Host: Alex, Mint Ventures Research Partner

Guest: Mindao, founder of dForce

Statement: The content we discussed in this podcast does not represent the views of the institution where the guests are located, and the projects mentioned do not constitute any investment advice.

Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we continue to ask questions and think deeply, clarify the facts, explore the reality, and find consensus in the WEB3 world. We will clarify the logic behind hot topics, provide insights into the incident itself, and introduce diverse thinking angles.

Alex: In this episode, let's follow up with an encrypted narrative that once attracted much attention a few years ago, but gradually cooled down, but recently became popular again: STO, or securities tokenization, especially the tokenization of US stocks. The guests invited today have rich experience in the fields of traditional finance and Defi, and are also old friends of our program - Teacher Mindao. Please say hello to everyone by Teacher Mindao.

Mindao: Hello everyone, I am very happy to come to Mint Ventures again to discuss the topic of STO and securities tokenization.

Coinbase Stock Tokenization Ins and outs

Alex: The resurgence of STO as an old narrative is mainly from a statement from Coinbase's CEO last week, including a CFO, who said they would restart Coinbase's stock tokenization work. I believe you have also paid attention to this news. Based on the event information you have, can you sort out the ins and outs of Coinbase stock tokenization, including some key details.

Mindao: Actually, it was not just raised this year that Coinbase tokenization. I remember it mentioned it in 2020, but because the entire regulatory environment is very bad for the currency circle, and Coinbase was later sued by the SEC, I remember that after 2020 it was Brian who mentioned this concept, but it has not been implemented further. When Coinbase was listed, there was still a debate in the community, what is itTo go public or issue coins. It was originally a Crypto trading platform. There were these controversies at that time whether coins should be issued directly on the chain.

This topic was raised in January this year. The person in charge of Base was named Jesse. He proposed to consider deploying Coinbase tokens on the Base chain. Then in February, the SEC gave up the lawsuit against Coinbase. This is also a new friendly attitude towards Crypto when the United States took office. I think it is a concrete manifestation. This matter, including its CFO and CEO, mentioned that stock tokenization should be placed on Base and issued.

From the entire time point, I think it is very hardcore. After Trump came to power, new attitudes towards Crypto, including Crypto Summit, and Coinbase's CEO also participated. So we can see that when the entire regulatory environment changes, I think it is understandable to take such a move for the largest trading platform in the United States, and it is very suitable in terms of time.

The value proposition of stock tokenization

Alex: In your opinion, STO or stock tokenization, if we say it is a product, what are its main value propositions? In your opinion, is it a relatively organic value proposition? If a large number of US stock assets are on the chain, what kind of chemical reactions may it have with current DeFi products?

Mindao: Yes, the topic of tokenization of stocks is not a new thing, it has been mentioned in the past two cycles. At the beginning, I remember that there were STOs mentioned in 2017, so this was a very early approach. I think there are several reasons for this cycle to be taken out again. On the one hand, we can see that when the currency circle is stagnant due to regulatory reasons, Crypto has actually made great progress in the application of blockchain systems in the interbank system at the level of traditional finance Wall Street.

I think from the perspective of traditional finance, it also sees the benefits of tokenization itself for traditional financial institutions. For example, JP Morgan handles many of the interbank settlement systems through tokenization and tokenization. So this thing essentially saves a lot of settlement time for the bank. For example, even if it is the same bank, it may take several days or a week to settle across states or across states. But you can do settlement immediately with blockchain. Direct benefitsIt is because your capital has been reduced and the cost of funds has been greatly reduced, so traditional financial institutions can see what its advantages lies.

Then we see the tokenization of the entire stock. If we talk about it from a purely capital channel, it must have changed from a single market to a global market. There is a blend of non-licensed and licensed. But in fact, there are many conflicting things, because traditional securities regulation is based on territorial principles. The US market has a set of laws and regulations. The market has regulations, and every place is based on territorial principles. However, when we connect to the crypto public chain market we are talking about, how to deal with this territorial principle is a very big conflict.

This is why after the stock is tokenized, it can be considered to be the Berlin Wall to some extent. There are many conflicts in how funds from the free world go to a stock market regulated by territorial principles. However, for companies that do STO and stock trading platforms, at least turning this entire capital channel from a regional market to a global market is an important point that most STO companies may consider.

The Coinbase thing we are talking about is still very different from other general stock tokenizations. Because Coinbase itself is a trading platform. In fact, Coinbase's stock can be compared with Binance's BNB. BNB is actually a very good stock-based token, and then Coinbase is a pure trading platform stock. But we can see that BNB is much more useful than Coinbase. Coinbase The perspective of traditional stocks is a shareholder's equity and shareholder certificate. But we see that in its trading market, BNB can deduct handling fees and can also go to airspace, which has various functions.

So I think the biggest significance of Coinbase is that it does not just put a stock tokenization on the chain, but empowers traditional stocks. I think it is a power expansion movement. That is to say, it used to be a shareholder voucher. Now let’s give a simple example. If Coinbase tokenize your stock and put it on the Base chain, then Base assumes that Coinbase’s stock can be used as pledge, node verification, or gas payment in the future, so that the stock will no longer be a pure shareholder voucher, but a thing with the function of using it.

We put CoThe case of inbase has expanded to other ones. For example, expand to Disney and Netflix. If you hold its stock tokens, you can buy tickets with discounts. Why can't tradition be done? Because doing this in traditional finance is too complicated and there is no tokenization, it is very difficult to connect these systems. But we can imagine that if Disney tokenize its stock, and users have its stock in the future, tokens can buy tickets directly and offer discounts, and even have some preferences.

On Netflix, its subscription can also be based on your stock staking, or how much stock you staking, I can give you a subscription. For example, tokenize a coal mine enterprise, there is really no practical value. However, companies like Coinbase, Netflix, and Disney have a lot of interactions with users at the level of their company products. I think the tokenization of their stocks is very likely to expand their power, from a pure shareholder voucher to a use voucher, and become something of utility. This is the very important point in my opinion that STO is natively combined with the currency circle, rather than just turning it into a stock and putting it on the chain.

This is back to what we said earlier, which may be to expand the market of the capital pool and to transform from a regional to a global market. But we now know that the United States has actually accounted for a very large financing market in the world. How much does it mean to add such a market on the chain? It may not make much sense. This is why you see a lot of STO tokens trading on the chain, but there is actually no trading volume in the past few cycles, because the traditional market has met the investment needs of most people with capital needs.

Alex: I think the concept of stock expansion just now is very novel and reasonable. Let’s extend it along this topic. You just talked about the fact that JP Morgan has improved the efficiency of using funds after adopting the blockchain settlement system. I have a technical question, that is, JP Morgan should use a system similar to a system like Alliance Chain. Which specific technical designs can improve its capital efficiency or system operation efficiency? I've always been quite curious about this.

Mindao: Everyone knows that banks are dinosaur-type in the technology world. Many traditional backend systems of banks are technology from decades ago. Of course, I think it makes sense to maintain this conservative technology as a financial institution. The first one it involvesIt's money, so older, more tried and tested technologies may be more important to the security of the banking system, far more important than improving capital efficiency. Even if it is the same bank, settlement and clearing between different systems will actually involve many issues, and cross-border is even more troublesome. For example, JP Morgan, in the United States and the United Kingdom, each involves different fund supervision, and needs to be done with Swift or other external settlement systems, not just within the bank.

A bank settles between different branches, because different regulatory issues involve, there will also be a delay in settlement time. For example, JP Morgan is just an interbank settlement. When it was expanded to the alliance chain, like in the Pearl River Delta Greater Bay Area, a few years ago, China Merchants Bank and several core banks in that region formed a supply chain alliance, which was also to use the blockchain system for settlement. Different banks are more complex, and each bank’s design system is different.

The advantage of blockchain is to use an ledger, which is consistent in all states and does not require a different backend system of each bank to make a match. Why do finance see such good applications? Because traditional finance can tell at a glance that blockchain design can basically completely replace existing bank infrastructure. This is why stablecoins can be used so quickly as soon as they come out. Of course, this starts with wild growth, and in the end, the most focused thing banks and US regulators are on stablecoins. Traditional finance can tell at a glance that it has obvious advantages over traditional banking systems.

The interaction between the U.S. stock market and Defi

Alex: Understand. If a large number of such US stock assets have appeared on the chain, what kind of interactions may arise with our existing DeFi projects? Are you optimistic about this, or do you think it is important for the development of the industry?

Mindao: I think the most critical point for DeFi infrastructure is that we see that DeFi is done in the entire crypto, such as dex, lending, and stablecoin projects. So far, most of the assets it carries on upstream are still native to the currency circle, such as ETH, BTC, and transactional and Meme assets are also native to crypto.

So for the entire DeFi infrastructure, it is nothing more than what kind of upper-level assets I support. And for downstream DeFi infrastructure, this is definitely a benefit. For example, after the stablecoins come in, we see more than just stablecoins, but actuallyThe largest scale of STO is the tokenization of Treasury bonds now. And we see that the tokenization of Treasury bonds in this cycle is very obvious, including Makerdao, Ondo, etc., putting it all on the chain.

We can see that the tokenization of treasury bonds has brought a large number of so-called interest-generating assets to the DeFi protocol in DeFi, including many pools in Pendo and Uniswap. Now they are pools of interest-generating assets. In the liquidity field, RWA-like stablecoins and RWA assets actually provide very important liquidity for the entire DeFi. So we can imagine that further tokenization of stocks is the same. The advantage is that the entire DeFi infrastructure is now perfect, whether it is AMM form, Order book form, or perpetual contract form, and all kinds of bridges have been set up. After DeFi summer, the infrastructure has basically been laid and has been tested.

All bridges and DeFi protocols have undergone a lot of hacking incidents, so the entire DeFi infrastructure layer has been solidified to some extent. What I am talking about is technical curing. The advantage of curing is that safety has been tested. From DeFi Summer to now, there has been about $100 billion in losses, which is the money that has been hacked. So the DeFi infrastructure in this area is already in a ready state.

So, if you access STO and stock assets, you don’t need to rebuild these assets. This is a very critical issue because the distribution channels and infrastructure are already here, and only new assets are needed to come in. This is different from banks or traditional institutions. If they want to promote these assets, they need to rebuild the public chain and DeFi system, which is very difficult.

So now we look at this cycle, the entire crypto narrative, such as the tokenization of Bitcoin ETFs and Treasury bonds, has entered the traditional financial vision. If the stock comes in, the best thing is that the infrastructure can be taken directly for use. This will definitely be a benefit for DeFi to have more assets to trade and have better liquidity for all underlying DeFi protocols.

Is STO in line with the interests of the United States?

Alex: From a larger perspective, if STO is compliant and pushed away, for those listed American companies, like some of the cases you just mentioned, such as having close relationships with consumersThey may gain a lot of incremental benefits through expanding their equity in Disney, Netflix, etc. So for the overall US listed companies, do you think they are very interested in the concept of STO? And is this matter itself in the long-term interests of the United States?

Mindao: I think if we look at it as a whole, we really need to look at different types of companies, because not every company is suitable for on-chain issuance, and it may not attract everyone's interest. For example, in the early days, many stock tokens were released, whether it was DeFi projects or CeFi projects. At that time, they chose technology stocks like Tesla because they knew that investors of this type of stock overlapped with investors in the currency circle. You won’t choose coal mines or industrial stocks because these do not overlap with the currency circle. So I think for those that have overlap with users in the currency circle, such as AI companies, this type of company is definitely beneficial in expanding its fund pool and audience.

From the American perspective, the alignment of this alignment with American interests is now very obvious. For example, the most important thing for US regulation is the stablecoin bill, because it is consolidating the hegemony of the US dollar. For STO, as the world's largest stock market, after tokenization, on the one hand, the costs of these financial companies in the United States will be greatly saved. For example, various shareholder voting and dividends require a lot of backend support in traditional finance, which is very costly. So from a cost perspective, it can replace many old infrastructure.

In addition, treating the US stock market as a US dollar stablecoin is actually expanding the influence of the US stock market globally. From this point of view, it is completely in the interests of the United States. Of course, this may not necessarily be in the interests of some American financial companies, such as stablecoins may kill many traditional banks' businesses. After the tokenization of US stocks, some companies that are now at the forefront may not be traditional companies. Traditional brokerage may be eliminated, because many intermediate links on the chain are not needed, and they can be operated directly after accessing DeFi.

So, this may cause a very big change in the structure of the US stock market. That's why this matter itself is not easy to advance, as it affects many different players in the existing chain of interest.

Alex: This involves a question I thought of before. The impact of stablecoins you mentioned on the United States just now, and the scope and application scenarios of the US dollar have actually been greatly supported. But it seems that Europe or others are not active in promoting stablecoins. For example,There seems to be no very positive action on promoting euro stablecoins and yen stablecoins. For example, the RMB has been making overseas, wanting to have more settlement scenarios, but it has not promoted RMB stablecoin. Don't they realize this? Why aren't it as active as the US dollar in this regard?

Mindao: I think the stablecoin of the US dollar, to be honest, if it weren't for Trump's coming to power, I wouldn't be so optimistic about this matter. And you will find that after Trump came to power, the United States was not the dollar token that he wanted to promote. Trump also issued an executive order to prohibit the United States from issuing so-called dollar tokens. What the United States now promotes is actually private sector tokens. For example, banks can issue them in the future and trading platforms can issue them, but the United States federal government does not allow them to issue them. Of course there are concerns about excessive power.

But we see that the EU should also launch their stablecoins this year. EU stablecoins are actually not the same as US dollar stablecoins. The main stablecoins currently being promoted by the US dollar are all from the private sector, from enterprises, banks, and trading platforms, not from sectors. The EU should launch stablecoins from the level. The big difference between the EU and the US is that the euro, US dollar and Japanese yen are all freely convertible.

So from this perspective, for them, there are obvious benefits to promoting freely convertible stablecoins. But it is quite special because it is not freely convertible. So you will encounter conflicts, and make a freely flowable and non-licensed stablecoin. For example, USDT is largely unlicensed, but it will seriously conflict with currency control. This is why it is embarrassing to push this thing. If the stablecoins launched have various restrictions and return to the limitations of the fiat currency world, then there may not be many possibilities for application. In fact, the digital RMB is not much different from the current wallet, so the application is very slow.

This has a lot to do with its own monetary system. For freely circulating currencies like the EU and the United States, the key is how to promote them. Is it mainly promoted by the private sector like the United States and not interfered with it; or is it like the European Union, which directly issues digital euros as the main body. However, with other monetary controls, this will have a very big conflict with foreign exchange controls and monetary management goals, and this conflict is not easy to resolve. If a currency that sends a digital currency with strict KYC and circulation restrictions can be checked, then no one will choose this method, which is no different from traditional payment, so there is a big conflict between the targets.

The obstacles to stock tokenization

Alex: Understand, realize itAfter the digital RMB was launched, not many people used it and the speed of pushing it is relatively slow. Then let’s go back to the topic of STO. In fact, after Coinbase proposed to restart tokenization, a Swiss RWA service provider Backed was the first to issue a tokenized version of Coin that it issued itself on Base.

But recent data shows that the transaction volume is not large, and there are serious decoupling problems. As you said, not all stocks are suitable for tokenization. In addition to the type of stock companies, what are the main factors that hinder this type of stock tokenization product?

Mindao: I think there are still many factors. Building a stock is actually the same as doing other tokens or stablecoins. First of all, the issuer is very important. For example, if Coinbase's stock tokens are not issued by Backed finance, but by JP Morgan and Bank of America, it may be different.

Because I think the biggest problem the issuer will encounter is that I buy your coin. Who is behind when I cash it in the end, and can it be cashed out? In fact, FTX has also issued Tesla tokens in the past, and they have used a German brokerage firm. It is very important whether third-party institutions have sufficient commitment to the issuer to cash in on the underlying tokens. There is also the problem of deaning. If there are enough market makers to support them and market makers are allowed to exchange for underlying tokens, severe deaning is unlikely to occur. Just like why stablecoins can maintain a dollar, because there are a lot of coinmakers and market makers who have access to Coinbase and Tether to redeem it for a dollar. The reason for deaning may be that there are not enough market makers, poor liquidity or the redemption channel is not smooth, and the underlying stocks cannot be redeemed and sold in a short time.

If Coinbase proposes tokenize its token, the credibility will be stronger. I just talked about the expansion of stock tokens. This thing can only be done by Coinbase, but others cannot do it. For example, allowing the Coin coin to be staking or gas on the Base chain, this is not something Backed finance can handle. This must be a new attempt in the expansion of token power.

In crypto, many players can buy US stocks through overseas accounts, which is not a very high threshold. Therefore, I just want to attract users in the currency circleIt's more difficult to buy. This is also why there is little demand for different token attempts in the past few years, including synthetic stock tokens we have made ourselves. The reason is that if the currency circle users only use as a capital pool to buy US stocks, the demand will not be as large as expected.

Alex: Understand, then suppose Coinbase finally officially launched a product like STO, which institutions need to participate in the structure of this product? Except for Coinbase itself.

Mindao: I think the first team needs a market maker, but it does not necessarily need a market maker designated by Coinbase. As long as Coinbase provides a good channel in the stock and token exchange levels, there are naturally market makers willing to provide liquidity. Just like the coin and redemption channel for stablecoins, this must be available.

In addition to this, there is also the problem of liquidity depth. Pools like Backed finance are made on aerodrome and may not be as efficient as order books, unless the pool depth is very deep. Therefore, different dex support is needed and official liquidity support is required. It is quite difficult to rely solely on a third party.

I think for Coinbase, it should be related to the Base chain. Most people go to Base to play in hopes of having tokens upside in the future. If it can be tied together, Coinbase will become the only trading platform token that has both listed companies and currency advantages. This will be a very interesting way to play, but this requires Coinbase to do other designs, not just simply putting stocks on.

Alex: Assuming his own stock issuance is successful, do you think he can attract other US listed companies, such as Strategy or Tesla, to issue their officially authorized STO on Base? Is this very likely?

Mindao: In theory, issuing stocks does not require the consent of these companies. Because this structure is actually a bit similar to a stablecoin, just like if you issue a US dollar stablecoin, you don’t need the Fed’s consent. As long as the bank has US dollar deposits, you can issue a certificate.

So theoretically, as long as the US regulations meet, these so-called tokens do not require stock company capitalauthorization and consent. But product design may vary, whether it depends on whether your product can only be purchased by KYC users, or it can be fully shared and can be purchased by everyone else. Tokens like Coinbase should not have any KYC requirements and should be bought directly on the chain. If it can be purchased by users who do not need KYC at the non-licensing level, it will definitely attract many companies because it will create a new liquidity pool.

But this also depends on the regulatory issues. I feel that this matter is not clear yet. Like those who issued T-bill tokens before, a pool was built on Curve, but only whitelisted users are allowed to purchase because it is completely a Security Token. So my understanding, tokens like stocks, on the chain, are themselves Security Tokens and should not be allowed to buy them. So there will be many specific problems when it is implemented. If only KYC users are allowed to purchase, the audience will be limited and may compete with those who use traditional channels such as Futu, which will become a stock competition, rather than an incremental market. This is the problem that stock tokens need to face in the go to market.

Alex: Like the Buidl tokens issued by BlackRock, how are their purchasing permissions designed?

Mindao: It also needs to go through KYC. Buidl's distribution strategy is not for retail investors, but for Defi protocols. There can be an account that is KYC. After purchase, it can be passed to the user. Buidl itself is a company or institution market, targeting a business. For example, whether you are doing Defi protocols or other financial products on the chain, I will only distribute it to users like you. As for how you distribute it to other retail investors after you synthesize it, it is the problem of others. Actually, I think it is a bit like the current stablecoin minting model. It is aimed at coin vendors and has hierarchical distribution, rather than directly facing retail investors. This model is relatively reasonable.

STO reheating factors and market performance expectations

Alex: I understand, we just talked about the concept of STO, but in fact there were projects in 2017, such as Polymath, which tried to promote but did not promote it. Now many project parties and industry parties are paying attention to this track again. Apart from the regulatory shift we mentioned after Trump took office, are there any other demand or new factors that have made this field regained attention recently? And are you optimistic about its market performance in the next one to three years?

Mindao: In fact, stock tokens were earlier than 2017. In 2017 and 2018, including the last Defi cycle, such as Synthetix's synthetic assets, Luna's project Mirror, and we also did it. We issued four or five tokens, but finally found that the transaction volume was not good. At that time, we analyzed that it might be a problem with the synthetic asset model, such as Synthetix, which has a very high super collateral rate and low capital efficiency. Later, FTX also bought some Tesla stocks, and the trading volume was average. I think the core problem is, for example, before Defi Summer 2022, we will see what kind of players are playing in the Crypto market structure. Most people have a slogan called "long crypto, short the world".

I think many people enter Crypto because it is an industry with particularly obvious asymmetric returns. It was particularly obvious in the early stages, and the overall returns were particularly high. Therefore, those who enter this market look down on people in the traditional market, real estate, commodities, and stocks. What is the concept of selling stocks in this group? It’s like selling ice in Antarctica. It’s not that there is little demand for stocks, but that the audience is wrong.

But this year there have been several important turning points. One is that after the Bitcoin ETF was launched last year and after the Ethereum ETF was launched, a large amount of traditional financial funds entered Crypto to make allocations. In addition, on the chain, we look at the two large stablecoins now, which are about 230 billion or 240 billion US dollars in coins. This fund is only a few billion US dollars left in Defi, and most of them are not played in Defi. Most of the people here are friends around us. Many people have no idea about coins at all, so they simply regard stablecoins as US dollars. So I said that the market structure has actually changed a lot now. Most of them used to be crypto native, and now a large number of people come to the currency circle to hold stablecoins.

But these people may have been converted from traditional finance, and there is absolutely a demand for stocks. The traditional account opening channel is very smooth, but I think if you really have a US stock trading market on the chain, which is very convenient for everyone to buy with stablecoins, this demand will easily replace the traditional practices like IB, which ranges from RMB to US dollar, then US dollar to trading platforms, and many problems in bank account opening. We have encountered those problems in reality.

If there is such a US stock trading market on the chain, I think there is still a demand, and why do you feel that this demand will be available in the next three to five years? I think the biggest reason is that the market structure has changed, which is different from the market structure five to six years ago. At that time, these people who were completely native to crypto now have more and more non-crypto users. They don’t even care meme, btc or eth, they just treat stablecoins as US dollars. If you give him a traditional asset and these people are very familiar with traditional stocks, there is still a configuration requirement. And it is indeed much more convenient on the chain than on the trading platform.

The only point now is that the infrastructure of the entire US stock market is not so perfect. For example, we don’t have so many token choices, and the slippage is so high. So I think the tokenization of the US stock may still be like Defi in 17 and 18 At that stage of 2018, Defi Summer has not yet arrived. I am actually quite optimistic about this. I think there should be a relatively large market in three to five years. But the premise is that this asset can be issued. Now the question is whether the US stock asset can be issued in compliance. Everyone is still trying. Coinbase is still trying, so I think as long as there is a compliant framework that can be issued on the chain, this market can be raised.

The beneficiary of STO Inspur

Alex: In the long run, assuming that this market can be raised, there is also a compliant framework that allows them to issue. With this as a premise, which track projects or companies do you think can benefit from the STO Inspur? Is it DeFi, Layer1, Layer2, or some specific RWA project?

Mindao: I think the best reference is to look at stablecoins, because stablecoins are essentially the largest asset class of RWA, which tokenize US dollar certificates. In this track, the biggest beneficiary must be the asset issuer. The asset issuer I am talking about does not refer to companies like Tesla or Disney, but to the party that really issues their stock tokens. Because whether it is stocks or stablecoins, the most important thing is the network effect of liquidity, which makes it difficult to replace liquidity to achieve the Matthew effect. I think this is very critical.

So, if someone can really put the index tokenization of the QQQ and Nasdaq index with the largest trading volume on the chain, and the token itself forms a network effect of liquidity, just like USDT, in the end, became forced to use it. In this case, heThey are definitely the biggest beneficiaries. Because at the bottom and stablecoins, there are many things to do in stock tokenization, such as margin financing and securities lending of the underlying tokens, and some fees from the sender and issuers. There are many business models that can be established, but I think the biggest beneficiaries should be those issuers, especially those that can quickly form scale.

We can see that whether it is ETFs or some money funds, the market share is usually the first issuance, which will account for a large proportion. For example, Bitcoin ETFs, you see that they now have a large market share, and they will still be in three to five years. The cake continues to expand, the proportion will not change, and may be higher. The network effect is very obvious. Because after the stock token is issued on the chain, many companies will synthesize it again, just like DeFi. Just like USDT and USDC, there are a large number of Defi products synthesized on it. This will form a very solid moat. Therefore, I think the issuer of the token should benefit the most.

Alex: Assuming these issuers have many asset offerings, which chain they might prioritize? Is it a chain like Ethereum that has good credit and is so-called orthodox, or is it a chain like Solana or Base with stronger performance?

Mindao: I think there is already a Playbook, just learn USDT, and send it no matter what chain it is. This is the most typical example. The USDT story is particularly interesting because it was first issued by Bitfinex, but it is particularly difficult for trading platforms to issue stablecoins for other trading platforms to accept. This is also why after DeFi Summer, Binance, OKX, and Huobi all issued their own stablecoins, but refused to recognize each other. However, USDT happened to exist when there were no other alternatives in the market, so the other parties accepted it and became a network effect.

Stock tokenization is the same. I think any chain needs to be issued, just like the early days of USDT. As long as there is a demand, it will be issued, and the company will allocate inventory uniformly. I don't think any chain has unique advantages at the RWA asset level. For example, Ethereum USDT is issued more because of the large demand, and that's all, not because Ethereum has any special advantages at the application level. For stablecoin issuers, the market is large enough, and the DeFi protocol is large enough, and it can accommodate more funds. I think this is an issue that asset issuers may need to consider. This market is big enough, just send it.

How to view the current environment of the crypto industry

Alex: Understand that most of our previous articles are talking about STO, we also mentioned that there is a big shift behind it. The possibility of compliance is increasing. In fact, it has been almost three months since we talked about encryption last show. A lot of things happened during this period, such as Trump’s issuance of coins, the Trump family launched the World Liberty project to purchase various crypto assets, and Trump signed the so-called executive order for BTC strategic reserves. Some bad news has also come. Many states have failed in their Bitcoin reserve plans, and about four or five states have failed to legislate successfully.

There are voices that most of the crypto industry promised by Trump before taking office have been fulfilled, and there may not be many subsequent positives. What do you think of the environment of the crypto industry at this point in time? Are there any key events in the future that are worth looking forward to or paying close attention to?

Mindao: I have a mixed feeling about this matter. Indeed, from the perspective of this, many positive factors emerge, including the degree of positive and execution speed, which far exceeded my expectations. At the level, Bitcoin is regarded as a reserve asset of the United States. We know that the US reserves can be divided into several categories, one is commodity with practical value, and financial products such as gold. Therefore, to raise it to this level, I feel that it has reached a very high level, both in terms of execution speed and definition. And many other assets are also included in the so-called stockpile.

So, there are indeed many benefits on the surface. But another not very good thing is that it is like some operating methods. For example, if there were no Trump’s issuance of coins and what World Liberty Finance did, I might have been more positive overall. Because Trump issued coins, including the MELANIA coin, it seems that the Meme cabal was operating. World Liberty Finance is looking for cooperation in the currency circle recently. I learned that big project parties are contacted to exchange currency transactions, that is, you buy his coins and he buys your coins.

In addition, we are discussing whether to invest in a trading platform. This series of events is related to it, which makes me feel bad. Because Crypto itself has always been an anti-fragile and is disdainful of the regime. Crypto's rise did not rely on any regime support, and this wild growth was at the heart of its anti-fragility. But now it seems that all this has been kidnapped by the Trump family. Imagine what to do in 4 years? Moreover, Trump has some public use and private use, so he is too deeply tied to his family. If the Democrats come to power again, revenge will come particularly fierce. It is particularly important to note that most of Trump's measures are achieved through EO (Executive Directive), and new ones can be abolished after they come to power.. Just like Trump abolished more than 100 EOs in the Biden era. Therefore, the key to the next 4 years is to see how many EO types can be officially embedded in the US legislative framework. If these can eventually become law and be approved by Congress and state legislatures to form a legal framework, then there is no need to worry about being easily abolished. It depends on how much these things can be solidified in the next 4 years. When these measures are tied too deeply to Trump’s personal interests, Crypto may become something very negative to be suppressed once the Democrats come to power, which is something I am very worried about.

And you think about it, all of these things seem to be very blurry in the line between selfishness and public power. If you are a Democrat, if you want to attack him, use all his transactions as the attack point, which can't be more convenient. He issues coins, engages in DeFi, and conducts these subsequent transactions, which are particularly easy to be attacked. In this case, with the Democrats coming to power, Crypto could become an important weapon in attacking Trump or his family. In this way, will there be positive legislation? This is very difficult.

So, I think the market has also seen that the level is indeed very good, but these are all superficial. How many of them can eventually fall into the legal level and be solidified into part of the system? These are too tied to his family and have become a private tool. For example, at that time, Crypto Summit was rumored to spend $1 million to buy tickets, which was not only in the United States, but also in the developer. You find that many OGs in the currency circle have stopped speaking up recently, so they don’t want to express whether this kind of thing is good or bad. It really can’t be explained clearly. It depends on how many things can be put to the legal level in the end.

Of course, there are also some people in the currency circle who think that I just cater to the needs of Trump and his family and do whatever they should do, but what do you want to watch again in three to five years? Now there have been attacks. The Democratic Party in the United States has begun to investigate Trump's issuance of coins, so I think it is a very complicated emotion.

Alex: Maybe everyone thought that Trump’s push for this matter was a big favor, a big favor at the level. However, when he started issuing coins and proposed to include ada, SOL, and xrp in the same reserve as Bitcoin, the seriousness of this matter was completely eliminated.

Mindao: Yes, it has been completely eliminated. We initially thought it was really at the national policy level, turning the United States into a part of the so-called Capital of Crypto. HoweverSuddenly I found that all operations belonged to private devices and became personal gain, which changed my taste.

I think the biggest turning point in the market is that after Trump and Melania issued coins, it also included the subsequent Libra issued coins, as well as the so-called cabal manipulation exposed by this incident. You see, the entire market starts to go down, that is a turning point. Everyone began to be confused about this matter, whether it was used as a private device or became a real and real one. There are obviously differences in the consensus in the market.

Alex: Yes, many people have expected the Bitcoin reserve bill at the federal level, but after so much chaos in January, it was difficult to pass in most states in February.

Mindai: The meme token issued by Trump, including World Liberty Finance, is also recently rumored to acquire tokens from trading platforms. These conflicts between private transactions and public power led to a lot of opposition voices when the bill was implemented. Is this for or for personal services?

Another comparison case is Tesla. Tesla's stock fell about 50% from its highs because everyone thinks Tesla and Musk are too tightly tied. Tesla's volatility is Trump's volatility, and Tesla's shareholders are definitely unwilling to do so. Some people like Trump is not satisfied with his or her in Ukraine and are unwilling to buy Tesla stocks. I think it is not good to be too linked to the characters. This is also the reason why many people have negative emotions now, because they are too tied to the Trump family.

Alex: Especially Trump has been in the second session and will not do it anymore. He will only last more than three years at most.

Mindao: Even if other Republicans come to power in the future, they may not be able to promote these things like him. To be honest, even though I have been in Crypto for so many years, it has been difficult for me to tell whether these measures are for personal gain or public interest. I don’t think it’s entirely public interest.

Alex: OK, today we talked about STO and a lot of related topics. Thank you Teacher Mindao for your participation, and I hope you will be invited next time. Thanks.

Mindao: No problem, thank you.