Startup Feature: ZuzLab — Tokenizing the Municipal Bond Market | Boston Blockchain Week 2026

Uh thank you Ian and thank you Cubic Labs and for everyone here. Uh I'm Seth Goldstein as you said um and uh this is Lisa Biololis. We're going to tell you about how we are modernizing the municipal bond market. Um this work is an outgrowth of my research as a professor in Cardi Mil. So the municipal bond market is possibly the most important and least well-known capital market in the United States.

Anytime your city wants to build a bridge or repair their potholes on your road or a university wants to build a dorm or a hospital wants to build a new wing, they raise that capital with the municipal bond. Last year alone, over $600 billion of municipal bonds were issued. The interesting thing about this market is that over half of the bonds are owned by people like you and me, retail investors. But we are basically not allowed to buy the bonds when they are issued in the primary primary market. So when a new issue comes out, we can't buy the bond.

That difference between the fact that we end up holding the bond at the end and we can't buy it at the beginning costs the cities a ton of money, US taxpayers probably billions of dollars, and it screws us as investors. Why does this happen? Well, the issuers work with the underwriters who perform a really important job and that is selling the bond. And the because of all the compliance and regulation stuff that you've been listening to all day today, they can't sell it directly to retail. They sell it to institutions and brokers that act as middlemen and sell it to retail after the primary issuance is over.

We introduced new technology that allows both the issuers and the underwriters to reach new customers directly at primary issuance. Now, what's the big deal? Well, this is something you probably can't see very well, but the big deal is the fact that all of these red dots up here represent retail buyers. These dots over here, that's primary issuance. So the city got $96 a bond.

All the retail customers are paying 99 and $100 a bond. That difference is 14 basis points in interest that they pay extra every year. On a hund00 million bond, the city is lo would save with our system a million dollars present value over 15 years. So our value proposition is simple. We lower the cost of raising capital for municipalities uh issuers of all uh sizes and stripes like universities and hospitals and we also lower the risk for underwriters to move onchain.

Now we've been hearing about this all afternoon and we have a technology that allows the bond to be issued in a way that it works both with tradi and onchain. So, uh, that example over there, 14 basis points. In general, on average, uh, issuers will save about 10 basis points on their interest costs per year. And as I said, that's about a million dollars over a hundred, uh, on a hund00 million issuance. How do we do that?

Well, we automate and standardize the compliance and regulation that you've been hearing about all day by using the right smart contracts. So, we can pre-board people. We can do KYC. We can do AML. We can do all the suitability checks that right now cost tens to hundreds of dollars for a new customer, making each ticket that they write have a fixed cost.

that means retail investors can't buy and that's uh really uh bad for everybody. So, um in addition to that, we reduce settlement risk. With a new customer, you don't know whether they're going to actually pony up the money uh when the when the deal closes and so the underwriters are hesitant to sell to new customers. By using blockchain technology, we can make escrow contracts that are incredibly inexpensive and lock up the money so the underwriters know what's going on. But that's more important not just because we've lowered their settlement risk.

We've also made the book transparent so the underwriter can do a better job pricing the bond and getting a better price for the issuer. The result is that 10 basis of savings points. So our second value proposition is to lower the risk uh for underwriters because when you issue a bond on our system, one bond, one QIP, two places to record ownership either on the ledger at the DTC or onchain. Okay, this is really important because in the past tokenization has required traditional institutional players to say we have to throw out our relationships and we have to move completely from one system to another getting rid of all of the knowledge and and infrastructure that we have built up with Zoo's lab they can issue the same QIP and it can be settled on either one and that means when trading happens later on you don't know whether the counterparty is onchain or at the DTC. It's completely frictionless.

We have uh we're essentially an infrastructure technology company. That green box is lab. We take this comp complex market with a ton of compliance and regulations and we sit in between the issuers, underwriters and investors and the various players that make this market work. Our business model is tiered transaction fees. So we have small transaction fees on the issuance, the trading, the redemption.

There's over 600 billion dollars of bonds that were issued last year. We get about $7,000 per million issued. We've talked today a lot about the regulations and how the SEC is engaged. Now's the time. Uh we also have the technology that allows the interoperability and allowing the traditional finance organizations to have a way onto the blockchain without having to solely uh commit everything all at once is a more gradual on-ramp and more practical and appealing solution.

Our go to market is approach is to leverage those who are currently players in the market. The underwriters with the relationships uh with the issuers they have you know one underwriter knows many educational institutions or health systems that they work with. We're also uh forming technology partnerships. We are in talks with tokenization platforms to bring the bonds on their platform and we have uh a an LOI with a digital MUN uh marketplace that's a front end. We're looking for introductions to these strategic partners.

We anticipate being profitable after three years and our initial target our focus is on universities and municipalities particularly with innovative forwardthinking mayors. our uh plan looking ahead well we completed a pilot in 20 and in this past year have this year have finished our MVP uh next year we are working to issue our first bond and then we'll scale our team has both business and technology experience and Rich Rifel has a depth of experience in the municipal finance space both on the buy side and the sell side. We invite you to join us as we help issuers to reduce the cost of raising capital. Thank you so much. So we have a little bit of time and if there are any questions we would be delighted to answer them.

So the question was what the business biggest point of resistance is to the to our product. Uh it's never been done before. Modulo the Quincy bond which was on a private ledger. I think the players in this market are incredibly risk averse and they want to be assured that the money's just not going to disappear. So for instance um if I tell you that it's impossible because of the smart contracts for you to get bonds from me and uh me not get money from you because of the escrow contract.

You understand that making them understand that is hard and so they really the the the apparent risk to them is is the big thing. If there are any other questions, I have a mic here.

Okay.

All right. Thanks.

Thank you very much.