Haonan Li: Ethereum's Big Bet on Stablecoin Chains Is Here

Transcript

And so the dream of these governments has always been what if I could just do local swaps directly and it has never happened. >> What we are beginning to see in the wild is that people are doing these transactions directly on chain without the dollar. [music] That is the lead that the US dollar stable coins have in the market today. And so because of that they're worried about capital flight. >> What does the work that you are doing with banks look like? How does Codeex plan to make its mark on this institutional realm of DeFi? >> Welcome back to the rule.

>> This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. >> We are breaking crypto out of its echo chamber and taking it to the real world. Sit back, relax, and enjoy it. [music] >> [music] >> Welcome back to another episode of Stabled Up, our premier weekly show covering the ins and outs of digital dollars, stable coins, and the future of decentralized finance. The >> show is made possible by FRA and FRA is powering the financial engine of the internet, powering FRXUSD, and genius compliance stable coins. This is the

stablecoin super cycle made possible by FRA. Now enjoy stabled up our weekly stable coin show. All right guys, welcome back. Rollup TV live from Buenosades Dev Connect. It is day one of the Rollup TV marathon. We've got Henoan Lee of Codeex, one of the upcoming stable coin chains, the the man himself >> for all stable coins. >> I assume you flew in from uh Korea perhaps. >> Uh despite the haircut. [laughter] >> Yo, so that's how you know French. >> I People look at my hair, they go Korea.

[laughter] No, not Korea. Not Korea. >> No, that's that's crazy. >> New York, >> man. Well, shout out to Frank for helping to make this happen. >> Shout out to Franko and to the Dragonfly team. >> Yes. >> Oh, yeah. Congrats. >> Thank you, Anukica. >> How are you enjoying bonosis? >> I've had three steaks already. >> Yeah. >> Breakfast, lunch, and dinner. >> I, you know, love steak. I don't know if I want a fourth steak. >> Yeah, that might be a bit much. I >> I kind of want food dispersion. You know, I I like some diversity. >> Did you get an empanada? >> You have you tried any empanadas yet? That is a great idea. That's what I should do. That'll mix it up. I mean, that'll get you fired up.

>> Our diet has consisted of pretty much purely Malbeck wine, uh, Argentinian steaks and empanadas >> and Zins and the espressos. [laughter] >> Yeah, espressos for sure, >> man. So, Codex, man, stable coins, DeFi, this expansion. Um, where where do we start? I mean, we're in Argentina, right? Why don't we start here with just the understanding of where we are in the world in the global economy? um you know stable coins being more of a lifeboat for emerging markets than you know people in New York, people in the states. Um what has driven you to create codeex? What is your what was your kind of lore and story into building this? Uh and why do you feel like this is what

you wanted to choose to do with your life's work? >> Yeah, I remember being handed a envelope full of cash as a child because I was going to US for school and I thought to myself like how can this possibly be the best way to do this? I'm gonna get robbed at Boston Logan. And so that's an early memory of mine. I also grew up around um you know parents that grew up in communist China where you know property was maybe uh expropriated temporarily, right? And and so I've always had this deep uh resonance with this mission of helping people um create the best possible way to transmit the fruits of their labor across space across space and time. Um was my earlier spiel not perfect

fantastic. Yeah. Yeah. Yeah. Hanging out. So we're just hanging out. Um and so so that's why this mission is particularly interesting to me. >> And so you know you've you've chosen to go and build Codeex as this platform for you know Rob what you say to power all of the stable coin >> coin codeex.xyz. It's the native chain >> for all stable coins. >> For all stable coins. >> Okay. So we have some Tether chains and we've got like some circle chains, some USDC chains. Codeex is for all stable coins. That's right. >> So you're like the DEI chain of stable [laughter] chains.

>> Um I'm not sure under the current political climate we like that framing. I I think [laughter] um we are equal opportunity. >> Understood. >> Um you know maybe we would call the tether chains affirmative action chain. >> Okay. >> You know, affirmative action for Tether over there. Okay. Um, we're very much uh, you know, we want the market to sort it out itself. I think if you want to bet on what the stable coin landscape looks like 10 years from now, I think it's perhaps not very wise to assume that it's looks like the sort of incumbent position today. In particular, we think non-dollar stable coins will become more and more prominent and more and more useful.

>> And so our thesis is very much about uh making the best possible neutral infrastructure. We don't run a PSP. We're not a fintech. We're not an issuer. We're not going to be competing against you. So, [snorts] if you want a neutral place to build, we're the best place. >> Havachi is fast and private [music] per trading secured by ZK with Celestia underneath. Go to habachi.xyz [music] to start trading today. Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released [music] its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your [music] coins. Get a treasure at treasure.io. IO. Yeet is built for big moments. The most fun you'll ever have

with your crypto. Go to yeet.com to yeet into your next game. >> You know, I don't know if you guys played Call of Duty back in the day, but that there was a special ops uh uh uh game format, >> right? >> Um you you guys are describing or you know, you've been described as Ethereum stablecoin spec ops team. >> Yeah. >> What does this mean in the context of of Ethereum's kind of stable coin landscape? >> Yeah. I I mean, so I grew up in the Ethereum community, right? I was very lucky to be pretty early at optimism and at the time, you know, six or seven of us living in a hacker house in LA with Vitalic. I'd come downstairs and Vitalic is on the phone with Elon, Ashen Kutcher's in the kitchen. You know, it's sort of that type of surreal environment. Um, and so I've always felt

a deep affinity of Ethereum. I think um it's incredibly important for us to extend the dominance of Ethereum and stable coins beyond where it is today and into the future. I think you see a lot of these other players come in in an effort to supplant Ethereum and we're very much Ethereum's answer to that. >> But aren't you building your own L1? >> L2. L2. >> Okay. L2. Sorry. [laughter] >> And so after all >> that would be that would be a problem. >> I was going to be like, dude, you can't just come up here to sit down and say this stuff if you're building your own L1. Okay, good. >> After all this time, I I mean people are building all L1's. They're they're building stable chains, but you guys chose to build an L2. What even you know Ethereum has certainly gone through its

trials and tribulations. What is it that continues to draw you in? Why did you build an L2 instead of building something like an L1? >> I think they're rational reasons. They're ideological reasons and they're emotional ones. Let's start rational. Um versus the brute fact that most stable coins are on Ethereum today. I think that's something that's not talked about very much. Second is that neutrality actually does matter. I know it sounds like this crazy religious word that Ethereum people chant in a corner while holding hands but it does actually mean something right what it means is that you know you won't be competed against you know this layer is not going to be adversarial to you if you're add right and uh you know you're thinking about what chain to deploy on what does that calculus look like do you want to go to

your board and say hey like listen the stripe guys way smarter than us way better than us we're just going to go do that some of these things are not quite tenable on a BD basis Right. And so I think um Ethereum has a ton of advantages that are perhaps underappreciated. >> Okay. And so what what uh technical architecture did you guys decide on for the L2? I mean we've had big and based rollups come in here. We've been talking a lot about native rollups. We've had stage one, we've had stage zero, stage two, you know, all of these things. >> Uh and there's such an expressive design [snorts] space for you to choose from.

Uh where exactly did you guys uh fit in that in that map? >> Incredibly expressive. And um I I um I want to make sure that we don't catch a very terrible disease. >> And that disease is research fetish. >> Yeah. We've had >> Wow. We should coin that. >> Yeah. >> Research fetish. >> Fetish. >> Fetish. >> Fetish. You know the technical ADHD PhD founders that are only doing things for the research and never shipping. >> Super cool. Super cool. Great for recruiting engineers. Fantastic for recruiting engineers. I get nerd sniped reading some of this stuff. It's fantastic. But then I think the question you have to ask yourself is does the customering care?

>> And if the customer does noting care, you probably shouldn't be focused on it. >> Yeah. >> And so there's this legacy of like chains distinguishing themselves or making themselves legitimate by doing this kind of R&D fetish. R&D for R&D's sake, right? Does it even matter if you squeeze out more TPS? Who gives a makes me legitimate? >> If you turn a new net use case, then it does. But very very few founders are able to turn a research fetish into something pragmatic. >> That's right. Because you're trying to back into it, right? You've got this research agenda and then you're trying to back use cases into it, >> which is ass backwards.

>> And so, you know, what we're focused on is what we actually see as the key bottleneck today. And it's almost so obvious as uh it's incredibly obvious what that bottleneck is today. What that bottleneck is today is if you want to move $10 million of local fiat into stable coins is still too expensive. Simple as that. That barrier between fiat and stables is too difficult. And it makes too many of these use cases not make sense. And so there's all this story and hype about stable coins today, but the reality is it only makes sense for the most extreme edge cases, the most crazy situations. And our mission is to extend that well beyond the edge cases into the mainstream. And [snorts] we're not going to get there by catching research fetish.

>> Okay. So, let's put this a bit in some of your terms for context. Uh, quote, "We intend to leaprog Tron. Our priority today is to make the boundary between fiat and crypto disappear. To do this, we are willing to work through all the painful banking, licensing, and engineering issues no other chain team is focused on. So, I think the question here is what does the work that you are doing with banks look like? How does Codeex plan to make its mark on this institutional realm of DeFi?" >> Yeah. So if you think about your classic chain team, what is it? It's um a bunch of very brilliant people um seated in a circle and thinking about well you know what would be great is if we squeezed out XYZ technical property out of this substrate and what does nobody want to

do? Nobody wants to touch the fiat because one 3 years ago it'd be ideological right like fiat why the hell would you touch the fiat? Like we're crypto people. Second, like it's incredibly inelegant, right? I could send a ERC20 from here to, you know, China incredibly easily, but if I have to deal with all this fiat it takes forever and super painful, but that's actually what needs to happen, right? But nobody wants to do it and nobody's staffed to do it. And so, we are staffing up to do it. >> And so, what does that look like on a practical basis? Uh, it looks like institutional relationships. It looks like BD connections. It looks like uh relationships with decision makers at financial institutions. Um I take it you

have those. >> We do. We do. We're very lucky to have some of those. Um and you know it means doing it the right way. It means doing the licensing. It means grinding out a lot of the gunk honestly which you know is why I have I many folks on my team have eye bags and and are working very hard on this. I I think um crucially it's the focus on eliminating this the friction of moving between fiat and stables is crucial. Why is that crucial? Because um if you want a mainstream use case to emerge, meaning like your average company wants to do this stuff, that's the real friction. Like is it is it gas cost? If I'm moving $10 million, do I care if it's 10 cents or 5 cents?

Maybe. Is it that I need a dedicated payments lane? Is that really the problem? Is there so many stable coin transactions we can't handle the gas? So, you know, I I think again we want to focus on where the real problems are. >> And so, this fiat to stable coin swap product you guys are calling Avenue if I'm not mistaken. >> That's right. Uh we are renaming it Codex FX. >> Codex FX. >> Kudos to your research team. That's great. >> Yeah, [laughter] >> dude. I find it hard to take him seriously. Um, so with this Codeex FX product, we actually just had Luca from M0 on and Rob, you actually asked a question about that the FX uh market and kind of what what he thinks and how M0 is going to play that. But he >> he was a little bearish on he was super

bearish actually. That's why I think it's important, >> right? And so what is your Well, we should set the frame, right? Because you know, why was he bearish on FX? Because um we're going to see the proliferation of stable coins. We're seeing stable coin adoption here in the in the US. uh and it and it's accelerating, but around the around the world, they're worried about capital flight, right? And so I made the point like, look, we can have denominations of uh regional stable coins, and it doesn't matter if you switch the form factor, you can still have a capital flight uh from a fiat currency into uh stable coin of the same denomination. Right now, we're in this really interesting time where US dollar stable coins um I'd actually love to see numbers around this. I don't have the numbers, but uh I'm curious if we have

US dollar stable coin dominance exceeding that of the fiat US dollar dominance because it does seem that way. That is the lead that the US dollar stable coins have in the market today. And so because of that, they're worried about capital flight, right? And that's why we're not seeing regional stable coins as much. And so his bearish take was centered around the idea that because there's so much capital in these FX markets is going to be extremely difficult to actually make a any sort of meaningful change because the system is so entrenched in in it. So it seems like you're tackling a big problem. So you know if you're speaking to Luca now understanding that context like what is what would be your uh you know >> response? Yeah, >> I guess my response would be that the history of FX markets is the history of

very incremental innovations driving massive differences in flows. >> You see this with the rise of prime brokerage. You see this with the rise of CLS which are actually mechanically very simple things. But why do they reshape FX markets? Because they're just more efficient. Think of it like a river, right? The river will seek the least path of resistance. And if you manage to create a least path of resistance, it will come flooding in. The question then becomes like can you actually create the least path of resistance and there you know we have some ideas. Um I think classically the problem with non- US dollar stable coins because you're right dollar stable coins stable coins so far have been a dollar phenomenon.

The problem is who the hell wants to use this stuff right? Let's say I have a um I who do I not offend? Uh let's say I have a ringit Malaysian ringit stable coin. Why the hell would anybody want to use this thing? doesn't hold value particularly well. >> I'm not even Malaysians wouldn't necessarily want to use that stable. >> I've got fiat, right? So why why what what the hell does this get me, right? And I have to take all this what's this weird wallet thing, right? >> Even if I want to buy crypto, I got to swap into a dollar stable coin because all the markets are not made in dollars. And so it just doesn't make sense. Now, uh where we think it does make sense is if we can shift the FX transactions on chain and that's beginning to happen.

And uh you know we've got some exciting things cooking there. >> One last >> any helpful on that? >> Maybe not specifically there but like I I'll give sort of other color here. Um >> we're starting to see transa like classically what is the problem in FX? Classically the problem in FX is all the local countries want to disintermediate the dollar because you're giving so much power to the United States government if all your transactions go through the dollar. You're a Malaysian city in Malaysia. You want sing dollar. you typically actually go from ringit to US dollar to densing dollar which is insane right you got these two countries right next to each other the United States is oceans away and yet you're going through the dollar >> and that's because of the depth of liquidity [snorts] um and so the dream of these governments

has always been what if I could just do local swaps directly and it has never happened >> what we are beginning to see in the wild is that people are doing these transactions directly on chain >> without the dollar which is a radical Reshaping of how commerce works globally. Now the flows are quite small still. >> Trade on anything. Economics, weather, [music] sports, crypto, and more. All on couchy.com 24/7 for the world's biggest prediction market. >> Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again.

>> Looking for yield that stands out? Infinifi gives you just that. deposit stable coins and earn far more than the current savings rate. Infinifi is a battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz. But it it it's it's in in like in the current sense, in the traditional sense, it's always gone through the dollar is what you're saying. So, you're breaking that you're basically taking that intermediary out if you will. >> Uh, right. >> In a sense. Yeah. >> Right. That that's that's happening. It's unclear to what degree it will continue to grow, right? But I I think it's quite interesting to see sort of uh commerce get reshaped. So we're a bit tight on time here. Um just one last >> I just want to put in put into

perspective the the idea to respond to the previous uh regional denominations of stable coins which is that we're you know attacking this massive industry of FX but we're not unbundling it all at once. We're taking the particular pairs the particular denominations that currently are not very liquid on the traditional FX markets. We're choosing to bring those pairs over first and we're gonna incrementally unbundle the FX mark and bring it onchain very incrementally, one at a time. >> I I think that's right. I think that's right. And I think um look, the US has been having all the fun recently.

>> So, think about it from Besson's point of view. You're taking what is classically been an offshore dollar system out of London and you're moving it onshore through stable coins. So, now you have much more purview through it. You have transparency through it. you no longer are backstopping this sort of foreign system. It's beautiful. But I think there uh there are other games to play as well. >> Last thing for you, what's the what's the Q4, Q1, Q2 uh trajectory look like for Codeex? What are you guys cooking? >> Yeah, so we're we're cooking this onchain FX product that we're really excited about. Um and uh you know, we're ramping up uh various other community initiatives. It'll be an opportunity for the community to kind of partake in some of the profits generated from the

system, which we're very excited about. >> Very cool. Thank you for your time, man. >> Thanks for having me. Keep cooking, man. >> Thanks for dying Coke. >> Cheers.