Navigating the Future of Finance: How TradFi is Embracing DeFi and Stablecoins

Major Trad institutions are still working on their crypto custody plans.

Deutsche Bank is the latest bank to announce plans to do so starting next year.

Yet Trady is still increasingly embracing D5.

Stablecoins do seem to be a top priority for the big banks right now, but we're also seeing retail trading apps such as Robin Hood and Gemini explore tokenize. strategies.

Well, joining me to break all of this down is Evan Feng, partner and director of research for.5.

Evan, good morning and thank you so much for joining me.

So BI, Gemini, Kraken, and Robin Hood, all announcing tokenized equity plans in the past week.

So how do you expect to see on on chain finance on board new traders and retail?

Hi Remi, great to be here.

Thanks for having me.

I think the news is obviously directionally very positive.

One of the underlying tenets of blockchain is global access for global products, and I think we're starting to see the convergence that we at Coin Fund have always thought would happen playing out in real time.

In my old world investment.

Invest in investing rollout hedge funds like Citadel and 72, it always felt like the the discourse around how to invest in stocks and bonds, etc. were, you know, relegated to only folks of kind of the smaller industry as opposed to being broadly accessible.

I think we've seen with the proliferation.

In of these instruments today on chain that it's just making US equities more accessible globally through the power of the blockchain and that actually mirrors a lot what we've already seen starting to happen with stablecoins as well.

So I think the same crypto rails are going to power the proliferation of US assets kind of globally across the world.

And building on what you just said, Evan, stablecoins have been getting plenty of airtime.

Trad 5's top D5 priority appears to be stablecoins, at least for now.

So how do you expect stablecoins to accelerate DI growth here?

Yes, so one of the beauties of stablecoins and one reason they've been a great on-ramp and training wheel product for most of the people who are new to being crypto native is the fact that they don't carry price risk.

As you know, they're backed by a US dollar, a US dollar somewhere, depending on how the sponsor's custody is set up.

But what is terrific about stablecoins is they are native on chain bear.

Assets.

So we are already seeing stablecoins add fuel to the fire for D5 because they are able to be deposited into a variety of different use cases on chain.

Some of the ones that we're aware of include these fault-like products, for example, by Veta and other vault providers that actually allow access to a variety of passive and active.

Returns through taking a variety of collateral that includes not only Bitcoin and ether but stablecoins as well.

So I think even beyond just the transfer payments use case or remittances or settlements from payments or receivables perspective, stablecoins themselves are actually are proving to be acceptable collateral universally across much of the fi's primitives.

And speaking of use cases, what challenges do you think have historically weighed on DFI's growth in terms of consumer adoption and also what D5 projects are these challenges based on?

Right, so two great related questions.

I think the earliest product market fit that we saw with DFI was through decentralized exchanges or DEXes, perhaps you've already talked about you know swap before, but generalizing from there, the Common problems that DI has had historically are around accessibility and that onboarding friction.

It's not the easiest to understand how to navigate to the right web front end and really safely interact with the DI protocol.

Sometimes these protocols have their own front ends, but those carry certain licensing and certainly prior to this administration, additional regulatory risk.

Other risks DI have also.

Had to navigate through include on chain efficient market predation in some ways you've probably heard about MEV minor extractable value, and there are other risks when you think about multi-chain DI.

So interacting with exchanges or decentralized exchanges natively on Ethereum, but at some points users have also wanted to access D5 that is on other blockchains.

So I think consumer adoption is now progressing because a lot of these Challenges are being solved either at the application or at the infrastructure layer.

So whether through bridge aggregation protocols like LeFi or others, there are now ways to make it easier for the consumer to not have to bear the cognitive burden of navigating through DeFi, but at the same time benefit from accessing whatever their ultimate risk tolerance is as it relates to on chain liquidity or sources of potential investment return.

And while we're on this topic, explain to the layperson who's watching right now what D5 vaults actually are and what is Coin Fund doing in the space?

Yeah, that's a great question.

So we believe DI vaults are an emerging perimeter that is here to stay.

The simple analogy is to think of an on-chain container like a box where you can deposit collateral a variety of different kinds Bitcoin, ether, stablecoins as well.

And ultimately these vaults enable access to a variety of different passive and active strategies.

The vault market itself is pretty new in crypto.

It's only been around for maybe 1.5 or 2 years, but we've already seen a lot of different companies build vault technologies.

The market leader, actually a portfolio company of ours, is called Beta, but there are a few others, and ultimately what they, what they enable access to is really a turnkey solution for both a B2B and a B2C go to market.

So you can directly access them yourself, or as we're seeing with Beta and other vault providers, they're having a lot of A demonstrating a lot of traction, going to businesses both web through Native as well as Web 2 and FinTech in nature and representing kind of this customer ease of use as it relates to the overall motion that we're seeing of everyday users looking to get more out of their money by having that money come on chained, and we think vaults are a big part of that future.

OK, Evan, well, we will have to leave it there, but thank you so much for joining us this morning and thank you so much for sharing your insights and your perspective.

Thank you, it's a pleasure.

Thank you.