PANEL: Collateralising Stablecoins w/ Performant Real World Assets in a Financially Sustainable Way

baby [Music] you say to save the best for last and we're gonna try and go out the bang here uh the final panel is going to be on collateralizing stable coins using real world assets so Xavier has assembled a fantastic panel Xavier from um uh ill invio invio please it's all yours hello everybody thank you to stay for the last panel I think the most interesting panel for stable Summit and let uh oppose my co-panelist for this interesting panel um Finance Assad Khan from centrifuge and Sam McPherson from Felix Labs thank you guys [Applause] as I mentioned uh I think you are some of you veteran of stablecon crypto and defy Let each of them introduce you and what is your relation with this panel some please uh yeah so uh veteran and D5 I don't know what the qualifications are there for that um so my background uh I co-founded Phoenix Labs uh fairly recently we are focused on building out spark protocol which is um a lending Market that's in the maker Dao ecosystem before that I did smart contracts uh in maker Dao in the protocol engineering core unit so operating within the Dow building smart contracts that were used within the core protocol maintenance that kind of stuff I guess more broadly in D5 I've been in the space versus a hobbyist since I came in in 2017 bull market just hobbyist investor I think as a lot of people kind of start and then became more and more interested in the technical side about how it works and joined maker Dao was that August 2020-ish working for the Dow kind of a unique path in that I didn't work for the maker Foundation I was like one of the first smart contract developers to work entirely under the Dow and back then I mean Dows are all over the place now but it was really um we were really bootstrapping the whole Dow process so yeah thank you Sam Claude hey my name is Claude I'm a co-founder and CEO at memo Labs we're working on all things stablecoin but more recently especially like we really specialize on real world assets I mean what we're focusing on and we have a form of a protocol that we call Kuma that essentially acquires debt from a company perspective and sells it on on chain in the form of nfts and interest-bearing stablecoin so essentially like the panel of today being like backing stablecon with variable assets it's pretty much what we're doing all day and night so yeah that's why I'm here yeah um thanks for having me my name is Assad I'm with centrifuge I've lost unfortunately a lot of money in crypto so I've paid a lot of attention to the places I've lost money and it's stable coins right um I2 Business Development and Partnerships the D5 space for centrifuge centrifuges worked really closely with maker Dao we've been Guided by seb's French accent for years on how he thinks about things there and that's kind of you know a big part of what we do we're really big Believers in stable coins big Believers and real world assets and stable coins and um that's why we're here it's been a really cool day of talks and conversations and I'm incredibly jet lagged so if I fall asleep I'm sorry I'll wake you up sorry do not worry do not worry you wake up thank you Assad Raymond hi everyone I'm Raymond from Blue Jay Finance so I'm a CTO and co-founder there I have been in the space in 2017 uh as a Hobbies uh doing meva Arbitrage trading on the site formerly got into the space um in two years ago and that's where we started blue jay Finance so what blue jay do is that we actually help investors we Gateway for investors to get access to private credit deals or rather private Investments placements so um basically you're looking at assets around the world where basically you can get you from now on the other side of the market we also help businesses in the real world get access to Capital uh well from the decentralized space as well so I'm really excited about the whole development of the real world assets a big fan of centrifuge yep thank you everybody thank you to my coupon panelists the Aries of of this panel is clearly to evaluating a real asset collateral helps to lower overall risk we talk about risk in crypto and stable coins since the beginning of crypto winter also managing capital inefficiency and centralized point of failure introduced by a a real real war asset also and the onboarding users an institution to defy via the integration of the this real world assets because the CCI this is at the end of the day to have a real client and user of the different protocol and services how those collateralizing stablecon with performance real-world asset contribute to lowering overall risk compared to other collateral options well I mean okay I'm going to start I mean like yeah I thought you were going to start because you're a government maker but uh I'm gonna I'm gonna start I'm going to take a stab at this one I mean again that depends on the original position where we stand but if we consider that okay like you have a stable coin that is only backed by one type of asset like only let's say a virtual asset or only like a centralized entity and all that you as a user have like do not really have much options to see like what's behind and there is only like one type of asset that you see behind the stable cone you're using having stable coins on I mean having a robot that set on chain could enable like a stable coins to be backed transparently by different sorts of real world assets and not only the reservoir Circle or the reserve of tether and stuff like that you could have something that is lowering the risk of putting all your eggs in the same basket and like from um like decentralization perspective I think it's a step forward of course those companies bringing robot assets on chain all like someone centralized but as it you rely on multiple centralized companies instead of one I mean at least you can so that's again that's one way it can do something better and again like you mentioned like performance uh World assets it's if if we call Performance rewards it's like rewards I said that have yield then you can limit the risk of having unsustainable stable coins like you can have essentially room base of the yield that room to pay your salaries of people working on stable coins you can room to pay to users in the marketing fees of whatever I want to grow but essentially you can have like sustainable infrastructure and that's something again what did you step forward in our industry yeah um it's a good answer and uh to add to that so include sad to that um I'd just like to say like if you really if you really stop and think about it like um what are the assets that are not real world assets and at a large scale there's really only one in the ethereum ecosystem that is Ethan safety and uh you know potentially L2 kokens and stuff like that for the scale of something like maker Dao or larger to collateralize uh positions so and there is no reason that the demand side for the stable coin should balance on those who are primarily taking leverage right now why should that match and so you okay you come to the inevitable conclusion if you want to scale that you need real world assets and I think a lot of people look at stuff like usdc usdt those are real world assets like they're just have the biggest uh Demand right now there's um but like there's a whole sea of assets out there and so if we were not to use real world assets like we would just forever remain this sort of uh Niche uh thing with no connection to the real world so like to be able to grow and change like change the whole economic system it's not about do you back yourself with real world assets it's more like you have to and then deciding what is uh the path to take that is safe depending on um the protocol you're running so for maker um being a US dollar uh stable coin which is attaching itself to a real world asset the US dollar You Are by necessity going to have to back yourself to some degree with things that look like cash US dollars so um the obvious answer to that is t-bills um so that's especially as of now that's giving a very nice uh risk-adjusted return as it's essentially the risk-free rate of the underlying asset which is the US dollar so if you have a stable coin that's pegged to something else there might be a different equation here but ultimately especially if we're pegging to things that are in the real world um maybe the term real world assets is not the best but um whatever we'll stick with it you need to have something that looks like the underlying so by necessity that means you need to tokenize the things that exist in the real world and then it's the stable coin issuers job to balance that risk and reward yeah I mean I would even take it further actually and like if you're a stable coin that doesn't have a real world asset strategy I think you're just irrelevant right you're absolutely doing nothing for the space you're creating an environment where we just kind of decentralize into Oblivion and stagnation and irrelevancy and you leave the door open for people like BlackRock and JP Morgan to come in and you know you don't like they'll be emotional stable Summit three years if you don't like wave two yeah come on and have some money and I don't think that you need to sacrifice the principles of your stable coin to engage with real world assets but you need to have a strategy and you need to understand that I think what Sam said really well you're never going to be able to scale if you can only rely on the markets of eat and steak eat right and those might be great markets with Incredible activity but and I think they have a huge role to play in serving stable coins and honestly creating quite a bit of uh utility right but they're not the place that we can stay and they're not the place we can stop I equally also think that treasury bills and treasury assets are [ __ ] boring as hell as well so yeah okay we'll get to that part of the conversation too but like the the basics are we have to have this stuff otherwise what the hell are we doing here maybe I'll just merge both of your arguments I I think there's a stands somewhere in there that makes sense for both right the I think the question right here is risk and when we talk about risk um usually we are talking about you know portfolio management as a whole um how does my various different assets perform in relations to one another so correlation covariance is a big uh factor in there and now if you actually look into a lot of the Sable coins provided out there they actually have a Hulk basket of like Goods that is entirely correlated um and if you look at the episodes around usdc right now um You can actually see how all of the assets underperform or rather be very correlated with usdc depak at the same time and that is because like we used to think 2008 financial crisis is you know something a Black Swan but actually there are things to be learned there which is a lot of assets are very correlated when moving downwards uh and during the market of uh during the time where Market is being stressed um basically you are looking at uh you know liquidity being pulled because as a market maker it does not make sense for me to continue to provision uh liquidity in this space when you know things are moving all around the all around the place so for stable coin that makes it even more important to have things that are are basically not highly correlated and I think real world asset actually give that a good mix around it and with any portfolio manager right uh the at the end of the day is about what is the goal of this portfolio right because different portfolios for instance like income fun right would uh would likely do money markets right and their Benchmark would likely be the T bills the uh tbus um that that sort of funds and then it makes sense actually to have the portfolio say Okay um majority going to have like different durations of the uh T bills uh based on let's say the liquidity requirement of my fund but if let's say my stable coin is more like a inflation resistance a bit of hedging against the U.S market performance then it does not make sense for my portfolio to be fully comprising of only US Dollars assets altogether right or I shouldn't have uh I should spread it out in different markets not just money markets right now what I see is that a lot of protocol at best they extend to money market but nothing beyond that there's no real world asset allocation there's no stock at allocation there is no um yeah basically you get it right no equity all of those things now if you want your portfolio to be resistant then basically having introduction of all these things uh would actually lower the overall risk of this portfolio because at the end your stable coin is really just a portfolio and the coin itself is just basically the stocks issue on that just think about it as ATF so I think both of your argument uh makes sense right if I'm looking for a dollar money market strategy then obviously it makes sense for me to have tbus within my portfolio mix but if something I'm trying to do inflation resistant definitely more than that I think that's interesting that you call like a stable coin especially like the like a token that represents a share of an ETF you know portfolio because it's it's uh even though it has some truth in it this there is also the inherent concept of returns in a portfolio that we expect most stable coins do not provide them so that's that's uh that's the thing I mean I think this is according to you this is a problem or not well I mean it's more like it's it's not necessarily a problem it's more of a definition thing right if we're saying that well it's like the share of ndtf except it doesn't provide return then it's not really like a share of an ETF they switch this is why I thought this is pretty interesting but the reason why I'm bringing the point is that it's only because we have rwas inside that now we can even consider that this could be like an ETF because this could have returns and stable coins could therefore be yeah pretty much like shares of an ETF that could be a very interesting proposition so I think in what you're bringing like uh the Ken stable coin be backed by um by reward assets and can Heal the World risk well in this case it could be something pretty cool because the risk can be represented by the yield and then we could have something pretty interesting and essentially consider stable coin to be like you know shares of a portfolio um yeah so uh definitely advocate for returning yield good answer yes that's good good answer yeah definitely a fan upstairs coins uh offering a yield to the holders to Bear most of the risk um be hesitant to equate it to an ETF though because um you know owning a stable coin is not the same as a deposit you have no guarantee of redemption um so I think that's an important distinction I want to make that's that's an interesting thing I mean again like uh the we we're making a stable coin that gives return to the user so I'm obviously biased in this direction just want to say that you know like there's also Circle that exists and they're not dead yet so it turns out it's not like what everybody wants yeah I actually think the distinction whether it's a deposit or not right I think that's like very academic you know back in the day before Banks just became like compliance functions for ensuring the man got his like 10 cents worth right our grandfather's Banks our grandparents you know financial institutions used to actually provide like a level of risk and provide some sort of profile that would meet different needs in the market and I do think that's what all of this is right we can talk about decentralization and principles and crazy ideas and rebase yourself to death or whatever it is but you have to provide utility to users and ultimately you have to provide different profiles of risk for different users in different markets and the way to do that is on the balance sheet side of it whether that's collateralizing the stable coin that's creating markets where users hold assets or trade them against certain assets in your stable coin that's all the aggregate balance shade right yeah exactly yeah exposure to Bridges exposure not to Bridges right you have to make these decisions as a stable coin provider or organization or decentralized individual contributing to a not security thing yeah I think at the end it's really just a not security thing right um and you're just trying as a user um you're just looking at the balance sheet and then looking at my assets that I'm holding is it matching the Au end there right you can say that I slow the way that I return assets back to you by rebasing slowly but at the end of the day the user is going to Discount that uh by duration they're going to see okay if you're going to give me my money back in four years then I'm going to sell this off in secondary for whatever that I think the forward rate is going to look like in four years so the asset itself the pricing might not be what is what you think the product asset uh is redeemable for right now might not be what the asset is truly worth to you know someone's holding it at the end of the day and that's what makes the market right as prices move around that some people take you know both sides of the trade right that's what makes a market in the end of the day maybe you don't need a ratings agency maybe price is enough I don't know where the ratings guy is but I think I would like to come back on one point mentioned it by I said um when you you talk about Black Rock and gpmorgan no it's stupid question sorry I will put a stupid question for a whole over you guys don't you think at the end um for Mass adoption about collateralizing stable current stable cut adoption and so on the the best promoter as this kind of actor JPMorgan BlackRock because at the end of the day we know how human being works with a fomo if BlackRock go on this business or make that even they're wrong they don't have the good guys it's a good good taken economy what you want most of people we trust and they follow what do you think just just because I initiated this conversation if BlackRock and JP Morgan came to the table and we're creating really useful Tech that was really pushing the needle on financial Market infrastructure solving real problems that are fundamental to you know honestly the globe at this point right and I would personally have no issues people might kill me for it you know I will call Larry Fink daddy if that's what it takes right but at the end of the day the people building that stuff are in this room and except for Xavier none of us are really Bankers right you know we're with techies and I look at people like Sam and like we need to be able to build this [ __ ] together and I think the things that maker is doing is a great example of why those guys won't actually do it because you need to take rest take of these ideas and develop them in a market where you can be tested right yeah I think it's important to be clear though like uh not having them run the show but if they were one of many contributors to for example die being a rwa a ranger or something like that um but again one of many because like otherwise what are we doing here it's like it's got to be descended centralized or else we're just Reinventing the banking system so I mean again what we're asking is is centralization going to be necessary for Global adoption of stable coins or the industry so far I'm not sure I actually pretty much disagree like the most popular crypto out there is still Bitcoin and it's like as decentralized as it gets so like maybe it will help for the adoption of stable coins to have big labels that people can recognize like oh yeah well you know the BlackRock is there and this and that but turns out when we do real world assets you can have even the FED behind your coin like it's all right it's already a big name as well you know you can promote those things you have like even bigger name that those organizations that will at the end of the day play no better role than a middleman that you know like will not necessarily add that much value and I understand that it could have some impact on the marketing on Solutions but I'm not sure that they will have a tremendous impact in bringing the next billion people in the in the industry like it will be Innovation it will be yield it will be I think like it will be more on what can you do with this or maybe what can't happen once you hold this then who makes it like we're not there yet or maybe we will not be there to ask though Claudio did just really you know the most used stable coin today is usdt right the most attractive digital asset might be Bitcoin but on the other side of that usdt offers none of that no yield it's all centralized I don't think there's any Innovation there in reality yeah steel but I mean again like um I'm talking about what would move the needle from there and again like usdt I think is a good example of the anti-level who knows who's behind desert except for people in this room I ain't nobody who knows what's inside of this nobody yet I mean it's something that is centralized but for most people like ever touching usdt it has like the same level of opacity as Bitcoin like people have no clue what's inside and they send that to them and yet people use it and it's the most used table coin right so I think the the whole thing about labels and all that might not be as necessary as it gets for the growth at least so far this is not what the space has shown us wouldn't it be great if there was a stable coin where you could see what it's backed by by all the different assets write down onto the end borrower all on chain all completely auditable right up to the second that's pretty much what we built thank you for pitching I think it's interesting where you know the crypto Community is always talking about you know full transparency at what point uh do we want to stop that because at scale not everything can be completely transparent and I think even with make a doll you have created a new organization where basically um you invest in deals that you know you cannot fully describe what they do intrinsic detail is about because uh some of them could be Trade Secrets right so some of them I mean at the end of the day if you're doing Investments um it is what you invest in uh that gives you the alpha and sometimes you don't have to share that yeah I can respond to that so um you know I'm from maker Dow but I don't necessarily agree with all the deals that were made I'm I'm much bigger fan of tokenized public markets Public Credit um because like those are huge like we haven't even begun to tap those out so doing more bespoke private credit deals I'm I'm not a big fan of so I'm like let's exhaust like the public markets so then you don't like there's not these issues about like opaqueness and stuff like that like you know uh t-bills is a huge market like we're just not even cracking the surface there and like there's a whole world out there um so yeah let's let's exhaust that first and yes personally I agree with you advocate for uh transparent Public Credit I wholeheartedly agree I think we built this industry on on a couple of things transparency between one or being one of them and maybe like not being transparent can still work as we've seen you know like a non-transparent Solutions did work but then again like you still have a choice both when you buy an asset or when you create the asset like then we're I guess we're talking about personal preferences here and the market seems to be okay with both transparent or not transparent I would personally just join like what a friend said here like transparency is still good but again then again like I don't think the market has forced us into but I still think this is more of a cultural thing like we we have a culture in the industry that is a culture of transparency maybe actually this is a bigger question maybe the non-transparent the the lack of transparency could lead us to something bigger because there's a lot of organizations that would adopt crypto only if it was not transparent maybe something like that but at the end of the day for what we have now I would hope that we can go as far as possible with transparent Solutions foreign guys thank you and I have a question regarding uh collateralizing stable coin with Performance Real World asset do you think accept tbils because you will talk about tibials do you have other eligible a real asset to collateralization yes good yeah yeah no no no no totally Bad Assets terrible so like t-bells are the obvious one because it's like as close as you can get to the underlying which is the US dollar um so for die um but there's there's tons of other stuff uh but it gets um there's kind of like two camps there's protocol controlled value um which is stuff that you want that uh basically won't lose value to relative to what you're trying to Peg to so this is like basically like t-bills and like you know AAA bonds this kind of stuff stuff that's like super safe as safe as you can get to the underlying then there's uh user vaults which is uh volatile compared to the underlying so this would be crypto vaults would be uh one example of this but there's no reason you can't have like tokenized stocks and stuff like that that's more volatile where you enable users to speculate on this in the same way that they speculate on the price of eth so yeah there's all kinds of room here for all kinds of rwas exactly I mean as long as you have efficient liquidation strategy energies as long as you have the infrastructure in place for it there's no reason why you can only use one type of asset it's then it goes down to portfolio management like do you want to put all your eggs in the same basket is the goal you're still going to generate yield is the goal of your stable coin to be more of a betting market for like for people to long and short take long and short position on volatile asset you can do a lot of those things and what will make what will make something good or bad is more like how um how easy is it to liquidate the asset in relatively to how much you want to have of it right and that's why you might not want to do like a third world real estate for backing a stable coin like that that that has a lot of liquidity for example because maybe it might not be easily liquid like easy to liquidate but maybe like a lot of us it's like we're talking stock we're talking like uh I mean we could have money market funds that we said earlier we could have the corporate debt again like we we I'm somewhat biased here because we're building a ton of stable coins backed by different assets and why want to use want to have protocols use these table coins as like a part of their portfolios to build different stable coins on the top of them so like I we do believe in an approach that you can have a lot of type of asset behind behind stablecoin because at the end of the day just goes back to portfolio management like what's the sharp pressure of what you have and you just have you know normal portfolio management like um the the whole idea of portfolio management is pretty old and there's there's a lot of research and available information on that I don't think like only T bills is a solution that will that will get it because at some point people will want to generate Revenue when you want to generate Revenue you will want to have like something that pays more and when you want to have something that pays more you're going to have to do portrayal management so to add on to I'm going to share some examples for me guys so I know you don't agree with this right but maker actually did uh quite quite interesting deals in the private markets so one of the things that they do is that they actually have really uh real estate involvements they have trade uh finance involvements and as well and these are different uh these are different uh you know markets that you can invest in and what is interesting with maker is that they don't actually go into Equity part of real estate they take on actually the debt positions if I'm not wrong right and that actually gives them a senior support that on top of like the real estate Equity fluctuation so that means they won't be hit as bad or even hit at all if the real estate um you know prices going you know go gone down the same thing as with trade financing uh with a lot of involved factoring deals that um you are also investing in yeah they are doing that right it's just something think that Sam is not agreeable too right they are doing that and these are actually uh collaterals that are interesting right that is also related to uh you know maintaining a good uh healthy diet at the end of the day because these are also that position but now is it is it good no the problem is not so much of is this collateral good by itself because ultimately there's no one uh one collateral that is good by itself right you need to go back to how you are managing the portfolio am I going to allocate 99 of those things into real estate then oh I'm actually investing in a real estate fund and not really US dollars right am I allocating 99 of those into uh trade financing then you should have just call yourself a trade financing firm right but the at the end of the day it's right down to your portfolio composition that is going to um that it's going to reflect uh on what is the ideal goal that you are trying to achieve what are some of the downside and upside that you're trying to capture or avoid so so I think the conversation on what is a good collateral is not as effective as how am I going to you know go about compositing my entire uh you know class of baskets of goods uh to actually support what kind of ideology that I'm trying to you know move forward with yeah the only twist I'll add to this conversation is I actually think that as like a stablecoin industry we're quite unsophisticated right we're we're obsessed with this like a short duration idea that can be redeemed at any time transact at any time and we think that that's the only way to offer these products and there's a lot of technical implications and we're operating in Dows we're operating in Crazy Market environments so I understand why we're so focused on kind of the maybe what's right in front of us right but the reality is is that you know it's balance sheet management sources of funding right composition of your funding and your liabilities your assets I mean how many stable coins even offer term deposits or anything like that right there's a similar few examples you you know there's protocols that are building ideas on top of other stable coins I think really in order to be able to engage the whole world of assets out there you have to have these kind of ideas and these Primitives built into your Marketplace you have to have sophisticated markets with you know buyers and sellers that are consistent and active and large volume and you have to do so many things to even build all that up and then you can really start to engage with the interesting things in the world right until then maybe treasury bills is enough right yeah I completely agree with the liability we haven't even really discussed the liability side but yeah term deposits stuff like that I would like to a person I would like to start exploring uh that more um basically having the users commit to duration um so that you can match it in a more explicit way in the um asset side instead of just guessing what roughly uh the users are going to do um but yeah I think it's a cool primitive that's been underexplored so far I think it goes back to the last question about what happens when we bring BlackRock inside right because at the end of the day look at we as an industry I think the crypto is very is trying to draw a very clear line it's like we are the web for you guys and then we have two guys right and then we draw you know fat fat line dance like this this is us and that is you but I think the how you're going to progress ahead as the industry is that we start to you know clear out the line because if you look at uh you know the whole real world asset narrative it's actually the web web 3 folks try and get into the web 2 industry and melding that and I think it's it helps when you know we can actually merge the tool and call it Finance again instead of calling it this is like web tree and then people are web too because the webto folks certainly bring a lot of experience especially in structuring experts uh understanding you know asset liability and also basically uh funds that are not immediately liquid so when I was talking to people about a liquid funds and assets all together no one had an understanding why do I invest in something that is one year but if you go to if you go to any VCS any funds out there they're like wow what is what is this one year thing why is it social how do you achieve that because their investment Horizon is like five years their shortest and then 10 years how the fines usually run right so there there's a lot of mismatch in how we run things uh that I think as an industry we have a lot to learn from still uh from the so-called web 2 Guys yeah I mean there there's a couple things like uh the where of course it's nice and Rosy to see that we will all blend together at some point let's not forget that there's also a reason why we exist right like it's uh go back to the lack of transparency like when you when you want to have access to a lot of the real world assets that are backing uh you know like our the stablecon that we're building today those things if you want to have access to them as a retail user in your bank you just won't have access to them because there's a lot of gatekeeping work a lot of things like that that we as an industry have decided collectively to break and it's not as rosy as we all work together I think it's uh we're still kind of like you know stomping on their feet a little bit they will not be necessarily as happy as that to to work with us but man you know we became we become their customers at the end of the we become another customer than than the retail users that they're trying to get Keep From a Certain category of assets and I think this is again there's a lot of good things to happen from that but it won't necessarily be a smooth path like towards working with web two guys so I think the real world asset category of like D5 is the rebels from you know web tree stepping forth to say hey we are going to start working with like the you know the web 2 folks now the question is who from the web tour is going to be the first Rebel and step forward and say that hey this guy's really got something right so where the Rebels for working with Trad five I like it I thought we were all Trad five rejects is that why you're here I couldn't get a job hey guys how you doing [Laughter] it's the last panel for the day right you're gonna make it fun you are not still drunk keep it easy just a vodka I think so but anyway no very interesting and in your different companies how do you see um the adoption uh because today to be honest this is a niche you know we need to accelerate in order to to cover uh some stuff such as Financial inclusion liquidity to small people and and so on how do you how do you work on that in your company in term of mass adduction well this is again like if we want to talk about Mass adoption of in the specific context Mass adoption of stablecoin backed by real world assets it will be like I think it's just capitalism that is the answer if if a stablecoin has more Treasury and has productive Treasury and can make more money to become promoted easily actually to have better stuff to have like you know more growth then it can grow I think it's just uh like they can't even decide to pay the users and stuff like that so money will find its way towards like making more money and at the end of the day as he was saying like if you don't have a strategy about real world assets or even if you don't have a strategy about like making more money at the stablecoin company then you're just going to be eaten by somebody with a better strategy to make more money than you because if the stablecoin is a commodity then it's about who can make it more efficiently right I think the question is going down to the topic of governance because when we look at the web tree now um I so traditional company you elect the CEO right you elect a management team to actually make smart decision for the rest of the folks right and in the web free space right we talk about trying to distribute Equity to their you know to the masses but the question is is you know should liquid democracy the right way to run things around here right because does that lead to good decisions especially around Finance right where it's something that is a little bit opaque a little bit hard to grabs and there are some easy things that we want to reach out for we want high yield we want High liquidity we want low risk but quite frankly how do you uh get to that mix right you need some trade-off somewhere so someone needs to make that decision right and uh I think that the answer does not lies with the masses and I think makers structure is interesting but is there other structures that we can explore that you know actually allow people in this space to make collection uh you know decisions collectively um that is optimized for everyone rather than like oh I'm optimizing for you know uh liquidity and um you know pricing and then maybe I actually forgo a lot on risk right I'm super Exposed on Long terrorists and it's only until too late that I realized that hey um actually I should have done more uh in that space instead are you advocating for recentralized recentralization of our world like I think like I think it's a big big question right because it's like it's democracy good man yeah I think it's not so what we're building in like in building these whole dials and all that is not necessarily that we have a whole democracy because it's not everybody that can vote it's just people with tokens so essentially those answers are going to be solved by the market right like if one like whole like a token has a bad risk management strategy another Dao like has maybe has a better like a risk management strategy people will vote by the tokens of that and then grow so essentially you have by effect of having the choice the possibility of splitting governance then again I mean we can also talk about different governance models like maybe we can make like a dow that elects five people that are you know that top Economist and stuff like that and those guys make decisions that could be something that exists and I'm fairly confident it's eventually going to happen but it's still like at the end of the day we have the luxury of having a market that that that defines like which governance model can work best yeah I mean I think the stablecoin market is really the most interesting place where this whole thing plays out right not just because adoption is useful because stable coins are useful for users in the marketplace in the first place but you also are starting to see this really a wide variety in the panel earlier had like six different perspectives on what a stablecoin was and how to go to market with it and and so I think from like a real world asset perspective to us it's about like doing the basics bringing these assets on chain like integrating them with D5 protocols making it so that they're useful at the interface level and the way that like crypto native protocols can really use them trying to build like you know legal solutions that they can trust and trying to build transparency in when we can right so ultimately that different stable coins can kind of choose to select these different strategies Implement different things you know do it with a tech based advantage and the market will price it out and kind of choose which you know users want right yeah we need more Primitives I mean that's again like I don't want to do a Shameless plug that's exactly what I've been like striving to do like where we're where we're working like we did not want to build just another primitive that could only be used by three people we work like night and day with Regulators to try to make like a permissionless real world asset kind of thing which can therefore be used by different protocols but I know it's still rare and again like once you did all this work you need to get the word out and all those things I think it's hard but it's coming like uh when we came out with whatever we've built where we realized that older people are coming out of the woods with pretty good stuff and fairly confident that we will have more Lego bricks to essentially like build a nice like defy world and yeah this could lead to more adoption hopefully but do you believe um um the the regulator should will give in the future uh a framework because at the end of the day if as I mentioned by Raymond it's a question of government if you and I we are agree at the end we don't have we don't need a approval of uh regulator that depends on which part of the process we're looking at right from the tokenization layer and you know where you still need to integrate Fiat into a system to buy the real world assets are going to do the whole thing regulator still needs to work there because we still have these money laundering issues and stuff like that so only at that level then whatever comes after like the portfolio management strategy and all that hopefully all this thing can be done on chain and this is why we're all striving for here I guess yeah and Regulators uh like there's not just one regulation body there's many countries so they face a prisoner's dilemma in that those that are gonna just reject the space are going to be left behind economically so uh one by one you'll see countries that are more favorable but you're starting to see it now that are being crypto favorable and um I'm definitely a fan of Regulation that makes sense um but no over not overreach let the market play out but you know protect people from the scams and the Ponzi schemes as best you can so this Middle Ground approach I think we're going to see more and more countries uh doing this and they'll be be the others will be forced into it what we to me sorry what we see as in my opinion something that is good in terms of Middle Ground approach is when Regulators focus on transparency and disclosure requirements essentially like well you can't do X and Y as long as people know what's in the box and once you do this type of thing like you have a much easier conversation with Regulators because it's about okay well make sure people know make sure it's like clear when you people take a risk make sure it's clear when they don't make sure all those things and I mean again we're regulated in Lichtenstein which I believe in like so far has been a pretty Progressive as a regulator and like we're seeing Hong Kong making good steps in this direction again like a regulatory shopping is a thing in crypto people really understand it very well and it's it's not going to stop tomorrow but again some Regulators are pretty Progressive on that and I think it could be pretty convenient no I mean I just hate the regulatory topic right you know hug your local regulator or something I don't really know right but there's different products that exist today already that are making this happen you don't think we need to wait for Regulators right it's back they're swarm they've got different approaches centrifuge has its own approach Maples got their own approach and you know they're all working today and they all have different opportunities associated with them it's the markets market right oh Cleary this is nearly the end um if uh one word for the audience last word for each one if you want to share some something with the the audience no no I don't know I'll just stress on portfolio management because I think we don't understand the Dynamics of like uh things as they work with each other a lot of time we are too focused on the individual one thing uh that is within the the you know balance sheet and Overlook the how that one thing plays well with other things so I'll let them take away with that thank you Raymond I just think your stablecoin needs a real world asset strategy and if you don't have one come talk to me I'll give you one thank you yeah I would say uh given not that not all stable code like not all stable coins are made equals it's just the same with reward assets we're talking rwa or w a but it's not like not all real world assets are made equal and even though you have a real world asset strategy well I mean transparency is going to be the key please look inside the box like this is why we're building this industry we're making things making sure that things are transparent so please take the time to look before like you you cry because your token like goes down to zero and it was written in the duck that it was going to go down to zero If X and Y happens right like I think we we have the possibility of making much much riskier uh stable coins and we can make like super risky things if we do crazy portfolio management but it also we could have crazy yield from that and essentially we we have a room we're talking stable economic T bills from the beginning of the conversation but we could go like much further into bringing like stable coin back with super risky things and I think it could still be somewhat kosher as long as it's written on on the box right and I'm pretty sure this is going to happen because people will go for yield it's just that at that moment when you see something that pays please look where the yield is coming from and even if it's a real world asset it's not because BlackRock is behind something that it means it's safe it could be BlackRock making a crazy like a crazy option strategy that pays a ton and still have something therefore a thought of risk right and it would be a good level but high risk and you would still put money in it and then cry when you lose so it's uh yeah believe in the transparency like look into the real world assets they're not all made equal that would be like the main thing I have to add thank you Sam uh I don't really have anything inspirational uh the future of France is alive and well [ __ ] yeah man thank you very much to all of us I think we have the time for questions for the audience if you have questions do not hesitate I think the thing that we haven't talked about a lot today is that you need to create liquidity and usdc you need to pair against that and provide an ability for your lenders to be able to access that because at the end of the day if it's three oil assets are going to want Fiat and you know uscc usct those are the Avenues for getting there so that's like step one in my head right and I think there's others but that's to me a big one yeah I mean I think we're actually getting there I mean makers scaling pretty rapidly up with the t-bill uh Investments so um and that like that's almost infinitely scalable compared to the size of crypto I mean it's not infinite we will tap it out eventually but uh that's a long ways away so um just getting more and more of these uh very safe Investments on chain ideally tokenized with liquid secondary markets would be ideal just keep building on that but I think we're already like through the door yeah I think it's uh sorry okay I think it's it's about either you you create news table Corners that are back by real world that says and in which case it's a liquidity problem so then how do you solve that it will mean yield somewhere so then you can incentivize trading and like um you know like have insert device curve pools or get like good market makers to play ball with you which you can because your assets are productive so then you have budget for that so that will be the the step or you work with already established stable coins and then you compete against whatever is paying them right now so then like it would not be about growth of new stable coins with revolved that's it it will be more like gross of wearable as I said inside of existing stable coins like there's two ways to answer the question and I think in both cases it goes down to yield so it depends on how you define scale right because if you are looking at 2x 3x scale then whatever that you are doing just do more off right but if you're looking at growing the industry like 10x 100x it requires a fundamental revamp of the whole Plumbing in fact starting from liquidity starting usdc would not cut it don't add data in that right so it just doesn't cut it right they don't have the capability to provide that level of liquidity the matching um you know to actually trade against it so it's not just about the asset scaling side but also on the liquidity scaling side can I actually introduce like uh you know two billion dollars worth of assets into this space tomorrow without moving the needle no it's going to completely trip the the market cap over the price is going crazy and then like everything is going to be lost to slip ages and all of that right so that might require us to rethink about things um and I'm afraid right it actually requires you know right regulatory you know the work the government to work on this right so that you know Black Rock and the likes of it can actually come in and say that hey you know I can actually professionally Market make for you and I'll use my name as a guarantee I use my asset as a guarantee my balance she has a guarantee uh to provide this service all together so that level of Skilling is slightly different from what we are doing right now what we can do right now is we can go you know one at 1.5 to x 3X and from there I think at the end of the day is really trying to see how we can use this as an experiment to prove to the the rest of the world that you know this is actually a worthy Endeavor and then basically to get the bigger player in whether it's uh Capital whether it's other sorts of resources to actually scale that 10 times 100 times thanks maybe more tactical or lower what technical problems need to be solved to help you reach the growth goals or timelines that you have pricing it's like easy to Price t-bills Right but it becomes really hard to start pricing anything outside of that I think in reality um you know more liquid it is the easier to surprise but liquidity is one of those things that changes across marketplaces and especially once portfolios get interesting pricing is a really really challenging problem and you can't just say throw a oracles at it it becomes all about valuation what are you holding assumptions you know asset composition so that's a really good really very very technical challenge remember with assets yeah for um maker what so we've done the first step of uh getting the direct exposure to t-bills but it's the process is still fairly opaque um so the next iteration is going to be tokenizing these things bring them on chain and putting the entire loan book from end to end on chain real time and so when we have that it's not like it's a technical barrier for anything other than I would say trust within the system like uh we don't want to just recreate these opaque Black Box boxes of before right we want to innovate so the Innovation is going to be with these Oracle pricing actually similar to what con said yeah the Oracle pricing stuff like that such that any auditor or any individual can just like uh use some piece of software and say okay I this is exactly where all the assets are the entire loan book is like the supply chain is on chain in some form such that you can see and we have it broken down such that the people who are posting this are all very independent actors independent jurisdictions and have been just lots and lots of diversity so that um this will just build the confidence of the stablecoin so I'll add on to the pricing but there's actually one other thing that is very important which is legal structure I don't think the industry has gotten around to it uh also primarily because the government you know made it extra hot so if even if you look the the bigger the organization is right now the more complex the legal structure look I mean if you take a look at makers rarely just one in uh one Corporation itself right and the problem with just a balance sheet a Consolidated balance sheet approach is also that yes I can list down my asset and liability in uh in a Consolidated balance sheet and everything looks good and Rosy but here's the thing right if your legal structure actually puts assets on one one side of the thing and then uh liabilities on another site right um basically creating what you known as maybe bankruptcy remote entities and all of that then basically uh in times of stress where one of the you know the liability is still there your asset value drop doesn't mean that you can use actually the asset to actually net of the liability as well so a lot of uh my challenge here today is also understanding like the legal structure around uh how to create this kind of thing and I actually urge people to understand go beyond like just what is on the balance sheet but figure out what does it mean when you hold this certain things in this you know on your balance sheet where do you hold it what kind of like claims do I have on it is it a senior claim is it a junior claim if it's a senior claim who is more senior if it is a junior claim how am I going to be affected by like other senior adapters on this and then like basically the legal structure and it's not simple right so this whole thing is very complex I would say that essentially there is I mean regulatory level technical regulatory steps to to be achieved in order to help I actually agree with the difficulty of auditing the different seniority or different type of debt that you could have behind real world assets and stuff like that but there is uh if we really want to stay really technical there is uh I think something to solve in two places one is the interface of whatever users would be using because if those stable coins back by real world assets are better it needs to be communicated somehow to the end user at some point so like how do we like you know like technically speaking like how do you represent the transparency how you make it clear to the user that this is better this is going to be like a piece of work for people like building wallets and stuff like that if they want this thing to grow then like how uh because most of the movement of stablecoin actually happens on centralized exchanges how do you make like the stable coins back uh like the stable coin used by centralized exchanges actually like we use real world essays that are on chain so if we're talking about productive stable coins that have interest bearing and stuff like that how do you like Leverage with how do you make the tech of centralized exchanges work with interest bearing stablecoin like they're very far from there like the takeoff of most exchanges is more optimized towards trading and not for the asset management itself they don't they generally have big dump of the balances so you know if my token grows next person a year he's talking gross why person a year and we put them in put them like both on binance today like there's just no way to to to to for our assets to grow they have taking programs instead but it's very far from what from the actual Tech of real world assets so I think it's a thing where D5 is way ahead of the centralized world and from a technical perspective well you know Central everyone needs to catch up before that happens again that was only for a technical perspective thank you thanks to everyone for your presentation uh fellow uh Trad fire Refugee um the reject uh um depends on your perspective what uh um what really distinguishes what all of you are doing from the Structured Products desk at BlackRock like what what is really different than something that needs a disclosure regime has a kind of basket portfolio formation process creates it into a product that creates exposures that are different than the underlyers themselves like it all everything you've said today I haven't seen something that just jumps out as oh that's so different that blackrock's just not going to come back in or Citadel or someone's not going to just come back in and structure something that that replaces it that this isn't just the future of Trad Phi and you happen to be here early so can can some of you comment on things that really stand out as different from uh there's a couple things first is transparency uh it's it's more on what what we try to build as we've said a little bit earlier it's about like trying to make what everything twatify has been doing we inner black box replicating in an open box in crypto so those things are not sitting in oh that's fund a and you put money in it and you know like uh this happens no it's this smart contract where all those things happen and you can have a proper composibility of things we're thinking of things as Primitives and Lego blocks where they can be composed to each other and this is something that like essentially like what whatever is built by BlackRock does not work like it's it might have the same exact mechanics but it's built in a totally open framework and this open framework is also modifiable and composable by the user again crypto uh one of the things that crypto is is programmable money and it's like we're essentially just leveraging programmable money and we can like issue new products like really quickly directly on chain without having to like go through an approval go through a period of having an issue of the product and all that you actually use Smart contract use primitive TV primitive C boom boom you have a new structured product so again what we say might sound like what you could see in a bank except it can be done faster and more transparently and this is why a lot of us like have worked in bank before we understand like how it was done there and we're like maybe we can make this transparent and all that but again like this specific panel is about bringing real world assets on chain so in the real world asset part there will be a lot of overlap with what the real world already does so I guess we first like match before we we go further the second thing that I think we're bringing is like the permissionless nature of the of the things like you you buy you buy something again the shared black the share of a fund at BlackRock transferring it then putting it in another protocol using it as collateral to borrow something and then putting it in in something else on D5 is not really possible with what we're doing given that we consider everything we're doing as Lego bricks we like see things as being as um again like permissionless as possible usable as possible within a concept of programmable money easy to move and as liquid as possible within the space of a peer-to-peer Network so it's um again the the back of it might sound very like again very similar to what has been done but that's because we just didn't talk about all the things that crypto already offers because the assumption is that in the room everybody understands that oh yeah okay that's that's what we do here right the compressibility the the nature of everything moves freely that that's the crypto part and this is this part is where it's interesting this part is the Innovation part that yeah now BlackRock just doesn't cut it here yeah yeah so uh all all uh World Reserve currencies uh also carry uh monetary premium attached to them as being a world Reserve currency so it's always been dye's goal to be a credibly neutral uh World Reserve currency that is the end goal you know whether we'll get there who knows it's a pretty lofty goal but this is the idea such that um people are free to use it but nobody has ownership of it unlike Fiat currencies are can be used and abused by uh the states that are in control of it to inflate to pay for various domestic policies at the loss of those who are holding it in as reserves in other countries so the US dollar is the world Reserve currency the main one right now so when they're inflating the currency who's paying everybody else in the world who's holding it as Reserve so this sort of Premium um this is the goal of die maker Dao is to have a world Reserve currency that everybody can share and it's a public good for the world and not owned by any uh individual state or otherwise so my take on that is actually access there's actually two parts to access right so one is actually physical access can I actually buy can I actually hold this thing now uh if you look at blackrock's product right shut off the ETF okay maybe we will talk about ETF how many people can actually get access to a stock market the newer Stock Exchange to actually buy the ETF actually if you look at the global population not many people have access to NYSE that's one right and even if let's say you have access to NYSC right and maybe you are accredited investors even right that does not mean that you have access to all blackrock's um you know products either right that's all there are some products that requires a one million dollars uh you know uh initial check and I'm not sure how many people can have a one two million dollar liquidity right now to just pay off like just one Bond or something like that right not many people can do that so I think one part of like you know the industry is actually breaking down the access to actually allow people to have like you know access into this get it down what I found out is that a lot of funds doesn't have a very good way to run the process of actually automating this kind of payments and crypto did a great job at you know I can do a mass payout to like tens of thousands of people and it costs almost next to nothing for the one dispersing the funds that's physical access right the other part is actually knowledge uh you know the ability to understand this thing and I think the approach that you know the industry take on this is actually rather interesting because rather than going after the mine people are going after the heart of the investors first or rather the individuals right um basically you get it you get first-hand knowledge of like who you're dealing with how you can serve them primarily and then later on figure out what kind of products that you want to structure what kind of things that you want to offer and not just that so you provide education you provide different sorts of resources to help people get get there a lot of a lot of this value is in uplifting the individuals rather than like hey I'm going to sell you something uh in that sense now this is something that in fact uh I'm you know as we talk to funds um a lot of them actually have real trouble actually reaching out to the mass and by the mess I'm talking about Mass affluence so people of accredited investor status so if you look at the statistics around um you know how individuals and how funds actually invest actually 50 of all um all the money in the uh investment products actually comes from Individual but then if you look at uh private uh private private products actually that's only 10 so there's actually a huge gap around understanding around access uh in that aspects as well so even reaching out to a category known as the mass affluence so not not people who who doesn't have money to pay for things right um you also have problem because these people number one they don't understand they don't understand the option strategies they don't understand what is private credit they don't understand a lot of things uh you know how to run a VC Finance how to you know get uh access to all of these things all of this requires not just like hey um I'm a VC fan I'm trying to you know uh sell you this thing right I actually need to do the due diligence to go through what this fund actually meant what is the strategy what is the risk behind that and I can't do that to every individual looking to put 1K check into this right but the industry is actually taking a flipped approach around how do I actually provide access to as many people as possible and flip it around optimize on the cost right and then actually use the power of the masses to actually get you know into this thing so I think that's a huge advantage that um you know a big industry player uh will not be able to have even if they tomorrow decide to flip the switch and say hey let's offer this on that platform yeah big Banks did it for the wealth crypto does it for the people that's you know as simple as that all right thank you very much a big fan of a big round of applause for a final panel of the day and we know there's a ton of questions uh so feel free to uh Mob the panelist afterwards right thank you very much thank you that was a great way to end it so this is the official end of stablecoin summit day one uh we hope to see all of you back tomorrow we've got an even better day planned for tomorrow but we've proven we can take out