Unchained - Jesse Pollak on ‘Base Is for Everyone’ + Guy Young and Carlos Domingo on Converge - Ep. 820

Episode Date: April 18, 2025

This week on Unchained: two big stories, one episode. First, Jesse Pollak, head of Coinbase’s L2 Base, joins to unpack the chaos behind the viral “Coined It” memecoin moment, a tweet-turned-token that hit $17M in an hour, crashed, then rebounded, igniting a firestorm on Crypto Twitter. Was it a media experiment or a botched launch? Was there insider trading? And why does Jesse think coins are the future of creator monetization? Then, we dive into Converge, the recently announced chain backed by Ethena and Securitize, aiming to bridge TradFi and DeFi. Carlos Domingo and Guy Young explain what makes Converge technically novel, why they’re building on Arbitrum and Celestia, and how it could reshape the onchain landscape for institutions. Also in this episode: Whether Jesse regrets greenlighting the Base post The future of creator coins and tokenized assets How Converge plans to prevent hacks and improve UX And why Converge isn’t just about migrating existing assets, but “expanding the pie” Thank you to our sponsors! Bitkey: Use code UNCHAINED for 20% off FalconX Mantle Part 1 Jesse Pollak, Head of Base and Coinbase Wallet On Wednesday, Coinbase’s layer 2 network Base posted a tweet that read: “Base is for everyone,” followed by a tweet: “Coined it.” That second tweet linked to a page where the post had already been turned into a coin. Within an hour, the coin hit a $17 million market cap, then dropped to under $2 million, then went back up to over $13 million. Crypto Twitter exploded. Some called it a rug. Others accused insiders of sniping the launch. Coinbase later issued a statement saying that Zora auto-tokenizes content, but Jesse Pollak, head of Base, tweeted that he personally greenlit the post. So what really happened? In this episode, Jesse sits down with Laura to discuss: Whether this was a memecoin launch or a media experiment Why he thinks the crypto community overreacted Whether insider trading occurred And why he believes coins, not NFTs, are the future of creator monetization Plus, he explains why he’s okay being the “punching bag.” Part 2 A month ago, Converge was announced as the new chain backed by Ethena and Securitize, aiming to become a home for tokenized assets and institutional capital. On Thursday, the teams behind it released the full technical specs. From validator-triggered circuit breakers to 100ms block times and support for yield-generating private credit, Converge is pitching itself as the chain for both TradFi and DeFi. In this episode, Securitize’s Carlos Domingo and Ethena’s Guy Young join Unchained to explain what’s actually novel in this architecture, why they chose Arbitrum and Celestia, and what it will take for institutions to get comfortable onchain. Plus:  What Converge means for Ethereum and other L2s Whether gas tokens like USDe and USDtb solve real UX problems How they plan to prevent bridge-based hacks And why this isn’t just about migrating existing assets, but “expanding the pie” Guest Carlos Domingo, co-founder and CEO of Securitize Guy Young, founder of Ethena Labs Links Previous coverage of Unchained on Ethena: After an Incredible 2024 for USDe, Ethena Plans to Supercharge Growth Ethena’s USDe Grew to $2 Billion in 7 Weeks. Is It Safe? How Ethena’s USDe Challenges Traditional Stablecoin Models Unchained:  Tokenized T-Bills Grow Despite Trump Tariffs Causing U.S. Treasuries Sell-off Tokenized Treasuries Grow 20X Faster Than Stablecoins as Crypto Market Languishes Learn more about your ad choices. Visit megaphone.fm/adchoices

I think a lot of this is downstream of what I would classify as a level of cultural toxicity that exists on crypto Twitter, which is that you have to conform. And if you do something that's outside of that conformed sense of what is right or what some group thinks is right, people will attack you. And my job as a leader is to make it so that there's psychological safety for people on base to do new things and to experiment. Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin. We are now featuring quotes from listeners on the show. Today we have comments responding to my interview with Bitwise's Matt Hogan and Falcon X's Matthew Sheffield about the market turmoil and its impact on Bitcoin. On X, Frigg says, quote, strong fundamentals always take time to shine,

feels like the long-term play is still very much alive. Also on X, Amin CAD writes, The real question is when does Ethereum begin to fulfill its potential? To have your comment featured, write a review of the podcast overall, or leave a comment on our video on YouTube, X, or Farcaster. This is the April 18th, 2025 episode of Unchained. BitKee is the Bitcoin Wallet from the team behind Square and Cash app. It's the first two of three multi-sick hardware wallet

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Today's guest is Jesse Pollock, head of base and coinbase wallet. Welcome, Jesse. Thanks. Glad to be here. On Wednesday, Base became the center of crypto's attention when the base X account tweeted, base is for everyone, and in a reply wrote, coined it, and posted a link to a coin on Zora. The price pumped up to about, I think it was $17 million market cap within an hour, and then it immediately dumped down to less than $2 million. users were crying foul saying that what happened here was a rugpole. Coinbase later issued a statement saying, base posted on Zora, which automatically tokenizes content.

Yet you had also tweeted that you had greenlit the token launch. So what happened there? Was this intentional? Was it a mistake? Or just explained the behind the scenes? Yeah, absolutely. So one of the biggest priorities for base right now is figuring out how we can give creators better tools for being creative online.

Because when we look at the last 20 years of the internet history, one of the biggest things that has driven the growth of the internet is creators. They're the ones creating all the content on Twitter, on TikTok and Instagram. When you look at the reality of those creators, they're kind of getting left out to dry. Those platforms are making massive amounts of money off of the creativity, but the creators aren't earning. And so one of our beliefs about on-chain is that an opportunity for us to build a new creative economy, where creators can actually earn from their creativity. Instead of platforms taking 90% of the

value, the creators can take 90% of the value. And so that's something we've been iterating on for the last while. We've been using Zora and other creative platforms for the last two years since the beginning of BASE to figure out what's a model both for brands and individual creators that actually works. You might remember when BASE launched the TestNet, we did the BASE introduced NFT. At the time, that was the biggest NFT that ever had been on chain. 400,000 people collected it. And so it's been two years of iterating and experimenting and trying to figure out how this system is actually going to work for creators. And through that iteration and experimentation, what we've seen is that the systems that we've been iterating through haven't been perfect,

and there's always opportunity to improve them. And one of the big learnings has been that coins, the simplest form of tokenizing something on chain is actually a really, really powerful tool for capturing the value of content and capturing the value of creativity and letting creators own that. And this has been led by, you know, pump. It's been led by Zora. And over the last six weeks, Zora actually shifted their entire platform. So instead of creating an NFT every time you post, you create a coin every time you post. And we think that's good. We think that's normal, we think that there's a big stigma around coins because people have done bad things with them historically, but that really, it's just another piece of technology that can help creators

earn more money. And so over the last five weeks, I've been creating on Zora. I've created a ton of different content. All of them have been coins. I've been sharing all of my thinking about why I'm doing that, about what that looks like, about what the impact is for me and for other creators. And yesterday, we took the next step, which is that if I'm going to lead the way and kind of break that seal, we also need brands to do it. And Base is the biggest crypto-native brand that's doing on-chain native marketing. And so that's exactly what we're going to do. We're going to coin content because we believe that every brand should be coining their content. Every creator should be coining their content, because that's the best way for creators to get their creativity valued in the open market

and then actually capture that creativity and let them earn more so that they can have a better livelihood. And so then it does sound like it was intentional. So then just square that with the Coinbase statement about base posted on Zora, which automatically tokenizes content. Every time you post on Zora, it turns into a coin. That's the Zora protocol. We're going to put content on Zora. That's going to turn it into a coin. Base is going to keep posting on Zora, and we're going to keep creating coins for all of our content. Oh, interesting. And so then just like if I'm going to walk through what this future looks like, then is it a situation where we could expect that Coinbase would ever list bases for everyone coin?

Well, I think if you look at what Brian and, you know, other Coinbase leaders have said and I've said as well, our goal with Coinbase is to list everything. We don't want Coinbase to be playing this role of picking and choosing because when we're thinking about building an open global economy and we're thinking about increasing economic freedom, what that means is it means giving everyone access to this global market that's being formed and then giving them the tools and information so that they can make decisions for themselves. And so the next big thing that Brian's been talking about is actually integrating Dex's directly into Coinbase so that all assets will be directly available to our customers on Coinbase. And so there's no news on that today. But again,

the North Star for Coinbase is list everything and give our customers access to the entire global economy. Okay. Well, I guess we'll have to see a web. or if this gets listed. I did want to mention something that a lot of people talked about, which was that Luxon Chain reported that three wallets, but large amounts of base is for everyone token before the base account posted about it. And those accounts all quickly cashed out.

And I wondered if Coinbase has looked into who was in control of those wallets or if you plan to try to investigate that, you know, because it seems like either they had some insider, knowledge, like potentially they could be Coinbase employees or they just got very lucky or what do you think happened there? And what do you plan to do about it? Absolutely not Coinbase employees or anyone affiliated with Coinbase or affiliated with base. Coinbase has very strict trading policies that we enforce. We are constantly monitoring all of the employee behavior and there was absolutely nothing connected to Coinbase about people who are buying bases for everyone. So I just want to be really,

really clear about that. And just understand the certainty around that, because there was that incident with the two brothers or the two relatives, one of whom worked at Coinbase. I'm just forgetting the exact details. But so like to now, yeah. And in that case, Coinbase had monitoring. Coinbase detected that. Coinbase reported it to the government. And we supported the case against those folks. And so again, Coinbase has probably the most rigorous employee trading surveillance of anyone in the industry and can give you 100% certainty that there was not, you know, insider coin-based activity. Absolutely not. Now, in terms of how did people find out about it, we always post our content first on-chain. We posted it on Zora. Before we put it on X,

we posted it on Zora. And shocker, there's a lot of people who are on Zora. There's people who are scrolling the Zora feed constantly because they're using on-chain products. I think that might seem crazy at times to people. Like, oh my God, they're using on chain products. They're not just talking about stuff on Twitter. But yes, there are people using on chain products. And, you know, when we're thinking about content and putting content on chain, you know, that content is going to be variable in how much it's valuable. And people are going to make decisions about do I think this content is more valuable or less valuable? In that case, some people thought it was valuable. They saw a base post it. They bought it. And then they later sold it. And, you know, you mentioned

that the price went up and then the price went down. And I think it's also really important to note that the price also went back up. I think I was looking, the price is $11 million right now. Who knows if that's the right valuation for this piece of content? Yeah, the market cap, yeah. There was so much hysteria yesterday about, oh my God, base rugged. Base did not rug. There was no insider trading. The market is a free market where people are valuing this content. People decided to buy it. Some people decided to sell it. Then some people decided to buy it. And when we're thinking about the global crypto economy, this is what a free market is. And the most important thing is creating a culture and then creating technology systems where we're creating long-term positive sum outcomes for creators.

And that's what Zora is doing. That's what base is focused on. We're not always going to be perfect, but we think the best way to figure it out and the best way to pave the road for hopefully people like you one day to actually earn more money from your content. is to be out there in the trenches, creating content, putting it on chain, listening, learning, seeing what happens, and then making it better. And so that's what we're doing. We're going to keep coining things. And we think that it's going to have a really positive impact on the ecosystem.

And if you look at the last 24 hours, there have been more creators creating on Zora than ever before. Because people are realizing, oh, my God, if instead of me creating content and Facebook decides how much it's worth, and then Facebook monetizes it through ads, and then Facebook takes all that value. I can create content. The market can decide how much it's worth. And then I can capture the value. That's actually a pretty good thing.

And so I actually think that there was a lot of kind of furor yesterday about this, but I kind of see this as a turning point where people are realizing, okay, the only way to the other side was through a little bit of chaos. But now that I'm coining every day and bass is coining every day, and there's lots of people coining every day, there's no stigma here. Coim your content. If you coin your content, you'll make more money.

You'll have more direct connection with your fan. You'll have more connection with your fans, and you're safe. It's a safe thing to do. Yeah, well, we'll see if they take that lesson away, considering how you were criticized on all sides. But, you know, you are either prepped very well by somebody or you just managed to somehow hit a certain soft spot I have, which is this notion that I do think that Web3 has the potential to help creators, which, you know, they were, they were not served well by Web 2.

And, you know, I saw you talking a little bit about how basis for everyone coin is not a meme coin. You were calling it a content coin. But how do you differentiate between those two things and how do you also square that? And maybe this is just a different category entirely. But, you know, there are ideas like story protocol where, you know, you could use that to pay royalties to anybody who contributes on an artistic project. So, like, what's your vision for, you know, how this would all work? Yeah. So first, let me talk about this meme coin versus content coin thing.

And really where this has come from is I've been creating on chain. I've been creating on chain for, I mean, I've been building on chain for 12 years. I've been creating on chain for as long as people have been creating on chain. I did it with one of ones. I did it when Zora was, you know, open editions. and now I've been doing coins for the last six weeks, create a bunch of different coins. I've learned a bunch of things from it.

And the biggest single thing that I learned is the first time I created a coin on Zora, everyone instantly mapped their mental model of meme points. And people were in my replies, they were like, when are you going to tweet about this specific piece of content again? And like, when are you going to create the telegram group for this specific piece of content?

And like, whoa, whoa, whoa, whoa, whoa. You guys, like never. It's a piece of content. Treat it like a piece of content. The second time I created a piece of content on Zora that got coined, people were like, Jesse's rugging because they were mapping that expectation of this is a long-term project that's a meme that Jesse's running with to this thing that's actually just a piece of content that should be valued like a piece of content.

The fifth time I created a piece of content, no one was talking about it anymore. They were just like, oh, this is just a piece of content. And if I think it's a cool piece of content, I can collect it. If I think that other people think it's a cool piece of content, I might speculate on it increasing in value, but I'm going to treat it like a piece of content. And so I think sometimes when I'm talking about this like content coin versus meme coin, people are like, what's the technical difference? Like, you know, how do you segment these things? How do you? And really my perspective is this is really a cultural and an expectations difference, right? If I'm telling people, this is a piece

of content, value it like a piece of content. If you think it's cool, collect it because you can spend 10 cents and support me as a creator. And if you think other people think it's going to be cool, you can speculate on that. That's really, really different than me saying, I'm launching a meme. I'm going to create a telegram group for that meme. I'm going to create all this different content around that meme, almost like an aggregated series of content. And so what I've been trying to do with this kind of language around content coins and meme coin is really just help people kind of segment their thinking about what's happening on chain right now. Because a coin is at the end day just a piece of technology. It's a financial primitive that we can map into a bunch of different

use cases. We can map into a bunch of different contexts. And I believe that mapping it onto a content context is going to be a huge, huge unlock because it's going to let all of that content be valued in a way where we can then redirect that value to creatives. So that's the first thing. Now, the second thing, on your question around story and IP, I think a lot of this goes to the question of in this future, then let's just imagine for a second, where all content is tokenized, what does the value accrual system look like? And is it built on the historical model of value accrual, which is really IP-driven and kind of legal-driven where it's like, you know, I have a right to use this content and that right gives me access to revenue, or is it something

new? I think my hypothesis, and a lot of this is informed through conversations with Jacob Horn, who's the creator of Zora, is that it's going to be something new. And he has this phrase, which is free but valuable, which is basically in this new era of on chain because we have the ability to have the content tokenized on chain in the form of a coin and have that providence directly connected to the creator and then have it valued by the free market, we can actually have this world where the content is valued in and of itself. And that drives kind of this value accrual to the creator,

whether it's through trading fees or ownership of that content. And because that's happening, because the attention is kind of manifested in that coin, then you can also make it totally free. So that's something that just is valuable in and of itself. And then everyone else can benefit from it. And it's kind of turning the world on its head. But if you look at the history of crypto, you know, you look at CCO, like Creative Commons, like that's been at the core of crypto. There's always been this idea that if we let things be free, they will proliferate more. And as a result of them proliferating more, the value will accrue back in some way. And I think what we're realizing with coins and content and all this stuff is the way it accrues is through attention. And when

there's attention, there's some segment of people who think it's cool to own a small part of it, just because. And that is a economic engine that can then drive value and can drive value capture for a creator. Yeah. It's super interesting. what you're saying. That bit right there made me think, oh, if this comes to fruition, then it would spell the end of certain middlemen. Like I was just thinking about if you're a visual artist and, you know, you basically reach your market through a dealer, then this type of software would allow you to pass by that. But I did want to say the one thing about the meme coins and content coins description that you gave me. It was interesting because actually it felt to me like

the differences that you are making between meme coins and content coins are the exact same differences that people used to make between NFT coins and meme coins. Because you were saying like, oh, the meme coin comes with, you know, this like roadmap and this group and you know, whatever. But to me, that's more like NFTs. And then the way you were talking about content coins, I was like, that to me sounds like a meme coin. Yeah. Yeah. Well, I think the reality is all of this is very gray and we're kind of figuring out as we go. But I think what what naturally happens is if you think about kind of NFTs as a prototype of meme coins, we've basically gone expanding the aperture of what can be brought on chain. With NFTs, it was like you have to bring on this whole collection,

you have to make it all. With meme coins, it's like you have to actually just bring on this idea and then everyone else can create content around that and that can drive the attention. And then with content, it's not even an idea anymore. It's just a piece of content. And that content could ladder up to an idea. And I actually think we're going to get to a future where you might have a meme coin, and this is actually happening on base already, you have a meme coin. And then that meme coin is creating tons of content about their meat. And every single one of those sub pieces of content actually has an economic relationship back to the meme coin. So it creates this kind of driver of attention and value accrual back to the meme coin. And that's going to give us this world where we kind of have layered

value that's letting creators capture value at every single point of the life cycle. And maybe just to bring this back to kind of you personally, my bet would be that if you decide to coin your videos, just every video that you posted, you would make money because those videos are worth something. Yeah, I mean, we are doing like pods and we're in a, but we're on fountain. We're on a bunch of, I think we're on like Dracula. We're on a bunch of these. Yeah, but we remember them all. You're already experimenting, right? And I think the funny thing is if you look back at the history of, you know, BASE posts on Zora and my posts on Zora, before Zora actually went full coins, they had this kind of hybrid model where it started out as an NFT and then it turned into a

coin. And Bates had posted a ton of those before. And so there already been economic assets that looked like this. It's just that there's this really, you know, funny cultural stigma right now around coins that I think is kind of well placed because there's all this history that, you know, we need to work through as we're building out kind of new models. But again, my feeling is like we have to work through it to get to the other side. And as we do that work, we're going to find better and better models for how to monetize with creators. And I actually think that we'll see platforms potentially like pods and others say, hey,

what we're seeing on Zora is really interesting. It's actually accruing value better for creators than our current model. And then they might adopt it. And so again, our attitude on all of this is we want to be at the forefront. because that's the only way you can learn. We're going to do it in public because building in public is how we normalize experimentation and it's how we create space for everyone else to feel safe. And we're going to do things on chain.

Because if we're not doing things on chain, if we're not using the apps, how can we expect anyone else to? And so sometimes that's going to be a little bit messy. But this is what it takes to build a new internet. It's what it takes to build a new social network. What it takes to build a new global economy. Yeah, I like what I hear in this sense that there's a certain amount of open-mindedness and like not feeling like you have to do things the way it's been done before.

And, you know, I just saw this exchange, which I'm sure a lot of people saw where Alon of Pump Fund tweeted, quote, I think there's a reality where what based it is normal in a few years' time, but it definitely isn't today. I'm a huge advocate for the vision of tokenizing everything, but you can't change current market realities. If you launch a coin and have social influence, that comes with responsibility, namely the responsibility to stick to this basis social standards to a T. Don't launch or shell other coins. Don't set high expectations. Don't talk about price, et cetera. And you respond, and he also said these standards aren't dictated by him or Pump Fund or by CoinBase or anybody, but by the users.

And then you responded, next time, I will definitely make sure to conform to the prescribed pump.com. Trench standards for how to correctly use Internet capital. markets. And so, you know, that reflects this attitude you talked about. But I did want to ask because, you know, as we mentioned, so this moment in time where you have been the punching bag on a crypto Twitter for the last 24 hours, it feels like, you know, we've seen this before. There has been other times when the crypto community has derided. For instance, your videos where you ask people if they'd like to make money to get on chain. And I just wondered if what people are picking up on there is that it feels more top down or it feels more like you're trying to create

activity, whereas crypto historically has been more of like a grassroots grassroots phenomenon more decentralized. And so I wonder just like how you think about how a more centralized entity like base or Coinbase participates in this world that's trying to move toward a more decentralized world. Yeah. And first of all, let me just address the outline tweet. in my reply. I just think it's kind of funny. Like, if you, if you would have asked six months ago, Alan, how do you feel about, you know, people in Ethereum or somewhere else telling you that pump dot fun is wrong? He would have been like, that's the most ridiculous thing in the world. And now here he is. And I'm saying, hey, we can do something slightly different. He's like,

no, no, no. You have to follow the rules that are set by the pump dot fund trenches or else. I mean, like, come on. We talk about internet capital markets. We're talking about free markets. We're talking about open global economy. And we're talking about a. reality where there's less than 1% of the world on chain. Do we really think that if we follow the rules that the pump.com user base has set, we're going to bring a billion people on chain? I'm sorry, like, I don't buy it. Like, I'm going to keep experimenting. I'm going to keep pushing boundaries. I'm going to keep trying new things, because trying new things, embracing new products, being unafraid even when there's cultural backlash to push those new things. That's how greatness happens.

And I don't know whether we're there right now, but I'm not going to stop experiment. And so that's the first thing. Now, the second thing is, do I think that the reaction that people have to me is as a result of some centralization or some top down? I don't think so. I think that some of the stuff I'm doing is genuinely like somewhat transgressive, right? Like, have you seen other people out on the street trying to bring people on change before I did? No. No, right. Yeah, because it's freaking weird and hard and super painful. And have you seen other people

trying to normal? Actually, I will say, yeah, there, I mean, Bitcoin meetups maybe back in the day, but anyway. Yeah. Yeah. Have you seen other people trying to normalize enabling creators to value and monetize their content with coins? No, because it's super hard. And because when I did it, who like, you know, people love, you know, like me in a lot of ways, I got shit. on for 24 hours. How could an everyday creator do it? There's no psychological safety there. I think a lot of this is downstream of what I would classify as a level of cultural toxicity that exists on crypto Twitter, which is that you have to conform. And if you do something that's

outside of that conformed sense of what is right or what some group thinks is right, people will attack you. And my job as a leader is to make a it so that there's psychological safety for people on base to do new things and to experiment. Because if people do not have psychological safety to do new things and experiment, even if I disagree with it, even if crypto disagrees with it, we are not going to make any progress. And so I'm happy to get shit on for 24 hours. I'm happy to be the punching bag. That's the best thing ever because if me being the punching bag makes it so that there's one or five or 10 or 100 more creators who feel the safety to do something new, it's all worth it.

And when you look at the data, and people will look at the data from the last 24 hours, what you will see is that as a result of me coining some stuff on Twitter and posting about it and the crypto Twitter attacking me, hundreds and thousands of new creators have experimented with a new economic permanent and a new platform. And some of them will not like it, but my guess is that a lot of them will like it. And a lot of them will realize, oh, my God, this lets me earn more money. This lets me feel more valued. This lets me connect more directly with my fans and my community.

And then they're going to stick around. And they're going to be the ones who get to benefit from this new global economy that we're building. So I don't think it's about centralization. I think it's about we need to get comfortable with trying new things. And that's a little bit of a process that all of us need to work through. Yeah. Yeah. I totally got it.

Trying to change people. It can be challenging. Well, Jesse, I so appreciate that you came on the show. show, especially at a time when people were, you know, throwing eggs and whatnot at you online. Yeah, of course. Yeah. Otherwise, it's been such a pleasure having you on Unchained. Awesome.

Thanks so much, Laura. Appreciate you. We have a double header today. Next up is my interview with Guy Young of Athena and Carlos Domingo of Securitize about Converge. Stay tuned. BitKee is the only Bitcoin wallet on Time Magazine's best inventions list of 2024. Built by the team behind Square and Cash app, BitKee is a two of three multi-signature wallet and the first hardware wallet with an innovative recovery suite that eliminates the need for seed phrases in self-custody.

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We have another listener comment, this one responding to Matthew Sheffield's remarks on some of ETH's problems. On X, Uncle Sam of Afrinix, says, quote, EF isn't just a yield machine, it's infrastructure. If you're only in it for coupons,

you're missing the entire innovation stack it's powering. Again, if you want to hear your comment featured on the show, please read a review or leave a comment on an episode on YouTube or Farcaster. I think the, you know, large thesis that we have here is if we really think about what our blockchain is being used for today, there are really two core use cases. One is facilitating like the settlement of speculation, i.e. meme coins on Solana or derivatives

on hyperliquid. It's just really like settlement for casino type activity. And I think the second one is actually settlement for stable coins, digital dollars, and tokenization. And if you really believe the thesis of crypto, which is, we're going to start to bring all these financial assets on chain and finance moves on chain more broadly, you have to think that that second bucket that I just described there is going to be an order of magnitude bigger than this sort of circular speculative casino type of use case that we have today. Today's guests are Carlos Domingo co-founder and CEO of Securitize and Guy and Guy founder and CEO of Athena and Securitize have both been very successful in DFI,

securitizing getting institutions like BlackRock to build new products on chain, Athena, and creating this synthetic dollar with high yields that is garnered about $5 billion in total value locked. Together, both of your projects have about $10 billion in total value locked. A month ago, U2 announced that you were launching Converge, which will be built with the arbitram tech stack with Celestia as data availability. I cannot say this, availability layer. However, we just had an interesting moment here on the podcast, which we cut for editing purposes. I had in my initial intro that it was going to be a layer one blockchain because there was a lot of talk about that.

And Guy and Carlos Justin for me, no, it is actually a layer two. Ethereum will be used as the settlement layer. So go ahead and just explain this setup and also why you think there was so much confusion around this. The first thing I want to say is that from my user perspective, most people don't care whether it's an L1 or an L2 because there's really not different. You're using a blockchain and you know, you rely on some underlying security for securing that network. And that could be done with an L1, creating your own set of validators. So it could be with a tech stack like Arbitrum that rolls into Ethereum and you rely on the Ethereum validation. When you use an additional stack to settle on

Ethereum. You also have to have to secure that stack. And as you know, some of the L2s out there are not like really decentralized. They have centralized sequencers. Our purpose is to build something which will look and feel like an L1, but and it has its own security for the sequencer and then rolls into Ethereum for further additional security. And it's an EVM part of the Ethereum ecosystem. Yeah, I think maybe just to touch on that in terms of how we sort of went through the decision process. And I think I agree. with Carlos, the lines or, I think, sentiment towards like L1s versus L2s is going to shift quite a bit from now into the next few months as I do believe that a lot of these, like,

technology decisions are going to become somewhat commoditized for businesses or applications in terms of choosing where they want to go. I think the interesting piece of an L2, despite, I think, some of the negative sentiment that you've seen around them as it relates to, like, the way it interacts with ETH, the value of cruel for ETH and all these different pieces, is that As a business, I think it still makes the most sense to be launching an L2 just because of the, A, the cost savings that you're making in terms of not having to manage a security budget for an entire L1. But then also the performance that you can actually get out of them because you're not having to reach consensus at the L1 layer is obviously helpful if you're trying to run, you know, perform in applications and sit on top of it. So, yeah, I think the decision that we made might have been actually slightly against the current sentiment that you see within the market now where I think a lot of projects or different teams are sort of trying to chase this.

this L1 premium that people perceive to exist within the market. But I think it's quite, we have a pretty firm view that if you're going to try build a business and have like product-led tech decisions to support that business, this made the most sense for the path we're going down. Okay. So now let's just talk about your full vision of what activity on this chain will look like when converges up and running because what you're creating is sort of a really interesting hybrid, you know, trying to bring these two worlds together.

So, yeah, like, at least to me, I don't feel like there's anything that's been successful so far in bridging those two worlds. So what would be, you know, your ideal of how this would look like? So maybe I can start with that question. First, we just want to make something clear that this is a public blockchain that is permissionless. It's not that I listened to the interview with Arthur Heise, where you guys talking about this is like an R3 type of thing. It is not like that. It is a crypto network that is completely public and open and permissionless. That said, you know, RWS by nature, they are permission assets because they represent securities and they're regulated tokens.

And then, you know, if you want to then those assets to interact with DFI, you also have to put some sort of permission in around the DFI protocols that today does not exist. Today, DFI protocols are largely permissionless and anonymous. and this also prevents the institutional adoption because, you know, you have to think that maybe if you have an asset and you post it as collateral and you're borrowing USC, you don't know who you're borrowing from, right? So if you are a large, you know, financial institution and you're borrowing USC and it turns out that that USC has been deposited in a pool by somebody in North Korea, then you're running all sort of problems, right?

So I think that adding, and by the way, all the, you know, DFI protocols, they understand that to go from the $100 billion or whatever is DFI. stack now to like a trillion dollars, they need to bring more capital, and that capital needs to come from traditional institutions participating in this space. So at the same time, I think there is a lot of advantages on the permissionless and anonymous nature of some of the defy protocols in terms of getting things quickly done, and a lot of people do not care. So what we're trying to bring is both things.

There will be apps that are permissionless and completely anonymous like the Defi operates today, and then versions of those apps, like, let's say, Horizon that Abe is working on. that introduce some degree of permissioning to be able to interact with permission assets like RWA as well as for institutions to participate in a safe way. Yeah, maybe just to add to Colos's comments and I think the super high-level thesis, I guess, that we both came together with

was, I think a bit of frustration actually on my side in terms of the way that the cycle had progressed or the way that crypto had progressed since, you know, four years ago in 2021. on. If we just take a step back and think about, like, what are the real sources of inflows that we've seen into the space? The cycle, it's really been only two sources. It's like BTC, ETFs, and then stable coin supply has gone up a bit for USDC and UST. But if you look at DFI-T-VL, it's actually down in percentage terms versus where we were four years ago. And to me,

that's actually pretty indicative of the fact that we haven't actually done a very good job of actually positioning the space and the products that we're building for this amazing, you know, you know, thematic tailwind that we have behind the whole crypto, which is like institutions are actually here and trying to use these products and deploy capital into the space. So to me, that was just like a very strong indication that we had basically been shuffling around the same chips between Ethereum to Solana to Barra Chain or like the same apps. We're just moving the same money around and we hadn't actually stopped to think, what can we do differently to actually get real institutional size flows of inflows into the

space more broadly? So that's something that like we at Athena had been thinking about a lot and had been working with securitize in terms of how do we institutionalize? the product that we have, and I know this is something that we discussed on the last podcast that we had, Laura, and thinking about how do we wrap up what we do in a format that can actually be consumed by TradFi. I think the, you know, large thesis that we have here is if we really think about what our blockchain is being used for today, there are really two core use cases. One is facilitating like the settlement of speculation, i.e. meme coins on

Solana or derivatives on hyperliquid. It's just really like settlement for casino type activity. And I think the second one is actually settlement for stable coins, digital dollars and tokenization. And if you really believe the thesis of crypto, which is we're going to start to bring all of these financial assets on chain and finance moves on chain more broadly, you have to think that that second bucket that I just described there is going to be an order of magnitude bigger than this sort of circular speculative casino type of use case that we have today. And I think the view that we had was that Athena and Secretize are really uniquely positioned to go and capture that second piece that I mentioned, is you have Athena, you know, one of the fastest growing like dollar assets in the space and one of the most vibrant, I think, devire ecosystems that exist within the EVM at least today. And then you had securitizers as the chosen tokenization partner for some of the largest financial institutions on earth and the partner that they're actually going to be working with

to bring more assets and more activity on chain from Tradvi. And so really it's like a meeting of the two, what we view as leaders of different ends of the spectrum and trying to bring them together to create products in the middle to really benefit from those flows from dry-value. Yeah, I love that description. I do really feel like that criticism is spot on and kind of the vision that you have is like probably a really good direction to go,

especially at this moment in time. And I was just curious, you kind of mentioned that it seemed like you were hearing from institutions about what they would be interested in using D-5-4 or just in general, like how they would want to participate on chain. So what, you know, what are they saying to you? So I hear two things from institutions. And as Guy mentioned, we are probably the only company in the space that actually does tokenization

for large institutions because if you look at some other, you know, RWA players, they actually have their own products. So they're not, they're kind of playing to be asset managers. Our position is very different. We are a regulated entity that has a ton of licenses that can serve a large stratifying institution and bring it on chain. So we do have. I think a better understanding anybody else in the space about what those institutions are thinking. And there's two things that are interested in. One, they are interested in how can they access some of the crypto-native yields that are sometimes better or higher than defy. And I think USDE is a really good example of that.

But it will not be on the shape and form that is today because for an institution to access it, you would probably have to have a regulator wrapper, you know, some sort of intermediary like us facilitating transactions, etc. what we're working with Athena, but they're also interested about some of the things they could do with their assets that Defi will enable, and I'll just give you a very simple example. USDA has been very successful because it's an asset that when it was yielding much higher than the USDC borrowing rates, people could actually leverage it, right? You could post it on Defi in a very simple way. You could borrow with that as collateral, and then you can buy more and borrow more,

and then you can go from like a 10% yield into like a 20% yield. This is what they call the loop, right? So why not do that with, let's say, a private credit fund? A private credit fund today yields higher. Let's say, like the ones we have with Hamilton, Lane or Apollo. It yields higher than the borrowing rate for dollars, for, you know, dollars on chains, stable coins. So you could think of the same experience, right? Like I posted it as a collateral.

I buy like, let's say, $10 million of these, and then I borrow $8 million. And then I buy $8 million more. I borrow six. And then you loop it. And then you go from like the 10% yield to higher. And the entire process of the borrowing as well as controlling the liquidation process for the collateral is all on-chain automated. This is literally impossible to do with capital markets infrastructure. I mean, go try with your JP Morgan account and tell them, oh, I $100,000 credit fund.

Can you lend me dollars against it? And then can I buy more and then lend me again? Like this, forget about it. This is not going to happen. So I think they're very interested about how the value of their assets. assets, when they tokenize them, they put them on chain, it's not just that they have a better ledger, but it's actually they can do more things with the assets than they could do before. And I think that's one of the reasons why tokenization is now a very exciting industry as opposed

to, like when I started seven years ago, where you couldn't do anything with the assets. There was no stable coins, defy didn't exist. Like, you know, yes, you're tokenized. You put in a token format is a better ledger, but that's it. And then today, I think the reason tokenization and RWs are growing so much is because people, for the first time see that is not only a better ledger, it's actually the asset itself becomes a better asset because you can actually do things with it that you could do before. Yeah, I think that's exactly right.

And I think from our perspective, one of the things that I think is going to be most unique about this chain and the way that we're actually approaching the application level was something that Carlos touched on now around, really thinking about taking the areas that Athena has found product market fit building on USDA already. So applications like Arve, Morpho, Pendle, there's like a long. list of them. We already know that like different, you know, applications sitting on USDE have found enormous product market fit for different use cases. But as just one example here, so I think Carlos gave the one with, you know, leveraging on ARPA. I think another very good one here is like,

let's say you're taking this IUSDE product that I described and you're trying to approach these pools of capital within trad by and you say, here's a volatile interest rate that's moving up and down quite a bit. You know, roughly averages around 18%, but can go as low as zero. Some pools of capital would actually just rather have a fixed rate that you can provide on that product, which is essentially what Pendle is providing, saying we'll take a floating rate of interest and sort of swap it into fixed. That would be an amazing product with a huge amount of demand, but the problem is, is when you're doing this in a non-KyC'd environment, you don't know who the buyers are on the other side. And so these big institutions can't basically take funds from someone who can be a North Korean on the other side.

So I think the really interesting feature of this chain is that you're going to have applications which will be permissionless in the same way that they exist within Defi now, but they'll have just a button that sits on the top right hand corner that says normal or institutional. And if you've signed up to actually be able to be involved with them, the institutional one, or have all the guardrails that these entities need to face off on the other side. And then you already have things that you know make sense and have found product market fit around your core assets, that you can then start to sort of export out in the right way into Tradfi. So that's just really like the things that we're trying to think through at the moment, which is not trying to create new things that don't exist that we're just taking a shot in the dark.

we're saying what really works already with the core products that we have and how can we deliver it in a format that actually makes sense for these people, you know, and meet them where they are. Yeah, yeah, this definitely, like I said before, just seems like a really, an obvious opportunity and the right time for it. So in a moment, we'll talk about your most recent announcement, which is about the tech stack that you're using, but first a quick word from the sponsors you make they show possible. Mantle is revolutionizing its on-chain financial hub, powered by a $4 billion treasury and proven products like Mantle Network and Emmeth Protocol, Mantle is launching three innovation

pillars. Enhanced index fund for optimized crypto exposure, Mantle Banking for blockchain-powered banking, and Mantle X for AI-driven innovation. Experience the future of finance with Mantle and follow Mantle on X to stay tuned. Back to my conversation with Carlos and Guy. So, as we just mentioned, you guys have picked Arbitrum for your tech stack with Celestia's data availability layer. And I was wondering when you said about searching for your tech stack, like what tech specs were you searching for or what problems were you trying to solve with that?

Yeah, I can jump in and call us obviously add anything that you think. Yeah, I think for us, it's really trying to think about we already have an enormous asset base sitting with Athena at the moment and with securitized. So I think you mentioned in the beginning, few months of the way between ourselves is around $10 billion. and being able to take the existing critical mass that we have into a new environment in a very easy way for users to be able to come across without a huge amount of technical debt was like a big consideration for us.

So going to a new VM, anything else that was pushing the boundaries outside of the VM was something that we couldn't consider in the beginning just because of where the bulk and the majority of our existing assets and applications actually sat. I think the second piece for us was just trying to get towards a tech stack that we felt A, worked out of the box now is actually at the level of performance that we would require to run the applications that we need to right now. But B, was also able to be customized going forward

for some of the needs that we required. And I think the main piece of innovation that we're adding on top of the existing stack that exists now with Arbitrum outside of performance improvements is basically this idea of validating a network that sits on top of it. The idea here is that you can sort of think

about the sequences that's running on an L2 the moment as almost the most centralized or permissioned version of any execution environment that you could have, right? So a single sequences sitting with base and Coinbase ultimately is deciding are those transactions going through and that's a single entity that's sitting on the other side. One piece, I think, in the conversations that Carlos and I have had with institutions is that there is some benefit in having some guard whales around something that looks like an isolated island outside of Ethereum, where if something were to go wrong with a hack, you know, the wrong type of user is coming in who's doing something.

something malicious within the chain, the real point of weakness is actually when you're trying to bridge out of the chain to say, we need to get our assets out of here and swapping into ETH to then longer it somewhere else. Being able to have a small validating network that actually sits at the bridge level, so in the case of like Athena's assets, they'll be sitting within a DVN on their zero, actually gives them more assurances that if something were to go wrong on the chain, large institutions are actually using the chain, have an ability to actually step in post the fact of something going wrong before it's fully finalized on Ethereum. And so that's just one piece that we've sort of added on top, which is additional guardrails that these institutions can participate in by sort of like staking towards this validator network.

I want to add something about, you know, moving, you know, traffic products on chain because I think there's something people are missing, which is called transaction finality. So in finance, there is a concept that a transaction hasn't finalized until everything has moved, right? And of course, a blockchain actually tremendously improves that because you can do, you know, swaps of two assets with our counterparty risk, instant settlement and all that stuff. But the finality happens when you record it on the chain, right? So if you have an L2 that is completely centralized, that only settles the transaction when it writes on Ethereum, that only happens every 15 minutes. So at what point do you record the transaction on the books and the records of the actual. financial institution doing it when it's when it's uh settles on the l2 or it goes to the l1 ether and of course everybody will tell you the l2 right because that's when people assume that

the transaction is finalized and the tokens just move but that actually maybe is not actually truly secure yet because it hasn't actually gone through the additional security so being able to secure the let's say converge on top of the security of then writing back into ethereum i think is a very important concept for providing, you know, piece of mind to financial institutions that, you know, there's finality in the transaction, the financial services transactions. Okay, yeah. This whole thing about just the ways that this is structured, you know, it's sort of like there's kind of a spectrum of centralization and decentralization that's on offer within

the chain itself, which I find really interesting. And before we talk about the validator bit, which I definitely want to get to, I did want to just circle back to this part about the different apps, some of them being permissioned and some of them permissionless. And, you know, Guy mentioned something like there was a button where so like, let's say that you're in one of the permissionless apps and you decide that you want to interact with one of the permissioned ones. He said there's a button or something where I guess maybe that's where either you go through KYC or if you've already offered your information, then, you know, you can, or if he's like uploaded it somewhere, then you can give it to this app.

Is it something where each app is deciding like what information it wants? And then is it literally the same as like when you deal with the financial institution where you are handing over personally identifying information or is there any aspect of this that is more futuristic, you know, that kind of uses ZK approves or something where you don't have to give up the information, but you can still participate? I just want to clarify as one thing in terms of KYCE and personal identifiable information, which maybe answers to some extent your question is first. We do KYCA on people as a financial institution.

We are a broker-dealer and a transfer agent, but we never keep the personal identifiable information on chain. On chain, we only basically, while it's wallets to make sure they're known to be safe and keep enough information to be able to determine the legality of the transatlification. transaction. So in other words, if you own, you know, shares of Apple and you want to send them to Guy, as far as, you know, both of your approved market participants, you hold the shares and the other one can actually receive them, etc. You can just transact. And there's no need for anything to happen off-chain. Everything happened on-chain with smart contracts and is completely decentralized. There's no, but securities have constraints, right? Like, might be that you are, I don't know, like you have a

lockup period for a year before you can sell the shares or you there's a flowback restriction that shares sold to somebody in this country kind of flow back to somebody in another country. So you need to have some information about the characteristics of the investor, but not the actual personal level, person that will identify upon information. So that is never on chain for security purposes. So you're not handing over your data and it shows up on chain and they know who you are or a copy of your passport is there or things like that. That doesn't happen.

I think this concept can evolve to create a better, if you want. on-chain attestation network that actually works for institutions. There is a lot of people chasing this concept that, oh, I do KYC here, and then I attest that this wallet is valid. The problem is that if you interact with that wallet, assuming that has been KYC by somebody else, you're taking counterparty risk towards that company because you're relying on their KYC. So if that company is not a regulated entity, then that is completely useless.

I can 100% guarantee you that our customers will not want to be. that we take, you know, KYC that's been done by, I don't know, some unregulated entity that is dealing with that. And many of these RW chains do that. They just, oh, we do KYC. Well, you don't. Like, you just have a tool to pass KYC. That doesn't know what KYC means.

So. And so then basically for these permissioned and permissionless apps on converge, each permission to app will have its own way of verifying whether or not you can transact on their app. Is that it? We want to make it uniform to converge that when wallets are while listed, there is enough information on chain for each app to determine whether they want to interact or not without wallet. So not that every app is different. And then sometimes it's not the problem.

It's not the app. The problem is the asset. That's what people don't understand. You can design an app that will take an RWS collateral and then borrow against it. And then whether you can actually move or not the RWA or the RWA is something you can liquidate against another. entity or not. It depends on the restrictions of the RWA itself. So the apps can actually be built in a generic way. And that's how we're working with, you know, some of the protocols that we're kind of helping them on the design phase of how to make their products, their protocols compatible

with RWA's. And then we, outside of the app, take care of the rest of the restrictions for the asset itself. So the restrictions are more than the asset level. And then the apps naturally, because it's on chain, will inherit the restrictions or lack of restrictions of its asset. Okay. So essentially, it sounds like from the user perspective, it seems like there will be a lot of friction because there won't be predictability around a number of things. First of all, whether or not any individual wallet can transact in these different apps. And then second, whether or not any asset that they would want to use, it sort of seems like they're kind of constantly going to be trying to figure out, like, will this work or will it not?

it doesn't have to have friction, right? So in DFI, you also have pools with different assets, right? And you have the DFI protocol is the same, but then each pool behaves maybe differently depending on the asset. So this will be the same thing. And then, you know, if you are the holder of the asset, you actually know already what restrictions you have in terms of transferability or not of the asset. So I don't think that this will add friction. And by the way, the KYC part. But then the user has to have an awareness of what all the restrictions. They have to keep it in their head. But they do today as well when they buy RWS, because that already exists. So RWS, because of the nature of being securities and being securities with different characteristics. Some of them are private. Some of them

are registers. Some of them have different exemptions. Some of there are different RWS for QP, some of the for accredited investors. They already have those restrictions in place. So that doesn't change from what we have today. And the KYCP is. which is another criticism I was here, it's like, oh, well, people like D5 because you don't need to do KYC. I just, you know, because I've been long enough in the industry, in 2015, 16, you could open accounts on central access changes without KYC. Yeah, it's true.

I do. I do remember. That was nine years ago. Fine, nine years ago. And then all the centralized exchanges impose KYC, some of them faster than others. But today, it's literally impossible for you to open an account in finance and cracking. and CoinBest, whatever, without KYC, right? And what has happened with the volume?

Has gone up or down? I mean, it has gone up. Yeah. So this perception that, oh, KYC into this restriction, and then nobody's going to use it because customers have to KYC, I think that's actually not true. You can also look at what happens in Tradfy. To open a Robin Hood account, you need to have KYC and how many users they have. Yeah, my question was more around like user experience rather than saying, like, this isn't

going to work. more just, I'm wondering what will it be like for a user who it wants to just move back and forth, but like, you know, like an everyday retail person. Like, yeah, that's, that's the part that I'm wondering. I'll tell you how we solve it in Securitize today because this problem is a problem that we already have because each asset that we have, it behaves differently. So if you come to our account and you have, let's say, you create a securitized ID. Let's say, in the case of conversely say you connect your wallet to the chain. So you're connected to the wallet.

Because that wallet has been whitelisted, the chain knows your characteristics as an investor. They know if you're a retail or not. They know if you're a US or not. They know if you're an institution or individual investors because that's the non-personal or identifiable information that we inject on chain, right? Then you can actually have a UI that will only show you the products that you can interact with. And today, if you go to securitize, that's actually what happens.

Like if you go there and if you're an individual investor, you're not going to see the black rock product. Biddle because it's only for institutions. So it's a very simple filtering of you're going to have a range of protocols. And the protocols, by the way, will work across all the assets. As I mentioned, the issues the assets. So some assets are, you will be eligible for some assets or for some other ones. But because the eligibility or not depends on your characteristics as an investor,

those things are visible to the chain. So it will not be, it will not create friction in the sense that it's not that you're going to one see, oh, this is, I'm an individual investor, and I see the BlackRock product, and I want to buy it, and then I can't buy it because we would not let you see it anyway. This is exactly what happens on our portal today. You only see the products that you're allowed to purchase, because we know the characteristics of the investors. Okay. Yeah, so that sounds smoother. So let's talk about the Converge Validator Network. You know, this is what Guy was mentioning about how, like, if there's some kind of big hack or something, then you can keep the funds from leaving the system

through these different bridges. So tell me about, you know, how many validators are there? Like how, like where on the spectrum from decentralized to centralized as it sit? Yeah, it's not in the hundreds. It's like somewhere between 10 to 20 is where we'd originally like plan to roll it out. Again, this is just supposed to be for the largest institutions that actually hold capital on the chain to be a participant in that decision making of something where to go wrong. So yeah, it's not. intended to be something that's in the thousands will replicate, like, a validator network that you'd see on an L1.

Ethereum already has a very robust and large validator network, right? You just need to create another one that provides some degree of security temporarily while things are not settling to Ethereum. And to understand, you know, when they would intervene, like, are you guys kind of setting up different parameters for when it's appropriate to do that versus not? So, you know, the $1 billion hack by North Korea is like a very obvious one where most people would say, you know, this is why some of the places like Thor chain and I'm just blinking on the other one. But there were other chains that got criticism for not intervening there. But, you know, are you kind of coming up with like a decision tree in advance or how do you think about when they should intervene versus not?

I just want to distinguish between digital assets that are better assets and RWAs that are not very. asset because there is a confusion in the industry about it. So if you buy ETH, let's say, then it's a better asset, right? So the moment you send it to somebody, it leaves your wallet, it goes to the other wallet. There's nothing you can do. But, you know, all their assets, like let's say stable coins have a mechanism to freeze stable coins in case it's needed. And for RWS that represents securities, the smart contract that governs that, obviously with all the controls, has the ability to actually freeze the asset or even barn the asset. So I think that the hacks, obviously something can happen everywhere, but they can also hack your bank account

and take some money. But in this world, because the assets are not better assets, it's actually a much safer world. And this is why institutions interact with RWAs, because the risks that they're taking are in a completely different level. So, so, So the degree of risk, and we've talked to regulators about this. Like, when you are doing custody of digital assets, your risk is like, you know, 90%. Like somebody, if they're studying loses the keys or if somebody hacks you, then you can lose all the assets. When you're doing custody of RWA's, you don't have zero risk, obviously, because I'm thinking wrong, but your level of risk has dropped like to 10%.

Yeah. And, Guy, you were going to add something there? Yeah, I was just going to mention that a lot of the L2s are ready in production today have these concepts of security councils that sit around them, which are quite prescriptive, as you mentioned, around, you know, where they might actually step in for something going wrong. But this is more like the social level rather than something that's encoded into the chain. Yeah, it's a very similar concept here where we'd just be adding an additional piece specifically as it relates to like the bridging in and out of the chain, which would, which would, you know, be different between

the different assets on the securitize and Athena side. But yeah, it would look something that's not too distant from what you see from security counsel pieces that exist today. All right. I also wanted to mention another part of your announcement, which is Ethereum, your new decks. And I saw that you said to ensure Ethereum can maintain high levels of performance at all times, Ethereum will sit on top of its own block space, but post proves down to converge. So it sounds to me like it's an app chain within Converge.

That was kind of my read on that. But yeah, I'd be interested here more if I misunderstood or how it works. Yeah, that's exactly correct. So I think perpetual exchanges are really one of the very few applications that make sense to really live as their own isolated app chains in my view. I think the reason for that is that they don't rely as much on composability with different applications, i.e. you don't need a uniswap pool there to support a PAPTX because it's already dollar denominated and synthetic on the exchange itself. And so your requirement for composability is much less, but then also your requirement for isolated block space, which is not being into very much. by the actions of other apps on the chain, it's quite important because what you tend to see is that when, you know, demand for block space is the highest is when things are melting down, there's chaos, people are getting liquidated, all these different pieces when gas spike. And that's the moment when people are trading the most and don't want to be interrupted the most while they're doing that. And so actually isolating an exchange and what is pretty heavy computational requirements from an exchange from the rest of the chain itself, I think is one of actually the very few examples of where, um, I isolated app chains make the most sense in terms of types of apps. All right. So we're coming up on time. The last probably quick question I just want to ask is, you know, people often talk about how institutional investors want privacy. And they didn't know if there was anything that you were offering in this regard or if that's, you know, further down

the line. That's a very good point. That's definitely on the roadmap. Not for the main net that we're planning on doing Q2 because for obvious reasons, this is more complex to build. And that was also one of the things we like of the arbitrage stack. I think that institutions will want to have some degree today is fine, to be honest with you, like it hasn't been a barrier for institutions participating in the space. But as this space grows, if you're going to take, let's say, a tokenized treasury fund like Biddle and you're a institution and you're going to post it as collateral using converts for derivatives trainings, et cetera, you don't want to see that people see that transaction once they've identified

your wallet because then they know what you're doing in the markets, right? So introducing some degree of privacy for transactions, I think it's going to be important for the growth of the space overall. Do we need it today? I don't think so. I think today is growing very nicely. And tokenized treasurer as an example, went from $500 million a UM in March last year when we launched with BlackRock to almost $6 billion now. So it's more like 10% 10 times, sorry, not 10% 10 times growth over one year. So I think that definitely is there. But I think that's an important feature for our roadmap in the future.

100%. Okay. So as you mentioned, soon you'll be launching your test net, main net in the next few months. And at that point, just one last question. Will the activity that both of your protocols have on Ethereum itself be moving to converge, or will you leave the activity that you already have there and then just start building a new converge for Athena and securitized products. Yeah, I think on outside, we have no, no ambition to sort of like leave or abandon the existing

activity that we have. There's not very like a rational, like reason for why we'd care about USD in one place rather than the other. I do think that we're looking at a slightly different user base, you know, this whole idea of tailoring some of these use cases towards institutions just might mean that it actually is opening up, you know, expanding the pie rather than actually just trying to fight for the same amount of dollars sitting on different chains. And so, yeah, I think it's a lot of different user base that we're facing up to there. I'm sure, you know, some of the assets that we actually

hold behind some of the Athena products. I think one example here is actually the Biddle product that we have with Securitize and Carlos. So like USD-TB, I think, is the largest holder now of Biddle. And obviously, as like a centralized stable coin, we can sort of decide where those assets actually it. And so we would move if we have some of those assets that are actually, you know, in control of like a centralized table coin like USDTV. It might be that we house that on converge rather than on Ethereum. But we still want like USBE and most of our products to coexist on all chains. We just have a much more specific distribution channel and view of who we want to target on Converge. So I don't necessarily see them as like conflicting. Yeah. I want to clarify

one thing. Our assets are not our assets. So we are we issue assets for our customers, which are the asset managers, right? And then they are investors that purchase those assets. So I kind of just go there and tell, you know, you need to move your assets from here to there. And we support 10 different chains

and we'll continue in supporting the other chains. They've been really good partners. You know, we recently launched with Solana. We have a very long-standing relationship with, you know, avalanche, polygon and optimism and other people. That's not going to stop. I think perhaps Ethereum is the most like neutral place because you are there,

as a default, but there's nobody behind that the decision of being there. And I think that the assets will move when people see more value of having in Converse because we've built these potential integrations or DFI Prowded protocols where the asset can interact

that might not necessarily be available in all the other chains. So but as a guy said, I think that over time, we will see natural demand of moving things over converge or just the new AUM and the new growth of the assets will, you know, accrue there alongside accruing in those places.

All right. Perfect. Well, thank you both so much for coming on Unchained. Sounds good. Thank you very much. Don't forget. Next up is a weekly news recap today presented by Wondercraft AI. Stick around for this week in crypto over this short break. Welcome to this week's Crypto Roundup. In today's recap, a sudden $5.5 billion token crash rocks mantra. Movement Labs' investment labs. investigates suspicious trading around its move token. And CZ rebuffs claims he cut a DOJ deal to testify against Justin's son.

We'll also cover how a simple base social post sparked a frenzy, how the White House is eyeing tariffs to boost Bitcoin reserves, and what the SEC's latest ETF delays mean for staking and redemptions. Plus, Anchorage Digital faces scrutiny from Homeland Security, and over 12 million is drained in exploits on Zekaseink and KiloX. Thanks for tuning in to the weekly news recap. Let's begin. OM token.

Crash erases $5 billion. The OM token, native to real-world asset blockchain mantra, experienced a devastating collapse on Sunday, plummeting over 90% in value and wiping out more than $5.5 billion in market capitalization within an hour. The mantra team attributed the free fall to reckless forced liquidations by a major investor on centralized exchanges, which they say triggered cascading sell-offs in a thin liquidity environment. However, on-chain analysts raised suspicions of coordinated activity. Spot-on chain reported that a wallet moved over 14 million OM tokens, worth approximately 91 million,

to OKX just days before the crash. Adding to the controversy, pseudonymous researcher Zach XBT suggested links between the incident and refinance founder, Denko Mancheschi, alongside an individual using the alias Foucoggo Riosho. According to Zach SBT, the pair sought large loans backed by OEM holdings ahead of the price collapse. Based on my findings, it was not Laser Digital or Sharuk, he clarified, rejecting speculation about two VC firms previously rumored to be involved. Facing mounting scrutiny and community backlash, Mantra's CEO John Mullen took to social media on Tuesday, announcing plans to burn his entire share of team tokens. When we turn it around, the community and investors can decide if I've

earned it back, he stated. Montra confirmed that its team allocation of 300 million OM tokens, roughly 17% of total supply, is locked until April 2007. Mullen has yet to disclose how many of those tokens were specifically allocated to him. Movement Labs launches probe into move. Token irregularities. Movement Labs and the Movement Network Foundation have launched internal and third-party investigations into market-maker abnormalities surrounding the recent

performance of the MOVE token. The inquiry follows Binance's removal of an unnamed market maker, which allegedly sold 66 million MOVE tokens shortly after launch, generating an estimated $38 million USDT profit while placing minimal buy orders. Movement Labs confirmed the ongoing probe in a statement to Blockworks, calling it a standard transparency measure. It would be inappropriate to speculate on the outcome of the review or any actions that may or may not result, a spokesperson spokesperson said. Meanwhile, co-founder Rushi Manchi has taken what was described internally as a temporary leave of absence. As per Blockworks, sources noted his company's slack account was deactivated last Friday, but appeared active again by Monday. Ciz deniers' ideal to testify against Justin's

son. Former Binance CEO Changping CZ Kau has denied a Wall Street Journal report, alleging he agreed to provide evidence against Tron founder Justin Sun as part of his 2003 plea deal with the U.S. Department of Justice. The report, citing unnamed sources, claimed this cooperation was an undisclosed element of Zhao's settlement related to anti-money laundering violations. Zhao responded on X, calling it a baseless hit piece, and emphasized that he served a four-month prison sentence, unlike typical government witnesses. People who become Govy witnesses don't go to prison. They are protected, he said. Justin's son also disliked. missed the rumors, writing, CZ is both my mentor and a close friend. Only by standing together

can we change everything. The DOJ has not commented publicly on the matter. Jiao has previously suggested that lobbying efforts may be targeting him and Binance as part of a broader campaign within U.S. regulatory circles. White House Eyes. Tariffs to boost Bitcoin Reserve, says advisor. Bow Hines, Digital Assets Advisor to President Donald Trump, said this week that the administration is considering using tariff revenue to expand the U.S. Bitcoin Strategic Reserve. We're looking at many creative ways, whether it be from tariffs or something else. Heinz said during an interview with Anthony Pompliano, the initiative follows Trump's March executive order,

establishing the reserve and directing federal agencies to report their digital asset holdings. Heinz emphasized that the strategy must be budget neutral and not burdened taxpayers. The U.S. currently holds over $198,000. BTC, according to Arkham Data. Heinz also referenced legislation like Senator Cynthia Lummis' Bitcoin Act, which could unlock additional funding by revaluing federal gold reserves to reflect market prices and was reintroduced in March. SEC delays.

Key decisions on crypto-ethe f staking and redemptions. The U.S. Securities and Exchange Commission has postponed rulings on two significant crypto-ETF proposals, extending its review into June. The regulator delayed a decision on Grayscale's request to enable staking for its Ethereum Trust and Mini Trust products, moving the deadline to June 1st. It also pushed back determinations on in-kind redemptions for ETFs from BitWise, Wisdom Tree, and Vaneck to June 3rd. Staking would allow Grayscale to generate yield from Ethereum held in the trusts, while in-kind redemptions let investors exchange ETF shares directly for crypto assets rather than cash. Though similar features are permitted in other markets like Canada and Hong Kong, the SEC has never approved staking in U.S. ETFs. The delay follows the confirmation of Paul Atkins as SEC chair and comes amid broader agency efforts to develop a long-term digital asset strategy.

Homeland Security Task Force reportedly investigating Anchorage Digital. Anchorage Digital Bank is facing scrutiny from the U.S. Department of Homeland Security's El Dorado Task Force, a unit dedicated to combating money laundering and financial crime, according to a report by Barron's. The unit, which focuses on transnational money laundering, has reportedly contacted former Anchorage employees to inquire about company practices and policies. The nature and scope of the probe remain unspecified. Anchorage is the only federally chartered crypto bank in the U.S. and has previously drawn regulatory attention. In 2022, the Office of the Comptroller of the Currency issued a consistent, order citing weaknesses in its anti-money laundering controls.

A spokesperson for Anchorage refuted the report, telling Cohen Telegraph, the Barron's piece on our company was based on speculation and had no information about the nature of the inquiry. ZKSink and KiloX exploits. Drain over 12 million. Two major crypto exploits this week have shaken decentralized platforms ZKSink and KiloX with combined losses exceeding 12 million. On Monday, decentralized exchange KiloX was hit by a $7.5 million attack,

which blockchain security firms attributed to a price oracle vulnerability. The attacker reportedly manipulated ETH-USD price data, opening a position at $100 and closing it at $10,000, netting $3.12 million in one transaction. Cyvers noted the exploiters' wallets were funded via tornado cash, while Peckshield highlighted weak access controls as a key failure. your point. Klo, the platform's native token, dropped 30% following the breach. A day later, Ethereum Layer 2 protocol ZK Sync confirmed that an admin wallet linked to its AirDrop contract had been compromised. The attacker used a contract function to mint Wundered 11 million unclaimed

ZK tokens, valued at roughly $5 million. ZK Sync stated that no user funds were affected and that necessary security measures are being taken. And that's all. Thanks so much. much for joining us today. If you enjoyed this recap, go to UnchainedCrypto.com newsletter, that is Unchained Crypto.com newsletter, and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Aranavich, Megan Gavis, Pam Majumdar, and Margaret Curia. The weekly recap was written by Wan Orinovich and edited by Stephen Erlich. Thanks for listening.