Moderator: Aaron (BD manager @R2)

Speakers:

• Boris Redfern (Head of Capital Markets @KasuFinance)

• Nathan Paitchel (Director of Growth @OpenEden_X)

• Josh (Head of BD @matrixdock)

• Harsh (BD manager @R2)

1. Can you briefly introduce your protocol and how it contributes to the on-chain yield landscape?

• Kasu Finance is an on-chain private credit protocol offering retail access to high-yield, short-term products like invoice factoring and receivables financing. With over $500M in term sheets, they are launching a $40M test in Australia, targeting returns of 12-25% with zero losses. Their goal is to democratize institutional-grade credit for both TradFi partners and retail investors. (Boris)

• Matrixdock, part of Matrixport, tokenizes T-Bills and gold (XCUM), launched in 2022 with strict KYC for accredited investors. They offer on-chain yield through permissioned assets, leveraging Matrixport's crypto expertise to serve institutional clients across Asia. (Josh)

• OpenEden offers tokenized T-Bill funds ($188M TVL) and the USDO stablecoin, backed by T-Bills and money market funds. Operating from the BVI and Bermuda, they focus on regulatory compliance to attract institutions while enabling DeFi composability. (Nathan)

• R2 bridges retail and traditional finance, offering 6-10% annual yields on USDC deposits through a simple, Web3-native approach. They focus on ease of use and interoperability, aiming to provide institutional-grade yields to retail users without complexity. (Harsh)

2. What is your interpretation of the GENIUS Act? Do you see it as a turning point for DeFi regulation?

• The Genius Act is a significant step forward, offering legal clarity for developers by distinguishing decentralized code from centralized intermediaries. It fosters innovation in yield-generating products and strengthens institutional confidence, aligning with Matrixdock's compliance-driven approach. (Josh)

• The Act accelerates the convergence of DeFi and TradFi, creating "JustFi." It legitimizes stablecoins and boosts bank confidence in private credit deals, making tokenized RWAs visible and compliant. While it supports institutional infrastructure, it may not immediately drive retail adoption. (Boris)

• The Act ensures the U.S. doesn't miss out on the stablecoin and tokenized treasury revolution, facilitating global distribution of U.S. treasuries. It's a major step for regulated stablecoins, though its impact on non-TradFi use cases (e.g., micropayments) remains uncertain. (Nathan)

• The Act advances transparency, compliance, and security, addressing trust issues in crypto. It opens doors to trillion-dollar RWA markets like private credit, marking DeFi’s maturation, but it’s just the beginning of a broader regulatory journey. (Harsh)

3. How does the regulatory clarity from the Genius Act shape your protocol’s architecture, compliance approach, or BD strategy? Are institutions more willing to engage now that policy guardrails are defined?

• The Genius Act doesn’t change R2’s core design, as they already prioritize compliant, centralized custody. It builds trust, paving the way for more institutional partnerships and a smoother user experience, aligning with their mission to bridge retail and TradFi. (Harsh)

• Matrixdock’s permissioned, KYC-focused T-Bill product is already in line with the Act, so no major changes are needed. The Act accelerates institutional partnerships and capital inflows by reducing perceived risks. (Josh)

• OpenEden's regulation-first approach remains the same, but the Act creates new BD opportunities. They continue to work with top law firms, auditors, and fund admins to stay ahead of regulatory changes, positioning themselves for potential U.S. licensing. (Nathan)

• The Act legitimizes crypto, easing conversations with TradFi institutions. It supports stablecoin payments and blockchain-based securitizations, helping reduce crypto's stigma and encouraging banks to engage in private credit deals. (Boris)

4. How are you navigating the tension between DeFi’s decentralized roots and regulatory realities? What trade-offs are you facing, and how do you keep innovating without sacrificing compliance or user trust?

• OpenEden follows a bottom-up, highly regulated approach to ensure long-term viability, avoiding the risks of unregulated protocols. They focus on compliance to build trust, offering institutional-grade products while maintaining DeFi composability. (Nathan)

• Regulation bridges trust gaps, driving innovation through transparency. R2 combines centralized custody for compliance with decentralized yield generation, offering user-friendly interfaces that maintain accessibility without sacrificing regulatory standards. (Harsh)

• Compliance is crucial for institutional adoption, but protocols must simplify the user experience to preserve DeFi's accessibility. The key trade-off is centralizing certain components (like custody) while still innovating within regulatory frameworks to maintain trust. (General Consensus)

5. Do you think the Genius Act will accelerate the adoption of tokenized RWAs, or could it impose new friction? What needs to be true for RWAs to scale meaningfully?

• The Act will have a positive impact, but mass adoption of stablecoins in banking apps for payments will be more transformative. Simplifying user experiences, such as eliminating complex seed phrases, is crucial for driving RWA adoption, as complexity deters mainstream users. (Boris)

• The Act boosts builder confidence by reducing legal risks, but real adoption depends on solving practical issues like faster redemptions and atomic settlements, as well as simplifying the user experience. RWAs will scale if protocols offer superior capital experiences for both retail and institutional users. (Josh)

• The Act ensures the U.S. taps into global demand for tokenized T-Bills, easing the path for regulated products. Future stablecoin use cases, such as micropayments, will drive RWA adoption, but value and distribution need to align with user needs for success. (Nathan)

• The Act will speed up RWA adoption by improving transparency and trust, opening trillion-dollar markets like private credit. Scalability requires specialized, interoperable protocols with user-friendly interfaces, reducing chain-specific complexity. (Harsh)

6. For everyday users (savers and liquidity providers), what should they pay attention to as new rules reshape the market? Are there new risks? Is the bar for transparency higher?

• Users should be cautious and avoid chasing high yields without proper due diligence. Structured products backed by reputable TradFi institutions offer safer options to avoid risks like rug pulls or Ponzi schemes. While the Act improves transparency, user education is still key. (Nathan)

• Users should only invest what they’re willing to lose, as speculative DeFi carries high risks. Builders face a “regulatory arms race,” and protocols must prepare for global scrutiny to avoid legal issues. The Act increases transparency requirements, pushing for greater compliance. (Boris)

• The Act reduces risks by enforcing compliance, but users should focus on regulated, reputable protocols and do thorough research. With rising transparency standards, users must stay vigilant in the evolving DeFi landscape. (General Consensus)

Big thanks to Boris, Nathan, Josh, and Harsh for their invaluable contributions! 🙌 Your insights really helped shape the discussion. We're already looking forward to the next AMA — get ready for another round of exciting reveals! Stay tuned!