Unchained - How the Competition Will Play Out in the Great Stablecoin Race - Ep. 936

Episode Date: November 1, 2025

In this episode of Unchained, Laura is joined by Rob Hadick, General Partner at Dragonfly, and Sam MacPherson, Co-founder and CEO of Phoenix Labs, to break down the fast-moving world of stablecoins and stablechains. They discuss Ethena’s USDe $5 billion drop, the rise of “stablecoin-as-a-service” models, the emergence of payment-focused blockchains like Tempo and Codex, and the return of TradFi heavyweights like Visa, Mastercard, and Western Union to the digital dollar race. From liquidity challenges to regulatory shakeups and tokenized deposits, the conversation explores what it really takes to win the stablecoin wars, and, importantly, whether any of these players can even make a scratch to king Tether. Thank you to our sponsors! Binance Guests: Rob Hadick, General Partner at Dragonfly Sam MacPherson, Co-founder and CEO of Phoenix Labs Links: Previous coverage on Unchained: Stablecoins Are Popping Up Everywhere. What’s the End Game? Why Every Chain Suddenly Wants Its OWN Stablecoin - The Chopping Block Timestamps: 🎬 0:00 Intro and ads: Binance 📉 1:09 Why Ethena’s USDe plunged from $15B to $10B 🔮 5:34 Rob’s view on the future of Ethena 💸 7:06 Why Spark exited Ethena despite being an early believer ⚔️ 11:32 Protocol-native stablecoins—and why Rob and Sam disagree about the trend 💡 21:03 What it really takes to win the stablecoin wars + what makes Tempo's strategy “interesting” 💳 32:11 Tether’s USAT launch: can it succeed? 🏦 36:27 How Tether and Ripple are using the same acquisition playbook 🔥 39:40 Plasma’s emissions strategy and whether it’s sustainable 🏛️ 44:10 Inside Circle’s Arc testnet and its 100+ institutional partners ⛓️ 51:08 Codex and the debate: should stablechains be L1s or L2s? 💵 56:42 How Spark aims to stand out in the new wave of stablecoin competition 🏢 1:00:04 Why TradFi players are entering the space with so much strength 🚀 1:06:04 Why Rob remains so bullish on the future of stablecoins Learn more about your ad choices. Visit megaphone.fm/adchoices

Every single boardroom is talking about stable coins right now. Every single public shareholder is talking about stable coins right now. I was on with one of the biggest traditional asset managers in the world this morning. Why did it was on with them? They had reached out to talk about stable points, right? There is no world in which you are a large investor, shareholder, company, etc. That you're not actively thinking about your stable coin strategy today. Hi, everyone.

Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. Before we continue, we'll take a quick word from the sponsors who make this show possible. Finance is the world's number one crypto exchange, trusted by over 290 million users. With industry leading liquidity, security, and a wide range of digital asset products, finance is the place to buy, sell, trade, and earn crypto. Download Binance today to get started. Today's topic is Stable Coins Part 2.

We're back with Rob Haddock, General Partner at Dragonfly, who is now joined by Sam McPherson, co-founder and CEO of Phoenix Labs. Welcome, Rob and Sam. Good to be here. Hey, Laura. So our initial stable coin discussion was with Rob and Murmptaz of Solana and Helius. And we got into a lot of things, but the stable coin space is so competitive right now that we really only ended up scratching the surface with discussions of things like Tether and Circle

and there are so many other players that we just didn't even get to talk about. And one of the really big ones that we didn't get to discuss is Athena. So why don't we start there? Something that is kind of interesting. So it's the third largest table coin. But actually, ever since October 10th, its market cap has dropped significantly from $15 billion to $10 billion. And obviously the reasons for that aren't necessarily Athena's fault, which is kind of interesting. So, you know, why do you think that is?

How do you think they can come back from that? And then just generally, how would you position them in this kind of great stable coin race that we're seeing, you know, take off? And why don't we start with you, Rob? Yeah. So I guess there was really two questions in there. One is which, okay, so why is the arc come down, cap come down over time? Then also, I mean, since we've had the little bit of the leverage washout and then also, you know, how do we see them playing in the future? I think those are a little bit of different questions.

So one is, okay, well, there's USDA and there's USTB, right? So those are the two different stable coins that Athena has today. USD is the one that is more well known. It's the larger asset. It's the one that is the asset that was at question on finance when we had the leverage washout a few weeks ago. USDA is the one that is essentially collateralized by crypto assets. But, and the yield comes from, if you stake USD, from, you know, the basis trade, which I think a lot of people understand now and probably at least this audience does.

Then there's USTP and USTB is the version of the Athena stablecoin that is essentially treasury backed. So just sort of like any other payment stable coin that a lot of other people have used across, you know, a bunch of different types of assets. that is also in the U.S. issued or just moved over actually to be entirely issued through Anchorage in a compliant manner with Genius Act for whenever that that goes live. And so I just want to bifurcate those two a little bit. For USDA, obviously having that being the one that most people are focused on, haven't come down in market cap, is in part because what has also happened is that the yield on basis has come down. Right. And so a lot of people use USD as a product to, one, stake it and then get yield. And so the way it works, obviously, with the basis trade, maybe this isn't obvious, but when you go call it long a Bitcoin spot and you go short a Bitcoin future, you're getting paid for the funding rate. The funding rate is a function of how bullish or bearish or just how much leverage people have in the in the ecosystem when they want to go and trade.

a specific token. Well, you know, obviously, I guess two weeks ago today, we had the largest leverage washout in crypto history. So the demand for leverage has come, has come down quite a bit. We then had more liquidations earlier this week when we saw the, we traded down the past few days since the Fed meeting. And so that, you know, yield that you get paid on the basis trade has come down quite a bit. And so there's just, you know, as people think about, okay, well, their relative return on the risk-free rate, we've seen a just less demand for that yield. And then we've seen some de-leverging and some of the defy, you know, native protocol things that are happening there. And so that's to be expected. I think USDA and Athena are somewhat prosycical. And I think that it will

continue to happen because of the fact that as the cycle is doing well, like, you know, you get more yield and then more people want to be in that asset. So that's that piece. And sorry if this is a long-winded answer, but I think important to to flesh this out. Then there's the UST. USTB has held up pretty well. USB also backs U.S.S. DE and is I call it a genius compliant. Stable coin for, you know, with treasuries behind it, that's been fine. That hasn't moved. And then he said, okay, well, what do I think about the future worth of you know?

Well, I think the reality is what they're doing is their future-proofing themselves because they have this asset of USDE that is very crypto-native, that is very pro-cyclical, as I mentioned. But they also now have these other business lines. They have USTB, which is going to be a payment statement. stable coin through genius that could compete with, you know, Circle and Tether. And now they have this white label product that they are also using that can compete with Lysof the Acoras and the Paxos and the and the MZOs of the world for, you know, issuing the call it white labeled stable coins as well. And so, you know, they're doing a little bit of

everything because they want to, they understand that stable coins are going to serve a broad variety of use cases. And yeah, I think, frankly, Guy is maybe the single best founder in DFI at the moment. And I just would be shocked to ever bet against him as he tries to grow into all those different use cases. So I remain really bullish. And we're, you know, for full disclosure, one of the biggest backers of Athena and actually the biggest backer of Athena from the outside. Yeah. I agree with that about Guy. Just kind of every single time I talk with him, it feels like he has a natural instinct for like the exact right answer. But that's probably just a reflection of how much work he's put in,

how much, how prepared he is for all scenarios. It's just very apparent every time I talk to him. Sam, what are you, what are your thoughts about, Athena? Yeah, sure. So, yeah, I agree guys. They've done an amazing job. Props to him and the team. They've really come out of nowhere and really, like,

shined this cycle for sure. I've known them for quite a while. Spark was actually one of the first depositors at size into USDA back in that was beginning of 2024. So we were really kind of helping bootstrapped the protocol back then. So we did extensive due diligence on it and the whole construct made sense. I think what will be helpful is like so for us as depositors in the protocol, where it went right and where it went wrong as of more late. So our history is we've been deploying capital in there to get out. access to the funding rates within CFI exchanges.

And so this has sort of just been naturally scaling over, like, I would say, up until about six months ago for that full year that Athena was growing from about zero to six billion-ish, I would say. They were able to feed all of that into the basis trade. The problem is that over the years, the basis, during the basis trade, became more competitive. As people, you know, these high yields do. not remain. These like opportunities naturally get taken advantage of by like hedge funds and stuff

like that. So over this year, the competition increased and the capacity for this trade was starting to hit scaling limits. And it seems like it was tapping out at about six or so billion-ish. What happened in, I would say, July, so we were depositors into, Spark was depositor into SUSTE primarily, and the yield was quite good up until about June. What happened then is that there was these arrangements between like, say, Athena and Ave to do like, say, liquid leverage, which was sort of putting a lot of the yield into this sort of like boosted TVL stuff. It's like it's sort of more of a leverage game and less of like a direct deployment into the basis. And so this made SUSDE less attractive for Spark as sort of a yield generation strategy. And then furthermore with the integration of, say, Binance with the 12% guaranteed yield. This was funneling most of the yield into these deployments, which was disadvantaging depositors into SUSDE.

So since then, Spark has exited entirely. So the thing about this is like during bull markets, this end with the combined funding of ENA. This sort of boosted the market up to the market cap that it peaked out about $15 billion. But I think what's going to happen is going to settle out more at where it naturally sits with like organic capacity within the basis. And that's more like at this like $6 or $7 billion range

in my opinion. I mean, I do think it really depends on, I mean, so there's one, there's organic capacity. So there's, okay, well, how much of the basis do we think? I think it can be relatively, I think we're something like 35 billion of Bitcoin OI right now. And there's, you know, obviously, the ETHI, which is much smaller. So there's, okay, well, how big do we think Athena can be of that OI and that, how much basis can they actually do?

But there's also, I think the point around like, do you think OI continues to increase right? And so like six or seven billion, if we take some math to be correct, means that, okay, well, we think that, you know, they can be, you know, something like, you know, 10 to whatever, you know, 15% of the OI in the market, right? Maybe maybe a little bit bigger. Okay, well, should OI increase in because there's more demand, because it becomes more mainstream, because we get different types of exchanges and, you know, different types of potential venues. that people can trade on. And there's there just more people that will come into the space.

And so I think that's the question as well. It's really a, it's an input of like how big can they be on a market share perspective, but then also how big can the market itself be. And but I think, of course, this is why we're seeing a lot of, you know, interest and doing things like USTB and, you know, white labels that are backed by you by treasuries like USTB, et cetera. Yeah. Well, let's talk about that stable coin is a service part of their business

because obviously now we're seeing there are so many chains that are doing or and even apps like Jupiter has jupe usd mega-eath has m-usd sui has sui usdee so do you do you feel like we're just going to keep seeing these you know like protocol native chains that are sorry stable coins and if so then like is this is this going to be a bigger and bigger part of Athena's business Or, you know, where do you see that trend going? Yeah, I guess I can take that. So, yeah, this trend of protocols, chains having ownership of, like, the back end of their stable coins, I think this trend is only going to accelerate.

I, like, definitely, you know, you see with like the hyperliquid situation where they're not really down with paying, you know, all the yield to circle in Coinbase. And so naturally, they want their own stable coin where they can get access to the underliectuary. lying treasury yield. So I definitely think that trend is here to stay. This space is quite competitive. There's lots of people vying for this sort of stablecoin as a service. You know, you have Paxos, MZero, various others. So yeah, it's definitely here to say. So an interesting point is so from Sparks view, as we like have access to the most like one of the largest amounts of on-chain stable coin reserves currently over $9 billion in USDS.Ds, we're able to facilitate liquidity bootstrapping

between all these different types of stable coins. So, for example, recently there was announcement that Spark did a deal with PayPal to bootstrap PiUSD. So Spark is behind the scenes sort of deploying its own balance sheet to facilitate liquidity with PiUSD with more liquid stable coins such as USDC and USDT as well as USDT as USDT as SDS. And so this is really helpful for all this, you know, Cambrian explosion of stable coins that are going to be emerging. Spark is able to provide this sort of liquidity infrastructure on demand and sort of at a very planned scale to bootstrap these stable coins within Defi. So I'm going to disagree with Sam a little bit. The, there was a lot of tailwind behind this idea of like a white label stable coin, both Defy native and non-Defineative, right after.

the hyperliquid situation, you know, especially with, you know, the amount of attention that the hyperliquid situation brought on and, you know, all the people who put in proposals. Clearly, that was, I think, the top for interest in least in the near term. So we had, I think, right after that from what we've seen, a lot of the protocols, a lot of the chains, they all reached out and they said, hey, listen, we want to figure out how to do something. We want to have, you know, call it. But we want to make sure that the stable coin is benefiting our chain and not necessarily benefiting somebody else. What we've seen and what we've heard over the last, you know, call it one, one and a half since that happened is that a lot of people have realized that it's actually quite hard to align incentives around everybody within your ecosystem to do that.

And so especially if you're, you know, in the hyperliquid case, you know, it's an application that is, you know, first. And by the way, it's an application first for, you know, that's 99% of the, you know, that's 99% of the case. of what's happening in the hyperliquid ecosystem. And then there's some of these builders are around the space. We just don't have yet a lot of use cases, a lot of volume other than potentially being front ends for hyperliquid itself. And so when you already have a thriving ecosystem, it's really hard to get a protocol to say, yeah, I want to align with the chain. But then I also want this other protocol to align with the chain and get all the protocols around the table.

And so that's why you've seen people like Jupiter and others do. their own stable coin. And what we've seen the least is that people have kind of pulled back a little bit. And instead, the idea has been, okay, well, how do we then instead incentivize maybe the people that we care more about or that we want to align more with over time. And so I think, you know, what that also happened is in the USDA case, like, it's been, I think, pretty hard even within the hyperliquid ecosystem to get people around USDA. So, you know, we've heard of a number of, you know, call it, you know, problems in terms of

of people wanting to align with native markets in USDA and wanting to adopt them relative to just USC, right, because of the deeper liquidity because of the better infrastructure. And so my expectation is that while white label continues to grow, that we probably doesn't grow at the pace that like people expected. I think we will probably see a little bit more white label growth continuing on the, you know, called on the bank side or, you know, called the traditional financial player side. because there's like real incentives around owning those economics. But when you're when you're an ecosystem and not an application,

I think it's a lot tougher. And it's a lot tougher when you're entirely on chain versus that, versus doing some stuff off chain because of the ability and the need to like bootstrap a lot of liquidity in these liquidity pools and et cetera. So I think it's probably not going to grow at the pace that like maybe, you know, Mert and I talked about a few weeks ago. So actually, I completely agree with you. Liquidity is the whole thing.

And so this is where on chain stable coin, protocols that are, you know, fractional reserve and able to deploy liquidity as the, as the issuer, can really step in and shine here. So some of these new emerging stable coins, Rob is exactly right, because they're a full reserve and they have to keep 100% off-chain treasury backing as part of being compliant, pay, they have to pay for market makers to bootstrap liquidity. These costs are quite expensive, you know, double-digit percentages. But, the advantage of on-chain stable coins is that they're able to be these market makers with these newly emerging stable coins, and the rate is much, much cheaper than like normal

LPs you have to pay. So, yeah, we're talking more like, you know, high single-digit percentages versus like the double-digits percentages of market makers. Why is this the case? It's the case because of the demand for stable coins in general. So right now we see product market fit in crypto for stable. is very clear. It's just up into the right, bull bear market, it's just going up. And so right now we have a situation where there is like an excessive amount of demand for stable

coins, but on the lending side, there's not the same capacity on the other side. And so this is how you get the sort of access to cheap capital, you know, potentially even sometimes cheaper than exist in Tradfai because of all this excess demand for stable coins. And so this is why protocols like Spark are able to fill this gap for these new stock. stable coins and fill in this liquidity bootstrapping issue and do it at a reasonable cost. Well, so one other thing that's related, but maybe a little bit different, is the new open issuance product by bridge in which different applications can have their own stable coins, but it's centralized on the back end. It's like the company basically creates its own

little mini tether or circle. So, you know, just for Rob, where you were talking about, you feel like the Athena's stable coin as a surface or these white label things might not take off as much as initially thought. But like, what do you think of something, you know, which is just similar but not quite the same, you know, this open issuance product? I mean, open issues isn't that different than what we're seeing with like Paxos Labs or what we're seeing with Agora or, you know, even MZero is obviously a different kind of governance model. But like, you know, shared liquidity, but, you know, the ability to go and have, you know, I guess the differences for bridge specifically, you can like plug into like there. like broader ecosystem of what they do or the broader capabilities of what they do horizontally, right, which you don't necessarily have with others. But I mean, Paxos has on and and softrams, they have MTFs. They have their, uh, all the, the, the regulated licenses

globally, um, they have wallet infrastructure, custody infrastructure, etc. Right. So it's like, it's not really any, any particularly different. Um, so it's, I don't know, Athena is, you know, with Anchorage now on the USTB side. And the USTB is what's, what's backing most of these white label products, it's really kind of the same exact thing. It doesn't change what Sam is saying in terms of like, and what I mentioned as well in terms of like needing to bootstrap liquidity, right? So like if you're going to do something on chain, then you need to have the liquidity on chain. You need to pay the people on chain. And that's, that's true for whether it's, you know, open issuance or Paxosur or M0 or anybody else. The, or the, the, if you're going to

do something that's called like a, you know, a. You know, a payments token that's within your own, call it off-chain application that is really only used for your own use case. Then it's a different story. And then I think it's a different set of potential. There's a different use case there. And then there's probably a different infrastructure that's better for you. And now we're seeing people like Braille will get involved there who aren't really involved on chain, right? And some others.

And so that's a broader set of use cases that's just like different. And I think not necessarily comparable to the on-chain stuff that Sam's talking about. Okay. So let's, we're going to, because there's just so many of these different players to talk about, we're going to move on to Tempo, which is another big one that we didn't get to last time. When they launched, there were a lot of jokes made about how the initial structure reminded people of Libra or DM. There obviously was this huge kerfuffle about the fact that this was a chain and not an L2 on Ethereum. Talk a little bit about, you know, what it is that you see. as their strategy and, you know, whether or not you think that this will work for them or whether some of the critics, you know, were either right or at least had a good point. Yeah. So I think in general, with all these, like launching stable coins and stable coin chains, the key point that is going to make the difference between the successful ones and the not so successful ones is distribution. And I think this has been hit on again and again. But it's

entirely key. You look at all the successful stable coins, you know, Tetherhead, Bitfinet. So it's a lot of Coinbase. And then some of these other ones have other exchanges that they're connected to. So Tether is really the one that's been able to break out and become used as cross-exchange settlement emerging markets, these kind of like more larger use case that's broken out from its incubating exchange to our distribution channel in general. But you see a lot more of the newer emerging ones. if they don't have this attachment to some large distribution channel,

they're going to be dead out of the gate, basically. So something like tempo, that's very interesting, specifically because of the integration with Stripe. Stripe is quite big. So, like, naturally sort of, like, these are the ones I'm more bullish on, where there is this distribution connected to it. And so, yeah, I think in general, we see a trend of, like, the fintechs, coming on chain, the exchanges coming on chain.

Like base and Coinbase are like a perfect example of the way I think everything's going to play out where, you know, all of these fintechs and stuff are wanting to go on, you know, Robin Hood has their own chain. And so I think they're all going to be progressively coming more and more on chain. A lot of them will have their own stable coin. And like really within their own distribution, it's going to be quite easy to have their own stable coin in there. Breaking out to the next level, that is that is far more difficult. And so, you know, I'm not saying one way or the other way. We'll just see how the market goes with that.

Yeah, I think, I think that's the right point, right? Which is that it sort of depends on like how you want to define success here. Right. So when you talk to the tempo team, depending on who you talk to, when you talk to them and like what they're trying to pitch you, it's either like very stripe aligned or it's not stripe aligned and it's, it's, there's a lot of this like, I think, you know, kind of talking out of both sides in terms of when you talk to the Stripe team, like, I know for a fact that they're actively like pitching a use case like of, oh, hey, we have this consolidated

offering of, you know, tempo plus bridge plus, you know, Stripe and we have all these use cases. Like they're going out and actively like marketing this and talking to, you know, potential clients about this. And in that case, to Sam's point, like, yeah, they have this distribution. You have this full set of capabilities that, you know, Stripe is able to offer across with Bridge and Privy and tempo. And that allows them to bring people on chain if it makes sense. Right.

And so for them, if they want to be fully on chain, if there's a use case there, if there's a, you know, maybe it's lower cost, maybe to get through some of the intermediaries, maybe it's faster, better for cross-border. Like that makes complete sense, right? And so they have that distribution piece. But then you say, okay, people, a lot of people are trying to tell you when it's more crypto-native conversations that this is actually a, you know, a permissionless, open-source, you know, chain that we want everybody to build on and it's not actually stripe a line.

We see all this is the future of payments, right? And, you know, I think maybe by the letter of the law or, you know, if you're if you're very just, I guess, if you're really just digging down to like what it actually means to do those things, maybe that's true, right? So like, you know, there, maybe there'll be a permissionless validator set. My guess is it's somewhere in between of those two things. And maybe, and they're doing what some of the ways they're thinking about, you know, prioritizing or incentivizing stable coin transactions is more at the technical level

versus like, you know, a validator set or your permissioning, et cetera. But the question becomes is, is it aligned with Stripes economics? And if that's true, then why would any other PSP ever want to put any sort of volume through there? Why would any other network that is theoretically at odds with tempo want to put volume through it? They won't, right? Like PayPal, checkout.com, they will not want to have any of their volume if they come on chain on tempo if it's stripe aligned, right? And the same way you hear from the Salana community that they're worried about USDC being the major stable coin on Solana because it benefits base. And base is, you know, coin is probably their biggest competitor, right?

And so you're going to see a lot more of that conversation, which is, okay, well, like, why would I want to benefit my competitor? And so I think we'll see tempo be successful potentially in this world of which, you know, hey, listen, we can go in, you know, pitch to current strike clients on a consolidated solution. I think we'll see, I mean, right now, if you look at payments that are happening on chain, they're not happening. They're happening mostly on, you know, Ethereum and Tron, basically today. right and so if that's true you know we we have to have some reason for them to shift over the reason they're happening on theorem intrante is because that's where the liquidity is that's where the market makers are that's where people will you know actually hold those stable coins today so there'll have to be some bootstrapping of you know of getting that liquidity on but then when we have

like call it like real payments flowing through from anyone else it really looks like striper's trying to be competitive with all of their close partners right at least over time and so it's not clear to me that they'll be able to go broader, right? And they'll be able to pull in those other potential, you know, customers that, you know, don't necessarily want to benefit strike over themselves. And so I think that's the question that they have to answer and that if there's been a bit of maybe talking out of, or talking to, you know, kind of both sides of that one. Yeah, just for some examples of those partners, like once I would put in that category of being kind of competitive with Stripe.

So Visa, Shopify, Revolut, yeah, Deutsche Bank, like some of these Mercury, New Bank, maybe these. Yeah, I mean, it's like a Shopify, right? Like, Stripe is actually, they exist today because of Shopify. Like that partnership between the two of them, Stripe did all of the processing for Shopify.

Yeah, Shopify grew into this big business. And they were really aligned for a long period time. They continue to be, right? So I think the bigger question will be, call it the other, the other PSPs. But I do think there's also a question about people like Visa, right? Because Visa has been a long-term aligned, you know, Stripe partner, right, for a long period of time.

But theoretically, you can do, you know, with the full suite of applications we're talking about with Virgin Stripe, you can now do some sort of transaction outside of the Visa network, right? I don't know what, you know, somebody like a Visa will do and how they'll react. You know, they've come out and they've said that they support. My guess is what actually happens in these cases is, you know, people like circle or people like visa, people like, you know, someday at checkout.com, some of the neobanks to your point, right? They'll come out and they'll say, yeah, like we support tempo and we want to be close because, you know, Stripe is a big name and they're powerful and it matters. But they'll push somebody else, right?

So they'll support it, but they'll incentivize people to go elsewhere. Like, that's what I get. My guess is what will actually happen. And, you know, some of what we're hearing in our conversations with people like that. I'm sorry, like when those partners sign up, then their competitors will be pushed to use. I didn't know what you were saying at the end. Who will be pushed? Let's give an example of, you know, another PSP, right?

So like a checkout.com, right? Checkout.com. So Visa, or sorry, not Visa, Stripe, they, people use certain part, like other payment service providers. support Stripe merchants, right, and vice versa, right? So there is, call it, you know, people where you're going to want to support Stripe Checkout, you're going to want to support a type of Stripe capability, right? And so at checkout.com might say that we will support Tempo because some of my clients might care, right?

Like, that's how the world exists today, right? But what they're not going to do is they're not ever going to send any volume to Tempo, that they're not directed to do, right? meaning that they will attend, they will try to push people to other chains if that will happen, because they will try not to benefit their competitor if possible, right? And so that's what we see in traditional payment service processing today. We see in traditional networks is that everybody needs to support each other because you want to have the capabilities if you get pushed to do that.

But you're certainly not going to incentivize people or base or have your base support be for a competitor's product. Okay. Okay. I get it. Yeah. I mean, it is interesting because I am realizing just it is also intertangled. So sometimes it's like, you know, you partner with someone just in sort of like a minimal way because you don't want to hurt yourself, but then you also don't want to necessarily benefit them. So all right. So in a moment, we're going to talk about many of the other ventures in this area. But first, we're going to take a quick word. from the spots just make this show possible. Finance is the world's number one crypto exchange, trusted by over 290 million users globally.

With world-class liquidity, security, and a wide portfolio of digital asset products, finance makes crypto easy for everyone. Whether you're new to crypto or a professional, finance offers a simple user experience. Learn with finance academy, browse hundreds of tokens, and track your portfolio on an easy-to-use dashboard. For experienced users, Binance Pro, provides industry-leading services and bespoke trading products. With some of the lowest fees and deepest liquidity in the market, it's no wonder over 290 million users choose Binance for everything crypto.

Buy. Sell, trade, earn, live, crypto. Download Binance today and begin your journey into the future of finance. Disclaimer, Binance is not available in certain countries, including the U.S. Check its terms for more information. Binance.com slash E.N. slash terms. So yet another entry into this face is USAT, which is a brainchild of a tether, and they now have bohines at the helm, which is a great get for them, obviously somebody who's extremely well-connected politically. They just announced that they'll be launching in December with what they say will be 100 million users, such as the user base of Rumble, which is 51 million. They're also investing in two to three other companies and will focus on the creator economy to launch.

What do you think of their launch strategy? Yeah. So I think something that's kind of interesting is I think people over index on like stablecoin issuers. They actually have a very limited control for creating demand for stable coins. So like I think a good example of this. So USCT is a great product. But I'm sure like they don't necessarily want like all their supply on Tron, for example. But like you, this is what users want.

So like there's sort of like this this like natural demand in the market about where people want to use the stable coin. And oddly enough, the issuers actually have very little control over this. So it's really like a market demand driven. You know, Tether's a great company. They've done great work. So, you know, I wouldn't bet against them. But yeah, it remains to be seen how big this stable coins.

going to get. Yeah, I think Sam's mostly right and that, you know, for the stable coin issuers themselves, like there's not a ton of ability to drive demand. I do think that's a little bit different for Tether specifically because they just keep acquiring everything that they are trying to use to drive demand. I mean, this is actually true. I actually think the person most analogous to Tether right now is not circle, but it's Ripple. If you look at what Ripple is trying to do with RLUSD, right? So, you know, Ribble bought, they bought Hidden Road, you know, called it the second largest prime broker in the space. They bought rail, which is, you know, one of the maybe five or six biggest,

you know, Stapoint orchestrators in the space. They bought Jewie Treasure, which is like one of the, it's not big. It's like the fifth biggest, like treasury management software that exists, but like to essentially go and stick RELUSD into those businesses. We're seeing, Tether already has that distribution, that name burn recognition. You go to Argentina today. Like people don't say, I want a stable coin. They say, I want tether, right?

Like it has branding that is valuable, whereas in, you know, like Circle does not, USDC does not, you know, these others don't. But then they also now have Rumble, to your point, Laura, and they have their, you know, we've seen them bidding on a bunch of different assets, investing in a bunch of different things. And they do probably have the ability to call it push stable coins, especially as the world gets to call it less crypto-native. And more of these fintechs, more of these Apple, applications are just like digital dollars, right? And people like, you know, are just like the benefit of what they, for, you know, for whatever reason of having a stable coin underneath. If you own that company, you can obviously push the distribution through them. So I think Tyler's going to do a ton of that. They're, you know, they're going to make, I think it was announced that they're probably going to do like 15 billion of net profit this year, right? Like, that's, that's a war chest that they can. And then they're trying to raise a bunch of money, which has been announced potentially. And so I think they're going to do a ton more of that. And that will just allow them. to continue to try to drive distribution.

For USAT specifically in the US, I don't know, that's a different question, right? So in the US, the US is probably the only place where Tether doesn't have, you know, call it, maybe maybe the US and EU are the only places where Tether doesn't have like, you know, potentially that name brand recognition over circle, right? And so there's a question around, do we know whether they'll be able to, you know, really penetrate this market. But listen, with Bohinds there, they're politically well connected, you know, I'm sure they'll be able to, you know, try some interesting deals and, you know, buy companies there that they can distribute

through as well. So it would be hard pressed to bet against them too much, to be honest. Yeah. Yeah, agreed. I was amused when I heard you say that Tether and Ripple are maybe the two most similar companies. It's not how I would normally think about it, but I agree from a war chest perspective. Yeah, just talk a little bit more about the RLUSD thing because that's a fact. fascinating thing to watch. You know, essentially they, I mean, they've been around forever and they have a ton of money, but they've never like really had anything that was a successful product. And then now they're almost cannibalizing XRP by pushing RLUSD. Do you agree with that or maybe you don't even agree with that assessment? I guess as as XRP was originally thought of and talked about,

like that's true, right? So if you think about like the history of Ripple, what they were trying to do is like this like bank like software infrastructure and then XRP would be like that transfer mechanism that sat within the middle of it. Clearly that never worked, right? And so like they did some pilots, money grand and some bank and in some of whoever else. But like nobody wanted like a 40 wall asset that sat on their balance sheet to be able to go and transfer, you know, a bunch of, you know, value elsewhere. But I don't know if it's cannibalizing today because XRP today, I think, is primarily just the war chest. And it's a, you know, call it a exposure to, you know,

maybe the ripple story. And, you know, you can debate how much utility it has. Maybe it's just a mean coin. Maybe it's a meme. Yeah, some form of, you know, ripple equity somewhere in between. But REOSD, I forget what the exact number is today. But it's like 800, 900, 900 million, I think, of outstanding at the moment. You know, they're growing.

You know, they're trying to push themselves into these things. It remains, you know, unclear what the ROI will be, of course. But like, it's very clear that RUSD and RIPL are trying to turn themselves into a stable coin company. They are buying these places where, you know, volume and liquidity kind of aggregate. They are buying these things where, you know, they can put a lot of, you know, stable coin liquidity to work. I mean, if you look at something like a hidden road, they can probably, you know, easily put two to three billion dollars to work and stable coin collateral right now. And if that all gets denominated in RULSD, right? Like, there's a lot of ROI in that, you know, acquisition for them.

And so I expect that we'll continue to see RLUSD get bigger as they continue to do these things. But there's no doubt about it. They're paying a lot of money to achieve this. But I guess, you know, why build a $100 billion war chest if you're not going to go use it, I guess? Yeah. So completely agree with that. Like only in crypto can you like get this like the, the token comes first and then you can kind of buy your way into a long-term success.

So I think this is definitely a case of that where the XRP army is like definitely one of the most fanatical groups of people in crypto and they've really boosted up ripple to what it is. And now with all the acquisitions, yeah, these are legit businesses. Like Spark interacts with these. We interact with the RLUSD team. we interact with, you know, on the hidden road side. So these are revenue-generating businesses. And I think, like, I definitely wouldn't bet against it.

They've got a lot of money and they're actively acquiring key businesses in the space. All right. So let's talk about after USAT, let's talk about plasma, which is another big chain that is piggybacking on the success of USDT, in my opinion, if I'm looking at the structure of this. Basically, it offers zero-fee transfers on USD-T. you know, we all saw the plasma ICO was a big success. The tokenomics of this is it has sort of like an EIP-1559 mechanism, which basically burns XPL tokens when there's activity in non-stable coin uses on the chain.

So, you know, we actually touched on this very briefly in the past episode, actually, But I was wondering what you thought about this particular chain, how it might do and sort of where you see it in this landscape of competitors. Yeah, I can start. So, yeah, like, I think with all these chains, it comes back to this thing, which is distribution. And so, you know, plasma's had a very splashy entrance into the scene. But now it's really on them to, you know, get the user base. And so I haven't seen that yet. this is really what they're going to need to do to convert this into a long-term durable business.

As of right now, most of the TBL is being funded by token emissions. And so we know this is not sustainable in the long run, but it's a very good bootstrapping program. So, you know, I'm not super in the weeds of what they're doing, but yeah, it's really, with any of these stable coin chains, you know, there's like a new one every day. it's really this connection to distribution that's going to bring long-term sustainability for the chain. Yeah, I don't have a lot to add. I mean, I think there's a couple ways to think about some of these stable coin chains, right? So if you think about like a tempo or like a codex, I think, you know, maybe an arc will be this way too. I think it remains to be seen some of their marketing.

But these are definitely like more like call it like B2B focused, right? So these are places where they want to go and figure out distribution with businesses themselves, with, you know, maybe the exchanges, et cetera. They're focused on providing, like, a better rail for, like, global financial systems. Plasma is definitely taken a little bit more of a call it, I would say, retail approach, right? So they've built out a lot of these, you know, they focus a lot on their TVL programs, a lot on bringing people on chain for, you know, the initial, you know, air drop.

They, and as Sam mentioned that, you know, kind of funding that through emissions. We've seen that be, I think, both successful and how splashy it came out and also has caused a lot of the, call it, bad price action over, you know, over the last few weeks as people kind of, you know, kind of take profits on those. And they've come out and they've done, you know, call it an incredible job marketing. They've talked about, you know, wanted to launch plasma one, which is their, you know, call it like direct to retail kind of neobank. clearly if they can go and build a neobank, it's of a real scale and put people underneath it on their chain. That'll be a huge win for them. I think, you know, there is a question around whether like the chain or the neobank is meant to come first, right? So or how much easier it is

to do one versus the other. Like it would probably be easier, I'm guessing, for new bank to launch a chain and put a bunch of people, a revolut to launch a chain and put a bunch of people on their chain versus like plasma to launch a neobank and find distribution outside of, call it crypto natives who aren't just farming the token. But, you know, listen, they've done an incredible job in terms of marketing today. And so, you know, I'm interested to see how that evolves. I know they're also doing some of these like, you know, call it exchange to exchange transfers. So a lot of one of the things that happens on Tron quite a bit on USDT is like, you know,

people moving money between or the exchanges themselves money between their treasury and also between, you know, their exchange and another exchange. And I know Plasma has been trying to make a little bit of headroads and inroads there as well. Very unclear to me. Like, you know, if that's like valuable, right, but it does allow you to go and say, hey, listen, I got this amount of transaction volume on my chain, which, you know, might be good for the token price. But definitely, you know, call it from a go-to-market perspective, they've, you know, approach things a little bit differently than, you know, I think some of those others.

Okay. So another big player is ARC. But there's more details that have come out since the last conversation with Rob and Mert. So Circle has now deployed the test net. And they included or they allowed 100 financial institutions or more than 100 financial institutions, asset managers and tech firms to, you know, to start using it. So Black Rock Visa, HHSBC, Anthropic, where some of the ones name. And there were also, oh, yeah, sorry, some of the others are State Street, Deutsche Bank, and BESCO. And then they have, like, a bunch of different stable coin issuers around the globe.

So, you know, one in Australia, one in Brazil, one in Mexico, one in the Philippines. You know, what do you think when you look at kind of like how they're approaching this, the different types of players that they're inviting? You know, what does this say to about their strategy and how effective do you think it'll be? Yeah, so I feel like I'm repeating myself a bit, but yeah, this is a stable coin issuer, which is Circle. They do not have access to the distribution. This is why they're partnered with Coinbase. And so bootstrapping chain is a very hard thing to do if you don't have your own user base to bring along.

So maybe this is more like a B2B thing, I guess. And in which case, like, you know, what, yeah, the business case is a little bit unclear to me. but, you know, they could surprise us with some sort of a strategy that I'm not aware of. Yeah, actually, just sorry, I did, so I didn't read the entire question I had written, but part of what I had also written was to me it looked like they were, you know, kind of focusing more in that institutional or B2B market. And I think what some of the language that I saw was that they're aiming to be a base layer for financial services from tokenized.

for financial services, we'll leave it there. Cool. Yeah, I mean, lots of people are launching these types of chains. So we'll see. I mean, at Spark, we're like, we're happy to just see how the market plays out and really activate support with our stable coin allocation system, cross-chain stable coin allocation system for whoever the winners of the market are. So, yeah, we're pretty agnostic about this. But yeah, network effects are extremely hard thing to overcome. And so a lot of like the RWA activity just continues to compound on Ethereum. And so bootstrapping a new chain in general, like one, you've got to bring distribution. That's to get even in the door.

But then overcoming the sort of natural network effects in any network is going to be a hard thing to overcome. So my base case is that RWA's just continue to compound on Ethereum, as that is the market leader right now. Yeah, I mean, on the, it's definitely B2B focused. Like I mentioned, I think in the last one, I think like them and Tempo and Codex are kind of focused on that space. You kind of hear them all say the same thing, which is like, okay, well, we're going to have like built in FX and we're going to have like opt-in privacy and we're going to have, you know, sort of, you know, integration into like, you know, certain types of like end, you know, bank counts directly. We're going to be able to do better reconciliation, like, you know, things like this, right? And so I, I, we'll see how differentiated they actually are in a technical perspective.

It sounds like tempo will probably be the most differentiated from a technical perspective. Obviously, they have the Rath team there and paradigm there who's doing, I think, most of the work specifically. And they've, you know, obviously great, great engineers. And so I expect the arc and to be a little bit more, call it like out of the box similar to, to what Codex is, which is on the OP stack. But, you know, we'll see, right? Now, I guess the question around, okay, well, you know, distribution, you know, Circle announced CPN back in May.

They launched it pretty soon after, you know, we're now like several months into it. You know, I happen, you know, I've seen people. Yeah, sorry, CPN Circle Payments Network, which is sort of like a standard and a set of APIs for people to, you know, kind of send and receive quotes from each other, but is not on a blockchain itself. It can settle at any other blockchain, right? You know, what we've seen to the network effect point that Sam said, is there hasn't really been very much volume through CPN,

maybe as you'd expect relative to, you know, circle otherwise. There's, you know, I know, I definitely, or this I have heard from people who would know that there is, you know, call it more volume that is going through some of these other payment chains, quite a bit more volume with some of the other payment chains. A lot of these other, you know, call it quote unquote, orchestration providers who are providing these types of services. And so, again, that was a network effect point.

And it was a point around whether or not, you know, there was real demand for this and whether or not they were actually adding enough value that they could have a rake, essentially, right? And so like the CPN was plugging into these orchestration players. And I was saying, okay, well, like pay us or, I mean, right now it's free. But over time, you can see how they would, they would want to be paid for it. and like you have to add some sort of extra value for there to be another middleman

or another intermediary to take a take rate, right? And we just haven't seen that really work there. And so, okay, so we'll let's move to the chain itself, right? Maybe those two things together will allow for, you know, additional, potentially like an additional use case that will allow them to, you know, bring volume to both sides. I think, you know, what are, there are ways of which, it is interesting and better to build an integrated product with your chain itself.

So, you know, some of these specific, you know, stable coin, like kind of things that you can do, like the opt-in privacy or prioritizing transactions, you know, paying, you know, sponsoring gas or paying gas with stable ones, all that kind of stuff. Those are the things that you can do. But at the end of the day, I think what a lot of these chains are probably just going to do and how they're going to win, because they're going to give away some of like the software stack for free and they're just going to subsidize, you know, transactions. utilizing their own tokens, right?

And so if I know Circle hasn't talked about this, I don't know if this is true. I'm completely speculating, but I think it's probably impossible to win the quote, unquote, stable coin chain meta if you don't launch a token. Tempo is, I mean, I don't know if they're saying they're going to launch a token up, but I'm certainly will. And I am certain that, you know, the others that are doing this well.

And so Circle, I think, is in a murkier situation around whether or not it makes sense for them to launch a token. I mean, we've seen the same conference. conversation at base. If they launch a token, my guess is it will do better. If they don't, I think they'll struggle. Yeah, well, I think so both them and Tempo say they plan to decentralized. And so if they're going to decentralize, then they do need a token. So it sounds like eventually there will be. Yeah, let's talk about Codex. So Howan, who's how in Lee, the founder, came on the show. And, you know, part of this was like that L2 debate, uh, or,

or really the L2 criticism of tempo. So Codex is an L2 on Ethereum. It's built with optimism. And it's going to focus on the B2B sector, as you mentioned. But, you know, it's stablecoin focused. And so what Hounen was, you know, kind of talking about in the show was how he felt that it made more sense for Stables to be on Ethereum, to be settling to Ethereum. And I was wondering, you know, since Dragonfly is an investor in Codex,

If you could talk about, like, how you think about that because that was such a big thing that people got really upset about in crypto. So, yeah, so why is it that you think it would make sense for stable coins to settle to Ethereum, you know, versus being on their own chain? Or maybe you think, like, both will exist. I don't know. Yeah, I mean, I definitely think both will exist. I think as you, and actually, Mert actually said this, I think, two weeks ago when we were had that conversation as well, that he thinks if you're going to have a stable coin specific chain, it actually makes more sense. to be an L2 than it does to be your own L1. Yeah, and then he made fun of himself because he used the word L2 and he knew people

were going to go after him. But anyway. Yeah, because he's obviously not pro pro L2 generally, but he has a belief that, which I do as well, that if you're going to do a call it a stable coin or payment specific chain, it should should be an L2. You know, a big part of that is obviously that as we see, call it more native or based roll-ups directly into the ETH ecosystem, like there's going to be better interoperability. than there is across, you know, L-1s and, you know, other L-1s, right?

And so you're going to be able to tap more broadly into, you know, global liquidity. You're going to be able to tap more broadly into, you know, some of the, you know, financial use cases that are happening elsewhere. Like if you want to do, you need things like, you know, dexes and you need, especially if you're going to do FX, you need, you know, borrow land. But you also, it's going to be good for a, you know, payments chain to have, you know, we'll call it structure products and derivatives that, you know, exist that are,

people can swap directly into other ecosystems that may not exist there. And so I think there's also a question around, okay, well, if you want to do, will certain types of users, especially on the business side, will they want to control their own economics, how they want those economics to work, right? Will they want to potentially be, have their transactions validated within a, you know, a validator that could theoretically be O-Fax sanctioned? How do they want to think about block construction? Like, how do you want to think about MEV?

Right? These things are primarily easier to manage as a, if you have a single sequencer, right? And you're a call it like a little bit more centralized, but also not necessarily like, you know, completely. I mean, we can debate about the spectrum of centralization, of course. But like, I think, and then you share the, call it the global use case of Ethereum, the liquidity with Ethereum. And so I think it makes complete sense. And that's, you know, part of the reason that we backed Codex as an L2 relative to call it like one of these payment L1s.

I also just think the team is incredibly good, Howan and MoMo having built, you know, call it products both in crypto and outside of crypto and Silicon Valley for years. And so, you know, we're super bullish on them and what they're trying to do. And so, yeah, I don't know. Maybe same has some perspective on that as well. Yeah, sure. So let me speak from my perspective in terms of like this L2 versus L1s for like payments and stuff like that. So I agree completely with the premise that L2s are going to be much more important for payments because precisely because they sit close to Ethereum. So Spark is actually a big user of Ethereum as a settlement layer with the and we do like capital allocation across all these different chains. Now right now, most of it is going with finality on the chain. So no matter which chain you go to, you know, it's about like 20 minutes to settle. But with improvements like a single slot finality and then, you know, having the L2 settlement

be directly tied into the finality of Ethereum itself, these types of optimizations drastically improve capital efficiency when you're rapidly kind of moving funds around all these chains. So I think it's because of this tight connection with the consensus on Ethereum that will like make L2 is a much better place to do payments. So for our product in particular, we have a product called Spark Savings where we export this cross-chain yield that's generated across all the chains. And so in order to do that, we have to manage the liquidity on the back end and where the

reserves are sitting and moving it into the best yield generating opportunities as fast as we can. So this is where, you know, maybe 20 minutes doesn't seem like a long time, but these types of inefficiencies will, you know, if they can be eliminated, like get down to like a minute, you know, a few seconds. Like, these are the types of improvements that are just going to compound so that L2's kind of run away with the like the payments use case. So Sam, I know you referenced a little bit of what you're working on at Spark, but we didn't go into in-depth. And I was just wondering if you could talk a little bit about like how you are approaching this heightened competition and how,

you know, I don't know how much you're talking to sky. but I would imagine you know some of their strategy and thinking as well. Yeah, so maybe I could just run over a little bit about like the structure of Sky and how it sits now and where Sparks sits within the Sky ecosystem. So Sky was previously Maker Dow. And since the transition, there's been the rebrand, but also a restructuring of the Dow governance. It was realized early on this flat Dow structure does not work for making like at-scale decisions about lots of capital. And so the idea is that Sky converted into more of a, and I want to preface by saying these are not banks,

but I think it's a useful analogy. So Sky, you can think of it more like a central bank. So it issues wholesale credit to multiple sub-dows of which Spark is one of those sub-dows. And you can think of the sub-dows like commercial banks. They actually interact with the end customers and this sort of stuff. So Spark itself, we have a couple different products that we offer. So the first one is the second largest lending market on Ethereum, currently over $8 billion in deposits.

So this is like, I think, the old school lending of ETH and Bitcoin. You deposit that as collateral and you could borrow stable coins against it. How Sparkland is differentiated is that we're targeting institutions. We are very institutionally focused a project. And so we're not listing every collateral into the sun. The collateral is not re-hypothicated. is meant to be, you know, a simple set of five or so assets that we know people like to borrow at at scale and then borrowing stable coins against that. And so this market, this lending market

has been growing quite well. It's doubled actually year-over-year growth. And we think this is going to continue as institutions continue to come on chain. The second project, or product I mentioned before, which is a savings, which is cross-chain earned product on your stable coins. So you can deposit usDC or UST and you can earn the Spark universal savings rate, which we think is the best risk-adjusted yield in defy. So currently generating 4.5 percent, and this is at the scale of like billions of dollars. So you could think of it's sort of like a cash product, but outperforming the Fed funds rate that you get on like Treasury Bill products. And then the last product, which is the allocation system that I mentioned before as well.

This is called the Spark Liquidity Layer. So this is the yield generation system that generates the yield for savings depositors. And so this will deploy capital across opportunities in Defi, and CFI access to the funding rate. It deploys into now the CME, the Super State USC. We're also one of the largest LPs into the Coinbase Bitcoin Borrow product on base. actually even larger than Coinbase itself, funnily enough. So, yeah, we're really kind of providing liquidity everywhere. And that is currently $3 billion deployed feeding into the savings rate.

All right. So before we wrap, let's talk about some of these Tradfi players that are also now competing in the space. I'm going to wrap up a whole bunch of different little news bits. And you can talk about any of these players or just generally, you know, how you think about them. I know obviously some of these players I'm going to mention, they're all quite different in their business, so you can kind of pick and choose. So J.P. Morgan is experimenting with this deposit token. These are blockchain-based tokens that are backed by the licensed depository institution, and they represent that a deposit that can be claimed against the issuer. So I don't know if I fully understand it, but when I was looking at this, I was like, okay, it feels like this is their way of issuing a stable coin without abandoning. the fractional reserve business or something.

That's kind of maybe how I was thinking about that. Then we have Visa. They're now using four stable coins on four chains. MasterCard, obviously, the $2 billion acquisition of zero hash the other day, which I will just quote, Fred Guy, because this is exactly what I thought when I heard the news, which is who the fuck is zero hash?

And then Western Union is making news about its stable coin, USDP, which may apparently go by WUSD. That's like a trademark application that they have filed. So I'm sure there's other. And then obviously MoneyGram that, you know, they've been involved in stable coins for a while. They just launched a new app that uses stable coins on the back end. It's USDC and stellar. I'm sure there's others that I miss, but just, you know, for all these different news, it's like when you're looking at, all of these tradfired players that clearly are realizing that they're being threatened by the stable coin competition. Like, how do you think about the position they're in and, you know, how you think they should

handle this, you know, upcoming disruption? Yeah. So maybe I'll talk more generally. And I was at Money 2020 earlier this week. So if anybody knows what Money 2020 is, I think, the largest fintech conference in the world. A lot of it also happens to, you know, exist around. not just fintech itself, but like payments more broadly. You see the banks there, et cetera.

And, you know, I was on a panel and my panel, there was a panel before mine about identity. And there was like 10 people in the panel. And then I went backstage, waited for 20 minutes, got mic'd up or whatever. And then I came out and we were talking about stable coins and every seat was taken. Right. And every conversation I had last week during my 2020 with all of the traditional players was, either it was about one of the two things. It was about stablecoins or it was about agented commerce, right? I was at the Fed, the Federal Reserve, last Tuesday, so a week and a half

ago, where for what they called the Payments Innovation Conference, it was primarily a stable coin thing, but it was, you know, they also talked about agentic commerce, etc. there. And Governor Waller specifically gave remarks about, call it like a skinny master account for stable coin issuers, potentially in other fintechs to get access to Fed payment rails without a without necessarily needing to be a regulated bank. And so I think the reason I say those things, because like, you know, fifth third was at that event and others, is every single boardroom is talking about stable coins right now.

Every single public shareholder is talking about stable coins right now. I was on with one of the biggest traditional asset managers in the world this morning. Why did it go on with them? They had reached out to talk about stable coins, right? There is no world in which you are a large investor, shareholder, company, etc, that you're not actively thinking about your stable coin strategy today. We had Bill Gurley talk about it on his podcast, you know, a couple of weeks ago, right? Like, this is happening, right?

And so this is not the end of those types of announcements. This is just the beginning of them. Some will have more teeth than others. Some will be more actually like deep than others. We've seen starts and stops with MoneyGram before. So we'll see what happens here. But the Western Union thing seems real. And we saw the shares traded up afterwards.

right? What does that mean? That means that like the public markets like that, right? And so that's an incentive for these companies to continue to go and innovate around this. And so this isn't stopping. This is going to continue. And, you know, I cannot be more bullish for the state of stable coin adoption in 26. Yeah. I'm sad. So like I definitely this, this is what winning looks like in my view. And so now the banks, I think previously they've tried to fight things like, you know, you're not able to forward interest to users, especially when it comes to like these full reserve stable coins that are just forwarding the risk-free rate, I think this should always go to users because this is a no, like the only time you should be generating additional yield is that there's some trade-off

in risk. And so what the banking system has historically done is take advantage of these low-access users who basically just park their funds in a checking account. They get paid peanuts and then the banks are earning the treasury rate on the back of that. And so fundamentally why this is a big margin for banks. So this is why they're so afraid of stablecoins. Because once you get the permissionlessness and openness and composability of defy and on-chain accounting, basically the end user, you no longer are able to take advantage of the end user like this. And so the success of stablecoins is driving the banks to adapt. And so now

they're forced to compete in this new playing field. So this is why they're coming on chain. And so this is just a natural progression of the success of the industry. I expect this to continue. And yeah, I think it's like with the change in the U.S. regulatory posturing, I think it's all systems go for a huge amount of growth in the near future. Okay. Last very quick question.

Rob, I think you have your ear to the pulse in D.C. Do you know, like if this, you know, interest loophole that the Democrats are calling the, you know, what happened in Genius, do you think that's going to be closed off or do you think that that will continue? I don't think it'll be closed. Where, but I also don't think we're going to get a market structure bill. So, you know, there's that conversation as well. But I expect that we're going to see what's at. Like, Genius, we technically have until January of 27. to do a lot of the actual rulemaking, right?

And so it's not the end of, you know, this conversation around yield. It's not the end of the conversation around some of the nuances with stable coin issuers. I also think over time, like we have this, like what is ingenious is mostly defining a quote-unquote payment stable coin. I think we're going to start having like carve-outs for things that are non-payment stable coins, but other types of stable coins. So this is going to get more complicated over time. And I'm sorry, what does that mean? Are you talking about like a bit old type thing?

Or what is that? Well, so, I mean, you talked about the deposit token. Was a deposit token stable coin or not? Well, in the place it's not. But it also means things like, you know, eventually over time, you know, could a payment stable coin right now needs to be essentially like an arrow bank, right? And it needs to be one to one backed by a treasury, right? But is the world in which, you know, a savings stable coin exists, right?

And it doesn't necessarily need to be one to one backed by a treasury anymore. Do we have yield stable coins? Like these things are probably come in the way of another. we're probably going to get defined in some way or another, whether that's through legislation, or whether that's the rulemaking at the regulators themselves. So we'll see what happens over time. But I think where genius was the start of what is going to be continued conversation around this in D.C.

Not the end. Yeah. Yeah, that makes so much sense because the definition is so narrow in that. And obviously there's like five million different creative ways to create a stable coin. So, okay, you guys, well, we managed to cover at least a lot more, not everything. I did leave things on the cutting room floor. So if you are a stable coin project and you didn't get mentioned, I'm sorry. There's just like way too much.

But Sam and Rob, it was great chatting with you and catch you all later. Thanks Laura. Thanks for having us. Welcome to this week's news recap. Let's begin. Global Stablecoin. Push gains momentum as major players announce new initiatives. The stable coin sector saw a wave of major developments this week,

underscoring its growing integration. into traditional finance. Citigroup announced a partnership with Coinbase to pilot Stablecoin payment services, allowing institutional clients to move seamlessly between Fiat and crypto. City's head of payments, Debapama Shen, said, clients increasingly demand programmable 24-7 payment systems

as the bank forecasts of $4 trillion stable coin market by 2030. Meanwhile, Coinbase deepened its ties to traditional finance through a second partnership with Apollo global management to expand Stablecoin-backed lending and tokenized credit products. Visa also broadened its Stablecoin network to four new blockchains, now supporting eight tokens across 40 countries, with Stablecoin linked card spending, reaching a $2.5 billion annual run rate.

Elsewhere, Western Union filed a trademark for WUSD, just days after revealing its USDP-PT stablecoin on Solana, signaling plans for global remittance integration. Circle launched the public test net of its ARC blockchain, onboarding more than 100 partners, including BlackRock, HSBC, and Visa. And Stable, a Bitfinex-backed layer 1 focused on USDT payments, announced phase two of its predeposit campaign following backlash over alleged insider participation in the first round.

Sam Bankman freed claims, FtX quote, was never insolvent, end quote, a new online manifesto. Convicted FTCS founder Sam Bankman-Fried has resurfaced on social media, publishing a 14-page document claiming the collapsed exchange, quote, was never insolvent, and quote, and that customers could have been repaid in full. Posted to his ex-account late Thursday, the document argues that FTX faced only a temporary liquidity crunch in 2022, which was worsened by its, quote, external counsel, end quote, taking control. Bankman-Fried, a subject of asserted that FDX and its sister firm, Alameda Research, held up to $25 billion in assets against

$13 billion in liabilities, and that if their investments had been retained, total holdings could now exceed $100 billion, including stakes in Anthropic and Robin Hood. The document further claimed the exchange's native FTT token would be worth $22 billion today. The Post reiterates arguments Bankman Freed made a trial, where he was convicted on seven counts of fraud and conspiracy and sentenced to 25 years in prison. His renewed effort to recast the FTX collapse comes amid reports that allies are lobbying for presidential pardon, though prediction markets currently assign the attempt slim odds. Securitize and consensus prepare for public market debuts. BlackRock-backed tokenization platform securitize announced plans to go public through a merger

with Cantor Equity Partners, too, a special purpose acquisition company sponsored by Cantor Fitzgerald. The deal values securitize at $1.25 billion in pre-money equity, with the combined firm set to trade on NASDAQ under the ticker, SECZ, as early as January. CEO Carlos Domingo told CNBC that, quote, tokenization is what everybody's talking about, end quote, adding that the listing will allow investors to, quote, index themselves to tokenization.

Securitize has partnered with firms, including Apollo, KKR, and BlackRock, having helped launch the latter's B-UIDL fund on Ethereum. The company has tokenized over $4 billion in assets and will digitize its own equity once public. Meanwhile, Ethereum developer, Consensus, creator of the MetaMask Wallet, is preparing an initial public offering led by J.P. Morgan Chase and Goldman Sachs, according to Axios. The listing would be one of the most significant for an Ethereum native company. Founded by Joseph Lubin, Consensus develops software that powers decentralized applications and operates the Linear Layer 2 network. A company spokesperson said it is, quote, constantly exploring

opportunities to expand its impact. In related news, a website claiming to be MetaMask's token portal surfaced online, driving up betting odds of a mask token launch to 35% on Polly Market. Though the wallet provider has not confirmed its authenticity, and has repeatedly warned users against fishing attempts. ETHZILA sells $40 million in Ether to fund stock buyback. Ethereum-focused Treasury firm ETHZILA sold $40 million worth of ether from its reserves to finance a share repurchase program, the company confirmed Monday. The move follows pressure from activist investor Dmitri Capibara stocks,

Semeniken, who recently acquired a 2.2% stake and urged leadership to address the firm's steep discount to its net asset value, NAV. ETHZILA shares had been trading at roughly half the value of its crypto holdings before the announcement. Chairman and CEO McAndrew Rudicil said the company plans to, quote, continue selling ETH to repurchase shares until the discount to NAV is normalized, end quote. So far, ETHZILA has bought back 600,000 shares worth $12 million as part of a $250 million buyback plan approved in August. The firm still holds about $400 million in Ether, and its stock

jumped more than 14% following the news. Founders Fund, led by Peter Thiel, holds a 7.5% stake in the company. Polymarket set to relaunch in U.S. with sports focus and token plans. Prediction market platform, Polymarket is preparing to re-enter the U.S. within weeks, marking a major comeback after being forced offshore and fined $1.4 million by the Commodity Futures Trading Commission in 2022. The relaunch, expected by late November, will center on sports betting and begin in an invite-only phase during the peak football and basketball seasons, according to Bloomberg. The company recently acquired QCX, a licensed derivatives exchange and clearinghouse, giving it the regulatory footing needed to operate in the U.S. once again.

Chief Marketing Officer Matthew Modaber confirmed that Polymarket will introduce a native token, P-O-L-Y, and an accompanying airdrop after the domestic rollout. Quote, we want the token to have true utility and longevity, Modabur said, emphasizing that the launch will follow only once the U.S. platform is fully established. MasterCard I's $2 billion acquisition of zero hash. MasterCard is reportedly in advanced talks to acquire Chicago-based crypto infrastructure firms, zero hash in a deal valued at up to $2 billion, according to Fortune. Founded in 2017, ZeroHash builds blockchain and stable coin infrastructure

that enables banks and fintechs to launch crypto trading, payments, and tokenization services. Its clients include interactive brokers, Franklin Templeton, and BlackRock's B-UIDL fund. The acquisition would mark MasterCard's latest expansion into digital assets following its 2021 purchase of blockchain analytics, firm CipherTrace, and its participation in a Stablecoin consortium with Robin Hood and Cracken. Zero Hash recently raised $104 million in September at a $1 billion valuation backed by Apollo, Morgan Stanley, and SoFi. Mega-Eath token sale draws $1.39 billion in bids,

oversubscribed nearly 28 times. Ethereum Layer 2, Project MegaEath, has closed its highly anticipated public sale after attracting over $1.39 billion in commitments from more than 50,000 participants, according to the project's official post on X. The auction, which aimed to raise around $50 million, was oversubscribed by 27.8 times, highlighting intense demand for the platform's native token, M-EGA. Mega-Eath said that participants who bid below 0.099 will automatically receive refunds, while bids at that price, are currently being reviewed for allocation.

Final results are expected by November 5th, with refunds for unallocated users to follow. The sale offered 5% of Mega's total 10 billion token supply, with the option of a one-year lock-up for a 10% discount. Developed by Megalabs, MegaEath aims to deliver sub- millisecond transaction speeds and process up to 100,000 transactions per second, drawing backing from prominent figures, including Ethereum co-founders, Vitalik Buterin, and Joe,

Lubin. Bot sends Hyperliquids H-Y-P-E token, soaring to $98 before crash. Hyperliquid's native token, H-Y-P-E, briefly surged from $47 to $98 in under a minute on the decentralized exchange, Lider, before crashing back to its prior range on Monday. Lighter attributed the extreme move to a quote, runaway bot that aggressively cleared its order book in a low liquidity market. The platform later removed the price spike from his chart interface, citing user experience concerns, while emphasizing that on-chain records remain unchanged. The decision sparked sharp criticism from traders who accused lighter of obscuring market data. Quote,

You're effectively lying to your users by doing this, crypto analyst Duo 9 said on X, arguing the exchange should acknowledge its illiquid order books instead. Others defended the move as practical given charting limitations. Blockworks shuts down news division to focus on data expansion. Crypto Media outlet Blockworks has announced the closure of its news division as part of a strategic pivot toward data and software products. Co-founder Jason Yanowitz said the company is, quote, becoming a software and data-first organization, end quote, citing strong growth in its analytics business over the past two years. Founded in 2017, Blockworks built its reputation through podcasts,

research, events, and news coverage before launching a data platform now used by investors and blockchain firms. Yanowitz noted that demand for, quote, data as a primary information source has outpaced traditional reporting. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Oranovich, Margaret Curia, and Pam Majumdar. The weekly recap was written by Juan Aranovich and edited by Stephen Erlich. Thanks for listening. Thank you.