WEBVTT 1 00:00:00.240 --> 00:00:03.399 Financial use cases that touch our day to day life. 2 00:00:04.120 --> 00:00:06.719 They need to connect with the treade file stack right, 3 00:00:07.160 --> 00:00:09.679 And I think this connection between DeFi and treade file 4 00:00:10.320 --> 00:00:15.720 is clumsy, it's difficult, it is opaque and is prone 5 00:00:15.759 --> 00:00:19.359 to risk. So I think that the first the first aspect, 6 00:00:19.640 --> 00:00:22.039 I think the first evolution that will be required is 7 00:00:22.079 --> 00:00:24.839 for more stuff to come natively on chain. So we 8 00:00:24.879 --> 00:00:28.920 see a lot of securities to organized so called, a 9 00:00:29.039 --> 00:00:32.320 lot of things natively coming on a on a on 10 00:00:32.399 --> 00:00:35.799 crypto stack. So I think the define needs to expand 11 00:00:35.799 --> 00:00:39.320 a little bit because otherwise we are just like patching 12 00:00:39.439 --> 00:00:42.000 different technologies at the same time and this create risk. 13 00:00:49.039 --> 00:00:51.240 This content is brought to you by v chain, which 14 00:00:51.280 --> 00:00:55.439 is a leading enterprise grade Layer one public blockchain spearheading 15 00:00:55.560 --> 00:01:00.000 a digital revolution from a sustainable, highly scalable smart contract platform. 16 00:01:00.520 --> 00:01:04.079 The v chain blockchain has many unique features, which makes 17 00:01:04.120 --> 00:01:07.719 it an ideal choice for Web three applications. V chain 18 00:01:07.840 --> 00:01:12.599 is working with many great enterprises such as PWCGVONCI, BMW 19 00:01:12.920 --> 00:01:16.239 and Walmart China. Most recently, they partnered with the Boston 20 00:01:16.319 --> 00:01:22.560 Consulting Group to build a revolutionary decentralized application ecosystem. I'm 21 00:01:22.560 --> 00:01:25.200 a big believer in this project. I have been since 22 00:01:25.239 --> 00:01:28.040 twenty eighteen. I've been a VET token holder for years 23 00:01:28.400 --> 00:01:32.760 and this blockchain is highly scalable, great with security and speed, 24 00:01:32.879 --> 00:01:36.359 and it has low energy consumption. If you'd like to 25 00:01:36.439 --> 00:01:39.640 learn more about v chain, please visit vchain dot org. 26 00:01:39.959 --> 00:01:42.760 Link will be in a description. Welcome to the Thinking 27 00:01:42.760 --> 00:01:45.719 Crypto Podcast. I'm your host, Tony Edward. With me today 28 00:01:45.760 --> 00:01:49.200 is Luca Prospery, who is the CEO and co founder 29 00:01:49.280 --> 00:01:52.319 of m zero Labs. Luca, great to have you on. 30 00:01:52.799 --> 00:01:55.239 Thanks for having me Tony, Luca. 31 00:01:55.560 --> 00:01:58.319 As stated before the recording, I'm excited to learn about 32 00:01:58.480 --> 00:02:01.879 m zero you guys. Recently ran is an incredible of 33 00:02:01.959 --> 00:02:05.480 funding round which was led by being Capital Crypto. But 34 00:02:05.560 --> 00:02:07.599 let's start with your background. Where are you from and 35 00:02:07.640 --> 00:02:09.039 what's your professional background? 36 00:02:09.560 --> 00:02:12.919 Technically from Italy, although I haven't lived in Italy for 37 00:02:12.919 --> 00:02:16.039 a very long time, I actually spent most of my 38 00:02:16.919 --> 00:02:22.960 adult career in London. I'm a mathematician by background. I 39 00:02:23.000 --> 00:02:27.439 spent fifteen years more than fifteen years in traditional finance 40 00:02:28.840 --> 00:02:33.199 as an advisor, investment banker, or investors in financial institutions 41 00:02:34.159 --> 00:02:37.759 before deciding that DeFi was too interesting for me. To 42 00:02:37.800 --> 00:02:40.599 stay out of it during COVID, and then I decided 43 00:02:40.639 --> 00:02:46.719 to leave what I was doing before and join the 44 00:02:46.759 --> 00:02:49.159 DeFi revolution. I mean, we can go as deep as 45 00:02:49.159 --> 00:02:51.680 you want there. But I spent the first couple of 46 00:02:51.759 --> 00:02:55.919 years being actively participating to some of the largest protocols INFI, 47 00:02:56.360 --> 00:03:02.039 most notably maker Out, advising some funds, investing in the space, 48 00:03:02.080 --> 00:03:05.520 and publishing my own research under a sub stack called 49 00:03:05.680 --> 00:03:07.439 dirt Roads that started as. 50 00:03:07.360 --> 00:03:08.919 A game and became something more. 51 00:03:09.759 --> 00:03:12.800 Then we decided to join forces with my two co founders, 52 00:03:12.800 --> 00:03:15.240 Oliver and Gregg, and found and zero at the very 53 00:03:15.319 --> 00:03:16.199 end of twenty twenty two. 54 00:03:17.280 --> 00:03:21.879 Now you mentioned, you know, being in a treadfy historically 55 00:03:21.960 --> 00:03:25.520 and an advisor to companies and funds. What was your 56 00:03:25.560 --> 00:03:29.560 first encounter with crypto? Was it a DeFi protocol or 57 00:03:29.639 --> 00:03:31.960 was it bitcoin? And you know where did it click 58 00:03:32.000 --> 00:03:32.199 for you? 59 00:03:33.159 --> 00:03:33.400 Yeah? 60 00:03:33.560 --> 00:03:36.680 For me, it was not Bigcoin. For me, it was DEFY. Indeed, 61 00:03:37.319 --> 00:03:41.400 the reason is that I have been deeply involved in 62 00:03:41.479 --> 00:03:45.599 financial institutions for fifteen years, right, And you know, sometimes 63 00:03:45.639 --> 00:03:49.039 there is this conception of I don't know a banker 64 00:03:49.639 --> 00:03:55.080 that knows who knows banking. Actually bankers are service providers 65 00:03:55.159 --> 00:03:56.919 or investors or service providers. 66 00:03:56.919 --> 00:03:58.319 They know the industry they operate. 67 00:03:58.400 --> 00:04:01.360 And I used to be a banker for bankers, So 68 00:04:01.400 --> 00:04:05.520 I used to be a financial institution specialist at Morgan Stanley, 69 00:04:06.120 --> 00:04:08.039 so one of the largest investment banks in the world, 70 00:04:08.479 --> 00:04:11.520 and I used to invest in banks and financial institutions, 71 00:04:11.560 --> 00:04:16.759 so I knew deeply how money is created, distributed, and 72 00:04:16.800 --> 00:04:20.839 how actually financial intermediation works most people, most people ignore it. 73 00:04:21.519 --> 00:04:24.439 But I stayed out of the so called fintech revolution 74 00:04:25.120 --> 00:04:27.600 because for me, it was a very interesting front end, 75 00:04:27.920 --> 00:04:31.000 let's say, innovation, but the back end of financial institutions 76 00:04:31.040 --> 00:04:32.680 world was always the same, like you know, the way 77 00:04:32.720 --> 00:04:35.720 we we create money, we move it, we store it, 78 00:04:35.839 --> 00:04:38.959 the way we the way we like we recognize value, 79 00:04:39.000 --> 00:04:43.319 et cetera. So when I started looking at DeFi protocols, 80 00:04:43.680 --> 00:04:46.720 this was in the beginning of the DeFi summer. For me, 81 00:04:46.800 --> 00:04:49.079 it was like an Euroca moment in the sense that 82 00:04:49.120 --> 00:04:52.800 I realized that for the first time, maybe even unconsciously, 83 00:04:53.240 --> 00:04:56.120 there were teams that were trying to reinvent the way 84 00:04:56.199 --> 00:04:59.680 actually we create money in the first place. So there 85 00:04:59.720 --> 00:05:03.240 were actually innovating the back end of financial institutions, which 86 00:05:03.279 --> 00:05:06.199 is very philosophical in nature, so that's why I got fascinated. 87 00:05:06.279 --> 00:05:09.879 So for me to click, the real clique was maker 88 00:05:09.959 --> 00:05:13.279 out I started. I don't even remember how I got 89 00:05:13.279 --> 00:05:14.800 in touch with the guys at the first place, but 90 00:05:14.879 --> 00:05:17.439 it was very quick down the rabbit hole time kind 91 00:05:17.439 --> 00:05:18.199 of process. 92 00:05:18.560 --> 00:05:22.519 Wow. And does it surprise you that many of these 93 00:05:22.600 --> 00:05:25.759 firms like Morgan Stanley, black Rock and so forth are 94 00:05:25.800 --> 00:05:30.519 now participating with ETFs pick one ETFs, Many are testing tokenization, 95 00:05:31.319 --> 00:05:34.600 some are custodying stable coin reserves. I think black Rock 96 00:05:34.639 --> 00:05:38.959 custodies circled USDC reserves. Do you feel this is inevitable 97 00:05:39.040 --> 00:05:44.199 they all have to capitulate to this technology. 98 00:05:44.279 --> 00:05:47.680 Yes and no, in a sense that it doesn't surprise 99 00:05:47.800 --> 00:05:53.279 me that very sophisticated and diversified financial institutions like the 100 00:05:53.480 --> 00:05:58.680 large investment banks for USET managers like black CROC are. 101 00:05:57.680 --> 00:06:00.000 Active because the guys are very small. 102 00:06:00.160 --> 00:06:02.120 They want to be at the forefront of innovation and 103 00:06:02.160 --> 00:06:05.879 they want to service an industry that emerges. The ATF, 104 00:06:05.879 --> 00:06:07.560 I think is a separate story. I think there is 105 00:06:07.680 --> 00:06:10.160 market demand and they want to be on top of 106 00:06:10.160 --> 00:06:14.839 the flows. At the same time, not everyone is the same, 107 00:06:14.920 --> 00:06:17.240 so on the other side, we see a lot of 108 00:06:17.360 --> 00:06:23.639 resistance from traditional commercial banks about proper innovation in DeFi 109 00:06:24.120 --> 00:06:27.040 because I really want to protect their business right and 110 00:06:26.600 --> 00:06:31.920 I think crypto is threatening the financial institution's business and 111 00:06:32.040 --> 00:06:36.759 will keep threatening it. So in my opinion, the most 112 00:06:36.839 --> 00:06:42.600 innovative and smart institutions will adopt this revolution and thrive 113 00:06:42.680 --> 00:06:46.439 and transform themselves. The least innovative will not, and I 114 00:06:46.480 --> 00:06:49.480 think they will they will go back. They will just 115 00:06:49.519 --> 00:06:52.959 shrink with time. So it's interesting now to see the 116 00:06:53.279 --> 00:06:55.680 smart and most innovative ones get very active and the 117 00:06:55.720 --> 00:06:57.800 others one get very resistant at the same time. 118 00:06:58.480 --> 00:07:02.480 Yeah, now, question on DeFi, because I'm a big believer 119 00:07:02.519 --> 00:07:06.319 in DeFi believe it's the future. However, we've often seen 120 00:07:06.360 --> 00:07:09.839 with technology version one point zero is you know, nowhere 121 00:07:09.839 --> 00:07:12.639 close to being perfect, and there's usually a lot of flaws, 122 00:07:12.680 --> 00:07:16.480 and we've seen a lot of exploits around DeFi. Where 123 00:07:16.519 --> 00:07:19.279 do you think or how do you think the industry 124 00:07:19.319 --> 00:07:21.920 goes from one point oh to two point to avoid 125 00:07:22.000 --> 00:07:24.079 these exploits in these things, I. 126 00:07:24.000 --> 00:07:27.040 Think a couple of I think a couple of ways. 127 00:07:28.399 --> 00:07:31.360 First of all, DeFi currently. 128 00:07:32.439 --> 00:07:33.199 In order to. 129 00:07:33.279 --> 00:07:38.240 Absorb most of the financial use cases that touch our 130 00:07:38.360 --> 00:07:41.000 day to day life. They need to connect with the 131 00:07:41.040 --> 00:07:44.279 treade file stuck right, And I think this connection between 132 00:07:44.279 --> 00:07:48.480 DeFi and trade file is clumsy, is difficult, it is 133 00:07:48.480 --> 00:07:53.519 opaque and is prone to risk. So I think that 134 00:07:53.720 --> 00:07:56.399 the first the first aspect, I think the first evolution 135 00:07:56.560 --> 00:07:59.120 that will be required is for more stuff to come 136 00:07:59.240 --> 00:08:01.480 natively on. So we see a lot a lot of 137 00:08:01.600 --> 00:08:06.240 securities organized so called, a lot of things natively coming 138 00:08:06.439 --> 00:08:10.199 on a on on crypto stack. So I think the 139 00:08:10.199 --> 00:08:13.879 the finance to expand a little bit because otherwise we 140 00:08:13.920 --> 00:08:16.759 are just like patching different technologies at the same time 141 00:08:16.800 --> 00:08:20.839 and this create risk. And the second point is I 142 00:08:20.879 --> 00:08:26.439 think the early early builders in defire, we're dejons, we're innovators, 143 00:08:26.759 --> 00:08:32.039 were disruptors. This is great, but obviously some sort of 144 00:08:32.080 --> 00:08:35.879 institutionalization and professializational services is going to benefit everyone. And 145 00:08:35.919 --> 00:08:37.799 we have seen it also in tach right in Web two. 146 00:08:38.480 --> 00:08:40.960 Google now is not a startup. Google is the largest 147 00:08:41.960 --> 00:08:44.200 is the largest company in the world or something like that, 148 00:08:44.240 --> 00:08:46.879 so they have very standardized processes, a way to do stuff. 149 00:08:46.919 --> 00:08:49.639 So I think we are professionalizing ourselves as an industry 150 00:08:49.679 --> 00:08:50.000 as well. 151 00:08:50.559 --> 00:08:54.039 M Yeah, great points. So let's talk about M zero, 152 00:08:54.279 --> 00:08:57.200 tell us about M zero, how it came about, and 153 00:08:57.600 --> 00:08:58.480 what's the mission. 154 00:08:59.320 --> 00:09:02.759 I think it's connected to what you were saying before. 155 00:09:03.120 --> 00:09:08.000 When us as founders. 156 00:09:08.080 --> 00:09:12.919 We we got like we fell in love with the 157 00:09:13.000 --> 00:09:16.080 maker now construct and mission. You know, Maker it out 158 00:09:16.200 --> 00:09:18.919 was an early For those who are not too familiar, 159 00:09:19.639 --> 00:09:22.120 it's still like a very big defa protocol, but it 160 00:09:22.159 --> 00:09:24.399 was an early protocol that was trying to innovate the 161 00:09:24.399 --> 00:09:28.200 way you create money. So instead of creating money, I 162 00:09:28.200 --> 00:09:29.960 don't want to get to nerd your money creation. But 163 00:09:30.799 --> 00:09:33.600 in the world, banks create money out of thin air. 164 00:09:33.799 --> 00:09:35.639 It's not that they're giving you money that is someone 165 00:09:35.639 --> 00:09:38.679 else's now. In the case of maker ow, they had 166 00:09:38.679 --> 00:09:43.559 this system decentralized and permission less to create fungible money 167 00:09:44.720 --> 00:09:47.320 by pledging certain. 168 00:09:49.759 --> 00:09:50.720 Digital assets. 169 00:09:51.000 --> 00:09:52.960 So we thought that that was a very very powerful 170 00:09:53.039 --> 00:09:56.720 construct and within the DOW we tried to expand it 171 00:09:57.080 --> 00:10:00.240 and to integrate it with the traditional financial world. And 172 00:10:00.840 --> 00:10:03.519 you mentioned Black Crock, but you know, we we spoke 173 00:10:03.600 --> 00:10:07.080 back in the days with many financial institutions Black Crock, 174 00:10:07.159 --> 00:10:10.279 Pin Costs, Sociotationeral, and a few others. They wanted to 175 00:10:10.279 --> 00:10:12.200 connect to the protocol and they were trying, but it 176 00:10:12.240 --> 00:10:17.639 was very difficult. So I think that we we took 177 00:10:17.679 --> 00:10:20.840 those lessons and we decided to actually recreate a new 178 00:10:20.879 --> 00:10:25.360 protocol that would learn from those lessons, but without certain 179 00:10:25.399 --> 00:10:29.320 flows in governance, in retail participation that we thought were 180 00:10:29.919 --> 00:10:33.320 detrimental for the protocol to scale. And at the same 181 00:10:33.399 --> 00:10:37.200 time spend a lot of time thinking about the integration 182 00:10:37.279 --> 00:10:41.279 with the thread five and and and the protocol, and 183 00:10:41.360 --> 00:10:43.200 ultimately what we want to do is very ambitious. I mean, 184 00:10:43.200 --> 00:10:46.200 I think we want to create a protocol that the 185 00:10:46.480 --> 00:10:53.399 the elevators. The Elevators pitch is a protocol that empowers 186 00:10:53.759 --> 00:10:57.519 a federation of minters, so any any approved institution can 187 00:10:57.559 --> 00:11:01.919 come and bring and print to fully fangible stable coin 188 00:11:02.080 --> 00:11:06.120 that is hyper transparent and it's fully fangible across the network. 189 00:11:07.080 --> 00:11:12.679 The real ambition is bypass completely banking institutions and issuers 190 00:11:13.519 --> 00:11:16.440 from money generation. So instead of having a system with 191 00:11:17.360 --> 00:11:23.080 central banks and commercial banks just like taking a lot 192 00:11:23.080 --> 00:11:26.320 of risk but also participating in distributing money, et cetera, 193 00:11:26.480 --> 00:11:28.879 we would like to have a protocol like m zero 194 00:11:28.919 --> 00:11:34.559 at the center of everything, enforcing full transparency innovation so 195 00:11:34.600 --> 00:11:37.320 that money actually can be generated and used in fully 196 00:11:37.360 --> 00:11:42.879 fangible way without depending on the legacy legacy stack. So 197 00:11:42.919 --> 00:11:46.759 it's very very very ambitious and long term project. 198 00:11:47.840 --> 00:11:50.360 So it's all us about the protocol of the blockchain. 199 00:11:50.559 --> 00:11:53.360 Is obvious there's different protocols out there, proof of history, 200 00:11:53.399 --> 00:11:56.399 proof of stake and so forth. What protocol does the 201 00:11:57.080 --> 00:11:58.320 M zero blockchain use? 202 00:11:59.120 --> 00:12:03.440 So M zero is currently deployed on may not. So 203 00:12:03.840 --> 00:12:08.440 is on ethereum may not. So that uses obviously the 204 00:12:08.840 --> 00:12:16.519 standard consensus consensus approach of ethereum. But this is the 205 00:12:16.879 --> 00:12:20.200 engine we think the stable coin for a lack of 206 00:12:20.200 --> 00:12:24.279 a better term, that will be generated by interacting with 207 00:12:24.399 --> 00:12:28.039 M zero will exist on every chain. And how we 208 00:12:28.080 --> 00:12:31.559 are actually taking care of this portability is something that 209 00:12:31.600 --> 00:12:32.799 we're working on now. 210 00:12:33.799 --> 00:12:34.200 Got it. 211 00:12:34.519 --> 00:12:36.799 And then there's the M token. Tell us about that 212 00:12:36.879 --> 00:12:38.240 and the tokenomics. 213 00:12:38.919 --> 00:12:45.320 Yeah, so actually we have three tokens. We like to 214 00:12:45.360 --> 00:12:48.960 be to do things complicated apart from the jokes and 215 00:12:49.039 --> 00:12:51.120 you know, like we if you look at the M zero, 216 00:12:51.519 --> 00:12:53.960 if you look at the M zero logo, it's M 217 00:12:54.000 --> 00:12:57.799 a power, a power symbol and zero. There are reasons 218 00:12:57.840 --> 00:13:02.559 why we M zero is called en of course. The 219 00:13:02.600 --> 00:13:05.679 nerdier one is empower anything power zero is always one, 220 00:13:06.519 --> 00:13:10.519 so there is a lot of stability within the logo itself. 221 00:13:11.120 --> 00:13:13.200 So we actually have an empower, an MP token, a 222 00:13:13.240 --> 00:13:15.919 power token, and a zero tok Now the M token 223 00:13:16.039 --> 00:13:18.320 is what we what people in this space called a 224 00:13:18.399 --> 00:13:20.879 stable coin. So the M token is a token that 225 00:13:20.960 --> 00:13:28.600 represents a claim on the underlying collateral and is should 226 00:13:28.600 --> 00:13:31.799 be because before because the market forces softly packed to 227 00:13:31.840 --> 00:13:36.120 the dollar. So for the use for the user, uh, 228 00:13:36.159 --> 00:13:39.600 the experience shouldn't be different from using a us DC 229 00:13:39.720 --> 00:13:41.639 and U S d T. We just think is a 230 00:13:41.679 --> 00:13:47.879 better better design in terms of transparency, in terms of resilience, 231 00:13:48.480 --> 00:13:52.919 in terms of ill portability. If within the stack, I think, uh, 232 00:13:53.200 --> 00:13:55.919 the MP token is not ill bearing itself, but can 233 00:13:55.960 --> 00:14:00.519 bring underlying yield to the to the user venues. So 234 00:14:00.559 --> 00:14:03.200 the M is some sort of so called stable coin. 235 00:14:03.279 --> 00:14:05.840 Let's put it like that. And then the power token 236 00:14:05.879 --> 00:14:09.080 and the zero token are our governance tokens. So the 237 00:14:09.080 --> 00:14:13.120 power token and the zero tokens in jointly they govern 238 00:14:13.399 --> 00:14:16.960 the protocol, so they allow token holders to take decisions 239 00:14:17.480 --> 00:14:21.360 who can come and connect, how to parameterize the protocol, 240 00:14:21.799 --> 00:14:25.279 and how to claim the economics of the protocol. Now 241 00:14:25.320 --> 00:14:28.240 we are not a tao in the in the appropriate sense, 242 00:14:28.320 --> 00:14:30.759 in the sense that we don't have a decentralized workforce. 243 00:14:30.799 --> 00:14:32.639 We don't have a treasury that is accrued, but the 244 00:14:32.720 --> 00:14:37.120 protoct can be used by the tao. We're just like 245 00:14:37.159 --> 00:14:40.399 a group of parties that take decisions through tokens. But 246 00:14:40.480 --> 00:14:43.039 there is no there is no treasury, there is there 247 00:14:43.080 --> 00:14:48.039 is no underlying workforce. Whatever whatever economic flaw is generated 248 00:14:48.080 --> 00:14:53.039 by the protocol gets distributed out. And these two tokens 249 00:14:53.080 --> 00:14:58.360 have a very like a rather sophisticated toconomics, a set 250 00:14:58.399 --> 00:15:01.360 of sort of in set of emission and set of mechanisms. 251 00:15:02.039 --> 00:15:04.759 And you know, we spent we spent a long part 252 00:15:04.840 --> 00:15:06.919 of our white paper describing those. 253 00:15:07.559 --> 00:15:11.320 Your core use case seems to be stable coins, a 254 00:15:11.519 --> 00:15:15.879 US dollar backed stable coins. Are there other use cases? 255 00:15:16.759 --> 00:15:19.360 Could it be central bank digital currencies? Could the central 256 00:15:19.399 --> 00:15:22.720 bank use this for that? And are there other things 257 00:15:22.799 --> 00:15:24.480 like to organization that are possible? 258 00:15:24.799 --> 00:15:27.559 So the central bank digital currency is an interesting question. 259 00:15:27.879 --> 00:15:33.120 I don't think central banks could use M zero for CBDCs. 260 00:15:33.240 --> 00:15:37.279 I think M zero could use CBDCs or collateral. So 261 00:15:37.320 --> 00:15:41.639 it's that a way around cbdc's most probably would be 262 00:15:42.519 --> 00:15:46.480 a wholesale instrument, meaning that central banks will use it 263 00:15:47.320 --> 00:15:52.519 interacting with all salors like commercial banks, et cetera. So 264 00:15:52.559 --> 00:15:58.279 we currently the M zero protocol approves only US treasuries 265 00:15:58.279 --> 00:16:02.320 as collateral for the meanting of stable coin. Nothing forbids 266 00:16:02.399 --> 00:16:05.799 us to actually approve CBDCs as collateral for the issues 267 00:16:05.879 --> 00:16:08.200 of several coins because we always think there's going to 268 00:16:08.200 --> 00:16:14.039 be an additional layer for distribution required. So this is 269 00:16:14.080 --> 00:16:17.519 another point in the direction of bypassing the banking sector 270 00:16:17.559 --> 00:16:22.039 in sever ways when it comes to toganization, Yes, I 271 00:16:22.039 --> 00:16:24.039 think it is a very important point. I think our 272 00:16:24.120 --> 00:16:28.080 point is that we can we are using our technology 273 00:16:28.159 --> 00:16:33.480 stack to mint fully fangible stables from many issuers. We 274 00:16:34.320 --> 00:16:38.759 could evolve these technology stack to allow issuers to create 275 00:16:39.759 --> 00:16:43.919 as the tokens that actually have different collateral and different nature. 276 00:16:44.639 --> 00:16:47.279 So we could actually use the protocol to create some 277 00:16:47.320 --> 00:16:51.000 sort of one chain securitization. So toganization platform itself, it 278 00:16:51.120 --> 00:16:54.919 is actually one of the. 279 00:16:53.759 --> 00:16:58.679 Next chapters of our development roadmap. 280 00:16:58.960 --> 00:17:01.600 But now we're absolutely focused on the stable coin use case, 281 00:17:01.639 --> 00:17:04.319 which we think is a massive is the largest use 282 00:17:04.359 --> 00:17:07.319 case encrypton in the world, and I think has already 283 00:17:07.359 --> 00:17:12.240 seen obvious product, market fit, market adoption, and very strong 284 00:17:12.279 --> 00:17:14.920 economics by the very few issues that dominate those markets. 285 00:17:15.440 --> 00:17:15.759 Yeah. 286 00:17:15.799 --> 00:17:19.039 Absolutely, Now, maybe you can do a mock scenario. Let's 287 00:17:19.039 --> 00:17:22.200 say Morgan Stanley, right, they want to issue a stable 288 00:17:22.279 --> 00:17:25.279 coin and do it and do it. Let's say on 289 00:17:25.400 --> 00:17:28.160 M zero, how would they go about doing that? And 290 00:17:28.200 --> 00:17:31.000 once they issued that stable coin, what could it then? 291 00:17:31.599 --> 00:17:34.200 Could they then use that stable coin to do lend 292 00:17:34.240 --> 00:17:39.079 it out, move it off onto another chain. You tell 293 00:17:39.160 --> 00:17:41.440 us about the different things an issuer can do. 294 00:17:42.640 --> 00:17:46.720 Yeah, I think that it's supply and demand. I think 295 00:17:46.720 --> 00:17:49.880 the use of a stable coin is always the same. 296 00:17:50.000 --> 00:17:53.880 Like you use stable coins, you use money to store value, 297 00:17:54.039 --> 00:17:56.480 to transact, to settle. 298 00:17:56.119 --> 00:17:56.839 To do everything. 299 00:17:57.440 --> 00:18:02.880 Now, producing money is very profit doble like because what 300 00:18:03.079 --> 00:18:05.680 you are actually what you're. 301 00:18:05.559 --> 00:18:07.559 Actually doing when you produce money is. 302 00:18:09.599 --> 00:18:15.200 You are, let's say, keeping someone's wealth and paying someone 303 00:18:16.319 --> 00:18:18.640 an interest. Like you know, you deposit your money in 304 00:18:18.680 --> 00:18:21.720 a deposit, in a bank deposit, you get an interest rate, 305 00:18:22.720 --> 00:18:24.960 and then you use this money to invest it in 306 00:18:25.000 --> 00:18:29.319 the back end on certain assets. And typically the money 307 00:18:29.359 --> 00:18:31.680 you pay to the depositors is way less than the 308 00:18:31.759 --> 00:18:34.079 yield you get from the assets, and you benefit from 309 00:18:34.079 --> 00:18:40.000 this spread, so public printing money is a very profitable business. 310 00:18:40.640 --> 00:18:43.599 The issue is that this system works if there is 311 00:18:43.640 --> 00:18:46.400 a lot of demand for your money, so there has 312 00:18:46.440 --> 00:18:48.240 to be used for your money. 313 00:18:48.400 --> 00:18:50.480 And this is where this is why. 314 00:18:50.319 --> 00:18:52.519 We're seeing the domination of very few parties in the 315 00:18:52.519 --> 00:18:54.720 stable coin because if you want to use a stable coin, 316 00:18:54.759 --> 00:18:58.000 the stable coin needs to be liquid, otherwise it is unusable. 317 00:18:58.519 --> 00:19:01.079 And currently the only true liquid stable coin in the 318 00:19:01.079 --> 00:19:04.519 crypto space is Tethered. It might not be a great 319 00:19:04.559 --> 00:19:07.680 stable coin in the way it is designed, but it's 320 00:19:07.720 --> 00:19:10.440 super liquid and in omnipresence, so people really use it, 321 00:19:11.440 --> 00:19:13.720 at least the people that are in crypto today. Now, 322 00:19:13.759 --> 00:19:16.200 whether this is good enough for the future of crypto, 323 00:19:16.400 --> 00:19:18.640 it's not for me to tell. I have opinions, of course, 324 00:19:18.680 --> 00:19:23.319 but it's not for me to tell now. So let's 325 00:19:23.359 --> 00:19:26.759 say that everyone wants to print a stable coin. The 326 00:19:26.799 --> 00:19:32.119 reason why it's difficult for everyone to go their own 327 00:19:32.200 --> 00:19:35.440 way is because you imagine, if you have ten twenty 328 00:19:35.599 --> 00:19:39.160 fifty stable coins, you are fractionalizing late the liquidity. And 329 00:19:39.200 --> 00:19:41.319 if you fractionalize the liquidity, there is not a real 330 00:19:41.440 --> 00:19:44.519 use for stable coin. If there's not a real market 331 00:19:44.559 --> 00:19:46.599 for your stable coins. Who are you're selling your stable 332 00:19:46.640 --> 00:19:51.960 coin into. So the fact that many institutions are thinking 333 00:19:52.000 --> 00:19:54.319 about issuing a stable coin, we think is not a 334 00:19:54.400 --> 00:19:57.519 viable solution. It's just like a race to the bottom. 335 00:19:57.759 --> 00:20:00.839 So what we're trying to say here is that we 336 00:20:00.920 --> 00:20:04.799 are like the call to action would be for institutions 337 00:20:04.880 --> 00:20:07.720 like Morgan Stanley, like large market makers, like some of 338 00:20:07.759 --> 00:20:10.039 the market makers in our cap table, the Winter Mutes, 339 00:20:10.039 --> 00:20:14.160 the Galaxies, the gsrs of this world is guys you 340 00:20:14.279 --> 00:20:16.759 think is very profitable to actually enter in the stable 341 00:20:16.759 --> 00:20:21.240 coin business. So set yourselves up in a way to 342 00:20:21.279 --> 00:20:24.119 be compliant with the M zero requirements, and you all 343 00:20:24.160 --> 00:20:27.119 together meant the same stable coin. So you kind of 344 00:20:27.160 --> 00:20:29.559 help each other by creating something that is bigger and 345 00:20:29.599 --> 00:20:33.240 it's more liquid and can grow and benefit everyone so 346 00:20:33.359 --> 00:20:36.920 stronger together kind of approach. In order to do that, 347 00:20:38.480 --> 00:20:42.440 we are now launching our first issue of stable on 348 00:20:42.480 --> 00:20:46.160 the network that we are booth strapping. We are publishing 349 00:20:46.240 --> 00:20:49.759 guidelines on how those issues issues should be set up 350 00:20:49.839 --> 00:20:53.359 in order to be hyper safe. For this for the 351 00:20:53.400 --> 00:20:57.799 backing of the stable, we will we will open source 352 00:20:57.839 --> 00:21:00.880 these standards to the institutions want to connect, and we 353 00:21:00.920 --> 00:21:04.000 will help those institutions to set themselves up to connect. 354 00:21:04.359 --> 00:21:06.799 So as soon as they have a good connector, which 355 00:21:06.880 --> 00:21:10.119 is some combination of legal structure and tact, they can 356 00:21:10.200 --> 00:21:15.480 actually part collateral meant the stable the same stable if 357 00:21:15.519 --> 00:21:18.960 they want, and use it in the network for everything. 358 00:21:20.200 --> 00:21:24.759 So that we really want to empower the Stronger Together mantra, 359 00:21:24.880 --> 00:21:27.799 not only for the institutions, but also for other stable 360 00:21:27.880 --> 00:21:31.200 coin projects instead of going the wrong way and not 361 00:21:31.319 --> 00:21:33.920 everyone has the benefit of as the luxury of having 362 00:21:34.039 --> 00:21:36.400 raised the amount of mind with it just to come 363 00:21:36.440 --> 00:21:39.480 and participate with us Stronger Together. 364 00:21:40.440 --> 00:21:40.680 Yeah. 365 00:21:40.759 --> 00:21:43.839 Absolutely, And a follow questions to that, how do you 366 00:21:44.079 --> 00:21:48.200 verify that the issuer has the reserves? And in context 367 00:21:48.359 --> 00:21:51.440 of you know, there is new stable coin regulations coming 368 00:21:51.480 --> 00:21:55.000 in the EU, they're working in the United States, there's 369 00:21:55.039 --> 00:22:00.720 been questions about, you know, our certain stable coins backed appropriately, 370 00:22:01.160 --> 00:22:03.079 So how do you verify they have their reserves? 371 00:22:04.119 --> 00:22:10.519 Yeah? Two elements for the answer. 372 00:22:12.319 --> 00:22:14.400 The second one is more controversial, but I'll risk it. 373 00:22:15.799 --> 00:22:18.079 The first one is that we have created a system 374 00:22:18.759 --> 00:22:26.400 today as a set of cross checks that can allow 375 00:22:26.720 --> 00:22:30.759 the ongoing daily verification that the reserves are there. What 376 00:22:30.920 --> 00:22:37.519 it means is that we are suggesting how the vehicles 377 00:22:37.599 --> 00:22:41.839 that hold the reserves should set up, what are the 378 00:22:43.880 --> 00:22:47.880 contractual obligations of the parties that come and interact, how 379 00:22:47.920 --> 00:22:48.720 they should look like. 380 00:22:49.440 --> 00:22:50.480 We are actually. 381 00:22:52.240 --> 00:22:55.400 Planning to publish templates of those contracts to make sure 382 00:22:55.440 --> 00:22:58.039 that the contractual set up is as strong as possible, 383 00:22:59.119 --> 00:23:04.519 so that we are piggybacking on law. The second part 384 00:23:04.759 --> 00:23:09.039 is we are empowering a network of so called validators 385 00:23:09.119 --> 00:23:12.599 that have the ability to continuously check those reserves and 386 00:23:12.759 --> 00:23:16.839 publish signatures about what's in those reserves. And those validators 387 00:23:16.880 --> 00:23:20.319 are independent, so that there is an independent check ongoing, 388 00:23:20.920 --> 00:23:23.440 and the penalty for not having this independent check is 389 00:23:23.559 --> 00:23:28.480 to be deepermissioned by the protocol. The third aspect is governance, Right, 390 00:23:28.559 --> 00:23:31.880 we want governance to be always ongoing on top of 391 00:23:31.960 --> 00:23:34.240 what's going on. So I think we have a system 392 00:23:34.359 --> 00:23:38.519 of several cross checks. But also we know that that 393 00:23:38.680 --> 00:23:40.960 part will evolve. Right at some point the reserves will 394 00:23:41.000 --> 00:23:43.759 exist directly on chain and we can just purchase them 395 00:23:43.839 --> 00:23:45.079 and put them in a smart contract. 396 00:23:45.079 --> 00:23:47.200 But this is not what happens today now. 397 00:23:47.279 --> 00:23:49.640 The second part of your question is that I think 398 00:23:49.720 --> 00:23:53.799 that the current m zero construct is not compatible with 399 00:23:53.920 --> 00:23:58.720 European regulation or US regulation because the US regulation and 400 00:23:58.839 --> 00:24:02.839 European regulation are not good enough. They are exposing the 401 00:24:02.920 --> 00:24:07.079