Perena on Solana: USD*, Tranched Yield and What Onchain Wealth Management Looks Like

Anna. Anna. Thanks for coming on. Yeah. Hi, guys. How's it going? Nice to see you again. Good. Were reminiscing about our last conversation in Denver that feels like so long ago. So many lives have been lived. Yeah. For sure. It's been been a fun past few weeks. I'm excited to dig into Perennial.

And I know that there's kind of you've you've gone I feel like since that last conversation, you've kinda gone through a bit of a metamorphosis evolution. So I'd I'd I'd love just kind of like a baseline of maybe where you were at the last conversation, what's changed, and where where you're at now. Maybe just brief background on on who you are because you have you have quite the history, especially in the Solana ecosystem.

We've gone through a pivot. I would call it not the final pivot. We will continue to pivot. So it started off as a decentralized permissionless stablecoin exchange for DeFi people. We we built a stable swap and realized that no longer, like, twenty twenty one companies should make actual revenue. Stable swaps are not the most profitable business in the world, the capital utilization is fairly low. So we listened to our users' feedback and moved into the on chain structured products and investment side of things.

Our second product, USD Star, has been live since last September. We've generated over 10% returns since inception for our our depositors, paid out over $1,000,000 in yield. So that's the direction where we're going is, like, the the Agoras of the world and the CoinFlows of the world are making money move, and we're the ones that are grow making money grow. I think both are super exciting and happy to talk more about what we're doing. So just a quick question on the stable swap reality of, like, the v one.

We actually, I think, hopefully, hopefully tomorrow, I'm now on the hook swap for delivering this episode tomorrow with Sam

Broner from Better Money Company. Is that effectively how you see what they've built? It it kind of is like that business, or how how do you think about the comparisons? Well,

there's Sam. There's what's the other guy? There's a Ubix. Veteran from a bank. Yeah. Ubix. I think they have a slightly better shot than what we did. So we wanted to do permissionless. And because that's where so the swabbers the demand side is always almost always permissionless first. Even if they're a fintech, they would ask, can we swap this thing without KYC ing all of our users?

But the supply side and the structure of, like, Better Money Company, hopefully, is a lot more efficient than running giant AMM pools. In terms of whether those can make whether those are good business models, I think you need some sort of incumbent positioning and that potentially, like, some sort of consortium structure, like a DTCC setup, where this thing is, like, so ingrained in the stablecoin ecosystem that it becomes a thing.

Otherwise, if it's just, like, one clearinghouse, I do think it would be difficult to grow into a profitable business while being able to service a lot of the this new stablecoins that would want liquidity.

Yeah. It's interesting. I think both of them are taking a, yeah, more permissioned or approach with working directly with issuers or licensed parties like banks. UBIX seems to be leaning more into the banking side versus I think what the Better Money Company seems to have done very boldly off the bat is go and, like, partner with a bunch of the issuers, like, permissioned or not or cust custodial or non custodial. Like, they seem to be building that. So I have, Zach, just a ton of interest around the founder.

Like, I'm I'm always skewing founder mode of, like, what's the what has that been like for you personally going through that? I think a lot of people who are building businesses, raising capital, growing teams, like, or maybe going through seasons where, like, what they thought was gonna happen may have changed. Like, what has that been like for you personally going through this? And any learnings that you would impart maybe on folks who might be actively going through?

I mean, I can't tell you how many times we have personally pivoted. How we think of ourselves? Like, what what what's the learnings there that you'd give to others? I mean, I've seen you guys pivot as well as as well as many of the companies that are on this rolling banner from

Agora itself to Artemis and so on. I did not coin this term, but I think this is called the valley of death where you're at an inflection point and you need to build rebuild conviction. We are currently at, I would say, our second inflection point where we've but a much better one than the first one.

Because the first one, it was we saw the clear demand, but I didn't really think if it were a negotiation, I didn't really think that the two sides had, like, a overlapping BATNA where the supply and demand would be able to, like, over time consistently overlap. Whereas this time, now that we've built, essentially, asset management structure product, there is a lot of overlap.

It is more about how do we identify a thousand customers who love us versus, like, we currently have over 10,000 customer 10,000 users who are maybe a little bit more smart about their money, and they would move it to, like, a different estimate a different on chain asset management program

every time they see better yield. So, yeah, it will have the value of death. Think we Or the need trough of I've also heard people say the trough of sorrow or, like, the yeah, these are pivotal moments of like a company's journey, like trying to figure out Yeah. Like, what what are the things Yeah. That exist that persist that continue to keep you alive and continue to bring value, I think ultimately is the thing. So what what was that for for you guys?

Like, when you thought about the maybe there were some things that you had to let go of, but what were some of those core pieces that stayed that felt, like, extremely important to keep keep

Stable points. Building with stable points, building as much as we can a permissionless experience and building with transparency. Building for the end customer is something that we've always done. We've so far never done a, quote, quote, TBL deal. So every time we grow, it's always direct to the end customer. In terms of our products, something that we we are we pride ourselves in is making the product as simple as possible for the end user to understand.

I still say if you go to our website, piranha.org, and talk to a non crypto user who doesn't know what stablecoin is, they would be confused. Hence, we're trying to figure out, like, how do we hook up to the fiat rails, like direct centralized exchange or even bank deposits into our product. But yeah. So those are the things we we did not change. But in terms of where we change or where we can go, I think there's a lot more that that's on the table if explored.

How do we we'll we'll always keep this, you know, fund to funds style, multistrat yield product because it has generated and delivered above market returns relative to how much risk we're we're taking. It's very diversified. But the presentation and packaging of this to the end customer is tricky because with the recent exploits, even though we weren't impacted as nearly as much, we we lost, like, $3,000 or $2,000 from a secondary effect on Solana.

But those are things that are very, very hard to convince a seasoned DeFi user to say, like, DeFi is safe or even convince a new fund who's never touched DeFi before to come on board. So now it's it's pretty tricky. So I I kinda have two paths I mentioned to go down. I always wanna understand, you started with USD Star.

You have USD Star now protected in junior. Please correct me if I'm wrong. But before we go down that route, I guess, you know, we had Aya from Upshift on Yeah. Some of, like, the vaultification of DeFi, and she was talking about Earn USD and how that's integrated in other consumer facing apps like Tria.

I guess, how much do you think about owning the consumer journey within a Perennial product itself, you know, like, on your website versus, like you said, maybe being more directly embedded in a Phantom wallet or, you know, name x y z, you know, neobank. We certainly will be open to it, but I think the best,

like, USD Star is very embeddable. Yes. So definitely possible to embed. I have a preference to go direct to consumer because or direct to the end user because I think that's a better way for us to explain what we're doing. For example, and not to put altitude or Squads on the on this under Spotlight, but Squads has a product called Fuse. Fuse is an excellent product. It has onboarded many, many non crypto users into onto Solana and into crypto. However, in their own vault, they hooked up to Drift.

And a lot of people who used FUSE didn't know what Drift was. And in fact, they even if they knew vaguely what Drift is, did not have the ability to understand that Drift is a more complicated system than, let's say, Camino, specifically on, like, dependency of the the systems. So, yes, you can have, I think, a lot more, like, Upshift, Morpho, and all those guys are very aggressively going b to b b to b to c, and it's, like, excellent business model.

But from a creating the best investing experience and saving experience for the end user, I think if we could own more of that stack, that would be a

slightly superior or, like, slightly more nuanced experience for our users. I like hearing that. We don't hear it quite often. You know, we we we're even talking about the x money news and how it seems like applications are really quick to want to consume the whole experience and and financial lives of their users. And I think there's something to be said in the same way where we're open we're not creating media on every single thing in d in crypto, in finance. We're niche so that there's a place to say, hey.

We're okay saying niche and saying direct to consumer because we care more about the experience or, more about more than just distribution because this is a really big pie. Going into the products themselves, kinda pull back the hood. Help us understand the difference between the three products you offer right now and the age old question. Like, where does the yield come from? Yeah.

So we've been small shill on us. We've launched this program called Perennapurple for people who deposit over a 100 k. So that lets us communicate even more directly. So we we're putting out weekly market updates, biweekly portfolio updates, however we explain in detail each of the yield source and why we choose them. We're going to publish more of that on our main sites in the coming weeks as well.

And at a high level, we source yield or we allocate across fixed income private credit type of products and then Delta neutral quant funds. Those are the two underwriting expertise we have, And those are we chose these because, one, we don't want any equities or crypto beta exposure. It is very much like a savings. Think of it as a fixed income, high yield savings product.

But two, we can sufficiently diversify our counterparty, our venue, our asset class risks because a crypto delta neutral fund has quite very little to do with private credit credit card receivables somewhere else in the world. And there the things that could go wrong are very different. So that's what we have right now. We do have sub 10% exposure to on chain lending because that is what enables us to have a redemption liquidity. We might change that into using relying on RWAs secondary liquidity.

So, for example, a figure figure HELOC prime token or HUMA PST token, they usually also have secondary liquidity that we can use. So we've maintained at this rate, at this yield, and twenty four seven liquidity is very rare, and we've been able to maintain this. So in terms of USD star j and USD star p. So USD star is the main product. It is you put USDC in right now. We split it into USDC, USDT, and in the future, maybe more diversification, but it goes into a bunch of different vaults. This is great.

So on the left, you have USD star. That's the simplest thing. Put money in. You don't have to think about it. APY just grows, and then you can take it out. It's like a like, NAV increases. I guess these RP is for people who want fixed rate, so the APY is fixed up five There is an unofficial insurance. It's not a proper, like, license insurance yet. This is something we're we're looking to get.

But, essentially, it's another related entity from our our different entities that we have that is underwriting this, and therefore, it has a cap of 1,000,000. That's the most low risk product on our site. And then USD Star J is something that we added after USD Star came out because USD Star J is the junior tranche that protects USD Star and also USD Star P. So if let's say great example that we had, Drift, we were like, the $22,000 something dollars that we we got impacted by Drift, that came out of USD Star j.

So USD Star j's APY was 0% for two days because it suffered a a small loss. But the USD Star holders had no issue at all. They just continued to grow their wealth because all the other assets, if you scroll down a little bit down a little bit more I've selected one of the sets. Do you want all of them? Yeah. Okay. And if you scroll down, you can see the underlying assets of what's yeah.

So here so if you like, one of them loses money or stops updating their APY for, like, two days, the other ones are still updating their APY, and therefore USD Star would still be earning. One of the things that is interesting potentially to some of the depositors is the APY fluctuates right now quite a bit because traditional traditional asset management is not used to having their NAVs updated twenty four seven in real time, whereas we are.

So sometimes there's a lag between when they update their APY or Oracle and price and when we update our price. So some this is, like, all the nooks and crannies of of stable point versus not like, Shopify versus stable point five is, yeah, most funds aren't. They they don't update NAV on weekends, but we do. So our NAV is like there was a there were a few weeks where our NAVs on Saturday, Sunday our APY on Saturday, Sunday dips, and then Monday increases. Yeah.

So those are things that we're we're working through right now. Like, how do we properly report this? Do we assume an APY? Do we just let it fluctuate on Saturday, Sunday, or on weekends or or not? Like, this this was most likely Yeah. You I I imagine

I imagine somebody coming to do their research on a you know, they have nothing to do on a Sunday afternoon. And they're like, oh, what's the highest yield out there? They land on your page on a Sunday and like, oh, well, okay. Move on. And then, you know, they don't know that on Monday, it jumped up, you know, two points or something. Yeah. Yeah. Exactly. That that was really like this

really like this find my match portion on Like, the

this feels like more of where Yeah. We're excited to go. What is walk us through what this this looks is this new? Like, what what's the strategy behind this? Yeah. This is new. It came out, I think, last week. We wanted to help onboard people who are not as familiar with investing and also be able to derisk us as a platform.

Because in many jurisdictions, when you have investors, you have to ask them for their risk appetite, and you have to ask them that a disclaimer that they understand exactly what they're getting into. We had users that thought USD Star Awesome. Is a stablecoin and has the same underlying as Circle, which unfortunately, it does. So we have to make it, like, super, super clear. You get eight percent APY

because you are taking on some level of risk. This is really sweet. Drew, I got a question. I love this. So, you know, we we were just talking about Super State and their fund OS announcement. We've talked quite a lot about tokenization and bringing these on chain products. I'm I'm a big fan of Figure and what they're doing with the prime product. Help Yep.

Some of the people understand that as these funds and other products can get tokenized, how does that impact the way that vaults are structured and the type of products that Pirena has access to? And, like, even why currently build on top of Prime? Like, I think that's a great example that people don't realize of where the yield is coming from. It's it's coming from a source that a lot of banks generate yield from. Yeah. Yeah. For sure. Like,

real estate financing is quite lucrative for banks, so are many other types of financing. That's, like, the main way that banks make money. So a very interesting angle I noticed and I wrote about in our purple market update is vaults are increasingly vaults are in high cognitive dissonance right now. Like, if we if you ask if the if a regulator comes to ask me, is USD Star a fund? I have to say no. And Morpho will say no, and Upshift will say no.

Yet Upshift just got I think they just did a fund admin with securitize to report their NAV. So are we a fund? Are we not a fund? Everyone's trying to kinda dance around this question, and I think we'll get some clarity very soon. So I'm trying to pursue both paths of understanding can we become can part of our product become regulated on chain funds? And then can part of the product be essentially the legal structuring of a lot of these?

Like, whether it's prime or certain syrup, USCC, or I I think Upshift might have a similar one. A lot of these are structured as debts. And when you say, like, is like, debt versus LP interest or debt versus, like, deposit, that that's a quite a nuanced distinction. It's a very important distinction, but one that the end customer or end user might not really really know or really even care about. Now to your question on, like, why prime is better than not prime, do you they look very much like open ended funds.

Like, a lot of these products don't I think ETFs and REITs and similar to REIT structure, like, trust structures that are traded on exchanges were, like, last century's attempt at making these things more liquid, more tradable, etcetera. This century's attempt is, like, the whole tokenization because it's even more flexible than ETFs and REITs. And we're we're doing the same thing. We're just packaging things that generate returns or generate yield, making it more accessible to people.

But now instead of, like, on weekdays, now it's twenty four seven, and the yield distribution, the composability, etcetera, are all way better. So something that the prime is super cool for HELOC, but I think there is a lot of trades that you can put up, a lot of asset classes you can put up into a single single asset on chain vaults. And then those vaults can be picked up by people like us that specialize

in in multi strats, and then we create the indexes that the end investor would would invest in. Are there any strats that you know of in TradFi that you're like, man, this needs to come on chain so I can have access to it? Yes. Quite a few of those.

There let's see. We recently talked so some of the more exciting ones that I would love to bring on chain are emerging market, quant funds, and traditional longshore, like, longshore sector specific funds. They're that's something I I've advocated with within the Swan ecosystem as well. Like, we don't want we don't really need another just private credit. Like, we can do a lot more with with Quant, which is the largest growing alternative asset in the last, I think, twenty years.

Outside of that, there are some cool ones that I've met recently. There's Camino was bringing on warehouse financing, so that's really cool to learn. They're doing, like Break that down. What does that mean? It's one so traditional, and you can do it with mortgages. But let's say a bank has got a borrower that wants to borrow a $100,000,000 for a bunch of mortgages, the bank doesn't have a $100,000,000 to lend to them. But the bank can take on this loan first as a business.

And then they go turn around and they go to another bank, a bigger bank, and be like, hey. Can you borrow can you lend me a $100,000,000 because I'm going to lend it to this other guy? And that deal itself is sufficient collateral to get this loan, a loan much bigger size than what they otherwise would be able to get. So that's, like, one type of warehouse financing. And in the specific case of Camino, which I think they they have put out an announcement already, is when Is this their work with Figure and Hastra?

Their, like, multi chain, multi asset yield engine or something else? No. It was another announcement. I don't know how much they put out publicly, so I won't, like, say everything. But, essentially, that warehouse financing is is something that they're bringing on. I think Jupiter is doing, like, fixed rate financing that they they posted on Twitter recently. There's some more to that that could be, like, super interesting. But a lot of these, on one hand, like, they're all interconnected.

Borrowed Line is very interconnected with private credit, public credit, and that's very connected with the LP base that we are servicing because our LP base is never going to underwrite individual deals, but we can package those the this debts, tranche it, and then provide that to this to these, like, end LPs or end end investors. And all they see is, like, is like buying your Fidelity money market fund. That's, like, a bunch of different t bills and stuff.

You're not never going to go look at the individual duration or amount of t bills. You're just going to see, like, oh, I bought a I bought, like, $10 of of this money market fund. I think the beauty of having a lot of these tokenized is traditionally, every one of these asset classes would have a different custodian, a different essentially a different process. If you're thinking about, like, okay.

I wanna buy a little bit into, like, a Indian emerging market Indian, like, equities quant fund and the Chinese equities quant fund and then, a Japanese equities quant fund. There's no way you can put all that together and purchase make that order. You cannot buy that thing in one day or sell all of that in one day just because the, naturally, the the stablecoin the process of money is, like, so slow.

But with stablecoins, you can do a lot of that even though they're custody by different different jurisdictions and different custodians. Likewise, if you do mining, financing, infrastructure financing, GPU financing, like, you can finance a bridge. You can finance really, I mean, everything requires financing. And you can package all of that together into mind over into, like, very few indexes.

So interesting. I just have one more question, Zach, and it surrounds the specific purple, like, purple I'm reading here. Piranha Purple, you mentioned it. Invitation only membership for users holding a 100,000 or more in Piranha. What just like, when you're thinking about actually building content or media for that group, what what do you what type type of approach are you taking? Useful and valuable content that that group needs to be consuming, and how are you approaching that? It's

continuously evolving. So we wrote about DeFi has a relationship problem, and most of these most of the DeFi protocols don't have a good way to don't really have a CRM. Like, it's in the nature of DeFi that even me as a user don't want the protocol to know who I am. However, we, as the protocol, want to be able to service you. So in many ways, we've we increase transparency. We talk about the portfolio. I write about every week, like, some new field source or some new structure that I I meet.

So every week is about, like, a new interesting asset class. And then we also expand. I think as we grow, we've been very heavy on exporting culture. That's, like, our identity.

So anything, like, cultural related that could be interesting to an investor that is maybe not directly relevant to to making money, so so to say, but the culture that drives that can turn into, like, an investment philosophy or can turn into, like, a cool investment opportunity into a farm or into, like, a a new geo or into, like, some ESG thing, and we'll try to bring in deals that are unique to, for for our LP base that they will not be able to see in other places.

And that's definitely early early days, But I hope that's You're doing this, like, weekly? It's sort of like a weekly update? Yeah. So I I jokingly say that we made it really hard for ourselves because we're twenty four seven online and redeemable. We provide twenty four seven nav updates. We provide weekly investor updates. We're live in, like, on chats answering people's questions, and no other traditional fund would dare to do this because they they can't process it that quickly.

So part of it is, yeah, Stablecoin's beauty of, like, Upshift more for us. We we can all do that. But also part of it is, like, how do we max out transparency and and provide the best service we possibly can to our users. Yeah. It's awesome. I don't hold over a thousand $100,000

in Preno, but I would love to see some of that alpha of what you're what you're bringing to the table there. And, yeah, if there if there are ways that we could, I don't know, maybe, like, once a month, like, pop in and highlight one of those or come back and start stream, and we can kind of walk through one of those. That could be a fun collab. So keep us posted. It's great to hear an update on on what you've been doing, and we'd love to have you back. Yeah. Zach, any final thoughts from you? Great work.

Been a big fan for the past, I think it's almost two two years. Kimono in my in my bathroom.

We'll have more kimonos coming out soon. This time

Let's go. Yeah. I'm sure I know you'll at least see Drew at, I'm sure, at Accelerate.

Yeah. We we were at Accelerate, and then we'll be we won't be in, Miami this year, but, yeah, we'll see you at some other event. Maybe we can do, like, a New York stable point pop up event or something. That'd be great. That'd be great. Yeah. Alright, Anna. Thank you for the time.