Tomasz Resigns, CFTC Says "Golden Era Of Markets", OP Founder, OpenTrade & Rune, Securitize & Stani

Transcript

Black [music] [music] [music] down break down right now down. I'm off the back. [music] [music]

[music] JP Morgan, Black Rockck, DTCC, Fidelity, the entire thing was just institutions. It's [music] just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. [music] I'm bullish. You said it. You finally said it. So, he's bullish. I'm bullish. We're bullish. [music] down the [music] back

[music] the >> [music] [music] >> H the B [music] >> [music] [music] >> Hop up above the back.

[music] [music] >> [music] >> The rollup is headed to the [music] top. If we're not already at the top, we're going to the top. We're on fourth floor today. We're going to be on floor one and then we're headed straight to the moon boys. >> Hey, happy Friday.

>> Friday the 13th. A little spooky out there. >> First day of the week that we've talked about the market and it's been green. Hey, I just think shout out happy Valentine's Day coming up tomorrow. You got to just say >> Oh [ __ ] I forgot about that. >> You got to just say I mean to anyone that doesn't have a girlfriend, you look at the candles out there, it's all you need. >> Yeah. Yeah. I thought I saw uh threat thread guy had a stream. It was like um good morning from Quai Network. Uh he he he was like, "Dude, if you don't have a a date locked down by Tuesday this week, then you're cooked." Thought it was pretty funny. The right guy's a certified lover boy. That's for sure.

The market's gonna bail out everyone on these expensive dinners. They're taking people out on. >> What's going on? Hype 31.7. How about Sky? How about Neo freaking Finance? Shout out to everyone that was on that A train. Uh Rumor Mills hitting hot this week. Layer Zero, A Sky, Ethereum Foundation, Uniswap, Black Rockck. Guys, we hit a lot this week uh in terms of news coming down the wire. So guys, we had a sick stream today. We've got uh Rune from from Sky, the founder. We've got Stani, the founder of A. We've got uh the optimism founder, Carl. We've got Securitiz's new head of issuance and issuers, Zen Gui, and a

lovely member from Open Trade. So, a lot of uh a lot of tokenization, a lot of neo finance, a lot of kind of token talk today. Should be a banger. >> Look, I am particularly excited because we are crossing the chasm on Roll-Up TV and we've uh got uh representatives from both sides of the aisle. Uh obviously, Stan's been on the show before, Rune has been on the show before. These guys are Goliaths in the DeFi world. And then you flip over to the other side and you've got the institutional world. You got tokenization coming from securitize and open trade and then optimism is kind of an RWA dark horse and they've pivoted quite a bit refined their strategy when it comes to RWAs. We'll be hearing from Carl about that to get us warmed up.

>> Uh without further ado, plenty to go over. Andy, we got 20 minutes before Carl joins. Uh why don't we get right into it? >> Yeah, man. Let's do it. So first and foremost uh innovation advisory council uh plenty of people that we know uh on this uh which is particularly exciting and so uh the chairman of the CFTC Mike Celig said that he's proud to announce uh the innovation advisory committee uh the IA's broad financial sector insights which actually is pretty broad obviously a lot of these people come from the crypto world. But then you have

DraftKings and FanDuel founders on this on this list that we'll get into. Uh these guys will help the CFTC future proof its markets and develop clear rules of the road for the golden age of American financial markets. >> Yeah, man. I mean is it's kind of funny that the uh title here in the image is the Kashi screenshot. Yeah. >> Golden Age of Financial Markets, prediction markets. Claire Cart commented on my tweet and was like, "Don't forget gambling." thought that was pretty ironic. Well, um I actually I have something to say about that because I think people forget that when you're looking at gambling markets often times they are they're clearly a risk on industry but it's a lot of the same

financial infrastructure that underpins like you prop betting and parlays and moneyline things and so these are just another form of markets prediction markets are blurring those lines even more and I think the fact that you have FanDuel and DraftKings people on this list shows that they're actually one of the more forwardthinking groups within the broad industry of markets. Um I mean they're able to take the list is nuts. >> They're able to take risks. >> Yeah. >> Yeah. They are. I mean you've got Hayden Adams, CEO of Uniswap Labs, Brian Armstrong, CEO of Coinbase >> Shane from Poly Market. You've got Tom Farley, CEO of Bullish. Uh, you got Brad Garlinghouse, CEO of Ripple, president

of FanDuel, CEO of Cali, CEO of Crypto.com, >> Chris Dixon from A16Z, >> Sergey from from Chain Link. >> Let's not forget our our boy Vance Spencer from Framework Ventures, >> you know, one of the one of the founding fathers of Neo Finance, >> the CEO of Intercontinental Exchange, Vlad from from Robin. So, >> pretty insane lineup. Um, I I was getting some push back on my tweet. Uh people were saying like they were expecting um that this wasn't that positive for it wasn't that positive for DeFi because the people that were kind of coming into this world aren't that there's not much DeFi support here other than Hayden. So they weren't that positive on the DeFi aspect of things.

Look, I mean this is just the state of things, right? We're moving into a world where we have a innovation advisory committee because uh so much is happening on chain with prediction markets with DeFi uh with these new types of asset classes new types of markets and >> I don't know man this list also people were saying it looks staged looks put together I don't know there was a lot of interesting takes around how this list was created let's put it that way >> it sounds like people are upset that they weren't included on this list uh which is how it goes for any list. Um I I think it's important to keep in mind that this is the CFTC. Uh and so when we're thinking through the impact that

these people will have on financial markets and innovation, it's primarily going to be derivatives and commodity markets. The fact that they're taking into account so many crypto people inside of com of a commodities market, Innovation Council, seems to me that a lot of these things are either going to get a carve out as their own asset class or be considered commodities all together. And so when you're looking at, you know, how we're going to split up DeFi, tokens, yield coins, the sorts of things, there's been this whole debate, are they securities, are they commodities, are they something completely new? Clarity Act is going to help uh distinguish this as well.

Um, okay. Well, I'm I'm for this. I think the fact that they're taking into account, and this has been a pillar of this entire administration, they've taken industry leaders, like you have Scott Bessant, someone who's proficient at trading currencies in charge of the Treasury. It just makes sense to put industry leaders that are at the forefront of financial innovation into a place where they can advise the administration on how to navigate that innovation. I just think that they're so much more open-minded and thoughtful about the direction that this regulation is heading. And I I I mean, call me contrarian, but I think this is bullish.

>> I mean, I hear you, man. I hear you, man. Um, I think it's positive for the market as well. Uh, I just think that there's definitely some push back around these like elite committees being created to dictate the markets and yeah, so anyway, move moving on. Congrats to everyone who was listed. big big day. Uh moving on from the uh chairman Celix's post, we've got the Fed paper. This is initial margin weights for uh their new product, which is kind of surprising as well in its own way.

Margin weights for crypto linked derivatives. Um >> Okay. Interesting. >> Yeah. Um again, something that we've been talking about quite a bit, Andy. You know, I've been I've been harping um on the idea of credit creation as a result of tokenized equities and and tokenization of digital assets. >> The more that we're able to tokenize, the more that we have an a better understanding of risk and where it exists within the system at any given time, this makes liquidators and margin callers a lot more willing to extend credit, >> which doesn't necessarily mean rehyp. I was a I was a rehypothecation minimalist for a long time after Teral Luna, after

FTX. I thought if we're extending loans and we're issuing credit, that is a bad thing. That is leverage and that's just going to lead to a systemic liquidity contagion and it inevitably ends in blowup. >> Yeah. I I've come to realize that, you know, through [snorts] the basis trade and through just a better understanding of financial markets as a whole, that our [clears throat] system rests on loans and credit, that is what has been ever since we got off the gold standard, that's the way this system operates. And so, it's actually not, you know, debt isn't necessarily a bad thing. It's just something to be, you know, something very powerful. It's something to be used responsibly. And so when we're looking at how margin is being computed, you

know, within tokenized derivatives, I think this is a step in the right direction. Again, regulatory rules of the road are going to have a better understanding of where risk is, where margin is extended, who's overextended, and and ultimately where we should liquidate positions to maintain uh healthy debt in the system. as we're able to get a better understanding, we issue more credit, we issue more debt, and and this is this is how uh how the things go around. >> So, a couple notes here. Uh the Fed is basically recommending separate risk weightings for floating cryptos.

Basically, ETH, Bitcoin, and then obviously PEG stable coins have, you know, they have quote unquote different volatility patterns. Um, they're trying to basically create a benchmark index to model crypto market behavior. Um, yeah, I mean, cool. Great. Congrats, Fed. Um, you know, this is part of their shift, right? This is part of the broader bank engagement with crypto. Uh, skinny master accounts apparently are coming for um, uh, crypto companies at the Fed perhaps. So yeah, >> that was announced a couple months ago, the skinny master accounts. I I think, you know, it's important to remember that the Fed obviously controls interest

rates and we have, you know, Jerome Pal and Kevin Wars get on the podium every once in a while. Um, and then they control some aspects of regulation, but by and large, the Fed is also doing research. And so when they put out these papers and like these thought pieces, I I think it's important to read between the lines here. The Fed proposing margin weights is a suggestion to brokers when they are the ones that end up implementing margin requirements on tokenized assets. And so you can really think about this Fed paper as um a research piece that they end up giving to Goldman and Citadel and City and like you know the institutional market makers

at large that are now starting to and JP Morgan that are now starting to get into you know the crypto brokerage game and and you know because they are just now kind of getting into it they don't have uh empirical data to base a lot of these requirements off of, you know, it requires simulations. And so I think if you're looking at what the Fed is doing here, it's research and it's indicating that more of these brokerages and institutions are going to get deeper and deeper into extending margin on tokenized assets.

>> Yeah. Uh Cooker, a big Twitter account guy, responded to one of my tweets yesterday and that was that was kind of what I said about what's going to happen in the immediate term for um tokeniz, you know, tokenized assets, neo finance, private credit, etc. is just this extension of credit on chain. So, let's move on here from from the Fed um and their new margin weights. >> Yeah. Next, we got Jesse. Uh >> yeah, interesting post here. >> Yeah. So again, like there's rumors coming out all over the place. Jesse's arguing that the SEC could issue a token safe harbor. Yeah. For what they're considering non-security tokens, uh, and legitimize cash flowing DeFi tokens as a

formal asset class, not securities, but have a carveout in the regulation for this asset class in particular. And we've been calling these yield coins. >> Yeah. I mean what they really are is there's they're basically securities on chain but they have different properties than um uh other you know actual securities because there's you know they run on these immutable smart contracts or these decentralized smart contracts uh they're non-custodial right so the and the way in which that the that the revenue is generated is not typical like customer paying it's like fees from um you know different uh I mean it is customers paying but it's not like a BTOC transaction It's there's liquidation fees. There's all these

different types of things that happen. So my take on this, the anticipated SEC safe harbor for nonsecurity tokens will formalize cash flowing DeFi tokens as an asset class making them institutionally investable. At the same time, traditional assets are moving on chain in part thanks to forthcoming rule on making on forthcoming rulemaking on tokens. My take is I agree with Jesse. Uh I think he's right. I think as a result of Black Rockck buying unis swap that would not have happened if there was not some upcoming uh regulation coming for cash flowing defy tokens. I also believe that a's move is a part of this. A finally was released from their SEC investigation

last August. I believe that this happening is going to set up the greatest asymmetric return trade in the entire space we've seen over the last six months. It's going to be there's going to be this realization in the market that the narrative based tokens are are completely fried and that the cash flowing tokens are now able to return cash back to their uh token holders in a regulatory compliant manner. Should this in the market structure bill go through, >> I believe what's going to happen then is that there's going to be a massive shift in capital allocation onchain and on centralized exchanges where there's

going to be a a very dense concentration into these cash flow and defy tokens. A lot of them are in our N7 neo finance bucket. Sky a uh Morpho Hyperlid um and >> Hyperlid. Yeah. many of these likes. And so my take is I agree with Jesse here. I think he's right. And I think this is going to set this stage for one of the the biggest transfers of allocation profiling in crypto we've seen the last six months. >> This is the rotation. I I we've been talking about this for months, how you're right, the the the previous uh group was narrative driven tokens and you saw these things swell up and then ultimately just bouncy ball uh you know, volatility, death all the way down. um

the roller coaster meme, if you will. Now, you have a small group of business, actual businesses that are driving revenue on chain. And so, if you're looking at the broad swath of assets that are out there, you have this long long tail. And if you're thinking that there's a rotation, which we are, of of capital from this long tale of assets into a smaller subset of the token uh the token complex and and these are altcoins or tokens that have real businesses. They're driving revenue and those businesses are actually driving the revenue back to their token. We're going to see this uh capital swell into this this subset of this asset class.

And in particular, you know, we we had um uh yesterday we had Santi on, right? And Santi is talking about the difference between equities and tokens and and how equities are a right to future cash flows of a particular asset uh that stock. That's that's what an equity is. And right now that that assurance does not exist in the token market. What I think this asset class carveout could do is it could bring the gap between equities and tokens closer. And yes, you have to set aside yield coins, but thinking about what these network tokens that have real businesses are. These things have cash flows and the investors deserve a right to those cash flows if you're buying the

token. So I think absolutely this is something that we're going to see more of and it does open this to a new set of institutional investors because they're used to the investor asurances from equities. Now if we see that in tokens we're we're going to see a large suite of investors come into the space. >> Yep. That's also a big a big important takeaway that I was talking to a couple guys from some pretty uh good solid funds yesterday and talking about how this makes a institutionally what what a let's just move on to a because I think uh you know what what happened there is that um a now becomes institutionally investable if this goes through is kind of the

>> AB's got that I got from >> we're going to talk with Stonnie but I mean I was looking into a revenue venue yesterday, last night kind of prepping for Stanie. I mean, they've got hundred million revenue streams. So, absolutely, there's a business here and if this is flowing back to the token, then we're going to make a a something that would be I I'd be curious to see where they would rank in terms of equity if the token had similar investor protections. >> Yeah, I mean, it's definitely pretty cheap right now, I think. Uh but not really sure. All all I know is that if you guys were a part of that part part of the A fam this week, good trade. Um so a new alignment framework that

directs 100% of product revenue to the A DAO treasury under a token centric model. Effectively this is I mean this is the great unification of token and equity. >> Y >> we actually had Sam from Frack come on and talk about this this year how he believes this year is going to be the the great unification year. Um and I think this is a great example of this. So uh I you know there's a couple key takeaways from this. Uh one being that 100% of the protocol revenue goes to uh the the DAO token holders. The other kind of key takeaways here is that there is a solution for protecting the A

brand. uh there's they will ratify a v4 as the protocol's core technical foundation for future development and they'll create a framework for the DAO to fund strategic growth and development. So pretty awesome for a and token responding well and yeah I mean I pretty I'm pretty excited to see that a is winning. I mean I don't know how else to put it. We are literally like we're watching them win. Um they they deserve it. So A is definitely a security then bullish. I don't think it's a security. [snorts] Um it's it's part of this new asset class of tokens is my take.

>> Yeah, obviously this is uh this is something that is a for-profit entity and so it is trying to maximize shareholder value or token holder value. But the way it deres that value is fundamentally different than an equity. And and so um you know right now you have the Dow and you have the labs. If these things were to fully unify then we would have to look into why you know these things might not be considered securities. But at at the current point there's still a separation of of the two entities. And I think that is part of why we're seeing this carve out. Um, and so part of, you know, what what we're seeing from the from Jesse Walden kind

of arguing this token safe harbor is that cash flowing DeFi is a new asset class separating from cash flowing equities. Um, the reason being uh a a variety of different reasons that I don't feel particularly uh uh I don't think we're I don't think we're going to comment on the legal structure here. Guys, if you're watching on YouTube, smash that like, smash that subscribe. We're here hanging out. We're here every day. We're going live from New York City in two weeks. You guys are going to be blown away. Blown away as what we're about to put together. Um guys, we're going to move on from a that thing is ripping. Uh rumor mill strikes again and stoked to uh be here today. Our first

guest is coming up really soon. But guys, DJ Spartan is back. Den Spartan is back and he investing in stable stable coin blockchains. As the era of stable coins becoming the primary trading asset meaning exchange of the internet better infer is needed to support it blah blah blah. The growth of stable coins is undeniable and effectively egro capital DJ Spartan is going into stable blockchain when cal. Yeah, man. I mean, Cow is also a damn good one that has revenue. They need to figure that out for themselves, but I bet they will.

That is part of this like Yeah, I think Cow Swap is a is an interesting one. Thanks for bringing that up. [snorts] >> Yeah, it's a good one. I use Cow Swap. >> So, if we scroll down a bit, we can see kind of more details about their in investment. Uh, keep going here. Obviously, stable coins are are ripping. Um, >> I have a transaction volume's flying. Stable the token. Let's look at this. Stable the token. [snorts] Uh, let's see.

Stable. Stable's ripping as well. Uh, it's performed well on the last since Christmas. It's performed quite well. Hash dollar. Yeah. I mean, dude, I I generally agree with this thesis. We are bowled up on plasma. We have plasma venture bags over here on our Good Idea Ventures fund. Um, that's where we're placing our bets. But Eero Capital seems to have gotten some sort of OTC or opportunity to invest in um, Stable. So, congrats to them. Stoked for them and hope it goes well. And I just generally agree directionally with the thesis. Uh it's a little bit weird that stable has

been outperforming plasma so much. Um but that's the state of that's the reality that we're living in. So uh we'll we will see what happens when Tempo goes live. Arc as well. I think all of these are probably going to end up doing okay. So that's where we're at. >> This is part of the NEO finance thesis. Stable coins are at the core of it. uh and stable coin blockchains like Arc and Plasma and Stable are building out a suite of financial products focused on stable coins. Uh I saw Habachi's announcement yesterday about um uh uh refinement of their strategy from from general purpose per is such a significant modality of

financial markets that it can be applied and specialized into particular areas and so yeah shout out to those guys. I think uh you know they they were able to execute I think it was10 billion dollars in volume um which you know obviously compared to hyperlquid uh uh you know is is rather small market share but it shows product market fit and I think that is the key piece here that they're now able to specialize um and so I think they they made a nice partnership with circle and arc as well um and it just makes sense that we're going to see more of these specialization plays and so blockchains you know, specialize into stable coin blockchains. We're seeing PERS specialize into uh tokenized equity

perex. This is a further refinement. Um, and a lot of the financial experimentation ended up getting too general and now we're seeing teams niche down. Um, which I think uh which I think is actually a positive development for the industry. >> And so, all right guys, we've got our first guest, Carl Flourish, ready to come up on stage. He is the co-founder of Optimism. They've just recently brought ZK proofs into the OP stack. Happy to chat about that, but stoked to actually hear about their tokenized assets thesis RWA push and just kind of like generally what they're seeing with their inst institutional flows. Um, lot going on in in that side. We're calling

it NEO finance. It's what we think uh is is the next and most important wave of this industry for at least this year, if not the next couple years. So, let's get Carl up and let's get this show started, guys. >> There he is. Carl, welcome to the show, man. >> Yo, calling in from one of those booths, those like sick telephone booth things. >> It's all about the It's all about the uh audio quality. It's good dampening in here, you know. >> Yes, sir. >> Absolutely. >> How you doing, man? Happy Friday. >> Happy Friday. I'm doing great. I'm thinking about enterprises. I'm thinking about Opie Enterprises. It's been a, you know, this is my enterprises. Jam.

>> Absolutely, man. Well, according to uh a blog that Optimism posted recently, the tokenization of RWAs is expected to be the primary driver of onchain asset growth over the next 10 years. So, it's no surprise that you're thinking about enterprises. tell us why you're thinking about enterprises and how you think enterprises are going to contribute to this blockchain space. >> Oh yeah. I mean I I think we are in a real radically transformative moment for crypto. This has been kind of honestly in some ways years in the making. We've been like, "Oh, the financial rails. We are creating the new financial rails." And we've been [laughter] saying it so much.

And it is insane to see that like after, you know, 10 years of talking about this stuff that it's finally coming true. Like we have we've already seen a you know we've already launched like 50 live chains tons billions in TVL but we are starting to see a massive influx of all of these enterprise institutions like major financial companies that want to bring their assets onchain because bringing their assets onchain gives them all of these new capabilities that otherwise would not be possible in the traditional rails. And so in we're we're basically where you know kind of where we fit in is where the folks that are out here trying to make sure that

everyone who wants a chain has the ability to deploy that chain and not have to worry about all the crazy web 3 crypto insane stuff with you know upgrades security and you know management. We're we're trying to make that process as easy as possible so that we can go from being you know candidly a you know fraction of a percent of the global financial system to you know 100%. Let's go. >> Oh yeah. >> Yeah man. Uh I'm curious kind of about some of the so so we actually had uh Mark and um your product guy on in Buenosarus. I'm I'm blanking. And we were talking about kind of like what what they are what they are after and you know this this kind of new new era

of of in institutional flows in terms of capital as well as demand to interact on chain and also this new era of existence in the market of like less speculative demand. Demand for block space internally within the crypto natives has also dried up quite a bit. I'm curious like when it when it comes to interacting with um you know whether it's the the JP Morgans, the Fidelity, small banks, asset managers, funds, custodians, etc. Like what is it that you guys are providing that is really sticking like like what is it that is interesting to uh non crypto folks that are running more traditional fi financial strategies, funds, etc. firms?

What is it that's interesting? >> Nice. Yeah, they I mean resoundingly they want one uh control over their rails. They want to have a chain where they can, you know, bring their assets. Two, they want to be able to differentiate their chain from all of the other chains. They want to be able to customize it to make it special built for their needs. And three, they want it to happen fast and not to worry about all of the general uh there's a there's a perception that it's really hard to deploy a chain. And that perception is backed by something understandably, but it really doesn't have to be backed by something. It should be incredibly easy.

And in fact, we know how to make it very very easy to bring a new chain into existence. So that is that is like overwhelmingly you know uh you know it's happening. [laughter] >> Yeah, it certainly is. Um Carl, I I'm curious about how optimism will fit into this broad neo finance stack. Um you know, we've been talking about this essentially as stable coins have been the wedge by which the legacy financial ecosystem and the DeFi ecosystem have really started to blossom. And then you've got a ton of financial mechanisms that are built around stable coins. And so, you know, I I I'm I'm also, you

know, looking at this blog post. It it seems that a lot of major institutions are projecting RWA in the trillions. Right now, we're looking at about 35 uh billion in RWAs as of the end of last year. You've got City projecting four to five trillion. You've got Deote projecting three trillion. JP Morgan projecting 16. standard charter projecting 30 trillion. This is all by 2030. And so once we have, you know, trillions of RWAs on chain, how does optimism fit into this this market?

>> Yeah. I mean, we're we're bringing the rails where those RD RWAs will sit, right? Like if you're bringing billions in assets that you are, you know, responsible in some way for, you are managing, you are somehow able to bring on chain, you better believe that you're going to want to make sure that the rails that you are built on are, you know, enterprisegrade, that they are controlled by you, that they are customized for whatever your, you know, users need. We are going to be the kind of catalyst. That's our goal is to be the catalyst that brings all that makes that transition so easy. Um, and it's really it really is going to be a massive massive transition. I mean,

Ethereum and its L2s already are like 65% of all the RWAs today. And I think that that like [laughter] that that lead and we're we're just seeing the beginning of RWAs coming on chain without question. And it's very obvious why they would. everything from, you know, 24-hour trading to, you name it, access to more liquidity. Like, this is >> it's kind of an inevitable future. At least that's, you know, some might say. I'm sure that many here would agree. >> Carl, so we're calling this Neo Finance. I'm curious to get your take on it.

We've kind of thought a lot about this idea of this convergence between legacy financial rails these these products these applications these uh you know whether it's a money market fund or a traditional private credit um you know fund etc etc and then you've got DeFi you've got like you know all the big DeFi applications you've got the blockchains and these two spaces are just converging very quickly to this newer era of finance it's not fintech because it's not custodial it's DeFi because there's a forgot password button, there's a customer support agent who can help you. There's a a much easier, cleaner UX, there's no seed phrase, there's no approve button. It's this it's this neo finance era and it's

kind of coming together at at this point. And so we're kind of thinking about this as like uh it's the easier way to onboard people onchain um in a much less kind of like scary kind of DeFi way. And again, then it takes it to the next step of like, okay, it's if the if we're thinking about like the enemies here, the enemies are are kind of like traditional finance is still, you know, custodial banks, T plus2, uh, you know, um, uh, trading settlement times, uh, custodians, etc., etc., etc. to some extent. And then just like typical infra slop, no product market fit on the crypto side, no real demand, not not any

actual like real customers or or users or revenue. And kind of like those are like like the common enemies of the thesis. And then the thesis is really the convergence of of of you know traditional DeFi as we know it and legacy finance as we know it. kind of picking on the weaknesses of both and to actually make them a strength. Curious your take on neo finance. How would you describe neo finance? [snorts] >> I mean it is I'm very I like the I like the term neo finance. Basically what I have what is seemingly incredibly clear for over 10 years is that there needed to be an upgrade to the financial system

and that crypto and crypto rails were so much better and so like from a fundamental technological perspective it made so much sense but it was unclear if it was actually going to happen if there was going to be the willingness. If there was going to be the adoption maybe some other alternative path would be going you know people would go down. But now we're at a point where it is actually coming true and the actual willingness and the the momentum is there and in and it feels like it's gaining speed essentially every day. And so what I kind of see as this this transition I'm I'm really excited to see it uh kind of evolve into a I want to see a lot of diversity. I want to see all of these institutions coming on

chain and I want them to have the ability to when they do come on chain to bring whatever their expertise is and bring whatever their financial products are that they are you know really good at building whatever they're and make the crypto ecosystem even more vibrant even more diverse even more customizable all of that kind of stuff like I I I I don't I think there's one interpretation of the world coming on chain and it's just like okay It's crypto but bigger numbers. But I think that we are actually like there's so much more that we can achieve when we have all of the institutional knowledge and all these builders that are building out these financial applications that are just bringing perspectives that I would not

have considered then I mean don't even get me started on you you were saying that you know block space has uh demand for blockspace has dried up. I just I see it very obviously we are on the precipice of like every single AI agent uh you know constantly asking for like can I get like 0.00001 ETH um and this is like just I think we are like at the precipice of this transitionary moment and it's it's like anyway it's it's funny because I mean crypto is just the constant uh you know you you see the fundamentals and then you just like wait for the world. Um, but that's that's how it is, right?

>> Yeah. >> Okay. That's so good. You're so fired up. [laughter] >> I feel like I feel like that, you know, so just like kind of rounding that out then, Carl. Um, what do you So, I got asked this on Twitter and I'm really curious your take. Um, you know, I put out this tweet about to uh I think Securitize put a graphic about how tokenization is like the next logical step for markets. And then, you know, you you could take it all the way back to like when we would like trade in coins and then cattle or cattle then coin, you know, like kind of like the whole like history of money thing that every crypto person has has like learned about, right? And then so now tokenized assets and tokenization of of equities 247 is like the next logical step. And this guy Cooker uh was like a pretty

prominent like I don't know he's like salana kind of guy and had a lot of like like a big trader and he was like like you know what do you see as the big obstacles for this like do you think that this is just too early still and I kind of responded like like I was like you know I think it is a bit too early for this year to really see all this happening but it's happening unfortunately being early is often the same as being wrong. Carl, are we wrong? Like, is it too early for tokenization and tokenized assets and NEO finance or is it just the right time? Kind of talk to us about kind of like time frame.

What are some of the obstacles that you're seeing? >> Well, if you are uh going extremely long or extremely short, any short period of time, you are probably wrong. And so, please exercise extreme caution. Don't, you know, but I I mean, look, I could if Okay, if I said that we're wrong, then I'd be wrong for the past 10 years. You know what I mean? like I can't I can't I can't emotionally do that. I think we are obviously right. We just have to have our our you know eyes on the prize, right? We can't be like, "Okay, I'm in it for I'm we're building technology.

We're building the fab the social fabric of like a more efficient economy." Like this is this is the kind of stuff that is at a scale which is impossible to perceive and impossible to predict. like talking about some I mean we can have the word you know the global financial system right we can say those words but to imagine the global financial system and all of its complexities is fundamentally impossible in fact even imagining a small segment of the global financial system is impossible I would have to spend my entire life understanding little tiny intricate details so like of course I don't know how this ma like the exact details of this massive Goliath you know thing that

is hard to quantify or even con conceptualize how that changes. But I can absolutely identify one foundational principles that I that are first principally reasoned and that are true such as the fact that we have the proper rails for the global financial system and two that I can see the mo the movement. I can see the directionality and the directionality is incredibly clear and in fact gaining speed and gaining you know gaining legitimacy and that is like that is so so it's like you it's you you you can't you can't get like lost in the sauce you

know you just have to remember like okay we're here we're moving forward take one step at a time and you know the the future will unfold um >> yeah yeah I I I I don't know. I I thought my my obstacles were regulatory and education. What's your take on that? >> I think those are very similar, right? Like we need we need to make sure that the world understands what crypto is and what it can provide. And when the world understands what crypto is and what it can provide, then the regulations will be able to be perfect and ex you know protect investors, protect users, protect institutions, you know, eliminate waste and do good things. And

I I I think it's like uh you know, we just have to talk about this stuff and it it takes time. It absolutely takes time. Um but you know, we're here. We'll be here when when it comes. Yeah, I think that market structure bill should be coming through pretty soon. >> Yeah, >> I mean there's still a lot of debate around it, but I think that's going to unlock a lot of the a lot of the floodgates for tokenized assets on chain, tokenized equities, etc., etc., etc. >> One of the things that you guys announced like very recently was uh partnership with succinct bringing ZK deeper into the OP stack. I'm curious how these two visions link together. You know, hyper optimizing and focusing on RWA is this big, you know, watershed

moment as more tokenized assets come on chain. Are are institutions and fintexs asking for ZK to provide them some more, you know, privacy and interoperability and and ultimately accomplish their business goals as they tokenize more of their assets? >> Yes, definitely. Definitely. They are absolutely asking for it for all of those reasons. They also want the ability to quickly move assets from, you know, a layer 2 to, you know, L1. There ZK is a real unlock for enabling people to essentially expanding the surface area of trust and making it far more efficient and fast. And so, you know, of course, we, you know, we actually designed the OP stack deliberately so

that we would be independent of any individual proof system. So, we obviously had to build on our own thing. built the you know the optimism fault proof system and then we also then worked with a whole bunch of ZK teams and you know created some ZK proofs for the OP stack and we're now bringing OP succinct all the way into you know OP mainet and the you know the super chain so it's very very exciting this is this is the beginning and there's going to be a huge I think we are like I mean oh yeah I I could go off on the proof the proof system universe but we have been cooking for so many years and it is like finally coming to pass that we have serious ZK proof systems that are at a

cost level that are reasonable for end users. Um, and so that's like that's a super exciting development >> and and as you know, Andy and I have been in the space for a long time and we went deep into the depths of the blockchain architectures all the way down to the fault fault proof systems getting in the into the weeds about how these things are determined. Um, differences between optimistic roll-ups, ZK roll-ups, getting getting into the weeds. Are these institutions getting that deep? Is it their engineering teams, their business teams? Like what is their vector through which how how deep are they trying to understand this technology?

They definitely do a lot of due diligence. Um, but I would say that the way that we talk to cryptonative folks and the way that we talk to the institutions as we bring them on chain is just radically different. Like when we talk to crypto folks, we're like, "Oh yeah, the ZKP combined with the TE gets you the DA that you need." You know what I mean? And obviously that's not true. A and wildly different, >> you know, but but but the but the instead we have to talk about [clears throat] >> what is the value that we are providing to users and to be honest that is a skill that we and the crypto [clears throat] industry would do very well to learn because it's a little bit crazy the way that we talk about

technology when we talk about the implementation details because the problem is people don't understand the implementation details. And so you end up confusing everyone and it is just it's not scalable. So instead we've been really focusing on talking about okay what are the aspects what are the what are the benefits what are the downsides right how how early are we in the technology what are the what are the tail risks what are the you know opportunities that we have for improvement that is the kind of language that we're using to really express and candidly educate the world about what crypto provides and we need to be honest and just like say how what it is and how it affects people.

>> And what would you say are the top one or two things that we still have to improve to make sure that the technology is sound enough for these institutions to come on chain? >> I mean [snorts] there yeah there's a long laundry list to be honest because you know every one or two that you guys are focusing on. >> All right I'll give you three. I'll give you three. >> Scalability we need to process far more TP even though we have a lot we still need to keep going. Latency we need to make that really really fast actually I'm gonna give you four customization surface area for customization that is critically important because every institution wants a different thing out of their chain critical and the final

thing is fragmentation there is way too way too many islands we need interoperability between these chains the entire point of the web three you know the upgraded financial system is interconnectivity, liquidity, access and sharing and auditability protocols etc. that is not real until we unify the both the backend and the user experience. So that is like I don't know four things I guess. So >> yeah. Yeah. Carl, last thing for you. We recently saw yesterday a put a proposal to redirect 100% of a brand revenues to the DAO, which is effectively the token

holders. Hyperlid has obviously made a big splash in the last 18 months with regards to their tokconomics. Uh protocols like Sky have have done a um increasingly good job of doing buybacks from their revenues. I recently saw that optimism also has uh placed a focus with regards to some of the super chain revenues as well as revenues from your product line back to the OP token. I think it was it was 50% is what I read. Talk to us about the the gain theory and the kind of thought process around designing token models in this new regulatory regime. I actually think that I have a thesis that more top-down product and protocol decision-makings uh

is now a competitive edge in the current regime. Talk to us about how you guys are thinking about the tokconomics and just economics of optimism a or just your general takes on how the kind of token equity unification and uh general uh shift what I call the revenue meta is happening. Yeah, I think we are seeing a maturation of connecting the dots and the loop for protocols and the ecosystem so that it is possible finally to have a contribution to the protocol actually you know be incentivized in the ecosystem be incentivized to use the protocol to be a participant to uh you

know improve upon it and this is really just like a maturation of the space and candidly I think this is you could One could have predicted this, you know, way way long ago. I think we like we had this crazy, okay, we started out with like, okay, what we're going to do is we're going to create decentralized and permissionless protocols that have economic flywheels that incentivize participation and usage and all of the different things that we want in the ecosystem. And then we, you know, went through this, you know, kind of rocky area. We were like, oh, actually, you know what we need to do? We need to put everything on discourse. We need to talk on Discourse. We need to have uh usernames. Sorry, I'm just making fun of Discourse. But like the point is we had

this crazy thing where we just were experimenting. And to be honest, that's really exciting and really great and we were doing doing the thing, right? And that was like that was like the end state. But now we are at a moment where we have the tools, we have discourse, we have the communities, we have the companies that are building on the ecosystems and we are now getting to the point where that whole flywheel is able to connect. And it's still, you know, it's still a few years out that we're going to, you know, see the kind of uh realization of what it really means to be a decentralized protocol that is, you know, aligned and like a full economic loop. We're still seeing that play out.

Um, but I think we are like it's very obvious that we're making meaningful steps from, you know, from basically kind of uh a little bit of uh crazy to now more tangible. >> Yeah, Carl, man, appreciate your time and uh congrats on the recent work with Succinct. I hope the enterprise work is also going quite well. I'm sure it is. There's a ton of ton of uh capital and in institutional flows that want to come on chain. It's quite it's quite a it's quite a weird time where inside of the ecosystem it feels very slow and bare market and kind of apathetic and then outside with the largest global like the world's largest capital allocators are

just chomping at the bits to allocate to figure out how to get their strategy down. There's like a whole global FOMO happening. Meanwhile, uh inside it's quite slow. So, it's an interesting dynamic >> when it feels like this. This is the moment for opportunity, right? Like when the world is zigging your zagging, right? Like this is this is where we build heads down and actually realize the vision because we are closer than ever to that happening. >> Carl, >> thank you so much, man. Have a great weekend buddy. >> All right. Thank you. You, too. Bye.

>> Cheers, man. >> Talk to you soon. Bye. >> Carl's on fire. Absolutely on fire. >> Yeah, Carl brings the energy. It's great to see. >> Absolutely flying. >> Certainly not apathetic over there at Optimism. >> Absolutely flying. Guys, we're going to take a quick break. We'll be right back in just a sec. We got four more guests lined up. Big show today. We'll be We'll be right back. [music] >> Yeet is built for big moments. The most fun you'll ever have with your crypto.

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>> [music] >> Talk to AI like your lawyer or your doctor or your therapist. [music] Yours, private and here today. Visit near.ai to have a fully private chat experience. Havachi is fast and private [music] per trading secured by ZK with Celestia underneath. Go to habachi.xyz [music] to start trading today. Looking for yield that stands out?

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>> All right, guys. Um >> Tom is out. >> Yeah, he is. I had the the pleasure of meeting Tomas in San Francisco during uh the University of California uh science of blockchain conference. Okay. >> Super nice guy. Um was very forward thinking. Um and was also very focused on AI as uh you know one of the forward drivers of Ethereum's like activity. Uh >> and so look I people are calling this bullish. I think this is positive. I mean he got in there. Um >> yeah he did what he needed to.

>> Exactly. the Ethereum Foundation was in shambles last year when he when he took over. I mean, we remember that there was a significant competitive uh spirit taking place between rollups and and infighting was at an all-time high. >> Yes. Um >> sentiment around Ethereum was so so low. Uh and I think Tom was around when Ethereum jumped uh almost like in the course of like couple weeks it jumped from like 1500 up to 3K or something like that. >> Yep. Um, and so yeah, I tend to agree. I think Tamas did what he needed to do and now he's handing it off to uh people that are internal uh Bastian O uh who will serve as interim co-executive

director along with the rest of the organization. Yeah. >> Um and I I just don't know if I can call this bullish honestly. Um we literally have the the EF is fullon uh they they they had this bullish reversal. Yeah, >> but E, let's just say, let's just put it this way. [snorts] >> Tamas led the bullish reversal. >> ETH Denver is going to be really interesting. Vitalic one L2s and then Tamas leaves the EF. Uh, we got Bastian Au as the interim co-executive director effective immediately. To Tomas was credited with stren with strengthening the EF's operational focus, enterprise outreach, organizational efficiency, as you said, Rob, led the bullish reversal.

Now, Bastion brings a lot of deep internal experience. Um, you know, they've been there for a while, previously involved in grants, enterprise initiatives, operations. And the way that the Ethereum Foundation is framing this is as a moment to refocus on core development and long-term stewardship of Ethereum's technical and social layers. I just I'm a bit worried as to why he left. Was he forced out? Did he leave on his own accord? Was this planned? You know, how did this kind of come come about? Is kind of the speculation that I would want to get into.

>> Yeah. So, let's see. Um, he said in his most recent tweet, this was 30 minutes ago. Just to clarify based on some messages I'm receiving, I am not planning to take any breaks. I'm finalizing the transition by the end of February with the EF then building on Ethereum from the 1st of March. >> We'll see. >> Building on Ethereum. >> That's what he says. starting the 1 of March. Um, and you know, people are asking, you know, how much of this was uh related to Vitalic's recent tweets. Um, but it sounds like he's going to be building a project. And remember, Tamas comes from Netherm, you know, like the largest and most significant Ethereum client. And so, >> yes,

>> I believe he's still got a stake in Nethermind. He's still significantly invested in the Ethereum ecosystem. Uh I don't know what he's planning on building next, but uh it would be interesting to hear more specifically why he chose to leave. If he was chose to leave or if he was forced out. >> I think I think I think they're going to have some um I think they're going to have some um AMAs. He's going to also be at ETH Denver. >> Yep. >> Uh so I would expect to see him there and to have him be talking about it there. Uh there's just like a lot going on for Ethereum from the uh kind of like like the like the higher powers like you've got Vitalic and his L2's you've got now you've got Tamas leaving. I

don't know man. It it leaves me with wondering kind of where this all shakes up. Um >> so in Tamas's blog post he says um I may continue traveling and working with local communities and helping businesses build on Ethereum. Key word there is may he does say I plan to act more as a core dev a hands-on product builder and among other things work on the agentic core development and agentic governance. So like I said Tomas is very focused on AI. I have a feeling that's where his true passion is. He did step up you know and was intimately familiar with Ethereum being at Nethermind founding that company.

>> Yeah is just oneshotting people right now so hard. Look, this is possibly related to Yeah. Like you you're seeing a lot of people leave crypto. You know, some people are getting calls like, "Hey, why are you still building in this weird ecosystem?" Other people, I think, are looking at AI and they're thinking to themselves, this is a once in a generation opportunity, once in a lifetime opportunity to work on something that could be innovating at a faster pace in crypto. Combine that with, you know, people feeling like it's being co-opted by institutions.

I can see why people are leaving to AI, but ultimately, you know, these things do intersect. So, Tomas is at a really interesting uh crossroads here. >> I mean, I agree. I I I I do think it's probably partially uh like I bet what he's going to come out and announce in March is going to be something with regards to using AI on Ethereum. >> Yes, I would I would imagine so. You heard what Carl just said from optimism about agents coming on chain to >> Yeah. >> Uh it it seems like the no blocks based demand problem is the the thesis here is oh well we're going to have a ton of demand from agents.

>> Oh yeah. Oh yeah. I think blockchains are almost like the spam protection for agents >> and and the reason being like if you have >> you know why microtransactions might be like significantly important is because if if you're in a subscription model and you can pay 30 bucks to ping an API a gazillion times that end that could end up costing the subscription service more than 30 bucks and then they're not breaking even on that anymore and so you end up needing microtransactions micro payments to pro appropriately charge agents for these services, which just to sum that up, it requires them to be on chain the services themselves and the agents paying for

them. >> Yeah. Well, the internet doesn't have a microtransaction layer right now. Like there's just not there's not a payments layer to the internet, which kind of feels wrong. Well, credit, you can't use a credit card transaction for a micro payment because the servicing and the settlement of that transaction ends up costing more than uh something that would cost 0.001 cents. >> So, you're talking like less than a penny transactions. >> Yeah. But those add up because the again gazillion think about how many tokens are generated by these agents. There's not a payment mechanism or rail to support a transaction that costs that little. That's why a cent is like the lowest denomination of a currency. Yeah, >> you know, a Satoshi on a Bitcoin goes to

eight decimal places. So, you've got a little bit more granularity. Ethereum, I think, goes actually even more than that. And so, in stable coins, you you can identify 12 or 16 decimal places as well. And so, I think that is going to be the civil protection or the spam protection for uh agents as they as they need to get metered and they use these these APIs and these services. Yeah, they're going to need to h I think these things are going to need to happen on blockchains because there's not anywhere else to facilitate this this type of service.

>> I saw this tweet. It was like agents chose Bass and then it was like they like Bass amplified it all out. It was like it was like why did the agents themselves choose Bass? It was an interesting It was an interesting uh uh tweet like like the agents had the autonomy to select which blockchain they wanted to to operate on. That's a big look, we know that once liquidity and and transactional activity occurs on one chain, it starts to build up. >> Yeah.

>> Liquidity effect, liquidity begets liquidity, >> more things are going to flock because you have the wealth effect and the network effect. The one chain that ends up winning agent transactions probably not just going to be one, but if they really did choose bass in that regard, that is huge as that spirals upwards. I don't know if they exactly chose bass, but like you know what I mean. >> I I do. You're saying that like there's this organic like there's a plethora of chains out there. The fact that a lot of agent activity is happening on base, the question is why?

>> Yeah. Yeah. Yeah, man. Um man, kind of a kind of a a a dream day in the market today huh? >> Yeah. I mean, we had some macro news. Inflation came in a little bit lower than expectations. >> Is that what happened? >> I I'm not saying that's why the market's going up. I'm just saying that's one thing that happened today. >> Yeah. >> Um I feel like inflation is super low. >> I think it's 2.4%. The uh expectation was 2.5.

Let's see. US uh consumer prices rise 2% uh estimated was.3. January consumer prices rise 2.4 estimated 2.5 CPI.3 estimated was.3. >> Yeah. >> Um so pretty much right at estimates just one tick below. And then there was also uh more tariffs got wiped. Uh the US reached a deal with Taiwan about let's see >> nice >> um >> it is funny how like >> inflation falls to 2.4 for uh secretary sorry yeah United States signs trade deal with Taiwan cutting tariffs to 15%

in return Taiwan will remove 99% of trade barriers on US and purchase $84 billion worth of goods >> that sounds bullish >> you were saying >> no that sounds bullish um I was just saying that it's funny how like often these announcements align with like different levels that people will call out on charts as well like they'll >> makes you feel like we're in a simulation. >> Yeah. Yeah, it really does to be honest. Um all right, let's just move to Rob and I and let's just vibe. We got another guest in seven minutes. Uh we got the open trade uh fellow who who is actually a really interesting fellow.

>> Tell us about him. >> Uh well, he's got 700 followers on Twitter. Um he's a huge Bitcoin guy. Um I think he's pretty early into Bitcoin. Um he is a he's the CEO and co-founder David. >> Yep. >> And yeah I mean they're building out a massive like RWA infrastructure product basically >> and they're focused on Latam. They're focused on different regions. And again, it's these products that were like kind of boring for the the market for the last, I don't know, year, two years that are now becoming like actually uh

relevant and uh generating revenue and becoming like what people want to pay attention to. It's funny how like those things shift like every six 12 months you get these different shifts. It's very similar to the wealth effect or like network effect, but it's conceptual wealth effect. It's like the gravitas of working on something. Take AI. It's why you get this intellectual brain drain of people that end up working in that space because conceptually it holds so much more real estate in people's brains. They feel like anything that they're doing that's not that thing ends up being a waste of time. And so you end up getting a lot more people paying attention and spending time on that thing. And then so it's just like a

psychology thing. >> I think it's a psychological flywheel. It's like a mass hallucination like a collective consciousness thing that people end up doing more and more of that thing as it grows more and more in the >> zeitgeist. >> So AI obviously gets a lot of that. we're seeing like who would have thought optimism would be like an enterprise first >> Yeah. >> like [laughter] you know like that if that's not a sign of the times. >> Yeah, dude. I got to set up Cloudbot, man.

>> Well, we're going to be in Nearcon. I'm planning on asking people smarter than us to set it up for us. You sent me that one tweet um >> uh how to set up Cloudbot >> like safely basically. >> Yeah, that was a like rather non-technical way to set it up. Um from my conversation with George, the product chief of product at Near. >> Yeah. >> He says um treat it as if it's a new employee. basically put it in something like a container like a Mac mini like a bo a body essentially embody it in something that does not touch any other hardware.

So you don't really want it in the cloud because that is much easier to penetrate. You put it in its own hardware and you give it access to its own things. Don't give it access to your telegram, Gmail, email, Twitter. Give it its own Twitter, its own email, its own Telegram. uh give it its own slack notion and treat it as if it's its own employee. Otherwise, if you give it access and credentials to your thing, then it can start acting very weird. >> So, you want to make a new Telegram account for Claudebot.

>> It'll make its own Telegram if you tell it to. >> You just like tell it to make its own Telegram in terminal. >> Its own uh Yeah. And I think there's ways that you can interact with it without like you don't need a terminal anymore. It can just do natural language. >> Wow. >> Um but yeah, you it'll you know it can access the internet like us. It can go create its own telegram. You can give it a phone number. Um >> wow. >> You can do all these things and just it's basically like it's its own digital person. >> Wow. The clankers are clanking, huh?

>> The clankers are indeed clanking. Uh one of my best buys this bare market has been clanker. Clanker. >> Yeah. >> Is that Is that a token? >> It is. It's on base. >> Oh my gosh. >> And I It was um I think it was like the first token deployed by Let's see. Clanker.world. >> Oh yeah, I remember that. They got acquired or whatever. >> Well, yeah, it was part of Farcaster and then Farcaster got acquired. >> Oh, right. Um, Clanker is an autonomous agent for deploying tokens. So, this is like the launchpad. Currently, users may request Clanker to deploy an ERC20 token on base

by tagging it in tagging it at Clanker on Farcaster. So, so yeah, you can tag it like an agent would use Clanker to deploy a token. >> [clears throat] >> On another note, Rob, Binance fired their compliance team who uncovered Iran sanctioned violations late last year. >> Yeah, >> how about that? >> Give us a give us an interpret. I don't know how to interpret that one. >> I don't know either. The comment section is about to be crazy. That's not very compliant of them. [laughter] That's like the US going after Edward Snowden.

[snorts] Not a raise or a promotion. We see the bad, quote unquote, but we closed two eyes. Geez. Somebody tagged the FBI in the comments. [snorts] Wow, that's pretty bad though. FedEx is joining the Hideera Council. FedEx will run a network node and take part in governance. Oh my god, the world's coming on chain, brother. This feels like a very, you know, how 2021 kind of felt like 2017 and then, you know, you match up four year cycle to four year cycle.

>> Yeah. >> This feels completely different from a sentiment perspective. Like even though we're in what technically this would be the year, this would be two years after the happening, right? So this would be year one of a new four-year cycle. If you're if if we're in a four-year cycle paradigm, which maybe we are, maybe we're not. But this does not I guess this would be the most weird. I don't know because you've got some like latestage bull run. >> I know. So much of it. >> But at the same time, prices have already appreciated and we're technically in year one of this entire cycle happening over again.

>> I know, man. And like all the news is still like it's still just like it's so weird, man. It it does feel like bull market news somehow. >> Yeah, it does. And it's just not. And like people are still in denial. Like we're we're we're going to get a bounce probably and people are going to be calling for the bottom. And like maybe the price has bottom, but like you guys are going to have time. That's for sure. You're going to have some time to get to do whatever you want to do down here. I think that's the reality. White House official Patrick Wit says there are trillions of dollars in institutional capital on the sidelines waiting to enter the crypto market

>> ba based off like the clarity act or the market structure bill getting passed or what? um just them saying more bullish things every once in a while. They just, you know, like Trump talks about the market, the market goes up most of the time. Bessant says something about crypto, it does a little something something. You know, they just continue to make sure that people realize that they're going to do something to reverse the trend. >> You think that's that, you know, Trump must be down a ton on WLFI and all those ETH buys. I don't I don't think Trump had a cost basis on WLFI.

>> Yeah, I'm not sure he had a cost basis ever in crypto. The guy's just been accumulating. Did you see Pam Bondi's uh clip yesterday of her like going after Trump? >> She was going after Trump. >> I didn't watch it all, but I I think she was basically trying to say that like the Epstein files, we've had enough of it and >> Oh, yeah. >> Like there's look at all this other things that are happening. And then people made a really cool graphic about it. >> Yeah. It's like Claude Code, Melaniacoin, Donald Trump Jr., World Liberty, tariffs, all this stuff. And it was just like I think I Yeah, I think I think some of the like traditional politicians are a little bit shook by the market

uh by the market focus from Trump. Oh, and not on Epstein. >> No, like Epstein is like this thing that's happening, but Trump is so focused on the markets more than anything. Like I think the over speculative nature of this new administration is getting under the skin of some of the people that have been around who haven't experienced a regime so oriented around financial speculation. >> Yeah. Well, look, I think if you focus on domestic Okay, let me try to let me try to sound this out because, you know, I I tend to think that a do the domestic economy is like and and you know, global

economy is part of this as well, but if you focus on domestic health of like domestic economic health of citizens, >> yeah, >> you would you would think that would help a lot of social constructs as well. Meaning like if inflation's low, people can afford groceries, they feel like their their their social mobility, they're kind of moving up in their in their wealth, they're probably going to just be friendlier. They're probably just going to like take it easy, have a have a better time, go on vacation, you know, like afford to do things, and just be less like mean to others and like less civil unrest. So if that theory is true then then yeah like enriching one's

population would be one of the like one of the root right and my math brain is always like let's try to reduce this to most you know kill the most birds with the least amount of stones that is a very simplistic way to look at it but unfortunately the politicians or the folks that care about or that are you know not so pleased with the regime they are not exactly counting pennies so the you It's a bit of a different type of people that are that are a bit upset about the behavior there. So, anyhow, that's enough politics for today on the Rob TV.

Let's get back in. We got David Sutter, the co-founder of Open Trade. He's going to be joining us here imminently talking about stable coin yields, talking about the work that they're doing in the NEO finance space. Let's get Dave up and let's get the show on the road. Uh, glad to have Dave back on the show. First time actually. Dave, welcome back. Good to see you. >> Hey guys, great to be here. How are you doing today? >> Fantastic, man. >> It's a pleasure to have you here. >> Dave, what's the lore behind your your Twitter handle, man? You've got this Dave BTC giving me big OG vibes. >> Uh, yeah, I guess we could we could be considered OGs. So, my co-founder Jeff and I, we got into Bitcoin when we were in college in 2012. Um, and so you'll see that handle's actually from 2014.

So, I've been a Bitcoiner for over 10 years now. Andy, we just got to college like a few years too late. Man, >> I realized that we were like too young to be a part of the Bitcoin elite, just in time to be a part of the Ethereum elite, too old to be like the zoomers who are going to be clawbotting their way to like a ninef figureure business. So, like somewhere in between there. >> Oh man, there's a lot of fun stories there. Uh, I bet >> probably not appropriate for this uh for this venue, but maybe over a beer. >> Let's do it, man. We'll save those for another time. Well, I I'd love to hear a story that you can tell us, you know, maybe how how you started Open Trade and and generally, you know, maybe some things that happened after college once

you embarked on your entrepreneurial journey. >> Yeah, [clears throat] absolutely. So, um Jeff and I have have sort of followed the the arc of tokenization and stable coins. Uh so, we started it on Bitcoin in college. Um we helped launch one of the first dollar stable coins, one of the first real world asset tokens. uh then helped build a sort of through the phase of uh early tokenization. So we helped build a a consortium of 50 banks that uh were doing tokenization for corporate lending and trade finance and then wound up uh back at a firm called Center which was a joint venture between Coinbase and Circle that um founded and governed USDC

um which was wound down as a part of uh Circle basically acquired that and um uh you know USDC stands on its own now. Um, and somewhere in there we decided we we wanted to do uh a venture in the stable coin space and and focus on yield. Um, and so it's been a wild ride over the last 12 years kind of from the Bitcoin days, you guys mentioned Ethereum, watching that, you know, uh, multi-purpose permissionless blockchains, uh, through to tokenization and their adoption in in mainstream financial services and regulated industries to through DeFi summer and and the resulting stable coin boom. And uh, here we are today, right? We're

moving $50 trillion on chain with stable coins in 2025. Um, so yeah, would love to to talk about any and all of that with you guys. >> All right, Dave, where's the yield coming from? Your new 15% stable coin yield product hedges Salana staking with per why is this a better product than RWA or DeFi yield or maybe we can just start a little bit easier. What is the product suite here of Open Trade and talk to us about some of like the vault strategies, you know, kind of what you guys are doing there. Yeah. So the way the way I like to explain Open Trade is is with an analogy. Um so if you look at Stripe as a business, one of its core lines is it allows e-commerce businesses to embed checkout in their apps and

services, right? These e-commerce businesses, they don't have that competency. They don't want to build their own checkout experience. They use Stripe and they have checkout. We do the exact same thing for yield. So we work with neo banks, exchanges, staking providers custodians payments companies, and they use Open Trade to embed yield products in their existing apps and services uh both to manage their own treasury cash, but also allow their users to earn safe, predictable yield on their stable coin balances. To your point, I I love the way that you asked that, right? Where's the yield come from? uh we started the company directly in the wake of FTX and saw you know firsthand the BlockFi the Celsius kind of the disasters that there were

and so the day one ethos of this business was to do the opposite of that really to build a platform that was safe reliable secure uh transparent and so all of our yield generation strategies are run through a bankruptcy remote structure with regulated asset managers and service providers um and maximal transparency. Um the product lines are diverse. So we have products across uh publicly traded real world real world assets um public fixed income securities uh private credits. Uh we have the cryptonnative line of business that you alluded to which is a delta neutral salana staking strategy. Uh we have a a a bunch of DeFi strategies. We've

launched a a DeFi native product called Sierra which is a permissionless liquid yield token. And so we're our job is not to be really opinionated on the market. We want to provide our customers with the broadest tool set possible so that their users and their treasury can can build products that that kind of span the spectrum, the risk curve, liquidity duration, tenor exposure, um uh target returns. So we really our platform runs the gamut. We have over 45 different counterparties and venues that we connect to and you know through that are able to offer hundreds of different strategies.

>> Incredible. Um according to RWAXYZ you guys have 100 million in uh I guess distributed asset value. Uh maybe it's more than that or less than that but upwards of 100 million. Uh almost 90% of that is on Avalanche. Curious why you guys chose Avalanche as a a key partner. uh to deploy these these strategies. >> Well, that's actually a great plug. I'm wearing my favorite Northace right now, which is a an Avalanche Northace. I don't know if we can get that on the screen. Um, look, we made a decision very early on that um uh we got in touch with the Avalanche team. Um, technically it's it's very good, right? It's it's fast, it's it's efficient, um it's EVM

compatible. Uh but really on the business development and sort of community building and strategic partnership side, they've been fantastic. Um, and so we've really gone down into Latin America together and working with them, um, shown that stable coins and stable coin yield can be a real product for real people. Not not that crypto you I'm a cry I'm an OG, right? I'm a DGEN and so I'm not saying I'm not a real person, but these are remote workers, uh, savers, travelers, people are using stable coins to save and earn yield. Um, and that's kind of the spirit of our partnership with Avalanche and and we just haven't found a reason to to go anywhere else. Um, they've been fantastic.

>> Yep. Um, we had the head of tokenization uh from Avalanche on, her name is Olivia, maybe got, you know, work closely together. Uh, and she kind of laid out uh the spectrum of tokenization in this current era. uh she took us through kind of the the most uh the easiest one to implement right now is kind of the the wrapper the regul regulated wrap around an SV SPV um and then you've got kind of like a hybrid approach that is backed one to one and then you've got native issuance which is a little bit farfetched not a lot of teams doing that right now um where do you guys fall on that spectrum uh is it you know is it closer to like okay this

is something that's here and now or is it restructuring everyone's cap table? >> So that's a really good question number one. So there is a part of the industry right now that is trying to and it's a good fight rewire Wall Street with the public and permissionless blockchain. And so really the work that they're doing is solely focused on bringing assets on chain. That's not our job. our job is as an infrastructure provider to those fintexs so that they can earn yield regardless. So we're not I guess what I'm saying is we're not idealistic like we have onchain products, off-chain products, DeFi products, crypto products. Um and so it depends on the product. We have some products that follow the first model that you alluded

to, right? We have an SPV and there are um vaults that basically issue tokens that represent uh interests in in the investment activity of those SPVS. We have hybrid models. We also have partnership with direct issuance. So we have some products where debt is being issued directly on chain and that's where the yield's coming from. And so our our model supports all three. Um I have my own personal thoughts and opinions after working with large financial institutions for close to 10 years on on bringing assets on chain and the the challenges and opportunities there. But for us as a business, we're unopinionated on that. Well, it would be great to hear because you guys span a wide breadth of this spectrum to hear the pros and cons about where someone

may fall. Like we consider this an educational channel. There's plenty of, you know, founders, bu builders that are considering coming into the space. Give us a sense of what it takes to build at some of these different levels. >> The first thing I'll say is that I think the number one objective for any company or anyone learning about this space is to focus on the end user and the problem that you're solving for them. And most of the time you'll find that they either don't know or don't care about whether it's a wrapped SPV or it's directly issued on chain. They want to know how are you improving the way that they go about their day or the way that they manage their financial lives. The nuts and bolts of it um really depends on the asset, the uh the venue, the geography

that you're focused on. I think that what we will see and this is what you can expect is there is a lot of great work being done for these things to be issued natively on chain and that's a really important step forward because you're going to get 247 atomically swappable uh um assets and investment activity around the world like you have NASDAQ or I think maybe the New York Stock Exchange one of them is launching a 247 uh market that's going to be settled and stable. coins, right? That's incredibly exciting and that helps us. Um, but I think the the thing I would say for anyone that's thinking about building in the space is to be very pragmatic. Like I wouldn't make it your mission to wait

for Wall Street to come on chain. I I whether it's an SP, you know, there's a variety of different ways that you can you can do this and you can skin the cat, so to speak, and whatever way is best for that first thing that I said. what is the what is the problem that you're solving for that for that end user? We have very specific ICP. We know what they want. We know what they need. Um and that drives our design choices in terms of how we structure everything in the back end. >> Yeah. Yeah. Yeah. I think that's something that that we firmly have realized as is that this this step of tokenized equities on chain or uh different types of money market funds or private credit funds etc etc etc. Even just like you know being able to trade silver and gold on hyperlquid as an

example. These are like the it's like the intermediate pragmatic step of tokenizing all assets and then eventually getting better assets on chain to speculate on as as well. That's kind of like like the phase that we're in right now. Uh it's it was like I think the industry was trying to skip that step and go straight to have like just creating this entirely new system. Seems like this this intermediate step is also shaking out a lot of a lot of believers in the space though who kind of had that that early cyberpunk innovation and ideas. For us, we're kind of calling this neo finance, right? It's this convergence of legacy finance assets without the T plus2 settlement times without the opaqueness centralized custodial kind of uh operational

capabilities. And then it's also DeFi without seed phrases and without a clunky UX and without have you know losing your assets to an exploit and having a forgot password button having a customer support agent etc etc. So we're kind of seeing this convergence calling it neo finance um I'm curious kind of what your take is on this convergence on this idea of neo finance from your perspective like what does this really look like? What does this mean to you Dave? So, that's a really good question and I I share I share your guys's view of the world. Um, let's talk about kind of the historical arc and where we're at. Um, the and we can't go we're not going to go back further than Bitcoin, but we

have Bitcoin, right? And and and really the first inklings of tokenization were something called colored coins where people were using little pieces of Bitcoin to track assets other than Bitcoin, right? and using the OP return in Bitcoin to say this is a barrel of oil or this is a dollar or what have you. um that kind of kicked off a wave, let's say from 2014 to like 2020 where um the uh the finance side of NEO, right? So the non-cryptonative, the nongens, they approached the problem by saying we don't trust public and permissionless blockchains. We're going to create these private consortiums and use private chains and um uh we're going to build our own little siloed networks, right?

And there was a lot of time and money spent on that. Uh really there was like every bank in the world focused and what it did is it taught them a lot about it got them comfortable. So I don't think this was a waste. 2020 onward you started seeing institutions get comfortable with public permissionless blockchain. So they kind of said you know what these private networks they lose all the network effects and they lose a lot of the value because of that. And so you start seeing Black Rockck and Franklin Templeton and Wisdom Tree and uh both on sort of the tokenization side, but then also like bit uh the Bitcoin ETFs and uh um the DATs. And so now where we're at basically, as you already pointed out, is the institutions

are comfortable with the tooling and they're finding ways to adapt their business model to incrementally adopt public and permissionless blockchains for mainstream financial use cases. And the next wave beyond that will not be just recreating existing products on chain, but it will be creating entirely new products, right? because now we have 24 by7 liquid markets. Anyone in the world with internet access can can can save invest uh you know we have this whole move away from bank accounts to digital wallets and and we can talk a lot about that but I think the wave that we're at right now is still uh the convergence of institutional finance figuring out how

to do the existing products and services on public and permissionless blockchains. And as there's comfort and adoption there, you'll start to see them innovate and launch entirely new products and services. Um, like a DAT is a good example of that, right? That's a completely new sort of business model that didn't exist um until very recently. Whether it's good or bad, we can argue that. Um, but uh yeah, anyways, I hope that makes sense. your your view of the world sounds very similar to we had Mike Kagy from from Figure and he was at Sofi as well and um he was describing similarly how uh digital wallets not financial super apps are going to be the way in which we were we will navigate the neo finance world and and so you know it makes a actually

a lot better sense when you put it in this in the framing of a transition away from bank accounts and so you actually believe that we're going to transition away from like right now at, you know, checking in and savings at a brickandmortar bank, you know, we'll get a quarter basis point if that, right? And so part of this NEO finance thesis is that we're going to transition into a high yield savings environment via neo banks. Um, and it might actually be optin, right? So if I don't want the bank to lend out my money, I don't have to get any yield. If I go and, you know, I go to a bank, I get no yield, but they also, you know, lend out my money. And so in this new format, I can opt in uh and I can get a high yield. And and you

think that this is going to be a transition away from bank accounts into something like the digital wallets. Just fill in more details of that picture that you think is is going to is going to develop 100%. I think that that's happening already. Um Mastercard did a study uh I think two years ago where they they found a third of consumers in LAM had made an everyday purchase with the stable coin. It wasn't happening through banks, right? Um, and so I think that that's happening. Let me kind of deconstruct that a little bit on [clears throat] stable coins specifically. Anyone that's listening, I I' I'd urge you to just go to Google and type in narrow banking. So stable coins is really a rediscovery of an old concept of narrow banking where the existing banking system being

fractionally reserved is inherently fragile. Um and actually it turns out academics and financial professionals all along have been saying you know people should basically have the uh option to opt into that model but that there should there should be these other institutions that actually exist only to move money right they're utility providers and they're not fractionally reserved which makes them a lot more resilient right that is essentially the core financial structure of a stable coin it is a narrow bank right it takes in uh deposits it issues stable coins and it is not fractionally reserved. It invests only in shortdated US Treasury securities.

And then on the yield generation side, um you can then opt in to do that, right? Where you can choose your risk tolerance of, you know, I want to invest in things backed by treasuries or I want to invest in things backed by private credit or I want to invest in things backed by, you know, you have more granularity over what your account does, what your institution does with your money. And that's what you're seeing on the neo banking side, right? So you have this kind of like a a a rediscovery of old concepts. Um that's actually fairly threatening to the existing commercial banking model. That's why you've seen the ABA uh come out and really just go hard at stable coins and yield on stable coins and saying in on paper that there

could be up to a 30% deposit fight from existing institutions if st like if that's not an endorsement of how good this product is, I don't know what is right. Um, and so anyways, that's that trend of stable coins as the new digital internet native neo bank or narrow bank and then uh neo banks providing yield as the sort of new opt-in model to high yield savings where people aren't just getting 25 basis points on their checking account in exchange for that bank making risky illquid loans and doing maturity transformation and lending to you know what I mean? I think that that challenges a lot of the way that the current banking system is >> and I mean that's why they're so against the the market structure bill as it stands with regards to yield being able

>> from stable coins to holders. Dave, as we kind of come to a close here, what's what's the 2026 outlook for uh stable coin yield on chain? Uh obviously Trump is going to try to bring rates down in the US. this is will directly affect um you know the likes of tether and circle dramatically from a bottom line perspective. Um we we we will also have seen speculation kind of dry up a little bit in crypto meaning that that that the yields have came down that the desire to borrow is less yet still I've seen incredible yields on some different vault products. What's your take on stable coin yield for 2026?

>> I'm incredibly bullish on it. Um I think that um rates may come down right uh we don't have a crystal ball but when they do it's relative right so the rates for everything come down and so basically people's expectations around what they can earn on idle cash is going to be readjusted and will need to be readjusted and that will impact DeFi money markets that will impact trapi money markets across the board um but the core demand for stable coins will continue to grow and in line with that the core demand for yield on idle stable coins will grow in line with it like there's not I don't see a world where people are like actually I just I'm okay with 0% right they we know they want

stable coins as a global uh internet native permissionless dollar like that is an unstoppable force the genies out of the bottle there right and as that marches on so too will the demand for yield regardless of what the macro environment is right it will it might change the way people think about where they allocate those stable coins. But the core underlying driver of I need stable coins and I now need yield on those stable coins is is unstoppable in my opinion and is all weather doesn't matter the macro conditions. >> David Seder, co-founder of Open Trade, thank you for spending some time with us today. Really enjoyed this segment. Hope you guys had a big year. Uh, I think stable coin supply, we estimate about a 40% year-over-year growth, hoping to get

closer to 50 or 60% get closer to that one trillion total dollar mark. Thanks, Dave. >> Andy, Robbie, thank you. Have a great time. >> See you next time. >> Byebye. >> All righty. Talking about stable coins, we've got Run Christensen, the co-founder of Sky, talking Sky USDs buybacks. Uh I think they projected a $600 million revenue year uh from the uh USDS stable coin as well as a doubling in the USDS supply. That was a great conversation with Dave again like very much bit more on the legacy finance side but that is the way that the that the language is spoke and that the the kind

of uh growth vectors the thought process the mental models it's all kind of from that lens. So exciting. >> Yeah. >> Yeah. As we can go ahead and send Run in whenever he's ready, but I I really am enjoying these conversations with tokenization partners and RWA partners because I think you know these are new conversations and it's a new language, right? It is. >> And so we're going to we're going to chat with Rune here uh in a moment. We're going to bring him up and I think you know we've we are now closing the gap between these two worlds. Yes, >> we're seeing the integration in real time and I think we we are now drawing closer between one common language

between legacy finance correct and DeFi. This is becoming this neo finance language that I think is a blend of both of these and we're just squeezing that gap until it no longer exists. So, uh why don't we bring up Rune and uh we'll we'll get an update on on Sky as a driver of NEO finance. Run, welcome to the show, man. Good to see you. >> Glad to be here. Hey Run, how's how's Hong Kong, man? >> Oh, I'm not in Hong Kong. I'm uh at home in my basement grinding. >> Nice. I thought I saw a video of you in Hong Kong or something.

>> Well, I was in New York and uh doing a whole bunch of uh talking to Trafi institutions and allocators and all of that. >> What are they what are they saying? [laughter] >> Well, they're all about stable coins >> and tokenization. So, they they're happy to talk to me. >> Yeah, man. Well, coming up now as the third largest stable coin in in the digital asset industry, also having recently released your $600 million revenue projection for 2026, as well as a potential double in USDS supply. I think it's been maybe like four or five months since we last spoke. Catch us up what happened in the end of in the end of Q4. Obviously, we had 1010 um into the the the the beginning now of Q1.

What changes have you made at Sky? uh catches up then. >> Yeah. I mean, look, so Sky actually has probably the best momentum it's ever had. So, we're not exactly seeing a bare market or a crash or anything like that. In fact, it's been really good for us to have this like um renewed focus on fundamentals. And uh yeah, I mean, so uh since we last spoke, uh you know, we finished last year uh with Sky doubling almost the supply of USDS. So, we're like right now it's at like 9.6 6 billion. Uh it started the year at around 5 billion and ended the year around 9 billion. So that was like really really good growth. And then a total revenue for the whole last

year of 338 million uh with 96 million of that used for buybacks. So uh yeah, I think like financially uh the protocol has really proven itself and then it's just the beginning. So, um I mean the thing that's driving Skye's growth in addition to just like the the fundamental uh efficiency of USDS and the fact you can get the sky savings rate at 4% which is just the most efficient uh best risk adjusted return in the space. Uh, but it's also being powered by the Sky agents, right, like Spark, Grove, and we've had some neurons launching, including OPEX, and this is just going to continue to to grow to to launch and basically grow the momentum

of Sky. >> Yeah, man. I mean, I think the market is uh kind of catching up, but is still a little bit um behind on what's happening. And we've we've been uh calling this kind of convergence here. Neo finance, legacy finance, uh DeFi coming in happening, stable coins obviously being a big part of it. Um when it comes to these expectations for growth, right? So 338 million uh last year looking at over 600 or around that 600 mark this year. what is driving that growth uh in terms of the pure revenue projections as well as the USDS uh growth in terms of uh getting that

thing over 20 billion as projected. What's driving that? Who's driving that? How is that going to happen? >> I mean the great thing about being the world's largest decentralized yield generating stable coin is that there is now more than 300 billion in stable coins out there that's not earning a yield on on stable coins that simply don't pay a yield. to people that just have dollars but their capital is completely inefficient right and someone else is getting that yield and that just results in this sort of structural inflow that's constantly happening to USDS because it's the biggest so it's sort of the default place for uh for capital allocators and for this capital to go because look capital just wants to earn a return it doesn't want to sit earning zero it wants to to be

efficiently used uh and USS USDS is still just like getting started and still is getting proven, right? I mean, it launched um a little more than a year ago. Uh so there is just this constant passive inflow. Uh and that's definitely something that uh you know, in the Sky Frontier Foundation, which is the the organization that made this projection where we are we're expecting this sort of passive inflow effect to actually accelerate as USDS just gets more and more lindy and and gets, you know, older and and more proven and more widely integrated in the space. But the really sort of active push for adoption uh comes through the sky agent network as I was mentioning earlier right you have

something like spark right spark is is this sort of its own right very established defi project uh like they're the second largest lending lo market in the world they have like uh I think around three billion in tbl right now and they're like really competing heavily in onboarding users onto like USDS directly but also like various products that are powered by USDS such as SUSDC so you have this like you know you have basically all of this innovation and all of these parallel projects and teams executing on the overall growth strategy that benefits Sky as a whole but also benefits these individual projects and then with Grove and OPEX which are like the two new big ones that have come live and uh basically KE which is another agent

that's that's launched and and basically other agents coming up uh in the near future from Sky. All of this is just going to like really um compound this momentum. >> And so each of these things are are sort of stars in the sky ecosystem. Um and at a high level, they're aligned incentives between these stars ultimately back to the sky, you know, kind of home. But talk us through the game theory of how you're able to do that and align these different projects. Is it is it through buybacks? Is it through the savings rate? generally what are some of the under underpinnings here of how you're able to align incentives between all these stars?

>> Fundamentally um the stars are built on the rails of the sky protocol. So they're just sort of fundamentally like inside the framework of sky and follow the rules that is basically set by sky governance. These rules are then like very um you know very clear and very uh reliable, right? So, so basically there's like a basic set of rules around things like uh as a star um what's the cost of capital right when you borrow from from sky uh so when spark they go and find some kind of like a really good uh source of yield or grove they they onboard a new um RWA such as um JA right is the first ever tokenized CLO that

grove onboarded and that they then deployed $1 billion into but basically so when they do this and they find a good source of yield and they um you know they basically get to to develop some kind of uh outperformance through this this new source of yield that outperformance goes to the star right so sky just gets the base rate like sky gets like the basic return uh the star gets all the upside but the star then also has to do what's called credit enhancement so basically put up extra capital to make sure it's still safe uh on the on the sky side and then on the stable coin adoption side essentially uh the the inline ignment of incentives is through effectively a referral program called the distribution rewards. So every single time spark they

bring uh users to USDS or to the products like SUSDC uh and the same for grow right if they bring institutional users on board and so on for all the stars they you know the users are super happy because they get 4% on their capital which is the best rate available in DeFi right with really good risk adjusted return but on top of that the star basically gets this distribution reward as a referral fee just as like profits for them to basically make that connection and this is like a very scalable you know very parallelizable model where the stars are paid if they deliver results right if they don't deliver results they don't get anything so they have to perform uh which they then do right because they have skin in the game >> on that on that note run is there

anything particularly exciting from the OEX incubator that you've uh that you can share with us today or just any general kind of uh progress update progress report >> so I mean I can't share specifics but I'm like what I'm really excited about because kind of the next step for Sky right is to uh own more of the rails end to end or sort of integrate more of the rails into end. So uh if you look at um you know like the most exciting collateral type we've done so far which is JA in my opinion that's an example of like bringing on board like a structure product with CLOS and so it's like pretty advanced but it's actually still very much like a Trefy product where a

lot of the complex stuff that's happening with these CLOs's that's happening in Trefy world and the next phase for Sky is to actually uh bring the structuring bring the financial engineering uh bring like the risk trenching onchain so it's happening within sky uh like sky ecosystems and and basically done on the the infrastructure of sky and this gives us three major advantages right so the first one is just efficiency uh because you know there's just less intermediaries so the fees can be lower and then it can be higher scale um and then it is security with like better risk like sort of access to data and and you know like the risk management is much more scalable and and just that

actually also opens up for more efficiency. So you can actually in many cases give more leverage because you just have a better understanding of the full risk profile. And then finally uh it gives this like much greater control in terms of technical risk and legal risk. So all this sort of like uh sort of black swan type of stuff where you really don't want to get hacked and you really don't want the funds to get frozen or something that is like all coming under the umbrella of Sky with this new generation of of uh build out to the Sky agent network. And again, it just means like you can have more and more of these agents all operating in parallel, all executing on their own strategies, ultimately looking out for their own benefit, right? Like just chasing profits for themselves, but doing so in a way that's going to grow

Sky ecosystem as a whole and yet not create some kind of, you know, outsized risk or somehow like blow up the whole system, right? At worst, they can, you know, make, you know, basically not make profits and and not do well as a business. Uh but if there's five of them, 10 of them, you know, 20 of them, then some of them are going to do really well and the ones that do well are the ones that's going to grow and the ones that's going to take it forward. So you have this evolution really in the ecosystem that just drives growth and innovation constantly. >> Yeah. Yeah. >> Go ahead. >> Yeah. No, Rob, I I was going to say we've been kind of on point two there.

We've been really hammering on that thesis about how uh our our thought is that okay right now we've got you know CLOS's backing USDS obviously money market funds shorted treasuries back the large stable coins in the ecosystem but the next phase is going to be the actual interesting and for lack of a better term capital efficient you know take that back from DeFi summer ways to take these products bring them on chain and then do very simple things like even just borrowing against a money market fund on chain or looping different types of private credit uh funds, these types of things. We're seeing this as like the very clear next step to where then the kind of institutional capital flow

that's when their brain that's when like like the light bulb goes, oh this is why blockchain is actually really interesting. This is why composability and DeFi is really interesting. And we and we're already seeing it with vaults on Morpho. We're seeing it with different types of products that have much stronger yields using the traditional or or the legacy finance products on chain. And so Rob, I was just going to say like your point on credit creation and basically additional leverage being the main product market fit for the immediate term. It's it sounds like Rune, you're kind of confirming that to be the interesting next phase for Sky.

>> Yeah, absolutely. I mean, I I think uh when I look back at like the history of DeFi and Maker and now Sky, it's basically over time, we just learned more and more that essentially we we're really trying to rebuild Trafi. Like it's it's it's it's like the same type of stuff of what's already happening in the financial system today. The difference is it can be done way more efficiently and in some cases it unlocks these complete face changes and like paradigm shifts where you actually can do like completely new things. But usually what what's just happening is you're like doing the traditional stuff but like faster and cheaper and then that opens up for like new levels of scale or new new levels of sort of network effects and economies of scale

out of it. But yeah, like um uh like it's exactly happening and like and to your point, it's like increasingly when I'm out like pitching the institutions and and and also when they come to us, it's increasingly they're sort of realizing okay actually we're already doing this but we have all these problems and then what you're saying is by you know automating it with a smart contract or uh you know connecting directly to a shared data infrastructure then we can like solve all these costs and all these uh problems we have right now and then through that ultimately like I mean there's two ways right one there's two sides they look at it right one is like they can increase their profits but actually what I think is the more common stuff that's happening now is is what we call institutional FOMO right where they're starting to be

worried that the others will do it and that will like sort of lower the margins or like you know it'll like sort of like they might like erode at their at their fundamentals and so they feel like they have to be in there now like they they don't want to one day get caught off guard and and realize that they're just getting out competed by somebody who were faster at adopting the technology. >> Yeah, man. And we had Santi on yesterday talking about how his his thesis is is around crypto enabled companies actually being able to take crypto rails, bring them into their company and those being the like the investment opportunities that he wants to be a part of. But coming back to to the token side of things, Run, and kind of to part of this in institutional flow, you know, the future of token markets are really

starting to look a lot more like public equities. This was also part of our conversation Rob with Santi. Quarterly or earnings calls, quarterly reports, investor relations and capital markets teams, onetoone engagement with the largest holders, centralized top-down product decision-making, kind of the the the fugazi decentralization around Dows eroding ultimate transparency. A lot of these things run Sky has been very very ahead of the rest of the market with uh especially when it comes to the transparency pro uh the programmability.

We saw $2 million of buybacks each week since uh late January. talk to us about your perspective of the sky sky the asset as it pertains to kind of looking more like a uh looking more and more of something that you know investors can understand what they're investing in obviously not financial advice here but talk to us about your perspective of of the industry at large and sky as it pertains to really the restructuring of crypto assets. Yeah. I mean, so what what I think is is uh interesting is that uh it's just so important that finally uh there seems to have been some kind of

you know like a face change in the industry where hype and pump and this like brain dead casino behavior is not the is finally no longer the driving force and perhaps this time actually will not come back for good because I remember saying this exact same thing, you know, when Luna crashed and FDX crashed, right? it did come back, but I think this time it's it's quite a bit different. It's like a lot more brutal how uh the space is sort of crashing into reality. And I mean the reality is just like um you know if you want to run an economic system or a business you it has to be sustainable, right? It has to make money. It has to generate value in some way. Uh however, what's interesting to sort of this this broader point is that you know the crypto projects that

really really generate value in a in a sustainable and scalable way, they are the ones that I mean the the thing that sets them apart is that they tap into the core benefits of decentralization, right? Because that's actually the only real thing that that crypto has to offer, right? Like if you're not doing that, then you actually you don't really have much value uh from crypto ultimately. And you look at something like you know tokenizing assets and and DeFi and like financial engineering onchain right like ultimately it's about enabling decentralization which then enables things like uh you know um like free market dynamics which brings you efficiency right and transparency which

gives you risk management which lets you get leverage and which gets you more liquidity uh and sort of and and like I mean Sky basically is a system that sort of it's all about just like figuring out okay what aspects of decentralization are the ones that unlock value in this way right and then let's kind of put them all together make them as efficient as possible and make it as easy as possible to use them in the right way because like I mean there's a lot of projects out there that sort of get some of this stuff right but then some of it they get wrong and you have like you have centralized components or you have like overeager like uh sort of uh too much uh but with Bitcoin as I called it right like where this sort of like unnecess necessary levels of blockchain

or or sort of overengineering of it. Uh and then that causes some people to then conclude okay this decentralization stuff it doesn't work like it doesn't it's not really more efficient look it's causing problems look the governance is stupid this kind of stuff right and sort of writing the whole thing off but what's happening is you just you you're you're messing up one of the components and you hear all of the components end to end need to line up right the stars need to align so to speak uh and then you start to really unlock a an economic engine that is just at a completely different level like unlike anything that's been seen before, right? Because with decentralization, with resilience, you get this sort of ultimate ability to scale without

running into like scaling issues if you really do it right. And I mean, finance is just I mean, it's fundamentally sort of like the ultimate scaling of everything, right? Then you find that you end up with sort of the most abstract which allows you to handle the most stuff all at once which allows you to sort of bundle all the scale together and then unlock economies of scale right and this is where the sort of fundamental efficiency comes from that it's like it's like the the the basics of like uh economics really right that's that's being applied in practice and that's what we're doing with Sky and we're turning that into products like stable coins and Sky agents and all of this stuff that that's coming out that's going to drive the growth of the ecosystem.

Yeah, w without any of the fluff. Um and and so you know one of the things that came out I think just yesterday was this announcement around block black rockck and their bidding tradable and composable with the rest of DeFi which could unlock the credit and leverage as it becomes more deeply integrated with some of these DeFi mechanisms. I'm curious from your perspective, how much of the fundamental decentralization and blockchain value comes as a result of tokenizing the thing, putting it on chain versus how much value is unlocked once you can borrow against it and it becomes composable with the rest of these mechanisms. Like you got efficiency gains and then you've got network effects, right?

>> To my earlier point, the whole point is you got to you need it all really. And there's a bit of a ching and egg problem, right? where even when you have it all then you have need to have it at scale. Uh what's also I guess what we're seeing a lot what's kind of to a benefit in DeFi now is there is this amount of essentially like captive liquidity that that exists inside of crypto and inside of DeFi that actually means that despite the fact that most of the products in crypto right now they're like less efficient. I mean the the sky savings rate is like one of the few examples of like a you know um a large scale lowrisk high liquidity product in crypto that actually pays more than sofur right for

the most part you you see like total underperformance of of crypto just like terrible rates you know and even then there's like lots of risk and lots of weird technical quirks and so on right and but it's but actually that doesn't mean like I mean we're not totally dead because we just have a bunch of captive liquidity that's still playing in this space and that basically prefers crypto and or essentially native to crypto, right? For good reasons, right? Because obviously stable coins are just that's the most convenient way to hold capital if you know what you're doing for sure. Uh but um where what we really need is we need blockchain to actually showcase its real advantages and come out with products that are both lower risk and

higher returns and better transparency uh and then just systematically uh you know DeFi pill right and get them to really get into the space and and not just do one of these things but all of these things and most importantly make profits from doing it. >> Yeah. And again, like I said earlier, this is happening and in fact they're afraid of their competitors doing it, right? So they are sort of getting involved yet. We we're not really seeing the economies of scale just yet, right? But but because of this FOMO that's happening, it is a self-fulfilling prophecy. Like we're absolutely going to get to that point where it scales like that and the whole the sort of the flipping will happen, right? Where the whole system comes on chain.

>> Yeah. A as we close out here, I I'm curious to hear more about this institutional FOMO that you're talking about. are are your sales cycles getting much much faster and how how quickly is an institution able to bring a CLO or a money market on chain? What are the the steps that ultimately they need to do after they you know sit down with you in New York? >> I mean so Sky is in a very unique position because uh we are sort of the we are like the slowest uh link you could say in the chain because we we have the money, right? So, it's pretty easy for an inst I mean it's it's well nowadays it's really easy for an institution to tokenize something and get it done if they know they're going to get you know 200 million when they do

it right or a billion or something right. Uh the harder part is like um then figuring out well what what do they need to come with and what can they bring that will let uh you know uh like an allocator like like Sky basically you know support them in the sky risk framework so that you can have uh a sky agent like Grover or Spark deploy into it in a way that's safe and that's scalable and then where the economics end to end makes sense right and uh So what we're actually seeing now is um and as I was talking about earlier right this is sort of the next phase for Sky is that they are they're willing to fully adopt our models right and like

basically understand okay instead of of of Sky having to sort of um you know like in every single time sort of use some kind of bespoke approach to figure out how do we make the connection between some particular asset which is what we did with like Bidd and Jillian all these like these OG uh tokenized assets that have been brought on chain up to this point, right? Essentially, most of them were brought on chain by Sky doing like this sort of bespoke due diligence and then finally figuring out how can we see the liquidity and then that's what brought the institution to kind of tokenize it, bring it on chain in the first place and then it could grow from there, right? And but it was still it's still a pretty relatively limited amount of tokens that have happened like that and that have actually achieved scale and the next

phase is then that Sky sort of you know we we're basically going to start um using these standardizations. So once you do it one time then it's really easy for 10 20 institutions to all do the same type of thing and then all of them get allocations from sky right and that's when you'll see the sales cycle ex you know shorten extremely and then the real cool part is then from there it can easily grow to the rest of DeFi as well and uh and just it's all going to feed on top into each other basically and and just like grow the network effects liquidity and the efficiency >> thank you for your time man I really appreciate it yeah this is great >> glad to be here thanks Keep up the good work. See you next time. Thank you.

>> Congrats on the on the recent success. Hope hope you guys hit that 600 million mark. That'll be a big year. >> Yes. Thanks a lot. >> All right, man. See you. >> All righty, guys. We've got our next guest, Zang from head of issue growth at Secure Size. We'll take a quick break. We'll be right back with and we'll get Zang up and ready. Got Zang Stani. Happy Friday. >> Don't go anywhere, guys. >> [music] >> Yeet is built for big moments. The most fun you'll ever have with your crypto.

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all righty guys we're back. We got Zang Bu the head of I is growth at securityize a new hire with a pretty epic background in finance. Zang, how are you? >> Uh I'm good. Thank you so much for having me today. >> Absolutely. thanks for coming on. So, you you were previously the VP and head of US equity and ETFs at NASDAQ. Um, could you just give us a a a background and a story as far as how you you go from, you know, head of uh US equity at NASDAQ to securitize? What what was it that you saw that ultimately brought you there?

>> Yeah, I mean, I've spent the past decade at exchanges. So, most recently leading US equities and ETF for NASDAQ. So I'm really grateful for that background in traditional finance and exchanges because it gave me the opportunity to work really closely with issuers, regulators, liquidity provider, and a lot of market participants on some really cool investable products. You know, notably spot bitcoin ETF today, those launch was definitely a highlight of my career. So I had a front row seat into how you bring innovative products and modernized market but doing so in a careful and collaborative and with a very strong in investor protection regulatory framework in mind. So you know tokenization is has been something very interesting to me just through my

exposure with digital asset products. Um and I do believe in it being the next evolution that will transform the financial markets. you know, tokenization at its core is upgrading the ledgers and making everything more transparent, secure, programmable. So, there's been a lot of growth within the the space and over the past few years, and there's a lot of um you know, tailwinds ahead from a regulatory and adoption standpoint. So, I knew I wanted to be at a firm that is enabling this growth in a responsible way. So why not join the biggest firm um you know that has a regulated end to-end staff to support issuers and already has earned a trust with the world's largest uh ass managers that is securitiz >> beautiful congrats and congrats on the role. Um be before

we get into everything that's happening you know with issuers and securitize I'm just curious is it the consensus opinion when you left NASDAQ you know the adoption of tokenization was that something that your peers shared? I mean definitely um it's something that when I was at NASDAQ we were talking about on a daily basis about how do we you know enable this uh NASDAQ did put out a filing to enable trading of tokenized um you know securities on their exchange. New York Stock Exchange also put out announcement about um them operating a tokenized ATS. So you're seeing a lot of these traditional players forming digital assets team creating a digital asset strategy for themselves.

>> Awesome. Um, you know, we we've had a lot of conversation, especially more recently around this concept of NEO finance, all of these financial mechanisms around tokenization and RWAs and stable coins and and these are hitting a primarily target audience of issuers, asset managers, institutions, allocators. Could you just help us identify, you know, given that you're the head of issuer growth at Securitize, what does it mean to be an issuer? An issuer is you know you're you're issuing a security. So for a company you know it's your it's your company stock foreign asset managers is investable products that investor can um invest into the product. So you know at

securitize you know we talk about native tokens issuerled tokens. So that means you know we're working directly with the issuer to mit these tokens and so the tokens from securitize and who in partnership with these issuers are one and the same as the investment product that they're putting out. You know it's not a derivative or um you know a swap base um to the underlying where you only get the price appreciation. you actually truly own the underlying security and you know you have the same dividend rights, voting rights uh and you know you're on the the issuers's cap table as well as a shareholder. So you're truly you know it's one and the same um got it through the securities model.

>> Yeah. And I I've got one more followup then I'm sure Andy's got questions as well. I I'm curious. You know, we've had a lot of these conversations about tokenization ranging all across the spectrum from SPV rappers to hybrid models that are onetoone backed all the way through to securitizes native tokenization, native issuance. How did you become convinced that the native issuance model was the right model for issuers? >> Being at an exchange, um you know, we we've always worked with issuers, right?

Um, you know, it's always, you know, at our core, we're thinking about, you know, what is the best for issuers because they're the foundation of the financial capital markets. Um, you know, what what works well that can be traded well, you know, what is it about invest like we really care about investor protection. So, by going in in the um, you know, issuer-led native tokenization, it's the only approach in my opinion that allows for all of that. you know, you in partnership with the issuer, you know, you're able to be able to provide those same rights as the traditional share. Um, you know, and it really is setting the standard for what a token really means. And, you know, there's, like you said, there's a lot of options out there for tokenization, but if you're not digging under the hood,

you don't actually know what you might be owning. You might be owning a a swap, a derivative. you don't know what access you really have when corporate actions are applied like are some of these other wrap type of structure for tokenization really reflecting those corporate actions properly. So the way security does it we believe it's the right way um and because it's in partnership with issuers that you truly know what that token represents. >> Yeah. Yeah definitely. So, so then with that kind of uh unique competitive advantage in mind as the head of issuer growth, what are your top priorities in the first few months here particularly in expanding securizes issuer base beyond the current $4 billion or over $4 billion in tokenized assets now.

>> Yeah. So, um you know in my role I'll be working with asset manager public private issuers to you know tokenize their uh their assets. You know you I know you guys are familiar with our model tokenizing the world and you know we truly believe that all assets will move on chain to take advantage of this superior technology. So my role is to show issuers you know what better infrastructure better ledger technology really can unlock for them and their investors. So I'll be spending my time deepening relationships with asset managers. You know, we already have a really great list of uh partners like Black Rockck, Van, Hamilton, Lane, Khr, Apollo, but you know, we want to continue to expand those partnerships with the marquee asset managers out there and as well as companies. Um, so we'll be sharing insights about the

tokenization landscape, you know, what are the benefits of tokenizing, what efficiencies and access, um, and what are some of the use cases of the tokens that we're seeing today. Um so on that that's on the you know the issuer side but we're also we want to make sure that the token is um you know has a robust ecosystem that is supporting it. So we're engaging with you know traditional liquidity providers as well and and banks and service providers to ensure the transition is as seamless as possible. And so our goal is to partner with these firms to launch new funds across asset classes. You know today you know the treasury market is definitely a big one. you know, we recently launched a high yield uh AAA um CLLO um token that is in the market, but we want to bring additional asset classes so that

there's solutions for all of the investors needs on chain as well as tokenization of public stocks and ETF. >> Where are issuers right now on their educational journey learning about tokenization? Um like you mentioned inside NASDAQ, you were talking about tokenization every day, made this filing. um native issuance is sort of at the the tip of the spear when it comes to tokenization. Do you have issuers that are just a little bit too early? They're not ready to restructure cap tables and do these kinds of things and and yeah, where where do they fall on on how early or ready are they for these products?

>> Yeah, it definitely varies depending on the firm, right? Um, you know, Black Rockck launched Bid with us in 2024, which I know, uh, Run just said it's the OG asset, uh, which is really a great testament to, you know, the reputation they've built being a 2-year-old fund, uh, and token. So, you know, that's really exciting. So, you you have that product and then you have a number of other products out there. So, you know, they're definitely we're but we're still in early days, right? You know, the RWA market is 25 billion. Um, so it's still very early. There's a lot of projections from anywhere from 2 trillion to 30 trillion in the next 5 to 10 years. So there's a lot of opportunities there. So our conversations with issuers are at various stages. There's but we're

talking to pretty much all the largest asset managers because they're interested in learning. There's definitely firms that have started thinking about what products in my lineup works well to be tokenized. You know, there's firms that have filed to offer tokenized share tokenized ETFs um out there. So there's definitely varying uh degree of readiness but there's I think one at the core is just everyone's asking about it talking about it and you know it's been an exciting three weeks for me at securitize because we get to be at the center of those conversations and hearing how firms are approaching it.

>> Yeah. >> Yeah. I'm curious if the um if the actual uh vision for where you want to take this, you know, you your role, but just generally working with the issuers, if you guys have an aligned shared vision, you know, I know it's only been a couple weeks perhaps you had your perspective coming in to, you know, from your experience with NASDAQ, then, you know, securitize has their way of doing things and then there's an entire market that has their whole way of doing things. What has been some like the throughine? so far that you've experienced or just maybe you could give us a bit of more insight onto you know the perspectives or the or the ways that that that the issuers are thinking about things versus how secure size is versus

how some of your experience and perspective gained at NASDAQ. Just trying to get a bit better of an understanding as to like where there may be some potential you know uh divergences in in agreement disagreements or generally like where there is consensus in the issuer space. you know we take a very collaborative approach with the with the issuer you know we try to understand what is their time to market what's their goal of tokenization um and you know how can we solve those um you know those needs for them so you know in the conversations you know we want to understand you know are they looking to distri like expand their distribution is it about efficiency so we're trying to learn all of that and then we work with them in terms of

what's the right structure to to launch these products um you know what what would be most attractive to the onchain ecosystem uh about the product so that when we're structuring it you know we make sure that we're incorporating those those aspects within the tokens themselves to make sure there's utility on chain um I mean coming from the ETF world I think things I've learned about ETFs you know now it's kind of ubiquous that people are very familiar with ETF but in the beginning days you know there was a lot of questions about like how exactly does this work is this product going to be able to withstand market volatility and all the different market cycles and um and then you know once it did you know it really accelerated

adoption. So I think tokenization is in a similar path, right? Like we're early days. We have a few products um that have done really well and it's going through those market cycles and really showcasing that it is a resilient structure. We're partnering with issuers who have really strong brand. They're providing instit institutional grade investments and you know their products are serving a purpose. So it and so would when you wrapped all of that together and you bring in the ecosystem like that's how you make the product successful and you scale it into the future.

>> Yeah, I I think security ties took the world by storm with this unis swap bidd collaboration. Um people saw it and they say yes finally we're integrating these things more deeply into blockchain finance, defi, neo finance. Um, and and this is a trend that I anticipate will continue uh in orders of magnitude as more of these products come online. I I'm curious if you could help us understand how this does relate to BlackRock's um you know vision for tokenization and how you see this progressing with their goals. Is it to expand distribution? Is it to increase efficiency? Is there something else? And generally as people, you know, launch these products, what what does it seem like is the most prominent goal with

tokenization? I mean we were really excited about the announcement uh in the integration with unis swap x. Um you know it the integration is um you know to create liquidity for the token. So it operates a request for quote so that when an investor wants to buy or sell the asset you know we're able to facilitate that liquidity um you know so that the transaction can be executed on train and have that transparency and efficiency. So you know liquidity is always something that is very important. Um, you know, a lot of the use case for tokenization today has been very much primary market driven. So, you know, we're this the most powerful outcome of this integration is about the two-sided liquidity in the secondary market for

for these tokenized assets. So, um, and I think at the key is also it's still being regulated like everything we're doing has compliance and regulation at the core. you know, we're ensuring that everyone who is owning the token is holding it in KYC uh whitelisted wallets. So, that continues to be very important to us. Um and so, you know, I think you asked about like what are people looking for with the tokens. Um you know, one is about, you know, the efficiencies that blockchain technology can provide with the updated ledger. Um distribution and accessing new investor base is definitely very important for for the issuers. Um and that comes with um how integrated is your tokenization

partner into the DeFi ecosystem and you know securitize has some of the largest you know has very plugged into that ecosystem. You know we're plugged into 20 different blockchains. We're integrated with the custody the custodians the market makers the the oracles so and the D5 protocols. So we really are able to facilitate that endto-end solution for for issuers when they're looking to enter the the space. >> Yeah. And you guys have like the SEC registered transfer agent. I' I'd imagine that some of those licenses like like this one as well as you know you're operating the the regulated ATS. How do these licenses work that allow you to facilitate the two-sided liquidity of these of these products? I mean we are

the only tokenization platform that has the regulated end to end full stack to support issuers when they want to tokenize. So you know you mentioned our SEC register transfer agent or SEC register uh ATS and broker dealer uh and then we also have a fund administration uh service because you know to us we're not looking to enable this by uh you know waiting for exemptions from the SEC or you know trying to push the boundary of regulation. we want to do it in the way that it fits with the existing framework. Um, and I think that really aligns well with the asset managers and the issuers who are highly regulated.

You know, they and you know, that gave them the certainty that you know, we're able to support them in a compliant way. Um, you know, so you know, throughout the whole stack, you know, we issue we mint the tokens and support the uh uh cap table and and shareholder management through our transfer agent. We service the fund through our fund admin business. um you know we support uh placement of the of the tokens through a broker dealer and also can facilitate trading through that and then we have the ATS to support the um secondary market but we're really excited to see how the ecosystem continue to grow and how these additional integration will help even further make the liquidity more robust.

What are some missing pieces? Because, you know, when you when you mention the full stack, it feels like everything has been, you know, put together. You've got all the licenses, you've got all the regulations, you know, in order to facilitate the the movement and tokenization of these things on chain and then also connect them with distribution partners or or like you said, endtoend full stack liquidity. What are what is the work still to go? Where are some of the missing gaps that you're hearing from these issuers? Yeah, I mean for for me and like why I'm focused on it is really bringing more of the assets on chain. Um you know we want to be able to have different types of products that are available on chain to service different needs for investors.

You know um a retail investor need might be is very different than an institution. So you know we want to be able to have products that appeal to retail um and also and they can use it for the different use cases that they have. Um and then we also want to make sure that we have uh products for institutions. So you know having those conversations with issuers to think about what are different investment vehicles they have and how do we bring that into the tokenized eco uh um economy is you know what you know I'll be focused on and where the gaps I see uh for for for my role. Um and then you know I think as the product come on chain um you know people develop new utility for those assets. So, it's it'll be exciting to see that as

>> Zen, last thing for you. Um, when it comes to the the kind of experience that they've had with ETFs, Bitcoin ETFs, etc. Um, you know, we're seeing different we're seeing different developments on the market structure side of things, on the regulation side of things. I I'm curious how you anticipate should this market structure bill, if we're speculating here, go through before the end of the year, before the next midterms or sooner, how do you anticipate these positive regulatory shifts impacting tokenization growth?

You know, what what should issuers be thinking about? How do you kind of think about this? Yeah, I mean regulatory clarity is really welcomed and that's um you know that's been one of the tailwinds that has accelerated acceleration over the past year and as um you know the clarity act hopefully get adopted and additional rule making that is happening you know that just provides more clarity for the market and you know what institutions need is that clarity so that they can have confidence in you know investing further into their digital asset platform. Um, and so, you know, we're we think that's all positive. And, you know, the SEC's already started to put out guidance in terms of taxonomy for different types of tokenization. I think that's all been

very helpful and positive steps. >> Awesome. Thanks for your time. Congrats on the new role. >> Thank you so much for having me. >> Yeah. See you next time. >> It's a it's a different journey over here in the uh in the onchain landscape. So, I hope you're getting familiar with uh everything. We need to see your Twitter account. I'm sure you've got LinkedIn, but we need to see your Twitter come soon. >> Yeah, we'll we'll work on that. No, it's been very exciting so far. So, I'm excited to be working with you guys more. So, thank you. >> Awesome. Congrats again. >> Thanks. >> We'll see you next time. Thanks, Z. >> Tokenization, man. It keeps happening.

>> I like I gotta say I enjoy learning about this. This feels like we're like digging into the plumbing of finance, which from my perspective, it was all paperwork and it was all like almost like politics. So, it wasn't that interesting. But when when we think about it, like there's the the >> like there the regulations are the code, you know what I mean? Like, >> yes, >> we're going to have to take all of this paperwork and all of these like rules and regulations and codify them and program them so that they do become enforceable on chain. And that work is just as interesting as all the onchain work that happens today.

>> Yeah. Yeah, man. I mean, it's this convergence just keeps keeps it keeps becoming more and more apparent. Um and and it's just very very it it it's exciting. It's cool. Some some crypto natives don't like it. Others think it's great. As we spoke with about with Dave earlier, it's the logical next step. Um guys, we got our final guest. We've got Stani Kulicha, the founder of A Labs. A's big A will win proposal from A Labs this past week. That was yesterday actually. Um big proposal. We talked about it earlier on the show. We had some tweets come out about it earlier this week. This is the first time Stany's talked about it publicly. Uh we have a good set of questions. We have

some things that the community wants to hear about, wants to know about. As far as short-term, uh market has a green day today. A has been reacting well to it. I've seen a ton of different people responding positively. Others uh you know have their have their grips about it. We're going to get to the bottom of it. We're we're gonna get Stani up and excited to just generally dig into the reasonings and understand a bit more about the why and the how about the A will win framework. So without further ado guys, we will get Stani up and we will close off this awesome week on Rollup TV. Stanie, welcome back to the show, man. Good to see you. big week.

>> Good to see you everyone and happy Friday. >> Happy Friday, man. Congrats on the proposal. A will win. >> Thank you. Thank you. It's uh it's um I think it's interesting times in uh DeFi at the moment and also for for a and also a team, but but also where u the whole ecosystem uh is going and and the potential uh of of a and defi uh for the future. I think we're gonna probably talk about it a little bit a little bit more.

>> Yes. >> Yeah. >> Yeah. I think just some context setting, right, Stonyie? We've kind of been going through this kind of sophistication and maturation phase of the industry broadly, right? And I think there's certain token designs that that were prohibited due to regulatory um you know regimes. Previously I talked about imagine seeing Andre Cronier's valueless governance token medium article be written today as a new token structure right and I we talked about returning to fundamentals we talked about this idea of of the revenue the revenue uh meta which is kind of a beam but it it also works in terms of like oh this is where the space is going towards cash flowing

tokens towards this new idea of actually unifying token and equity Why don't you just break down the A Labs proposal? A will win to the DAO and why this matters for A's next phase of growth. >> Yeah. No, I agree kind of on the the the the landscape of of the tokens is is is a is a very interesting inflection point. Um and the the AV win proposal is um that has been for us a a way sort of uh to try to think about like a how does the token value capture work and there's there's obviously like when you go all the way back to the

early days you know the the project itself was funded by uh an ICO back in um 2017 um when we were uh eat at that time and uh very experimental project one of the first uh would say uh DeFi uh protocols uh first lending protocol uh at that point and more of like a peer-to-peer model and at that point the the the idea of uh token token economics uh token value capture and and and whole DeFi space was completely different and obviously over the years things have been evolved uh quite concretely but when we think But um at that point when

uh things started off for for Eatland, our sort of a main idea was that how do we actually uh are able to build this uh sort of a infrastructure that could be connected to any sort of a use case uh in lending and and down the line could become um a a a backbone for uh financial systems and and and the same way as for example the pro internet protocols like IP and HTTP are servicing everyone and and be as uh little as opinated as possible. So effectively everything started with uh with experimentation and overlaps. uh back then as the ETL team we were the contributors of this uh systems and over

the years obviously 2020 came we launched uh the first version of the uh of a protocol which which was fundamentally very different what we did uh in in the past um and then follow DeFi and that 2020 uh year was fundamentally uh important for us not just because uh the the protocol itself started to get traction uh protocol market fit but because that was when a lot of these uh initial uh sort of uh uh governance functionalities started to uh be built into the system. So at that point uh AIP1 uh was something that we uh released and AIP1 also defined uh

effectively what the token governance is for the a protocol. what does it do? Uh what's the purpose? Um and also what is the value capture of the protocol? And it's stated uh effectively that um [clears throat] any sort of uh protocol revenue that's that that revenue that is created uh the protocol takes uh portion of that uh revenue into the Dow treasury and then the Dow treasury can be used um to fund uh different sort of uh initiatives whether that's uh further development of the protocol uh further um uh uh research re research as well or uh paying for service providers such as

for example risk management and and other uh services that effectively add value into the uh protocol. So it kind of like that opened the doors for uh the community to come and contribute and that year also is when uh the DeFi summer was peing. So uh you had this interesting yields uh on chain at the same time when you know it was COVID uh interest rates were low uh everywhere in the traditional world. Um and then you had this uh governance tokens on on top of it uh sort of uh that protocols are are were giving uh for users ability to own these uh piece of uh pieces of in

infrastructure. So coming out of there and uh over time obviously labs has been a uh fundamentally important uh participants uh and and kind of permanent contributor in the a uh ecosystem uh building some of the infrastructure from like the global stable coin of a v4 and so forth. But one sort of uh big thing for us uh as a big kind of a push back has been always the regulatory uncertainty and over the past uh few years I think it's been uh extremely uh hard to be a a DeFi builder uh whether it's someone who is in in the US or um in Europe or any

anywhere any part of the world and we were experiencing uh years of uh uh risk that came out of that uncertainty and aggressive uh policies by the SEC uh to pretty much almost every single uh DeFi protocol that was um out there and that sort of pushed a lot of the the innovation back and a lot of the adoption back and I feel like uh that also affected the the whole growth of DeFi. So if you look at the existing uh growth phase where where DeFi is today uh let's say it's in in total 120 billion uh last year peaked at uh 220 or

so billion and going few years back uh it was 200 billion. A lot of that sort of limitations uh came from the fact that uh it was extremely uh risky for a lot of DeFi teams to actually uh contribute and push push the innovation and push the uh growth uh further. And the the the A will win proposal um uh effectively uh establishes a really really important uh uh uh part of the whole um uh uh story is that um the labs, you know, the the labs as a as a contributor um builds products and and wants to be

su self- sustainable and and wants to create a proto player that then acquires uh users and then increases the economical activity of the of a protocol. Um and one of the things that has been really challenging is to understand that well where does the value capture go? Does it go into the uh a token or the the the avalapse in form of equity? Um and the second question is that so when you get funding let's say into the labs to to basically grow these products and compete with uh the biggest uh Finex in the world um uh and and grow the protocol at the same time where kind of like the focus is going to go and how

to ensure that everyone who is contributing growing the protocol are thinking and focusing on the other token and and being token and going back and forth that there's a lot of discussions in the in the past months uh about this topic and and and and DeFi in g general D5 protocols and D5 teams had to rethink uh about how to think about token value capture and token economics and how to go away of this model of like these are just governance tokens um you know valueless tokens but actually these are fundamentally important businesses that are being built now and could be uh uh empowering the whole financial

infrastructure uh over the long-term period and how do we basically ensure that that is very clear um and that's where the a will win uh proposal uh comes into place where we from a labs we want to show a extremely strong uh commitment but also alignment uh with the a token holders and ensure that the work that we are doing is seen been going as a value capture at a 100% rate on on anything that's basically we're building on the product layer directly into the DAO. So it takes the AIP1 which basically gives a mandate that the

protocol generates revenue and that revenue goes uh into the Avid treasury into also that products that that are being built let's say outside of the the protocol uh by Ava Labs uh 100% of that revenue is going to the ADA uh treasury and that is fundamentally big thing because it unlocks a completely new streams, not just a one stream, but streams of revenue outside of the blending business model into new sorts of business models and also on the product layer. And that is a big benefit for what this proposal actually does for uh for the a

uh ecosystem. So I I think that traces through the entire history leading from AIP1 all the way through to a will win which is transcended several eras of DeFi. Um and you know we were also early contributors of DeFi. You may not remember a grants was actually the first the first dollar that the the rollup made way back in 2021 I think for doing DeFi education. And so, you know, we've kind of grown as a grown and as the space has grown. And I think there was a tremendous effort to decentralize early on could have been due to regulatory. We there was also a

strong belief that decentralized governance was the right path to organize a community working on an underlying protocol layer and we were fighting forces of centralization and intermediaries. um you know there was a lot of things that happened in the middle which which you explained in AIP1 and and now we find ourselves at at a at a point in time where we're we're seeing the the decentralization that spread a lot of people and things out and diffused all of this operationally. We we're seeing a lot of it consolidate and come back. And here at the world we've been talking about this unification and and that's really what the proposal feels like. It feels like a unification of labs and DAO

and through the proposal there's several points that I think we want to get into. One of them is that you know a labs is making an ask. I believe the ask is I want to make sure that we we get this right but it is for a certain amount of USDC and a certain amount of a and so you know if the DAO is to you know commit to this ask and and uh you know provide this USDC and this a to a labs in exchange for 100% of the revenue generated via the protocol and some of the other products from a it almost feels like you know the Dow is kind of buying out the labs and so could you

unpack the is this the right way to think about this the it's this exchange of money now for money later and you know if if we get into the numbers here I believe the revenue that we saw in the in the in the thread that a posted was upwards of hund00 million throughout all of uh I believe it's per year throughout all of these a products um the the cash and a that the labs entity is asking for 75,000 a uh at these prices roughly uh 8 to10 million it's a significant portion of the Dow's a holdings and then there's USDC um of which the A Dow holds $161 million

uh and it's asking for 40 the A labs uh is asking for 42.5 million of stable coins 25 million in primary, 17.5 million in milestone grants. And so this is a substantial ask, but it seems as if the A DAO would recoup this investment in a short amount of time, perhaps even one year or less. Is that the right way to think about this proposal? And can you just verify this math that you know this this investment that the Dow makes in labs would get recouped in a year or two?

Yeah, the there's of course there's different stable coins. Not every everything is um in the um USDC. So there's different proportions of of that and and assets and and typically stable coins in the treasury are also um earning uh as well. And something to to think about is that um when it comes to the the a uh treasury effectively it's not um a static treasury like in many of these dows. So throughout the years uh over the past um uh eight eight years we've been able to effectively build uh a uh a a a protocol um and and an infrastructure both both a and a native

go stablecoin uh into a place where it's revenue generating um very few dows and very few protocols are in the same state um as as as for example um a But fundamentally uh that means there's ongoing revenue. There's a one important part of that is that uh the protocol has um usage um and it has users and that is something that the a labs uh develop protocol layer is uh is supporting and driving that traffic and experience and and so forth. And and the way we think about it is that um our original approach was that um maybe actually the

the products of the other labs can actually be self- sustained and developed outside of the protocol. Um and that's a way to effectively uh grow the products uh fund raise and and really compete on user acquisition at the same level as for example a lot of these uh fintexs are doing. Um but at the same time you get this sort of a same problem of uh uh value capture which is uh fundamentally uh in a a uh uh place where you have to think about is is the value going for example into the equity or into the token and the way to solve this is uh kind of like

an interesting and and a little bit similar model as UNISOP unification uh proposal. Um so there's some uh ingredients there but uh a bit different model uh is applied here. Um so in unisoft unification proposal they are forgoing all the application fees to basically drive traffic uh into the protocol and also monetize on the protocol level. In the a will win proposal the um uh the the the the trade effectively here is that the protocol itself is earning and the protocol is uh creating revenue and with good treasury management um that

revenue is is is managed well and treasury is managed well but at the same time as a labs are is building these products uh it generates additional revenue and then the idea here is that that additional revenue is now at 100% rate um directed to the avid treasury. So that effectively means that um the the the uh as the products are growing uh which is effectively uh a app and a app is our new offering that is fully tailored to consumers because we believe that the only way to get DeFi to to mainstream u is by building

experiences that feel like fintech. So abstracting away wallets, uh gas fees, uh networks and being able to link your bank account into a app and deposit in few seconds is the experience that um is is uh passes the the sort of a fintech test. Uh then obviously there is a pro which is um about the sophisticated DeFi experience but also close connectivity to banking so you can pull funds in additional security on the wallet management and you can connect your own wallets and the third product is the uh AVA kit which is more on the API SDK level um enabling integrations of the AV protocol in a safe and secure

enterprisegrade uh level. um for for example FinTex and traditional uh institutions. Then there's obviously the the horizon market which is a RWA uh uh play that we think is is going to go grow substantially. So the way to think about it is that um these products will uh effectively grow the revenue for um a because we grow uh the user bases uh user activities and that grows the economical activity uh for the protocol going directly to the consumers servicing uh sophisticated uh DeFi users and then enterprise uh uh sales for uh

Finex and by foregoing the revenue uh of these products that could be as big as any sort of uh uh fintech in in the future. Um the trade here is effectively that the avid funds a budget annually for uh a labs uh not just build and maintain these products at a extremely high quality um but also to to grow these products and invest into customer acquisition. So the way to think about here is that um the DAO effectively is investing into uh protocol innovation uh R&D and product innovation and and

and product growth and that expands the uh revenue capture surface and also the the the velocity of of of revenue uh over the upcoming uh years. And fundamentally what we're saying is that Avalapse will keep building forprofit products and expand the profit surface but all the profit is going to go to one place which is the AV token and by doing that uh that creates uh uh that removes the uncertainty uh between value capture and that makes things more uh simple for anyone who are thinking about the AVA token or thinking about

thinking how are thinking how do you um how the relationship with the labs and the uh the protocol the DAO and and the token holders is is is structured. Um, and I think that's that's a uh really good model because um what I'm very excited about is also to look into the traditional uh public markets and think about what kind of things we can bring from there to actually make tokens that are running uh incredibly uh potential businesses on chain and how to improve those governance uh mechanisms uh for the token holders. And I think that is a a really uh interesting uh topic as

well. >> Yeah, I mean I think the industry wants tokens with clear value acrruel mechanisms undeniably. I also think that this proposal from the more institutional folks that I've just spoken to about it in the last 24 hours uh makes the token much more investable from an institutional standpoint which I think is very important and and and it just kind of shows that the future of these token markets are going to start to look a lot more like public equities right quarterly earnings calls quarterly reports investor relations capital markets teams uh onetoone engagement with large holders you know more top- down hierarchical uh decision-m on product as a as a competitive advantage just kind of just

this different regime is enabling a different structure. So you've talked about kind of how this proposal will allow you to go and compete with some of the largest uh fintech applications with your full product suite. You also you also talked about the continued funding development and execution from the the lab side. I'm curious how A V4 uh pertains to this, right? Why this is such a central part of the proposal uh and what V4 unlocks from the A perspective as it pertains to you know the token being the central part a token future why that why V4 creates a interesting dynamic for the token.

No, you're you're absolutely right also in the sense that um you know the best execution environment for uh ideas and businesses um is is typically startups and scaleups where you have a very little friction you can move really fast um and that type of an environment is where the products should be. So um decentralized governance governance works really well when you want to add resiliency uh additional accountability and and transparency and and that's where basically um in our protocol's case uh you have this uh uh system where every sort of a parameter that goes into

the protocol asset listing has a prevetted process and that ensures that end to end uh the protocol is safe and secure and that's why a as a protocol is is is a leader because the risk is managed really well and there's checks and balances when it comes to the the proto player. Um you can't really use uh decentralized governance um uh voting and you know uh for example what kind of a features are should be voted into an application or what kind of things should be on on a landing page and and whatnot. you have to operate uh in a sort of uh autonomy uh product autonomy and and people who build the best products in the world uh you know and

now and in the past and you know if if you think about like Steve Jobs and and and a lot of these uh icons um they have a lot of uh product auton autonomy so there needs to be this sort of uh um independent decision- making of how and what needs to be built on the application layer uh and iterate quickly and and take risks. So, one of the things that I'm uh really a big fan of is is that we never know what sort of initiative or a product or a feature actually is going to be um a groundbreaking feature. So, for example, when uh we were developing the uh a uh a v3 uh we added uh one

interesting feature which is called uh e- mode. So it's sort of an efficiency modes where um uh you could get a a really high alone to value ratio between assets that are collate correlated and that works really well for uh users that are looping these assets and and that created a lot of uh uh net deposits for the other protocol. But when we were brainstorming about this feature uh and and and uh implemented it, we didn't understand exactly the impact. And it turns out it was a really good impact and some features have less uh impact.

Uh but the main point is that you never know beforehand. So you have to keep innovating and iterating and av4 um follows the same sort of uh innovation uh pattern that we've done uh almost the past decade where uh we build things uh but we build in a way uh in a in a structure where we can actually uh add new add new products and and features and test them out. So V4 is kind of like a combination of the best of the both both worlds. So we have uh what B3 exactly does really well uh at the moment but also adding a sort of uh modular architecture uh with the hubs

and spokes where hubs are where the liquidity is concentrated and spokes are um borrowing configurations where the hubs are giving credit lines to those spokes and spokes can be any sort of even custom uh implementation. So what it really enables is that you get the same sort of a experience as you get uh today, but you can bootstrap really quickly new uh collaterals and use cases uh with uh proper risk management uh by giving new credit lines from uh from the hub. And [clears throat] I think av4 is something that uh uh is is going to be a a gamecher as a sort of a baseline. But what I'm even more interested is that if

you look at DeFi today and and we're sitting at 120 uh billion uh TVL mark as an example and peaked at 200 and few years ago it was um at a 200 uh billion peak. What that really tells us is that DeFi has been able to prove itself really well through resiliency. um on 10 of 10 of uh last year we liquidated over um 200 million worth of collateral in in in in the time frame of minutes and uh we liquidated um over a week ago uh half a billion worth of collateral in a period of a week. So these crypto assets has and lending against Bitcoin and Ethereum has proven sort of a

resiliency. So if you if you can use this type of infrastructure for uh the most s sort of a dynamic assets um that means that um uh you kind of like a have battle tested uh the infrastructure and with a v4 we can actually keep expanding that use case. So whenever there's interesting native primitives that are coming into uh from any any part of DeFi, we're able to iterate quickly on board them uh without uh taking excessive risk. Um and at the same time uh we know that we need to bring all the value into onchain uh and then that comes from tokenization which can be

supported with um uh av4 but also in the future the lending for example might not have any sort of a tokenization but you need to have some sort of a custom adapters to adapt to that use case. So that's where the monolith the the modular model really uh uh plays a a a a very uh significant role. So I'm very uh bullish on on uh expanding a into lending against u traditional assets like what we're doing with uh Horizon lending against uh uh RWAS but also I think that um if you look at where things are going over the next uh sort

of uh decades um you know we we have AI we have a uh we basically have almost unlimited amount of intelligence at anyone's disposal. Um, we're going to have extremely cheap um energy uh from solar. We're going to have batteries. We're going to have robotics. Uh we're going to have a lot of uh uh a lot of resources around everyone that really uh makes uh labor abundant, intelligence abundant, energy abundant.

um and and and really kind of like uh creates this sort of uh uh new world and getting towards that transaction transition we need financing right so >> if you look at the next uh uh maybe 50 years if we are able to use a as a protocol to finance sort of uh uh the future maybe we will grow it uh bring it faster by 10 20 uh uh 30 years and that is for me personally more interesting than you know uh tokenizing uh anything that can be already traded in a traditional exchange or mortgages u uh and and so forth because that is basically the future we want to bet on and for a vision going uh for the next

uh uh decades you know we want to have a future proof vision where a lot of the collateral is coming from basically these types of high quality yield sources and that can be uh distributed through the a the a kit all the way to the whole uh user bases. So there's a lot of connecting dots between the product layer a v4 um and there's going to be a lot of quick wins but the long-term horizon here is that uh a should be used effectively to to finance the whole kind of global transition into this uh new world we're we're starting to head towards. I I think this is an incredibly powerful vision, Estani, and

I think you make a really important point. We've seen decentralized organizations become oified for better or worse in the past, right? You you look at Bitcoin, it's effectively oified. Uh you look at Ethereum, it operates on, you know, timelines that are very very long. Um, lending is still a very active and hyper uh hyper innovative segment of this industry and a has the chance to do something really really special. um the way you put it is essentially finance the future and I think there's an incredibly powerful um effect that this could have on not just the AV ecosystem

but DeFi and and finance at large if we can effectively bring these tokenized assets on chain and extend credit on these assets and a is rising through the ranks as one of the top banks in the world and this is the job of banks is to finance the future a has the chance to extend credit and create a wealth effect for highquality assets in exogenous sources of yield and this this is a really really special uh opportunity and time in the market. Yeah. I also think that um the margin really comes for from like not being I I I think like the businesses that are run on uh sort of

like um bringing full access run on like a very thin margins let's say like if you have a brokerage uh that allows any access to you know trading any any stock for example um or any fund investment and so forth. If you're a lending protocol and you just enable any sort of assets and lend the trust that you basically create wi-i with within the audiences um I I I think that's form of like a accessibility business have um a very low margins and I think where the the the margins are higher and and and the the mode is more defensive um is actually when you have a bit more opinionated or quite a opinionated take

on um what sort of asset should be tokenized listed as a collateral uh borrowed against um and what is the composition of of the yield. So the the way I think about it is that the the the the business models uh whether it's on chain or offchain that just purely like provide any sort of access can be outco competed really quickly uh with the right incentives the right amount of funding uh product execution and that competition is fierce for very thin margins and that creates a very very thin uh value uh layer. But basically a a setup where you have a a really opinionated take on what are the uh the best financial

um opportunities uh in the future have high quality yield and high quality uh user bases. You end up in a place where you actually have a lot of defensibility and that translates into the branding uh and that allows also to capture additional revenue. That is why the uh a app, a pro and a kit are extremely important for uh the AVA is is not because it only allows uh to ensure distribution whether it's consumers uh fintex and institutions existing uh defy users. Um but it allows to actually build upon that margin uh and add upsell to the users and and build better

products and also products and features where you can move faster and monetize faster because protocol development is is of course uh moving much slower pace right >> and that is kind of like a why this setup uh where the not only the protocol layer but the product layer is bringing additional revenue streams into the aido is such a uh powerful example and focusing on really good products itself is is really important and I think in DeFi we kind of uh lack on on the idea of building uh extremely good uh products and uh distribution and we are trying to sell all this sort of uh uh uh infrastructure to each other and and

Finex but in in reality a lot of those sort of uh integrations will get commoditized so that is why the the the sovereign sort of a protocol is important for for a >> and that kind of explains there then why this protocol includes brand brand governance right I mean maybe you could talk a bit about that the A brand and why you feel formal stewardship of the of the brand at this current stage is so important >> yeah I think it's it's really important because um in the past for example a labs and you know a uh aid and a token holders they they effectively share a brand surfaces and I think when you know we have a setup where basically uh any

usage of the brand or branded products the revenue goes to the to the u ava that creates a sort of a revenue and product alignment but more importantly is that we want to ensure that um even if a labs won't exist for example in the future that the brand is protected uh in any sort of uh for any sort of a uh outcome And that that is why it was important for us to to put into the uh same proposal. And that brand is also used for uh growing the the the A products uh on the product layer growing a v4 and and also the reason why uh we have all these elements in the same proposal because they're all

interconnected. So uh a v4 enables a lot of these uh revenue streams. uh the branding is used to grow um the product layer um and and and also um that that sort of a reason is is is basically uh there. So I think uh in overall uh this proposal should set a uh extremely strong foundation on how we from Avala's perspective are uh working uh uh as as part of the DAO. So, soaps is part of the DAO but working uh towards like a one uh direction and and and one goal.

So, it it highlights the importance of being token centric and and sending that signal uh to everyone. And that's just the baseline and and then the next steps is is thinking of upcoming years of like how we get get to the next lay next sort of uh improvements that we can do like how do we add more transparency protection and um those kind of things that already exist in the traditional capital markets but taking the good parts and leaving the bad parts out and applying them in token world because I truly hate the narrative of like tokens are worthless because you know they do control an extremely important infrastructure. But this infrastructure is not going to be that valuable if we

don't go beyond um these exa these existing uh crypto assets. You know, if you want to trade all the value in the world, yeah, you need to go beyond uh the crypto value. You need to go into any value that is is is basically a potential target. >> Yeah. And you know you you stunning you speak about the the product layer, the protocol layer and the brand governance. All of these are reinforcing one another. Um another part of this proposal is the cur the curation of a of a foundation an independent foundation that would hold the a IP and the trademarks uh and some of the branding rights.

How will the independence of this foundation be assured to the A DAO and A labs? What do you see for the structure of this foundation? Maybe who do you see should be on a board for this foundation? And if there is a disagreement, you know, between A Labs and and A DAO, how do you ensure that this foundation makes the correct decision on behalf of A? Yeah, the independence is is the the the key there uh element and I think independence is something that is you know established also in in traditional uh boards and and there is different ways to do that and and obviously like a labs is is part of a it's sort of a a

permanent contributor uh into the a uh protocol we get paid for uh doing certain things like building the a v4 and previous versions and uh have some sort of uh also marketing uh budgets in the past and and here it's it's more about consolidate consolidation and and and basically going uh effectively for a growth mode from a a startup uh mode and of course in in Dows there's there's uh always various different opinions and you know the strongest voices don't really actually own the DAO and that's also like the beauty whether it's Cyclops or someone else um and that doesn't really that that is the beauty

of actually um uh Dows is that you know anyone can have their voice and opinion but what truly matters is what is on chain uh and and what basically decisions are are are made and it works in the same way in running these traditional businesses uh as well uh end of the day decisions needs to be made um when it comes to uh execution in regards to the the actual uh foundation um there needs to be just purely uh independence uh from from any uh any party including uh Labs and everyone else.

>> Donnie, uh just a couple more things just coming back just to finalize and and crystallize the the economic structure here. Could you just give the audience a quick run through as to how directing 100% of the revenue from a labsu built products will change the existing economics of a I think a lot of fundamental analysis are really excited about a lot of protocols and tokens that are redirecting capital back on a pro programmatic consistent basis. Maybe you could just talk through like what that what your current model is and then what you expect the changes to be in the economics in in the flywheel as a whole uh you know if this goes through.

>> Yeah. Yeah, the existing model is uh sort of quite quite quite simple and what we established um uh back in uh 2020 with the P1 uh which is simple that uh revenue uh borrowing revenue comes uh into the protocol and portion of that is taken into uh the aid and then that's sort of like one business model where users supply stable coins and they're borrowed and and that generates interest. There's also the Avenative Go stable coin which is sort of a second line of uh business um where the A protocol itself operates uh at a takes a margin of of the lending um in go

lending in in in in the most cases and in the of the core market there's for example 100% of uh u margin that goes into a DAO because there's on the borrowing side because there's no uh LPS as technically the the A as a protocol is the um LP there and what basically happens with the A will win proposal is that in some ways a third uh business line is is created uh and this third business line is um anything that is created on the proto player uh by AV labs um so that can be for example the existing uh swap fees

that has nothing sort of hasn't any relation to the protocol but are simply swaps on these user interfaces um and also position swaps. So if a user wants to um swap one asset that they have as a clutal to another one or swap one dep position to another one um they generate fees and those fees go into the of a DAO and it's about um 10 million in fees annualized that uh is is going to the to the DAO but also any sort of uh revenue streams we might add um uh uh even even further with new products, new launches uh and Something for example we're working now in the AA app is a a card.

So for example any sort of a time a user a user is swiping their card a portion of that card swap is going to go to the avid. I think it's quite cool because you know it's a it's a very sort of a rare uh model where you think you are doing as a customer of chain and you're generating revenue that goes all the way to onchain uh that benefits uh token holders. So fundamentally um it allows labs basically build products in autonomy add monetization features as long as they go directly uh at 100% uh into the DAO and I think that is really really powerful

because on a product layer we can move faster uh and we can increase monetizations faster and obviously V4 on the on the protocol layer expand some of these uh revenue features for example we have a uh reinvestment feature that we are add we we added in the AV v4 protocol. So when the rates on a are lower than the risk-free rates, uh the float part of the the float of the pools can be reinvested into um treasuries or onchain sort of a risk-free uh products like Asco and and and and these types of uh products [clears throat] and that generates more revenue and then with the spokes you can

add additional use cases um and those can range of uh using LP LP positions as collateral to lend uh go against at a 100% margin. Um or for example um borrowing um uh lending funds into qualified custodians where Bitcoin and Ethereum is used as a collateral to borrow. So this sort of OTC business is still growing um outside of DeFi and this enables that revenue stream to go back to uh back to D5. So there's there's there's certain elements on a v4 which expands this uh um revenue uh layer uh on on the protocol side. But

for me the most exciting thing is is that now we actually have outside [clears throat] of protocol revenue features on whatever the users uh might be doing. So um it's going to be really interesting few like a couple of years to think about what do we add into the app to build more revenue. >> Yeah. Stan, last thing for you. What happens next if the DAO ratifies this framework and what can the community as token holders uh expect in terms of follow-ups kind of what can we expect to come next? >> Yeah, upon ratification the proposal um there's uh there's obviously you know continuous development of uh uh there's a v4 launch that is coming. So that is going to be a a big thing. there's going

to be a follow-up ratification on the uh parameters uh for a v4 um and also on a continuous basis a labs is sharing u in form of accountability reports and continuous uh reports to the a community so one of the things we want to ensure that there is a high degree of uh transparency and accountability um and I think it's uh very easy to do because all the focus is on the token centric uh model uh which simply needs which simply is easy to point where we have to grow uh where where the growth is going and and what do we need to do

to achieve that growth. Um and obviously the vision is is uh something that takes uh uh few years to actually develop. Uh but a lot of these product launches are happening uh very soon and and we're very excited to bring D5 to millions of users. and also get a integrated into the one of the biggest uh fintexs. Um and also still not forgetting the the the sort of uh you know the the sophisticated DeFi users like myself for example um and providing them the best experience. Um so we have to innovate uh quite a lot uh and there's a lot of competition uh but also we're going to see a lot of competition coming from

FinTex. them way more better funded. Uh but we have the expertise. Um you know, we re rely on smart contracts. We rely on the A protocol. So there's a lot that we can actually build and and win at the same time. >> Yeah, man. A will win. Stan, thanks for your time today. Congrats on the proposal. And I think that the market has been the market is absolutely begging for this from tokens, from the market at large. uh given the I mean just the the state o of prices being down but just we are we are ready to kind of be seen in this more mature sophisticated light as it pertains to

valuations comparables to to traditional markets as well as just the revenue potential for onchain onchain businesses and crypto enabled businesses so hope this goes through hope everything goes well have a great weekend man >> thank you and a will win Thanks for coming on. >> See you, Donnie. >> All right, Rob. >> Stany's a man. >> What do you think? >> I uh >> I think this is great, man. I mean, I did the math. Stonnie didn't directly validate that my math was correct, but I'm pretty sure if you total up, you know, you look at this as like a trade,

right? And if you're the A DAO and you're positioned to get a hund00 million per year in revenue added to your bottom line and then you look at the outflows and yeah the outflows are substantial by what essentially is happening from my perspective is uh a DAO's aqua hiring a labs. >> Yeah. And so like you know these before this proposal these were two separate entities that were both contributing and both benefiting from a what you have now is a DAO superseding and basically absorbing a labs and paying for the things that they had. But those things should pay off in like a very short

timeline. I my math was like less than a year it would take at the current run rate for a to a DAO to recoup its investment in labs and then there's ongoing costs that it would pay out but it would not uh supersede the revenue that they would get from this proposal. So I I I think it's a no-brainer. I think a like you know question we didn't ask that Stani was like how is a lab's equity investors how are they feeling about leaving a lot on the table >> that's the that's the that's going to be a really interesting dynamic to watch play out as these kind of token equity merges happen like what happens do they

get a pro rata share is there a a you know buyout is there token distributions I I think specifically with this the biggest push back I've seen is just around like the the foregoing of the decentralization or the the kind of immutability or resiliency that a Dow structure gives in any sort of regulatory regime or you know that is more you know restrictive or just the whole idea that we're just going to put all the power into one. This vote's going to go through. Um, I think it's obvious. Um, and that I think is the biggest push back. I think the I think if we're thinking about this from a very

pragmatic perspective, like we had Dave on from Open Trade earlier talk about it. The pragmatic understanding is that if a is going to compete at the scale of the largest banks and fintex in the world in as Stonyie said, autonomy is a is a must. It's a priority and that [clears throat] needs to happen. And so I think like there's just a lot of like pragmatic lens that needs to be applied to a lot of these scenarios that often goes headtohead completely with the more ethos maxi type of folks in the community which I think is very fair. I understand both sides. Um and some and sometimes and maybe we'll get to a point where

pragmatism equals decentralization at its core. Um but seemingly if you're trying to compete against you know thousand person orgs like a revolute or like any other fintex at scale right son made a great point like this is just there needs to be this this kind of set iteration loop uh for all these types of decisions that isn't Dowo governance uh and I think it's just the sign of the times too we talked about it like tokens are going to start to look a lot more like public equities I think it's very clear if you're a token holder obviously the last what 48 hours has been great but like institutional investors will look at this and they will want to be a part of something that has a clear value

crew token hyperl is obviously dominating here you know we had we had we we had run on Skye's doing a great job >> well I see more and more of this happening and like this is just a snowball like a now who's next you know like this is just going to keep happening due to a multitude of factors >> stick on Rune for and Sky for a second Because we often talk about the ethos driven decentralization of the world which operates better because it's it's difficult to really >> it's like if you're playing whackable >> that was Ruin's point.

>> Well, yeah. Okay. So, so if you're you know you can't whack a a decentralized network, right? But if we have complete centralization and unification of these things, it's easy for a regulatory agency to whack one entity. But I think the thesis is that we're going to get clarity or like we're going to get the market structure built through and that >> that would look like DeFi isn't going to get whacked as hard as it has been in the past. Like the SEC just laid off of it. Like they they like they just went hands off. >> The SEC right now is very pro crypto. >> I agree. That's that's an issue.

Yeah, >> Trump could piss off a lot of people and we could get a you know what a anti-crypto regime in next and that's what people >> but as long as we get the regulatory uh that's why this market structure bill is so important to get this thing >> codify it into law make it much more difficult to repeal for sure I I do think that these are very black and white systems >> and they have their merit reality is not always obviously in the current regime the centralization and unification of these forces and entities is much better because you don't have to worry about regulatory whack-a-ole. If you have to worry about that adversary, then you want a decentralized one because yes, it may operate slower, but it's more difficult to to destroy. Yes, >> the the the I kudos to Sky to Rune for

building Sky in such a way that has been able to move quickly and innovate at a top down level with their whole rebrand and how they were able to structure things but also have this decentralized network of stars that ultimately are aligned back to the the sky pillar like the me you know what it reminds me of like real real quick is like a Federal Reserve And then like these regional banks because like you heard Run say, Sky has the money and so people are coming there. They're the arbiters of capital and then you have these stars that are able to supersede that from a risk return perspective if they provide that upside. They get to capture the

upside. >> I understand. But again, it's still like I'm I'm telling you the word decentralized is used in tongue in a in a in a way that has one meaning and and you can interpret it and understand it across a whole spectrum of nuance. However, I do understand where you're coming from. I I I directionally agree, but there's just a lot of nuance when it comes to this kind of like phrase. Look, market likes it. Market likes it. A's up maybe like 10% since yesterday. Market market likes it. Market wants this. Market loves hyperlquid right now. Obviously, that's one of our larger positions if it if not our largest. That's what the market wants. The market wants revenue. Sky is doing well. Hype's doing well. A could could turn around here. We'll see. But

this is what the market wants. This is what the market's been asking for. This is what traditional investors want. This is what Rollup TV wants. Great week, guys. Thank you for being part of the show. What a week. We got ETH Denver next week. Nearcon the following week, guys. That's all. The market wants you to have a good weekend. >> The market wants you to touch some grass. Do that. Tell us how it goes. We'll see you guys on Monday. [music]