On The Brink with Castle Island - Bhavin Vaid (Birch Hill) on Better Markets for Tokenized Assets (EP.700)

Episode Date: February 11, 2026

Wyatt sits down with Bhavin, co-founder of Birch Hill to chat about the tokenized asset and DeFi market broadly. In this episode: Who is assessing whether cryptoassets are safe in DeFi today? Who is assessing risk and ensuring assets are solvent and not fraudulent? How have these standards been set and how are they evolving? What is a risk curator, how do risk curators make money, and what is their role? Is it the responsibility of protocols, curators, wallets, or someone else to protect users from buying bad assets? How do you expect non-DeFi-native market participants will start to enter this market? Will users eventually buy, hold, and sell assets on protocol interfaces, brokerages / exchanges, or risk curator interfaces? Does the Fat Protocol Thesis hold true? Where does value accrue today?

This is Wyatt from Castle Island, and on today's episode, I sat down with Bobvin Vade, co-founder of Birch Hill. Birch Hill focuses on working with digital asset-focused businesses, including asset issuers and trading and lending markets alike, to help them build out compliant, secure, and institutional-friendly workflows when enabling users to buy, sell, and hold tokenized assets. We touch more on what this looks like in practice in the episode. Bobvin has spent his career at the intersection of traditional financial markets and crypto asset markets. His first role was an investment banking at Goldman Sachs before spending time on the

investing side at server risk capital management, 50T, a leading crypto growth investor, and Halo Capital. In this episode, we discuss why Bobin and his co-founders, Jack and Connor, got excited about this gap in the market, what organizations that are thinking about tokenizing assets should know before moving forward and how the landscape of tokenized assets will continue to evolve and what that will mean for crypto and financial markets broadly. Without further ado, I hope you enjoy our conversation. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guest and host may maintain positions in the assets discussed in this

podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round

of quantitative easing. You print a couple trillion dollars and all of a sudden, people start to worry. So out of this worry, we have something called the Bitcoin. Bob, and thanks for coming in to record in person, which is fun. I'm excited to have this conversation with you. I want to get started with how you describe Birch Hill, what Birch Hill is, where you guys want to go and where you want to be in the market ultimately. The broad way I like to describe Birch Hill is that we're an institutional grade risk curator. What that means can be a lot of different things.

How we like to describe it is we're building that translation layer that allows traditional institutional capital, think asset managers, credit funds, corporate treasuries to access on-chain credit markets safely and at scale. We're not trying to replace specialist lenders, credit originators. We're providing the on-chain capital and operating system to make their deals possible. To touch on curation, because I want to dive deeper there, my view of why it's such a commonly used word and why it's a category that's an emergent defy is because crypto markets started with a lot of these permissionless frameworks where any asset could be listed.

People were trading all these all coins they didn't know a lot about because you had people losing money, you had people making money quickly. So the natural need out of that was curation with someone who's going to pick, okay, what should users be seeing, what stuff is safe, or at least what can you find out about? How would you describe curation? Is that somewhat accurate? And what have you seen in the market that made you say you want to go play in that space? I think explaining what a risk creator actually is is helpful to frame the market structure, because if you look at the on-chain market structure, you have a couple layers. You have trading and lending platforms for centralized exchanges, think Coinbase. You've decentralized venues,

think Uniswap on the exchange side or Avain Morpho on the lending side, and then you have asset issuers who create the different financial products that exist on these blockchains. Some of those are starting to look a lot more like traditional firms that offer financial products. similar to the vanguard's fidelitys of the world. And then there's the longer tale of less reputable, less known players, which part of that is where curators, I would think, fit in. Risk analysis firms also fit in there, whose job is to, one, enable these markets to function properly.

That lending and borrowing rates are appropriate and not mispriced. Trying to keeping the efficiency within the market, and that liquidity is getting matched efficiently. That's what the job of a risk curator traditionally is to be done. A lot of that's happened around permissionless collateral. So the biggest markets you see around Bitcoin, around ETH, around Seoul, around the major stable coins, USDC, USDT, we're seeing that starting to deepen out and broaden a little bit further.

A lot of people are mentioning this concept of the defy mullet coming back, and you're starting to see that happen with our distribution partners in the crypto world being the large exchanges in the U.S. Coinbase and now most recently Cracken announcing their recent vault product in partnership with Veda and Chaos Labs. I think a lot of the curators are some of the smartest entrance in the space. They're the Quants, the Defi Natives, who've built a lot of this incredible infrastructure.

So you're seeing a lot of curators today also cross over into being infrastructure providers, whether that's creating the new vault stack that they want you to operate your strategies on. I think a lot of those folks are technically exceptional. But what I think is a new type of curator coming in is those leveraging the best in class infrastructure that exists today.

That's where I think Bertil tries to play a role. And we're not trying to compete on being the best vault infra provider. We have some capability there, of course, but we're generally leveraging who we think are best in class. Where we're coming in is bringing that translation to the traditional financial world, bringing in products like real estate credit funds, like wreaths, like traditional specialty finance originators. These are a lot of the folks that come from my background, my career, whether at Goldman, my co-founder's career at BlackRock and what we did in the digital asset space since then.

Yeah, it reminds me of what makes a good brokerage. It's not the one that necessarily has the best software platform, but that can be nice. It's one that offers you interesting investment products where you're not going to get rugged, where you're getting what you think you're getting as opposed to being deceived, which I think was what a lot of the defy market got tired at at one point, was feeling like you didn't necessarily know what you were trading and how the markets were set up. It's true. I think a lot of what happened in the defense.

1010 gets commonly referenced. There's echoes of what happened years prior around the Terraluna blowup, around the FTX blow up, and seeing some of the lessons that we learned from back then, I am old enough to remember things like Celsius, things like BlockFi and my time at 10T. Those are some of the largest companies in the space. They were getting the attention of large institutional allocators because they were offering a really simple way to provide yield on crypto collateral to retail customers. I think, similarly with the on-chain blowup that happened on 10-10, that same opakness started to come through. And there's mirrors of like the traditional financial crisis, what happened back in 2008 with mortgage-backed

securities blowing up. And I think on-chain, that effect happened a lot faster and a lot quicker. You saw these things like Stream and Noble getting hundreds of millions of TV up relatively quickly. Very quickly. A lot of people who are unsophisticated may just go to the two things they're looking at. effort trust are amount of TVL and amount of yield being offered. And I think the issue became enough time had passed. There was frothiness in the market with things around AI and people chasing yield and chasing price. With price moving up, that these yield opportunities started to look, or at least certain players depositing it to them, led to other players feeling that it was okay

to do so. And so this shared risk and impact of composability really bit on chain markets hard on the other way. So we've been spending so much time trying to make these assets composable, these protocols composable with one another. What we hadn't thought about enough was how composable this risk is and how really one asset, one depegging of an Oracle could really trigger this cascade liquidation. So you're seeing a lot of the lending markets on chain starting to converge around this idea about siloing the risk, isolating the risk, not pulling the risk anymore. So whether that's morpho really started this with their vault architecture and their markets architecture, you're seeing the change

in Camino v3. You're seeing the change with Ave v4, Ave Horizon, Oiler with their comeback on these isolated markets. So we're learning lessons faster. And I think now is that opportunity for this new era of on-chain yields to become on-chain. I think the point of isolated risk is really important and it's one that we'll grow into as an industry a bit because if you go back to 2022, I think there was a lot of finger pointing that certain people blew up because of counterparty risk or because of insolvency from counterparties. And regardless of who's culpable, it's just demonstrative to your point of you just take on that layered risk with what you would generally call composability.

And with that in mind, these decentralized platforms have to evolve to protect their users in some way, I think it's the basic reality because you can't just have users who are losing all their money and that they're not sticky anymore, among other issues. And with that in mind, I'm curious because you guys play in this probably broadly spoken about category called curation, which I would just consider people who are using these decentralized frameworks to build actually reputable products, hopefully at least. You go back 10 years, Joel Monegro wrote the Fat Protocol thesis, which when he wrote that, we were in a market structure where it was protocols, applications, and tokens,

but tokens were early. So I think it's a simple math equation to say, okay, the protocols I think are going to ascertain value in this stack. But now in a world where you have protocols, you have applications, which are, again, we've decided decentralized. You've the curators who are building on top of that to try and create markets that users can feel safer about.

And then you've more complex types of asset issuers. Do you believe that value accrues to the curators in that stack? or how would you upgrade this thinking on where value accrues and what is now a more evolved stack? I think curators are attracting value in the same way that traditional businesses are able to win revenue and win customers. And that is curation is a trust game.

It is a game of being a party that these institutions want to work with because you are translating their existing in a lot of cases archaic processes into a more streamlined on-chain business. I hear you on the Fat Protocol thesis. I think it was part of what led to these high layer one valuations where a lot of people were pricing layer ones

on a relative value to the existing applications to ecosystem underlying it. So if Ethereum and Uniswap trades at X ratio, then X fork of Uniswap on the new L2 should trade at a similar relative valuation to the base layer one. And so all these games, I remember, I'm sure you remember seeing happen in 2021, 2022, and so on. I think we've now converged upon Ethereum and Solana have really

separated themselves from the pack amongst the base layers for block space. With block space becoming a commodity, what is less of a commodity is liquidity. And those are the two chains that have the most liquidity for an institutional player to want to get involved. I think there's some layer twos that have started to bridge the gap as well. Things like base have done really well as well, but really you see these players, that is less of a question now. It's more of between these few parties, where are you going to go? And the application has really separated itself because of, I'll say, a few factors. One, I like to think about Morphos, example, their partner we're working with closely. With Coinbase integrating Morpho enabled Bitcoin loans on their platform, I think that is

a recipe of what's to come for the success of a protocol. And it's really this blending of the C-Fi and Defi native protocols. Coinbase becomes the distribution layer for the underlying Morpho smart contracts, morpho vault architecture to the Coinbase retail user. Morpho does retain some of that value. Obviously, they're not charging any fees on any of that product. And it's more about gaining market share and gaining users and piggybacking off of the distribution networks,

whether that's the curator's distribution network, or whether it's actual distribution partner like Coinbase. It's who owns the users, wins and has the leverage. Correct. And I don't think you can think about a user as solely a Solana user anymore or solely an Ethereum user anymore. They really are everywhere, wherever the product they're looking for is. Well, I think the things admittedly that the lending markets might struggle with at some

point. And I think they are in the most interesting category because they'll benefit so much from these assets coming on chain and people will own tokenized investment products and borrow against them for short-term liquidity. I think the challenge they might face, though, is to try and continue to be permissionless. They'll struggle to simultaneously establish accountability with end users. It's much easier for a curator to establish accountability because you don't have to try and be neutral in any regard. Whereas Ethereum morpho, they have to some degree, I would argue, try and stay like a permissionless framework, which means that either they have to find a workaround

to curate or cater assets to users where they'll develop that user trust, or it'll be someone like you guys or Coinbase who's doing the creation work and users will say, oh, I trust Birch Hill or I trust Coinbase because they're selecting the reputable Morphal opportunities for me. I think that's an incredibly astute observation, which is as these protocols have acted as both front ends as well as infrastructure, at massive scale, it's likely that I think they might have to choose one or the other. For me, it seems like Morphil is really choosing that infrastructure scale, which is what gets us so

excited about working with them as a platform. But it does go to the question of who is accountable for displaying a certain market to an end user that does have an issue. Just because it's isolated risk does not mean there's no risk by any means. There's certain markets offered within the isolated market contexts that are highly risky with very volatile collateral basis. That's not where Birch Hill is focusing on those kind of opportunities. Obviously, there are curators who are special in those markets. And I think at scale, you are right, it becomes a question of who is responsible for that user at the end of the day. So I see it as curators and these applications are going to be owning the eventual front end. I'm very curious to see how a Bitwise,

who've recently announced that they're going to be launching a vault take this approach as a US regulated ETF issuer. It's going to be very interesting of, I don't expect that they will be on the Morphal front end for accessibility and to see how they go about. not doing something like this will be interesting to watch. How do you guys assess counterparty or platform risk? Because I imagine you're working with Morpho, but you probably get pitched by a lot of these lending markets, and at the same time you get pitched by issuers of a new U.S. Treasury-back token

or a new gold-back token. How do you assess the risk that you're taking on by potentially working with these folks and who's kosher to work with? I really appreciate my background as an investor when it comes to this. having won a lot of context from my past career attendee and co-founding Halo on a lot of the existing players in the space. So leveraging those relationships has been helpful in my own context on the market. But when it comes to a new player, I think for us, we're assessing operating history, existing partner stack, and really working with our third-party partners

to help us assess risk when it comes to something we may not be the best to assess. So when comes to smart contract risk, really working with some of the top auditing firms that we have relationships in the space who are best in class at assessing those kinds of risks, even traditional companies, but even chatting with some of the more on-chain native folks, think folks like YERN and their new Y audit program to really try to get who is best in class at assessing that counterparty risk. I do think is an important factor. And when we think about our own, I was a key management, key setup, a lot of the hacks and exploits we've seen in the space have been, in a lot of cases, fishing-based and may not even be an underlying smart contract vulnerability

in some cases, but it's your own OPSEC, your own business practice security. And so really trying to be cognizant of how we approach that, I think we're going to be trying to go for our own stock type two reporting classification under our own business. And those operational checks really force a level of sophistication and security in our own internal practices. As you're thinking about each of these markets, let's say I'm a user and I want to use Defi. I want to go buy a yield-bearing asset and borrow against it. Talking about these risks, how do you assess the actual surface area of each of these risks that are historically present in Defi? Because I'd say if I do that, the risks you're presented with are the asset

the deep pegs or the underlying is fraudulent for some reasons to make that. Smart contract risk so that there's underlying morpho, smart contract risk. I have a problem on my side with my key management. That's a risk. There's browser end risk. Is there something that's pertinent to you guys when you're looking at this risk stack? Do you think there's each somewhat analogous to each other and there's a probability of each or tangibly how do you think users are getting hurt here the most?

I think for us, with our focus being a lot more around, call it real world assets, think traditional credit funds coming on chain, like the Apollo A Creds. There's a lot of lessons to be learned from the permissionless crypto yield-bearing assets and how those vaults function when working with these RWA collateral assets as well that are functionally doing something similar just with a real asset backing behind it. So things like calculating on-chain net asset value becomes really important to how you are doing that and how you are reliably showing and displaying what the net asset value of your underlying product is, whether it's crypto collateral or real-world asset collateral. That is a key component to check, having a real guardian in place

to assess on supply cap changes on... It's a Tradfai risk, by the way, the number of bad net asset value reporting across funds and trad-fine accounting for funds, it's an ever-present one. And you're seeing that, I think, permeate into some of the business plans and the reason we've been winning some of this institutional business and folks we're chatting with. It is nav being misreported. It's not a problem only in crypto.

It happens something in every single financial industry. And what really is net asset value becomes important to track. Right now, the BDC going public is like a very common thing. A lot of these interval funds are flipping to just publicly listed securities and trading way off net asset value,

30, 40% off. The truth is a lot of these net asset values are inflated. People are afraid to mark their books to market on what the actual value of the underlying assets are. Think real estate, for example. A lot of loans were made back when I was at Goldman in 2018 when rates were far lower. And not just at Goldman, but every single financial institution that issued 10-year paper at that time, those assets are no longer at the same cap rates that they were trading at back then. And the

debt may actually be no longer accretive for some of these cases. And so you're seeing people in the traditional lending markets, giving back the keys in the case for real estate, or also just defaulting on a lot of these loans. So having NAV be accurate, updated real-time on-chain is something that we think can be extremely beneficial to not just digital assets, but also real-world assets. Yeah, I completely agree. This is a blunt question, but I think it's one that would be informative for me, frankly, I think for anyone listening, which is how do you guys to generalize the curators make money for the most part? And then by extension, what's the best way for users just think about how these other folks in the defy stack make money.

So through an engagement that you do with Morpho or whether it's through Coinbase integration, like where are people making money in this stack? I would say there's two ways people are making money. In one case, it's these long-term consulting arrangements they have with various either protocol DAOs that are paying risk managers. The one I like to think about most clearly is AVE and Chaos Labs, where Chaos is the third-party risk company that helps manage all of Avey's internal risk. The other way is strictly asset management performance fees, typical of how a fund manager typically operates.

There's the gray area, I would say, about whether these are on-chain funds in some capacity or if digital assets being curated, then is that also classified as a security? I think we're operating on the assumption that we would eventually like to register whenever we need to do so. Currently, we don't have any assets that we manage, but our approach is to come at this from a proper asset management sense, because that really is what is happening. And if you think about it, with that in mind, the firms that are already registered as asset managers would probably do really well as part of this market structure. And you guys are positive some. So I would think you think about it this way, too. I totally think so. I expect a lot of these traditional asset managers to come on chain. Ideally, I'd like to hope that they're going to need the help of someone like a Birch Hill to really do this in a native way, yet still be accretive to the traditional financial institutions and customers that they're servicing. What do you think of the consulting style model versus the asset management style model as a business model? For us, we think about consulting as the way to keep the lights on for the business, but really it's to develop that relationship with that client. I think that's where it really matters for us. Our focus really is as an asset manager.

The consulting really is it takes some time to get these traditional financial institutions over the line and to educate them to explain what really is going on, how it's a creative to their business. and really honing in on what specifically that should be has been a, I would say, a value ad on our end for the client, but also really helpful for our core business as it grows and scales. What's your view on the state of the market of the offerings that someone sees right now on these lending platforms? And obviously that's a product of who the issuers in market are, who the other curators are, who the lending platforms are, and frankly the amount that people are putting money into each of these because that establishes their prominence. Do you think there's a high quality opportunity set right now? Do you think there's going to be a lot of turnover and who the

actors are? Do we'll see a different set of assets? Do alt coins need to get out of the way? What do you view is the state of the market here? I think right now the state of the market's an interesting place because you have a couple big players who really are, I would call it generalist players. These are the what's at stakehouses of the world. And they touch everything, whether that's real world assets, digital assets, looping, staking, bespoke, perp-related strategies, they really touch it all. They're some of the smartest people in the space. Where I think the market's evolving is going to be more specialized, specific curators. The truth is, a real estate fund may not want to work with a more generalist curator and want to work with somebody who's more specialized and focused on that

specific specialty, and that's how I expect the curator set to start broadening out. You're starting to see folks focus on tokenized credit card receivables. That's very different. than some place that Bert Shale might have area expertise in. And so the same way out the asset management space has mega asset managers, the vanguard, the Black Rocks of the world. You also have specialty asset managers like PIMCO focused specifically on credit. You also have traditional private equity players like the KKRs and Carlisles of the world. You also have macro funds, think Bridgewater.

And I think that's how I expect the curator space to start expanding and broadening. Do you think ultimately with that in mind, gonglet, Steakhouse, each of these platforms evolve? into a front-end-centric user-facing platform. Do you think that's what the engagement with the user looks like here? Eventually, you're starting to see things like that. You have Steakhouse issued Grove,

which is a little bit different, more of like an allocator engine. You have Gauntlet who issued Aera, which is their vault's front-end platform. So I do see it starting to happen to be announced yet what Perch Hill will be doing, which will announce shortly, but I do expect that to happen.

Thanks. And what about on the capital side? Are you seeing that, These new products on chain, whether it's real estate, whether it's tokenized equity, are they able to go raise capital? Are these getting listed on decentralized venues or crypto brokerages and getting deposits? Or is it difficult? Or where would you peg it? When you asked your question before, where is the market right now? I think the market is starving for high quality real-world assets to come on chain. There's a lot of capital chasing few opportunities right now. So one of the

things we've seen as a curator is it's not only our job to do the risk management, asset management of these assets, but really to help bring the origination of net new high quality assets on chain. So working with the clients on the solution side has been really helpful to get that first step over the line, which really has been our focus to start, which is just help educate high quality asset managers to bring their assets on chain. You're seeing the trend from traditional asset managers trying to broaden out who their client set is from pure. a few pension funds here and there who are investing into their vehicles into being a more broader offering. I think this on-chain suite fits really nicely in that. And it's no longer,

I would say, a conversation of if and more required of when. And our goal is to make that happen as soon as possible. When you look at the world of traditional investment products, so you have ETFs and you have bonds, with ETFs, you have a distribution where the big ones are really big, but there is a longer tail. When you think about the future of on-chain products, do you think there's a lot of concentration among a smaller number? Is there something about the ethos of Bitcoin and the early crypto assets being very centered around individual assets where you're more likely to have a couple central ones and the longer tail is less meaningful? Or you think you have a meaningful longer tail? In the digital asset specifically, you will see

a lot of folks leveraging Bitcoin as what it is pristine collateral to borrow stable coins and really for this asset liability matching engine to happen at scale of borrowing stables at four or five percent and depositing into what you think of is a safely risk managed opportunity at eight, nine, ten percent and capturing that three to five percent spread. That really is the business that a lot of the mega asset managers are starting to play with folks like Apollo, Quant Athene or KKR acquiring Global Atlantic Financial Group. these insurance premiums coming in and being invested from the asset manager on the other side, that is something that I think is still being yet to develop on-chain.

That is finally with Morpho v2 coming out with more fixed rate markets, fixed duration, customizable on the interest rate model, you're going to see an unlock of these new types of opportunities and really the expansion of the on-chain credit curve coming. Right now it's been a lot of T-0, a lot of T-1, maybe soon one-month, three-month type stuff, pendoles really unlock some stuff with the PTYTs, and I expect that market structure to expand meaningfully. I have to say, I think the point you made about Bitcoin being a very canonical asset

that you alluded to is important because one of the fundamental trades is you can borrow Bitcoin or borrow against your Bitcoin and with the other asset being US dollars, which is really cool because you can pretty much at any point put on a long Bitcoin short dollar trade or a long dollar short Bitcoin trade, which I think was almost an under-discussed use case. That's an incredibly powerful thing as someone who just has to store money on a regular basis. The area that I'm probably just sad hasn't come to exist is more fiat currencies at scale on chain. Because I think even though it's not necessarily a utility-based trade, the ability to use US dollars as collateral to borrow Mexican pesos or use Mexican pesos as collateral to borrow yourself, that's all I think an incredibly interesting design space because it lets you basically, it lets you hedge the currency or country, like where you live your life. So I'm just throwing that out. I'm a little disappointed

that reality hasn't materialized that much. Totally. I think one thing, as we get older and start realizing things, things like when you're buying a home, showing assets that you have to declare your creditworthiness to buy a home. For the longest time, Bitcoin wasn't allowed to be considered as any value that you had. I think a few unlocks changed that with the ETF being one, so it's now in your brokerage account. So that allowed it to be potentially being used for margin. But you see home mortgage providers now beginning to look at things like Bitcoin and offer value and credit against that for your overall net worth and assets as it comes to a originally loan for you. That buy-in from the broader market is what's going to enable Bitcoin to really

be used as collateral, because I'm sure I'm not the only one who your average retail customer does not necessarily know that you could borrow against your Bitcoin on a coinbase. You can borrow against your Bitcoin on a variety of centralized platforms, let alone the decentralized ones that we know about. I saw the dollar was down 1.3% the other day, he said, it was incredible. You don't even think about things like this. And like you said, that really matters more in the emerging markets too, right? Where you can be in Argentina and you can have your currency DPEG by 20% in one day.

So saving in Bitcoin or saving in dollars at that point is incredibly meaningful. Are stable coins going to be a big part of your guys' business or is it more tokenized asset classes? I think working with stable coins to help build out their on-chain credit curve like I mentioned, it's not just something that USDC and USDT want to do. All these stable coins are trying to become units of account, whether it comes for any asset manager. And I think the way you do that is you denominate credit in that asset. So that's the opportunity that we can help enable for certain stable coins. And I think our plan is to really lean in on US dollar specific ones. Yeah, that makes sense. When you're talking about how you're tapping these on-chain financial

markets and different folks, you mentioned credit, what advice would you give to potential asset issuers of financial institutions who might be thinking about issuing an asset on chain, listing an asset on chain. How would you work with someone like that and what do you think they should be thinking about? Because I think these problems that are still difficult. I like to think about it, not just for crypto, but really traditionally what's happened when people go to a technical solution. I think that's something like Masterworks, which is we're going to buy a piece of extremely valuable luxury art, fractionalize it into millions of pieces, and sell it at a premium to retail. Really, jamming retail with a bad price that they're never going to actually

make any money on. If that is the approach of how you want to issue assets, I don't think you're going to have a meaningful longevity in this space. Really, where we're trying to work with folks is, where can we find savings within your process? Efficiency. Efficiency, exactly. Coming from, I used to be a CMBS originator when I was like, Golden. So understanding various counterparties in that system, there's a loan monitoring agent, there's a loan servicer. There's various folks along that value chain that make up that five, six percent interest rate in BIPs. Think 25 Bips for a servicer. These are illustrative numbers. Think 20 Bips for a loan monitoring agent. Eliminating that by encoding legal contract agreements with smart contracts, things like Morphal vaults, morpho markets,

is the thing I think we are trying to enable at scale and where Burch Hill is trying to let us get to that next level with on-chain credit. Are you guys able to do the off-chain automation side? Do you plan to work with users when it comes to off-chain workflows as well? We're exploring some of the work on-chain to on-chain, really leveraging things like ZKTLS and some of the new emerging primitives, but working closely with our partners to see what is that best-in-class offering that gets used at scale.

And there's a few folks we've been chatting with folks like, opacity. I've been doing some cool stuff on this front. So definitely exploring how we can enable. that because you're right, that is something that institutions are asking for. What assets do you think are going to grow the most predominantly here in the near term as tokenized assets? Credit-based assets that are yielding between 8 and 11 percent are extremely attractive to on-chain markets. And so it's not just these players like treasuries or protocols, but the

emergence of, I know they're trading well off their net asset value right now, but the DATs, these are folks who own large amounts of Ethereum, large amounts of Bitcoin, a large amount of Solana, that they need to be productive with said assets. And they are looking for a safe real-world asset exposure to put on that trade that we were discussing before, borrow against your base canonical capital asset, whether that's Bitcoin in an ideal scenario, but also Ethereum and Solana, I think, are approaching that real capital asset-based standard to borrow dollars in order to asset liability match you into something accretive. Yeah, I think credit's a great point because it's this very sizable yield market. And when I think about the debate of how much of financial transition to stable coins, I think people think ideologically a lot or they want it to happen or don't want it to happen for one reason. I look at the incentive structure sometimes. And I think a reason people don't talk about why that could very well happen quickly is because it's a bit of a battle of the banks versus the private credit firms and the other major institutions because if those guys can help us,

usher this transition away from bank deposits into stable coins, that capital's up for grabs for them now. They can go and get people who are in stable coins because it's easy to get them converted over to tokenize credit. Whereas if money's just in the closed-loop bank system, they can't go get that source of capital. And you look at the scale of Apollo and BlackRock and some of these firms now, like, it's pretty enticing for them to go and try and get the user deposits because they've already raised a lot of money from all the capital sources globally. It's true. One thing I will say, though, is those folks are almost too big to want to innovate. And like you said, they're afraid of disrupting themselves. I think Apollo I have a lot of respect for, given that they do seem to

really push on the digital asset narrative. They seem like they've invested a lot of resources there. They have a product on chain. Same with BlackRock. I think it's even more meaningful for those middle market private credit firms where they can actually achieve a meaningful cost of capital difference that actually is an added incentive for them to come on chain, not just that they see the puck is moving here, but because it's a cost of capital arbitrage, so they need to. That is where I think we're at this very unique point in the market where they're starting to see that, and they're trying to figure out what are the steps that we need to encode this in order to make this reality, which is where a player like Birch Hill can help them, not just think through

how do you execute this on chain, but how do you report for this? What are the compliance functions you need on chain? What are the third parties you need to be integrated with inside your operating stack to make this actually work seamlessly? So that's the only caveat I would add is some of these middle market firms might be even better position, but your point is well taken. It's a bit like when the digital brokerage model emerged. I think the traditional brokers were excited about it because they could go tap and do an audience, but the same time, if you want to disrupt what you have, but you have e-tradens and these platforms come out where they built major businesses because they were compelled to go out and be like, oh, this can be a niche for us now. Bob, and touch on how you guys can help any client who comes to you guys generally. what do you do when you're onboarding folks and how can people get in touch with you?

For us, reaching out directly to me at Twitter at Real Bob Invade or on my email, BV at burschal.com. It's the best way to get in touch. Whether it's working with you as a solutions client for virtual solutions, we can really help educate you, guide you on the process of what it's like to tokenize your assets on chain, what these vault structures are looking like on chain. We're happy to engage directly. you can also go to our website at www.berchill.io. We'll also be publishing research on our Twitter as well as our substack.

So any way you want to reach out to myself or anyone on our team, we're happy to get in touch. And yeah, thank you for having me on this. Bob, and thanks for coming on. Come back. Thanks for listening to another episode of On the Brink with Castle Island. To learn more about Castle Island, visit castle island.vc. And to listen to all of our podcast episodes, please visit Castle Island.V.C. slash podcast or just click on the tab on our website. Thanks for listening.