Who Owns the Stablecoin Economics? Jacob Laufer on Building with M0

0:00 Welcome to Panoramic Content Suite, Singapore edition, alongside Token2049. Got the beautiful MBS in the backdrop, a little bit of tasteful haze. That's right. Yeah, thank you Jacob for coming on out of your busy day. Yeah, Jacob is the chief growth officer at M0, but I will let him do short intro by himself. Yeah, thanks so much for having me on. Yeah, so as you said, I'm the chief growth officer at M0, leading business development, sales partnerships. M0 is a stablecoin infrastructure company. We do a few things. We help issuers with the smart contract layer for issuing stablecoins. We build platforms on top of other stablecoins.

0:47 So we take stablecoins like PYUSD, a partnership with MoonPay and PayPal there, and turn that into a development platform to allow builders to build custom stablecoins on top of that. And then we bring it all together with an orchestration layer. So handling all the liquidity for the stablecoins that we help to issue. And that's really an important piece of this, is that of course issuing stablecoins, everyone wants to control the economics of the use case and the distribution that they own, but you need to have acceptance and usability of that stablecoin. And so the orchestration layer is really what brings it all together. So yeah, a little bit about me. I was an investment banker for almost 10 years. Doing what I like to think about as the exact opposite of crypto. I was doing, restructuring bankruptcy, distressed M&A, fell down the crypto rabbit hole pretty early, like I guess like 2017, but just dipping my toes, but it was immediately seized by the ideals.

1:45 And then when DeFi summer hit, it coincided with COVID being home from work and just was doing, it was in the trenches 20 hours a day. The golden days. Yeah, the golden days doing that full time. And then eventually left banking to go run a protocol as an anon. That's all I can say about that. And then through that met the founders of M0 and joined them in 2024. And you've been there since, so about two and a half years. Incredible. Yeah, it sounds like a very interesting, we can have a separate conversation outside the podcast. Exactly, off the record. Off the record. Yeah, M0 obviously got a very strong backing from some of the top VCs in, actually not just crypto, but traditional venture as well.

2:34 And you guys are obviously working with some of the top names in the financial industry, including PayPal. Yeah, I was curious in terms of the core unlock that you guys provide for some of these customers, those stablecoins have been talk of the town for quite a few years now. We've seen whole blockchains launch around stablecoins as well. We see Tether has been the incumbent. USDC has been taking a big part of the market share over the past few years. But I think we're seeing that you don't have to rely on these partners who may not always be reliable. You don't have control over these stablecoins. So it's curious how you guys work with some of the customers on unlocking stablecoin in a few case. Yeah, I think the key thesis behind M0 is in contrast to USDC, USDT, which are obviously amazing businesses, is separating out or bifurcating issuance, which is like, I like to think about as the raw material of stablecoins.

3:33 That's the reserve management compliance, all that from the distribution. And really empowering builders who control distribution to own the economics and really own their stablecoin in a very easy way. So not to have to worry about, again, that downstream reserve management and all the complication around potential licensing applications of that, but really focus on their use case and distribution. And again, in contrast to something like USDC, USDT, where they're doing that full stack, right? They're obviously doing the backend management, but they're doing the selling and trying to distribute USDC, create a network around this. And because they're doing that, their default position is that they don't wanna share the economics, right? Unless you really have strong negotiating power.

4:19 But if you're starting from zero or you already have a use case that controls a lot of distribution, you have float on your platform. The thesis that we had is we wanna make it super, just like dead simple to create your own stablecoin, robust asset that will allow you to monetize that. So that's, I think, really the key unlock there. We've done this in a really crypto native fashion with builders who have come from the stablecoin space. So like Joao, our CSO, really was the architect of USDC at Circle. Luca and Greg both come from the early days at MakerDAO having built on the decentralized side of things. And so marrying that knowledge and like it was really how M0 was born. Incredible, incredible. Yeah, I think we've seen different iterations of stablecoins, but the trend is just getting started, especially as we have more institutional adoption in the backdrop of Token2049.

5:13 The ball has finally started rolling or it's not even stoppable anymore in terms of institutional adoption and capital that's coming in. I was curious to see what type of stablecoin demands that you guys are seeing as you guys talk with multiple different partners. Is it more on the institutional side? Is it crypto native side? Where do you see a lot of demand and potential coming up in the future? Yeah, I guess I'll separate out demand and potential. I think currently it's still really crypto native. I guess on the potential side, because GENIUS passed and CLARITY is on pause for now, but with the advent of GENIUS, everyone thought there was gonna be explosion of institutional and enterprise use of stablecoins. I think it's still pretty early.

5:59 A lot of the things that we've seen on that side of the house is really just still in the pilot phase. That doesn't mean it's not gonna happen, but I still think it is kind of latent potential. Whereas there's real activity happening on the crypto native side, which is really our roots. And so that's where we spend a lot of our time is helping crypto native builders. This can be wallets like MetaMask, who's built mUSD on M0, NeoBanks is a really interesting category like KAST. There's a lot like built USDK on M0. And then a whole spate of more traditional protocols. Chains is a really good opportunity because again, you're starting from, you control distribution of what happens on your chain. You don't wanna pay $5 million for Circle to come and deploy native USDC.

6:44 Why not just capture all that value yourself? So on the chains it makes a ton of sense. And then we're really seeing a ton of traction in what I like to think of like the structured product space. This is using crypto native capital sourcing to fund very niche interesting opportunities on chain and package that up until it's basically like a yield-bearing stablecoin. And Ethena was kind of the progenitor of this type of asset with USDe, but we've seen a lot of fast follows there. So builders like USD.AI who are loaning against GPUs, Saturn, Dawn, there's a lot of really interesting ones that are coming down the pipe that are very similar that are using crypto native rails to raise capital to deploy into these opportunities and then bringing that yield back on chain.

7:34 And so I think that's really interesting space where we've been spending a lot of time. Yeah, USDC is a fascinating project. Yield on GPU credit. Yeah, it's a really fascinating product. And the way you can provide stable utility through stablecoins while earning yield from GPU lending is incredible concept. And I'm excited to see more experiments like this happen. Ideally, on a successful, yeah, yeah, curious to see what's in the pipeline. But yesterday we also had founder of XYUSD one of the largest holders of Stretch, S-T-E-S, yeah, Stretch on chain.

8:20 They're launching stablecoins where the users get exposure to Stretch. I use Stretch yield, yeah, I prefer yield. So yeah, I was really excited about these type of experiments that are going on, the unlocks that you get from coming on chain. Yeah, are you able to share any other, maybe deals in the pipeline? No, I can't talk specifics, but there's a lot of these similar, listen, like we're working, again, there's the GPU loans, there's Stretch, Telco, Oil and Gas, but I think trade finance is another one, financing receivables. Like this model can be applied to so many different types of credit. Really not just credit, really any type of investing. I think it works best when you have some sort of like high velocity, high turnover, it gives a lot of the depositors comfort, they'll be able to understand the product well, but also some safety in the product.

9:15 But there's a lot of these, really anything you could think of, any type of credit, I think is gonna be brought on chain in this way. And it's really, I think highlights the beauty of DeFi, and the reason that I got into it was you have this frictionless global pool of capital, and smart contract based rules, really should be a black hole in sucking all this liquidity. And for now, I think it's super competitive, and maybe the cost of capital for these guys is actually a little bit higher to source this capital, but I think it's gonna be really sticky, and over time that cost of capital will come down, and actually be more attractive than traditional private creditor, private facilities, warehouse facilities, et cetera. So yeah, this is an area that I'm really excited, I think it's gonna grow 10x over the next year. Yeah, capital efficiency is huge for on chain users.

10:00 And yeah, in terms of the core product that you guys offer, is it fair to say it's a B2B2C product? That's exactly right. Okay. Yeah, so we are working with builders who have their own distribution and user base, not really directly with the users, although we are interfacing with users with on the liquidity side, right? Allowing them to get into these products. But the service is really to the builders, right? So making their capital, leveraging our own capital actually, efficiently to provide liquidity for all the assets that we issue. And then interfacing with the users, but yeah, B2B2C is exactly right. Yeah, and for the builders out there, why they should use your product is, it seems like there's a lot of regulatory, or sort of unlock that, and capital unlock that you guys provide with your infrastructure, not just the tech, but they understand how to get exposure to maybe bonds, bonds through your product.

10:55 They don't have to figure all that out on their own. Treasury yields, which is the most often the source of yield that these stablecoin companies, the I1, M2. So yeah, maybe you can, if you don't mind maybe explaining a bit about that for the builders who might be interested in using and building with M0. Yeah, so again, there's two parts of it. I think there's the issuance, and why builders build with us. So first of all, tried and true. I think that no one else in the market has issued as many custom stablecoins as we have. We just have the most robust tech that's been proven in the market. It's an easy way to access very safe T-bill yield, either through an issuer that we have bootstrapped ourselves or other partnered issuers. We can handle both onshore or offshore, so regulated GENIUS issuance, or offshore, more like yield coin type issuance that have their trade-offs obviously.

11:47 So onshore is attractive if you want to market to US users. I'm saying onshore as an American-centric, right? So forgive me, but I'm talking more about the US market there, with very clear rules around stablecoin issuance, and then offshore, usually referring to BVI issuance, but this can be really anything. And so we can offer flexibility between those, and interestingly, you can start off offshore and then move to onshore. We make it really easy to migrate. I think that's been a really key piece for builders is having that comfort that they really control their use case and can migrate between these different options. And then the other part of it is, I think, the other part of issuance really is the feature set that we've built that the market really demands. We've done a lot of unique things around the way yield is accrued, accounted for, distributed in real time.

12:35 So not like weekly monthly payouts, like second by second. And all the accounting is handled, so you have the overhead is really low on doing reconciliation. On-chain AML, KYB, access control. So do you wanna do whitelist versus blacklist? Like that type of methodology. And so that's on the issuance side, that kind of custom ability of the feature set. And then the liquidity, as I said before, I think is a critical component as well. And marrying these two together within a seamless package where you can do the issuance, control the feature set that you want, and then have liquidity out of the box for your stablecoin, I think is very attractive. Right, great. So you guys support a full spectrum of businesses from crypto native all the way to institutional, which is amazing.

13:20 Yeah, it's great. Perfect for talking for 2049. But along the spectrum, one of the topics you'd like to touch on is the AI side of things. I wanted to see what are you guys seeing there? I know agentic payments is-- Yeah, yeah, it's something that I think we spend a lot of time thinking about. It's hard to know exactly where things are going there. Like we're just, we're trying to stay close to builders and the agentic space, x402, et cetera. I think agentic payments are definitely gonna be a thing, even though the volumes are relatively low today. Whether this should be, having rules embedded at the stablecoin level are useful for these agents or at the wallet level is less clear to me. And so we're trying to, we're feeling our way around the space.

14:06 But I think very generally speaking, we're really bullish about it. We're just trying to find out exactly where we should play there. But if any of these agent harnesses, LLM companies, if they decide they want their own stablecoin to facilitate this agentic payment network, then they can-- And they know what it talks to. Yeah, there you go. Yeah, so obviously PayPal is a huge name, and you guys launched a PYUSD stablecoin with them. Was curious if we can get more insight in terms of what that collaboration looked like. Why, you know, you guys, why did you guys close such a successful big name to come on chain through M0? Yeah, so the PYUSDx platform, and you said it really is a big deal for us, that we're really excited about. It's still in the early days. We officially launched it last month, but it had been building in the background for a long time, and we have over 100 million now in supply built on the platform.

14:57 The unlock here is that rather than going down to the metal and reissuing stablecoins with our feature set, with like the, which is essentially turning a base asset like PYUSD into a developer platform, instead of redoing that asset, we've been able to just take that asset and build a platform on top of it that allows it to have all the features of M0 that I talked about before with the yield streaming, the liquidity built in, all the cross chain parts of it, all the access controls, et cetera. So turning a simple asset into a developer platform. And this was attractive. Obviously, I think this really expands the addressable market for like existing payment stablecoins that have a simpler feature set.

15:45 This opens up the market of all the custom assets that wanna use their liquidity on the bottom, but be able to control, for builders to control their own digital money and the behavior on top of that. So whereas before it was really just PYUSD and take it or leave it, now you could take it and make it your own. And so I think it was interesting to PayPal because this allowed them to really expand the market for PYUSD. And we're seeing that in production now. You can imagine that this is probably attractive to a lot of other stablecoin issuers out there, that this is an extensible platform idea. And so yeah, we're starting to have some really exciting conversations around that. Again, can't touch on any specific names here, but I think this is like for us, this has been a focus also internally in seeing how big these X platforms can get.

16:38 Yeah, I mean, that's a great name. I think it's one of the largest financial institutions out there that handles payments online. And congratulations on the launch again. Thank you. And it's widely available on all chains. Is that the case or is it? Not yet. So I think we're expanding chains quickly, but right now on Ethereum mainnet, Arbitrum, we'll be on Base shortly, Solana shortly. So yeah, we're expanding and especially on the EVM side, it's pretty quick to spin these up. Yeah, yeah. I was gonna ask you, what's your favorite chain was, but it sounds like you guys focus on EVM first and then maybe start supporting some L2s. Solana, it sounds like it's gonna be the first SVM. Yeah, we're live. So the M0 generally is live with our orchestration and our original issuance on SVM and Solana, but for these X platforms and some of the new stuff we're doing still in upcoming the next few months, but yeah, we love them all.

17:34 I like our children. Yeah. No favorites. Yeah, we're seeing a lot of exciting blockchains launch. Robinhood has been talk of the town recent months as well, but obviously it's a Ethereum L2, so I'm sure it's very composable with the same infrastructure you guys have. It's on the roadmap, so we'll be there. We're watching the activity there closely for sure. Amazing. And given this week's Token2049 conference, what would you like to get out to the audience about M0 or anything, any teaser that you might be able to give to the audience? Yeah, no, I think if you're a builder out there who controls distribution, we wanna talk to you. That's why we're here. Thinking about your own stablecoin for your use case, you need liquidity for your stablecoin, we really make that very easy and we strive to make it as seamless as possible.

18:27 So yeah, that's why we're here to talk to builders. Really, that's our focus. I think we think of builders as our core customer. Those who are like on-chain crypto-native builders right now and issuers and existing stablecoins as our partners. And so we wanna work together with them, but to really serve the builder community as best as possible. And if they like to get in touch to use and collaborate with M0, can we reach out? Yeah, I mean, so we have a bunch of people in town so they come find me at M0 on Twitter, I'm old, so I still call Twitter. I reach out through our website, you know, you can find me. Man, I'm not on Twitter so much. I'm on Telegram at J_0, hit me up.

19:13 Cool, we'll add the relevant links below, but thank you so much for joining us this podcast. Thank you, it was a pleasure.