Stablecoins Are Eating The World: Understanding The $200 Trillion Opportunity

Transcript

All I would say is if stable coins are an inevitability at this point and if you are building uh in fintech and or at a payment company and you aren't actively figuring out how do I future proof this business for stable coins you're going to lose. Welcome to Banklist where we explore the frontier of internet money and internet finance. And today on Banklist we are exploring the frontier of stable coins. The stable coin conversation in crypto goes all the way back. You can find discussions of stablecoin concepts as far back as the Bitcoin talk forums which was the original venue for all of crypto's great ideas. In 2025, the conversation continues. Stable coins have been and seemingly always will be

an incredibly important part of the crypto revolution. Things are a little different now, however. In 2025, things are no longer conceptual. The emergence of stable coins like USC and Tether have grown into a $200 billion market cap asset class and the performance of blockchains have risen to match the needs of internet-based stable coin settlement networks. Because of these unlocks on the crypto tech tree, we are now finally seeing startups weave together the old siloed financial system into new internet public blockchains. And it's because of the utility value of stable coins that so much progress has been made over just the last year. Rob Haddock, the guest on the show today says that he is seeing 30% month overmonth growth of crossborder stable coin volumes. All of this combined with

the regulatory clarity and stable coin bills that are passing through the United States Congress are creating a gold rush in the stable coin economy. Everyone is trying to get a piece of the incredible amount of value that is going to be produced by the invention of stable coins. It's also interesting to note that during the times of Donald Trump's isolationism and rejection of globalism that the crypto and stablecoin industry represents an inherent interconnectedness since blockchain networks know no borders and stable coin transfers are weaving together the global financial rails tighter than they've ever been before. I just thought this was an interesting contrast that came to my mind during my podcast with Rob. I learned quite a bit with Rob, so I'm sure you will as well. So, let's go ahead and get right into that episode.

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Cello or offchain. Audited by ZK security, the self app is live on iOS and Play Store. Visit self.xyz and follow self protocol on X Banklist Nation. I'm here with Rob Haddock general partner at Dragonfly. Rob welcome to Bankless. Thanks for having me. Rob, I'm going to start this episode by reading off a quote and then maybe you can just pick up the trail uh right from there. Stable coins aren't going to be the best product for all forms of payment collateral mobility savings etc., But they are better and will continue to get better for many many use cases eating into that trillions of dollars of the addressable market. Now this this is a quote from you. Uh maybe you could just expand on that and overall just you know set the table for us when we get into the conversation of stable coins where we are now where

things are going and why people think stable coins are just such a big deal. Yeah listen the stable coin topic is like not a new one. Uh people have been talking about this for a long period of time. time circle existed since 2012 and there's been a lot of conversation around stable coins that I don't think has made a ton of sense but what we've really started to see in the last year is people kind of formulate or understand where are the places where stable coins are the most exciting so you know when I when I put that quote out there you know a lot of people have talked about oh like merchant payments and stable coins or you know domestic payments and and we haven't seen that adoption because I haven't actually been particularly that excited about that type of use case and in part because

stable coins sometimes aren't cheaper. They sometimes aren't they don't have the right level of compliance, don't have the right level of usability or a better level of usability than you know call it traditional rails. But what we have seen today is that for things like crossber payments, things like payouts um just the want or desire to have US dollar access in emerging markets things like um being able to use this as collateral for different types of trading or atomically settle across different assets like those things are all clearly much much better in stable coins. That market is trillions of dollars. They are taking over that market. I think what people are learning right now, especially with the um election of the recent administration which is of course much more crypto friendly, which means that we're going to get some crypto friendly legislation pushed through Congress, which is

definitely the backdrop of why people are talking about stable coins right now. people are looking at how crypto is going to become uh you know regulatory compliant, regulatory clear and I think people are realizing that stable coins are just a first step into traditional finance you know the the rest of the world's foray into crypto they're going to start the first stop on that train is is stable coins and in addition to that I think people are just kind of looking around at all the stable coins and realizing that the conversation doesn't end at stable coins we are not ending the conversation at USDC or tether there is like many many many next steps for investment and you know projects building out this stable coin tech stack. Uh maybe you can kind of um pick

up where that train goes. So we already have USC, we already have Tether. What are the few like next stops on that stable coin train that you are seeing getting at built out first and are the most interesting to you? Yeah. So I think it's it's helpful to uh maybe frame this as like what is a stable coin because what I think in crypto happens is we talk a lot about stable coins for different types of products that are clearly not stable coins or stable coins for different use cases. So you know you mentioned circle and tether very traditional you know treasurybacked or almost treasury backed in in tether's case um stable coins that are meant to be for payment use cases. So you mentioned the Genius Act or the stable bill here in the US. They specifically um talk about these um you know these

payment stable coins. Mika has the same thing essentially. And there are things we talk about in crypto that are stable coins that are um better for like what I would call quote unquote collateral mobility. So um things that are potentially you know yield bearing products that aren't meant to be moved a lot but are meant to be maybe um used as part of a treasury operation or something like that. A savings vehicle. Uh yeah, exactly. savings vehicle. Same thing. Um then you also have stable coins like um you know that are more crypto native that maybe are um you know some sort of like tokenized um you know cash and carry trade like an Athena um or you know a part of that plus they have USB so it's BL where it's meant to be more of a you know call it a like a

savings account or a yield account etc that for for retail potentially um and and and institutions and you have these kind of different use cases and we call them all stable coins but they're they're really meant to be used for different things and so I think you have to kind of like start there and then you have to say what do each of these things uh and how do they they you know kind of fit in with different parts of the market on the payment side you know I've actually written about that the most wholesomely but I actually think that's the part where we've um haven't seen a lot of pickup until recently so you know tether and circle you know it's over $230 billion outstanding today but almost all of those use cases traditionally had been just you know essentially trading pairs on centralized

exchanges and decentralized exchanges vast majority majority of tether has been on you know like Binance and centralized exchange like that over time but just over the last year now what we've started to see is the right infrastructure for payments and so um you know you have things you know and I and I wrote an article about okay what are the different parts that you need of the the infrastructure stack but you have um now you have these orchestration players like bridge and conduit um you have the um you know settlement rail so you have a lot of people starting to talk about okay well we do do we need a stablecoin native uh you know blockchain that does specific things um at the blockchain level that are are better for you know kind of training traditional PSPs online. So um uh Codeex is one that

we back. There's another one called Plasma that's talking about this. You have uh some of these guys that are just trying to pull together like the last mile or APIs for like local currencies. Um and a lot of people in between that we you know we started to see stable coins specific banks etc. Um but that infrastructure is now just good enough that we I think we're probably doing and this is kind of some prop proprietary data but maybe $50 billion a month of like crossborder actual payments being done on stable corn rails and that's been growing extremely quickly 20 30% um you know month over month but then 20 to 30% month overmonth in volume being transacted across border and stable coins. That is incredible growth.

Incredible. Yeah. And it was basically nothing 15 months ago. So like if you look at you know bridge or conduit or any of these guys uh they were like a million dollars of revenue last like you know call it January or 2024 what happened over the last year was that these came into the mainstream the infrastructure was there people were excited and now you you go and you talk to you know world pay or you talk to checkout.com you talk you know obviously stripe anybody uh even like the corner CEO tweeted like oh do I need a stable coin strategy now and the answer is yes and every single one of them has a stable coin strategy today. Let me just trace over the conversation as I heard it and you can um correct me if you if I get anything wrong. We're on using this

metaphor of like we're on the stable coin train and all the stops on the train. The first stop is the stable coin the stable coin stop and I and I said circle and tether and you expanded that to also include other types of stable coins that you know even though that we call these things all stable coins they are functionally different products. You know, you have the the true stable coins, the USC, the USDT. I don't know if you want to call those the true stable coins, but those are the stable coins that I think come to mind when people say the word stable coin. Payment stable coins. Payment stable coin. And then there's also like savings vehicles like Athena where the yield coming from exchanges. The way that the Athena works, there's a bunch of yield in the background that turns into a stable coin

and it has like a savings facility that really makes that work. Same thing with like Maker Dow and the die savings rate. Uh, and so there's different even though the the the product that comes out of these things is a stable coin, how that stable coin emerges is kind of characterizes that flavor of that stable coin. But that's the first stop nonetheless. There's a there's a crypto dollar, there's a synthetic stable coin that's out there that's produced and there's produced in a variety of different ways. Uh, and this and the dollar just comes out of that as a token on some sort of crypto rails. Yeah. And and I would functionally put like Bidd in there as well even though it's not meant to have a lot of velocity. It is theoretically like should be one to one swappable for a stable coin. Well, and

it is too. It's actually in the B contracts to be one to one swapable with USDC. Yeah, that's right. And it is functionally used for now a lot of things that stable coins, you know, the cerles or the tethers used to be used for like the collateral mobility piece. And so I think you know we hear city talking about or they actually have a tokenized deposit uh product and some of the banks are thinking about that all of these things at the end of the day have different maybe like collateral or backing but they functionally serve similar use cases and they cross over and I think it's good to segment them in that case when you think about okay we're investing or what do I hold for what use case and and also how the regulators think about them. Okay. So that that's the first stop, a true

stable coin, a token that is valued at a dollar. Uh, and then I think what you said next is like, well, the next stop is is payments. And that's still kind of getting built out. There's still a lot left of juice left to be squeezed there. Uh, and that makes sense to me. Uh, like in when we talk about crypto, you know speedrunning the history of money and finance, we actually just start with the value and then we figure out how to pass it around. That's the second stop. But really just hanging on that that first stop of all the different, you know taxonomies and different ways of creating a stable coin. How much do you think that we're done on building out that first stop? Like turns out I I don't think anyone really saw the the novel construction of Athena coming so late in the crypto game. Uh I know still

early. Uh but nonetheless, we found a new way to create a stable coin that's incredibly valuable. Um, how how you know percent completion do you think we are done with figuring out all the different ways to build a valuable stable coin? Oh, we're like 5%. Oh, wow. We're we're we're early. So, listen, the payments market is humongous. And so when you think about payments, it's $200 trillion uh that are done annually crosser. Right now, we are doing I think 50 billion cross border on uh on stable coins. I think the reality is stable coins for that specific use case are functionally and unequivocally better as long as we solve the infrastructure problem. So

there's compliance concerns. There's making sure that we have enough liquidity that costs come down. There's making sure that we have the last mile solved. But as we build those things out, the vast majority of that especially at the SMB market, which is about 40% of that number, uh is going to be better served by stable coins and stable coin rails. I think Wise came out with a um uh kind of a TAM uh slide in one of their kind of end of year uh reports maybe like a few days ago. I'm blanking on the exact number now, but when they put their TAM out there, they said essentially it's like $50 trillion of revenue that Wise thought that they could go and attack. And I'm telling you right now, Wise is a great business. It

is a business that is capital efficient that requires a lot of interconnectivity with the banking system, that requires a lot of operational connectivity. That would not need to happen if it was on stable cornrows. and that business maybe they will do it themselves or maybe they'll be displaced but that $50 trillion would be better based on stable coin rails 100%. Now when you say 5% are you talking about specifically payments? Yeah. So so I'm talking about or the kind of intersection or the getting into the payment side. I think on the savings account side though I don't think it's that different right. So you look at the emerging markets, you know, clearly like New Bank is starting to add and, you know, Revolute's been talking about adding, you know, stable coins and we've we hear a lot of conversation around

this from a lot of these different, you know, PayPal has it. Um but it's unclear to me yet that um the majority of new bank customers or it's definitely not true that the majority of new bank customers when they get a dollar in is actually being swapped to a stable coin and maybe a non-custodial manner and being able to use atomically with other types of protocols or um you know being able to swap for other types of assets etc. And so I think we're maybe further along, but in the emerging markets we're starting to see just a tremendous tremendous amount of growth as well. But I still think we're that far along. Like we're talking big numbers for crypto.

We're talking small numbers for the global economy. Right. Right. I want to um just narrow the question back down to just the first stop on the stable coin train, the the USC's, the Tethers, the um USDS's, which formerly die. Um the Athena stable coin. Uh, how much left in do you think is there room to make a new stable coin, a new valuable construction of a stable coin? Uh, that was actually the original intent of of my question. It's like filling out this first stop on the on the train. Are we mostly done? Is are we ready to leave and focus on payments or is there still plenty of juice left to squeeze with a potential potential building out of a new stable coin construction? Yeah. So I think if you look at the business model of Tether

and and Circle um Tether has essentially become like you know uh an asset manager an investment manager like if you look at you know they continue to dominate uh in emerging markets they continue to try to um you know expand their influence in those places but they you know and actually Paulo was on a lot yesterday and he's been kind of running around DC so it's clear he's thinking about you know the media tour. Yeah. Yeah. It's it's clear to think about what's happening in the US and and Europe, but so far Tether has not me compliant. Um if you look at the first iteration of the Genius Act, it doesn't look like Tether can be compliant there. There's been news that like maybe they'll have a segregated, you know, US uh version of Tether. I frankly find that hard to to believe that that would do well because

like you have a lot of the issues that you know, just kind of a startup has and it doesn't really have a great brand with the you know the regulators and the regulated businesses here in the US. Um so you know, it kind of feels to me like they're going to continue to dominate this one piece um of the market, but that I don't know if they'll grow into the other parts of the market. And and interestingly, I I moderated a panel with um with Paulo in Dubai last year and uh I asked at the end to everybody because all the others were were challenger startups how much market share they thought Tether would have in 5 years. And the most bearish person on the panel was Palo. uh he said I think we'll have like 35 or 40% market share at the time it was 70 everybody else was

like oh 70 like it'll continue to dominate and I think he kind of sees the world coming um that you know he's not going to be able to to really keep that moat with their current business model and that's why they are investing in so many other things and doing so so many other things I think circle you know same thing you see it like they're starting to think more about payments specifically as part of their business you know you look you saw their their S1 um there's clearly they're clearly giving away a lot of the economics but they're hamstrung by that that Coinbase deal. They're not able to potentially you know, really kind of uh I think incentivize the way like a Paxos has been able to with, you know, their global dollar network or some of the startups like Agora um are able to. So

I actually think there are a lot of possibilities for challengers and this market that's $230 billion of issued today, but that my guess is, you know trillions or tens of trillions um of dollars. I recommend it comes for for the Euro dollar market in the future. also a lot of opportunity for non- US dollar stable coins um as we get a more robust FX market. So, so I think it's you know it's definitely not 5% but do I think that there are going to continue to be you know challengers and that we might be in the um I don't know Netscape period of stable coins like I think that's possible. Mhm. My next question is pretty um related to this is just with the incumbents that already have network effects how valuable do you think those network effects are? And so

is Circle, Tether. We could even talk about Coinbase and Stripe here. Uh I know you know Coinbase is stable coin is basically essentially USDC's. Stripe doesn't have a stable coin, but it is a incumbent with network effects surrounding payments. How much new value do you think will flow to incumbents with network effects versus how much do you how disruptable do you think that these incumbents are? Yeah, so there's no doubt there's a lot of network effects and I think the uh you know Circle and Tether are going to continue to be great businesses. are going to continue to grow. I think what we'll see a lot kind of will mirror the fintech you know, boom of the early 2010s where uh a lot of the challengers that grow will grow because they grow with other businesses that grow with them, right?

So, if you look at Stripe, how did Stripe become so dominant? They grew with Shopify, right? They weren't the first one to offer e-commerce payments PayPal was already there. They offered a better experience. They got into Shopify. Shopify blew up. They grew together. They were going to see some of that with some of these challengers. uh but they're going to continue to to kind of really entrench themselves on like the Coinbase, the Stripe, etc. I think there is a really big conversation to be had around all of these startups that are doing things like call it stable coin orchestration, you know, calling themselves stable coin payment service providers do stable coin banks, things like that. I think this is especially true on the directto retail like fintech side. It's kind of unclear to me like why a new directto retail fintech would

win over new bank just making its product better with stable coins and with you know DeFi on the back end. Um where we've seen some a lot of investment capital from a lot of the traditional firms the sequoas and QEDs etc of the world go into those those products because they're growing really quickly but in many in a lot of cases not all the cases they're growing because crypto natives are looking for like things to do with their stable coins. how do I spend it without actually offramping? But it's unclear to me like why these traditional incumbents can't just, you know, put stable coins in the back end and and and win. I think for like the banks now, if we talk about like the banking system, the banks are are uh can I say I think the banks are Like the they're they just move really slowly. They're not

going to innovate. Um they're going to do their own stable coins. It's going to be closed loop. It's not going to work. Um but at the PSP FinTech side, like I really struggle with the stable coin specific new startups. Okay, so now we're getting a little bit further down the the train of the the stable coin journey and this is will actually bring us to the article that you wrote which uh inspired this podcast to begin with. You wrote this article called stablecoin payments who actually wins. Uh and then you just listed out a variety of categories. Maybe it's comprehensive maybe it's most of it, maybe it's maybe there's some missing categories, but I'll just read them out here. settlement rails, stablecoin issuers, liquidity providers, value transfer and money services, aggregated APIs, messaging platforms, merchant gateways and ramps and then stablecoin powered fintexs and applications. When I was reading this

article, I was just kind of getting this idea of like this larger structure around stable coin infrastructure. You know, you start with the actual token you start with the stable coin, and then you need to build products and services around stable coins to really expand the utility around them. uh maybe you can just kind of walk us through how you see that structure being built uh and really uh as we go from you know stable coins to stable coin payments to some of the more longer tail parts of the ta the stable coin tech stack what parts of that tech stack really get you the most excited so the issuers actually came first um and well the problem with stable coins for a long period of time is they solved this problem which was that nobody wanted to denominate their onchain capital and their trading pairs

etc with you know something that was also volatile but that's the the only place that they were used and you know kind of what we just talked about right is they weren't really usable in any other way outside of uh outside of crypto for for until recently honestly and in any real way you know you listed out those those categories I I would essentially you know I I don't think it's comprehensive anymore there's some things I'm missing like you know banking where we've started to see that and um but I think it is a good way to frame most of what is being built when I think about um those different pieces is okay well you know you started the blockchain layer the settlement layer right and so that's the most basic form of what you need when you are with the issuer what you need when you're transacting and I

think there's a real question around um and I know you you have specific opinions about this and and some other people have really strong opinions about this but I think there's a real question around whether or not general purpose settlement rails or general purpose blockchains actually serve the needs of what like largecale traditional businesses need if they're going to do trillions of dollars of crossber payments and so specifically talking about like how do I bring a world pay or a checkout.com onto uh onchain and then bringing the majority of their transactions on chain especially the crossber ones I don't think that even the high throughput chains that exist today the bases the the salon etc serve those needs I think there's specific things that they are never going to do which they aren't going to give priority to these specific transactions they

aren't going to um help with me resistance for these specific transactions there's not going to be privacy at the transaction um they're not you know they're they're not going to stop the launch of the new memecoin that might you know just like make the RPC roll over, right? And so like you know there's these these things that happen that I think you need a specific chain that is a network for these types of payments. Um that's I think highly debatable. Uh but we've we put our money behind that and we see a few other people um launching those. I I also think it's just true that if you can fully verticalize the stack. So, you know, I talked in my article about how maybe that orchestration layer doesn't have a lot of pricing power over time but what if I can vertically integrate

the orchestration layer with, you know value added services like compliance with the chain itself where I get sequencer fees and maybe I have like a governance token that all these people have to stake to be part of that network. Um, can I give away the orchestration for free where everyone else is charging, you know, tens of bips? Um, and I just make up that money on the back end by, you know, uh essentially having them like stake my token and pay sequencer fees. And so now you're starting to get, you know, really interesting thought processes around like how to structure my business, how can I price it, how can I incentivize people to be a part of it. Um, so I think that's that's kind of number one.

Um, before we move on to number two could you just define orchestration layer? What does that mean? Yeah. So, uh I think Zack Abrams actually uh coined this and he kind of uh reinvented the way people think about bridge which in many ways bridge was an on-ramp and off-ramp uh but he called it an orchestration layer which was just a way to connect different ramps and different counterparties uh with APIs to transact on uh with stable coins. Okay. So, what what what problem is that really solving in the stable coin? How does that expand the utility of stable coins? Why do we need this? Yeah. So for that, right, if you like when we talked about before right, a lot of these stable coin transactions are happening across border, right? And so um one of the

biggest problems right now is that like it's hard to find uh liquidity if you need a different um some sort of different FX. It's hard to find um you know maybe the right ramp in the right location. I.e. meaning like you know the biggest remittance market in the world um is is US to Mexico, right? One of the second biggest I think is US to India. Um actually both those markets today are doing over 9% of their remittance volume in stable coins. um which is actually humongous. But you have to be able to like the end user or the receiver in Mexico, they want to be able to receive that stable coin, at least in historically they want to be able to receive that stable coin, bring it into or at least been part of it into the local uh currency, the peso, and then

potentially put it into uh their bank account, right? So connecting those liquidity providers as I talk about connecting those uh ramps, those banks those real-time payment services in those local areas, you typically have to have like some sort of, you know, call it, you know, API um that is allows you to do that. It requires usually a few different counterparties. So you're essentially wrapping a bunch of APIs into maybe a single uh product like what B is doing is one way to understand this. We we have these um financial servers in the cloud, right? Bitcoin Ethereum, Salana, these are servers.

Blockchains are just servers in the cloud. And they're they act as like a coordinating hub for everyone to point their, you know, for their servers too right? It inverts the way that we have banking where, you know, Wells Fargo is a closed server. Every single bank in America is a closed server. Now, now we have this these fewer servers where everyone can point their their finance to in the cloud, but we also still have the rest of finance to deal with, which is still this like mesh network of siloed servers. And it is maybe what you mean by own orchestration layer is bridging that gap between these new types of financial servers in the cloud.

Bitcoin, Ethereum, Salana, all these layer ones and then the many many different types of siloed servers that actually do uh have like present boots on the ground in these like local economies and an orchestration layer just bridges that gap. Is that a way to understand it? Yeah, I think that's a a great analogy. Um the the cloud is also a really good way to think about like the adoption uh curve here and and how we've we've kind of evolved. Okay. So there's like with every single country there's just like kind of like a long tale of payments or banking relationships that we need to you know inter interoperate with in order to make stable coins on public blockchains actually you know connect to local economies. And so that that's what we mean by orchestration layer. Yeah. And I

I'll give you an example here right. So um, and there's a a portfolio company of ours that did a uh a payment from Brazilian Royale and they they've been starting to do payments from Brazilian Royale to do Euro um from your bank account in Brazil to your bank account in a European Union country where they are pulling using uh Pix, which is basically like a a real time um real-time payment uh business in in Brazil. They can pull that um capital out of your bank account in Brazil. they can swap it to a stable coin um typically US dollar denominated or if they if you issue and have enough liquidity for Brazilian uh realale. uh then they can swap it onchain to a euro uh euro um using you know maybe an amp

pool or you know some sort of liquidity provider and then using a sepa instant in Europe uh immediately putting it into your bank account in Europe right but there are a bunch of different people involved in that transaction liquidity providers in different countries banks in different countries real-time payment businesses in different countries but doing all of that through one API to that end customer and bringing that together and transacting relatively cheaply in less in 15 minutes the traditional banking market you know maybe two weeks to settle right so that I would imagine that this startup has a direct uh call to circle right they are minting USC directly minting and burning USC directly as needed in order to facilitate that and so what I'm seeing here with this orchestration layer is they're actually abstracting away which

we always promised to do the blockchain world so the blockchains are just becoming increasingly transacted the utility of stable coins is becoming increasingly expressed while also increasingly hidden and we're just allowing people to do things with their normal lives and experiencing the value of public blockchains without actually exposing it to public blockchains. Yeah that's absolutely right. I mean, the businesses when we're talking about like, you know, integrating ourselves with banks and like web two payments businesses, they absolutely do not care about what chain they're on. They don't care about particularly what stable coin they're using unless they have, you know, OFAC concerns or BAS concerns. Um they care about the fact that it's happens quickly. it's cheap, that there's, you know, uptime and that they

the transactions don't fail, that there's good compliance, and that you're adding value to them and their their end customers. And so, if you can abstract that away and offer this kind of integrated solution that uses all these different counterparties for um and better than what they're having today um like they love that. Okay. So these these orchestration layers I would imagine are going to change the topology of the financial landscape in these local economies because if their goal is to connect stable coins to you know the every single citizen in Mexico or every single citizen in in an emerging economy they need to they need to generate that relationship with the right banks or the right fintexs to to connect users to stable coins so that they can connect it

to the rest of the world. But I would imagine they they don't need to integrate with every single bank and every single fintech that's in Mexico or Argentina or any emerging economy. They just need to connect with the one that like has 90% or they can cover 95%. And I think that actually might expand the network effects of the dominant players in local economies. And so we can start to maybe get more efficient by really just um ex allowing the winners the the top three winners of a local economy to just connect connect into the orchestration layer which allows them to connect to a public blockchain which allows them to connect to the other dominant players in a different emerging economy and allow for that remittance network to just become hyperefficient.

But I imagine this this stable coin technology is a boon to the already dominant um uh like banks and fintech layers in local economies. That's my intuition. Is that right? Yeah, I would say that's true. The the one thing I would say or I would I would caution and and we see this in a lot of the people that are, you know, out kind of raising capital is that you have to do hard things. Uh and why do I say that building a an API that kind of wraps other APIs today when Stripe did it, you know, over a decade ago and they turned the banking system, e-commerce payments into seven lines of code, that was novel. That was incredible. and everybody was like, "Holy like this changes the the market." Doing that today, it's a lot easier and a lot more people can do that. Your moes are not as

deep. And so, to your point, if you're a traditional player who is thoughtful enough and and already has the connectivity and can innovate or build a tech stack quickly enough or partner quickly enough, like you can probably build those modes a little bit. On the startup side, what we've seen is if you want to be able to uh really kind of get into these markets, you need to do the hard things. And what are the hard things? The hard things are dealing with the banks. The hard things are getting them comfortable with your operations and your compliance and scaling them because the banks are the ones who will say, "Hey, listen, like, you know you're putting too much volume through right now. We think you're high risk.

We're going to limit you and you just get you have to limit your customers because of that." Um, it's also compliance. Compliance and payments is actually very hard. Uh and it's a big part of the reason. Compliance and risk are the two reasons payments are expensive. Um not any other reason. And so being able to um isolate that risk underwrite that risk in a uh asset that atomically settles, that's really hard still as well. And so, you know, if you can do the compliance, you can deal with the banks and you can uh figure out how to front risk or be capital efficient with um uh you know, maybe partnering with with your risk like that is where uh we're seeing people build moes or maybe startups where you might think the incumbents are able to do but they haven't really quite wanted to vulture

their own business yet by by doing that. What's an example of a stable coin company that uh maybe you're like the deck comes across your desk and you're like, "Oh, you guys are not doing any hard things." Uh what's an example of an easy trap for a stable coin company to fall into? Yeah. So, I so I won't name any specific names. Uh but there there's one that comes out that I've seen the CEO kind of in a bunch of news uh and and raised um and raised some capital and they're kind of doing or they they also talk about themselves as an orchestration layer what we're talking about but they don't have any end relationships in any of these uh local countries. They don't have any bank accounts within these local countries for client bank accounts. They aren't able to do um any sort of compliance

themselves. And so what actually ends up happening is the um you know they might you know someone will connect into their API and then they'll essentially get matched with somebody else also connected to the API when they want to go call it you know Hong Kong to Africa but they those two counterparties then have to essentially be onboarded with each other even though that they're they're in the they're they're connecting through the API and they have to sign what is essentially a non-reliance agreement with that API provider that says hey listen like we're not actually the ones doing KYB or complian science and so like they're they're essentially people are are signing up for these products because like they're trying to quickly add more geographies but those types of products we're seeing a lot of people build those because they're like the easiest things

to to build they're all going to get just like cut out of the transaction flow as other people they're too thin they are too high up in the stack they're going to get superseded by somebody who can get deeper than them yes that's our opinion anyways right yeah that makes sense to me yeah like doing the hard things generally ends up being the things that no one else wants to do. Yes, it's it's it's and you see it in payments, you see it in stable coins, you see it in crypto broadly like people don't want to do the hard things and then they get cut out of the cut out of the value chain. Right. Understood. Okay, that was that was really helpful.

I think uh understanding the orchestration layer. I feel like that is where there's a lot of juice left to squeeze when it comes to to permeating stable coins across the globe. And that maybe maybe that's like the era that we're in right now is this part of the payment tech stack and and really the growth of crypto at large is focus on this area specifically as we kind of like weave in the global economy through stable coins through public blockchains and through orchestration layers. Would you agree with that like general take? Yeah, absolutely. We the first era of like stable coin adoption outside of you know trading like we talked about was um kind of payouts to like local contractors um so you know people who are you know contracted engineers in

Latin America who would like much rather take stable coins and they're getting their you know essentially their pay um in in stable coins. That was kind of the first era with that you know of adoption real world adoption. We've seen some of that too. There's actually a well-known uh payments orchestration or stable coin orchestration business that is working with a a web 2 PSP that is doing like an only fans payout. But as you can imagine, there's like only fans creators all over the world. They do tremendous tremendous amounts of volume in most areas of the world that aren't developed countries. Those creators actually want stable coins. And so that's actually been a huge bo for their business. It's it's high risk, but you can you can see this also permeating to Tik Tok and to every other social media, right? That's been kind of the first era. But then

what we've seen is a move towards okay well now these traditional fintexs these traditional uh businesses now also wanting and seeing a value ad and that's the the number I I mentioned earlier 50 billion of crossber B2B payments that's that's the number that was essentially zero uh 15 months ago and has now moved into this tremendous growth era and my expectation is that continues to grow about 20 30% month over month uh through at least the rest of the year and into next year. You said that that 50 billion number was proprietary. How are you guys measuring that? Where are you guys getting your data from? So, we're we're pulling together a few different data sources. Also, just reality is is we happen to see probably most of the guys who raise uh in the space and so, you

know, pulling together a lot of the data from from the different companies. Um that's a little bit of the high end of of what I think it could be. Like I probably 30 to 50 uh on the month right now, but also like every time I talk about this number, it's probably outdated. Uh and so it's just growing so quickly. But uh it's clear that this is something when you talk to any web two business, any bank now that this is uh top of their mind. Imagine a world where your day-to-day banking runs on a blockchain. That's exactly what Mantle is building. Powered by a $4 billion treasury and poised to become the largest sustainable onchain financial hub. As part of their 2025 expansion Mantle is introducing three new core innovation pillars that bridge traditional finance with decentralized technology. First is their enhanced index fund aiming for $1 billion in AUM

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Infinex has in my opinion the nicest crosschain swap in bridge feature that you will find anywhere. It is called Switch Swap and Bridge. And we're going to show you what it looks like. First we're going to log into my Infinex account with a pass key. Now, there's no seed phrases in Infinex. This is a one-click setup with biometric pass keys. But in addition to that, my Infinex account is fully non-custodial. So, bam, I just logged in. It was two clicks and I'm already into my Infinex account. So, let's go make a switch. I'm going to go switch my USDC that is on base and I'm going to buy Barachchain which is a completely different chain.

Uh, so we're going to switch this. I'm going to press that button and then Infinex is going to execute this order this crosschain order for me. And now it is done. But actually, I'm not really feeling bearish anymore. So, I'm going to go from Barra uh to Penguins. I'm going to buy a Penguin on Salana. So I'm going from the Barra chain to Salana. See, no transaction signing, no gas to worry about. You just switch across whatever chain that you want with Infinex. That was so easy. Go check out Infinex and try your first switch. Today, I'm going to turn the conversation to uh the layer ones or the chains that really support stable coins. Generally speaking, I think that the first era of stable coin growth really came from native DeFi usage where we needed stable coins inside of Compound and then A and then now Morpho just to

facilitate, you know, stronger DeFi uh lending and borrowing, leverage, margin like all that kind of stuff that allowed DeFi to go and take its next step. Uh and then with with Salana, you actually see the increase of uh volume over lowered total supply of stable coins. So say Salana doesn't have that much total supply of stable coins but had but punches way above its weight class in terms of volume and you can kind of see that well that's just aligned with the the architecture of the Salana network but nonetheless I think as you said earlier there's just a lot of constraints that public blockchains have no matter what about uh what is needed to really create strong uh payments network in stable coins and so now lately so that's like kind of the public blockchain side of things lately we've seen I've seen and focused on stable

coin specific specific blockchains like call it stablecoin app chains either a layer 2 or even a dedicated layer 1 with some pretty serious trade-offs uh permission validator sets um you know private privacy at the layer 1 which kind of rubs against defi and other parts of uh what we know to make a public permissionless blockchain uh but I'm seeing this next phase of blockchain design stable coin uh focused blockchain design to be really trying to go toe-to-toe with things like Visa and really optimize for maximum throughput and are are happy to make very strong trade-offs to really lean into stablecoin and stablecoin specific uh uses. Uh maybe talk about where you see chain design going in the stable coin era. Yeah, I try really hard not to be

ideological about the way I invest and uh even though I have specific things that you know I might like to see in crypto and I know I know you feel this very strongly about this as well. I think the reality is is like businesses that are going to put trillions of dollars of of capital through these rails, they do not care about the things that, you know, maybe got you and I into crypto, they do not care. They care about liquidity. They care about pricing. They care about, you know being able to have a full a full application set that makes it easier for them to do their business. They care about privacy. They care about um you know potentially not having to be in the same pool as you know some sort of OFAC sanctioned uh you know North Korea or Russia or things like that and and they

care that their transaction gets there on time when they expect it to be there and uh those are the things they care about. Now there's a network effect and to your point around Salana that exists where you have okay well you have a lot of this other activity you have DeFi and that DeFi means that there are more stable coins already on uh on the chain. There are already more liquidity providers there. There are already ways to potentially transact and that alone should cause there to be some sort of like you know lower pricing and should cause it to be essentially potentially easier for certain things to exist. But what you don't have is you don't have uh the other things the privacy at the blockchain layer. You don't potentially have the the concerns and maybe you can do that in application layer around um

you know OFAC sanctions BSA stuff like that. Uh you do you don't have prioritization of transactions. You can't pay gas fees and stable coins. You um and so there's there's trade-offs to your point but those trade-offs are things that um maybe you and I care about that the businesses themselves do not care about. So today what we've seen is um mostly incentives have won right like why did PayPal decide to really put their focus on Salana on day one and and I might get hate tweets for this but it wasn't because of the technical infrastructure it was because Salana has a fantastic PD team and they paid them a bunch of money right and the reality is is like that is what we have seen from where these people have gone today is because they've cared about the pricing

and they've cared about you know having somebody that they could pick up the phone and be like this is not working for like help me fix it, right? And so those who those chains who have done that type of BD and that type of marketing and customer service, they're the ones who have um you know won kind of more of that flow today. And so if you can take that, you can do something that's a little bit more centralized you can put a full stack solution together that allows you to innovate all the way through the chain through the application layer. Like it's my opinion that for those use cases, people would rather deal with those chains. What so what do you think is stopping something like Tether or Circle making their own dedicated like high throughput chain?

And you can kind of see this show up where Tether has Tron and Tron's dominant activity is like te Tether's transfers. Still a generalized permissionless blockchain, but at least it's moving towards that direction. Uh and then uh Circle has base. Same problem. It's it has other things too. It has other baggage, but at least it gets some of that throughput. So you can see some of these shapes starting start to emerge, but none of them have really gone after building their own proprietary like payments network like why do you think that is? Or maybe it just hasn't happened yet. I think more to come and more to be public uh in some cases that said like like in Tron's case for instance, you know, they've I think publicly announced that Bitfinex uh invested in a thing called Plasma. Um

obviously they have Tron um you know not public yet, but I think they've invested in three other blockchains at this point. like they're trying to get themselves closer to a lot of these chains where they think that they can um influence, but what they don't want to do is they they don't want to isolate or alienate these other places where they're also being used today, right? Like if they try to put all, you know USDT flow on their own chain, what's stopping uh, you know, Binance and BSC from trying to put, you know, kind of push USDT off BSC, right? and they don't want to potentially have this situation where they're eating their own their own business already. And so I think what we've seen in Circle you'll hear a little bit more about too, they're

aligning themselves with with another chain and then they've also um uh they're also kind of launching their own orchestrator. So they're really focused on payment side as well. And so what we've seen is these guys have wanted to um have influence. they want to uh be able to kind of be a design partner and figure out or or optimize the chain for the use cases that they want or go hand inhand with somebody to do that, but they haven't wanted to go so far into like alienating uh the current use cases in the current chains. What about any new projects that are building that don't have the baggage of uh their incumbent business and are building a dedicated layer 1 or layer 2 or some sort of chain that's just meant for

stable coins and stable coins only? Are there any projects out there that you're particularly excited about or are worth highlighting? Yeah, I mean we we we just announced an investment into a business called Codeex over I think it was the Friday that we announced it. Um super excited about that. Uh founders were uh serial entrepreneurs. One of them was the first employee at at Optimism. Another one was um a very successful web 2 entrepreneur um working very closely with a number of design partners who are going to be announced over the next month or two that will I think solve some of these problems where they're fully integrated from the chain level to the application layer to do some of these interesting things around designing their business around how the um the product set actually looks for the end user. Um, and there are going to

be a bunch of actually really interesting Flow partners or launch partners who are doing some of the things we talked about before who are going to be sending Flow through there on kind of day zero. Um, so we're really excited about that. And is that a is that a new layer one? Is that a layer two? What what's some of the the architecture look like? Yeah. So they're building a layer 2 founder was um uh like I mentioned the first employed optimism. So is that Liam? No. Han. Yeah. So um he was uh there for a long time um and maybe he was the second employee actually. So uh he but um there for a long time and uh that's been you know that that's what he knows best and so that's where they're designing today.

Um and you know kind of pushing the technical limitations there as far as they can layer two that that settles to Ethereum. Yeah. Okay. And then there has been in the some of the deal flow that we look at bank list ventures there's just a lot of other layer one even permission chains that that are cropping up just to become sort of like visa competitors. What do you think about these sort of design constructions? The biggest problem for all of these guys is going to be flow on day one, right? So like how do you incentivize people to u come on your chain? And it depends on in some sense like you probably you may want permission with validator set maybe you don't. Um, but if you're going to do that, you still need to have it be easily interoperable with other parts of

crypto. If you want to be able to bring you know, USDC, USDT, other stable coins on, you want to be able to bring biddypes of of uh maybe USD, etc. If and you're going to serve um, you know, call it not just um, you know, B2B payments but you're going to serve like a broad set of payments that includes retail. So, for me, it's always been about okay, well, like why is this permissioned? if it is permissioned is the do they have some sort of edge for how they're going to bring flow here. Uh my opinion has mostly been that if it's completely closed system completely closed systems do not work. Uh they they will just get eaten by Visa. Visa is doing tokenized payments um themselves.

They also have a thing called Visa Direct which by their standards has not done well by crypto standards has done very well uh in terms of the amount of volume that and that's kind of outside of their traditional network. So you have to be thoughtful around what are the things you are doing. So, you know I don't know which specific ones you're talking about, but and there's one I'm specifically thinking of that, you know is really just a centralized database uh, which if if that's the case and you have kind of none of the, uh, I don't know of the value ad of being, you know kind of onchain and in crypto, uh, none of the transparency, um, none of the ability to audit uh, those transactions that I think is is not particularly interesting. A little bit too close to the old world. Yeah. You're just too

close to the old internet. Like there's definitely a a spectrum of blockchains obviously right but if you're really just saying okay well I'm going to create a web two database but I'm going to put it on blockchain well like we've already done that with hyperledger uh and that didn't work right and so but if you are saying okay well I'm going to build on a permissionless stack that um is part of the super chain and that is able to have interoperability as people want to do uh expand their risk tolerance and do different things but also it can be u do all of the best or can be the best uh place for you to do just you know direct B2B transactions that's where you start to get this like liquidity flow, right, in this liquidity mode. So you you prioritize those co those those customers, but you allow for

different types of of transactions and different type of use cases because what I I do think is going to happen is that risk tolerance will change over time and the a lot of these traditional guys over time might say, okay, well now I do want to do something with tokenized assets. Now, I do want to do something where um I have, you know, my stable coin or my tokenized asset be part of this like regulated FXM, but then also potentially be uh used as collateral for something that's permissionless on chain as well. Mhm. How do you see all of these different parts of this stack collapsing together over time? If you go to Argentina and you look at the fintech businesses down there, they are doing both stable coin payments and stable coin savings. So you can get like three four, 5% on your stable coins in this

fintech app, but you can also pay your friend too. Uh, and that's actually just because some of these stable coins and some of the yield sources are just hooked right into DeFi. And that's because that's also where the stable coins are. We're also talking about this whole entire new growth of orchestration networks and other types of stable coins and, you know, payment chains. I would imagine as if you we just fast forward 5 10 years in the future, a lot of this stuff has really consolidated to become really uh having some sort of like singularity where all these all the utility here is really pushed into the same vertical. Um how do you see that playing out? Will that play out? Will that be fast? Will that be slow? What do you think that looks like? We're starting to see a little bit of it now.

I I I absolutely agree that we're going to see consolidation. I it's not clear to me um at what part of the stack we're going to see consolidation today. I do think you know the straight bridge transaction uh was obviously a harbinger for you know probably more um M&A interest from call it you know traditional payment service providers you know it's clear that stripe also they they want to go from just a merchant business to a network business they also you know just uh talked about becoming a bank as well and so you're seeing like kind of traditional fintech traditional payments kind of have that collapse between okay well I want to be a tech company and I want to be able to take risks because that's where a lot of the money is made and how do I kind vertically integrate that and then and

also uh add a lot of different capabilities where I can again you know make more money as part of that. So I think we're going to see the web 2 guys come in and buy some of these orchestrators buy some of these local uh ramps these last miles. I think we're going to see these you know kind of um a lot of issuance happen also at the call it orchestration layer with these like PSPs i.e. meaning like you're a um Stripe customer and you know Stripe has their like treasury product today. Well Stripe will probably start to also issue a stable coin or also an RWA as part of their treasury product so that you can uh more easily manage like your capital um with you know stable coin or stable coin type products. So I think that

issuance layer is going to um collapse quite a bit and I also think you're going to start to have to do um compliance um specifically at the chain level or in the application stack where you um control that chain if you're going to um uh do kind of more regulated like you know kind of long um uh payments for for these large players. And so I I expect we'll see most of the stable coin fintech apps we've seen today like I think most of them are going to fail. So, I mean, that's that's normal for startups, but they're just going to have a hard time finding distribution relative to the people who exist today. Um, and then like the merchant gateways, the ramps, like those are really tough standalone businesses in in traditional finance or traditional

payments. Those are like either small businesses or they just we've seen actually in the 2010s we saw a lot of consolidations of like basically PE backed stable coin gateways and ramps that had verticalized software as part of them where they just bolled them up and I expect we see a lot of that happening as well. What do you think I think you already gave me this line banks are but maybe we can go into that question specifically. What does this mean for oldw world banks? The banks as we know them the banks I pay my rent from u you know the JP Morgans, the Wells Fargo, even the regional banks. What do you think happens to all of them? Well, I I think regional banks are for uh non-crypto reasons too just because the the we've seen this kind of consolidation of Gibbs. Um but

banks are not good innovators like that has always been true, right? So they're slow to the tech stack. Um you know the the best thing that's ever come out of bank is Visa. Visa was a was a kind of a bank consortium. They spun it out but that was at a time when tech just moved much more slowly than it it does today. Domestically, banks are still going to do an incredible job. Like the real-time payment networks are are coming or fewer, depending on which jurisdiction you're in. Um, they will be able to do real-time uh payments that are at the speed of and cheaper than blockchain rails for a lot of domestic use cases.

That's going to that's going to continue to be true. But then if you look at the global uh macro market right like right now the US is in the midst of cutting ties or pushing away some of its allies we are becoming more protectionist the world is becoming more protectionist at the same time when uh we already have this like interconnected crossber banking system that is ineffective and doesn't work very well together. My expectation is that becomes even tougher in this future protectionist world that we're seeing. And if that's true, then all of this crossber payments are going to go to to stable coin rails. On top of that, what you have right now is you

have a bunch of countries where their local currency is inflating where people don't have demand for their local currency potentially. I think we can debate a little bit about what's happening with the US dollar uh this past week and the tenure this past week but today at least people still see the US dollar as the the reserve currency and that'll be true for the foreseeable and that demand also means that these people uh they want US dollars and at a time when US dollars are becoming more usable. So, um, I'll give you an example. We invested in an emerging market, um, kind of, uh, you know payments, uh, fintech, um, stable coin business that when they finally were able to get a card issued by Rain, that meant that they could now, um, and it's

on the Visa network, that those people could now pay for uh, and it's an economy that wants a lot of US dollar goods. They want Netflix, they want OpenAI, track GBT, they want um, to import a lot of US dollar goods. if they were to try to pay for that dollar good through the traditional banking system. Uh today they would have to pay a 10% tax. Now if they pay with their stable coins, they're not. There's a regulatory arbitrage there. There's a question around how long that regulatory arbitrage stays. But what's clear is for those young people and those types of payment rails, they want more access to US dollars, US dollar goods, uh and things like that. And that'll continue to I think be a big issue for local governments, local central banks who today have been really protective of their their current currencies. I think

and this is like a more macro point, we might be getting into a world where the amount of currencies is just going to come way down and we're going to see a world where, you know, you just have somewhat of a currency war between the dollar and the euro and the remimi and like a lot of these other countries their currencies are So not only is this uh kind of a harbinger of the end of times for banks generally but also for central banks for currency issuing banks secularly. Yeah. I I think so in a lot of a lot of these emerging markets. Yeah. Yeah. Yeah. What about nond dollar stable coins though because there's is a push for tokenized euro tokenized like longtail developing country fiat. Uh what do you think about this whole sector of the of the

conversation? Yes. So you absolutely need non US dollar stable coins for FX right? And so 60% of or roughly 60% of the global reserves of of currencies are in US dollars. The rest are in other types of currencies. Um it's a roughly similar um number for the amount of transactions or the type of transactions that happen. What we have seen to date is that uh you there is need for a euro when we're doing the type of transactions we talked about before where you know you're going bank account to bank account and and you know call it you know Brazil to to euro but um at the end people are wanting to offboard to fiat and in the I think the the um developed markets you're still going to

continue to get a lot of that it's the developing markets where people have wanted to keep things onchain potentially or in these places where there's like regulatory arbitrage you're doing things like trade finance which are high risk. I think we're going to continue to see adoption of those stable coins. I am not bullish on most of those non- US dollar stable coins uh becoming things that people hold on chain. So, um maybe you know the few people that I talked about, but I I think like when we're talking about u the Naira, like like people are going to do it because they want to do this remittance or they want to be um it to get usable, but but in the future they're either going to hold the US dollar or they're just going to offer it to to their bank. So maybe is it correct to say that dollar stable

coins will hold all of the market cap while the longtail fiat you know uh you know African fiat currencies developing country fiat currencies they'll they will exist simply as a accounting tool in the foreign exchange world in FX maybe they'll be high volume for local payments maybe not um but they're mostly there just as a utility token truly to get the utility out of their denomination uh so that they can connect local economies local local developing market economies with the the rest of uh the stable coin networks on on public permissionless blockchains which are all going to be dollar denominated. Would you agree with that general summary?

Yeah, that's my expectation. Like I think what you said utility token is is a really good point. And so they're either going to want US dollars and they're they'll get that their stable coins or they're they're going to be using some sort of local route is my expectation. Okay. Uh final question final like kind of as we wrap this up. How many different stable coins do you think that there will be? Will every bank issue a stable coin? Everyone's going to try and issue a stable coin. I feel like that's kind of the hot uh tweet that could go viral right now because everyone's into this idea of like everyone's getting a stable coin and I think it's very reminiscent of everyone's getting a layer 2 and we all kind of know how that turned out. Uh what do you think about this conversation? Uh it sucks. I really hate

it. I So I I put out like a tweet um like a week or two ago that was basically like listen if this is not your core business like use somebody else. um to do it for you. I think what could happen is like okay well we think there's a million stable coins but it's actually like Paxus or Agora or Braille on the back end and they're all like interoperable with each other. I do think we're going to see at least for a period of time a bunch of people be like I need a stable coin and we're starting to see this too where people are like oh I need a stable coin but it's only going to be for internal internal use because I'm you know essentially basically um it's essentially using it as like a money market fund. Well, like you could also just buy Bittle, right? Uh in the

same thing. And I don't know why you wouldn't just do that, um in most of these cases. And so, uh there's going to be a lot I think will steady state get to like maybe like on the US dollar side like five to 10 that gain any real scale. Feel like we already have five that of real scale, US dollar, but like I guess what would you call scale? And uh yeah. Okay. Okay. Good point. Okay. Circle Tether uh D Maker Maker Dows, D, uh, Athena. Um, maybe there's one I'm missing, but I guess you could argue that Maker Dow and Athena are not really at any sort of really scale in terms of market. Yeah. Well, I I so I think there's scale and for their specific use cases with like, you know onchain, but when I said that, I meant it more as like call it like the Paxos

Circle, Tethers, like you know, a few others that that are um, uh, maybe more used in traditional payments. Um, I do think like there's definitely still room for like cryptonative like you know savings and investment products um that have stable coins lent to them to to do really well. The reality is like D is pegged to the dollar because of what they decided to put in their collateral. Like they could have completely changed all of their collateral from day one and it would no longer be a dollar stable coin. So yeah, listen, I think there'll be a lot in the near term. I think we'll see then a lot of consolidation after that. And then what I do think we'll see is we'll see a lot of basically interoperability because people are using the same service providers on the back end but they've decided to brand it

for whatever reason because people are narcissistic uh and they think it's good marketing um as their own stable coin. So when you see a stablecoin project uh deck come across your desk and like this the opening slide is we're going to make a new stable coin uh do you open that up with like cynicism with optimism? Like what's your first emotion when you see a new stable coin project? So I I open up every deck with cynicism. Uh naturally naturally my um but yeah absolutely like I today I think like if you're doing like a new stable coin issuance like there has to be a really uh good hook and a really good reason for why this new thing has to exist because you're so far behind um all the competitors. Okay just kidding. One last question before

before we wrap this up. Circle S1, I'm sure you took a look at it. what stood out to you in the S1 uh and then broadly what do you think the Circle IPO will just do for this Ablecoin game? Yeah, so the Circle S1 was was was about what I expected. Uh my my opinion on Circle has continued to be in that they are really hamstrung by that Coinbase deal. And not only are they hamstrung by that Coinbase deal, we've seen them try to grow into like Binance into other sort of of distribution partners by paying them a bunch of money. And so they just have to continue to do that and that's how they've eaten into Tether's market share. But it means their margins are going to come way down. And what it means is that potentially the public markets aren't going to like what their

revenue composition looks like and they're not going to trade as like the tech company or the payment company they want to. I think that's the debate right? So we we there was this headline around though that four to five billion was the potential value. People were surprised by it. I wasn't super surprised by that because the revenue model today looks like it's an asset manager and I think it's very clear over time how they don't just continue to get squeezed on their margins themselves. They have to build out more of a payments business if they are going to get um the value that they want and if they are going to be valued on a multiple like they shred or somebody like that which is I know is is what they think is is appropriate. Your second question I guess around uh you know what does it do for the market

it'll be humongous. though like you know and I and I do think the one argument against what I just said about them trading well will just be because everybody knows stable coins are eating the world and the public market investors will only have one way to express that and it'll be buying that equity. So let's uh simulate a hypothetical uh uh universe where tomorrow you wake up and you are actually in Jeremy Aair's seat and now you are calling the shots of circle. What are what are the first obvious decisions that you make about how to lead the company? Yeah, so it's a good question. Super hard question. I do not have to answer that. I'm gonna I'm gonna get a call from Jeremy's office after you post this. And um but no, I listen I think they need to continue to focus on

other lines of business. They need to figure out that how their revenue mix changes. They need to figure out a way to not have that Coinbase distribution partnership be so such a drag on their business. I don't know if they can get out of it. I don't know any details there, but they need to become more neutral in my mind over time. The Coinbase deal made sense when they did it because that's how they bootstrapped that distribution. Now it is a a drag on their business. And so how do they figure out a way to improve the revenue composition to add other services around it where they can monetize and how can they figure out a way to not have Coinbase take 60% of their their top

line? Those are the things that I would be focused on. So, yeah. So, Circle just really maybe maybe they wouldn't characterize it, but like did a deal with the devil where they gave a part of their revenue to Coinbase in trade for distribution and in trade for growth. And that worked for the time that they needed it. And now what you're saying is like well now that non-neutrality that the fact that Circle's beholden to Coinbase is preventing them from finding other markets because now they're branded as like the Coinbase uh stable coin. uh and the the lack lack of neutrality is preventing them from expanding into like alternative distribution models. Yeah, it's it's absolutely centered the growth. I mean they've what they've done on with Binance has been actually incredible and like congratulations chairman team like

they but we do know they they paid them 60 million bucks and are also giving all of their yield that they can uh to Binance to be able to do that and you know maybe that will again be uh a deal that's that's worth making and I do think it it probably is but you know they're in a situation where they have to give uh 100% of all surplus revenue that's derived from USDC on Coinbase uh to to Coinbase and then 50% of all other revenue. How do you go and build other uh you know distribution partnerships at scale over time when this goes from you know the the amount of issuance they have now and it goes 10x from here if they're continuing to be in that uh that type of deal. And so like it was the

right move to get them to here. How do they get from here to 100x from here or 10x from here? I think it has to change and I think it'll be really hard for them to to continue to do so with with that weight on their their shoulders. Rob, this has been definitely one of the most informative podcast episodes I've done in a while. So, I really appreciate you coming on and educating me and educating the Bankless Nation. Thanks so much, David. This was this was awesome. Really appreciate it. Yeah, maybe just one last like time just to no specific question, just open-ended uh stable coins. Uh maybe just give us your your broad thoughts, your conclusion, your your bullish raw as we end things.

really what what other sectors that I haven't asked about are getting you excited or any any remaining thoughts that I just haven't asked. All I would say is if stable coins are an inevitability at this point and if you are building uh in fintech and or at a payment company and you aren't actively figuring out how do I future proof this business for stable coins, you're going to lose and uh you need to you need to figure it out and you need to come here and you need to ask me or you know any of uh any of the other people who are really smart about this. That's a perfect way to start the risks and disclaimers for this episode. Rob really appreciate you coming on. and Bankless Nation, you guys know the deal.

Crypto is risky. You can lose what you put in. You can also lose if you are not paying attention to what's going on in stable coins. But nonetheless, this is a frontier. We're glad you are with us on the bankless journey. Thanks a lot. Thanks Dave. [Music] [Music]