Wall Street Could Be the Catalyst DeFi Is Waiting For

Wyatt Khosrowshahi (0:00)

So I think if you are a DeFi user, you would want to be looking from the lens of those two lanes and know exactly what game you're playing. Of like, okay, I'm buying something because I think it has fundamental long-term value, I believe in the people behind it. Or like I'm looking to find the next runner.

John Gillen (0:16)

DeFi is back and booming, but what does it take to bring more quality assets on chain? What do you need to know about all of this? And when will all of this mean number go up? Hello and welcome to Milk Road Crypto. The podcast is here to remind you that Luna Classic still has a market cap of $230 million, so there's still hope for you too.

I'm your host John Gillen. Today is Tuesday, September 8th. We will be releasing this episode on Friday, September 11th. And today we are joined by Wyatt Khosrowshahi. Wyatt is an investor at Castle Island Ventures, where he focuses on the on-chain economy and DeFi lending. He also co-hosts the firm's own podcast, On the Brink with Castle Island, which is a lot of fun, I recommend it. Wyatt thinks about blockchain-based capital allocation for a living. He is full of alpha about all things crypto, and he's going to share a lot of information with us in this episode. If that sounds good to you, make sure you like and subscribe, share this episode with somebody who's going to enjoy it. And as a reminder, our podcast today is free, and that would not be possible without our wonderful partners at Sabre.Money, the stablecoin payments platform built for Asia. So keep an ear out for more information on them later in the episode. But for now, welcome for the first time to the Milk Road show, Wyatt, how are you?

Wyatt Khosrowshahi (1:22)

John, I'm doing great. Thank you for having me. A great introduction. I'm excited now. I'll try to live up to even a part of that.

But I've been a fan for a long time. You guys so excited to be here.

John Gillen (1:33)

Well, I've been a fan of Castle Island for a long time. Wyatt, I'm happy to have you. I thought that would be a good place to start the conversation. Tell us a little bit about Castle Island Ventures, what you guys are, what you do and a little bit about your role there at the firm as well.

Wyatt Khosrowshahi (1:46)

Yeah, definitely.

So by background, the firm got started in 2018 by Matt and Nick, who were the founders. They'd previously been a very early part of Fidelity's digital assets practice, which goes back to about the mid 2010s, Bitcoin, very early days of Ethereum, I should say.

We're doing a lot of work in this space. Then one of the things they realize is from the lens of a brokerage like Fidelity, there was a lot missing in terms of infrastructure to make crypto work properly alongside other traditional financial assets like equities and the other things that someone like Fidelity would be working in. They started Castle Island with the idea that there would be a lot of opportunity to invest in technologies that would be required if crypto were going to become a financial asset class, mature asset class, I should say, and blockchains were actually going to be a cornerstone part of financial markets. That's things like data services to make sure that Bitcoin trades at the same price across exchanges, wallets and ways to custody assets safely, things like key recovery in case people lose their keys, pass keys to make sure that it's easier to store your crypto, compliance to make sure that people aren't breaking rules, ways to issue new assets on chain and tokenization, which is coming into the fore now and we can talk about later. But effectively, we focus on investing on all these technologies that underpin on-chain technology and the idea that this can be used more widely for financial asset classes. So we're actively investing, continue to be excited about the next wave of startups. And then I joined the firm a bit over three years ago, got into the crypto industry around 2021, and was working on the traditional equity side at a hedge fund before. So again, I appreciate you having me and excited to be here and chat about things in the market and beyond.

John Gillen (3:30)

Yeah, well, I think there's a lot to unpack here. Castle Island is known for, as you said, trying to invest in the gaps in financial market infrastructure for digital assets. And I'm curious what opportunities you see there today, because a lot of these problems are, you know, you talked about our problems of the past that have sort of been solved. But what opportunities are you seeing there today and where are you seeing those opportunities?