Ondo Finance is Dominating the Institutional Tokenization Surge! with Ian De Bode

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
One of the key fundamental innovations of the crypto space,
Quarde frankly, is to launch a token that can have
network effects in where you can have value accrule of
the network that in and of itself, I don't think
should be forgotten. The very novel way to do capital formation,
which we as you know, being active in traditional capital
markets and putting traditional financial assets on chain. It's a

(00:21):
very interesting concept for usto to look at.

Speaker 2 (00:24):
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to many exchanges, and all the links will be in
a description. Check it out. Hey, folks, welcome into the
Thinking Crypto podcast. I'm your host, Tony Edward, and my
guest today is Ian Debode, who is the chief strategy
officer at Ondo Finance. Ian, great to have you.

Speaker 1 (02:38):
On, Great to be here. Thanks for having me Tony. Ian.

Speaker 2 (02:42):
As we were talking about before the recording, I'm a
fan of Hodo. I'm an Ondo token holder. I love
what you guys are doing, so I'm excited to dive
into the details about all the great work and initiatives
that you and the folks there are working on. Let's
kick it off with your background. Tell us a bit
about yourself, where you're from and your professional background.

Speaker 1 (02:59):
Yeah, and per say so. I'm originally from Belgium, born
and raised. Came to us in twenty thirteen for business school,
decided to stick around by trading. I'm actually an engineer.
I used to be. I used to work at a
semiconductor company as an R and D engineer or product manager,
but that feels like forever ago. Those business school actually

(03:22):
worked for almost a decade at McKinsey and Company as
the consultancy shop. I ended up managing all their working
digital assets, so working primarily with all of the trad
fis on what are digital assets, where do they not?
What can you do with them? And about a year
and a half ago I joined Onto as the Chief
strategy Officer, really to focus on obviously the strategy, corporate development,

(03:47):
go to market, all sorts of fun things that you
get to do at a ultimately small startup.

Speaker 2 (03:53):
Absolutely So was your first encounter with blockchain and digital
assets and crypto at McKenzie or did you hear about
it before? Some people have heard about bitcoin and they
were like, man, I wish i'd paid attention.

Speaker 1 (04:04):
Yeah, well, it's funny. I'd heard about bitcoin, but it
never really did it for me. Although as I'm longer
in the space, the more I appreciate the OG. But
the moment I read about Ethereum, that's when it flicked
all of a sudden. I mean, at the time, even
at McKinsey, I was doing some work in financial services
with some of the TRACIFI giants and I was just
kind of shocked at how inefficient the system was, quite frankly,

(04:28):
and then when I read about Ethereum and the whole
concept of smart contract tech stack that could operate twenty
four to seven. I mean, mind you, this was pre
DeFi though, you know, I hadn't really seen it, but conceptually,
the whole concept of having a smart contract that could
execute code twenty four to seven, that could do basic
functionality that finance did that really spoke to me from

(04:49):
a very early on. So I ended up then trying
to do as much blockchain work within McKinsey as I could.
I couldn't really need mckenzi, primarily in the visa reasons,
so even if I wanted to stay in the US,
I couldn't really leave Kinsey. So that caused me to
add a very early onset in my McKinsey career try
to do as much blockchain work or crypto work as

(05:11):
I possibly could. Back then, there wasn't a lot. Yeah,
the first project I did was on tokenization actually in
twenty sixteen for some French banks. Wow, And back then
it was all, you know, blockchain, not crypto. I mean
there's still some of that, but increasingly less so. But

(05:32):
that was the first time that I did anything professionally
with blockchain. Back in twenty sixteen.

Speaker 2 (05:38):
Wow, that's fascinating because that's so early twenty sixteen. I
don't think I got into the market then. I didn't
hear about the word tokenization till years later. And then
you mentioned, you know, the dynamic between blockchain and crypto,
because there's always been kind of the narrative battle taking place.
But you need both. I mean, you can't have a

(05:58):
public blockchain with a public with some sort of currency
greasing the network. And I think people don't really recognize that.

Speaker 1 (06:05):
Yeah, I know one hundred percent. I encountered that so
many times with a lot of these traps. It's like, oh,
but I like blotching and I don't like crypto, And
I'm like, well, you can't really have one versus the other,
because otherwise, how are you going to essentially pay your
validator network to make sure that it gets included. And
then they're like, well, why don't you just use cast
I'm like, well, you can, but that's not necessarily decentralized system.

(06:28):
So you have to like walk them through the concept
of why does a native asset to a chain make
sense in the first place. Needless to say, a lot
of the trad files just don't get it because for
a trad FI they have to meet certain compliance requirements anyway,
So the whole concept of a decentralized system is very
foreign to them because all the time that would then

(06:49):
ask the question, but like what's the throat to choke,
like where is a regulator going to go? You're like, well,
that's kind of not how this system is ultimately designed
per se, and you have to get into the nuance.
So there was a lot of education to do, which
I think in part is why this whole concept of
tokenization of traditional financial assets and adoption by the draft
flights truly has taken quite frankly over a decade.

Speaker 2 (07:13):
Sure, and then it's also maybe a very foreign concept
where you have the convergence of a network with a
currency or something that holds value, because before it was
just here's the protocol, there's a company behind it, maybe
you get shares, private equity, IPO, YadA, YadA. But for
the first time you have this conversion. So I think
for a lot of people, even retail outside institution, they're like, so,

(07:35):
why do you need the token or why do you
what's blockchain and what's crypto? It's like hard for them
to understand its paradigm shift.

Speaker 1 (07:42):
Yeah, no, one hundred percent, and I mean quite frank
I mean that's why it's a journey. I feel like
everyone who gets into crypto has a million questions and
it just takes some time for you to ultimately work
through all of them and to really get what this
stuff is about. And then you know, you ultimately also
start to appreciate and realize that it's kind of all
of a spectrum. Like the centralization is a spectrum. Yeah,

(08:05):
the trust assumptions in asset, that's his spectrum. So it's
a very nuanced and complex space that just requires some
time to work through. And quite frankly, you even see
it now on crypto Twitter. In the crypto space these days,
there's a lot of these RWA issuers and providers that
are starting to build these purpose build chains right like

(08:28):
Temple and Arc and you get a lot of debate
around wait is that really a blockchain? So yeah, those
debates have been around for ten years and I don't
see them stopping quite frankly, for sure.

Speaker 2 (08:40):
Yeah, And you know, time will tell the winners and
what the market wants, and you know, what gets real
world adoption. I think there's a lot of players right now,
which is this is a normal process. It's healthy as well,
trying to figure out maybe there are some solutions that
exist that don't have a problem, but there are certainly

(09:01):
folks like I believe, like you guys on it. I'm
not saying that because you're on the podcast, but I
believe what you're you folks are doing. You know, we're
going to talk about onto global markets and so forth,
but you're really building a key infrastructure item for the
adoption of you know, the technology and tokenization and much more.

Speaker 1 (09:17):
Yeah, one hundred percent. With a lot of crypto. I mean,
crypto sometimes gets a bad reputation because a lot of
people in crypto think, you know, build it and they
will come, and that does not necessarily how things play out.
Yet at the same time, I think you can credibly
say that a lot of infrastructure that has been built
in crypto initially was build it and they will come.

(09:37):
And turns out a lot of these crypto engineers and
developers were ahead of their time and build something that
maybe at the time wasn't necessarily needed. But you know,
three four years down the line, people look at that
and say, oh wow, that's actually pretty innovative. So I think,
you know, time will tell to your point on how
this space plays out. It's kind of a cliche, but

(09:58):
I do think ultimately we are still pretty early. But
sometimes when you look at some of these crypto prices,
it's hard to believe.

Speaker 2 (10:05):
Yeah, it's so fascinating the two ends of the spectrum
here with the building but also the speculative aspect of
the coins, which it is what it is. Human beings
are speculative. Markets are speculative, and it happened in the
dot com boom and the real estate boom and all
these things. So can't escape it.

Speaker 1 (10:23):
Yeah, can't escape it. Tohoman nature, I believe. But the
fund like one of the key fundamental innovations of the
crypto space, quite frankly, is to launch a token that
can have network effects and where you can have value
accrule of the network. That in and of itself I
don't think should be forgotten. It's a very novel way
to do capital formation, which we as you know, being

(10:44):
active in traditional capital markets and putting traditional financial assets
on chain. It's a very interesting concept for us also
look at.

Speaker 2 (10:52):
Yeah, let's talk a bit about that because it's still
something I'm noodling on and it's so fascinating, and I
try to explain it to people because they ask, you know,
why is this mean coin worth money? And I try
to explain network effects, metcaps law and reads law that
take the real world, or I should say not the
real world, but the non digital world. Politics, religion, people

(11:14):
who crowd around a movement. That's a network being built there,
but it's now it's in a digital form and there
is a financial component to it. So that's all it is.
It's people coming together agreeing this has value. We believe
in this, even if it's a silly meme.

Speaker 1 (11:30):
Right, yeah, I mean there's two there's two schools of
thoughts in terms of what I mean. There's price in
there's value, right, and people conflate the two often. I
think that the dominant school of thought is that the
way to value any type of business is to look
at the underlying cash flow that it generates. How much
of the cash flow does that when I hold a

(11:50):
particular instrument, does that give me claim to and as
a result, how much is that ultimately worth? You know
that that clearly it has some merit to it if
you look at how a lot of companies are valued
and dividend payouts and the like. But I think the
reality is that oftentimes whatever you end up paying for
something in the price of the acid, and the price

(12:11):
of the acid is dependent on how many people that
want to buy a particular thing, right, and so there
are a lot of things that people are willing to
pay money for, But when you look at the underlying
value from a cash flow perspective, it's not really there.
Does that mean that the price that people pay is
unreasonable or not right, well, you know, to be debated,

(12:35):
because people clearly pay the money for it and are
willing to pay for it. So I think it's just
different schools of thought whether you look at price or value,
and it's a very complicated discussion to have.

Speaker 2 (12:49):
Frankly, absolutely, I feel there's going to be a lot
of studies about these things, but huge generation like why
is those coin on ariz.

Speaker 1 (12:58):
For Oh boy, that means yes, quite, It's so funny.

Speaker 2 (13:04):
It's like human behavior on the blockchain. It's so fascinating.
I'm curious. You know, what your perspective is of your
time at Mackenzie and you know, even going back to
twenty sixteen and now where things are at, I mean, Ian,
it's an amazing growth and surge of adoption by trad fight.
Are you blown away by the amount of adoption we're.

Speaker 1 (13:25):
Seeing, Oh for sure, and I mean relative to twenty sixteen, yes,
but even relative it is quite frankly at twenty twenty three,
it's just night and day, right, I think the space
has come a very very long way. The infrastructure has
been developed a lot more than back in twenty sixteen.
The liquidity that's available also grew quite a bit. I mean,

(13:49):
this really is the innovation of the stable coin that
really was a key unlock for this entire space to
really mature and unlock, because you could have crypto that was,
you know, around in the ecosystem, and you could even
put traditional financial assets on a blockchain, but all the
way back to twenty sixteen, but what were you going
to do with the actual settlement of these instruments. You

(14:10):
needed a cash leg, which ended up being a stable
coin leg. So stable coins truly were the first zero
to one innovation I think in how to make all
of this work, which back in twenty twenty sixteen, obviously,
I mean stable coins existed, but they were so small
it didn't really matter. I think, DeFi was the other
massive zero to one innovation where all of a sudden

(14:32):
people could actually see how this could work in the
twenty four to seven autonomous fashion, And there was a
ton of innovation happening back in twenty twenty twenty twenty
one in the space. And then the last thing that
really unlocked post twenty twenty three really is the regulatory
clarity and the attitude of the regulators. I think that
was the final key unlocked that really needed to happen,

(14:56):
where the ETFs played a very interesting role. Ultimately, that
was the first introduction of crypto into the mainstream where
it was very very clear that there was a ton
of untapped demand and crypto ownership and appetite was a
lot broader than I think what the other administrations had expected,

(15:16):
and I think that created a lot of visibility for
the space. Obviously, the Trumpet administration right now is very
crypto friendly and wants to make America the home of crypto.
But all of those things combined over the past ten years,
I think have finally led us to this moment and
the amount of trad fi interest in almost fomo quite

(15:36):
frankly that I see in the space is really incredible.

Speaker 2 (15:40):
Yeah, I mean the names that are involved, and we're
going to talk a bit about some of them that
are using Onto and partnering with you. But before we
get ahead of ourselves here, give a quick overview of
ONDO for those who may not know what is Ondo
and how's it work and things like that.

Speaker 1 (15:55):
For sure, So think of ONO as a company. We
put traditional financial assets on block shainrails and make them
available to a global audience. This is really what a
stable coin piloted with cash we do for treasury stocks
and etf We also develop the services and infrastructure to
make that issuance and distribution process more seamless and to

(16:16):
give real utility to these assets. We did that back
in the day when we developed the flux Finance protocol,
which was the first example of how a rebuild market
could work with tokenized treasuries as collateral. So we started
our entire journey, really, i'd say, back in twenty twenty
two twenty twenty three, by tokenizing treasuries in the first instance.

(16:40):
We looked at stable coins as having product market fit.
Stable coins are beautiful products, but they're not perfect they
actually don't give you very good investor protections and they
don't pay out yield to it's euroup to their holders,
and so to solve both of those issues, we believed
at a token its treasury fund with a lot out
of investor protections was actually the way to go. We

(17:03):
started doing that with a product called OUSG. It's a
permissioned tokenized treasury fund. At the time, it was pretty
innovative because it was the first time that a tokenice
treasury fund, which is essentially security, could be transferred peer
to peer on chain as long as you were onboarded
with us. That also meant that you could allow list
whitelist a smart contract to then use this asset as

(17:26):
collateral in that ended up being flux Finance. So we
started really with the first peer to peer transferable tokenize
treasury fund. We have since expanded that mission to tokenize
other tokenized treasury funds that are permission lofts in the
secondary market, very much like a stable coin, but it
still pays out yield on a daily basis. And most

(17:47):
recently we also launched onto Global Markets, which is a
platform to tokenize any stock and etf that you want.

Speaker 2 (17:55):
So let's talk a bit about onto global markets. So
essentially any institution can come plug in, launch their token
ied asset and push it out to the market.

Speaker 1 (18:06):
We can actually do that with no permission even needed.
So any stock or ETF that is traded on your
traditional financial exchanges and is available in a normal brokerage account,
we can put that on chain now and make that
available to non UFS investors in the primary market, so
think of a global audience. These assets are in a

(18:27):
stable coin like format, so there are permissionless in the
secondary market, meaning that you can use them in D
five however you want twenty four to seven. They are
all fully backed one for one. So for every token
that we issue, there is a let's say it's a
token iced Tesla token, right, there will be Tesla stock
sitting in a brokerage account that is itmovable, plus a

(18:48):
large collateral buffer on top so that people can rest
assured that there's always enough collateral backing the tokens out there.
And ultimately the benefit of the platform that we've developed
is that we can put in stock and ETF on chain,
which is very helpful for a lot of the crypto exchanges.
In the crypto wallets that really want to offer their
users access to these stocks and ETFs, but for them

(19:11):
to work with the traditional financial system is a lot
more complicated than if they can just use tokenie stocks
and ETFs, where the settlement can happen in stable coins.
These things can trade twenty four to seven, all sorts
of benefits relative to the traditional system.

Speaker 2 (19:27):
You a question I have, and it's not just specific
to Ondo, but just in general, when the tokenization of
an asset takes place, and I think you touched a
bit on this that you know the asset sits in
the brokerage, but how do we verify that? How do
we see the bridge that connects the tokenized asset on
the blockchain to the physical asset, whether it be gold
or if you're tokenized real estate or if it's stock.

(19:47):
Where can one say I need to see that bridge
where all this is connected.

Speaker 1 (19:52):
Yeah, it's a great question, because ultimately, when you tokenize something,
trust and transparency is incredibly You can put a stock
on chain and it's a synthetic asset and you can
claim that it's a token I stop, but if there's
nothing backing it, I would not recommend that anyone buy it.
So we take a lot of pride in the fact

(20:13):
that all of our assets are fully backed. We actually
the tokens that you hold on chain, they're tokenized notes.
It's a debt instrument relative to the issuer of the tokens.
That issuer can issue these tokens that is really debt,
and they then hold the assets underlying or backing that

(20:36):
token in a clearing broker account plus a collateral buffer
on top. We have done this the similar structure that
we did for USDY, that is that permissionless tokenized treasury product.
We've had it for about two years you've take out
in the market. We have an agreement with a third
party agents called the collateral Agent. They have access to
our brokerage accounts, so they can literally just see the

(21:00):
value in the account on a daily basis, make sure
that whatever we are holding that we say we hold,
we actually hold, and that we have everything fully collateralized,
plus the collateral buffer on top. They post daily attestations
for everyone to see, so that anyone can go to
our website and take a look and say, hey, it's
really fully backed. They also have a legal obligation that

(21:23):
when we as the issuer, failed to meet a redemption
in a timely matter, or if they look at the
account and say, oh, a drop below a certain level,
they are legally obligated to seize all of the assets,
sell it for cash, and repay the debt holders of
the issuer, which is really the token holders in the
first place. So these things are structured in a fully

(21:44):
bankruptcy remote way. When you hold a token, you actually
have a security interest in the collateral that is perfected
by a third party, and that third party also posts
daily attestations that anyone can take a look at.

Speaker 2 (21:57):
That's great, great to hear. And then is there ever
a situation where the tokenized assets need to be in
a custodian or is it just all in smart contracts?

Speaker 1 (22:08):
Well, so the underlying sits in a custodian right, so
the actual tizla shares of the actualist and P five
hundred ETF that all sits at the actual custodian custodian
we issue the tokens against that. These assets are mobilized
so they can't move. But these tokens then obviously can
freely float wherever. You can use those tokens out of

(22:28):
custodian too. If you want, you know, if you're holding
them and you don't plan to move them anytime soon.
We do have support from some of the major custodians
in the space, so that also an institution can feel
comfortable custodying these assets in the way that they want.

Speaker 2 (22:42):
Got it, guy, Thank you for that insight, because that
is a question I've had once again just in general.
So great to get that insight. You know, you mentioned
the tokenization of stocks and the ability for people around
the globe to access certain markets and assets they have
never been able to. And I'm not sure how many
people know about this, but if you're in some country
in Africa, you can access the New York Stock Exchange

(23:03):
or free platin America right, but now you can and
that could change your life, opening up investment opportunities, wealth opportunities,
and obviously some banking opportunities with stable coins and so forth.
So tell us about your plan to expand to other
markets and are there regulatory hurdles or not necessarily yet?

Speaker 1 (23:22):
No, Yeah, great question. So I fully agree with your
point in that this is really initially a global access play.
The number of people out there globally who clearly want
to have access to US capital markets and invest in
it is pretty substantial, right We as Americans, we don't
really appreciate how difficult it is in many jurisdictions to

(23:44):
get a brokerage account. And even when you can, the
fees to buy any of these products, both FX fees
and then just normal you know, buy and selfie are
quite frankly absurd, right, So we are very excited to
have a platform that we can put all of these
US capital market assets on crypto chain and make them

(24:04):
available to that global audience, so that anyone that has
a stable coin can ultimately acquire any of these assets
in the secondary market. So that is a pretty meaningful
innovation in and of itself. These things are permissionless bear asset, right,
so in the secondary market they can flow wherever. It's
very similar to a stable coin tablecoin. You can send

(24:25):
wherever you want to. If you engage in a peer
to peer transaction with a stable coin or if you
use it in DeFi, there's no there's no regulators are
going to tell you, hey, you can't do that, right,
But if there is a called it essentialized platform that
decides to market these assets in a specific jurisdiction, and

(24:45):
you know, has billboards in a country that says by
token is stocks. Now that probably means a license. So
it kind of all depends on how it's implemented. But fundamentally,
our platform is set up in such a way that
these assets are are available to a global audience. Anyone
with a stable coin can find their way.

Speaker 2 (25:04):
Going back to what we were talking about earlier with
network effects, is this going to change markets forever? And
even private equity markets? You know, let's say the SEC
opens up accreditation and private companies can you know, get
their equity out there in a tokenized format. Plus you
have the token ied equities and stocks and so forth
that now you have liquidity coming in from around the globe,

(25:27):
which once again we've never.

Speaker 1 (25:28):
Had that before. Yeah, I never had it before. It's
a great question. I'm not sure how exactly it's all
going to play out. If I'm being honest, it'll probably
take some time. But if we talked a little bit
about you know, education and it just takes time for
people to appreciate what this stuff is, I think the
same thing is going to play out with token is
stocks because the number one question we still get is

(25:48):
why are you tokenizing stocks? Right, Like, why why not
like real estate Because most people when they think of tokenization,
they think of real estate and other types of asset classes.
We've always believed that makes most sense to tokenite those
assets that people globally already want and that you can
use as collateral on chain, because that's ultimately you know,

(26:09):
the two benefits of tokenizing an acid is you can
open it up to anyone globally because now it lives
on blockchain reels and it can move twenty four seven.
And number two is you can use it in smart contracts.
Most of the smart contracts on chain leverage some acid
in some form of collateral, whether that's for staking, for
margin purposes and the like. So for both of those reasons,

(26:30):
you typically need an asset that has very good pricing transparency, right,
Like what is an asset worth? People want to be
want to know that whatever it is they're buying is
they're buying and at the right price. And that's really
hard to do with assets like real estate like pe,
where there's a lot of information asymmetry. But when you
do that for dox ETF treasury acids, there are incredibly

(26:53):
liquid markets out there in trap FI already where pricing
discovery occurs. So once you put these things on chain,
actually pretty straightforward to figure out what these things should
be worth. So that's kind of why we put stocks
and ETFs on chain in the first place, because people
feel very comfortable buying them. So if you get all
of a sudden an avenue and a technology that hundreds

(27:18):
of millions of people are now going to be able
to buy these things almost frictionless, I think there's real
potential for that to change market structure down the line.
It's kind of very similar to how even the US
Secretary of the Treasury now it's saying, hey, you know,
stable coins, we expected to create meaningful demand for US

(27:38):
treasuries globally over the next five to ten years. I
think at some point people will say the same thing,
but you know about increasing demand for US capital markets globally.
But how long is that process going to take? I
don't know, but it could be very meaningful.

Speaker 2 (27:54):
Absolutely. And then you know you mentioned the DeFi components,
so I can not just hold the asset, but I
can put it to work to help me earn additional
income and yield and so forth.

Speaker 1 (28:04):
One hundred percent, And this is where trat FI gets
very excited about tokenization because once it lives on crypto rails,
you can tap into new sources of yield that historically
we're not really available, essentially because you disintermediate a lot
of people from the process that you would normally do,
get them take a margin loan, right, and as a result,

(28:27):
ultimately these processes become more efficient. So there's a higher
yield to be earned, and there's new sources of yield
that you could tap into, particularly if you enable it
for these crypton native primitives like staking. So that's where
the trap files really get very excited about how all
of this could evolve. I think again, it's going to
take a little bit of time for all of that

(28:48):
to play out because right now, I mean, we're very
excited to put these stocks and ETFs on chang, But
I think the reality is that DeFi isn't really built
with stocks and ETFs in mind. Like this simple scale
that these things operate at. I don't think DeFi was
particularly well designed for. So take your brokerage account, right,

(29:09):
I have a brokerage account. I've got two actually, and
I can buy let's say one thousand or so assets,
maybe even more in them and then I just hit
a button if I ever want to get a margin loan,
and it just happens automatically, no gas fees paid, Like
there's no problem. They can look at the thousand assets
that I hold and I can get margin on all

(29:29):
of them. So to speak. That's not really how defis built, right.
If I have a thousand different stocks in ETFs and
I want to get margin on it, I can't just
hit a button with no gas fees and then get
a margin loan twenty four to seven on my holdings.
I think there's going to be some changes that are
required in the DeFi ecosystem to really work with the

(29:51):
scale of stocks and ETFs, But I have no doubt
that a very eager developer ecosystem is going to adapt
to that pretty quickly. Now that these things are actually
on chain at the right price, with deep liquidity, with
the right structure, I think it is actually going to
be very exciting to see how the DeFi ecosystem evolved. Yeah.

Speaker 2 (30:10):
Absolutely, And you know, as you're saying that that it
will take time. I'm envisioning twenty years from now potentially,
you know, after institutions have set up the infrastructure you know,
folks like yourself and onto have set up the infrastructure.

Speaker 1 (30:25):
It's very easy.

Speaker 2 (30:27):
I could take a rare baseball card, a Mickey Mantle
rookie card, or a rare comic book or an old
Ferrari that's worth a lot of money, take it to
a proper institution like ontore, whatever it may be. You
go through the whole process. You're holding the asset, it's
verified on the blockchain, and I can put that asset.

Speaker 1 (30:46):
To work ultimately down the line, if you really go
twenty years down the line. Sure, I think all of
that is going to be possible for some of the
assets that you highlighted. I think is really going to
be how much is that thing worth? And pricing it
right in a way that even a DeFi protocol or
an oracle could get comfortable with. But there's nothing like

(31:08):
the process of tokenization in and of itself even today
is actually pretty straightforward, right. All you got to do
is take a traditional asset, put it in a custody account,
whether that's a bank account or a clearing broker account
or whatever the appropriate custody account is, make sure that
you immobilize it, you issue a token against it, and tada, right,

(31:28):
you've tokenized the asset. That's actually pretty straightforward. The hard part,
oftentimes is doing the pricing of that asset on a
real time basis and doing the subscription and redemption between
the traditional world in the unchained world, in the twenty
four seven manner, because a lot of these trap fi

(31:49):
systems that you need to tap into to acquire an
asset or sell an asset, they don't work twenty four
to seven, whereas the crypto ecosystem does. So that liquidity mismatch.
How you bridge that? That's the really hard part. Yeah,
that makes sense.

Speaker 2 (32:04):
And setting up, yeah, setting up the market for it
and so forth, and there has to be demand for
the asset, of course. You know you mentioned twenty four
to seven markets. Clearly that's the direction the puck is
heading in. I see these stock exchanges, you know, exploring
ways to open longer, and it's so fascinating to see
them get you know, getting disrupted in a way and
they're trying to catch up and so forth. Do you

(32:25):
think by twenty thirty we're going to have full twenty
twenty four to seven three hundred and sixty five day markets?

Speaker 1 (32:32):
Probably? To be honest, I think, you know, Nastak already announced.
I think they're going to go for six days a
week starting next year. And I think it's just really
clear that there is ultimately retail appetite to trade twenty
four to seven. And right now you're you're in a
situation where crypto markets are operating twenty four seven, people

(32:53):
wipe to trade the you know mean coins over the weekend,
bit point of the weekend, whatever it is they want
to do over the weekend. And then you look at
the traditional financial markets, which are far larger in size
still but they don't. It's a very weird, weird dichotomy.
So I think you'll see that the traditional exchanges see

(33:15):
some pressure to move towards twenty four seven, increasingly, particularly
once the stocks and ETFs are now moving on these
blockchain rails that can move twenty four to seven. I
think there's a real chance that the crypto ecosystem moves
towards twenty four seven trading of these assets already even
before the traditional brokerage accounts to And then over the

(33:38):
next five years you start seeing those traditional financial systems
actually catch up and upgrade so that they can support
twenty first seven as well.

Speaker 2 (33:47):
Yeah, great point, because many of the crypto exchanges out
there are launching token is stocks and it will trade
just like crypto assets twenty four to seven, that's right.
And then obviously with a twenty four to seven market,
no nights in we and all these things and opening
a closing bell, are we going to drive ourselves ourselves?
I'm going to be up three am a bank of

(34:08):
those or we have AI agents doing mm.

Speaker 1 (34:12):
Yeah, it's a great question. I'm very curious to see
how all of that is going to evolve. I mean
that a proponent would just say we're giving investors more
choice on when to trade, right. But yeah, it's funny
whenever I talk to someone in TRADFI or even in fintech,
you know, one of the number one questions that typically
get is like, but it's twenty four to seven? How

(34:32):
do you even deal with that? Right? How do you
ever relax? And I mean it takes a little bit
of getting used to, but over time, it is what
it is. And I think with traditional financial markets it's
kind of going to be the same thing, but it
does require very big changes in how a lot of
these traditional financial firms operate that are not to be underestimated.

Speaker 2 (34:53):
Yeah, and I think humans we find our way. Sometimes
we get sucked into a trend or technology. It disrupts
our lives and then people start saying complaining, Oh, this
is so bad, but then we figure it out and
our collective knowledge improves. I think we're going through that
with social media, right, and the collective knowledge would be like, Okay,
you got to get balance back in our lives with
our devices and so forth, so we'll figure it out.

Speaker 1 (35:15):
Hund of present and you've seen that in like I
don't know, there's lots of books about that too, right,
Like when the printing press occurred was invented, there was
a mass revolution almost in the access to information, which
ultimately unfortunately led to the religious wars. But it's a
good example of like how you had a shot to
the system, It took some time to recalibrate, and ultimately people,

(35:38):
you know, the system finds balance again. I think we're
seeing a lot of that, but at a very accelerated
pace with the Internet, social media and now twenty four
seven networks and pretty soon Aya. Yeah, absolutely.

Speaker 2 (35:50):
I want to talk a bit about some of the
adoption news that I read for ONDO, like connects us
by JP Morgan using the Onto blockchain. Tell us a
bit about that and maybe some other example of institutions
using Onto.

Speaker 1 (36:02):
Yeah, so this one kind of fits into the whole.
How do I connect the on chain environment which happens
twenty four seven to a tradi fy environment that normally
does not operate twenty four seven. Now, luckily, JP Morgan
has been ahead of the curve and realized a long
time ago that they need to have a system that

(36:23):
can operate twenty four seven, that is interoperable with public blockchains,
so that you know, if someone wants to move their
cash sitting in a JP Morgan account around, they can
do that twenty four to seven. And that's essentially what
the Connectionus platform is. It's a private ethereum blockchain that
they've implemented years and years ago that can operate twenty

(36:44):
four seven and where JP Morgan deposits can move around
between their clients. We then had a collaboration with JP
Morgan and chain Link as well, where Channeling provided the
infrastructure to connect the Connectsus platform twenty four to seven
JP Morgan platform through the Onto chain, where a lot

(37:04):
of the real world assets live and where you can
have an ecosystem of trading that can happen twenty four
to seven, but like that connection between the two is
what really needed to get built. So we partnered up
with JP Morgan and Chaining to make that happen so
that a transaction could occur where two investors that had

(37:26):
an account at ONTO and had an account at JPM
Morgan could transfer between themselves a tokenized treasury fund on
the atochain, yet settle that transaction on the JP Morgan
network with cash. So that was the pilot that we did,
and the first time truly that you would have a
public blockchain designed for RWAs really engage with the traditional

(37:47):
banking environment that could operate twenty four to seven. And
it's all about that connectivity between the on chain environment
and the trad fi environment because as mentioned previously, tokenizing
something's pretty easy. Got to learn how to deal with
the liquidity mismatch, and these types of pilots really help
tackle that liquidity mismatch that normally exists between trat fi

(38:09):
and the blockchain world.

Speaker 2 (38:10):
That's pretty profound because it seems like the direction we're
heading in is that to your point, building those bridges
because some of these institutions like banks, they need their
private blockchain networks internally to do to their things, which
is fine, but they need to bridge their real world,
and you're helping.

Speaker 1 (38:26):
To do that one hundred percent. There's a lot of
debate typically and a lot of skepticisms towards private blockchains,
which are very healthy. But I think it's because a
lot of people look at a private blockchain say, well,
you can't ever have DeFi on it, It's never really
going to be a real blockchain, And that's true, but
a private blockchain historically has been very helpful for a

(38:48):
trat file to just upgrade their internal system so that
they can work twenty four seven right. For that purpose,
a private blockchain, it's great. Like we as an asset
is sure. As a tokenization company, I love it when
a trast fly has a private blockchain network because then
I know their systems, or at least some of their
systems can operate twenty four to seven, and that makes

(39:08):
our lives significantly easier to tokenize an asset on a
real public blockchain, which can then be integrated into DeFi tell.

Speaker 2 (39:15):
Us a bit about the bridge and the settlement and
the communication. Is it like atomic settlement, Like how fast
is that happening?

Speaker 1 (39:22):
Yeah, so not all block these chains aren't necessarily fully synchronized, right,
So I think in the case of the JP Morgan pilot,
all of this happened I believe, in thirty seconds, So
it's not exactly atomic, but it's pretty close. And like
thirty seconds. For a crypto person, they're like, wow, you
know on in one second, but for a trap fi

(39:46):
that is like unbelievably. They're used to tepless one of
two settlements. So JP Morgan was very very happy with
that result.

Speaker 2 (39:56):
Oh yeah, absolutely to your point, we as cryptoph I said,
you get it right away. But that absolutely makes sense
that these trat FI institutions, that's night and day for them.
And I'm sure as with further iteration and fight tuning,
it's going to get down to five seconds, two seconds
for sure. That's amazing, really great stuff. There was also
the Onto Finance MasterCard partnership recently or tell us a

(40:20):
bit about that.

Speaker 1 (40:21):
Yeah, it's very similar actually in its intent. So we
partner it up with with MasterCard to be integrated into
the MasterCard Multi Tooken network. That one is essentially a
network that can where banks can plug into and connect
it into their own internal systems so that they can
move deposits twenty four to seven. So again very similar

(40:42):
to the Connections platform, but this one it's across various banks. Again,
the whole purpose of these pilots and agreements and partnerships
is that we can connect into track fire rails that
can operate twenty four to seven, so that when the
trad Fi client wants to subscribe to our tokenized treasury
assets that live on public blockchains, they can actually do

(41:02):
so with cash in their bank account instead of a
stable coin on chain and really pay us twenty four
to seven subscribe to our products twenty four to seven
with the trad five rails like that is a pretty
meaningful innovation because there's a lot of institutions out there that,
you know, if possible, they'd like to keep at least
some cash where they've kept it for years and years

(41:24):
and years, yet they still want to subscribe, you know,
to our assets and mint them on public blockchains to
do a wide variety of things with them. But the
master Card Multi Tooken network kind of enables these particular
institutional clients to stay on their trad Fi rails. It
still have them operate twenty four seven.

Speaker 2 (41:41):
Amazing. It's a brave new world.

Speaker 1 (41:42):
Man. It is so fast. It's still happening quite fast.
To be honest, I mean a lot of crypto people
I think are impatient, rightfully so, because the pace of
innovation in crypto is incredibly fast and furious. But at
least the trad five standards, all this stuff is happening
way faster than these guys are used to. And now

(42:02):
with the tokenization of stock and ETFs and making that
available to a global audience, like all of the building
blocks right now are there were really meaningful innovation and
how capital markets operate and how payments operates, obviously with
stable coin, right so, it's going to be very very
interesting to see how the next five years.

Speaker 2 (42:22):
We're speaking of the next five years and stable coins.
The Genius Act pass huge for the industry, Clarity Act
coming up this fall. Do you anticipate we're going to
see this massive innovation boom because the market has clarity.
No one has to look over their shoulder anymore.

Speaker 1 (42:38):
Oh, for sure. It's night and day for an institution
right now. Because with a Genius Bill passing, everyone kind
of looks at that and says, wait a minute, this
Congress can actually get stuff passed, and digital ASTs is
important enough to do it. I do think that the
Clarity Act may be more impactful than the Genius Act

(42:59):
quite frankly from a market structure perspective and what draft
files are going to be able to do. But it's
clear that this Congress can actually pass bills, and it's
clear that digital assets is the priority for the ADMIN.
And so with all of that in mind, all of
these strat files truly are racing towards having a digital
asset strategy and starting to implement it. Because crypto is

(43:21):
also starting to be at a scale where it's very
very hard to ignore. Right you're confronted with this ecosystem
that keeps growing. Ta will coin TVL is now close
to what three hundred billion token I Treasury is starting
to accelerate almost at ten billion. There's now stocks and
ETFs coming on chain. So a lot of these strat

(43:43):
fis look at that and say, hmm, interesting, I guess
I can't ignore it. Historically they had the excuse, oh,
there's no clarity, regulatory compliance and the like, but that's
pretty soon going to drop so there's real, real appetite
and interest to move on chain. So that's why you know,
companies like Onto are very excited in helping these strat

(44:06):
fives move on chain because they often do need partners
to do that. These strati files don't have the capabilities
and skill set to do everything by themselves.

Speaker 2 (44:14):
I am so curious to see what innovations and things
are built over the next five years. I know a
lot of people are looking when number go up, right,
but we try to get people like the number go
up will follow the infrastruction, the building, and the adoption
and building bringing billions of people on chain.

Speaker 1 (44:31):
For sure. I was I was talking recently with Joseph Shalom.
I don't think he's gonna mind me saying this because
he said it on a Twitter spaces it was public already,
but he made the point. So Joseph would used to
be the head of digital Assets at Blackrock. He's now
the CEO of as BED, and he make the point about,
as you know, putting his former Black Blackrock pat on

(44:53):
as an asset manager. All of a sudden, you have
assets now, stocks and the like that live on public
blockchain rails where permissionless innovation is possible that has never
ever happened before. Right as an asset manager, before you
had to figure out how to design and structure products

(45:14):
with these very old and clunky TRADFI rails. But now
you've got all sorts of tick stacks that can operate
twenty four to seven with a defied developer ecosystem of
thousands that look at this stuff and say, hmm, what
can I build? That's never happened before in the history
of mankind. And so the level of innovation that you're

(45:34):
going to see what people are going to be able
to do for what passive investing looks like if you
then throw in AI as well, I think truly what
investing is and what you can do is going to
change pretty dramatically over the next five years. It doesn't
mean that mainstream adoption is going to arrive in the
next five years, but a lot of interesting things will

(45:58):
start to happen. And I think it's too meaningfully disrupt
asset management, wealth management, brokerage, robo advisory, and just broader
investing at a global scale in a way that has
never happened before.

Speaker 2 (46:11):
It's exciting times, and we're gonna have to do our
next interview in person. Man it joined the conversation a lot.
I do have some wrap up questions here for you. First,
if you could create your own metaverse, what would theme be?

Speaker 1 (46:26):
Oh? Boy, I used to be a very big gamer,
so I'd have to go with one of the like
original Command and Conquer games or something go old school
that would be. That would be fun.

Speaker 2 (46:39):
Rapid fire questions.

Speaker 1 (46:40):
Favorite food. I'm Belgian, so I'd have to go with
like most feats, favorite musician or band the Prodigy, favorite
movie The Matrix, favorite book Atlas Shrugged. And when you're
not working at ando, what are you doing for fun?
Oh I've got a family, two young kids, so they
take a bullet all the time. I know how that is.

Speaker 2 (47:00):
I was a seven year old, so my our love,
my wife and our allies would revolve around her.

Speaker 1 (47:04):
So there you go. I love it, Ian great stuff.

Speaker 2 (47:08):
Like I said, We've got to do the next one
in person. But I really appreciate your thoughts and uh
how this is a funny conversation.

Speaker 1 (47:13):
Thank you so much, love it. Thanks so much for
having me ton been a pleasure.

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Ondo Finance is Dominating the Institutional Tokenization Surge! with Ian De Bode

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