JD Durkin: A longtime friend of the show, Solomon Tesfaye, joins us now, Chief Business Officer at Aptos Labs. Welcome back. Nice to see you, as always.
Solomon Tesfaye: Good to be here.
JD Durkin: Aptos is now powering Decibel and BitGo to open on-chain markets directly to institutions. Talk to me about those latest developments, and what do you most expect that actually gives to those institutions, Solomon?
Solomon Tesfaye: Yeah. So BitGo, for those that don’t know, is a $65 billion on-platform qualified custodian. They connected their actual institutional trading desk to Decibel. Decibel is the only fully on-chain decentralized exchange. And now that we have done, cumulatively, about $7 billion of transactions—
JD Durkin: And I know you’re closing in on about $1 billion in tokenized real-world assets. What has that process looked like, and what is really driving that growth, would you say?
Solomon Tesfaye: So really what we’re seeing is more diversification on-chain. Historically, it has been private credit and, for the most part, money market funds. Now we’re seeing commodities, public equity and a lot of other fixed-income products that are coming on-chain.
So as you see this capital formation through stablecoins coming on, with $7 trillion in transactions in the last month alone, people are looking for access to just diversification on-chain and trading on-chain.
JD Durkin: What actually turns a tokenized asset into a functioning market? It’s much more than something that’s more simply just being issued, let’s say, to a would-be investor or token holder.
Solomon Tesfaye: So it’s one thing to actually put an asset and represent it on-chain. It’s another thing to actually make sure it has the connectivity to actual liquid venues, which could be in a centralized exchange, could be a decentralized exchange, but you actually need buyers and sellers in order to facilitate any type of trading.
JD Durkin: Okay. Help me better understand a few of these phrases. I know those are important. Institutions certainly need speed. They also need settlement. We know that. How do throughput and sub-second finality—that’s a great phrase—how do those things actually make this work?
Solomon Tesfaye: So when you think about high-velocity applications like stablecoins, we think of, like, remittance, cross-border transactions, anything that’s moving with a certain level of volume, it does require some level of performance from an underlying blockchain perspective.
So there’s very few blockchains that can actually meet the demands of institutions when you think of what their throughput or their expectations for the settlement is on a regular basis.
JD Durkin: What does the next phase of on-chain financial markets actually look like, Solomon? Are there parts of this conversation you still feel perhaps we are not talking enough about?
Solomon Tesfaye: So I think one is you’re going to see a lot more distribution. Right now, there is this gap when we bring product to market on-chain. Really, it doesn’t have that connectivity with legacy systems.
So as there’s more regulatory clarity, I think that’s what’s going to really close the gap, because the value proposition of the underlying blockchain is very clear.
JD Durkin: Before we let you go, any popular misconceptions that people still have about the general conversation of tokenization?
Solomon Tesfaye: So I think people conflate the terms. They always think blockchain, think crypto. And then, of course, you need to separate crypto from protocol and what’s powering the actual network.
And then also, of course, there’s tokenization of assets, leveraging the technology to actually represent it on-chain, so you actually get the benefits of instant settlement and programmability and so forth. So I think those terms understandably get conflated.
JD Durkin: Solomon Tesfaye, Chief Business Officer, excuse me, at Aptos Labs. I’m always grateful for your time. I know you’re a very busy man. Thanks for taking time for the show today.
Solomon Tesfaye: My pleasure.
