Real-World Assets: When Crypto Meets Reality | Jon Walch, Jillian Bethel, Ivy Kang, Felix Machart

Transcript

[Music] Jillian from ER and stream Ivy from plume and Felix from Greenfield Capital thanks a lot yeah I mean maybe we can each say a little bit of thing a little bit about our project um I'm fix from Greenfield Capital um we are investing um across crypto uh defi consumer infrastructure and our core thesis is that defi can reach its true potential if if it can serve the real world and um yeah hence I'm really excited to moderate this panel I'm Julian I'm from

earre uh we're based in the Bahamas and um we're turning wages into into liquid programmable uh distrib uh digital assets so that employees could instantly use it and Access Financial products and credit hey guys I'm Ivy I'm on the BD side of plume um we are an alvan focused on rwas and focus on the intersection of rwas and defi composability um you know we're looking to bring on all types of tokenized assets and actually make them usable um interesting and actually um allow crypto users to tap into real world yield hey guys I'm John from superstate I'm the head of engineering uh what we do at superstate is we basically take

private mutual funds with investment mandates and then we put them on ethereum as the R c20s so one of our products is a treasury bill fund the other is a cash and carry trade not too different from Athena and uh our assets have allow lists but we put uh a lot of effort into making sure they're still composable in defi yeah I think generally us crypto natives we're talking about onboarding Audi Rays while tread fire rer talks about onchain Finance I think ultimately it will just be finan all running on blockchains with the advantages that that encompasses we have around like 600 trillion assets globally while crypto is only three trillion at the moment around uh like 18 billion of tokenized assets

excluding stable coins which are 220 billion at the moment so we have loads of room to grow and uh I guess you guys are the ones that making it happen um and are you rather providing the the the tax stack that improves an existing value proposition for your user base or an existing tax stack or are you rather providing a solution that allows users to Leap Frog non-existent solutions for example in Emerging Markets yeah so um when we so for earn stream we we exist in an emerging market that has some specific nuances one of the big things that we have in the

Bahamas is exchange control that's been limiting how much we can access or how much we can use or how much we can benefit from some of the existing Tech but then of course there's Tech that exists that is already out there already usable things like streaming payments that you know a lot of dowo companies use um and so I I think we have a a mesh of of of of both um where we use a lot of the protocols that already exist but we have to innovate some protocols and and in one instance totally recreate how we approach um some of the tech to be able to fall in line with regulation that's not likely to change right away so um for the tech yeah we we we have some small changes to make it fit the

mar markets and as we go through the carabine I'm sure there are other like nuances that we need to to match and we'll have to change tech for that as well yeah yeah at Plum I think our goal is really to allow asset issuers um all the way from you know the large Franklin templon to the Middle Market you know credit funds all the way down to smaller issuers really tap into tokenizing um without the headache of hiring you know smart contract Engineers we actually built an in-house product called Arc um this is a tokenization that's free to use for our whole ecosystem and it deploys smart contracts directly and lets asset issuers manage the life cycle of their tokenized assets on plume um I think on the you know more

ecosystem side we're really not trying to reinvent the wheel cuz I think the beauty of you know what other ecosystems have built bu arbitrum you know ethereum mainnet um you know optimism is they built really great Defi composability and we're our goal was really to bring in some of these larger protocols um you know the pendal the Spectras the AES of the world to accept these tokenized assets that are coming on to plume and really be kind of like the the breeding ground between the two so imagine you can take a tokenized credit position or yield bearing treasury or some sort of yield bearing asset that's potentially well you know one of your assets um and actually make them let's say collateral

on on a permissionless borrow lend Market or allow you to trade the yield portion in a DEX um that's something that you know we're trying to bridge um so we're not creating you know all of our H our products in house but really trying to um bring the hard part on which is the tokenization part and allow the the benefits of composability and um the integration with existing protocols happen yeah at Super saate there's a lot of uh similarities with plume in the sense that uh we're not really trying to reinvent the wheel but we're trying to take assets that exist offchain and make them useful onchain um and be used widely throughout def5 so that's in a nutshell cool and what what kind of asset classes are you seeing most demand

for be it from uh the issuer side uh or the like so supply side or demand side and is it rather retail or institutional and what are you you guys focusing on specifically go yeah I can take this one um so on superstate what we're seeing a lot of demand for so far is especially our treasury bill fund um a lot of stable coin issuers are starting to use um USB that's our treasury bill fund um to back their stable coin and potentially pass some of that yield back to customers so for example um fra just launched their new stable coin F FRX USD and it uses uh two different superstate

assets to back it along with other assets as well yeah I think um treasuries are probably the ones that are going to have the most kind of next product Market fit um I think what's interesting is um any type of Yi product that has is in the profile of like more liquid so it could be um you know it could be you know payy products where you're financing crossb payments um anything that's more liquid I think will have kind of the next iteration of traction um you know what stable coins did really well was they were actually the original rwa because they're backed by treasuries but the reason why people don't actually even think that they are rwa is because they kind of transcended that and um you know

they're composable they're permissionless um anyone can buy them and purchase them and sell them um so I think you know as we move down to kind of the scale probably go from treasuries to money markets um and just go more um as the industry matures you'll start to find um you know credit things things of that nature that get more um composable and used throughout crypto yeah and for us so we're still very very early stage so we don't we we haven't seen the demand yet but I mean what we're banking on is looking at exactly I mean what we're doing is tokenizing wages and so the programmability that brings to the retail Market is something that we think is going to be very very useful for those markets and then treasury management and uh things like yield for um the institutional markets

is what we are looking at and we think will be beneficial to those markets yeah can I throw in a quick wild card so I think I think the next asset class that's going to come on chain pretty quickly is tokenized equity I don't think we're there yet but I think it's actually going to happen really really fast yeah I guess we already see some tokenized ETFs I mean I think mirror for example back in the day was a pretty wild success until it was not like a legitimate version yeah but yeah definitely I think that that's really cool and like if we come to to that like in the composability part like having large like large number of asset classes the more like the biggest asset classes on chain enabling then just automated portfolio management via emm I think

that's a really exciting use case personally um what are what what would you say are the most significant advantages of tokenizing individual assets or or funds I guess the question is a bit like yeah where where do we also see like more traction uh in in in the short to midterm um since I think it's it's a bit hard for for individual investors to like track for like all the individual assets and uh and kind of invest for example into individual loans but um yeah in your mind maybe from your use use case perspective what's what what what are most significant advant this is this is the problem that um we're building earn stream for um we find that like in in the Emerging Markets or in in the markets that we are

in employees just can't access Credit because they they can't access uh the financial products that are needed to to basically um for for lenders to give them the the the products right now 40% of of employees in the Bahamas have access to credit and financial products um uh the rest of the rest of them the workforce is is underbanked and so yeah so that's that's kind of like where where um where we see that benefit um for tokenized wages yeah forgot your question halfway but yeah we're there yeah I mean like you could say like way like a tokenized wage is like an

individual tokenized asset and like I mean there you can basically tokenize all different kinds of uh like guess physical asset PLUS Financial assets and like a a cash flow like a stream definitely kind of like you can represent that yeah that cash flow is where there's a lot of benefit we actually we did a we did some models um uh based on minimum wage um workers and if if a worker and let me get my stats right if a worker enters a job with $760 of debt it would normally take them and this is absolute minimum wage which just Rose in the Bahamas and Stephan's going to have to tell me what it is I think it's $725 an hour now um if they were to enter a job a new job with $760 in debt

um they would be able to pay that off in8 months but with the accumulation the fast accumulation of streaming uh or that increased cash flow they're actually able to pay it off in three and a half months by doing nothing different just because the the cash is accumulating faster and that they can actually allocate it because it's Pro programmable allocated toward paying off the bill faster and maybe also more Capital efficiency for for using like the stream payment uh like maybe even in a yield bearing asset absolutely and and that's without having uh the yield bearing side and that's without calculating extra fees on top of that for late payments yeah yeah I think one thing that we're really excited about at plume is actually unlocking liquidity

for a lot of assets that are very idle um currently sit in know wall Gardens and don't really have much utility uh one good example I think a lot of companies in the space are trying to do is um actually tokenize um you know private markets so I can think of like preo Equity or um you know private positions that are held within funds um you know what's really great about um liquid markets is that they enable price Discovery um so you know imagine you can actually have very very liquid uh trading markets that um don't use a middleman broker to match buy and sell orders of let's say you want to purchase SpaceX stock right um actually having this on a decentralized um trading venue

um where you're not kind of only matched with Whit listed ad Whit listed participants or other institutions can actually now enable you know folks to go down the line down to retail um and then also enable kind of a a price discover of these um private markets that have traditionally been held very close to like the company and and very close to the investors that are close to the company um so I think that's one also potentially using these assets as collateral right um being able to generate yield potentially off a private Market position or being able to generate yield off of like a tokenized S&P is something that unlock is unlocked by um by tokenization as well so there's some like Niche use cases but um I think

those are like net new benefits that we can bring to the market yeah I think one thing that we all take for granted uh being in crypto is trading 247 with real-time prices and uh so superstate we make um mutual funds and traditionally with a mutual fund you will have one price per business day right and you have to wait until the next business day to get the price of the previous business day to actually exit your position so to try to solve for this um we came up with what we call continuous price ing for USB such that for every second you can get a u continuously increasing Price of USB uh based on um what the yield of the treasury

bills is so this allows people to enter and exit positions very very quickly and pro provides more of a you know real-time price for a asset class that didn't have it um another another use case is that uh rc20 is are way easier to send around so if you are you know whale using an OTC desk you use trading desks regularly instead of posting USD or usdc as collateral you could post a t- bill product uh which would allow you to you know still hold on to some yield uh without having to give up on that yeah so some of you already touched upon upon the element of composability using tokenized assets as collateral I

think that's super powerful um in case you have any other kind of use cases how we can actually enhance yield or enhance just utility for tokenized assets through the power of composability I would be curious to hear about that and also whether we need actually synchronous composability for example for for Flash loans or if like it's Sol fine if it's asynchronous like sequentially happening uh for this type of use case specifically uh yeah guess that looks for me yeah so I mean all of the different um components or or The Primitives and earnst stream I think we we prioritize security and compliance more than anything and for

what we're doing there's no real need to have like um synchronous composability so asynchronous is probably best for us um I'm sure there's a use case in there somewhere uh down the line um um but asynchronous is kind of where at just because of just because of the regulatory environment uh the security and compliance is just where where we're at it's it's people's wages as payroll um and so uh each of those uh I guess modular blocks of of what we're building just really need to happen one on its own you know we're we're trying this out we don't want to do too much to start yeah yeah so we actually think about this a lot um I was originally under the

assumption that everything that we did at superstate should have a uh Atomic synchronous composability element to it and I realized that a lot of our customers actually don't care it's kind of split um so that real-time pricing thing that I was talking about we built that so we could do atomic um subscriptions and redemptions from the fund all on chain um so you wouldn't have to touch anything besides smart contracts um however uh we have a lot of customers who you know if you're we have some of our customers or Venture capitalists investing their um their funds while they're waiting to deploy Dey them they don't they don't want to use a Smart contract they want to burn their tokens

and then 5 minutes later have usdc sent to their wallet so it's really the right thing for the right customer um and at Super saate we do both and you Jill you touched upon the regulatory component already like do you do you other guys have uh a stance or opinion on what are the regulatory challenges in enabling composability for token ass that'ss like to use them in wider defi or Solutions also potentially I think it's been a really tough uh environment to operate in rwas especially for you know plume itself we're based in in the states we're based in New York um so the core team is you know based here all our engineers and Dev are also based in in the states um I think traditionally you

know we've you know it's actually been really unclear if you actually tokenize an asset that's not a security and actually put it and if you put it on chain um the question still stands does it become a security so we've been kind of operating in this gray area for a very long time where we don't know actually if tokenizing assets presents additional layer of regulatory risk um because one of the way that it's offered um you know on blockchain um you know can you give this you know to the retail the retail folks as well this is per this is like classify Securities offering so we're working right now I think we've actually entered kind of an interesting ERA with you know the regulation in the states with the new administration of you know they've

classified a lot of you know um you know with the lawsuit of coinbase is offering you know Avalanche laa Securities um I think there is an interesting white space where the admin is currently actually very very positive on tokenization um you know at plume we've kind of op we've kind of like taken the Uber approach um where like you know if there is no current you know guidelines black and white will operate in that gray area for example our Focus really is to have assets be distributed even to um retail users right so um you know for offerings that are traditionally uh maybe only given to credited um you know we have different ways with protocols

that we build inhouse one called Nest um actually Nest Dow LLC actually takes inspiration from the maker Dow model um where you actually have your own Dow uh KYB with different entities and so they're The Entity that they are uh that we are facing with issuers right right and then we can actually um permissionless distribute yield similar to how SII is actually actually modeled so I think you know for us um we've always been kind of a few steps ahead on the regul regulatory side but more regulation is actually useful for I think rbas in general because it gives some clear guidelines on how to operate um and so yeah I mean very hopeful I

think a lot of firms we talked to a lot of institutional firms in the states a lot of them are very very bullish and very positive on on the outcome of um tokenizing these assets and I think you know New York will kind of become you know continue to be a hub for for our debates especially yeah from a regulatory perspective um there are definitely challenges with the old Administration I would say that it actually materially impacted our goto Market strategy so uh our products right now are only for qualified purchasers um later on this year our uh treasury bill fund will be a public fund so that means anyone who does kyc can invest instead of having to be a um qualified purchaser and like that's just one example of how the regulatory landscape changed and it

actually made our products better cool yeah I mean some of you also touched upon stable coins already uh we have now as I mentioned earlier 220 billion in outstanding Supply and it seems like to a large extent stable coins have been the main distribution channels uh channel uh for rwa since like at least for the the field backed and like onchain rwe backed uh stable coins like it's it's a really sizable part or the majority actually of the of the stable coin Supply that's constructed like this like and uh do you think that that will continue that way uh to be that that stable coins will be that distribution Channel maybe also like a compliant liquidity wrapper of sorts where then

everybody can just interact with it and and then as a Next Step being like the the checking account and savings account of the future that that people can leverage in a composable way programmable way through streams and so on and so forth so how do you see that unfold in our case I mean uh stable coins are obviously the base layer um and so I imagine that the traction only increases for stable coins um but you know down the line there's there's like like we've mentioned like collateralizing um future income um uh being able to get credit off of those products like I can see down the line where the wages being tokenized creates its own like asset class but I don't think it's going to overtake stable

coins ever because stable coins are the base layer of of what we're developing yeah we see um the distribution and use case of stable coins very important for um the adoption of rwas um you know at pl we actually have a Neo banking strategy right I think what Emerging Markets have done really well is actually adopted the use of stable coin as local payment or like a local way to protect against um inflation of their local currency um I think the next iteration right is like after you reach this kind of um you know threshold of okay now we have like we have kind of local economies using stable coins um how else can they tap into um you know safe ways of yield or

actually us denominated um assets that can generate outside return relative to their local market so if you can enable you know a local investor in Argentina to actually have access to QQQ or Tesla stock that's a huge unlock for them that I think is um overseen or even like even a stable savings account um I think is tremendously valuable because they don't completely Trust Banks right I think there's there's you know the benefit of being the states is actually we trust our Regulators we actually trust our institutions but you know when you go into other um emerging economies that trust isn't always there and so by having a stable coin a self- custodial wallet where you can actually earn yield sourced from um you know econ like

American Capital markets and American um you know products um I think that's an an very very good use case and something that we're kind of thinking about all the time is you know who is like and also I think there's the aspect of defi is kind of tapped out of its marginal user I think a lot of the folks you know who's kind of the next user of a or or right these Primitives um because they're incredibly difficult to use for the average person so how do we find ways to expand the pie of um of distribution and use cases of this time yeah I don't think stable coins are going anywhere as long especially as long as USD is the world Reserve currency um I think what we will see a lot more of which we're starting to see

now is it stable coins in the front and then it's tokenized products in the back and those are usually abstracted away from the user so they're interacting with the stable coin they see that they're getting yield on the stable coin but the yield is actually coming from for example a tokenized t- product cool yeah thanks a lot to all the panelists here appreciate your thoughts and we're at the end of the panel thanks everybody here also