How Stablecoins Will Kill Traditional Banks with Rob Hadick

Transcript

There's really only three investable areas of technology anymore and it's AI, it's biotech and it's crypto. Like that's it. >> We're very clearly not in the like let's look at DeFi llama and see what to buy anymore. It's like okay who's buying what in size. >> Is this because stable coins are coming to eat their lunch or these issuing banks that are that are backing these stable coins are kind of in trouble. >> 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 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. Rob, good to have you.

Um, you are the >> you are you are the other half of Dragonfly, which we know our uh our famous or our infamous Hib clip on him calling the top on proof of stake uh was was the one to remember from Permissionless, which I suppose because of DATs, he's now reeled back in. But it's good to it's good to have you on. I've been watching a couple of the Empire Roundups. Good to see you there as well. And um yeah, man. H how you doing? >> I'm doing well. Uh thanks for having me on. It's a bummer because we the market's like melting down the last few days. I was like I was like really excited. You hit me up on last week and I was like the markets are doing well. A good Jackson Hole uh conversation and then you know the last two days have

been been a real bummer. But you know we we are where we are. >> Yeah. You kind of called it though in one of your tweets. I think uh after the flush you were like weekend pump into the the leverage flush. It's just classic. >> Classic. Yeah. And it's it's happening again here you know after uh I think the equity markets were pretty tough today as well. So, uh, but we we'll we'll we'll get back to it. >> And Rob, do you think this is kind of a blip on the radar given the more dovish Jackson Hole sentiment? Um, are we going to start to see some more structural changes and, you know, general monetary policy and that's going to that's going to take its effect or are we starting to frontr run whatever the next thing is?

If we're doubbish now, we're going to be hawkish later. We're starting to see that turn out. I think what you saw in the market. I was just actually chatting about this with a a few really smart uh traders that I know is the initial reaction on Friday is everybody was excited about the doubbishness and they were surprised. They were a little bit caught off guard or caught off sides. There was I think an expectation that um you know Powell continued to be a little bit hawkish and that you know maybe there would be some some downside there. he was surprisingly dovish and he also indicated maybe a change in the way that the Fed is going to think about monetary policy going forward. So the initial reaction was you know way into the upside right and we saw just everything rip. Um right after that happened in a

lot of the conversation Saturday into Sunday from a lot of the macro traders that I that I you know am close to and that I think are are quite smart became well what does this actually mean about the future of monetary policy in the US? What do we think this means around you know potential um effects on or knock on effects on the economy over time? Do we think like higher inflation over time? Is that you know net negative or you know potential growth and is that going to eat into you know the EPS of um a lot of these these companies? And I think what we're seeing right now is the uh kind of just understanding that you know maybe that change that Powell indicated on Friday is not actually good for growth over you know call it the next

you know 12 to 18 months and so we're seeing that a lot of that initial kind of pump retrace because of that. >> That makes a lot of sense. I think uh the the sentiment here was like okay we're starting to lower rates and inflation is still above their target 2%. I think Powell told you he's going to probably forget about the 2% or 2% is no longer, you know, the mandate, right? And if that's true, then what does that mean for, you know, and how does that permeate through the the rest of the economy? And I think there there's a maybe an expectation from a lot of people that like 2% was still the goal, we would get back down to it. It would just maybe, you know, higher for longer was the story. And now it seems like the story is like, well, maybe it's just

higher forever. And what does that mean? >> Is that the hyperinflation? Bitcoin is the alternative, the denominators going to zero. like this is really playing out. This isn't just a meme. >> Yeah. I mean, listen, it's um you know, maybe it's not hyperflation, but it's 3%, but you know, 3% leads into 4% eventually. And I think that's the concern, right? And and I think as I think about it, there's also a concern about well, what does this mean if assets continuing to inflate, but things like, you know, you know, incomes don't inflate, right? Or it becomes, you start to see that, you know, call it this like wealth disparity that has existed kind of continues to blow out, right? Right.

And if that blows out, we see a lot of, you know, the gambling behavior that we've seen or a lot of the concerns around just, you know, how do how does like the new generation make it, right? And that result that can eventually if you, you know, take it out long enough can result in just, you know, uh unrest, right? And like broader issues globally. >> Well, I think I think you're speaking to them, Rob. And uh I think the the answer is uh hop into the metaverse with your AIVR set, get your Pizza Hut delivered, and uh have your dopamine sent to you via Neuralink or fight fight your way to make it to the Citadel. So one way or the other. Um but Rob, you brought up a good point that that that I think that the uh the mind share of crypto Twitter

at least has been orienting around uh which is uh you know this kind of hyper financialization with regards to prediction markets. Uh it's been a lot of talk about that the last I don't know 72 hours really even like like the last week the the poly market CEO DM'd me and was like yo man why is there so much talk about prediction markets on the timeline now like what's going on um you know from your perspective in in the venture seat you know is are prediction markets or what we've seen on the venture side with our small fund is more of like interesting spin-offs of them with you know either opinion markets or conviction markets different timebased decay functions different outcome functions. Um, is this something that's interesting to you from a venture perspective? How, you know, and I also

put out to be like, how do I get exposure to prediction markets? Is this a trend that you want to invest in? Like what do you think about it from a, you know, a personal portfolio? And, you know, perhaps how is Dragonfly thinking about it? >> Yeah. So, so Dragonfly is a a relatively large investor in Poly Market and so, you know, we we have exposure there. I I can't say that we've done any of these spin-offs and we've seen all of them. They they've crossed the desk. I I find that um if you take like a really successful platform like a poly market and then you say okay I'm going to splice it up into like you know verticals and you know try to like kind of win at that vertical I I don't find that that typically in most cases has you know is able to get the right you

know kind of funnel in place right you can't pull enough people into you can't pull enough eyeballs maybe you can get like a really good like core group of you know like sports gamblers to come to your sports gambling website um that that is you know focused on that we've seen I think there's like a football one that uh sixman is back that that has been out there. >> Football a lot of fun. Yeah. Yeah. >> Yeah. Right. So So there's things like that that maybe that that you know really is interesting for like a a really hardcore group of users and you see them move there and and and as we all know in in platforms like this like you know 20% of the users or like 80% of the volume, right? And so they you really have to focus on that that hardcore group. But I I think you know

broadly these platforms whatever can get the most eyeballs in are the ones that usually typically win and that's why you see you know who's gotten the biggest it's probably poly market it's couch sheet it's like people like this um so we haven't backed any of the what I would call the more the more you know verticalized ones or the the more I guess like smaller market ones like you know opinion markets and things like that but not to say that they won't be successful it's just been as we think about you know venture outcomes addressable markets it's you know a poly market's been where we put our our play >> introducing extend ended exclusively on Stark, a nextgen ps 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 compatible and engage in unified margin spot trading lending and per trading exclusively live at extended.app on starknet today. Yeah, I mean I think I think we've been you know ideating on it as like a crossover between media and these markets like if if there's a way in which you can come on Rob today you you have a take like you know we're we ask you about a salon of dad or something a and you have a you have a take then we can just go directly take that take make a prediction market for it on poly market or on a you know it may be easier to to do on a smaller one if if there's some like liquidity grant et, etc., right? And then we we can then

create this interaction with our audience such that uh they're betting on your takes that just happened on our show today that you know, let's say the outcome is a month away. Then all of a sudden, like now we've created this kind of uh this kind of relationship where our audience can make money consistently or lose money based on the takes of the guests and whether or not like we agree with it, we disagree. they can they can kind of like uh tail us or fade us. Um just kind of like ideulating on like okay if we know a couple things are happening. One is that everything is going faster, attention spans are going lower and people want to be you know actively participating in some sort of financial way then it's like it's all

roads lead to like some sort of way to basically allow your content consumers to participate in the speculative upside or downside of your show. Um, and so yeah, we we've just been running through experiments on thinking about how to do it. >> Yeah. Listen, I I love the idea. I think you have an oracle problem, right? And there's nothing people like hate more than saying, "Okay, well, I put my money behind this thing. Now I think I'm right and now they're telling me I'm wrong and like now I feel like I'm rugged." And like that's the problem you have in these things all the time, right? Is like if there's an opinion or if there's like unclear like, you know, oracle resolution, right? We've seen it with Poly Market with with UMA. People get, you know, quite upset over the um the the Zalinsky suit. uh uh conversation,

right? You know, there's like hundreds of millions of dollars on the line there. Like now you start talking about like, okay, well, I say something about, you know, let's take a a take that I've had over the last couple of months, which is that like I think like XOXOX is not a product that like people are actually going to use on chain, right? You can go look at the data right now and you can tell me, oh, well, people are using it. It's doing $3 million of daily volume, right? And I could be like, well, $3 million is like absolutely no volume. Like I what I said is is correct. And there's just there's those problems about how you resolve those things, right? And differences of opinion. And so I think the more you have oracle issues or the more you have like subjective resolution, the more

people are going to be upset in, you know, these types of markets. And if people lose money and they think it's unfair, like they're just not going to come back. >> And Poly Market is hilarious for this exact reason because they whether you call it shooting themselves in the foot or or simply just not caring, they list markets like is Earth flat or will Jesus come back this year? like they do just absolutely ridiculous markets because people find them entertaining and then they sort of deflect all the responsibility onto Uma and Uma just takes it like there's they're the oracle they're the resol they're the resolution engine and the source of truth. I also think that um Andy to your point about media and the way that this combines uh

and converges a show and its audience I'm pretty sure allin the podcast with Chimath and uh Jason Calakanis these guys are already doing this on Poly Market which is really cool to see. I've also seen Zero Hedge some other Twitter personalities start to list their own markets on Poly Market and so it's really cool that Poly Market is doing this. Uma's got their hands full for sure. >> But I I am really really looking forward to uh user generated markets within reason. Obviously you can't go all the way into the augur scenario where they have assassination markets and all this crazy stuff. But user generated markets I think is some some nut that one of these prediction markets will crack.

>> Yeah. Listen, I think if you if you ask Shane like he'll tell you like he wants to be the information oracle for everything, right? like he wants to be the market for everything and and that's what they're trying to do and they're trying to thread a needle right like you go look at the cowi resolution scenario and how do they do it that's entirely subjective you know based on you know the an internal body that they have that does that right and poly market's the other end of the spectrum like they're trying to use a you know decentralized like third party like UMA right and there's obviously you know I've been at times debate about whether or not that works right I think what's clearly true is you don't want you know entirely like some subjective third party from a regulated business to to do it and and

maybe at times Zuma hasn't worked and how do we you know find the right you know part of that spectrum is I think still a work in progress that everybody's trying to figure out. >> Yep. Yep. Rob, kind of shifting gears here um to some of what's happening in the in the broader kind of market here with these treasury companies and with the just broad kind of adoption of uh Bitcoin, Ethereum and quite a few of other assets. Um, yesterday there was news that uh I think Jump, Panta, and Multicoin are looking to raise a billion to buy Salana in some sort of treasury vehicle. Um, I I've been tweeting out that I think Salana is next on these.

Uh, I'm not asking you for any information that you're privy to, but I think in inside of the circles, people know that Salana is uh or that some sort of treasury companies are coming for Salana. I think it's just like like a logical next step uh and then leading into the, you know, other assets. Um, I think my main question is is kind of where where do you see us in the in the scope of this entire paradigm and and I asked because uh about three three months ago I put out a tweet that was like uh you know we're in the revenue meta like everybody cares about revenue.

They're like and that kind of blew up and I got a lot of flack for it and it became a term on crypto Twitter and you know I'm I'm equally embarrassed as I am proud of it. It's quite a silly thing. >> Yeah. And so that poll blew up, but like I think we're very clearly out of the revenue meta and into the DAP meta. Now obviously it still persists and everyone's excited about Hyperlid's numbers and a's numbers and etc's numbers, but like we're very clearly not in the like let's look at DeFi llama and see what to buy anymore. It's like okay, who's buying what in size? And so like you know I'm just curious like in this transition like where are we at do you think in this kind of treasury company uh accumulation uh meta or concept? um you know, has your views changed over

the last several weeks to months? Um yeah, like how are you thinking about this at large? And we can kind of get into some of the nitty-gritty. >> Yeah, I would say two things. So, first, I actually don't think we're out of the revenue meta. I do think people are distracted by the digital asset treasury companies. just a lot of the volatility um at least to the upside has moved from the tokens and into uh these digital asset treasury companies especially on Bitcoin actually like you know Bitcoin V has been has been somewhat depressed over the last you know two months um I think so if you look at like what's done really well in the token side like Athena Hyperlid a like these things that are doing really well well in DeFi and so I think that continues to to be true on the treasury company side like listen

like it's clear that across crypto there is a lot of interest in these a lot of the people who you know you probably see it in your group chats it's not just the VC funds or the trading firms it is also you know your average like you know whales or your average like retail traders who are you know if you go into your your group chat like they're talking about you know espatic strategy and they're talking about you know um bit miner and like all of these things right and so um I I think it's it's pretty obvious that people want to move where volatility is and like things like eset have honestly traded like you know shitcoins at times, right? And you've seen like, you know, the the price move like 70% in one day, which is, you know, you don't typically see in equity

markets, right? And so that's been been interesting to see. I think to your point, there's a somewhat in terms of the private investors or the people are doing the pipes, the people are doing the converts. I think there's exhaustion a little bit. There's been so much of or so many of these that have come out. Salana obviously to your point a lot of these are coming out but you know there's you know and I think there was another B&B one that was announced today and then there was a B&B one that got delisted last week and then if you you kind of you know pull forward like everything that you know we're seeing happening I I would expect that you're going to see a couple of these for every asset in the top 20 or 30 and even some you know kind of beyond that or at least

they'll try to make that true right and if that's true like how much private capital is there to invest in these things I I think where you maybe in this like lull or this dip where people just feel tapped out especially the crypton native investors who have participated in a lot of these and so we need to get more interest more capital from you know the the traditional investors the the Wall Street investors and not just you know the Jane streets of the world who are going to like you know invest in your pipe or invest in your convert and then like hedge you on the per to the downside and like you know trade out immediately but you have to get like longer term investors but I am starting to see a little bit you know and I think this will probably pick up post like the

August lull when volumes are really really far down the some of the traditional financial firms on the street who are starting to think a little bit more um thoughtfully about these and and not just and take more of a notice and not just saying okay well there'll be an ETF someday and I want exposure that way so I I think we're you know in the seventh inning but I don't think it's over >> yeah Rob I take it you guys are one of the longer term investors in this space h how much do you balance liquid versus VC and the time horizon that comes with that and then and then also, you know, if you're not too uh distracted by some of these digital asset treasury companies or some of the short-term metas, what is your focus on a longer time horizon?

>> Yeah, so we um we have four venture funds. We're currently investing our fourth venture fund and we do have long like long only liquid fund, but we look at that book like once a month. So, it's not active trading. We're, you know, not trading in out of positions. It's it's really kind of like a liquid venture as people like to talk about. Um, so you know, with the DATs, like we haven't really participated. We we did publicly invest in one um called TLGY or stablecoin X, which was Athena's. Um, and that's because we're already a very large Athena investor and we want to continue to support them in places where we've played in these, you know, digital asset treasury companies. It's been things or uh tokens where we're already large investors and holders and um that's only place we're going to continue to play. Like we're not, you

know, playing the premium to nav game and trading in around these. it makes sense for I think some of the liquid hedge funds that's not who we are. Um to your second question around okay well you know what are we focused on I actually think you know it's a lot of the old narrative right I you know we've what are blockchains good at blockchains are good at moving value and information right that is what they are good at and every time every cycle people start to talk about you know all of these things around social and gaming and like you know other types of you know AI and and the other types of metas and and maybe the tokens do well and they pump and people trade around them But where do we ever see PMF in those things? I it's unclear to me that we we have in in

really any of those, you know, verticals. So, we continue to do what we think, you know, crypto is good at. We think things about moving money. So, you know, stable coins, payments, DeFi, um, you know, broad like financialization markets and and things like poly market, you know, trading, um, you know, uh, infrastructure, right? So, continue L1's, L2s like crosschain infrastructure, messaging layers, wallets, right? the things that um we think will continue to reinvent the global financial rails and will change the way that you and I interact with finance over time. That's where we continue to focus and we still think there's a lot of things to invest in on those themes. And so we're trying not to get distracted around, you know, whatever the shiny new thing is that crypto trader cares about today.

>> Yeah. Rob, are you seeing different types of founders come into the space? Like one thing um you know like let's say that there's just these unsexy narratives that we all know that are the best use cases for blockchain like 2017 type narratives that we all got bowled up on that are like now coming to fruition payments tokenizations RWAS uh stable coins u enterprise use cases crossber instances etc like very boring but like very very important um like are you seeing a next generation of like non-cryptonative founders that you guys are are uh being pitched by or like maybe like ex Stripe employees or like ex Revolute people like are you seeing a better new generation of founders that you haven't previously seen or is that

is there still like a brain drain into AI or a brain drain into other uh sectors because crypto is still not kind of like sexy enough? >> So it's absolutely picked up again. So if you remember, you know, 2018 there was a little bit of that and then, you know, Bitcoin went to 19K, back down to three and I think we lost that that meta again. And in 2021, actually the founder quality was tremendously high. But you'd get these kids who came out of Stanford and, you know, they had, you know, 4.0 CS degrees and they're like, I'm going to do a unis swap fork on uh, you know, name your chain, right? And you were kind of like, okay, what's the point?

But all of those things were getting funded because everything was moving so quickly, everything was doing so well. Um and then you know obviously we had 2022 which was a tough time for all of us who are in the space and we we kind of had a der of talent. you know, people who were very crypto native were still here, but that new talent, that new wave, you know, really kind of disappeared for a couple of years and then over the last call it, you know, year or so with, you know, Black Rockck and the Bridge Stripe acquisition and, you know, just the excitement, you know, since the new administration has come in, we've seen that, you know, talent level for that entrepreneur pick up again, especially in things where, um, you know, again, what blockchains are good at. So the tokenization aspect, you know, to your point, you know, payments

and stable coins, like the amount of people I see from places like Stripe or like large payment companies, um you know, large financial institutions um there it's it's really really growing quickly. We we've we funded um a number of people this year who are, hey, I've always been interested in crypto, but you know, we're coming out of this big financial institution. We've got a CS background. We've been doing crypto on the side and you know now we're really excited to go full-time because we feel like now is the time and you know that's you know that was our investment actually in Athena right um you know guy young used to work at Cberus right which is you know a big private equity firm and during 2021 he was like you know maybe I'm not supposed to say this but he was like deening it up like on the

side you know the whole time and then he was like I want to be in the space full-time and he he made that move when the market was you know kind of at the bottom but a lot of guys like him are now feeling comfortable making that move and so we've been really excited about that group of of entrepreneurs. That said, there is still competition with AI that has made I I think it tough beyond maybe the financial aspects. So in those other parts where people have been excited about that, you know, those people who aren't necessarily wanting to build, you know, financial rails, they might still be going to AI. And so there's a bit of that brain drain.

>> Yeah. Yeah. Well, I just thought that that like this next era of founders is going to um like I would be excited to invest in somebody as you said like a guy obviously in in hindsight but somebody who's coming from that world and wants to work work in crypto but has that like because they're not coming with the same baggage and mindset that a lot of like the crypto natives kind of have with regards to tokens and projects and protocols. like they're going to come in and they're going to try to build a real business. They're going to be a part of the revenue meta. They're going to generate revenue. They're going to figure out a way to like, you know, either get it back to shareholders, token holders, etc., and you know, build something that has immediate like, you know, just immediate need. Um, now that

they might struggle with like some of the culture and the vibes and the and the conferences and but you can always hire out for the these types of things. Um, but yeah, I think that that that is the big turning point. Like, you know, what I'm trying to get at here with with the thought is like even though we're still not early to crypto, like the last 10 years was obviously like the early phase, we're still like early enough, but like maybe with venture like investing in the 21 22 23 cohort has worked out, but maybe there's like a whole new set of like even better founders that we've ever seen in the space before. are such that like the venture cycle is almost restarting in a way where there's an entirely new niches and sectors that will come in from better people, better ideas, more

positive regulatory clarity that will make a lot of the current projects look small and like like like like they were early in 5 years. So maybe like the venture cycle is like almost restarting again because of the positive changes in the in the regulatory regime as well as just the broader perception change which is bringing in these new founders. I don't know. I >> I think this is going to be a really good vintage for new founders. I I think the whole space is maturing. It's getting more sophisticated. There are there's more dispersion. So, in 2021, you know, everything went up. Everything either went up together or it went down together. So, you know, you could throw a dart at the wall and, you know, you maybe over the right time period you would make money, right? That's not true anymore. I think it's it's healthy

because we want there to be dispersion. And we want there to be, you know, winners and losers because that's how, you know, we are able to differentiate between people who are building good, you know, product with PMF and and people who aren't. And, you know, then the token becomes less of the product and hopefully people focus more on the product itself and what they're building, right? Because I think there was always this meme on Twitter that the token is the product, which was was unfortunate, right? But I think a lot of people took that to heart and it meant that they didn't build for the future. Today we're seeing a new set of founders who want to come and they want to reinvent the way money moves. They want to reinvent the way people bank, right?

And that's exciting. And I think there's really only three investable areas of technology anymore. And it's AI, it's biotech, and it's crypto. Like that's it, right? That's where all the growth is coming from over the next next few years. And so if you want to build in the fi financial ecosystem, like it's crypto, right? It's, you know, AI, you know, can can help out, but like that's the place where you want to be. And I think we're seeing a lot of, you know, really exciting new founders who understand that finally and feel comfortable doing that because of the regulatory clarity. >> Not a big robotics guy, huh? >> Listen, I put robotics, AI. I kind of put them together.

>> Yeah. Yeah. Just >> But yes, >> Rob, I got I got one last question for you before we let you go real quick because you've spent so much time thinking about stable coins and and you're talking about reimagining how people are banking. you you put out a a a quote tweet on one of the Wyoming stable coin, which seemed to me like was a big deal. It was a public it was it was one of the 50 states launching their own stable coin, but you kind of had a cautionary tale to tell about, you know, kind of watch out for the issuer banks. Is this because stable coins are coming to eat their lunch or these issuing banks that are that are backing these stable coins are kind of in trouble?

What what was maybe you could just unpack that and clarify a bit. >> Yeah. Yeah. So, so what I was really trying to say there was um if you think about what an issuing bank is and and I'm sure a lot of your audience hasn't thought about payments that closely, but um people or a bank uh sorry, I'll back up a second. So, in traditional payments, there's a four-party model. The four-party model typically has, you know, call it an issuer, the person who's like issuing a credit card essentially and is backing that credit card with credit. Right? Now, um, what happened in that, you know, Wyoming stable coin was they were saying, "Okay, well, we're going to issue a stable coin. So, we don't necessarily need a bank unless you need credit, right? And then we're going to allow you to spend that stable coin if you get we're going

to allow you to get that stable coin if you have social benefits or on your tax return. And then we will allow you to spend that stable coin with a a RAIN issued card. Rain is a um a company that does like stable coin backed cards, but they have their own um they have their own like regulatory license essentially so that they don't need a bank to issue that card. Meaning that all of a sudden now I can get my tax return from Wyoming in a stable coin and spend it without ever having my money touch a bank, right? >> And that type of payment flow we're starting to see more and more of, right?

Like if you look at what Stripe has done, they said, "Okay, well, we're going to issue our own stable coin. We're going to issue our own stable cocoin backed card. We're going to issue our own virtual accounts uh overseas and we're going to also acquire Bridge, which is going to be able to do the orchestration across everything. If you take all of that together, and now also, by the way, they have Privy, which is the account layer. You take all of that together, theoretically, you never need to touch a bank, right? because like you can get you can spend in your Stripe ecosystem with a stable coin backed uh card for like a supplier that is also in the Stripe ecosystem, right? And so when I look at the future of payments, if they're happening on stable coins, then

you don't really need an issuer bank anymore because the stable coin issuer and the card issuer can be outside of the banking system potentially. I mean genius act there's a lot of conversation around in a banking license but you know you have companies who are able to get OC regulated and and you know obviously circle trying to do that and others are right and so I think the long tale especially like the non-GIBs like the community banks the you know call it midsize banks I think they are in a lot of trouble and you're seeing that right now with them trying to push back against the genius act in terms of um potential yield or this workound so there's this there's been this like rumor that's gone around and I think we've seen it talked about on Twitter a little bit that the banking lobby wants

to not allow Coinbase to give you rewards if you hold USDC on Coinbase. It's because and they're saying specifically that we think they're going to be deposit flight. We think people are not going to want to keep their capital in the bank anymore. And they because they realize they are not competitive, right? And when they say they're going to be deposit flight, I say, "Okay, compete." And they don't want to compete. That's the problem right now. And so we're reinventing how banking should work. And they're trying to entrench themselves. And I think, you know, the the stable coin um out of Wyoming and the rain card was one part of that, but I think the issuer banks are in real trouble over time. Th >> this feels like the same thing that got shut that shut down the Facebook Libra project because all of a sudden social

media companies were going to go and and innovate on banking and probably another deposit flight risk as you're describing. >> Yeah. And but that the market's ready for it now because we have >> like, you know, we have this regulation, the Genius Act, and we have regulators and and people in the administration who want to push forward this innovation, which is clearly better for consumers. Like, why do I care about the banks if if they can't compete, right? And and you know, that's a long conversation. I'm sure somebody listening to this is telling me about local mortgages and things like that. And I get it. We It's a nuance conversation, but compete.

That's all I'm asking for. >> Yeah. Love it. >> Yeah. I I think uh if there's a world where where we have like a fully stripe like a full stripe based payment rails from their own stable coin, their own chain to everything to a card to the POS system to the issuer, etc. All like that would be >> it feels closer than we think, but that would that would be insane. That would be so that that that would be great. I think the only thing that you may have like like maybe skipped over in the explanation was just that you need somewhere to like hold the funds which I suppose would be like the chain your account on the on their chain.

>> Yeah. I mean they're they're quite privy, right? So like you have your wallet um and they have the virtual account which is is also um is is on chain and yeah now they're building their own chain in and tempo I guess. And you know I mean right now Stripe does still use um Lead Bank which is kind of like a fintech bank for for their card issuance. But let's say that you know the Stripe wanted to use you know Rain instead and this and who who has their their own um kind of you know regulatory license so that they can go and and issue this card without a bank like you don't actually need an issuer bank at all. The only bank that needs to be involved is holding your like collateral for your your um stable coin.

That's it. And other than that you can get rid of banks altogether. There's there's a question around how you get credit into the system but a lot of people are trying to solve that right now. >> Fascinating. >> Rob, we appreciate your time man. and um and the insights. Uh look forward to having you on again in a couple months. Hopefully we can get some uh some some more interesting DAT uh shakeouts developments uh stable coin payments etc. Uh always a pleasure to uh speak with you you guys from from Dragonfly, Robbie Hib, the guys. So uh pleasure to pleasure to have you on for the first time and thanks for the insights, man.

Thanks guys. I really enjoyed it. Pleasure. Cheers, man. See you. Have a good evening.