Hello everyone and welcome to today's panel, DeFi 2.0: Wall Street Meets Blockchain. Today you will hear from the largest players in DeFi discuss their roles in reimagining finance, as well as the challenges and the opportunities to make this vision a reality. You will also be thrilled to know that this panel is the last obstacle between you and lunch. So let's jump right in. We have assembled an impressive lineup of industry leaders who will be sharing their valuable insights with us today. David, would you like to do a quick introduction?
Hi, I'm David Schwartz. I'm the CTO at Ripple and one of the co-creators of the XRP Ledger.
Hi everyone, I'm Sergey, co-founder of Chainlink, the leading data oracle in the blockchain space. We also create bridging solutions, identity solutions, and compliant solutions to create more complex blockchain transactions.
I'm Mary Catherine Lader. I'm Chief Operating Officer of Uniswap Labs, which builds the most used DeFi applications and products and is the leading developer of the Uniswap protocol, the most used DeFi protocol.
I'm Konstantin Richter, the CEO and founder of Blockdaemon. We're the largest infrastructure provider for institutions in crypto. We run around 250,000 nodes, empower transaction staking and wallet development for institutions.
Great, thank you so much for being here. Konstantin, let's start with you. Blockdaemon is a leader in on-chain infrastructure for transaction staking and wallets. Given your expertise, how do you see TradFi playing a role in enhancing this critical infrastructure?
Yeah, thank you, it's a good question. I think one thing we've learned, we've been aligned with financial institutions really since the beginning. One thing that's unique about us, we have JP Morgan, Goldman Sachs, and Citibank with major shareholder denomination on our cap table. We've done that really for the same reason that you asked the question, which is really we wanted to learn about compliance and the requirements they've had in a company of our nature that engages in crypto, so we ultimately don't make mistakes that would disqualify us to be a vendor to them in the future. And so I think one thing we can learn from TradFi is that it's very hard to reverse engineer compliance. So understanding compliance, understanding risk tolerance is something that the crypto industry can learn from TradFi institutions. I think it's really important to understand that sometimes in the crypto side we're a little bit like, 'Hey, our tech is 10x better than what you have,' we can be a little arrogant about that. But there's another component than technology to the infrastructure stack, and that's security and compliance. And I think here TradFi has a lot to add, and that's going to be really exciting. The other is really real-world asset tokenization, where obviously institutions are really primed to come in and bring a lot of liquidity to the stack that we like. These assets need wallets, there's monetization mechanisms around it that will really help crypto to find a larger audience. So I think those are the main primers for it.
Yeah, I think that all makes sense. David, you have seen the whole evolution of blockchain from early Bitcoin days and have been a co-creator of the XRP Ledger. In your view, what do you see as the most significant difference between DeFi 1.0 and DeFi 2.0, and what do you think is needed for mainstream adoption?
Yeah, so thanks. Both myself and Ripple have been in this business for well more than 10 years now. We watched the very early stuff going to what's happening now with institutional adoption. In the very beginning, it was very experimental and it was almost like Las Vegas. It was gambling. It was very sexy though, like you attract a lot of people to fancy casinos, but it doesn't have a whole lot of real-world utility. It's not Financial System 2.0. Financial System 2.0, a lot of it is frankly boring. For most people, what they need is like a savings account, which is an extremely useful thing. It doesn't produce high yield, it isn't very volatile, but it's extremely useful and practical. And so we've watched that evolution to more useful, more practical, more enterprise-focused, more compliant. Compliance was a bad word in the early days, like everything was just completely decentralized. But the problem is the value is in the real world. If we're going to build Wall Street 2.0, we can't just say forget about everything that we have. It's trillions of dollars worth of real-world value. So what you're seeing today is you're seeing stablecoins, which are igniting DeFi ecosystems. They're very institutional products, but they're also anybody can hold them and transact them. They're compliant, but they're also free-flowing. You're starting to see DeFi applications that look more like TradFi. They're not about getting huge amounts of yield at very high risk, but they're about things that make a lot of sense to people like treasuries. I think the obstacle for mass adoption, and we're within a few years of that cusp, is we need the institutional adoption first. The same thing happened with the internet. You have to build bridges to where the value is, to where the people are. There has to be usability. We have to solve all of those problems to be able to turn that corner to mass retail adoption. So I think the precursor to that is going to be mass enterprise adoption, and I think that's right where we are now. That's probably why everybody's here.
Yeah, absolutely. MC, the long-awaited Uniswap V4 upgrade is now live. I'm sure many in this room are undoubtedly very excited about that. However, liquidity remains a key issue in DeFi, especially for larger institutional players. How can DeFi projects improve liquidity while still maintaining decentralization? And is there an inevitable trade-off between the two, or can you have the best of both worlds?
Well, first, thank you Katie and Ando for having us. I'd say I spent 15 years in suits in Midtown at Goldman Sachs and BlackRock, and I'm so happy to now be at a crypto event where most people wear suits. It's just a great sign of how far we've all come. There's not a trade-off. I think that's a misunderstanding that there's a trade-off between liquidity and decentralized protocols. For some time, the Uniswap protocol, which is decentralized, immutable on Ethereum, has had deeper liquidity in top trading pairs than centralized exchanges like Coinbase. So that's not the case. But what has held back adoption of DeFi for TradFi, a couple things. Absolutely compliance, as was just mentioned, but also blockchains weren't fast enough or cheap enough. They just weren't competitive with your alternatives and the systems that you need today and that users need today. And so the net effect of that means that there aren't assets that people want to buy to drive more adoption. And so I think what's happened in the last three years, definitely last 10 years, is that blockchains are now cheaper and faster, and DeFi is more customizable. So with Uniswap V4, it allows you essentially to create your own market structure and create your own customized set of rules for a liquidity pool. So whereas with prior versions of the Uniswap protocol or other DeFi protocols, you have to accept a determined market structure and that's the same for everybody. Now you can say, well, we need only these users to be able to access this trading pair, or we want to integrate with this kind of leverage with these kinds of limits, just the stuff that you're used to having in traditional markets. So that customization, I think, will unlock so much more innovation, which is again open to anybody. Anyone can build on top of it. There are already hundreds of what we call hooks, different smart contracts on top of Uniswap V4 within four days, that are all allowing different kinds of trading market structures and different kinds of assets. And the other thing I want to mention, I think is really exciting for bringing way more liquidity, lots more liquidity on-chain, is Unichain. So we are launching an L2 on Ethereum next week that will be, in a few months, it'll be as fast or faster than Solana, it will be cheaper than Base, and it will be decentralized. So stakers will validate transactions, which is in contrast to some other L2s. And that is really allowing the benefits of decentralization, allowing network participants to benefit, and also bringing the faster and cheaper benefits. So I'm extremely excited about 2025 because I think that some of those advances in DeFi, along with all the other infrastructure that my colleagues in the panel can share, means that we're going to see a lot more adoption and that some of the trade-offs that felt like they existed will be busted through and it'll become apparent that they were just a point in time.
Yeah, absolutely. The momentum is definitely here. Sergey, you work with some of the biggest names in TradFi, most of them are in the audience today. How do you see the relationship evolving between the traditional institutions like banks, hedge funds, asset managers, and those of the DeFi world? Can collaboration happen, or is disruption inevitable?
So I think there are two things that are true that aren't fully clear yet. The first thing is that the TradFi community and the DeFi community are each other's biggest customers. And the simple reason for that is that the TradFi community has a lot of the capital that is yet to flow into the industry. And the flow of new capital is what defines the growth of our industry. Net inflow of capital is what defines the growth of the crypto blockchain industry. Where is the new capital going to come from? Okay, three and a half trillion now. How much more retail speculative demand is there? Let's say we go to seven or 10. Okay, great, we're at seven or 10, hooray for us. Where's the rest? Guess where it is. It's where it's always been, with the asset managers and the sovereign wealth funds and the banks and so on. So TradFi is DeFi's biggest customer. That's very clear to me. And I think that's what's going to be happening. To David's point, we have to make the bridge connections, we have to make compliant transactions possible, we have to interoperate, we have to make all that happen. That's one thing. Another thing is that the DeFi community is the kind of hotbed of permissionless innovation that's going to consistently push the limit on the risk-return equation. What are the financial markets basically about? Here's a certain rate of return at a certain level of risk. Where do you see the fastest rate of innovation? Is it in regulated institutions where everyone has to get a sign-off from three people to borrow a paperclip? No, it's not in these places. It's in the places where people can just ship a piece of code globally and test whether liquidity is interested in that risk-return proposition very quickly. So you have this hotbed of innovation that's going to continually innovate and make the highest, best risk-return newest stuff. You have all this capital over here, and then you have also a growing retail market in the public chain space. I think that's what people are interested in now from the asset management industry, is how do you create a tokenized fund that captures the public chain space. I think that's just kind of the early stages, and as that industry grows, that's also going to happen. So they're each other's biggest customers. The second thing that's going to happen, I'm pretty sure about this as well, is that the real-world asset trend will reformat the public understanding of our industry from being about highly speculative things, meme coins, NFTs, cryptocurrencies not backed by anything real, into what real-world assets are. I personally think that the real-world asset total value locked will surpass the cryptocurrency industry value. If you add up all the money that's going to flow into stablecoins, commodity coins, tokenized funds, and a number of other tokenized things, the universe of that value is, in my opinion, larger than the universe of speculative demand for meme coins and NFTs and cryptocurrencies. Now, meme coins, NFTs, and cryptocurrencies are great. I'm a big, big fan of those, I really am. And it's like a wonderful thing. But I think you had a point in the internet when it was about email or something. What's the internet? The internet's this thing that's going to kill the US Postal Service. And that's not what the internet is. The internet is information technology, which is all information, not just the US Postal Service's piece of information. So I think we're going to be now, with the new regulatory environment relatively quickly, in a world where DeFi can operate and our industry goes from highly speculative stuff to very legitimate stuff. And so the average person goes from 'cryptocurrency is a scam' to 'cryptocurrency is the new format for financial products that I want to deal with.' But you know, that's my view of where we're going.
