Nicholas Krapels, MANTRA: Why Real-World Assets Need a Purpose-Built Layer 1 | ETHSofia

[Music] hi Sophia uh I'm Nicholas KES the chief strategy officer of Mantra chain and I'm here to talk to you today about the future of rwa real world assets it was 15 years ago when Satoshi developed Nakamoto consensus which was designed to remove Financial intermediaries from the exchange of value between two counterparties and yet centralized intermediaries dominated the history of our industry Mount go quadriga cryptopia blockfi FTX all of these were terrible severe Market disruptions that forced eventually and what I think we're going through now is a process of selfhealing um where we collectively as an industry learn the importance of self- custom and onchain availability of less volatile but still Native crypto assets and right now during this transitionary phase we're still probably trusting a little bit too much towards centralized entities and why so part of why we end up using centralized exchanges is liquidity it used to be simply that centralized counterparties had much deeper order books which minimize slippage um but now since 2020 with the rise of Defi and what I prefer to call onchain Finance the efficiency gap between centralized and decentralized liquidity is narrowing and this gets better every year so if liquidity is becoming less and less of a problem why do we still flock to Sexes to trade our digital assets the the primary reasons for this seem to be convenience users have to cross the blood brain barrier essentially to go from onchain assets to offchain assets and from offchain assets back to onchain assets and this is incredibly capitally Capital inefficient so let's imagine a user who did well to turn their initial Capital into a nice grub stake maybe they want to protect that grub steak but where do they store it right now they put it all too often on centralized exchange and as we know even if the most Sterling reputation are not as safe as your own self custody now if you are trying to move your gains offchain to protect them you will lose out on the ability to come back into the the crypto Market because if you move from offchain to onchain crypto just moves too rapidly you have a t plus2 settlement time which often stretches into a week or more due to business hours weekends national holidays and other real world scheduling concerns so ideally we need to remove this blood ban barrier and keep our all of our assets onchain onchain Finance is 247 traditional Finance has business hours given the trends of globalization and violently exponential technological progress which type of Finance do you think is the most suitable for the future to me the answer is clear it's time to put all of Finance on chain according to UBS total Global wealth uh clocked in at around 450 trillion in 2023 right now the total crypto Market's around 2 trillion so in the 15 years since Satoshi has given us the chain of blocks we've managed to put a whopping 0.45% of the world's assets on chain most of those represent value that was created on chain so it seems obvious that that is that number is not going to persist that over time uh assets will move on and how's that going to happen the answer is real world assets or rwa advanture chain we believe that we are currently standing at the precipice of massive growth in the rwa space and we're not the only ones BCG and many institutional uh investment banks have talked about this for a few years now but as atory Frameworks mature Network Technologies enable uh you know faster finality we're maturing to the point where it is possible to enable the efficient issuance transmission settlement and most importantly highly liquid trading of real world assets on chain but how do we convince institutions to bring their assets on chain this is where um it's not just a technology solution at mandra chain we believe that bringing institutional assets on chain is a journey the question now for financial institution is not whether or not they should be participating in the future onchain economy but how can they most effic efficiently and effectively leverage their existing software and infrastructure to best enter the future onchain economy should we create a Dap should we make our own private Enterprise blockchain these are questions that will soon fade away in the last bull cycle companies came on chain with a variety of approaches like like Nike Tiffany's PSG NBA they used l1s l2s whatever and they created retail facing daps the daps flopped do you does anyone remember Top Shot does anyone still trade those things um but you know we have to try these experiments it's not a bad thing that it f it was it was you know successful for a minute in the B2B service realm companies and finance and supply chain sold private blockchain Solutions based on hyperledger fabric and even Enterprise ethereum no one used them they never got any network effects so how do we make sure that in this cycle we don't get the same result with dealing with Enterprise the reality is that an Enterprise's relationship with blockchainbased assets is a journey at the outset the Enterprise is not an experienced software Solutions provider most likely at the outset they're not an expert at technological infrastructure and at the outset they're probably not a marketing machine but they have assets and those financial assets have value so how do you start engaging with the future unchain economy if you're an Enterprise that that creates such assets but you don't have the blockchain background to bring those assets on chain obviously there needs to be a solution for these companies ad manager chain as the rwa rap Market is rapidly expected to mature by 2030 some people say $30 trillion even uh probably you know 10 10 to30 trillion is a is a good estimate um we're at manro we're creating secure asset issuance processes infrastructure software and a community of builders that will be with you every step of the way when you're building your rwa uh strategy the manra rwa suite is offered on three different levels so your Enterprise can evolve from tentative dabbler to a seasoned native asset issuer and we can do that all within the same ecosystem first we have you the ability for you to permissionless deploy so imagine you want to start with a lowrisk tokenized apartment maybe worth 50k you can do that on the permission side uh or if you'd like to deal with a little bit more size you probably want to deploy within our per Mission guard so this gives you access to accredited investors and you can raise a lot more money compliantly once you've done those things and you've got comfortable with issuing assets and trading assets and providing liquidity for those assets and all of the things that those of us have been in blockchain for many years are accustomed to but certainly are not normal in the real world you may find out that you once you're comfortable with this you want to start your own Enterprise L2 and you can do that with mandra too as a business's onchain digital asset strategy matures the industry will also change so with how we're designing our rwa ecosystem will have the flexibility to accommodate these changes withc fting about this is that the regulations are coming now to enable this like we haven't really had the regulatory participants who are willing to accommodate blockchain uh but as we've seen with Vera and Micah that's happening even the SEC it's been a slow process but they are moving towards some kind of resolution they don't they no longer just throw their hands up and say ah yeah well everything's a security so that's progress at Mantra we are seeking our ver license so we have decided to set up shop at least initially in Dubai and that is because the Dubai uh government is willing and ready and excited to participate in creating digital economy and so when you have a situation like that uh you know it's a lot it's it's a lot easier to move forward that certainly wasn't the case in 2016 2017 or even 2020 so the stage is set for exponential growth in rwa issuance unfortunately what is very clear about global digital asset regulation even though we're excited about we have some clarity uh the truth is this Clarity is is going to evolve in a very fragmented fashion at different rates all over the world and it'll create hot spots and cold spots for blockchain development and those jurisdictions might even change from year to year and thus this needs like a a little bit more modular approach to compliance within any regulated framework compliance is not impossible with digital assets secured by blockchain technology it just sometimes proves difficult to be compliant with existing regulations using existing blockchain Tech so it's best to kind of seek out a situation where you're working together with the regulatory body to create what is essentially the future of Finance why are we doing this we think that rwas are the key to scaling the onchain economy and how do we know this because it's already happened when did happen it happened with stable coins back when I started in crypto the total crypto market cap sat around $15 billion this is end of 2016 and now we have 10 times more than that around I think was recently reported $160 billion in stable coins uh which are secured onchain so that's a 10x growth from Total market cap in 2017 to Total stablecoin market cap today and what's great about stable coins is is you see the onchain market cap today for total assets on chain is around 2 trillion 2 and a half trillion depending on on the market when you bring real world value on chain it has an exponential effect on the value that is ascribed to the native digital assets I would argue that Bitcoin and ethereum would not have experienced such a price rise as they have had we not also seen an increase in stable coin usage at the same time many people don't see it this way but actually stable coins are a form of rwa they just don't have any yield so what rwa is is sort of providing a layer on top of St coins which provides yield which is anti-correlated to price movements of sort of more digitally native assets like Bitcoin and ethereum going back to my blood brain barrier analogy you got to understand that people at some point take profits but it's really not in our best interest as an industry to assume that those profits need to be taken offchain into a bank in order to get uh the risk-free rate so the first thing we did with rwas in the industry was obviously to move Beyond stable coins and add the most safe yield in the world which is from us treasuries so we have great products throughout uh the multi-chain ecosystem uh with Ando uh have usdy and we hash node and we have a variety of other uh great projects that are working to tokenize treasuries and bring them on chain this is a huge uh benefit uh for investors and and users so that they can store their value on chain without having to be exposed to the volatility of crypto while also you know combating the inflationary nature of Fiat so beyond tokenized treasuries though what else is there in rwa obviously there many ways to get yield in the real world and what are we doing at mandra well mandra is just providing The Ledger of record for these rwas and we're seeking Partners to put those assets on chain we have a lot in the pipeline as of today and not only are we looking to put those assets on our team but we're also looking to export them to ethereum and other important chains uh because that's what we are we're The Ledger of record for rwas so what other rwa we have obviously our first focus is property it's lots of yield in property you can rent it uh when you buy it the difference in price between when you buy it and sell it also yield a lot of different ways uh to make money with property you should get that exposure from your crypto wallet why not why should you have to move your assets from your crypto wallet onto Schwab just so you can buy a Reit but it's not just real estate we're excited about bringing a lot of other asset classes on chain and we should be excited about that as an industry it doesn't matter where the provence of those assets are in my view we just need to bring assets on chain the first uh category is other sovereign debt so obviously you what we me is beyond us treasuries there obviously European treasuries um bulldog bonds from England and in maybe even the El Salvador Bitcoin bonds these things should trade on chain and maybe another success story of onchain assets that may not conflate with rwa in Europe your mind is is uh gold uh we have the number one gold uh project uh in crypto is paxus gold and very very very interesting to see the growth in holders of that token uh from the beginning of 23 in 2023 increase from 38,000 to almost 55,000 today so that's like almost a 50% growth in in you know a little over 20 months for what you know is obviously can you got kind of a boring asset other asset classes Venture debt funds like um crypto funds run by institutions that you might know uh and crypto but also uh hedge funds that aren't dealing with crypto should have their funds on chain we're working on that art I think it's a huge huge opportunity to not only to sort of Legacy art but also work with artists directly to create new forms of Art and distribution of that art which might inform the creation of that art it's very early stages of this uh particular sector uh and last but not least it's luxury goods um there are lots of projects that want to tokenize I would maybe cize Pokemon cards here but you know watches and and jewelry and other uh handbags you know especially with supply chain Providence projects we can embed uh QR codes inside the luxury good so we know it's authentic and we should also be able to um trade those assets online or at least speculate on them so that about wraps it up rwas are coming and rwas will ensure that the blockchain remains the most relevant source of financial growth in fintech thank you [Music]