Why Stablecoins Are Crypto's Biggest Opportunity | Charlie Noyes & Bam Azizi

But the killer app of crypto is a stablecoin and the killer app for stablecoin is payment. So I'm excited for day-to-day payment in the US happens in a stablecoin and settled on stablecoin instead of credit cards or network or ACH or wire network. We are getting there. We are moving in the right direction, but I hope we can get it this year, but I'm a little bit more realistic. So I think maybe it takes a couple of years to get to that place, but I'm excited.

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All right, everyone, welcome back to Empire. I'm still battling a little sickness from Das, so excuse the nasally-ness. We've got Charlie, who's a GP at Paradigm. We also have Bam coming off an $82 million raise, founder of Mesh. So Charlie, Bam, welcome, guys.

Thank you for having us.

Yeah, of course. Charlie, man, I want to start with you, which has nothing to do with stables, actually. I was looking for— I was like, I'll listen to some old podcasts that Charlie or some recent podcasts Charlie's done. I think it's been 4 years since you've done a podcast.

That sounds possible.

I don't know. I feel like the role of a crypto VC is like storytelling and posting on Twitter these days. What's the— why do you take more of a backseat?

You know, we hope that our role is more building things than just talking about things. So I've been taking that approach the last few years. But no, it wasn't intentional. I think a few years ago I felt like there was a lot to say on MEV and some of the topics that we were working on at the time. And for the last few, been more heads down.

Nice, nice. All right, let's talk about this Mesh raise. I think I got the number right. $82 million raise. So, Bam, first off, big, big congrats, obviously. Maybe Charlie on the investment side and then Bam, I want to hear about the story of Mesh. Charlie, why is this— when I think of like Paradigm's investment lens and framework, it's been more infrastructure. And you guys are, I mean, pretty notorious for leading or investing in a lot of the best, I think, crypto.

You have to, but we haven't done a lot of infrastructure historically.

Yeah. What's the reason for this, for this Mesh deal?

Well, you know, I think a lot of folks know us for the work that you're probably referencing on some of the more crypto-native protocols that we've been fortunate to partner with, like Uniswap and Optimism and Flashbots, and those that are sort of more on-chain, crypto-native. Also MakerDAO. And Reflexr, two decentralized stablecoins that we were pretty closely involved with a few years ago. But we've also always done more traditional-looking companies. Like, a lot fewer folks know, but we also led pretty early rounds in Fireblocks. We invested in Chainalysis and some of the other infrastructure companies. So, yeah, Mesh wasn't abnormal for us. I mean, I met and loved Bam, and I think we're really excited about the stablecoin story overall and seeing more merchants and payment providers and such adopt it. Things like Stripe acquiring Bridge and making it a more core part of their business. So it felt very natural to us.

Nice. Did BAM find you guys or did you guys find BAM?

I think BAM reached out to us originally. It was a long time ago, actually.

You know, what's the— maybe you could— what's the story of the raise? I'd love to hear it because you guys also did some quirky things, which was I think you raised entirely in stablecoins or a large chunk of it was in. So I'd love to hear the actual story of the raise.

Sure. Yeah. Happy to give you my side of the story, Charlie. Keep me honest here. But yeah, we got connected to Charlie through one of our investors more than a year ago. The joke here is like, I have like hundreds of people on the cap table, but none of them, I got the check over weekend or overnight. All of them I built relationship, gave them updates and kind of had conversations to make sure they're the right fit, we are the right fit for the firms. So Paradigm is no exception. So I was basically, we met in downtown San Francisco. Before that we met over Zoom first. I really, really liked the fact that Paradigm, even though it's a big firm, like their average age there is like around 30, a lot of young people, very bullish in crypto and what's going to happen in the future of finance. So compared to other firms that like more conventional, that kind of stood out for me. But what happened is like I sent an end of the year update to like 5 firms that I really respected and Paradigm was one of them. But, and then one meeting led to another meeting, and then we had multiple offers. But I really, really liked what Paradigm did. So they were like, I was not just another check for them. They showed me how they can add value post-deal. They went above and beyond to make sure they accommodate every single items that was important for me and my employees, my investors. And they were, because we were both young people, we move fast. They're like, even though it's a big firm, they're moving as at the speed of startup. So we were able to close the entire deal in 2 weeks, which was shocking for our industry.

That might have been a record for us.

Why did you guys want to move?

Yeah, go ahead, Ben.

I asked Charlie that, can we close in 2 weeks because my birthday is in 2 weeks? And so like, if you move fast, we can move as fast as you. So we did it.

Bam, I feel like there's a bunch of founders who are going to take the wrong lessons from this episode, which is like, oh, just email a bunch of updates to a bunch of random VCs like every month and like, just tell them if they close by your birthday. So I just want to—

I don't know if that's a good guidance for you. Mesh is a 5-year-old company. I was the first check in my own company. Like my previous startup, we raised less than $1 million over the course of 6 years. So it might look like an overnight success, but It took me 12 years to get to this place. And yes, we don't send updates every month and bother investors. It was a year-end update. And then the situation was also like great because stablecoins and payments are soaring from the user's perspective. And I think you're like, you're a nice fit as well for the Paradigm's portfolio, basket portfolio, because we can work with a lot of these portcos. So it's a symbiotic relationship.

Nice. Let's maybe get into the Mesh story, man, because I've spoken with folks— I've never— we've never met, but I've met many folks at Mesh over the years, and I feel like the story and the product has really evolved. And I just like, kind of close to my heart, I feel like, because Blockworks has gone through— so we're in now year 8 of Blockworks, and we've gone through so many pivots. We started as an events business and layered on the media and then research and then data and adding things and pivoting, and so I kind of know that game a little bit, but I'd love to hear just like the original story of Mesh and how you came to be the company you are today.

Sure. We have to go a little bit back before what happened to Mesh. So my life thesis is find a pain for myself and then find a solution for it. And if I can find another like 1,000 people, they have the same pain, then we can easily build a business on top of it. So I have a PhD in computer science and I wanted to always use my coding skills and my programming skills to solve a problem. So my first idea was that I co-founded the company called NoPassword. And the idea was bringing frictionless password authentication to life. And I don't know anyone who loves passwords. So it wasn't easy to understand, like, this is a pain for everyone. But to do that, you have to build a lot of integrations. By a lot, I mean like thousands of integrations. So we had no money. So we, as I said, we raised less than a million dollars over the course of 6 years. We had to be cashflow positive in the heart of Silicon Valley and build up all of these integrations. And we sold that business to a public company in the US. And when I started Mesh, initially it was a B2C application called Front. You could connect your Robinhood, your Coinbase, your MetaMask, and manage your crypto portfolio in one place. To do that, you had to build integrations again. So because we had a lot of scars in our back and we knew how to build integrations, we were coming from like cybersecurity authentication background. So we were able to build 300+ integrations across chains, wallets, and exchanges. Globally. And then the moment we rolled that out, the usage kind of skyrocketed on the B2C application, but it was very, very hard to monetize. And I gathered my team and told them like, we have to make money. It's just, it's 2022, everything is down. There is no magic wand that I can wave and raise money anymore. Like forget about 2021, like that's, that's gone. So, and then we realized that our real expertise is in building API integrations, building that connection layer. And it worked for us. Maybe it works for thousands or tens of thousands of other founders as well. So we launched it on Product Hunt, September 2022. We ranked top 3 that day, landed 5 customers day one. And we felt like, okay, this is it. We shut down B2C, we pivoted to B2B, and that's how MeshConnect born. And then after that, we raised Series A and then Series B. We have like market customers like Revolut, like MetaMask, Coinbase, and others. And what we are super excited about is the next chapter of Mesh, which is using that connection, that powerful tool that we have for the payment use case and believe that's the future.

My really layman's understanding of Mesh is like, you've got people who hold crypto over here, like exchanges and wallets. And then you've got over here, you've got the payment service providers, and then those people plug into the merchants and Mesh sits somewhere in between, I think, like the exchanges and the payment service providers. Is that generally the right way to think about it?

Yes. That's, that's exactly like what you said. We call it like global payment network. So there are many different exchanges, many different wallets. Crypto industry is very fragmented. So we built one API that basically integrates all of them. So when we go to PSPs as a customer, like companies, like any PSP, like PayPal, Stripe, so on and so forth, all the usual suspects, tell them like, instead of going building integrations one by one with all these exchanges and wallets to enable crypto payment, just use one API. And also our pitch to exchanges and partners is instead of you going building integrations one by one with all of them, just integrate with us and we basically cover all the big names and the long tails as well for you. So it kind of makes sense to be that network for this fragmented space, both on the PSP side and also on the crypto side. And the reason that makes sense is you cannot use wallet address copy and paste it for the payment use case. The user experience is not ready for the prime time. I call it the grandma test. It doesn't pass the grandma test. So if you're walking, walking to a coffee shop, you swipe your card or your phone, you pay with your fiat currency, you grab your coffee, you walk out of the store next second. If you, if you want to do the payment with crypto, you have to scan a QR code, copy the wallet address, find the right token, find the right network. And then wait 20 minutes for that transaction to be settled and pay gas fees. And then, then and only then you can walk out of the store. So we wanted to kind of bridge that gap from experience perspective. And the reason that's a pain is the market cap of crypto is 4.5 or 5 trillion. Market cap of a stablecoin is 200 billion. Merchants want to accept stablecoin, users owning their assets in crypto. So as a result of that, 95% plus of payment transactions requires 2 or more manual transactions on the user side. So even if, even stablecoins are not made equal, you might have USDT, the merchant might accept only PiUSD. So you have to do that conversion. So it's like the analogy in the fiat world is you go to Europe with your Visa credit card that you got from Chase or Bank of America. And then you swipe it and it doesn't work because it's a US credit card and you have to convert it to euro and then pay with it. So everything happens behind the scenes. So the consumer behavior requires you to handle everything behind the scenes. They just one-click, one-tap and pay. That's why a network like MASH makes sense here.

Nice.

Even as a sophisticated crypto user, somewhat sophisticated crypto user, I think my lifetime sent to wrong or zero address number is in the six digits, probably. And yeah, even before BAM had sort of executed the pivot, uh, you know, to the payments use case really heavily, uh, upon meeting initially, uh, it just felt like very obvious that the future of crypto would require better UX and that like the copy and paste wallet address, like figure out what network select, like enter to 5 digits of, uh, you know, specificity, like the amount to send, like it's just like not sort of an acceptable user experience for widespread adoption. And I think, uh, uh, Mesh is a, is a pretty serious upgrade.

This episode is brought to you by zkSync. In 2024, zkSync took a step toward a multi-chain future by transforming from a single L2 into an ever-expanding network of zkChains, the Elastic Network, to onboard the whole world into crypto Many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose zkSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy-first design. Join over 20 chains, including Abstract, Sofon, and Cronos in the Elastic Network today. Behind zkSync is the zkStack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zkSync.io/empire. Thanks to zkSync for making today's episode possible.

Is it fair to say, like, if I try to boil it down, Bam, into like, this is solving one problem, it's the liquidity fragmentation of stablecoins?

Yeah, for payment use case.

For payment use case. Charlie, did you have a framework that you thought about when investing in Mesh? It's like, this is the Twilio of stablecoins, or this is the, like, what, what, what was your framework for investing in Mesh?

Uh, I think frameworks can be dangerous and, you know, no one ever likes to be described as the Uber for X or whatever, but I think if you were to pick one, hopefully, uh, BAM likes this one enough. I think of it kind of like Plaid for crypto where before Plaid, you would pull out your checkbook, you'd type in the routing number and the ACH details. Maybe you would wait for them to deposit something for them to try to confirm that whatever you entered are actually you, because your private key is your public key and all of that. And then Plaid comes along and sort of builds the necessary and difficult integrations for you to just do— to add API services and to make it like a one-click sort of experience. That's not all that Mesh does, but I think if you were to like sort of squint and try to make a Web2 analogy, that might be the best one.

Yeah.

Bam, how do you think about that?

We definitely, from experience perspective, are very similar to Plaid. You connect your accounts, but the difference is Plaid is more of a generalist in terms of like, for different type of fintech use cases. We want to kind of be more focused on the payment use case. So I love Visa for crypto more, more than Plaid for crypto, but from user experience perspective, you're more similar to Plaid. You're, you're absolutely right, Charlie.

Yeah. Bam, just, this is unrelated to stablecoins, but just as someone building a, you know, a crypto business right now myself, how do you think about the future of, um, like what will, it feels like SaaS businesses are getting less and less popular and API-driven businesses are getting more and more popular. Can you just maybe share some thoughts on that? And I don't know if you even agree with that or not, but—

No, I, I, like, I love APIs and I think that's the future. Um, uh, and I think if you add API plus AI, you get the best of the best. But, um, anyways, your question in terms of like transactions versus SaaS, we went through the same type of dilemma and challenges to see like what, how we charge the users or the customers. We believe that we wanted to have the best of both worlds. SaaS is very predictable. You can build projection on top of it and transactions can be very volatile, but that's where the revenue is, where the volume is. So you can again compare like in analogy, you can compare like how Plaid charges and how Stripe charges like as per API call transactions or Twilio, as you mentioned. And then, then Plaid is just more of a SaaS, like number of users connecting their platform accounts to the platform and things of that nature. So to find the best of both worlds, so we decided to charge a minimum fee. And then there are basically BIPs or transaction-based model on top of it. So if the volume goes to zero, we still have that minimum fee that we're collecting. So we can have some sort of projection and prediction of the future. And also at the same time, getting the upside of transaction model. So when we have more volume, we will have more revenue into the door. Another thing that kind of is kind of dangerous, it might not apply to every single industry. So we did a lot of research, we look at a lot of data. One of the piece of information that was critical for us is stablecoin is not volatile and it's growing super fast. So when you look at 2022, that everything went down, stablecoin usage was going up and up and up to a degree that Now we have more number of transactions in terms of volume and number on a stablecoin and blockchain than Visa card and MasterCard combined, plus 7% on top. So that was an important piece of information that helped us to kind of build that model. So shortest, short answer is you need to look at the industry to see what is the best fit for you in terms of like SaaS or API. or transaction-based type of model. Uh, but if I have to bet on one, it's transaction.

Yeah. Charlie, do you have a framework for how you think stablecoin— it's like stablecoins are clearly the hot thing in crypto right now. Um, it's funny, actually, I feel like everybody agrees stablecoins are the hottest thing in crypto, but nobody, especially the VCs, don't know how to invest in them. It's like, do I buy like Athena token? Do I buy like AAVE? Do I invest in the equity of companies like Circle or AmeSH? Maybe I'd turn that into a question for you. Like, how do you think— obviously you guys just invested in Mesh, but maybe Mesh investment aside, like, how do you think about allocating and investing in this? Obviously, it's like, it feels like the trend of the year right now.

Yeah. I mean, at a high level, I think stablecoins are probably the first, maybe the second after digital gold, like sort of lab leak out of crypto into the rest of the world. And it sort of feels like It's happening, basically. We're super excited about it. I think stablecoins rightfully deserve all of the attention and excitement that they're garnering. I think even with it being the story, stablecoins being the story of the year, we're probably collectively underrating how disruptive they have the potential to be. I think you're starting to see folks come around that now, like Patrick Collison in Stripe's annual letter. Described them as room temperature superconductors. And I think people are sort of starting to come around to the idea of this is actually a real sea change in possibly how dollars circulate through the economy, how payments are made, how we think about financial regulation and all of that. As to how you invest in them, depends on what you define as a stablecoin. Many years ago, we were pretty involved with folks trying to create decentralized stablecoins. It turns out those were pretty tough to scale, like DAI and Maker, um, you know, obviously to, to some degree, but, um, kind of tough. Um, you mentioned Athena. I don't think of Athena personally as, as much of a stablecoin, at least today. I think of it more as kind of like a structured product. I think Guy is one of the strongest founders in crypto, uh, and I love Athena personally. But when you say stablecoin to me, it kind of makes me think the sort of like core, uh, you know, treasury or cash-like collateral custodial stablecoin model, um, that Circle and Tether are sort of dominating at the moment. And then within that, the issuers, how do we think about investing in it? We're super excited about businesses like Mesh. I think there's a lot of surface area for folks to build on top of stablecoins and make them sort of more legible and useful to businesses, to consumers, to payment acceptors, merchants, all that stuff. So you've got folks like Mesh, you've got folks like Bridge and BVNK and the orchestration folks and others. And I think that's like a super fruitful and interesting field, especially for founders who are more like fintech-brained than crypto-brained. Mesh— BAM obviously has both, but I think it's really exciting that like it's an actual beachhead for just really strong talent to come work in crypto without needing to necessarily be like weird crypto people in the way that like we are. I'm really excited about that. And then, you know, I think obviously the issuers are sort of like an insane business model, like Tether. Is up there with ByteDance and Binance and others as one of the greatest businesses, maybe the greatest created in the last 10, 20 years. I think they're great businesses. I think they're really tough to compete with. I think that there could be some incremental opportunity for competition at that layer, but it's interesting. Currently, they soak up— the issuers soak up so much of the economics that It does kind of create this gap where you have folks like Mation Bridge and others working, you know, closer to the consumer basically. And then you have the issuers soaking up all of the economics around yield on the collateral and that kind of thing. And it does create kind of a gap in the middle of the market. And I think it'll be interesting to see how that gets filled.

That should change though, right? Like, you know, if Circle or Tether is taking the 5%, like there's, there's no— I think these fee agreements are already starting to change. I would guess that the You know, and like, what is the VanEck kid? Agora. Agora. Thank you. Thank you. Yeah. Like Agora making it possible to kind of like launch your own stablecoin. Like, you got to imagine these fee agreements start changing.

Yeah.

I mean, you know, when you have sort of like one of the greatest businesses, business models at least of all time created, like it incents a lot of— incentivizes a lot of competition. You know, I think like the law of financial gravity is, is that if you have folks making that much money, uh, with those margins, like, you're gonna see a lot of competition. And, and like, I do think there are a lot of folks trying to chip away at it. Um, at the same time, like, stablecoins have really strong network effects, uh, and the regulatory environment is shifting pretty quickly, and the issuers, uh, have a lot more resources, a lot more liquidity, etc. Um, you know, if you look back on it, probably like the nearest challenger to the Circle Tether duopoly historically was Binance's BUSD stablecoin. Obviously that ran into regulatory challenges, but I mean, there's a lot of people who aren't even crypto users. They're just Binance users. There's this insane stat. Yeah, it's a few years old now, but at the time that I saw it, it was like, I think over half of Binance's user base never exports any asset ever. They're not even like a crypto user. They're just a Binance user.

And beyond that, Binance is their bank account.

It's not like they have a bank account funneling into Binance.

It's Binance is the bank account.

And obviously insane business. And they, you know, themselves tried to bootstrap a stablecoin on the back of their perpetuals business and their entire customer base and everything. And, uh, you know, even for them it was a real fight. Like, it, it was sort of starting to get going, but it was not easy. It took a lot of capital investment, a lot of incentives. And so I agree with you that, you know, they sh— like, the issuers should face some competition, but at the same time, uh, it's not easy. You know, there's sort of real, real network effects and, uh, and and economies of scale at play here.

So this episode is brought to you by zkSync. In 2024, zkSync took a step toward a multi-chain future by transforming from a single L2 into an ever-expanding network of zkChains, the Elastic Network. To onboard the whole world into crypto, many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose zkSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy-first design. Join over 20 chains, including Abstract, Sophon, and Cronos in the Elastic Network today. Behind zkSync is the zkStack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zkSync.io/empire. Thanks to zkSync for making today's episode possible.

Bam, what do you think? So today it leaked out that Fidelity is launching a stablecoin and like, you got to imagine this is just the first of like 100 announcements that we'll see this year. Like every bank is going to launch one, every brokerage will launch one. You know, I would bet most of my money that Robinhood launches one. Monzo, Revolut will launch one. And I'd even say that I would guess the Facebooks of the world come back into this. Yeah. Start launching them too. So what, like, what do you think this will look like? Will they all have their own? Will it be FUSD and Bank of America USD and, you know, Fidelity USD and Facebook USD, uh, USDC, or will, will they do partnerships with USDC and just get a bigger rev share? Will they launch their own? Will they launch these consortiums? Like, I think Anchorage, Paxos, Robinhood Galaxy came together to do one. Uh, well, what, what's this? What is the world going to look like here?

Yeah. So, uh, you're going to see a lot of fragmentation. Uh, I, I'm personally a big fan of, uh, Bank of America because BAUSD is my initial USD. Jokes aside, uh, I. Think there would be different type of stablecoins for different type of use cases in different regions. So we might have non-US dollar USD or non-US dollar stablecoins that can be used for different regions for different use cases. We will have payment type like PiUSD or RippleUSD that they would work on or be more focused on the payment use case, whether it's B2B or consumer type of payment. And then you will have this general list, like Tether Circle as well, will be around as well. But the bottom line is it would be fragmented. And I think, again, if you want to offer a unified experience, something like Mesh can add more value if there are more fragmentation. So overall, the way I see it, the future is it would be all abstracted from user's perspective. You look at your account on Coinbase, you have US dollar and part of it could be USDC, part of it could be PiUSD or whatever. But from user perspective, they really don't care like what type of stablecoin behind the scene is getting used. They want cheaper, better experience, more efficient experience, things in that nature. So it's up to the platforms to decide what to use to offer that optimum user experience to their consumer and end users.

So I know it's on them to decide, but what do you think it will look like? Like, let's say, like, if you're in Fidelity's shoes, do they do it with Agora or like an mZero, or do they partner with USDC and try to take more of the revenue? Would you do it with Tether? Would you just launch all, like, I don't know.

Yeah.

How would you do it if you were in their shoes?

I don't think they will partner with Circle and Tether. They will use M0 and Agora to do that because they need that white label service to offer like, this is fidelity stablecoin versus USDC and USDT. They have a horse in the game. They want to kind of be more focused on their brand versus just diversifying on that end.

So, so we'll have hundreds of these stablecoins, right? And they're all called—

yeah, now we have states like state of Wyoming wants to issue their own stablecoin. We will have countries. Issuing their stablecoin and we have banks and brokerages, as you mentioned.

So, um, it would, from user experience, I'm, it's, we are going through like a hell period before we, yeah, it's funny, even doing, I'm sure Charlie, I'm sure you guys see this all the time, like on the, uh, just the, on the angel investment side, like it used to be, oh, just send me a wire. Then it became send me a wire, send me Tether. And became send me a wire, send me Tether, send me USDC. That now it's like, all right, we accept USDC on Base, Ethereum, and Solana. We accept Tether here. We accept PYUSD as well. So yeah, it is this little period of hell before it all gets smoothed out.

Yeah, I'm very hopeful that we will sort of make everything work. I mean, if you rip back the hood on like the traditional financial system, there are some incredibly great and valuable business built, businesses built basically like turning just a really bad, really messy situation into something that's able to be consumed by APIs and look seamless to consumers. I think the same thing is going to happen in crypto, but sort of like across the stack, how many assets are issued, how many chains they exist on, how many wallets different consumers are using, or exchanges and funding methods and blah, blah, blah. I do think we're kind of in for it, uh, you know, for the next year or two.

Yeah. Who will be the winners of this? Uh, maybe Charlie, I throw this one to you and then Bam, I'm curious to hear what you think too.

Uh, stablecoins or fragmentation generally?

Well, let's say you get Fidelity Coin and Facebook Coin and Robinhood Coin and all these things. Um, are the, are one of them going to win and they have the distribution, so they'll just overtake USDC and USDT? Will USDC and USDT be the winners? Who wins in this whole game?

I don't know. If I had to pick an existing player that I think was most likely to emerge as a big winner or at the top of a power law, it would be Tether because I think the last mile distribution that they have is subtly incredibly difficult to compete with. Basically, once you reach a certain level of liquidity and distribution, you just sort of organically start to spring up the gas station cash-in, cash-out, or hoala networks or whatever. And I think Tether is a lot farther along that curve globally than any of the other competitors are. And I sort of have an inclination that I think they're probably likely to retain that position, at least for a while. I think when you get into sort of like US-specific stuff and especially more regulated use cases like collateral for derivatives, payments internal to the United States and this kind of thing, or less global, it's a lot less clear. I think the banks have a somewhat credible story. The fintechs probably have a slightly better one, or at least have another credible story. I think it'll be really interesting to see how USDC responds to this because that's sort of their current core lane or whatever, like a bit more regulated, a bit more US-centric. So I don't know, I, I don't, I don't know who will win there. Um, but I expect Tether to continue to be an important, important player, especially globally, I'd guess today.

Bam, what do you think?

Uh, I agree with Charlie, uh, but I've seen, uh, a lot of news about like compliance part of Tether, like what happened in EU, what's happening in US. So they need to fix that compliance part, um, uh, to kind of retain their global leadership. I can pick a winner on the payment side. I think specifically for the payment use case, I'm very bullish on PiUSD and also emerging one, which is RippleUSD, because these Ripple and PayPal, they're payment companies. They already have the distribution. PayPal has 400 million users. So they can basically become the payment currency of the world. So if you want to pay or global payment, if you want to pay with a stablecoin, you will get basically mandated or forced to use these stablecoins because they have the distribution with the banks, with the merchants globally, and they can be the leader on that end.

What's the reason for Ripple USD? I feel like most folks would take the— yeah, most folks would be surprised by that answer.

Yeah, at some point, like based on the on-chain data, Ripple was a big chunk of what USDC was kind of getting used. So now they started their own stablecoin. Do a lot of B2B payment.

So most of the USDC was getting used in what, the Ripple network?

No, Ripple as a company was using a stablecoin for bank-to-bank transfer, right? And then they were using USDC and then they started, and this is like maybe 5 years ago, not today market, but they started issuing their own stablecoin. Ripple has a lot of volume. That they need to move instantly globally. And they will be using, so far they were using XRP, which was not the best use case for XRP because it's volatile in terms of the price. But now they're going to use Ripple USD on top of XRP Ledger or other L2s. As a result of that, they get high transaction volume, maybe low number of transactions, but billions of dollars in transaction volume. That's how they can basically become. And most of these use cases are payment use case, but mostly B2B. PayPal is B2C payment. If someone wants to buy a pair of shoes or a t-shirt online, they will pay with crypto, and then behind the scene, everything will come be converted to stablecoin.

You know, Jason, if I had told you 6 years ago that most last-mile USDT usage would be on Tron, you probably would have said that would be surprising too. But sometimes these outcomes surprise us.

It's true. And it doesn't go away. Still, it still happens.

Yeah.

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There's two like paths of stablecoin adoption. There's like, oh, everyone in the world is going to like use stablecoins at the gas station and like at Macy's and like at the grocery store and things like that. It's like instead of credit cards, maybe we move to stablecoins or something like that. That one's a little tougher for me to see. But then there's the corporate adoption, which is all corporates just basically stablecoin to stablecoin. What gets you guys more excited right now?

I mean, when you say, you know, you're using credit cards, like, I feel like a very privileged a US person, like, I've got a credit card, it like works pretty well.

That's great. Most people in the world do not get their credit card.

Yeah, so I think that, that's one factor. And then, you know, I think the more interesting question is like, what are people settling their bills in on the— like, what are consumers selling their credit card bill in? Um, probably, um, I don't necessarily— I don't expect credit cards to go away in the US, definitely, but, um, I think there is like a pretty plausible case that you might at the end of the month, instead of like auto ACHing, uh, settle up with your bank in a stablecoin. I think that there's a plausible case the banks will do a lot more settlement, especially cross-border, in stablecoins. I think there's like a pretty plausible case that when you go to Europe, uh, and you pay for something, the underlying FX route that's taken, um, you know, is over stablecoin rails or, or, uh, markets. Um, And so I don't know, I sort of view it as both a commercial and a consumer innovation, basically.

Agreed. I think the prominent use cases for stablecoins are cross-border as of today. But again, we are like all privileged living in the US, our credit card works everywhere. Some people don't have bank account, as you mentioned, they have Binance as their bank account. Some people don't have credit cards. And they were just using basically the debit card if they have access to it. So there are hyperinflation areas or regions like Turkey, like Colombia, like Venezuela that they have to have stablecoins because if they hold their assets in fiat currency or their fiat currency, it would lose its value 40%, 50% a month. So they have to get paid in stablecoins and they would pick merchants that they accept stablecoins as a result of that because they don't want to go and do the FX every single time. So as a result of that, merchants, because of consumer behavior has changed, they are offering stablecoin in those regions. The other piece is like if you're seeing in the news like Ferrari or Lamborghini accepts like Bitcoin or crypto. So luxury goods has a lot of requests for crypto payments. So we are going to have one big announcement soon on that end. And then there would be some global businesses like Starlink and others that they want to accept a stablecoin. I'm sure at some point companies like Netflix or Amazon that they have a global presence, they need to leverage a stablecoin to be able to collect fees and collect all the payments from their customers. And then companies like Wise, cross-border payments, they would definitely use a stablecoin. That's like a killer app for them instead of just going the FX route or like managing parallel books in different regions. It's so 1990s. We have to change that. The way I look at it in general perspective, which could be an interesting angle for your audience, is what happened in cloud. Will happen in stablecoin. So cloud computing, like when it came, it was just mostly tech startups were using it. Uh, there was like a bit like if you go and say to bank that you have to host your data on a cloud, you say like never ever ever never. Same thing kind of happening in the stablecoin. Soon we will see all these banks, um, uh, they were like using regulation as an excuse, but mostly was like the reason that we are comfortable with what we have, why should we change it? But the competition is coming after them, so they have to adopt new technologies like a stablecoin. And good news is blockchain is free, it's global, you can use it day one. There are a lot of tools built around it. So it's easy to leverage a stablecoin compared to building it in-house. So the same analogy that worked for cloud will be used for stablecoin and blockchain technology.

I like that cloud analogy because there's some crazy stats that I don't have on the top of my head. It's like only 20% of companies right now have moved their entire stack onto the cloud. They're still like very like on-prem, like a lot of the Fortune 500s are very like on-prem still and not in the cloud, but still the size of, you know, AWS, Alibaba Cloud, you know, Azure, Google Cloud are still obviously absolutely massive. And I think the same thing is with, with these stablecoin businesses, like you can create so many unicorns or decacorns or billion-dollar top line, however you want to measure it, even if the market share or like the penetration is only like 5-10% because the TAM of money is so, so, so large.

I call it TerraCorn.

TerraCorn. There you go. Mesh.

I'm going to trademark it. But yeah, so I totally agree with you. So in terms of like what you think about the cloud side for a second. A company like Bank of America might still have everything on-prem, but they're using services that they are running on cloud. They might use Salesforce or Slack and others, right? 10 years ago, that was a big no-no. Like they would go to all these software and service providers and ask them to build something for them to keep it on-prem. That has changed. Same thing will happen for blockchain. You will, they might not build their own chain, initially, but they will use a lot of blockchain-based services.

Charlie, what chain is all this going to happen on?

That's a tough one.

It's a tough one. I'm currently in a multi-chain headspace, I think.

Does that flip like every 6 months, or is that like your, your thesis?

I wouldn't say that it's a thesis necessarily. It's more an observation that I think talent is surprised, like really diffuse at this point. There's a lot of ecosystems at this point with really high quality teams building the core infrastructure and really high quality teams building companies and apps and infrastructure on top. And it just doesn't feel like they're going to go away, basically. I mean, if you go talk to the Ethereum people, it's pretty clear that they're very committed to building their thing. And I think have a lot of interesting avenues forward in that. Similarly, if you go to a Solana conference, I just don't think that those people are going to stop working on the thing, basically. And I think they're really high quality. Similarly, there's a lot of pockets of talent out there at this point, basically. And in the very long term, maybe this collapses, but at least for the next few years, it just seems pretty clear to me that these people are all going to keep working on their stuff. And I expect a lot of them to be successful.

Yeah, I totally agree with Charlie. I think if you go to Breakpoint or ETHCC, you see like a lot of win or die mentality. So they are like dying on that hill to make sure that it's going to be successful. But from my perspective, I'm old enough to see what happened in Web2 is kind of happening in Web3 as well. So the analogy I use on the Web2 side is programming language, right? Like there was always like C# and Java. And then like, there were a lot of like front-end versus back-end, different type of stacks. Those type of fight happens and it's good for the industry because as a result of that, we will see more quality products coming to the market. That said, it will be all abstracted from a user perspective and people who are building on top of application layers, especially with the AI coming in. These are all tools and these are like basically shovels and, and things that you use to build things, and it really doesn't matter for the person who is living in that house that you're building. They just care that it is built. Um, so, uh, and I agree that it would be— there wouldn't be one winner-take-all. Um, it would be a multiple multi-chain, uh, universe.

Okay, let's say there's 3 reasons why an institution like a bank or brokerage or someone hasn't adopted stablecoins. Bucket 1 is The tech is not good enough. Bucket 2 is the policy and bucket 3 is like the brand of crypto. How would you, so the tech, the policy and the regulations, and then the crypto is like kind of crappy brand. How would you bucket those?

Um, I think policy is number 1. And, um, when, so the way I answer it in the, from the Mesh perspective is we are building rails. And there are a lot of companies and people who are willing to use these rails. If you're a risk-averse person, you say like, this is not safe for me yet to be able to use it. So regulations acts as a guardrail. So the moment they become available, we can implement them. It makes it safer for more risk-averse institutional adoption. And they, they will come in as well and use your rails. And same for crypto. I think we are past the point that crypto is a bad brand. It was like maybe 5 years ago you could say this, but stablecoin kind of changed everything. And luckily the new admin and new regulation coming in changes that. So I put that as the third bucket as I don't think it's relevant anymore. But second piece is the technology, right? So if you are a bank and I don't know, in Midwest and you're a union bank, you have to compete with Coinbase, with Mesh, with all these big tech companies to hire Web3 engineers. So that would like, it's a limited pool of resources for people who know the technology and who can build for you. That will change, of course, in the next 5 to 10 years, but initially it would be a tough competition that banks need or financial institutions. Need to win.

Charlie, maybe as we think about wrapping up, I'd be curious just to get a bigger macro view from you. How are you thinking about 2025? I mean, the market's been very weird. I feel like the 4-year cycle is kind of breaking or it's very much intact, but it's like this lag in the middle, in the middle of a bull market. Like, I think everyone's just kind of like, what's going on in this market? Not just in crypto, by the way. Like, a lot of uncertainty in the broader global, like, equities markets too, just Curious how you're thinking about 2025.

Yeah, I mean, I think in general, we're pretty fortunate not to have to think on super short timeframes. Like a lot of the stuff that we talk about internally is how much do we feel like it's getting built? What's like the quality of talent that we feel like we're encountering in crypto or that's coming into it? You know, how excited is like the next generation of super smart college students and kids and such feeling about crypto? And on those dimensions, I think we're feeling pretty good. I think there's a lot of work to do. I think we have some sort of plausible paths to making crypto have the kind of substantive impact on the world that a lot of us have wanted to see it have for the last decade or longer. I think the quality of talent and of founders in crypto continues to go up. The bar, from our perspective, feels like it just keeps getting higher each year. I think that's actually really exciting, honestly. With Bam, I think is in sort of what I would consider to be the new class of founders where it might be a bit more sort of commercial and I don't know, just has pretty high clarity on wanting to build a large business and what the path there might look like. So I don't know, on all those dimensions we're super excited and there are some specific areas I think alongside stablecoins. Personally, like, the real-world asset stuff that's happening I think is super interesting. I think people probably underrate the quality of DeFi infrastructure that we've been able to build, meaning like, I think the actual markets and DEXs and lending markets and all that kind of thing that we've been able to build are like actually surprisingly good. And I'm like, I'm personally pretty excited about if we could get a lot more high-quality assets onto those rails. I think that would be like really interesting and open the aperture a lot of the kinds of activities that you can see happening on-chain. Put another way, if you have super economically productive equities or debt or whatever that are being actively traded and repackaged on-chain, I think the accessible space of interesting products is just a lot larger than it is for meme coins, which I don't look down on or anything. It's just they're simpler assets in that sense. So I'm pretty excited about that. I feel like that could be— I feel like that could be another avenue where, where you see a lot of, a lot of excitement and entrepreneurial activity and stuff in the next year or two.

Bam, do you think the— how do you think about Charlie's statement that like the type of crypto founder is changing? Because you actually strike— I mean, it's clear you have a lot of like API experience and fintech experience and stuff like that. But I mean, you do strike me as like pretty crypto native. And historically, I have seen most founders who come from outside of crypto try to build in crypto. If they, if they don't get crypto native pretty quickly, they do not make it. And I wonder if you think that is going to continue or change.

It is changing. Not only changes for founders, it's just crypto would be an underlying, or blockchain would be an underlying technology that a lot of these companies are able to use that in the application layer. They get all the benefit of the crypto and none of the complexity. So that is changing. And the reason that a profile like me is more interesting for a person like Charlie, or in general, I'm using it as a theme or as an example for a trend, is because a lot of these Web2 players are moving to do things on-chain. So the opportunity is getting bigger and bigger for founders like me to be able to build and bridge the gap between Web2 and Web3. So my suggestion, and a humble suggestion for other founders, is there is no better time to build for crypto and a stablecoin and payment use case. If you have an idea, go and build it. Don't feel like it's too late. You're just the beginning of this journey. And in the next 10 to 20 years, it's going to be quite interesting for everyone who is building in that realm. Might be and might not be as interesting as AI, but also it's much, much simpler than AI in terms of like you can build real-world use cases with a couple of tools. You don't have to have the best experience or knowledge to be able to do that. So I encourage founders, new founders to start building in this space. Nice.

Pam, Charlie, appreciate the time, guys.

Thank you. Thank you.

Thank you, sir.