Travis John (00:02.219)
Welcome back to another episode of the Real World Assets Show. Today we have a special guest. We have Jim Hiltner. He's here with Superstate. He's the co -founder and head of business development. Welcome, sir.

Jim Hiltner (00:13.23)
Hey Travis, how are you? Great to be here.

Travis John (00:15.499)
Great to have you. So I've been chatting with you and some of your team for about a month now. So exciting things happening at Superstate and finally able to put a face with the name here and chat with you more about what you guys have been up to. I know some of your co -founders, some of the Who's Who and DeFi, Robert Leshner, you guys have been working together for a while. But before we get into...

some of the exciting things happening with your newest project and what you're doing with RWAs. Maybe let's chat a little bit about your background. I know a lot of your team and yourself came from TradFi. I know that you spent a good bit of time at Citi and then I think you had itch and some things kind of started sparking from there in your career trajectory, so to speak. So yeah, love to hear more about that.

Jim Hiltner (01:05.838)
Yeah, you guys, you caught us at a great time where we are at Superstate. So I'm really excited to dig into all of that. And you're right, the second half of the chapter of my career has been a lot more interesting than the first half. So I started at the banks and, you know, it was kind of miserable just doing a lot of the middle office, back office stuff and realized, you know, that that wasn't a long -term plan for me. And, you know,

Had a stint on the trading side and decided let's go even further out the risk curve and go towards a startup. And, you know, really found my way in the FinTech space back in 2016, helped out a company when it was just eight people and a bunch of ideas and left there.

really good shape with about 600 people at the company and got to really get a taste for what it was like to build an organization from the grounds up and have a real true enterprise business development infrastructure in place and specifically was focused on the financial services space. So a lot of that really built a great foundation for myself as I wanted to push a little bit further and go into FinTech even further landed at a company called Pagaya.

and spent about a year there helping kind of build out the bank partnerships. And it was really eye opening there, seeing how capital markets work. You don't really understand when you're taking out a credit card, really like how the capital and on the underwriting and the risk happens throughout that transaction and really all the different players in those markets, which I think is honestly ripe for a lot of what I'm doing now, which is moving into the crypto space. I had a chance two years ago,

to join Compound and help Robert and the team there build out really the institutional business. You know, given the network and the relationships that I had and just the understanding of the client side of institutional asset management or, or investors was able to help build out, you know, what we built at Compound, which was the Compound Treasury business. And it was effectively, you know, a tool for investors that were.

Jim Hiltner (03:13.198)
trying to understand how to participate in DeFi markets, but weren't necessarily either set up from an operational standpoint or from a regulatory compliance standpoint to do so. So they used us as a great mechanism to still grow their balance sheet without having to interact directly with the protocol. But, you know, spent about...

a year and a half really with Robert and the team trying to figure out as we were walking through the depths of 2022 and the crypto winter and the bear market to figure out how do we expand what we're doing here to service customers at a much more broad level and actually build something super interesting that leverages not just the Compound protocol, but a whole host of other tools and networks and opportunities and.

the crypto ecosystem at large. Staying very institutional focused, but trying to build something completely novel. So that takes us to where we are today. We launched Superstate. We just hit our one year anniversary in April. So very excited to be standing in front of you now where our first product brought to market. I'm sure we'll dive a lot further into that, but.

Yeah, the team before that started about a year ago is now a team of 15 or 16 of us. And bringing some really cool things to market and really looking for the next phase of where financial services go. And if you kind of continue to pull on the thread of where I've been in my background, I'm excited for this next chapter, which certainly should be a lot more exciting than everything that I've done before, which was already a lot of fun.

Travis John (04:48.171)
Yeah, I hear you. And I think just, just worth noting, cause you kind of say it that five year period, you know, in, in a few sentences, but you know, ultimately what you, what you and the team did at Compound, from 2017 fast forward, like you mentioned until like the 2020 at 2022 Mark really was blazing new trails in DeFi, but also onboarding these capital market, traditional market folks.

into understanding how this works. So I think that's, you know, you guys were part of the early pioneers that were essentially, you know, helping the people on Wall Street and the capital markets to kind of see, you know, see what this world's like. Now, as we, yeah.

Jim Hiltner (05:32.494)
Yeah, absolutely. Yeah, I mean, there's a ton of innovation that happened at the protocol level. You know, certainly I came in towards the tail end of a lot of the success. So I can't take any credit for it. Robert and a lot of the team, you know, all the Compound labs folks built all of that from the ground up to like really just pioneer. How do you interact, you know, peer to peer in a money market type of a sense, you know, Compound for the, for the audience is, you know, one of the larger default protocols where.

you can borrow assets against certain collateral and just the mechanism that was created there for how interest rates and collateral and liquidations and all of the transparency that comes along with basically building a bank on chain was unbelievably successful and continues to be today and continues to expand and grow. But to your point, Travis, like,

There's a lot of opportunity there, but there's also a ton of, since it's breaking new ground, there's a lot of education that's required for larger institutions that see opportunities, but need to have somebody to help kind of walk them through the infrastructure, the economics, the operations, all the things that are related to interacting with a pool of capital like that.

And so the institutional business at Compound, you know, largely was at the forefront of doing that with banks and family offices and asset managers and corporates and a whole bunch of FinTech players that, you know, wanted to...

take advantage or participate in those pools and leverage the relationships and the understanding that they had with us as a counterparty to be able to do so. So yeah, definitely swept that into a short little snippet, but there was a lot of really cool things that happened there and continue to grow and develop even as we stand today.

Travis John (07:23.083)
For sure. So let's talk a bit about Superstate and we can talk a little bit more about kind of the macro and total addressable market and really how this all came together. But I'd love to hear about that maturation of the team, like you mentioned, where I kind of cut you off of the starting of Superstate. Four of you founded it. And I guess just take me from there and kind of what the thesis is and was at the time.

Jim Hiltner (07:51.822)
Yeah. So, I mean, just at a high level, Superstate is an asset management business and, you know, we've built our entire company from the ground up to enable very traditional investment vehicles or, you know, investment structures to participate on a very new platform, which is on blockchain rails. And so what does that mean? Like if I'm an investor into a Superstate fund, you know, I'm committing capital to a pool that looks very similar to a mutual fund or some other type of vehicle that.

You know has a specific mandate to deploy that capital to buy certain assets. Our first product is just very very focused on ultra short duration government bonds. So what does that mean Treasury bills and you know those types of securities? but when I'm receiving the

record of ownership of my participation in this pool are basically my shares that I bought in the fund. I have the option to put them on Ethereum and self custody them. And there's a whole bunch of things that that opens up in terms of opportunity, but fundamentally under the hood, it's a very, very.

conservative structure in this particular vehicle that looks like a money market fund gives investors exposure, especially in a high yield environment to be able to earn yield on their capital.

But so we, in order to get to the point that I'm describing right now, you know, we spent, you know, considerable amount of time with various infrastructure partners to pull this all together. And, you know, we are the manager of our fund and we're very proud that we, you know, define the investment strategy. We act as the investment manager for the fund to direct the, you know, investments that are made for each vehicle that we will launch. But it also takes a lot of other...

Jim Hiltner (09:38.574)
you know, folks like me to get a custodian to actually hold the securities in the fund. You need to have an auditor to audit the fund. You need to have a fund admin that's actually doing the accounting and valuation to understand how the portfolio, you know, fundamentally should be priced. So, you know, built all of that from a bottoms up, you know, started from scratch. And there was a lot of, you know, interactions with traditional finance.

you know, TradFi players in order for us to like stitch this all together. but we launched USTB, which is the flagship product for Superstate, back in February. And, you know, here we are about 90 days after, after launch with $110 million in the fund and a bunch of customers that, you know, we should go into, you know, how and why and what they're doing in terms of using the fund. but yeah, our team has grown a ton, the number of folks in legal and compliance and operations. And then.

probably the best engineers I've ever seen in my entire life, building a lot of product, both on the user interface standpoint, but also on chain and the interaction with the token and some of the other connective tissue with those service providers that I was mentioning in order to make this all come together in a really, really simple, elegant experience for clients that takes a lot of work underneath the hood so that you get to that point of having a really cool product that folks can interact with.

Travis John (11:02.955)
Yeah, love that. I know even, I mean, just watching that assets under management go up, it's pretty wild how fast that's grown. I want to say it's only been about a month ago, it was around 85 or 86. Now you're at 110. So it's, like you said, it's, you're really, the adoption rate is scaling quite nicely.

Jim Hiltner (11:23.854)
It is, yeah, I know we're excited about where we are, but...

we have a ton of momentum and pipeline to convert over the next foreseeable future of a lot of opportunities to really substantially grow asset center management. And I think it kind of boils down to a few different areas of the market that we're seeing traction in. And one is on your traditional corporate balance sheets. And those corporates can look like a protocol foundation. It could be a crypto native company that has

you know, a balance sheet that they just started looking for managing their own Treasury to get exposure to these types of, you know, Treasury bills or other, other products that will help enable them to continue to grow and, you know, and, you know, increase their balance sheet and grow, grow working capital and, and, you know, keep the lights on for certain other, you know,

parts of their business. So that's very traditional balance sheet, Treasury management. And then you kind of get into the investor world where you've got hedge funds, venture funds, and family offices, and prop trading firms, and whatnot that have that same Treasury management use case, but also are interested in how can I use a tokenized version of what Treasury bills offer.

in terms of using it as collateral or to settle trades and to have these secondary market opportunities associated with not just, you know, sticking it in, you know, my custody or on my balance sheet, but actually being able to interact with certain protocols or certain counterparties where this tokenized version of a fund enables me to do things that I couldn't do otherwise because the rails in the legacy role are just so inefficient.

Jim Hiltner (13:13.806)
And then, you know, kind of the third bucket are those folks that they're facing off with, you know, folks that are, you know, maybe they're market makers, OTC desks, or prime brokers, you know, there's a whole host of intermediaries, you could even put DeFi protocols there, that facilitate the capital markets. And, you know, they're also interested in how they can create a more capital efficient...

marketplace for their clients and maybe streamline their operations as well in order to, you know, still do the same trades that they're doing with their counterparties, but do it in a better way that, you know, not having things on, on chain, adds a ton of friction and really, really slows down the process. versus having something that is yield bearing that can move at the speed of the blockchain enables them to do a lot more with their clients and make their.

businesses way more efficient. So those three categories kind of all support each other to a certain extent, but we're really excited about all three of those verticals continuing to mature as we bring more clients on board.

Travis John (14:16.139)
Yeah. And I like how you, how you explained that just because the client focused approach that you guys have taken, I know is, is very unique. So I think we can maybe build on this a little bit, but I know that you have, what you just described is a lot of how you, you approach this kind of white glove approach to listening to the clients. And, you know, you're kind of building, building in, in, in, in the public, so to speak, or, you know, in, in, in plain sight.

and helping your clients understand this because from what I understand, I guess you have an order book entry as well as the blockchain rails like you were describing, which allows people to onboard and to have kind of their level of risk or use case based on what they're looking for and even what they're comfortable with at this point.

Jim Hiltner (15:03.182)
Yeah, I mean, like even within each of those three verticals that I described, there's a whole spectrum of different use cases and opportunities. And so one of them that you just described there is, yeah, I mean, the fund is fantastic for investors that like, hey, I'm holding a bunch of USDC and I don't have a brokerage account. I can't buy Treasury bills. We give them a great opportunity to do that. If they onboard with Superstate, they can send USDC to an address and then, you know, magic happens behind the scenes where, you know, we're investing the T -bills and provide -

adding yield back to them so that when they redeem their shares, they're able to get principal plus interest. But they don't necessarily, some of them don't want to hold that on chain. Maybe there's perceived risks or they have less interest in.

taking the traditional vehicle that they're investing in and bringing it on chain. We absolutely offer that as well. So if you want to hold them in a book entry, you know, with us and see them on your portal and interact somewhat web2 two and a half where you can send dollars or USDC into a fund that doesn't get minted as a token in terms of your shares, great, happy days. We're happy to do that. So yeah, we're taking a very pragmatic approach to how we build our business. And, you know, I think that,

is evident in a few ways. Like one is on the things that we just described of like listening to the client feedback, adjusting, you know, because we're in control of our own destiny. Like we can also think about how we create new products that have different investment classes or return profiles or risk profiles that might exist in future funds that we can create bespoke for a pool of clients that want that type of exposure.

We can also help control the experience from a client perspective when it comes to.

Jim Hiltner (16:55.502)
what secondary markets do these tokens interact with and really prioritize that based on demand and not just, you know, launch on a particular protocol or a particular chain or at a particular venue, unless like there's real organic demand. And, you know, we, we hear a lot of that from something that we created earlier this year, which we call the Superstate state Industry Council. And it's effectively 20 and growing, folks that are clients of ours that are.

investors, their hedge funds, their family offices or, you know, venture funds. Then you have some of the like intermediaries I described, like the OTC desks and the prime brokers and market makers. And then you have even some DeFi protocols that are interacting with that.

consortium together to say, okay, this is a great opportunity for us to collectively come together and share opportunities and challenges in a closed door setting that enables Superstate to go and help build things that are very useful for the industry and use this as kind of a working group to get very close and direct feedback from that designs, you know, most of our roadmap and.

whether that's the distribution strategy of where does it make sense for us to plug USTB in as collateral or what should the next fund be or what should the next chain be, we're really, really keeping an ear to the ground very actively with that community and meeting on a regular basis rather than just saying we're all working together. We have a very specific program that we put in place to make sure that this working group.

continues to help move the entire industry forward, not just for Superstate, but for all of the ecosystem.

Travis John (18:43.019)
That's phenomenal. I mean to have the mastermind and have your finger on the pulse as to where the demand is as well. And those two things alone are a significant advantage. And I think even just taking a step back from this conversation, I think you hit something down the head as just kind of helping the macro altogether. Where do you see in the current state of RWAs right now, of course, stablecoins are the biggest mover and have been since the beginning.

and where you guys are sitting and of course, there's other people that are doing treasuries as well for good reason, because there's roughly 25 trillion and a total of at least probably 100 trillion total assets that could be tokenized in the future, that that total addressable market is something that clearly you guys have your eyes set on in an iterative fashion. But I'd love to just hear about kind of like your...

from this consortium and just from your own personal views where the current state is and kind of where you see yourself fitting at this current moment.

Jim Hiltner (19:51.47)
Yeah, I mean, the current state is really exciting. You know, as of late, I'm sure the entire audience is aware. I mean, large asset managers are putting their, you know, their money where their mouth is and actually building products either independently, you know, internally or collectively with some providers in the industry, which is just amazing to see not only folks kind of going on their own and trying to build on chain, but also folks that are willing to interact with

some large innovators and collaborate with industry to actually bring the traditional markets on chain. And so it's not a surprise I'm talking about BlackRock and Franklin Templeton here. That is really, really cool. I think Superstate is building all of this up from a very crypto native and very nimble perspective. And we have a lot of experience, of course, building both on the institutional side, but also on the...

Travis John (20:34.987)
Right.

Jim Hiltner (20:51.374)
crypto side. And so, you know, I think we have a really good combination between the two. But with that tailwind, what it's done is really brought a lot of opportunity into this space. Like if you look at, I think there's, you know, stats out there, which some of it's a little bit double counting, but you know, we're heading close to the first time to hit a billion dollars in a total addressable market or a total AUM in Treasury bills. That to me is a really, really exciting thing. I don't get too excited about it.

because then I look back at your other number, which I'm very aware of, which is the trillions of dollars that really are out there. So a billion dollars is just a blip on the radar to get things started. But it's great. It's great to see that growth and the continued momentum. I think there's a lot of work to be done to making these instruments on the Treasury side way more ubiquitous across the capital markets. And whether that's on the DeFi side or on the CeFi side,

there's just so much development that has to happen to actually make all of the moving pieces and the counterparties in this industry be able to leverage these instruments the way they would just a standard, you know, Treasury bill. So there's a lot of wood to chop there. And I think if that, you know, takes place here over the next 6, 12, 18 months, you're going to see the $1 billion number is going to look like that blip on the radar here in the not too distant future, which is what we're really excited about.

And so one of the things that we've done there before I kind of get to your actual question is, you know, we just turned on transfers for USTB TV yesterday.

Travis John (22:20.363)
No, That's good.

Jim Hiltner (22:25.102)
And we're really excited because what that means is you're not just holding this book entry or tokenized version of the fund on balance sheet that you can mint and redeem or purchase and redeem back and forth a Superstate state. If you tokenize it, you actually have the ability subject to all the folks that are KYC to transfer it to any of those addresses. And so what that opens up is.

a network of other participants that you can face off with to either post collateral, you know, have really, really like instant portable collateral that's high quality, that is, you know, very capital efficient because it's yield bearing and there's high, you know, there's low haircuts on that type of paper or on that type of asset.

And then you also have the ability to, hey, like I'm doing a lot of my on and off chain work where I'm just like, I might go risk off of my fund. I'm going to move my assets down to a money market fund at a bank. And then next time I want to go risk on, I'm going to move that money back on chain, buy some USDC, and then I can buy Bitcoin or whatever it is. It's like that seven or eight step process can be reduced into two. It's just like click a button to mint and redeem, and then be able to also stay there with your counterparties and actually settle trades.

back and forth because you can just transfer the token immediately and not have to like worry about liquidity or overnight management of you know certain parts of your process. So to me like that transferability is just a major step function and growth in terms of where the industry can go because now you have these assets that can move around and be programmable and composable with different protocols or with different counterparties that's

not possible when you just have things sitting in a wallet. And so this then creates the foundation by which once that's laid down, you can start to go up the risk curve. And yeah, Treasury bills are there because they're the most liquid, safest asset on the planet. And they're actually really attractive right now, given where inflation is and where the Fed has kept the Fed funds rate. But then you extend out further where I think our view is...

Travis John (24:32.715)
Thank you.

Jim Hiltner (24:36.398)
We're not going to jump all the way to the other end of the spectrum and just start tokenizing illiquid real estate because we don't have an axe in that space and nor do we see a ton of demand in that space. I think we're still, crypto loves yield. And so if you go up the risk curve a little bit, maybe it's longer duration yield with less liquidity, or maybe it's corporate or investment grade credit where you still have...

you know, a fixed stream of income and there's yield there, but there's maybe a little bit more juice on it because of the, it's not Treasury bills, right? There's a spread on risk free rate. But we'll continue to like listen to the market and figure out like, are there even bespoke baskets of securities like stocks that we could put into a token that might give investors the hedge or the beta or the, or some sort of alpha that they can.

get exposure to that historically they couldn't because they don't have access to traditional brokerage accounts. So there's a lot of things to be done between the far left end of the spectrum and where this whole, all capital markets go. But listening, keeping our ears to the market is something we're doing every single day. And we're excited about what that next product could be. But I don't think it's going to be all the way at the other end of the spectrum. We're going to continue to work our way up the risk curve.

Travis John (25:51.603)
Yeah, 100%. That makes sense. And Robert has said this before, you know, I enjoyed his YouTube video and his presentation in November when he talked about, you know, boring is good. And, you know, that, like you mentioned, the total addressable market of these yield bearing assets is really where it's at. I mean, it's the significant part of the market.

It's not going too far up the risk curve and there is demand. And I think that's, you've said that, and I think that's one of the things that listeners will appreciate. And you've got to follow the demand. And, you know, even though a lot of this is sexy and some of it seems like everything should be tokenized, realistically, as you pointed out, the demand for a lot of these sectors is just not very significant, even in commodities and some of these other things, even though...

It makes sense and in a lot of ways, some of these things don't necessarily have the demand yet.

Jim Hiltner (26:54.99)
Yeah, it will all get there. I mean, you know, the ability to originate a highly illiquid or historically impossible to access private equity fund, I think is a massive opportunity for the folks that...

are already managing those kinds of funds that don't have the distribution channels to retail because it's just a lot of paperwork and the juice isn't worth the squeeze for a smaller check. On the other end of the spectrum, if you're an investor and you're looking at your portfolio allocation, you're like, hey, why don't I have the access to these alternatives that I'd love to put in my portfolio if it was accessible? So all of that kind of stuff, I think, is going to come. But you have to, again, go back to...

the bedrock has to be there and the pipes have to be there so that the technology is great, but also there's still a ton of marketplace dynamics that need to be stitched together in order for you to expand the product set to a whole host of things. If Amazon like started as a marketplace, just selling some very esoteric product of like, you know,

whatever high quality wine or something like that, or like luxury watches. Like, yeah, there'd probably be a market for that. But like if they sold bars of soap when they first launched, there's a ton of market demand for that. And like, there's, you know, way more volume to like get a captive audience and build out the distribution and make sure that all of the logistics work really well there. And that's kind of the way that I view tokenization is like, yeah, the marketplace will eventually allow you to go and buy a car, but like,

you know, make sure that you're starting with this stuff that is, you know, part of the daily fabric of capital markets or people's lives. And then you can expand the marketplace and platform from there.

Travis John (28:45.629)
Yep. And I think it's worth noting, and you can comment on this too, but that you're building your US based company, you're building here based on US compliance, you know, just for any listeners that are unsure of, you know, where this is and how to get involved. You are completely compliant building with US based regulation. You are an asset manager here in the US, which is significant. And what I think is also important to note,

Jim Hiltner (28:52.654)
Mm -hmm.

Travis John (29:14.283)
Some of the other examples you mentioned, in your case, you guys are building all under one umbrella. You do have clients, of course, but in the sense of an asset manager, you're building the DeFi Rails along with the asset management is all under one roof, which is really, I think, great. Of course, then you also have this consortium that's giving you really great feedback to continue to evolve and innovate.

Jim Hiltner (29:38.734)
Yeah, absolutely. Yeah, I mean, we're very proud and consortium, I think, in a lot of senses in terms of building here in the US. And, you know, there's a large opportunity with the capital markets here, but there's also a large hurdle rate to getting, you know, through the regulatory apparatus in the US at the moment. But that being said, yeah, I mean, from a from a counterparty that our investors face off with and who we are, like we've got a US entity, we're all US based employees, the

the trust, meaning that all the assets and the custody that all stays on shore, it's, you know, in a bank in Kansas City. So, you know, we are very proud of building through all that. But that being said, you know,

we're able to service customers globally. And so we're not restricted to folks that are just in the 50 States in the U .S. in terms of our counterparties, our investors that we can face off with, but you know, anybody around the globe and you know, we're focusing on the large, you know, hubs of capital in terms of where our investors are based, whether they're offshore or onshore. But we're excited to like continue to just expand.

the addressable market is really, really disappointing that you can't launch a fund that does all the things that we do in terms of the regulatory structure here in the US. That'll change and that's gonna take time and that's why we're...

engaging with the regulators to demonstrate, hey, look at USTB. This is how KYC works. This is how, you know, the investment goes from client to fund back to client, right? And there's like a whole demonstrable use case there that can prove all the things that we're trying to do that is really, really similar to the trillions of dollars of assets that are managed in 40 mutual funds today or ETS today. It just happens to trade on a different.

Jim Hiltner (31:34.414)
operating system and that operating system is way more efficient, but there's still all the same kind of controls and, you know, requirements in place that we've built from an asset manager perspective that if you took away the blockchain element, we would still be an asset manager. It just happens to be that our funds also interact with the blockchain.

Travis John (31:54.635)
Right. And as you mentioned, you know, significant amount of benefits that are unlocked there that just makes perfect sense. You know, and, you know, a lot of times, you know, bring this up on the show is a lot of what's happening here is not crypto. The defied side is where you can go risk on based on your, your yield, for example, or your tokenized if you want to tokenize your asset, but most of

Jim Hiltner (32:17.902)
I think that's changing though and sorry to cut you off but so yeah like we're building the Lego brick basically right like we built the ERC20 token that represents shares in the fund like that

Travis John (32:20.331)
Yeah. Yeah.

Jim Hiltner (32:30.318)
is the most ubiquitous or standard type of token standard that all of DeFi interacts with. And so, you know, you had made a comment that we're building the connected tissue with DeFi because we're partnering with large DeFi protocols that are seeing the opportunity that securities and that's what USTB is, could interact with their protocols, but historically have not. And that's because...

the Uniswap and the Aave's and the other protocols out there, the large DeFi protocols have been wildly successful proving out that their technology is the best on the planet. You have an amazing, daily leveraging event that we sat firsthand and watched with Terra Luna all the way through to FTX, where asset prices and liquidations were at all time. The declines were down by 80 % liquidations were at an amazing all time high. But where was the bad debt? Everybody that's in bankruptcy,

court in Delaware, it's not on Compound and it's not on Uniswap and it's not on Aave because those protocols did exactly what they were supposed to do and everybody knew where the risk was 24 -7. That's just like the beauty of DeFi. The problem is though is that the only things that you can trade or interact with on those protocols are just crypto native assets, which is not a problem if you're a crypto native person, but it's a problem if you're a TradFi person which, you know, wants to interact with these like sophisticated systems, but they don't have the assets that like

The integration just doesn't exist there for like a traditional fund. If you buy a fidelity money market fund with a DeFi protocol. So super state fuses those two worlds together and you know, these, these.

protocols that want to see their TVL and volume and just like taking advantage of the beautiful innovation that they created really, really scale. They have a strong conviction that real world assets and tokenized securities like what Superstate's building is a great path forward so that they can interact with Bitcoin and Ethereum on one side or USDC and stablecoins on one side and a USTB or other type of tokenized asset on the other side.

Jim Hiltner (34:42.08)
whether that's a swap or using as collateral. And so like that to me feels like the next phase of where this world goes or it's yeah, you know, you have a token that is programmable. Well, like let's go program it into something, right? It's composable. Let's like make sure that it's the, you know, it's plugged into the light socket of a protocol.

Now there's a lot of challenges associated with that because you have to consider the participants in a particular protocol or with a particular asset like USTB, we've got KYC and regulators that we need to adhere to their guidelines. And so it's not as plug and play and there's a lot of work to be done, but because the DNA of a Superstate state,

is our head of engineering came from Frax, our front end came from Uniswap, another full stack engineer came from Compound. We've got ladies and gentlemen that really, really know how this stuff works, and they layer it onto all the stuff we're doing from the regulatory side. And that's what becomes super exciting when you have potentially trillions of dollars of assets that could all of a sudden interact with these really, really awesome tools that nobody really has figured out how to do yet. And that's our mission.

Travis John (35:54.827)
Yeah, love that. You're definitely talking about the future Superstate state. like you said, or the future of the markets, which is amazing. And I, I agree because it's, everything's not crypto native. Now you're building crypto native. You are building the connective tissue. And to your point, I think where we see this going and where, what I'm excited about is, is whether it's zero knowledge proofs or whatever has to happen to have that permission and first permissionless where we're able to pass KYC data, able to pass.

any other permission data that has to do with regulatory to know like whitelist, you know, a blacklist, whatever. So people can, can essentially still do DeFi, you know, basically on, on native platforms that are building into this, I guess, you know, and, and your team is obviously probably working with a lot of these, it, you know, as partners or interfacing directly so that you're able to make this happen sooner than later. Cause clearly that does unlock, that is the future.

That is where we all are aiming to go.

Jim Hiltner (36:54.67)
Yeah, it's 24 seven really transparent, efficient markets like, wow, like, can you imagine if that's how the stock market worked? I mean, it's just amazing just the amount of in a fit like despite where we are in 2024. And, you know, we have around the cusp of like,

Generative AI like, you know, I mean, it's just amazing what the human, you know, what we're able to do from an innovation standpoint, but we have not really touched our financial system in so long. And it's really, it's really like, we're on the cusp of doing a lot of really cool things. but yeah, I mean, there's also a lot of debates that, that, you know, and infrastructure that has to be, fully developed, you know, there's, there's, you know, permission versus permissionless chains. Like where do we land on that? And how do you figure out interoperability between one chain or another? And, you know, how do you integrate, you know,

know, ZK proofs or some sort of KYC that's embedded that the regulators are comfortable with. Like, there's a lot of those things that are still very embryonic. And while it feels like, you know, we've been doing things for so long, we really on the time scale, you know, the billion dollars that we're excited about now.

you know, if you like extend out the time scale of all the infrastructure that's going to be built to get us to a trillion dollars, like it's, it's quite a bit. And we're going to look back and see that this was a, I think a seminal moment in this entire space, just given the, the focus and the continued momentum that like, regardless of what happened in the capital markets, crypto and call it winter of 2022, but like,

A lot of the institutions did not stop down or did not stop their efforts. And, you know, there's insane with the, the industry has continued to collaborate with, you know, larger banks and asset managers. I mean, yesterday there was an announcement that one of the large interoperability players is participating in MAS sandbox. You know, Axelar R is doing something with Deutsche Bank. I mean, that's a partnership that probably people thought would have never happened a couple of years ago that.

Jim Hiltner (38:54.798)
is not the first of its kind, but it's really exciting to see that kind of stuff continue to take place.

Travis John (39:01.451)
Absolutely. And as you know, once you see some of the big players jump in, you see partnerships happen, then it becomes a bit of a FOMO game because it happens even at the institutional level, as you know. So ultimately, a calculated FOMO, clearly it's not crypto FOMO in that sense. But I do think that you probably agree that you do see more people

Looking at this, I'm sure your inbound is significantly higher now based on a lot of these tailwinds that some of the big players are making.

Jim Hiltner (39:39.552)
Yeah, and it's all goes back to risk, right? And the further the technology gets hardened and the more evidence that the technology is extremely safe and there's more research that's done. It's just these things takes time. I mean, I think if I go back into my career and I go back to the visible alpha days, which was that, you know.

basically taking data from a bunch of banks and giving it to asset managers to help them optimize their research process. It's like pretty novel. You know, people were just pretty.

blown away by the fact that they didn't have to get a bunch of spreadsheets out and have their computer crash 12 times while they were just trying to find one number and compare them against each other on a couple of different screens. It's like, hey, you can click a button and it's right here because we serve that up to you on a silver platter with a SaaS platform. That was like mind blowing for a lot of folks. And what I thought was even crazier was that it was like two years later that all of a sudden you had the largest DE Shaw's and the Valley Asnees and the Citadels of the world. They were like,

that data that you have, I want to consume that in an API. And it's like, Whoa, we just gave you a GUI to see this information. Now we're going to give you an API. It's like that stuff, the, the, the innovation cycle. My point is that things are happening way more quickly. And because the confidence in the technology is there, it just opens up so many more opportunities for new business models to be developed that previously weren't there. Like that.

that interaction with that data in a more systematic way, just like probably opened up a bunch of people to launch investment strategies that they previously wouldn't have been able to raise funds for because they couldn't have that input to their process. Well, now think about it, if you have a collateral that can move around 24 seven, it's like, how many more business models and efficiencies can we interact with or bring into the traditional system that.

Jim Hiltner (41:39.15)
Like the service area of opportunities is so undefined at the moment. It's just building out all the infrastructure now to kind of get to that place where we can really see the fruits of the labor on what the programmability of a tokenized fund looks like. I mean, nobody really knows until we get there.

Travis John (41:56.715)
Yeah. Well said. Well said. So what's next for Superstate? I know that we talked a bit about some of the kind of the upcoming trends. I know that the transfers of the USTB is a massive announcement and obviously allowing that on -chain peer -to -peer transfers just like we talked about. You're already an example of what we're talking about of kind of pushing the needle forward of being able to allow investors to...

transfer back and forth peer to peer to addresses, white listed addresses of course. So aside from that, which is exciting and probably doesn't need any more announcements, but if you have anything else that you'd like to share of things that you're up to and even anything you see happening in the industry that we haven't covered, I'd love to hear your thoughts.

Jim Hiltner (42:43.566)
Yeah, I think it's taking that transferability over the next foreseeable future and really embedding the opportunities into the capital markets. There's, you know, you can move very quickly from one announcement to another, but like it takes time to get something off the ground and really embed it into the fabric of every.

transaction where it makes sense in CeFi land, DeFi land, you name it. And so that's gonna take a lot of time. I think we've got a ton of momentum and of course we've been working towards this prior to the announcement. So we're excited for some of these proofs of concept to really come to life and share that with the community and build case studies and whatnot around it. But I think the next phase is really like scaling up on DeFi. And...

You know, DeFi is just ripe for so much more opportunity. Again, going back to the point of the fact that these systems are extremely resilient and have yet to really integrate with the traditional system is something that we're really excited about, bringing that to market. And...

You know, then from there, it's, it's one other type of assets. Can we bring on chain that folks are excited to invest in and, you know, the demographics that I described or the like, you know, ideal kind of clients of a Super state today could look wildly different in six months. So we're laser focused on like the opportunities out in front of us and, and, you know, creating, you know, opening the doors for the addressable market to grow and develop. But I think over the next year, we'll have a lot more.

opportunities for our existing products to benefit our clients and also bring more opportunities on chain that they're seeking that they don't have access to that could be extremely, extremely beneficial. So yeah, this summer is not going to slow down whatsoever. We'll have a lot more opportunities to share with your listeners and with our clients. And yeah, we'll see where the next couple of months take us.

Travis John (45:00.011)
Love that. Yeah. DeFi summer for sure. And, and, you know, make DeFi great again. Superstate's definitely doing that. I think, you know, as you know, DeFi is a lot of those rails are there. The benefits and use cases are clear, but most of the use cases or almost all of them currently are crypto native assets, which have not really changed a whole lot realistically. I mean, we have obviously thousands of coins being created every day, but

but realistically valid, legitimate DeFi opportunities with native crypto assets is kind of not much different than it was a couple of years ago, realistically. So to your point, what you've done with USTB and what you're unlocking there and what this future means for bringing these capital markets on chain will change DeFi significantly. So keep building, certainly love it.

Jim Hiltner (45:55.086)
Yeah, we're excited.

Travis John (45:58.667)
Jim, it's been an outstanding conversation and I really appreciate you sharing and spending time with us.

Jim Hiltner (46:04.302)
Thank you, Travis. It's great to share our story with your audience. And yeah, I'm sure we'll have a lot more on the next episode once we do a kind of revisit on where we've been over the last couple of months and next time that we're chatting.

Travis John (46:18.699)
Yeah, we'll be chatting. It's a marathon, not a sprint as we know, so we'll keep the conversation going. Been a pleasure. Thank you. Talk soon.

Jim Hiltner (46:24.814)
Absolutely. Thanks, Travis.

Appreciate it.