Latest / CRYPTO 101 / Ep. 756 Tokenized Stocks Are Becoming the Next Big Trading Market

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Ep. 756 Tokenized Stocks Are Becoming the Next Big Trading Market · CRYPTO 101

0:09
[SPEAKER_02]: Alright, everybody.
0:10
[SPEAKER_02]: Welcome back to another episode of the crypto 101 podcast.
0:14
[SPEAKER_02]: I'm your co-host Bryce Paul as always joined by my good buddy Brendan Veman Brendan how are you price.
0:23
[SPEAKER_01]: I am doing freaking amazing and let me tell you what
0:27
[SPEAKER_01]: I'm stoked for this podcast.
0:29
[SPEAKER_01]: If you know me, then a big fan of Robinhood and thus Robinhood chain as well as trading.
0:36
[SPEAKER_01]: And I feel like I get the best of both worlds here today.
0:39
[SPEAKER_01]: So a little extra pep in my step.
0:42
[SPEAKER_02]: little twinkle in the eye.
0:44
[SPEAKER_02]: Look, I'm really excited that we have a fantastic guest, Eddie Zang, who's the founder and CEO of Arcus.
0:50
[SPEAKER_02]: Among many other things, they are the leading decks right now on Robin Hood chain.
0:55
[SPEAKER_02]: Eddie, welcome to Crypto 101 and first and foremost, how are you doing?
1:00
[SPEAKER_02]: I'm in great.
1:01
[SPEAKER_02]: Yeah.
1:02
[SPEAKER_02]: Awesome.
1:03
[SPEAKER_02]: Um, and let's just dive in a little bit high level walk us through how you guys became the leading decks on Robin Hood Jane.
1:13
[SPEAKER_00]: Definitely.
1:14
[SPEAKER_00]: So, back in the wise, I had a crypto startup that was like a social training platform on Sloan and we were acquired by Dubai DX in July of last year and then I took over 4 Antonio in September of last year and around 10, 10, 10, I think we realized that kind of the world,
1:35
[SPEAKER_00]: had changed.
1:37
[SPEAKER_00]: And at the point, at that point in time, we had been building DIVX before, of course, which was the evolution from V3.
1:46
[SPEAKER_00]: And I pretend to know I think we realized that the technology was
1:51
[SPEAKER_00]: needed kind of like a next-generational change in terms of its ability to handle many more users like how handled liquidations, how like the world won't be moving towards RWA is all these things at once.
2:03
[SPEAKER_00]: And so we opened up a conversation around where we saw opportunity and what we thought would be a good home in terms of chain, what would be a good partnership.
2:14
[SPEAKER_00]: During that time, we talked to a couple of different people, predominantly, I guess we talked at the other major exchange, American exchange, you can probably guess.
2:25
[SPEAKER_00]: And I think what we discovered is that we believe very strongly, this idea of access globally for American equities, this idea of equity perpetuals,
2:37
[SPEAKER_00]: And the vision that Robin had had around how they wanted to bring that to like real people in the focus on retail access and like trading.
2:48
[SPEAKER_00]: And so we really thought that that was pretty well matched with what we saw as the world, the way the world was going, kind of what we thought would be a vision of future.
2:56
[SPEAKER_00]: So around
2:58
[SPEAKER_00]: Let's see, in December, we did like a demo of our next generation exchange, which allowed for, I think, at that point in time, several hundred thousand TPS, instead of an on-chain, we demonstrated it on arbitrum at the time, because, you know, rapid chain wasn't fully live yet.
3:13
[SPEAKER_00]: We signed kind of like the old turns, and then we launched us like a day zero partner in July.
3:17
[SPEAKER_00]: It's just about two months ago, almost actually exactly a few months ago.
3:22
[SPEAKER_00]: Not a long time ago.
3:23
[SPEAKER_02]: Well, yeah, congrats on all the success on all the success.
3:26
[SPEAKER_02]: I know there's a lot of work ahead.
3:29
[SPEAKER_02]: Get 10-10 was a very pivotal moment for the industry, for folks who are listening, they're like, what's 10-10?
3:34
[SPEAKER_02]: For crypto folks, this was a day that had a lot of bloodshed, highest amount of long liquidations and history, Binance, auto-deliverage, all these different positions, and it really marked the top.
3:49
[SPEAKER_02]: Um, as many altcoins bottomed out.
3:51
[SPEAKER_02]: I mean, I saw order books go literally to zero.
3:54
[SPEAKER_02]: And so what about that moment in time and and all of those, you know, goings ons what was it from that experience that made you say, okay, well, here's our new strategy.
4:08
[SPEAKER_00]: Yeah, I think we kind of felt like a lot of things.
4:11
[SPEAKER_00]: It was a very emotional day, very busy, of course.
4:15
[SPEAKER_00]: And I think we saw that
4:19
[SPEAKER_00]: There is maybe more single dependency on the Oracle side.
4:24
[SPEAKER_00]: Everyone kind of depended on Binance for prices that were assumed to not be able to be manipulated.
4:31
[SPEAKER_00]: And it seems like that maybe wasn't like 100% true at the time.
4:37
[SPEAKER_00]: We also saw, I think, this idea that fundamentally crypto asset prices are all correlated together, which
4:49
[SPEAKER_00]: I think that's kind of why we started looking at RWA's really seriously, because the broader start market is loosely correlated with crypto a bit much less so than all crypto assets.
5:00
[SPEAKER_00]: And so we had this belief that if people could kind of trade in and out of RWA's and crypto seamlessly, that that would result in better of alteration over like long time
5:20
[SPEAKER_00]: So you can kind of go back and forth or we've obviously seen like a bit of research isn't Bitcoin prices recently.
5:26
[SPEAKER_00]: It kind of lets you have more range in like what you're trying to trade.
5:30
[SPEAKER_00]: Do you think allows them better as in better kind of like loan term outcomes?
5:35
[SPEAKER_00]: I think those are probably the main takeaways, was we didn't want to have single points of dependency.
5:41
[SPEAKER_00]: We saw some trade offs between centralization, decentralization during 10, 10, 10, and we saw some trade offs between assets.
5:49
[SPEAKER_00]: Asset mix.
5:51
[SPEAKER_02]: Yeah, mix ton of sense.
5:52
[SPEAKER_02]: Would you say that Arcus is equally focused on equities and native crypto assets, or would you say you ski one way or another?
6:04
[SPEAKER_00]: Yeah, yeah.
6:05
[SPEAKER_00]: I think I definitely believe in building like what people want, but also trying to guide them towards what we can be features.
6:11
[SPEAKER_00]: So what people still want is at least like half like crypto assets.
6:16
[SPEAKER_00]: And so I think having a good quick retreating experience is really important for what users want today.
6:22
[SPEAKER_00]: But I also think it's obviously important to have an idea around differentiation and where you think you can provide like the best possible product.
6:29
[SPEAKER_00]: And we think that Robin and Shane having like native equity issuance.
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[SPEAKER_00]: We have both like a spot and a purpose product.
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[SPEAKER_00]: We're announcing our implementation of stocks as collateral.
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[SPEAKER_00]: Hopefully in the next month, all those things I think will make it.
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[SPEAKER_00]: So we're hoping to be the best place on the equity purpose site.
6:48
[SPEAKER_00]: While we'll still offer, obviously, a lot of what crypto natives want in terms of disability.
6:55
[SPEAKER_01]: Why did you choose perpetuals over other types of contracts?
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[SPEAKER_01]: Because that's a bit of a question that we get over here as like there's all these different options out there.
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[SPEAKER_01]: How do I myself as a trader choose?
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[SPEAKER_01]: And I think it's a pretty valid one, right?
7:09
[SPEAKER_01]: Because there's pros and cons and you know, different ones are better at different things.
7:14
[SPEAKER_01]: But I guess for you all, why did you decide to go with perpetuals as opposed to options or futures or other things?
7:20
[SPEAKER_00]: Yeah, definitely.
7:22
[SPEAKER_00]: I think we saw that the vast majority of crypto traders, of course, have gotten used to trading professionals.
7:30
[SPEAKER_00]: That market is by far the biggest in terms of just like raw size inside crypto trading.
7:36
[SPEAKER_00]: So that was like really important.
7:37
[SPEAKER_00]: I also think we saw that equities had robbing her, especially as famous for bootstrapping options trading for equities.
7:46
[SPEAKER_00]: And we believe that equipe repetitions are actually much simpler thing to learn how to trade than options.
7:53
[SPEAKER_00]: And so we saw.
7:53
[SPEAKER_00]: I would agree.
7:55
[SPEAKER_00]: Yeah.
7:56
[SPEAKER_00]: We saw an opportunity to introduce the world to happy pretzels as an actual evolution, given how well, you know, like the YDX and the Hyperliquid famously trying to introduce the broader audiences to decentralize pretzels.
8:10
[SPEAKER_00]: So we kind of saw that as like the evolution over time.
8:13
[SPEAKER_01]: I was going to say it does feel like there's been a big push for perpetuals over the last maybe year or so.
8:19
[SPEAKER_01]: It's always been pretty, pretty popular in the world of crypto to do perpetuals.
8:24
[SPEAKER_01]: I'd say it's been more popular to do perpetuals in crypto than it has in the traditional financial side of things, but especially in the last year here, there's been a huge focus on perpetuals, like even recently with that announcement of
8:39
[SPEAKER_01]: of the U.S. saying, hey, maybe we can bring in something like hyper liquid and legalize them.
8:44
[SPEAKER_01]: You know, prior to that, there wasn't even room for that because it was like perpetuals across the board.
8:49
[SPEAKER_01]: We're almost impossible to do inside the U.S.
8:53
[SPEAKER_01]: So why do you think that is and what do you think that that means?
8:57
[SPEAKER_01]: Yeah, I think.
9:00
[SPEAKER_00]: I think that the U.S. has been the world's financial capital for like a really long time.
9:06
[SPEAKER_00]: And that's been like a primary reason for like innovation happening like here.
9:13
[SPEAKER_00]: It's powered a lot of technology innovation and it's powered a lot of financial innovation.
9:19
[SPEAKER_00]: And so I think that the climate right now is some recognition that there is a lot of interest in demand and that perpetual can be traded and structured in a way that's safer for consumers.
9:34
[SPEAKER_00]: Because I think that was always maybe the hesitation was that
9:37
[SPEAKER_00]: Yeah, when it was like a newer instrument, it was, there's always a concern with new financial instruments around consumer protections and making things, you know, like safety introduced to people.
9:49
[SPEAKER_00]: So yeah, that's what I view as like the major difference and kind of historically why.
9:54
[SPEAKER_01]: Yeah, and I guess I should have asked you this before.
9:56
[SPEAKER_01]: So, you know, for the listeners out there, can you explain like what we call Perps?
10:01
[SPEAKER_01]: What Perpetual contracts are to the average listener, how they work, and then I guess explain the differences and the pros that you see to them as opposed to these other kinds.
10:13
[SPEAKER_00]: Yeah, I definitely.
10:14
[SPEAKER_00]: So, professionals are a derivative that just don't expect.
10:18
[SPEAKER_00]: And so, most people view it as margin trading is very similar, like leverage trading.
10:22
[SPEAKER_00]: So, what you do is you put up money, you're borrowing more of what you're buying, then the money you're putting up.
10:28
[SPEAKER_00]: And what happens is, instead of having a set of experts, which is what happens with options, you're exposed to price volatility risk.
10:38
[SPEAKER_00]: So with options, you have a date that you agreed to buy or sell out.
10:42
[SPEAKER_00]: And prices that you agreed to buy or sell out.
10:44
[SPEAKER_00]: So you don't have any worry that until that date, you have to do anything as a certainly.
10:51
[SPEAKER_00]: But it only lasts for the time period.
10:54
[SPEAKER_00]: So it expires after a year or a month of a day.
10:57
[SPEAKER_00]: Um, perpetuals don't expire at all, but if the price moves too much, uh, you can get liquidated, uh, so people take the money that you put up, if the price on like what you're trading has changed too much, and that's the risk reward is that, you know, you're betting not on time, but you're betting on like volatility and direction.
11:18
[SPEAKER_00]: whereas the options you're betting on time and price.
11:20
[SPEAKER_00]: So fundamentally, it's a little bit, yeah, structurally different, but I think it's easier for people to think about price and direction versus.
11:29
[SPEAKER_02]: Was it something inherent in, like, in the 10, if we kind of go back to the 10, 10 example was, you know, an analogy here, like,
11:37
[SPEAKER_02]: that probably like if the crypto market was really built around like calendar dated futures or options, maybe that wouldn't have happened.
11:46
[SPEAKER_02]: But since their perks, it did happen.
11:50
[SPEAKER_02]: Is that a fair sort of assessment?
11:52
[SPEAKER_02]: Or is it kind of picking, you know, bullying the the perks a little bit?
11:58
[SPEAKER_00]: Um, what I would say is my personal belief obviously outside of the centralization, which is the core reason.
12:04
[SPEAKER_00]: I think the core reason is centralization around true price being on one exchange, sitting on Binance, um, was like the core reason, but the secondary reason which is maybe very close to as important is correlation.
12:19
[SPEAKER_00]: And so the fundamental issue is that, you know, in a large market downturn, our sudden rather, a sudden market downturn, people may have been using a lot of crypto as collateral for other crypto positions.
12:35
[SPEAKER_00]: So, um, I guess in terms of lame, like retail explanation, it's like, I put it Bitcoin to buy three times as much Bitcoin.
12:43
[SPEAKER_00]: And so, like, Bitcoin goes down a third and you take my Bitcoin, then you have to sell that Bitcoin that you took from me.
12:49
[SPEAKER_00]: Well, it's going down, which causes it to go down more.
12:53
[SPEAKER_00]: And so, a lot of what we're trying to do here is,
12:58
[SPEAKER_00]: Arguably just like simple diversification or basically saying, okay, maybe instead of putting up Bitcoin as collateral for Bitcoin, our Bitcoin as collateral for like Ethereum, put up like NVIDIA stock as collateral for Bitcoin, or put up Bitcoin as collateral for NVIDIA stock.
13:15
[SPEAKER_00]: And allowing that diversification means that on average, your user base is better because during these like high volatility moments, they don't lose their original collateral, like the money they put up.
13:27
[SPEAKER_00]: And that's what I think is what the future would bring is people will naturally take some of the things they discovered in crypto rails and crypto exchanges and expand it to include more assets so that you can kind of balance better as you try to.
13:45
[SPEAKER_00]: But yeah, that's what I would say.
13:47
[SPEAKER_02]: No, that that was a great explanation and it definitely seems like there's a big push, obviously from from crypto companies, but now it seems like more traditional companies as well, you know, like the New York stock exchange and a continental exchange trying to get into the purpose market.
14:04
[SPEAKER_02]: Um, which I think is good.
14:05
[SPEAKER_02]: It expands this.
14:06
[SPEAKER_02]: Um, I also saw that the CME is like very wholeheartedly against these, uh, purps and they're trying to fight it in court.
14:16
[SPEAKER_02]: I think I believe I saw there.
14:17
[SPEAKER_02]: They're suing the CFTC.
14:20
[SPEAKER_02]: Um, and I was talking to somebody about this.
14:22
[SPEAKER_02]: I was like, why are you know, why are they so pissed off about purps and they're like, well, they make all their money off the roll.
14:27
[SPEAKER_02]: right if there's no exploration and there's perpetual contracts there's no contract rolls you know less you know trading needs to happen or whatever um what's your take do you think that they're just you know incumbent boomers uh that don't want to see change uh and it's inevitable that we're going to change or do you think they have a real case in court?
14:47
[SPEAKER_00]: I don't know what's in the specifics of their lawsuit, but I do think that it's, what's changed maybe in the last five or 10 years is that I think people have maybe internalized the innovators dilemma, which used to be like a very Silicon Valley technology thing, which is essentially that it's actually more dangerous to not change, because if you don't kind of like look forward to change, you would just get like swallowed by innovation.
15:16
[SPEAKER_00]: And some companies, legacy ones, quite frankly, have started to adopt that mindset that I think you still only be in technology companies because technology is kind of everywhere now.
15:26
[SPEAKER_00]: You see it in obviously like blockchain and AI and robotics and you know like everything will has been like gradually I think maybe not like consumed but people are aware that if they don't
15:39
[SPEAKER_00]: open up to innovation that it may kind of destroy their business by being stagnant.
15:45
[SPEAKER_00]: Because that's one of what I view is I think it's great that the New York Stock Exchange is considering 247 trading even though we offer that.
15:52
[SPEAKER_00]: I think it increases the market.
15:54
[SPEAKER_00]: I believe strongly in this idea of like Japanese paradox, like when there's, you know, demand is cheaper, that actually goes up dramatically.
16:02
[SPEAKER_00]: I mean, you're seeing that with AI and you're seeing that with crypto.
16:05
[SPEAKER_00]: Like now, that's cheaper to run transactions to man goes up dramatically, as opposed to having, like, worse demand to get cheaper.
16:11
[SPEAKER_00]: But I also think that there will be legacy institutions, like the CME, that try to resist that change in order to preserve their businesses.
16:20
[SPEAKER_00]: That's like an after-reaction, but I think on average it's the wrong one.
16:24
[SPEAKER_00]: because moving kind of like against momentum as like individual company or as an individual is always much harder than kind of recognizing that momentum is coming and getting on the momentum wagon if that analogy holds up.
16:42
[SPEAKER_00]: Yeah, the bandwagon, I love it.
16:44
[SPEAKER_02]: Yeah.
16:46
[SPEAKER_02]: So if we talk about your guys' approach to tokenize stocks that there's many different ways that companies have tokenized stocks and derivatives, can you kind of explain where your philosophy is rooted in?
17:02
[SPEAKER_02]: Are you guys on the scale of superstate or more hyper-liquid or somewhere in
17:13
[SPEAKER_00]: Yeah, I think, um, we view the tokenized stock side is heavily integrated with Robinhood.
17:20
[SPEAKER_00]: And it's one of the touch points where we're the, I would say probably the most integrated.
17:25
[SPEAKER_00]: So just a, I guess, like, let's talk to, is that right?
17:29
[SPEAKER_00]: Yeah, so there's like a lot of tokenized equities platforms.
17:33
[SPEAKER_00]: What I would say is I guess I can go like a few layers around.
17:37
[SPEAKER_00]: Like the reason why we felt that Robin Hood was like excellent is because of course, in American equities, they have a lot of dominance.
17:45
[SPEAKER_00]: Most, they're not the biggest platform, but in terms of trades per user and like young people adoption, they're very, very large.
17:51
[SPEAKER_00]: And so their book itself is really deep.
17:53
[SPEAKER_00]: So when you trade with us, we use Robin Hood's book to issue stock, in fact, it was speaking.
17:59
[SPEAKER_00]: And so we believe that because of that linkage, we can offer the best prices.
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[SPEAKER_00]: That's like one.
18:04
[SPEAKER_00]: point two would be that the actual technology we built on chain is designed to offer the best prices.
18:10
[SPEAKER_00]: So what we actually built is a RF key system that requests prices for mob and hood directly and we take zero fee because we believe that it's good for the ecosystem and we believe that if people buy spot stocks that they will eventually convert to perpetrators where we do charge your fee.
18:28
[SPEAKER_00]: And so we view it as like positive net zero, some, like it's a positive, you know, like offering.
18:34
[SPEAKER_00]: And so generally in robber to chain, we found that we have the best prices for that reason at size.
18:41
[SPEAKER_00]: Because even though it's like a bit of a hybrid on chain off chain implementation, as opposed to everything is on chain, it allows us to, you know, offer the best prices because we're taking a few.
18:51
[SPEAKER_00]: And then the final point with I would say is, um,
18:54
[SPEAKER_00]: We did build something unique as well, which is settlement.
18:57
[SPEAKER_00]: So normally what you would have a problem with is, if you offer several hundred stocks, you would have to maintain little tiny pools of several hundred stocks, as a market maker, and it'd be very hard to kind of get enough liquidity, because maybe it's suddenly, people are training a meme stock on revenue chain, and no one has any of it, and so it's really hard to get.
19:19
[SPEAKER_00]: So what we built instead is effectively like an escrow system.
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[SPEAKER_00]: So what happens is that the user deposits funds into like a smart contract, the Marka Maker can has like, takes about two minutes to tokenize something from Robert right now, two to five minutes in that range.
19:35
[SPEAKER_00]: And so the user gets a locked in price, the minute the Marka Maker quotes, and then they wait two minutes, hopefully five minutes sometimes, while Robert had tokenizes, and then that could deliver to the smart contract.
19:47
[SPEAKER_00]: And then the market gets the fund back.
19:49
[SPEAKER_00]: And so it allows us to support hundreds, thousands, basically every day we wanted to with the same million dollars.
19:56
[SPEAKER_00]: We wouldn't need to have, say, like, 100 pools of $10,000, or, you know what I mean?
20:02
[SPEAKER_00]: Like, thousands of pools of $10,000, and you can trade more than $10,000.
20:05
[SPEAKER_00]: Instead, you can trade the maximum capital or holding.
20:08
[SPEAKER_00]: It's very capital efficient.
20:09
[SPEAKER_00]: So those are kind of, I think, the three layers of what's talked to the set.
20:13
[SPEAKER_00]: Draw on it.
20:14
[SPEAKER_01]: So,
20:16
[SPEAKER_01]: Is this, I guess, would you say that this is specifically built for Robin Hood chain right now is what it sounds like, but let's say that this is really successful and it takes off and there's other chains that want to use this, I mean, would you ever think about expanding to other areas of Ethereum or maybe even beyond that would you ever even think about expanding to other chains entirely like Solana is that something that's even on the table.
20:41
[SPEAKER_00]: So what we thought about so far is we want to offer the best possible experience in a focused way.
20:47
[SPEAKER_00]: Like you want the highest quality bets at the post like lots and lots of bets that are like video care, of course.
20:54
[SPEAKER_00]: And so we think that the way it sequences for us is we're hoping to offer the best liquidity on stock tokens.
21:01
[SPEAKER_00]: which will allow us to offer the best multi-ascent collateral, so stock tokens as collateral, which will allow us to offer the best for vegetables.
21:08
[SPEAKER_00]: And that sequencing is actually quite simple, but it's also easy for people to understand.
21:12
[SPEAKER_00]: Go ahead.
21:13
[SPEAKER_01]: Yeah.
21:14
[SPEAKER_01]: And do you think the zero percent on a fees is also sustainable for the long-term?
21:20
[SPEAKER_01]: Or is that more of like an intro?
21:22
[SPEAKER_01]: I don't want to say like an intro offer, but you know what I mean, where it's like, hey, to kind of get this and gain market share, you start off with 0% on fees and then down the road, maybe that increases to, you know, 0.1% or something like that.
21:34
[SPEAKER_00]: Yeah, we view it as if people come to us for stock tokens and then they convert to perpetual straders, then it may be sustainable to be at zero fee forever on stones.
21:52
[SPEAKER_00]: Um, but I would say that I think we're mostly interested so far in having like one thing that's like a loss leader, because that way we can get the best kind of consumer experience there by having the best market makers and then having the consumer demand, um, and having the breadth of assets, those are kind of like the three things.
22:12
[SPEAKER_00]: And we're willing to run that as long as we make it back on the perpetual side.
22:19
[SPEAKER_00]: in terms of revenue.
22:20
[SPEAKER_00]: And so far, it's been holding up pretty well.
22:23
[SPEAKER_00]: We have the professional's product in beta, so it's invite only right now, but the stock token product is just anyone can trade it.
22:29
[SPEAKER_00]: And so it's a lot of us to have a bit of both where you can still come to us and try something and then we take that into account actually when we take people off the waitlist.
22:38
[SPEAKER_00]: If you do like a lot of stock doing trading, then we're much more like we take you off the waitlist on the perpetual side right now.
22:44
[SPEAKER_02]: And is it just anyone or do you have to be like not American and not Canadian and not like United Kingdom citizen like because as far as I understand like most folks in those jurisdictions can't access this service and you know all the other ones similar to it.
23:03
[SPEAKER_02]: Hopefully that changes or am I completely misread in the situation.
23:07
[SPEAKER_00]: No, you're right, so stock tokens and professionals are both restricted.
23:13
[SPEAKER_00]: They're not quite exactly the same restrictions, but they're like pretty similar, so stock tokens the restriction is actually on the Robinhood side because all the stock tokens we allow for trading on our issue and redeemed out of Robinhood's identity.
23:26
[SPEAKER_00]: And so Robin has been definitely the critical entity.
23:29
[SPEAKER_00]: So Robin and it has a list of countries where so far they view it as like too risky to offer stock tokens to the consumers.
23:37
[SPEAKER_00]: The US Canada and UK are definitely on the list.
23:39
[SPEAKER_00]: I think it includes Switzerland and whereas perpetual is like a different list.
23:45
[SPEAKER_00]: But yeah, perpetual is not available in the US Canada or UK.
23:50
[SPEAKER_00]: And there's like a couple other geos that we view as like risky.
23:54
[SPEAKER_00]: Right now, we actually do as a tertiary thing offered crypto trading on the spotlight.
24:00
[SPEAKER_00]: And so we offer mostly robbing her chain memes because our router was already pretty good at spot routing and so we expanded it to allow for makers to quote, you know, cashcat, there's other, there's a couple other big robbing her chain memes.
24:16
[SPEAKER_00]: So those are available ever crypto is available.
24:19
[SPEAKER_00]: But that's, I think, like our front end does differentiate between, like if the user is restricted for each category of products.
24:26
[SPEAKER_02]: Yeah, that makes a ton of sense in practice.
24:31
[SPEAKER_02]: In theory, I think it's BS.
24:34
[SPEAKER_02]: Not that you, I mean, not BS that you guys are following the law, but BS and so far as the government won't let Americans trade whatever we want.
24:42
[SPEAKER_02]: So why is that?
24:43
[SPEAKER_02]: Like what is the government's, or the regulators, you know, what are they standing on?
24:50
[SPEAKER_02]: Like to basically enforce that and do you think that'll ever change?
24:55
[SPEAKER_00]: Yeah, we've, we're very closely with the safety C over the history of the company.
24:58
[SPEAKER_00]: Do I do I do it myself has been around for nine years almost like a decade and during that time we've engaged with them heavily.
25:05
[SPEAKER_00]: I stopped at the States too, right?
25:07
[SPEAKER_00]: Yeah, yeah.
25:07
[SPEAKER_00]: We were famously the like first major perpetual stacks that did not move.
25:12
[SPEAKER_00]: We stay in America.
25:15
[SPEAKER_00]: All the time.
25:16
[SPEAKER_00]: Yes, in terms of our headquarters and most of our employee base.
25:20
[SPEAKER_00]: I would say that, I think on the regulations side, the policies around margin trading came out of consumer protections, as things like this usually do.
25:31
[SPEAKER_00]: But they were never really reconsidered, because there wasn't enough demand for people to really get it to be reconsidered.
25:42
[SPEAKER_00]: Whereas other financial restrictions over time were like removed are like,
25:46
[SPEAKER_00]: You know, ease based on people asking, and a famous sea of course, there was lots of restrictions on what you could buy in terms of crypto assets for like a long time, and the fiat on ramps were really difficult.
26:00
[SPEAKER_00]: I think I made a comment earlier about momentum, and I think it's the same thing, which is that when consumers
26:06
[SPEAKER_00]: find value in something and they believe that they want that thing.
26:11
[SPEAKER_00]: The government does have a history of eventually prioritizing access to that thing.
26:17
[SPEAKER_00]: We do live in a democracy after all.
26:19
[SPEAKER_00]: So I think it's more that the moment has come.
26:23
[SPEAKER_00]: uh, in the last year or so, where there's enough people who see value and like the products and the offerings that the government has started to change its mind around like having a safe offering for consumers and having an access route to love people, try professionals in America.
26:41
[SPEAKER_02]: Yeah, I thought it was pretty remarkable.
26:44
[SPEAKER_02]: I guess it was two weeks ago.
26:46
[SPEAKER_02]: I think it was like August 19th-ish It was like I remember it was like the same day that Scott Besson was like yeah We're gonna buy back a bunch of like 30-year and 20-year like off the run bonds out of which liquidity
26:59
[SPEAKER_02]: And so the market was like ripping in like on the same day all these crypto guys were in the white house for like meeting with all the regulators and president and the president is like yeah, we're gonna bring on hyper liquid on shore we're gonna make it you know hyper liquid great again and all this kind of stuff and everything like the whole
27:16
[SPEAKER_02]: You know hyperlabeled went from like 60 to 80 dollars in like you know a couple hours and everybody or office at least was just like, oh my god, that's just crazy, you know a couple of the DJs had you know polymarket bets that Trump would say a crypto net like all this kind of stuff but like you know if if that really does happen obviously that would be a huge boon for arcus and for everybody else but it seems like the puck is kind of going
27:46
[SPEAKER_02]: And Paul Ackens from the SEC are like super bullish on crypto in a sense and they've got project crypto.
27:52
[SPEAKER_02]: So I think if I were to read the T leaves that we will, you know, by the end of the president's term have, you know, crypto perpetuals on shore and equity perpetuals on shore, but that's just that's just my my thought and hopefully that happens
28:11
[SPEAKER_02]: Yeah, that was that was crazy.
28:12
[SPEAKER_02]: Do you remember that Brendan?
28:14
[SPEAKER_01]: I do.
28:14
[SPEAKER_01]: We were exploding in our group chats when this will happening.
28:18
[SPEAKER_01]: It was wild.
28:20
[SPEAKER_01]: I just remember looking at the chart and being like, I think I don't know.
28:23
[SPEAKER_01]: One of us was the ones who posted it and we were like, oh my gosh, look at the price.
28:27
[SPEAKER_01]: And it was just one of those like euphoric parabolic candles.
28:30
[SPEAKER_01]: You know.
28:32
[SPEAKER_02]: But, you know, I definitely want to refocus on Arcus and just like some of the the KPIs and success, you guys have had like, you know, what's, you know, what do you guys really focus on like, you know, are you guys really like dead settle like let's boost trading volumes or liquidity or TVL or daily active users and, you know, from those things that you guys are really, really dead set on how have you guys been performing.
28:55
[SPEAKER_00]: Yeah, definitely.
28:55
[SPEAKER_00]: So we recently crossed $2 billion in volume.
28:59
[SPEAKER_00]: I think about a few weeks ago.
29:00
[SPEAKER_00]: So the price been live for exactly eight weeks.
29:03
[SPEAKER_00]: So I think that's quite a bit of success in the time period.
29:07
[SPEAKER_00]: I think mostly what we were focused on was making sure that the trader experience is really good.
29:12
[SPEAKER_00]: So I think that generally speaking, my background has always been in consumer tech.
29:17
[SPEAKER_00]: And I care a lot about the average person being able to use the products really well and having really good experiences.
29:24
[SPEAKER_00]: I also think it's proven true that in perpetual dexes in general, retaining the traders for a willing to hold directional positions, or willing to make bets is like the audience that's like the hardest to retain.
29:38
[SPEAKER_00]: They tend to be long biased, as you mentioned, so during like large events, it's hard for them, et cetera.
29:43
[SPEAKER_00]: And so we've spent most of the time as like the fuzzy metric making sure that having good experiences was usually means really good liquidity.
29:49
[SPEAKER_00]: And so we have the concept of an internal market maker, which provides back-stop liquidity to make sure people can trade what they want to trade without moving the price too much, or getting to our off-the-price, and making a lot of progress there, as well as recently of course there's been a lot more demand for crypto names.
30:09
[SPEAKER_00]: So we recently, I think actually today we're listing a ton more crypto names that people have been asking for alongside the very interesting crossover between what crypto traders want in the equity markets.
30:20
[SPEAKER_00]: We did that last week.
30:22
[SPEAKER_00]: There's been a bunch of like interesting equity names that have been added on Robinhood as part of stocks, but also are getting that we're added as professionals.
30:31
[SPEAKER_00]: So like bought, for example, which is Andrew Tang's
30:35
[SPEAKER_02]: Yeah, no, that's that's awesome, you know, perpetuals and, you know, these derivative exchanges, really feel like they've found their pocket in the world because I just remember like when the whole Iran Moore started, like, you know, the markets closed and all of the attacks or whatever were happening on the weekend and people, you know, who run billion dollar, you know, hundred billion dollar books.
30:59
[SPEAKER_02]: They were like, where do we, you know, long oil over the week to manage our book or, you know, flat in our risk or whatever.
31:06
[SPEAKER_02]: And hyperlique was like, talked about in the news, like on CNBC, like ABC, like all these different people were starting to talk about like, you know, this new technology.
31:16
[SPEAKER_02]: So it feels like it's just really, um,
31:19
[SPEAKER_02]: You know, it was really kind of like a technology that met the moment, and I see a lot of that, obviously with you guys, and I'm just curious in terms of with Robinhood, like obviously they've gotten so much just attention, their experts at viral marketing and all that kind of stuff.
31:36
[SPEAKER_02]: How do you think they keep going?
31:39
[SPEAKER_02]: How do you think that they keep up their success trajectory at Robin?
31:42
[SPEAKER_02]: And I know you're not speaking for Robinhood.
31:45
[SPEAKER_02]: But basically, how do you think Robinhood
31:47
[SPEAKER_02]: is going to maintain their enormous growth and their enormous market share.
31:55
[SPEAKER_00]: I think that rather than his unique position, because I think that people talk a lot about this idea of like bringing the financial system on chain.
32:03
[SPEAKER_00]: But the reality of it is that it's very hard to do a lot of that without a motivated legacy style like partner that has all the right
32:12
[SPEAKER_00]: Um, whether it's like business development relationships or the right licenses or the right, you know, etc infrastructure, technology to be able to do that.
32:21
[SPEAKER_00]: And I think that Robin Hood is the best position in that way to allow for a lot of the really interesting innovation on the financial side, to really be on crypto rails.
32:33
[SPEAKER_00]: We actually have something very exciting coming up in a few weeks that's a demonstration of this, but unfortunately I can't speak with you yet.
32:41
[SPEAKER_00]: I can't speak to it yet.
32:43
[SPEAKER_00]: But if you remember that specific response that I had in a hopefully an under a month, you'll see an example which I think is a unique thing that only Robin Hood and a decentralized partner could pull off together.
33:01
[SPEAKER_02]: So that's awesome.
33:03
[SPEAKER_02]: I will definitely be at my desk.
33:05
[SPEAKER_02]: I'm sure get the notification.
33:07
[SPEAKER_02]: I'll just be fondly thinking and smiling.
33:10
[SPEAKER_02]: He was right.
33:10
[SPEAKER_02]: He was.
33:13
[SPEAKER_02]: No, that's really cool.
33:15
[SPEAKER_02]: Yeah, no, look, there's a lot, you know, to talk about.
33:18
[SPEAKER_02]: just in terms of the overall market turn, I think that we've kind of experienced and I'm just curious, you know, how have you seen your, I mean, also like kind of a great time for the launch, because you guys launched what feels like to me at the end of the bear market and the start of the new bull market, but how have you kind of seen just from like, you know, your data sets or just anecdotes,
33:42
[SPEAKER_02]: about like this turn in the market because everybody talks about the four-year cycle you mentioned, you know, crypto, the four-year cycle and stuff.
33:49
[SPEAKER_02]: Have you seen the bull market essentially confirmed?
33:53
[SPEAKER_02]: Like would you say we're back in a bull or is this kind of a dead cap bounce?
33:57
[SPEAKER_02]: I know it's a tough question to put you on the spot for it, but just want to throw it out there.
34:02
[SPEAKER_00]: I think I'm hopeful that the bottom is in the past.
34:06
[SPEAKER_00]: I'm not like sure, of course, no one ever is.
34:08
[SPEAKER_00]: But I think that what we're seeing is a form of that diversification, which is that, of course, like,
34:17
[SPEAKER_00]: Crypto prices have been sideways since 2010, but stablecoin adoption has been continuously growing in terms of the amount on chain.
34:26
[SPEAKER_00]: We're starting to see that in terms of RWA ownership.
34:29
[SPEAKER_00]: And so what you're kind of starting to see, I think, is critical moments are obviously really compelling towards people because they see a lot of wealth being created suddenly.
34:40
[SPEAKER_00]: And maybe what we're seeing now is less of like the historical dead kept balance, or we bought them down or like whatever, and more that people are successfully mixed shifting from crypto asset holdings to like stable coins and RWAs, which allow for hopefully more sustainable long-term U.M.
34:58
[SPEAKER_00]: growth in the same way that most, you know, like most brokerages in America that are stock brokerages,
35:03
[SPEAKER_00]: the money that they manage naturally goes up because it's in stocks and even if you're like a bad stock picker you're mostly just underperforming the 7% the S&P goes up you're not underperforming you're not like losing all your money dramatically you're still making like 3% 2% and in a bad year maybe you know it fluctuates around the 7 but the whole point is I think the mixed shift allows people to grow about more sustainably and you don't get these big white
35:30
[SPEAKER_01]: So, you know, I guess talking about all this has got me thinking about another thing because, you know, if we start adding all these different stock tokens and perpetual contracts and these different ways to trade and invest, do you think that that might take away from altcoins?
35:49
[SPEAKER_01]: Because if you look at something like, you know, one of the things that we like to look at over here is the overall state of altcoins.
35:54
[SPEAKER_01]: And when you look at something like the, we call the others chart, right?
36:00
[SPEAKER_01]: It shows, you know, how is the general altcoin outside the top 10 largest cryptos doing?
36:05
[SPEAKER_01]: And excuse me, something that we've seen for a while is that even outside of the 10 crash.
36:11
[SPEAKER_01]: Those were kind of decently lower than where they had been previously.
36:15
[SPEAKER_01]: And my thought process was, do you think that products like we've talked about today might be taking market share away from how people used to traditionally get exposure to crypto in the past through just like your average altcoin?
36:31
[SPEAKER_00]: I think that maybe the high level of your or the principle is that crypto all coins have always fundamentally been more like venture bets.
36:42
[SPEAKER_00]: And so what you're really betting on is a transformational technology and you're betting on being early to a transformational technology.
36:50
[SPEAKER_00]: Um, the unfortunate reality of that is that some number of like the whoever and goes from number whatever 500 mark a cap to like four, okay, It's going to be the majority of the, you know, the venture return style that you would see.
37:08
[SPEAKER_00]: And so I don't think that necessarily I would say it's like an attention game for like all coins.
37:14
[SPEAKER_00]: It's more a question of
37:16
[SPEAKER_00]: I think the fundamental is that the distribution's venture, like size, roughly, maybe not like seed stage venture, but like series air series, be venture for alls.
37:24
[SPEAKER_00]: And so if you're betting like that, then the problem is that you have to be right in the one that is the venture bed, and you have to actually scale into that, which is how a venture firm actually returns capital and you know, does well.
37:41
[SPEAKER_00]: And so that's what I would say is I think it's not like an attention game, it's just that the distribution is not like the stock market where you do get tail returns, but by the time a company is public, it's you know 80% 70% of the way through it's return curve on average.
37:58
[SPEAKER_01]: Fair enough.
37:58
[SPEAKER_01]: Well, again, I don't want to get you in trouble, but I am curious to just pick your brain a little bit more about what is next on your radar.
38:07
[SPEAKER_01]: You got this big announcement.
38:08
[SPEAKER_01]: You can't talk about that.
38:10
[SPEAKER_01]: But what can you tell us?
38:12
[SPEAKER_00]: Yeah, definitely.
38:13
[SPEAKER_00]: So I think that the things that we're focused on in the near term are we're really excited about Dr. Kansas's collateral, which I mentioned a few times, we will allow probably some crypto assets as well.
38:26
[SPEAKER_00]: So we're thinking like East as collateral, probably like SPUIs collateral, and then you can you don't trade wherever you want the other side.
38:33
[SPEAKER_00]: I think that will be really exciting because it'll allow for really deep liquidity.
38:38
[SPEAKER_00]: which I'm very good at experience.
38:40
[SPEAKER_00]: I really excited about our mobile app, which is also in pre order right now.
38:45
[SPEAKER_00]: So we're doing a lot of work there that I think well allow people to access stocks in a much easier way internationally.
38:55
[SPEAKER_00]: So internationally we have all these things around more like very lucky actually to be Americans.
39:01
[SPEAKER_00]: We have Robin Hood, which is one of the best
39:08
[SPEAKER_00]: Um, we think that the stablecoin adoption in international countries is like a leading indicator of people who will, who right now are using it to avoid inflation and local currency, but eventually would maybe hold American equities because, you know, you can do better than avoid inflation.
39:27
[SPEAKER_00]: And then yeah, I would look forward to we think that we'll be making some announcements around the Asian conferences around KVW and token that I'll be the stuff that are hopefully be really exciting.
39:42
[SPEAKER_00]: But yeah, those are probably people a little bit of a lid on until the end of the month.
39:47
[SPEAKER_02]: I love it.
39:48
[SPEAKER_02]: And I appreciate it.
39:49
[SPEAKER_02]: Eddie, thank you so much for joining us here.
39:51
[SPEAKER_02]: CEO and founder of Arcus, again, the leading decks on Robin Hood chain.
39:58
[SPEAKER_02]: We're so grateful that you're able to spend the time with us today.
40:01
[SPEAKER_02]: Where can people find out more?
40:03
[SPEAKER_02]: We'll put some notes in the show notes where do you want to drive some folks to?
40:09
[SPEAKER_00]: Yeah, yeah, you can definitely go to August of Ecclesi, or you can find us on Twitter.
40:13
[SPEAKER_00]: So, both of those are great routes if you want to either start trying the product, or you want to be alerted of some of those juicy products that are coming out soon.
40:21
[SPEAKER_00]: I guess Twitter will probably be like a little bit easier in terms of that, but either is great.
40:25
[SPEAKER_00]: Awesome.
40:26
[SPEAKER_02]: Well, again, we greatly appreciate it.
40:28
[SPEAKER_02]: And we hope to have you back on some time.
40:29
[SPEAKER_02]: Maybe in a quarter or two.
40:31
[SPEAKER_02]: And we will be able to debrief on those announcements that we're foaming at the mouth to hear about.
40:36
[SPEAKER_02]: But again, we'll keep an eye out.
40:39
[SPEAKER_02]: We'll invite you back on when those announcements come and everybody at home watching.
40:44
[SPEAKER_02]: Thank you for joining.
40:45
[SPEAKER_02]: Stay tuned for next week.
40:47
[SPEAKER_02]: We got some more great guests coming.
40:49
[SPEAKER_02]: Mr. Eddie Zayne, take care.
40:51
[SPEAKER_02]: Thank you.