Bankless - Stablecoin Gold Rush: A $200 Trillion Opportunity | Rob Hadick

Episode Date: April 14, 2025

Stablecoins are no longer a niche crypto curiosity—they're a full-blown financial revolution. In this episode, Rob Hadick, General Partner at Dragonfly, joins us to unpack the emerging stablecoin tech stack and why cross-border payments, savings, and financial infrastructure are being rebuilt from the ground up. From Circle and Tether to next-gen orchestration layers and stablecoin-native blockchains, we explore why this $200 trillion global opportunity is only 5% unlocked—and who stands to win the most.------📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium------BANKLESS SPONSOR TOOLS:🪙FRAX | SELF SUFFICIENT DeFihttps://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAINhttps://bankless.cc/unichain 🌐SELF | PROVE YOUR SELFhttps://bankless.cc/Self 🛞MANTLE | MODULAR LAYER 2 NETWORKhttps://bankless.cc/Mantle 🏦INFINEX | THE CRYPTO-EVERYTHING APPhttps://bankless.cc/Infinex ------TIMESTAMPS0:00 Intro5:08 Why Stablecoins?6:50 The Stablecoin Train20:26 Stablecoin Network Effects22:55 Stablecoin Payments: Who Actually Wins?26:51 Orchestration Layers41:53 Stablecoin Blockchains52:53 Stablecoin Singularity56:03 Traditional Banks59:38 Non-USD Stablecoins1:02:05 How Many Stablecoins?1:05:03 Circle IPO1:09:32 Closing & Disclaimers------RESOURCESRob Hadickhttps://x.com/hadickmStablecoin Payments: Who Actually Wins?https://medium.com/@HadickM/stablecoin-payments-who-actually-wins-ebd72a1cc8b3------Not financial or tax advice. See our investment disclosures here:https://www.bankless.com/disclosures⁠

All I would say is if stable coins are an inevitability at this point, and if you are building in fintech and or at a payment company, and you aren't actively figuring out how do I future-proof this business for stablecoins, you're going to lose. Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today on Bankless, we are exploring the frontier of stablecoins. The stablecoin conversation in crypto goes all the way back. You can find discussions of stablecoin concepts as far back as the Bitcoin.

talk forums, which was the original venue for all of crypto's great ideas. In 2025, the conversation continues. Stable coins have been, and seemingly always will be, an incredibly important part of the crypto revolution. Things are a little different now, however, in 2025, things are no longer conceptual. The emergence of stable coins like USC and Tether have grown into a $200 billion market cap asset class, and the performance of blockchains have risen to match the needs of internet-based stablecoin settlement networks. Because of these unlocks on the crypto tech tree, we are now finally seeing startups weave together the old siloed financial system into new internet public blockchains. And it's because of the utility value of stablecoins that so much progress has been

made over just the last year. Rob Haddock, the guest on the show today, says that he is seeing 30% month-over-month growth of cross-border stablecoin volumes. All of this, combined with the regulatory clarity and stable coin bills that are passing through the United States Congress, are creating a gold rush in the stable coin economy. Everyone is trying to get a piece of the incredible amount of value that is going to be produced by the invention of stablecoins. It's also interesting to note that during the times of Donald Trump's isolationism and rejection of globalism, that the crypto and stablecoin industry represents an inherent interconnectedness since blockchain networks know no borders and stablecoin transfers are weaving together the

global financial rails tighter than they've ever been before. I just thought that it was an interesting contrast that came into my mind during my podcast with Rob. I learned quite a bit with Rob, so I'm sure you will as well. So let's go ahead and get right into that episode. But first, a moment to talk about some of these fantastic sponsors that make this show possible. In the wild west of Defi,

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or bridging Uniswop's web app and wallet, gives you the tools to unlock DeFi's full potential on Ethereum, base, arbitram unichain, and more. Use Uniswops web app and wallet for a more efficient way to use DFI. Bankless Nation, I'm here with Rob Haddock General Partner at Dragonfly. Rob, welcome to Bankless. Thanks for having me. Rob, I'm going to start this episode by reading off a quote and then maybe you can just pick up the trail right from there. Stable coins aren't going to be the best product for all forms of payment, collateral mobility, savings, etc.

But they are better and will continue to get better for many, many use cases, eating into that trillions of dollars of the addressable market. Now, this is a quote from you. maybe you could just expand on that. And overall, it's just, you know, set the table for us when we get into the conversation of stable coins, where we are now, where things are going, and why people think stable coins are just such a big deal. Yeah, listen, the stable coin topic is like not a new one. People have been talking about this for a long period of time, circles exist since 2012. And there's been a lot of conversation around stable coins that I don't think has made a ton of sense. But what we've really started to see in the last year is people kind of formulate or understand where are the places where stable coins are the most exciting. So, you know, when I put that quote out there, you know, a lot of people have talked about, oh, like merchant payments in stable coins or, you know, domestic.

payments. And we haven't seen that adoption because I haven't actually been particularly that excited about that type of use case. And in part because simple coins sometimes aren't cheaper. Sometimes they don't have the right level of compliance, I don't have the right level of usability or a better level of usability than, you know, call it traditional rails. But what we have seen today is that for things like cross-border payments, things like payouts, just the want or a desire to have U.S. dollar access in emerging markets, things like being able to use this as collateral for different types of trading or atomically settled across different assets. Like those things are all clearly much, much better in stable coins.

That market is trillions of dollars. They are taking over that market. I think what people are learning right now, especially with the election of the recent administration, which is, of course, much more crypto-friendly, which means that we're going to get some crypto-friendly legislation, push through Congress, which is definitely the backdrop of why people are talking about stable coins right now. People are looking at how crypto is going to become regulatory-compliant, regulatory clear. And I think people are realizing that stable coins are just a first step into traditional

finance, you know, the rest of the world's foray into crypto. The first stop on that train is stable coins. And in addition to that, I think people are just kind of looking around at all the stable coins and realizing that the conversation doesn't end at stable coins. We are not ending the conversation at USC or Tether. There is like many, many, many next steps for investment and, you know, projects building out this stable coin tech stack. I mean, Maybe you can kind of pick up where that train goes. So we already have USC. We already have Tether.

What are the few next stops on that stable coin train that you are seeing getting built out first and are the most interesting to you? Yeah. So I think it's helpful to maybe frame this as like what is a stable coin? Because what I think in crypto happens is we talk a lot about stable coins for different types of products that are clearly not stable coins or stable coins for different use cases. So, you know, you mentioned Circle and Tether, very traditional, you know, treasury-backed, We're almost treasury-backed in Tether's case, stable coins that are meant to be for payment use cases.

So you mentioned the Genius Act or the Stable Bill here in the U.S., they specifically talk about these payment stable coins. Mika has the same thing, essentially. Then there are things we talk about in crypto that are stable coins that are better for, like, what I would call, quote-unquote, collateral mobility. So things that are potentially, you know, yield-bearing products that aren't meant to be moved a lot, but are meant to be maybe used as part of a treasury operation or something like that or collateral for trade. A savings vehicle? Yeah, exactly. Savings vehicle, same thing. Then you also have stable coins that are more crypto-native

that maybe are some sort of like tokenized, cash and carry trade like in Athena or a part of that, plus they have USTB, so it's Biddle, where it's meant to be more of a, you know, call it like a savings account or a yield account, etc. For retail, potentially in institutions. And you have these kind of different use cases, and we call them all stable coins,

but they're really meant to be used for different things. And so I think you have to kind of start there. And then you have to say, how do they, you know, kind of fit in, with different parts of the market. On the payment side, you know, I've actually written about that the most fulsomely, but I actually think that's the part where we haven't seen a lot of pickup until recently. So, you know, tether and circle, you know, it's over $230 billion outstanding today. But almost all of those use cases traditionally had been just, you know,

essentially trading pairs on centralized exchanges and decentralized exchanges and decentralized exchanges. A vast majority of tether has been on, you know, like finance and centralized exchange like that over time. But just over the last year, now what we've started to see is the right infrastructure for payments. And so, you know, you have things, you know, I wrote an article about, okay, what are the different parts that you need of the infrastructure stack? But now you have these orchestration players like bridge and conduit. You have the, you know, settlement rail. So you have a lot of people starting to talk about, okay, well, we do, do we need a stable coin native, you know, blockchain that does specific things at the blockchain level that are better for, you know, kind of

traditional PSPs online. So Codex is one that we back. There's another one called Plasma that's talking about this. Some of these guys that are just trying to pull together like the last mile or APIs for like local currencies. And a lot of people in between that, we, you know, we started to see stable corn specific banks, et cetera. But that infrastructure is now just good enough that we, I think we're probably doing, and this is kind of some proprietary data, but maybe $50 billion a month of like cross-border actual payments being done on Sable Corn Rails. And that's been growing extremely quickly, 20, 30%, 30%, you know, month over month. 20 to 30% month over month in volume being transacted across border and stable coins.

That is incredible growth. Yeah. And it was basically nothing 15 months ago. So, like, if you look at, you know, bridge or condiment or any of these guys, they were like a million dollars of revenue less, like, you know, call it January of 2024. What happened over the last year was that these came into the mainstream. The infrastructure was there. People were excited. And now you go and you talk to, you know, World War II.

or you talk to checkout.com, you talk, you know, obviously stripe anybody. Even like the Klorna CEO tweeted, like, oh, do I need a stable coin strategy now? And the answers, yes. And every single one of them has a stable coin strategy today. Let me just trace over the conversation as I heard it. And you can correct me if I get anything wrong. We're on, using this metaphor of like, we're on the stable coin train and all the stops on the train. The first stop is the stable coin stop. And I said, circle and tether. And you expanded that to also include other types of stable coins that, you know, even though that we call these things all stable coins, they are functionally different products. You know, you have the true stable coins, the U.S.D, T. I don't

know if you want to call those a true stable coins, but those are the stable coins I think come to mind when people say the word stable coin. Payment stable coins. And then there's also like savings vehicles like Athena where the yield coming from exchanges, the way that the Athena works, there's a bunch of yield in the background, that turns into a stable coin. And it has like a savings facility that really makes that work. Same thing with like Maker Dow and the die savings rate. And so there's different, even though the products

that comes out of these things is a stable coin, how that stable coin emerges is kind of characterizes that flavor of that stable coin. But that's the first dot nonetheless. There's a crypto dollar, there's a synthetic stable coin

that's out there that's produced and there's produced in a variety of different ways. And the dollar just comes out of that as a token on some of those sort of crypto rails. Yeah, and I would functionally put like Biddle in there as well. Even though it's not meant

to have a lot of velocity, theoretically, like, should be one-to-one swappable for a stable coin. Well, and it is, too. It's actually in the Biddle contracts to be one-to-one swaptable with USC. Yeah, that's right.

And it is functionally used for now a lot of things that Stable Coins, the Cerecores or the Tethers, used to be used for, like the Claremoability piece. And so I think, you know, Meteor City talking about or they actually have a tokenized deposit product and some of the banks are thinking about that.

All of these things, at the end of the day, have different maybe, like, collateral or backing, but they functionally serve similar use cases and they cross over. And I think it's good to, segment them in that case when you think about, okay, well, we're investing or what do I hold for what use case? And also how the regulators think about him. Okay, so that's the first stop, a true stable coin, a token that is valued at a dollar. And then I think what you said next is

like, well, the next stop is payments. And that's still kind of getting built out. There's still a lot of juice left to be squeezed there. And that makes sense to me when we talk about crypto, you know, speed running the history of money and finance. We actually just start with the value and then we figure out how to pass it around at the second stop. But really just hanging on that first stop. of all the different, you know, taxonomies and different ways of creating a stable coin. How much do you think that we're done on building out that first stop? Like, I don't think anyone really saw the novel construction of Athena coming so late in the crypto game. I know it's still early. But nonetheless, we found a new way to create a stable

coin that's incredibly valuable. How, you know, percent completion do you think we are done with figuring out all the different ways to build a valuable stable coin? Oh, we're like 5 percent. Oh, wow. Or early. So, listen, the payments market is humongous. And so when you think about payments, it's $200 trillion that are done annually cross-border right now. We are doing, I think, $50 billion cross-border on stable coins. I think the reality is that stable coins for that specific use case are functionally and unequivocally better,

as long as we solve the infrastructure problem. So there's compliance, concerns, there's making sure that we have enough liquidity, that costs come down. is making sure that we had the last mile soft. But as we build those things out, the vast majority of that, especially at the SMB market, which is about 40% of that number, is going to be better served by stable coins

and stable coin rails. I think Wise came out with a kind of a TAM slide in one of their kind of end-of-year reports maybe like a few days ago. I'm blinking on the exact number now, but when they put their TAM out there, they said essentially it's like $50 trillion dollars of revenue that Wise thought that they could go and attack. And I'm telling you right now,

Wise is a great business. It is a business that is capital-efficient that requires a lot of interconnectivity with the banking system that requires a lot of operational connectivity that would not need to happen if it was on stable corn rails. And that business, maybe they will do it themselves or maybe they'll be displaced. But that $50 trillion would be better based on stable-coin rails, 100%. Now, when you say 5%, are you talking about specifically payments? Yeah, so I'm talking about the kind of intersection or the getting into the payment side. I think on the savings side, though, I don't think it's that different, right? So you look at the emerging markets, you know, clearly like new bank is starting to add and, you know, Revolut's been

talking about adding, you know, stable coins and hear a lot of conversation around this from a lot of these different, you know, PayPal has it. But it's unclear to me yet that the majority of new bank customers, it's definitely not sure that the majority of new bank customers, when they get a dollar in, it actually being swapped to a stable coin. And it's actually being swapped to a stable coin and maybe a non-custodial manner and being able to use atomically with other types of protocols or being able to swap for other types of assets, etc. And so I think we're maybe further along, but in the emerging markets, we're starting to see just a tremendous, tremendous amount of growth as well. But I still think we're that far along. Like,

we're talking big numbers for crypto. We're talking small numbers for the global economy. Right, right. I want to just narrow the question back down to just the first stop on the stable coin train. The U.S. E.C.s, the tethers, the U.S. SDS is that would formerly die, the Athena stable coin. How much left do you think is there room to make a new stable coin, a new valuable construction of a stable coin? That was actually the original intent of my question. It's like filling out this first stop on the train, are we mostly done is are we ready to leave and focus on payments? Or is there's still plenty of juice left to squeeze with a potential building out of a new stable coin construction?

Yeah. So I think if you look at the business model of tether and circle, Tether has essentially become like, you know, an asset manager, an investment manager. Like if you look at, you know, they continue to dominate in emerging markets. They continue to try to, you know, expand their influence in those places. And actually, Palo was on Al-BOTs yesterday and he's been kind of running around D.C. So it's clear he's thinking about, you know, what's happening. He's going on in the media tour. Yeah, it's clear as thinking about what's happening in the U.S. and in Europe.

But so far, Tether has not made a compliant. If you look at the first iteration of the Genius Act, it doesn't look like Tether can be compliant there. there's been news that maybe they'll have a segregated, you know, U.S. version of Tether. I frankly find that hard to believe that that would do well because, like, you have a lot of the issues that, you know, just kind of a startup has. And it doesn't really have a great brand with the, you know, called the regulators and the regulated businesses here in the U.S. So, you know, it kind of feels to me like they're going to continue to dominate this one piece of the market, but I don't know if we'll grow into the other parts of the market. And interestingly, I moderated a panel with Palo in Dubai last year. I asked at the end to everybody, because all the others were challenger startups, how much market share they thought Tether would have in five years. And the most bearish person on the panel was Pallet. He said, I think we'll have like 35 or 40 percent market share at the time. It was 70. Everybody else was like, oh, 70. Like it'll continue to dominate. And I think he kind of sees the world coming that, you know, he's not going to be able to really keep that moat with their current business model. And that's why they are investing in so many other things and doing so many other things. I think Circle, you know, same thing. You see.

they're starting to think more about payments specifically as part of their business. You know, you saw their S-1. They're clearly given away a lot of the economics, but they're hamstrung by that coin-based deal. They're not able to potentially, you know, really kind of, I think, incentivize the way like a Paxos has been able to with, you know, their global dollar network or some of the startups like Agora are able to. So I actually think there are a lot of possibilities for challengers and this market that's $230 billion have issued today, but that my guess is, you know, trillions or tens of trillions of dollars. after a recalum of incomes for the euro dollar market in the future. Also a lot of opportunity for non-U.S. dollar stable coins as we get a more robust FX market.

So I think, you know, it's definitely not 5%. But do I think that there are going to continue to be, you know, challengers and that we might be in the, I don't know, net scape period of stable coins? Like, I think that's possible. Mm-hmm. My next question is pretty related to this. It's just with the incumbents that already have network effects, how valuable do you think those network effects are? And so is Circle, Tether, we can even talk about Coinbase and Stripe here. I know Coinbase's stablecoin is basically essentially USDCs.

Stripe doesn't have a stable coin, but it is a incumbent with network effects surrounding payments. How much new value do you think will flow to incumbents with network effects versus how disruptable do you think that these incumbents are? Yeah, so there's no doubt. There's a lot of network effects. And I think Circle and Tether are going to continue to be great businesses. They're going to continue to grow. I think what we'll see a lot kind of will mirror the fintech, you know, boom of the early 2010s, where a lot of the challengers that grow will grow because they grow with other businesses that grow with them, right?

So if you look at Stripe, how did Stripe become so dominant? They grew with Shopify, right? They weren't the first one to offer e-commerce payments. PayPal was already there. They offered a better experience. They got into Shopify. Shopify blew up. They grew together. They were going to see some of that

with some of these challengers. But they're going to continue to really entrench themselves. On the Coinbase, the Stripe, etc. I think there is a really, big conversation to be had around all of these startups that are doing things like call it stable coin orchestration you know calling themselves stablecoin payment service providers doer stablecoin banks things like that i think this is especially true on the direct to retail like fintech side it's kind of unclear to me like why a new direct to retail fintech would win over new bank just

making its product better with stable coins and with you know defy on the back end where we've seen a lot of investment capital from a lot of the traditional firms, the sequoias and QEDs, etc. Over the world go into those products because they're growing really quickly. But in a lot of cases, not all the cases, they're growing because crypto-natives are looking for like things to do with their stable coins. How do I spend it without actually off-ramping?

But it's unclear to me like why these traditional incumbents can't just, you know, put stable coins in the back end and win. I think for like the banks, now we talk about like on the banking system, the banks are, are, can I say fucked? I think the banks are fucked. Totally. Like, they just move really slowly. They're not going to innovate.

They're going to do their own stable coins. It's going to be closed loop. It's not going to work. But at the PSP, the Fintech side, I really struggle with the stable coin specific new startups. Okay, so now we're getting a little bit further down the train of the stable coin journey. And this will actually bring us to the article that you wrote, which inspired this podcast to begin with. You wrote this article called Stable Coin Payments, who actually wins. And then you just listed out a variety of categories.

Maybe it's comprehensive. Maybe it's most of it. Maybe there's some missing categories. but I'll just read them out here. Settlement rails, stablecoin issuers, liquidity providers, value transfer and money services, aggregated APIs slash messaging platforms, merchant gazeways and Rams, and then stablecoin powered fintechs and applications. When I was reading this article, I was just kind of getting this idea of like this larger structure around stablecoin infrastructure. You know, you start with the actual token. You start with the stable coin and then you need to

build products and services around stable coins to really expand the utility around them. Maybe you can just kind of walk us through how you see that structure being built. And really, as we go from, you know, stable coins to stable coin payments to some of the more longer tail parts of the stable coin tech stack, what parts of that tech stack really get you the most excited? Yeah, so the issuers actually came first. Well, the problem with stable points for a long period of time is they solved this problem, which was that nobody wanted to denominate their on-chain capital and their trading pairs, et cetera, with something that was also volatile. But that's the only place that they were used. And, you know, kind of what we just talked about, right, is they weren't really usable in any other way outside of crypto until recently, honestly, in any real way. You know, you listed out those categories, you know, I don't think it's comprehensive anymore. There's some things I'm missing like, you know, bank where we've started to see that. But I think it is a good way to frame most of what is being built. When I think about those different pieces, okay, well, you started the blockchain layer,

the settlement layer, right? And so that's the most basic form of what you need when you are, with the issue or what you need when you're transacting. And I think there's a real question around, but I know you have specific opinions about this and some other people

have really strong opinions about this, but I think there's a real question around whether or not general purpose settlement rails or general purpose blockchains actually serve the needs. of what, like, large-scale traditional businesses need if they're going to do trillions of dollars of cross-border payments. And so specifically talking about, like, how do I bring a world pay or a checkout.com

on-to-on-chain and in bringing the majority of their transactions on-chain, especially the cross-border ones, I don't think that even the high throughput chains that exist today, the bases, the salinas, et cetera, serve those needs. I think there's specific things that they are never going to do, which they aren't going to give priority to these specific transactions. they aren't going to help with MEV resistance for these specific transactions. There's not going to be privacy at the transaction layer.

They're not going to stop the launch of the new meme coin that might just like make the RPC rollover. And so, like, you know, there's these things that happen that I think you need a specific chain that is a network for these types of payments. That's, I think, highly debatable, but we've put our money behind that and to see a few other people launching those.

I also think it's just true that if you can fully verifiable, class that stacks. So, you know, I talked in my article about how maybe that orchestration layer doesn't have a lot of pricing power over time. But what if I can vertically integrate the orchestration layer with, you know, value added services like compliance with the chain itself where I get sequencer fees and maybe I have like a governance token that all these people have to stake to be part of that network? Can I give away the orchestration for free where everyone else is charging, you know, tens of bips? And I just make up that money on the back end by, you know, essentially having them like stake my token and pay sequencer fees, right? And so now

you're starting to, you know, really interesting thought processes around like how to structure my business, how can I price it, how can I incentivize people to be a part of it? So I think that's kind of number one. Before we move on to number two, could you just define orchestration layer? What does that mean? Yeah, so I think Zach Abrams actually coined this and he kind of reinvented the way people think about bridge, which in many ways bridge was an on-ramp and off-ramp, but he called it an orchestration layer, which was just a way to connect different ramps and different counterparties with APIs to transact with stablecoins. Okay.

So what problem is that really solving in the stable coin? How does that expand the utility of stable coins? Why do we need this? Yeah. So for that, when we talked about before, right, a lot of these stable coin transactions are happening across border, right? And so one of the biggest problems right now is, like, it's hard to find liquidity if you need some sort of different effects.

It's hard to find, you know, maybe the right ramp in the right location, i.e. meaning like, you know, the biggest remittance market in the world is U.S. to Mexico, right? One of the second biggest, I think, is U.S. to India. But actually both those markets today are doing over 9% of their remittance volume in stable coins, which is actually humongous. But you have to be able to, like the end user, the receiver in Mexico, they want to be able to receive that stable coin, at least historically I want to be able to receive that stable coin, bring it into, or it's been part of it into the local currency, the peso, and then potentially put it into their bank account, right?

So connecting those liquidity providers, as I talk about, connecting those ramps, those banks, those real-time payment services in those local areas, you typically have to have like some sort of, you don't call it, you know, API that allows you to do that. It requires usually a few different counterparties. So you're essentially wrapping a bunch of APIs into maybe a single product, like what it's doing. Is one way to understand this. We have these financial servers in the cloud, right? Bitcoin, Ethereum, Solana, these are servers. blockchains are just servers in the cloud. And they act as like a coordinating hub for everyone to point their servers too.

It inverts the way that we have banking where Wells Fargo is a closed server. Every single bank in America is a closed server. Now we have these fewer servers where everyone can point their finance to in the cloud. But we also still have the rest of finance to deal with, which is still this like mesh network of siloed servers. And it's maybe what you mean by an orchestration layer is bridging that gap between these new types of financial servers in the cloud, Bitcoin Ethereum, Solana, all these layer ones, and then the many, many different types of siloed servers that actually do have, like, present boots on the ground in these, like, local economies. And an orchestration layer just bridges that gap. Is that a way to understand it?

Yeah, I think that's a great analogy. The cloud is also a really good way to think about, like, the adoption curve here and how we've kind of evolved. Okay, so with every single country, there's just, like, kind of like a long tail of payments or banking relationships that we need to, you know, interoperate with. in order to make stable coins on public blockchains actually, you know, connect to local economies. And so that's what we mean by orchestration layer. Yeah, and I'll give you an example here, right?

So a portfolio company of ours, they've been starting to do payments from Brazilian Real to Euro from your bank account in Brazil to your bank account in a European Union country where they are pulling using picks, which is basically like a real-time payment business in Brazil. They can pull that capital out of your bank account in Brazil. They can swap it to a stable coin. typically U.S. dollar denominated, or if you issue and have enough liquidity for Brazilian

real, then they can swap it on chain to Euro using maybe an M pool or some sort of liquidity provider, and then using a separate incident in Europe, immediately putting it into your bank account in Europe, right? But there are a bunch of different people involved in that transaction. Liquidity providers in different countries, banks in different countries, real-time payment businesses in different countries. But doing all of that through one API to that end customer and bringing that together and transacting relatively cheaply in less than 15 minutes. And what would take the traditional banking market, you know, maybe two weeks to settle. Right, right.

So I would imagine that this startup has a direct call to circle, right? They are minting USC directly, minting and burning USC directly as needed in order to facilitate that. And so what I'm seeing here with this orchestration layers are actually abstracting away, which we always promised to do, the blockchain world. So the blockchains are just becoming increasingly transacted. the utility of stable coins is becoming increasingly expressed while also increasingly hidden. And we're just allowing people to do things with their normal lives and experiencing the value of public blockchains without actually exposing it to public blockchains. Yeah, that's absolutely right. I mean, the businesses, when we're talking about like, you know, integrating ourselves with banks and like web two payments businesses, they absolutely do not care about what chain they're on.

They don't care about particularly what stable coin they were using unless they have, you know, OVAC concerns or BAS concerns. they care about the fact that it happens quickly, it's cheap, that there's uptime and the transactions don't fail, that there's good compliance, and that you're adding value to them and their end customers. And so if you can abstract that away and offer this kind of integrated solution that uses all these different counterparties and better than what they're having today, like they love that. Okay, so these orchestration layers, I would imagine, are going to change the topology of the financial landscape in these local economies, because if their goal is to connect stable coins to, you know, every single citizen in Mexico or every single citizen in an emerging economy, they need to generate that relationship with

the right banks or the right fintechs to connect users to stable coins so that they can connect it to the rest of the world. But I would imagine they don't need to integrate with every single bank and every single fintech that's in Mexico or Argentina or any emerging economy. They just need to connect with the one that, like, has 90 percent or they can cover 95% and I think that actually might expand the network effects of the dominant players in local economies. And so we can start to maybe get more efficient by really just allowing the winners, the top three winners of a local economy to just connect into the orchestration layer, which allows them to connect to a public blockchain, which allows them to connect to the other

dominant players in a different emerging economy and allow for that remittance network to just become hyper-efficient. But I imagine this stablecoin technology is a boon to the already dominant banks and fintech layers in local economies. That's my intuition. Is that right? Yeah, I would say that's true. The one thing I would caution, and we see this in a lot of the people that are out kind of raising capital, is that you have to do hard things. And why do I say that? Building an API that kind of wraps other APIs today, when Stripe did it, you know, over a decade ago, and they turned the banking system and e-commerce payments into seven lines of code, that was novel. That was incredible. And everybody was like, holy shit, like this changes the market.

Doing that today, it's a lot easier, and a lot more people can do that. Your moats are not as deep. And so to your point, if you're a traditional player who is thoughtful enough and already has the connectivity and can innovate or build a tech stack quickly enough or partner quickly enough, you can probably build those moats a little bit. On the startup side, what we've seen is if you want to be able to really kind of get into these markets, you need to do the hard things. And what are the hard things?

The hard things are dealing with the banks. The hard things are getting them comfortable with your operations and your compliance and scaling them because the banks are the ones who will say, hey, listen, like, you know, you're putting too much volume through right now. We think you're a high risk. We're going to limit you. And you have to limit your customers because of that. It's also compliance.

Compliance and payments is actually very hard. And it's a big part of the reason. Compliance and risks are the two reasons payments are expensive, not any other reason. And so being able to isolate that risk, underwrite that risk, any asset that atomically settles, that's really hard still as well. And so if you can do the compliance, you can deal with the banks, and you can figure out how to front risk or be capital-efficient with maybe partnering with your risk.

That is where seeing people build modes or maybe startups where you might think the incumbents are able to do, but they haven't really quite wanted to vulture their own business yet by doing that. What's an example of a stable coin company? Maybe the deck comes across your desk and you're like, oh, you guys are not doing any hard things. What's an example of an easy trade? for a stable coin company to fall into.

Yes, so I won't name any specific names, but there's one that comes out that I've seen the CEO in a bunch of news and raise some capital. And they also talk about themselves as an orchestration layer what we're talking about, but they don't have any end relationships in any of these local countries. They don't have any bank accounts

within these local countries for client bank accounts. They aren't able to do any sort of compliance themselves. And so what actually ends up happening is, you know, they might, you know, someone will connect into their API and then they'll essentially get matched with somebody else also connected to the API when they want to go call it Hong Kong to Africa. But those two counterparties that have to essentially be onboarded with each other, even though that they're connecting through the API.

And they have to sign what is essentially a non-reliance agreement with that API provider that says, hey, listen, we're not actually the ones doing KYB or compliance. And so they're essentially people signing up for these products because they're trying to quickly add more geographies. But those types of products, we're seeing a lot of people build those because they're like the easiest things to build. They're all going to get just cut out of the transaction flow as other people grow. They're too thin. They are too high up in the stack.

They're going to get superseded by somebody who can get deeper than them. Yes. That's our opinion anyways. Right. Yeah, that makes sense to me. Yeah, like doing the hard things generally ends up being the things that no one else wants to do. Yes. And you see it in payments.

You see it in stable coins. You see it in crypto broadly. People don't want to do the hard things and then they get cut out of the value chain. Right. Understood. Okay, that was really helpful. I think understanding the orchestration layer, I feel like that is where there's a lot of juice left to squeeze when it comes to permeating stable coins across the globe. And maybe that's like the era that we're in right now is this part of the payment tech stack and really the growth of crypto at large is focused on this area specifically as we kind of like weave in the global economy through stable coins, through public blockchains and through orchestration layers. Would you agree with that like general take?

Yeah, absolutely. The first era of like stable coin adoption outside of, you know, trading like we talked about, was kind of payouts to like local contractors. So, you know, people who are, you know, contracting engineers in Latin America who would like much rather take stable coins. And they're getting their, you know, essentially their pay in stable coins. That was kind of the first era, you know, of adoption, real world adoption. We've seen some of that too. There's actually a well-known payments orchestration or stable coin orchestration business that is working with a Web 2 PSP that is doing like an only fans. pay out. But as you can imagine, there's like only fans creators all over the world. They do

tremendous, tremendous amounts of volume. In most areas of the world that aren't developed countries, those creators actually want stable coins. And so that's actually been a huge boon for their business. It's high risk. But you can see this also permeated to TikTok and to every other social media, right? That's been kind of the first era. But then what we've seen is a move towards, okay, well, now these traditional fintechs, these traditional businesses now also wanting and seeing a value ad. And that's the number I mentioned earlier. 50 billion of cross-b-b payments, that's the number that was essentially zero 15 months ago and has now moved into this tremendous growth era. And my expectation is that continues to grow

about 20, 30 percent month over month through at least the rest of the year and into next year. You said that that 50 billion number was proprietary. How are you guys measuring that? Where are you guys getting your data from? So we're pulling together a few different data sources. Also just reality is we happen to see probably most of the guys who raise in the space. And so pulling together a lot of the data from the different companies. That's a little bit of the high end of what I think it could be. Like probably 30 to 50 on the month right now, but also like every time I talk about this number, it's probably outdated. And so it's just growing so quickly. But it's clear that this is something when you talk to any

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I'm going to turn the conversation to the layer ones or the chains that really support stable coins, generally speaking. I think that the first era of stable coin growth really came from native defy usage, where we needed stable coins inside of compound and then AVE and then now morpho just to facilitate stronger defy. lending and borrowing, leverage, margin, like all that kind of stuff that allowed defy to go and take its next step.

And then with Solana, you actually see the increase of volume over lowered total supply of stable coins. So Solana doesn't have that much total supply of stable coins, but it punches way above its weight class in terms of volume. And you can kind of see that, well, that's just aligned with the architecture of the Solana network.

But nonetheless, I think, as you said earlier, there's just a lot of constraints that public blockchains have, no matter what, about what is needed to really create strong payments network in stablecoin. So that's kind of the public blockchain side of things. Lately, I've seen and focused on stable coin specific blockchains, like call it stablecoin app chains, either layer two or even a dedicated layer one with some pretty serious tradeoffs, permission validator sets, you know, privacy at the layer one, which kind of rubs against defy and other parts of what we know to make a public permissionless blockchain. But I'm seeing

this next phase of blockchain design, stablecoin focus, a blockchain design to be really trying to go toe to toe to with things like Visa and really optimize for maximum throughput and are happy to make very strong tradeoffs to really lean into stablecoin and stablecoin specific uses. Maybe talk about where you see chain design going in the stable coin era. Yeah, I try really hard not to be ideological about the way I invest. And even though I have specific things that, you know, I might like to see in crypto, and I know you feel very strongly about this as well, I think the reality is businesses that are going to put trillions of dollars of capital through these rails, they do not care about the things that, you know, maybe you got you and I into

crypto. They care about liquidity. They care about pricing. They care about, you know, being able to have a full application set that makes them easier for them to do their business. They care about privacy. They care about, you know, potentially not having to be in the same pool as, you know, some sort of OFAC sanctioned North Korea or Russia or things like that.

And they care that their transaction gets there on time when they expected to be there. and those are the things they care about. Now, there's a network effect, and to your point around Solana, that exists where you have, okay, well, you have a lot of this other activity. You have Defi. And that defy means that there are more stable coins already on the chain. There are already more liquidity providers there. There are already ways to potentially transact.

And that alone should cause there to be some sort of, like, you know, lower pricing and should cause it to be potentially easier for certain things to exist. But what you don't have is you don't have the other thing. the privacy at the blockchain layer. We don't potentially have the concerns. And maybe you can do that in an application layer around, you know, OFax sanctions, BSA, stuff like that. You don't have prioritization of transactions.

You can't pay gas fees and stable coins. And so there's tradeoffs to your point. But those tradeoffs are things that maybe you and I care about that the businesses themselves do not care about. So today what we've seen is mostly incentives have won, right? Like why did PayPal decide to really put their focus on Solana on day one? And I might get hate tweets for this. But it wasn't because of the technical infrastructure.

It was because Solana has a fantastic BD team and they paid them a bunch of money. And the reality is that is what we have seen from where these people have gone today is because they've cared about the pricing and they've cared about having somebody that they could pick up the phone and be like, this is not working for me. Like, help me fix it. And so those chains who have done that type of BD and that type of marketing and customer service, they're the ones who have won kind of more of that flow today. And so if you can take that, you can do something that's a little bit more centralized.

You can put a full stack solution together that allows you to innovate all the way through the chain, through the application layer. It's my opinion that for those use cases, people would rather deal with those chains. So what do you think is stopping something like Tether or Circle making their own dedicated high throughput chain? And you can kind of see this show up where Tether has Tron. and Tron's dominant activities like Tether transfers, still a generalized permissionless blockchain, but at least it's moving towards that direction. And then Circle has base.

Same problem. It has other things, too. It has other baggage. But at least it gets some of that throughput. So you can see some of these shapes start to emerge, but none of them have really gone after building their own proprietary payments network. Why do you think that is,

or maybe it just hasn't happened yet? So I think more to come and more to be public in some cases. Like in Tron's case, for instance, you know, they've, I think publicly announced that Bipfinex invested in, I think, called plasma. Obviously, they have Tron, you know, not in public yet, but I think they've invested in three other blockchains at this point. Like, they're trying to get themselves closer to a lot of these chains where they think that they can influence. But what they don't want to do is they don't want to isolate or alienate these other places where they're also being used today, right?

Like, if they try to put all, you know, UST flow on their own chain, what's stopping you know, finance and BSC from trying to kind of push UST off BSC, right? And they don't want to potentially have this situation where they're eating their own business already. And so I think what we've seen in Circle, you'll hear a little bit more about two. They're aligning themselves with another chain. And then they're also kind of launching their own orchestrator. So they're really focused on payment set as well. And so what we've seen is these guys have wanted to have influence. They want to be able to kind of be a design partner and figure out or optimize the for the use cases that they want

or go hand in hand with somebody to do that. But they haven't wanted to go so far into alienating the current use cases and the current chains. What about any new projects that don't have the baggage of their incumbent business and are building a dedicated layer one

or layer two or some sort of chain that's just meant for stable coins and stable coins only? Are there any projects out there that you're particularly excited about are worth highlighting? Yeah, I mean, we just announced an investment

into a business called Codex over, I think it was a Friday that we announced it. super excited about that. Founders were serial entrepreneurs. One of them was the first employee at optimism. Another one was a very successful Web 2 entrepreneur working very closely with a number of design partners who are going to be announced over the next month or two that will, I think, solve some of these problems where they're fully integrated from the chain level to the application layer to do some of these interesting things around designing their business, around

how the products set actually looks for the end user. And there are going to be a bunch of actually really interesting flow partners or launch partners or doing some of the things we talked about before who are going to be sending flow through there on kind of day zero so we're really excited about that is that a new layer one is that a layer two what's something that the architecture looks like yeah so the founder was like i mentioned the first employee optimism so is that Liam no how man oh okay yeah so he was there for a long time and maybe he was the second employee actually but there for a long time you know that's what he knows best and so that's where they're designing today and you know kind of pushing the technical limitations there as far as they can

It's a layer two that settles to Ethereum. Yeah. Okay. And then in some of the deal flow that we look at bankless ventures, there's just a lot of other layer one, even permission chains that are cropping up just to become sort of like visa competitors. What do you think about these sort of design constructions? So the biggest problem for all of these guys is going to be flow on day one, right?

So like how do you incentivize people to come on your chain? And it depends on, in some sense, like you probably, you may want permission to invalidator set. Maybe you don't. But if you're going to do this. that. You still need to have it be easily interoperable with other parts of crypto. If you want to be able to bring, you know, USDC, USDT, other stable coins on, you want to be able to bring Biddle, those types of maybe USDA, et cetera. And you're going to serve, you know, call it not just, you know, B2B payments,

but you're going to serve like a broad set of payments that includes retail. So for me it's always been about, okay, well, like, why is this permissioned? If it is permissioned, do they have some sort of edge for how they're going to bring flow here? My opinion has mostly been, that if it's completely closed system, completely close systems do not work. They will just get eaten by Visa. Visa is doing tokenized payments themselves. They also have a thing called Visa Direct,

which by their standards has not done well, by crypto standards has done very well in terms of the amount of volume, and that's kind of outside of their traditional network. So you have to be thoughtful around what are the things you are doing. So, you know, I don't know which specific ones you're talking about,

but there's one I'm specifically thinking of that, you know, is really just a centralized database, which, if that's the case, and you have kind of none of the, I don't know, the value of ad of being, you know, kind of on-chain in crypto, none of the transparency, none of the ability to audit those transactions. That, I think, is not particularly interesting, and especially if we're not going to be a A little bit too close to the old world.

Yeah, just too close to the world and you're not, like, there's definitely a spectrum of blockchains, obviously, right? But if you're really just saying, okay, well, I'm going to create a Web2 database, but I'm going to put it on blockchain, well, like, we've already done that with Hyperledger, and that didn't work, right? And so, but if you are saying, okay, well, I'm going to build on a permissionless stack that is part of the super chain and that is able to have interoperability as people want to expand their risk tolerance and do different things, but also it can be the best place for you to do just, you know, direct B2B transactions. That's where you start to get this like liquidity flow, right, in this liquidity mode. So you prioritize those customers, but you allow for different types of transactions and different type of use cases.

So what I do think is going to happen is that risk tolerance will change over time. and a lot of these traditional guys over time might say, okay, well, now I do want to do something with tokenized assets. Now I do want to do something where I have, you know, my stable coin or my tokenized asset be part of this like regulated FXAMM, but then also potentially be used as collateral for something that's permissionless on chain as well. How do you see all of these different parts of this stack collapsing together over time? If you go to Argentina and you look at the fintech businesses down there, they are doing both stable coin payments and stable coin savings. So you can get like 3, 4, 5% on your stable coins in this FinTech app, but you can also pay your friend too. And that's actually just because some of these stable coins and some of the yield sources are just hooked right into defy. And that's because that's also where the stable coins are.

We're also talking about this whole entire new growth of orchestration networks and other types of stable coins and payment chains. I would imagine as if we just fast forward five, 10 years in the future, a lot of this stuff has really consolidated to become really having some sort of like singularity where all the utility here is really pushed into this same. vertical. How do you see that playing out? Will that play out? Will that be fast? Will that be slow? What do you think that looks like? So we're trying to see a little bit of it now. I absolutely agree that we're going to see consolidation. It's not clear to me at what part of the stack we're going to see consolidation today. I do think, you know, the strike bridge transaction

was obviously a harbinger for, you know, probably more M&A interest from, call it, you know, traditional payment service providers. You know, it's clear that strike also they want to go from just a merchant business to a network business. They also, you know, just talked about becoming a bank as well. And so you're seeing, like, kind of traditional fintech, traditional payments, kind of have that collapse between, okay, well, I want to be a tech company, and I want to be able to take risk because that's where a lot of the money is made. And how do I kind of vertically integrate that?

And then also add a lot of different capabilities where I can, again, you know, make more money as part of that. So I think we're going to see the web two guys come in and buy some of these orchestrators, buy some of these local ramps, these last miles. I think we're going to see. a lot of issuance happen also at the, call it, orchestration layer with these like PSPs, i.e. meaning, like, you're a Stripe customer, and, you know, Stripe has their, like, treasury product today. Well, Stripe will probably start to also issue a stable coin or also in RWA as part of

their treasury product so that you can more easily manage, like, your capital with, you know, stable corner or stable coin type products. So I think that issuance layer is going to collapse quite a bit. And I also think you're going to start to have to do compliance. specifically at the chain level or in the application stack where you control that chain if you're going to do kind of more regulated payments for these large players. And so I think most of the stable coin fintech apps we've seen today, like I think most of them are going to fail. I mean, that's normal for startups, but they're just going to have a hard time finding

distribution relative to the people who exist today. And then like the merchant gateways, the ramps, like those are really tough standalone businesses. in traditional finance or traditional payments, those are like either small businesses or they just, we've seen actually in the 2010 we saw a lot of consolidations of like basically PE-backed stablecoin gateways

and ramps that had verticalized software as part of them where they just rolled them up and I expect to we see a lot of that happening as well. I think you already gave me this line. Banks are fucked, but maybe we can go into that question specifically. What does this mean for old world banks? The banks, as we know, the banks that I pay my rent from,

you know, the J.P. Morgan's, the Wells Fargo, even the regional banks, what do you think happens to all of them? Well, I think regional banks are fucked for non-cryptor reasons, too, just because we've seen this consolidation in G-Sibs. But banks are not good innovators. Like, that has always been true, right? So they're slow to the tech stack. You know, the best thing that has ever come out of bank is Visa. Visa was kind of a bank consortium. They spun it out. But that was at a time when tech just moved much more slowly than it does today. Domestically, banks are still going to do an incredible job. Like, the real-time payment networks are coming or are here, depending on which jurisdiction.

you're in, they will be able to do real-time payments that are at the speed of and cheaper than blockchain rails for a lot of domestic use cases. That's going to continue to be true. But then if you look at the global macro market, right, like right now the U.S. is in the midst of cutting ties or pushing away some of its allies. We are becoming more protectionist. The world is becoming more protectionist. At the same time, when we already have this like interconnected cross-border banking system that is ineffective and doesn't work very well together. My expectation is that becomes even tougher in this future protectionist world that we're seeing. And if that's true, then all of this cross-border payments are going to go to stable coin rails. On top of that,

what you have right now is you have a bunch of countries where their local currency is inflating or people don't have demand for their local currency potentially. I think we can debate a little bit about what's happening with the U.S. dollar this past week. and the tenure this past week, but today at least people still see the U.S. dollar as the reserve currency, and that'll be true for the foreseeable. And that demand also means that these people, they want U.S. dollars, and at a time when U.S. dollars are becoming more usable. So I'll give you an example. We invested in an emerging market kind of payments, fintech, stable coin business, and we've been really selective in that category. But when they finally were able to get a card

issued by rain. That meant that they could now, and it's on the visa network, that those people could now pay for, and it's an economy that wants a lot of U.S. dollar goods. They want Netflix, they want OpenAI, chat TBT, they want to import a lot of U.S. dollar goods. If they were to try to pay for that U.S. dollar good through the traditional banking system, today they would have to pay a 10% tax. Now if they pay with their stable coins, they're not. There's a regulatory arbitrage there. There's a question around how long that regulatory arbitrage stays. But what's clear is for those young people and those types of payment rails, they want more access to U.S. dollar goods and things like that. And that will continue to, I think, be a big issue for local governments,

local central banks who today have been really protective of their current currencies. I think, and this is like a more macro point, we might be getting into a world where the amount of currencies is just going to come way down. And we're going to see a world where, you know, you just have somewhat of a currency war between the dollar and the euro and the Rambi and And like a lot of these other countries, their currencies are fucked. So not only is this kind of a harbinger of the end of times for banks generally, but also for central banks, for currency issuing banks secularly. Yeah, I think so in a lot of these emerging markets.

Yeah. Yeah, yeah, yeah. What about non-dollar stable coins, though? Because there is a push for tokenized euro, tokenized like long-tailed developing country fiat. What do you think about this whole sector of the conversation? So you absolutely need non-U.S. dollar stable coins for FX, right? And so roughly 60% of the global reserves of currencies are in US dollars.

The rest are in other types of currencies. It's a roughly similar number for the amount of transactions or the type of transactions that happen. What we have seen to date is that there is need for a euro when we're doing the type of transactions we talked about before, where you know, you're going bank account to bank account and, you know, call it in Brazil to euro. But at the end, people are wanting to offboard to fiat. and I think the developed markets, you're still going to continue to get a lot of that. It's the developing markets

where people have wanted to keep things on chain, potentially, or in these places where there's like regulatory arbitrage, you're doing things like trade finance, which are high risk. I think we're going to continue to see adoption of those stable coins. I am not bullish on most of those non-newest dollar stable coins

becoming things that people hold on chain. So maybe, you know, the few people that I talked about, but I think like when we're talking about the Naira, like people are going to do it because they want to do this remittance or they want to get usable. But in the future, they're either going to hold the U.S. dollar or they're just going to offer them to their bank. So maybe is it correct to say that dollar stable coins will hold all of the market cap while the long tail of African fiat currencies, developing country fiat currencies, they will exist simply as a accounting tool in the foreign exchange world and

the FX. Maybe they'll be high volume for local payments, maybe not. But there will be a mostly there just as a utility token, truly to get the utility out of their denomination, so that they can connect local economies, local developing market economies, with the rest of the stablecoin networks on public permissionless blockchains, which are all going to be dollar denominated. Would you agree with that general summary? Yeah, that's my expectation. I think what you said, utility token is a really good point. And so they're either going to want US dollars and they'll get that their stable coins, or they're going to be using some sort of local realm is my expectation. Okay. Final question as we wrap this up. How many different

stable coins, do you think that there will be? Well, every bank issue a stable coin, everyone's going to try an issue a stable coin. I feel like that's kind of the hot tweet that could go viral right now because everyone's into this idea of like, everyone's getting a stable coin. And I think it's very reminiscent of everyone's getting a layer two. And we all kind of know how that turned out. What do you think about this conversation? It sucks. I really hate it. So I put out a tweet like a week or two ago. That was basically like, listen, if this is not your core business, like use somebody else to do it for you, I think what could happen is like, we think there's a million stable coins, but it's actually like Paxos or Agora or Braille on the back end,

and they're all like interoperable with each other. I do think we're going to see, at least for a period of time, a bunch of people will be like, I need a stable coin. And we're starting to see this, too, where people are like, oh, I need a stable coin, but it's only going to be for internal use because I'm, you know, essentially basically, it's essentially using it as like a money market fund. Well, like, you could also just buy Biddle, right, and the same thing. And I don't know why you wouldn't just do that in most of these cases. And so there's going to be a lot. I think, well, a steady state get to like maybe like on the U.S. dollar side like five to 10 that gain any real scale. I feel like we already have five. They're of real scale. U.S. dollar, but like I guess what would

you call scale? Yeah. Okay, good point. Okay. Circle tether, Maker Dows, Dau, Dye, Athena. Maybe there's one I'm missing. But I guess you could argue that Maker Dau and Athena are not really at any sort of real scale in terms of market cap. Yeah. So I think there's scale and for their specific use cases with like, you know, on chain. But when I said that, I meant it more is like call it like the Paxos circle tethers like no few others that that are maybe more used in traditional payments. I do think like there's definitely still room for like crypto-native like, you know, savings and investment products that have stable coins lent to them to do really well. But like the reality is like die is pegged to the

US dollar because of what they decided to put in their collateral. Like they could have completely changed all of their collateral from day one and it would no longer be a US dollar stable coin. And so so yeah, listen, I think there'll be a lot in the near term. I think we'll see then a lot of consolidation after that. And then what I do think we'll see is we'll see a lot of basically interoperability because people are using the same service providers on the back end, but they've decided to brand it for whatever reason because people are narcissistic and they think it's good marketing as their own stablecoin.

So when you see a stablecoin project deck come across your desk, the opening slide is we're going to make a new stable coin. Do you open that up with cynicism, with optimism? Like, what's your first emotion when you see a new stable coin project? So I open up every deck with cynicism. Right, natural, naturally. But yeah, absolutely. Today, I think, like, if you're doing, like, new stablecoin issuance, like, there has to be a really good hook and a really good reason for why this new thing has to

exist, because you're so far behind all the competitors. Okay, just kidding. One last question, and before we wrap this up, Circles S1, I'm sure you took a look at it. What stood out to you in the S1? And then broadly, what do you think the Circle IPO will just do for the Stablecoin game? Yeah, so the Circle S1 was about what I expected. My opinion on Circle has continued to be that they are really hamstrung by that coin-based deal. And not only are they hamstrung by that coin-based deal, we've seen them try to grow into like finance, into other sort of distribution partners by paying them a bunch of money.

And so they just have to continue to do that. And that's how they've eaten into Taylor's market share. But it means their margins are going to come way down. And what it means is that potentially that, you know, the public markets aren't going to like what their revenue composition looks like. and they're not going to trade as like the tech company or the payment company they want to. I think that's the debate, right? So there was this headline around, though, four to five billion dollars was the potential value.

People were surprised by it. I wasn't super surprised by that because the revenue model today looks like an asset manager. And I think it's very clear over time how they don't just continue to get squeezed on their margins themselves. They have to build out more of a payments business if they are going to get the value that they want and if they are going to be valued on a multiple like they strike or somebody like that, which is I know is what they think is appropriate. But your second question, I guess, around, you know, what is it do for the whole entire industry?

It'll be humongous. And I do think the one argument against what I just said about them trading well will just be because everybody knows stable coins are eating the world, and the public market investors will only have one way to express that, and it will be buying that equity. Interesting, interesting. So let's simulate a hypothetical universe where tomorrow you wake up and you are actually in Jeremy Aller's seat,

and now you are calling the shots of circle. What are the first obvious decisions that you make about how to lead the company? Yeah, so it's a good question. Super hard question. I do not envy me having to answer that. I'm going to have a call from Jeremy's office. Do you post this? But no, listen, I think they need to continue to focus on other lines of business.

They need to figure out how their revenue mix changes. They need to figure out a way to not have that coin-based distribution partnership be such a drag on their business. I don't know if they can get out of it. I don't know any details there, but they need to become more neutral in my mind over time. The Coinbase deal made sense when they did it, because that's how they bootstrapped at that distribution. Now it is a drag on their business. And so how do they figure out a way to improve the revenue composition, to add other services around it where they can monetize, and how can they figure out a way to not have Coinbase take 60% of their top line? those are the things that I would be focused on.

So, yeah, so Circle just really, maybe they wouldn't characterize it, but like did it deal with the devil where they gave a part of their revenue to Coinbase in trade for distribution and in trade for growth. And that worked for the time that they needed it. And now what you're saying is like, well, now that non-neutrality, the fact that Circle is behold into Coinbase is preventing them from finding other markets because now they're branded as like the Coinbase stable coin and the lack of neutrality is preventing them from expanding into like alternative. distribution models. Yeah, it's absolutely centered the growth. I mean, what they've done with Binance has been actually incredible and, like, congratulations chair, management team. But we do know they paid them 60 million bucks and are also giving all of their yield that they can to finance to be able to do that. And, you know, maybe that will again be a deal that's worth making it. And I do think it probably is. But, you know, they're in a situation where they have to give

100% of all CERPEL revenue that's derived from USDC on Coinbase to Coinbase. and then 50% of all other revenue. How do you go and build other distribution partnerships at scale over time when this goes from the amount of issues they have now and it goes 10x from here if they're continuing to be in that type of deal? And so it was the right move to get them to here. How do they get from here to 100x from here or 10x from here? I think it has to change.

And I think it'll be really hard for them to continue to do so with that weight on their shoulders. Rob, this has been definitely one of the most informative podcast episodes I've done in a while. So I really appreciate you coming on and educating me and educating the Bankless Nation. Thanks so much, David. This was awesome. Really appreciate it.

Yeah, maybe just one last time. Just no specific question. Just open-ended, stable coins. Give us your broad thoughts, your conclusion, your bullish rah-ra as we end things. Really, what other sectors that I haven't asked about are getting you excited or any remaining thoughts that I just haven't asked? All I would say is if stable coins are inevitability at this point. And if you are building in fintech and or at a payment company and you aren't,

actively figuring out how do I future-proof this business for stablecoins, you're going to lose. And you need to figure it out and need to come here and need to ask me or any of the other people who are really smart about this. That's a perfect way to start the risks and disclaimers for this episode. Rob, really appreciate you coming on. Bankless Nation, you guys know the deal. Crypto is risky. You can lose what you put in. You can also lose if you are not paying attention to what's going on in stable coins. But nonetheless, this is the frontier. We're glad you were with us on the bankless journey. Thanks a lot.