We have talked a lot on this show about getting assets onto the blockchain. But tokenising something is only half the story. The real question is what that asset actually does once it is there. My next guest is building the layer that takes tokenised assets and puts them to work automatically using AI. Joining me is Ryan Turner, Founder and CEO of ARKØNIX. Ryan, welcome to Capital Markets. Tokenisation gets described as the future of finance constantly. What does not get talked about?
What does not get talked about is what happens after you tokenise something. When you tokenise things, they are on a ledger — and that is great. You can do a lot of things with it. But that still does not create liquidity. It does not create yield opportunity. It is effectively the same as sitting in a filing cabinet. The ownership record was never the difficult part of finance. What is difficult is how you put those assets to work over time.
ARKØNIX uses AI to manage allocation and rebalancing. Why does a tokenised asset need an AI manager in the first place?
I want to separate those two things because it is important to some of the people we work with. We actually use AI in the development of strategies and the overall effectiveness of our platform. But all of our strategies themselves run on rules-based mechanics — rules that run inside a tested environment. That allows us to prove that what we are promising will happen with the code is actually what is happening. We use AI a little bit upstream of that — in the development of strategies, in battle testing, in managing and watching risk, and effectively in our risk engine when assessing different scenarios that pop up.
What are the specific uses of AI at ARKØNIX today?
We utilise AI primarily in our risk engine. It takes in large amounts of data, processes that, and outputs a recommendation. An example — you have the USDC depeg versus the LUNA depeg. Those are fundamentally very different events. Our risk engine is able to look at that using AI and output a recommendation as to what action you should take on the vault, depending on the different inputs.
What is actually broken about how tokenised assets generate returns for the people holding them?
The primary problem is that most tokenised assets do not actually create and generate any returns. That is the layer that has yet to be built — prior to us. On top of that, a lot of the yield opportunities you do see in the market actually come from emissions-based yield. If you have a vault with a 20% return and the emissions-based return token depreciates in value, your APY has gone down. Additionally, an emissions-based system is not sustainable over the long run. As we get deeper into this upcoming cycle, I think we are going to see more protocols attempting to generate actual real yield as opposed to emissions-based yield.
How much of the decision making in your system is truly automated versus human-directed?
Our execution is completely automated — and it is provably automated. It all starts with signal generation inside a tested environment, and then it flows down through our execution system that faithfully executes those signals. At no point is a human able to jump in and override the system. What that does is make it so that I cannot go in and move money out of the vault. I cannot panic and override our established trading strategy. And it makes it so there is no question for the end user as to what happened with their capital.
What happens when the AI gets it wrong? Who is accountable?
This is exactly why we keep AI out of the execution path explicitly. An AI model is effectively a black box — there is no way to hold a model accountable. Whereas if we build a rules-based strategy and deploy it on-chain, now I am responsible and we as a protocol are responsible for the execution of that strategy. There are a lot of things that change when you are operating with other people's capital. One of those is that you have to be able to prove that you are doing what you say you are doing.
Is this the direction all tokenised finance is headed — away from static holdings and toward actively managed ones?
If you are talking active like a hedge fund — I do not really think so. I think people and institutions are largely moving away from the typical person with discretion over tokenised assets. The future is rules-based, and the future has to be provable at every point in the process. But as far as managing versus static — absolutely. I think that is a clear next step for tokenised assets.
Ryan, thank you so much for being with us today.
Thank you.
