already. How and that's sort of the size of the market but how much in in fees and gener you know revenue is generated based on that you know somewhere between 380 billion and 13 trillion what is the scale because I take it that as we add different types of tokenized assets that can be lent out between these banks >> I mean this is a massive opportunity to create value as we add forms of collateral so maybe you could just paint the picture of the before and the after how much in revenue is generated from that $13 trillion ion dollar in the industry today and where do you think this can get to for the infrastructure providers such as broad >> so I don't have a good answer on the actual revenue that's generated um I'm

actually not even sure um but I can think about it this way so that 13 trillion becomes 100 trillion becomes 150 trillion I don't know what the number is as you have more and more assets that can be used from a collateral perspective one of the areas that we're starting is US dollarbased repo is probably the most common that you see in the world we've extended that to the G7 where we can actually use different underlying treasuries to facilitate this activity. But there's already conversations around can you basically do this on top of money markets? Can you do this on top of tokenized equities or tokenized funds? The answer is yes, >> right? And so, you know, I think the combination of of kind of traditional approaches like that, you know, there's Morpho, there's vaults, there's other things that are coming online where we're going to see this kind of the

ability to collateralize assets that are sitting still even for a very small period of time to generate yield. That's what this is all about. And one of the things I talk a lot to our clients and you know, a lot of the traditional financial service industry may not understand all the pieces of this. And so one of the examples I often use just in the stable coin versus money markets area is I think about a stable coin as your checking account. Think about the money market as your savings account. But then think about being able to move information back and forth real time, >> right? So when you're not using your cash, you're generating yield.

>> When you need to use the cash, you instantaneously convert it back and you facilitate a payment. Like >> it's kind of like a no-brainer, but >> it is a no-brainer and it's not the case right now. >> It's not easy. It's not the case today. >> And they add in foreign exchange and all the other things that goes with that. Um I think later today, right, Circle's announcing ARC, right? That's a really interesting capability where you can seamlessly move between potentially different stable coins in different countries. >> Very exciting stuff. >> Yeah. So Rob, I again I just love how educated and passionate you are here. When you think about like the end, not the end state, but the 2030 vision of Broadidge, you know, obviously you're not calling all the shots there, but you're calling some of the shots here, right?

>> What does that look like? like what is Broadidge's what is the difference from today versus in 2030 about what you guys are doing onchain specifically and what does that vision kind of look like so I'll start with this one of the questions we often get is okay what percentage of adoption do you see in equities in the next few years and I'm like that's that's a trick question I'm not answering that the joke is one of our executives says it's somewhere between 1 and 99% and I'm not going to tell you what it is what I can tell you this is that for foreseeable future over the next four or five years these two systems are going to need to work together and what I can see is the introduction is how do you take this kind of new capability of digital assets and feed it into the old traditional

assets I do expect by 2030 that'll start to shift a little bit where the traditional infrastructure may actually start to be replaced by the onchain infrastructure and I think the benefit of that is going to be efficiencies right like you know inside operationally if you can provide efficiencies that equates to cost savings and that what it's that's really the back of the middle office. What gets people excited? If you think about the front office, what gets people excited is yield. Well, it's yield and it's access to more products. And so, one of the areas I get most excited about are private and alts. If you think about the way we invest in these products today, it's complicated.

You have to fill out applications. You have to go to the appropriate wealth firm or go directly to the underlying alternative investment manager. If we think about the tokenization of those assets, they start to trade almost like a like an equity security, right? Right. Much easier to participate. The other thing is we can take the entry point where think about who invests in a a PE fund or a VC fund today, right? They're writing a check for a million dollars that they can leave there for seven years. Even if we just stick with accredited investors, those in that million to $15 million range, >> they're not writing a million dollar check that's going to sit on the sidelines for seven years.

>> Yeah. So if we can reduce that entry point down to a few thousand where they can get that exposure% huge opportunity and then I think where it's going to be really intriguing is both on the asset manager and the wealth side as they develop strategies for clients those strategies can now actually be a lot more personalized to the specific needs of the uninvestor and it can include asset types that they never be able to include before. >> Love it. Yeah. You know, like like Andy said, we we've been at this for just about a decade, and we've found that the conversations that we're having have shifted from the technological ones to more the finance ones. Ultimately, this is fintech, but we've shifted from technology more to finance. And I think that's because finance has become the limiting factor. And so, just to kind of

reframe the last question, what do you think are the limiting factors? Because it no longer feels like the technology is the limiting factor. Is it regulatory? you're saying if we can, you know, kind of bring down these barriers and increase access, what is what do we need to solve to accomplish those things? >> So, I you know, it's interesting. Big financial firms are moved by usually one of two things, right? One is um related to a new startup that's entered the space that does something completely differently. And I I'm going to age myself now. I think back to the '90s when trading went online and we went from $150 trades to $10 trades and every single bank and broker created an online division which eventually became the brokerage division. So that's kind of

one thing. The other is really around regulatory change and I do think there are certain firms that were hoping for the clarity act to be passed yesterday as a driver to facilitate this. I think absent of that though there's certain activities that we see the DTCC na and NASDAQ embracing this in the US and London Stock Exchange and Deutsche Boris and other exchanges around the world. There's a FOMO that's now building where people are scared they're going to be left behind. And so where that starts becomes what do I need to do to be able to participate in the ecosystem for me and for my customers. And if you think about it, it starts with wallets in custody. Right? Today you cannot hold digital assets in an account. So you need a wallet and custody solution and I

think as that starts to come then firms can start offering these products to [music] their clients across all different areas of their business. Right? So, we think about, you know, we're really focused on capital markets, kind of the the securities market side of things, but think about the banking side of things, right? Tomorrow, when my bank enables me to hold assets via wallet, I can send money to relatives overseas instantaneously at almost no cost, right? I can generate yield on those particular assets that is sitting in my checking account in a ways that I've never been able to do before. That's all coming, but it starts with this big unlock, right? Yeah.

>> And I think the good news is the traditional financial services community is not just they're not just I would they're not scared anymore. They're like how do we embrace this and how do we recognize the efficiencies ourselves. Yeah, that's what I was going to get to rap because this question was great and great answer because it's just kind of like >> getting us to who's going to win and who's going to lose here or like what is the outcome going to look like and we we asked this question a lot and I'm really curious your take is if this tokenization thesis is correct right we you know broadsid gets to a billion a day in repo then 5 billion you know you're doingillion sorry [laughter] sorry trillion I didn't say that >> yeah a little bit of a different number there uh five trillion a day right you

know tokenized equities get to hundreds of billions right, etc., etc., stable coins and >> who wins and then by default who doesn't necessarily win as much. >> Listen, there's no doubt that there's going to be intermediaries that are evaluating and have an existential crisis on their hand of thinking about how do they position themselves going forward. You know, in in my head, you either innovate and disrupt or you be disrupted. And I think a lot of firms are starting to recognize that. I I do where if you think about where efficiencies are going to come from, it's going to be through automation in the way back office services operate.

And so that market's going to evolve and it's going to change. I think who wins out of this. It's going to be the consumer. >> It's also going to be institutional investors, but at the end of the day, the consumer is going to be able to do things they've never been able to do before. And I'll just give you two examples. As a US resident, you guys are US. Okay. >> It's really hard to invest in foreign companies, right? There's a few ADRs that are listed there. I got really excited the other day when I heard that Lseg is going to actually make the top 100 companies available in a tokenized form which means we can buy them. And so I think the ability to kind of get that exposure globally really really exciting. I think what may be even more exciting though is the unlocking of

emerging markets. Right. I I spoke at a conference a few months back um is in DC. was around kind of it was a trade conference and I joke that perhaps the biggest trading event that has ever occurred for the United States is the introduction of US backed stable coins and tokenized US treasuries, right? people that you know in emerging markets. I I I I did a project with this group in Cornell and one of the students was from uh Nigeria and he talked about how they get locally they get paid in Nigerians currency and they really can't do anything with that money. So they need to convert it to US dollars and they either go to the guy down the street who can do it instantly and give them 20% of their money or they go to the bank and it takes 30 days and they

take 10% of the money. And so he like came up with the model, why don't we just pay everyone in US dollar back stable coins and we'll give some of that money to the federal government. We'll build in the the essentially the bribes. But that's like really valuable like the ability to kind of seriously change people lives in these emerging markets. I think we're going to start to see that come true um as this starts. >> I love it. Rob, thank you for your time. Thank you for the answers. Thank you for the energy for the just being here. >> The education and the insight into this repo market. who feels like we're on the precipice of this tokenization super cycle and the repo is one asset class that I think is ripe for tokenization.

So, thank you so much for uh the pudding man. >> Enjoy the rest of the conference. >> Cheers, buddy. >> You both cheers, man. Cheers. >> All righty, guys. Um, another extremely bullish interview, if I may so so say so myself. Um, I would describe our next guest as a character. I would describe her as a character in a very fun way. And this is about to be quite fun. Uh if you never heard from Sandy Call, then you're going to have a laugh, a smile, and we're going to have some damn fun today. I'll tell you that much. Um tokenization is simply accelerated. Uh I cannot say the direct quote or the

brokerage or the firm, but maybe somebody affiliated with Sandy said that they're trying to do a yard onchain of tokenized money market settling almost I think a day uh by the end of 2027. So we're we're moving. We're talking about yards now. Sandy, she's in the house. I love Sandy so much. She's amazing. Sandy, great to have you back. >> It's so fun to be here. One of my favorite interviewers always. [laughter] >> Yes. Amazing. We'll catch us up, I guess. I'm the new one here. I have It's good to meet you. >> No, no, no. You have interviewed in the hotel room at least two or three times.

I think I stepped out for that one, too. >> Oh my goodness. How about that set up, Sandy? Yeah. And you missed the fan. I have [laughter] heard so much about you. So, it's great to meet you. And uh I I want to I'd love to get catched up. >> Yeah. Catch us up. I mean, Bermuda was what, four months ago? >> Um we were kind of deep in the bear. uh vibes were down but institutional side from your side has been a constant progress. Um catch us up. >> Yeah. So look, I've been thrilled that the markets have been a little like uh low key because we are accumulating some of the best talent in the industry. We are huge believers that this is going to be one of the best investment opportunities for people's in portfolios probably for the next two generations,

right? And we are so at the beginning of this new period of investing. And so we are putting together the top crypto investing team across the street that's going to continue to grow and build and we'll have some exciting launches next year. >> Here we go. >> Um but this is our time to build because this is the moment that I think we see mainstream understanding that crypto is as important a set of technologies as AI. And every institution in the world is well positioned to benefit from AI growth in their portfolio, but they are way underpositioned.

>> Extremely underexposed. >> Extremely underexposed. >> And so it feels like where we are right now is, you know, we're on the heels of the Clarity Act, not reaching closure, but we're on the precipice of tokenization, super cycle, and institutional FOMO. And and so given that that is sort of the flux that we find ourselves in, what excites you the most? Where do you find yourself spending the most attention? What are you focused on? >> Yeah. So, what excites me the most is this new potential that I am going to be able to move the point of advice >> to the wallet, right? That my wallet is going to become my interface to the world.

>> It's going to merge my payment wallet, my crypto wallet. It's going to become one and the same. It's going to be my interface that I use in the world just like I use my smartphone as my interface to the world today. That wallet is going to be as critical as my smartphone. And everything comes to me in my wallet. My investment advice, my portfolio advice, the agents that are going to be rebalancing my portfolio on my half, the agents that are going to be optimizing every asset in my portfolio in my behalf. All of that is going to come to me because this is going to be the way I succeed in an AIdriven future. My data is worth money. My wallet is worth money. And people are going to service it. and that's how I'm going to make my living.

>> Do you think the wallet solutions that we have available to us right now are adequate for the future that we're faced with. >> They are evolving and they are they see the picture, right? They see the vision and they understand what needs to happen to get us there. And that's why even with the Clarity Act having followed, I don't care because it failed because of ethics. It didn't fail because people disagree about how we should operate with the assets themselves. So that's just a matter of time. >> Yeah. All right, Sandy, let's get bullish. Let's get bullish here. Franklin Templeton's got a ton of assets onchain. Market looks great. You know, what are your north stars here for Franklin Templeton goals wise? Let's talk numbers. What are you trying to get onchain by the end of the year? What's your outlook for next year? How many

assets? What asset types? Let's get let's get kind of let's get, you know. >> Yeah. So, we're just over three trillion three billion. Sorry. Just over three. [laughter] >> Exactly. We got it, guys. We got it. >> Just over time. just over 3 billion in assets, right? Uh I would like to see that well over five by end of the year. I think that we could potentially double or triple that number by this time next year. >> Wow. And what drives that growth? >> What's driving that growth is the combination of a trusted brand name with an 80year history that operates globally and 1.8 trillion I'm using trillion correctly this time. trillion of assets globally um with a firm that operates digitally native. Don't forget we

launched our first tokenized fund and have been running it 24/7 since April of 2021. >> No way. I didn't know that. >> So, we are a digitally native player who happens to sit within a highly respected, globally known $1.8 trillion global asset manager. So that's what's going to attract the assets. >> What do you think of the learning moments like over the years given that you were one of the first ones, if not the first one, to tokenize these funds? >> You've had the experience that others will face as they start to tokenize and enter the market, but you've been here for a while. So what have been the learning moments that you think others will soon face and realize that you know

everyone will come to understand? So it sounds so elementary but like one of the biggest learnings is in crypto everyone subscribes and redeems to investments using stable coins or crypto right >> for a regulated investment product you need to use fiat cash >> so moving the stable coins or crypto into cash is like a critical part of being able to run a crypto investing business >> right that's so elementary right but I'd say some of the other lessons we've learned is that you got to be creative, right? Because we are digitally native and we were the absolute first to ever do this. We have already started to reinvision. So our money market fund, we can calculate interest intraday. So you

know if you hold it for 3 hours and 6 seconds, you get 3 hours and 6 seconds worth of interest. Y >> nobody can do that today. >> That's huge. So there's no no such [music] thing as idle capital now. >> No such thing as idle capital. >> Sandy calls world. There is not a single scent in her portfolio that will be idle. I'll tell you that right. Not only that's not idle, it better be earning me a lot, >> right? This is the productive asset piece. This is and I think everyone sort of it's a huge light bulb moment once we understand the programmability of what's possible on chain because we take all of this idle capital, we turn it into productive assets and that goes for assets all across the risk.

>> That's right. And with AI, right, and this intersection of AI and crypto is something we should talk about every day from now on because with AI agents, >> I can trust that my agent is scanning every single collateral pool, every single DeFi pool, every single exchange, every second of the day to find me the best possible deal. And it is then executing on that on my behalf. I do not need to be managing my portfolio. I just need to set the goals and set the expectations and then this is going to self-execute for me. It's really going to be so exciting.

>> And I got to ask you just kind of thinking about like putting your investor hat on. Um, you know, we've gone through this bare market, right? You guys have grown your assets under management on chain throughout the bear, right? Obviously, bull markets bring more speculation. I think we're very firmly in a bull market. We've got a Fed rate hike today potentially. I don't think it matters higher by the end of the year. I think next year is going to be very positive. We have too many catalysts, too many tailwinds. What can we think about from the investor perspective to make the most of this upcoming cycle or bull market? How do we think about optimizing portfolio and optimizing positioning for this kind of what I consider crypto's first institutional bull run?

>> So, as someone who has managed money for many many years in my career, you know what you have to understand is what has just occurred in the past year. We have washed out the speculators in the market. The market has moved from what they call weak hands, which are people that were going to move their money quickly into strong hands, which are people who are going to leave that money in because they now have great entry points. Right? So you need to understand that when the markets are the most quiet and boring is the best time to get into those markets because otherwise you end up chasing the market as the market goes higher. If you only start establishing

positions once the bull run has begun, you put yourself at a real disadvantage. Whereas if you can position and be patient now the rewards you get on the other side of that are going to more than make up for the weight. Right? So understand where we are. We have put a bottom or are making a bottom into place into strong institutionally established positions that they are not going to get shaken out of. I totally agree and that that's what I was going to get to is I just think that the capital now is stickier, less swayed by volatility and more willing to zoom out. Would you agree with that?

>> 100%. Right. And as people have been like getting excited about prediction markets, which are super fun, I love them myself. They've been getting excited about tokenized securities, which is really, I think, a harbinger of how big this space is going to become. They've been ignoring crypto and this is not the time to ignore crypto. This is the time to position. >> Yeah. And so as we think about positioning and outperformance, one of the things that I think is most lucrative as we think about a long-term time horizon is compounding. What do you think are the parts of the industry, the facets or the or the little pockets of the industry that are most right for exponential compounding as we go forward?

>> Look, I am a huge believer in certain new decentralized business models, right? So I think anything that has to do with decentralized digital identity, huge opportunity space. Anything having to do with agentic AI and micro payments, huge opportunity space. Anything having to do with postquantum computing and codes, right? Being able to strengthen the security infrastructure, huge opportunity space. So we are moving past the Bitcoin leads and Bitcoin is the predominant asset. Bitcoin is going to be an important asset always. But what we need to understand is that the

fundamental investment case for other parts of the ecosystem has strengthened to such an extent that these are becoming really important growth opportunities that you should have in your portfolio. I I want to double click on the first one that you mentioned. These decentralized identity protocols feels particularly relevant based on everything that we've heard about around transfer agent regulation and the upgrade and modernization of the SEC rules is the KYC identity verification as these things become regulated and they need to pass KYC across blockchains and across different assets in a tokenized way.

>> What are you seeing? What are you hearing? what is the best approach as we literally build this out for the first time because it feels like this is maybe the one technical gap we have a lot of work to do on the regulatory front but when it comes to a technical solution it feels like this is a missing piece how should we think about this >> so I was the co-chairman of the CFTC's digital asset subcommittee and this is a critical thing that we are advocating for in the industry which is to go to this idea of an eventbased KYC amount Right. So, why wouldn't I store my KYC AML information with my key that I need to sign a transaction? And when I sign that transaction, I should be able to do

an instant on the spot check of my KYC AML eligibility, which in turn should be a prerequisite to the transaction being verified, >> right? And so I think we need to change the whole thinking about where in the process it occurs, when in the process occurs, and how it acts as a gating item because don't forget today all these firms do KYC AML and if they update it once every 18 months, that's shocking. Right. >> Right. So it could be so stale. If we can do it as an eventbased process, it becomes a more secure system.

>> And the last point I have on that is composability. How do we achieve composability of KYC AML across assets and across chains? >> This is where standards become so critical. This is where having the industry getting behind certain smart contract templates, being able to really agree that we are going to use common language, common data fields, common processes. This is the unlock that's needed. I was talking in the presentation I just made. We are moving away from a system where Franklin Templeton builds its own infrastructure, Black Rockck builds its own infrastructure, Fidelity builds its own infrastructure. We're moving into a world where we all plug into a network.

And we need network infrastructure. And that network infrastructure for financial services has to be these smart contract templates that allow us to do the regulatory checks that are needed to really open up the entire 150 trillion of assets that trade glob. >> Exciting. I always appreciate our conversations because not only do you bring bullishness, which I think this industry needs, and optimism, but also actual depth and educational kind of power to just understanding how Franklin Templeton and just really this institutional allocator space is thinking about this asset class. Um, something in the air today. I don't know if it's an avalanche summit, if it's just the market, if it's whatever it is, but it's on. So, thank you so much.

>> Thank you guys so much for having >> See you guys soon. Thanks so much, Andy. >> Another insanely bullish conversation. Great. This is one. I like the rapid fire today. It's a little bit shorter segments. >> Thank you, Sandy. That's always so great. >> Great energy. Thank you so much. >> She's so fun. >> She's great. And and all all the conversations today have been great. They've been very educational, but they've got this air of bullishness. I mean, we're bringing it. I mean, we're bringing it. We're bringing it. We're bringing the bullishness, [laughter] buddy. Someone's got to be optimistic. Everyone's pessimistic on the timeline. I got bears in the live stream yesterday screaming at me for saying don't be bearish because clarity didn't pass.

Like why are we screaming at your lovely co-host for being bullish? How do you make money in this market? You make money by being bullish. Stay bullish. Stay long. Stay strong. Stay educated. Stay safe. We got Stanny Kulachov of a ready to >> RWA hub. >> The RWA hub is live. >> Come on over. We got Stani. You guys fired up. The RWA hub is live and uh this is an exclusive partnership between Avalanche, Tether and Avalanche. The RWA hub is live.

>> Stonnie, great to see you again. >> Stunny's in the house. Great to have you. >> Good to see you, buddy. Um, let's not bury the lead here, man. First of all, how you doing personally? How's everything? Are you all good? >> Tired, busy? >> I like the jackets. >> Thank you. Thank you. [laughter] It's a new era. >> Yeah, we're going to wear this at the next RA. I hope I hope everyone's ready for the Robing suit era. >> Yeah, man. [laughter] >> Everything's good though. Team's good. >> Amazing. Yeah. Yeah. It's been a pretty pretty cool like there's a lot of growth now. A lot of exciting things happening and uh the AV app is coming and yeah, it's been amazing.

>> Good man. Well, let's not bury the lead. RWA RWA hub launch with Tether and Avalanche, two kickass partners. Donnie, what does this mean for a nuts and bolts of this launch? >> Yeah, I mean uh the background is this. A has grown uh to be the the market leader, the leader in the UFI with basically lending and borrowing. So we have the largest pools um tokenized uh well actually like mainly like on crypto assets uh bitcoin, ethereum and you can borrow uh uh cash legs on on stable coins. So um this has been like very uh exciting process so far. We've uh o over the years we we processed over um 4 trillion in net deposits uh 1 trillion

in in borrowing volume. Wow. >> Just basically with few hundred lines of code. Um so it just showcases like how you can run a resilient uh business on chain uh at this scale without having back office employees uh doing basic credit doing settlement and doing all these sort of like uh um uh activities that we see in traffic. Now one of the biggest things for AB is to keep expanding into RWAS and why because um the market is bigger than uh than uh native crypto assets which is also a business that we keep growing but we want a to be powering everything in finance. That means that tokenized assets. So RWS is the format to bring these assets on chain and uh our goal is

to make these assets productive. So now we launched with avalanche a RBA hub which is the main focus for a for RWAS and us as a cash leg and what this means is that um effectively we wanted to make our base to be productive but being able to use as a collateral borrowed against and this is going to be a a big use case for uh institutions. Um and USAT is a partner on the stable coin side on the cash leg and they have a significant focus in the in the US where a is going to have a lot of uh institutional uh demand as well.

>> So I I I'm curious about the USAT piece of this you know the foothold in the US but a also has go like you have a native stable coin so why was it important for you to partner with tether and launch this with USAT? The interesting piece about uh USAT is that it's a genius compliant uh stable coin uh and go is a effectively a credit funding instrument um in in in in our ecosystem and part of this initi initiative as well there's going to be a GSM which is a um sort of like a AMM module where you can actually uh m go through USAT um that you can also use then go to uh capture the they they have a go savings rate which is

4.5% as well. So uh they're very synergic uh uh opportunities and why USAD is important for us is because uh there's a great emphasis on um uh also on institutions and institutional partners and this is the key for st for AWS uh and growing them on chain. >> Yeah. And so Stony when you're thinking about kind of um what the path looks like to scale this right. So V4, as you mentioned, has been absolutely crushing on Monad. It's been really doing well across other chains. It's been doing very well.

>> So obviously, you know, you're not new to launching versions or new products. V2, we were there for V2. >> No, I ship every week. >> We were there for V3. [laughter] >> We were there for V4. You know what's next, right? And so >> what is your strategy to scale this, right? Is it similar to V4, V3, etc.? Is it a different strategy given the let's say different clientele you expect to use it? What's your kind of scaling strategy? >> Very very diff different. So DeFi has grown over over the years and on chain finance in general and um you have to keep changing the strategy because uh you are working with a new audience and what is important in RWAs and institutions is is basically for them to being able to participate in various

different market structure. So, AV4 is a mod modular protocol meaning that you can have isolated pools. You can also share risk uh uh sorry share liquidity between the pools and what is exciting is that V5 and finance has liquidity fragmentation problem and a V4 is to solve that. So you can isolate uh risk while sharing liquidity across different uh opportunities and and use cases and and this reduces the cost uh improves the liquidity network effects um and um it's it's basically a what institutions are uh looking for. So that's why V4 is strategically very important to to achieve the institutional adoption and seeing RWS to grow on chain >> and as the name suggests RWA hub this is

for RWAS but RWA real world asset is such a general silly term if we're being honest >> it's like every asset is a real world asset just an asset so what specifically what asset classes is this hub specifically for you've designed it in such a way that appeals to is you know, tokenized money markets or treasuries or equities. Can you just explain a little bit about the specific asset classes? >> So, this is an interesting piece because uh into a hub, you can connect multiple markets. So, we're going to have a market where you have uh tokenized money market funds. You're going to have a market where you have tokenized bonds, tokenized credit funds, and and basically uh liquid uh instruments inside of those u vehicles. And then

we're going to have tokenized tops. It's going to be very very big part of our uh story on the next uh uh couple of years. So we simply uh want a to be used on all these asset classes that exist already. So we did really well on the crypto side and now it's time to take a and then just use it everywhere. And this should actually then going back to that few hundred lines of code and what we've done with uh lending and borrowing uh being able to bring that cost efficiency into traditional world is where a can succeed. So if you can actually access what could be a better at a better cost structure less middleman less fees uh directly on chain with a that's going to be the default path on on accessing capital and borrowing against and that's

what we want to go towards. Yeah. Um another uh you know iteration of a that comes to mind as it relates to RWA hub is a horizon. Can you just compare and contrast like what is the difference or how similar are Ave a Horizon and what it's for and what RWA hub is trying to >> I'm curious about the strategy series like a combination is it kind of going to merge together like Tesla SpaceX you know tell us about what's happening there >> yeah exactly and uh Horizon has been incredible uh market grew to half a billion and uh a horizon has been like a baby to us and basically the RBA hub on Avalanche is going to be the the the the sort of like a more like a teen version of uh of of a supporting um uh RWAs and

the key is that Horizon has uh various different assets. Uh it's a very heterogeneous market and what we're going to see with uh the RW market on Avalanche is that you have different asset classets >> uh in different markets that are connected interconnected with a hub >> and this is going to be the the the game changer. We're going to share liquidity across different markets while capping the risk uh uh based on risk assessment and this is going to help to scale our base without having this sort of a liquidity um uh fragmentation issue and just one one followup here and hypothetically like you know given that this RWA hub is kind of like a grownup version of a horizon and it is specifically built and designed for

regulated asset classes in the United States. I can imagine that there might be a regional approach that maybe we go to Europe or we go to Asia, we start to build purpose-built designs for those regions right? >> Exactly. >> Okay, great. So, that is part of the strategy. I wasn't going to suggest that, but I that is great validation. How does that work? Maybe you can just unpack the strategy as we think about regional approach approaches for a iterations. Are those isolated? Do they come back to the hub? what kind of composability or fragmentation exists.

>> So obviously we don't decide how uh it's going to play out. We could and in terms of go to markets um we're going to support any kind of a use case that is uh has a lot of value for the users. So I personally think that the the sort of like regional aspect happens on the uh asset issue level but I also think that there's going to be a global market and a US market and then some of the regional markets in in Europe depending on what types of assets we're uh are in in question. So I personally advocate for completely open uh markets you know and I I've been a DeFi advocate building defi and onchain finance for the past decade now. Um I think there's some safe parts that the institutions want and I

think uh that's a great way to start but end of the day the whole mobile financial system has to be interconnected uh open but the risk needs to be managed and asset issuers are the best place to manage the risk because they have all the tooling available uh there. >> Yeah that's a great point and I really appreciate that answer very educational. I didn't think about issuers as that kind of point of control, if you will. But that kind of gets us to the broader question here with RWA hub and just how you're thinking about scaling this thing is clarity didn't pass. I saw your tweet. I quote tweeted. I was like, look, clarity is, you know, dead, but we're still going to win by tokenization exemptions. Yeah.

>> Real exports of this industry, tokenization, stable coins, per vaults, RWAS lending etc. >> We've been punched in the face so many times. We get back up every time. we show up every day, we're going to win, right? And so I think you share a very similar >> We're fighters. We're fighters. And I think you're uh absolutely right. So regulators themselves want to, you know, they want to bring some regulation and and they they care about innovation. The past last year has been uh really pro innovation for a lot of these regulators and they see a lot of potential in the space, the cost savings and cost structure. there's a lot of improvements, access, transparency that uh onchain can bring. So, you know,

there's no no doubt about that. And I think that uh what we need is simply build use cases that bring millions of people users on chain and uh the lawmakers will follow eventually. I think that's I I think we we're doing a lot of uh great work in policy. We got the Genius Act. That's a big thing. Um, and you know, now I would say also clarity isn't, you know, the game isn't over there. You know, there's there's still things are happening, things are moving and we might still see something there. But I I hope I hope so. Um, and if that doesn't happen, um, end of the day, you know, the users will decide, uh, people will decide and if this technology is valuable and helpful, um, you know, the regulators, well, the

lawmakers will at some point uh, wake up to to that. >> Yeah. And just to kind of follow up there, first of all, I love that you're very present in the US now. I know that probably it wasn't always that way for a lot of the OG DeFi founders [music] especially. I mean, you know, I know a lot of founders who just didn't step foot in the US. And so, it's great to have you here. It's great to have the industry kind of on shoring, but also it's a global industry. It's also a bipartisan industry. So, I think from what I've heard, we're we were about 80% of the way there on Clarity and there's still possibility for a bipartisan outcome. We just know without getting into that too much and kind of what you said about the issuers being the point of control how

you're thinking about these tokenization exemptions what that future looks like for a what is required for you guys to be able to really scale RWA hub and kind of this institutional offering. Do you have the licenses that you need? Do you have to go to the SEC and talk to them more? Do you need to get uh rules from the SEC or CDC? like what are you looking for? What kind of like what do you want from the regulatory bodies to be able to move forward towards your goals? >> I think uh innovation exemptions are really important. So obviously clarity act provided a lot of u lot of sort of um uh certainty around what can be done and what can uh you know for example whether it's uh for financial institutions or defy protocols um I

personally think that innovation exemptions should uh be out there for uh protocols uh defy builders uh on tokenization as well uh on vaults and these are the topics that sort of needs to be u somehow brought clarity and if it's not the lawmakers like regulators have a uh a good opportunity to actually come and step in uh here and and and provide more uh certainty for developers to innovate and the sooner that happens the more innovation uh the United States will capture more developers will come here and more startups will build the future of finance we are building the future of finance and um it's up to the US uh up to the regulators and lawmakers to decide how much of that will happen

here um in in the American soil I I have a specific question on this front. A as we think about composability across regions and and jurisdictions. I I share your vision of one global open market. I I'd love to get to that point, but currently we exist in a regime where we have fragmented regulatory jurisdictions across the world and that creates frag, you know, regulated market regions. One hot topic that we've heard a lot about today has been composable KYC and AML where there's like these decentralized identity providers that do KYC at the point of attack, you know, event driven KYC and then >> level potentially at the issuer level

and then that KYC is shared. But this is extremely important because now we're dealing with regulated assets and KYC is required. And so does a have a perspective on how KYC, AML and identity should be handled across chains for regulated assets. >> I mean um people have tried to solve this for many many many times and if someone solves that that would be amazing. I will buy that that person a dinner [laughter] you know any any time because it is a really like a it's it's sort of a simple problem that's uh could be solved with a simple solution but there's certain like a coordination problems and requirements between different participants I do think a lot of the KYC will happen on the issue

level on the primary issuance and I think that's a good approach where the secondary sort of like a market should be permissioned open and and even on the primary issuance I think we still want to see um uh some kind of like a uh coordination uh between asset issuers with with KYC providers and and simplifying this problem because especially when you use these assets as a pl and you have liquidators you know they they have to on board as a client to be able to redeem some of these assets being able to reuse the the data it's a data problem essentially >> yeah exactly >> data and API problem so whoever solved that is is uh you know dinner is on me >> feels like CK product.

>> I I can see it. I I could see it. Stunning. Just closing out here. Closing thoughts. >> Um, you know, I don't want to bring up uh Sour Tea here, but obviously went through a rough situation earlier this year just mentally, teamwise, what's it been like to bounce back? Um, not trying to get into the details of what's happening in the legal front, but just talk to us about what it means to take a punch to the face, founder perspective, bounce back, build better. Um, and it looks like you guys are out on the other side here. what's kind of what can you share? No, I I think it's it's been um it's been an extremely big year for for a lot of events happening and and I think uh especially for the you know past couple of years uh there's is sort of like a um feeling about rebuilding

everything like you're rebuilding the castle >> uh effectively and I think it's been like a big learning experience for us but also there's been a lot and a lot of uh people who are being supportive a lot of friends in our networks who are basically um helping us to get get back on the feeds. And the past uh two to three months has been uh incredibly amazing. We we grew the uh the the AV4 uh into almost 1 billion. Um and also probably is already by by as we speak. >> Yeah. >> Um the AV app uh we're already uh you know that's coming out. It's still in pre-launch. We are giving go passes >> uh for people to come and on board early and test the experience.

>> Uh effectively want to bring DeFi to everyone. uh that means uh abstracting away like the the the the components of stable coins, wallets, networks or the complexity and just bringing DeFi to everyone um you know one user at a time uh hopefully millions and billions of users in the future. I think it's been a really humbling experience uh for someone who's building for so long and being a leader in the space and I think it's the best time to build uh we have a new chapter um our base are the future and stable coins and uh and DeFi is the epicenter that's where the best financial opportunities will exist and that's where um obvious the best positions uh position to do that. Yeah,

just one last follow up there, Stony. I appreciate the uh you know, genuine authenticity there. When you think about where we're now, I mean, I think our third Defi Slate podcast episode was with Mark, right? Mark's no longer part of the team, but it was just like some of the the rawest experimentation energy, if you will, possible from the early primitives of what this DeFi thing could be. You know, here we are 6 years later now almost to the tea. I mean we're a little bit more than 6 years probably seven years into a now or ETH land now a >> I mean I mean like if this is what this seven years look like what do we look like in the next seven quick reflections

on kind of like where we got to whether good or bad and then what is the next seven >> yeah I think the next next seven years is even more important where where we are today I think the early foundations has been built the protocols and and I think that's and a lot of primitives are seeing Big B builds uh A has uh amazing protocol team with uh we built some incredible innovation over the past years from like to V1, V2, V3 and now V4 and and V4 being modular it means that we can cumulatively innovate uh a lot of building blocks not just for a team but as a open infrastructure for everyone to use and and scale. Um I think we're going to a path where money becomes uh

on chain fully >> uh assets uh through RBAS will will be on chain and maybe we'll stop calling them RBAS and just assets. >> That's what I was thinking. >> Uh hopefully that happens already next year. Um and I just want a to basically cover all finance and and all the cost savings uh improvements will um roll down all the way to the users and we want to make finance better and also fight against inflation and create better opportunities. the cost of living is increasing you know uh energy cost is increasing and eventually the world is heading to abundance you know one category at a time now with intelligence with AI it's going to be also labor with robotics uh energy with solar batteries

um and eventually if if these abundant assets can be funded through a maybe this transition over the next uh 50 years can be speed up by a decade by using a an abundance assets and funding them and and really providing uh better financial opportunities for everybody. >> Yeah, obviously financing the future. >> I think there's only one more question. >> Yeah, please do. Please do. >> When RA >> That's a good [laughter] question. That's going to be a good one. Um when RA I need to think about that when when we're going to put another one out. I'm tempted I'm tempted to do >> maybe. [laughter] Uh wait, when's the next big conference? to you got >> using Ethereum conferences.

>> We have a lot happening. Yeah, we have a lot happening this year. Um, you know, but also next year. But the next round I want it to be bigger than ever. Uh, I want it to be for, you know, new people that are coming to the space using our technology uh without knowing even much about uh the underlying tech and just being the users of the end product. That's what I want the the next to be about. >> The a will be very crucial in that process. You know what I mean? whether it's ticketing or you know having users you know have that app and be able to just earn some yield on those stables etc. Yeah. when we reach uh 100 million users on the A app. Um well, let's talk about with 1 million users, we're going

to do a ra. >> Yeah, there we go. We'll do >> million users on a >> at 100 million. We're going to have a music festival that's going to be [laughter] at Stany's house. >> 100 million users we're going to have to do raw [laughter] and see you in a couple hours, I think, at the Arc event. bullish conversation. >> Another bullish conversation. We see Carlos is getting prompted by Tom. Tom is telling him what he can't talk about and what he can talk about. I'm already in hot water, so I'm not going to get myself in any deeper. I did receive some messages from Carlos the other week.

They weren't the they weren't the most pleasant of messages, [laughter] but we're going to make up here today, aren't we? >> Good to see you, Carlos. >> It's good to [laughter] see you, Carlos. >> Good to see you as well. Good. What a time to be alive. >> Yeah. What a time to be alive. >> What kind of controversy we're going to get into today? [laughter] >> Whichever one you want, Carlos. >> No, I don't know. You come out with >> Well, catch us up, man. You were just in DC yesterday talking to SEC. Obviously, >> I go there as soon as they come. I think it's it's very refreshing to talk to this administration. uh Paul Atkins and the team are are great and we had really good meetings there with the you know uncertainty what was going to happen with cloud or not which we didn't know

yesterday but I think irrespective of that I think we're looking at a very bright future for the industry. >> Yeah. Yeah. I mean, I think the industry was somewhat disappointed. Um, but you know, as you saw, we had gotten, you know, kind of tipped off about this tokenization exemption, uh, possibility for transfer agents to >> you know more than me about. Well, [laughter] we also we also had Carlos, we had Taylor Lynman, the chief counsel of the crypto task force on the show and he told us about right crypto, >> you know, he told us about some exemptions, whether it be innovation or tokenization exemptions, you know, uh, fundraising as well as 24/7 markets that New York Stock Exchange, NASDAQ are working towards. And then he talked to

us about, you know, the modernization of the rules specifically around transfer agents, >> which is great, by the way. And and so maybe you can help us understand like where we're at today in terms of what is real and what is not real because I think the rumor mill gets a little bit blurry around the engine. So maybe you could just help us clarify any sort of misconceptions that are out there. >> I mean the the the things that are real for sure is the modernization of transfer agents. The the the proposal from the SEC is already out there is open for comments. I think the comments closed in November will we'll be for sure uh commenting on those because obviously we're very opinionated company when it comes to that is something that you know at the tail end of the Jake Clayton era they tried to do it it never

happened at that time then Gensler I think as I posted I actually pitched that to to him and he didn't think it was important commissioner first was very supportive back then and she's now uh you know in a more you know leadership position at the SEC today and I think it's great to see that this is moving forward We'll see what end ups coming out. Obviously, there is some controversial aspects of of things there. Uh but but nevertheless, it's actually a very positive. So, that's real. It's going to happen. >> Yep. >> Recrypto is also out there again open for comments for people to comment. It's actually I like the way they've done it because it kind of mirrors uh the crowdfunding rules. Rec plus where you have 5 million tier, 75 million tier, depending how much you raise, you have

to have more disclosures, etc. Which is very it's very similar to how from the industry work from the job side that was done in 2014 I believe so that is also real but again it's open for comments now the innovation exemption for tokenized securities is not real yet it's something that I know the wants to do and they've been working on it for a long time is a controversial one >> more controversial I would say than the other two uh because obviously it's going to allow we don't know exactly what's coming out but it seems that the patter will be that it will allow you to do certain things with you know decentralized infrastructure that will not require licenses. So obviously the the more

trusted by companies in the space they you know are pushing back saying why do we need to be regulated and these guys are using a different technology and they have a lighter regul regulatory framework. I believe it will be somehow limited at the beginning which is maybe the right thing to do to kind of be able to experiment without blowing anything up. Um, and hopefully now that Clarity unfortunately died, that opens up a door for the AC to go and do something on that front. So, I'm hopeful that we're going to see it coming out in the in in a short period of time. >> Yeah, I agree. And I think honestly, Carlos, it should be a bit more nuanced and have a bit more depth to it than the breadth that Clarity had, if you will, which, you know, we'll see what happens.

We'll see what comes out. But I think the context here that we've kind of glazed over that we need to address is Robin Hood stock tokens. Because if we're being honest, Vlad going on TV saying tokenization is the future of finance is driving a lot of the conversation, >> which I agree. He's great. He's he's the one of the best spokespersons for the industry. So >> yeah, and I agree. I think he's doing everybody in the industry a service. However, what I do not necessarily think is the best is that we're conflating different types of tokenized assets as one concept when they are not. And we don't need to do a whole education power hour on on different types, but I think it is important to hear your perspective on stock tokens and on this kind of un like on this breakthrough that they've

had on Robin Hood chain. What is happening there from the securityiz perspective? What do you think has worked well and what do you think is a cause for potential concern? >> I I think I I wrote an article on Monday this week. Um there's kind of like three models, right? You can tokenize a share and the token is the same share, the same rights, the same you table, you're the rightful owner is completely legal in the US and uh worldwide etc. That's what we did with our IQ when we put it on chain when we got listed in the New York Stock. You can tokenize an entitlement which means the share itself is held at custody somewhere and the token is basically um a full securities

entitlement that allows you to actually within the the share and the full security entitlement are regulated uh under code a UCCc and they are precisely regulated to make sure that they represent the same instrument you always have a claim to wars etc and essentially today when you go to a broker dealer in the US and you buy Apple shares you're not getting the share, you're getting an entitlement. You always have the right to claim the share, but you're not getting it. And then the third one, which is what Robin Hood, many other people claiming that their my model is better than your model. I mean, they're all, in my opinion, derivatives one way or another, some of them more regulated than others, some of them fully unregulated, some of them regulated by offshore jurisdictions, etc. But in

those models, you're basically creating a derivative. and a derivative that is basically what what the token gives you access to a derivative. You're not tokenizing the share. So I think it's very misleading to call these stock tokens. In the case of Robin Hood, they're debt securities. So maybe it should be called dead tokens or something like that. And I think that's part of where where the confusion comes, right? You know what is that you're actually marketing and and buying and then what problem is that solving, right? Because a lot of the activity that happens in the chain is just because the tokens are permissionless. So people can do anything they want with them and they create all these trading pairs with memecoins and stuff like that which obviously if you you do full you know regulated instrument you would not be able to do those things but you know

at the same time regulations are there for a reason right to protect about insider trading AML you know and protect that terrorist don't get hands of US securities and stuff like that I I I think one of the key takeaways here is that these are different products >> 100% for different target customers meaning The target customer for a a debt security or a stock token that Robin Hood calls it. The target customer for that is a retail investor, someone who may enjoy pairing their stock token debt instrument with a memecoin. Whereas the model that you're describing, securitize, has taken I think has a it's a different product and it I think has a different target customer. Who is the

target? >> I disagree. I disagree. Okay. Look, Robin Hood is a phenomenal company that I use every single day since 2020 that has built an extraordinary business by serving retail customers, >> right? >> And and that doesn't necessarily mean that, you know, you need to not be fully US regulated. They have 30 million customers or whatever. I think what you're serving there is not retail. It's the crypto DJ >> which is subset of [laughter] retail. >> It is correct. Subset of retail. A lot of retail people want to make sure they have buying fully regulated products that they know what they're buying that they have protections that you know that the things are not going to blow up that they trade at the price they need to trade that they have all the rights etc.

So I think that that's not just retail versus institutional. This is all a very extreme part of a retail. >> And so you would say that the product market fit that Robin Hood's debt instruments have found is primarily with crypto dgens and that's not indicative of the product market fit that you think tokenized equities in general could arrive at. >> I think I think we've we've all been long enough in crypto to understand that the crypto den crowd it's a limited amount of people. The majority of the people want to make sure that they buy things that are safe, that are sound, uh that are regulated, that they they give you what they promised to give you, etc.

So, Crypto DJ is great and it's a lot of fun and today is, you know, Robin Hood stock tokens, but before it was NFTs and uh and before that it was uh you know, memecoin, you know, after that meme coins, etc. So, there's always going to be something new for the for the more crypto digent thinker. That's great. Um I think that's a a very limited uh audience if you want to build products that are scalable that go across jurisdictions that you know have proper retail adoption um institutional support from a you know market making perspective and stuff like that then you need to build products that are more fully regulated. Okay. And getting getting into some of the nitty-gritty around the regulation here for tokenization. Again, we had Taylor Lim on the show and he's leading the charge

on a lot of these things. And one of the things that he's looking for is feedback. You mentioned that you're going to be doing a comment during the open comment period that they put out on the proposal. I mean, he was like, "Hey, the reason that the SEC is going on all of these podcasts is so that they engage their audience and they get as much feedback as possible." And I think it's really bullish because they're actually listening. Whereas Gary Gendler was not listening at all. This SEC regime is actually listening. They're looking for people to tell them what to do. And we have a very limited time frame in which we can actually instruct the SEC on what should be done and they'll actually listen. And so what maybe you can just give us some insight into what your comment is going to consist of. What

will you be instructing the SEC? What should they be doing here? So, so first we've always been commenting to the SEC and the discover a letter that we send which is actually public a publicly available. You can go it's not the the the beauty is not that only that they're listening but also you can actually see what everybody's commenting because there is there's a full website where you can see the letters from everybody and by the way you can also see the conundrum that the is going through because the same thing that they will get you know positive feedback from somebody like me they also get not very positive feedback from some other people on the other side of the spectrum which are not necessarily people in favor of tokenization or in favor of of crypto.

So it's kind of interesting to see the the different points of view of people and uh and and where the SEC sits that at the end of the day is serving both markets, right? So you can't just like do something that is extremely favorable for crypto and tokenization that then negatively impacts where traditional markets are today, right? So I think that's the that's their challenge in in terms of comments like look the the the transfer agent modernization rules is a very lengthy complex thing. So, so you know, we obviously, you know, without going into the nitty-gritty details of what we're going to say, but we want to push for as much as possible digitization of the process. We want to make sure that we eliminate everything that it's legacy dealing with papers,

dealing with physical addresses, uh dealing with mailing proxy vaults like I think that's a a legacy, you know, legacy rules that are, you know, there that today in in a fully digital world and especially if we move into a fully tokenized world, you should be able to interact with your investors in a fully digital way through the wallets, etc. And I think that's ultimately the goal and and the the nature of our comments will be pushing towards that direction that digital transfer agents like us should be able to operate fully digitally without having to deal with any legacy processes. So >> I love it. I love I love it >> because I mean it shows that where we're headed is this transition or this transformation and obviously we're very early right? We're we're talking ten of

a percent half a percent 1% of you know the equities market or the repo market or the money market coming on chain over the next couple years. But it's a massive notional dollar amount of of of size. And it's interesting to hear that that you, you know, understand that there's push back to this, right, from banks or from other folks because, well, not everyone sees the vision, right, Carlos? And I think part of you guys going public is allowing yourself to beef up the war chest, beef up the treasury, do some acquisitions that I'm sure you guys have your eyes on, spread the word, and really try to grow this to something, you know, you've been doing this for 10 plus years now. You know, let's go big, right? And so just talk to us a bit about what going public was

like, that process, ringing that bell. I saw the photos. It was awesome. I I'm so happy for you. And then what now, right? Acquisitions, is it growth? Is it team? Is it marketing? What now? >> So, um it was a very lengthy process till we we finally went public which it took a lot longer than I was expecting. Um it it was complex dealing with bankers, with lawyers, with auditors, etc. uh and it just felt like an uncurmountable amount of work which by the way this is something that you know I think this current SEC is very aware of that you know they should kind of simplify the process of going public because I think it's good for for more companies to go public and then the amount of publicly traded companies in

the US has been as shrinking over time which makes no sense and companies wait you know too long to go public so I think for me it was something that I've always wanted to do I didn't think I was going to be able to do it but eventually it happened it felt a bit surreal Well, to be there to be honest with you, ringing the bell with all the people there and you know be overwhelming and then the day after the reality hit. Now we're publicly traded and you know we have to deal with quarterly earnings and uh do as you know make sure we track uh results in a better way that we communicate what we do in a way that investors understanding because otherwise that you you get overreactions. Yeah. I have to deal with all the people on on X. uh the day we go

up 10% I'm a hero and the day we go down 10% I'm the worst person in the humanity and then you know deal with all things and it's part of it comes with the job but the the good news is that we raise a lot of money we have you know after we pay all all the fees and all the costs etc more than $250 million uh of cash in the company for first time in 9 years I don't have to worry the company's going out of business and trust me you know it's a it's a much better place to be than than you know uh the situation we had before. So, that's very exciting because now I have the peace of mind that I can actually build for the long-term future. Um, we're definitely been very vocal about it. I think acquisitions are are on on the radar.

Um, uh, that is something we we actively are are pursuing and hopefully we get things done uh in the coming uh in the coming months. But also overall continue investing on this. This industry is still very nent, very small, very immature and you I think you guys are doing a good job putting the the communication out there. There's still a lot of confusion about tokenization, the different models, the you know the advantages depending of the asset class. So I think you know being publicly traded help us put the the word and the narrative out there for investors which ultimately are the ones that need to be buying these products and understand more about the advantages of what we do.

>> Very cool. And so a as we get into what this tokenization super cycle is ultimately going to manifest itself in, which is trillions of dollars of assets coming on chain, we expect those assets will start to flow into the protocols that make them composable and give those tokenized assets utility and turn idle capital into productive assets. I'm just curious as far as the things that you're most looking forward to because it seems like we're getting progress on the regulatory front. We're getting progress on the technology and we're getting progress from industry partners at large that are leading the charge such as yourself. And so just as we come to a close, I'm curious, what are you most looking forward to as we embark on what people are calling a new

cycle? >> I think that the the the supply side of things it's there. Um, you know, all the asset managers are excited about it. They all are working on tokenization. Some of them are already working with us. Some of them are coming live in the coming months. So I think that's very exciting. The infrastructure for the most part is there like you know people don't remember when I started the company stable coins were not a thing like USDC actually launched a year after I launched the company. So so so that there's a lot of things that did not exist back then that exists today. I think the user experience of using blockchains is improving but we still have progress to to make there. I think what I'm more most excited about is is uh seeing how the demand outside of the

crypto digent community but the the broad you know traditional people that are investing in financial products are going to start you know using uh tokenized products and I think that's what you know is really the step change that the industry needs which is you know move for billions of dollars to trillions of dollars but that's not going to happen only with crypto people consuming tokenized assets that we have to make have to make sure that you know my grandmother buys a tokenized asset and that's the moment that you you made it out of of this uh community into the broader traditional financial system consuming tokenized products and that's when you get to the trillions of dollars.

>> Thank you so much Carlos and uh again didn't mean to rate on your parade there. I really appreciate all of your work and thanks for >> appreciate you coming on and >> thanks coming out to our audience. >> Thanks Carlos. >> Yeah we'll see you again soon >> guys. What a summit. Another bullish conversation. I mean that is like what eight in a row now. Carlos is a friend of the show. I mean, security. I mean, I think we got wind of them in 2017. Yeah. Let's get a quick photo with with a Polaroid. Carlos, put it on the wise shot. Leo, >> get get it for the cam here. Sit in there Carlos. >> There we go. Tom, one more for you.

[laughter] Securize on three, baby. One, two, three. Secure time. >> Sexy. Sexy, baby. >> Let's give that a sign. All right. >> Oh, you didn't bring the Sharpie. >> Someone's got to get the Sharpie. Ladies and gentlemen, this has been AVAC Summit Day one. Taking a little break. Give us a couple minutes. Give me a lunch. Give me a coffee. Could use a beer, but we're not going to do that. It's noon. We'll be right back with you guys. Quick standby and we'll be right back. >> [music] [music]

[music] >> That's perfect, Roder. Right about there. And maybe zoom >> [music]

[music] [music] [music] >> Don't you So you

want [music] and [music] you want [music] Heat. Heat.

Hey, hey, hey. I had a metabolic health disease that I

had no idea I had. And that's really what was keeping me from getting pregnant. I'm trying to revolutionize the way we think about caring for our [music] health. Ouch.

Ouch. down. Hey Heat up

here. Hey, hey hey. >> [music]

>> Daddy. What's with all the hands?

>> I'm getting a hand from Legal Zoom. >> Why? Recharge.

Everything. Hey, I can't

>> [music] >> Life's little missions make the biggest impact. That's why you >> [music]

[music] [music] [music] >> We get deep. We get deep. We know. We get deep.

We get deep. We get deep. Knock. We get deep. know we get deep know we get deep we get deep know we get deep know we get deep [music] we get deep know we get deep we get we get deep we get deep we get [music] we get deep know we get deep [music] >> [music]

>> You know we get deep. [music] We get deep. We get deep. You know we get deep. [music] We get deep. We get deep. You know we get deep. >> [music] [music] [music] [music] [music]

[music] [music] >> We get deep. We get deep, you know. We get deep. >> [music] >> We get deep. We get deep. You know we get deep know [music] we get deep. We get deep know we get deep [music] know we get deep. We get deep know we get deep know we get deep [music] we get deep know we get deep we [music] get we get deep we get >> yo yo yo what's going on guys this is

itan with the rollup we're going to be patrolling the streets of New York City getting answers to the questions that you guys have most are people trading what are people investing in how much do people actually budget going to have people from all over, all different investment classes, people who are dead broke, people who are dead whales, people who are just loaded. There won't be a mayor or politician to stop us on the streets. We're going to go everywhere. All five burrows. We're taking over the 212.

[music] >> [music] [music] [music] [music] [music] [music]

>> We get deep. We get deep. We know we get deep. We get [music] We get We know we get deep. You know we get deep we get deep know we get deep know we get [music] deep we get deep know we get deep day one took a little lunch break went to the bathroom had a put a zin in drank some caffeine we're up we're up market's ripping FOMC is what two hours away >> hour and a half away from uh rate hike or hold rates Uh, I think it's probably a hold today.

>> Oh my goodness. That's a hold. A hold would be absolutely insane. >> Well, we've got Kevin, the CEO of Tar Tar, and they raised $12 million and they announced it today. And you're bringing Freddy on chain. Congrats, man. Let's give him some love. Let's give Kevin some love. $12 million raise. Give him the air horn. >> Kevin, talk to us about what's going on, man. >> Yeah. Uh, well, first off, like I said, longtime fan, first time caller, so excited to be here. Uh, yeah. Yeah, I mean if I mean we we announced our fund raise today, but really we've been hard at work for the last five six years. Um I co-founded this company alongside uh Lucas Vogulang who was the founder and uh CTO and then CEO of Centrifuge. Um and uh our other partner Ky Moodall who

uh ran product at JP Morgan Kixie. So, uh, a lot of experience between the three of us and just kind of thinking about how tokenization is going to transform how regular people take out mortgages and, uh, and take out any sort of like kind of like loan in the United States, uh, and eventually globally. Uh, there's so many things wrong with it. I'm happy to get into it, but I'll pause there. >> I Well, I think that's actually a great place to start. I mean, they're talking about raising rates or holding rates steady. 10 years above 5%, 30-year is upwards of six. And uh mortgage rates are the highest they've been since 2007.

It is almost impossible to afford a home if you're a regular everyday American. Uh this is a big big problem. And so how can tear and the onchain economy help make homes more affordable? >> Yeah. Well, >> I think the first thing I'd say just be totally upfront is we're not focused on mortgages right out of the gate, but I think it is a like it is a perfect way to examine what is happening in the system. And so I used to run the structured credit trading desk at Cityroup focused on like consumer credit and asset back securities and uh ran a private credit fund and when we would buy mortgages or pools of mortgages like let's say you take out one today you pay 7%. But if I'm buying your mortgage in these securitized pools I'm getting 5.5%. like where is that 1 and a.5%

going every year on uh $13 trillion of mortgages here in the United States alone, right? And so how does this save people money? Well, the obvious path is just like who are the constituents in this transaction? There's the money and then there's you looking for opportunity and if I can connect you in between through a dramatically different cost structure on the blockchain, then can you would you rather take out a mortgage at 6 12%? Would the investor rather get 6%? Can we or can our system or companies in our industry create and replicate all of the complexity in between and do it for cheaper than our system today and then basically just your margin is my opportunity this whole thing that's our vision

>> I mean that is the thesis it's the removal of intermediaries through connecting us via peerto-peer technology and you know a good lens to view this through is like Uber like if we if you take and this happened to me yesterday here in New York if you take Uber out of the equation And you know the the one guy, he was on the street, he couldn't find his ride. I couldn't find a taxi. I couldn't find an Uber. I said, "I'll pay you cash." All of a sudden, the rate I was getting on Uber was $35. Now I'm giving him a $20 bill and both of us are happy. He's getting more and I'm paying less. And so what you're describing is peer-to-peer, right? And it's removal of intermediaries and both of us end up at a price that we're happier with. And so how does tear accomplish this? And and

what are you focusing on with this technology? >> Yeah, absolutely. Well, I think the easiest I mean There's a ton of technical nonsense underneath the surface, but at the core of it, what happens is we rely on intermediaries to navigate two relationships. There's the borrower to the asset. So, like I take out a mortgage, that mortgage is a promise. And like there's a bunch of people trafficking promises on Wall Street, right? And making money by like putting it over here, packaging it up. If you watch the Big Shore, you know what I'm talking about, right? And and also that was like me. And so then on the other side, you've got the the ledger of promises and all of these complex settlement and like formulas that need to go to make sure money gets to the right place and and it's done

compliantly. The collapse of these two systems into one already removes many of the needs of like these intermediaries to navigate, okay, well, what's the truth between the borrower to asset and what's the truth between the asset to investor? But then I think the next layer of this is well what happens to an Uber or like what do digital marketplaces with one shared ledger actually look like today? Door Dash is kind of the canonical example I always use where yes they connect people through a single shared system. It's not on a blockchain but the way that they do it is they have three vertically integrated applications. They have one for us when we order food. They have one for the restaurant to take in the order and like like scheduling schedule the line. Then they have one for the

couriers that actually like say okay well you go and deliver this food in this order to this person at this address. That's how the future is going to look and that's what Terara is building. Like we build all of these modular smart contracts to replicate all of the settlement and complex structured financing transactions that occur every day to for us to get mortgages at all. But we're building vertically integrated applications for the stakeholders of our system, the investors, the originators who are creating the mortgage and finding you and then also like the servicesers who are actually like moving money back and forth and doing the accounting, the compliance, etc.

>> Yeah. And so, um, Kevin, if I may kind of ask, you know, you've got this big vision here. Obviously, you know, you're fired up about it. I don't know how much coffee you've had, but I've had a lot. Um and what are we going to do with the $12 million? You know, what are we going to spend imminently on? What are we going to invest into? What is going to allow you to go raise your next big round and get to product market fit quick? What What's that look like? >> Yeah, I mean, I think it's show don't tell. So, the reason that we raise this capital and even just this infrastructure that I'm talking about is we're we are our own first customer. So, we stood up uh a lender today that's registered or licensed in about 30 states and hopefully we'll be in 45 in

the next couple months. And we're going to go out and make loans directly to people. Uh and that is a whole other game than, you know, what crypto and many of these like companies are trying to do because you're trying to think about how do I build neutral infrastructure? How do I not like actually focus on everything? Because it's hard. And I think in order to change the world, you got to do everything. in order to like deliver you a mortgage or a loan at a cheaper price, I need to acquire you. I need to underwrite you. I need to do fraud detection, servicing, everything that can be reimagined has to be uh and so the money is going to basically so far building out our team, building out this product infrastructure as we've said. Uh but then also legal compliance because starting in a few weeks like you'll be

able to find us um through select like channel partners and take out a unsecured personal loan um and you'll be comping us against Upstart or Lending Club or whatever. And our long-term vision is uh to utilize the cost savings and the disintermediation that we're able to create through this technology and then also just actually go back to Upstart and Lending Club and be like, "Hey, join this network. We're building this infrastructure for you to run your business better as well. >> And why is it important to do this on Avalanche? We're here at AVAC Summit. Obviously, there's, you know, a connection there. Why did you choose Avalanche as a partner in building this out?

>> Yeah. I mean, I think the first aspect of of good partnership is that you have to be going in the same direction. And so if you look a lot around at a lot of L1's or uh just different in like parts of this space, even if they think they're going after tokenization or finance or whatever, that's like like that's what does that mean, right? Avalanche was very opinionated in our experience with working with them for years um about like okay we're going to go and find the places where we can wedge into like we can wedge our technology into the endto-end operations private credit asset back finance um has a been a core focus for them has been a core focus for us and I think like that's really uh a a core aspect of this partnership we have the same northstar

of course there's like elements of the technology the fact that we have the ability to like layer in privacy the fact that we have the ability to, you know, spin off a side chain in the future. All well and good, but really ultimately this to change the world, we need to convince people and we need to convince people with other people who like like are trying to convince them of the same things we are. And so that's really why Avalanche, >> I mean, look, man, it sounds like you've got your ducks in a row. What are your what what are your headwinds here? Like, is it what are your headwinds? Is it is it the competition? Is it regulatory? Is it marketing, distribution? What's your what what are the number one and two problems that you're looking to address

uh quickly? >> There is a lot of there's a lot of different elements that go into like building this like lender. Um the most important ones are like where are we getting the borrowers? Where are we getting the capital to like spin this whole thing up? Um I mean we have answers for for all of these different types of things that's probably not worth getting into here, but that's obviously the first piece. How do we like get people to want to take our money and where do we get that money from? Longer term, I think the challenge is that this technology in a single shared system of record in like actually in my experience has almost no value navigating a bilateral rel like relationship like it's very

simple to just like share one Excel file back and forth. The challenge is when do how do you navigate a many to many market and that is like the like for us right how do we as an industry go and show value when we're just like navigating bilateral relationships and get people to understand that when we are all using this ledger that 150 basis points being taken away from us is is gone like from a first principles basis they are only there because we're not on the same ledger because these our manual processes and like in the future like how do we bridge that gap between today and the future and I think like that's the biggest thing

>> and as a credit marketplace where do you start do you start with the supply side or do you start start the demand side >> yeah I mean I think Paul Graham has a great great piece of this like any marketplace business should focus initially on like well what's the hardest part of this market to actually get so I think the hardest thing for early stage originators is uh to understand like what type of product what type credit risk am I going to expose people to? The benefit of what we're doing and a lot of the way we've architected the system is we're not trying to compete on like novel credit products or going to like different crazy places. We're going to the most commoditized space in lending, unsecured personal loans, and just saying we're going to bet that over time we have a

dramatically different cost structure and approach and and this is a window for the next generation of people like Upstart or whatever to like actually leapfrog their competition by coming onto this network and benefiting from these types of in efficiencies that they'll see over time. So, um I think that's probably the biggest thing. Capital first, but that's how we solve it. Well, let's give Kevin some more love. $12 million raise. Congratulations, man. Um, amazing work. Thank you for spending some time with us. I hope you have a good summit. It's uh it's quite busy here. There's a lot of activity. There's a lot going on.

Clearly, there's a buzz in the air. I don't know if it's the market. I don't know if people are also bullish on Zcash. I don't know what it is, but someone's someone's up some money in their portfolio. Some institution is going to buy something from them soon, and everyone's fired up about it. We're here. Kevin, congrats on the race. >> Awesome. Thank you guys for having me. >> Thanks, Kevin. >> Awesome, man. >> Another bullish one. I mean, $12 million raise. Product sounds epic. Uh, sounds like he's got the Yeah, I mean, he sounds dialed. Like, it just makes sense. You know what I mean? It just makes sense. So, happy to hear that.

And, uh, we're up. >> We're absolutely up. >> Uh, we're excited. >> Kevin said that they're going to hold rates. I mean we are >> if they hold race minutes away from the FOMC decision >> and >> 75 minutes away >> this is the last remaining I don't do you call it an obstacle do you call it a catalyst it's just an event that is going and it's over it's just the foreshadowing is just like the gravity holding the beach ball underwater it is the the the foreshadowing that is subduing the momentum in the market and we are 75 minutes away from

that foreshadowing being over. >> I think we rip guys. I think we pump face. >> I think there could be a reality where if wars doesn't hike the stock market dumps but crypto flies. Hear me out. If wars doesn't hike, equities dump a percent and a quarter instantly. crypto nukes quickly and then flies. Gigaf flies. Gigaf flies. Gigaf flies. I mean, guys, here we are. Avalanche Summit day one. Our next guest is going to be Guy Young from Athena. Uh, we'll see where he's at. I think he's a little bit behind. Um, and I think one of our producer needs to go grab him somewhere

in the crowd and bring him over. So, let's go ahead and go find him in the crowd and bring him over. He's probably over by the bathroom somewhere. He's very popular guy. Probably getting stopped by somebody. Um, and we're going to hit Guy up. Guy's a legend. Obviously, the Athena uh CEO, co-founder, founder, and I think it's very clear the conversation topic with Guy. >> Yeah, stable coins are a national economic priority. >> Yeah. >> The Treasury and the Fed have an understanding. They have an understanding that the politicians want to spend money.

>> Yep. This is the only motivation for any politician ever throughout the history of existence. Throughout the history of government, all they want to do is spend money. They need to get the money from somewhere. It needs to be financed. And it's no longer the long end of the bond curve financing the government spending. It is the short end. >> The short end is the cash instrument. the reserves of the stable coins becoming a structural demand vehicle for US short-term treasuries as a national defense and economic priority. What's up, John? Good to see you, buddy.

Looking great. Looking great, man. This guy's a legend. 40,000 views on our video with John on Ethereum. Let's go, man. This guy >> Ethereum is the least owned asset. It is somehow the most contrarian debt to the portfolio construction thesis. It is so underowned that it is so non- consensus. >> John Zcash sideline though. He's sidelined. Zcash, but we are absolutely bullish on Ethereum, >> guys. Shout out to Milk Road, Milk Road Crypto, Milk Road Daily. Give him a follow on X. Give John a follow. Bitcoin Jesus ETH guy's a legend. Thank you, John. Much love and uh great to see you, man.

>> Yep. Yeah. >> And so, back to stable coins being this national economic priority. If you guys did not see our episode on this, >> after Jackson Hole, there was an article that came out that described the inner workings of what makes up a dollar. If you have a dollar in a bank account, it is a deposit in a depository institution FDICbacked and there is a certain amount of structural bid on short-term US treasuries that that dollar in the depository institution creates. It is about 10 to 15 cents for every dollar.

Stable coins very similar represent a digital dollar deposited at a stable coin company and it is onetoone backed based on the Genius Act. >> Yep. >> With reserves by these stable coin issuers. These reserves are similar. They are short-term US treasuries. They are cash instruments. A very similar reserve asset to what the banks use to back fiat deposits. the difference. >> Guys, we're gonna ask our lovely team to go find Guy Young from Athena, please. >> The structural base knows what he looks like.

>> 80 to 90 versus 10 to 15 cents with fiat deposits. That is an 8 to 9x greater of a structural bid on US Treasury bills. the short end of the curve. Y >> the bonds and the bills that Treasury Secretary Bessett and Fed Chair Kevin Worsh need to be bought in order to finance the politician spending, the infinite politician spending that the government wants and needs. They're going to spend it. The financing needs to come from somewhere. It's going to come from the buyers of short-term US treasuries. Who are the buyers? It is structurally the stable coin issuers more so than the banks and the financial depository institutions

at a scale of 8 to 10x greater of a bid by stable coin issuers rather than fiat depository institutions. And so it is a national economic priority >> to insert the stable coin issuing companies into a place where they can provide that structural bid. That means an increase in the reserves which means an increase in the issued stable coins >> which means an increase in the asset prices of crypto assets because that is where the creation of stable coins comes from and that is where the structural bid of US treasury buys comes from in order to back those stable coins that

are issued. So, we are very very excited for Fed chair Kevin Walsh to provide >> the FOMC decision. Uh we are just about an hour away. We are 70 minutes away from that FOMC decision. Uh and we are about 10 minutes away. >> I think we're about uh oh, we're 70 minutes away from 2 p.m. Eastern. >> From 2 p.m. Eastern where we get the interest rate decision and then FOMC chair Kevin W will go on his press conference and answer questions from the press.

expect volatility. >> Expect volatility, but don't expect any forward guidance. He's going to answer these questions and he's going to come out and either have hawkish or doubbish rhetoric. He just can't not >> crazy call. Freedom guy. I would say one of our most loyal, loving, funny, hilarious, witty, smart investor community is calling for a 25% cut. 25 basis point. >> 25 basis point cut.

>> You think they're going to cut? >> Freedom guy says we have to buy him a lunch in New York City. If they cut, >> Freedom Guy, if they cut, we will buy you the most exquisite lunch in New York City. We are extremely excited. If they cut, that would absolutely catch people [laughter] by surprise. So many people would be sidelined and off sides except for freedom guy. He would be the one person that was expecting exactly that.

>> He would be giga long and giga strong. He says he bought Zcash at the bottom. This will be my second best call ever. My best was buying Ze at the absolute bottom. >> Guy is nowhere to be found. This I mean stable coins are a national economic priority. Yeah, >> guys out there fighting for our country. We thank him for [laughter] his service. >> We thank everyone. All the first responders, >> all of the country men and women, >> we thank you for your service.

>> Let's pull up some shards while we're waiting. Might as well. I mean, what else? We got Guy Young and then we're going to wrap pretty much. Oh, he's coming now. He's coming out. Let's pull up the charts anyways. Um, let's pull up the charts anyways. Let's go ahead and throw it. You can just do it full screen even if it's easier. Um >> I mean guys, I don't think you're ready for the Zigaz. >> The Zig Zen. >> The Zigazen is imminent. Here's Guy. >> Here's Guy. >> All right, we're going to have to put a pause on the charts.

>> Let's not put the charts up just yet. We're going to have Guy on. We're going to be talking about why stable coins are a national economic priority here in the US to provide a structural bid for short-term US treasuries as Fed Chair Kevin Walsh prepares to either crush crush our dreams as expected by the market and hike rates or to hold rates steady. Thumbs up for the Polaroid. All right, guy. Welcome to the show, man. Good to have you. I know you're busy, man. Um, good to have you, man. Congrats on the launch of Athena. uh big launch and I mean what a what a we are in an institutional era of the market clearly. I think you guys have been strongly positioned for this. Obviously you guys came out with that unlock news

which I think the market responded well to. I think also you know setting a standard perhaps for some other teams wanting to just get those overhangs done and just get to the point we're building a real business here. Here's what we got. talk us through just kind of where we are at on the state of Athena. Just kind of catch us up. >> Last year was definitely the most challenging I think I've had in my like career and also just like Athena's existence in the last three. I think um post 1010 I think we're just caught offside with like multiple almost like a comical series of just like bad market events that could have specifically happened to us. So uh 1010 obviously a huge impact to us with kind of derivative open interest just collapsing even worse than it was in 2022. Uh then we had the RV and kelp incident straight

afterwards where USC was like the largest collateral asset on Ave and then we used layer zero for our cross trainin infrastructure and so it just felt like every three months we were just kind of having these uh you know uh four sigma events basically happen to us every 3 months. Uh but yeah I think uh repositioned I think both the core product and USCE to just be a bit more resilient and have a stronger foundation through the cycle. So I think it's no kind of secret that it's a pretty reflexive product through the cycle in the sense that when times are good it's like an amazing product that's paying 10% yield and like you know goes to 15 billion in 18 months but then when the market unwinds you just have a much more difficult sort of uh time sort of adjusting to that period. So USC is a

core product I think has just become a lot more resilient through time as we've expanded to do not only basis but actually institutional lending RWAS and then obviously two bills that's it within there and then I think the big growth factor that's sort of opening up on that side is uh the growth that we've seen or perification of everything like per RWAS and that kind of stuff I think outside of the exchanges who are facilitating the trading of the of the uh RWA pertheane is probably the second biggest beneficiary of that trend just because you're essentially expanding the TAM of what could go into USD from two and a half trillion dollars of crypto to $150 trillion dollars of other assets.

And we've seen, you know, RWA perhaps have gone from like zero to 15 bill in OI paying 15 to 18% this year uh over the last 9 months. And we had an announcement out I think a couple of weeks ago that we're starting equips next week basically in the backing of USD. So I'm just very excited about that just because you know in simple terms we got to 15 bill just doing this on crypto. I really just think that like RWA perhaps are going to be multiple of the size that we saw with crypto in general and so the tan for what we're doing is just going to be multiple of their 15 bill going forward. Uh so yeah that's on the Athena USD side and then uh also have a white label stable coin uh business where anyone can sort of like launch on top of our product. So

you have Jupiter Mega E3 a couple others that are coming out soon on that side. I think it's actually the largest in the market right now in terms of AUM for Y level and then Athena Pay which we obviously you know announced a couple of weeks ago where I think the broad thesis for us here is just uh I think we've done a decent job of kind of integrating in the correct like distribution platforms to grow USD through Robin Hood's Coinbases etc etc but like in an end state I don't want just don't want to just be the back end for other people's kind of front ends and I think owning the customer relationship and driving the destiny of your own distribution is an important thing for you to try and do And for us like the form factor of a mobile neo bank is

really the ultimate way for you to try to do that when you're in the business of like money which is what we are. And uh for us like we really think that there is an edge here which is you own the structural vertical integration of dollar issuance and yield generation with the NEO bank at the same time. So to me it's pretty crazy that a lot of these new banks right now have basically built their products on someone else's stable coin which is great for circle and tether but if you look at the revenue of uh a new bank or revolute 40% of the revenues are just interest generation on balances that are sitting there and so if you control the dollar with the highest yield in the whole market which is kind of the bread and butter of what Athena has done since day

one we think you have a structural advantage versus everyone else in the market to acquire customers and keep them and sort of uh build that through time. So extremely early days for us on Athena Pay. But for me, I haven't felt this excited about a market opportunity since USD. And I think actually the potential for this product is potentially even bigger than USD was when they first came out, if you do it correctly. Yeah. >> And I feel like the right term to explain what you guys have done the last 6 to 8 months is is well grit one, but like really it's this resiliency. It's this okay multiple collateral backing for USDE resiliency as a team as a founder as as well. Can you confidently say that USDE is far more resilient

today than it's ever been and that that will be the backbone for your future growth? >> Yeah, for sure. I think um if you remember when we first came out, I think like the tagline was just like this is the next lunar, they're going to blow up the whole space, etc., etc. And uh I don't think that's the perception right now from the outside in. I think it's been kind of like 3 years of all the disasters that we've spoken about with by bit hacks 1010 a etc etc we've had about $30 billion flow through USD on mint redeems and never lost a single basis point of someone else's money which for me is kind of the proudest achievement of everything in the last sort of 3 years and so for us I do think the lindy of the product is massively different to before we can even kind of

see it in the in the growth numbers relative to your cost of capital in the sense that like in 2024 when Athena first came out when the yields dropped from like 20 to 10%. The product wasn't growing. It was kind of shrinking when it hit 10. And that that was a pretty scary moment because you're looking at this and you're like, does this thing need to pay 20% infinite like forever to for this thing to ever grow? And then now it's like bumping up to 4.5 4.75 and we've had almost a billion of like new inflows that came in the last sort of like 3 to four weeks. So to me that is the market telling you that like the risk of this thing is not the same as everyone thought it was like 3 years ago and actually paying a little bit above two bills you're growing like a

billion of supply in the last sort of like month and so that's actually very important metric which is if you really think about the business models of DeFi applications outside of trading infrastructure you're in the business of two things which is you're selling trust to people and you're just in a in a game of accumulating dollars at the lowest cost of capital. So if you think about really the only two onchain businesses outside of trading that I think multicycle have actually managed to acrewue significant value at scale it's really been just sky and a where they've where they've basically generated more than 100 mil of free cash flow a year in the business of like aum aggregation and the business model is the same thing which is you're going to trust me so much to leave your dollars with me at basically sofa and I'm going to create a

spread to those dollars that you've left with me and so for us you know it was pretty painful to go through those experiences that I described of you know market unwind we had a huge unwind in terms of our TBL mark and stuff but just surviving through those events actually creates like a much more solid foundation on the other side because people go well I don't think the risk premium on this thing justifies you know a huge spread to so far it is basically just a little bit above so far yeah >> um guy just a quick segment today so kind of as we close we've been preaching this stable coin thesis uh which is that uh stable coins that are backed uh they need reserves And uh the government is going to continue to spend money and they need uh basically a structural bid

on treasuries. This is happening all across the world. It's not just in the US. We're in the middle of this global bond crisis that people are calling for. And maybe it's a little bit exaggerated, but the reality is that we're twisting the duration out of the bond curve all all over the world. And we need buyers for short-term bills in order to finance government spending. And in fiat depository institutions, my understanding is each dollar in fiat deposited at these institutions creates a structural bit of bills about 5 to 15 cents for every dollar. Whereas Genius compatible stable coins create 80 to 90 cents for every dollar that is deposited at these stable coin issuing companies that is backed by those reserves in

those bills creates that much more 8 to 10x more of a structural build for US short duration bonds and and bonds all over the world. Is it a conspiracy to think that stable coins are national economic priority in the US and abroad or is that a reality? Uh yeah, no maybe just preface. I'm not like a macro uh [laughter] expert before I start to say things that are outright wrong. Uh but yeah, I think you can even just see the way that percent uh Trump himself speaks about stable coins. It's clearly one of the most important sort of like pieces that are coming out of crypto broadly in terms of their interest and importance of just like the subcategory. Uh the one piece I would say is like broadly I think the numbers that you're mentioning

are in line which is like a deposit at a bank right isn't just 100% treasuries. It's like the amalgamation of all the different things that a bank does within its balance sheet with like corporate lending MBS ABS etc. etc. which doesn't just flow through to a bid on short-term treasuries. Maybe the one caveat I would just mention to what you've said is that it feels like the piece that's most out of control right now is really the long end of the curve rather than the short end where the long end can kind of untether itself from short-term interest rates when inflation expectations are way out of order, etc., etc. And that's what Bent is trying to bring under control right now with the buying that he's doing on the long end.

and stable coin issuers are not buyers of the long end. It's only shortdated stuff. The long end basically has duration which you can't take like the mark risk on. So I think that there is like uh yes it's an important piece but I think this very specific issue that we're seeing people overreact to I think in the last kind of couple of weeks. It's like a long end issue which stable coins I think don't really touch or are involved with. Yeah. >> Guy as we you know it's a bit of a short segment. We got a couple more minutes. Um, as we kind of think about where the Athena ENA, the asset goes, I coined this term kind of ironically about 18 months ago, the revenue meta. And it's really comical and I got thrown in the doghouse for it really hard. But here we

are and our current barbell is onchain businesses that generate cash flow and do buybacks and have a really good token economic model and then store value assets. We'll kind of put that to the side and think about this part. The Athena token is I believe there was a proposal for buybacks that is either in proposal still or it just went through and so how do you think about you know Athena in 2024 versus Athena in 2026 with regards to the asset. What is different about the assets? Put your investor hat on here. Look at the landscape of crypto assets. Why is Athena different now? Why is it more appealing to institutional investors?

Not financial advice. And take this wherever you want. Yeah, for sure. I think um the best place to start is probably just that announcement that we came out with that you referenced because I think it sort of encapsulates all of the different thoughts that we had around this. So I think in many senses like Athena was the poster child of kind of a dirty VC coin that no one wanted to touch and was like you know low flow high FPV like we saw those comments and I think a lot of them were reasonable. Um I'll be the first to put up my hand that I made like a lot of mistakes when it came to like fundraising, who we had on our cap table, all those different pieces. And I think the one good thing about the market sort of getting to the place that

it did, even though it was extremely painful for everyone involved, was that it uh just gave us a moment to basically just reset everything and kind of try to clean up some of the mistakes that we've made in the past or that I had made personally. So what we did was um a recognized that uh this whole sort of like uh labs equity foundation token sort of confusion piece is really just like an unnecessary cloud that sort of hangs over you that you should just like clarify and there really is no reason to leave any doubt around this like at all going forward unless you're trying to be dishonest about things. I think uh for us it was basically just crystallizing in a public document which I'm not sure many people have done outside of Morpho to say even even go as far as saying all

the IP that was produced within labs now and on a continuous basis going forward is transferred over to the foundation and also crystallizing that if the business is ever sold to anyone if you have an acquire come in it's actually shared pro rather between all token holders on the other side because we've seen a few of those acquisitions where like token business gets bought token is just a zero and then like the team kind of walks off with 20 mail. So like all of that is crystallized now in a public document where there is no conflict and the equity has no claim on any cash flow whatsoever going forward. Uh the other piece is just around the unlocks which is we bought out every single investor who sold a token in the last uh 10 months since 1010. So this is from when prices were five times higher than what

they are now. If you sold a single Athena token and you own more than 20 basis points of supply, we bought out everyone and the best that they had which I think to us was basically just saying we're going to double down on ourselves now. we think it's the bottom of the bare market and there's no better time to like take you out and we're just going to continue building. We as the team stayed locked obviously and we just unlocked all investors and just said if you want to get bought out we'll just buy you out like straight up right now. And it was just pretty hilarious timing cuz it was basically like literally a week before the market ripped like 100%. which uh sorry to and then and then uh yeah I think the final piece was just around uh crystallizing basically the schedule of

buybacks relative to where we are in our growth cycle. I think this is one piece where I slightly disagree with the market and the whole buyback matter I think in general which is uh I think Paul was on your show the other day talking about why he's not doing buybacks and I think he actually has a very good point by the way which is kind of like if you genuinely believe the market opportunity for you to grow your product is 10 to 100x where it is now which is my view I think if stable coins go to 3 trillion these sort of like reward bearing savings products like Athenos there's a very real possibility of one of these is sitting at $100 billion or the size of tether in the next like 5 years if you believe that to be true, you should just be spending

every single dollar that you have making sure that you create that outcome for yourself instead of like, you know, buying back what is a slightly uninteresting amount right now. I'd say having said that, I've I've come to realize that my view on that is not like it's not reasonable to push that view on everyone. And you can clearly tell that people want to see some connection and value capture to the token now, even if that is your ambition to go forward. And so the balance that we tried to strike was basically just saying the amount that we're buying back right now is much much smaller versus where we think it could be in an end state in terms of a take rate. And as we start to get bigger and fill out that market opportunity that we're describing, the percentage that we're buying back of the token uh

scales basically with our size. And so you're basically just trying to say we hear you out. We hear what you want as a market, but please give us more time to actually go and capture the opportunity that we sit ahead of us, but we're still going to try to find a middle ground with you to say there will be some buybacks, but the price that we're running after is so much bigger than a bit of buybacks now the size that we're sitting at. So, >> and uh and forgive me for not reading the proposal. I don't think I've looked at a governance form in a couple years. Uh is what it is. Do the buybacks scale in a linear fashion such that as the price increases they the buybacks actually come down >> relative to price it's like relative to size of USD basically so it's saying

like at 7 12 bill of USD supply only 5% of the gross yield will go back to buyax when it's at 20 bill it's like 20% basically so you're basically saying your take rate on the product is increasing as the size of the product increases but I think the point that you're raising is another good one which is People love this idea of programmatic buybacks or like indiscriminate don't care where the price is. we're just going to shove into the market every day at the same rate which is not anyone in trify will tell you that that's not a great allocation of capital to say like there is no price at which this isn't uh expensive right and so I think eventually the market will mature and say you know if we're at some trailing PE multiple we're going to be doing more or less of these things but right now I

think people just want to see as a first you know instance are you doing it or not and giving us that assurance and I do think honestly a lot of this stuff is driven basically by like the broken trust that token projects have created with everyone else in the market in the last 5 years. And I think the good thing about the market and you know we've obviously responded to it as well is that the market has just said we no longer want any games or any doubt around FD versus token structures. It's either you do what we want to see or you have zero bid on your token and is going to zero basically go on the other side.

And I think that's actually a pretty healthy thing by the way for >> Yeah. just I'm glad that you also recognize this early lucky timing, but it's better to be lucky than good, right? I mean, that's the reality. Um, obviously I'm sure you were calculated in that. And just final point is that you you've almost got separate things happening with your business and you're starting to see this across the board. You've got your core business scaling your stable coin to $und00 billion of total outstanding supply and then you've got almost like a discretionary hedge fund on your token, right? And you've set up like a model that you're going to follow, but other teams may have a more discretionary outlook where they're trying to slam it at the lows and then,

you know, take the take the foot off the gas as the bull market goes on. try to kind of manage the expectations of the market almost manage almost be a market maker for their own asset and so you've almost got this like bifurcated business structure forming just closing thoughts there closing thoughts on Athena >> yeah well I think in an end state right now the buyback schedule we put forward is just programmatic to say it's going to be this fixed percentage relative to USD size not trying to price it relative to like the price of the token essentially but I would say that I agree with you directionally that is a better allocation of capital to be doing The problem is that like I think equity investors understand that a lot better which is like uh they reward you for being a smart allocator of capital where

a Google and Apple will sit on the cash wait until the dip and then buy a ton and the investors aren't going like oh my god you didn't buy back every month consistently we trust you to be making the right calls at the right time but in crypto I think it's sort of seen by uh some people are sort of saying well if you're not willing to buy the token now at this price why should I and like should I sell it actually on the other side so I think there's just like a market structure maturity kind of question type thing but uh I think we'll get that >> I think we're I think we're early in the sophistication of this token economic conversation but we're more or less directionally going in the right way which I think is it actually makes our job a lot easier like we've been you

know strongly positioned in a handful of assets it's like the last 6 months there's only been a handful that are like if you believe this then there's only it's it's actually been kind of easy right but it'll change and it'll mature and things will develop so guy thanks for your time amazing comeback, if you will. Um, I was probably once more on the negative side. So, if you ever heard that from us, apologies, but firmly Athena Bulls, love what you guys are doing. Love your energy, man. And thanks for coming out. >> Awesome. Nice to see you, guys. Cool. Thanks. >> All righty, guys. Another bullish one. [laughter] I mean, that is nine bullish conversations in a row all across the board.

>> Like, wow. I mean, guys, Class Act does a great job and Athena is going to continue to grow. Uh we are excited for what they're doing. And guys, we do have a special announcement to make today for you guys. It is a special guest as we close out this stream for the next Circle Arc mainet launch here. We're going to head over there down to Tribeca. We're going to take the stream off for an hour and two.

We'll be right back up with the Ark mainet live event. And guys, if we get a clap, a drum roll or something. I believe we have some breaking news from the rollup headquarters. Ladies and gentlemen, the breaking news is about to break, guys. We have the CEO Jeremy Aair will be live on the rollup at 400 p.m. Eastern today from New York City at the Ark mainet launch

event. Get ready. Get ready. Get ready. It's coming. Let's make sure the team gets the post out on X. We don't need breaking news on it. Just launch that thing. Let them know it's coming. Breaking news. Jeremy Lair, CEO of Circle. Rob, close us out. Avac Summit day one. >> Guys, we're going to be right back. Don't go anywhere. New stream spinning up in about 30 minutes. And >> let's get it, man. Great stream, guys. W's in the chat. If you're watching on YouTube, throw us a like. Throw us a subscribe. If you're on X, same thing. Throw us a like. We'll be back on I don't know, >> 30 minutes. 30 minutes. We're going to have 30 minutes. We'll have the Ark Conversations and the Stage Live and then we're going to go on shortly

thereafter at about 3:45 and then Jeremy Aair is going to be on at 4. Get ready, ladies and gentlemen. You're watching the rollup. Today's Wednesday, September 16th, Fed decision 45 minutes. Let's get it. See you guys later. Peace. [music] >> [music] [music]