Upshift x Kraken on Insto Vaults, DeFi Yield, and Institutional Crypto

The new core for the next era of finance.

Gang's all here. How we doing? Got some shift a little bit of shifting going on. No pun intended. Can we hear us? We're good. Yeah. We're good. We're good. I hear we're your last session of the day, so we're gonna make it the best one yet. Yes. We're gonna You have all freedom as well. Warmed up. Yeah. If you don't have a hard stop, we can riff. We can rap. We can go super deep into this one. Clear the schedule. Perfect. Here we go. Awesome. Awesome. We got a little,

yeah, a little side by little logo logo action going on. This is this is fun. We love we love hosting, like, partner related, integration related conversations like this. It's such a fun way to kind of highlight companies coming together. So maybe we start with just quick intros, and then we'll we'll dive into what's going on between Upshift and Kraken. Aya, you wanna go first since you're you're the returning guest? Sounds good. Sounds good. You have preference. Aya

Kantorovich, cofounder, co CEO of Upshift. We're a Vault platform. And today, you know, consider Vault across over 30 plus chains and over 900 assets and

a 100 protocols. Yeah. Lincoln Bartlett, head of OTC sales here over at Kraken, helping institutions

in many different ways within crypto, most recently with Vaults. Okay. Tell us about the relationship. How did this how did this all come to be, and how how do you guys come come together? Was like, when did we start dating? Just we were just joking about you it's funny. We're just talking about the bachelor bachelorette.

Like, people we need to have, like, a we were talking about I don't know if you heard it in the green room, talent matchmaking with, like, companies who are hiring and people looking for jobs and Yeah. It's it's a thing. Funny, like, position in between. It's also kind of the romance of the logo logo partnerships. We could also have a segment on that. But how did this come to be? Yeah. Well, crypto is a small world, specifically institutional crypto.

And, you know, Adya and I have been at different firms in the past and have different overlap in the past. And now in our most recent roles, you know, this is the hot theme as far as giving institutions access to more choices for yield, specifically some of the best curators in the market. And you have to do that in a extremely regulated compliant airtight workflow way, and what better platform than Upshift to partner with. And

so Yeah. To add to that oh, sorry. Go ahead, Maya. Yeah. Please. I was just gonna say, you know, look. In terms of from our perspective, finding a partner on the institutional side, you know, QC and qualified custody, that's just one piece of the prime stack. And so when you think about how do you enable yield on assets sitting in qualified custody, which are significant in size? It's really finding a partner that has all of the prime offerings on top of that.

So you think, you know, trading derivatives, you know, equities, like with X stocks, the lending desk, and so much more. And so it was to everything Lincoln said on top of that, also the unique positioning of Kraken having all of the liquidity solutions in addition to the regulated qualified custody.

What what is the user experience around this? I was actually looking into this morning for our business account. We have a treasury, and I was realizing that funds are accumulating in this account. And I'm like, okay. I prob maybe we should, like, put these to work a little bit. And I was going through this process of what that looks like. What what does that look like if I'm using Kraken Institutional? Maybe I'm holding assets on platform. What is the process by which I would go to engage this partnership?

A 100%. So, you know, when you think over the past couple of years with institutional crypto, years ago, institutions had to do this big patchwork of vendors to say, k. Well, if I wanna access this part of the market, who are the best players? And then wait. I also want to use those assets in other ways. And they would have to go through this interview process to figure out who are the reputable providers, what is the security, how much transparency is there, can I actually trust the process?

And what has happened over time is that the qualified custodians in the space, and there are only a few of them, are really the portal to access all of those different opportunities from one central safe, secure, trusted, regulated center. And so to your question, our institutional clients are logging into their qualified custody portal, and they're able to perform many different activities. Now there is a button that they can click and access yield through vaults.

So no longer do they have to withdraw assets off platform and hope everything goes well, now there is that full airtight process where they can provide the capital to these

curators, these portfolio managers on chain in a much safer fashion. When you're talking with clients right now, Lincoln, where where is where is the interest? Is it stablecoins? Is it Bitcoin? Is it ETH? Is it I got all of them. I want yield on all of them. We talked with with a few people where it's like, hey. People just yield hungry right now. Yeah. It it depends on the client profile.

If you're referencing venture capital firms, if you're referencing digital asset treasuries, if you're referencing miners, if you're referencing ultra high net worth individuals, they all have different needs. But the prevailing theme is that, you know, the the market has been lower and people are still trying to access yield. And how do you find yield without going too far out the risk curve? So the most common use case have been institutions that are sitting on idle Bitcoin, for example.

Or maybe they've got ether that's staked by in a in a liquid way that can still access this on chain yield. And so now their eyes are some are opened, and they're seeing more and more often the word vaults and curators. And what is that? How is that different than the crypto yield opportunities in the past? Everyone was kinda scarred by what happened in 2022 with those different firms where there was no transparency.

Now through vaults and curators, transparency is front and center, controls in front and center, and customizable. This is can all be very bespoke and one to one to the institutions. You don't have to be in thrown into a vault where there's tens of thousands of retail individuals. Those are available also, but institutions might want to toggle different dials to have a bespoke experience

specific to their risk appetite, and now that's possible. Yeah. Yeah. I school How do Go ahead. Go ahead, Zach. No. Was gonna say, how do you approach that? Because that was a foundation of our last conversation with it. It's like, hey. How how do we share this information? And then also, I'm curious about the second part. It's always been about, okay, how do we democratize access? But it's like, do the institutions want to democratize access?

To what point, like you said, do they have to, you know, protect their nest egg and do the do what's safest for them? How how do you think, you know, we we balance the two two of those those two words? Question.

Sorry, Lincoln. Go ahead. No. That's Uriah. Okay. I I was gonna I was gonna say Lincoln really hit the nail on the head in that, you know, today, a lot of these clients want customizable solutions because the amount that they're putting at stake in these yield products are 200,000,000 plus in size. And so, you know, commingling is very top of mind. They could, the end of the day, still end up in DeFi pools that have other users within.

But perhaps, you know, whether it's the borrow leg, it's a trading leg, it's a derivative leg, or otherwise, some part of that may need to be priced one to one. And so there's a lot of bespoke ways that you can structure these different EARM products where it's customizable to specific needs that they may have on certain parts or certain legs of the trade. And so I think that's what's most interesting.

You do, to Lincoln's point, still have access to the EARM platforms that expose yield across a number of different protocols that are perhaps commingled. But then you also have the ability to do permissioned KYC, KYC, KYC b vaults. You have the ability to create these custom yield vaults that are maybe more OTC that perhaps have a DeFi leg to it. You can create vaults that also have exposure to RWAs that go through a fully KYC, KYCB route.

And so it gives you a lot of levers to push and pull here that I I think gives the depositor or the client all of the controls that they are looking for. And with Uphchib, you can enforce that on a smart contract level both on chain and off chain as well. And so I think it gives you a lot of flexibility for the institutional client to say, okay.

I want that additional yield on my idle funds and QC, but this is exactly how I want it because perhaps I'm a publicly traded entity or I need to report in a certain way or I'm audited in a certain way. And so this is exactly what I need in order to fulfill that. I am gonna give you, like, sixty seconds to walk us through kinda I went in and saw

this. It looks like it's very relevant flow of funds for what's going on here. Maybe you can just walk us through, like, sixty seconds or so. What what is happening behind the scenes and give us a little bit of a mini mini masterclass here. Yeah. Sure. So I'll do this in sixty seconds. So you have two vault types. You have an e

I can speak fast, so watch out. So we have two vault types. We have ERC four six, which is industry standard. That's single asset deposit. Then we have something very similar, but it's multi asset deposit, so it breaks the ERC four six two six model. And if you look at then what happens in the underlying so a smart contract or a custom smart contract that allows for deposit and withdrawal, and that is also the smart contract that will strike NAV.

So all of the underlying reporting for risk in terms of where the strategy develops its yield, that is the vault that, you know, you receive the receipt token, and that's a reflection of the underlying strategy. Now then that goes whether it's the first or the second that's deployed into the strategy, and that can go into so many different things. It can go into DeFi pools on chain. It can go into OTC positions that are priced on chain. It can go into an exchange account. It can go into something else completely.

And then all of that is priced at the vault level. And so someone deposits into that vault. You can say, okay. At this specific time, this is when I deployed this exact amount. And then the underlying yield, you know, sometimes it's daily, weekly, monthly, depending on what the underlying strategy is. And that receipt token will show the appreciation or depreciation of that strategy and the yield that's accrued.

And so, you know, there's customizations for this on the institutional level across the entire stack, exactly what asset protocol and platform is used to generate that yield. And, you know, is it KYC and KYC enforced and wallet enforced? And there's so many different things that we can do to make this fully customizable to exactly how people want it reported, audited,

and again, dispersed and distributed. Beautiful. Thank you. I'm well done. Know.

That was great. Was lot That's perfect. I mean, really is a level of detail. That that's what the institutions want. Right? Like, they don't want a black box. They too have people behind them, investment committees, investors, and they need to explain every last detail of this process. It's not a single individual making that decision. They have to validate that it's safe, transparent, that there's controls in place. Right?

And so everything that I had just described is what enforces that logic and really gives comfort to institutions.

Yeah. That's your it's kinda leading into what we were gonna go into is, like, from your point of view, Lincoln, like, what was what was it about kinda teeing you up here a little bit. What what what was what was it about Upshift and and them as a partner or integrating this functionality into the back end that really stood out to you on the institutional side of what you're building other than Aya's awesome background of at Falcon and all that all that good stuff on the products I listed out.

You can imagine for a firm like Kraken, there's a immense amount of due diligence that goes into

every single deal like this. Kraken has been trusted for fifteen years within cryptocurrency. We have 15,000,000 clients. We've had qualified custody for three years. So there are many eyes that will diligence every possible vendor. And throughout that process, Upshift just stood out.

They're a very clear innovator with plenty of experience in the space and, have just been wonderful to work with and and really a major unlocker so that institutions now can access yield through many different curators, and Kraken and Upshift are the portal to access those curators. Are there any specific curators right now that really are kind of, like, leading the charge for you, Leland?

You love all your kids same, but maybe if, you know Love all my kids the same. Yeah.

I'll I'll get in trouble if I name drop any in particular, but I'll say categorically, many of them are different. Right? They have different niches. They have different track records. They have different risk profiles. Right? So if an investor only knows about one type of curator, they're kinda missing the forest for the trees. Right? You can access yield on chain or off chain, for example. And then on chain, which chain are we talking about?

You know, there's different lending markets on chain that have a different amount of risk on them. So, the way we view it is curators are just like portfolio managers. Right? And so in traditional finance, you wouldn't make a blanket statement about portfolio managers. You would say, well, which portfolio manager and within which niche is the strongest?

And so, yes, we've interviewed all of the top curators, and that is some consultation that we can provide to institutions to say what type of yield are you looking for, on what asset, in what size, what are your liquidity needs? For example, are you able to commit this capital for a long period of time, weeks, months, or is it something where you might need liquidity instantly, as as far as the next block that prints on chain?

Once we narrow down that process and have a better understanding for what the institution is looking for, then we can say, you know what? We've actually interviewed various curators that fit that profile. Let's meet them with you, and then you can also get a sense for their process, get comfort with their people, their controls, and their investment thesis. And then if you like it, we can help you plug in in a qualified custody fashion.

How is this what's what's it been like bringing this this product to market? I mean, is this like shooting fish in a barrel right now? Your clients have been asking for this, and you're like, hey. I finally got this thing that you've been asking about. Or is there Yeah. A learning curve right now, and it's like, hey. I'm great. I'm excited to have this in in my arsenal. But, hey. We're not there yet. I still have to go, you know, hit the ground and do some education.

And From my process yeah. From my perspective, it's the education process. So many people are interrupted in this. They've seen vaults. They've seen curators at conferences online on Twitter. Right? But they don't exactly understand what that means. And so most of the time, this has been leaning into those institutions to say, well, we we know you have idle assets. Are you interested in yield opportunities around those assets? Here are various ways that we can help with yield.

Vaults and curators are one of those opportunities. And then we go through the explanation of what does that actually mean? What does it look like to plug into this process? How is it regulated? How can we give you comfort? And then once that individual has the understanding, oftentimes, there's a long process after that with an investment committee that also needs to understand it. And that's why this is not some, you know, YOLO decision.

This is a very thoughtful process that is supported by facts and processes that are airtight,

and all of that is available through this new announcement. I would just add to that quickly because I think it's just so important what Lincoln's mentioning. We often talk about, you know, institutions coming on chain, when is the next comma gonna get added to, you know, on chain TBL. And Lincoln's really doing the hard part of this journey because it does require significant amount of education to, you know, teach people about, one, smart contract risk, flow funds, new operational workloads and workflows.

And I think, you know, again, the controls are so, so, so important when it comes to this type of product, but it does require months, sometimes years to get some of these folks comfortable with that flow funds because, again, they're regulated and publicly traded and audited in a very different fashion than someone who is deploying, you know, 1,000,000, 2,000,000. We're talking about 200,000,000 clip sizes. And so that's what make the makes us so powerful.

It will take time to to scale, but it's it's so important because it's truly bridging that gap for that next wave of institutional adoption.

From your perspective on these four buckets here that you that you're going after, you have exchanges, payments, fintechs, and then issuers. Which of these four would you say is, like, the most dynamic or complex in terms of the actual implementation? Do you think it does fall into this, you know, more of what Kraken is is represented here as, like, the exchanges? Or how do you measure

complexity and and what you've achieved here with with the Kraken deal? Look. I think Kraken is truly setting the gold standard for this. And what I'll say I'll say that because every, you know, single deal that we've looked like looked at has been very custom. And the reason for that is because the end user and client has, you know, a different geography user and asset type that they're looking to service and then audit and report on it in a different way to a different regulatory body.

So, you know, I think today when you look at all those four buckets, initially, one might say, okay. These are kind of out of the box solutions that you can sell the same product to, you know, 14 or 15 different type of platforms. And that's actually not the case. Each one of these are customizable. And so if you think about this offering with Kraken, this is just the tip of the iceberg in terms of again, this this touches on QC at a high level, but it's really the entire prime stack.

How do you enable crypto earn and just stablecoin solutions and remittances and, you know, asset movement and flow of funds and Kraken just launched cards. Again, how do you offer that full suite of products to some of these end users with Earn being a subset of that? And for each of those players, it's going to look and feel a little bit differently.

And so, again, going back to what Lincoln said, it's just so critical and important because there is going to be a large learning curve in terms of how do you implement each part of that the stack of that product into a large massive organization's back end. And it's definitely not going to to look and feel the same for each of these providers. And so, yeah, we're excited to to take this model and then apply it for

quite a number of of those four buckets that you mentioned. Yeah. Kraken, just as a business, I'm, like, just looking at this and kind of going back to that last question is, like, Kraken is so big and PayWard is so big at this point that, like, yeah, they're kind of hitting all of these things in their own ways. So I'd imagine this is a pretty a pretty exciting and compelling wedge for for Upshift. Excited to follow more of this. What what have we what have we missed?

Anything that we're not talking about or just topically that that gets you both excited? I know we gotta close here in a little bit. What have we missed about this partnership and how you guys think about moving forward? You know what? Institutions are eager to innovate. Right?

Years ago, they just wanted qualified custody. Then they wanted staking. Then they wanted spot lending options. Now it's yield. We've got other partnerships that are off chain versions of yield, like our Bitwise partnership. And now vaults are the most recent innovation that institutions are looking for. And so this will continue to evolve.

And I think it's important that we're putting a stamp on the institutional safe, secure way for vaults to begin an institution's journey, but I do view this as the beginning of the journey. And there will be much more that comes within vaults, different types of vaults, different types of curators. And over time, most institutions, I believe, will access Yield in this way.

It's awesome. I'm having fun with all of our different layouts. I was gonna say, Drew. Like, can go ahead and spend the day. I'm layout happy. I'm definitely giving this thing a test ride. Aya, what about you? Any any final thoughts here? Yeah. I couldn't agree more with the what Lincoln said. Look. I think at the end of the day, you know, Vault is a way to seamlessly

provide a back end, middle office, and operational workflow for all things yield. And so to Lincoln's point, whether that comes via on chain yield sources, off chain yield sources, on the equity side of the business, on the index side of the business, you you wanna aggregate that in one place and really wanna offer some of these users one click yield and diversification portfolio management across all these different places.

And so, you know, look, I've I've almost spent my entire crypto career in the institutional infrastructure stack, and it's crazy to say that because it it takes a long time to go deeper and deeper into these traditional institutions, but we are truly getting there. And it's phenomenal to hear some of these large regulated players say, oh, yeah. The future is vaults. And, yes, more confetti. It really is it's coming. It's happening. It's it's happening.

We talked about vaultification last time I was here, and it's it's continuing to to go. Coined that term, so I'm gonna continue to push that across each time I'm back up a year. Yeah. What I guess Here we go. I gotta shoot up right here. From an asset perspective,

we've talked about first guest talked about tokenized gold today and got to talk about tokenized silver. There's been real estate. Like, I really just keep on asking the question, like, what comes next with Vault? We've seen the stable coins. We've seen the Bitcoin. We've seen the yield. You have ETH, the Solana. Like, what are those areas that are next that nobody's talking or thinking about next? Or they're just whispers right now. So I just view it as collateral. Right? It's just different sources of collateral.

Working with some of the crypto native firm initially, of course, Bitcoin, Ether, Solana, Ripple, Hype, these are the first use cases. But anything that can be on chain from a collateral perspective and connected to, you know, an ACA agreement where it can be used pledged as collateral can access strategies like this. So it it certainly is not limited to only one chain or one type of coin. It's anything that can express value on chain and that an oracle can look at and say, okay.

I see that there is value in that collateral, and therefore, I'm going to allow, you know, x y z loan to continue because the collateral backs the loan. So that's what we mean when we say this is beginning with the crypto native firms that are zipping into some of these smart contracts, but there are many creative ways that you can use collateral to access the portfolio managers on chain, which have been deemed curators.

Yeah. The idea of Kraken's web growing in the last twelve months so meaningfully with, you know, folks in the family now like Xdocs who are doing kind of what we're talking about. And this was kind of a mind blowing thing for me even personally in the process of running the the show with Zach is just thinking about in in a in my own retail mind, owning a stock has never been like that it's kind of been like a bullet point at the end of the sentence. It's like, okay. You own the stock. That's it.

You hold it kind of long term, and that's all it can really do for you. That's, like that's the silo that it sits.

And I think the market, not just retail, but I think as more of these products come to market that actually bring things like lending into the fold, things like real yield into the fold from stocks themselves or or other, like, real world assets that are sitting in custody, things that have been withheld and preserved for the extremely wealthy, these types of products with with I'm imagining a lot of these pieces coming together.

It's so compelling to me even as a personal like, from a retail person standpoint, having the ability to potentially one day go to an app like Crack or an exchange like Kraken and be able to purchase a tokenized stock. And then not just have that thing sit there, but then using partnerships potentially in the future with Upshift or others, like, have that stock that I can remain in custody of continue to work for me.

Like, that is real wealth generation that, yeah, I think historically has been so preserved for a very small group of people just because that the dynamics of that. I remember sitting next to quick quick aside, sitting next to an old coworker of mine at Coinbase, and he was he owned, like, 7 figures of Apple stock. And he was talking to me about the unique relationship that he was able to form with JPMorgan because he had so much Apple stock to get a credit line from that, and he didn't have to sell it.

And I was, like, mind blown by this. It's just like that level of capability given, I'd imagine, eventually to just more of a fractional retail use case. So I know we're not necessarily there yet, but things like that get me really excited with both of you coming together and other friends in the family like XDocs and things like this. So thanks for letting me soapbox a little bit. Of course. Of course. That's the dream. Right? He's in the blockchain for freedom in different ways. So cool. And Kraken's like the OG

OG platform. I mean, truly, the OG exchange has been operating in The United States for so long. I mean, it has not been an easy road. And so I think that's what makes us even more monumental and why we're so excited to partner with someone like Kraken. But I I couldn't agree with you more. I mean, today, those markets have been historically gate kept for very wealthy individuals.

And now today, anyone can take, you know again, do the risk underwriting themselves and figure out if they wanna do margin lending, but that should be accessible to all. And Kraken is best positioned with all the services that they have to to be able to offer that.

Beautiful. Zach, you wanna close this?

You guys answered everything for me. I guess if somebody's watching this right now, one call to action, where what should they go? Where should they go? What should they check out? Who do they reach out to? Do they reach out to Ida? Do they reach out to Lincoln?

What do they do next? Sure. So from a Kraken perspective, on our website, we've got a a custody page. This is for institutional qualified custody. You click that link.

You can reach out to the team. Someone like myself will respond to you same day. Awesome. Alright. Well, thank you both for joining us. Open invite, open door for whenever you wanna come back on and yap with us on stable dash live. Thank you so much. It was a blast. Thank you, guys. Bye. Be well. See you. See you next time. Bye. Take care.