Fireside Chat: DeFi Liquidity and Regulation with Chaeho Shin and Yana Prikhodchenko

Transcript

[applause] >> Hi everyone. It's nice to see everyone here and before we start just 1 minute a big big applause to the team of organizers Karting and the entire team. You know how much it takes energy and time and dedication to make it happen. Thank you guys. >> [applause] >> So today we are New York is a center of liquidity and capital markets and our guest today is actually started career in traditional finance, right? You started in the bank of career, then you followed with the role of Citibank and if I'm not mistaken like couple of other companies in crypto and finally see for

almost like more than 4 years at one of the most used protocols in D5 1 inch. And you know what since a couple of days ago I watched your interview with Davos. It was in 2024. At that moment you shared your perspective on this like convergence of trade fire and D5. And today we are sitting here 2026. We see that the market has changed a lot. We are moving from the speculative market into traditional adoption into the capital usage in a proper way, but still one of the biggest issues we are facing is liquidity. And actually if you look at the market today up to like 80-90% of liquidity is just sitting idle, not

working, not we are not using it properly. And just wondering what is like your perspective on it. What is the underlying reason of this issue? >> Thank you. Thank you for the question. Um So as you mentioned the 80-90% of the liquidity sitting um idle in D5 space is largely coming from the fragmentation of the liquidity. Um you know, as investors, as um holder of uh assets, you need to deposit your liquidity, your your assets into multiple liquidity pools separately. And it's required to to make it

uh functional. And um that's I think is the biggest problem um in terms of liquidity of DeFi. And 1inch is um actually solving that issue right now uh by introducing the shared um 1inch shared liquidity protocol. Yeah. >> Yes, one of the things actually good that you uh touched on it because shared liquidity and intent-based systems, they're like they get lots of attention now. But can you please explain why? Why does it bring so much of attention from people?

And why is your system, your approach at 1inch different from other like traditional pulled systems? >> Yeah, I mean as the name suggests, the shared liquidity, it uh solves the issue of capital inefficiency in the current DeFi space. Um which actually literally means that um it allows users to reap more uh higher yield from more efficient capital usage. So, um your assets, your liquidity from your wallets, your self-custody won't be touched. I mean, you you won't uh your your capital doesn't leave your custody. And uh we

allow that um assets in your wallets to be shared um across different liquidity pools. So, that's the new breakthrough. And I think that's a new innovation in DeFi space, yeah. >> But speaking of liquidity, we also I believe, need to discuss AMM's AMM strategies, right? Because you remember back to like years ago, it played a key role in scaling DeFi. But now I see that more and more people actually talking about the fact that it became kind of bottleneck for the next phase of the market. What is your view on it?

>> Yeah, definitely. Um I mean, because of the current um I I don't think that, you know, the the DeFi has begun in 19 2019 2020, and I don't think there was ever a real innovation afterwards. I mean, it DeFi the liquidity pool concept itself is is a true innovation, uh a new financial introduction, um even to the traditional finance, um and it really never improved in in many aspects. And and now we're trying to really address that issue, um the core issue of uh the core problem of the current system,

current DeFi system. Um and that's why we may view the current AMMs as a bottleneck for, you know, next adoption. And if we solve this issue of capital inefficiency, then uh we think that we can really achieve the generation the next generation of DeFi uh system. >> Now, we always speak about capital efficiency, and we see that institutional capital is coming. And for instance, if you speak about our favorite RWAs, it's still the segment is the most like highest in terms of narrative. Now, just a couple of weeks ago, I remember like CZ just said that it's overrated, right?

Uh it was the first sight. But then he said, "You know, guys, I thought about it that it's overrated, but now I see it's underrated, because actually the quality of the narrative is changing, and you see that it's new infrastructure is coming into place. But the interesting fact is that now you see around like 30 billion dollars on chain, right? But reality is around like 2.5 billion dollars is active in DeFi. The question is why and how can we change it? Because you're talking about capital efficiency, but what it is real like in practice?

>> Yeah, I think there might be two complications that complications that might be um getting in the way of uh real adoption in of RWA in DeFi space. Maybe one is as you all know the compliance and regulatory issues. Um and again, the second thing is the liquidity and people don't know where to trade, people don't know if they the RWAs can be traded at efficient rates um at the same rates that they would trade in traditional finance platforms. And um I think we we all know those two are the uh biggest hurdles biggest hurdles for the real adoption of RWA in DeFi space.

And um we 1inch is actually tackling both um aspects at the same time. We want to be um the most ready regulatorily ready DeFi uh protocol out there to um really adopt this um new RWA uh trading um which um which allows us to be uh to be the best partner for um RWA swap engine with other partners out there other um you know, client-facing platforms out there. So, that's one aspect. And as I mentioned with this new um shared liquidity protocol that we're building,

uh it would multiply the liquidity uh the the RWA liquidity that's in the DeFi space um which would really uh make an impact um in this DeFi space with the um uh adoption of the RWA. Yeah. >> But just also speaking continues this topic of tokenization. But now we see that yes, there is the issues with secondary liquidity, market is fragmented, regulation is not here yet. But and you still see that like different asset class classes they come on chain.

What What do you think would be the key solution of RWA so that it turns in a way that it becomes more efficient apart from liquidity just your personal professional view on it? >> Well, I think the the real real breakthrough of uh this combination of RWA and DeFi is that um if you actually trade RWA in DeFi, then you have you actually have this opportunity to generate additional yield that only DeFi can produce. Um you know, if you hold on to your uh your for for example, your securities in traditional platforms, um you don't really generate extra yield. You You only would get dividends

at best. But if you trade your RWA assets on DeFi space then um you get this liquidity pool uh trading fees and your uh DeFi yields uh which is extra yield on top of uh whatever the security brings you. So, I think that's the biggest um merit in this combination of DeFi and RWA. >> Thank you. And also when we talk about a capital right now today within the US, right? It's as I said, it's center of global markets. And you have a great experience in Asian markets. Me personally, I'm also I'm based out of Dubai, right? And we are like I have also lots of friends here and from Dubai

and we see how it's changing in terms of the way like the government behaves, the regulation they are implementing. I'm just curious to learn more from you. I guess you know the Asian part. I'm sure you also know the US part. It's interesting to learn more about capital allocation, especially today here when we have builders at this conference, how it works and overall what is the main what are the key differences between like APAC approach and the US approach. >> Well, I think the biggest difference as of today between the APAC markets and the US market is um that APAC

markets are much more retail led, retail focused still at this at this time. Um I mean, crypto began from the retail, but um I think APAC is um definitely slower than the than the US in the institutional adoption. Uh and largely that's because um you know, including Korea, uh APAC countries really look at benchmark the US system, the Wall Street, the New York that that we're sitting here right now.

Um so it's it's actually great news that we have all these regulatory uh developments in the US and uh we already see even even more than the regulatory development is really the involvement engagements of all the institutions in New York in Wall Street and that's really driving a lot of changes in the US and uh all the APAC countries including Korea are are um you know, benchmarking US Wall Street, so they're just waiting for all these regulatory clarity uh to be uh to be ready. And I think uh the institutional adoption in APAC um is is

there. Like I know for a fact that um a lot of like there are so many institutions that's waiting for this regulatory clarity in the APAC. And you know, the first thing is the US and then everyone follows suit. I think that would be the likely scenario you know, next year next 2 years. And we'll see a lot of changes in APAC as well with all the institutional adoption. >> As you said like New York in the US is still viewed like a like a biggest benchmark. But what are the key learnings? What are the things you say like yes, that's a good one. I need to have the same or we need to implement it. What are the key like couple of things you would like to mention?

>> Uh Can can you maybe elaborate a little more? >> you say like APAC, right? And US. You say like for instance, US regulatory is going very fast. It's something what we need to implement APAC side, you know, or like US to know how to work with old money, you know? Just like your personal key learnings from the US. >> Um Yeah, I I mean I think everyone is very familiar with the what what's going on in the Clarity Act. And uh they're a spot on. Like all the all the new regulations mentioned in Clarity Act is

has always been um the the uncertain areas the uncertain regulatory um interpretations that that we need like the APAC countries needed. So, I've been in crypto for almost 9 years now and the those are exactly the what you know, the the points that's being addressed by Clarity Act is actually exactly the the key things that that I started um to question back back 9 years ago and and it's now really coming to a more uh clear execution of the regulations which would really make things much more clear

for everybody in in in institutional space in APAC and I think that's uh, that's the key part, yeah. >> Clarity on regulations, the fact that they bring it to everyone. As we said like US yes and then you see as I said like in Dubai it's where in Europe Mika is also playing it's full year. So this clarity is obviously needed. But also speaking of the liquidity, now it's the market is obviously not that great, but the good thing we are still here. I see the lots of builders, amazing projects coming up and actually lots of projects about to launch the new things and bring it to the market. Just what is your own view? What will be next phase in terms of liquidity? Now we have certain

issues, but I would like to talk about future. What is your like professional expert view on what will be next? >> Yeah, definitely in the DeFi space as I mentioned it's I think the the lack of interest or uh, the current bear market, especially bear market in DeFi space is definitely the yield, you know, you know, it started from everyone knows that DeFi started as a speculation. Everyone was providing more than 100% yield with the tokens that they own they issued and >> People miss this time, you know.

>> [laughter] >> Yeah, yeah, so do I, but anyways like it's it's no longer there and the yield in DeFi is is generally it's not attractive at all like for the complexity and sophistication that it brings to the users and you need more reward and I think the the only solution here is that not another speculation, not another scam coins. It's it's actually better capital efficiency through new innovation and and that's exactly what our 1inch shared liquidity is bringing. So, it would definitely bring in very fundamentally supported higher yields

and that would generally that would definitely bring in more interest from not only the retail side, but from also institutions as well. >> Thank you. It's actually very good point on the yields, you know, because still there's lots of projects and things they're running their rewards. It's very good advice actually for our guests. But before we finish, I would like to bring some more energy into our conversation. I have a couple of bonus questions. So, the first question is let's say morning. How do you start your morning? Coffee or emails?

>> Slack. >> Slack. Okay. DeFi or TradeFi for your own capital? >> Diversify. Mix. >> Mix. Okay. So, speaking of the market like bullish market energy or bearish market building? >> Definitely bull market. >> [laughter] >> We're all waiting for it, you know, just just a couple of days ago I went to Wall Street and I took a photo of like bull like is a sign. Guys, remember that bull will comes back. The market is moving in cycles. And one more question because we are still interested in 1inch strategy. What is the one big key goal for 1inch for 2026-2027?

>> Yeah, I think I've mentioned multiple times. It's the 1inch shared liquidity. That's the next generation DeFi. Yes. >> And for you as a CEO of the company, right? What is your key goal like in one word? Maybe in two. >> [laughter] >> More money. Yeah. >> [laughter] >> Good. [gasps] So, and let's assume we meet here in 1 year. I'm sure Karthik will be very happy with the conference. He will double it or maybe it will be triple size conference. If everyone will be wearing suits because it will be finally like capital efficiency in place. What do you think will be the key topic, key narrative in 1 year from now?

>> Well, as as we're building it to right now this year, the the shared liquidity, I think next year the biggest the hottest keyword will be the shared liquidity where people will be already uh