The Delphi Podcast
The Delphi Podcast
Guilhem Chaumont: Following the Flow Into Crypto’s Next Growth Phase
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Join Kevin Kelly from Delphi Digital as he hosts Guilhem Chaumont, CEO and co-founder of Flow Desks, for an insightful conversation about institutional-grade trading services in the crypto space. Flow Desks has established itself as a full-service digital asset trading and technology firm, pioneering a unique "market making as a service" approach.
🎯 Key Highlights
▸ How Flowdesk created "market making as a service" to serve crypto-native projects
▸ The growing importance of transparency, neutrality, and trust in crypto trading
▸ Why institutional adoption is a slow, steady shift—not a tidal wave
▸ The role of stablecoins and tokenized assets in the future of finance
▸ How regulation and compliance are shaping crypto’s next phase
▸ Why Flowdesk won’t issue a token—and what it says about alignment and incentives
▸ Long-term vision for tokenizing real-world assets and transforming financial rails
💡 Want to stay updated with the latest in crypto & AI? Hit subscribe and the notification bell! 🔔
🧠 Follow the Alpha
▸ Kevin's Twitter: @Kevin_Kelly_II
▸ Guilhem's LinkedIn: Guilhem Chaumont
▸ Flowdesk's Twitter: @flowdesk_co
🔗 Connect with Delphi
🌐 Portal: https://delphidigital.io/
🐦 Twitter: https://twitter.com/delphi_digital
💼 LinkedIn: https://www.linkedin.com/company/delphi-digital
🎧 Listen on
Spotify: https://open.spotify.com/show/62PR1RigLG2YN5Pelq6UY9?si=18ac7ccf36ab4753
Apple Podcasts: https://podcasts.apple.com/us/podcast/the-delphi-podcast/id1438148082
Youtube: https://www.youtube.com/channel/UC9Yy99ZlQIX9-PdG_xHj43Q
Timestamps
00:00 - Introduction to Flowdesk
02:00 - Providing Institutional Grade Service to Crypto Native Teams
04:00 - Challenges and Convincing the Market
06:58 - Current Market Read
10:00 - Why We Won’t See Large Drawdowns
13:00 - Growth Areas Going Forward
15:52 - Tokenization of Existing vs. Illiquid Assets
18:48 - Institutional Hesitation and Fee Capture
21:28 - Biggest Opportunities for Flowdesk
24:50 - Stable Coin Demand
Disclaimer
This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host and members at Delphi Ventures may personally own tokens or art that are mentioned on the podcast. Our current show features paid sponsorships which may be featured at the start, middle, and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product, service or token.
It's Kevin from Delphi Digital, and I'm very excited to be joined by Gillam Schema, the co-founder and CEO of Flowdesk. Gillam, really appreciate you doing this. How are you doing today?
SPEAKER_01I'm doing good. Thank you very much for having me.
SPEAKER_00It seems that we're doing this on a green candle today, which we'll get into the state of the market and all that good stuff soon. The marketing copy would describe you guys in Flowdesk as a full service digital asset trading and technology firm. But as we'll get into, there's a whole lot to unpack there. How would you, your elevator pitch, how would you describe yourselves?
SPEAKER_01Yeah, so I think you know the way you described it is actually the perfect way to describe the company. We come from a market making background. We were notably known with a product that our clients love, which is called market making as a service, which is a slightly different approach to a regular proprietary market making. So we we've been quite popular with that, with that, but very quickly we evolved into a full-service digital asset trading firm, which means that basically we talk to a wide range of counterparties, some of the biggest projects out there, some of the small projects, talk to institutionals, ETF providers, uh that'd be banks, you know, everything basically that touches crypto, and we try to offer those guys all the range of services you could expect in crypto. So indeed that we go from market making, we do custody, we do brokerage, on spot, derivatives. Now we are launching credit as well. So, you know, we have this um we're building, you know, this really like all service financial services firm. And at the same time, at heart, we are a hardcore technology firm because obviously in the back end is all the connectivity that we that we had to build and all the algorithmic um and all the software.
SPEAKER_00Yeah, what I what I really like about your founding story is you initially were focused on the simple goal of providing institutional grade services, but for crypto native teams, right? I'm I'm really curious, maybe we can start there. What went into that decision making and what was a kind of key insight or thesis you had for wanting to start there?
SPEAKER_01Yeah. So I think uh so it was back in 2020. So, you know, we we came with the following assessment. So I think, you know, at this time it was quite interesting because everybody was expecting, you know, an institutional wave and they were all you know building in that regard, you know, those prime brokers, it's gonna be regulated, et cetera, et cetera. And and our deep conviction was that it would not happen for a wide number of reasons. We thought the market was not ready. We thought, no, it's gonna be maybe for five years, for 10 years, this is gonna be remaining like a crypto thing and crypto-native thing with some various projects, infra, you know. I mean, at that time, obviously, we didn't have a lot of the building blocks that we have today. So we thought, okay, we're gonna focus on crypto firm. And where where can the edge be? The edge can be a bit of a contrarian bet, which is to offer this institutional grade level of service, but to crypto-native counterparties. And I think at this time the market was missing a lot of that. You know, a lot of things were shady, mostly proprietary market makers. Obviously, we we didn't have at this time some of the market makers that we have today in the landscape. Regulation obviously was different. So we're like, okay, let's try to take a contrarian approach, institutional grade level of service, but to the smaller projects out there, and and that's probably why we became so successful. And and we anticipated, and and and I think we we we were right about that, but it's probably only the tip of the iceberg today that this wave of token issuers will only increase and they will get more and more institutionalized, more security token, RWAs, obviously, those topics in five years have gone in the right direction, and we are very happy about it. But we but we thought you know the the building of this is to talk to the people who are in crypto right now. And at this time, it was only crypto native counterparties.
SPEAKER_00What were some of the challenges in those early days, but also I'm sure that you still face today in terms of, again, that focus on crypto native teams? If you go to any big company or especially traditional financial players, the concept of market making, a lot of the services you guys provide, is kind of table stakes, right? Or it's or it's or it's something that's very common. Whereas when it comes to crypto native teams, a lot of them might be very technology forward, but don't have the internal expertise to assess why they would need a market maker, things of that nature. I'm curious how those conversations went, especially in the early days of just trying to convince the market that what you were doing actually was value add and was something that eventually they were going to need.
SPEAKER_01So first of all, I'm gonna state the obvious, you know, when you have the ambition to do everything with a wide range of counterparties, wide range of products, you inherit from the complexity of wanting to do everything. So the best is to have a single approach on a single product, a single type of client. So I think we we haven't made our life a lot easier by having this conviction they want in the company. And if you think about it, particularly when you think that the spectrum of token issuers you are talking to already back, you know, four years ago, can be a billion-dollar market cap protocol heavily backed, but on the other side of the spectrum, you may have a two billion dollar market cap, a very small cap. And how do you address this range? It's extremely complex because obviously the cost of running market making in a fragmented market like crypto, when you talk about hundreds of exchanges, DeFi, C Fi, I mean, all the things that we that we know very well, it's hard. And that's kind of how we coined also this market making as a service approach, which is how can we address those thousands of token issuers who cannot afford to give 10% of their supply, who cannot afford to pay thousands of thousands of dollars per month for a market maker when you have like you know tiny liquidity. We need to find something that is just very efficient and very transparent. And that's that's how the market making as a service approach, very cheap, very affordable, high coverage. You are your own market maker about transparency. You do have to provide your own capital, you indeed take more risk because you take market risk, counterparty risk, etc. So, you know, it was kind of like we tried to engineer the only thing that could fit for this market. And that's that's that's really how we came to it. And today, we we are very happy to see that we still work with that side of the spectrum, and our clients are very happy, and we are very happy to work with them. And we can also work with the other side of the spectrum, which is also looking for some of the features of those products, including notably transparency and control over their tokens. So I think at the end of the day, we are doing crypto, but we are not reinventing the wheel. It's a set of financial services. There is a decentralization sort of flavor, but we are finding exactly the same problem. It's about regulation, it's about balance sheets, it's about coverage, because we are in a 24-7, 365 business. So when you think about it, that's about having operations globally, trading, sales, monitoring of funds on-chain, you know, like all those sorts of things, which would just create an entry barrier that is getting higher and higher. And honestly, it's it's not the beginning of the end. So the the game we're trying to play is be everywhere, do everything, be compliant in every jurisdiction we operate. It's a very long journey. That's why we we think our journey is still quite early and and and we keep building heavily and investing heavily, but it's it's gonna be a very long journey. And and the market will evolve a lot.
SPEAKER_00Yeah, to that point, if we if we fast forward to today, obviously we're living through very interesting times. There's a ton of uncertainty right now. The market looks quite different than it did three months ago, let alone six months ago. What's your current read on this market right now?
SPEAKER_01I mean, so to to to to to talk about you know the fundamentals and and the numbers, the the volumes right now are kind of uh anemic. To be very clear, we're down 60%, 70%, uh slightly, slightly above one trillion of volume per month. We we almost hit uh 3 trillion at some point. So so the the Bitcoin price, the Bitcoin face value is kind of you know hiding a forest of not much is happening. And obviously the the altcoins and some of the altcoins have have have lost significant um amount of value. So that's the current picture. The current picture is the market is basically as slow as it was before the whole US election and the whole activity that we saw last year. That's the reality. On the other hand, we have tons of reasons to be bullish on the long term, I think, and that's that's why on our side we're still heavily investing. And you know, we we have we haven't we have never really looked at you know the spot picture of crypto, which is why we always focused on on keeping on building and why we had so so good results even in the worst conditions. And and I think the fundamentals are very good, you know. The the the the regulatory clarity is happening, particularly in the US, of course, and we can do a lot of things. The institute institutionals are coming in. And this time I believe I believe it fundamentally. I don't think that they are coming in the way that people may think, and we can we can talk a bit a bit about that later on, but that's where the flow is. And that means the market is is radically changing its structure. I fundamentally believe that we are not in a four-year bare bull cycle sort of structure. I don't think the the flow is is mostly retail anymore. You know, all of this those things we are we are witnessing. So the market structure is changing. So what it means? It means simply that the market is maybe gonna be more boring to some extent. Why? Because we are much more linked to to the economic activity. We see it every day. Everybody is witnessing, you know, what the US is going to do in terms of tariffs uh and what Trump may announce, but that's not really crypto-linked per essence. So we we can see a strong correlation here. We we we think obviously, if you look at venture activity, most of it is is price now. So, you know, those good old days of doing 1000x because you invested in an early stage project, it's over because all those rounds are preempted at higher valuation. And again, also the the venture lets scape is going to drastically change in the next few years. So I think it's it's becoming a bit more boring, some would say. On our side, we are we are very excited because the thesis around institutional and tokenization, we see it arriving and we are at the forefront of it, to be frank, given the projects we work with. But but that's essentially it. So, what we could expect this year, in my opinion. I don't think we are gonna have the biggest bull run of all time and the and the highest multiples that some people will expect. But on the other hand, I definitely see think that whether or not we are in the bear market, we won't see those 80% retracements on bitcoins, those sort of things. That's my uh that's my that's my deep conviction. And uh and uh and and I think that's quite bullish for the space because at the end, volatility, due whatever whatever the reasons, including lack of liquidity, which bring which bring back to our topic of market making, is is not good. It's not good for the long term.
SPEAKER_00And and why is that you talk about how don't expect to see these large, extremely large in some cases, drawdowns that we've historically seen throughout, let's say the last you know, three, really four crypto cycles, depending on how far back you want to go. You're saying you don't see necessarily that that those times might be over in terms of the those types of drastic drawdowns. Um why is that? Is that because the way in which you're seeing institutions come into this space?
SPEAKER_01It's the the there are multiple reasons, but the the number one reason that we are seeing is the flow are changing and the view on the maturity is also changing. So to summarize, it's it's not the exact picture, but I think it will be a good proxy. Until today, it was I'm trying to get in in the bear market and I plan to sell in the bull run. I have this like 18 months, two-year sort of view, 80% you know, retail driven. Now the people who invest most of the flow, and particularly in Bitcoin, do not have an 18-month horizon anymore. I think and and I think when you look at the flow of the ETFs recently, you clearly see it's it's a it's it's a multi-decade TWAP, and money is just flowing in and is and is holding it in a similar fashion that people have been uh holding uh gold, for instance. So so that so that's why I I think essentially, you know, the the people who've been accumulating Bitcoin will not sell with the same horizon that the previous cycles were happening. That's I think that's the key fundamental fundamental reasons for what we are seeing. And obviously, we're seeing it on Bitcoin first as a first order of magnitude, but obviously it trickles down to all the other coins to a lesser extent.
SPEAKER_00Gosh, and and that wave of institutional capital, which a lot of people have been looking for for a number of years now, right? And to your earlier point, was never going to be a giant wave. They came in all at once. It's more of a slow, progressive process. But when institutions do come in, they're stickier capital, their longer-term holders, once they're making that decision, once they're in, they're in, in a sense. And it's not so much the retail, more kind of crypto G Gen, if you want to call it, type of trading mentality where it's very short-term focused. The new players that are coming in have a longer time horizon, is what you're getting at.
SPEAKER_01This is what I'm what I'm getting at. And their their perspective is is extremely different. Those guys are not gonna hold top 500 of coins, do some TWAP and just and just wait. In my opinion, they will either hold the top assets or what they will hold and what they will buy is the technology and they will issue their own coin. So what I'm trying to say is what will bring you know crypto from a $2 trillion market cap to a $10 trillion market cap is not the increase of the market cap of the current token that we see. And maybe, maybe by the way, that that may be bearish from from a speculative perspective. It's gonna be new assets coming into the space being being tokenized. This is starting with the RWAs that we're seeing at the moment. So it's it's very important to understand that I think for for whoever is is is expecting and waiting for that wave to basically pump their bag, I don't think it's gonna happen much. That doesn't mean that the casino casino use case of of crypto is over. This is gonna remain a $1 trillion market cap. It will have ups and downs, there will be extremely good projects that will do, you know, whatever multiple and all of that. But this is not a relay of growth. That's uh that's the point I'm trying to make.
SPEAKER_00And where do you see the most growth coming from going forward? Is it the tokenization side? Is it other new token issuers that are focused on maybe consumer? Where do you see the biggest growth areas going forward?
SPEAKER_01So I think we have three areas essentially. We have the store of value in a digital gold fashion. Most of that will be grabbed by Bitcoin, obviously. Then you have a few key networks that and that will have some market capitalization derived from their revenues. Ethereum is a good example in the negative, a good negative example these days. But as soon as you have a network that has a value of fees of 2 billion, 10 billion a year, you can easily derive some market cap using whatever high multiples. So I think there will be a lot of value in the networks, on the contrary to Web 2.0, uh to be to be clear, it's it's very different. And then the third is tokenization, obviously. And uh this is a 10, 15, 20 year process that will start with easy things that has started, by the way, a long time ago with stable coins, tokenized fiat, or to be more precise, tokenized uh money market funds, uh government corporate bonds to some extent, uh, with some of them. So it has already started a while ago and it has been quite successful. The only key difference today is that the yield is passed on to the to the ultimate user, and that's very exciting. But I but I I I think this is where the next relay of growth is. So I think we will start with the simple use case. How do we bring the yield on chain? And if if you think about it, it's interesting because even without crypto, this is happening more and more. You know, on our side in in Europe, now whatever bank you have, and I know it exists also in the US, you have this, you deposit, you deposit cash in your neobank and you basically get the Fed funds rate or whatever the equivalent is. So it's happening on both sides. Obviously, the crypto brings a much better competitive environment and a very much more interesting flavor of it because it can tokenize it and you can move money around very easily. But I think it will start heavily with tokenizing the yield, whatever the yield is, and obviously then we're gonna go down to some much more interesting routes.
SPEAKER_00And do you see the the rise of tokenization being more focused or a bigger growth area being tokenizing or bringing on chain existing assets or traditional markets, or on the other hand, actually creating liquidity around assets that historically haven't either been illiquid themselves or haven't had liquidity at all?
SPEAKER_01Uh obviously, the the wild dream is to have assets which were not liquid, to that they become liquid. So we are all you know extremely excited about tokenizing and that that we start from pre-IPO sort of firms that that but that would go down all the ladder until tomorrow the grocery store of the corner may have a two million dollar market cap and distribute its dividend on chain. I think I think this will happen. And by the way, is is the number one reason why we are building Flowdesk. But I think it will happen in a very long time because it's a very complex use case. So right now, what we are seeing and what we are thinking is the next two to five years will be dedicating to bringing existing assets that are already liquid, just to tokenize them and bringing them on chain and having all the positive sides of crypto, using them as collateral, transfer them easily. I mean, you know, that there is there is even a use case for crypto that I think that that I uh that uh that I think is is quite possible is the end of fiat money. Because tomorrow, if I can pay, if I get my salary with those tokenized money market funds and it's accepted as a payment on a one one-to-one basis, who would want to hold fiat? We will just hold those to the tokenized asset and I will pay you with it, you will pay me with it, and and boom, and we have yield. And just just that piece of the puzzle is an insane use case for the world and is in and is a $10 trillion market cap uh in in itself. But I think quickly after we will see the rise of a new wave of assets. And again, it will start with liquid assets, so with the Tesla, the Apple, all those stocks, starting with the bigger one, will be brought on chain, will be used as collateral with whatever LTV. The companies may bring even their dividends on chain quickly. I think you know, Coinbase tokenizing their stock is is probably the first stage of the rocket. And ultimately it will go down on the down all the ladder. But I think we're probably talking about 10-15 years, and we need to appreciate how institutionals are very careful about this. And and people are often wrong about is it the technology ready, is it the risk appetite? No, it it's it's it's none of that. We need to understand that tokenization, the banks are not going into it because the regulatory doesn't allow it. If you look at the ratios in terms of RWAs, so the risk-weighted assets, those are insane now. It's and it was interesting because um a few days ago the the French public investment bank announced uh a crypto fund where they will invest directly in crypto, and uh but that they're they're getting smashed on their balance sheet for doing this. So there is also some some regulatory, some basal requirements which need to evolve at the same time. But and and that's why, by the way, the institutionals are starting with what looks like the easy stuff. Uh, but but I think it's it's very exciting, obviously.
SPEAKER_00Is is part of that hesitation on the institutional side also regulatory, obviously being a very big component of this, but when you dig a bit deeper, and let's say the regulatory kind of curtain was lifted, conversations I've had, but again, you've got a really good purview into this world, institutions are also trying to figure out how they can capture fee revenue or capture the upside economics of tokenization in a world where this world is crypto native, is all about permissionless technology and decentralization. And I I think it I I personally have a hard time sometimes imagining that some of these big, especially these big trad find incumbents are just going to come into this space without having a full understanding and plan for how they're gonna be able to capture the upside from bringing a lot of these assets on chain.
SPEAKER_01Uh, I could not agree more with with what you have just said. For them, you know, it's a combination of what are the efficiencies that these things are bringing, and by definition, how much more money can we make doing the same thing combined with a risk aversion of we're not sure we understand 100% of these things. It seemed that these things they remove a lot of our value on the operational side, notably. So to which extent we are letting the baby go. And that's why they are, and obviously, all of this with on the top, this thing can explode to our face because you know this is on-chain, there are hacks, there is security risk, there is protocol risk, uh, PR risk, and obviously we're talking about crypto. So, crypto is is a is is is a hot topic for everyone. So that that explains partially the risk aversion. But everyone who has a decent understanding of what's going on in crypto on the institutional side, and you know, you just need a 10%, 20%. And I think some of the guys out there, like BlackRock, for instance, or all the other guys were issuing some sort of money market fund tokenized or stable coins at the moment, have well understood this, see, see a huge advantage. And at some point, I suspect, of course, right now they are in a mode where they understand the synergies that it's bringing, they understand that they need to be careful, they need to understand that this can be a winning game or losing game for them. But at some point, it's gonna be a losing game for everyone to not judge to just not go into crypto. At some point, the risk will not be to go into crypto, it will be to not go into crypto. Again, it's it's gonna take years, but as you know, the retail keep embracing these markets, the investors on the buy side keep keep embracing these products, it's gonna be a loss of opportunity for them at some point. But but uh we could definitely understand why they are very careful about it. But again, you look at the numbers, you look at the TVLs of those stablecoin biddle tokens, it's it's exploding these days. And again, back to what I said, you know, even if we think about you know the stablecoin market being 150 or whatever the number is, billion market cap, it's ridiculous to compare it to what it could be tomorrow. We would be talking about 5 trillion, 10 trillion, those sort of numbers.
SPEAKER_00And when you have this type of longer-term perspective and a pretty clear thesis on where you think this space is going, obviously today FlowDest does a lot of different things. How do you think about where are the biggest opportunities within your market that you see right now? Or what are the ambitions of how you want to go out and try and capture or be part of this evolution that you first see in terms of both market structure, but the different types of players coming in? Like what has got your attention most right now?
SPEAKER_01So, you know, I think it's what when you have a thesis that is as strong as the one we have and that we should. With with most of the markets, so we're not making a contrarian bet here. Don't get me wrong. The question is how do we get there? And how do we get there is the complex answer, particularly if you think that you're gonna get there in 10 years. So the question is what do you do now? And I think in the I mean, essentially everything we've been building in the last years is centered around that vision, building operations, building the regulatory framework. And to put it in a more simple manner, we think that we will trade those tokenized security exactly the same way we trade token uh utility tokens today. And by the way, utility tokens won't die. There are some very interesting utility tokens, and that's probably gonna be a single digit trillion market. It's not gonna be two digit trillion, but uh, but we we we think it's there are some very interesting tokens out there. And but my point is we will trade those security tokens exactly the same way we trade them today. So what I'm saying is ERC20 tokens, on pool, some RFQ on chains, some centralized exchanges, they may be centralized exchanges, you know, of TRAT5, they may be Robin Hood, you know, whatever, whatever it can be. But at the end of the day, the technology is there and it's gonna happen exactly the same way. Of course, it's gonna be permissioned, very likely, because you need to know who's buying, you need to do quite KYB, KYC, KYT, all of that. But essentially what we're building at Flowdesk is the is the technology for that. That's our deep view. And we don't think that it requires any additional technical infrastructure improvement. We think we have that since you know the L2s came in, the fees are viable enough for any transactions. Uh and we think it may change. And if it does, by the way, we will be at the forefront of innovation, so we'll be very happy. But we think that part of the puzzle is is done. And now it's only a matter of time until it happens, and until then, we will watch the TVL of all those assets uh grow um every day. So now what we are looking, what we are looking for in the market is just working, helping the current players in the market, who whoever they are. Obviously, we come from a strong background of working with crypto native firms and token issuers. So we try to help those guys on all fronts. We think, just like I told you, that when we trade with security tokens tomorrow or utility tokens, stable coins, we will trade the same way we trade with our clients today. They are looking for credit capabilities, we can bring them credit capabilities, they are looking for various structured products to bring an additional yield. We can we can do that. We're doing it with the top foundations out there. So, you know, all those things is just you know trying to keep that long-term vision, but build bricks that make sense for the ecosystem today and that will make sense for the ecosystem tomorrow. But it's very interesting to see that, yeah, now the the strongest demand that we have in terms of clients is stable coins. We are we are we are we are we're incredibly excited about the stable coins that we that we see out there. Everyone is launching stable coins. We are working with some of the biggest out there. What's happening on the security token side is also is also very interesting. Less and less is happening on the infrastructure layer side. Obviously, there is a huge, almost philosophical question about where is the value gonna be? Is it is it gonna be EVM? If it's if it's EVM, it's gonna be on layer one and some layer twos. We see also those chains, RWS compliant day one coming in. I think that's an interesting use case. Um, but uh but yeah, the road is very long. So our job obviously, and and that's where we become risk averse, is to make minimum bets in terms of where we want to be, because we we think our job is to be everywhere and to and to adapt to the future evolution of the market.
SPEAKER_00When you say demand for stable coins is one of the areas you're seeing the most growth and or the most demand for per se. Uh, how exactly does that manifest, or or what specifically does that mean?
SPEAKER_01I think we something is happening, and and stablecoin demand is is is really happening driven by the retail. That's one of the interesting retail things. On the contrary of what I said before of institutional coming to market. I think there is a real adoption from the retail market to start using stable coins. And obviously, we know it came more from countries with with lower GDP, lower access to banks, but I think it's it's happening. We we see now you know two-digit percentage adoption in some of the countries used on a daily basis. We've all been paid by some friends in stable coins. We see we see people in our families who are not necessarily 100% crypto savvy who start using stable coins with, you know, with and and what people don't understand is to have crypto adoption, we don't need people to fully embrace crypto in in dead gen mode and they all have a ledger wallet. I mean, having having a wallet in your in your smartphone with 1,000 bucks, 2,000 bucks of stable coin is perfectly enough to do your daily operations, just like you have your credit card and you pay this and there and you don't really really think about it. So I think that's where the demand is. And there is also a self-fulfilling prophecy of the offer is creating the demand. Now, for a wide number of reasons, a whole bunch of people want to create stable coins because obviously they've they've seen some some very good returns, they've seen some exits, a lot, lots of that. So they want they want to get into and they are also creating the narrative and the marketing to start onboarding. Banks are distributing it. It's no secret that we work with some of the larger, largest banks on their on their stable coins. They are creating the demand for it. Uh right now it's mostly driven by retail, but the second stage of the rocket is having banks using those stable coins to settle between them, to collat to collateralize with them, put those stable coins in some credit support annex as they as they trade derivatives. So again, I think it's we're talking about three years, four years, five years, whatever whatever it is. But I think this is what is driving the demand right now.
SPEAKER_00Yeah, and I I I've got a pretty called outlandish question, which we can certainly cut if you don't want to answer, feel comfortable answering, but to put to put it bluntly, what's to stop you, or what would stop you from issuing your own stablecoin and then having that work within your own ecosystem and and you know the liquidity aspects and again the the additional revenue you could drive from issuing something like that? I'm curious, like if what would stop you from doing that?
SPEAKER_01So it's been a question that has been asked uh very often to us, and to a wider extent, why wouldn't you issue a stablecoin, a tokenized money market fund? Why wouldn't you issue your Flowdesk owned coin, utility token? You know, it's it seems that it's it's an easy money grab or you know, whatever it is. Our answer has been always the same and it will remain always the same. We are being seen more and more as a transparent player, a trustable player, which sounds kind of ironic in a world where we're trying to remove the trust, but I think this will this will never happen. Uh, with no conflict of interest, as I as I said earlier, we're not trying to bet on one pony versus the other. Like it's it's almost a philosophical approach that we have to it that we think is very, very important. Because once you're linked to a certain ecosystem, once you start building your products and start distributing them, then are you really being fair? And that fairness, that trustability has a lot of importance for us, has a lot of value. We think it will have even more value in the future. That's why the counterpart is trade with us. So ourselves, we will never see us as a company investing into building a product that is like directly client-facing and that we have to advertise and advocate for it. Because what that would mean, it would go against the interest of our own clients. So we know exactly where we are in the in the food chain, and we don't want to go uh elsewhere. Even though you know it sounds uh quite appealing considering that we have obviously the technology, we obviously have a good understanding, we have the distribution, we have the we have the regulations, it could be it could be easily doable. But I think when you look at the complexity of the things we are building already in our realm, we we have a lot of food on our plate to do a lot of things for the next 10 years. So I'm I'm not too worried.
SPEAKER_00Certainly. And I think that point around trust is a really important one. You know, before we we turned on the camera, you and I were chatting briefly before this about how I think that a lot of people probably have or would like to think they have a rough service level understanding of what market making is, specifically, what you know companies such as yours provide. But digging into that a little bit, what do you think is one of the biggest misconceptions about market making? And then on the trust side, when it comes to teams that you're working with, right? Token issuers, what are the critical questions or things they need to know before engaging a market maker?
SPEAKER_01Um, thank you so much for this question. It's a it's a quite interesting one. So obviously, the the biggest misconception about market making is that it works potentially against your interests. If you work with the right market makers, it's EV positive for your token. So assuming you're working with the right market maker, and honestly, there are more and more very legit market makers, even some of the biggest out there who have been put wrongfully in the light uh for what the market was thinking was the wrong reason. No, they are legit people and they are they are just trying to do their job. And at the end of the day, a market maker is supposed to be delta neutral. So if you are delta neutral, that means that you are not betting on the success of the token. You're just buying and you're just selling and you're just trying to monetize the spread. So you buy a bit lower, you sell a bit higher, but you don't do that over a six-month period. You do that over a millisecond, uh sometimes almost microsecond sort of period. Um so that's the first misconception is that the the the the market maker is making money on your back. Of course, if your market maker is using all their inventory to basically dump your token and enter a big short in your project, that's that's another thing, and that's that's another debate. But let's let's assume that market makers are doing their job. So, as a project, what you should look like is let's go back to the fundamentals. You have a token, you're basically doing an IPO day one, you're gonna be listed on multiple exchanges, your token is gonna be traded against multiple currencies. Some of those currencies are gonna be fiat, stable coins, some other assets like like ETH and so on and so forth. What will attract demand for your your project is two things. Is it a good project fundamentally? Does it have good fundamentals? And if you think about a security token tomorrow, is does it have good financial ratios, PER, those sort of things, whether it distribute dividends, etc., etc. Um, and the second thing is how quickly can I get in and get out? People need to understand that, and particularly that's particularly going to be true for institutionals, they have liquidity requirements. How fast can I get in and can I get out? When when the funds get regulated, that's a question that is asked by the regulators and they categorize the assets in different categories. So the first thing investors will look look at, and that's even true for retail investors to some extent, what is the depth of the order book? If I buy $1,000, $10,000, $100,000 worth of token, what is going to be my execution? If my execution cost is 5% to get in, 5% to get out, that means that if I want to get in, get out the same day for whatever reason, I lose basically 10% of my money. So the liquidity is how you attract investors and how you reduce volatility. Because those two things are positively correlated to uh to attracting investors. So that's that's the number one reason you hire a market maker. You want your your book and you want to have pre-tized KPIs from your market maker how much liquidity I'm gonna put in the book. And then we could talk more into the into the details and into into numbers if that's necessary. But yeah, it's not you know putting liquidity uh very far away from the mid. You want typically to have a bid ask spread for alleged token to 10 to 20 dp sort of spreads. You want to make sure that you have a decent amount of liquidity, you want further liquidity in the book, you want to have a decent uptime, 95% is very reasonable. So you know there are a whole bunch of metrics that projects should look into. And at the end of the day, they should um compare what they pay and what they get for it. And that's you know, just like anything in life, for the same thing, you could pay 10x the price talking to different competitors who have you know different uh different Ax to trade your token a certain way, different connectivity to exchanges. So, you know, at the end of the day, the way I will summarize it is look at the KPIs, what are the numbers saying, pick what you think is the best market maker, the most transparent one, the most the one that aligns the most with your interest. Some market makers will try to extract money from your project, some market makers will just try to provide liquidity and just extract market making just from the spread and taking arbitrages. So, you know, that's that's two very different approaches. Is the market maker directional in the underlying? That's what I'm talking about. Uh, you definitely want someone who is market risk neutral. And uh and at the end of the day, you know, the market is evolving in the right direction and it takes time. This is still a market that is in its infancy. So, you know, the track record of market makers will will speak over over 10 years at some point.
SPEAKER_00Yeah, I I think a good way to try and understand this this idea is also to kind of flip that question on its head and imagine a world in which what would do crypto markets look like if firms such as yourselves didn't exist?
SPEAKER_01Yeah, it's uh it's a very good point. I mean, there would be two things. So, first of all, it wouldn't be a disaster as much as people could think. Why? Because you would have simply proprietary trading firm operating on a full discretionary basis, not having any links with projects, who will be here basically to monetize. So, you know, it it's it's we're not gonna give any order of magnitude and it's it's completely indicative, but it's not gonna be 1,000x you know, worse. That there will be people taking arbitras, even even retail markets, putting orders in the book, limit orders manually and trying, you know, to reduce that spread and sort of and so on and so on. But obviously, if if there were market makers, we would be looking at completely different volatility. I mean, if you look at the top assets like Bitcoin and ETH, obviously market makers, even the pure proprietary one, have have limited impact. Uh it's it's it's very clear because when you look at the liquidity of the but for all the rest of the market, you would be looking at much more realized volatility. So take any asset of the top 100 coin market cap, top 50, you would be looking at you know 200% realized volume instead of 80, 100%, whatever, whatever it is. And particularly when you need a market maker is in is in the worst moment when everybody is out of out of the books in the extremely volatile, in the volatile event, you prefer to have a drop by 20% in your token instead of going to 70 or you know, even eating and going through the full order book and virtually going to zero. And then of course spiking up. You want to avoid that. So I think market makers clearly play a very efficient role in the market. It's been demonstrated by the way by the literature that assets who have a higher liquidity tend to trade at a high at higher multiples. There is a premium for liquidity. So that's uh so that's that's that's essentially you know a very important thing. And and whether it's through relationships with token issuers directly, with banks, some of the brokers out there, market makers will will persist in in some sort of new fashion, uh, as crypto has has brought it. It's a slightly different model than in TratFi. Would it become very similar to TrotFi? Maybe. I don't think so for wide reasons. But yeah, clearly market makers and financial services player in general play a key role in the industry.
SPEAKER_00Yeah, and as this market matures, and we talked a lot about how institutions are coming in and the ways in which they're coming in. How do you think about moats around the business that you've created, especially if and when we start to see big traditional finance incumbents come into this space?
SPEAKER_01So there are multiple ways to look at it, and obviously nobody has the answer. So the the the first thing that we should really be clear about, and that's irrespective of new incumbents, big firms, the entry barrier is getting higher and higher, as I was stated before. In the world of today, in the world of tomorrow, we cannot operate this business without having the right regulation, the right people, and the balance sheet. This is becoming a balance sheet game. So, you know, and and to be very clear and very honest, we created Flowdesk a few years ago, and we created with limited means. Uh, we raised funds very quickly, and that was fantastic, but it was a very small team. So you could hardly do that today, at least not with the ambition and the velocity that that we did. The entry barrier is gonna get bigger and bigger because it's just becoming more complex and it's just becoming more competitive. We're talking about you know market making. How do you find your market maker if you look at the implied price of getting a market maker? It probably has shrunk by a 10x factor uh in the last uh in the last five years versus you know 2021. If you look at the percentage of supply that token issuers were doing, uh I'm I'm happy that with our very little little limited means at FlowDes, we have we've contributed to that to some extent to our market making as a service approach, which is arguably uh 10x cheaper uh already. So I think what what will happen is is very simple. The theory is institutionals, banks, we want to embrace crypto for all the right reasons. We talked about it, we will talk about it before. But we think that it's gonna be nearly impossible for them to build it because the complexity is a higher, one one order of magnitude above doing it in TradFi. And it's and it's slightly different. We're in TradFi, it's centered around you know, single trading venue, high frequency trading. Here it's a fragmented market, it's you know, we you're you're touching assets, you are touching exchanges that you that you have less uh less readability on it. So the complexity is different. So we think the only way that they would want to embrace it is either working with with people, buying some technology, buying the firms, or buying the technology directly. That's why there are lots of bets made on the on the infrastructure side of trading in crypto at the moment, and there are some really good firms that have uh emerged out there. So, so so you know, we we think that's the that's the only way it can happen. Some of them we try to invest, they will invest a lot of money, maybe they will be successful, probably some will be, but most of them will realize that the complexity of crypto is so high that it's probably better to partner with with existing people. At least that's what we think and that's what we hope very selfishly, to be frank. But also there is another interesting scenario as we as we talked about you know crypto itself being a threat to institutionals, is maybe we will witness through this reshuffling of cards the emergence of crypto-native firms that become very big, arguably you know, larger than the current institutionals. This is a bet probably that has low probability because when you look at the track record of those firms, the regulatory, the size, the balance sheets, you will be like, well, okay, no, um those big banks are gonna remain the big banks. But after all, why not? Why not? And that's why as an ecosystem we should be very ambitious about just providing the best that we can for our clients as an industry. And if it means we can replace what is existing and we can do it in a better way, let's do it.
SPEAKER_00Given the bearers' entry are only getting higher and have only gotten higher over the last five years, to your point. I won't ask you if you today hadn't launched, if you would try to launch and build a company like Flowdesk. But if you were starting from scratch, what do you think it would take capital-wise to actually be able to compete?
SPEAKER_01Um I can answer the I can answer you the question. I I would still do it today because I'm very naive. And I realize the risk and I realize how much of a hard battle it is only, you know, a few years later when I when I have a few gray hair on my head. So, you know, I'm I'm way too naive to to think about all these things when I'm building it. And it's more a self-reflection, you know, having gone through this. So I think today there are multiple things. So, first of all, yes, the entry barrier is is is higher in crypto and in and and in crypto trading, but you could run a similar parallel that launching any new startup today is probably harder because there are more competitions and you know everything. But the tooling is incredible. And when I say tooling, I mean obviously both the crypto tooling, like you know, it was a pain in the ass five years ago to do anything crypto. We could talk about cybersecurity. I mean, obviously, we have we've had some really good um custody provider, technology provider that that arrived and that solved those topics and they were almost non-existent five years ago. So the the building blocks are much more solid today. The blockchains themselves are much more solid. Of course, I'm not even talking about AIs, you know, the the the way we developed Flowdesk. Uh, still the CEO and CTO today of the firm. It was a very different way we did it five years ago. We had Stack Overflow. Today you have you have OpenAI, you have you have you have you have you have all the AI that you want. So the the it's it's becoming more easy on the tooling. That's 100% sure, and that's why I would still do it today. However, the entry buyer to launch a trading firm today, and again, it depends on the vision. If you want to run a similar prop shop, maybe close a few deals with token issuers, you do that from a single country, the coverage is not gonna be excellent. You don't necessarily have to be 100% compliant because you will be under the radar, you can do that. And you can probably run a single dollar million business quite easily doing that and be and be very profitable. I don't think that's good quality for the client. I don't think that's sustainable over the long run, but arguably you could do that. If you want to launch a business that is global, regulated, that has similar equity story as we had with Flowdesk, we are already talking about the high two-digit million dollar balance sheet. We are already talking about probably 40, 50 people between sales trading and operations globally. And what I'm not even mentioning is a non-compressible timing, which is the regulation. To get regulated, it takes years now. And we were one of the first um regulated, we were actually the first to regulate the trading desk in France. Uh it was back in 2021 or 2022. Uh, it took us three, four months to get it. We did some really good work and probably we were a bit lucky. And and the regulator was was very constructive at that time and very favorable. Today, there is not a single-legged regulation that will do this, you know. Like you look at the UAE, for instance, we which has a very interesting framework. We're talking about hundreds of companies who are be who are waiting to be regulated there. And on top of that, the requirements are much higher. So, you know, you have all these things where basically you need more money, but also you need time, and money cannot necessarily buy time, you know, it's not one of the other. But I think you know, it's good to see that there are still new incumbents into the space because those new incumbents are gonna be as naive as we were a few years ago, and maybe they will crack things that we haven't figured out. And all in that's that's very positive for the space because at the end of the day, the clients, whoever they are from token issuers to institutional, they will benefit from that. So I strongly encourage people to keep trying things and hopefully hopefully bring something positive to the space.
SPEAKER_00Yeah, I think that's a a really we could we could talk for hours about all of this stuff and and unfortunately we don't have we don't have hours and hours but as we kind of get towards the end here I think one of the things I wanted to wrap on is as we look to the future you know recently you guys announced a very big financing round had some actual very reputable players involved in that I think most notably BlackRock um or at least managed by funds by BlackRock. Where are you investing most right now? Like where are you really pouring fuel on the fire given what you expect over the next 12, 24 months?
SPEAKER_01Yeah. So so you know we we're obviously at a stage at Frodesk where we are very lucky not to have you know a very healthy business from a financial standpoint where we would not need to raise any further money our GB today. And we are obviously blessed to have incredible people around us. You mentioned Blackrock among others that's that's that that's really good. So for us it's very simple uh I I think I I told you a bit earlier that we try to filter the noise from crypto and you know we try to be a bit bullish when everybody's bearish and a bit bearish when everybody's bullish and we have we have a roadmap of you know keeping on doubling down into everything that we do. So that's where those funds will be poured. So more than ever we are we are doubling down on the infrastructure side we're trying to build the whole suite of technology products that allow us to trade any asset, any token everywhere, enable our clients to to do that in the most cost efficient manner. That's a lot of technology that's a lot of investments we are very happy to pour our funding round and our profits into into that mission which will take years. We're doubling down on our own people because as as I stated arguably you could run this business with 15, 50 people, whatever it is based on your ambition. But the firm of tomorrow that very big firm you know multi-billion dozens of billions of dollar valuation financial service firm would definitely not be a 3000 people firm for for right number of reasons. We were talking about a few hundreds at least so us we are just doubling down on trying to find the the the the best talents who fundamentally and deeply love crypto and and when I say it it's it's very important. And those people are rare but they exist and they are just incredible. We are building on the long term who understand that building a firm and being part of such a journey is a different timing than you know just trying to speculate over the next coin and just trying to to get rich in in in one year or two years sort of horizon. So we are building all of this together with a lot of of naivety and obviously the the the big challenge that we have is how do we scale our balance sheet because to get into that point and being that firm we arguably need to 100x or balance sheet. We're gonna do that with our profits. Maybe we can buy time you know another way that's partially why we also did this round and why we'll do the others. So you know again trying to take all the pieces of the puzzle um at the at the same time and invest uh energy into what we think the future would look like we talked a lot about tokenization that's that's our big battle now we're not forgetting all the other aspects of the ecosystem because because we love what everyone is building on the infra side all those utility tokens some of them are not really useful some of them are very useful but that's the market we'll decide eventually that's not our call we're not here to judge if this token is good or bad. We're just trying to provide them the best financial services in the most transparent way and we let them do their own journey.
SPEAKER_00So you know I think this is essentially what we are looking at and we are and we are we couldn't be more excited obviously of of where we are today but it's it it it's a it's going to be another 10 years journey to get to where we think we can get it certainly and and you beat me to the punch on what my final question was going to be which was we talk a lot about all the exciting things and and you're I think similar to me in terms of being almost a perma optimist right um but what is the biggest challenge that you and the team face right now?
SPEAKER_01Oh that's so there are multi there are multiple ways to answer this question. The first way to answer it is more as an entrepreneur and CEO is the is the people side of things because you know when you when you start a company in a very naive way and and you have more an engineering background technology background you build things it's a small group of people and then you know when it becomes just unmanageable but uh fortunately we have we have incredible people across the firm who are who are making sure that everything holds up together. So you know it's it's a people battle it's it's it's the biggest challenge for every firm. People say it the first time you hear it you think it's bullshit and then when you build your own company you're like holy smoke it's true because that's fundamentally everything that it is. If you have the right people or you can be lucky you can be a good shot caller about this will go up or this will go down but you assuming you you need this anyway then you need the people so the people is is is is a huge challenge and how we get there. The regulatory side of things is is a big challenge for us at the moment particularly as a European based uh firm because uh because obviously we have Mika coming into practice exchanges are starting to delist USDT for instance not Mika compliance stable coins we we even came across uh something in the recent days where one of the largest exchanges didn't want to list in Europe a coin that didn't have on-chain traceability supported by you know the chain analysis the elliptic and and and others so this is where we are heading and as usual you can see the glass half full or half empty half full half empty you're like ah we don't have business today and half empty we know that this is what probably will enable the next wave of the business for banks to be reassured and to prove that they are compliant in every way um other challenges obviously we we are facing is keep scaling our technology with the same pace that the market is scaling cybersecurity more than ever we saw it in the recent months the the threats are probably at at all time high in crypto and and and arguably we are probably a prime target too. So you know that these those are the sort of challenges but fortunately we we touch wood and and we have an incredible set of people working with us. So you know for us we we just try to make it happen every day and that's that's already a lot.
SPEAKER_00Yeah no I'll double click on that last point too having the right people in the right seat is the arguably the biggest unlock for going and scaling a successful business. Absolutely so true. Give them really appreciate you hopping on I'm already excited for our next conversation and you know we'll do this again and we'll we'll get some updates on where you are where the market is you know I'm really curious to see how this thesis plays out there's a lot that we unpacked here. So really appreciate you joining me tonight.
SPEAKER_01And so the welcome thank you very much for the
