We'll get started in a few minutes, everybody.
27PTSD, good to see you as well.
We're going to get started in a few minutes.
We're just waiting for our guests.
And then we'll get everyone on stage and we'll start this amazing conversation.
Looking forward to this discussion.
For everyone trickling in here, we're just going to get everyone on stage here and get everything set up and kick it off shortly.
Thank you for joining us.
And I am going to pin a tweet if anybody has questions and we can get to them at the end.
Good to see people trickling in.
Good to see people trickling in.
Good to see people trickling in.
Thank you for joining us.
Absolute pleasure to be here.
How are you doing this morning, Jackson?
Well, I guess it's barely afternoon now, but how are you doing?
And I think we've got everyone up on stage, Alec.
Thank you, everyone, for joining.
We've got a really exciting space for you today.
We've got myself, Alec Beckman, as your host.
Co-hosting is Jackson Blau and Noah Pollack, as always, from the Infineo team.
We also have our own chief economist, Robert Murphy.
For the real stars of the show are going to be Rob Montgomery, who's the CEO of Revest Finance.
And they are bridging the gap between traditional and digital assets through the offering of on-chain yield factoring facilitated with financial NFTs.
As well as Peter Gaffney, who is the head of research at Security Token Group, who is providing comprehensive tokenization research and advisory solutions to the greater capital markets, including clients and prospects in the asset management, private equity, private credit, commercial banking, ETF, and mutual funds and infrastructure segments.
So thanks for joining us, everyone.
Today, we're going to be really speaking about real-world assets, specifically collateralization and liquidity, and also institutions.
So we'll start with Rob from Revest.
Rob, do you want to make a quick introduction about yourself and Revest?
I'm the founder and CEO of Revest.
I got into this space way back in 2012, bought my first Bitcoin in 2013, and finally went professional.
In 2021, when I dropped out of my doctorate in nanothermal engineering to go into crypto and digital assets full-time.
I've been building Revest for quite a while with my team.
And where we have ended up, after building an awful lot of things that kind of form the substrate of what we do, is we've realized that there is a large gap in the world of asset management for tokenized digital assets.
What we see in the space right now, it's very risk-on, it's very degen, but there's an awful lot of people out there who would like to be able to get exposure to crypto and digital assets without the possibility of seeing all their money go to zero at the drop of a hat.
So with Resonate, that sort of high-risk, low-risk structure, which is a terrible oxymoron, I'll get into what we actually do a little bit down the line, that's what we've been building.
We basically built a system where you can borrow against the future yield on your U.S. treasuries, and then you can take that borrowed yield, deploy it anywhere in crypto or DeFi, take out your 100x levered perp on Bitcoin, and best case, you quadruple, quintuple your returns on treasuries.
Worst case, you lose your interest and get your principal back at the end of whatever duration your treasury has on it.
So we're working with an awful lot of tokenizers to make this a reality, and we should have some interesting news later in the day.
Not sure I can talk about it just yet, but some very interesting goings-on.
Perfect. And then I'll turn it over to Peter Gaffney to give a quick intro to him and Security Token Group.
Yeah. Hey, everybody. Alec, thanks for the invite, and host, and Rob, good to connect with you here.
Great intro, and great to hear a bit about Revest.
Peter Gaffney, head of research at Security Token Advisors and Security Token Group more broadly, one of the original advisory consulting and research firms in the space.
And we've kind of built up the research desk kind of as an industry agnostic and capital markets agnostic research player in the broader tokenization space.
And so a lot of our clients on the advisory side, I think, to date, somewhere between 40 and 50 total are really on the real estate side, on kind of fine art, carbon credits, and ESG products.
But the last, you know, let's call it 2023 as a whole, way more institutional focus on the asset management, the private credit, private equity side.
And then even on kind of the public side with ETFs and fixed income products that are coming to market.
And so a lot of players will kind of use us as either white label research teams, general consulting and advisory firms, and different players kind of on the branding side.
And so we work with all the different service providers.
Rob, I'm sure there's a way we can work with your platform.
And if you're looking for different issuers, a kind of integration, connectivity, we'll definitely chat about that.
But really just kind of bridging the gap between a lot of the different siloed solutions, the distribution channels, where the actual buyers of demand are, and kind of, you know, looking at different issuers and asset classes and how they really apply on the retail and institutional levels.
Perfect. And then a man who needs no introduction, but I'll turn it quickly over to Bob Murphy.
For those of you who don't know him, he's our chief economist.
So Bob, do you want to give a quick intro about yourself?
Sure. Yeah. I was a college professor working in the Austrian economics tradition.
Then I got into working with Whole Life Insurance and helped develop a training program to teach financial professionals how to use life insurance for cash management purposes.
And then Cole Snell, the founder of Infineo, recruited me to say, hey, we're taking what you're doing with Whole Life Insurance and putting it on the blockchain.
And that's what we're doing at Infineo.
So this conversation we're having today is right up the alley of exactly what we're doing here at Infineo, too.
Hey, Rob, I had a question for you regarding Revest and Resonate.
But I kind of let it, you know, pan out to begin.
And I was wondering your take on the whole real-world asset sector right now, kind of less so in terms of the, I guess, real-world assets and more in the, you know, the price actions that have in all these real-world asset tokens.
I know a lot of them are kind of nonsense.
If you don't mind talking about kind of your opinion on the sector in general and also the current price action on the tokens.
I think the sector is, so, I would say that it's fairly nascent, but has a lot of promise.
I think that expectation and that understanding is what is driving that price action.
That awareness that groups like BlackRock and JP Morgan are now eyeing ways to move capital into the blockchain.
That awareness that we are finally seeing the financial infrastructure coming to fruition that is really needed to actually effectively tokenize assets.
That's the absolute Cambrian explosion of tokenizers that we're seeing.
And, I mean, as someone who works with tokenizers, I see an awful lot of tokenizers springing into existence.
And they all have different methodologies they're using to tokenize the assets.
They all have slightly different approaches to what segments they're targeting.
So, to me, just talking about the recent, you know, where the sector is right now, I think it's very early.
There's a lot of people who can tokenize assets now.
But there's not a lot of things to do with those tokenized assets, which is where we're trying to come in.
Where we're able to, you know, offer our services on collateralizing the future interest on those assets and let you borrow against it.
Overall, I've seen a few money markets.
I've seen a few marketplaces springing up.
Mostly what I've seen is people who do the tokenization, which is, of course, a necessary first step.
And an absolutely huge development for the sector.
In terms of where this current crop will grow, I think a lot of them are probably going to end up having a sub-ideal tokenization methodology.
I don't think we're going to have, we might have one explosion, but most of them, it just won't be an ideal fit.
The ones that I think have the best fit are still pretty early in their development cycles or their release cycles and haven't become widely known quite yet.
But once they do, I think that they're going to capture large shares of the market and then you'll have your defined tokenizers.
Now, who those guys are mostly servicing right now is, of course, going to be your family offices, your crypto-native hedge funds.
So far, we're not actually seeing a huge glut of institutional capital entering the space.
We have seen that beginning with the work on Avalanche lately, where we saw JP Morgan sending tokenized capital around AVAX.
I myself, a few weeks back, ran into some BlackRock representatives.
And when I asked them what they were doing at a conference, they responded that they were interested in putting a few trillion dollars on chain.
And that was quite a surreal moment.
But in terms of the overall sector, it's very early.
A lot of the tokens out there will not perform in the long run.
A lot of them are, you know, shots in the dark, half-baked ideas.
But there is a decent cluster of stuff that's been very quietly building during the spare market and is about to come out absolutely swinging.
Well, in my opinion, if it has a long-standing token, I, of course, am the exception of this.
But if it has a long-standing token or if it's a brand-new token, right now, the best RWA products I'm aware of don't have a token.
Except for me, of course.
Yeah, that's definitely something I was curious.
That's something I've noticed.
A lot of the products don't have a token.
Peter, I was wondering your take on the kind of the sector as a whole and if you could dive a little bit more into kind of possible utility for the RWA tokens.
Because, like we just said, a lot of the projects don't have a token.
I was wondering if you see a need for utility in a real-world asset token.
Yeah, I tend to agree with the last point Rob just mentioned around a lot of the quality ones don't have tokens right now.
In my opinion, I don't see a lot of reason to have a utility token.
Like I see kind of these overnight RWA protocols, let's say.
Now there's another utility token to buy to interact with the protocol.
A lot of that, in my opinion, is unnecessary.
You already got big chains with established communities and networks that are integrating with a bunch of different transfer agents and broker-dealers and alternative trading systems or different regulated marketplaces globally.
And that's really where the institutions are going to play.
I think a lot of the DAOs and even Web3 VC companies are looking at more utility token-based products in the RWA space.
But when you're talking about, like BlackRock was mentioned before, when you're looking at Blackstone, when you're looking at major asset managers, everything they're doing has to be kosher to the very end.
So, you know, a lot of what we look at is really on the compliance side.
And a lot of these products on the RWA side may not need to be issued as securities if they're like raw NFT-based loans and individual products.
But the vast majority that are going to come on from the institutions are going to be done with regulated brokers and, you know, licensed entities.
So, to that point, I really see the existing landscape kind of being dominated by, like, Providence blockchain, by Avalanche is doing a great job, Polygon and different layer twos.
Base has no token right now, and they obviously have insane distribution capabilities, which is really the number one need right now in the market.
Like, there's no shortage of people who want to put assets on chain.
There's definitely a shortage of, okay, where are the actual buyers so that I can fill my $10 million bond, you know?
So, I kind of look at groups that have distribution first and then work backwards from there.
I think that makes a lot of sense, Peter.
And that actually kind of sets me up to ask another question that I'm really interested to talk about in terms of tokenization of real-world assets.
Just looking through your Q3 report, 2023 most recent report, for anyone that hasn't read that, I highly advise that you do.
It has all the latest that's going on with institutions and real-world asset tokenization.
And in that report, you note that the tokenization of Treasury specifically has almost creeped up to a billion dollars.
And I just know that's a really interesting topic for Revest as well.
But I wanted to just talk about the main use cases you're seeing for tokenizing assets right now,
and whether you like them or you think that there's room for improvement on them.
Yeah, I think the money markets and treasuries is a great Trojan horse.
I think I look at it really from a portfolio construction standpoint.
Like, the industry kind of started looking at alternatives like real estate, private equity, pre-IPO shares and whatnot.
That's the ambition, you know, for everyone to be able to invest in these alternative products that you're not really finding in traditional channels.
But the reality is a lot of those are, you know, kind of siloed off solutions and really one-off products.
Instead of finding, let's call it programmed buyers or kind of repetitive recurring buys.
Whereas when you look at it, you know, the end vision is to have an end-to-end, not to use the word end too many times,
but an end-to-end digital interface is what you're looking for.
And you can only solve for that so much by, you know, accepting ACH or wires or cash transfers.
So I see a lot of these asset managers and even service providers themselves becoming an issuer, offering a money market fund.
That allows users to, let's say, convert cash or convert stable coin into this money market.
And the way I see it, as soon as you're in that money market or treasury fund, you're on-chain, you're in their digital system.
And now there's new alternative offerings in, like, the real estate side, the PE side, private credit, whatever.
As things become more available and become more progressive, now you can easily kind of rotate from yield generating money markets, treasuries,
and equivalent, you know, fund products into these alternatives.
And that's really where you'll start to see more precise portfolio management, which is what I think a big value of tokenization is.
Because it's great to see even, you know, a lot of the products that are issued with, like, Securitize and with different companies that are broker-dealers are still limited to qualified purchasers,
which leaves the vast, vast majority of individuals out of the picture.
But the real thing to look at is, like, if I have a private credit product with Hamilton Lane, I think the minimum buy-in is, like, $20,000 on Securitize.
Alternatively, the minimum buy-in is $2 million traditionally.
So even if I'm a QP with just $5 to $10 million, like, I can't justify putting a fifth or more of my capital into one product.
So, okay, I can look at the tokenized version.
Maybe I'll throw even $100,000.
Maybe I want to reallocate and hit certain targets for my clients that only need maybe half a million dollars.
So that's the perfect use case for them.
And then eventually as things may become listed on ATSs or retail-enabled marketplaces based on disclosures and legal filings,
because at the end of the day we still have to obviously go through that channel, then retail will get their shot.
And I think what we'll do is we'll turn the same question over to Rob,
and then we're going to invite Sean Risto from Figure to hop up and give his thoughts as well.
So in terms of where I see the tokenized treasury markets going, how I see them, and that is the question, right?
I'm going to assume that's the question.
So right now, the most interesting thing I see in the tokenized treasury sector is what I'm pursuing.
And what I'm pursuing is a new form of treasury management, a safer form of treasury management.
I've seen an awful lot of people make the mistake of holding their treasuries in ETH,
and I've seen an awful lot of crypto-adjacent firms holding their treasuries in U.S. treasuries, off-chain.
While I know that there is a middle ground between those two, because one is they're not taking on any exposure to digital assets.
The other has way too much exposure to digital assets.
And so my angle falls right in the middle, where you take the component of a yield-bearing asset, in this case a U.S. treasury,
and that treasury has several benefits that a stablecoin farm, for instance, would not have.
That treasury is KYC-a-milled.
That treasury is held off-chain, which basically eliminates, for all intents and purposes, the risk associated with smart contract risk.
And then you also do not need to worry about something like custody, because the treasury is also, in most of the solutions that I've seen,
being properly custodied in something like BNY-Mellon.
Now, what you can do from there, at least using us, is you can borrow against the future interest on the treasury,
and then go ahead, deploy that into whatever you want, whatever high-risk position you want,
all the same while you now have Bitcoin exposure, but you're still custodially compliant,
and you still are principal protected.
So, we see the treasury market as a sort of way to route people who've been wanting to get into digital assets,
who are holding most of their, you know, balances in U.S. treasuries or cash equivalents.
We see it as a way to route them into digital assets through that principal protected vector.
Now, in the long run, I think that once we have even more advanced tokenization systems,
and right now we've been seeing a lot of people tokenizing money markets,
we're seeing some very early moves into tokenizing the individual duration-matched assets,
which I think is the far more interesting of those two options.
Once we see that really explode into the scene, I think it's going to create a very interesting world
where you have what I think Peter was alluding to, which is retail-facing on-chain money markets.
I may have misinterpreted what he's alluding to, but that's where my head is.
And the way I see it, you have these assets that represent different fixed-income positions,
different outlooks, and in a normal world where you're running money markets,
you actually have a hierarchy that dictates what the composition of a given money market portfolio should look like.
But in a world where tokenization has advanced to a sufficient point, even just starting off with treasuries,
you can actually set up effectively a hunger games of money markets
and have different managers ranked on their performance,
thus allowing someone who might have been at the bottom of the traditional hierarchy
to rise to the top of a leaderboard just by being ever so slightly better at managing a portfolio than others.
So, in my mind, treasuries are both a way that people with institutional capital can step outside of the walled garden
that is the traditional financial world through utilizing borrows on risk-free components of that asset,
and they are ultimately a way that we build the existing financial system
into a more agile, reactive, and data-driven environment over time.
Perfect. And I'll turn it over to Bob really quickly, Dr. Robert Murphy from our team.
You know, hearing what Rob just said about treasuries and more fixed-income-type assets,
can you kind of relate that to what we're doing at Infineo with Whole Life Insurance as a fixed-income alternative?
Sure thing. So, yeah, we even, I have a white paper that we've written up, we just call SoundBeats Bonds,
and, yeah, the specific idea behind that is that we think once, as the space develops more,
that it's going to just be a no-brainer for people who are large institutional money managers
who are sitting on a lot of treasuries, for example, or other comparable fixed-income assets,
that getting tokenized access to a pool of, for example, Whole Life Insurance policies,
where what you're getting access to is the growth and the cash surrender value.
So the underlying asset's extremely safe.
And, you know, similar to what Rob is saying,
that you don't know exactly what the growth is going to be,
but, you know, it's fairly predictable within certain bounds.
And then some of the benefits, just to be real quick,
as to why might you prefer that type of asset rather than just sitting on a bunch of treasuries,
is the huge issue that's very relevant right now is that you don't have interest rate risk, right?
So for a whole life insurance policy, if interest rates go up,
the cash value in your policy doesn't go down,
even though, you know, the carriers themselves are ultimately sort of backstopping those policies
because they've invested in a lot of assets on their books,
many of which include traditional fixed income.
And so from the, you know, end users' point of view, that's one huge advantage.
And then the, you know, we have scenarios where we think the growth rate,
especially in the long run, is much more attractive for whole life rather than treasuries, let's say.
So you sort of get extra return and then a lot of the risks are mitigated.
And I'll just say one last word on that, just because it's interesting how it works out that we realize that life insurance companies,
even though on their asset side, they're holding traditional fixed income.
So you might say, okay, so aren't you just kind of, you know, deferring or spreading,
putting the risk somewhere else?
And are we worried the carrier is going to be in trouble then?
And at the same time, though, the nature of their business, their liabilities are denominated in, you know,
future dollar liabilities as well.
And so from the carrier's point of view, yes, if interest rates spike all of a sudden,
the value of their treasuries and other, you know, commercial paper and whatnot, you know, that can go down.
But at the same time, their liabilities also go down because their liabilities consist of a bunch of people,
you know, that they have to pay death benefits to when they eventually die.
And those are in fixed dollar amounts.
So that's just one way of showing that we think as we explain this to more and more institutional money managers,
it becomes realistic for them to easily get in and out of this as an asset class that, yeah,
they're going to realize, oh, yeah, let me reduce my holding of traditional fixed income
and expand it to this other area that, you know, this company Infineo is providing me.
So that's kind of what we're working on at our end.
So hearing this, and Rob, I want to kick it back to you.
So with the technology that you're building at Revest and Resonate, you know, how do you see,
you know, assets or how do you see going on to different assets that you're working with currently,
you know, whether it's life insurance with what Infineo is working with or, you know,
other assets like real estate or art or different things?
So with Infineo in particular, my primary interest, without a doubt, is in, well, okay.
So from a fixed income, there's two things I'm interested in with Infineo.
The first is fixed income.
The way that they're structured, their products, they are fixed income products.
And they can be used in our system in the same way that a tokenized U.S. treasury can be used.
It has a guaranteed future payment based on the structure of the asset.
And we can allow people to borrow against that future payment to get capital today to go risk on with without risking their principal.
So that is the most basic implementation of things that we have in common.
The one that really, really interests me, though, is the potential for ultimately having these policies have their asset management on chain itself.
So shouldn't Infineo move into that sector and begin to, you know, accrue this, to accept this capital on chain, keep the capital on chain in U.S. treasuries on chain simply because that's the native sector and avoids any costs between moving on and off?
Well, in that case, I'm very interested in the applications of our technology to being able to manage their portfolios, to be able to take whatever treasuries they have, allow them to receive that future interest today, and then go utilize it in various delta exposed positions in ways that they would not otherwise be able to, taking additional profit and then passing the reduction in premiums on their users.
Or just taking additional profit, or just taking additional profit up with them.
Now, in terms of the fixed income sector as a whole, I actually see the next logical leap being municipal bonds from U.S. treasuries.
They're still big ticket items.
They are still quite standardized.
And to me, that seems like the next logical leap.
From there, I think we're just going to see an explosion.
It will have to be NFT-driven, mind you.
That's actually something we worked on very early in the history of Revest, is financial NFT engine that we pioneered.
And the concepts there, you need a non-fungible position to represent a non-fungible fixed income asset.
These assets have different, you know, once you get into real estate, once you get into auto loans, once you get into, you know, even like an MBS.
Or even a basket of them.
It's still something that has, you know, a certain duration and a certain rate that those things are going to be grouped by.
So, we will need to see some additional technological resources come along.
And we may end up building them ourselves.
But to me, I'm definitely very interested in the long run in getting more involved with things like real estate auto loans.
In the shorter run, things like municipal bonds and treasury bonds are definitely more fungible, which makes them easier to work with from an interest perspective.
Just because there's more liquidity on them.
So, then I'll turn it over to Peter again.
And my question to you, Peter, is, you know, what are you seeing in terms of some of the assets that are resonating with more institutional focus groups in this space?
And is there anything you're really excited about from an asset perspective?
Yeah, I think the other segment that's really taken off and taken strong footing this past year is just general asset-backed securities and, like, HELOCs and mortgage assets.
That's something that I think, just based on different yield profiles and, frankly, on regulatory standing, it's tough right now in the U.S. to have fully native or on-chain private funds.
Not everyone yet has that solution, but asset-backed securities and HELOCs can be originated on-chain.
And now you're kind of in that whole end-to-end digital system.
So, to me, that's, like, just a sector that's really caught some steam.
I know figures already hit a billion in Q3 alone in new originations, and I think total they're probably pushing $10 billion.
Definitely a sizable piece of the market, maybe something like 6% or 7%, but that's just me talking.
Like I said, the money market stuff is great as a Trojan horse, but really we're still seeing the end goal is really either these asset managers trying to develop their own infrastructure pieces to go direct to retail,
kind of like what you're seeing with Wisdom Tree Prime and their digital 1940X funds.
Or others just figuring out, you know, what consortium to join and how they can kind of ride along with some of their peers, if you will.
It's kind of funny because you always think these investment banks and asset managers are super competitive,
but in this industry right now, it's definitely more of a collaborative field.
And that can kind of just range from digital bonds to, you know, I mean, real estate portfolios and offerings.
Again, the real tough part isn't the product.
There's no shortage of that.
It's really finding buyers.
And, of course, that comes with the mechanics of investing and finding real risk return profiles,
but also, you know, who can make it most seamless for their investors to onboard and to manage.
And that's where I think there's a little disconnect between kind of the RWA protocols
and what institutions, frankly, need in their controls and their compliance to work with.
Rob, if you wanted to add on.
I had a thought right after you asked what other sectors are you interested in or are you excited about.
I would say another sector that I am personally excited about.
And I'm not going to say, you know, what my long-term plans for it are,
but we obviously are doing, we're obviously doing yield factoring.
We're allowing people to receive their yield up front today.
And we borrowed that term from the factory industry, which is extremely prolific in trade finance.
To me, that sector is absolutely fascinating, both from the perspective of the next developments on-chain,
bridging that real-world on-chain gap, and from the perspective of regulatory considerations.
Because in most circumstances, and just so everyone here is clear,
factoring an invoice is where you have an invoice, say you're a trucker,
and you have delivered a load of goods.
You want to get paid today, not in 30 days, so you sell the invoice to a company for a 1% to 2% discount on it.
That's an extremely high rate of return for the people purchasing the invoices.
But what's most interesting from a regulatory standpoint is that that's not actually considered a security
because it falls outside of the mandate for security, which I believe is 270 days in most circumstances.
But that makes it an industry that is right for disruption by on-chain RWA developments
simply because it doesn't have as much of a regulatory hurdle
as some of these more traditional asset classes like mortgages or auto loans
or even U.S. treasuries do.
Just kind of following up, going to different assets and what we were talking about before, liquidity.
One thing I've noticed with this space and all growing spaces is liquidity issues.
And I was kind of wondering, both Peter and Rob, what your thoughts were on the future of kind of omni-chain lending
and different assets in the real-world asset space.
I know right now the few omni-chain protocols out there aren't being really used that much.
But, you know, I think everyone agrees we're not going to be in an only EVM future.
There's going to be lots of chains doing lots of different things.
And I was wondering what your thoughts were on those chains communicating
and especially in, like, treasuries, for instance, what your thoughts are on that?
Yeah, I think it's a great question.
And agreed, it's got to be a multi-chain future, not just EVM-compatible chains,
but kind of across the board.
And there's multiple avenues to liquidity.
And obviously, collateralization is definitely something extremely interesting to a lot of clients
and to a lot of prospects that are issuing this stuff.
You know, I mean, the whole idea of tokenization is to make things more actionable,
whether you have illiquid assets or assets that are kind of the future in the trade finance side,
like Rob mentioned, you want to make them more actionable as you can.
And the more velocity with assets, I think the more different strategies that managers
and players in the buy and the sell side can kind of control or kind of create and work with,
which, of course, is the name of the game,
as things get more and more commoditized in the financial services side.
In terms of execution and what we've actually seen happening,
there may be more happening on the retail side than I'm aware of,
but really the institutional side is everything's going to be kind of cut off from retail.
Like, think of Avalanche and their subnets or Providence and their zones.
That's kind of how they brought the deal together, both those blockchain foundations
with like Apollo and JPM and WisdomTree recently, a couple or three weeks ago.
There's going to be really a siloed between retail and institutional until the tech
and the compliance especially is locked and loaded.
And even at that point, a lot of the institutional collateralization or liquidity promises
that we hear are really going to be new controls kind of for the portfolio management team,
whether it's asset management or wealth management groups or even private banking clients.
But really, that's kind of what I focus on lately.
So I can't speak very much on the retail side.
So I will split hairs a little bit on the EVM component.
I actually have a strong view that it will be EVM chains that become dominant,
like Avalanche, for instance, or anything built off of Ether, Ethereum mainnet,
My original role in my company was both CEO and developer.
And I'm quite familiar with development.
Once a language has become dominant in a sector, it is impossible to supplant it.
Other languages can spring up and grab market share.
But solidity has taken over the Web3 sector.
If you, as a new developer, want to get into programming in digital assets, you will learn solidity.
The same way that you, as a web developer, your first language will undoubtedly be JavaScript,
just because there are a ton of jobs that will pay you money for knowing JavaScript,
and there are not as many jobs that will pay you for knowing Python.
Same holds true for solidity.
Chains that have their own esoteric languages,
unless they figure out a way to transpile solidity to that language,
they are going to have trouble getting that widespread adoption,
just because most developers are relatively lazy
and only really want to learn one or two languages for a sector rather than, you know, three to five.
And the ones that learn three to five,
they want to be compensated significantly more for their effort.
You can find solidity devs at every college across this country,
but you can't necessarily find someone like a Cairo dev,
which is ZK Sync's proprietary language.
So, to me, I think EVM chains do end up on top,
and the chains that don't have EVM,
people like Rust, you know, not Rust, Solana,
which they're a Rust dialect,
that'll probably be a secondary the same way
Pythonic languages are secondary for web development.
But you're always going to have an easier,
cheaper time building a system,
building it in solidity than you will in any other language.
Now, as the liquidity problem,
at least in the small to medium level institutional sector,
and I'm not talking about the big boys like JP Morgan or BlackRock,
I'm talking about the smaller guys,
the family offices, the hedge funds,
the guys who are already here
or looking at this sector kind of greedily,
the people who are in, you know,
the top 200 asset managers on the planet,
but maybe not the top 50.
To me, the way that we go about this
is we build systems that are asymmetric,
and that's how we bootstrap liquidity.
The example I'd give from my own system is Resonate.
We allow you to borrow against only the interest on a position.
If you have a one-year treasury,
that's currently about 5%.
And what that means is that the lender only needs to have,
you know, one-twentieth of what the borrower is bringing.
If the borrower shows up with a billion dollars,
the lender only needs to have 50 million.
A billion dollars is very hard to find liquidity for in this space,
but 50 million, that fits into the current ecosystem.
That fits into what decentralized finance
and the surrounding sectors have built already.
You'll be able to find liquidity on that quite easily.
Now, the interesting component becomes we also issue you a packet,
an FNFT that represents your principle,
your rights to reclaim your principle at a future date and time,
and you can take out a loan on that too.
this basically solves the chicken and egg problem of liquidity,
which is, okay, I want to bring a billion dollars on chain,
but I don't have somebody as a counterparty who has a billion dollars on chain.
Well, bring a billion dollars on chain,
get a counterparty who has 50 million,
and now there's a billion dollars on chain
that is just sitting around waiting for somebody to show up
and do something with it, something for it.
And that cycle that normally is a complete circle,
there's no way to break in.
It now has a beginning point,
and we can start from there and spiral outward
rather than just being stuck with which one do we start with first
and not being able to get either.
Finally, I do think we will see the biggest players in the sector
but I actually think the biggest drivers
are probably going to be those mid-level guys.
when we look at the disruption of industries at a fundamental level,
the biggest players actually rarely survive.
And I'm not saying that that's going to happen,
but it's a fantastic book.
It's called The Innovator's Dilemma.
And one of the case studies,
it's actually pretty classic now.
I think they even teach in business school.
One of the case studies is Caterpillar.
When Caterpillar showed up in the construction industry,
which is an absolutely massive industry worldwide,
everybody across the world was using cable-based construction equipment.
you controlled it with cables and a winch.
had a lot of moving parts,
and Caterpillar showed up with the hydraulic piston.
They were the very first company to do that ever.
What ended up happening is
every single one of those companies
who existed prior to the arrival of Caterpillar
who survived by specializing in the only construction equipment
that uses cables anymore,
which is the tower crane.
because they weren't able to adapt fast enough
to catch up with Caterpillar.
And the postulate here is that
when a new innovation shows up,
the middle guys are the ones who,
the guys in the middle are the ones
who will jump ship from the guys at the top
and go over to the new innovation
a bit harder for them to adapt.
And so I'm not going to say
they're not going to make it,
but I will say that I view
the development of this sector
but it'll be faster than people think
by the people who everyone expects it
And I think that's a great point you make there
and actually will transition really nicely
into some insight from Peter
as he's really been on the ground
in the tokenization space for a while now.
I'm really interested to hear your insights
and whether or not you feel
that we've seen this exponentially
increasing rate of institutional players
entering the tokenization space begin
and whether you think these players
are going to be around for a while
or whether you think they're going to be displaced
entering the real world asset space.
we see prospects all over.
So I like the top 200 asset manager
but also like things get super siloed out
across different sectors and focuses.
I don't know if anyone's getting
necessarily displaced yet,
you can look at even ETF issuers,
And you have a lot of those firms
because they're seeing what people,
what protocols and platforms
and wrapping ETFs and issuing,
and issuing tokens on that.
And now it kind of begs the question,
where's the future landscape
And just going to be kind of
now to blockchain transfer funds
mcclature you want to work with.
And then even on the asset management side,
like these are just products
they have to either look at
or they can start offering themselves.
are going to be broker dealers
And people kind of have this misconception
that you can just issue a token
and overnight you'll raise
100 million for your product.
as unreal as that would be
being able to have that validity.
really good placement agents.
that can find proper investors
In a world where there's so many
similar profiled offerings,
in the real estate space,
or even startup companies
when they try to raise capital
Like look at our space alone.
There's so many companies
and that deep edge of investors.
even to use Rob's language,
have their own platforms.
I think a lot of the middle market
are either joining consortiums
We talked to a few of them
and even there's a couple
that are underwriting IPOs
They're all going to start
I don't know if it's in this
to get involved in the space.
Like if you're an investment bank,
a tokenized private placement
is now part of the industry.
typically those who don't adapt
you'll see the innovation come.
everyone's got an innovation
who's actually innovating
And I think just for the listeners,
what might be even more helpful
to talk about potentially
of these institutional deals
and what you've really liked with it,
whether it be from your Q3 report,
or any of your other articles
I know that you're writing.
Is there a specific example
of a tokenized deal company,
that you've been really impressed
I can name a couple here,
but even straight from the top,
I think they know their focus.
They're not looking at retail.
They're not looking at small issuers,
but they realize tokenization
the next technology overlay.
you don't always have to go
looking at the DeFi space,
on their 100 million euro bond,
issued by European Investment Bank,
you could throw a little extra bonus
kind of proof of concept type
So just imagine doing that
a bundle of different bonds.
And that's when you can really
start to see economies of scale.
Your 100 million euro bond
of yield on to their buyer,
which was union investment,
You got to scrap for yield,
people in the capital markets
And even when you look at it
from the asset management side,
If you're ignoring the stuff,
in the digital asset space
you should be educating yourself
what this technology is doing
of your assets pretty much.
another thing on the sell side,
is a legacy transfer agent
whether it's the ETF side,
for every hundred thousand
they're really transacting,
provider under the sell side
tokenization as a service
institution-to-institution