TradFi Goes Onchain: Who's Building the New Financial System?

Andrei Yurkevich, Protofire · 00:00

Hi everyone, thanks for joining us, whenever you are, in Asia, in the United States. I'm in California, 6 am. Happy to be here. And today we have our fourth episode of Protocol Roundtable. Our topic today is TradFi Goes Onchain: Who Is Building a New Financial System? And we have an awesome line of speakers. We have Brian from Polygon, we have Gagan from Circle, we have Luis from Protofire and Ilia from ADI Foundation. Let us run a round of intros. Now, please, guys, tell about yourself, why you are in this panel and what makes you excited this day about TradFi and Web3. Let's start with you, Brian.

Brian Butler, Polygon Labs · 00:57

All right, happy to. Thanks for the invitation to be here. Really excited to chat with all of you. So, real quick, yes, my name is Brian Butler. I lead partnerships at Polygon Labs. Formerly I worked at Visa on the crypto team, where I led stablecoin settlement. Stablecoin settlement enables banks to pay Visa [in] stablecoins or get paid by Visa [in] stablecoins. They just announced that that's now at $20 billion in annualized volume. So it's grown rapidly. I was there when [it] was at $50 million. So, definitely, product managed it there.

And then from my vantage point, what's been exciting me is, so given I'm on the partnership side, I'm obviously seeing these companies that are in the trad space trying to now turn on stablecoin rails. And I'm one person at one company, and I would say I see about a hundred million dollars every single week that either wants to be on and off ramped using stablecoins from these traditional companies. And if you extrapolate that out across all the other people that are probably doing this in this space, we're seeing massive growth, right? And so we're really in this era of introducing ourselves, I guess, to all these larger banks, larger money movers, and then really starting to turn on these stablecoin rails.

Andrei Yurkevich, Protofire · 02:00

Awesome, thanks, Brian. Gagan.

Gagan Mac, Circle · 02:03

Hey everyone. Very nice to meet you, and thank you for having me here. My name is Gagan Mac. I work at Circle. I lead the product and engineering team for Arc. Very excited about launching Arc. We launched the public mainnet a couple of days ago. I've been in Circle for four years. The promise of programmable money brought me to Circle just over four years ago. And before that I have worked as an engineer and product manager, led teams, built products at Facebook, Amazon, Twilio, a variety of places.

Andrei Yurkevich, Protofire · 02:37

Thanks, Gagan. Ilia?

Ilia Shirobokov, ADI Foundation · 02:41

Hey everyone, my name is Ilia. I'm head of blockchain at ADI. I lead our chain itself, efforts around [it]. ADI itself is a institutional layer two chain with a framework for building enterprise chains on top of it. And well, I think the exciting part for me, because I work in crypto for quite a long time, I think eight or nine years already, in the infrastructure side of this. And well, I believe that all TradFi coming to chain, it's actually finally the way to bring a lot of end clients to chain, to finally see that, well, at one day my mother is going to use some products which settle onchain. And that's actually one of the reasons [why] ADI was originally created, to bring these things. So I think something like that.

Andrei Yurkevich, Protofire · 03:31

Thank you, Ilia. Luis?

Luis Medeiros, Protofire · 03:34

So hi, my name is Luis Medeiros, I'm CTO at Protofire. Thank you for having me here. Nice to meet you all. So for the last four or five years I've been working with different features and infrastructure pieces that we, Protofire, helped chains and protocols to build, both as common goods and also to create differentiation for them. And for the last couple of years, I'm also CEO of Arenas, that is an initiative, or fintech, that Protofire started with the support of a foundation to connect real-world assets to be able to borrow from onchain liquidity. And I'm very excited because of this work that we're doing, trying to offer what we already have in DeFi, the [rates] we have in DeFi, for real businesses, mainly small business in different geographies. That's what excited me most.

Andrei Yurkevich, Protofire · 04:46

Awesome. All right, guys, so we were attending conferences for the last seven, eight years, and every conference had a panel: TradFi goes onchain. In the meantime, even today, we understand that tokenization volume is just a rounding error in comparison to bond markets, and we know that the majority of projects in TradFi are two developers and press release. So what is really happening this year, in 2026? Now, is anything happening? Brian already gave his sneak peek a little bit, but what do you really see? Anything is happening? And if it is, what is driving? Is it technology, is it regulation, is it fear being the last one on the market? Or is just our sales skills that drive the [unclear] and the industry forward? So yeah, Luis, let's start with you.

Luis Medeiros, Protofire · 05:51

Thank you. So yeah, I see several things happening. It's still a thin layer of TradFi, right? It's not huge adoption, but we see that, for everything, TradFi players see that we already have a legal framework that allows them to go there and to experiment, at least. We see things happening mainly on stablecoin rails for cross-border, and also tokenization of funds and assets distribution onchain, mainly. So finding this new way of distributing assets and investment opportunities, or loans, onchain, and that DeFi allows it to go to different geographies without borders. So those things I see happening, but again, still initial adoption, right?

Andrei Yurkevich, Protofire · 07:01

Brian, what's your take?

Brian Butler, Polygon Labs · 07:05

Okay. So I guess let's start with the stat. I believe B2B stablecoin volume grew 700% just this past year. So where we're really seeing the adoption is coming to cross-border use cases, because in a sense cross-border payments is really broken, right? You're trying to connect local markets using SWIFT, which can take days for settlements. And so I would say right now stablecoins are really solving a latency issue. I wouldn't say we're getting to the pricing part just quite yet. And I would say the reason we're really not at that pricing, lowering pricing, I mean, in instances we are, because if you can solve for latency, that leads to better prefunding, which leads to better economics for these cross-border money movers.

But we'll probably get to pricing once we start seeing domestic payments as well being in stablecoins. What I really mean by that is people being willing to hold stablecoins, which is why we need things like the CLARITY Act to pass, because we're still not at this stage where people are receiving the stablecoins and then just holding it. And that's really where you see the beauty of the payment system in this global RTP network. We're taking these stablecoins and still off-ramping them into local fiat, which is a lot of what Polygon does today, because again, these different businesses or merchants still want to get paid in their local fiat in order to perform all the transactions they still need to make.

But we're definitely seeing adoption. I mean, you see Visa Direct announced that they're doing stablecoin payouts, stablecoin prefunding, that's a cross-border product mainly. Mastercard acquired BVNK for $1.7 billion. Thunes integrated stablecoin payouts. So the global money movers are certainly moving on this, and that's the first solution right now. And then I think we get to the domestic use cases once we get comfortable holding stablecoins.

Andrei Yurkevich, Protofire · 08:41

Awesome. Thanks, Brian. Ilia.

Ilia Shirobokov, ADI Foundation · 08:45

Yeah, I think that's the first thing for sure: it's moving more slow than we would like to, because we are working with quite conservative entities actually, and that's fine. But we see more and more experiments here. We see more and more banks and other financial entities comes onchain. And I think what's interesting is today they try to just repeat the first mover steps. They're not trying to adopt today for their particular use case. They try to repeat what already exists, and that's, well, that's totally reasonable. I would do exactly the same on their place. But what it means, it means that still today the step itself to onchain is a big experiment for all financial entities, for institutionals.

And that's why I believe after this first step we will start to see actual adaptation of the technology. That's why we see originally, firstly, stablecoins and not tokenized deposits, despite the tokenized deposits [being] a bit more natural thing for banks, for example. But still I would use stablecoins firstly as well, because stablecoins, okay, I've seen the story, it works, nice, it's safe. And so yeah, I think that today we see this experiment with the onchain itself, and after that I would expect to see adaptation for the particular use cases.

Andrei Yurkevich, Protofire · 10:09

Awesome. Thanks, Ilia. Gagan, please close the round.

Gagan Mac, Circle · 10:13

Yeah. I think beyond payments, agree with what everyone is saying, that the experiments are accelerating. There are a lot of signals in the market. Like when you think about 2026, right? Just last week, or I think this couple of days ago, we had the news that OpenZeppelin got acquired by S&P Global. And that is, I think that news went under the radar, but that's pretty big news. And earlier in the year, ICE invested in Polymarket.

So payments are definitely the beachhead. I do think it's going to get very interesting when tokenized deposits grow. Every week we see that the tokenized stocks are growing in volume, transaction volume. So there is a lot of signal that the interest from TradFi companies is growing, the number of experiments are growing. What I'm watching out for is trading volume, more number of assets available to users around the world, more TradFi companies growing their volume and building smart contracts. And we have signals that a lot of the companies are starting to participate. Like all our validators: we launched Arc this week, all the validators are institutional participants. So it's very exciting time right now.

Ilia Shirobokov, ADI Foundation · 11:10

Yeah.

Andrei Yurkevich, Protofire · 11:31

Awesome. All right, my next question is for Ilia, and actually for everyone, but let's start with Ilia. When we speak about a bank or an asset manager saying that we want to go onchain, what does it actually mean by default? Is it settlement, is it distribution, is it collateral, is it something else? So what is the default use case for the market?

Ilia Shirobokov, ADI Foundation · 11:56

Well, I can say that there's the default use case, but there are still the most common use cases. Common use case for today would be the settlement first, because the settlement is, at least, it's the most understandable use case. Yes, that's the best way to say this. The most understandable way is the settlement, and the settlement without this T+2, T+1 things, the settlement in the same day, without some kind of only in business days and all that stuff, the settlement with both legs at the same time in atomic transaction. I would say this is the most usable because it's the most understandable.

In general, I believe that's, I think I will repeat myself multiple times today, that's one of the big issue for today, onboarding. The blockchain ecosystem today is still too complex to understand. And that's why the first use cases are the most understandable use cases.

Andrei Yurkevich, Protofire · 12:59

Yeah, thank you. Gagan, what's your take?

Gagan Mac, Circle · 13:04

Can you repeat the question again? I was thinking about Ilia's answer, and I couldn't agree more about complexity, so I lost [the] question.

Andrei Yurkevich, Protofire · 13:12

Yeah, yeah, yeah. The question is, what is the default case when bank or asset manager says we go onchain? What does it mean by default?

Gagan Mac, Circle · 13:22

What does it mean by default? To me it's like there is settlement that is onchain. The way I think about it is, when you create a tokenized asset, or when you're, quote unquote, going onchain, your product as an asset issuer is available on the internet in the internet native format to everyone in the world. Now, of course, there is a legal side to it, where there are regulations on who is an accredited investor, or some sort of barrier to accessing assets. But if you just set that aside for a second, the core property of an asset, a tokenized asset, is that it is available to anyone who has a wallet and can transact on the internet.

And so when a TradFi company or when an institution says, okay, we are going onchain, or we are launching our asset on the blockchain, to me the first benefit, or the first thing I look for, is, okay, does it actually enable, number one, broad-based access? And number two, when the asset is onchain, there are a variety of ways to trade that asset. You can trade in spot, perps, which is, I guess, not very different from what you do in options, and you can do leverage trading even in off-chain assets. But I think access is one of the huge things that is different.

And then the way the asset gets treated on the blockchain, it makes it composable. So there are different lending and borrowing opportunities that become available with that asset, and developers then innovate on it, innovate with new protocols. So I think when an institution says that an asset is onchain, to me it's mainly that the tokenized deposits are available and it's composable for developers to actually build new protocols and use it in normal ways.

Andrei Yurkevich, Protofire · 15:13

Okay, yeah. Luis, what's your take?

Luis Medeiros, Protofire · 15:18

So the first thing that, of course, banks were going for was custody, right? People wanted the exposure to digital assets, but it was kind of isolated use case. And now we see something that is really integrated to DeFi, right? So, at least to give you an example, here in Brazil, cross-border payment took over the market using stablecoins, because it made it very, very cheap. At least, again, Brian was saying that maybe in the US it's not that cheaper, but in Brazil it made it very, very cheap. So all the banks had to go for it, because the neighbors doing that. And from there, once you have this first feature, DeFi feature, adopted, you can offer other things, because people are already integrated and you already had to make it compliant.

So the tokenizing and distributing it onchain, I think it was the second thing that people tried to offer. But it is complex to merge the risk management of what we are used to do onchain and what we need to do off-chain, right? We, in DeFi, we are used to automatic liquidation. We know the value of the asset. We don't have to ask, to go after anyone to liquidate something. So how do we merge it? So it got slower, but I think it's now happening, at least in [unclear], no big volumes, right? Things that are low risk. But I think those three things are what you usually see banks and TradFi going for initially.

Andrei Yurkevich, Protofire · 17:16

Brian, any opinions to piggyback?

Brian Butler, Polygon Labs · 17:19

Yeah, yeah, yeah. Well, one thing I wanted to point out is, Luis, you're in Brazil, and I believe the reason it's certainly cheaper to be using stablecoins right now in Brazil is because of the fact that it's evading a tax. Specifically, I think it's called the IOF tax. When somebody in Brazil is sending money outside of Brazil, like a cross-border payment, they usually have to pay this US dollar tax on it, like a cross-border tax, which I think ranges from like 0.4 to 6%. And if you use stablecoins right now, just due to the regulation there, you evade that tax. Not saying we should do tax evasion, but I'm just saying I think that's the main reason. Brazil's a very specific market. And the reason I bring that up is Polygon in itself, we do a lot of cross-border payments with our on and off ramping. And Brazil is certainly a market we're going local in right now, because there's such advantages to doing so, such as what I just talked about.

But I guess, to answer your question specifically, Andrei, what are the default use cases? So specifically, I would say prefunding and payouts again are these cross-border ones. And just to explain what prefunding is: for everyone that sends global payments or cross-border payments, effectively there is capital parked around the world that is ready to deploy once your payment has been initiated, right? So if I'm sending money from the United States to India, there are these companies, such as Thunes, Airwallex, Visa, that are parking millions of dollars in those markets. That way a payment looks instantaneous when you send it, right? So if I initiate $100 to my grandma, let's just say back in Peru, then it's going to look instantaneous. But it actually required intensive capital being parked across the globe in order to do so, which is idle and not efficient.

And so we're seeing a lot of these companies, the default use case coming in is like, hey, I want to send capital globally instantaneously, right? And that leads to a better prefunding model, which leads to more efficiencies. And capitalism wins out in that situation, because at the end of the day, if your competitor has better rates than you, you have to fix your problem, right? You have to fix your solution. And so that's really where we're seeing the industry being pushed, similar to how domestically Cash App and Venmo came around and they effectively made these peer-to-peer transfers free. And so the banks got together and said, we've got to create Zelle, right? So very similar types of use cases. And that's kind of why, in some ways, capitalism is always going to just drive innovation, because you have to get better rates or a better experience.

Andrei Yurkevich, Protofire · 19:31

Awesome. Okay, this one for Gagan. And, well, this week there was big hopes, expectations, everybody was holding their fingers and refreshing the pages, voting for CLARITY Act, right? It didn't happen.

Gagan Mac, Circle · 19:43

Yeah.

Andrei Yurkevich, Protofire · 19:52

So...

Brian Butler, Polygon Labs · 19:53

Sorry, just real quick. I was clapping because I thought you were talking about Arc launching, and I was like, oh, yeah, yeah, yeah, yeah. But yeah, congrats on that as well, by the way.

Gagan Mac, Circle · 19:57

Ha ha.

Andrei Yurkevich, Protofire · 19:58

Yeah, that will be my next one. But yeah, right now, no congratulations. Unfortunately, our expectations for the rest of the year now vanished. But what does it mean, right? SEC and CFTC will be regulating the industry in the United States. And what use cases are safe to move ahead under these agencies' regulation?

Gagan Mac, Circle · 20:02

That's right. Yeah, yeah.

Andrei Yurkevich, Protofire · 20:28

And what do you think are the use cases that have to be parked and wait until CLARITY clears the path?

Gagan Mac, Circle · 20:35

Very frankly, Andrei, I pay very little attention to the specific details in the regulation. There are people much smarter than me who are focused on that kind of stuff, and there is a very good reason for it. I'm a firm believer in innovating and building value for people. And the regulators have a job to do. They are balancing a lot of different aspects. There are a lot of different players. There's a lot of deliberation that happens. And sometimes the outcome that happens in these deliberations is not the one that an innovative industry like ours wants.

And it takes many attempts to get a legislation passed at times. And we understand it, because it took many years for GENIUS to get passed, for stablecoins to be recognized as payment instruments. And so I have a lot of empathy for everyone who's trying. And the only thing I think about is, how can we keep building enough value that we just become undeniable? And there are precedents in many other industries, whether it is Uber and taxis or Airbnb and hotel legislation, where if there is enough value in the products and people love it, then the regulations evolve. We are seeing the same thing happen in AI as well. So I honestly do not think a lot about what might have been or what would have happened. I was not pinning a lot of hopes on it. To me, on a day-to-day basis, it's very focused on what is it that we can build that actually delivers good value.

Andrei Yurkevich, Protofire · 22:17

Okay, yeah. Anybody else have ideas and opinions about what use cases now will go forward right now and what will be parked? So what will be just too risky in the current regulatory framework to go ahead, just because of uncertainty, and which project will be waiting and which project will be moving forward. Luis, what do you think?

Luis Medeiros, Protofire · 22:50

Well, just first, to mention one thing about the CLARITY Act, right? We didn't realize that before, but it was easier to get things approved when the only thing that we had to fight was the regulator and the government looking at what we were doing. But now, because we have significant volume and we are actually competing with TradFi, we have new people looking at us. So the big part of the reason of not getting approved was actually pressure from banks, right? So it was not just the regulator looking at us. So it's a good sign that we now have relevance and we are actually playing, or are getting a part of what used it to be a bank spread, or their ground.

So what I think, at scale we will need to first go for things that we already have space to do, right? As a stablecoin payments and cross-border. We will still have to stay away from things that are assets that we want to classify as, like, stablecoins that pay yield, right? On taxes, or this kind of assets that it's still hard to classify. We still had to stay away from them, at least at scale. We can experiment, but in my opinion it's better to go for the things that we have some clarity on the regulation.

Andrei Yurkevich, Protofire · 24:53

Awesome. All right, Brian, my next question is for you. I attended another webinar, another panel earlier this week, and it was about AI and banking. And what surprised me, that several panelists told that there is a fast track for AI procurement right now, that it takes like 30 to 60 days to evaluate, close within 90, because in the AI world, if you wait for like 12 to 18 months for the regular procurement cycle, then you will be buying something completely different. Now, what about our industry? Do you see similar acceleration? Do you think it's necessary for us to have this acceleration? Or we're already mature? So how long does it take to close the procurement cycle today? And what is the gating factor? Is it technology, is it regulator, is it the internal bank committee? What do you see?

Brian Butler, Polygon Labs · 25:55

Yeah. My first thought was, I wish my sales cycle was sixty, ninety days. I'm talking to banks all the time and they have like a year to evaluate at least one little product, right, to go live with. So it takes some time, definitely. It's not as fast as AI, because you're basically asking these people who have built old ledgers since the thirties, forties and fifties to upgrade their systems, which is definitely scary, and it requires a lot of coordination. So it takes time. A lot of it's, I guess, quote unquote, farming relationships, I would say, which is, I've taught, all the expertise I have, if I can call myself an expert, is something I have to teach to every single individual partner constantly. Have multiple working sessions with them.

And I think where they're always getting stuck is definitely the compliance side of it. So it's like, how are we going to make sure we're not doing any terrorist type of transactions? Where's the sanction screening? Where's the OFAC screening, all those types of things? And thankfully things like TRM Labs is integrated specifically into Polygon. But this is really why, to the shameless plug of the Polygon Open Money Stack, this is really why we built it, in the sense of we want to get these traditional players onchain. When I was at Visa, it was very much an issue where people would say, hey, I want to settle in stablecoins. And then we would have to say, okay, here's this one company to go get wallets from. Here's this other company to go get ramps from. And here's your chain company too. It was just a massive vendor triage that they had to stitch together.

And so I joined Polygon because we've condensed that into one stack, again, the Open Money Stack, and that's, we offer wallets, ramps, cross-chain tools. We support thirty plus blockchains with our own ecosystem, Arc being one of them. We're not of this mindset that there won't be multiple chains. There is going to be multiple chains, because they all specialize in different types of verticals. So for us right now, that's how we're really trying to reduce that sales cycle, I would say, and get these companies live, is just saying, hey, we have it all within this one house. And I feel in some ways we're always a stepping stone for these companies, because I'm sure they want to all get the licensing internally themselves one day, because you want to get closer to the metal. But for now, we're happy to be that stepping stone. So yeah, there's my shameless plug.

Andrei Yurkevich, Protofire · 28:01

Okay. Ilia, what's your take on this question?

Ilia Shirobokov, ADI Foundation · 28:05

I feel Brian's pain so much here, because that's actually the thing: yes, this alignment between different entities, it is the hardest part, not the technology. Technology, well, we solved technology quite some time ago. And I believe that's actually the reason why today the whole moving of TradFi onchain becomes better in some way, because we have companies who now are able to manage this alignment. It's either companies who spent years and years in crypto to get to these people and say, okay, let's sit for the table and let's together solve this, or it's companies who were, well, originally born to this environment as part of this whole TradFi friendship group, let's say that.

And that's, again, that's actually, I already start talking about complexity. That's second part of the complexity. First part is the whole tech side still complex to use. The second part is alignment side. And it's hard to underestimate how complex it is to do this alignment with these entities today. And I believe that's, again, one of the things why personally I do quite a bunch of educational work with partnerships and with public communications, because I believe [unclear] part of this, because they still talk to people who do not fully understand what's going on onchain here, because we build very complex onchain system and we not trying hard to make it simpler for partners, for clients, for people.

Andrei Yurkevich, Protofire · 29:47

Okay, yeah, actually my next question is for Ilia as well. How do institutions actually arrive onchain? Do they pick... Yeah, so sorry. Yeah, Gagan, yeah.

Ilia Shirobokov, ADI Foundation · 29:57

Sorry.

Gagan Mac, Circle · 30:01

Yeah, I was just going to add one more thing. I think we often, when we think about, okay, what is this complexity? Why is it so complex for the procurement cycle to be so long for banks? And why is it so fast in AI, right? You have to think the value props and the business models, they matter so much here. There is a fear that if you're not using AI, then you are missing out on massive productivity gains, or you're missing out on strategies, that your intelligence is something which is now getting commoditized. You can do so much more now. That forcing function for crypto or for onchain technologies, what is that? It is actually disruptive to the business models that exist right now. So of course the procurement cycles are going to be long unless those business opportunities become extremely obvious. And where the business opportunities are extremely obvious, there the regulation is unclear, which goes back to your previous question as well, right?

So that is the reason why, if you focus on the TradFi companies, there is this inertia to go from an experiment stage to just overnight switching the whole system, or procurements being very fast. The way I think that happens is when there is a forcing function through an innovative company that shows the value props in action. The examples I think of are, for instance, Hyperliquid, a very small company building perps DEX that is in global news. Why is that? They must have built something, a product that is able to provide value that was not obvious earlier. And when they do that, now they are in the center of the conversation across many TradFi companies. And suddenly the incumbent industry wakes up to the novel possibilities.

So I think we need more breakout applications, more breakout use cases like that. Same with prediction markets and Polymarket. People are identifying, the TradFi industries are investing in that, they're identifying new opportunities. So the point I'm trying to make is, there are different ways TradFi...

Gagan Mac, Circle · 32:24

...and incumbents in any industry in general are going to enter a new technology. Sometimes it's going to be through experiments, sometimes it's going to be through investments, sometimes it's going to be through acquisitions. But the expectation that the old business model is going to completely change with a vendor or an enterprise relationship, that, I think, it's very hard, especially in an [industry] like ours, where regulations are at times unclear.

Andrei Yurkevich, Protofire · 32:49

Okay, yeah, and actually you were leading a little bit into my next question. What I wanted to ask is how institutions actually arrive onchain. Now, is it just they happen to you, Ilia, or you, Ilia, happen to be at the right time and the right place, and you tell them about ADI Foundation, what you can bring to them? Or they decide, okay, we want to build on Ethereum because that's the biggest ecosystem. Or we want to build on Arc now, right?

Andrei Yurkevich, Protofire · 33:24

Do they select the ecosystem first, or they start with some use case, that we want to tokenize existing fund, or to pay yield on our balances, settle with a counterparty? So how do they arrive and how do they choose? So yeah, Ilia, please start.

Ilia Shirobokov, ADI Foundation · 33:42

Well, I would split these institutionals coming to chain in three groups. Let's say the first group, we can call them dreamers. It's the companies who very intentionally go on chains, because they decided inside, and they already have use case. They probably already have use case in their case, and they just start looking for the best ecosystem they can find for this use case. That's the first group. The second group would be actually the companies, the institutionals which are in some way forced to go onchain, because government of these countries really push them to this in some or another way, because they provide better regulations onchain for any reasons. And in these cases, usually, well, it's more complex how they find the best ecosystem. It usually comes through government actually, because, well, it's more complex one. It's unpredictable how they're going to find the ecosystem.

The third case is the most understandable one: well, that's actually companies who, well, they heard about blockchain. They kind of think, okay, that's nice, that may be interesting to [unclear] something. And here some great guy from either ADI sales team, Polygon sales team, whatever sales team, come to them and say, okay, let's build on us. We'll help you to define better use case. And here a lot of complex work starting. Actually, the third case, usually there is not one great guy. There is multiple great guys from different sales team, from different companies. And here they start choosing not only use case, but also the ecosystem itself.

And actually, that means that in the third case, and for many basic use cases, well, the honest answer is most of the ecosystem for today use cases would work good as any other. I mean, more or less. What is important here? What becomes important? What these companies planning to do next. What is going to be their next step? How they plan to interact with the chain after that?

Ilia Shirobokov, ADI Foundation · 35:58

And here, this is the full, let's say, company responsibility now to explain them why. Well, for example, in ADI, we explained why it's quite great to have this ZK technology on top, because for the future, neutral settlement, all that stuff, whatever. But that means that, okay, there's, first of all, no the unified way. There's three different ones.

The dreamers already know what to do, and they usually don't ask you about ecosystem much. They already choose inside. You first of all working with this third category, and the second category as well, but they are usually not very motivated. So the third category is the best one. This is the category you can find the actual, the most, I would say, financial companies, institutional financial institutions. They allocated in this third category, and they choose on the future use cases. On the future use cases, it's also, you again should explain to them, because not all future use cases today is obvious to these people. A bit long, but yeah, now I finished my answer.

Andrei Yurkevich, Protofire · 37:14

Okay, yeah, thanks, Ilia. Brian, what do you think? What do you see?

Brian Butler, Polygon Labs · 37:19

What do I see? I really liked what Gagan was saying, where there's cool new interesting use cases that are forcing some companies to get onchain, because it's effectively enabling something that wasn't really there before. So for example, I work with this company called [unclear]. They're based out of Israel. And specifically them, they are a predictions market, but in the sense of they actually are used to hedge bets for companies that are trying to take insurance on things. So for example, they work with a ski resort, and the ski resort is worried there might not be snow next year. And so they can actually go to this prediction market and hedge a bet, and saying, okay, we're going to make sure that if there isn't snow, we put a bet on that, and so we don't lose all of our money. So there's cool new use cases like that, where effectively you can take insurance out on things that were never really insurable before, that are going to get some more people onchain.

But I would say, how do you get there? It goes to, again, you need wallets, ramps, cross-chain tools. I would say these companies don't necessarily care about which specific chain they're going to be using. Some of them have preferences. Transparently, I would say a lot of these chains are just kind of bidding for a lot of it. It's like, how much grant money can I give you to use our blockchain? Because it's all fairly commoditized. We're all fast and cheap at this point. So where you really separate yourself is how much can you offer within one cohesive stack.

I guess I'll leave you guys with this. So our chief product officer at Polygon is John Egan. He's the former head of crypto at Stripe. And when he was at Stripe, he actually led the Bridge acquisition, he led the Privy acquisition. And I've asked him, why did you do that? You got $1.7 billion, let's say, to spend in money. Why'd you choose those two companies? And his idea is, it's full stack or die, right? For a lot of these different companies. And you're probably seeing that right now with also Circle, getting a blockchain now, a stablecoin. They have a CPN, Circle Payments Network. You're seeing this with a lot of different players in the space of trying to expand that stack.

Transparently, I think the other blockchains are going to be following suit in Polygon. We probably have like a year or two year head start, but you're probably going to see, you already kind of saw with Solana, they have the Solana developer platform, which is stitching together a ton of different vendors, saying, hey, use BVNK, use this company for different types of infra. I think it's just a matter of time until they really do it as well. Same with probably Arbitrum. Not saying that they will, I don't know their roadmaps, but that's just my guess, because we've seen it with other...

Brian Butler, Polygon Labs · 39:38

...companies across the space. So yeah, it's going to continue to be competitive. But thankfully, I think there was two quadrillion in payments last year, and stablecoins were only ten trillion of that. So we can all go conquer some land.

Andrei Yurkevich, Protofire · 39:50

Okay. Yeah, my next question is for Luis. So Protofire builds on multiple platforms. And how do you see the process of choosing the platform by the customers? And what TradFis usually underestimate about the work of choosing of the chain and running it in production?

Luis Medeiros, Protofire · 40:18

Yeah, definitely. We worked with more than 100 chains during this ten, eleven years in the space, doing Safe integrations, oracles, all the infrastructure that Brian mentioned. And I think for a long time the dispute was around which chain had the best infra, right? Or TPS or whatever. And we're getting more mature now, and I think there will be a few winners. I think we are here with three of the few winners that will remain in the space. And because we are getting to the point where the network effect of what is your ecosystem, what are the things you can build together or connect within the chain, will be more important than the infrastructure itself, right? The infrastructure will be, okay, this is the minimum, right? But what is there that I can connect with? And this is what I think TradFi is still missing. Most of them don't understand it completely, how we build in Web3, one on top of the other, connecting things, like composability. They are not used to that.

And this will be a big edge, like the chains that can, for example, have insurance product that can then be used by anything that you bring onchain, or other innovative things. So here, we in Arenas, we are working on allowing people to separate who takes the risk, right? You have one party that underwrites using an asset that can be liquidated onchain, and then part of the risk is actually going with an off-chain liquidation. So those different building blocks that they still don't understand, that can be then connected to the products that they are building, those are the things that the chain that concentrates more innovative building blocks [unclear] will be one of the winners.

Andrei Yurkevich, Protofire · 42:41

All right, yeah, thanks, Luis. My next one is for Gagan. And yeah, now, thanks, congratulations with the big launch of the whole ecosystem. I was waiting, interested, curious about what Arc actually will be bringing to the ecosystem. So why did you decide to build it now? Why the existing ecosystem? Why didn't you just build on Polygon? Why didn't you build on plain Ethereum? So why it wasn't enough, and what banks and fintechs can expect to get on Arc that they cannot get elsewhere?

Gagan Mac, Circle · 43:21

Yeah, yeah. So thank you. Thank you so much. And yeah, the team, it's interesting backstory. I've been at Circle for four and a half years, and we have contemplated building a blockchain from the entirety of my time here, and it has come up multiple times. A lot of things had to line up before we decided to actually go ahead and do it. So we actually started, and we still, I think Brian was mentioning this earlier, I'm also firm believer in the two things. One is that fragmentation makes adoption harder. So defragmentation is really good. Simplifying complexity is really important for acceleration. So that's one principle.

And another principle is that, yes, there are going to be new blockchains that continue to emerge. And the way I think about the world is like how internet is comprised of various intranets that are connected with each other. Similar to that, blockchains, I equate to, are like intranets for money, and they have their own, yes, money flows, but then they will connect with each other. And so we continue to actually invest in supporting multiple ecosystems. And it started with, USDC now is on 38 blockchains, right? So we have continued to expand USDC on all the ecosystems, and then we connect it with CCTP. So we are continuing to support this kind of philosophy where you will have multiple blockchains that need stablecoins, and value will flow between networks, and that's very healthy, because you need different blockchains for different use cases.

Now, coming to Arc, we contemplated L2 designs, we contemplated building an L2 on Ethereum as well. And we finally, when we went back to the fundamental questions that enterprises were asking us over and over again, because over time we have supported enterprises like Grab and Jio with their wallet stacks. And every time an enterprise would come to us, and TradFi companies would come to us, they would ask us some basic questions. Okay, how do I account for network fees? How much should I allocate?

Gagan Mac, Circle · 45:48

And what is the value of it? So if you're holding a volatile gas token as network fees, then accounting for it is complex. And it is something which, I understand tokens are needed for coordination, network coordination, but then when those tokens end up flowing into accounting and user experience, it creates a problem for the finance teams. Okay, second question: who are the validators, and how do I know? I think Brian mentioned earlier, or someone mentioned earlier, about the compliance, risk and compliance. Who are the validators? And how do I know that my transactions are not being validated by nodes in a sanctioned country? Very hard questions to answer.

And then the third question was, okay, when is a transaction final? Not just technically deemed final, but also legally the definition of completely settled. And on L2s, because there are rollups and batch settlement happens, there's always a chance of reorg. So these were some of the foundational questions that became design principles for Arc to solve, so that we are able to give institutions and enterprises comfort that, look, the validator cohort is companies, global institutions you already know. So it's BlackRock, it's SBI, it's Mastercard, it's DTCC. And you have a sub-second finality, because this is a layer 1 with BFT consensus. So when a transaction is deemed final, it's within a second. And we can offer that SLA almost with our validators. And then you're holding USDC as a stablecoin, as network token. So the complexity of coordination through Arc token is abstracted away from the user experience. So these were some of the very foundational principles with which Arc layer 1 was constructed.

And then on top of it, everything that Brian described, we have our own way of thinking about, the reason we call Arc as like an operating system for the internet is because we do believe, in principle, operating systems solve some of the very fundamental problems. Basically, it is a variety of developers, and comprehensive across use cases, and then the right level of abstraction for developer tools and user experience. And so our mental model for Arc is like an operating system which has the layer 1 network, the assets that come on it...

Gagan Mac, Circle · 48:10

...the interop stack that connects it with the rest of the ecosystem, and then cutting-edge developer tools that enable developers to build new applications fast. So we also announced, for instance, with Arc, Arc Studio, which is our harness, our coding agent for going from an idea to smart contract really fast. And it has security scans baked in. So I encourage everyone to look at it and see, and we are happy to open source, share ideas. And the goal is, again, for the whole ecosystem to grow together.

Andrei Yurkevich, Protofire · 48:44

Awesome. Thank you, Gagan. So my next question is for Ilia. Ilia, ADI operates in a different geography, it operates in the Middle East. And when we think about the Western fintech coming onchain, we're thinking about a team, budget, market opportunity. Now, when we hear on the news about Middle East, it's national strategy, sovereign fund, royal decree. So these are the drivers for adoption. Is it true, is it real? How do you compare this Western world and Middle Eastern world? And what do you see in terms of the buying process, how it's different, who evaluates, and what are the requirements? What to keep in country, whether to have a local validator. So yeah, and we only have like ten minutes, so if you can answer this loaded question within like...

Ilia Shirobokov, ADI Foundation · 49:20

[unclear]

Andrei Yurkevich, Protofire · 49:40

...three, four, that would be awesome.

Ilia Shirobokov, ADI Foundation · 49:43

Okay, sure. Well, the first thing is, [ADI] does not work only in the Middle East. We actually work in Europe. We have partnership in Europe, we have partnership in US as well. But for sure, kind of, Middle East was our kind of first market, which we start with. And well, truth is, well, it's still the same capitalism everywhere. It's working the same way, it works with the same cost, it's worked with the same team resources, all that stuff. Is there differences? They are in the cases, because we are not work only with private companies. We work with kind of partnerships which are, in some way, binded by laws in some way.

For example, for locality of the data, the localization of the data, locality of the data is one of, well, my pain points, because for that reason we actually have enterprise chains as a separate way: not only deploy on ADI directly, but deploy your own chain. There you can put server and data of this chain in the particular country and operate on that. First of all, create tokens on that side, create tokenization on this side, and you can change it later on ADI, but tokenization is important to be in a particular place.

So answering to your question, first one, the same capitalism everywhere works in the same way, more or less. Difference comes then, in some cases, there are requirements. For example, we work with healthcare in some countries, and healthcare does not allow you to send data of the people, of the citizens of this country, to another one. In this case, you need enterprise chain, which is going to run locally. In this case, yes, there are quite bigger difference into definition of this sovereignty and all that stuff. When we talk about private companies, private banks, well, it's more or less similar. I cannot say that it's such a huge difference. We live more or less in the same world.

Andrei Yurkevich, Protofire · 51:55

All right. Okay, yeah, my next question is for Brian. So BlackRock, Fidelity, they're already onchain, they have brand, they have distribution. And in the meantime, if the midterm, 30, 40 people fintech lands onchain, they land on the same rails. So does it really help David to compete against Goliath, so that they land on the same infrastructure and they have access to the same rails? Or is it just another avenue for giants to win? What do you see, and have you seen any positive use cases of smaller organizations being successful in competing against the giants?

Brian Butler, Polygon Labs · 52:35

Can you elaborate on the question? I don't really understand it.

Brian Butler, Polygon Labs · 52:41

Can you elaborate on it? I don't really understand the question, honestly.

Andrei Yurkevich, Protofire · 52:46

Yeah, I mean, we have products from BlackRock, Fidelity. They're onchain already, they have distribution, they have brand, right? And smaller bank, smaller fintech now starts a project onchain, on the same Ethereum or Polygon, whatever, right? Can they compete fairly, and can they beat giants because they have access to the same infrastructure, or it's still not the...

Brian Butler, Polygon Labs · 53:16

I see. Yeah, yeah, yeah. No, it's a good question. And yes, David versus Goliath in some sense, for sure, when you're going against a BlackRock. I would say yes, there is the same infrastructure, right? But at the end of the day, these companies usually rely on others to kind of bring them into the ecosystem. It goes to what I said earlier, where effectively I think Polygon is a stepping stone for a lot of these payments companies that already exist to get into stablecoin payouts and prefunding collections, but eventually they will want to get their own money transmission licenses in order to do so. So I do think it's definitely a good fight for us to be competing. And it is also fair to say, though, a lot of these companies kind of gatekeep a lot of that payment volume going onchain, which is why we need to unlock the Visas of the world, the Mastercards of the world, because they're going to really bring so much adoption into this ecosystem that's going to keep us all getting paid, right? So I'm always rooting for those types of things to be happening.

Now, to just frame the question, if I wanted to be a David and go win, something that I would go do, whoever's listening out there and wants to be a founder or something, you can steal my idea. I think that I've noticed, when I worked at Visa, Stripe, for example, I think they're licensed in like forty-five markets, let's say, to do acquiring there, but they do cross-border acquiring, or acquiring just in general, in a hundred and ninety markets, right? Meaning they just don't get the local licensing in all these places, because it's not really advantageous to do so. You see the same thing with on and off ramping with stablecoins. A lot of people have the Mexico licenses or the US licenses, but no one really has the Peru on and off ramping licenses, or these smaller emerging markets that eventually will continue to grow and become more impactful.

So I think the real winners, and what's something that we evaluate at Polygon, is where is a company that really got close to the metal, let's say in Nigeria, South Africa, these fairly big emerging markets that have a lot of stablecoin adoption and need, because of the fact that there's hyperinflation and things along those lines. And can we partner with them? Because they specifically are solving a very particular use case that matters. So I would go get the equivalent of MTLs in these emerging markets to do so. And I guess that would be my version of being a David. But yeah, I guess a roundabout way of saying that I do think that we'll compete, but it is only a matter of time. We'll see how it...

Brian Butler, Polygon Labs · 55:39

...we have a lot of years to go and a lot more volume to bring onchain.

Andrei Yurkevich, Protofire · 55:45

Yeah, Gagan, please.

Andrei Yurkevich, Protofire · 55:49

Yeah, you're muted.

Gagan Mac, Circle · 55:52

When you think about competing with a BlackRock, right? I don't think that you can compete if you play the exact same game that they are playing, right? Or any institution is playing. They have such massive reach, such massive capital, access to capital, and when they are issuing assets, I think you have to think of it from the other end of the spectrum, is that you are competing for someone's dollar to go into that asset, or someone's wallet. You're competing for a wallet, money in the wallet.

And if you're building a novel asset class, I think it is about actually figuring out how can you create a new category, or how you can create a new use case that incentivizes people to bring their dollar into that use case. So for instance, BlackRock has issued BUIDL, people will hold BUIDL because they get stable rates, 4% return from a money market fund.

But then if you look at the, we were talking about prediction markets earlier, it's a very different kind of asset class. Now it is more accessible in some ways to people who understand, there's a stat where I think Gen Z and younger have a higher allocation of their assets in prediction markets versus in any of the traditional stocks in investments. So if they start treating prediction markets as investments, it completes a new asset class category. So I think we have to think of it in different ways, because I don't think you can win as a developer by competing with the TradFi companies with the exact same business model.

Andrei Yurkevich, Protofire · 57:34

Yeah. All right, guys, time is almost up. I still have tons of questions, but I will ask you one final. Now, please, everybody, like 20, 30 second, one prediction for what will be live and [boring] by September 2027. Luis.

Luis Medeiros, Protofire · 57:53

Yeah, definitely cross-border with stablecoins. I think it will be the standard, at least in many geographies.

Andrei Yurkevich, Protofire · 58:03

Thank you. Ilia?

Ilia Shirobokov, ADI Foundation · 58:05

I'd like to see no market hours in my bank app.

Andrei Yurkevich, Protofire · 58:10

Gagan.

Gagan Mac, Circle · 58:12

I would like to see more trusted agent marketplaces, so you can actually have agents that you can hire. And I think the intersection with blockchain is going to grow over time.

Andrei Yurkevich, Protofire · 58:24

Thank you, Brian.

Brian Butler, Polygon Labs · 58:27

I think I just checked Kalshi, and the CLARITY Act's odds of passing this year are at 9%. And then for September of 2027, I'm not sure what those odds are, but I guess I'm hoping for that. And I guess something I'm definitely going to be keen to watch, and Circle's on the call, I'm curious to see how OUSD develops, certainly, with Stripe, Visa, Mastercard, all trying. We'll see. Consortium stablecoins, I'm like 50-50 on.

Andrei Yurkevich, Protofire · 58:54

Awesome. Yeah, thank you, guys. Time is up. Thanks for joining us today. It was a great discussion, and have hope to see you soon in our next roundtables.

Gagan Mac, Circle · 59:04

Thank you for having us.

Luis Medeiros, Protofire · 59:06

Thank you.

Brian Butler, Polygon Labs · 59:06

Appreciate the time.

Ilia Shirobokov, ADI Foundation · 59:06

Thank...