theCUBE + NYSE Wired: Crypto Trailblazers | Haonan Li, Codex

Haonan Li, Codex

In this insightful episode of the Crypto Trailblazers series hosted by theCUBE, Mike Cagney of Figure Markets sits down with analysts from theCUBE Research to discuss groundbreaking advancements in blockchain technology and their implications for the finance sector. This video is part of the NYSE Wired digital event, aimed at bridging the gap between Silicon Valley and Wall Street by integrating technology and finance. Cagney, an eminent figure in fintech, shares expertise on the transformative role of blockchain in financial markets during this interview. Conducted by seasoned analysts at theCUBE, the discussion delves into Figure’s innovative contributions, including their blockchain-native loan origination and securitization process. He outlines how Figure leverages blockchain to achieve cost reductions, enhanced security and improved liquidity in financial transactions. Key takeaways from the interview highlight insights on the evolution of the Web3 ecosystem, such as the emergence of stablecoins as pivotal to transaction processes and the rise of decentralized finance (DeFi). Oltsik states these developments signify a shift towards democratizing finance, wherein truth and transparency are foundational. The conversation concludes with a look at Figure’s pioneering efforts in creating a new financial marketplace utilizing blockchain technology. #CryptoTrailblazers #FigureMarkets #BlockchainInnovation #Web3 #NYEWired #BlockchainFinance #DecentralizedFinance #Fintech #Stablecoins Find more SiliconANGLE news and analysis https://siliconangle.com/. Follow theCUBE's wall-to-wall event coverage https://siliconangle.com/events/ Learn about the latest theCUBE events https://www.thecube.net/ 00:00 - Intro 00:05 - Emerging Innovations in Financial Technology and Market Dynamics 02:45 - Key Elements in Financial Ecosystem Dynamics 06:20 - Blockchain: Truth and Transformation 09:39 - Shaping the Future: Innovations in Financial Markets and Stablecoin Integration 13:15 - Enabling the Future: Navigating Disruptions in Banking and Lending 16:51 - Exploring Opportunities and Building Confidence in the Blockchain Ecosystem

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Haonan Li

Co-founder & CEO

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Haonan Li, Codex

Haonan Li

Co-founder & CEO Codex

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John Furrier

>> Welcome back, everyone, to theCUBE. I'm John Furrier, host here in our New York Stock Exchange studio. Of course, we have our Palo Alto Studio connecting Silicon Valley and Wall Street. This is the NYC Wired program at CUBE Original. We're talking about the intersection of capital and technology. The market is technology, and one of the hottest markets besides AI is crypto infrastructure, blockchain, stablecoins. Haonan Li is here, co-founder and CEO of Codex, stablecoin-focused blockchain infrastructure company. Great to see you again. Welcome back. You were here in November. Seems like yesterday.

Haonan Li

>> Seems just like yesterday.

John Furrier

>> Outside of the wild flux and the prices of ETH and Bitcoin and others, still very bullish sentiment on the infrastructure side. So price of the currency, okay, that's just market stuff talking. The AI infrastructure is one of the hottest areas. We're seeing all that in the mainstream news. In the parallel universe of crypto infrastructure, continuing to build it out, the applications. Give us an update on where we are, because stablecoins has been in market. There's been movement there, but it brought a lot of clarity, pun intended, to what's going on.

Haonan Li

>> Totally.

John Furrier

>> Give us the update on what's happening on your end.

Haonan Li

>> Yeah, so Codex is the stablecoin FX specialist, so we help people move anything to anything. So you come in with dollars, we can get it into Rupiah. If you come in with Rupiah, we get you into dollar stablecoins. Any form you want, any place you want, and cheapest and fastest and easiest way.

John Furrier

>> What's the visibility on some of the commercial use cases you're seeing now that are stable, growing, people are gathering around? Where is the gravity around some of the use cases in the market?

Haonan Li

>> Yeah, I think we're seeing a couple different areas where folks are having steady demand. I think much of the initial product market fit has to do with south to south flows, so global south to global south flows where the banking infrastructure is less robust, where people have less access to financial services. And so that's where a lot of the initial traction is, and that's now extending beyond just the most worst conditions to places where the infrastructure is actually not so bad, but still worse than say stablecoin rails.

John Furrier

>> Explain Codex's market opportunity in terms of what are you guys targeting in terms of the market and the business model that you guys have right now? Where do you see it evolving to?

Haonan Li

>> Yeah, so I think what we want to do is we want to make a currency fungible in a way that it previously wasn't. So if you think about what money is, money is just some data entry in a database. It's a very weird database. If you change the currency, if you change columns, it costs you a lot of money to change columns and it takes time. Why does it take time and why does it cost money? Why can't you just have this blob of value that just transforms to whatever state you need it to be? You need it in dollars here, it's dollars. You need it in some other currency there? It's there. You need it on chain? It's on chain. Why can't we just have that? And so I think that's the future that we're building towards where the fruits of somebody's labor can get transmitted across space and time and form in this frictionless way.

John Furrier

>> And that buyer customer is who for you?

Haonan Li

>> The customers today are mostly fintechs, exchanges, some businesses that do a lot of cross-border transactions. Classic example is commodity folks who are moving large amounts of commodities cross-border. There, the friction point is very, very bad. Sometimes they can't let the goods offload until they've received the payment. And so the fact that the payment hasn't arrived yet means not only that your money isn't there, it means that you need people, you need the boat to still be in the dock. You can't offload the goods. It's a total disaster. There's just so much inefficiency across all these economic systems that really should all be going to zero. I think what you're seeing with AI is that the marginal cost of producing software is dropping substantially. And so the question then is, well, one, what are interesting businesses to build that do not rely purely on software? And two, how can we reduce the frictions elsewhere in the economy when most of this kind of software stuff is going to zero?

John Furrier

>> Yeah, it's interesting you have a software angle there, and again, people can debate the levels of commoditization of software. I mean, obviously, look at the coding assistance. I mean, software will be plentiful. The things that see on the AI side that's similar to what you were just talking about is that all these mechanisms that were either blockers or don't exist or older mechanisms, so if you're doing something that's cross-border, it's like, hey, why should we replicate the old? Where's the new? And then you go, okay, is it possible? So what are some of the dependencies? Is it regulation? Because I see that being very clear. Hey, if you got two things going on, remove the friction, remove out these mechanisms that aren't needed that create no leverage or creates friction. What's the blockers? What's the key right now to making that happen faster?

Haonan Li

>> It's very complicated. It's you need this blended expertise of both understanding the traditional rails as well as understanding the new crypto rails. You need the pragmatism to kind of not get lost in crypto la-la land and to really focus on what the customer needs. And so I think there's very few teams that can execute at this intersection. The other dimension of this is you can't Claude Code your way into this. You're not going to be able to sit in your bedroom and just Claude Code your way into this. I think it's a lot of pounding the pavement and being on the ground and configuring these systems in a way that actually makes things work.

John Furrier

>> So it's basically you have to essentially design from a domain expert standpoint some of these workflows that become mechanisms. That's what you're saying. It's not like just, "Hey, agent, go code me up a system that does these two things." What are specific things that are needed that you're pounding on the ground? Is it just certain relationships? Is it workflow-specific?

Haonan Li

>> I think it's relationships, it's figuring out the right compliance to put in place such that the flows are legitimate. It's about blending using crypto rails in a pragmatic way when they're actually useful and they actually can create efficiencies for customers. It's about all these things. I think that's why you see, for instance, you see the bank lobby attempt to kill these kind of stablecoin yield type projects. You see this happening in DC today. I think what's happening there is traditional banks are realizing how dangerous all this can be, dangerous for their bottom line.

John Furrier

>> Yeah, for them.

Haonan Li

>> For them.

John Furrier

>> It's good for everybody else.

Haonan Li

>> That's right. That's right. And I think there's all kinds of ironies about their position and how they're thinking about all this stuff. For instance, they're making the claim that, well, if you allow stablecoins to generate yield and pass on yield to their customers in some form, either in the form of rewards or otherwise, then the entire US lending credit intermediation system will totally collapse.

John Furrier

>> And I think it's funny you say that, because I hear this all the time and I think what's really irrelevant is that what you're doing is a generational shift. Some people are old enough to remember Blockbuster and then Netflix killed it. Okay. Nokia and BlackBerry phones killed by the iPhone. Yeah, I was having a conversation yesterday with an Apple employee, former Apple employee now doing a new venture who's the founder of Nest, Matt, and he said, "Yeah, iPhone killed the biggest business at Apple, which was the iPod." So Apple killed its own to bring in the iPhone. So I feel like the traditional banks and institutions have to recognize that, hey, if we try to hold on like BlackBerry did, I mean, who has a BlackBerry? They killed it. It's dead. Netflix obviously killed renting movies. This is a similar thing happening in the crypto infrastructure. At some point, it breaks for the existing players.

Haonan Li

>> Yeah.

John Furrier

>> What's your reaction to that?

Haonan Li

>> Absolutely, and I think then incumbents typically reach for a couple tools, and one of those tools is regulatory capture and you get the government to shut it down. And I think America as a country's done a good job of resisting that in its worst successes. And I think the hope is that that continues here.

John Furrier

>> What's your secret sauce as you guys navigate through this market? Obviously it's a good climate politically here now, but that could change. So what's your strategy and what's the secret sauce?

Haonan Li

>> Yeah, I think you're seeing a shift in crypto where in the early days of crypto, you had all these sort of very fantastical ideas about what might work on crypto rails. It's kind of what you're seeing in AI today where you've got 50 different crazy ideas and 49 of them probably will not play out. And I think in crypto today, we now know what works. It's the financial applications that work really well and in particular stablecoins are clearly working. And so for us it's because we realized this maybe two and a half years before everybody else, we just want to keep doubling down on this bet. It's playing out. Stablecoins have gone from 200 billion last year to 300 billion this year. That's growing rapidly at scale of hundreds of billions.

John Furrier

>> Yeah, it's no-brainer really, if you look at it. I mean, there's also wild cards that are not market-driven, like you said, the regulatory capture. What about some of the numbers? What's with you guys? And can you share some of the momentum numbers?

Haonan Li

>> Yeah, happy to. We're growing rapidly. We're growing about 30% month on month. We're hitting multi-billion annualized run rates. And so things are good there. We just want to keep doubling down on building this infrastructure out.

John Furrier

>> Yeah, yeah. So you feel good?

Haonan Li

>> We feel good.

John Furrier

>> What do you think about it? As you wake up in the morning, what's the first thought in your head? What's the price of Ethereum? Or from a work standpoint, what are you optimizing for? What's your focus?

Haonan Li

>> I think one of the great advantages of our business is that we really don't care where the price of Ethereum is. We don't really care where the price of Bitcoin is. We don't care where the price of Poopcoin is. That's not really what we do. What we focus on is, well, how can we help financial flows move around the world in a more efficient way? And we focus on anywhere to anywhere, right? Anywhere to anywhere, anything to anything. And so what I spend most of my time thinking about is what is that next geo that makes the most sense? So we're considering expansion to Africa right now, and we see a lot of opportunity there as well.

John Furrier

>> You guys are building a great network. One of the things I like about what you're doing is you're laying down the foundation for a lot more growth. And I want to ask you about that, because we've been looking at the market for the past couple of years. In the past, I think 12 months particular, it really, about a year ago I'd say that it moved from, okay, blockchain is back as an infrastructure, but all the alphas were working on it, doing all the heavy pioneering work. Some of the mainstream apps and people-building apps were coming on about a year ago and still a lot more like, wait, this is really, really good. So we think, theCUBE and research team, that there's going to be a massive tsunami of DeFi apps as the regulatory gets clarity around what's going on. You get the use cases that are stable, you got stablecoins. We think there's going to be a massive kind of digital convergence between the on-chain assets and physical digital world. We all have been talking about that for the whole series. But what that does is it brings the developers in. So you look at the frothiness of say the AI market, we think in the next 24 months that will move all over to the same paradigm, will move right into the blockchain. Okay, that means it's going to be a tsunami. First of all, do you agree? And if so, what does that look like? Because people will be like on the bench right now saying, "I don't really want to. I'm busy with my current software business, and maybe it's risky." That clears up, boom, huge amount of demand on the supply side. More smart contracts, more action on the chain, more settlement. It's obviously global. What's your thoughts on that? What's your reaction?

Haonan Li

>> I think you're going to see two things. I think the first thing you're going to see is that these worlds were mish-mashed in interesting ways. I think the first mish-mash is between traditional finance and crypto. And you're already seeing that. Apollo is taking stakes in the DeFi protocols and so on and so forth. Uniswap and BlackRock are doing something together. I think you'll see these worlds collide and what will come out of these are more useful crypto primitives that actually service the real economy, because now it's plugged into the actual atoms.

John Furrier

>> Yeah, the money-making system.

Haonan Li

>> That's right. That's right. And then I think the second intersection that you'll see is something with AI and crypto. I think precisely what is a bit unclear. I think there are many people who are yelling about it. It's not clear to me that it's quite figured out yet. I think the dominant story is something about agents will have crypto wallets, not credit cards. Maybe.

John Furrier

>> In this scenario.

Haonan Li

>> It's possible. I think something interesting there will come out. I think the second thing you're going to see though is people will slowly realize, well, what businesses are actually robust to this incoming AI wave? And so for instance, if you're running some B-to-B SaaS company, I'd be quite concerned, right? At bare minimum, you're going to have a ton more competitors that are probably going to whittle away your ability to have any pricing power. I think what can't Claude Code produce is a very interesting question. And so what Claude Code can't produce is liquidity. You're not going to be able to liquidity into existence. And so crypto has done a really good job of actually mastering these liquidity games. How can I create a pool of liquidity that gives me this liquidity moat? And so that's very much how we think as well.

John Furrier

>> It's interesting you bring that up because liquidity is data. Crypto means data being stored, immutable data on the chain. But if you think about it, it's the crypto in the loop. They always talk about human in the loop on the AI. So having that crypt, not, I won't say manipulated, but managed or influenced by the software, the software just... That's input to the software. That's what you're saying. Liquidity is static in the sense of it can't be fungible by software unless there's a directive or an application or a transaction.

Haonan Li

>> That's right. There are all these interesting contrasts. To some extent, these LM outputs are probabilistic. You very much don't want a probabilistic ledger of a value. You want that to be very much deterministic.

John Furrier

>> We'd all love the prompt liquidity. Hey, give me some liquidity. Genie in the bottle kind of approach.

Haonan Li

>> That's right.

John Furrier

>> All right, so what's going on with you now? Obviously you got the geographic expansion. How do you feel about some of the crypto conversations around the mainstream and the kind of traditional I call OG crypto pioneers?

Haonan Li

>> Yeah, I think-

John Furrier

>> Good? Still going on?

Haonan Li

>> I think both sides are kind of sniffing each other out a little bit. I think with many of the crypto OGs, they're sensing the market shift into this new paradigm of like, oh, well, we can now interact with the real economy, so we can't just kind of sit in a circle and sing Kumbaya and talk about communism. So I think you're seeing that with many of the OGs. I think I have not seen a very successful collaboration yet between a traditional financial firm and a crypto firm. I think many of these things are still kind of at the white paper or PowerPoint stage of things, something to talk about at a board meeting more than reality. It's still been my view that the only people who can pull off the next generation of interesting things to build in crypto are the teams that have a blend of these expertise inside one team, not some collaboration between two totally different-

John Furrier

>> You mean one team with cross-pollinate skills?

Haonan Li

>> That's right.

John Furrier

>> Interdisciplines in on one team.

Haonan Li

>> That's right. There is the traditional financial knowledge that can understand what these systems might be useful for. Then there's a deep knowledge about crypto and what it's actually good at and where it might be useful. And combining that into one team I think is, I mean, I'm talking-

John Furrier

>> It's more cohesive. I mean, you have a cohesive team, you're not just talking to another team. All right, so you got the supply side of the apps coming on smart contracts, we think. Now you got the primitives. What are some of those primitives you mentioned earlier that people are getting behind that seem clear, that are what's working?

Haonan Li

>> I think the first layer to do is you got to really nail payments. And to some extent, we haven't really nailed payments. I think what happened there is Bridge and some other folks figured out that, look, I can actually use stablecoins to move value round pretty efficiently. And what ended up happening was that where do they get the liquidity? They get it from the exchanges, and the exchanges were actually running out of liquidity and the prices were getting more and more expensive to the point where it may not even make sense to use stablecoins anymore. And so you see that kind of seesaw effect there. I think we need to first nail payments, we need to nail the FX component of it. If that's a solid foundation, then all the other primitives start to make more and more sense.

John Furrier

>> And you build on top of that. So you're enabling, you're accelerating more enablement with those two factors?

Haonan Li

>> That's right. And so just to maybe make that concrete, so if a company is moving most of its value on crypto rails, first you have to convince them to do that. Why would they do that? They would only do that if it's cheaper and faster. So that's where we are today. Once you get past that stage, then if they do the bulk of their business on crypto rails, really interesting things open up.

John Furrier

>> Like what?

Haonan Li

>> For instance, you could generate a financial statement every seven seconds. You know all their flows, right? You could generate a cash flow statement every seven seconds. Think about what that means for credit underwriting, right? If I'm a debt fund and I want to lend to some business I don't know, what if I could click a button and I could see every single thing this business has been doing? It'd be very powerful. It would compress borrowing costs dramatically and it would create much more effective credit provision across the economy. I mean, that's where the future's going. .

John Furrier

>> Yeah. I like the way you're thinking about this, because it's a system. You mentioned the exchange is running out of liquidity. Well, that should have been thought, dependency. It's like, oops. It's not like just build a tool or build a thing. You got to build the system. And that's what you guys are doing, right?

Haonan Li

>> That's right. That's right. And the plumbing of this is really complicated and it kind of splits between traditional and crypto. So somebody's got to figure it all out.

John Furrier

>> Well, great to have you on. You're certainly a pioneer. Love the infrastructure mindset. It's an operating system. I love that word. I've been using the word operating system on theCUBE now for a full year in many different conversations. And GPUs now, data centers are now operating systems. You're building an operating, basically an operating system. Not in the classical sense, but it's a system.

Haonan Li

>> Right. Yes.

John Furrier

>> Well, thanks for coming on.

Haonan Li

>> Thank you for having me.

John Furrier

>> All right.

Haonan Li

>> Great to see you.

John Furrier

>> I'm John Furrier, host of theCUBE. Again, the crypto world is continuing to advance fast. We saw the same movie in cloud computing, basic primitives get built and then higher level services open up, and then new use cases and new things we couldn't fathom happen. And certainly, that's happening in crypto. We're doing our part to keep you covered here on theCUBE. Thanks for watching.

Haonan Li, Codex

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John Furrier

>> Welcome back, everyone, to theCUBE. I'm John Furrier, host here in our New York Stock Exchange studio. Of course, we have our Palo Alto Studio connecting Silicon Valley and Wall Street. This is the NYC Wired program at CUBE Original. We're talking about the intersection of capital and technology. The market is technology, and one of the hottest markets besides AI is crypto infrastructure, blockchain, stablecoins. Haonan Li is here, co-founder and CEO of Codex, stablecoin-focused blockchain infrastructure company. Great to see you again. Welcome back. You were here in November. Seems like yesterday.

Haonan Li

>> Seems just like yesterday.

John Furrier

>> Outside of the wild flux and the prices of ETH and Bitcoin and others, still very bullish sentiment on the infrastructure side. So price of the currency, okay, that's just market stuff talking. The AI infrastructure is one of the hottest areas. We're seeing all that in the mainstream news. In the parallel universe of crypto infrastructure, continuing to build it out, the applications. Give us an update on where we are, because stablecoins has been in market. There's been movement there, but it brought a lot of clarity, pun intended, to what's going on.

Haonan Li

>> Totally.

John Furrier

>> Give us the update on what's happening on your end.

Haonan Li

>> Yeah, so Codex is the stablecoin FX specialist, so we help people move anything to anything. So you come in with dollars, we can get it into Rupiah. If you come in with Rupiah, we get you into dollar stablecoins. Any form you want, any place you want, and cheapest and fastest and easiest way.

John Furrier

>> What's the visibility on some of the commercial use cases you're seeing now that are stable, growing, people are gathering around? Where is the gravity around some of the use cases in the market?

Haonan Li

>> Yeah, I think we're seeing a couple different areas where folks are having steady demand. I think much of the initial product market fit has to do with south to south flows, so global south to global south flows where the banking infrastructure is less robust, where people have less access to financial services. And so that's where a lot of the initial traction is, and that's now extending beyond just the most worst conditions to places where the infrastructure is actually not so bad, but still worse than say stablecoin rails.

John Furrier

>> Explain Codex's market opportunity in terms of what are you guys targeting in terms of the market and the business model that you guys have right now? Where do you see it evolving to?

Haonan Li

>> Yeah, so I think what we want to do is we want to make a currency fungible in a way that it previously wasn't. So if you think about what money is, money is just some data entry in a database. It's a very weird database. If you change the currency, if you change columns, it costs you a lot of money to change columns and it takes time. Why does it take time and why does it cost money? Why can't you just have this blob of value that just transforms to whatever state you need it to be? You need it in dollars here, it's dollars. You need it in some other currency there? It's there. You need it on chain? It's on chain. Why can't we just have that? And so I think that's the future that we're building towards where the fruits of somebody's labor can get transmitted across space and time and form in this frictionless way.

John Furrier

>> And that buyer customer is who for you?

Haonan Li

>> The customers today are mostly fintechs, exchanges, some businesses that do a lot of cross-border transactions. Classic example is commodity folks who are moving large amounts of commodities cross-border. There, the friction point is very, very bad. Sometimes they can't let the goods offload until they've received the payment. And so the fact that the payment hasn't arrived yet means not only that your money isn't there, it means that you need people, you need the boat to still be in the dock. You can't offload the goods. It's a total disaster. There's just so much inefficiency across all these economic systems that really should all be going to zero. I think what you're seeing with AI is that the marginal cost of producing software is dropping substantially. And so the question then is, well, one, what are interesting businesses to build that do not rely purely on software? And two, how can we reduce the frictions elsewhere in the economy when most of this kind of software stuff is going to zero?

John Furrier

>> Yeah, it's interesting you have a software angle there, and again, people can debate the levels of commoditization of software. I mean, obviously, look at the coding assistance. I mean, software will be plentiful. The things that see on the AI side that's similar to what you were just talking about is that all these mechanisms that were either blockers or don't exist or older mechanisms, so if you're doing something that's cross-border, it's like, hey, why should we replicate the old? Where's the new? And then you go, okay, is it possible? So what are some of the dependencies? Is it regulation? Because I see that being very clear. Hey, if you got two things going on, remove the friction, remove out these mechanisms that aren't needed that create no leverage or creates friction. What's the blockers? What's the key right now to making that happen faster?

Haonan Li

>> It's very complicated. It's you need this blended expertise of both understanding the traditional rails as well as understanding the new crypto rails. You need the pragmatism to kind of not get lost in crypto la-la land and to really focus on what the customer needs. And so I think there's very few teams that can execute at this intersection. The other dimension of this is you can't Claude Code your way into this. You're not going to be able to sit in your bedroom and just Claude Code your way into this. I think it's a lot of pounding the pavement and being on the ground and configuring these systems in a way that actually makes things work.

John Furrier

>> So it's basically you have to essentially design from a domain expert standpoint some of these workflows that become mechanisms. That's what you're saying. It's not like just, "Hey, agent, go code me up a system that does these two things." What are specific things that are needed that you're pounding on the ground? Is it just certain relationships? Is it workflow-specific?

Haonan Li

>> I think it's relationships, it's figuring out the right compliance to put in place such that the flows are legitimate. It's about blending using crypto rails in a pragmatic way when they're actually useful and they actually can create efficiencies for customers. It's about all these things. I think that's why you see, for instance, you see the bank lobby attempt to kill these kind of stablecoin yield type projects. You see this happening in DC today. I think what's happening there is traditional banks are realizing how dangerous all this can be, dangerous for their bottom line.

John Furrier

>> Yeah, for them.

Haonan Li

>> For them.

John Furrier

>> It's good for everybody else.

Haonan Li

>> That's right. That's right. And I think there's all kinds of ironies about their position and how they're thinking about all this stuff. For instance, they're making the claim that, well, if you allow stablecoins to generate yield and pass on yield to their customers in some form, either in the form of rewards or otherwise, then the entire US lending credit intermediation system will totally collapse.

John Furrier

>> And I think it's funny you say that, because I hear this all the time and I think what's really irrelevant is that what you're doing is a generational shift. Some people are old enough to remember Blockbuster and then Netflix killed it. Okay. Nokia and BlackBerry phones killed by the iPhone. Yeah, I was having a conversation yesterday with an Apple employee, former Apple employee now doing a new venture who's the founder of Nest, Matt, and he said, "Yeah, iPhone killed the biggest business at Apple, which was the iPod." So Apple killed its own to bring in the iPhone. So I feel like the traditional banks and institutions have to recognize that, hey, if we try to hold on like BlackBerry did, I mean, who has a BlackBerry? They killed it. It's dead. Netflix obviously killed renting movies. This is a similar thing happening in the crypto infrastructure. At some point, it breaks for the existing players.

Haonan Li

>> Yeah.

John Furrier

>> What's your reaction to that?

Haonan Li

>> Absolutely, and I think then incumbents typically reach for a couple tools, and one of those tools is regulatory capture and you get the government to shut it down. And I think America as a country's done a good job of resisting that in its worst successes. And I think the hope is that that continues here.

John Furrier

>> What's your secret sauce as you guys navigate through this market? Obviously it's a good climate politically here now, but that could change. So what's your strategy and what's the secret sauce?

Haonan Li

>> Yeah, I think you're seeing a shift in crypto where in the early days of crypto, you had all these sort of very fantastical ideas about what might work on crypto rails. It's kind of what you're seeing in AI today where you've got 50 different crazy ideas and 49 of them probably will not play out. And I think in crypto today, we now know what works. It's the financial applications that work really well and in particular stablecoins are clearly working. And so for us it's because we realized this maybe two and a half years before everybody else, we just want to keep doubling down on this bet. It's playing out. Stablecoins have gone from 200 billion last year to 300 billion this year. That's growing rapidly at scale of hundreds of billions.

John Furrier

>> Yeah, it's no-brainer really, if you look at it. I mean, there's also wild cards that are not market-driven, like you said, the regulatory capture. What about some of the numbers? What's with you guys? And can you share some of the momentum numbers?

Haonan Li

>> Yeah, happy to. We're growing rapidly. We're growing about 30% month on month. We're hitting multi-billion annualized run rates. And so things are good there. We just want to keep doubling down on building this infrastructure out.

John Furrier

>> Yeah, yeah. So you feel good?

Haonan Li

>> We feel good.

John Furrier

>> What do you think about it? As you wake up in the morning, what's the first thought in your head? What's the price of Ethereum? Or from a work standpoint, what are you optimizing for? What's your focus?

Haonan Li

>> I think one of the great advantages of our business is that we really don't care where the price of Ethereum is. We don't really care where the price of Bitcoin is. We don't care where the price of Poopcoin is. That's not really what we do. What we focus on is, well, how can we help financial flows move around the world in a more efficient way? And we focus on anywhere to anywhere, right? Anywhere to anywhere, anything to anything. And so what I spend most of my time thinking about is what is that next geo that makes the most sense? So we're considering expansion to Africa right now, and we see a lot of opportunity there as well.

John Furrier

>> You guys are building a great network. One of the things I like about what you're doing is you're laying down the foundation for a lot more growth. And I want to ask you about that, because we've been looking at the market for the past couple of years. In the past, I think 12 months particular, it really, about a year ago I'd say that it moved from, okay, blockchain is back as an infrastructure, but all the alphas were working on it, doing all the heavy pioneering work. Some of the mainstream apps and people-building apps were coming on about a year ago and still a lot more like, wait, this is really, really good. So we think, theCUBE and research team, that there's going to be a massive tsunami of DeFi apps as the regulatory gets clarity around what's going on. You get the use cases that are stable, you got stablecoins. We think there's going to be a massive kind of digital convergence between the on-chain assets and physical digital world. We all have been talking about that for the whole series. But what that does is it brings the developers in. So you look at the frothiness of say the AI market, we think in the next 24 months that will move all over to the same paradigm, will move right into the blockchain. Okay, that means it's going to be a tsunami. First of all, do you agree? And if so, what does that look like? Because people will be like on the bench right now saying, "I don't really want to. I'm busy with my current software business, and maybe it's risky." That clears up, boom, huge amount of demand on the supply side. More smart contracts, more action on the chain, more settlement. It's obviously global. What's your thoughts on that? What's your reaction?

Haonan Li

>> I think you're going to see two things. I think the first thing you're going to see is that these worlds were mish-mashed in interesting ways. I think the first mish-mash is between traditional finance and crypto. And you're already seeing that. Apollo is taking stakes in the DeFi protocols and so on and so forth. Uniswap and BlackRock are doing something together. I think you'll see these worlds collide and what will come out of these are more useful crypto primitives that actually service the real economy, because now it's plugged into the actual atoms.

John Furrier

>> Yeah, the money-making system.

Haonan Li

>> That's right. That's right. And then I think the second intersection that you'll see is something with AI and crypto. I think precisely what is a bit unclear. I think there are many people who are yelling about it. It's not clear to me that it's quite figured out yet. I think the dominant story is something about agents will have crypto wallets, not credit cards. Maybe.

John Furrier

>> In this scenario.

Haonan Li

>> It's possible. I think something interesting there will come out. I think the second thing you're going to see though is people will slowly realize, well, what businesses are actually robust to this incoming AI wave? And so for instance, if you're running some B-to-B SaaS company, I'd be quite concerned, right? At bare minimum, you're going to have a ton more competitors that are probably going to whittle away your ability to have any pricing power. I think what can't Claude Code produce is a very interesting question. And so what Claude Code can't produce is liquidity. You're not going to be able to liquidity into existence. And so crypto has done a really good job of actually mastering these liquidity games. How can I create a pool of liquidity that gives me this liquidity moat? And so that's very much how we think as well.

John Furrier

>> It's interesting you bring that up because liquidity is data. Crypto means data being stored, immutable data on the chain. But if you think about it, it's the crypto in the loop. They always talk about human in the loop on the AI. So having that crypt, not, I won't say manipulated, but managed or influenced by the software, the software just... That's input to the software. That's what you're saying. Liquidity is static in the sense of it can't be fungible by software unless there's a directive or an application or a transaction.

Haonan Li

>> That's right. There are all these interesting contrasts. To some extent, these LM outputs are probabilistic. You very much don't want a probabilistic ledger of a value. You want that to be very much deterministic.

John Furrier

>> We'd all love the prompt liquidity. Hey, give me some liquidity. Genie in the bottle kind of approach.

Haonan Li

>> That's right.

John Furrier

>> All right, so what's going on with you now? Obviously you got the geographic expansion. How do you feel about some of the crypto conversations around the mainstream and the kind of traditional I call OG crypto pioneers?

Haonan Li

>> Yeah, I think-

John Furrier

>> Good? Still going on?

Haonan Li

>> I think both sides are kind of sniffing each other out a little bit. I think with many of the crypto OGs, they're sensing the market shift into this new paradigm of like, oh, well, we can now interact with the real economy, so we can't just kind of sit in a circle and sing Kumbaya and talk about communism. So I think you're seeing that with many of the OGs. I think I have not seen a very successful collaboration yet between a traditional financial firm and a crypto firm. I think many of these things are still kind of at the white paper or PowerPoint stage of things, something to talk about at a board meeting more than reality. It's still been my view that the only people who can pull off the next generation of interesting things to build in crypto are the teams that have a blend of these expertise inside one team, not some collaboration between two totally different-

John Furrier

>> You mean one team with cross-pollinate skills?

Haonan Li

>> That's right.

John Furrier

>> Interdisciplines in on one team.

Haonan Li

>> That's right. There is the traditional financial knowledge that can understand what these systems might be useful for. Then there's a deep knowledge about crypto and what it's actually good at and where it might be useful. And combining that into one team I think is, I mean, I'm talking-

John Furrier

>> It's more cohesive. I mean, you have a cohesive team, you're not just talking to another team. All right, so you got the supply side of the apps coming on smart contracts, we think. Now you got the primitives. What are some of those primitives you mentioned earlier that people are getting behind that seem clear, that are what's working?

Haonan Li

>> I think the first layer to do is you got to really nail payments. And to some extent, we haven't really nailed payments. I think what happened there is Bridge and some other folks figured out that, look, I can actually use stablecoins to move value round pretty efficiently. And what ended up happening was that where do they get the liquidity? They get it from the exchanges, and the exchanges were actually running out of liquidity and the prices were getting more and more expensive to the point where it may not even make sense to use stablecoins anymore. And so you see that kind of seesaw effect there. I think we need to first nail payments, we need to nail the FX component of it. If that's a solid foundation, then all the other primitives start to make more and more sense.

John Furrier

>> And you build on top of that. So you're enabling, you're accelerating more enablement with those two factors?

Haonan Li

>> That's right. And so just to maybe make that concrete, so if a company is moving most of its value on crypto rails, first you have to convince them to do that. Why would they do that? They would only do that if it's cheaper and faster. So that's where we are today. Once you get past that stage, then if they do the bulk of their business on crypto rails, really interesting things open up.

John Furrier

>> Like what?

Haonan Li

>> For instance, you could generate a financial statement every seven seconds. You know all their flows, right? You could generate a cash flow statement every seven seconds. Think about what that means for credit underwriting, right? If I'm a debt fund and I want to lend to some business I don't know, what if I could click a button and I could see every single thing this business has been doing? It'd be very powerful. It would compress borrowing costs dramatically and it would create much more effective credit provision across the economy. I mean, that's where the future's going. .

John Furrier

>> Yeah. I like the way you're thinking about this, because it's a system. You mentioned the exchange is running out of liquidity. Well, that should have been thought, dependency. It's like, oops. It's not like just build a tool or build a thing. You got to build the system. And that's what you guys are doing, right?

Haonan Li

>> That's right. That's right. And the plumbing of this is really complicated and it kind of splits between traditional and crypto. So somebody's got to figure it all out.

John Furrier

>> Well, great to have you on. You're certainly a pioneer. Love the infrastructure mindset. It's an operating system. I love that word. I've been using the word operating system on theCUBE now for a full year in many different conversations. And GPUs now, data centers are now operating systems. You're building an operating, basically an operating system. Not in the classical sense, but it's a system.

Haonan Li

>> Right. Yes.

John Furrier

>> Well, thanks for coming on.

Haonan Li

>> Thank you for having me.

John Furrier

>> All right.

Haonan Li

>> Great to see you.

John Furrier

>> I'm John Furrier, host of theCUBE. Again, the crypto world is continuing to advance fast. We saw the same movie in cloud computing, basic primitives get built and then higher level services open up, and then new use cases and new things we couldn't fathom happen. And certainly, that's happening in crypto. We're doing our part to keep you covered here on theCUBE. Thanks for watching.