TradFi Eating DeFi, or DeFi Eating TradFi? - TOKEN2049 Singapore 2025

Good afternoon. How are we all doing? It's good to see everyone here back for another edition of Token 249. Uh I'm joined by a fantastic lineup of people panelists tonight. Many of which many of which I call friends actually.

So I'm actually quite excited to just kick this conversation off. But you know before we start maybe just a quick 15-second intro on all of you guys. Maybe Kaledora you first and we'll just go around.

Awesome. Thanks everyone for being here. Uh I'm Calidora. I am co-founder and CEO of Osteium. We are building the first PEPS platform for trading TRDFI assets.

So we're the only place you can uh long or short gold, S&P, NASDAQ, Tesla, Palladium, you name it. Uh with lots of leverage in perform on chain with great execution.

Yeah, I'm Ten, uh co-founder and CEO of Pendle. We're a rates yield trading protocol. um tokenizing yield um and then enabling the speculation of yield and also for uh rate uh yield to be fixed.

Yep. Hello everyone. My name is Thomas. I'm the chief commercial officer at the GTO Foundation. Uh JO is a core Salana infrastructure provider uh dealing with block engines and um block building transaction landing.

Um, I spend most of my time on our liquid staking token, Geto Soul, which is the largest one on uh on Salana and uh particularly in terms of getting it in the hands of people who can't trade on chain. So, ETFs, structure products, QAS notes, etc.

I'm Nick Van, the CEO and one of the co-founders of Agora. We're a stable coin issuer and issuance platform.

Fantastic. So, I guess this is a just very binary topic, Tradfy eating DeFi or vice versa. So panelist yes or no answer. Do you agree or disagree? Is trad fighting in DeFi or the vice versa?

Maybe Nick first. Yes. No.

Uh I would say Trad is eating DeFi.

Okay. Thomas.

Uh I think it's going to be a meaningless distinction. I think they're going to kind of essentially merge and in some period of time, 10 years from now, 15 years from now, my my kids won't need to know what is uh handling the plumbing behind the pipes.

Ten, it's converging. It's uh the line's blurred. color.

I gota I'm not going to be very contrarian. I got to agree with them. The last two

them. Sorry, Nick.

Oh, okay. So, I didn't I didn't know that we could do a cop out. I thought it was supposed to be

Thanks for attending everyone. We're done. No. Um, I want to set the expectation here because I feel like the the topic is almost deliberately binary, but I think, you know, it's very much a convergence, blurring of lines. I think what we're going to cover today is distinctions on what makes, you know, I think Trafy what it is, why it's been around for the, you know, for the time it has, and also what DeFi is bringing to the table and really trying to distill, uh, what makes it unique.

So maybe in just kicking off, I know we talked about this backstage for a little bit. Um the role of acquisitions M&A in a lot of you know trad companies uh acquiring crypto tokens on the balance sheet all the way to you know for those that were in Korea recently the announcement that Naver big Korean conglomerate acquires up bit one of the largest exchanges in the world they do about you know 80% of spot volume for those that might not know. So, as we're talking about it, it's quite interesting because when you hear neighbor is acquiring up bit, this big traditional organization is acquiring this crypto company, you might think, okay, it's like this big guy eating the little guy, but that's not quite true. Maybe Thomas, uh, if you want to give some thoughts on that.

Yeah. So, um, I think this is still a developing story. I have heard that this has been unconfirmed or like it's now in rumor stage or something but essentially the the news that kind of rocked KBW last week was this idea that uh neighbor was buying Dunamu which is the holding company of Upet and so from you know when it was first announced the idea was very simply like Naver is viewed in Korea as like the Google of Korea it's like the massive conglomerate uh it offers lots and lots of services and so they're buying this crypto platform that allows them to gain exposure to uh you know a lot of the retail uh appetite for crypto in Korea. And then it turned out that Dunamu's uh chairman was actually going to become the the the largest shareholder in the combined company and might be taking over as chairman afterwards. So it became more like, you know, for those of you who are old enough to remember this, like a Time Warner AOL type situation where it looked like Time Warner was buying AOL when actually it it like functionally became the opposite where the smaller kind of uh the smaller growing uh company actually became the dominant force behind the the growth of the conglomerate.

Um so we'll remain to see it be seen but it's exactly this kind of framing like is it is it a traditional company that is buying a crypto company or is it actually the crypto company becoming the way that traditional financial companies can grow.

Absolutely. And I think this is sort of the segue and why I deliberately brought this up was to set the scene for you know stable coins. I think stable coins is something that everyone is fairly familiar with. we interact with on a regular basis. And this is almost the the the first and one of the most novel payment concepts on moving stuff that is traditionally fiat to what is now onchain.

But then, you know, as we take the step further, we've heard so much news about the stable coin renaissance. Every company wants to issue a stable coin or be part of the yield that the stable coin is capturing. Everybody, you know, wants to issue their own one or, you know, be somehow eating parts of that lunch. uh as we think about these you know even billion dollar asset managers vying for the peace of this action I'm curious to get everyone's thoughts on how this has played out I think we've seen many instances of companies like PayPal trying to launch their own token um you know a lot of companies bidding for proposals such as the recent USDH one um where do stable coins exist in this whole paradigm and maybe Nick for you to kick off given that your business is the probably the closest line to to this topic.

Yeah, I think stable coins are the center of the paradigm, right? Because they are the main way that people move value on chain, right? And so whether it's DeFi or Trady eating DeFi, you're going to have stable coins at the center of all of this, right? And I think a lot you know at least what the USDH proposal did as well and we've sort of been the original champions of this when we started the business two years ago is we were looking at the market you tether circle and neither of them were really uh partnering with the rest uh of the universe right uh obviously tether operates independently and circle has a close relationship with Coinbase but everyone else that had money on their platforms whether it's a perex right or a payments business or someone just using Fireblocks were missing out sort of on on the float income. And so we said, hey, like that that shouldn't happen.

The USDH proposal, I think, was brought to bear because a lot of people started to point out that, okay, there's 5 billion of USDC on hyperlquid. Like that's hundreds of millions of dollars a year that they're giving up supposedly um to uh to Circle. And so they should be capturing that value. And so I think the idea that all these platforms that are using stable coins, right, or you know, wanting to white label their own are going to want to return this value back to themselves or their users, right? And and they should because it's a very meaningful amount of money, right?

So you just using Hyperlid as an example, right? Whether it's you disperse that to users, use it to, you know, buy and hold or buy and burn the token, like that can have a very material impact on your business. And so I think a lot of companies that that started years ago are uh struggling to sort of change their flows um where they can own a lot of the economics or or the branding. But new businesses, you know, whether they're crypto startups or innovators that we call them, or enterprises that are coming in, you know, and by traditional enterprises, I mean like an Amazon or an Uber that are coming into this world for the first time are really thinking about how can we capture value and whether that's, you know, using something like AUSD where we just pay them on the float income or white labeling their own stable, you know, they can achieve the same outcome. And so I think it's going to be center to everything that happens.

So why has it all come to light in 2025? It felt like you know circle's been operating for many years, tethers for many years before that as well. But somehow we all woke up in 2025 and said okay give me some of that yield. What do you think has caused this catalyst take place? Like why are we why is this being brought about now and not two years ago say

right? So for you know years interest rates were at zero which was great for crypto tokens but not great for stable coin issuers and then all of a sudden you know 2 3 years ago tether became the most profitable business on earth right and so that brought a lot of attention to it. I would also say now the market is a little bit more mature right uh than it was years ago. instead of you know having two three issuers there's now like you know a dozen I would say and there's credible competitors right so like you know we use state street under the hood and so if you're an enterprise like Jane Street or Citadel that actually cares about your counterparty risk like you can get comfortable with that and so I think also that you know there's enough competitors now um to offer these solutions in a really efficient way and have brought down costs of issuing new stable coins to effectively zero right through technology. And so I think that's sort of why now.

So there's the centralized state street under the hood, treasuries in the background, but then there's all this, you know, new defi native stable coin, not even stable coin, that's I lie that's actually more of an investment product uh that we know is Athena and I think maybe Tien maybe you want to comment on what that looks like. Like I know Pendle works very closely with Athena and you know even in last year the net Athena flows were actually more than circle was 2.1 billion versus 1.7 both of which obviously huge numbers and very good for the ecosystem but the fact that something that is you know supposedly DeFi native coming to light is almost never seen before. I mean this is almost like the first where this DeFi native concept has really you know outpaced its centralized competitor.

Any thoughts on that? ETNA's growth is uh has been quite spectacular and then we are a great beneficiary of ETNA's growth. I think a big part of the contribution to to the growth is is really just the yield offers to um the depositors because I mean conventionally if let's say like risk-free rate at like uh 4% or a bit less than that um with Athena and on top of that there are shards which will realize into tokens that effective yield becomes 10%. And then if the users are bullish on the prospect of ENA tokens then they can bid higher and then I believe in August if I recall at one point in time USD SUSD the implied yield was trading at around like 15%. And this is all on stable coin.

And so with with that sort of attractive yield, it's it's really hard to uh not take it seriously. And then it's also fairly liquid. So with with that liquidity and then that uh that opportunity um it really resulted in huge influx of um capital uh allocated in into Athena assets. taking a step beyond just Athena going into just your product as well which was almost like obviously a big beneficiary of how does Pendle work with a product like Athena to sort of take it that next level

how does it work

yeah so because Athena yield fluctuates and it it it can be like uh 3% now but 15% a week later depending on the market sentiment so Pendle offers an avenue for users to fix the yield at a desired level. So let's say the current um Etheas uh sorry USD uh sorry this the current SUSD APY trades around 10% and you think that it's it's going to go down from from from uh from now on. Um, yeah, Pendle offers a venue to to lock in that rate at 10%. And if you believe that the yield can go up to 15% and it's trading at 10% today, then you can buy that yield exposure and when it goes up, you can benefit from the spread.

That's fascinating. And I feel like it's a very like crypto. You've essentially chopped up the yields tokenized in that regard. I feel like that's very adjacent to, you know, what we see in like interest rate swaps in this sort of traditional space. Um, and I think that's I want to highlight.

It's like you just can't ignore the yields at such a, you know, higher number. 15 versus five is is fairly significant. Three times the difference. Um, and I think that's such a a lure to a lot of people holding this changing lane slightly to, you know, the purpose side. I think we're both in this business as well.

And, uh, for many years, USDC has been the default. You know, we're not getting anything. The users getting anything, but all of a sudden that's changing. There's this prospect of having, you know, you generating collateral to offset funding rates, offset positions. like how how is this development affected off and how do you look to incorporate stable coins that do offer that kickback you know whether it be all or some of it

it's not something we have right now uh we are all USDC based at the moment but it's something that we're exploring and definitely that there's demand for so yeah

would you chase circle for some of that lunch

uh I can't say anything but I think there's a there's definitely a lot of demand for as you said yield to offset maybe funding rate costs and other costs So what's the platform like Austrium for using Agora for instance? You know, you have Nick on the very end happy to share the yield with you.

We could have Austrium dollar.

Exactly. Yeah. I mean, I think uh I I would say it's just part of a general trend of like verticalizing infrastructure. Um and or maybe there's uh maybe verticalizing is not the right word, but uh different application level products using uh the same suite of different pieces of infrastructure to allow them to verticalize. So when I say verticalize, I don't mean necessarily that each application builds all of their own infrastructure that's downstream, but that they leverage a shared suite of products that allowed them to ultimately capture more of the revenue and they can make the decision to distribute that more among their users.

I think what's very unique about, you know, Agora and Nix product is that they, you know, work with these protocols to distribute some proportion of the yield directly to the protocols and the protocols can decide what they want to do with that. they can retain that if there's they can get away with it and there's probably some, you know, optimal optimal amount for them to retain to maximize their revenue or you can distribute all of that. So, but in any case, it's giving the protocols new means of monetizing and doing that through uh a yeah verticalizing their infra. You're not just using something that's completely universal. You're customizing it for your use case, but you're not necessarily building it in house.

And I think that's uh that's that's sort of the direction I see things going. And I I see that happening at many levels of the stack from you know the stable coin to oracles to even keeper systems if we're talking about a per deck which is maybe a little going too far into tacticals but you know systems what I mean by keepers are uh systems that go and trigger automated orders like limit orders or liquidations and so forth. So um yeah a lot of lot of interesting developments from that perspective.

No for sure. I feel like the infrastructure is like thing I want to touch on. I think you know jetto jetto soul is the the the most widely held liquid staking asset on on Salana today and I think know there's been plans and I think notices of you know ETF filings and I think for the very first time introducing staked soul into an ETF which has never been seen before. It's almost like a yielding asset within that. Curious Thomas if you're able to sort of distill to the audience what that looks like what that means for the industry.

Yeah sure. So um we're very excited about it. We expect the stake soul ETFs to launch in the next week or two. So it's very very imminent. A lot the timeline depends actually on the government shutdown.

But it should be worth knowing. So there is a stake Solana ETF in the US today. The ticker is SSK the issuers Rex shares and it's been wildly successful. It's there's they've attracted over 300 million uh dollars aum. Um, but we think that that's a very different structure than the the ones that people are used to like the IBITs and the EAS of the world.

And those are the the products that we expect to launch soon. And I think the main thing is for people to understand is that the ETF issuers have this core dilemma that they're trying to solve, which is how do you maximize the achievable yield for investors while still retaining liquidity on redemptions. And so if you took 100% of your fund and you pu post it with a staking provider that would provide the maximum achievable yield like the the fund is 100% staked and the investors get the most uh most return. But what do you do in the event of a redemption and the issue on Salana is if you post it with a staking provider you need to unbond your your stake and then you know you receive it at the end of every epoch which is roughly about two days. And so that's a limitation on the amount that you're willing to stake.

Like there's a there's an equilibrium that each uh issuer is trying to balance. And the approach that we're taking is that liquid staking uh tokens are actually a very very neat solution to this problem because you can stake 100% of your fund. It's by definition fully staked. But in the event of a redemption, there are many more options to access either inindu uh redemptions or cash using liquid staking. And using goto soul actually provides a third benefit which is to the ecosystem because the way that goto disseminates stake it's done via this program called stake pool.

And so whenever stake comes in it's automatically delegated via smart contract to a universe of 200 and soon to be 400 validators. And so actually as stake comes in, it actually helps decentralize uh the network and provides more security. So that's the benefit for liquid staking tokens and ETFs and we're very excited to see those uh incorporated into many more ETF products.

From your experience, you know, even at Jane, prior to this, was there anything remotely comparable in that traditional space that resembled an LST?

Oh yeah, there's loads. Um, so it depends on your frame of reference, but essentially the idea is if you so that I've been trying to describe stake to people or staking to people who are kind of very new to to crypto is if you think about a bank account, right? You deposit money in a bank and then the bank generates some economic activity. They loan it out. they use it for for other services and then users receive a portion of the revenue that that economic activity generates.

Like that's how bank accounts work and that is what happens for staking. That is just staking. Now the issue is banks have this fundamental problem where they're essentially borrowing short. They're borrowing short-term deposits but they're lending long. like the banks are taking in deposits that can be called at any time and then posting pull, you know, posting them into like 30-year mortgages.

And so then they're this runs this duration risk. And so what the banks do is they offer like more yield if you're willing to time lock those deposits. And you know the structure of these are like certificates deposits or CDs. And so if you're willing to lock up your money for 12 months, then they're willing to give you a little bit more yield. But then what happens like what happens if you actually need access to the capital like you have a your roof needs to be repaired or you need to do some medical procedure you can't actually access your money in the near while during the time lock because you otherwise have to pay a penalty when actually if you could just trade that entitlement to somebody else not only do you benefit because you get access to capital right away but actually the bank benefits because they continue to retain this time lock on the capital which is something that they need and that they want.

And so you see this on lots of other kind of products today like dirty bond pricing is one way to think about it. Um if you think about like how people trade gold today like they don't trade physical bars. They actually trade what's called um unallocated receipts. It's just a a demonstration of ownership of an underlying asset. And so liquid staking token is like and actually uh commissioner pur said it in uh so the SEC reli sorry I'm going to stop talking in a second the released guidelines on liquid staking in August 4th and commissioner pur added a comment onto it and she basically just described liquid staking as a new solution to old problems

and I think you know you mentioned gold so I've looked at aim recently and your gold market has popped off as well so there's clearly a demand And for synthetic gold synthetic exposure to it, it's like you know today I think 10 billion got added like how does the per maybe as a starting point you know introduce something new that traditional finance historically hasn't had and then how does it also then deal and reconcile with traditional market that has a closing and doesn't operate on weekends.

Yeah, this is a great question. Um, so maybe just for context, we have the best performing gold per in the market right now. Um, we have over $125 million of open interest on gold, uh, which is more than Binance and Bybit combined on Pax Gold. So, uh, it's going well. Uh, and there's very clearly demand for trading gold and for getting exposure to the asset on chain.

Um, some of you might, you know, first ask, how is that different from Pax Gold or from one of these tokenized gold products? And we have a fundamentally different approach. We take a synthetic perplike approach rather than going through tokenization. And uh I'll maybe insert a bit of verbiage here. It's we call it perpication or per first approach rather than tokenization.

Uh a little bit of tongue and cheek. Um and the basic principle is that there is we started from sort of a very strong first principles conviction around what there was demand for on chain. And we had the belief and I think that's been validated by the market that there are a lot of people who have a large proportion of their wealth or their capital on chain who want access to traditional markets and largely because they want to to some degree speculate or they want to take directional positions that are somewhat time bounded in nature. They don't want to hold them indefinitely. They want to you know bet over the course of maybe till the next Fed meeting or you know based on some macro catalyst like tariffs or you know some inflation number whatever it is uh government shutdown who knows.

So uh and and our conviction was that doing that through a perl like synthetic perl like instrument was both far more capital efficient and better serve the needs and the demands of traders than through a through tokenization. And I'll just give an example. Um I I generally refer to tokenization writ large as effectively taking the you know circle tether agora model of uh you know taking a dollar set of treasury you know short duration uh treasuries and holding them and then having a minting redemption process where you generate you know uh let's say ERC20 token in the in the Ethereum instance that represents that underlying asset that you can then redeem for the underlying um and then applying that to other assets. So Pax Gold for instance would be an example of that. They you know hold gold, you can redeem it and so forth.

Um there's definitely demand for this but uh and certainly for assets that people want to sit on over a long duration that they might want to use as a store of value. But our general view was that the uh demand for something that was more proper tokenized product was skewed towards assets that would be used as a store of value or a means of exchange like a stable coin rather than an asset where the demand was primarily coming from people who wanted to trade it over some shorter time duration. And on top of that, if you are going to tokenize something, you need to have, you know, some minting redemption facility. You need to actually sit on the underlying thing. um and you you know you have to have it onetoone backed it's uh ownorous let's say to extend that to some long tale of assets um and we often see I'm sure you guys see this with per like the you know this better than anybody the demand for shorter duration trades is highly variable people might be really really into trading you know palladium around some crazy piece of news but totally don't care about it you know 3 weeks later and so trying to spin up some means of tokenizing that asset every single time there's interest is uh not particularly feasible nor capital efficient nor just operationally efficient and so doing that through a perl like instrument is just way simpler um you know all you really need for a per or I keep calling it perp like because there's there's a few sort of little distinctions that are not worth going into but you need basically a price feed you need some sort of pegging mechanism you need some sort of funding rate or some rolling fee system and then you basically need a market to that you know uh buy you know match buyers and sellers and that is far more capital efficient than doing it through you know a full minting redemption and tokenization process.

So, so Ten, uh, I want to just jump in for a second cuz I know Pendle released new product Boros and it's about, you know, the interest rate

related swaps and there's like it's a little different from Pendle. Um, you know, when you think when you hear versus tokenization like how do you think about that for your product from my product perspective? One is more like a spot trading. The other one is with margin um and then literally just trading contracts. So one is the spot is I mean it gets the work done but it's not very capital efficient.

So for example if we're trading yield of ETH 3 to 4% right so the rates fluctuate but it fluctuates in a very very tiny band. So in order to make meaningful amount of money from that small band of fluctuation, you need a big amount of underlying. Comparatively with Boros, it's a lot more capital efficient. Last week with just a million dollar in position value, we were able to facilitate $200 million of notional volume. So the capital efficiency is very different.

Yeah, I I that basically that's kind of how I think it's uh you know when I when I get asked the distinction both products are still rates trading but just one is more for like spot the other one is um like futures per uh conceptually totally and then I guess for businesses in the stable coin space there's like treasuries and all that you know is there is there a world where one can squeeze lease more yield out of you know treasuries. Uh is that something you guys thought about? Um especially obviously as rates come down a little bit like for a business how does it affect you guys because it would seem to me that there's quite a lot of sensitivity just based on how rates move. So how does then Aora also evolve with that?

Yeah. So I think on the business question you build different products right? So those can be transaction based um which we're working on now. We actually already have a transaction based product. Um, but we'll continue to sort of expand the suite.

We we view the world as like you have the settlement rails which are like the old rails are like wire, swift, sepa, a new ones are Salana, Ethereum and stablecoin issuers are the glue, right? And then you have you know wallets on and offramps and then the application interface and a lot of actually what we're trying to do is get traditional businesses on chain right because the instance settlement and you know capital efficient efficiency benefits you get from using stables can translate to Amazon Uber you know JP Morgan and so actually a lot of what we're doing beyond just stable coin issuance is getting all this wrapped up in a bow right because you know what Genius did is I would say get a lot of businesses is interested in stable coins in earnest not just in the United States but globally and how it can impact um you know the treasury management you know preunding all these sorts of things um and you know they need a nice package out of the box right now they're like oh you know how do we figure out managing keys and all this and what we want to do is become that one-stop shop um for all these businesses but getting back to your uh you know question about do you find different collateral mechanisms I think yeah or you just have different assets right? Like Athena is very different um from AUSD or Tether, right? And it serves a very different purpose. Um I think the market is small today, so people just have an the inclination to glom all of like stable coins together even though they're fundamentally different products, right?

The way that I explain it to people is like if you want to buy a treasury bond, you buy a treasury bond. If you want to buy a junk bond, you buy a junk bond, right? If you want to buy a CLLO, you buy a CLLO, right? And so I think you'll have an explosion of what I'm calling like yield coins because I think yield bearing stable coins is a ter like a terrible term like a nothing term. Yeah.

Because like most of these things like actually carry quite a bit of risk right and that's like

part of the cell is right like you're taking more risk so that you can get higher yield. Um and I think there'll be an explosion of those assets. You know, today we're actually working with um a few different vault providers to launch uh yielding assets where AUSD is the deposit token. So, we're going to have you know earn a USD launch that'll be an Athena like token uh in some of these new ecosystems soon. Um and I think you know you'll can see you know from our perspective we want to work with a lot of people so we don't want to own this all in house right is like we're going to own this in house then we'll do USDTB you know what we're saying is like hey we want to work with all of these vault you know providers or strategists and say hey just use us as the deposit token we'll work with you to help grow it either through liquidity or incentivization mechanisms but we want to like you know open this up to the panacea of possibilities like you have with USDC today right where you have like Maple launching syrup, USDC and other types of products and and we want to be an issuer that um you know works with with everyone to develop interesting strategies around

AUSD.

Fantastic. Um in the time we have left I want to just wrap up with one overarching sort of hypothesis which is this whole concept of capital markets arbitrage. You know I think there's this claim at least in the last couple years that DeFi has become relatively safe. The yields are seemingly higher. People are taking assets that they may have offchain, put them on chain and earn this 15%.

Which is fantastic. I mean to earn even 9% unlevered is already unheard of. Uh let alone 15% on something like ENA just by holding the token with no leverage. So how does this all converge? And this is sort of open to everyone here.

You know, I know three of the four panelists talked about, you know, it's going to be in the middle somewhere. So and usually arbitrage is being, you know, this mechanism for efficiency appears to be the way to get there. So what does that look like in the next one, two years versus the next 5 years?

Oh, fine. I'll start. Um so I think that uh when you work in crypto you're very used to this idea of uh of experimentation and iteration like every generation of product is uh slightly better than the ones that have come before because you know the flaws in the earlier designs are ones that you target in the next iteration. And so every generation of stablecoin, every generation of structure product, every generation of perplex is a little bit better than the ones we have before. And the current winners are the ones that have been able to solve the problems that existed in the past.

And I think that like we shouldn't begrudge the fact that traditional finance is doing the exact same thing using the innovations of DeFi, using the innovations of crypto because I do think that there are lots of ways in which crypto has fundamentally altered the market structure of traditional f finance, but it's doing it in like the most boring ways. And so you don't necessarily see it, but they're huge. like the ability to move collateral intraday is a massive massive benefit for banks which is going to feed back into the ability for users to do the things that they want to do. The you know US stocks are now settled on a T1 cycle which is a direct benefit of a lot of the innovation of crypto. the fact that you can trade stocks on, you know, stock exchanges on 245 basis.

Like, these are all things that have come out of the innovations that have come out of crypto. And so, fundamentally, I think the reason why we're all here is because whatever economic activity that you want to engage in, that you're trying to uh to that you're trying to conduct, like fundamentally blockchain makes things cheaper. They make them easier, they make them faster, they make them more efficient. And that's been great. And ultimately the easiest way that we're going to access it is by having some sort of unified UI where all of the stuff behind the scenes whether it's on traditional rails or on these new crypto rails are kind of abstracted away.

And so I you know for me this is really exciting the idea that tradi and defi can actually converge because so much of the experimentation that's happening in defi is feeding into the services that that we're experiencing today. M I very much agree with this statement because I think like for example private credit fund is I mean it it's it's it's been around as it is right now it generates uh the base yield is fairly interesting but now we're starting to see a trend of private credit funds like getting a tokenized representation and once they're in the DeFi zone and I think that's where things can get really interesting. So, but because of the composibility of tokens and contracts in general, there are many ways to increase the effective APY with very manageable and modest risk. And I think the base yield at 10% with some strategies, it can be increased to 20%. relatively easily, but not with an outsized exposure to to like additional risk.

So, I think that's the kind of experiments that we we're generally excited about and and I think this is potentially I think a big value add to uh that can come out of this convergence.

No, I I like that a lot and I definitely didn't pay you to say this, but Apollo's private credit fund launched on Drift. We were the first venue D5 venue to take a private credit token for the first time 9% unlevered but then through what you described TN we can actually lever that up get 16% 70% on that and you know again a relatively well riskmanaged position where a vault manager comes in manages this private credit token interest loops it there's essentially a supply side which is you know dollars that come in you resubscribe and I think it's quite a compelling case because all of a sudden you know 17% on private credit seems quite interesting and I think obviously you're assessing default rates and all that but that's a very attractive proposition. Uh that is also very uncorrelated with existing you know crypto beta crypto market. So I I think there's definitely a lot of elegance and just like fluidity and like tokenization and I think as that converges it's you know we're definitely going to see more adoption of that. Um but that said one thing we've also noticed is you know there are still middlemen that play in this realm that that are providing the rappers that you know I think introduce some level of friction there's you know the purps of some of this friction uh to to some extent you know it has been frustrating on the operational side you know you still have to work with the traditional you know redemption timelines which for a private credit fund is 90 days and you have to submit that notice 90 days in advance as well so it's 3 plus three.

It's a long time and the token has to still represent that. And I think what hasn't happened yet is something that pays respect, pays homage to the liquidity of the token because right now the token is just a mirror of this off-chain asset and that's that's not that's imperfect and I think eventually that will hopefully change. Um Nick Calidor, any comments on your side?

Yeah, I think something that Thomas mentioned right is like intraday collateral mobility. You can also have like real-time yield acrruel, right? Right? So like this is like something that uh businesses are going to love. But what we do is we can say hey even you know whether it's a payments business or a corporate we say if there's a USD in your wallet for five seconds we can attribute that to you or five hours or two hours right or for 4 hours at night and like that is actually like a meaningful difference especially with rates where they are cuz like you know you're basically making let's say a basis point a day right from the risk-free rate and you know put that on hundreds of millions of dollars like and no longer do you have to preund like you have a lot of these mega cap multinationals that are all of a sudden going to be having hundreds of millions of dollars more in free cash flow, right?

That was going to middlemen, right? Or primarily like the banks that they're now actually going to see if you know we have this sort of panacea of running on stable coins happening, right? Or something like Agora. And so, you know, some of the really cool DeFi innovations that are coming, but it's al also some of like maybe the unsexy like unfun things that are going to actually make a huge difference in in the traditional world. No,

maybe to just Oh, go ahead.

I was going to say I really like that cuz now now when I see balance, it's just like nice to see number keeps going up.

Tough riot.

That's actually a feature that we're building, you know. This quarter real number goes off.

Yeah,

I was going to add in maybe one thing. Uh maybe just get a little squishy, but I think uh the reason I wanted to get into DeFi in the first place is that I think uh there's a lot of analogies to almost like a federalist system. You have experimentation. Um, and I think that's I mean that's why a lot of people I think are in DeFi in the first place is you have an idea about a market structure that you think could be better and you can actually go and build it. Um, and I I guess I worry a little bit as almost TRDFI perhaps eats DeFi in in Nick's words that some of that experimentation might become the stakes become higher.

Experimentation is easier when the stakes are lower. The stakes are getting higher. Things are getting more institutional. Um, the the barrier to entry becomes higher. or the ability to experiment becomes perhaps I think is obviously still remains very high and I I hope and I think this is what gives me a lot of hope about actually some of the regulation changes is that there's been a lot of discussion around sandboxes and innovation exemptions and so forth which I think are absolutely critical perhaps the single most important thing in order to preserve what I what I believe DeFi is bringing and will continue to bring which is new models uh people might think it's wacky in the beginning but ultimately winds up changing how finance and markets work in the first place.

So, uh, yeah, I think that's what I everybody here is, I think, doing that in some very important sense. So, um, yeah, they're converging and that's really the endgame in the first place and hopefully the, uh, innovation forward aspect and ability to sort of operate in the sandbox persists.

So, the last 30 seconds I have, I always like to leave the audience with the takeaway. So for all the panelists like what if anything is the single biggest catalyst you think that is going to affect that convergence? I think genius and market and then a market structure bill happening

because no other bit like no one in the in sort of the traditional world was earnestly doing things because this was a gray area and in the prior administration they were basically like you know financial terrorists right um and so that like far and like way has like been the biggest the biggest catalyst I think

Thomas

uh I think we have yet to see uh how fundamentally user behavior changes um given in the new suite of products that DeFi offers and that's um we can't control it. We can only react to it but I think that um we're well on our way to to actually improving the experience for uh users. Ten

like Nick, I think genius.

I feel very strongly that I think it's better wallets, better you know, smart accounts, basically UI because if you want to improve your rate of learning and you know catalyze innovation, the single most important thing is making contact with reality and you make more contact with reality, more contact with users if more people are actually able to onboard and you get a wider variety of people with perhaps more differing opinions on what a good product looks like. So I think UX

yeah better user off was what it was is like email pass keys all that I think for users. Yeah.

Yeah. Fantastic. Well that's all we have time for today guys. A big round of applause for our panelists today. Thank you very much.