Why "Institution" Is a Meaningless Word in DeFi

A institution can be a wallet with 5 million of capital in it up to JP Morgan. Essentially, all of DeFi is institutional. What I mean by that is if you scan the TVL on a Morpho by the amount of wallets that make up over 80% of the TVL, you're going to find an extremely small number. Uh so, you know, the last 8 to 10 hacks were not super technical. They were poor key management, uh, poor liquidity management, poor oracle understanding and configuration.

These are, you don't need AI to find this. DeFi is one of those worlds where diversification actually hurts you when you only have a small amount of really solid players, but I I I made this comment a couple years ago, there's no new DGens being created. And I think people get offended when we say we when we reject one of their assets and we're like, listen, I would own the asset. I just wouldn't leverage it five times. >> Hey Anthony.

So yeah, nice to have you beyond the yield. Welcome. Um excited to have a conversation today uh with you about all things institutional capital uh risk and overall um capital allocation in the DeFi space. So yeah, um happy to have you here and maybe let's introduce a bit um your background to our audience. Um so how did you end up where you are right now?

How did you end up at at with Santo? I know that the story is pretty interesting one. So yeah, maybe you can pick it up from here. >> Sure. I so I was um I spent the first 22 years of my career as a trader um but on Wall Street between UBS Barclays and HSBC.

Um I traded short-term interest rates and then I traded the Fanny Freddy book leading into the housing crisis in 2007 through 2009. Um and then I moved over from UBS where I started to Barclays. it was the global head of emerging markets rates and effects trading. Uh and then moved to HSBC to run all local markets for Latin America. Um left HSBC in 2020.

Uh moved to Coinbase in January of 2021 to build a DeFi and derivative trading team. And the idea was to build kind of structure products uh on behalf of Coinbase to distribute to institutional clients. Um, I left to start my first company in 2023. Uh, my old unit rolled up into Coinbase asset management. Um, and the company I started was called Trident.

So, Trident was um like a capital markets advisory team uh that focused on helping stable coins and blockchains and assets grow onchain. Um we later merged with a company called Into the Block to form Centur in April of 2025 and we raised our series A um back then. So into the block was um a smart contract based non-custodial asset manager uh where they could create yield strategies fully automated um and clients could could deploy their assets non-custodially and we had sold the product uh to large institutions mostly exchanges. Funny enough I was a client at Coinbase of Into the Block. So I've known my co-founder Jesus Rodriguez for quite a long time.

Uh so when we decided to merge we we kind of had this um really unique skill set. So we had one team that was very uh had a deep Wall Street background from risk capital markets trading and into the block had a deep onchain analytics, smart contracts and AI engineers. Uh so what we created is um a firm that that has what I think is all the disciplines that are required to take onchain opportunities, yield generation, risk management to the kind of institutional level as we continue to get regulatory clearance at least in the US. >> Okay, that's nice. Yeah, we can see that definitely the team had all the required tools and talent to actually uh reach uh what you have reached.

Uh we see that Centauri is now manag like the top three asset manager in the crypto space. So that's quite an achievement I guess during the last couple or so years. Um and you're in this like unique position right like for the past I don't know like couple years um in the crypto space everyone has been speaking about like institutions are coming institutions are here right but like um what does it actually mean that institutions are here like could you maybe expand like what these institutions actually are and how are they entering the space because I think you're the you know like you are at the forefront like on on boarding them and like working with them. So, like really interesting to hear from you, like how do you see it happening right now? >> Yeah.

So, there's a couple things in in crypto and DeFi that bother me, but I think the term institution is just almost a meaningless term, right? Institution can be a wallet with 5 million of capital in it up to JP Morgan, right? So it's um it's kind of a useless term. I think under the hood that term has evolved in a couple different ways. So I think there was this early expectation that banks and asset management and hedge funds are going to want to trade uh Bitcoin and be involved in the the crypto space through trading.

And that that has evolved mainly through the creation of ETFs which basically created an abstracted way to get exposure to these these type of this new asset class. Um and then all the kind of trading that's required to support an ETF, a regulated ETF. Um and then you kind of you move on and you see asset managers uh trying to tokenize some of their Trady assets to be brought into DeFi. You've seen some traditional asset managers kind of like dip dipping their toe into curating vaults. Um there's institutions whether they're family offices or kind of non US banks getting into the borrowing lending versus uh bitcoin collateral.

So these are all considered institutions. I think what centuries keenly focused on is I would call them enterprise companies. So essentially uh fintexs and they could be remittance companies, payments companies, earn wage access companies, payroll companies that um really benefit from upgrading their underlying rails from fiat, a swift type of settlements to blockchain, stable coins, wallets and vaults. And once these type of companies upgrade into this infrastructure, there's a series of new products that can be created that um that can't necessarily be created on traditional rails. So you know we for for our sake we you know we've launched the largest earn program in the market with Kraken.

Um it's over 800 million over 100,000 users and you know it's it was really great to see that if you can finally deliver on abstraction people will show up and it's been really an exciting experience for us and you know Kraken taking the like having the courage to step into a space where you know the regulatory environment is still not 100% clear um and doing tons and tons of due diligence. This was a year-long process to get here. So ve very thoughtful from a lot of different angles. Um has really opened the gate to more enterprise type clients wanting to get into the space. So you know earn programs through exchanges is great.

You obviously Robin Hood um is starting off with a bang over there. You know Coinbase is um continues to gain ground through base chain abstracting DeFi away to their clients. But I the next level I think is really these kind of fintexs and you know we struck a deal with um with deal the payroll company to provide yield where contractors get paid. So kind of earn where you earn um has really become a big metaphor at least for us. Um helping payments companies who have to rely on traditional bank loans to settle payments while they wait for the AC system to settle.

you know, creating vaults where users can earn the yield and lend to these fintexs as opposed to banks lending to the fintexs. Um, you know, short-term receivable loans against payroll uh for earn wage access companies. Uh, the ability to earn yield on the cash sitting on your debit card. The ability to use the equities you own in a tokenized fashion to borrow against if you can't pay your credit card bill. So basically using your equity collateral borrow at 6% instead of paying MX 26% when you can't make that next payment.

So I think there's so many fantastic um new products that can be created just by being on faster and more efficient rails. Um, and I think that's a big focus for Centur and is a lot of what we're building and where our clients um where our client road map is really driving towards. >> Yeah, that's super interesting. Like you mentioned that infrastructure is the backbone of everything but I'm really curious like when institutions like as you mentioned enterprises maybe like banks, exchanges uh approach you right what's like their biggest motivation? Okay, you mentioned that probably most of the times it's efficiency improvements but sometimes it can be that you can generate yield which you won't get from a risk-free rate which is like 4.5% right now right um so is it the yield is it the infrastructure improvements which means like lower headcount for them is it some regulatory compliance things that actually attract them to deploy into the space and to and to actually use this because we still see that DeFi as a space is viewed a bit you know like in a tricky way.

It it doesn't have, you know, like the um the look that banking system has or like private credit even maybe might seem for others more trustworthy than the DeFi space. So yeah, just curious like where do you see the main attraction point for them to actually step into into this industry and then to stay here for the longer term and build their products around that? Um, it's kind of a funny question because the honest answer, especially from banks and asset managers, is a little FOMO. Like they don't know what they want, but they know something's happening and they don't really know how to articulate it. So, they're just looking for information.

So, I would say that's probably half of my conversations with that group. Um, and they're just hoping that regulation keeps gets stalled because the banks are in a great position. They're max rent extractors. You know, they obviously provide valuable products that the ecosystem needs, but they recognize the efficiencies that come in will disrupt portions of their business model and they haven't quite figured out how to position themselves the way they're positioned in the old model yet. So, they don't see a a drastic decline in revenue and users, right?

So their game is, you know, so in that type of environment, you know, there's a first mover advantage, but there's also some wisdom to hanging back and, you know, understanding the space and waiting till there's clarity before deploying your assets. So that's where I would say the majority of the conversations really are. Now the ones who have been really thoughtful even though they're still constrained because while the the the tailwinds are great in the US and the administration is very supportive which is 180 degrees from the last administration banks can't really move at scale until there's laws on the books and we're not there yet right so um I think from a high level for like banks and asset managers tokenization opens up um a wider user base. Uh tokenization opens up embedded utility like the ability to take leverage against their assets which is not something traditional asset manager offer to their clients. It might be offered through intermediaries but they themselves unless they construct a levered fund don't give they don't have any place to use these assets as collateral within their own platforms.

Right? So by supporting something like that for tokenization inherently they benefit. So they're interested in those type of things. Um I think vaults are really interesting for banks because you know many people are thinking about you know the banks want to come in and curate. I don't think that's the case.

I think what banks are looking at vaults as kind of um digital SPVS and and my head of risk Patrick uh Hower put out a piece earlier this week about digitized SPVS being the kind of the correlation of what vaults are to the stratifi world. Many big lenders are looking at this as a way to facilitate their existing lending business but at a lower uh capital charge. After the global financial crisis, DoddFrank um regulation really pushed a lot of lending off banks balance sheets and you see this correlation to the growth of private credit. I mean it's a it's it's essentially onetoone move as you see credit from bank balance sheets uh diminish the whole private credit industry exploded right they don't like being out of that flow but under the current capital rules they can't really participate so creating vaults that allow them to support their clients in somewhat of an indirect way while not taking the same type of capital hit as if they lent off their balance sheet is where we get a lot of focus in the space so I don't JP Morgan is going to curate a vault on Morpho. Like that's not where I think they're looking.

I think they're looking at the ability to source dollars to lend to other clients without having to to take the friction of running it through a traditional balance sheet and getting traditional capital charges. And then there's other trading things, but there's other people you can discuss that with that are more in the trading space. We're very much in yield generation and improving payments and settlement rails. >> Interesting. And you mentioned you're having a lot of conversations.

I'm very curious who typically makes the decisions in these organizations and enterprises, right? Is it usually like pushed by like bottom up or you know like people in the board like they identified the need of actually entering the crypto the DeFi space to be on top of like the emerging technologies. So like who are these decision makers and who are pushing between the organizations to actually adopt and dive into the space? Um, if I'm being honest, I think uh I think a lot of people have formed committees and groups, but it's unclear to me at these large institutions if there even is a decision maker. I think they're more factf finding groups.

you know, did you know I I I speak to a good hand of my old bosses, friends, colleagues that I've had that are still working with traditional banks and asset managers, and there's very few that have a clear mandate. Most of them are are really just on factf finding missions. >> So, it's basically whoever finds it out uh and then they see clearly rationally that it just makes sense, right? It's profitable. It's allowing to reduce the cost.

It's allowing to increase the yield, right? And this is how they present between the meetings when this idea kind of starts getting attention and then they pile up pile in basically. >> Well, I think they're they're going to they're gathering the information. The thing that is what if you're if you haven't been in the traditional finance system, the traditional finance system by definition is extremely centralized, right? Nobody's on their own island.

Also, it's very rare that a firm like JP Morgan will use Goldman Sachs's technology, right? So, while they're all very centralized, they also don't really trust each other. So, the part of the being of not being a first mover advantage, if we want to tra I'll give you an example of what I'm trying to say. If you want to have tokenized trading of stocks, there's multiple exchanges and settlement layers and liquidity providers that sit within that construct of the way the current equity markets in the US work. So, it's not like JP Morgan's going to say, I wanted to trade tokenized equities with my clients because their liquidity source is still going to be in the traditional world.

What needs to happen is the in aggregate the traditional finance communities to decide okay what blockchain are we going to operate on what exchange structure are we going to use what settlement layer we're going to use what lending layer we're going to use but until because they all trade with each other. So until they not only do each of the firms have a view it's really we're not going to see this at scale until they all decide the common infrastructure and how they're going to work together. Right? So you have a group of people that have to figure out a new ecosystem that all have different uh goals and and ways to make money having to agree on a central system to make. So you could see the delay, the stall, the time, right?

I I I I don't know if they get there themselves. I think they're going to have to perceive the threat to be much larger before they move even after we get regulatory approval, right? Because they have to build consensus. I said, like I said before, none of these players are an island. They all rely on each other to transfer risk, to source liquidity.

Um, and until they all decide like what are the rules of the road and what are the infrastructure, it's going to be very slow going. >> Okay. Interesting. Um, and actually like we started getting quite a lot of different um institutional products if we can call them like that, right? We have tokenized stocks.

We have um deposits into vaults. We have earn program programs which you help to launch, right? Like we have stable coin launches. There are so many like different items right now in the D5 space that you can actually focus on and then um yeah deploy your capital to. So which of them do you see like getting probably the most attention or capital allocation?

like which pools are actually attracting institutional capital on chain um and like how how they see this as part of their growth strategy when you discuss it with them. I mean, I think essentially all of DeFi is institutional. What I mean by that is if you scan the TVL on A and Morpho by the amount of wallets that make up over 80% of the TVL, you're going to find an extremely small number. So, the only real retail involvement in in DeFi is coming from these abstractors. So, like Kraken's earn program, Robin Hood's earn program, right?

You know, there's a couple other earn programs that are coming that I I would be willing to bet that of the hundred and something thousand users of Kraken earn, 90% of them never deployed directly into DeFi themselves, right? So, that's kind of been the the that's kind of the bifurcation you have either abstracted retail or institutions that are in the space now. Um I I think there's been so many different exploits. Um and they kind of happen for three reasons. So So one is uh the industry is slow to recognize a scam or a fundamentally flawed business model which then just gets lumped into being a scam.

Uh I think the um the there's the the rise of AI and the ability to to find weaknesses a lot faster. Um, you know, I think I think it's hard to to discount that as being a factor, but I think it's slightly overplay to how big um like how big an influence it is. And I think the third is, you know, a large part of companies that were funded in the last VC wave were dying and their attention to detail or attention to risk is just not there as these companies are running out of money and are less focused. Um and it's really sad because they are still the shepherds of other people's money. Uh so I you know the the last eight to 10 hacks were not super technical.

They were poor key management uh poor liquidity management poor oracle understanding and configuration. These are you don't need AI to find this right and they typically are happening like like I said new projects that haven't been battle tested or older projects that are just asleep at the wheel. Do you find that it's something that prevents from more capital entering the space? >> That definitely definitely doesn't help, right? Like you know, especially and and uh you know, we have dozens of fintech clients that are very close to jumping in the pool.

Um we had a massive client who was about to jump in the pool in April of last of this year. And then the kind of kelp issue and the drift hack just put everybody with their hands up and now we're starting to see them slowly come back. But yeah, it definitely where it slows down these stratfi integrations, enterprise integrations that will abstract it for retail users. And um and I think that as they continue to go down this path, we're going to have if there's not a solution, we're going to have this problem. It's gonna it's gonna inhibit growth in the sector for for the time being.

>> Yeah. And then you mentioned this. So yeah for example new enterprises entering the space but there are like also you can call already OGs of the space like Kraken also adopting you know these earn programs and then the question is like how much of these uh funds are actually new funds entering the space and growing the space versus existing funds maybe you know cryptogs like are used to using Kraken interface so we just deposit through Kraken rather than doing themselves because of the management and all other um extra work that we need to do. So um are you tracking like how much of the capital entering crypto right now is new versus like just recycling what has been made like recycling profits that have been made during the past cycles. >> So we have a big research team but it's very onchain focused.

So when capital comes into a centralized exchange, it's really hard to tell if it's OG money or new money because it gets washed at the chain level. So I I would I would suspect that the vast majority of capital coming in from exchanges or earned programs, enterprise earned programs is new capital. Um, and by definition, the OGs are leaving because we we're about a third of or half of where the highs are in DeFi previously. So, it's net outflow and it's it's bouncing off the lows, which is great along with prices. Um, but I I made this comment a couple years ago, there's no new DGEN's being created.

So, it's either professionally managed money or abstracted retail, but the net number is clearly lower because we're we're well below the all-time high in DeFi. >> Yeah. And do so do you think these earn programs are one of the most effective way of actually attracting new capital into the crypto space? Um, >> I do. I do.

So I think I think in the current iteration it's a big step forward but about a year ago we um as a team felt very strongly about earn program as being the abstraction layer that we've needed for 10 years or five years or whatever. Um but once we got there if the infrastructure didn't get safer if the hacks didn't go down we would hit another bottleneck. So that's when we decided to incubate a company called Firelight. Um, fire light is a insurance is is say a it's not insurance in a typical sense but basically it allows uh protocols and earn programs to secure cover which is just simply saying is collateral being posted against risk of loss of those pools and that's what firelight has become. it it sounds like insurance but insurance is a regulated word and we don't currently don't have the license to call it insurance but I think you know we've t we spent over a year coming up with the model and I think the first six months was just how do we price the risk how do we price the probability of loss how do we price the probability of recovery after loss um and you know as we did I mean once we came up with a model and agreed on it and started to raise money we've been you know constantly sense checking uh constantly sense chessing the the models and you know the the incident on kelp you know many people came to us and said did your models work for where you priced a and in the end the model did work because our model takes two major factors if I kind of tlddr it it's the probability of loss minus the recovery right so if you what's the probability you lose $100 then what's the probability if that happens, how much of that $100 you get back.

So in aggregate, the price came out correct, but the pieces uh the allocation of the risk of the pieces was different. So the probability was under quoted, right? Because it happened and a had never had uh an incident that could have created loss, but in the end the recovery was 100%. Right? So the net pricing worked out.

um but the prices the the distribution of the price to the components was was a bit off and now taking that to upgrade the model. So as the as the what the model tries to do is come up with a clear price. Previous iterations of of insurance or cover were kind of a poly market for insurance. It was very much somebody wanted insurance and was willing to pay X and if somebody wanted to earn X they would do the transaction. there was nobody sitting in the middle saying the transaction should be at Y and then between that midpoint you decide the commercials.

So that's what we've attempted to do with Firelight. We just announced our our seed round uh earlier this week. We raised 8 million um and we're launching the full product by the end of the month within the month uh with three confirmed pools right around that time that time frame. So you'll There'll be pools now that investors can deploy into and have this cover uh module attached to it. I'm >> really glad you touched on risk management.

You're known in the space as one of the best risk manage managers um based on your past performance and uh yeah your partners speak for the for themselves, right? that they choose you to work for the earn programs. And for the end user, let's say they just deposit into an earn program. They don't see the risk management. They don't see cover.

They don't see anything. They just care about like getting that six% yield >> um and you're abstracting everything. So maybe you can walk a bit like how does your allocation strategy actually work? What's happening behind the wheel when I click and I deposit my $100 into your wallet? How does it get like invested?

Like who is making the decisions? Is it AI models? Is it like still pretty manual process? And like yeah, walk us through how it actually works in the back end. >> So think of our products as as three three products.

So you have the enterprise earned programs like Kraken and Deal. You have our simple vault curation um which is you know Centur is one of the largest vault curators on Camino and uh Morpho um and so you kind of like there's that product um and then there's these aggregated vault structures which are like earn programs but not distributed through a front end like Kraken. So if you go to vaults.sensor.com sora.com you there's four vaults. There's a dollar vault, an RWA vault, a Bitcoin vault, and Neath vault. When you click into those vaults, you actually see the distribution of assets.

You see um our embedded risk management tool called risk radar that gives alerts to activities happening to the pool and the how how close or far away we are for certain risk triggers. Um, and then there's a there's a resource section which gives our the due diligence we do on assets that we add to our pools. So, it basically shows you our rationale of why we decided what risk factors still exist. Um, and really trying to move towards a traditional Wall Street like perspectus like when you buy a fund or an ETF saying, "Hey, this is the this is the the field that we're going to play in. Here's our parameters.

here's the type of risk we're willing to take. Here's the type of credit we're willing to take. And within that bucket, we can operate and optimize. And that's what we're really moving towards. Now, how do we get to that?

We have a a pretty rigorous um risk management framework that is completely outside any commercial decision. So, the risk team within Centura can overrule myself as the CEO or any of the co-founders. They have final say on risk. Uh which is sometimes frustrating for our partners. Um but you know that's kind of our first line of defense.

If you if you're very diligent on the asset selection, the probability of loss goes down significantly, right? Uh so we start with asset selection and then our engineering research team does very deep dives on all the tech and what you start to realize when you look at Centur's strategies is they're they're very few assets meet our standards and very few protocols meet our standards right DeFi is one of those worlds where diversification actually hurts you when you only have a small amount of really solid players. So actually the more you allocate outside of the the core your diversification actually hurts you because you're diversifying by definition into more risky protocols and more risky assets right so that might work for getting a higher yield but from a risk perspective it makes it really diversification is almost a nonsense factor within risk management on chain and that's a big divergence from tradfi right everybody talks about diversification in trady because there's a certain level of understanding of risk and safety that doesn't necessarily exist in in DeFi. So, and listen, we we have a process. We're very public about our process.

We publish reports about our decisions and how we make those decisions. So, we're never going to say that we're right. We're just going to say that we have a rigid framework and we're going to stick to it. And people who want to do their own research is available on our site to do that. Um, but what we try to identify is that this isn't risk- free.

You can't earn above the risk-free rate without taking risk. So what we want people to understand is this is not risk- free, but how can you lose money? And once they understand how they can lose money, meaning what is the risk I'm really taking, then I think they can make a more informed decision on taking that risk. I agree with you. The risk decisions that are currently being made are not as sophisticated as they probably should be uh for most counterparties, but we're just trying to help move the whole space forward along with other curation partners and protocols.

Like we all understand that if we don't educate the consumer and they keep getting burned, the consumer is going to go away, right? And I think the the the more uh recent issues, we're working with um a rating agency and helping support them rolling out the first series of vault ratings. So like similar to how bonds are rated. So, we've spent a lot of our own resources and time to help advocate and push that project forward because the importance of ratings is it's it's kind of a standardized normalized risk metric that people sophisticated investors understand. So, by taking something they don't understand and applying a risk rating that they do understand, I think that's going to be a big gateway to traditional capital flowing uh into the space >> because Yeah, go ahead and then I'll I'll add on.

>> Okay. Yeah. What did I just ask like do you think like this one standard risk rating actually fits DeFi well because like there are so many you know like risk factors other than um for example you can give an a risk rating for an asset but like the pool can be riskier than the asset. You can give a risk rating for the pool but then the asset might itself might be much more riskier. So like what's your view on how these risk ratings work in this space?

>> Um so it's a process, right? We're working with the ratings agency to highlight all of these different, you know, in the end they're going to have to make a decision, right? And I don't know if I'll be happy with it or not happy with it, but they've been very open to speaking to myself and others in the space and taking a lot of feedback. And every evolution of what I see is getting better. And I think for the first time that this started, I'm really impressed by how much these rating agencies have learned in the past year or two.

Right? These conversations a year ago were very far from being useful and I actually think we're pretty close to getting something now. Again, people might not like what the rating is, but I would much rather a rating that that maybe over overrates our risk the way than the way we see it. But getting on the risk spectrum will get us so many more eyes and focus that it will force us to improve within that framework because the benefit is capital. If you can conform within that risk where trillions of risk is being allocated versus you know the original attempts were just try to create our own rating agencies.

But the problem is capital is not going to flow to a rating system that capital doesn't already approve. So it's kind of one of those trade-offs that I think DeFi needs to make begrudgingly is to try to fit in to the traditional finance system in this one aspect because the the goal is large amounts of capital can now flow when there's a rating. >> Okay. Interesting. And you also helped couple of stable coins to grow in the space like actually two out of the top 10 stable coins right um specifically I mean uh PayPal USD and Ripple USD.

>> So based on your experience like what's the current playbook for stable coins? We see all the institutions or enterprises as we can call them like banks interested in launching or even launching at the moment like their own stable coins. What's the like what's the playbook for launching a new stable coin? Like how to get adoption like what's the what what strategy should they choose? Like is it incentives only because they are kind of temporary but like how do you get like real >> industry adoption here?

So we we managed to um and soon to be three um when we evaluate a project. So we've we've been asked to do over two dozen. We've passed on all but three. Um and we didn't get chosen for one. We there's so many people who want a stable coin who don't understand why they want a stable coin.

And even the ones who do understand they want to have a stable coin don't have the infrastructure to monetize that stable coin. So I'll make a blanket statement. Launching a stable coin is there's two things. It's not a standalone stable coin without an ecosystem or infrastructure like a stable coin being part of a payments network or a stable coin being part of a banking uh conglomerate. Um, one is not cheap.

When you start a stable coin, you're essentially starting a bank and a credit card company, right? So guys who rock up and raise $5 million for a stable coin, we won't even listen. We won't even take the conversation. It is the cost of the cost of entry is just higher than that, right? The second is the stable coins on their own without knock on offense are not a profitable business right there is a could it be marginally profitable in the long term the only profitable business model at scale is tether and tether's use case is extremely different than circle's use case you know circle's doing a good job squeezing out what they can squeeze out but the most profit able use case probably on earth by employee is tether and it fits a very specific model that I don't know how anyone ever replicates and to be fair we won't even attempt to work with someone who's tries right it was just it grew in a period that had everything going for it and a lot of those benefits are either regulatory or or risk no longer available to new entrance uh or the barrier of entry because they're so big is so high that it's just impossible to to reach that um what we're really excited about is purpose-built stable coins for that have a true use case where having a stable coin unlocks features for you that make you as a institution more profitable.

So, I'll give you an example what I mean. Um, if you're a remittance company, a remittance company will take cash in at their agents or their or their locations and then immediately credit the agent in the other country with that cash. But they don't get that cash immediately. They have to wait for the AC wire system 3 to five days to bring the cash in. So, how do they reconcile that gap?

They reconcile that gap by taking a bank loan or issuing debt. like they they they have to pay for a service they provide for free, right? If the ecosystem upgrades to being stable coins in, stable coins out, that cost goes away. The the reliance on balance sheet goes away. Now, there's a lot of steps between here and there.

We could be here for two hours describing that, but like the ability to lose the time delay of on-ramp off-ramp because when cash sits in the AC system, the bank that's moving the money is earning the interest the whole time it sits there and the bank that's receiving the money or the entity receiving the money gets nothing, right? So, this is just another fee that the the ex the incumbent banking system uh creates for itself, right? So being able to get away from that fee structure makes the companies more profitable and makes the products cheaper. The other thing that happens is when money moves in a remittance company when that cash sits on the in the agent side and the cash usually comes out very quickly one to three days three to five days it sits on the platform before it's fully extracted nobody earns interest on that money as fiat. But if it was moved as a stable coin, the issuer of the stable coin and the company that uses that stable coin can now earn interest on that cash.

So they again become more profitable and they can use that to cheapen the services or grow or so just stable coins that are using that and I can give you 10 examples of where I see the value but launching a company that's not attached to a commercial environment on its own is really really difficult to make sense as being a profitable project. Are these delays or like these processes part of the reason why Centuri is now getting into like managed credit portfolios and payment receivables? I saw recently you're like started >> going into credit more and more. >> Yeah, that's um that's away from the stable coin side. The the reason we're getting into credit, we're hiring a traditional credit um private credit uh uh risk analyst from traditional banks is we Kraken and other programs have grown so quickly and the limited scope of assets that we feel comfortable with are creating a situation where we're almost getting too big for the market and the way it exists right now.

So before we were just takers of liquidity and assets that were provided to us and we just selected but now we're we're starting to see the space is actually growing faster than we anticipated and we're starting to revise our prediction of how big the market can get. And when you do that you realize that the supporting assets and collateral doesn't scale to match that. So we spent a lot of effort basically bringing new RWAs to market to facilitate that oncoming demand. And so we've done three very recently. One is Figures Prime, one is uh Huma's PST and the more recent is uh a partnership with Midas and Wellington to bring MWIN uh which is a basically Tradfi ETF that's been tokenized that uh we helped create to be specifically useful for DeFi.

So we spend we have a whole division within the team that is purely focused on doing due diligence on new RWAs and making sure they meet the right safety, liquidity, volatility profiles and we are helping these companies basically grow in DeFi and so and by helping them grow it gives us more capacity to grow our own earn programs. So there's a reason we don't do it in isolation. It's all kind of connected together. So as you're growing out of the market uh at the moment like there's yeah barely like opportunities for you to invest based on your risk level, right? What what should the market look if you would if it would be up to you to decide like how would the market look like in three in the next three years like how would you see this entire like enterprise institutional adoption like and actual funds being deployed like how what's your ideal view of the market in the next three years where it grows and how it looks afterwards.

>> How about I tell you what our one-year goal is and then you can kind of backfigure into that. So our our our one-year goal >> is to right now crypton native assets are 90% of our strategies. We'd like to make that 10% in New Year's time. That doesn't mean we're going to reduce our our uh exposure to those companies. It means the market's going to grow so so much that we need these other assets primarily RWAS to take on the the overflow of cash.

Uh because you know if you tokenize an ETF and they buy public uh instruments I don't want to say it's infinite but if a billion goes into MWIN it's not going to dilute the rate. If 10 billion goes into MWIN it's not going to dilute the rate. If 10 billion goes into Athena, which is a fantastic product, it will reduce the rate until they can allocate it properly, right? So, if we start to hypers scale, the traditional crypto assets just can't take on the pace of that growth. Um, so we're very focused on changing our asset mix, not by reducing who we use now, but increasing the new this new kind of asset class.

And this would be extremely helpful because right now 90 something% of RWAS are not being used in DeFi. There's a very very small amount of RWAS that are actually deployed as collateral in a protocol and that needs to change. So we're kind of shephering new assets in that are D5 ready because most of the existing RWAs while they're great assets are not good collateral for DeFi. And we wrote a long paper about this explaining is like, listen, we don't like private credit as collateral because the liquidity and the redemption windows are too long for an for a money market protocol that requires liquidations every second. But it's not a bad asset to own if it sits within your personal risk profile.

And I think people get offended when we say we when we reject one of their assets and we're like, listen, I would own the asset. I just wouldn't leverage it five times. like there's a very big difference because my my responsibility when I curate these vaults is to ensure that I protect the the LPS in the vault. That's my number one job when I curate a morpho vault, right? My job is to the suppliers of capital that even if I add assets that are risky, the risk level is less important than the ability to see the price decline and liquidate before it creates bad debt for our LPs.

So if an asset's sitting in our pool, doesn't mean it can't go down in price. And the more RWA that we onboard are going to have much more price volatility than the existing crypto yieldbearing assets. But that doesn't mean that it shouldn't be collateral. If it's got a constant price or a daily price and and enough exit liquidity, it absolutely is good collateral. I just need to make sure that we we can it's observable and liquid enough that if the price declines materially, it doesn't create bad debt for my suppliers.

>> Very interesting. Well, yeah, thanks a lot Anthony for for your thoughts. I have a tons tons of questions more but I know that we are running out of time so maybe we can do part two um in some time seeing uh if you manage to grow as you see in the next year. So um thanks a lot again for joining uh it was super interesting. I wish best of luck for you and Centaur team in growing into the next stages entering the enterprises in on boarding them on chain and helping the entire space grow.

So yeah, thanks a lot again for this and uh hopefully you'll have a good time building D5 projects. >> Same here. Appreciate the your time and uh and your um your distribution and people to speak to. So I really appreciate it. >> Thank you, Anthony.

Have a good one.