On Ep. 7 of Stablecoin Stats, Anthony Yim, Co-Founder @ Artemis and Andrew Van Aken, Data Scientist @ Artemis are joined by Alana Levin, Investment Partner @ Variant to discuss Variant's focus on crypto investments, takeaways from Fintech NerdCon and more!
On Ep. 7 of Stablecoin Stats, Anthony Yim, Co-Founder @ Artemis and Andrew Van Aken, Data Scientist @ Artemis are joined by Alana Levin, Investment Partner @ Variant to discuss Variant's focus on crypto investments, takeaways from Fintech NerdCon and more!
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This episode is brought to you 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.
This podcast is powered by Artemis
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We’d also like to remind you that the views or opinions of our contributors today are their own and do not necessarily reflect those of the companies they are representing. Nothing we say should be taken as tax, financial, investment or legal advice, do your own research!
Music by Henry McLean
Andrew Van Anken 00:10
Welcome to tokenize. The show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Andrew Van akin data scientist at artness, a crypto analytics startup. I would like to welcome you to stable coin stats, a monthly show on the tokenized podcast dedicated the stats behind the stable coin market. Joining me, as always today is my colleague and friend, Anthony Yim, co founder at Artemis, sir. How are you on this fine morning?
Anthony Yim 00:33
Much better. I didn't tell you. I actually missed my flight couple days ago to New York. I was just too engrossed in a actually, we were talking about stable price, and I missed the window by like three minutes, and they had the wrong gate on my on my boarding pass, and so
Andrew Van Anken 00:48
sure, blame it on the gate. Blame it on the chain. You know, blame it on the blockchain. Today, we are also honored to have Alana Levin, investment partner at variant, who is fresh off dropping a 180 page report on crypto trends. Alana, an honor to have you. How are you today?
Alana Levin 01:02
Doing well, really excited to be on the pod. So thank you guys so much for having me.
Andrew Van Anken 01:06
Have you recently missed a flight? Are you punctual with your flights? Sounds like
Alana Levin 01:10
I'm doing a little bit better than Anthony. I'm the type of person that shows up, like, three hours early to the airport. So, you know, two ends of the spectrum.
Anthony Yim 01:17
That's me, usually. That's why it's even more painful that I missed. It.
Andrew Van Anken 01:20
A quick disclaimer before we get into things, I need to remind you that the views or opinions of your contributors today are their own and do not necessarily reflect those of the companies they are representing. Nothing we say should be taken as tax financial investment or legal advice. Do your own research. And lastly, before we get into the stats, I'm thrilled to remind you that this podcast is made possible by Visa and powered by Artemis. Alana. First, I would love to learn more about yourself, and yeah, would love to have a quick background, if you don't mind,
Alana Levin 01:45
of course. So I'm an investment partner at variant. Variant is an early stage crypto native venture capital firm. I work as a generalist, so I've done everything from infrastructure to consumer to defi, and quite a lot around stable coins and payments. The lens through which I look at the world is anywhere crypto makes the world more productive, gets me really excited. And I think stable coins are leading digital asset in that way, and a beachhead for all the other sorts of digital assets that we can get adopted. And so that's one of the reasons that I spend so much time on stable coins. I love it.
Andrew Van Anken 02:19
Well, we're happy to have you and you both were at FinTech nerd con while I was just at home, just making the charts. As always is Simon Taylor, a genius for planning conferences in warm places during cold months. Anthony M
Anthony Yim 02:33
Absolutely man, I could not wait to get out of New York, and we actually had our Artemis off site right after.
Andrew Van Anken 02:39
This is true, I did actually join you for some nice weather, but I know both of you are frequent on the conference scene. Alana, what were some takeaways from FinTech NerdCon, and what was the attitude overall of the conference? It was
Alana Levin 02:51
really interesting. FinTech NerdCon, I'd say, had probably like 30% crypto people, and then 70% non crypto. And the theme that tied the sort of two ends of the spectrum together with stable coins and payments and all the different ways that existing fin techs are starting to think about payments. One of the things that was really made clear during the conference is how much data exists around the layers of payments. So in the traditional system, when you move money from one country to another or one institution to another. There's probably a dozen different layers of data that get incorporated. And when you start to think about what that looks like on chain and sort of the new infrastructure stack there, there's actually quite a lot that changes. And so that, to me, was one of the big thematic areas of like, how do we think about identity and tracking and transparency and all those sorts of metrics when you move on chain. A lot of it was really exciting, but I'd say sort of that that was like my big takeaway of it's not just the money movement, but all the data that's associated with the money movement.
Andrew Van Anken 03:52
Interesting, Anthony, would you agree disagree? Or what was your favorite panel? Besides yourself, you can't plug
Anthony Yim 03:58
yourself, darn it. My biggest takeaway is similar to Alana. Actually, one of my favorite moments was jamming with Max Siegel from Freeview. Now, you know, acquired by stripe on just like how much more there is to getting stable coins to work for payments, besides just the pure like money movement ledger layer and specifically, and I will, we'll talk a bit more about this later on, having to retrain fraud models, especially if you're thinking about this world where there are agentic payments that are being powered by stable coins. It's like, literally, my job at Venmo in my previous life is to train neural networks on bots. And so now, actually, the bots are not all fraudulent they were before. So now what? So there's still a lot of work left. And so that was probably one of my favorite moments. Just like being a jam with payments people and payments nerds on, like the real problems with payments, so not jamming with crypto people on layer sevens doesn't get you that excited. It's a shame, sorry to hear that so.
Andrew Van Anken 04:55
But a lot I would love to dive into, since this is a podcast on stable coin stats. I would love to dive into your report, because I believe that the first section of your report is stable coins, and so that works out very well, and it must mean that you're optimistic on the sector. And when I was actually going through this, I think one of the biggest things that resonated with me was you have a lot of good data on potential opportunities and challenges for stable coins to really explode to, you know, a trillion, $2 trillion and we hear these, like projections all the time, and, yeah, I really like the slide here that you had about interesting stable coins. It's an all time high with Google carries. And we are growing. I think actually month over month was, like, quite flat with stable coins. But I think that you brought up a lot of good points on how these services will enable us to get to almost, like, 3 trillion or five or 10 trillion stable coins. And I really like this slide here about turnkey and about how, like, their volume has absolutely exploded. I would love to hear your thoughts on, first off, General Lee, like, what do you think we need as the industry to get to these massive numbers? And then would love to hear some thoughts on like turnkey and embedded wallets, and how you see that fitting in
Alana Levin 06:05
totally So at a high level, the motivation for putting together the stable coin section in the report was really like, there's all this talk about stable coins. It feels like it is very real and accelerating at an incredible pace. Let's try and put some numbers to that sort of back it up, see if the data really supports it. Incredible and really exciting thing was it does. The data is overwhelmingly supportive that stable coin adoption is happening faster than it's ever happened. It is accelerating. So it's growing at an increasing rate that's backed up in sort of the Google query interest, as you mentioned, it's also backed up in the hard numbers. When you think about where stable coins are today, and I think the total circulating supply of stable coins is sitting at around, or just under $300 billion question is, how do you get to a trillion? How do you get to 5 trillion? How do you continue to grow from there at a high level, my view of the world is that all of the dollar deposits in the world will eventually be tokenized. And so when you think about the total addressable market for that, it is massive. As we get that shift from Fiat to Siebel coins, there's so many opportunities that exist just from the size of the market, 100x ing or 1,000x ing. Question is, what benefits and what is the infrastructure that's necessary in order to sort of get us there. So the question is sort of twofold. Was Gosh enough said, 300 billion in circulating supply so far, and what are the pieces of infrastructure that we still need to get to the next leg and the leg after that? Of growth turnkey is a great example. So one of the slides in the report that for anybody looking at the video version of this, there's a slide on turnkey, which is an embedded wallet provider and sort of verifiable compute platform. They power a lot of stable coin infrastructure. You can basically think of them as a digital wallet that connects to crypto rails and enables anybody to send or receive any type of digital asset. One of the major beach head use cases is stable coins. Why is that? It's because anybody with access to payments, which is pretty much any business in the world, may need to think about this in the future. And so the slide, some of the stats on it, is that turnkey has experienced about 300% week over week growth, pretty consistently in terms of stable coin transfer volumes, their peak transfer volume was in the billions of dollars, which is incredible. Typically, they're transferring hundreds of millions of dollars in USCC every single day. When you think about like the companies that use turnkey under the hood, it's Bridge, which is a payment orchestrator, it's many payment service providers, so companies that are facilitating vendor to vendor payments internationally, payroll companies, expense companies, anyone that is sending money cross border, it's just far easier to use stable coins. It's faster, more liquid and oftentimes cheaper. Turnkey is one of the pieces of infrastructure that powers that. It makes it so anybody can receive and send stable coins instantaneously. Well, yeah,
Andrew Van Anken 09:02
like the wallet infrastructures is embedded wallets. How do they really, like, unlock it. Is it just ease of use for customers? Is it, you know, seed management, like, how best does turnkey, like, enable, like this, easy onboard of users.
Alana Levin 09:15
So when you think about turnkey relative to something like a bank account, and how something like payroll might be done with dollar deposits, with payroll and sort of like a bank account in the traditional fiat system. What happens is the payments are done in lump sums. It's often in like two week or monthly intervals. Part of that is because it is hard to reconcile between one bank versus another. It takes several days of settlement time. You oftentimes have to think about currency conversion. If you're doing Global Payroll, something like turnkey it is just faster and easier. You can stream payments daily. There is functionally zero cost to sending a transfer on chain. It is more open and transparent, and so it is easier to simultaneously sort of update the ledger and update your internal accounting systems. Of like, where is the money going? Can we track it? Can we see it in real time, all of that data that exists on top of the payments layer, you can have insights into when you use something like turnkey. It's also because you're transacting in stable coins instantaneous. It can settle within 10 minutes, oftentimes even less than that. And you can sort of do the currency conversion in real time. So when you think about something like turnkey relative to a traditional bank account, and it's just a better form of $1 deposit in somebody's digital wallet, whether that be on chain or off chain. Turnkey is just sort of an improvement in those types of payment rails. Then you may say, but we already have wallets like something like Phantom, which we're investors in. We love the Phantom team. When you think about what that looks like, there's a bunch of sort of policy considerations that come in when people think about their internal accounting systems, where something like turnkey might actually be better. So in one respect, you can set up a wallet with just a few clicks of a button. You don't really need a long seed phrase. You can just use your email. You can have sort of a compliance system around these embedded wallets that differs from maybe what something like a meta mask wallet looks like second you can also start to set internal spend limits and create this additional policy layer on engine on top of like, how do people spend in certain ways? How do we think about who within an organization has access to certain types of assets? Can we create spend limits? Can we create sort of checks around before somebody goes and makes, like, a million dollar purchase on something? And turnkey is just a way to do that with a lot more efficiency on top of these new money rails.
Andrew Van Anken 11:33
That's interesting. So it's almost like because obviously, you know, I was trying to spend $1,000 this weekend on my corporate card, Anthony to buy some Dom Perignon, but I was rejected for some reason, which is very upsetting. But it's almost like this is a different audience completely, where turnkey, almost kind of like unlocks, almost like sometimes, like a business account, where you can only have it settle for certain things at certain times and really have guardrails on it, versus like a wallet where you can literally do anything and everything.
Alana Levin 12:00
That's such a good way of putting it. I think of turnkey as really market expansionary for this set of crypto assets that can exist where many of turnkey's early customers are very crypto native trading terminals, like axiom prediction markets, like poly market, and so they're they're really embedded in many of the leading crypto native products. But that has battle tested and hardened the infrastructure to enable them to also go and win major deals with traditional payment processing companies or fintechs that then maybe they start out just using stable coins, and over time they want to incorporate other types of digital assets, but it's really market expansionary, and part of how we get from 300 billion In sable coins today to 3 trillion in stable coins? Yeah, no,
Andrew Van Anken 12:43
I would love to get to 300 trillion, Anthony. I would just retire to a beach. I thought of you Anthony when I saw this slide. So we're looking at a slide now on the number of transactions that blockade has processed. And first of all, I'd love to hear you know about the blockade story and the founder is there, but it seems to me now that since a stable coin can do anything, people like me now have just so many areas in which can go wrong with stable coins. In terms of fraud, it's not just now, like fraud prevention, like, oh, did someone steal my credit card? It's just so much more than that. So I'd love to hear your thoughts on how security comes into this picture of really like expanding the stable coin market. And would love to hear about the blockade team and story.
Alana Levin 13:29
The blockade team is incredible. The founders, Ito and Roz, are some of the most forward thinking, sophisticated security actors in the space that I have ever met. They were leading researchers in the IDF. They won the IDFs top cyber security prize, and so they are just like absolute geniuses. I can never say enough good things about this team, in part because, like, one of the things that matters is we think about growing the size of the pie and growing the overall market for crypto and for stable coins. You need people to feel secure transacting. They need to know that they're not clicking on something that they don't intend to clicking on a scam, or accidentally sending funds to somewhere that they can't recover it from. And so blockade is really the critical piece of infrastructure that unlocks this larger market that gets us to many trillions in stable coins. Specifically within the world of stable coins, they cover a couple of different parts of the stack. So one of the key things is sort of fraud and compliance engines around how you think about transferring stable coins, and I'll go into that in a sec. But one of the other things that blockade really does, that I think is important, is anyone at the issuance layer, when you think about how many stable coins to issue, how are you making sure that they're ending up in sort of compliant wallets or compliant places. Blockade is a policy and security engine around that I don't know if you guys remember, like a couple of months ago, I think PayPal accidentally minted like several trillion pui USD. That is actually a really big deal, if something like that happens and it affects the way that people are transacting and updating their accounting ledgers. So blockade can prevent something like that from happening. At its core, block aid does smart contract scanning and is a whole security engine that sees into the operations of an organization, and is a preventative measure to make sure that mistakes like that don't happen and that bad actors can't manipulate the system.
Andrew Van Anken 15:17
Anthony, if you were at PayPal and your job at Venmo was, not only do you have to prevent card fraud, but you have to prevent every single financial transaction fraud. Would you have still taken the job? This is crazy, right? Because Lockheed needs to do so many things,
Anthony Yim 15:31
yeah, since fraud detection is such like a under the hood, you know, you never really think about it when you make a Venmo payment, or when you make a PayPal payment or Cash App payment. I think people don't understand the degree to which stable coins now really enables fraud and theft, not necessarily fraud, because where the thing that they teach in computer security class is that, like with the internet, maybe not literally, but like, every hacker is your neighbor, right? Like you have a direct access to everyone's computer because of the internet. And so you have the same analogy with stable coins in the blockchain now, where it's like, literally, you're connected maybe one to two hops away from every most sophisticated financial theft and fraudster in the world. And so it's a massive problem, and you can't just tack on a solution, as I mentioned earlier in the podcast, at least for existing payment systems. I was heavily involved in venmo's Anti fraud systems. When we were we had to retrain the whole neural network to account for this like new use case, because in the future, payments that are done by computers and bots will now not just be exclusively fraudsters, but also real users, right? And so how do you differentiate the two? Who knows? So you have to look at like on chain and off chain signal. Signals to power machine learning algorithm. And that's a lot of work it takes, you know, many training cycles. It takes a lot of label data sets. It takes just like, lots of mistakes, honestly, initially, before you can train an algorithm to have a high true positive rate, I would say, like, my biggest annoyance with agentic payments conversation now is, like, how little the stuff is talked about, and we're all just excited about X 402, and like, x4 two is cool, but like, it doesn't actually solve the how do we get to three or $30 trillion of stable coin supply in the next 10 years?
Alana Levin 17:17
When you think about what are the factors that go into fraud today, the inputs are often largely around typical spend that a consumer or a user does. So is there sort of a purchase that is out of the norm? Are they transacting in a geography that they don't normally transact in? So if you live in New York City and all of a sudden you're transacting in Australia, that might flag something in the system, especially if you're at the same time still transacting in New York, they may say, hey, somebody has access to your information or your credit card that maybe they shouldn't. When you think about how that translates to the world of on chain, much of that existing fraud infrastructure breaks down in that you don't know the location of who's transacting or where they're transacting, there's not that same layer of identity. You can maybe start to look at things like, what is the typical spend size, but because the set of things that people do with their wallets and the ways in which they transact on chain are so varied, like somebody could be using the same wallet to make a trade on hyper liquid that they are also sending their friend money for dinner, you don't have that same set of signals. One of the things that blockade is incredible at, and I think one of the reasons they're such an important piece in building out this new fraud and compliance infrastructure around stable coins, is they have this incredible clustering system where they can identify the flow of funds through different bad actors in crypto, they can see what wallets are typically interacting with each other. They have some wallets labeled so like, for instance, if there is a major merchant, they know what the wallets are, and they can start to incorporate that into the system. So if it is like a hub within the cluster, they may be able to say, like, that's actually okay, because we know this is like Shopify, and they should be receiving and sending a lot of payments. But this other cluster that we've identified, which is largely how they do security analysis today, may actually be a bad actor, and we want to double click into like, what's going on there. We want to send some signals to the user and say, like, Hey, are you sure that this is what you're intending to do? And so that's one of the reasons why I think, when you think about re architecting this fraud and compliance infrastructure around what identity and data looks like in the world of stable coin payments blocking is such an important component to that.
Andrew Van Anken 19:30
Yeah. So it's like, even though we have tons of blockchain data and everything is on chain, old like, fraud models won't work at all. So we can't just take the work. I mean, we could take some of the work, I guess that you did, Anthony. I don't want to throw all of your work aside, but it's almost like we have to start from scratch, almost like we have all this data, but we have to not only start from scratch, but like, expand the types of fraud by 10x or so
Alana Levin 19:52
exactly, and then in the world of sort of agentic payments. Just to touch on the last thing that Anthony had said, when you think about. About the flow of an agentic payment. So, like, something that I am really excited about, that I hope that X 402, enables is, say I am tracking my macros, and I'm using my fitness pal, and then I also want to order food for dinner on Uber Eats. If I have an agent that I say, like, Hey, look at my existing macros for the day or my remaining macros, and then go order me dinner on Uber Eats. The agent, maybe it pays a few cents to My Fitness Pal to access the data, incorporates that and then goes and orders me something on Uber Eats. There's a ton of payments that are involved in that. When you think about that agent, though interacting with the different websites needs to make sure that the website isn't malicious or a scam. Blockade has that as a core part of their screening technology. Today, the website needs to be able to say, like, hey, we actually recognize this payment and we know that it's not coming from like a non state actor, we can feel comfortable accepting this payment blockade has transaction scanning technology and sort of identification systems for that. And then you start to think about the whole flow like there's just so many more pieces that you can start to build out. Very much to Anthony's point,
Andrew Van Anken 21:12
yeah, no, that makes a lot of sense. Morpho obviously has seen crazy growth in the past year or so, and one of the ways that, obviously, you talked about tokenized deposits moving on chain is, like, really going to be this catalyst for going to these, you know, trillions of dollars here we're looking at is, you know, total deposits in Morpho pool. And you really like see it accelerate after Coinbase launches, direct integration, while it may have dipped a little bit. It's almost now up more than 50% since, you know, Coinbase integrated it. I'm curious first, like, would love to get just a general overview of Morpho, but then are these centralized players going to play an increasing role in really driving this forward? Or how do these centralized exchange players, you know, push this forward to where, like, anyone can really access Morpho.
Alana Levin 22:03
So putting this in context of the broader theme in the deck, which frames cryptos growth as a story of three compounding S curves, asset creation, asset accumulation and asset utilization, I think something like lending protocols, which Morpho is the leading lending protocol within the crypto ecosystem in terms of net new adoption, that really speaks to the utilization S curve for stable coins. So we've had all of these stable coins that have been created. There are many new issuers emerging on the market today. That's the creation S curve. Something like turnkey and something like blockade are helping with the accumulation S curve, making it easier for people to get stable coins in the hands of anyone, anywhere in the world and feel comfortable and save transacting with them. Third S curve is utilization. We're seeing some utilization on the payments front, which is really exciting, but really one of the major second order effects of all these stable coins being created and adopted is utility within markets. Something like Morpho is an incredible example of a project and protocol that has benefited from the growth in stable coins. As more people hold stable coins, just as the equivalent of dollar deposits, they want to put them to work. They want to earn a little bit of extra yield by supplying them in a lending protocol and letting people borrow against those assets. So instead of just having it sitting in a bank account, earning like a fraction of a percent of interest annually on Morpho you can earn like six to 7% yield in a very safe and sort of low risk manner, which is really exciting when you also think about what are the ways in which people want to put those even more to work. You can borrowing stable coins. And there's some interesting slides in the deck that suggest here are the ways in which people are thinking about stable coins, similar to, almost like home mortgages and access to more sort of market rates around interest mechanisms. I think one of the big things that has catalyzed MorphOS growth beyond just the fact that they are so sort of in tune to the stable coin growth and stable coin tailwinds is they've really targeted distribution through centralized exchanges and incumbent fintechs. A major theme of the report is that many of the new ways to create and utilize assets will be built on chain and sort of pioneered on chain, but then distributed through existing front ends, like Coinbase is a great example, Robinhood, Sofi, society general, like many, many more, and that is where Morpho is focused on growth. How do we meet users where they are with their existing dollar deposits? If we anticipate that those dollar deposits are going to convert into stable coins in the future, Morpho wants to be there and ready to help people put those assets to work, and I think that's really incredible.
Andrew Van Anken 24:43
So these like protocols should really be figuring out either like get distribution or reduce friction by partnering with centralized exchanges Robin Hood, or like going the almost like the turnkey route, or like having a very easy to set up wallet where you can log in you have to manage a seed phrase. Yeah, and so that you can really just get distribution as quick as possible, to grow as fast as possible, totally.
Alana Levin 25:05
I think you could very much envision a stack where it is turnkey and blockade enabling a centralized front end to do something like borrow and lend on Morpho, where turnkey lets you connect to the protocol and creates a safe place for you to then deposit your funds. Blockade can make sure that you're not depositing into a pool with any sort of exploit or vulnerability. They can also make sure that our user is actually intending to, like, borrow or lend against their assets, in that it just creates, like, another sort of security and compliance check. And then the centralized front end just taps into Morpho once it has that other infrastructure in place. So it's really like a holistic, I think it's part of how we get stable coins from 300 billion to three or 30 trillion.
Andrew Van Anken 25:49
Yeah, the last slide I wanted to show here is the cost to borrow dollars. Now, with these decentralized markets like Ave and Morpho, you highlighted here that the cost to borrow is actually like below the 30 year mortgage rate in the United States of 7.5% I'm curious, like, how you see this like, uncollateralized versus collateralized lending approach take into effect because, like, obviously, like, Ave USCC, Morpho, like, you have to, like, post collateral to take out stable coins. I'm curious, how do you see this evolving? Do you think, like in the future, people will be able to easily take out less collateralized loans or under collateralized loans? Or how do you kind of see this evolving in the future?
Alana Levin 26:30
The set of ways to borrow against your assets is certainly a spectrum, and the slide shows the rates on something like Marco versus the 30 year mortgage rates. Those exist on opposite ends of the spectrum, where something like a 30 year mortgage, you can get a loan for a relatively high interest rate, but you don't have to post that much collateral. So it's to your point. Andrew under collateralized something like Morpho, if you want to take out a million dollar loan, you can oftentimes get a better rate than the 30 year mortgage, but the prerequisite is that you have more than a million dollars worth of collateral to post. I think that something like Morpho is really incredible for people who already hold crypto assets and have a lot of their wealth on chain and are willing to put that to work in order to sort of borrow against those the thing that actually inspired this slide was I have a friend who holds a decent amount of crypto and he's developing real estate in California. So what he does in order to help finance his build out of homes is he is very bullish on crypto and sort of a long term believer. So he doesn't want to sell his assets in order to create liquidity to go buy the homes. He posts collateral to something like more fun and borrows against it to go finance the home. Turns the homes into cash flow generating assets, and then repays his quote, unquote mortgage on Morpho, which I think is really incredible. But of course, like the prerequisite is that you hold, like, a lot of crypto in the middle of this spectrum. So 30 year mortgages on one end, Morpho on the other end is a whole host of things that you can mix and match. And so I very much anticipate a world in which we will see lending protocols start to incorporate things like off chain credit ratings. Maybe some specific pools will require KYC, and that is a choice that a protocol can make, and the way that they tap into crypto is just like permissionless liquidity from anywhere in the world. It is a step function better than what exists today off chain, anyone in the world can still provide liquidity. It's just the question is, like, Are they comfortable? Ky seeing, you can start to envision things like insurance playing a role as well, against somebody that is like borrowing against a volatile asset. One of the great things about Morpho is that they, again, are this leading lending protocol in terms of generating a lot of adoption, but they're also a model. Also a modular protocol, and so by utilizing crypto, they have turned a product into a platform, and we see a really impressive emergent developer ecosystem building on top of Morpho trying to bring like fixed rate lending infrastructure to the market, or some of these other under collateralized or unsecured lending structures as well. And so long winded way of saying, Andrew, to your point, I think you're totally spot on that the way that lending exists today on chain is not the steady state of what it'll look like in the future. There's still a lot of room for startup opportunities to come in and like, bring new types of user credit systems, especially as we start to think about many more people and many more types of institutions coming on chain, the full set of preferences that they'll have.
Andrew Van Anken 29:27
Do you think the lending surface area expands like, do you think that Morpho will accept, like, land or gold, or because it seems like now we're headed to this area where, like we've talked about like everything will become tokenized, and that you could lend against everything tokenized. Do you see a world in which just just gets crazy, where people can just lend against anything?
Alana Levin 29:45
I wouldn't use the term crazy. I think exciting in that today, high net worth individuals have access to some of these services where somebody may borrow against, like, a really expensive piece of art that they own, and that is. Is a very narrow market, and it's only accessible to a certain set of people within society. The question is, for any asset that somebody owns, if it is transparent, composable and sort of accessible, how do you price the risk of borrowing against that? How do you think about the future value? I would almost flip the question on its head and say, like, why shouldn't you be able to borrow? Be able to borrow against more than just, like, dollar deposits? When you think about taking a mortgage on a home, you're basically borrowing against the home itself. And so when I start to think about what that looks like on chain, of course there should be the ability to borrow against many different types of tokenized assets. And then the question just becomes, how do you price that risk, and how do you manage the risk? And there's, there's a whole ecosystem of emergent risk managers that I think are really interesting businesses.
Andrew Van Anken 30:49
So you're saying lending against Pokemon cards is not in the next year or so?
Alana Levin 30:53
Well, it's a really interesting question. You might not want to borrow against your Pokemon cards for buying a home, but who knows, maybe somebody wants to finance their like Chipotle burrito purchase with a loan against their Pokemon card, and that is like a nice coincidence of wants. That's probably not where we're headed. I think there's bigger opportunities to tackle. But, you know, one of the great things about crypto is that if somebody feels really passionate about that, they can build that.
Andrew Van Anken 31:17
That's true. I mean, PSA 10 charizards, you know, are do go for quite a bit amount of money. My last question, Alana, since obviously you work at a venture capital fund, and where are you excited and where are you looking for founders to pitch new opportunities to what areas in the stable Coin World?
Alana Levin 31:32
So the way that I think about what's most interesting in Siebel coins is Siebel coin enabled markets are really interesting to me. There's many opportunities to improve the existing way that stable coins get transacted today, from private transactions to new types of credit systems to loyalty and rewards programs. My guess is that many of those actually turn into features adopted or pioneered by some of the incumbent payment service providers. The opportunity for startups is create new markets that take advantage of these being super liquid, super composable assets. Couple examples of where this may be interesting is you could imagine non USC stable coins creating issuance around something like a Mexican peso, tokenizing that, and then building an on chain foreign exchange market that helps facilitate cross border payments. In that way, you could imagine stable coin orchestrators that help make it feel like one stable coin is composable with another to a user. It should just feel like you're transacting with US dollars. But under the hood, there are ways that these stable coins are actually a little non fungible, in that the reserves or the compliance policies, or even minting and redeeming may differ, there's a whole sort of market infrastructure and different set of exchanges that you can build to make sure that, like, one sable coin feels like another to the user, I would say, like those are probably the two pockets and then all the second order effects that come so something Like Morpho is a great example of a protocol that has benefited significantly from stable coins. What are the other ones that are now uniquely well suited to grow or uniquely well suited to be able to be built? Because stable coins exist, I think it's a good open question. I've got some ideas, but if you have any, please, please reach out to me, because I love jamming on this stuff,
Andrew Van Anken 33:20
Pokemon cards. That's it. You heard it from Alana, maybe stable coined back to Pokemon cards.
Anthony Yim 33:26
Ana, last question for you. We almost met nearly four years ago and started talking about crypto, and a lot has happened since then. That was like March of 2022,
Andrew Van Anken 33:35
what did a lot has happened. I don't think anything has happened. What are you
Anthony Yim 33:39
talking about? Notwithstanding, we had a bit of our capital in some little bank called Silicon Valley Bank. Luckily, we got everything back, but but to hear some like reflections you had since we first met. Where do I start? What are you both surprised about?
Alana Levin 33:54
I think that many people view crypto as this very cyclical industry, very speculative. Price goes up, price goes down. There are these major boom and bust cycles. And really what I tried to do with the report was say, like, hey, there's actually a method to the madness how the underlying technology has progressed over time. And so the price does go up and down. No one's sort of immune to paying attention to that. But there is a steady trend of ways that we can sort of underrate, like, what's coming next in the future. The perspective that I take in the report is I think we still have some room to run in the asset creation S curve, and we have a lot of things left to tokenize when you think about putting all of the world's value on chain and sort of what that means, but where there's even more room to run is accumulation of these assets and then ways to put them to work. Crypto is the most composable, open for experimentation asset class that has really ever existed. It is the first internet native money that we've ever had. And so, of course, there should be new ways to experiment with different parts of the asset life cycle. The thing that has surprised me the most is probably. How fast the industry has recovered, and I think it speaks to the resiliency of the builders and many of the real sort of underlying fundamental technological progressions that do exist. I wouldn't be here if I didn't think crypto was a really productive force for the world and really truly making people's lives better. We don't always see that. If we're in the United States, where it's very easy to pay with a credit card and get access to the bank account. There are many people around the world that rely on crypto for many meaningful parts of their life. FTX was three years ago the industry. When you think about the chairman of the SEC, Chairman Atkins, coming out in July of this year and saying, like, we're launching project crypto, we're going to figure out a way to make the US the home of digital asset innovation and tokenization. That, to me, is really impressive, because I think any other industry in the world you could look at and say, if something like FTX happened, it'd be over, like it'd be done. And in the grand scheme of things, it didn't take that long for crypto to recover. And that, to me, is really exciting, and it just speaks to like, the fact that there is a real global innovative force behind this industry, so probably an optimistic take on the set of things that surprised me when I joined I also wasn't expecting FTX to collapse, so that was a surprise too. So you can sort of take it both ways. My hope is that we don't get anything like that in the future, and that the set of use cases in general that people are using crypto for continues to expand and grow in ways that we can predict, and then hopefully some ways that surprise us, in good ways as well.
Andrew Van Anken 36:27
I love the awesomeness. Um, I really do. It's a fun time to be in crypto, especially with stable coins taking off, and we're happy to have this podcast. Well, thanks so much for joining us. Alana, where can people find more about you?
Alana Levin 36:39
You can find the full report in my pinned tweet on Twitter. Alana D Levin, you can also find the full report on the variant website, variant dot fund. And then I write a blog that covers some of these topics, and then just some other topics in crypto as well. At back of the envelope, dot XYZ, oh, that's a good one.
Andrew Van Anken 36:57
That's a good one. And then, Anthony, where can people find more about you
Anthony Yim 37:00
at Anthony Yim, my full name on X or formerly Twitter, and obviously you can find Artemis at Artemis.
Andrew Van Anken 37:07
Thank you very much, everyone. And if you haven't already, please subscribe to tokenize on Apple, Spotify or wherever. Podcast. Finally, if you enjoy this and want more, leave us a review. Illegit helps us other. Find The Show. Stay stable, everyone.