On Ep. 70 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Diogo Mónica, GP @ Haun Ventures and Chris Maurice, CEO @ Yellow Card to discuss BlackRock offering DeFi trading with Uniswap tokens, Erebor Bank receiving its full OCC charter and more!
On Ep. 70 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Diogo Mónica, GP @ Haun Ventures and Chris Maurice, CEO @ Yellow Card to discuss BlackRock offering DeFi trading with Uniswap tokens, Erebor Bank receiving its full OCC charter and more!
Timestamps:
Tokenized is sponsored by Visa
A world leader in digital payments, Visa is bridging the gap between traditional financial institutions and innovative blockchain networks, helping players in the payments ecosystem navigate the ever-evolving world of tokenized fiat currencies with confidence and ease. Learn more at visa.com/crypto.
Tokenized is presented by Bridge, a Stripe company.
Just like the internet made information global, stablecoins are making money global. And Bridge, a Stripe company, is the infrastructure powering that shift. Built for speed, scale, and simplicity, Bridge helps businesses send, store, convert, and spend stablecoins instantly, all without borders or having to navigate the complexities of crypto. Learn more at bridge.xyz
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Music by Henry McLean
Sy Taylor 0:00
Simon, welcome to tokenized. The show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Simon Taylor. I'm your host for today, author at FinTech, brain food, and head of market dev over at tempo. And joining me, as always, is my colleague, my friend, my co host, shy Shai Kai Sheffield, wow.
Cuy Sheffield 0:30
How many times we show, man, you don't know my name. You don't know my name.
Sy Taylor 0:35
You are definitely not shy, but you are Kai. How you doing, mom,
Cuy Sheffield 0:38
I'm great. What a week we've got really just friends on the show, longtime friends, to break down what is probably one of the biggest weeks in a while, terms of all the news. So let's get into the
Sy Taylor 0:49
All right. Joining us once again is Diogo Monica GP at home ventures, the engineer that allocates capital.
Diogo Monica 0:56
How are you, sir? I'm doing fantastic. Thanks for having me on thanks for being back, and
Sy Taylor 1:01
also for debut. Is Chris Maurice, who's CEO of yellow card. How you doing?
Chris Maurice 1:05
Chris? Oh, better now that I'm here with you guys. Man, this is great.
Sy Taylor 1:09
Let's go. Let's do this just before we get into the show, I've got to remind everybody that views and opinions of our contributors today are their own and might not reflect companies they represent. Please always do your own research. Don't take anything we say is tax, legal or financial advice, and with that, let's jump into the first story. This story was just about everywhere, but we picked it up from Fortune. BlackRock are going to offer defi trading for the first time. They bought uniswap tokens, and they're going to be listing their Biddle fund on uniswap directly, and securitize are going to be handling the institutional whitelisting, and Wintermute are providing the liquidity. So caveats, it's for qualified purchases only. You have to have $5 million in assets, and there's only going to be a handful of folks whitelisted at the beginning, but still, this is technically an institutional defi pool with Blackrock that feels as big as the Blackrock ETF moment. Surely. Diogo, your thoughts.
Diogo Monica 2:17
I love the fact that they're buying uni the token so that in itself, is pretty great as a capital allocator, because it further validates, especially in this generally like crypto winter, if you want to call it that, but definitely from an outs, has been quite a ride. And so this validation, I think, is fantastic. I do think it is a little bit of a templated move, in the sense that it is a very safe move with the access restrictions, with the white listing, and so it is the expected way in which such a large institution would go into the space. And the other thing that is interesting to note is that this is step one. Step two is figuring out how to then actually do true defi and truly pools that are mixed white listed and not white listed, or some way in which you can have some participation of institutions, directly onto liquidity, onto defi, that is going to be really the major next hurdle. But this is step one, and it's extremely exciting. Chris, any thoughts?
Chris Maurice 3:11
I mean, I agree completely that this is step one, right? I think for most institutions, there is demand for defi, and the types of services that you can get on defi, but the user experience of defi doesn't work for your average institution, right, or corporate buyer. And so, of course, with this, Blackrock is taking steps, as they have been pretty aggressively in the space, and I think that you're going to see a lot more, right? You're going to see with them buying tokens and making all this available, I think this is a to your point, a pretty drastic move from the Bitcoin ETF to, you know, a much deeper participation in the space. And so I think you will start to see a lot more financial products becoming available that are backed by defi, that are backed by some of the other protocols and everything out there. And I think it's quite exciting that, you know, this stuff is actually hitting the financial market and becoming available to a class of investors that, otherwise, again, just wouldn't be able to figure it out, or doesn't have the confidence to, you know, go onto uni swap themselves and try to make these transactions.
Sy Taylor 4:18
You know, it's such a fascinating arc for them in those three years, but since then, Larry Fink has been on almost every media platform, banging the drum for tokenization. And don't forget that Blackrock operates Aladdin, which is the back end core platform, the system of record for lots of other asset managers as well. So this is an organization that thinks about infrastructure as well as what products they sell, versus other asset managers that might have some of their own infrastructure but create funds primarily. BlackRock creates funds, sure, but it's thinking longer term, and it's taken such a front row seat to leading the charge for tokenization, whether Larry said. Davos, or whether he's at some other venue, I think really pushing for that. Quite fascinating. Tai your thoughts on this move?
Cuy Sheffield 5:08
Yeah, I'll just say shout out to Robert Mitch, Dick in the team. They've just been on the forefront, bringing the whole space along with them. And so incredible the long term view that they're taking. And it's clear everything they do, the rest of the industry is going to follow. And so I think they're incredibly well positioned and continue to innovate, being the first major institutional asset manager in multiple realms of crypto.
Diogo Monica 5:30
I love it. Shai is no longer the only person at a large institution moving crypto forward, right?
Cuy Sheffield 5:35
Shai, we're all in the same team. That's what you realize. Like, every time I talk to a head of digital assets, it's like, we're all over, we're all working together in some way.
Sy Taylor 5:43
That's right. The shy keffield Over here, appreciate you. You know we do, Chris, you alluded to something quite interesting, which is like they sort of building far more than just Biddle here. Are they going to be tokenizing a lot more? They've said they intend to. We've seen a bit of a journey from tokenized money market funds into other asset classes. They obviously have the iShares business, which is the biggest ETFs and fund business in the world. What do you think the next logical steps for somebody as big as a Blackrock looks like? I know Bailey Gifford's been looking at tokenizing quite a few different assets. Are you seeing anything as you speak to people in stable coins around treasury, you know, what are the other assets that people are after and where's the attention going?
Chris Maurice 6:29
Yeah, I mean, so I think I would separate a lot of what Blackrock is doing from stable coins and from treasury management, right? I think this is a pretty clear sort of investment use case, versus more of like a payments and treasury management one. But to your point, these guys have been going around saying that they're going to tokenize everything, and generally, they're pretty good at doing what they say they're going to do right. And they have, you know, the resources of the bull to be able to do what they say they're going to do right, especially with the current administration. And so I think that you're going to see a lot more, and I think that they have an opportunity, especially over the next handful of years, to get a lot more aggressive with the types of products that they're able to offer, right where you can have a fund, for example, the money is sitting in a number of different defi protocols, earning yield, and you get some diverse exposure across, you know, all of these different defi protocols. Obviously, there's a ton of other assets out there, other than Bitcoin, that they, I'm sure, would love to tokenize and to bring that exposure to everybody, right, and bring that on chain. So I'm sure that these guys have a lot up their sleeve, and I think the fact that they are working closely now with uni swap, seems to indicate that they're going to get pretty creative in the types of offerings that they're going to come out with.
Cuy Sheffield 7:48
But Chris, when you say it's not a payments thing, Diogo, we'd love your take on this that I would argue that historically, Bittle hasn't really been relevant for payments because you just can't move in and out of it fast enough that, like it's gonna take a few days. Yeah, wait till Monday, if you're like, redeeming it directly. And so what they announced with uniswap, if it works, theoretically, you could say, all right now I could move 24/7 between USDC and Biddle. And so then it could become a payments thing where a corporate treasurer can sit on Bittle, but then the moment they want to make a B to B payment, can swap into USDC or usdt or usdg and be able to send it out. And so it feels like being able to do 24/7, tokenized money market to stable coins is like a key unlock that can make it more relevant for payments. But how do you see that dynamic? I think
Diogo Monica 8:39
that's absolutely right. What I would say, though, is that we do have try to find solutions to that right. We could have somebody else just take the risk of the redemption from BlackRock, which candidly is very little risk, and just take the overnight or the weekend type of type of trade. And you can definitely do that with a current white listed type of setup, because the USDC portion moves on the weekends, and you can settle a Counterparty on both legs of the trade, on the bill side and on the USC side. So if there was a lot of need and demand, you could do that. I mean, anchorage for one sort could do that. Could do it for balance sheet, could offer a product. And so if that's not happening, or it is in certain situations, in certain cases, but if that's not happening, it's because there's not as much demand as people thought there was going to be, and people aren't actually moving that much on the weekends. It is a nice to have and maybe not a need to have. This is just a generic solution, which is, I think, is what you're driving at, which is, it's a generic solution for that type of problem, and it's much easier way for participants to come in and coordinate around that exact point of liquidity, because right now it would probably be just like point in time and peer to peer types of agreements, which is not the point at all of the system. So it is possible, but very hard, this makes it much easier. And I hope that's exactly the direction that they're taking for solving the problem of liquidity on the weekends. And I do think that that I wouldn't call it a game changer, but it is also a step function and increased utility of these types of products.
Sy Taylor 9:55
Betel, as I understood it, one of their biggest clients was circle, but also stable client. Was generally some of the biggest buyers of money market funds and treasuries and repos. So Blackrock would naturally have a relationship with that segment. So they're also interested in serving that segment well and following them into all of the places that they go. Chris, that's kind of what I was driving. I was maybe more on the issuer side of like serving them at that institutional end. There's probably a whole bunch of products they can wrap around it. And it's the crypto native institutions that are driving a lot of the innovations we're starting to see in markets. And I think that's something that's that's going to continue our next story this week from just about everywhere, Stripe has launched machine payments with the idea of allowing autonomous agents to make payments in an HTTP native or an internet native way, they've integrated one of the protocols that enables this, which is x, 402, and that uses USDC on base, something Jeff Weinstein at stripe said on X was really fascinating to me. He said, commerce hasn't been designed for machines. It was designed around humans going to a website and clicking pay, but at this point, commerce is happening very much by machines who think in command line interfaces and deal in HTTP and so something like an x4, or two is key. Jeff also said they will be adding more protocols in the future as those start to emerge, because there's a lot of protocols around agentic commerce and payments these days, they're probably more protocols than there are payments, but there's a real need here. Kai, we've talked in the past about some of the challenges with API keys, like, I don't know how much you guys have been playing around with Claude code and whatever else lately, but there's always that point where the machine stops and goes, Can I have an API key? Please? Like, I need an API key. Can you insert this in the UI onto that screen for me, please? And that's where things get stuck in online commerce. So Kai, your thoughts on on this
Cuy Sheffield 11:55
development, I think, like everyone else in crypto and on X, I've been going down the clawed code rabbit hole, having a great time, so much fun trying to learn to vibe code. And I've been spending a lot of time in the command line, which is a place that I've never I've never been. So it was very intimidating. And Diogo is like, oh, yeah, of course, like, I'd never been to the command line before. And so I start using Cloud code in the command line, and I'm struck by how many times I want to do something and it's like, oh, I can't make a payment, oh, I can't do and it's really frustrating. It breaks the flow, and I gotta pop out and I go sign up for an account. I gotta grab an API key. And so I am really excited about this opportunity of what I like to think about is like command line commerce, where there's gonna be this entire world of vibe coders who are going to want to be able to spend. And if you can give Claude code and give your agents the ability to spend, you could turn a vibe coded project into a real business. And so I think that the big question is, what infrastructure needs to exist, what protocols? How can you embed both stablecoin capabilities, card capabilities, and now, like going as someone who is never in the command line to I never wanna leave the command line, and I wanna do everything I can just embedded inside of it, but I can't, because the right infrastructure does exist. And so I think there's a huge opportunity with many companies on, how do you build out that vibe, code payment experience. And there's a big role for stable coins to play, among other payment methods. But curious. Chris Diogo, like, have you guys been vibe coding? Like, what do you see? Like, how does this play out?
Diogo Monica 13:31
So the answer is yes, tons of tools for Han ventures, personal tools, tools for my wife, with my siblings. I have 214 year old siblings, and, you know, a Harry Potter sorting hat and stuff like that gets built and vibe coded. And it's pretty cool because has actual graphics. And before, I was absolutely zero. But let me just point out something which is kind of interesting. There's a lot of excitement X 402, is growing in terms of transactions. More recently, it's been dropped quite dramatically. The realization is that there was a bunch of, like, a meme coin, you know, very little utility type of payments. So we're trying kudos to stripe for doing this on X 402 which actually uses based on USDC, which is not necessarily the platform that they're actually focusing the most time on. It is not the first thing they launch. Right? They launched TCP agent, tech commerce platform protocol A while back, which was a partnership with open AI, if I recall correctly, to actually do chatgpt style checkout. Can I just point out the fact that I think it makes sense for us to build general frameworks that make agents pay each other much more easily, but primarily in a world where acceptance is being done in cards or acceptance is being done in the current form that is being accepted, we're also building technology that is extremely generic, generic in the sense that it has all capabilities. And so, for example, replit, when you want to use APIs, they actually front the APIs themselves and automatically inject as part of the framework your Gemini keys and your open AI keys, and just make sure that they're available under one payment system. And so you say, I want to use Gemini, or I want to use chatgpt, or I want to use Claude, and they just. Inject the actual authorization into the flow, and then you sort of like, now are using it. So there's a lot of solutions, just to say that there's lots of solutions using using MCP, some remote skill that has the capability of actually aggregating the payments themselves. And AI is so good that it can actually go through all the flows and can actually pay with all of the cards, and can actually find itself and make decisions that are very concrete decisions about use the card that has the most points. And by the way, cards as existing if they're collaborating and buying shoes, I kind of want the same credit card style protections that I have around chargebacks, et cetera. So I actually don't want the agents to go use some logit thing that is actually like instant settlement in dazzle protections, because they actually want the card itself. So if you can, like, take it all in the sum of its parts, it is absolutely makes sense. Agents should pay each other. A car is paying a charging station is, though, a very different use case than a chat bot under a human command, buying something out in the world. And I don't know if these things are all going to be solved within the same types of thresholds. And the technology is so good at being generic and at using what we have that it is a competition in a race for are we developing agent style payments faster than these AIs are getting good enough to just literally, like, look at our wallet, scan all of our cards, and then be really good at protecting it and just making decisions about, like, when to use and how to use it as we would so I would just say that, like, this is not a thing that I've heard. People are all excited, all gung ho. I am too. I would love to invest in this. We don't really have any public investments that we can talk about it in this area, but I'm looking at it, and I'm looking at founders that teach me something, that show me some unique insight as to why this is going to be big. But so far, there's no good answer that I've heard about the problem statement that I've just described.
Chris Maurice 16:34
Yeah, the only thing I would add to that is that is something that I have actually changed my opinion on over the last several months, because I think you know initially, as you think about machine to machine payments, right? And agentic payments, the natural bot is that all of that has to happen through something like stable coins, right? And all of those payments need to happen on chain. You need a system that works for machines. I think that that is still largely the case, but I especially with the amount of time that I've been spending with the visa team and others, have come back around to the idea of cards in these flows, mainly from a consumer protection standpoint, and from the perspective of protecting yourself against some of The stuff that you know, especially in the early days vibe coded agents are going to do. There's a lot of good about vibe coding, right, which you guys just talked about. The bad about it is, as more and more people are vibe coding, I think the number of security incidents and other issues that you're going to see over the next five years is going to be pretty mind blowing, right? Because now you have large corporations and large startups that are vibe coding stuff, right? And for as good as this technology has gotten, it is still like a junior to, I mean, you know, maybe mid level in some cases, but mostly a junior engineer.
Diogo Monica 18:02
Can I say another way? It's kind of funny. Chris, yeah, so the industry, historically, has gotten really good at dealing with stolen credentials, which has been historically bad because there's been lots of solar credentials. And, you know, the bands are easy to steal. And, like, you know, cars weren't encrypted for a long time, and now we're just giving it to machines. And now we're really good at it, like, we've come full circle. We're good at dealing with stolen credentials, and we're not good at dealing with stolen private keys, for sure.
Chris Maurice 18:27
Yeah, yeah. And we've come full circle on, like, security where, like, you have all of this investment in security infrastructure, and now it's like, hey, let's just vibe, code it and then give it access to all of my private keys and life, right? And so just speak like that about Claude bot, Chris, do not speak that way about Claude bot. Look, my Claude bot had nothing but good things to say about me. On, on, you know, multiple that's because of the psych, authentic personality here. But yeah, so I actually think long term, you end up in a world where machine to machine payments are all happening on chain, right? They're happening through stable coins, all of that. I do think that Visa Card payments, et cetera, will be the bridge for that. And I think that the tail for card payments will be longer than people expect it to be to diogo's point because of, like, the consumer protection that it adds in. And as these agents get more aggressive in terms of things that they're able to do and things that we tell them to do, having the added security of a card versus, you know, a machine with my private key that can do literally anything without any ability to stop it. I think that there will be a lot more demand for that than people are expecting before we end up in a world where eventually, you know, everything is just flowing on chain and is totally seamless.
Sy Taylor 19:53
You know, I think there's three things going on here. I can see that stable coins are a better. A rail for settlement, but definitely not for authorization, right? Like, the authorization and trust layer is going to be the big gap, but there's also a layer above that. So like, authorization and trust is what visa historically has done really well, and we've had things like push payments before that didn't have that authorization layer. I think this is the reason that open banking payments never took off is there's no consumer protections around them, and the experience is kind of janky, like credit cards are overpowered with their experience like, boom, click, done. They're really overpowered. But in Europe, in the UK, Amazon has just launched pay by bank for all of its online purchases and for Prime cool. But what happens when one of those purchases goes wrong and you want to hit the charge back button? And I think that's where it always seems to fail. So there's a bad consumer experience, there's a bad and you think about stable coins, they have a lot of those same problems, like, it's a bad user experience and there's no consumer protections. But if I'm just trying to do settlement, stable coins are great. They're 24/7, they're instant, I can see that it's happened. There's less reconciliation issues. So they're really much more of an infrastructure technology, but they're not an authorization technology. But then this machine payments thing, I think that's a layer above the authorizations. This is something that's happening much, much faster at the HTTP level. And you know, a lot of the stuff around x, 402, they diagnose the right problem, which is HTTP 402, was always supposed to have payment required. And if you look at web scale, there's something like four or 5 million emails sent per second. It's truly wild. How much activity is happening at HTTP header level on the internet. And if we do get to a world where there are billions, trillions of economic agents transacting millions of times a second, then even the fastest blockchains in the world and settlement layers in the world aren't going to keep up with that. And even visas or thrails, which are incredibly performant, probably wouldn't keep up with that. But I'd want them making sure I had trust. I still need this thing above it, which is, I think, what stripe is trying to enable and get ready for. And I think there's just this understanding that, look, this could be an exponential take off at some point. Like there was the blog post that went viral over the week or so that, which is, like, it's time to tell your friends about AI, like it's the coronavirus moment. The code is the code is now writing code. The code is now doing AI research itself. And then that's where we head into the exponential takeoff moment. And so if we are there, then you have to assume that whilst nobody's making machine to machine payments today, there is very little volume in agentic commerce, really, from a payment standpoint, that could all change, and when it does, you need to be ready. So doing something like stripes done is quite interesting. You mentioned Diogo. You've not got any bets yet. But how are you trying to map out what's interesting in this space? Like, how are you trying to make sense of
Diogo Monica 22:59
it all? So we spend a lot of time with the protocols, with the teams. We see every team that comes to us and obviously are reaching out proactively to folks start doing interesting stuff. It's pretty easy, actually, because these things are published the x 402, website actually is very convenient, has all the projects, so you can, sort of like, reach out to them and see who's actually doing interesting things. And so we try to spend time with them. We try to see what's real, what's not real. I think there's two big sets of questions, which is clearly this type of payments, agentic payments. It's not all payments, and the sliver of payments that for which it actually seems to be useful or hypothetically useful for actually is much narrower than the general use. You know, I don't think paying for something necessarily makes sense for us to have these types of agentic payment frameworks. Maybe we'll get there. And there's definitely better protocols than the ones that we have in that using card credentials, because we know micro payments. We know the flat fee components here, all these components, I think are important to to point out, but it is not clear to me that people are separating correctly. What's actually truly agentic to agentic, where has to be microseconds, it has to be a final transaction. It's untrusted party. It is really your Tesla paying for electricity without middleman, in a peer to peer fashion in which the requirements are very different than you know, me buying shoes online. That's one of the things that I don't think is very well separated. The other one actually is something that I sort of felt like you were falling trap to when you described this. I think you described it as the brilliant people that designed the HTTP protocol left 402 in there because they knew at some point blockchain and stable coins were going to come, and forward two was going to be taken. It's going to be the golden way in which all the internet was going to take payments, when, in fact, the same people also created 418, HTTP 14, which is I'm a teapot, and it was actually whose goal was an HTTP server to respond when somebody attempted to brew coffee using a teapot, right? So, yes, it was an April Fool's joke, and it's a joke, but it is an RFC, and it's HTTP four routine, and so those two things are both HTTP codes. So just to say that I actually think is higher likelihood than not that the agentic payment mechanism and protocol that we end up using it is not HTTP at all. It is something else, maybe much closer to MCP, maybe a subset of this, maybe a new variant of these agents waiting for. Agent protocols that come from the big AI labs and not something that necessarily gets done here. Or we have a separation of multiple types of payment mechanisms and protocols for API related stuff and then commerce related stuff.
Cuy Sheffield 25:14
Yeah, I think it's the point you made is super important that agentic commerce is a very, very broad space that encompasses many different types of transaction flows, and it could be a very, very different set of requirements and interfaces and use cases if it's your agent helping you shop and buy shoes, versus if it's your agent that is buying inference credits as it builds a project that you're vibe coding. And so I think it's very hard to just bucket it together into one and say agentic commerce is going to be like x, and I think that there's room for many protocols, many payment methods, many user experiences. And I think it's one of the most exciting and interesting areas where there is a ton of experimentation. But like you both have said, this doesn't really exist like today. It's just super small.
Diogo Monica 26:04
And by the way, there is no clarity of thought. Yes, we're all exploring, we're all doing tests. There's no clarity of thought exactly, or great hypothesis of the buckets, division of the buckets, and what different solutions are going to be, which is exactly what you're pointing out. It is so broad, and I haven't seen really people kind of like doing a really good job at, like separating this thing meaningfully.
Sy Taylor 26:21
I had a go at it on brain food, and I don't think it's a really good job. I think it's the first step. Honestly, I just sent you that link. Please abuse it. But there's so many things happening. Let me just rattle off all of them put together when I tried to put the image together at the bottom. So we have Google's agent communication. So A to A, which sort of is not dissimilar to MCP, it's like about communication, but you can actually use the two together, because A to A gives you a little bit more confidence of who the underlying agent is. Then there's like trust protocols. So Visa's trusted agent protocol. There's ERC, eight, double 04, they're sort of like, Can I trust this agent? Has it been seen before? Then there's Google's AP two, which is an agent now has an intention to make a payment, either now or in the future. Then there's the actual transaction coordination. And these can be human in the loop or human out of the loop. So human in the loop is ACP or UCP. UCP is the Google Shopify Gemini loop. Then there's the open AI stripe, kind of Shopify ACP. And now, then you've got a transaction coordination in the machine space. And that's X 402, and I expect to see more coming in it. And that's before you get to the like stuff that's going on at the network level. So these are intelligent commerce, the whatever MasterCard thing's called. You could use stable coins for it, and then you've got the underlying payment rails,
Cuy Sheffield 27:56
like we need the meme of Simon. That's like pointing at the board with these all
Chris Maurice 28:01
over the place. I love it. String, connecting
Cuy Sheffield 28:04
everything that is Simon right now, just trying to connect.
Sy Taylor 28:10
I mean, I've really tried, man, but this is what I mean about this. More protocols than transactions. So to try and allocate capital, even as an engineer at this point, must be like extremely difficult, but and you
Diogo Monica 28:23
have to hear, you have to hear a cogent theory or hypothesis of the near future at least. You have to hear some hypothesis from the founder. You have to learn something new. It's one of the exciting things about deploying capital and being a venture investor too, right? It's just like you get to learn with the most brilliant people. And it's been hard to find people that have truly, kind of like this clear at IG about a hypothesis of the future that they're deploying on. It's a little bit more of the like I'm building it. And let's see if the agents will come.
Sy Taylor 28:47
Yeah, I do think that even an inkling of traction can be catnip as well, because I just haven't seen that in any of these and I suspect that will come. And this is the bet that a lot of the payments companies have to make, which is, well, that's going to come, but we don't know where it is, so we kind of have to, just like, play battleships and squat on everything, and the one of them lands, because we don't want to miss out on this.
Diogo Monica 29:09
And if you're a founder building on this, first, reach out to me, then reach out to Kai, Simon and Chris,
Sy Taylor 29:14
sure, or you can reverse the order. That's absolutely fine. All right, with that, we're just going to take a quick pause while we hear from our sponsors. This episode, if it's not obvious, is brought to you by our friends at visa, a global leader in payments. Visa's tokenized assets platform vtap uses smart contracts and cryptography to help banks bring fiat currencies on chain, vtap allows financial institutions to issue Fiat back tokens, improving financial efficiency and enabling programmable finance. You can check out the links in this episode's description to express your interest in vtap. This episode is sponsored by stripe stable. Coins are the building block for borderless financial services, making money move around the world as easily as data. With stripe, you can use stable coins and crypto to reach untapped customers, reduce cross border fees and settle payments in minutes instead of days. Best of all, it works the same way other stripe products do by API or write inside the stripe dashboard, meaning you don't have to worry about the intricacies of which blockchain or what wallet to use, from Shopify to vercel, global businesses trust stripes complete crypto solutions to unlock new markets and reach more customers. Borderless finance built on stripe. Learn more@stripe.com forward slash crypto. Thank you so much to our sponsors. The next story is about layer zero. They're unveiling their layer one blockchain called Zero. Confusingly, so alongside this launch, they also revealed investments from Citadel, arc and tether, and collaborations with ice, that the parent of the New York Stock Exchange, the DTCC and Google Cloud, Xero, is going to use Z KPS to separate transaction execution from verification, fascinating, and this is among other advances in Compute and Storage, hypothetically allow the chain to reach 2 million transactions per second, layer zero cost better known for being, I think, the dominant cross chain kind of bridging solution that's out there, one of the most secure in terms of market share. So lots of thoughts on this one. But if those TPS numbers are true, and we've had Brian from Les ear on the podcast before, certainly very technically proficient, then you gotta say they've got track record here. This could be fascinating. Indeed. Any thoughts who wants to come in first?
Diogo Monica 31:54
I'll just say that Brian and his team are killer. They've been building through the bear market, kid, I think we're an all time high in terms of fear on the fear and greed index in crypto. And in that moment, they do big launch and announcement of the blockchain to end all blockchains that just takes a level of chutes that I just absolutely love, because they are building something that they're very much believe in and that is very meaningful, and something that has a different set of trade offs than other blockchains that have come blockchains that have come and they have tons of experience, tons of credibility, and the project is extremely exciting. And I think the announcement itself got an invite, ended up not going. Somebody from my team went and I think it was palpable from the descriptions that I've heard, the excitement around the room about what they were building. And so to me, that is the best thing that you can do, and when the fear is at all time high, is remind people what we're here to do and the cool stuff that we're building and how they can actually be used for real use cases, and how we keep advancing through the bear markets. And so I thought that was amazing.
Cuy Sheffield 32:52
It's awesome to see the continued technological innovation and competition around New Layer ones that are just continuing to kind of push each other and try different approaches. But I think Chris, the question for you is, like, you're on the, like, very practical side of talking to shipping companies, like moving money, and so it's like, you have, like, the crypto ecosystem where it's like, here's this new layer, one that, like on paper, is like, better at all these ways. The big question I have is, how do chains actually get distribution. And when you talk to your clients, and they're just saying, I'm trying to, like, move dollars to, like, pay for something, how much does the chain matter? And then, is it the payment company, like yellow card, that's in the position to choose the chain, or do they, like, delegate to you? And they say, Chris, like, what chain Do you think? Do they care? And so when you see these new chains emerging, what's your strategy to say, okay, which ones do I support? Which ones don't I support? Like, how do you even think about that?
Chris Maurice 33:48
Yes, well, distribution should be easy, because there's not that many l ones and so, but no, look, I mean, I'm a big fan of the layer zero team. I think the technology and everything sounds great to Kai's point. It really depends on who the target audience is. If you are visa, then you need to process more than 2 million transactions a second, right? If you are a normal company, right? If you are to Chi's point, a shipping company or anything like that. These guys live totally outside of this conversation that we're having, right? They don't care about transactions per second. They don't care about settlement time or anything like that. It's a much more simplistic equation. It's, you know, hey, I need to send money to Argentina, Mexico, whatever is my money going to get there? And how long is it going to take? And that's it. Those are the only two things that you know most, most people and most companies around the world actually care about. And so you know, it really depends who the audience is, and getting. Distribution with corporates, with the companies that are actually doing these large scale international payments today, is a lot less based on the technology than people in the industry think. And so we can talk about how great the technology is and how powerful this would be for payments. But your average corporate or institutional customer doesn't actually care about that, and that's never crossing their mind, right? For most of these guys, it is just new infrastructure that's going to be a pain in the ass to switch over to. And you know, the stuff that they have works today. And so I think especially for what these guys are trying to do, the real target needs to be underlying institutions. You know, banks, financial institutions, et cetera, like the types of companies that actually need the ability to move millions of transactions a second. And then you run into the issue of for a lot of these institutions, chi can speak for visa better than I can, right? But, you know, I have a hard time believing that visa would outsource the processing of its transactions, right, versus building something in house. And I think that that's the case for a lot of banks, at a lot of large financial institutions, where we're seeing more and more that they actually want to move away from public blockchains and move away from available infrastructure, and they want something that's private. They want something that keeps their data private, that gives them a walled garden that they can play around in and have full control over, versus something that's going to go out and needs to be authorized by anybody outside of their institution
Sy Taylor 36:41
as a good reminder of that. I was speaking to a bank just yesterday, actually, over lunch, who moves trillions per day, genuinely trillions per day, and they were quite pleased with the fact that the recent AWS outage didn't impact them at all, because a lot of their infrastructure is on prem, and they do use some cloud services, but it's nothing mission critical, and they control all of that in house, and that enables them to have really resilient uptime. And so I do think you've got a good point there, Chris, what's fascinating is that the gaps between those organizations don't have anything near that uptime. So there is something to be said for resilient, performant infrastructure, and the gaps between those organizations, especially for settlement and then layer zero. Interestingly, because it is the layer zero, it's the connectivity between these organizations, could probably between existing blockchains, could probably do a good job of bootstrapping this network and making an argument that this should be the pivot point between all the other layer ones. Because right now, Chris, I don't know how many you're plugged into, but you probably have to plug into four or five, and they all work a little bit differently, and you have to spend a lot of time building liquidity in each and managing across all of them. And so somebody that can come along and just take that pain away, potentially, is is interesting, but I'd echo Kai's point there, of like most users and your point, they don't care what chain it's on. They care that it gets there quickly and cheaply. But I think the intermediaries, the payments companies, the money movers, folks like yourself, if there's a better chain there that can be more economic for you or less of a pain to deal with that your engineers prefer. I think you're more likely to be the customer of this than the end customer is very, very few corporates are direct members of visa, even if they use visa direct through their bank partner, for instance. And I think chains are in a similar place to that.
Diogo Monica 38:35
Can I just point out that what zero, what layer zero and zero is trying to attempt to do? I think is something more ambitious than a layer one, I think it is the final merge or the final step, and hopefully they've achieved it. Of it is no longer layer one. It is a full cloud. It is a full cloud. It is a full environment that has all of the characteristics that you'd get from a cloud in which you can have arbitrary compute, arbitrary storage, arbitrary execution. So if you think about it, the model that way, it is much more exciting. And to achieve that, they've been able, or they have had to, basically create innovations in leapfrog the current generation of technology for basically every single thing that they touched on. If you want a true cloud, then you do need, like, millions of transactions per second. And by the way, they do have 2 million transactions per second, but if I call correctly, is on a zone, a per zone basis. So arguably, it's infinite TPS. If you kind of like, do the horizontal scaling that they're doing, and you have multiple zones, which you can have multiple zones, if you kind of like, want to do something else, they come by default with three different zones, but you can add as many zones as you want, and it's infinitely scalable. So that's their argument. It is, yes, 2 million TPS per zone, but you can have as many zones as possible. But just to make this argument point more salient, they've had to, like, do the, I think they call the QM dB, which is a database storage, which they claim it's 100 times faster than rocks dB over at Facebook. And it's like at the 92% close to theoretical limit of being able to do storage. And it has, I don't know, 5 million or 3 million or whatever, like transactions per second. They've had to do compute. So they have a new algorithm that. Allows them to do scheduling, apparel. Scheduling algorithm on transactions is much faster. The Z can proving doesn't require all the nodes to have to execute everything. Means that they just have to run the proofs themselves. They have networking so they have something called SV ID, which allows them to have the system that is, like 1000 times faster. So if you kind of collect all the 1000s, all the orders of magnitude of evolution that they've added, they've been able to get a multi threaded, full on cloud and compute in which transaction cost is, what 110 1,000th of a penny. And that allows to have very efficient storage, close to theoretical limits and infinite scaling. So arguably, this is actually at a different beast. We're no longer in the order of magnitude of blockchains and layer ones. We are now evolving this into full on featured clouds. And if they create a good enough development experience and a good enough deployment experience, I do think that you can just hot swap what you had there, and it's no longer layer one. It is literally hot swapping AWS. I might
Cuy Sheffield 40:53
have missed this in the announcement, but, like, I didn't see a big focus on privacy. It seemed like the focus was on scalability, which makes sense, and that scalability, I think, has improved a lot, but, like, there's still room to grow. But it feels like in every conversation that I'm having with institutions and enterprises, like they're actually not worried about scalability, like, for most use cases, it's just like, we've gotten to, like, fast and cheap enough. They're worried about privacy, and that's what they're like coming to us. I'm like, What are you kidding me? Like, you think we're gonna put transactions on a public chain, and so did I miss that? Or, like, is within the zero design, is there a privacy approach to it? Because that seems to be the next major piece for an unlock for a lot of institutional use cases.
Diogo Monica 41:34
Yeah, I don't, I don't think I saw it. But as you know, privacy is extremely unpopular at the layer one, and so it actually, right now, as you know, hinders your adoption, not helps with your adoption when it comes to infrastructure players supporting it and integrations. And so if you are layer one, actually the maximal optimal strategy, if you're doing the game theory, is not have privacy on the layer one, and probably add privacy on whatever stable coin types of transactions you have with many other mechanisms on top. And if, by the way, you're extremely fast and you have extremely high throughput for execution, you can actually do the smart contracts, probably that can actually run the whatever your knowledge or whatever privacy mechanisms that you want on top, which was not necessarily the case with Ethereum and some other smart contract platforms. So I would say that, you know, privacy is left as an exercise for the reader. That seems to be the strategy. And I don't know this for sure. I didn't see that either, but I would assume that if I was doing it, I would do the exact same thing. And this is why, because I know how hard it is for large platforms, including Anchorage, to go in and, you know, full on, let's integrate private transactions on a layer one. And then the question is, are you insane? How are you going to meet all of our fiduciary and obligations, and, like, compliance obligations? And then, you know, you know, you go through that rabbit hole, and there's a million different solutions and different hypotheses, and then at the end of the day, you're like, oh, that may be a little bit like too much for us to do right now. So let's prioritize an Excel one that is much easier to, like, plug into our systems. And every single platform makes that same decision over and over and over again. So it becomes very hard for those things to actually have adoption from day one. And I don't think you need to, I don't think you need privacy at the layer one. It might actually be that it's better to have this privacy is left as an implementation detail for the upper layers.
Chris Maurice 43:07
Yeah, it seems like a chicken and an egg in terms of getting adoption outside of, like, the core industry, right? Because, I mean, I agree with you, right? I mean, when we have to implement private chain, I mean, it's a total pain in the ass, right, however, and I think Tai probably talks to, you know, a lot of the same people, right? But when we talk to banks and financial institutions, you know, mobile money players, et cetera, especially outside of like US and Europe, privacy is typically the first thing that we get questions about, right? Is, well, if we're using this in any way, shape or form, are people going to be able to see the transactions that our institution is performing? Right? Are people going to be able to see our customers transactions if we're implementing this into our systems and it's on, you know, in an account by account basis, now I can see all of Kai's transactions on chain if I'm an institution, especially in emerging markets, is somebody able to see transactions coming into my system and then front run currency markets, in markets and currencies that don't take billions of dollars to move the market right. And so the privacy of transactions definitely seems to be the big conversation that we're constantly dealing with when it comes to getting institutional adoption from banks and like other financial institutions into this industry and utilizing this technology, versus the tech itself. Right where to your point? I think generally, the tech has gotten to a point where it solves the majority of use cases for some of these guys, right? By the
Diogo Monica 44:45
way, I'll do a just in time correction. It does seem like one of their zones is a privacy zone. It is one of the zones that they're launching
Sy Taylor 44:50
with, and that would make sense. You'd want to have it separate in some way. You'd have a zone for it. That's something that we're talking about at tempo is privacy zones, right? Like you have it as adaption. Traction that's available. And I think you don't bake it into the l1 for all of the reasons you've kind of said there fascinating that they're aiming at that original World computer vision that Ethereum had, I think, for quite some time as well, that this is broader than simply payments. So very different approach. And we wish them well, there's one more thing I wanted to cover before we run out of time this week, which was there's a bank called arable, which its name is inspired by the Hobbit. This is, of course, backed by the annual founder, Palmer, lucky and Dale. And it's received a lot of green mics lately. It got its conditional OCC charter, I believe it's now been given its full charter, and is working through its organization phase in order to get fully mobilized and launch as a bank in the next few weeks. So they have 630, $5 million in regulatory capital. They've achieved a $4.35 billion valuation with no website and no customers. But the plan is that they would allow its customers to potentially mint stable coins. They'll lend against crypto. They'll run 24/7 this is if you were going to start a Silicon Valley Bank for the 21st Century, this is probably what it would look like. And they've gone the hard path, a path that you have traveled before, going for the Federal charter. Your thoughts on this? And I believe they're a portfolio company,
Diogo Monica 46:15
that's right. So we led the seed for Atticus, which eventually became air war. I'm on the board alongside Palmer, Luckey and Joe longsdale and the founders, you know, Owen, Jacob Trevor, the rest of the team. And just to correct one thing, I do have an account. There are accounts to our clients. I have an airborne account. Is pretty fucking cool, as you'd expect, lots of American flags everywhere. So I'm excited. I've already deposited stable coins on it, so I can give you the thumbs up, that it does actually work, and that my funds are actually safe over at our board, I think it's kind of cool. You are absolutely right. Look, this is hard. Starting a bank is brutal. And I think the three hardest things, well, there's many hard things. And you know, I'm kind of like an interesting character to talk about this, because I'm one of the very few people that has actually done it five years ago with Anchorage and now is going a second time on the board, and one of the very few people, I guess, that is on the board of two federally chartered banks, which I did not intend to do, but here I am. So I think the three hardest parts that I always talk about on starting a full bank is the capitalization, over $600 million raised for equity capital itself. And so that's, that's it's hard to do start for investors to get the excitement. Historically, banks have low roe and they're not venture style returns, and so actually gathering that excitement to get it to start is extremely, extremely hard, and is one of the big reasons why it hasn't done before. The second reason that this is hard is obviously regulatory approval. I think under Trump, we're seeing 25 plus charters that are actually been submitted, whose approval are coming here, you're absolutely right. Airborne was the first one out of the gate. It was the fastest one to get from an area of CC approval. I believe, in 25 years, it had the preliminary FDIC approval, and then it had launch very quickly. And in fact, it launched on a Sunday, because we can't right, which is kind of like a nod to No, no. This is 24/7 and the age of like, the weekday bank is over. And then the third thing, outside of regulatory proof, it has been historically very hard, and the capitalization is obviously getting to scale on your depository base. So you can actually get to scale. And, you know, jumpstart those teenage years where you're not big enough for real players to use you, but you're not big enough for that, so you can't launch it, and so you can't actually attract the deposit that you need to jump those teenage years and actually get big enough. And the amount, amount of pipeline and people around the table and in depository base is extremely impressive. It really is a nod to the team and to Palmer and to the rest of the folks, what they've been able to get around the hoop. So right at the gate, we have achieved all the meaningful milestones on all three and it's kind of an exciting bank to be part of, and I do think that it speaks to this need for a different type of bank that is extremely modern. So let me just give you two other things. The bank is a different bank. It has 12% of tier one leverage ratio. This is actually for people that are listening to us, double the typical requirements, which means that it's much safer on ratio perspective and on a leverage perspective, to the capital itself. And then over 60% of the assets are in cash for high quality, liquid investments. And so from a structural perspective, this bank actually operates very differently from traditional banks. And the goal really is to help support America and push AI forward, crypto forward, push defense forward, and have something modern that people in Silicon Valley can use. And so I've been describing in many ways, but American dynamism bank could be one of the ones that we described it as phenomenal.
Sy Taylor 49:30
Chris, a couple of thoughts. Just conscious of the Tai,
Cuy Sheffield 49:33
yeah, we are also getting our
Chris Maurice 49:34
account set up. I mean, I think it's quite exciting. And I think for these guys, the way that I see it is the next several months will be critical, right, in growing that deposit Bay, you know, to diogo's point about, like, sort of a teenage years for a bank. Because obviously, this is a direct response to choke point and everything that you've seen over the last several years, right, where US and many other companies were losing all of their bank accounts just because. We were doing crypto, we couldn't get a bank account, and now that is finally changing, right? I mean, at the charter level, with banks like this that are openly trying to serve crypto companies being able to start up, but then also, we're seeing a lot more traction, right? I mean, you know, look, we opened our first tier one bank account recently, and so the access to banking has changed drastically over the course of, you know, about a year. And so I think that definitely for these guys, growing quickly is going to be key, because the end, it will become easier over the next several years for people in these industries to be able to get banking. These guys are front. Running it right? These guys are really at the front. And so I think if they can get through the next several months with some pretty wicked growth, they'll be in a pretty great position,
Sy Taylor 50:50
phenomenal to see. I think they can. They've certainly got the backers for it. A bunch of stories we didn't have time to cover this week. One really fascinating one moon pay and deal have partnered to help 40,000 businesses with stablecoin payouts in the EU and Europe. Of course, this follows the acquisition of iron, so it looks like that sort of acquisition is really paying off. And stablecoin M and A also works Robinhood has launched a Public Test net for their blockchain built on arbitrum backpack, the crypto exchange are raising at a billion dollar valuation, phenomenal stuff. And the forecaster founders, Dan Romero and Varun servinian are joining tempo. Welcome to the team, guys. And a whole bunch more happened this week around prediction markets and lots of more. We could have like a five hour daily show with the amount of news. At the moment, it's wild.
Cuy Sheffield 51:39
Sign me up. Simon, approach, we're just, we're just gonna run it as a marathon, this group, five hours straight, no breaks like, let's do it.
Sy Taylor 51:49
Tbpn, roll up. Watch out. Here we come. All right. Thank you so much guys for watching and listening. Chris, if people want to find out more about you and yellow card, where do they go to do that?
Chris Maurice 51:59
Well, we have a website. So yellow card.io, yes, that's probably the
Sy Taylor 52:05
easiest. What about you, Diogo? We have the website.
Diogo Monica 52:08
Website is the best way. Well, we have a website. You can go to un.co and you can also follow me on at Diogo Monica on Twitter or x Yes, none of the three of
Chris Maurice 52:18
us are that hard to find. Actually. Tai, do
Sy Taylor 52:20
you have a website? We do,
Cuy Sheffield 52:22
in fact, like it's visa comm slash crypto, but I'm usually on x at Kai chef.
Sy Taylor 52:27
I have two websites for you. You can check out FinTech, brain food comm or tempo dot XYZ, and on the socials at sy Tai. Know, wherever you do your socials. And please, please do the thing where you hit the Like buttons and the subscribe buttons and all of those, because it really helps us. If you enjoyed this conversation, that's how you say thank you. So don't be rude. Say thank you. We appreciate you. Thank you so much, guys, take care and we'll catch you next time.