Paxos Labs on Amplify Transit, the New Stablecoin Movement Layer

The new core for the next era of finance.

Great to see you guys again. Is that welcome sequence new? It's it's pretty hype. It's clean. I like it. Just for you, we were up late last night, getting it ready.

Thank you. Think definitely new since since you've come on. There's the show has been we've been iterating on it week after week. So it's Looking good, guys. See it all coming Well, man, how's Yeah. That's that's what we wanna hear. Gives that, you know, a little little jamming up before you come on. Yeah. But how's life, man? What's changed? You know, I love the kinda intro to to this product announcement when you just and this is a theme that we've heard a lot lately as well is, great. You issue a stable coin.

You bring it on chain. Like, what comes next? How do you how do you move money, and how do you how do you monetize it? So, yeah, maybe give people just quick quick intro, who you are, Paxos Labs. We've talked to you before, but maybe get you guest tuning in. Yeah. I mean, it's it's awesome. Talking today? Yeah. Yeah. It's awesome to be back, and thanks for having me back. But

to anyone that I haven't seen yet, but, Bo, great to meet you all. I'm the cofounder of Paxos Labs. Paxos Labs is a a team that we spun out of Paxos about almost two years ago now, really focused on kind of building on chain utility around digital assets. Right? The Paxos, I think, really well known as the issuer of USDG. PYUSD has a crypto brokerage as a service product. But what we started looking at at Paxos a couple years back was, hey.

This kind of bridge from kind of off chain to on chain needs to be done in a regulated way, the right way. Paxos is now an OCC regulated federally regulated OCC trust. But, really, what we started to build Paxos Labs for is, hey. There's this whole utility stack that's going to need to be built for assets once they are on chain, and that's what Paxos Labs has really been focused on. And for the last time, I think, we caught up, we were spending time talking about this kind of, like, whole conversation around, hey.

Great. You've gone and started with Stablecoins. What do you wanna what do you do with them next? The conversation we had with a lot of our clients around that was, hey. Like, a very clear next step for what you do once you have Stablecoins on your platform is help your customers get into safe, differentiated yield profiles. Right? How do I actually make money on the the dollars that are sitting on my platform?

But over the last couple of months, as we spent more time with customers, especially enterprise clients, we realized there was a problem that was slightly further upstream of the yield problem. Right? It was, hey. Actually, I have all these different stablecoins from these different networks coming into my platform. Right? And and I actually wanna be accepting of them all because, again, as a platform, as a fintech, as an enterprise, I don't wanna say no to a dollar that's coming to my platform.

And as we've seen, more stablecoins are getting issued either through us or through, like, the names you guys mentioned, Mzero, Agora, all these guys are kind of in that business. And and the problem we kept hearing from our customers was, hey. It's really hard for me to kind of accept all these stablecoins and route them into my platform, but also being able to route them or orchestrate them in a predictable way is a big problem.

What we were actually seeing was some of these enterprises were doing the swaps of stable to stable themselves, and they were kind of, like, batching transaction. It's like a nightmare for anyone that's, like, any team that's not really on Yeah. Even if you are on Chain Native, like, you don't really wanna be sitting there kind of, like, batching a bunch of transactions over the course of, like, hours on on on a DEX.

And so what we built and what we launched this week is our new product called part of our Amplify product suite called Transit. And what Transit is really focused on doing is enabling stablecoin to stablecoin swaps, different stablecoins between each other, but also across different chain ecosystems. Right? And so and what we're able to do is actually offer our customers fixed pricing on these on these movements.

And so, again, when you're an enterprise, when you're an eco build an ecosystem around stablecoins, you can't really tolerate this completely variable pricing. Sometimes it works. Sometimes it doesn't. And so what we've built is a single API where any of our customers can integrate and get fixed pricing on their routes between stablecoins and chains. And our primary customer since we launched two weeks ago was helping Robinhood Chain build their flows of USDG into their ecosystem. Right?

And so just about two weeks since launch, we've seen now about $35,000,000 of volume largely between Ethereum and Robinhood Chain, which has been awesome to see. But the main thing for us is, like, this is a clear pain point. If you're launching a new fintech app, you're launching a new chain like Robinhood just did, you're launching any ecosystem that's built around stablecoins, actually, one of the first problems you need to solve is how do I accept dollars into my, oh, I love it. I love it.

Accept dollars into my ecosystem, and how do I do it in a predictable way that works for my enterprise? So, yeah, I was gonna I'm glad you beat me to the Robin Hood punch. You know, talk to us about

without saying any specific names, there's been a lot of talk about stablecoins, consortiums. I know Global Dollar Network isn't one. But why do why is a chain like Robinhood, why do you think they would use a stablecoin like USDG at its core? And what do new chains need to even think about when they're going when they're orchestrating an ecosystem around a native stablecoin?

I I mean, look. I GDN, Global Dollar Network, is actually was kind of essentially formed as a consortium, and and Robinhood was one of the founding members of of GDN. Right? I think it it you know, this was almost a year ago, but, obviously, they've had a lot of things cooking in the background. I think their plan was always to, you know, build around USDG. I think, you know, why someone might choose to build around an asset like USDG look.

It is, like, the difficulty of launching a new stablecoin from scratch, I think eventually. Like, even if you go back, call it, I think it was three years now ago to when PayPal launched their stablecoin, even then it was, like, more feasible to launch a new stablecoin and get it to global scale. The competition has gone through the roof. The cost of scaling a new stablecoin has gone through the roof. And building kind of, like, the network utility around stablecoins is becoming increasingly challenging.

And I think everyone has come around to the idea that, like, hey. Stablecoins are a network product, and you need to kind of work with others to build a successful Stablecoin ecosystem. And so I think USDG and GDN has done an incredible job of doing that. Right? And, obviously, like, Robinhood is the the latest entrant into really growing that ecosystem. You know, OKX has built their ecosystem around USDG. You see Kraken doing the same thing. If you go on the Kraken app, USDG is the primary stablecoin.

And so building with others for a network product is the way to go, and I think a lot of people are realizing that. And especially if you're trying to build something that is very globally available versus just focused on your ecosystem. Right? If you just want a stablecoin that's just gonna be in its own kind of bubble, you can get your own brand stablecoin, build your own thing, and accept that when it leaves into the broader ecosystem, it's gonna go out as something else. Right?

That's kind of a counter a countertake to what I would expect or what I would think as from our vantage point, all of these different tools,

partners, like, you could say that there has never been more options and more ability to issue and create things like stablecoins. I'd I'd love I'd love for you to maybe double click on what's where where does that complexity really Yeah. Get felt? It sounds like the idea of, like, interoperability

and and utility is kinda where you're going with that. Yeah. So, like, again, like, five years ago, the hard thing about launching a new stablecoin, it it really was like a technical and regulatory problem. Like, who has the scaled infrastructure to issue a stablecoin? Really, like, five years ago, was really just like Axos, in my opinion, that had, like, the the Axos Circle Tether, really, that had the infrastructure to actually issue a stablecoin at scale.

And then, obviously, the regulatory frameworks aren't in place yet. And so you had to have the ability to wade through, like, regulatory uncertainty when you're issuing a stablecoin. Now I think a lot of that's been resolved. Infrastructure is miles ahead of where it was before. The regulatory clarity is there. And so those problems have kind of, like, faded into the in the in the background, which, to your point, makes it easier to issue a stablecoin.

But I think what people are realizing, again, like, you know, at Paxos, we've been issuing stablecoins for, you know, five plus years. Paxos was the issuer, even Binance's stablecoin BUSD back in the day. We learned, yes, even once you get through the issuance of the asset, there's a mountain ahead of you of scaling the asset. Right? And I think that's what a lot of people are learning is like, hey. How do you actually scale the asset and build broad utility?

Is the problem that I think a lot of people are now arriving at because they have gotten through the issuance and, like, regulatory navigation that has gotten easier, frankly. But people are trying to figure out how do I actually build utility for my stablecoin in the ecosystem, ecosystem, and it's really hard. There's a lot of competition. There's a lot of entrenched players, USDC, USDT. And so you have to kind of really go to the market with a certain amount of force and coordination to have a chance.

And it and really, like, I don't think any company can really go it fully alone at this point. Yeah. Been spending some time in the last couple weeks getting to know the

I don't even know what to call this part of the stack, but the kind of LeFi relay, what was just for a while, like, the LayerZero wormhole interoperability

stuff. Yep. It seems like there's kind of a new wave of companies who are sitting in this part of the stack to help accomplish what you're talking about with things like Amplify Transit. Did you guys work with one of these companies to enable this, or did you guys build more some of this yourself, or how did that that work? Yeah. So so Transit's built all in house. And so we actually work with Wi Fi and across they they they integrate our endpoints. Right?

So, actually, if you go on Wi Fi or Jumper right now, you'll actually see, like, certain routes. You'll see our powered by Paxos Labs Transit. Right? And so the way we see it is, like, we are, like, a really, like, to the metal infrastructure on interoperability. We're integrated with a bunch of the issuers. We're integrated with all kind of a lot of the stablecoin mid burn rails, and and we're able to essentially give end customers more predictable pricing.

And so, again, like, we don't we don't build, like, a we don't have a front end. Right? Right? I see I see ourselves again more as kind of this bare metal infrastructure provider to the Li Fi's of the world, to the Crosses of the world, to LayerZero, Uniswap. These are all folks we're working with, right, to say, hey. How do we make your user experience better, right, by by plugging into our rails underneath the HUD?

How how does how similar like, you know, we we talked with Sam from the Better Money Company. We've seen Tony come out with Ubix. How similar is transit to something like a stablecoin clearinghouse, or is it are we just looking at it from two different perspectives? Obviously, Paxos Labs being a little bit more DeFi native in nature. Yeah. I I mean, look, I think there's similarities, and, like, there's probably, like

and, like, with Sam, and and we work with Sam in a Better Money company as well. Like, I think they're great. I I think there's definitely similarities. I think there's, you know, potentially different approaches to the market. I think transit really is meant to be a set of, like, on chain endpoints, right, that these kind of, like, more DeFi on chain native players can integrate and get access to. Right?

And then I think some of the other players may be more focused on, like, a purely kinda, like, off chain b to b source. Right? To say, hey. You're a you're an enterprise. You're an enterprise. You're not necessarily interacting through on chain DEXs, for example. Let us connect you. Where we're building from is, like, we really think this ends up becoming kinda, like, the most efficient way to move between stablecoins permissionlessly on chain. Right?

And so I think there's, like, a slight difference in the approach and, like, the coverage areas, but I think similar problem statements. Right? So what is the difference between

maybe this is just, like, a simple way to understand this in my mind is the flow of funds or what would happen when I'm moving between let's just say there's, like, two assets that are both issued and working as as natively as possible with Paxos Labs and moving between those two assets on chain versus something that isn't issued by Paxos Labs, like, what that flow or process would look like. How do you like, what what are what are some of those, like, key differences that allow for transit to function? Yeah.

I and, look, I think, like, the the first thing I'll say is that

transit is meant to, work as a, issuer agnostic, stablecoin agnostic solution. Right? It's not just built for, you know, Paxos or Paxos Labs issued stablecoins. Like, for example, the most common route that we see right now is people that are going from USDC on ETH, again, not the issuer of USDC, to USDG on Robinhood. Right? And so Mhmm. Again, like, our goal is how do we enable the most efficient routes between any stablecoin? Right? Obviously, there's, like, like, obvious ones to start with.

USDC, USDT, USDG, PY, USDA, like, are kind of the the four big ones in our minds right now. But what we're essentially enabling is is people to route in in that direction. But what we're also capturing is people that wanna go the other way. Right? And we're able to start netting those flows and understand, hey. How do we get the most efficient settlement and get those savings back to our customers? Right?

And so, again, like, obviously, in some cases, we have direct inroads into issuers where we can go natively mint and burn. But in other cases, we have a a kind of a network of liquidity providers that we've consolidated to say, hey. Like, if we can't actually go to the issuer directly for this, are you willing to give us this swap at this price, which we can then bundle up across different providers and give our customers the best price on the other side. Right?

And so there's ways that people do this today, and, like, sophisticated actors might have, like, a way of kind of, like, doing this. But, again, for, like, the average user, like, this is, like, such a nightmare of a problem to solve. Even like, forget the average user. The like, the average business. Right?

Like, it's such a nightmare of a problem to solve for them to be able to plug into a single endpoint for transit, and then we give them fixed pricing on on specific routes, it helps them operate in a predictable way. They don't have their treasury team sitting there and saying, hey. Is now a good time for me to make this trade from USDC to USDG, I need to make for my business operations? They can make it programmatic.

They can call our APIs because they know they're gonna get settlement at fixed prices at fixed latencies,

essentially. So can we let's get a little practical. I wanna think like, you mentioned specifically in this in this announcement Morpho and giving access for Morpho to Robinhood chain, like, on day zero. I think just generally, there was the the hype around l ones and the hype around new ecosystems, and we've seen them come and go. And Robinhood just feels like a very different beast. What is the impact of giving a protocol and an ecosystem like Morpho access to Robinhood?

How do those two come together, and why is this infrastructure so impactful? Yeah. Totally. I mean

so I I think there's been, like, a a long run of l ones and l twos, and, you you guys you guys have been around in this space for a while. Yeah. The thing that I think is very different about this Robinhood chain launch is that a lot of the l ones and l twos started with the technology and then thought about distribution. Right? I think with Robinhood, it's not the way around. They have distribution, and then they thought through the technology and the infrastructure stack after that.

And then, obviously, they did a great job doing so. And I think almost Robinhood benefited in some ways from maybe being a little bit later. Like, know, there's been a lot of l two launches over the last few years, but I think there's been so many learnings over the last two, three years about how do you scale an ecosystem the right way. Right? What are all the pieces you need? You need a stable coin. Okay. You need someone that can help you orchestrate the stable coins. Okay. You need you need a yield engine.

You need a lend borrow market. Okay. Like, Morpho has got done a great job with that. Right? How do you get all You wanna have, like, a native perps provider. Right? There's all these pieces that I think there's become, like, a clearer playbook of how do you scale a new ecosystem. And I I think Robinhood, you know, really knocked it out of the park with, like, hitting on all those points.

And so combine that with the distribution that they have, right, I think they're, like, very uniquely positioned to be successful because I think they made all the right picks on the infrastructure side. They took all the learnings over the last couple years, and they're combining that with their their massive distribution. I mean, people really kind of forget how big Robinhood is. Right? Like, they're they're a massive massive distribution channel.

So I I think they they just kind of, like, got all the pieces that are all the other l twos struggle with, they got all of those right. And then, you know, then they obviously

got the technology piece right as well. Right? Yeah. Candidly, don't think I've done I've done enough homework. I don't know about you. I kinda go in, like, phases of, like, how much I, like, like to go explore stuff on chain. And another time, like, just give me a simple app, and I just wanna click one button.

But I think if Drew would be really cool to do, like, a live stream where we start to explore the ecosystem from both perspectives too because you can access it through the Robinhood app, through the, you know, the kind of the call it the normie experience, or, again, through the DeFi native experience, have your own wallet, and go see what's out there. I mean, I'm sure there I'm sure there's some very attractive boosted stablecoin yields, the the one good thing about new

ecosystems. I do think and, like, I think the way you put that. Right? Like, I think if you wanna build a successful crypto ecosystem today, you have to take a barbell approach. You almost need to take, like, a strategy for the on chain degens and have, like, a great KerpStex and have, like, a meme coin launchpad. And then on the other side, you need to have, like, a mobile app, very smooth, very clean experience, like, with very simple explanations. And the barbell approach is what wins.

I think there's been a lot of people that have kinda went after, like, the middle.

And and I don't know if that's the winning strategy, and I I I think it's kinda like this barbell approach of, like, go for the, like, super on chain it is, and then go for the people that, like, don't know what a stablecoin is. Right? And they just, like, wanna earn yield on their Yeah. I mean, I think that's a great way to sum up, like, especially what what even Solana's been doing, you know, to some degree. They're like, hey. Like, you can still do all the meme point stuff here.

We're gonna go sponsor the World Series of poker because, again, we think this is line with our ethos. And in the same time, we're gonna go build with Western Union and Fiserv and, you know, all all these all these other things. SoFi. Yeah. And SoFi's. It's interesting how, again, at the end the day, it's like, don't let the use cases determine the infrastructure. Build the core infrastructure and go serve your customers.

But when when you think about the, you know, just maybe the learnings from Robinhood chain, the even I was looking on on x, I believe this was yesterday, and some of the stuff with Base and Coinbase and all the stuff that's going on there, and a lot of people are kind of suggesting, and I I, like, I think I agree with them that some of this urgency is because of how successful Robinhood Chain is and and what what these volumes are starting to look like.

What are some of those learnings forward looking in your mind that the success of Robinhood Chain, the volumes that you're seeing, what is this indicating to you? And how are you as a builder and a founder of of this business now, how is this changing your go to market approach or how you're thinking about positioning Paxos Labs, the stack, and spending the rest of the year in terms of, like, where you're spending your time? Yeah. So I I think when

you want to serve customers at the scale of Robinhood and Coinbase and, you know, Kraken and, you know, like, all these very large platforms, you need to build in a certain way. And I think that is actually, a level of rigor that has started to come into the infrastructure that has been built in crypto. I don't think it was here two, three, four, five years ago. And if it was, it was, like, a a select few players that got that right.

I think people are really starting to build with with the perspective in mind of, like, what are the compliance requirements? What are the security requirements? What are the economic predictability requirements of a publicly traded company? Right? I because back to my point in the beginning, if you go to, like, a publicly traded company that wants to move billions of dollars through your infrastructure, and they're like, cool. What's the pricing? And your answer is, it depends. It just does it it doesn't work.

Right? And so I think, again, like, this is how we think about the world, but I have been seeing more of the crypto space, I think, mature in this way to be able to, like, really think through what are the requirements of a very skilled platform. What are the things that they're gonna want from their infrastructure provider?

And I think, like, folks like Robinhood and Coinbase and Kraken and Charles Schwab and all these guys coming into crypto is great for this space because it forces the infrastructure builders to really stress test and and make sure we are building something that can handle that scale of end users and and volume. So what's next? What are the missing pieces? What's on the horizon? Obviously, you can't give it all away, but

we talked a lot. You know, more folks coming out of midnight. We're seeing that on like, fixed rate just across all realms right now seems to be a big big theme. Zero FX fees, you know, is another big one I'm seeing. Again, like, stand Flexible yield. Zero. No. It's big thing here. Yield. Yeah. So what are what are you thinking about as these ecosystems, again, continue to mature, continue to evolve? Like, what what else do they need? Yeah. So, you know, I think I think you're seeing this with

certain ecosystems. I mean, I think you've definitely seen Robin Hoodchain talk about it. I think you think see Solana talk about it. I still think the big wave that's yet to come is more RWAs. Right? And people might say, like, you know, like, I think stablecoins are maybe the first RWA that that have gained, traction in in the ecosystem. You know, I think there's gonna be more tokenized currencies. I think there's gonna be more, tokenized RWAs.

I think, again, like, this is, like, very similar to what we've talked about over the last few times we've gone together. Nuance is one thing. Right? How how do we issue more RWAs? How do we make sure we have issuers that have the infrastructure to allow the issuance of, RWAs? But then the second piece is how do we actually enable people to get in and out of them? Right?

And so I think there's, like, something that's gonna be really interesting with on chain FX, whether that's currency to currency or even just stablecoins to different types of RWAs and who can build the right infrastructure to enable those experiences. Because, again, there's trillions of dollars of assets that are waiting to be tokenized. And, again, solving the issuance problem is one thing, and we spent the last five years talking about how do you issue a stablecoin.

I think the next five years are how do you issue more tokenized RWAs, and then how do you actually build utility and and and movement around them. And so I think, like, the stablecoin story is, like, the tip of the iceberg, and and we're about to see kind of things could go a lot deeper across kind of this tokenized RWA vertical. Totally agree. It's fun to it's fun to see that we were just talking earlier on the show just to, like, the wedge

that even for our business and how we think how we thought of ourselves in the beginning of, like, stablecoins is kind of the focus and positioning around that, but really how that really has been a wedge and is growing into so much more. And it's been fun to ride that wave and see see what that looks like. Are you guys thinking about, you know, perhaps what what that could look like, not just with stablecoins, but other things as well? Definitely.

And we'll have more share more to share here soon, but the teaser I'll leave is I think stablecoins are, you know, obviously incredibly hot right now. The other thing that we are seeing a lot of interest around is gold denominated products. And so I think there's a lot of interesting things to do there, especially as you see kind of different levels of volatility across the world. Something that we see a lot of interest in is is gold denominated products. And so that's something that we're looking at very closely.

Pitting you with a Pax G cannon as we're There you go. Talking about this. Pax G cannon.

Yeah. I mean, Pax G, I think, is, like, something that comes up in conversations all the time. There's so much interest. And especially outside of The US. Right? We talked to platforms in South America, Asia, Middle East. Like, gold is is such such a thing that's top of mind.

And, especially, I think if you see a world where maybe certain central banks across the world, you know, wanna tamp down the amount of presence that USD stablecoins have, I think there's an interesting world that that gold really takes off even further as this kinda, like, tokenized representation of it, especially in those markets. And so that's something we're keeping an eye on or very interested in, and and and definitely we'll have more to share soon. Super interesting. Well, cool. Yeah.

Well, thanks for keeping us posted on the latest. It's always great to to catch up with you and,

yeah, excited to hear, watch, and see more as the wedge grows and how you guys grow. Congrats on everything with Robinhood, riding that wave, right time, right place. So, Bo, thanks for coming on. Yeah. If any Robinhood native founders work their way into your to your circle, shoot them our way. I definitely will, and thanks for having me on again, guys. It's always great to be here and

loving where the show's headed, and it's it's always good to be on. Cool. See you, man. Take care.