Making Crypto Feel Invisible

Transcript

[applause] >> Thank you all for being here today. I'm really excited about this fireside chat with Itai. Um, New York is a special place for optimism. This is kind of uh, home base for us. We've got our HQ out here. Um, so it's good to get to see high-caliber events like this in our backyard. Um, and uh, Itai, it's going to be a pleasure talking to you today. Thank you for your time. Um, yeah, love to love to, you know, get a quick introduction from you and and we can kick things off. >> Yeah, absolutely. So, first, I appreciate appreciate uh, you you kind of joining me for this. First, hi everyone. I'm Itai.

Uh, I can dive into, if helpful, a little bit of kind of what Dynamic is. Uh, but so, just who here has heard of Dynamic, by the way? Okay. Who's heard of Fireblocks? Okay, great. I'll tell the Fireblocks team we're not losing as compared to Dynamic. Great. Uh, but uh, so I'm Itai, again, uh, co-founder of Dynamic. Uh, we we started Dynamic in late 2021. Um, so you and and for those that don't know, we've we've kind of been acquired by Fireblocks towards the end of 2025.

Really, what Dynamic does in a nutshell is embedded wallets. Um, you know, the premise when we started this was kind of uh, crypto hype and the premise was very much that, um, you know, every app on your phone will have a crypto wallet. And that kind of is coming true and we can talk through that. Uh, but that that's a very quick intro. >> Mm, perfect. Um, so I kind of wanted to set the stage for the discussion a little bit and, you know, like Itai, like the next frontier of crypto adoption is it's really about that moment where users, you know, are not thinking about crypto at all, right?

Like full chain and asset abstraction. Um, so, you know, we want to we want to get into like how embedded wallets uh in this chat um, you know, we want to talk about things like the specific use cases that they're powering, uh which include things like cross-border remittances, you know, payroll, savings, and and the defining challenge, um which is, you know, shifting away from, you know, um the chain itself and more towards hiding that, hiding that aspect, hiding the underlying infrastructure that's powering all of these user experiences.

Um and then, you know, when we think about enterprises, I think, you know, whether it's a centralized exchange, a fintech, a payments company, a financial institution, um they're seeing wallet infrastructure mature at a high rate. They're seeing DeFi kind of come to the fore and really shape or reshape the plumbing that underlies uh you know, uh traditional financial infrastructure and and financial services. So, this is like a great time uh to be in the wallet space, I think, and to be powering these wonderful abstracted user experiences. Um And I think that's that's like the the backdrop uh of of the discussion, but to kick things off, you kind of gave us a little

bit of a a background on um on Dynamic, but I'd I'd love to love for you to walk through like Dynamic from inception through to, you know, the recent Fireblocks acquisition last year and how the organization is evolving, you know, given the current trends and and what institutions are demanding. >> Yeah, absolutely. So, I think to your point, I alluded to this a little bit, but when we we started Dynamic pretty much in in um you know, crypto summer, uh end of 2021. For those that have been around, you know, we all were getting rich off NFTs and every the world or some of I don't know folks made money, I lost money. But uh uh um you know, we we all had a great time and the the crypto was very much an

isolated thing. Right? You had the crypto industry, it was very separate. Uh again, you would have a lot of experimentation, a lot of deep in experimentation, RWA experimentation. You have you know, we had DeFi summer, etc. And that's when we started Dynamic. And the premise was that it is very painful for developers to actually build these tools. Right? You needed to know about gas fees and you need to know about private key management and you need to know about all this type of stuff that wasn't very scalable. And so the premise for Dynamic was very much that you need a set of developer tools that abstract all of that away from you. And you know, at the Dynamic we kind of said at the end of 2022 we gave like an internal

presentation and we said, "Well, we we're currently use only kind of working with crypto companies and our goal for 2023 is to partner with one fintech." Right? That was our kind of goal. And fast forward today, our goal is pretty much reversed, which is it's mostly fintechs and if we get kind of a couple companies that are like crypto natives, we get very excited because we can talk to them in Telegram instead of Slack. Right? Uh but we we kind of have seen this as we were talking, we kept saying, "Look, every app on your phone is going to have a crypto component in a couple years." So if you open your phone in 5 years, um you know, every app that you look at today is just going to have a wallet in there. And in in 2022 we said 5 years, in 2023 we said 5 years, 2024 we said 5

years and then 2025 we said, "Oh, it's now." Right? Uh and so that that has shifted very very rapidly in terms of the adoption and kind of willingness both of non-crypto companies, fintech companies to look at kind of crypto rails and crypto infrastructure. And kind of the the types of use case that come up all the way from experimentation to now what we're seeing in payroll and remittance and we'll talk through that. And so that's a shift that that uh has happened in in within dynamic. You know, we I wear more buttoned-up shirts than I used to, which is also a I guess a resulting shift, but that's really what we've seen in in the acquisition with you know, by Fireblocks pretty much

accelerates that, right? Fireblocks for those who don't know, you know, powers about six you know, trillion dollars in yearly volume that passes through their systems, about 10 or 15% of all stable coin volume passes through Fireblocks systems. And so, you know, when we think about working with the Western Unions of the world and MoneyGrams and the Visas, etc., it it you know, that kind of accelerates dynamic. >> That's great. I think like, you know, this transition from crypto native, you know, to more of the enterprise, like you said, a lot of our your customers now are are very much FinTechs and financial institutions. I think, you know, that kind of sets maybe the tone for the rest of the conversation where we we double click on a couple of key themes, right? Like I

think embedded finance is definitely top of mind for for most of I'm sure your clients. And you know, we're seeing embedded financial applications across everyday apps that we use, whether it's Uber or Airbnb or DoorDash, Grab. All of these are are starting to incorporate some sort of financial applications. And everyone is effectively turning into some form of a neo bank, if you will, right? So, um embedded finance, I think a key theme here. And then another one is how institutions are actually building on crypto rails as well. So, maybe we can double click on on those two items. And you know, you know, we were in New York last year at Progma, EGS Progma. And you gave a talk about

how to build you know, a FinTech application using stable coins. We've seen stable coins, you know, it's very topical in crypto. It's maybe the first you know, area where we've seen true product market fit, over 300 billion and and total supply you know in stable coins. Everyone's taking notice including large fintechs and financial institutions. So I'd love to hear from you like maybe we can touch on the use cases. What are the stablecoin use cases you're seeing in embedded finance as you're having these conversations and doing discovery with you know prospects and existing partners and and you know what are maybe some of the more emerging ones and you know how

is dynamic enabling those specific use cases for your customers? >> Yeah absolutely. So I I think to your point and maybe that's the theme of kind of this this conversation is crypto's moved from being front and center and to being very much in the background very much like infrastructure in the way in which you kind of build a global neo bank right? If you want to build a global neo bank in a weekend it's pretty much your only option is to use crypto rails right? And and we're seeing a bunch of these use cases and I I think two we're seeing anywhere from you know a gentle commerce and things like that all the way to more traditional quote unquote payment use cases. Two that are super interesting to us that we're spending a lot of time on. One is the trade

everything use case and I think it was alluded to this in the coinbase conversation is we're seeing this shift where non-crypto companies the e-trades of the world and the Robinhoods of the world etc. Start bringing on more additional things you can trade on their platform and the way they're doing it is crypto rails and the reverse is also true. So very crypto native companies or crypto adjacent like the calshis and polymarkets are starting to bring more types of markets into their system like prediction markets etc. Again using crypto rails. And so one theme that we're seeing is this trade everything theme the the idea that you're going to have an app on your phone that is your financial hub to trade anywhere from

stocks to uh prediction markets to earn yield on you know yield bearing platforms etc. to like buying RWAs and so forth all in a single spot. And to get to that you need embedded non-custodial wallets within your system. And so we're seeing we get to work with the companies like Bitfavo which is one of the larger exchanges in Europe and we're seeing that they're putting essentially a non-custodial embedded wallet within their existing platform. It's invisible. No one sees it. Coinbase actually I think does the same but it lets them open these types of investments that their users couldn't do before. So that's one big use case.

The second large use case is is essentially the payroll remittance use case. Right? We we're fortunate to work with companies like Western Union or Papaya Global and really what we're seeing is we're seeing the use case of I want to pay someone in Argentina. That person today if I want to pay them on a Friday, that person gets their money on a Monday. Uh on every $100 they lose a dollar or two in uh kind of that transition. Uh and they automatically converts into kind of you know pesos or or whatever actually I don't know what the Argentinian currency I I might be butchering like an entire If you're Argentinian, please accept my apologies.

I'm terrible at this. Uh but essentially you know you don't have a way to deal with the high inflation costs as a result. And so really what we're seeing is we're seeing the the Western Unions and the Papayas etc. say, "Look, why do I not just give you this this non-custodial embedded wallet embedded in your app? It looks and feel like any other part of your app. You log in the regular way. And when you receive that money instead of 4 days, you receive it within a second. It costs a cent. And by the way, it stays in dollar denominated accounts until you actually want to move it out.

So you can earn yield on it, right? So you can kind of add a card like a Reap or Rain or any one of those, into that into that uh embedded wallet and spend. Or you can even do more sophisticated stuff. So, that's a second super interesting use case. Again, doesn't crypto is nowhere to be seen. It's completely in the background, but it's a really powerful use case because it just allows folks to kind of get access [snorts] to things they couldn't get access to before. >> I used [clears throat] to work for a company that used to papaya and had they had, you know, more of the integrations with crypto and DeFi under the hood, I probably would have left, you know, my my earnings on papaya, but it, you know, instantly we're moving it out because

there isn't any of those features and products that are useful, right? That provide the yield and provide the payment rails that are quick and seamless. >> That's exactly right, right? If you think about it from their lens, right? So, papaya or or, you know, creator economies, right? The the TikToks of the world. Today they do payouts and the money leaves their ecosystem. And that's really bad for them, right? But if you can keep that money on your ecosystem, if you can keep that relationship, and you can do it globally, you get massive benefits as a company, as an end user, etc. That's the power of this.

>> Totally. Totally. I I think like maybe offering >> [clears throat] >> optimism's perspective, you know, when like the the big use case that we see from a lot of our enterprise prospects and clients, really revolve around earn, you know, and powering [clears throat] earn products, whether that's in a fintech app or a financial institutions front end or a payments company, that seems to be the one that pops up over and over again. And the way that we think about it is is really we approach this from two perspectives. It's it's, you know, there's the yield source that's powering that earn. And if you if you think back to maybe one of the first DeFi mullet examples, you know, we've all heard of, you know, Morpheus and Coinbase's original DeFi mullet,

where you could collateralize BTC, you take out a USDC loan, that all happens on Morpho, and we've seen, you know, more of that, more of those DeFi bullets across, you know, Aave's of the world and and other DeFi protocols, but we really look at the infrastructure that's powering those earn opportunities. So, we think about, you know, reputable curators, we think about, you know, blue chip protocols like the ones I talked about, we think about protocols that are actually investing sufficient resources in hardening their security posture. And, you know, security is becoming ever more important. I think I think Mythos was just released today a a limited version of that, but I mean, I imagine we're hopefully, fingers crossed we don't, but I imagine there's going to be,

you know, more exploits on the horizon, and we need ways to mitigate all of that. So, security is extremely important um to power these earn products that are plugging into enterprises that ultimately are providing that seamless like, you [clears throat] know, very fintech like web two like experience for users through, you know, wallets like Dynamic, of course. Um on the security front, I think like, you know, we think to a lot of the yield infrastructure, whether it's a protocol or it's a vault. You know, everyone does audits. Audits are important, but I think, you know, taking the next step, form- formally verifying your smart contracts, doing fuzz testing, you know, ongoing security monitoring.

Many of us in the room who are builders probably use tools like Hypernative or Guardrail or Zero Shadow, you know, having bug bounties. And there's a lot more we can do on the security side, and I think, you know, as an industry, we need to invest more in that so that we can ultimately appeal to the to the large enterprises in the fintechs, you know, that where the money is going, it's secure, and you know, they get that warm gushy feeling inside. Everything is fine. You know, nothing is ever 100%, but I think we there's a lot more to do in this industry to harden our security posture. So, like with that, I'd love to hear from you, Tyan, you know, what is uh what is like the security What are the security features within Fireblocks MPC wallet solution look like? And And where are you investing time and energy on

that front? >> Yeah, absolutely. And And by the way, just on on the earn point, I think two two two important points around that is first, you know, you you guys have led the way in a lot of this type of stuff, so it's really cool to see. I think we've had conversations probably like a year ago around kind of integrating earn, so it's it's really cool to see that come alive and alive and on that front. Kind of shoutout to the for those that haven't seen the Morpho team, uh today raised uh a tiny, what I would call a seed round of $175 million. Uh so, shoutout to them for doing that. Uh and they're they're incredible partners. On the um security side, you know, that's that's actually one of the things we're fortunate with with Fireblocks. Fireblocks is very much a a security company, right? I think I

mentioned this before, right? We kind of move over $6 trillion a year. We secure, you know, um most of the global brands out there, whether it's Nubank, Revolut, or Robinhood, or others, all kind of run on Fireblocks systems. And so, it is managed to to an extreme level both and we think about security depth both on the anywhere from supply chain type management to kind of how detection works uh to how, you know, switches that you have, etc., all the way to cryptography, right? And so, we have spent a lot of time thinking about the right cryptography for securing this stuff at scale. Fireblocks has a full team around uh cryptography. We specifically use what's called MPC

uh for the geeks in the room, you know, Google it after multiparty computation. It's a really cool set of math uh type uh solutions. It's zero knowledge proof type solutions. Pretty much saying that there's no private key, but rather uh different shares that only together kind of work. Uh and that's that's really important. It's really important both on the security side. It's actually really important parts of the world around in Europe and others around custody uh which is okay can I ensure that an end user holds a share and can independently export a wallet right and so when we talk about all these use cases it's a combination of how do we secure this a scale but how do we still provide self sovereign ways for someone to export their keys and take it with them and so that's that's

really how we think about it it's pretty much 80% of the time we spend internally is security. >> It's good to hear our money safe. I I want to spend maybe a little bit of time we can maybe run through this cuz we got a couple minutes left just around financial institutions and what they look for kind of in the same vein you know security is really important but compliance audit trails risk controls are extremely important you know at optimism we've we've invested a ton in privacy solutions you know privacy is definitely a non-negotiable requirement for a lot of these financial institutions so you know we recently announced privacy boost for confident confidential transactions.

We've got multiple compliance layers built in including programmable block building which enables a lot of the rules and policy setting at the sequencer level for transactions you know like I tell you like I'd love to hear from you around you know what you're hearing from financial institutions on the front lines as it relates to those requirements and how is again dynamic you know enabling them in that regard. >> Yeah so we we we're fortunate to kind of talk to financial institutions very early in their journey right so they start very much with okay we can get the high level use case we get the kind of you know you can move money at scale globally and you can do it really fast and really cheaply.

Right and then you start getting into second and third order questions and after a couple weeks the engineers for all these financial institutions come back and say wait all of this is public on chain like and and at that point it hits everyone that well crypto is public right you can go to ether scan or whatever base scanner uh know, um and even the tools that are out there and pretty much see all transactions. And that's a big no-no if you're moving bank-to-bank transactions or if you're doing payroll or if you're doing remittance or accounts payable, right?

That is competitive information. That's someone's personal information. So, privacy becomes this really non-negotiable uh type thing, right? I I think uh as you mentioned, right? You guys have led the way with a lot of innovation in terms of kind of privacy protocols. There there privacy-specific chains like Canton and Aleo. Um which which which have really unique and and and sophisticated approaches. There privacy pools and things like Tempo and others. And And what you're seeing is that And Solana has private transactions, right? You're You're seeing that I don't know if I can say Solana in an ETH conference, but like uh you know, it'll be fine.

Uh but essentially, you're seeing all these types of uh protocols come up, which is essentially critical. I think it's not going to be a discussion in next year or two. It's just going to be a default thing. I don't think a fintech will launch, um you know, at scale without this. >> I think we're almost at time. Um maybe like one parting thought from you, Tai. Like just, you know, what's what's top of mind? Maybe something that you guys are working on that's on the road map that you're looking forward to or an interesting trend you're seeing that's informing the product road map. Um yeah, what's what's top of mind in that regard?

>> Yeah, so top of mind for us in in for for many years we talked about and you know, as I said at the beginning that wallets will be on your phone in the next 5 years. And that always was 5 years away and all of a sudden it's happening now. And so, top of mind for us is now scale. Is how do you do that at global scale, right? You're You're Each of us has um five, 10 financial applications at least on our phone anywhere. And I consider an Uber or uh know, an Airbnb financial application that sends and I consider um a Instagram and a TikTok a financial application. And all of those are going to have wallets and you know, within them. And all of those need to think

about security, need to think about on-ramps and off-ramps and privacy and um you know, gas fees and that type of stuff. And so, the road map for us is getting that to work. Making sure that when you wake up in the morning on a Saturday and you want to build a global neo bank, you can. And within midday Saturday with Ethos, to your point, or I think they have a different name for it now. I I feel like uh um uh they have a new name for it. >> Less scary version. >> Right, yeah, exactly. Less scary. Uh you can just do that very quickly. That's what we're focused on.

>> Amazing. Um you tie, thank you very much for this chat. This has been quite illuminating. And thank everyone in the audience. Um we're we're excited to kind of hang out later on afterwards, but uh yeah, pleasure chatting with you today. Thank you so much. >> me, Bruce.