# Tokenized Stocks and On-Chain Market Dominance

**Podcast:** The Milk Road Show
**Published:** 2026-08-31

## Transcript

When we think about the opportunity for on-chain products, we're not benchmarking against things that are happening on-chain.
We're benchmarking against things like the New York Stock Exchange and the NASDAQ.
We think the potential for on-chain markets, and so over time, they will eat away at those.
other businesses.
Last week, Coinbase launched tokenized stocks on their base chain with liquidity from Aerodrome.
Everyone has been talking about tokenization for years, but now that it's here, how does it work?
What does it mean?
Who's going to win the market share?
And what do you need to know about all this?
Hello and welcome to the Milk Road Show, the podcast that knows that the real future of finance is swapping meme coins directly into Nvidia from an app on your phone while you're sitting in the drive-thru at 2am.
I'm your host, John Gillen.
I'm not speaking from personal experience.
I'm your host, John Gillen.
Today is Monday, August 31st.
And today we are joined by Alex Cutler.
Alex is the CEO and co-founder of Dromos Labs, the company behind Arrow, the largest decentralized exchange on base.
Alex is going to share a ton of alpha with us today and maybe pick a fight with Uniswap.
We'll see what happens.
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Share this episode with somebody who's going to enjoy it.
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Without further ado, welcome, I believe for the first time to the Milkrow show, Alex, how are you?
I'm doing well.
It's great to be here.
I'm glad to have you.
I rearranged some of our podcast schedule to get you on the show because you were kind of the man of the hour in the tokenization world.
Let's start with the big news.
Coinbase launched tokenized stocks on the base app.
They started with four assets initially, NVIDIA, META, Apple, and Alphabet.
Talk to me exactly about the role that Aerodrome plays in this and what you actually built to make this possible.
Yeah, thank you for the question.
I mean, these are incredibly exciting times.
You know, we've been building this space for four years and the vision has always been right that we are going to build all this incredible infrastructure in order to enable the world's most vibrant, most real time, most dynamic capital market on chain.
And we know that to date, of course, that has largely represented assets that look.
like the types of digital assets we've seen today, right?
Some incredible blue chips and Bitcoin and Ethereum, stable coins, a lot of fun on the long tail, as you were mentioning at the setup here.
But the vision's always been to bring the world's assets, to bring the world economy on chain.
And for us, this was a very big deal to partner with Coinbase to bring to market the first four.
tokenized stock products.
These are something entirely new.
What we've seen to date with tokenized stocks on chain is that these are largely derivatives or wrappers or sort of tokenized debt securities, IOUs, that type of thing.
And what we've seen Coinbase bring to market here is the real thing, right?
Something that is backed one to one, conveys the beneficial ownership.
rights that is held by a qualified custodian, doesn't sit on anyone's balance sheet.
And so this is the real deal.
And the real deal is super important because if we are going to bring the world's economy on chain, if we're going to have these robust internet markets and capital markets on chain, it has to be the actual underlying assets.
And I think this is the beginning.
of something that's going to move very, very fast with the tokenization expansion that we're seeing right now.
Could you talk to me just a little bit more about that?
You spoke about how this is the real thing on chain.
Differentiate for me this version of a tokenized asset, a tokenized equity from some of the other products on the market, like an X stocks, like an Ando, like, you know, anything else on the market, because everybody uses the same word tokenization.
And I think some of the audience doesn't really understand the difference.
What is the difference and why does that matter so much?
Yeah.
I mean, I think if you've operated.
on-chain for some time, you know the difference between a token that represents something, right, in a very real way, either via immutable on-chain assurances, right, smart contracts, or it's tied to something very, very real and there's a degree of legal relationship between those things.
And the progression, I think, that, of course, we're seeing on-chain is things moving away from maybe the more experimental, IOU, derivative-type things into things that are very, very real.
And I think just to make this super simple for folks, right, if you go to the terms and conditions, right, of many of these other stock products, they're going to be very, very clear about what this is.
You know, this is a debt security.
This is a derivative.
This is a wrapper.
And this is a way to speculate on the price of the underlying thing.
But you do not actually own the stock.
And nobody can take and mint and redeem it with all the beneficial ownership rights associated with it.
So, you know, Coinbase is working with a qualified custodian here.
They are very, very clear that this is in a trust that conveys full beneficial ownership to the users.
And that means you can bring to bear things like stock splits and dividends and that you basically have a claim on the underlying.
And that is a big, big deal because.
if it is not the actual underlying, we cannot build robust on-chain spot markets that can support the growth of these assets on-chain.
Because we've seen on Hyperliquid, tons of trading around real-world assets and stocks to date.
But these are just markets that need to connect to need to derive the price from something.
So they derive it from, you know, of course, traditional markets and oracles.
What we see the future as is these assets and these markets around things like tokenized stocks increasingly existing on chain, off market price discovery increasingly being created on chain, that the derivatives even that we see will begin to derive their prices on chain because the on chain markets are 24 seven.
The on-chain markets are 365.
The on-chain markets are globally accessible, they're fully transparent, and that will give them the ability to tap into markets at real time.
But you can only get that if the underlying asset is the actual real thing.
You need functional parity to create sort of product and distribution parity.
And this is the first version I think we've seen that you can credibly say, yes, this is the real thing.
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Okay, so this is the first real bridging of the traditional finance world, moving that on chain, and you're saying that...
bringing the real thing on chain is also going to bring a lot of other markets and users and demand with it.
That makes a lot of sense.
I want to get a little bit more clarity on something I've heard you say, which is that Aerodrome allows users with these stocks on chain now to be their own market makers and kind of act like their own version of Citadel Securities.
I think this has something to do with a new feature called predictive allocation.
But Alexander, I spent most of yesterday trying to understand what this means, and I'm kind of lost.
But explain this to me in plain English from a user's perspective.
How do I get to become a market maker on chain in this product offering that you've launched here?
Yeah, I mean, I think we can kind of separate the two pieces because the idea that anybody can come on chain and participate in the very act of market making is a core feature.
of automated market makers, generally speaking, right?
Of course, most people in the world have very restricted access to any type of asset.
And where those markets do exist, they're not 24-7, and they're certainly not accessible to anyone to come participate.
So one of the most amazing things about the on-chain economy and one of the core innovations of the AMM.
is that it makes the very act of market making an open thing that anyone can participate in.
And so why is this so interesting as additional asset classes come online?
Well, I'll give the example of last week, we saw NVIDIA, of course, announce their earnings.
And for folks, you know, who may be not deep in the world of stocks and, you know.
traditional exchanges.
Well, of course, the market closes before an earnings call and they release it.
But then there are after markets that you can participate in if you are a particular type of person or pre markets, post markets, things like that.
And what we saw on chain was that liquidity providers were positioning like an order book would the buy or sell side of Nvidia.
on chain on herodrome basically participating in speculating on what they thought those earnings were going to be and that provided deep liquidity then for the traders to come in as they began to announce these markets move very very closely and in a similar way to what you saw in after markets or even on platforms like hyperliquid but this is what i mean in the sense of the act of market making is usually something that is reserved for a select few.
And this is a place in which anyone could come in, participate in those markets and then gain the reward.
Right.
We like to contrast, you know, the potential of these on-chain systems with, again, some of the most like legacy incumbents.
And of course, for most people in the world.
you would have to go through something like interactive brokers, right, to have access to all these types of assets.
And you certainly couldn't participate in the active market making around them.
You know, interactive brokers has hundreds of billions under management.
I think they extract something like 77% margins on the activity, on the capital that they create.
And on-chain systems ensure that all the value that's created to that, if we can distill something like these giant brokerages, these institutions into code and redistribute all the value back to the participants, it makes something much more powerful in the network effects that can come.
So that's just like the benefit though of AMMs generally.
I'm happy to get into kind of the predictive allocation portion of this because this is something entirely new.
But yeah, I mean, from day one, you know, people can come provide liquidity.
In fact, they can even go to Banker.
We have a great new partnership with Banker.
Natural language, tell their BankerBot that they want to provide liquidity here, have it managed for them dynamically.
And we think like this is the future of these types of markets, not these very slow, old, expensive ones.
Well, yeah, I think just to expand on that, because I know that Aerodrome has partnered with Banker and this predictive allocation feature, the idea of it basically is allowing people to sort of bet on where future demand is going to be in these spot markets.
And if they're right about that volume and they provide liquidity early, they kind of get outside rewards.
How does this actually work from a user's perspective?
Again, because I still get lost in the weeds in some of this.
Run that by me.
Yeah.
So maybe just a bit of background on our system, right?
So there are three primary stakeholders or user groups in an exchange like ours in the Metadex.
That is, of course, traders and traders just want, of course, the best execution for any asset that they're looking to trade.
Liquidity providers, they're the ones who are bringing the liquidity.
that traders need and fundamentally they are just looking for the best reward for the risk that they are taking on and providing the capital and in our system we also have the token operators so these are folks who take the arrow token they stake it and then they participate each week by allocating arrow rewards or capital into markets that they think will be productive and in exchange they earn 100 of the revenue that the protocol creates so the big innovation with predictive allocation is we move from self-organizing marketplaces, and this would be the traditional Uniswap model, where you are just connecting together traders and liquidity providers, from that to coordinated marketplaces.
And that's what we have on Aerodrome today, where you have the token operators who are allocating capital across these markets, earning back the rewards, to markets that are now predictive, that they are now moving ahead of where they think is demand.
And so the example of this in the space of tokenized stocks, I think is very, very interesting.
If I am a S-Aero staker, each week I am able to allocate Aero rewards to the markets that I think are going to be used, that there will be demand.
And so if I think, you know, that there is going to be a.
big moment around something like Nvidia earnings and that that market needs to be deeply capitalized, right?
It needs to attract a large number of liquidity providers and deep liquidity.
I can allocate Arrow rewards to that pool.
And now if I am right, because I was early and I made the right bet there, I can earn an asymmetric reward in exchange for that capital allocation to that market.
And this has a number of amazing benefits, right?
Now the incentive is for every capital allocator to be trying to think ahead on what markets will be used.
And this is different than a prediction market because in a prediction market, you're merely just trying to bet on kind of a binary outcome of an event.
This is allowing you to bet on there being an event that people will actually speculate on.
And so you could allocate.
towards that market on something like Dividia.
You could allocate towards markets over the weekend when you know traditional markets will be closed and you think that there's going to be a bunch of news.
I think we've learned in the past few months how much news can happen on weekends, how much markets can move.
And basically you get the opportunity to be rewarded proportional to how right you are.
So this makes our system much more efficient.
This moves our liquidity ahead of demand and it gives participants the ability to earn the same types of asymmetric rewards that they can on prediction markets, but without needing to bet just on the binaries.
Okay.
So what I want our audience to take away from this is that what's...
Aerodrome is doing is kind of a first of its kind tokenized product.
And as a result of the way they've set up their systems here, there are new ways of generating returns, alpha rewards.
And you should look into this more and understand how this model actually works because there's a lot of cool things happening here.
Alex, I want to pivot a little bit to Aero here because you guys have announced plans for a long time to merge Aerodrome and Velodrome into Aero and have just one unified token, the Aero token.
Talk to me about where that token fits into all of this, because every project, every DEX has sort of like a different value thesis, a different revenue model, a different way they think about their token.
Where does the Arrow token fit into all this and what do we need to know about that?
It's a great question.
I mean, from day one, we have built according to a set of like very clear first principles.
And one of those first principles is that maximum value distribution.
will be the only moat in on-chain systems because you either take all the value these systems create and redistribute them through to users of the product, or you are going to become disrupted by somebody who does it or who does do this.
Right.
And this isn't just how, you know, innovative new on-chain products like Aerodrome have disrupted major incumbents.
But I think this is how we as an industry.
go and disrupt traditional platforms with thousands of employees extracting massive margins, it's because we can offer them something, we can offer their users something better than they can, that they can never reproduce.
And so in our system, it's very, very simple.
We redistribute 100% of the revenues of the platform back to those who take the token, lock it and participate each week.
And I think there's a very easy analog here.
that folks now probably understand very well, which is Hyperliquid.
Hyperliquid has become basically the dominant force in the sort of space of perpetuals.
And Hyperliquid is very much the darling of the last cycle.
And they got to this dominant position by focusing on, of course, an amazing product, but also a token that represented almost all of the value that that product.
creates in that they take, I think, 97% of the total value created, they buy back the token and redistribute that value back to users of their token.
And so our system, right, we're going to have Airdrome, Velodrome combined into a single exchange.
That exchange is going to extend now into the deepest liquidity market in mainnet Ethereum.
It's going to expand to new chains like Circle Spark.
And the intention is very much to unite the entire spot market, AMMs, which is still the level of the on-chain economy that produces more value than any other layer of the on-chain economy, raffle that value in a single token, just like Hyperliquid did, and hopefully dominate on-chain exchange in a moment when tokenization is going to accelerate it significantly.
Okay, you just brought up like a half a dozen things I have a ton of questions about.
So let's take these one at a time.
Let's start with hyperliquid.
I've heard you in the past make this analog before.
You've called Aerodrome, Aero, the hyperliquid of on-chain spot markets.
And I'd like to hear you kind of expand on that.
But the question that comes up naturally here is, you know, hyperliquid is doing something like $180 billion a month in perp volume, and they've grabbed 44% of all on-chain derivatives trading.
Coinbase's year-over-year spot volume is down, I think about 30%, 31%, something like that.
And so it seems like what we're seeing is a shift away from spot markets towards perpetuals, platforms, and perpetuals contracts.
How do you think about that?
Because Aerodrome is definitely going for the spot markets, but it seems like the market is moving towards perpetuals.
Does this worry you?
Just walk me through your thoughts on this.
I think these are symbiotic things.
So in what you described, is more trading activity increasingly moving on chain?
Definitely.
Right.
And you see this in the way in which, you know, folks like Coinbase, folks like OKX, right, many of these centralized exchanges are increasingly turning into distribution layers for the underlying economies on chain.
So Coinbase last year, of course, they launched a Bitcoin lending product where their customers can go on Coinbase.com, borrow against their Bitcoin.
That is just Morpho on the back end.
They also integrated directly into their front end DEXs like us.
So if you launch a token right now on Aerodrome, within 24 hours, you are trading on Coinbase.com, not via their centralized order books, but via a direct integration.
into our DEX rails.
So I would say absolutely, we've all seen the charts, right, of the increasing dominance of markets trading on-chain versus centralized order books.
And we've seen the trend in the centralized players increasingly becoming the distribution layer for these on-chain products.
So I think that's very exciting for both ends of these markets and derivatives and spot markets.
But in terms of the relationship between, you know, something like Hyperliquid on Perfs and something like Aerodrome on the spot side, I mean, we know from traditional markets that both of these things need to exist.
You need to have the New York Stock Exchange and NASDAQ in order to have the Chicago Mercantile Exchange, right?
They have to derive from something.
And what is very exciting right now is These derivative markets have had their big on-chain moment, but they are captivate in their ability to grow because they still need to rely on, when we're thinking about the trend of tokenization, markets that exist off-chain that are not real-time, that are not 24-7.
And of course, we don't need to dig into how Hyperliquid does that on the back end, but it's a bit of a self-referential thing, and it's capped.
So you can't have true on-chain price discovery.
around the real world asset when traditional markets are closed in something like a perpetual market nor can you build like the composable lego blocks around this and lending markets and new innovative products like what uh bitwise has launched with the automated portfolio manager and things like that you can't build the same sort of composability so i think these two things are actually very related and spot markets are about to have their hyper liquid moment And what we will see is, you know, these on-chain spot markets will increasingly become the markets in which, you know, derivative markets benchmark against, the oracles are built against, where on-chain price discovery happens.
And that can only happen via the combination of these two.
But the big difference, I think, like, you know, Hyperliquid and us are very similar.
They never raise, we never raise, right?
They distribute 100% of the value of the token.
We've done the same.
They have done a very good job now, I think, of wrapping the collective value that these markets create into a single token that allows, you know, even the most traditional like investor classes to look at it and kind of understand what they're buying.
Today, Aerodrome's just competed for about, you know, a fifth of the overall DEX market.
We win a dominant share, you know, a hyper liquid like share anywhere we compete.
But this is our big moment because we're expanding across EVM.
we're going to bring that same sort of winning formula.
And then hopefully we're able to show that the same model that's one in hyperliquid can win in spot as well.
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This is really helpful, Alex.
I'm getting excited about this.
Okay, before we go to how Aerodrome is expanding, I want to ask one more question about a competitor or a competing product, which is the ETFs.
Because Spot, Bitcoin, and Ethereum ETFs have done a cumulative volume of over $2 trillion.
And it seems like these are really popular products.
They're accelerating in their adoption.
Do you see the ETF products as a competitor in any way?
Or do you also see that similar sort of symbiotic relationship that you see with perpetuals?
Or how do you think about that?
Yeah, I mean, depends on what time horizon we're thinking, right?
Obviously, ETFs are incredible right now in the sense that they give access via traditional markets to these really incredible on-chain products and services.
So the ETFs are amazing, right?
And onboarding more folks, onboarding more capital into these markets.
And I think that will be very important for some time, right?
Because we talk about you know brian armstrong talking about uh 10 of global gdp coming on chain in the next five years well that's still going to take some time and that still means that there's a lot of gdp off chain so these markets will continue of course to exist both on the traditional and on chain side for some time But I think when you look at the Bitwise product, right, this is basically something that allows folks to access these tokenized equities, almost similar to an ETF.
But you actually do hold the underlying assets and those assets can be rebalanced and there's no sort of fund wrapper around it.
So if you imagine a world in which any margin that is being extracted by a traditional vehicle, whether that's a exchange, whether that's a financial product, that margin is the opportunity.
for on-chain systems to come and deliver something that's faster, cheaper, more real time.
And I think we will see products being built on top of one-to-one representations of real world assets that don't need to take the same types of fees and rates.
We don't have thousands of employees to feed and to pay and to all this sort of stuff.
But these products will increasingly have a foundation in on-chain rails.
For anyone who missed it last week, I did an interview with Ryan Rasmussen of Bitwise about this product that Alex is referring to, these automated token portfolios that they think is going to compete with ETFs and that also uses tokenized stocks on base, stocks on base, sorry, which Alex and Aerodrome are providing support for.
Okay, so that's very helpful.
Let's pivot this conversation back to the expansion of Aerodrome here.
Airdrome is expanding from base onto the Ethereum mainnet onto Circle's arc.
This means you're going to be going directly head to head with some of the largest DEXs in the space, Curve, Uniswap, and you're playing on their home turf.
What is your plan to win and sort of dethrone these sort of like enshrined institutions of the DEX space?
And how do you plan to go about challenging these bigger incumbents?
I mean, it's a great question.
And it's a question I think we've been answering.
from day one in in many ways you know for anybody who doesn't know our history uh we started as basically five guys in discord um virtually all anonymous even to one another and when we got started we got started believing in the power of this model, right?
A model that redistributes value maximally, that can quickly bootstrap all this liquidity.
And we thought the power of the model could disrupt some of the biggest incumbents in space.
But we didn't raise any money.
We didn't sell any tokens.
So we've had to be scrappy at every step of the journey.
And I will say at every step of the journey.
we were reminded at how improbable it was.
So our first product, right, which we launched about four years ago, as of this July, was Velodrome on Optimism Mainnet.
And we didn't start as the number one decks on Optimism.
In fact, we weren't even early to Optimism.
Uniswap had been there for some time.
Curve had been there for some time.
But on the very power of the model itself, it slowly started to gain market share.
And it started to gain market share against incumbents at that point, you know, that were billion dollar, multibillion dollar incumbents, incumbents that were backed by, of course, some of the biggest names, most entrenched interests in the space.
But Velodrome rose and eventually became the number one DEX on Optimism mainnet and extended that dominance across about 10 different Optimism super chains.
And then, of course, with the launch of Aerodrome.
We now competed once again.
We weren't first, but we competed once again against some of the biggest incumbents.
And this time it was on the single most important, the single fastest growing Ethereum L2 in existence.
And Aerodrome as well rose to a dominant position.
So our opinion is this model has proven itself.
Anywhere it competes head to head with any of the biggest, most entrenched incumbents, it wins.
And it wins.
uh pretty handily right like a two to one market share against uh some of the largest incumbents in the space so even if we were just taking this model and extending its total addressable market to places like ethereum we think it would have you know more than a fighting chance right to uh play the same growth model as it has today but we're combining with the biggest most ambitious upgrade we've made to the model in its history in Metadex03 and the all new era.
So we think fundamentally, if you want to boil down what our advantage is, that first principle I described earlier, maximum value distribution is the only mode.
And so we stay focused on things like ensuring that our system can maximally reward liquidity providers.
Because if you reward liquidity providers maximally, you'll get more trades.
If you get more trades, you create more fees, you can redistribute to VE Aero or Staked Aero, and those Staked Aero folks can direct more value back to the liquidity providers.
And we're very excited about this because this is like a different philosophy, right?
Some folks that we will be up against are taking more of a platform economy kind of approach, right?
This is...
a very traditional approach.
It's like the Apple App Store kind of approach where they say, well, you can come use our rails.
Certainly you can deploy a token here.
If you're an issuer, you're a liquidity provider, you can come like earn here.
But in exchange for that, we're going to take, say, an average of 25 cents of the dollar and we're going to redistribute that value to a different stakeholder class.
We think you have to reward maximally.
And we think that seeing these two models compete head to head in markets like mainnet Ethereum will show that once again, you have to reward maximally or you're going to lose share.
Five dudes in a discord trying to change the world is a good description of crypto overall, Alexander.
So I appreciate the history lesson on that.
But this is the part of the podcast where I'm going to try to start a fight.
But the description you just laid out there contrasting Aerodrome versus other approaches, that is the approach that Uniswap is taking.
They have rolled out a plan to redirect some of the fees from liquidity providers back to the token holders in a token buyback program.
A lot of people have been very enthusiastic about this.
You've been sort of critical about this.
You touched on this a little bit, but say a little bit more about why you think the approach Aerodrome is taking is going to win here and sharpen that distinction for me a little bit.
I mean, liquidity is the lifeblood of any exchange, traditional or otherwise.
If you are a trader.
You're pretty exchange agnostic.
You know, if you're on Coinbase.com today, you probably don't really care if your trade is hitting their centralized order books.
You don't care if it's routing it into an exchange or base on base or whether or not that exchange is Aerodrome or one of our competitors.
You just want the best execution.
So our model and what we have optimized for from day one and will continue to do is ensure that we are rewarding liquidity providers maximally.
And we do that by wrapping more value than just trading fees, but we also wrap 100% of trading fees.
So in V3, right, what liquidity providers will be able to earn is a token that represents things like all the trading fees of the platform, launch payments, bridge fees, MEV internalization.
sort of bringing in even more value that's traditionally extracted from LP providers.
And we put all of that straight into the active tick of liquidity to attract more liquidity providers, which attracts more traders, which attracts more fees and more value.
We think that that model is going to be the winning model because fundamentally, you know, John, if you are coming on chain and you've got, you know, tokenized Apple.
and some wrapped ETH and you want to put it to work somewhere, are you going to want to put it to work somewhere whereby you get 75 cents on every dollar that that value creates?
You get $1 of every dollar it creates, or you get even more, you know, a buck 25 or a buck 50.
And, you know, this is just core to us because it's a very user centric approach.
Are we trying to recreate the sort of traditional platform economies that we saw in Web2 and the sort of model whereby platforms are able to sort of extract or redirect value of the systems?
Or are we here to create on-chain systems that maximally redistribute the value they create to the users that create it and create an insurmountable?
amount of network effects that grow these on-chain markets and systems.
So we're very confident in our model.
We're confident because we had none of the advantages of our competitors and we've won dominant positions, two to one positions and markets like base and Optimism Mainnet.
And we're very excited to expand that dominance into other on-chain markets.
And we're very excited to do it in a moment where tokenization is at its peak.
And if you are skeptical of Alex in presenting this, let me just give you some data points.
Aerodrome does more volume most weeks on the top traded digital asset today while operating on one network in Bitcoin.
More volume than all the other exchanges, all the other chains combined.
That is the power of maximally rewarding our users.
We've got another very important one.
We do more volume most weeks on foreign exchange on-chain, which we think will be a quickly accelerating vertical of the on-chain economy.
That's the value of maximally rewarding liquidity providers.
And in just the first week, right, of tokenized stocks launching on Airdrum, BASE was not first in issuing these.
Airdrum was not first in hosting the liquidity for these.
But on these four initial assets.
In one week, we carved out about 25% of the total market.
And that is something I think that will only accelerate.
So maximum value distribution, I think, is the only moat.
There's no amount of incumbency.
There's no amount of VC backing.
There's no amount of sort of Linde that can compete with that.
And that's what we're very excited to continue to prove around the entire EVM marketplace.
I love the confidence.
I admire the success.
I'm really excited to see how this plays out in the markets here.
I want to ask you a few questions around the relationship with Coinbase because there's been some controversy.
Coinbase choosing Uniswap V4 over Aerodrome for its verified pools feature got a lot of attention.
People were calling this a betrayal, saying Coinbase stabbed you all in the back.
You've pushed back on that, but could you just explain a little bit of what actually happened here?
You know, what is the nature of the relationship between Arrow and Coinbase today?
And just talk us through a little bit of what's going on there.
Yeah, I mean, that's very funny.
I haven't heard that one in a while.
But yeah, I mean, we've been very close partners with Coinbase since day one.
You know, the day that Airdrum deployed to base, the TVL of the chain doubled.
Ever since that moment, you know, we have been the primary trading liquidity hub on base.
The alignment is so significant, right, that Coinbase went out, Coinbase Ventures went out and made the largest liquid investment, I believe, that they had ever made.
And it may still be the largest that they've ever made in buying and purchasing Arrow off the market, not via a private sale or anything like that, T-wopping on chain.
locking those tokens for four years and now voting and participating in the system each week.
So they've got a direct stake in the network.
You know, that's no different than any other lockers.
They get to allocate capital to new markets each week and earn back the value that those markets create.
So what's been the power of this, right?
Things like the Bitcoin dominance.
We worked very closely with Coinbase to help bring CBBTC to market.
And Coinbase used their own voting position, of course, direct incentives to those markets and earn back the value that those markets created.
This is how we've grown our dominance on FX on-chain.
Coinbase and us both aligned using the power of the token, the tool to direct capital to new emerging markets, deepen liquidity there and grow dominance.
With respect to verified pools, that was something that they approached us on at the time.
And we were just skeptical whether or not the market was ready for verified pools.
This is something whereby somebody has to KYC in that pool.
um in order to uh participate whether you are trading and providing liquidity so we passed on it and then there was some hubbub but even coinbase was very quickly quick to correct this is not a betrayal this is an experiment we're running we're using uh some uniswap v4 rails and all of that but i think our thesis there was very much proven out because that product i think is virtually you know dead at the moment But the future will come for verified pools.
We've done a lot of work in this in our V3.
And so when the demand will come there, we'll be very ready to work with partners like Coinbase on products like that.
Brian Armstrong said last year he thinks 10% of global GDP comes on chain in five years.
You mentioned that in this interview as well.
You guys have partnered on tokenized stocks with them.
What's the plan to scale this?
Are you planning to roll out a whole lot of new stocks?
Are you moving towards indices?
What's the expansion of this tokenized stock product look like or what's next on the roadmap there?
Yeah.
Yeah.
I mean, look, this is a big reason why we're focused in the areas that we're focused on, right?
You know, how is it that this little exchange on one chain became the top venue for trading Bitcoin?
How is it that this one chain or this one exchange on one chain became the top venue for trading FX?
How is it that we've, you know, in a single week in the assets launch so far, grabbed 25% of the share?
We are focused not on the markets that have like driven the on-chain economy to date.
We're trying to skate to where the puck is going.
And the puck is clearly going towards tokenization, everything.
on chain very, very quickly, and we're not going to get distracted.
You know, we're going to move faster on this and ensure that we've got a dominant and moat around the asset classes and the verticals that will grow fastest.
So what's coming next?
A lot more stocks.
This was the set of the first four, and I think we've already exceeded early expectations there.
So I would expect the roster of stocks to grow significantly, but I would also expect things.
like additional types of assets, real world assets increasingly deploying on our rails, pairing against those tokenized stocks, which again, I think represent the best versions of these things on chain, migrating from other exchanges or issuing first on us, more markets and things like the Bitwise products building on top of them.
And so these become sort of compounding network effects that will grow these assets, grow the amount of activity around them.
I think because these represent one-to-one the underlying, you could see more neobanks tapping into these.
You could see funds wanting to hold these actually on their books.
We'd see more traditional folks wanting to come in and help to make these markets.
And so as Jesse, the founder of Base likes to say, and I think it's very, very real in the context of these, this is just day one.
These were four assets.
It's been explosive to date and our goal is to bring as many as we possibly can on chain as quickly as possible.
The Arrow token as of today is trading in the mid 40 cent range of just under half a billion dollar market cap.
Do you have a price prediction in mind or a market cap size as a target in the back of your mind in terms of the growth of this project that you see for the rest of 2026 or just like an addressable market that you have in mind?
Give me some thoughts of your own opinion on how big this can scale.
Yeah.
well i certainly don't have any price predictions and and certainly nothing i say should be construed as uh financial advice in any any way but you're too hard for me alex i mean i i always appreciate the attempt but i mean look we've stayed very very focused on ensuring that we are going to dominate spot exchanges just like hyperliquid has has dominated in derivatives because we look at last year and spot exchanges produced about $5 billion in fees on chain compared to derivatives producing, I think, about $3 billion, you know, chains producing about $2.5 billion, I think lending a bit less than that.
So we think in terms of a total addressable market, second only to stablecoins, dominating and capitalizing and wrapping all the value of spot markets is the single biggest opportunity.
on-chain today and that is before you even think about the pie growing with these trillion dollar markets coming on chain and tokenized stocks in index funds in global fx and payments infrastructure and things like that so i think we increasingly when we think about the opportunity for on-chain products we're not benchmarking against things that are happening on chain we're benchmarking against things like interactive brokers.
We're benchmarking against things like the New York Stock Exchange and the NASDAQ.
We think the potential for on-chain markets, because they are just better products, faster, cheaper, real-time, 24-7, they are just a better product.
And so over time, they will eat away at those other businesses.
They will redistribute that value entirely on-chain.
And so we believe, you know, the total market cap of this industry is going to grow substantially as we eat away at Tradify.
All right.
I have a very specific ask for you guys.
Somebody listening to this knows the person running marketing at a crypto or AI company that should be advertising with Milk Road.
We reach more than half a million investors across everything we do and Q4 is filling up.
So don't be the brand that waited too long.
And the cool part about sponsoring the show is this episode is still going to be getting plays months from now.
So send this to them.
look like a genius and tell them to go to milkroad.com slash sponsor.
Alexander, I have kept you way longer than I agreed to.
So I'm going to get arrested by your team if I don't let you go here.
But I do just want to say I rearranged the schedule this week to try to get you in because I think what you're doing is really important.
And I wanted our audience to get a chance to hear directly from you about what's going on, what you're doing.
So I'm really excited about it.
Thank you so much for being on the Milk Road Show and sharing all this with our audience.
Where can we send people to find more of you and your work online?
Yeah, you can find me on Twitter at at wag me Alexander.
You can find Airdrome at Airdrome 5.
And yeah, we tend to be pretty chatty on there.
So please do follow along.
It's going to be a very exciting few months here.
So I hope, you know, your audience tunes in and participates.
Well, I will definitely be following along with the announcements.
Alex, I hope we can catch up again soon to see what's going on in the space.
But in the meantime, thank you so much for being here.
Thank you very much.
Cheers.
And thank you all for joining us.
I hope you all learned something today.
So until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milk Row Show.
Thanks for being here, everyone.
Bye.
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