Why RWAs Didn't Remove Risk

Yes, incentives are a good way to bootstrap, but without a plan to actually retain users without a retention plan. Incentives only incentivize rotation. They do not incentivize that couldn't be further from the truth, [music] right? So do not remove risk. I think they just change where the risk uh lives.

uh some RWAs exist on chain simply because they cannot get any smart capital offchain and so they're trying to leverage let's say the stupidity of the some DeFi users or or I would say the lack of knowledge right around some products for it's a bit early to fully delegate capital to AI the ways you can do that now again could very well exist without AI they're just hype in my opinion I've been through three bare markets and uh um despite what some feel I feel like this is really one that's putting our industry at a bit of a existential crossroad. >> Welcome Luka to be on the yield. Uh excited to have you here and hopefully we'll have a nice conversation. So yeah, let's kick it off. Maybe um you can tell a bit about yourself about Delos Consilium, right?

Um so that yeah, all the listeners would have some background about uh how you ended up here. >> Beautiful. Yes, thank you very much for having me. not my first time talking with you guys at the I really love the work you're doing. Um very happy to intro myself.

I've been in the space uh professionally with Telos Consilium since uh 2021. Uh we've been advisers for uh projects especially projects in the pegged asset space whether that's LSTs or stable coins. Uh before that I um run a cleaning company. That's actually how I got into crypto in the context of optimizing the treasury and doing treasury management for this cleaning company. Also a little bit of let's say uh uneasiness with the banks, right?

Uh and uh and all of that led me down the rabbit hole starting 2018 2021 I decided to hire a CEO for my cleaning company and I was able to start Telos Consilium which is my full-time crypto venture. We have a we have a small team on the advisory side. Last year we made the decision in the context of our advisory work to um also start hiring technical folks to develop smart contracts. We've done so for a project called money which is a $70 million INTVL project on plasma. They're both clients on the advisory side and on the technical one which ultimately led us to the realization we mastered the go to market.

we mastered uh smart contract development. What's stopping us from doing our own project? Uh and that project is called CASA which is expected to uh go live very soon. Actually already has a couple of interesting products on oiler live now. And so and so it's an interesting journey from uh let's say opportunistic um entering the space for opportunistic reason then you know seeing a professional opportunity on the advisory space bringing my traditional business opportunity into web 3 uh and now actually finally building products in web 3.

I think it's a it's an interesting journey. Uh but everyone in the space has a unique story and it's always interesting to learn about uh each and every one of them. >> Yeah, that's definitely quite a journey. Um from yeah cleaning service right uh till like actually building D5 protocols uh that yeah quite a lot has passed. Okay.

So yeah, maybe let's uh then start uh with a simple one, right? Like you've been working as you mentioned you've you started with treasury management, right? And you work with a lot of D5 protocols. So yeah, maybe like we can speak about like more about the yields and to start with uh could you maybe go into like where does the onchain yield actually come from, right? like is it all just rewards redistribution you know like is it just um farming right like if we take uh some words from 2020s and 2021s so yeah maybe you can explain to the listeners you know like where the yield is actually coming from like what are the type of yields right like you've been involved with like these LSTs as you mentioned since a long time ago so like maybe you can name some like of the most sustainable one yield opportunities right then at the same time which ones are on the other side which are not so sustainable right so like maybe we can start with that >> yeah that's a very interesting question right and this is a space that changes so frequently that if you if we were to have this conversation let's say three weeks from now two months from now my answer could be different so maybe let's start with some fundamentals right where does the yield come from and [laughter] uh let's say generally speaking in finance the yield or the premium the return let's call it a price right it's a price for a risk that an investor had to incur um they in the case they incur it successfully they're able to recover well their principle plus the premium which is the return so I would say this is kind of the core concept of it you exchange risk for for returns uh and you cannot really fully decouple from this uh even in Defi even devs cannot cook something that fully decouples risk with premium and risk with return.

So you can say that APY is kind of the output where risk is the input. So every yield uh as a payer uh somebody's paying for that yield. You know, you can think even some let's say vanilla strategies like liquidity providing well those generate yield because user users are willing to trade and so every time assets are traded well as a liquidity provider let's say on unis swap you're exposed to the risks of those two tokens to the smart contract risk and well if you if those risks do not incur well you are rewarded with a price but if they happen then you are the one actually you know having to eat the loss. Um so there are always these counterparties that interact against each other in a very delicate equilibrium uh and then uh it's very hard to find you know sustainable long-lasting yield sources um because you know they tend to the alpha tends to decay right so over time yield sources uh become known and you know people start to leverage them more and more value is starting to be extracted more and more maybe also the size of the opportunity decreases um and so the yield decreases and for some becomes maybe not a good enough yield adjusted opportunity anymore and so you have to rotate and kind of you're in this kind of endless cycle of finding alpha finding new opportunities which by definition is unsustainable. Um so there is no real safe strategy that I can share with you now that's going to work you know when the listener is going to have the opportunity to learn about this podcast.

It's it's a continuous job that you need to perform endlessly and that's why DeFi has become in my view a little bit too complex for you know the average player for myself as I was you know when I started my journey in the space seven eight years ago been way too complex of a space with too many uh things to be mindful of and too many attack vectors to monitor. Uh so the allocation in DeFi is heavily professionalized now. uh most of the sticky long-term capital is placed by long-term professional allocators which you know are also called curators etc and uh and so I think if you want to have this kind of role in the space this is kind of the way you have to imagine this happening for you now you mentioned incentives are very interesting because they have been able especially until uh recently last like last year to kind of skew a lot the risk adjusted uh profile of a lot products say you know you're expecting 5% in terms of riskadjusted returns but then there are incentives on top and the yield is suddenly 10%. Well, now this is you know a very interesting opportunity and that's why a lot of capital really fled to farming incentives and in a way as an industry we have unfortunately you know realized that we have incentivized a lot more rotation rather than stickiness presence real engagement real um users and that's maybe something we can discuss even a little bit later today because as advisors you know our work has been a lot into Yes, incentives are a good way to bootstrap, but without a plan to actually retain users without a retention plan. Incentives only incentivize rotation.

They not incentivize. They do not market your product. They're not they're not the loss leader that you want users to enter into to then give them other things. There are some very good examples of companies very successfully going about their incentives campaign, but we also have incredible examples of massive expensive failures. Like who remembers Uni Chain now, right?

And Uni Chain had a incredibly uh high budget for incentives. They were distributed by Gauntlet if I'm not mistaken last year. They they fueled the massive TVL influx, but as soon as the incentives dried up, so did the TVL. Uh and and you know, you knew olders unfortunately were left a little bit hurt by that. Um other examples maybe on the opposite end.

Well, I I maybe do some astrourfing here a little bit, but use money is a great example of a protocol that has spent very well its incentives despite launching and living through a very turbulent uh time because user money launched in October 2025 just before a series of major blowups in the stable coin space. Then it survived uh the um the kelp dow exploit. they survived the resolve exploit. Um, so throughout all of these, you know, they were able not only to retain but now also to grow past their all-time high in TVL with a very cautious approach in terms of incentives oftentimes almost always aligned with some larger uh partners and all of that draw users that are sticky and uh and the protocol is run very successfully and has a very bright future ahead. Okay, maybe we can speak yeah a bit more about these rotation games and how you decide in a bit just before that um wanted to touch base on uh RWAS are coming on chain right uh and now we kind of like have on chain as well like a market neutral like uh a market neutral position which is US treasury right like which is like paying around 4.5% or something like that and it then places D5 yield above ove that all the time, right?

Like because if you have a bit below then the incentive games went wrong, right? So um and it's a place where I guess the capital is not rotating so often, right? Uh as pretty stably you can get this yield depending of course on the fed policies and other questions but still like there's some incentive attached to that. So, so did you see any change uh recently due to RWAS in the incentive space of DeFi? Um because yeah, we can see that the yield game is changing a bit on chain, right?

So, how does it impact the overall incentive game and like how um how yields are packaged, how they're promoted and like overall maybe you can comment a bit how are the blaze are impacting the uh our OG D5 space. >> Absolutely. Yes. I mean I think we all realized early in this year 2026 especially I would say January that this was going to be the year of the explosion of our WA onchain. Um you know it's interesting because some people think oh real world asset that means something tangible something that exists offchain so you know it must be real I can touch it must be must be safe that couldn't be further from the truth right so airw do not remove risk I think they just change where the risk uh lives and and so when we talk about we need to you know make sure we are still applying some of the categorizations that are needed to diversify the risk profiles.

Uh some RWAs exist on chain simply because they cannot get any small capital offchain and so they're trying to leverage let's say the stupidity of the some D5 users or or I would say the lack of knowledge right around some products and so yeah you have to be really careful is a very broad category and not every RWA is created equal. They're definitely forcing uh curators [clears throat] and users alike to, you know, become credit analysts, lawyers to have very deep operational due diligence teams, not anymore just smart contracts or, you know, other more known assets and ways of doing due diligence. That's why, by the way, we uh shipped Telos skills. Uh so little plug here. Toss skills is a free-touse AI skill that allows your favorite AI to run deep due diligence on all kind of assets but it was really created with RWAS in mind.

So at Telos we do a lot of due diligence for curators. We have also published some of it. Uh in February, for example, we published some due diligence on Main Street uh highlighting some gaps uh in the construction of the protocol and indeed a few months later the protocol kind of blew up. We also um more recently done a due diligence on up coin shift which is instead doing quite well. It's being built quite solidly and that's also thanks to the foundation that this due diligence gives.

Um yeah you mentioned something critical uh the spread with T bill with T bill at 4.5% there are a lot of opportunities and a lot of capital in DeFi are sitting below this hurdle rate and so one is right about asking what is it doing there it doesn't make any sense what is there some hidden incentive that those people are receiving from a purely rational standpoint this doesn't make any sense and you know I kind of tend to agree with this feeling if uh the T bill rate is considered the risk-free rate. If your capital is sitting in a smart contract in a self-custodial wallet below that, it's uh well you're actually losing value. Uh now not everybody is about optimizing to the maximum their portfolio and so you can expect uh some lag but the size we're seeing now is a little bit higher than that. But it makes me optimistic about the future of the space. If every player plays the game in the optimal way then there is no game to be played at all.

Right. Um I think next to RWA's another interesting category is the one of market neutral strategies. So we've seen it pivot from you know purely market neutral kind of tokenized fund to a more heavily RWACO uh fund itself. Um and so those are interesting especially now that we are the day after the itina security council just uh renewed their votes not without drama. Uh what I want to say is that even market neutral uh does not mean risk neutral.

So when you hedge market risk again you do not eliminate the risk you reveal uh some of the risk that the protocol can hide underneath it. and this has shown in some of those LA last uh series a series of blowups as well. Um the space remains very interesting. I really like how RWAs in DeFi gain from day one the advantage of being composable. A token can be put in a liquidity position.

They it can be um oftentimes used as collateral to borrow. Yes, you can also do that in traditional finance with repos. But unless you're a multi-millionaire uh and you want, you know, the position to be open in two months from now and stay open for a long time because the admin is so crazy. Well, in DeFi, you can do that in a minute. And that and that's really compelling for distribution, for growth, and for utility.

>> Yeah. Interesting that you mentioned um different risk levels. And I wanted to ask you like how should an investor compare you know like a treasury rate of 4.5% let's say with market mutual fund which generates what about like maybe up 10% right uh without looping uh I guess so like what how should investors compare it like how can you actually calculate the risk that you're putting when investing into one or another as you mentioned there's some also like fundamental um risk with the treasury yield is being onchain and self custoded but like at the same time it's kind of treated as a safe safest investment like a safe heaven you can call it like that but then it when it comes to market neutrals it's also it can sound quite safe but then you are really depending on like backend operations by that organization right so like how should investors really compare it and evaluate these opportunities and how to make decisions you know where to invest how to make your capital work the best because of course you want the better yield but you don't want to lose it at any point of time. So like what's like how do you decide within the Telos right and when you advise to other um treasury management organizations >> in one word the tek skills [laughter] tk skills is able to you know explain to you what the products do and based on what they do you can decide if you're comfortable for that right it reminds me a little bit what we're seeing your question reminds me a lot of what I was asked a lot maybe in 2020 2021 what coin should I buy right what coin is right for me what coin is gonna pump and you know there's really no right answer that fits all. Uh everybody has different risk tolerances and has different objectives with their own capital both in terms of the returns they want to achieve the duration over which they want to deploy it and so you cannot really just give an answer that fits everyone.

The the job of an asset manager is also to uh well actually reveal you know the risks that are underlying the product. You can never really escape the risk letter. The risk letter says well if a product gives no return uh then generally or very low return generally it's considered the safer right uh then you know as you move up on the risk ladder you get yes more return more price but why are you getting more price well because you're incurring more risk so you can always uh find opportunities that are uh let's say risk adjusted in a way that you think like the market has not priced risk correctly but in the context of our WAS for example that's a little bit tough because like just the market is so large and so full of quants and teams with you know machines that you cannot even imagine that are calculating this so you from your iPhone thinking that you have an edge over those teams is a little bit unrealistic on chain still I would say you can find some of this for example user money has a senior trench that currently yields about 8% um it's done mostly through looped strategies if If you understand what leverage is and what um loops are and the risk that are involved and the collateral tokens that are used and you're comfortable with those, I would say that loops are a fairly decent risk adjusted opportunity. They rely very heavily on uh more passive uh less institutional, less uh smart capital sitting as lending liquidity. And because you're looping, you need $10 of lending liquidity against $1 of smarter capital.

So, you know, this game now works, but it it might not work indefinitely. Now, it works. And so, 8% for looped ETNA or looped syrup looks on paper uh like something that you could potentially arbitrage in terms of the risk returns and something that sits in a interesting position in the risk leather. Another thing is arbitrage. Arbitare strategies are generally um not crazy complex to uh in terms of the uh risks that they expose you to because you're holding assets only for very short periods of times and you're you really only have execution risk and so I've seen some teams and recently we made a hire in that uh context for CASA where you know once you are able to exploit that extract value from arbitrage, high frequency trading, especially sex to DEX.

So, centralized exchange, decentralized exchange, well, those plays um have a very acceptable quantity of risk for the returns they're able to um generate for the for the people running them. We're talking like something 12 14 even 20% at sometimes. The only I would say downside is that there is a very uh evident ceiling on how much capital you can deploy at such returns. At some point the opportunities kind of vanishes and the more capital you add the more you're just diluting the strategy. So so yeah those still exist they are out there.

Um any listener very happy to chat with them. We we are actively deploying strategies with Casa. We soon have this sex strategy available for users. We uh have also this goal now of deploying uh strategies for users in their native currency and from Switzerland we have seen a lot of capital exit defi just because everything is denominated in dollars and dollars have done very poor uh against Swiss Franks but also against euros for example right so dollar since in the last three year lost maybe 20 25% of its value against a native currency so even with a very risky strategy you have not as a Europe European or Swiss underper outperformed simply holding money in your bank account. And so Kasa wants to fix that.

We want to deploy strategies onchain but also offchain in the native currency of users so that they're not exposed to uh the dollar which is uh yeah which is a bit volatile especially lately. >> Yeah. Yeah, that completely makes sense. Um yeah, I want to find out a bit more about like your processes. Maybe you can tell um let's say there's a new um strategy launching they promise around 10% yield from finding let's say maybe arbitrage opportunities it can be offchain it can be onchain right um or yeah they generate some yield by loaning the assets and yeah we target let's say 10% uh APY what's your overall where do you start like what's your due diligent process due diligence process right How do you make sure that it's a sustainable yield and that uh your investors won't actually lose money, right?

Like and maybe how do you advise them to structure it so that it would be actually safe? So maybe you can walk us through it. >> Yeah, that's very good question. It's hard to find now lending opportunities at 10%. They imply that you're lending to something that's yielded actually higher with a promise of your capital potentially being more liquid but actually being the first that goes under full stress the moment there are issues with redemptions.

So I was analyzing uh yesterday uh an RWA product that uh is meant to tokenize bonds and the way they're going about it is very interesting because they are packaging extremely safe bonds with extremely risky ones in a single uh in a single product. So you have on one end of the spectrum bonds that are just you know 50 bips above T bills and on the other hand stuff like loans to Aston Martin which currently go for 20 25%. And um and that's very tricky to analyze because you need to predict the future a little bit. So you know you need to look at Aston Martin how are they doing in F1? They're doing poorly.

They're the one of the teams that's spending the most while they're also dead last at every race, barely doing times that allow them to qualify for the race even. Uh and so, you know, I'm not too optimistic about that part. But then there are other components to the loan of companies that maybe I don't know as well. And so you need to really research a lot. Usually when you have a doubt, it's better not to go forward with your investment because uh it's where the thing will break.

It's not just Marily law, right? It's it's well I understand all of the risks except this one but you know everything else seems fine whatever well actually no you really need to understand everything in depth uh you really need to go to the end of the process uh to to make confident decisions I think you know we spent a lot of time in crypto building financial primitives but the next phase uh is packaging so it's not because something sits in a vault that magically it's safe right it's not because somebody manages it that suddenly it's risk-f agree it's quite the opposite. There are allocators that purposefully build vaults with, you know, some risk profiles not for the faint of heart and that's perfectly fine, right? It's it's it's a perfectly legitimate thing. You just need as a user to understand what you're doing when you deploy capital into those why one creator offers, you know, 12% instead of eight, 8% instead of six and so on.

So, for example, we now have a Casar WA product that lends to ray. raise a reinsurance protocol that mostly deploys into reinsured funds around cat. CA cut is traditionally in finance one of the you know catastrophe events. one of the so you know insurance companies securitize uh different bundles of insuranceances uh sold to people and then they put them on the market to sell them to people and they distribute 12% 14% sometimes yield uh in exchange obviously for you know capital at risk uh in case an event actually happens uh but if you distribute geographically enough and in the case of ray if you also have trenching in place with a you know a junior trench and as an entrrench and then the senior product. Well, you know, in we did made the decision that this was a good risk adjusted opportunity yielding about 11%.

So, we decided with Agora to deploy a product called Casio WA that lands at approximately 8% against it. Um, you know, it's a very interesting product. It's one that we think has a bit of this arbitrage in terms of risk adjusted returns, but it's not for everyone. You need to understand that, you know, if something was to happen in Florida or, you know, in some of those other places where this insurance happens, uh, well, then your capital is actually at risk of being eroded and that's why you're getting such a high price for your capital being in this product. So, so yes, the next phase is packaging.

We need we need to become better at packaging things. And and once we do, um, I think onchain becomes just an implementation detail, right? like you will not buy an onchain yield product anymore. You'll buy a Swiss Frank, a euro, a dollar yield product with potentially some of the execution happening onchain or not. Like the end state of DeFi is for it to be transparent to the end user and to be distributed in places where the customer even just stops caring that where it's DeFi or not just because it's on the same level as any other financial community.

>> Yeah. Makes sense. And uh you touched quite a bit. It's about you know like uh also about diversification and allocation like how do you choose like where to allocate the capital to and as you mentioned like for example um this D5 protocol that you mentioned it has like a partially Aston Martin bonds which they probably added just to increase the yield right and make it more attractive and it would lead you to a rejection but for example let's say it's a Ferrari bond right like which is probably more secure and we're now like kind of performing quite well and this would lead to probably like at least a small allocation made by a fund or like um or by someone investing it because yeah it's you're still aiming to diversify and search for different yield opportunities. The other might be like what you're launching with CASA the RWA products right also you want to allocate a bit to that in order to potentially get like more yield.

Um so what actually justifies doing at least like a small allocation doing like a huge allocation going basically all in right or like rejecting it right away. [laughter] >> Well you know if you are uh loaning money to Aston Martin while also shorting their stock you know potentially you have what could look like a delta neutral position is not at all but potentially you're have a hedge on your play right and so you can look how much does my hedge cost? Oh, it cost me 17%. That means I'm comfortable loaning to us and at 20, right? So, every product has a sense for someone uh at least the ones with actual capital on them, right?

Sometimes it's just capital doing a mistake. But overall, you should assume that it has some sense. It has some reason to be there and for some it makes sense. Not for all, right? If I'm not short on Aston Martin stock, I even at 20% I would not loan money to them.

If I was if I wanted to loan money at Ferrari, probably I can find some way to do it, but certainly not at 20%. I'm sure loans for Ferrari go for a lot less than that just because well, Ferrari is not willing to overpay uh for customer for money for investments and uh and at some point you find the balance between supply and demand a little bit like a the spread in an order book, right? You find that the acceptable rate of return and those by the way are very sensitive to whatever is the Fed rate, right? So now that interest rates are a little bit higher at least in the US because you know in Switzerland for example we are still at 0%. So finding Swiss Frank denominated opportunities is still quite hard because we're at 0%.

But US is quite high. So if the rates were to increase further then also those products the yields will increase. If the if the Fed rates were to go down obviously also those rates go down. We say as an industry that when rates go down, well, people then are willing to put their money into riskier stuff just because they want the same return, right? As a user, I want 8%.

I don't care if it's, you know, 400 bips above spread or 700. And uh um and so people tend to deploy more into risk on assets. If you think about, you know, the last big bull run right after COVID that happened exactly in a context where interest rates were essentially zero even in the US and people were willing to take more risks to to get their kind of hurdle of return. Um, so yeah, did I answer your question? I think we've touched on so many things and it's really so interesting to see >> uh actually now I'm thinking, you know, so who eventually does due diligence better?

Is it AI or is it human beings, right? Because you recently launched also like a cloud skill for that. So, um maybe you already got a chance to test it out and like Yeah. could you maybe you personally could do that level of uh due diligence right after spending hours or weeks I guess or even months of uh time. But um yeah, what results are you seeing when AI is doing due diligence versus you?

where does it still like maybe like fail or where does it do a better job? So like what are your insights so far? >> Yeah, that's such a great question. I think where AI is very powerful is that it's able to not take the statements from the team at face value but always verifiesing them essentially against the whole amount of publicly available information that you can find on the internet. That's still not a lot of information because a lot of founders maybe are members in communities where they may be known for having scammed or failed or rugged or behaved in a way that's not considered good.

There there are really a few groups I would like to mention Yields and More here in particular that really have a nose for fishy stuff. they seem to um really know uh what uh products are not as good as they seem uh just because of their very long experience in the space and their nose their good knows you. So AI can never beat a good nose. [laughter] But if uh if a thunder says, "Oh, I have this experience and that and hides, you know, the bad stuff," well then AI will actually find the bad stuff quite soon. Uh and you'll be able to confront them about it and, you know, already potentially raise a red flag.

Uh this AI does very well. Another thing AI does extremely well is onchain analysis. I was extremely impressed by this. If you give AI some good RPC, you know, it finds you how concentrated the liquidity is, uh especially if there are only a few large holders. We've seen some assets with markets deployed for them with many lenders but only one borrower and then you're like oh you know and then you dig into a little bit into who's the borrower and it's actually you know address related to the team and so you're like well there could be some you know self-minting unbacked self minting going on and that's what happened with M digital mood digital another product which uh asked us to do due diligence on them and we refused just because the amount of red flags was simply unsurmountable We we asked them uh you know what's your process in case you have a wave of redemptions coming in and like ah no but this will not happen we [laughter] don't have such process like yeah no that's a tough one a really massive red flag u but again as a user if I was a user if I didn't have this direct line with the team if I didn't have these tools and this team allowing me to analyze all of those things I I would be very scared to allocate capital in DeFi right now it's really a landmine right like it's so easy to fake APIs it's so easy to fake TVL uh you know you can be a curator but you know are you a good curator even good curators have uh have lost money right uh you know with the resolve hack with the kelp incident uh things can happen that as a let's say everyday user like non-professional user you will spend a lot of money and have a very hard time preventing.

So, so yeah, we are at this interesting kind of crossroad in the space where we have the financial primitives, we have interesting assets, we have composibility, but we need to do some effort into packaging this better if we want to, you know, on board the next trillion dollar of chain. >> Yeah. Makes completely sense. So, you launched a tool for due diligence, right? Like when are you launching a tool for actual asset allocation, right?

making choices for you based on your risk levels and similar things. So like how do you see like overall AI managing capital and actually doing decisions for you like is it really going to happen like are you going to trust your funds fully to AI or human being will always be still in the middle like making like its own biased decisions maybe. [laughter] Oh wow. Yes, it's way too early for me for full agentic allocation. You know, a lot of those AI capital allocators could just exist without AI.

They they simply follow some script of, you know, allocate into pre-selected opportunities and so on. I don't know a AI locator that will actively find you new opportunities and build you complex strategies uh and allow you to find some, you know, exclusive alpha that no other agent has. we we're still a little bit far off of that. Uh but yes, as allocators now, we manually build strategies that fit different risk profiles. Obviously, everybody cares about their users not being wrecked.

But you also need to understand that there is a niche of people that are are happy with riskier products and they happily deploy there. It's just important that as a curator, as an allocator, you do a good job at educating the people, making them understand, you know, why there's a product that yields five versus one that yields 10 or 12. um for it's a bit early to fully delegate capital to AI. The ways you can do that now again could very well exist without AI. They're just hyped in my opinion.

They they are just really, you know, uh it could be a few if sentences on a program and it could do it, you know, with so much better even potentially. But uh like some of our allocators bought, they run all without AI. We could say it's AI optimized, but you know, we it's not so we are not going to say that. uh but others say they are well they perform less well and they do a lot less. So uh yeah with that said again I'm not think we're fully there yet.

Yes, it will it will come though as you know as AI capabilities increase especially you know as soon as there is the financial interest to build something so complex that they can actually find alpha for you in the market and find opportunities for you and you know have capital available. I think you know it will happen first onchain then offchain potentially. Yeah, this is actually what I wanted to ask you. So, how do you think the space will look like in two to three years because we're seeing like exponential growth in AI and also like in onchain markets. So, this seems like um yeah like both spaces should grow in the coming years, right?

So, um maybe you have your own like insight or like u yeah like where do you believe this space is heading like where will we be actually in two to three years? I've been through three bare markets and uh um despite what some feel I feel like this is really one that's putting our industry at a bit of a existential crossroad like if we do not uh really solve you know this packaging distribution issue well we we're find we're failing to find the reason to exist as an industry in many ways. Uh so people like yield they like yield that scales. So I think if those products are packaged correctly and they do well and they do not wreck users uh well I think you know we have a bright road ahead. If not then you know DeFi will be a subcategory of finance as a whole.

It will be yes continue to exist and be incorporated uh but will not become you know the future of finance to call it [laughter] with a term that we've been hearing a lot. So um well it's easy to have a pessimistic outlook during the bare market and then you know be super optimistic during the bull. Um we were a little bit plagued by extractive actors that used the space for a quick gain rather than building for the long term. But a lot of u you know convinced long-term principled builders are still around. Uh and so uh I don't want to you know I don't think the bell of the last round has rung yet.

I think we you know we can still we we're still in for a good for an interesting ride. It whether you know DeFi stays relegated to kind of a subcategory of the broader financial ecosystem or it fully overtakes it. Uh I cannot say honestly. Uh it depends a lot on the people that work in it and what they do. And I think at the end of the day, if you work here to give to others with love for what you do and with care for other people, you know, I think this it's down to what every individual does, but ultimately it's what will bring the industry forward and make the space more meaningful even in a word so cruel and so uh you know down to earth in terms of uh being only answering the laws of maths.

I think love space. [clears throat] >> That's super interesting answer. Thanks for it. Um yeah, maybe for wrapping it up um what's coming up for Telus, right? Like you started with advisory curation now you're building your own tools like uh you're building AI skills, right?

Like you're really like getting your hands dirty and like trying a lot of different hats. So where do you see uh tell us going as a leader right like where do you see opportunities where you are trying to f put more focus maybe more and what's upcoming in the next like maybe six months like what can people expect from you and your team? >> Yeah, thank you for asking. I think with Telos we've roundt the advisory cycles. We we've done a lot of it.

We we know we're good at it and we're looking for our next challenge. Not that we will say no to those kind of opportunities. But I think we're a lot more interested now in building and developing our own products. And so Telos Consilium is essentially the service provider of Kasa, right? So Kasa has become kind of the main name brand where things happen.

And the mission of Kasa is to deploy managed strategies in the currency of choice of the user. Whether that's Swiss Frank, Euro, dollar, ETH, right? Whatever is your currency, we have a strategy for you. at the bottom you still need kind of the same core components uh intelligence diligence data monitoring uh you need skill in allocation deciding where the capital is going and so I think through advisory we built a large enough network to that allows us to be connected with all different ecosystem players the asset issuers the chains uh that puts us in a privileged position to make those decisions in a correct way uh but again you need products that um package [clears throat] those allocations in an interesting way for investors And ultimately you need uh mechanisms for pricing and transferring the risk as you can never really decouple return from risk. Given a long enough time horizon any risk will eventually happen and even a product with two beeps above T bills can and will fail.

So uh I think after you you've done a good job with yield what's very interesting is to do something around risk. Finding a way to transfer this risk to price it to make it tradable. We we now have you know the tools with stuff like chain link proof of reserves with also octave redstone are doing a terrific job with those products uh accountable uh you could have a fully deterministic onchain system that acts as a credit default swap and packages and transfers risk and um and I'm very interesting in exploring this primitive uh potentially you know making this kind of a real standalone product. I think we'll see something like this happen whether from us or not uh in the next six to 12 months. >> Okay.

Well, that's exciting. Luka, thanks again for jumping in. Hopefully uh you had a great time here. Thanks again for sharing your insights. Um I bet everyone will be able to take something from uh from it to themselves and apply it to their like own capital allocation and risk management.

Um, so yeah, wishing you all the best with Telus Consilium. Again, thank you and yeah, hopefully you'll be having great time building products yourselves. >> Thank you very much for the nice conversation today and looking forward also to Dia doing very well. >> Okay, amazing. Thanks, Luka.

Bye.