Benjamin Sarquis Peillard - NEXUS Final Round #2: Cap - TOKEN2049 Singapore 2025

Hey everyone, my name is Benjamin and I'm the founder of CAP. Yesterday we spoke a little bit about how, you know, we're backed by a lot of these traditional finance institutions, how our team comes from a long line of DeFi innovation. We talked a little bit about our insured uh yield protocol for uh US assets like permission assets like Benji Bled as well as permissionless assets like USDC. Uh we went a little bit over the the flow of funds how you have Bitcoin holders underwriting USD uh yield. I want to focus a little bit more today specifically on the uh crypto side.

how Bitcoin, ETH and alternative asset holders are able to underwrite the activities of regulated uh financial institutions to generate yield for us. Now, currently uh the platforms we use to underwrite these activities are shared security markets like Ian layer, Babylon, Symbiotic. There's over 20 billion in these uh marketplaces that were set up to underwrite the risk of operators doing certain tasks. Traditionally that was uh proof of stake so validating data. We got the idea of exploring alternative activities such as generating yield such as traditional financial institutions borrowing funds from us and the result um has been that we've been able to generate real yield.

If you look at Babylon, if you look at layer, the yield is just people farming their tokens, right? Even though there's billions of dollars in those protocols, uh people are not really generating any fees. Just with our test transactions around 20 uh 20 million on Symbiotic, we're generating more fees than all of Symbiotic and Babylon combined. And these are protocols with billions of dollars uh in a versus just 20 million delegations that we're testing with. This shows the power of our system.

Now, where does the yield come from? We're we're marrying two different kinds of assets. We're marrying the most productive asset in the world which is the US dollar uh and the most scalable yield for that asset which is unsecured credit. If you look at finance in general, most of the yield comes from debt and within that the overwhelming amount comes from unsecured credit. That premium in crypto is around 12 to 15%.

That's a lot of margin to work with. On the other side, you have Bitcoin, ETH, uh, and even other alternative assets like the Singapore dollar that don't generate a lot of yield, but they have value. So, what we're allowing these alternative asset holders to do is to vouch for individual institutions that they're comfortable with. For example, I can vouch for Sysuhana International to generate yield for cap. Maybe my friend can use their ETH to vouch for Wintermute to um underwrite their activities.

And in exchange, we get a credit spread. This credit spread is a fixed yield uh that's given in the form of dollars not you know random token inflation uh and it allows for a very scalable yield source for these alternative assets we can move on to questions

thank you very much Benjamin nicely done over to you judges

how do you expect cap to perform in a maybe lower interest rate environment if we're looking at a few more cuts coming in the next you know 12 to 18 months

yeah so I think the lower interest rate environment will affect our supply side the most in terms of the US dollar right now. Even though there are a lot of um US stable coins in in crypto, most of them are tibo rappers and they all rely on the treasury's yield, we rely on a different source of yield. We rely on unsecured credit. And even though there might be some uh bips uh you know cutting the interest rate, um it won't really affect our interest, but it will definitely affect all of our competitors. So, a lot of folks that are holding Benji, that are holding BL, they're going to see this as a very good use case for their tokens.

So, if you know, let's say I'm a retail newbie to crypto, how would I actually engage with your protocol? And do I see you as more of an asset manager or like a intermediary between asset managers and allocators?

Yes. So, for from our perspective, we want to leave the simplest part of our protocol to retail, right? We don't want them insuring loans. We don't want them interacting with Trafa institutions. We just want them to be on the US dollar side.

And so from their point of view, we are an insured uh form of private credit where maybe you're not happy with treasury yields. So we're giving you marginal yield on top of that. We're not going to be 40 50% APR. We're just going to be marginal yield on top of US treasuries. Uh while maintaining some very strong financial guarantees via smart contracts.

where do you think the biggest risk lies in the mechanism you've created and you know what are the ways that you're mitigating that risk?

Yeah. Well, first of all, what we've done uh compared to other stable cos is take away humans from the equation and really rely on smart contracts. Uh what has survived from the last cycle until now is overcolateralized lending. Every time that we rely on unsecured hedge funds like BlockFi, like Celsius, etc., that's where users lose money.

So that's kind of what we've improved. However, we're now relying on these decentralized marketplace uh marketplaces like IGEN layer. So, I en layer smart contract risk is is uh something to look out for. And the other one is uh the quality of the collateral that we're using to underwrite these loans. So, as long as we keep to Bitcoin, ETH and other majors, we should be fine.

If we start adding, you know, Banana Coin as an insurance asset, that's when you should be worried.

Is the plan I mean, how do you handle liquidations and maybe systemic debt within the system? But there's a bad liquidation or if bananacoin doesn't do well after you add it.

So this is just like what we're used to in a compound etc. If the collateral to do uh to loan value uh goes down uh to a certain extent anybody on the blockchain can liquidate and this stuff like this type of liquidation transactions are more competitive than HFT trading in charty.

So what is your uh six to 18month road map look like? What are your highest priorities coming forward?

Right. So right now we're connecting our protocol to all the sources of liquidity. It's not about size, it's about connecting to sources of liquidity. On the Bitcoin East side, we're connecting to all of the restakers that have these like $20 billion, right? So that means getting every single rester to delegate a little bit of money.

We started with Symbiotic and every single rester is delegating to us. Then we'll move on to uh layer in the next two week and we're going to do the same thing. When it comes to the US dollar side, first is DeFi integrations. we've already gotten all the integrations we needed. So that's Morpho, Oiler, Chainlink, etc.

You guys know all of those kind of integrations. Uh then when it comes to uh the more mature markets is connecting to all the uh money market funds. So we've convinced Winston Tree, Franklin Templeton and other asset managers to whitelist our DeFi protocol which has never been done before. Now that means that their money market funds can now be lent and borrowed in our system. And so first we connect by adding them as collateral.

Then we are able to pitch all these foundations that have nothing else to do with their funds. And so from both of the sides after connecting to those liquidity sources, it's just a matter of sales.

How do you think about some of the other I say um unsecured credit focused protocols out there right now. Um you know, there's another been announced maybe in the past month or so. It seems like kind of a hot area. Those seem maybe a little bit further up the risk curve from you, but I mean, how do you think about sort of competitive positioning and and go to market? Yeah, from our point of view, you have to think about what is the one thing that matters the most for us and that is Bitcoin and ETH, right?

We're able to give fixed yield, real yield uh on ETH and Bitcoin and that's going to be most of our TVL. If we can source that, then we can allow our traditional institutions to compete to make yield on our product and then we will always have the best yield because if you rely on the market to make yield rather than a team, you will always have better outcomes. So, I'm not really worried about the battle on the supply side. I'm more worried about making sure to deliver on the promise of yield on the other side.

And um can you remind me what your pricing model?

Yeah. So everything's dynamic. There's no human uh decision- making from our side. For the Bitcoin ETH holders, they get to secure the loans of these various entities uh based on bilateral agreements. So if I want to um secure Susihana, I'll tell them, hey, I want 4% of Bitcoin.

Or if I'm securing Winterme, I'll say, hey, I want 7%. And that's completely up to you. uh and and they kind of uh manage that. We just automate it on the smart contract level. When it comes to the dollar and dollar asset, you know, derivatives, the way we do it is based on market dynamics.

First is every asset has their own benchmark yield. For Benji, Bold, etc., it's just the US treasuries. For USDC is the alternative, which is a over collateralized lending. From then on, we grow based on utilization.

If a lot of people are borrowing, it costs more to borrow. If not a lot of people are borrowing, it costs less. And we just borrowed Morphos IRM for that. That way we don't have to decide on the slope or the kink rate.