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Banks Got Outplayed DeFi Vault Trick Just Beat the Banks · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Clarity Act is underway, and one of the biggest issues
• 0:02
  Speaker 1: right now is the demand of the banks and where
• 0:04
  Speaker 1: stable coin yields are going to be done. Well, we're
• 0:06
  Speaker 1: going to break it down today. Let's just jump right in.
• 0:08
  Speaker 1: I want to go over and look at the Clarity
• 0:10
  Speaker 1: Act first because there is a lot happening. We are
• 0:13
  Speaker 1: starting to see a spike in the potential for a
• 0:17
  Speaker 1: Clarity Act being signed into law. This would be huge
• 0:20
  Speaker 1: for the market, especially right now as things are starting
• 0:24
  Speaker 1: to slide on all assets out there. And when I
• 0:27
  Speaker 1: had Cody Carbone on from the Digital Asset Group, it
• 0:32
  Speaker 1: was an interesting statement when we started talking about vaults,
• 0:35
  Speaker 1: and the reason was is, well, listen to this clip
• 0:38
  Speaker 1: and you'll see you look at these vaults going crack
• 0:41
  Speaker 1: and pro right there just example of of eight percent
• 0:44
  Speaker 1: right now to possibly earn this is an escape patch
• 0:48
  Speaker 1: if yields do not occur. Do you think banks understand
• 0:52
  Speaker 1: what's happening in vaults right now?
• 0:54
  Speaker 2: No, But we don't want to give them any inch
• 0:57
  Speaker 2: because then they will still try to take a mile
• 0:59
  Speaker 2: and once they wake.
• 1:00
  Speaker 3: Up to this, they're going to be pissed.
• 1:01
  Speaker 2: But that's the beauty of the digital asset industry. The
• 1:05
  Speaker 2: banks will lose their minds of this, but I think
• 1:06
  Speaker 2: we're two three years away before they have any understanding
• 1:09
  Speaker 2: of what a D five.
• 1:10
  Speaker 1: All is DFI vaults. This could be one of the
• 1:13
  Speaker 1: areas that could surprise banks a little bit. Well, one
• 1:16
  Speaker 1: thing we want to do was bringing an expert, and
• 1:18
  Speaker 1: of course that is Jonathan Mann coming in from you
• 1:21
  Speaker 1: know them bit wise. How are you, Jonathan good?
• 1:23
  Speaker 3: Great, doing great? Thanks for having me.
• 1:25
  Speaker 1: Hey, let's talk about valts. This tweet got our interest
• 1:28
  Speaker 1: very quickly. Finances moving on chain vaults are a key
• 1:32
  Speaker 1: part of that offering, and you guys kind of point
• 1:35
  Speaker 1: at a couple of things in reference to what you're doing,
• 1:38
  Speaker 1: and that is that bitwise is launching non custodial vault
• 1:41
  Speaker 1: strategies through Morpho and with Morpho with some pretty decent
• 1:45
  Speaker 1: apy on this around these lending pools. So some good activity.
• 1:49
  Speaker 1: Can you share a little bit more about what assets
• 1:52
  Speaker 1: you guys are going to be supporting.
• 1:54
  Speaker 3: Yeah, so that was a big kind of watershed moment
• 1:58
  Speaker 3: for us. Our first on chain product from bit wise.
• 2:03
  Speaker 3: It's structured as a overcoloralized lending vault against you know,
• 2:11
  Speaker 3: the largest assets in Crypto, Bitcoin and eth overcoralized and
• 2:18
  Speaker 3: using us DC as the lending asset. In general, those
• 2:23
  Speaker 3: deals are targeting four to six percent, depending on market demand.
• 2:27
  Speaker 1: All right, are you guys what chains are you looking
• 2:30
  Speaker 1: to launch on right now?
• 2:32
  Speaker 3: Initially, this first vault will go live on Ethereum, L
• 2:36
  Speaker 3: one and on Base and then you know, obviously from there.
• 2:40
  Speaker 3: I like to tell a lot of people that we're
• 2:42
  Speaker 3: racing to the starting line here. So there's just like
• 2:46
  Speaker 3: the a world of opportunity, a world of different products,
• 2:52
  Speaker 3: different integrations that we can do. Well, We're generally going
• 2:56
  Speaker 3: where our clients are and where we see market demand.
• 2:59
  Speaker 1: How are you guys curating safety? Because I think that
• 3:03
  Speaker 1: especially when you look at security, Uh, this is one
• 3:06
  Speaker 1: of the biggest factors out there. I think a lot
• 3:09
  Speaker 1: of people look at Morpho because they're connected to coinbase.
• 3:12
  Speaker 1: How are you guys going about that?
• 3:13
  Speaker 3: Yeah? Absolutely, I mean safety is number one priority we approach.
• 3:18
  Speaker 3: We approach vaults just like we approach any type of
• 3:22
  Speaker 3: business that or product that we launch. You know, if
• 3:26
  Speaker 3: we were fiduciaries at first and foremost, right, and so
• 3:30
  Speaker 3: we are approaching it from a safety from a market
• 3:34
  Speaker 3: risk standpoint as well as from a smart contract hack
• 3:37
  Speaker 3: risk standpoint, we build in a lot of safeguards as
• 3:41
  Speaker 3: it relates to you know, the volatility of the assets
• 3:44
  Speaker 3: and preserving you know, the principle of the assets that
• 3:49
  Speaker 3: get to positi into our vaults, and we're also monitoring
• 3:52
  Speaker 3: smart contracts looking for hack detection to protect us from
• 3:57
  Speaker 3: any malicious activity as well.
• 3:59
  Speaker 1: Well, that's good to here. One of the biggest players
• 4:01
  Speaker 1: out there is Steakhouse Finance, and of course they have
• 4:05
  Speaker 1: been absolutely just skyrocketing over in their partnership with Morpho
• 4:09
  Speaker 1: around these prime vaults. When you look at them getting
• 4:12
  Speaker 1: kind of that trust mindset in the market and you
• 4:16
  Speaker 1: bring in a name like bit Wise, people would say,
• 4:19
  Speaker 1: that's a trusted mindset. Are you guys, do you think
• 4:23
  Speaker 1: you have a chance to maybe flip what Steakhouse Finance
• 4:26
  Speaker 1: is doing.
• 4:28
  Speaker 3: Yeah, I mean what I would say is that bit
• 4:30
  Speaker 3: Wise is making vault creation a high priority for us,
• 4:35
  Speaker 3: not just for this year. It's not an experiment. We're
• 4:39
  Speaker 3: in this because we believe that vault AUMs are going
• 4:43
  Speaker 3: to grow significantly and we want to be a meaningful
• 4:47
  Speaker 3: part player in this space. So, yeah, Steakhouse is doing great.
• 4:51
  Speaker 3: We think we can do just as well.
• 4:53
  Speaker 1: All right, I like it. What about withdraw all times?
• 4:56
  Speaker 1: What's that going to look like?
• 4:57
  Speaker 3: Every vault is different. In the vault primarily in our space,
• 5:02
  Speaker 3: are one hundred percent liquid, have one hundred percent of liquidity.
• 5:05
  Speaker 3: You know, you can come and go as you please.
• 5:09
  Speaker 3: As we go further out and we explore other types
• 5:12
  Speaker 3: of strategies that may be different, but you know our
• 5:14
  Speaker 3: initial vaults will be one hundred percent liquid.
• 5:17
  Speaker 1: Jonathan, When you look at just curation fees, I'm just
• 5:20
  Speaker 1: showing the chart here on Doune you can kind of
• 5:22
  Speaker 1: see this has been climbing dramatically over quite some time here,
• 5:27
  Speaker 1: and there's kind of the leader list. Do you think
• 5:28
  Speaker 1: we could hit ten million in curator fees in twenty
• 5:33
  Speaker 1: twenty six? Do you think we'll continue to see the
• 5:34
  Speaker 1: market go up?
• 5:35
  Speaker 3: Oh? Absolutely. We put out at the end of last
• 5:38
  Speaker 3: year our projections and our predictions for twenty twenty six.
• 5:42
  Speaker 3: You know, one of those projections was for aum within
• 5:47
  Speaker 3: vaults to double in twenty twenty six. You know, with
• 5:50
  Speaker 3: that fees will go up. We may see some compression
• 5:53
  Speaker 3: as it becomes more competitive, but you know, this is
• 5:56
  Speaker 3: a growing industry. And again it's a priority for us.
• 6:00
  Speaker 1: If you look at trad fi, how would this compare
• 6:03
  Speaker 1: if you look at fund management, how would this compare
• 6:06
  Speaker 1: for functionality with what you guys are doing.
• 6:09
  Speaker 3: We're big believers that vaults are just a superior vehicle, right.
• 6:14
  Speaker 3: Our CEO, Mahogan calls it ETFs two point zero. Right,
• 6:18
  Speaker 3: this is a fantastic instrument vehicle for investors to access
• 6:26
  Speaker 3: any type of strategy. Right today we're doing lending vaults.
• 6:30
  Speaker 3: In the future, it could be anything else and it's
• 6:34
  Speaker 3: just fantastic. Right. Do you have transparency, what edibility, accessibility?
• 6:38
  Speaker 3: It's borderless, it's frictionless us the next iteration of investment vehicles.
• 6:45
  Speaker 1: Yeah, the opportunity is big. This is something we've been
• 6:48
  Speaker 1: looking at for quite some time. DeFi is one of
• 6:50
  Speaker 1: the areas I think we're going to see some definite
• 6:52
  Speaker 1: growth in. Obviously Flare networks. We've talked to Hugo and
• 6:56
  Speaker 1: his team before. They focus in on bitcoin and x
• 7:00
  Speaker 1: RP and are starting to expand, and then they've added
• 7:03
  Speaker 1: in some tie ins with Morpho around XRP. When you
• 7:07
  Speaker 1: look at that and where you guys are, what about XRP.
• 7:10
  Speaker 1: You know, vaults, I mean you guys are right there
• 7:12
  Speaker 1: on the list. I'm looking at the XRP locked up
• 7:15
  Speaker 1: list and guests who shows up bit wise.
• 7:17
  Speaker 3: What about Yeah? Absolutely. I mean again, like vaults can
• 7:22
  Speaker 3: do really anything right and so and they can take
• 7:25
  Speaker 3: any assets as the deposit asset. What's always been a
• 7:29
  Speaker 3: driving principle for a bit wise is that we we
• 7:32
  Speaker 3: listen to what our customers want and we then we
• 7:35
  Speaker 3: try to build solutions for to suit those wants and
• 7:39
  Speaker 3: needs right and so we'll continue to do that even
• 7:43
  Speaker 3: with vaults. As our as our clients and our customers
• 7:46
  Speaker 3: are asking for XRP type yields, then we'll develop products
• 7:52
  Speaker 3: to meet those requests.
• 7:54
  Speaker 1: I think this would definitely bridge the gap of trust
• 7:58
  Speaker 1: that and I'm not saying that you know, people don't
• 8:00
  Speaker 1: trust DeFi, but you know, when you look at traditional finance,
• 8:03
  Speaker 1: a lot of people and maybe even some you know,
• 8:05
  Speaker 1: high network individuals who are willing to go into vaults,
• 8:08
  Speaker 1: they may be looking to a bit wise because of
• 8:10
  Speaker 1: the trust factor that you guys kind of bring in
• 8:12
  Speaker 1: terms of regulated finance. So you mentioned other assets that
• 8:16
  Speaker 1: could potentially be there. We're starting to see gold show
• 8:20
  Speaker 1: up around this here, of course, is roro. We've talked
• 8:23
  Speaker 1: a little bit about them in the past, but gold
• 8:25
  Speaker 1: silver showing up inside vaults now getting yields. Do you
• 8:29
  Speaker 1: think that is in the cards for what you guys
• 8:31
  Speaker 1: are going to do.
• 8:31
  Speaker 3: It's it's incredible. Tokenization is a fantastic thing. It provides access,
• 8:37
  Speaker 3: but then once you have the exposure to it, you
• 8:39
  Speaker 3: naturally start to wonder what else can you do with
• 8:42
  Speaker 3: this asset? Right right? Yeah? And delivering yield, delivering returns
• 8:47
  Speaker 3: on those whole you know, spot exposures that they have,
• 8:51
  Speaker 3: that is something that we are interested in doing. We
• 8:56
  Speaker 3: already have had conversations hearing from people who are looking
• 9:00
  Speaker 3: for yield on those types of assets, and so yeah,
• 9:04
  Speaker 3: it's it's all part of the equation of what's next
• 9:09
  Speaker 3: for bit wives.
• 9:10
  Speaker 1: Do you think this is going to make all coins
• 9:13
  Speaker 1: more volatile or less volatile as we start to see
• 9:16
  Speaker 1: these locked up involves That's a good question.
• 9:20
  Speaker 3: That's hard to predict. Like my gut reaction is that
• 9:23
  Speaker 3: if you're holding an asset that you believe in and
• 9:26
  Speaker 3: it's and then now you can generate yield with it,
• 9:29
  Speaker 3: you it's more of a reason for you to continue
• 9:31
  Speaker 3: to hold it. Right now, of course, if the asset
• 9:35
  Speaker 3: is incredibly volatile and it's going and it's experiencing a
• 9:39
  Speaker 3: draw down, then every user and every investor is going
• 9:43
  Speaker 3: to have a different calculus of whether or not that's
• 9:44
  Speaker 3: worth it for them to can you continue hold on?
• 9:47
  Speaker 3: You know, net net, all things being equal, a yielding
• 9:49
  Speaker 3: acid is more attractive than a non yielding aid, for sure.
• 9:52
  Speaker 1: Yeah, for sure when you go further into this, and
• 9:54
  Speaker 1: now you've had a chance to work with a lot
• 9:56
  Speaker 1: of the regulators and setting these things up, is KYC
• 10:00
  Speaker 1: gating going to essentially limit your ability to grow in
• 10:05
  Speaker 1: the future, especially when you look at some of the
• 10:07
  Speaker 1: unchained projects that bitwise is trying to do.
• 10:10
  Speaker 3: You're probably the most famous example of vaults and being
• 10:13
  Speaker 3: being integrated is right, like the Coinbase morpho integration with
• 10:18
  Speaker 3: Steakhouse as the curator. Right, the vault itself is fully permissionless, right,
• 10:24
  Speaker 3: and then the but the distribution process is happening through
• 10:29
  Speaker 3: Coinbase and Coinbase is users are being kyc and that
• 10:36
  Speaker 3: seems to be quite a powerful paradigm. And so I
• 10:40
  Speaker 3: would imagine that things like that continue to be explored,
• 10:44
  Speaker 3: and yeah, well we'll go from there. We'll obviously evolve
• 10:47
  Speaker 3: with the regulations as as they evolve and change as well.
• 10:52
  Speaker 3: And we're not here to kind of skirt regulations or
• 10:55
  Speaker 3: anything like that. And but you know, we're here to
• 10:58
  Speaker 3: play by the rules in play play you accordingly.
• 11:01
  Speaker 1: One thing that has started to percolate that I think
• 11:04
  Speaker 1: is getting a lot of attention is the yields that
• 11:07
  Speaker 1: are going into self custody wallets. Tangum one of our
• 11:10
  Speaker 1: partners here on the show. We've talked with this about
• 11:14
  Speaker 1: them or with about this with them many times. And
• 11:18
  Speaker 1: why not get a like a bit wise you know,
• 11:21
  Speaker 1: card going here to where you could essentially tie into this.
• 11:24
  Speaker 1: That would be a perfect partnership to integrate into wallets.
• 11:26
  Speaker 3: What do you think. I think we've had enough to
• 11:29
  Speaker 3: chew on with between all the different things that we're doing.
• 11:31
  Speaker 3: But I love I love the creativity there.
• 11:35
  Speaker 1: Hey, we're coming up with ideas. Man, we want to
• 11:37
  Speaker 1: get as going for you guys, because it could open
• 11:40
  Speaker 1: up something that I think is going to be big
• 11:42
  Speaker 1: and that is going to be around tokens. Lido is
• 11:45
  Speaker 1: doing this right now. If you look at some of
• 11:47
  Speaker 1: the things they're doing, they actually give tokens or I
• 11:52
  Speaker 1: guess yield you know, bonuses that we don't know what
• 11:55
  Speaker 1: that's going to be worth yet, but the point is
• 11:57
  Speaker 1: is it's loyalty bonuses. You could do the same thing
• 12:00
  Speaker 1: here for a wise loyalty token to hold inside a vault.
• 12:03
  Speaker 1: Make a light a wise loyalty token, make it benefits
• 12:06
  Speaker 1: some other.
• 12:10
  Speaker 3: I'll try to pitch that in our next products update meeting.
• 12:14
  Speaker 1: If you guys do that, you got to give us
• 12:16
  Speaker 1: credit for that. Okay, So I'm gonna I'm gonna pin
• 12:18
  Speaker 1: Matt down.
• 12:20
  Speaker 3: Listen.
• 12:21
  Speaker 1: Other things that we're watching is moves in the space
• 12:25
  Speaker 1: right now where people are now being able to get
• 12:28
  Speaker 1: paid via stable coins. Imagine if you had a stable
• 12:32
  Speaker 1: coin payment direct deposit and it goes right into my
• 12:36
  Speaker 1: bit wise vault.
• 12:37
  Speaker 3: Absolutely absolutely, I think that's the of the future. It
• 12:41
  Speaker 3: starts with stable coins as just you know, payment, more
• 12:45
  Speaker 3: efficient payments and remences. Right. But once you're in that world,
• 12:49
  Speaker 3: you don't really want to leave, right exactly. Wow, why
• 12:53
  Speaker 3: have to on off board just to go invest? That
• 12:56
  Speaker 3: is actually the driving force of why vaults will become
• 13:00
  Speaker 3: the next big thing, if not already the next big thing.
• 13:04
  Speaker 1: Yeah, I think they are now for sure. I want
• 13:06
  Speaker 1: to go to a lightning round with you and get
• 13:08
  Speaker 1: your opinion because you get a chance to see this.
• 13:10
  Speaker 1: Do you think clarity is going to pass with a
• 13:12
  Speaker 1: stable coin yield band this year? The banks get their way?
• 13:16
  Speaker 4: Yay, Nay, that's a good one, I would say current,
• 13:23
  Speaker 4: I would say probably yay, yeah, yes, this is all right.
• 13:29
  Speaker 1: Okay, what about banks trying to ban vaults next?
• 13:33
  Speaker 3: What do you think? No? I mean, I don't think
• 13:35
  Speaker 3: they even know what to do here. It's it's they
• 13:39
  Speaker 3: have so many other problems to worry about.
• 13:41
  Speaker 1: Hey, listen, Jamie Diamond watches our show. I'm telling you,
• 13:46
  Speaker 1: I don't know if you knows what vaults is, but
• 13:47
  Speaker 1: he definitely watches our show. Fed rate cuts, will that suppressed.
• 13:51
  Speaker 3: The vault growth?
• 13:52
  Speaker 1: Do you think if we get rate cuts reducing that
• 13:55
  Speaker 1: interest right down?
• 13:56
  Speaker 3: No? I actually I think would be a benefit for vaults.
• 13:59
  Speaker 3: Why is that? Well, well, if you think about a
• 14:01
  Speaker 3: risk for your rate right like as rates are coming down, right,
• 14:04
  Speaker 3: then you know that becomes holding a T bill becomes
• 14:08
  Speaker 3: less attractive than anything that can.
• 14:09
  Speaker 1: Happen in define Okay, one of a couple others here
• 14:12
  Speaker 1: on chain. Vaults reach one hundred billion in AUM this year.
• 14:15
  Speaker 1: Do you think we'll hit that that.
• 14:17
  Speaker 3: I would love to see it. But do you think
• 14:20
  Speaker 3: it will happen? Yeah, the realist in me would say no,
• 14:23
  Speaker 3: but I would love to see it.
• 14:25
  Speaker 1: All right, you're less of a bull than me. I say, yes,
• 14:28
  Speaker 1: that's going to happen. Who's going to dominate the vaults
• 14:31
  Speaker 1: more Ave or Morpho?
• 14:32
  Speaker 3: I would say Morpho has created this category and you're
• 14:37
  Speaker 3: going to win.
• 14:38
  Speaker 1: So you think they win because of the creation kind
• 14:40
  Speaker 1: of first mover, obviously distribution with coinbase getting that trusted,
• 14:45
  Speaker 1: you know, status. I don't know, man, I feel like
• 14:48
  Speaker 1: they're going to win the institutional side, but I think
• 14:50
  Speaker 1: AVE is going to win the hearts and minds of
• 14:52
  Speaker 1: the common person. And when the common person finds out
• 14:55
  Speaker 1: how this works, it is going to be a le
• 14:58
  Speaker 1: It's going to be a gold rush.
• 14:59
  Speaker 3: It's go a gold rush.
• 15:00
  Speaker 1: So I think maybe AVE.
• 15:02
  Speaker 3: They're both fantastic names. Yeah, for sure.
• 15:05
  Speaker 1: Matt Hogan abandons ETFs and becomes a Vault Maxie. Yes,
• 15:11
  Speaker 1: all right, Matt Hogan, you're watching this. I know you're
• 15:14
  Speaker 1: going to be watching this right now. You are now
• 15:17
  Speaker 1: the Vault Maxie. According to Jonathan and me. Hey, Jonathan's
• 15:21
  Speaker 1: been great having you on the show. Thank you so much.
• 15:23
  Speaker 1: I know you get a run, but we do appreciate
• 15:25
  Speaker 1: you stopping in today.
• 15:26
  Speaker 3: Yeah, anytime. You know, it's a pleasure.
• 15:35
  Speaker 1: If you like this video, like and subscribe, drop a
• 15:37
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• 15:41
  Speaker 1: The link is in the description.