Live at Digital Asset Summit: London

Transcript

Okay. I weirdly get like I'm very comfortable talk but I just worry about messing up people's titles. Yeah. >> Yeah. No, I don't care. >> Yeah. >> I have like six titles that's why I don't care. >> All right everyone. Uh we are live here uh recording from DI Digital Asset Summit London. Uh I am sitting opposite Beth Haddock, director and adviser at the stablecoin standard. Beth, welcome. >> Thank you. Good to be here. >> I'm really excited. Uh you know, we've got a lot to cover and uh not as much time as I would wish with someone like you, but can you just give uh the audience a quick 30 second intro and then you know, we're speaking here live from D London, so give us your impression of the conference as well as a first.

>> Sure. I just came off the stage and I love the fact that um the audience was very engaged. Lots of people came up afterwards and wanted to talk. Um so I feel like we're at this golden age of a convergence between traditional finance and crypto. And that's my background. I spent a couple of decades um in traditional finance uh running uh regulatory compliance programs and then I really wanted to be part of a new paradigm. So I pivoted around 2016. I was lucky enough to be um helping a lot of the A16Z um portfolio companies when they first started out in crypto. Okay. Uh so since

then I've been a director and an advisor and I've been pretty fortunate to work on some really interesting projects helping innovators globally and now um as we round out 2025 lots in stable coins and payments. >> Amazing. Well, that's what I want to chat to you about. Um and maybe like you know it was such a big theme of the conference this year especially. Um you know I one of the the most surprising things to me in the last year coming out of the US side has been some of the words that Secretary Treasury Scott Bessen has said on this subject and you know every time he speaks about stable coins publicly it's always very positive but he has got these pretty grand you know grandiose predictions around you know first it was two billion$2 trillion

dollars of stable coins by 2028 then it's you know 4.7 by the end of the decade. I mean, these are really, really large numbers coming out from someone who's extremely important in the United States, but also has the power to make that happen. Uh, right. And it's from an office that has traditionally been highly resistant to that. So, yeah, it's been kind of all over the stages of over the course of the last couple days. I'm not sure how much I know you had your own panel, but uh, what do you think? And I want to eventually get to this idea of convergence because there's a lot of positivity I would say there, but then there's some, uh, maybe downsides as well.

>> Yeah. So, so maybe I'll pick up on that with the opportunities and the risks. >> Yeah. Perfect. Perfect. >> Yeah. So, to me to have um leadership in the US and quite frankly globally like in Asia they were leading even in Europe having already had um laws that then the US with the Genius Act the legislature had a chance to sort of iterate on it I think was really great. So we're at this point where we have more clarity but as you probably know there's hyper competition and the traditional banks there's a lot of um influencing and discussions and we just submitted our

own um comment to the treasury department for the implementing rags for the genius act. So I think the leadership's um commitment to responsible innovation is not unlike the last administration's commitment to uh I think they called it responsible development in the previous executive order and responsible innovation in the current administration's executive order. And I'm glad to see it. To me, it's part of um what we need as we're growing to make sure that everyone knows innovation isn't going to stop. It's going to keep accelerating. Let's figure out a way to do it in which um all of the different users can be protected. But I do think

it's a little messy once you get underneath those broad statements when you look at the hyper competition between traditional finance giving up the status quo um and then innovators understanding that in order to grow we need to have better operational resiliency whether what we saw last Friday or just generally as any sort of great innovative products grow. So, okay, I want to talk about maybe some of the resistance from the incumbents side of things first. So, you know, a lot of at least with Genius, there's been a lot of discussion around being able to uh give interest to users, pass interest on

to users, and it's been explicitly sort of banned, but there's a loophole that I understand the banks are now trying to close. And the argument from the bank side of things has been this is going to be really bad for small banks, for community banks. you know, um there's a part of me that's a little skeptical about whether or not JP Morgan really cares that much about that. And I'm very curious about your perspective here. How real is, you know, it seems like there are going to be loopholes which allow uh passing interest back. You know, Coinbase has been pretty vocal on this, but maybe describe what some of those are and then how real is the threat to, you know, small community banks. Is this is this true? Does that even matter? Uh how do you feel about this entire, you know, train of thought? Yeah. So I I do

think it's true in the sense that change has um different incumbents um figuring out how they can adjust, right? And you can you can adjust by trying to maintain your position or you can innovate and accept that change is inevitable. Of course, where probably you and I sit, we think change is inevitable. And I've recently been um part of a lot of the Genius Act implementation discussions where I do think a large amount of banks understand that change is inevitable. Um this concept of a loophole ingenious um I smile when I when I hear you ask the

question because I think of all types of different laws throughout the globe. Let's just take the US where there's always exceptions and exclusions and this is no different. So I don't think it's a problem with the law that was passed. I do think the reason why we have the laws and then we have the implementation regulations is because we come to a balanced position and sometimes exemptions and exclusions are permitted.

>> Yeah. >> And then if experience shows that we didn't strike the right balance, we can adjust. Yeah. >> So, think how long hedge funds and private funds are not operating in the same regulatory regime as banks or or broker dealers. Um, and that's exemptions and exclusions that we're comfortable with. And we could probably come up with lots of others. >> Yeah, I'm sure. I you know, one thing that I had never really thought too strongly about was the amount of interest that banks pay to people that deposit into their checking accounts.

And maybe it's watching more bank malfunctions in the era of social media, but it was very interesting to see something. It was a big discussion when Silicon Valley Bank was failing around uh you know checking accounts not being protected, but something like a sweep u or a money market fund being protected. That was the first kind of interesting aha. I mean, it is up to a certain point. There's $250,000 FDIC insurance, but if you're a big depositor, it's not quite protected as much. And you know, I had never really thought that deeply about what is the appropriate uh you know, funding rate for banking deposits.

And it kind of seems like you know much more about banking than me. I don't I haven't been checking that net interest margin on most big banks or community banks recently, but it feels a little crazy that it seems like post08 the you know the amount of interest that gets paid out to depositors like 0%. >> Yeah. Like so to get to your community bank question and then to address this which is I think this is an opportunity >> for community banks to really sort of engage more with their um regions instead of us having these big cifhies that are really um >> monopolizing with a little m the market.

>> Yeah. So um so I do think it's an opportunity and I think even if you looked at some of the discussions I think there was one last week with the Fed that a lot of innovators are focused on that. Um and I also think that since 2008 it doesn't make any sense. You probably hear this from Gen Z and any of the other generations that are coming post 2008. They don't trust the banking um the banking structure that we currently have because it's almost doesn't make any sense that you give the bank all of your money. The bank uses all of your money and you don't get paid for that use, but then we're talking about

getting paid if you put your stable coins on Coinbase and Coinbase is going to give you yield. Like it almost intellectually >> you can't even follow the train. >> Yeah. So, so because I spent many years um working at banks and um being part of the American Bankers Association, I know there are risks everywhere. Mhm. >> This risk doesn't bother me >> because I do think that as long as we have informed risks and you have responsible innovators and we have the Genius Act there, much more clarity than we even had two years ago, >> um I I don't I don't worry about it and I do think we're going to improve on the current system because for you or myself

or for the Gen Z's or others that are trying to get ahead, we want people to have their own freedom of their money and to allow large organizations to use it and not pay for that. It's almost like the corollary of your data >> like you give your personal data and someone else is using it and these data brokers and the rest and there's so many great innovations on the blockchain where you get to have your own data and have it be portable. So, I think we're going to see that trend whether it's in the commerce, money, banking, our own personal data. And I think it's uh it's a way that I'm more optimistic about the way that we interact. M and talk to me a little bit about the small bank versus

big bank here cuz I actually can imagine if net interest rate margins are compressed or if the NIMS are compressed um because banks now have to pay out more to attract funding then I could see big banks that have scale uh and maybe have a more durable and that interest margin being less impacted than the smaller banks. Is that true? Not true? >> Yeah. I I don't know. The only thing that I would focus in on is like to me this is the moment, right? This is a moment where there's going to be rapid change. So, can you be bold as a smaller bank and go allin instead of sort of standing back and waiting and then needing to either rent rails that have been built by someone else or sort of be

strapped with having to upgrade your legacy systems. >> Yeah. Um, so I think if if one is a smaller bank and willing to be bold in a responsible innovation type way that wouldn't it be a better dynamic if our banks served local and regional communities instead of being massive global organizations that really aren't necessarily focused on incentivizing small businesses um in really helping out um entrepor reneurs. I mean, the whole next generation, they're more likely, I'm sure you probably even know the statistics to be entrepreneurs.

>> Funny bone here. Yeah, I completely agree with this. And you know what blew me away? Actually, this was during COVID and this was when all the stimulus was going out and, you know, preferential credit and all this stuff. And I remember thinking there was this argument going on that big companies were being favored here. And I, you know, I thought to myself, well, that makes sense because probably big companies employ most Americans. And I looked it up and that's not true. Twothirds of Americans are employed by small business. And you know, I actually used to write, we have a great newsletter writer named Byron, but I used to sub in for him back Oh, he's the best. Shout out Byron. Uh Matt Lavine is the poor man's Byron Gilliam. So uh but we uh I used to write on I had this uh

idea about um if you look at the number of commercial banks in the United States. There used to be something like 60,000 and it has been a one-way trip down and the US is still better than most uh banking industries in different countries. The the challenge there though and if you talk to people in banking most of them will say that makes a lot of sense. That's great. Whenever someone gets out over their skis on risk, someone with a bigger balance sheet steps in and absorbs it. But the the challenge there is if you are a small business and which by the way employs most people in the United States. These banks are not set up to serve you at all. They're not interested in you. They don't want you as a customer. And I don't fault them because it's completely rational for them to

think like that. But it does open up an opportunity. And I think >> right voila. Yes. Yes. Absolutely. And it's and it's like two different shifts that have recently happened, right? And the recent shift are um the more and more entrepreneurs which we want which is really great and then the consolidation since 2008. >> Yeah. I have a qu this is going to sound a little bit like a non sequator. Do you think banking is overregulated? And here's here's where I here's why I ask this question. I'm starting to see one of the attacks that people used to levy at crypto was it's just regulatory arbitrage. And I thought about that word a lot and I actually think that crypto is very good at predicting the future

and showing market inefficiencies. And I'm starting to develop the view that a lot of markets are highly overregulated and equity markets are a great example of this. Companies are staying private twice as long as they used to, 15 years. Asset issuers do not want to go public. And I was talking today with uh Danny Masters. He's the executive chairman at Coinshares and he was describing he was a coin is a public company in the UK for 5 years. They recently went public via spa in the United States and it is unbelievable uh how thorny that process is and you know from my perspective it's like why are we making it so we want big deep liquid public markets we want to share the wealth creation we don't want

wealth create so I'm going on my diet tribe here but I I'm starting to see crypto fixing a lot of areas where there's overregulation >> yeah well so I'm shaking my head yes because I agree and that's why I joined crypto in 2016 because I don't think it's intentional I do think it's also this this change where the laws are from 1934 or 1940 and technology has just changed everything. So some of the risks that we were concerned about can be solved by the nature of the actual technology as long as the regulator the regulators and the leaders understand that technology. That's why I'm really pleased that in the US and actually here in Europe there's more and more

discussion and more requests for comment. We just submitted one this week um from the US Treasury about how to fight elicit finance and the specific question was give us novel rag tech regulatory technology because I don't know if I would agree it's overregulated. I would just say it's over bureaucratic >> and then unfortunately you end up missing the risk because you're you're focused in on these legacy manual processes and the one that to me is most germanine to crypto is personal financial privacy. So when I think about Michael and Beth having to give our

passports, our our licenses, even though you probably have global entry and have already and like the government has your biometrics, the government has everything they need to know about you, why do we have to continually become more and more vulnerable to financial institutions by giving our personal information? So that's where it's like, is it overregulated or are we so antiquated we should be focusing on transactions and wallets, not monitoring people?

>> I It's like you're listening into my private conversations. Ironically, I >> I haven't I >> Well, the um this exact example I've been talking because I uh I lost my passport recently along with I got a new dog and in the excitement of going to pick this new dog up, I lost my left my wallet and passport in the car that we rented. zero out of 10. Do not recommend ever doing that. Uh but I had to get a new passport in a very short period of time. And yeah, it's first of all, if you don't have one form of government ID, good luck getting another form of government ID. But also, you know, I was trying to I had to fly through uh to go to the new passport place. I was like, why do I need my passport here? you have all of my I have a theory about this if

you're open to like a minor conspiracy theory which is I think that they just don't want everyone to know that they have this much private biometric information on people that >> I have digital ID so when I walk there and I don't open up my passport and the TSA agent says hello Beth >> it's obvious but I would love to know the name of your new dog >> oh his name is Chonk he's an English bulldog >> oh adorable adorable >> yeah I'll show you a pictures. He's I'm biased because he's a cutie. >> Okay. So, I also am big if I was one if I could only pick one ideological issue be privacy.

>> Yes. >> And I I really dislike some of these rules around, you know, lowering the threshold for financial surveillance. It's like $600 or whatever they lowered it to. >> Talk to me about, you know, we started this conversation with the pros and then maybe the cons of combining stable coins and CFI. And you know, one thing having been to DC now a good amount, it seems like no one is particularly interested in sticking up for privacy. Correct me though if I'm if I'm wrong on that. And then also talk to me about the drawbacks of all there's all this great stuff. Our TAM is going to expand. We have the blessing of the regulatory apparatus.

But what are some of the drawbacks that you see in your mind? >> Yeah. So I started my career on Capitol Hill. >> Yeah. >> So I understand that there are so many stakeholders and interests there. Um, so it may feel like it's not a discussion, but I would say if you could have every single podcast talk about personal financial privacy, I think you should do that. Yeah. >> Because every where wherever I go, I talk about it because I feel like it's the year of the killer app of stable coins.

>> Yeah. >> But in 2025, we've been talking less about it than we should. >> Yeah. >> But not that it's any less important. >> Yeah. Um so for the stable coin standard we do have standards by way of example for defy stable coins >> as like let's self regulate to make sure that the stable coins don't need to come under the Genius Act but that they're operationally resilient and they deliver what they promise if they say that they're going to be stable and they're going to hold a peg. Um, and I do worry that 2026 when we get to DeFi, if we don't continue to highlight the need for financial privacy in either an economy

that's volatile or a government that might be corrupt um that we're going to lose an opportunity. So, please keep the conversation alive. I will I will try I I have a I keep talking about my own theories here, but I'd love to try this one out on you because there there is a story about pretty good privacy, the standard, you know, back in the 90s when the government thought classified encryption as weaponsgrade technology. And what got them over the line on not having that be the case was not some sort of ideological argument to be won.

It was there's a business case. Businesses want transactions private. And so my thought on this has been what will succeed here and who we should actually be lobbying is not politicians, it's business leaders because if they're going to bring things on chain and you can see it here there there are examples of RWA focus L1's and privacy is built in from day one. And I'm cur I my more positive spin would be I think actually institutional adoption will fix the privacy problem in crypto because no one is going to be comfortable with all of their transactions. businesses won't be putting that all out in the open.

>> Yeah. Well, it's smart business to whether you call it privacy by design or only collecting what you need. And as a business, if you do not collect the information, then you're not accountable for all of the friction that comes with protecting it and dealing with incidences and breaches. >> So, I do hope that there are those economic behavioral incentives that end up solving the problem. But I feel like it's such an important issue that we should do both lanes at the same time. >> Yeah. Okay. Final question for you here and then we can wrap up and I would love to if folks uh want to hear more about the work that you're doing at Stable Coin Standard, please just drop a a gentle shill at the end of the podcast.

But >> one um so this is less about genius and more about clarity, but I'm just curious, is it still a very bipartisan issue around crypto in the United States at the moment? because it seemed like uh you know the last I I listened to Jake Travinsky on all of this stuff uh from shout out Jake uh he's great uh and I was reading a tweet thread from him the some of the recent push back on clarity um and it seems like a lot of folks including Hayden from Uniswap who were always very in the middle and saying we need to build a bridge to both sides are kind of actively just saying the Democrats do not want DeFi uh in the US and I'm just curious like is it what's your sense from probably speaking to this contingency more than me. Is it still very, you know, uh, is it a

partisan topic or Yeah. What what's your thoughts here? >> So, you may accuse me of being an optimist, but I will still be an optimist at the end of this, which is like when I look at genius >> and how the Genius Act was passed, I think we haven't talked enough about the bipartisan effort of Senator Jillbrand and Senator Lumis. And so I am going to optimistically hope that we do the same. This should not be a political issue. >> Y >> but with the midterm elections coming up and with such a massive year one of the new administration, I do think that it is um it is a political moment. Let's just hope it

passes. Um, and I I I have had lots of conversations, bipartisan conversations. So, I don't think we should give up and assume that it is just one party that cares about responsible innovation. And even just my reference to the executive order under the last administration, it was the same sentiment, but it was like the next level down and then the fear and we had FTX, etc. that we we got offkilter. >> I agree. Okay. Well, Beth, this has been a really, really fun conversation for me. I agree with uh so many of your takes. So, this has been total fun. Um, if folks want to find more about the work that you do at the stable coin standard or just follow you or whatever,

what's the best way to do that? >> Yeah, so you can follow uh the stable coin standard. We have a website. We have our own global standards. We have a big announcement coming out tomorrow about a transparency index. So this way you can really um rank your stable coin >> and you can find me on LinkedIn or Twitter. >> Okay, awesome. Well, Beth, this has been a ton of fun. Thank you so much for talking to me today. >> Thanks for having me. uh

product. It's kind of like using an old product and into the space, but they found a way. I think that also will drive a lot of adoption and that's why it's taking some time because they haven't really found the sweet spot some of them anyway. >> Yeah. So that the answer to that really involves thinking through the RWA stack. So I was just drawing out the RWA stack on SA like a few days ago for something else. But if you think about the number of activities that is involved in picking up an asset and taking it on chain. Of course tokenization is just the start of the journey. Even to get there you've got to have transfer agents lined up. You've got to have all the regulatory rappers. Um and of course you also need to make sure that the token

mechanics that you're using is is uh is is kind of viable for D5 consumption. Um so that's the upstream and then you also if you're going to go D5 distribution like if you're going to use a platform like Kamino um the ideal form at this stage is going permissionless. So there is a there is a bit of legal compliance um and tech operational angle to that. So that has to be built in. Um and then you have to think about price feeds, proof of reserves. Um and once you have lined all this infrastructure element out, then you start thinking about liquidity. Who is going to be the first investor to take the asset on chain? Who is going to be the investor who is going

to be providing lending opportunities for this asset when it's used as collateral on chain? And who's going to provide DEX liquidity? How are you going to incentivize the whole launch? So tokenizing an asset is just the starting point. It's it's not the the end stage. It's just the starting point. And if you really want to prove that an asset has actually got legs on D5, there is so much more involved. And it is a journey. And lot of this lot of these actors or a lot of these capabilities the word capabilities along the stack is still being built right as as as and and and it's that's the fun thing here. You're actually living through this massive transformation of financial services and you're being part of it. history is

happening here. Um, and it takes time. It's a journey. >> Victor, how are you thinking about the >> Yes. Uh, I think first to give some stats, uh, back in 1991, um, the use of, uh, cloud services was approximately, you know, 3%. Uh, after 30 years, you would think, okay, um, everybody's using cloud. actually cloud from what I see from the latest research reports is approximately under 60%. Uh, and that's shocking, right? So these things >> and it's the same with e-commerce, right? Like you think e-commerce is everything, it's not, right? Like vehicular commerce is still much larger than e-commerce 20 years.

>> So here I I give it to a I blame it first on a time factor. That is a common denominator. If you um if you start spying on everybody's phone calls, uh the the common uh expression is I have no time. I'm busy. Right? We're sacrificing time with our kids uh with our partners and everything just uh you know to to to get more work done even sleep. So I say that's that's that's one which is very important. It has nothing to do with technology. Um second I blame the engineers. Uh a lot of engineers here they talk about cubern needs and layer one layer two proof of warp proof. Look when I use Apple Pay I don't give a about what's the seven steps behind is it cheaper better faster then I'll pay for it. Right. So engineers and narrative it's it's another problem.

Right. They get too technical. The TPS look the end user >> that's not in the audience. >> Yes. And like a true product because ironically engineers are the smartest. >> I didn't know that storytelling was a talent until I arrived in the in the DeFi ecosystem because no one could tell could tell a simple story because all you have is 30 seconds elevated speech, right? Everybody's ADHD. Um we can't stay focused for over over two seconds in the same uh uh user interface. So narrative is one thing. You can blame also the regulators, the lawyers, etc., etc. But I think it's the narrative. And last but not least, also uh a little bit of complacency when we don't have time.

Why? Uh private markets for every you know bank and private wealth they're having the best years of their lives. Crazy AU and crazy inflows. Um and when it comes to private equity and private bank everything is about raising money and deploying right uh operational I don't care in order for me to do blockchain I have to open a book that I've never opened up after um my master's or undergrad. uh it's very difficult to reuse your brain and and and take extra time uh at night and enroll in MIT Oxford courses for a blockchain that is not worth very much and uh you need to compete with guys that are trying to sell you an a a pixel at a JPEG at one ETH right this is how life life is changing um it takes time and um their lives right now when you're

at like mid-40s plus you're not incentivized to halt operations use extra time uh risk your uh marriage and your sleep and do something that will um hinder uh your bonus payments etc. I think it's a mix of everything but um you know just to make it a bit controversial engineers I blame you guys you guys are smart figure it out and second will be you know just just human behavior incentives >> what do you think Randy I that's hard to top but >> no we'll see what I can do um but um I think that we're it's it's still so nent I mean right now about if you set aside stable coins it's a little over $30 billion of RWAS on chain I mean compared to hundreds of trillions of dollars of

actual assets So it's tiny tiny a lot of it is kind of money market funds which I think is a good first step but I think the real value comes when other assets come on chain and a lot of these are not digitally native natively issued which is critical a lot of it is traditional assets go into an SPV you tokenize the SPV which creates its own set of inefficiencies so for example if you tokenize equities that way what do you do with corporate actions what do you do with voting um so I think that there's a lot of maturation that needs to happen I think some of it is there's been lack of regulatory clarity to say the least in the US. I think it's becoming more clear. It's not perfectly clear that will need to happen. But then I would just draw one other example. When you

think about the the time it took to electronify the capital markets, it really started in the late 80s and ramped up in the '90s. Today we've reached about 90% electronic markets. Some markets like fixed income are still only 60% um uh electronic. It took equities even which are well suited for electronification at least 10 15 years to get to 50% electronified. And I would say that blockchain enabling the capital markets is a much bigger change. It's a more impactful change. But if you think about rewiring the operating system of the way capital markets works, it's much is a much bigger change than changing how orders are handled, orders are matched. This is like the backend back

office processes that are being fundamentally changed. So, I think it'll happen um within that sort of time frame because just the the pace of the pace of change is is just ramped up. But I think it'll be huge when it happens, but it's going to take time. And I think I just pick up on one thing that Sebastian said. I think transparency is another wonderful example of all this. And I think it's great for to save operational costs, especially when you get into more complex structured products, CLOS's, things like that. It adds a lot of efficiency. But um I think a lot of the larger capital markets players are making tons of money on the opacity.

That's one of the reasons why a lot of the markets a lot of the traditional huge markets like derivatives and fixed income are are much much slower to electronify because the banks have benefited from sitting in the middle of the market. The markets are opaque and they make tons of money with that. So if you then take that away and say let's make that all transparent let's make everyone equal that is not good for banks. Um so they have they have all the connectivity they have the distribution they eventually they will be forced to come around just like they have with electronic trading but they will drag their feet. So that that's another I would say more less obvious friction.

One one thing I'll add is uh to say something positive on on on the moves from like the traditional players that they and and this is something that I've been surprised about in the discussion that I've had with them in the past couple of years that it's not they're just sitting idle and not doing anything about it, right? Like they all have plans and teams and very brilliant teams that are like ready to do big things. to your point, you know, it's going to take time, but it's like it's not like they're just waiting and saying, "Well, we'll put this and we we'll look at this when it's ready or when we have the regulation." They're they're they're ready like not fully ready, but they're like getting ready for it. And I think that's an important thing to take into cons consideration.

>> What about from an infrastructure perspective? Is is the infrastructure there? What are the what challenges exist still? Well, so I'll I'll I'll I'll speak obviously uh from from from my standpoint, which is really around security and and making sure that you know, one of when I was talking about the PSD uh aspect, you know, a big part of it is can this be secure right now? Like the ETF, for example, is really easy because it's not really on chain is like, you know, it's basically a product that you know, you're you're doing it the old the old fashioned way like are you willing to hold Bitcoin on your balance sheet and if you do that, what are you going to do with it, right? Like how do you secure it, etc. And I think that that's um one of the things where you need the tools and and they have to

be um obviously you know the gold standard in terms of of security. I think they have to be very close to what they're using today. Uh so you know for example like we use HSM technology which is something that is being used by traditional custodians. So when we talk to them about about doing it for Bitcoin or for ETH etc etc they understand because it's like the setup that they already have. So you're talking the same language kind of um in a way. Um so on the security aspect I think that's what we're trying to do right like build something similar to what they they've been using so that they don't you know need to relearn everything. So from my standpoint that's that's more important >> and I think I mean I think I mean to to carry on to Sebastian's point I think that ultimately banks are going to

choose you know a lot of the value chain that they're going to want to insource and control. I think that will be that'll certainly go to custody. That's something that's very comfortable for banks. They have the brand, the reputation, the balance sheet. So, that would suggest that they're going to want to um they're going to want to use custody technology. So, that would be like a ledger enterprise or a Fireblocks versus outsource that to another uh digital asset custodian today. I mean, I think they they'll have other sorts of clients, but I think that banks will want to have that and control it as they build products on top of it.

just to add uh we we we looking at it very much from a traffic perspective um but there's also a defi angle here which is the defi um platforms out there they'll also have to start embracing some of the um the standards that tradfi have set for themselves uh those rules and regulations have been there for a reason um and personally for me one of the things I'm deeply proud about kamino is not just today I'm not saying this just to show the platform but even back in the day in like 2 years ago just after FTX whenever there used to be a liquidation event in the market the CEO used to come out and talk about how

their the liquidation engines have performed very publicly most other platforms D5 platforms back then they would be shilling um the the yields that they are able to produce but the moment there is a liquidation event they would shut up whereas this this organization would shout out about how riskmanaged they have been. And even today this across chains, across lending platforms, we are the only ones that offer a realtime risk dashboard looking at risk metrics across 12 different dimensions.

You can check you can go to risk.como. Finance and see it live. The reason I say that is not because uh Kamino does it alone, but that's the culture we have to have in the on the D5 side. As Vic said, trady do not have to compete with NFT holders and NFD agents. There there is a there is a space for that. AB absolutely but there's got to be a space where people can transact on chain safely and feel comfortable doing that. And that's a journey. It's a cultural shift. Um it's a it's a of course as a from a legal and compliance perspective there's quite a lot a lot needs to be clarified and there's got to be a lot of work done there. But also from a DeFi standpoint, we've got to embrace some of

those aspects. >> Well, and and I think you know once you get through the regulatory clarity, I mean, I think that what will happen with DeFi is it will become the back office for a lot of what's what's happening because there there's a huge number of activities that banks do that you do not need an office tower of people to manage. There's there's many use cases that could be handled programmatically on chain, transparency, cheaply, instantly. And I think that will migrate there. We already see it in kind of the borrow lend marketplaces where like if you want to borrow against your Bitcoin it's, you know, if you go to a centralized party, it's 10% plus on a it's 5 6%. So it's way more capital efficient. Like you couldn't even get wholesale funding against Bitcoin, you

know, less than 7 8%. I think that'll probably come down over time. >> It's free on Camino cheap shell. >> That's what I'm saying. So, I I think that we'll see more relationships like Coinbase, Morpho, I think Robin Hood just announced something like that. But I think for the average user, that's how they'll touch DeFi. It'll kind of disappear into the background. There'll always be the more crypto forward retail people that are looking for the the newest things. It's going to go to the the web interface. But the average person, like I always think about my mom or dad, who are are they going to go to like the Camino dashboard? Probably not.

But they would if JP Morgan had a commamino market on through their Chase app, they probably would use it and they wouldn't even know it. Right. >> Victor, how are you thinking about infrastructure? >> Whether the infrastructure is ready again another, you know, just to make it a bit more fun. Uh, as long as we have 90 year olds, 80 year olds and 10 years old. Um, the infrastructure would never be like harmonized or standardized because a 90 80 year old will never use a MetaMask or a Phantom wallet, right? They will they like the trust factor. They like uh the relationship manager, financial advisor. Now there's a life story in where a um um a a a bank owned by a family. It's a private bank um very successful. They've decided to take this path of staying class. So no digital

just you know um Napa Valley you know um Basat um events and you know really like for the VVIPs. Now all of a sudden um they start asking their clients, hey um your son and daughter they um why are they not showing up recently and this is to the point to say that infrastructure is not ready yet but it would change. Uh and the answer was um they say you suck right and they're like um beg your pardon. Um they say that you suck because first you don't have an app.

Number two, you don't have any crypto solutions and uh they just um hate uh going to these uh wine parties and uh it's a waste of time. They are doing everything with their app and the fact that you don't have one for them is a waste of time. You're too expensive. uh and this ties with this uh one of the most uh most recent powerful uh research um analysis that has been conducted in where we're living in the biggest greatest generational wealth transfer that the u human history has ever seen. Now, 81% of the um recipients answered and stated that as soon as they inherit their assets from their parents, the first thing that they're going to do

is fire um their financial advisor. Why? The first wallet that they had was a Revolute or was an app-based account. Now think about you ask them and ask them to go and open up a bank account in a you know retail high street you have to wait few hours and paperwork they get shocked right so for them the risk of of of embracing the old infrastructure they would never do that you know they everything has to be instant like they need to have everything in one place again ADHD is is a is is not even a disease these days it's is it's like oxygen I mean It's everything has to be

atomic. So the infrastructure with these users uh we take for granted all of this digital atomic set on transparency etc etc. I think all of the custodians they will adapt to it. Heck, and we can this is a good segue for the last question is and I'm sure Ledger would love it is like at some point everything will be on a self-custodial base, right? Um and people may not know but that's that's where I think the new generation will kick in and every company has to have a a strategy for the future now for the 90 87 year old but also for the what's come what's next to come. I think I mean what's interesting is that it's a cultural shift that's very wide that goes beyond finance. I mean, finance obviously that what we're talking about

it's a great example and your Revolute example is on point like all of my kids have Revolute accounts and they will never go to my bank and I would and and I'm and if I could I would do the same because when I when I use Revolute for me it's so much better than any other app that I've seen and it has crypto like built in right like you buy Bitcoin on Revolute with like you know one swipe but the cultural shift I think goes beyond in the sense that it's the same kind of thing that you used to you know give your health to like your doctor and like you wouldn't see your blood results, etc., etc. It's like, oh, he's taking care of it for me and your financial advisor is taking care of your money and think we're at a and and and I

will get the news from like CBS because I trust it, etc. And then that trust is like gone because you're realizing that you can learn on your own and you can know on your own. And so you want to know about your health, you want to like know about your finance, you want to know about your news on your own. And I think it's that's the cultural shift that's happening. That's really big. >> One more funny anecdote. It's slightly off topic, but just on the whole point that we're making with Revolute, my 18-year-old when when she has cash, she's like, I think that that feels like fake money. She doesn't believe it's real money until it's on an app. >> That's that's she's like, it's easy to spend because it feels fake. It's like, well, it is a little bit >> bill. I agree.

>> It is a little bit. Yeah, >> it is a good segue into our our last question, though. So, you know, we covered the use cases. We covered why it's taking so long. What will it look like when Wall Street is onboarded on chain? Um, we'll we'll say I guess what are you most excited about in in the RWA space? Maybe we can start with you Arun. >> For me, I think it'll be aligned with what the new generation is all about instant gratification, right? So, from T plus2, we'll have T in terms of settlement. So, uh it's not going to be we send money somewhere and they have to wait a couple of couple of days. we we do a transaction and for it to settle we wait some time. So that's kind of and it it it unlocks a lot of capital

efficiencies, right? So that's I think that's a that's the kind of the gist of where we're heading with uh heading uh but I I would like to be in a place where I can sell a part of my grove mangrove in in India and buy a part of Buckingham Palace here right so that's the level of tokenization that we should be aiming for irrespective of the liquidity profile of assets irrespective of where the assets are what the what the form of the asset is um but um but on a on a more grounded basis says, "I would like to get to hundred billion dollars of TV alone commamino."

>> Victor, what do you think? Where are we headed? >> Um, everything will be money, everything will be cash, everything will become a payment method. So, in concrete, RWA is real assets. Sometime I call it the real worst asset because it's so hard to tokenize. But, um, uh, that's already happening. Uh, next in line would be NBA. Uh, stands for non-bankable assets. So um music royalties uh art um sports everything that is non-bankable uh in where everything will be represented as a as a payment method. So everything will be money and this will be like internet you know capital markets internet money and uh it's it's a pure democratization to to to the max.

It's atomic, transparent, and um it will be hopefully uh more trustworthy and um uh it will grow the entire pie size. Great innovation. >> Gentlemen, thank you so much for attending. I'm sorry to tell you that the >> I I agree with that with all of that. I would just say one of the other themes that I think is really interesting is the prospect for um AI and the agentic economy. It's one of the focus areas for for our next fund. But if you think about once you have RWAS, everything's instantly settlement, you have stable coins, I I think there's a huge um amount of latitude on once all that infrastructure is in place. I think that there will be agents that will act on people's behalfs that will replace at

least part of what financial adviserss do today. I don't think humans will come out of financial advice given the emotional piece to it. But there's a lot that could be automated, riskmanaged probably much more optimally than is is done today. and having all of the assets on chain in a programmatic way is the first step to doing that. I still think that's that's a few years off. Um, but I think that's something that will certainly emerge over the next 3 four years given the rate of change that we're seeing across crypto and AI. And that that's something that I'm actually super excited about. I I'll totally second you on that and the fact that actually there's this very strong link between the two because right now, you know, if I want to give an agent access to my bank account, it would be next to

impossible. But if I want to give them access to a wallet, whether I put a little bit of crypto and then have it have the agent do things with it, it can, right? And people have done experiments with it like have agents made money for them, etc. So that is a use case that exists today, right? That probably will get democratized, etc. But I I fully agree with you on that. Uh I I like this idea of thinking that because I think it's part of the ethos of uh the industry at the beginning is that it's going to be fully global that there's going to be like interoperability across like the different chains and access to like the different markets which you know is really important as well because you know we we've talked a lot when people used to ask you know what is the

use case well the use case is that there's two billion people that you know are unbanked in the world right so giving access to all of that and I mean I like your idea of like the grove in India is also like a way to like you know bring in a lot of people that currently like don't have access and maybe to like level the playing field a little bit like to give them access to things that they don't have access to today. Um and then you know I love this idea of keeping so we're talking about transparency but also privacy uh because those things are human rights. They're really really important. Um and uh and and I think that in this new world like people people will have be able to have both right like transparency and like where the transactions are but if you

want to keep you know remain private you'll be able to like keep that privacy I think that's really important as well. >> So Sebastian I think it was you that mentioned the institutions are there. They're ready. They're thinking about this. We've talked about the infrastructure. Victor you said the infrastructure is there. I mean what's the next catalyst for driving Wall Street adoption? Victor, did you do you have >> engineers >> regulations? >> Yeah, regulations. >> Regulation. >> More use cases scale. No PC's but real real native. Uh yesterday somebody mentioned like no more replica, you know, like has to be native onchain uh use cases that have really proven to be um cheaper, better, faster without

twisting the story. It has to be just so self-evident just like Apple Pay. Yeah. >> And I think like corporate adoption is an important thing as well. I think that you know when we talk about the genius act and we talked about stables uh what we should be seeing is uh people that are not in crypto space today going into it. So I'm thinking always of Amazon because if you know clearly saving two three billion dollars in credit card fees by issuing like an Amazon coin and then giving you an incentive to use it instead of using dollars I think is huge and that I think will also like spearhead and and then maybe like them having some of the treasury in bitcoin right like we at ledger we have a big part of our treasury in in bitcoin and I think that more and more corporates will

do that as well and I think that they're the clients of like the bigger banks if they start moving towards crypto they will also force the overall ecosystem to like adopt I think that that could be something that would move the needle in some ways. >> We only have a couple minutes left. I I want to give everyone an opportunity to answer this last question. So, we'll say 5 years out. What are you most excited about when it comes to Wall Street on chain? Are you ready, Randy? Do you want to start? We'll go down. >> Five years out. Um well like I said I think there'll be a lot more going on with um with AI but I mean I I think that from a from the perspective of the capital markets infrastructure like I said I think it's going to take 10 to 15

years to really re rewire most asset classes and have it actually have the scale and liquidity that that we see today. Um so 5 years from now I think we'll be partially along that way. I mean you see most of the studies that are out today project I think it's 15 to 20 trillion of assets on chain by around 2030. I mean that's probably correct plus or minus 10 trillion. Again if you think about that in the scale of all assets which is hundreds of trillions of dollars there will still be a lot more to go but I think that even with that amount on chain there's a lot of these use cases that we're talking about will be able to come to life. Um but you know obviously there there will be more more to come in terms of the the liquidity

perspective of it. >> What I'm excited about is for the industry to grow up uh as a whole and and and that I hope that you know we put in the rearview mirror a lot of the negative things that have happened in the past and I think a lot of it goes to having very strong foundations security being obviously one of the key ones. So what I hope to see in five years is obviously all the inflows etc etc but like in a space where we're not talking about scandals and this and that or you know deeps etc but like well this is here to stay. I think that that's really important >> that those inefficiencies are where where money is made but uh from my from my perspective I want to be in a place where we don't talk about blockchains >> protocols we don't talk about TCP IP

when we use our internet any anymore. So we've got to get to that place as soon as possible and I've seen technologies particularly payment technologies in India scale massively. So I was in a in a matter of 5 years I went from paying in cash and a taxi driver turning around and said no I don't accept cash that is not too far away if you use stable coin as rails and there's so much that could that could exponentially drive the growth for us. I think that's what uh be awesome >> save best for last. Um I'm sure a lot of uh we see a lot of young and not uh less young audience. So a lot of you have missed the u internet uh the do uh bubble or opportunity. A lot of you also have missed the um COVID RNA uh train

probably. Um what excites me the most is the blockchain. Uh and AI look everybody talks AI. I don't know how many really understand but blockchain is real. Uh it's more immediate. Um you can do good make money. Um so socially commercially it's it's um it's an opportunity for you to stay in whatever you do uh representing here finance but it's applicable everywhere. So um uh my asset class 50% from um for this to be democratized by retail but also by the um by the digital natives. So that's what excites me the most.

>> Great. Thank you all so much. Thank you for joining us. Sorry to the engineers. >> Thank you. I [Music] [Music] Okay, everyone. That was a great conversation. Just a reminder for everyone that came in to put on your your headphones.

This is the last uh session of today and of the digital asset summit and we're finishing with a very interesting one inside the Goldman Sachs digital asset playbook. So um help me welcome to the stage Michael Lipolo from Blockworks and Matthew McDormouth from um Goldman Sachs. [Music] No one saw there was >> Matthew. Uh welcome. Welcome. Thank you

so much for joining us today. >> Thank you very much for having me. >> Yeah. uh really excited here to uh to close things out with you and uh maybe we've got a lot of ground to cover in only about 20 minutes. So before we get into it though, could you just give a really quick 30 second introduction to yourself and the work that you do at Goldman? >> Yeah, sure. So I've been at Goldman now, this is my 20th year, believe it or not. You wouldn't have thought that. Yeah, exactly. Um and I've been running the digital asset business for the last kind of five and a half years, which as you can imagine has had a lot of highs and lows, but feel like we're in one of the highs at the moment, which is great.

going to say very few gray hairs for 20 years and uh five years in digital assets you're doing well. >> It's not died. I hate this word as well. Yeah. >> Um okay. Can we just start out you know I want to end with where you see this market going and sort of the state of institutionalization etc. But could you actually just maybe use as a jumping off point what's going on uh on the Goldman front these days? I know um there's a platform on the uh you know tokenization front that I want to talk to you about but just give us the the high level state of the union. Yeah. And and some of you may have kind of heard this before, but I mean we kind of really have digital assets dissected into kind of four core areas. One is the crypto part of the business. So we try to be as

active as we can in every product um that we're able to trade. Um and obviously with the movement in the US kind of legal and regulatory kind of space, you know, hopefully that's going to broaden, but we're kind of all cash settled products and as we see the market become more kind of institutionalized, there's just more demand for kind of different products. So you got the kind of crypto trading which is a global endeavor. Big focus on data and um content as well in that part of the business. We also have um the tokenization kind of part of the business. you know, obviously another kind of topic, dour. Um, so they're a big focus on kind of different tokenization initiatives. We developed, as I think many of you know, our own digital asset platform, which we're

still very kind of focused on divesting that kind of next year, middle of next year is still the plan. And then there's also kind of the use of distributed ledger technology for kind of collateral mobility. And as we start to see with kind of more use cases for kind of stable coins and tokenized money market funds and other things and 24/7 markets, collateral mobility is just going to become ever more kind of key. So that's kind of that part of the business. Then there's kind of the classic banking part of the business which really kind of manifests itself in two ways. one we've made a number of investments strategic investments which again is a little bit of a microcosm of the market because you've seen a lot of kind of M&A activity even amongst our portfolio and you know kind of naturally kind of folks

have aspirations to go public some have announced that publicly and then we work very closely with our kind of banking team um who you know the market is just kind of night and day over the last 12 months in terms of you know kind of traditional M&A and capital market activity so we're very involved there just given our presence in the ecosystem over the last kind of five plus years. And then finally digital money uh big focus um kind of many threads to that but stable coins obviously again big focus as we all know um and also we've invested in a company called finality so also looking you know quite closely to kind of central bank digital money too.

Um can we take that maybe in reverse order and ask about you know the money side of things and you know we had uh Nigel Farage come here today to talk about uh maybe some opposition uh to central bank digital currency and digital IDs and I'm I'm just curious maybe on you know in the UK market specifically you know do you see something like central bank digital currency ticking off versus stable coins do you see them being complimentary you know how do you view that >> yeah no look it's a good question um I would say a lot depends how you define and central bank digital currencies. And I think Nigel's probably, you know, kind of thinking perhaps more along the lines of the retail central bank digital currency, not wanting to put kind of words into his mouth. I guess where we're kind of more focused is on a

wholesale solution. And I think Finality is, you know, is is really focused on that. They're already live with the Bank of England, so it's something that, you know, is there. And I think given where they sit, when you think about kind of money, they're the M0 layer, so they're that central bank settlement layer. stable coins will be just very complimentary. They're kind of M1. Um, and so, you know, for us, I think the two can coexist. Stable coins obviously probably more accelerated, are going to have more market presence, but I do think you get ubiquity, scale, and a slightly different risk profile with central bank money.

>> And can you just uh just articulate the difference between a wholesale versus a retail approach to CBDC's? >> Yeah, well, retail by definition is something that's designed for retail. Um and I guess you know the theory there is that you can have kind of great oversight in terms of how they spend what they spend it on etc etc. When we think about kind of a wholesale solution that's more for kind of capital markets activity and there the structural design is one where actually you deposit cash at the central bank and then you tokenize that. >> Got it. Um, okay. Let's talk a little bit about M&A. And this is actually something that we talked about the merging of the equity market and crypto markets to some degree, especially in the United States at the moment. Um, and

a little bit about uh, you know, the IPO window, but we didn't talk a whole bunch about private M&A and kind of consolidation in general. So, I'm just curious, you know, when you look out into the market, maybe putting your more traditional banker hat on here, you know, what what are you seeing out there? >> I mean, I mean, just that, right? I mean, I think there's you've seen a a lot of companies kind of grow over the last four or five years, probably more lately with very little access to liquidity. Um, and as the market continues to grow, there's still kind of naturally only space for so many companies. And so, you starting to see that a little bit in the exchange space, but kind of across the ecosystem. Market data vents is another good example. A company we'd invested in, Coin Metrics got recently kind of acquired. And so I

do think you know even when we look at the digital asset treasuries obviously something you know the number that's spiked publicly this year has been pretty astonishing and so you know as you start to think on the forward it wouldn't surprise me if we see some consolidation there as well. So I just think it's a natural evolution of the market as it you know becomes a bit more kind of um dare I say institutionalized and you probably just have you know kind of the merging synergies in costs and things like that. Um so so that's yeah something that we're definitely seeing. >> Yeah. Um there's obviously DATs uh you know is a major sector there. any other sectors in particular? And you know just one observation of mine just watching the market over the years is that it seems like there tends to be the

sequence of a bubble in funding um in various categories like um you know custodians and kind of prime brokerage was one over the years infrastructure more on the crypto side of things and it takes a little while for that to play out but consolidation happens after when the money kind of dries up because returns returns don't materialize and so I'm just I'm curious are there any sectors outside of DATs um you know that feel particularly ripe here or is it just kind of across the board? >> Well, I think a really good example is custodians actually because you think there's a lot of digital asset custodians. We've got two in our portfolio. Um, fantastic companies, but there you've also seen the emergence of City I think who spoke earlier this week. Um, BMY I'm sure spoke as well.

And so, you're starting to see a lot of the traditional players also enter the field with large balance sheets, probably more risk appetite and tolerance. And so, naturally, you think that there will be consolidation there. Um I don't necessarily think you need a spark, you know, of someone of a lack of liquidity. I think actually what we've seen or what I've certainly seen this year is, you know, companies, you know, kind of well managed, but still the revenue pie kind of growing slower in certain sectors and therefore just makes sense to consolidate, streamline the costs and have a stronger business. >> Yeah. And uh you know the last uh or the you know first area that you mentioned is the uh tokenization platform. And you know I actually uh maybe would start with the question of do you think that

for the most part you know Goldman are you building your own technology here or are you leveraging crypto uh crypto providers and I saw an article come across uh the newswire either today or yesterday that you know Black Rockck has used securityize as a partner but now is going to be developing their own technology in house and I'm curious because I think a lot of um you know kind of infrastructure plays in crypto were kind of counting on uh you know the holders of assets and providers of institutional liquidity to come in and they can act as a partner and I'm just I'm curious to speak to someone kind of sitting on the other side of that equation. Think are you going to be using crypto solutions or potentially building your own?

>> Yeah, look I mean you know we've been very vocal about this. I mean we've been working very closely with digital assets. Um you know we're very excited to see you know kind of the can network and see the momentum that's kind of been driven there. So, you know, we've been users of their software and that's helped us kind of develop our own digital asset platform. And, you know, as we look to see how the regs evolve and how we see, you know, kind of our f future journey that excites us. This also plays into another theme when you think about, you know, we've talked a lot about kind of private networks. This ability to actually kind of be active on a public blockchain, albeit where you actually have privacy at the core, I think for us is, you know, naturally a key focus. Yeah.

>> So, so I think you know that's kind of been our modus operande. >> Got it. And uh I'm sure you know we heard from some folks from Canton. Uh and shout out thank you for sponsoring the conference as well Canton. Uh but I would love could you just for folks who might not have heard some of those chats can you just give a quick overview of what that platform is and why it appeals to Goldman. >> Well there's kind of two two components. So I mean we so when we kind of developed the digital asset platform kind of way back it conceived in 2021 early and then we actually launched it in 2022. You know, one of the things at the time we were very focused on was we wanted to develop a kind of like kind of layer 2 platform whereby you had the

flexibility to actually settle on different underlying networks because at that point in time wasn't clear personally whether we would be able to use public blockchains or whether it would have to be kind of a private network which is kind of where we've operated thus far just given the regulations. But what we've seen with digital assets that we've worked very closely as a partner is them obviously kind of developing the count network and that is a public mainet and you know there's the kind of the whole tokconomics play. they've got the count on coin and we really kind of like you know how that's evolving and so for us naturally as we think about kind of that ability to be active on a public chain once the regulations allow us to do so you know for me that's where we want to be active and the reason we are

obviously and you know I've talked about this as well before one of the reasons we want to divest the platform naturally is I think having platforms on balance sheet is very hard to scale it's very hard to get that pro that broad kind of institutional adoption but whereas if you create something that's more market neutral with key market players who we're working with. I think that gives you the ability to really scale, accelerate adoption and be interoperable with others who develop on the network as well. And I think that's a key point. Um, so that's kind of the focus for us. And coming back to another point you made, you know, one of the things that excites us about the platform is, you know, we have from primary right through to post trade. So you have the full life cycle of an asset and I think when you

start to layer in others doing the same, that's very powerful. So you have issuance right through to kind of you know trading distribution and then post trade >> and can you talk to me about the importance last question on this uh the importance of privacy in the network here I have a little bit of a follow on but I'm just you know why is that so important? >> I think the ability to be able to transact and not have the whole network see who you're trading with I think naturally is how we kind of transact today and that's something that I think is you know kind of a core ingredient across the financial market. It's super interesting because privacy is one of these topics that has always been maybe used a little bit against crypto uh in a way because it's like why do you need

privacy you know if you're not doing anything wrong uh but it's very interesting to see blocks has a couple of different conferences I was this is our suits conference and we have a t-shirts conference and the t-shirts are the blue-haired developers in Brooklyn and it's interesting to see this uh converging because if you were to talk to that group of people privacy was maybe an original sin that we didn't get right uh in crypto and so to Here you also be converging on that same currencies,

um, equities, but there's also almost a barbell of there's also been a push into private credit, uh, where it seems like it's kind of the opposite end of the spectrum and liquid, uh, higher yielding stuff. My sense is there are some issues of people deciding to hold stable coins perhaps than placing cash on deposit.

You know, this is more a philosophical discussion rather than anything else. But then how do you mediate credit to the market? You know, one of the ways you'll do that is probably through investing in tokens. So that will be fund tokens and then that gets kind of either an infrastructure fund that could be a private credit fund could be a mortgage fund. So you can see a way where there's also a different way that the market you know kind of receives credit rather than just through banks. And that's possibly kind of something that will happen you know a bit quicker in the US and elsewhere. And then maybe a slightly spicy one to end on here, but you know there's been uh the Genius Act which has passed in the United States and one one focus of that has been the ability to pass interest through to uh

to holders of uh USDC etc. And uh there's been a little bit of resistance from uh the incumbents which are the banks over there. And I'm just curious, you know, from your perspective, I know Goldman isn't a commercial bank, but are stable coins and innovative technology that should strengthen incumbents or is it disruptive or a mix of both? >> I think a bit of both. >> Yeah. Okay, that's easy. Not that spicy. >> Okay. Well, uh this has been a ton of fun. If folks want to find out more about the work that you're doing at Goldman or follow you or or just get in touch in general, what's the best way to do that? probably LinkedIn in fairness, but I know a few faces here, but yes.

>> Excellent. All right, faces are LinkedIn. Uh, this has been a ton of fun, Matthew. Thank you so much for doing this. >> Very much indeed. Thank you. Thanks everyone. >> Thanks everyone. >> Oh, everyone, uh, please leave your headsets where they are. Some of you have been naughty and taking them out of the room, so please just leave them. Take care. Heat. Heat. [Music] [Music] All right, everyone. Uh, I am coming

here live from D London. I'm joined by Michael Bentley of Boiler Fame. Michael, welcome. >> Yeah, thank you for having me. >> Good strong name. >> Good. You mean like the car? No, Michael. Oh, Michael. I think Michael Bentley like uh Yeah, a lot of people think maybe I'm related to the car company. >> Yeah, >> I'm not. So, yeah, good strong idea. Thank you for clearing that up. That is what the users needed. The >> you come here for the hard-hitting content. Uh speaking of hard-hitting content, so we are coming to you live from uh the Digital Asset Summit in London. So my first question to you, Michael, is this the best crypto conference you've ever been to or just the best conference you've ever been to?

>> I I mean it's the best it's the just the best thing I could ever ever wish to do in my life. Yeah, I'm having a great time. Uh I'm exhausted. My voice is very grally because I'm I've been uh I've been doing Yeah. a lot of com conversing with the potential users of Oiler, potential builders uh on podcasts and panels and it no it's just been full on but I've had an amazing time. >> I'm glad to hear thank you for enduring two dad jokes here in rapid succession to start coming. >> Just be curious uh out of curiosity any takeaways like I always learned so much uh talking to people at these sorts of events like any takeaways from the conference or anything like that? Uh yeah, I was just saying to your colleague before I came on when I when I f the very first D conference I came to

was um a good few years ago now and for us it just it didn't feel relevant like I'm I'm being being brutally honest, you know, just there was just no connection really between uh people building in DeFi and uh and all the institutions and the fintexs and the banks and everything and that's just completely the opposite now. Yeah. >> I mean it feels so relevant to be here. We're just being getting it's an onslaught, you know, and it's in a good way, right? It's a really nice problem to have. So yeah, it's just a sign of the the times really how think how quickly things have changed. Um it's just a fantastic conference for us. Yeah, >> that's amazing. I'm super glad to hear that. Um >> okay, so uh you know I would love to actually start. I'm a big fan of not bearing the lead here. I'm just going to

jump right into it. I understand that you have an exciting announcement to make here. So >> talk to us. What is >> Yeah. >> Get a little drum roll here. >> Let's go for it. Yeah. Fantastic. Thank you. Yeah. So we're um we're launching a new product. Uh it's it's uh it's Oiler USD uh a synthe synthetic dollar. >> Yeah. >> Uh as you know Oiler is today not just a lending protocol, it's also uh a DEX. So we have with with this new new product coming soon, we will have the holy trinity. Uh we have the DEX, the the credit markets uh and the and the the synthetic asset that people can borrow.

>> Um yeah, it's it's still uh still a few weeks out. So uh so yeah, you can't use it right away, but um it's going to be really a really important part of Oiler going forward. Uh I think we're in a really great place to to launch something like this. A lot of projects are obviously going down the stable coin route at the moment and they all need to integrate with credit markets. They all need to integrate with dexes and uh that's one of the main reasons Oiler has grown to 4 billion in deposits is because we have so much market fit for those kind of uh assets. But um ultimately all of them have to pay for all the extra infrastructure that they're using, right? They have to pay LPs and and the pro protocol fees for other protocols and oil is uniquely placed to launch products like this

because we don't we don't it's all internal. So there's there's no there's no value leakage outside of the system. So I think this is going to be a really great >> uh product for for uh bringing more value to to oil token holders. >> That's fascinating and I I'm super interested in this idea. I have a million follow-up questions for you, but for listeners, you know, this feels like a really interesting continuation on of there was a word there's some kind of buzzword the you know, it might have been the curve wars or something I can't remember back in the day, but at one point curve uh uh formerly maker now sky and a kind of woke up and looked at each other and said actually all kind of doing similar stuff here and the infrastructure that's required uh to power our protocols on the lending side

or the stable coin side >> pretty pretty similar. So maybe we should launch into each other's spaces and that's how you got go from a y uh it didn't really ever take off with CRVUSD but they also launched a stable coin and >> Maker now Sky is kind of an interesting mix of lending they've got uh you know Spark and their stars and they're obviously one of the OG decentralized stable coins. >> Uh talk to us about the the synergies that you see here and then I would love to build towards some of the cool new stuff that you can do with the stable coin that might not have been possible before product features. Yeah, I mean there's there's a ton of synergies here.

I mean, one of the unique features of Ola USD is that you'll be able to borrow uh against a variety of different collateral uh but at fixed rates. Uh so there'll be a unique uh borrow rate per asset which is really important because uh with a lot of other stable coins where there's a sing singular rate at which you borrow uh that leaves the the synthetic asset vulnerable to uh being picked off basically by borrowers that recognize that the it's it's too cheap to borrow than it should be. And so they they borrow very very aggressively which can lead to instability in the peg mechanism. >> So so this will be uh yeah the interest rates here will be uh a unique composition of a kind of base rate which can be used as a monetary policy tool much like the Fed changes the base rate

of the uh for the for the dollar. Um but uh but then also a risk premium attached to to each unique cart or type. So, we'll have uh we're working on partnership with somebody uh I can't I can't talk about just yet, I'm afraid, but um there'll be hopefully uh both uh crypto native collateral, so things like Bitcoin and ETH. Uh there'll be real world assets. You'll be able to use uh Pendle PT tokens to borrow uh to borrow this synthetic. So, um yeah, on the borrowing side, very very exciting. On the on the sort of lending holding side, uh who's who's going to uh earn the yield from this asset? So uh we are able to use some of the existing tech we have

to essentially create these markets across a multitude of different networks. So we're on 10 plus uh chains today. So you'll be able to borrow this asset across all these chains, but the yield will all flow back to a central yield hub uh on Ethereum uh which is quite unique uh that we have this one big massive honeypot for for yield basically for the stable coin as well. >> Um and you know I'm could you talk for listeners as well? I mean this was uh it took a couple conversations with shout out to Adrian from steakhouse and uh actually Sam from from Frack who pointed out to me in the early days the similarities actually originally between the infrastructure and the competencies required of running an LST and a stable coin and then eventually a lending market right so there's this margining type infrastructure needing to manage

redemptions sort of core competencies and same similar infrastructure build like talk a little bit about that and then are you exploring with the stable co I don't know if you can talk about this yet but I remember with Curve, uh, they were exploring kind of this idea of so soft liquidations where instead of liquidating everything after one tick, you know, they kind of sold your collateral off into their stable coin and then they would actually sell it back >> with a little bit less due to fees. Uh, but it's better experience than some of these harder liquidations that we see. >> I love that mechanism. Yeah, it's fantastic. Oiler, the the the the synthetic here will work um much like the other assets on Oiler. The oiler itself, the underlying credit markets were built with this with this uh maximally flexible uh sort of design

principle in mind. And actually the synthetic that we're building is kind of an extension of those the the abstract modules that we've built for for the the core credit markets. And so this this stable com will come equipped with a a liquidation mechanism that we have in oiler today for for ordinary uh you know over collateralized loans. The way that our liquidation mechanism work it uh is effectively when a user becomes unhealthy uh as they become more and more unhealthy the liquidation bonus that they pay to the liquidators rises slowly over time. And what this means is there kind of a Dutch auction at play for the liquidation bonus. And to give you an example of why that's so important and why it's so so um so effective as a as a as a mechanism we had uh during last

Friday when there's a little bit of market turmoil uh we had >> was there on Friday >> you remember that yeah it was old you know ancient history now uh there was um yeah we had a one large user on oiler that got liquidated unfortunate for them but fortunate for them was that they used oiler and not other platforms where liquidation bonuses are often 5% plus sometimes 10% on oiler they get liquidated for with the bonus less than half half a percent. And that's because that was all that was needed during that those market conditions to make the liquidator profitable. >> Yeah. >> Uh and so yeah, new synthetic will come equipped with the same that same high quality I I think arguably the best liquidation system and most efficient liquidation system in uh in D5 today.

>> That's fascinating. Um I'm excited to see it live and in production. Uh one question that I have for you is do you have a plan for distribution here? uh you I know go uh for example has maybe struggled to take on the scale that although uh now shout out to blockark's dashboards actually we have a great dashboard of go and the income there and it's actually generating a pretty significant amount of income now for for a but they have struggled maybe with the amount of distribution that they would have liked and it's taking a little bit longer how do you plan to do that from the lending platform the dex yeah great question I mean the dex is a really crucial part of this >> any new uh any new synthetic uh you launch the a major major challenge challenge is where does the liquidity

come from? How do you get how can people exchange it? They need to often you know the main use case is you borrow it and then almost immediately sell it, right? So you need to be able to handle that that sell pressure in order to maintain the peg and in order to make the the product useful. >> Oil is uniquely placed because of oiler swap uh which is another product we launched earlier this year which is a swap protocol that's built on top of the underlying credit markets as well. So you can see that how we sort of stack things up here. We have really core solid infrastructure with the credit and then we have the decks and we have synthetics on top. So what what what Oiler Swap does uniquely is it provides exceptionally deep liquidity for uh stable coins and very very efficient um

efficient liquidity mechanism. So uh the synthetic will benefit from that. We'll have very very deep liquidity for the synthetic on day one. It won't be something where we need to go out and uh try to bootstrap liquidity by incentivizing LPs or you know recruiting professional market makers. There's a huge amount of value leakage there which then restricts the how big the asset can grow. Um if you have a synthetic there's only a few million dollars worth of uh liquidity on on these DEX markets. Well then there's not too much you can do with it. People can't borrow it too much because they just can't exit it basically. So yeah, key part of distribution is the swap.

>> Fascinating. Well, I I'm very excited for this and congratulations. >> Yeah, thanks. We we are too. >> Yeah. Um one one actually last question for you here. I was listening to the panel that you did here and there was some talk about um RWAS and maybe bridging the world of RWAs and how you'd manage something like liquidations. Is you know, Oiler has a very modular design and you've kind of kicked some of the design uh risk up to your your curators. Um, >> do you expect, you know, RWA design vaults with their own specialized set of curators to be a bigger part of the business going forward into the future or what do you think?

>> 100%. Yeah, I mean it's um it's it's growing quite quickly. Uh, Oiler was um Oiler was the first uh first lending protocol to uh house uh Black Rockck's uh tokenized version of Black Rockck's bidded like several months ago. Uh and we're seeing more and more real world assets coming on chain. I think there's going to be a lot of private credit that comes on chain. The these assets pose unique challenges when it comes to liquidations, I think, because you they often don't have dex liquidity. And one of the principal ways that people uh when when assets need to be unwound, positions need to be unwound, especially in liquidations is that you need to be able to sell them back for for dollars or for whatever the debt asset is that needs to be repaid. And um yeah, this is another area where Oiler Swap can

actually help. Um we have this uh feature called just in time liquidity uh on oiler swap >> where um if you were the LP uh and you let's say you had some small amount of margin uh in a in a particular real world asset if I wanted to exit a real world asset and there's no liquidity on unis swap what can I do I can actually transfer and swap in the uh the real world asset to yourself you would then add it to your existing collateral and then the the aggregate of that the total collateral would then be used just in time to take out a loan of dollars, let's say, or USDC, USDT, and that that would be sent out to me.

>> And so, this operates very much like an instant redemption mechanism. Um, the difference is obviously from my perspective, I just swapped a real world asset for for dollars, which is great for me. >> For you, well, you just sent a a chunky uh a chunky swap fee because you you know, your margin may have been only a million dollars, but you might have just facilitated a swap of 20 million. Yeah. >> So, you can get this very, very chunky swap fee. The challenge then is for you is you're then left with an open position. You know, have lots of real world assets. >> Yeah. >> Yeah. Exactly. So, um this is something that I think this is where professional market makers and OTC desks and others come in. If this was done, you know, uh Friday night, you know, when all the desks are closed and the whatever, the

the the market maker then has to hold that position maybe over the weekend and they can then slowly unwind it when the market's open the following week. Um so yeah for for from for their from from their point of view they're doing it uh they're perhaps hired by the asset issuers themselves. We see a lot of demand for that from asset issuers. Maybe they're doing it p for purely profitable reasons though like this if the swap fees are greater than the cost of borrowing or the risks that they're taking by holding this position then uh it justifies itself in its own right. So yeah >> what about um for some real world assets that have longer duration profiles uh is there more of a challenge there? or do we need to see more specialized market makers that are comfortable holding that on their books for a longer period of

time? >> Yeah, absolutely. I mean, um, one of the key ways that you, uh, you can you normally liquidate in DeFi or historically by essentially taking the uh the distress position and you immediately swap the the collateral for the debt asset and repay. Um, but that's not the only way to liquidate a position. You can also take if you hold enough margin, you can just take the collateral and the debt onto onto your own balance sheet. So, if we have a specialized uh market maker that's um that's that's eligible to hold some of these uh trickier assets, let's say, then they can they can they can take that risk, hold it, you know, choose to take it onto their own balance sheet.

Now, at what price point should they do that? Well, uh it depends on market conditions, right? They have to themselves figure out whether that's something they want to do. And again, this is where the oil liquidation mechanism is very useful because we basically have this decaying uh this this bonus um which which rises through time. And so uh if it's not profitable to do that at a 1% bonus, maybe it is at two. And so the the liquidators will just wait until 2% at that point they go "Yeah >> I'll I'll be I'll get paid 2% to hold this distressed uh position and close it out in six months." I would imagine I would imagine that funds that have the mandate that allow them to be comfortable, you know, holding that risk on their books. I think yeah, for the right type of fund, I could see that

being super interesting. >> Yeah, there there's definitely a ton of ton of ways to make additional money here. It's something that's all quite new, though, so we're going to have to it's going to be something people scale into. It's a whole new business opportunity for somebody out there, but there's Yeah. >> Yeah. I remember I did a whole season with Dan Robinson on Dex Design and you know he describes in the early days of MEV. There weren't it was just too early for there to even be this you know group of folks who would pick up free money. You literally leave $10 on the sidewalk and you'd hope that people would pick it up and you know the arbitrageers just didn't really exist yet. Um and now you know that's very very competitive space especially the sex the decks arbitrage area. And I'm sure this is just one of

those space like hey guys there's there's money here. Maybe it'll take a little while, but money doesn't get left on the sidewalk so far. >> No, it doesn't. No, it will. Yeah, somebody will step in to fill this because it could be very very lucrative. I mean, with these assets, the the margins quite small, but the scale can be absolutely enormous. There's like 80 trillion of in the wider economy and only 80 billion or something in DeFi right now. So, uh if some of those assets come on chain and you have big institutions, you know, lending, borrowing billions at a time, then uh you don't need to make an awful lot on the percentage point to to make a lot of money.

>> Yeah. Uh final maybe as we start to wind down here. Uh switching ts onto the more personal note. Yeah. I think Oiler has executed one of the most honestly impressive comebacks I have ever seen. I can't even imagine >> how stressful and I get it as a founder, right? You're all in the spotlight. So many folks, I'm sure, counted you out and you've just painstakingly built the brand and the trust and the credibility back and it's so good to see you guys winning again. But >> yeah. >> Oh, what was that like? I mean, I can kind of guess, but how did it feel?

>> I mean, it's it's it's been exhausting, right? Been kind of awful at times. Uh but um I mean, also exhilarating and uh and and rewarding. So, like a big bag of mixed emotions, I think, from us and the team. >> Um yeah, there's there's something nice being the underdog at times. Um you know, when people sort of rule you out and and count you out of things. It's it's just not possible. when I hear something like that that's like a you know rag red rag tubble like I'm just like no it is possible so um we're we're ultimately a really determined team uh we have a lot of uh we've shown a lot of resilience it's been a massive team effort and it's been a really tough one uh it's been yeah very tiring but um we are delighted to see uh to see to see

the all the progress and everything and it and it's really testament to the quality of the products because if the product wasn't good there would be zero way to do what we've achieved So, we've had this yeah big uh big baggage to carry around with us and um and in spite of that, we've still managed to grow and and you know on on a shoestring budget as well. It's uh yeah, massive shout out to my team. I'm so proud of us. Yeah. >> So impressive. I I'm curious. Did you ever think about changing the name? This is one of the things. >> Yeah. >> Why didn't you? >> Well, there was a big discussion about it. Um I think uh I think what in the end what I'll tell you what in the end what won it for us was we thought yes uh we have this baggage but Ola had a very

strong brand name before that it's very recognizable uh it's it's terribly branded because it's no one can pronounce it but because of that it's kind of uh become >> we've got stuff no one can pronounce either I remember saying I would never have anything that people can't pronounce and then for DS people are like DAS dos no one calls it the same thing so it's DS Yeah, but the um what we what we felt is we didn't want to um if you if we just rebranded then it might look like we had something to hide and I really don't feel like we we did. You know, we're building a very very challenging industry. Everybody that you've interviewed will have had uh issues a very nent technology and everything and oiler before we had some of the real top security practices. We had very very

clean audits, multiple audits, big bug bounties. we were the some of the earliest to to experiment with formal verification on this. So, we didn't feel like we had anything to hide. Uh and so we decided just no, we're going to own it. Own the story. It's part of our history now. And uh and so with that, let's just keep our our terribly branded name. >> Yeah, >> I think it's a very cool name and it is it's a mathematician. I know, right? I'm not >> Yeah. Do you know why why we're called? Actually, I can tell you very very >> outing myself as not having done all my research here. So um yeah when you if you want to earn interest the best thing you can do is compound it right you and uh how how do you earn the most interest well you you compound very frequently

the more you do that the more it compounds the faster the the yield grows. So if you compound instantaneously quickly like every you know minimalistic second uh you get to um you you end up defining uh something called e which is oiler's number >> and so oiler is the thing oiler is the thing that maximizes your compound interest. >> So it's very tenuous you have to there's about five you know you have to get a degree to >> that's a great for the five math nerds out there I'm sure they're like >> they love it. Yeah. Yeah. Exactly. So um >> uh that's awesome. Well, seriously, heartfelt congratulations. I can just imagine how much >> uh you would have worked to do that and it's showing and yeah, wish you all the success.

>> Yeah, thank you. >> All right, I think that's about all the time that we have. Uh Michael, this has been a ton of fun. If folks want to learn more about Oiler, uh find out more details about the stable coin that you're launching or just get in touch with you. What's the best way of doing that? >> Yeah, uh I would say Oiler. is our website. Uh you can find me on uh on Twitter Oiler_MAB. The last bit is my just my initials. Um yeah, we there's not much about the stable coin. This is you've you've won an exclusive here. You've talked me into it. There we go. >> So, uh there's not much about out there yet about this, but um there will be soon. So, watch this space.

>> Excellent, Michael. This was a ton of fun. Thank you. >> Great. Thank you.