Author: The DCo Podcast | Date: October 2023
Quick Insight: This summary is for builders and investors looking to understand how institutional grade rails are moving beyond speculative trading into real world asset deployment. It explains why liquidity is the prerequisite for any meaningful market expansion.
Eric Hall discusses the evolution from early Bitcoin trading at DRW to building the Canton Network. He highlights the transition from speculative trading to a mature ecosystem where institutions use blockchain rails for real world assets.
"The presence of that liquidity helped beget a bigger market."
"Stable coins have hit an inflection point that is deeply compelling to a broader audience."
"One thing that was just very obviously missing was an institutional entry point."
Podcast Link: Click here to listen
Stable coins have obviously hit an inflection point that is deeply compelling to a broader audience than just the crypto casino and a growing ecosystem of applications of the composability of blockchains or the access to asset classes that were otherwise constrained in some ways that are the early wave of broad RWA deployment into the ecosystem.
As far as your journey goes, how was it before Cumberland? What was the thought process to start Cumberland and then move on to start digital asset and Canton Network?
I mean personally I've been around the Bitcoin scene since around '09, 2010 and I was just personally very drawn to it. There was a very cool ecosystem of early Bitcoiners inside DRW and there was a very lively internal conversation and I traded a very illiquid commodity, long-dated natural gas futures.
There was a firm in the space, Curus, that their entire business model was we'll make you a market in anything no matter how liquid it is but you've got to cross our two-way and we'll let you out. So you maybe would lose 50% on a trade but not 100% and you could get out if you needed to. And just the presence of that liquidity helped beget a bigger market.
And so the general thesis around the early ideas for Cumberland were well, you know, we were a firm at DRW that's really good at taking risk. We're very good at trading and we have a good balance sheet so we could provide good liquidity in a space that lacks it. And by providing liquidity will help become, help the ecosystem become bigger and have a larger flywheel that builds around that liquidity. So that was that was the kind of overly simplistic idea.
And at the same time the idea was well, you don't want to just market make something with a very small addressable market. So you should also be proactively investing in and building things that will grow the ecosystem. And at the time my co-founder Yuval was spinning up DRWVC and so he was very active in the venture space broadly speaking and started to do overlap with the Karland desk looking at things in the crypto ecosystem.
And one thing that was just very obviously missing was an institutional entry point into this broader crypto ecosystem and not just from like a trading or a custody perspective but to really use the rails and actually get some value out of it. So digital asset in 2014 was a very early idea of just something that was missing from an institutional support perspective for the broader crypto ecosystem.
You know, it's taken us the better part of 11 years to really bring that full solution to market and there's still plenty to do and a long way to go but I think we've been quite prescient in terms of the things that have been missing, the things that need to get built, the sensitivities to what those large institutions need and that has been the hallmark of how we've driven our product development road map and our features in the Canton ecosystem.
