Latest / The Paul Barron Crypto Show / SEC Crypto Deadline Is Here🚨Who Wins?🚀Sentora Interview

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SEC Crypto Deadline Is Here🚨Who Wins?🚀Sentora Interview · The Paul Barron Crypto Show

• 0:00
  Speaker 1: The SEC's deadline is today, and today we're going to
• 0:03
  Speaker 1: be breaking down what that might mean into the market
• 0:05
  Speaker 1: and also revealing some very interesting things, including what tokens
• 0:09
  Speaker 1: could be applied. So make sure to stick around for
• 0:11
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  Speaker 1: self-custody to you. So make sure and check it out.
• 0:51
  Speaker 1: Tell them we sent you. Let's start right here. And
• 0:53
  Speaker 1: I want to start with this statement from Digital Policy Alert.
• 0:56
  Speaker 1: obviously talking about what's going on with the SEC. And
• 0:59
  Speaker 1: this was the period for comment. And this course now
• 1:03
  Speaker 1: reached its deadline, October 20th. It is here now. There's
• 1:06
  Speaker 1: a lot of things that have happened over the last 30,
• 1:09
  Speaker 1: 45 days as we started to see Paul Atkins and
• 1:12
  Speaker 1: team starting to push out some sort of alignment of
• 1:16
  Speaker 1: how these rules for crypto are going to be applied.
• 1:19
  Speaker 1: And we went in, dove in a little deeper and
• 1:21
  Speaker 1: found out exactly what was going on. So some of
• 1:24
  Speaker 1: this In terms of backing, these are the ones that,
• 1:27
  Speaker 1: of course, we show here. Scaramucci, SkyBridge, you had Hyperliquid, Rialto, Hedera,
• 1:34
  Speaker 1: Paul Josie, who is a securities lawyer. These are the
• 1:37
  Speaker 1: guys who kind of have been backing what's happening with
• 1:39
  Speaker 1: the SEC and say, yeah, it looks good.
• 1:41
  Speaker 2: We're ready to go.
• 1:42
  Speaker 1: The people that are wanting changes, though, has been five
• 1:45
  Speaker 1: key law professors, Davis Polk, who is the Wall Street
• 1:49
  Speaker 1: law firm, and then also Avalanche. These are more interested
• 1:53
  Speaker 1: in where Safe Harbor is written in and how it applies.
• 1:57
  Speaker 1: And I'll explain that. But when you look at it,
• 1:59
  Speaker 1: here's Hyperliquid's five asks. These were in the comment period.
• 2:03
  Speaker 1: We did some research to find out exactly what was
• 2:05
  Speaker 1: being dropped in here. You had airdrops are not investments.
• 2:08
  Speaker 1: Dex trading exemptions, pretty big. protecting builders, another one. Auto
• 2:14
  Speaker 1: buybacks are different. These are rules, not a central policy
• 2:18
  Speaker 1: or not a central party. And then also keep state preemption,
• 2:23
  Speaker 1: which would be after the safe harbor component. And then
• 2:27
  Speaker 1: you had the safe harbor trap, which was the issue
• 2:29
  Speaker 1: that a lot of people were looking at. And this
• 2:31
  Speaker 1: could pretty much set it up for using it where
• 2:34
  Speaker 1: it could look like an admission. And this is where
• 2:37
  Speaker 1: Davis Polk, which was the Wall Street Law Forum, he
• 2:39
  Speaker 1: wants a core test that's A little bit better, so
• 2:42
  Speaker 1: the one that's there is unclear.
• 2:45
  Speaker 2: Avalanche came in, Avalabs.
• 2:46
  Speaker 1: They want to come in and write something to the
• 2:48
  Speaker 1: exit side into the rule. And then you had Hedera
• 2:51
  Speaker 1: asking for one clear answer on this for Safe Harbor.
• 2:54
  Speaker 1: And then there were some closed-door meetings, which was surprising
• 2:57
  Speaker 1: to me. Canton had a closed-door meeting. They didn't do
• 3:00
  Speaker 1: a public comment, which I don't know.
• 3:03
  Speaker 2: Why that is.
• 3:05
  Speaker 1: What were they not wanting out in public, but just—
• 3:09
  Speaker 1: for you guys to kind of know. And then you
• 3:10
  Speaker 1: had Coinbase that, of course, put one out, and Digital
• 3:13
  Speaker 1: Chamber also putting one out on August 19th. So September
• 3:17
  Speaker 1: 2nd was the most latest one. What they asked for,
• 3:20
  Speaker 1: not necessarily in the memo, so be aware of that.
• 3:23
  Speaker 1: The last thing was, which is kind of surprising, this
• 3:26
  Speaker 1: was actually in the discovery that we put out, and
• 3:28
  Speaker 1: that was two different elements, wildcards that were in the docket.
• 3:32
  Speaker 1: One was on GTA 6, which is possibly an in-game currency.
• 3:37
  Speaker 1: If you guys go back and look at our GTA
• 3:39
  Speaker 1: 6 videos, you'll find that almost two years ago we
• 3:41
  Speaker 1: were calling for at some point there will be a
• 3:44
  Speaker 1: in-game currency. And in fact, it looks as though there
• 3:47
  Speaker 1: is going to be one called Shark Bucks. We'll see
• 3:48
  Speaker 1: how that plays out.
• 3:50
  Speaker 2: You also have Mr.
• 3:51
  Speaker 1: Beast with Beast Token putting in a utility token with
• 3:55
  Speaker 1: 100 million supply cap. This is an interesting one as well.
• 3:58
  Speaker 1: I want to bring in a guest. And this will
• 4:01
  Speaker 1: get into a little bit where tokenized stocks are heading
• 4:04
  Speaker 1: because this has a large portion of what's happening with
• 4:07
  Speaker 1: this ruling right here. Joining me is Jesus Rodriguez, who
• 4:10
  Speaker 1: is the co-founder and CTO of Centora.
• 4:13
  Speaker 2: How are you Jesus?
• 4:14
  Speaker 3: Very good, Paul. Thank you for having me.
• 4:17
  Speaker 2: So nice to have you.
• 4:18
  Speaker 1: I want to go first before we get started, because
• 4:21
  Speaker 1: there's a lot here. I want to dive into what's
• 4:25
  Speaker 1: happening with Kraken and xStocks in general. And this is
• 4:28
  Speaker 1: kind of just a little bit of a diagram here
• 4:30
  Speaker 1: where Centora is involved.
• 4:33
  Speaker 2: Explain this to our audience.
• 4:35
  Speaker 1: How Centora works on these vaults and how that's connected
• 4:39
  Speaker 1: to Camino, what Firelight is connected with.
• 4:43
  Speaker 2: Give me kind of a rundown of how you guys work.
• 4:45
  Speaker 3: Yeah, so as a matter of context, so Centora is
• 4:49
  Speaker 3: the biggest institutional DeFi provider in the market. So we
• 4:54
  Speaker 3: have this platform called EarnOS that essentially allows large companies
• 5:00
  Speaker 3: to basically access EOS or borrow some DeFi in a
• 5:05
  Speaker 3: very safe way. So we've run over 300 strategies, 1,000
• 5:08
  Speaker 3: risk models. We incubated a cover slash insurance protocol called
• 5:13
  Speaker 3: Farlight independently of Centora. We work with large stable coin
• 5:18
  Speaker 3: issuers like PayPal, Freepo, and others and have over $ 3
• 5:23
  Speaker 3: billion in assets deployed. One of our marquee programs is
• 5:27
  Speaker 3: that we power Kraken. So Kraken has become sort of
• 5:32
  Speaker 3: the the best earned program, DeFi earned program in the market.
• 5:37
  Speaker 3: It was very well architected. It launched last year with
• 5:42
  Speaker 3: a number of vaults in stable vaults. Then we launched
• 5:45
  Speaker 3: a Bitcoin vault that achieved 700 million very, very quickly.
• 5:49
  Speaker 3: And then Kraken has been really pushing the innovation boundaries
• 5:54
  Speaker 3: in terms of tokenized equity. So very early on, they
• 5:57
  Speaker 3: worked with the Xtalk team and decided to back that
• 6:02
  Speaker 3: team eventually ended up acquiring the company as part of
• 6:05
  Speaker 3: Payward that is the parent company of Kraken. So one
• 6:12
  Speaker 3: of the ideas that we had was what if we
• 6:15
  Speaker 3: could launch bots for a specific tokenized equity? So today,
• 6:21
  Speaker 3: when you look at the The value that on-chain finance
• 6:26
  Speaker 3: could bring to tokenized equities, there are two things that
• 6:28
  Speaker 3: are very hard to do as an equity holder. So
• 6:31
  Speaker 3: if I want to borrow cash against my equities, if
• 6:36
  Speaker 3: you're very wealthy, you can, but the rates are very,
• 6:39
  Speaker 3: very prohibited. And if you want to earn yield against
• 6:43
  Speaker 3: your equities, I want to earn yield against my Microsoft stock,
• 6:47
  Speaker 3: I can't. So building that utility on-chain is one of
• 6:52
  Speaker 3: the promises of DeFi. So the X-Dock Vault was the
• 6:55
  Speaker 3: first attempt to show how that's possible. Essentially, the way
• 6:59
  Speaker 3: it works is users deploy their tokenized equities and behind
• 7:02
  Speaker 3: the scenes, there is a strategy that borrows the stables,
• 7:05
  Speaker 3: deploying to a stable vault at a higher yield than
• 7:07
  Speaker 3: the user makes. The difference and the risk is being
• 7:10
  Speaker 3: managed automatically. Beta is our partner and the vault infrastructure
• 7:14
  Speaker 3: provider for the solution and Centora is providing all the
• 7:17
  Speaker 3: yield capabilities.
• 7:19
  Speaker 1: So with Centora as kind of the governing company, I'm
• 7:23
  Speaker 1: showing right here on screen Kraken being able to kind
• 7:26
  Speaker 1: of address your point right here, earning.
• 7:28
  Speaker 2: Yield on your X stocks.
• 7:31
  Speaker 1: With Centora, though, and Firelight, how much risk is there
• 7:35
  Speaker 1: right now in terms of these vaults themselves? And what
• 7:39
  Speaker 1: do you guys do to kind of ensure to minimize
• 7:42
  Speaker 1: that risk?
• 7:43
  Speaker 3: Yeah, so I'll make the distinction between the two. So
• 7:48
  Speaker 3: Centora we built for the last four years a fairly
• 7:52
  Speaker 3: sophisticated AI-first risk management engine that processes thousands of signals
• 7:58
  Speaker 3: block by block to protect capital. This is the engine
• 8:03
  Speaker 3: that protects your lending positions against liquidations or your AMM
• 8:07
  Speaker 3: positions against a sleep ash or a well exit in
• 8:10
  Speaker 3: the market, things like that. Now, one question that we
• 8:13
  Speaker 3: always received was, particularly as we evolve, into companies like
• 8:19
  Speaker 3: Kraken or FinTechs. We power deal earn as well. So
• 8:24
  Speaker 3: particularly as we evolve into that demographic, we always were
• 8:29
  Speaker 3: faced with the question, well, if you guys can manage risk,
• 8:33
  Speaker 3: can you price? And that is sort of a covert
• 8:37
  Speaker 3: insurance question. That is a problem that was never solved
• 8:40
  Speaker 3: in DeFi at a scale. So about a year and
• 8:43
  Speaker 3: a half ago, we incubated a project called Firelight, as
• 8:46
  Speaker 3: a subsidiary of Centora that came up with a sort of,
• 8:50
  Speaker 3: let's say, a clever way to come up with large
• 8:56
  Speaker 3: capital to protect assets in DeFi. The company raised $ 8
• 9:01
  Speaker 3: million independently of Centora. We launched a few weeks ago,
• 9:05
  Speaker 3: and one of the first things that we did was
• 9:07
  Speaker 3: Centora launched two protected vaults as part of the launch
• 9:11
  Speaker 3: and then Kraken. launch a protected pod and next week
• 9:16
  Speaker 3: or the following week we have another big announcement of
• 9:19
  Speaker 3: another partner so we want farlight to become the cover
• 9:23
  Speaker 3: or insurance layer for DeFi which we think is a
• 9:27
  Speaker 3: very um it's a very uh primitive very missing primitive
• 9:32
  Speaker 3: in DeFi and it uses XRP as a source of
• 9:35
  Speaker 3: capital to uh to ensure DeFi and given your audience
• 9:40
  Speaker 3: i think this is extremely relevant.
• 9:42
  Speaker 1: So, okay, I'm looking at how Firelight is adding $ 30
• 9:46
  Speaker 1: million in.
• 9:47
  Speaker 2: Cover to the Kraken USDC vault.
• 9:51
  Speaker 1: Explain to me how that is enough, because this would
• 9:54
  Speaker 1: seem as though this is going to be a much
• 9:56
  Speaker 1: more popular vault, which is going to drive a lot
• 9:59
  Speaker 1: more value on the market. this. Is this a scaled
• 10:02
  Speaker 1: coverage that you're going to grow with as the vault grows?
• 10:05
  Speaker 2: Explain how that works.
• 10:06
  Speaker 3: That's what it is. So if you think about the
• 10:10
  Speaker 3: history of DeFi, so if you look at any financial market, Typically,
• 10:15
  Speaker 3: the financial evolution of the market and the evolution of
• 10:19
  Speaker 3: the insurance of the market, they go together. Maybe the
• 10:22
  Speaker 3: insurance trails a couple of iterations. In DeFi, that never happened.
• 10:28
  Speaker 3: So DeFi has evolved for the last five years and
• 10:31
  Speaker 3: it has grown to hundreds of millions. And there was
• 10:34
  Speaker 3: no insurance or cover solution that had any meaningful traction,
• 10:38
  Speaker 3: maybe a hundred million, but very tiny. So you have
• 10:41
  Speaker 3: this gap now that you, how do you ensure protect
• 10:45
  Speaker 3: hundreds of billions? Which I always say is the problem
• 10:48
  Speaker 3: that you never want to face as a startup, but
• 10:50
  Speaker 3: you need to start with a scale. So for us
• 10:53
  Speaker 3: is where do we find the scale? We had a
• 10:55
  Speaker 3: very good technical model to. price technical and economic risk,
• 11:00
  Speaker 3: given that at Centoro we have been protecting capital for
• 11:04
  Speaker 3: a long time. So how do we achieve a scale?
• 11:08
  Speaker 3: And this is why XRP gave us. So the magic
• 11:14
  Speaker 3: bullet to this is what if we could use non-DeFi
• 11:18
  Speaker 3: correlated assets like XRP, like XLM, even like Bitcoin to
• 11:22
  Speaker 3: some extent. You can stake those assets and protect premier
• 11:26
  Speaker 3: properties in DeFi. centora bolts avid markets morpho bolts things
• 11:32
  Speaker 3: like that so essentially you're using an asset that has
• 11:35
  Speaker 3: zero cost of capital because it has no yield and
• 11:38
  Speaker 3: you get the equivalent of a yield of the top
• 11:40
  Speaker 3: properties in in d5 now we don't want to start
• 11:44
  Speaker 3: so we have about 80 100 million that to to
• 11:47
  Speaker 3: start with uh we're adding more but we want to
• 11:50
  Speaker 3: go step by step so day one We added two
• 11:53
  Speaker 3: Centauri bolts. And following two weeks, we added this Kraken
• 11:57
  Speaker 3: bolt that started 30 million, but it's going to grow.
• 12:00
  Speaker 3: And we're adding more Kraken bolts. In a few days,
• 12:04
  Speaker 3: you're going to see another big announcement of another premier
• 12:06
  Speaker 3: crypto company. And we have more. We want all the
• 12:10
  Speaker 3: top properties in DeFi, all the top protocols, all the
• 12:13
  Speaker 3: top curators, all the top bolts to protect the assets
• 12:18
  Speaker 3: using Firelight.
• 12:20
  Speaker 1: I'm looking at the website there on Firelight on how
• 12:23
  Speaker 1: it enables DeFi cover for this working. I understand pretty
• 12:28
  Speaker 1: much everything here. My question is this resolution of incidents
• 12:33
  Speaker 1: that you're mentioning.
• 12:34
  Speaker 2: Explain how that works.
• 12:36
  Speaker 1: Where do you guys plug in to actually solve some
• 12:39
  Speaker 1: of the problems that do happen?
• 12:41
  Speaker 3: Yeah, so Firelight is a platform built for frontier tech
• 12:50
  Speaker 3: cover at insurance so the bigger vision that we have
• 12:54
  Speaker 3: that obviously is not where we're at today is probably
• 12:57
  Speaker 3: we're not going to be in the next few months
• 12:59
  Speaker 3: is what could you enable when you make insurance programmable
• 13:04
  Speaker 3: like is when you can ensure something as granular as
• 13:08
  Speaker 3: a transaction and if you look at the way tech
• 13:11
  Speaker 3: is going so frontier tech call it ai call it
• 13:14
  Speaker 3: robotics call it biotech Those industries are evolving at a
• 13:21
  Speaker 3: pace that traditional insurance models cannot keep up. So Lloyds
• 13:26
  Speaker 3: of London is not set up to insure AI agents.
• 13:29
  Speaker 3: So we wanted to build a new platform that in
• 13:32
  Speaker 3: the future could do a lot of those things. So
• 13:34
  Speaker 3: the way it works is you just take your XRP
• 13:37
  Speaker 3: or XLM. Automatically, there is an ending when you request
• 13:41
  Speaker 3: cover for a specific bolt for a specific asset. That
• 13:44
  Speaker 3: price is called a risk graph. So it understands the
• 13:47
  Speaker 3: risk of every asset on every chain across the entire footprint.
• 13:52
  Speaker 3: It gives you a price. You start paying the cover. Now,
• 13:54
  Speaker 3: if there is an incident, because this is all AI-based,
• 13:58
  Speaker 3: the platform automatically recognizes that there is an issue that
• 14:01
  Speaker 3: might affect some of the covers. And then all the
• 14:05
  Speaker 3: evidence is compiled on-chain. And then there is a consortium
• 14:09
  Speaker 3: of some of the best risk managers in DeFi. And Centora,
• 14:14
  Speaker 3: on purpose, doesn't participate. It's not part of the consortium.
• 14:18
  Speaker 3: So we decided to preclude ourselves to avoid any conflict
• 14:22
  Speaker 3: of interest, given that we're covering a lot of our positions.
• 14:26
  Speaker 3: By default, we didn't think it was fair that we
• 14:28
  Speaker 3: had a seat at the consortium, but companies are hyper-native,
• 14:31
  Speaker 3: like others out there. They preview the evidence, they vote,
• 14:34
  Speaker 3: and if they vote, the claims get pressed. All right.
• 14:37
  Speaker 2: I like it. Good explanation there. Okay.
• 14:40
  Speaker 1: So is this, when you look at doing what you
• 14:43
  Speaker 1: guys are doing with Kraken, will this kind of model
• 14:47
  Speaker 1: be available in the United States?
• 14:53
  Speaker 3: Yeah. So we, so the question about where is, where
• 14:59
  Speaker 3: do we take funds from? It changes quite a bit.
• 15:04
  Speaker 3: So we initially decided to not take U.S. and Europe
• 15:11
  Speaker 3: for something. I think that's very fluid at the moment.
• 15:16
  Speaker 3: The current administration is way friendlier to this topic, so
• 15:23
  Speaker 3: we're evaluating it constantly. But the Kraken arm per se,
• 15:30
  Speaker 3: it is available to U.S.
• 15:32
  Speaker 2: Holders.
• 15:34
  Speaker 3: What I discover is that Tokenized equities, they're very sentiment
• 15:40
  Speaker 3: driven so far because the way it works is it's
• 15:42
  Speaker 3: not like I can take my Nvidia stock and immediately,
• 15:47
  Speaker 3: the process of tokenizing is complicated. Most people just go
• 15:50
  Speaker 3: and buy a tokenized equity, which is something that it
• 15:54
  Speaker 3: took us a little bit to understand that culturally it's
• 15:58
  Speaker 3: a different demographic than your traditional Uh, equity holders. So
• 16:04
  Speaker 3: a lot of what you're seeing in terms of adoption is,
• 16:06
  Speaker 3: is being driven by what you're seeing in the news,
• 16:08
  Speaker 3: what you're, what's happening, hyperliquid and curves and, uh, and things, uh,
• 16:14
  Speaker 3: things like that. Now this value proposition that I can
• 16:17
  Speaker 3: go from NVIDIA to more NVIDIA using tokenization and DeFi
• 16:23
  Speaker 3: underneath is beautiful. So this doesn't exist in traditional market.
• 16:29
  Speaker 3: This is the one use case. for tokenized equities. So
• 16:34
  Speaker 3: in the, there is a world in which all the
• 16:39
  Speaker 3: other use cases don't make sense. Like if, why would
• 16:42
  Speaker 3: you tokenize stocks? I mean, you get access to markets.
• 16:45
  Speaker 3: Markets are gonna go 24 seven. Anyway, so trading, not
• 16:50
  Speaker 3: that interesting. There is a use case for perps maybe,
• 16:54
  Speaker 3: but a lot of traditional exchanges are adopting perps. So
• 16:57
  Speaker 3: that's gonna become a table stakes. The one thing that
• 17:01
  Speaker 3: you can do, the two things that you can do
• 17:03
  Speaker 3: with on-chain programmable finance and tokenized equities that you cannot
• 17:07
  Speaker 3: do in traditional markets is borrow cash, borrow stables, and
• 17:11
  Speaker 3: earn yield. Those are the two. So that intersection, it
• 17:15
  Speaker 3: is a massive deal. Like go and try and call
• 17:18
  Speaker 3: your broker and say, tell them that you want to
• 17:20
  Speaker 3: borrow against your micro or whatever stock and you will
• 17:23
  Speaker 3: see the rates. I mean, they're double digits. They're prohibited. Now,
• 17:29
  Speaker 3: It's kind of like Morpho.
• 17:30
  Speaker 2: Morpho has done a really good job at that, you know,
• 17:32
  Speaker 2: on crypto.
• 17:33
  Speaker 3: They've been able to really... These ones are in Solana,
• 17:36
  Speaker 3: but we have the same solution on Morpho, right? Just
• 17:39
  Speaker 3: because Xtalk has a better position in Solana right now,
• 17:43
  Speaker 3: we decided to launch with Camino. But we could do
• 17:46
  Speaker 3: the same. Morpho has done a phenomenal job. On this,
• 17:49
  Speaker 3: it has been one of the platforms pushing that. Ave, Morpho, Camino,
• 17:52
  Speaker 3: they're the three platforms that are very well positioned to
• 17:57
  Speaker 3: capture sort of that market. Now the challenge is the
• 18:02
  Speaker 3: user experience today is not there. So you have to
• 18:06
  Speaker 3: go buy the stock and earn the yield, whether what
• 18:10
  Speaker 3: you really want is I want to take my Microsoft
• 18:13
  Speaker 3: stock and receive more Microsoft stock and all this disappears.
• 18:17
  Speaker 3: So once we figure out how to do that with
• 18:20
  Speaker 3: the right prime broker, with that entire network, and Kraken
• 18:24
  Speaker 3: has all the ingredients because they have their licenses, they
• 18:27
  Speaker 3: have the the technology. So I think they're going to
• 18:30
  Speaker 3: be the first company to get there.
• 18:32
  Speaker 2: Okay.
• 18:32
  Speaker 1: Well, I'm kind of curious because you've got Coinbase, which
• 18:35
  Speaker 1: has already established a very deep relationship with Morpho. Morpho
• 18:39
  Speaker 1: has already started to set up a large amount of
• 18:42
  Speaker 1: user base that's accustomed to taking loans out on crypto.
• 18:46
  Speaker 1: And now you've got potentially tokenized securities coming into Coinbase,
• 18:50
  Speaker 1: which essentially I'm assuming was going to be able to
• 18:52
  Speaker 1: translate into.
• 18:53
  Speaker 2: Morpho pretty quickly.
• 18:55
  Speaker 1: They do have a user experience that's very enticing and
• 18:58
  Speaker 1: and easy. Do you think that's going to be the
• 19:01
  Speaker 1: race between Morpho and what you see coming out of
• 19:04
  Speaker 1: Kraken maybe?
• 19:05
  Speaker 3: Interestingly enough, what BASE announced was tokenized equities in Aave
• 19:11
  Speaker 3: on BASE, which is interesting considering the relationship that Coinbase
• 19:16
  Speaker 3: and Morpho have. I think both, if I have to guess,
• 19:21
  Speaker 3: the race is going to be between Kraken, Coinbase and Robinhood.
• 19:25
  Speaker 3: Those are the three that are in the best position.
• 19:28
  Speaker 2: How long do you.
• 19:29
  Speaker 1: Think, Jesus, how long do you think, really, before here?
• 19:32
  Speaker 3: The technology is there. All these companies have the license.
• 19:35
  Speaker 3: The technology is there. So I think this is a
• 19:37
  Speaker 3: matter of months if the effort is there. So the
• 19:40
  Speaker 3: yields there, the bonuses are there, the stable incentives are there.
• 19:45
  Speaker 3: So it's how do I go from, my broker account
• 19:51
  Speaker 3: to integrate all this thing behind the scenes.
• 19:54
  Speaker 2: What do you think about this right here?
• 19:55
  Speaker 1: Because this is an argument I think a lot of
• 19:57
  Speaker 1: people have with lending, especially with something like a Morpho,
• 20:00
  Speaker 1: where you've got that variable lending rate that goes against
• 20:03
  Speaker 1: your crypto at any given time. You never really know
• 20:05
  Speaker 1: what that fee is. but Camino goes out, they launched
• 20:08
  Speaker 1: this fixed rate borrowing, and this is for tokenized assets.
• 20:12
  Speaker 1: So that's a big, to me, that's a huge, huge advantage.
• 20:16
  Speaker 1: Do you think everybody's gonna go in this direction in
• 20:19
  Speaker 1: the future?
• 20:21
  Speaker 3: No, I think a lot of credit markets have a
• 20:26
  Speaker 3: combination of fixed rates and variable. rate in DeFi we
• 20:32
  Speaker 3: never figure out the the fixed rate because most of
• 20:35
  Speaker 3: the lending is over collateralized with assets that fluctuating in
• 20:40
  Speaker 3: price I think Morpho recently came out with Midnight to
• 20:44
  Speaker 3: address this Camino follow with this solution I think there
• 20:49
  Speaker 3: is a market structuring friction there that you have to
• 20:52
  Speaker 3: have the counterparty on the other side to maintain that
• 20:55
  Speaker 3: rate and A lot of these products still need to
• 20:59
  Speaker 3: work to build that muscle to get there. But eventually,
• 21:04
  Speaker 3: I believe you're going to see fixed rates in DeFi
• 21:07
  Speaker 3: and you're going to see variable trades as well.
• 21:10
  Speaker 1: Do you think we'll get to a point in DeFi
• 21:13
  Speaker 1: where I'm holding my stocks in whatever wallet I've got
• 21:18
  Speaker 1: out there, whether it's doing something with X stocks or
• 21:21
  Speaker 1: Kraken or maybe even over on BASE? where I won't
• 21:26
  Speaker 1: have KYC involved. And I'll be able to use whether
• 21:30
  Speaker 1: it's zero proof or other ways to be able to
• 21:34
  Speaker 1: lend against my stocks, just like my crypto, without going
• 21:37
  Speaker 1: into KYC.
• 21:38
  Speaker 2: Do you think that will happen?
• 21:40
  Speaker 3: Yeah. So many, a couple of years ago, I wrote
• 21:43
  Speaker 3: an essay about this, tried to be a little bit
• 21:47
  Speaker 3: polemic at the time, which essentially said, We don't need
• 21:52
  Speaker 3: to brute force our way to KYC in DeFi. So
• 21:55
  Speaker 3: when you look at traditional KYC, the way that you
• 21:59
  Speaker 3: identify if a specific investment vehicle is clean or not
• 22:03
  Speaker 3: is you take a statistical sample of the participants. So
• 22:08
  Speaker 3: because everything is visible on chain, you can do two things.
• 22:14
  Speaker 3: You can scan the vault, and we do that today,
• 22:17
  Speaker 3: and say, well, this is 99%. This has three degrees
• 22:21
  Speaker 3: of proximity to a mixer or something like that that
• 22:25
  Speaker 3: could trigger a red flag and that could give you
• 22:29
  Speaker 3: a KYC score. And you don't need to go wallet
• 22:31
  Speaker 3: by wallet. And the other one is you could start
• 22:35
  Speaker 3: launching bolts that have KYC. And you incentivize the participants.
• 22:40
  Speaker 3: You pay a higher deal for that. What I think
• 22:43
  Speaker 3: is it will be a wasted opportunity is if the
• 22:46
  Speaker 3: regulators come and say, oh, you have Morpho, you have
• 22:49
  Speaker 3: to KYC all the votes. Can they do it? Absolutely.
• 22:52
  Speaker 3: But I think that's a brute force approach that is
• 22:55
  Speaker 3: neglecting the technology innovations that blockchain brings to the table.
• 23:01
  Speaker 3: So as you said, if I want my tokenized equity,
• 23:04
  Speaker 3: and I want to lend it down to a specific vault,
• 23:06
  Speaker 3: I'll be fine saying this vault has a 99% score.
• 23:11
  Speaker 3: And there's AI agents that are doing that on my behalf.
• 23:17
  Speaker 3: I don't need to know every single address. I think
• 23:21
  Speaker 3: that's what programmable finance should aim to build.
• 23:25
  Speaker 2: Well, the question will be, does the SEC agree with you?
• 23:28
  Speaker 2: And that's, you know, obviously we were reporting on that today.
• 23:30
  Speaker 2: Of course they will.
• 23:32
  Speaker 1: Where does the SEC allow AI agents to kind of
• 23:37
  Speaker 1: come in and meet on-chain finance?
• 23:39
  Speaker 2: Do you think that's coming? We saw the.
• 23:43
  Speaker 1: Period right now that has expired, and most likely the
• 23:46
  Speaker 1: SEC is going to start applying this. It's likely we're
• 23:49
  Speaker 1: going to see more rulemaking coming out that could go
• 23:52
  Speaker 1: in this direction.
• 23:53
  Speaker 2: What do you think?
• 23:54
  Speaker 3: Yeah, so that topic sits at the intersection of multiple things.
• 23:58
  Speaker 3: My background is in AI. That is what I teach,
• 24:01
  Speaker 3: what I do. I built several AI companies in recent years.
• 24:06
  Speaker 3: So I spend a lot of time on this. So
• 24:08
  Speaker 3: AI regulation by itself is a big thing that you've
• 24:11
  Speaker 3: probably seen, right? That has been a core topic on
• 24:14
  Speaker 3: Congress committees recently. So identity for agents haven't been hasn't
• 24:22
  Speaker 3: been solved yet. So what is the identity of your agent?
• 24:25
  Speaker 3: Is it your identity? Is it a new identity that
• 24:28
  Speaker 3: is delegated? So that is a layer that needs to
• 24:31
  Speaker 3: be solved. So does your agent inherit your KYC? By definition,
• 24:37
  Speaker 3: it is a brand new thing. So agentic commerce is happening.
• 24:41
  Speaker 3: I think this is unstoppable right now. And the typical
• 24:46
  Speaker 3: argument on chain is, oh, agents cannot have bank accounts. Well,
• 24:49
  Speaker 3: they're sort of getting credit cards and things, right? That
• 24:52
  Speaker 3: there are mechanisms for that. So it is important if
• 24:58
  Speaker 3: on-chain financing wants to be a participant in that identity
• 25:02
  Speaker 3: commerce economy, there is a window of time to make
• 25:05
  Speaker 3: that work because there is a lot of companies I
• 25:08
  Speaker 3: think Tempo particularly is extremely well positioned for this. Stripe
• 25:12
  Speaker 3: is obsessed with agentic commerce and they're pushing it really hard.
• 25:16
  Speaker 3: I think Coinbase is doing their part. Circle seems that
• 25:20
  Speaker 3: they have ambitions to do that with ARK as well.
• 25:24
  Speaker 3: But what is that regulation of that? It's a combination
• 25:28
  Speaker 3: of e-commerce regulation with crypto regulation with AI regulations.
• 25:34
  Speaker 2: No doubt. No doubt. There is some pushback, though.
• 25:37
  Speaker 1: A couple of things that I want to highlight here
• 25:40
  Speaker 1: is you had NASDAQ along with some other companies, CoreWeek, Broadcom, Verizon.
• 25:44
  Speaker 1: There was nine different companies out there objecting to tokenized
• 25:48
  Speaker 1: trading of their shares.
• 25:50
  Speaker 2: Not only that, then you have, of.
• 25:52
  Speaker 1: Course, the best troll of all, which is Adam Aaron,
• 25:55
  Speaker 1: the CEO of, yeah, so we've talked.
• 25:58
  Speaker 2: About him with AMC.
• 26:00
  Speaker 1: And he's been pushing back constantly with Robin, and they're just,
• 26:03
  Speaker 1: you know, jousting in the open now. Do you think
• 26:06
  Speaker 1: we're going to have companies that finally realize this is
• 26:10
  Speaker 1: going to be good for stockholders? It's going to be
• 26:13
  Speaker 1: good for the companies themselves? Or do you think there's
• 26:16
  Speaker 1: going to be a class of stocks out there that
• 26:19
  Speaker 1: just fight this?
• 26:22
  Speaker 3: I think the short term is you're going to see
• 26:25
  Speaker 3: a class of companies. companies that fight this. It's not completely,
• 26:32
  Speaker 3: obviously I don't sympathize with that, but I don't think
• 26:34
  Speaker 3: it's completely crazy because the implementations today, they are on
• 26:41
  Speaker 3: a little bit of a gray area. And again, regulatory
• 26:45
  Speaker 3: structuring is not my domain, but I talk to a
• 26:48
  Speaker 3: lot of these players and a lot of these vehicles,
• 26:51
  Speaker 3: you give up your voting rights, whether that, I don't
• 26:53
  Speaker 3: know how many times you vote on the stocks that
• 26:55
  Speaker 3: you own. I particularly don't ever, but So I don't
• 26:59
  Speaker 3: know how important that is or not, but you end
• 27:02
  Speaker 3: up making some concessions there that some people classify as
• 27:07
  Speaker 3: not an equity. And then what the bigger argument here
• 27:13
  Speaker 3: is the level of fragmentation that is causing in the market,
• 27:16
  Speaker 3: whether it trades on some venues, it trades 24 seven
• 27:20
  Speaker 3: in others and things like that. So that is a
• 27:25
  Speaker 3: bigger argument. So I think in the short term, you're
• 27:26
  Speaker 3: going to see a lot of that fight, but this
• 27:29
  Speaker 3: is unstoppable. I don't think you're going to win that
• 27:34
  Speaker 3: fight with agents coming on chain, with the level of
• 27:38
  Speaker 3: innovation that programmable finance. I think you're on the bright
• 27:40
  Speaker 3: side of history if you're fighting this.
• 27:44
  Speaker 2: All right. So I've got a list.
• 27:45
  Speaker 1: As we analyzed a lot of the comment period for
• 27:48
  Speaker 1: the SEC, what kind of projects and companies could come
• 27:51
  Speaker 1: out of this as a winner? And then we analyze
• 27:54
  Speaker 1: this against how much some of these tokens have gone
• 27:57
  Speaker 1: down since their all time highs. And where these, you know,
• 28:01
  Speaker 1: there might be some winners here. So obviously we show
• 28:04
  Speaker 1: the big ones there, ETH, HOOD, SOL, CIRCLE, HYPERLICUID, UNISWAP, AVE,
• 28:11
  Speaker 1: ONDO in there at 79% down, 84% down on UNISWAP.
• 28:13
  Speaker 1: But the biggest ones have been LIDO at 95, JITO
• 28:14
  Speaker 1: at 92% down. and Jupiter at 85% down. So all
• 28:23
  Speaker 1: these markets look like they're going to benefit from what's
• 28:26
  Speaker 1: happening with these SEC rules, tokenized stocks, the eventually agentic payment.
• 28:34
  Speaker 1: Is anyone on this list here, first of all, that
• 28:37
  Speaker 1: you would say this might be a big winner, or
• 28:40
  Speaker 1: are we missing.
• 28:41
  Speaker 2: Anyone on this list?
• 28:42
  Speaker 3: So look, I think... Uniswap, the AMN should be a
• 28:47
  Speaker 3: beneficiary of this because the tokenized security exception basically allows
• 28:51
  Speaker 3: you to trade these things on AMN. So they should
• 28:54
  Speaker 3: be a winner. I think Hyperliquid could come out of
• 28:58
  Speaker 3: this looking pretty good. As well, there is, I don't
• 29:01
  Speaker 3: think it's in this set of comments, but there have
• 29:03
  Speaker 3: been a lot of speculation of what the SEC is
• 29:06
  Speaker 3: going to do in terms of DeFi and bots or
• 29:08
  Speaker 3: legal team and Centauri meets with the SEC. regularly. So
• 29:14
  Speaker 3: I think that's a lot of the pressure that you're
• 29:15
  Speaker 3: seeing on the Alice and Morpheus of the world, but
• 29:19
  Speaker 3: who knows? I mean, I think some regulatory guidance is
• 29:22
  Speaker 3: better than no guidance at this point.
• 29:25
  Speaker 2: Oh yeah, for sure.
• 29:26
  Speaker 1: Listen, okay, so we're going to cover this a lot
• 29:28
  Speaker 1: more because I think there's going to be some pretty
• 29:31
  Speaker 1: big breaking news items that are going to come out
• 29:33
  Speaker 1: of this SEC finalization, especially as we get into new rulemaking.
• 29:39
  Speaker 1: So Jesus, it's been great having you on the show.
• 29:41
  Speaker 1: Thank you so much for coming in today.
• 29:43
  Speaker 2: We appreciate it.
• 29:43
  Speaker 3: Thank you for having me.
• 29:51
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• 29:54
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• 29:57
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• 29:58
  Speaker 2: The link is in the description.