Why CLOs Are Suddenly DeFi's Hottest Yield Play

Absolutely. I mean, I think we kind of get a frontline seat to seeing like where the market is heading, right? Because we see what clients are working on and how we need to adapt our technology to be able to support those use cases. you know as you pointed out right i think the shift over the last 12 months as you know as monetary policy rates um you know have kind of um studied is how you know can we kind of increase yield right it's it's no surprise right that in defi you know people love uh their yield they love their kind of yield looping strategies right so uh the race has been to create products that are you know, attractive to that part of the market. Right. And, and that's really where we've seen CLOs take off. Right. So we saw, you know, Centrifuge with Janice Henderson launched J triple a right. We saw like, what else did we see? I mean, Hamilton Lane and, and, and a cred. Exactly. Yeah. Right. There were, there was the Apollo accredits, right. You know, all, all of these, which, which we actually support a chronicle. um and i think even just yesterday or i think it was like two days ago now uh we announced right that we were supporting galaxy's uh first uh tokenized clo um which you know i i think is quite interesting because you know galaxy if if they're getting into tokenization i mean they're going to be a really huge huge player i mean they have the uh they have the the network uh and they sit kind of perfectly nestled in between you know defy and and on the trad fi side so i think i think they're they're going to do really well um and i mean like the product that we support there right is um galaxy is either directly or indirectly right uh letting people borrow against their crypto right against bitcoin against eth sole xrp right whatever it is um and so you know all that we are doing right is we are getting like the loan book from um from galaxy um and then we going to their custodian right we going to anchorage and we're checking like okay um is there actually you know all this btc all this soul all this xrp all this eth in custody you know can we trace every way you know every satoshi that is claimed to be as collateral on these books. We identify the liabilities. And now we can say, okay, this CLO is 200% collateralized. And it's yielding 7%. So it's giving pretty good yield. And so now, one, anyone who wants to potentially buy this Galaxy CLO right? Like can see, okay, look into the guts and like, know that like someone independent, like Chronicle has like validated all of this. Um, but two now someone like Morpho, uh, you know, you can have a vault and you can create like a looping strategy on this, right? So you can juice your 7% yield into 14 or 21%, right? What have you. Right. And that's really like what, like, you know, it's this two stages of like what Chronicle enables, like one, it's the transparency that gives like the confidence in these assets. And then two, right, it's the ability for DeFi, right, to integrate them. So, I mean, in terms of like what's coming up, you know, we're seeing, for example, like REITs, like real estate investment trusts are, there's a couple of those coming out. So we're excited about those. I think you may have seen Centrifuge just announced with New York Life that they're going to be releasing a new fund as well. I think kind of equities right now are really hot and i think it take a while to get there right like you were alluding to before right that there like all these promises and uh some of them have panned out and some of them haven't i don't think it's it's a matter of it it hasn't it doesn't pan out i think it's more a matter of just like it needs more time than anyone thinks it does but like the the promise is huge right like if you you go if you have some stock if you have tesla stock and you want to go borrow against your tesla stock like your broker is going to charge you like very high single digits low double digits right um versus in defy i mean uh if you're gonna lend these things with the i don't know ltv of like 30 or something right um you know defi will like offer you like mid to you know high you know single digits on this stuff like all day like if you look at op what do you get for lending usdc you're getting 2.7 you're literally getting less than t-bills like so there's i think there's really an opportunity, right, for DeFi to kind of be the mechanism where it can, one of the flywheels for tokenized equities taking off is just going to be this ability to get leverage against your equities at like much cheaper rates than you can in TradFi with your broker. Yeah, one thing I was actually kind of really dying to ask you is I want to get your thoughts on some of the, I guess, controversy that surrounded, like for instance, the SpaceX IPO and some of the markets that were spun up where people were able to kind of bet on the price of some of these pre-IPO shares or private market shares. And I know with the SpaceX I mean I think there were a couple of like tokenized providers that had to give back the money because they weren able to procure the shares out there And I mean that seems to be like the types of issues that a company like yours would make sure does not do not happen Yeah. Yeah, sure. I mean, at that point, it's people didn't know what they were buying. Right. They were buying an SPV on an SPV on an SPV. Right. They had like second degree, third degree exposure. And yeah, when it came time to, hey, I want to get my shares, right? A lot of these things blew up rather from fraud or just improper legal structuring, right? Or just they never got the shares, right? But yeah, right. This is really what Chronicle is here to do, right? Is just give you absolute end-to-end transparency into everything, right? And that's what's going to keep DeFi anti-fragile. That's how we're going to scale DeFi with tokenized assets and keep DeFi from not having the same systemic risks that we see in the traditional financial industry. If you hold crypto on your phone, your biggest vulnerability isn't your wallet. It's your carrier. AT&T, Verizon and T-Mobile have been breached again and again. And SIM swaps are still one of the easiest ways for attackers to drain accounts. That's where CAPE comes in. America's privacy-first mobile carrier. Same premium service, but CAPE rotates the identifier on your SIM every 24 hours, deletes your call and text metadata after a day, and protects against SIM swaps with a 24-word recovery phrase that only you control. You also get two middle-to-end encrypted secondary numbers for banking and signups, so you stop handing your real number to every app that asks. Go to cape.co slash unchained and use code unchained for 33% off your first six months.