Stablecoins: The Next Trillion-Dollar Market | Austin King - Omni

[Music] and we're live all right hello everybody can you hear me well Chase give me a sound check all right okay um cool well uh welcome to eth Denver everybody I imagine this is probably one of the first talks it's pretty early in the week so hopefully energy is higher and people aren't too fued at this point in time um but yeah so for this presentation uh we're going to be talking about where the industry is heading at large uh I've been building in crypto for eight years at this point and honestly I've never seen more opportunity than I do right now and so uh bit of background on myself I'm Austin I'm a co-founder of omni network uh originally I actually had another company that I started in 2017 I was still studying computer science at Harvard at this point built this company it was actually an interoperability Network focused on payment uh we hit 10 billion payments after a couple years I sold it to Ripple and then I quit Ripple to start Omni so that's a bit on my background curious to get like a pulse check for the crowd um who joined crypto this year we can just do hands nobody okay oh we got one all right how about in the past three years okay all right past five years all right we have anybody who's been here for like 10 okay cool respect uh cool well uh thank you and respect for being here for 10 years uh but for those of you who are newer um you know actually I think things are just getting started I think we're at the tip of the iceberg in regards to the utilization of stable coins and tokenized assets at large and I think this really is going to be the key unlock for the industry moving forward so uh let's dig in so um yeah uh basically we're going to go over the current landscape kind of what's going to happen next and what the key things that need to change uh in order for us to actually embrace this next new stage um cool so nice big stat there uh which honestly is pretty crazy uh think about just in four years stable coin utilization has grown that much um and so probably the biggest criticism that we get as an industry at this point in time is that it's a casino and it's not providing any real utility you know I think those of us who are here understand that this goes far beyond a casino but also you know if you talk with your Normy friends it's pretty easy to understand they think this is all just some speculative thing like we do have a lot to prove in the industry um so this is an example of data that is beginning to grow where it shows like okay this is not a casino people are using stable coins uh to a pretty high degree across the industry right now and I'm particularly excited about stable coins because it's one of the most clear use cases for driving impact in the real world today so uh I imagine can we get a show of hands how many of us are from outside of the US okay all right so we we have some International people here uh but yeah most of us are American and I think for us Americans you know when I talk to my friends who are not in the crypto industry they really struggle to understand why crypto is needed and it's because we have a system that works you know pretty well here uh it gets the job done we don't have a currency that depreciates pretty rapidly uh things are pretty good here in the US but in many countries across the world uh obviously that's not the case uh already in Argentina and many other countries people are using stable coins to flee the local currency and while you know this might kind of sound like an abstract thing like all right they're leaving their fiat currency into these stable coins um it's something that like you can think about in the sense of okay well when you're older are your parents going to be comfortable and independent or are they going to have to move in with you and be depend on you for their livelihood just because some government couldn't manage its finances so even though stable coins are more of a simple utilization of crypto technology that really can make the difference between you know your parents depending on you so that's why I care about them a lot and I think we are just kind of like just dipping our toes in this um cool so more nice numbers uh we've actually like made a lot of progress in stable coins at large um but really like a lot of this presentation is actually going to be uh requesting you to zoom out and realize that basically this is all just happening in the shadows today we haven't had clear stable stable coin regulation ever and that's withheld the largest institutions across the world from actually adopting this technology and most of the end users uh they're not going to care about the tech powering it behind the scenes obviously if you're here at eth Denver you probably care about the tech uh but most people across the world don't they just want money to work for them uh and in a lot of places across the world money works against them and so stable coins are a great way where we can actually just scale sovereignty of money to people across the world and so I'm Express I'm impressed with you know how much progress we've been able to drive so far without even having like clear regulation around this is a stable coin that is full collateralized this is not cool um so you know this presentation the title is actually kind of funny to me because it's called the uh the trillion doll opportunity but you know that's only a 5x and like I said we we literally don't even have like Clarity on regulation for these things yet so uh I think the trillion dollar opportunity is actually very much underestimating uh where we're going with these things uh I think a lot of us especially if you know I've only ever worked in crypto personally and I think a lot of us uh have spent a major like a lot of our careers in crypto and while it's really exciting to see the progress that we've driven so far I do think that it causes us to not understand how much progress we still have yet to drive traditional Finance is massive uh it's far beyond a trillion dollars like there are certain asset classes that we'll cover in this presentation that are you know multiples of that cool uh so here's some data just kind of showing like uh benchmarking against what we're seeing with traditional payment processors uh this stuff's happening people are like actually adopting stable coin Technologies and a like at pretty serious scale you know we have Visa Mastercard and American Express up here and stable coins at large are driving trillions of dollars in activity um and so even though we might not see it and feel it in our day-to-day uh there really is like steam picking up here um cool so let's just go over a brief overview on why stable coins are awesome uh so they're better because they're always available uh they're borderless and they're programmable uh honestly a lot of crypto the way that I think about it you can really lean into the fact that there's like the opportunity for self- Sovereign money and like decentralized networks but just if you think about the programmability side of it a lot of our traditional Financial system uh is based on like paperwork like literally it's like people emailing each other for approval on different things this is all just apis it's all programmable and so stable coins can just be sent anywhere across the world at any point in time uh and they can have logic wrapped around them uh there also faster I mean I don't know if any of you have kind of dug into like what it looks like to make a payment through the existing traditional Financial system but it sucks uh you know intermediaries are not only bad because they gate access to things and cut people out of the system but they're just they add delays and fees on top of things stable coins you can just send them directly to who you want to work with um cool and they're cheaper uh this is a pretty crazy stat when you think about it the amount of volume that is going through networks that charge multiple percentage points of the value going through it it's kind of like like a snake like giving a strangle hold on the economy today you know if it's it's like a tax not I mean stripe I respect stripe but it's a massive tax on all economic activity that is happening and with stable coins we can just entirely circumvent that cool uh and one of the coolest thing that things that has happened in the past few years is a majority of these transactions are costing less than a Cent and they get confirmed in a few seconds at this point I don't think people outside the industry really understand how much progress we drove like L of the news was focused on FTX and SPF just running this Mega scam and everybody thinking that crypto is just all speculative and nonsense like people were building and we have made serious progress primarily through like rollup Centric type architectures but yeah uh transactions are nearly free and instantaneous at this point in time okay cool so I imagine a lot of you were like didn't need to be shilled on why stable coins are cool so uh let's walk through about like what's going to actually come next here um so uh how many people were familiar let's just do hands again how many people uh have bought a treasury bill on chain all right we got one person Okay cool so uh treasury bills uh are really exciting to me because I think about tokenization as a spectrum you know it's it's this like meme that's going on right now like RW uh but if you think about it there's this spectrum and you know on this far end we have complex exotic derivatives and tokenizing those are going to be pretty hard uh CU they're complex Financial assets but on this end we have stable coins like that's really what they are they're just tokenized Fiat currencies and so what is one step deeper it's treasury bills and so for those of you who aren't deeply familiar with treasury bills you can effectively think about them as just stable coins that give you a yield that's really like largely what they are um and this is really exciting because uh treasury bills alone can really overhaul how defi works today and so traditional Finance for example anytime that you post collateral you use treasury bills but on chain today when you're posting collateral you use usdc so that just means your collateral is sitting there it's not generating any yield and that's just not how it's done in traditional finance and so even just treasury bills taking one step deeper into this tokenization spectrum presents a huge opportunity to like replace the base collateral of these defi systems with stable coins uh directly to uh treasury bills and so uh this single type of asset has huge potential um but one thing that's kind of trippy to think about is like I was saying it's all apis and if it's all programmatic why would you ever hold a dollar like like why why would you do that why would if you could just hold a treasury bill coin why would you ever hold usdc in your wallet and so one thing that I think is going to happen in this next stage is the like concept of money will be a little twisted in people's minds because we'll be able to have Smart contract wallets where anytime you receive money it can just automat be converted into a treasury bill which might sound a little weird but zoom out and think about your checking account and your savings account it's actually probably more weird the fact that this isn't happening by default today and so like why don't we just generate yield in our checking accounts it's just because the systems like bureaucratic slow and inefficient there's really no fundamental reason why our the deposits in our bank account wouldn't automatically be be deposited into treasury bills that are generating us yield it's all just kind of like left over bureaucracy at this point so I think that's going to happen I think we're going to have Smart contract wallets where anytime you receive usdc just automatically gets converted into treasury uh Bill coins so you're just generating like 4% apy by default all the time um so okay if treasury bills are one step in on the Spectrum what comes next um so let's take this one step further you actually could take this smart contract wallet and set of like you know I don't just want to get uh Treasury yield I want to accumulate Nvidia uh I'm really bullish on Nvidia and so anytime I receive money I just want that programmatically swapped into Nidia this is kind of like the next step deeper into the tokenization Spectrum it's corporate bonds and equities and we're already seeing some of the world's leaders like Larry Fink who manages 11 trillion do of assets he's like on CNBC saying uh I want the SEC to legalize the tokenization of stocks and bonds today and for him it's because he runs this massive machine that is just run in a very inefficient way where he he knows if it was programmatic they would make way more money their margins would be way wider and so uh we're going to after treasury bills we're going to see this next stage where bonds and stocks uh are moved on chain and this is going to like very importantly be able to serve normal people uh most people don't want altcoins that's honestly probably for the best uh most people just want to ACR wealth and just you know live their life work and then just be able to acrw wealth for their family and for themselves um so this is going to make uh defi as a system actually functional for them um cool and so another big number but uh I stand by this and so the trillion dollar opportunity again is massively underestimating I said I was going to cover a couple different asset classes uh so treasury bills alone is a28 trillion asset class that's literally just treasury bills okay Global bond market is worth $130 trillion so these are just two types of assets and we're already talking like hundreds of trillions of dollars and so uh I think going back to what I said I think a lot of us are really proud of the progress that we've driven in crypto so far because it has been a journey we have gone through a lot to get where we're at right now but I do think with this new Administration in the US and more clarity around legally like how can we move things on chain this for the first time that I've worked in this industry I actually see a clear path to onboarding the finan the existing traditional Financial system uh to our onchain systems that are cheaper more efficient more transparent uh and yeah more Equitable for people across the world cool so let's talk about how we actually get there like really exciting to think about like wow what would happen if the defi that we have today went from hundred billion do to hundred trillion do like that is possible uh but what would it take uh to get there so there's really uh three key things that need to happen for us to onboard the Global Financial system on chain um one is we got get people out of the weeds right now everybody's talking about fragmentation it's e Denver ethereum is facing this the most right now uh fragmentation is a huge problem right now um but it's actually a good thing uh fragmentation is how we scaled the internet when you go to google.com you don't think about the fact that there are hundreds of thousands of computers running that single website you just go to the website and it works uh ethereum is going to look the same way it's going to be this massively horizontally scaled system where uh we're going to get insane throughput uh from that scaling horizontally but it's going to be abstracted away from the end user experience yep y so uh you know you have to like think about bridging and stuff today anytime you work across rollups it doesn't feel like one ecosystem it feels like you're in arbitrum World okay now you're an optimism World okay this new rollup just launched what's the best Bridge let me Google how to bridge to abstract okay maybe I clicked the wrong link and I just got my wallet drained like it's crazy we can't expect normal people to do that and they simply won't uh they'll literally lose their money and just get lost cool okay so asset complexity as well uh we we're in this weird dystopia where there's like seven different types of eth in the wallet that I have uh this is way too complex for people we need to abstract this all away um but you know I'm really excited because I see a pretty clear path to this and I I think ethereum is in this stage where it started to scale horizontally and now we're going to like tie it all back together it's kind of like the unbundling and rebundling that happened with streaming services it was really chaotic man all these different things but it's going to all come back to a point where it's just going to feel like using ethereum again cool and then the LA the third thing here regulatory Clarity um obviously this past election was spicy uh people had very strong feelings about this uh and and you know Trump decided to launch a mem coin two days before he was inaugurated there's lots of things we could say on this uh but one thing that is really really exciting is that we are going to get regulatory Clarity for this industry and this is something that has choked it for many many years uh you know we say the term rwas today a lot of people that have heard of that term they haven't heard of the term stos from 2017 and so we have wanted to tokenize assets for eight years now uh but people like we just literally legally were not able to because the US Administration uh Not only was proactive like was not proactive about things but you know actively created this environment where there was ambiguity and uh just made innovators in the US uh live in fear you know before I started Omni I had a really serious conversation with my co-founder I was like look I love America I'm American he's from Pennsylvania he also loves this country but we're like all right if we need to move to Asia like are you down to do that like as my co-founder because like we might need to do that at some point depending on which path this country takes uh I personally am super proud to live in New York City and be able to build in this industry at this point and I'm not concerned about like my welfare and like legally being able to do that uh so I do think going to see a ton of progress on the regulatory Clarity side of things I think it's already happening I think it was actually just today that the SEC dropped the Unis swap lawsuit and so uh a few days ago there was one with coinbase that was dropped as well so we are seeing pretty positive momentum here and I think a lot of people are like all right is Trump just pandering to crypto people for votes or is he actually going to like get things over the line he's getting things over the line like like the dude is pushing like say what you will about that guy like but he is like doing positive work for our industry right now putting potentially the mem coin that he launched aside um Okay cool so what is Omni um basically it's this network that makes it so you don't have to think about these things it's a substraction Network so even if your funds are held on chain a or like rollup a and the app is on rollup B you don't have to think about that you can just use the application and from a developer perspective you can just integrate the SDK and it takes less than a week uh in many ways this is kind of like what cross chain daps wanted to achieve for many years uh but like for those of us who have like paid attention to cross chain adapts can you think of a single one off the top of your head that has been very successful like probably not and like why is that it's because that was just the wrong design Paradigm and that made developers think about launching across all these different uh rollups that's not how it is we just need to create this network where uh we can just effectively just rapidly link users and the applications together give the developers simple experience give the users a simple experience and let market makers handle all the complexity that's the way that this is going to go cool um Yeah so basically yeah I I just said that all right cool so uh what what are we actually like concretely doing here uh we're abstracting way the fragmentation like I said it's good that we have a bunch of different rups that is how we are going to scale uh you know people talk about unifying liquidity all the time that's not how it's going to go you do not unify liquidity uh we're going to continue to fragment and it's actually a good thing because it means we're scaling further the key thing is we just need to abstract away that fragmentation from the end user experience um on top of that uh you know we're like the omni's design makes it so that these market makers have to compete to fulfill user requests uh so in many ways actually the best way to understand Omni is to think about Robin Hood and Citadel so Robin Hood present this really nice experience where uh you know I can just have an app and I can just click a button and buy $100 of Apple stock I don't need to think about the New York Stock Exchange I don't need to think about what type of order was placed I can just click a button and get the Apple stock um in many ways Omni does the same thing so you know if a user has 100 usdc on arbitrum and they want to use an application on optimism they just sign a transaction that says I want to do this over there and then some Market maker finds the optimal routing and takes care of it for them so it's this similar abstraction that we used in traditional finance and we're using in decentralized finance as well to achieve that same level of Simplicity cool and uh the other really cool thing about this is we make uh market makers uh handle all the risk so this is actually the developers and the users aren't taking on the risk here there's always some amount of risk when you're working with systems like this the question really is where do we put that risk uh in in omnis design uh we put the risk on market makers we make them do all the complex thinking here and we make it really simple for users and developers so uh at large oh time is up right on time great so uh let's Empower Everybody by moving the financial system on chain thank you very much for coming to my presentation on the trillion dollar opportunity uh that's my Twitter if you want to follow me uh yeah and thank you all I hope you all have a great week I hope you stay healthy drink some vitamin C get enough sleep uh and have a good time thank you