Is the Yield Sustainable? Panel

All right, let's talk about yield. All right, let's open up with introductions. I think we might actually get to all the questions since we're down two people, but so I've done a few panels so far and we never get to all the questions, so this might be the lucky one. All right, let's start with you. Who are you?

What do you do?

Yeah, Sebastian Sebastian Divo, co-founder of Seos Financial. We are providing product for the stable coin economy mainly creation on mofu but also managing grove uh which is a subdow of sky. So I'm fukkunda waring um I've worked in stable coins for a long time at tether now I'm at Agora I head up latam for the team and focus a lot on our growth and our partnerships in the region.

Hi I'm Michael the CEO of liquidity. Liquity allows you to take credit against your ETH with a chipped cheap and fixed rate and it allows you to save in the most trustless stable coin only.

Great. Uh let's start talking about how the Genius Act has impacted how you think about yield on stable coins. I know uh Fukundo you were mentioning that that's had a pretty big impact for you.

Yeah. So, um, I actually met a lot of the legislators when they came down here to Argentina a few months ago. Um, there's a lot of limitations there. Obviously, you know, the bank lobby has kind of had their say. Um, we've had our say.

I think what what we always want is, you know, we want consumers to have a great time. And so, I think what's been great is it does have to be, you know, very secure, very high quality assets, which is always great. Um, so you can sit in T- billills, you know, repo, reverse repo, cash, treasury notes. No one really does treasury notes, so it's mostly the other four. someone has a very boring job deciding what what you're in out of those four.

Um but as far as the yield, one of the things is, you know, you you can't pass on the yield directly to consumers. That's one of the things. And there are very um strict rules with regards to also the naming and the the nomenclature around a lot of these things as well.

So has that changed how you think about yield? you know, were you on a different path before? So, wait, hold on, hold on a sec. Who's a stable coin issuer here, Agora? And then, so this impacts you the most.

So, we have I think the three of you will have very different points of view on stable coin yield, right? So, I'll come back to you, but what what is your point of view on stable coin yield? How are you bringing yield to users?

Yeah, that's a [clears throat] good question. So genius is not allowing yield to be processed. That's true except everyone gets a yield on their stable coin because you just need an intermediary with genius is quite fine. If you have USC on base for instance you will get the yield. It's reward obviously you don't get the actual yield but it will be very close to the reward you should get.

So it will be more than zero. In Europe we have a mica which is a bit stricter because you cannot do indirect deal neither [clears throat] but you can still have ways and uh because most of the issuer are providing rewards to incentivize you to do some specific action. So it's not just for holding the stable coin you need to do some actions. So at STOS we are obviously I'm bullish on giving the yield to users that way I was a long supporter of the yield bank stable coin which were the safe and the more responsible way of doing stable coin onchain like mont protocol or pusl now thanks to the regulators you are not allowed to get the yield and those product are shutting down not there wasn't they weren't in the US but it's just easier to follow the US uh we are providing vaults. So it's a lending facility and that's how you get the yield.

So the fact that the regulation doesn't allow stable coin issuer to provide the yield is actually good for us and if you don't I don't agree with it. It's that's why we have a business. So I kind of like it at the end of the day.

Okay. Yeah. How about you Michael?

Yeah. Liquidity has a very different yield source. Usually kind of in the stable coins we move all the crypto collateral into treasuries. So liquidity moves into threadfi and then the yield is funneled back. Liquid is fully onchain.

So and liquid is one of the few protocols that funnels the borrower interest directly to the stable coin holder. So it's a pure onchain yield. It's peer-to-peer finance and there is no intermediary and I think we are the only protocol that funnels 100% of the borrowers just to the stable coin holders. So that's like a closed system which with its own um yield source.

Okay. Yeah. Very different.

I I think maybe and and it's quite a convoluted, you know, discussion maybe. But I I think the real problem here is that there's lots of different types of instruments and these are all being called stable coins broadly. Um the genius bill is very clear that if you want to be called a you know payment US dollar stable coin there's very specific types of assets you can sit in and it's very specific you know what ways you can give yield or not give on yield and the marketing and it's all very I I I think it's great. I think what happens then is that then you have a lot of companies that in crypto you know they want to give more yield which I think is you know it's a fine impulse. I think consumers should have choices.

Um we're working on a lot of this stuff. We think that there is a demand for higher yield a lot of times and there are ways to get you know sustainable um backing on that but I I think where the real problem comes from is from this idea that um there are a lot of things put in this bucket that's called stable coins um that have nothing to do with each other right so we saw during this crash um a little bit ago you know where there's big D pegs a lot of these stable coins have a large large amount of looping activity which makes them very volatile the small movements in price because people get liquidated very easily Um, and I I think that is where the problem arises is that you have many different things that are called a stable coin. And I don't think any of these things are bad. I think the issue that maybe regulators are trying to grasp with is it it's very different if you have, oh, I have a a bucket of debt to AI companies that are growing very quickly. um and I'm tokenizing that and then I'm rebasing that to a dollar all the time and I'm calling that a stable coin versus oh I have you know assets that are liquid to the tune of of trillions of dollars where I can get liquidity instantaneously.

um th those are two very different things and I think that's where consumers have a hard time parsing those differences where if you have a background in finance you understand very immediately hey you know if I try to liquidate 90% even 20% of um you know these loans that you know are backed by data centers or just to you know name one specific example um that is very different than hey I have you know 90% T bills that average 21 days or something Fair. Fair. So that kind of ties into the the idea of a variety of risk for users. So as we're trying to get more and more user adoption, getting people to make their

Oh, sorry.

All right.

You made it.

We've got

Xavier.

You're Xavier. Okay. You're in Julian's chair. All right. Xavier.

Hi. Welcome. Where were you?

No, just kidding. Just kidding. [laughter]

I'm sorry.

Welcome. Welcome. Uh, tell us who you are and

Oh, it's Julian as well.

We've got a full house.

We are so back.

We're so We're back. We're back.

So back

up. Only

like we've never been. [laughter]

Okay. I We have to keep the chair straight. We can't look at each other while we talk. [laughter] Okay. All right.

Let's get some introductions from Julian and Xavier. Tell us where you work and also tell us uh how what you do relates to stable coin yield like what part of the stable coin yield world you're getting into. And we just were when you're done that we'll get back to what uh Fakundo was saying talking about how there's not just one thing that is a stable coin. There's many types of stable coins and we'll go from there.

Yeah, sure. Just I'll keep it brief. Um [snorts] my name is Xavier. I'm the founder of Fractus. Uh we raised $20 million this year.

We're a crypto native preede fund. Uh we've made 10 investments to date uh primarily investing 500k to 1 mil checks uh in early stage founders. Uh the relevancy here is that my previous life I was at Chorus one which is a major staking company. So I'm very familiar with staking yield uh in particular. So yeah looking forward to the conversations today.

Uh my name is Julian Bhu founder and CEO of state capital. It's uh we've been in the space for quite some time invested in more than 200 different projects. Uh we also provide liquidity in the space. We have a quantitative trading uh desk. Uh we also ran uh recuse.

Uh also created st and I was involved in curve finance for almost uh four five years. Um and we created a one of the largest auto market maker a stablecoin and I've been running validator for uh almost 10 years. All right, thank you. Uh let's talk about the how users are using stable coins and specifically in with yield. Let's say let's get from each of you um maybe the ideal way to chase yield in stable coins and the riskiest way to chase yield in stable coins.

Let's start down there.

So the safest and the riskiest. Yeah.

Well, maybe I start with ourselves. So, I think we have a very safe and predictable way because we just pass through the borrower interest rates to the stable coin holders. So, you get the market rate. Uh it's like a bit the defi treasury I would call. So, for people that like to be on onchain finance, I think that's a very safe way if you feel comfortable taking the technical risk and the oracle risk.

Um so I'm looking at that especially if your collateral for example is not rehypotheicated and lend out which is the case in in in our protocol the risk the most riskier stuff I think it that's what we have seen that blow blow up you kind of trust somebody you send your dollar somewhere you have no idea what's happening it's offchain they're looping and doing crazy stuff um yeah I think then then you just kind of pray and Did I just misar you? Did you say that you are rehypothecating?

No, we are one of the very few where you earn yield and your dollar is just there just sitting there and you can withdraw at any time.

You don't have many opportunities like that because everybody gets yield by lending out. So why are our users getting the yield? They're putting up capital to perform liquidations. That's what they are paid for. And I think the nice thing is yes, it's not rehyperated.

That's why I said I think it's a very safe way to get yield on the on the dollar.

All right. What about a risky way?

I do you want to say a risky way?

Sorry.

Do you want to say a risky way? I think you were saying that some of these vaults

Yeah. Yeah. Yeah. Exactly. If the risky way is when you give your dollars and it's lent out and you have no idea what what they're doing it.

It's kind of

free pass. So, uh yeah, then you're just blind because you don't know the risk and you don't know what yield you should get.

Okay. I I would say probably for the safer ways. Um you know obviously I'll talk a little bit you know we we custody our assets with state street that has over $44 trillion um custody for customers all over the world and the reserves are are managed by VANC that has over $160 billion in assets under management. So you know very high levels both those companies have relatively modest levels to extremely low levels of crypto exposure. So, you know, people always say, "Oh, we work with the first crypto bank."

And it's like, "Well, actually, I'd rather work with a bank where I'm the only crypto guy, you know, so they're not overexposed. You don't have a Silicon Valley bank situation." And I think there's a lot of our partners um that pass on yield in one or different ways. Um I know we we work with some of the people on the panel as well for things. Um and a lot of the big blue chip DeFi protocols I think are great.

I I think then when you talk about um the riskier ways to earn yield, you know, it's always risk and return have to be together. Um, I think there's a lot of these stable coins that don't yield um, very very don't have very high amounts of yield and then, you know, they're in like some crazy debt related to AI or like they have, you know, some real world assets supposedly backing them. Um, and a lot of these are also subject to looping, right? So, it's not just what are they doing with the yield, but then what are the other consumers that are also in this? And so if a lot of people are looping and like 80% of your volume is looping, if you have a 20% DPG, you know, a lot of people will get liquidated and get very hurt.

Can you define looping?

So looping uh yeah looping is when you you take out a loan against a it's basically a very high leverage loan that you're taking maybe in simpler terms, right? So you're trying to maximize yield. So against a very small amount of collateral, you're taking out a very large amount of a stable coin that is yielding. Yeah, on my end I I fully agree with Fakundo. The safest way is you need to have in some institution that is issuing a stable coin or any product but it should be based on T bills.

uh no strange come to party risk uh big custodian those kind of stuff very simple the yield might not might not be good if there is a yield sometimes it might be difficult for you to access for instance you have breed from black rockck but the minimum size is 5 million and you need to be QC and it's not very liquid it's very liquid itself but it's difficult to access onchain for retail people at least uh on then you can go to lending for instance At STEOS we have the STEOS USDC vault which is alpha million. We also providing the product for Coinbase users. Lending is blue sheet of assets. So that's in a way quite safe. There is oracle risk.

There is a technical risk. But if you look over the last few years since lending exist in DeFi there never was an issue on that or more or less no issues specifically on those crater. Then you can lend against more risky assets then you are taking obviously more risk as we saw recently. uh and you always need to think about uh solveny of your the protocol you are using. So will you get the money back and liquidity how fast can you get the money back?

So as you mentioned uh some stuff where you're lending on private credit investing in private credit or GPUs or real estate those stuff tend to be a bit more complicated and it's more difficult to underrite at least and then you can go on leverage looping as you mentioned I would say that's the most risky part there is a safe part that we are not focused too much which is yield farming good transition VC tend to finance startups and startup to succeed need to incentivize you to use a product. By using the product, you might have a good risk adjusted yield because someone is paying for it just for you to use it. Obviously, that's not sustainable. It requires a lot of work because you need to move from one opportunity to another and at some point there is a smart contract risk and you lose everything. So, it's not riskless, but if you put the work, you can find great opportunities.

Yeah, I can maybe come at it from a more VC lens. So we primarily transact with USDC and you know sometimes even with some of the work that stakehouse does on chain put that to work. So um I think for us like you know as a VC fund with LP money in terms of like safer yield opportunities onchain you have sort of centralized exchanges which we try not to keep too much uh capital on and then we have sort of decentralized things that we do onchain for example like moro oiler a of course all of these things now have some very small level of smart contract risk in fact I think balancer recently sort of proved that you know none of us are necessarily safe so that definitely made us rethink think where we're putting our capital to work to earn yield on the more startup side I would say we look at some more higher risk yield opportunities in terms of like investments we make that are generating higher yield there are some really interesting things you know being built right now I think in that space and I think when it comes to yield itself I guess from our experience at chorus one like so much of it comes down to product and distribution and so like there's a question with users like there's a lot of things you can talk about yield or the risks etc but like the end user for a lot of this stuff is like really not even aware of I guess like the risk behind the yield itself. They're probably just using a product and they see a number there. In fact, many people don't even know what yield is.

I guess like longterm when the the whole world is using crypto rails, I think many of them probably won't even see like the number or even know what yield is. So, I just think they're like we really look for products as opposed to like protocols now, I would say. So, like I think there are already some amazing protocols. Of course, these guys work with many of them as well on chain and these protocols are getting to a level now where you can kind of build consumer products and apps on top of. And so, yeah, there was a cool startup yesterday I caught up with.

They're generating like 14% yields like pretty sustainably working across oil and pendle and actually composing on top of some stuff that steakhouse is doing. And like I've been pushing the startup quite hard to like focus on the end user like distributing it to people outside of crypto as well. And so I'm very bullish on yield where they own the power and the end user because I think that's really where all the value will acrew to to startups long term and even anyone in the yield space for for that matter. So that's my my lens. Well, um I believe the the major problem in the space is the definition of stable coin.

Um I would say like 99% of stable coins are not stable coin. They are like advanced exotic structure products and only 1% are actually pure stablecoin. So um when users are um chasing yield they really need to understand what type of yield they are after because if it's a structure product exotic type of uh product then it's very likely that they can the risk of losing the capital is pretty high and if you don't have I think the market will really change in the coming um months or years where you have counterparty or insurance that will provide insurance product for stable coin uh real stable coin. So for example, if you have a DPEG, you get your money back and this is actually a pro uh a proper stable coin because you have someone that take the risk of uh a DPEG which basically show that that product is a real stable coin but you will if you have an insurance product I would I believe that they will only uh provide that type of feature to 1% of the market and this will really define what are the stable coin and what are not the stable coin. So I think there's a misinterpretation of what is a stable coin in the space and we tend to look at everything that call themselves a stable coin to be a stable coin but they are not and it's what makes the space extremely dangerous for retail

and usually the bigger is the yield the less is a stable coin. Yeah, that's a excellent point. And I just keep thinking about how uh what you're saying and what you were saying, it's almost hard to be up here all talking about this this one topic when it's actually like 10 topics rolled into one. Um

yeah. Yeah. This is where you know if you have a portfolio of data centerbacked loans or whatever that I was saying that's very to what you were saying um Julian where you know that's very different from oh you know I'm holding 90% T bills that will have liquidity in 14 days like these are two very different things and arguably I think they should not both be called stable coins and here's where we probably need people on the front end and people to do more education. Um yeah it's just [clears throat] fundamentally a very different product.

Totally. Uh let's jump onto something that Sebastian mentioned which is incentives. Um incentives drive a lot of yield and certainly some of the riskier yield. Um you know let's start with Sebastian. What do you think is the role of incentives today and where do you see that involving evolving?

Yeah so it's a very dynamic space uh defy and crypto in general. So there is a lot of activity, a lot of new ideas coming in, but there's a lot of noise as well because a lot of things are happening. I mean, I'm working full-time on it. I don't understand 90% of what is happening. If we look at people that want to list their new stable coin or collateral or whatever we want to call it on a vault, we get two or three requests per day.

There is no way we can analyze everything. So we need to make um very big decision on that. And sorry I forgot the question.

Where do you see incentives going? Do do [clears throat] they prop up? Are they propping up?

So to go outside of the noise and sell their product, those new companies, new protocol, new startups need to have incentives to justify for people to understand how it works. And so for instance, you might have I don't know for instance open Eden. uh that's a stable coin that is bermuda regulated CUSDO or USDO and you need start to need to understand why there is a C version and a nonC version what's the difference but so to to create some traction initial traction because they they create a lot of incentives and you have some pendal token on top making some a higher yield because some people are buying the points or the token or whatever they are giving and that's create traction and that shows the product to a lot of users. that initially are just coming because there is a good yield and that's a way to get new users. Obviously the question is is that sustainable?

What I see usually and what we see usually is that when someone is incentivizing quite a lot it create traction you might get to alpha billion TVL quite fast but when there is no incentive anymore money tends to leave to the new yield opportunity but at the same time it's still a good way to start. It's a very expensive way to start, but so you at least you retain some people and you get some PR mention and people get, oh yeah, I use this product 6 months ago, it worked, so maybe it's I can use it again.

I think incentives are probably unfairly maligned a little bit. I don't know if you guys agree, but I think incentives are a little unfairly maligned. um like everyone does, you know, like a new sandwich shop opens down the road and they'll do oh 50% off cuz we're opening and like we all think this is normal, but then for whatever reason when it happens with financial products, people say, "Oh, this is like incentives." And yeah, you know, they want you to try out the product and see if you like it. And I think that's fine.

I do think you you have this thing that happens that obviously, you know, you have this very active capital um you know, maybe some of the guys on the panel um that is chasing yield specifically for LPS. And so yeah, once you turn off the faucet, you know, they're going to go to the next sandwich shop offering 50% off or whatever because they have a duty to their LPs. But, you know, you can also try to discern what kind of users you can get. And I think there's a lot of ways you can do that.

I I do think something interesting that I could see happening particularly in the real world asset space in the next sort of year or two might be uh discontinuation of some of these incentives. Um I guess from our time at chorus one and operating all these privacy stake blockchains you know we've seen over time many of these chains have ceased to exist first of all because they didn't pick up enough activity and the ones that have survived you can see the governance proposals today and many of them are trying to cut incentives and yield and I think that's a good they're always the pioneers in my opinion of the yield space in crypto and a good sign of what is to come I think in other sort of categories of yield in crypto and so I I personally feel like these reward assets the incentives in particular and you know maybe some of the other things going on outside of that probably have a limited lifetime and then it'll settle down to some sort of smaller number longterm and and very few will survive just the dominant ones that will then end up being adopted by I think some of these players up here. So it'll be interesting to see I guess the yield in the year or two how sustainable it is for these kinds of emerging categories and if it will suffer the similar fate as proof of stake because I would assume it might be curious to hear Julian's take on that though. Well, my take was 99% of stablecoin are not stablecoin and I would say that 99% of most product that are using stablecoin are not real product. So I don't really necessarily agree what you said.

Um if you go to a shop they might offer you 50% discount but then they expect clients to come by because they have expenses. They they selling something so they will

No, no, I agree. I mean you don't have to go back to the sandwich shop. I'm just saying I I think incentives are sometimes unfairly maligned.

Yeah. But the problem is like in this space um most of the product that people are building is not actually building for intrinsic value. They're not actually creating something that's solving problems. If you compare the market to AI, you have billions of dollars being injected, but you also have a lot of retail paying for the product. So they can they can um have a vision um they can plan for the next couple years with correct P&L error and and they understand financial expectation over um like type of discount and and type of incentives and that's what's missing in the space is really about trying to build something that is really solving a problem.

I think in Argentina is really that's the reason why this conference and and um Defcon is is really unique uh this year because we seen that stable coin and crypto has really helped a lot of people here because to save value from their work to counter or age themsel from hyperinflations so it's real product but in the stable coin space and yield most of the product that people are chasing and chasing the yield actually not really providing any value that's that's the problem

agreed completely I think there's two different worlds in crypto that we're seeing. I think crypto and emerging markets is very different from I I you know sometimes I'm a little mean. I I love the people out there but like crypto and Bushwick you know um I I've gotten paid in stable coins for the past 5 years at this point so I've been a big user and I'm from here from Buenosides and so I've seen people using AUSD to get cash this week for example uh to get physical pesos. Um so yeah I agree completely there's two different worlds. Um, what I mean is just I think incentives are maligned as as something bad.

And I think when they're when there's an honest story about, hey, we're giving you an incentive, so you try a product and if you like it, you try it long term and we structure in a way so that it's sane and it's healthy for both parties. I don't think that's necessarily bad. Um, but but I agree with you. Obviously, it's an incentive. It's going to come.

It's going to go away. You know, probably most people cannot sustain, you know, they haven't raised enough funds uh to to pay, you know, whatever percentage they're offering nowadays. And then the other thing a lot of people will say, "Oh, targeting, you know, this much and then they're not really going to hit that much, right?" Uh, that also happens.

All right. Anything to add? It's okay if No.

No, not that much. I think we've covered it. Honestly, that the incentive part I don't find it so interesting because somebody has to pay for it. So, the backers or the VCs

for the users, it's great. The they get rewarded. That's how it gets bootstrapped. and you need to know is it worth do you have a good product does it really help to get exit velocity and I think then it's a good mean or the other use case is you want to pump with the TVL and the token that's probably the other use case um and that's about it so I don't find it so interesting I find it more interesting to talk then about the real yield of these products and the risks that are I think for user it's great they get extra money like if you sign up for Evolute and they give me 50 bucks to do so

yeah um you said it's more exciting to talk about the real yield

and the risks. Yeah, I I think that's where we have seen what blowed up uh how users behave and where where kind of um

so we need some education. I think

what's the real yield

uh the I mean the the real yield you you get from the underlying that is sustainable that is not subsidized and there are different yield sources. So um you can get that from treasuries t bills from other defi users that are borrowing or from lping. So there you have different yield sources and that's for me the real yield and the yield has always a profile and I think you need to understand what you're looking for. Um you know how volatile is that? How predictable is that?

Is that in in stable coins? Is that in a coin that can deflate? and and and and just there I think again like with the stable coin we throw everything in one bucket and it's just a yield number and understanding a bit the yield and what's behind it and what risk is behind it. I think that was a bit a wakeup call the last weeks and months I think for the space.

Yeah, I'll say I'll say something spicy. I think a lot of people who call themselves a stable coin should probably I mean I don't know if not allowed to but I definitely think frontends in the industry should probably be more clear about okay this is a yield coin or this is a tokenized hedge fund that's rebasing um versus this is a stable coin you know you can agree or disagree with where the genius bill set the line um but I think what's what's clear is that you know there's a big difference between oh you know we're sitting in 90% T bills 5% cash 5% repo versus oh you know we're you you know, a delta neutral hedge fund with dependencies across 10 different centralized exchanges and a couple decentralized venues and whatever. And the second product can be great risk return adjusted, but it will usually intrinsically have a much higher risk than the first. I think that's where probably a lot of the front ends um need to step in and be more honest um to the user about what's going on underneath the hood.

100%. I think so I I fully agree that uh we should have a word for something that only invests in T bills um lending like liquidity maybe should be it's not the same because they are some market so I agree but for instance you can have a yield and be just in T bills and banks tokenized bank deposits I mean we don't say they are stable coin but they could be stable coin and they are fractional reserve banking so that's not fine for instance there are some stable coins that are Mika compliant. The only investment they have is bank deposits. What is a bank deposit? It's not a T bill for sure.

It's fractional reserve banking, but it's still completely regulated. And let's be honest, it's still quite safe because if I have my money in a global systemic bank, nothing will happen even if it's not Tibs. But it's completely shady. It's shady underneath like any bank. You will not see the balance sheet as of today in granular detail.

While you can have it for some D5 stable coin, you can see what is the exposure I'm taking every day or every block. So I think it's complicated, but I would agree on the directional.

I may be a little bit more skeptical about some of these banks particularly. I don't want to pick on my my friends on the old continent, but in Europe, a lot of these banks are doing the this hold to maturity accounting, you know, and their balance sheets are looking a little shaky, but yeah, in in principle agreed.

Well, SVB that did all to maturity was in the US. So this is true. This is true. Yes, of course.

But I agree with the banks and and I see it really dual. I think we will have the regulated stable coins and I think they're great. You know, a Paxus dollar is a great dollar, much better dollar than your bank dollar be because they make money with it. So it's much more secure and I think that's totally legit. And then I think with the other end where we are maybe more where you say you do a decentralized stable coin, a truly digital dollar that only lives on chain.

I think that has also a use case and I think everything in between will be difficult from a regulatory point of view or is then some kind of money market fund strategy that is doing something but for me the the world will become quite dual and everything in between is in a gray area either it's regulated or you know they're doing just kind of some strategy with it.

I think we can all agree where the banks aren't great, right? [laughter]

No, I'm pro bank. Um well no but speaking of banks um you know if we take away yield opportunities like uh lending or liquidity providing we really focus on the the stable coin like direct stable coin yield opportunities. How if the interest rate environment continues to decline if yields get lower if interest rates keep getting lower do we lose an edge? Do we lose an edge with stable coins to the banks or not? What do you think?

Or do you think rates will go up?

Well, if you think from the compliant stable coin on the genius or mica and we assume there is no loophole so they cannot give the yield in any way. I would say it should be actually be better because if interest rate in so sofer or bank deposit uh saving accounts what they are offering with the banks is going down and as the payment stable coin cannot offer you any yield then it's make become better and better to just hold the stable coin instead of a bank deposit. Yeah, with I mean demand demand deposits don't give yield in banks today, right? But so I see what you're saying. But what about

Well, some are some are I mean obviously there are trade but yeah

yeah they're not giving a lot. Let's say five bips but five bips is better than what you have on the payment stable coin that is not allowed to give you anything.

That's fair.

But obviously with a stable coin I think we can all agree that you have the utility is more efficient. It's settlement. I really prefer to transact in stable coin. wall company is doing a stable coin uh using stable coin for any payments and banks are always an issue to work with. So

it's true you you often can't get the yield directly for regulatory reasons and whatnot. But the reality is most most users holding these payment stable coins are holding them through some kind of intermediary that you know in some way or another is paying out yield to them. Um some more sustainable, some less sustainable. Um but but usually they're getting it. you know, you have very few people sitting on a balance of, you know, however much um, you know, whether that's, you know, Agora or Circle or Tether or whatever you're talking about, and it's just sitting there in their wallet doing nothing.

You know, if you stable out, at least try to get 4%. You know, you should I see a lot of people like stable out and they're not even getting 4%. And it's funny because in the traditional financial world, it's like it's it's free, you know, it's like that's why it's called the risk-free rate. um you know, you you should be careful of and and weary of what kind of intermediaries you're working with. Make sure they're high quality.

Make sure you know they have a track record. Um but within that, if you stable out, get some yield. Uh don't just stable out. And I think as you said, if rates go down, yeah, you will you will earn less. But there it really depends on the yield source, you know.

I think for treasuries and decentralized table, yes. But I think for example, in our case, we have a totally different yield source. So if crypto is going up and people are leveraging because we pass on the borrow rate, you could get a really nice yield. So that's why it's important to understand that the different yield sources that uh stable coin brings uh to the user. So we are like a decoupled yield source.

So we are more dependent what happens in crypto.

Well the the question was um are we losing an hedge compared uh to the financial traditional financial world. Right.

Right. Um well over the past few years we've been calling uh trade to start adopting DeFi and and whatsoever. Uh well it's it's it's really happening and and um I think they coming at um our uh freelance and um so D5 players have been saying oh they don't understand um they should be using it because it's really solving problems. They can save uh money. They can uh be more efficient.

Well, this is now starting to to be a reality and uh you have hybrid um startup trade five application like Revolute uh Robin Hood um that now starting to adopt DeFi in order to um be more efficient uh save um money and provide better uh product for retail. uh but then DeFi on the other side will suffer because those uh projects startup trade hybrid defy will have way more uh access to bigger market and and way more power executions. So um it will be more and more difficult for DeFi players to actually compete with hybrid thread fire players and this is something that we've already seen. I remember like a start was saying oh but we've been building something like similar to bridge but bridge got acquired for billions and us we just uh a few a few millions US valuations yeah but this is reality of the market you have now more sophisticated players coming traditional finance that start to understand DeFi and now providing product that we've been using but to find players

yeah I've been uh speaking with a few sort of consumer credit startups recently which are pretty cool and you know things ranging from buy now pay later to tokenized credit and yeah, I I do think that especially banks that feel like they're behind the April when it comes to the crypto regulations and all of that, community banks in US in particular, like they want to move capital in size to some of these DeFi opportunities. And I I just think that will be a very interesting yield source, I guess, and sustainable yield source, I think, as these major players come into the space. So, it be interesting to see, I guess, these guys team up with these kinds of banks as they come on chain.

All right, we're out of time. I really enjoyed hearing all of your opinions and information and I hope that you all have a great rest of the conference.

Thank you.

Thank you very much.