TradFi and DeFi adoption may “meet in the middle”

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Blockchain tech is entering TradFi

Traditional finance is filled with middle men.

Look at the U.S. Treasury market for example, in order for banks to facilitate liquidities for people and institutions to trade, they need a huge balance sheet, Chiente Hsu, co-founder and CEO of ALEX, a Bitcoin DeFi-focused platform, said on Talking Tokens.

“You have this issue of it’s not instantaneous, in order to facilitate,” she added.

But on DeFi, this problem is gone. “This is ‘controlled’ by smart contracts,” Hsu said with quotation marks. And institutions are starting to understand it — even if they’re not saying it out loud to others.

(Listen to the episode on Spotify, Apple or YouTube)

For example, in recent years, JP Morgan and Goldman Sachs, alongside other massive banks, have begun to use blockchain technology to transact instantaneously.

In general, there’s over $12.73 billion in total real world assets onchain, up from $5.2 billion at the beginning of the year, according to rwa.xyz data. There’s also about $172 billion in total stablecoin value across 123.44 million holders.

“Blockchain technology or stablecoins are well accepted by TradFi or DeFi,” Hsu said. “TradFi or DeFi, ultimately there is a set of challenges for financial services 24/7, global [and] borderless. But how can we solve it?”

The adoption will come from both ends, Hsu thinks, and will most likely meet somewhere in the middle.

And the timeframe for that may be sooner for some regions opposed to others.

“I would say globally it would be different, we are sitting in a place where we’re one of the last ones,” Hsu said from her NYC apartment.

“I would say in Asia it will be way ahead of us, trading tokenized assets, we’re already seeing that. But [in the US], I don’t know, November may be a good catalyst to see where we’re going.”

Check out the next section for more details and the full episode.

The latest Talking Tokens podcast 🎙️

For this week’s Thursday episode, I interviewed Chiente Hsu, co-founder and CEO of ALEX.

We talk about Chiente’s journey from TradFi to DeFi, what it’s like building a Bitcoin-focused DEX, how institutions and traditional market players are entering the space and more.

Talking Tokens episodes are released on Spotify and Apple Podcasts at 6AM EST or YouTube at 10AM EST every Tuesday and Thursday. Listen in!

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Monitoring blockchains

Looking at some of the biggest developments onchain.

• Chainlink partnered with Taurus, a digital asset and tokenization platform, to expand institutional tokenized asset adoption

• EigenLayer's token launched this week and brought in some criticism surrounding its supply — which the team replied to

• Franklin Templeton adds Aptos support for its OnChain U.S. Government Money Market Fund (FOBXX) that has about $430M in market cap

Taking on the tokens 

The total crypto market cap decreased 1.4% in the past 24-hours to $2.11 trillion. It is down 6.6% over a 7-day period.

As for the largest cryptocurrencies by market cap…

These metrics were taken prior to publication on Thursday morning EST.

Other numbers we’re eyeing…

• $11 billion — that metric is Aave V3’s total value locked (TVL), which is up 157% from $4.3 billion at the beginning of 2024, according to DeFiLlama data

Money and people moves

Latest updates on crypto startups that secured funding and industry players who are starting something new or are on the go.

1. There were a few changes at Coinbase this week:

   • Jesse Pollak, creator of Base, is also now leading Coinbase Wallet and joining the exchange’s executive team as VP of engineering

   • Nemil Dalal is now leading the developer team at Coinbase

   • Manish Gupta departs Coinbase after four years as head of platform

2. Jacek Bugaj, former head of macro product at Two Sigma, joins Prometheum as head of product

3. Ex-investment partner at Chapter One, Jack Lipstone, joins Sei as head of DeFi business development

4. Veronica Irwin is now a full-time regulatory reporter at Unchained

5. Abbas Khan joins Scroll as a business development lead

6. Coin Center’s Executive Director Jerry Brito and Senior Policy Counsel Robin Weisman are leaving the company at the end of the year

Talking points for the road 

Here’s some headlines and topics that you can talk about at your next dinner party, crypto event or on a first date to look smart (results may vary.) 

1. Bitwise filed for registration of a spot XRP ETF with the US Securities and Exchange Commission

2. How North Korea Infiltrated the Crypto Industry (CoinDesk)

3. Paxos Gold's $500 million milestone highlights increasing TradFi interest in gold-backed crypto (The Block)

4. Bitcoin tends to recover after geopolitical shocks like Iran. Here’s when BlackRock sees a price rebound (DL News)

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Please note that this content is for informational and entertainment purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.