Could Some Vaults Trigger Securities Law? Yes, but It's Case by Case

**Sun Raghupathi** (0:00)
What people need to understand, though, is it's really important that people know the level of risk that they're taking. It's not critical, in my opinion, that there's no risk at all.
The whole point of finance is moving risk and trading off things like liquidity and yield. I think we want to support a large universe of interesting assets. It's just users need to understand they shouldn't think they're having some safe, insured savings account, and suddenly they're getting exposure to basically an on-chain hedge fund like Stream Finance.

**Laura Shin** (0:28)
Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this livestream, though heads up, this was pre-recorded a couple weeks before publication. Now we'll take a quick word from the sponsors who make this show possible.
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Today's guest is Sun Raghupathi, co-founder and CEO of Veda. Welcome, Sun.

**Sun Raghupathi** (1:08)
Thanks for having me.

**Laura Shin** (1:11)
We booked this podcast a week or two ago, and now suddenly there's a lot more chatter and the polls than there was even at that time. They're already a big business, about $67 billion in TVL and vaults.
Why don't we just start with the basics? We've never had a deep dive on them here in the podcast. Veda is an on-chain vault infrastructure provider for institutions, but let's just start with the question, what is a vault?

**Sun Raghupathi** (1:37)
Yeah, great question.
Vaults are basically on-chain vehicles for giving users exposure to on-chain markets. The general problem that exists are DeFi markets are diverse and complex and very hard for normal people to use, and vaults have emerged as this primitive that sits on top of DeFi markets that allow users to get simple exposure to these underlying markets. Another way to think about this is vaults are infrastructure for creating financial products on top of on-chain markets. Those can be lending, it can be baskets of RWAs, trading vaults, there's a huge spectrum. Vaults are a word that everyone uses to mean different things, but the thing that unifies all of this is this layer for giving investors exposure to on-chain markets.

**Laura Shin** (2:26)
Okay. Yeah. It reminds me a little bit of some of the things that were bubbling up during DeFi summer, like Yearn or even I think like Instadat might have been another one.
But I'm curious to hear how you even got into crypto and came to launch Veda.

**Sun Raghupathi** (2:44)
Yeah. My journey has been sort of circuitous and wrong and long. I've been building in DeFi for the last five years. Before that, I was actually enrolled in a PhD in computer science, machine learning, had nothing to do with crypto or DeFi. I'd heard of Bitcoin, but nothing beyond that. A friend of mine from college was actually joining a startup in the Cosmos ecosystem back in the day. Before my PhD, I was starting to wonder if maybe entrepreneurship and doing startups was a better fit. So I deferred my PhD and joined DeFi. What I found was an industry that is in many ways very interdisciplinary. You get whatever your academic interest is, whether it's game theory, economics, cryptography, computer science, there's a place for you in the crypto world where you can do something interesting. That was the thing that initially nerd sniped me.
Over time, what I started to understand was that the things we were building today are the infrastructure and foundations for a new financial system that is going to touch billions of people.
When I joined in 2021, the space was basically DGENs. Yield farming was crazy. There were all kinds of interesting game theory experiments being run on chain.
A perspective that I adopted then, and I still think is true, is that DGENs are the beta testers of the on-chain world. We needed people who were willing to take massive amounts of financial risk with their own assets to test all of the infrastructure that we've been building. Without that, these things, these systems would never get battle tested at scale and would never be adopted. That's been really fun. I've seen crypto and DeFi evolve from what was effectively a on-chain casino with crazy experiments being run to now, what we see is an ecosystem of really strong and diverse on-chain primitives are being adopted by enterprises and institutions globally.

**Laura Shin** (4:36)
Okay. Yeah. I think what's really interesting about Vaults is, this is the solution to what most people think they want for all their money, which is just to get yield and to have it be automatic, and they don't have to think about it.