Hello, welcome.
I am here in Amsterdam for Money 2020 Europe, and I am very lucky to be joined by Kyle Jenie, who has come over.
He's the Chief Business Officer for Optimism.
Kyle, hi, thanks for joining us.
Yeah, thanks for having me.
So, Money 2020 is about to kick off as we're speaking.
What are you most excited about today?
Yeah, we're most excited because we really feel like the time is now.
We're seeing all of these large financial institutions.
Moving into blockchain and so we saw recently, you know, NYSC invested $200 million in OX, Deutsche Bors $200 million into Kraken.
The industry is moving, we think 2026 is the year, and those discussions are happening here at Money 2020, and so we're really excited to be here with our customers.
Absolutely, and it's nice to see all those headlines grabbing news while there are so many exciting things happening and cross finance.
Still, this blockchain play is, is really defining things.
Um, in that blockchain play, tell us about optimism, exactly what it does and where it sits in the ecosystem of tokenization and digitalization.
Optimism, we help large enterprises build blockchains, right?
And so we've helped 50 of the largest enterprises in the world build their blockchains.
Base is built on the OP stack, OKX, Uit out of Korea, Kraken, Uni, Sony from Japan, and so we have a long list of customers who have built their blockchains on top of optimism.
And a fun fact.
You know, last year we had 6 billion transactions flow through OP, which is about 15% of all crypto transactions are flowing through the Oak stack.
Yeah, it's so exciting.
I mean, it's like the bricks and mortar of digital, um, or the digital bricks and mortar of finance, um, which is brilliant.
Um, on that exact point, I mean, the, the OP stack, um, Owned exchange Opisack powered exchange owned chains.
They last year, I think you guys reported in H2 that $495 million flowed through this.
I mean, what does that tell us about what's happening to exchanges and Yeah.
Yeah, what we're seeing is we're seeing the rate of adoption of the exchanges chains increasing, and so you're seeing more apps being deployed, you're seeing more users interact on those chains, and ultimately that's generating revenue for our customers.
And one of our goals at the company is we want our customers to be successful and profitable.
And so that stat, the $495 million of app revenue, is just a great indication of that.
Yeah, you know, when we look at, um, someone like a base, it took them months to scale up the volume on their chain.
When Kraken launched, it took them 24 hours, and that was only, you know, a year and a half years difference, and that's just the speed and of increase that was seen in the industry about progress, yeah, definitely, and, and it's so nice to see actual numbers of actual money moving.
Because I feel like this space for so long has been in a kind of potential world and a pilot pilot world, um, sandbox worlds, and now here we are just seeing actual value, actual capital flowing through, as you say, um, chains that are powered by by OP, um.
Talk to us a little bit about this question about um owning the chain yourself and building it yourself.
And obviously in the crypto sort of native space, you see everyone using the uh public blockchain.
Um, Coinbase now has Base, Unisop has UniChain, Kraken has Inc.
Um, what, why are exchanges building their own chains and why is this important to them?
Yeah, so there's really 3 main reasons, uh, that they're choosing to, you know, own their own programmable financial infrastructure versus renting it from someone else.
And because that's basically the two options you have.
You can pay rent to another chain, or you can own it yourself, and there's really 3 reasons that they choose to own it themselves.
Number 1 is they want to differentiate their products in the market.
And to differentiate your product, you actually need to be able to customize your infrastructure.
And if you own your own blockchain, you're able able to drive that customization.
And when we look across the market, competition is fierce.
You've got fintechs like Revolut competing with native crypto companies like a Coinbase, which is now competing with traditional financial institutions, and so that competition is fierce and these exchanges, they want to be able to customize their product and differentiate their products in the market.
The second reason is they want to own the economics and so instead of paying rent.
To somebody else, why don't you accrue those fees?
Why don't you accrue those economics, which are only going to scale over time.
So we're helping our customers build a real revenue generating business out of it.
And again, like you say, that progress in the business model then, and it's, it's a constant changing landscape.
Absolutely.
And then the third reason is they want to control security and privacy and compliance.
And again, when you rent someone else's chains, you're kind of at their mercy.
When you own your own infrastructure, again, your privacy solution, your compliance solution, and yes, security standards, and to the largest companies in the world, that's really important to them.
And that is true across the board, not just in the crypto space, but um it brings us on really nicely to our next point, um, when it comes to compliance, when it comes to satisfying regulators that um we have met standards that other institutions, other financial institutions would be kept to.
We've framed it a little bit as like a, there's the infrastructure race of like how do we differentiate ourselves, how do we build and quickly.
And then also there's this really interesting regulatory window now where the states is passing through their regulation, you've got clarity coming in the UK, in the EU, certainly across Asia.
Um, next 18 months, right?
Like if exchanges move, what gets locked in if they don't.
Yeah, so globally right now.
We're seeing regulatory move, so Europe is a little bit ahead right now.
We see Mica, we see Dora over here in Europe, and that's created a great framework for our customers like BitPanda to roll out solutions to serve the European market.
In the US it looks like clarity could be, you know, a month or so away.
And when that gets passed, we actually think that's a major catalyst over in Europe, or excuse me, over in Asia, where a lot of the Asia markets are actually looking at the US to see what they're doing.
And so, You know, I started off by saying the time is now.
This is an example of a signal where we feel really bullish globally that 2026 is the year that these large enterprises globally are going to be choosing their financial infrastructure.
And that's certainly what everyone's been asking for, it's like, it's all very well to have regulatory clarity in one jurisdiction, but if you don't have it elsewhere, then no.
One can operate because this is a global digital borderless um activity.
And so yeah, that that clarity and that alignment.
I mean, as you say, Europe is ahead, but is also thinking of reopening.
Yeah, there are not the frameworks were right.
So it was, it's a constant moving target but as you say, those dominoes are shifting and, and it's definitely a point of no return.
Um, economic ownership of that chain, and controlling infrastructure, the compliance, upgrade timelines.
Walk us through what unlocks that for an exchange and and um why it's important that they own the the the chain itself.
Yeah, so, again, starting off really around the product differentiation.
Over the long term, this is gonna be an incredibly competitive market for the user and for the user's share of wallets, and the competition is gonna be fierce.
And so you wanna give yourself every opportunity you can to differentiate.
And if you're running on the same blockchain as everybody else, it's gonna be so much harder to differentiate.
But if you own your infrastructure, You can now customize that to allow you to differentiate your product.
Let me give you a tangible example.
Um, and this is a bit in the details, but if you program your sequencer to execute leverage trades first.
You now can go out and market and say we are the safest place for leverage trading.
That is a differentiator in the market from what everybody else is doing, and we think we're going to see these institutions again customize their infrastructure to allow them to do that.
And then on top of them, the privacy, the compliance, that is just absolutely critical that they get that right.
And again, when they own their own infrastructure, they're able to do it exactly how they want.
Yeah, and again, like you say, back to the kind of bricks and mortar, you have that similarity with the banks when back in as, as banks were developing and becoming these huge global institutions, you've had to work out what the differentiator was beyond your different font.
Yes, exactly.
What are you offering the customer?
Um, so looking out the next few years, um, what do you think the financial system as a whole looks like if this trend plays out, and, you know, like you say, the competition is not just within the crypto space, but also for banks, fintech leaders.
What should, what should we be doing about it and what, what is the role of a conference like Money 2020 in that?
Yeah, so if I look out a couple of years, I'm really excited.
Because I see financial institutions, fintechs being able to bring so many more products to people that they weren't previously serving, and, and that's good for the world that people now have access to financial products that they didn't previously have access to.
And again, going back to the infrastructure piece, the only way you can do that effectively in that scale. is if you're owning out, you're owning your infrastructure, building out that infrastructure, and so we're excited to see that companies are making that investment now, um, to give you a sense, uh, globally we're talking with 215 different enterprises.
There's 78 here in Europe we're in conversation with today, and so there's real numbers of the most important financial companies in the world that are moving in this direction, that are making decisions now.
That's a real change of the landscape.
Absolutely.
Well, thank you so much for joining us, Kyle, and for those like great insights.
I really hope you enjoy the rest of the conference.
Thanks for having me on.
