Can Onchain Lending Win Over Wall Street Before the Next Cycle?

Transcript

Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream. Before we get started, a quick reminder, nothing nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only, and my guest tonight may hold assets discussed in the show. For more disclosures, visit unchainedcrypto.com. >> Introducing Nexo, the premier digital wealth platform. Receive interest on your digital assets. Borrow against them without selling. Trade a variety of cryptocurrencies, all in one platform. Now available in the US. Get started today at nexo.com/unchained.

>> Today's live stream features two guests in the on-chain lending world. In the second half, we'll hear from Paul Frambo of Morpho, but first up, we have an interview with Sid Powell, CEO and co-founder of Maple Finance. Welcome, Sid. >> Hey, Laura. Thanks for having me on. Glad to be here. >> Yeah, excited to chat with you. So, there's a number of DeFi lending protocols. Maple Finance is one of them. So, just tell us what niche it occupies in this world. >> Yeah, in the DeFi lending space, Maple >> [clears throat] >> Maple kind of crosses two two interesting two interesting unique unique segments.

So, we do primarily institutional lending. So, Maple does not lend to to retail users. Our counterparties or our clients who borrow from us typically include asset managers, trading firms, exchanges, family offices, you know, other other trading other investment management firms. And the other the other thing that's unique about Maple is that we are almost a hybrid. So, we source capital on-chain. We have syrup USDC, syrup USDT, which folks can deposit to through smart contracts.

However, when we do when When do loans with our institutional borrowers, we sign off-chain legal agreements with them, and then we can also accept collateral into qualified custodians. So, in this way, we're a little bit of a hybrid between CeFi lending, which would use off-chain agreements and custodians, and DeFi lending, where you take in the capital on chain and you record all of the loans on chain. >> Okay. Yeah. Yeah, I mean, it's this interesting hybrid. So, describe a little bit more about the borrowers and lenders that use Maple.

>> Yeah, it's a great question. So, if you if you look who would come and use Maple, typically typically our clients, as I mentioned at the start, are going to include prime brokers. So, folks who provide margin or lending or over-the-counter settlement to trading firms. It also includes asset managers who might be running yield strategies on chain, for example, or they might be running liquid token strategies. And then we have family offices who might hold a you know, hold a significant amount of crypto, but they want to take out a loan to purchase real estate or make some other kind of investment. So, the loan sizes that we do are typically anywhere from the smallest loan we do

would be about $10 million, and the largest we did was actually just before Christmas was a $500 million one. In each case, our clients will post Bitcoin or ETH or Solana or XRP, but some large capitalization crypto, which serves as collateral for us, and helps ensure that if they can't make their repayments, that we still have protection so that us and our users are not going to take on you know, take on any credit losses. >> Okay. And then you also mentioned another key component of the Maple system, which is your stablecoin, which there's a USDC and USDT version. Explain a little bit more about how that is used.

>> Yeah, now this is interesting. So, you've seen over 2025, Laura, we had a ton of new stablecoins emerge. A lot of them uh purporting to use, you know, different trading strategies or arbitrage to generate their yield. Uh what we decided to do was not necessarily to build a stablecoin. We have built a call it a yield product or or a savings product on top of two existing stablecoins. So, on top of USDC and USDT. The yield in our in Maple's instance comes from uh the over-collateralized loans to these institutional borrowers.

So, we originate a loan to them, they pay interest. That then gets passed through as yield to holders of Syrup USDC and Syrup USDT. So, we launched both of these uh over a year ago. Since then, they've grown They've been the fastest-growing uh products that we have, and they drove a lot of Maple's growth over 2025. And a lot of that, I think, has come from the composability. So, when you have Syrup USDC or Syrup USDT, you can use it as collateral in Aave Aave or Morpho uh or Euler. You can uh put it into uh Pendle and hedge the price uh or rather hedge the interest rates, or you

can use it cross-chain on Solana or Arbitrum or most recently Base. Uh so, I think that DeFi composability has been another unique point where Maple kind of is different to other CeFi lenders. And that drove a lot of our growth that we saw in 2025. >> Yeah, you briefly mentioned Aave. I saw that, you know, you um are now an issuer on Aave in a partnership that began in October, I think. And now you're the fastest-growing issuer on Aave. >> [laughter] >> So, explain a little bit more about that partnership. Is Is that the Syrup USDC or USDT?

>> Yes, it's I have funny funny enough, it's actually both. So, we uh entered into a partnership with Aave late last year in in um end of Q3 early Q4 and uh the way the partnership works is that serum USDC and serum USDT have been onboarded as collateral. So, effectively the the the proposition to a user is you can put USDC into serum USDC, mint it, and then it's earning you at the moment it was uh moment it's closer to 5%, but in the past it's been up around 6 or 7%, and either way the important point is that you can earn a higher yield than you can than the cost of borrowing on Aave. So, it makes sense to post it as

collateral to Aave, borrow against it, mint more serum USDC or USDT, and then post it again to uh to Aave. So, you're performing the looping trade. That's why the the yield outperformance is the reason that it's grown so fast, and and our partnership with Aave has actually taken place across multiple chains. So, initially we did plasma with them, and then we've since taken that partnership to Arbitrum, to Base, and uh and we're looking at other chains at the moment, but you know, it it's been a a really good partnership for us, really good partnership for them. For Aave users, what it means is that it brings up the utilization. So, people might have said, "Well, aren't you a competitor with

Aave?" And the answer is no, we actually work quite well as partners because having serum USDC on there increases the utilization and the yield available for Aave users. >> Yeah, and I also saw um yesterday Athena published a proposal to use Maple and Anchorage as potential direct lending partners for the backing assets of USDE. Explain how that would work and how that proposal came about. >> So, uh we've you know, we we have a great relationship with Athena. I've known Guy for a number of years, and the way that that proposal would work is that Athena would use uh serum USDC or or SYRUP USCT or our permissioned

uh Maple Institutional Pool as a source of yield. So, they would deploy some of their uh some of their assets uh that are backing USDE to it, and then it provides a yield, and then the yield uh can serve or the yield can be passed on to their SUSDE holders. So, it's a partnership for them that represents diversification of their asset backing and their sources of yield. It gives them access to a non-correlated source of yield. So, lending rates uh you know, lending rates are are different to the basis trade.

So, it's a diversification of their strategies. Um And uh for us, you know, it's a great partnership. Athena is is a blue chip within the space. We would love to work with them. And ultimately, we want uh you know, we want to kind of fulfill this niche of being an institutional lender and providing curated yield opportunities to partners, whether they are, you know, family offices or asset managers or uh blue chip DeFi protocols like Athena. >> Yeah, so let's talk a little bit more about um you know, the work that you do with um institutions. Last year, we saw that Cantor launched a Bitcoin lending facility that uses Maple um or or Maple sorry, was one of the

first to tap its credit facility. Um you also have a partnership with Bitwise. This also happened last year, and that's for their institutional clients to gain access to on-chain investment opportunities. Tell us how those arrangements have been going, especially in what is kind of an interesting time in the market. Uh you know, I don't know how that's affected like institutional interest in these types of products. >> I think it's uh yeah, it's definitely one of the one of the surprising things has been the resilience of the institutional interest in crypto, I would say, over, you know, periods of of kind of price weakness for lack of a better word.

Uh now, the Cantor relationship uh you know, began a while back. We uh we were onboarded as their first uh you know, their first uh Bitcoin backed borrower. So, the way the relationship worked was Maple posted Bitcoin to borrow dollars from Cantor. And uh you know, and then they have since brought on other institutional borrowers like FalconX. Uh but for us, this was a huge watershed moment because obviously Cantor has an incredible brand and presence and history within traditional finance. And I think it really signaled the maturity of the space that a storied Wall Street player like Cantor was willing to come in and do Bitcoin back lending. And I think it

signifies that you should expect to see more private credit players or investment banks start to move into this space over time and that it's an investable asset class. You know, the the credit risk is good enough, the yield is good enough for institutions to want to earn yield from Bitcoin back lending. Uh Bitwise similar similar case, although they are more of an asset manager uh and so they were allocating from one of their funds. They liked the yields that were available on chain and they liked the transparency, the liquidity available from deploying into yield opportunities on chain.

Where I've seen institutional interest evolve uh over the past 12 months, you know, uh Bitcoin has has been down or trading sideways, altcoins have been trading down, but what we've seen is that the key difference this time versus 2022 is that there is no case of fraud or there's been nothing that's really dented the trust of institutions in the space. And so, you know, I was at Consensus on calling a couple of weeks ago and what I saw was continued interest from a lot of community banks, credit funds, other asset managers in exploring partnerships with players like us and and like other crypto lending firms in the space. And I don't expect that trend to slow down anytime soon.

>> Yeah, it's interesting that you brought up the comparison to 2022 because I just realized that, you know, what we in the crypto world talked about so much that year was about how um, you know, DeFi kind of worked as expected. You know, the um software, you know, did liquidations in an orderly fashion. You didn't have that problem that you had with the CeFi lenders where they um, you know, were either double posting collateral or they were lying to people. >> [laughter and gasps] >> You know, anyway, so um it's just so interesting that then, you know, now we have this um trend where institutions are getting more involved and what

they're doing is they are using these on-chain protocols, the you know, the software and um yeah, it I think it sort of like shows, yeah, how much trust they have in that system. Um but I wanted to to, you know, ask a little bit more about the institutional view on the crypto markets because obviously we're quite well aware that retail sentiment right now is a little bit maybe more on the pessimistic side. So, you know, I wondered if yeah, you could talk a little bit about where you think on-chain institutional activity will go this year based on, you know, what you're hearing that they're interested about and and things like that.

>> Yeah, no, I I I think uh great question. A few recent things I'd kind of signpost in the way of institutional activity. So, uh a few weeks back Ledn was able to successfully securitize some Bitcoin back loans. They were able to get a rating on that uh deal from S&P and it was arranged by uh Jefferies. So, you know, very large, well-respected uh traditional investment bank. Uh >> [snorts] >> Last week we also saw Kraken and Nasdaq announce there was going to be 24/7 uh trading of of tokenized equities. And then uh the other point I would mention is uh you know,

this is going back uh further a few months, but you saw that JP Morgan also indicated they might look at uh lending against Bitcoin collateral. So, I'd say see that's three important sectors. So, investment banks, commercial banks, and uh and uh equities exchanges. And so, I think this highlights three of the key trends. So, we're obviously biased towards the crypto lending space, but in our view, there are real businesses there that produce revenues in crypto-backed lending. And there's currently over 50 million Americans who hold crypto of some kind. We think that share is going to grow over time, and so there's going to be more of a need to lend against Bitcoin or provide credit

against Bitcoin over time. So, I expect that trend to continue, and I expect private credit firms and banks to start to get involved. The other element is crypto has uh highlighted the the need or rather the the consumer appetite for 24/7 trading. And so, I think you're going to see more assets tokenized so that they can trade 24/7. That's really being driven by crypto and meme coins and uh prediction markets starting to encroach on what used to be the the territory of of traditional exchanges.

And uh And then the other thing is I expect you to continue to see tokenization of funds and other assets over time. So, these are three of the big trends that we're seeing this year. Uh how I think you need to position yourself is being able to work with traditional players uh to uh you know, to partner with them on say accepting their tokenized funds as collateral or you know, or sourcing funding or or you know, structuring facilities where you can access traditional capital. That's one of the things that Maple is focused on for 2026.

>> Okay, yeah, and and just explain a little bit more about that, you know, cuz we saw this news about Nasdaq and Kraken. I don't know if you saw Vlad Tenev of Robinhood was quoted I I didn't yeah, catch the exact something like you know, tokenization is going to eat everything essentially. So you know, how do you think that will intersect a little bit with the on-chain lending world? >> Yeah, it's it's a great question and so I I have heard that Vlad speak before on you know, tokenization kind of eating everything and uh and then of course with with the recent Kraken announcement, I have heard the Nasdaq CEO talk about it as well, but the way that it intersects crypto

lending is right now the limits to the growth of our business, whether it's Maple or Morpho or Ave or Euler is stablecoin inventory that you can lend out. So we need more stablecoins. So the genius act has been very positive and then the other the other point is collateral. So the primary collateral that we will lend against at the moment is large cap crypto, whether it's Bitcoin, ETH Solana XRP. The more uh credible financial assets that get tokenized, whether this whether it's the S&P index or Nvidia or Microsoft or the mag seven, the more collateral there is to lend. So you have a flywheel there where as more

assets get tokenized, you can do more lending against it and therefore it becomes more useful to tokenize more assets and that flywheel will generate a feedback loop that attracts more and more people into tokenizing their assets. Wall Street asset managers, whether they be Apollo or BlackRock or Hamilton Lane, look at tokenization as a way of getting new distribution, a way of growing their assets under management, and that's why they've been so attracted to and enticed by the trend as well. So, in my view, it creates a feedback loop, but the part that we at Maple would play is we would be happy to lend against these tokenized tokenized assets, whether they be equities or funds or or something else.

>> Yeah, yeah. I mean, just hearing you talk, it's so clear. Um you know, everybody's talking about how crypto and TradFi are going to converge, but, you know, once you hear, you know, just that simple unlock, like um tokenizing stocks, like it like then you start to see kind of the money Legos piece come together, and it's not just crypto, but, you know, all all forms of finance. Um so, I wanted to ask you a slightly technical question. Um And you know, I noticed you're on um Ethereum Solana Arbitrum Base Mantle, Ink. There's probably a few others that I missed.

Um and we're in this position now where Ethereum is now going to be focusing on scaling the L1 rather than following an L2-centric roadmap. And, you know, obviously I saw So, last year you deployed on Solana, and just generally, there's kind of a lot of options now about where to deploy. So, how do you think about that decision? And um and I'm also curious, like if you have any thoughts on the strengths or weaknesses of the on-chain institutional market both on Ethereum and Solana. >> Yeah, it's a it's a great question, and uh and uh There's a lot There's a lot to un- There's There is a lot to unpack. Uh I'm not technical, so I will do my best to

kind of simplify for the for the audience. But, effectively, Maple deployed our our key contracts. So, where we originate loans to institutional borrowers takes place on Ethereum. Uh and then but this limited our reach. So, last year as we looked to other ecosystems that we wanted to be part of and and participate in in their growth with alongside them. Uh we looked first at Solana and how we approached is more of a hub and spoke model. So, currently from Maple Ethereum remains the hub. This is where we do loans to our institutional borrowers.

And it's where the smart contracts primarily sit. And then you have the spokes, which are our presence on other chains. So, Maple uh partnered with Chainlink and use CCIP to bring Syrup USDC and Syrup USDT to other chains. So, Syrup USDC is on Solana and this was our first big cross-chain push. And what we had to do is we had to look at why hadn't yield products worked on, you know, when they'd been bridged across to Solana in the past. And what we found was they weren't integrated with the ecosystem there. So, how we've approached cross-chain has been Maple tries to partner with the lending protocols and the money markets on other chains so that Syrup USDC or Syrup USDT

can be uh held as collateral and looped and and and bring yield to those ecosystems. It then means that it makes it more useful having stablecoins on those ecosystems as a holder. So, the ecosystem likes it, the other DeFi protocols like it, and they don't view us as much as competition, but instead a partner who can help them grow. So uh as we look at other chains, our key focus has always been we're kind of chain agnostic. Like we would like to be on as many chains as possible, but the way that we make decisions is kind of first and foremost commercial. How many stablecoins are on that chain and therefore how many potential customers do we have if we go to that chain. It's no good going to a technically brilliant chain that has little to no stable coins

on there because there just won't be any customers for us. So that's sort of how we look at it. As I look at institutional adoption, I think the liquidity and the the liquidity and the supply of stable coins on Ethereum really is a a very material lead and advantage for it as an ecosystem. And the way I've heard it expressed before is that Ethereum is kind of evolving as the debt capital market of on chain and of the on chain ecosystems. And Solana was kind of positioning itself as as almost the the sort of the equity capital market.

I think the two will converge over time because I've seen you know, I have seen significant debt transactions take place on Solana, but I would say that you know, in tech you tend to follow kind of power law distribution and so Ethereum does very much at this point kind of remain the hub and you can see it as you can see it expressed in being the first chain that a lot of these tokenized funds are getting launched on. And indeed in the fact that you know, Maple, Aave, Athena, you know, three very big yield you know, sources of yield for people still most of the activity takes place on Ethereum.

>> Okay, that's super interesting. Um so I did also want to ask about another big trend that we're seeing which is that DAOs are having some challenges. There were a number of DAOs in 2025 that disbanded or paused and obviously Aave is you know, experiencing these tensions between the labs entity and the DAO. I mean it looks like it's resolved but in a way where yeah, there's sort of a a split happening. Um and you might have seen in Stani's uh little essay on X, he kind of talked about how having a DAO [clears throat] have kind of so much say over a protocol um just meant that there were challenges that it

had in you know trying to be nimble and you know kind of like responding to the market and so a little bit more centralization is in a way a competitive competitive advantage but I was interested to you know hear you talk about how you think about that cuz you know obviously I I see Maple governance token and you have a doubt so yeah talk about how you think about that conundrum. >> Yeah it's it's an interesting one I've I've I've sort of I've watched the the Ave matter play out and I'm you know I'm I'm sympathetic to both sides of the argument we you know we work with with both teams and we have a great relationship with the Ave ecosystem.

It was hard like navigating the navigating the doubt conundrum. A lot of the issues stem from really the regulatory enforcement environment of 2020 to to 2024 under Chair Gensler where there was an emphasis that you had to be decentralized as aggressively as possible and this meant naturally you had to then separate the labs entity because you have to employ people to kind of work on your protocol from a doubt or governance entity which functions like a treasury governs all of the code needs to have decentralized credible representation by token holders and that

it then created issues like uh you know should every budget decision need to be approved by the public at large who hold the token and does that prevent you from moving nimbly or fast or taking taking risky bets when it comes to the direction that you want to take the protocol in. The way that we also one other point to make is Uh, you raise should you raise capital by selling equity in the labs entity or should you only ever sell tokens in the DAO?

The way that we approach the problem, because we we encountered similar issues, but uh, fortunately or unfortunately, we were as much smaller than Aave, so so over the course of uh, you know, 2020 to 2024, you know, there there wasn't as much uh, you know, there wasn't as much public DAO interest in us. Um, but what we did is at Maple, we've we've always determined that you should just have one governance token that that manages everything, and so we never raised equity into an uh, a conventional LLC entity from from venture capitalists. Instead, everyone has just participated by holding or purchasing the token. So, we kept a single capital structure, and I would

encourage new startups to to kind of go in that direction. I think you can choose equity or a token, but you can't have both, because you end up with conflicting priorities. Who owns the revenues? Who owns the assets? >> [snorts] >> The other element is we've had uh, consistent governance participation where anyone who holds the token can vote on the governance forum, but we've tried to delegate enough responsibility to us as a core team, like the labs company, so that we can make efficient management decisions and move fast and uh, you know, and and make strategic decisions for the benefit of the protocol, rather than having to put

every decision up for a committee. So, I think there is a balance between uh, agency and management and ownership, and you have to strike that. It's it's just The answer is it's just very difficult to do that uh, for for DAOs, and that's why a number of them have, you know, experienced the issues that they have. >> Yeah, that bit about where you talked about how there's like a conflict um, of interest with the token and the equity, you know, just reminds me of what happened with the Circle Axelar thing and, you know, definitely the token holders really I think felt um burned basically by what happened there.

So, um >> We we we put all of our IP into a Guernsey trust and then the Cayman Foundation is the beneficiary of that trust. So, hopefully we've we've kind of done enough work to to ensure that an Axelar-like situation can't can't happen to the Maple ecosystem. >> And then but what about that bit about what Stani said about how he felt like when you have a DAO involved in governance, then it kind of makes it harder for you to kind of respond in a nimble fashion, you know, the way that like a business would, you know, being more centralized. So, how do you, yeah, manage that?

>> I agree with that. I think ideally the the balance you strike early on is you set out, here's the decisions the business is going to be responsible for and have delegated authority for and it's accountable for these decisions. And then here's what they need to escalate to the DAO. And I think if you strike that balance early on, it's it's possible to manage. But, I do sympathize with that like should the DAO should the DAO review everyone's salaries and set you know, at the moment we put up a quarterly budget and we seek approval from the DAO um to, you know, effectively to finance uh budgetary expenses for the next quarter.

However, if you had the DAO having if you needed to show you'd hit milestones before the DAO approves your budget to pay salaries for software developers, it becomes harder to attract talent because you can't provide surety for their employment. What if you don't get your next budget approved? And uh also if If open it up to kind of everyone to question maybe not maybe question is the wrong word, but if you have to then kind of justify your entire strategic plan for the next year to to everybody who's in the DAO, some who may be less across things than others, then I think it it's it's naturally going to force you to

move slower. I think the the the correct you know an analogy might be imagine if Steve Jobs had had to go and get approval from an entire committee of hundreds of thousands or maybe not thousands of people but hundreds of people for every product decision he wanted to make ahead of time. You might risk never having had bets like the iPhone. Certainly you couldn't have released a finished product because it would have been leaked like way ahead of time. Perhaps not the best analogy, but that's the way I think about it and I and so I am very sympathetic to the argument that you do need some latitude and discretion in in in management.

>> Yeah. Yeah. Um well, the other kind of hot topic that I wanted to ask you about was AI. Um I'm sure you're seeing just how quickly AI is being integrated into crypto. Um and I wondered how you're thinking about how to protect either against potential hacks or how to take advantage of AI um for Maple. >> Yeah, AI AI has definitely been uh a super hot topic this year and you know and with fantastic reason behind it. So, I think we're kind of thinking about AI in sort of three stages. So, I think right now, you know, right now you use our engineering team uses it. We our

originations team uses it for screening new collateral or for letting us know if the if the portfolio is at risk. So, if you're hitting if you're hitting into a volatile trading period and you need to make sure that you have everyone on deck. So, every day I get an AI digest of here's all of Maple's loans, here's the collateral we have against all of them, here's the volatility of the collateral, and is it increasing or decreasing? So, that's kind of like stage one. That's, you know, very very low lift. Stage two for us would be can we engage with customers using AI? Could we send Could we have an AI bot that detects if a position is approach approaching margin call and sends them an automatic notification, lets them know the address

to send the the Bitcoin to, and uh and you know, helps them helps them troubleshoot the process. Stage So, that's stage two, and I think that's coming over the next 12 months. Stage three, which we're nowhere near yet, would be we have a senior underwriter on the Maple team, and then they have a dozen agents underneath them who go out and do everything from negotiating new loan terms to helping to settle the loan to servicing the loans, collecting interest payments, and uh managing any margin calls or liquidations. That's stage three, but that is I do think we're going to get there, and it's going to it's going to one benefit customers cuz you can charge less interest or tighter

margins, so less cost for them, uh faster onboarding for everyone. So, we will be able to underwrite decision loans much much faster. And then for anyone in the in the Maple ecosystem, it will mean that Maple will be able to manage multiples of the billions that we do today without significantly increasing our headcount. So, all of that will mean ultimately more operating profits dropping through to the bottom line of the protocol. >> Great. Um well, last question for you. I saw that um I think this was some notes that your team sent to me, and it said that Maple's targeting a $100 million in annual recurring revenue goal for 2026. And I wondered if you Yeah, would talk a little bit about how you think

you're going to reach that. >> It's a It's a It's a good question. I'm putting us on the spot. So, our our stretch target for the year is definitely 100 100 million ARR. We're currently just over 30 million ARR. So, we've been doing well, but we have about a three to four X to go from here. Uh the way that that will work for us is we manage about 4 billion today. So, what we would need to do is about 4 X it. So, we'd we'd need to be up towards, you know, between somewhere between 15 and 20 billion AUM. This is not unachievable. So, if you look in Q4, Maple went from the fourth-ranked uh institutional lender to number two, just behind Tether. So, if we continue to gain market share there, I think it's

very eminently possible for us to get to that number. And then, uh today we today deployments are lower. So, as in there's not as much borrower appetite in the market. So, what we're doing is one, we are uh you know, speaking to a number of large borrowers. So, they're expanding to more exchanges, more uh crypto or Bitcoin miners. >> [snorts] >> So, we're looking at more borrower deployments. And then, we're also looking at things like uh private credit on chain. Might we allocate there? That will help pick up the utilization and bring up the revenues that the protocol earns. And And ultimately, it's that combination of more assets under management, higher utilization rate of

deployments, and branching into new areas like private credit that will help Maple hit 100 mil ARR. So, that's the uh that's That's the goal, but there's a lot of work to do. >> All right. Well, we'll have to see how it all plays out. I look forward to um hearing an update from you in the future. >> Yeah, we'll do that. Let's go back on. >> All right. Well, Sid, it was so nice speaking with you. Thank you so much for coming on Unchained. >> Thanks for having me, Laura. My pleasure. >> In a moment, we will talk with Paul Frambot of Morpho. But first, we're going to take a quick word from the sponsors who make the show possible.

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>> Now I'm back with today's second guest, Paul Frambo, co-founder and CEO at Morpho. Welcome, Paul. >> Hey, thanks for having me. >> Morpho is a borrow lend protocol. It's mostly known for its integration with Coinbase in a DeFi wallet setup where Coinbase users have a centralized user experience, but then they're accessing an on-chain protocol. Tell us more about that arrangement. What are um, you know, some other features of it or or just generally, you know, other features of Morpho that you think people should know about.

>> Sure. So so I guess the first thing to know about Morpho is that Morpho is an infrastructure for people to build their own on-chain lending and borrowing use cases. We don't manage like assets or issue loans ourselves as a DAO or as an entity. Instead, we provide people with a stack that they configure the way they want and, you know, if they want a specific asset as collateral or a specific compliance, a specific risk, they basically control the control the code, the control the risk, and they implement it in the way they want for their product, basically. And and so in the case of Coinbase, you know, uh the Coinbase uh app used to have like a centralized lending product back in the day, right? And it was a great product, but it was kind of

limited in terms of like the liquidity and the rates that you could get there. Simply because like the balance sheet and and the loans that were issued were like coming from like centralized sources. Whereas in the nothing setting, in the blockchain setting, if you end up like plugging directly into the blockchain, you have basically global access to capital, right? So they basically deployed like, you know, specific lending market tailored to the use cases they wanted to do. And now, on the other ends of the spectrum, you have other users coming from externally of the Coinbase platform. Could be like the BitPanda's of the world, could be like the Binance wallet, could be, you know, OKX, etc. that basically are lenders in the Morpho network that would provide capital to the Coinbase users, right? So moving into like, you know, the

blockchain to power this like lending and borrowing service allows them to basically tap into global networks of liquidity, which allows more competitive rates for their users, but also deeper liquidity. So basically the way it was built is like, hey, Morpho provides this like permissionless, immutable, configurable structure for them to basically specifically tailor to their use case. And then around that, you know, Coinbase did what Coinbase does best, which is like, you know, crypto product experiences. And so they fully abstracted away the ability to lend and borrow on on on on the protocol.

And so there is a wallet behind the scenes, the user does not see it. There is gas, there is a chain, but the user does not get to see any of that, right? What they only see is a web two UX. Like there is like complete feature parity with your traditional you know, product. Except that this time it's superpowered by web three infrastructure, which allows you for, you know, again, deeper liquidity, better pricing is mostly what it brings you. >> Okay. So you launched that a year ago or a little over a year ago with Coinbase.

So far I think it's seen about over $2 billion in total loans. And I wonder, you know, if you had certain expectations going into the deal, and what has actually, you know, surprised you in terms of what has has actually happened? >> Yes, so I think the overall, you know, ambitions are are are are bigger. And and I think from the start they were, uh, you know, big. I think we're on track to where we want to be. Uh, surprisingly, I think we thought of the those goals as like quite ambitious back in the day, like a year, you know, and a half ago when we started building the thing. It was really a completely new approach to DeFi and everything. Like for the very first time,

uh, we were breaking out of like those, you know, DeFi native circles, right? Like most of DeFi today, to be frank, is is pretty crypto native, right? In terms of user base and, you know, the people that actually get to benefit, right? It was the very first attempt ever to get, you know, to users that were not here to do some DeFi looping, but were actually using their Bitcoin as collateral to spend or to buy a house or to buy a car, uh, or, you know, you know, spend on their Coinbase card and and and do some payments, etc. And so, it was hard to anticipate, but I think, you know, in general it it was like on track with the with our expectation uh of what we we we wanted to do. And then, you know, soon after we also launched the other side, which is the earn and

the yield side of things, which is um basically the the the Coin-Coinbase lenders that are earning yields through Morpho on on the platform are basically financing the other side, right? Which is very interesting because now you end up in a situation where like Coinbase builds this internal flywheel, where the more lenders they get on one end, you know, the better the product is going to be for the product for the borrowers, right? And and vice versa, like the more borrowers come in, the more interests are paid to the lenders, right? So, it's it's very interesting like, you know, business approach uh for from Coinbase perspective. I think they've you know, executed amazingly well and inspired as well a lot of people, right? That was the very first, you know, DeFi integration and I think that's just inspired

everybody else, like to be frank, like every single fintech, every single, like, you know, large distributor that is moving money around. They're like, "Oh, right, that makes sense. Like, you know, moving on on-chain rails will allow me to have like cheaper, more powerful financial services." And and this is, yeah, basically the the momentum of the so-called DeFi mullet, you know, has been like reproduced across like pretty much every single, like, large player. >> Yeah, so I'm going to ask you about a few more of these deals that you have. Um, one of them is a new integration with Bitwise. That's for their on-chain vault, which is targeting 6% yield on USDC. Explain how that differs from the Coinbase arrangement.

>> Yes, so the key thing to understand with Morpho is that, unlike the Compound or the Aave's of the world, we're not operating the lending market ourselves. We're not asset managers, you know, we're not brokers between like lenders and borrowers, etc., right? Instead, we provide a stack for everybody that want to do non-custodial asset management, such as Bitwise, for example, uh, to basically create what we call a vault, which you should think of as a product to basically earn, park your USDC and if or or USDT, like, if you think of the stable coin as like the checking account, the Morpho vault is the savings account, right? And so, this savings account needs what we call a curator, someone that can, in a non-custodial way, allocate your money into different

lending markets, right? And and the role of Bitwise here is to be the asset curator, the person that's going to, you know, basically manage that strategy. And and and what happens compared to Coinbase is that Coinbase, in their case, they're just distributing the product. They're not operating the curation of of of product. For example, Coinbase uses another creator. They don't use Bitwise, they use Steakhouse Financial, right? So, if you're lending on on on the Coinbase app, behind the scenes, there is a similar player to Bitwise, which is called Steakhouse, that will manage the money to power the yield of of the service, right? And their role is basically all the time figuring out what is the new

borrowers to underwrite, right? What are the collateral asset that we could accept? What are the the the people that we could believe in to basically fund their activity, right? And and this is a fundamentally very different model than what you have in traditional lending models, where it's more of a DAO that is operating like the risk parameters. Here, it's the free market. Anyone can come in, create their own vaults, you know, and if you have risk management capabilities, you can basically discover who is eligible to basically receive funding from you, and and then you can bid. You can propose a rate, and then people get funded for, you know, their collateral, which is Bitcoin or or ETH, or maybe no collateral at all. You don't need collateral in this model. You

just need, you know, the lender trusting you. >> Okay, so there's another really interesting deal that happened, which involved Morpho. Sorry, Apollo, I meant to say. [laughter] And Apollo Global Management committed to acquiring up to 90 million Morpho tokens, which is about 9% of the supply. They'll do this over 48 months. And you know, Apollo Crypto is also using Morpho in its USD product. Tell us more about that deal, you know, how it came together, you know, what you think the significance is.

>> Yeah, so So, Apollo and Morpho are working together to support on-chain lending markets on Morpho's protocol. It's currently too early to disclose any specifics, you know, we we expect to share more details like, you know, later this year. >> [laughter] >> Okay. >> [gasps] >> All right. All right. Well, um I guess I just generally I'm curious like it feels like the strategy is so you know you launched on chain, but then now you're making a lot of deals to kind of go after users. So talk a little bit about you know what that strategy is and how you came up with that.

>> Yes. So I think you know basically the general idea is that the world is coming on chain, right? And so you have basically two different aspects to that. You have the distribution and you have the operation of the markets. Morpho provides the infrastructure and what we've seen with the Coinbase use cases you have crypto native operators that operate products for crypto native distributors. Right? And when you think about like players like Apollo coming in and and and others, you should think about is like now fintechs that have not much to do with with with crypto uh are going to come on chain to power their financial services. And and the V2 of the DeFi mullet is basically going to be fintechs that are running on chain products that can be run by TradFi,

right? Traditional finance with the traditional finance trust and expertise, right? So that's really the evolution that we see, you know, in coming in 2026 is is getting more traditional players to operate those those those services on chain with the trust and the expertise that they bring, which basically creates a nice flywheel. Like the more serious the you know the market operators are, the more trusted uh they will be by new distributors. And the more distributors we bring in, the more business there is. So you have more asset managers coming in etc. etc. And and yeah and so what this is personally what I'm excited about.

>> All right. So um you know a number of these products would be considered quote unquote DeFi mullet style products. Uh you know something a little bit more centralized or fintech looking on the front and then, you know, the actual financial wizardry that is happening in the background is on chain. I wondered if you could talk a little bit about when you think this type of product makes sense, you know, what kind of like principles or different features make it work and what it is that the DeFi protocol and the centralized partner need to do to make it successful.

>> Yes. >> Sophie >> It really comes down to two things. Um So, first you need the the core piece of infrastructure that the distributor needs is account abstraction, you know. So, having your own wallet that has capabilities that you can spin off for every single one of your users. Like, if you are a distributor that manages money and your users have a money account, you should spin off a wallet for them that they should control in self-custody. You hide it from them, right? You have a bunch of services that is like, you know, preview from Stripe or or or Fireblocks now have their own solution and that basically you're going to embed into all of those products, right? So, that's the first

step and once you have the wallet, you have access to the chain, right? So, why what is interesting to have in the chain for in order for this to be interesting? What we've noticed is that a distributor wants infrastructure that they can own and that they can control. They want to control the code, they want to control the compliance, they want to control the risk, the fees, everything, right? And it makes sense, right? For a lot of those distributor, like they've they've spent the last 10 years owning distribution but not owning infrastructure, right? Because they were relying on TradFi to for the infrastructure piece, right? And so, they think of DeFi as the opportunity for them to extend and be able to own end-to-end the products they offer from

distribution to infrastructure. So, how does that work in practice? You want a DeFi infrastructure, not a DeFi product. What I mean by this is that they care about having control. And And what does that translate in in practice is like having your code being immutable, that you know, not relying on someone that can upgrade it and change the parameters of it, where you have billions of of dollars of your own users is very, very important for them. Or, for example, making sure you can control the risk profile you expose your users to without having to rely on like specific types of governance that you need to trust. You don't want to have those trust assumptions. You want control end-to-end. And so, that's like the second ingredient to success after account abstraction is control. And then

the third one is openness and global networks. Why moving on chain in the first place? Well, you need the financial product to be better. And how do you have the financial product that is better? By aggregating intents from all over the world, right? The The reason we have every single exchange like, you know, plugged into Morpho, whether that is like crypto.com, Gemini, Coinbase, like Kraken, OKX, Binance, everybody is is moving there is because we connect everybody. And so, when you, you know, basically take a loan, you're able to to get liquidity from all the other players at the same time. And so, you move from a world where everybody has their own backends, with their own exchange that is segregated with segregated liquidity, to a world where everything is globalized. And as a

result, you get much better financial products because it's more efficient, uh you get better prices, again, deeper liquidity etc. >> Okay, so, um you're soon going to be launching the V2, or at least that's the focus for this year, and that will um shift to having fully market-driven rates. Tell us more about V2 and why you chose the particular upgrades that will be in it. >> Sure. So, I guess the first part of Morpho, the first innovation we introduced was really about externalizing the risk management.

We thought DAOs were not good at risk managing. You know, they were pretty slow and frankly it does not make any sense to ask your token holders to vote on like thousands of risk parameters every day. Like, yeah. Um and so the first thing we're like, "Hey, shouldn't be the token holders underwriting people, should be the market underwriting people, right?" And so really what we believed in is we want to build financing infrastructure more than a crypto lending product uh that allows anyone to underwrite anyone through on-chain rails, right? In an open way. And why is that interesting? Well, because now in the not because the system is open, anyone can come in with their ambition, their

aspiration to do stuff and they show why they should be trusted, whether that is some collateral, whether that is some identity, and people can underwrite them. That was the initial idea and we came up with this idea of externalizing the risk and getting those vault managers to to underwrite. Now, the piece that is missing now is that we externalize the the risk management, we we don't externalize the rate management. So, what does that mean? It means that the asset managers currently in the Morpho uh stack, well, basically don't get to choose the rate. The rate is still determined by a formula. So, in in DeFi lending and ever since the compound days like many years ago, the way interest rates have been driven is through like a formula. And that formula can be immutable, it can change, it can be, you

know, driven by governance, but it's like basically variable rates that depend on the liquidity of a given pool. That system is great when you have no smart player that can bid and can define the rates, when you have low liquidity, when you have a high gas constraint, that's really a beautiful innovation and all credit goes to the compound team by the way for that. That was that was really really awesome. Um but we feel like and talking to a lot of TradFi players, like frankly this is what I've been doing for last like year and a half, is absolutely not the way things are done in TradFi. And there's, you know, 30 years of innovation behind them.

There's a reason they do the way they do things. They want expressivity and control on the price for the risk. It's as simple as this. So, if you're underwriting people, and it seems obvious when you say this, but you need to basically set the price yourself, right? So, that's number one. Number two is maybe you want to lock in the capital for longer, right? Maybe as as as a lender, in order to be able to fund different types of ambitions, different types of loans, well, you may want to fund people over 1 month, 2 months, 3 months, 2 years, like who knows, uh directly from the chain. And so, really, we thought the key missing piece in lending today was a term structure, where you can have fixed rate, fixed term uh lending and

borrowing. And that was not only key from an infrastructure perspective to allow people to to express their their intents, um but also purely simply from a product perspective on the borrower side, you also want predictability when you're borrowing, right? When we get integrated into those large distribution platforms, the number one feedback that we get is the rate is variable. Like, you know, I'm buying a house right now. Like, I I can't I can't have a variable rate to buy a house, right? It's much more practical considerations, right? But But both matter.

>> Okay. So, um you know, what one other thing is, so when the V2 launches, what is it that people will be able to do that you feel like right now they're limited in with V1? >> Yes. So, there are two key changes. What won't change is as a user, you could still be able to earn yield on your stablecoins, right? And you'll still have a vault that provides you a very liquid experience to earn, you know, yield on your stablecoin in crypto. Now, what you can do now, above than what we were able to do before is borrowers can borrow at fixed rate, right? And so you can lock in a specific term and a a specific fixed rate.

As an asset manager, so the person that are cooking the savings products, right? The on-chain non-custodial savings product that are vaults, they have now more levers to pull to be able to to provide better interest rate, better liquidity. And this is basically uh issuing those fixed term fixed rate loans. And while it may not matter for the lender who's still earning a variable save savings rate, it really matters for the asset manager curator that is is is underwriting those loans, right? And then the third thing that changes is that if you're willing to trade liquidity, if you don't care about being liquid, you can earn more, right?

And that's like the the big, you know, difference is like today there is one liquidity profile in DeFi. We basically are under the impression in DeFi that this is uh only up technology unless you get hacked, in case it goes to zero. And DeFi protocols can never lose money and you can always exit, right? That's sort of like the current status of the value proposition, but that's not the reality of financing, right? In you know, in in finance, the reality is that sometimes people don't repay and sometimes there is bad debt. Or sometimes people need money to borrow for more than, you know, one block and they effectively need to borrow for 20 years for, you know, long-term financing, right? And so so Morpho is going to provide infrastructure for

people to do those type of lending agreements as well. >> Okay. So um I did also want to ask, you know, we are in this period where the Ethereum Foundation has finally come out and said that they're not going to be focusing on an L2 centric roadmap. And they'll be, you know, looking to scale the L1 more. I have been noticing that Morpho V1 is on almost 40 chains, many of them are Ethereum L2s. I saw I already V2, you know, has a number of different chains that it will be on. And I wonder, you know, how that is changing how Morpho thinks about where it plans to deploy or how many chains it plans to deploy on.

>> It's a good question. Um I So, the first thing to know is that for us deploying on a chain is easy, right? We are just an immutable piece of software that anyone can come in and deploy permissionlessly in to operate, right? And so, that's like the key difference is that we don't have to Basically, we can deploy on any new chain and then another asset manager can come in and create their own vault and start like lending to people, right? So, that's like the first thing to to know about Morpho is that we're much more agnostic of where we deploy as long as you're EVM compatible and, you know, your chain is not, you know, like has the most recent version of the EVM and like practical constraints like this.

Now, what does that mean in general for the chain landscape? It's like a question I ask myself like every few months like because the landscape changes, but basically, we went from there is just Ethereum to there is Ethereum, OP mainnet, Arbitrum, and maybe Solana. So, like five, six like players to we're going to have a myriad of chains and we started like deploying a bunch of chains everywhere to then maybe we're not going to need that many chains and we're going to refocus around like maybe a few chains, maybe there's going to be tempo-based Ethereum, uh Robinhood chain, uh and and and and a few others. And so, what I'm thinking right now is is you're probably going to have

five six dominant chains for quite a while. And then you're going to have a bunch of very small chains for dedicated enterprises, right? Uh and so I think this is what the constellation is going to look like. And then I think over time we're going to go through cycles of bundling and unbundling, bundling and unbundling until maybe one day we have one single atomic world computer that scales to like, you know, infinite throughput. I don't know if one day we'll get there, but it feels like this is where everybody's going. Like when you look at like Solana's road map, Ethereum's road map, Arbitrum, Optimism, a zero, they they all converge to the same idea

of having some form of sharded computer, whether you call this a multi-core, a super chain, uh you know, shards, it's basically the same thing, right? Like so so and so maybe at some point there is a winner takes all. But I think it's going to take so much time, especially because there is so much past dependency with distributors. Some distributors are married to some chains, you know, Robinhood with Robinhood chain, Coinbase with Base, uh Stripe with Stempo. And so this is going to create such a moat that's going to take, you know, ages, like 10 years to reaggregate. Maybe not 10 years, but you get the idea.

>> Yeah, yeah, no, that makes sense. Um so I did also want to ask you, um I'm sure you have seen that your competitor Aave is facing a number of challenges, you know, with the DAO and the Labs entity. And this is actually a pretty common theme now in crypto, you know, we're sort of seeing that, you know, once the second Trump administration took hold, it's, you know, much more open to crypto innovation and that is emboldening some protocols to take a more centralized stance without fearing that they'll run a foul of the SEC. You know, Paul Atkins himself is, uh you know, very knowledgeable about crypto, quite open to it. Um and also I think a lot of these protocols are noticing that

there's just a lot more difficulty acting nimbly with a DAO structure. Um, Stani Kulechov of Aave Labs, he did write in a recent essay essay on X about this, talking about how, you know, trying to do DAO governance for >> [laughter] >> Aave with, you know, the temperature check and then the voting period and all of that, it just doesn't allow the DAO to, um, you know, react in, um, yeah, as nimble a way as a centralized entity would. So, Morpho doesn't have a Labs entity. Um, it just has a foundation.

So, explain, you know, how you came to the decision to do it that way and and, um, you know, explain how you think it kind of addresses some of the issues that we're seeing with these DAO structures currently. >> Sure. So, so a few comments on what you said. So, I guess the first thing is, so, so, by the way, don't think Aave as a as as a competitor to Morpho. I know a lot of people like like to compare the two because there is a word lending somewhere, but I think of Aave as aspiring to become like the JP Morgan of the world, whereas Morpho aspires to become infrastructure for JP Morgan. Like, Compound was a competitor to Aave.

Now, Compound builds on Morpho, for example. Lend has like, you know, some vaults, you know, typi- typically. And we have a bunch of asset managers like this. And Aave could build on Morpho as well, leveraging like Morpho's technology and and and everything to manage their assets through their DAO and and and everything. Now, that said, and I think this distinction is important because it also dictates how we've been thinking very differently about governance in general. Um, in the case of Morpho, we the protocol in itself, the product in itself, has no use of governance or token. We're just a piece of code, right? We're just an immutable piece of code like Uniswap, uh, if you will. We're basically we have a stack for lenders to meet with

borrowers, and we call that a market. And then, for lenders that don't understand how to choose their borrowers, well, there is a vault that can aggregate multiple markets. And that's really the two pieces of technology, which you should think of as like a non-custodial fund on one end and a non-custodial market on the other end. And and when we were thinking from first principles like 3 years ago about this, we're like, "Hey, well, why would we have like this world DAO process and everything? The protocol is the most decentralized you could think of. Like, I can't even change the protocol. No one can. Like, there's no, you know, Oracle that I need to change or update. Those are like the the you know, the asset curators that are

choosing those risk parameters. I don't update the risk parameters, right? And so, really what the the the Morpho token was about is owning a share of the network value of of of of of the protocol. So, what is that exactly? Basically, Morpho aggregates a bunch of lenders with a bunch of borrowers, right? Forms the state of the smart contract. So, it's a piece of code that has a specific state, right? And this is an act of value creation. You bring together two sides of the market that were not know- know- knowledgeable of each other. Like, if we take the example of Coinbase, they are able to borrow from like 10 other exchanges through a neutral media. This is value creation.

And so, as a result, the Morpho protocol can take a fee. And the owner of that fee, the owner of the treasury, is a set of token holders that have programmatic control over this value right? And that's as simple as this, right? And and now it seems to be a very trendy thing with unification uh from Uniswap or or or Aave Labs like, you know, changing things. I don't know if they still have Aave Labs or or or not, but but um but I yeah, so we we've been doing this for a few years now, and I think this is what is the single most aligned thing to do.

We believe in tokens generally more than we do in equity. We believe this is the best way to own a share of a decentralized network. Uh we believe this is the best way to align the different players around that that that network because at the end of the day super programmable. So you're able to distribute ownership in that network in such a way that you can incentivize growth of that network, whether that is, you know, through incentives to distributors, to lenders, to borrowers, etc. And it's an incredibly powerful tool that has been super instrumental to the growth of Morpho. Uh but at the end of the day it's super minimal. We're just like a French, you know, foundation that, you know, is researching about like, you know, what what should be the next version of the protocol and

and publishing this code on chain and giving ownership to token holders. >> And so the Morpho token, um what is that used for? >> Yeah, so think just there is no, to be very extremely clear, you don't use the Morpho token as part of the product. And and I I there's no reason you should be and frankly I don't think, except if you're an L1 with a staking protocol, I don't think there is any use in like in that is fundamental to the uni token, to the Morpho token, to to anything. What in the product, I mean.

The token is just the ownership in the treasury and the fees of of of of the future fees of the protocol. As a token holder you own the protocol network value. That's the only thing. >> Okay, and so there's like I I thought there was some governance in Morpho. >> So there is, but the scope of governance is super limited to those parameters, right? Which is basically owning the smart contracts and owning the fee switch and deciding what you do with this budget that you create in order to create more growth for the decentralized network. So it's pretty it's it's it's pretty simple, but at the end of the day you can't really expect a very complex task from a large set of token holders.

What you expect from them is to be economically aligned with with the growth of of of the project. You can't expect risk expertise. Uh you can't really expect them to be super active. You You can expect them to make, you know, one decision, you know, from time to time uh around the budget on how to the the key headlines on how to grow the decentralized network. That's what you can expect from a network token, basically. >> Okay. So, I'm sure you're very well aware that AI is infiltrating our lives ever more and ever more rapidly.

We've seen several instances of AI hacking smart contract code in research settings. Um that, you know, OpenAI and Paradigm did this with their EVM bench work. There's also Anthropic did did some work with uh SconeBench. And I wondered how you're thinking about that for Morpho. How do you protect against that? >> Yes, this is a good question. I think, in general, smart contract development and is extremely extremely extremely hard to secure. I think it's underappreciated in this industry how hard it is to build a lending protocol that does not get hacked, for example, right? And if you take the list

of like the top 50 lending protocols, I don't know how many were hacked, but probably the majority, right? And And it's pretty crazy when you think about it compared to like other industries, right? And I think each of those hacks were extremely specific bugs. There is not like uh There There are some patterns, you know, the famous reentrancy hacks and and and everything. But in some cases, they're extremely specific, which makes AI somewhat relevant to capture maybe the 40% and I think EVM bench from Paradigm and OpenAI is approximately the result that they have is like 40% of the bugs of like a Code Arena. So, I think it can reduce a lot the noise for auditors such

that so that they can focus on those like extremely long-tail bugs that can create the most amount of of of damage. And so I don't I don't think necessarily as as of it as a threat, but more like as a tool to like, you know, improve like, you know, the security during the development development process. I think one one one tool that we, you know, use internally a lot at Morpho is formal verification. We have a team of formal verification, you know, PhDs and engineers. Um where it's very interesting because it's about formally deterministically proving that the piece of code is executing according to a specific spec.

And what is interesting is that it is fully deterministic, which is very different from the nature of AI, which is by design very probabilistic, right? And so what that means is like whatever is how smart the hacker is, whether that's like AGI or whether that is like a black hat, this according to the spec, we've mathematically proven that it will operate in a specific way. That's only possible and easy to do if your smart contract is small enough, is simple enough. In the vast majority of the DeFi contracts today, it's very hard to do formal verification on. Uh and and and in the in the case of Morpho, it's actually very easy. It's also the case in some contracts like Uniswap that can provide us this confidence that even if you're AGI, you're not going to do

because it's math, basically. Unless AGI breaks math, in which case we have a lot more problems to care about. Uh but but yeah, that's the general idea. Uh and by the way, I think blockchain and AI marry is beautiful in that sense. It's like blockchain is deterministic computing at its like, you know, executing code exactly as it was instructed. Uh whereas AI is having a lot of agency and, you know, executing with high confidence. And those like bond very well with one another. And one of the use cases I'm most excited about is basically usage and how you can use DeFi through agents. Uh and how do you enforce guardrails that are

deterministic with smart contracts around like an execution environment for your agents that has agency over certain amounts, certain spend limits, etc. And can then operate on the chain in a very like, you know, internet native way, which looks very futuristic and very exciting. >> [snorts] >> And are you seeing AI agents using Morpho or how would you figure out that that was happening? >> So we probably can't know the exact numbers if I'm being honest. We experiment a lot internally, like we work a lot on on this.

We even have a team like dedicated to this and and so and that's been, you know, that's been very interesting and far more promising than I I have to acknowledge I was a little bit skeptic initially as we were starting to work on this. But I think this is is very promising in general. Um and I don't think I would be able to know exactly what share of of users are AI agents, but you know, it's I think it's probably safe to assume that it will be a majority in a few years.

>> Yeah, yeah, yeah. Give it some time. All right, well, last question. What's next for Morpho? >> Well, you know, I think I've touched on this a little bit. I think just Morpho in general inspires to more than just crypto in the product sense. Like we really think of crypto as an infrastructure that's going to make financing better. What I really what I care personally about, right, is financing. Like how can I, you know, fund the ambition of people and how can I matchmake as much as possible lenders with borrowers and in other terms, like people that have aspiration with people that believe in them, right? Turns out blockchain

is phenomenal way of doing that, right? Uh and and but when I think about what's next for Morpheus, like how can I get into more real world lending markets? Again, of course, but powered by the blockchain, etc. But how can I bring in more traditional lenders and you know, you mentioned like Apollo as like a partner, which is literally the largest credit, you know, fund in the world, right? Uh um and and and bringing in those traditional players so that we can access like real world demand and real world usage uh powered by the chain and and distributed into real world applications that have nothing to do with crypto where crypto is completely hidden. The wires are unnoticeable from from from the user. And this is frankly where I

spend like 90% of my time is is trying to bring the two together and and to provide the same financial services. There's nothing going to be extraordinary and new to people. They're still going to require loan or or yield. It's just going to be so much cheaper and so much more accessible for those that don't have access to it. And the reason is again, global connectivity, global competition. And and at the end of the day, like what what you're doing with this is is like really reducing the cost of like people trusting each other. And this is like where I I I I get excited about and I think 2026 is going to be mostly about like getting those like fintechs integrated into tradfi.

>> All right, awesome. Well, it has been super fun chatting with you. Thank you so much for coming on Unchained. >> Likewise.