How To Bridge Traditional Finance and DeFi with Ian De Bode

Transcript

even maybe have one investment account where I have both of my crypto and of my stocks in one place so I can get margin on both at the same time. And if I don't like the margin in that particular platform, I'll go shop it around on DeFi or wherever the hell I want. >> You know, my thesis is that that's going to grow to like 10 to 15% of the RWA market in in the coming years. I'm curious like do you agree with that? Do you think that's right or wrong? Are you working on sort of the bridges from uh kind of the native chain to some of these other chains where DeFi exists?

Are you working on some of those integrations? >> Welcome back to the Rowup. We are your hosts. I'm Andy. >> I'm Robbie. And this is your home to learn from the biggest guest, 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. First time for on the show. I'm good friends with Tom who's a longtime BD growth guy o over there. Met him in London a couple times and and have had some good times. And then actually met Nathan here in Hawaii in December for a little party at at at Nick's house. So this is my first time meeting Ian. Ian, welcome to the show.

Uh and uh it's good to have you. >> Thanks so much for having me. Yeah, man. Rob and I >> Rob and I were just kind of chatting about uh these, you know, Stripe L1 announcements, circles arc L1 announcements. You know, you got Plasma and stable button heads with them. We've got like somewhere in between like stable coin chains aren't valuable to like stable coin chains are the future of finance where crypto Twitter is versus institutions are. >> What What was your honest reaction to these two announcements? um you know, did it catch you off guard? What was your take? Um why is why are these companies building these stable coin chains? I just like to get like a more

broad holistic view and then we'll dive into some of the ono specifics. >> Yeah. No, 100%. Uh I mean, did I fully anticipate so many trifers to launch their own L1? Maybe not entirely, but it doesn't really surprise me. I feel like a lot of the the mindset of a lot of these companies still is that they prefer at least some semblance of control over the environment that they want to build, right? And I agree with a lot of crypto Twitter out there of like, do you truly need another L1? It really depends, right, on what it is that you're trying to accomplish with that particular L1.

How permissionless is it going to be? Are you creating it for censorship resistance in the first place or do you just looking for a 247 rails that you can plug into Trafi in a way that you think is very helpful? And it kind of runs the spectrum a little bit. I don't expect the big Trafi L1s to be the most permissionless chains, but that's fine, right? the the concept of these private trafi chains or semi-private trapfy chains has been around for a while and a lot of people hate on them for good reason because historically not a lot of people have really used these things but I think what a lot of people forget is that the trfy rails right now just aren't very good and if you can build a

private chain or semi-private chain that at least helps you bridge or hook into trafficy in select ways so that if you can then at least have 247 movement of some value and then go to the true public chains that works that's fine that's a helpful product um but it's just it's a spectrum and a lot of people don't judge it on a spectrum whereas I think the reality is at least for some of these stratifies having a chain that is not fully permissionless but at least helps them improve their own internal infrastructure and the like is already a giant step forward.

Yeah, very very interesting. Um, to your point, these companies are choosing more control over composability. I'm I'd imagine if I was in their boardroom, they're talking about their own network effects versus what they stand to gain from tapping into perhaps like, you know, Ethereum or another public blockchain's network effects. Um, I I'm curious as it relates to Ono and what you guys are doing in uh the RWA markets. You guys, Congrats Andy, tea up the confetti, just launched Ono Global Markets, conveniently named >> Confetti.

>> Ono GM uh which is a platform that will include a broker dealer with accounts at traditional trading, clearing, and settlement venues. uh in addition to accepting client orders via API and web app also accept orders via smart contract calls and or token transfers. So this feels like as you were just describing kind of this bridge between the traditional world and the cryptonative world maybe it exists on a public chain or just generally in a web 3 world. Tell us a little bit more about why GM ono global markets and how you anticipate uh the market will react to adopting ono global markets >> 100%. Yeah. The so our we're very excited to launch it. It is our platform

to launch and essentially tokenize any publicly listed stock and ETF that trades 245. uh it's going live with a hundred or so assets give or take but over time it'll scale us to a thousand plus assets. The way to think about the platform truly is that it is in a way a connectivity between the onchain world and the trafi world where all the liquidity for these stocks and the like sits. Right? There have been tokenized stocks in the past. We've all seen you know the Kraken X stocks launch. We've seen the Robin Hood announcements and the like, but none of these platforms right now truly fulfills its promise. We would argue in part because take the

other other products that are out there in a permissionless like format like Xbox. With that model is that you've segmented liquidity onchain and offchain, right? There's no easy connectivity between the two. So you're trading onchain in these liquidity venues, but once liquidity dries up, these prices start to diverge from the underlying. So as an investor, if I'm buying Tesla stock onchain, I would love to know that the price I'm getting is the same thing as what I would get in the Trafi environment in the NASDAQ, New York Stock Exchange, and the like, right? You want to make sure that there is parody between the two. But the way these systems currently have been architected, that liquidity bridge does not exist, right? That's why you get

these stocks that start to dep similar to what a stable coin can do. If there is an instant minting of USDC or USDT, you're you're starting to see environments where these things depict and you need that instant liquidity, instant minting and burning to bring it back down to a dollar or bring it back up to a dollar. Um, and you see the same thing with stocks. So, our platform truly is the first time where our assets are issued in a stable coin-like format um where there is instant minting and burning of these assets so that what you buy on chain can be bought at the same liquidity and the same price as is available in a normal brokerage account.

>> Introducing extended exclusively on Stark, a nextg purge trading platform live today. With 50 plus trading pairs from crypto to tradi, you get the best experience on chain today. Deposit in the community vault for attractive returns and engage in a fully unified experience for spot trading, lending, and per trading exclusively live at extended.app on starknet today. >> And so is the right way to think about this almost like a a tokenized rapper? you know, I if uh you think of something like, you know, stable coin probably fits this bill, but also something like wrapped bitcoin um and and you know, imagine wrapped bitcoin is available for redemptions, right? I can take my

wrapped bitcoin, I can send it into the smart contract and that smart contract will deliver me one bitcoin on the bitcoin chain. Similarly, you guys have a broker dealer as part of Ono Global Markets. And so, if I send my tokenized Tesla stock into the Onondo Global Markets broker dealer, it'll burn the tokenized version and it'll release this real uh legitimate Tesla equity into my brokerage account. Well, uh, almost. You can send us your tokenized Tesla and you will get the value of the Tesla share back in stable coin instantly. The reason why it's not exactly how you describe with, you know,

you get your Tesla and your brokerage account is transferring stocks between brokerage accounts is incredibly difficult, right? You would have to wait days and days and days. Um, so the way it what you can do though is essentially buy a token on chain that represents the same economic exposure as the Tesla stock where dividends are reinvested after it withholding the appropriate taxes and essentially where you get the exact same economic exposure as if you were holding the Tesla stock in your brokerage account. If you at any point want to redeem said token back into stable coins, you can do that 245 in size.

>> Ian, I'm curious, what type of clientele do you expect the demand for this product to come from or like when you guys were scoping this out as something to really push forward as part of the road map? like what is the market segment of of of the world that you're like this product is definitely for these people and this is why uh you know I'm curious is it like people like us who are like you know pretty native on chain is it more people that are like crypto curious is it larger investors institutions like who is the market segment that you anticipate to you know soak up a lot of this uh uh of the demand side of of of this product? Yeah, we expect there to be quite a large retail audience quite frankly that historically globally has really

struggled for access into US capital markets. Right? If you look at there's a lot of talk right now about stable coin and it being a better mousetrap to get access to the US dollar, which we would agree with. The same thing is going to be the case for tokenized stocks and ETFs. It's a much easier way for a global audience to get access to US capital markets. And people fundamentally underestimate how large that population is and how large that untapped demand really is. Like brokerage outside the US, there's a lot of minimum balances you need to hold.

You get absolutely ripped off on the fees. You may not even have the products available in your brokerage platform that you want. You can't buy them 245. There's a lot of limitations right now for global investing. Whereas at the same time, you've got 400 500 million people who have a crypto exchange account, a crypto brokerage account essentially, that are willing and wanting to hold crypto, but that would love to get access to US stocks in a much more straightforward way. So we fundamentally believe that the same audience that has figured out that a stable coin is a nice way to get access to the US dollar at some point will figure out that tokenized stocks and

ETFs are a very nice way to get access to US capital markets. But even for a US audience quite frankly because I get this question a lot. Okay, I'm in the US. I already have a brokerage account. Like why do I care? Right. >> Yeah. Um but even there I have multiple brokerages broke bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro brokerage accounts I can compare and contrast the two some brokerage accounts give me 245 trading which is really nice uh but then if I want to take margin on that platform I can only do it to invest more I can't actually take it off platform into my bank account if I ever need a mortgage or whatever right other brokerage accounts do offer that but they don't have 245 trading or the rate I get on my

margin is absurdly high. I would love to just have my stocks in tokenized form, move them between platforms, even maybe have one investment account where I have both of my crypto and of my stocks one place so I can get margin on both at the same time. And if I don't like the margin in that particular platform, I'll go shop it around on DeFi or wherever the hell I want. Right. >> Y >> it's almost like what a stable coin did for your bank account. I think most people would agree a stable coin is actually a better mousetrap than a check account because you can send it wherever you want 247 and you can use it in DeFi.

Same thing for tokenized stocks and ETFs. And I would argue it's even a bigger leap forward because at least with a bank account, I could easily send money to you or wherever else. With a brokerage account, I mean, you can transfer stocks between your accounts, but it is not an easy process. >> Yeah, as you mentioned. Yeah, I think there's like one interface for I think that's where we're going, right? I think that's like what the race is for Robin Hood, for all these different places is like one interface, your entire financial assets that are like basically like like let's just call like your digital assets uh which is basically everything that isn't real estate, land, physical metals etc. etc.

commodities, uh all all in one place. Uh, and one part of this that I think is that I've grown a thesis on and that I've seen slowly play out is that I think private credit is one of the dark horses of the RWA market that is like set to really uh if you get at at like the uh at the pie chart on RWA.xyz out of the 250 or sorry, it's it's it's a significant uh number. I don't want to butcher it. It's it's a very small slice of the pie. Probably less than four four or five percent right now. You know, my thesis is that that's going to grow to like 10 to 15% of the RWA market in in the coming years. I'm curious like do

you agree with that? Do you think that's right or wrong? Um and then iso positioned to expand into private credit markets or into other kind of uh adjacent uh RWA markets or you know pretty much just focus on on the stable coins and and equities side. Yeah, it's a great question because I do get it a lot and it's almost a fundamental question of like which asset classes does it make sense to tokenize in the first place. Yeah. Right. >> Um we've always taken the view that you tokenize things for two reasons. Number one is globally people want access to the product and they struggle to get it.

So putting it on crypto rails is a better way to facilitate the distribution and access. That's one. And then number two is people want to use the asset on chain as a form of collateral. And collateral can mean that you stake it, you use it for margin, you could do a wide variety of things with it, right? But for both of those things to be true, typically people need to have some semblance of pricing transparency. People want to be able to understand what is something worth. That's where you get into trouble with stuff like tokenized real estate, tokenized PE funds. Quite frankly, even some of these tokenized private company investments, you just don't have the same investor disclosures. So >> you mean like the whole like the open open AI next

>> stuff? Yeah. All of these things. How are you going to value it? Because the disclosures requirements are not the same. If you go to public markets, any public company has a ton of public disclosure requirements. They do quarterly reports. It's quite easy to at least form a perspective on what these things are worth. And you have very deep and liquid markets. So that makes it a good access play because people can look at what is really the price of this thing. and if I'm what I'm buying is the same price as the underlying and it's good use as collateral because if people ever need to liquidate it there's a very deep and liquid market. So that's why we focused on you know treasuries, public stocks, ETFs to go back to your question around private credit. The nice thing

about private credit is it moves you up on the yield curve, right? But you do run into the issue at times of what is the underlying how much is this thing worth? How do I value it? Now, the good thing is with some private credit vehicles, they're also wrapped in a public wrapper. So, you can buy ETFs that essentially are, you know, private credit ETFs and we can put those on chain. But, we're not going to be the tokenization company that goes out and tokenizes these esoteric private credit products or real estate and the like. People have tried that. I hope someone figures it out, but we just don't think it's a good use case.

>> Yeah. So basically in in markets where there's not like a very liquid tradable and clear public value that is agreed upon by the market, it's much more difficult to tokenize those things and that is going to require a different mechanism than you know what is currently present in the market today. >> Well said. >> Yeah, got it. Cool. >> Introducing Summerfi, one of DeFi's oldest and most battle tested platforms. Summerfy automates your exposure to DeFi's highest quality yield so you can sit back and enjoy this summer. Deposit stable coins at USDC or USDT and let Summerfy route your funds into optimized low-risk lending strategies. With over a 100 million in instant liquidity and

support for over 34 protocols across Ethereum, Arbitum, and more, you always stay in control. Choose from a wide range of curated strategies reviewed by independent risk experts all in just a few clicks. So why work hard for your yield and you can be lazy? Start earning now at summer.fi, the home of the lazy summer protocol. And earlier we were talking about uh using some of these assets as collateral rather than selling it for liquidity. And I'm curious as you you are bringing more and more of these tokenized stocks on chain. Um you you mentioned distribution and access is is one of the the key differentiators value propositions of these onchain equities uh or tokenized equities. Um are you guys are you working on sort of the

bridges from uh kind of the native chain to some of these other chains where DeFi exists? Are you working on some of those integrations? For instance, I can imagine a tokenized Tesla on a borrowing against it on Ave or are you building out some of these solutions and and these D5 protocols yourself? Where do you where is sort of the next uh the next jump here from a product perspective? >> Yeah, I think it's a great question because I don't I think DeFi is amazing. It is one of the key reasons why you put an asset on chain. I also think that DeFi is not quite built to support a thousand different stocks and ETFs all of a sudden.

>> That would be chaos. >> Yeah, pure chaos right there. Now, so we launched our global markets platform on mainet Ethereum. We'll go to Salana B&B chain pretty soon. We'll go to chain once it launches pretty soon too. And you know the that is really an access play because we want to go where the users are obviously public you know mainet Ethereum has a lot of users Salana B&B chain there's a lot of users I think people are going to really welcome the fact that they can get access to these assets and I'm pretty positive that the DeFi ecosystems on these various chains will support these assets in a limited way right because I don't think a right now is going to all of a sudden deploy a thousand different markets for these for these stocks and

ETFs FS it's not that it doesn't scale like normally in a brokerage account you can have a thousand different stocks and ETFs it'll just show you what your margin balance availability is and you get it in your account right current DeFi isn't really set up for that um so that's part of the vision for the chain quite frankly is to build out an ecosystem a DeFi ecosystem that really is tailored towards these public stocks ETFs treasuries all-in- ones so that we can really build brokerage on chain in a better way, but the current DeFi protocols may not necessarily be super well set up to do that at scale.

>> Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. I think maybe at best you can have like a like a mag seven type of selection on something like like an a or even just like an index. I I don't Yeah. individual stocks as you say like even on a today or most you know suitable lending markets there's a selection of you know 10 to 20 crypto assets that are deemed you know reasonable to borrow against right and so to extend that to equities is a whole another kind of level kind of on a tangential note here um Eric Trump slowly becoming a main character in crypto Twitter somehow dunking on people for calling for ETH to go lower uh pumping Bitcoin celebrating ating shorts, getting blown out, all

sorts of stuff. Um, I saw he was present at the Onondo Summit last year, or maybe it was earlier this year in New York City. Also recently saw him on an interview talking about how banks are basically losing like the current setup with banks is failing, that they can't process transactions on on the weekend, all these types of things. Um, you know, I'm just curious like in your interactions with the, you know, with the World Liberty Finance people, Eric Trump himself, like what has been their their driving force or what has been their like like what is those what is that interaction like um speaking with them? Just like generally curious what you can share your experiences and feel you know feel free to share whatever you

feel is is relevant. Yeah, I mean the they've got they've become quite public in why it is that they're building what they're building, which in part is because obviously the Trump family experience with getting debanked and the current system quite frankly not really being in service of everyone and not operating 247. I think when we had them over at the Ando Summit already back then, which was in February, that vision was very clear and that is why they're building what they're building. Um so you know it it it helps quite a bit if someone with that you know public stature etc is spreading that narrative which I think is true and as to you know why Ethereum in the first place why DeFi

in the first place if if the president's son uh has been debanged and is publicly speaking about it and is use and and has that as the narrative as to why this technology is relevant in the first place. That's pretty powerful. Um, I would also add that, you know, in my interactions with him and the the person itself, he took the time to meet a lot of people within Hondo, uh, you know, I always find that quite impressive when someone truly takes the time to just meet everyone and say hi to everyone. So, honestly, I can't, uh, have nothing bad to say.

>> Beautiful. Ian, we we appreciate your time and joining us today. um look forward to seeing on chain roll out and um yeah look forward to just the broader development here. It just feels like this space is the space of this kind of iteration of crypto today. um you know, narratives come and go, but it does feel like this one uh with regards to RWA's tokenization is only really at the beginning stages, which feels crazy because crypto's been around for so long and it's like, wow, like this was the obvious along like we tried so much other stuff, but like why didn't we just try this? Um so >> yeah, >> I'll give you a fun fact. Um I used to manage digital assets within McKenzie

the big consultancy and the first project I did for a trafi was in 2016 and it was about tokenization. So already back then it was the you know what can we do with this technology obviously since then not uh it hasn't really played out as fast as what a lot of people thought. I do think this time is different in part because you have a lot of stable coin liquidity out there. Onchain adoption is real. The whole concept of tokenization to facilitate access to an interesting asset for a global audience. DeFi exists now. It didn't exist back then. So, I think the time really is now to start moving all

of this stuff on chain. the adoption will probably take slightly longer than what we think, but I think the primitives truly are getting built right now. >> There certainly is lots of momentum. Um, and you guys are pushing uh the space and RWA space forward as a whole. So, thank you for that. Keep up the good work. Ian, thank you so much for coming on and we'll see you next time. >> Yeah. Cheers, man. Thanks, man. >> Bye. >> Speak soon. >> Thanks. >> Congrats on