How to Bring Wall Street Yields Onchain Without Breaking DeFi

Transcript

Now, please welcome our last presenter, Mr. Ben Nadski. Please come up to the stage. Hello everyone. My name is Ben Natareski. I'm the co-founder and CEO of Solstice Labs. I also think I'm the last talk for today, so everyone can get out of here after this one. Um, we are a stable coin provider and yield protocol that is launching this month with over $150 million of capital and a leading staking infrastructure provider with securing over $1 billion in assets. As a brief background of myself, I started my

career in crypto uh or as a derivatives trader originally on Wall Street before entering crypto in 2013 and I've worked at institutional firms including R3, Consensus, Six Digital Exchange and Galaxy Digital. And I want to talk to you today about how the DeFi industry are bringing sustainable yield strategies uh to onchain and how institutions and DeFi protocols are deploying these yield strategies as well. So everyone looking at the DeFi industry right now wants institutional capital to come into DeFi. This is a narrative that has been reiterated almost every single day across all the different applications in crypto. And everyone in the Trady world is wondering on the yield side when they're looking at these DeFi yields. Well, let's start off with

the assumption. What if US Treasury bills are not really the risk-free rate? So, where else can I start to look for sustainable yield in the market? And what if there was a better way for these yield opportunities to be accessed? DeFi yields have traditionally been capped at low liquidity uh without battle tested strategies or institutional backers taking a stake in the operational development of the protocols. It's the first time today and uh leading up in this year especially where institutions are seeing something they can relate to with the inflow of capital on the edge of entering into the DeFi sector.

So the current iteration on both sides is currently broken. This is where the need for this yield strategy on DeFi is really coming into play. Most professional platforms require accredited investors who meet certain requirements on the private investment side to have, you know, minimum access of 100,000 US dollars, high fees, and most importantly, the direct access of thirdparty financial adviserss to allocate those funds. In DeFi, while everything is on chain, things are often hidden by organizations offchain. And this has been an issue that we've experienced over the last several years in the DeFi industry. And most of the hacks and breaks in the DeFi protocols that have been providing these yields have all happened offchain. This is not a blockchain issue. This is a

trust and transparency issue. And so both sides have started to converge in solving these problems and meeting somewhere in the middle where DeFi protocols now become a strategic investment vehicle for leading institutions. The DeFi side still needs to evolve a little bit more to create a safe haven for institutional capital, which is what I'm here to talk about. Um, each by itself might not work for everyone, but something in the middle can. And institutional capital can work within regulated frameworks, things like tax preps, audits, jurisdiction licensings, etc. While most institutional capital still can't access the DeFi protocol simply because they can't report it the right way. Defi wants institutional capital but isn't willing to meet them

in the middle where they have to onboard it. So this is where solstice comes into play in the middle of tradi and defi and very explicitly these are some of the driving columns and factors in our industry that are leading the institutional bridge of capital over into the DeFi sector. Collateral stability is number one. Having enough backing of principle for depositories is critical. If you don't have user funds, then we we've seen this play out many times. DPAGs occur in stable coins. RWAS get low liquidity and we've seen funds pull out. Collateral stability is key.

Uh number two is audits. A track record for overcolateralization from independent third parties, which we're starting to see a number of firms in the D5 sector offer for institutions come in. For some yield protocols, it becomes tricky to prove off-chain assets and sexes or RWAs, for example. But these are starting to become reported in the correct ways. In ensuring your protocol has public audits often is a helpful way to help them build trust in the user base. Liquidity markets is uh a very key factor as well. So when you're going gets tough, the tough needs to stay pegged as we like to say. You need to be able to have high liquidity markets which has been one of the major blockers for access over for institutions over a lot of DeFi yield protocols cap out at 5

10520 million and the major institutions that want to deploy know that a significant investment size that's not going to cut it in order for them to take a stake in a D5 protocol. You need a diverse user base uh being you know you want to have have protocols that effectively have a diversified wallet share of the core capital and a widespread market on a global basis. You need a growth engine for these D5 protocols and you also need an ecosystem to support this. So wrapping all of this these core pillars up what could this look like? And when combined properly and the principles from the previous slide you start to get the best of both worlds here. So deep liquidity and DeFi's permissionless access with

institutional involvement and the regulatory transparency that would be expected and whether if you have 50 yen or 50 million yen these protocols such as Solstice uh are ready for institutional capital. Solstice is an example of the new business model for asset management on chain uh for sustainable defy yields where capital is introduced through a native stable coin. yield is generated by locking the stable coin up in a secure transparent custody and then attractive DeFi yields are returned back to these investors. In our case at Solstice, we have been executing a dynamic delta neutral strategy across sees such as Binance with hundreds of millions of dollars of capital in a sustainable way. These returns are

consistently double digit, transparent, and permissionless to access. The whole concept there's these very exciting yields in DeFi. There's institutions that want to get in and there's no correct bridges that currently exist. We've been doing this at scale at the DSX Capital level who I also represent. It's a billion and a half dollar asset manager out in London and Solstice grew out of that to focus on a decentralized protocol that will allow for both institutions to come on board and access these yields in a B2B way as well as the permissionless access. So whether if you all you need is a wallet and connectivity to the internet.

This business model is not just for pure trading strategies as well. The RWA model consistently has shown that this is another route for yields in the DeFi sector that are starting to pour institutional capital into uh the DeFi industry. So finishing this is exactly where the convergence comes to light. This is an example of a direct application that is driving institutional capital into DeFi markets and you're going to see a lot more of these evolve as we have seen over the last 12 months coming in the next two to three years. To learn more about us at Solstice, you can follow us at solsticelabs.io. IO which will turn into Solstice. Finance coming up in our September launch coming up. And you can also follow us on X at Solsticefi Solstice FI. Thank you so much.