How Tokenized Stocks Could Undercut Interactive Brokers' 77% Profit Margin

**Alex Cutler** (0:00)
I like to think about this as like the internet allowed anybody to do what Steven Spielberg did, create content, movies, films. I don't know if you've seen Obsession, but this is a guy who came out of creating content on the internet, has now created one of the highest grossing films to ever exist. And what these markets are gonna allow people to do is anyone can now be Ken Griffith. They can come on chain and they can participate in the very act of market making in a really incredible way.

**Laura Shin** (0:31)
Hi, everyone. Welcome to Unchained, your no-hive resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream.
First, we'll take a quick word from the sponsors who make this show possible. This episode is brought to you by 1inch Aqua, the shared liquidity layer from 1inch. Back multiple liquidity positions with one wallet balance, and keep your tokens in your wallet until a swap fills. See how it works at 1inch.com/aqua.
Today's guest is Alex Cutler, CEO and co-founder of Dromos Labs. Welcome, Alex.

**Alex Cutler** (1:04)
Thanks for having me. Good morning.

**Laura Shin** (1:07)
Yeah, excited to chat. So Coinbase jumped into the tokenized stocks race this week by launching tokenized Apple and Nvidia, Meta and Google on base. And there's already been a number of tokenized stocks that are out in the market. But as people are learning on the back end, they can be quite different. So kind of maybe explain some of the different types and broad strokes and explain what type the Coinbase tokenized stocks are.
Yeah.

**Alex Cutler** (1:35)
Yeah. Thanks for having me. And this is like an incredibly exciting time for us. So I can't wait to jump in.
Before I answer that, I'll say, what's the overall vision here? I think in the words of my friend, Jesse Pollock, the founder of Base, on chain, what we're trying to build is the most vibrant, deepest, richest capital market in history. And we can do that because traditional markets, they are only open for about a third of any given week. They work bankers hours and on chain, our markets can be faster, cheaper, globally accessible, 24x7, 365, and the assets that power them are fully programmable. So this is like bringing the network effects of the internet to financial markets for the first time. So you're correct. This is a very big moment for tokenized stocks because these represents something very different than the versions we've seen before. Prior versions, which I like to think of as kind of betas for tokenizing a real world asset like a stock, they were largely synthetic representations, debt claims, a derivative wrapper or something like that. And that of course just adds friction, right? It adds risk and it adds cost to the usage. And any friction, cost or risk will hold back their ability to be adopted freely. What Coinbase launched is a paradigm shift moment. I think this is leaping far ahead of the solutions we've seen, because it is fundamentally a representation of the actual underlying asset in the stock.
Every token that you see today issued on base, it's backed one by one by an actual share, and it's custody and issued by a regulated custodian, right? It's held in trust, and the Mint and Redeem model here is the exact same one that we see in traditional ETFs, and so it's basically the gold standard for this type of thing, and this is really critical, because if you look at some of the existing solutions out there right now, they will be very clear in their terms and conditions that you do not actually have any right to the underlying set, right, that this is just a token.
If something goes wrong, you definitely can't sue us. You can't come claim it. And what Coinbase has said from day one is, this is actual beneficial ownership. This is the real thing. And for us to have true adoption parity with traditional markets, to have true price parity, you need to have functional parity. And this is the first true version of it we've seen yet on Chain.

**Laura Shin** (4:31)
Yeah, it's super interesting. Once I started digging into the details, I was like, wow, it gets kind of complicated. But I do agree that what you have built seems kind of like a superior product in multiple different ways.
What kind of volume have you seen out of the gate?

**Alex Cutler** (4:50)
Yeah, I mean, this is really incredible.
And we've been working as a close partner to Coinbase for some time since the launch of Base and we've helped them to stand up what is the highest volume markets around the top traded digital asset in Bitcoin today. So on base on Aerodrome, we many weeks do more volume than every other chain, every other exchange combined on the world's top digital asset. And same thing for global FX markets, which is another trillion dollar market.