What Does the $100M Galaxy x Sky Deal Mean for the Future of DeFi?

Greg Feibus (0:00)

If the tokenized market grows to many trillions of dollars, which I actually do believe that will happen in the next five plus years, that SUSDS could easily become a $100 billion plus asset.

John Gillen (0:12)

Galaxy bought an undisclosed amount of Sky tokens and is now holding $100 million of SUSDS on its balance sheet. Is this the beginning of institutional money finally coming to DeFi, and what do crypto investors need to know about all this? Hello and welcome to Milk Road Crypto, the show that knows that when Sky and Galaxy team up on the future of finance, the only direction to go is to the moon. I'm your host John Gillen. Today is Tuesday, September 29th, and today we are joined by two guests, Max Bareiss, head of lending at Galaxy, and Greg Feibus, global head of capital markets at Sky Frontier Foundation to discuss their new partnership. We're going to tell you all about it. There's going to be a lot of alpha in this one. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who needs to hear it. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Nexo, the digital asset platform that lets you trade, earn and borrow all in one place. So keep an eye out for more information on them later in the episode. But for now, welcome to Milk Road Crypto.

Max, Greg, gentlemen, how are you today?

Greg Feibus (1:09)

Doing well, John. Good to see you.

Max Bareiss (1:11)

I'm doing well. Thanks for having me, John.

John Gillen (1:14)

Well, I'm glad to have you guys. Gentlemen, before we dive into this new announcement, this new partnership or new, I guess, agreement in the ongoing partnership, tell me a couple of sentences each about your roles at your respective firms and your involvement in the partnership that's been announced. Max, let's start with you.

Max Bareiss (1:29)

Happy to. So, Max Bareiss, I'm the head of lending at Galaxy. You already mentioned that, but I've been here for almost five years now, which in crypto, you now have seen multiple cycles. It's been a great time to be at Galaxy. We run a number of different things in terms of the lending book here. We've been long-standing power users of the Sky ecosystem.

Really excited to talk about some of the things that we have going on with a number of the different teams within the Sky ecosystem, how we've been able to partner and then talk about what we're doing at the actual Sky level now with Greg and John who have recently joined. This has been a long overdue in terms of us codifying this partnership and really happy to make that announcement here.

John Gillen (2:16)

Awesome. Greg, yourself?

Greg Feibus (2:17)

Sure. Unlike Max, I've been at Sky for almost five months, not five years, but global head of capital markets, really that's multifaceted role that concentrates on working alongside our risk team to really focus on asset liability management for the balance sheet and really balancing our requirements around liquidity with our current investments. There's a part of certainly working closely with the various agents who are looking at their own allocations, but looking at that from a portfolio level, grouping exposures together and ensuring that the protocol is operating at an optimal level where liquidity is there, but we're also optimizing the yield and the return that we're getting for SUSDS users.

John Gillen (3:10)

Okay. Before we dive in a little bit more to the ongoing relationship between Galaxy and Sky, let's just talk a bit about what was announced last week and what you think people should know about some of these headlines.

Greg, let's start with you on this one. Talk me through what's been announced and what the takeaways are here.

Greg Feibus (3:28)

Yeah. The major headline announcement, I would say, was the $100 million allocation from Galaxy and their balance sheet to SUSDS, which is our savings token that's issued by the Sky protocol. That was obviously the headline number, but you also have a purchase of Sky token, which is the governance token for the protocol, in addition to accepting SUSDS as collateral.

Obviously, the unlock there was having underwritten it themselves, which Max can talk to you about making it available to their clients as acceptable collateral for the landing desk.

Max Bareiss (4:09)

I can piggyback on that.

I think more than anything, and this will probably bleed into what was going to be your next question anyway. But from my standpoint, $100 million of SUSDS is more of a codification than anything else. We've been power users of the Sky ecosystem for a very long time. We had SUSDS on the balance sheet many times throughout the my time here at Galaxy, and so this is more of just a formalization. Putting $100 million on the balance sheet is regular way course of business for us. It's a really good way for us to effectively do treasury management for the digital asset balance sheet. There's a number of different things that allow you to both put on additional SUSDS positions and then also utilize it on a weekend, for example, when you have clients coming in for large flow, and unlike something like a treasury bill or even a traditional money market fund, I don't have to wait until Monday morning to get out of that position. If I have a large ticket that comes in from the trading side of things or the derivative side of things or even a loan, I have the ability to move that position on chain and be able to get myself the liquidity I need to continue to facilitate the business that continuously flows to Galaxy. 24-7 seems like the weekends are oftentimes the busiest, which I know can be fun from time to time, but that's the business we chose to be in.