Stablecoin Beyond Bitcoin: What Liquidity, ETF Growth Signal for Crypto's Future

Nicole (0:01)

It's time for our ETF watchlist segment, and we're so glad you are with us, folks. Josh Olszewicz is with us, Portfolio Manager at Canary Capital. So we're going beyond Bitcoin today, other digital assets and blockchain. And today we're looking at TRXS.

This ETF is an important one. Tell us more about it.

Josh Olszewicz (0:24)

Hi, Nicole. Thanks for having me.

So the TRXS ETF, like you said, it's outside of the Bitcoin, ETH, Seoul, maybe top three. It's lower down the market cap list, top five to ten in any given time. And its main focus, honestly, these days is working on providing stablecoin access and stablecoin transactions to the world. A lot of places outside of the US, where they don't have Venmo, they don't have FinTech ways to send money, they use Tether, which is a stablecoin, and they use the Tron network to do that. I know that's a lot of blockchainese for people who aren't familiar, but essentially again, it's a great network to send cheap dollars, USD, to individuals in a peer-to-peer way.

Nicole (1:13)

It's very interesting. Blockchain aside, now you're looking at stablecoin, the growth, how it gets passed along.

With that now, the number of transactions, the adaptation, the penetration of stablecoin and using Tron. Tell me more about that. What kind of numbers are you looking at? Two times, three times, 10 times in the next few years.

Josh Olszewicz (1:40)

Sure. So the US markets have had sort of this on-again-off-again relationship with the Clarity Act. Now that that got pushed down or didn't pass, the SEC and the CFTC have come forward with a few other defining, clarifying, if you will, actions regarding markets.

So we expect to see continued progress in the stable coin front. Currently, USDT, Tether is the biggest stable coin, followed by USDC.

Fifty percent of all USDT in circulation is on the Tron Network, which a lot of even crypto natives don't even realize how much activity there is on Tron any given day. And the Tron Network itself is pushing over a hundred million transactions at times with very low fees relative to the rest of the market. So again, for individuals sending stable coins, this is critical. They need cheap near zero fees and they need speed, and they need to do it without government intervention. Typically, again, we're talking non-US transactions here. So we expect stable coin growth to continue unabated, really, especially as we're seeing some lift here in the crypto markets, and we're seeing more activity and liquidity come into crypto. We're going to see more stable coin prints, most likely, and we're going to see more Tron activity as well on the back of that, most likely.

Nicole (3:08)

Yeah, I saw that total stable coin market capitalization on Tron grows to a record of over 89 billion. The Tron averaged 11.8 million transactions a day during the quarter, and just continues to grow. So that's a big story right there overall. So when you talk about what's in there, you said the smaller names, right? So what else should we be looking at here? Because you even mentioned 5 to 10 At first, I was thinking 1 to 5, 5 to 10

Okay, Bitcoin is on top, Ethereum is on top. What's below those that has validity to you, is worth being in this ETF? Tell us more about some of the other parts of this.

Josh Olszewicz (3:54)

Sure. Yeah. So we look at a lot of proof-of-stake tokens, which provide a yield which is baked into the NAV of the ETF, such as Sui, SUIS and Solsi, Solsi, Solana.

So again, you have Bitcoin, ETH, Sol, XRP, some of these older networks like LTC.

Are they a smart contract network? Are they a currency network? Are they hybrid in between? Are they involved in tokenization? Are they involved in real world assets? These are ways to differentiate for people not familiar between all these chains. So they might look sort of uniform and they all tend to correlate together a little bit. But individually, under the hood, they are different. They are trying to solve different problems and they are solving different problems. And again, Tron is solving the stablecoin transaction puzzle very well. You know, ETH is solving smart contracts, Solana is very good at tokenization right now. LTC is very good at currency right now. HBAR, HBR is very good at business-to-business sort of higher level transactions in a ledger format. So, all of these lesser known networks, probably to most people outside of the crypto ecosystem, their time is coming to shine with the rise in things like real world assets on chain, things like stablecoins, as well as tokenization. Again, a lot of this stuff is really non-US facing in a sense that us in the US are blessed with many brokages and fee free trading and access, whereas outside of the US, that's not so much the case. And it's also providing 24-7 trading to individuals looking to get access, again, through the tokenization lens, to equities, which 24-7 trading is coming to the US shortly here, soon, in a couple months. Anyway, so everybody's gotta get ready for that. But those networks are the rails allowing for this smart contract activity to happen.