[SPEAKER_00]: What's up, everyone?
[SPEAKER_00]: Welcome back to the Crypto Maddox podcast.
[SPEAKER_00]: And we have a great guest here for you today.
[SPEAKER_00]: It's Ben Payart.
[SPEAKER_00]: He's the founder.
[SPEAKER_00]: He's the CEO of Cap.
[SPEAKER_00]: It's a crypto finance company rebuilding the architecture of high yield savings for the digital age.
[SPEAKER_00]: Really excited to have him on today.
[SPEAKER_00]: Ben, thanks for joining us.
[SPEAKER_00]: Thanks for having me.
[SPEAKER_00]: Well, we're excited to have you on and kind of talk, you know, all things cap all things crypto stable coins just kind of all that good stuff, but for people here in about cap for the first time with loved and know what it is, what you're building, how you got involved in also pepper us a little bit about your background as well.
[SPEAKER_00]: How'd you get involved in the space?
[SPEAKER_02]: Yeah, so high level cap is a credit platform.
[SPEAKER_02]: We do direct lending to the productive economy.
[SPEAKER_02]: So we are lending cash to real companies anywhere from your film production companies to HAT firms, other financial institutions.
[SPEAKER_02]: So it's really trying to get yields.
[SPEAKER_02]: from the whole economy and bringing it to the blockchain.
[SPEAKER_02]: People really like us because we have principle protection.
[SPEAKER_02]: So all of the dollars that go into our platform have insurance.
[SPEAKER_02]: So all of these loans are covered.
[SPEAKER_02]: You're not taking the risk of these loans.
[SPEAKER_02]: And yeah, I've been in stablecoin space for quite some time six years now.
[SPEAKER_02]: And so always been super interesting stablecoin, super interesting D5.
[SPEAKER_02]: But there's a big problem.
[SPEAKER_02]: We are really enjoying D5.
[SPEAKER_02]: But unfortunately, most of the world doesn't get to use what we have, and it's really sad, right?
[SPEAKER_02]: Like, my my cousins, you know, idea of a high yield savings account is T-Blorate, which is ridiculous, right?
[SPEAKER_02]: And so how can we get everybody to enjoy the benefits of what we enjoy?
[SPEAKER_02]: But we have to build, you know, real financial products, that's all problems that, you know,
[SPEAKER_02]: Well, we've been held for today, up to today, which is just building products for the gambling economy.
[SPEAKER_02]: And so that's kind of how I go into cab.
[SPEAKER_02]: That's why I'm excited about cab.
[SPEAKER_00]: Yeah, you know, stable coins have certainly been the talk in the town, especially over like the past year.
[SPEAKER_00]: But when you talk to somebody, just like we'll call them like a normie.
[SPEAKER_00]: Somebody that's not like completely fluent with crypto, they think of stable coins as like a digital daughter.
[SPEAKER_00]: dollar.
[SPEAKER_00]: You know, it's easy to transact back and forth.
[SPEAKER_00]: It makes a lot of sense to them when you present it that way.
[SPEAKER_00]: But there's just so much more around stable coins.
[SPEAKER_00]: So kind of give us your insight of, you know, your insight on stable coins and then how that applies to cap.
[SPEAKER_02]: I mean, for me, stablecoins are just dollars on chain.
[SPEAKER_02]: And by vitro of being on chain now, there can be programmable.
[SPEAKER_02]: And you can do all sorts of stuff with them.
[SPEAKER_02]: So for us, we're doing this, this lending is a credit platform, but you can do payments.
[SPEAKER_02]: Obviously, all the VCs are excited about agentic payments right now.
[SPEAKER_02]: So there's all sorts of things you can do with stablecoins.
[SPEAKER_02]: But we should stick to say, you know, stablecoins are tablebacked.
[SPEAKER_02]: instruments, right?
[SPEAKER_02]: They're fed back only with like the dollar deposits in like a bank account, right?
[SPEAKER_02]: Anything else is some sort of structure product and it should be a separate conversation.
[SPEAKER_02]: I think last cycle, we have some issues with everything being called a stable coin, like Carolu enough, for example, and then suddenly people found themselves by any cash.
[SPEAKER_02]: And so let's let's avoid that.
[SPEAKER_02]: And so that's why this cycle, we're kind of the alienating it.
[SPEAKER_01]: How do you explain to the normal person?
[SPEAKER_01]: Like we always say here listening to this, the three-sided platform, USDU, private credit, and financial guarantees, because like Brian alluded to, most people just know it as a digital dollar.
[SPEAKER_01]: But there's some terms in there, does it is a more for institutions or is retail have a hand in this also?
[SPEAKER_02]: Yes, so for most people, half is a digital dollar that earns yield.
[SPEAKER_02]: And they know that the yield is coming from the rural economy, from credit.
[SPEAKER_02]: And they know that all of the credit is principal protected.
[SPEAKER_02]: So they're safe from those defaults.
[SPEAKER_02]: That's kind of what they know.
[SPEAKER_02]: But in the back end, there is a marketplace that will build foreign institutions.
[SPEAKER_02]: And in this marketplace, you have underwriters and you have borrowers.
[SPEAKER_02]: The borrowers are all sorts of types of companies from, like I mentioned, film productions all the way to HFT firms, et cetera.
[SPEAKER_02]: And they're borrowing from our platform without having to post any collateral on-chain.
[SPEAKER_02]: So it's completely the same structure that they would use to borrow from Apollo or any other direct lending platform.
[SPEAKER_02]: But then we have the big issue of, how do we decide to get to borrow and how much?
[SPEAKER_02]: How do we do the diligence on potentially tens of thousands, even millions of loans, right?
[SPEAKER_02]: It would be impossible for us as a team to do that.
[SPEAKER_02]: Just like it's impossible for teams like Apollo to underwrite billions of loans, millions of loans, right?
[SPEAKER_02]: And so we've devices marketplace where a network of underwriters get to choose who borrows from our platform.
[SPEAKER_02]: So each individual underwriter will be able to say KTR cannot borrow from cap or war and the brothers cannot borrow from cap.
[SPEAKER_02]: And the way they do that is that they have to put some sort of guaranteed collateral in our platform to back their decisions.
[SPEAKER_02]: If they make a mistake, we take their collateral.
[SPEAKER_02]: If they're correcting their decision, they get the credits spread of the loan, which is the difference between how much the borrower is willing to pay, and how much is going to the dollar provider.
[SPEAKER_02]: And so, why would they do this right?
[SPEAKER_02]: Because they're using unproductive assets as that guaranteed collateral.
[SPEAKER_02]: They're using gold, they're using Japanese yen, they're using stocks to another unlocking some of that value from these assets, in a way that could only really happen in crypto, right?
[SPEAKER_02]: Backing alone for KKR with your S&P 500 could only happen in crypto.
[SPEAKER_02]: And so that's what they're doing in.
[SPEAKER_00]: So walk a fool up to that.
[SPEAKER_01]: Sorry, sorry, Brian, because no, you're grateful.
[SPEAKER_01]: Yeah, because I've been hearing, you know, from words out there that private credit market my collapse and that's just hearsay.
[SPEAKER_01]: I think the average person doesn't understand the private credit market at all, right?
[SPEAKER_01]: And you explained it a little bit one inch deep, but you and you said that crypto fixes it very, very nicely.
[SPEAKER_01]: So how how does that, you know, how does that look for the average person was was the big problem was a big unlock there.
[SPEAKER_02]: Well, in private credit today, you have these funds where you put your money into these funds and then investment committees that are made up of let's say 10 to 30 people will make decisions over that money they will originate loans they will sign legal agreements with counter parties and they will lend money to them and these loans can last a long time and so that makes the investment very liquid.
[SPEAKER_02]: But that's not really the problem.
[SPEAKER_02]: The problem is that eventually these funds get very big.
[SPEAKER_02]: Maybe they have as much as a trillion dollars, maybe hundreds of billions of dollars.
[SPEAKER_02]: And so, trying the world is a team of 30 people, able to underwrite enough loans to deploy that much capital.
[SPEAKER_02]: It's impossible.
[SPEAKER_02]: And so what will happen is one or two things.
[SPEAKER_02]: Either those 30 people will underwrite more loans that they can really do the
[SPEAKER_02]: or they'll get these big loans that are underperforming because at least now they can get the capital out.
[SPEAKER_02]: They don't have that much capital that's sitting idle.
[SPEAKER_02]: Both of those are undesirable outcomes for the depositors, right?
[SPEAKER_02]: And you know you would think why would they be rushing to deploy capital, right?
[SPEAKER_02]: Because the incentives of those 30 people, I got the same incentives as the people depositing funds.
[SPEAKER_02]: The people on this depositing funds, one they're principle to be protected
[SPEAKER_02]: Those 30 people, no, they're just humans, right?
[SPEAKER_02]: They want good bonus, they want to keep their job, they want the AUM to stay there, so they feed, keep occurring, so they're completely different set of incentives.
[SPEAKER_02]: And so naturally, the outcome is just not going to be good for whoever is depositing, because everybody's looking for something different.
[SPEAKER_00]: You know, you, you kind of spoke on this already, but I want to make sure it's really clear for the audience and then just kind of identified.
[SPEAKER_00]: So walk us through CUSD, what it's backed by, how people need to think about it in comparison to USDC, the USDUSD, and just really other digital assets.
[SPEAKER_00]: And then on top of that, I know you of STC USD, you know, stretch you to see what's, what's, how's that, how's that work with CUSD?
[SPEAKER_02]: Yeah, I think some people might get confused with all these like token names, right?
[SPEAKER_02]: At the end of the day, if you're putting dollars into our platform, we're going to give you some receipt so that we know that you put money into our platform.
[SPEAKER_02]: And that receipt we call it, Capio is the, it's just a deposit token.
[SPEAKER_02]: And for some crypto integrations, you need that token to be paid.
[SPEAKER_02]: And that's why the,
[SPEAKER_02]: like bare deposit token is packed, there's not earning yield.
[SPEAKER_02]: But if you want to earn yield, you just take it, right?
[SPEAKER_02]: There's no waiting period to stay around stake.
[SPEAKER_02]: It's very easy satomic.
[SPEAKER_02]: You can do it in a second.
[SPEAKER_02]: And so that's how we organized deposits in our platform.
[SPEAKER_02]: Now, it's backed by the deposits of our platform.
[SPEAKER_02]: So people can come either with USDC.
[SPEAKER_02]: which is a permission as asset or they can come with all these sort of money market funds.
[SPEAKER_02]: So we have very special deals with regulated asset managers in the U.S. to allow their users to use their platform.
[SPEAKER_02]: And so now if you're a wisdom tree user, your Franklin Templeton user and you're tired of earning just the U.S. Treasury's rate, you're now allowed to come to a platform and deposit those wisdom tree deposits into cat.
[SPEAKER_02]: So we've made those deals with those asset managers and they white the center are a platform to do that.
[SPEAKER_02]: It's the first time that they've done this for a different protocol.
[SPEAKER_02]: And so at the end of the day, what is CUSD is used to see with all these deposit assets from these recommended asset managers.
[SPEAKER_01]: One of the more, oh, go ahead.
[SPEAKER_01]: Sorry, Joe.
[SPEAKER_01]: So I think that's the most important question for the people watching is that they can deposit with you guys and then get collateralized and CUSD and argue it on that, right?
[SPEAKER_01]: And tap into the private credit market where they couldn't ever do that before.
[SPEAKER_02]: Right, because right now if you're earning yield and $1 on the blockchain, at least where are you getting your yield right you're getting either table yield like 3.5 3.7 and depending on the day then you have all these sort of like balls and kind of lending platforms they're not even beating the table yield right I mean there's some crypto yield platforms based on the basis trade for example they're barely beating 3%
[SPEAKER_02]: Right?
[SPEAKER_02]: It's a lot of the over-collarized than the markets are two to three, maybe maybe four percent.
[SPEAKER_02]: Right?
[SPEAKER_02]: Cap is giving five to seven percent.
[SPEAKER_02]: and we have this principle protection and it's not because we're like some financial genie sense it's just that we decided to not focus on the crypto native economy and we're getting it from the economy outside the blockchain and the economy outside the blockchain it doesn't blink right and so even if Bitcoin prices are down if these prices are down you know there's still holy economy out there is still growing and so you can get yields from that economy.
[SPEAKER_01]: What's the risk historically been for this and is that mitigated a little bit with crypto?
[SPEAKER_01]: For like loans like two type of companies.
[SPEAKER_02]: I mean there's a couple of risk right the number one risk is defaults
[SPEAKER_02]: you know like what happens to the people don't come back with money and so at cap every single underwriter which is an institution is only exposed to queries that they're underwriting and they have legal agreements on this side to protect them but they're institutions they know how to enter these deals and they can protect themselves.
[SPEAKER_02]: The retail layer which is the people providing dollars in their platform you don't have to worry about any of that because the other writers are covering the chance of default on their behalf.
[SPEAKER_02]: And that's a new, right?
[SPEAKER_02]: Like if you go to like an Apollo today, sure they're using CLOs, collateralized loan obligations, where there's collateral backing balloons.
[SPEAKER_02]: But it's not real collateral in the sense that we know, which is like on-chain collateral that you can see and verify.
[SPEAKER_02]: It's PDFs, right?
[SPEAKER_02]: And a PDF saying, yeah, sure I have a tax credit, or yes, sure, you know, I will pay you the money back.
[SPEAKER_02]: But as we saw last year, there were three huge cases of fraud.
[SPEAKER_02]: with first brands, with tricolor, where even the smartest people in Wall Street, like JP Morgan, like Apollo, like Ari, they all lost millions of dollars, hundreds of millions of dollars, because they trusted those PDFs, because they trusted those CLOs.
[SPEAKER_02]: And so what crypto does better is that always collateral is on chain.
[SPEAKER_02]: And so this impossible to double place that collateral.
[SPEAKER_02]: It's impossible to say you have collateral, but you actually didn't.
[SPEAKER_00]: And obviously, that's why institutions would want to borrow through an on chain credit market instead of sticking with these traditional finance rails, right?
[SPEAKER_00]: It's because it's very hot.
[SPEAKER_02]: Well, on the borrower side, not quite because the borrower side, you're not taking risk.
[SPEAKER_02]: This is more for the depositors.
[SPEAKER_02]: The depositors really care that this is all on chain, because then they don't have to trust us.
[SPEAKER_02]: On the borrower side, why is Susquihanna right now having a hundred million dollar revolving credit facility with us?
[SPEAKER_02]: Which they do?
[SPEAKER_02]: Why would they do it with us now with Apollo?
[SPEAKER_02]: Well, the reason is that if they want to borrow from us, they can borrow in a second.
[SPEAKER_02]: They can take liquidity from us in a second.
[SPEAKER_02]: If they want a bar from Apollo, get in line behind the data centers behind whoever else they're lending to, it could be months before you get alone.
[SPEAKER_02]: And so if you look at the barbell of credit in the world of credit, right, you have the bulge bracket banks.
[SPEAKER_02]: we're never going to beat them, right?
[SPEAKER_02]: They're lending at very, very low rates, but they're super slow.
[SPEAKER_02]: Traditionally, on the other side, you have private credit where they're a little bit faster, but they lend at a higher rate.
[SPEAKER_02]: We're leading them in the middle of the barbell by extending it.
[SPEAKER_02]: Now, we're going to be infinitely faster than these private credit funds because it can happen in seconds.
[SPEAKER_02]: You can get loans in seconds.
[SPEAKER_02]: And you can repay them in seconds.
[SPEAKER_02]: So it's much better for the modern economy, not just for the HFT firms than maybe in the future for a gigantic borrowers, right?
[SPEAKER_02]: And so we're sort of extending the barbell.
[SPEAKER_01]: Is there a canary in a coal mine and for private credit like morning us of the economy as I alluded to earlier there was Rumors of default in that in the traditional space not within you know your company, of course.
[SPEAKER_01]: It just cares about your How how how how out look is for this year
[SPEAKER_02]: to say, you know, traditional finance makes me nervous because I know it's not as transparent, it's not as efficient and it's not as safe as defy.
[SPEAKER_02]: It's just not, right?
[SPEAKER_02]: And right now we have a big problem which is all of these funds are lending money that's not theirs.
[SPEAKER_02]: They don't have the downside of those decisions.
[SPEAKER_02]: So not because they're bad people but because if you're in nature, eventually
[SPEAKER_02]: And I think many of them have already done those.
[SPEAKER_02]: Maybe they're lending to AI companies they shouldn't be lending to.
[SPEAKER_02]: In order to get exposure to the AI boom, maybe this AI companies can't really make the money to return.
[SPEAKER_02]: And you can't pay back a loaning chips, you can't make a pay back a loan in tokens, right?
[SPEAKER_02]: You have to pay back the loan in cash.
[SPEAKER_02]: And so that could be pretty bad to be honest.
[SPEAKER_02]: I hope so, I hope that it's not the case.
[SPEAKER_02]: I hope that they don't blow up, but as an investor myself, right?
[SPEAKER_02]: I'm not going to put my money into those types of things.
[SPEAKER_00]: You spoke about this a little bit earlier, but I think it's just a big point to hit home for the audience and I'm on your website looking at it and just this financial guarantee market.
[SPEAKER_00]: You know, tell us about the interesting parts about it, why that's such an important component of cap.
[SPEAKER_02]: It's about the scalability and efficiency that you get with code.
[SPEAKER_02]: If you're a private credit fund in traditional markets, you're 30 people on max, and you can maybe underwrite 300 loans a year.
[SPEAKER_02]: We can underwrite an unlimited amount of loans every second.
[SPEAKER_02]: because you could have an unlimited amount of underwriters constantly originating loans.
[SPEAKER_02]: So maybe you have, you know, a thousand funds that are focused in film financing underwriting loans at the same time.
[SPEAKER_02]: You could have a billion agents at cap, underwriting another billion agents, right?
[SPEAKER_02]: You can have a traditional credit funds that maybe they have,
[SPEAKER_02]: Right.
[SPEAKER_02]: They don't know.
[SPEAKER_02]: They nobody wants to borrow their six francs, but now they can underwrite dollar loans that cap all of these people at the same time.
[SPEAKER_02]: Spinding all the best deals for loans and underwriting them separately.
[SPEAKER_02]: I mean, this is just much more efficient and it's a better way of building the markets.
[SPEAKER_01]: Is that because of the way that underwriting is handled in crypto a little bit different or is that because of AI?
[SPEAKER_01]: Like, why how come you're so much faster and better at it?
[SPEAKER_02]: It's because by having smart contracts, we can set rules for people to interact with our market place, and then we can delegate the decision making to a home market.
[SPEAKER_02]: Without smart contracts, there's no way for you to tap the efficiency of the market, because you don't trust the market, and the only way to interact with people you don't trust is a smart contract.
[SPEAKER_02]: And so now I get to use an unlimited amount of market players to help me, so long as they can make money, whereas in traditional finance, you're just a company, right, making decisions within your employees or within sort of your own little bubble.
[SPEAKER_00]: Yep, so I want to give a question, Jeff.
[SPEAKER_00]: No.
[SPEAKER_00]: Oh, okay.
[SPEAKER_00]: Well, we're kind of going back and forth a little bit today.
[SPEAKER_00]: I can notice, you know, we're we're interested in cap and everything that's going on.
[SPEAKER_00]: So we're trying to get as many questions as we can with Ben.
[SPEAKER_00]: I do have just some overall macro questions.
[SPEAKER_00]: You know, let's talk a little bit about stable coins and just the market outlook.
[SPEAKER_00]: Because I know a lot of people in our audience.
[SPEAKER_00]: are interested in stable coins, they have an understanding of stable coins, but it's certainly been one of the clearest product market fits in crypto.
[SPEAKER_00]: Where do you think stable coin markets go over the next few years?
[SPEAKER_00]: What's the big picture here?
[SPEAKER_00]: How's this all going to evolve?
[SPEAKER_00]: I feel like that's what a lot of people within our audience and just people in crypto want to know is what we understand with stable coins are, but what's this really going to turn into?
[SPEAKER_02]: Yeah, well, first of all, the future of the dollar is on chain, you know, eventually all of the dollars are going to be on chain because every single company will want to get out of the current hold that stripe and, you know, the semester card have on them.
[SPEAKER_02]: You know, these fees are pretty large, and so if these guys can go on chain and
[SPEAKER_02]: corporations, cross-border effortlessly at very low cost.
[SPEAKER_02]: Why wouldn't they do it, right?
[SPEAKER_02]: And if they trust in the blockchain, which already the largest institutions in the world already trust Ethereum, they're already using Ethereum for transacting.
[SPEAKER_02]: So I don't see why
[SPEAKER_02]: the other institutions that haven't joined yet wouldn't trust Ethereum for settling.
[SPEAKER_02]: So I just see everybody making their unstable coins and the sort of intersecting.
[SPEAKER_02]: That's already written in stone.
[SPEAKER_02]: What's not written in stone is, what does that mean for programmable finance?
[SPEAKER_02]: Like can we get capital markets on chain?
[SPEAKER_02]: Can we get loans?
[SPEAKER_02]: Can we get more complex trading stuff like that?
[SPEAKER_02]: Can we get it on chain?
[SPEAKER_02]: that will be a function of a few things, right?
[SPEAKER_02]: One is like our imagination, can we build these applications, but who's regulations?
[SPEAKER_02]: If you see a junior-sactant clarity, both of them focus on stable conditioners, they're saying nothing about programmable finance.
[SPEAKER_02]: And so if you are a large pension fund in America, you're probably still scared about using programmable finance, but you're probably okay using stablecoins.
[SPEAKER_01]: At a question about
[SPEAKER_01]: I'm not sure if it's a D-Fi question, so you can help clarify for me.
[SPEAKER_01]: Congrats on the money raised from Franklin, Templeton.
[SPEAKER_01]: So they have a fund, right?
[SPEAKER_01]: Build and build ends of dollars, dear, right?
[SPEAKER_01]: And I've read a stat where a lot of RWAs are not being utilized within D-Fi protocols.
[SPEAKER_01]: This would seem like one where it makes sense, right?
[SPEAKER_01]: Is it a more of a derivative?
[SPEAKER_01]: Would this be a D-Fi play?
[SPEAKER_01]: Like, can a pension who has a lot of build, utilize their liquidity to be unlocked with the cap?
[SPEAKER_02]: That's a wonderful, wonderful question.
[SPEAKER_02]: So, first of all, so, Franklin's money market fund is Benji and then it's like Benji with Franklin.
[SPEAKER_02]: Super funny.
[SPEAKER_02]: And then, uh, BlackRock is, you know, I'm sorry.
[SPEAKER_01]: Yeah, I'm just thinking, yeah, Benji.
[SPEAKER_02]: No worries at all.
[SPEAKER_02]: We already have the integration set up for that.
[SPEAKER_02]: So their users can already access this and it is our intention to get these folks like the people holding Benji, holding Betel to underwrite Reddit with their assets that are permission.
[SPEAKER_02]: Cause you're right, up to now, there's nothing really that they can do with it.
[SPEAKER_02]: You can't loop it, they interest rate is too low, right?
[SPEAKER_02]: And then you can't really trade it, right?
[SPEAKER_02]: It's permission assets, what do you do?
[SPEAKER_02]: Right, so I can't, we are giving an option for people to do it.
[SPEAKER_02]: So what if you can underwrite Franklin Templeton borrowing and now you're getting yield?
[SPEAKER_02]: There's no way you would have access to that outside of cap or maybe you can underwrite KKR alone for KKR.
[SPEAKER_02]: And no way you would have access to that otherwise.
[SPEAKER_02]: So yeah, we are very much exploring that.
[SPEAKER_02]: All the RWAs are very interesting like gold as well.
[SPEAKER_01]: Yeah, you just brought my brought on my inner degenerate because that's how defy war started right everyone's taken or stable is looping it on Pendo and then I read that stat and I was like, oh, I wonder what the appetite for institution is when is that chasm get breach like where to can utilize the benefits right, but not get too crazy right like with uh, uh, on chain mechanics.
[SPEAKER_01]: So,
[SPEAKER_01]: This is great to see because this is the first I've heard and it makes me really bullish on both of those RWAs and then DeFi coming in and DeFi overall It's got a negative taste this year, right?
[SPEAKER_01]: With all the the scams and the bridges and he talk about that and how how that affects you guys or it doesn't
[SPEAKER_01]: It's very unfortunate, right?
[SPEAKER_02]: We've had so many hacks, especially in April, right?
[SPEAKER_02]: It's famously was every single day that was a hack.
[SPEAKER_02]: But I will present you maybe a hot take.
[SPEAKER_02]: We don't know if it works, right?
[SPEAKER_02]: A lot of the teams who had apps, right?
[SPEAKER_02]: I mean, first of all, most of these hacks were just compromised administrative keys.
[SPEAKER_02]: which means whoever control this by contracting their wallet, it got hacked, and then the hacker drains the protocol.
[SPEAKER_02]: But on chain, all it looks like, it looks like the owner of the contract rug the protocol.
[SPEAKER_02]: How do we know that it was a hack?
[SPEAKER_02]: We don't?
[SPEAKER_02]: And everybody just says, oh, it's North Korea, it's the boogie man in the closet, right?
[SPEAKER_02]: They're not the most active projects.
[SPEAKER_02]: They're not the projects that are doing very well.
[SPEAKER_02]: Maybe the market cap is significantly lower than the TBL.
[SPEAKER_02]: And so you have to wonder where they really have, or where they're maybe teams that may the decision that they can make more money being malicious and not.
[SPEAKER_02]: And so to answer a question, it's been a terrible for our market, right?
[SPEAKER_02]: The worst has happened.
[SPEAKER_02]: There was bad debt at Abbott.
[SPEAKER_02]: I think it'd be worse, or defy.
[SPEAKER_02]: It's like our Lehman Brothers moment.
[SPEAKER_02]: And it's very unfortunate because they were very dumb hacks, right?
[SPEAKER_02]: It's just, or very dumb mistakes, if they were mistakes.
[SPEAKER_01]: But how do we fix that?
[SPEAKER_01]: I come from the security background, actually, and before crypto, because human error is always, do we just take our humans and just have Asians?
[SPEAKER_01]: Is that the solution?
[SPEAKER_01]: Because admin keys, I mean, we haven't even done that.
[SPEAKER_01]: It's not even like, I'm not a city, I'm not a dev.
[SPEAKER_02]: Day one of crypto school is use a ledger.
[SPEAKER_02]: They want to script to school, it is.
[SPEAKER_02]: You simultaneously.
[SPEAKER_02]: And so this doesn't, a lot of people are like especially in the media, right?
[SPEAKER_02]: They, they want to paint the picture of AI getting very good.
[SPEAKER_02]: And that's why there are so these hacks because it sells, you know, that's what people want to hear.
[SPEAKER_02]: But that's not what was happening at all.
[SPEAKER_02]: They haven't done any crazy hacks.
[SPEAKER_02]: It's literally just compromising on a computer, which is extremely easy to do, right?
[SPEAKER_02]: I'll send you a PDF over email, and because you don't block the auto download feature, like now have your computer, right?
[SPEAKER_02]: So it's not that difficult.
[SPEAKER_02]: And so I think how do we fix that?
[SPEAKER_02]: Do better.
[SPEAKER_02]: Right?
[SPEAKER_02]: It's just like the teams need to do better.
[SPEAKER_02]: And, but one thing I'm happy about is that the good teams, the teams that are quality teams, to be completely frank with you, they haven't got to have.
[SPEAKER_02]: This doesn't happen, where teams that are on top of their, um,
[SPEAKER_02]: top of their game.
[SPEAKER_02]: This has been teams that have been reckless and now they suffer the tries for being reckless.
[SPEAKER_02]: In my sound harsh but like they have an impact on my business, they have an impact on my users on our industry and it's a shame because it's just so easy to prevent.
[SPEAKER_01]: I'm high jacking this podcast.
[SPEAKER_01]: I want to thank you Joe.
[SPEAKER_01]: So bring it back to, you know, cap for a second and how does or who regulates the underwriters, right?
[SPEAKER_01]: Because, you know, we all watch the big short and we don't know what's in there.
[SPEAKER_01]: Underwriters do, with smart contracts a lot cleaner, but can they get messy at all?
[SPEAKER_02]: Well, in 2008, the way that people lost funds is that the insurance providers did not have a downside exposure.
[SPEAKER_02]: In fact, it's the opposite.
[SPEAKER_02]: If you did not give a good rating to an instrument financial instrument, the company is just wouldn't come back to for ratings.
[SPEAKER_02]: But let's say there was a default, you didn't really lose any money, it's not a U, you should say, oh, look, the investors should have known better to your own research, right?
[SPEAKER_02]: In cap is different.
[SPEAKER_02]: The underwriters put their own money with their mouth is.
[SPEAKER_02]: And so if they make a mistake, okay, we'll take your money.
[SPEAKER_02]: And it's in S. Korea, that's my contract, so there's nothing you can do about it.
[SPEAKER_02]: And so we really aligned the decision maker with the person taking the risk as it should be.
[SPEAKER_00]: I'm going back to your hot take a little bit because I enjoy that and enjoy a good old hot take and to think outside of the box a little bit because honestly I read a lot of those headlines and I just kind of took it for what it's worth you know but then you you come on the podcast and I'm sure a lot of people in our audience then you you propose some questions that were like okay wait a minute
[SPEAKER_00]: that does kind of make a lot of sense and that could certainly be a real story.
[SPEAKER_00]: And then you said something, it's like kind of click baby about everyone talking about like AI and how they could continue his happen.
[SPEAKER_00]: And I think it was the founder, CTO of like Open Zeppelin, came out with like, uh, uh, uh, it was fun.
[SPEAKER_00]: Yeah, forgets named manual something, but he said something along the lines of like AI is going to make it more accessible to hack these protocols, but in my mind, you could look at it the flip side as well as AI is not just helping builders write code.
[SPEAKER_00]: They're also helping you find bugs faster and prevent these exploits.
[SPEAKER_00]: I think that was a big
[SPEAKER_00]: click-bady article that I read and I kind of came back from it like I don't know 100% agree with this guy but would love your take on it because it was circulating pretty, you know, viral.
[SPEAKER_00]: It was, I mean, this, this first established context.
[SPEAKER_02]: This person, yes, they were, you know, one of the founders or the founder of, you know, opens up and he hasn't been involved
[SPEAKER_02]: Yeah, no idea what I was talking about.
[SPEAKER_02]: Yeah, he's not leading Open Zeppelin.
[SPEAKER_02]: I mean, we have to give him respect, because he did a lot for industry early on.
[SPEAKER_02]: Sure.
[SPEAKER_02]: But he doesn't know what he's talking about.
[SPEAKER_02]: Right?
[SPEAKER_02]: He's not involved in auditing or anything like this anymore.
[SPEAKER_02]: And even Open Zeppelin themselves, the company came out and rebuted him.
[SPEAKER_02]: I said, this guy doesn't know what he's talking about.
[SPEAKER_02]: And, you know, who knows why he would say stuff like this?
[SPEAKER_02]: It's such a ignorance, you know, maybe he just wants to attention.
[SPEAKER_02]: But I'll tell you this, whatever the hackers have exposure to, we have to, like we all have the same tools.
[SPEAKER_02]: It's not that because North Korea has a hundred million dollars, and we have 10, that they're going to be 10 times better at hacking a protocol.
[SPEAKER_02]: You know, we are in the position that we are because we're good at what we do, right?
[SPEAKER_02]: just people are very scared about AI and everybody's talking about it because it's super cool right people want to talk about it yeah but it's unfortunate to see somebody like that say something like this.
[SPEAKER_00]: Yeah that that was a very quick baby article.
[SPEAKER_02]: I just remember reading it was like two days ago I think and maybe there was a go to Twitter third or you think you said like one thing that kind of out at him was not knowing what he's talking about
[SPEAKER_02]: Make it out hasn't been called, make it out for maybe two years.
[SPEAKER_02]: Come on man, you got to be better than that.
[SPEAKER_00]: Right.
[SPEAKER_00]: Yeah, that kind of shows from the last time you were really had the pulse on the market.
[SPEAKER_00]: And again, everyone slips off.
[SPEAKER_00]: I mean, I host a podcast.
[SPEAKER_00]: They say crazy stuff all the time.
[SPEAKER_00]: But I don't think that position of power.
[SPEAKER_02]: Like, for example, I'm a Zack.
[SPEAKER_02]: I mean, credit.
[SPEAKER_02]: I mean, stable coins.
[SPEAKER_02]: You know, when I say something about stable coins, people listen, right?
[SPEAKER_02]: you know, with somebody that has supposition of authority, um, at least in the eyes of the public, not in the eyes of the experts, right?
[SPEAKER_02]: Uh, on security, you know, people listen.
[SPEAKER_00]: Yeah, and again, Jo and I, even though we're pretty fluent in the world of crypto, we're by no means experts on defy and stable coins and all things crypto related.
[SPEAKER_00]: Yeah, and we look at a lot of these positions.
[SPEAKER_00]: The power like yourself, this individual, I didn't even realize he's been out of the industry so long, but when you kind of hear like a co-founder or CTO of OpenZep, then you're worth carry a lot of weight and you can really cause undue stress.
[SPEAKER_00]: Anyway, read the article, I would dig a little bit deeper because when I first read it, my monkey brain didn't really completely agree.
[SPEAKER_00]: So having somebody as brilliant as you kind of like also, also, John, I was also like worried about it.
[SPEAKER_02]: Don't worry, I had to go to my DMs and figure out what happened and somebody else told me that he hadn't been.
[SPEAKER_02]: So I confirmed he hasn't been part of it for a long time.
[SPEAKER_02]: Yeah, he has some access.
[SPEAKER_00]: the maker Dow thinks kind of telling is well I didn't realize that so um I mean the world I know we're kind of running short on time but the world of AI is super exciting I mean you can see it's been exciting for years now it's something Joe and I have been talking a lot between like centralized AI decentralized AI we're talking about AI agents all these platforms the tools it's just
[SPEAKER_00]: changing the world, not even just crypto, but the entire world the way we know it.
[SPEAKER_00]: We loved to know just kind of your take on how AI is going to change just everyday life and then how is it going to?
[SPEAKER_00]: I look at AI as a very
[SPEAKER_00]: big part of where crypto, like the crypto rails and how can integrate it just feels like it could work that way, but just to love to know your thought process of how AI is working in the world right now and how that could help improve and develop crypto.
[SPEAKER_02]: I think it's like any major technology, it can improve the lives of a lot of people and so I'm very excited about that.
[SPEAKER_02]: Um, but just like any big wave, I'm just probably one of the biggest technological revolutions ever.
[SPEAKER_02]: Maybe rival to it like the industrial revolution, right?
[SPEAKER_02]: It's huge, it's huge implications.
[SPEAKER_02]: So for everybody, I mean, either get on or get out, right?
[SPEAKER_02]: When the computers came on, like, I remember there was always like the computer people and then they're not computer people with a computer people and I have like big villas in the came in, so I like there the people that I did understand computers that very well for themselves, the people that ignored technology did not a eyes the same, you have to adopt no matter what industry you're in and I'm pretty excited about it.
[SPEAKER_02]: But I don't think it's going to destroy crypto.
[SPEAKER_02]: I don't think it's going to shut down the world.
[SPEAKER_02]: I mean, this guy's are great at marketing.
[SPEAKER_02]: They throw up big people release something and they're like, yeah, we might topple a couple of countries by accident because we release this model early, fantastic marketing.
[SPEAKER_02]: I mean, this is really like, people are going to write books about that.
[SPEAKER_00]: How do you do feel like AI's gate positively impact
[SPEAKER_02]: Yeah, I mean, it's going to possibly impact our ability to have better ideas, ship faster, it did have a lot of a brain drain.
[SPEAKER_02]: A lot of people moved on, right, and they're going to AI.
[SPEAKER_02]: I don't know.
[SPEAKER_02]: I'm not sure how it will affect long term, but at least for cap, it's been great.
[SPEAKER_02]: We're nine people.
[SPEAKER_02]: I don't think we're going to get much bigger because everything's automated, right?
[SPEAKER_02]: So that's been very good.
[SPEAKER_00]: And one of the last questions for you, as you talk at the town over the past couple months, have been, has been like, regulation.
[SPEAKER_00]: We hear genius act.
[SPEAKER_00]: We hear about the Clarity Act.
[SPEAKER_00]: Just regulation around stable coins overall.
[SPEAKER_00]: How is that going to affect companies like Cap and does it create any new challenges?
[SPEAKER_02]: And it's fantastic.
[SPEAKER_02]: The more regulation the better, every time there's a new bill passed, any time something happens, we get more inbound, right?
[SPEAKER_02]: We're already working with the world's largest financial institutions.
[SPEAKER_02]: So that's already there.
[SPEAKER_02]: If we want to expand to other industries, we'll need to pursue how more regulations.
[SPEAKER_02]: So yeah, genious act and clarity act, they kind of,
[SPEAKER_02]: limit what stablecoins can do.
[SPEAKER_02]: It's another gonna need programmable finance to earn yield.
[SPEAKER_02]: And so it'll just bring more of their users to us.
[SPEAKER_02]: So I think it's good for CAP.
[SPEAKER_00]: amazing stuff and Ben, we really appreciate you jumping on the podcast.
[SPEAKER_00]: You're obviously brilliant in this space and have a lot of great information.
[SPEAKER_00]: As always, we'd love to, as stable coins and the clarity acting, all of these things start to you know, flow through the doors.
[SPEAKER_00]: We'd love to have you back on the podcast to hear more about what you're building, get cap, but I want to give an opportunity for you to give a shout out to people to learn more about you and then more specifically, how can they learn more about cap?
[SPEAKER_02]: Yeah, if you want to learn more about Cap, we are a cap app on Twitter, on X, CAP app.
[SPEAKER_02]: And you'll find me if you find Cap, but we post everything that we're pretty active.
[SPEAKER_02]: You know, we have a pretty famous guy, defy Dave on our team and he's super active on X. I'm sure you guys have heard of him.
[SPEAKER_00]: Yeah, absolutely, and for everybody in the audience, I'm going to put all those links down below so you can learn more about cap, you can learn more about defy Dave, all the good people behind the scenes, so really appreciate you jumping on the podcast, and we'll see you soon.
[SPEAKER_00]: Thank you.