From Private Chains to Public Ethereum: Matthew Dawson on Institutional Adoption

0:00Kinsa Durst Thank you. Welcome to Panoramic Content Suite Singapore Token2049 edition. We got the MBS In the backdrop with the nice little haze, a gradient over it. And we got a special guest Today, Matthew, the co founder of Ethereum Institutional. I know you guys are fairly in Terms of public awareness, new ish. Yep. But wanted to have you on to have dig deeper Into what you guys are doing, learn more. So thank you for taking the time out of your day To be here. Yeah, my pleasure. Great to be here. I like to kick things off with a little Bit of introduction about yourself. I'm curious how you ended up at Ethereum Institutional. Yeah,

0:40Matthew Dawson I started my career off in financial services consulting, fairly typical path for many people Out of university. And at that time, I was getting more and more interested in crypto. I think it's fair to say that for most people, at least those that got interested in crypto Between like 2015 and late 2022. The reason we got excited was because of smart contracts, Interoperability, verifiability, all things that were brought to us by Ethereum. And like since Then, we've seen lots of new shiny objects and stuff like that, but was getting really interested In Ethereum. And I thought, okay, I'm working in finance. Really, I think DeFi some was kind of The flip. Okay, this actually is beyond just a chain. These are like new financial primitives That will probably disrupt finance. And so I wanted to be on the other side doing the disrupting Rather than being disrupted. So I took the leap into into crypto is working with a lot of startups.

1:36Matthew Dawson At the time, there was a really massive institutional ecosystem. And then after a Few years of experience with VCs and startups, the Ethereum Foundation was creating an enterprise Team. So I joined the Ethereum Foundation and myself and some of my colleagues who co-founded Ethereum Institutional with me, we built the enterprise team, started engaging banks, asset Managers, fintechs, financial services firms. And we did that for the best part of the year at the EF. And then in July this year, we spun it out as an independent org. So the EF focuses on research And development. And with the backing of BitMine, Tom Lee, SharpLink, Joseph Chalom, Joe Lubin, And some Ethereum co-founders have a dedicated institutional adoption entity for Ethereum.

2:23Kinsa Durst That's incredible. So you guys have been working on this for a while before spinning off.

2:27Matthew Dawson Exactly. Which is nice, because it's not been like a cold start. It was very much a transition Of many existing relationships from within the Ethereum Foundation. Bring those relationships Over, building the pipeline further, and importantly, scaling. So at the EF, there's Three or four of us. Now, we've also spent the first few months as well as obviously working With institutions, building our team. And so we have a head of APAC joining us in Singapore, Starting at the beginning of November. We've got a head of technical strategy based out of Abu Dhabi, who also leads MENA. And looking forward to having people join us in New York, London, and elsewhere, Hong Kong, other markets, before the end of the year, so that we have Both the capability. These people are coming from tier one banks having built tokenization Within the bank, gone through that process. And so we're excited to bring those experts Into the ecosystem to help the ecosystem, but also financial services firms that are

3:25Kinsa Durst Going through that process. Yeah, that's incredible. You can dive deep into it, Into all the different things you mentioned. But I think Ethereum is the OG smart contract Platform. I think EVM has the widest adoption in terms of smart contracts and infrastructure support As well. So super excited to see. I think you guys have all the basic building blocks and Lego blocks and just need to push the institutions over the ledge.

3:50Matthew Dawson Kind of, yeah. I mean, institutions care about a few things like security is paramount, Financial assets at the end of the day, resilience, so that every financial market infrastructure Or institution has to often meet like five nines or 9.999% uptime, SLAs. And Ethereum Really the only chain that has continuously produced blocks since it started, and it Started before all of the others. So that's a huge kind of signal for institutions. And Because of that, like you said, because of the EVM, because of the deep and old ecosystem, Most of DeFi was born out of Ethereum. And so we continue to have the deepest liquidity. So it is kind of a default and we support them on that journey as well.

4:39Kinsa Durst Yeah. I guess it sounds like you've been doing it for multiple years. We're curious How the institutional approach to on-chain has changed over the years or what the recent Trends are. I think we're seeing a lot of traction in terms of tokenization of stocks. Robinhood just launched their own chain as well. Are they looking to launch their own chains Like Robinhood or do they just want to tap into this permissionless smart contract, Global smart contract platform? What types of demand are you seeing?

5:12Matthew Dawson I think the institutional transition path or the roadmap thus far has been quite clearly A move from private chains to public chains. So most institutional or enterprise blockchain Efforts historically were private chains, and to be found most of them, like some form of Private Ethereum, the Hyperledger, Besu or the likes, are consortium chain, which is like more Admirable effort because you need participants to grow an ecosystem. But almost all of them failed Because without lack of global access, liquidity, and use cases, it's very difficult to bootstrap An ecosystem. So there's already a natural incentive to come to Ethereum because that's Where everything is. And now from a tech perspective, capability within institutions, And importantly, regulatory, there's a lot more comfort coming to public chains.

6:10Matthew Dawson So that's been the big migration, and institutional assets is why. So lots of institutional Assets are permissioned. So you have KYC, AML, you have control built into the token layer, Into the contract, so you can freeze, you can move tokens if needed. That gives them a Lot more comfort. So I still get the question, oh, can I build on public Ethereum? It's Permissionless, yeah, the base layer, which is what gives a lot of its great properties. But you can program in at the application layer, all of the controls you need. And privacy is a Really big one as well. Now you have confidential tokens, you can have ZK enabled privacy, Importantly, all confidential, but compliant. So you can give special access to either the issuer Or the regulator, so that the regulator can not necessarily like day to day be looking At what everyone does. It's more like, if there's an incident, and it has to be investigated, You can go and review it. So now we're starting to have the building blocks to feel comfortable Really moving on. I think the next big unlock is, okay, the assets are on chain, What do we do with them? There's already a lot of use cases, but there's still a little bit Of a bridge to cross in terms of, okay, let's get all of these permissioned assets into Lending pools, like Aave has, Aave Horizon or Uniswap with V4 have like permissioned pools.

7:45Matthew Dawson So it's now upgrading historical permissionless DeFi infrastructure to meet permissioned Institutional assets as well. That's incredible. Yeah, one of our guests here was Figure,

7:54Kinsa Durst Which originated like $7 billion worth of loans, putting it on chain, securitizing it. I think a lot of these quality assets coming on chain is allowing for on-chain assets to not Be idle and farm sustainable yield, which is super exciting. Yeah. And Vitalik, Speaking of privacy, the latest thing that Vitalik posted was kind of like towards the Thesis of this ZK-EVM for Ethereum too, that supports different privacy functions.

8:22Matthew Dawson And ZK-EVM is interesting as well because a lot of ZK research and billions of dollars Have gone into it. Thanks to so many great teams in the ecosystem, it's got a dual purpose. It was A lot about scaling. So we see like ZK L2s, but it has obviously privacy properties as well. ZKing the EVM is super interesting. And the Ethereum roadmap, I think, is probably under Communicated and under understood. Ethereum today is nothing like Ethereum in 2016, 2015. It was proof of work, now it's proof of stake. That in itself is huge, let alone everything Else has changed. Currently, if you want to verify an Ethereum block, every node verifies Each transaction. It will get to the point in the next few years where you just have One prover proving that that block is valid. And so you can scale the size of that block Tremendously. It requires a lot of compute, but then all of the nodes or verifiers will just Validate that that proof is valid. And so the scaling through ZKing the EVM is going to be Really tremendous. So Ethereum is scaling significantly already through Glamsterdam, It's going to have the biggest scaling event in its history, and it's only going to accelerate From there. So I still get the idea that Ethereum is slow and expensive, because we all remember Paying like $300 to an NFT, but it's just not the case anymore. I do want to maybe get like

9:55Kinsa Durst Brief sentence or two or a few words on why Ethereum is the best for institutions to come

10:02Matthew Dawson On versus any other chain out there. Yeah, I mean, it's clearly the best. You just have To look at the figures that the largest asset manager in the world, BlackRock largest bank In the world, JP Morgan, and the world's largest custodian of US Treasury bills, Bank of New York, Are all actively choosing Ethereum. Like the majority of their funds, the majority of their Money market funds or capabilities are built on EVM and Ethereum. So that's clear. And why Is that the case? Because of the things we touched on, it is the oldest Lindy, It's consistently been up and continues to produce blocks. So it's reliable. And it has The most used cases, the deepest liquidity, and the largest developer base. So all of these things Make it the perfect thing for institutions and for everyone else that wants to put on a blockchain.

10:46Kinsa Durst One thing I like to also touch on with all the guests is on AI. Are there institutional Interest in AI? How are you guys dealing with this agentic payments, blah, blah, blah? I mean,

10:59Matthew Dawson Agentic payments, I've been on I think two agentic payment panels in the past Two weeks here and in Korea. It's all a buzz. For good reason. It's absolutely, I do believe the Case that agentic finance is going to completely transform most people's lives in a really Positive way. SharpLink and Joseph Chalom recently came out with a research report, Essentially estimating that hundreds of billions of dollars are going to be put back into the Pockets of consumers through the fees that are compressed by AI agents, but also through the fact That AI will now essentially provide financial literacy to everyone. And finally, it will bring Essentially attention in an attention deficit economy where you don't have to pay attention To everything anymore because the agent is there to support you. And so I do think that the Transformation is going to be fantastic. Are institutions currently calling me up and saying What were you doing about agents? No. I think the beauty of Ethereum of a general purpose blockchain Is that it can facilitate everything. And so what is the purpose of an agent? Ultimately, We need it to bring efficiency and add value. In order to maximally add value, it has to be where The value already is. So it can compress fees or it can optimize for opportunities. And that's why We need to continue building the building blocks that agents will use. Outside of, you know, We've got x402, we've got 8004, all of these standards that are going to be influential in Agents operating on crypto rails, but they're going to use stablecoins. And they're going To use tokenized funds, tokenized securities, and smart contracts. And so all of those are, I think, value drivers and use cases for the agents to really deliver with.

12:50Kinsa Durst Yeah, I'm really curious to see all the unlocks that agents bring. One of the conversations that I had earlier, actually with Brett, was it's going to change from monthly subscription model to Supporting microtransactions again, because agents can handle these microtransactions. And I just hate subscription models. I hate managing all those.

13:11Matthew Dawson Although my AI subscription model is great value.

13:14Kinsa Durst That is true. I'm glad I don't have to pay API for that. Token maxing on a weekly basis. Yeah, so except to see all the unlocks that it provides, I guess, in terms of five-year horizon, 10-year horizon, there would be huge paradigm shifts.

13:29Matthew Dawson Yeah, I think it's a five-year one. Like we always, in every industry, get a little bit Ahead of ourselves. Actually, in my previous role before the EF, as a VC accelerator that came out With a very comprehensive agentic post-web thesis. And I still think that a lot of that aligns with The direction we're traveling. But if you're too early on these things, then we get really Excited about it. Oh, it's right around the corner. And it will come, and it will be Transformative. But like with everything that is so transformative, there's a few key unlocks, User experience, agent trust, all of these things that need to come as everything else Is adopted with them. Being too early is a thing.

14:19Matthew Dawson 100%. We are still early, by the way. We keep saying it, but we are.

14:25Kinsa Durst I believe so. Super cool. And as we are at Token2049, we're in the middle of your APAC Trip at KBW last week. Is there any message or what are you looking to get out of these Conferences? Any message you want to send out to the audience as we send out these highlight clips?

14:42Matthew Dawson Yeah, I mean, crypto is absolutely global and borderless, and increasingly, so is global Finance. All of the major financial institutions have an office in Singapore as well. So we find That whenever we're working with a global financial institution, we have people based in Every large financial hub, as do they. And so we have to, we manage that globally as well, Because most of these digital asset teams are globally dispersed. So that's where we Have all of our touch points. But most of the work really, I would say, happens outside of The conference week. This is good for meeting new people and taking advantage of everyone

15:24Kinsa Durst Being in one spot. Well, since Ethereum Institutional spun out, what are some Exciting projects or announcements that you're able to share? Because I know institutions are

15:36Matthew Dawson Very sensitive with this topic. Yeah, that's a good point, actually. A lot of the work we do Is all behind NDA. So we're used to people building in public and announcements after Announcements. We have to wait for kind of a big bang. One that came out last month was Revolut launching their euro stablecoin on Ethereum. Revolut is one of the largest Intakes in the world, so super exciting with that and for what's to come. And we've touched A little bit already, but the largest institutions are deploying. So Baillie Gifford have launched BAGEY, which is with Bank of New York. BlackRock announced 14 new funds on Ethereum. So there's Two money market funds and 12 cash shares, which are being tokenized with Securitize, Bank of New York, JP Morgan, and JP Morgan launched a few money market funds as well.

16:23Matthew Dawson So really significant. And I think that we're just going to see that increase now, because Every subsequent one's a little bit easier once you've gone through that process. So Definitely a lot more to come. Those are some big names and Big liquidity injected here. Without a doubt, yeah. I mean, multi-billions or any of those.

16:40Kinsa Durst Awesome. I did want to ask, I don't know. Yeah, it depends on you. But do you, When institutions come and they want to get on team, do you recommend L2s or do you push them

16:52Matthew Dawson Towards the L1? Yeah, I mean, L2s have, I mean, they've had a tough time, ups and downs. I am a massive fan of L2s. I think that the L2 roadmap will prove to be a stroke of genius, Because especially for an institution, and Robinhood is a great example and success story As it's Coinbase and Base, the ability to have your own chain with a lot of control, But not have to bootstrap a validator network, to be able to inherit Ethereum security, Interop, and that rich ecosystem is so valuable. And I think we'll only see that increase as L2 technology improves, as does interop, and we see larger and larger financial institutions

17:33Kinsa Durst Leverage that. Yeah, I think as you were in KBW, GIWA chain is launching very, very, That's right, Upbit, the largest exchange in Korea's, their own L2 on Ethereum. Exactly. So yeah, we'll see how well they do following up on Robinhood's success.

17:48Matthew Dawson Yeah, and I guess the opposite end of that spectrum is we see JP Morgan is on an EVM Private chain, Kinexys, that does like $7 billion in volume a day now, Increasing interop between private Ethereum chains and public Ethereum chains through ZK Gateways or cross-chain solutions, and that will really help onboard institutions as well.

18:09Kinsa Durst Okay. Well, everyone's gaining on chain. Yeah. And maybe one interesting thing that's

18:15Matthew Dawson Different in this industry than many others is often what we see is like challenges and New startups or particularly FinTechs really pushing the pace. And in some ways, we've seen The FinTechs do that. But because the upfront investment for blockchain adoption is quite Significant, what we really see is the largest institutions, like we talked about BlackRock, JP Morgan, et cetera, really pushing the pace because they have both the resources, Capability, and desire to both manage the initial risk, work closely with the ecosystem, And to really lead the way. So it's kind of flipped on its head a little bit. Yeah. And so then we'll see all of those learnings and capabilities picked up by the rest of the Ecosystem, I think, and accelerate the rest of the adoption. Yeah. They're slow to start, But once they get rolling, it's impossible. Suddenly, then all at once.

19:03Kinsa Durst Yeah. Yeah. Super cool. Super exciting. And if the audience wants to find out more about Or businesses, institutions want to get in touch with you, what's the best way to make that happen?

19:14Matthew Dawson Yeah. So our website is ethereuminstitutional.org. We're on Twitter. We're on LinkedIn. And you're on Twitter as well? I am on Twitter, ismiMatthew. We're going to start increasing our content as well. With, obviously, an institutional focus. So I think there's still a lot to communicate about What's already happening on Ethereum. We have by far the most institutional deployments, So we need to start bringing attention to that, but also kind of documenting Playbooks and success stories, how institutions can adopt it as well.

19:53Kinsa Durst Yeah. I think success stories, playbooks, the more... I think it's really under communicated, Like you mentioned, but there's a lot going on under the hood. So excited to see what happens In the near future. Fantastic. Thank you for hopping on. Appreciate you making time.

20:10Matthew Dawson My pleasure. Thank you very much.