Vladimir Novakovski: The Rise of Perps In Mainstream Finance (Robinhood Partnership Explained)

Transcript

Guys, welcome back to Tokenization Tower. I've got Vladimir Novakovski, the CEO and co-founder of Lighter. Vlad, welcome back to the tower. Good to have you man. >> Great to be back. >> here. Um you've been coming up to New York quite a bit. It's good to catch you again. Don't want to bury the lead here. Lighter and perpetuals have been looking for a distribution wedge into consumer finance. And uh you guys have uh been able to create different partnerships and distribution venues for Lighter itself. Now, notably uh into this current partnership with Robinhood. Vlad, I know it's fresh off the press here. Talk to us about what this means for Lighter, how this came about, and just kind of what's next for Lighter. Uh and thanks for coming back.

>> Yeah, absolutely. Uh excited to uh dive into the news here with with you guys and uh and your audience. You know, I think we've had a history with Robinhood kind of going back to uh the early days of Robinhood when I was an early advisor to their team. And uh then the last year they uh participated in kind of our last funding round before the token launch. But, what we're really excited about now is uh kind of the first of what we um see as like uh various uh partnerships we're going to do with them. But, the first one is is uh what's live now. And uh Lighter is the exclusive uh perpetuals

partner for Robinhood Wallet. So, kind of for the self-custodial wallet that's accessible to uh Robinhood users kind of outside the US, you know, in jurisdictions where um those use cases are possible right now. We are the exclusive perpetuals partner. >> Yeah. Yeah. Yeah. And I mean I mean when you think about distribution for Lighter, right? You think about uh new traders globally wanting access to 24/7 capital markets on chain, commodities, equities, crypto assets, the entire scale. What is this distribution wedge mean for Lyra and for the growth of of your user base?

>> Yeah, so one thing that's really interesting about this partnership is tokenized stocks that Robinhood been working on for a while on their chain will now be collateral that traders could use on Lyra as as part of kind of the the perps offering. I think we we've um talked in the past how tokenized stocks are on our road map and with this partnership these two pieces are going to come together, you know, the tokenized stocks and then perps on various assets kind of from the crypto native assets to um you know, equity perps, commodity perps and and so on. And and this really opens up a whole 'nother um

distribution channel as you said, right? Like you know, Robinhood has been the pioneer in retail trading for over a decade now and has really like I think we we share a lot of common points as far as like the emphasis on the best experience for the retail trader, right? Like low lowest cost um best UI, you know, best access to markets and so we're really excited about this. I think this this kind of opens up a whole 'nother dimension to perps that you know, a lot of a lot of people have never had access to or haven't even heard of perps, right? Like the um I think

the average Robinhood customer to the extent right now it's like those that can access the wallet product and down the road it'll be expanded to other parts of the Robinhood stack, you know including um customers in the US right now that are that are not able to use the wallet, but across the board I mean I think it's uh you know, probably the strongest consumer uh brand in uh in retail trading, and so we're very excited about it. >> Yeah, and then from you know, from the Robinhood side, you know, I I I I'm sure they've seen the rise of perpetuals grow significantly over the coming the past years, and you know, we had chairman Mike Selig on

CNBC a couple weeks back talking about uh just the rise of perpetual futures in general. So, the like the awareness curve is really, really growing here. When you When you think about Robinhood's perspective to this partnership, right? W- What is it that this integration with Lighter brings, right? Obviously, there's this perpetual futures offering in terms of the products uh and the assets that are tradeable on Lighter, but from Robinhood's perspective, you know, they're they have their customers in mind, their user experience in mind, and wanting to build the best, you know, retail trading application. What is this integration, what is this partnership with Lighter uh bring from their perspective, how does this impact their offerings?

>> Yeah, so a couple things, I mean, I think that uh we've seen in a number of studies that we have kind of the lowest latency offering, which obviously consumers love. Uh we're able to work with partners at a lower cost structure than um other competitors in the space, in part because of kind of how our technology scales. Uh but I think another important part here, right, is like the Robinhood chain, which they've been hard at work on for the last year plus, you know, is also an Ethereum L2, right? And so, there's a lot of interoperability there. So, I think you know, the the the customers uh that have kind of collateral on Robinhood chain will

directly use that as collateral for trading uh perpetual pairs on on Lighter. And I think that that that's really key as well. And I think as as kind of as we expand the work we do with with Robinhood going forward it'll uh you know, there are other ways to do that that'll accrue value not only to you know, the Lighter protocol, but also to the Robinhood chain. I think that's that's obviously synergistic with a lot of other things, you know, they're building kind of outside of uh perps and spot trading.

>> Yeah, most definitely. Yeah, I mean, I think like when when people think of Robinhood, they they actually also think of the options volume and and then, you know, I think I saw a stat that said that that they do about $4 billion of profit annualized from options. Um and there's actually been a rise in much more short shorter-term dated options uh in retail trading in general. Uh and you know, this has led to just higher volatility, higher implied volatility, different options prices, just educational happenings from the retail crowd. You know, when it comes to the the the consumer set of Robinhood and Robinhood chain, who do you think is is the is the next user of the perpetual product? Is it those shorter-term options traders? Is

it, you know, more kind of sophisticated market-making institutional allocators? Who do you envision to be, you know, that that next marginal user from this partnership for Lighter and from, you know, Robinhood's customer base? What does that kind of look like from your perspective? >> Yeah, I mean, I think it'll it'll come in waves, right? First, it'll be the the the retail customers who are um you know, familiar with the Robinhood brand, trust the brand, understand the tech and want to try perpetuals for the first time. I think, you know, institutions as well, but but I think um you know, one of the things we've been really focused on is working with the CFTC on

a license for Lighter in in the US, right? Once that's done, then that'll obviously open up a broader set of the market including for the Robinhood partnership. All right, so then a lot of the the traders as as you said who are active in options will be able to kind of within the same product they use today um trade you know, all these various perps products. Um we've already seen that the CFTC is supportive of perps uh broadly speaking and as we've seen from you know, our work with them they are working on figuring out the best way to

do that in in the decentralized context. I mean, I think you know, one thing we strongly agree with the Robinhood team on, right? It's like decentralized rails are the future. You know, tokenized finance is the future. And um and that Ethereum is kind of the essentially like the clearing layer of of uh decentralized security you want to build on for for finance. Right? And so I think with with um when those things come together, that's attractive both to retail and institutions, right? Like a lot of the institutions that are currently not on chain we believe the first time they come on chain will be in the context of the work we're doing with Robinhood, you

know, the the work we're doing with the CFTC and so on. >> Yeah, I mean, I think you know, thinking about the offering as it stands to non-US customers in eligible regions, once we get this onshoring of perpetual futures offerings in the US, it kind of opens up a whole another market. Obviously, a lot of capital is here. I actually had had seen a stat on the contrary though that about at the foreign equity investment in US equities is at all-time highs. Um and so there there is a lot of demand from global market participants into the US equity markets for tokenized stocks, tokenized equities. But of course, unlocking that onshoring uh through through the work of the CFTC and just in general provides that. You know, when you look at the at the professional

futures landscape with centralized exchanges, you know, like the Bybit, the OKX, Binance, the decentralized perp exchanges, and then just like broadly the CME, the NYSE, you kind of have these three buckets. And I think Robbie asked you this kind of last time about how you kind of see this playing out. These types of integrations into these consumer-facing products and and and these partnerships, they again, I'm going to keep using this term, they provide a distribution wedge for Lighter. How important is this is this you know, in in in a string of potential partnerships for Lighter? Is Robinhood kind of this one-stop shop for you guys? How do you think about establishing more and more distribution wedges? Telegram wallet,

Robinhood wallet, and Robinhood chain. How do you think about, you know, kind of continuing to expand that presence? >> Right. Well, Robinhood has you know, a number of different products in their stack. You know, some are regulated in the US and you know, so we're we will need to wait until we are to integrate with those products. Others we're already in integrating with today, right? And we've of course we've had the long history with Robinhood. Um >> Yeah. >> you know, but beyond that, I mean, we're we've been kind of ready to partner with various folks kind of from crypto-native partnerships to you know, Telegram and and and some of the the

names you mentioned just now from TradFi, right? We've we've we've been having conversations with. I I think you know, what sets us apart here is I think a combination of things, right? One, you know, I I generally think we have the best tech in the space here, right? Between the low latency, security, the verifiability, low cost structure, right? And so that's that's really attractive to partners whether their consumer offering is centralized or not. I mean, you want um all those strong technical components under the hood, right? I think second thing is we're we've kind of been forward-looking on the regulatory front and um you know, spending a lot of time on

that, kind of mapping out how rules that have been established decades ago, how they they apply in in the DeFi context, right? And I I And I think the third thing is you know, for at least partnerships like, you know, you need good dance partners, right? Like where our team is in the weeds with you know, we've been spending weeks with with um weeks actually turned into months, right? With with the Robinhood team kind of on a lot of these details. Same thing with Telegram wallet team and I think other uh partners that want to work with us, like we're going to be uh you know, one of uh my um mentors and former colleague Joe Lonsdale, right? I worked with him at

Addepar. He's angel on the firm, you know, kind of co-founder of Palantir. I think we kind of learned a lot from him as far as like forward-deployed engineers and really being uh you know, they they I mean, different space, right? But they they were like the first to really partner with large banks on a lot of modern technology. I mean, I think we want to be that for for TradFi as TradFi meets DeFi. And I think we this step with Robinhood is a major milestone in that direction. >> Yeah. I mean, Vlad, kind of coming to a close here, you know, looking back on Q2, one of the most successful quarters for purposes of category, I think, in terms of market awareness, in terms of volumes, open interest, you know, as well as just generally for Lighter and

and for the growth of the LTT token, the asset, as well as the protocol, the integrations, the technical adoption upgrades, just kind of give us your reflections to the to the to the Lighter community, token holders, shareholders, investors, broader kind of digital assets community. What is your kind of reflections on Q2? What do you think you guys did well? What do you think could use improving on and looking ahead into, you know, through throughout Q3 into the end of the year, what do you have your sights set on? >> Sure, absolutely. Yeah, so as we start Q3, maybe starting with that part of the question first, like you were talking about options earlier, we're um kind of moving full speed ahead on

adding options to the product offering. Um and you know, in different geographies like options are probably going to be dominant to perps and other areas perps will be dominant, but I think having both, being able to trade both from the same on-chain balance sheet will be really awesome. So that's that that's a big thing in in Q3 and of course always um improving the core tech, you know, lighter VM, new partnerships um and and so on. But I think going back, yeah Q2 I think what we've done well is leaning into our strengths. Sure. You know, like like when we I feel like when we talk about the tech, we win.

>> Yeah. >> Uh you know, and so for example, the event we did with Vitalik, you know, some of the you know, partnering with third parties like L2 Beat and um other folks who've uh tested our our latency, who've tested our security, you know, doing like um fully kind of very verifying um our our protocol in various ways. Like I think the more And and that stuff, you know, some people say oh traders don't care about this stuff, but I think I think actually you know, I think that's a bit too cynical, right?

I feel like, you know, if you're if you believe in in blockchain, if you believe in crypto, like you you know, maybe you don't know how all the tech works, right? But like this there's a reason why people are in this space starting with Bitcoin, right? And so I think, you know, this stuff does compound, right? And it's like as we build confidence over, you know, um really like showcasing different parts of the tech, we win. And I think beyond that, you know, just kind of being just doing the hard work of adding markets, right? Talking to customers and and staying focused. Uh I think, you know, those are areas where we do well in and I think leaning into our strengths is is key, right? As opposed to, you know, I think

you know, there there are like segments of the industry that focus more on like being tribal or like talking more about other products than your own product. Like I think the less we do that, the better, right? The more we talk about our tech and what we can offer to partners, you know, what we can offer to customers, that's how we move ahead and um you know, we we hope, like I said, when a kind of division of DeFi merging with TradFi evolves, we'll be at the center of it. >> Yeah. Yeah, man. Well, congratulations on this a very successful quarter, as well as this partnership with with Robinhood. Um more to come. Obviously, perps are still a very small, you know, we're we're scratching bips of the total derivatives

market globally in terms of uh traditional finance and the derivatives space there. And so, I mean, we're just we're like Sisyphus. We're pushing the boulder up the hill one day at a time. Sometimes it rolls back down and we just keep going. So, Vlad, thanks for your time, man. >> Thank you. >> Cheers.