The Future of Blockchain Financing Reimagining Capital Formation for the Real Economy

Hello everyone. Welcome, welcome panelists. All right, future of blockchain financing. We'll start things off with quick intros of all the panelists. Uh so I can start.

My name is Ben Lakeoff. I run Bankless Ventures. It's an early stage venture capital fund operating within the crypto space. Our edge is we run a large media brand which gives us a lot of access in the space.

Um I'm Omar Khan. I'm chief technology officer for Cryus Labs Inc. building some exciting technology around RWA's account abstraction wallets, multi-chain wallets, um and other blockchain platforms.

Hello, my name is Yang Kim. Uh I'm the CEO of ARA Investment Partners. Uh previous to this job, I was actually a blockchain blockchain innovation at Hana, the premier partner of this uh ADFW.

Good afternoon. My name is Neil Woods. I'm co-founder of Liberty City Ventures. We are a $2 billion venture capital firm focused on investing in the company, the equity of companies, building the infrastructure for tokenized world, stocks, bonds, currencies. Uh before that uh I was much like you guys in the financial services industry uh managing money for Goldman Sachs for today's 72 and I also ran my own hedge fund uh during the financial crisis.

Awesome. So four of us 15 minutes we're going to power through them. Yeah. Um

actually they gave us 12 minutes.

I know right. All right. RWAS they've been around for like nearly a decade. Let's start off with the why now. Why why are we up here getting excited about it?

Anyone can take.

Yeah, I'll jump in. Um, we started building companies uh in 2012. Uh, Paxos, a company that many of you guys may know. We started in 2012 based out of Singapore working together with the MAS while we were also creating the regulation uh between 12 and 15. uh became the first regulated blockchain company and that framework has been basically copied and pasted around the world to some degree.

Um what's what's changed now is despite the fact that there are over 5 to 10 to 15 PC's in all banks uh during the last 8 n 10 years and we had a very favorable regulatory environment. we kind of went backwards in the United States uh as the Biden administration came in and with Gary Gendler um everything changed. Trump came in and you guys have all read what's been happening. Things have massively changed from Paul Atkins's view at the SEC, Scott Besson's view, uh the cryptos are as well. And so now everything's aligned.

We've gone 180° and now all the banks that were already working on things that were bubbling underneath now things are the energy is being released. This is going to this is going to happen fast thanks to the fact that regulation is now aligned uh with the power of what blockchain will promise. And um I also think from the technology perspective a lot has changed. You know it has kind of evolved from a solidity based contracts and couple of spreadsheets to battle tested rollups. Uh L1 chains focus on tokenization.

I think there are now MPC wallets. Um there are super fast low um latency instant settlement chains and infrastructure um available. You know we have seen chain link has built an entire business around nav oracles and live price feeds of assets coming into play. I think technologically we are at a point where it's like ready to explode right now.

You want

Yeah. Uh I'm going to have to say the regulatory clarity. So coming from my personal experience of having worked at a large financial institution again uh so technology was never the problem I would say but there was lack of regulatory clarity plus basically the large financial institutions were discouraged from embracing crypto because of the volatile nature of it but then like Emil's point uh the US stepped up and signed this genius act and ever since all the rest of the world had to uh speed up to up to speed and yeah before it was you know don't do too much but then now it's like don't uh fall behind so things have changed and now it's going to be different going forward. Yeah

definitely um we talk about step changes versus tradfi a lot um let's talk about a real example of what you're seeing with uh real world asset financing. Um so I think um if you look at um tokenized private credit credit market with automated um cash flows I think that's a huge step function change in the sense that you know you look at this there are five to seven intermediaries there are multiple parties involved in that transaction but now all you have is a smart contract function that would basically um take in tokens as input, process them to all of the parties involved um and basically be able to distribute this into all stakeholders without any intermediaries involved. So I think that that collapse of intermediary layers uh with deterministic code and continuous updates and real-time settlements, it's definitely a huge step function improvement in like what we have seen in the traditional finance today. So for me and then you know recently we have seen tokenized stocks. I think in emerging markets this is a huge step function change for the market who never had access to those stocks before.

So as we kind of see these markets maturing we see a lot of that activity happening through those tokenized instruments. I'll jump in here. At the start of any ecosystem, what really matters is the base producer level. In the ocean, you have plankton which captures all the energy from the sun which leads to zuoplankton, small organisms, medium-sized fish, whales. In the financial system, that analogy is basically central bank issued notes, currencies much like the last panel talked about stable coin as well as governmentissued bonds such as treasuries.

That's all been happening and that's all with the help of people like OMR been actually being able to made to be made program uh program programmatical pro programmable um and so that unleashes all of the energy that the sun has captured if you will going back to the C analogy. So from there many different innovations will take place. I'll give you another example. Much like Omar mentioned, um we've also created another company called Lend OS. Lend OS is going to be the private credit market solution.

It's already being used actively for Blackstone to move all of their private credit business onto a blockchain which is actually built on the Canton network. A very important network for you guys to also focus on. Um but private credit $3 trillion market is now all moving onchain for Blackstone. That takes settlement times internally fundto fund from 60 days as a first step to 22 days obviously going to same day soon and then obviously with all of their different counterparties. It'll basically be an amazing uh lubrication for the private credit space.

Right next to it very similar. It's his cousin um bank um banknotes as well. another three trillion dollar market. So these are all happening coincident but because of the fact that these are all being built years ago and we just needed that catalyst of regulation aligned.

So talked a little bit about programmability uh with what what sort of financing structures are now available with programmability that weren't available to us with trad.

Yeah. No, this one is my favorite actually. I think this this enables those new innovative financial controls and structures which were like completely non-existent in a trady environment. So you know I earlier talked about the the waterflow the the waterfall model for the for the cash flow for tokenized private credit. So you know the same thing you know you have um seven intermediaries monthly statements coming in two different custodians involved all of this is now collapsed into a deterministic code you know it automatically gets distributed in all stakeholders the other one that's my favorite is the um basically a composable collateral across multiple protocols so what that means is that the same tokenized bill could be used in a money market fund to earn and yield for 4 and a.

5%. Um you can use that same um tokenized T bill um for backing a stable token as well or a stable coin somewhere and then you could put this to multiple use across multiple protocols um while maintaining that proof of custody um and making sure that there's no duplication. Uh the other one of uh one of my favorites is basically uh self-regulating self-adjusting algorithmic index funds. So you know if before in a in in a trif what you would do is like you would do these adjustments quarterly monthly or whatever that period is for auditors to get together and rebase the weightage in those funds. Now you can have a nav oracle in place and it's super composable.

you know, you can adjust that composibility, the weightages in that index fund down to a second. Um, and this is while keeping everything open and transparent on chain. Anybody can come in and track those assets with like a proof of reserves, proof of custody, custom miracle proofs as well. So I think you know the way um uh DeFi and the way tokenization opens up these new programmable financial structures it's completely new very exciting and innovative.

Yeah.

Uh for me it's going to be have to be the fractional ownership and fractional governance. Uh because tokens obviously can be embedded with different voting rights, different information rights, seniority, trenches. Uh with the embedded uh rights like that, uh again to your point, uh things that were not impossible, uh things that were capital formation in in different different ways is completely possible. Yeah.

Yeah. Look, OMR and Young hit it, but basically lending, loans, bonds are all programmable and adaptive as opposed to just sticking to negotiated terms. It'll be dynamic. So, as cash flows change, as market conditions change, as risk parameters change, things are automatically adjusted and that's going to offer up a whole new suite of how we do business.

Yeah, that being dynamic, that expressivity I think is super super important. All right, last one perhaps. um what institutional segment brings on the first trillion dollars of assets into RWAS and why? Um I will tell you what might not bring that liquidity but you know it's not the banks for sure but I think it's like the large asset managers you know you see a lot of stuff happening with bidd um Benji Franklin and Templeton I think those large asset managers uh we see a lot of stuff happening with DATs um the digital asset treasuries and then I think like a lot of hedge funds corporate treasuries are probably the first ones are going to bring a lot of that liquidity on chain and tokenize all of those assets. So large asset managers, um, hedge funds and corporate treasuries.

Uh, I have a similar view. It's going to be the asset managers. But uh for me alternative asset managers, alternative asset managers are already competing in fees, liquidities uh and if we can combine the market with a token uh order books and everything then uh asset managers, alternative asset managers will definitely uh benefit the finance world in many different ways.

Based on the world as we know it today, I totally understand and see their point of view. The unlock here is getting depositories, the depository institutions in each respective country, the depository char clearing corp, uh, which is the dep central depository in the United States. That just happened. It just happened a few weeks ago. So, together with Citadel, Bank of America, they tokenized a US treasury.

That's the base unit of the financial system, the base collateral. And so I think that the 10 to 15 projects that I was telling you about that each bank has had is really going to accelerate and and turbo boost here. So these things will happen coincident uh but I think that you're going to see a huge catch up in terms of assets issued uh by banks uh and um you know excited to see uh if it's asset managers, alternatives or banks, but they're all going to be working furiously behind the scenes.

There you have it. It was a short panel. I think as as we went over, RWAs have been around for a long time, it took this uh panacea that suddenly adds liquidity, but it certainly adds a lot of efficiency, dynamic ability, and expressivity to these assets. So, thanks for thanks for being here and thank you to the panelists.