🚨LIVE: ZAMA Shielded Q2 Report! Market Update, Rand Hindi, Pantera & Morpho Then Rebecca Rettig Join

Transcript

[music] [music] [music] Heat. Heat. [music] >> [music] >> 17 floor.

We'll see you around the timeline. Feels good to be back. >> I think The Rollup [music] is one of the most premier media brands in crypto and Andy and Robbie are great experts [music and singing] at everything they talk about and it's my favorite podcast. >> Adding it to my library every >> potentially multi-chain deployments. >> We are at Dev Connect day one here from [music] space. >> [music] [music] >> Heat. Heat.

[music] >> [music] >> Heat. Heat. [music] [music] >> [music] [music] >> JP Morgan, Black Rockck, DTCC, Fidelity,

the entire thing was just institutions. It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. I'm bullish. >> He said it. He finally said it. So bullish. Andy's bullish. I'm bullish. We're bullish. [music] [music] >> [music] [music]

>> Heat. Heat. [music] [music] Heat. Heat. >> [music] [music] [music]

>> Roll up [music] is headed to the top. If we're not already at the top, we're going to the top. >> Roll up is my favorite. >> People from all walks of life, all over the world, all over this industry come together for the rollup. [music] >> [music] [music] [music] >> Heat. Heat.

[music] >> [music] >> Zoom out. The institutions aren't coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. [music] >> Welcome to the next. See you on the show. Let's go. Happy Monday. Welcome to the rollup today. Fantastic show for you guys. Um, if you're a little bit worried that uh the AI market is collapsing and robots are going to take over the world, you're watching the right show because we've got a privacy day today. Today is Q2, 2026, July 27th, and today is

Shielded Day. Shielded day. We are going to bring you guys a tremendous slate of guests. We've got uh guys from all over the privacy ecosystem, and today is powered by Zama. Uh Zama is our privacy partner. uh they are helping keep essentially the entire chain, the onchain economy and the entire asset market here confidential. We're going to be talking about exactly what that means. Uh we're going to bring up a ton of tremendous guests. We've got uh Rand who's the co-founder of Zama. Kyle O'Brien is going to help co-host the show today. And we're going to be going over uh a lot of what has happened in the world of privacy and uh Zama's world in Q2. These guys have a tremendous uh

tremendous product, tremendous confidential uh privacy uh suite that they are pushing forward. Uh we've had Rand on the show several times. Uh he's told us about the partnership with T-Rex. Uh there are trillions of assets that are going to end up on chain and it's important, privacy is important to every single one of them. Uh we are also going to bring up in addition to Rand and Kyle uh guys from Pantara. Uh guys from Flowesk and Morpho, we've got Franklin from Pantara, Nico from Flowesk, and Kirk from Morpho. And then we want to hear from you guys. We want you guys to tell us all of the questions that you want answered. Uh and so we're going to bring up uh Kyle and Rand to do some Q&A at the end. Uh you guys know

Zama. I mean, we talk about them almost every show and for good reason. Uh privacy is one of the categories that uh people are paying a lot of attention to these days. Um paying a lot of attention to is another way to say that the token is pumping. Uh so it's a tremendous time to learn about Zama, get involved in the community, hear how confidentiality works and ultimately uh shield your assets. Today is Zama shielded day and uh it is July 27th uh in Q2 2026. We're going to be learning all about Zama.

We've got some tweets that we want to share with you guys to start off the show. Uh Zama has been uh pretty front and center as of late because of all the uh things with privacy going on chain. So, first off, uh and you guys heard a little bit about this, but we want to double down. Uh let's go ahead bring up our first tweets. Uh Zama confidential uh vault went live. Also, the RFQ system went live. And so, uh, trade onchain without revealing size, asset, or direction. I'm sure you guys saw Tar from Multi-Chain put out these things.

Everyone was tracking Multi-Chain. They said, "Oh, they unstake their hype. They're going to dump all their hype." Hype actually, you know, had a reaction to this. Um, and so in the followup, uh, Tushar, uh, and Multi-Chain, which is involved in the Zama ecosystem, came out. They said, "Look, this is why we need technology like Zama to help make all of these moves on chain confidential, shield these wallets so that you don't have this cohort of people that are watching these wallets and making arbitrary decisions about what these actions could mean.

Obviously, uh, everyone who's claiming what they know is about to happen is just entirely out of the loop here." And so large trades don't happen onchain. They happen in dark pools on OTC desk and over encrypted chats for a reason. And that's because using a public blockchain to swap means disclosing your strategy to the world, being frontr run and getting worse execution prices because of MEV. Anyone who tried to move size onchain has had to face this kind. So Zama introduces a solution to this and this is confidential RFQ. And so look on chain here is describing what happened with multicoin. They unstake a lot of their hype. It appears they are taking profits, right? Uh and obviously this was not the case. Multi-chain and

Two Shark came out later on and said, "Look, you know, this is part of regular uh we're not selling any of our hype here despite them making a $20 million profit on hype." And they're going to continue to stay in the ecosystem. But look, this is why it's important to have tools out here that protect privacy. They mean uh that investors don't get frontr run. Execution stays very very solid. And so this is uh this is one of the reasons why confidentiality is so important. It protects uh those large trades uh and what is ultimately happening onchain. We we you know this is the way that the world works offchain. It's important that these things are kept onchain as well. And so Zama here says that they are putting a

end to the tyranny of me by launching the first fully onchain composable and confidential RFQbased swap protocol. Here's the kicker. Every trade size and direction are confidential at all times. The Zama confidential RFQ is now live in private beta on Ethereum with a public launch planned for September and multi-chain support soon after. The goal is to provide the best trading venue with the deepest liquidity, best execution for institutional investors while keeping things shielded and confidential. So there's a clear demand for this in the market and uh this was rather you know uh quick action from Zama uh to effectively launch this privacy preserving protocol and uh meet

the demand that is present on chain. So let's keep cycling through. We've got a great show for you guys. Like I mentioned Pantara Flowesk Morpho uh just absolute Goliaths in the onchain space. Um, and so it's pretty tremendous that we're going to bring them all together for you guys here today. And we've got a great run of show that we're going to get through. All of it powered by Zama. Couple more tweets that we want to show you guys before we bring up uh our co-host for today. It's not going to be Andy. It's going to be Kyle from Zama. Let's uh let's bring up our next tweet uh to get a bit more of an understanding about how Multicoin is thinking about privacy. Again, they were uh you know, one of those primary benefactors from Zama's technology.

Let's go ahead and roll the clip here uh of what Tousar is uh is talking about with respect to privacy here. >> It's so obvious to me that RWA are coming on chain, right? You see that with project crypto, from the SEC, you see that from all the big asset issuers, all the banks. Everyone wants to modernize that infrastructure. But I think it's ridiculous to think they're going to do that and broadcast all of their activity in real time to the public. uh that doesn't make any sense. Privacy is not optional if you're a large trader. Uh it's not something you can risk uh leaking out there.

[clears throat] People are very sensitive about information leakage. So what do you need? You need privacy protocols like Zama that then enable you to have the upgrade of the system that blockchains allow but allow you to do so privately. >> Zama is [music] powering the private onchain future. Visit zama.org to learn more. >> Yeah. Um, [music] and this is going to increasingly become a primary focus, I think, with AI just continuing to take a closer and closer look at everything. I mean, let's talk about in the state of New York, how they just doxed several hundred, if not thousands of people that

are at risk, maybe just possibly liable to pay this tax. And then they just go and expose all of the addresses, all of the personal information. I saw some things that said this is already public information, but it was very very deep down a rabbit hole that you had to look. This makes it that much more accessible to just understand people's personal information where they live knowing that they have money and that makes them targets for attacks. This is increasingly the divide between what we're seeing on a political front as well as what we're seeing just time and time again when it comes to financial taxation, when it comes to the rights that we have. Privacy is a fundamental right. It takes important frontier technology to ultimately instantiate this right and protect each and every

one of us. Um there are forces and powers that be that are trying to take these rights away and there they are you know just blatantly doxing you know people in broad daylight. Uh it is important that privacy preserving technology exists and so that people can take uh their rights into their own hands and protect themselves. So on a day, you know, when when Tushar and Multicoin got their wallet tracked and everyone thought that they were going to be dumping their hype all the way to today and, you know, the the the state itself is doxing people's addresses, it's just that much more important that we have privacy preserving technology.

Uh so it's incredible to see this happening on chain. Again, you know, the casino funds, the research lab. Some of the most important technological advances are happening on chain and we're we're very great grateful that they are. Uh let's just blitz through the rest the rest of these and then we're going to bring up our co-host for today, Kyle. Um so to obviously this has been what we've been talking about. Yesterday we unstake a large slug of hype. We did not unstake to sell. This uh squashed any sort of uh FUD that was taking place from watching these wallets. Uh this is why privacy matters.

Our funds are constantly tracked, forcing regular wallet rotations. Institutions need privacy to operate. This is why we're long Zama and Zcash. This is, you know, essentially the best way to express uh bullishness on privacy. So if you see what's happening in New York, if you see what's happening on chain and you think there is a better way, technology is catching up and meeting the demand that people have for these privacy elements and you want to express bullishness on this thesis, Zama is one of the best ways to do that. Tar is saying exactly that here. Zama and Zcash um this is why they're long. they have exposure to these assets because these are the assets that are some of the best expressions of the privacy thesis and you know you guys have talked

heard us talking about this on the show several times uh you'll continue to hear us talking about this I think this is only going to accelerate in the climate that we have uh you know sort of everywhere but especially on chain guys I see you in the chat no CSM uh keep the comments and the questions coming we're going to tally all those up Any questions that you guys have, we're going to ask the Zama team uh later in the show. So, definitely uh keep those ripping with us. Um the last tweet that we have comes directly from Rand, the uh the Zama founder, who we're going to have up in a few minutes. It seems confidential staking and unstaking is a use case. Should we build it? Well, they went and they built it. These guys are

shipping. Uh very cool to see. one of the uh one of the teams that I think it's important we continue to pay attention to in the space and uh I mean the market is reflecting exactly that token is doing incredible things and uh they're also doing uh really really great things on what they're building and they're taking to market. So it's great and uh I'm extremely thankful for uh their sponsor of this show and us uh them supporting us at the rollup. Uh I think they know everything we do here is with a educational format in mind. Uh, and it's important to us that we maintain a lot of the ethos and principles that are core to this industry. So guys, we're 15 minutes into the show. We're going to bring up our

co-host of the day, Zama Shield. Today, Q2 2026, powered by Zama. We're going to bring up Kyle O'Brien from the Zama team. He's going to be uh kicking it with us and asking our great guest some questions. Let's go ahead and bring him up on the show. And uh yes, absolutely. Here he is, Kyle. There we go. Let's bring him up. >> Amazing. Thanks a lot, Robbie. Appreciate you hosting us today. Listen, welcome to Shielded, Zama's quarterly institutional grade report covering onchain, confidential onchain finance.

As Robbie mentioned, I'm Kylo Brian. I lead protocol relations at Zama. And we've got an incredible show today. But first, I want to thank Andy and Robbie and the whole team at the rollup for letting us hijack their stream. Big shoes to fill for the next hour. So uh I you can judge me at the end of the show. >> Um >> listen >> nonstop at Zama. We announced our acquisition of token ops to enable confidential distribution investing contracts. We launched the first ever confidential USDC vault with stakehouse financial and morpho. We expanded capabilities in the Zelma SDK and app.

We support more asset classes in the Zma registry. And notably, we hit nearly half a billion dollars in shielded volume through the protocol. Stake circulating supply is at an all-time high. And it appears privacy season is alive and well despite the bare market that you're referring to earlier, Robbie. [snorts] We're going to cover all of this and more with today's guest lineup from Panta, Flowesk, and Morpho. But to start, let's check in with Zama founder and CEO Rand Hindi with his take on Q2. Rand, welcome to Shielded. All right, let's go ahead. I'm gonna see you guys soon and we're gonna bring up Rand and uh Kyle, I wish you a uh a fantastic show. We'll see you soon.

Thanks a lot, Robbie. Rand, welcome. And he's coming up on the screen. Looks like slight technical difficulty. There he is. Ran, how's it going? You're live. Amazing. Well, before we go into the formal report, I want to have a little back and forth. This was a really exciting quarter for us at Zama. I know there's a ton to discuss. Uh, but before

we get into it, I I want to put you on the spot. I want to ask you what is the highlight that you're most proud of this quarter? >> Well, I think the the biggest highlight for me is launching the financial protocol on top of the you know core privacy protocol that we had because I I think we just showed to everyone that confidentiality and onchain finance are indiscible from each other. Um, and you know, it was just a first launch and there's plenty coming up soon. So, yeah, I think that was the defining moment for sure.

>> Yeah. So, I I have another question which is around privacy. Uh, no doubt. But I I'm curious why you think privacy has prevailed as a key narrative despite marketing conditions. Is it have anything to do with institutional adoption? Is it really that privacy is just the last frontier to conquer in crypto? Why do you think this has remained such a relevant topic? Because I think people are realizing that for the past decade in blockchain, they've been told a lie. You know, they've been told that the only way to use a public chain was to reveal to everyone everything you're doing. And now they know there is another choice, which is to use a public blockchain with all of the advantages, but without actually disclosing everything to

everyone. And yeah, it's just a turning point, you know, it's the it's the moment where the technology works at the time where people actually need it. All right, in just a minute I'm going to hand you over the keys so you can walk through all of Q2. But before we do that, I want to ask you what you're looking forward to most in Q3. What's on what's on the agenda? What's on the road map? What are you excited about launching? >> More users, more TVL, just more of everything that we've been doing, frankly. [laughter] >> All right, great. So, uh, we we put a lot of time and energy and care into, uh, packaging this report. So, we're super excited about it, very proud of it. Uh, and I'm incredibly excited for

you to kind of shepherd it into existence here live on the rollup. Uh, I'm going to hand the keys over to you. You can go, uh, and share your screen, and we're going to spend the next 10 or 15 minutes walking through what took place at Zelma in Q2 via the shielded report. >> Okay. Excellent. Um, all right. Let me share that now. All right.

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Q2 report, the update on the Zama protocol. I'm Rand. I'm the CEO here at Zama and I'll be walking you through what happened over the past quarter. So just as a recap, Zama is a full stack confidentiality protocol for onchain finance. We enable people to use public blockchains like Ethereum and Solana to manage assets, trade assets, earn yield on assets confidentially without having to bridge to a different ecosystem. So the Zama protocol has three different layers. uh you have the privacy protocol which sits on top of public chains and then you've got the financial protocol which uses those privacy tools to provide a set of financial primitives

like confidential swaps so earning and then on top of that we have apps and SDKs. So, we had actually a lot of activity. Um, by the way, those numbers are as of the end of the quarter, so June 30th. Uh, things have changed quite a lot over the past month. Uh, so, you know, they might look a little bit outdated already. Uh, perks of being in crypto. I guess things move very fast. But the headline number I want to talk about is what we call total shielded volume. So, the amount of money that moved through the Zama protocol. And we've reached over $400 million moving through Zama in uh since the

beginning of the year. Uh and we already actually a couple hundred million more since the beginning of July. So things are picking up very very fast. Uh shielded TVL now sits at around $40 million which is materially more than it was at the end of last quarter and growing. We also have quite a lot of stakers. One in five Zama holders is actively staking which is a very large amount of engagement. Uh that represents about 63% of the circulating supply. So 2/3 of the tokens circulating are currently staked in the protocol.

When you look at the distribution of TVL in volume per asset class so we have four different type of asset class that we support in the protocol. We've got stable coins, tokens, vaults, and rwas. Stable coins, uh, USDT, USDC, and GBP stable coins. Vaults is the new, uh, launch that we had this quarter. You know, we launched a state house prime USDC vault. We have also like a GBP vault. So overall what we see happening is that stable coins are becoming a main driver of usage of confidentiality through the ability to pay people in dollars or to earn yield on the stable coins. But going forward we're also expecting RWA to become a big big part

of the usage of the protocol. So look at this slide and see how it evolves over the next quarter. Very important milestone technically speaking. It's a milestone I didn't think we could achieve myself. So, you know, it's to tell you and I'm very optimistic and this was a surprise to me as well. We reached a thousand transactions per second, a thousand TPS of confidential transfers on GPUs, a thousand confidential transfers per second on GPUs. This is huge. You know, we've always considered a thousand TPS to be the moment where we can confidently say that yeah, you know, FHE is a done deal. We've solved the

problem. We can basically move on from trying to talk about uh how fast it can go and just build all the use cases. We talked initially that this would require some specialized hardware. Well, it turns out it worked on GPU. And at the current pace of improvement, which is about 10x every couple of years, we are on track to reach 10,000 TPS in 2028 and 100,000 TPS of confidential transactions by 2030. To give you some sense, payments globally, Visa, Mastercard, a combined is about 25,000 TPS. So, FHE is already fast enough for most of blockchain use cases and soon enough will be fast enough for global payments at scale.

Something that we launched, we're very proud of is the Zama app. If you go to app.zama.org, you now have a very nice user interface. It allows you to interact with confidential assets. You can take any of these supported uh tokens and shield it. You can pay people, transfer tokens confidentially. You can deposit that in vaults to earn yield confidentially. And we just announced that you can now also swap tokens confidentially. So think of the Zama app as the front end that gives you access to the whole Zama ecosystem.

All of this is also available through the Zama SDK. So if you're building a financial application or service, it could be a wallet, it could be a D5 protocol, it could be a custody solution, you can actually integrate confidential tokens, confidential swaps, confidential vaults directly through the Zama SDK without having to worry about any of the FHE related topics. So I encourage you to actually use that to play around with it and see what you actually want to build. There's another topic which came up which we knew was important but really came up big time over the past quarter is the importance of auditability of the shielded supply. This is one of the strong suit of FHE. the ability for

anyone to publicly verify that the amount of shielded tokens corresponds exactly to the underlying token deposits in the protocol. What this means is that it would be impossible for someone to double spend shielded assets without this being immediately visible to anybody who wants to verify the integrity of the supply. And if we're talking about confidential finance, we're talking about trillions moving on chain. Compliance and auditability are requirements for that to happen. And I think, you know, this is showing that FHE has a very unique positioning and is very, very strong technology to enable exactly that.

Let's talk a little bit about some use cases and partnerships. We've continued shipping throughout Q2. Uh there's a lot of things that still needs to be done, but we've been effectively launching things pretty consistently over, you know, the past well five years, but particularly over the past quarter. For example, we announced the acquisition of Token Ops. TokenOps is a platform that enables distribution and vesting of tokens. Chances are, if you've invested in a token or received an airdrop, you've probably interacted with Token Ops with or without knowing it. They've distributed over $2 billion already. The reason why we acquired Token Ops is because we believe that vesting is a great way to build TDL into

the protocol because you're effectively on boarding shielded supply by enabling protocols to distribute tokens to their investors, to their team, to their partners confidentially. And those confidential tokens which are vested are going to stay confidential for two to four years. which means that we can build utility for people when they actually start claiming them for example they can swap them confidentially they can stake them confidentially so we see confidential vesting as a great way to build TVL long term and we are going to be relaunching token ops in the coming months with confidentiality end to end another big launch probably one of the

biggest one that we've done so far is partnering with morphin stakehouse to launch the first confidential USDC vault. You can now take your confidential USDC and you can place them in the stakehouse prime USDC strategy on Morpho. This is huge because it means that you have access to the same exact yield as you would with non-confidential USDC without having to reveal your position or stake in the vault. Um, so we are now at over 25 million TVL, which makes this one of the top 10 USDC vault on Morpho. This happened far faster than we had anticipated and I think it shows

that people are excited about using confidential vaults. Uh, so look out for that. We have a huge strategy for confidential vaults coming up with a lot more products that we're going to be launching in the coming months. We also partner with Defense. Defense is a provider of wallet infrastructure for institutions and they now support ERC 7984 confidential tokens through Zama which means that anybody using defense can now shield, unshield and transfer confidential assets directly through defense.

Finally, we just recently announced that we are running a beta on mainet for our confidential RFQ protocol. So RFQS are very important because it allows you to trade directly with market makers and Phil effectively trades which would be too big to just be broadcasted publicly on blockchains. We can now solve that problem because you can put an intent on chain that is encrypted. market makers would quote that intent without knowing the direction or even the asset that you're trading but they still quote you and then you know you can settle with the winning market maker. So this is a great way to bring institutional order flow to public blockchains without

having them risk being frontr run me or you know just signaling their strategy to the entire market. I'm very bullish on that. uh every single fees that we're going to be collecting through the swap is going to go towards buying back and burning Zama tokens. 100% of the swap fees of the RFQ protocol are going to go back towards buying back and burning Zama tokens. There are no front-end fees or anything. This is fully owned and operated by the protocol itself. If you have any other questions, you can reach out to me directly at rand hindi on Twitter or you can reach out to Kyle who's uh in charge of investor and protocol relations. Thank you everyone.

Uh look, tons of stuff have taken place this quarter. We've got even more coming up next quarter. Uh [gasps] I I think uh it's it's nice always to to showcase our partners, but it's even better to bring them on stage and and talk uh through uh what exactly it is we're building with them and and what we're building for them. So we've got a pretty stacked uh lineup today. Uh I want to bring up our first guest to talk uh a little bit about uh confidential investing and distribution. I think it's a problem that's near and dear to his heart. Uh Franklin Bay is a general partner at Panta Capital, one of the biggest names in crypto venture. I'm sure all of you have heard of him. Uh he's been backing early stage DeFi, infrastructure, web3 projects since about 2019. So he's been in the game for a while. Um I'm really

excited to bring him on stage. Franklin, thanks for for joining Shielded today. Franklin, welcome to Shielded. Thanks

for joining us today. >> Of course, thanks for having me and uh it's great to be here. Uh as you mentioned, uh onchain privacy is something I've been working on for many, many years. uh going all the way back to uh when I was at JP Morgan uh started a blockchain team there back in 2015 and it's kind of a full circle moment after JP Morgan actually built a PC on Zama and it finally feels like we're at the precipice of uh onchain privacy uh finally being able to go mainstream.

>> Yeah, that's incredible. Nice full circle moment for you. Um well at Panta, you know, I I pulled some numbers earlier. You've got something like $3.5 billion dollars of assets under management, over a 100 early stage token investment. So, you're no stranger to investing in distribution being on the receiving end. Can you tell us a little bit what it's like uh to be on the VC side of uh of that transaction today? >> Uh yeah, sure. I mean, the the short answer is it's been it's been rough. Um I mean you know having been so early in the space a lot of the things and you know sort of playbooks that we have to run are things that we've had to build ourselves. Uh so all the way from you know when we first started in 2013

literally you know writing down um you know secret keys uh and storing them in a vault to now trying to figure out how do we handle you know having vesting schedules investing information um on blockchains that are transparent by default. So the way we've had to do that is is actually um really manual. We have to figure out how to offiscate activity, how to make sure that you know when we make a decision, we want to be making a true investment decision, right? Are we deciding to buy, sell or hold based on our conviction in the project, based on what we believe is going to happen in the long term? And a lot of the times I think you know I hear of other investors

who have to deal with all this other noise of hey what happens when uh the markets see that the vesting schedule is going to play out in a certain way and that a token unlock is going to happen on a certain date. Suddenly it's not about the investment decision anymore. It's about what is everyone else going to do. And that's kind of the classic prisoners dilemma that unfortunately when you have that happening in a market it's really unhealthy. I mean that's that's you know one of the key things that that can drive a market failure. Uh and so you know for us it's been so important to be able to figure out what is the path to you know having all the benefits of a blockchain for open markets and open settlement but also

making sure those markets are healthy. uh because the ability to conduct your transactions and uh be uh just a rational market participant uh through onchain privacy is is so important. >> Yeah. Well, it sounds like you must have a few battle scars. Could you tell us a story about I don't know a vesting cliff gone wrong, you know, a public contract that was monitored and, you know, token dumped or something along those lines? >> Yeah. Yeah. I mean there's there's a bunch and I would say it's both our own battle scars and also what what we've just seen happen to other investors too.

Um you know I can think of at least a couple examples where I won't say the exact uh project name but um you know 3 weeks out uh the unlock is about to happen. Uh all the trackers that you see out there around unlock schedules show that information. Uh, and you know, at moments like this, everyone's kind of circling the wagons, right? I mean, all the investors are talking to each other, the founding team, the community, they're all trying to figure out, hey, what's going to happen when that unlock occurs? Um, and you know, in that type of moment, people just assume the worst and they start shorting. So, you see this total um, sort of schizophrenia in

the market where we're circling the wagons. We love the project. we want to keep holding uh that position for the next 5 10 20 years and we're hearing the same thing from all the other early stage investors. But then in the public markets, you've got people suddenly starting to short the token. Uh and so you know I've seen this exact situation play out where the token just gets shorted. It starts to dump people assume the worst and then suddenly uh you're in this situation where uh none of the early investors sold a single token yet somehow the token is down 30% 40%.

>> Sure. >> And you go on to Twitter and what people are saying is oh wow I guess all the VCs dumped. Uh [laughter] and that's just so ridiculous because uh you know this this gap between the reality and the conviction in the market market and what's happening just because of this um this thing that could have been totally avoided uh and really just does not happen in a healthy um capital markets. Um you know the the project just has to deal with it. Um, and you know, I would say it's it's quite unfair to the community and quite unfair to the founding teams um to have to do that kind of damage control when the reality is they've been doing everything right, everything's going well. Uh, but it's

just the nature of um the transparent by default um ecosystem that exists in blockchain today. >> Yeah, it's a complete lose-lose situation which uh is incredibly frustrating. I uh you mentioned earlier a little bit about the operational overhead of managing your portfolio. Uh you know the the investing in distribution is really just the first touch point in this kind of broader life cycle of of owning a token portfolio. You eventually might want to move in and out of position. You might want to rebalance your portfolio. You might want to swap for other tokens. You might want to generate yield uh on the tokens you end up swapping for. I I'm curious from an operational standpoint, token operational standpoint, you've probably

got a team behind you doing this. Uh how how does this save you from some of that headache? If if you could receive confidential tokens, you could swap in and out of them without, you know, adverse signaling to the market. Uh you could generate yield on them. Does does that change the game for for you guys? >> Yeah, I mean it really does because you know this whole calculus that we have to go through it just shows up you know every single day, right? We are lucky enough to actually have our own trading team, our own trading infrastructure, our own connectivity to venues. So you would think that you know if we've invested those kinds of resources that we should be um you know able to be as flexible as we want able to take um sort

of the the opportunities as we see them uh and just participate fully uh in whatever uh investment we've made and and really just be as great of a partner as we want to be to our entrepreneurs. And that's really what drives everything. But because uh you know sometimes if the vesting schedule is being telegraphed just on a public chain um we have to make these sub-optimal decisions right we can't participate in yield opportunities we can't help support the liquidity uh environment fully uh and that's because the market may see us moving tokens out of a wallet out of an exchange and assume the worst when really we're

actually doubling doubling So again, it's just it's the total opposite signal. Um, and sometimes I I hear the argument um from from um you know, folks on Twitter that hey, you know, blockchain is meant to create transparency and you know, this is great for the market that everyone can see what everyone else is doing. But then, you know, things like these come up and you say, well, no, this is not uh actually the desirable outcome for the market. when people who want to do something can't do it because it's going to have all of these circumstantial uh consequences. So, you know, yes, I think the ability to, you know, conduct uh our trading more confidentially, to

participate in yield opportunities privately, um you know, all those things would, I think, just help build a better market environment for for everyone, not just us. Um, and therefore, you know, we can really focus on the things that that actually matter. >> Amazing. Well, you you've uh you've been in the privacy game and an advocate for a long time. Uh it sounds like this is a full circle moment for you, which is great. You've been a supporter of Zama for for several years. Uh so we're excited that you're still excited about privacy. Uh I'm being told we're running a little loose on time here, so I got to transition to our next guest. Franklin, thank you so much for joining Shielded.

Really appreciate the insights. >> Of course. Thanks for having me and uh love everything that Zama is doing. >> Awesome. Take care. >> Bye. Next up, we've got Niko Non from uh Flowesk. He leads business development.

Everyone here uh is most likely familiar with Flowesk, right? They're the crypto liquidity and marketmaking powerhouse. Uh he's on the front lines keeping digital asset markets liquid and efficient. Uh he's also a close friend and partner of ours here at Zama. Nico, welcome to Flowesk. Welcome to Shielded. I love Flowesk so much that I'm actually going to change the name of the uh of the report. Welcome to Shielded. Thanks for joining. >> Hi Kai. What's up? Thanks for having me. >> Yeah, of course. Well, listen, for those of uh of the folks in the crowd that aren't familiar with Flowesk and aren't familiar with you, Nico, maybe you can give us a quick background on on who you are. Tell us a little bit about where where you sit within the Flowesk ecosystem.

>> So, yeah. Um I've been with the firm for like four years and something. Um we're just a six years old firm. So, uh been been a while. Um I've seen a bunch of everything. I looked after mostly BD uh but also like new initiatives like anything we do in DeFi. Uh I'm sort of involved, investments, uh token market making, OTC. I mean I just try and bring some some money to the firm and and new counterparties really. Um that's what I do. >> Amazing. Well, the the the topic we want to cover today is around our new RFQ protocol. It's been an exciting announcement behind the scenes. are working with a number of counterparties who are kind of helping us with the design process as we bring this to

market. Uh and you've been influential in that. Uh I think maybe to set the stage, you can walk us through kind of the the state of play today for uh RFQ or OTC desks like what what does that look like? Uh how much of it is being done onchain versus offchain? Like what is a typical experience for someone who's looking to sell something over the counter? So t typically right now you've got two different um areas for the business. You've got the bilateral rotc stuff which is done uh in crypto mostly over telegram. Um some a bit of overlack for for the most sophisticated companies but that that's mostly Telegram. Um and it's

not really that fancy actually. It's just a chat with a butt and then people ask for quotes and they ping each other. um they ask for price, they ask for firm quotes, they ask for all sorts of algorithmic orders for bespoke executions for spot, for derives, whatever. Um and then on the on the other side of the coin, you've got all of the onchain RFQ stuff which is trying to mimic uh an OTC transaction but onchain uh with an atomic settlement window. Um, these two are somewhat the same, but they have like very distinct kind of like characteristics. Um, >> and right now I would say the most common workflow to educate kind of like

the audience. Um, if they're unfamiliar with it is just somebody like Kyle, you would come up to me in chat and you would be like, I want to sell 100 Bitcoin. And we would just get you a price. And if that price is good for you, you like it, you just um confirm that you're done with it. and then all of the risk is transferred to us. So that's essentially it's a risk transfer uh business most of the time. Um because you wouldn't want to push the buttons yourself on an exchange to keep it very >> Yeah. >> Yeah. That's mainly what it is. >> Okay. So it it sounds like a lot of the activity actually takes place offchain.

You're talking about Telegram and Slack. >> Yeah. Most most of it. >> Yeah. And and so I would imagine that's uh for for a reason. Uh part of that reason is is around privacy, right? Like early signaling and MEV, right? And and so I'm I'm you know I'm curious in in the current state of affairs, how much friction does this introduce to your workflow? I mean, is this a huge burden for a desk like yours to to keep up with? And would there be a major advantage to having this fully on chain assuming you could eliminate some of the negative signaling risk that comes along with it?

So I think the the main constraints you you've mentioned privacy, right? Uh which is which is fair enough. It's um it's actually a big a big problem like we've got a lot of our wallets that are operating wallets that are tagged on aram and tools like like that. Um they are just like operating wallets. They just have funds come in and out omnibus style. Um but sometimes you know some counterpart is sending tokens and then they're like oh this guy is like sending tokens because they want flawless to dump for them or whatever. Um so it's true that it's a problem. Um uh even then even if you do it offchain like your wallets eventually are bound to be tagged and flagged. That's um you know

that's the way it goes. Um but with onchain settlement you also eliminate some other other type of risks like um settlement uh car risk credit uh which is actually one of the biggest problem in OTC especially when you do it over telegram or you know offchain um uh wave uh but the the inventory requirements are a bit different so I would say privacy is key but also um it's about inventory management uh and getting quotes executed quickly.

With an OTC trade, settlement can take time like hours um or maybe days depending on the order, depending on the size. Um when you do it on chain, you eliminate a lot of the friction um because you can have atomic settlement up to a point, right? Because if you're going to trade uh very large tickets um then you need to also take into account that some some counterparties might not have that you know readily read readily available in the wallet. You can't have like you know 2,000 Bitcoin in a wallet. That that doesn't work. Um so I think yeah it's it's a trade-off. You have to to really um >> Yeah. Okay. So I I know that you are

familiar with confidential tokens now. You guys have uh received confidential token deposits. You probably had conversations internally with compliance teams and the operational teams. Uh I I'm curious to get kind of two opinions from you. One is what is the user experience like from from a from a market maker uh with confidential tokens? I mean is it is it distinctly different uh operationally or is it is it relatively fluid? Is it easy to integrate into your process? And the second is what do confidential tokens and some of these confidential financial products something like a swap for example a confidential RFQ or a swap uh or a confidential uh you know deposit into a vault uh sitting on Morpho how does that impact your existing line of

business like who the customers you're already working with is this something that you think you could effectively you know for lack of a better term sell into them uh is this something there's an appetite for >> yeah so confidential tokens we've already um used them a bit a fair bit uh so my operations team was uh not happy initially I had to convince I had to do a lot of convincing internally both on the operational side and compliance side as well compliance is a big you know it's uh it's key it's critical um but when you get used to it you start to realize all of the all of the perks that it it provides like uh you could be sending just a balance uh shielded and

then we would only have to unshield whatever we need to if we have to. But if the if the scope of activities that we can perform >> for ourselves on a prop basis or for clients um is growing in the confidential space then at some point I expect we might not even have to uncheit anything. Um, but it's it's fairly simple to use really like we're just chilling and chilling with the Zama app most of the time and we just hope that one day most of the big custodians are going to to to implement you know um kind of like native shielding and unshielding which is bound to happen in my opinion uh because there are just so many advantages. Um, and I think the

endgame killer would be just exchanges enabling uh shielding and unshielding and then shielded transfer uh directly. Uh, so you can just withdraw from like Binance or whatever. Um, shielded which uh which is going to be a nice um uh quality of life improvement for for everyone involved in this industry. Um bearing in mind that this is compliant by design uh and this isn't like other alternatives in the space and this has always been brought up by my compliance team but we found a way to make it work.

Uh you can absolutely check the source of fans and um yeah there are no compliance issues whatsoever with comp with with C tokens. So, and to your last point, yeah, I think a growing part of our customer base, um, they're kind of like warm to the ID and I think it just takes time to educate them and because, you know, it adds maybe one extra button. Right now, you just have to click shield and shield. But, uh, eventually this friction is going to disappear and I think we can sell into a larger audience. Um, so I'm I'm I'm very optimistic about the prospects for for confidential tokens.

>> Amazing. Well, Nico, thanks for being such a good design partner uh and uh an advocate for confidential tokens. We're really happy to be partnering with you on this and the RF platform and all the other endeavors we have coming up. So, thanks for joining Shielded today and uh I will see you. >> Thanks for having me. Bye. Kirk Hutcherson aka the one true Kirk.

He leads governance and multi-chain growth at Morpho, one of the top lending protocols in DeFi. Surely you've heard of them. Kirk, welcome to Shielded. >> Thanks for having me, Kyle. It's a pleasure. >> Super excited to be here with you today. Um, there's a lot we can talk about, but I think the focal point for us today is around the confidential USC vault we launched with Stakehouse on Morpho. This for me was a sleeper pick. I I I knew it was going to be exciting. I knew there was going to be some novelty to it, but we did not expect uh the response that we got from the community. So, I want to touch on that in a minute, but maybe before we do that, you can tell me a little bit about what you sit at Morpho.

Uh tell tell us a little bit about your day-to-day. >> So, I'm on the partnerships team at Morpho over Morpho as a whole very much has an enterprise or institutional focus. Um you know, at the end of the day, the number of people who are clicking around on their own hardware wallets is fairly saturated, right? And we believe the next mile for crypto is all about scaling into existing distribution. And yeah, I think this is a very relevant topic for privacy because a lot of um you know fintech will say well what do you mean all the user balances are public right? Um >> so so this is interesting for us on the partnerships team our job is to work with um you know partners like Zama work with chains and stable coin issuers to facilitate uh this kind of B2B

um sales process. Yeah. Yeah. Incredible. Well, may maybe we can talk about one of those B2B processes, which was uh the vault we launched a little over a month ago. So, you know, over the course of the lifetime of the vault, I think we've we've, you know, seen over 60 million in deposits. It's sitting around 20 to 20 million 25 million in TVL at the moment. Became a top 10 USDC vault. Um I I'm curious uh first impression from from your side. What was your expectation before this if you had one? And what do you think the kind of overwhelmingly positive reaction to this says about privacy features for Morpho?

>> So I think you know we don't overindex on the short-term metrics but what I'd highlight as impressive is that any new technology and new smart contracts always carries a risk premium for for users to plug in. Uh and I think this is a good show of confidence that people see that Zama takes security seriously. It's a show of trust and it's a wedge um for bringing this technology where it will ultimately matter which is not you know right now the vault has good rates right people are interested in that but this is a proof um that can then be taken to distributors who want privacy to say look this is live it's liquid um it's been somewhat battle tested by the time they're thinking about bringing it to market which is um very exciting and useful for us.

>> Yeah incredible. Uh so how do you guys think about privacy internally? So, you know, this kind of first version of the vault was what we call a a batcher, right? We're we're batching uh confidential deposits, unshielding them in aggregate and depositing them into the vault. Uh you know, the next logical step would be a fully native integration on on chain uh uh on on Morpho. Uh how do you guys think about privacy uh internally and like what what kind of what level of importance do you assign to it? Is it something that that you view as uh you know potential for the road map? So the way that I would put it is that Morpho, you know, if you people jokingly have called our UI Morphos scan. Uh, you know, it's very it's very detailed. Um, Morpho ultimately is not

in the business of building consumer products. We build tools for people to build consumer products on top of. Uh, so the way I think about privacy is, you know, a customerdriven approach where by a customer talking about a fintech, uh, you if we take an example, someone that's not using privacy today that but could be a type of use case for it. um deal launched an integration on morpho on tempo not long ago and that category of fintech is exactly who we have in mind as caring about privacy for their users and likely you know as it matures and as it's proven in the market to want to integrate Zama and you know that we would look at this as a collaborative effort where whenever we're working with the fintech or other partner who expresses a need for a

privacy solution uh we can in a credibly neutral and objective way highlight to them what is the available tooling and if we point and say look the largest confidential you know privacy implementation on morph today is the Sama vault um and so forth that's something that we can highlight and support them in the integration >> right can you tell me a little bit about the conversations you're having with vault curators I mean this is a a term that you guys effectively coined and has now become kind of the standard in uh in the lending onchain lending space you what what are the conversations you're having with curators like what what are they most excited about and just privacy see come up in the conversation.

>> It certainly does and I think there's been a lot of interest, you know, as well as I do that there's been quite a few curators who want their vault to be the next step after steakhouse. U I think all of them want to be able to point to something ready to go in their conversations with prospective integrators because you know we and curators are the same. At the end of the day, it's not about competing for the same dollars on chain whether it's us versus other lending markets or curators uh doing PPP with each other. It's about closing distribution and bringing net new users. Um, and we all see privacy as an important part of that toolkit. And you know, one thing I wanted to highlight is why I think Zama is more powerful than some of the past privacy solutions that I've seen is that it can

plug into the existing public liquidity. Um, this is critical, right? Like if you had to make a separate new vault that was private, then you're starting from square one. You need to find lenders. You need to find borrowers. Being able to plug right into the existing morpho infrastructure means that there's no um extra boost strapping step and it's a it's an easy cell. >> Yeah. >> Okay. So, I want to close out on a on a prediction. Uh you know, there there's been a lot of excitement. You've gotten a lot of feedback from curators. Uh you know, we're excited to deepen the partnership and and expand our our our vault strategy, confidential vault strategy. Uh what is your prediction for confidential vaults in the second half of the year? Do do you see more and more strategies, more and more curators adopting the tech? Uh, you know, what

what kind of uh TVL targets can we can we imagine? >> Well, yes, I certainly see um a diversity of curators adopting the tech. Um, I will give a solidly boring answer to the TVL targets, which is that, you know, sitting on the morpho partnerships team, I'm looking at enterprises where we're talking about a, you know, 6 to 12 month cycle from the first conversation to them bringing a new product live. Um, so we don't care so much about what it looks like in six months. What we care is who is going to lock in to build a product on top of it within the next 3 to six months that will ultimately scale to billions in liquidity. Uh, so that's what we're excited to work on. Um we are confident that there will be billions um you know double digit plus billions of

fintech capital flowing into DeFi over the the next one to two years. Um and that's something I think privacy will be increasingly important. The the closer you get to institutions like banks, the more they care about this. Um so the people who are on chain today are not representative of who will be the biggest adopters of this kind of technology in my opinion. >> Yeah. Incredible. Well, that's a nice place to close. Uh, thanks a ton for joining, Kirk. Really good to speak with you. We're excited to work with Morpho, uh, and all the vault curators in your ecosystem. So, uh, let's see what the second half of the year brings. Thanks for joining Shield today.

>> Thank you for having me. Appreciate it. cool. Cool.

Kyle, man, how do you feel taking over the stream today? >> I'm feeling good. You know, I I I like my job at Zama, but the more I think about it, if you got a role opening up, I might uh I might apply. >> Well, we've got your boss on the screen, that's not the that's [laughter] not the right time and place. Oh, I didn't see Rand was there. >> Oh, man. Well, we've got some Q&A for you guys. Um, it has been a tremendous stream. I've been watching here behind the scenes. Um, Rand, could you give us a quick test? Make sure we can hear you before we do some Q&A. >> I'm here.

>> There we go. All right, cool. Um, yeah. No, it's been incredible. And anytime you hijack, you're gonna you're in for a bumpy ride, right? I I think that's [laughter] just that's just normal. Um, the one thing that I just I see in the chat here that people are extremely excited about, I mean, I know we've talked about RFQ, we've talked about Vaults, we've talked about a lot of exciting things with privacy. People want this multi-chain. There's Salana Moonboys in the chat and they're like, when Zama on Salana? So, Rand, can you just talk us through like I mean obviously the bigger question that everyone wants to know is when, but like there's a lot of intricacies that go along with that. maybe you could just tell us, you know, why it's a technical thing that you guys need to decide and how you plan it out. What goes into

making a multi-chain deployment? Uh what are the considerations and ultimately yeah, when can we expect this to take place? >> Sure. So, I think, you know, we're very excited about bringing this to Salana. Uh I mean, Kyle Sani, obviously probably the largest Salana bull [laughter] ever, is sitting on Zamba's board, right? So like I've got a board member you know who's literally the biggest uh promoter of Salana I would say and we're very close to you know the multicoin guys and everyone. So Salana is coming. The thing about Salana is you don't launch something small on Solana. When you launch on Salana you got to launch something big. And big

means a lot of throughput capacity. It means a big use case. something that's actually going to get people to trade this on Solana like they would other things uh there, right? And so, you know, we only have one chance of launching there. And so, we want to make sure that when that happens, we do it with the absolute best possible conditions. So, what does it mean in practice? We've talked about reaching a thousand TPS on GPU. We need to put that on mainet before we can hope to achieve anything on Solana. I'm not going to launch Solana without at least a thousand TPS. It just, you know, it would be respectful of the Salana

community if we didn't give them the kind of performance they're used to. So, that's number one. Second thing is we have to rebuild the whole protocol from the ground up to be SVM uh to be SVM and that means the core privacy protocol, but also all of the financial primitives that we built as well. It's not hard, you know, it's pretty easy to build for Salana. It's just a different ecosystem with a different set of constraints. You know, uh storage cost on the SVM is much more expensive and we have to rethink a bit of those assumptions. But all this is being solved and uh I don't want to give you an exact date. All I can tell you is soon.

>> Okay. Well, that is uh that is telling um and and it seems promising and I think it makes a lot of sense the way that you think through you know rather the somewhat easy technical consideration which for so long it was like okay this these are engineering problems we need to figure out what are the the design choices what are the some of the technical considerations I think it's pretty indicative that the Zama team is cracked and these engineering considerations are actually the easy part the more difficult part is the go to market strategy it's you know getting 1,000 TPS and then it's ultimately bringing a fantastic product because you're right, you you only have one shot to go live the first time. And so doing that the right way is of extreme consideration and that uh means being

very very thoughtful. Uh Ran, next question here for you is from bullun.btc. Uh pretty incredible username handle there. Uh he says, "Hi Ran, thank you for building Zama. In your opinion, where do you see Zama in the next 5 years? Do you believe it can become the global standard for confidential smart contracts across all major blockchains? Our goal is to become HTTPS for public blockchains. Uh we want every financial transaction, every stable coin payment, every trade, every vault deposit to be done confidentially using Zama. And I do believe that this is going to be a

winner takes all market because the more liquidity is shielded with Zama, the easier it is for people to actually swap and trade and uh use Zama. And so it's a race to who's going to become the biggest liquid shielded liquidity pool effectively in onchain finance. And we've got a pretty good head start. Uh, I would say today, you know, I think Zama is probably one of the biggest privacy protocols already, but that's not too hard considering how small privacy DeFi is at the moment. Uh, you know, the the competition is is not as big as Trii would be, but this is changing. So, look, I'm I'm going to tell you something that many people are kind of afraid of

saying, right? But, you know, at some point we have to say it. Um, if we believe that finance is moving on chain, it means we're talking about trillions moving on chain. Okay, we have to stop talking billions, man. Like this is this is small potatoes, right? We have to talk about trillions now or nothing. Otherwise, what are we even doing here, right? So, if you want those trillions to move on chain and you want to do that in a way that's confidential, you need a technology and a protocol like Zama to actually exist. So for me it's very clear four or five years from now either 95% of financial transactions on public blockchains are encrypted using Zama or we actually failed something or finance

has not moved on chain. But honestly for me it's going to be 95% of financial transactions. That's my goal. >> Yeah. And it it does really feel like there there's a wealth effect here where more capital gets shielded and it begets more capital getting shielded because there's more of an economy of shielded assets and it just continues to to flywheel and grow. >> Exactly. Exactly. You know, I mean uh uh look at uh HTTPS on the internet. There was plenty of people who proposed in confidentiality protocol for the internet. In the end, HTTPS won because it got standardized, which is what we're doing with ERC7984.

And it won because it got adopted, right? And at the end of the day, you know, adoption is all that matters. Uh, you know, we spent six years making a technology work and now the only thing that matters is getting people to use it. >> Yeah. Um, ran two more questions here. I got one. I'm going to save that one for the last and then Okay, so this one, uh, should we expect Zama hardware in the future? A year ago, I would have said immediately yes. I think now GPUs have proven to be a lot more powerful than we had anticipated for FHE. You know, my my initial thinking was that it would require at least FPGAAS to get to a

thousand TPS, but we achieved that on GPUs a couple of years faster than we thought we would do it on FPGAAS. So, it it seems that the the Moore law, the Moors law of FHE is even stronger than I have anticipated. And, you know, keep in mind, I'm the most optimistic guy in the room, right? And even I did not anticipate how fast FHE would grow in performance. This is insane. Like the cost of an FH transaction on GPU today is, you know, less than 0.00001 is free. Like done, it's free right now.

Where dedicated hardware is going to become important is for low latency use cases. I think throughput, we're going to get it with GPUs. You know, throw more GPUs, you'll get 100,000 transfers per second. Latency is where you need A6, dedicated hardware. You know, if you want to be able to fill an encrypted trade in an order book in in one millisecond, GPUs are not going to get us there, right? We're going to need dedicated hardware. And so, I think I think the difference between Zama using GPU and Z using specific hardware is going to be just the number of use cases we can address. payments, institutional order flow, RFQ, all of that we can do on

GPUs. Low latency, high frequency order book trading on chain confidentially, you're going to need dedicated hardware to get there. >> Very cool. Zama potentially playing in the world of atoms. Um, all right, Ran, this is the last one. It's a fun one. Uh and it's a pretty retail friendly one as well. People are asking why is Zama token up today? >> Oh uh I think I think you know there is a general sentiment that everybody's realizing now is that you know privacy is non-negotiable for finance to move on chain. And obviously we've been saying

this for a while but it's very different when we say it and when it kind of becomes apparent. Um, a few days ago, you know, Multicoin, one of our biggest investors at Zama, unstaked some of their hyperlquid tokens, right? This got flagged on social media. Multicoin unstaked some hype and then, you know, people are like speculating about what Multicoin is doing. By the way, Multicoin is a long-term investor and everything they're doing, right? So, like, you know, I'm sure they had very good reasons for doing that. But nonetheless, people freaked out and you know, Tushar basically just said, "Well, now you actually understand why Zama is building something important for blockchain." And it's just like there are moments where people just understand the scale and importance of a technology

because it just blows up in front of them and it's just the beginning, right? I think it's just the beginning. So look, I I think we have to focus on doing one thing which is build more utility, focus on getting people to use the protocol, more confidential assets, more vaults that people can earn yields on those confidential assets, more liquidity for the RFQ protocol. Like we need to make the Zama protocol the best place for institutional investors to manage, trade, and earn yield on chain confidentially. And I think if we do that job right and all of those fees funnel into buying back and burning Zama tokens then you know the market will decide whether this is valuable or not.

>> Yep. Brand you've uh you said more than most token founders do. So appreciate that and uh appreciate you sharing all the insights today. Kyle, thank you so much for co-hosting man and uh absolutely giving me a little bit of of a break on the hosting side. >> Thanks for letting me intern. Happy to do it. [laughter] >> Absolutely. The newest rollup intern. Um, no, you you you guys are crushing it over there at Zama Rand Kyle. Really really appreciate you guys. Thanks for uh hijacking the stream today and uh yeah, congratulations on a fantastic quarter two. Uh this has been Zama Shielded Day. Thanks so much for joining.

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We get deep. [music] We get deep, you know. We get deep. [music] Bang. Bang. There we go, guys. Zama is up. I think Zama's up like 17 and a half% today. Um, pretty fire show. like uh we heard I mean Panta, Morpho, Flowesk, that's a that's a pretty star studded lineup right there. Uh that is a Cabal of sorts. Um and Zama's flying. Uh honestly, Zama and ETH are probably the two and probably pump Fun. It's a weird

market out there, guys. like now is really the time when uh winners are made and it's time for the men to separate from the boys here because I mean if you look out there it's not like everything's like moving at the same time same time you know not everything's moving in unison. We don't really have like a super friendly macro environment and the lack of forward guidance is basically telling us that hey we don't know what's going to happen in the next Fed rate cut. Um, I think we're at like 7030 uh note change versus rate increase, which is significantly more opposed uh or unpredictable than things have been in recent history. So, we don't really know what the Fed's going to do. The macro environment is a little bit

unpredictable. The war is unpredictable. And we're seeing things go up, but things go down, too. Memecoins are doing well. Majors are doing well. It's like a very barbell type of approach. I've been taking the approach here where I mean look you've got like these secular driven markets like we know that privacy is going to get a bid. Um it's happening I mean I think if you look at what's happening in New York they're doxing people people's homes like that is going to cause people to take privacy into their own hands take it a lot more seriously. Um and and look I mean Zama is absolutely leading the way. Zcash again leading the way there. So we're seeing this happen. You've got, you know, the AI cohort as well. And then broadly, what seems to be happening is

that you've got these major assets that are doing particularly well. Bitcoin is seemingly holding up, ETH. I mean, I'll go out on a limb here and say that Bitmine, Tom Lee's Bit is the top performing DAT right now. And I think after all of the shenanigans that Michael Sailor has pulled with strategy, Bitmine is in a position where they are now the the pinnacle of digital asset treasury companies. I think Tom Lee has executed in I mean you you could say look you could have waited to buy the absolute pico bottom but not even Tom Lee, not even Michael Sailor, no one is able to just do that. You know these guys are human, right? But the capital allocation strategy has been one where they've been able to steadily buy all

the way down, retain enough cash, right? They have this income product that they're probably g but they started really slow, which I think was an extremely prudent approach and they're they're going to ramp it up as time goes on. And it's not like they put their themselves in a position where, you know, they raised a bunch of cash, sold a lot of this income product, and now they're on their heels, you know, and they have to scramble and try to find the cash in order to pay this dividend. not the case. They're in a really really favorable capital position. And I think this puts ETH in a very favor favorable position as well because remember these treasury companies are just taking capital, taking supply off of the table.

This may not have a really influential buying pressure, upwards pressure on the price right now. I don't think they're going to be able to offset or counteract any sort of headwinds. But the thinking is that once the tide turns and these markets are, you know, transitioning from a from a bear to a bull or a bear to a pre-bull, the lack of supply on the open market is going to allow the liquidity conditions to just just take off. And that is what I think these digital asset treasury companies are actually in a position to do. I think Bitmine is one of the few that has realized that they are consistently on sides just buying buying

buying. When the price just gets hit harder than most days, they're in a position to buy. They have plenty of cash. They don't need to scramble and uh they're in a really good position. Um and so I think Bitine, I would actually give Bitmine uh the award for the top uh performing treasury company thus far. still a long way to go, but I think they're do they're in an incred incredibly favorable position. Guys, we've just got one or two tweets and then we're going to get into our daily equity and then we've got a clarity update for you guys. So, let's get Novagrats up here. Uh he's got a word on clarity. I want to listen to what he has to say before we bring Rebecca Retig, uh the CLO at GTO Labs.

Let's play the clip. I think the Clarity Act is going to pass. I do. And I know right now it doesn't feel like it at all, but I think it's going to be a lastm minute small little compromises. You just need a small compromise on ethics. And I think that ethics compromise is going to look like what they did with Lake and Riley where they said the state AGs can't sue Congressman or the president, but they can sue the DOJ if they don't think the law is being applied appropriately. and they're going to call it the Lake and Riley clause or something. And that will be enough, I think, to get both sides to say that's a

tough enough ethics bill. Let's pass this thing. You heard it here. >> So, I think to say that uh that he thinks it's going to go through. Him and Scare Mucci are just up there just chopping it up. I mean, this is what happens when boomers get into crypto. These guys just got so much money. Uh they are certainly incentivized for this clarity vote to go through. I think Novagratz does bring in a nice little piece of uh financial regulation lore, you know, as he says that they've done this before. Uh this is a compromise that can get both parties over the line and you know, they're in a position where none of the state attorney generals would be able to sue people that are involved in this.

Ultimately, I think that is what they are looking for from an ethics provision. But man, I mean, if we're just checking um if we're checking the prediction markets here, what do we have on clarity? What do we have on clarity? I mean, this is just it's do or die time. We know if this doesn't happen by August 10th, we've got two weeks, 38% chance. It inched up a little bit. It wasn't looking good even after the ethics language came out. Um, how much volume we got here?

Only $2.7 million of volume. People just aren't sure. This guy says it's not as dumb as that big beautiful bill, but it's pretty dumb still. By far the worst US admin in history. Even worse than the one during Trump term since now we literally don't have a single competent person in the leading admin. Never happened before. Okay. All right. How do you really feel? Um, I think it would be good for crypto. Obviously, I mean, people, there are people out there that still want crypto just to exist in the wild west, but this is getting uh this industry is getting suited up. So, that is what is ahead of us. Um, all right. What do we have next?

The other thing that is in a position to get regulatory uh attention here is PERPS. Uh we have seen this uh we've also seen how there's been lobbying groups uh in DC uh pretty consistently and they're talking to the CFTC innovation desk. They're talking to the SEC innovation group. There is a ton of workshopping and learning that's being done uh at these levels. So I think ultimately this is healthy. I think it is beneficial for governments, regulatory bodies to have a better understanding of the technologies that exist out there. Um maybe we don't get legislation, maybe we don't get these things codified into rules, but I do

think everyone upgrading their mental models for the technology that exists, the investor access that can be obtained is ultimately going to put us in a better position when it's time to establish some investor protections. for now this might be the wild west you know whether we get this or not does in influence how much institutional adoption we see and that's going to be all across the board I mean clarity is like this you know farreaching you know it's got these five pillars like there's several pieces that make up the clarity act one of them is going to be per so here um I think we can dig into per a little bit uh there's a particular section of this podcast that we want to play let's go ahead and play the clip

between David from Bankless and Vlad at Lighter >> that you founded. Correct. >> That's correct. >> Yeah. Uh tell me about just how the the spark came to you about like why Lunch Club was a good idea. >> Well, I think a lot of the if you like even if you just um we think about our conversation right now, I think it's it's pretty clear that connections are very important, right? Like sometimes just [clears throat] like even a single connection can change the trajectory of someone's life or career in some cases an industry right like you know like what how much value was created from Peter Tio meeting Elon Musk in 97 >> the industries we know this happens all the time right >> um so the idea was like okay but this stuff is all random people just happen

to meet like there's all this data on the internet now we use this this data to shop we use it to listen to music >> to find recommendations for movies for content [clears throat] to read why not use as a way to like do really valuable um networking, right? Making the right connections. And but the the so that that idea was kind of that was the the mission, but the implementation detail that made it work or at least made it work as well as it did cuz there there have been others that have tried this kind of stuff, right? That didn't really go anywhere. But I mean for us it worked pretty well, especially during co >> and even since then it's like plateaued.

It didn't it didn't die. But the key insight on the implementation side was like how do you avoid adverse selection right? Cuz if you have a system where you use like the the model from you know dating sites where you're like okay like like double optin that doesn't really work too well for networking because unlike dating where there's like somebody for everybody like in networking it's like if you see if you could send requests to anybody like it's like you know I don't know Mark Andre would get like a million requests right and someone who's like a college kid might not get any right >> even though what should happen is the college kid who's thinking about biology maybe should be matched with a college kid who's thinking about AI and they can make the next great AI agent for healthcare. Like that's the kind of that

should happen. >> Like an extremely insightful thing here that you know Vlad is talking about and and if anyone is unfamiliar he's talking about actually the predecessor to Lighter. Um for anyone who's unfamiliar this uh this company that he's talking about Vlad founded Lunch Club in 2016. It's an artificial intelligence platform AI for curated professional networking and smart introductions. And so what I think I I just find fascinating here is that this is fundamentally very similar technology to lighter. And you might think, you know, how is uh like a link an AI linked in similar to lighter, but it's just matchmaking. You know, there's bids and asks, right? And they're able to create an algorithm and in this case use AI to matchmake between orders or

matchmake between, you know, professional people that are looking to connect with other professional people. And he talks and he tells the story about Elon meeting Peter Theel and how that has created quite literally trillions of dollars of value across the combined you know PayPal and SpaceX and you know all these companies that these guys have founded. It's pretty fascinating stuff. Uh, and Vlad was, you know, a founder of this company and it's actually the same company just transitioned it. It evolved into lighter. And so I think, you know, through we we don't always understand the level of generality that some of these founders are thinking at, but ultimately, you know, what do we have here? We have pattern recognition and, you know, instantiating that into a

protocol. and and that pattern recognition algorithm is true for you know he he mentioned dating apps it's true for you know professional networking it's true for orders on a marketplace and so quite literally this matchmaking algorithm is the same thing that has now you know been uh been the core of lighter and it's been you know order flow and it's been order books and it's been all these things so shout out to Vlad I think he's doing an incredible job and I just think per is going to continue to expand and evolve um as a market class which is pretty phenomenal. Uh, and he's doing an incredible job.

Guys, we've got one last segment before we bring up Rebecca. We're going to do a quick daily equity and then uh we're going to get into Rebecca Ratig from Jetto. So, let's go ahead run daily equity and uh we'll see what's going on the equity markets today. Doesn't look >> [music] >> All right, daily equities here, guys. Uh the NASDAQ is looking pretty rough and today is

July 27th and the war is on and then the war is off and then the war is on and the war is off and then you know AI bubble has burst and then you know it's AGI and so we are just totally flip-flopping. The market is totally unpredictable right now. The KBSC letter here says that the shocking stat of the day is that foreign purchases of US equities are up to a record $850 billion over the last 12 months. The figure has more than quadrupled since the start of 2025. This shows just an absolutely enormous foreign interest in the US stock market. I think people have seen how the US government is prioritizing the US stock market over the US bond market. And you've literally seen bonds crash, yields are through the roof on the 2-year, the 10- year, and the 30-year. And so, as the yields are

upwards of 5%, that means bonds prices are crashing. Yet, the stock market is just continuing to just push new highs. Again, how sustainable is this? We've been of the mind that this is actually more sustainable than not, but it is concerning to see what is happening out there in things like the NASDAQ and some of these industries. Um NASDAQ looks pretty rough. If you're looking at it on the one-year, it looks like it's right for a correction. It looks like we might have another 6 to 10% down before we start moving up. And so I do think what we're going to see here is that you know who is the who is the buyers of you know the US equities market abroad right now it's usually large institutions right it's it's foreign hedge funds it's

sovereigns it's these sorts of things we haven't quite gotten to the point where we've evolved this capital base into you know foreign retail investors investing in the US stock market that's to come and so when we think about the you know the foreign interest has now quadrupled in the US market. But that is still not quite just the individual investor. They have not yet been empowered. That is what is happening next. As all the institutions abroad have now gotten their fill, they're going to be looking for exit liquidity. Unfortunately, that's just the nature of the game. There's still a lot of gains to be made.

The next step here is tokenizing these equities and expanding access to the individual investor abroad so that they can also take part in the US stock market. Um obviously we want this to happen at a point where there is plenty of gains left. I think in certain categories that is still the case but that is what I think we're going to see next once you know we we we talked about how the US equities market has been effectively it's at ownership highs in the US now in foreign markets. There's qu there's four times as much ownership abroad in the US market. Now I think the next step is going to be the individual investor abroad, foreign individuals that are going to get into the US stock

market as well. And I think the vehicle in which they do that is tokenized US equities. And so obviously dinari uh is in a position where they stand to benefit from this along with the rest of the leaders of the tokenized equity class. And we've seen quite a few do extremely well as of late with this guys. That has been the daily equity segment. We're going to bring up our first and last guest of the day after a tremendous Zama shielded day.

We're going to bring up the COO and CLO of Jetto. Uh Rebecca uh from Jetto is uh she is going to be answering some of the questions that we have about the Clarity Act. And so we are extremely excited to be talking with her. Uh we're going to bring her up in just a moment as we get her ready backstage and uh she's been at JTO as COO and CLO and um I think there's plenty happening as we talked about earlier in the show. I mean this is do or die time for the uh for the clarity act. I think before the August recess is when we really have to get this done. And so it's an exciting time.

Uh Rebecca, as I said, CLO at Judo Labs. Uh she leads legal compliance and policy strategy in the Salana ecosystem. Uh she previously served as chief legal and policy officer at Polygon Labs and general counsel at A company. So she has had uh quite the circuit in the space. Uh and before crypto she was a financial litigator. So no one better to talk uh about the Clarity Act and talk about some of the legal happenings in the crypto space. Rebecca, we've got you on stage now. Welcome to the show. >> Thanks for having me. Good to see you.

>> Absolutely. Good to see you, too. Thanks for waiting. We uh we've been on a we've been on a roll today. So, it's been it's been uh a good Monday. I'm curious. It is your first time on the show. Maybe you could just tell us a little bit about your day-to-day these days. I mean, Clarity Act ramping up as someone who's, you know, COO, CLO of a Protocol Labs company. How much are you, you know, planning for Clarity Act to go through? You're reading through some of this language and you're thinking to yourself, okay, if this goes through, we're going to need to do this, get this license, do that. or is it like, hey, we're not really going to do much until this thing goes through and just kind of continue operating business as usual.

What is uh what are you seeing on the ground there at Geto Labs? >> Yeah, that's actually a great question because I circulated a copy of the updated combined 600page draft of the Clarity Act and actually got a lot of questions from people about what are we going to do about this, what are we going to do about that and some of it is you have to plan, but some of it is wait and see. I think the other interesting part about clarity is there are an unprecedented number of rulemakings. So what clarity does is it lays out the framework for how things should work or how things will be treated and then it gives a lot of authority to the SEC and the CFTC to create specific rules for compliance. So yes, you'll have to do a lot of disclosures for tokens. Um

there's a big section on that. All the section numbers have changed since they merged the banking and a pieces. Um, but so the first part of the bill talks about disclosures around tokens and we're going to have to wait for the SEC to do rulemaking on that. So there's not a ton to do daytoday yet, but you know, you called out my a days um early on and when I was there, there were maybe two people doing policy on the DeFi side and everybody else was from centralized exchanges and so I got to do it then with uh Uniswap CLLO. Uh, so you know that having been through six, seven rounds of market structure that you can't plan until the bill actually

passes. So obviously keeping in touch on calls every day about it. Um, but otherwise, you know, not changing our business strategy yet. >> Got it. That that's actually very um very insightful uh given that you guys are a big labs company here and you know, I think others are watching the show and they're, you know, they're they're looking at this and trying to figure out, you know, how quickly should they move. So, very helpful to hear how you guys are thinking about things. Um, I've got questions about where, you know, where things are headed, where where we're at now. But first, could you just give us a quick status update because you mentioned uh Senate and and the A committee. Um, some of these things have just evolved and I I know the ethics langu language came out last week. prediction markets are still

putting this at like 38% to go through and I found it surprising that even after some of that ethics language came out they didn't really move it seemed like you know there was some people that have been optimistic they stayed optimistic others have just stayed pessimistic feelings didn't really change even after that ethics language came out can you give us a bit of a status update where are we what are some of the progre progress moves that have happened ad committee ethics language how important are those and and how much further forward does it put us closer to ultimately getting this thing through?

>> Yeah. So, I actually think 38% is pretty high when it comes to thinking about passing a bill. Um, the other interesting note is that maybe a month or two months ago, sta congressional staffers were banned from using prediction markets. So, you don't have people who really know what their bosses are thinking um participating. Also, you know, depending on the prediction market, maybe US persons are not supposed to be on there. uh but you don't you don't sort of have the um specific information that's necessarily flowing in from a day-to-day perspective. I also think that there's a there's a line in DC that a bill dies I don't know seven times nine times before it ever gets passed and I and I actually think that 38% is say I've been at

around 35% for the last 6 to9 months honestly because there are a ton of hurdles to jump through. It's not that if we get a vote on the Senate floor next week, uh it will even be a substantive vote. It may just be a procedural vote to move the bill forward to a substantive vote. And so there are a lot genius I I um spoke to Senator Hagerty a couple weeks ago and said you made it really easy uh you made it look really easy to pass the Genius Act and he said you can't imagine the work we did behind the scenes but I think there was this critical mass of belief around stable coins and so it was an easier bill to pass that's a 60page bill as compared to this 600page bill for

clarity. So there's that. As you noted last week, the combined text from banking and agg came out. It included very specialized language on ethics. No matter what people say about it, it is actually unprecedented to have this types of ethics language around a very specific asset class come out. There are continuing discussions behind the scenes uh with a number of Democratic senators about getting to an even better place on the ethics language. And I think if we can get there, it will be a real shame and an enormous miss and actually a miss on a win for Democrats to make clarity get across the line. I think one of the things that is missed a lot is that this is actually a really hard bill to comply

with. It actually goes to your first question like what are you doing to comply? It's not going to be easy. Um and you know I think there is some meta around Democrats in DC that says well if we put a bill forward we're legitimizing the industry. It's a relic, but it still exists. Uh, sort of that thought process around it. And I think the real answer is it actually makes it much harder for industry to progress quickly and to outpace traditional finance if we have a bill like this in place. When you do not have regulation in place, uh, I think we've seen that crypto is more risk than Tradfi is. So, we're going to keep seeing that. And this, I think, puts crypto in a sort of even playing field with Tradfi in many ways.

>> Yeah. Yeah. And there, like you said, there there are people out there that want this to continue to be a wild west, but typically those are the people that are out there for sort of questionable reasons. You know, those who are out there that want this to go through are intending to comply with it and like you said, legitimize a business and run legitimate businesses, which I think ultimately does put us in a much more mature industry and uh a much more reputable one as well. And I I think it would clear the way. But I I'm I'm actually curious about your thoughts on this. I my you know speculation here my inclination is that this would clear the way for institutional adoption and I realize that's a broad sort of handwavy term but when it comes to banks coming in you know doing tokenized deposits or

you know New York Stock Exchange other stock platforms have talked about 247 settlement they're running research and development programs for blockchain you know tokenized equities and tokenized assets. Are we in a position where the bottleneck to those programs is fundamentally the Clarity Act and getting this thing through does sort of open the floodgates if you will or is there something else that's holding those things up or there's nothing holding them up? It's just a matter of it's just a matter of time. >> Yeah, I actually think those types of programs are just a matter of time and getting regulators um comfortable with seeing certain types of instruments on a blockchain or digitized in a way that's totally new. This bill deals with

tokens, selling tokens, launching tokens, disclosures around tokens. It actually has DeFi provisions, um, how we deal with sanctions on the front end, um, and sanctioned screening, how trady can plug into DeFi, and then it has a whole section on how digital commodities intermediaries need to register with the CFTC. for what the banks are doing and what a lot of traditional financial institutions are doing. It just is a new way to do old um old types of instruments and old types of uh you know generalized financial transactions or actions and so that's just going to take time working with regulators which all these traditional financial institutions are doing now. I think your question

though goes to the heart of how fast will traditional financial institutions want to move and how much capital are these institutions putting behind these pushes. You can see Morgan Stanley has a head of digital assets. Bank of America just hired somebody but other banks are waiting to see what happens with clarity before they put the full weight of their resources behind it. So I think that's where the difference is but I don't think this is going to stop the you know treadfi era that crypto is in right now. Okay. But there are banks and there are financial institutions that haven't put full resources behind it because we don't have this legislation in place.

>> That That's right. But I don't think it's going to change what they actually could do on the ground dayto-day if they worked with the regulators. >> Got it. Okay. And so so that that was actually my next question is you know when you sort of gave us that status update you mentioned that you know this clarity act would extend additional powers to the regulators in in terms of compliance if I heard you correctly. My understanding is that this this law would essentially codify a lot of the market structure and and you know irregardless of the administration that we have in the office this would remain the law. The regulators right now are issuing guidance, but maybe you could te talk to us about, you know, what additional powers are given to the regulators through the clarity. What

yeah, where do they navigate? What are they not able to do now that they could do with clarity in place? >> Great question. So, I think there are a few different pieces to it. One, this the clarity act is legislation. It is written laws. it to your point can never be changed unless it is challenged in you know the Supreme Court or in the courts for from a constitutionality perspective. So that will be the law of the land and it won't change and you're right doesn't change you know from administration to administration. There are there's guidance as you noted that is not binding. Hard to know can you really rely on it? You would if you went to a court of law and sure a court would probably say you were right to rely on it but um but rules are also uh the agencies all have the ability to

promulgate rules. Now we've seen the CFTC put out what's called a notice of proposed rulemaking on prediction markets. We've seen that from the SEC in the past on um uh on things like communications protocols and exchanges and the like. So they can do that now. Those can be overturned from administration to administration, but it is extremely hard. It's not the law of the land in the same way, but it is rules that people must comply with in order to be in compliance with the laws. And there's a whole long process. There's an economic analysis. Those can be challenged in court, too. But it this the clarity act would really lay out what the SEC and the CFTC and the Treasury Department would have to put

out notice of proposed rulemaking on agent um the industry and anybody else would be able to give feedback on the proposed rules and then the agencies have to put them in place. So it's a normal process that happens all the time. We don't pay attention to it as much as normal but this has something like 40 to 50 independent rulemakings and it's a lot. And when you think about the last major piece of financial legislation in the DoddFrank Act, which was a long time ago, they're not even finished with their rulemakings. And as we heard last week, uh the genius rulemakings I think were supposed to be done on the one-y year anniversary and those are not finished either. So it is very hard to do rulemaking.

>> Okay. Okay. Well, that that is helpful as well. So it extends when ultimately a lot of the provisions of the Clarity Act would go into place because getting this thing through, you know, is going to instantiate into law. But we actually have to make and execute all of those rulemakings and and as you mentioned from the Genius Act, we're still not done with those. And so even, you know, if clarity does go through, those rulemakings could take years to roll out. >> That's right. There may be some interim guidance on like how to comply before you get the rules uh put in place. And there are of course timelines and clarity for when the agencies have to roll out the rulemakings and have to be finished with them. But it is a it's a difficult process. It's definitely not

easy and especially when you get tons of industry feedback and I would say AI probably makes feedback even [laughter] more vast these days and you really have to show that you've taken everybody's uh responses into account from the agency side. >> Yeah, makes sense. Um just a a bit of a more general question here. What what do you think are some of the biggest wins in the clarity text? you know, as someone who's representing a protocol and you've represented several across multiple different blockchains, you know, both the DeFi side primarily, uh, but essentially, you know, the blockchain side as well, kind of all across the docket. So, you've seen the way that these protocols operate. A lot of them have had this, you know, split DAO equity structure as well.

>> What is it in the Clarity Act that you think is going to be the biggest help to the onchain industry? >> Well, I think we can, you know, that's a great question. Um, it codifies a lot of what we're doing today, uh, in terms of how do you sell tokens and giving us information about how to sell tokens. As I said, the SEC will have to do rulemaking on that, but it'll make it a very legitimate way to move forward. We've seen it with VCs, but I actually think it will make at least certain tokens more investable um, and concrete and move them maybe more out of the retail side and into the traditional side for people to think about what to do with tokens. Um, I also think it's a huge win for the exchanges and uh the OTC desks and things like that to have a

real registration path forward and not have to be under this strange patchwork of money services businesses laws which you know go from state to state. Um, but I think it's really just you know I think it's I was thinking about when you said who's it a win for, I was thinking who's it a win for, right? Like it is a win in some ways for the industry and we all clearly see it that way but when you think about who is it a win for like and not to be super cheesy about it is a win for like the US economy and US consumers because you actually know what you're engaging in and and in my view I certainly think um people in Congress should be viewing it that way like as I said it's not easy to comply with not just from a token disclosure perspective

but this is the only set of laws in the world that touches DeFi period. Okay. And so this is going to be tough. It's going to have lots of new compliance obligations. Treasury is going to I mean the other thing that is a big win is you know we've talked a lot for many years in the industry. Oh it's decentralized in name only and we've been calling things DeFi that have control mechanisms. Treasury has a rulemaking authority under the Clarity Act to define when there's control and when there's not. And so really to cut a line for what's what we consider DeFi and where people may have regulatory obligations for onchain finance. So this is a very difficult bill and we've seen this happen in Europe with MA where you

put laws in place and it actually makes it harder for industry to move forward quickly. >> Right. And that's something that I think the industry ought to be aware of. That's and and I think that's what you're indicating as well is that our industry I mean especially early in its days we were breaking things moving fast. It was a industry made up of cipher punks that were used to sort of this >> anarchist libertarian, you know, code is law type of framework and they could move as quickly as the law or excuse me as as quickly as the code would allow them to. Um, and especially with AI now, that means extremely quickly. And it sounds like this would really put on some some ankle weights and slow the industry down a little bit. And maybe for good reason because, you know, it would in enforce some compliance, but it

would slow down the industry in terms of some of that innovation. Um, and so maybe that would be the part of the industry that would continue to operate offshore and that would be sort of the experimentation grounds. But then we would also hopefully get this very uh robust very legitimate um accessible industry part of the industry as well that would allow us to understand what we're operating in. And and I do like the the line in the sand that Treasury would have uh the ability to say this is decentralized. This is where control lies because I mean frankly, you know, I can understand how how you know people that are offchain not really accustomed to these things. They just want to trust that this thing is legit. for someone who's on chain like we sort of know that legitimacy is a blurry line and

decentralization is one one line where we can draw and and sort of say all right if it is sufficiently decentralized it can't really be gamed it's not able to just you know someone can't just take control and arbitrarily decide what to do with it if it if it is sufficiently decentralized so that that makes a lot of sense and I think there are some rules that even us technologically inclined innovators we like to see innovation but there there are some of these things that we would like to see enforced. Yeah. >> Um >> and to your point on the wins, there is a preservation for self-custody and recognizing that as an inherent right. I think that's obviously very important.

The other thing that is um good for the industry, I don't know if we call it a win, but it is a cottification of law is something called the blockchain regulatory certainty act or the BRCA, which it goes to what we were just talking about. It says if you are a non-controlling software developer, so you don't have control over user assets, you do not need to register as a money transmitter. That is the line that Fininsen has been drawing for many many years. I'd say a decade, but people may, you know, tag it back to the 2019 guidance. But I think that's very good because there has been at least some use in the past by prosecutors of of trying to put that in touch to shut down DeFi.

And so I think that would be a very helpful point as well. I remember I remember that you know uh people were a little bit concerned whether that meant uh wallets it could mean aggre uh aggregators exchanges venues that were just potentially just AMMs just decentralized exchanges but there was some question on whe whether or not they were included in this money transmitter license regulation but you're saying if clarity goes through that wouldn't be the case if you're not custodying funds and most smart contract protocols do not custody funds most of this is self-custody. They would not get wrapped up in that.

>> Well, the line is not custody. The line is control. So even if you self-custody, if there is control over the protocol, you're not going to get the um coverage from the BRCA. And so it goes to this uh part of the bill that I was talking about where Treasury could define what is a controlling versus a non-controlling developer. So if you fall within the non-controlling part, you do get coverage from BRCA. But even if it is onchain finance where you're using self-custodial wallets, but there is control over the protocol, which means you can take user funds at any time, whatever the whatever Treasury decides is the line in the sand, you don't get coverage from the BRCA.

>> Got it. I I could also see how that could mean like some of these actively managed vaults as well. You know, the that that would certainly indicate that they have control. you might be, you know, self-custody, you can withdraw from the vault, but while you're deposited in, uh, they can manage maybe amongst some whitelisted assets. >> Yeah, it's that's so tricky to figure out. And this is what I've been grappling with for so long having been in DeFi, which is, you know, if you do have control, what are you from a regulatory perspective, right? Are you a trustee? Are you a fiduciary? Probably neither of those things. So this is actually something we need to be able to progress DeFi vaults, you know, moving DeFi or onchain finance into institutional use cases. I think it'll

be really important for that. >> Yeah. Yeah. And that is where I think there is, you know, this industry is poised for a lot of growth, but I I could understand why institutions might be on the sidelines kind of looking from the outside in because they don't have that guidance quite yet. So this is an important part that is, you know, uh kind of shortcircuiting some growth at this point. As we're talking about some of the nuts and bolts here, I also wanted to to follow up on the token disclosures that you mentioned and how you particularly mentioned how this >> seems like it could be a win for Democrats and >> at least from my point of view and I'm not in DC, but it seems like Democrats are the ones that are, you know, holding this up. Um, is that true? Is it the

Democrats that are holding this up? I I I think it is. And and and if so, why do you think token disclosures is particularly a win for Democrats that they could be leaving on the table? Oh, I think clarity in general is a win for Democrats from a customer protection standpoint and from a, you know, US economic standpoint of view. I think, and this is a political uh tactic, not a Republican or a Democrat tactic, but everybody is trying to get the most they can for what they believe their constituents care about. And I think you can't fault either side for doing that.

And there are few red lines that Democrats have, a few red lines for that Republicans have. But I think ultimately people want to get to the right result which is one putting together a bill that hangs together and makes sense and two that moves it for moves the industry forward in a way that gives you know good guard rails. >> Yeah. Um in in this 600page you know uh bill here do would you say are there things that just don't belong? Like I I understand it's intricate. There's a lot of nuances when we're talking about who has control, who doesn't, where the rulem comes from. But I I've also heard just stories, you know, when these bills come through. It's like, you know, politicians maybe slip in, you know,

we've got maybe a military package, but they slip in a health care thing or vice versa, right? Healthcare and you slip in a military. So, are would you say there are things in this in this in this gigantic bill that just maybe it's a little questionable? Why are those things in there? Is that is that holding things up when we don't really need it in there in the first place? >> No, not in the same way that you're talking about. I think what you're talking about is something like the NDAA, which is the National Defense Authorization Act, that goes through every year. It has military spending attached to it. People know it's going to move because it's pretty necessary, although it didn't move this last time because there's been so much politicization in DC right now and um a lot of hyperbole and people going to

both sides. But, you know, people will tack on bills that they want to have moved with these certain bills like the NDAA. There may be one or two little things peppered in there that we'll see get cut out in the House potentially, but uh one people aren't really super focused on those. The staffers in the House are focused on things they might want to have excised when it comes to the House, but this is really a very cryptofocused bill and you don't see things like, you know, animal rights provisions being tacked on into the end. >> Okay, that that makes sense. I think that's going to be helpful to get this thing through. And you know, it seems that we've got 10 days, right? That's effectively what we've got before the August recess. How how real is that deadline?

>> Um, it's pretty real from a procedural standpoint. I don't think anybody expects there to be what's called a cloer vote this week. That's the procedural type of vote that I was talking about where people say, "Okay, we think there are enough votes to move this bill to the floor." People don't like to move bills for substantive votes to the floor. Leader Thun certainly does not want to move a bill to the floor. that does not look like it is going to get a full amount of votes. And look, it didn't the first time on genius. And then um Senator Hickor has been very public. He went he said to the leader then, "Give me a week. I'm going to get this across the line." And he did. And then they came back. They had another closure vote. They had the procedural votes. And then it got across the line

substantively. So I think all we really want before the August recess is a procedural vote to say it should move forward. And that's really important. There are actually a few procedural votes that we'd have to get through with I don't want to bore everybody with those details. So, I think that's really important to have by next week and then we when we come back from recess, we'd go through and have some of the substantive votes. >> And what I hear you saying is that if we get the procedural vote sometime in the next week or so before this deadline there, the expectation would be we would come back from the recess and this substantiative vote would go through as long as we get the procedural vote in the next 10 days. Hopefully, um, you know, as I said, a bill dies a number of times before it ever becomes law, but I

think everybody is hoping that we see a a procedural vote before the August recess. >> Okay. And what would you say are the things what's holding us up from getting a procedural vote? >> Ethics for sure. Okay. Uh, and then uh I think there are still some concerns around the blockchain regulatory certainty act and whether we need to make any amendments there. That's been a big piece of it. The other interesting piece that people haven't talked as much about is that the tribes have been pushing for potential provisions relating to prediction markets. And this bill does not touch traditional derivatives. So it doesn't touch per it doesn't touch prediction markets. It doesn't touch the CFTC's current authority. All it does is give the CFTC

new authority over crypto spot markets. Um but the tribes are seeing this, as I was saying before, everybody is using this as a an opportunity to exert leverage. So, there's been some of that in the background as well. Um, but I don't think that ultimately the prediction market question is going to hold things up. >> And when you say tribes, you you're talking Native American tribes that are currently running casinos across the country and they're >> sort of looking at the prediction market space as a potential infringement on the gaming industry.

>> That's right. That's exactly right. >> Okay. Okay. And so are they trying to include some regul like regulation in the Clarity Act to keep the prediction markets and the per markets at bay? >> Yeah, a little bit. They So definitely the prediction markets. I don't think the tribes are as concerned about per um but they want to have some language in there because there are these developer protections for things like writing code running validators and nodes like very heavy technical work that is scoped out of the regulatory perimeter that's captured in clarity and there's been discussion around whether decentralized prediction markets and really I think they're looking at poly market but probably other ones that are online on chain um and saying we don't want those

to be captured by these developer protections that are in the bill either on the spot side or on the equity side. >> H >> I know. >> Yeah. >> DC is a funny place. The things that you don't expect to have happen. But look, I do think that there we forget that just as we have interests and can, you know, we're a constituency of a number of people, there are all sorts of industries out there who see this touching them. Yes, we saw the banks and we're like, "Oh yeah, of course the banks are coming because we they know we're coming for them." But people have seen the expansion of, you know, the digitization of finance, onchain finance, whatever you want to call it, and seen the threat that it poses to existing businesses.

>> And would you say that kind of the approach that, you know, the incumbents are taking, whether those are the tribes or the banks, you know, they're sort of trying to save off the the, you know, DeFi industry as long as possible. Do they do they maybe see that it's inevitable? They're just trying to buy themselves time so that they can roll out their prediction market offering or they the banks can incorporate some of their blockchain finance aspects as well or are they just trying to permanently ban these things? >> Uh we just saw right before this it was announced that the CME rolled out single equity futures in a 247 uh way. So and we saw the CME sue the CFDC over per you know about a month ago or so. So, I'd argue that uh everybody's trying to buy

themselves some time or exert maximum amount of leverage to get things that they think will protect their business or keep their moes in place. And I, you know, I would say you can't really blame people for doing that because people are used to their businesses operating in a certain way for decades and so they see the threat that the changing world is bringing to them. >> Yeah. Wow. Rebecca, I think that's I think that's about it. I'm sure we could, you know, continue to talk, but in a couple hours there's going to be more news that comes out of DC and then we're going to have to, you know, do this all over again. I I I'd love to have you back on before that that deadline and just, you know, make sure that we get a chance to catch up before this ultimately hopefully, fingers

crossed, goes to the procedural vote. >> I know. Well, happy to be here anytime. Thanks so much for having me. >> Awesome. We'll see you next time. Thanks so much, Rebecca. >> Bye. >> All right. Yeah, I mean 38% like it like like we said, not too much volume on those things and who knows those aren't too close to the regulators or the legislators themselves. Anyway, um fascinating stuff. Uh and she makes a great point. Rebecca's fantastic. I mean, her and Salman from uh Plume, um you know, they uh they're both just super knowledgeable. I mean, they spent a lot of time in DC. Uh Rebecca's been all across the docket, Polygon, um Jetto, a so like DeFi, blockchain, L1, D5, L2, like just you know, Solana,

Ethereum, really really expansive uh awareness of everything that people are looking for on chain across all the chains. So very cool uh to hear her perspective and she brought a lot to the table. I mean, you know, you guys heard about the ethics language, you heard about the token disclosures, you heard about uh some of this blockchain, you know, control regulation, u which some of this, you know, even as an onchain native I would be looking for because, you know, we don't have some of the most sophisticated technology out there. There's private companies like chain analysis that are actually doing the labeling, right? So they know, you know, who, you know, there's 30 wallets and, you know, there's 30 different people voting on this governance proposal, but

really they all are owned by the same person. There's one person voting on this governance proposal. Like there are some very questionable activities out there when it comes to portraying decentralization and creating this decentralization theater. And if we could actually, you know, have some sort of control on that, it would be helpful to get a better understanding, a more clear understanding of where things actually stand in terms of how decentralized they are. Um, so that would be super helpful. I'd love to see some of that. Uh, but we uh we won't until the Clarity Act ultimately does go through or not. Guys, fantastic show. Uh, shout out to Zama.

They powered uh most of the show today. Zama Shield today for quarter two of 2026. Appreciate you guys rocking with us. Um, a lot of you guys in the chat have done absolutely fantastic with us. Keep rocking. Um, and man, we're going to keep it up, guys. You You're going to want to tune in pretty much every day until clarity goes through or not. Seems like that could be a pretty bullish catalyst to get us off of this floor. Uh, also war in Iran or not, we'll see. And, uh, plenty of things happening. So, don't go anywhere, guys. We'll be back same time tomorrow. And uh we'll keep bringing it to you guys real every day, every time.

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