RWA Tokenization & DeFi Ecosystem Expansion

[Music] all right everybody uh my name is David Garfunkel I'm at index Cooperative I lead D5 Partnerships uh super excited to talk about rwas today uh luckily I've been able to work with everyone sitting up here which has been great um but yeah let uh let you guys get started and sort of introduce yourself maybe talk about wire into rwas or how your protocol integrates them sure um hey I'm Sam um co-founder of Phoenix Labs uh which started up uh recently like two months ago we are building the spark protocol which is defy lending Market um but for the relevance of this panel um I've been involved in maker Dao uh on the protocol engineering team building smart contracts maintaining uh the protocol and all that kind of stuff um I I haven't been directly involved in real world assets but I like I understand what's going on from the maker and uh die perspective so I can speak to them and how it's relevant to maker from that perspective hi I'm Cynthia founding partner and CEO of Matrix Port Matrix portal was established four and a half years ago more known as a senpai crypto asset manager so on our platform we actually offer more than 40 percent of 40 different categories of yield products to the investors a lot of you sitting here might have various interaction and collaboration with mutual support from those regard and this year we have launched a new brand called Matrix doc which 100 works on rwa because I believe Arabia is where the new yield is going to come from and because of the composability of D5 it's very exciting to bring the real world asset onto D5 hey guys um Erwin here um I work at backed um I've been with the company for almost two years now um involved in operations and and distribution um but I've got a traditional Finance background uh doing sales and trading um for banks and and Brokers and um been a hobbyist in the space for a number of years uh before transitioning professionally um full-time into crypto thanks for having me here my name is Irene I am head of strategy at Lair zero Labs layer zero is an omni chain interoperability protocol and we're also the Builders of Stargate Finance we are working with a bunch of projects that are in the rwa space and certainly spend a lot of time with stablecoin uh issuers and I'll speak a little bit to how we view stable coins as right now the leading rwa in terms of product Market fit um but yeah thanks for having me and I do apologize I probably have to head out earlier than these three or four but you're in better hands with them we'll certainly be talking for long enough so not too worried um so like I said I work at index Cooperative we're sort of like a lair on top of all of these protocols and and teams here um we've been building a real world asset index for over a year now we're hoping to launch the end of this year um it's been super interesting to see it go from basically nothing to uh so many products we have today uh I'd like to start with you Cynthia uh you guys are building an rwa product what category is it in what other categories are there I mean it's just saying real world assets is like a bit of misnomer because it's really everything uh so yeah could you start with that what what is matrixock and like within that what are the other categories of rwas foreign yeah so this year the first portal we launched uh by matrix Doc is a a short-term treasury bill token called sdbt uh the reason we came about uh launching this is really because there is a vast uh market cap of stable coins sitting there 130 billion and a lot of that last year was getting yield from all sorts of synthetic platforms like FTX Genesis and all this doing landing and borrowing at as we all know that people don't realize there's too much risk involved in it there's too much antibody risk you are taking without knowing right so with all those Black Ops actually a lot with this stable coins are put not in use and it's underutilized while at the same times you are seeing the rate hike uh by the Fed so I think the apparents demand that people want to have an unchain version representation of the treasury bill at least earn that five percent risk-free interest without the hassle to handle without off-ramp on amp trade execution settlement all those kind of things I think that is just why we come up with this product I just think so similar logic would apply for other real world assets as a people's appetite and the market cap of our industry grow I think more and more people want to get access to the real world yield without needing to offend right that's how we expand the scope the use case and the market or the the product varieties and the target audience of our industry yeah thank you um yeah I mean I totally agree it's tough One Lending usdc on Ave gets two percent but treasury bills get five percent there's obviously a difference there uh we say the risk crew rate but obviously they're smart contract risk and all that once you get on chain um but yeah for us like we look at it as Public Credit and private credit the private credit side uh seemingly been around for a few years on chain uh with things like centrifuge and Goldfinch the Public Credit to us though is we think every on-chain team that's holding uscc should probably have liquid treasury bills as well um backed has been working on this for a long time uh could you go through some of like the regulatory hurdles that maybe got you there like for example back isn't available in the US like why is that and like what's the process for you guys going from off-chain fund to on-chain back to token sure so like regularly regulatory uh hurdles um obviously in um like tokenizing those uh traditional assets um legal issues is is probably like uh the number one um yeah hurdle there's like projects like Matrix Doc and our sales face um and um yeah it's all question it's a matter of like trade-offs which which customer base are you going after um if you want to serve us customers then um you know you um you will abide by the U.S laws and um and that will constrain your ability to have permissionless or um permissionless assets um so we we chose you know um we chose to to to have our model um when we built the company was was uh uh Circle and their usdc uh we wanted those assets to be able to like move freely uh in the blockchain and uh to be as composable as possible with uh with D5 um so that guys like uh you know index Co-op or others could could build uh products on top of that um so we chose um we chose Switzerland as a as a jurisdiction to uh to incorporate the company and um and its uh issuer um so that you know that gave us um basically a legal framework to build those assets um and for them to be able to um yeah be better assets and trade uh permissionlessly um in in D5 yeah fair enough uh when you say permissionless still goes through the kyc process correct so it's it's very much uh like a circle uh with usdc I.E the primary Market is a permission market so uh people that want to Mint and redeem tokens uh through us have to on board with us we have to go through kyc transactions have to go through you know AML uh but then the tokens that we issue are playing erc20 tokens so they can move freely um and and be transferred freely um so yeah that's why you know or how permissionless they are got it got it yeah when we say permissionless in D5 sometimes it means different things when we talk about RWS um Cynthia you had mentioned to me earlier today that Matrix Stock's product is actually liquid on curve could you explain some of that it may be like also just as an anecdote uh there have been rwa products that have been traded on places like curve that have had problems keeping their Peg or have traded a discount and stuff like that so could you explain how it trades on curve and like maybe what that difference is between buying it directly through yeah sure so I think what we are addressing uh is launching liquidity right we want to give instantaneous liquidity to people that's a very important user experience because when you Mint or redeem the uh treasury token from us in the primary Market it takes t plus three or t plus four that is because all those operational hassle need to happen offline of chain right and that's if you are maintain like 20 million of course that's it's okay to wait for three four days but if I'm just a client I want to Mint like 5K sdbt and you will ask me to wait for three four days that's I probably don't want to do it right so I think from and also from the default integration perspective if you ever want to integrate your uh token into other for the landing protocols as a collateral or used as a classroom for certain taxes or be used as a yield component on other unseen treasury as a management protocols you need to be able to allow them to liquidate right and risk management and that that that's why in stainless liquidity on chain is very important that's why we build a curve pool where it's basically provide 24 7. so people ask okay you are sto you are not erc20 you are ERC 1400 why you can have that kind of a curve pool does that mean it's really permissionless it's not the token itself format itself is erc1400 so there is one for it's like yards to 20 plus certain restrictions controls right and uh I think herb can support that token as well that token format as well so if you are already in the wireless address where you already kyc or credit investor are validated you can interact with the carpool to buy or sell maybe just one SCBT that's also doable on curve so I think the Define infrastructure infrastructure is the infrastructure is a neutral I think in the future it should support multiple token formats and the the token format will give different level of permission nest and then the the infrastructure just function as a infrastructure so I think we are making a good example on how permissions uh pull can be set up on on curve and still be active and growing in liquidity yeah there certainly will be more permission pools hopefully on on most Sexes curve is a good example um yeah the piece of instant liquidity is like the new paradigm of crypto that I think's incredibly important um I'm curious like when you look at like not so much new tokens but like the instant liquidity you get of like a flashlight on Ave like obviously T minus four days isn't going to work when you need the token back in the same block um so like for us like if it's not instantly liquid it's it's probably not D5 like the way we think it is um it's not interoperable through all these T5 protocols then you might as well just have it sitting off chain um I wanted to switch conversations a little bit just as we talk like what these sectors of of rwas are to me the biggest and obviously seemingly obvious the biggest rwa is usdc um could you just give a little bit of background uh how makers use usdc and then uh how that's been like a pass through with rdwa is to like the DSR for example that you guys build on top of uh yeah sure um I would say the biggest is tether though yeah um but yeah usdc um so yeah maker has had uh Reliance on usdc um going back to uh March 2020 which we call uh black Thursday which was the event where eth uh There Was You know the covid lockdowns eth price crashed about 50 um within a day it was a very massive drop um the maker protocol was only like four months old at that time so like uh there was like insolvency that had to be recapitalized Lies by minting new maker and the protocol was like this close to being shut down um and settled uh so anyways as a repercussion of this previously maker or die had been trading uh below Peg uh consistently so uh we were raising the rates to uh have people close out their uh leverage loans and then uh to bring the diet Peg back up in line the opposite happened after this where there was more demand for holding die than there was for uh taking leverage on the other side with eth and so the dipeg broke up actually quite significantly it broke up to even uh one 10 cents 10 cents above a dollar basically um and so there were efforts to try and uh rein this in using just eth But ultimately the strategy failed so uh the decision was made to onboard usdc at that point um because there's really no other uh asset to bring the peg back down so that time we onboard usdc we onboard it as user Vault originally then uh in December of uh 2020 the peg stability module was introduced which actually I I built uh um so that uh was a one-to-one swap uh with between usdc and die and so there it basically opens up an Arbitrage that would force the peg back down to one dollar um so since then uh demand for um defy summer was in full swing and uh you know the whole crypto Market exploded so die market cap went huge and uh ever since uh yeah March 2020 the demand for holding die has outpaced the demand for crypto leverage and it's been that way ever since and so the crutch we're using was usdc and I was pretty heavily backed by usdc at various points um which is fine you know I no problem with circle like uh but it's we're aiming for a decentralized stable coin so we want to diversify the uh portfolio backing it um so over time maker has been working on this diversification and um the obvious choice now in the past year has been t-bills so Maker's been heavily ramping up uh treasury bill Investments um first uh major uh foray into this was November of last year um through monatellis uh MIP 65 it's uh we don't have to get in the technicals I guess anyways it was a direct treasury investment uh first buying uh ETF I believe is Blackrock um ib01 and then uh and actually was a mix of a few things but yeah basically short duration treasuries in an ETF that was ramped up to 500 million um in earlier this year that uh package was then subsequently ramped up to 1.2 billion which was uh switching to a laddered direct treasury investment strategy and now we have a duplicate of this under a new proposal that just passed recently another 1.

3 billion which is removing the uh stable coin backing which was uscc paxos and um Gemini usdc or sorry Gemini USD and uh so because those are um I mean those are backed by t-bills as well it's just they're not paying makers so might as well get paid for the same backing so uh yeah diversification more directly into the underlying assets um now that's not to say that maker makers not just yield maximizing and nothing else like uh die needs to maintain its pegs so uh uscc and usdt are still very very liquid on chains so uh maker uses those for maintaining the Peg and for that purpose it's it's worth worthwhile maintaining some inventory in usdc um and probably and tether as well soon we don't have any tether backing right now but it's that's changing so yeah usdc is still the primary uh Peg making mechanism got it understood thanks for explaining the yeah MIP 65 is definitely like important no but but it's it's like it was an important turning point in D5 in my opinion uh before we get off that topic could you explain a bit of like the underwriting process for how you guys maybe go about uh allocating to some of these positions like t-bills can be relatively easy but you guys have financed solar farms in the past things like that what's the process you guys have like a working group for that or I know makers change a bit in the past couple months so if you could explain like how that goes from underwriting to tokenization yeah okay so and let me preface by saying I'm not on the rwa team so I kind of watch this stuff from a distance but yeah there um was originally um a real world asset uh core unit for those unfamiliar uh maker Dao is actually operating as a dow so there's like no legal entity um so the workforce was organized into what are called core units which are um like uh specialty segmented uh teams so like for example I was on the protocol engineering core unit we built smart contracts and stuff like that so there was a real world finance core unit uh which was led by my colleague Zeb who's actually around here at the conference so he was running that and there was like lawyers and stuff like doing the underwriting on the various uh products that were being invested into uh this was mostly small scale uh up until about last year uh so like I think the biggest deal was Huntington Valley Bank at 100 million um but yeah it was really sort of more of a trial um thing as uh most of the income was coming from defy but now that we're in a high rate environment you know D5 rates have gone to the floor basically it makes sense to be ramping like getting serious about these rwa Investments so the t-bills is definitely like the vast majority of the RDA rwa exposure both directly and indirectly through uh Fiat back stable coins um but yes there is uh the underwriting process yes we have there's like lawyers and stuff that were doing the radio so right now makers in a transition like a governance transition period so um the uh sub-dos and I don't know how much you want to get into this but I'm happy to get into it we're a participant in many of these so happy to talk about it but yeah uh this whole process is like unknown to a lot of people so yeah certainly would happen sure okay so maker core uh previously uh Dow was a very flat structure and um the governance ended up in a very uh politically is is basically like very politically driven which was not great for uh running but I'd be more akin to a business um but anyways For Better or Worse that's that's what it was so um ruin the co-founder of maker Dao has uh put forward the end game plan which is to lock maker core down into just very basic functions and have all the Innovation and growth and balance sheet allocation move out to what are called uh sub-dos so these are like recursive smaller versions of maker dial you can think of them like that and they have their own treasury um Surplus and they have their own revenues and make her uh just charges them a certain cost of capital and then they're free to deploy into whatever there's what there's obviously rules about what to deploy into but um as as these uh sub-dials build more and more of a junior Capital position um they can then be more free to experiment as their underwriting more and more of the credit that's going out so um it's sort of this tiered system and uh that's this is not in place yet the subdials will be launching next year um but this is the idea yeah certainly exciting it was interesting we went from go on maker Forum to now it's maker Forum with with five different uh sub-dos which was cool to see um Irene I have a question for you so we're talking a lot about rwas many of these are on ethereum how do we get these cross chain how do we get these into the hands of regular users that don't want to pay 10 gas fees yeah I mean I'll start by saying that uh when I I think about a year and a half ago I was in New York and I went to a debate that was happening with uh like a prominent advocate of cryptos is what I'll say and uh a very very bearish software Tech VC and uh they were on stage and they were debating the topic of use cases for for crypto and uh the proponent said like tokenized real estate and obviously in a crowd full of software Tech VCS everyone like booed and they're like no one cares about that I I think that's really really cool but there just isn't actually market demand for that right now and I think uh you know three years ago everyone was really excited about rwas and um had all these really uh you know unique and novel use cases for it but where there is Demand right now is uh lower risk high yield uh like tokenized uh assets like t-bills and so I'm particularly excited about that however now that we're at this place we have to figure out how to make it even easier to bring in new users so yes we can serve current crypto native users but we also want to bring in like bring tradfy to D5 rather than D5 to try fine I think making these uh tokens accessible via l2s is really important for that um and L2 to L2 movement there is incredibly important and also layering things in like account abstraction so you asked about how to bring these cross chain or omnichane with some of the projects that are integrating layer zero they are now converting these tokens into ofts which are Omni chain fungible tokens it's a way to uh mint tokens that are native of multiple chains and allow for seamless movement between them just by paying gas fees so not going through a wrapped asset Bridge or a very clunky process that involves multiple gas tokens multiple clicks and also uh it's interesting the most high volume Pathways across the layers your messaging protocol uh are arbitrim to optimism optimism to Arbitron like L2 to l2s that's where there's so much product Market fit and so we're really really excited about that I think over the next six months there will be rollouts of uh particularly exciting rwas that will have product Market fit and will be ofts and of course as I said at the beginning I think the highest product Market fit version of these is stable coins and I spoke yesterday on a panel about uh stable coins in a multi-chain world so that's something that we are super Keen to see and I think also for me and in the work that I'm doing leading strategy at layer zero trying to explain how block the blockchain tech stack is actually superior to the current Tech stack for all of these uh Financial products is is really important too it's just actually better for regulators and and people in tradfi to utilize uh blockchain technology and interoperability embedded into that because it's it's easier to audit there's instant settlement uh the composability aspect uh and uh like opening up the the pathways across different uh like nation states for example and using all of this so we're really excited about it I think oft in particular is purpose built for these kinds of tokens and I will be really Keen to see reception to what's coming out over the next few months yeah I definitely agree I think a lot of us think from like a D5 perspective how do we get ethereum stuff and how do we move it over to these layer twos well like you said like optimism Arbitron polygon ZK event to arbitrum like things like those are gonna be super important uh ofts or something I'm familiar with uh at index but but from looking at like a wider view uh and and this is why uh you the question Cynthia about liquidity like if these are kyc tokens for example like how do we get them across chain like is this gonna be a world where like okay some things are going to be permission they may not be allowed everywhere um this is certainly like a problem like we have to think about as like an ecosystem uh so yeah do you think we're gonna be able to like get these everywhere or is it going to be just a permission section of D5 I think it depends on the specific implementation layer 0 is actually already in production servicing permission chain to public chain uh information passing and uh the way oft works is you deploy oft contracts on all the chains that you want your token to be uh Native on and enable movement between so if you're the owner of the contracts that means you can expand and contract the sort of like native scope of your token let's say layer 0 Launches on Linea day one and right now your token is an oft on ethereum and optimism Arbitrage you would just deploy an oft contract there and and it would immediately hook up and it'd be the same contract address and token ID and maintain provenance across all of these um and you can embed within the oft contract any kind of of like metadata or features including geofencing kyc all of these things so it just depends on the token issuer and uh we're seeing some or I've been helping out with some experimentation of this uh it's one other instance of of teas which is really interesting is deploying your oft as native also on something like avalanche's Evergreen and Spruce subnets uh and enabling your your native tokens to to also be native there which is now an app chain that most of the large tradfi entities are using and you know props to Avalanche for bringing them in and engaging them in this way awesome um go for maybe to jump in um so yeah I mean we we built those tokens and we issue tokens that are you know in the case of ethereum playing the lc20 tokens um yes it's a permission Market on the primary Market but then you know they're freely transferable just like usdc uh but what we're seeing is um obviously these are security tokens they're Securities and so you have roles that are specific to those assets and um that govern the traditional Finance um and what we're seeing you know with um so so we've got a bunch of these assets that have been issued but we're struggling to to build liquidity on secondary markets um and that is because um people you know um with the D5 infrastructure as it currently is um and trading with uh unknown um people and defy um you would be instantly like breaking a few a few laws and rules um AML laws obviously but then also like Securities um rules um specifically like um when you're offering Securities uh you're meant to have a broker-dealer license um in the jurisdiction uh where the investor lies and so obviously like if you're providing liquidity on on uniswap then um it's an issue like which broker dealer license like how do you put this together it's it's um it's it's it's really a world we're hitting right now and so um we're it seems that you know at least for now we'll have to find a way um to create um permission markets where that liquidity can be safely uh bootstrapped um and then before evolving you know further uh into permissionless world yeah if I can try to explain how some other Protocols are doing it like how we look at it if whether it's good or not um it seems like the permission issuance and Redemption of a specific token can be gated can be can be permissioned as maybe Matrix stock does um an example of this is matrixock an example of this is like Ando ousg um what we find interesting is that there still are ways to make these permissionless as long as there's uh a permissioned issue and some Redemption route so for example onto ousg is integrated with flux markets that allows for fusdc to be uh minted on top of it that's permissionless I'm not I'm not the one to say that's good or bad but but it's certainly what's happening um something like fusdc can then try and go get listed on on a place like Ave where index group would look at that and go okay we can maybe build a strategy um is that the same process that Matrix stock uses to get liquidity onto curve or are there other pieces as we let go from origination to tokenization um at this moment the curve pool is a gated pool so that means all the people who provide or take liquidity from that pool need to be kyc that is already on the on the wireless address so not really from that regard but I think some of the application you mentioned example you mentioned is very it's a good reference right uh it's it's whether I think the the Restriction comes from that this is a sto and there's a restrictions around Distributing the sto which need licenses um and or or very strict reverse solicitation rules however if it's not Distributing the sto directly but use the the security as some sort of underlying for some other assets which there there might be a flexibility around that so I think that's where everyone is trying to explore yeah there's certainly like a balance between like we want these things to be permissionless but in many cases they can't be um so I I bring up fusdc as example uh it's just tokenized treasury bills uh we look at something like that as like voters on Ave and go okay that's like a very interesting use case for a money market um as like maker and Spark looks at like tokenized treasury bills are there criteria you may look at to list an asset like that or like generally when you look at rwas on money markets like what what are you guys looking at in terms of like the parameters to set possibly yeah I mean uh for I'll speak for maker because it like spart on the spark side we're more focused on defy stuff um user Vault it's more like user Vault land and actually let me explain that a bit so uh when you're backing a stable coin there's uh two places you can put the backing it's either in protocol controlled value and this needs to be super safe stuff or else you risk insolvency um if it's volatile so this is this backing will mostly be t-bills and like AAA corporate debt basically stuff that looks like cash um but you want to kind of maximize the yield there then there's like user Vault land which is um you know each collateral uh vaults so you can take leverage out on eth and this would also apply to tokenized stocks or whatever tokenized Commodities um whatever else so let me talk about the make the maker side because I think that's more relevant especially with the onslaught of uh t-bill investment opportunities that have come recently um so for maker there's there's a the main trade-offs I would say is uh liquidity and return so like a good example of this is uh ondo ousg and the flux market so probably um and this is of course after performing due diligence and stuff like that we need to bankruptcy remoteness is something that maker is looking for in any investment vehicle um so yeah by the way just if you're if you're building these types of things make sure they're bankruptcy remote because some of them are not and it's it's not great um so after performing due diligence and you know it seems like a Sound Investment nothing fishy uh we look at how liquid is it so what is the Redemption time so if we're in to invest into uh some t-bill investment how long does it take to liquidate that position if maker needs to bring the peg back up uh if it's breaking down um so this is usually a couple of days um but getting this number down as as much as possible is uh is a huge uh Advantage for your product um now flux is interesting because it kind of sits more in the middle the yield is lower but it's uh way more accessible to uh some like there's idle liquidity there so you can actually pull liquidity back into the protocol uh immediately to a certain degree so it all exists in this trade-off between liquidity and I would say the most liquid asset is usdc um but there's no yield on it so it's a trade-off between yield and liquidity basically and that's that's the trade-off that maker is looking at primarily yeah understood I mean from our perspective index Coupe it's like again it's it's good it's permissionless but like we need to know how it gets there we get a cat on stage if anyone's ask a question uh um but yeah I mean when you talk about liquidity can and this might be a good question for you Cynthia like how much liquidity is enough like is that a question you asked like do you think about like curb bribes like obviously you do um when we look at liquidity like we certainly have like worst case scenarios of like what could happen if it's illiquid uh money markets probably want multiple areas like liquid and asset it's like what's the liquidity looking like now like where do you hope to be in the future yeah currently it's uh between like 16 million to 20 million in that pool and I think by end of this year we are quite confidence we can get it to 30 to 50 million uh and whether that's enough I don't know because I think that demand of that the the the the liquidity demand for that pool is grow in tandem with the different Integrations we have right the more Divine integration we have the more um kind of liquidity sensitive they are the more demand they have on this pool then we need to find different ways to grow the liquidity there right so I think now we are thinking of very healthy um it's it's it's the the I wouldn't say it's flywheel but currently we're seeing a very good momentum uh that uh the both side is growing um but I think yeah we hope that once we get hold of some of the big protocols where they are sitting on billions or hundreds of millions to deploy then they definitely will need has a very strong Demand on the Deep liquidity on chain but it's also very much depends on the on the liquidation mechanism right so I think um yesterday I was at uh listening to the first chat of um of Michael from curve I think he he mentioned that they have a new mechanism for liquidation where they out of the ten dollars that loan you need to be liquidated actually they have a way that actually end of day they only liquidates um a small portion of it maybe one dollar I think this is also important if the efficiency of the liquidation could include move through some sort of a smart algor then there isn't that much big um liquidation need to happen at once and then that also helps right it certainly helps llamas like a huge innovation in my opinion uh Sam you mentioned uh black Thursday like if you have any leverage position on maker and then one day 24 hours it goes down 30 50 like that's that's terrible that's that's that's incredibly risky and it's like one of those things like we just have to take for granted um index Coupe builds like uh managed leverage positions that like would do that automatically for you but even then like the volatility within those just like you'd have to continually rebalance it so it's certainly difficult that's why llama comes out on curve USD and like super exciting for us um we're talking about liquidity and like how you get liquidity for some of these tokens do you think it's all just a yield game like I know Stargate has has their own own problems when it comes to trying to incentivize people to get onto their chain like is this all about yield is it about the underlying token like how do we incentivize liquidity for all these different stable ones I also want to say I unfortunately have to leave in in like a minute or so to run to another uh thing but I with Stargate uh we Stargate leverages something called the Delta algorithm which is a proprietary algorithm that handles the accounting across these unified pools of liquidity and if you guys are unfamiliar it's a native asset Bridge only made of assets of course and ofts uh it's sort of just like add subtract across different chains um I I actually think that it is a like a yield challenge but I I also think that um as I had mentioned before to bring more liquidity on chain into this the actual like packaging and go to market of of these assets has to bring in net new users as well and and so uh like designing those those user experiences matters uh a lot quite a bit and I think Stargate will play a large role in that um but yeah unfortunately I do have to to dash so these these four are the best hands to be in thank you so much uh yeah the reason I asked a question about like a yield game is just because like it seems like it sometimes is a yield game in D5 but but sometimes it's not we're speaking earlier like the DSR on dive for example three and a half percent like you'd think all deposits of of a uscc would move directly to that but it just it just hasn't happened maybe die yes yes apologies well I'll die I'll be usdt like you think it all it'll all move over but but that wasn't the case um like what role does user experience play in some of these rwa tokens like for example like we built on top of back finance and we go to our users with our with our new token and hopefully it's easier for them to get into hopefully they don't have to kyc multiple different times to get in multiple different positions um but this might be a good question for you Cynthia like what's that user experience like is it different for rwas than it would be for some of the traditional like traditional four like Bitcoin or ethereum is that process different to get into these or do you see like different users having like different type of uh experiences uh I think it should be as uh as most as possible now it's probably not the case right that's why you are not seeing a lot of users coming in holding out of the way yet but I think there's a lot of improvements you can do regarding the user experience where they can first get instant swap of rwa once they qualified as a holder and they don't have not they do not necessarily need to go through the the the the the the three-day four-day meeting and Redemption process and also there should be way for smart contract to interact with the main thing contract which we also launched it's easier for Dao and other like Define native protocols to interact with the whole maintain process and well during that process has 100 transparency and visibility on which uh it's so the whole process is a fully trackable so that maintaining a smart contract yeah so we try to make it I think the area that we really like make sure start really spend a lot of effort on is really how to make this uh whole experience and integration um very much defy compatible um yeah because we once we are there we don't want to go back certainly uh yeah go for it oh yeah I was just gonna say um my view on it uh having observed the defy space for a while it's um have you defy people are kind of a little uh skittish and untrusting of new things and um so why isn't there everybody piling into these higher yielding um Investments um quite honestly I think it's a branding and reputation like these things are new people are unsure in a space where you know getting rugged is like commonplace uh people are naturally uh worried about uh the soundness of what they're investing into so I don't know that's also true but I mean why don't they buy tokenized assets you know why don't why doesn't Deutsche Bank come in and go to Nike sport I want to buy you a Gmail token yeah I mean there's the Degen side for sure but I like this is my personal observation you know feel free to disagree but uh yeah I did it from my view people like okay these Brands you know maker Ave compound these feel safe so they Park their money there right and For Better or Worse that's kind of how in my opinion uh the average D5 user kind of thinks about this stuff so when newer stuff comes in and it's even if it's higher yielding you you're skeptical of these things so uh I think it's just it's slow and steady process as more tvl gets locked into these new these newer instruments people will get more and more confident like I've heard many times people like oh that had high tvl why you know uh for example Euler it kind of loved the Euler team they it was very unfortunate that they had that big hack but a lot of people were caught off guard by that because they get they're like it's had so much tvl in it therefore it's like very safe and so yeah I just think that's how people think about this stuff and just be a slow process to ramp up for 10 years we've come to Australian dollars yep just to go back to your question I think like when you're a Deutsche Bank and you have access to the traditional markets you may not you don't need Matrix stock or backdoor uh to actually get exposure and you prefer to trade directly on the exchanges I think we're more about like giving access to people entities that don't currently have that access to traditional assets I think that's where the game is right now um potentially further down the line so so people in in um I don't know let's say Latin America South America Africa well yes and then crypto native entities your treasury like what is it I want you why would I buy take my crypto money that I work so hard to build are you in Easton Bitcoin in your treasure is uh volatile you don't have oh yeah you have to balance it I also have stable coins in there yeah um you just don't get the extra rebuild that we're talking about yeah yeah I I want to share a little bit my view on this uh actually I asked we we ask internally the same question why whether in the future the the tri-fi big boy is will join our market and I think there they will um the reason I think the will of course at this moment agree with their wine and agree with Sam that the current demand mainly coming from the crypto native guys people not having access to the tri-fi uh products and they might be the first batch users but I don't think this is the end game I think the end game is there's going to be a toppling effect and that uh Tipping Point will happen when you have significant unchain activities right in our markets and there is a significant participation from this vote and the the superior um efficiency of the defy infrastructure which 24 7 more inclusive lower cost would once you have that traction there will be a like a Tipping Point where they see okay what's happening here and the more efficiency and also the arbitrary opportunities that exist in this 24 7 pool of the treasury bill uh trading Market that we built on curve versus the only trade a few hours and then they don't trade on weekends and bank holidays in the US there gotta be a moment that they feel interested about this and start to double into this world and then they try and play out and see okay it actually makes sense and to do more and it and it helps because this is a permission Market they do not have all that bank kind of risk officer giving you questions about the kyc and who you are dealing with AML issues so I think that will happen it's just that will happen in stages that's why we do hold a long-term confidence in building in rwa fundamentally like crypto rails are much better suited to financial transactions than the Legacy system and it will take time as Cynthia just said but uh it's just yeah just a matter of time before that it happens yeah and I I think uh is uh you saying that your treasury was a lot in eth I think so to clarify I'm talking about those who are holding uh stable coins getting zero yield why are they not transitioning I understand holding eth Bitcoin is entirely different discussion so there's obviously different risk profiles with each each but those who are holding stable coins right now say usdc getting zero yield why are they not uh getting these into these higher yielding Investments with the same underlying backing that's that's my point yeah it brings up an interesting question one that I wanted to ask you you kind of you kind of front run us on there which is great uh how do we get from it's like backed it builds on top of BlackRock ETF for example how do we get from a tokenized rapper on top of the traditional Legacy system to actually originating some of these assets on chain like taking advantage of all these efficiencies right so I mean yes we're just an add-on to the existing system uh where as you said like a wrapper um to to those products um eventually further down the line uh we'll get issues to natively issue on chain um and yes potentially like the Deutsche Banks of this world uh will push their clients uh to do so because of efficiency um and uh and you know liquidity um features that that crypto offers um I think you know we're in that interim stage where we have to uh Bridge those those two worlds those and um and yeah before before those those issues come natively on on train I think right now it's still very complex um and they you know those issues don't see the benefits of doing so as well yeah uh in my mind it's it's certainly too risky from at this point to even try um it's like part of some of the conversations we have with our our institutional team at index it's like we could do this but really what's the upside for us I think that upside will be clear in the next hopefully five years or so um but yeah like the liquidity the instant liquidity instant Redemption of some of these things is incredibly important the efficiency of using amm's the efficiency of using money market protocols things like llama that allow you to only get partially liquidated um we do think that's like an up to me in my opinion that's why we're building these things so like why wouldn't that that extra uh layer come on top one's on traditional teams are in this um yeah it again brings up like an important topic like what does this look like in five years like I was just looking at rw8.xyz we have like 630 million in in treasury bills on chain uh some traditional Finance teams are building those some uh non-traditional crypto teams uh RWS is obviously much bigger than that like we talked about real estate like what is this going to look like in a few years What's it gonna be like like we can't be calling it rwas in five years hopefully did you guys have an opinion on that sure just um at back we're gonna try and and uh we will bring uh many assets on chain um from different asset classes you know equities we already have like an S P 500 um token uh but yeah equities uh fixed income obvious you see Commodities uh real estate you name it maybe art um that will come on chain and within each asset class you know if you take fixed income for example will um you know be able to offer products within different currencies dollar euro jbp um and different types of issues government like coffee bonds uh corporate bonds show duration long duration again to try and offer a wide panel of of tools for uh for players um and and people to to Really um do better uh financial management of of their uh of their money um I mean I think yes the space is it's growing like the rwa space is growing but it's still really tiny um and um yeah when I mean analysts of uh throwing numbers like uh four or five trillions will get to organized in the next uh five to seven years um it's it's definitely a possibility um and yeah we're just scratching the surface here yes yeah I agree I think I just want to share two um observations I'm based in Hong Kong Hong Kong is a financial Market I used to work in traffic I used to work at Hong Kong exchange five years ago before I joined crypto full time um so I recently this year has had a lot of conversation with the tripod people and they all every one of them is mentioning rwa all the big SM managers all the big broker dealers they are talking about rwa I think some of them even have internal teams really working on that you don't really see that for crypto for crypto it's a different narrative right last bull run because the price goes up so much and they might have some end client requirements they were kind of forward into the space right they wasn't really sure about what crypto is but they they were like okay maybe there's a demand our client is asking for it they will get pushed into the space that's how last bura happens but this time I feel it very differently I feel they are leaning forward very much to get into rwa probably even more eager than us right because they have already have an asset they have already have the distribution they have the brand they have the licenses everything right so they also feel that okay this is a game changer for them so it's the first time in the history of crypto that you see the two forces are going to join somewhere very soon in the near future so my estimation of the the the the scale of this is um phenomenal I think in the five years time there are going to be tens of trillions of market cap new market cap brought in by real world assets and that's probably going to be a very significant part of the digital asset world right so our industry is no longer going to be called crypto industry it's going to be called digital asset industry yeah I mean are we going to be able to change the name rwa in five years I don't know a lot of people seem to be trying but names tend to stick from what I've seen um anyways uh yeah five to ten years I I view you know tradify D5 this is it'll just converge into finance and everything will be on chain tokenize everything at the edges um in very uh Lego bloxy Atomic units with independent Auditors at every step and um then you have everything on chain and liquid secondary markets and ideally as permissionless as possible but you know I understand there's probably going to need to be some permission segment um but striving for permissionless as the goal is is um the world I would like to see um yeah I think that's roughly my view of it um yeah I think you brought up a good point Cynthia of like the way we look at it as crypto people is totally different like if if you go to a conference that's a bit more Trad five focused maybe like you'll hear like six months ago I heard like Bank of New York melon talking about like bringing the assets that are illiquid on on their on their rails and bringing that to crypto that's totally different than talking about treasury bills on chain um so yeah I I do agree I mean like fragrance template has there rwa product that's just t-bills like I I see a world where they're going to bring all of their products on chain because of the efficiencies um I think we can keep talking forever uh that's about all I have uh certainly very happy talking to you all about this uh we hope you guys keep Building Products that index Coupe can integrate um but yeah uh I think hopefully in the five to ten years we'll talk about we'll all have uh tbls on our on our protocols that are that are much bigger than we have today um but yeah thank you to all the panelists and uh hopefully we continue talking thank you