Inside Crypto’s Credit Revival With Sid Powell | Roundup

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with the passing of the Genius Act, you know, it's kind of like the arrow of time is going in one direction, right? And so the direction of capital markets, it's going to be settling more and more in stable coins. It's almost inconceivable that you know that you it's going to hit some level and stop where people continue to decide to use fiat. >> Quick shout out to today's sponsor, Katana. We'll hear more about Katana's 1 billion CAT campaign later today, but for now, let's get into the episode. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on bell curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds or

projects discussed. All right, everyone. Welcome back to another bell curve roundup. You got Michael's one and two, Vance. Uh we have another special guest. Uh this week we're talking to Sid Powell from Maple. Uh Sid, welcome. >> Thanks for having me, guys. Glad to be here. >> You know, it's uh you know, it's the doldrums of the summer when we're just going backtoback guest episodes. >> It's It's been a pretty busy summer, though. There there hasn't been as much um just like malaise. The market hasn't really taken time off. ETH's alive, so it's a good summer so far, but we're we're still only probably halfway through.

>> I feel like ETH's really leading the pack. Uh Sid, I'm curious. I mean, would love to um you know, get your view on it. >> Wait, wait, wait. Before before we ask, Sid, there's there's an amazing photo of uh of the ESB IPO and there's all this confetti and then just like you zoom into the back and you see Yano in the back just like >> really. >> I'll try to find the uh I sent it to Michael last night. It's an incredible picture. >> Oh my god. Yeah, please send it. Uh >> but sorry. >> So funny. >> Not to not to interject. >> No, no. Uh, how did he look? Was he uh >> happy? He looked like he owns more ETH than he used to. So, >> wait, wait. I got it.

>> Yeah. Pull this up. >> Yeah. Yeah, we'll pull up. >> Nope. We can't. We don't have the technology image file, bro. We may have to uh loop in our executive producer to get this this photo up. Maybe uh yeah, we could dim it in the bell curve chat. All right, while we're uh while we're working on the tech here, uh Sid, I I would actually love to get your perspective. Um I think we want to use you kind of as a uh you know, as a representative of kind of like DeFi 1.0, right? And how well that's doing at the moment. But uh maybe as a jumping off point, we could talk about this bit of news that just came out today or this uh report from uh the SEC, which is the launch of Project Crypto uh which is

probably the most bullish thing that I've seen come out of a US regulatory agency in at least eight years that I've been in crypto. So can you just give us the the headline of just the crazy 180 degrees that this uh this regulatory body has done and and what was the substance of the report? Yes. So the uh there was uh there was a speech from uh from Chair Atkins uh so chair of the SEC and I think I mean as a as a DeFi builder here in the US it's it's tremendously bullish. Uh I think it it you know it begins with an acknowledgement that the SEC has probably been a little bit too heavy-handed in the past. But ultimately uh there's this northstar goal coming from the administration that they want to reshore crypto founders. they want to

make the US, you know, the the leader for for DeFi and crypto in general. And so some of the things that I took away from the report that, you know, were were just awesome to see was, you know, one this desire to to reshore uh crypto builders to the US. um acknowledging that you don't need to have kind of this what they call decentralization theater in the uh in the speech and that you don't need to have teams go and set up these offshore foundations and um and that they can you know they could they can be centrally managed in the US and uh and then a number of pretty important carveouts for DeFi. So

you can you don't need to enforce intermediaries into DeFi where it's not required and where the technology just solves a problem outright like think automated market makers and um and dexes and uh and that you can make these products available to Americans which I thought was one of the biggest you know positive takeaways from the speech who have been left out of airdrops and and other you know they're they're often geoblocked from a lot of DeFi apps um provided that you have, you know, just just basic and and um you know, features like whitelists. Um so I mean as uh as I said as somebody building in the US, I was

super bullish on this speech. I think it hit a number of the uh a number of the kind of the pain points that people have expressed about the direction that legislation might go in. And actually one further takeaway, it was very positive on self-custody as a kind of core American right. Uh, so you know, I know there were a lot of concerns that we were all going to have to use custodians for everything we do and that that was going to kind of hamper DeFi innovation. So really good across the board. >> What a 180. >> Yeah, it was massive. >> Yeah. Um, I haven't read the the full take, but um, with that also was this kind of like project crypto idea where they're doing a, you know, kind of aggressive project to bring a lot of the pieces of capital markets onchain today.

And you know, they're even calling out ERC20s as the tokens that are going to do this. And it's uh yeah, I know I need to read it more more fully, but um even Nick Carter is saying, you know, this is uh pretty breathtaking stuff. So very positive for the industry and it's uh you know down 2% as is to be expected. >> Well, I was going to say Nick would be happy because it also explicitly mentions Operation Chokepoint 2.0 know in the speech which was uh which was a term he coined >> I think he incepted that entire thing into the current administration.

>> It's an unbelievable achievement. Yeah. And really good investigative journalism actually that he and uh his partner Matt did. >> Yeah. A lot I know a lot of research went into that. >> Yeah. Uh lots of calls, lots of interviews. So absolutely wild. Um yeah, I would be do you guys, you know, I was speaking to um a liquid fund manager last night who kind of gave me the perspective, you know, he his sort of high level thesis is, you know, he's only really interested in things again on more of a short-term uh trading kind of orientation that that he thinks the boomers are going to want to buy. Um and kind of gave the mental framework that the boomers are kind of where everyone was like three or four years ago, right?

So kind of what's heating up in their imagination is like kind of the I I think that 2021 was kind of the cycle of ETH and that's when everyone got really excited about this idea of world computer decentralized economy the decentralized finance and yada yada. Um I think maybe just from an asset price perspective DeFi 1.0 has been a little challenged the last couple years. ETH price action has been but it feels like there's a huge renaissance and push in that direction. Um, and even like DeFi activity on ETH main chain has still been kind of the stalwart and is still the go-to place if you want to deploy especially anything that looks like borrowed and stable coins etc. Sid I would love to get your perspective on kind of the institutional demand around the space like what's it felt like you've been building for a long time

like kind of take us through the journey here of what it felt like in the beginning kind of the the messy middle and it does are we coming out the other side? >> Yeah, it's a good question. I think if we uh I mean we've been we've been kind of building in live since 2020 and if I think back to what the institutional conversations were like back then a lot of you know a lot of uh traditional finance uh companies and Wall Street companies had set up crypto teams by then. you know, 2021, we were we were meeting folks at City and uh you know, City and and initially Black Rockck, obviously Black Rockck's made a lot more progress than other than other companies uh since then, but we're meeting those teams. They were very interested in

tokenizing assets on the blockchain. And uh but none of them had really kind of, you know, made substantial investments or or launched anything. And then obviously we went through 2022 and the plug really got pulled on most of those teams and projects. A lot of them got you know repurposed within the organizations to work on different stuff and and really the interest was kind of gone for a couple of years and uh you know we wouldn't have been able to get any calls with any of these banks in uh in 2023 and uh and early 2024. And now it's come uh you know we've kind of come full circle and we're once again having conversations with some of the the large

bulge bracket uh banks in Wall Street and you're seeing you know headlines about JP Morgan considering lending against Bitcoin. And so I think we I think we're back to where we were in in 2020 and and 2021 but this time with much more traction. You know Black Rockck has uh tokenized money market funds. um and uh as do a number of other uh players whether it be Franklin Templeton, Wisdom Tree and uh and so I think we've made a lot more progress uh since then. But what I would say as well is that you're seeing firms who also didn't actually participate in any way back in 2020 and 2021 now involved in the space. Caner is doing lending against Bitcoin. Um other firms are kind

of looking to do the same thing. So I think I think we've actually come further than we did back then and uh it's it's happening at a faster pace now that they're not doing it in this environment of kind of regulatory ambiguity. There's more of a clear mandate. We've got project crypto. Um there is the north star that you know the president wants the US to be the leader in the space and so I think people are taking that as a green light. This episode is sponsored by Katana. Katana is a DeFi first chain built for deep liquidity and real yield by redirecting chain revenue back to active DeFi users. The 1 billion KAT campaign is live. Bridge and deposit directly into vaults in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link

in today's show notes to get started. We're entering crypto's cloud era and IGEN layer just launched IGEN Cloud to power it. Just like AWS transformed the internet, IEN cloud is a full developer platform that gives developers cloudgrade programmability with cryptograde verifiability on any chain. To learn more about how the IGEN token is securing a new class of verifiable apps and how to get exposure to this growing class of crypto infrastructure, follow them on X at IGEN layer. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research.

The the other thing I would say is is much different from 2021 is um the lending space broadly and there's no genesis today and I think in the last quarter of 2021 they did 21 billion of originations and had >> um just an absolutely massive you know multiples of that total loan book um and they're gone but you know it does still feel like people were very concerned about the amount of leverage that's in the ecosystem and just to remind everyone what was happening back then was people were borrowing from uh retail aggregators like Celsius and BlockFi lending it out to people like three arrows and nobody had real knowledge of this leverage other than three arrows and and maybe these few deaths but um today I think even these digital asset

treasury companies are kind of orders of magnitude less harmful in terms of you know it's a no leverage you know generally equity constrained investor base and they're not really putting a ton of risk on the table other than what's being invested into the companies but maybe you could talk about just like the the Genesis story and and how that has shaped lending uh the lending landscape today. >> Yeah, for sure. And it's worth noting just um I mean in terms of total numbers like I would have said lending loans outstanding back in 2021 and 2022 probably got to about 55 billion in terms of assets in those lenders. Today I'd say it's less than you know it's probably in the order of 20 to 25 billion. So we're still less than half what the leverage was back then in the

system. Um but if you look at Genesis they you know they were the largest institutional lender. Uh their loan book at its height probably would have been about 18 billion in size. And as you mentioned you know they they could do multiples of this in originations during a quarter. And uh and you know they they really set the standard for lending in the space. And then you had other players like Celsius and Genesis that had more of a retail focus. But I think you know what happened there um with uh with Genesis was you know they they had uh substantial amount of loans outstanding to to 3AC against um the GBTC and uh and a couple of other assets and uh you know so there were

there were credit losses involved in um in that lending relationship and what happened was that you had kind of uh inter lending or you know almost interbank lending between the Genesis of the world, Celsius and BlockFi, as well as the customers who were borrowing large amounts from them like a Alamita or 3AC, sorry, Alam or FTX. And so I think one of the issues was there was less transparency back then and um uh the the the underwriting was definitely more aggressive. So you had tons of money being pushed into the system from, you know, like aggressive central bank activity and um and really low interest

rates. And that meant that a lot of these companies were just trying to aggressively grow their loan books because that was how they were valued. You know, you were valued as a multiple of your loan book rather than how much revenue make you. And so often they were lending at well below market rates or even unprofitable levels. as in, you know, imagine the bank paying out 6% on checking accounts and then going turning around and lending it out at 4%. Like that was kind of what was happening. And um so just it it kind of hugely distorted the space. Whereas if we fast forward to today, most of the lending I see has triparty accounts um in place, which for those who don't know means that, you know, if I was lending to Vance, Vance would put his Bitcoin in an Anchorage account or a Coinbased custody

account or a Bitcoin back. So, it's just a much safer lending practice than what we saw back in, you know, back in in those days. and transparent. >> Yeah. Way more transparent. Yeah. >> So the the the the kind of direct lending space is hald haved and then you have probably I don't know what open interest was at its peak in 2021 maybe you know 30 40 billion now it's 60. Is is kind of the the leverage transformed from direct lending into kind of the basis trade because a lot of the lending that I assume was happening back in the day was to put on this basis trade was

>> Yeah. Yeah. Yeah, that's exactly right. Like a lot of a lot of the the firms who were taking on the uncolateralized loans were really just putting on the basis trade with it. And now you've seen those products have kind of in a way also been made safer, right? Like they've been tokenized in in forms like Athena. And so um that's now been productized and you can just go and purchase it directly instead of you know putting your money into a fund as an LP and then them putting it on putting the base straight on for you. So I think yeah it's kind of the trend is institutionalization standardization and and productization of all these things that were kind of more just done in a in a kind of ad hoc fashion previously.

>> And I guess another question is back in the day it was I would assume just directional punting uh of the you know of the of the US that's loaned into kind of whatever and now it's it's more delta neutral as a general flavor. Um >> I guess as >> sorry go for it. Yeah, I was going to say in in in a not super transparent way, right? Like you you saw obviously 3AC took on substantial loans and and it turned out that was more for directional um trading rather than market neutral which is what they would have represented.

>> And in terms of the traditional shops that are now in crypto that weren't before, are they still being financed by the usual prime brokers or or have they started to tap crypto capital markets for anything, you know, beyond that? uh it's uh it's it's it's actually a mix now. So I think you're seeing um in terms of crypto crypto lending the other you know the the other kind of emerging company we've seen has been Wildcat which um which does more uncolateralized lending but you can see that the volumes there are kind of constraints. you have Wintermute is able to borrow in size like to the tune of 100, but the other players are are substantially smaller.

Like it's a it's kind of a power law, you know, they're like onetenth the size. Um, but there's not a lot of financing of an uncolateralized variety happening at all in the space, particularly not to the to the larger market makers that we see. What they often do is they borrow Bitcoin unsecured, which carries a pretty low interest rate. you know, think like 2% 3%. And then they pledge that to players like us and and some of the primes to or the exchanges themselves to borrow for trading purposes on those venues, whether it be through a prime or they borrow Bitcoin unsecured, post it to us, and then and then we lend to them in a collateralized fashion. So that's how that's how they're financing themselves. But we're

seeing much bigger demand these days. like we had one, you know, larger sort of more treadfi market maker who took out a 100 mil loan the other week and so that they are coming back in size. I'd say >> well one uh one kind of just orthogonal question uh is it's generally very hard to short things in crypto and obvious and also kind of a bad idea because you can just absolutely get torched on these uh on these things going vertical. But have have have you seen any kind of pickup in these like directional shorts where people are trying to borrow things to maybe do kind of like long short pairings or I guess I guess ju maybe more broadly like just the short side and any interesting uses of capital that are are just new.

Yeah, we see um we often get requests for what we assume to be short borrows. Like if you're you know if you're trying to borrow an altcoin it's generally going to be for for kind of shorting purposes. Um, so we we see the demand for it, but I think the the main issue is it's super hard to get access to it. Like the supply and the inventory is really limited, particularly now that you don't have players like BlockFi and Celsius. You know, before Celsius would have been one of the biggest lenders in the market for offering short availability on some of these altcoins because they had the the front-end retail um you know savings app uh product that people could put you know Soul or XRP or or other altcoins in and

then they could be lent to the to the market makers. What we find now though is your best bet to source some of this stuff is either to go on the onchain lending markets like the full DeFi protocols or you're going to look at borrowing it from one of the exchanges that allows people to opt into these earn programs. But um but there's very few desks we see that kind of have the ability to offer short financing these days. >> Why is that said? What's uh like what is is it is it like I've heard there are games uh we've talked about a little bit on this podcast before around like if you look at the actual circulating supply that's not super real all the time or 100% accurate. Is it like a float type issue or what's behind the >> uh I think well historically um

you know you had a different market structure. So you had you had these retail aggregators like you had Celsius, Voyager, uh BlockFi who were taking in deposits from retail holders. So you know the the retail holders had small amounts but collectively they had um you know had a large amount and so it could be aggregated at the level of a Celsius and then lent to market makers. Whereas now if you look who are the large holders it's going to be a fund that is 100% not going to lend you something that they're holding long term so you can go and short it or it's going to be the foundation who for same reason is not going to lend you the assets to go and short or you know what they assume is going to be you shorting it. So the um the supply is just super fragmented.

There's nowhere you can go to get those aggregated retail supplies except what we're starting to see is that some of these exchanges are are trying to offer these kind of um you know you can borrow the tokens inside the exchange you know walled garden as like a kind of prime form of prime brokerage of their own. So, do you ever see um the like people taking another whack at uh the centralized lending structure that you saw of like BlockFi and Celsius? Uh I'm just curious. There's a habit of going back and trying old ideas. I've seen some Algo stable coins getting pitched again. And I'm just curious, yeah, if you think that we're going to see a, you know, Blockfire Celsius 2.0 rehashing at

some point. >> Yeah, I mean, we we've been keeping an eye out for it. um because they're either depending on how you look at it, they're either going to be a competitor or a potential partner or customer of ours and uh in that you know we can lend wholesale to um to one of these players who who does retail lending >> but very very few like I think I imagine it would just be super hard to get an idea like that funded right I mean uh it's it's pretty capital intensive and and there's not a lot of um venture funds you know Michael Michael and Vance can probably attest and give the the venture perspective, but I don't think there's too many people who are going to be tickled by the idea of funding something like that. And uh what we have seen though is there have been a couple who

survived who were much much smaller at the time and they've now grown into bigger lenders. But fortunately, they all seem to have taken the lessons of the past and have have changed their, you know, how they manage risk. So you have these days you have Lein, Salt, and uh and Arch who kind of operate in the North American market doing retail lending. But in each case, they take the customer's collateral and it's usually held in uh an escro account or a triparty account like I mentioned before. So they're taking much better care of the customer's collateral and they you know they they they put a lot of transparency behind it. So I think and and also in most cases they're pretty conservative. Like if you look at

the eligible assets it's like you can borrow against BTC. In some cases like Leen I think the appetite is only BTC and then others like an Arch there might be a little bit more appetite for Soul or ETH but you're still talking you know maybe half a dozen max eligible assets. You can't borrow against meme coins. You can't borrow against longtail DeFi assets. So it's it's just across the board way more conservative. So, one kind of maybe taking a step back a little bit um perspective in question or or subject that I was curious about with your perspective is um you know we had DeFi 1.0 and we had you know 2021 2022 the boom and the bust. Now we've

got sort of like DeFi 2.0 know and I don't know maybe we're we're drafting off of that terminology too much but >> and I think you know like there there's really smart you know pundits and academics all over the world that say like Carlo Perez talks about how you have a runup and a bubble and then a burst and that's how technology you know actually gets widely adopted. I'm I'm just curious like what's your 10,000 foot perspective on what DeFi 2.0 means? you know, we talked about in um and even, you know, Vance and I talked about this with RLPs when we're we're talking about the funds. It's like it's kind of back to the classics in a lot of ways.

And there are some, you know, maples of the world um who are going to survive through through that um transition, but then there's a lot of ideas that are coming back that, you know, maybe should or should not be coming back. Um but one of the things we talked about in 1.0 was just all the innovation that was come on chain. um maybe some of the regulatory changes allow us to have the structural like clarity on on how to operate with a foundation or a company, a development company. I'm I'm just curious like how do you see the prognosis for 2.0 and is it fundamentally different from what we thought it would be with with 1.0 or do you think that it's kind of like hey we still have a lot of work to do uh to to accomplish the goals that we set out in

2019? Yeah, it's it's a good question and I yeah, I used I used to read a lot of Carla Perez as well and so you know I tend to agree that that's kind of the stage we're at in the cycle which is like we've been through the bust and now the adoption is kind of there but the now the valuations kind of haven't caught back up again. Um uh so I think I think there's a lot of work still to be done on kind of refining and perfecting the ideas from from D5 1.0.

And you can see that the things that still have the most tra traction it's like lending, stable coins um you know basic forms of um of dexes and and derivatives products. Uh I haven't seen anyone tackle you know options again. Um >> but not not for not for failure of trying. >> Yeah. Yeah. Yeah, exactly. Exactly. But uh but yes, I I think um there were a lot of uh there was a lot of uh let's call like points of distraction from D5 1.0 like as as you mentioned you had to go and set up these cumbersome foundation structures significantly decentralize and uh you know have a lot of like onchain governance time locks that type

of thing. And so there was a lot of fluff that went along with actually building working products that distracted you from going and finding customers and perfecting your your products. And so I'm hopeful that DeFi 2.0 know can actually go much much faster in terms of um you know in terms of hitting the types of milestones and um and growth that we had wanted to see in uh in 2020 and 2021 because we're starting to get you know more of that clarity coming down from the um from you know from the regulator and and the SEC which allows you to you know you you can run a more centralized DeFi business provided you meet certain basic you know uh disclosures and protections to ensure

that you're not doing anything fraudulent or nefarious, but it gives you the freedom to just focus on building a better product. And the fact that you don't have a regulatory crosshair on your back obviously makes it easier to attract customers, right? It was super hard to go and, you know, talk to the Millenniums or the Citadels or, you know, these other players when, uh, when the space was being so harshly cracked down on in the past. And now that you know, now that you kind of have that blessing, I think it's much easier to have those conversations. >> Shout out to today's sponsor, Katana.

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investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. >> One question I had just on the lending space is just uh the origination uh function of you know like Athena originating the basis trade. you guys doing a lot of Bitcoin back lending. Um, you know, people like neutral which are kind of trying to expand the Athena style basis trade to just like the middle tale of alts. But maybe you could speak about how origination has changed over the years and and where just a lot of the meat on the bone for origination is today. Um, and I just to tee it up, I know you talked about Bitcoin as being kind of the the mortgage back securities of crypto. It has the most scale. It has the most, you know, reasonable APY you

can be doing it the safest. Um but maybe if you could you know just kind of start with that and and then talk about the origination landscape across crypto today. >> Yeah for sure. I think um in term like we we talked before about how the kind of the market size today is about 20 20 bill um in terms of Bitcoin back to lending and uh on a on a Bitcoin market cap of a little over two trillion you're talking about 1% penetration. So it's still relatively small like this is quite a tiny market. But you know if we think the reason I'm the reason I think Bitcoin is kind of like the the mortgage back securities of of you know the millennials and the zoomers is uh you know I continue to think it's going to

increase and appreciate in price. And so let's say Bitcoin doubles over the next 24 months and you're looking at 4 trillion. I think it's not a stretch to see that the the lending or the loan origination market could expand from 1% today to maybe 5%. Um, you know, in equities, it's kind of in that singledigit um mids singledigit level. And uh and then 5% on 4 trillion, you're talking about suddenly a $200 billion um Bitcoin backed loan market. And I think the the reason for this is that Bitcoin's going to make its way into everyone's portfolio over time. Um because in the same way that real estate was really the wealth accumulation vehicle of boomers, you know, you had

this secular trend of declining interest rates and easier access to mortgage finance through things like securitization. And um and so most boomers had a lot of their wealth in their house. And I think our, you know, the the millennials and the Zoomer generation is kind of in a lot of ways priced out of uh real estate, but they can buy and start buying into Bitcoin. And so I think over time the game for them is going to be accumulating more Bitcoin. And they'll be able to borrow against it in the same way that boomers borrow, you know, home equity lines of credit against it. And so that's why I think it's going to over time be an extremely big institutional market. And the way that that will occur is that institutions will start investing in, you know, portfolios of

Bitcoin backed loans pays a good yield. It's well secured. It's pretty short duration. And so that's, you know, that that's where we see that industry kind of trending over time. >> And and the syndication side doesn't really happen today, right? Like I feel that that has not been recognized yet. If you look like if you look today at the large you know the largest lender in the space is Tether. Tether provides loans uh collateralized by Bitcoin but you got to post the Bitcoin to them in order to to do that. And um whereas in uh in mortgage back securities markets you have you know a basket of 10,000 mortgages but the houses you know the

deeds to the houses are not all held by the investors. They're held in a vehicle and the investors get secured bonds of very, you know, various levels of protection against them. But that's that's what all of your pension funds, your insurance companies, and your major um, you know, your your major institutional investors um, put money into. And that's what like that's what the maturity of this market will look like in the end state. you'll have an insurance company who's got um you know bonds which are backed by or you know which are backed by Bitcoin backed loans under the hood. Fun fact, fun fact on insurance companies, which I just learned this past week, is if you hold Bitcoin on your balance sheet, it's a

30% capital charge. If you hold IBIT on your balance sheet, it's it's 100% capitalized, which is kind of a and none of the insurance companies actually own this yet, but um the insurance regulations are are still catching up. And you know, talk about large pools of capital that are untapped. The second that you can have a full collateralization, which basically means that you treat it like a bearer asset and it's treated the same way as cash um an equity wrapper for a Bitcoin or a crypto asset um has a better uh capital charge uh for an insurance company's balance sheet, which is just crazy.

>> Yeah. Yeah. It's crazy. Talk about as we were talking about before like where the SEC kind of wants to remove this forced intermediation where it doesn't make sense and is kind of already handled by the technology. I think that's like a a kind of prime prime example. Um but yeah, so I see that being institutionalized and you can see on the basis trade Athena is trying to do a similar thing right like they have this concept where they want to take the basis uh trade you know what they put on with USD and and SUSD and effectively put that in an institutional wrapper that could be a fund vehicle or some other maybe a structured node um that institutional investors can can access.

I think sailors kind of pioneered this like I'm not I'm not the uh the world's foremost expert on um you know strategy capital structure um unlike uh unlike Jeff but what I what I broadly observe is that he's shown that there is institutional appetite for structured Bitcoin products and um you know using financial engineering to kind of pass that out and uh if you look we can try and do that with Bitcoin backed lending and you as as can other people and then Athena and these other models of you know the basis trade can do that with the basis trade as well. So effectively securitize it trench it out and um and offer different structured products to

institutional investors and those are kind of three verticals you can see that in you have the volatility of Bitcoin you have the yield from Bitcoin back lending and then you have the um the uh the yield from the basis trade and and the funding ar is is there I mean what other kind of lending I mean it feels like the other stuff that's changed since 2021 are these kind of like the move from a uh V3 style markets to to kind of more like risk curated markets like Morpho has um you have Wildcat which is pioneering the under or you know partially collateralized lending space. Are there any other veins of of you know real lending activity in crypto you know

outside of kind of the OTC desk and then the fund lending like like is Bitcoin mining still a big source of of lending flow or where else are you guys like looking at and are interested in? >> Uh I think the uh the short answer to that is some of these treasury companies. Uh but the um the uh the the the answer to one of those earlier questions is yeah miners are still present. Um, but what's happened there is that that market is starting to consolidate. So now it's like there's a couple of larger miners who are taking out, you know, monster debt facilities and uh and have a lot more leverage at the table in in negotiating like a, you know, like a marathon, for example. They put out announcement the other day. But

so that space is consolidated. The market makers don't do a ton of borrowing at the moment. they're relatively constrained because they won't post collateral because for them posting collateral is always less efficient than just turning the collateral from the asset they have into the asset they want and so they go to the unsecured markets and so you can see wildcat um but I think the issue there has been the buy side appetite let's say the the people who have capital who are like I'm happy to get 13% yield uh unsecured and Um, I think the issue with those markets is they're relatively uncurated. So, it's like a player can go and request a loan, but there's not a lot of, you know, there's not somebody

kind of vetting that on the other side unless except for the investor themselves or the lender themselves. And then you have in between you have the morpho markets, you have these curators, and I see that expanding a lot because I think there is a really specialized skill set in curating which assets and um, and doing the credit work. You've got Gauntlet, MEV Capital, the steakhouse guys, um, um, RE7. So, you've got, you know, half a dozen of these players and you got more entering that. And you have Morpho, Oiler, they kind of operate similarly and they have a lot of the same kind of curators coming across, but I do see that curator role as being one of the kind of the biggest, fastest growing segments that we see across the DeFi

space. Um, yeah. Yeah. And then and then you've got the more conventional altcoin lending. >> The the other one I was going to touch on was just like you know people people like Apollo both being an issuer and being an underwriter for some of these markets like steakhouse I think has a Apollo private credit looped >> uh you know credit sleeve. Um does that meaningfully expand the universe of you know capital inflows or is that just kind of Apollo trying to leverage sheep capital and crypto and take it elsewhere? Just like how do you see that? Yeah, this is this these are the two different strategies you can run on the whole tokenization of assets. So on the one hand you have uh large traditional funds and in this bucket there's not just Apollo there's Apollo,

Blackstone uh sorry Black Rockck uh you know Wisdom Tree, Franklin Templeton and um these players the thesis is we have an asset management product. What we're going to do is we're going to seek a new market to distribute this to and that market is onchain investors and they can do it directly uh or they can do it through um these kind of yield enhancement strategies like uh like Apollo has with the uh the gauntlet vault and and the morpho integration. So you loop it, it's pays you 12, you loop it a few times, it pays you a high teens rate. Um but broadly the strategy there is they already have an existing business. how do they find a new market to distribute it into? And then you've got the the opposite side which is kind

of the punt that we are taking or the bet that we are taking and the bet I would say Athena is taking as well. Um which is you have a cryptonative product where the yield and the the source of returns is onchain. So in our case it's Bitcoin back loans. In Athena's case it's basis that product you can't go and buy from Morgan Stanley. Morgan Stanley doesn't have a tokenized basis trade or a fund that does the basis trade and they don't have a fund that does Bitcoin back lending. So, can you take the cryptonative product that's unique and differentiated and can you package that and sell that to Tradfi investors?

I'm more confident in that because I think it's a product they can't get elsewhere. So, you're effectively in a market of one or two. It's you and maybe some other, you know, one other player that can do it. Whereas when you take a fund asset and bring it on chain, you're competing with every possible source of yield or return on chain. Apollo's competing with everything else that is yielding 12%. And it turns out that onchain investors have a different time preference and they have a different return hurdle to what your average pension fund or family office has. Well, one question on that. One question on that is like, you know, um like let's say you went the other way and you said let's put Syrup USDC in a bond ETF format and let's offer it, you know,

next to Apollo private credit in a prime brokerage, you know, by Morgan Stanley. I assume there would be all sorts of hurdles from Morgan Stanley compliance. Like we can't even trade IBIT, you know, through Morgan Stanley. So maybe in a bond format ETF, this would be more approachable. maybe they'd still have some, you know, concerns, but um is that other way strategy something that you guys think about? Like how hard is that to actually pull off? Can you get in this walled garden and and really make hay? Or is it just, you know, there's so many hurdles that it it it would just be difficult? There's definitely a lot of hurdles. I think I've been it's kind of let's say that's probably phase two of the treasury company uh trend that we're

seeing at the moment. like I saw uh you know you've obviously we we began with strategy and then the BTC treasury codes then we went to alt assets last week you saw you know Athena had uh stable coin X right which is a little bit of a hybrid um predominantly focused on the governance token but I was thinking today could we take syrup USD and put it in a BDC let's say you know a BDC is a business development company for those >> who um >> similar yeah very similar it's like it's effectively a vehicle that invests in debt and private credit and um you can either have debt or equity in it but Blackstone does a lot of them, Black Rockck does a lot of them and um but it's it's the ne this would be the next

stage where you were investing in a vehicle that does yield plays and there's no reason that you couldn't have a BDC that does like the basis trade, but it's it's a tradable vehicle that does, you know, yield and credit type plays. And I think that would be the next evolution of what we're seeing with with the very basic treasury companies today. But you're you're totally correct, Vance, like putting that you're not going to end up with that on the NASDAQ or or one of the major exchanges day one. So it's going to begin as OTC and then and you know and um and direct sales and then over time you're going to be able to get it onto onto different venues. I think >> so. This is going to be my question which is it seems like both are looking for both strategies that you just

described like Franklin Templeton are looking for new customer base with onchain clients and I think you syrup USD uh USDE the Athena product um and I think those are one and two in terms of you know what what let's call yield coins versus stable coins >> um you're also looking for new distribution channels which is you've got the onchain and the capital is you know in a certain sense constrained as to whatever is on chain right now. But as we start to see more of the stable coins, actual stable coins, look to have that yield element, especially as we and we we should talk about the genius act and how that will apply here. You can have yield pass back, but you can have USDC flow into something like a syrup

USD, which is probably where the majority of the growth is coming from. I guess maybe my question is like as you think about stable coins and yield coins as like >> two kind of uh related and potentially combinatorial assets, how do you think about the growth vectors? Is it you know the BDC route where you're going to try and equitize this like reverse tokenize >> the the distribution channels or >> later you tokenize the BDC loop and loop and loop and fees all the way. Um >> no I I think of it it's a good question.

I think of that as an interim solution. So what you're trying to do is like you know it's this whole um you were talking about Cara Perez before but you also have the the Steven idea right which is that um you know you don't convince like in a scientific revolution you don't convince people it's just the older people die and so you have the the portfolio managers of today can buy a BDC over the next couple years that has USD or has syrup USD in it and um so you're you're providing a distribution channel that meets them where they are today, not where you want them to be.

And then the the millennial and the zoomer uh PMs who are coming through, they can they will eventually just be subscribing for things in stable coins. I think with the gen with the passing of the Genius Act, you know, it's kind of like the arrow of time is going in one direction, right? And so the direction of capital markets, it's going to be settling more and more in stable coins. it's almost inconceivable that, you know, that you it's going to hit some level and stop where people continue to decide to use fiat. And so the way I think about it is the the two are linked. So you have if you you legalize stable coins with the Genius Act, but you can't do passback of

yield. But it's it's inconceivable that you would do that and then not contemplate that there are going to be savings products built on the stable coins. And that's where I think SUSD syrup USD come in is their products built on top of stable coins that you know we're not the same issuer but we allow people to earn a yield on their stable coins. And um that's where I think the puck heads over the 10-year horizon let's say. >> Right. We just don't want to have to wait for an inordinate number of funerals to be able to have progress. >> Yeah. Yeah. Yeah. Yeah. Exactly.

Exactly. I is um I I've heard this take that uh you know we we don't need more you know stable coins being issued by people but I think syrup USDC you know from starting relatively humble beginnings has grown into a real juggernaut and it does feel like this syrup USDC concept um it's not quite a stable coin it's not quite kind of a yieldbearing pure like bond instrument it's somewhere in the middle where you're able to create a lot of value matching assets and liabilities as well as making um not just you know debt but like liquid debt and and I think that is what syrup USDC does so well in terms of making it um something that is is

exchangeable instantly for US dollars and and I guess there is some cool down period but do you see this trend of you know maybe like Wildcat has its own stable cocoin you guys have your own stable coin like is this going to be an era where there are hundreds of different stable coins and I I guess what are the second order effects of of something like that. It's um I think I think it gets really complicated if you start accepting um the yield bearing let's call them yield bearing stable coins or or the the the liquid dollar because we we call syrup USD a liquid dollar product but if you start accepting these as money and using them for payments I think it becomes really hard because then let's say I have syrup USD and Michael has wildcat

USD and we're trying to work out are the should these be at par or is there a different risk level and uh I think that's where you know if you if you just have the basic stable coin themselves whether it's USDC USDT USD um that's being used as kind of the the medium of exchange that doesn't have yield and credit risk involved in it keeps things simpler for people in the if you look back in the era of every bank issuing their own private money and and IUS it became really difficult and costly to kind of decide the discount factors that should between them.

So, um I don't think that I think the dollar products um continue to get built and there'll be many different kinds of dollar products cuz wrapping it in a token is a very easy way to to package it for distribution whether it be a syrup dollar, a Wildcat one or or an Athena one. But um I don't think any of us intend for it to be used as as kind of you know spent in the same way that that currency is. >> I'm not using tea bills to pay for coffee. >> No, no, >> no, no. But like you know one one example is you know Cororeweave which is this large data center h or you know kind of neocloud has done these big bond issuances and the bond issuances don't really trade on exchanges. like you can

check the price every once in a while and there's like a trade every once in a while but it really is this handtohand you know market that doesn't really exist and it gives no transparency or price discovery to the underlying if they just had like coreweave USDC or coreweave USD you know they could back those issuances under that and and have this thing that's more liquid and can reflect the underlying value and um I do think there is this case where you know there should be more stable coins in terms of different issuers of these things just because they do provide fundamental business value to both the business and and the underlying instruments that you're trying to monetize.

>> No, no. I I think that that is a really good point. Having a savings product or a yield product that trades at par like as Syrup does and and SUSD and these others do where the yield varies but effectively it's always kind of liquid and trading at par. I think that that is really important. What we found was one of the big unlocks with the syrup USD growth was um when we introduced secondary liquidity for it. So when we had a strong deep um uh you know deep um pair for it on you know unis swap and and other dexes. So folks didn't have to wait to get redeemed out. They could they could redeem out you know effectively trade out of it straight away with very little slippage. And you

can kind of see that in um you can see that there's some appetite for this in traditional markets because if you look at like the latest micro strategy instrument, it's a thing that trades around par where the yield varies in the same way that our yield syrup USD C yield varies and and SUSD yield varies and so some there's there's some appetite for that in in trad um do you see eventually it kind of seems like um the construction in between something like, you know, Maple uh and Athena is like relatively similar. You're kind of just going after different strategies or different pockets of yield. Um and then there are other like attempts at this like that are maybe a little bit different construction like a cap or something

like that where where there's incentivizing uh different operators to go out and earn yield in whatever they want that it cruise to a stable coin yield bearing like instrument. maybe not exactly stable coin. Um but it seems like eventually right after theoretically like uh you know you max out your market on you know Bitcoin back loans or Athena does on um you know the uh the basis trade right they you would go after similar markets right do you see eventually convergence here and competition in between um you know like the Maples and the Athenas of the world or when >> it's an interesting question and um you know I know I know Guy pretty well and the team there so I would say you know at certain times like when when Bitcoin

runs up um basis, you know, basis picks up and the yield from their strategies pick up and so there there's like a natural competitive tension where their yield probably climbs a bit faster than ours and people might swap or or reallocate um between us. So there's but that's kind of like a very narrow sense of competition and that we're we're competing to offer people a yield and um because the market's so small people kind of just focus on the topline number of yield. But I think as the market expands which I think we both you know both us and them think it will you're going to naturally end up with specialization. Like if you look at an asset manager, both Citadel and Apollo are asset managers, but Apollo is

specialized in credit and Citadel is specialized in trading. And the top the the headline number that you get is well, this was the return that the asset manager delivered over a period of time. But under the hood, there are very different things happening. And if you're an investor, you may not want to allocate entirely to one of them because you want to diversify. You want to have multiple strategies. You don't want to be, you know, you don't want to be all in trading or all in in credit and fixed income. And so I think the market will grow enough that each of us is is able to find our own specialization and we'll just focus on disrupting the um the Tradfi players and uh eating their lunch instead of each others.

And is it zero sum between the asset manager of the asset managers of the world within crypto and the stable coin providers or is it positive sum like we've seen Sky give you guys a lot of capital and that's grown the pie and Athena's grown the pie because Sky is their largest depositor. It does feel positive sum but I think it can be framed in the zero sum lens. So it' be good to get your take on that. Yeah, I think uh uh the I mean my my short answer is I think it's positive sum because if you look at um if you when I was in banking we did we covered a lot of lending companies and I always wondered when I was a junior associate there why don't we just do the

lending and then cut these guys out and and um but the answer was you know there there was enough of an ecosystem where you know the the bank I was at didn't necessarily want to do loans to self-employed people or you know smaller car loans. They had a certain type of market they wanted to go after and they were happy to just partner with the lending companies and participate there but in a way that reduced their risk. And so I view the the you know the partnership or the combination um between us and uh you know and the maker sky ecosystem as they are looking to be the central bank and and there's certainly a principal agent problem that having partners like us and several

partners whether it be us and Athena and others who specialize in that we kind of keep each other honest and we address the principal agent problem in some way. So ensuring that you know we provide quality underwriting and Athena provides access to the basis trade in a safe way and by having this two-step process where they are the central bank and and we are kind of in a sense a commercial bank or or an or another way of looking at is they are a fund of funds and we are one of the fund managers they choose. keeps um you know it it enables them to get more leverage on their time and um not have to staff out a ton of people themselves and also to to ensure they have the best product in each

category because if we don't deliver then we can always be swapped out for somebody else and same for Athena. So I think it's I think it's actually symbiotic. >> Yeah. I think it's I think it's um kind of the equivalent of venture capitalists saying you know we should also be starting these companies. >> Yeah. And every once in a while that does happen and usually that's a sign that the entire concept is undifferentiated and it's likely to be you know abstracted by somebody else. But um I I think what's happening with so many of these stable coins uh you know ser USDC included uh and like these central bank concepts it's just like the world is splitting. it's getting bigger, but it it's kind of going into these centers of excellence that um is good

for the entire space and um yeah, it'll be interesting to see how it plays out, but I certainly don't think it's it's negative sum for anybody as long as you're playing these long-term games. And there's $270 billion of stable coins on chain. So, you know, even making a 10 or 20% dent in that is is a huge huge deal going forward. >> And I think that's going to continue to grow a lot. Um, if you look like when the Genius Act got passed, apparently some of the positive feedback came in from like KFC franchises who like the fact they wouldn't have to pay uh, you know, interchange fees and um, to the uh, to the the card processor. So, Visa and Mastercard and uh, I think on that trend, you know, you look at some of

these exchanges who are talking about doing 247 trading. Well, what if they could have 247 funding? Like surely those exchanges want people to be able to fund their accounts more often during the day and if you're doing that through the banking system you can only do it you know 9 to5 5 days a week whereas if you accept stablecoin deposits as you know one of these trading venues then you know then people can deposit and 247. >> Yeah I feel like we're it took a little bit this is a great example of it takes longer than you think it's going to take. Um, but these were all things that we were talking about, you know, in 2017 and 2018 about why we thought Wall Street might be excited about uh the stuff. And it turns out they are, but they just needed uh, you know,

regulation and less risk and all of that stuff. And it just took a little longer than we thought. But I I want to return to I know we don't have uh too much more time and I want to return to um this idea of kind of where credit or leverage is building up uh in the system and the difference of market structure this time around. And you know, one of the uh I don't know benefits, but maybe um you know, one of the something about last the way that it was all set up last time is that you had fewer lending shops. And so it was kind of easier. You could kind of look at Genesis's loan book. They did these quarterly reports and be like, "Wow, $50 billion loan book. I guess people are borrowing to punt long, right?" Um and people weren't as in tune

yet, right? But a lot of the funds that were going into GBTC were also kind of this indicator of leverage buildup. It seems more dispersed today. um in some ways it's much more visible because it's on chain. Um but also there are many different shops and there's less uh it seems like kind of centralized lending activity and I'm just curious like if you're looking at kind of markers or like buildup or as a way as an indicator of um you know how frothy things might be getting like how would you know you're just kind of an average retail person listening to this like what would you be looking at? >> It's a good question. Um, if I were average average retail person today and I was trying to assess the level of leverage in the system, uh, Galaxy does a pretty good So, you know, you used to

look at the Genesis report which I think was um, yeah, was some of the best research. >> Those were so good when those used to come out. >> Yeah. >> Yeah. No, they they had um they had a great team putting putting those together. Like I always read those and uh, I think nowadays Galaxy has a really good report on um, on lending. They did one maybe a quarter back, but it had effectively a leaderboard of like the top lenders within the space. And that's where I pull that number of 20 to 25 billion from. So, uh, in the lending space today, you have Tether somewhere in the low teens billions in terms of loans outstanding. They're the largest and then it's daylight between them and the next largest. The next largest, according to the previous report, was uh, Coinbase and Galaxy. And they both

they were both sub a billion. and you had two prime and leen also in the kind of the the top um the top six and us I would say now you know our loan books about a bill and so we're probably somewhere around that maybe like three top three mark but if you wait for the next one of those I think they're produced on like a quarterly basis but that is one of the best um resources on the the size of centralized lending today and uh I would pay attention to that so at 20 to 25 billion As I said, we're still like only 50% of what we were last cycle, which was about 55 billion at the height. So, still relatively unleveraged, I think. And the other thing you can look at is if you

want another more realtime barometer, I would I would go on look at Wildcat, which has the uncolateralized lending, because that's going to be in the higher risk category. So if you one day see that spike to you know 400 mil from where it is today like that would be an indicator of frothiness picking up in the space and then you can of course look at um look at us and a but I think typically and you you know you can you can view the metrics through D5 lama but if you look at um the level of leverage on the D5 protocols whether it be us or a morpho or oiler that will also be a proxy for how much leverage there is in the space. Do you think it gets back to that 50 60 70 billion or and if so over what period of time?

>> I think it goes beyond that. I think um I think it can get back to the ne to the 50 to 60 billion within the next 12 months. you know, I'm I am I mentioned the number of you know, can Bitcoin back lending get to to 200 billion in the next um you know, 24 to 36 months. And I think a lot of it is going to be enabled by stable coins because ultimately they kind of set the boundary condition of how much can be lent. You know, we're all lending stable coins. So the the capacity to lend comes from derives from the capacity of stable coins. Um, but I I could see us I could see us easily getting past the 50 to 60 billion over over the next 12 months and then really accelerating from there because you look at like just look at the the source we

didn't talk about much was these treasury companies. Now we look at them as an interesting potential customer to to lend to over time because they already tap capital markets through convertible bonds and prep equity. Um, but over time they might want to add a form of secured facility to like buy the dips. Let's say Bitcoin dips back to 90K. Uh I would want to have a facility I can, you know, draw at a day's notice and go and buy Bitcoin at 90 if I was one of those companies. How are they going to outperform each other competitively? They're going to have to be better at tactically buying Bitcoin or have cheaper cost of capital. Now, when you issue pipes and things, those investors want to hit a 20% plus irra, right? Whereas when you borrow against

Bitcoin, it's a, you know, it's an 8% cost of capital. And it's not like you can spin up a pipe in 24 hours. >> No. Exactly. >> And and so like like a Maple I mean there's two versions of lending to these companies, right? One is doing the converts directly and the other is like this assetbacked, you know, kind of offbalance sheet style lending where you actually have the crypto collateral. Are both of those interesting to Maple? Uh yeah, more so more so the second one because there's the converts but um the converts are longer duration and then you know there's a kind of implicit understanding that you're probably going to convert into the equity like that's that's where the return really comes from on those things. Um so our our interest is more in the secured facility

and I think where we partner with them is we can offer them something that's cheaper, faster to draw down and more flexible. you can draw it down and repay it in a week if you wanted. So you can use it as bridge finance that complements your converts and your your pref equity and the other stuff you're doing, but it brings your overall blended cost of capital down. So when you you know maybe you didn't have to do it when you were one of three Bitcoin treasury companies, but when you're the 25th one, it's a much more competitive space. I think >> just as context, you know, as a venture firm, um it's pretty typical and and we utilize this as well to have what's called a capital line capital call line of credit where if you need to make a a an investment and let's say it's a hot

deal and you have a week, but your uh capital call timing is, you know, you send it out to your investors and say, "Hey, we're calling 10% to make this investment." That takes two weeks. you know, we we have leveraged, you know, a capital call line of credit which you use temporarily and then you pay down once the capital call comes in. >> Yeah. It's like a it's like a revolver, but it allows you to, you know, to not miss out on those deals. And that's kind of similarly what I imagine for these treasury companies and we've had conversations with a few of them. Um, so I think uh, yeah, I think I think that's going to be a big market that will accelerate some of the, you know, some of the the Bitcoin backed lending and and getting us close to that 50 to 60

billion number. >> One one question I had for you just on basis, I know we're at an hour, but um, one thing I've noticed with basis is that it doesn't spike as high and it doesn't persist for as long. And a lot of that is just how much capital and how much open interest has come into crypto. Um and so that kind of isn't as reliable of an indicator as it used to be. But how how do you think about basis going forward in terms of you know increasing increasing trad um but also just like how do you think about the barometer of oh there's too much leverage in crypto or there's not enough or just like a a market health check.

So I think when when you see basis spike really rapidly and as as you said as you noted advance it doesn't rise as um as acutely as it used to and uh so it's a I think it's a general barometer of kind of frothiness in the market like if you see sustained basis you know it it's it's kind of more bullish conditions and we use basis to rerate our book so if we see basis spike we will go out to our lenders where we have recallable loans and we'll often repric them up you Maybe it's 50 or or 100 basis points because it's like when basis spikes, it's like the Fed lifting rates in crypto lending.

It's um it suggests that there's a new it it it's the proxy for the risk-free rate and it suggests that if it's rising, you should be charging more for interest. And we also see more demand from the borrowers. So, they don't really borrowers don't really push back as much. They're willing to pay more because they recognize the risk-free rate has increased. um over time as the space institutionalizes I see that coming down like I you know because you just look at the the trady instruments and you don't get paid nearly as much for you know effectively like a funding rate arbitrage but at the same time as well like cryptobacked lending as it matures will also come down in um in spreads uh as you know more because I

think it's kind of mispriced at the moment where the market the trady market assumes it's riskier than it is today. You know, you're you're significantly overcolateralized by Bitcoin which you can go and liquidate billions of on a Sunday. Um there's not too many assets that you can do that with. And so I think it's actually it's probably priced too high relative to where it would be if everybody fully you know recognized the the you know the true or appropriately priced the true risk. So, I mean, may maybe just to follow up on that is let's say the Fed starts cutting rates and rates are so much higher than they were um whatever in 2021 and it feels like the long end is probably not going to respond, you know, to a short end cut. Um but there could be this thing where you start cutting rates,

things get frothier, you know, credit spreads kind of blow out even harder. >> The two diverge. Yeah. Like >> that that' be the counter to that, right? But it would just be good to get your take on like in a world of decreasing interest rates and I think that's coming. You know what what does the lending landscape change uh look like? >> Yeah, it's it's interesting. I think you've got the first and second order effects, but I think uh typically what we see what we would see over the short term is that if you cut rates, risk assets typically trade higher because of a lower discount. And so Bitcoin um Bitcoin and crypto sees appreciation.

What that does is that then pushes up basis. So you see almost the tradfi and crypto economies start to to bifurcate and diverge from each other. So as the the Fed cuts rates at the short end, risk assets will trade up, basis will trade up. We'll get we'll see more borrowing demand and we'll start charging more for interest rates. And so our lenders, you know, the folks who give us capital will start getting paid, you know, paid more, which you you you kind of need to because you have to keep them sticking around because otherwise they will say to themselves, why don't I just go out and buy market beta? Like why why am I collecting yield? You need to pay me more to keep me in this product. Otherwise, I'm just going to go and buy BTC or Soul or ETH or just get

the the market beta return. >> Yeah. it like it's you either sell them more duration which is tough or you sell them different credit mix and that credit mix on the short end you know there's not probably a ton of options other than something like you know what what crypto has to offer or other >> I mean maybe shorter term financing things like exist in a prime but um I generally think of like DeFi lending as being very long credit spreads and yes the world of lower interest rates on a nominal short-end basis probably get better credit spreads on just about everything What's worth noting just um while we trip down memory lane, you know, 2021, 2022 when you're doing Bitcoin back lending, often those were getting

doubledigit, you know, double digit returns and the over collateralized stuff initially could fetch, you know, 12, 13, 14% when you're posting excess Bitcoin to borrow. But keep in mind that was when uh you know, the Fed funds rate was like zero. That's that was when sofur sofur was zero and investment grade stuff was sofur plus two so 2%. So you were getting effectively a 10% spread to um to investment grade stuff and and a 12 13% spread to to t bills. It was like exactly to your point about credit spreads in crypto.

>> Maybe a good time to do the uh the BDC if that uh >> yeah if that ever comes back. All right, guys. Um, well, Sid, you've already been super generous with your time in and just, uh, a hearty congratulations again. Uh, I feel like Maple was really one of those names that, um, you know, was kind of you, you really, uh, you know, put the work in over the course of the last, uh, 18 or 24 months, and it doesn't happen overnight, but I think people are waking up and realizing and yeah, uh, I think 3.2 billion in in TBL, you know, speaks for itself. So, congrats, um, on all the hard work and success.

>> No, no, thanks for having me on. It's just, um, a love of chewing gloss. Love it. >> All right. Sweet. Appreciate it. Thanks, guys. Cheers. >> Later. Appreciate it. See you.