So, if anyone in the room guessed, uh the room guessed, uh , yes, Shilang is my boss, and I've had the pleasure of working with him for seven years, and this is the first time I've had this opportunity and the chance to interview him. Everything related to the markets, and of course everything related to, uh, Aterea. Um, so let's get started, shall we? Traditional finance Traditional finance is like, you know, your 830 to 4 system, uh, but blockchains are not. And Ethereum has quietly become a payment layer, uh-huh payment layer, uh-huh .
We've seen the rise of stablecoins, we've seen tokenized treasuries, obviously decentralized exchanges and Defy. So when we say that Ethereum powers 27,247 global markets, what does that actually look like in practice today, and how does it differ from, say, Forex markets? Yes. Um, so I think the big difference is talking about trading markets and settlements. Um, and I think that's the difference, right?
For example, Forex markets are already trading at 247, but it's not, you know, instant settlement at 247, right? For example, when you settle after a transaction, a lot still depends on traditional banking, right? Like Horsebend, bond banking or SWIFT bond banking or SWIFT messages, or settlement windows that can still take a day or two, whereas, you know, settlement on Ethereum by definition, uh, is, you know, okay, you know, and, uh, instantaneous, right ? So, I think that's a significant difference. And what does that look like, uh, in practice, right?
It probably looks like you have trillions of dollars of stablecoins being transferred annually, uh, associated with that. Uh, this means that this means that anyone from anywhere in the world, uh, can now access these, uh, markets, uh, 24/7. Uh, what that means is that capital or, uh, collateral, uh, that's tokenized can now be, uh, used and, and, and, and, and, and, and, used and, and, and, and, and, and, and, and, transferred on Saturday, uh, uh, unlike, you know, traditional Rails, uh, which opens up a lot of, you know, capital productivity and, uh, new forms of risk management that I don't think exist, right? Um, I think those are the main differences, but the main thing to remember is that trading and calculations are fundamentally different. So, given that you know that Ethereum is currently a settlement layer settlement layer , right?
We have seen many institutions move towards tokenizing real assets: money market funds, treasury bonds, and even private loans at this point. Um, what do you think is the driving force behind institutional interest? And could it be the 247 aspect, the programmability, the liquidity? Where do you think the main interest comes from? Yeah, I think it's a combination of all those points that you, uh, brought up, right?
I think one of them is that hopefully we'll cross our fingers that the clarity bill gets passed, but obviously that would unlock regulatory clarity, which in itself would unlock significant institutional engagement, right? I think you've seen a lot of headlines. Um, the institutions are ready. They're just waiting a little bit for more clarity. Uh for more clarity.
Uh , but, um, other than that, yeah, I, I think that probably in order of importance, in my opinion, it's probably, uh, calculations, and then programmability and layout, uh, and then 247 trading, right then 247 trading, right ? I think the calculations ultimately unlock, um, a huge amount of capital base, right capital base, right ? I think one of the biggest opportunities is actually the repo markets; They don't really talk about it, do they? It's not the same or as attractive as tokenized stocks or tokenized funds, etc. But the repo market is what's actually in the underlying capital markets, right?
This is really only talked about in investment banking branches, right? But beyond that, it's not really, but the repo markets are what, um, were the basis of what was a problem during a lot of the financial crises in 2008 or the sharp rise in repo rates. Uh, in the '20s, I think it was in 2018 I think it was in 2018 , 2019, but overall you had good collateral that couldn't get through the system fast enough to meet the margin requirements, right? So I think solving this problem by structuring, programming, and instantly moving these types of good collateral, I think collateral, I think , solves and unlocks a lot of the bottlenecks that exist in global financial markets. Uh financial markets.
Uh , and then obviously the layout and programming that allows for, you know, instant calculations and, uh, again, just moving the provisioning. Uh, and then 24/7 trading, obviously, in itself, uh, just allows you to determine the price instantly, as opposed to these weird spikes on weekends or, uh, holidays or something. So do you want to add to that that CME is looking to or has already moved to a 24/7 market? So do you think tradition will eventually embrace this 247 market, or are others perhaps well behind? Yeah, you know, NY CME, they're all moving towards a 247 model, they've seen some demand from traders and investors, for example, Hyperlid, they're all developing their own blockchains as well.
So we'll have a combination of, well, 247, and then a combination of private and public blockchains public blockchains . But I think institutions clearly understand the value of this. And who are they, actually, the winners and losers from this, right? I think, you know, in a way, uh, obviously the participation of retailers, uh, is a winner in the sense that they can now participate in these markets around the world 24/7. They can be defeated in the sense that these are probably institutions, sophisticated institutions that have automation, bots, and the ability to monitor risks 24/7.
Also, um, other losers, probably, it's, you know, there's a whole huge industry around settlement calculations and margin, um, indexation, which revolves around the idea of, quote, " idea of, quote, " market opening," " market opening," " market closing," but if you have 24/7 access, it kind of disappears, doesn't it? So, I think there will be some changes there, hmm, but I think let's look at, let's say, retail. Uh, what will probably put retail at a disadvantage will probably also allow them to, um, maybe, um, reverse that disadvantage. Right? And I mean, in the future, there's going to be a lot more AI and agent-based types of commerce, um, which by default kind of levels the playing field, um, and yeah, this automation and so on, really improves the ability of institutions to learn in a 247 world, but I think at the same time, retail solutions are the same, um, reason for that.
Um, so do you want to talk a little bit more about these 247 markets, yeah? So, currently, traditional markets have circuit breakers and, you know, auction closings and, you know, clearing times and all that, right? So once they move to the 247 model, which, you know, the current Ethereum protocol provides, what does that mean for liquidation at 3:00 AM on Sunday, and, you know, where there's no time for a crisis? You've already touched on this a little bit: for regular participants it might be better, but not so much for those in the middle, what do you think, how do you see more of this? Yes, I think crypto natives have historically pointed to the inefficiencies of traditional markets, and the inefficiencies, and said that instant settlement and finality are what will solve these problems of traditional markets.
But I think a lot of what exists in traditional markets, uh, isn't necessarily a problem, right? This, these are actually functions, right? For example, things like circuit breakers, uh, having an FCM. Uh, they exist because of the many lessons that have been learned in traditional markets, which I think cryptocurrency is learning much faster, right? Like what happened on 1010, or issues with things like leverage cycles and hacks and all of these things, uh hacks and all of these things, uh , I think could actually benefit from some of the safety nets that exist in traditional markets.
Uh traditional markets. Uh , and we're going to find out about them now, aren't we? So I think what we're likely to see the world look like in the future will probably be a combination of the two. And going back to the point of, you know, the separation of settlement and trading, I think a lot of safeguards can exist in trading markets where it doesn't necessarily have to be, uh, purely like on- chain or, you know, uh chain or, you know, uh , something like cryptocurrency to begin with, right? I think a lot of the guards could be more human-involved, or it could be automated, but not necessarily instantly, right?
And then, once those guardrails are battle-tested and established, the settlement level settlement level , I think, can exist more on-chain or in the native world of cryptocurrency. So, I think it's probably a combination of the two, but I think we shouldn't dismiss everything that exists right now, you know, in traditional markets as a flaw, because I think a lot of it exists for a reason and a purpose, um, and we're learning a lot about that now in the cryptocurrency, you know, trading markets. Speaking of time, and if you touched on clarity, early on I was part of, uh, the blockchain association that flew to the capital yesterday, and we met with, uh, a few senators and their staff, and without exaggeration, in the same vein it was Bitcoin and Ethereum, and my job was to basically educate everyone on DeFi. So, given the interest in clarity, given the desire for clarity, what does this mean from a regulatory perspective in terms of how these permissionless networks , permissionless protocols, um, you know, will fit into the current regulatory, um, you know, general, I would say...Yes, I think, um, my interpretation, at least, of how regulators approach regulating 24/7 markets is that they regulate the peripheral segments peripheral segments .
Uh, I mean, um, they're... I mean, for example, they're kind of like , you know, stablecoins, right? The regulation is that they regulate issuers like, um, a narrow bank, right? It's...it's kind of like , you know, an audit, a fully secured assurance, um.
And then they regulate custodians, prime custodians, prime brokers, inputs and outputs, right? So, here's what I mean by the peripheral segments: how individuals and institutions interact with blockchain, um, and financial markets, um, digital assets. Eh, I guess that's what they'll focus on. The main question is: how to regulate a protocol that has no centralized entity? I think this still needs to be resolved, don't you?
Uh, you know, should we go after the developers? This is clearly not the best approach, right? They probably won't stop there. Instead, I think it's more about how login/ how login/ logout happens and how users interact with that protocol. It's almost like a global internet, isn't it?
You can't regulate it to a certain extent, but you can regulate how users interact with it. So it's kind of like perimeter security, right? And then, uh, another example: you can regulate, let's say, tokenized assets, meaning, you know, you control and regulate wallets or whitelisted addresses of tokenized assets , and, you know, tokenized assets can only interact with those platforms and whitelisted addresses . Good. So these are some of the ways that I think regulators approach regulating a 24/7 market.
I have a two-part question. First of all, do you think Ethereum will remain, you know, dominant in this market, or do you see some fragmentation in the future? This is the future? This is the first. And while you're thinking about that, my second question is: you've been a cryptocurrency founder for over a decade , and you have a traditional background.
You were a trader at UBS, Maril Lynch, Bank of America. If there is one liquid markets product you would like to see on Ethereum, what would it be? Okay, so, as for the second question, what liquid markets would I like to see? I think there are two of them, right? First, I've already talked a little bit about repo markets, and what that opens up, I think approaching that market using blockchain rails solves a lot of the problems that exist in that market.
Hmm, it's a huge market, yes huge market, yes , it's trillions and trillions of dollars. Hmm trillions of dollars. Hmm , and then the second part, which I think we'll see develop, but which has n't developed that much yet, is stablecoins that aren't denominated in US dollars. Um, given how the foreign exchange markets have developed in terms of, in terms of, uh, how big the foreign exchange market is and how big the non-dollar foreign exchange markets are , uh, and how important the concept of currencies is to emerging markets that are not denominated in dollars. Uh, I think that's the next development that we'll see, uh, you know, too.
Uh, and then, to your first question, if you could repeat it, I lost my temper. You know, Ethereum is deeply dominant right now. Right. Right. So, uh, Ethereum is definitely dominant by definition.
Uh, that's the reason why Black Rock Wisdom and others decided to build on Ethereum first. Uh, I guess you know, will it continue to collapse or fragment? I think it depends on what part of the market you already see, to some extent, a fragment with payments like this, for example. I think there is a lot of payment activity payment activity that will speed up the chains, but it depends on which part of the Ethereum stack they want to focus on. I think focus on.
I think Ethereum, given that it's the most secure, uh, and battle-tested chain, uh, it should focus on computation, right? I think in the future we'll see a world where there are fragmented payment chains, fragmented trading platforms, uh trading platforms, uh , but the calculations, I think we can imagine a world where they're more concentrated, uh, and I think Ethereum should focus on that and be able to dominate that. Uh , great. We are on time. Uh, do you just want to wrap up briefly for 30 seconds , or something that you would like to see in the next cycle, like Ethereum, like we've seen Ethereum in securities Ethereum in securities , ETFs, you know, digital assets, in the token itself.
What would you like to see over the next few months? And you know, the final thought is from you. Um, I think one thing I've been thinking about a lot lately is, okay, so I'm a trader first and foremost, and you know, I've been fixated on price my whole career. Um, and I'm a little disappointed with how focused the industry is still on the price of Ethereum. Um, because, for example, if you look at some, even, other assets like crude oil, for example, yes, in dollar terms over time it has, you know, gone up, depending on usage or geopolitics and so on, but there's a large period of time there's a large period of time where crude oil or other commodities just fluctuate up and down.
It doesn't always have to go up and to the right, but it still has a lot of uses, and it's, you know, used for manufactured goods. And so I think if Ethereum to some extent, given the price dynamics, everything, for example, can get out of this trap of the narrative that it wants to be a store of value or something, and that everyone is fixing the price. If you can focus more on the use cases, I think it probably reflects more of a more mature product, similar to a lot of products that exist, where there are cycles where it goes up and down. It doesn't always have to go up and to the right forever, does it? So that's what I've been thinking about as a narrative for the community.
Thank you, Shillyang. Thank you very much, Cartek, for giving me this opportunity to interview Shillang. We are here if you have any other questions. Thank you again.
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