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NOTE Open Interest — chris-kim-axis. Draft: automatic transcript (faster-whisper small.en) of the released edit, automatic speaker assignment (resemblyzer, 2 speakers), corrections applied from the editorial glossary and OCR of the burned-in captions. Not yet reviewed line by line.

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<v Josh Han>Welcome back to the content suite.

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<v Josh Han>Today we have the co-founder and CEO of Axis.

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<v Josh Han>Chris, before we get into your Axis, I know you have a very extensive history within trading.

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<v Josh Han>Can you touch a little bit about what you were working on before Axis?

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<v Josh Han>Sure.

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<v Chris Kim>My name is Chris Kim, I'm CEO and co-founder of Axis.

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<v Chris Kim>I've been in the trading space for about 10 years.

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<v Chris Kim>It's both an arbitrageur and market maker in a stablecoin and FX space.

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<v Chris Kim>At Axis, we are building a liquidity provisioning business, primarily relies on DeFi for working capital formation.

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<v Chris Kim>We build our own low latency infrastructure and high frequency trading, execution technologies to execute our delta neutral trading strategies spanning across crypto, FX, equities,

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<v Chris Kim>And now tokenized markets.

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<v Chris Kim>Very exciting.

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<v Josh Han>Tell me a little bit about the history and why you co-founded Axis.

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<v Chris Kim>I've been basically running a hedge fund that is focused on arbitrage strategies in the past six, seven years.

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<v Chris Kim>The way how we see the stablecoin space and tokenization space evolving,

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<v Chris Kim>We've realized that the arbitrage stack that we've been developing has higher potential in terms of use case that is tackling a lot of these

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<v Chris Kim>Bottlenecks when it comes down to on-ramps, conversion needs,

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<v Chris Kim>And secondary market liquidity provisioning for all these tokenized assets.

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<v Chris Kim>Amazing.

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<v Josh Han>You used to do get this yield by yourself and your fund, and now you're bringing it to the mass market.

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<v Josh Han>Tell me a little bit about how you guys are productizing this market making and arbitrage.

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<v Josh Han>Sure.

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<v Josh Han>Firstly,

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<v Chris Kim>Not all hedge funds are arbitrageurs, but generally speaking, all liquidity providers are arbitrageurs.

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<v Chris Kim>So there's a shift in business model when we were a licensed hedge fund out of Singapore versus right now as a protocol where we

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<v Chris Kim>Rely on capital formation on chain,

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<v Chris Kim>Basically opening up the Axis for balance sheet participation to the public.

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<v Chris Kim>So it's a first of its kind, not just in terms of liquidity providers relying on chain for capital, but also the execution of the

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<v Chris Kim>Reserves and the collateral of our synthetic assets being applied to low latency and HFT strategies.

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<v Josh Han>How can one get exposure to this within the Axis ecosystem?

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<v Chris Kim>We have an on-chain synthetic asset called USDx that can be attained through DEX on Curve.

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<v Chris Kim>Participants can stake it to receive rewards, which is all coming down from two yield sources, dislocation in prices for market structure.

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<v Chris Kim>There's a lot of opportunities in the space where one asset is being traded at multiple different prices,

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<v Chris Kim>Different venues.

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<v Josh Han>I'm going to lay out the question.

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<v Josh Han>So through your trading firm, you were doing arbitrage and gaining yield, and now you're bringing it to a bigger audience through this product.

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<v Josh Han>Tell me a little bit about how one can get involved or kind of tell me about the product experience.

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<v Josh Han>Sure.

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<v Chris Kim>So in terms of DeFi users, very similar to a lot of the synthetic assets out there in the market today.

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<v Chris Kim>You can attain the synthetic asset USDx, stake it, and you will receive the rewards that we generate from market structure yields.

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<v Chris Kim>It recently has been doing about 20%, number one on DeFiLlama.

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<v Chris Kim>Basically, we rely on volatility, volumes, and also liquidity in the space.

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<v Chris Kim>So it can go down, and also it can go up depending on the market situations.

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<v Chris Kim>Looking back three, four months ago, we were yielding about 12% to maybe 13%,

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<v Chris Kim>But as there is more volume in liquidity coming in, and now in tokenization market, you have 10 different formats of [unclear] stocks.

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<v Chris Kim>This is where liquidity providers and arbitrageurs have to step in to close up the gap.

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<v Chris Kim>Interestingly, like I said, arbitrage yields are going to get compressed over the next five, 10 years, but I said that 10 years ago, so

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<v Chris Kim>We'll see how it goes.

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<v Chris Kim>Funnily, the opportunity set is increasing with all this [unclear] happening.

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<v Chris Kim>Basically, the law of one price has been broken due to tokenization and all these crypto venues.

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<v Josh Han>Amazing.

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<v Josh Han>So not only are you guys creating a stablecoin where I can get 12% to 20% yield based on volatility, but you

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<v Josh Han>Guys are also making the market more efficient, basically.

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<v Josh Han>I know that right now, basically, you're offering this through USD.

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<v Josh Han>Do you have future plans to onboard other assets?

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<v Josh Han>Yes, absolutely.

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<v Chris Kim>So we're going to launch BTCx, BTC yield, their denomination.

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<v Chris Kim>Same thing was for gold assets as well.

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<v Chris Kim>We're looking into different currencies and also commodities.

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<v Josh Han>What are you most excited about?

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<v Josh Han>I don't think it's been that long since you guys have released USDx.

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<v Josh Han>What kind of next product do you think will happen next?

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<v Chris Kim>Yeah, I guess the next step for us is more integration with DeFi protocols.

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<v Chris Kim>Composability is a big part of DeFi and also working with remittance operators, FinTech applications that are in need for conversion capabilities.

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<v Chris Kim>The fact that we are able to generate arbitrage yield means that our underlying infrastructure is able to attain the best prices from one asset

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<v Chris Kim>To another, one region to another.

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<v Chris Kim>So yeah, I'm thinking of arbitrage stack is more than just a yield generator, but rather a very important part of future capital markets.

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<v Josh Han>Since you guys have Axis to the best prices, I guess it's almost like working with you guys directly as a prop AMM, or is

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<v Josh Han>It similar to that?

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<v Josh Han>What might be the differences for that vision?

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<v Chris Kim>This has to be served off-chain into remittance, FinTech platforms.

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<v Chris Kim>So yeah, think of this as an on/off-ramp, multi-currency on/off-ramp.

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<v Chris Kim>Interesting fact is that due to the adoption of stablecoins by all these FinTech players in the last three, four years, they started working with

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<v Chris Kim>OTC desks.

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<v Chris Kim>That is becoming an important part of, I would say, a new version of SWIFT,

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<v Chris Kim>Where all these liquidity providers in different regions and markets are functioning as a node operator of a new network that you can potentially replace

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<v Chris Kim>SWIFT.

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<v Chris Kim>Very cool.

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<v Josh Han>Who has been your primary customer when you guys created USDx that you want holding, and how do you imagine them interacting or thinking about

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<v Josh Han>Holding USDx?

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<v Chris Kim>So yield seekers, obviously.

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<v Chris Kim>We are playing the role of connecting yield seekers and liquidity seekers.

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<v Chris Kim>I would say that it's a new introduction of yield source.

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<v Chris Kim>So far, there has been a lot of market-neutral strategies out there in the market.

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<v Chris Kim>But yeah, we've yet to see a low latency HFT execution-based strategy.

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<v Chris Kim>So I'm looking forward to the advancement.

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<v Josh Han>Are there any other product updates that you want to share or kind of talk about

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<v Josh Han>Future product things?

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<v Josh Han>What is the big goal for Axis?

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<v Chris Kim>We aim to become a prominent market maker in the secondary market space that is connecting with different venues,

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<v Chris Kim>Different issuers.

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<v Chris Kim>And so as tokenization market grows,

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<v Chris Kim>The demand for arbitrage and liquidity providers will increase.

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<v Chris Kim>So looking forward to more partnerships,

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<v Chris Kim>Whether that is the FinTech operator that is seeking liquidity for multi-currency settlements or different yield seekers in the DeFi market.

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<v Josh Han>If an Axis user currently gets 10% to 20% APY through the arbitrage as well as liquidity provisioning that you guys are doing,

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<v Josh Han>How could that lead into different products that you're creating?

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<v Josh Han>I know you've talked about OTC and being able to provide size for OTC.

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<v Josh Han>Tell me a little bit about that.

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<v Chris Kim>Sure.

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<v Chris Kim>So utilizing our arbitrage infrastructure,

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<v Chris Kim>We monitor and observe all the different combinations in the market.

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<v Chris Kim>We are currently monitoring about 25 million different permutations and it's very capital intensive.

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<v Chris Kim>So as there's more TVL,

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<v Chris Kim>We are able to generate potentially higher returns to a certain extent because we are able to

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<v Chris Kim>Spread out to more different venues, regional markets,

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<v Chris Kim>Different issues, working with more issuers as market makers.

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<v Chris Kim>And so we are looking at this market where the market structure has changed and we think that the dislocation price is going to be

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<v Chris Kim>Pretty sustaining.

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<v Chris Kim>It will take maybe five to ten years for these to collapse.

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<v Chris Kim>But yeah, basically our role to make markets efficient is being now opened up to DeFi users.

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<v Josh Han>If I'm in the market for a stablecoin as well as some yield, what would be the bull case or the reason I should hold

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<v Josh Han>USDx?

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<v Chris Kim>Yeah, users will be participating in our ecosystem, contributing capital for us to utilize as working capital,

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<v Chris Kim>Basically patching up dislocations and prices across different formats, venues and markets, whether that's CME or Hyperliquid or Binance or maybe bitFlyer in Japan.

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<v Chris Kim>And so we are trying to be at the intersection of different asset classes.

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<v Chris Kim>And yeah, the arbitrage yield that is based off low latency execution tech is very unique to us.

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<v Chris Kim>And so DeFi users will be able to

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<v Chris Kim>Axis these types of yield that was traditionally only allowed to be accessible by private LPs and no different OTC desk or liquidity providers.

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<v Chris Kim>Right.

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<v Josh Han>So yield that was only available to accredited investors are now available to anyone who holds your stablecoin and they can expect literally the number

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<v Josh Han>One yield according to DeFiLlama.

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<v Josh Han>Is that correct?

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<v Josh Han>Yes.

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<v Josh Han>Yeah.

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<v Josh Han>What is the current yield and do you expect it to ever go past 20%?

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<v Chris Kim>Well, the average yields returns that we've made done in the past seven years was about 36%.

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<v Chris Kim>Of course, that's not like the representation of future yields.

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<v Chris Kim>It all depends on volume, volatility.

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<v Chris Kim>Yeah.

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<v Chris Kim>So yeah, it really depends on markets.

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<v Chris Kim>Can range between 10 may go up to 30, you see.

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<v Chris Kim>Another part is also the TVL, which is going to be impacting the outcome.

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<v Chris Kim>So yeah, we are trying to strike a good balance between working capital and matching different opportunities.

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<v Josh Han>Very nice.

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<v Josh Han>Well, thank you, Chris, for joining us.

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<v Josh Han>We've learned so much about Axis and the stablecoin that they're building.

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<v Josh Han>Thank you for democratizing this yield for everybody and appreciate you coming on.

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<v Josh Han>Thanks for having me.

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<v Josh Han>Thank you, sir.