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

Jillian de Ernstream, Ivy de Plume and Felix de Greenfield Capital. Thank you so much. Yes, perhaps each one can say a little about their projects can say a little about their projects . Um, I'm Felix from Greenfield Capital. We invest in crypto, DeFi, consumer infrastructure, and our central thesis is that DeFi can reach its true potential if it serves the real world, so I'm excited to moderate this panel.

I 'm Julian. I come from Ernstream. We are based in the Bahamas and we convert salaries into liquid, programmable digital assets so employees can use them instantly to access financial products and credit. Hi everyone, I'm Ivy. I'm on Plume's team .

We are a Layer 1 focused on real-world assets (RWA) and the intersection between RWA and DeFi composability. We aim to integrate all types of tokenized assets to make them useful, interesting, and allow crypto users to leverage real-world performance. Hi everyone, I'm John from Superstate. I am the head of engineering. What we do at Superstate is take private mutual funds with investment mandates and bring them to Ethereum as ERC20 tokens.

One of our products is a treasury bill fund and the other is a " and the other is a " cash and carry" operation, similar to Athena. Our assets have allowlists, but we work hard to ensure they remain composable in DeFi. Yes, I think that generally as crypto natives we talk about onboarding and also " onboarding and also " on-chain" finance. I believe that, in the end, it will simply be finance running on blockchains with all the advantages that entails. We have around 600 trillion in assets globally, while cryptocurrencies are only three trillion, with about 18 billion in tokenized assets, excluding stablecoins which are 220 billion.

So we have a lot of room to grow, and I guess you guys are the ones making it possible. Are they providing a technology stack that enhances the value proposition for their user base, or are they offering a solution that allows users to bypass non-existent solutions, for example in emerging markets? Yes. For Ernstream, we operate in an emerging market that has very specific nuances. One of the great things in the Bahamas is the change control in the Bahamas is the change control , which limits how much we can access, use, or benefit from some of the existing technology.

But of course, there is existing technology that is already out there, ready to be used, such as streaming payments that many DAO companies already use. Um, and I think we have a mix of both. We use many existing protocols, but we have to innovate in some and, in one case, completely recreate how we approach some of the technology to comply with regulations that are unlikely to change anytime soon. So, for the technology, yes, we have to make small changes to adapt it to the markets, and as we move through the Caribbean, I'm sure there will be other nuances that we'll need to cover and we'll also have to change the technology for that. Yes.

Yes. At Plume, I think our goal is really to enable asset issuers, from large ones like Franklin Templeton to mid-market ones like credit funds, and even smaller issuers, to access tokenization without the headache of hiring smart contract engineers. In fact, we created an internal product called ARC we created an internal product called ARC . This is a free tokenization tool for our entire ecosystem that deploys smart contracts directly and allows issuers to manage the lifecycle of their tokenized assets on Plume. As for the ecosystem side, we're not really trying to reinvent the wheel, because I think the beauty of what other ecosystems have built, like Arbitrum, Ethereum mainnet, or Optimism, is that they achieved great DeFi composability.

Our goal is to attract some of these larger protocols , such as Pendle, Spectra, or Ethena, to accept these tokenized assets that come to Plume and be a kind of breeding ground between the two. Imagine that you can take a tokenized credit position or a yielding treasury asset and convert it, say, into collateral within a permissionless lending market , or allow them to trade the yield portion on a DEX. That's something we're trying to connect. We are not creating all of our products in-house, but rather trying to solve the difficult part, which is tokenization, and enable the benefits of composability and integration with existing protocols. Yes, at Superstate there are many similarities with Plume in that we're not trying to reinvent the wheel, but rather trying to take assets that exist off-chain and make them useful on-chain and widely used throughout DeFi.

So that's it in a nutshell. Brilliant. And what types of asset classes are you seeing with the highest demand asset classes are you seeing with the highest demand ? Whether on the issuer side or the supply or demand side, is it more retail or institutional? And what are you specifically focusing on?

First. Yes, I can answer this one. Well, at Superstate, what we're seeing with a lot of demand so far is especially our treasury bill fund . Many stablecoin issuers are starting to use USB stablecoin issuers are starting to use USB , which is our treasury bill fund , to back their stablecoin and potentially pass some of that return on to their customers. For example, FRA just launched its new stablecoin, FRXUSD, and uses two different Superstate assets to back it, in addition to other assets.

Yes, I think Treasury bonds are probably the ones that will have the next best product-to- market fit. I think what's interesting is any type of performance product that has a more liquid profile. So it could be, you know, payment products where you finance cross-border payments. Anything that's more fluid, I think, will have the next iteration of traction. You know, what stablecoins did really well was to be the original RWAs because they're backed by treasury bonds, but the reason people don't even think of them as RWAs is because they've transcended that.

And, you know because they've transcended that. And, you know , they're composable, they're permissionless. Anyone can buy them, acquire them, and sell them. So I think as we go down the ladder, we'll probably move from treasury bonds to money markets, and as the industry matures, you'll start to find credit and things of that nature becoming more composable and used throughout the crypto world. Yes.

And for us, we're still at a very early stage, so we haven't seen the demand yet, but what we're betting on is exactly what we 're doing: tokenizing salaries. And the programmability that this brings to the retail market is something we believe will be very useful for those markets. And then treasury management and things like performance for institutional markets is what we are looking at and we believe will be beneficial for those markets. Yes. Can I quickly play a surprise card ?

So, I think the next asset class that will come to the chain fairly quickly will be tokenized equity. I don't think we're there yet, but I think it's actually going to happen very, very quickly. Yes, I suppose we're already seeing some tokenized ETFs. I mean, I think Mirror, for example, was a pretty crazy success at the time, until it wasn't . as a legitimate version.

Yes. But yes, definitely. I think that's really cool, and maybe we'll get to that in the composability part, like having large numbers of asset classes, the largest asset classes on the chain, then enabling automated portfolio management through AMM. I think that's a really exciting use case, personally. Um, yes, what would you say are the most significant advantages of tokenizing individual assets or funds tokenizing individual assets or funds ?

I suppose the question is a bit like, yes, where do we also see more traction in the short and medium term, as I think it's a bit difficult for individual investors to track all individual assets and invest, for example, in individual loans? But, um, yes, in your opinion, perhaps from the perspective of your use case, what are the most significant advantages? This is the problem we are building Earn Stream for. We discovered that in emerging markets, or in the markets where we operate, employees simply cannot access credit because they cannot access the necessary financial products for lenders to provide them with the products. Currently, 40% of employees in the Bahamas have access to credit and financial products.

The rest of the workforce is underbanked. And yes, that's where we see the benefit for tokenized salaries. Yes. Great. I forgot your question halfway through, but yes.

Or something like that. Yes. I mean, you could say that a tokenized salary is like an individual tokenized asset. And, well, I mean, you can basically tokenize all kinds of, uh, like physical assets and also financial assets and, like, cash flow. As a flow, it's definitely something you can represent.

Yes, that cash flow is where there's a lot of profit. In fact, we did, we did some models, uh, based on minimum wage workers, uh, and yes, if a worker, and let me check my statistics. If a worker enters a job with $760 of debt, it would normally take him, and this is with the absolute minimum wage this is with the absolute minimum wage , which just went up in the Bahamas, and Stephan will have to tell me what it is. I think it's $7.25 an hour now.

Uh I think it's $7.25 an hour now. Uh , if they started a new job with $760 in debt, uh, they could pay it off in 8 months. But with the accumulation, the rapid accumulation of streaming, uh, or that increased cash flow , they can actually pay it off in three and a half months without doing anything different, simply because the cash accumulates faster and they can allocate it, since it's programmable they can allocate it, since it's programmable , to pay off the bill faster. and perhaps also greater capital efficiency by using, for example, streaming pay-per-streaming, maybe even in a yield-generating asset.

Absolutely. And that's without considering the performance generation side and without calculating additional late payment fees. Yes. Yes. I think something that excites us a lot at Plume is freeing up liquidity from many assets that are very idle.

Uh, they're currently located, you know, in walled gardens and aren't very useful. Um, a good example that I think many companies in the sector are trying to do is, uh, tokenize, you know, private markets. So you can think of pre-IPO capital or, you know, private positions held within funds. Uh, you know, what 's really great about liquid markets is that they allow for price discovery. Uh, so price discovery.

Uh, so , you know, imagine you could have very, very liquid trading markets that, uh, don't use an intermediary broker to match buy and sell orders for, say, you want to buy SpaceX stock, right? Well, actually, having this in a decentralized trading environment decentralized trading environment , where you're not just matched with registered participants or institutions, can allow, you know, people to reach the retail investor and also facilitate price discovery in these private markets that have traditionally remained very close to the company and investors close to it. So I think that's one, in addition to potentially using these assets as collateral, right? Being able to potentially generate returns from a private market position or generate returns from something like a tokenized S&P is something that tokenization also unlocks . So those are some specific use cases, but I think they are new net benefits that we can bring to the market.

Yes, I think something we all take for granted in the crypto world is trading 24/7 with real-time prices. And at Superstate we create mutual funds, and traditionally with a mutual fund, you have a single price per business day, right? And you have to wait until the next business day to get the previous day's price so you can exit your position. To try to solve this, we created what we call a continuous price for USB, so that continuous price for USB, so that , for every second, you can get a continuously increasing USB price continuously increasing USB price , based on what the Treasury bill yields. This allows people to enter and exit positions very quickly and provides more real-time pricing for an asset class that didn't have it before.

Another use case is that ERC20 tokens are much easier to send. So, if you're a "whale" using an OTC dealing desk and you use trading desks regularly, instead of depositing USD or USDC as collateral, you could deposit a Treasury bill product, which would allow you to continue earning some return without having to give it up . Yes. Some of you have already mentioned the composability element when using tokenized assets as collateral. I think that's super powerful.

In case you have other use cases on how we can improve the performance or simply the utility of tokenized assets through the power of composability. I'd be curious to hear about that, and also whether we really need synchronous composability, for example for flash loans, or if it's perfectly fine if it's asynchronous, occurring sequentially, specifically for this use case. Ah, yes. I guess that's fine by me. Yes.

So, I mean, across all the different components or primitives at Earnstream, I think we prioritize security and compliance above all else . And for what we 're doing, there's no real need to have synchronous composability. So asynchronous is probably best for us is probably best for us . I'm sure there's a use case for it somewhere in the future. But asynchronous is where we find ourselves, simply due to the regulatory environment.

Safety and compliance are simply our top priority. It's people's wages priority. It's people's wages , it's the payroll. And that's why each of those modular blocks of what we 're building needs to happen on its own. You know, we're testing this.

We don't want to do too much at the beginning. Yes. Yes. In fact, we thought about this a lot. Originally, I had the assumption that everything we did at Superstate must have an element of atomic synchronous composability.

And I realized that many of our customers really don't care. It's a bit divided. So, that real-time pricing function I was talking about, we built it to be able to perform atomic subscriptions and redemptions of the fund, all on the chain. So that you wouldn't have to touch anything other than the smart contracts. Hmm.

However, we have many clients who, you know, some are venture capitalists who invest their funds while they wait to deploy them. They don't want to use a smart contract. They want to burn their tokens and five minutes later have USDC sent to their wallet. So it really comes down to doing the right thing for the right customer. And at Superstate we do both .

And you, Jill, you already mentioned the regulatory component, do the others have a stance or opinion on what the regulatory challenges are to enabling the composability of tokenized assets, such as for use in broader DeFi? Or potentially in solutions. I think it has been a very difficult environment to operate in at RWA, especially for Plume; We are based in the United States, in New York, so the main team is here and all of our engineers and developers are also based in the United States. I think traditionally, you know, it's been really confusing if you actually tokenize an asset that isn't a security and put it on the chain, the question remains, does it become a security? So we've been operating in this gray area for a long time where we don't really know if asset tokenization presents an additional layer of regulatory risk.

Because one of the ways it's offered, you know, on blockchain, offered, you know, on blockchain, can you also give it to retailers, to ordinary people? Does this qualify as a securities offering? So we're working on it right now . I think we've entered an interesting era with regulation in the United States and the new administration, which has classified many assets, with lawsuits like Coinbase's, as securities, whether it's Avalanche or Solana. I think there's an interesting space where the current administration is actually very positive about tokenization.

At Plume we have adopted Uber's approach, where if there are no clear black and white guidelines, we will operate in that gray area. For example, our focus is really on getting assets distributed even to retail users, even to retail users, right? For offerings that are traditionally perhaps only given to accredited investors, we have different approaches with protocols that we build internally. One called Nest. Nest DAO LLC is inspired by the Maker DAO model, where you have your own DAO, doing KYC with different entities, and they are the entity we deal with the issuers, right?

And then we can distribute the performance without permissions, similarly to how ESI is modeled. So I think that, for us, we've always been a few steps ahead in the regulatory aspect. But greater regulation is helpful for RWA in general, because it provides clear guidelines on how to operate. So yes, I have high hopes. I believe that many of the institutional firms we spoke to in the United States are very optimistic and positive about the outcome of tokenizing these assets.

And I think, you know, New York will become, will continue to be a hub for our base, especially. Yes, from a regulatory perspective, there were definitely challenges with the previous administration. I would say this had a material impact on our go-to- market strategy. Therefore, our products are currently only available to qualified buyers. Later this year, our treasury bill fund will become a public fund.

This means that anyone who completes the KYC process will be able to invest without having to be a qualified buyer. That's just one example of how the regulatory landscape changed and really improved our products. Brilliant. Yes. I mean, some of you already mentioned stablecoins.

Now we have, as I mentioned before, 220 billion in circulating supply, and it seems that to a large extent stablecoins have been the main distribution channel for RWA, at least for those backed by fiat currency or on- chain assets; it is a very substantial part or even the majority of the stablecoin supply that is built that way. Do you think this will continue in this way, that stablecoins will remain that distribution channel, perhaps as a conformal liquidity wrapper, where everyone can interact and, as a next step, become the checking and savings account of the future that people can leverage in a composable and programmable way through flows, etc.? How do you see this developing? In our case, stablecoins are obviously the base layer. So I imagine that traction will only increase for stablecoins.

But, in the future, as we have mentioned, there is the collateralization of future income and the possibility of obtaining credit from those products. I can see that, in the long term products. I can see that, in the long term , wage tokenization will create its own asset class, but I don't think it will ever surpass stablecoins ever surpass stablecoins , because they are the foundation of what we are developing. Yes, we see the distribution and use cases of stablecoins as very important for the adoption of RWAs important for the adoption of RWAs . You know, at Plume we have a neobanking strategy, right?

I think what emerging markets have done very well is to embrace the use of stablecoins as local payment or as a local way to protect themselves against inflation of their national currency. Um, I think the next iteration, right I think the next iteration, right ?, is like after reaching this kind of, um, you know, threshold of, "Okay kind of, um, you know, threshold of, "Okay , now we have like local economies using stablecoins, um," how else can they access, um, you know, secure forms of yield or dollar-denominated assets that can generate higher returns relative to their local market? So if you can allow, you know, a local investor in Argentina to have access to QQQ or Tesla shares, that 's a huge step forward for them, which I think is, um, underrated, or even a stable savings account. Um, I think it 's incredibly valuable because they don't fully trust banks, don't fully trust banks, right?

I think there is, there is, you know, the benefit of being in the United States is that we really trust our regulators and our institutions. But, you know, when you go to other, um, emerging economies, that trust isn't always there. And then, having a stablecoin, a self-custody wallet where you can actually get returns from, um, you know, economies like the US capital markets and products, um, you know, US. Um, I think that's a very, very good use case and something we're thinking about all the time is, you know, who is, and I also think there's an aspect of DeFi that has reached its marginal user limit. I think a lot of people, you know, who's the next user of, or, right?

, these primitives, because they're incredibly difficult for the average person to use . So, how do we find ways to expand the pie of, um, distribution and use cases for this over time? Yes, I don't think stablecoins will disappear as long as, especially as long as, the dollar is the world's reserve currency dollar is the world's reserve currency . Um, I think we'll see a lot more of this, which we're already starting to see, is stablecoins in the front and then tokenized products in the back, and those are usually abstracted from the user. So, they interact with the stablecoin.

They see that they are receiving returns from the stablecoin, but the returns actually come from, for example, a tokenized Treasury bond product tokenized Treasury bond product . Brilliant. Yes. Thank you so much to all the panelists here. Thank you for your opinions, and we're at the end of the panel.

Thanks to everyone present as well.