Bankless - BUIDL: Blackrock's $10T Bet on Ethereum | Carlos Domingo

Episode Date: April 2, 2024

Earlier this month the largest asset manager in the world released its first tokenized fund on Ethereum called the BlackRock BUIDL fund.  We knew this was big… but after recording this episode we��re realizing this is an even bigger deal than we initially thought. Tokenized treasuries on chain Tokenized securities on chain. The largest institutions in the world are here and they’re tokenizing their assets. ------ 🌐 CRYPTEX | GET INVOLVED WITH GOVERNANCE FOR THE FUTURE OF DECENTRALIZED MARKETS https://bankless.cc/Cryptex_pod  ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24  https://bankless.cc/spotify-premium  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠  🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo    🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku    🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  🏠 CASA | SECURE YOUR GENERATIONAL WEALTH http://casa.io/bankless  ------ TIMESTAMPS 00:00:00 Intro 00:06:46 What Just Happened Last Week? 00:09:09 What Composes This Fund? 00:15:01 Onchain Dividends 00:20:02 Is BUIDL a Security? 00:22:56 Is It Permissionless? 00:26:02 Redeem Function 00:30:47 What Assets Come Next? 00:39:55 Securitize's Role In This 00:42:39 Size of Inflows 00:47:09 Total Market Size 00:50:46 Yield Accounts 00:53:01 Onboarding New Users 00:55:41 When Central Bank Involvement? 00:59:49 Where Do We Go From Here? 01:02:14 Legitimizing Our Case 01:05:04 Next Blackrock Product ------ Carlos Domingo https://twitter.com/carlosdomingo Check out the fund contract on Etherscan: https://etherscan.io/token/0x7712c34205737192402172409a8F7ccef8aA2AEc  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠ 

We're hitting this afternoon 150 million in AUM. By the time this gets published, it's probably going to be $3,400 million. I don't know, depending on how the inflows come. But wow. My sense is that this is going to be a pretty big fan because there's so much stuff out there that is likely to move here. Welcome to Bankless, where we explore the frontier of BlackRock on Ethereum, tokenizing securities. Really interesting subject today. So earlier this month, the largest asset manager in the world, that is BlackRock.

released its first tokenized fund on Ethereum. We talked about this on bank lists. It's called the Black Rock Biddle Fund. So I think David and I knew this was big, like a big deal. But after the recording, the episode you're about to listen to, I think we're realizing it's an even bigger deal than we initially thought. This is about tokenized treasuries on chain. This is about tokenized securities on chain.

This is about the largest institutions in the world, opening what we call a bank branch on Ethereum and starting to tokenize their assets, a very bullish episode for you today. Before we get into that episode, we're going to talk to our friends and sponsors over at Cryptex Finance. Cryptex is a Defi app on Arbitrum that makes crypto-native market tradable. They've been around for a while. And Cryptex produces the asset T-cap, total crypto market cap. It's a synthetic asset that tracks the total market cap of crypto.

If you just want to think less about the tokens that you are buying in this bull market, it uses a chain link to produce that synthetic asset. And the Cryptex is launching other indices. and they want you to be a part of that. All Cryptex indices are managed and governed by CTX governance. So if you share the same vision as Cryptex, which is, of course, to make crypto-native markets more tradable, hop into their Dow and see what you can do.

There's a link in the show notes to get started. I think this is the best indexy in crypto, by the way, David, because it's truly set it and forget it. Yeah, it's just you buy everything all at once. You don't have to think about it, right? You don't have to think about. Yeah, think less. It's a really nice passive instrument, I think, for peace of mind.

Today on the show, we have Carlos Domingo, who is the founder and CEO over at Securitize. Not BlackRock, but BlackRock uses, leverages, securitizes software, like a software platform to help them produce and maintain this on-chain security, this tokenized security on-chain. There's been like mixed reviews about people's perceptions about BlackRock coming and being on-chain. Like, oh, everyone is so excited that Black Rock's here. And then the other half of the other half of the people are saying, like, oh, why are we celebrating this bank coming on-chain? First off, it's actually not a bank. BlackRock's not a bank. It is an investment management firm. has a lot of assets. BlackRock is allowed to go bankless just like everyone else. And so to me,

this is the process of BlackRock taking its treasuries, taking its assets, putting them on Ethereum and taking them away from other people. So this is the process of BlackRock, the largest by capital organization firm ever choosing to put their toe into the world of going bankless, starting with the most proximate security after actual dollars, which is tokenized treasuries, putting it on chain. Pretty cool. All right, guys, we'll get right to the episode with Carlos talking about BlackRock on Ethereum. But before we do, we want to thank the sponsors that made this episode possible, including and especially Cracken, which is our recommended exchange for 2024.

This is an exchange that David and I personally trust, go create an account. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Cracken, one of the longest standing and most secure crypto platforms in the world. Cracken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone, everywhere to trade crypto. Cracken's intuitive trading tools are designed to grow with you, empowering you to make your first or your hundreds trade in just a few clicks. And there's an award-winning client support team available 24-7 to help you along the way, along with a whole range of educational

guides, articles, and videos. With products and features like Cracken Pro, and Cracken NFT Marketplace and a seamless app to bring it all together, it's really the perfect place to get your complete crypto experience. So check out the simple, secure, and powerful way for everyone to trade crypto, whether you're a complete beginner or a seasoned pro. Go to crackin.com slash bank lists to see what crypto can be. Not investment advice, crypto trading involves risk of loss. Taking self-custy of your crypto is one of the most important things you can do on your bankless journey. It's also one of the hardest things to get right with huge consequences if you don't. If you want help going bankless, talk to Kasa. Kasa helps you take custody of your

crypto assets so you don't have to wonder whether you're doing it right. Kasa is a one-stop shop for doing self-custody the right way. With Kasa vaults, you can hold ether, Bitcoin, stable coins, all with one simple app and multiple keys for the ultimate peace of mind with a support team to help you every step of the way. But it doesn't stop at self-custody because even though crypto is forever, you are not. We all plan on making life-changing wealth in crypto, but with CASA's inheritance product, life-changing wealth can elevate to generational wealth. For your kids and your loved ones who don't know anything about crypto. With CASA, you won't lose your private keys and you won't accidentally take them to the grave either. Click the link in the description to get started

securing your generational wealth. Selo is the mobile first EVM compatible carbon negative blockchain built for the real world. Driving real world use cases like mobile payments and mobile defy and with Opera MiniPay as one of the fastest growing Web3 wallets, cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now Sello is looking to come home to Ethereum as a layer 2. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the cello layer 2 to build upon their stacks. Why the competition? The cello layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one block finality. What does that all mean for you? With cello layer 2,

gas fees will stay low and you can even pay for gas natively using ERC20 tokens, sending crypto to phone numbers across wallets using Social Connect. But cello is a community-governed protocol. This means that Sello needs you to weigh in and make your voice heard. Join the conversation in the Sello forums. Follow Sello on Twitter and visit Sello.org to shape the future of Ethereum. Is BlackRock now tokenizing things on Ethereum? It seems like it, maybe. How big of a deal is this? The smart contract that rolled out to MayNet last week is called Biddle. That stands for Black Rock, USD, institutional, digital liquidity fund. On the podcast today, we're going to find out what exactly that means and if it's as big a deal as it seems. And we have the perfect guest

to guide us through that. Carlos Domingo, he's the founder and CEO at Securitize, a company that tokenizes real world assets. And they were the ones that were involved in the press release and provided the platform to help BlackRock tokenize the Biddle Fund. Carlos, welcome to Bankless. Thank you for having me. Big fun of a pod. Well, thank you. We're a big fan of what you're doing in terms of bringing real world assets onto our crypto networks. And so I think we want to start by really trying to understand what actually happened last week because we got excited, crypto got excited.

BlackRock, of course, is the largest asset manager in the world, something like $9 trillion in assets under management, absolutely massive. They are certainly a bellwether for the rest of traditional finance. And if they are tokenizing, we want to know as much as we can about it. So can you help. tell us what is going on. We see a press release here.

We see BlackRock tokenizing something. In your words, what just happened last week? So what happened last week is exactly what you said, right? That the largest asset manager in the world decided to take one of their funds and tokenized it on the public Ethereum blockchain, which I also agree with you guys. I read the post you guys did yesterday. This is a bigger deal that most people think. And we've done a lot of tokenization projects over the years, probably more than anybody else. but I think this is really an inflection point in the industry because of the importance of the company doing it, but also how it was that.

And we can talk about the specifics of that. But yes, it's a big deal. And I hope crypto people realize about it. Just to nail down some of the specifics here. This is actually not a new fund. This is a pre-existing fund that is now being put into the form factor of a digital token on Ethereum. Is that correct? No.

So this is a brand new fund set up specifically to be tokenized. It is just similar to other funds that BlackRock has. BlackRock has, I think, $800 billion of cash management products, they call it. So these are funds that help companies manage their cash. And this is one of them, which is very similar to, I think, it's called the Fed Fund, the one they have. But it's a standalone fund that has been set up brand new for, you know, the tokenization project. Okay, so what are the details behind this fund? Like, what is the return profile of this fund?

on what it composes this fund. So the fund contains overnight repos and three-month duration treasuries. So it will give you the same yield that the Fed rate gives you today. And that obviously depends on how interest rates changes, but around that. And then it's a cash equivalent fund, if you want, because what it contains is like cash and it's as liquid as cash. Okay. So short-term interest rates, short-term treasuries.

This is like cash and cash equivalence. This sounds like the safest, most proximate fund to actual cash. It's like cash plus like the most proximate amount of yield possible. But it gives you a yield, right? It's like if you hold cash, you don't get a yield. Or if you go hold stable coins, you don't get a yield. If you held this, which is cash equivalent, then you're getting a yield on your assets, right? So it's used for, we can talk about the use cases, but they,

The most obvious one is treasury management, right? Like anybody that has treasury, you keep a portion of it in a very safe instrument to make sure it doesn't disappear overnight and that you can convert it in cash anytime you have liquidity needs. So that's the kind of instrument that we're putting on the Ethereum blockchain now. Really dumb 101 new question for you, Carlos. Like when you're talking about a fund, this is a BlackRock, a new BlackRock fund. What do you mean by fund? Is a fund just a pool of capital?

or is there some specific asset manager meaning to the term fund? No, a fund is basically an structure, a legal structure, that is set up as a fund meaning that is an investment vehicle where people can deposit money to that money be deployed certain underlying assets that you need to disclose who they are, which ones they are, that provides a return to investment. So a fund, it could be a private equity fund, a VC fund, a credit fund, or these kind of instruments,

which are referred usually as money market. funds. Would it be accurate to say, Carlos, that this is like a tokenized treasury? We've been talking a lot on bank lists of the last six months about this sort of emerging theme of like tokenizing treasuries. Is that what this is or how proximate to that? Yeah, it's very close. You don't tokenize one treasury. Let's say you can buy a T-bill for a certain duration and then tokenize that. This actually is an actively managed fund that they keep, you know, basically buying different treasures in the underlying. And that what you're buying is that you need of the fund that is actively managed. by investment manager, which in this case is BlackRock.

So it's, yes, it's within the realm of tokenized treasuries, but I will say it's a bit more sophisticated than just taking a treasury and tokenized it. What is something a similar analog maybe in the traditional finance world to what this actually is? Would a money market be in kind of the realm? Yeah, money market fund. It's a very good.

This is essentially a money market fund correctly. Okay, so I actually use a product in the TradFi world through Apple Pay. It's really nice because it's integrated into the wallet, for instance. And I think Apple behind the scenes works with Goldman, basically. And with Apple pay, they have the partnership for the credit card and everything we're going on. Yeah, yeah. There's actually like a credit card and it's, there's a high yield savings account. So like my Wells Fargo account, like full disclosure, in case people in bankless didn't know, both David and I have bank accounts. We bank at Wells Fargo occasionally. We try to minimize them whenever possible. Some people are very surprised by that, Carlos, but we still do have to pay some,

you know, trad bills around here. Anyway, so I also have an Apple pay account, and they offer a high yield savings. It's like 4.7 percent, something like this. It's better than what Wells Fargo offers, which is like 0.2%. They are not passing on the savings in the checking accounts to their customer. And I think they work through Goldman to effectively, you know, power this. I'm sure Apple gets its cut. Goldman, you know, like takes its profit.

You think even 4.7, a lot of people gets a cut in between. Yeah, exactly, exactly. So it's not great, but it's much better. than my Wells Fargo account. So I guess how close is this to something like that? Now, it seems like it is gated to institutions, of course. So like retail can't get it in the same way I can get the, you know, 4.75% in my Apple wallet. But like how approximate is it to something like that? It's very close. So you have on the blockchain, you have stable coins, right? That's like like dollars that you can move around. And then in real world, you have like the actual dollars. And then

have your saving accounts that give you a yield, right? So this is the same thing. People can actually move their dollars, their digital dollars and put them on a, let's say, digital savings account on chain to start earning a yield. Something that's unique that is part of this offering this this, this tokenized product is that it's a, the tokens themselves are stable coins or they're worth one dollar. But it's a yield bearing instrument. And so the way that the yield actually gets sent to the token holders is that every 30 days, there is like an on-chain dividend, call it, where the yield that was accrued over the last 30 days is sent pro rata to the token holders on-chain.

Can you talk about the design choice of why make this a yield, a stable-value instrument, and then also the design choice of sending the yield every 30 days? So first, this is common. Like there's many money-market funds that you buy a unit at a fixed price, let's say, a dollar. And then as you accrue interest, they will give you more units of the money market fund. So it's called rebasing and the underlying value of the unit of the fund or the token in this case doesn't change. And then the way we're doing it, though, that is very differently is that once a month and, you know, hopefully one day, this will not be once a month. It will be block, black block because from a technology perspective, there is no reason why, you know, tokens are infinitely divisible, right?

So you could think of a scenario where, you know, every block on the blockchain, you're accruing 0.0.0.0.0.1. percent of a token and then you get all those tokens there. But today, we walk before we run. It's a once a month. And it's kind of like an eardrop if you want. That's not a technical regular, it's a technical term. It's not a regulatory term, but essentially what you're getting is you're being erredop more tokens with the same price into your wallet every time you do it.

And for us, it's easier than to do it this way because from an infrastructure perspective, we basically, once a month, we, you know, calculate in our platform, look at all the holders on chains, see how many tokens every wallet has, et cetera, and then just run one transaction on the blockchain that basically that's all there's drops to people. So from an operational perspective, it's a super efficient way of doing it. The other mechanism would have been a rebasing token. This is a token that we've seen throughout defy at times where rather than having these tokens be worth $1, they would actually just like increment upwards, where

the collateral behind the token increases in value. And so it starts at $1, then it's like $1 in two pennies and it's $1.4 pennies. But you're saying you are choosing to do it this way just because that is the form factor that it exists in other traditional money market funds. Is that that that's just the thought process? That's correct. And it's also, if you think about what we were discussing before, that you have cash and deposits as a similar of having stable coins and the middle product,

and you want to move them in and out, then it's better if they have the same price, right? Because for one token, you get one stable coin. For one stable coin, you buy one token. Certainly. How does the value actually get transferred? So these treasuries and repos in the back end are increasing in value. How does that actually, what's the steps for the increasing value of the treasuries

and the other products that make up the fund? they eventually ends up as more tokens in people's wallet. How is that calculated? How is the value actually transferred? What's going on in the back end? So treasuries are basically loans to the US government in a basic form. So the huge government has to pay an interest on that. And they have a certain duration.

So when they mature they pay and then you keep buying more of the same duration and you keep sticking them. So that's how these funds work. And then as the treasuries are accruing value or being liquidated, then there is a traditional fund admin that has nothing to do with the blockchain or world that operates in the traditional side of things that provides us, which we are the transfer agent of the fund, the NAF calculation of what has been the interest accru.

We're actually getting on a daily basis, and then once a month we then accumulate that and do the air drop of the tokens. Okay, so Carlos, when we're saying do the airdrop of the tokens, what token are we talking about? like what's the denomination of this? David mentioned, you know, like a stable coin. When you're, you're talking about air dropping the yield, is that denominated in a stable coin or is that denominated in Biddle tokens? And how does that work? It's denominated on the Biddle token. The Biddle token is not a stable coin. It's a security. I know crypto people don't like that

term, but that's what it is. So, and by the way, I think this helps people understand that the fact that things are securities is not necessarily a bad thing and that we can figure out how to make them work in the crypto space as well. This is security. We are registered transfiguring with the SEC. We are selling it through a broker dealer, et cetera. And then the token, it represents one unit of the fund and the Biddle token. And then we keep sending you more Biddle tokens that represent the interest that you've

accrue over time. So I have these Biddle tokens and that represents the interest I accrue over time. So let's say I want to like cash that out and I want to to go back to the traditional financial system and get dollars or something to that effect. Or you're like, let's just start with that case. I want to take my Biddle tokens that I've accrued over the past year and I want to cash that out. How do I do that? At the moment, at launch, there's a redemption wallet that is controlled by us where you basically send your tokens to a redemption wallet and then that trigger basically liquidating your position

or the partial position of how many wallets you've sent. And then we will wire you money to a bank account. That's how it works today. The idea what we're working on is that there is a much better, more crypto-centric process where, you know, the middle tokens, you know, get redeem on chain and you get stable coins into your wallet instead of getting dollars in the bank, et cetera. So so that's the ultimate, you know, vision of the, of how this will integrate with the crypto ecosystem, that there is, you know, funding mechanisms that are crypto.

as well as redemption mechanisms that are crypto, and you don't have to, you can completely live parallel from the banking space that you guys probably like that. Oh, bankless. We can go bankless, huh? You will be bankless. This product will be bankless.

But as much is not. We're part of the way there then with, with Biddle to kind of going bankless. Right now, if I want to redeem, if I have a Biddle and I'm accruing that, that those Biddle tokens in interest, then I have to sort of redeem via the traditional banking rails and essentially go back to Fiat. But to be to transform my eth address, where I hold Biddle into a complete like bankless, like savings account, then we need some sort of on-chain redemption process.

And that's what you're talking about there. Now, like in the meanwhile, could I like spin up a uniswap liquidity pool for Biddle? Or are there actual technical restrictions on like transferring Biddle at the, the contract level? Or like, I'm not sure that I'd have incentive to do that. But with crypto, all this stuff is permissionless. So maybe someone could do that. So this is unfortunately not fully permissionless because it's a security. So yes, you can transfer your tokens, but it has to be to another authorized party.

So somebody else that has been onboarded in the fund and that we have whitelisted their wallets. Once that happens, across all the market participants, they can basically send their tokens peer to peer. so you don't have to actually read them. You can just sell them to somebody that wants to get the tokens. And that's another form of liquidity, if you want, instead of redemption. In terms of interaction interacting with DFI, ultimately, we want to do that as well. Obviously, from a technology perspective, is super interesting, both the lending side as well as the automated market making. Again, we will require a bit of an upgrade in the system to be able to deal with securities.

But I think this is coming. This is unavoidable that is going to have. I think the defy space will have a pure permissionless side of things, but it will have also a sort of like, my team and I would call it high-fi, like hybrid finance, so it's not fully decentralized because that's never going to work well with regulations. But it will be hybrid in the sense that today the BILT token, if you, you know, Ryan are onboarded in the fund and you've purchased some tokens and David has also been onboarded, you can permissionlessly send it to across. the blockchain with only smart contracts approving the transaction without any intermediary, you know, touching the transaction. So, so it is, to some extent, there's some degree of decentralization and permissionless, but there is also some degree of permission and centralization, which is unavoidable when you're touching regulated instruments.

I want to backtrack a little bit because we were talking about redeeming, we said the redeem word, and inside I was poking around inside of the contract that, like, all of crypto Twitter found and started playing with over the last week. And there was actually a redeem function that was called like seven or eight or nine days ago or something by whoever deployed this contract. And when you called the redeem function, that's called me. Sorry? It's deployed by us.

It's deployed by us. Okay. So great. You're exactly the person I want to ask then. I'm going to tell you what it is for. This redeem function swapped out 25 Biddle tokens for 25 USC tokens on chain. specifically USC. So like what happens

what happens under the hood when the redeem contract is called? So I say this is our contract that is on chain so people, you know, very quickly find out what we were testing. So as I mentioned, the idea is that you can do

on-chain redemption of the token against stable coins in this case USDC. So that's something we were testing. It hasn't been launched. So that's all I can say for a time. Is it? Is it stable coins?

Could this be like dye as well? Or like what's kind of the scope here? I mean, ultimately you can think of anything that, that you can redeem against that has a stable value because this is why we can be the billed tokens. This is $1 because it makes it easier to swap with another token that has the same price. You don't need any complicated like, let's say, pricing oracles or looking at pricing,

which might be different in one place from another, etc. So, yeah, it doesn't have to be USBC for, time being the test that people hustle on chain is with USDA. Okay. Okay. So this is the way you guys were talking about the parallel financial system. We're like, yeah, you can get it wired out to your bank account or you could just stay in stable coins directly on Ethereum because there is actually this unique technical property of the token

contract that allows one-to-one transferability between stable coins that are like added to the redeem function, right? Because it can't be any stable coins that has to be actually manually approved to the smart contract, but then you can get one-to-one redemptions for your on-chain fund into stable coins. That's the bungless future, yes. Beautiful. And then is the idea for this that, because like once you get that, like once you have

Biddle being one-to-one transferability between like stable coins, like U.S.EC being the big one, then like Biddle has a similar liquidity profile on chain to USC, which starts to like open up some doors for Biddle being. collateral in defy. Is this like some, is this like on the thought process of the roadmap or is there any sort of conversations about this or like what is there? Could you see Biddle as like collateral inside of like AVE or MakerDA or like other applications? I'll love to for that to happen and we're certainly thinking about it and been looking at it. I think that is easier because you can just work with the foundation and you know, get it approved as collateral. but in a pure defy pool that is permissionless,

I think that's a bit more tricky from a regulatory perspective because you're basically putting a security as collateral and you don't know who is on the other side so it could be somebody from a sanctioned country or things like that, which is a bit more tricky

from a regulatory perspective, but ABE has ABEARC, which as you know is a permission pool, we actually want to make companies approved as being a waylisted for AVEARC. And I know there's many defy companies that are thinking about that way Maple finances already done some some stuff along those lines uniswap is coming with version four

which has permission pools etc so i think that's the that's the direction of the industry is taking and we certainly would like to participate as much as possible because that's the beauty of what we're building here right i actually want a brief aside because i'm not sure how much carlos can comment on this so this is a brief aside to my to my fellow co-host here because david we were talking about this in the roll-up yeah we're sidebarring carlos just gets to watch and we'll look for his facial expressions if heads are nodding or whatever else. We'll do a body language analysis.

Yes, I'm not to react to do anything you're saying. All right. So, for David, so we saw the redeem function on chain being used in some of the crypto-twitter sleuthing, including some of your own, because again, you can see this entire, like it's basically like a Black Rock

has opened a branch, bank branch on the Ethereum network. And what's cool about this, We can see what the bank branch does. We can see it's, you know, like its functions. And one of its functions is this redeem function. In fact, we saw on chain, we saw it used for USDC. Now, what would it mean if on chain, something like Biddle, had a redeem function for

USC? I, you know, and I want to ask that to you, David, to see what dots you're connecting. One dot, it seems to me to connect, and this might be kind of like a layman stake or a dumb take, but this feels like almost like a liquidity portal from Tradfide to crypto. That's like directly on chain, right? So we can go from securities and the biggest security of them all, which are these like treasuries thing and the biggest asset holder of them all, which is freaking Black Rock with like a lot more. And we can get that into directly redeem into stable coins, into USDC. That is very fascinating because that would be a direct on chain like bank branch that

Black Rock has to exchange like, you know that meme? I have an offer, right? It's like a thought. offers is treasuries for USDC. So that could absolutely explode something like USDC in terms of the amount of USDC that's out there. That's what I'm connecting. But what are you thinking? What's in your mind? No, that's exactly right. It's just less reasons to remove your wealth from being on-chain to off-chain. If you can simply liquidate your biddle treasury to like USC or like a stable coin. Like it doesn't sound like a USC is particularly enshrined here. But just like if you can go from Biddle to USC, like that is a USD-sized foot in the door for people keeping their wealth on chain. Rather than like getting a wire back to your bank account and having your bank account custody your Biddle Fund.

Now you can have your Ethereum wallet custody your Biddle Fund. And then when you're done with the Biddle Fund, you can go to USDC and you can buy your meme coins straight on Uniswap. So like you're actually like one degree. one degree of separation from the left. It's like really close coupling between Biddle and meme coins. Carlos is going to keep. Yeah, confirm or deny, Carlos. Go for it.

I'm not going to confirm or deny the function because he's on chain and everybody else. But I want to quote Jeremy Aller. Jeremy Aller is the CEO of Circle. He's probably, in my opinion, one of the most articulated persons in the industry. I love his podcast. And I've been there with him. and many, many times. I think he always says something which has always resonated with me very well,

because I've been on the tokenization of securities for a long time, right? And he's been in the tokenization of cash, which is basically what a stable coin are. And then he always says that one of the reasons why blockchain is so powerful as a new, you know, capital markets infrastructure, if you want, is because for the first time in history, you have on the same ledger with the same underlying technology, you can represent securities and cash alongside. And this is the build. token is an ERC20 token. Use this is an ERC20 token. And then suddenly you have the

two instruments that on traditional finance are completely paying the ass to swap around because the banking rails that manage the cash and the securities rails that manage the securities are completely disjointed and separate and they use different ledger, right? Like a blockchain at the end of the day is a ledger. And then today, now you have these two instruments representing on the same ledger with the same technology with the ability to swap them without taking any counterpart to risk, with atomic swaps and all that stuff. So that's where the future. is going and why tokenization of securities is so exciting. And it was not something when I started the company in 2008, you could do because they were

not stable coins. So now you have stable coins as the most successful use case of tokenization. The next one is securities. And because it will play along very well. And that will allow you to go bangles because that at that point in time, you have on the same ledger, the two instruments that you want to be dealing with in your daily life, right, which is something to pay and something to move around quickly and something to, you know, invest or earn a yield.

Yeah. And with the Biddle Fund, which is short-term treasuries, overnight repos, the most liquid non-cash assets that exist. And so, like, now what do we have tokenized on Ethereum? A ton of stable coins, like, one of the most liquid assets that exist, the dollar. And then, like, the second most liquid asset that exists, which is, like, short-term, short-term treasuries and overnight repos. And so, like, what I see is, like, this is the first of, like, opening up a very long door of, like, you know, still pretty liquid assets, but then even less liquid assets and even less liquid assets, more and more securities. And this is just logically the first one. But now we are like moving down the curve of liquidity beyond stable coins, now into short-term treasuries, maybe then like medium-term treasuries, maybe then like long-term treasuries. And then after that, like, it's quite a quite a lot of number of things. Credit, credit. Credit is the next one, right? So if you look at the tokenized credit is the largest asset class of the tokenized, so it's tokenized, uh, so it's tokenized, uh, kind of as you said, that's the number one.

Then you have tokenized, you know, treasury, money market funds, you know, those kind of instruments of different durations. I think some of the companies have like multiple variations of the same product. But then credit is the next one that has less liquidity but higher yield than a different risk profile. We have done a tokenization of a fund with Hamilton Lane, which is a trillion dollar asset manager. It's not nine trillion like BlackRock, but it's pretty big, I can tell you. And then Hamilton Lane has a product with us, Colescope, which is a tokenized. credit fund, which has less liquidity.

So we are kind of enabling through the cash accounts in our platform, a more frequent liquidity, but the fund itself is only monthly liquidity. Because obviously credit is more difficult to liquidate if you have in their line loans. But that's kind of like the next dominant default. And if you look at the credit on chain, it's great. There's a law of companies doing credit, but, and with all the respect to anybody, I just don't want to sound offensive to anybody. But I think that there is a lot of like higher credit product, credit products out there from the largest

asset managers, rather than crypto companies, you know, paying to be asset managers and selecting loans and stuff like that. I don't think that that's their job to do for crypto people. That's what the asset managers that have been doing this for decades and that they have trillions of dollars and their management are good at. So we're bringing those on chain already with Hamilton Lane and hopefully with some other asset managers, right soon. That's really cool.

Yeah, I agree with you on the credit category, by the way. That's actually something that TradFly does far better than crypto right now. I mean, like, crypto does, you know, over collateralized loans fairly well. But when it comes to credit, when it comes to, like, doing a risk assessment. All collateralized loans are not credit, right? Credit means I'll give you a loan against a certain asset or revenue stream or something like that. So the financial service process of analyzing the underlying asset to make sure you're lending at the right rate and with the right risk profile. It's a very complicated thing.

Yeah, they do a reasonable job about that. But let me ask you, when you're talking about credit, are you also including like mortgages? Would that be something inside of this? I'm thinking about private credit. Private credit has exploded because the banks, you know, when they went under last year and they've stopped giving a lot of credit. So the private credit space has exploded. So people, you know, just basically create funds that you invest in it for an asset manager

with experience on credit to be able to provide those loans that the banking system is not providing today. By the way, this is another side for my co-host. David, the reason I think it's going to be more USDC on this redeem function than something like die and tether. This is my own speculation and we can watch Carlos' body language, but it's because this is Black Rock we're talking about. Going to take a long time for them to get more comfortable with kind of like a die type of primitive or like a tether. Like, you know, Tether was just, you know, maligned in front of Congress. Whereas, you know, USDC is homegrown America and like tied in with the biggest banks in the U.S., but we'll have to see how that redeem function works.

Another example of what they could do with this product, which is, you know, as you know, Tether, one of the problems with Tether is that the lack of transparency on their holdings, right? That's been a speculation in the crypto industry for a very long time that they don't, for some reason, they can't come up with an attestation of their underlying assets, etc. By the way, Circle doesn't have that problem because the Circle Reserve is managed by BlackRock. Very comfy for that. This is public information, by the way. I'm not discussing anything.

So you can think in a scenario where somebody like Tether, if they really wanted to, you know, convey trust to the industry by having transparency into their holdings, they will hold the Biddle token. It's by Biddle. Buy Biddle. By Biddle is probably very similar to what they're buying anyway because apparently Tether move away from, you know, doing commercial paper and things that are more risking nature. Now the interest rates went up. So just buy Biddle, people can see it on chain.

And there's other friends like Martin from the Want10 Protocol that has announced that he's going to do that with his yield bearing stable coin. It's going to buy Biddle. So people will be able to see the attestation on chain. So I think that's another great use case, right? Not just treasury management, but build derivative products. Okay. So it does sound like the actual U.S. DEC contract specifically is enshrined in the Biddle contract. But I want to ask you that.

Oh, I don't know about that. but I just feel like there's some social enshrinement at least there. But like what's really crazy about this is by BlackRock essentially opening a treasury bank branch on Ethereum like Mainnet, then it's essentially exporting all of Black Rocks like credibility, regulatory compliance, like all of that entire apparatus to anybody who can then buy Biddle as a treasury for their fund. And so if Tether wants to like, quote unquote, legitimize with the U.S. traditional banking system, rather than like, you know, like get better auditors to look at it, all they have to do is replace the assets in Tether with Biddle. And then like immediately they've got like black rock level assurances in their treasury. Again, this is just me speculating with my co-host, Carlos. Also, look, I mean, you just say something that is very important that I don't think people understand that.

So when you're investing on the Biddle token, you're giving the money to BlackRock. We are just the tokenization platform. We are the transfer agent managing the assets, providing the smart contract infrastructure for, you know, transfers, possibly redemption in the future and broker-dealer, etc. But the money is managed by BlackRock. So the counterparty risk you have here is with BlackRock. So there is a lot of other, you know, tokenized treasury projects and money market funds where it is either much-in-moder asset managers or, you know,

crypto people that they woke up and they decide to be asset managers and now they are managing and money market fund. I just don't understand why when you have the product from the largest asset manager in the world, we will not want to take counterparty with anybody else, right? Especially if all the functionality you need is there, right? Like it's on chain, it's peer-to-peer transferable, in the future, better interaction with the stable coins for investment and redemption, etc. Mantle, formerly known as BitDAO is the first Dow-led Web3 ecosystem, built on top of Mantle's first core product, the Mantle Network, a brand new high-performance Ethereum Layer 2 built using the OP stack, but uses eigenlayers data availability solution instead

of the expensive Ethereum Layer 1. Not only does this reduce Mantle network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle treasury is one of the biggest Dow-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 onboarded, like Game 7 for Web3 gaming, and Buy Bit for TVL, liquidity, and on-rass. So if you want to build on the Mantle network, Mantle is offering a grants program that provides milestone-based funding to promising projects

that help expand, secure, and decentralize Mantle. If you want to get started working with the first Dow-led layer-2 ecosystem, check out Mantle at mantel.xyZ and follow them on Twitter at ZeroX Mantle. Sello is the mobile-first EVM-compatible carbon-negative blockchain built for the real Driving real-world use cases like mobile payments and mobile defy and with Opera MiniPay as one of the fastest growing Web3 wallets, Sello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now Sello is looking to come home to Ethereum as a layer two. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the cello layer two to build upon their stacks.

Why the competition? The Sello layer two will bring huge advantages like a decentralized sequencer, off-chain data availability, secured by Ethereum validators and one block finality. What does that all mean for you? With Sellow layer two, gas fees will stay low and you can even pay for gas natively using ERC20 tokens, sending crypto to phone numbers across wallets using Social Connect. But Sellow is a community governed protocol. This means that Sellow needs you to weigh in and make your voice heard.

Join the conversation in the cello forums. Follow Sellow on Twitter and visit sello.org to shape the future of Ethereum. Okay, so BlackRock has the actual assets. securitize issued the token, like wrote the token contract. Can you talk about, can you just like shed more light on like securitize its role in the whole creation of this, this product? So BlackRock is the investment manager of the fund. So they take care of anything that is related to the fund in terms of, you know, receiving the money, investing buying the treasuries, liquidating them, etc. Um, basically on an admin that takes care of the enough calculation

on a daily basis for us. And we are, we played three roles if you want. One, is a transfer agent. Transfer agent is an SEC registered entity that basically keeps track of who owns the securities. So we are the ones responsible to monitor the blockchain and changes on the blockchain for peer-to-peer transfers, redentions, whatever, to be able to keep an updated cap table of who holds the tokens. We're also responsible for issuing the air drops with the dividends. We brought all the smart contracts and everything. And we also, the broker-dealer that does the investor onboarding. So to invest in the build fund, you have to create an account with Securitize.

We do all the K-YB for the entities, onboard them. Then we basically register the wallets, while they list them on-chain, etc. Okay, so you guys primarily deal with like the on-chain state and the on-chain logic. It also sounds like you guys have your own like. It's complicated because we deal with the on-chain, but we're regulated entity, right? So we need to basically be able to take the on-chain data and produce an off-chain version. for a regulator. It's called the Securities Master File that as an SEC registered transferage,

we have to keep from legal and regulatory reasons. But yes, we built all that infrastructure. We've been building that for years. So I think the reason we've landed this project probably is because I can't think of any other company in the space that has done all the tech work and the regulatory layer on top of it to be able to kind of interact between the TriteFi and the crypto world in this way. Right. So we have this like on-chain digital ledger and then securitize in order to like make this compliant with the SEC has to like make a mirror like a carbon copy of that. Make it go back into an analog form because that's the analog form that the SEC understands. And and and that's like that checkbox and then all the other kind of like nuances of it being on chain. You guys are just managing like the traditional way of operating this this structure. but then you couple it into making it on chain and like in this digitally native format. So it will be a bankless project, but I don't think it will be an SEC less project for time.

Yeah, I mean, what's really interesting and why I think this is that absolutely massive deal is like, you know, like number one, this is BlackRock. So again, largest asset manager in the world. Number two, what we're looking at here is the early phases of a pipeline between treasuries and potentially on-chain. redeemable stable coins. So that's a new pipeline. And then number three, it's kind of like a meta transformation of what we're doing here because on the one side of that pipeline is sort of like securities. And on the other side is, you know, potentially something more more crypto-native and a stable coin. And so your comment earlier, Carlos, what can we kind of like securitize next and what other like pipelines can we actually create?

this to me is a big freaking deal. Let's remind folks, though, that of course, this is starting small and it is starting, of course, with like, I believe there are some limitations and you call them whitelists early. Can you talk about, I think it's sized 100 million right now? How does that grow larger over time? So you can see the token on chain and track the progress. So the the token open up on so we issued the first tokens on Thursday last week. Well, I don't know when they did it gets published. So on Thursday, I'm just going to give the date so people know. So we issue the first tokens on Thursday, 21st. And then as of Monday 25th, we're hitting this afternoon 150 million in a UM by the time this gets published. It's probably going to be

$3,400 million. I don't know, depending on how the inflows come. But my, my, I think, So my sense is that this is going to be a pretty big fund because, you know, there's so much, you know, stuff out there that is, you know, likely to move here, right? Like, why don't you move, as I mentioned, you know, treasuries of crypto companies that they want to keep it on chain instead of like having to go on to the hassle of opening a bank account with a warehouse to be able to buy those products, etc. When they can just buy it on chain from, as you mentioned, the largest asset manager in the world. So it's pretty risk-free. The other use case that I mentioned is a lot of these derivative products that are being built that have treasuries, that those treasuries are analog. Now, they can just buy a digital treasure, a digital money market fund to build the derivative products that will do other stuff. And then the third use case, which is very interesting as well, is if you think about how crypto trading works today, when a trading firm or a liquidity provider is trading on exchange, they post-collateral, right?

And they post collateral for, you know, as a margin account or to borrow against, etc. Today, that's done with stable coins. There is no reason why you wouldn't be able to post-Biddle as a collateral on exchange. And that opens up like a massive or another use case of this product because, you know, it's cash equivalent. It's less risk-free from an underlying perspective. It's risk-free from a counterparty perspective or as risk-free as it gets. So there's no reason why trading firms and exchanges will not do this. in the near future.

So Carlos, how can we watch this grow? Is this just like directly on EtherScan? If we go to the EtherScan, search for Biddle. We work with the friends from EtherScan, which, by the way, thanks a lot to them for helping us with, we're getting this quickly done. So if you search there, you can actually see the actual contract of the fund and you can see how is it growing. We should talk insomely once a day at 3 p.m.

So we receive funds throughout the day and then every day at 3 p.m., you can see how it. you will see new tokens being issued and hopefully grow. So not on weekends though, right? Not yet. Not on weekends, seriously? Man, so weird. That's all right. BlackRock, I guess you take it gets off.

Look, ideally you want to be able to make this something that, you know, the same way that you can in the future have a faster redemption process in crypto, you can also buy a faster purchase process on chain, right? So it's 24-7 available. Okay, so we've talked about some of the demand sources for this, right? I'm just like looking at the trajectory. So we're in the, you know, like 100 million range now, and that could quickly rise to 300 million, 400 million, that sort of thing. You've talked about the demand being from like treasuries, exchanges, derivatives platforms.

Let's camp on the demand a little bit longer. What do you think the total market size of demand is for something like a token? organized treasury from Black Rock for Biddle. And we should note that this is not available for everybody, right? There are some requirements, right? So, like, I can't, like, necessarily buy this. You know, bankless listeners can't necessarily buy this. It's not a retail product. There are some securities laws that go into effect here. But how does this grow to, like, one billion and then 10 billion and then 100 billion in your mind, Carlos? So first, just to add, there's the first comment. It is for institutions for the time being.

I think that's the number one use case, all the crypto institutions, whether there are startups or there are, you know, L1s, DAUs, you know, foundations, trading firms, changes. They all qualify. So, so there's hundreds of, you know, companies that can potentially buy this product and use this product. So it's not necessarily that limiting in that respect. You know, it can be registered with the SEC as a FRIAC fund and then it's available to retail. That's another like regulatory process. So that might happen in the future. And then in terms of how big can this get?

Well, so first, there's two aspects of it, right? One is that there's a lot of crypto companies that have cash off-chain. That's the number one thing because a lot of the companies, they actually keep their money on a, you know, Morgan Stanley money market fund. So there's no reason why that can actually not move to to this product on chain once you, have the option to do it on chain with, you know, a credible asset manager like BlackRock, etc. So those are like billions of dollars already. Like because look at how much money all the crypto companies have raised.

And if you look, that's not on chain, right? So then there is the billions of dollars of on chain stable coins that are not necessarily earning a yield that are being used for, you know, liquidity purposes, people keep in stable coins or for, you know, posting a collateral for exchanges or for, you know, trading, et cetera. So there's another like $3 billion, like probably tens of billions of dollars that is there. Then the third part is that all the stable coins themselves that could use this as they're underlying. So that's another like 100 plus billion dollars. So this could get really, really big over time. So it could get really, really big. And I think it could that could happen

fast, right? It sort of depends. But you know, like yields are so attractive right now. I could easily see how this gets to, you know, tens of billions of dollars and then potentially hundreds of billions of dollars. I, I want to bring this also a full circle, because I wonder if it's possible to, you know, the Apple Goldman example that I was talking about earlier, where Apple has the distribution, anyone with a, like an iPhone has the potential to use Apple pay, so it has, you know, hundreds of millions of customers just waiting. And then Goldman comes in with basically the, you know, like the tokenized, you know, treasuries. And boom, you've got a high yield, interest account. I could see a future where a distributor, you know, someone like a Coinbase,

for instance, or a Metamask with a wallet basically has a high yield option for retail in their wallet where they get a cut of it and they go through all kind of the securities regulation, but underlying all of this and the source of the yield is something like Biddle. And I wonder if that like could increase things more. Again, this is just me, you know, projecting of things that I've see work in, like in FinTech, I guess, and, you know, in the Web 2 side of things. But There's all sorts of sources for demand for this thing. I agree. I mean, there is regulatory hopes to be able to provide yield accounts.

We went through this in the crypto space where, you know, block five Celsius and all those companies that were giving these yield accounts. We're doing something. We're breaking a million laws because, you know, banks are authorized to give yield accounts. How does Apple do it? I'm just saying, you know, if Apple can do it? You know, the crypto wallet should be able to do that. It is probably when you're depositing on Apple, I'm assuming, I just don't know the details,

but that the money is managed by Goldman, Goldman gives you the yield. And Goldman is the bank, so they can do it. I remember, I'm not going to say the name, but one of the CEOs of one of these, you know, companies that were doing centralized yield that was saying, oh, we can do this because banks do it. It's like, no, banks do it because they have a banking license. Oh, you're talking about somebody like a Blockfire or Celsius or some of those names that went down hard last. Exactly. So, I mean, unfortunately, and by the way, the reason banks do it and Celsius and Blockfire were not authorized to do it and they went under is because if they had been authorized to do it, they will have a lot of more scrutiny about what they were doing with the money.

Right. And they will not have gone under the way they went. So, yes, we don't like regulations or we think regulations get on the way, but at the same time, they protect investors to some extent. So I think some degree of regulation is good for retail people, right? So let's talk about the supply side of things. We talked about the demand. Is BlackRock going to run out of treasuries? Like, do they have like infinite amount of majorities?

If we got to $100 billion in Biddle, would that be a problem for BlackRock? The U.S. government keeps printing money. That's where treasures come from, right? So we have infinite supply, basically. So there is $3 million of dollars in treasuries. at the, you know, when they, when the U.S. government prints money is that they're basically borrowing money to issue dollars and then they have a yield to pay. So, and I think that there's, yeah, there's plenty of treasures out there. So it makes sense that the first consumers,

like three months treasures, right? So they buy them and then they buy another one and then they buy another one and then the previous one gets liquidated and then so. So it makes sense that this product's first buyers are like on-chain participants, Dow's organizations, people, who are already crypto-native. But how would you sell, how would you pitch this product to people who are definitely interested in treasuries, but they aren't on chain? So, like, in what ways might this product actually bring more people on chain? And what types of people might this be?

Have you thought about something like this? Yeah, I don't know if this product is what's going to bring people on chain that are not on-chain already, because I think that, you know, for the most part, you can get, what Ryan was saying, you can get treasuries throughout. a yield-bearing account with banks. Maybe you don't get the same yield because there's two or three layers of intermediaries there, but you get pretty decent one as opposed to having a bank account. If you're a more sophisticated investor that have an account with a wealth management bank,

like say, Morgan Stanley, J.P. Morgan, you can buy treasures there. So I don't think this is necessarily what's going to move people there. But I think what's going to happen with this product is that it's going to move more assets on chain. And because I think we've been talking to asset managers all the time. Like we are the first large asset manager that was did something on the token issue space was KKR back in 2022. Then we closed Hamilton Lane, which we done three funds. Unfortunately, in between, all the shenanigans with crypto happened with blockfries,

Celsius, FDX, et cetera. So that kind of like gave a pause to people thinking, is this like a serious industry? Is the regulatory risk? Is their reputational risk, et cetera? I think that we're in a position now where for the most, most part, whoever needs to be in jail is in jail, whoever paid a fine has paid a fine. And, you know, now the Bitcoin ETF kind of brought crypto back into, you know, more legitimate space.

And now with BlackRock entering the tokenization space, I think that all the asset managers and I can look at my own email the last week or so are now thinking, you know, we need to do something about it because BlackRock is doing it. So I think that's going to bring a ton of more interesting projects. And those are like, eventually will be things that. that are not just trying to serve a need for the crypto natives like this product, but how to provide efficiencies for the non-cryptinate crypto-native when they move on chain. Yeah, I think BlackRock as kind of a flag bearer and a bell weather for all of this.

If Black Rock's doing it, then you can bet every single large asset managers figuring out, like, in their boardrooms, what is our tokenization strategy right now? And I want to make kind of like a prediction because, like, we've been fortunate enough to watch crypto emerge over the past, you know, five to ten years. Carlos, and this to me is just a major milestone. We have the largest asset manager in the world, now tokenizing, opening up a bank branch on Ethereum. You know, the only thing larger than something like BlackRock is actually a different type of bank, and that is a central bank. And I sort of wonder when we are going to see our first Ethereum smart contract directly from a nation state

central bank deployed on chain. And I don't know if we'll be able to get a central banker on from the representative country in the way that you've been able to come on the podcast, Carlos. But I bet that has a redeem function in that smart contract. And there's some way to sort of mint new tokens, new whatever the denomination is from the central bank currency on chain. That is kind of the next step. And I'm just zooming all the way out to give folks like we have come so far to this point. And yet we still have other larger entities that have yet to come on chain. So at some level, we are still early as well. I'm not a big fan of CBDCs, and let me tell you why. I think that first, we already have something like CBDC, like USDC for me is like CBDC. Why do

I need that to be issued by the government when I have CERCO, which is a private innovative company doing it, when I have the reserves being managed by BlackRock. So I trust that the reserves are there, at least provide stable coin. So, and I think that the private market is more innovative, If it moves faster, it will do more things. And I don't know what's the point on the U.S. government to step in and do a CVVC. And if they do it, the governments have a tendency to want to then monitor transaction and using it to exercise more control over people, et cetera. So from my perspective, I don't think that I'm not really glad to happen.

Yeah, I guess you're kind of making anything. What will be like, you know, what would be the difference? Like, the only difference I can think of is that if the stable coin providers could connect to the Fed to be able to like right that's sort of what I was thinking it would be done by by private just cut out the middleman entirely but but I guess what you're saying is um in a way maybe this is the central bank this is the dollar this is a proxy CBDC on chain because if you think of something like you know USDC and to like mix that with treasuries and it's kind of like well the US already has a central bank digital currency it's just in the form of a staple coin

And this is certainly Jeremy Aller's take, and I think it's very interesting. By the way, talking about going bankless, this is an interesting project, not just because it's going to be bankless at some point, but because it also, it's taking business from the actual banks. We've seen so many people that call us and say, oh, I have treasuries with ex-bank. I'm not mentioned anybody specifically. I'll just move it on chain. And suddenly, they've got rid of the bank.

and they move it to black log on chain. So I think that this should be a wake-up call to the banks as well, that they need to be participating in this space. And of course, banks, unfortunately, because I know some of them are trying to be novative and do stuff, they have restrictions because of the OCC regulations of not using public blockchains, which fortunately as the managers don't have those restrictions.

But eventually this should be a wake-up call for banks, because they will see the deposit is going, you know, decrease because people will move the money to this on-chain product that is a safe and higher yield as what they're providing. Oh, 100%. I totally agree. Essentially, like, we're seeing property kind of like migrate on-chain. You're sort of freeing yourself from, like, I very much prefer, I would prefer a high-yield savings account in my Ethereum account, like in my Ethereum address on a wallet that I can control versus, like, going and connecting to Wells Fargo. By the way, it's also more secure.

like, you know, I can keep it more secure and I can use any front end that I want. I'm not like constrained to, you know, the Wells Fargo developers and their ability to spin up a user interface. It's really a bring your own assets to the wallet world. And you know, so much that will be built on top of this is certainly very exciting. So Carlos, where do we go from here? So do you have any like, are there any other milestones that you're excited about? we'll be on the lookout for that that redeem function on chain. Yeah. So maybe some of that. What does the future hold for this? I think that, look, I was thinking the other days, like, the moment that crypto kind of became mainstream

was when they hit $1 trillion, because that's kind of like a catchy term. Like the moment crypto, you know, crossed the $1 trillion mark is where people started taking really seriously. And then that has triggered also the events we've seen recently with the Bitcoin ETF being approved and things like that. I think on the, on the tokenized, you know, real world assets, tokenized securities, where most real world assets are going to be tokenized as securities anyway, but they say token as real wall asset, which is the crypto term.

I think we're in the in the very early stages, right? Like maybe what crypto was before. So if you, even if you add stable coins, we're still not even like in the, in the, in the 200 billion or 200 billion mark, right? So I think that ourselves and hopefully now many of the companies, like the last few years, it's been very exciting for me because I've seen a lot of companies coming into the space, which is great because when I started six years ago,

nobody care about this. And now people care in crypto, which is great. So collectively, I think that as an industry, once we hit the $1 trillion mark of real wall assets on chain, that's when this becomes to be really, really, really important as a part of the, you know, capital market. it's some financial services industry, right? So for me, that's kind of like the future I'm looking at.

Then the next, I don't know, three to five years, whatever it takes, hopefully three, not five. Collectively, we get to that number. And that's when this becomes mainstream and when there is no way to stop it. And then that's when, you know, all these promises that everything will be tokenized, everything will be unchained and start like happening. Carlos, is something like this going to improve our narrative and our positioning with regulators and those in government who have been cynical on crypto in the past. And when they look at crypto, they somehow, even though we've reached the heights we've reached,

they only see, you know, like see drug dealing and whatever else they see meme coins and Ponzi schemes and SBF and all of the kind of the negative connotations. And they dismiss it. But now we have BlackRock here with like the risk-free asset of the world, which is treasuries. And that's deployed on chain. That seems to me to be a, a. counter-narrative and a counter-reality that flies in the face of this idea that crypto is just a bunch of

Ponzi's and memes and, like, deeply unsurious people. And I would think that's something like this. Well, we are deeply unsurious. So we'll concede that point. I'm just saying, does this help our case? Like, this is, you know, it does. It does. It's not our case. Look, I mean, they, I've been active last year for for the first time on going to Congress and trying to reach out to, to the right people there from the House of financial services from the subcommittee of digital assets. There's great people there. I had the pleasure to spend quite some time with, you know, Congressman French Hill. And I think that, you know, tokenization is not a controversial topic.

I think both sides, both Republicans and Democrats, they do understand that this is an important thing that they need to support and then they need to facilitate that it happens at a scale because it's good for everybody. Right. So probably other topics in crypto are a lot controversial. Like, you know, what's the security, what it's not? What is the market structure for trading crypto? All the, you know, still ICOs and all that stuff.

And so, but forget about that part. This part, tokenization, I think that this is the use case that we can get everybody to rally around to really push towards doing something productive with blockchain. And, you know, this whole narrative. the last two years of the real wall assets. I think that one side is a terrible name because RWA means something else in traditional finance. But in one side, it's actually interesting that the crypto people are calling this real as opposed

to what they were doing before, which had nothing to do with reality. Or you can mean coins and, you know, imaginary internet money and... It's a different kind of reality, Carlos. Digital reality. Yeah. So I think this is something that hopefully, you know, there's no reason why regulators wouldn't like it and will not see as an improvement as an upgrade on the financial system, right? Like when I started this industry, what I got me excited about crypto was not the meme coins or

the NFTs or the tokens. It was an upgrade to the financial system that this technology could bring, right? For the reasons we've discussed, you have, you know, cash and securities on chain that can interact easily, that transparency, you know, speed of settlement and et cetera. So hopefully this narrative is the emerging one in the, in the crypto space. space. And of course, there will be some people still building meme coins. It's unavoidable because it's permissionless and people can do whatever they want. But hopefully that will not be that part of the market, as we've seen in the last few years, but small one.

So, Carlos, completely, hypothetically speaking, if there was a second product, tokenization product out of Black Rock, what might that be? The next one? Yeah. Well, I can't speak for BlackRock. So I don't know. Yeah, just completely like, or just like, what makes sense to you? So let me speak for Securitize. As I mentioned, so there is, you know, tokenage treasuries, which is now big and we have a product that can get the scale bigger than anything else. There's variations of that that maybe that's one of the potential paths to follow. But there is also private credit, which I think it's very interesting because also, you know, defy lends itself very well for lending, right? Like the defy protocols for lending, there's a real problem in financial services.

people don't realize that when you want to take a loan of, let's say, an asset, the number one problem is how do you prove you own the asset, right? I know some silly, but nobody knows whether you actually are the owner of an asset because you maybe purchase a fund from, let's say, Morgan Stanley, you go to JPMorgan. I have no idea whether you actually own that. They look at paperwork that you've done, but they don't know if you sold it, if you got divorced and you only own 50%, etc. So I think that the token model solves very elegantly the proof of ownership because it's there.

If you put it as collateral, it's not there anymore. So you kind of like borrow twice against the same asset. It also, the whole liquidation process is very efficient and et cetera. So I think that I'm very excited about lending and credit and how to bring that on chain because I think that's a massive also multi-trillion dollar industry that, that, you know, has a lot of opportunities to bring it on chain. And then I think also the next one, which might be a bit more complicated from a regulatory perspective is automated market making, right?

But Uniswap and others are doing is super innovative. I wish I could do it for securities because securities have this problem, right? That they have the long tail of securities that are very liquid, that these protocols could actually bring liquidity. I think it's more complex to make it to get it right from a regulatory perspective for securities, but we'll eventually get there. All right. Penny stocks on Uniswap. Maybe that's the future, Carlos.

Well, that's what it is today. It's penny, you know, coins on Uniswap. You might as well put something real. That's true. That's true. Any coins, but there is a lot of alternative assets that are not small necessarily, but are illiquid because of the nature of the underlying asset that you can bring some degree of liquidity.

And if you want to democratize access to financial services products, inequity is a big problem for individual investors because you don't know what's going to happen with your life. Like tomorrow you have to, you know, move cities because you've got a new job and you have to buy a new house or you get married and have three kids and you need cash and, you know, or you get divorced and you need cash to pay 50% of it. So there's a lot of things. stuff that prevents individual investors from accessing illiquid products, that if we can figure out

how to bring some degree of liquidity with this technology, it will democratize the access to those products and will allow individual investors to invest like the rich people invest, because the rich people don't have that problem. So, and I think that's the thinking of crypto as a democratization layer for financial services. That's what I'm excited about. Carlos, thank you so much for sharing this with us. The mission truly is to democratize finance, and this is an incredible exciting milestone for crypto guys black rock is now on chain they have something tokenized huge and Carlos we appreciate you sharing more about it and what your company is doing to help further the tokenization journey for crypto thanks for having me it was a pleasure bankless nation just one

action item for you because I think this is a this is a milestone and deserve some celebration we will include a link to the black rock bank branch on chain on either scan in the show notes so you can go check out what that looks like if you're a nerd like the three of us. I'll give you the right link to make sure you're right here. I think I got it. There were some people there

pointing to different tests, smart contracts that we issue, etc. Yeah, you find the right one. We don't want you to be a victim of the fisher, but it'll be there in the link. Got to end with this, of course,

risks and disclaimers. Crypto is risky. So is banking. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us

on the bankless journey. Thanks a lot.