How Fintechs Are Embedding Yield on Avalanche

To dot x y z. And we have Olivia here. Olivia, thank you for making your way in here. Welcome to stable dash live. How's it going? Sure thing. Thank you so much for having me. I've been a fan and a listener for a while and have Awesome. For what what you're building. Seen some of our partners, like Charles from Rain and Thomas Cowan from Galaxy, so it feels like a logical continuation to be here today. Let's go. Yeah. Let's go. Thanks. I appreciate you reaching out, and

thanks for thanks for your patience coming on the show. We So were just talking about how you know, talking to somebody from Ava Labs was kind of a full full circle moment for us. Drew, I think you mentioned that it was kind of a kinda crucial role for your education in the space. It was my kind of, like, journey into DeFi way back when Avalanche was watching. So what's kind of been your journey with Avalanche? And and kind of just bring us into the moment you would say AVA Labs in is as a whole.

Because I said, kind of lovingly, there was this moment where, you know, all these layer ones were competing. You know, it was almost like token wars by token price is gonna go the highest in the bull run. And I've seen Avalanche kinda quiet down, but not in a sense of it was more like, hey. Actually, we're not in that DeFi conversation anymore. We are in tokenization. We know we have some product market fit here, and we're focused on building.

I don't know if you share a similar sentiment, but, yeah, maybe just help us see where where you're at and where Avalapse is at. Yeah. Sure thing. So first of all, just stepping back for those who are less familiar, Avalab

company supporting the Avalanche blockchain network. Avalanche is a network of purpose built layer one blockchains. They offer sub second finality and the lowest average transaction fees of any major chain as of as of March. And really the philosophy from the Avalab side is to build blockchain solutions for business and be deliberately understated and make Avalanche invisible.

Our our chief business officer put it put it this way that we want to power the products and services behind the scenes the same way that AWS powers Netflix with adoption driven by tangible economics as opposed to brand recognition. And just for you know, just to to fill out a little bit on my background, I came from T. Rowe Price to Avalabs about a year and a half ago. I'm now leading out tokenization within Avalabs. I'd say upfront that our institutional credibility has really predated the RWA narrative.

You know, WisdomTree, Wellington, VanAck, KKR, Apollo, all have been building on Avalanche before tokenization became a dominant conversation. And I'd say that that track record to date has really given us the foundation to build a really strong network of tech enablement partners that we call in you know, including OpenTrade, which we'll talk about in a bit.

But think about b to b and b to b to c companies that are actively connecting to fintechs, neobanks, and enterprises to help them unlock cost savings, capital efficiency, and really new revenue streams through blockchain infrastructure on the back end. And again, the user never sees that it's avalanche on the back end, and it's really the business that reaps the rewards of new revenue streams or or cost efficiencies.

And so that's what I'm really excited about for Avalabs in 2026 and beyond is really building out, as I call it, this fully embedded on chain finance stack for real companies, real clients, and and volumes that are in production today. And I'd I characterize it in in terms of layers. Right? At the base of it is the institutional asset issuance we've been working on for years and which are live on Avalanche. It's BlackRock's Biddle, Franklin Templeton's Benjie, Apollo's Acred, Janice Henderson's JAAA.

Again, the the largest asset managers in the world that are on chain and really providing the raw material, if you will, that the rest of the stack runs on. And above that, we're building out a yield layer with the open trades of the world, for example, converting idle stablecoin balances into productive treasury assets. And, again, giving any Web two based fintech, you know, three to 13% APR yields backed by real world assets through an easy to integrate, you know, single API.

The next level I call out is that of the credit layer. We've been, at Avalanche, very focused on enabling a new generation of stablecoin denominated private credit infrastructure that's programmatic, just in time funding against real world receivables. Most of the costs in private credit isn't underwriting. It's operational overhead. So every participant's maintaining their own version of the same data, and the on chain infrastructure that we've been building out has really been collapsing that entirely.

I can go into more detail on it, but think delivering 30% interest savings and 80% lower operational overhead, thanks to stablecoins on the on the back end. And then at the last layer I'd I'd call out is the settlement layer. So think of the Axioms of the world that are eliminating prefunded account models that really bleak capital across quarters today. And, again, thanks to to real time stablecoin settlement. So altogether, each of these layers of the embedded finance stack that I line can, of course, stand alone.

But together on Avalanche, they can really, you know, compose into a complete financial infrastructure of yield, credit, asset access, and and settlement that are, again, embeddable through an API with no blockchain expertise

and really work to upgrade businesses, again, with what happens to be blockchain and tokenization on the back end. Yeah. That's epic. Man, there is so much we could unpack with that. Probably we could probably create, like, an entire There's a lot there. Episode on We're very busy. Yeah. Like like, what does like, what is embedded finance now? Like, that's We could, like, create a whole dictionary of terms and, like, spend, like, thirty minutes on each of those. It's amazing.

I personally, I was curious just to hear, Olivia, from you on just the transition from T. Rowe Price into Ava Labs. Like, what was what did that look like? What was the conviction around tokenization for you personally? Bring us a little bit into just the Olivia story with this, and then we can go into some of the the specifics around open trade and and stuff like that. Yeah. For sure.

So at TRO, I was previously in equity research, so very much in the traditional finance world covering small and mid cap bank stocks. And when you spend enough time modeling bank balance sheets and and understanding how net interest margin gets generated, where the reconciliation

overhead lives, and and really what t plus two settlement can cost in practice, the inefficiency became really impossible to ignore. And I got really excited about blockchain's ability to not disrupt the financial logic, of course, but really compress the settlement stack and eliminate the reconciliation overhead that I just saw across so many of the banks that I was I was studying and, you know, focused on that are, you know, oftentimes based on COBOL based legacy infrastructure.

So once I understood that, the move made complete sense. Had been involved in the digital assets working group at TRO, and so I came to know the Avalabs team very well through a pilot that we had done. Again, this was 2022, 2023 era, so very different regulatory regime and and hence why it was pilot. But I got really excited about the Avalabs team, many of whom came from Wall Street.

There are quite a few folks from Citi on our team, and just really appreciated their expertise and and their many years of, you know, experience on the ground on Wall Street and from the world that I came from. Was that pilot your first exposure

to this world of blockchain embedded finance, or was it like, you know, you're already on your off time kinda getting into it, and then this pilot just happened to come across your desk, and you're like, this is match made happen. So I would say that it was not my first time or rather it wasn't what sparked my interest in in crypto. I've been investing

personally since college. One of my friends actually started and launched a a tokenized real estate marketplace. And so it was through him that I I got to have my first foray and into this space. But I'd say what was really exciting about that pilot was that I got to really experience more of what it means for tokenization to upgrade financial infrastructure.

And so that's where I'd say is really the that was the, you know, entry point for me into understanding again how blockchain technology tokenization, which, you know, are quite quite boring when you think about it, could really upgrade legacy infrastructure.

So going into upgrading now legacy infrastructure and maybe getting into the OpenTrade case study a bit Yeah. You know, we're we're saying that, hey. This API, you don't need to have any blockchain experience. What how maybe the conversations shifted, and how are these products being introduced? I imagine, obviously, some of your previous relationships help coming into this. But, you know, we've spent so much time three, four years ago focusing on this education gap.

This education gap is compressing with products being made with abstracting away the blockchain layer. What has it been like for these companies to actually start embedding these products? And is it easier now? Is it harder in some way? If you could also, Olivia, just explain what OpenTrade that partnership is, that would be helpful too. Yeah. Absolutely. So just to start off with, like, what is OpenTrade? OpenTrade is is one of the tech enablement partners that I alluded to earlier.

They are what you would call a yield as a service platform that enable

stable coin holding companies to generate institutional grade returns. So those range from 3% on money market backed products up to 13% on more what I call sophisticated real world asset strategies. But, again, it's yield on idle balances through a single integration point and backed by a curated menu of real world assets within a bankruptcy remote legal structure, and they've done a great job on the distribution side.

They've secured 25 plus live fintech partnerships with this approach, spanning exchanges, neobanks, payroll platforms, and and wallets, particularly across LATAM, APAC, Africa, and and Europe. And, through one integration, they give access to these fintechs to 40 plus financial institution relationships, bankruptcy remote legal protection, and, you know, a yield curve that really runs from the risk free rate to to private credit.

And that's the product or or the service that they're offering, not blockchain tech, not tokenization, or or any of the other processes that that run on the back end. As far as the, you know, problem that OpenTrades target clients, namely fintechs, you know, were trying to solve. Stablecoin holding companies were sitting on significant uninvested cash positions with no clean path to really deploying them into yield generating assets. So there were two options that were structurally broken in my opinion.

The first option is that of DeFi. So you get programmatic access and reasonable liquidity, but no contracted counterparty, no enforceable legal recourse or or collateral structure. And if you're a more conservative regulated web two based fintech with fiduciary obligations to end users, that's, you know, not a a risk management framework. It's really the absence of one. The second option is that of bilateral relationships with financial institutions. That is a hefty process.

It entails lengthy KYB, bespoke legal agreements, and just operational complexity that really grows each counterparty that you add. The beauty of OpenTrade is that it collapses that entire cost and operational structure into a single integration. And that's what I got very excited about because you could ask the question, you know, why wouldn't a Colombian neobank like Lidio, which is outlined in the report, just go to Fidelity directly?

If you think about Fidelity's institutional money market funds, those are traditionally designed for pension funds, insurance companies, and large corporate treasuries that have scale. If you're a Colombian neobank that, again, is growing rapidly but hasn't achieved that scale, even if they navigated the onboarding, they'd they'd still need to repeat that process for every incremental yield source that they wanted to add.

So OpenTrade, again, has already established those relationships, negotiated the legal frameworks, and built out the operational infrastructure so that what would take a fintech eighteen months to replicate is available on on day one. Yeah. Really, really interesting. The analysis and research that you've spent

all the time you spent learning about the banking industry and, like, what what banks are going through and understanding the the pain points they have, this idea of like collapsing the stack down. One of the biggest things that we are trying to explore right now in this show is how institutions like a bank, how where they go, what problems they have, how practically they are adopting and updating their systems with things like stablecoins.

It sounds like you you both have, like, a history with with understanding that business model and are in a lot of the conversations with some of these partners that might be serving institutions like banks. What is the practical moment that we're in with maybe some of these, like, neobanks or emerging banks around the world? What are you seeing them, like, struggle with historically that are now being solved with things like stablecoins or bringing tokenization systems into their into their walls?

Like, bring us in a little bit to the the things that you're seeing specific to banks right now. Yeah. Absolutely. So I would first, I would rephrase the question in terms of, you know, like, isn't this what OpenTrade's doing just recreating

what, you know, banks do or not even OpenTrade, but the end clients of OpenTrade? And I'd say, yes. Those end clients, you know, functionally, the fintechs, yes, are recreating what banks do. And that's kind of the point. You know, banks have been intermediating between savers and borrowers for centuries. They take deposits. They deploy them into yield generating assets, and they pay depositors the spread. And that model is, you know, not broken. It's it's one of the most durable financial mechanisms ever designed.

But what I would call out is broken is the access layer that's a top, you know, sitting a top of it. So when you think about what it actually takes to access Fidelity money market fund yield today, if you're a fintech that's, you know, operating outside The United States, you need an established legal entity in the right jurisdiction, a prime brokerage relationship, like months of onboarding, goal agreements, and, you know, the operational infrastructure to really manage that custody chain.

And then you multiply that by every additional yield source that you want to access. So the financial logic is sound, but, the access architecture is more exclusionary. You know, it was it was built for a world of bilateral institutional relationships as opposed to programmable APIs.

And so, again, what OpenTrade is doing is really taking the same centuries old financial mechanism, secured lending against institutional and collateral, and rebuilding the access layer from the ground up so that it's interoperable with on chain infrastructure. But, again, also accessible to fintechs anywhere in their existing legacy financial infrastructure and that doesn't require them to replicate, you know, a year and a half worth of of institutional relationship building.

And that's all thanks to the structures we have in traditional finance, which is a bankruptcy remote SPC, an FCA regulated fund manager, JPMorgan custody chain. You know, all that's the same financial infrastructure that today underpins traditional, you know, institutional asset management. The difference again is that it's now accessible through a single integration that a neobank and Bogota or a payroll platform and Lagos can deploy in under a month. So, yes, in short, this is recreating what banks do.

But I think that framing may miss the, you know, more important point, which is that, you know, the innovation was never the financial mechanism.

It's really the innovation, you know, is that for the first time, the same yield infrastructure that UK pension funds and US insurance companies have accessed for decades is now available to a distributed workforce platform serving 300,000 workers across emerging markets or a Colombian neobank with 80,000 plus users who have never had easy access to dollar denominated savings products in their lives. Again, like the financial logic is is centuries old, but the access is really what's new.

It seems like such a key pillar for emerging,

you know, stablecoin native neo banks or or applications that are building from first permit first principles on chain to be able to pipe into systems and Yeah. And sources of of yield like this. Are you seeing the trend of, like, more because this is this is a the fundamental pillar for, like, anyone who's building banking or, like, financial products. Like, the idea of earning on your money is such a core piece to this being attractive.

Are there do you see this as an emerging trend, like, types of partners, these types of companies that are building strategies or building, you know, API access into into yield like this, I'd imagine there might be a handful of others or other partners that are top of mind. Do you see this as like an emerging category? It almost seems like that. I would definitely say it's an emerging category.

And I'd say what has surprised me most about this partnership with OpenTrade, again, they run most of their vaults on Avalanche, and we work very closely together.

We do a lot of joint business development work together. So I'm in the trenches as well. You know, I have a pump pipeline of 1,500 fintechs that I'm reaching out to alongside OpenTrade to, you know, get them integrated. But what's really surprised me the most is how fast the demand side signal has appeared. I don't think it's any surprise that, you know, issuance in the supply side of tokenization is pretty well solved for. It's really demand that has been the significant challenge.

The demand side signal here has appeared very quickly. OpenTrade's been around for about a year and a half or so, and, again, they've accrued over 25 plus fintech partnerships. And the reason that they found success is that, you know, you can model the addressable market and build the distribution thesis, but what you really can't model is the speed at which a fintech CEO in Colombia or Turkey, you know, immediately understands the value proposition when you put it in front of them.

Here with the API integration and the legal structures being, you know, drawn from from traditional finance, there's not as much of an education lag. And also for many of these operators in LatAm and fintech, they're living the problem daily that is currency devaluation or hyperinflationary pressures. And so the conversation really does jump pretty quickly from does this work, you know, to how fast can we go live with OpenTrade. I think the fastest close was two weeks from first call to first deposit.

And that's the velocity that really makes the distribution thesis work, you know, in practice as opposed to on paper. You're in the trenches, which is amazing. Love I love that.

That's part of the what we love on the business development on the business development side is is, again, offering strategic guidance, but also being, you know, doing the hand to hand combat, if you will, in terms of knocking on doors and leveraging our own institutional network, but then, of course, you know, going to emerging fintechs and,

you know, offering a slew of options like OpenTrade that can upgrade their product suite. You know, I'm I'm thinking about Drew. I'm thinking about our conversation with Bryce from NewBay. Did a research report. He had an interesting tagline where he says amongst treasury managers in emerging markets, only 5% of them had said that yield was one of their concerns when integrating stablecoins. Obviously, treasury managers are quite a different ICP as, you know, fintechs with embedded finance.

I just think it's interesting that within the span of two weeks, we've seen two categories using the similar infrastructure and similar products that care have two vastly different, really, reasons to care about Sablecoins and what they enable.

So in this embedded finance conversation, I think what's something that Drew and I think a lot of, you know, we've talked with Ben from Braille about this a lot, where it's good business to integrate stablecoins in your platform to bring in a net new revenue stream to offer yield to your clients. But where do we go from here?

What what is that next leg in not only embedded finance, but I think I think what we're seeing Ron Keyrails was talking about this a lot, was obviously credit, trade financing, and for his use case in emerging markets. We've talked about CreditCoop with financing for payments companies like Rain and Moto. Where where are you seeing that next that next leg in the conversation?

Yeah. I mean, I'd say over the next couple of years, there will be a few compounding vectors, particularly for for OpenTrade. First of all, I think there'll be continued expansion into APAC, same or similar stablecoin native user base with unmet yield demand and and which exists, you know, at a scale that one might argue could dwarf LATAM. I'd say second of all, there there will be more product expansion as the tokenized asset universe grows that'll, you know, continue to deepen OpenTrade's yield menu and others.

And then, of course, you know, everyone talks about the regulatory piece, but I think regulatory consolidation as MICA, Genius Act, and equivalent frameworks mature globally, undercollateralized products get pushed out and and potentially concentrate AUM into structures like like that of open trades. So I'd say that there are really the the three vectors, you know, that are compounding simultaneously.

APAC and LATAM continued expansion, product depth as these tokenized assets grow, and then also, you know, just regulatory consolidation

helping to eliminate some of the historical competition. Olivia, as we as we close here, when we think about the pace to be made for working with Ava Labs right now and the type of experience that you wanna give to partners or to people that are in the position of OpenTrade. It's awesome to hear that you are taking such an active role in accelerating the the business of a company like OpenTrade.

When you're talking to partners, even on days like today, when you're in in decision making point as these partners are looking around the ecosystem, blockchains, where are they gonna build? Who are they going to, like, you know, wrap arms with and go go do this thing? What what's the pitch that you have these days to builders like OpenTrade? How are you positioning Avalanche as a partner? What what are you finding that is really tipping the scales toward going and building really closely with you guys?

What is that what does that message look like right now? Yeah. Absolutely. So I'd say on the one hand from

a more technical or an architectural perspective, Avalanche's EVM compatibles are pretty easy to integrate with if you're an institution that may have been building on Hyperledger before or on Ethereum or on l twos. In addition to that, I think it's very important that Avalanche's architecture offers sub second finality and more specifically deterministic finality, particularly EU regulators care quite a bit about that. And then, of course, there's inexpensive transaction fees.

As I mentioned earlier, you know, average transaction costs were, you know, among the lowest of leading chains as of March. So that's the the architectural perspective.

From an ecosystem perspective, we have, you know, integrations with all the top t you know, top tier DeFi or blue chip DeFi protocols, you know, an array of USD and non USD stables and other tech partners that can help a project really scale quickly and benefit from, you know, introductions to those in the ecosystem that may have built, you know, a similar product or service before.

What I would say from an Avalabs perspective is where we shine is really serving as a strategic adviser to projects that are new to the ecosystem or new to blockchain, and again, to find ways to bring their existing business on chain and unlock cost efficiencies or new revenue streams. And so Mhmm.

To do that, it really does look like I mentioned earlier, you know, taking a very hands on approach from a business development team standpoint, working closely with teams to ensure their success, be it on the distribution or business development side. Like I said, I'm targeting 1,500 plus fintechs with my my team and, you know, working very closely with OpenTrade, Acxiom, Denari does tokenize US equities, and these other partners of ours who have products and services that these fintechs want and need.

And then in addition to that, you know, considering ways that we can support in terms of making relevant introductions to tokenization platforms or Oracle providers or all the things that as a Web two legacy player, you know, you might not know or have connections to and that we can easily make those introductions for and and get you up to speed quickly and and efficient efficiently. So I'd say first part of it, you know, first part of the pitch is really the strong tech and architecture.

And then the biggest pitch for the Avalabs BD team is just how hands are we are in in terms of ensuring the success of a project that wants to build on Avalanche. I remember a few years ago, and it's gonna pop up the thesis of the Avalanche side chains. How relevant is that today, especially in the context of tokenization

and approving some of these larger RWA

players? Yeah. So for everyone's guide, Avalanche is a network of layer one blockchains. Our public permissionless chain is called the C Chain. That's where much of the liquidity lives. That's where much of the blue chip DeFi protocols, you know, stablecoin supply exists. And so OpenTrade Vaults, for example, that On top, which is a global payroll provider, and Lidio, which is a circle backed, y c backed, Colombian neobank.

Those types will generally leverage the assets that OpenTrade and others provide on our our public permissionless Sechain. I'd say where the purpose built layer one blockchains are most important are for institutions or government entities, for example, that require very stringent privacy demands or privacy requirements that have to be baked in at the chain level, KYC baked in at the chain level. Some of the constraints on where validators can be located.

And so I'd say for the more institutional enterprise or government entities that, again, require privacy or granular permissioning at the chain level. Those are the types that are are building their ones. Or another example that I just put out there is that if you're a project that's doing very well on the Avalanche Seachain and, you know, is has concerns about congestion, you might also consider building out a layer one blockchain in a more isolated environment. FIFA is one such example.

They're doing a number of initiatives on their layer one, including digital collectibles and other elements. But, you know, that's one reason that they decided to build their own sovereign blockchain was because they wanted their own, you know, environment to operate on. So interesting.

That's probably worth a a follow-up call in the near future. Yeah. If anybody else could Happy to come back. Because I could that that one is more of a personal, just interesting category when we're talking about how do people build and architect on on chain. Yeah. Olivia, we'll absolutely we'll absolutely have you back. You're extremely well spoken. I like how you see the picture of, like, the macro side of how these pieces fit together, But, also, it sounds very Gary Gary v of me, like,

and micro, like, the the clouds and the dirt. I think that's how he says it. I love You you know the you know the game and, like, can see macro, but you're also, like, you know, cold calling with OpenTrade and, like, in the weeds of the dirt with with scaling this out. I appreciate that. I resonate with that. And, yeah, we'd we'd love to have you back on the show. Again, thanks for making the time. To be back. Thank you guys for having me.